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Allegiant’s vision for resort comes into focus
By Scott Kauffman
In a quarterly financial report last October, Allegiant Travel Co. said it added eight Airbus A320 series aircraft to its fleet, and two additional Airbus jets were expected to be acquired by year-end 2018. To be sure, aircraft acquisitions are routine news announcements for publicly traded airline companies like Allegiant Air.
What wasn’t expected from Allegiant last fall was something that didn’t make the company’s third-quarter report. That was the news of Allegiant closing on a Southwest Florida golf course last August called Kingsway Country Club.
For a nationally known, low-cost airline to purchase a golf course was both surprising and ironic, considering the golf industry is far from flying high these days. At least that’s how many might describe an industry where course owners and investors are increasingly looking to sell and/or close their properties, let alone purchase new assets.
In fact, after the total number of U.S. golf facilities declined 1.5 percent in 2017 to 14,794 – with the permanent closure of 205.5 18-hole equivalent courses and the opening of just 15.5 new ones – the National Golf Foundation is projecting similar course supply attrition for 2018 once the final numbers are in.
However, while Micah Richins, Allegiant executive vice president, acknowledges golf profitability is a concern to some, it hasn’t deterred the Las Vegas-based company one bit. So why on earth would an airline of all things want to stay grounded with a semi-private golf course in Suzy, Florida, a relatively quiet town near the Charlotte Harbor between Fort Myers and Sarasota?
Actually, if you spend time getting to know Allegiant’s evolution over the last two decades, the purchase of Kingsway Country Club makes a lot of sense and represents a natural extension to what the company already does. And is planning on doing on a much grander scale once the company opens its $420 million luxury Sunseeker Resort six miles away on a 22-acre tract along the Charlotte Harbor.
Oh, by the way, nearby Punta Gorda Airport, which saw 1.5 million passengers come and go through the first nine months of last year, triple the amount from 2013, is controlled by one lone carrier: Allegiant.
As Allegiant president and former MGM Grand Resorts president/CEO John Redmond put it during the company’s 2018 Investor Day webcast last September: “We’re not building a hotel, hotels accommodate people for eight hours. … They’re designed to be a bed to sleep in. That’s it. We don’t want that. We want their entire leisure spend.”
Indeed, many people familiar with Allegiant might think it’s simply an airline. But Allegiant Travel, which generated $1.26 billion in revenue for the nine months ending Sept. 30, 2018, couldn’t be anything further from that public image.
Case in point is Allegiant started selling third-party hotel rooms in 2002 and got into the rental car business three years later, truly becoming a leisure travel company.
Then, perhaps unbeknownst to many golfers and frequent flyers, is Allegiant’s growing golf tentacles through its wholly owned subsidiary Teesnap. According to Richins, who was named chief operating officer of Sunseeker Resort last June, Teesnap has approximately 500 courses using its proprietary tee-sheet management and marketing technology solutions since Teesnap founder/CEO Bryan Lord joined forces with Allegiant about five years ago.
All of these leisure interests are becoming big business for Allegiant. Since 2005, the company notched $3.4 billion in ancillary product sales (i.e. selling seat assignments and bag fees) and $1.3 billion in third-party leisure product sales, including more than 6.5 million hotel room nights.
Last year, Allegiant grew its “rental car days sold” 27.5 percent to 1.4 million through the first nine months, according to its third-quarter report, and increased “hotel room nights sold” 3 percent to 313,360. Now, the company’s going direct to consumer in golf rounds. For Redmond and Richins, Kingsway Country Club and the new Sunseeker Resort are just the beginning of something even bigger for the growing leisure company.
Like his Allegiant boss, Richins knows the leisure and business traveler as well as anybody having previously spent 25 years as a senior executive for MGM Resorts International. In his last position for MGM Resorts, Richins was chief commercial officer for MGM and managed 40,000 Las Vegas rooms and drove $2 billion-plus in annual room revenue for massive casino resorts like MGM Grand, New York-New York and Luxor.
Of course, one of the unique Las Vegas leisure assets under the MGM umbrella during Richins’ regime was the exclusive Tom Fazio-designed Shadow Creek Golf Club originally built by Vegas casino mogul Steve Wynn. Richins sees Allegiant’s new Kingsway golf course playing an equally prominent role with Sunseeker Resort.
That prominence is indicative, Richins points out, by his top two new hires at Kingsway: general manager David Kent and superintendent Brad Caporini, both of whom worked for several upscale private golf and country clubs in the Fort Myers and Naples markets. Caporini came on board first in September and his presence is already being felt from an agronomic perspective.
In January, the club hosted the annual Kingsway Senior Amateur Invitational and players raved about the beautiful striped fairways, smooth fast greens and overall conditions, according to Kent, who previously spent 12 years as the PGA Professional and general manager at the Club at Renaissance. Since the Ron Garl-designed Kingsway opened in 1976, golfers always enjoyed playing the course, Kent notes, because the layout features an “old Florida feel” with very few homes laid out on the course.
“(Kingsway) has always been a great golf experience,” adds Kent, who started his new position in November. “The course is in the best shape in years, if not overall. Everybody’s really excited about the future with Allegiant and its resources.”
According to Richins, progress on the 500-room hotel tower is going well and the Port Charlotte community should start to “hear a lot of noise in the March timeframe” when Allegiant’s general contractor begins driving the pilings that will support the resort’s main 500-room tower and two adjacent towers that will offer a combination of 1-, 2- and 3-bedroom suites that guests can enjoy as their home away from home.
“The way we look at is when people make a selection to come on vacation, they’re selecting not only this spectacular resort but they’re also selecting a destination,” Richins says. “And things that people do in this destination to make sure their vacation is amazing and memorable and want to come back. With Kingsway, we see this tremendous synergy between the two and the course is just an extension of the world-class amenities at the resort.
“It’s another outlet for the customers that are going to be coming into Port Charlotte. Golf isn’t going to be the only thing customers are going to want to do, but it’s certainly the primary driver to be able to control that environment and create an experience that’s akin to what you would receive at the resort. … Golf’s always been important in my opinion to the leisure companies that participate in it. Golf gives us a tool to appeal to and provide resources for a very, very lucrative segment of the travel business.”
And the key to leveraging that golf appeal to the fullest, according to Richins, is owning and controlling the course rather than partnering with one. For instance, if Richins’ resort team wants to close the whole course for a particular day because “we’re going to give it to a group” visiting the resort, they can.
At the end of the day, Richins says it’s all about controlling the leisure spend as much as possible based on Allegiant’s time-tested, direct-to-consumer business model. In the investor day last September, Allegiant forecasts “golf and marina” revenues to grow from $4.5 million in year one to $5.5 million within a five-year period.
Overall resort revenue is projected to be just over $88 million when it opens in 2020 and $113.2 million by 2025. “Think of the number of people that we’re flying into Punta Gorda and we’re the only ones flying into that airport,” Richins says. “That gives us an opportunity to leverage our database so when you think about being a customer of Allegiant. … Getting our emails etc. We have the ability to touch you and say, ‘now that you’ve selected your flight, do you have your room (at Sunseeker Resort).’
“Oh, now that we see you have your room and your flight do you realize there’s this great opportunity for you to golf. Or by the way, any other type of amenities that we then either develop ourselves or partner with. So, it’s not like you’re this stand-alone organization sitting there in Port Charlotte. You’re part of this broader group of people that have the ability to touch very many customers.”
This strategy to keep growing in the leisure space has Kent and the rest of his Kingsway golf course staff optimistic about the future.
“The change is palpable and it’s wonderful to know that you have this great vision from the company,” Kent says. “And of course, everyone is so excited about the imminent opening of the Sunseeker Resort. It’s just really exciting to see that you have light at the end of the tunnel.”
Or, in this case, it’s a bright light at the end of the runway.
Scott Kauffman is a golf business writer and the managing director of Aloha Media Group.
SOURCE: GolfBusiness
