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Ledohowski drops bombshell
Mar 20, 2008

If there’s any potential to catch a media wave, hotelier Leo Ledohowski is first in line. He seems to have a nose for the big story and an innate ability to sniff out the best way to have his name displayed prominently atop the crest.

Ledohowski doesn’t always effortlessly stay above water, but he does put up one heck of a good ride before he’s toppled.

In recent months, he has managed to have himself before the media when it came time to debate a new stadium — a battle he lost to CanWest executive David Asper — as well as trade-show space at Assiniboia Downs — another lost cause due to the intervention of the mayor and premier — but that hasn’t stopped the hotel entrepreneur from making another pitch on another project.

It all started with Mayor Sam Katz’s proposed five-per-cent hotel tax, something hotel owners across the city have decried as undue punishment for their bottom line. Knowing that such a tax was in the offing from city hall, the Manitoba Hotel Association had earlier proposed a compromise two-per-cent voluntary hotel tax, which is actually referred to as a voluntary two-per-cent “destination marketing fund levy.”

The hotel association said the proposed city tax would decrease hotel industry revenues by five to 10 per cent. The association and Ledohowski have termed the projected decrease in revenues as punitive.

Faced with the dilemma of countering the city’s new tax, Ledohowski put on his thinking cap and came up with what at first glance seems to be a rather valid — if not unique — proposal. He told the city’s executive policy committee (EPC) Canad Inns is willing to purchase and run the money-losing Winnipeg Convention Centre if council backs off from imposing the new tax on hotel rooms scheduled for June 1.

“This alternative offers a positive solution based on sound business principles to the city’s challenge with the convention centre, rather than a punitive tax on a specific industry,” said Canad Inns president Ledohowski in a company press release.

Annually, the city and province subsidizes the convention centre to the tune of about $3.5 million — $2.1 from the city and $1.4 million from the province. Since its inception, the subsidy has amounted to about $100 million in today’s dollars, added the Canad Inns president.

According to the Canad Inns press release, the convention centre accounts for at most four per cent of overall hotel occupancy in Winnipeg.

“While some hotels are able to adjust (to the city’s new tax), others will take a look at the tax and come to the same conclusion of the Sheraton on York to convert their properties to alternative uses,” said Ledohowski.

Ledohowski is referring to the 271-rooms in the hotel being converted into rental apartments in late 2007.

What the hotelier is proposing for the convention centre is more or less a private-public partnership. According to Ledohowski, if the city drops its bid for a hotel tax, some of the projected $200 million in savings to the hotel industry would be used to help fund a $200-million expansion of the 34-year-old facility. At the rear of the convention centre and across the street is a parking lot that could be used for the expansion.

Convention centre general manager Klaus Lahr told the media the facility needs some $200 million for an expansion, otherwise it will lose millions in tourism and trade show business. Such an expansion would require funding by all three levels of government.

The bombshell Ledohowski dropped occurred during the appearance of delegations at the EPC’s meeting on the city’s 2008 operating budget. According to media reports, no one had seen it coming, especially the EPC.

Mayor Katz was not amused by the unsolicited proposal, saying Ledohowski had not put anything in writing nor had city hall received a certified cheque to prove his intent.

Katz also asked some rather pertinent questions, such as if Ledohowski intends on paying property taxes on the convention centre and what guarantees will be made to unions that have signed contracts with the city on behalf of convention centre employees.

Virtually all Ledohowski has said is that Canad Inns is willing to go ahead with the purchase and operate the convention centre using a business model. He said his private company could run the facility more efficiently than the current “bureaucracy” in charge of the  convention centre. He told the media he has single hotels which do more business than the convention centre.

Actually, his proposal could have been a response to his 2004 plan for a domed stadium/hotel complex that included convention centre operations such as trade shows that was rejected two years later by both Premier Gary Doer and Mayor Katz.  

Ledohowski revamped his rejected domed stadium plan and proposed to build a new home for the Bombers in St. Boniface. This plan also included the germ of a convention centre and trade show facility, although the promise was made that it would not compete in the marketplace with the MTS Centre for entertainment nor the convention centre for trade shows. This time around, the Blue Bombers rejected the Ledohowski version in favour the Asper version that would remain at the existing stadium site in Polo Park.

Ledohowski has not revealed how much he is prepared to pay for the convention centre, which has an assessed value of $43.9 million although its actual value is said to be closer to $185 million.

But it is unlikely Ledohowski will hand over anywhere near $185 million to buy the convention centre and then shell out $200 million for a major expansion.

Ledohowski knows talk is cheap and what he is receiving in the wake of his outburst at city hall is plenty of free column space and air time for his most pressing cause — the end of the proposed five-per-cent room tax. 

Indeed, Ledohowski is a master of media manipulation, using whatever means  available to draw attention to a pet project or cause.