Unique Ways For Resorts To Radically Increase Revenue
Have you spent much time lately considering ice cream parlors, specialty retail stores, waterslides, or aromatherapy treatments? If so, you could be among a growing number of timeshare resort owners and operators nationwide looking to increase top-line revenue in new and inventive ways. An added amenity such as an indoor waterpark, spa, retail store, or eatery can increase a resort’s overall perceived value to potential owners - resulting in sales at increased point values. Resorts can charge higher maintenance fees as attractions are added, thus passing the cost along to owners. Additionally, resorts with added features can achieve higher annual revenues, especially if those features are available year-round.
Indoor Waterpark Resorts
Historically, the primary growth of indoor waterparks in hotels and resorts has taken place in summer vacation-oriented locations. However, indoor waterparks are increasingly being developed in suburban and urban locations. Since the early 1990s, indoor waterpark resorts have been popping up across the United States with escalating frequency. According to Hotel & Leisure Advisors, there were 100 operating indoor waterpark resorts in the U.S. in 21 different states at the end of 2007. These indoor waterparks range in size from 10,000 to 173,000 square feet, averaging 33,172 square feet of indoor aquatic space. The cost to build these large-scale indoor waterparks has ranged from $300 to $500 per square foot of net indoor waterpark space. The cost is highly dependent upon the location, amount of theming, and the attractions included.
Addition of an Indoor Waterpark to an Existing Resort
Based upon the findings of research conducted for numerous resorts in the Wisconsin Dells area, where indoor waterparks are most prevalent, the inclusion of an indoor waterpark within a condominium resort complex can increase the selling price of the condominium units by as much as 50%. We interviewed executives from some of the largest U.S. timeshare sales companies, as well as exchange companies. Due to the low number of timeshare resorts currently offering indoor waterpark components, it is difficult to pinpoint the precise benefit the waterpark has on timeshare sales. However, our interviews revealed that timeshare resorts have the potential to increase point values for weeks sold by up to 30% with the inclusion of a large-scale indoor waterpark. In addition, our interviewees stated that having an indoor waterpark helps a timeshare resort to sell its less desirable weeks both at a quicker pace and at higher point values than would have been possible otherwise. Indoor waterparks have also helped to boost occupancy levels at resorts, which has led to increased ancillary revenues in other departments such as food and beverage.
To date, five timeshare resorts in the United States include indoor waterparks with another adding an indoor waterpark in 2008. According to our confidential interviews, several more are in the planning stage. The following chart depicts the six U.S. timeshare resorts offering indoor waterparks. We note that the Resort at Split Rock’s indoor waterpark is still completing construction and will not open until summer 2008.
Massanutten Resort reported that after the indoor waterpark addition was announced, both sales and prices of timeshare units increased. According to a representative of the Westgate Smoky Mountain Resort at Gatlinburg, the waterpark amenity has been a definite boost to timeshare sales. Management of the Resort at Split Rock indicated that the average price of the timeshare week sales has increased since the announcements for the proposed indoor waterpark. Glacier Canyon at the Wilderness Resort in Wisconsin Dells has enjoyed very strong sales of timeshares which management attributes to the indoor waterpark amenity offering. They will add an additional 100 units by 2009.
Addition of Timeshare Units to an Existing Indoor Waterpark Resort
To pay for the addition, most timeshare developers are charging increased maintenance fees. With the exception of the Resort at Split Rock and Massanutten, all of the previously listed timeshare resorts include waterpark admission rates in the owners’ annual fees (maintenance fees). The fees are therefore somewhat higher than those charged by timeshare resorts without indoor waterparks. Alternately, the Resort at Split Rock and Massanutten Resort charge a discounted daily admission price to their timeshare owners for the waterpark use.
Further Revenue Opportunities to Consider
The amenities listed previously can increase revenue via the sale of daily admission for usage/entrance while also generating increased demand for some hard to sell off-season weeks. As an example, day passes to an indoor or outdoor waterpark and/or amusement park can be sold for $25 to $50 per person depending upon the size of the park, the number of attractions offered, and the level of theming.
Another way a resort can increase its top line revenue is via the development of new revenue centers popular among guests. As timeshare guests typically prefer resorts in close proximity to several entertainment and activity options, resorts have the potential to earn extra income by providing such amenities on site. Potential revenue centers not previously mentioned include:
- Restaurants, bars, nightclubs, coffee shops, and other eateries
- Retail shops (which could be leased to an outside operator)
- A day spa (which could be leased to an outside operator)
- Family entertainment center (including features like miniature golf, laser tag, an arcade, and virtual reality games and simulators)
- A multi-purpose theater capable of showing movies and hosting comedians and various types of musical and theatrical groups
The timeshare resorts mentioned earlier all have several amenities and entertainment options to offer which require timeshare owners to reach for their wallets. For instance, Wilderness Territory Resort includes a six-hole executive par 3 golf course, an 18-hole golf course, five different eateries, a spa, and an arcade. Massanutten’s timeshare resort includes twin 18-hole golf courses, 14 ski runs, and six eateries. Westgate Smoky Mountain Resort at Gatlinburg’s amenities include an arcade and two eateries. The Villages Resort offers a marina, rental of paddle and pontoon boats, jet skis, miniature golf, horseback riding, and an activity center. The Resort at Split Rock charges additional fees for multiple eateries, an indoor sports dome, bowling, movie theater, 18-hole golf course, and spa. In addition to being revenue-driven, all of these amenities aid in selling timeshare weeks.
Summary
AUTHORS
David J. Sangree, MAI, CPA, ISHC is President of Hotel & Leisure Advisors, a national hospitality consulting firm. He performs appraisals, feasibility studies, impact studies, and other consulting reports for hotels, resorts, waterparks, golf courses, amusement parks, conference centers, and other leisure properties. He has performed more than 1,000 hotel studies and more than 100 indoor waterpark resort market feasibility and/or appraisal studies across the United States and Canada.
He was formerly employed by US Realty Consultants in Cleveland and Columbus, Pannell Kerr Forster in Chicago, and Westin Hotels in Chicago, New York, Fort Lauderdale, and Cincinnati. Mr. Sangree received his Bachelor of Science degree from Cornell University School of Hotel Administration in 1984. He became a certified public accountant in 1989. He became an MAI member of the Appraisal Institute in 1995 and a member of the International Society of Hospitality Consultants in 1996.
Since 1987, Mr. Sangree has provided consulting services to banks, hotel companies, developers, management companies, and other parties involved in the lodging and resort sectors throughout the United States, Canada, and the Caribbean. He has spoken on various hospitality matters at seminars throughout the United States and on Good Morning America. He has written numerous articles for, and is frequently quoted in magazines, television, and newspapers covering the hospitality field.
He can be reached via telephone at (216) 228-7000 extension 20 or via e-mail at [email protected].
Laurel A. Keller has been a hospitality consultant and appraiser since 2001 and holds a Certified Real Estate Appraiser’s License in the state of Ohio. She has performed appraisals, market feasibility studies, and impact studies for a wide variety of hotels, timeshare resorts, golf resorts, ski resorts, indoor waterpark resorts, restaurants, and other leisure and hospitality oriented income-producing assets in over 25 states. Ms. Keller is a graduate of Purdue University’s hospitality management program. She has held management positions in the food and beverage, front office, and sales departments of hotel and country club properties in Ohio and Illinois. She can be reached via telephone at (216) 228-7000 extension 22 or via e-mail at [email protected].