Waterparks guide-Travel Insurance

If you have the occasion to visit the Town of Chesapeake Beach, Maryland, you can rest assured of one fact: There are no pot holes in Chesapeake Beach! How do we know this? Read on.

Chesapeake Beach, Maryland is a small town located where else – on Chesapeake Bay. The mayor of Chesapeake Beach is Gerald Donavan, the owner of the Rod and Reel restaurant and other assorted businesses in town. In 1993, Mayor Donavan retained Mark Wilkinson of Paddock Pools to begin plans for an aquatic facility for the town. This was not to be an easy assignment. The only site available for the proposed project was a filled site: land reclaimed from Fishing Creek. Not only would development on this site be expensive, the amount of land available for the project was quite limited. As if site problems were not enough, the Mayor advised Mark Wilkinson that he did not want a simple swimming pool, he wanted something different, something that would excite the public and draw them to the facility.

Mark decided he could use some help, so he called Bill Haralson of William L. Haralson & Associates (WLHA). Haralson’s firm had consulted on hundred’s of aquatics projects – mainly in the private sector, where they are called water parks. Mark asked WLHA to assist in determining the potential for some type of aquatics project in Chesapeake Beach, including the project’s sizing and mix of elements. Haralson determined that there was an opportunity for a small project, if it could be marketed to the population beyond the Town of Chesapeake Beach.

This was enough for Mayor Donavan. Along with Mark Wilkinson, he toured every aquatic center and water park in the region. Moreover, he paid a call on Jeff Henry at the Schlitterbahn water park in New Branfels, Texas, one of the largest and most well-attended water parks in North America. Jeff convinced Mayor Donavan to accelerate the project by going with two large slides in the first phase of development.

The Chesapeake Beach Water Park opened for the 1995 season. Within a “footprint” of perhaps an acre (not counting parking), Mark Wilkinson managed to shoehorn in a lazy river, two adult slides, seven children’s slides, two small speed slides that are available to the handicapped, an activity pool, a children’s wading pool and lap lanes for swimming. The park also has a geyser that “erupts” on schedule.

So what has been the result of Mayor Donavan’s project? During its first five years of operation, the water park exceeded Haralson’s projections for attendance, per capita expenditures, revenue and net operating income.

The park’s operating history is presented in Table 1. As shown, attendance at the park has ranged from a low of 32,665 in 1997 to a high of 54,293 in 2001. By comparison, the Haralson study projected “stabilized attendance of 40 thousand. Discussion with the park’s manager, Michelle Jenkins, revealed that the park’s 1997 attendance was the result of poor weather. She further advised that the park’s 2001 attendance was virtually full capacity for this pint-sized park.

According to Mayor Donavan, revenue generation has been a learning curve at Chesapeake Beach Water Park. In the first year, he chose to go with a concessionaire for food and beverage service. This proved to be a mistake. As shown in Table 1, in 1995, the park’s share of snack bar sales was $10,152, or $.22 per capita. In 1996, the snack bar was operated by the park and snack bar sales increased to $46,713, or $1.12 per capita. Once on its own, the park’s snack bar continued to show improved sales, peaking at $159,880 in 2001, a per capita expenditure of $2.94 – a figure that most commercial water parks would hope to achieve.

A review of per capita spending at the Chesapeake Beach Water Park shows dramatic improvement since its opening in 1995. A major reason for this improvement is, of course, the snack bar’s performance. But there are other reasons. In 1995, the park had three categories of admissions: daily admission; season passes and private parties. However, beginning in 1996, the park started to have success with group sales, and by 2000, group sales accounted for 14 percent of the park’s admission revenue. In 1997, the park introduced another ticket category: evening admissions. This proved successful in 1997 and 1998 but has been less attractive to attendees in more recent years. Season pass sales have also tailed off in recent years, although this, in part, reflects management’s flagging enthusiasm for selling these discounted tickets, while the park is in demand at general admission prices.

In addition to ticket and snack bar sales, park staff has experimented with other types of in-park revenue generators. Since 1996, the park has had a sno-cone concessionaire, who pay’s the park a negotiated amount each year. Also, the park has generated a nominal amount of revenue from swim lessons. Some items have not proven to be worthwhile or practical. For example, tube rental generated a healthy per capita expenditure in the first year; however, it appeared to be unseemly to charge extra for tubes in such a small park, which had fairly aggressive admission rates. Further, merchandise and the arcade proved to generate insufficient revenue to continue their operation. Lockers could also be included in that category; however, they are provided as a service to park attendees.

Over its first seven years of operation, park management has indeed been on a learning curve, determining what works and what doesn’t. However, as the saying goes, it’s the bottom line that counts. Table 2 shows the bottom line for Chesapeake Beach Water Park. Shown in the table are revenue, operating expenses and net operating income for the water park for the seven year period: 1995 – 2001. Between 1995 and 2001, revenue increased by 89 percent, while net operating income increased by 105 percent. As shown, the park has posted a profit in each of its first seven years, ranging from 21 percent of revenue in 1996 to 37 percent in 1998.

We asked Mayor Donavan to look back on the history of the park’s development and operation and cite what was done right and what was done wrong. The Mayor was quick to point out that the strength of his park is its diversity of entertainment. “In spite of its size,” said the Mayor, “Chesapeake Beach Water Park provides a great experience for its patrons.” In part, the Mayor said, that is due to the synergy created by the park’s entertainment components. But he went on to add: “Our philosophy is that we are in the hospitality industry. We welcome our guests to our park, and we do everything we can be make them feel at home.” As an example of the park’s hospitality, there are two 8-person golf carts that ferry guests to and from the parking lot. For the coming season, guests will be able to order food and drinks from the comfort of their chaise lounges by remote control.

What was done wrong? The Mayor regrets contracting out food service during the first year. And the concession building should have been larger, a problem that is being addressed. Other than that, the mayor opines, how much more can be done in a one-acre water park?

In 2001, WLHA conducted an audit of operations at Chesapeake Beach Water Park to determine what, if any, improvements might be made of either a physical or operational nature. We looked at attendance figures, the park’s finances and any other factors that we thought would shed light on our assignment. In addition, with the assistance of Michelle’s staff we conducted a visitor survey to determine attitudes about the water park. On question that was included related to place of residence. The responses to this question were tabulated and calibrated to determine market penetration for the park. The results were astounding. The survey revealed two findings. First, market penetration within a 5-mile radius was 93 percent, a rate that is nearly double that of most other public aquatic facilities. Secondly, the findings revealed that some 37 percent of total attendance originated from beyond 15 miles of the park. Both of these findings reflect the tremendous drawing power of this little park.

We asked Mayor Donavan how the Town of Chesapeake Beach has benefited from having the water park in their midst. He smiled and said: “In more ways than you can imagine. First, we have something of quality for our town, our county and the surrounding area to enjoy. Furthermore, our town can benefit from the fiscal and economic impact brought about by the increased tourism in our community. And, last but not least, the income stream from the water park has allowed us to landscape our town, hire an additional policeman, lower our taxes and (you guessed it) repave all of the streets in our town.”

Bill Haralson is President of William L. Haralson & Associates, Inc., an economics consulting firm that specializes water parks and family aquatic centers.