11 August 2009

Hack the (cruise) tax?

As the Alaskan cruise season winds down, there’s talk of what’s next for the ailing state’s tourism industry.

"The 2006 implementation of a $50 head tax -- part of a statewide travel initiative, put into place by voters to generate revenue -- has sent cruise ships packing, with Royal Caribbean, Cruise West and Carnival Corp. reducing their Alaska itinerary offerings.," says Cruise Critic.
Fares are lower -- but so is demand.

Observers of what has happened to Alaska cruising say it offers lessons to many other areas.

So what's going to happen next?

A summit at First Things First Alaska Foundation, a non-profit organization, brought in everyone from business owners to public officials to talk about what the state needs to do to woo travelers, and particularly cruise passengers, back to the area.

Some recommendations:

---Remove the $50 head tax, or find a more affordable common ground and revamp it. "People are making choices about where to go and how much to spend," said Peggy Ann McConnochie, executive director of First. She adds: "As cost goes up, interest in the area goes down. People aren't going to come just because you have a beautiful destination. You have to be fair and offer value. What benefit does a person being charged receive by coming?"

---Implement a new marketing campaign, aimed at drawing travelers back to Alaska. Speakers discussed the region’s lack of a viable travel marketing campaign.

---Intensified educational efforts for local residents. McConnochie says many residents who voted to pass the tax believed port cities would see a direct profit, even though that's not the case.

As for lessons learned for other areas, she said:

"I would tell them to look very carefully at the unintended consequences of what they do," McConnochie says. "Are they really helping or hurting themselves? When you start taxing people who don't live there, where are you going to get that money if they leave?"

by David Wilkening

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$50 tax isn't the whole story

While a $50 head tax is certainly part of the economic equation for travelers, there are other costs to the ballot initiative in Alaska that created turbulence. There is a gambling tax, regulations for water treatment that are beyond the ability of the cruise lines to meet at a reasonable cost and a few other issues. They all contribute to the total cost of doing business in Alaska and thus lower the margin for cruise lines. It is the lower margins in total that make us less attractive for the companies to sell.

By STEVEN SILVERSTEIN, Thursday, August 13, 2009