Aqua Park Feasibility Study
Leisure Business Advisors (LBA) specializes in conducting the
feasibility study for a variety of leisure businesses, including
aqua parks (also known as water parks). An independent industry
expert usually prepares this detailed study, which is required by
potential lenders and investors.
The feasibility study is the first step of the development process
and provides critical guidance for design, construction, and
operations. It evaluates potential market support and forecasts
usage. The feasibility study determines potential financial
performance and maximum warranted development costs. It provides
physical planning parameters, such as total land size needed and
building space required. It recommends the attraction mix and can
include a walk-through description and artist conception images
for use in initial presentations.
The following paragraphs outline the major tasks typically
involved in conducting a feasibility study.
Task
1: Orientation Meeting
An
initial meeting would be held to discuss the project in more
detail and to see the prospective site if one has been chosen.
Task
2: Site and Area Evaluation
The
site and local area would be evaluated to determine its effect on
potential usage. Factors include:
- Market
proximity
- Physical
limitations or constraints
- Access
routes
- Traffic
patterns
- Surrounding
development
- Potential
complementary and competitive facilities
Task
3: Concept Description and Industry Trends
The
aqua park concept would be described and industry trends
discussed. Readers of the feasibility study may be unfamiliar with
the concept and this section of the report provides an
introduction before specific project-related issues are examined.
Task
4: Market Analysis
The
market areas would be defined based on distance from the site.
Demographic characteristics for the resident market would be
analyzed to provide an indication of support. This would typically
include:
- Population
growth
- Age
distribution
- Income
distribution
The
tourist market would be defined and analyzed. Based on available
information, this analysis would likely examine:
- Current
size
- Historic
growth
- Other
characteristics
Task
5: Evaluation of Comparable Facilities
Selected
aqua parks would be examined. Available reported information would
be provided on individual characteristics, including:
- Name
and location
- Physical
description
- Financial
performance
- Development
costs
Task
6: Annual Usage
Potential
annual usage for the proposed aqua park would be estimated for the
first five years of operation based on a number of factors,
including:
- Planned
components
- Size
of the available markets
- Qualitative
market characteristics
- Market
performance achieved by comparable aqua parks
- Location
and potential competition
Task
7: Physical Planning and Concept Development
LBA
would make physical planning recommendations needed to service
expected market demand. The specific parameters vary from one aqua
park to another. Physical planning parameters may include:
- Recommended
types of activities
- Recommended
mix and sizing
- Recommended
visitor service space
- Minimum
land area or building space needed
Initial
conceptual efforts may also be provided. These could include:
- Functional
layout diagram for the new aqua park
- Narrative
description of a typical visit from the perspective of a typical
family
- 3D
computer graphics visualizations of selected activities
The
final report could also include a video presenting the results of
the feasibility study with a "fly-through" or "walk through"
computer animation of part of the new aqua park.
Task
8: Financial Analysis
The
financial analysis for the proposed aqua park would be based on
the selected concept and potential usage. Financial estimates for
the first five years of operations would include:
- Revenues
by category
- Operating
expenses
- Operating
profit or surplus
- Return-on-investment
for equity investors, if applicable
Task
9: Warranted and Typical Development Cost
LBA
would determine the warranted development cost or investment based
on potential profitability. This is the recommended maximum amount
that should be spent to effectively develop the project and return
a reasonable return-on-investment to equity investors. This
warranted amount would be compared to the actual development costs
for other comparable aqua parks. Relative size would be taken into
consideration. This comparison would provide guidance as to
whether the proposed aqua park could be developed for its
warranted investment. If it can be, the project is considered
financially feasible.
Past
Aqua Park Consulting Projects
Selected past aqua park (also known as "water park") consulting
projects are described below. All involved John Gerner, LBA's
managing director.
Water Park Expert Testimony (Niagara
Falls, New York USA)
LBA was retained by Empire State Development Corporation, a
public authority of the state of New York, to evaluate the
feasibility of reopening Fallsville Splash Park in Niagara
Falls. It was the subject of a New York State Supreme Court
case. John Gerner served as an expert witness in tourist
attraction development in this court case in early 2009.
Harris Beach was the attorney for this state authority and
the main client contact. In the court's decision filed on
April 5, 2010, it states "the Court places additional
reliance on the testimony of John Gerner. Mr. Gerner is a
leisure industry expert." Click
here for the court's decision.
Boardwalk at Hersheypark (Hershey,
Pennsylvania USA)
The Boardwalk at Hersheypark is a water park area of the
theme park that opened in 2007. It includes a wave pool,
lazy river, seven slides, and a children's play area. Gerner
Consulting evaluated the market and financial potential of
water park activities for Hersheypark management as a
subcontractor to Economics Research Associates.
Morgan County Aquatic Center (Madison,
Georgia USA)
The Morgan County Aquatic Center opened in 2009, and is a
public facility operated by the Morgan County Parks and
Recreation Department. LBA conducted a feasibility study for
the aquatic center as a subcontractor to Doran &
Karwoski, Inc.
