Northland Properties president Tom Gaglardi (left) and Northland Asset Management Co. president and COO Graham R. Rennie sat down with the Revelstoke Times Review to talk about the state of Revelstoke Mountain Resort. Northland Properties is the parent company of the Revelstoke resort.

Tom Gaglardi talks past, present and future of Revelstoke Mountain Resort

Report on the Resort: Northland Properties president Tom Gaglardi discusses the state of the resort; 2011/12 season numbers are in

I walk into Moxie’s restaurant in the Sandman Inn on 151A Street on a sunny Friday morning in Surrey just as the hostess unlocks the door for the lunch trade.

I’m there to meet Tom Gaglardi, the president of Northland Properties, a family-based business that owns a series of hotels, construction businesses and restaurants, including the ones I’m walking into. Locally, they’re the owners of Revelstoke Mountain Resort, having acquired it in late 2008 when they transitioned from a minority lender to the project to the management group.

In January, 2009, Gaglardi visited Revelstoke and addressed a packed room at a meeting hosted by the Revelstoke Chamber of Commerce, where he presented a rather frank assessment of the situation with the resort.

I travelled to Surrey to do an update interview. Three years later, economic and financial waters are slightly calmer and the resort is just finishing up odds and ends on the three main buildings that form the core of the hotel and condo buildings at the base of the resort.

I wanted to find his perspective on the past three years, and more importantly, his outlook for the future of RMR.

Gaglardi arrives dressed in Vancouver casual. The Dallas Stars owner is sporting a Band-Aid next to his left eye, due to a high stick while out playing scrimmage hockey with Mark Recchi. Recchi is one of several current and former NHL players who co-own the Kamloops Blazers with Gaglardi. The Gaglardi family has roots in the Kamloops area. We were joined by Graham R. Rennie, the president of Northland Asset Management, a division of Northland Properties. Based in Vancouver, Rennie is responsible for much of the day-to-day communication and liaison with local management in Revelstoke.

Here are key points from our 50-minute interview. For the complete transcript, see below.

RTR: Last time when you came to the [Revelstoke] Chamber of Commerce about three years ago, times were different. You’d just transitioned from a minority investment partner to a managing group for the resort. And the macro-economic situation was a mess and vacation rentals were in rough shape too. Business-wise, how have things been going with RMR since then?

Gaglardi: It’s a challenging business. If you look at the total investment in the hill now, is more than $300 million dollars. And so, I guess it all depends on how you want to measure it. We’ve backed the thing and we’ve got a tremendous amount of cash invested in the resort. I guess that’s what we’ve signed up for when we made the decision on Thanksgiving weekend whether we were going to be an owner or be a lender. And, so, it’s been a long, arduous process. I think on the positive side the resort has grown from a ski visit perspective and I think that the resort has enjoyed strong notoriety around the world. I think long-term that bodes well for them. That’s the positive part of it. The negative part of it is I think that 63 per cent of the real estate inventory remains unsold. So, it has been a difficult financial situation. So, as it is, there’s positives and there’s negatives. In a simplistic way to analyse it, I think there’s been positives and there’s negatives.

RTR: When people went down to the showroom when the project was announced prior to your management involvement, they saw all the ski hill lifts and hotels and condos everywhere, and maybe their expectations were a little high. They thought that was going to happen tomorrow, or next year. I guess, I’m wondering, is that final vision still the plan?

Gaglardi: Oh, I think so. I think when Don Simpson came to Revelstoke and pitched this development, it was grandiose and you could make those statements in that day. The world was quite a bit different place. He made some wild statements and some wild promises and some wild things, and I suppose had the world not changed, he may have been able to deliver on those things. I think it’s notable that we haven’t done anything different than that vision. Except from a chronological view. Because in order to do all those things, you need fuel. … We no doubt in our minds have built the start of a world-class resort. We haven’t cut corners. We have lived up to Don’s initial vision of the resort. I guess we would all hope that there would have been more things sold and more things happening, but here we are spending over $300 million dollars, and half that on the real estate product, and 63 per cent of it’s unsold. We have no debt on it, and all we do is hang around there and wait for the market to return. And we haven’t slashed prices; we haven’t done anything to hurt the market value of people who have bought. I think we’ve done a tremendous job of that and I don’t know anybody else who’d have the staying power and that type of ability to say, ‘We’re in it for the long haul.’ It’s tough now, but we believe in the product and we believe in the vision, we believe in it being an upscale offering. And we just did everything right. We bought the best ski lifts you can buy in the world. We just did everything right and we haven’t cut anything back, despite what you might read on a blog somewhere – people making false statements. If you look at what Don promised to do, we’ve done it.

On the golf course, more ski lifts, and summer operations

Gaglardi says his family is crazy about golf.  “So, there’s nobody that wants to see a golf course as part of the resort more than our family.” But the reality of the situation is RMR condo owners are there for the skiing. “This is a winter thing, and this is the best ski resort in North America and top-five in the world. That’s what our owners believe. The consensus from them [is] we would rather see you invest in making it a better ski experience, a better ski resort,” he said.

Gaglardi emphasizes the work that’s been done to create a better family experience, including the new Turtle Creek beginners area, a daycare, the Revelstoke Outdoors Centre for youth, re-grading of the lower mountain and snow-making to create a better beginner experience.

He also emphasizes the completion of the Wino wine bar and the addition of La Baguette this season.

But future plans like summer operations depend on a revival of the moribund recreational real estate market in Canada. “I think we’re in a good place right now in terms of the ski business. We’re seeing growth there, which is encouraging,” Gaglardi says. “The big elephant in the room is certainly the state of resort real estate.”

PHOTO: Northland Properties acquired the Sutton Place Hotel brand in 2011 and rebranded the lodge at the base of RMR to fit with the luxury image. Rob Stokes/Revelstoke Times Review

He also emphasizes the long-term nature of the investment, pointing to Northland’s pattern of acquiring and holding long-term. Gaglardi says the investment in RMR makes sense, “if you own it and hold it for 20 years. A really long-term view of it. But that’s the type of owners we are. Once we decide we’re going to do something, we do it. We don’t trade things. Our main business is hotels. We build and develop them and buy them and almost never sell them.

“I think that RMR I wouldn’t call a core holding for us, because we’re not in that business particularly,” he adds. “I think out of necessity, you have to take a long-term view of it. We think that over time this will be worth owning.”

Throughout our conversation, there is no promises of summer operations; instead the focus is on consolidation of the winter product and long-term planning – with fingers crossed for a real estate turnaround.

Infrastructure issues: avalanche closures and airport renovations

Here’s an excerpt from our interview:

Gaglardi: I would think if you put aside the state of resort real estate for a second, I think there are three keys to Revelstoke, because this resort can really power the community and really be even more than it has been. The two biggest hurdles I’d say are airport and highway. … We’ve got to figure out how to get a Dash 8 in and out of there everyday. The effects of that for the resort and the community are going to be immeasurable. That should be the biggest lobby effort there is, is getting some kind of an airline operation to get into Revelstoke. The highway, it killed us last year with the closures. How many road closures did we have last year?

Rennie: 163 over 60 days.

Gaglardi: Can you imagine that?

Rennie: We monitor those stats.

Gaglardi: It just killed us last year.

Rennie: It’s absolutely brutal.

Gaglardi says although they monitor the situation closely, they haven’t been actively involved in lobbying for improvements to the highway, but are fully supportive.

And the third key he alludes to?

Conflict brewing with city staff

One message that came across loud and clear is a brewing showdown with city staff. Gaglardi clearly feels that RMR isn’t getting the cooperation they need. This comes across unequivocally:

“It’s been pretty challenging. The types of demands on the things that the city staff – I think there’s just generally irresponsibility there in terms of – we would think twice about dealing with the city. There are cities that we run into in Canada that we would think twice about going back to them because of city staff that aren’t as [cooperative] as they need to be to foster development and investment. It’s a real concern.”

Gaglardi hopes that city staff can see the big picture of financial hardship caused by the world economic downturn. “We seem to have a city staff there that think that it’s still 2006 and the world’s a great place and this is a great resort and it’s frustrating for us, I’ve got to tell you. With what we’ve done for that community to have the frustrations of dealing with the city and the demands they’ve put on us. It is really, frankly disheartening. It’s one of the biggest challenges we have; the constant liaison with the city staff.

“I wish that it was more of a teamwork situation where we all looked at it and were reasonable about it, pragmatic about it. I think for all we’ve done – we’re not asking for anything other than just be fair and reasonable with the economic circumstances of that resort,” he says.

He’s penned a letter to mayor and council in early April. I checked to see if it was on the city agenda for their April 24 council meeting, but it wasn’t. City CAO Tim Palmer said it would be on the agenda at a later meeting.

Gaglardi underscores the financial commitment Northland has made to the city and the resort. $300 million in investment to date, and a $17.5 million staff payroll last year alone. “The city staff have told us on numerous occasions that we’re not committed to the resort,” he says. “And I’ve got to tell you it is absolutely maddening to hear things like that.”

Past troubles, current debates

“But I think that’s old news, isn’t it?” Gaglardi asks me about the controversy surrounding the transition to Northland ownership in 2008. Bills from contractors were discounted. Gaglardi said the situation was more complex than it’s been presented, and he disputes the “60 cents on the dollar” saying.

Gaglardi says the plan that was put into place was authored by the previous ownership group. “There was a situation where they said, if we can do these things, and we said, if you can do those things, we’ll commit this much. We’ll do this and you’ll do this and we’ll do that. That was the plan. … You have to understand, we weren’t in management then. The obligations that were created there were not our obligations.” He also said there was “tremendous” gouging going on. Some were paid more based on the ability to absorb losses, some less. “It’s old news and people should do their homework in terms of bankrupt resorts and what guys actually get paid,” he said. He also emphasizes their significant investment to keep RMR afloat: “I don’t think the resort would be there – I know it wouldn’t be there. The lift company would have come and claimed its lifts, taken them away and we’d be sitting on nothing.”

I also ask about the cancellation of the final two weekends this year. Rennie says it was a business decision. It cost too much to keep it open for two weekends. In the future, the resort is planning a firm closing date, likely based on the Easter weekend.

***

COO Rod Kessler presents annual report to chamber

PHOTO: Revelstoke Mountain Resort Chief Operating Officer Rod Kessler joins new Revelstoke Chamber of Commerce Executive Director Judy Goodman at a chamber meeting on April 18. Kessler presented a report on RMR’s winter operating season. Aaron Orlando/Revelstoke Times Review

Resort COO Rod Kessler presented an annual report speech to a Revelstoke Chamber of Commerce luncheon on April 18. He said the season was “a really good story.”

“We just had a banner year. It’s going to be kind of repetitive because everything is up. All categories, all sales lines, all business units really performed outstanding this year.”

Mother Nature cooperated by delivering big storms just before the weekend, “teeing us up for the weekend [and] the highways stayed open.”

He cited new rooms opening up due to completed construction and the transition from Nelsen Lodge to the new Sutton Place Hotel brand as key. They had “a real positive impact” Kessler said.

Kessler also touched on family-friendly additions mentioned in the story above as key to bringing in new clients. “All that added up and really gave us a strong foothold to say, yeah, we can provide this family experience.”

Intermediate grooming was another key focus, allowing aging skiers to have a more fluid experience on the hill. “We really think it worked – I know it worked for my knees,” Kessler said.

Media exposure was key. They averaged 90 media visits a year in their first seasons – a key component of their marketing strategy. This year it tapered off to 70 due to a focus on refined messaging, especially the family-friendly story theme. “We were more selective with the magazines, the articles and the angle. Part of our angle was not so much big mountain freeskiing; it was more about family.”

Global wholesale partnerships were up, including traction with key big players in the wholesale tourism market.

“Last but not least, which I think is a huge part of what really drove this overall success is the community,” Kessler said. “I’ve said it before and I’ll say it again – Revelstoke is very real. There’s nothing inauthentic about it … it’s diverse.” He contrasted it to other “contrived” ski resorts, saying it was a key advantage.

RMR doesn’t share hard numbers, but they do provide percentage increases. Kessler provided the following statistics to the meeting:

– Season’s pass sales were up 21 per cent

– Lift ticket visits were up 30 per cent

– Lift ticket revenue was up 20 per cent

– Lodging was up 10 per cent

– Outdoor centre was up 60 per cent

– Cat skiing was up 28 per cent

– Rental sales was up 45 per cent

– Retail revenues were up 32 per cent

– Wholesale business was up close to 70 per cent

Kessler thanked the Revelstoke Chamber of Commerce members for their help contributing to the businesses successful year. “It takes all of us to make this thing work,” he said.

***

WEB EXTRA: The interview with Tom Gaglardi and Graham Rennie

[Editor’s note: Due to much anticipated interest in this story, I’ve included a transcript of my interview with Tom Gaglardi and Graham Rennie. I spoke with them ahead of time and indicated I’d like to consider doing the story in a Q&A format. This is the vast majority of the interview, minus some cross-talk, false starts and a few small diversions I’ve edited out. The passage repeats sections of the interview already printed above.]

RTR: Last time when you came to the [Revelstoke] Chamber of Commerce about three years ago, times were different. You’d just transitioned from a minority investment partner to a managing group for the resort. And the macro-economic situation was a mess and vacation rentals were in rough shape too. Business-wise, how have things been going with RMR since then?

Gaglardi: It’s a challenging business. If you look at the total investment in the hill now, is more than $300 million dollars. And so, I guess it all depends on how you want to measure it. We’ve backed the thing and we’ve got a tremendous amount of cash invested in the resort. I guess that’s what we’ve signed up for when we made the decision on Thanksgiving weekend whether we were going to be an owner or be a lender. And, so, it’s been a long, arduous process. I think on the positive side the resort has grown from a ski visit perspective and I think that the resort has enjoyed strong notoriety around the world. I think long-term that bodes well for them. That’s the positive part of it. The negative part of it is I think that 63 per cent of the real estate inventory remains unsold. So, it has been a difficult financial situation. So, as it is, there’s positives and there’s negatives. In a simplistic way to analyse it, I think there’s been positives and there’s negatives.

RTR: When people went down to the showroom when the project was announced prior to your management involvement, they saw all the ski hill lifts and hotels and condos everywhere, and maybe their expectations were a little high. They thought that was going to happen tomorrow, or next year. I guess, I’m wondering, is that final vision still the plan?

Gaglardi: Oh, I think so. I think when Don Simpson came to Revelstoke and pitched this development, it was grandiose and you could make those statements in that day. The world was quite a bit different place. He made some wild statements and some wild promises and some wild things, and I suppose had the world not changed, he may have been able to deliver on those things. I think it’s notable that we haven’t done anything different than that vision. Except from a chronological view. Because in order to do all those things, you need fuel. … We’ve no doubt in our minds have built the start of a world-class resort. We haven’t cut corners. We have lived up to Don’s initial vision of the resort. I guess we would all hope that there would have been more things sold and more things happening, but here we are spending over $300 million dollars, and half that on the real estate product, and 63 per cent of it’s unsold. We have no debt on it, and all we do is hang around there and wait for the market to return. And we haven’t slashed prices; we haven’t done anything to hurt the market value of people who have bought. I think we’ve done a tremendous job of that and I don’t know anybody else who’d have the staying power and that type of ability to say, ‘We’re in it for the long haul.’ It’s tough now, but we believe in the product and we believe in the vision, we believe in it being an upscale offering. And we just did everything right. We bought the best ski lifts you can buy in the world. We just did everything right and we haven’t cut anything back, despite what you might read on a blog somewhere – people making false statements. If you look at what Don promised to do, we’ve done it.

RTR: You just said significant portions – 63 per cent is unsold – buildings one, two, three are basically done. There’s a little bit of work to do this year, but they’re almost there. Is that the next step, to sell out those and then take it to the next level, or are you going to be moving ahead with the next phases?

Gaglardi: Suffice to say, we’re not going to create more inventory in the short term, until we sell some of our inventory that we’ve got. We’ve got some ideas the type of inventory we’d like to create, but until we get some absorption of what we’ve created, I don’t think we’re going to create new products. We’ve got I don’t know how many lots unsold – single family lots. We’ve got roughly half the condos haven’t been sold. We’re going to go finish them. We have a … 222-suite, five-star operation, which is great for the mountain. Now the plan is to wait for the market to return to some type of normalcy where we can sell some more real estate product, and certainly we would love to be in a position to envision and create more product.

RTR: What about on the resort asset side? Things like golf course, more lifts, beginner lifts, other on-hill resources, mountain biking, summer operations. What’s the outlook on those things?

Gaglardi: One thing that my family are crazy about golf. More so than skiing. We’re not a ski family, per se. We’re a golf family for sure. So, there’s nobody that wants to see a golf course as part of the resort more than our family. It was in fact, I think when we first became a lender to the project, we really thought that to have a true four-season resort, golf would need to be part of the mix. So, we announced our intentions to do that. I think with the lack of being able to sell significant amounts of real estate, the golf thing is not a high priority. It’s something we’re committed to doing. I’m not sure when. I think three years ago I would have thought we would be in a better spot from a real estate perspective. Being able to sell product. … Golf courses don’t make money on their own. They have to be financed by real estate. We would create some real estate product around that to help offset that. But you know, when we talk to our owners and our best customers the last couple of years, the feedback we’ve gotten from them is so lopsided against golf being a priority. And I’ll explain what I mean by that. The consensus – and it’s not even close – is that we didn’t buy here to come play golf. This is a winter thing, and this is the best ski resort in North America and top-five in the world. That’s what our owners believe. The consensus from them [is] we would rather see you invest in making it a better ski experience, a better ski resort. Golf is great, and that would be great, but we never really intended to spend our summers there as owners. [They say] ‘We’re skiers first and foremost, and our owners are skiers.’ They’re not golfers; they’re skiers. I think that we took that to heart. We realized a couple years ago that the hill is a complex hill – pretty skewed to advanced skiing, and we weren’t as family friendly as some of our competitors in the area. And so it became pretty clear … and if you look at where our priorities have been, [it’s] been invested in families – in making ski experiences for families. That’s what we did. … I think the thing that we need to point out and I can give you some statistics on it, we’re skiing so much terrain. I can’t imagine a ski resort anywhere, if you look at the ski visits divided by the amount of terrain that we ski at Revelstoke. Don, with the chairs he put in, we’re skiing way too much terrain for the amount of skiers that we have. And I know people say we should put in more chairs – we’re already skiing way too much stuff. I remember speaking to somebody in the ski business who analysed our ski hill. [He said] ‘You’re having to maintain far too much area for how many skiers you have.’ But that’s the way it is. We put the [Ripper] chair in. A new chair, it’ll come when it comes, but I just can’t see the need for a chair. Now, do we need to fix family friendly? … Lift 11, the lift we looked at doing, it didn’t work. It’s like there’s a plan and these analysts or these planners draw [on it.] … We go look at that lift and you look at the land and it goes like this (Gaglardi gestures a rolling, flat surface.) We’d be dynamiting for five years to put lift 11 in. So that’s what we pursued and we lost really a season trying to pursue lift 11 and we realized it wasn’t economical.

Rennie: And it wasn’t opening up anything for skiing. Critical to our thinking is we’ve got to get into the family business and we’ve got to get people from children right up to beginner skiers. We’ve also now got a village that we need to get some life and vibrancy on. Last year we brought in snow-making down to the village. … You couldn’t ski down to the village. So we brought in snow-making that takes us from the day lodge down, and that can be expanded and fed out and we’ve been using it this year. And we’ve also put in the new carpet in Turtle Creek, which is the new beginner area … and the tube park. And we’re completing re-grading slopes for beginner terrain from the day lodge back to the village. So the progression now will become if you’re brand new, start on Turtle Creek, we’ll be making snow there year-round. Then you can progress to the day lodge, so the first step at the gondola, you can ski back down. … Then we’ll take you back up to the top of the gondola, and come back down to the mid-station, then you’re ready for the Stoke [chair]. So, through progression we saw that as being a much more viable option.

RTR: What about over the next few years? What’s critical path for Northland Properties at RMR? What are the key goals and objectives?

Gaglardi: I think that first and foremost this has been to date a horrific investment. I can’t (laughs) imagine many people entering into this business and doing what we did and hanging around for it. But the point I’m trying to make is that this thing will only be a good thing. If you own it and hold it for 20 years. A really long-term view of it. But that’s the type of owners we are. Once we decide we’re going to do something, we do it. We don’t trade things. Our main business is hotels. We build and develop them and buy them and almost never sell them. I think that RMR, I wouldn’t call a core holding for us, because we’re not in that business particularly. I think out of necessity, you have to take a long-term view of it. We think that over time this will be worth owning. It’s been a terrible blow [for us] thus far. But if the market returns and we can sell real estate and recover some of our equity, then it’s a little easier. But we would have hope we’d be in a better position than we are today. That’s the decision that we made. We made the decision to be an owner and I think we did it for the right reasons. We did it because we didn’t want to see the thing go sideways and believed in it. It’s our home province and all those reasons are why. Fortunately, I guess, we’re in a financial position that we could afford to do it. We feel good about what we’ve done. As I say, from an investment perspective, it’s been a very, very difficult deal. We view ourselves as long-time owners. We’d love nothing more than to build out the vision of 10,000 – 12,000 – 15,000 bed units. So we’re committed to that and the timeframe is really dependent on the recovery of resort real estate. The vision is still there. We don’t think about developing out a resort that is really lower end. We view Revelstoke as a premium resort and that’s the way we’ve kept it. I think what we’ve done … you’ve just got to be realistic about some things. I think in one hand Don [Simpson] thought he’d have the next Yellowstone Club. … That didn’t even work in Montana. … I think ultimately we will probably temper Don’s view somewhat … more pragmatic, but it’s still going to be a luxury, high-end resort. That’s our niche. We really believe that. The skiing’s too good – we’re attracting people from around the world. And there’s lots of cheaper places to go ski with your family – more affordable places. … We really improved our family business this year.

Rennie: With [Revelstoke Outdoors Centre] and with Turtle Creek and parents can see what’s going on [and the daycare.] It’s really what we see as core to the basic operation. We’re excited operationally too, that there’s obviously the real estate and infrastructure piece that go hand in hand, but at the same time we’re excited about the opportunities that we have for skier visits to keep the mountain functioning on that seasonal basis. We’re a world-class mountain.

Gaglardi: A beautiful place. Not naming anybody particularly, but the resorts in the geographic area, if you drive into Revelstoke and you stay at Sutton Place with the gondolas … the great thing about RMR was that we didn’t have to create this big village that never works, because we’re six kilometres from a 130-year-old railway town with a lot of character and a lot of services. If people want to have that village, it’s there; we didn’t have to recreate that, which is great. But then, if you want to stay in the village, we thought it was really important to enhance that experience. I think we’ve done it. I think this year I’m really proud. We have a village. We have a hip wine bar and that type of experience. We’ve got Rockford, which has done very well during the season. Adding La Baguette I think was important – to get a good coffee in a nice environment and bakery. … and a few groceries – the staples if you stay in a condo and you want to cook. You can go down there and get all you need to make breakfast, and some basic meals. I’m really proud of what we accomplished in the last year with all of the beginner improvements and Turtle Creek … and adding Wino and adding La Baguette to the offering. I think we’re in a good place right now in terms of the ski business. We’re seeing growth there, which is encouraging. The big elephant in the room is certainly the state of resort real estate.

RTR: On that note, people like to say, ‘It’s not a ski hill business, it’s a real estate business.’ In your experience is that right or is that wrong, and how is the ski hill business doing in Revelstoke? Is it self-sustaining?

Gaglardi: The ski business is now self-sustaining. But in terms of a return on what’s invested, it would be pathetic. The ski business is now turning a small profit, but not before considering what’s being invested. The ski operation itself is not losing money. And that’s really where we see the value over time, is if we can continue to grow the ski visits. And we’ve grown our ski visits every year the hill’s been open. We had one kind of a flat year … [last year] was very weather-related with road closures. … And our competitors had as much snow as we normally have. A bunch of things happened. We kind of flatlined. We had a nice increase this year. The ski business I think is important because it’s a recurring business and the infrastructure is in place there and hopefully that will grow over time and be something valuable. We’ve go so much invested in the ski hill. There’s no way to get that back with the ski business. It’s going to take a real estate recovery and sell some inventory to recover what’s been invested. I guess ski hills – those with real estate – there’s two real profit centres. I don’t think necessarily one’s better than the other. The ski business can be a decent business once you’re up and running and you can get over a certain level of ski visits, then it becomes a reasonable business.

RTR: What about larger infrastructure issues. Our Mayor David Raven met with the Minister of Transportation Blair Lekstrom a couple weeks ago to lobby for improvements on the Trans-Canada which is abysmal in the wintertime for avalanche closures and safety. He’s also travelled to Ontario for federal budget committee meetings and certainly has our MP David Wilks on board to some extent with a prolonged lobby effort. As well as the airport, – the CSRD is moving forward with modest improvements, coming up with a new flight plan, a little wider, new fences to hopefully improve that. Is this really important to you guys? What’s your perspective on this, and are you guys also involved in those lobby efforts.

Gaglardi: I don’t know if we are or not. I’m not involved necessarily in that. I would think if you put aside the state of resort real estate for a second, I think there are three keys to Revelstoke, because this resort can really power the community and really be even more than it has been. The two biggest hurdles I’d say are airport and highway. … We’ve got to figure out how to get a Dash 8 in and out of there everyday. The effects of that for the resort and the community are going to be immeasurable. That should be the biggest lobby effort there is, is getting some kind of an airline operation to get into Revelstoke. The highways, it killed us last year with the closures. How many road closures did we have last year?

Rennie: 163 over 60 days.

Gaglardi: Can you imagine that?

Rennie: We monitor those stats.

Gaglardi: It just killed us last year.

Rennie: It’s absolutely brutal. Just off the topic a little bit. I remember driving to Revelstoke 20 years ago, 25 years ago on my routine trips, and the road was never closed. I think an avalanche came down and they cleared it. Now it tends to be much more of a sense of predicting these things, so cut it off before it happens. There’s obviously it’s a lot more proactive when it comes to avalanche control.

RTR: And risk management and insurance people looking over your shoulder.

Rennie: Perhaps.

Gaglardi: I think that those are the two biggest challenges. And the third thing is that we really are somewhat frustrated with the city and the lack of support we get from the city. We ride into this thing and I just can’t believe where that thing would be if we had not stood up. I don’t think the resort would be there – I know it wouldn’t be there. The lift company would have come claimed its lifts, taken them away and we’d be sitting on nothing. We seem to have a city staff there that think that it’s still 2006 and the world’s a great place and this is a great resort and it’s frustrating for us, I’ve got to tell you. With what we’ve done for that community to have the frustrations of dealing with the city and the demands they’ve put on us. It is really, frankly disheartening. It’s one of the biggest challenges we have; the constant liaison with the city staff. I wish that it was more of a teamwork situation where we all looked at it and were reasonable about it, pragmatic about it. I think for all we’ve done – we’re not asking for anything other than just be fair and reasonable with the economic circumstances of that resort. We’ve done our part. We’ve kept that thing open. I think given the circumstances of what’s happened I think we’ve done a tremendous job and created a great resort. The three biggest challenges [are] resort real estate, highway/airport and the city.

RTR: Would you care to elaborate on that? Is that over and above what you’d experience if you were building a hotel and a restaurant next door, out here in Surrey, for example?

Gaglardi: It’s been pretty challenging. The types of demands on the things that the city staff – I think there’s just generally irresponsibility there in terms of – we would think twice about dealing with the city. There are cities that we run into in Canada that we would think twice about going back to them because of city staff that aren’t as [cooperative] as they need to be to foster development and investment. It’s a real concern.

RTR: Is that something you’ve been able to work with mayor and council on?

Rennie: I think they’re sympathetic to what the issues are, but they take a lot of guidance from staff. … The world changed in 2008 and the realities are that we need the support and accommodation and assistance of the city to get through some of the challenges that we have and that if things were thought of being one way in 2008, maybe we have to look at them being different today. The realities are different and the solutions need to be different too. That would be my take on it.

RTR: One last question. What about a direct message to the residents of Revelstoke, the people of Revelstoke. I think certainly over the past few years, concerns about the whole thing drying up and going away have dissipated but there’s still some worry about the future. What’s your direct message to them.

Gaglardi: What’s the worry about the future? What is the worry about the future?

RTR: I guess what’s your message to the residents of Revelstoke about the future of the resort. What would you like to let them know?

Gaglardi: I think that our message, I guess, [is] we’re bullish on B.C. We are committed to being responsible owners of RMR. Like we have been and we’ll continue to make Revelstoke the best place it can be. It’s like I said, we need the support. We need support from the city to ensure that this thing can be as good as it can be. Being unnecessarily … pushed around and having to do things that aren’t necessary today. … The more this resort grows, the more investment it gets, the more ski visits it gets, everybody wins. It’s more hours, it’s more employment, it’s more money to the community. I view it as a partnership. I think we’re all in it together and we’ll all benefit together. So, as I say, I’m proud of what we’ve accomplished there. There are over a hundred golf courses and resort developments in the Okanagan that are in a standstill, that are bankrupt. And this thing should have been and it’s not because of the goodness of our family. I hate to say … that’s the way it is. To date it’s not been a good investment. But having said that we’re big people and we’re responsible people. We know what we took on and we’re not complaining about it. We’re not complaining about it. But we are complaining when we are having to deal with what we think is a staff – I think the nature of government today is that the elected people aren’t in the control that they need to be in. I think that it’s a sad fact that we see everywhere where the city staff have – there seems to be an unwillingness of the elected people to …

RTR: Take back the zoo from the monkeys?

Gaglardi: Absolutely. Constantly we see it. The city staff have far too much power and they’re not accountable. And they don’t need to be accountable because they know that the elected officials aren’t going to make them accountable. We run into it far too often. There are good communities that we do business in and there are ones that aren’t being managed effectively. To come after us to do things that are just wasteful – it doesn’t help. We’re businesspeople. We’re going to do it for us. I think that there are communities that are great to invest in, and I think that Revelstoke needs to be wary of that.

RTR: Is there anything else that we didn’t talk about that you guys wanted to … talk about?

(Small pause while Gaglardi checks for a letter on his iPad.)

Gaglardi: (Referring to a letter Northland recently sent to mayor and council.) We just need the support of the community.

RTR: People are going to take me to task if I don’t bring it up. I don’t want to end on a bad note, but back a few years ago there was discounting of what was owed to a lot of contractors. On a much smaller scale, but people tend to get worked up over these things as well, the past two weekends – this weekend and the next one – [were closed] due to financial reasons. They are money losers because there’s no one up there. You’re telling me you’ve invested $300 million so far. Do you bristle at those complaints, or how do you deal with a different culture, perhaps, than the big city in a small town where people have long memories over these kinds of things.

Gaglardi: … When we agreed to support the resort, it was Don Simpson and his manager that created a plan that said we think we can settle all of these outstanding obligations on different scales. And there’s certain people that they knew they would accept something different. It got said that there’s 60 cents on the dollar. Depending on the person and the situation, some were higher and some were lower. There was a situation where they said, if we can do these things, and we said, if you can do those things, we’ll commit this much. We’ll do this and we’ll do this and we’ll do that. That was the plan. At that, you have to understand, we weren’t in management then. The obligations that were created there were not our obligations. They were obligations of the resort, which we were a minority owner and a lender to. What I will tell you with absolute confidence is that had we foreclosed on the resort, the people that got an average of pick your number, wouldn’t have got anywhere close to that. That I can tell you. It’s old news and people should do their homework in terms of bankrupt resorts and what guys actually get paid. The other thing I can tell you is there was a tremendous amount of gouging and things going on there. It was, frankly, it was disgusting, the abuses that went on there from contractors and things at that resort. Things cost far more than they should have. With the knowledge of that, then there was a lot of ability on management’s part to go to certain of the big players and providers to the resort because there was some excessive profit margins. As I say, the smaller the guy you were, I think you got a bit better than 60 cents. A lot of guys did a lot better than that. But there was a plan put in place and that was part of what we agreed to do. But I think that’s old news, isn’t it?

RTR: I think so to some extent. I think the greater issue that we’re dealing with is change to a community that was used to a rhythm of life. …

Rennie: I think our track record for the last four years since we jumped in with both feet that everybody’s paid. [There’s a] huge payroll, huge investment. That transition by the prior ownership group to get us through that transfer to us taking over was critical to us taking over. But since that day, nobody can say that we’ve reneged on any payments or that we’re not timely and not inclusive of the community and using local community and employing hundreds and hundreds of people. I think the track record from 2008 forward has been exemplary. Nothing but positive.

(Brief gap in the transcript.)

Rennie: [On the last two bonus weekends.] It wasn’t financial concerns. We saw the petition … we got. It was a business decision on a history of the season and our ability to continue shutting the resort and then reopening for two weekends, which presents inordinate challenges for the mountain. And also we don’t want to be in a situation, the return on investment is still not there, and we’re certainly not into the habit of wanting to not protect the long-term investment in the resort, cash flow, et cetera. But what we did is we didn’t cancel anything. We moved the weekends forward and we had the large weekend on April the 8th. I think going forward we’re going to have a finite closing day. We’re not going to try to keep open for those five days of no business. And we looked at hotel, we looked at bookings, we looked at who we had coming in and the sheets were clean. There was nothing after April 8. There’ll be snow up there until July, but we certainly have no intention of staying open until July either. And that does rely on our ability to continue to employ people and do things. We did advance our opening a week early. We stuck on a firm date of April the 8th and that’s probably our approach going forward, to come with a firm date, and have those celebratory weekends – they’ll continue, but they will just be around a firm closing. And the good rotating date on that is Easter. It’s when people go back to school, everybody’s back into spring mode, the flowers are coming up. The rains have started. I was there two weeks before and we’d lost the lower mountain. We were having a hard time skiing to the day lodge. All these things factor. Restaurant employees are moving back home … and we can’t deliver what we should be delivering post that period.

PHOTO: A snowboarder takes part in the S-Games competition near the mid-mountain lodge in late March. The resort plans a fixed closing date in the coming years, anchored by celebratory events. Alex Cooper/Revelstoke Times Review

Gaglardi: … I made a call and I just got the answer. We spent $17.5 million dollars in labour this past year on that mountain. That’s 17 and a half million dollars into peoples’ pockets. The city staff have told us on numerous occasions that we’re not committed to the resort. And I’ve got to tell you it is absolutely maddening to hear things like that. We’ve spent far more money building condos in the past year than we’ll ever get out of the place. So all we do is continue to write cheques and invest in that place, and then to hear that we’re not committed is frankly, it’s a joke. It’s aggravating. We don’t feel that we’re being dealt with fairly for everything we’ve done. We’re not after statues, we just want a fair shake.

Rennie: I think the decisions that we make and whatever we are asking for are with the long-term vision in mind. This isn’t a short get rich quick program.

Gaglardi: $300 million dollars is a pretty big commitment. And we continue to write cheques. I don’t know of anybody else that would have. We should have never, on an economic basis, ever continued to build the last two phases of Sutton Place. I mean it doesn’t make any sense. And then we’re not committed? … You’re going to have eight-, ten-, twelve-thousand bed units built out there. Those are things you’ve got to talk about. But today, given the fact that we have 63 per cent of our real estate product unsold? Let’s get real.

RTR: Well, if that’s been what’s been going on behind the scenes. I got to every council meeting and I read all their documents. It’s part of my beat. But they’ve held those cards pretty close to their chest. I don’t get a sense of RMR bashing or controversies coming out in a public forum. Maybe they don’t or maybe it’s all in camera.

Gaglardi: The feeling on our side is that it’s probably time for us to do a little bit more about that, and I think part of that is explaining our view to you. You know what? We’re British Columbia people. Born and raised here. My father’s born and raised here. I’m born and raised here and we’re committed to this province and no one can question that. And for anyone to question our commitment to RMR is laughable.

Rennie: And we’re demonstrating it. It’s not talk.

Gaglardi: We don’t talk. We don’t do anything. All we do is back it and continue to write checks and continue to support it. We’re proud of the resort. I can tell you something; there’s a lot of pride in our family and our company for what we’ve accomplished in Revelstoke. I go down and we do everything we can. If you go to a Dallas Stars game, Revelstoke is on the screens, it’s on our website.

RTR: Really?

Gaglardi: Absolutely. Come to Revelstoke. We’re running programs for fans, draws. Come to Revelstoke.

Rennie: We’re giving away a holiday. We’re promoting it through all our restaurants as well. We do coupons and …

Gaglardi: Across Canada. It’s in Moxie’s, it’s in everything that we do.

Rennie: The other part of that is operationally, the team there is committed as well. There’s no one – non committed comments, wherever they … originate certainly impact [us] as well.

Gaglardi: The other things we’re doing too I think, given our hotel expertise and all our relationships worldwide with the biggest tour companies, we’re now driving major tour companies to Sutton Place in Revelstoke. They were never going there. Now we’ve got them staying there at Sutton Place in the summertime. And you talk to any of the owners that own the condos in there, we’re delivering for them. They’re getting a return on their condos because we know what we’re doing running hotels. We are doing a good job on driving occupancy and average rate at Sutton Place and it’s new-found business. … We’re getting JTB and the big boys to stay. …

Rennie: They were looking for that product and that product … isn’t touched, not for 100 miles around.

Gaglardi: Now we’ve got the biggest tour companies in the world building programs to stop in Revelstoke and stay at Sutton Place in the summertime. We’re delivering for the people who have bought condos. They’re getting a return on their condos, and, again, driving business in a community that otherwise wouldn’t be there. We’re doing our best. We’re prudent operators. This is something we take seriously. Our [staff] take a lot of time promoting this resort and building business there.

***

Aaron Orlando is the editor of the Revelstoke Times Review. Email him at editor@revelstoketimesreview.com or follow Aaron__Orlando on Twitter.

 

 

 

 

 

 

 

 

 

 

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