HOUSE FINANCE COMMITTEE January 24, 2001 2:08 PM TAPE HFC 01 - 18, Side A TAPE HFC 01 - 18, Side B CALL TO ORDER Co-Chair Mulder called the House Finance Committee meeting to order at 2:08 PM. MEMBERS PRESENT Representative Eldon Mulder, Co-Chair Representative Bill Williams, Co-Chair Representative Con Bunde, Vice-Chair Representative Eric Croft Representative John Davies Representative Richard Foster Representative John Harris Representative Bill Hudson Representative Ken Lancaster Representative Jim Whitaker MEMBERS ABSENT Representative Carl Moses ALSO PRESENT Tina Lindgren, President & Chief Operating Officer, Alaska Travel Industry Association, Anchorage; Ann Campbell, Chair, Alaska Travel Industry Association, Anchorage. PRESENT VIA TELECONFERENCE None GENERAL SUBJECT(S):  ALASKA TRAVEL INDUSTRY ASSOCIATION (ATIA) PERFORMANCE REPORT ON TOURISM MARKETING FOR ALASKA TRANSITION FROM ATMC AND DIVISION OF TOURISM TO ATIA The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 22nd Legislative Session, contact 465- 2156. After the 22nd Legislative Session they will be available through the Legislative Library at 465-3808.   LOG SPEAKER DISCUSSION    TAPE HFC 00 - 18  SIDE A  000 Co-Chair Mulder Convened the meeting with the Alaska Travel Industry Association (ATIA).  092 ANN CAMPBELL, CHAIR, Noted the handouts that had been ALASKA TRAVEL distributed. [Copy on File]. She INDUSTRY provided a brief historical overview of ASSOCIATION, the agency. She stated that the ANCHORAGE organization was managed by a 23-member elected Board of Directors, representing various sectors of the Alaska visitor industry and various regions of the State. Marketing programs are developed and implemented through an extensive committee structure, including advisory committees with the active participation of 40 members. As managers of the contract, Department of Community & Economic Development must approve the marketing plan prior to implementation.  280 Ms. Campbell ATIA currently has just over 900 small businesses. She noted the percentage of business per number of employees. Regular membership levels start as low as $100 for small businesses; and marketing partner investment rates increase depending on the number of people employed during the peak season.  365 Ms. Campbell Noted that ATIA provides advantages to the small businesses. Additionally, they are making good head way in marketing and strength. ATIA is moving forward into the future. Listed the fund raising events to date.  434 Ms. Campbell Clarified that the total contracting amount was $6.928 million dollars. The State of Alaska contributed $4.850 million dollars. The Alaska Marine highway will not be transferring funds into the fund. The private sector is expected to contribute 30% in matching funds. To date, the cruise partners have contributed $819 thousand dollars.  537 Co-Chair Mulder Asked what the "play to pay" partners were.  557 Ms. Campbell Responded that they are the cooperative advertising programs.  579 Ms. Campbell The partners have made two payment allowances. The money to date has been committed only. She added that 83% cash had already been collected.  630 Ms. Campbell She expected that the remaining 15% would  be collected in the next several months.  622 TINA LINDGREN, Referenced the handout specifics and PRESIDENT, CHIEF details.  OPERATING OFFICIER, ALASKA TRAVEL INDUSTRY ASSOCIATION, ANCHORAGE 681 Ms. Lindgren Addressed the missions and measures of ATIA.  695 Ms. Lindgren It is important to market Alaska as a visitor destination. The State is attempting to attract a diverse mix of visitors. · maintain or increase the average length of stay in Alaska · increase year round employment · attract a diverse mix of visitors who travel to and within Alaska by a variety of travel modes · endeavor to position Alaska as a year round destination · increase total visitor expenditures statewide · increase independent visitation to Alaska · increase the rate of repeat visits · increase interest in Alaska as a visitor destination · increase awareness and participation of business in the marketing program · increase private sector funding of state tourism marketing programs.  772 Ms. Lindgren Spoke to what is doing well - ATIA is creating an opportunity for those interested in marketing to have one destination with marketing concerns. That could be an advantage., while creating greater efficiency in having all businesses "dove-tail" together. She reiterated that would create greater efficiency.  852 Ms. Lindgren Touched upon some new additions to the program: *Public relations (Martha Stewart) *Advertising - 2 million direct mail pieces mailed which hopefully will generate inquiry. Magazine advertising. Trip planning information pieces being sent with a total of 450 thousand pieces produced  * Trade, including international - she listed the current overseas offices, including Japan, UK, Germany and Australia. * Developing an on-line travel-training program. * Maintaining the "Travel Alaska.com" web page.  1222 Ms. Lindgren She noted that ATIA employs 9.5 people, working on the contract. She interjected that ATIA is being efficient investigating additional marketing partnership opportunities beyond basic listings and links.  1250 Ms. Lindgren Monitoring the investment. Following up with telephone interviews indicates that nearly 20% of people that request info come to visit within two years.  1292 Co-Chair Mulder Asked if there had been a follow up with those who visit and intend a continual return to the State.  1316 Ms. Lindgren She noted that ATIA buys the most efficient media first. She acknowledged that there has not been recent television advertising. She agreed that could have an effect on those that might act impulsively.  1354 Co-Chair Mulder Questioned why there was no television advertising.  1363 Ms. Lindgren Stressed that had been a budget managing decision. The hope is to get back to television advertising.  1379 Co-Chair Mulder Referenced the idea of a conversion matrix system?  1400 Ms. Lindgren Offered to provide the conversion study and the breakdowns that accompany that study.  1428 Co-Chair Mulder Asked what greater funding would provide the State. He requested real numbers and how they would translate to numbers of people.  1453 Representative Inquired if there had been entry or exit Hudson surveys done.  1468 Ms. Lindgren Explained that there had been a draft research undertaken recently to identify such a concern and identify the maintained Alaskan visitor's habits.  1510 Representative Asked if that information would include Hudson what entices visitors to come to Alaska.  1529 Ms. Lindgren Responded that there is less information available from those persons that receive their information from word of mouth.  1558 Representative Asked if this had been the 1st year Hudson without television advertising.  1570 Ms. Lindgren Responded that last year, there was small television funding. She acknowledged that it had been a few years since there was real television advertising.  1601 Representative Acknowledged that television advertising Hudson was advantageous and very expensive.  1626 Co-Chair Mulder Referenced the cruise ship marketing television ads.  1651 Vice-Chair Bunde Requested a comparison to other western states tourism activity and how it relates to that in Alaska. He suggested that perhaps tourism is down because of the gas price increase.  1670 Co-Chair Mulder Asked what would be a healthy rate of growth in tourism in Alaska.  1683 Ms. Lindgren Commented that there is not one rate of growth that affects each community the same. The national average is 2.5% increase. Last year Alaska was at 3% growth. Currently, there are more people entering the tourism industry, which creates tremendous competition.  1733 Ms. Lindgren In the tourism market worldwide, the cruise rate percentage has increased substantially. The Alaska cruise rate has maintained a 10% growth.  1768 Ms. Lindgren Explained that a target that the State expects to achieve is not available. She commented that what would be enough would be when business owners are happy and full. 6% increase would keep tourism healthy for the State. She acknowledged that at 3%, Alaska is falling behind and that some of the State's marketing budgets have declined.  1870 Vice-Chair Bunde Suggested that there are places in Alaska that tourism is maxed out, such as Juneau. He commented that the Alaska tourism market was too focused on the high volume areas.  1907 Ms. Campbell By definition, an average tourist is in Alaska 10+ days. They are spending more than the average visiting days. These tourist tend to be "better and bigger" spenders than most visitors to other states.  1953 Representative Commented on the average numbers being Whitaker provided. He spoke to the goals established by ATIA, which he did not believe measured success. He recommended  that ATIA provide a percentage number.  2054 Co-Chair Mulder Agreed that there should be an encompassing number, which could provide a measurement for the Legislature to identify.  2080 Ms. Lindgren Explained that last year, the state increased the budget by 12.7%. One goal is to increase visitation by 3% in the next year, a target set by ATIA. She commented that to achieve that goal with the current budget would be unreasonable. She added that ATIA lacks the measurement tool of the State's statistics program. She reminded the Committee that the program is only 6 months old.  2141 Co-Chair Mulder Noted that it would make better sense to formulate a more focused groundwork for policy amounts. He understood that 3% was what had already been received. He challenged the Board to isolate a number, which would sustain a healthy rate of growth.  2184 Ms. Lindgren agreed that made sense.  2190 Representative Asked if ATIA targeted summers only.  Lancaster 2197 Ms. Lindgren Explained that the entire program was a year-round marketing program. The entire program is meant to market Alaska as a year-round destination.  2222 Representative Croft Asked what it would cost for ATIA to create sustainable goals. He referenced Page 9 of the handout, which highlighted the outlined goals. He commented that they had been well defined. He inquired what a budget with a 4-5% growth would look like. He questioned if industry would be willing to step up to that.  2268 Representative Echoed sentiments of Representative Davies Croft. He recommended that discussion should be regarding market shares and the sustained increase.    TAPE HFC 01 - 18,  Side B  007 Co-Chair Mulder Commented that it would be a good point to debate the market shares. If a 5% growth were attained, then what other considerations should be made.  111 Ms. Campbell Replied that at present time, ATIA is focused on the transitioning programs.  170 Co-Chair Mulder Commented that ATIA had a much more defensible budget.  217 Ms. Lindgren Noted that ATIA has both a pro-active and  re-active media-advertising program. ATIA proactively goes out and seeks national publications and that media story ideas are continually distributed throughout the nation.  334 Representative Commented that the marketing campaign has Hudson to have consistency. There must be long- term goals established. Everything, which is planted, must be given the opportunity to grow. He recommended that public relation advertising be encouraged. He recommended that there should be people from the trade going out and speaking about the trade. Additionally, he suggested that legislators give talks about Alaska tourism destination when out of State and abroad.  466 Ms. Lindgren Advised that ATIA is now in the planning stages for FY02. She noted that by the beginning of March, there would be a draft plan and contract, which then should be negotiated on April 1st. To date, the marketing committee has met. One of their plans that they have discussed is the increased public relations.  532 Ms. Lindgren Interjected that ATIA has to date, only had six months to merge all programs.  577 Representative Asked about ATIA's funding goals.  Davies 596 Ms. Campbell Replied that in three years, they intend to reach the goals of the working plan.  621 Ms. Lindgren Next year, the goal continues to be 30%.  641 Representative Asked if the total request amount was Davies expected to increase.  660 Ms. Campbell Replied that ATIA is currently planning a $7.6 million dollar budget.  700 Co-Chair Mulder Questioned if there was a good business plan.  708 Ms. Lindgren Replied that ATIA is working on that. At this time, ATIA is encouraging businesses to pay more if they can. She acknowledged that it is difficult to get people to pay more out of their pocket.  737 Co-Chair Mulder Commented that all of Alaska enjoys the services, yet none want to pay.  760 Co-Chair Mulder ADJOURNED: 3:05 PM