My research thesis is the end result of a graduation assignment commissioned by Tourist Development and Attraction Consultants (TDAC).
TDAC is a European consultancy firm founded by former Efteling COO Coen Bertens and former BRC Imagination Arts executive Bart Dohmen. It has indicated that there is an increasing amount of European holiday resorts investing in the development of a water park. TDAC assumes that water parks can have a significant positive effect on the business of European holiday resorts.
Image credit: WhiteWaterNevertheless, there is only limited common industry knowledge about the role of water parks within the business model and strategy of European holiday resorts.
Multiple involved stakeholders such as investors, operators, and suppliers can benefit from this specific knowledge. Therefore, this study functions as an information source to share within the leisure and tourism industry.
Based on the main conclusion of the research it can be stated that the development of a water park is a great investment opportunity for European holiday resorts. Investing in a water park is a way to create additional product value.
The investment in a water park directly increases the asset value and product value of a holiday resort. In the long term, this investment eventually results in a higher financial return.
A water park causes a variety of positive economic influences on the business model and strategy of holiday resorts. For instance, it has positive effects on essential key performance indicators. These positive effects can result in a consolidation of the financial position of a holiday resort. In turn, this strengthens the long-term feasibility.
In the end, it is recommended that European holiday resorts invest in a water park. This attraction creates additional product value which results in significant positive effects on their general strategy and business model.
A water park investment has a significant positive influence on the following key performance indicators of holiday resorts.
The following model visualizes the influences of a water park investment on the key performance indicators of a holiday resort.
To indicate the general business model of European holiday resorts, there is a defined business model canvas that functions as a rough benchmark. The investment strategy behind this business model is focused on generating income from managing the park as well as increasing asset value. For owners, holiday resorts function as long-term investments in real estate property to generate cash flow and increase capital growth.
The business strategy of a water park investment is to achieve a positive financial return on its capital expenditure. Because it takes a relatively high capital expenditure to develop a water park, it takes a longer period to get a positive financial return.
On the other hand, the result of capital expenditure is a direct increase in the asset value of the resort. Next to the capital expenditure, a water park also contains high operational expenses. Due to high operational costs regarding energy, safety, staffing, and maintenance, a water park is considered a high-cost attraction. It significantly increases the operational expenditures of a holiday resort.
Nonetheless, a resort can spread its overhead costs enabling the OpEx to stay financially feasible for the business model. Despite a relatively high CapEx and OpEx, water parks are still considered in the long term to be a profitable investment.
The presented business model canvas visualizes the impact that a water park has on the general business model of European holiday resorts. The investment in a water park significantly influences the general business model in a variety of aspects.
Firstly the business model is expanded with a new key partner and an extra revenue stream. Furthermore, the key activities, key resources, channels, revenue streams and value proposition of holiday resorts are positively influenced. Meanwhile, the cost structure and some customer segments are negatively influenced by a water park.
The product mix of a water park is one of the most crucial factors that influence the level of success. Therefore it is recommended that European holiday resorts develop a water park product mix that meets the following aspects:
The extra revenue of a water park investment in the short term does not outweigh the extra operational costs. So, the most challenging part of a water park development is to effectively operate it to achieve a positive financial return.
Most water parks only achieve successful profitability after a long term of effective operation. To maintain effective operation it is recommended to execute the following points:
Cost reduction: It is essential to reduce operational costs and spread the overhead costs over the operation of the whole resort.
Efficient operations: To save costs and it is necessary to operate efficiently.
Regular developments and investments: It is important for effective management of the park to keep developing the operations. Owners should also invest regularly in maintenance to control the quality of the park.
Source: Roovers, T. (2023). Justification report: Influence of water parks on European holiday resorts. TDAC. Breda University
Involved experts: Bart Dohmen, co-owner TDAC; Inaki Laucirika del Valle, a market intelligence specialist at ProSlide; Ivan Koole, water park manager at Center Parcs Port Zelande; Lars Lenders, former business development manager at ProSlide and van Egdom; Domingo Vergoossen, VP global business development at WhiteWater and Michael Kreft von Byern, general manager of Rulantica at Europa-Park.
Top image: credit ProSlide
Costs associated with taking on such an endeavor will depend largely on your short and long-term goals for the park. Your first, and most important investment, will be in land. When choosing your location, carefully research the areas you’re considering. Choose a well-populated areas, centrally located for easy customer access. If your vision is to operate a large tourist attraction, choose a city with an airport. Visitors arriving from other states, cities, and countries will be ready to start their experience. If they have to travel several additional hours to get to their final destination, they may decide to make other plans. Experienced waterpark owners recommend purchasing between 8 and 15 acres of land, depending upon what type of waterpark you plan to build:
Once you’ve purchased the land, meet with an experienced consultant and contractor to begin the planning process.
Construction costs will vary depending upon how large of a facility you wish to build and where in the country you’re building, but average between $250 and $600 per square foot. Reports indicate an indoor park with 2720 square feet would set you back almost $690,000. Included in these costs are: building, HVAC, pools, mechanical, snack bar, supporting areas, theming, and waterslides and recreation equipment. For the same construction services, a 9450 square foot indoor park would run close to $2.5 million, averaging $273 per square foot. Owners of exclusively outdoor park report startup costs of approximately $1.5 million.
Do not let these numbers discourage you. To save on costs, many park owners purchase enough land to fulfill their vision, but start out with the essentials that fit into their budget. As business picks up, they invest a portion of their profit back into the business, adding attractions over time. In addition to saving your startup budget, this also helps retain customers. Families are excited to return, as they’re anxious to see what’s new. They start to feel as though they’re part of the process and will develop a loyalty that is unmatchable.