Where have you gone, Great Wolf Resorts (Nasdaq: WOLF)?
The pioneer of high-end hotel resorts with massive indoor waterparks appeared destined to rock the world when the company went public a little more than two years ago. Shortly afterward, the company got the nod as a Rule Breakers newsletter recommendation.
But Great Wolf was kicked out of the growth-stock research service's pack after a few disappointing quarters. The company's shares have been meandering in the low teens ever since, perhaps oblivious to the industry's progress elsewhere.
Great Wolf once managed the largest chain of indoor waterparks. With nine open locations and two more in construction, its holdings are still impressive, but its dominance is now challenged.
Earlier this month, InterContinental (NYSE: IHG) opened its 12th Holiday Inn location with an ambitious indoor waterpark makeover. Since last month, a consortium of private companies has opened three CoCo Key Resorts, with plans to open three more later this year. The plan is to have 20 converted hotel locations up and running in a couple of years. Income Investor pick Cedar Fair (NYSE: FUN) has one indoor waterpark in Ohio, and its recent regional amusement park acquisitions may ultimately inspire more, once it completes the tricky digestive process. Even Hilton (NYSE: HLT) has an indoor waterpark resort in Milwaukee.
In short, indoor waterparks are everywhere.
Yes, Great Wolf had lightning in a bottle. Along with Kalahari, it was the class of the niche. The self-contained destination model was resonating with the public, and holding back a few units to sell as condos helped to bankroll the hefty construction costs. Now the industry is being disrupted by nimbler players, who are ramping up quickly and cheaply by beefing up conventional properties.
The last laugh may still belong to Great Wolf. The company posted a turnaround quarter in November. Occupancy rates rose 9.5% during the critical summer season, reversing the debacle of 2005's pivotal third quarter. Its decision to move into new markets, away from saturated Northern strongholds, is paying off.
The company is barely profitable at the moment, but it's clearly asset-rich. With a history packing more twists than one of its waterslides, the time has come for Great Wolf to take pride in its recent accomplishments and reclaim its destiny as a family brand that matters.
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Longtime Fool contributor Rick Munarriz hit four indoor waterpark resorts this past summer. None of them were Great Wolf. He does own units in Cedar Fair. The Fool has a disclosure policy.
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