HOUSE SPECIAL COMMITTEE ON INTERNATIONAL TRADE & TOURISM February 7, 1995 3:02 p.m. MEMBERS PRESENT Representative Beverly Masek, Chairman Representative Alan Austerman, Vice Chairman Representative Jeannette James Representative Brian Porter MEMBERS ABSENT Representative Pete Kott Representative Irene Nicholia Representative Caren Robinson COMMITTEE CALENDAR Alaska Visitor's Association Overview WITNESS REGISTER JOHNE BINKLEY, President Alaska Visitor's Association 1975 Discovery Drive Fairbanks, AK 99709 Telephone: 479-6673 POSITION STATEMENT: Gave an Overview of Alaska Visitors Association BRAD PHILLIPS, Chairman Alaska Tourism Marketing Council Phillips Cruises and Tours P. O. Box 100034 Anchorage, AK 99510-0034 Telephone: 276-8023 POSITION STATEMENT: Offered comment regarding wintertime tourism ROD BRADLEY, Owner Bradley/Reid Communications 1840 S. Bragaw Anchorage, AK 99508 Telephone: 276-6353 POSITION STATEMENT: Offered comment regarding winter scenes in marketing DENNIS BRANDON Westmark Hotels 880 H Street, Suite 101 Anchorage, AK 99501 Telephone: 272-9403 POSITION STATEMENT: Offered comment regarding task force results on access issues in Denali ACTION NARRATIVE TAPE 95-1, SIDE A Number 000 The House Special Committee on International Trade & Tourism was called to order by Chairman Beverly Masek at 3:02 p.m. Members present at the call to order were Representatives Masek, Austerman, James, and Porter. Members absent were Representatives Kott, Nicholia, and Robinson. (The meeting was not teleconferenced.) CHAIRMAN BEVERLY MASEK offered each of the committee members an opportunity to present themselves to the speaker and audience beginning with Vice Chair, Representative Austerman. Number 023 REPRESENTATIVE ALAN AUSTERMAN mentioned that he's from Kodiak Island, District 6, and he previously sat on the Alaska Tourism Marketing Council (ATMC). REPRESENTATIVE JEANNETTE JAMES announced she's from North Pole and is a strong proponent of tourism and associated activities. Number 032 REPRESENTATIVE BRIAN PORTER stated he is from midtown Anchorage, District 20, and he shares the views of the previous two speakers. Number 034 CHAIRMAN MASEK asserted that she is trying to make this committee as geographic as possible in order to have statewide representation. One of the ideas on a format of how she'd like to conduct this committee is to call in different agencies statewide to get testimony regarding their past accomplishments and to bring up any goals or plans they have for the future. She would like a general overview of what they have done statewide and what plans they have for tourism statewide coming up to date for FY 95. While acknowledging that planning is very hard, she expects it to go really well. She divulged today's agenda as being an overview by the Alaska Visitor's Association (AVA) and if there are members of other agencies who would like to share information with the committee, she would appreciate that. Number 097 CHAIRMAN MASEK thanked everyone for showing up and for their interest. With tourism being one of the state's largest industries, she can foresee in the future leaning more and more toward tourism, and she would like to get more input from other people as well. On that note, she turned the floor over to Johne Binkley. Number 112 JOHNE BINKLEY, President, Alaska Visitor's Association, voiced his appreciation for the opportunity to come before the committee and give an overview on the Alaska Visitor's Association. He noted that some may be familiar with all the different aspects of AVA, ATMC, and DOT and some may be new to that so, he'll overview all those different aspects. The AVA is a nonprofit organization made up of people in the industry. It is people who are interested in tourism, business people who contribute their own money to the association to further the goals they have in promoting tourism in Alaska. It was originally formed in the early 1950s, actually about 1950. Some of the people who were involved in the industry, including his parents at the time, felt that it was important to have a statewide organization to start working towards bringing more people up to Alaska rather than just promoting their own individual businesses so, they formed the AVA. It struggled along in the early years with a very minimal amount of marketing. In the early 60s, after statehood, the state got involved in marketing tourism and started to spend some money on destination-marketing of marketing Alaska outside. They formed a partnership in the 70s when they felt it was beneficial to have the input from the private sector and some of the money from the private sector along with the state money--to combine those efforts to market the state and bring people up to Alaska. That was really formalized in legislation in 1987 with the formation of the Alaska Tourism Marketing Council (ATMC). That council is made up of 11 members basically who are appointed by the governor and, 10 members that come from the private sector. Those 21 members decide what the marketing plans should be for the state of Alaska to generically market Alaska to bring people up to the state and to get them interested in traveling to Alaska. There's public dollars, state dollars, associated with that and private dollars. Right now, the percentages are 75 percent state dollars, 25 percent industry dollars and, spending those monies is determined by that 21-member council that comes from the private sector and the state government side. It's been extremely successful and it really has been a program that's been the envy of other states around the country, because you have the strength of the funding of the state but, you also have the participation of the private sector who has their own money involved in it and, who brings to the table, to the council, expertise in marketing. Number 163 MR. BINKLEY added they are driven by results unlike some government agencies where it's simply a question of getting your annual appropriation and spending the money. In the private sector side, if you don't produce results with your marketing dollars, you're not in business anymore. And they're continually looking at the results they get from the monies that are spent in that program. As a consequence, you get an efficient use of those dollars and how they are spent. They're very, very proud of the program; they think it's very successful. Unfortunately, the funding was dramatically cut this last year and, there are several different ways they go about marketing the state. But one of the most important ones is the image advertising, where they create in peoples' mind the desire to travel to Alaska. And there are other mechanisms that they go about to convert that desire or that image of Alaska, into an interest where they actually take an action to get some information about Alaska and then where they actually sell them on coming to Alaska. But what they've had to do as the budget has been cut, is virtually eliminate all of that image marketing. And the way they do that primarily is through television--similar to probably how all of you went through your campaigns last fall, you know how important television is in reaching your constituents or your markets. This year for the first time in years and years they will virtually be off the television. The screen will be blank when it comes to people making their decision about where to travel. It may not hurt them so much in the short run as it does in the long run. It's very similar to a farmer planting the seeds. You have to plant those seeds and nurture them before he actually can harvest the product. And the image advertising is what plants the seeds in peoples' minds and gets them interested in traveling to Alaska. And when they stop doing that, pretty soon they don't have a crop the next year that's going be coming up. And so they're very, very concerned about that. Number 201 MR. BINKLEY mentioned that they've spoken to the Governor. During the course of the campaign, he had indicated that he's going to introduce a supplemental to try and get some money back into the budget so they can get back on the air this spring and start planting some of those seeds in peoples' minds so they don't have that dip in the growth of tourism. It's been growing steadily, about 8.1 percent over the last five years has been the rate of growth for the industry. It produces a tremendous amount of economic activity. Like any other industry, a lot of that economic activity, the overall expenditure of it goes to areas outside of Alaska. When people buy a ticket in Des Moines, Iowa to fly up to Alaska or they drive their motorhome up to Alaska some of those expenses they expend in the course of that are spent in places outside of Alaska. But it's an industry that brings a tremendous amount of the percentage of that into the state and, in the employment in the state. They're proud of the fact that 84 percent of the people that are hired in the industry are Alaskans. It provides job opportunities to young people, people who are working their way through college, in many cases just getting started. It gives them an entry into an industry in which they can proceed up the ladder. He related the example of Ray Pederson who started as a baggage handler and is now president of Princess Tours. There are many other such examples. Also, it's an industry that offers a lot of opportunity for small operations who don't have a lot of capital, that want to work for themselves to get started in the business. He mentioned the literally hundreds of bed & breakfast operations around the state who have invested a little money in modifying their homes, taking guests in - it's a family operation and income. Number 235 MR. BINKLEY informed the committee that in their family operation, they have 21 members in their family, 19 of which work in the business. They're proud of that; it's a family-oriented business. The two that don't work are less than five years old; he anticipates they'll be joining the business. It's a great industry, a lot of fun, it's growing and expanding. It's also fun because it's serving people. They come up to see Alaska and when you take the time to show them your home and what's beautiful about Alaska, they're very appreciative. It makes it very rewarding. Number 251 CHAIRMAN MASEK called a brief recess to accommodate the people overflowing into the hall. CHAIRMAN MASEK asked if Mr. Binkley had concluded. MR. BINKLEY affirmed that he had and he'd entertain questions. Number 259 REPRESENTATIVE AUSTERMAN thanked him for coming. He supposed the biggest question will come back again this year on the taxation issues that they addressed last year. Of course, he was on the other side addressing it. Is the AVA and the ATMC, or the industry still at the same position they were before, in that before they were willing to place taxes on the ATMC that they'd need to look back to the constitution, the amendment? Number 265 MR. BINKLEY responded that the industry feels it contributes a substantial amount to the general fund. There are revenues that have been estimated as high as 52 million that are (indisc.--coughing) back into the state coffers. While some of that goes to the Alaska Marine Highway System, some to the Alaska Railroad, some to the airport funds but, there are significant revenues that are generated as a result of the industry that go back into the government, not only state but, particularly local state, (i.e., bed taxes, city property taxes, sales taxes). That generates a tremendous amount of revenue for local governments. Just corporate income taxes alone from the visitor industry is well over five million that comes back directly in the fund. There are revenues that are coming back into the state's general fund. Those revenues have been increasing over the years. Every year when the visitor industry grows, the amount of revenue that comes back into the general fund grows as well. Even though the contribution back to the general fund is growing, the budget for marketing is being cut back. They're concerned if we speak of additional revenues that they might generate from the industry going to the general fund, those might not necessarily translate into additional marketing dollars. That's been their experience in many local communities in dealing with our convention & visitor bureaus. For example, in Fairbanks when the bed tax was first initiated, the industry supported it because 100 percent of those revenues were going to go back into marketing Fairbanks, thereby bringing more people into Fairbanks. What's happened is that covenant with the city council has been lost, new members come and go on the council and now they're down to about 55 percent of the bed tax dollars going toward marketing. So when we start talking about taxes or raising revenues at the state level, they're concerned that they'll offer up or support a revenue proposal that will just go into the black hole of the general fund and won't translate into more marketing. Their approach has been support of measures to raise additional revenue but, they'd like to see some assurance that those monies would go back into marketing. The only real true mechanism there is for such an assurance would be an amendment to the constitution. The reality of that is pretty tough. People are very hesitant to dedicate revenues in this state. He reiterated that their position has been that they'd be supportive of taxes but, they'd have to have a constitutional amendment to be able to protect those to go into marketing. CHAIRMAN MASEK asked if there were any other questions. REPRESENTATIVE JAMES noted that despite the large amount of monies that go into the aforementioned AARC, marine highway and airports, that is for services provided. If you didn't need to provide the services, you wouldn't need the money. She doesn't think that is an extra money; it is something that runs through the coffers and they like that. The corporate income taxes is certainly an issue. She expressed a concern about the services they have to provide to tourism that are extended like road and emergency services, public safety and those issues on our highways. Last time they had an amendment, supposedly for the constitution which would have set up a dedicated fund for transportation needs, and she would tend to support such an issue though it would not be politically advisable to get involved now but, in the future she might be willing to do that. If there were dedicated funds for the highway issue, would he be opposed to additional fuel taxes they might be able to impose that would directly affect the visitor industry? MR. BINKLEY asked if she meant fuel taxes that would go to highway maintenance? REPRESENTATIVE JAMES responded yes. MR. BINKLEY stated he'd have to go back to the board and that would be a board position they'd have to come up with. He felt that it's important to the visitor industry that the highways are well maintained and they're supportive of adequate maintenance in upgrading of the highways and if that requires more money to be able to do that, he thought they'd be willing to do that however they could. He said if that was through additional fuel taxes you'd probably find the visitor industry supportive of that if they knew that was going to go back into maintaining those highways. Number 346 CHAIRMAN MASEK asked if the AVA is happy with the direction the state has taken with the dollars into marketing so far. MR. BINKLEY reflected that an area he didn't really mention was the Division of Tourism, a statement of the Department of Commerce, that has marketing responsibilities. They market primarily the international market. They do developmental markets and a lot of other functions that it would be better to have them testify before you on their aspects that they work on. The ATMC is the entity that AVA is directly involved with, and they do the domestic marketing. AVA is very happy with the direction that the ATMC is going. Theyre supportive of them, they participate in that and they think theyre headed in the right direction. They understand the Division of Tourism that they have a vital role to play in bringing more visitors to Alaska from other destinations. Theyre supportive of them and the missions they have. But they really dont have an opportunity to participate in how the Division of Tourism actually spends their money. Thats a function of the Department of Commerce, ultimately. They dont get involved in how they decide to spend the money within the department but, theyre supportive of the things they do. Number 369 CHAIRMAN MASEK related complaints from her district about foreign and statewide investors who are using and selling Alaska but, theyre leaving with little income to the state in return. Does he have any idea how we can get them to pay their fair share in Alaska? For instance on the Deshka River out by Lake Clark area, there are many foreign investors who have lodges put up and they pay out of country to come to Alaska. So when they come here they spend very little and they leave with practically everything, boxes and boxes of fish. Are there any ideas he might be able to share with this committee on foreign people owning lodges, etc., in Alaska who travel here and they dont really pay in Alaska; they do all of their booking out of the country. Number 383 MR. BINKLEY responded thats not an issue that theyve really looked at and it hasnt really come to AVAs attention and frankly, one he wasnt aware of until she mentioned it now. But he could understand the concern particularly of the people who live in that area, if they see the good properties, the lodges that are located in the right spots for fishing, are going to foreign investors and, people come in the summertime and run them and leave and theres not much left for the local community. Its not an issue that hes really looked at that carefully or thought much about but, hell give it some thought. CHAIRMAN MASEK would appreciate it. MR. BINKLEY offered that there is an issue that some people raise about foreign investment by larger companies. For example, two of the largest cruise ship companies that come to Alaska are Holland America Line Westours and Princess Tours. Princess Tours is owned by a British company and Holland America Line Westours is owned by Carnival which is a Panamanian company. So they are both foreignly-held companies. The capital investment thats necessary to offer the kind of product they have in Alaska is tremendous. One of those cruise ships nowadays cost about $260 million. There arent realistically any entities in Alaska, any local companies that can afford that kind of a capital investment. Anytime you buy one of the new motorcoaches, its a quarter of a million dollars at least. A hotel, the hotel that Princess Tours just built in Fairbanks, $20 million. There are very few companies and people in Alaska that can afford that kind of capital investment and have the infrastructure necessary to bring those volumes of people up to Alaska and move them throughout Alaska. Its probably like any other resource industry, whether it be the oil industry, mining, timber or even fishing. Theres a lot of foreign investment that comes in to provide the capital to be able to utilize those resources. But there is a tremendous benefit to the local economies from those large cruise ship companies bringing people in. When they build a hotel in Fairbanks for $20 million, all local construction people who worked on that project, all the service staff that work in that hotel year-round are Fairbanks residents. They bring people in. Some of those people we're able to take out on our river boat, some out to our gold mine operation. Theres local people who drive the motorcoaches, who are mechanics, who repair those motorcoaches, they buy their parts at the local auto parts store in Fairbanks. Theres a huge economic benefit that is generated throughout our community by those people making that capital investment. Property taxes on their hotels pays a big part of our property taxes in our community. The utilities that they utilize help support our utility system. REPRESENTATIVE AUSTERMAN commented that the amount of foreign visitors that come to Alaska is about 6-8 percent compared to what the domestic market is. The Division of Tourism, he doesnt know what their budget figure is or how much money they spent for those 6-8 percent that they actually are supposed to be or key in on them rather than the domestic part...anyway, his question is the benefit of the Division of Tourism for that percentage of visitors compared to money that was taken into ATMC and what AVA does, does he (Mr. Binkley) have a feel for how effective the division is, whether that should be taken another look at? And if he feels awkward about answering the question, he understands. Number 434 MR. BINKLEY advised that it would probably be best to have the division come and speak to those.... REPRESENTATIVE AUSTERMAN replied that he knew what they would tell him, right off how well theyre doing. Thats why he kind of wanted to get another feel for it. He offered that they could talk in private at some point in time. MR. BINKLEY agreed. Number 438 REPRESENTATIVE PORTER suggested that maybe he could ask it another way. With his (Mr. Binkley) background in this area from different perspectives and recognizing what most of their constituents have asked them to do with government, would it not be a likely candidate for consolidation to take the international marketing, and domestic marketing...theyre not mutually exclusive. Number 444 MR. BINKLEY thinks that the transition team the Governor had look at the commerce area, that may have been one of the recommendations that they came forward with. REPRESENTATIVE PORTER responded with son of a gun! Number 448 MR. BINKLEY further stated that they were some (observers) here that participated [John Litton] in that transition team and they may be able to speak to that. Number 451 CHAIRMAN MASEK inquired what commitments orally or in writing has the Governor made to AVA in regards to tourism? MR. BINKLEY replied that most of the Governors commitments were made during the campaign actually to the industry when he addressed their convention. There is some question whether a commitment is actually a promise or (indisc.--laughter) in terms of art but, they believe the Governor understands the industry. Hes a restaurateur and a small businessperson, he was on the board of directors of the Anchorage Convention and Visitors Bureau (ACVB), hes been a member of the AVA for many years and he understands the visitor industry. He understands the value of marketing and so theyre enthusiastic that they have somebody who understands that and hopefully, that will translate into an increase in the budget for the ATMC that will get them at least back to where they were in FY 94 so they can get back in their image advertising and get out in front of the people when theyre making their decisions on where to spend their travel dollars. Number 467 CHAIRMAN MASEK queried what spaces or gaps in the tourism industry does he see that need attention statewide? MR. BINKLEY declared that from the marketing standpoint, its the television advertising,. When they made the reduction in the ATMC budget, they basically cut out the television; theres still a very small amount thats out there but, its really very, very slight. It would be like you in your campaign being on television once a week and your opponent being on television ten times a day. You just dont get your message out there very well. On another side, apart from the funding and marketing issues, one of the greatest challenges they face in the industry is access to public lands. A vast majority of Alaska is owned and controlled by state, federal and local governments and when you have a growth in the number of visitors coming up to Alaska and you have a very limited amount of area that you can bring those people into the state and show them because the rest of it is all closed up to access, pretty soon as those numbers grow the quality of that vacation to Alaska will start to drop because youre simply pushing too many people into too small of an area. For this industry to grow to its potential over the years, they have to have more access to the public lands and they have to be able to maintain the high quality of the visitor experience to Alaska that theyve enjoyed for so long and that gets them such a good reputation throughout the world really as a world-class destination. And so, their challenge really in the next ten years and twenty years and beyond is to make sure theres adequate access in the public lands without jeopardizing the quality of that experience into those areas. Number 488 CHAIRMAN MASEK asked if there were any more comments. Hearing none, she posed this question: To what degree are AVA policy decisions driven by larger contributors to the state? MR. BINKLEY explained at AVAs level, theyre an industry organization; anybody can join the AVA. They encourage people to; they are always out trying to seek more members. Everybody gets a vote on who gets onto the board of directors of the AVA. Thats how their organization is run. They have large operators who are represented on the board and, they have very small operators. Their newest board member is from Tok Junction; he and his family run an recreational vehicle park in Tok. They also have some representatives from Holland America Lines or Princess Tours who also serve on the board. They have a good cross-section. The board members are elected by the membership, the membership is open and everybody gets a vote. But its usually those people who are willing to take the time and effort to participate like any volunteer organization. Theyre not paid any salary or receive any compensation; they have to take care of their own travel, donate their time. And its the people who are willing to contribute the time into the AVA that usually are the ones that have the most affect on where the organization goes and what their policies are, because theyre willing to put in the time and effort. Number 509 REPRESENTATIVE AUSTERMAN asked if theyve hired a new executive director? MR. BINKLEY replied yes and proceeded to introduce her, Tina Lindgren. She worked as a staff member for many years and then was hired by the ATMC to be their executive director. Then when their executive director left they were able to entice her to come back to work for the AVA and theyre pleased to have her. Number 515 REPRESENTATIVE AUSTERMAN commented on the drastic price change for the advertising in the Destination Alaska and they raised quite a bit of hackles of a lot of the small industry people. Is that still an issue? Has any of that still been resolved or is it just continuing to (indisc.--noise). Number 518 MR. BINKLEY allowed that is an issue, a tough one for them, a dilemma really. The legislature over the years has raised the amount that the industry needs to contribute to match the state's portion; its gone from 15 percent up to 25 percent. So as that percentage has increased, their mechanism for raising money within the industry is selling space in the travel planner, its like a large brochure that goes out to people that are interested in traveling to Alaska. Theyve had to raise the advertising rates in order to generate the revenue to meet the state mandated match. Its been a burden on a lot of small businesses; a lot of small businesses dont have a big advertising budget and this is the only mechanism they really have to reach a national audience. You can have your own brochure, you can put it on a brochure rack with your local convention and visitor's bureau or you can have a little budget to work around your area to try and get people to try and come into your business but, theres no way a small business, even like their business can go out and have any kind of meaningful exposure on a national level. But that vacation planner allows them to do that. Unfortunately, theyve had to raise the rates in that in order to meet the mandate by the state, of the percentage of match. Now one thing that theyre planning on doing this year is having a listing and, by the way, former Senator Brad Phillips is here--hes the chairman of the ATMC and he maybe able to testify to some of this more accurately than Mr. Binkley could and more in depth but, theyve established a listing which is $275 for a three line listing in the vacation planner. Theyre hopeful that will allow a lot of the smaller operators, when they raised the rates, who couldnt afford to advertise anymore to come back in and advertise and at least get a very small message out about their product. Number 541 REPRESENTATIVE AUSTERMAN asked if the legislature approves the Governors increase $5 million-$10 million back to the ATMC is that going to drive the rates back down? MR. BINKLEY responded that it actually wont. He shouldnt be speaking on behalf of ATMC because hes not even a member of that organization. The difficulty, the challenge, for the industry will then be in raising $2.5 million to match that $7.5 million which would be from the states portion. Thats going to be a real challenge, a significant challenge and he doesnt see the council being able to cut the rates and increase the revenue to meet that match. Number 549 REPRESENTATIVE AUSTERMAN stated that it was a big concern. MR. BINKLEY said thats a tough one. Already the rates in the vacation planner are inverse from what they would be in a normal publication. In a normal publication, the larger your ad is the cheaper it is per column inch. If you buy a full page, you get a cheaper price than if you buy one-eighth of a page ad. In the vacation planner they do it the other way around. If you buy a full page ad, you pay far more per column inch than if you buy one column inch. That is so that the larger advertisers pay proportionally more than the smaller advertisers. That was a way to, in effect, subsidize the smaller operator so they could still afford to get a small amount of space but, not have to pay a pro rata share. Number 559 REPRESENTATIVE JAMES remarked that this is interesting the way this conversation is moving, and shes not sure this is the way they ought to be moving but, she has a couple comments relating to herself. She has a little seven room motel and when it comes time to for her to determine what she can pay for advertising, its very small. The reason its very small is because she has to find a direct relationship to that money that shes spent on advertising to someone to stay in her place. If she were to spend $270 for three lines in the vacation planner maybe once every three years, shed get another person to stay overnight in her motel. So that is not a decision that shes going to make. She thinks probably those people who are making that decision are not looking at it that seriously and they are contributing to the overall thing thats going to bring people into the state and they have to feel some connection to that. In that whole process they cant believe that its going to help them but, its going to help the industry and by the industry being helped, its going to be helping them. But for those people that cant afford it, that doesnt even make any difference. Just for the concern that Representative Austerman has represented of people out there who would like to be part of the vacation planner, a lot of people just cant and somebody else has got to carry the ball on that because there just isnt enough money. She doesnt even have very much in the phone book either because she doesnt think that a bigger ad in the phone book gets her any more people, either. Shes measured who comes and who doesnt come. So those are the decisions that small businesses have to make. You could pay everything out in advertising and probably not--where is the balance? Just for the information of the people, I can understand Representative Austermans concern because it is a real spendy thing for not much personal benefit. Number 577 MR. BINKLEY related that its an excellent point that shes brought up about the fact that $275 goes for more than just the three lines you get in the vacation planner, that really is the match for the television advertising, the public relations, all of the things that really drive more people coming up to Alaska. They may not see your three line ad in the vacation planner, but they may be in Alaska because they saw a television ad. REPRESENTATIVE JAMES suggests then maybe its a donation. TAPE 95-1, SIDE B Number 004 CHAIRMAN MASEK asked is the AVA open to ideas this committee will present to explore new direction, techniques and strategies in order to fully benefit all sectors of the visitors economies? MR. BINKLEY said you bet. CHAIRMAN MASEK related that this is one of the first meetings to get people to come in to testify and theyre just beginning this process. Theyll be reaching out to more agencies statewide. She notes her appreciation for his time and coming in to share with the committee. She asked for further questions or comments from the committee members. Number 020 REPRESENTATIVE AUSTERMAN inquired about in-kind versus cash contributions; what percentage is basically cash, like through the book, versus in-kind contribution, or is this all cash matched towards the... MR. BINKLEY answered that the travel planner generates cash. It goes towards the entire program. There is a tremendous that is raised in products and services that are contributed by the industry to promoting Alaska that were not recognized for in that 25 percent. REPRESENTATIVE AUSTERMAN confirmed that its strictly cash thats recognized for the 25 percent. MR. BINKLEY affirmed thats correct. But there is a great benefit that comes from the entire state from the industry contributing products and services to get more exposure for everybody in the state. And also the expertise thats brought to the council level on a volunteer basis for many of them on the industry side. Number 039 REPRESENTATIVE AUSTERMAN remarked that he knew there were some forms sent out each year to try to figure out exactly what that percentage is of in-kind as compared to the cash and compared to what the state puts in. Does he have those figures? MR. BINKLEY is given the figure $3.5 million in-kind. Number 045 CHAIRMAN MASEK gave opportunity to the observers to ask questions. MR. BINKLEY asked permission to introduce John Litton, with the AVA in charge of government relations on their executive committee and so they probably will be seeing a lot of him down here and will help out with any testimony that they have and Tina Lindgren who he introduced as their executive director and also Senator Brad Phillips the chairman of the ATMC. Dennis Brandon who is the past president with Westmark Hotels and Laurie Herman who is their executive secretary and serves on their executive board at the AVA as well. He thanked the chair for the opportunity to testify before their committee and noted appreciation for her interest in tourism and the impact that it has on the state. Number 065 CHAIRMAN MASEK thanked him. She reiterated her feeling that its what the state will be leaning toward more in the future as far as generating revenue. She knows a lot of the tourism is focused on summer mostly and shed like to hear more ideas on what AVA does for off-summer season, as well as going into the winter part activities since our state has approximately six months of winter here and it does carry out pretty long for some of the business owners in the state who cater to tourism in the winter and shed really would like to hear more on that subject sometime. She appreciated him having all the AVA members here and thanked him for his time. She then asked if any observers would like to share any overview, opinion, or comments regarding Alaska tourism? Number 082 MR. BRAD PHILLIPS, Chairman, Alaska Tourism Marketing Council, recommended that she might talk to somebody from the ATMC. As an example, she just mentioned about the wintertime. They have a fall/winter/spring committee and they have a budget for promoting wintertime traffic to Alaska . They bring travel riders and tour operators in the wintertime and at tremendous response for the Iditarod, for any of the activities in the wintertime. So they are not unaware of that and theyre trying their very best to expand tourism year-round because that would be better for all of us. Its hell trying to make a living in 100 days, as she probably knows. So theyre as anxious as anybody. One of the problems they have is a perception; most people dont think of Alaska as a vacation in the wintertime. There are few places that compete with that, like Mexico, Hawaii and Palm Springs but, theyre doing their damndest to get the adventurous person who wants to experience Alaska in the wintertime. He thinks theyre making some real headway on it; their agency has been really working on that program. For the advertising that they do, they put out a special section of their travel planner for winter which has never been done in the past two years. Maybe before the committee finishes their work here, theyll have an opportunity to lay out what their program is on the ATMC. He mentioned that hes heard a member of the committee knows pretty well what it is who has been pretty quiet but, he does know it because he served on the ATMC. Hed be glad to lay that out for them sometime to give them a little more depth of understanding in and maybe a little more confidence in whats happening in the marketing program. Number 121 ROD BRADLEY, Owner of Bradley Reid Communications introduced himself and spoke about how a year and a half ago they changed some of their television commercials as well as added to the pool of television commercials fall/winter/spring scenes in their television commercial and theyre running that about one-third of the schedule of television commercials or one-fourth was that commercial showing scenes of fall/winter/spring activities. So they had some facts and figures how many tens of millions of impressions going out to the public. Of course, its kind of a moot question right now because with the budget cuts they dont have any television running. But when they get more money and they have television running there will be images of fall, winter and spring of Alaska out there to the vast public. Number 135 CHAIRMAN MASEK inquired since they have shown the commercial is there any impact on the visitors coming into the state during the fall/winter portion? MR. BRADLEY declared yes, he thinks there is. He thinks theyre seeing an increase; theyre not dramatic numbers because a lot of the problems they have and this is something the fall, winter and spring committee would have to speak to but, a lot of the problems that they have is an inventory problem that they didnt have a lot of things to sell in the fall/winter/spring and more of those--its kind of like a chicken or the egg; they get a little bit more visitors they have a few more people who decide to stay open all winter and then more visitors and more stay open and then you get an Alyeska resort that builds a nice first-class facility for the winter. So he thinks youre seeing this come along and will continue to come along as long as they have the marketing going thats going to drive the demand. What you have to do is drive the demand before people start staying open in the winter and so on. And the only way youre going to drive the demand is to get the television commercials going and that way you need more budget. And here we are back at budget. Number 152 CHAIRMAN MASEK indicated back to the budget that we have to learn how to do more for the dollar. REPRESENTATIVE JAMES inserted that even though she is open and supportive of wintertime tourism activities in the state, she likes to remind people that our highways are very dangerous in the winter and the people that would rent the cars and so forth that would drive on our roads and are not familiar with the kinds of icy conditions that we have, shes extremely concerned about the Parks Highway as an example because its a great part of her district--the people that come to Mount Denali and the serious accidents that they have on that highway traveling with the truck traffic and everything and so, she just wants to keep reminding everyone that while were planning on winter tourism lets be sure that we have some way for these people to get around and make it safe for our population and also safe for those tourists. Number 167 CHAIRMAN MASEK pointed out that she lives near Anchorage area and that when we do get the snowfall you have numbers of accidents as Representative Porter may well know having served on the police department and how we can tell when new people are coming to the state who dont understand how to drive but, then again we also have many Alaskans who also have the same problem. Shed like to just share a few things from her own perspective as shes traveled over to Europe many times and she knows we focus a lot on the Orient for people coming to Alaska to visit. But we do have a great interest in Europe for Europeans to come to Alaska. Shes made many trips herself personally and traveled to many big tourism trade shows. She went to one in Italy and they had nine football stadiums that were full of people from all over the world and she was there in the U.S. booth and during one day they had over 300,000 people coming through. They were very interested in learning more but they said its so cold, that they cannot come to Alaska in the winter and theyre even afraid to come during the summer because they think people live in igloos up here all year-round. And she thinks thats a turn that we must try to work on because the European customers are traveling and they do have the money to come to Alaska and she thinks we can offer them more year-round, which many of the small business owners here really can rely on and use not just for three months of the year but try to make it a 12 month availability for a visit or a plan for a vacation. Those are just some of the details that have been going through her mind for a long time and she thinks we really need to do more in the European side. Number 202 REPRESENTATIVE PORTER offered a wrap-up statement. Dont give up any idea that has any kind of merit. Weve mentioned that Palm Springs has got such a natural environment that can induce people there that we cant compete with. Well one of the things that Palm Springs uses to draw people to Palm Springs, albeit a certain small segment, is dog racing. He means--mushing! Twenty minutes out of Palm Springs on the tram they have dog mushing; a ride on a dog sled. Maybe we should induce people to get a suntan at Lake Spenard. Number 214 DENNIS BRANDON, Westmark Hotels, mentioned that he served on the Denali's task force which was a task force put together by the National Park Service to take a look at access issues or issues surrounding Denali. And out of 14 day-long meetings came a report that addressed in part access today and some of the problems that exist because of the single road going into this enormous area that we call Mount McKinley or Denali. Part of the recommendation was to, in the long-term, look at a potential new venue which would be the Tokasitna region or south Denali area to develop because it was noticed by the entire committee that we do have a real problem with access into the park. Thats only going to compound itself over years if we dont look at not only Denali but other areas in terms of infrastructure development and basically a strategic planning process thats going to incorporate more product, for people to come to visit Alaska, to enable them to use. So the recommendations that came out of the report were favorable. The access issue itself was not dealt with as in-depth as much as the National Park Service Board would have liked to have seen so, they did offer an amendment to the report itself to look at favorably a northern route access into the park which was adopted by the National Park Service Board and he went back to Washington to testify in favor of opening that access. It is he thinks a two-fold problem as Rod had indicated too, the product--the chicken and the egg--they in combination with promoting the state need to look at the infrastructure development of the state and encourage whatever they can to work with the department working with the Department of Divisions working with divisions to look at what would be proactive development in this tourism industry to make certain of that infrastructure that it does suit the long-term need for this growth that were anticipating. So he thought it might be at least worthwhile to look at that in your plans as well as the marketing plan. Number 249 CHAIRMAN MASEK thanked him for bringing that forth to the committee. She knows it came up the year before when they had some people contesting to going in and driving into Mount McKinley or the Denali area. I would really like to encourage him to share the information with the committee members on his trips and updates as to the access problem. Number 256 REPRESENTATIVE JAMES is glad that she brought up that point because she has been a real strong supporter of the Kantishna group and the rail among northern access thats going in there and as she understands it currently theyre having some success in Washington, D.C. to get the attention of the National Park Services to be able to get access through that for the rail and the interesting thing about that rail access is that it would be all funded with private funds so, it wouldnt be anything wed have to do and certainly give us twice as much access to a park that is totally inundated with people that dont always go away with a good experience. So if were going to keep tourism coming to our state we do need to be sure that those tourists come here and go home happy. And we cant do that right now. Any kind of support that you would get out from the people in this room and/or people in the committee to support that issue of that additional access into there or anyone who has any questions about it shed be happy to provide them with the information regarding that light rail that wed be putting in there. MR. BRANDON added that there was also one recommendation that did get carried forward that was a road improvement into Taklameka which is an extension of the natural history tour by about another eleven or twelve miles which could be done immediately and that one could very well move forward rapidly with support from the state. He does have a full report that he could make available to each and every one of the committee members if theyd like outlining not only the recommendations but the amendments that included the recommendations for that and other (indisc.) access. Number 279 CHAIRMAN MASEK announced that would be really great. She would appreciate it if he can share it with the committee. Are there any further comments from other agencies? Number 282 MR. BINKLEY asked for another allowance to reintroduce Linda Anderson, she is doing the lobbying work for the AVA as well as Sam Kito. Theyre two individuals they can rely on or call on if none of the others are around to get information about the association or be updated on whats going on and theyre very pleased to have Linda join them this year to help in the lobbying effort. They have a small business as well and theyre glad to see them help out. ADJOURNMENT CHAIRMAN MASEK thanked Mr. Binkley. She then adjourned the meeting at 4:10 p.m.