Tourism industry needs stable tax decline

By Deantha Crockett

Alaska’s tourism industry needs what every other industry needs: a stable tax environment, regulations based on sound science, and reinvestment of profits to enhance the industry for years to come.

These sentiments relayed by Scott Habberstad, Director of Sales and Community Marketing – Alaska for Alaska Airlines and RDC Board member, remain true for each industry featured in the opening segment of RDC’s 32nd Annual Conference titled “Alaska Industry 2011 Year in Review and 2012 Outlook.”

In addition to serving on the RDC Board, Habberstad is also a founding member of the Alaska Alliance for Cruise Travel (AlaskaACT), Marketing Chair for the Alaska Travel Industry Association, and Vice Chair of the Anchorage Convention & Visitors Bureau.

Habberstad outlined two distinct methods of tourism travel to Alaska: visitors who come by cruise ship, and visitors who come by air, highway, or ferry, called independent travelers. He explained that independent traveler numbers, measured by bed tax receipts received in communities around the state, decreased in Southeast and Interior Alaska but increased exponentially in Southcentral Alaska in 2011. He added that domestic airline service provided by Alaska Airlines, Delta, United, US Airways, and Jet Blue decreased by 4% overall, as a result of reduced flights on Delta and United. International airline capacity was up with flights arriving on Condor, Edelweiss, Japan and Korean Airlines.

Habberstad noted Alaska had enjoyed 12 years of climbing cruise passenger numbers, until the 2006 ballot initiative passed, which placed a head tax on visitors as well as instituted a corporate income tax increase, a gambling tax, and unattainable discharge requirements that even municipalities and state ferry systems cannot meet. He indicated the punitive affects of the measure, combined with the high expense of operating in Alaska and a weakening economy, caused cruise lines to redeploy their ships to more profitable regions of the world. This was a devastating blow to the Alaska tourism industry as well as to the economy, Habberstad said. He stated that 2010 brought the lowest number of cruise passengers in years, and many small businesses that depend on those passengers had to close their doors.

The good news, Habberstad said, is that in 2010 Governor Parnell began working with industry leaders to improve the bleak cruise passenger situation. He described a compromise to reduce the head tax was created and approved by the Legislature, and as a result cruise lines have routed ships back to Alaska (see brief above).

Habberstad presented to the audience the worth of an average Alaska visitor: $935. He explained that this number does not include travel, for instance the cost of their plane ticket or cruise itinerary, but includes money spent on the ground in restaurants, at gift shops, on tours, etc. He mentioned that $935 per person adds up to $1.5 billion spent by Alaska visitors this year. He pointed out that the tourism industry employs 36,000 people statewide and pays $1.1 billion in wages annually.

Habberstad concluded by reminding the audience that increased tourism is good for all Alaskans, and industry leaders want to ensure a stable tax policy, equitable regulations, and reinvestment of profits to keep the industry healthy for years to come.

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