New Castle Hotels to Run Signature Resorts

Nova Scotia has entered into a contract 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. The company will take over operations on February 1.

"With this new contract in place, resorts will become a net contributor to the province's bottom line," said Rodney MacDonald, Minister of Tourism and Culture. "Our new arrangement is enabling the province 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 in Halifax and Deerhurst Resort in Ontario. These properties are managed by a Canadian company called Resorts Management Nova Scotia Limited Partnership.

"We look forward to helping these treasured Nova Scotian landmarks continue to flourish," said New Castle's president and chief operating officer, Gerry Chase. "The preservation and management of historic resorts and hotels is a forte for us. We are eager to put to use the experience we've earned at similar landmark properties."

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 extending the season at all properties.

New Castle is offering all seasonal staff a position at their current rate of pay. General managers will also be offered their current positions. Additionally, all remaining civil servants will be offered a two-year secondment with the company.

The company is also committed to buying locally. It has a proven track record of supporting local businesses.

The province will pay a three per cent management fee to the private-sector operator, which will be based on a percentage of gross sales. Right now, resorts are operating at an annual net loss to the province of about $1.3 million. This new arrangement will result in a positive economic return with net operating profits at the resorts reaching more than $2 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. 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 increased revenues for the resorts, more jobs and greater local impact.

"The tourism industry looks forward to working with New Castle and expect they will be good partners in growing the business of tourism," said Karl Webb, president of the Tourism Industry Association of Nova Scotia (TIANS). "TIANS is pleased that the contract ensures that the legacy of excellence will continue to exceed expectations and sell Nova Scotia as a destination of choice."

Nova Scotia derives significant benefits from its resorts. They employ about 400 staff on a full-time and seasonal basis, with a payroll of about $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.

The government 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.