 |
|
|
|
|
|
14 New Hotel Waterparks Open, 32 Under Construction |
.
| By Jeff Coy and Bill Haralson, October 1, 2004
The USA hotel industry reached 62.7% for the first
eight months of 2004, up almost two points over a year ago and only one
point below benchmark Year 2000. Hotel room rate averages reached $86.55,
which is higher than Year 2000 levels.
USA Hotel Industry Performance Revenues, supply and demand all showed positive growth for YTD August 2004 compared to a year ago. Revenues per available hotel room were up 7.3% over 2003. New hotel construction rose only 1.1% while demand for lodging increased 4.5% --- allowing both occupancies and room prices to rise. Summer of 2004 was better than last summer for the
hotel industry despite colder than normal temperatures in many markets
and the impact of several hurricanes. In August 2004, occupancy reached
67.2% --- down ½ point from 67.7% in 2003. However, hotel revenues
are up substantially in 2004 over 2003.
In the first eight months of 2004, luxury and upscale hotels among the chains have shown the most improvement in both occupancy and average room rate compared to a year ago. Luxury-priced hotels ran the highest occupancy at 70% among the price tiers followed by upscale-priced hotels at 64.8% compared to a year ago. Resorts ran a higher occupancy in 2004 than 2003
and achieved the higher occupancy and average room rates than all other
types of lodging --- urban, suburban, airport and highway. USA Resorts
achieved 69.1% occupancy for 2004 through August, up 4.5% over a year ago
while urban and airport hotels reached 66%, suburban hotels ran 61% and
highway hotels peaked at 58%. Resorts produced average room rates of $132
for 2004 through August, which is 3.4% higher than the same period last
year and higher than most other types of lodging.
Families in the USA continued to vacation close to home and escape for weekends to nearby regional resorts --- some which included indoor waterparks. Consumers and leisure travelers have kept the hotel and travel industries alive for the last three years by continuing to make time for family recreation at regional resorts and taking short vacations, although closer to home. Business travelers are just starting to come back to hotels in noticeable numbers. Currently, the most lucrative states for hotel investment
are Hawaii, New York, Nevada and Florida where the revenues and their growth
rates are the highest in the nation. Hotel revenue per available room (RevPAR)
is the key indicator that takes into account supply, demand, occupancy,
scarcity and pricing.
RevPAR is a measure of asset productivity that often points developers to the most attractive locations for new construction, although many of these desirable locations also have high barriers to entry. In 2004, the most desirable hotel markets, in terms
of their ability to generate the highest revenues per available room as
well as double-digit growth rates, are New York City, Oahu, San Francisco,
Washington DC, Miami, Boston and Los Angeles.
However, not all trends start on the East or West Coasts and move inland. In 1994, Stan Anderson, owner of the Polynesian Resort in Wisconsin Dells WI and acknowledged "father of the hotel indoor waterpark resort", started a 10-year trend of building more than 60 hotel waterpark resorts that have extended from the Midwest to Maine and Washington State. Thirty-two (32) more waterpark resorts are under construction or will break ground in 2004. USA Hotel Waterpark Resort Performance Sixty-two hotel waterpark resorts are open and operating in the USA, as of October 2004. This sector of the resort industry has experienced rapid growth in the last several years. Jeff Coy and Bill Haralson formed Hotel Waterpark Resort Research & Consulting, a collaborative effort of JLC Hospitality Consulting of Rochester MN and William L. Haralson & Associates of Richardson TX. Coy, a hotel consultant, and Haralson, an attractions consultant, joined forces for the purpose of building an industry database for this product sector. Both were appointed co-chairs of the Resort Task Force by the World Waterpark Association in 2002 and continued in those roles today. Their latest research is presented annually at the WWA Waterpark Development Workshop. Go to www.waterparks.org. This third annual industry report includes supply trends, sizing components, construction costs and operating expense ratios with a special focus on hotel waterpark resort performance trends in Wisconsin Dells where the concept originated and numerous hotel waterpark resorts are clustered in one market. In 1990, before indoor waterparks, Wisconsin Dells ran a 40% annually hotel occupancy and had a 100-day peak season. Today, it has 18 hotels with indoor waterparks and has 365-day peak season. The largest hotel waterpark resorts are running occupancies in the high 70s and low 80s --- 15 to 20 points above the national hotel average. Wisconsin Dells Hotel Performance Two years ago, we discovered that hotels WITH indoor waterparks achieved 26 points higher occupancy and $69 higher average room rates than hotels WITHOUT indoor waterparks. We reported the amazing fact that eighteen (18) hotels WITH indoor waterparks captured 85% of the total market hotel revenue in Wisconsin Dells while forty-four (44) hotels WITHOUT indoor waterparks were left with only 15% of the total market hotel revenue. As a result, we referred to Wisconsin Dells as "the land of haves and have-nots." In 2004, we updated that research survey to determine
the impact of 9/11, the economic recovery and what happened to the haves
and have-nots in Wisconsin Dells over the last three years.
Wisconsin Dells still has 18 haves and 44 have-nots. (We didn’t count the properties with less than 20 rooms.) However, the haves have built 390 more rooms while the have-nots have not. In 2003, there are 3454 rooms connected to an indoor waterpark while 2402 rooms are not. The number of available room nights at hotel waterpark resorts reached 1,260,710 in 2003, up from 1,118,360 in 2001 while available room nights at the have-nots remained unchanged at 876,760 since 2001. In 2001, Wisconsin Dells ran 59.2% occupancy --- almost equal to the national hotel occupancy of 60.1%. In 2002, during the aftermath of the 9/11 attacks, Wisconsin Dells gained one point of occupancy while the nation lost one point --- providing evidence that families were still vacationing albeit closer to home. Resort occupancy was up compared to other types of lodging. In 2003, the haves sold 834,000 room nights, up from 781,000 in 2002 and 744,000 in 2001. Hotels WITH indoor waterparks reached 66.2% occupancy while hotels WITHOUT indoor waterparks achieved only 43.1% occupancy --- a difference of 23 points of occupancy. In 2003, the 18 haves achieved average room rates of $120, up from $114 in 2001, while the 44 have-nots reached $61, down from $65 in 2001. Hotels WITH indoor waterparks recorded ADRs that are 2X that of hotels WITHOUT indoor waterparks. And the ADR trend over the last three years is getting higher for the haves and lower for the have-nots! The top two hotel waterpark resorts achieved average room rates of $191 and $175 in 2003. The 18 hotels WITH indoor waterparks captured 75% of the total hotel market room revenue in 2001, 77% in 2002 and 81% in 2003. This upward trend begs the question, "How long can you succeed in Wisconsin Dells as a hotel without an indoor waterpark?" The biggest properties are getting bigger while the smaller properties continue to lose market share. Lessons learned include:
Seventy-six (76) hotel indoor waterparks are open
and operating in the USA, including four properties scheduled to open in
the final two months of 2004. Hotel waterpark resorts opened over the last
three years in the following states:
These properties have a total of 12,470 rooms, nearly 1.6 million square feet of indoor waterpark space and 373 meeting rooms covering 780,585 square feet of meeting space. Independence Versus National Branding Of these 76 hotels, 42 are independent while 34 are affiliated with a national hotel brand. Properties in resort locations tend to be independent while properties in urban, suburban and highway locations tend to be franchised. Brand names include AmericInn, Baymont, Best Western, Comfort Suites, Country Inn & Suites, Days Inn Hawthorn Suites, Hilton, Hojo, Holiday Inn, Marriott, Microtel, Quality Inn, Ramada, Sleep Inn and Wingate. The following chart illustrates the growth over the
last three years.
Whether or not to affiliate with a brand is a major issue in this product sector of the hotel industry. Two companies, Great Lakes Companies and Kalahari Resort, are reproducing their prototypes in multiple locations --- in effect, starting their own brand. Great Lakes Companies signed a license agreement with Ripley’s Entertainment for its Great Wolf Lodge in Niagara Falls, Ontario --- which is a first step in becoming a franchisor in the hotel waterpark resort industry. While several hotel chains, like Marriott and Holiday Inn, are studying the indoor waterpark concept, several entertainment companies, like Six Flags Inc, Paramount Parks and Nickelodeon are developing their plans in the hotel business. Top 25 Largest Hotel Waterpark Resorts in the USA Hotels with the largest indoor waterparks are concentrated
in Wisconsin Dells WI where 18 waterpark resorts now exist. The Polynesian
Resort in Wisconsin Dells is generally acknowledged as the first hotel
indoor waterpark in 1994. The Bavarian Inn Lodge in Frankenmuth opened
the first of its five indoor pools and 30,000 sf of indoor water features
in 1986 but did not install any waterslides. Who was the first? What is
a waterpark? A waterpark resort task force is establishing new categories
and definitions for waterparks.
Other hotels with indoor waterparks are concentrated in Wisconsin, Minnesota, Michigan, North Dakota, South Dakota and Montana. In Wisconsin, other hotel waterparks are located in Wisconsin Dells, Green Bay, Tomah, Minocqua, Madison, Prairie du Chien, Ashland and Lac du Flambeau. In Minnesota: Shoreview, Owatonna, Baxter, Minneapolis, Detroit Lakes, Nisswa, Moorhead, Rochester, St Cloud, Thief River Falls and Orr. In Michigan: Grand Rapids and Mackinaw City. In North Dakota: Fargo and Bismarck. In South Dakota: Watertown, Aberdeen and Sioux Falls. In Montana: Anaconda and Missoula. In other states, you find hotel waterparks in Spokane WA, Norfolk NE, Sheperdsville KY, Hutchinson KS, Utica IL, Amana IA and Colorado Springs CO. Profile of USA Hotel Waterpark Resorts by Number of Rooms Among the Top 5 largest resorts by room count, the
average number of hotel rooms is 470 with an indoor waterpark of 73,200
sf or 155 sf per guest room. The Top 5 resorts have an average of 4.3 waterslides,
2.5 pools and 2.5 hot tubs. All of them have a lazy river, 50% have a wave
pool and 33% have a water coaster. The Top 5 resorts average 32,160 sf
of meeting space and 27.7 meeting rooms.
Among the next ten largest (Top 6-15) hotel waterpark resorts, the average number of rooms is 275 with an indoor waterpark of 45,277 sf or 164 sf per guest room. Among the top resorts ranked 16-25 by room count, the average number of rooms is 213 with an indoor waterpark of 22,350 sf or 105 sf per guest room. Using the chart above, the waterpark developer can estimate the size of his hotel, indoor waterpark and its components. Depending upon size, all hotel waterpark resorts average from 2-7 waterslides, 2-3 pools and 1-2 hot tubs. Almost all of the Top 25 Largest Hotel Waterpark Resorts have a lazy river while less than 30% of the smaller resorts have them. Only one-half of the Top 5 Largest Hotel Waterpark Resorts have a wave pool and less than 10% of the smaller resorts have them. Wave pools, while very attractive to surfers, take up a lot of space for the smaller number of guests who can use them. The Top 25 Largest Hotel Waterpark Resorts are clearly in the meetings & convention business to balance their seasonal and weekend-weekday mix of business. Profile of USA Hotel Waterpark Resorts by Size of Waterpark Hotel waterpark resort developers face the difficult
task of sizing their projects. Hotels with highest number of rooms don’t
always have the largest waterparks. And vice versa.
A direct relationship exists between the number of hotel rooms and the size of their indoor waterparks. Hotels with indoor waterparks more than 50,000 square feet average 325 rooms and 87,143 square feet of indoor waterpark --- a ratio of 268 sf of waterpark per guest room. That ratio decelerates as waterparks get smaller. To illustrate, hotels with waterparks 40,000 to 49,999 sf average 217 rooms and 42,500 sf of indoor waterpark --- a ratio of 208 sf per guest room. Notice that hotels with only 80 to 120 rooms tend to have the widest range of indoor waterpark --- from only 2,600 sf to over 12,000 sf in size. Hotel owners and developers can use the chart above to help size their projects. Top Hotel Meeting Facilities with Indoor Waterparks in the USA Among the Top 15 Hotel Meeting Facilities with an indoor waterpark, the number of rooms varies from 98 to 738 and the meeting facilities vary from 15,000 to 125,000 square feet. Several of the largest hotel waterpark resorts are
in the meetings & convention business. The 738-room Kalahari Resort
& Convention Center in Wisconsin Dells WI is clearly the largest meeting
facility (125,000 sf) with the largest indoor waterpark (125,000 sf). The
194-room Grand Harbor Resort in Dubuque IA, with 25,000 sf indoor waterpark,
is connected to a 120,000 sf convention center that it operates for the
city.
Hotel waterpark resorts obviously target the individual leisure traveler segment. But these properties have the advantage of targeting another customer segment --- the group market --- to fill in hotel low periods and weekdays when kids are in school. .
The Top 5 Largest Meeting Facilities with an indoor waterpark average 336 guest rooms, 79,000 sf of meeting space, 36 meeting rooms and a 42,600 sf waterpark. Components average 4 waterslides, 2.2 pools and 1.6 hot tubs. Half of these properties have a lazy river and 20% have a wave pool and water coaster. Among the meeting facilities ranked 6 through 10 in size, these properties averaged 207 guest rooms, 26,600 sf of meeting space, 15 meeting rooms and a 22,200 sf indoor waterpark. Among those ranked 11 through 15, the number of guest rooms averaged 213 with 15,781 sf of meeting space, 10.5 meeting rooms and an 18,354 sf indoor waterpark. This is only one of several methods a developer should use to estimate the size of meeting facilities in a hotel waterpark resort. Hotel Waterpark Resorts Under Construction in USA Hotels with indoor waterparks are growing from 23%
to 29% annually while the overall hotel industry expects new supply to
grow only 1.2% in 2004 and 1.3% in 2005. In 2000, there were only 18 hotel
waterpark resorts. Today, over 60 are open nationwide. Eighteen new additions
and expansion projects are expected to open by year end. Hotel waterpark
projects under construction have grown from 8 in 2000 to 32 that are under
construction or will break ground during 2004.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||