Business/Economy

Large cruise ships are returning to Southeast Alaska, ending a 21-month hiatus

JUNEAU — Southeast Alaska’s tourism drought is ending.

On Friday, the first large cruise ship in 21 months, Royal Caribbean International’s Serenade of the Seas, tied up to Ketchikan’s docks.

The ship was a test voyage, intended to gauge the effectiveness of COVID-19 precautions. But others will follow later this month and they will keep arriving through October. Sitka will see its first ship mid-month. Juneau, the state’s biggest cruise port, will welcome its first big arrival on July 23.

After an intense political and economic effort, an abbreviated tourism season is underway in Southeast Alaska, highlighted by the return of the big ships.

There is some trepidation. COVID-19 is still around. Still, business owners, political leaders and residents say they’re excited.

“Personally, I am ecstatic,” said Midgi Moore, who operates a food-tour business and serves as president of Juneau’s downtown business association.

Tourism is the biggest industry in this part of the state, and while independent travelers and small cruise ships have been coming to the region for months, large cruise ships — those carrying at least 250 passengers — are the mainstay of the tourist economy.

In 2019, 1.33 million cruise ship passengers traveled to the region, most arriving on big ships. The industry expected even more in 2020, but because of the COVID-19 pandemic, almost every sailing was canceled. Just 48 cruise ship tourists arrived in Southeast Alaska in 2020, according to independent economic organization Rain Coast Data.

Patti Mackey, head of the Ketchikan Visitors Bureau, helped organize a celebration on Friday to welcome the first ship — “traditional Ketchikan-style entertainment,” she said, as well as speeches from U.S. Sen. Lisa Murkowski and Lt. Gov. Kevin Meyer.

“I think it’s just a ‘we-did-it-yay’ kind of celebration,” she said.

The pandemic has had a brutal effect on Southeast Alaska’s economy.

Across the region, tourism businesses said their revenue in 2020 was down 83% from the year before. A third of those businesses said they were at risk of permanently closing without a 2021 season, according to a survey conducted by Rain Coast Data.

For Ketchikan, Mackey estimated the community lost about $263 million in 2020 with no cruise ships. That included tours not sold to tourists, fish not sold to visiting ships, and wages not paid to summer workers.

The industry was shut down last year after it became clear cruise ship travel posed serious risks. By April 2020, at least 54 cruise ships hosted coronavirus infections, with close quarters aboard ships spreading the disease among passengers and crew. The Centers for Disease Control and Prevention, seeing the rapid spread, took action.

As the cruise industry attempts to restart, it is imposing vaccine mandates, enacting new health standards and working with local public health officials to handle possible problems. Communities are balancing the need for employment and subsistence with the need to protect public health.

“I want to get to 2022 healthy, and if that means having a few fewer passengers in 2021, I’m OK with that,” said Skagway Mayor Andrew Cremata.

Even if COVID-19 doesn’t pose additional problems, it won’t be a full tourist season. Many Southeast Alaska residents cram a full year of work into the frenetic four months between May and September. That schedule has now been further compressed, and tourism businesses need to hurry to find seasonal workers just as year-round companies are reopening fully, too.

Mackey said she expects in the neighborhood of 170,000 to 175,000 passengers this year.

In Juneau, Moore said that given the short time frame and trouble hiring, a lighter year will give her enough work that she won’t be overwhelmed.

“I’m kind of glad we’re not getting all the business, because I just couldn’t accommodate it,” she said.

“It will get me through this year,” she said. “I’m going to be OK. I’m going to do fine. Am I going to have the banner year of 2019? No, but am I going to have a better year than 2020? Absolutely.”

A ‘brutal’ business environment

That’s the mood in much of Juneau, where some year-round businesses are belatedly lengthening their hours for summer — the Alaskan Bar, for example, now opens at noon instead of 4 p.m. — and seasonal shops are preparing to open their doors.

As they open, businesses are having to contend with a tight labor market.

“I do think one of the biggest hiccups every single business is having is staffing,” said Moore, of Juneau’s Downtown Business Association.

Holland America-Princess, the largest tour bus operator in Juneau, has called former employees into service for help and is offering free housing as an incentive. The sled-dog camps atop the Juneau Icefield aren’t operating this year.

Reecia Wilson owns five restaurants in downtown Juneau. Two remain closed because it doesn’t make economic sense to reopen them for a few weeks of tourists. The others aren’t operating at full capacity because of a lack of workers. She traveled to Seattle to recruit, offering free housing, a plane ticket to Juneau and a free plane ticket home.

[To lure employees during the worker shortage, some Alaska companies are offering perks or more pay. Others are scaling back until they can restaff.]

“We don’t have the seasonal people to pick from. Everybody who’s working at restaurants is working at two or three restaurants,” said Tracy LeBarge, owner of Tracy’s Crab Shack, one of the most prominent businesses on the cruise ship waterfront in Juneau.

The lack of tourists has hurt her restaurant. Business was down 95% last year, and it is down 76% so far this year. She’s not breaking even, had to pay cash for crab over the winter and has sold two of her other restaurants, an upscale venue called Salt and an Indian-food restaurant called Saffron.

“Salt can’t even open up fully because they don’t have enough staff,” she said.

At the crab shack, she has a reliable crew of employees, she said. But she normally hires extra help — college students and foreign workers — to get through the summer. Those workers are hard to find this year.

“It’s brutal,” she said.

And it will take more than this year’s cruise arrivals for many local businesses to recover. Dean Graber owns and operates Rainforest Custom, which manufactures custom furniture and cabinets. Until 2020, he also sold products from a gallery in downtown Juneau, in the cruise ship district. When the pandemic hit, that storefront closed.

“My wife was going over the numbers and saying, if there’s no ships, we’re sunk,” he said. “We decided just to pull the plug.”

He sold much of his stock at a loss but kept his woodworking shop.

“I don’t think this year is going to be very much of anything. If people can open, they’re having a hard time finding people to reopen,” he said.

He also isn’t sure about how the cruise industry will fare under COVID-19.

“I’m skeptical that the ships are going to be able to remain COVID-free, especially with the new variants popping off, but we’ll see,” he said.

A cruise season beginning ‘against all odds’

For most of the spring, it appeared as if Southeast Alaska’s 2021 tourist season would resemble last year’s.

Federal law requires foreign-registered ships — which account for almost all large cruise ships that visit Southeast Alaska — to stop in a foreign country when traveling between two American cities, such as Seattle and Juneau. But in February, Canada announced that it would extend a ban on large cruise ships through 2022.

Alaska’s politicians made a multipartisan push in response, urging Congress to temporarily suspend the federal law that requires a foreign stop.

Businesses “were able to make it through one season, but I kept hearing from more and more that if they had nothing to look forward to in this season, they weren’t sure if they would have the ability to remain open,” said U.S. Sen. Lisa Murkowski, R-Alaska.

The effort worked “against all odds,” Murkowski said. Alaska’s congressional delegation got unanimous support in Congress for a temporary waiver, and President Joe Biden signed it into law.

While that waiver solved many of the legal issues facing a restart, it didn’t end the cruise industry’s challenges with COVID-19.

Cruise lines that idled their ships in 2020 are now beginning to reopen under a phased approach mandated by the Centers for Disease Control and Prevention. That approach has been successfully challenged in court by the state of Florida, but it’s still in effect in Alaska.

Under the CDC’s rules, cruise lines have two ways to restart sailing. Each line has to come up with a ship-specific COVID-19 mitigation plan that includes mandatory testing. If the cruise line doesn’t guarantee that more than 95% of a ship’s crew and passengers are vaccinated, the ship has to undergo a “simulated voyage” — a test trip that judges the effectiveness of its mitigation plan.

The ship that arrived in Ketchikan on Friday — the Serenade of the Seas — was on that kind of test trip. About 800 crew and 300 volunteer passengers — many Royal Caribbean employees — were on board.

The CDC is using color codes to grade ships on their readiness for sailing. Green is good to go, red is unready. On Thursday, Serenade of the Seas was coded orange, a sign that it hadn’t yet completed its trial.

Brian Salerno, a senior vice president with the Cruise Lines International Association, a trade group, said cruise lines are interested in having an Alaska season this year because they think there’s passenger demand, and because they want to demonstrate support for Southeast Alaska’s port cities.

“I think there was a real desire to demonstrate that we’re committed to the state as an industry and we wanted to resume as soon as we realistically could do so,” he said.

Masks mandated onboard, and casinos limited to the vaccinated

Royal Caribbean, like all of the other big-ship cruise lines operating in Alaska this year, is requiring crews to be vaccinated and passengers 12 and older to be vaccinated. The company is asking passengers to show proof of that vaccination, such as a copy of their vaccination card.

Because Royal Caribbean expects to carry families with children, it’s not guaranteeing the vaccination standard that allows it to avoid a test voyage. Salerno said it’s reasonable to expect 90% instead.

Even with vaccinations required, the company has a long list of rules onboard: Masks are mandated and seats are spaced apart. Dining rooms are segregated into spaces for vaccinated people and groups including unvaccinated individuals. The onboard spa and gym facilities are available at selected times for unvaccinated and vaccinated people. Onboard casinos were limited to the vaccinated.

“The procedures onboard are probably the most stringent of any you would find in a comparable environment onshore,” Salerno said. “I would say these ships are as healthy as they can humanly be.”

The CDC is also requiring port cities and states to come up with response plans to deal with possible outbreaks. In Southeast Alaska, cruise towns like Skagway don’t have the medical facilities to treat even 20 sick people.

“It’s kind of an unlikely scenario, but we know we don’t have enough room if there was a major outbreak,” Skagway Mayor Cremata said.

In response to those and other concerns, the state of Alaska and Southeast’s port cities reached a series of agreements with each large-ship cruise line that plans to operate in Alaska this year. The first agreement, with Norwegian Cruise Lines, was signed in late May, and other agreements have followed.

The Norwegian agreement is typical. The cruise line is in charge of quarantining any crew or passengers who test positive, and if anyone falls seriously ill, they will be flown to Seattle at the cruise line’s expense.

The hope for many is that if businesses can make it through this year, next year will bring even more tourists.

“I know this is not what everybody hoped for, but to be able to have visitors in the Southeastern part of the state for the next six to eight weeks here, I think it’s going to be the shot in the arm that we need and will give us something we can look forward to in 2022,” Murkowski said.

“Our hope, of course, is that next year, in 2022, things will be closer to 2019,” Salerno said.

The cruise lines are acting that way: Norwegian Cruise Line is moving forward with plans for a large new dock in Juneau, the city’s fifth, and new docks have opened in Hoonah and Ketchikan.

“As for next year, maybe things will be back to normal. Maybe it’ll be crazy Juneau again,” Graber said.

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