High fuel costs threaten plans for a bumper tourist season in Newfoundland

The meandering 100-kilometre road from the Trans-Canada Highway to Twillingate, N.L.,  is not one ordinarily travelled by accidental tourists. Visitors to the colourful historic town of 2,000 residents, which dubs itself as the "Iceberg Capital of the World," are what the tourism industry calls destination travellers.

And that is precisely what worries Deborah Bourden, owner of the Anchor Inn Hotel, as she watches her business costs soar alongside record fuel prices in recent months.

"Newfoundland is a very expensive destination," she said. "But Twillingate within Newfoundland is an even more expensive destination because we are, as we say, at the end of the line."

Bourden relies on staycationers who take day trips or several overnight vacations near home during the tourist season to make up half of her revenue. 

The capital city, St. John's, is six hours away by car, and people who dropped in for a day or two might now think twice, said Bourden.

"So if people are now … saying, 'I can only go half the distance' … it's always going to be us that falls off the table."

After carrying deficits in the past two years because of the COVID-19 pandemic, many tourism operators in rural Newfoundland were hoping they would recover their losses this summer. Last November, the provincial government declared 2022 "Come Home Year" in an attempt to boost the tourism sector, which runs from May to October.

High fuel prices and surcharges have also driven up the price of food deliveries, which means Bourden has to make tough decisions about how much to increase menu prices. 

Canola oil, for example, has tripled in price, lettuce has gone up by 30 to 35 per cent, and scallops by 25 per cent, she said. But passing on the full cost increase isn't viable in such a price-sensitive market.

"You can't have a plate of french fries costing $12. You cannot do it. And sometimes you have to make decisions about what actually goes in that salad. Maybe you have to take out some of the premium items so that you can keep the price point to where it's at least acceptable," she said.

"You always still need to understand that you have to give value for that person who's paying, so it's not prohibitive to eat in our establishment."

In the end, Bourden increased menu prices by 10 to 15 per cent.

"I think there is a role for the visitor to play in being patient with us, trying to understand that there's no money grab here."

Barry Rogers employs 40 to 50 people at Iceberg Quest Tours in Twillingate and St. John's.

He relies on the lure of icebergs and whales to fill his tour boats from May to September, a seismic shift from the days of his ancestors, who viewed both as a threat to their livelihood because they destroyed fishing nets and lobster traps.

"This piece of ice — and others such as it — represents 50 per cent of the business," Rogers said.

But this year, he will need to welcome aboard a higher volume of iceberg- and whale-seeking tourists to make up for the cost of filling the tank in his boat.

"Fuel's gone right through the roof," Rogers said.

When he factors in the jump in the price of diesel oil, fuel surcharges and taxes, it costs Rogers $12,000 to fill the tank in his tour boat, a threefold increase from pre-pandemic times.

Like Bourden, Rogers said he is not prepared to offload the real cost onto his customers.

"A lot of folks have been saving for years, come here to our beautiful province and enjoy what we're looking at here this morning and … we don't want to price ourselves out of that."

To reduce expenditures Rogers is making a number of adjustments to how he runs his tour business, the most significant being a cut in the number of daily sailings when the boat is not booked to capacity.

"If we've got, say, low numbers on the 4 o'clock [sailing], we ask our guests to move back to the 1 o'clock … rather than go with small numbers."

Rogers will also reduce his boat's travel speed from about eight knots to six in order to conserve fuel. By using a combination of cost-cutting measures, Rogers said, he was able to limit the increase in the price of a ticket to $5.

The chance to see an iceberg up close had been a dream for Australians Jane Darbyshire and Matt Linfoot.

"To see this iceberg, we're pretty lucky," said Darbyshire, adding that they came from about as far away in the world as is geographically possible on the chance that they would see one.

But Darbyshire and Linfoot have not been so lucky with the cost of gas to fill their rental car having shot up in the months since they left home on their travels.

"The only way you can really do it here is with a car," said Linfoot, who is trying to absorb the cost of gas by not thinking about it too much.

"I'm trying to keep the tank full when it hits about half. So I'm kind of lulled into a false sense of security that it's not costing that much, when in fact, I think if we went for a full tank, it would be shocking."

An added concern for both Rogers and Bourden in a time of labour shortages is the high cost of gas for their employees, many of whom commute daily from nearby towns to Twillingate.

Bourden feels a responsibility to pay them above the minimum wage that's standard in much of the hospitality industry.

"They're coming from … 20, 30, 40 kilometres away. This is costly and so we have to make sure that they can afford to come to work," said Borden.

Rogers agreed.

"The more volume we have … that enables the company and myself to be able to employ our people, pay them well," he said, adding that bookings for the season are higher than normal.

Bourden's hotel bookings are up as well, but she is looking beyond this year to guarantee her long-term survival as a tourism business in far-flung Twillingate. The road back to profitability will require even more creativity to stay afloat financially if fuel prices stay high.

The pent-up demand after two summers of very little travel should boost profit margins somewhat, Bourden said.

"But next year it will not be the same … so that does concern me."

"I've been in business for over 40 years and Newfoundland, Labrador, there's always challenges of some sort or another," Rogers said.

"There's a lot of people, families that are counting on me, so we do what we can."

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