Bucking the Trend: A Strong Year in a Weak Economy

Ojibwe traditions have always emphasized the value of reflection. Generations of our people have looked to the old ways that still mean so much us, even in the 21st century. But people are not the only ones who study their reflections to see how they can be better. Businesses also must reflect on the past to ensure vibrant futures. In 2011, Fortune Bay Resort Casino was a model of how to do that.

For the fiscal year ending Sept. 30, 2011, Fortune Bay Resort Casino posted double-digit increases in net gaming revenue and its best ever non-gaming revenue. Total revenue was also strongly up, as were earnings before interest, depreciation, taxes and amortization (EBIDTA). Up, too, were net assets and operating income. Even the down numbers were good—expenses were trimmed from last year and long-term debt was paid down. And all this happened despite a sluggish economy and ever-present legislative threats that continue to hurt Indian casinos across the county. Our smarter strategy helped us buck a depressing industry trend.

How did we have a strong year in a weak economy? Through reflection on the past that helped us make changes and develop a smarter strategy.

Targeted Marketing
Significant changes made to Fortune Bay’s marketing efforts in late 2009 and 2010 paid off handsomely in 2011. These changes included hiring a research firm and an advertising agency that both specialize in Indian gaming. They, along with in-house marketing experts, found new ways to gather and analyze marketing data and better target marketing promotions.

Fortune Bay’s direct mail program was revised, targeting specific prospects rather than sending out bulk mail. Data was collected after each mailing, and the direct mail program was further refined, which saved marketing dollars.

Typically, businesses find that approximately 80 percent of their revenue comes from about 20 percent of their customers. We found that Fortune Bay is the opposite: Most of its revenue comes from 80 percent of its guests. Based on this information, Fortune Bay revamped its players club. Rewards for members of the new Wild Edge Players Club start at a lower threshold than before in order to reward greater numbers of casual players.

Player Promotions
After learning from research that casual players are a major part of Fortune Bay’s business, promotions to draw gamers were refined to generate a greater volume of traffic through the doors. In part, that meant giving more players more opportunities for more prizes. For example, Fortune Bay began offering “continuity” gifts, a related set of gifts that increases in number based on the amount of play, such as turkey platters at Thanksgiving and sets of cookie jars for Christmas. Incentives were also offered to encourage people to join the players’ club.

Promotions went beyond the gaming floor, too. To attract guests during the recession, Fortune Bay offered deals such as lower-priced hotel rooms or $1 buffets.

Bigger was definitely better in 2011. Fortune Bay brought bigger names to the stage, and fans responded. After a huge December 2010 outdoor concert with the band Heart, 2011 highlights included John Fogerty, ZZ Top and Dwight Yoakam.

Careful Reinvestment
Nationally, the reinvestment level on slot machines averages about 20 percent. Our fairly isolated location in northeastern Minnesota—about 40 miles from the Canadian border—challenges us to offer our players incentives that they can’t find at other, more conveniently located casinos. For this reason, we closely monitor our reinvestment level to maintain an attractive 28 percent reinvestment in our players.

Non-Gaming Revenue
With a fabulous luxury hotel, 18-hole world-class golf course, full-service marina, rustic RV park, complete conference and banquet center, and award-winning heritage center, Fortune Bay is much more than a casino. Non-gaming revenue comes from Fortune Bay’s food and beverage sales, hotel stays, boat rentals, marina and gift shop purchases and more. All had increases in 2011.

For example, at The Wilderness golf course, total revenue was up 5 percent over the previous year, despite the fact that the same number of rounds of golf was played as in 2010. But we worked hard to increase business in other areas, and it paid off: A 9 percent increase in Play & Stay rounds, three new golf tournaments added, a 9 percent increase in food and beverage revenues, and a 6 percent increase in the Pro Shop sales.

A Tremendous Team
Fortune Bay’s tremendous success in 2011 reflects extremely well on the resort casino’s team. Most senior managers are Bois Forte Band members, so they understand just how much Fortune Bay revenues benefit the band through programs, services and improved infrastructure on the reservation.

The number of Bois Forte Band members working at Fortune Bay has grown, thanks to deliberate efforts to help them advance their careers. Just over one-third of the entire Fortune Bay team is now native employees—34 percent, up from a self-imposed goal of 30 percent.

Change is never easy. It requires us to step outside of our comfort zone and tackle something new. But when changes pay off, as they did at Fortune Bay in 2011, they are a brilliant reflection of commitment, innovation and the drive to succeed. Fortune Bay had a great year because the people of Fortune Bay worked their hardest to make it great.

Looking Ahead
The phrase “a tough act to follow” comes to mind after reviewing Fortune Bay’s achievements in 2011. And the challenges for 2012 are taking shape, including lenders’ reluctance to invest in businesses on trust land and an effort to put a Vegas-run racino in our area.

But we are optimistic that Fortune Bay can, and will, remain successful by reflecting on the past and making changes for the future. The resort casino will continue to support and work with its staff to help each employee innovate and improve. And the Bois Forte tribal government will put more money into education and training so that more band members can go back to school, especially in critical areas like construction, management and accounting. After all, “When you’re through changing, you’re through.”