From a small northwestern observatory…

Finance and economics generally focused on real estate

North, to Alaska

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Now, you’re dating yourself if you recognize the name of this song/movie from 1960 (Johnny Horton sang the theme song to the John Wayne movie.  The song, which topped Billboard‘s Country chart and reached #4 on the “Top 100” chart, was significantly more popular than the film.)

Ms. K and I took a lovely cruise to Juneau, Ketchikan, and Skagway last week, on board Norwegian’s Jewel — kudos’ to them, by the way, for a great job on the cruise.  More intriguing, though, was my observations of the Alaskan economy and real estate.  I’ve been to the 49th state several times on business, and still have some back-burner projects up there.  Ms. K had never visited (ironic, given her Scandinavian background).  We did the normal tourist-y stuff, including riding the Juneau tram to the top of the mountain and riding the Skagway Railroad along the Yukon Trail gold-rush route into British Columbia.  Of course, throughout the trip, I had a careful eye on tell-tail signs of the health of the state, or at least that small part I was able to see.

Ketchikan —  This is the southeast-most “sizable” city in the state, and is often referred to as the gateway to Alaska.  The economy is heavily driven by tourism and fishing, and it serves as a marine and air hub for this part of the state.  I had more “on the ground” time in Ketchikan than in other cities, and also was accompanied by a local real estate investor.  I had the chance to meet with two bankers (one of whom is also a state official) and tour a mechanical contracting facility.  In general, the economy seemed to be booming.  There was significant construction ongoing, and I also saw significant interior shopping mall which has been successfully “turned around” by an investor.  The local bankers I met with were “conservatively positive” about the economy, and indicated that lending was ongoing.

Ketchikan has benefitted in no small part from major governmental changes in 2010.  Previously, in 2006, the Alaska state government enacted certain taxes and regulations on the cruise industry which were difficult, if not impossible, for the industry to meet.  As a result, there was a significant decline in cruise passengers into Ketchikan from 2006 – 2010.  However, the state rolled-back the taxes, and now Ketchikan is expected to receive about 470 port-calls from cruise ships this year and over 900,000 passenger visitors.  The economic impact of this cannot be under-stated.

Thus, as long as the state government continues on a business-friendly pattern, the economy of Ketchikan should continue on solid footing.

Juneau —  This is the state capital (no, it’s not Anchorage!) and about half of the employment is government related.  Juneau also receives about the same level of tourism as Ketchikan, plus it’s a significant center for commercial fishing and mining.  As such, the economy is less vibrant than Ketchikan but more solid.  (Juneau’s unemployment rate is 4.8% — the lowest in the state.)  Since my last visit to Juneau, there has been significant construction and upgrades in the “tourist” part of town, and occupancy looked strong.

Skagway — This was the launch-point for the Yukon Trail gold rush, and later a rail road was built (about 120 miles or so to the Yukon) to haul gold down to the Skagway docks.  Today, the entire town is a national park, and the population is entirely dependent on tourism.  Nonetheless, there are efforts afoot to expand Skagway’s economy, leveraging off of the fact that it’s one of the only cities in that part of the state to have road access to Canada and the lower 48 states.  New construction is almost non-existent, since nearly the entire town is historically preserved.  However, the preservation efforts seem to be paying off, and the town appears to be flush with tourism money.

I’m not trying to write a promotional piece on Alaska, nor would I suggest that the benefits in these three cities are in any way transferable to other parts of the world (how many cities could handle a daily tourism influx equal to their entire population?).  However, the efforts of locals to integrate tourism with other strengths, and to focus on being “business-friendly” so as not to kill the goose laying the golden eggs, is an admirable set of traits for other cities to study.

 

Written by johnkilpatrick

June 13, 2012 at 2:16 pm

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