Tourism continues to be a leading industry in Southcentral, Southeast, and Interior Alaska with visitors spending nearly $1.36 billion annually.

When CIRI entered the local tourism industry in 1997, much research had been done on visitor figures, the trends of vacationers, and potential business endeavors. CIRI decided to focus its entry into this industry within and around its own region and local cultures.

CIRI's first acquisition, in 1997, was Kenai Fjords Tours, which today is the number one wildlife and glacier cruise company in Alaska. The popularity of Seward as a summer tourism destination influenced the company's decision to expand tourism operations by purchasing the Seward Windsong Lodge in 2000. Growing summer visitor business dictated the need for expansion of the lodge by adding a new 36-room building last season.

Situated two-hours north of Anchorage on the way to Denali National Park, the Talkeetna Alaskan Lodge offers magnificent views of Mt. McKinley. As with the Windsong Lodge, growing summer business at the Talkeetna Alaskan Lodge, which CIRI built and opened in 1999, led to expansion.

In 2002, CIRI has focused on bringing efficiencies to the operation. Tourism management has consolidated the accounting, reservations, and sales and marketing functions for the various properties under one roof in order to increase control and reduce overhead costs. They have also evaluated the packaging operation of Alaska Heritage Tours and are making changes in how they market products.

"While we have had some losses in tourism, we have high quality tourism products, and we've seen an increase in revenue from 1999 to 2001," said Carl Marrs, CIRI president and chief executive officer. "We've seen growth in our tourism bookings, even though tourism may be a little flat in terms of Alaskan visitations."

"The business has matured to a point where we can make adjustments to our business plan and we are working to drive profitability," said Marrs. "Even with the effects of the September 11th events, we are back to seeing an interest in our visitor products and increase in reservations and booking numbers."

"Tourism is incredibly important to Alaska. Tourism has helped diversify our economy and is the second largest private sector employer in the state," said Commissioner Deborah Sedwick of the Department of Community and Economic Development. "CIRI is also an incredible economic engine for Alaska. They do business all over the world, but they hold Alaska in their heart and soul. Even their money earned outside Alaska comes home to benefit all Alaskans, not just shareholders," said Sedwick.

"That CIRI is engaged in tourism, one of our most important sectors, is important for tourism growth. As an example, look at the benefit of CIRI's investment in the Talkeetna Alaskan Lodge. The benefits of jobs and bed taxes alone is enormous to the community," added Sedwick.

Rendering of The Ritz-Carlton, Lake Las Vegas

At Lake Las Vegas, Nevada, CIRI has invested in the Hyatt Regency Lake Las Vegas Resort, which opened in December 1999, and The Ritz-Carlton Hotel, Spa and Casino, scheduled to open in early 2003. CIRI estimates these properties may take three to five years after opening to stabilize and achieve profitability. Until then, early period losses are expected. Once stabilization has been achieved, the company believes these properties will perform well.Lake Las Vegas is an emerging resort destination situated 20 minutes from the Las Vegas strip. Two premier golf courses with easy access to both the Hyatt Regency and The Ritz-Carlton recently placed Lake Las Vegas as a highly rated golf resort in the U.S., according to the March 2002 issue of Golf Digest.

"We believe that the lake experience combined with great golf and easy access to the Las Vegas strip situate the area for success as a resort destination," said CIRIPresident and CEO Carl Marrs.

The Hyatt Regency expects a better year in revenue in 2002 than it had in 2001, despite the setback to the lodging industry following the events of September 11th, when the Hyatt itself reported a more than $3 million decline in revenues. Cancellations were experienced for both business groups, who represent a large customer base, and leisure travelers. The uncertain economy and difficulty with airline travel were factors causing cancelled reservations. Improvements in both of these aspects have led to a rebound for the lodging industry in the first quarter of 2002, and the Hyatt Regency is experiencing this as well.

The events of September 11th also resulted in cost control measures designed to help offset the decline in revenues. Although some of these controls were short term, others have been kept in place since then and have helped improve performance in 2002 without affecting guest satisfaction.

In addition to its two Lake Las Vegas resort properties, CIRI has also invested in The Westin Kierland Resort & Spa in Scottsdale/Phoenix, Arizona. This project is still in the construction and development stage and is scheduled to open in late 2002 and early 2003 respectively.

"We should not lose sight of the progress we've made with our in-state and out-of-state tourism investments. They are part of the long-term investment philosophy that the CIRI board feels is necessary to fuel future returns for CIRI," said Marrs.