Economist analyzes effect tourists have on peninsula

Based on taxable sales, tourism unquestionably impacts the summertime economy of the Kenai Peninsula Borough and those of its cities. However, while the seasonal influx of visitors dumps a load of cash, the borough's economy also shows year-round strengths, according to an analysis of borough sales tax data.

Speaking before a Soldotna Chamber of Commerce luncheon crowd Tuesday, Jeanne Camp, economic analyst with the borough's Community and Economic Development Division, said it isn't easy to determine the true effect of the thousands of tourists who flock here each year to fish, camp and sightsee.

"How do we define tourism?" Camp said. "It's very difficult to quantify, because there is no clear definition of a tourist."

Camp chose what she called a subjective viewpoint to help cull tourism-related information from the flood of data supplied by businesses as sales tax returns. Using Standard Industrial Classification (SIC) numbers assigned to all businesses that place them in various industrial categories, she selected as tourism related those where 90 percent of their annual sales occurred between April 1 and Sept. 30.

These centered on SIC codes in transportation (bus services, water transportation, travel agencies, tour operators, air transportation, marinas), services (lodging, sport and recreation camps, RV parks and rentals, amusement recreation including guides, laundries, automobile rentals, museums and art galleries and the like), and retail sales (seafood markets, bakeries, gift shops, gas stations, bars and restaurants).

Camp found that in 2003, tourism-related transportation accounted for about .9 percent of sales tax revenue, tourism-related retail sales another 12.2 percent, and tourism-related service sales about 9 percent. Altogether, roughly 22.1 percent of all taxable sales are tied directly to tourism.

Camp said she was surprised that grocery stores and department stores were not listed, but the seasonal percentages of taxable sales in those industries showed a greater evenness across the year.

"They are busy in the summer months, but I checked back three, maybe four years, and in each year approximately 55 percent of sales occurred during second and third quarter and 45 percent occurred the first and fourth," Camp said. "The problem is we (retail outlets) must do really well during the holiday season."

Gas service stations, she added, had about 60.4 percent of sales in the summer months, indicating that tourists aren't buying a lot of fuel here.

Looking at the borough's total taxable sales, it is clear there is a marked seasonal impact from the tourists. Data from 1991 through 2003 show that in each year the third-quarter figures dominate followed closely by second-quarter numbers.

However, the overall trend, regardless of the quarter, has been upward, meaning sales have increased during all 12 months of the year steadily since 1991.

The 2-percent borough sales tax goes directly to fund schools. In 2003, taxable sales were around $732 million, providing about $14.6 million. About 30 percent of that came directly from tourism.

Soldotna only showed about 12.4 percent of its taxable sales as being directly connected to tourism. The city can be seen as a retail center, however, as fully 67 percent of all taxable sales in Soldotna are not related to tourism, indicating that the community is largely serving its residents and those of surrounding peninsula communities.

The general upward trend in taxable tourist-related sales exhibited by the borough over the 12-year period was mirrored in Homer, but not in Kenai or Soldotna. The tourist effect was generally flat in the two central peninsula communities, but overall sales (tourist- and nontourist-related) were healthy and showed their own upward trends. Compared to that of its neighbor, Kenai's graph was the more erratic, showing visible effects from such things as Kmart opening in 1993, Fred Meyer opening in Soldotna in 1994 and Kmart closing in 2003.

In the unincorporated parts of the borough, guide services and bed-and-breakfast operations helped drive tourist-related taxable sales upward from 1991 through 2003, Camp said.

While the economy is seasonal in nature, it is diverse enough to have a large percentage of its work force on the job during the winter months, too.

"We have a seasonal economy, but really we have 16,000 to 17,000 working all year, and some 20,000 during the summer, so this is not a totally seasonal economy," she said.

Camp concluded her remarks by listing her list of "Seven Natural Wonders of the Kenai Peninsula Borough" that are likely attractive to tourists and residents alike. It included the aurora borealis, Cook Inlet tides, Exit Glacier and the Harding Ice Field, the Homer Spit, Kenai Fjords National Park, spawning salmon and the view of the four active volcanoes visible from the peninsula.