Financial woes derail train tours

Rising insurance costs and other factors have prompted Marcia Pilgeram, president of Montana Rockies Rail Tours http://www.montanarailtours.com/ , to suspend operations in 2005.

The company is not closing. It will also refund its 2005 reservations and protect travel agent commissions, Pilgeram said.

By ROBERT STRUCKMAN of the Missoulian

http://missoulian.com/articles/2004/12/03/news/mtregional/news06.txt

"We’re looking forward to the opportunity to strategize and bring in new partners," she said. The company plans to reopen in 2006.

Montana Rail Tours, based in Sandpoint, Idaho, has operated its substantial collection of 1950s-era streamliner rail cars along Montana Rail Link lines through Montana for the past nine years. The restored stainless steel cars include a diner, coaches and a lounge car.

Running a vintage railroad according to modern standards is difficult and expensive in the best of circumstances, Pilgeram said. But the challenges of the last few years have made the enterprise untenable.

Rising insurance and fuel costs and the increasing role of the Internet in hotel booking have all cut into Rail Tours’ business. Since the terrorist attacks of Sept. 11, 2001, insurance costs have increased dramatically and overall tourism has declined. Fuel prices affect all aspects of the business.

"And it’s a different world today with hotels," she said.

In years past, Pilgeram’s company could negotiate low prices with hotels along its routes. Yet increasingly, hotels offer last-minute low prices via the Internet. As a result, too often passengers have found that the negotiated rates from Rail Tours were higher than rates offered on arrival.

"Also, we need to be more integrated vertically," she said.

As the train trundles on a two-day tour from, say, Sandpoint to Livingston, Rail Tours lines up perhaps as many as 15 components. Some of those components might be an afternoon in Missoula or a tour of Yellowstone National Park. Of those components, Rail Tours might own only two.

"We need more control over the components," she said.

Pilgeram is considering a number of possibilities. The company may consolidate with another small tour company. It may also move its headquarters to a larger population center, although Pilgeram said she intends to stay on Montana Rail Link lines. She has considered the entire Northwest, she said, specifically mentioning Billings and Spokane.

Also, Rail Tours itself needs to evolve, she said. Instead of centering its schedule on the seasonal national parks, the line could work more profitably if it offered tours all year.

"That way, we could spread out the insurance costs through the year," she said.

Most important, Pilgeram said, is that some things will have to change. By suspending operations for a year, the company will have the time it needs to make those decisions and follow through with them.

"Canceling was a tough decision. But it gives us a change to step outside the box and really look at what we’re doing," she said.

Reporter Robert Struckman can be reached at 523-5262 or [email protected]