October 12, 2006 --- During 2006, thirty-three (33) new hotel indoor waterparks are expected to open, including new additions and expansion projects that are scheduled to open in the final months of 2006. Seventy (70) hotel waterpark projects are under construction or will break ground during 2006. 

Hotel waterparks are a small but fast-growing sector of the resort industry which now totals one hundred and forty-one (141) properties that are a big hit with families nationwide. 

These properties have a total of 24,009 rooms, nearly 3.5 million square feet of indoor waterpark space and 399 meeting rooms covering 982,935 square feet of meeting space. The following chart illustrates the growth over the last five years.
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Today, about 99 projects are in the development pipeline compared to 121 in 2005, 69 in 2004, 46 in 2003 and 19 in 2002. Clearly, hotel waterpark resorts are outpacing the overall hotel and resort industry.

USA Hotel Industry Performance

The USA hotel industry reached 65.2% for the first eight months of 2006, up nearly one point over a year ago and almost two points higher than benchmark Year 2000. Hotel room rates averaged $96.81, which is more than $10 higher than the last several years. 
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Revenues, supply and demand all showed positive growth for YTD August 2006 compared to a year ago. Revenues per available hotel room were up 8.3% over 2005. New hotel construction rose only 0.3% while demand for lodging increased 1.7% --- allowing both occupancies and room prices to rise.

Summer of 2006 was even with last summer for the hotel industry despite $3.00 per gallon gasoline prices. In August 2006, occupancy reached 68.7% --- up 0.3% from 668.5% in 2005. Hotel room revenues were up 7.0% over 2005. 
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In the first eight months of 2006, luxury and midscale hotels showed the most improvement in occupancy. Luxury, upscale and midscale hotels among the chains showed the biggest gains in average room rates compared to a year ago. Upper upscale hotels ran the highest occupancy at 72.8% among the price tiers followed by luxury hotels at 72.5% compared to a year ago. 
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Resorts and airport hotels ran the highest occupancies in 2006 compared to other types of lodging --- suburban, interstate, airport and small town. USA Resorts achieved 69.8% occupancy for 2006 through August, up from 69.5% during the same period a year ago while airport hotels reached 71.0%, urban hotels reached 69.6%, suburban hotels ran 65.8%, interstate reached 59.3% and small town hotels achieved 58.7%. Resorts produced average room rates of $138.03 for 2006 through August, which is higher than all other types of lodging. 

Families in the USA bit the bullet on higher gasoline prices and refused to abandon their vacation plans. Many vacationed closer to home and escaped for weekends at nearby regional resorts --- a growing number of which now offer indoor waterparks and family entertainment centers. 

The leisure traveler segment continues to breathe life into the hotel and travel industries. In addition, business travelers have now returned to hotels in greater numbers. 

Currently, the most lucrative states for hotel investment are Hawaii, New York and Florida where the revenues and their growth rates are the highest in the nation. Nevada, Rhode Island and Alaska, while posting high revenues per available room, slipped a bit from last year. Hotel revenue per available room (RevPAR) is the key indicator that takes into account supply, demand, occupancy, scarcity and pricing. 
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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 2006, the most desirable hotel markets, in terms of their ability to generate the highest revenues per available room are New York City, Oahu, Miami and San Diego. The markets recording the double-digit revenue growth are Chicago, Boston, Oahu, San Francisco and Los Angeles. 

Some of the leisure destinations like Houston, Dallas, Atlanta and Nashville recorded 14% to 21% improvement in revpar compared to last year. 
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In sum, the USA Lodging Outlook reveals:

• Hotel room revenues supply & demand all showing positive growth over last year.
• Room revenue up 8.6% over last year.
• Summer 2006 was even with Summer 2005.
• Hotel industry has surpassed benchmark Year 2000.
• Resort performance was even with last year
• Resorts and urban hotels achieved higher revenues than other types of lodging.

Hawaii is the leading resort destination with 82.1% occupancy (down 0.7% from last year) and $187 average room rate (up 12.9% over last year). This compares to the national hotel occupancy of 65.2% and average room rate of $97 in the USA. 
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Nevada, California and Florida are trailing close behind with 73.5%, 71.3% and 70.2% occupancies, respectively. Hawaii and Florida recorded the biggest gains in occupancy improvement over last year. 

The highest resort room prices were found in Hawaii at $187, in Florida at $112 and in California at $111. Hawaii recorded a price jump of more than 12% in 2006 compared to last year. 

Wisconsin and Minnesota achieved statewide occupancy under the national average in both occupancy and average room rates. However, these two states have the highest number of hotel indoor waterpark resorts, and the top hotel waterpark resort properties recorded occupancies and room rates far above the national averages and equal to many of the Sunbelt resort destination states. 

In fact, due to the double-digit growth of indoor waterparks over the last several years, Coy and Haralson formulated 17 predictions on the future of resort development. 

• Regional drive-to resorts will attract more guests than national fly-to resorts.
• Business travel will become more an elective and less a requirement. 
• More Americans will telecommute. 
• Mixing business & leisure 24/7 will lead to greater stress.
• Never disconnecting will cause greater stress.
• Lodging, recreation and entertainment concepts will continue to merge.
• Resorts will become more like theme parks.
• Resorts will grow faster than other types of lodging.
• More resorts will become part of mixed-use developments.
• Future resorts will focus more on guest participation and interaction.
• Theme parks and resorts will use more simulators to create virtual reality.
• Resorts will increasingly become a teacher.
• Seasonal resorts will become year round operations.
• Resorts will build more and more indoor recreation facilities.
• Resorts will increasingly incorporate water into their designs.

In 1994, Stan Anderson, owner of the Polynesian Resort in Wisconsin Dells WI and pioneer of the hotel indoor waterpark resort installed some water gizmo in his indoor pool and weekend occupancy skyrocketed. That started the 12-year trend of building more than 100 hotel waterpark resorts that extend from the Midwest to the Northeast and Pacific Northwest. 

During 2006, thirty-three (33) new additions and expansion projects are expected to open by year end, bringing the total to 141 hotel waterpark resorts open and operating in the USA. Seventy (70) projects are under construction or will break ground during 2006. 

Clearly, hotel waterpark resorts are not a fad but here to stay. About 99 projects are in the development pipeline compared to 121 in 2005, 69 in 2004, 46 in 2003 and 19 in 2002. The waterpark 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. Together the two consultants produce Hotel Waterpark Development & Expansion Workshops, where they present their latest research and a variety of expert speakers. 

Wisconsin Dells Hotel Performance

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 a 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.

In 2002, hotels WITH indoor waterparks achieved 26 points higher occupancy and $69 higher average room rates than hotels WITHOUT indoor waterparks in Wisconsin Dells. 

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. 

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 2006, the top two hotel waterpark resorts achieved average room rates above $200. Hotels WITH indoor waterparks recorded average room rates that are 2X that of hotels WITHOUT indoor waterparks. And the average room rate trend over the last three years is getting higher for the haves and lower for the have-nots! The biggest properties are gaining market share while the smaller properties continue to lose market share. 

USA Competitive Supply of Hotel Waterparks

One hundred and forty-one (141) hotel indoor waterparks are open and operating in the USA, including properties scheduled to open in the final months of 2006. 

Hotel waterpark resorts opened in the following states since 2001:
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Of these 141 hotels, 75 are affiliated with a national hotel brand while 66 are independent. We counted the Great Wolf Lodges as branded properties starting in 2005. We counted the two Kalahari Resorts as independents, although this familiar name is another emerging national 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, Howard Johnson, Holiday Inn, Marriott, Microtel, Nickelodeon, Quality Inn, Ramada, Sleep Inn, Super 8 and Wingate. 

Whether or not to affiliate with a brand is a major issue in this product sector of the hotel industry. 

Two companies, Great Wolf Resorts Inc and Kalahari Resorts, 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. 

Two hotel chains, Marriott and Holiday Inn, are creating indoor waterpark prototypes. 

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. 
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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 657 with an indoor waterpark of 86,400 sf or 132 sf per guest room. The Top 5 resorts have an average of 5.6 waterslides, 2.3 pools and 1.8 hot tubs. All of them have one or more lazy rivers, 80% have a wave pool and 40% have a water coaster. The Top 5 resorts average 70,700 sf of meeting space and 51 meeting rooms. The Top 5 hotel waterpark resorts in 2006 have more rooms, bigger waterparks, more water features and more meeting space than the Top 5 resorts in 2005 --- and the race to be the biggest continues! 
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Among the top resorts ranked 16-25 by room count, the average number of rooms is 282 with an indoor waterpark of 41,200 sf or 146 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 2-8 waterslides, 2-4 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. 

About 80% 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. However, they generate a lot of entertainment value for spectators, and ski resorts seem to love 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

Feasibility consultants face the difficult task of sizing their client�s hotel waterpark projects. Hotels with the highest number of rooms don�t always have the largest waterparks. And vice versa. While there are many factors that determine sizing, a rule of thumb is the rooms to waterpark ratio. A direct relationship exists between the number of hotel rooms and the size of the indoor waterparks. 
 

To illustrate, hotels with waterparks 40,000 to 49,999 sf average 217 rooms and 42,200 sf of indoor waterpark --- a ratio of 195 sf per guest room. Notice that hotels with about 100 rooms to vary widely in the sizes of their indoor waterparks. 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 50 to 738 and the meeting facilities vary from 25,000 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. 
 

Canadian Supply of Hotel Waterparks

In Canada, we have identified 113 hotel indoor waterparks that are open and operating in 2006. Most are located in the western provinces.

World Waterpark at the West Edmonton Mall in Alberta is the largest indoor waterpark in the world. The Mall is the largest shopping center in the world, according the Guinness Book of World Records. 

The Fantasyland Hotel at West Edmonton Mall was built in 1986 with 355 rooms. Technically, the Fantasyland Hotel is not a hotel waterpark, but it is closely connected. You can walk from the hotel through the mall to the 217,800 sf World Waterpark without going outside. So, the largest hotel in Canada associated with an indoor waterpark is the Fantasyland Hotel in West Edmonton. 
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In Canada, hotel waterparks are different than in the USA. Many are really indoor pools that have been enlarged and enhanced with waterslides and water playthings. Many of the indoor waterparks in Canada are under 10,000 sf while many in the USA are over 10,000 sf.

Top 15 Canadian Hotel Waterparks by Size of Waterpark

While the 217,800 sf World Waterpark is not really a hotel waterpark, it is situated very closely to hotel rooms located at the West Edmonton Mall. And the 355-room Fantasyland Hotel is part of that same mall --- making a connection between the hotel and the waterpark. 
 

Third largest is Travelodge World Hotel in Ottawa, which also opened its 13,000 sf indoor waterpark in 2004 --- connecting with its 177 guest rooms. 

In Canada, the biggest concentration of hotel indoor waterparks is in the Economy Hotel sector, where room counts are typically under 100 rooms and indoor waterparks are less than 5,000 sf. 

Canadian Hotel Waterpark Resorts In Development

Nine (9) major hotel waterpark resorts are in the planning stages for Canada, 3 in Alberta, 2 in Ontario, 2 in British Columbia and one each in New Brunswick and Saskatchewan. 

Mexican Supply of Hotel Waterpark Resorts

While most waterparks in Mexico tend to be outdoor waterparks, we have identified a few that are indoor-outdoor combinations and onsite, adjacent or nearby lodging that would tend classify them as hotel waterpark resorts. 

We are in the process of surveying owners, consultants and suppliers in Mexico to gather more data and develop a better profile of hotel waterpark resorts in Mexico.
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About 1,000 waterparks are open & operating worldwide --- a combination of public and private outdoor waterparks and indoor waterparks that may or may not be connected to lodging. Only about 400 are park members of the waterpark association. Therefore, data is incomplete regarding many of the waterparks around the world. Since waterpark developments are growing rapidly in many parts of the world, hospitality & leisure consultants Jeff Coy and Bill Haralson have commissioned a team of people around the world to assist in data collection for the Annual Waterpark Industry Report. 

We have identified fifteen (15) properties in the rest of the world that have a combination of hotel rooms, indoor waterparks and outdoor waterparks. Our team continues to survey owners and managers to build a profile of outdoor waterparks, indoor waterparks and hotel waterpark resorts around the world.
 

Monte Mare Adventure Spa has 269,100 sf of indoor-outdoor waterpark in Rheinback, Germany.

World Waterpark in West Edmonton, Alberta, Canada, claims to be the largest indoor waterpark in the world with 217,800 sf.

Alton Towers/Splash Landing in Staffordshire England is generally recognized as the first hotel waterpark resort in Europe with its 216 rooms and 40,000 sf indoor waterpark.

Center Parcs has 20 natural resorts throughout Europe --- located in the Netherlands, Belgium, Germany, France and Great Britain. Only a few driving hours away from home, these parks offer unique short breaks, completely apart from daily routine. Each Center Parc Village has a choice of villas, dining, children facilities, sports centers and water activities. All Center Parcs have a children�s activity pool, hot whirlpools, outdoor pool, solaria, waterslides and an aqua café & terrace. Many of the parks also have a baby pool, rapids, wave pool and a wild water chute. Some of the parks have a themed pool and water sprays. We are still developing a profile of the Center Parc resorts --- with the help of Mike Walls.
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In the rest of the world, here is a list of hotel waterpark resort that either under construction or in the development planning stages:
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Worldwide, waterparks are growing in popularity with both leisure travelers and resort developers. In the USA, the hotel indoor waterpark resort concept quadrupled over the last six years. 

For details about what�s under construction and in the development pipeline, see two related articles:

Hotel Waterpark Resorts: Construction Report 2006
Indoor Waterparks Add Value to Hotel & Resort Mixed-Use Projects

Jeff Coy
 HOTEL WATERPARK RESORT
Research & Consulting
JLC Hospitality Consulting
PO Box 4090 / 39401 N 67th Place
Cave Creek, AZ 85327-4090
480-488-3382 tel
480-488-3382 fax
Email is [email protected] or [email protected]
Website is www.jeffcoy.com