Games boosted economy, but gains not evenly spread

Bonus no surprise, but ...

Posted: Wednesday, June 14, 2006

This year’s Arctic Winter Games appear to have given a boost to the peninsula economy, especially in Kenai and Soldotna, according to the latest Kenai Peninsula Borough economic report.

However, anecdotal evidence also appears to suggest that visitors spent their money at large stores, not small business vendors, and that the boosted retail sales noted in the report were not spread evenly about the business community.

The borough played host to the biennial international event in early March, and the thousands of visitors and athletes they attracted had a favorable impact on the retail and service sectors of the economy, boosting taxable sales, said Jeanne Camp, borough economic analyst.

Meanwhile, the influx of spectators and athletes helped visitor industry efforts in promoting the area’s shoulder seasons by exposing visitors to what the peninsula has to offer beyond its summer fare.

In the recently released Quarterly Report of Key Economic Indicators covering the first quarter of 2006, Camp said while boroughwide gross sales declined 7.7 percent compared to the same period in 2005, taxable sales jumped 7.1 percent with seven of 10 sectors reporting increased sales.

A $6.2 million gain in retail sales was “certainly influenced by the Arctic Winter Games,” Camp said in the document’s executive summary. Retail sales in 2005, she said, amounted to just over $85.8 million, while this year that figure jumped to $92.5 million.

Other increases were found in the travel, communications and public facilities sector, in the service sector, the wholesale sector and in the finance, insurance and real estate sector. Taxable sales also grew in the agriculture, forestry and fisheries sector.

Overall, taxable sales for the quarter increased by more than $10 million compared to 2005.

Only three sectors saw declines in the first quarter taxable sales figures compared to last year, including construction sales, mining and manufacturing.

Looking at taxable sales revenues by area, there were some clear winners.

Soldotna saw an 8.1 percent gain in the quarter as retail sales grew by $2.3 million over 2005 first-quarter figures. Total sales there reached $41.8 million, Camp said.

Kenai sales hit $31.8 million, a 7.8-percent increase, much of it associated with tourism, “which may reflect Arctic Winter Games 2006 activity,” she said.

Even beyond the central peninsula, retail sales showed increases. Sales in Homer grew 2.3 percent, while across Kachemak Bay, Seldovia’s small and struggling economy saw a 10.8 percent increase. Outside the incorporated cities, taxable sales grew a healthy 10.1 percent, from $41.1 million in 2005 to $45.3 million in 2006. How much of those increases were directly due to the the Games is not clear, though.

While the data shows a decided Games’ impact on retail sales, what is harder to pin down is which stores and businesses saw benefited. No scientific survey has been done, but the general buzz is that many small businesses may have been left out in the cold.

Shanon Hamrick, executive director of the Kenai Peninsula Tourism Marketing Council, said Monday she’d heard “many of the same stories” about a lack of visitor business during the Games.

At least some retailers in Seward and Homer had complained about seeing no particular jump in business attributable to Games’ visitors, she said. Meanwhile, because catered meals were provided at sports venues, many spectators and athletes may have had little reason to eat at local restaurants.

It appears that visitors, many of whom came from very remote locations, spent their free time in malls and larger retail outlets like Fred Meyer, rather than wandering the streets in search of bargains in small stores.

“The malls were an attraction. It was wintertime and the kids were looking at going to major stores that they don’t have where they come from,” Hamrick said. “I heard jeans were a hot buy.”

While visitors may have done the bulk of their shopping in large stores, their presence clearly boosted the economy.

“Overall, it had a great impact on the community it helped the borough with a spike in the sales tax,” Hamrick said.

If the retails sales weren’t evenly spread among large and small businesses, the Games did help expose a large number of potential repeat visitors to what the peninsula has to offer, Hamrick said.

“Anytime we can get people who would not normally be coming here to come and see what the Kenai Peninsula has to offer it is fantastic for us,” she said. “They take a lot of information home with them. They talk with their families and friends about their experiences, which is one of the best marketing tools we have. Over 33 percent of the visitors to the Kenai Peninsula are repeat visitors.”

The marketing council recently launched a new campaign, the Community Brand Print Economic Development Project, to boost tourist interest in the peninsula’s shoulder season, which she jokingly referred to as anything “non-July.”

What is needed in those shoulder seasons, and in the dead of winter, as well, are services aimed at off-season visitors, such as guides for skiing and backcountry snowmachine trips, she said.

“We’re here to market it” when they develop, she said.

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