Legislature(2007 - 2008)BELTZ 211
05/08/2007 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB155 | |
| HB205 | |
| HB228 | |
| SB165 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 155 | TELECONFERENCED | |
| + | HB 228 | TELECONFERENCED | |
| *+ | HB 205 | TELECONFERENCED | |
| *+ | SB 165 | TELECONFERENCED | |
| + | HB 217 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 165-TOURISM DISCLOSURES AND NOTICES
2:19:53 PM
CHAIR ELLIS announced SB 165 to be up for consideration. He said
it is companion legislation to house legislation that is coming
over shortly. His goal was to hear this bill and move it on to
the Judiciary Committee and expect the House legislation to meet
it there. He said that Representative Holmes had done the lion's
share of the work and would speak for Senator Elton.
REPRESENTATIVE LINDSEY HOLMES, sponsor of the HB 217, asked
JAMES WALDO, her staff person, to help present the bill.
MR. WALDO said SB 165, which is the companion for HB 217,
addresses concerns of the local vendor tour businesses. It
alters and improves the disclosure section that was passed in
the cruise ship initiative, Ballot Measure 2, in the last
election. It adds several requirements for disclosure for on-
board sales and alters the commission rate disclosure; it also
adds a section that applies that to advertisements for shore-
side retailers as well. He said the on-board tour sales are
changed to require a disclosure under every sale that the on-
board sale is a wholesale/retail relationship between the shore-
side tour vendor and the cruise line. This basically helps the
passengers to be informed that the cruise line will keep a
percentage of the money paid for a tour. The disclosure is also
required to include information on other alternatives available
at future ports of call with different prices and different
features. It also requires the cruise ships to provide vendors'
contact information to the visitors' bureaus in each port of
call so that the passengers can contact them independently and
compare prices.
2:21:51 PM
MR. WALDO said this legislation alters the disclosure
requirement that was in the initial initiative. It originally
said the cruise line is required to disclose the exact
commission rate in all written materials when they sold that
tour. However, that threatened the local Alaskan business on the
shore-side because it would expose their pricing structures and
they had a very really worry that this would lead to price
undercutting. This price undercutting would only affect the
Alaskan businesses because they would be competing with each
other for lower and lower prices while the cruise ships
maintained the higher commission rate.
After working with the initiative's sponsors, Mr. Waldo said,
they came to a good fix in requiring a disclosure when the
commission reaches a certain threshold of over 20 percent. This
helps the consumer realize they are paying a commission over a
certain rate.
2:24:19 PM
Finally, it adds a new section that was left out of the
initiative. That section applies these disclosure requirements
to shore-side retailers as well. Right now on-board the cruise
ships shore-side retailers, like Diamonds International,
advertise, but they charge extremely steep advertising rates
that amount to a percentage of the sales. This would allow
passengers to see that a percentage of those retail sales are
being recouped by the cruise ship and effectively allows them to
realize that there are other stores and other alternatives for
them to use.
2:25:10 PM
SENATOR BUNDE asked if sponsors of the cruise ship initiative
agree with this legislation.
MR. WALDO replied yes. He said that Joe Geldhof is on record in
the House Judiciary Committee speaking in favor of HB 217 and
Kirsten Cohen, another sponsor of the initiative, had also
written a letter in support.
SENATOR BUNDE said he heard from a number of constituents who
said they knew what they voted for and didn't want it changed.
MR. WALDO responded that to assuage those concerns even more,
one of the more significant final pieces in the bill corrects an
error in the initiative that cited violation of these
requirements as an unfair trade practice - with a maximum fine
of $100 - which for a cruise line, is just a slap on the wrist.
Any other unfair trade practice has a penalty of $1,000 to
$25,000, a significant deterrent. So, SB 165 and HB 217 remove
the requirement the $100-penalty and replace it with $1,000 to
$25,000.
2:27:58 PM
DON HESS, Chilkat River Adventures, supported SB 165. He was
once in the logging business, then he turned to trucking and
being a heavy equipment operator. In 1973, he decided to start a
river tour business in Haines. He said his current company is
successful only because of the cruise ships and now it is being
drastically affected by the initiative's disclosure requirement.
He urged them to pass SB 165 out of committee today; 50
businesses have testified in support of these changes and not
one business has testified in opposition.
CHAIR ELLIS said he personally thought a good balance had been
struck between the spirit of the initiative and the sponsors and
some of the practical implications.
2:32:37 PM
JOHN DUNLAP, Manager, Allen Marine Tours, supported SB 165 and
thought the language met the intent of the voters better than
that in the ballot initiative.
2:34:16 PM
STEVE HEIGHTS, Skagway Streetcar Company, supported SB 165. He
agreed with the previous two testifiers and said that most
importantly, the committee should understand that tour operators
don't pay commissions to the cruise lines. Rather the cruise
lines customers pay them. He explained:
We create, manufacture, tour products, and we sell
those at wholesale net price to the cruise ship or
retail store. We sell our products at a volume rate,
too, because blocks of seats - we can produce for less
than the cost of a single seat. Some of us sell
retail, as well, at our windows, but those are at a
retail price, not at the wholesale volume price.
He knows of no other retail business that has to disclose their
retail markups. He is not opposed to disclosure, but the
disclosure he wants to see is the truth. He said point 4 in SB
165 is still wrong in that it still includes an arbitrary 20
percent figure; it still uses the incorrect word "commission"
and this is not true. Rather:
The truth is that there is a retail/wholesale
relationship here and having been so stated in a
statute, there should be no more that needs to be said
- because that in and of itself in business states the
truth of commerce. HB 217 and SB 165 may be a
temporary fix, but they still do not state the truth
and truth and honesty in disclosure for the citizens
of Alaska, for the consumer, is what the people voted
for. Thank you so much for my opportunity and I do
hope you pass this along.
2:37:10 PM
ALLEN LEMASTER testified from Gakona in support of Mr. Heights'
testimony. This bill is the best fix we can have for what is a
bad idea initially.
2:38:46 PM
KELLY DINDINGER, Alaska Travel Adventurers and Alaska Cruises
Inc., said she is very concerned that this bill may not move
forward quickly. She said Alaska Travel Adventurers is her
livelihood and it doesn't start making money until July - and
"We're out of money now. We need to start making our sales." She
just got an announcement that some cruise lines are telling
their customers if they don't buy a tour before hitting Alaskan
waters, they are not going to get to buy it, because they don't
know what is legal.
2:42:19 PM
SENATOR STEVENS moved to pass SB 165 from committee with
individual recommendations and attached fiscal note. There being
no objection, it was so ordered.
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