Tourist industry puts growth plans on hold

MAT-SU-- Alaska's tourism industry is expecting a downturn in the 2002 season, which some industry insiders believe will bring the nationwide recession to Alaska.

Slow bookings have caused large operators to look inward for cuts and offer steep discounts at the same time. Smaller businesses are also scrutinizing their budgets -- in short, everyone involved in tourism is looking ahead to a slow season and more likely to call their accountant for an audit than their banker for a loan.

"We were considering buying an airplane this fall," said Sandra White, office manager of Talkeetna Air Taxi. "In fact, it was very high on our list, but we decided to wait and see."

White said the company pulled back after the terror attacks of Sept. 11. Talkeetna Air Taxi has a rather large neighbor down the street in CIRI Alaska Tourism, the subsidiary of Cook Inlet Region Inc. that owns of the Talkeetna Alaskan Lodge. CIRI Alaska Tourism doubled the size of its hotel to 203 rooms last year. When those rooms are full, White and Talkeetna Air Taxi's 21 summer season employees are kept busy.

CIRI Vice President for Tourism Dennis Brandon told the Frontiersman his company is just coming off a five-year growth plan that included acquiring three tour-boat operators that serve daytrippers and building hotels in Talkeetna and Seward. The company expects 2002 to be a fine-tuning year, Brandon said -- but that doesn't insulate them from the shock of the Sept. 11 attacks.

"We didn't really have anything on the drawing board that we have canceled," Brandon said, "But we've certainly put everything under a microscope … we're dealing with a anomaly year -- obviously, we're dealing with things that we hope will never happen again."

The growth in Alaska's tourism industry has been driven by cruise-ship operators, airlines and the companies such as CIRI that own large hotels. Brandon said the bulk of the reservations for those companies are taken between September and December.

"September just dropped off the radar screen," Brandon said of the reservations.

Early bookings serve as a bellwether for smaller operators such as car rental agencies, day-trip charter companies and smaller hotels and bed and breakfast operators who benefit from high occupancy rates at large hotels. At this point, the bellwether isn't exactly leading the flock -- it's more like he's lying in the pasture licking his wounds.

In a presentation for the Mat-Su Convention and Visitors Bureau, Brandon touted the industry's emergency funding plan, which is being presented in Juneau this week. (See related story on Page A1.) Brandon also told his audience that the major cruise-ship operators are offering steep discounts -- as much as 50 percent off -- which means the big boats will be carrying a different tourist than they have in the past.

"You're just dealing with a whole different mind-set," he said. "People who gravitate toward a deal will gravitate toward more deals." Brandon said gift shops can expect to sell less ivory and more T-shirts.

It's not too much of a stretch to suggest that all small operators should try similar strategies-- 2002 might be the year the salmon quesedilla out sells the king crab platter.

In Talkeetna the small operators have been experiencing a boom for the last few years. Because they have been trying to keep up with growth, White said she thinks Talkeetna business owners are likely better positioned to ratchet down for 2002.

"Talkeetna in particular has been a bright spot on the Alaska travel scene." she said. "Last year, when a lot of the state was flat, Talkeetna was still up and growing."

But Talkeetna Air Taxi canceled its plans to plunk down about $300,000 to add a plane to its fleet of floor. Last year, the company leased a five-passenger Cessna 206 to accommodate growth in Talkeetna's market. The plane performed better than expected, according to White.

"We were up 27 percent in flight-seeing last year," White said. She said the company is getting ready for a flat year, with the worst-case scenario being a possible 20-percent drop in overall sales. "If the big boys end up being down we probably will be, too."

In his talk abut the steep discount trend, Brandon also pointed out a bright side. Rates are so low that some travel agents are booking cruises as basic transportation. It's a new trend, but Brandon suggested that those travelers might be more likely than traditional cruise passengers to see Alaska on their own by spending money with small operators.

"The good news is that they then become an independent traveler," Brandon said.