Introduction
How to Analyze the Market
and
Determine Economic Feasibility
for
Waterpark Projects
Presentation by David J. Sangree, MAI, CPA, ISHC
What is a Feasibility Study?
•
Purpose of a market feasibility study
•
Who needs and uses feasibility studies
•
Scope of assignment
•
IIncludes
l d extensive
t
i
research
h and
d provides
id realistic
li ti
conclusions on performance
•
May address specific development plans or make
recommendations for sizing and plans
Presentation by David J. Sangree, MAI, CPA, ISHC
Feasibility Study Contents
Presentation by David J. Sangree, MAI, CPA, ISHC
General Economic Characteristics
and Trends
•
R i
Review
local
l
l and
d regional
i
l demographics
d
hi and
d economic
i trends
t
d
•
Review major employers and local demand generators
•
Assess tourist attractions in area
•
Analyze why people are currently coming to area
•
Review highway infrastructure and traffic counts
•
Analyze numbers of groups and conventions coming to market
•
Analyze corporate demand for market
•
Review airport statistics
•
Analyze population and income within three-hour drive of site
Presentation by David J. Sangree, MAI, CPA, ISHC
Demographic Analysis
• Number of family households within drivable distance
• Number of children within travel distance
• 180 miles is the approximate distance that people are
willing to drive to stay at an Indoor Waterpark Resort
• Up
p to 60 miles for an Outdoor Waterpark
p
• Compare proposed site with existing areas with
waterpark resorts
• Compare number of rooms and waterpark size to the
number of the family households
Presentation by David J. Sangree, MAI, CPA, ISHC
Demographic Analysis –
Households per Room
Ratio of Family Households to Indoor Waterpark Hotel Rooms
within 180 Miles of Wisconsin Dells & Sandusky
Wisconsin Dells
Sandusky
4,247,920
6,501,587
37
13
Total Rooms
8 892
8,892
3 815
3,815
Family Households per Indoor Waterpark
Hotel Room
477.7
1,704.2
2011 Est. Family Households, 180-mile
radius
Number of Existing and Soon to be
C ompleted Hotels with Indoor Waterparks
Sources: ESRI, Hotel & Leisure Advisors
Presentation by David J. Sangree, MAI, CPA, ISHC
Demographic Analysis –
Population Drive Time
Presentation by David J. Sangree, MAI, CPA, ISHC
Outdoor Waterpark Supply
to Population Analysis
Outdoor Waterpark and Population Comparison
Region
Number of Waterparks
Population
Number of Persons per Waterpark
58
55,317,240
953,746
Midwest
192
66,927,001
348,578
South
185
114,555,744
619,220
West
90
71,945,553
799,395
Total
525
308,745,538
588,087
Northeast
Source: Hotel & Leisure Advisors and 2010 U.S. C ensus
Presentation by David J. Sangree, MAI, CPA, ISHC
Site Analysis
• Review and analyze site and nearby land uses
• Review site visibility and access
• Assess visibility
y from highways
g
y with higher
g
traffic counts
• Identify nearby tourism attractions
• Identify nearby amenities including state and national
parks, shopping, amusement parks, etc.
• Review access to corporate & group demand generators
• Assess size of site and availability for expansion
• Review zoning of site
Presentation by David J. Sangree, MAI, CPA, ISHC
Recommendations Included
in Feasibility Study
•
Product concept
•
Facility configuration
•
Sizing
•
Amenities
•
Acreage
•
Hotel franchise or independent
•
Branding
•
g
company
p y
Management
•
Phasing
•
Development costs
Presentation by David J. Sangree, MAI, CPA, ISHC
Outdoor and Indoor Waterpark
pp y Analysis
y
Supply
2012 U.S. Open Waterpark Supply by Region
U.S. Outdoor Waterparks
Region
Municipal
Priv ate
4
54
58
145
47
192
South
87
98
185
West
41
49
90
Total
277
248
525
Northeast
Midwest
Total
Note: Outdoor waterparks defined as an aquatic facility without
attached hotel having 3 or more slides
U.S. Indoor Waterpark Resorts
Region
F ranchise
Independent
7
6
13
34
64
98
South
0
10
10
W
West
t
4
5
9
Total
45
85
130
Northeast
Midwest
Total
Note: Indoor waterpark resorts defined as a hotel with more
than 10,000 square feet of indoor waterpark space
U.S. Standalone Indoor Waterparks
Region
Municipal
Priv ate
0
1
1
22
0
22
South
6
3
9
West
14
1
15
Total
42
5
47
Northeast
Midwest
Total
Note: Standalone indoor waterparks are defined as being
larger than 10,000 square feet and featuring multiple water
features
U.S. Resorts with Outdoor Waterparks
Region
F ranchise
Independent
Northeast
0
2
Total
2
Midwest
1
11
12
South
8
15
23
West
8
6
14
Total
17
34
51
Note: Resorts with outdoor waterparks are defined as being a
resort hotel having an outdoor waterpark with at least 3
features (e.g. slide, lazy river, wave pool, etc.)
Combined Total Number of U.S.
U S
Waterparks
Source: Hotel and Leisure Advisors, August 2012
Presentation by David J. Sangree, MAI, CPA, ISHC
753
Open Indoor Waterpark Resort
Supply Analysis
Indoor Waterpark Resort Supply Analysis
Number of
Resorts
Average
Room Count
Average
High
Low
Percent
Franchised
C olorado
C onnecticut
1
1
125
279
10,000
26,000
10,000
26,000
10,000
26,000
0%
100%
Florida
1
392
30 000
30,000
30 000
30,000
30 000
30,000
0%
Idaho
2
182
31,000
42,000
20,000
50%
Illinois
4
282
33,550
60,200
24,000
25%
Indiana
4
184
28,000
40,000
12,000
0%
Iowa
7
137
17,571
25,000
10,000
29%
State/Province
Indoor Waterpark Size (SF)
Kansas
1
281
38,000
38,000
38,000
0%
Massachusetts
3
291
24,333
37,000
10,000
67%
Michigan
12
213
26,667
58,000
10,000
33%
Minnesota
14
173
24,357
75,000
10,000
64%
Missouri
5
311
22,040
32,000
11,000
40%
Montana
1
109
25,000
25,000
25,000
0%
Nebraska
3
208
24,000
32,000
10,000
67%
New Hampshire
1
163
35,000
35,000
35,000
100%
New Jersey
1
283
30,000
30,000
30,000
100%
New Mexico
1
290
28,000
28,000
28,000
100%
New York
3
182
27,833
38,500
12,000
33%
North C arolina
1
402
81,000
81,000
81,000
0%
North Dakota
4
172
20,750
40,000
10,000
75%
Ohio
8
337
55,750
173,000
15,000
25%
Pennsylvania
4
348
60,250
100,000
10,000
50%
South C arolina
1
495
30,000
30,000
30,000
0%
South Dakota
3
184
24,333
30,000
13,000
67%
Tennessee
2
661
51,750
66,000
37,500
0%
Texas
4
404
61,750
80,000
19,000
0%
Utah
1
191
10,000
10,000
10,000
100%
Vermont
1
416
40,000
40,000
40,000
0%
Virginia
2
901
61,625
67,000
56,250
0%
Washington
3
279
26,000
58,000
10,000
33%
Wi
Wisconsin
i
30
238
36 737
36,737
205 000
205,000
10 000
10,000
17%
Wyoming
1
160
11,000
11,000
11,000
100%
Total USA/Average
130
290
32,884
Alberta
3
260
80,600
217,800
12,000
67%
Manitoba
Ontario
2
6
148
453
10,000
40,833
10,000
90,000
10,000
15,000
100%
67%
10,000
10,000
100%
Saskatchewan
Total Canada/Average
1
157
10,000
12
204
28,287
Note: Resorts have a minimum of 10,000 square feet of indoor waterpark space
Source: Hotel & Leisure Advisors, LLC , August 2012
Presentation by David J. Sangree, MAI, CPA, ISHC
35%
75%
Open Resorts with Outdoor Waterpark
Supply Analysis
Resorts with Outdoor Waterparks Supply Analysis
Number of
Re o t
Resorts
Average
Room Count
Roo
Co t
Percent
Franchised
F
hi ed
Arizona
2
602
50%
C alifornia
2
481
50%
Florida
7
946
57%
Georgia
1
287
0%
Hawaii
7
1248
86%
St te/P o i e
State/Province
Idaho
1
12
0%
Iowa
2
122
50%
Mississippi
2
588
0%
Nevada
1
3,460
0%
New York
1
160
0%
Ohio
2
861
0%
Pennsylvania
1
50
0%
South C arolina
3
500
33%
Tennessee
1
704
0%
Texas
6
587
33%
Virginia
2
817
50%
West Virginia
1
40
0%
8
51
1
456
702
406
0%
40%
0%
1
406
0%
Wisconsin
Total USA/Average
Ontario
Total Canada/Average
Note: Resorts have a minimum of three waterpark features
Source: Hotel & Leisure Advisors, LLC , September 2012
Presentation by David J. Sangree, MAI, CPA, ISHC
Competitive Supply Analysis
• Analysis of local hotel or waterpark market
• Product types of local hotels (e.g., budget,
midscale, resort)
• Quality level of local hotels and resorts
• Supply of waterpark resorts within region
• New hotel supply in local market
• Proposed waterpark resorts within region
• Demolitions of existing hotels
• Convention and Visitors’ Bureau information
Presentation by David J. Sangree, MAI, CPA, ISHC
Indoor Waterpark Resorts
Opened in 2011
Indoor Waterpark Additions & Indoor Waterpark Resorts Opened in 2011
Indoor Waterparks and Resorts
World Waterpark at West Edmonton Mall Addition of Three Slides
Sahara Sam's Indoor Waterpark outdoor ropes course addition
C larion Batavia Indoor Waterpark Addition
Kalahari 115,000 SF C onference C enter Addition & 5BR C ondos
Great Wolf Lodge-addition of MagiQuest
Evergreen Air Museum Hotel with Indoor Waterpark (hotel later)
City
State / Prov
Indoor
New
Waterpark
Rooms
Sq. Ft.
Edmonton
AB
0
West Berlin
NJ
0
0
0
Batavia
NY
0
12 000
12,000
Sandusky
OH
6
0
Niagara Falls
ON
0
0
McMinnville
OR
0
52,000
Splash Lagoon Wave Pool Expansion
Erie
PA
0
35,000
Jay Peak Indoor Waterpark and Hotel
Mount Olympus Hotel Rebranding/Additions of Luna Inn, Four Seasons, Raintree
Resort, Star
S
Motel,
l C opa C abana
b
Hotell
Jay
VT
57
40,000
Wisconsin Dells
WI
496
0
Kalahari Resort Wisconsin Dells Addition of Three Slides
Wisconsin Dells
WI
0
0
Gillette
WY
160
11,000
Fairfield Inn, C ountry Inn, and C aribbean C ove Indoor Waterpark
Note: Resorts have a minimum of 10,000 square feet of indoor waterpark space
Source: Hotel & Leisure Advisors, LLC
Presentation by David J. Sangree, MAI, CPA, ISHC
Indoor Waterpark Resorts
To Open or Opened in 2012
Indoor Waterpark Additions & Indoor Waterpark Resorts Projected to Open in 2012
Indoor Waterparks and Resorts
Soaring Eagle Resort and C onference C enter with Indoor Waterpark
Holiday Inn Express (opened in 2011) with Indoor Waterpark (will open in 2012)
Wilderness at the Smokies Indoor Dry Park and Water Slide Expansion
Indoor
New
Waterpark
Rooms
Sq. Ft.
City
State / Prov
Mt. Pleasant
MI
243
45,000
C linton
OK
87
28,000
Sevierville
TN
0
23,000
South Padre Island
TX
221
80,000
Jay Peak Indoor Waterpark Hotel Addition
Jay
VT
176
0
Jay Peak Indoor Waterpark Golf C ourse C ondos Addition
Jay
VT
50
0
Wisconsin Dells
WI
0
0
Schlitterbahn Beach Resort (conversion of former 221-room Holiday Inn)
Wilderness Hotel and Golf Resort indoor ropes course addition
Note: Resorts have a minimum of 10,000 square feet of indoor waterpark space
Source: Hotel & Leisure Advisors, LLC
Presentation by David J. Sangree, MAI, CPA, ISHC
Outdoor Waterparks
To Open or Opened in 2012
2012 Openings of Outdoor Waterparks
1
2
3
4
5
6
7
8
9
10
11
12
13
Park
City
State
BamaJam Farms
Enterprise
AL
Waylon's Water World at Z Fun Factory
Yuma
AZ
Sailfish Splash Waterpark
Stuart
FL
Legoland Outdoor Waterpark (formerly Splash Island) Winter Haven
FL
C aptain Bly's Shipwreck C ove
New Bern
NC
AquaVenture Waterpark
Norfolk
NE
Oklahoma Aquarium's Extreme Waterpark
Jenks
OK
Andy's Alligator Waterpark
Norman
OK
Wild West Water Works at Frontier C ity
Oklahoma C ity
OK
The Pirates C ove Fun Zone
Burleson
TX
Hurricane Alley Waterpark
C orpus C hristi
TX
Hawaiian Falls (formerly Waco Waterpark)
Waco
TX
Splash! In the Park
Breaks
VA
Source: Hotel and Leisure Advisors
Presentation by David J. Sangree, MAI, CPA, ISHC
Demand Analysis
•
Review occupancy and average daily rate performance of local
hotel
ote supply
supp y through
t oug analyzing
a a y g Smith
S t Travel
a e Research
esea c data and
a d
conducting interviews with local hotels
•
Demand is up in 2012 for both hotels and waterpark resorts
•
Review
R
i
occupancy and
d average daily
d il rate
t statistics
t ti ti ffor hotels
h t l in
i
MSA or region and for regional indoor waterpark resorts
•
Conduct demand interviews with potential users of facility
•
Analyze the number of fill days in existing hotels and resorts in
estimating induced demand
•
Estimate future growth in demand for hotels and resorts
•
Analyze regional and national trends in the waterpark industry
•
Review statistics of waterparks in different regions and their
performance
f
Presentation by David J. Sangree, MAI, CPA, ISHC
Performance Figures Great Wolf Lodge Resorts
Great Wolf Resorts, Inc. Operating Statistics for 2008-2011
2011
2010
2009
2008
63.3%
59.7%
60.4%
61.9%
ADR
$260.10
$252.30
$244.66
$243.81
RevPAR
$164.58
$150.60
$147.66
$151.02
Total RevPOR
$395.18
$387.83
$376.57
$369.61
Total RevPAR
$250.05
$231.50
$227.28
$228.95
All Properties (Same Store)
Occupancy
Generation I Resorts (Wisconsin Dells, Sandusky, Traverse C ity, Kansas C ity)
Occupancy
56.1%
52.7%
52.7%
56.6%
ADR
$201.09
$198.56
$191.45
$196.25
RevPAR
$112.77
$104.70
$100.92
$110.98
Total RevPOR
$302.77
$300.42
$288.87
$293.86
Total RevPAR
$169.79
$158.42
$152.28
$166.19
Generation II Resorts (Williamsburg, Poconos, Niagara Falls, Mason, Grapevine, Grand Mound
and C oncord)
O
Occupancy
66 0%
66.0%
62 3%
62.3%
63 7%
63.7%
67 0%
67.0%
ADR
$279.05
$269.48
$263.95
$279.58
RevPAR
$184.15
$167.94
$168.14
$187.44
Total RevPOR
$424.84
$415.76
$408.36
$421.50
Total RevPAR
$280.37
$259.11
$260.14
$282.60
Source: Great Wolf Resorts, Inc.
Presentation by David J. Sangree, MAI, CPA, ISHC
Performance Figures –
Great Wolf Resorts v.
v Overall Hotel Market
• Great Wolf Resorts was purchased by Apollo and is no
longer on the New York Stock Exchange
• Both the larger
g Generation II resorts and the smaller
Generation I resorts showed improvement in
occupancy, average daily rate, and RevPAR in 2011
over 2010.
• Average daily rate is well above national averages for
hotel properties in similar markets
• Ch
Chain
i has
h shown
h
strong
t
results
lt in
i occupancy and
d
average daily rate over the years
Presentation by David J. Sangree, MAI, CPA, ISHC
Performance Figures –
Outdoor Waterpark Resorts
Top 20 U.S. Waterparks
by Annual Attendance
Rank
1
2
3
4
5
6
7
8
9
10
11=
11=
13
14
15
16
17
18
19
20
* = indicates a tie
Park
Typhoon Lagoon at Walt Disney World
Blizzard Beach at Walt Disney World
Aquatica
Wet
et 'n Wild
d
Schlitterbahn
Water C ountry USA
Adventure Island
Noah's Ark
Hyland Hills Water World
Schlitterbahn
g White Water
Six Flags
Six Flags Hurricane Harbor
Raging Waters
Wet 'n Wild
Splish-Splash
Six Flags Hurricane Harbor
Wet 'n Wild Emerald Point
Soak C ity at C edar Point
Zoombezi Bay
Water C ountry
Location
Orlando, FL
Orlando, FL
Orlando, FL
Orlando,
O
a do, FL
New Braunfels, TX
Williamsburg, VA
Tampa, FL
Wisconsin Dells, WI
Denver, C O
Galveston, TX
Marietta,, GA
Arlington, TX
San Dimas, C A
Phoenix, AZ
Riverhead, NY
Jackson, NJ
Greensboro, NC
Sandusky, OH
Powell, OH
Prtsmouth, NH
Source: TEA 2011 Theme Index, The Global Attractions Attendance Report
Presentation by David J. Sangree, MAI, CPA, ISHC
2011
Attendance
2,058,000
1,891,000
1,500,000
1,223,000
, 3,000
980,000
723,000
644,000
643,000
559,000
535,000
500,000
,
500,000
471,000
461,000
432,000
400,000
398,000
395,000
374,000
367,000
2010
% Change
Attendance
2,038,000
1,872,000
1,500,000
1,223,000
, 3,000
960,000
784,000
626,000
637,000
545,000
530,000
500,000
,
500,000
466,000
425,000
475,000
450,000
410,000
387,000
350,000
360,000
over 2010
1.0%
1.0%
0.0%
0.0%
0
0%
2.3%
-7.8%
2.9%
0.9%
2.6%
1.0%
0.0%
0.0%
1.1%
8.5%
-9.0%
-11.1%
-2.9%
2.1%
6.9%
1.9%
Performance Figures
•
Occupancy levels among indoor waterpark hotels/resorts of all
sizes range from 35% to 85%
85%, while ADRs range from $75 to
$350. Properties that have added indoor waterparks have seen
improvements in occupancy levels with some gaining as many as
16 points
points. They have also experienced a $10 to $100 increase in
average daily rate.
•
Outdoor waterpark attendance ranges from 100,000 to 2 million
visitors per year depending upon location, size, extent of
amenities, etc.
•
Wide range of performance is due to location,
location size of waterpark,
waterpark
resort amenities, management, marketing, performance of
existing hotel supply, and number of nearby family leisure
attractions
attractions.
Presentation by David J. Sangree, MAI, CPA, ISHC
Projected Financial Performance
•
Occupancy and average daily rate
•
Waterpark usage including possible use of day passes
•
Other revenue departments including food and beverage,
arcade, gift shop, rentals, parking, telephone
•
Expense categories including rooms, food and beverage,
waterpark, arcade, telephone, gift shop
•
Undistributed
U
di t ib t d expenses iincluding
l di
administrative,
d i i t ti
marketing,
k ti
maintenance, energy, taxes
•
Projection of net operating income for forecast period
•
How financial projections are utilized in income capitalization
approach of an appraisal
•
Discount rate and capitalization rates
Presentation by David J. Sangree, MAI, CPA, ISHC
Financial Performance
•
Our review of 41 indoor waterpark resorts actual financial
statements indicates an average income before reserve of 20%
p
to Host Report
p
for resorts indicates income before
compared
reserve of 21%
•
More successful resorts achieve higher figures averaging 24.9%
•
Resorts with indoor waterparks can achieve higher net income
percentage due to stronger room revenues and other operating
departmental revenues
•
Our review of 27 outdoor waterpark actual financial statements
indicates an average income before reserve of 25.5%
Presentation by David J. Sangree, MAI, CPA, ISHC
Using a Feasibility Study
•
Market feasibility
y study
y should provide
p
projected
p j
revenues,,
expenses, and net operating income for future 10 years.
•
Developers should compare value created by cash flows with
projected construction costs to see if economically feasible
•
Market feasibility study represents projections at the time of
research that may not actually occur
•
Changes may occur in market or to the facility that may be
different from assumptions of feasibility study
•
Development
p
of indoor or outdoor waterparks
p
is risky.
y Most
projects succeed, but there are some properties whose values
are below development costs because demand has not met
expectations.
Presentation by David J. Sangree, MAI, CPA, ISHC
Questions?
David J.
J Sangree,
Sangree MAI,
MAI CPA,
CPA ISHC
President
Hotel & Leisure Advisors
Advisors, LLC
14805 Detroit Avenue, Suite 420
Cleveland, OH 44107
Phone: 216-228-7000
Fax: 216-228-7320
Email: [email protected]
Web: www
www.hladvisors.com
hladvisors com
Presentation by David J. Sangree, MAI, CPA, ISHC