in North America in ‘07
|By David J. Sangree, MAI, CPA, ISHC -
Indoor waterpark resorts have continued to expand throughout North America
with 95 open facilities in the United States and an additional 13 open
facilities in Canada as of July, 2007. There are 3,643,100 aquatic square
feet and 27,230 hotel rooms associated with indoor waterparks as of July,
2007. This family-oriented resort segment has established itself as a viable
segment of the travel industry and has expanded well beyond its original
Wisconsin base. By the end of 2007, 24 states and five provinces will have
at least one indoor waterpark resort. The number of indoor waterparks has
grown significantly since their inception in the early 1980s, while the
average number of hotel rooms attached to these waterparks has also increased
substantially over the years. Between 1994 and 2006 in the United States
and Canada, 97 indoor waterpark resorts opened either as new construction
properties or as additions to existing hotels. The following table shows
the number of hotel rooms and square feet of indoor waterparks that opened
in the U.S. and Canada from 1983 to 2006.
Hotel & Leisure Advisors (H&LA) defines an indoor waterpark resort as a lodging establishment containing an aquatic facility with a minimum of 10,000 square feet of indoor waterpark space and inclusive of amenities such as slides, tubes, and a variety of indoor water play features. Although numerous hotels bill their indoor pools as waterparks, those with less than 10,000 square feet of aquatic area should be categorized as hotels with water features rather than as waterparks. H&LA divides indoor waterpark resorts into two categories:
The table indicates that there are currently 95 indoor waterpark resorts located in the United States with 32% located in Wisconsin. In addition, there are 13 indoor waterpark resorts operating in Canada, although many other hotels in Canada offer smaller indoor water features with less than 10,000 square feet. Currently, 16 hotels located in Wisconsin Dells, which is known as the “Waterpark Capital of the World,” have indoor waterparks with a total of 4,641 rooms and 748,500 square feet of indoor waterpark space.
The six largest indoor waterpark resorts located in Wisconsin Dells outperformed the franchise Wisconsin Dells non-resort hotels’ overall average occupancy by 17 occupancy points and the average daily rate of the non-resort hotels by $112 in 2006. The average daily rate for these properties includes usage of the indoor waterpark. According to their recent SEC filings, the Great Wolf Lodge properties open in 2006 averaged an occupancy level of 63.5% with an average daily rate of $240.04. However, certain properties in Midwestern markets have shown a decline in performance in 2006 due to expanded competition from additional indoor waterpark resorts.
Hotel companies, investors, and developers in the U.S. continue to explore
the potential benefit of affiliating indoor waterpark resorts with a national
hotel franchise. Franchised indoor waterpark resorts are more common in
Canada. The previous table shows that only 41% of U.S. indoor waterpark
resort rooms are affiliated with a national hotel chain, while 77% of indoor
waterpark resort rooms in Canada are franchised. Though the non-franchised
resorts can benefit from not paying franchise fees, they lack the benefits
of a central reservation system and franchise recognition. The following
chart shows the affiliation of the franchised indoor waterpark resorts
in the U.S.
in U.S. and Canada
The ratio of franchise to independent indoor waterpark hotels has fluctuated
since 1994. The following table shows the number of indoor waterpark rooms
that have been added per year by franchised and independent hotels.
Between 2001 and 2005, the number of indoor waterpark rooms added by independent hotels exceeded the number of rooms added by franchised hotels, while in 2006 the figure was nearly evenly split.
The overall average ratio of waterpark square footage to guest rooms in indoor waterpark resorts varies widely with some larger destination resorts offering as much as 200 square feet of indoor waterpark space per guest room while some hotels with indoor waterparks may offer less than 100 square feet of waterpark space per guest room. In 2006, the overall average ratio for all existing properties in North America was 133 square feet per guest room.
The increase in the number of guest rooms constructed has kept pace with increases in demand for indoor waterparks in most markets, although in Wisconsin, Minnesota, and Ohio oversupply issues are beginning to surface. In these states, some properties with indoor waterparks are recording lower rates of occupancy and average daily rate than they recorded in previous years due to increased competition.
The following table indicates indoor waterpark resorts which opened
in 2006 in the United States and Canada.
The table indicates that 23 waterparks came on line within new resorts or expansions of existing resorts in 2006. A number of properties which opened in 2006 added or expanded waterpark facilities in existing hotels. The largest projects to open in 2006 included the Waterpark of America and Grand Hotel in Bloomington, and two Great Wolf Lodge properties in Mason/Kings Island and Niagara Falls. The Grand Hotel at the Waterpark of America recently announced that it will affiliate with Radisson Hotels in order to boost weekday corporate business. The single largest guest room expansion was the Wilderness Resort's addition of the Glacier Canyon Lodge, a condominium resort hotel with 461 keys, which was built at the same time as the addition of a third indoor waterpark and a new outdoor waterpark area.
Our research indicates that there are 25 new indoor waterpark resorts or expansions to resorts which are projected to open in 2007 in the United States and Canada. The following table lists these properties.
Lodge at Storm Lake & Kings Pointe Waterpark Storm Lake IA
The table indicates the properties which have opened or are due to open in 2007. Of the 25 total on the list, 18 are new waterpark additions to existing hotels or room additions to existing indoor waterpark resorts. Based on the number of projects that have recently been financed or have begun construction, we project that the number of new construction indoor waterpark resorts will be higher in 2008.
Because of the strong performance of indoor waterpark resorts in Wisconsin
Dells and other locations, there are many properties considering the development
of an indoor waterpark resort. The following table summarizes the indoor
waterpark resorts which are under construction or are in planning or development
The table indicates that there are 273 properties in the United States and Canada which are proposing to add indoor waterpark facilities or are developing new construction indoor waterpark resorts. The list has grown substantially over the past year from 190 properties as of June, 2006 to 273 properties in June, 2007, indicating substantial interest in developing an indoor waterpark project in North America.
Most indoor waterpark resorts that are currently operational, under construction, and proposed are located in northern states due to a shorter summer season. The previous list includes indoor waterpark resorts known to be in the planning stages or under construction. Of this list, only those with proper planning and financing will be developed. We project a number of these projects will not be developed due to the challenging financing issues.
Unique Features and Properties
A number of trendsetting developers are creating exciting concepts in indoor waterpark resort properties. The following bullets describe a few of these projects.
Indoor waterpark resorts have emerged as leisure destinations for families looking for a convenient weekend getaway or vacation. In the 1990s, the indoor waterpark resorts were located in the Wisconsin Dells region, but growth continues throughout the United States. As with the amusement park industry, owners and operators of indoor waterpark resorts have discovered that in order to attract new families to their facilities and keep their repeat guests coming back for more, they need to continually work to add new components and keep the concept “fresh.” We project that the average size of indoor waterparks constructed will continue to increase as customer expectations increase. We project continued development of indoor waterpark resorts in the northern United States as they offer an attractive year-round leisure opportunity for families and attractive investment returns for developers. However, with the substantial growth in supply in the segment, we recommend thorough feasibility analysis be performed for projects to ensure that the project's return on investment is adequate for the development.
This article will also appear in the World Waterpark Association’s 2007 Water Leisure & Lodging publication which is available prior to their annual convention held in October, 2007.
David J. Sangree, MAI, CPA, ISHC is President of Hotel & Leisure Advisors, a national hospitality consulting firm. He performs appraisals, feasibility studies, impact studies, and other consulting reports for hotels, resorts, waterparks, golf courses, amusement parks, conference centers, and other leisure properties. He has performed more than 1,000 hotel studies and more than 100 indoor waterpark resort market feasibility and/or appraisal studies across the United States and Canada.
He was formerly employed by US Realty Consultants in Cleveland and Columbus, Pannell Kerr Forster in Chicago, and Westin Hotels in Chicago, New York, Fort Lauderdale, and Cincinnati. Mr. Sangree received his Bachelor of Science degree from Cornell University School of Hotel Administration in 1984. He became a certified public accountant in 1989. He became an MAI member of the Appraisal Institute in 1995 and a member of the International Society of Hospitality Consultants in 1996.
Since 1987, Mr. Sangree has provided consulting services to banks, hotel companies, developers, management companies, and other parties involved in the lodging sector throughout the United States, Canada, and the Caribbean. He has spoken on various hospitality matters at seminars throughout the United States and on Good Morning America. He has written numerous articles for, and is frequently quoted in, magazines, television, and newspapers covering the hospitality field.
He can be reached via telephone at 216-228-7000 or via e-mail at email@example.com.
Hotel & Leisure Advisors, LLC
|Also See:||Number of Indoor Waterpark Destination Resorts Grows in 2007 / David J Sangree/ February 2007|
|Indoor Waterpark Resort Numbers Increase in ‘06 / David J. Sangree / August 2006|
|Financing Your Indoor Waterpark Resort / David J. Sangree / September 2006|
|Appraisal and Market Analysis of Indoor Waterpark Resorts / David J. Sangree / September 2006|
|Indoor Waterparks and Hotels - Year end 2005 Overview / David Sangree / February 2006|
|Indoor Waterpark Resorts Continue Impressive Growth in ‘05; a Viable Segment of the Travel / David J. Sangree / January 2005|
|Indoor Waterpark Resorts Expand Nationwide / David J. Sangree / April 2004|