Hotel Waterpark Resort Growth
Accelerates,
Projects
Get Bigger
Consultants Present 2008 Industry Report at Workshop
Feb 28
February 22, 2008
--- During 2007, thirty-three (33) new hotel indoor waterparks opened. Eighty-three (83) hotel waterparks are under
construction now or will break ground during 2008 --- including
fifty-five (55)
projects scheduled to open in 2008 and another twenty-three (23) that
are
slated to open in 2009-2010.
Industry consultants Jeff Coy
and Bill Haralson will present the 28-page Hotel Waterpark Resort
Industry
Report 2008 at a workshop, Developing
& Financing Hotel Waterparks, scheduled for February 28 &
29 when
the full report will be distributed at the Kalahari Resort in Sandusky Ohio. Over 40 speakers, 32 sponsors and several
hundred developers are expected to attend. Go
to www.hotelwaterparkworkshop.com. Co-authors of the report, Coy heads JLC
Hospitality Consulting of Cave Creek AZ and Haralson heads William L.
Haralson
& Associates of Alto
NM.
Highlights of the 2008 Industry
Report include:
Hotels and resorts with indoor waterparks
are a small but
rapidly-growing segment of the lodging, recreation and entertainment
business. Nationally, waterpark hotel
rooms grew 20.9% in 2007 compared to ordinary hotel rooms at 1.4%
growth. The following chart illustrates
the growth
over the last six years.
Growth of Hotel
Waterpark Resorts in USA
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
2002
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Amount
|
Hotel
Indoor Waterparks
|
169
|
|
136
|
|
104
|
|
81
|
|
65
|
|
50
|
Rooms
|
28,888
|
|
23,899
|
|
18,998
|
|
13,877
|
|
11,464
|
|
8,510
|
Indoor
Waterpark Sq Ft
|
4,132,469
|
|
3,225,669
|
|
2,344,469
|
|
1,721,269
|
|
1,385,969
|
|
1,019,104
|
Meeting
Rooms
|
511
|
|
479
|
|
422
|
|
373
|
|
352
|
|
322
|
Meeting
Space Sq Ft
|
1,627,414
|
|
1,326,435
|
|
978,935
|
|
806,085
|
|
679,435
|
|
626,955
|
Affiliated
with a Brand
|
81
|
|
66
|
|
52
|
|
37
|
|
27
|
|
20
|
Independent
|
88
|
|
70
|
|
52
|
|
44
|
|
38
|
|
30
|
Source: Jeff Coy & Bill Haralson, Hotel
Waterpark Resort Research & Consulting, Feb 4, 2008.
|
Nationally, these 169 properties
have a
total of 28,888
rooms, over 4.1 million square feet of indoor waterpark space and 511
meeting
rooms covering 1.6 million square feet of meeting space.
Today, about 48% of hotel waterparks are
affiliated with a national franchise brand and 52% are independent. Hotel waterparks are popular with families
and hotel owners
because they fill empty rooms at higher room rates than hotels without
indoor
waterparks. Every year the construction pipeline
gets
bigger. And hotel waterpark projects keep
getting
bigger in size. Many are part of
mixed-use resort destination developments that include conference
centers,
recreation, entertainment, retail shopping, offices and residential
units.
Recently, the Kalahari Resort
& Convention
Center in Sandusky OH
completed its expansion to become the largest hotel waterpark resort in
the USA
--- with 884
rooms and 193,000 sf of indoor waterpark under one roof.
Chula Vista Resort in
Wisconsin Dells is in the
midst of a 4-year $200 million expansion. It
recently topped the charts of the Top 10 Hotel Meeting
Facilities
with indoor waterparks in the USA
--- with 150,000 sf of domed meeting space and 110,000 sf of indoor
waterparks. Kalahari Resort in the Dells
dropped to second largest (125,000 sf) meeting place with an indoor
waterpark.
An indoor waterpark is like an outdoor
waterpark, except all
the fun is packed into a cube which is attached to a hotel that is open
365
days a year, rain or shine. The first
hotel
indoor waterpark in the USA
was created in 1994 by Stan Anderson, owner of the Polynesian Resort in
Wisconsin Dells WI, a businessman who was trying to fill his hotel
rooms on
weekends. He installed some water gizmo
in his indoor pool, and weekend occupancy skyrocketed.
From this, Wisconsin Dells has spawned 21
waterpark resorts and has become the waterpark capital of the world.
Hotels and resorts have ups and downs. They are seasonal properties with high
periods and low periods from month to month and from weekday to
weekends. The indoor waterpark has an
amazing ability
to fill empty rooms with families and young children on weekends all
year long
and whenever kids are out of school. Yet
a hotel waterpark resort is still just a hotel with a very expensive
attraction,
similar to having a golf course or conference center.
The indoor waterpark is a perfect component
for the hotel owner that wants a balanced mix of customers ---
individual
business travelers, groups and individual leisure guests.
USA Hotel Industry Performance
The USA
hotel industry occupancy reach 63.2% for 2007, just slightly under the
63.3%
recorded for 2006 --- up from a low of 59.0% in 2002 and almost even
with
benchmark Year 2000.
USA Hotel Industry Trends
|
|
2007
|
2006
|
2005
|
2004
|
2003
|
2002
|
2001
|
2000
|
Occupancy
|
63.2%
|
63.3%
|
63.1%
|
62.7%
|
60.8%
|
59.0%
|
59.8%
|
63.7%
|
Average
Room Rate
|
$103.64
|
$97.89
|
$90.95
|
$86.55
|
$83.60
|
$83.19
|
$84.85
|
$86.04
|
RevPAR
|
$65.50
|
$61.96
|
$57.39
|
$54.25
|
$50.87
|
$49.04
|
$50.73
|
$54.07
|
Source:
Smith Travel Research.
|
Nationwide, hotel room rates reached an
average of $103.64
in 2007, up from $97.89 in 2006, a low of $83.19 in 2002 and up from
$86.04 in
benchmark Year 2000.
In 2007, airport, urban and resort hotels
ran the highest
occupancies. Occupancy growth slowed for
all hotels while resort occupancy declined one-half of one percent in
2007. Urban hotels and resorts recorded
the highest average room rates at $148 and $143 respectively. Room rate growth remained strong for all
hotels, with urban hotels achieving the biggest gains.
Hotel occupancy was down 0.2% during the
first half of 2007
compared to the first half of 2006. Summer
2007 occupancy was up 1.0% higher than Summer 2006.
However, occupancy started to dwindle during
the last three months of 2007 amidst news of a slowing economy.
While hotel occupancy softened, hotel
average room rates
remained strong throughout the year --- up 5.9% in 2007 over 2006. As a result, revenues per available room were
up 5.5% during the first half of 2007, up 6.6% during Summer 2007 and
up 5.7%
for the Year 2007.
Most families in the USA
bit the bullet on higher
gasoline prices and refused to abandon their vacation plans. Many vacationed closer to home, ate fewer
meals in restaurants and escaped for weekends to nearby regional
resorts --- a
growing number of which offered indoor waterparks and family
entertainment
centers.
USA Resort Performance
Hawaii
is the leading resort destination with 75.3% occupancy (down 5.3% from
last
year) and $199 average room rate (up 6.8% over last year).
This compares to occupancy of 66.1% and
average room rate of $136 for all resorts in the USA.
Hot & Cold Resort
Destinations
|
|
2007
Occupancy
|
%
Change
|
2007
ADR
|
%
Change
|
Hawaii
|
75.3
|
-5.3
|
$199.87
|
6.8
|
Nevada
|
71.2
|
0.5
|
$109.12
|
4.4
|
California
|
69.3
|
-0.3
|
$118.94
|
6.5
|
Arizona
|
66.3
|
-1.0
|
$105.17
|
6.5
|
USA Resorts
|
66.1
|
-0.5
|
$136.73
|
4.7
|
Florida
|
64.1
|
-2.7
|
$117.35
|
5.7
|
Colorado
|
63.1
|
3.6
|
$106.78
|
6.7
|
Minnesota
|
61.8
|
2.3
|
$88.05
|
4.5
|
Wisconsin
|
54.8
|
0.2
|
$79.54
|
3.5
|
Source:
Smith Travel Research.
|
Nevada, California
and Arizona
trail closely behind with occupancies of 71.2%, 69.3% and 66.3%
respectively. Colorado
recorded the biggest gain in occupancy at 3.6% while Hawaii recorded
the biggest decline in
occupancy versus last year. The highest
resort room prices were found in Hawaii
at $199,
All USA Resorts at $136, California
at $118, Florida at $117 and Nevada at $109. Hawaii, Colorado, California
and Arizona
all
recorded price jumps of more than 6% in 2007 compared to 2006.
Florida, Colorado, Minnesota
and Wisconsin
achieved statewide occupancy under
the national average for all USA Resorts. However,
trends are shifting. Wisconsin
and Minnesota
have the highest number of hotel indoor waterpark resorts in the
country, and a
growing number of ski resorts are considering indoor waterpark projects
to
achieve year round revenues. Many of the
top hotel waterpark resort properties record occupancies and room rates
far
above the national averages and equal to many of the Sunbelt
resort destination states.
USA Hotel Waterpark Resort Performance
On January 1, 2007, there were 136 hotels in
the USA
with indoor
waterparks --- from the smallest water features to the largest
waterpark
resorts.
During 2007, thirty-three (33) new additions
opened, bringing
the total to 169 hotel waterpark resorts open and operating in the USA at
the end
of 2007.
Another fifty-five (55) projects are under
construction now or
will break ground during 2008 which are scheduled to open in 2008. Realistically, some projects may slide into
2009.
Construction Project
Growth
Hotel Waterpark Resorts USA
|
|
2008 F
|
2007
|
2006
|
2005
|
2004
|
2003
|
2002
|
2001
|
2000
|
Open at
beginning of year
|
169
|
136
|
104
|
81
|
65
|
50
|
41
|
32
|
18
|
Openings
during year
|
55
|
33
|
32
|
23
|
16
|
15
|
9
|
9
|
14
|
Total
Open at end of year
|
224
|
169
|
136
|
104
|
81
|
65
|
50
|
41
|
32
|
Percent
Change
|
32.5%
|
24.3%
|
30.8%
|
28.4%
|
24.6%
|
30.0%
|
22.0%
|
28.1%
|
|
|
|
|
|
|
|
|
|
|
|
Under
Construction
|
83
|
93
|
73
|
52
|
32
|
9
|
10
|
9
|
8
|
In
Development
|
|
166
|
108
|
121
|
69
|
46
|
19
|
|
|
Source: Jeff Coy & Bill Haralson, Hotel
Waterpark Resort Research & Consulting.
|
The waterpark sector of the resort industry has experienced
annual growth ranging from 22% to over 30% in each of the last seven
years. Clearly, hotel waterpark resorts
are not a fad but here to stay.
About 166 hotel waterpark projects were in
the development
pipeline at the end of 2007 compared to 108 in 2006, 121 in 2005, 69 in
2004,
46 in 2003 and 19 in 2002. In 2008, more
than 200 projects are in the planning stages.
Hotel Construction Will Increase in 2008
More than 211,000 hotel rooms were in the
pipeline as of
December 2007, a 35.5% increase from 156,000 rooms in the pipeline a
year
earlier, according to Smith Travel Research. Hotels
that received funding during the easy money period
of 2007 will
be under construction during 2008 and 2009.
The 2008 Lodging Industry Construction
Pipeline stood at
718,000 hotel rooms at the end of 2007 --- up 36% over the previous
year. Hotel rooms were growing at a rate
2.2%. The new hotel room supply growth is
forecast
at 2.8% for 2008 and 3.4% for 2009 taking into account anticipated
market
conditions, according to Lodging Economics.
From Easy Money to the New Reality
During the first half of 2007, investors
were hungry for
hotels. It was a period of easy money. In the second half of 2007, there were signs
of a slowing economy --- due to higher fuel costs, higher construction
costs, a
residential mortgage crisis and negative news that started to affect
hotel
lending. Almost overnight, the period of
easy money ended.
In 2008, there’s still lots of capital, but
it’s back to
reality in terms of tougher underwriting standards.
Hotel industry occupancy in the USA
has flattened at 63.2% but average room rates continue to grow 5% to 6%
annually. Hotels with indoor waterparks
typically outperform ordinary hotels in terms of higher occupancy,
higher room
rates and higher revenues. A weaker US
dollar is attracting more international visitors to the USA,
which is
good for the hotel, travel and attractions industry.
The full report, Hotel
Waterpark Resort Industry Report 2008, available Feb 28, provides
details
regarding the following items:
USA Hotel Industry Performance
USA Resort Performance
USA Hotel Waterpark Resort Performance
Wisconsin Dells Hotel Performance
USA Competitive Supply of Hotel Waterpark Resorts
List of Hotel Waterparks That Opened in 2007
Major Transactions of 2007
Top 25 Largest Hotel Waterpark Resorts in the USA
Top 15 Largest Meeting Facilities with Indoor Waterparks in the USA
Emerging Multi-Unit Owners
Emerging Management Companies
Independent Vs Branding
Recent Transactions
List of Hotel Waterparks Scheduled to Open in 2008
For info on the
workshop, go to www.hotelwaterparkworkshop.com. For information on the Hotel Waterpark Resort
Industry Report 2008, contact co-authors Jeff
Coy
and Bill Haralson. Reach Coy at
480-488-3382 or email [email protected]. Reach Haralson at 505-802-1522 or email [email protected].
|