Soaring gas prices can be a boon for Minnesota resorts

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Soaring gas prices dampening distant summer vacations could be a boon for Minnesota resort owners.

For some families, the cross-country road trip to Yellowstone or Disneyland may be canceled this year. But that, in turn, will make nearby vacation spots, like the state’s numerous resorts, a better choice for many.

“People might say, let’s take another COVID holiday,” said Ed Tausk, owner of Vermilion Dam Lodge, about 65 miles west of Ely. “I look at my calendar and I’m fully booked until August.”

“If nothing changes, it’s going to be another great year,” Tausk added. “But everything can change quickly.”

Memories of the start of the pandemic in 2020 hold great meaning for many business owners. Due to early uncertainty about the virus, resort owners feared answering their phones as cancellations mounted. But within weeks, Tausk said his phone was ringing non-stop as nearby outdoor destinations became the vacation of choice.

“It was crazy,” he said.

Tausk was one of many resort owners who had a stellar year in 2021. This year is shaping up to be another good year with many reservations being made months – sometimes a year – in advance. But resort owners also know that families are pressuring the grocery store and the gas pump.

“There could be a tipping point where they’ll have to forego vacations this year,” Tausk said. “I haven’t seen it yet, but I have a feeling we’ll see a few [cancellations] here and there because people’s disposable income will be affected.”

Inflation and gas prices have replaced COVID-19 as the top obstacle to travel this summer, according to a national survey, said Ben Wogsland, executive vice president of Hospitality Minnesota, which represents the state’s restaurant, lodging, hotel, resort and campground industries.

But there’s still pent-up demand to travel and connect with family, Wogsland said. This allows people to replace longer journeys with ones that are closer to home. And that should be a bonus for Minnesota resorts already anticipating a good year.

The bad news: many owners may have to absorb higher inflation-related costs while continuing to grapple with a labor shortage that is easing but still a concern.

More than 6,000 workers entered Minnesota’s hospitality industry in April, Wogsland said. Still, the hospitality and leisure industries have lost 25,000 jobs compared to 2019, he said.

“Most try not to turn guests away or cut hours or services because of it,” he said. “So you have general managers and owners cleaning rooms … and working more hours to fill any gaps in the labor shortage.”

Look for solutions

Resort owners are using every tool possible to empower their workforce, Wogsland said.

Some rely on the federal J-1 visa program, which allows foreign university students to enter the United States for temporary work. COVID-19 travel restrictions have stifled the program for the past two years, but resort owners expect to see more foreign students this year.

“Our population here is too small to get enough seasonal workers, so the international workers are a strong complement for us,” said Jim Vick, general manager for Lutsen Mountains on Lake Superior’s north shore.

To compete alongside McDonald’s and other food and service companies for workers, many resorts have raised wages, expanded benefits, and increased job flexibility for a new generation that insists on work-life balance.

Accommodating people who don’t want to work weekends in the leisure industry, which serves visitors seven days a week, creates “little hiccups,” said Beth Schupp, fourth-generation owner of Fair Hills Resort in Detroit Lakes and Five Lakes Resort in Frazee.

“We have to adapt so that they stay because they can walk and get a job somewhere else,” she said.

That is why the owners have raised wages, in some cases significantly. Tausk used to pay workers $10 to $15 an hour to clean his 25 cabins on Lake Vermilion. Now he pays $20 to $25 an hour. He has enough staff to last the season and bolsters his workforce with retirees camping nearby in their RVs.

Andy Leonard, owner of East Silent Lake Resort near Dent, built three RV sites and added about half a dozen permanent worker housing options onsite. “We’re trying to be creative to address this [shortage],” he said.

Paul Bugbee, the third-generation owner of the Bug-Bee Hive Resort in Paynesville, needs eight more workers to supplement his 27 employees. But the labor shortage doesn’t appear to be as bad as it was in 2021, when he went to the local addiction counseling center in search of prospects.

“Do you have anyone who could help?” he asked the director of the center. By Saturday he had five new workers; three of them are staying this year.

Jobs are likely to remain unfilled at some resorts, forcing owners to cut back on services.

Justin Lederer, manager at McQuoid’s Inn on Lake Mille Lacs, used to have about a dozen starting boat captains. Now he has four. “People don’t want to work weekends,” he said.

At Schupp’s Fair Hills Resort in Detroit Lakes, daily cabin cleaning has been replaced by an on-call service.

“We all do the dishes and housework at the weekend,” says Schupp. “Sometimes we call on friends for help. You all do what you have to do.”

When Schupp ran out of a dishwasher at some point last summer, the resort went to “Lake China” — better known as paper plates. When the sailing instructor didn’t come, Schupp stepped in.

With rising inflation hurting their bottom line, many resort owners may need to do even more.

Bugbee has hiked its rates by 3.5% this year, but rates were fixed last fall — well before inflation more than doubled.

“The cost of everything has gone up, from the cost of the equipment to the cost of topping up that equipment with gas,” he said. “That means I have to keep other costs, like labor costs, down.”

That means owners will be doing more of the work themselves — like Bugbee mowing until 9 p.m. on a final evening.

Nevertheless, he and other resort owners are looking forward to the start of the summer season.

“Everyone I talk to says it’s going to be a great year,” Schupp said. “I think people are happy doing what they’re used to.”

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