January 6, 2022
Even for the year 1890, it was a shocking May-December romance…
Carolyn Foster, a “country girl” from Waltham, Massachusetts was just 22 years old and fresh out of college when she met Joseph Stickney, a wealthy coal mine operator and hotel owner 30 years her senior.
They fell in love, and two years later were married. They had about a decade together before he died and subsequently left her $20 million – more than a half trillion in today’s dollars. And most importantly for the story I’m about to tell you, he also left his young wife a hotel.
And not just any hotel… a hotel that could hold the secret to a booming economy in 2022 and beyond.
Let me explain…
Formula for Success
I just returned from my family’s annual ski trip to Bretton Woods in northern New Hampshire where I stayed (as always) at the legendary Mount Washington hotel… its majestic, old-world towers and red-tiled roof rising up in the snow-capped hills.
Now at first glance, things seemed like this vacation might not go so well…
My room rate this year was almost double what I’ve paid in the past, and dinner and skiing were no longer included in the price.
Staffing at the hotel and ski slopes was less than half of what it normally is. Several restaurants were closed, and there was no room service. The hotel was at maximum capacity and housekeeping was intermittent. Plus, the ski school was on hiatus for the winter.
But contrary to my worries, the trip was fantastic…
Maybe after two years of COVID, I’ve just developed some low expectations?
Or maybe there’s something to all those ghost stories about Princess Caroline (Carolyn later married a French aristocrat and took the title of “Princess Caroline”) roaming the halls of the century-old establishment… still looking after her prized property.
Because somehow, this hotel – now owned by Omni Hotels & Resorts – figured out how to increase its productivity and ensure quality with a whole lot less staff.
It’s the formula for success that could be what our economy so desperately needs.
Staying Local in the North Country
At the turn of the century, thanks to Princess Caroline’s efforts, the hotel had become a legendary establishment, catering to wealthy families that wanted to summer in the country air of the “Switzerland of America.”
Decades later, the hotel would go on to become the site of the Bretton Woods agreement, where, near the end of World War II, the allies created the gold standard and adopted the U.S. dollar as the world’s reserve currency.
Though she lived in Paris during the year, Princess Caroline returned to the hotel every summer until her death, working hard to ensure its place in the world as a leading resort.
She’d be proud of her establishment today…
Increased productivity, combined with better pricing power (consider that increase in my room rate) and higher wages for its employees (more on that in a moment) is something that a growing number of businesses across the country are just beginning to understand.
Because of the hotel’s remote location in the middle of a national forest in northern New Hampshire – where the nearest town (population 6,000) is 30 minutes away through winding mountain roads – the hotel had become dependent on cheap labor from overseas in recent years.
Foreign workers on cultural exchange programs populated its work force for months at a time and would be traded out for new groups of “J-1s” (as the local staff referred to the foreign workers) at various intervals.
But given the travel and visa restrictions that have arisen since COVID, the J-1 visa labor pool is no longer as easily available… which is not good when you’re in the hospitality business and rely on these folks for employees.
Local hotel workers on site told me this lack of labor was the resort’s biggest problem… The hotel couldn’t open all its restaurants, increase spa appointments, or even offer its traditional turndown service because it lacked the J-1 visa employees that had typically taken care of these tasks.
Mount Washington was even having to limit the sale of lift tickets and ski rentals because it didn’t have enough personnel working on the mountain.
To gain more workers, employees told me the hotel is increasingly turning back to the North Country communities and offering incentives like never before…
A local woman working in the hotel gift store told me she had her pick of well-paying jobs at the hotel when it reopened after COVID. Sure, it’s a hefty commute, but just about everything in the North Country is. And “though it can be tough driving home during a snowstorm,” she decided the job was worth the good wage and benefits.
Another local employee, a waiter at one of the on-site restaurants, told me workers had received a nice pay raise in August and they’re anticipating another raise this quarter. He confirmed that some of the resort’s restaurants (including its fine-dining location) had temporarily closed because the resort didn’t have the kitchen staff.
“There’s a lot of demand from other places,” he explained, adding that in Cape Cod this past summer (another local seasonal spot), restaurant owners were “paying as much as $20 to $25 an hour for dishwashers.”
A new system shows which stocks could soon rise 100% thanks to a Connecticut couple’s catastrophic 401(k) loss.
Earnings and Opportunities
Given this limited labor supply, you’d think that Mount Washington would be struggling…
Yet miraculously, the hotel operated quite smoothly while we were there. Our dinner reservations were on time, lift lines were minimal on the slopes, and check-in and check-out were a breeze. Plus, the staff were extremely pleasant and seemed genuinely happy to be there.
I’d wager it’s because this hotel has figured out the essence of what smart companies across the country are just beginning to understand: Even with higher wages, if businesses can exercise greater pricing power while still delivering the “goods”… they’ll earn more money.
Judging by the earnings growth so far in 2021, corporations nationwide are beginning to understand this new opportunity.
Corporate earnings ballooned 45% last year… helping to push the S&P 500 Index up 27% for its third consecutive year of double-digit gains. At the same time, consumer companies are reporting that they’ve gained a once-in-a-generation ability to raise prices.
While some analysts are skeptical as to whether earnings will continue to accelerate into 2022 thanks to inflation, I suspect that next year will prove to be another solid year for earnings growth as more businesses discover Princess Caroline’s hotel secret – better productivity, higher wages, improved employee retention, and stronger margins will lead to greater growth and stronger profitability.
Now, as a red-blooded American capitalist, I’m not calling for blanket raises for everyone…
For a business to support wage growth, the profits need to be there.
And if adding another worker means a greater return, that’s an investment a company will make.
Given underlying economic fundamentals like our record savings rate and pent-up demand, the capital-labor equation finally has a chance at being realigned in a healthy, productive way.
To echo my thoughts from last week, this is more evidence that we’re in store for good economic times ahead.
There is a rare opportunity, given the technological advances coming our way with Web 3.0, for everyone to partake in the growth… including workers in the most remote parts of the country, like Bretton Woods.
So, get ready… There’s new opportunity and success ahead for America in 2022.
Love us? Hate us? Let us know how we’re doing at [email protected].