Kenai Peninsula Tourism Industry Expected To Grow In 2017

Feb 27, 2017

A breathtaking roadside view on the Kenai Peninsula
Credit Shady Grove Oliver

While other sectors continue to struggle, tourism is still growing in the state. That growth is reflected on the Kenai Peninsula, which has seen increased interest and a new kind of tourist over the last few years.

Looking at numbers for tourism on the Kenai Peninsula means digging deep into second and third quarter taxable sales for a particular year.

At first glance, the numbers for 2016 were concerning to Kenai Peninsula Tourism Marketing Council Executive Director Shanon Davis. The peninsula was down by about 3.1 percent, but Davis knew it had been a solid year for tourism. She wanted to know what could account for that drop.

“One of the things that we found was a large percentage of that drop was actually attributed to the city of Soldotna who had seen a $16 million drop in their sale and that is because of the grocery sales tax," Davis said. "They were not able to collect the taxes on grocery sales for three months out of those two quarters and that really accounted for a large drop.”

Looking beyond the Soldotna grocery tax, the numbers for primary tourism taxable sales actually reflected growth. Those numbers come from sightseeing tours by water and land, car rentals, tour operators, restaurants, and accommodations.

“Once I got those numbers from the borough, a different picture emerged,” she said.

Primary tourism sales came in right around $175 million in 2016, or a 1.7 percent increase over the previous year.

It's important to keep in mind that 2015 was already a very good year with 8.6 percent growth over 2014, meaning tourism is still up significantly from where it had been just a couple of years ago, Davis explained.

As in years past, Seward was the primary money-maker on the peninsula. It brought in around $45 million and was up 5.6 percent over 2015.

“But not too far behind them was Homer," she said. "Homer brought in $31 million in taxable sales and Homer was up 4.7 percent, so [that was] substantial and your growth was higher than most of the rest of the peninsula.”

Both Seward and Homer saw a bump in guided water tours and Homer also had an uptick in guided land.

Soldotna saw an increase of 1.2 percent, bringing in around $18 million.

“Seldovia, bless them, actually did see a growth year this year and we were excited to see that," Davis said. "They’re up 1 percent and they brought in right around $800,000 in taxable sales.”

The only community whose numbers declined in 2016 was Kenai. They came in right around $12.8 million with a decrease of 10 percent over last year. That’s a reflection of the oil and gas industry contraction and the LNG project, Davis said.

“One thing I do like to point out to people is Kenai had seen an incredible boom the previous year with being up 45 percent, so this contraction down 10 percent is actually less than I might have anticipated and I think that they’re still doing well considering what’s happening with our oil and gas industry," she said.

Tourism accounts for about 25 percent of all sales tax dollars in the borough, Davis said, making it a very important player in the regional economy.

“Every sales tax dollar that we get from a visitor is a dollar that doesn’t have to come from our residents to support services that the borough provides. That’s roads and schools and landfills," she said. "Also, visitors are an import, so we are bringing new money into the peninsula and then those visitors leave and leave their dollars behind here. So, it’s very important to our economy. It’s more important than most people realize.”

Alaska as a whole was up 2 to 4 percent for the entire year. So, while it outpaced the peninsula overall, Davis noted the two are not on the same playing field when it comes to marketing dollars.

The Mat-Su Convention and Visitors’ Bureau, which Davis says is probably the peninsula’s most serious competitor for tourists spends about $900,000 annually on marketing. KPTMC works with a budget of about $340,000 by comparison.

To use that money wisely, Davis explained it’s targeted specifically to the most useful sectors of tourists. KPTMC plans to up its presence in the Anchorage market this year to help sell out the shoulder seasons.

In addition, it’s become profitable to entice a different type of tourist than it did historically.

“For many, many years we were very focused on baby boomers," she noted.

There’s been an uptick in tourists who are younger, more independent, and seeking adventure, meaning demand for services catering to that type has grown.

Tourism throughout the state is expected to grow by another 2 percent this year. With more contraction expected within the oil and gas industry as well, Davis said she hopes residents will start to embrace the change and appreciate the growth sectors.

“I know that it can be frustrating when it’s the middle of July and we’re stuck behind the motor home on the road, but if you can just kind of picture dollars flying out their windows, it might make you a little more patient," she said.

After all, Davis said the Kenai Peninsula is positioned well to continue taking advantage of tourism growth for years to come.