HOUSE SPECIAL COMMITTEE ON INTERNATIONAL TRADE AND TOURISM February 21, 1995 2:35 p.m. MEMBERS PRESENT Representative Beverly Masek, Chairman Representative Alan Austerman, Vice Chairman Representative Jeannette James Representative Pete Kott Representative Irene Nicholia Representative Brian Porter Representative Caren Robinson MEMBERS ABSENT None COMMITTEE CALENDAR * HB 180: "An act relating to liquor licenses issued to a hotel, motel, resort, or similar establishment; and providing for an effective date." PASSED OUT OF COMMITTEE Alaska Tourism Marketing Council Overview (* First public hearing) WITNESS REGISTER REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature State Capitol, Room 102 Juneau, AK 99801 Phone: 465-3743 POSITION STATEMENT: Prime Sponsor of HB 180 ROBERT DINDINGER, Vice Chair Alaska Tourism Marketing Council Department of Commerce and Economic Development 9085 Glacier Highway Juneau, AK 99801 Phone: 789-0052 POSITION STATEMENT: Gave overview of Alaska Tourism Marketing Council PREVIOUS ACTION  BILL: HB 180 SHORT TITLE: LIQUOR LICENSES FOR RESORT/LODGES SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 02/15/95 369 (H) READ THE FIRST TIME - REFERRAL(S) 02/15/95 369 (H) ITT, CRA, L&C 02/21/95 (H) ITT AT 02:30 PM CAPITOL 408 ACTION NARRATIVE TAPE 95-3, SIDE A Number 004 The House Special Committee on International Trade & Tourism was called to order by Chairman Beverly Masek at 2:35 p.m. Members present at the call to order were Representatives Masek, Austerman, James, Nicholia, Porter and Robinson. Members absent was Representative Kott. REPRESENTATIVE KOTT arrived directly after the call to order. HITT - 02/21/95 HB 180 - LIQUOR LICENSES FOR HOTELS/RESORTS Number 030 REPRESENTATIVE JEANNETTE JAMES, PRIME SPONSOR, stated that HB 180 was a direct result of Michael Tittle, owner of McClaren River Lodge, and others being unable to obtain a liquor license within the Mat-Su Borough as his lodge does not have at least 40 rooms. This is a cooperative effort between remote lodge owners and the Alcoholic Beverage Control (ABC) Board to correct an inequity. Under current law, some small lodges which happen to be located in a remote corner of a large unified population area cannot get a liquor license. REPRESENTATIVE JAMES explained that the law now reads if a person wants to develop a small lodge or tourist facility in a remote or inaccessible area of the Mat-Su or Kenai Borough, the lodge would be required to have 40 rental rooms to obtain a full-service liquor license. This requirement is excessive and unfair. Without a liquor license, a lodge has very little chance of success. This is not a liquor issue; this is an effort to remove a roadblock created by an inequity in our laws. REPRESENTATIVE JAMES noted a letter from the ABC Board Director, Patrick Sharrock (may be found in the House International Trade and Tourism Committee Room, Capitol Building, Room 418, and after adjournment of the second session of the 19th Alaska State Legislature, in the Legislative Reference Library). She worked with the ABC Board to draft this legislation and the ABC Board is in support of it. The ABC Board knew of this loophole, but there wasn't anything the ABC Board could do about it. The exact wording of this bill allows a liquor license to "a hotel, motel, resort or similar business, that is inside a unified municipality or organized borough, has at least ten rooms available to the public for rent, and from the nearest first or second-class city or established village, cannot be reached by highway, or could be reached by highway during no more than 10 of the 12 months in the calendar year preceding the year in which the issuance or transfer is requested; in this paragraph, `highway' has the meaning given in AS 28.40.100." Number 089 REPRESENTATIVE BRIAN PORTER asked if she wanted to say on line 8, page two "a hotel, motel, resort, or similar business `outside' a unified municipality..." REPRESENTATIVE JAMES responded that's the problem. The existing law says if you are within a municipality, that [status] dictates how many rooms you have to have. There's not a problem currently with the people outside of an organized borough. Had Tittle's lodge been a mile further north, he would've been in the Denali borough. That borough's population is so low that he would have been able to get a license. The law is established by the population within the municipality. REPRESENTATIVE PORTER expressed concern for the effect on his district. REPRESENTATIVE JAMES doubted that a small business in Anchorage would meet the accessibility criteria that this bill covers. She reiterated the ABC Board's support. REPRESENTATIVE ALAN AUSTERMAN took exception to the sponsor's statement that lodges aren't likely to succeed without liquor licenses; that's not the case. Secondly, he had a lodge within his district that applied for a license. The problem was that the lodge was within a 20 minute-skiff ride from one of the villages. The village didn't have a liquor license within it and didn't want one that close. Number 147 REPRESENTATIVE JAMES said that since those villages have populations of less than 1500, this bill doesn't change anything for them. She recognized that the villages, as part of the Kodiak borough, would be held to the minimum number of rooms for Kodiak's population and then conceded that this bill may adversely affect his district. REPRESENTATIVE AUSTERMAN said this bill lets anyone with 10 rooms available to the public obtain a liquor license. REPRESENTATIVE JAMES stressed that any issuance is an ABC Board decision, it's not automatic. In Tittle's case, the ABC Board was willing to issue the license, but was unable to under the existing law. Although someone might qualify, the ABC Board could still deny it. She emphasized they're only reducing the number of rooms that one has to provide to the traveling public. REPRESENTATIVE CAREN ROBINSON affirmed that the ABC Board makes thoroughly-researched decisions and feels that this is a minor change. REPRESENTATIVE PORTER would like to hear from the ABC Board. He agrees that while normal licensing has to meet many stringent requirements, this particular license is a convenience license as it is an exception to nine-tenths of those requirements. Once someone qualifies under this provision, i.e., the licensee is a felon, he'll get the license. Number 215 REPRESENTATIVE JAMES felt there's not a case wherein a license would be granted by the ABC Board over area residents' objections/opposition. REPRESENTATIVE PORTER responded that the way this is crafted, the ABC Board doesn't have a choice. In his experience, the board would only be beholden to meeting the requirement of the statute. If the statute requirements are met, that's it. A hundred people living in close proximity not liking it are not included for consideration by the ABC Board in this bill. CHAIRMAN BEVERLY MASEK noted that this bill will encourage economic development of small businesses in rural areas and offer incentives to tourists. She referenced the letter from Pat Sharrock and the support of the ABC Board. She asked Representative Porter what additional information he wanted from the Board. Number 269 REPRESENTATIVE PORTER wanted to know if this bill would provide someone in Anchorage with the opportunity to get a liquor license they otherwise would not be able to get. He doesn't want to pass a law that accommodates one person that has an adverse impact on ten others. REPRESENTATIVE AUSTERMAN concurred in wanting to clarify his concern with the ABC Board. REPRESENTATIVE PETE KOTT reflected that this is a fairly isolated case. He further stated that under AS 04.11.400(d) it says, "The board `may' approve the issuance..."; it doesn't say shall. If those questions need to be answered by the ABC Board, they will be resolved in Labor and Commerce. They don't need to hold it up in this special committee. REPRESENTATIVE IRENE NICHOLIA felt the committee should resolve the questions before the ABC Board before passing it out of committee. REPRESENTATIVE ROBINSON suggested that since they are not comfortable with passing this out of committee, they should get Mr. Sharrock on-line in the next meeting to settle these concerns to enable moving this next week. REPRESENTATIVE KOTT reiterated that this is a small issue. If this issue is in fact as serious as could be portrayed, then he would not be willing to push it out of Labor and Commerce. REPRESENTATIVE JAMES felt that if they passed this on to the next committee with their concerns put forth, that would move it along. CHAIRMAN MASEK moved to adopt the zero fiscal note. REPRESENTATIVE AUSTERMAN moved that they forward this bill on to Community and Regional Affairs with individual recommendations and the zero fiscal note. Number 364 Hearing no objection, CHAIRMAN MASEK stated they will move this bill out of committee to Community and Regional Affairs. HITT - 02/21/95 ALASKA TOURISM MARKETING COUNCIL OVERVIEW Number 393 ROBERT DINDINGER, VICE CHAIR, ALASKA TOURISM MARKETING COUNCIL, began his overview by announcing the Alaska Tourism Marketing Council (ATMC) just hired a new executive director, Dave Carp. Cooperative marketing for tourism promotion has been around for 20 years. The formal state structure in the ATMC has been around for about seven years. The budget a year ago was $7.5 million; last year it was $4 million. That has cost the ATMC the television advertising. The supplemental budget going through now includes $2.5 million for television. MR. DINDINGER presented the ATMC program as divided into two parts: Print advertising and television. The print portion is direct mail and collecting names/addresses of people who are interested in traveling to Alaska. The ATMC makes those names available to businesses throughout the state. The businesses can then, with target-precision, send their few brochures to people likely to visit and buy their services. That part of the program costs $4 million. The television portion is generating awareness of Alaska to people who know nothing about Alaska; creating an initial stimulus for traveling to Alaska. The television effort this year gave about 81 million exposures, most of it on cable. It ran for three weeks and was over in December. MR. DINDINGER explained that 64 percent of the people who will book a summer vacation to Alaska do it between March and May. The ATMC will have no television exposure during that time. It's particularly unfortunate that the ATMC won't have any follow-up effort on television to the Good Morning America segment on Alaska. One exposure usually doesn't accomplish much; it takes multiple exposures. The ATMC feels it will take at least 1/4 million to launch a successful campaign. When Jay Hammond was Governor, the ATMC was spending a total of $10.5 million on promotion of Alaska and $5 million on television alone. There is still a lot of Alaska on television due to the cruise lines advertising their Alaska experience. However, they're selling cruises and motor coach tours, not the entire expanse of Alaska. Number 447 REPRESENTATIVE AUSTERMAN asked since the ATMC cut the television, is that indicative that the ATMC feels the print matter is more important than television? MR. DINDINGER responded that the print advertising is the base program. The operators in the state are dependent year to year on getting that list. If the ATMC went a year without providing it, people would go bankrupt. The television campaign is a long-term project and a multi-year effort. The ATMC realizes they should be doing television at all cost, but they don't have the will. The only way to build a bigger pool of consumers is through television. However, the ATMC doesn't want to see the smaller businesses go bankrupt without the print advertising. CHAIRMAN MASEK queried if the ATMC is looking at what other states are doing to gain a larger share of the marketplace. MR. DINDINGER said the ATMC is, although Alaska's real competition is Europe (the number one competitor), along with Mexico, the Caribbean and Hawaii. The kind of money it takes to vacation in Alaska is comparable with a trip to Europe. Alaska is being overwhelmingly out spent when it comes to promoting tourism. With their consistently declining budget, the ATMC hasn't been able to be too reactive to outside marketing programs. Mr. Dindinger expressed that the ATMC would be willing to consider new approaches to television advertising that are successful in other states. Number 491 REPRESENTATIVE JAMES expressed her concern for services (i.e., roads, emergency, etc.) that are not funded by the tourism industry but have to exist to provide a nice place for tourists. MR. DINDINGER replied that the ATMC is in the marketing business, not the infrastructure or long-term strategic planning business. He felt that Alaska was going to have to succumb to a tax (income or property) in the future. REPRESENTATIVE AUSTERMAN offered that if it comes to a state tax to help fund an industry, that industry should have to pay to help support the infrastructure of the state. MR. DINDINGER observed the ATMC has no position on taxes, whereas the Alaska Visitors Association (AVA) is supportive of a broad-based dedicated tax. The travel industry is not volunteering to be taxed. REPRESENTATIVE JAMES expressed a concern for too many tourists adversely affecting the state's residents' ability to live comfortably. She feels that money spent on marketing needs to be matched with money towards infrastructure, to be able to handle larger numbers of visitors. TAPE 95-3, SIDE B Number 002 MR. DINDINGER agreed. He commented that we should promote alternative destinations within Alaska with the national parks and other areas that aren't visited much. Although more visitors go to Disneyland in a day than come to Alaska in a year, he contended that the state could handle those numbers with money and a long-term plan. CHAIRMAN MASEK inquired how closely the ATMC is following the blueprint for Destination Alaska study. MR. DINDINGER reflected that the Destination Alaska study was predominately about infrastructure development. It was almost a planning and zoning document where tourism ought to happen. It didn't deal with marketing, so it's had little effect on the ATMC. For Destination Alaska to be successful, it will require participation by the Department of Transportation and Public Facilities, state parks and other state agencies. Number 044 MR. DINDINGER believed the input from 35 communities was the basis for the recommendations for that study. It was an AVA project. The general thrust of that input was that most communities want to participate in the economic benefits of tourism while trying to protect their own values/community life. He felt that it got a lot of communities much more proactive in infrastructure development and tourism planning. Number 094 MR. DINDINGER mentioned the cost of the study was about $300,000. It was commissioned by the AVA. The AVA raised the money from the major operators within the industry. REPRESENTATIVE AUSTERMAN commented that many small communities were unhappy with the Destination Alaska recommendations. The highlighted areas to be immediately taken care of were through the main-flow areas, whereas deficiencies were noted in the smaller areas. He felt learning the source of the sponsors of the study reflects how the results were determined. MR. DINDINGER proposed that a responsibility of the state should be to help the communities that want a bigger role in tourism with technical advice on how to create their own Destination Alaska projects. He considered that the consultants who did this study, did a good job in pointing the state in the right direction in terms of what needs to be done to provide the services that will be required as a world-class travel destination. Number 173 REPRESENTATIVE AUSTERMAN supported that the study was a good plan for long-term planning. However, he reiterated that as the report was made available to the general public, a popular interpretation was that the communities with minimal infrastructure were construed as places to avoid versus the others which were recommended. MR. DINDINGER illuminated that they would welcome new and successful techniques in marketing, as opposed to the print advertising and television the ATMC is now doing, from the Division of Tourism. REPRESENTATIVE PORTER questioned why the two agencies aren't considered together as a whole. MR. DINDINGER replied that the ATMC and the Division of Tourism used to be one entity, the Alaska Visitors Association Marketing Council. It was a business group that consulted with the state on how marketing should be done. It was a voluntary program with no required matching program. Then the state decided it was going to stay with the international business, but the industry could participate in the domestic marketing if they paid, at that time, 15 percent. Legislation drew those lines; that's not particularly what the industry wanted. REPRESENTATIVE PORTER asked if the marketing techniques are that different for international versus domestic to preclude a unification between the two agencies. Number 233 MR. DINDINGER said that's a much debated issue with no clear consensus. He felt that some techniques are different, yet the principles are the same. There are some operators that wouldn't be interested in participating in a foreign marketing program, waiting years for any noticeable results. He thought it could be done either way, but it was the call of the Commissioner of Commerce. He did state that the industry would like to participate in the decisions; the industry views the state more as a support service. REPRESENTATIVE AUSTERMAN commented that the percentage of foreign visitors is 6-8 percent, which the Division of Tourism markets. That leaves 92 to 94 percent of the visitors that the ATMC handles. It is his contention that issue needs to be looked into. He changed the subject to the House bill that would create a sport fish marketing council and asked for Mr. Dindinger's thoughts. Number 279 MR. DINDINGER said the ATMC used to do special-interest marketing. The best way to bring more fisherman is to run a fishing-oriented ad. They have done that in the past, but not to the extent that meets all the needs of the entire fishing community. The fishing industry has identified a mechanism to fund their marketing effort with. He has mixed feelings. When there are so few dollars for tourism marketing, he hates to see it splintered out to a lot of small efforts. Specialized advertising went away with the budget cuts. He feels this effort is a reaction to the fact that less marketing is being done. CHAIRMAN MASEK asked how the ATMC decides policy. Does it involve a broad spectrum statewide? MR. DINDINGER allowed that it does. Seven of the ten AVA seats are sold to the largest contributors and three are usually given regionally; one each to Southeast, Southcentral and the Interior. Then there are ten Governor appointees. They have been receptive to advice and criticism. He contended that the biggest safeguard for preventing one special interest having control was that under statute, they must have 11 affirmative votes to take any concrete action or in determining policy. He confirmed that all segments of the industry are involved in ATMC's decision making and there is no conscious effort to preclude any group. Number 368 REPRESENTATIVES AUSTERMAN and KOTT both confirmed from their personal experience, the diversity and objectivity of the council and decisions made within that council. REPRESENTATIVE KOTT observed that although it is difficult to pinpoint, he feels the tourism industry does contribute to the infrastructure of the state. Maybe the state should redirect attention to areas in rural Alaska that are not at capacity during the summer months. The state should place more emphasis on moving tourists through the entire state than concentrating on the dense areas. On a side note, he offered that the state of Ohio spent three times the money on tourism that Alaska did last year. Number 430 MR. DINDINGER concluded that while the last few years have been beneficial, that is a direct correlation to the television the ATMC ran four and five years ago. He expressed concern for the future of small businesses in the industry. REPRESENTATIVE KOTT related the example of California cutting their steadily increasing marketing budget by about 40 percent. It wasn't the first year, but the next year they not only lost tourism, they also lost residents. ADJOURNMENT There being no further business before the committee, CHAIRMAN MASEK adjourned the meeting at 3:58 p.m.