Total Profit Optimization: How Sea Island Resort Boosted Performance Across Its Outlets with Data

This episode is sponsored by MDO and their new report, Data-driven Strategies to Move Beyond Rooms Revenue.

We might be entering the golden era of hotel operations, but that doesn’t mean success will come by itself. “Now we’re going through a Darwinian phase where it’s going to be the survival of the fittest,” said Gilda Perez-Alvarado, Global CEO at JLL Hotels & Hospitality at this year’s NYU Hospitality Investment Conference. 

“Operators are prioritizing robust business intelligence and improved operational efficiency,” said Rajeet Mohan, Principal at PwC, at the event – with a key focus being on optimizing revenue production and profit from across the hotel operation today. 

Every business looks at its profitability, of course, including hotels. But what’s new now is the amount of data really that’s available to hotel operators. The availability of data has grown so much that today, hoteliers can look more holistically at all the revenue outlets across their property and determine which areas are contributing the most to the bottom line.

To learn more about what this looks like in action, I recently spoke with Billy Copelan, Director of Revenue Management at Sea Island Resort. Sea Island is an iconic southern resort that was founded in 1928 and its expansive property includes 16 different dining outlets and a wide range of recreational activities from golf to tennis to water sports to hunting and nature programming.

Billy’s career with Sea Island Resort has spanned three decades and focused on revenue functions for the last 20 years. “Before that, we never had any sort of rate yielding or revenue management,” he told me. “We used to operate off of a rate card, setting our rates at the beginning of the year and that was that. I was working in our reservations department at the time and became very interested in how we could use data to bring more money into our business.”

Expanding the focus to all revenue streams

With so many outlets across the resort, Billy had a lot of opportunities and wanted to start with golf. 

“Golf is a huge part of our business, we have three championship golf courses. We host our own PGA Tour event in the fall called the RSM Classics.”

Billy approaches revenue managing this part of their business as they do for rooms. “We look at all the data we have to understand the highest demand times of the day and times of the week, and then price golf tee times based on what we see. We’re able to build custom packages on the fly while we’re talking to a guest.”

The results now speak for themselves, and today Billy has a case study he can take to other department leaders in the business. 

“We’ve seen a huge increase in revenue on what used to be our lowest performing course, and driven results there as well as on our two more premier courses. Initially, our Director of Golf was a little skeptical about the impact of this on the business and on our guests, but by proving the value to him, we’ve been able to do more and more in that area of their business – which is great to take to other departments, and show them what we did with golf.”

Operating in a way that drives guest satisfaction – and profit

Billy and his team are focused on driving revenue, but they never lose sight of maintaining guest satisfaction.

They are always looking for ways to use revenue management strategies to drive value for their members. An example of this is something they call “Member Monday.”

“In some of our outlets, for Member Monday, you get a member discount. Behind the scenes, we’re looking at the data we have to understand where our business is the slowest and use these discounts to not only increase revenues there but give our members more value. Many of our members enjoy the option to come in between 4 and 6 PM, for example, and save some money. We found it makes our members feel special and valued to have something unique and special for them.”

This shows that Total Profit Optimization isn’t a zero-sum game, and all stakeholders can win through this process.

New metrics for an expanded focus 

An expanded focus on Total Profit Optimization requires new metrics for hotels today. One of these is Total RevPAR (TrevPar), which stands for total revenue per available room

TrevPar is a metric designed to zoom out and look at the revenue of a hotel business holistically beyond just room revenue and include money coming in from outlets such as food and beverage, golf, spa, and parking. It’s still a top-line measure, but a metric that recognizes the importance of optimizing the performance of the entire business. 

Benchmarking services such as STR have introduced P&L products that allow you to benchmark this metric, and also track how revenue flows to the bottom line across outlets. 

These advances are enabling hoteliers to think creatively about how they might mark up offerings such as spa treatments and serve guests willing to pay more for increased amenities and experiences without becoming uncompetitive in room rates.

Billy has been looking at this approach to measurement for years now. “We built out a whole suite of reporting that is updated frequently. I like sharing our ancillary spend reports with our department leaders, so we understand not only how much revenue we’re pulling in from each of these outlets, but get insight by type of guest – as well as how much is flowing to our bottom line. We’re able to see which segments are most profitable, and how things are trending against historic performance.”

The result of this has been increased performance across the board. “We’re able to earn very high room rates, and we’re increasingly earning very high ancillary spend from our guests,” he shared.

Billy is constantly managing all of these data points to understand what will drive the best performance for the company overall. 

“There needs to be a balance between raising room rates and increasing ancillary spending because even rich people have a budget when they go on vacation. There’s a price point at which people will start spending less in our outlets. You have to continue looking at the whole picture to maximize overall spending.”

The opportunity with Business Intelligence (BI)

Business Intelligence (BI) presents the ability to provide much-needed visibility and insight into performance and enables Total Profit Optimization.

Being able to capture all relevant data is critical. But you also need to turn it into usable formats for your leadership across the business. “Each leader needs to have this ability in their respective area to own the business outcome,” Billy told me. “They need to make sure what they’re doing is helping to get the right money to the bottom line and help our overall company performance. That’s where business intelligence has been very instrumental for us. It’s allowed us to put data at the fingertips of our leaders in a very digestible format so they can understand it – even if they’re not familiar with data analysis.”

This is the opportunity with business intelligence, Billy has seen. “It allows our leadership to not only understand what’s happening but relay opportunities and trends to their staff and the people working their departments so we can all work together to drive the most profit to the bottom line.”

Using MDO’s Business Intelligence Platform has also allowed Billy to get creative in his reporting. “If I think back to what got me interested in revenue management early in my career, it was really digging into the data and building reports that give me new ways of looking at what was going on. Today, technology has made that a lot easier.”

Of course, the goal isn’t to build reports just to build reports. “We need them to be useful and used,” Billy notes.

One of the things that excites Billy the most is continuing to evolve and innovate with business intelligence, using MDO’s platform together with tools such as Microsoft PowerBI. 

“PowerBI opens up a whole other world to make it even easier for people to digest data, and make reporting very interactive. We’ve been able to link it to our data warehouse so that people can change their view of what they’re looking at on the fly. It’s not just a static report. They can ask questions like what the last month looked like and what the last year of the same month looked like. I’ve shared it with some colleagues, and they’ve been very excited about what this will enable them to do.”

Empowering team members with data

Adopting a strategy of Total Profit Optimization in a hotel operation can empower your teams to think about profit and how their areas of responsibility can contribute. 

Sea Island Executive Chef Danny Zeal is a great example of this. Danny started his career in the kitchen as a sous chef, and during his time with the company and working with Billy, has evolved into something of a data analyst as well. Through data analysis, he can now forecast with accuracy how many steaks they’re going to sell every night, cutting down on waste. Danny has also been able to measure which servers are upselling the most and uses this insight for coaching.

It’s just one of many examples at the company of how Sea Island Resort is able to empower talented hospitality professionals with insights to help them get even better.

An opportunity to align and thrive together

Total Profit Optimization represents a much-needed opportunity for hotel operators to align and succeed in this environment. 

This case study shows the importance of the leadership of Billy and Sea Island Resort president and CEO Scott Steilen, who is a very data-driven person. “Every major report that I create, Scott reviews and relies on to make decisions. His focus on leading with data permeates throughout our organization on all levels and shows us all how important it is to analyze data to make sure that we’re continuing to do the most profitable things for our organization.”

By leading through action, trying new things, and then encouraging others to adopt this way of operating, hoteliers today can thrive in whatever lies ahead.

Learn more about Total Profit Optimization in MDO’s new report, Data-driven Strategies to Move Beyond Rooms Revenue

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