More Boats,
More People,
More Money

Growth in the cruise market and other segments boost Alaska’s tourism industry

By Tracy Barbour

*Editor’s Note: This article was researched and written before the COVID-19 pandemic spread across the globe, therefore the interviews and forecasts within do not take into account the impact of COVID-19 on the industry.

or twenty-one years, Alaskan Tour Guides has been helping tourists make once-in-a-lifetime memories. The company, owned by Bob and Doreen Toller, specializes in small-group land tours that take people to places large companies normally can’t go. “We go places they can’t access with their big motor coaches… There’s no crowd, and you get to see the real Alaska,” Bob Toller says.

With its modern, thirteen-passenger vans, Alaskan Tour Guides takes groups on up-close adventures led by year-round residents with engaging stories to tell about living in Alaska. The Wasilla-based business runs tours from Fairbanks to Homer, with Kenai Fjords and Denali National Parks being popular destinations. Its customers can see amazing vistas, watch incredible wildlife, and indulge in unique activities like gold panning, dog sledding, and exploring glaciers. “Our trips are a little bit more expensive than the cruise ship tours, but you get ten times more,” Toller says.

or twenty-one years, Alaskan Tour Guides has been helping tourists make once-in-a-lifetime memories. The company, owned by Bob and Doreen Toller, specializes in small-group land tours that take people to places large companies normally can’t go. “We go places they can’t access with their big motor coaches… There’s no crowd, and you get to see the real Alaska,” Bob Toller says.

With its modern, thirteen-passenger vans, Alaskan Tour Guides takes groups on up-close adventures led by year-round residents with engaging stories to tell about living in Alaska. The Wasilla-based business runs tours from Fairbanks to Homer, with Kenai Fjords and Denali National Parks being popular destinations. Its customers can see amazing vistas, watch incredible wildlife, and indulge in unique activities like gold panning, dog sledding, and exploring glaciers. “Our trips are a little bit more expensive than the cruise ship tours, but you get ten times more,” Toller says.

About 90 percent of Alaskan Tour Guides’ clients are from the Lower 48, with the rest mostly coming from Australia and India. Baby Boomers—and others wanting to avoid large crowds—are especially keen on its personal and customized tours. As a testament to this, the company boasts high ratings and a 2018 Certificate of Excellence from Tripadvisor. Consequently, Alaskan Tour Guides has been experiencing a consistent increase in business. “We’ve shown steady growth for the last five years; we’ve added a couple of vans in the last two years,” Toller explains.

Currently, Alaskan Tour Guides has six vans that transport about eighty people each day. The company does approximately 100 land tours annually, in addition to its family tours, cruise transfer tours, and other transportation options.

The growth that Alaskan Tour Guides is experiencing is due, in part, to the steady increase in tourists visiting Alaska. It’s also reflective of the overall growth that’s taking place in different segments of Alaska’s tourism industry, including the cruise industry and transportation. Record anticipated numbers of cruise ship visitors will be a bright spot in 2020, according to the January 2020 of Alaska Economic Trends magazine, published by the Alaska Department of Labor and Workforce Development. “Tourism numbers keep reaching new heights, and 2020 is expected to break another record with an anticipated 6 percent jump in cruise ship passengers,” according to Alaska Economic Trends.

This projection doesn’t surprise Sarah Leonard, president and CEO of the Alaska Travel Industry Association. “The cruise industry is our fastest-growing sector,” she says. “Passenger volume was up 6.5 percent last year.”

Leonard points out that the 6 percent increase expected for cruise ship passengers this year is not just for southeast Alaska, where most of the itineraries for cruise ships go. It will also impact cross-gulf travel. “That traffic was up 15.3 percent in 2019,” she says.

The growth of the tourism industry has a broad impact on the state’s economy. It lifts Alaska’s air market, supporting increases in Anchorage and Fairbanks, in particular. However, independent travel is mostly flat. “Alaska Marine Highway ferry traffic is down, which is due in part to the budget situation,” Leonard says.

She adds: “As we experience more visitors spending more time in Alaska, that definitely lends toward the economic impact for communities and the state through various visitor fees and direct and indirect spending. Alaska visitors contribute over $4.5 billion in overall economic impact in the state… When we look at jobs created, we see the tourism industry is the second-largest private-sector employer.”

In fact, one in ten jobs in Alaska are in tourism, creating an important part of Alaska’s employment picture, according to the Resource Development Council. In 2018, more than $1.4 billion in payroll was created by tourism business employment, for an economic impact of $4.5 billion. And more than $126 million in state revenue and $88 million in municipal revenue is generated by Alaska’s visitor industry through a variety of taxes and other fees, helping to fund services benefiting residents and communities. Additionally, Alaska’s tourism industry invests heavily in the state, spending hundreds of millions of dollars on capital expenditures, construction, operating equipment, marketing, and contributions to nonprofit organizations.

Julie Saupe, president and CEO of Visit Anchorage, also cites significant growth in Alaska’s cruise industry and air capacity in 2019. Last year, there was also increased demand for hotels—not just in the summer but year-round. “Hotel demand was up 7 percent in summer,” she says. “Also, there was 6 percent growth in the fall/winter/spring of 2018-19.”

While the surge in overall visitor volume is significant, the effect of Alaska’s independent travelers is also notable. “If we shift to economic contributions rather than volume, we see larger-than-average spending and engagement in independent travelers who fly in and explore using a rental vehicle and a mix of other transportation (rail, guided excursions, etc.),” Saupe says. “These travelers tend to stay longer, spend more, and incorporate more—and more varied—activities.”

The rise in visitors coming to Alaska has affected various facets of the state’s tourism industry. An estimated 2 million-plus out-of-state visitors traveled to Alaska between May and September 2018, according to McDowell Group’s Alaska Visitor Volume Report, Summer 2018, released February 2019.

Summer 2018 visitor volume represented an increase of 5 percent (100,000 visitors) from summer 2017. The report explained: “Most of the increase is attributable to the cruise market, which grew by 7 percent (79,300 visitors). The air market increased by 1 percent (9,600 visitors), while the highway/ferry market increased by 13 percent (11,100 visitors).”

The summer 2018 visitor volume of 2 million-plus was the fourth consecutive summer of growth, according to Alaska Visitor Volume Report, Summer 2018. Volume increased by 7 percent, 4 percent, 4 percent, then 5 percent, from 2014 to 2018. From a long-term perspective, the 2018 volume represents 27 percent more visitors than a decade earlier.

Additionally, the number of Alaska Marine Highway System passengers was up by 1.4 percent in summer 2018, residents and visitors combined. Sportfishing licenses sold to non-residents were up by 13.5 percent between 2017 and 2018, January through September. Bed taxes and vehicle rental taxes—which reflect usage by both residents and non-residents and can be affected by changes in rental rates—told a mixed story. Bed tax indicators varied by community for April through June (the last quarter available before the report was released), with bed tax revenues up for Fairbanks, Denali, Juneau, and Sitka and down for Anchorage and Ketchikan.

So what’s driving the steady increase in the visitor volume and different segments of the tourism industry? It’s a mixed bag, according to Saupe. “It’s a combination of a good national economy, strong local promotional push, and expanded product offerings across many interests and pursuits,” she says. “It’s rare that visitors to Alaska focus solely on one or two activities; they hope to see and do a little of everything.”

In addition, Saupe says, Alaska’s tourism industry is deeply local, which plays well for places like Anchorage. “Anchorage tourism is still principally made up of small, locally-owned companies, stores, and restaurants,” she explains. “This helps make Anchorage a perfect match for one of the broader trends in tourism: the interest in authentic experiences, the desire to find the ‘real’ place.”

Within the cruise industry, there are multiple influences fueling the growth. Key factors include higher-capacity ships, recent port investments, and the addition of more land packages, Leonard says. “They’re bringing larger ships, so there is more space for visitors,” she explains. “They are also investing in our communities with port investments in Ketchikan and Juneau and land investments with some companies enhancing or expanding their rooms.”

Holland America Line, for example, is expanding the guest experience on its Alaska Land+Sea Journeys with the addition of new guest accommodations at its Denali operation that includes the McKinley Chalet Resort hotel and Denali Square.

The addition of cruise itineraries is also having an impact on the tourism industry in Alaska, which is the premier cruise destination market in the United States. As more ships enter the Alaska market, new itineraries are being added, including the Northwest Passage, the Aleutians, Valdez, and smaller communities in Southeast Alaska, according to the Cruise Lines International Association (CLIA).

Ten additional ships are scheduled to visit Alaska in 2020, with twenty-nine added port calls, according to the Alaska Department of Labor and Workforce Development.

There are also some surprising areas of growth within the state’s tourism industry. For example, Alaska is now being viewed more as an adventurous place to travel. Articles are talking about how more consumers are looking for a responsible way to travel. “Anecdotally, Alaska is seen as an adventure and ecotourism destination,” Leonard says.

There is a growing element of tourists who are interested in businesses that practice sustainable tourism. They prefer to visit areas where they can have a positive impact on the environment, society, and economy. To encourage sustainable tourism, the Alaska Travel Industry Association operates an Adventure Green Alaska program that certifies businesses that voluntarily practice economic, environmental, social, and cultural sustainability. Adventure Green Alaska-certified companies believe that outstanding Alaska experiences can also be sustainable and beneficial to visitors and hosts. “I think it’s an exciting program that educates businesses that want to think more sustainable and want a way to market to that traveler,” Leonard says.

There has also been an increase in aurora tourism, which is often thought of as a primarily Interior pursuit. However, Saupe is seeing a significant amount of interest from Anchorage travelers who want to catch a glimpse of the spectacular aurora borealis. “Luckily, we’re in a prime spot to take advantage of the northern lights, and we’ve seen a number of companies expand their aurora viewing options,” she says. “Vantage points like the Knik River area, Glen Alps, and Turnagain Arm have good northern lights viewing prospects amid a very dynamic mountain landscape. When we talk to people planning a visit between August and April, the northern lights tend to be a big interest and a key motivator.”

Anchorage also has seen a big response in terms of product development for winter tours—the northern lights in particular—but also fat tire bike rentals or guided rides, snowshoe tours, kennel visits, and hands-on dog sledding lessons. “Visit Anchorage stepped up the intensity of marketing winter, but the product development by companies is the element that makes a trip in the winter most appealing,” Saupe says.

The growth of various tourism segments speaks to the state’s immense popularity as a travel destination. Around the world more people are becoming cruisers, and Alaska remains a popular cruise destination. “It’s a great initial way to visit Alaska,” Leonard says. “Some of it has to do with the strength of the dollar as well as what’s happening around the world… We can compete with other international destinations that might be offering somewhat similar experiences.”

Alaska is also a safe and exotic bucket-list destination for many travelers, Leonard says. And a significant number of people who cruise to the state on a first-time visit opt to return. In fact, according to the Resource Development Council, one in three Alaska visitors are repeat travelers to the state, and many of those who return are independent travelers who first came to Alaska on a cruise ship.

To Alaskans, Anchorage may feel like a well-established place for travel, Saupe says. But there are people who don’t have the city on their radar yet and are surprised and excited by what Anchorage has to offer. There’s a wide appeal for what Anchorage has in all seasons, and there’s still opportunity to foster better returns and expand. “Moderate, managed growth means big benefits for locals and our economy, while maintaining a high level of service/product for our customer, the traveling public,” she says.

As such, Visit Anchorage continues to focus on not just volume, but also the length and quality of time visitors spend in Anchorage. For example, the organization works to ensure that cruise passengers who might otherwise only see Anchorage at the start or end of a visit are aware of what the area has and what extending the visit—for a day or a week—opens up for their travels.

Saupe emphasizes that there’s also opportunity for growth with food and beer tourism. Big Swig Tours is a good example of a company that’s leading the way in this area. “Anchorage has thirteen breweries, plus distilleries and a meadery,” she says. “Anchorage’s food scene tends to surprise travelers who aren’t initially sure of what to expect in terms of variety and number of choices. Certainly, there are lots of opportunities to sample Alaska in the glass and on the plate here in Anchorage.”

She adds: “We see a lot of potential in expanding offerings with a local angle, food being just one possible aspect. In any season, we can use more experiences that incorporate local people and stories, particuarly Alaska Native perspectives.”

However, Saupe says, travel promotion is vital for the continued growth of tourism in Anchorage and Alaska. And growth doesn’t happen automatically. “It takes a combination of promoting the place, a good national financial picture, and exciting product development aligned with traveler interest,” she says. “When those three things align, we make gains. Tourism is a crowded, competitive, and global business, and Anchorage has to stay top-of-mind and relevant to travelers, or else they’ll choose someplace else.”