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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 jeffcoy@jeffcoy.com.  Reach Haralson at 505-802-1522 or email wharalson@aol.com.
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Contact:

Jeff Coy
480-488-3382
jeffcoy@jeffcoy.com

 

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Also See: Hotel Waterparks Construction Report 2008; 33 Hotel Waterparks Opened in 2007, 55 Scheduled for 2008 / February 2008

Hotel Waterpark Resort Industry Report 2007; 48 Hotel Waterparks Opening, 97 Under Construction / Jeff Coy and Bill Haralson / July 2007
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