Falling house sales, creeping inflation, rising gas prices, seesawing stocks without a doubt, the economy is shaky. It would seem rough times are ahead for the aquatics industry as well. But while there are bound to be some repercussions, experts say the industry is poised to remain strong.
?The commercial segment seems to have entered into this year with confidence, but operators are also very focused on watching for changes in this trend,? said industry veteran Tom Saldarelli, president, Paragon Aquatics Division, Pentair Water Pool and Spa Inc. in Grangeville, N.Y.
The numbers support Saldarelli?s contention, led by the burgeoning waterpark resort market. Already this year, 27 new projects totaling 752,500 square feet are slated to open. That compares to 21 projects opened in 2007 and 553,000 square feet, said David Sangree, president of Hotel & Leisure Advisors, LLC, in Cleveland.
Experts suggest that a number of factors are fueling continued growth. A big one: Many of the 2008 projects were approved earlier last year, before the problems in the residential housing market were fully actualized, says Saldarelli.
Still, attorney Nelson Migdal, with the Miami-based international law firm Greenberg-Traurig, expects that financing for new projects will continue. ?It will be at a slower pace, but I think there will still be growth,? he said.
Another reason for the continued activity is that the demand for entertainment remains strong. ?Families may not be willing or able to take an [extravagant, extended] vacation,? Migdal said. ?But they can still afford a weekend getaway at a waterpark resort.?
In fact, Sangree noted that Great Wolf Resorts reported fourth quarter ?07 same-store sales occupancy rates at 52.8 percent, up from 52.5 percent during the same period in ?06. Average room rate also increased from $235 to $249.
In addition, Sangree said that at present, those more likely to be directly affected by the economy are lower income people not the primary target market for the indoor waterpark resort market.
Where will the industry feel the effects of a weak economy? ?I think public pools using public dollars are being impacted by the overall economic decline,? Migdal said.
Currently, the industry is seeing cutbacks in lifeguards and facility operations. In his 2008-09 budget proposal, California Gov. Arnold Schwarzenegger called for closing 48 parks and beaches, and laying off at least 50 percent of the seasonal lifeguards in Orange, San Diego and Santa Cruz counties.
In Canada, the Toronto district school board announced plans to close 78 school pools. In Louisville, Ky., Mayor Jerry Abramson proposed closing five pools; and pools in Phoenix will be closed for an additional two months. Many of these budget cuts are a direct result of falling tax revenues.
The down housing market may affect aquatics in other ways as well. ?We believe fewer new homes will be built this year, which potentially indicates fewer subdivisions that are potential locations for a community swimming pool,? noted Loren Brown of PK Data, a Duluth, Ga.-based market research firm that specializes in the aquatics industry.
Migdal said he has seen similar trends with mixed-use development. ?There are mixed-use developments out there with residential components that aren?t being sold,? he said. ?I have seen some [mixed-use] condo/hotel pool projects where the residential pieces have been scrapped, but the hotel and waterpark amenity pieces are still moving forward.?
As a result of the general tightening of the belt, the industry also may see less spending for upgrades and replacements.
?In these economic times, in general, operators are likely to delay any discretionary spending, until they feel more comfortable,? Saldarelli said. ?People are going to defer spending on replacement parts and upgrades, much as one might hold off on buying a new computer.?
Only time will tell what?s going to happen in the future.
?A lot will depend on how consumers deal with current and forthcoming economic conditions,? Brown said.
Still, the experts maintain that the overall picture for the aquatics industry looks pretty rosy.
?People are being tighter with their discretionary incomes, but that said, our impressions on our finances can change quickly,? Sangree noted. He added that rebate checks will be arriving just in time for summer, the peak season for aquatics.