What to do with the money-losing Larry’s Gulch fishing lodge?
ADAM HURAS LEGISLATURE BUREAU
SEPT. 8, 2018
The provincial government says Larry’s Gulch has lost thousands of dollars in each of the last several years under its management.
And it’s now back operating the infamous fishing lodge itself after a short attempt at hiring a third-party operator to take over financial responsibility in the aftermath of a controversy over its guest list.
A contract with a private company has not been renewed and the province’s tourism department is again back in charge.
Meanwhile, the government’s attempts to generate new revenue from the Gulch through the creation of a lottery to select New Brunswickers to stay at its lodge on the Restigouche River has also fallen short of targets by thousands of dollars.
Still, the government contends that the draw is successful in publicly promoting what has long been the exclusive retreat of the government in power used to lure the business, entertainment and political elite to the province.
Brunswick News has also asked provincial party leaders what they think should be next for the lodge that’s been losing money under the management of both Liberal and Progressive Conservative governments. Most agree it should stay under public ownership.
Private operator walks away
The province has had its own salmon fishing retreat in northwestern New Brunswick since Larry’s Gulch Lodge was purchased in 1974 for $22,000.
Since then, the rustic fishing lodge has been used to lure business, entertainment and political elite to the province, including former U.S. president George H. W. Bush and Saturday Night Live creator Lorne Michaels among its guests.
Private bookings at the lodge cost $26,000 in peak season for a three-day visit.
Service New Brunswick now lists the property as having an assessed value of more than $1 million.
But usage of the lodge was thrown into question in recent years.
After a controversy over its guest list while the former David Alward Progressive Conservatives were in power, the Gallant government announced in its 2016 budget that operating a fishing lodge was “not part of government’s core functions or priorities,” instead promising that a private sector proponent would operate Larry’s Gulch by the 2017 season.
The lodge had also been losing money for the province both with Alward and Gallant in power.
“This strikes the balance of maintaining the valuable asset in the hands of New Brunswickers while ensuring it is managed better and not abused for partisan political purposes,” then Finance Minister Roger Melanson said inside the legislature.
In March 2017, a one-year contract was awarded to the Restigouche Salmon Club, one of the world’s most exclusive fishing lodges located in Matapédia, Que, west of Campbellton, to conduct the day-to-day operations of the Gulch.
The agreement signed by government was to see all revenue from Larry’s Gulch remain with the third party operator, according to Tourism Department director of communications Jennifer Vienneau.
They would also be on the hook for expenses.
But the Restigouche Salmon Club, the oldest private fishing club in North America, with a membership which has included mining magnate George Webster, jeweler C.L. Tiffany, rubber guru David Goodrich and automaker William Dodge, declined to operate the Gulch for a second season.
“The Restigouche Salmon Club chose not to renew for a second year as it did not meet their business objectives,” Vienneau said.
When reached, Charlotte Cameron with the Restigouche Salmon Club wouldn’t say why the contract wasn’t renewed.
“We currently have no involvement with Larry’s Gulch,” Cameron said, declining any further comment.
The province’s Tourism department is now running the Gulch during the current 2018 season.
But the department says that the Gulch has lost thousands of dollars in each of the last several years, over two governments, when it was responsible for its operations.
Vienneau said that the fishing lodge has an annual revenue target of $280,000, while adding that the “average operating costs of Larry’s Gulch are approximately $300,000 annually.”
“Larry’s Gulch has also been running a deficit since 2011,” she said.“In 2014, government recognized that this was a serious issue and it needed to do more to increase revenues, which is why a one-year contract was awarded to a third party to operate the lodge.”
A review of the government books shows that Gulch revenues only once reached $300,000 since 2010-11.
It was $68,000 short in 2016-17, the year the Gallant government launched a search for a new operator.
Prior to that, the Gulch brought in $330,000 in 2009-10.
But Gulch revenue also didn’t hit the $300,000 mark in fiscal years 2008-09, 2007-08, or in 2006-07.
However, it exceeded that mark in the four years prior.
The province’s financial records show the Gulch made $435,000 in revenue in 2005-06, $329,000 in 2004-05, $400,000 in 2003-04 and $313,000 in 2002-03, suggesting the lodge has been profitable in the past.
Vienneau added that a number of external factors have impacted the Gulch’s revenues, including fishing restrictions, the length of tourism season and the weather quality.
With a provincial election day looming, it’s unclear what happens next.
Tourism officials say the plan is for the department to run the lodge this year.
“Government remains committed to increasing revenues at Larry’s Gulch, while making it more available to the public as means to increase revenue and promote tourism in the Restigouche region,” Vienneau said.
Draw missing targets
In another attempt to raise revenues, but also make the fishing lodge more accessible to New Brunswickers, the Gallant government decided to open up Larry’s Gulch through a public draw that would see 16 New Brunswickers stay for free.
When the draw was first launched in 2015, the Liberal government estimated that the lottery could generate roughly $100,000 in new revenue each year for provincial coffers.
The government set a fee of $10 to enter the contest.
But the province’s Tourism said it received 785 applications this year for the contest.
That’s $7,850 in revenue.
Private three-day bookings at the lodge during peak fishing season cost $26,000 in July, and $16,000 in June, August and September.
The department said it has received close to 4,800 applications for the draw since its beginning in 2015.
The province received 1,908 applications in 2015, but that has slipped to 1,058 in 2016, and then tallied 1,070 in 2017 and then 785 this year.
But that equates to an average of roughly 1,200 applications a year - or $12,000, an amount less than what it would cost to privately book the prized fishing lodge.
The winners of this year’s draw headed to the Gulch last month.
Eight individuals had their tickets drawn for the dates, each allowed to bring one other person.
For two nights and three days, they were provided with fishing gear, guides, meals and accommodations free of charge.
Asked about the targets, Day replied that “the draw is intended to facilitate promotion of Larry’s Gulch while introducing more anglers to the Restigouche River and nearby communities.”
The government had predicted higher interest.
The department said in 2015 that based on “target audience, which is New Brunswick residents who buy salmon licenses and those that apply for the resident moose draw, revenue could range anywhere from $40,000 to $100,000.”
“The revenues that we will raise from the draw will go back into programs and services for New Brunswickers,” then Tourism, Heritage and Culture Minister Bill Fraser said at the time.“This is a way to create some publicity around the site, some positive publicity.”
Where the leaders stand
The Gallant Liberals will try again to find another private operator if New Brunswickers give them a second mandate later this month.
“We had a competition to find an operator, who ran the lodge last summer, but they chose not to renew,” Liberal party spokesman Jonathan Tower said in an email.“We will have another competition to find a new operator for next summer.”
Meanwhile, Progressive Conservative Leader Blaine Higgs says he sees the benefit of a lodge that showcases New Brunswick to outside investors where deals can be struck in a non-business environment.
“I think that it should be a profitable operation, without a doubt. I think it should stay in ownership of the province, but I think there should be clear guidelines around its usage as far as provincial use is concerned.”
Higgs would also seek a third-party operator.
NDP Leader Jennifer McKenzie said the party “would keep Larry’s Gulch if the public sentiment supported it,” but put it to use to help people at social disadvantage.
“Like at-risk youth, sufferers of mental illness or for environmental studies, First Nations uses, or other social good,” she said.
People’s Alliance Leader Kris Austin said he would ask the auditor general to pore over the financial records of the Gulch to determine what benefits - if any - the property has for taxpayers.
“If there is no solid case for its continuance, I would recommend turning it over to the private sector,” he said.
Green Party Leader David Coon declined to comment, although he is previously on record saying the Gulch shouldn’t be sold - the problem, as he saw it, is that the rules of lodge use need to be followed.
“I see no problem with owning the resort, but the problem I see is that its use appears to have been abused, and that’s the big issue,” he said two years ago. “I think governments can get too comfortable in their skin and forget that these are publicly-owned buildings.”
Changes brought on by controversy
The changes to the lodge were brought on by controversy over its guest lists.
It was revealed in early 2015 that a Larry’s Gulch guest list from 2013 had been altered and the names of NB Liquor officials, government representatives and their guests removed and replaced with the word “private.”
A 2013 Larry’s Gulch list obtained by Brunswick News on Sept. 18, 2013, had 20 names, including then Premier David Alward and Murray Guy, the assistant managing editor of the Times & Transcript at the time, beside a three-day trip in July organized by NB Liquor.
Another version of the guest list obtained later by the newspaper L’Acadie Nouvelle no longer had any of those names for the dates in question, instead replacing them with “private.”
Privacy commissioner Anne Bertrand investigated the issue of the different guest lists and released a report in which she concluded that two senior government officials “acted inappropriately” by altering the Larry’s Gulch list - a document that is available to the public under the Access to Information law.
The RCMP concluded a subsequent investigation laying no charges.
The lottery was announced amid the controversy surrounding the camp.
That Gulch guest lists are also now posted annually on the government’s website.
The Gallant government has announced among changes to how the fishing lodge is operated that booking priority at the Gulch is now being given to private sector groups, although government trips will continue, limited to excursions that “will lead to job creation, improving New Brunswick’s economy and fostering intergovernmental partnerships.”