Chad Emerson interviews Scott Sanders, of the management consulting company Integrated Insight Inc., about the unique issues of waterparks. Prior to joining Integrated Insight in Feb 2009, for 20 years Sanders worked at Disney, where as VP of Pricing for Disney Theme Parks and Resorts worldwide, he oversaw all pricing efforts inclusive of theme park and waterpark admissions, room rates, food and beverage, merchandise, and many ancillary products and services.
Emerson: What are some unique operational issues that come up with waterparks that generally do not with hard parks?
Sanders: In the water park environment, guests are much more in control of their overall experience than they are in theme parks and amusement parks. To illustrate, on a theme park ride, guests are secured in the ride and all have the same experience. However, in the water park wave pool you have hundreds of guests with different levels of swimming skills, all trying to catch that same perfect wave. Their experience can be influenced by the size and power of the wave and the number of guests trying to experience the ultimate in “body surfing.” The open-ended nature of the situation makes it critical to have highly-trained employees with advanced skills and certification in areas such as water safety and CPR. Furthermore, safety standards may result in higher staffing to guest ratios for water parks.
Water parks also have guest and employee health and safety concerns related to water quality and air quality. Interestingly, chemicals are necessary to ensure water quality but can result in poor air quality, especially if facilities are indoors. Employee knowledge of standards and chemical training plays an important role, and signage telling guests to shower before entering the water and to avoid drinking or swallowing the pool water can help mitigate risk of water-borne illnesses. Strict rules and reinforcement of the rules around swim diapers and use of diaper changing facilities is a must.
Finally, Mother Nature can present operators with unique challenges. While theme park guests may be able to tolerate inclement weather, it can be unbearable and potentially unsafe for water park guests.
Emerson: Please compare/contrast the revenue models typically used for water parks and hard parks.
Sanders: Not unlike hard parks, admissions or ticket sales are the primary revenue driver for water parks. Annual or seasonal passes are a key part of the ticket portfolio designed to drive repeat visitation. Additionally, water parks generate revenue from food and beverage and retail sales. While the water park model has many similarities to the theme park model, water parks tend to be more seasonal and have a shorter experience. Both play into ticketing and pricing strategies. Water parks are much more likely to have day-of-week pricing and or partial-day admissions. Another fairly significant difference is guest purchase behavior. Water park guests are more likely to utilize lockers to store personal items while in the water park, taking away from spontaneous purchases. Revenue or sales strategies for food and beverage and merchandise must be re-thought.
Emerson: What are several operational or revenue innovations that you believe have had significant effects on water parks?
Sanders: The water park industry has grown significantly over the past ten years. As it has grown, owners and operators have become creative in order to optimize the value of their assets. Not only have they become more efficient through better designs, they have discovered the value of branding and theming. They have added wave machines producing perfect six-foot waves, every surfer’s dream, and some are offering 24-hour use. In addition, they are offering private surfing lessons and hosting competitions. They are also building on the brand by adding themed food and beverage and merchandise, and using their facilities to host special events and parties.
Another key development over the past ten years has been a move toward indoor water parks. The indoor water park has provided for a year-round experience vs. a seasonal operation. Most have been tied to hotel development. In addition to keeping the brand in front of consumers, water parks have been leveraged to help drive hotel value by helping to fill rooms and increase room rates.
One thing is certain, continued innovation will be required for future success. Looking forward, owners and operators who understand consumer wants and needs and deliver against those needs, ensuring a repeatable experience, will rise to the top.
Emerson: Why might an amusement and theme parks opt to add a companion water park (as many have) as opposed to, for instance, a golf course, bowling alley, arcade, etc.?
Sanders: Water parks today are designed to have something for everyone. Lounging for mom and dad, rides for the older children, and play areas for the younger ones. This is one attraction water parks may have over some of the other options, particularly bowling or golf that may be difficult for young children. They also allow for significantly more throughput than many of the other options which not only means more revenue, but also the ability to spread out overall theme park demand or capture excess demand during peak periods.
The creative aspects of waterparks and the ability to brand the water park experience as part of the overall experience are also appealing factors. No two facilities or water park attractions need be the same. The mix of activities is endless as is theming. This allows for a more dynamic and stratified pricing model. Well-run water parks can have very attractive margins.
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