Friday, March 19, 2010

Western Star - Resort can still lead the economic charge


The Western Star

Resort can still lead the economic charge: professor

A business professor at Memorial University says the original allure which made Humber Valley Resort attractive is still intact and the development can continue to be a hallmark component of the regional economy.

The troubled resort has emerged from bankruptcy under the ownership of a consortium led by local residents Katie and Graham Watton and Gary Oke.

Tom Cooper, assistant professor of strategy at Memorial’s School of Business, was in the Corner Brook area when the new ownership was announced last week and said the news was obviously the talk of the town.

More importantly, Cooper said the announcement can mark the beginning of a brighter chapter for the property since the risks of operating a resort are different than those of breaking ground and developing it.

The new proprietors need to concentrate on positive cash flow and effective marketing, according to Cooper.

“I think Humber Valley still has a good reputation in the province,” he said. “It’s now a matter of taking more of a longer-term view and making sure they run it like a business, rather than how quickly can we get these chalets up and get money back to our investors.”

It is common for resort developments to change ownership hands before they get off the ground, agreed Cooper, but they don’t usually spiral into bankruptcy like Humber Valley Resort did.

“For the new owners, though, this was an opportunity because they were probably able to get it at a reduced cost than if they had bought it from the original developers,” said Cooper.

The Western Star has not been able to confirm how much the resort’s assets were sold for, though it is believed to have been less than what was required to reimburse the millions of dollars owed to all of the project’s creditors.

“The interesting thing is, whenever I speak to other developers, they always point to Humber Valley as a success,” said Cooper. 

“It as the first big resort of its kind to be done, it was marketed to Europeans and it was done in a professional way. Just the fact it was done was a success. The question now is can the new owners make it a success as a day-to-day operational resort?”
Having local ownership is a crucially positive component of the new approach, said Cooper. So is having someone, like Oke, who has a solid understanding of the golf industry.

“Whenever you’re managing something like this, it’s mostly about how you generate cash flow to keep things maintained and up to standard,” commented Cooper. “Humber Valley should always be a high quality experience, given its location and the amenities invested in it. But you still have to make sure the maintenance is there and it is well staffed and has good management.”

Prior to bankruptcy, major hotel franchise Marriott confirmed it was interested in the Humber Valley area. 

The new owners have indicated they will be looking into the possibility of establishing a hotel at the resort, which some have said would be an integral piece if the resort is to fulfill the vision of being a major international vacation destination.

Landing a high-profile brand such as Marriott would be a positive move, said Cooper, in that it would lure travellers to the region and would create economic spin-offs.

One thing Cooper does not want to see is a plethora of resort-style developments inundating the area.

“I think creditors —  banks and investors — may be a bit cautious, given what’s happened in the past, but I think entrepreneurs can still see some real benefits that will accrue,” said Cooper. 
“The question is how much development can the west coast of Newfoundland sustain in terms of the number of resorts?  ... That competitive advantage could be lost if there is resort after resort after resort.”

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