Sage Enters Waterpark Niche

By Staff -- HOTELS Magazine, 2/1/2007

Sage Hospitality Resources has opened eight CoCo Key Water Resorts in the United States, with plans for about a dozen more.

Indoor Waterparks = Fountain of Youth

DENVER, COLORADO In need of a solution to seasonal RevPAR

issues and to reinvigorate aging properties, the Midwestern

United States is witnessing a boom in indoor waterpark hotels,

which attract the regional holiday market with weatherproof

family-friendly fun. The indoor waterpark market could triple in

the next five years with some 242 projects in various stages of

development, says David Sangree, president of Hotel & Leisure

Advisors. Most are new constructions, but a significant number

are existing business-class hotels.

Denver-based Sage Hospitality Resources hopes to build the

waterpark concept into a national brand with its CoCo Key Water

Resorts. Since 2006, Sage has opened eight waterparks under

the CoCo Key brand in hotels that have struggled to fi ll rooms on

weekends and holidays. Costing US$43 million to US$65 million

for facilities of 40,000 to 80,000 sq. ft. (12,192 to 24,385 sq. m),

the Key West-themed parks are designed to

appeal to families seeking short weekend vacations.

Sage is partnering with established brands like Sheraton,

Marriott, Best Western and Holiday Inn, with the goal of

opening about 20 parks in the United States by 2008. It is

focusing on suburban and semi-urban locations that have steady

weekday business travel but soft weekend sales.

"A lot of investors have taken hotels with some physical

obsolescence and have added a reinvigoration to them in the

form of waterparks," says Alan Tantleff, executive vice president

of Jones Lang LaSalle Hotels. "It's a way to move the needle

signifi cantly for hotel occupancy."

The Midwestern waterpark craze is beginning to reach the

American coasts, but it could be awhile before the trend reaches

overseas, says David Bailey, managing director of Londonbased

TRI Hospitality Consulting. Aside from a handful of

isolated projects-including a US$87 million waterpark to be

built in Budapest-most European hoteliers have not begun

thinking of hotels as destinations unto themselves, Bailey says.

That could change soon, if industry leader Great Wolf

Resorts Inc. has any say. The Madison, Wisconsin-based

company has plans to expand into Europe, Asia and the Middle

East, although no timetable has been set, and CEO John Emery

is confi dent the product would be successful.

"What we do is pretty broad-based," Emery says. "People

like water, they like to be safe, and they like to be clean. What

we're fi nding is that our (concept) crosses cultural barriers."

Great Wolf operates eight North American resorts under the

wilderness-themed Great Wolf Lodge brand, plus a mock cruise

ship called Blue Harbor Resort, and it has two more resorts in

development. The brand's waterparks are highlighted by a 12-

level treehouse-style water fort with inner tube waterslides and a

giant water-dumping bucket. Great Wolf also offers a plethora of

other entertainment options, including adult spas, which set the

brand apart from most other hotel waterparks, Emery says. "The

thing about waterparks that people keep missing is this business

is 80% entertainment and 20% lodging," he says.

Battle Of Business, Pleasure

The potentially uncomfortable overlap between business

travelers and pleasure-seeking vacationers is not a concern to

Sage President Walter Isenberg. During the CoCo Key development

phase, planners took particular care to keep the waterparks

relatively isolated from the main lobby, to make sure seriousminded

business people are not irritated by gaggles of sopping

children running to and from the play area. "If you never want

to interact with or see the waterpark, you would never know it

existed," Isenberg says. "We believe that Sunday through Thursday,

most weeks, there are not a whole lot of families that are

going to be traveling with their kids and booking waterparks."

Unlike CoCo Key locations, which are essentially lighthearted

alter-egos of business hotels, Great Wolf Lodges are strictly

vacation-centric, and thus the two entities do not consider

each other competitors. In fact, aside from a few independent

hoteliers competing for Great Wolf's market share in its various

locations, it has no real rival, Sangree says.

The same can't be said for CoCo Key, which fi gures to face off

against Best Western International and Holiday Inn in locations

where the brands choose not to partner with Sage. Best Western

and Holiday Inn have been in aquatic recreation for years, though

previous efforts were not on the scope of current trends.

Holiday Inn is trying to recapture eroded waterpark market

share, with 12 full-fl edged waterparks in operation and another

13 in development, says Mark Snyder, senior vice president for

brand management. RevPAR in Holiday Inns with waterparks is

three times higher than comparable locations, he says.

Holiday Inn is not pushing the theme park atmosphere like

CoCo Key or Great Wolf; instead, the brand hopes to create an

experience that can be refreshed and tweaked as tastes dictate,

Snyder says. Lighting, music and décor will be ever evolving,

and the company is also considering retractable roofs to make

the waterparks more attractive during nice weather, he says.