Newfoundland and Labrador Product Development Strategy

- 169 -o Also, some level operating subsidy for the first year or two should be considered ifnecessaryIt is suggested that the funding agency appoint a person to the project’s board of directors tomonitor the development and operations of the project throughout at least the early years of itsdevelopment cycle. This will ensure a higher level of fiscal oversight. The agency might alsotake back a right of veto on resale to protect against flips.In any event, there are unlikely to be more than a few such projects developed in the provincein the medium term. However, one or two would be a major gain.Resorts are Important Tourism InfrastructureWhile such a ‘generous’ approach to supporting private sector resort development is out ofkeeping with current funding programs in the province, there are long and well-establishedprecedents for subsidizing the development and even the operations of resorts, not only inCanada but elsewhere as well. Resort development is a well-recognized, powerful way todevelop tourism for a destination.Today, the major resorts in all three of the Maritime provinces are financially assisted bygovernment in various ways and to varying degrees.Even in Ontario and Quebec, with large markets available, governments have invested heavilyin assisting resort development. The Quebec government invested millions of dollars in theredevelopment of Mont Tremblant Resort by Intrawest, a necessary inducement to attractabout one billion in resort investment in this project. The Ontario government investedheavily in bringing services to the Blue Mountain Resort to assist its growth and development.Resort development has to be treated like infrastructure – worthy of public investmentbecause of the powerful effect such projects can have in growing tourism and also becausedoing so is commonly necessary to make them viable for the private sector to invest.Real Estate-Based Resort DevelopmentThe modern way accommodations are financed at resorts today is through the sale ofrecreational real estate and rental management agreements with the owners, or some form oftimesharing. The traditionally financed resort concept of the past is generally unfeasibletoday given high development costs for the quality of accommodations contemporary resortgoersexpect. The real estate approach is much more feasible.Unfortunately, public agencies have shied away from supporting real estate-baseddevelopment, considering such projects to be real estate development, not tourism. But that isnot the case, at least with timesharing and mandatory rental management agreements. Inthese cases the real estate program has to be seen as simply a creative, and more viable way ofdeveloping and operating resort accommodations. The ‘owners’ are simply prepaying fortheir future use of the unit in the timesharing concept, while, with rental managementTHE ECONOMIC PLANNING GROUP of Canada Newfoundland & Labrador Tourism Product DevelopmentD. W. Knight Associates Strategy and Accommodation Needs Study