Saturday, May 2, 2009

Cruising Alaska (part 1) - Are We Tourists or Cash Cows?

Many Alaskans understandably experience mixed emotions regarding cruise passengers which is understandable. The scales weigh between needing income from tourism versus not wanting tourism to destroy the environment.

But Alaska’s politicians use cruise passengers as a cash cow for the state. Taxes and port-related fees are tremendously higher in Alaska than in most other areas. For instance, I compared two ships, each sailing to four ports in mid-August. Each had minimum balcony rates with just about the same cruise base rate. The taxes and port related fees for Carnival Cruise Lines’ Carnival Spirit in Alaska came to $318.45 whereas the same line’s Carnival Valor in the Caribbean had fees and taxes of $228.87. I found that the added costs on the Alaska cruise represented about 25% of a traveler’s price while those added costs on the Caribbean cruise were 17% of the total price. Obviously on a lower priced cabin such as an inside, the percentages going toward taxes and port related costs would be much higher.

Included in these inflated costs of cruising in Alaska is a $50 “head tax” known as the “Cruise Ship Initiative” that was barely voted in during 2006 to start with the 2007 sailing season. Also included in this “initiative” is a requirement that cruise lines must pay one third of all onboard gambling proceeds to the state of Alaska. As alcohol and gambling represent the two largest shipboard incomes, this is a huge blow to the cruise lines’ pockets which either needs to be made up in revenue elsewhere or as lower earnings when sailing in Alaska.

In a bad economy, the law of supply and demand has translated into too many cabins still available in this year’s Alaska season for the cruise lines to be comfortable. Therefore promotions roll out that lower prices on whatever sailings aren’t filling adequately. The providers of the accommodations, food and entertainment--- the cruise lines--- bite the bullet and have to lower their prices although the state of Alaska still gets their same income per passenger.

A combination of the economy and the cost of doing business in Alaska were the biggest motivators in Royal Caribbean announcing that they are going to deploy one less ship in Alaska in 2010. Immediately following this announcement, ABC Alaska News reported, “Analysts predict $55 million in lost revenue, 42,000 less visitors to Alaska, and the loss of 600 full time jobs.”

Royal Caribbean’s statement was soon followed by similar announcements by Holland America, Princess Cruises, Carnival Cruise Lines and Norwegian Cruise Line.

The state of Alaska will experience drastically lower revenue from cruise passengers next year. But perhaps their environment will be better off.

Stay tuned for a future blog on how this affects everyone wanting to cruise to Alaska whether you are a travelers who has a disability or not.

By the way, I meant no disrespect to cows in the writing of this blog. I lived on a dairy farm as a young child. We had Holsteins. They’re cute in a big, dumb kinda way. They don’t understand taxes. But I’m not crazy about bulls. Maybe some day I’ll tell you about Big Jack.