News for the Hospitality Executive
Indoor Waterparks: Surfing a Wave in North America in ‘08
|By: David J. Sangree, MAI, CPA, ISHC
Indoor waterpark resorts have continued to expand throughout North America
with 107 open facilities in the United States and an additional 14 open
facilities in Canada as of June, 2008. There are 4,138,150
indoor aquatic square feet and 31,865 hotel rooms associated with
indoor waterparks as of June, 2008. 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 2008, 26
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, and the average number of hotel rooms attached to these
waterparks has also increased substantially over the years. Between
1998 and 2007 in the United States and Canada, 96 indoor waterpark resorts
opened either as new construction properties or as additions to existing
hotels. The following table shows the number of waterpark resorts
and square feet of indoor waterparks that opened in the U.S. and Canada
from 1998 to 2007.
The following chart indicates the number of hotel rooms and the square feet of indoor waterpark space for indoor waterpark resorts during the period 1998 to 2007 for the U.S. and Canada.
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, as of June 2008, there are currently 107 indoor waterpark resorts located in the United States with 28% located in Wisconsin. In addition, there are 14 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 4,651 rooms and 738,500 square feet of indoor waterpark space. Most indoor waterpark resorts that are currently operational, under construction, and proposed are located in northern states due to a shorter summer season.
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 2007 averaged an occupancy level of 62.2% with an average daily rate of $248.66. However, certain properties in Midwestern markets have shown a decline in performance in 2007 and 2008 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 71% 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 North America.
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 other hotels with smaller indoor waterparks offer less than 100 square feet of waterpark space per guest room. As of June, 2008, the overall average ratio for all existing properties in North America was 130 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 2007 in the United States and Canada.
The table indicates that 21 waterparks came on line within new resorts or expansions of existing resorts in 2007. A number of properties which opened in 2007 added or expanded waterpark facilities in existing hotels. The largest indoor waterpark project to open in 2007 was the Kalahari Resort in Sandusky expansion of both the indoor waterpark and the guest room count. The Sandusky property now has the largest single structure indoor waterpark in the United States. Other large projects included the opening of the Great Wolf Lodge Grapevine, Texas, and the opening of the Canad Inn Grand Forks, North Dakota. The 2007 list includes four CoCo Key indoor waterpark facility additions to existing hotels in Rockford, Illinois; Danvers, Massachusetts; Omaha, Nebraska; and Sharonville, Ohio.
Our research indicates that there are 29 new indoor waterpark resorts
or expansions to resorts which are projected to open in 2008 in the United
States and Canada. The following table lists these properties.
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 indicates the
number of indoor waterpark resorts which are under construction or are
in planning or development stages.
The table indicates that there are 313 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 two years from 190 properties as of June, 2006 to 313 properties in June, 2008, indicating substantial interest in developing indoor waterpark projects in North America.
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 which exist in 2008.
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 are expanding their reach 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 today 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 2008 Water Leisure & Lodging publication which is available prior to their annual convention held in October, 2008.
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 and CNBC. 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 ext. 20 or via e-mail at email@example.com.
Hotel & Leisure Advisors, LLC
|Also See:||Number of Indoor Waterpark Destination Resorts Grows in 2008 / David J Sangree/ February 2008|
|Financing Your Indoor Waterpark Resort / David J Sangree / August 2007|
|Indoor Waterparks: Making a Bigger Splash in North America in ‘07 / David J Sangree/ July 2007|