Failure to launch

Posted on March 16, 2020 | Atlantic Business Magazine | 0 Comments

Despite months of uncertainty over when (or if) the heavily subsidized Maine-to-Yarmouth ferry will sail again, Nova Scotia tourism operators aren’t ready to abandon ship

Let us begin in the sweetly optimistic fall of 2018 with a tale of two Nova Scotia tourism operators at opposite ends of the been-there-done-that scale.

First a little context. We’re in historic Yarmouth at the southwestern tip of Nova Scotia “on the edge of everywhere,” as its local boosters boast. The largest community (population 6,500) in its region, Yarmouth is enjoying an economic and civic renaissance. That’s thanks in part to a still-lucrative lobster fishery, but also to the revival of the area’s tourism industry.

Tourism in southwestern Nova Scotia had taken a seemingly down-for-the-count hit in 2009 when the then-new NDP government “created all this mess with their brilliant minds,” as one motel owner put it to me acidly. Having calculated taxpayers were spending way too much public money to prop up an in-decline summer ferry service between Yarmouth and Maine, the NDP canceled the subsidy, which immediately sunk the ferry “and sent us into a spiral.”

A spiral? Two local motels converted their facilities to seniors’ housing. At least two other inns were mothballed.

Finally, in 2014, Stephen McNeil’s new Liberal government revived the service. While it struggled at first—the government fired the first operator after only two years and replaced it with Bay Ferries, the company that had run the service in its heyday—Yarmouth’s hoped-for ferry-fueled future finally seemed about to dock. In 2018, the CAT, as the ferry is known, ferried 50,185 passengers from Portland, ME. That’s a far cry from the 95,000 visitors who landed in Yarmouth at the service’s peak in 2002, but a respectable 21 per cent more than the year before. That had helped goose investment in Yarmouth’s tourist economy and put a spring in the steps of local business folks.

“For the previous five years,” Neil Mackenzie, executive director of the non-profit, tourism-promoting Yarmouth and Acadian Shores Tourism Association, tells me, “we’d seen year-over-year-over-year-over-year growth; 2018 was our biggest year yet.”

The portents for 2019 promised more and better.

Which brings us to the story of our two Nova Scotia tourism operators: Mark Rodd of Rodd Hotels and Resorts, one of Atlantic Canada’s largest privately-owned hotel chains; and Josh Ramsey and Dawn Nickerson-Ramsey, a new-to-business couple with a van and a plan. They intended to launch their own company to provide thirst-quenching tourist tours to local breweries and wineries.

Mark Rodd grew up in the hotel business. The third member of his family to head the 80-year-old, Charlottetown-based hotel and resort business, he could even claim personal experience in Yarmouth’s choppy ferry waters. During the late 1990s when two vessels still plied the route between Yarmouth and Maine, he’d served as manager of the company’s 65-room Rodd Colony Harbour Inn, one of Rodd’s two Yarmouth properties. In 2010, soon after the last ferry sailed, he became president and CEO of the chain, meaning he’d been forced to shutter the 40-year-old Colony and eventually donate its furnishings to a shelter for homeless and at-risk youth.

Now, however, thanks to those ever-increasing numbers of ferry passengers looking for ever-more Yarmouth places to rest their heads, the time seemed ripe to re-invest. As Rodd himself explained it to the Tri-County Vanguard newspaper: “Now, you come [to Yarmouth] and it’s exciting. Sip [a popular local café that had won a contract to supply food services on the ferry in 2018], the new breweries, the whole downtown has been revitalized. Housing seems to be booming here now. People are coming here to renovate houses; real estate prices are going up.”

On Dec. 18, 2018, Rodd announced his company would spend $7 million not only to re-open the Rodd Colony but also to renovate and upgrade its local flagship 132-room Rodd Grand Yarmouth Hotel and Convention Centre.

Rodd wasn’t alone in his eagerness to tap into this new optimism.

In 2017, Josh Ramsey and his wife Dawn had given up well-paying jobs in Ontario—he in the film business, she as a sommelier—and relocated to Yarmouth to take care of her aging grandfather. After he died, they decided they liked the community well enough to stay. Given Dawn’s background in wine and the emergence of a wine and craft beer industry in southwestern Nova Scotia, they crafted a business plan for “Wine & Beer Tours of Nova Scotia,” bought a new nine-passenger, high-top van, struck deals with local wineries, breweries and restaurants, got themselves listed on every touristy things-to-do list they could find, printed and distributed hundreds of promotional rack cards, even traveled to Bar Harbor, ME—the ferry’s soon-to-be new U.S. terminus—to spread the word about their business.

While the Ramseys’ investment may pale in comparison to Rodd’s, it represented their entire life savings. Like Rodd, the Ramseys were betting on the ferry to build their future.
But then… the ferry never sailed. Not once. Not in all of 2019.

Before we go there, there are a few things you should know.

The ferry service has long been cost-benefit controversial in Nova Scotia. Debates over whether and how much it should be subsidized from the public purse have also exacerbated the traditional divide between urban and rural.

The ferry’s legion of Yarmouth supporters argue the service isn’t just vital to the future of their region but also supports the broader rural economy as well as tourism throughout the province.

“Some people seem to think visitors spend seven days on the wharf in Yarmouth,” Neil Mackenzie complains. “But they usually spend seven days to a week in [other parts of] the province spending money wherever they go.”

But others—many of them in Halifax—note, less sympathetically, it costs taxpayers a bundle to even get those visitors to the wharf. Nova Star, the ferry’s first operator, burned through close to $40 million in government subsidies in two years while carrying just 110,000 passengers—70,000 fewer than it had projected—until the province canceled its contract. In 2016, the government signed a new 10-year deal with Bay Ferries that also included plenty of subsidies. By the end of 2018, that had cost taxpayers another $39 million while generating an average of just 41,500 visitors a season.

Worse, things were about to get even more expensive in 2019 from a public funding perspective. Bay Ferries’ lease at its Portland, ME, terminal—for which Nova Scotia taxpayers had already shelled out $1.5 million for upgrades—was about to expire. Although there’d been talk of extending the lease—and Portland officials later claimed they were willing—the company opted to move its U.S. base to Bar Harbor instead. That meant those same Nova Scotia taxpayers now had to cough up an additional $8.5 million to make the new Bar Harbor terminal ferry-ready and U.S. Homeland Security-certified. Neither the company nor Maine put up a penny.

Sure, it was a big investment, Yarmouth’s tourism operators acknowledged, but it was absolutely necessary to keep their tourism industry—and the region’s and province’s economies—growing.

But that is where everything went wrong. For everyone. In every way.

When Josh and Dawn Ramsey launched their Wine & Beer Tours business last year, they hoped to service visitors arriving in Yarmouth via the ferry. They’ve had to rethink their business model.

Dawn Nickerson-Ramsey remembers being surprised when she and her husband traveled to Bar Harbor in April 2019 to promote their fledgling tour business and noticed the new ferry terminal didn’t look anywhere near ready for its scheduled June debut. She assumed those who were in charge must know what they were doing.

In February, Lloyd Hines, Nova Scotia’s upbeat transportation minister, had colourfully claimed to reporters he was confident there would be a summer service. “Yeah, there is an element of uncertainty around what would happen if whatever kind of Scud missile came that took the operation out,” he dead-panned, “but, at this point in time, we are confident.”

The first Scud landed in Yarmouth on June 7, just two weeks before the season was supposed to start. With Yarmouth’s tourist operators primped to welcome their first visitors, Bay Ferries—which had been accepting reservations-as-usual for its summer crossings—dropped a Friday afternoon news bomb. It was cancelling all sailings until an imprecise “mid-summer” date because of what it described as unforeseen delays in meeting terminal security requirements mandated by Homeland Security, not to mention the reality that “exterior landside facilities” still weren’t complete, not to forget the lingering impact of a January U.S. government shutdown on Washington’s approvals bureaucracy. Etc., etc.

Still, Bay Ferries said it would accept reservations for after July 7—but with no promises they’d be honoured. Many of the tourists who’d been contemplating a ferry-fueled Nova Scotia vacation changed their plans.

A spokesman for the Lakelawn Motel—he asked to remain anonymous because “we find talking about it affects the business in a negative way”—told the Vanguard in early July he’d already lost 844 room-night bookings. “Just today alone, I lost 72… In the last three hours, the phone hasn’t stopped. It’s just mushroomed from every angle.”

Other operators stared into a similar abyss. “July and August are our busiest months,” lamented Mark Rodd as he contemplated the fate of his company’s major Yarmouth investment, so much of it staked to the success of the ferry service. “It’s going to be a huge impact.”

Meanwhile, Josh and Dawn Ramsey—their new van decked out with a “Wine & Beer Tours” logo—stood by, ready to pick up ferry passengers, but there were no passengers for them to pick up.

What exacerbated the situation for everyone was the ongoing, never-ending uncertainty. Bay Ferries kept pushing off its unspecified season launch date to an even more unspecified future date. Transportation Minister Hines continued to be “optimistic,” “hopeful.” After a lobbying trip to Washington in early July, he even suggested the ferry could be sailing by the end of the month. It didn’t. Nor by the end of August. Labour Day came and went. Kids went back to school. Thanksgiving loomed. With the season officially scheduled to end Oct. 15, Hines remained “hopeful” the ferry could make at least one crossing. It didn’t.

Ferry or no ferry, Jonathan Joseph of the Argyler lodge and restaurant says he plans to continue cooking his signature beachside lobster feasts for years to come.

Jonathan Joseph, the owner of the Argyler Restaurant and Lodge, says he and his staff “worked our asses off” to find innovative ways to compensate for the lack of ferry service, but still ended up with $50,000 less in the till by the end of the season. “That’s a lot for a six-bedroom operation.”

“I sent three emails to the premier,” adds the spokesman for the Lakelawn Motel referenced above. “He never responded.” Even though he believes the present Liberal government offers the best hope for the ferry’s future, he’s frustrated. “They should have gathered all the stakeholders together and said, ‘Here’s what happened. It shouldn’t have happened, but it happened and here’s what we’re doing to make sure it doesn’t happen again.” Instead, “we only know what we read in the news.”

Selling the ferry to skeptical Nova Scotians outside southwestern Nova Scotia didn’t get any easier after news late in the summer that, thanks to the government’s contract with Bay Ferries, taxpayers were on the hook for another $11.4 million in subsidies in 2019—despite the fact the ferry didn’t make a single crossing!

Bill Black, the former president and CEO of Maritime Life turned Tory politician turned newspaper commentator used Yarmouth’s “unfortunate 2019 experience” to compare regional and provincial tourism numbers with and without the ferry service. “It shows,” he wrote in the Halifax Chronicle Herald, “that the subsidy vastly outweighs the possible income generated by the low-wage seasonal jobs that might have been available if the ferry service was operating.”

Tim Bousquet, the editor of The Examiner, a Halifax-based online news site, went a step further, cheekily suggesting taxpayers could better help the region’s economy by subsidizing its young people to attend university or community college, or… “we could simply toss $20-bills from a helicopter above downtown Yarmouth and get a better return than we’re getting from the ferry.”

“People [in Yarmouth] are frustrated,” explained Tina Comeau, the lead editor at the Vanguard, “because there is such a negative connotation attached to the ferry service now. I think people here just hope to have a season that is smooth, with no issues or problems, just a ‘normal’ season. You often hear people say, ‘Just one year,’ meaning just one year where things run smoothly.”

Will 2020 be that year?

By mid-July 2019, The Cat’s failure to launch cost the Lakelawn Motel more than 850 room-night bookings.

As I write this story, it is the middle of January 2020. The beginning of the summer ferry season is only five months away, and no one yet knows what to expect.

“We’re getting a lot of calls,” the Lakelawn spokesman tells me. “People want to book, but they want to know, ‘Will there be a ferry?’ I tell them ‘yes,’ but to be honest, I’m not sure. There’s no one to assure us.”

Certainly not the provincial government. When I asked the transportation department if the ferry will sail in 2020, a spokesperson emailed back to say work on the Bar Harbor terminal “remains ongoing.” More than a year after it began! “We believe in the ferry and are continuing to work towards a 2020 season,” the statement continued, BUT, “we do not have an approval timeline to share at this time.”

Despite all of that, despite everything that has gone before, no one I talked to in Yarmouth is ready to give up.

Jonathan Joseph, a Florida native, who has owned and operated the Argyler with his wife since 2005—including during the five years when there was no ferry and through all its many hiccups since—says he isn’t going anywhere. The Lakelawn spokesman recalls that, “during the last shutdown, I started a restaurant” to diversify business. And he’s proud to note he didn’t lay anyone off last summer. “If people left, they weren’t replaced and those that stayed didn’t get the same hours,” he acknowledges, “and planned raises for senior staff had to be put on hold.” But he’s still in business, still accepting reservations for a hoped-for next season.

As for the tale of those two tourism operators with which we began, they too are adapting, moving forward.

Work to reopen Rodd’s Colony Inn continues. While renovations are still ongoing inside the building, Tina Comeau tells me, the exterior “looks pretty amazing, like a completely new facility.”

The Ramseys? Last year was an unmitigated disaster. With fewer than 20 tour bookings, they quickly depleted the nest egg they’d set aside to grow their business. Josh sold his personal car—he now drives the tour van—and signed on to work again in the film business in Halifax.

“We aren’t giving up,” Dawn insists, but they are re-thinking their business plan, considering buying a second, smaller van to be more flexible with the size of tours they can accommodate and testing the waters for their business in other, less ferry-dependent regions of the province.

“We’ll get over the speed bumps,” Joshua tells me confidently. “The future doesn’t favour those who give up.” •

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