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January 2007

Diving In

The first article in a special section on summer entertainment. Here we look at the lure of waterparks.

Written by Allen Best | 0 comment

The bar chart representing the growth in waterpark customers in the U.S. looks vaguely similar to that of snowboarders. From virtually none in 1983, the growth trajectory rises like a double-black-diamond trail. Even places with snowy winters are reporting big numbers. Which raises the question: do sandless beaches and water-based amusement rides with names like Hurricane and Cannonbowl make sense next to ski slopes?

Ski areas are just beginning to put their toe into the water, but there’s reason to believe they will succeed. Noah’s Ark, an indoor waterpark at Wisconsin Dells, Wisc., drew 576,000 customers last year. It is one of 18 waterparks in a resort area originally predicated upon the limestone cliffs and other natural features of the Wisconsin River. The Dells is now the model for waterparks worldwide.

What’s the attraction? A virtual exotic adventure, close to home. Noah’s Ark is a rough facsimile of a Caribbean setting “good enough to fool the kids,” reported a Washington Post staff writer in a February 2006 story. “Actually, kids who love amusement parks—bless their tacky little hearts—will probably prefer the faux tropical world of the Dells to a truly exotic tropic locale,” declared writer Cindy Loose. “There are more games here, more inventive ways to experience water and more thrills. Plus, there are no bugs, no sand to get caught in bathing suits, no darkness simply because the sun has set, and no sunburns.”

If this trick works in Wisconsin, will it work elsewhere? Can indoor waterparks fill hotel rooms in May and November, or help put skiers on slopes in January?

Looking Good at Massanutten

Kenny Hess, assistant ski area manager at Massanutten, Va., believes so. He says that waterparks strengthen the appeal of one resort vis-à-vis another. When people are booking their ski vacations, be it for a long weekend or a full week, a waterpark could be the deciding factor for some customers. To reinforce that bond, the resort’s spanking-new waterpark is connected thematically with the ski area in the feature names: Massanutten Meltdown, Avalanche, Peak Splash and Melting Mogul, among others. Massanutten’s $30 million waterpark has been in operation less than a year, so it has not been able to quantify this spillover effect yet.

But as part of the resort’s real estate proposition, Massanutten’s 80,000-square-foot waterpark is already a hit. The resort has 1,200 units now, and plans to grow to 3,000 units—all sold in weekly time-share units. The waterpark is a major part of the draw in moving this product, says Mak Koebig, vice president for Great Eastern Resort Corp., the owner of Massanutten.

But it’s a big investment, and there’s nothing gained by skimping on features. Koebig encourages other operators considering waterparks to loosen the purse strings for high-tech adventure features. You do not want a ho-hum ride, he warns, but rather something that the kids, once they have finished, will rush back into line for another trip. To broaden the family appeal of its waterpark, Massanutten included a 280-seat restaurant, plus a 5,000-square-foot arcade.

Exactly how does a waterpark fit into the overall operations? Massanutten is still working that out. Koebig says Massanutten started out operating 84 hours a week, but now reduces the schedule to 40 hours except when schools are out.

And that helps answer some of those questions about filling up the resort when the snow is gone.

Foggy Picture at Boyne

Boyne Mountain Resort, Mich., is one of the other pioneer ski area operators to take the plunge into indoor waterparks. Here, says Stephen Kircher, president and CEO of Boyne USA Resorts, the jury is still out. “We are only into our second season with it,” he says. “At this point we are digesting the reality of it, trying to figure out whether it makes sense anywhere else we are doing business.”

Avalanche Bay, Boyne’s 88,000-square-foot waterpark, was bid three years ago at a cost of $22 million. Rising prices for steel and other construction goods would push that to $30 million if built today, Kircher estimates.

As at Massanutten, the waterpark’s theme ties directly to Boyne’s ski product. Boyne Mountain has an Austrian-Swiss connection that is echoed throughout the resort. Avalanche Bay reinforces that connection with its theme of a Swiss Village being hit by an avalanche. Kircher has no doubts it is the right theme.

Waterpark Essentials

The difference between your neighborhood swimming pool with a slide and the big waterparks is like that between night and day. The three largest waterparks at Wisconsin Dells, for example, all share certain features: multiple swimming pools of various depths, a pool with basketball hoops and volleyball nets, and a pool with floating pads and ropes that kids can hang onto while attempting to walk across the water.

But the core of waterparks-as-destinations are thrilling, high-tech features. The Post describes a “screaming jag of terror” ride called the Master Blaster. Four 60-horsepower engines shoot 5,600 gallons of water a minute, producing what is reputed to be the only uphill water roller coaster in the United States.

A ski area waterpark may not need an uphill water roller coaster, but Kirchner and Koebig recommend features that attract younger, thrill-seeking demographics. In the case of Boyne’s Avalanche Bay, it’s a surf machine called the Rip Zone that cost $800,000. “It’s not a high-volume feature, but has high impact, and is in line with our image,” says Kirchner. “Without it, Avalanche Bay really would have been hollow, I think.” Avalanche Bay also has an array of slides called the Super G, the Downhill Matt Racer, and Vertigo, plus an array of more sedate features.

Bottom-Line Issues

To what extent do the demographics of water-park users and ski area customers overlap? At Boyne Mountain, the demographics square less than perfectly, says Kircher. (Boyne Mountain’s experience demands an asterisk: Michigan has the nation’s highest unemployment rate and the lowest hotel occupancy in the U.S. outside of Katrina-impacted areas). Waterparks tend toward more passivity than skiing, and the average income level of waterparkers is lower than ski area customers. This does not automatically present a problem, because waterparks operate year round, and ski areas already deal with different income levels between winter and summer visitors. But, at least at Boyne Mountain, this is a consideration.

Kircher says there are limits to the extent to which waterparks can counteract the midweek and shoulder-season doldrums. “It helps fill hotel beds in summer and in April, when kids are out of school. It has not helped during the mid-week,” he says. (But see story on page 36.)

Operational costs are significant. Labor costs are steady, and unavoidable, to ensure safety. Some relief may come from proposed Red Cross standards that would allow lifeguards with lesser swimming abilities to work the shallow pools. But needs are high, as are the costs. “Energy costs are up 40 percent from what we projected,” says Kircher. “The amount of water you have to pump through a large waterpark is so much more than a ski area in terms of snowmaking, and they’re running all the time, too. It’s amazing.”

Pat Helland, co-owner of the Wilderness Hotel and Golf Resort at Wisconsin Dells and a waterpark consultant to ski industry veteran Jerry Jones, takes a different view. He concedes construction costs are high, particularly in high-end Rocky Mountain locations, but maintains that improved engineering is mitigating rising electricity costs. And while pumping costs can be considerable, waterparks do not use overwhelming volumes of water. The water is recycled and refiltered constantly.

Helland is a consultant to a waterpark planned at Jones’s Grand Elk real estate development, located near the SolVista and Winter Park ski areas. There, as at many other resort areas, a waterpark will extend the average length of stay of visitors, Helland says. It gives youngsters something to do during the evenings. “It really makes sense, because hotel waterparks seem to succeed in established tourism destinations,” he says. A waterpark, he argues, will differentiate one ski area from another. And it need not be at a ski-in, ski-out location. It only need be within an easy drive.

Is Golf the Analogy?

Still, doubts persist. Are waterparks the equivalent of golf courses in the early 1990s? Fifteen years ago, everybody thought they needed to build a golf course, Kircher says, and now more golf courses have closed than have opened. “Golf courses aren’t making money at every place, and I think that waterparks will be in a similar position,” he says.

Kircher advises winter resort operators to be wary of consulting reports that are trying to sell the waterpark concept, instead of offering solid, bottom-line advice. Although customers have responded well to the waterpark at Boyne, the amenity represents a big hunk of capital, with no assurances that it will remain a vibrant attraction 10 or 15 years from now. “That’s the big, big question,” he adds. “Fifteen to 20 years down the road, after spending all this money, will this facility still be relevant to the kids and make sense, and how much will it cost to make it relevant over the long haul?”

Massanutten’s Koebig believes the market is nowhere close to saturation. “There is [only] one other in Virginia, and it’s quite a ways from us,” he says. “I’m not worried.” Helland, amidst the water wonderland of the Dells, agrees. As does Jones. Waterparks and fractional timeshares are a “natural tie,” he says, and “putting them into a ski resort makes a tremendous amount of sense.” The key, he says, is the lodging.

Silver Mountain Resort in Kellogg, Ida., is making the same bet. Its 47,000-square-foot waterpark will open in spring 2007 and will be one among many amenities: an 18-hole golf course, a 3.1-mile single-stage gondola, and, not least, skiing. Again, real estate is part of the story, although Cathi Jerome, marketing manager, insists it was not the sole motivating factor. The resort has 68 condominium units, with another 99 coming on line this spring, and another 110 by December 2007. Customers are expected from along the I-90 corridor, from Missoula, Mont., to the east and Spokane, Wash., to the west, as well as from Seattle, Portland, and other coastal cities.

Like any other major project, a successful waterpark requires careful planning and analysis. It’s not a slam dunk by any means. But for many resorts, the potential to boost other-season business and augment winter business is too good to overlook.