Fog horns sound and enthusiastic passengers spill down cruise ship gangways to fill the streets of downtown Ketchikan. Tour companies are running, shops are open and Port Security personnel have returned to their posts at the downtown crosswalks.
This July marks the approximate midpoint in Ketchikan’s first “full” season of cruise ships and tourists since 2019, before the COVID-19 pandemic struck in 2020 and put the town’s economy in a hole that it’s just now starting to crawl out of.
For example, the City of Ketchikan collected $12.8 million in sales tax revenue in 2019, before dropping 33.3% to $8.5 million in 2020 due to the pandemic, when no ships visited Ketchikan. 2021 represented a modest increase at $9.8 million, and 2022 is expected to improve on that figure.
But even with the tourism industry beginning to make its return, it might take more than three months of tourism to get the industry “back to normal.”
The assortment of ships resuming port calls in Ketchikan so far this season have not been at full capacity, with some ships that boast capacities over 2,000 guests coming to port with just a few hundred on board.
The Ketchikan Visitors Bureau’s 2022 cruise ship calendar projects that 1.4 million passengers could visit Ketchikan this summer, based on the lower berth count — which tallies the overall number of passengers if every cabin on each ship is occupied by two passengers. That would exceed the previous record for actual passengers, which was 1.17 million set in 2019. Those projections are not expected to be reached.
In a memo written for the Ketchikan City Council meeting of July 7, Ports and Harbors Director Darryl Verfaillie wrote that the average onboard passenger capacity for ships visiting the downtown docks from May 29 to June 25 has been about 70%. The city used the same projected percentage when developing its budget for 2022. Those projections do not include ships docked at Ward Cove.
Through the months of May and June, a total of 254,601 cruise ship passengers arrived in Ketchikan, substantially fewer than the 449,935 passengers who came to town over that same period in 2019.
In the January issue of its “Trends” magazine, the Alaska Department of Labor and Workforce Development forecast an 86% recovery compared for statewide “Leisure and Hospitality” industries for 2022 compared to 2019.
Although this season might not be an immediate return to the prominence of 2019, Great Alaskan Lumberjack Show Owner and CEO Rob Scheer still sees this season as a return to form for Ketchikan’s tourism industry, and he compared this season to 2016.
“I would call it a bounce back year,” Scheer said. “2016 numbers for Ketchikan are good numbers — they mean that we are creating a really strong economy again. From the jobs, to the sales tax that trickled down, to the suppliers. If you look at all the suppliers that we have, they're moving a lot of product and inventory now because the industry's back. So I see a lot of positive stuff happening, a rebound for sure.”
Kawanti Adventures Vice President of Operations and Taquan Air Director of Business Development Christa Hagan said a “soft opening” was to be expected this season, and she hopes the volume of passengers will continue to increase as the summer continues.
“I would say it's going according to plan,” Hagan said. “As far as supply and demand, we knew the season was going to start out soft. The full fleets are coming in as planned, but the ships are not coming in at capacity. We're seeing that increase steadily throughout the course of the summer. For shoreside tour sales, the demand isn't necessarily matching the level or the pace of the increase of the load factor on board the vessels. But we expect to see that jump significantly in the next couple of weeks.”
Some downtown businesses such as the New York Cafe were able to lean on the support of Ketchikan locals while tourism was substantially lower.
While the New York Cafe relies heavily on visitors from out of town, the coffee shop and restaurant likely wouldn’t have been able to survive without the continued patronage of locals during the past two years, according to co-owner Raffy Tavidagian.
Tavidagian sees tourism’s return as seasonal income that supplements his year-round business of serving locals.
“Our business model is not strictly aimed towards tourists,” Tavidagian said. “It's an added cushion that we get from tourists. It's all broken into the calculations, but we are, first and foremost, a cafe or restaurant for the locals in town. We live here year round, and we want to make sure that we are taking care of our locals first and then focus on whatever else we get.”
With tourist season revenue providing a cushion, Tavidagian acknowledged that the past two years have put his business model to the test, but Federal Payroll Protection Plan Programs and the limited 2021 tourist season helped keep the business afloat.
He added that he’s “excited that things are getting back to normal, even if it's not a hundred percent there.”
Tongass Trading Co. is another business that relies on both locals and tourists to keep their doors open. Vice President Shane Greaves detailed how important both have been for the company since the start of the pandemic.
“Our company's kind of unique because half of our company caters to the tourists, and the other half we cater to the locals,” Greaves said. “So we kind of have the best of both worlds where we're dependent on each other and the local people for business and from our guests that come. The last couple of years, we haven't had our visitors, so we're very thankful that we are able to have our local business and our friends and families and neighbors that supported us through the last couple of years of COVID.”
As thankful as Greaves was to see the continued support of Ketchikan locals, he’s also thrilled to have out-of-towners frequenting Tongass Trading Co. shops once again.
“We're really happy that now we get our friends that are coming off the ships,” Greaves said. “We feel pretty honored that they want to come up to see where we take for granted every day, this beautiful place that we live. We're very happy they're back and they're happy, every day they tell us how much they've missed coming up. We've talked to people that have been up here several times in the last bunches of years on cruise ships and they're excited to come back.”
He added that Tongass Trading is “coming back in full force” this season, and made a point to express his appreciation for the employees that have made it all possible.
Ketchikan might be once again seeing a substantial number of cruise ship passengers, but not all sectors of the tourism industry are rebounding. One subsection that’s taken a big hit is dock sales for excursions.
As Taquan Air and Kawanti Adventures Lead Dock Salesman Brendan Lyle explained, an increasing number of guests are purchasing their tours on board their ships, which has taken a substantial chunk out of the revenue that dock salesmen rely on.
“The amount of pre-booked cruise ship passengers versus non pre-booked passengers dwarfs anything that I've ever seen in the past,” Lyle said. “So that just completely decimates our opportunity.”
Lyle also referenced shorter port times for ships as another hindrance for 2022 dock sales, and said that he doesn’t think many tour companies will be able to afford to keep representation on the dock if sales don’t pick up. He suggested reduction on lease costs for sales locations as one way to combat the issue, and stated that he thinks the landscape of dock sales will “look vastly different than it has in the past” in 2023.
The addition of the dock at Ward Cove — which began operations in 2021 — also has affected revenues for many businesses downtown. As Scheer puts it, the dock’s location — about seven miles from downtown Ketchikan — can result in less time for passengers to spend downtown.
According to the Cruise Line Agencies of Alaska Cruise Ship Calendar of 2022, Ward Cove saw 54 ship visits from May through June, and will see a total of 159 ship visits for the entire 2022 season. Norwegian Cruise Lines has docked all of their ships at Ward Cove this year — just as they did during the abridged 2021 season — due to an agreement between the cruise line and Ward Cove Dock Group, LLC.
“We're seeing numbers going to Ward Cove, but the complications there are that if they're on a five-hour port call to Ward Cove, it's really hard to get them anywhere else to do other things,” Scheer said. “Meaning, if you had a three-hour tour, and it was a five-and-a-half hour port call, plus the transportation component, you just have minutes to spare and that's no time left for the downtown experience of Ketchikan.”
The majority of port times in Ward Cove in May and June ranged from six to nine hours depending on factors such as cruise line and day of the week. There were also port calls ranging from 11 to 15 hours on occasion.
Another problem some companies areawide have run into is staffing, with some reporting having issues finding employees to fill key roles this season.
Hagan said the absence of a season in 2020 and the severely abbreviated season of 2021 have made it difficult to retain experienced employees.
“Our primary challenge this entire season has been hiring due to COVID and the gap in seasons,” Hagan said. “We were not successful in bringing back returning staff that are experienced, especially on the technical side. So we've really been behind the eight ball on training and continuing to hire to provide the capacity that our cruise lines are going to need.”
Karri Erickson oversees all Southeast Alaska transportation operations for HAP Alaska Yukon. She has seen a similar trend when it comes to finding employees for this season.
“We definitely have been impacted by staffing shortages,” Erickson said. “We have a very referral based recruitment program, and with minimal seasons in 2020 and into 2021, we kind of lost that momentum on hiring for 2022 that we've historically relied on. So that definitely played into our seasonal employee numbers for this season. We have some amazing new employees and we're super excited about next season, but [an employee shortage] has been our biggest challenge to overcome this year.”
Erickson said that things “probably feel busier this year than in 2019” for HAP because the company has fewer employees, and added that “people are wearing multiple hats, trying to fulfill all the different roles and create great guest experiences for our customers and for our cruise line partners.”
According to Hagan, the main objective for this season is to learn as much as possible for next season and to iron out the kinks that come with restarting an entire industry.
“When you think about a pragmatic business approach to starting an operation, it grows over the years and restarting a huge operation that is mature, but stagnant, is really a challenge,” Hagan said. “So it's going to be lessons learned this year and how do we apply ourselves in a very strategic manner that will address the gaps that we might have experienced this year, in order to execute a 2023 season successfully.”
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