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New life for Hecla Resort

Lakeview closes deal on shuttered operation

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The latest chapter in the story of the Hecla Resort is about to begin, and this one is entitled the Lakeview Hecla Resort and Golf Course.

Lakeview Management Inc. closed the deal late last week to purchase the resort located 150 kilometres north of Winnipeg, which has been closed and in receivership for the past two years.

Keith Levit, Lakeview's president, said crews will be on site soon and he hopes to reopen the resort in the spring, coinciding with the opening of the Hecla golf course.

Lakeview plans to turn it into a family-friendly resort affordable and enticing to budget-conscious Winnipeggers.

Lakeview will be the second Manitoba hotel operator since 2005 to take a stab at turning the challenging but handsome Interlake resort into a winner. Prior to that, the province owned and operated it and lost several million dollars in the process.

Lakeview takes over from Paletta & Company Hotels Ltd., which, despite its best intentions -- and many millions of its own dollars, $5.5 million of the province's and $8.5 million from the Business Development Bank of Canada -- could not make it work.

But with a new 21-year lease from the province -- the property is located in the Hecla/Grindstone Provincial Park -- and four, 21-year options to renew, Levit believes this time it will work.

That's partially because he will be able to take advantage of the work Paletta already did to make Lakeview's own business plan make sense.

"One thing we have to say is that the Palettas created a fantastic resort up there," Levit said. "But their business plan was very challenging."

For starters, Levit believes Paletta's plan to create a five-star attraction was not the right approach.

Since the property was forced into receivership -- Paletta is still pursuing legal action to recoup some of his losses -- Lakeview was able to buy it at a very low (but undisclosed) price and can start afresh without much debt.

But perhaps just as important, Lakeview can leverage the operating infrastructure it already has in place. It has 22 other Lakeview-flagged hotels across Canada (and one in Grand Forks). Its Lakeview Hospitality division manages more than 40 hotels.

Paletta was operating Hecla Resort under the Radisson flag, an expensive line item that Lakeview does not require because it has its own brand, including its own reservation system and its own sales and marketing team.

Not only that, but one of its properties is only an hour away in Gimli.

"We're a well-known brand, especially given our property in Gimli," Levit said.

"There will be synergies with Gimli. It will help us with staffing, some food preparation as well things like golf packages."

Lakeview has negotiated another loan with the province -- Lakeview's vice-president, Wayne Bollman, said it was less than $1 million -- as well as arrangements for 10 video lottery terminals for the property.

"With a low debt service, our own reservation system, no third-party franchise fees means we will be able to bring the room rates and dining costs down," Levit said.

He said he believes their experience in the region will help in securing staff for the relatively isolated property.

Lakeview employs about 100 people at its Gimli hotel, which is very similar in size to the 90-room Hecla resort.

The deal is bound to ruffle some feathers. The receiver had two other, higher bids, including one from Ian Rabb to run a drug rehabilitation centre for at least $3.1 million. It is rumoured that Lakeview paid significantly less than that.

The receiver had been beating the bushes for two years to find a buyer and there was scant interest. It was facing a $450,000 winter-upkeep bill and no one willing to pay. It had already solicited quotes for the demolition of the property before the Lakeview offer came in.

Republished from the Winnipeg Free Press print edition December 20, 2012 B6

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About Martin Cash

Martin Cash joined the Free Press in 1987 as the paper’s business columnist.

He has spent two decades chronicling the city’s business affairs.

Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.

Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.

Martin Cash on Twitter: @martycash


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