March 28, 1955 (22nd Parliament, 2nd Session)


George Gordon

Mr. Gordon:

We will not organize the hotel company to be a complete operating company in all respects. Certain administrative services will be provided to the hotel company by the railway.
It seems to me that the principal service provided so far has been to sell the operation of the hotel down the river to the Hilton corporation. Certainly we have had no other factual data or indication in this house. However the quotations I have put on the record make certain facts clear. First, the new hotel was presented as something which would be operated on the same basis as the existing hotels. Second, it was indicated that on such a basis it would be a satisfactory business venture. Third, no indication was given that the operation would be conducted by an outside organization. Fourth, the presentation made to the committee indicated no need to call in an outside organization to operate the hotel, since it was indicated that it would be a satisfactory operation under existing circumstances.
It seems to me that policy has changed drastically since that point, and I think we must look to the government for an explanation of that fact. Tracing what the public might know about this project, for the benefit of the railway committee, the next development took place on November 15, 1954, when a general statement was issued by Mr. Gordon and Mr. Hilton announcing that the Queen Elizabeth would be managed by the Hilton hotel group. This was the first intimation 50433-1561
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Committee on Railways and Shipping hon. members of this house received that the hotel was not going to be operated by the Canadian National Railways itself; we read it in the newspapers. It was the last and only piece of authoritative information this house has been able to garner to date.
Under the guise of enabling the C.N.R. to operate its day to day business without interference, repeated questions in the house on this subject and repeated requests for information have met with a blank and stubborn refusal to give any more information. This point was extremely well traced by the hon. member for Prince Albert, so I shall not labour it. However, I wish to put on record the interesting fact that other organizations and the Hilton corporation itself find it unnecessary to throw what I have described as a hot air curtain around their operations, and secrete facts within themselves.
I turn to one paragraph in Business Week of April 11, 1953, referring to an hotel which is to be constructed at Havana, Cuba at a cost of approximately $10 million, in conjunction with a local labour union there. The paragraph states as follows:
The retirement fund of the union (with a bank loan to help) will finance the hotel and get two-thirds of the gross when it's operating; Hilton will lease, manage, and supply working capital in return for one-third of the take.
There is the financial information in connection with that particular operation, the division of the profits and everything else. Yet, Mr. Speaker, these gentlemen sit over there on the treasury benches and say, "We will not tell you anything about this matter because it is not in the public interest."
I realize, Mr. Speaker, that there perhaps must be some reservations in dealing with the C.N.R. in order to keep its competitive position free and on an equal basis with that of other railways in Canada, but I just cannot see that certain particular aspects of its policy and certain of its major policy decisions should be kept secret when they represent matters of urgent public interest to the people of Canada, and when there is no competitive reason for so keeping them secret. Particularly, Mr. Speaker, I see no reason why they should be kept secret when a 15-year contract is involved and millions of dollars are at stake.
We will turn over to the Hilton corporation a $20 million hotel. It is indicated that we shall be putting up an additional $5 million in furnishings. It is an immense operation. For example, it has almost three times the value of the Chateau Laurier. Yet we cannot find out anything about it. This is not an operating matter. When you take $25 million of quasi-public funds and put them into an
Committee on Railways and Shipping hotel and then turn it over to a United States organization for management, that is a matter of prime public interest and prime public importance, and one upon which the house has every right to be fully informed.
Turning to this announcement, stripped of its verbiage we find that the only information we have on the subject is this. The announcement tells us that the hotel will be managed by Hilton for 15 years under a percentage division of profits after payment of all costs of operation. Ownership remains with the C.N.R. At least 95 per cent of the staff will be recruited in Canada, where possible from the C.N.R. organization. The remainder of the announcement, probably in an attempt to camouflage the absence of facts, goes at length into the fine qualities and great size of the Hilton organization, the marvellous job they will do of managing the hotel, and the advantages-largely unstated- of the agreement to the C.N.R.
The facts which would enable the house to evaluate for itself the wisdom and advantages of this arrangement and its possible implications are simply not contained in that statement. For example, the reference to a percentage division of profits after all costs of operation are met is meaningless, even to a trained accountant. I personally have examined the standard accounting practice of the American hotel association, and the figure which is referred to here could be one of four or five different figures in their financial statements. There are some who would include in the cost of operation such items as depreciation and interest. If you do that, in the amounts at the disposal of such an agreement it means a difference of hundreds of thousands of dollars every year. Yet we do not know on what basis it is, and the committee going into its session will not have that information at its disposal, although I sincerely hope it will be made available.
The only basic advantage to the C.N.R. and the people of Canada which has been clearly set out by the president of the C.N.R. as arising from this agreement is expressed in the words:
. . . the working agreement is likely to ensure a stable and high occupancy of the hotel.
These statements may well be true, but why pay for something we were going to get anyway? Just a year ago Mr. Gordon told the railways and shipping committee:
We know from investigation there will be a very intense interest in using the convention facilities of this hotel . . . Our committee which considered the suggestion for this hotel came to the conclusion there would be a high degree of occupancy . . . We already have received a great number of inquiries from organizations ... I think the interest being shown in the hotel long

before we have begun at the site would indicate that we should not expect to have much trouble once the erection of the hotel takes place.
In just a moment I think we might call it six o'clock. If these statements I have quoted were correct, as I believe they were, why do we need the Hilton corporation to solicit business which already is banging on our hotel door? Why do we need to pay a percentage of the profits of our new hotel to get business which the committee evidence showed we could get for ourselves?
Mr. Speaker, would you call it six o'clock?
At six o'clock the house took recess.

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