Allegiant’s $420M bet on Port Charlotte: Airline building its own $200-a-night hotel to upsell flyers
Excellent article by Dawn Gilbertson, USA Today, reporting on Alegiant’s entry into the luxury hotel business in Port Charlotte.
Allegiant Air is renowned for getting vacationers to buy more than cheap plane tickets.
Passengers spend an extra $45 on average for seat assignments, bags, priority boarding, travel insurance, in-flight food and drinks and more on top of $67 for airfare. And they book enough car rentals, hotels and activities through the airline to bring another $4 per passenger in commissions.
The airline is now betting $420 million that it can capture even more of vacationers’ dollars with the ultimate upsell: a stay in a $200-a-night-and-up resort Allegiant will own and operate.
Allegiant plans to break ground in February on the new 680-room Sunseeker Resort Charlotte Harbor in Port Charlotte, halfway between Fort Myers and Sarasota on Florida’s southwest coast. The waterfront resort will feature restaurants, bars, golf and a marina.
The project was formally unveiled in August 2017, but the plans have since changed dramatically. What was going to be a complex with up to 10 towers of individually-owned condos and a small hotel (76 rooms) has turned into a large hotel (500 rooms) with a small component of suites (180) that may end up as condos, company officials unveiled during a lengthy presentation to Wall Street analysts on Sept. 13.
Allegiant Travel CEO Maury Gallagher called it the “coming out party” for the resort and the “relaunching” of Allegiant.
Disney does it; why can’t we?
John Redmond, an Allegiant board member turned company president, said the resort is designed to help Allegiant snag a bigger slice of vacationers’ wallets.
He notes that Allegiant and other airlines deliver millions of people to Orlando, Florida, every year and that the biggest beneficiary of that is Disney, because many of those passengers flock to the theme parks and Disney-owned hotels and resorts surrounding them.
“Disney sits there on the end and collects 90 percent (of vacationers’ budgets) … and airlines get 10 percent,” Redmond said. “We want to have the other 90 percent of that.”
Redmond said Allegiant is “uniquely positioned” to fill Sunseeker resort because it serves seven airports in Florida, with nearly 8 million passengers a year and growing. And it can pitch them when they are buying their ticket on Allegiant’s website.
The airline brings 1.5 million passengers into and out of Punta Gorda Airport, 15 minutes from the resort, and executives see that figure growing as high as 2.3 million as Allegiant expands from the 44 cities it currently serves to a planned 60. The airline carries another 2.2 million passengers in and out of St. Pete-Clearwater International Airport, 90 minutes away from the planned resort.
Allegiant says it needs to attract just one in 15 of the inbound Punta Gorda and St. Pete-Clearwater itineraries (couples, families and other passengers traveling together) to fill the resort year-round.
That’s not the sole source of guests, though. Allegiant said it expects to draw guests from other airports Allegiant serves, as well as travelers driving to Florida for vacation.
‘Where the hell is Port Charlotte?’
Allegiant gets a lot of questions about why it picked Port Charlotte, and it addressed them head-on during its investor day in 2017.
“People, of course, question the area,” Redmond said. “Where the hell is Port Charlotte? Punta Gorda, we’ve heard of because you guys fly there, but where is Port Charlotte? Well, it’s next door, 15 minutes away.”
Allegiant has said it it liked the site because land is cheaper than in the marquee resort destinations in that part of Florida and the company has access to a mile of waterfront. (Not to be confused with beachfront, which analysts say is a major negative given many visitors to Florida flock to the beach.)
One of the biggest selling points Allegiant executives tout about the area: Sunseeker’s aging competition from Sarasota to Marco Island. The airline says the average age of coastal hotels in the area is 26 years.
“Unlike wine and scotch, age in a hospitality environment is not a good thing,” said Micah Richins, executive vice president and CEO of Sunseeker Resorts and former top executive with Las Vegas hotel and gaming giant MGM Resorts International.
Allegiant passengers aren’t cheap, at least when it comes to hotels
Allegiant also zeroed in on key lodging metrics in southwest Florida and loved what it found: occupancy of 90 percent and average daily rates of $185 for a regular room and $360 for a condo-size room or suite. The airline says peak-season rates for rooms hit $350 to $400 a night.
Allegiant has other data points, too, to back up its claim that Allegiant travelers are affluent. Hotel bookings passengers made through the airline in the past year found that passengers booking hotels in Punta Gorda paid an average $221 per night for a standard room and $289 for suite.
And information culled from the location feature on Allegiant’s mobile app found passengers checking into luxe resorts including the JW Marriott Marco Island, Naples Grande Beach Resort and the Ritz-Carlton Naples.
“These are in the top two tiers of hotel class, and it’s hundreds and thousands of customers staying there between five and seven nights,” said Scott DeAngelo, Allegiant’s chief marketing officer.
The company is forecasting an average year-round rate at Sunseeker of $185, but executives said $250 a night is more likely.
You won’t be able to book a room at Sunseeker from online travel agencies such as Expedia and Priceline
As it does with airline tickets, Allegiant will cut out the middleman to save money. Travelers won’t find the Sunseeker Resort Charlotte Harbor on online travel sites, and the airline doesn’t plan to become part of any hotel chain to boost its exposure and reservations.
“The airline is our marketing partner,” Redmond said. “It’s the best marketing partner you could ever have.”