Theme Park, Amusement Park and Attractions Industry News

Theme Park Hotels – a marriage made in Disneyland?

Owen Ralph investigates the rise and rise of theme park hotels.

“What’s your new attraction for this season?” It’s one of the most repeated questions asked to park owners from writers on this magazine, and increasingly one of the most repeated answers is, “a hotel.”

“What’s your new attraction for this season?” It’s one of the most repeated questions asked to park owners from writers on this magazine, and increasingly one of the most repeated answers is, “a hotel.”

As with so many industry innovations, Disney was a pioneer in the field, with on-site accommodation integral to all its parks and resorts from day one. Today the group operates 38 hotels around the world, providing over 34,000 rooms – all within easy reach of the park gates. While this gives Disney a ready-made supply of guests, it also provides the hotel’s residents with an extension of the theme park experience.

“Disney resort hotels are designed to provide a lot more than a pillow beneath guests’ heads,” says says Charles Stovall of Walt Disney World in Florida. “They are themed to immerse guests in a continuation of the worry-free vacation and adventure of the Disney parks.”

At Universal Orlando Resort, “The hotels benefit greatly from their ‘on-site’ location and are certainly the preferred place to stay for anyone visiting our two great theme parks,” says vice-president of sales and marketing, Vince LaRuffa,

After an enjoyable, but tiring, day at the park, a bed and somewhere to unwind close at hand can often seem an enticing prospect. Keeping families on the property and perhaps encouraging them to visit the park, or a sister “second gate” attraction, the following day clearly has its advantages for park operators too.

“The development of theme parks around the world has followed a typical product life cycle of market growth followed by stabilisation and then investment to diversify,” notes Christian Aaen at the Hong Kong office of AECOM Economics. “Combining parks with peripheral property development can generate significantly greater returns than from the theme park alone. Peripheral developments have been lead by Disney and Universal, however regional parks in the United States, Europe and Asia are increasingly focusing on hotel development followed by retail. By having guests stay on-site, the parks ensures a much higher propensity for repeat visits.”

“A hotel can extend the visit significantly, by as much as three days,” highlights industry observer Dennis Speigel of International Theme Park Services. “A hotel holds guests longer on a site, thus generating more income for the facility as well as being a revenue producer itself.”

Themed Escapes

Michaela Euler of Phantasialand near Cologne, one of several German parks with successful hotel operations, explains the decision to branch out into overnight accommodation: “Many guests already came to Phantasialand for two days and booked overnight stays in the region. Our vision was that Phantasialand should become a mini-break destination, so we decided to build overnight facilities for every kind of guest. We have different offerings for different target groups, including a tipi village, a “garni” hotel (bed & breakfast), a 3-star superior and 4-star-hotel.”

Like the rest of Phantasialand, Hotel Matamba and Hotel Ling Bao are richly themed, complementing the park’s Deep In Africa and China Town areas. “Theming is very important,” believes Euler. “The guest expects to have a special experience even after the park is closed.”

“In the same way that Disney’s theme parks offer an escape to a timeless land of enchantment, Disney hotels offer a mix of adventures,” adds Stovall. “Our Imagineers have created detailed, themed environments that include the romance and beauty of Africa at Disney’s Animal Kingdom Lodge to Victorian opulence at Disney’s Grand Floridian Resort & Spa.”

“When well-executed, theming in a hotel environment can really transform the guest experience,” says LaRuffa. “The theming in our three on-site hotels – Loews Portofino Bay Hotel, Loews Royal Pacific Resort and the Hard Rock Hotel – is integrated into every aspect of the property, allowing us to successfully transport someone to Italy, the South Pacific or to a rock star’s mansion.”

Offerings such as the Flying Dutchman or Fata Morgana Suites at the Efteling Hotel in Holland provide the ultimate way for park guests to immerse themselves in their favourite ride or attraction. As branded attractions catch on various parks around the world, licensed characters are becoming part of the hotel experience too. At the Alton Towers Hotel in England, a Sonic the Hedgehog room offers a dedicated gaming area and “Green Hill’ theming, while young guests at the nearby Drayton Manor Park Hotel, which opens this summer, will be able to stay in Thomas & Friends-themed rooms, in tribute to the park’s Thomas Land children’s area.

Themed rooms and family suites with dedicated children’s facilities are just part of the theme park hotel experience. From character appearances at Disney hotels to exclusive park access at a variety of other properties, guests are offered a wide range of extras to make their stay special.

Added Extras

At Universal Orlando Resort, hotel guests enjoy benefits such early admission to The Wizarding World of Harry Potter, free Universal Express ride access, free on-site transportation, priority restaurant seating and complimentary delivery to their hotel room of purchases made in the resort’s parks. Sounds wonderful doesn’t it?

Of course, many of these “free” extras are factored into the package rate and, together with the theming and location, make it hard to make like for like comparisons with outside properties.

“Hotels located adjacent to or integrated within major theme parks generally achieve strong occupancy rates and industry average or premium room rates based on the value added experience,” notes Aaen. All this in addition to, “on-site economic activity from restaurants, retail and entertainment (shows etc).”

Yet before you rush out and draw up plans for a hotel on your property, be warned: “Hotels in attraction markets must be built on demand,” according to Speigel. “When Disney opened the first hotels surrounding Disneyland Paris, they experienced a very low occupancy rate, in the high 30% range. The company could not sustain this and closed the hotels for an extended period.”

“There are several factors to consider for success,” offers Aaen. “These include scale and type of theme park (local, regional or major destination), location (urban, suburban or rural), market (seasonal or year-round) possible second gate attraction (ie. a waterpark) and adjacent attractions and tourism products. Each case is unique, however, parks achieving attendance between 1.5 and over 2 million annual visitors can often sustain hotel development.”

“A hotel typically requires a 65% occupancy rate to flow positively,” adds Speigel. “The seasonality of a regional park makes this very difficult. This is why we have seen fewer hotels developed around regional operations.”

Like the park itself, the new Tivoli Hotel in the heart of Copenhagen can feed off a ready supply of tourists and business travellers in addition to park guests. Yet not all parks enjoy such prime city centre locations, meaning they must stimulate additional hotel business out of season.

At Phantasialand, “The events run by our conference department ‘Business to Pleasure’ are very important,” according to Euler. “As well as the high number of meeting facilities, our business guests enjoy the combination of food, beverage and the best in entertainment. At Christmas we host a lot of events, from small family celebrations up to large company events with up to 1,000 guests. This also gives us a great opportunity to showcase the offering of Phantasialand.”

Just Add Water

In North America, operators such as Great Wolf Resorts encourage year-round business by combining hotels with indoor waterparks. “These properties continue to perform better than those without waterparks – especially in a tough economy,” notes waterpark expert Jeff Coy of JLC Hospitality Consulting. “Many new projects are designed as mixed-use resort destinations that include hotels, conference centres, family entertainment centres, sports facilities, shopping facilities and residential development. All these components clustered together act as a strong magnet that draws more families from a wider region.”

While some operators seem to a think a single hotel suddenly transforms a humble park into a “resort,” arguably you need some of the above components too. Merlin Entertainments, which already boasts on-site hotels and waterpark developments at Gardaland in Italy, Alton Towers in England and Legoland California, has a ready-made portfolio of “midway” attraction brands to parachute into its resort properties. All three of these locations, for example, now also feature a Sea Life aquarium, and there are plans for more hotels and second gate development at other Legoland outlets around the world, including the upcoming Legoland Malaysia, which opens in 2012.

While in Europe and North America hotels are typically built as an add-on to an established park, in Asia the resort model is very much becoming the norm, according to Aaen: “Many operators and developers have built or are planning to add standalone and integrated hotels as part of the anchor park/attraction, for example Everland in South Korea, Ocean Park in Hong Kong (three hotels under planning as part of expansion plans), Chimelong in China’s Guangdong Province and Sunway Lagoon in Kuala Lumpur, Malaysia. The mixed-use model of entertainment and real estate is a key development strategy in China, while in Singapore, the ‘integrated resorts’ model with Resorts World Sentosa/Universal Studios and Marina Bay Sands are setting a new standard in terms of hotel and entertainment offering.”

High Standards

At developments such as these, accommodation standards are high, something Aaen attributes to the typical guest profile, or at least those that can afford to stay overnight: “This generally fits with the target family segment and price/value proposition (3-4 stars),” he says. “Some parks have 5-star hotel properties on-site depending on location, local income levels and adjacent convention/commercial facilities.”

Yet in the current climate, “Not all attraction visitors can afford higher end stays,” warns Speigel. “People are looking for the best deal and making their reservations later than in previous years. Even at Disney, the world’s number one resort hotel operator, discounts abound. Disney is trying to reduce discounting but finding it necessary to fill the properties. This trend will continue in 2011.”

While there has been significant new hotel development over the last five to 10 years, we mustn’t forget the humble campsite or RV/caravan park, which for several parks remain an important provider of both revenue and guests. Such facilities also require far less capital expenditure than building a major hotel from scratch. Yet for the time being, the hotel trend shows no signs of slowing.

Pictured below: Hotel Legoland, due to open at Legoland Windasor in 2012

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