Rising gas prices may be a boon for Minnesota resorts

Surging gas prices that put a damper on far-flung summer vacations could be a boon for Minnesota resort owners.

For some families, the cross-country road trip to Yellowstone or Disneyland may get scrapped this year. But that will again make nearby vacation spots, such as the state's numerous resorts, a better choice for many.

"People may say, let's do another COVID vacation," said Ed Tausk, owner of Vermilion Dam Lodge, about 65 miles west of Ely. "I'm looking at my calendar and I'm booked solid into August."

"If nothing changes, it will be another banner year," Tausk added. "But it can all change quickly."

Memories of the start of the pandemic in 2020 loom large for many business owners. Because of the early uncertainty about the virus, resort owners dreaded answering their phones as cancellations ticked up. But within weeks, Tausk said, his phone was ringing off the hook as nearby outdoor destinations became the vacation of choice.

"It was crazy," he said.

Tausk was one of many resort owners who posted a banner year in 2021. This year is shaping up to be another good one, with many reservations made months — sometimes a year — in advance. But resort owners also know that families are feeling the pinch at the grocery store and fuel pump.

"There may come a tipping point when they have to give up the vacation 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 is being affected."

According to a national survey, inflation and gas prices have replaced COVID-19 as the primary stumbling block for travel this summer, 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. So people may replace longer trips with those closer to home. And that should be a bonus for Minnesota resorts already expecting a good year.

The bad news: Many owners may be absorbing higher costs caused by inflation while continuing to wrestle with a labor shortage that's easing but still worrisome.

More than 6,000 workers entered Minnesota's hospitality industry in April, Wogsland said. Nevertheless, the hospitality and leisure industry is down 25,000 workers compared with 2019, he said.

"Most are trying not to turn away guests 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 in all the gaps of the worker shortage."

Search for solutions

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

Some are relying on the federal J-1 visa program that allows foreign university students to enter the United States for temporary work. COVID-19 travel restrictions choked the program during 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 addition for us," said Jim Vick, general manager for Lutsen Mountains on Lake Superior's North Shore.

To compete for workers alongside McDonald's and other food and service businesses, many resorts have raised wages, expanded benefits and increased work flexibility for a new generation insisting on work-life balance.

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

"We have to adjust so they will stay because they can walk and get a job anywhere else," she said.

It's why owners also have raised wages, some 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 staffers to get through the season, bolstering his workforce with retirees camping nearby in their RVs.

Andy Leonard, owner of East Silent Lake Resort near Dent, built three RV spots and added about a half-dozen permanent housing options for workers on-site. "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, still needs another eight workers to fill out his complement of 27. But the labor shortage doesn't seem as dire as it did in 2021, when he went to the local alcohol addiction recovery center in search of prospects.

"Do you have anyone who could help?" he asked the center's director. By Saturday, he had five new workers; three of them remain this year.

At some resorts, jobs likely will go unfilled, forcing owners to cut back on services.

Justin Lederer, manager at McQuoid's Inn on Lake Mille Lacs, used to have about a dozen launch 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 housekeeping has been replaced by on-call service.

"On the weekends, we're all doing dishes and housekeeping," Schupp said. "Sometimes we call in friends to help. You all do what you have to do."

When Schupp no longer had a dishwasher at one point last summer,the resort went to "lake china" — better known as paper plates. When the sailing instructor didn't show up, Schupp filled in.

With rising inflation hitting their bottom lines, many resort owners may have to do even more.

Bugbee increased his rates by 3.5% this year, but the rates were set last fall — long before inflation soared to more than twice that.

"The cost of everything is up, from the cost of equipment to the cost of filling up that equipment with gas," he said. "It means I'll have to keep other costs, like labor, down."

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

Even so, he and other resort owners are eager for the start of the summer season.

"Everybody I talk to says it's going to be a great year," Schupp said. "I think people are happy to be doing what they are used to doing."