Tallying Up the Economic Fallout from the Lost 2020 Alaska Cruise Season
Call it the cruise season that never was. Even as the global coronavirus pandemic wears on and shuts down the majority of cruise operations some six months after it began in earnest, few destinations have suffered the way southeast Alaska, British Columbia and Washington state have.
The 2020 Alaska cruise season was poised to be one of the busiest and most profitable on record. Port cities from Vancouver to Seattle were citing capacity problems, with berths full to capacity for nearly the entire season that typically runs from April to October.
Roughly 1.44 million cruise passengers were expected to sail to Alaska this year aboard a total of 43 different ships making over 600 individual sailings. More than $800 million was expected to be spent by these passengers, separate from fees and expenses ranging from berthing to provisioning services and pilotage that can bring nearly $1 billion in additional revenues for a turnaround port.
None of that, however, came to pass. The global health pandemic sank the 2020 Alaska cruise season before it could even begin. For the first time in living memory for many West Coast residents, not a single cruise ship completed even one voyage to the Last Frontier this year.
This past spring, Cruise Critic wrote about the prospect of a damaging economic year to come should the season be partially or wholly cancelled. Now, at what should have been the end of the most prosperous season on record, all that is left to do is tally up the staggering losses along the West Coast and hope for better things to come.
Southeast Alaska: Reliant Upon Cruise Tourism.
In many ways, Southeast Alaska is similar to the Caribbean in that it relies heavily on tourism for economic income and local job creation.
According to Rain Coast Data and Juneau's Southeast Conference Visitor Industry Committee, nearly 90 percent of all visitors to Southeast Alaska arrive by cruise ship. Popular ports of call include major towns like Juneau and Ketchikan, along with smaller municipalities like Sitka, Wrangell, Petersburg, Skagway, Haines and Icy Strait Point, operated by the nearby Tlingit village of Hoonah.
Alaskan cruises also provide economic benefit to a number of other locales. Cruises routinely leave from Vancouver, British Columbia, and call on the provincial capital of Victoria. A handful call in more out-of-the-way ports in BC, including Prince Rupert and sometimes Nanaimo. Smaller, more expedition-oriented vessels sometimes travel to Klemtu or the hallowed islands of Haida Gwaii.
In Washington state, Seattle has positioned itself as a worthy competitor to Vancouver since cruises began out of the Evergreen State in 1999. Today, it routinely hosts up to half of all vessels bound for Alaskan waters.
Some of these cities have other industries that can keep them afloat during the pandemic. Others -- like Skagway and Icy Strait Point -- exist almost entirely for the benefit of tourists. And it is here that the losses of the 2020 Alaska cruise season have been the most acute.
Job Losses, Tourism Industry Retracts Across the Region.
According to Alaska's Southeast Conference, leisure and hospitality jobs retracted by 38 percent year-over-year between April and July 2020 when compared with data from 2019. Transportation jobs, including tourism-based motorcoach operators, shrank by a whopping 50 percent.
Data released this month indicates unemployment had already jumped from 5.2 percent in Southeast Alaska to 11.3 percent by July 2020.
Hardest hit was Skagway, which reported 19.1 percent unemployment by July 2020. Haines, which was already seeing 22 percent unemployment by May, leveled off at 15.9 percent. Hoonah (Icy Strait Point) experienced 15.9 percent unemployment by July 2020, with Ketchikan coming in at 12.7 percent.
The national unemployment average across the United States for this time period was 10.5 percent.
Many port towns in Southeast Alaska are reliant on tourism for a significant percentage of their jobs and economic income. More, still, are deeply reliant on the arrival of cruise ships to the state, which bring 90 percent of all visitors to Alaska.
Leisure and hospitality job losses in Southeast Alaska were pegged at 5,400 positions -- the rough equivalent of the populations of Hoonah, Haines, Skagway and Wrangell combined.
Cruise Ports Hit Hardest as Revenue Declines.
The Southeast Conference report shows that ports reliant on cruise and tourism have been hit the hardest when it comes to revenue.
Skagway, the pioneering Gold Rush town at the end of Lynn Canal that served historically as the base for the Chilkoot Pass and the Klondike gold rush of 1896 and the start of the famed White Pass & Yukon Route railroad, today exists primarily for tourism purposes. Much like the gold rush days over a century before, the town's population (and fortunes) flourish in the summertime before many residents leave for the winter months.
With the cruise industry absent for 2020, local businesses and attractions like the WP&YR have seen their profits largely eliminated.
"By community, Skagway businesses have lost the most, with reported average revenue loss of 80 percent, followed by Haines and Ketchikan," notes the report. "Juneau businesses report the smallest average revenue decline of 'only' 46 percent."
Nearby Haines, on the western edge of Lynn Canal, lost 68 percent of its revenue by June. Ketchikan, Alaska's most southerly port of call before entering the waters of British Columbia, reported a net loss of 67 percent of its total revenue, most of which is in tourism.
A 2019 survey prepared by the Southeast Conference and Rain Coast Data showed that of 460 respondents, 54 percent believed the overall business climate last year was "good".
A survey conducted in June 2020 showed that number had dropped to just seven percent. The majority of respondents (51 percent) said the overall business climate was "Very Poor," while another 38 percent rated it as "Poor."
A total of 43 percent of all businesses surveyed cited the loss of cruise ships in 2020 as having an "enormous" impact on revenues -- the fourth-most cited response out of 24 different possibilities. This came in just behind lost revenue, declining sales and lack of customers -- all of which are partially attributable to the loss of the 2020 Alaska cruise season.
Data released in September 2020 by Rain Coast Data and the Southeast Conference showed a full 35 percent of respondent businesses stated they are at risk of closing permanently by July 2021 unless conditions improve.
Vancouver, Victoria Not Left Out of the Economic Fallout.
The Canadian port of Vancouver, British Columbia, has long been a major turnaround port for cruises to Alaska, having been host to cruise and passenger ships headed up the Inside Passage for over a century.
According to the Vancouver Fraser Port Authority, which manages and operates the city's iconic Canada Place Cruise Terminal as part of the Port of Vancouver, each individual cruise ship call contributes CAD$3.3 million to the local economy.
Over 300 individual cruise ship visits were scheduled for the 2020 season, representing a loss of approximately CAD$990 million in direct economic activity for the Metro Vancouver region.
"We are committed to the success of the cruise industry, and while the industry has been significantly affected by COVID-19 for the 2020 season, we are shifting our focus now to continue working with cruise, industry and tourism toward the 2021 season, and beyond, to support this industry’s recovery in Vancouver," a Port of Vancouver spokesperson told Cruise Critic.
In the provincial capital, Victoria, the loss of the entire 2020 cruise season has been deeply felt. Victoria has become a popular port of call for ships departing roundtrip from Seattle, which must call on a foreign port to satisfy U.S. cabotage laws.
The Greater Victoria Harbour Authority, which owns and operates the city's Ogden Point Cruise Terminal that was recently rebranded as 'Victoria Cruise Terminal at The Breakwater District', switched to immediately planning for the safe resumption of cruise in 2021 following Transport Canada's decision to ban the vast majority of cruise ships from Canadian waters through October 31, 2020.
"Without cruise this season, our organization, which is a community-based not-for-profit, lost an anticipated CAD$12.5 million," GVHA CEO Ian Robertson told Cruise Critic. "We have had to reduce expenses, cancel numerous capital investment projects across our properties, and lay off eight staff. Even with these adjustments, we are still projecting a loss of close to $3 million."
Robertson notes a 2016 study indicated that the cruise industry was worth more than CAD$130 million annually to the Greater Victoria region. The cruise industry employs more than 800 direct and indirect jobs within the local region alone.
"The knock-on effect for commercial customers on our properties, those who serve cruise in the region, and the community as a whole is likely in the tens of millions [of dollars]," Robertson said.
The GVHA told Cruise Critic it will continue to follow direction from the Public Health Agency of Canada, Transport Canada, and the health and safety policies being developed by individual member cruise lines calling on Victoria in 2021.
"A lot still needs to be determined over the next few months and safety for our community, staff, visitors, and crew will remain as our top priority," Robertson said.
Stakes Are High for 2021.
For Southeast Alaska, the stakes are high for the 2021 cruise season. The catastrophic job and economic losses of a second canceled cruise season are almost unimaginable.
Working in Alaska's favor, however, is that it is still a massively popular cruise destination for domestic and international cruise passengers alike. Sailings have, in the past few years, commanded higher per-day rates than comparable destinations in the Caribbean and parts of Europe.
Holland America Line and Princess Cruises, arguably the industry leaders in Alaska due to their longevity in the region, routinely deploy the majority of their fleets to the region in the summer months.
Some cruise lines, however, have already pulled the plug on their 2021 cruise seasons.
In August, Cunard Line announced that it would redeploy its Queen Elizabeth from its runs in Alaska and the Pacific for next year, opting instead to send the ship on a season of voyages departing from the U.K.
Other lines have removed ships from their fleets that traditionally sail to Alaska. Holland America sold its Maasdam, which has been spending it summers operating in-depth voyages to Alaska for the past few years. Ditto for Amsterdam, which has now been transferred over to Fred. Olsen Cruise Lines and will sail primarily from U.K. ports.
Princess Cruises has also removed Sun Princess from its fleet. This means the ship will no longer travel to Vancouver next year for a series of weeklong Inside Passage trips from Canada Place between May and June, and from Los Angeles between July and September.
What this means for Alaska has yet to be seen. Transport Canada next month is expected to revisit its current ban on cruise ships that runs through October 31, 2020. In the United States, the industry is lobbying the U.S. Centers for Disease Control and Prevention to allow it to resume operations.
The clock is ticking. The Alaska 2021 season starts in just seven months.