Indoor Waterpark Resorts: Continued Growth
by: David J. Sangree, MAI, CPA, ISHC (Contact David)
The popularity of indoor waterpark resorts continues to turn heads in the hospitality industry as their growth spreads beyond the Wisconsin Dells into other northern states. These resorts offer a themed destination for family travelers and extensive water-based activities for children and adults in their waterparks. The growth in demand for the indoor waterpark resorts parallels changes in American culture in which more families want to spend increased time with their children including family vacations. As this segment continues to gain momentum, the primary growth is occurring through independent themed indoor waterpark resorts rather than from national hotel franchises.
Franchise Affiliation
Of all the indoor waterpark resorts in the United States with at least 10,000 square feet of indoor waterpark space only 28% are affiliated with a national franchise. The following table summarizes the results of our franchised vs. non-franchised hotel analysis of indoor waterpark resorts. We define an indoor waterpark resort as a hotel facility connected to an indoor waterpark with a minimum of 10,000 square feet of indoor waterpark space inclusive of amenities such as slides and tubes. Numerous hotels with large swimming pools are claiming to have an indoor waterpark; however, our definition of a 10,000 square foot minimum waterpark space restricts the use of resort to those facilities which have a variety of slides, pools, and tubes.
Currently Wilderness Resort & Golf, the resort with the largest indoor waterpark, has 150,000 square feet of waterpark space and is located in the Wisconsin Dells. The average room count for franchised hotels is higher due to high room counts in indoor waterpark resorts such as the 730-room Hilton Milwaukee and the indoor waterpark combined with the 357-room Courtyard and Residence Inn Depot in Minneapolis. The indoor waterpark average square footage of franchised resorts is significantly less than the non-franchised resorts. Historically, compared to standard hotels, indoor waterpark resorts have experienced higher occupancies in their respective markets. However, to date investors and developers have indicated a preference for independent resorts which are not affiliated with a national hotel franchise. Usually in non-franchised indoor waterpark resorts more emphasis is given to a particular theme and to the waterpark facilities. Even though the non-franchised resorts can benefit from offering a wider variety of indoor waterpark facilities and themes, they lack the benefits of a central reservation system and franchise recognition. In a franchised resort, an indoor waterpark facility is normally considered an additional amenity for guests; which is the main reason why the average indoor waterpark square footage is lower for such resorts.
Reasons
for Success
Indoor waterpark resorts achieve strong success particularly during school vacations including winter and spring breaks, summer break, and weekends. The resorts appeal to all children but particularly those up to age 14. The room rates at many of the larger indoor waterpark resorts range from $150 to $475 per night with the rate allowing access for four to six people to the indoor waterpark which otherwise would have an admission price of between $15 and $30 per person per day. The room rate typically includes admission on the day of arrival and the day of departure. Occupancy levels for the indoor waterpark resorts exceed their traditional hotel competitors due to their popularity during the winter. The reasons for this premium performance include:
- Year-round destination resorts
- Elimination of weather-related vacation risks
- Wide appeal of water-based recreation
- Increasing demand for short drive-to getaway vacations
- Themes with varying levels of appeal
- Convenient location proximate to customer base and within established family vacation market.
Largest Developer
The Great Lakes Companies Inc. currently owns two indoor waterpark resorts in Wisconsin Dells, WI (Great Wolf Lodge) and Sandusky, OH (Great Bear Lodge). In 2003, two Great Wolf Lodge Resorts will open in Traverse City, MI and Kansas City, KS, with additional resorts planned for Niagara Falls, Ontario, Poconos, PA, Sheboygan, WI, and Williamsburg, VA. This will make Great Lakes Companies Inc. the biggest indoor waterpark ownership company and make Great Wolf Lodge the most recognizable national indoor waterpark resort chain in the United States. However, the Great Lakes Companies do not franchise their concept.
Under Construction
The following table indicates indoor waterpark resorts which are currently under construction.
The table indicates that there are currently five major indoor waterpark resorts opening in 2003 in the United States, all of which are located in northern states. The Splash Lagoon indoor waterpark resort opened in Erie, Pennsylvania in late February, 2003. This facility has an elaborately themed indoor waterpark connected to the existing 82-room Holiday Inn Express & Suites and the 78-suite Residence Inn. Among the new resorts, Arrowwood Resort in Alexandria, MN is the only existing property adding an indoor waterpark on site. Most indoor waterpark resorts that are currently operational, under construction, and proposed are currently located in northern states due to a shorter summer season.
In addition, there are a number of indoor waterpark resorts known to be in the planning stages in a variety of northern locations including Kentucky, Illinois, Michigan, Missouri, New York, Ontario, Pennsylvania, Texas, Virginia, and Wisconsin. The success of a new indoor waterpark resort requires extensive feasibility analysis to determine the depth of potential demand from families and the competition from other leisure attractions.
Conclusion
Historically, a majority of the indoor waterpark resorts were located in existing tourist destinations such as the Wisconsin Dells or Sandusky, Ohio. With the success of the indoor waterpark resort concept, more resorts are being planned in locations where the resort itself will be the area’s biggest attraction. Indoor waterpark resorts have emerged as a leisure destination for families looking for a convenient and affordable weekend getaway or vacation. 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.