News article: Big business dominates Alaskan tourism
Tourism 2005 in the ‘Lost frontier’
By: Robert Howk
Dateline: Downtown Anchorage
This time of year you can count on two things happening in Alaska: days get longer, and the population explodes as hundreds of thousands of visitors make their way north. While the traffic jams and longer checkout lines are obvious, it is harder to determine how the processes of globalization, centralization and plain old bureaucracy are changing the Alaskan tourism industry.
Not long ago Alaska was a land of old sourdoughs and independent travelers. Now corporations with deep pockets such as Holland America Lines, Princess Cruises and Doyon/Aramark control major portions of the tourism industry. Some critics say the diversity of choices for independent travelers has shrunk, and ask: Can Alaskan businesses compete?
Holland America
John Shively makes it his business to understand the tour trade. As Vice President of Government and Community Relations with Holland America Line Inc., Shively has a pretty good handle on the numbers.
“We’ll bring about 200,000 people into the state this year, and the estimated economic impact (from side trips and activities) is about $1,000 per passenger,” he said. The cruise industry overall will generate about $1 billion in Alaska revenue this year, and the business is growing at about 8 percent per year, he noted. When you add up the numbers of passengers on Holland America liners, and competitors including Princess Cruises, Royal Caribbean and smaller independent cruise ships, they will bring approximately 900,000 visitors to the state for 2005, he said.
With that sort of volume, some might say there is an ongoing ‘corporatization’ of the Alaska visitor business, but Shively contends there is still plenty of room for small and medium-size entrepreneurs to find a niche in the industry.
“Obviously, we have some big pieces ... both Holland and Princess have hotel chains and we have our own bus system and railroad cars,” he said. “But on the other hand, if you look around at things like horseback riding, river rafting, flight seeing and such, it’s all Alaskans and many of them have built the majority of their income out of visitors that we bring to the state.”
The company’s corporate headquarters in Seattle welcomes marketing proposals from local vendors, he said. “Just give ‘em a call.”
The bulk of Holland America cruise passengers limit their vacations to ports of call in Southeast Alaska, Shively acknowledged, but a growing number are “going on the ground and riding the rails to Denali Park, Fairbanks and further north. He said Holland America accounts for about 70,000 ‘bed nights’ in Anchorage area hotels each summer.
As far as contributing to the needs of Alaskans, Shively said Holland America pays about $30 million per year in a variety of sales taxes and port fees to local communities, and that figure does not include property taxes on the firm’s hotels and other real estate holdings. “Look at the city of Juneau. They had a $6 million budget surplus last year, and I believe that is mostly attributable to us,” he said.
Unclear statistics
Steve Colt, an associate professor of economics with the University of Alaska Anchorage Institute of Social and Economic Research, said his best estimate for the total figure of annual tourist spending in Alaska is about $2 billion, and it is getting bigger each season.
But how tough is it for a local small business owner to break into the game with a new visitor attraction? Colt said he has heard lots of stories about successful start-ups, but also many tales of established owners selling out to bigger, corporate entities.
“I don’t know if selling out is necessarily a bad thing,” he said. “Usually it’s just a smart business decision.”
There are a lot of “myths” about how tourism is dominated by huge companies in Alaska, he said. “But you have to be very careful before you can validate those kinds of stories.”
His research shows there has been a big surge during the past few years in the number of “adventure tours” operating on the Kenai Peninsula and in Chugach State Park, and that many of the customers for those operations also are passengers from the major cruise ship lines plying Alaska waters each summer. There is plenty of data to show that it is not an “either or” situation as to where visitors spend their time and money, he noted. While many tourists use opportunities for side trips marketed by the cruise lines, many others simply shop around and patronize small “very local” enterprises. “It’s a very complicated interface between the big companies and the little guys. And it is poorly understood,” Colt added.
Further north: Questionable future for small businesses
Denali National Park is another visitor magnet and has provided a solid opportunity for Fairbanks-based Doyon Native Corporation in a joint venture with Aramark Inc., Shively added. He said the National Park Service has a contract with Doyon/Aramark to provide bus service into the park, and Holland America basically “buys seats” on the buses for their cruise passengers.
When asked if Holland America and Doyon/ Aramark essentially have the market cornered on visitors to Denali, Shively hedged a bit. “Well, I wouldn’t quite say we have it cornered, but we’ve got a pretty big part of it, there’s no question about that.”
And then there is the stretch along the Parks Highway south of the main park entrance that has boomed in the past decade, earning the nickname “Glitter Gulch” with no apologies to Las Vegas. But time may be running out for hopeful independent business entries.
“There’s no way you can break into that area,” said Fairbanks business owner Michael Scibor. “The big players have it all sewn up.” He said he had considered investing in the region but decided against it as costs went up and opportunities dwindled. “You would have to have a unique offering and find a very, very specific market. It’s too much of a pain in the neck, and the cost-benefit scenario is not a pretty picture,” he said.
The Fairbanks area continues to grow, however, and Scibor said he is optimistic that forward-looking business owners can still find ways to tap the tourist dollar.
Independent businesses still try
As the old joke goes, “Anchorage is a nice city, and it’s only 20 minutes from Alaska.” But Anchorage is the biggest market in the state and it has been a magnet to many entrepreneurs focusing on tourist traffic.
That does not guarantee success, though.
Inside the Ship Creek Center in downtown Anchorage last month, a steady gentle drumbeat emanated from ZBD, a small jam-packed gift shop. Lawrence Sheakley was sitting behind the sales counter striking a round caribou hide drum and smiling as potential customers strolled by. Sheakley was taking a break from carving a 12-foot tall totem pole in the hallway outside the shop.
It’s going to be really cool when it’s done,” the tall Tlingit Indian from the village of Hoonah said.
“It’s a commercial totem, but that’s what drums up business,” he joked. He and his partner Sue Rieckmann had negotiated with the center’s owners to erect the totem on a concrete stand outside the store along Anchorage’s busy Fourth Avenue. “It will help draw people in, and then they will see the nice variety we have here,” Sheakley said.
He said business has been good since the shop opened last year, and he attributes it to the fact that all the jewelry, artwork and assorted gift items in the shop are hand crafted by Alaska artisans.
“No ulus made in Taiwan in here,” he pointed out. He and Rieckmann craft most of the wares, and they take other artist’s work in on consignment. “We haven’t had to advertise too much, this stuff sells itself,” he said.
But Rieckmann was a bit more circumspect when we spoke with her later in the month. “We’re moving out. By the time people read about us, we won’t be here,” she said. When asked why the store was folding, she simply said “Bad ownership, bad management.”
The totem might stay if payment can be arranged, she said. “Otherwise, we’re taking it with us.”
Northern impressions
The ZBD store is one of several new firms downtown catering to visitors, and most folks we spoke with seemed to appreciate the shopping situation as part of a well-rounded Alaska visitor experience.
“It’s great, we’ve had just a wonderful time here,” Janet Garnerson of Minnesota said while waiting for a reindeer sausage from a street-side vendor. “You’ve got something for everyone,” her husband Gene said while eying gaudy t-shirts in a nearby storefront. “Beautiful scenery, friendly people, and lots of things to do. We retired a few years ago, and we’ll be coming back, if we can afford it.”
“Alaska rocks,” young Jason Friend from Idaho said. “I’m thinking about getting a tattoo.” Friend, wearing a Dave Mathews Band tank top and expensive-looking Ray Ban sunglasses, said he plans on making his way to Nome “just to have a look around and chill with some Eskimos.”
Dave Betcher of Arkansas is spending his extended vacation visiting small bush communities. “If tourists really wanted to see Alaska, there are hundreds of villages and dozens of tribes to learn from,” he said. “I can’t live that long to meet all those people.”
Not everyone was 100 percent positive, though. “Traffic in this town is a nightmare,” said Ben Kessler of South Carolina, echoing the sentiments of many Anchorage drivers. “I can’t believe you guys get gridlock at rush hour all the way up here.”
Contact Robert Howk at