Hoping to claw its way out of a freshman funk, Great Wolf Resorts
How well Great Wolf is doing at this point depends on how you want to gauge success. If you look at the older Great Wolf locations, things don't look so good. Occupancy rates and average nightly rates fell.
But things improve nicely when you tack on the Williamsburg and Pocono Mountains properties that opened last year. They are doing so well that Great Wolf as a whole has seen a 9% uptick in revenue per available room compared with the first quarter of 2005 (as opposed to an 8% decline without them).
That's been the knock on Great Wolf. The resorts do gangbusters business early on, but then buckle under competitive pressure and the faltering interest of the initially curious. Indoor water parks are still a relatively new phenomenon. Lavish lodges with active indoor play areas dominate the tourist haunts of Wisconsin, Michigan, and Ohio, but are still rare novelties elsewhere. Earlier this year, Six Flags
That may be Great Wolf's advantage as it expands into crowded markets. The two new openings for 2007 will be in Texas and the state of Washington. This promises to be an exciting introduction into some hungry markets. It's not like the Wisconsin Dells where dozens of hotels with watery play areas dot the tourist-friendly town. Larger metropolitan areas should be able to support Great Wolf's hefty lodging rates, given the concept's all-inclusive entertainment value.
Great Wolf's challenge is to exploit the virgin soil before the rest of the industry catches on. InterContinental's
Most of Great Wolf's worthy rivals are standalone locations like Cedar Fair's
The clock is ticking for Great Wolf. It better not blow its sophomore season.
Longtime Fool contributor Rick Munarriz enjoys taking his family on coaster treks over the summer. He owns shares in Great Wolf and units in Cedar Fair. T he Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.