Province offers lending hand to large-scale tourism operators
$50M in loan guarantees only available to companies with at least 100 employees, revenue of $10M
Nova Scotia is offering $50 million in loan guarantees to large-scale tourism operators who have seen their revenue cut in half between April and August due to the COVID-19 pandemic.
Eligible companies must have made at least $10 million in revenues in 2019 and have at least 100 people on the payroll.
Business Minister Geoff MacLellan said the goal is to help the 11 companies that may be eligible for aid borrow money to remain viable.
"They can't get the loans to refinance, reposition their financing, to survive," MacLellan told reporters Friday in Glace Bay.
"From my perspective and my belief, all these large operators are going to survive, they're not going to go insolvent. They're going to fight … and they're going to make it."
The Tourism Sector Financing Assistance Program will provide large operators access to lower-cost borrowing.
The repayable loans can be in the form of lines of credit or term loans issued either by a bank or the Business Development Bank of Canada.
MacLellan acknowledged it may appear the province is playing favourites.
"The optics of this, it seems as though we're helping the large guys, but it's the large players that are economic drivers as well. Everyone has a role in the economy, particularly in the tourism sector. We all need each other."
The Tourism Industry Association of Nova Scotia issued a news release saying it was "extremely disappointed" by the government's plan.
The association said it was not consulted on the loan program, despite holding meetings with MacLellan since the start of the pandemic and asking for a "wholistic and informed approach" to support more than 40,000 people who work in the province's tourism sector.
"We have been waiting months for a response and the announcement today does very little to address the immediate concerns for a broad number of operators across the province," Judy Saunders, association chair, said in the release.
"It appears that the government has decided to pick 'winners.'"
Aid coming for small operators: minister
The association said with the industry on the verge of "catastrophic losses," it would have preferred to see plans to mitigate the burden of property tax assessments, a provincial travel incentive program to increase tax revenues, and changes in policy to support business growth. More than 90 per cent of the sector does not qualify for the loan program, it said.
MacLellan has promised more help for smaller operators, perhaps in the way of property tax relief or government grants.
Tourism Nova Scotia estimates tourism revenues will plummet 65 per cent to $900 million in 2020, down from $2.6 billion in 2019, the association also noted in its release.
"Tourism is at the centre of the pandemic and will be at the centre of the recovery," said Darlene Grant Fiander, association president.
"This decision by government to advance an agenda that does not serve the broader sector is simply poor public policy and not the vote of confidence or leadership the sector was looking for."
Struggling to keep up
Playing favourites was certainly the way Grant Haverstock saw it. He and his partner, Jessica KleinHerenbrink, opened Iron Mountain Wilderness Cabins in Whycocomagh, N.S., last fall.
"I think it's asinine for minister MacLellan to say that bailing out the Hilton and whatever else, major tourism operators, is going to help anybody other than them."
Haverstock said his business was down to almost nothing since the pandemic hit Nova Scotia. He and his partner have been struggling to pay the bills since the spring.
"Property taxes, a break on that would be great," he said. "We've been open for seven months and we're up here in the middle of nowhere in the woods and we've got a $7,000 tax bill.
"There's lots that can be done. I think they just choose to look after their own one per cent buddies."
Business owner says program 'a good start'
Dennis Campbell, the owner of Ambassatours and Murphy's on the Water, said he was grateful for the program. The company employs roughly 450 people full time and seasonally, making it one of the biggest tourism operations in the Atlantic region.
"The impact of COVID has been absolutely devastating, not only to our company but to the entire industry," Campbell said Friday.
"I think this is an excellent program. It's a good start."
Campbell said his company was already working on a bank loan application — money that wouldn't be available without the government guarantee.
Spinoff benefits touted
He said it would help keep his business afloat and that would help the many smaller businesses and individuals that partner with Ambassatours.
"We take tours to lots of restaurants, pubs and accommodations in rural Nova Scotia," he said. "We also hire a lot of smaller tour companies to conduct tours for us, like kayak companies, as well as nature watch companies, hiking and cycling tour companies."
The maximum any operator can receive is $15 million.
The money will not go directly to the operators. It will be a standby line of credit for the applicant to provide to a lender as part of a debt application.