Alaska Cruises Heading Into Rough Waters

In a huge hit to its tourism industry, Alaska is expected to lose out on $130 million next year as potential visitors won't be making the trip to the Last Frontier by sea.

According to the Alaska Cruise Association, nearly a million people come to Alaska on cruise ships every year, but three of those ships won't be making the trip next year. In the past few months, Royal Caribbean, Princess and Norwegian Cruise Lines have all announced that they are pulling ships out of Alaska for 2010, citing reduced capacity, a weak economy and the state’s $50 per-head tax.

Alaska Cruise

The decisions to redeploy ships from Alaska voyages in 2010 will have broad ripple effects in the state's economy, particularly in Southcentral-Interior Alaska regions.

The visitor loss is estimated at 140,000 in 2010, which translates to 1,800 tourism-related jobs lost statewide, and a loss of $72 million per year in annual payroll.

In Southcentral Alaska, there will be 300 cruise-related jobs lost in 2010—or 10 percent of the 3,000 employed in a typical year. In the Interior there will be 309 jobs lost of 2,500 usually employed due to cruise ship tourists.

The redeployment in 2010 is a one-two punch for the state's tourism industry, however, because 2009 is likely to be a down year as well. While ships and passengers are still heading north, tourists are tightening their wallets once they’ve arrived on land. Traditionally cruise ship passengers have spent an average of $1,000 each while in Alaska.

Ralph Samuels, Holland America Line's vice president for Alaska, presented the dismal projections on lost passengers and jobs in a presentation to the Resource Development Council in Anchorage. He noted that cruise ships will operate this year because schedules have been committed and the companies will fill them through heavy discounting. One company, for instance, is now offering a seven-day cruise to Alaska for $299.

The cruise companies' profit margins in Alaska are taking a beating for a lot of reasons, the long sailing distances across the Gulf of Alaska being one, but the $50 passenger tax is high on the list. The redeployed ships won't return until margins improve and the effects of the 2010 redeployment will likely extend through 2011 and 2012, Samuels said.

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