Tourism & Hospitality and Real Estate & Retail

Indiana joins splashdown of water parks: Indoor resorts on the rise as hotels try to lure guests during offseason

April 2, 2007

The names Caribbean Cove and Paradise Bay inspire thoughts of tropical destinations where sunbathers slather lotion like Hoosiers butter their corn on the cob.

In reality, these types of "resorts" are spouting up throughout the Midwest, including Indiana, and require no protection from harmful ultraviolet rays whatsoever. They're indoor water parks, a trend hoteliers are embracing to cater to families seeking a weekend getaway-and to boost occupancy during the off-season.

The Indianapolis area features just one such water park so far-Caribbean Cove at the Holiday Inn at Michigan Road and Interstate 465. But that will change soon. A developer is expected to break ground on a massive water park this summer in Fishers, and another is eyeing the region for locations.

Developers White Lodging Services Corp. of Merrillville and Indianapolis-based REI Real Estate Services even proposed an indoor water park for their massive downtown JW Marriott hotel project, but it ultimately was squeezed out of the plan after the city advised the team to increase the number of hotel rooms to 1,000 to improve Indianapolis' chance of hosting the Super Bowl.

A simple swimming pool doesn't seem to cut it with some hotel guests anymore.

"They're getting bigger and fancier," said Mark Eble, a hotel consultant and regional vice president for Philadelphiabased PKF Consulting. "It's characteristic of the amusement parks-you're only as good as your newest ride."

To be sure, simple slides have given way to wave pools, water coasters and giant funnels that toss their occupants into the water below. The result is an industry experiencing phenomenal growth.

From 1996 to 2005, the number of indoor water parks in the United States mushroomed from four to 71, according to the World Waterpark Association in Overland Park, Kan. Moreover, the WWA is tracking a remarkable 121 projects that are either proposed or in progress in the northern half of the country.

The average rate of attendance for all water parks, not just indoor facilities, is growing 3 percent to 5 percent each year, according to the WWA.

"This is a trend that I think has long-term potential," said David Sangree, president of Cleveland-based Hotel & Leisure Advisors LLC. "But there is a limitation on how many of these a market can handle."

Paradise in Fishers

The Wisconsin Dells, for instance, boasts 30 water parks and is at a saturation point, said Sangree, who conducts marketfeasibility studies for developers. Central Indiana is in no danger of approaching that number, but will add another within two years.

Paradise Bay is scheduled to open in Fishers on the former Britton Golf Course site at State Road 37 and East 131st Street by March 2009.

The $80 million project is led by local developer Puller Group and will feature a 16-acre water park and hotel within the 104 acres of Fishers Marketplace, a mix of shops, restaurants and offices.

The WWA considers an indoor water park a "destination" resort if it measures at least 30,000 square feet. Paradise Bay will be double that size and dwarf the 25,000-square-foot Caribbean Cove on Michigan Road.

"If you go someplace where you have to drive, you don't have as much time," said Kenneth Puller, CFO of the Puller Group. "Here, you can spend all day and spend the night, and go home. That's the whole purpose of the park. That's why I think it will be a real winner."

Features will include a wave pool, lazy river, a giant tipping bucket and several rides. In addition, children will be able to rollick in an adjoining, 20,000-square-foot play area.

Puller hired FLG Hospitality of Columbus, Ohio, to manage the adjoining 236-room Sheraton hotel that will have a pool, spa and fitness center for adults.

The rooms will be about 25-percent larger than typical hotel rooms, to accommodate families, Puller said.

The top floor will have a conference center and meeting space in an effort to attract business travelers. Separate entrances to the hotel will enable those visitors to avoid the water park.

Caribbean Cove

Courting business guests in touristy surroundings might be difficult, however. The Holiday Inn on Michigan Road has lost some commercial clientele due to its Caribbean Cove addition, Sangree said. But the hotel is attracting a lot of guests. In fact, a visit to the Web site showed almost the entire month of March had been sold out.

Unlike Paradise Bay, which will have day passes available for local residents, Caribbean Cove visitors must spend the night, unless they're hosting a party for up to 10 guests. Parties are available Sunday through Thursday.

Executives for locally based General Hotels Corp., which owns Caribbean Cove, did not return phone calls seeking comment about the water park.

Tim Worthington, who owns local hospitality consultancy Worthington Group, was longtime president of General Hotels and oversaw Caribbean Cove's opening in 2004.

"My thought was that it was a way to be unique again," he said of the water park. "There was a lot of competition."

Eble praised General Hotels for its decision to add the water park.

"They had some available land and were looking at a way to boost traffic on some slower days," he said. "That's as good an example as I can think of for why people do this. From where I sit, it's been a home run."

Eble thinks Paradise Bay in Fishers can have similar success, mainly because Fishers is one of the fastest-growing cities in the country and is supported by a strong residential base.

Waves in Shipshewana

Annual average occupancy rates for resort water parks during the past six years have fluctuated between 55 percent and 61 percent, according to Tennesseebased Smith Travel Research.

While those figures might seem normal, Sangree said, they're really quite strong. That's because many of the hotels are in seasonal resort areas that suffer during the winter months. Average occupancy rates during the summer are as high as 75 percent.

There's no doubt Shipshewana in northern Indiana's Amish country is a tourist destination. For that reason, Valparaiso-based Focus Hospitality Services LLC is building its WanaWaves indoor water park in the community of roughly 600. Set to open in July, the $25 million resort includes a 25,000-square-foot water park and 160-room hotel.

"Shipshewana is a growing, dynamic market with a huge tourism base already," said Mark Moore, vice president of Focus Hospitality's Splash Universe arm. "It just made sense."

Focus Hospitality is so certain indoor water parks are the wave of the future that the company sold most of its 22 hotels to reinvest in the trend. It will open one in St. Louis in 2008 and is scouting every major U.S. city, including Indianapolis, for more opportunities.

The water parks are a natural evolution of the hotel industry's 50-year effort to attract families, Eble said. It began with indoor pools and morphed into poolside guest rooms popular with Holiday Inn's Holidome concept.

Likewise, the water parks are an attempt to boost business during down times.

"Hotels are a fixed-cost business, and the biggest cost is labor," he said. "That will be there whether you're selling 100 or 200 rooms."
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