2017 Methodology for Feasibility Studies for Waterparks ... · Presentation by David J. Sangree,...

Methodology for Feasibility Studies for Waterparks and Hotels

Presented by:David J. Sangree, MAI, CPA, ISHC

Presentation by David J. Sangree, MAI, CPA, ISHC

A feasibility study analyzes:

• Supply and demand• Demographics• Usage/occupancy• Revenues• Expenses• Net income

to determine the value of the proposed project compared to its projected development costs.


• Purpose• Necessity• Scope of assignment• Who is the client: developer, lender, government,

etc.• Determine financial feasibility• Analyze plans and designs and make

recommendations


• 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 and 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.


1. Area, Demographic, and Neighborhood Analysis

2. Site Review

3. Proposed Development Recommendations and Costs

4. Market Analysis

5. Proposed Development Usage and Pricing Analysis

6. Financial Analysis

7. Feasibility Analysis

8. Comparison of Value Created to Projected Costs


1. Area, Demographic, and Neighborhood Analysis

• Population Trends

• Number of families with children within driving

distance

• Household Growth

• Household Economics

• Area Economics

• Area Transportation


2. Site Review

• Drive-time Demographics:

Indoor waterpark resort: 180 miles

Outdoor waterpark: 60 miles

• Site visibility and access

• Amenities/nearby tourist attractions

• Governmental Impacts


Ratio of Family Households to Indoor Waterpark Hotel Rooms

within 180 Miles of Example City, Wisconsin Dells & Sandusky

Example Wisconsin Dells Sandusky

2016 Est. Family Households, 180-mile radius 9,012,310 4,273,443 6,647,145

Number of Existing and Under-Construction Hotels with Indoor Waterparks 11 34 14

Total Rooms 2,360 9,599 4,039

Family Households per Indoor Waterpark Hotel Room 3,818.8 445.2 1,645.7

Sources: ESRI, Hotel & Leisure Advisors


Residents per Outdoor Waterpark by Region

Number of Residents perRegion Waterparks Population Waterpark

Northeast 74 56,209,510 759,588Midwest 283 67,941,429 240,076South 284 122,319,574 430,703West 125 76,657,000 613,256Total US 766 323,127,513 421,837

Source: Hotel & Leisure Advisors, LLC, September 2017


3. Proposed Development Recommendations and Costs

• Physical plant information

• Facility size

• Branding

• Hotel affiliation

• Amenities

• Theme

• Development costs


4. Market Analysis – Hotel Market

• Hotel competitors

• Existing indoor waterpark resorts

• Demographic analysis

• Recent hotel openings

• Potential hotel openings

• Market segmentation and market penetration

• Projections


Occupancy % Change ADR % Change RevPAR % Change 2012 61.4% 4.2% $106.02 3.8% $65.10 8.1%2013 62.3% 1.5% $109.98 3.7% $68.47 5.2%2014 64.4% 3.4% $114.92 4.5% $74.02 8.1%2015 65.5% 1.7% $120.01 4.4% $78.63 6.2%2016 65.5% 0.0% $123.97 3.3% $81.19 3.3%

Source: STR

Overall U.S. Lodging Performance


Performance Data by Property Type

All HotelsFull

ServiceLimited Service

Suite w/F&B

Indoor Waterpark

Resort Convention ResortOccupancy 74.9% 75.2% 70.9% 77.6% 69.2% 74.8% 73.2%ADR $176.08 $184.80 $109.85 $161.04 $224.29 $192.90 $247.65RevPAR $131.94 $138.95 $77.87 $125.04 $155.16 $144.32 $181.40Source: CBRE Hotels and H&LA


STR CBRE PwC STR PwC

Supply 2.0% 1.9% 2.0% 2.2% 1.8%Demand 2.0% 2.2% 2.1% 2.0% 1.6%Occupancy 0.0% 0.3% 0.1% -0.2% -0.2%ADR 2.3% 2.5% 2.3% 2.3% 2.0%RevPAR 2.3% 2.8% 2.3% 2.3% 2.0%Source: STR/CBRE/PWC

20182017

Industry Forecasts


4. Market Analysis – Waterpark Resort Market

• Existing and potential competitors

• Attendance

• Demographics

• Amenities of competitors

• Waterpark pricing


2016 2015 % ChangeRank Park Location Attendance Attendance over 2015

1 Typhoon Lagoon at Disney World Orlando, FL 2,277,000 2,294,000 -0.7%2 Blizzard Beach at Disney World Orlando, FL 2,091,000 2,107,000 -0.8%3 Aquatica Orlando, FL 1,536,000 1,600,000 -4.0%4 Wet 'n Wild Orlando, FL 1,310,000 1,310,000 0.0%5 Schlitterbahn New Braunfels, TX 1,037,000 1,037,000 0.0%6 Water Country USA Williamsburg, VA 733,000 726,000 1.0%7 Adventure Island Tampa, FL 650,000 663,000 -2.0%8 Six Flags White Water Marietta, GA 568,000 541,000 5.0%9 Schlitterbahn Galveston,Tx 562,000 551,000 2.0%10 Six Flags Hurricane Harbor Arlington, TX 549,000 549,000 0.0%11 Splish-Spash Calverton, NY 513,000 513,000 0.0%12 Wet 'n' Wild Splashtown Houston, TX 501,000 501,000 0.0%13 Wet 'n' Wild Phoenix Phoenix, AZ 481,000 481,000 0.0%14 Six Flags Hurricane Harbor Jackson, NJ 449,000 440,000 2.0%15 Typhoon Texas Houston Katy, TX 440,000 Not yet open -16 Camelbeach Tannersville, PA 437,000 437,000 0.0%17 Hyland Hills Water World Denver, CO 434,000 444,000 -2.3%18 Zoombezi Bay Powell, OH 423,000 423,000 0.0%19 Dollywood's Splash Country Pigeon Forge, TN 416,000 416,000 0.0%20 Raging Waters San Dimas, CA 403,000 403,000 0.0%

Source: TEA 2016 Theme Index, Global Attractions Attendance Report (released 2017)

Top 20 US Waterparks by Annual Attendance


2017 US Open Waterpark Supply by RegionOutdoor Waterparks

Region Municipal Private TotalNortheast 10 64 74Midwest 233 50 283South 158 126 284West 70 55 125Total 471 295 766

Indoor Waterpark Resorts

Region Franchise Independent TotalNortheast 7 9 16Midwest 42 55 97South 3 10 13West 8 3 11Total 60 77 137

Standalone Indoor Waterparks

Region Municipal Private TotalNortheast 2 2 4Midwest 25 1 26South 12 2 14West 35 3 38Total 74 8 82

Resorts with Outdoor Waterparks

Region Franchise Independent TotalNortheast 0 2 2Midwest 0 3 3South 20 26 46West 14 5 19Total 34 36 70

Combined Total Number of US Waterparks 1,055Source: Hotel & Leisure Advisors, LLC, September 2017


• The Midwest boasts the largest number of indoor waterparks.

• The South has the largest number of outdoor waterparks with the Midwest close behind. It offers few indoor waterparks indicating potential opportunity.

• The Northeast has the fewest number of outdoor waterparks and the fewest combined indoor waterparks (resorts and stand-alone), indicating potential opportunity.

• The majority of outdoor waterparks are municipal due to the Midwest having so many municipal outdoor waterparks


Indoor Waterparks and Resorts City State / Prov

New Rooms

Indoor Waterpark Sq.

Ft.

Great Wolf Lodge Southern California Garden Grove CA 603 105,000

Great Wolf Lodge Colorado Springs Colorado Springs CO 311 45,000

Parrot Cove Waterpark and Heritage Inn & Suites Garden City KS 95 20,000

Expansion of Cape Codder Resort Hyannis MA 0 20,000

Holiday Inn Express Expansion Brainerd MN 21 3,000

Treasure Island Resort Waterpark Addition Welch MN 0 40,000

Sahara Sams Expansion West Berlin NJ 0 10,000

Great Wolf Lodge Addition of Wolf Tail Waterslide Niagara Falls ON 0 0

Hershey Lodge Water Works Addition Hershey PA 0 30,000

Valcartier Vacation Village Indoor Waterpark Resort Valcartier QC 153 80,000

Total 1,183 353,000

Source: Hotel & Leisure Advisors, LLC

Indoor Waterpark Additions & Indoor Waterpark Resorts Opened in 2016

Note: Resorts have a minimum of 10,000 square feet of indoor waterpark space


Indoor Waterparks and Resorts City State / Prov

New Rooms

Indoor Waterpark Sq.

Ft.

Cocokey Water Resort Expansion of Waterpark Omaha NE 0 20,000

Kalahari Resort Phase II Pocono Manor PA 520 114,000

Kalahari Resort 5-slide Outdoor Waterpark Expansion Sandusky OH 0 0

WaTiki Waterpark Resort Home2 Suites Addition Rapid City SD 107 0

The Epic Grand Prairie TX 0 60,000

Apex Centre Aquatics and Fitness Facility McKinney TX 0 24,000

Kalahari Resort Outdoor Bowl Slide Addition Wisconsin Dells WI 0 N/A


Indoor Waterpark Additions & Indoor Waterpark Resorts Projected to Open in 2017

Note: Indoor Waterpark Resort is defined as a hotel with more than 10,000 square feet of indoor waterpark space.


2016 Outdoor Waterpark OpeningsPark Location Total Slides

PrivateLaguna Splash at DelGrosso's Amusement Park Tipton PA 10Sandy Harbor Family Fun Center at Ocean Lakes Myrtle Beach SC 3Splash Kingdom Greenville TX 6Typhoon Texas Katy TX 33NLand Surf Park Del Valle TXTotal 52

MunicipalCabot Aquatic Park Cabot AR 4Pocahontas Aquatic Center Pocahantas AR 5Super Splash Park Carbondale IL 3Long Branch Lagoon Dodge City KS 6Midwest Health Aquatic Center Topeka KS 5American Legion Water Park Elizabethtown KY 4Carlsbad Waterpark Carlsbad NM 5Kingston Community Pool Kingston PA 3Clover School District Community YMCA Clover SC 3Greenview Pool Columbia SC 3Alice Natatorium and Water Park Alice TX 6Memorial Pool Renovation Wausau WI 3Total 50



Waterpark Location Major Attractions

Private Coconut Cove at Bananas Fun Park Grand Junction CO Play structure with slides and a 10,000 gallon tipping bucket

Universal Orlando Volcano Bay Orlando FL water slides, lazy river, wave pool

H2OBX Outer Banks / Currituck NC more than 30 waterslides, large wave pool, adventure lagoon and lazy river, FlowRider

Cedar Point Shores Sandusky OH Remodel of Soak City Waterpark including 3 new slides and kids area

Municipal Batesville Aquatic Center Batesville AR 3 slides, lazy river, zip-line

The Wave at Emerald Glen Park Dublin CA 6 slides, 3 pools, water playground

Independence Aquatic Center Independence IA pool with zero depth entry, six 25 meter lap lanes, a floatable water walk, two single flume water slides, a drop slide

Clarksville Aquatic Center Clarksville IN 6-lane competition pool, splash pad, tube slide, body slide

Waterpark Replacement of City's Aging Pool Hutchinson MN lazy river, water slides, zero-depth play areas

Pool renovation Palmer Twp PA zero-depth pool, splash park, 3 slides, 6-lane swimming area, diving well

Canyon Aqua Park Canyon TX slides, playground, group shelter, spa

Junior League Jurassic Jungle Odessa TX 180-foot spray ground, water playground and slides, jumping fountains

Erb Park Pool Appleton WI Two pools, diving board, 2 large slides, 1 children's slide, children's play area


2017 Outdoor Waterpark Openings


We are currently tracking 5 Indoor and 27 outdoor waterpark projects to open in 2018 including:

•Great Wolf Lodge resort in LaGrange, GA•Great Wolf Lodge conversions in IL and MN•Summit Splash at Blue Mountain Ski Area - Danielsville, PA•Big Rivers Waterpark at Grand Texas - New Caney, TX•Splashicana - Corsicana, TX •Municipal aquatic centers:

o Elk Grove, CAo Naples, FLo Chambersburg, PAo Abiline, TX


5. Proposed Development Usage and Pricing Analysis – Indoor Waterpark Resorts:

• Occupancy and ADR

• Demand Interviews

• Hotel and Waterpark Demand

• Day Passes

• Projections

• Pricing


5. Proposed Development Usage and Pricing Analysis – Outdoor Waterparks:

• Usage

• Facilities

• Population

• Projections

• Pricing

• Climate


6. Financial Analysis

• Estimate the potential gross revenues for the subject property.

• Analyze and project departmental, undistributed, and fixed expenses.

• Project the resultant net operating income over an appropriate holding period.


7. Feasibility Analysis

Economic value is calculated through a discounted cash flow analysis.


Sum of cash flows plus the reversionary sale price

equals market value


8. Comparison of Value Created to Projected Costs

• Is the development justified?

• How does valuation through a discounted cash flow

analysis compare with proposed development budget

including entrepreneurial profit?

• Need to request municipal incentives?


• Smaller properties generally struggle: three smaller indoor waterpark resorts in Ohio struggle due to competition from 890-room Kalahari Resort with 173,000 square foot indoor waterpark in Sandusky, Ohio – (one achieves occupancy levels in the 20% to 30% range)

• Coco Key Waterpark Resort in Waterbury, Connecticut closed in 2016 due to poor performance and was torn down.

• Weather affects outdoor waterpark performance.

• Too much competition can affect performance.


• National hotel industry achieved highest occupancy and ADR levels in 2016 and projections are for another record year in 2017

• Hurricane and other unusual weather patterns have impacted hotel occupancy and waterpark attendance in Texas, Florida, and other locations in 2017

• Growth by the Great Wolf Lodge chain is positive for the industry as they develop new properties in Georgia, Illinois and Minnesota over the next 12 months

• Kalahari Resorts is expanding their properties in Wisconsin and Pennsylvania and developing a new property in Texas

• Continued growth and interest in the waterpark segment with increased numbers of news stories


• Both private developers and municipalities continue to introduce new indoor and outdoor waterparks across the U.S. and Canada

•The development of an outdoor waterpark is less expensive than an indoor waterpark and can add seasonal recreation to a property.

•Waterpark designers continue to develop exciting new rides and attractions

•Volcano Bay in Orlando is the most expensive outdoor waterpark in the United States to be built

• Need to balance revenues versus costs

l


David J. Sangree, MAI, CPA, ISHCPresidentHotel & Leisure Advisors, LLC14805 Detroit Avenue, Suite 420Cleveland, OH 44107Phone: [email protected]


2017 Methodology for Feasibility Studies for Waterparks ... · Presentation by David J. Sangree,...

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