(For more retail coverage, click GlobeSt.com/RETAIL.)
DENVER-A trio of companies is deep into a $1-billion plan to add water parks to 20 business class hotels over the next few years. The JV already has already acquired eight hotels and two now have water parks. One opened two weeks ago in Columbus, OH and the other will open next week in Arlington Heights, IL.
The JV is comprised of hotel developer Sage Hospitality, water park developer Wave Development LLC and the private equity firm Hexagon Investments. Sage president and CEO Walter Isenberg tells GlobeSt.com the plan is to have the water parks not only be profitable in and of themselves but also increase occupancy in the hotels on weekends and holidays, when occupancy is typically very low for business-class hotels. "We're adding an amenity that is going to drive RevPAR in the slow times," Isenberg says.
The total investment in each property, including acquisition of the hotel and development of the water park, is expected to range from $43 million to $65 million. At $55 million each, the 20-hotel plan would require a total investment of $1.1 billion.
The hotels already acquired all are located in Ohio (2), Illinois (2), Nebraska (1), Missouri (1), Massachusetts (1) and New Jersey (1). The property that just held its grand re-opening is the Cherry Valley Lodge. The property set to open next week is the Sheraton-Arlington Heights. In early 2007, water parks will open at the Sheraton Ferncroft in Boston and the BW Clock Tower Resort in Rockford, IL.
Branded as CoCo Key Resorts, the water parks will range from 40,000 sf to 80,000 sf, depending on the market, and all will adhere to the same 1930's Key West-themed design. The water parks will feature water slides, an indoor adventure river, a "dip-in" theatre, an indoor-outdoor spa, an interactive wave play island, an outdoor splash pad, a wave pool. Other amenities will include restaurants, a snack bar, lounge and arcade.
In addition to regional vacationers filling the hotel on weekends, the plan includes selling day passes to locals as well. To keep the hotel from losing its business-class feel during the week, the entrance to the water resort will be separate from the hotel. "The connection to the hotel will be somewhat subtle," Eisenberg says. "On a typical Tuesday night a business traveler would come into our hotel and not even notice the water park."
After building the portfolio, Eisenberg says a portfolio sale to an institution is possible but not certain. "Our expectation is that these will be tremendous cash-flow assets," he says. "So a bulk sale is possible but right now we are just building a portfolio, a brand."
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
