Legislature(2007 - 2008)CAPITOL 106
04/03/2007 05:30 PM House ECONOMIC DEV., TRADE, AND TOURISM
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Seafood Marketing Institute | |
| HB217 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 217 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
April 3, 2007
5:29 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Chair
Representative Carl Gatto
Representative Kyle Johansen
Representative Vic Kohring
Representative Bob Lynn
Representative Andrea Doll
Representative Mike Doogan
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Lindsey Holmes
Representative Bill Thomas
COMMITTEE CALENDAR
PRESENTATION: ALASKA SEAFOOD MARKETING INSTITUTE
- HEARD
HOUSE BILL NO. 217
"An Act relating to required onboard disclosures and displays
about tours, flight seeing operations, other shoreside
activities, and visitors bureaus; and providing for an effective
date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 217
SHORT TITLE: TOURISM DISCLOSURES AND NOTICES
SPONSOR(s): REPRESENTATIVE(s) HOLMES
03/22/07 (H) READ THE FIRST TIME - REFERRALS
03/22/07 (H) EDT, JUD
04/03/07 (H) EDT AT 5:30 PM CAPITOL 106
WITNESS REGISTER
RAY RUITTA, Executive Director
Alaska Seafood Marketing Institute (ASMI)
Juneau, Alaska
POSITION STATEMENT: Provided the presentation on the Alaska
Seafood Marketing Institute.
JOHN WHITE, Owner
Nenana Raft Adventures
Healy, Alaska
POSITION STATEMENT: Testified in support of HB 217.
STEVE HITES, Owner
Skagway Street Car Company
Skagway, Alaska
POSITION STATEMENT: Testified in support of HB 217.
TOM TOUGAS, Owner
Four Seasons Tours;
Alaska Coach Tours
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 217.
BRUCE BUSTAMANTE, President
Anchorage Convention and Visitors Bureau (ACVB)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 217.
RON PECK, President and Chief Operating Officer
Alaska Travel Industry Association (ATIA)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 217.
PAT LUBY, Advocacy Director
American Association of Retired Persons (AARP)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 217.
KAREN HESS, Owner
Chilkat River Adventures
Haines, Alaska
POSITION STATEMENT: Testified in support of HB 217.
CHIP THOMA
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 217.
MIKE WINDRED, Employee
Alaska Travel Adventures, Inc.
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 217.
JEREMY GEISER, Employee
Gastineau Guiding;
President
Juneau Chapter
Alaska Travel Industry Association (ATIA)
Juneau, Alaska
POSITION STATEMENT: Speaking as an employee of Gastineau
Guiding, testified in support of HB 217.
BOB JANES, Owner
Gastineau Guiding
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 217.
BOB WYSOCKI, President and Chief Executive Officer
Huna Totem Corporation (Huna Totem)
Icy Strait Point
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 217.
ACTION NARRATIVE
CHAIR MARK NEUMAN called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
5:29:55 PM. Representatives Doogan, Gatto, Doll, and Neuman
were present at the call to order. Representatives Kohring,
Lynn, and Johansen arrived as the meeting was in progress.
^Presentation: Alaska Seafood Marketing Institute
5:30:28 PM
CHAIR NEUMAN announced that the first order of business would be
a presentation by the Alaska Seafood Marketing Institute (ASMI).
5:30:59 PM
RAY RUITTA, Executive Director, Alaska Seafood Marketing
Institute (ASMI), showed the committee some of the current
advertisements broadcast nationally on the Food Network. He
highlighted that the advertisements attempt to capitalize on the
beauty of Alaska and indirectly support the tourism industry.
He then began his PowerPoint presentation. Slide one, "What is
Alaska Seafood Marketing Institute?", indicated that ASMI is a
partnership of public and private sectors established 25 years
ago and has been reorganized to include seven board members who
are appointed by the governor. The ASMI mission is to increase
the economic value of the Alaska seafood resource which is
accomplished by promoting the seafood industry from the point of
harvest to the consumption of the product. Mr. Ruitta stated
that ASMI's ultimate goal is to encourage consumers to pay a
little more for a premium product.
5:35:24 PM
CHAIR NEUMAN asked for information regarding ASMI's budget.
5:35:39 PM
MR. RUITTA pointed out that Alaska seafood represents $1.4
million in direct payments to fishermen for their harvest. The
core funding for ASMI is provided by processors who pay a
voluntary seafood marketing assessment amounting to 0.5 percent
of the first value of what they process. This assessment
provides about $7 million annually in core funding that is then
used to leverage federal funding through the U. S. Department of
Agriculture (USDA), Foreign Agricultural Service Market Access
Program. Additional funding, for a total FY 07 budget of $19
million, was provided through the Alaska Fisheries Marketing
Board and the general fund. The FY 08 budget is estimated to be
$16.5 million, and this reduction will result in a diminished
advertising program.
5:38:16 PM
CHAIR NEUMAN questioned whether ASMI will receive general funds
from the FY 08 budget.
MR. RUITTA confirmed that $1 million in general funds has been
requested again this year.
5:38:40 PM
MR. RUITTA then displayed a pie chart illustrating that ground
fish species provide almost 50 percent of the total value of the
seafood marketing assessment. Halibut and sablefish contribute
20 percent of value. There is a significant disparity between
the tonnage of harvested fish and the commercial value. Mr.
Ruitta stressed that over 5 billion pounds of Alaska seafood is
marketed. He then turned to some of the threats and
opportunities that face the industry. Alaska is the model for
the world in sustainability, which is mandated by the state
constitution. Mr. Ruitta informed the committee that Alaska's
practices are similar to the science supported principles
encouraged by the North Pacific Fisheries Management Council and
the future looks good regarding this issue. The question of
wild versus organic is currently creating confusion in the
industry. Some foreign farmed seafood is identified as organic
and ASMI is working to inform consumers that wild is superior to
organic, and to fight efforts to have the organic designation
for U. S. farmed fish. Currently, the industry is doing well
with the exception of king crab, which, due to imports from
Russia, has dropped in value by 50 percent.
5:42:43 PM
CHAIR NEUMAN asked about the challenges of import and export
markets.
MR. RUITTA said that low import and high export tariffs are
problematic for the industry. For example, Europe assesses a 15
percent premium on Pacific halibut, but not on Atlantic halibut.
Valued-added products are assessed heavy tariffs as well. In
addition, China, although a large potential market, sets a very
high tariff on finished, rather than raw, products.
5:44:06 PM
MR. RUITTA continued his presentation by informing the committee
that aquaculture continues to be a serious challenge for the
industry. The availability of farmed whitefish varieties are a
threat to the pollock, halibut, and sablefish fisheries. He
said that talapia is a vegetarian fish that grows almost
anywhere, is now the fastest growing import in the U. S. market,
and will threaten the value of cod and halibut. Mr. Ruitta
explained that Alaska harvests 5 billion pounds of seafood but
only provides 2 percent of the world's supply. This disparity
is due to the high cost of transportation and processing; Alaska
can only compete at the higher level of premium valued fish and
not on a commodity basis. For example, the salmon harvest stays
within the range of biological limits and is a sustainable
resource; however, the aquaculture industry can grow its
harvest, and Alaska can not grow the salmon harvest. Similarly,
Alaska's pollock harvest is stable, whereas, the talapia harvest
continues to grow and will drive the price of pollock down.
5:47:09 PM
CHAIR NEUMAN asked for clarification on how the world market
brings the prices down for the fish caught by Alaska's
commercial fishermen.
MR. RUITTA further explained that the global seafood market is
growing due to the large number of aquaculture products. Mr.
Ruitta returned to the subject of challenges and opportunities
to the industry. He said that consumers around the world are
interested in healthful eating and in the value of omega 3s.
Wild seafood is accepted to be the best source for omega 3s,
though other options are becoming available. However, confusion
over seafood contaminants impairs the market. The ASMI must
continue to emphasize that Alaska's seafood is nearly
contaminant free and to work closely with the Department of
Health and Social Services (HESS) and the Department of
Environmental Conservation (DEC) to provide information
regarding the safety of Alaska's seafood. Mr. Ruitta reiterated
that the seafood prices, particularly halibut, are doing well
with the exception of king crab. It is extremely difficult to
compete with nations such as China, Norway, and Chile, that
spend millions of dollars for seafood marketing. In addition,
Alaska's geographic distance from its market drives up
production cost.
5:52:09 PM
REPRESENTATIVE GATTO asked whether farmed fish have a different
colored flesh than wild fish.
MR. RUITTA answered yes, artificial additives are put in the
feed to change the flesh to red.
5:52:41 PM
CHAIR NEUMAN asked whether ASMI marketing has resulted in higher
prices for halibut.
MR. RUITTA responded that ASMI has established a powerful brand
name for Alaska's seafood; however, to determine the specific
impact is difficult. He pointed out that the rise in prices
coincides with ASMI's active marketing campaign. Mr. Ruitta
returned to the PowerPoint presentation. He noted that the
value of seafood has steadily increased, not from volume, but
from higher prices, and that the expectation is that revenue in
2006 will be equally high or higher. Specifically, the salmon
prices are returning to their highest levels.
5:56:18 PM
MR. RUITTA then described ASMI's international marketing efforts
in Japan, China, and the European Union (EU). Japan is Alaska's
largest international seafood customer; however, for the first
time, the EU imported more salmon than Japan. He said this is
an indication of Europe's renewed interest in seafood and ASMI's
diverse international marketing campaign.
5:57:51 PM
REPRESENTATIVE LYNN recalled his opportunity to go to Japan for
the Special Olympics and he said that he was hosted in Tokyo by
ASMI. He expressed his impression that ASMI representatives are
very knowledgeable of their products and of the Japanese market.
5:59:01 PM
CHAIR NEUMAN requested that Mr. Ruitta describe a European
marketing tour.
MR. RUITTA described the European Seafood Show that will be held
in Brussels in May, 2007. He noted that sales directly
following last year's show amounted to approximately $104
million. The cost to sponsor the show is approximately $400,000
to $500,000.
6:00:18 PM
REPRESENTATIVE LYNN asked how ASMI and World Trade Center Alaska
work together.
MR. RUITTA replied that ASMI exchanges marketing information
with World Trade Center Alaska and the Alaska Travel Industry
Association (ATIA) whenever possible.
6:01:11 PM
REPRESENTATIVE DOLL asked whether ASMI works with any type of
regulatory agency.
MR. RUITTA answered that ASMI's technical program works with the
U. S. Food and Drug Association (FDA), the U. S. Department of
Agriculture (USDA, and the United Nations Alimentarius
Commission (Codex), which set standards for food quality and
safety. Although ASMI has no regulatory powers, it serves as a
resource to the industry and to state, national, and
international agencies.
6:02:33 PM
MR. RUITTA further described the European Union as a mixture of
mature and emerging markets, including the United Kingdom,
Russia, Eastern Europe, Czechoslovakia, and Ukraine. China is
still an emerging market and ASMI is maintaining an active
presence there as China begins to increase the size of its
middle class. Mr. Ruitta pointed out that in countries where
ASMI is marketing, seafood demand has grown by 44 percent; in
countries lacking an ASMI campaign, seafood demand has grown by
24 percent. The U.S. market is also growing, particularly for
sockeye. Many U. S. consumers are re-discovering Alaska seafood
and ASMI is advertising heavily in the U. S. in magazines and on
television. Television advertising began for the first time on
the Food Network in 2006, and has increased ASMI's marketing
presence by five-fold. Television advertising reaches 193
million households and the target audience is women aged 35-54
and with a household income of over $75,000. Advertising
campaigns will often tie in with the tourism industry and
include cruise promotions. Mr. Ruitta concluded by saying that
a consumer is 77 percent more likely to purchase salmon or
halibut from Alaska than from another source. Thus, ASMI
believes it is contributing to the rising value of Alaska's
seafood. Present and future ASMI marketing will focus on
foreign consumers, in promoting the purchase of frozen seafood,
and on continuing the message that wild Alaska seafood is the
best in the world.
6:09:19 PM
CHAIR NEUMAN recognized Representative Thomas as a commercial
fisherman and asked him to advise the committee about how the
legislature can assist the commercial fishing industry.
6:09:37 PM
REPRESENTATIVE BILL THOMAS, Alaska State Legislature, drawing
upon his many years of experience as a commercial fisherman,
informed the committee that ASMI's efforts have led to more
money for fisherman. He pointed out that the fishing industry
pays a 3 percent raw fish tax of which 1.5 percent stays in the
local communities. Representative Thomas opined that the
legislature should continue its support of ASMI and the Alaska
Department of Fish & Game (ADF&G). The ADF&G needs funding to
complete research and fish surveys. Representative Thomas
recalled that last year an additional $120,000 was allocated to
ADF&G for ground crab research and the result was an additional
three weeks of fishing.
6:12:13 PM
CHAIR NEUMAN asked whether the Alaska Industrial Development and
Export Authority (AIDEA) was assisting commercial fisherman with
refrigerated salt water and flash-freezing.
REPRESENTATIVE THOMAS replied that federal and state funds are
available for fisherman. He pointed out that it is incumbent on
the fisherman, with or without incentives, to maintain the
quality of the fish and protect the market.
6:13:43 PM
REPRESENTATIVE JOHANSEN asked whether fishermen are concerned
about fish quality.
REPRESENTATIVE THOMAS replied yes, and said that how a fish is
handled determines its marketability.
REPRESENTATIVE JOHANSEN further asked whether the fishing
industry is responding to the fact that fish quality is
important.
REPRESENTATIVE THOMAS replied yes; his partnership with Ocean
Beauty requires ice and bleeding at the time of the catch, and
fish quality is the key to the industry's success.
6:16:16 PM
CHAIR NEUMAN thanked the presenter and Representative Thomas.
HB 217-TOURISM DISCLOSURES AND NOTICES
6:17:19 PM
CHAIR NEUMAN announced that the final order of business would be
HOUSE BILL NO. 217, "An Act relating to required onboard
disclosures and displays about tours, flight seeing operations,
other shoreside activities, and visitors bureaus; and providing
for an effective date."
6:18:26 PM
REPRESENTATIVE LYNN moved that the committee adopt Amendment 1,
which read:
Page 2, line 1
After "other alternatives may available":
Insert "for a higher or lower price"
[Although not formally stated, line 2 of the amendment reads:
After "other alternatives may be available":]
REPRESENTATIVE LYNN informed the committee that Amendment 1 is a
friendly amendment and will ensure that the cruise ship
passenger understands that other alternative tours are available
for a higher or lower cost.
REPRESENTATIVE GATTO objected. He expressed his concern that
there would be few instances when the price of an alternative
tour will be higher and many instances when the price will be
lower. The implication of equal weight to the words "higher"
and "lower" gives little useful information to the purchaser.
Representative Gatto suggested striking the word "higher".
REPRESENTATIVE LYNN, after discussion, noted that the amendment
to Amendment 1 would strike the words "higher or".
6:20:48 PM
REPRESENTATIVE LINDSEY HOLMES, Alaska State Legislature, stated
that she is amenable to action on Amendment 1, as amended. She
said that the purpose of HB 217 is to implement the intent of
the Alaska Cruise Ship Initiative and avoid unintended
consequences.
6:22:18 PM
There being no objection, the Amendment to Amendment 1 was
adopted.
REPRESENTATIVE GATTO withdrew his objection to Amendment 1.
There being no objection, Amendment 1, as amended, was adopted.
6:23:37 PM
REPRESENTATIVE HOLMES explained that the intent of HB 217 is to
implement the intent of the voters who passed the Alaska Cruise
Ship Initiative ("initiative") while avoiding unintended
consequences. She noted that the bill adds a second alternative
disclosure requirement for tour operators that sell tours on-
board the cruise ships. The alternative requires that tour
operators disclose the existence of a paid promotion and that
other options may be available in the port of call for a lower
price. In addition, the cruise ship passenger is given contact
information for the convention and visitors bureau in each port
of call. Representative Holmes expressed her belief that HB 217
complies with the voter pamphlet language of the initiative,
with the language on the initiative ballot, and with the
initiative sponsor statement. She added that the committee
packets include many letters of support for HB 217 and that her
office has not received any letters in opposition.
Representative Holmes concluded that the intent of the
initiative was not to harm local Alaska businesses; however,
unintended consequences result in the disclosure of pricing
structures of local businesses and will limit their ability to
compete. This legislation addresses the aforementioned and
informs the consumer of his or her options.
6:27:45 PM
REPRESENTATIVE DOLL remarked:
What I want to do is just sort of clarify where this
comes inside the initiative ... it is actually on page
6b, "A person or other entity aboard a cruise ship,
conducting or making a sale of tours, flight seeing
operations or other shore-side activities to be
delivered by a vendor or other entity, shall disclose
both orally and in writing the amount of commission or
percentage of the total sale retained or returned to
the ... person making the sale." ... That is, I
think, what we're looking at right now in terms of
intent of the initiative....
6:29:21 PM
JOHN WHITE, Owner, Nenana Raft Adventures, informed the
committee that this particular initiative is flawed. His
company pays a 20 percent commission to the cruise industry and
to other local travel agents and he expressed his concern about
the disclosure of the wholesale pricing arrangements for his
white-water rafting company. Mr. White said that other
industries make arrangements for discounts based on sales
volume. He noted that he has lived in Alaska for 32 years and
that the initiative was heavy-handed revenge against the cruise
industry. In the white-water rafting industry, discounts result
in discounts to safety and the cruise ships require stringent
safety procedures from the tours they book. Mr. White concluded
by saying that cruise ship passengers account for two-thirds of
his business and the disclosure of his confidential pricing
information is an intrusion on small business owners.
6:33:49 PM
REPRESENTATIVE GATTO asked whether Mr. White feels that the 90-
day Session Initiative is flawed.
MR. WHITE replied yes. He added that he felt that the
legislature is the best judge of the amount of time necessary to
complete its business.
REPRESENTATIVE GATTO remarked that if the initiative is flawed,
that would mean that the voters are flawed in their vote. He
expressed his belief that the voters tell the legislature what
they want and the legislature must deal with what voters have
asked it to do, rather than search for a way to circumvent the
vote. He said that his respect for the voters supports his
inclination to not make changes in the initiative.
6:35:50 PM
REPRESENTATIVE LYNN asked whether the rafting company's
arrangement with the cruise ships included limits of liability.
MR. WHITE responded that the standard practice for liability
insurance is that the booking agents are named as additional
insured; however, essentially the service provider is liable.
Mr. White expressed his belief that there is a need for the
regulation of rafting and kayaking companies, and repeated his
concern that a lower price can mean an unsafe operation.
6:39:02 PM
REPRESENTATIVE DOLL expressed concerns with regard to the
constitutionality of the initiative and thus wanted that to be
addressed.
CHAIR NEUMAN told the committee that there will be testimony
from the Department of Law at a later date.
6:40:15 PM
STEVE HITES, owner, Skagway Street Car Company, informed the
committee that he is a 34-year resident of Skagway and the owner
of a Skagway sightseeing company. He said that his business has
grown with the market, has five year-around employees, and has
been in business for 21 years. He said that he felt that the
disclosure statement in the initiative goes far beyond what the
voters intended. He noted that other businesses are not
required to disclose prices. He stated that his concern is that
his family business and other tourism businesses that work with
the cruise lines will be forced to disclose confidential and
negotiated pricing to consumers and competitors. This bill will
offer an alternative choice that still meets the spirit of the
disclosure initiative. Mr. Hites concluded that parts of the
initiative were not clearly stated for the public and, thus, HB
217 will correct unforeseen ramifications. He urged the
committee to consider supporting HB 217.
6:44:47 PM
REPRESENTATIVE GATTO remarked:
I'm going to give you a statement that I have here;
[reading] "Since 1994 Alaska law has required oral and
written disclosure to passengers by cruise lines when
they receive commissions for promoting shore-based
tours." That, that statement is a pretty powerful
statement, because as a person who's bought 15 tickets
on the cruise lines, I can promise you I have never
seen that disclosure. ... What the initiative has done
... is to it set out as clearly as possible that since
they did not observe the requirement that maybe the
requirement was not clear to the cruise ship
operators....
6:45:57 PM
TOM TOUGAS, Owner, Four Seasons Tours and Alaska Coach Tours,
said that he and his wife operate a tour business offering tours
in Seward, Juneau, Ketchikan and Skagway. He informed the
committee that the initiative puts his company at a disadvantage
in its negotiations with the cruise lines due to the fact that
his company gives different prices to different cruise lines.
The disclosure, he said, harms small Alaska businesses and
benefits the cruise lines who will now compare pricing with
other operators. Mr. Tougas expressed his concern that the time
necessary for the oral disclosure will slow the sales process
and hurt business. He suggested that the changes in HB 217 have
more impact on helping Alaska businesses and less on hurting the
cruise lines.
6:48:47 PM
REPRESENTATIVE DOOGAN expressed his understanding that the
initiative requires the shoreside tour operator to disclose to
the consumer how much the operator receives from the price of
the tour.
MR. TOUGAS responded that the assumption is that the consumer
must be told what percentage or amount that the operator retains
from the price of the tour. It is important to know, he added,
that the cruise lines are doing all of the marketing and
accounting and, thereby, earn a commission.
REPRESENTATIVE HOLMES clarified that, as written, the initiative
requires the disclosure of the amount of the commission or the
percentage of the total sale. She gave an example of a tour
that cost $100, with a commission of 20 percent or $20, that
would reveal to the consumer the wholesale cost of the tour to
be $80.
MR. TOUGAS added that the commission may not be a consistent
amount when it is based on the volume of tickets sold.
6:52:41 PM
BRUCE BUSTAMANTE, President, Anchorage Convention and Visitors
Bureau (ACVB), informed the committee that the ACVB has 1,250
members and its mission is to build and grow the tourism
industry in Southcentral Alaska. He said that ACVB's review of
the initiative revealed that the disclosure section of the
initiative was damaging and punitive to its large and small
members. Mr. Bustamante noted that the ACVB board of directors
has issued a resolution in support of HB 217, and copies of the
resolution have been submitted to members of the legislature.
6:55:39 PM
REPRESENTATIVE DOOGAN asked whether the ACVB was involved in the
campaign against the initiative.
MR. BUSTAMANTE replied yes. In further response to
Representative Doogan, he said that the [disclosure issue] did
come up during campaign.
REPRESENTATIVE DOOGAN referred to the $2 million television
campaign and asked whether this argument should have been made
prior to Election Day.
MR. BUSTAMANTE said yes. However, HB 217 will mitigate the
potential damage to Alaska business.
CHAIR NEUMAN noted that he was contacted about the initiative
prior to the election.
6:58:08 PM
REPRESENTATIVE GATTO asked Mr. Bustamante whether the disclosure
was "the worst part" of the initiative.
MR. BUSTAMANTE replied that the disclosure has the most impact
on small businesses. However, the initiative causes problems
throughout an industry that brings one million visitors to
Alaska each year and is a big part of its economy.
REPRESENTATIVE GATTO stated that the growth in the cruise
industry is fairly substantial. He asked whether the ACVB has
objections to the establishment of the Ocean Ranger program or
to other parts of the initiative.
MR. BUSTAMANTE responded that all four parts of the initiative
can harm the growth of the tourism industry in Alaska. The
cruise industry is the state's biggest partner in tourism and
Alaska needs to ensure that it remains competitive and does not
layer costs on its product.
7:00:53 PM
RON PECK, President, and Chief Operating Officer, Alaska Travel
Industry Association (ATIA), testified that ATIA represents
1,050 small and large businesses. The board of directors of
ATIA has passed a resolution in support of HB 217. Mr. Peck
read the resolution and concluded by saying that the initiative
undermines the basic business model of tour programs.
7:02:33 PM
[Although not formally stated the gavel was passed to Vice Chair
Lynn]
VICE CHAIR LYNN inquired as to what portion of the initiative is
of most concern to ATIA.
MR. PECK responded that ATIA is specifically in support of HB
217 and that the ATIA board has only taken a position to request
modification of the disclosure portion of the initiative.
Through HB 217, a modification is made which is good for
business in Alaska and fulfills the intent of initiative.
7:04:14 PM
REPRESENTATIVE JOHANSEN expressed his desire for the committee
to focus only on HB 217 and to not continue a "fishing
expedition."
VICE CHAIR LYNN acknowledged Representative Johansen's comment.
[Although not formally stated Vice Chair Lynn returned the gavel
to Chair Neuman]
7:05:17 PM
MR. PECK urged the committee to move forward with HB 217 as it
will continue to support small businesses within Alaska. He
then read from an Alaska Daily News article.
REPRESENTATIVE GATTO objected to the testimony.
7:06:24 PM
PAT LUBY, Advocacy Director, American Association of Retired
Persons (AARP), informed the committee that AARP of Alaska has
no position on HB 217 at this time and will need more
information with regard to the impact on consumers. He said
that AARP's standard on evaluating bills is normally that the
more consumer information available, the better it is for the
consumer. This bill, he said, seems to limit the information
available to the consumer and he requested clarification from
Representative Holmes.
7:08:29 PM
KAREN HESS, owner, Chilkat River Adventures, informed the
committee that passage of HB 217 is vital to her business. She
noted that she has submitted additional written testimony for
members to review in their committee packets. Ms. Hess told the
committee that, in 1991, she and her husband choose to begin a
small tourism business with their savings and hard work. She
said that she was asking for protection for her business, and
for all future businesses, from the impact of the disclosure
statement. Ms. Hess expressed her belief in free enterprise and
the American value of opportunities for private business. She
stated that virtually every business in America operates
according to the principles of free enterprise, and the
initiative is discriminatory to Alaska tourism. Ms. Hess read
from the Alaska Constitution of the State of Alaska, Article 1.,
Declaration of Rights, subsection 1, Inherent Rights. Ms. Hess
stated that the disclosure statement does not allow her the
enjoyment of the rewards of her industry or equal rights and
opportunities. In fact, the disclosure requirement violates her
right to privacy and confidentiality. She expressed her hope
that the committee will support HB 217.
7:12:42 PM
CHIP THOMA testified that he is in support of HB 217 with one
recommendation. He commented that HB 217 attempts to devise an
alternate system of public disclosure regarding the choice of
tours. However, the bill does not address the many local tours
and activities that are purchased prior to the actual cruise.
He pointed out that the initiative does not affect these
purchases either; in fact, the language of the initiative was
designed for consumer protection of the passenger on-route
because many local businesses are not advertised or recommended
on-board the ships. It is estimated that in northern Southeast
$250 million of business is done by shore-based tours annually
and this amounts to a $50 million profit to cruise lines. Mr.
Thoma said that this amount is generally off the books, because
there are no ship taxes or reporting requirements for shore
trips. Ship passengers, he said, should have a choice of
activities and the ability to shop for inexpensive tours because
that is the basis of consumer protection. He recommended a
change to HB 217; on page 1, line 13, change "or" to "and."
This change will preserve the consumer protection language in
the initiative, enable cruise passengers to search further for
local activities, and thereby, satisfy all parties.
7:17:11 PM
REPRESENTATIVE JOHANSEN asked whether HB 217 changes the
language of the initiative that was approved by the voters.
MR. THOMA said he believes it does.
REPRESENTATIVE JOHANSEN expressed his concern about the
potential impact of changing one word [in an amendment]. He
said that he also has a problem with the reference to
"kickbacks" by local tour operators and requested that Mr.
Thoma's written testimony be re-drafted with less inflammatory
language.
7:19:43 PM
MIKE WINDRED, employee, Alaska Travel Adventures, Inc. (ATA),
said that ATA operates 15 shore excursions and books travel with
the cruise line passengers and with independent travelers. He
expressed his support of HB 217. Mr. Windred explained that ATA
has developed its pricing structure since its beginnings in the
1980s and that transparency to consumers has to do with retail
prices, rather than pricing structures. For example, ATA's Gold
Creek Salmon Bake does not receive many complaints about the
price, but he believes that passengers will begin to compare
mark-ups and will subsequently stay on board to eat. He urged
the committee to move HB 217 on to the House Judiciary Standing
Committee.
7:22:27 PM
JEREMY GEISER, employee of Gastineau Guiding and the Juneau
Chapter president of the Alaska Travel Industry Association
(ATIA), speaking as an employee of Gastineau Guiding, informed
the committee that the pre-election television advertising
campaign was too expensive to be conducted by small tourism
businesses. This bill, he said, will support the intent of the
original initiative, will benefit local businesses and will
promote the tourist's use of the local convention and visitors
bureaus. Mr. Geiser told the committee that the local operators
want to add language that supports the measure as it was
originally proposed.
7:25:36 PM
BOB JANES, Owner, Gastineau Guiding, testified in support of HB
217. He said that his company is a local family-owned business
and is an established and commissioned service to the cruise
industry. Mr. Janes clarified that commissions to the cruise
lines are paid by check or electronic deposit and local and
federal taxes are paid. He expressed his belief that the HB 217
legislation not perfect, but it is a good step to bringing the
language closer to the intent of the initiative.
7:27:34 PM
REPRESENTATIVE DOLL asked whether Mr. Janes had taken a cruise,
and if so, had felt the need for the disclosure of costs for
shore excursions.
MR. JANES answered that he took his first cruise this year and
in one port purchased a shore excursion on the ship. He noted
that the benefit to buying a more expensive shore excursion
affiliated with the ship is that the ship will wait if your
party is late returning to the dock. Mr. Janes added that he is
opposed to the lower price amendment because the services and
reliability of the excursion may be lower as well.
7:30:06 PM
CHAIR NEUMAN advised the committee members that a legal opinion
will be requested regarding the change suggested by Mr. Thoma.
7:30:19 PM
BOB WYSOCKI, President, and Chief Executive Officer, Huna Totem
Corporation (Huna Totem), Icy Strait Point, informed the
committee that Icy Strait Point is Huna Totem's largest
investment and is the only private port in Alaska. Mr. Wysocki
noted that as a private port owner, Huna Totem has invested
millions of dollars to market the Icy Strait Point destination
and attract the cruise ship market. This is a very different
business model, he explained, and requires that Huna Totem
recover its investment through tour sales. Icy Straight Point
has no convention and visitors bureau or other independent tours
operating on the site. Huna Totem's local economic impact is an
annual payroll of $1.5 million and employment for the residents
of Hoonah. All economic activity in Hoonah is related to the
evolution of Icy Strait Point. Mr. Wysocki stated that Huna
Totem's business has grown from 32 visits by cruise ships to 80
expected visits this year, and he related his support for the
disclosure of Huna Totem's relationship with the cruise ships as
disclosure promotes safe and quality programs. He said that the
cruise industry earns its funds by marketing programs, receiving
bookings, and collecting revenues. Huna Totem does not support
the disclosure of its business margins. He stated that
encouraging ruthless competition based on proprietary
information can not be helpful to Alaskans and small businesses.
Consumer demand is driven by the quality and value of the
product, not by margins, commissions, or efficiency of volume.
Huna Totem has made an investment in the community, the state,
and the people of Alaska, and fully supports HB 217. However,
for Icy Strait Point as a unique port, the reference to a local
convention and visitor bureau does not apply, and thus he
requested an amendment.
7:37:44 PM
CHAIR NEUMAN requested that Mr. Wysocki submit his suggestion
for an amendment to Representative Holmes. Chair Neuman noted
that the legislative process is a discovery process and issues
need to be studied in depth. He then read the names of some of
the businesses present and asked for a show of hands as to how
many support HB 217. Chair Neuman noted that galley opposition
to the bill was nominal.
7:39:09 PM
REPRESENTATIVE GATTO stated that approximately one million
passengers a year come to Alaska; however, they are not
represented by today's testimony. The initiative was to address
the concerns of those visiting the state and thereby, affected
those running the tourism businesses in the state. He expressed
his belief that visitors desire transparency. The initiative
was inspired by the concerns of an owner of a flight service who
stated that 40 percent of her profit was paid to cruise ships.
In addition, she expressed her fear that the cruise industry
would refuse to sell her tours if her concerns were made public.
Representative Gatto said that this bill tends to modify the
initiative and that he is very cautious when the legislature
attempts to change an initiative passed by a vote of the people
of the state.
7:42:35 PM
CHAIR NEUMAN stated that further testimony must refer to HB 217.
7:43:13 PM
REPRESENTATIVE DOOGAN opined that discussion of HB 217 must
include discussion of the intent of the initiative, and he
requested to see authorization that permits the chair to
restrict debate.
CHAIR NEUMAN remarked:
Representative Doogan, as the chair of this committee,
I certainly control the tone of the debate, and I did
state earlier that we would get a legal opinion and
have some discovery. I never, I never cut anybody
back, but I wanted to make sure, that, I want to stay
on the bill here.
REPRESENTATIVE DOOGAN said, "I renew my request."
7:44:03 PM
REPRESENTATIVE LYNN opined that the committee must realize that
HB 217 impacts the initiative and members will need to review
the bill in a broad context. He said that he was supportive of
the legislation, but was concerned about how much the
legislature should change the initiative.
CHAIR NEUMAN announced that HB 217 would be held over for
further discussion and with public testimony open.
7:45:08 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 7:45 p.m.
| Document Name | Date/Time | Subjects |
|---|