By Jenny Neyman
Photo by Jenny Neyman, Redoubt Reporter. A RV heads into Soldotna on the Sterling Highway on Memorial Day weekend last summer. Tourism is expected to slump this year.
Redoubt Reporter
The outlook for the upcoming tourism season is dreary indeed when the best that can be said is it may not be as bad as last year.
Tina Lindgren with Bradley Reid and Associates, former executive director of the Alaska Visitors Association and Alaska Tourism Marketing Council and founding president of the Alaska Travel Industry Association, lamented being the bearer of bad news during a presentation to a tourism summit held by the Kenai Peninsula Tourism and Marketing Council on Jan. 13 in Kenai.
“Normally I get to go out and give good news. I feel like the nightly anchor giving bad news, and, frankly, I don’t like it,” she said.
But even when presenting doom-and-gloom forecasts, she strove to point out the silver lining, and used the information as a basis for ways the Alaska tourism industry can craft its marketing strategies to make the most of what visitors there will be this summer.
“The good news is the recession is over. It happened very quickly. Everything went to hell in a hand basket very fast. But the recovery will take much longer to come out of. The estimates are all over the place, but probably five years. It won’t all be smooth sailing straight uphill,” she said.
In the travel sector, experts are predicting a slight recovery this season, in the neighborhood of 2 percent growth, Lindgren said, but that won’t even get travel back to the rate it was at before the recession. 2011 should see even more growth; around 3.7 percent is predicted, she said, with recovery back to pre-recession levels of travel perhaps by 2013.
That’s for the country as a whole, though. Alaska is in a different boat. Unfortunately for the local tourism industry, it’s in a boat that’s still sinking.
“The climb out, while it’s under way, is slow. In Alaska, we have perhaps an even rougher road. Next year’s projections for cruise ships are expected to be down about 100,000 cruise-ship passengers, so we’re looking at coming out even slower than the rest of the country. There’s no way to make that up,” Lindgren said.
Overall, there are signs the economy is recovering and people have a little more money to travel again.
The housing sector is beginning to rebound, retail rates are heading up, the unemployment rate is decreasing and consumer confidence is increasing, Lindgren said. Usually, those trends would mean people are also spending more — including on travel and leisure — but that’s not yet the case.
“That is a major driver of tourism, whether people have money,” Lindgren said. “Normally as consumer confidence goes, so goes spending. But now we’re seeing, even if they have money, they don’t necessarily want to part with it.
“There’s been a lot said about a new normal. There’s disagreement about whether this has forever changed consumer spending and the way we look at money. People have way more savings than there used to be. People agree it has changed (spending habits) in the near term, and there’s disagreement about whether it has changed the landscape forever.”
A Gallup poll found that in January 2008, Americans’ average daily discretionary spending — on food, gas, leisure activities, clothes, etc. — was around $100 to $110. At the end of 2009, it was around $66 a day, Lindgren said.
The irony is that if people did want to commit the money to travel and vacations, now would be a great time to do it because they could take advantage of lower rates for just about everything, including plane tickets, gas prices and lodging rates.
Plane tickets cost less than they did in 2008, although prices are rising and could spike this summer if airlines cut flights to compensate for lagging passenger numbers, Lindgren said. That could hit close to home.
“We may also see that here with the reduction of cruise-ship passengers, which are a huge consumer of flights in the summer. I wouldn’t at all be surprised to see less flights this summer,” she said.
Gas prices are lower than they were in 2008, and people who are traveling are tending to stay closer to home and drive rather than fly. Again, that bodes poorly for Alaska’s tourism season, since the vast majority of Outside visitors fly to the state, even if they end up driving an RV, taking a train or touring in a bus or cruise ship when they get here.
To the rest of the country, Alaska is a destination vacation. And though it seems closer to home and, therefore, more attainable, than an international vacation in a down economy, an Alaska trip may still be seen as too much of a luxury to indulge in when money is tight.
On one side of the coin, Americans say they still intend to take vacations, but on the other, they want to do it as cheaply as possible.
“When asked, people really view their vacation as a right, not something that is optional. They feel it is something that is owed them and, by and large, people are still going to travel,” Lindgren said. “The bad news is, especially for a destination like ours that is a long way away, people tend toward taking shorter vacations and staying closer to home. This economy has ratcheted that up even more.”
People who are traveling are looking to do so more cheaply, Lindgren said. Budget vacations and finding discounts is more important right now than fulfilling lifelong dreams to see Alaska, or other seemingly extravagant excursions.
“The Internet has made it easy for people to comparison shop. People are trading down, not out. They’re looking at five stars versus three stars versus bed and breakfasts. They’re not opting out of travel, but the way they are spending money has changed. People are downgrading themselves. People are maybe still going to spend money on travel, but they want a deal for it. It has changed the mindset of people in where they want to go, and they are looking for a bargain,” Lindgren said.
Big-ticket travel and leisure venues are especially feeling the pinch, Lindgren said. Attendance at theme parks and casinos is down, for instance, while attendance at zoos and national parks is increasing. But even so, overnight stays and spending while people are on a trip is still under 2008 levels, Lindgren said. So even when people do take a vacation, they tend to stay closer to home and spend less money.
So what does all this mean for Alaska?
For one thing, value is king in this economy, Lindgren said. Offering rooms or tours at a discounted price may be what it takes to at least get some revenue, Lindgren said. Better to have guests at a cheaper rate than not at all.
Tourism businesses also continue to look more toward in-state travel. Just as consumers in the Lower 48 are tending to travel closer to home during the recession and slow recovery, Alaskans are less likely to vacation outside, but may still want to take a vacation.
That’s good and bad news for tourism-related businesses on the Kenai Peninsula. In-state vacationers are still vacationers, but they’re more likely to stay with friends or at campgrounds than at rental accommodations, drive their own vehicles rather than rent, cook for themselves rather than eating at restaurants and, overall, spend less than Outside visitors.
And the small growth in the travel sector is still tenuous, at best.
“The swine flu is a big unknown,” Lindgren said. “The good news is there are no major new outbreaks right now. Although they have declared it a pandemic there aren’t any national travel warnings right now. But should this flare up again, basically all the (PowerPoint presentation) slides that we’ve shown you, you can take and throw them out the window because they don’t mean anything. Same with terrorism activity.”
As unenthusiastic as it may sound, holding steady may be about the best tourism-related businesses can hope for this year.
“The net takeaway from all this is if you are flat, you are doing good. Sorry to be the bearer of not-so-great news, but that is the reality we live with,” Lindgren said.
That’s actually better news than Stephanie Erkeneff expected to hear at the tourism workshop, she said. Erkeneff and her husband own the Kenai River Raven Lodge on Funny River Road in Soldotna. She attended the conference to find out how the industry was doing and to get ideas for marketing and how to make the most of what travel money is available. She said she thought the presentations were informative, and not as depressing as she feared.
“It’s almost more encouraging to me than what I was thinking it might be,” she said. “Like with the (attempted bombing of a Northwest Airlines flight on Christmas), I though, ‘Who on God’s green earth wants to get on a plane and fly with this?’ But some people are still traveling. So if we’re flat, that would be great.”
Erkeneff and her husband, Dick, recently bought another lodge near their Kenai River Raven Lodge, and are deciding what to do with it. It’s got a lot of rooms, as well as a commercial-grade kitchen and dining room. They’ve already been renting the facility out for meetings and are thinking about marketing it primarily to Alaskans in the winter as a retreat and seminar destination.
“It was a good deal. It worked out really well,” Erkeneff said, even though it was a large investment in an industry that’s undergoing rough times. “We weren’t too nervous about it. We’re more nervous about what’s going on in the market. Even if this stuff (stocks and financial market investments) goes down, at least the property value will still be there.”
