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News for the Hospitality Executive |
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48 Hotel Waterparks Opening, 97 Under Construction By Jeff Coy and Bill Haralson
The following chart illustrates the growth over the last six years.
Nationally, these 184 properties have a total of 28,729 rooms, nearly 4.0 million square feet of indoor waterpark space and 614 meeting rooms covering nearly 1.7 million square feet of meeting space. In 2007, about 46% of hotel waterparks are affiliated with a national franchise brand, up from 40% in 2002. 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 ($400 psf) 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 is expected to reach
63.1% for 2007, just slightly under the 63.4% recorded for 2006 --- up
from a low of 59.0% in 2002 and almost even with benchmark Year 2000.
Nationwide, hotel room rates will reach an average of $102.97 in 2007, up from $97.31 in 2006, a low of $83.19 in 2002/2003 and up from $86.04 in benchmark Year 2000. In 2006, airport, urban and resort hotels ran the
highest occupancies. Interstate hotels showed the biggest improvement in
occupancy over the previous year. Of course, resort hotel locations showed
the highest average room rates at $135.42, which reflects all of the amenities
of a resort, compared to other types of lodging.
Forecast for 2007 For the first five months of 2007, hotel industry occupancy reached 61.6%, only 3/10th of one percent behind the same period last year. Hotel room rates averaged $102.86 compared to $97.21, up $5 over the same period last year. Through May, upscale, upper scale and luxury chain hotels achieved higher occupancies than midpriced and economy properties. The Mountain Region produced the highest occupancy, probably due to the great winter ski season in the Rockies. Nationally, the highest priced hotels achieved the highest occupancies. Regarding location, airport hotels ran the highest occupancy at 70% followed by urban hotels at 67.3% and resort locations at 66.7%. Hotel room supply, demand, room rates and revpar (revenues per available room) all showed positive growth for the last 12 months and through May 2007. Hotel occupancy showed a slight downward shift for the last 12 months but showed positive for May 2007 as we head into summer.
In the summer of 2007, the USA hotel industry will achieve a new record number of occupied rooms per night of 3.14 million, according to a report by PriceWaterhouseCoopers in June. The summer occupancy in 2007 is forecast to be slightly lower than 2006, 69.6%, the second-highest since the peak of 72.1% in 2001 and about one percentage point below the 70.2% occupancy in 2006. Occupancy for the five-day weekend of the Fourth of July, which falls on a Wednesday this year, is expected to be spread among the before and after weekends at 69.2%. Labor Day weekend is expected to reach 70.1%. Looks Good for Summer 2007 Leisure Travel The USA travel industry is expected to have a good summer travel season in 2007, with leisure travel increasing 1.4% over last summer, according to the Travel Industry Association. Americans will take 330 million person-trips in June, July and August, a record high number. Americans are expecting higher gas prices this summer but seem to be taking it in stride. Gas prices of around $3.00 will cause 11% of Americans to modify their summer travel plans, according to a TIA-AAA survey. The real tipping point seems to be $3.50 a gallon gas, with nearly one-third of travelers saying they would cancel their trip. According to PWC, higher gas prices will result in 8,000 fewer occupied rooms per night between Memorial Day and Labor Day. There is also emerging price resistance to increases in hotel average room rates. USA hotel average room rate (ADR) increases will decelerate through the remainder of 2007, as new construction accelerates and demand lessens. Nevertheless, analysts predict that hotel room rates will increase in 2007 by the second-highest percent in 10 years. Most families in the USA will bite the bullet on higher gasoline prices and refuse to abandon their vacation plans. Many will vacation closer to home, eat fewer meals in restaurants and escape for weekends at nearby regional resorts --- a growing number of which now offer indoor waterparks and family entertainment centers. Most Lucrative States for Hotel Investment Currently, the most lucrative states for hotel investment are Hawaii, New York and Massachusetts where hotel revenues are the highest in the nation. Alaska, Illinois, Arizona and Massachusetts had the biggest gains in revenues per available room. Hotel revenue per available room (RevPAR) is the
key indicator that takes into account supply, demand, occupancy, scarcity
and pricing.
RevPAR is a measure of asset productivity that often points developers to the most attractive locations for new construction, although many of these desirable locations also have high barriers to entry. Most Desirable Hotel Markets In 2006, the most desirable hotel markets, in terms of their ability to generate the highest revenues per available room are New York City, Oahu, Miami and San Francisco. The biggest gains were made by Chicago, San Francisco,
Boston and Los Angeles, which recorded double-digit hotel revenue growth.
USA Resort Performance Hawaii is the leading resort destination with 79.8%
occupancy (down 1.6% from last year) and $184 average room rate (up 11.2%
over last year). This compares to occupancy of 66.6% and average room rate
of $135 for all resorts in the USA.
Nevada, Florida, California and Arizona trail closely behind with occupancies of 71.9%, 65.8%, 69.5% and 67.0%, respectively. Colorado recorded the biggest gain in occupancy at 3.7% while Hawaii recorded the biggest decline in occupancy versus last year. The highest resort room prices were found in Hawaii at $184, California at $111, Florida at $109 and Nevada at $104. Hawaii recorded a price jump of more than 11% in 2006 compared to last year. Colorado, Minnesota and Wisconsin achieved statewide occupancy under the national average for all USA Resorts in both occupancy and average room rates. 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, forty-eight (48) new additions and expansion projects are expected to open by year end, bringing the total to 184 hotel waterpark resorts open and operating in the USA. Another forty-nine (49) projects are under construction
now or will break ground during 2007 which are scheduled to open in 2008
and beyond.
Clearly, hotel waterpark resorts are not a fad but here to stay. About 166 projects are in the development pipeline compared to 108 in 2006, 121 in 2005, 69 in 2004, 46 in 2003 and 19 in 2002. The waterpark sector of the resort industry has experienced annual growth of more than 30% over the last several years. But it is difficult to know how well hotel waterpark resorts perform financially as a group. Many of the larger independent properties do not report statistics to Smith Travel Research. Even the Wisconsin Dells Convention & Visitors Bureau collects little in the way of way of hotel waterpark resort performance data. The hotel owners keep their operating data fairly close to the vest. Great Wolf Resorts Inc is a public company and their operating data is available for all to see online in various SEC filings. Yet, two years ago, Great Wolf Resorts stopped reporting individual property data in favor of reporting same store comparisons, which effectively makes it more difficult for shareholders and other observers to determine how well individual hotels are performing. Regardless, Great Wolf Resorts performance is not necessarily the industry benchmark because they are being out-performed in several markets --- although they lead the industry in terms of multiple locations. As a result, the best operating performance data is in proprietary databases of a few consultants, appraisers and emerging management companies with multiple locations. In 2001 Hotel Waterpark Resort Research & Consulting was formed for the purpose of collecting, analyzing and publishing data regarding this growing segment of the resort industry. HWRRC is a collaborative effort of Jeff Coy of JLC Hospitality Consulting of Cave Creek AZ and Bill Haralson of William L. Haralson & Associates of Alto NM. Together the two consultants produce an Annual Industry Report, a Construction Report and several developer workshops, where they present their latest research and a variety of expert speakers. Wisconsin Dells Hotel Performance In 1990, before indoor waterparks, Wisconsin Dells ran a 40% annually hotel occupancy and had a 100-day peak season. Today, it has 18 hotels with indoor waterparks and has a 365-day peak season. The largest hotel waterpark resorts are running occupancies in the high 70s and low 80s --- 15 to 20 points above the national hotel average. In 2002, hotels WITH indoor waterparks achieved 26 points higher occupancy and $69 higher average room rates than hotels WITHOUT indoor waterparks in Wisconsin Dells. In 2004, we updated that research survey to determine the impact of 9/11, the economic recovery and what happened to the haves and have-nots in Wisconsin Dells over the last three years. Eighteen (18) hotels WITH indoor waterparks captured 85% of the total market hotel revenue in Wisconsin Dells while forty-four (44) hotels WITHOUT indoor waterparks were left with only 15% of the total market hotel revenue. As a result, we referred to Wisconsin Dells as "the land of haves and have-nots." In 2007, the top two hotel waterpark resorts achieved average room rates above $200. Hotels WITH indoor waterparks recorded average room rates that are 2X that of hotels WITHOUT indoor waterparks. And the average room rate trend over the last three years is getting higher for the haves and lower for the have-nots! The biggest properties are gaining market share while the smaller properties continue to lose market share. USA Competitive Supply of Hotel Waterparks One hundred and eighty-four (184) hotel indoor waterparks
are open and operating in the USA, including projects scheduled to open
in the final months of 2007. Here is a list of hotel waterpark resorts
that opened in the following states since 2001:
Here is a list of the hotel waterpark resorts added
to the supply in 2006:
Top 25 Largest Hotel Waterpark Resorts in the USA Hotels with the largest indoor waterparks are concentrated
in Wisconsin Dells WI but the trend is moving nationwide.
Profile of USA Hotel Waterpark Resorts by Number of Rooms Among the Top 5 largest resorts by room count, the
average number of hotel rooms is 896 with an indoor waterpark of 99,200
sf or 110 sf per guest room. Among the Top 5, this sizing ratio varies
from 30 sf per guest room for the Massanutten Resort to 280 sf per guest
room for the Wilderness Resort. The Top 5 resorts have an average of 7.2
waterslides, 2.0 pools and 1.8 hot tubs. All of them have one or more lazy
rivers, 80% have a wave pool and 40% have a water coaster. The Top 5 resorts
average 75,766 sf of meeting space and 42 meeting rooms. The Top 5 hotel
waterpark resorts in 2007 have more rooms, bigger waterparks, more water
features and more meeting space than the Top 5 resorts in 2006. Several
of the Top 5 have condos pre-sold to individuals that are part of the hotel
rental pool.
Among the next ten largest (Top 6-15) hotel waterpark resorts, the average number of rooms is 360 with an indoor waterpark of 54,000 sf or 150 sf per guest room. Among the top resorts ranked 16-25 by room count, the average number of rooms is 274 with an indoor waterpark of 37,179 sf or 135 sf per guest room. Using the chart above, the waterpark developer can estimate the size of his hotel, indoor waterpark and its components. Depending upon size, all hotel waterpark resorts average from 2-8 waterslides, 2-4 pools and 1-2 hot tubs. Almost all of the Top 25 Largest Hotel Waterpark Resorts have a lazy river while less than half of the smaller resorts have them. About 70% of the Top 5 Largest Hotel Waterpark Resorts have a wave pool and less than 10% of the smaller resorts have them. Wave pools, while very attractive to surfers, take up a lot of space for the smaller number of guests who can use them. However, they generate a lot of entertainment value for spectators, and ski resorts seem to love them. The Top 50 Largest Hotel Waterpark Resorts are clearly in the meetings & convention business to balance their seasonal and weekend-weekday mix of business. Profile of USA Hotel Waterpark Resorts by Size of Waterpark Hotels with the highest number of rooms don�t always have the largest waterparks. And vice versa. While there are many factors that determine sizing, a rule of thumb is the rooms to waterpark ratio. A direct relationship exists between the number of hotel rooms and the size of the indoor waterparks. For example, hotels with indoor waterparks more than
70,000 square feet average 453 rooms and 105,250 square feet of indoor
waterpark --- a ratio of 231 sf of waterpark per guest room. That ratio
decelerates as waterparks get smaller.
To illustrate, hotels with waterparks 40,000 to 49,999 sf average 346 rooms and 43,125 sf of indoor waterpark --- a ratio of 179 sf per guest room. Notice that hotels with about 100 rooms vary widely in the sizes of their indoor waterparks. Hotel owners and developers can use the chart above to help size their projects. Top Hotel Meeting Facilities with Indoor Waterparks in the USA Among the Top 15 Hotel Meeting Facilities with an indoor waterpark, the number of rooms varies from 100 to 738 and the meeting facilities vary from 25,000 to 125,000 square feet. Several of the largest hotel waterpark resorts are in the meetings & convention business. The 738-room Kalahari Resort & Convention Center in Wisconsin Dells WI is clearly the largest meeting facility (125,000 sf) with the largest indoor waterpark (125,000 sf). The 194-room Grand Harbor Resort in Dubuque IA, with
25,000 sf indoor waterpark, is connected to a 120,000 sf convention center
that it operates for the city.
The Kalahari Resort & Convention Center in Sandusky OH has 95,000 sf of meeting space with an 80,000 sf indoor waterpark with another 93,000 sf of indoor waterpark space under construction for opening in late 2007. These hotel waterpark resorts obviously target the individual leisure traveler segment. But these properties have the advantage of targeting another customer segment --- the group market --- to fill in hotel low periods and weekdays when kids are in school. Hotel waterpark resorts with substantial amounts of meeting space run higher annual occupancies than those with little or no meeting space. Emerging Multi-Unit Owners
Of 184 hotel waterparks forecast to be open by end of 2007, 85 are affiliated with a national hotel brand while 99 are independent. Brand names include AmericInn, Baymont, Best Western, Comfort Suites, Country Inn & Suites, Days Inn Hawthorn Suites, Hilton, Howard Johnson, Holiday Inn, Marriott, Microtel, Nickelodeon, Quality Inn, Ramada, Sleep Inn, Super 8 and Wingate. Whether or not to affiliate with a brand is a major issue in this product sector of the hotel industry. Properties in resort locations tend to be independent while properties in urban, suburban and highway locations tend to be franchised. We counted the Great Wolf Resorts as branded properties starting in 2005 as they are considered an emerging brand in the hotel waterpark resort industry. Great Wolf Resorts Inc signed a license agreement with Ripley�s Entertainment for its Great Wolf Lodge in Niagara Falls, Ontario --- which is a first step in becoming a franchisor in the hotel waterpark resort industry. We counted the two Kalahari Resorts as independents, although this familiar name is another emerging national brand as they seek their third location. Wave Development Inc of Milwaukee WI, in partnership with Sage Hospitality of Denver CO and Horizon Investments of Milwaukee WI, have created an emerging brand of indoor waterparks called CoCo Key Resorts in six locations that are open and two locations under construction. Of the eight locations, four are affiliated with Sheraton, one with Holiday Inn and one with Marriott. When indoor waterparks first emerged, developers had to educate the major hotel chains about the concept. Now two hotel chains, Marriott and Holiday Inn, are creating indoor waterpark prototypes. Marriott announced it would participate with Nickelodeon to build up to 20 specialty resorts using SpongeBob SquarePants to attract the family market. Holiday Inns (IHG) is working on prototypes for converting holidomes into indoor waterparks, adding new indoor waterparks to existing hotels and building a new brand of waterpark resorts. Recent Hotel Waterpark Resort Transactions Tundra Lodge Resort --- Joe Buralli of Waterpark H2Otels USA LLC of McHenry IL purchased the 161-room Tundra Lodge Resort & Waterpark in Green Bay WI from Lombardi Ave Waterpark LLC in February, 2007. Closing is expected within 90 days. The resort has a 20,000 sf indoor waterpark. The resort had under-performed due to lack of conference space. "You have to sell rooms every day, including Sunday through Thursday," according to Buralli who plans to add 10,000 sf of conference space. He said the amount of lost business due to have no conference space is staggering. Buralli said he will contract with FLG Hospitality of Columbus OH to manage the operation. Regarding a flag, Buralli said Wyndham Hotels & Resort is interested in adding the Tundra Lodge to its network, but no decision has been made to affiliate with a brand. Boyne USA --- In June 2007, Boyne USA purchased two ski resorts in Maine, Sunday River and Sugarloaf, from American Skiing Company for $77 million in cash. Closing is scheduled on or before July 31, 2007. Sunday River features 131 trails spread across eight interconnected peaks serviced by 18 lifts, including four high speed quads, two full-service fractional ownership hotels, a recently constructed Robert Trent Jones golf course and other four-season resort offerings. Sugarloaf USA boasts New England�s longest continuous vertical drop of 2,820 feet and only lift service above treeline skiing. The four season resort also features one fractionally-owned hotels, conference center and golf course. Headquartered in Michigan, Boyne USA is a privately held company that has interests in seven North American resorts, including Big Sky Resort in Montana; Boyne Mountain, Boyne Highlands and Bay Harbor in Michigan; Brighton in Utah, Crystal Mountain in Washington and Cypress Mountain in British Columbia, Canada. Boyne Mountain Ski Resort in Boyne Falls MI opened Mountain Grand Lodge, its 200-unit condo hotel and 57,000 sf indoor waterpark, Avalanche Bay, in May 2005 --- as part of their strategy to become a four-season resort. Could a indoor waterpark at a ski resort in Maine be far behind? The Depot Hotel & Waterpark --- The Courtyard by Marriott at the Depot in downtown Minneapolis is under-going a multi-million dollar renovation, after which it will convert to Marriott�s more upscale Renaissance brand. The hotel has had somewhat of an identity crisis since it opened in 2000. "The downtown location draws business travelers during the week while the indoor skating rink and 10,000 sf indoor waterpark attracts families on the weekend," according Robb Hall, managing director. The owner, Minneapolis- based CSM Lodging, decided to switch to the full-service Renaissance flag in response to customer requests for more amenities. The hotel will add a business center, a conference room for teleconferencing, individual wireless work stations and a club room for frequent travelers. In mid May 2007, the hotel officially became The Depot, a Renaissance Hotel by Marriott. Mt Olympus --- In March 2007, owners of Mt Olympus Water and Theme Park in Wisconsin Dells purchased the neighboring Treasure Island Resort and related properties that will be incorporated into a single Greek-themed entertainment complex. The purchase included Treasure Island, Captain�s Quarters and Pleasant View lodging properties along with Bay of Dreams indoor waterpark and the former Family Land Outdoor Waterpark properties from Jim Mattei. All of the properties have been acquired by the sole proprietors of Mt Olympus, Nick and Eva Laskaris. All the properties will be renamed and upgraded to reflect the Greco-Roman theme. The 156-acre Mt Olympus Water and Theme Park was created with the 2004 merger of Treasure Island and Family Land with a neighboring theme park that was co-owned Matei and the Laskarises. Hotel Waterpark Resorts Opening in 2007 Twenty-two (22) hotel waterpark projects opened during
the first half of 2007 with another twenty-six (26) scheduled to open in
the second half of this year.
Canadian Supply of Hotel Waterparks In Canada, we have identified 114 hotel indoor waterparks that are open and operating in 2007. Most are located in the western provinces. World Waterpark at the West Edmonton Mall in Alberta is the largest indoor waterpark in the world. The Mall is the largest shopping center in the world, according the Guinness Book of World Records. The Fantasyland Hotel at West Edmonton Mall was built
in 1986 with 355 rooms. Technically, the Fantasyland Hotel is not a hotel
waterpark, but it is closely connected. You can walk from the hotel through
the mall to the 217,800 sf World Waterpark without going outside. So, the
largest hotel in Canada associated with an indoor waterpark is the Fantasyland
Hotel in West Edmonton.
In Canada, hotel waterparks are different than in the USA. Many are really indoor pools that have been enlarged and enhanced with waterslides and water playthings. Many of the indoor waterparks in Canada are under 10,000 sf while many in the USA are over 10,000 sf. Top 15 Canadian Hotel Waterparks by Size of Waterpark While the 217,800 sf World Waterpark is not really
a hotel waterpark, it is situated very closely to hotel rooms located at
the West Edmonton Mall. And the 355-room Fantasyland Hotel is part of that
same mall --- making a connection between the hotel and the waterpark.
The second largest hotel waterpark in Canada is the Americana Resort & Conference Center, which opened its 19,100 sf indoor waterpark in 2004 --- attached to its 160 guest rooms and 16,000 sf conference center in Niagara Falls ON. Third largest is Travelodge World Hotel in Ottawa, which also opened its 13,000 sf indoor waterpark in 2004 --- connecting with its 177 guest rooms. In Canada, the biggest concentration of hotel indoor waterparks is in the Economy Hotel sector, where room counts are typically under 100 rooms and indoor waterparks are less than 5,000 sf. Mexican Supply of Hotel Waterpark Resorts While most waterparks in Mexico tend to be outdoor waterparks, we have identified a few that are indoor-outdoor combinations and onsite, adjacent or nearby lodging that would tend classify them as hotel waterpark resorts. We are in the process of surveying owners, consultants
and suppliers in Mexico to gather more data and develop a better profile
of hotel waterpark resorts in Mexico.
What�s Ahead for the Hotel Waterpark Resort Industry? Based on our review of consumer behavior, lifestyle changes and travel trends, here are 17 Predictions on the Future of Resort Development:
Lots of Capital Looking for Hotels Investors continue their hunger for hotels, according to a recent report by Jones Lang LaSalle. Five major public hotel companies went private in 2006. In January 2007, Morgan Stanley Real Estate spent $6.6 billion to acquire CNL Hotels & Resorts, an unlisted REIT that owns a share of two Great Wolf Lodge waterparks in Wisconsin Dells and Sandusky OH. Contributing to the frenzy for hotel assets are low interest rates, strong industry performance, a glut of capital and smaller returns in other types of real estate. Lodging demand is expected to remain ahead of the rising hotel room supply pipeline Construction Growth Forecasts Construction of office building, hospitals, hotels and other non-residential buildings will increase almost 7% in 2007, driven by growth in the economy, compared to growth of almost 6% in 2006, according to the American Institute of Architects in January. If this forecast holds true, 2006 and 2007 will be the best two-year period for construction since the late 1990s. Hotels are expected to show the biggest increase in construction, with a growth rate of 13.1%. Amusement park and recreation properties are next with 9.9% growth, followed by office buildings at 9%. Coming soon: Hotel Waterpark Resorts Construction Report 2007. For more information regarding feasibility, supply and demand, contact Jeff Coy at 480-488-3382. Coy heads JLC Hospitality Consulting of Cave Creek AZ. Email [email protected] or go to www.jeffcoy.com. Or contact Bill Haralson at 505-802-1522. Haralson heads William L. Haralson & Associates of Alto NM. Email [email protected] or go to www.wlha-inc.com. |
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