Alaska was anticipated to welcome 1.3 million tourists by cruise ship in 2020 before the pandemic brought tourism to a halt. The economic loss from a canceled cruise ship season in 2020 alone totals $3 billion, with 2,180 businesses at direct risk – many of which are small family owned businesses. In early April, Governor Mike Dunleavy put forth a proposal to rescue the 2021 Alaska tourism season and prevent another $3 billion hit to the economy. The governor pledged to take the necessary steps to help Alaskans by putting forth an aggressive aid package to keep these businesses viable through to the 2022 tourism season.
Governor Dunleavy directed his policy advisor Bill Thomas and I to travel throughout the State to listen to community and business groups to gauge their needs and report their findings to the legislature.
From April 19th through May 3rd, we began conducting meetings with affected groups and individual businesses. In person meetings were held in Juneau, Sitka, Ketchikan, Kodiak, Healy, Fairbanks, Anchorage, and Nome. Zoom meetings were held with groups from Hoonah, Juneau, Anchorage, Valdez, Skagway, Whittier, Homer, Wasilla, Haines, Unalaska, Cordova, Tok, Seward, and Petersburg.
We heard from more than 20 Alaska communities and over 100 businesses. It was very clear that the need for assistance is real, it’s immediate, and it is substantial. Some businesses have lost 100% of their revenue due to a combination of no cruise ships and the continued closure of the Canadian border.
The top three immediate needs are:
- A grant relief program for those small to medium sized Alaska-owned businesses severely affected.
- Marketing funds targeting the independent traveler to come to Alaska this year.
- State action is needed to relieve the short term regulatory and fee burdens on small businesses.
Timing of the grant relief is critical – some businesses have loan payments due immediately.
Flexibility on what expenses qualify, such as fixed expenses like insurance, debt service, utilities, and licenses, would be allowed. Businesses need the application and the decision process to be easy. Some businesses were 100% affected by lack of cruise ships, others were only 40-75% affected. There was strong support for helping those small businesses affected the most first, then move down the scale – make the grants based on need, some businesses will not survive without help.
Local groups expressed the immediate need to market Alaska to attract independent travelers this summer season. In addition to directing funds to the Alaska Travel Industry Association (ATIA), funds should be made available to the Direct Marketing Organizations (DMOs) or local convention and visitors bureaus who are best suited to market their region and locality. Additionally, we received feedback citing a need for culturally focused advertising through some of Alaska’s cultural centers.
Marketing to international travelers is equally as critical. Destinations in Southcentral, the Interior, and Nome were all affected by a significant decrease in international tourism. While we look at the volume of tourists brought in by the cruise ships, it is important to recognize that tourism as a whole, across the entire state has been hit hard by the pandemic.
The Canadian border closure has affected many areas of the state, not just bordering towns. The flow of travelers from the Lower 48 through Canada has been severely curtailed.
Concerns about the availability of rental cars this year was mentioned across the state. Higher costs coupled with a lack of supply could affect the independent travelers and their ability to traverse the Last Frontier.
Alaska has suffered a triple whammy of no cruise ships, a closed Canadian border, and a limited supply of rental cars. Each of these factors suggest that a grant program of up to $150 million is warranted.
Please visit ltgov.alaska.gov/ltgovlistens to read our findings and recommendations. We encourage you to reach out to your State Representative and Senator and let them know how critical it is they address this issue now. If we want Alaska to remain the destination of a lifetime, our small businesses need our help without delay.
Lt. Governor Kevin Meyer