Taxes killing rural hotels: owners

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This article was published 03/03/2015 (3338 days ago), so information in it may no longer be current.

Three rural hotels have shuttered in the past month, and more will fall unless the province starts to ease the tax burden, rural hotel beverage room owners warn.

The Balmoral Hotel, the Mariapolis Hotel and the Leisure Inn in Newdale all closed their doors within a week of each other in the first week of February.

Other rural hotels are in crisis mode, said about 20 hotel owners who attended the inaugural meeting of the Manitoba Rural Hotel Association in Winnipeg on Tuesday. While Canad Inns isn’t categorized as a rural hotel, it supplied the small hoteliers a room for their meeting as a show of solidarity.

The business model for small rural hotel beverage rooms is broken, the hoteliers said. Banks already refuse to finance the hotels, and now some insurance companies are refusing to underwrite the bars, too.

“The gross sales numbers are fine. If you could just keep a sensible portion of it,” said Angelo Mondragon, owner of the Notre Dame Hotel in central Manitoba. He is leading the new association and stressed the small hotels have a better chance working together than alone.

“It’s all about taxes,” said Judy McCaskill, owner of the Sandy Lake Hotel in Sandy Lake. “I can’t give any more the way it is.”

One complaint is beer vendors are only allowed to keep 17 per cent of revenue from vendor sales before PST and GST. The normal return in retail is about 30 per cent.

As well, the rural hotels keep about 20 per cent of VLT revenues, whereas legions get 25 per cent, and First Nations keep 90 per cent.

Hotel owners also pay insurance on their VLTs, whereas in Saskatchewan, the government covers that cost. That’s another $2,000 cost for McCaskill, who has nine machines. In addition, the province introduced a new law a couple of years ago under which buyers of insurance pay eight per cent PST on top of premiums.

Also, hotel owners are not allowed to turn the power off for the machines. That racks up big electrical costs. Sheera York, who owns the Sprague Hotel, removed her VLTs and saw her electrical bill drop by $500 a month, she said.

VLTs were initially introduced as a way to help out rural hotel beverage rooms, but VLTs quickly spread to urban areas once they gained public acceptance.

Many of the hotel owners also belong to the Manitoba Hotel Association, but hope a rural hotel organization can be more focused on their issues. Tuesday’s meeting was to discuss forming a strategy for negotiations with the province.

“People don’t realize it until it’s gone, but a rural hotel is a big resource for the community,” said Garth Pickrell of Cherry Insurance in Saskatchewan, which provides coverage for VLTs in rural hotels in Manitoba.

bill.redekop@freepress.mb.ca