Indoor Waterpark Resorts: Franchise vs. Independent

 by: David J. Sangree, MAI, CPA, ISHC (Contact David) and Mohi Monem

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.  As this segment continues to gain momentum, no national hotel franchises have identified this niche. 

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% have franchise affiliation.  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 indoor waterpark resort with the largest indoor waterpark, has 150,000 square feet of waterpark space and is located in 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 this date hotel companies, investors, and developers have not fully explored the potentials and benefits of indoor waterpark resorts affiliated with a national hotel franchise.  Usually, in non-franchised indoor waterpark resorts, more emphasis is given to the waterpark facilities than the guest rooms.  Even though the non-franchise resort can benefit from offering a wider variety of indoor waterpark facility, it lacks 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.  Even though the franchised resort can benefit from a central reservation system, franchise recognition and corporate marketing; smaller indoor waterpark facilities limit the potential improvement in occupancy and average daily rate. 

Largest Developer

The Great Lakes Companies Inc. currently owns two indoor waterpark resorts in Wisconsin Dells, WI (Great Wolf Lodge) and Sandusky, OH (Gear Bear Lodge).  In 2003, two Great Wolf Lodge Resorts will open in the following locations: 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 as the most recognizable national indoor waterpark resort chain in the United States. 

Under Construction 

The following table indicates those indoor waterpark resorts which are currently under construction. 

The table indicates that there are currently five major indoor waterpark resorts under construction or just opened in the United States, all of which are located in northern states.  Amongst these resorts, Arrowwood Resort in Alexandria, MN is the only existing property adding an indoor waterpark on site.  The Splash Lagoon has the existing 82-room Holiday Inn Express & Suites and 78-suite Residence Inn attached to the indoor waterpark.  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.    Indoor waterpark resorts which are proposed or in planning are located in the following states: Wisconsin, Illinois, Missouri, Pennsylvania, Virginia, New York, Kentucky, and Texas. 

Conclusion

Historically, a majority of the indoor waterpark resorts were located in existing tourist destinations such as the Wisconsin Dells or Sandusky.  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. 

David J. Sangree, MAI, CPA, ISHC, a member of the International Society of Hospitality Consultants (www.ishc.com), is Director of Hospitality Consulting and a Principal with US Realty Consultants in Cleveland, Ohio (www.usrc.com).  He can be reached at 216-221-9191 or at dsangree@usrc.com.