As the economy begins to show signs of improvement, it appears recovery for the waterpark resort market is still something of a waiting game.
“Its’ kind of a mixed time right now,” said David Sangree, President of Hotel & Leisure Advisors, a Cleveland based industry consulting firm.
As of June 2010 the U.S and Canada had 144 indoor waterpark resort properties, and 38 properties with outdoor waterparks, according to a report by Sangree and his team. However, the report also notes that, “in 2010 the growth in indoor waterparks in terms of square footage will be the smallest in over ten years.”
Some new projects are happening. In March, Radisson Hotel in Albuquerque, N.M., opened an indoor waterpark; in April Sage Hospitality opened a CoCo Key Hotel and Waterpark Resort in Orlando, Fla.; and in June, Great Wolf Resorts announced a license and management agreement for the development of a new Great Wolf Lodge in Garden Grove, Calif. (near Disneyland). However, perhaps as many as 200 projects, according to Sangree, are in a holding pattern until financing opens up.
“We’re not seeing any money for new construction right now,” added Jeff Coy, president of JLC Hospitality Consulting in Cave Creek, Ariz.
He and others believe that may not change until next year or into 2012.
“I think it will be awhile before financing becomes available, unfortunately,” agreed Todd Neslon, via email. The owner and president of Kalahari Resorts and his team have been working to secure financing for a new property in Fredericksburg, Va. Nelson noted that the failure of some properties may hurt the reputation of the entire market with lenders.
Hospitality experts at Jeffer, Mangels, Butler & Marmara LLP are more optimistic. A spring 2010 report from the Los Angeles-based law firm indicates that some investors appear ready to jump back in.
Additionally, some troubled properties, including the Radisson Hotel and Waterpark of America in Bloomington, Minn., and Three Bears Lodge in Warrens, Wisc., have been sold and are now operating under new ownership.
All told, experts say waterpark resort development will bounce back, but recovery is expected to remain slow as lenders enforce tighter demands and more capital from borrowers. Coy anticipates that before new building picks up, there will be more operators and financiers taking advantage of “fire sales” and purchasing or refurbishing troubled properties.