[Case Study] Mohegan Sun Increases Revenue and Casino Hotel Occupancy

Mohegan Sun is a distinctive 1,200-room destination in southeastern Connecticut. The 34-story property is one of the largest, most attractive and spectacular entertainment, gaming, shopping and dining destinations in the U.S. Situated on 185 acres along the scenic Thames River, Mohegan Sun attracts guests from the New York, Boston, Hartford, and Providence markets. In June 2010, Mohegan Sun implemented Rainmaker’s guestrev® profit optimization solution.

 

THE CHALLENGE: Increase High-Value Casino Guest Occupancy

In 2009, Mohegan Sun had hotel occupancy of 95.4%, and the prior year it was 93.6%. Despite having such a strong occupancy rate, the property still believed there was opportunity for improvement. Analysis of denial and regret data showed the property was displacing higher value casino customers with lower value guests. The competitive environment was also becoming increasingly fierce. A year earlier, Mohegan Sun’s main competitor opened an 825-room property nearby.

Mohegan Sun’s Senior Vice President of Information Systems and Chief Information Officer, Christopher Friday, felt price optimization software was needed. “We evaluated Rainmaker’s guestrev® system to address our challenges. Due diligence confirmed that our Agilysys Lodging Management System (LMS) software would support the integration of Rainmaker’s system,” said Friday. “We wanted to implement guestrev in June 2010 to accomplish three objectives.”

Mohegan Sun’s objectives were to improve hotel occupancy within six months of system go-live; to increase casino revenue from hotel customers by booking higher value guests; and to achieve revenue gains in the first year of implementation to cover costs of the new system.

 

 

THE SOLUTION: Use Revenue Management and Price Optimization Software to Raise Per-Guest Revenue

Mohegan Sun formed a project Steering Committee to oversee the implementation and serve as change managers for the Rainmaker system installation. The project commenced with a formal kick-off meeting in December 2009. The core project team included property information systems members, key Mohegan Sun business stakeholders and Rainmaker’s implementation team. The property and Rainmaker each assigned a project manager for the installation process.

Before installation, the teams analyzed Mohegan Sun’s customer data to develop a new customer segmentation strategy and a customer valuation algorithm.

In March 2010, the project team shared its findings and recommendations for the new customer segmentation strategy and customer valuation algorithm with the project Steering Committee. Minor modifications were made based on the findings, and the implementation was set for June 2010.

In the final weeks before go-live, the project team focused on training the revenue management and customer contact center teams, as well as the executive hosts, player development and hotel desk staffs.

Approximately four months after Mohegan Sun implemented guestrev, the system was fully integrated into Mohegan Sun’s pricing process and was performing flawlessly.

 

THE RESULTS: Increased Occupancy with Increased Revenue from Hotel Customers

“Four months after the Rainmaker go-live, Mohegan Sun’s Senior Executive Committee requested a status update on our project,” said Friday. “Property occupancy from July 2010 to September 2010 was 95.6%. Early indications showed gaming revenue for hotel customers increased compared to the prior year’s quarter, and the increases came from the more valuable new customer segments. This was clear evidence that Mohegan Sun was doing a better job placing higher-value casino customers in its rooms. The guestrev software, customer segmentation, and customer valuation algorithm were delivering the desired business results.”

Further confirmation that guestrev was delivering higher revenue came at the end of 2010. “Mohegan Sun showed a 97.8% occupancy rate for its fiscal first quarter, and revenue growth trends continued in the high-value customer segments during the same period,” explained Friday.

Mohegan Sun also realized unplanned benefits and synergies from its revenue management project. The property launched its hotel reservation website for Player’s Club customers at the same time as launching the guestrev price optimization software. “The combination of Rainmaker’s system and the website helped to drastically reduce Mohegan Sun’s direct mail costs,” said Friday.

Prior to the Rainmaker system installation and the casino hotel booking website, demand for casino rooms was driven by monthly hotel mailers with static rates. Mohegan Sun moved guests away from the mailers and redirected them to the website to view and redeem their offers because the guestrev system changed hotel room rates based on demand. Since December 2010, more than 25% of the property’s casino hotel rooms have been booked via its self-service website.

“The change in customer behavior has decreased our customer contact center’s overall call volume and large call volume spikes,” said Friday. “The result has been increased service levels and reduced wait times for Mohegan Sun customers calling in to book rooms and get information.”

Six months after the implementation of Rainmaker’s guestrev solution, the project resulted in higher occupancies and higher revenue per casino hotel guest. Friday said, “Mohegan Sun views the Rainmaker project as a resounding success, both in terms of meeting an aggressive timeline for start-up and its demonstrated value to our organization.”