Cruise ship exodus from Alaska cuts very deep

Only a few months ago, most talk about Alaska cruises
revolved around the record season expected this summer and some concerns about
overtourism.

Then came the coronavirus. Now, Princess Cruises and Holland
America Line have canceled most of their 2020 Alaska sailings and all land
products.

Sarah Leonard, CEO of the Alaska Travel Industry
Association, called the cuts “devastating, not just to the hundreds of
businesses that rely on cruise passengers for their livelihoods but also to the
communities that receive a large portion of their revenue from visitor taxes
and fees.” 

Leonard said cruise ships bring a little more than half of
Alaska’s visitors and that the state’s tourism industry in total supports more
than 52,000 jobs and creates more than $4.5 billion in economic activity. 

According to CLIA Alaska, more than 1.4 million people on 43
ships were projected to spend $793 million this year. Juneau was projected to
have 626 calls this year, more than any other municipality in Alaska, followed
by Ketchikan (558) and Skagway (454). 

The changes mean that Holland America will not offer an
Alaska land program for the first time in 70 years. 

“These are unprecedented times,” Holland America Line CEO
Orlando Ashford said in a statement. “We know this decision impacts our loyal
guests, travel advisor partners, staff members and local businesses who rely on
summer tourism for their economies.”

Princess president Jan Swartz called the decision “extremely
difficult” and lamented not being able to support the small-business partners
throughout the state as it has “every summer for decades.”

“We know these decisions will have a large, adverse economic
impact on the state of Alaska, which relies on tourism,” she said in a video. 

Jan Swartz shares an update to announce our extended pause through June 30, including the impact on our Alaska season, Enchanted Princess delayed debut, and cancellation options: https://t.co/Jrf8ZqThVp We remain grateful for your support and look forward to brighter days ahead. pic.twitter.com/oq7WNXTNwW

Several factors played into why such a hot market became one
of the first to see major cruise reductions this summer. 

The biggest might be that because of the U.S. Centers for
Disease Control and Prevention’s no-sail order from U.S. ports until mid-July,
combined with Canada’s restrictions on cruising through June, half of the
Alaska cruise season was already lost. This has an outsize impact on Holland
America and Princess because so much of their business includes land and cruise
combinations. 

“The shortened summer season has made it simply not viable
to operate our [lodges, trains and buses] throughout Alaska,” Swartz said.

Holland America also cited the “complexities of starting up
hotels, rail operations and motorcoach fleets for what is at best a mid-to-late
restart of travel to Alaska.”

Tom Garrett, owner of Union Hill Travel, a Protravel
independent agency in Kansas City, Mo., that specializes in Alaska travel, said
that given how high the startup costs are for companies on the land side in
Alaska, it would be hard to recoup costs if they lost half the season.

“The season is roughly 130 days long,” said Garrett, who is
also the former director of tourism for Alaska. “They’re going to miss out on
over 50% of the season already. We used to say in Alaska, our businesses didn’t
begin to make money until late August.”

Adding to that is the uncertainty as to whether the national
parks will be open. 

“If nobody can go on a tour of Denali, and that’s one of the
main reasons for Alaska and guests can postpone for a year and get a future
cruise credit worth 125%, they’ll say, let’s just go next year,” Garrett said. 

Both Princess and Holland America are still offering some
Inside Passage cruises that  are not tied
to the land product. 

And while the massive cuts have some advisors wondering if
other lines will follow, Garrett said none are as tied to the land extensions
as Princess and Holland America. 

“They’re heavily invested in land assets,” he said. “A huge
portion of their business revolves around those land extensions. A company like
Celebrity takes advantage of those extensions but isn’t personally financially
invested in them.” 

In fact, he added, “it’s possible that some lines will say,
‘If Holland America and Princess don’t want to go, we’re happy to take their
space.’”

Another factor some travel advisors cited was the
demographic of Alaska cruisers. Eric Hrubant, president of CIRE Travel in New
York, said the decision did not surprise him.

“Alaskan cruises tend to have a big baby boomer population,”
he said. “People in the retired age bracket or not in perfect health probably
aren’t going to want to get on a cruise this summer.”

He also said those cruises attract a lot of
multigenerational families.

“Over the years, most of the people I do Alaska cruises for
are affluent retirees, and we’ll do a multigen thing: grandparents, their kids
and their kids’ kids,” he said. 

Deborah Deming of Frosch Classic Cruise & Travel in
Woodland Hills, Calif., also said her Alaska business is made up of a lot of
multigen families, which means “the 60-to-80-year-old is the one paying for
it,” and this year, they are unlikely to take a cruise. 

One thing she is grateful for is that the cancellations
happened before most clients made final payments.

“With so many things in flux, it makes sense for this to
happen now before they took in more money that would then have to be refunded,”
she said.

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