Head tax feared by cruise ship operators

Posted: Monday, October 15, 2001

The Alaska cruise ship industry is just one of many that was affected in the wake of the terrorist attacks of Sept. 11, according to an industry spokesperson.

Al Parrish, vice president for government and community relations for Holland America Line Westours Inc., brought that message before Kenai Chamber of Commerce members Wednesday.

"The aftershock of the unthinkable carnage in New York City, Pennsylvania and Washington now threatens to throw this nation into recession and destroy major parts of our economy," he said. "The travel and hospitality industries have suffered the most, with airlines shedding tens of thousands of jobs and shrinking their networks. Travel agencies are closing up shop, unable to absorb an estimated $1.36 billion in lost bookings in the weeks since the attack."

He said many amusement parks, hotels, rental car companies and restaurants are reporting plunges in business.

"About the only growth industry anyone can identify is pizza parlors -- which deliver to your front door," he said.

He said the cruise ship industry also is experiencing declines, with one company, Renaissance Cruises of Florida, declaring bankruptcy.

He said Holland America has shuffled its sailing schedule to stay closer to America and has added Port Canaveral, Fla., and Seattle as new home ports.

Alaska will see two additional Holland ships next season. Parrish said that could mean $66 million to the state's economy.

"Alaska will need this additional boost to help make up for the losses it's suffered to date," he said.

He said in the two weeks after the attacks, four ships plying the Panhandle changed itineraries and passengers on the ships that did make scheduled calls were not in a spending mood. He said Juneau lost $2.5 million, Ketchikan $1.5 million and Sitka about a half-million dollars in expected revenue.

"The (Kenai) Peninsula has not been spared. Day charters are down, way down. As are restaurant sales and airline bookings. Lodging vacancies are up. You -- we -- are some of the innocent victims of this attack on America," Parrish said.

He then spoke about a proposed $50 a person statewide head tax on cruise ship passengers.

"This ill-conceived business tax is absolutely the worst thing Alaska could do right now given today's uncertainty," he said. "It seems absolutely counter-productive to increase the cost of doing business in this state at a time when this industry has suffered such harm -- and faces such an uncertain future."

He said the tax could drive away visitors "at the precise time Alaska needs them most." He showed a slide of a survey the North West Cruise Ship Association commissioned on the effects a $50 tax could have.

He said 10 percent would not come to Alaska if the tax becomes law. Thirty-eight percent said they either possibly or probably would not cruise to Alaska. Forty-eight percent said it would have no influence on their travel plans.

Parrish's figures indicated about three-fourths of cruise ship passengers would reduce or eliminate the amount of on-shore excursions they would take if they did visit.

All this, he said, would severely cut into the money the industry and its visitors pour into the economies of their ports of call, mostly small Alaska communities.

"We do know that the upcoming season will be tenuous, at best," he said. "And a disaster if we impose a badly timed, ill-conceived business tax."

Terry Coval asked Parrish why travel to the Lower 48 is not affected by similar tourist taxes.

Parrish said that a $50 tax on cruise prices of $550 is much more significant than the same tax would be on someone paying $2,000.

"We are not opposed to broad-based taxes, but this would single out cruise passengers over airline passengers," Parrish said.

Betsy Arbelovsky said a New York Times article indicated tourism inside America could boom because of the current global unrest. Parrish said he has seen no information that would lead him to that conclusion. He did say that Holland has not seen any increase in bookings for summer 2002.

Mary Jackson asked if the cruise ship industry would seek a bail-out package from the federal government, as airlines have. Parrish said he doubted it, since many companies sail foreign-flagged ships. He pointed out that Holland is a subsidiary of Carnival Cruises, an American company.

The speaker at Wednesday's Kenai Chamber of Commerce luncheon will be Donna Peterson, superintendent of the Kenai Peninsula Borough School District. Lunch is at noon at the Old Town Village Restaurant and is open to the public.

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