Tourism continued on a strong trend upward, based on a 2023 third quarter report from Explore Fairbanks.
The tourism and marketing agency’s CEO, Scott McCrea, provided an update to the Fairbanks City Council last week as part of its annual update to funders.
According to third quarter reports, the Morris Thompson Cultural Visitor’s Center, home to the Explore Fairbanks office, received more than 51,000 visitors between July and September, about 24% higher than the same period last year. However, the numbers are still down by 23% below 2019 levels, the year prior to the Covid-19 pandemic era.
McCrea added that Fairbanks International Airport arrivals were up by 15% — more than 328,000 passengers — for a record July through September period.
Alaska Railroad passenger numbers coming through the Fairbanks depot were up by 13%, or 34,000 arrivals and departures. Alaska-Canada border crossings shot up to around 64,000 people, or 176% due to continued post-pandemic relaxed regulations.
Over the past two years, Fairbanks has seen an increase in bed tax revenue, something McCrea attributes to an increase in average daily room rates from hotels.
However, hotel stays have fallen by about 2% compared to last year, something he attributed to short-term rentals such as Airbnbs.
While occupancy rates are flat for short-term rentals, he said, “the supply in listings [has] grown significantly.”
He estimated about a 31% increase in the number of available short-term rentals compared to 2022.
“I think the reason we see that slight decline with hotels is because more travelers are gravitating to those short-term rentals, and we are at a point where their supply is outpacing the demand,” McCrea said.
Bed tax revenue from the city of Fairbanks and Fairbanks North Star Borough is Explore Fairbanks’ largest funding sources, which the organization funnels into marketing the region as a year-round tourism destination.
“It is anticipated that in 2024 those rates will increase but not to the same level we see in comparing 2023 to 2024 as we saw from 2022 to 2023,” McCrea said. “Average daily rates are a double-edged sword because on one hand it increases bed tax revenue, but at what point do those rates prohibit travelers from staying?”
He noted that some market trends continue to support that people are still willing to make travel a priority in their budgets despite a spike in inflation over the past year.
“We’re fortunate to be a bucket-list destination, so we remain optimistic,” McCrea said.
Explore Fairbanks intends to spend $4.66 million in 2024, with 61% of its budget spent on direct and indirect marketing and 39% on personnel.
“The budget as it stands now allows us to account for inflationary costs,” McCrea said.
Its marketing plan for 2023 has included expanded efforts to target markets in India and Latin America. The agency intends to place a strong emphasis on independent domestic travelers in 2024.
“We saw a decline in that for this year, whether for inflationary or other reasons, and we are seeing that across the state,” McCrea said. “We want to make sure we have a good position within our core domestic destination to try to retain our share of travelers.”
At a community engagement level, McCrea said Explore Fairbanks launched a complimentary “associate level” membership which would allow Fairbanks North Star Borough small businesses to be a part of the organization. The primary benefit, he said, would include a listing on the Explore Fairbanks website.
“There are small businesses and start-ups that might not be able to be a dues-paying member, so this allows them to become part of the industry and take advantage of marketing efforts,” McCrea said.
McCrea noted that tourism continues to be a strong economic driver for the Fairbanks North Star Borough and the Interior. The leisure and hospitality industry created about 7,700 jobs in the region through September.
“The jobs came back pretty strongly in Interior Alaska,” McCrea said.
According to the Alaska Tourism Industry Association, between May 2022 and April 2023, about 860,900 visitors came to the Interior, injecting $943.8 million in direct spending into the economy.
“I would argue that there is no better example of economic development in the borough than tourism in terms of new money coming in, jobs created and businesses that are developed,” McCrea said. “When we say tourism works for Fairbanks, it really does.”