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Keeping tourism dollars alive

Seeds of concern planted with local governments, as tourism funding for resorts comes under review by province

If Mayor Nancy Wilhelm-Morden was hoping to show off Whistler in all its resort glory, she couldn't have wished for anything better than the 2014 GranFondo in early September.

The annual road race from Vancouver to Whistler was topped off with an afternoon celebration at Whistler Olympic Plaza — athletes in spandex milling around with their families openly enjoying a well-deserved beer, a packed village with an upbeat vibe, and let's not forget the endless sunshine, shining between the two mountains, standing sentinel over all the fun. In short, Whistler doing what Whistler does best.

Watching in the wings was B.C.'s Minister of State for Tourism and Small Business, Naomi Yamamoto.

She was invited specifically to see provincial Resort Municipality Initiative (RMI) money at work — some $10.5 million that gets divvied out to 14 resorts across the province to boost tourism. GranFondo gets a small investment from Whistler's pot as the event continues to churn out millions into the provincial and local economies every September.

"(RMI) allows us to stay at the top of our game," says GranFondo co-founder Neil McKinnon the day after his event. "The funding is critical for us to allow us to maintain a sense of innovation and provide new opportunities that will enhance the event."

In a corner of the VIP tent after the awards ceremony Yamamoto confirmed that the RMI program is on the provincial radar — trade and immigration follows on the heels of tourism, after all, and the province is keen to foster all.

There is, however, a caveat.

"We definitely support RMI funding... but we are actually reviewing right now the return on investment," says Yamamoto.

"Some changes may be coming."

That has Whistler on edge. Uncertainty, the bane of all good budgetary planning, abounds. There is $7 plus million annually at stake. As of right now, Whistler's five-year deal is good until 2016. And then...

Is there is a chance of losing it? Is there a risk the $10.5 million could be redistributed differently among resorts?

Of all the 14 resort municipalities, Whistler stands to lose the most, by far, from changes to the program.

From the first year in 2006 until 2013, more than $50 million collected in Whistler has been funnelled back into the resort.

Safe to say, RMI has changed the face of Whistler.

It has helped build an athletes' village for the 2010 Olympics, which turned into long-term resident housing for employees; it has enticed big name events and big money to town — Ironman, The Vancouver Symphony Orchestra, Wanderlust; it has made the resort think more critically than ever before about its tourism spend; it has buffered Whistler from global storms.

Above all, the record-breaking room night numbers of late speak for themselves. 

"I'm not telling tales out of school by saying we're looking at what we fund through RMI monies currently and what that would look like if some, or all, of those funds disappeared. And it's not pretty," says Wilhelm-Morden.

"It's not necessarily the status quo which is critical. It's certainty, which is important. We have to be able to plan into the future knowing that the fund, all or part of it, is going to carry on existing."

To do that B.C.'s resorts must prove it's worth it, especially Whistler.

 

RMI by the latest numbers

 

Next week (Sept. 22-26), the 14 resort communities will gather at the annual Resort Collaborative meeting during the Union of British Columbia Municipalities (UBCM) convention in Whistler.

It's the annual check in — time to learn about successes in other resorts, learn about programs and projects that have made a difference, or not, time to bend the minister's ears.

Whistler is ready.

The RMOW's latest research shows that annual hotel revenues in Whistler have increased by $20 million annually since the RMI funding began in 2006, bringing its total annual hotel revenues to the $200 million mark.

That $20 million lift, in turn, has generated an additional $80 million in commercial sector spending on an annual basis.

"So you can see first the investment effect and then the multiplying effect," says the mayor.

Whistler is also ready to talk about its thorough evaluative process that the program is vetted through every year.

About half of Whistler's RMI funds go towards the high-profile $3.1 million Festivals, Events & Animation Program, which sees funding go to third-party producers like GranFondo ($65,000), Ironman ($250,000) and original programming like the Vancouver Symphony Orchestra ($245,000).

And then there's project funding — alpine trail development, conference centre improvements, the Rainbow Theatre reno, the outdoor ice rink at Whistler Olympic Plaza, the Spearhead Hut Project support.

The latter is a proposed series of backcountry huts beyond Whistler Blackcomb's boundaries and the $150,000 municipal commitment in RMI funds was instrumental in moving that $1.8 million project forward.

"It came as a great endorsement... that there's a real value for the resort in having a hut system," says Jayson Faulkner, chair of the Spearhead Hut Committee.

He points to potential additional room nights, the diversificaiton in snow sports experience and product, the potential iconic nature of the project, and the recognition of the growth in backcountry skiing.

"It certainly helps us move the ball forward in the sense that it gives that much more support and credibility when we reach out to other people to help us with funding for the project," adds Faulkner.

All in all, the RMI is designed to grease Whistler's tourism wheels.

In many ways it feels like Whistler's program is just hitting its stride — the past two years in particular have seen month after month of record-breaking room night numbers.

Sun and snow have played a role as has the rebounding global economy; so too has RMI.

Taking the three-year baseline period before RMI — 2004 to 2006 — and comparing it to the most recent three-year period — 2011 to 2013 — Whistler has seen a 12 per cent increase in annual hotel revenues.

"Our product hasn't changed," says the mayor. "The economy, if anything, is dampened these last three years compared to '04, '05, '06... and we've got 12 per cent higher annual hotel revenues. I think we can safely say that RMI funding and the programming that that funding has seen, and the projects such as Olympic Plaza, I think you can say that those funds have done what they were intended to do."

And not just in Whistler.

As Whistler's hotel revenues have grown $20 million annually since RMI, the 13 other Resort Collaborative communities collectively have also grown — to the tune of $60 million annually.

"(That's) 10 per cent faster than provincial growth as a whole," says the mayor.

Minister Yamamoto has seen it in action outside Whistler too.

The impact at other resorts is compelling.

"I've been in a few communities, most recently Tofino, and what we're finding is that return on investment from RMI funding is greater in those communities that are just starting to develop their tourism assets," she says.

Government statistics show that spending on tourism infrastructure has a positive effect in those areas, and, generally speaking, smaller communities, unlike Whistler by comparison, have the greatest infrastructure needs.

They also have the largest potential for growth, says Yamamoto.

"So, that money goes a lot further in a smaller community."

 

The Resort Collaborative

 

They all have the same stories to share — from the $61,000 that the City of Kimberly receives, to the $300,000 for Sun Peaks, to the $700,000 for Tofino — and the $7 million for Whistler.

The $10.5 million RMI pot is divvied out based on a complex funding formula. The resorts must have a tourism-oriented economy with at least two-thirds of the provincial average number of accommodation units and at least 2.5 times the number of units per capita, or it must have a ski facility within its municipal boundaries.

The resorts must also collect the two per cent Additional Hotel Room Tax, now known as Municipal and Regional District Tax (MRDT).

The final funding amount depends on the MRDT revenues collected the previous calendar year, multiplied by an Accommodation Unit Multiplier (based on the number of units).

It's complex. But at the heart of the calculation is the idea that the busier the resort, the more RMI money it gets — an "incentive-based program."

The Resort Collaborative will be telling its own stories this week at UBCM through the annual reports. And if there's one word common to all it's that the RMI funding has become "critical" to B.C.'s resorts — small and large.

 

REVELSTOKE — Talk about incentive. In Revelstoke, RMI funding has gone from the $400,000 range to more than $600,000 in a few short years — testament to the success of the program in the small southeastern B.C. city with a population of around 7,000 people.

The MRDT — a reflection of hotel revenues in general — has increased 36 per cent since the program started — increasing steadily every year.

It's been said it's the highest percentage increase of any of the resort communities.

"Locally we just can't believe it," says Alan Mason, Revelstoke's director of community economic development.

And while an argument can be made that three new hotels have come on board in that time, and the Revelstoke Mountain Resort (RMR) came to being in 2007, the heart of the issue is that Revelstoke is simply busier. A lot busier.

"We've seen just fantastic growth in our hotel revenues, largely due to a lot of the RMI projects that we've developed," says Mason.

"We're not just seeing growth because of the (Revelstoke Mountain Resort); we're seeing growth throughout the year, people coming in the summer and even in the shoulder season too."

Much of Revelstoke's half a million dollars in RMI has gone into infrastructure programming — adding two backcountry snowmobile huts, building a brand new visitor information centre in the heart of town, an upgraded Nordic ski lodge, to name a few of the amenities put in place.

That Nordic lodge, for example, cost in the range of $750,000; the RMI contribution was $150,000.

"The local club has been able to go out and get grants from other places," says Mason.

The new lodge meant Revelstoke was host to the BC Midget Ski Championships in 2013, which brought more than 500 competitors, coaches and their families for a weekend, something that was not possible without the facility.

With the focus initially on beefing up facilities, Revelstoke is now looking to signature festivals and events for the shoulder seasons.

"It's been really positive for us," says Mason. "There's no way we could have done any of that stuff, without that money."

 

SUN PEAKS — The money has had a major impact on summer business at Sun Peaks.

With the $300,000 in RMI, Tourism Sun Peaks president Christopher Nicolson says they have invested in large-scale summer concerts from Blue Rodeo to the Doodlebops, all in an effort to bring in guests who have never been to Sun Peaks before.

The changes have been significant.

RMI has helped transform a winter resort into a nascent year-round resort. "If you look at growth over the last couple of summers, we've grown the summer room nights 37 per cent since (RMI) started," says Nicolson.

Room nights last summer were 39,000 — more than half of the 66,000 winter room nights.

"We've got businesses that have, as a result of RMI, they have had some of their best summer days," says Nicolson. "There are restaurants that, for the first time ever and I'm talking 20 years, are now able to generate summer revenues that are somewhat in line with winter and, perhaps more importantly, it's provided numerous employers (the ability) to retain more staff on a year-round basis. There are families that have been able to stay in Sun Peaks on a year-round basis because there is that critical mass of business in the summer that means instead of going and working between Wickaninnnish (in Tofino) and Sun Peaks, they are able to work in Sun Peaks year round because there is now a summer trade."

 

TOFINO — Unlike Sun Peaks with its summertime concert line-ups driving business, Tofino has invested the bulk of its RMI, roughly $700,000 annually, into infrastructure.

The new infrastructure includes public washrooms and change rooms at beaches and trailheads; trails and pedestrian walkways; signage; upgrades to street furnishings; a bike skills parks and scenic viewpoints.

And while public washrooms on the beach don't have the same cachet as a big name outdoor concert, they too, according to Tofino's manager of resort municipality initiative services April Froment, are making a difference.

"It is, of course, difficult to isolate RMI funding as a unique driver of visitation," says Froment via email. "A lot of the infrastructure that the program funds in our community support items that visitors would... expect us to have anyway, such as a public washroom at the beach. It is unlikely that public washrooms motivated the visitor to travel to our community, but because it was there, they likely had a more positive experience while visiting, and are therefore more likely to come back or recommend Tofino to a friend."

The numbers again speak for themselves with increases in hotel revenues, particularly in shoulder season of May/June and September/October, as well as an increase in the average length of stay.

Tofino's two per cent hotel tax revenue (MRDT) was up 28 per cent in May, over May 2012. On the other side of summer, in the September shoulder season, 2013 was up 15 per cent over Sept. 2011.

"Even the normally sleepy winter months are showing gains," says Froment. "January 2014 was up 21 per cent over 2012. That's a significant change in just two years."

The fight for 'financial tools'

B.C.'s resort municipalities owe this boon to Whistler.

It led the charge, more than a decade ago, in the fight for what was then called "financial tools."

Back then the writing was on the wall in Whistler; unprecedented development had kept the resort engine turning for decades. But as the town was coming of age, and development was slowing with the town reaching build-out, Whistler's well was running dry. The question on everyone's minds was how to sustain the resort and keep this tourism jewel polished on the backs of 10,000 permanent residents? The tax base alone simply couldn't manage it.

Former Whistler Mayor Ken Melamed trips down memory lane over the long and oft-difficult fight to secure "financial tools."

It began with the 2010 Olympic Bid as a negotiating platform, and a promise from Gordon Campbell's Liberal government of the day, that win or lose the bid, Whistler would secure three lasting legacies from the province — a boundary expansion, 300 acres of Crown land for resident housing, and financial tools.

"We weren't exactly sure what the financial tools would look like," recalls Melamed, who was a long-standing councillor at the time.

"We threw a bunch of darts at the wall with the province."

Ultimately, they began narrowing in on a hotel-tax transfer — in other words, hotel tax collected in Whistler could be funnelled back into Whistler.

It seemed fair. But what about the other resorts? Why would Whistler, typically perceived as a town of fat cats, get even more from government?

This was the stalled conundrum Melamed inherited as mayor.

And then... a breakthrough.

It was 2005/06. The Olympic Games was just five short years away. Whistler was $8 million short on its $161 million athletes' village development and Melamed had promised the town that these Games would not cost taxpayers.

Melamed, Jim Godfrey, representing Whistler for the 2010 Games, and municipal CAO Bill Barratt presented a solution to the province — a transfer of hotel tax, based on a formula of hotel beds, allowing other resorts to participate.

It would solve Whistler's long-term problem, and more immediately, the RMI could help bridge the gap to the athletes' village.

"It was very clear that our intention was to have it be long term," says Melamed.

Melamed has been around long enough to know that there are ongoing fiscal challenges at all levels of government. And just as it was in his day, higher levels of government are continually downloading their fiscal challenges onto the backs of municipalities. (That conversation will likely be another hot topic at the BC Mayors' Caucus during UBCM.)

"It's always the same challenge," says Melamed. "The government giveth and the government taketh away.

"The most powerful thing that the Resort Collaborative can do is show the return on investment to the province."

 

Case in point, GranFondo

 

GranFondo has redefined Whistler after Labour Day. What was once the start of the slow fall shoulder season is now delayed by the annual road race, which sees roughly 3,500 riders take to the highway.

Co-founder McKinnon would never knock RMI funding; he's had annual contributions from Whistler in the last five years from as much as $130,000 in 2011 to the $65,000 this year. Putting on events like his is expensive, he says.

It's also risky trying new things.

That's why RMI is so critical. It "(allows) us to always maintain a sense of innovation and provides new opportunities that will enhance the event," says McKinnon.

This year there was a new family focus, funded in part with RMI money, with a goal of enhancing the event and getting people to stay longer and bring their families.

It's too early to tell just how busy it was. Tourism Whistler's stats aren't available just yet.

But the pace of bookings coming into the GranFondo weekend was 13 per cent ahead of last year, says James Buttenshaw, director of planning and partnerships for Tourism Whistler.

"It's difficult to determine exactly how many room nights are a result of GranFondo, as there were many other visitors here enjoying a summer weekend in Whistler," says Buttenshaw. "However, there is no doubt the event has significant impact on the resort."

In its first year, 2010, occupancy grew by 18 points over the previous year when the event did not exist — from 63 per cent occupancy on that first September weekend after Labour Day to 81 per cent on the Saturday night.

"We're really excited to see the success GranFondo has had this year in evolving the event into a multi-day experience and look forward to working with them to continue this evolution," says Buttenshaw.

"The pace of bookings this year showed strong growth across all three days of the expanded event, suggesting it was likely the busiest GranFondo weekend yet."

The last year the event was studied for its economic impact was 2011. Those results showed there was a spinoff of $8.2 million in provincial economic activity, with $2.7 million of that happening in Whistler.

"The RMI funding directly and indirectly allows us to do things that other events and other destinations just can't do," McKinnon says.

"We can build mediocrity or we can build excellence. And we want to build excellence and this helps us to get there."

GranFondo's story is the story of just $65,000 in RMI at work in Whistler.

In the spring, it's much the same with Tough Mudder, an event that at last tally brings $7.5 million in economic impact to the province, with $4.2 million of that occurring in Whistler. Last year Tough Mudder received $112,000 in RMI.

"Whistler RMI funding is essential to the success of the Tough Mudder event in Whistler," says Ben Johnson, via email. "Given the operational challenges of this event, the funds help support many critical needs, ranging from transportation to marketing costs to attracting and retaining more people into Whistler Village.

"The RMI funding and strong relationships in the community are the primary driver in our consideration of bringing a new event format, Mudderella, to the Village in September 2015."

There are many more stories like this — 50 million dollars worth of stories.

All play a role in pumping the 785 million new dollars into the province from Whistler every year — a full 22.5 per cent of the tourism export revenue in the province.

Whistler is B.C.'s tourism behemoth and RMI is keeping its belly full.

"We're really coming into our own with so much of this program," says Wilhelm-Morden. "And certainly I can understand the provincial government is reviewing all of its programs. I understand. But when it appears that the reason for the RMI funding in the first place is being met, the goals are being met, and the tremendous economic generation that we have in the province, to call that all into question seems to be odd."

Melamed, now the local candidate for the Green Party of Canada, is more blunt:

"If the RMI goes, then the provincial economy in British Columbia is going to suffer."



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