Legislature(2011 - 2012)BARNES 124
03/01/2011 10:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
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| Start | |
| HB160 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 160 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
March 1, 2011
10:21 a.m.
MEMBERS PRESENT
Representative Bob Herron, Chair
Representative Neal Foster
Representative Reggie Joule
Representative Wes Keller
Representative Cathy Engstrom Munoz
Representative Steve Thompson
MEMBERS ABSENT
Representative Kurt Olson, Vice Chair
Representative Berta Gardner
Representative Chris Tuck
COMMITTEE CALENDAR
HOUSE BILL NO. 160
"An Act establishing and relating to the Alaska visitor industry
investment fund; relating to matching funds for state tourism
marketing contracts with qualified trade associations; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 160
SHORT TITLE: TOURISM MARKETING CONTRACTS/CAMPAIGNS
SPONSOR(s): ECON. DEV., TRADE & TOURISM
02/16/11 (H) READ THE FIRST TIME - REFERRALS
02/16/11 (H) EDT, FIN
03/01/11 (H) EDT AT 10:15 AM BARNES 124
WITNESS REGISTER
TERRY HARVEY, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced the committee substitute (CS)
for HB 160 on behalf of the House Special Committee on Economic
Development, International Trade and Tourism, sponsor.
SUSAN BELL, Commissioner
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: On behalf of the administration, testified
in support of HB 160.
PATTI MACKAY, President/CEO
Ketchikan Visitors Bureau; Board Member
Alaska Travel Industry Association (ATIA)
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of HB 160.
RICHARD BENEVILLE, Owner/Operator
Nome Discovery Tours
Nome, Alaska
POSITION STATEMENT: Testified in support of HB 160.
TERRY WANZER, Executive Board Member
Alaska Hotel & Lodging Association (AkH&LA); Owner
Best Western Landing
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of HB 160.
JOHN MCCONNOCHIE, Co-owner
Cycle Alaska
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 160.
SHANON HAMRICK, Executive Director
Kenai Peninsula Tourism Marketing Council, Inc. (KPTMC)
Soldotna, Alaska
POSITION STATEMENT: Testified in support of HB 160.
FRED REEDER, Board Member
Alaska Travel Industry Association (ATIA)
Sitka, Alaska
POSITION STATEMENT: Testified in support of HB 160.
PAUL LANDIS, Chief Operating Officer
CIRI Alaska Tourism Corporation (CATC); Steering Committee
Member
AlaskaACT; Board Member
Alaska Travel Industry Association (ATIA)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 160.
CHIP THOMA, President
Responsible Cruising in Alaska
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HB 160.
BRUCE BUSTAMANTE, Vice-President
Community and Public Affairs
Princess Cruises and HAP Alaska-Yukon
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 160.
DALE FOX, President/CEO
Alaska Cabaret, Hotel, Restaurant & Retailer's (Alaska CHARR)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 160.
ACTION NARRATIVE
10:21:47 AM
CHAIR BOB HERRON called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
10:21 a.m. Representatives Herron, Thompson, Munoz, and Keller
were present at the call to order. Representatives Joule and
Foster arrived as the meeting was in progress.
HB 160-TOURISM MARKETING CONTRACTS/CAMPAIGNS
10:22:02 AM
CHAIR HERRON announced that the only order of business would be
HOUSE BILL NO. 160, "An Act establishing and relating to the
Alaska visitor industry investment fund; relating to matching
funds for state tourism marketing contracts with qualified trade
associations; and providing for an effective date."
10:22:33 AM
REPRESENTATIVE MUNOZ moved to adopt the proposed committee
substitute (CS) for HB 160, Version 27-LS0509\I, Bannister,
2/28/11, as the working document. There being no objection,
Version I was before the committee.
10:23:07 AM
TERRY HARVEY, staff, Representative Cathy Munoz, Alaska State
Legislature, reminded the committee of compelling economic
testimony by the visitor industry earlier this session that
tourism-related spending in Alaska is estimated to be $3.4
billion per year. However, the industry statewide and
nationwide is now struggling, and today's discussion would
address what the legislature can do to turn this trend around.
At this time, the visitor industry's top priority is to
establish the visitor industry investment fund, and Mr. Harvey
advised that HB 160 is about a sustainable marketing approach
for Alaska that offers much needed stability for the future, in
contrast to the varied plans in use during the recent past. The
bill is also a top priority of the administration, and an
opportunity to embrace a sustainable reinvestment plan for the
visitor industry.
10:25:34 AM
CHAIR HERRON asked whether this legislation not only addresses
the overarching theme of marketing Alaska in terms of fish and
tourism, but also for other aspects such as national security
and responsible resource development.
10:26:20 AM
MR. HARVEY agreed that all of the aforementioned aspects are
important to Alaska as a whole. However, this legislation
attempts to focus on one of the primary industries in the state
- the visitor industry. In a manner similar to the approach
taken by the Alaska Seafood Marketing Institute (ASMI), the bill
develops a long-range marketing plan that will lift up the
industry, promote Alaska globally, and allow the state to
compete in the global market.
10:27:13 AM
CHAIR HERRON pointed out that it is important for all to think
about Alaska as a whole.
10:27:53 AM
REPRESENTATIVE MUNOZ asked Mr. Harvey to explain the timing
issue of the industry's contributions.
10:28:12 AM
MR. HARVEY explained that the industry is currently operating
with a percentage match of 70 percent state funds and 30 percent
industry funds for visitor industry marketing purposes. This
arrangement will sunset at the end of this year and the match
will return to 50 percent state funds and 50 percent industry
funds. He said an important aspect of the legislation is to
move away from either a 50/50 or 70/30 split, and establish a
rate for the contribution from the visitor industry - $2.7
million - that would not change for years to come.
10:29:38 AM
MR. HARVEY, in further response to Representative Munoz,
explained that the state receives a number of tax revenue
streams from the visitor industry such as bed taxes, car rental
taxes, corporate income taxes, and local sales taxes, although
he could not provide information on the specific amounts of
increases since the initial legislation was established.
10:30:16 AM
CHAIR HERRON requested a written response from Representative
Munoz and Commissioner Bell's staffs to all of the committee
members answering Representative Munoz's question.
10:31:00 AM
SUSAN BELL, Commissioner, Department of Commerce, Community &
Economic Development (DCCED), advised that HB 160 provides an
important and much needed solution for funding Alaska's tourism
marketing program. She provided her background in tourism
business management and marketing in the Interior and Southeast
during the '70s and '80s, and disclosed she served on the Alaska
Tourism Marketing Council. Commissioner Bell relayed her
business experience helps her understand how small businesses
and communities leverage state programs because they are unable
to reach national and international markets. Recent market
research reveals that there has been a significant drop in
visits to the state; for example, 125,000 fewer independent
visitors came to Alaska in 2009, and 140,000 fewer cruise
passengers came in 2010. Analysis by DCCED blamed this decline
for a loss of 5,000 jobs in the state. She stated the priority
of her department and the administration is to work toward the
restoration of these jobs and economic activity, by maintaining
a strong presence in the tourism marketplace. Commissioner Bell
credited marketing and changes by the legislature with the fact
that independent visitors are beginning to come back and there
are increases in cruise deployments. She also pointed out that
the contract with the qualified trade organizations is a
marketing arrangement that is 11 years old; in fact, the state's
collection of taxes and fees has changed considerably, and after
changes made to the recreational vehicle rental tax in 2003 and
to the ballot initiative in 2006 and 2010, the state now
collects approximately $100 million in visitor-related taxes and
fees. Furthermore, she stressed that the tourism climate has
changed since the terrorist attacks of September 2001, the
economic decline beginning in 2008, and the increased marketing
of other destinations. The commissioner summarized, restating
the administration's support for finding a long-term funding
source that stabilizes tourism marketing, ensures a high-quality
stable program, protects the legislature's authority to
appropriate funds, and recognizes the changes in the collection
of taxes and fees from the industry.
10:36:12 AM
REPRESENTATIVE THOMPSON recalled one of the funding mechanisms
for the visitor marketing plan is the vehicle rental tax, and he
observed there is a potential conflict with proposed legislation
to establish a transportation highway fund, using vehicle rental
tax revenue.
10:36:44 AM
COMMISSIONER BELL said she was not aware of this conflict as the
vast majority of the rental tax now goes to the qualified trade
organization. She said she would research this issue.
10:37:24 AM
PATTI MACKAY, President/CEO, Ketchikan Visitors Bureau; Board
Member, Alaska Travel Industry Association (ATIA), provided her
experience of 15 years in the tourism industry in Southeast. On
behalf of ATIA, Ms. Mackay spoke of the recent impacts to
tourism businesses across the state such as homeland security
issues, federal land ownership, the recession, regulatory
issues, and a competitive marketplace. She stressed that the
tourism industry works twelve months of the year to generate
sufficient business during the four- or five-month tourism
season; in fact, were marketing for winter excursions and
conventions available, many businesses would like to extend the
season through the winter months. Ms. Mackay reminded the
committee that tourism businesses have been trying for years to
work with the state to grow the investment in an economic sector
of the state that creates jobs, and generates revenue at all
levels of government, and that sends people who visit home with
an appreciation of the state. The visitor industry's message to
legislators is that the existing program for marketing tourism
in Alaska falls short of funding that is sufficient to maximize
returns. She said the benefits of funding the marketing program
at a minimum of $20 million are: a substantive impact; more
visitors to the state; strengthen the tourism sector of the
economy; improve Alaska's destination standing as demonstrated
by the $18.7 million appropriation last year; a good investment
that will create additional jobs, municipal revenue, and tax
revenue for the state.
10:41:09 AM
RICHARD BENEVILLE, Owner/Operator, Nome Discovery Tours,
informed the committee he has owned and operated a small tour
company in Nome, primarily for independent tourists, for 18
years. Cruise ships visit Nome also. His company relies
heavily on the ATIA marketing program as rural parts of the
state only have the Internet and ATIA and its marketing program
available to them. In fact, the national television (TV)
campaign has been very effective in a short period of time. Mr.
Beneville also participates in the Alaska Media Road Show in
California and New York. His business is very small, but these
opportunities match his business with corporate entities and
allow him to compete in the world market. Tourism in Nome also
has a positive impact on local Native corporations, for example,
Bering Straits Native Corporation (BSNC) has lodging and a car
rental agency on the Seward Peninsula, and day excursions; in
fact, benefits from the tourism industry range statewide in
depth. Mr. Beneville urged for the committee's continued
support for the bill.
10:44:45 AM
TERRY WANZER, Executive Board Member, Alaska Hotel & Lodging
Association (AkH&LA); Owner, Best Western Landing, stated he has
been in business in Ketchikan for 39 years, and stressed that
his hotel and businesses are open year around. The Hotel &
Lodging Association is extremely appreciative of the legislation
to establish a sustainable funding plan for Alaska's tourism
marketing campaign with a minimum annual appropriation of $20
million. He pointed out that the state benefits from revenues
generated by the tourism industry that have been as high as $140
million, and the reinvestment of a percentage of those revenues
will sustain a healthy economy for the industry, and will result
in jobs for Alaskans and further revenues. Hotel and bed tax
revenues paid to local governments have declined as much as 22
percent and, without this revenue, local governments will turn
to the state for increased aid. Mr. Wanzer relayed that
research funded by $7 million in additional marketing funds last
year has generated an expected 4 percent increase in visitors
coming to Alaska this summer. In fact, the additional funding
in FY11 has given the industry an opportunity to improve
awareness and generate business; however, it is important to
ensure that Alaska's tourism marketing campaign does not "take a
step backwards." Mr. Wanzer urged quick passage of HB 160, and
noted that the Ketchikan Borough Assembly has passed a
resolution in support of tourism marketing on a state level.
10:48:34 AM
JOHN MCCONNOCHIE, Co-owner, Cycle Alaska, stated he and his wife
are co-owners of a small bike tour company located in Juneau.
Last season, Cycle Alaska employed 26 people compared to a staff
of 32 in 2009. The market value of his business decreased last
year as a result of 140,000 fewer visitors to Juneau, and all of
his vendors and suppliers were affected, along with the amount
of tax revenue collected for the City and Borough of Juneau
(CBJ). Mr. McConnochie asked for the committee's support of HB
160, and pointed out that his company depends on ATIA for its
marketing program. He has learned from his business experience
over 30 years that during a down economy, cutting marketing
dollars is a mistake. Mr. McConnochie concluded that a long-
term, sustained, marketing program is an opportunity to maintain
and grow the industry.
10:51:07 AM
SHANON HAMRICK, Executive Director, Kenai Peninsula Tourism
Marketing Council, Inc. (KPTMC), said she was a life-long
resident of Soldotna. The Kenai Peninsula Tourism Marketing
Council is a destination marketing organization working on
behalf of the Kenai Peninsula Borough, which is composed of 13
communities and over 1,000 tourism businesses. Its modest
budget is invested heavily in ATIA's marketing program because
without ATIA's research and broad-scale image advertising, KPTCM
would not be as effective; in fact, ATIA is KPTCM's tool for
finding visitors. Ms. Hamrick relayed that the economy on the
Kenai Peninsula has suffered during the past three years, and
tourism is its biggest potential for growth; however, tourism
businesses rely on marketing, but they cannot afford image and
TV advertising. She advised that HB 160 is an opportunity to
make a direct, positive, impact on thousands of small businesses
in Alaska that have worked towards establishing a budget of $20
million for tourism marketing to ensure a diverse and thriving
economy.
10:53:36 AM
CHAIR HERRON turned the gavel over to Representative Munoz.
10:54:22 AM
FRED REEDER, Board Member, Alaska Travel Industry Association
(ATIA), stated he was a life-long Sitkan and appreciated the
opportunity to finally address the need for a sustained visitor
industry marketing plan for the state. As a former mayor of
Sitka, he relayed the importance of tax revenues to the
community and spoke of the decrease in visitors to Sitka, since
2008, that has resulted in a loss of over $1 million in sales
tax revenue from the visitor sector. Because of this loss, the
City and Borough of Sitka will look to the state for an increase
in municipal revenue sharing. Mr. Reeder opined that if the
state has a long-term plan to fund visitor marketing,
communities like Sitka will increase their sales tax revenue
from outside sources, and lessen the demand for revenue sharing.
In addition, private industry will expand, supporting local
government and providing jobs. He advised that Sitka has lost
over 100 jobs related to the decline in the visitor sector. The
passage of HB 160 will bring more visitors to Alaska, increase
direct sales tax revenue, car rental taxes, and hotel taxes.
Mr. Reeder concluded that improving this sector of the economy
is good for all Alaskans.
10:56:42 AM
PAUL LANDIS, Chief Operating Officer, CIRI Alaska Tourism
Corporation (CATC); Steering Committee Member, AlaskaACT; Board
Member, Alaska Travel Industry Association (ATIA), stated that
all of the organizations he is representing expressed common
support for HB 160. CIRI Alaska Tourism Corporation owns and
operates hotel properties in Talkeetna and Seward and holds
interests in marine day tours; these businesses create over 460
jobs during the tourist season. He advised that although his
businesses and others rely on independent travelers from the
U.S. and abroad, they cannot reach the highly-targeted and
clearly defined consumer groups within ATIA's cooperative
marketing plan. Surveys indicate that Alaska's main visitor
attraction is its natural beauty, along with interest in Native
culture. As CATC is one of several Native corporations that
have invested in tourism, it believes in the continued
reinvestment in marketing Alaska at the $20 million level, in
order to open tourism frontiers beyond the Railbelt, create new
jobs, and increase Native shareholder value. Mr. Landis
observed, "One must spend to keep the numbers up, especially
when the competition is working towards the same end." He
concluded that HB 160 positions the state for success.
10:59:15 AM
CHIP THOMA, President, Responsible Cruising in Alaska, stated
that his organization is based in Juneau and is the group that
collected signatures for the 2006 Alaska Shipping Tax Initiative
- Ballot Measure 2, and for the 1999 Juneau initiative for a
local head tax. He opined HB 160 is premature and unnecessary,
in addition to being a dedicated earmark set up to move funds
into an allocation position. Mr. Thoma expressed his preference
for a 50/50 share of state and industry, similar to the
arrangement for the ASMI, although its share is 20-25 percent.
He referred to a copy of his letter - included in the committee
packet - urging the governor to return to Miami and request $7
million in support for ATIA from the cruise industry. He
reasoned that this support is due because the state rolled back
taxes in the amount of $25 million, and cruise ship passenger
rates have increased 35 percent in the last two years; as a
matter of fact, the cruise industry is booming worldwide. The
state would be well advised to match $10 million from the travel
industry for a total marketing budget of $20 million towards a
sustainable, yearly program. He restated that ASMI is a model
program at 20-25 percent, and ATIA's contribution should return
to 50 percent. Each year, the Alaska Cruise Association (ACA)
spends $70 million - $70 per head - to get visitors on its ships
to Alaska, and he estimated that ATIA spends $160 per person to
attract 100,000 independent air travelers. He stressed that
independent air travelers are a very important segment of
Alaska's visitors. Mr. Thoma opined ATIA does not fill ships,
but has a very important responsibility, and opportunity, to get
independent air travelers to Alaska. He provided information
on how many independent air travelers visit and how much they
spend; in fact, ATIA should focus on them instead of cruise
passengers. He urged ATIA to follow the example of the Hawaii
Tourism Association and put all of its effort into air
travelers.
11:05:15 AM
BRUCE BUSTAMANTE, Vice-President, Community and Public Affairs,
Princess Cruises and HAP Alaska-Yukon, stated he is a 19-year
resident of Anchorage, making his living by working in tourism.
On behalf of his companies and the Alaska Cruise Association, he
expressed his support for HB 160. Princess Cruises brings
visitors to Alaska on cruise ships, owns and operates hotels and
lodges and, along with its rail and motor coach division,
employs over 3,300 people in the summer and 450 year around. He
said HB 160 is critical to creating sustainable tourism
marketing funds for Alaska. Mr. Bustamante pointed out that
Alaska enjoys TV reality show exposure, and can capture this
attention by marketing ways for a potential visitor to take
action and make plans. He cautioned that every year there is
more competition from other destinations in states and countries
with mountains, wildlife, and glaciers. Alaska needs a strong
marketing program, and ATIA has provided compelling advertising;
however, the level of funding has limited its reach, and
Alaska's ability to compete effectively. Mr. Bustamante warned
that competitors are using larger budgets to create greater
market awareness. The committee's passage of HB 160 would
establish a funding program to generate $20 million per year,
which is critically important to support and build local
economies and create jobs. He encouraged the committee to
continue with the governor's foresight and commitment to a level
of support for marketing.
11:08:36 AM
DALE FOX, President/CEO, Alaska Cabaret, Hotel, Restaurant &
Retailer's (Alaska CHARR), expressed his support of HB 160. He
said Alaska CHARR represents restaurants, bars, and package
stores statewide that employ 25,000 Alaskans. The visitor
industry is very important to his organization, as visitors
spend $245 million on food and beverages - a critical amount to
these establishments. Although tourism is important to Alaska
CHARR members, none have money for national advertising, and
they count on the public private partnership between ATIA and
the state to send their message to the traveling public. He
opined ATIA invests marketing money wisely, and gets results for
the entire state. Mr. Fox encouraged the committee's support of
HB 160, because the bill is a marketing solution long overdue.
11:10:28 AM
REPRESENTATIVE MUNOZ announced HB 160 was held over for further
public testimony.
11:10:51 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 11:10 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 160 - ATIA and ASMI Comparison.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB 160 - Corporate Income Tax Collection Table.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB 160 - Travel Industry Marketing FAQs.doc |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |
| HB 160 -Sectional Analysis.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
|
| HB 160 -- Letters of Support 3.1.11.pdf |
HEDT 3/1/2011 10:15:00 AM HEDT 3/8/2011 10:15:00 AM |
HB 160 |