Small businesses still struggling due to pandemic’s effect on travel

Large-deck cruising is big business in Southeast Alaska, especially Juneau. But, while the cruise industry may be big, many of the local businesses that depend on cruise ship passengers are locally owned shops with owners and operators struggling to survive after COVID-19 torpedoed the last two seasons.

After a very successful summer in 2019, COVID-19 and the accompanying no sail order completely canceled the 2020 season. A short and significantly scaled back 2021 season happened after months of negotiation and an act of Congress, but its shortened length and lighter passenger load meant that Juneau received about 10% of the visitors that would arrive in a typical year.

That one-two punch has shuttered some local businesses left many others fighting to survive.

Business owners shared stories of losing houses, selling business assets, and taking money out of retirement savings to scrape by and hold out for a return to a full season of cruising and the one million-plus passengers that can visit Juneau in a typical year.

“The best way to describe it is that we are hanging by the thinnest thread at Alaska Knifeworks,” said David Summers, who owns the shop. “We absolutely will not survive without a strong, robust cruise industry.”

Summers said that he sold off two business interests and had to find other work over the last year to keep his main business afloat so he can operate next season.

Despite his efforts, he still lost his house.

“I am in survival mode,” Summers told the Empire in a Monday morning phone interview.

He’s far from alone.

Midgi Moore, Juneau Food Tours’ CEO, described the spring of 2020 when she had to withdraw money from retirement savings to refund deposits for people who had pre-booked tours with her company.

“I had to do it. I was worried I would get an ulcer,” she said, explaining that, like most tour businesses, she uses the early deposits to make the investments needed to start the season. In 2020, she had already spent the money to stock up for what she expected to be her best year ever.

[Cruise critics reflect on shortened season]

For Serene Hutchinson, general manager of Juneau Tours & Whale Watch, it was even more personal.

“I had to lay off my husband,” Hutchinson said, adding that for the first time, she could not offer summer jobs to her college-age children, who didn’t come home for the summer.

Hutchinson said that her business had to send out over $1 million in refunds in 2020 and could not operate any of their eight whale watching boats or 25 buses. She added that she still had to spend money to maintain and insure her fleet of unused vehicles.

Hutchinson said she took a job at Barlett Regional Hospital, working in the behavioral health department, to make ends meet — a job she kept even as her business started operating again in 2021.

When business did resume this year, it was on a much smaller scale.

“It was lovely but not sustainable,” Hutchinson said, adding that she has worked every day since April to keep balls in the air.

Still, she says she’s grateful that she’s been able to hang on when many businesses closed or could not operate at all in 2021.

Summers was more direct about the short cruise season.

“Emotionally speaking it felt good,” he said. “But, it was a complete financial loser at that level.”

More than dollars and cents

According to Jeff Rogers, finance director for the City and Borough of Juneau, tourism generates about $10 million in sales tax for the city each year.

He said that money comes from cruise ship passengers, seasonal employees, independent travelers and locals who have more money in their pockets thanks to seasonal work.

Rogers said the city lost $10 million in sales tax in 2020 when cruise ships could not sail and many local businesses did not operate.

“Cruise ship tax revenue and tourism is a big part of our economy,” Rogers said.

[City seeks to tax onboard purchases]

Local business owners say city revenues are only part of the picture.

“Take the legs out of the cruise industry and you tank real estate,” Summers said. “Even the people who are critical of the industry are beholden to the industry because of the sales tax.”

Laura Martinson, the owner of Caribou Crossing downtown, said that the short cruise season put her business in a worse place because of the expense of bringing in inventory, hiring employees and paying for daycare.

But, she said her shop represents over 60 small, Alaskan artists and she wanted to see them survive the year and still be in business when the passengers return.

Martinson said the artists have missed the “bread and butter” cruise season and holiday and summer shows. What’s more, they are dealing with supply chain disruptions that make it difficult to work.

Martinson said she also needed to provide work to dedicated employees she feared she could lose to another employer.

“It hurt people more than it helped,” Martinson said. “There’s a perception that if a ship is in the channel, all must be OK. That’s a false narrative. At the end of the day, everyone has held their breath as long as they can. We are all squeezed.”

Like Martinson, Moore said that her food tour business relies on other local businesses for success—in her case, local restaurants.

“I was delighted to see the ships back, but if local restaurants can’t get staff or operate at capacity, I can’t bring a tour there. We all work together.”

[An abbreviated cruise season by the numbers]

“It feels personal”

Earlier this summer, a trio of measures that would limit cruise ship travel to Juneau failed to gather enough signatures to appear on ballots. In October, the city conducted a survey to gauge how residents felt about the 2019 cruise ship season, the last one before the pandemic disrupted the industry. City officials are expected to share results before the end of the year.

Local business owners said they understand that some Juneau residents have concerns about tourism. But, call efforts and comments by local activists “insulting and hurtful.”

“It feels personal,” Moore said. “It made me so sad. I can deal with COVID-19, but when people came out of the woodwork to attack us, it was devastating. To say this season was ‘not intolerable’ is heartbreaking. People who have lived here forever from all walks of life are suffering.”

Summers said that he thinks about the passengers visiting Juneau for the opportunity to briefly visit the destination locals enjoy all year.

“It is very difficult to understand and get my head around how some people can be so critical of the industry and look into the faces of our children,” Summers said.

“I have met people who have scrapped together every dime they could to get up here to see Alaska. To dehumanize that is not fair,” Summers said.

Hutchinson said she understands that some people see tourism businesses as “a quick buck” and understands how that perception can drive frustration among some people.

“We get it. I’ve been blocked by my own bus,” Hutchinson said. “We understand that it’s a fine line. Our eyes are wide open with this and the fact that we are still in business after these two devastating years is because of all of the years of wonderful growth that preceded it.”

Martinson pointed out that the geography that makes Juneau special also makes it very seasonal and dependent on cruise ship traffic.

“People just can’t get to Juneau, Alaska,” she said, noting that it makes Juneau different than other tourist destinations.

“I want to thank my neighbors in Juneau for their patience and grace with us and ask them for their open hearts and understanding as we do business.” Hutchinson said.

[CBJ employee named to new tourism manager post]

Looking forward

Local business owners say that they are cautious and optimistic about the 2022 season.

Moore said that she’s encouraged by pre-booking reports from cruise ship operators.

“We are still in survival mode. I’m hopeful for 2022. But, it’s important that we stick together as a community. What we had this summer wasn’t enough.”

Summers said he’s closely watching the events of the holiday season to see how travel goes. Then, he’ll be looking at the convention business of the first quarter for hints about how the 2022 season may unfold in Alaska.

Martinson said she’s walking a “very, very thin tightrope” heading into the 2022 season.

“When you sell handmade goods, you can’t get them quickly. I need to order everything by January. You try to use your crystal ball and have realistic expectations. You can’t just call an artist and say I need 60 totem poles for next week. I’m trying to put myself in a position to pivot quickly.”

Hutchinson said she’s hopeful that cruise industry predictions of high demand turn out to be accurate.

Summers said with 750,000 to 800,000 passengers, he’d still be in survival mode.

“I need a million passengers to be comfortable,” he said.

• Contact reporter Dana Zigmund at dana.zigmund@juneauempire.com or 907-308-4891.