Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

COVID-19 could have a severe impact on Haines tourism this summer and, by extension, the Haines economy as a whole.

The Centers for Disease Control and Prevention recommended people avoid traveling on cruise ships as a safety measure. Cruise Lines International Association announced its members would voluntarily suspend sailings for 30 days. Royal Caribbean Cruises canceled sailings until April 10. Holland America canceled sailings through April 14. Viking Cruises announced it would suspend sailings until May 1. Princess Cruises canceled sailings until May 10.

At the end of last week, the Canadian government announced it would close its ports to cruise ships carrying 500 or more passengers and crew between April 2 and July 1.

The Jones Act, a law from the early 1900s regulating maritime commerce, requires ships moving cargo (or passengers) between U.S. ports be U.S. made, owned and crewed. This means “all ships flying international flags are required to stop in a foreign port. They cannot sail between U.S. ports only,” Haines tourism director Steven Auch said. “If (a cruise leaves) Seattle, they have to stop in Canada on their way up (to Alaska).”

Most of the cruise ships that sail to Alaska fly foreign flags, Auch said. If you look at the Alaska itineraries for most cruise ship companies, they begin or end in places like Canada and Japan.

Auch said it’s hard to predict how the policies relating to the coronavirus will impact the season at this point since everything is changing so quickly, but it is likely “some of those early season sailings could be delayed or canceled.”

“A rough estimation right now would be in the range of a thirty percent decrease in total summer sailing capacity in Haines itself,” Auch said. This 30% reduction in capacity only accounts for the reduction in the number of sailings. “We still don’t know what the impacts will be in terms of bookings,” he said. “More people could decide to book or fewer. I don’t have specific booking numbers.”

Cruise Lines International Association did not respond to requests for comment. The question of whether bookings are down and by how much is “a tough thing that nobody really wants to answer,” Auch said. “A lot of cruise lines in news reports are saying people are just pushing their bookings later.” Many cruise lines are waiving cancellation fees or offering deals like 125% credit for rebooking at a later date.

Even more than the impact of potentially fewer sailings, Haines will feel the impact of fewer cruise ships in Skagway, Auch said, referencing visitors who take the fast ferry from Skagway to Haines for the day. If Canada keeps its port restrictions in place until the beginning of July, Haines will feel the effects, Auch said.

In a recent interview with the Canadian Broadcasting Corporation, Skagway Mayor Andrew Cremata said a July 1 start date for the cruise ship season would leave roughly 60% of Skagway’s season intact, not counting the likelihood of reduced numbers of passengers and sailings. Cremata said Skagway is asking Alaska’s federal delegation to work to override the Jones Act for a period of time to allow ships to come before July 1. However, this plan assumes U.S. ports do not impose restrictions similar to Canada’s.

Some Haines tourism businesses are already making changes to the way they operate. Rainbow Glacier Adventures owner Joe Ordonez said he’s reduced his office staff to a “skeleton crew.” By this time of year, the company usually receives a dozen or more bookings a day. Those numbers have been reduced to single digits or none at all, and many tourists have cancelled bookings.

“We’ve closed our office. We’re working from home,” Ordonez said. “It’s my wife and I and our general manager right now keeping tabs on what’s going on.”

His business relies significantly on tourists who travel to Haines from Skagway on the fast ferry, he said. Last year his company invested in a new vehicle and property in Skagway for employee housing.

But now the 20 to 24 guides and support staff he employs each summer are on standby, Ordonez said.

“Just like the whole country, we’re (in) this wait-and-see state of mind,” Ordonez said. "We’ll just keep kicking things further down the road until the season’s a bust, if that happens. If it’s a bust we’ll put the sub net in the water, tend the garden and hang on.”

Others in the tourism industry are adopting a wait-and-see approach.

Alaska Mountain Guides owner Sean Gaffney said his company has delayed its guide-training program, but that his company is "at this point moving forward with all of our regular planning."

At present, the contingency plans are a worst-case scenario, Haines Rafting Company owner and Tourism Advisory Board chair Andy Hedden said. Currently, “things are changing so fast, it’s hard to want to act on anything.” His staff is aware of the situation, he said, “but we’re not making any structural changes at this point.”

“We have experienced some cancellations, but very little so far,” Hedden said. His business is small, with only three or four full-time employees, and their season doesn’t really start until June. “At this point, we have the luxury of our business being two to three months away, so we’re probably unique in the cruise business in that it’s not detrimental yet.”

However, Hedden said, “losing any business during (July and August, the bulk of their season) would result in closure… It would be pretty financially devastating.” Dealing with the financial fallout could include taking on a loan to tide the business over into next year, looking for other employment opportunities, spending down savings, asking for help from family or, likely, some combination of these, he said.

“I’m trying to monitor the situation to keep people informed about what cruise lines are doing... and trying to keep local businesses informed so they can make appropriate decisions in terms of hiring so they can minimize impacts to their businesses,” Auch said. He said he is communicating with organizations like the Haines Economic Development Corporation, which recently sent out a list of resources for local businesses feeling the effects of the pandemic.

“Tourism is the biggest driver by a landslide in this community as far as the role it plays financially,” Auch said. “Its impact in Haines is huge. It’s important to do what we can to minimize the impact (of COVID-19) and move forward in a safe way.”

Though the borough is not able to track sales tax revenue generated by tourism dollars, Hedden estimates it is significant. A 2011 McDowell group report compiled for the Haines Convention and Visitors Bureau estimates that visitors spend roughly $100 a day in Haines. Hedden said the report doesn’t necessarily capture the full impact of tourism dollars.

Having worked as a seasonal employee, a manager of seasonal employees and a tourism business owner, Hedden said his experience is that “the majority of the money (seasonal staff) earn here goes to the grocery store and the gas stations and paying rent.”

While current social distancing practices are putting a damper on winter business, Christy Fowler, who co-owns the Pioneer Bar and Bamboo Room with her husband, said she is also very worried about the summer. “It is very concerning because we do lunches for Alaska Nature Tours, which is completely dependent on cruise ships.” The lunches represent a good chunk of the Bamboo Room’s overall business, Fowler said, adding that her business also makes money directly from cruise ship passengers who come to the establishment and from seasonal workers.

Lower numbers of tourists will affect business both directly and indirectly, Fowler said. If everyone in town is hurting because of diminished revenue, “will they have money for luxury items like eating out?” She said she also worries that special events that bring visitors to town like Brewfest, the bike relay and the fair may be postponed or canceled this year.

Fowler’s business is facing more immediate impacts as a result of the virus’ spread. The state ordered all restaurants and bars to cease dine-in service by Wednesday at 5 p.m. “I’ve been calling all of our creditors to say that we can’t make payments right now,” Fowler said. The most difficult conversations have been ones with staff. She said she knows many rely on regular paychecks from their job. “Telling them they won’t have a job for a couple of months. That’s been the hardest thing.”

Laura Rogers, owner of Magpie Gallery which has locations in Haines and Skagway, said it is difficult to make plans as “I really just don't know what is going to happen this year. The only decisions we have made are to not open the Skagway store until we know more and to not buy any more work from Alaskan artists as we planned.” She said she is fortunate that her husband has a job outside their gallery. “If this was not the case… we would be out of business.”

The borough is anticipating lower sales tax revenue this year as a result of COVID-19, Haines Borough manager Debra Schnabel said. She said she is incorporating plans for lower revenue into her budget proposal due April 1. “We are still trying to determine how much—somewhere between a fifteen and thirty percent reduction from 2019 actuals.”

A 2019 report compiled by Rain Coast Data for Southeast Conference titled “Southeast Alaska by the Numbers” describes the visitor industry as a “counter-balance to a capricious economy. In just seven years, the tourism sector added more than 2,000 annualized jobs to Southeast communities, increasing wages by $85 million.” The report, complied before the COVID-19 outbreak, projected 1.44 million visitors in Southeast during summer 2020, spending an estimated $800 million in the region.

“Nobody knows exactly how far that tourist dollar travels, but it’s going to become apparent,” Hedden said. “From a policy standpoint, working to strengthen the general support for the tourist industry is something that is going to seem very poignant in the coming years.”

While COVID-19 may have an impact on the early cruise ship season, Auch said he is hopeful that the situation may start to improve in late summer. Based on his experience when past diseases like swine flu, Ebola and SARS impacted bookings, “people generally have a short-term memory,” he said. “Once things start to slow down, it doesn’t take too terribly long for things to return to normal.”

Prior to the COVID-19 spread, Haines tourism numbers were already predicted to be down compared to last year as a result of the loss of most of Holland America’s port calls in 2020. According to analysis by the Haines Economic Development Corporation, local businesses were predicted to lose about $3.4 million in tourism-related sales, and the Haines Borough about $187,784 in sales tax revenue from the loss of these port calls.

According to the Haines 2020 cruise ship schedule, the first ship slated to arrive in Haines is UnCruise Adventures’ 60-passenger Wilderness Adventurer on April 17. UnCruise has yet to cancel or adjust any scheduled sailings as a result of COVID-19; its ships are small enough that they would not be impacted by Canadian port closures.