Alaska voters just made life tougher for the cruiselines

Alaska voters just made life tougher for the cruiselines.

Quote:

Cruise Operators Face Alaska Initiative

By MICHELLE CHAPMAN AP Business Writer

© 2006 The Associated Press

NEW YORK — Shares of Carnival Corp. and Royal Caribbean Cruises Ltd., the world's two largest cruise operators, lost steam this week following the passage of an Alaska ballot initiative that includes new taxes which threaten to cut into onboard revenue and lower earnings.

Ballot Initiative 2, which was approved by state voters and is expected to be implemented next year, will result in a $50 per passenger head tax that will raise government taxes and fees paid by passengers taking Alaskan cruises.

A gaming tax will also be charged on any gambling that occurs in state waters, with a state corporate income tax incurred for cruise lines operating ships in Alaska.

Other measures include cruise lines disclosing profits on shore excursions and revealing sales earned from shoreside businesses.

Both Carnival and Royal Caribbean said they were disappointed by the initiative's passage.

"We believe this will inhibit the future growth and expansion of Alaska's tourism business," Carnival Chairman and Chief Executive Micky Arison said in a statement Thursday.

"Unfortunately it makes Alaska a more expensive vacation destination for our guests," Royal Caribbean spokesman Michael Sheehan said, noting that local businesses may also be impacted by the move.

Carnival said it is unclear what impact the head tax will have on its Alaskan business, but predicted that the games and income taxes may lower its 2007 earnings by about 3 cents per share. Sheehan said Royal Caribbean is still reviewing how its earnings may be impacted.

Anticipating the passage, Goldman Sachs analyst Steven Kent said in a client note issued Sunday that the initiative likely would not impact Carnival and Royal Caribbean's results too much due to strong Alaska demand, generally higher income level passengers and the uniqueness factor of the trips allowing them to "pass the head tax cost on while continuing to drive prices."

Kent sees the initiative having a "modest financial impact" on the companies by lowering onboard revenue, possibly reducing earnings by 3 cents per share for Carnival and 5 cents per share for Royal Caribbean.

Additionally, lawsuits which would delay the measure's enactment are likely, he said, as not every Alaskan port will benefit from the head tax. For example, Juneau and Ketchikan's current head taxes are more than what they would get through the initiative. There are also concerns about the legality of taxing gaming sales in international waters, Kent explained.

Analyst David W. Anders of Merrill Lynch said in a Wednesday client note that Alaskan cruises make up about 8 percent of Carnival's total fleet capacity and 10 percent of its earnings. The voyages comprise roughly 7 percent of Royal Caribbean's capacity and generate 9 percent of its earnings.

Shares of Carnival fell 8 cents to $38.87 in midday trading on the New York Stock Exchange, while Royal Caribbean shares edged up 19 cents to $32.84. Carnival shares finished Thursday at $38.95, down 2 percent for the week, while Royal Caribbean shares lost 4.9 percent during the week to close Thursday at $32.65.

I have never had any desire to go to Alaska, I don`t care to look at ice, snow and glaciers..JMO. I would have even less urge to go now they have passed the new head tax........jean:cool:

I don't think many people are even going to know that they will be paying an extra $50 a person as it will just be added into the cruise price and not many people ask the for a complete break down of all the charges, i.e. - port taxes, etc.

elmorejj........what an unpleasant post...go back to bed and get up on the right side . :mad: :mad:

I don't think many people are even going to know that they will be paying an extra $50 a person as it will just be added into the cruise price and not many people ask the for a complete break down of all the charges, i.e. - port taxes, etc.

I believe one of the provisions of question 2 was to make them provide a breakdown and disclose profits from things like shore excursions

Pardon my ignorance, RoseM ... but what's so unpleasant about the post? She just expressed her feelings. And not nearly so ire-filled as some others have posted on another thread.

I don't think it was elmorejj that got up on the wrong side of the bed. :rolleyes:

And just what is wrong with elmorejj's post ? THERE IS NOTHING UNPLEASANT ABOUT IT.

She expressed an opinion and that opinion is the same as Mr.Gizmo's. He never had any desire to go to Alaska. His idea of a vacation is geared more towards the islands, not viewing glaciers, ice, snow, having to wear jackets, and all the rain Alaska has during the summer months. I myself have no great desire to go to Alaska either. I would possibly like to see the animal life but I don't know if that out weighs the weather, and the hassle to get there.

Everyone's idea of a vacation is NOT the same.

I have never had any desire to go to Alaska, I don`t care to look at ice, snow and glaciers..JMO. I would have even less urge to go now they have passed the new head tax........jean:cool:

Don't know why you posted on this thread if you have no desire ever see Alaska.:confused:

I live only a few miles from you around the outerbelt of I-270 and know that we get our fare share of ice and snow at times - and in the '70s I thought I was looking at glaciers but it was just snow drifts from the blizzards.

I leave for Alaska in 2 weeks and can't wait to see the glaciers, wildlife, and history that I've only read about but never seen.

I, for one, have no problem with the voters of Alaska passing this tax. It's their voice and if I choose to cruise to Alaska in the future, I will pay the extra tax that was imposed by the voters of the state. That is my choice as a paying pax on a cruise I want to enjoy for the scenery and the experience.

Dianne

Don't know why you posted on this thread if you have no desire ever see Alaska.:confused:

 

What is wrong with commenting about Alaska and also the tax ? It is no different than you saying you have no problem with it.

Is this thread only for those that like Alaska and have no problem with the tax ?

Others can feel different, like why pay an additional 50.00 per person to look at ice ? For some, that can be less incentive to go to Alaska.

People have different views, give them a break.

Charlie, that is exactly why I don`t care to go to Alaska, I see enough snow and ice in Ohio..thank you very much. And to Rose, please tell me exactly how my post was unpleasant... i`d love to know.

Thank you Jim and Gizmo for backing me up........jean:cool:

Gizmo, you are right and perhaps I should not have taken that stance with the quote and to elmorejj-

Elmorejj - I appreciate your views of not wanting to see Alaska but your quote came across to me as sarcastic, sorry if I misread the intent of your words. And I might add that since we live in Central Ohio which seems to be a great crossroads of road travelers --- if our state could collect a $50 tax from travelers we might answer the state's question of balancing our budget. :)

Dianne

I don't have a problem with Jean expressing her lack of desire to see Alaska.

Especially since I have the opposite preference. Living in a hot state like Arizona, the thought of heading to the Caribbean just so I can sweat in the heat and humidity has very little appeal to me. The cool moist air and awesome scenery of Alaska get me excited about my next cruise!:)

Charlie, that is exactly why I don`t care to go to Alaska, I see enough snow and ice in Ohio..thank you very much. And to Rose, please tell me exactly how my post was unpleasant... i`d love to know.

 

Thank you Jim and Gizmo for backing me up........jean:cool:

Just wanted to add to you that it has taken me several years to convince DH to travel to Alaska on a cruise. His theory has always been that he wants' to spend his vacation time somewhere warmer than Ohio. We've enjoyed 16 cruises to the Caribbean and Mex. Riviera.

Had a couple of years here when Ohio weather was actually cooler than Alaska in September and had a couple of years of very warm, humid weather here. We're looking forward to this Alaskan escape in September, knowing we will cool off from the summer heat and get prepared for the winter to come.:)

Dianne

Like other threads on this subject, everyone seems to be keying on the $50 head tax. There are two other provisions, one for 33% tax on gambling and another for a corporate income tax. Each of these provisions separately could be more costly than the head tax. Until the accountants look at these two provisions, we won't know how much will be added to the cost of an Alaska cruise.

Rich

Thank you Diane for your post. I totally understand folks wanting to see Alaska, I just don`t. My son graduated from the USAF academy, and I spent many vacations in the rockie mts. with him, and I`ve seen all I need to see of snow and mts.:cool:

I have to stand on the side of people who aren't that interested in seeing Alaska. I saw enough snow when I was living in CT, that's why I moved to AZ! Now all I want to see is ocean, ocean, ocean and the ship. I look at the amount of sea days before I choose a cruise for the most part.

I live in Chicago and went to Alaska and loved it!!!! The scenery is phenominal!!!! I want to go back again!!!!!!:)

Jean,

I wonder if perhaps a couple of posters might have thought you were being sarcastic because you would never ever, ever, ever consider a cruise to Alaska. So when you posted an opinion on a head tax, which would of course never effect you in any way because you would never sail there, it could be easily construed as sarcastic.

Again you may not have meant it that way, but I can see how it could be taken that way.:)

Like other threads on this subject, everyone seems to be keying on the $50 head tax. There are two other provisions, one for 33% tax on gambling and another for a corporate income tax. Each of these provisions separately could be more costly than the head tax. Until the accountants look at these two provisions, we won't know how much will be added to the cost of an Alaska cruise.

 

Rich

Thanks, Rich, for adding this into the equation. We will wait until the accountants do their figuring before we get too wound up on the subject.

BTW, I've waited to see Alaska for 50 years. I was 8 when my babysitter used to tell me stories about Alaska. She and her husband drove travel trailers from Ohio to Alaska during the 40's and 50's for workers on the pipeline. Her stories have been in my mind all these years.

Dianne

Just got back from our third Alaskan cruise and our fourth time to the state. It is a "not to be missed experience" regardless of the Alaskan Tax Greed. I just hope other ports arround the World do not follow suit. I've seen Alaska but I have many miles to go before I sleep, many miles to go before I sleep.

Count me among those who love cruising in Alaska. I have to laugh when people dismiss Alaska because they don't want to see "mountains and snow" on their vacation. If you do the Inside Passage cruise, you only go as far north as Juneau - which, believe it or not, is a rainforest climate. You'll see mountains and glaciers, but it's not like you're slogging through snowdrifts in the summer! We've visited in June and August and the weather was temperate and lovely both times. I enjoy the Caribbean, but I'd always prefer to put on a light jacket than stand around sweating to death.

Different strokes...

Happy cruising,

Susan

Jean,

 

I wonder if perhaps a couple of posters might have thought you were being sarcastic because you would never ever, ever, ever consider a cruise to Alaska. So when you posted an opinion on a head tax, which would of course never effect you in any way because you would never sail there, it could be easily construed as sarcastic.

Don't we all express opinions everyday on all kinds of subjects which will never ever affect us? Why is having an opinion about a cruise topic any different and considered sarcastic?

Just got back from our third Alaskan cruise and our fourth time to the state. It is a "not to be missed experience" regardless of the Alaskan Tax Greed. I just hope other ports arround the World do not follow suit. I've seen Alaska but I have many miles to go before I sleep, many miles to go before I sleep.

I guess I'm in the minority. Looking at it the other way, why should a huge industry escape any of the costs of providing services? If hotel rooms are taxed (and they are, pretty much everywhere in the U.S.) is there some reason why Alaska shouldn't collect taxes to offset some of the costs of services to support the tourist industry? Given that the population of some of the ports triples or quadruples when cruise ships are in town, cruise ship passengers certainly put a measurable burden on the infrastructure of those communities.

I think you'd find that in Europe and a number of other places that the local taxing authority also imposes taxes, and the cruiselines survive.

If the tax on gambling is so onerous, then we'll quickly see cruiselines cordoning off the gambling areas when they're in the affected area. Anyone expect that to happen anytime soon?

They already charge port fees. Cheapest inside was $70pp (total) May 07.

It will be interesting to see what happens with the constitutional aspects of the various taxes.

I imagine prices will have to go up, but I don't think it will deter me from my favorite destination. I have little interest in the "hot and sweaty" Carib destinations, so probably would not switch to them for a lower price.

Even when I go on Mexico cruises, I like the cooler months there. ( plus they are easier to get to from Phoenix:) )