The Cliff Dweller Lodge was converted to employee housing for Boyne Mountain Resort. (Photo Courtesy of Boyne Mountain Resort)

There are new rooms coming to the Grand Traverse Resort and Spa but they’re not for guests.

Faced with rising home and rental prices, the resort’s pool of seasonal labor has continued to dwindle as workers are priced out of living in the city.

Next month the resort is breaking ground on additional staff housing to supply another 40 rooms. It’s a need that the resort saw coming years ago and budgeted for the project to start in 2020, HR Director Matthew McClellan said.

A competitive housing market and tight labor market have converged into an even larger issue for the hospitality industry.

A May survey by the Michigan Restaurant and Lodging Association found that 60% of the restaurant and hotel operators surveyed said “inadequate affordable housing” was a workforce challenge. Among the hoteliers specifically, 89% said they saw this as a staffing hurdle.

The survey included 146 responses from Michigan restaurant and hotel operators, representing over 500 locations and nearly 15,000 employees statewide.

In response, MRLA President & CEO Justin Winslow said housing was among the barriers slowing the hospitality industry down from its “much-needed comeback.”

“We were surprised by the degree to which the availability of affordable housing is negatively impacting the hospitality workforce statewide,” Winslow said. “It would appear this issue is no longer limited strictly to tourism-centric locations, suggesting the need for a legislative solution to address this issue before it gets worse.”

Related: Millions were spent on Michigan Airbnbs last year. See which county earned the most.

The pandemic exacerbated what McClellan calls an “almost nonexistent” local market. Operating while understaffed is becoming even less sustainable as travel picks up and waiting for that full comeback is too costly.

The resort will be moving forward with its $1.5 million investment into staff housing this summer.

“We just can’t wait any longer,” McClellan said. “The longer we wait, the longer our staff has to endure that kind of stress and those kinds of hours [which] reflect in the service quality and we don’t want it to impact the service quality that our guests experience here.”

Average rent in Traverse City at $1,400 for a one bedroom, according to Apartments.com.

Affording rent around the city is out of reach for seasonal restaurant and housekeeping staffs. That limits the local labor pool to retirees and students, McClellan said.

The same can be said for neighboring Glen Arbor, home to Cherry Republic.

Marketing intern and college senior Quinn Gilroy packed her bags in Portland, Oregon and will spend her summer along Glen Lake in one of Cherry Republic’s recently purchased homes.

Glen Arbor was Gilroy’s childhood getaway when her extended family would spend time there every summer. When Cherry Republic started offering housing, it became a rite of passage for each cousin to work a summer at the iconic Michigan retailer when they turned 18. Gilroy is already on her third year.

“As a kid, this was my favorite week of the year coming up here and going to Cherry Republic,” she said. “Little five-year-old me would have been so jealous that I get free soda and ice cream every day.”

President Bob Sutherland sees housing as Cherry Republic’s responsibility as large employer in the area. By providing housing for out-of-state employees his business isn’t taking away housing stock or local labor.

“I feel like us bigger companies are somewhat obligated to go the extra [mile] to leave that existing pool as much as we can for others, too,” he said.

The housing crisis’ effect on tourist spots hits home for Sutherland who grew up in Glen Arbor and started his business out of the trunk of his car.

“Glen Arbor, and some of these small towns, they’re not finding the next generation of business owners,” Sutherland said, “We’re really going to feel the bite because right now, there’s a changeover happening where a lot of older business owners are ready to retire, but there’s no one in line to buy their business or takeover.”

Future business owners don’t feel confident they will have a workforce to support them if they takeover a business, Sutherland said.

Cherry Republic has invested thousands in renovating and purchasing housing in the Glen Arbor and Traverse City area.

The retailer invested $35,000 to renovate the Leelanau School so the boarding school could be used by summer employees after students left. Additionally, the company has partnered with campsites and RV parks to save spots for seasonal labor.

Another $650,000 was invested in buying and renovating houses near Glen Lake. Next summer, Cherry Republic employees in Traverse City will have the option of living above the retail space in brand new apartments currently undergoing construction.

“We didn’t realize it was such a spiraling, continuous thing,” Sutherland said. “When I first bought that house, I thought that one place or the one dorm that would be enough, but it just continues to spiral and every year we continue to have to do these investments.”

Long-term Sutherland is looking to build an apartment complex, but he doesn’t think private businesses can solve the problem alone.

Related: Nearly 50% of Michigan renters are paying too much. The state wants to fix that.

In May, Michigan’s first statewide housing plan was launched. The needs assessment backing the plan found about 50% of renters and 25% of homeowners pay too much for housing.

Michigan’s five-year housing plan has a target of more than 1,000 new workforce housing units as part of its overall goal of creating or preserving 75,000 housing units.

The statewide housing assessment found 44% of Michigan’s vacant units are vacation properties.

Ed Grice, president of Boyne Mountain Resort, said he saw housing as a staff issue in the last seven years as more vacation homes and short-term rentals filled the Boyne City area.

“It’s tough to be popular,” he said.

To secure Boyne’s seasonal labor force the Cliff Dweller Lodge was renovated to accommodate 70 to 80 employees.

Grice estimates about 20% of his current staff are using the provided housing, but they’re still looking to expand. He said the resort could really use another 100 beds.

“You have to invest in your team and your employees, and if that’s one of the investments that we have to make, it needs to be a good one,” Grice said.

The larger issue is accommodating year-round workers who want to relocate with families. Renting in the area is “almost out of the question” and in turn families are commuting in from Gaylord and Bellaire. Grice fears the tight supply of housing will have ripple effects on the whole community’s population.

“Not only as a resort, but in our community as well, we just can’t grow until we can safely house that next group of people coming up that want to live here,” Grice said.

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