Niagara Falls Blog

Another good post from the January 31, 2005 print edition of Buffalo Business First:

Divided by a gorge

Why is Niagara Falls, Ont., so far ahead of its U.S. neighbor?

James Fink
Business First

Kim Craitor remembers Niagara Falls, Ont. — the way it was and the way it is.

Craitor, a lifelong Niagara region resident and current member of the Ontario Provincial government, remembers the Niagara Falls of the late 1950s and early 1960s. Then, the city was a honeymoon capital and major tourist draw, not only in the province but in the region.

He also remembers what it was like in the late 1980s and early 1990s when many of the city’s major hotels were teetering on bankruptcy and prominent attractions like Maple Leaf Village and a lot of Clifton Hill storefronts were boarded up and shuttered. The city had become a lot like a washed-up Hollywood star: It had a name, a seedy reputation, but little else.

“People have forgotten what Niagara Falls was like 14 years ago,” Craitor said.

Craitor was a member of the Niagara Falls City Council at the time and he was also employed in the provincial unemployment office handling claims from workers who lost their jobs, not only at hotels but at longtime manufacturers like Ohio Brass and Vincore Corp.

That was then.

The Niagara Falls of today is the poster child for an urban area that took a steep economic nosedive, but shortly before crashing managed to pull itself back up before.

“It’s a lot more touristy now,” said Tricia Tollins, 25, a St. Catharines teacher who was vacationing with her fianc�, Christopher, during a mid-January weekend. “It used to be just the two big (Skylon and Minolta) towers and not much else. Now, every time I look around there’s another hotel being built.”

This year marks a decade since the economic boom has taken hold in Niagara Falls and by all accounts, there appears to be no sign of it slowing down — at least for the next few years. Its growth has become both a regional and international model.

“Looking at Niagara Falls today, it is really hard to imagine what it was like here, even for those of us who lived here,” Craitor said.
Across the gorge

It stands in contrast to its neighbor at the other side of the Rainbow Bridge, Niagara Falls, N.Y., which is still struggling to change its economic fortunes. Yet, the economic development explosion in Niagara Falls, Ont., stands as example of what can happen in Niagara Falls, N.Y.

“There are similarities and that’s where you draw your hope from,” said Gary Praetzel, dean of Niagara University’s College of Hospitality & Tourism Management. “Ontario always viewed tourism as a real industry while on the U.S. for too many decades it was pushed to the back burner as they focused on manufacturing. Now, that is beginning to change.”

Christopher Glynn, president of the Maid of the Mist Corp. that operates the famous tour boats, has seen business from both sides of the falls. He agrees that Niagara Falls, Ont., has had a significant jump start and Niagara Falls, N.Y., is only now starting down that same path of making tourism and hospitality its primary industry.

“You have to remember this is not going to happen overnight,” Glynn said. “It won’t happen in five years, either. People are impatient when it comes to Niagara Falls, New York and I can understand why, but they have to learn to be patient.”

All they need to do is look across the Rainbow Bridge and revist the last 10 years. Niagara Falls Ont.’s economic boom began almost one decade ago when two watershed events occurred, both of which were directly inter related.

First, then-Mayor Wayne Thomson was able to bring the various tourism and hospitality factions together, specifically those that represented the Lundy’s Lane area and those that represented the Fallsview district, to work on one unified approach for the city.

The unified approach was critical to the second part of equation, lobbying Ontario leaders to place a casino in Niagara Falls. Unless everyone was working off the same page, that quest would have died.

Again, it was the universal understanding that the city’s fate was clearly tied to the tourism/hospitality industry that made all the difference.

“From a tourism perspective, that was the turning point, there is no question in my mind about that,” Craitor said.

The casino issue was put to a public referendum in 1995 and passed by an overwhelming margin, thanks in large to support from Niagara regional private sector leaders.

“Maybe, if it was a different economic time, the vote might have different,” Craitor said. “But the casino was viewed as the economic savior. There’s no question in my mind, that was the city’s turning point.”
Domino - er, dice - effect

When the lights on Casino Niagara lit up the skyline in December 1996, the mood in Niagara Falls changed.

Boarded up storefronts were replaced by multi-million dollar investments.

The confidence in Niagara Falls has been cemented by last year’s opening of the $1 billion (Canadian) Niagara Fallsview Casino Resort and this month’s ground breaking by Ripley’s Entertainment of the $200 million (Canadian) Great Wolf Lodge and indoor water park.

Add to that plans by the owners of the Hilton Niagara Falls to add a 58-story addition to its already burgeoning hotel and the development picture concerning Niagara Falls is as bright as any of the neon lights that dot its skyline.

“People don’t build 58-story hotels on spec,” said James Bradley, Ontario Minister of Tourism, Culture and Recreation. “What’s happening in Niagara Falls is really a sign that the city has come into its own.”

Statistics back that up.

In a big way.

A decade ago, the region drew about 6 million annual visitors. Now, it’s up to approximately 14 million visitors, according to Niagara Falls Tourism, and that number is projected to hit the 20 million mark in the coming years.

It also helps that the Niagara Falls brand name reaps the benefit of a $40 million annual marketing campaign run by the Ontario Lottery and Gaming Corp. The campaign is an international one that stretches into Europe, Asia and North America.

According to Statistics Canada, the country’s census bureau, the number of people, in what it describes as the Hamilton-Niagara Peninsula District, who work in the “information, culture and recreation’ industry has risen from 17,300 in 1987 to 35,500 in 2003, an increase of 105.2 percent. Just between 1995 and 2003, the number of workers in that field increased 46.6 percent, going from 24,400 to the 35,500 mark.

The same level of increase was also reported in the “accommodation and food services” field, rising 64.8 percent between 1987 and 2003. In hard numbers, that segment went from 31,300 workers to 51,600 people employed in hotels and restaurants in the region.

Between 1995 and 2003, the figure rose 60.2 percent, going from 32,200 workers to the 51,600 employee mark.

Most of those increases came from the immediate Niagara Falls area.

Meanwhile, the city’s population rose 4.5 percent between 1991 and 2001, going from 75,399 to 78,815.

And, the median household income rose a whopping 25.9 percent, going from $42,672 in 1990 to $53,715 in 2000, the most recent year available through Statistics Canada.

“Clearly, we’ve moved from a sad-sack economy to one of the more dynamic regions in the country,” said Tim Hudak, a regional member of Ontario’s provincial parliament. “It used to be that people came to look at the falls and then went home or to some place else.”

Not any more.

The casinos attract more than their fair share of customers with Fallsview attracting about 25,000 people a day and Casino Niagara bringing in another 18,000 people per day, according to the Ontario Lottery and Gaming Corp.

But, visitors are also attracted to a number of other attractions and places ranging from quaint Niagara-on-the-Lake to the more than 100 local wineries to its fast-growing stock of world class golf courses.

“We’ve also seen an evolution to a more sophisticated visitor,” Hudak said.
Tourists cascade to the Falls

Information compiled by Statistics Canada validate Hudak’s observation.

Between 1996 and 2002, the number of over night visitors who stayed in Niagara Falls jumped 39.6 percent, going from

2.86 million visitors in 1996 to 4.004 million visitors in 2002.

It was also during that same period that Niagara Falls has seen a dramatic increase in hotel developments. The city now has 14,000 hotel rooms, third most in Canada, with plans in the pipeline for another 2,000 rooms that are expected to come on line during the next few years.

Conversely, the only major hotel project being undertaken in Niagara Falls, N.Y. is the 26-story, 600-room addition to the Seneca Niagara Casino.

Total tourism spending in Niagara Falls, Ont., has virtually doubled between 1996 and 2002, according to Statistics Canada figures.

In 1996, the city had approximately $706 million in tourism-related expenditures. By 2002, the tourism dollars shot up slightly more than 100 percent to $1.414 billion.

People stay in Niagara Falls, Ont., for nearly two days, according to Statistics Canada. A decade ago, it was about four hours.

Niagara Falls, N.Y., by contrast, sees its visitor stay for about four hours.

The tourism explosion has had its own ripple effects elsewhere in the city.

Niagara Falls Mayor Ted Salci said the private sector confidence that is so prevalent in the Fallsview, Lundy’s Lane and Clifton Hill areas is working its way through the entire city.

Salci noted that Nabisco, which has operated a plant in the city for decades, has decided to expand its operations in Niagara Falls. Besides producing millions of Triscuit crackers, the plant has been selected by Nabisco to help manufacture a new cereal line that will result in 40 new jobs being added to the facility, which already has more than 300 workers.

Canadian retailing giant Zehr’s, because of the city’s rising population and household income base, has chosen a site not far from the Queen Elizabeth Way to build a 132,000-square-foot store, which will be one of its largest in Southern Ontario outside of the Toronto market.

Salci said preliminary plans remain in the works for the city’s first convention center and possibly a new 6,000-seat rink/entertainment center to replace the aging Memorial Arena.

None of that would be happening without the hospitality industry explosion, Salci said.

“We’re juggling a lot of balls, but it is a good problem to have,” Salci said.
The private sector’s faith

Noel Buckley, Niagara Falls Tourism president, said the city’s transformation was the byproduct of a lot of factors coming together, not the least of which was a belief by the private sector in the region’s potential as a hospitality hot spot.

Buckley credits private sector interests for being the catalysts of the city’s growth.

“It was hotel following hotel and attraction following attraction,” he said. “These things happened one step at a time.”

Private sector interests, however, credit the public sector - people like Thomson and Salci, along with their economic development teams, for laying the foundation.

Bob Masterson, Ripley’s Entertainment president, said his company watched very closely Niagara Falls’ development.

Ripley’s had a bird’s eye view, owning and operating several wax museums along Clifton Hill dating to the 1960s.

The 25-acre parcel along Victoria Boulevard where it is building the aquarium and Great Wolf Lodge complex has been under the company’s control since 1997, but it wasn’t until last year that they felt confident about making the $200 million investment.

“If the opportunity was there earlier, absolutely we would have taken it,” Masterson said. “But, would we have the guts to do this a decade ago, now that’s a different story.”

Ripley’s isn’t stopping with the aquarium/lodge project. It has already spent another $10 million refurbishing its Clifton Hill properties and is considering adding another museum to its local mix in the coming months.

Ripley’s isn’t alone. Not by any stretch.

Among the projects in the works is a 30-story addition to the Niagara Falls Marriott Fallsview hotel, a new motorcycle museum along Clifton Hill and a 700-seat entertainment theater on Center Street.

Marineland, the massive amusement park located just beyond the Niagara Fallsview Casino Resort, has its own expansion plans in the works.

Owner John Holer said he will be adding new bulga whales and shark exhibits and a few more roller coasters to his mix.

A decade ago, such an investment, was almost unthinkable, Holer said.

“The conditions have changed,” he said.

Marineland’s attendance for the past four years has grown about 30 percent annually, Holer said. He credits the growth to the two casinos and the development they spurred.

“The casino (Casino Niagara) became a lightning rod for economic development,” Holer said. “Businessmen love to follow success.”

Larry Lewin, Niagara Casino’s president, credits Niagara Falls’ growth to more than just the casinos.

To be fair, the casinos are major engines in the city’s economic development/tourism equation.

The two casinos, combined, welcome more than 43,000 people on a daily basis - two-and-a-half times the capacity of HSBC Arena.

Lewin, who came to Niagara Falls from Chicago and has development experience in such places as Las Vegas, said when he first came to Southern Ontario in 1998 he was absolutely surprised by what he saw. He was surprised in a positive way.

“I had no idea how robust it was and how robust it could be,” Lewin said. “I think what you are seeing in Niagara Falls is an economic development domino effect where one business leads to another business. Niagara Falls has a tourist-based economy that is only now just beginning to live and breath.”

Implications for U.S.

And, what does that mean for Niagara Falls, N.Y.?

The city has seen some investment take place, mostly in the form of the Seneca Nation of Indians with Casino Niagara and the under-construction hotel and from USA Niagara Development Corp., an arm of Empire State Development Corp.

“The casino issue is the parallel between the two,” Glynn said. “Both have embraced casino gaming as the catalyst for economic development and both have embraced tourism, but it stops at that point.”

USA Niagara invested $17 million to transform the long-vacant Falls Street Faire into Conference Center Niagara Falls. The center, which opened in May, is just beginning to make its own inroads in the convention and meeting business.

USA Niagara is also the driving force behind the $40 million Niagara Experience complex that will open later this year.

The Niagara Tourism and Convention Corp., while just three years old, is beginning to make some inroads into the meeting planning and hospitality markets. But, it still needs a vibrant product to sell.

Still, private-sector investment dollars have been slow to make their way into American side of Niagara Falls.

“There’s clearly different models and starting points between the two,” Glynn said.

In the meantime, the first stages of some private-sector development is just starting to take hold with Canadian developer Dino DiCenzio talking about building an indoor splash park in downtown Niagara Falls.

The difference between Niagara Falls, N.Y., and Niagara Falls, Ont., really boils down to philosophy.

“For decades, Niagara Falls, Ont., made a concerted effort to develop tourism as their industry while Niagara Falls, N.Y., focused on manufacturing,” Praetzel said. “It was a different mindset here.”

It wasn’t until Niagara Falls, N.Y., leaders looked across the Rainbow Bridge and saw construction crane after construction crane dot the skyline that they made a conscious effort to switch their economic development gears.

“Ontario clearly tied their growth to tourism,” Praetzel said. “Only now are people here making that change.”

Niagara Falls, N.Y. has a long way to go.

“Working in Niagara Falls can be done, but it takes a lot of ground work,” said Luiz Kahl, former Carborundum Corp. president and current Niagara Frontier Transportation Authority chairman. Carborundum was one of Niagara Falls’ largest manufacturers and the NFTA controls the county’s airport. “Niagara Falls’ track record is not an easy one and that may have to do with the ‘we-they’ attitude they have there.”

Still, it is city that welcomes about 6 million annual visitors. Seneca Niagara Casino, by itself, attracts about 4 million of them.

“Niagara Falls, N.Y., is trying, but Ontario has gotten a 40-year head start on them,” said Paul Ciminelli, Ciminelli Development Co. president.

The Amherst-based Ciminelli is currently working on a mixed-use project in the Lundy’s Lane area of Niagara Falls, Ont. It has no current project in Niagara Falls, N.Y.

Ciminelli said his company’s decision to cross the border was based on what is happening in Southern Ontario.

“We basically saw an opportunity,” Ciminelli said. “There’s a lot of momentum on that side of the border and we decided to take advantage of it.”

Many, like Ciminelli and Praetzel, feel that Niagara Falls, N.Y. leaders are closely watching their Canadian counterparts and trying to make them a case study for turning a region around.

Private sector dollars will come, Praetzel feels, but only after more public sector dollars are invested.

“It takes time,” he said.

Some of that will come from promoting regional attractions that encourage people to stay longer on the U.S. side. The just-released Buffalo Niagara Cultural Tourism Initiative addressed that issue.

The initiative is a blueprint that will drive tourists to the falls, but also to places like Old Fort Niagara or the Darwin Martin House in Buffalo.

“Right now, Niagara Falls, N.Y. is just an attraction,” Praetzel said. “It is not a destination like it is in Ontario. Sadly, that is the result of 40 years of neglecting the tourism infrastructure in Niagara Falls, N.Y. You can’t blame anyone. It was just the mindset that’s now finally changing.”