On a day that hot initial public offerings (IPO) are soaring out of sight, Great Wolf Resorts
Great Wolf Resorts is establishing a new niche, targeting families with children two to 14 years old looking for a drive-to resort featuring an indoor water park and other family-oriented entertainment.
The company operates four northwest-themed Great Wolf Resorts and one nautical-themed Blue Harbor Resort. The resorts are in such famed locations as Wisconsin Dells, Wis., and Sandusky, Ohio -- but new resorts are being built in Williamsburg, Va., the Pocono Mountains in Pennsylvania, and the Canadian side of Niagara Falls.
For the price of a room, a family gets full access to a 34,000-82,000 square-foot indoor waterpark and a "signature (emphasis added) 12-level treehouse water fort." That is one tall John Hancock!
Unlike the hot IPO for the Las Vegas Sands
Revenue is split 70% for rooms and 30% for food and beverages. The IPO's proceeds will be used to reduce debt and help fund the current expansion. The reduced debt will help results, as will economies of scale as the company grows.
Investors are expecting that families with young children are looking for a two- or three-day resort experience that theme park operators such as Six Flags
This was not a highly anticipated IPO, but it priced at the high end of expectations. The stock has faded as the trading day continued, but it is still up 20% from the IPO price. Investors would be wise to let the IPO froth settle while they wait to see if this company can, in fact, turn a profit.
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned but likes to visit Las Vegas.