Province sucking rural hotels dry: owner

RECORD PHOTO BY AUSTIN GRABISH

Lockport Inn owner Jim Major is one of many rural hotel owners who say it’s becoming increasingly difficult to turn a profit due to low profit margins set by Manitoba Liquor and Lotteries.   

 

By Austin Grabish, The Selkirk Record

Rural hotel owners say they can’t make a buck like they used to and are calling on the province to change its liquor and gaming rules so they can keep a higher return from beer and VLT revenues. 

Three hotels closed their doors for good last month.

But Liquor and Lotteries says the rural hotels are the highest paid in Western Canada and are doing “really well”.

The newly formed Manitoba Rural Hotel Association held an inaugural meeting earlier this month in Winnipeg to address what they say are unfair profit margins set by the province.

“It’s not easy today,” said Lockport Inn owner Jim Major.

“We’re trying to just keep our cash flows up and pay the bills and stuff.”

The hotel owners say it’s unfair they are only allowed to keep 17 per cent of the revenue earned on sales made at their beer vendors.

The province supplies the vendors with the beer, sets the price at which the products can be sold, and keeps the majority of the profit.

“We gotta do all the work,” Major said.

“Why should they be taking (that much of the profit)?”

The Rural Hotel Association would like beer vendors to instead keep 30 per cent of all revenues.

“That’s not going to make me all of the sudden successful, but that will give me a solid base on which to grow,” said Angelo Mondragon, president of the Manitoba Rural Hotel Association.

Mondragon owns the Notre Dame Hotel and said it’s becoming increasingly difficult for hotels to turn a profit due to the “enormous” price of alcohol and a lack of young people frequenting the bars.

“Right now I believe we’re at a tipping point,” Mondragon said.

Another complaint is rural hotel owners are only allowed to keep 20 per cent of revenues from VLTs.

Mondragon and others want to see that number increase to 50 per cent.

“It’s just trying to be fair a little bit,” Major said.

“We have payrolls to make, we have to keep proper people.”

Liquor and Lotteries critic Ron Schuler said when rural hotels struggle there is a direct ripple effect on their town.

“Once you lose your hotel and you lose the gas station and you lose this and that eventually the town dies,” the PC critic said.

But Manitoba Liquor and Lotteries says rural hotels are booming.

“Especially the smaller hotels (they) do really well,” said spokesperson Andrea Kowal.

Kowal said Manitoba hotels are the highest paid in Western Canada and have almost a complete monopoly on off-sale beer.  

“They sell almost all of the beer in the province,” Kowal said.

But at least three rural hotels closed their doors for good in the last month and numerous other hotels that have closed are listed on the Rural Hotel Association’s Facebook page.

Kowal said it is unfair to only look at beer and VLT profit margins, because vendors also make money by collecting empty beer cans and bottles.

“It’s not even beginning to look at what they get from their relationship with liquor and lotteries,” Kowal said.

In 2014 there was $307 million worth of beer sold in Manitoba. Liquor and Lotteries turned over $284.1 million to the province.

“They make a lot of money,” Mondragon said.

-- First published in the Selkirk Record print edition March 19, 2015 p.10