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Waterpark Resort Development: Successes and Pitfalls | By David Sangree

12 August 2022
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Waterpark Resort Development: Successes and Pitfalls
Great Wolf Lodge Maryland

The waterpark industry continues to flourish in the United States and Canada. While the pandemic slowed demand and growth in 2020 and 2021, 2022 has largely been a return to normal for operators but also for developers and investors looking for new opportunities to leverage the growing popularity of waterpark resorts along with increasing consumer demand for fun, family-oriented vacation options.

In 2022, the industry has enjoyed strong average daily rate (ADR) growth and higher day pass ticket prices, allowing for increased revenue. However, construction costs have increased, and developers continue to face financing challenges. Despite the industry’s many successes, there have also been some failures, showing that when planning a waterpark resort, there is no substitute for due diligence, proper planning, and a long-term vision.

Current waterpark supply

As of July 2022, the United States and Canada had a total of 1,188 waterparks, the majority of which are outdoor waterparks. Hotel & Leisure Advisors has identified nearly 20 new facilities with the potential to open by year-end.

The U.S. and Canada waterpark properties achieved total revenues of over $8.5 billion in 2021. The waterpark resort segment, which includes indoor waterpark resorts and resorts with outdoor waterparks, represents 19% of waterpark supply in the United States and Canada, but the waterpark resort revenue was 74% of the total revenue for all waterpark properties. Resorts include attached hotels that typically have additional amenities such as restaurants, conference space, retail, spas, and other attractions. The resort figure includes all revenue from the waterpark resorts during the time when the waterparks are open (excluding the cold weather months when resorts with outdoor waterparks close their waterpark). This article focuses on the waterpark resort segment.

Indoor waterpark resorts

Indoor waterpark resorts represent 12% of the total market and the total number (148) has been relatively stable over the past seven years. More than half (57%) of these properties are independent, while 43% are affiliated with a franchise. More than half of the franchise properties are affiliated with one of two chains: Great Wolf Resorts and Holiday Inn.

By 2026, 18 new indoor waterpark resorts are expected to open, with 10 being independent and eight being franchise affiliated. However, some of these have yet to obtain financing. Great Wolf Lodge will open five properties, bringing the company’s market share to 14.5% of indoor waterpark resort properties. More than $4 billion in projected construction of indoor waterpark resorts will occur in the next few years.

Great Wolf Resorts has broken ground on their upcoming Perryville, Maryland, and Naples, Florida, properties, which are slated to open in 2023 and 2024, respectively.

Three Great Wolf Resorts are currently in the development stages with debuts planned for 2024.

Outdoor waterpark resorts

Outdoor waterpark resorts are the smallest segment with properties representing 7% of the total waterpark market. This is the fastest-growing segment of the four waterpark segments with an increase in supply of 37% between 2014 and 2021. These properties are approximately evenly split between independent operators and franchises. Hyatt is the largest individual brand in this segment followed by Margaritaville and Holiday Inn.

A number of existing hotels and resorts are adding outdoor waterpark features in the United States. We are tracking six new resorts with outdoor waterparks that are planned to open in the next three years.

Preparing for success

With the success of many waterpark resorts in North America, it’s easy to lose focus on what makes a waterpark resort successful. The “if you build it, they will come” mentality is a not viable strategy. There are several key factors that developers, investors, and operators need to keep in mind when considering new builds or significant renovations.

Mitigating failures

While the industry has many successful ventures to its credit, it’s important to remember that not all properties have achieved financial success over the years. The following highlights some recent closures of waterpark resorts:

These failures highlight the importance of proper management, sizing of waterpark, area for expansion, continued programs of innovation and improvement, and a long-term strategy for success. Prior to development, a feasibility study can assist in looking at these long-term issues to help ensure success assuming the client reviews and implements the recommendations of the feasibility study.

Looking to the future

The pandemic forced the industry to adapt, but its fundamentals remain strong. We expect to see continued growth in indoor and outdoor waterparks at hotels and resorts. Owners, operators, and developers can take the lessons learned and challenges faced into the recovery with renewed hope and perspective for the future. The challenges facing developers lie in pursuing projects with strong fundamentals and a reasonable chance of financing. As waterpark resorts become more popular in many markets, those fundamentals will become even more important, with only the well-considered and expertly evaluated projects being seen as viable by investors and stakeholders.

This article was created for and first published by InPark Magazine, and is shared with permission. Visit www.inparkmagazine.com.

Organization

Hotel & Leisure Advisors
www.hladvisors.com
14805 Detroit Avenue | Suite 420
USA - Cleveland, OH 44107-3921
Phone: 216-228-7000
Fax: 216-228-7320
Email: dsangree@hladvisors.com

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