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Great Wolf Resorts Inc. is North America's largest family of indoor water park resorts and is in the business of “creating family traditions, one family at a time” with industry leading guest satisfaction scores. Although Great Wolf’s expansion plans have been stalled by the recession, third quarter results showed promise and a strategy to develop proprietary amenities and c
onserve capital by licensed expansion should see Great Wolf on the move again as the economy improves.
In 14 years with the company CEO, Kim Schaefer, has worked in a variety of roles, developing the brand and overseeing operations, however this October we saw her in a completely different light when she appeared on CBS’s Undercover Boss. The premise of the show is simple: leaders of companies get the opportunity to go undercover and work alongside their employees. Schaefer, like others before her, may have been expecting the highlight of the show to be the chance for her to see the underbelly of the company and spot process improvements. Human nature being what it is the rest of us watch the show hoping to see the Boss struggle with tasks that their employees juggle easily everyday. However, surprisingly the real TV magic came when the employees’ life stories were revealed and a real connection was forged between Schaefer and the people she worked alongside. Appearing on the show is potentially a very risky PR strategy but one that undoubtedly paid off as Schaefer came across as genuine, likeable and self assured.
Blooloop caught up with Schaefer at the IAAPA expo to find out how Great Wolf is doing and what life is like after Undercover Boss.
Recession
Great Wolf’s third quarter results to the end of September 2010 showed “significant improvement” year-on-year. While expansion plans may have slowed down, the quarterly results showed the existing business is riding the recession with adjusted EBITDA increasing 3.5 percent to $25.7 million from the prior year quarter driven by an increase in revenue – same store total revenue per occupied room increased 2.2 percent.
Blooloop: What has been the effect of the recession for Great Wolf?
Schaefer: You know there are two parts to the recession. One is the consumer experience and for us we’re down a little bit on occupancy so we’ve ridden the consumer discretionary spend recession very well. We’re very pleased that people have chosen to take a Great Wolf vacation, that’s been very positive, and we’re very pleased on the brand side.
On the growth side it’s completely stopped because getting loans for our speciality niche is very difficult, in fact impossible right now. Nobody is giving loans and it’s unfortunate because now would be the perfect time to build: construction costs are low, people need jobs and we've got facilities ready to be built. So it’s tough – we tend to be very dramatic you know it’s either everybody can build or nobody can build. You can write good contracts and get good people back to work – that’s been the unfortunate part of the recession.
Brand Expansion
Great Wolf have made a strategic decision to structure future development projects as joint ventures or 100% license and management projects to allow more efficient use of capital whilst leveraging brand, business model and operating expertise. Great Wolf already has two properties, Wisconsin Dells and Sandusky, which are owned by CNL Lifestyle Properties, Inc., a real estate investment trust, as well as a licensing and management arrangement with 
Ripley’s in Niagara Falls. In June Great Wolf announced that it had signed a license and management agreement for the development of a new resort in Garden Grove, California.
Great Wolf have also made it clear in their 2009 annual report that they believe the brand “could be successfully leveraged in certain international markets” and are “currently discussing opportunities with potential international partners to build Great Wolf Lodge resorts beyond North America… seeking to enter into licensing and/or management agreements with experienced companies that have local market knowledge.”
Blooloop: You’ve said that you’re expanding by licence to conserve capital. Is that also to maintain control of your brand?
Schaefer: Yes, it’s tough because we have so much experience in management, and all of the customer service and infrastructure that you need is so integrated into the actual product that you’re building. We’ve got CNL, we’ve got Ripley’s Entertainment, and it’s our intent to offer licence with management to any new prospective.
Blooloop: Are you actively looking for partners overseas?
Schaefer: International is a nice opportunity for us. Families are families no matter where you go in the world. Certainly there are different customs and attributes to those families but they enjoy spending time together and being able to provide that close-to-home experience for them is important. We have a lot of expertise that we can offer an owner or master developer. People will drive for 2 to 3 hours to come to our facilities so being part of something bigger is nice.
We’re looking for the same thing again, licence and manage. Finding those owners or developers who are looking for this kind of experience and then we can lend out expertise to their project. We’ve got some active conversations but we don’t have anything that’s announced at this point.
Europe is perfect for us because culturally there are a lot of similarities. You get over into the rest of the world and there is more market and cultural diversity but it’s not something that we wouldn’t do. We’ve just opened it up to all conversations regarding this type of a project.
Proprietary Amenities
Great Wolf has enhanced its proprietary amenities in 2010, first with the acquisition of a majority stake in Creative Kingdoms, LLC, developer and operator of technology-based, interactive quest adventure experiences MagiQuest in June and then with the pink carpet opening of its first, freestanding Scooops Kid Spa at the Mall of America (Bloomington) in August.
Blooloop: Please can you tell us what your strategy is for Great Wolf’s proprietary amenities?
Schaefer: There is only so much time people will spend in the water park and because they’re staying overnight we want to be able to offer them what we call “wolf moments” or experiences that they could enjoy as a family. We found that for us offering something that nobody has is really important, so we spent time finding and creating. Scooops was a creation for my daughter; she loved going to spas and I don’t like that “shh be quiet” so I created a Scooops product line. You know those are
the fun things that we get to do in our business because we’re 100% focussed on families. Everything we think about every day is how do we entertain the families, what can we do that’s unique, how can we take a trend like kids enjoying spas and create something out of it. It’s fun and kids love it, so now taking it outside of the lodge is a nice opportunity for us for a little bit of brand extension. It’s not a huge growth vehicle but we do believe that having that expertise in family entertainment allows us to take some of these products and grow them.
Taking a majority interest in Creative Kingdoms was a little bit defensive to protect our proprietary amenity, but we believe also as a company, Creative Kingdoms and what they have in patents and technology opportunities is a huge business model so we took a majority interest to actually be able to help them grow. We run it as a separate company and what we try to lend is additional support and structure for them. So kind of a twofold strategy: offence and defence.
Project Green Wolf
The Project Green Wolf initiative has resulted in Great Wolf being the first and only US hotel chain to have all properties Green Seal certified. Although it seems counter-intuitive that a water park can be green, Great Wolf have had considerable success in not just becoming more environmentally friendly, but also in bringing staff and guests along with the programme.
Blooloop: Can you tell us how Project Green Wolf evolved?
Schaefer: Project Green Wolf was around for many years but we just never really did anything much with it. We’d say, “Hey everybody come up with one idea for conservation”, and we would just throw a few things in the bucket under the name of Green Wolf. We knew we really wanted to do it but you can only do so much until you can inspire somebody to take on the project. So it’s like anything, first you have to find the people. Our largest property near New York was real passionate about it and they found the Green Seal programme. Again we didn’t want to recreate the wheel: we started with something that existed and then worked with Green Seal to add the waterpark element.
So it needed somebody to find the platform, Green Seal, and say, “You know what I’m going to take it upon myself to do this”, and finally those people who were excited about it have made it into a movement. Then you have to make time for those resources and you have to put the money towards those resources – a lot of times we like the idea of making something happen but we don’t want to allocate the time to have it
Blooloop: What has the response from guests been like?
Schaefer: The majority appreciate that it’s there but it’s not top of mind. People appreciate it as long as they don’t have to pay more for it.
Blooloop: So you haven’t passed any costs onto the guests?
Schaefer: No we haven’t. We’ve just adopted it as a way of doing business. I think it’s interesting that we were always very green on the water park side and a lot of the reason why this movement was so important was that people looked at us and said:
“You’re not coming to our city and taking all of our resources”
“But we use less water than the hotel down the street”
“Prove it!” [Laughs]
So that stamp helps.
Undercover Boss
Schaefer appeared on the CBS show Undercover Boss in October. Posing as a back to work Mum, Schaefer worked as a waitress, at reception, in the kids club and as a pool attendant. In the show we got to see Schaefer struggle with pizza making, drinks orders and even tackle an "AFR" (Accidental Fecal Release) in the pool. More interestin
g was that Schaefer’s good humour and warmth allowed her to connect with the employees who then shared something of their lives. Whilst their stories were not remarkable in the sense that any group of people would have similar worries and problems, what was notable was the employees’ commitment to their jobs and Schaefer’s ability to empathise. Schaefer also understands that the guest experience is dependant on the front line employees, and that Great Wolf’s ambition to be North America’s premier family entertainment brand can only be achieved with a happy workforce.
At the end of the show the employees who worked with Schaefer were re-introduced to their CEO and, in truly moving scenes, we saw Schaefer offering help to improve the life of each of the employees: a change of shift for Jackie so that she can attend hers kids’ extra curricular activities as well as payment for her knee surgery and recovery time; a promotion for Cub’s Club Bree, whose husband had just been made redundant and a college scholarship for her daughter; and flying lessons and development programme for ambitious lifeguard supervisor Kelly. Schaefer was moved to tears in particular by Deanna who lost her daughter and is now rebuilding her life as a working mum with a young child. Schaefer gave Deanna 6 months off to be with her new baby and a promotion.
Blooloop: Have you seen any effect from the show in terms of the business?
Schaefer: We’re having a good quarter and as we’ve said our business has held up pretty steady and it’s continued to as the recovery gets stronger. I think there’s some effect but it’s hard to measure. Our social media director went out to every single person on our database letting people know about the show. What I’ve heard from people is that it was a good reason to come back or else that “I hadn’t been there yet but when I saw the show it reminded me of why I should go”. So I think that there’s some effect but I don’t know how much. What I do know is that we have so much more awareness for our brand than we did 2 months ago.
It’s a family show and one was of the neat effects was having kids connect with Great Wolf. I’ve had more 11 year old boys chasing me down the halls than I did when I was 11 because this was personal for them, they watched the show on TV and said “I know that place I’ve been there, I get that and I can be a part of it”.
Blooloop: Were you worried about appearing on the show?
Schaefer: A little bit. It was fun but it was nerve wracking because I was going on to something that was a little unknown and it was on national TV: I didn’t know what I was going to be doing or seeing. Even though I wasn’t the most competent I knew all the jobs and have done them in some shape or form – at least I know every position that we have in our company.
Blooloop: I don’t think it mattered that you couldn’t instantly pick up the jobs perfectly. It made you more likeable that you struggled a bit and could laugh about it. I was surprised by how moving the show was.
Schaefer: I agree. I was so overwhelmed at the end; I have choices and I work a lot and my family may have to make sacrifices, but my husband can stay home and if I want to take a day off and pick up the kids from school I can. I have a lot more choices than a lot of our employees do and what moved me was that they come in with passion and commitment to our company even though they’re making a lot of sacrifices at home. As a leader of a company I just don’t know how you couldn’t be so inspired and so moved by all of that commitment, because you know that it’s not just those people that I worked with. You know that there’s a lot more people like that in our company and sometimes I don’t think that we take the time to realise the hardships that they go through. In getting to know these people there was definitely a connection there and it wasn’t what I expected. Since the show I’ve been out to all those properties and got a chance to sit down with everybody and stay in touch with them. They’re just people you want to have in your life and to be able to help them out and make their lives a little bit better.
That one girl at the front desk – all that I did was change her to a 7 to 3 schedule. We’ve got lot of young kids and lots of people who don’t have any other commitments. They don’t mind working those other remaining shifts – we do it all the time for college students or working around high school schedules. Why can’t we do it for working mothers? You know it was the easiest change. Just that little change didn’t cost me a dime.
Blooloop: I have to admit that I cried when I watched the show.
Schaefer: I can’t tell you how many people have said that to me. You made me cry, my wife was crying. I think it’s easy to – knowing the stories.
Blooloop: As you say, any employee would have a story and even though you were able to help the people you met, what changes have you made across the company?
Schaefer: There are a few things that we’re doing. Were still getting our arms around it but the first is a leadership counsel. There are a lot of young people like Kelly who we want to keep in our company and he’s not going to be a lifeguard supervisor forever. He’s going to grow so we need a programme that gives him and people like him an opportunity to grow as leaders, to mentor them and give them some of the tools that they need. We’re starting that next year.
The second things is “not so under cover boss”. Our entire senior management team next year is going to hold a contest about why we should come to your department with you and do the same thing that I did. What we’ve said is that it can’t just be me, we need our leaders 1, 2 or 3 levels removed to be spending some time truly working beside these people and getting to know them and then changing a schedule or identifying a great employee who could and should do more with our company. It will take a lot more effort to make sure that they can do it but it’s a fun way to bring light to the fact that we need to get to know our employees and find out what’s important to them.
It’s a great feeling and everyone is going to have the same feeling that I had when they go and work with 3 or 4 people next year and be able to say, “Wow, I got to make a difference for somebody”.
by Rachel Read
