Monday, March 09, 2009

Brian Dobbin announces his HVR bid to Owners

Brian Dobbin declared his bid for Humber Valley Resort assets late last week by emailing some HVR chalet owners.

One immediate comment from me, Brian refers in his letter to "anonymous blogs on the owner website". I'd just add FYI that we have over 400 owners, over 1,000 site emails between owners, 780 forum entries, across 199 subject titles - of which 1 (one!) was made anonymous simply to evaluate if having your name detered some owners from participating.

Anyway, read the letter below. Your comments are encouraged and welcome here, and on the Gary Kelly blog where there is a stream of previous comments!


Dear Humber Valley Resort property owner,

As you will have seen by Mike Ward's email, the tender for the purchase of the Humber Valley Resort assets is due. One falsehood spoils a hundred truths, so I am corresponding to let you know that I am leading a group to purchase the assets. As many of you may know, I began the resort and Strawberry Hill in the Valley over a decade ago.

The simple history of Humber Valley Resort is that I raised
approximately $15 M CDN in the late 90's in Asia and built the first access to
the land and started the first marketing efforts. We then sold over $60 M CDN of
land which was re-invested back into the resort, including over $20 M CDN in
construction losses from the home cost escalations as we built out the first 200
homes. I then sold the resort into a public company, which allowed for another
approximately $40 M CDN to be invested in the resort and its operations. This
included flights, tourism marketing, and paying the operating costs of
everyone's chalets for the first two years of the resort's operations.

The short story is that a lot more money went in than went out, and I do
not think my commitment to the future of tourism in Humber Valley should be
questioned, especially not on anonymous blogs on the owner website. I also
continue to own and use properties at the resort and am not trying to sell them.
I believe that the majority of owners bought their property to enjoy the resort
and surrounding area, as I do, and commiserate with those who bought for
property speculation and have not sold yet. Both parties are best served by a
continuation of the resort's growth as a destination.

I did not take a dividend at any time from the growth of HVR, reports of a pay-out were
unfortunately false. I do have 50 million Newfound shares that I can paper my
home with however. I left the public corporation in 2007 as I was tired of
fighting directors over control of the company and wanted to give those who
criticize the opportunity to take the lead. In the period since then I have
spent more time at Humber than I had in the previous five years. This time
reinforced why I love the place so much, and the fun that can be had here side
by side with spectacular nature and retreat.

We made the tourism operations profitable at Strawberry Hill Resort with a small dedicated team and little overhead. Humber Valley Resort grew into something that could not work. Some of the parts we were forced into - like picking up the flight cost five
years ago and continuing them when our first travel partner could not, and
having to market the destination because the provincial government would not.
What we ended up with was one company trying to do 15 jobs and doing them
not-so-well. The bankruptcy has caused all those pieces to fall on the ground,
and they are being picked up now by a number of different stakeholders and
interested parties.

The roads and water have been admirably dealt with by the owner association to date, but given the problem of enforcing cost recovery without legal right, the two local municipalities looking to take over their upgrade and maintenance makes the most sense. This is what is done at the Whistler and Mount Tremblant resorts in Canada. The maintenance and rental of Humber chalets is being serviced by at least a dozen smaller companies now, and this also is the norm in a resort town.

The government has come around a lot since the resort went into protection and then bankruptcy. The impact on the local economy has been noticeable and they are committed to participating more in the future. Being a third generation businessman in Newfoundland, I understand the politics here, and what is noticeably different now is the
province has been enjoying a budget surplus for the last while before the economic crisis and will do so again this year if the price of oil moves a reasonable amount. This is the first time in two generations that has happened and we believe the decision-makers in the provincial government are serious about investing in tourism growth here with us now. More direct flight access is being investigated and support of the local industry association and specific international marketing help for the Valley has been promised.

What is left in operations is the golf/clubhouse, the Beachhouse, and Strawberry Hill.
Our group intends to make all three separately owned and operated businesses,
co-operating together and offering different products. We will be bringing back
our best people who made you want to be here in the first place. We are also
bringing some new people in that will help attract new domestic markets for the
next years. We are now the best resort destination by far on this side of
Canada, and we will take advantage of that. We believe we can renew the magic
that Humber had it is really the people. I looked long and hard at branded
international operators and the reality is that they would be fish out of water
here at this stage of growth and would simply be too expensive to pay in any

We expect to lose some money in the next few years, but we can
make all three operations what Strawberry Hill was. We have the means to weather
the financial downturn for the next years and we will keep our overheads as low
as possible while creating three great experiences. Development talk for the
next years is premature. The only immediate concern is those who are on the
edges of the resort and the infrastructure that needs to be finished there. This
itself will take time to address as only new sales will drive it. We first need
to get the people who want out of the resort replaced with people who want in.
That will only happen with a good tourism experience, so we all agree what has
to happen. I believe we best know how to develop and sustain a great experience
at the resort.

I did not intend to communicate with the property owners as a whole until the bids were complete and the deal made, but I thought it time to let everyone know another side of what is happening. Should we be successful we shall contact again with more detail.

Brian Dobbin

We're ... Are you?

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