Thanks you for the shot Stu!
________________________________________________________________
Does Moncton need a convention centre?
Consultants hired by city asked to come up with three options, and recommend best one
HELPBy Brent Mazerolle
Times & Transcript Staff
Published Friday September 14th, 2007
Appeared on page A1
The City of Moncton has been trying for years to get one built in downtown, but the question begs asking again: Do we need a convention centre?
Advertisement
The city has hired one of the hospitality, real estate, and tourism industries' top consulting firms to answer that question. Representatives of PKF Canada were in the city yesterday to begin addressing the issue with area stakeholders.
The push toward a convention centre stems back to a feasibility study carried out by Horwath Consultants in 2000 that found Moncton was under-served in terms of meeting space. As a result, the city began exploring the idea of a convention centre in earnest.
But much has changed in the interim, and the convention market now isn't what it was in 2000.
With city council, city staff and other community leaders beginning to wonder if the missing piece of the convention centre puzzle -- federal investment to match funds put up by the city and province -- would ever materialize, the city decided last month to re-appraise the need with a $55,000 study expected to be finalized by November.
The consultants have been asked to come up with three options and recommend the best one for the city, investigating whether a stand-alone convention centre, a centre attached to an existing structure or combined with something like a casino, or simply increasing meeting space in the city in other ways is the best course of action.
All this delay in getting a convention centre off the drawing board might not necessarily have been a bad thing.
While consultants Brian Stanford, Fran Hohol and Rebecca Pickford were in town yesterday to merely start looking at Moncton's particular situation, the background information they brought with them on what Stanford called "the realities of the convention centre business in Canada," might help Metro Moncton residents see better what they could be getting into.
First off, "the financial reality of convention centres is they don't make money, they lose money," Stanford said. In fact, he added, only two of the 17 top performing convention centres in Canada don't need subsidies to break even. And the two that are self sufficient owe their financial situations not to conventions, but to renting the excess capacity of their parking lots.
"Most convention centres need in excess of $30 per square foot in operating subsidies (each year)," Stanford said, meaning the floor space sizes being considered for Moncton would cost anywhere from $250,000 to $500,000 per year.
On the other hand, each convention delegate visiting a city can be expected to pump $1,000 into the local economy, with more than half of that going to businesses besides hotels.
The consultants said if the business case is there, there is huge economic benefit to a whole community from having a convention centre.
The convention business is seasonal and cyclical though. "April, May and June and September, October account for 75 per cent of convention activity," Fran Hohol said. As well, large national conventions, no matter how successful they might have been in Metro Moncton, will still not come back for several years as the annual gathering is rotated around the different regions of the country.
Meanwhile, the consultants said they would only look at the two previously identified potential sites for a convention centre, the Beaver Lumber and Assumption Life properties, as well as anything else in the downtown core. Stanford said it didn't matter how great a plot of land a city might have elsewhere. "Building outside the downtown is not an option."
Moncton is, of course, not the only city looking to get into the convention business. Regionally, Charlottetown and Fredericton are both actively pursuing centres. And last week, the same federal government that has been silent on footing a $9-million share of an estimated $18-million Moncton convention centre nevertheless gave Niagara Falls $35 million to build one.
PKF said if all convention centres that have been proposed or are under construction in Canada get built, the convention space in Canada will increease by 40 per cent in the next few years. By contrast, the convention business grows by about eight per cent per year.
The trick for Moncton will be to compete with other destinations -- not the Tier 1 facilities in places like Montreal, Toronto and Vancouver, not the Tier 2 facilities in cities like Calgary, Edmonton, Quebec City or Winnipeg, or even the Tier 3 facilities like those in Halifax, Hamilton and Penticton. Rather, we would compete against places like Saint John or Fredericton or Charlottetown.
The consultants also came armed with a preliminary survey of Canadian meeting planners' perceptions about Moncton, which give some idea of how we might compete. Since meeting planners' perceptions matter as much as reality, their answers are indicative.
Moncton gets its highest ratings for a friendly atmosphere first, its green practices second, and the safety and security of its city third. Its fourth highest rankings came in perceptions about service.
Where the city fares most poorly in the minds of Canadian meeting planners is in its "airlift" -- industry jargon for whether or not delegates have easy air travel to and from a city. Moncton has just 117 domestic flights a week compared to Halifax's 480 and the 172 that serve St. John's, Newfoundland, the latter a convention hotspot because it's considered an atrractive tourist destination.
Moncton also gets drubbed by meeting planners for its overall location and destination appeal and the lack of large blocks of hotel rooms in the downtown core.
Among Atlantic Canadian destinations, meeting planners ranked the city fourth behind Halifax, St. John's and Charlottetown.
While Halifax has a Tier 3 facility in the World Trade and Convention Centre, the consultants noted demand is currently 25 per cent below the average for other Canadian Tier 3 centres, a statistic that might give pause to other regional cities.
The consultants briefed Moncton City Council yesterday morning and spoke largely to hoteliers at a public meeting yesterday afternoon also attended by Rob Robichaud of the Greater Moncton International Airport Authority, Riverview Mayor Clarence Sweetland, and various tourism and economic development officials.
They will investigate the Moncton situation over the next several weeks and plan to present a draft report to Moncton council by the end of October. They hope to present their final report by the end of November
_________________________________________________________________
Airport marks 10-year success story
But Moncton paid heavy price as pioneer of privatized airports
Times & Transcript Staff
Published Friday September 14th, 2007
Appeared on page A1
Tomorrow, Metro Moncton's airport marks the 10th anniversary of privatization.
Today, its proponents agree there is much to celebrate, yet challenges lie ahead and ironically, many of them stem from the federal government which launched privatization in the first place.
Moncton's airport was not only the first medium-sized airport in Canada to be privatized by Ottawa on Sept. 15, 1997 but, a decade later, is also one of the greatest achievements of the federal airport privatization program, a shining example of the success that can be achieved when the free market and the entrepreneurial spirit are permitted to call the shots.
On Sept. 15 1997 the volunteer members of the Greater Moncton Airport Authority inherited a terminal building that was deteriorating and soon to be condemned.
They also paid a heavy price for being the first; a $4.8 million debt to rebuild one of the airport's two runways and a $2.1 million chattel debt owed to Transport Canada. Subsequent privatization at other medium-sized airports across the country did not come with those debts.
In the last full year of Transport Canada ownership, the airport offered two passenger airlines serving 240,000 passengers to three destinations in Halifax, Montreal and Toronto and had seven cargo services handling 14,000 tonnes of cargo.
The airport operated at a deficit of $2 million, which was predicted to continue climbing under federal control -- indeed mounting costs were the reason Ottawa wanted out of the airport business.
Ten years later the old Moncton Airport is now the Greater Moncton International Airport and a glittering new terminal offers five passenger airlines that in the last fiscal year served 558,000 passengers, an increase of 133 per cent from 1997.
Destinations include the original three as well as a direct flight to Paris in the summers, various direct 'sunflight' destination in the winters, a direct flight to New York City year-round and next month, a new direct flight to Ottawa. Continental Airlines is also considering a second daily flight to New York within a year.
GMIA's private board of volunteers and the Vancouver-based company it hired a decade ago to run the airport operated at a $1-million profit and is also paying down those old debts, says Rob Robichaud, GMIA's general manager and CEO.
"We are paying down that $4.8 million debt -- it's now down to $3 million -- and, as was the case with other airports across the country, we've managed to get rid of the $2.1 million chattel payment and we've even had some success with the rent."
Another often-overlooked aspect of the privatization deals across the country is that privatized airports still sit on government-owned land and in 2016 they're supposed to start paying rent to Ottawa -- $900,000 a year in Moncton's case.
"That figure would just about take out our current annual profit," says Robichaud. "So far the board has managed through negotiations to reduce that to $200,000, but we still ask why we should be paying rent -- basically just free money for Ottawa -- in the first place."
But new challenges keep popping up. In 2001 Nav Canada, the private company that arose out of Transport Canada to take over air traffic control from Ottawa, tried to shut down its control tower at the Moncton airport, putting it at a disadvantage to Halifax.
It took Metro's entire business community joining up with GMIA to put the kibosh on that plan.
This year, a new issue arose with the Canada Border Services Agency, the federal agency that provides security services at borders and international airports. Public Safety Minister Stockwell Day gave additional staff to Halifax's airport so that it can operate its customs terminal 24-7, while Moncton has only enough officers to operate weekdays, and only during regular office hours.
When the customs office isn't staffed, any international flights coming into GMIA have to be diverted to Halifax, putting Moncton at a tremendous disadvantage.
GMIA's board and, once again the rest of the Metro business community is lobbying to alleviate the situation and, in fact, are hopeful after stating their case directly to Prime Minister Stephen Harper a month ago, but the fact remains Moncton has to fight for every scrap that Halifax seems to receive as a matter of course.
Moncton shares challenges with all other airports in the country, adds Robichaud; particularly a seemingly continuous stream of obstructive new regulations from Transport Canada.
"It seems to all of us that Transport Canada's bureaucracy somehow wants to get back into the business of operating the airports while not having to pay the costs or cover the debts," says the former Canadian Forces fighter pilot.
Despite privatization, bureaucratic attitudes still run deep in the industry suggests Bill Whalen, the original chairman of the 1997 airport authority which is actually rooted in Metro privatization study groups that began here in the mid-1980s, a decade ahead of the pack.
Moncton indeed paid a heavy price for going first, says Whalen, but even the first study groups "felt we had no choice because Transport Canada had given up on Moncton; they had no vision for us as anything but a spoke leading to Halifax. As a result, Moncton, the southeast and all of New Brunswick would be greatly disadvantaged. We were determined that we would not only transfer but be the first tier-two (medium) airport to do it."
During the negotiations, Transport Canada stated Moncton's second runway -- the 'bad weather' runway -- was deteriorating and would have to close, recalled Whalen. The Moncton group refused on the argument that runway was one of the few advantages Moncton had over Halifax, which is frequently fogged in.
Ottawa wouldn't refurbish it, but offered $2 million if the airport authority agreed to cover the rest of the $6.8 million project.
"As a result we had to start out $4.8 million in debt," said Whalen, although there were assurances from Transport Canada at the time that if later (privatization) deals (with other airports) improved, our deal would be reopened. To my knowledge that never happened."
Indeed it did not, even though dozens of other airports across the country, including Saint John and Fredericton, signed privatization deals much later that did not require renovation funding by the new local authorities, which in fact received federal assistance instead.
Like others in Metro, Whalen remains hopeful GMIA will eventually get an even break on the debt but like Robichaud, notes the challenges are manifold. Federal and provincial governments, for example, assisted in building the terminal and the required approach roads, but won't go all the way.
Eastbound traffic on Highway 15 (Veteran's Highway) has a ramp into the terminal but westbound traffic does not, again putting GMIA at a tremendous disadvantage for cargo customers from P.E.I., northern Nova Scotia or even Fredericton.
That could be a clue to the overall problem for GMIA given that the highway work would be a provincial decision, suggests Whalen.
"It's a matter of political will," he says. "We here feel Moncton has earned the right and deserves to be New Brunswick's leading airport but we see no one here with the political will to do that.
Both senior levels of government support Saint John's port and well they should, all New Brunswickers should support it, and to an extent Fredericton is developing an Information Technology sector which also deserves support.
"Just as with those cities, Moncton should be supported with its airport and I think many of the people in this debate would agree privately but in public, well, politics are what they are."
Brian Baxter, chairman of Enterprise Greater Moncton, sees GMIA as a key to continued growth in Metro. "When you're trying to attract industry to this province people want to know how they're going to get to their markets and how they're going to travel so one of the first questions they ask is 'what type of air service do you have?'
Baxter says he can sympathize to an extent with a federal government that feels it has to concentrate on the 'Big Eight' airports -- those located in the nation's largest cities -- because that's where most of the people, political clout and tax revenue are located.
But government must look beyond the 'Big Eight' at least for a few of the smaller airports and the obvious focus is on the successful ones, he says. "Moncton is a very successful one and we have to convey that to both Prime Minister Harper and Premier Graham, that Moncton is a very successful place and the airport is one of our best successes.
"You have to invest in success."
Prev
Linear Mode
