Introduction. How to Analyze the Market. Determine Economic Feasibility for. Presentation by David J. Sangree, MAI, CPA, ISHC

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1 Introduction How to Analyze the Market and Determine Economic Feasibility for Waterpark Projects

2 Hotel with Indoor Waterpark: A lodging establishment with an attached 10,000 to 30,000 square-foot aquatic facility inclusive of amenities such as slides, tubes, and a variety of indoor water play features The indoor waterpark serves as an amenity of the hotel versus a true destination.

3 Indoor Waterpark Destination Resort: A resort with more than 30,000 square feet of indoor waterpark space inclusive of amenities such as slides, tubes, and a variety of indoor water play features It is considered a true destination resort, which families frequent on a year-round basis primarily to utilize the waterpark and secondarily to visit other attractions or events in the area.

4 Resort with Outdoor Waterpark: A lodging establishment containing an outdoor aquatic facility with three or more waterpark elements requiring lifeguards such as slides, lazy rivers, or wave pools The outdoor waterpark is utilized primarily il by hotel guests but can also be open to the public.

5 Standalone Indoor Waterpark: A freestanding 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

6 Outdoor Waterpark: An outdoor aquatic facility with three or more waterpark elements requiring lifeguards such as larger slides, lazy rivers, or wave pools These parks often offer additional splash features for younger children as well.

7 What is a Feasibility Study? Purpose of a market feasibility study Who needs and uses feasibility studies Scope of assignment Includes extensive research and provides realistic conclusions on performance May address specific development plans or make recommendations for sizing and plans

8 General Economic Characteristics and Trends Review local and regional demographics and economic trends 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

9 Demographic Analysis Number of family households within drivable distance Number of children within travel distance 180 miles is the typical distance that people are willing to drive to stay at an Indoor Waterpark Resort Up to 60 miles for an Outdoor Waterpark Compare proposed site with existing areas with waterpark resorts Compare number of rooms and waterpark size to the number of the family households

10 Households per Room Ratio of Family Households to Indoor Waterpark Hotel Rooms within 180 Miles of Wisconsin Dells & Sandusky Wisconsin Dells Sandusky 2011 Est. Family Households, 180-mile radius 4,247,920 6,501,587 Number of Existing and Soon to be C ompleted Hotels with Indoor Waterparks Total Rooms 8,892 3,815 Family Households per Indoor Waterpark Hotel Room ,704.2 Sources: ESRI, Hotel & Leisure Advisors

11 Population Di Drive Time

12 Outdoor Waterpark Wt ksupply to Population Analysis Outdoor Waterpark and Population Comparison Region Number of Waterparks Population Number of Persons per Waterpark Northeast 66 55,317, ,140 Midwest ,927, ,319 South ,555, ,307 West 96 71,945, ,433 Total ,745, ,581 Source: Hotel & Leisure Advisors and 2010 U.S. Census

13 Site Analysis Review and analyze site and nearby land uses Review site visibility and access Assess visibility from highways with higher 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

14 Included Recommendations Product concept Facility configuration Sizing Amenities Acreage Hotel franchise or independent Branding Management company Phasing Development costs

15 Competitive i 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

16 Demand danalysis Review occupancy and average daily rate performance of local hotel supply through analyzing a Smith Travel Research data and conducting interviews with local hotels Demand is up in 2012 for both hotels and waterpark resorts Review occupancy and average daily rate statistics ti ti for hotels in 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

17 Projected dfinancial i 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 expenses including administrative, marketing, 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

18 U.S. Waterpark Standings

19 Combined Total Number of U.S. Waterparks as of September 2013: 837 The majority of these are outdoor

20 U.S. Outdoor Waterparks Private 300 Municipal Total Northeast Midwest South West Total

21 U.S. Indoor Waterpark Resorts p Franchised Independent Total Northeast 5 47 Midwest South West Total

22 U.S. Standalone Indoor Waterparks Private Municipal Total Northeast 1 Midwest 5 South West Total

23 U.S. Resorts with Outdoor Waterparks Franchise 30 Independent Total Northeast Midwest South West Total

24 The Midwest boasts the largest number of indoor waterparks The South has the largest number of outdoor waterparks with the Midwest close behind The Northeast has the fewest number of outdoor waterparks and the combined indoor waterpark resorts and stand-alone indoor waterparks potentially indicating the greatest opportunity

25 The majority of outdoor waterparks are municipal due to the Midwest having so many municipal outdoor waterparks In the Northeast, t South, and West there are more private outdoor waterparks than municipal The majority of standalone indoor waterparks are municipal. All indoor waterpark resorts are private

26 Indoor Waterpark Additions & Indoor Waterpark Resorts Opened in 2012 Indoor Waterparks and Resorts City State New Rooms Indoor Waterpark Sq. Ft. Bavarian Inn Lodge addition of Waterpark Frankenmuth MI 0 20,000 Soaring Eagle Resort and Conference Center with Indoor Waterpark Mt. Pleasant MI ,000 Holiday Inn Express (opened in 2011) with Water Zoo Indoor Waterpark (opened in 2012) Clinton OK 87 28,000 Wilderness at the Smokies Indoor Dry Park and Water Slide Expansion Sevierville TN 0 23,000 Schlitterbahn Beach Resort (conversion of former 221-room Holiday Inn) South Padre Island TX ,000 Jay Peak Indoor Waterpark Hotel Addition Jay VT Jay Peak Indoor Waterpark Golf Course Condos Addition Jay VT 50 0 Wilderness Hotel and Golf Resort Indoor Ropes Course Addition Wisconsin Dells WI 0 0

27 Indoor Waterpark Additions & Indoor Waterpark Resorts Projected to Open in 2013 Indoor Waterparks and Resorts City State New Rooms Indoor Waterpark Sq. Ft. CoCo Key Waterpark Redevelopment Arlington Heights IL 0 47,000 Clarion Hotel Waterpark Addition Springfield MA 0 10,000 Great Wolf Lodge addition of slide and bowling Traverse City MI 0 0 Sahara Sam's Indoor and Outdoor Waterpark Expansion Berlin Township NJ 0 8,000 Maui Sands Indoor Waterpark Resort Reopen Sandusky OH ,000 Wilderness at the Smokies Outdoor Water Slide Sevierville TN 0 0 Jay Peak Condos Addition Jay VT 50 0 Total ,000 Note: Resorts have a minimum i of 10, square feet of indoor waterpark space

28 Outdoor Waterparks Opened in 2012 BamaJam Farms Park City State Enterprise AL Larger Slides 10 Waylon's Water World at Z Fun Factory Yuma AZ 15 Legoland Outdoor Waterpark Winter Haven FL 6 The Bay Water Park Kansas City MO 3 Captain Bly's Shipwreck Cove New Bern NC 3 Andy's Alligator Waterpark Norman OK 5 Wild West Water Works at Frontier City Oklahoma City OK 5 The Pirates Cove Fun Zone Burleson TX 7 Hurricane Alley Waterpark Corpus Christi TX 8 Hawaiian Falls Waco Splash! In the Park Breaks VA 4 TX 11

29 Historical Performance of Grouping of Indoor Waterpark Destination Resorts 15 resorts with average of 425 rooms Year RevPAR % Change 2010 $ $ % 2012 $ % Note: Resorts contain over 30,000 SF of indoor waterpark

30 Private Municipal 2013 Projected Outdoor Waterpark Openings Park Location Acres Larger Slides Holiday Springs Waterpark Texarkana AR 15 5 SoakYa (Lake Winnepesaukah waterpark) Rossville GA 5 8 Buccaneer Cove Waterpark Norcross GA Seven Peaks Waterpark Porter IN Wet 'n' Wild Las Vegas NV 65 8 Splash Central Waterpark Huron SD Splash Kingdom Wild West Hudson Oaks TX 5 5 Santa's Splashdown Waterpark at Lake Rudolph Santa Claus IN 2 5 Rogers Aquatics Center Rogers AR 3 5 Donald W Reynolds Recreation and Aquatic Center Pauls Valley OK The Euless Family Life Center Aquatic Park Euless TX Schifferdecker Aquatic Center Joplin MO 2 3 Lions Water Adventure Kinston NC 3 3

31 Top 20 U.S. Waterparks by Attendance # Park Location 2012 Attendance 2011 Attendance % Change 1 Typhoon Lagoon at Walt Disney World Lake Buena Vista, FL 2,100,000 2,058, % 2 Blizzard Beach at Walt Disney World Lake Buena Vista, FL 1,929,000 1,891, % 3 Aquatica Orlando, FL 1,538,000 1,500, % 4 Wet 'n Wild Orlando, FL 1,247,000 1,223, % 5 Schlitterbahn New Braunfels, TX 1,017, , % 6 Water Country USA Williamsburg, VA 748, , % 7 Noah's Ark Wisconsin Dells, WI 666, , % 8 Adventure Island Tampa, FL 651, , % 9 Schlitterbahn Galveston, TX 546, , % 10 Hyland Hills Water World Federal Heights, CO 538, , % 11 Six Flags Hurricane Harbor Arlington, TX 508, , % 12 Six Flags White Water Marietta, GA 505, , % 13 Raging Waters San Dimas, CA 480, , % 14 Splish Splash Riverhead, NY 463, , % 15 Wet 'n Wild Phoenix, AZ 461, , % 16 Six Flags Hurricane Harbor Jackson, NJ 424, , % 17 Wet 'n Wild Emerald Pointe Greensboro, NC 406, , % 18 Soak City at Cedar Point Sandusky, OH 403, , % 19 Zoombezi Bay Powell, OH 389, , % 20 Camelbeach Tannersville, PA 367, , % Source: TEA 2012 Theme Index The Global Attractions Attendance Report

32 Performance Figures Occupancy levels among indoor waterpark hotels/resorts of all sizes range from 35% to 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. 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, size of waterpark, resort amenities, management, marketing, performance of existing hotel supply, and number of nearby family leisure attractions.

33 Conclusion

34 Waterpark demand continues to grow Both private developers and municipalities continue to introduce new indoor and outdoor waterparks across the U.S. The development of an outdoor waterpark is less expensive than an indoor waterpark and can add seasonal recreation to a property. Waterpark designers will continue to come out with new rides and attractions Balancing revenues versus costs

35 However, the development of a waterpark is risky and requires extensive research of: supply and demand factors demographics income levels potential per capita spending potential attendance profitability levels feasibility analysis economic impact analysis

36 Questions? David J. Sangree, MAI, CPA, ISHC President Hotel & Leisure Advisors, LLC Detroit Avenue, Suite 420 Cleveland, OH Phone: Fax: Web:

Waterpark Resorts Supply and Demand 2013 Update

Waterpark Resorts Supply and Demand 2013 Update By David J. Sangree, MAI, CPA, ISHC The country appears to be pulling out of the recession and heading for calmer waters if waterpark developments are any