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Closing time: The hotel beverage room is slowly disappearing from the rural landscape

Hey there, time traveller!
This article was published 21/11/2014 (947 days ago), so information in it may no longer be current.

NOTRE DAME DE LOURDES -- Angelo Mondragon remembers growing up hanging around picket lines in California with his mom and dad, who were union organizers.

His dad worked along side Cesar Chavez, the migrant farm worker who founded the Farm Workers Union in the United States, and who became that country's most famous Latino American civil rights leader.

Phil Hossack / Winnipeg Free Press
The Elma Hotel and Beverage Room has been closed and for sale for years. It remains padlocked along Highway 15.

Phil Hossack / Winnipeg Free Press The Elma Hotel and Beverage Room has been closed and for sale for years. It remains padlocked along Highway 15.

Notre Dame Hotel owner Angelo Mondragon has organized the Rural Hotel Association in an effort to save the struggling beverage room.

BORIS MINKEVICH / WINNIPEG FREE PRESS

Notre Dame Hotel owner Angelo Mondragon has organized the Rural Hotel Association in an effort to save the struggling beverage room.

Mondragon, as a child, would accompany his dad to Chavez's house, and was taken along on union rallies. "I didn't understand what these marches were about. I basically grew up in the (union) headquarters in southern California."

How Mondragon wound up in the heart of southern Manitoba owning a hotel beverage room -- and spearheading a drive to save small rural beverage rooms like his from vanishing off the landscape -- is another story. The small hotel bars scattered across the countryside have outlasted many a school, church and grain elevator, and are just as steeped in history, albeit a different kind. But the days for many of the small beverage rooms appears to be coming to an end.

"A friend of mine met a friend of hers," explained Mondragon, who is of Mexican descent, over a beer one afternoon in the Notre Dame Hotel.

His friend met a woman from Notre Dame de Lourdes, about 110 kilometres southwest of Winnipeg, who was visiting California, and they ended up marrying. Mondragon flew in from California for the wedding -- that was 10 years ago -- and met the bride's friend. A long-distance relationship ensued. He and Tina Bourdeaud'hui married seven years ago. They tried living in California but Tina, who is a physiotherapist, missed home. They returned five years ago. "How do you decide where to live? She's the boss," replied Mondragon, who is 37.

In Santa Cruz, his early attempts at a career ranged from police officer trainee to stock broker. In Notre Dame, he embraced that rural ethic of wearing several hats. He worked in a pig barn, drove a combine for a couple summers, sold wind turbines, and, most recently, worked for Manitoba Hydro.

The couple have two children with a third on the way, and live on an acreage outside town. "What we have here we could never have in California," Mondragon said.

When an opportunity arose to buy the Notre Dame Hotel, he liked the idea of being his own boss and took the plunge.

Despite five banks turning down his request for a mortgage on the old hotel, which started out as a men-only beer parlour a century ago, Mondragon was energized. The beverage room is in the centre of town, and seemed to have decent traffic. It seats 50 but can hold 80. It also had a restaurant and beer vendor. The town has a population of about 600, with another 400 on its periphery.

His first year, he reinvested $30,000 into upgrades including a new musical sound system.

Mondragon threw street parties, costume parties, theme parties, formal gown parties where women wriggled into their old wedding gowns for a night, light'n' bright parties (neon spandex wear), pyjama parties, toga parties and brought in musical acts. The events were good but they should have supplemented his income, not been his life support.

He hired an expert chef and expanded the restaurant hours, even offering 6:30 a.m. breakfast. He lost money every month but one. He finally closed the restaurant, something that's still a sore spot with people in town. The beverage room now doesn't open until 12:30 p.m. and he's had to cut staff and increase his own hours. After four years, he has yet to take a paycheque.

"You burn out. If you're working for nothing, you're motivation goes fast," he said.

Hotel beverage rooms have five income streams: beverage room, beer vendor, restaurant, VLTs and hotel rooms. But the rooms don't make money for many rural bars and are merely a pretext. Beverage rooms have been required by law to double as hotels dating back to forever.

One bar owner called his rooms "an embarrassment" and owners were reluctant to show them. One looked like one of the rooms upstairs at Miss Kitty's saloon on Gunsmoke. The room had a single bed, bracketed by arched metal head boards with vertical bars running between, ideal for hanging a six-gun holster. The old, wood-framed window looked like something you could jump through onto an awaiting horse below, should the sheriff show up.

There are 260 hotel-beer vendor-beverage room complexes in Manitoba. One industry official suggested to Mondragon that maybe the solution is for 160 of them to close.

That's when the son-of-union-organizers DNA started to kick in. Mondragon began phoning other beverage rooms to talk. It became like the old saw where patrons tell their troubles to the barkeep.

Mondragon heard his story told back to him again and again. In October, he started the Manitoba Rural Hotel Association. While many of the hotel beverage rooms are members with the Manitoba Hotel Association, that association includes major chains such as Comfort Inn, Super 8, and Canad Inn. The new association will focus exclusively on the business model for small, rural beverage- room owners.

"You're talking about businesses that are failing," Mondragon said. "The people I'm talking to are almost in tears. Some people will close by the end of the month. Some are just hanging on."

They are pursuing regulatory changes that could bring in more revenue for them to survive. They say it's time government stopped taxing them as if they were still cash cows of a century ago.

But is the rural beverage room worth saving?

Gary Desrosiers drives a school bus but not for kids.

Desrosiers has owned the Brunkild Bar and Grill on Highway 3, about half an hour southwest of Winnipeg, for 16 years. With all the changes to liquor laws -- from banning smoking to tougher drinking and driving laws -- he knows people are shying away from beverage rooms. After all, if you lose your driver's license, you can lose your ability to earn a living, especially in rural areas. And it's not as though people can call a taxi or take a bus to get home.

Well, they can at the Brunkild Bar and Grill. Years ago, Desrosiers bought a bus and began transporting people to and from his bar. His bus service picks up people from Winnipeg to Carman, and all points in between. He then drops them off again at the end of the night.

He's on his third bus. It holds 30 people but most times he carries from 15 to 20. The bus goes out once or twice a month to pick up some group or other. Sometimes it's University of Manitoba students from faculties like education or agriculture, such as when the aggies hold their "drink the town dry" events. He'll get a call from people who are bored at a house party, and bus the entire crew to his beverage room. Desrosiers only charges for fuel but that can run about $100 for his old gas guzzler built in 1979.

While transporting patrons, he's also picked up stranded motorists. He once picked up a family -- parents and three children, including an infant -- on a lonely stretch of highway after 2 a.m., in bone-chilling cold, and brought them back to his beverage room.

The bar as refuge? That's exactly what it is, said Desrosiers. Where do you want people drinking? he asks. He doesn't wait for an answer.

"The bar is the safest place. You have sober, experienced people to look after you. How many people are murdered in a bar versus murdered at a drinking party? I literally, under the law, have a duty of care."

That duty of care means if someone enters his establishment, he has a responsibility as much as reasonably possible to make sure that person remains safe.

"If they're intoxicated and try to leave, I've driven people home lots of times. I've driven people home I never served a single drink to. Two kids showed up at closing. They had no business driving. I literally took the keys away from them, drove them home in their car to Oak Bluff, and had my brother follow me and take me home."

Desrosiers acknowledged there isn't much sympathy among the general public for beverage room owners. But one of the effects of tightening government regulations on rural hotels is people have begun converting their garages into little private bars and having crowds over. The garages are insulated and furnished, and people can smoke and drink liquor at retail prices.

"Where do you want 30 people drinking? In you're neighbour's garage, or in my bar?" asked Desrosiers. "The reality is you used to have bars full on Saturday night. Now, people just do it in unregulated places."

The problem is the beverage-room business operates at the whim of the provincial government, and the government is in a conflict of interest, Desrosiers said.

For example, $20 may buy four beer in a bar. Or it can buy a 12-pack of cheap beer in a vendor. But the government gets more tax dollars from the vendor sale of the dozen beer, than from just four beer in a bar, leaving Manitoba Liquor and Lotteries in competition with beverage rooms.

It's a tough enough business as is. No bank or credit union will lend money so you have to get a mortgage through what Desrosiers terms "angel lenders." They are people of means who lend money through private mortgage brokers. They take a high risk but expect high returns. So the interest on Desrosiers' mortgage is 12.5 per cent. That's an insane rate today but it's typical in the business.

Insurance is also crazy. Desrosiers pays $13,000 a year for insurance on his hotel beverage room. That's for a small country bar that seats 69 people -- 100 if you move out the pool table. For the convenience store he owns next door, he pays a mere $1,500 for insurance, and it has a liquor vendor license.

And don't expect your property to appreciate. The value of the building is static at best because they can't be used for anything else. You can buy some bars for less than the cost of an average rural house. Meanwhile, the costs of heating the old buildings are enormous.

"What lunatic wants to take over a bar in a place like this?" Desrosiers asked at one point. Well, a lunatic like Desrosiers. He just always wanted to own a bar. He works hard, and uses his background in marketing to his advantage. "I tell the staff you don't sell liquor, you sell fun. You have to make sure customers have a better time here than at home."

To supplement the bar's income, Desrosiers operates the beer garden at Carman's annual fair. Six years ago, he bought the convenience store next door, which his wife Carrie runs, out of which he sells spirits and can supplement alcohol in the beverage room.

Desrosiers maintains food is the future of the business. He has increased his food sales 300 per cent since he started, and he is exploring catering. Food sales have a good margin, and people can get bar food such as hamburgers, chicken fingers or pizza 364 days of the year, until 2 a.m.

"It's a lot of work to squeeze out a very meagre return for the work you do, and government is there to put up obstacles every step of the way," he said.

The hotel beverage room is part of the "landscape heritage," Brandon University professors Dough Ramsey and John Everitt wrote several years ago in a paper that appeared in Manitoba History magazine.

In other words, they're from a bygone era.

You can see the long, slow death of the rural hotel bar while driving through the country. Many are old buildings that look like some dishevelled patron, after eight or nine drinks, tottering a bit and started to lean.

Closing time is nigh. Some have closed permanently in recent years -- the Inwood Hotel, Hadashville Hotel, Elma Hotel, St. Claude Hotel, Treherne Hotel, Fannystelle Hotel, and Belmont Hotel, according to the Manitoba Rural Hotel Association. The Dauphin Hotel and West Hawk Inn recently burned down.

And if they're not dead, they're often for sale.

Beverage rooms were typically among the first structures to be built in settlements of any size, so many are a century or more in age.

The beverage rooms never had a dress code. They were for the working man and the every man. But initially, there was nothing to do in them but drink. Government maintained allowing any food or entertainment -- or even sunlight -- would only encourage more drinking so the beverage rooms were dark, dingy, windowless caverns. The removal of windows was part of legislation after the end of prohibition (1916-1922). Governments didn't want young people corrupted by the sight of drink and drinkers. It worked both ways. The rule allowed those inside bars not to be seen and be judged. In many old beverage rooms, you can still spot where the windows were bricked up.

Rules against standing in a bar or carrying a drink also came in after prohibition. This was to get away from the raucous, saloon-style drinking before prohibition. In its place, every beverage room had to install little tables surrounded by four chairs, like tea parties, or poker games, but you couldn't play poker. There was a regulation for everything. Chairs at one time had to have arms. Drinking glasses had to be a certain size. The carpet had to be a certain kind.

And the biggest regulation was bars had to be hotels. It started with the hotel-restaurants built at every whistle-stop on the rail line, and asking government permission to serve their customers alcohol, said Jim Baker, president of the Manitoba Hotel Association. The hotels had guests, they were served meals, why couldn't they have a drink?

The government relented when it realized joining hotels to beverage rooms was a way to slow the proliferation of pubs. There was even legislation passed in 1928 requiring tourists rent a room in a hotel to establish "legal residence," if they wanted a drink. The rule still applies. Beverage rooms in Winnipeg or Brandon need to have at least 40 guest rooms and a certain square footage; in municipalities of 8,000 people or more, 20 guest rooms; municipalities between 2,500 and 8,000, 10 guest rooms; and municipalities of less than 2,500, four guest rooms.

Manitoba recently decided against changing the law to protect those beverage rooms that had invested in hotels. But in Saskatchewan, a similar law was struck down in November 2012. Bars and beverage rooms there are no longer required to operate hotel rooms, a brew pub or provide nightly live entertainment in order to get a liquor permit.

Perhaps the strangest government practise started in 1923 when Manitoba beer prices began being regulated by a public utility board. So for the past 92 years, government has set your beer prices. Even the specials. Those are sent around on a list to the beverage rooms.

In comparison, the government doesn't even set milk prices anymore on two- and four-litre cartons. Milk prices were controlled for decades to protect low income families. But when it comes to beer? Hey, the government's got your back.

So while residents of Churchill are paying $12 for a four-litre jug of milk, at least their beer is the same price as Winnipeg's.

The problem with saying government protects beer drinkers is no one gouges them more price-wise.

Who gets the money when you buy your beer? A breakdown shows on a 12-pack of bottled Labatt's Blue, which is priced at $22.95, government gets almost half: $8.08 for the province, and $2.29 for the federal government. The brewery gets $8.91, although that's also to cover freight, and the vendor makes $2.93, which is topped up by returns (40 cents).

No one has a bigger beef about beer prices than Sheera and Garnet York at the Sprague River Inn, in Sprague. They're near enough to Lake of the Woods people can buy 24 cans of beer for $29 in Ontario, versus $48.95 in her vendor at government-set prices.

Or people can go across the border into Warroad, Minn., or to the North West Angle. A pack of 30 Keystone beer costs $22.50 on American soil; it costs $25.85 in her vendor but that's for a pack of 15.

Government has tried to help small rural hotels. Beer vendors were approved in 1934. Part of the agreement today between the province and vendors is Liquor Marts won't sell refrigerated beer. It gives that business to the vendor. This is a handshake agreement begun when refrigeration was very expensive.

Also, since 1991, a row of flashing fruit machines can be found in virtually every hotel beverage room.

To soften public resistance to VLTs, the province initially announced it was only putting them in rural hotels to give them another revenue stream, and save the hotels from going under.

"It was a heartwarming way to bring in VLTs," said Dale Barbour, with more than a touch of sarcasm. Barbour wrote a paper on Manitoba's liquor laws several years ago and is currently writing his PhD at University of Toronto.

But two years later, once VLTs gained public acceptance, the government crammed VLTs into every bar and hotel beverage room in the city. The province even started pulling some VLTs out of rural hotels -- they'd served their purpose, like props on a Hollywood set -- because the machines could earn more in the city. It told rural hotel owners their VLTs weren't productive enough.

Today, there are 250 VLT sites inside Winnipeg, and 250 outside. The 2,400 machines outside Winnipeg generate $22 million in commissions for those operators. Most hotel owners agree VLTs saved many hotels, although they aren't happy with the percentage they are allowed to keep. Until recently, they only kept 20 per cent of earnings. That was recently increased to 22 per cent. There's also an additional tax. Proprietors are required to pay the government over $400 per year per machine in licensing fee. They also suck up a lot of electricity, and bar owners are not allowed to turn them off. If an inspector walks in and they're not turned on, the owner is in big trouble.

By comparison, First Nations, often within a short distance from rural beverage rooms, get to keep 90 per cent of their VLT earnings. And you can smoke in the First Nations gaming lounges. Just about every bar owner brings this up. The smoking ban remains a sore spot for many beverage rooms, which saw sharp drop in traffic after it was imposed in 2004.

Eins, zwei, drei, g'suffa!

That was the refrain every autumn, along with the rustle of falling leaves, in Winnipeg. It was time for Oktoberfest, a week-long celebration of copious beer consumption.

Not anymore. Times change.

The beer culture has been beaten into submission by tougher laws against drunk driving, the smoking ban, and higher prices. That's probably something to celebrate.

"Twenty years ago, people still took chances and drove home after drinking. Now the social probity against drunk driving is so strong," said Barbour. "The whole drinking culture that sustained these places, men getting together and drinking fairly heavily, just isn't there anymore."

Jim Baker, president of the Manitoba Hotel Association, agreed. He said his son and his friends find alternative entertainments, such as throwing potluck dinners instead of going to the bar, something Baker's generation would never have considered. "The bars are being challenged. Rural bars have been more challenged because they don't have the population."

The other factor, of course, is the e-age. Bars have to compete with a myriad of electronics designed to keep people in their homes.

Most beverage room owners concede that's all true but they still sell a lot of beer, especially through their vendors. And they sell enough to make a good return -- if they were allowed to keep more of it.

The problem is the provincial government has taxed the income out of the industry for small operators, said Loa and Doug Eyjolfson, owners of the Winnipegosis Motor Inn in west-central Manitoba.

"The government regulates how much money we make and we're not making very much at all," Loa said. Certainly not enough to keep up with rising expenses, such as the raise in minimum wage, utilities, and the price of groceries, particularly meat, for their restaurants.

"I've been doing this since 1997, and haven't had a problem covering expenses until this year. We're not on the TransCanada with oodles of people going by. We're in a little local area that can't do without a hotel," she said.

Government seems cognizant of the problem and has made changes to help rural hotels. The province has raised the return from VLTs for small rural bars to 22 per cent. It has increased payment for bottle returns for small hotels, by 1.5 cents to 40 cents per dozen.

Neither does the province sell domestic beer from its own licensed vendors if a beer vendor is in the same rural area. Andrea Kowal, spokeswoman for Manitoba Liquor and Lotteries, called it "a protected market." Beer vendors sell 83 per cent of the beer in the province. The total beer sales in Manitoba last year amounted to $307 million. "We give hotels a lot of opportunity to make a lot of money from selling their beer," Kowal said.

Perhaps the biggest move is the province now pays a rebate of up to $12,000, called a "low-volume discount," to licensed rural hotels whose beer sales don't pass a certain sales threshold. It's an awkward form of assistance. It almost seems like an admission of guilt by government that it's taking too much of the profit.

Finally, government recently changed laws to allow minors into beverage rooms until 9 p.m. -- so long as they aren't consuming alcohol. This allows beverage rooms to be used or rented out for events such as parties, reunions and sports team banquets.

The law changed over summer but Sheera York already has Christmas parties booked at the Sprague River Inn. Her gardening club also comes in once a week for coffee, and families drop in for her home-made pizza. "We cannot just rely on alcohol for this business," she said.

Mondragon is appreciative of the changes but says it's not enough. He's got 63 small rural hotels, in the newly formed Manitoba Rural Hotel Association, who agree.

Virtually every retail business outside of beer vendors charges a 30 per cent markup, said Mondragon, yet hotel beverage rooms are locked in at 13 per cent, or 17 per cent before PST and GST.

A greater margin on beer sales would be like a silver bullet and give rural hotels a financial base from which to work, he said. The problem is you can't raise the retail beer price any higher, and neither does he want to. The 30 per cent would have to come out of the government's share.

Sounds impossible, but it's being done in Saskatchewan. Individual beer vendors have been setting prices for years. They earn a margin of 25 to 30 per cent on sales of domestic beer, said David Morris, spokesman for the Saskatchewan Liquor and Gaming Commission.

"We're not asking for a hand out, or any kind of subsidy," said Mondragon. "We're just asking for a fair share of what we already sell. The business we do is sustainable. The government just takes too much of it."

Since 2002, Saskatchewan has also allowed beer vendors to sell spirits and wine, in addition to beer. That's something some Manitoba bars have expressed interest in.

But lest Saskatchewan be viewed as the voice of reason, it must be pointed out that while beer vendors can sell wine and spirits, they have to buy them from Saskatchewan liquor stores at retail, not wholesale, prices. This is something its hotel association has been fighting. The Saskatchewan government has just launched a public review on whether all liquor outlets should be privatized. Premier Brad Wall has said he doesn't see why government should be in the business of retail.

Another suggestion is to give the small rural hotels a bigger cut of VLT revenue. There are some precedents for that. Both the MTS Centre and the Manitoba Jockey Club at the Assiniboia Downs have received enhanced revenue shares of VLT revenue.

Mirrors, mirrors, on the wall. Why don't you bring good cheer to all?

The Mariapolis Motor Hotel walls are crammed with mirrored and neon beer signs, like an art house too small for its collection. It's kind of glitzy, in that dungeon bar kind of way, and there is buying interest from collectors.

Inside the beverage room, Charlie Coppens is working her final days. Charlie's real name is Teresa but she says maybe six customers know that after 18 years. That's when she started here as a waitress. She bought it two years later, and for most of that time the single mom has been sole proprietor. Or 'Charlie,' to her customers.

The reality of closing is setting in. The place is empty in the middle of the afternoon during the interview. Coppens chokes up a few times but catches herself. After interviewing an array of bar owners, it's amazing how hard they work, what long hours they work, how little they make in return, and yet how much they seem to love it.

Coppens has sunk everything she has into the business. She cashed in her insurance policy, she cashed in her RSPs. But the hotel's returns still slipped. She laid off workers and increased her own workload. Yet she still hasn't been able to pay her property taxes in three years. That's $8,000 annually, plus interest. Her mirrors, mirrors say it all. Time to close.

She planned her closing like someone planning their own funeral -- there was to be a huge Halloween party Oct. 31 and then, with the band still in town, a grand closing the next night, to coincide with the 16th anniversary of her grand opening.

Go out with a bang, she's resolved. But then, in the next minute, she has to catch herself. "It's why it makes me cry to shut down because I love this community. I wouldn't have sunk my savings in this if I didn't."

As it turned out, the funeral came and went. Coppens had the Halloween party but the musical entertainment failed to show, so she canceled the going-out-of-business bash. The local council hasn't put her place in a tax sale yet. "I'm just going week by week," she said. "If I can cover the liquor commission payment every Monday, I get to stay open."

Is there still a place for the small, rural hotel beverage room? There probably is in places like Mariapolis, Sprague, and Notre Dame. There aren't a lot of other places for people to go and socialize, people say.

The population of Mariapolis, 160 kilometres southwest of Winnipeg, just off Highway 23, is about 60. But the population was never more than 100, and the bar always survived. "I remember when (a resident) was having twins and we all thought we were going to break 100. But then someone passed away," Coppens said.

Jim Carels, in the Mariapolis Motor Hotel to pick up some beer, said the hotel closing would be another nail in the coffin for the small town. The school, garage and bank are already gone. "It would be terrible. There's not much left as is," he said. With the hotel, "at least we have a place where we can meet."

Ray Dacquay is one of the farmers who meet regularly at the Notre Dame Hotel beverage room. "The place is right in the heart of our downtown. It's a huge hole if it closes." A lot of business people still bring visitors to the hotel for lunch or to discuss business, he said.

The farmers near Notre Dame have it all worked out. They go to town to fetch the mail, all at about the same time in the late afternoon, then meet in the bar for a beverage or two. There were six of them gathered at a table on a recent Thursday.

"It's like a pair of old slippers," said Gabe Jamault. "Even if you should throw them out, you keep wearing them."

Coppens was only too happy to get a call from Mondragon and talk with someone who knew what she was going through. A recurrent theme is the business leaders feel alone in their situation. "I lose sleep every night thinking I must be the only one, the worst hotel owner in the world," she said.

Mondragon said he was thinking the same thing. He felt like a big failure. Now these failures are fighting back together. Don't turn off the taps just yet.

bill.redekop@freepress.mb.ca

Read more by Bill Redekop.

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