Editorial 

Big three facing substantial changes

"...RMOW cannot rely on revenues from new growth to pay costs. Whistler, put bluntly, will not be able to grow its way out of financial challenges."

- From LTF, March 2009

 

In some respects, the above epitaph, taken from Whistler's draft long term financial plan earlier this year, could apply to Tourism Whistler and/or Whistler Blackcomb just as easily as the Resort Municipality of Whistler.

While most of our attention is focused on the Olympics, the three principal organizations in Whistler are going through major changes and so Whistler is going through major changes.

To some extent, these changes are a product of our times - a great economic recession, climate change, an aging population in the developed world. The combination has shifted people's priorities and been felt in areas as divergent as the auto industry, the media, Wall Street and government policy.

But let's try and keep things local.

For most of its brief history Whistler has been based on growth. Hoped for growth, expected growth and predicted growth. And now we've cut that off. There's next to no physical growth planned. That's our decision and there are many good reasons to maintain and support that decision.

But there are also consequences. In the words of this year's long term financial plan: "For most of the last decade, robust development activity in Whistler expanded RMOW's assessment base and provided the municipality with a steady stream of new tax revenues to put towards infrastructure and program costs. Revenues from new growth during this period were sufficient to enable Whistler to meet rising service costs without adjusting property taxes beyond Consumer Price Index for Metro Vancouver."

Municipal budgeting for the last couple of years has (finally) responded to the slowdown in growth and development, with tax increases of 24.5 per cent over four years.

Meanwhile Tourism Whistler is also feeling the pinch. For years, an expanding hotel base meant new members and new member fees. But we've gone too far. Again, the municipality's long term financial plan spells it out: "Paid occupancy rates of 65 per cent or higher (annual average) are required by the accommodation sector in order to achieve economic stability in Whistler. This threshold has not been reached since 1999."

Moreover, Tourism Whistler and the RMOW have come to depend on revenue from the hotel tax. In 2008 the municipality received $11 million, or 15 per cent of its annual revenue, in the form of hotel tax. But with the recession dropping occupancy rates and forcing hotels to lower room rates, hotel tax revenue isn't expected to reach 2008 levels again until 2012.

All of this is important to Tourism Whistler because some of the hotel tax flows through the municipality to the marketing organization. But that may not be the case in the future. The introduction of the harmonized sales tax on July 1 next year is going to change things. We won't know exactly how until the provincial budget is introduced in February.

The provincial government, which still wants to see the tourism industry double in size by 2015, isn't likely to cut tourism-dependent communities off when the HST replaces the hotel tax, but that revenue may be distributed differently.

Tourism Whistler, like Tourism Vancouver and Tourism Victoria, also receives funding through Tourism B.C. But with the decision earlier this year to end Tourism B.C.'s status as a Crown corporation and move it into the Ministry of Tourism, long-term funding from Tourism B.C. to organizations like Tourism Whistler is now in jeopardy.

As well, some of Tourism Whistler's sponsorship contracts will expire in the next couple of years, which could mean reduced revenue.

And then there's Whistler Blackcomb. While the flagship in Intrawest's stable of resorts may operate profitably, that's not the case with all of the other resorts. The performance of Intrawest as a whole is one of the biggest concerns of parent company Fortress Investment Group. The concern comes from a lack of growth - the market for resort real estate has dried up.

Without real estate development Intrawest resorts, including Whistler Blackcomb, have to find a new model to grow business. That model isn't evident yet.

This isn't a crisis for Whistler, but the three principal organizations in town are all facing major changes and growing pressures. The boards, staff and elected representatives of these organizations are aware of this. But with the Olympics first and foremost in most people's minds it's easy for the rest of us to overlook how substantial the challenges may be after the Games.

 

 

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