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Visitor industry should unite Big part of funds raised from bill should be returned to local areas

Posted: Friday, February 20, 2004

Everyone involved in the visitor industry in Alaska agrees we need a more effective and better funded marketing program. Independent visitor counts have been in decline for five years or more. While cruise passenger counts have held steady, it has come at a high price: Steep discounting has hurt many segments of the cruise market, including hotels and optional tours.

The Alaska Travel Industry Association was formed in 2000 from the "Millennium Plan" an effort to create a private-public partnership to fund tourism marketing. The state was seeking to cut costs and warned the industry that it must find a long-term, self-funded approach to marketing Alaska. The industry reacted with a combination of "pay-to-play" programs, heavy contributions from the major cruise operators, as well as voluntary "assessments" from the Anchorage Convention and Visitors Bureau and smaller regional marketing organizations.

The state subsidy dropped from historical levels, but still contributes about $4 million of the annual $10 million budget. Most agree that $10 million is barely adequate to maintain a viable marketing program, and the threat of losing financial support from the state and cruise industry is ever present.

Alaska ranks low nationally in terms of its marketing budget. The cry for more money has met with resistance in Juneau, even in the wake of the Sept. 11, 2001, terrorist attacks. As the state seeks revenue sources to balance the budget, talk of sales tax, bed tax, cruise ship head tax and a seasonal visitor tax has stirred interest among different sectors. Once a specific bill or proposal is aired, the howls of protest ring and the lobbyists in Juneau start their engines.

Senate Bill 254 is the brainchild of ATIA and calls for a 2 percent "self assessment" on all in-state visitor services to provide a stable funding source for tourism marketing which is not subject to general fund appropriation. Projected revenue is about $18 million and would be earmarked exclusively for tourism marketing, similar to how the Alaska Seafood Marketing Institute assesses the fishing industry for marketing seafood.

This self-assessment would be subject to a vote of those assessed one dollar, one vote. In spite of noble efforts by the industry to create a solid front of support to the Legislature on this bill, negative reaction to SB 254 is widespread. However, due to the high stakes and the need for consensus, the industry is talking and negotiating in ways that have never happened before. This consensus-building is overdue and should address long-standing issues that prevent our industry from being truly united.

First, a summary of the conflict: Some feel the cruise industry does not pay its share, since it avoids sales and income tax on its ocean-based cruises and would avoid them under SB 254. Others feel the cruise industry has disproportionately subsidized the marketing of this state for a decade. Some feel the regional and political structure of ATIA is a dinosaur holdover of the 1970s-style Alaska Visitors Association and disenfranchises entire regions of the state; others feel opportunities exist for all who desire to be involved and that the system works.

Some contend our industry is 70 percent based on in-state resident visitation and more should be done to stimulate and expand this market, while others believe our mission should be to "increase the size of the pie" by focusing on nonresident visitors. This oversimplifies the complexity of our differences, but it fairly attempts to summarize them.

As a lifelong Alaskan, a local owner-operator of four visitor facilities on the Kenai Peninsula and one of its largest employers, here's my view and my solution. Historically, 65 percent of my business on the Kenai Peninsula is Alaskans and this is true of most Alaska visitor services, according to recent studies by the state.

A comprehensive study of our visitor base in 1989 concluded that about two-thirds of every visitor (nonresident) dollar spent on the Kenai came from Anchorage residents. Since 1989, our regional marketing organization's budget hasn't changed much, hovering around $250,000. What few non-Alaskans we do attract (about 100,000, mostly through Seward) have been in steady decline.

According to the Kenai Peninsula Borough finance director, the peninsula had $93 million in visitor sales last year that would be subject to the proposed 2 percent assessment, raising $1.9 million for ATIA! Of this $1.9 million, by reasonable conjecture, approximately $1.2 million came directly out of Alaskans' pockets.

SB 254 will extract $1.9 million from an area that perennially has the state's highest unemployment rate and will give nothing directly back. Our regional marketing organization would continue to struggle with a $250,000 budget and the Kenai Convention and Visitors Bureau would teeter on the verge of closing. Furthermore, the money goes to a marketing organization that has no permanent board seats allocated to the Kenai Peninsula and has no marketing dollars earmarked exclusively for our local marketing priorities.

Few know it, but the Kenai Peninsula is not even recognized as a region within the "Official State Vacation Planner,"but instead is marketed with Anchorage, Talkeetna, Glenallen, Valdez, and Kodiak as "Southcentral Alaska." This is like marketing Napa Valley as part of the "Western United States" and negatively affects peninsula businesses.

What has been done to rectify this, you ask. Beginning in 1999, the Alaska Hotel & Lodging Association and the Kenai Peninsula pleaded with the transition team implementing the "Millennium Plan" to create a more regional, in-state focus. We were told the transition process was complex and it needed immediate implementation, but our concerns would be addressed.

The Kenai Peninsula Economic Develop-ment District, three local chambers, our borough assembly and regional marketing organization have all passed resolutions asking the ATIA to recognize the Kenai Peninsula as a distinct region within its marketing program and political structure. We have been told "no." Now it advocates that this same region "assess" ourselves to raise $1.9 million for its programs.

So how do we find consensus on a funding mechanism? Very simply.

First, we support ATIA as having a vital role in marketing Alaska. Second, we respect the legitimacy of locally based regional marketing organizations in creating marketing programs which target their priorities independent of the ATIA. Third, we support SB 254 as a promising concept to fully fund a broad-based Alaska marketing program.

Finally, and most importantly, we insist that a high percentage of the revenues collected from this assessment are returned to the local areas from which it comes, such as Anchorage, Kenai, Fairbanks and Mat-Su, to fund their local "visitor industry" priorities. For Anchorage, this could be a convention center; for Kenai, a larger budget for the Kenai Peninsula Tourism Marketing Council. ATIA must see this not as a threat, but as part of its mission to promote Alaska for the benefit of Alaskans.

Once these steps are taken, great things begin to happen. Entire destinations, heretofore ignored, will create dynamic and creative marketing plans to stimulate visitor travel in and out-of-state. Rural economies will find resources to sustain innovative and targeted campaigns: Should the Wrangell Mountains be marketed with Fairbanks of course not. Should Cordova be considered "Southcentral" no way. Can the ACVB market Anchorage better than the ATIA likely so!

Let's unleash the creative genius of these destinations who know best what motivates people to come visit their region. ATIA has a role, a vital role, but it begins with a basic concept in the hospitality industry: Listen to your customers.

Let's unite our industry! Increasing our pie is a great concept, and so is sharing it.

Among Jon Faulkner's projects are the restoration of the Van Gilder Hotel in Seward and the Land's End Resort in Homer. He also is one of the people behind plans to turn Kenai Ward's Cove cannery into a multiuse destination resort called Kenai Landing.



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