Every waterpark or waterpark resort starts the same way — with a vision. Maybe a developer sees an underserved market, a hospitality group is chasing a new revenue stream, or a municipality dreams of an economic catalyst or a destination for its region. Whatever the origin, that vision quickly collides with a hard truth: ambition alone doesn’t secure financing, and enthusiasm does not guarantee returns. Before a single shovel breaks ground on a new indoor or outdoor waterpark, whether part of a resort or a standalone attraction, developers must first answer the question that lenders and investors will inevitably ask: can this project actually pay for itself? That answer requires more than optimism. Mortgage lenders and investors typically require a third-party feasibility study conducted by experts who specialize in analyzing waterpark and hotel developments, which is a critical analysis that evaluates whether the project will generate enough revenue, once built and operational, to justify its development costs.

Feasibility studies examine projected revenues, operating expenses, and net income to assess long-term value. They also account for current market conditions, including economic downturns, and forecast both market recovery and post-opening performance.

This article outlines the key elements of a waterpark feasibility study – highlighting both the universal and project-type-specific factors that can determine the likelihood of success.

Hotel & Leisure Advisors defines waterparks as follows:

• An outdoor waterpark is a facility offering three or more waterslides and other aquatic facilities.
• An indoor waterpark resort is a lodging establishment containing an indoor aquatic facility with a minimum of 10,000 square feet of indoor waterpark space inclusive of amenities such as slides, tubes, and a variety of indoor water play features.
• A standalone indoor waterpark is an aquatic center without an attached hotel, having a minimum of 10,000 square feet, inclusive of amenities such as slides, tubes, and a variety of indoor water play features.
• A resort hotel with outdoor waterpark is a hotel with three or more water play features, such as slides, lazy rivers, or wave pools that require lifeguards.

MAJOR COMPONENTS OF A FEASIBILITY STUDY

The following major components are essential to a market feasibility and financial analysis study for an indoor waterpark resort or outdoor waterpark project:

1. Area, Demographic, and Neighborhood Analysis
2. Site Review
3. Proposed Development of Recommendations and Costs
4. Market Analysis
5. Proposed Development of Usage and Pricing Analysis
6. Financial Analysis
7. Feasibility Analysis
8. Comparison of Value Created to Projected Costs

1. AREA, DEMOGRAPHIC, AND NEIGHBORHOOD ANALYSIS

A strong understanding of the local market is essential when planning a waterpark, which begins with a detailed area, demographic, and neighborhood analysis. This portion of the feasibility study evaluates the economic and social forces that influence a project’s success, focusing on who lives nearby, how they spend their time and money, and what attractions already draw visitors to the area.

The area analysis examines the broader environment, including population trends, income levels, employment statistics, and local economic drivers like major employers or tourist attractions. Key topics include:

• Population trends
  • How many people live in the area, and is the population growing or declining?

• Household growth
  • What’s the average household size, and how many children are typically present? (Since waterparks cater heavily to families, understanding the local child population is key.)

• Household economics
  • What’s the area’s unemployment rate?
  • What is the median household income?
  • How much discretionary spending power do local families have?

• Local economy
  • What major companies are nearby?
  • Are there established or emerging tourist attractions in the area?
  • Are any key demand drivers entering or exiting the market?

• Transportation access
  • How easy is it to reach the site by road, rail, or air, and how does that compare to competing destinations?

Additionally, a neighborhood analysis evaluates the surrounding real estate. Successful waterparks are often located near other popular destinations, such as retail centers, resorts, or beaches, which attract a mix of residents and tourists. Indoor waterpark resorts tend to thrive near major tourist attractions, while outdoor parks perform best in areas with a balance of local and visitor traffic.

Markets with growing family households and rising discretionary income consistently outperform projections. These demographic tailwinds matter as much as the waterpark’s size and amenities.

2. SITE REVIEW

The site review is a critical step in evaluating whether a location is suitable for a waterpark. This analysis looks at key factors like parcel size, access and visibility, terrain, and utility availability, all of which play a major role in project feasibility.

Location matters, particularly for attracting leisure guests who value easy access. Sites near major highways are especially desirable. To gauge market potential, our team typically analyzes the number of youth and adults living within 30-, 60-, 90-, 120-, and 180-mile (or minute) drive times from the proposed site. These figures are then compared to benchmarks from other successful waterparks across the country to determine whether the surrounding population base is large enough to support the development.

The following are some questions the study should answer:

• Drive time demographics
  • What are the population and household income levels within various drive times, and how do they compare with locations such as Wisconsin Dells, Sandusky, Poconos, Orlando, or other established waterpark markets?

• Site
  • Is the site large enough to support the planned waterpark project?
  • Is there room for future expansion?

• Amenities
  • Are there nearby amenities that would complement the proposed project?

• Governmental impacts
  • How do the subject’s ad valorem taxes, zoning, sales history, governmental restrictions, environmental regulations, and other factors affect the subject property?

A site that looks good on a map can still fail the drive-time test. Population density within 60 minutes is often the single most predictive variable in our models.

3. PROPOSED DEVELOPMENT OF RECOMMENDATIONS AND COSTS

As part of the feasibility study, the consultant should carefully evaluate the proposed development plans, including the scope of the project and estimated costs. Some clients come to the table with detailed plans, which the consultant reviews to suggest enhancements or necessary adjustments. Others rely on the consultant to recommend the full scope of the project based on thorough market research.

For outdoor waterparks, recommendations typically include the park’s overall size, ride and attraction mix, food and beverage venues, gift shop and arcade size, and any dry attractions or supporting amenities.

Indoor waterpark resorts receive a more comprehensive set of recommendations, covering everything from the number of guestrooms and size of the indoor waterpark to dining outlets, lounges, meeting space, spa facilities, family entertainment centers (FECs), and other guest amenities.

Cost estimates can be developed using benchmarks from similar projects or in coordination with architects and engineers who provide more formal projections. Considerations include:

• Physical plant information
  • Have any architectural plans been developed by the client?
• Facility size
  • What is the ideal square footage for the property?
  • How many rides and attractions should the waterpark offer?
  • How many guestrooms should the hotel offer?
  • How many food and beverage outlets should be developed within the hotel and waterpark?
  • What is the design day size and capacity for the park?

• Branding
  • For an indoor waterpark resort, should the hotel have a franchise affiliation?

• Theme
  • What kind of theme will create the most excitement and appeal for your target audience?
  • How immersive and detailed should the theming be to enhance the guest experience and support the brand?

Scope creep can be the quiet killer of waterpark feasibility. Getting the ride count and footprint right early prevents costly redesigns once construction costs come in.

1. MARKET ANALYSIS

A detailed market analysis is a cornerstone of any successful waterpark feasibility study. Whether you’re planning an indoor waterpark resort or an outdoor waterpark, understanding the surrounding hotel and attraction landscape is crucial – because the financial projections for the project will hinge on this data.

Indoor waterpark resorts typically draw a higher percentage of overnight guests, with some local visitation. In contrast, outdoor waterparks tend to attract a primarily local audience, supplemented by some regional tourists.

Hotel Market Analysis

For indoor resort projects, our consultants closely examine key hotel performance indicators such as occupancy, average daily rate (ADR), and revenue per available room (RevPAR). This is typically supported by STR reports and interviews with managers of competing hotels to get real-time insights into the local hospitality market. The consultant also identifies new hotels in the pipeline that could compete with the proposed resort. For outdoor waterparks, the analysis includes hotel performance, but with less emphasis on overnight visitation and more focus on capturing local demand.

The following factors are critical to the market analysis:

• Hotel competitors
  • How many existing competitors are in the market and to what degree are they competitive in terms of amenity offerings, affordability, etc.?
  • How have they performed in past years in terms of occupancy, ADR, and RevPAR?

• Indoor waterpark resort competitors
  • What indoor waterpark resorts exist within the region, and what are their occupancy, ADR, RevPAR, and waterpark attendance performance?

• Demographic analysis
  • How many indoor waterpark resort rooms exist within a reasonable drive of the proposed subject on a per household basis compared to competitive locations?

• Recent hotel openings
  • How many hotels have opened in recent years, and how have they impacted the market?

• Potential hotel openings
  • How many hotel projects are in the works?
  • What types of hotels will they be?
  • How many rooms will they have?
  • What is their projected impact on the current supply and demand in the market?

• Market segmentation and market penetration
  • What is the market segmentation and penetration of each competitor in the market?
  • The consultant reviews all market segments but gives special attention to the leisure market. Hotels in the area that garner the largest share of the leisure market will be the subject property’s main competitors.

• Projections
  • Based on the current market situation, is the subject likely to perform well in terms of occupancy, ADR, and RevPAR?
  • What are its potential penetration rates and market segmentation?
  • Synthesize the data and project the performance potential for the subject property.

Waterpark Resort Market

Analyzing attendance and pricing at comparable indoor and outdoor waterparks is a critical part of determining a new project’s potential. To build a clear picture, the consultant researches a wide range of published sources and conducts direct interviews with waterpark operators to gather data on visitor numbers, average ticket prices, and overall revenues.

Since waterparks are not tracked by an industry-standard source like STR for hotels, access to reliable data can be a challenge – many operators are reluctant to share performance figures. However, our firm maintains a robust, proprietary database of waterpark performance metrics collected over time, giving us a valuable edge in benchmarking and forecasting. New phone tracking software from companies such as Placer.ai provide indications of attendance at various attractions in the United States. Key considerations during this analysis include:

• Existing and potential competitors
  • How many indoor and outdoor waterparks are in the area?
  • How many are proposed?

• Attendance
  • How are existing waterparks performing in terms of attendance and usage?
  • How many days per year are they open?
  • What is the seasonality, including attendance by month and by day?

• Demographics
  • What is the population for a 20-, 40-, and 60-minute drive around each competitor on a per attendee basis compared to the subject site?

• Amenities of competitors
  • To what degree will existing and potential waterparks be competitive in terms of size, amenities, pricing, theming, etc.?

• Waterpark pricing
  • What are the rack rates for competitive waterparks?
  • What is the average ticket price per attendee at the competitive properties?
  • For an indoor waterpark resort, the focus should be on other indoor waterparks attached to hotels.
  • For an outdoor waterpark, the focus should be on existing outdoor waterparks.

The leisure segment is where deals are won or lost. Hotels that dominate leisure demand in a market are your real competition, not just other waterparks.

5. PROPOSED DEVELOPMENT OF USAGE AND PRICING ANALYSIS

Indoor Waterpark Resorts

At indoor waterpark resorts, hotel performance is the primary engine driving overall success. To estimate how the hotel will perform, the feasibility study projects key metrics such as the number of occupied rooms, average daily rate (ADR), and guest usage levels.

A detailed supply and demand model is used to evaluate the market’s historical performance and to forecast how the proposed resort is likely to perform. This analysis also includes estimating the number of day pass users by comparing the expected volume of overnight guests to the waterpark’s overall capacity for non-hotel visitors.

The following are key questions to consider during this process:

• Occupancy and ADR
  • What is the historical and projected performance of the competitive set of hotels in the market?
  • How will the subject property penetrate the existing demand in the commercial, group, and leisure segments?
  • What is the projected ADR by segment?
  • Does the projected ADR include usage of the waterpark?

• Demand
  • What is the projected performance of the subject property?
  • How plentiful are demand generators in the area?
  • What is the regional population of families with children who might visit the waterpark resort?

• Day passes
  • Will the subject offer day passes?
  • Indoor waterpark resorts are split between those that allow for day passes and those that require guests to stay overnight.

• Projections
  • How many waterpark visitors can the property expect, and will these visitors come from the subject hotel, nearby hotels, or will they be residents or day pass users?
• Pricing
  • What is the optimal waterpark admission charge for non-overnight guests?

Outdoor Waterparks

For outdoor waterparks, two of the most critical figures to estimate are total attendance and average ticket price. These numbers can vary widely based on factors like location, amenities, ride mix, park size, climate, and the strength of marketing efforts. The feasibility study carefully examines each of these elements to provide realistic projections.

Ticket pricing is especially nuanced. Municipal waterparks, which are often subsidized by taxpayers and do not carry debt, can afford to charge lower admission fees. In contrast, privately owned parks typically aim for higher pricing to cover development costs and deliver a return to investors

As you evaluate these factors, consider the following key questions:

• Usage
  • What are the historical and projected usage levels and pricing of waterparks and amusement parks within the region?
  • What is the projected attendance by month and by day at the comparable properties?
• Facilities
  • How do the subject property’s proposed facilities, location, and size compare to the other properties?

• Population
  • What is the population base within a 30- to 90-minute drive radius around the subject property?
  • How many youths are in the area who would potentially utilize the proposed waterpark?

• Pricing
  • What should the pricing be for season passes and day passes?

• Projections
  • What type of attendance levels will the subject achieve for the first five years of the analysis?
  • What pricing levels are reasonable considering the attendance levels?
  • What will be the attendance per month and per day for the subject property?

• Climate
  • How many days per year are over 80 degrees Fahrenheit?
  • How many rainy days typically occur during the season?
  • How long is the operating season?

Outdoor waterparks almost always underestimate seasonality risk. A realistic attendance curve by month is more valuable than an optimistic annual total.

6. FINANCIAL ANALYSIS

The financial analysis is a vital part of the feasibility study – it determines how well the proposed waterpark can generate income and delivers detailed financial projections for its future performance. This process involves comparing the project’s scope and features to similar properties, both locally and nationwide, while factoring in current industry trends and standards. The financial analysis typically unfolds as follows:

• Estimate Gross Revenue: We start by projecting potential revenue, drawing on any available operating history of the site, comparable property data, and national benchmarks. This helps set realistic expectations based on similar projects.
• Evaluate Expenses: We break down all major cost categories – departmental, undistributed, and fixed. Staffing and labor, in particular, are significant operating costs for both indoor and outdoor waterparks and must be carefully assessed.
• Forecast Net Operating Income: We project the property’s net cash flow before debt service over a reasonable holding period to gauge long-term profitability.

Labor is the expense category that most often surprises developers. Staffing a waterpark is structurally different from a typical hotel.

7. FEASIBILITY ANALYSIS

The economic value of an indoor or outdoor waterpark is determined through a discounted cash flow (DCF) analysis, a widely used approach in formal appraisals. This method takes the property’s projected net income before debt service and applies a discount rate and terminal capitalization rate to arrive at its overall valuation.

The discount rate reflects the average annual return investors expect based on the project’s risk and investment profile. Meanwhile, the terminal capitalization rate estimates the property’s potential sale price by applying a rate to future net income.

For illustrative purposes, following is an example of a DCF analysis for a 500-room indoor waterpark resort, showing how these financial principles come together to define value.

The discount rate is where risk gets priced in. A project that pencils at 9% may not work at 11%. In fact, small changes here swing value by tens of millions.

8. COMPARISON OF VALUE CREATED TO PROJECTED COSTS

The purpose of any feasibility study is to determine whether the projected value measures up to or surpasses the development costs of the proposed project. A strong feasibility study does not just crunch numbers; it presents a clear picture of the potential value created after carefully analyzing all the factors that influence success.

As is sometimes the case, detailed construction costs are not yet available, so the final feasibility conclusion can only be determined after estimates from architects and contractors are considered. However, when cost estimates are on hand, the study directly compares those costs to the projected value to determine feasibility.

The most attractive projects and the ones that have the most appeal for investors are those where the value created exceeds development costs. However, if the numbers fall short, projects can still move forward with support such as municipal incentives, tax abatements or infrastructure assistance that improve financial outlooks or reduce upfront expenses.

When value falls short of cost, the project is not necessarily dead. Municipal incentives and tax abatements have saved more than a few otherwise marginal deals.

CONCLUSION

Feasibility studies for indoor and outdoor waterparks demand specialized expertise that goes beyond typical commercial real estate analysis. Both require deep dives into market dynamics, economic and demographic trends, and visitation patterns. Indoor waterpark resort studies focus more on hotel and resort markets, while outdoor waterpark studies emphasize waterpark and amusement park trends. Both rely on comprehensive financial modeling covering revenue streams and expense categories.

That vision a developer starts with doesn’t have to remain a dream. But turning it into a fundable, buildable reality requires the kind of rigorous, expert-driven analysis that a thorough feasibility study provides. The eight steps outlined here aren’t obstacles to development; they’re the foundation it stands on.

Author: David J. Sangree, MAI, CPA, ISHC is President and Founder of Hotel & Leisure Advisors, an international hospitality consulting firm. David is a graduate of the Cornell University’s School of Hotel Administration and an MAI designated appraiser with the Appraisal Institute. In addition, he is a member of the International Society of Hospitality Consultants and is a Certified Public Accountant. As an expert in the hospitality and leisure field, David analyzes hotels, resorts, waterparks, amusement parks, conference centers, ski resorts, casinos, and golf courses.

David is an expert in the waterpark and attractions industry, having completed over 1,000 studies of various waterparks and attractions since 1999. Recognizing David as an industry leader, Aquatics International named him to their “Power 25” list of the most powerful people in the aquatics industry in 2008 and 2019, and the World Waterpark Association honored him with induction into their Hall of Fame in 2022, and with their Executive Board Award in 2016. These awards identify him as one of the primary consultants serving the waterpark industry. He has helped to shape some of the latest trends through his experience in the waterpark resort market. David has appeared on Good Morning America, CNBC, and Fox8 News on special reports about resorts and waterparks and is a regular contributor to various industry publications.

He can be reached at 216-810-5800 or dsangree@hladvisors.com.