February 12, 2008
by David J. Sangree, MAI, CPA, ISHC, published by Hotel Online
Summary: The year-end survey of indoor waterpark resorts in the U.S. and Canada by Hotel & Leisure Advisors, LLC (H&LA) indicates that the number of indoor waterpark destination resorts has grown steadily since 2005. There were 30 available properties as of year-end 2005, compared to 43 available properties as of year-end 2006, and 49 available properties as of year-end 2007. The majority of the destination resorts are independent properties not affiliated with a national hotel franchise.
In 2008, 15 destination waterpark additions to existing hotels or new construction properties are projected to open, all of which meet our definition of indoor waterpark destination resorts. Additional resorts are currently in development and likely to begin construction in 2008. As of February 2008, we are tracking 303 new indoor waterpark destination resort development projects and smaller hotel with indoor waterpark development projects incorporating both additions to existing hotels and new construction projects.
As of the date of this report, the Great Wolf Lodge brand offers the greatest number of indoor waterpark destination resorts in the United States and Canada and also has the greatest number of new resort properties under construction. Furthermore, Wisconsin Dells, Wisconsin, where indoor waterparks were first introduced, remains the destination with the most indoor waterparks. There are currently six indoor waterpark destination resorts and 10 smaller hotels with indoor waterparks in Wisconsin Dells.
Definition: An indoor waterpark resort is defined by H&LA 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 should be categorized as properties with water features rather than as waterparks. H&LA has divided indoor waterpark resorts into two categories: hotel with indoor waterpark and indoor waterpark destination resort. A hotel with indoor waterpark is a hotel with an attached indoor waterpark with 10,000 to 30,000 square feet of indoor waterpark space where the indoor waterpark serves as an amenity of the hotel versus a true destination. An indoor waterpark destination resort is a resort with 30,000 square feet or more of indoor waterpark space and is considered a true destination resort, which families visit on a year round basis primarily to visit the waterpark and secondarily to visit other attractions or events in the area. An indoor waterpark destination resort will typically have a number of rides and pools and high quality theming. A hotel with a smaller indoor waterpark may offer only a few rides and pools and little or no theming.
The following table indicates H&LA’s definition of the three types of indoor waterparks, which currently exist and are being developed in the United States and Canada.
Existing Supply: We have conducted a survey concerning the number of indoor waterpark destination resorts which were open as of year-end 2007 and those which are projected to open in 2008. The following table indicates the existing supply of indoor waterpark destination resorts as of January 2008. It should be noted that the figures used for the waterpark square footage indicate the net indoor waterpark area which excludes areas such as the arcade, gift shop, mechanical rooms, etc. For advertising purposes, some resorts indicate higher figures by including these additional spaces.
The table indicates the existing supply of indoor waterpark destination resorts. The chart indicates a number of trends. For example, the vast majority of indoor waterpark destination resorts are independent properties not affiliated with a national hotel franchise. Furthermore, the chart indicates that the Great Wolf Lodge brand is the ownership group and brand with the most indoor waterpark destination resorts, offering nine properties in the United States and Canada.
The number of indoor waterpark destination resorts grew by six new properties in 2007. In addition, six existing properties made additions to their facilities of either indoor waterpark space or new guest rooms. The largest new developments included the following:
Kalahari Resort opened a 93,000 square foot expansion to its indoor waterpark in Sandusky, Ohio, to create a 173,000 square foot indoor waterpark in late 2007. The resort added 288 additional keys in 96 hotel condominium units as an expansion to its 596-room resort. This resort now features the largest single-building indoor waterpark in the United States.
Great Wolf Lodge opened the 402-room Great Wolf Lodge in Grapevine, Texas across from the Gaylord Texan Resort in late 2007. The resort features a 75,000 square foot indoor waterpark. The resort has begun construction on a 203-room expansion along with a new conference center with approximately 30,000 square feet which will open by year-end 2008.
CoCo Key Waterparks opened two new waterparks in 2007 with additions to the Sheraton Ferncroft in Danvers, Massachusetts and the Sheraton Hotel in Sharonville, Ohio. The Danvers location offers 45,000 square feet of waterpark while the Sharonville location features 35,000 square feet. They also added an indoor waterpark with 25,000 square feet to the Best Western Clocktower in Rockford, Illinois.
2008 Openings: We have researched the 2008 projected openings of indoor waterpark destination resorts. The following table indicates those properties which we expect to open in 2008.
The number of projected destination resort openings in 2008 is higher than those that were projected to open in 2007. The openings projected for 2008 are well below the interest level by developers due to the current challenges of finding financing and investors for these entertainment-related projects. Of the properties projected to open in 2008, five properties are entirely new construction facilities while the remaining ten represent additions to existing hotels or additions to existing indoor waterpark destination resorts. The Great Wolf Lodge in Grand Mound, Washington, and the Key Lime Cove Resort in Gurnee, Illinois represent the two largest properties to open in 2008. Both properties will feature multiple restaurants and gift shops, spas, larger indoor water park areas, and themed guest rooms.
The Silver Mountain Resort, the Great Adventure Water Resort, the Red Jacket Inn, the Maui Sands at the existing Holiday Inn Express, and the Resort at Split Rock represent waterpark additions to existing properties. The additional CoCo Key Indoor Waterpark properties, located in Waterbury, Connecticut; Kansas City, Missouri; and Mt. Laurel, New Jersey are being developed by a partnership led by Sage Hospitality and Wave Development. Sage has five existing CoCo Key properties and is due to have a total of eight properties nationwide by the end of 2008. All of their properties are branded hotels where an indoor waterpark was added to the property.
In addition to the 15 destination resorts listed above, we are also tracking 12 new construction hotels with smaller indoor waterparks or additions of indoor waterparks smaller than 30,000 square feet which are due to open in 2008. Additionally, we are tracking 303 proposals for new indoor waterpark resorts or indoor waterpark additions to existing properties which include the properties opening in 2008. Many of these proposals are in the planning stages and have not yet begun construction. H&LA projects continued growth in supply in 2009 and 2010 as additional projects begin construction.
Indoor waterpark resorts have emerged as a leisure option for families looking for a convenient weekend getaway or vacation. Historically, the indoor waterpark resorts were located in the Wisconsin Dells region, but growth continues throughout the United States. We project continued development of indoor waterpark resorts in the northern United States because they offer an attractive year-round leisure opportunity for families and attractive investment returns for developers. There has been substantial growth in supply in the waterpark segment, and saturation of the market could become an issue in the future. Therefore, we recommend a thorough feasibility analysis be performed for projects to ensure that the project’s return on investment is adequate for the development.
This article was originally published by Hotel Online.