Anchorage hotels ready to host 1 million or more: 2006 looks to be very good year for tourism industry.

• Author: Orr, Vanessa
• Position: SPECIAL SECTION: 2006 CONVENTION GUIDE

Each year, hundreds of thousands of dollars are spent encouraging people from out of state to visit Alaska. Its largest city, Anchorage, is often a main attraction, offering visitors the chance to enjoy a taste of the frontier life while still enjoying all of the amenities a big city has to offer. It is especially important, then, that these visitors be made comfortable while enjoying their business or pleasure trip-and that means having the proper accommodations.

In 2005, the Alaska Industrial Development and Export Authority (AIDEA) contracted with Kennedy & Mohn, P.S. of Seattle to put together a hotel market analysis for the cities of Anchorage and Fairbanks. That report, released in October of 2005, was designed to reflect the current economic conditions and performance data for each market, and to project future lodging market conditions. Though a baseline report had been prepared a year earlier in June 2004, the Authority was surprised to see a number of positive changes since the first report's inception.

Too MANY HOTELS?

"We decided to conduct the first hotel market study because we felt that room supply and demand was way out of kilter," explained Jim McMillan, AIDEA's deputy director of credit and business development. "It was just a gut feeling, but we believed that there was a high supply of rooms and a low demand. And since we get a lot of requests through our credit programs to participate in the financing of new hotels, we wanted to get a better feel for the market."

A TURNAROUND

When the 2004 report came back, AIDEA's concerns were realized. "At the time, the interpretation of the results showed that the supply was strong, but the demand was weak, so we put a moratorium on hotel financing," said McMillan. "But this year's report showed something different-it showed that both markets were doing better than originally projected. So now we are back in the hotel financing business."

This turn of events can be credited to a number of factors, including the timing of the original study, and the lingering effects of the Sept. 11 terrorist attacks. The 2004 study, which was created from interviews with state and local officials, hotel owners, managers and developers, and a variety of direct and indirect participants in the tourism industry, was finished in June of 2004, before that year's visitor season was completed.

"One thing we learned was that the timing of the study is very important," said McMillan. "That first year, we were...