The rest includes about $236,085 in private source funding, a $10,000 Fairbanks International Airport grant and reserves from the previous year.

McCrea noted the borough’s formula for providing bed tax revenue can be more complicated. Explore Fairbanks, like the city, operates on a calendar year budget, while the borough’s fiscal year starts on July 1.

McCrea told the Assembly that Explore Fairbanks anticipates seeing $1.9 million from the borough’s $2.95 million in bed tax revenues from July 1 to June 30, 2025.

Explore Fairbanks uses the bulk of its funding for its primary mission: marketing the borough as a year-round tourism destination in both the Lower 48 and international markets. McCrea said direct and indirect marketing account for 61% of the Explore Fairbanks operational budget and personnel make up the other 39% of the budget.

Its projected revenue from the borough includes both remaining amounts from the existing fiscal year and a portion of the upcoming fiscal year projections.

McCrea said the Explore Fairbanks board of directors decided not to request funding from the North Pole City Council for 2024.

“We are in a fairly positive situation financially, it’s a small amount we typically receive from North Pole, they have a very limited amount of funds and there are a lot of different entities that apply for that bed tax funds,” McCrea said.

He cited one example with the North Pole Community Chamber trying to raise funding for a planned welcome center that has seen its construction cost estimates skyrocket.

“We made the decision to withdraw our application and allow those funds to be distributed to other entities,” McCrea said.

McCrea called 2023 a successful tourism year for the Fairbanks area. He noted that Fairbanks International Airport tracked a combined 1 million passengers for the year, or a 6% increase over previous years.

“The most remarkable aspect there is that for the first time ever, winter passenger numbers outperformed summer numbers,” McCrea said. He added Explore Fairbanks defines winter as October to April.

According to Explore Fairbanks data, 535,613 passengers flew into Fairbanks during those winter months compared to the 527,402 who flew from May to September.

“I think winter is just going to continue to grow,” McCrea said. “There is a renewed interest in aurora destinations, in part because we are heading into the peak of the aurora cycle.”

Explore Fairbanks tracks other visitor data. McCrea said crossing the Alaska-Canadian border was up by 3% to 97,628 people, while Alaska Railroad passengers to Fairbanks grew by 5% to 42,420 The Morris Thompson Cultural and Visitor Center visitations were up by 20% at 118,946 people.

McCrea said hotel occupancy rates saw a 2% dip in 2023, while average daily rates increased by 9% due to continued inflation. Short-term rentals such as Airbnbs fell by 4% as well.

Short rental listing increase

McCrea added that short-term rentals available through platforms like Airbnb have significantly increased. He said 2023 saw a 34% jump in listings over 2022.

“I think a lot of people in Fairbanks have seen the success of short-term rentals over the past few years and are gravitating toward that,” McCrea said. “But I think we are at a point now where the supply is starting to exceed the demand.”

He noted that 2023 was a record year for borough-wide room rental tax revenue, increasing by 11% over the previous year. For the winter months alone, combined revenue between Fairbanks, North Pole and the borough exceeded $3 million.

McCrea said a year-end survey produced by the Alaska Tourism Industry Association continues to prove tourism benefits the Interior’s economy.

Assemblymember Savannah Fletcher asked McCrea whether the short-term rental industry could withstand a higher bed tax rate compared to hotels.

“They currently have the same rate as hotels/motels, but it’s different housing impact for the community,” Fletcher said.

McCrea called the issue a contentious issue that the Municipality of Anchorage recently wrestled with.

The Anchorage Assembly narrowly passed an ordinance on Tuesday that heaped on additional costs and penalties for vacation rentals rented through online booking platforms. Anchorage Mayor Dave Bronson promptly vetoed the ordinance, citing that the city should not meddle in how individual property owners make a living.

McCrea said it can be challenging to find correlating data between an increase in short-term rental listings and an impact on a lack of available houses for rent.

“I think it requires some more research,” McCrea said.

‘Tourism works for Fairbanks’

McCreat noted that tourism continues to benefit the Fairbanks and Interior Alaska economies.

About 7,700 Interior Alaska jobs were connected to the leisure and hospitality field in 2023. Tourism borough 860,900 visitors between May 2022 and April 2023, directly injecting $943.8 million into Interior Alaska’s economy.

“I don’t think you’ll find a better example of solid economic development in the borough than the visitor industry,” McCrea said. “Tourism does indeed work for Fairbanks.”

Assemblymember Scott Crass asked whether Explore Fairbanks was still exploring options for a convention center in downtown Fairbanks. Before the Covid-19 pandemic, Explore Fairbanks launched research and outreach efforts to gauge efforts as the city moved along on plans to tear down the Polaris Building.

Since the pandemic, Explore Fairbanks pulled back its efforts on that front. The city awarded the contract to tear down the Polaris Building by the end of October.

“There are some private entrepreneurs out there who are looking at the potential for [that site] and we are more than happy to step aside and allow private entities to come forward with that,” McCrea said.