North

Northern hotels plead with Ottawa for financial help during pandemic

Hotels in Canada’s North are pleading with the federal government for financial help amid a sharp hit to business from the COVID-19 pandemic, CBC News has learned.

Idea of 'staycation' is a false hope to save industry, hotel owners say

The owners of the Explorer Hotel in Yellowknife say it has been operating at far below capacity during the COVID-19 pandemic. The company has been losing hundreds of thousands of dollars a month between the Explorer, and the Frobisher Inn in Iqaluit. (Sara Minogue/CBC)

Hotels in Canada's North are pleading with the federal government for financial help amid a sharp hit to business from the COVID-19 pandemic, CBC News has learned.

In a letter sent to Canada's Economic Development Minister Mélanie Joly, the hotels are asking for a boost to the Northern Business Relief Fund (NBRF) announced in April, warning "the viability and future survival of the accommodation industry north of the 60th [parallel] depends upon it."

It's a big bonfire of money for quite some time- Ed Romanowski, president of Nunastar properties

The NBRF is a $15 million pot to help small and medium-sized northern businesses. The funding is geared toward businesses with fewer than 100 employees, and who are operating at a loss, among other criteria.

But the hotels say many of them are ineligible for the NBRF —  they either have too many staff, or have a diversified business which generates revenue from other sources.

"Am I supposed to tell the 101st person that they're not that important? And as a result of that, the entire business is going to suffer because we can't employ 101 people?" said Ed Romanowski, the president of Nunastar Properties, which owns the Frobisher Inn in Iqaluit, and the Explorer Hotel in Yellowknife.

"That doesn't make much sense. Why are 100 jobs in one business not as important as 100 jobs in five businesses?"

Romanowski says Nunastar is losing "several hundreds of thousands of dollars" a month between the two hotels.

During the pandemic, the Frobisher Inn is averaging between 10 and 20 per cent occupancy, while the Explorer Hotel is even less. Romanowski says they need to be between 50 to 60 per cent to break even.

"It's a big bonfire of money for quite some time. I know we'll make it through, but what makes us different than any other industry?" he said, pointing to the millions of dollars being used to support northern airlines through the pandemic — a point also iterated in the letter.

'Staycations' a false hope

The biggest hit to the hotels hasn't been the loss of visitors to the territory, but rather the loss of government and business travel.

But even if hotels were eligible for the NBRF, it pays a maximum of $100,000 per month for four months.

The letter to Joly proposes that "the program would fund the lesser of $1,500/month/unit, or to bring the operation to break-even after operating costs." 

"The program would end the earlier of six months, or three months after unfettered air travel is reinstated into the Territories by travellers of all types, but in any case, never exceeds break-even cash flows."

One of the solutions to help the industry, pitched by officials in both Nunavut and the N.W.T., is to promote "staycations" within the territories.

Northwest Territories' chief public health officer Dr. Kami Kandola encouraged such ideas last month, as did Nunavut finance minister George Hickes during the government's COVID-19 updates last Thursday.

"Promoting 'staycations' within the territories in hope that this will be enough to keep the businesses afloat is a false hope," the letter reads.

"Yes, staycations along with government, health, personal and business travel will help. But the population of 125,000 residents in the territories is just not enough to bring most of the businesses to break-even. Very few travel-dependent businesses will survive with only staycation travellers."

'A key piece of community infrastructure'

Arctic Co-Operatives, of which its member Co-Ops have properties and affiliates in 20 communities, has been able to retain staff by reassigning them to other jobs within the company — like the grocery store.

Yet while the hotels have taken a financial hit, the individual community Co-Ops aren't eligible for the NBRF because of revenue generated from their other businesses in communities — like the grocery store. The federal government doesn't count the hotel as its own entity, but rather as one part of the Co-Ops' business as a whole.

The Sauniq Hotel in Pond Inlet, Nunavut. The vice-president of stakeholders relations for Arctic Co-Operatives Ltd., says hotels like these in small communities are key pieces of infrastructure. (Arctic Co-Operatives Ltd.)

"The thing with the hotels is they're a key piece of community infrastructure," said Duane Wilson, a vice-president at Arctic Co-Operatives.

"Look at COVID[-19] as an example. If there weren't a hotel in Pond Inlet, what would the government of Nunavut's rapid response have been able to look like? I can virtually guarantee you they couldn't be in there for a week on a few hours' notice."

In an email to CBC News, a spokesperson for Joly's office said they're working closely with the hotels.

"We're aware that hotels and other larger anchor businesses across the North may have liquidity needs that go beyond what's currently on offer through existing small business programs," the spokesperson said.

About the Author

Nick Murray is a CBC reporter, based in Iqaluit since 2015. He got his start with CBC in Fredericton after graduating from St. Thomas University's journalism program. He's also worked two Olympic Games as a senior writer with CBC Sports. You can follow Nick on Twitter at @NickMurray91.

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