Alaska cruises strengthen with higher capacity, Europe fears

Cruise lines in Alaska had their best summer in seven years
and are poised to do even better in 2017.

The destination has been one of the prime beneficiaries of a
turn away from Europe as a cruise destination for North Americans, a trend that
began in summer 2015 with the refugee crisis in Greece.

“There’s been a little shift for me from Europe to Alaska
for a lot of my U.S. clients,” said Kathleen Peters, a Cruise Planners
franchisee in Orlando. “A lot of them are well seasoned, so they wouldn’t even
say that it was about that necessarily. But when it comes down to making the
choice, it’s interesting that so many more of them are [traveling]
domestically.”

As a result, Alaska recorded its 1 millionth passenger on
Sept. 22, the first time it has surpassed that threshold since 2009.

Beyond the drop-off in demand for Europe, several other
factors are fueling a better market in Alaska. Some lines, including Royal
Caribbean International, have increased their capacity in 2016.

This year, Royal deployed the 3,840-passenger Explorer of
the Seas to Alaska, the first time such a large ship has operated there. Moving
the Explorer onto Alaska itineraries increased Royal’s capacity by 12%.

Also helping the trend toward more passengers are pier
improvements in Juneau and at the Icy Strait Point private port in Hoonah.
Previously a tender port, Icy Strait opened a 400-foot floating pier this year.

“It’s a phenomenal facility,” said John Binkley, president
of CLIA Alaska. “You don’t feel as if you’re in a port. You feel as if you’re
in an Alaska setting.”

Juneau is building a new pier, and Binkley said the first
phase was completed this year. The $54 million pier is the first of two that
will enable the city to accommodate ships longer than 1,000 feet.

“It’s possible that in 2018 we could see some even larger
vessels, so ports are now looking at that,” Binkley said.

Cruise ships account for about half the annual visitors to
Alaska. Cruise visitors peaked in 2008 at 1.03 million but fell below 1 million
in 2010 and stayed there for five years before rising above 1 million this
year.

Binkley attributed the falloff to a 2006 voter initiative
that created a $46 per person head tax on cruise passengers and made changes in
the regulatory framework under which cruise ships operated.

“As a result, cruise lines deployed ships elsewhere,”
Binkley said. “We’ve slowly been working our way back from that.”

The tax was reduced to $34.50 in a 2010 settlement between
the state and the cruise industry. Binkley said ships didn’t leave right away
after the initiative was approved and didn’t return as soon as it was modified.

“They pre-plan about two years in advance,” he said.

Planning for 2017 includes a seventh Holland America Line
ship, the Oosterdam, which will sail in Alaska rather than on the European
itineraries it had been planning. More capacity translates to more bookings.

Melissa Haefele, a Cruise Planners franchisee in Franklin,
Tenn., near Nashville, said, “This year was up from 2015, but what I’m seeing
is my 2017 bookings are greatly increased from what it was for 2016.”

Haefele said that while her Alaska bookings tend to be
cyclical, concerns about Europe are steering it for next year.

“Personally, I’m not the least bit scared to travel to
Europe,” she said. “But I do believe there are some clients who are saying,
‘Let’s just stay closer to home.’” 

As demand has grown, pricing has firmed, especially going into
2017. “They always have a low leader here or there, but it’s usually for real
shoulder season, May or August,” Peters said. “I’m not seeing the deep
discounts and deals [on Alaska cruises] I’m seeing in other destinations, which
must mean overall demand is strong.”

Binkley said that with bigger ships, improved piers and
growing consumer demand, the sky’s the limit for Alaska.

“If the demand is
there to get to 2 million, Alaska can handle 2 million,” he said.