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10 Reasons Why Australia Will Soon Get
Its First Hotel Indoor Waterpark

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By Jeff Coy, ISHC, June 2009

Australia has no hotels with indoor waterparks.  The closest thing is Sea World Resort on the Gold Coast with its own outdoor waterpark.  But, it’s not the same.

An outdoor waterpark, even if it is connected to lodging, is not the same as a hotel with an indoor waterpark.  And when Australian hotel/resort owners finally discover the difference that an indoor waterpark can make on the performance of their hotel, new development is going to take off. 

What’s the big fuss about indoor waterparks attached to hotels? 

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 accidently created in 1994 by Stan Anderson, owner of the Polynesian Resort in Wisconsin Dells, Wisconsin, 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.  Within a year, two mega hotel waterpark resorts were constructed in the Dells.  From this, Wisconsin Dells spawned 21 indoor waterpark resorts and became the waterpark capital of the world.  Today, the US has more than 200 hotels with indoor waterparks that attract the family market.  However, the US bank crisis has shut off the flow of money for new hotel construction. 

Australia is ready for its first hotel indoor waterpark.  Here’s why?

1.  The worldwide recession is mildest in Australia.  When you look at a world map of countries that are least affected by the global economic crisis, Australia takes the top spot followed by China with India and Singapore in equal third place.  Data is based on the results of a business confidence survey in 24 nations commissioned by Servcorp. 

2.  Hotels in Australia are producing an occupancy that is 10 to 20 points higher than hotels in other countries.  Australian & Oceana hotels achieved 71.3% occupancy for YTD April 2009 compared to all Asia Pacific hotels at 58.3% and North American hotels at 52.8%.  Australian & Oceana hotel occupancy was down only -5.1% compared to Asia Pacific at -14.8% and North America at -10.8%

3.  Australia is attractive to foreign investors.  While China and India get most of the attention, it is important to know that foreign direct investment (FDI) inflows to Australia almost doubled in 2007 to reach A$35 billion.  Average annual inflows had been A$16 billion for the previous six years.  In fact, the rapid growth of China has benefited Australia as a supplier of raw materials.  Some consultants are urging the government to loosen its inflow review process, saying it will take lots more foreign capital flowing in to help Australians invest in their own country. 

4.  Regional drive-to resorts are attracting more guests than national fly-to resorts.  Depending upon the cost of petrol and jet fuel, domestic travelers decide to getaway by car rather than fly.  Taking off several long weekends is replacing the annual vacation.  Regional resorts are excellent locations for hotel indoor waterparks.  Ski resorts, golf resorts, mountain and lake resorts are ideal locations for hotel waterpark investments.  Recreational locations with good highway access within a 3-hour drive from a major metro area are excellent targets for hotel waterpark development.  The owners of ski resorts in the Blue Mountains and the Snowy Mountains are prime candidates for adding indoor waterparks to their existing lodges.  Urban and suburban areas will also attract hotel waterpark investment to revive downtowns and convention centers.  A survey of Sydney residents pointed to the frustration of having to fly to the Gold Coast of Queensland for a waterpark experience.  “Sydney is the real capital of Australia,” said one respondent.  “We deserve to have our own waterpark resort right here in Sydney.”  Of course, there’s Jamberoo Action Park in Wollongong just south of Sydney, but there’s no lodging and no indoor waterpark --- yet. 

5.  Seasonality factors are greatly reduced.  Ordinary hotels, especially resorts, have big gaps in their business from season to season, month to month and weekdays versus weekends.  Seasonal properties find it increasingly difficult to pay annual expenses with a short peak season.  However, seasonality is no longer a risk factor for a hotel indoor waterpark resort.  Hotels with indoor waterparks fill rooms almost 100% every weekend and school break all year long.  Hotels/resorts with an indoor waterpark extend their peak season from 100 days to 365 days. 

6.  Adverse weather conditions are virtually eliminated.  Many times, even in peak season, poor weather will result in trips, vacations and meetings being cancelled.  Weather is no longer a risk factor for hotel waterpark resorts.  Hotels and resorts with indoor waterparks save the day with a venue that is weather-proof.  Indoor waterparks greatly reduce lost business due to weather and helps to preserve those revenues already booked. 

7.  Higher room occupancy.  Hotels with indoor waterparks consistently sell more room nights than hotels without indoor waterparks.  They achieve higher occupancies of up to 26 points higher than some ordinary hotels.  Our research of the haves and have-nots in Wisconsin Dells proves the positive impact of having an indoor waterpark.  The haves are capturing a bigger and bigger share of the area hotel room revenues while the have-nots continue to lose share. 

8.  Higher average room rates.  Most hotel waterparks combine the room rate and waterpark admission into a package price that adds substantially to the hotel’s ADR --- average daily rate.  Having an indoor waterpark can add up to $25 per person to the room rate for an upscale hotel or resort.  For a party of 6 persons in a suite, that adds a waterpark premium of $150 to the normal room rate.  So an upscale resort without an indoor waterpark and suites costing $200 can now charge $350 --- if it has an indoor waterpark.  Of course, for smaller, less expensive hotels, the waterpark impact on the combined ADR is less.

9.  Indoor waterpark attendance.  Attendance at an indoor waterpark attached to a hotel is a calculation of available rooms, occupancy, customer mix and persons per room/suite.  For example, a 300-room waterpark hotel/resort running 70% occupancy with a customer mix of 60% individual leisure guests times 6 persons per room could expect waterpark attendance of 275,940 persons annually.  Most properties limit their waterpark admissions to hotel guests.  A few open to the public at certain times using day passes.  Opening to the public is a revenue management decision usually announced a day or two in advance of admission.  If you decide, as an investor, to open to the public, you will want to over-size your indoor waterpark in the design phase. 

10.  Indoor waterpark admission prices.  Just for fun, multiply the above attendance number of 275,940 by $25 a head and you can expect to add $6,898,000 to your room and waterpark revenues.  Day guests (non-hotel guests) would typically pay $30 per person for admission to the indoor waterpark.  Two of the largest hotel indoor waterparks in the world that open to the public are charging more than $40 per person for admission.  Capacity is limited so as not to create lines for the hotel guests who are paying top dollar for their room and waterpark packages.  Having an indoor waterpark can add up to 26 points of occupancy and up to $150 to the price of a room/suite.  The combined boost in both occupancy and ADR yields an impressive increase in room and waterpark revenues.  Plus there are incremental sales to be captured: snack food, beverages, ice cream, baked goods, gifts and souvenirs. 

What’s Open & Operating in Australia?

Here’s a list of Australian waterparks.  All are outdoor waterparks.  Only the Sea World Resort on the Gold Coast provides lodging that is connected to its outdoor waterpark.  There are no hotels with indoor waterparks in Australia, yet.

Australian Waterparks

Open & Operating City State Type Owner/Operator Attendance
Big Splash Waterpark  Canberra  ACT  Outdoor Waterpark  . .
Sports & Aquatic Centre  Katoomba  NSW  Community Aquatic Centre  Blue Mountains City Council .
Penrith Whitewater Stadium  Penrith  NSW  Whitewater River Stadium  . .
Olympic Park Aquatic Centre  Sydney  NSW  Community Aquatic Centre . .
Wonderland Sydney CLOSED  Sydney  NSW  Outdoor Waterpark  Sunway of Malaysia  2,000,000
Jamberoo Action Park  Wollongoog  NSW  Outdoor Waterpark . .
Dreamworld & Whitewater World  Coomera  QLD  Outdoor Waterpark  Macquarie Leisure Trust  2,000,000
Sea World Theme Park Gold Coast  QLD  Theme Park  Warner Village Theme Parks 1,300,000
Sea World Resort & Waterpark  Gold Coast  QLD  Hotel Outdoor Waterpark  Warner Village Theme Parks .
UnderWater World  Mooloolaba  QLD  Oceanarium . .
WarnerBros Movie World  Oxenford  QLD  Amusement Park  Warner Village Theme Parks  1,300,000
Wet 'n Wild Water World  Oxenford  QLD  Outdoor Waterpark  Warner Village Theme Parks  1,000,000
Rock Pool Waterpark  Rockhampton  QLD  Community Aquatic Centre  City of Rockhampton .
The Strand Waterpark  Townsville  QLD  Outdoor Waterpark  City of Townsville .
Tattersall's Hobart Aquatic Centre  Hobart  TAS  Community Aquatic Centre  City of Hobart  .
Adventure Park  Wallington-Geelong  VIC  Outdoor Waterpark  . .
Adventure World  Perth-Bibra Lake  WA  Outdoor Waterpark  Andrew Sharry  300,000
Source:  Jeff Coy, JLC Hospitality Consulting, 2009.

What’s in the Pipeline in Australia?

Australian Waterparks
Under Construction/In Development  City State  Type  Owner/Operator  Attendance
Adventure Waters  Cairns  QLD  Outdoor Waterpark  Paul Freebody  250,000
Aussie World  Palmview  QLD s  Outdoor Waterpark  Warner Village Theme Park
Source:  Jeff Coy, JLC Hospitality Consulting, 2009.

Frequently Asked Questions

Where will the first hotel indoor waterpark in Australia be located?  Could be in a resort destination, such as the Gold Coast in Queensland.  Could be inside a metro area, such as Sydney, Canberra or Melbourne.  Could be within a 2 to 3-hour drive time from a major metro, such as the Blue Mountains west of Sydney.  “Melbourne might be a great target market,” says John Smith, managing director of Horwath HTL, Australia Pty Ltd, a hotel consultancy with offices throughout Asia Pacific.  Email jsmith@horwathhtl.com.au

How does hotel indoor waterpark growth in the US apply to Australia?  The first hotel indoor waterparks in the US grew out of Wisconsin Dells near the 43-degree latitude, along with Chicago, Milwaukee and Minneapolis, where the winters are long and cold and outdoor summer attractions have a 100-day peak season.  The concept was successful because families drove up to 200 miles on weekends during winter to check into a hotel with an indoor waterpark.  The concept spread to the higher elevations to include ski resorts.  Ski resorts in Kellogg, Idaho; Boyne Mountain, Michigan; Tannersville, Pennsylvania and McGaheysville, Virginia all have indoor waterparks.  Gradually, hotel indoor waterparks spread to the Sunbelt of the US, including Kansas City, Branson, Galveston, Pigeon Forge, Dallas, Orlando and Phoenix. 

How do the US cities compare with Australian cities?  Hobart is equivalent to Wisconsin Dells in terms of latitude and temperatures.  Sydney at 33-degrees latitude is similar to San Diego and Phoenix where summer and winter temperatures are nearly the same.  Brisbane and the Gold Coast are similar to Orlando, Miami and Key West in the US.  In fact, almost all new projects in the US are indoor-outdoor combinations using new high-tech structures and enclosures whereby outdoor waterparks are transformed into indoor waterparks and vice versa. 

What kind of facility would it be?  Could be all-new construction, upscale full-service resort with indoor waterpark, conference center, golf and adventure sporting facilities.  Could be an “add a box” project where an indoor waterpark is constructed and attached to an existing hotel.  Could be a conversion and expansion of an existing facility. 

How much would it cost to build?  Depends on size, quality and entertainment value.  A 100-room economy hotel with 15,000 sf indoor waterpark might cost $14 million, excluding land.  A 200-room midpriced hotel with 40,000 sf indoor waterpark could cost $37 million, excluding land.  And a 400-room upscale resort-style hotel with an 80,000 sf indoor waterpark may reach $92 million to build, excluding land. 

Who will likely build the first hotel indoor waterpark in Australia?  Could be Julianne and Vincent Cusumano, the owners of JV PLAY of Sydney, a waterplay/amusement equipment supplier for hotels, parks and family entertainment centers throughout Australia.  They have been studying the trends for these facilities over the last three years and recently announced their Great Reef Resort concept, which includes a 250-400-room hotel, indoor & outdoor waterparks and conference facilities to be built in western Sydney.  JV PLAY already represents the world’s major waterpark equipment suppliers in Australia and is currently seeking investors, managing partners and lenders to carry out their plans.  For more information about the project, go to www.jvplay.com.au/indoorwaterpark

Could very well be one of the major players, such as Village Roadshow Limited.  It is majority-owned by Village Roadshow Corp and run by John and Robert Kirby and Graham Burke.  Under its division, Warner Village Theme Parks, VRL owns and operates major attractions in Sydney, Gold Coast Australia, Hawaii and Phoenix Arizona.  John Menzies, CEO, Tim Fisher, COO and USA senior vp Robert White run the theme park division.  Warner Village Theme Parks oversees the Sydney Attractions Group which consists of managing the Sydney Aquarium, Shark Dive Xtreme, Tower Observation Deck, Tower Skywalk, Wildlife World and Oceanworld in Manly.  In addition, the company owns and operates Movie World, Australian Outback Spectacular & Paradise Country, Wet ‘n’ Wild, Sea World Theme Park and Sea World Resort & Waterpark --- all located on the Gold Coast, Queensland, Australia.  Being the first to build a hotel indoor waterpark in Australia would be easiest for Sea World Resort.  General manager Ernst Pfister already has the hotel and the outdoor waterpark.  All he needs to do is attach an indoor waterpark to his existing hotel. 

Could be another major player like Macquarie Leisure Trust.  Macquarie owns Dreamworld and WhiteWater World in Gold Coast, Queensland.  Dreamworld is a theme park with 1.3 million visitors annually and WhiteWater World is an outdoor waterpark with 1.3 million visitors annually.  The trust also owns marinas and 10 to 12 bowling centers.  Macquarie Leisure Trust CEO is Greg Shaw and CFO is Richard Johnson.  Macquarie is the largest player in raising capital in Australia and one of the largest players in the area of corporate mergers & acquisitions in Australia.  Through its subsidiaries and funds, Macquarie is the world’s largest operator of private toll roads.  It is invested in projects, such as airports, operating Sydney Airport and Bristol International Airport in the UK, for instance.  In 2007, the bank, together with a number of private equity firms attempted to takeover Qantas.  In 2008, Nicholas Moore became CEO. 

Could be Six Flags Corporation, which is a partner in the Great Escape Resort & Waterpark across from its theme park in Lake George, New York or it could be Ripley’s Believe It or Not, which owns the Great Wolf Lodge in Niagara Falls, Ontario, Canada. 

Could be Stella Hospitality Group of NSW which markets retreats, resorts and hotels under three brand names --- Peppers, Breakfree and Mantra.  Or it could be Mirvac Hotels & Resorts, a NSW management company. 

Could be the owner of a major ski resort, such as Perisher Blue, Thredbo or Smiggins, in the Blue Mountains west of Sydney or the Snowy Mountains southwest of Sydney. 

Could be the owner of an urban hotel that runs nearly empty on the weekends. 

Who will be first?



Jeff Coy, ISHC, is president of JLC Hospitality Consulting of Phoenix-Cave Creek, Arizona.  He is certified by the International Society of Hospitality Consultants and recognized as a leading authority on hotel waterpark resorts and adventure sports parks.  Contact him at 480-488-3382 or email jeffcoy@jeffcoy.com or go to www.jeffcoy.com
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Contact:

JLC Hospitality Consulting
PO Box 4090, 39401 N. 67th Place
Cave Creek, AZ 85327-4090
480-488-3382 tel
480-488-3382 fax
480-458-8050 cell
Email jeffcoy@jeffcoy.com
Website www.jeffcoy.com
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Also See: 18 Predictions About the Future of Hotel Waterpark Resorts / Jeff Coy and Bill Haralson / January 2005
Emergence of Adventure Sports Resorts; 10 Trends Point the Way to Future Resort Development / Jeff Coy / July 2008
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