N.S. Negotiates with New Castle to Run Signature

TOURISM/CULTURE--N.S. Negotiates with New Castle to Run Signature Resorts

Nova Scotia has announced its intention to enter into contract negotiations with New Castle Hotels to operate the province's Signature Resorts -- Keltic Lodge in Ingonish Beach, The Pines Resort in Digby, and Liscombe Lodge in Liscomb Mills. A contract is expected to be in place by early fall.

"Successful negotiations will result in resort operations being contracted to a company that has the marketing and sales strength to grow this business," said Rodney MacDonald, Minister of Tourism and Culture.

"This means more guests in our resorts, more opportunities for staff and more benefits for local communities. Through this approach, we hope to protect Nova Scotia's investment in these valuable assets while gaining additional revenues for provincial priorities."

New Castle Hotels has a proven track record in managing four-star resorts, and an aggressive strategy is in place to improve quality, increase sales and provide staff with increased opportunities. The company, based in Shelton, Conn., operates 23 properties. Its four Canadian operations include the Westin Nova Scotian and Deerhurst Resort in Ontario. These properties are managed by a Canadian company called Commonwealth Hotels.

"Our team is confident that we can enhance the value of these heritage icon properties for the province and we look forward to a smooth integration of both the management and associates at these three fine resorts," said New Castle's president and chief operating officer, Gerry Chase.

"New Castle has been part of the Nova Scotian hospitality community for the past five years through our ownership and operation of the Westin Nova Scotian. We believe that our revitalization of this historic property as well as our Canadian resort experience has prepared us well for this new challenge."

Assuming successful negotiations, New Castle will take over all of the tasks associated with operating the resorts. Resorts will immediately become part of a strong, worldwide reservation and global distribution system for the travel trade, and the company will work towards season extension at all properties.

New Castle proposes to offer all staff a position at their current rate of pay and has indicated that any changes in staff numbers will be as a result of attrition. The company has a solid benefits package, including a health plan and a retirement savings program. The company is also committed to buying locally. It is a good corporate citizen and has a proven track record of supporting local businesses.

The province will pay a management fee to the private-sector operator which will be negotiated based on a percentage of gross sales. Right now, resorts are operating at an annual net loss to the province of approximately $1.3 million. This new arrangement will result in a positive economic return with net operating profits at the resorts reaching at least $1.1 million over the first five years of the contract.

The province will also invest up to $10 million to upgrade these facilities over the next three years, which the resorts will pay back through their own revenues over a period of time. Investment is needed if the province is to continue realizing the significant benefits associated with these resorts.

The investment will be used to upgrade facilities and grounds at all three resorts, creating construction work in the short-term. In the long term, the investment will pay off in terms of increased revenues for resorts, more jobs and greater local impact.

"The tourism industry values these properties, recognizing they are travel generators," said Karl Webb, president of the Tourism Industry Association of Nova Scotia. "We would want any new business arrangement to maintain or indeed enhance the resorts' position in the marketplace."

Nova Scotia derives significant benefits from its resorts. They employ approximately 400 staff on a full-time and seasonal basis, with a payroll of approximately $3.8 million per year. Resorts are considered to be premier destinations for visitors to the province. They also serve as anchors for other tourism businesses and are a significant economic generator for local communities.

All three general managers have expressed excitement about the prospects of working with New Castle Hotels.

Keltic's Ian Green says "We were impressed with their management teams when they visited the properties last winter."

Rene LeBlanc of The Pines says "All three properties required capital upgrades for some time and we are encouraged that the government is investing in these Nova Scotia assets."

Rick Draper of Liscombe Lodge adds "New Castle's commitment to improving the shoulder season is also welcome news for all three operations."

The government has identified resorts as an area where a private-sector management contract would be negotiated. It recognized that an international chain would bring significant marketing power to the table, strengthening the resorts and increasing their positive economic impact to the province as a whole.

The province hired Colliers International, a company experienced in the hospitality business and in structuring such arrangements, to lead the extensive evaluation process that began last year. The consultants concluded that a management contract holds "tremendous promise to improve profitability, increase service quality and enhance the value of the assets."

The province has been operating three resorts for more than 30 years. It owns The Pines Resort and Liscombe Lodge, while Keltic Lodge is owned by the federal government and leased to the province under a memorandum agreement.