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The Rodd Colony Harbour Inn in Yartmouth will close Jan. 31, putting 20 people out of work. ((CBC))

The 65-room Rodd Colony Harbour Inn in Yarmouth, N.S., is closing after 40 years of operation, the owners announced Monday.

"It's been an emotional day for our company, our staff and the town of Yarmouth," said Mark Rodd, CEO and president of Rodd Hotels and Resorts, at a news conference at the hotel.

He said the main reason for the closure was the town's failure to secure a new ferry operator to resume service on the Yarmouth-Maine route, which was shut down a year ago. The hotel will close its doors on Jan. 31, putting 20 people out of work.

"This is a decision that I didn't take lightly," Rodd said. "I battled with this for a year, but it's something that our company has been forced to deal with."

Although the hotel will close, the restaurant will remain open, he said.

Rodd's larger Grand Hotel in Yarmouth will also stay open. The company also operates hotels in P.E.I. and New Brunswick.

Louise Larsen, who works at the Grand, said she's angry.

"Everybody feels bad because it's like a big family, and we've just lost part of ours," Larsen said. "[Premier Darrell] Dexter's absolutely useless because he's only for Halifax up."

In November 2009, Bay Ferries Ltd. announced that it was ending the high-speed ferry service between Yarmouth and Bar Harbor and Portland, Maine, because it didn't get extra funding from the provincial government for the 2010 season.

The company wanted at least $6 million to keep the Cat ferry going.

Ferry No. 1 priority

The town has been unable to secure another ferry operator, although in July, seven companies expressed an interest in operating a new ferry service.

Community leaders said the hotel's closure only underlines the urgency of restoring the ferry service.

Jim Greig, president of the local chamber of commerce, said the loss of the hotel is "a sad day for Yarmouth; there's no doubt about it."

"What's happening today really isn't that much of a surprise," Greig said. "It's a logical progression of not having the ferry service here."

Greig said the local economy is under pressure after a dismal summer tourist season. New economic development in the Yarmouth area has ground to a halt while existing businesses struggle to survive.

At least six tourism-related businesses have failed since the spring, Greig said.

Yarmouth Mayor Phil Mooney said restoring the ferry service is key.

"Our No. 1 priority for southwestern Nova Scotia is getting the ferry service back for 2012," he said. "Not only do I ask that for southwest Nova Scotia, but you can feel the effects right across the province from here to Inverary Inn in [Baddeck] Cape Breton to Amherst."

The Yarmouth Industrial Commission is currently evaluating five proposals for restoring ferry service.

Government shortsighted

The government has said it might help establish a new service, but it won't pay operating subsidies to keep a money-losing ferry afloat.

Liberal MLA Zach Churchill said the hotel's closure is a direct result of the government's decision to cut the subsidy to Yarmouth ferry.

"This is a serious economic blow to our area and is just the latest in a series of negative impacts that this region has suffered as a result of the shortsightedness of the NDP government," Churchill said.

"The last year has been a real struggle, and I appreciate the efforts of Rodd management to keep the business going to date. I am especially thankful management has decided to keep the restaurant open."

Churchill is calling on the NDP government to work with the community to re-establish a ferry connection between Yarmouth and New England as soon as possible.

Economic and Rural Development Minister Percy Paris has agreed to meet with community leaders in Yarmouth on Feb. 1 to discuss ideas to support the area.