Great Wolf Resorts is a chain of 10 indoor water park hotels. The company's resorts, in eight U.S. states and Ontario, Canada, are located in areas with cold winters where outdoor water parks would not be able to operate year-round. 
Its resorts are located in established local vacation towns, such as Wisconsin Dells, Wisconsin; Sandusky, Ohio; and Niagara Falls - the last of which attracts up to 14 million visitors each year.. However, Great Wolf's business fluctuates seasonally (the high-season being the summer and other school holiday periods), and reacts to changing trends in vacation preferences, consumer spending and general economic outlook.
Great Wolf has lost money since 2005, which the company attributes to the high maintenance costs of operating the resorts. Although revenues grew by 28% to $188 million in 2007, the company still lost $2.9 million in operating income. The company is trying to grow its margins by expanding conference facilities at its resorts, which have lower maintenance costs than the water parks. The company is also planning to open three new resorts including Great Wolf Concord (North Carolina) in 2009.
Great Wolf resorts earn its revenues through the sale of rooms (which includes admission to the indoor waterpark), as well as from food and beverage sales (from its themed restaurants, snack bars, ice cream shops and confectionery) and fees from other amenities. These amenities cost customers extra fees in addition to room charges and include full-service spa, kids spa, game arcade, gift shops, MagiQuest (an interactive, live-action, fantasy adventure game), minigolf, and conference spaces. The company also generates revenues from licensing arrangements, resort management fees, development fees and construction management fees.
Great Wolf generates the majority of its revenue from room sales. In 2007, room revenues accounted for up to 60% of total revenue, while food and beverage and other amenity sales contributed to 30% of revenues, and the remaining 10% was made up by management and other fees.
From 2005 to 2007, Great Wolf's total revenues grew at an average of 16% per year. But the company has had a negative operating income throughout all three years from 2005 to 2007, making a loss of $2.88 million in 2007. This is mainly due to the high resort maintenance and operating costs, which in 2007 accounted for up to 59% of total expenses, and almost 60% of total revenues. There were high depreciation costs (in 2007 as large as 20% of total revenue) involved in the resorts operations, as certain waterpark and games equipment must be retired after only a few years of operation.
From 2006 to 2007, total revenues increased by 28% to US$187.58 million primarily due to the opening of the Grapevine and Mason resorts in December 2007 and December 2006, respectively, as well as the construction of additional guest suites at the Williamsburg resort that opened in March 2007. These additional resorts and rooms led to more room, food, beverage and amenity sales. Net operating losses also decreased as operating expenses decreased in 2007. However, this is not because daily operation expenses declined but because of a one-off expense in 2006.
The key operating metrics used to evaluate resorts and hotel performance include:
Key operating metrics (across all Great Wolf resorts): 
|Average daily room rate ($)||234.21||244.16||4.2%|
|Revenue per available room ($)||150.24||150.16||-0.1%|
|Total revenue per occupied room ($)||351.34||370.77||5.5%|
|Total revenue per available room ($)||225.37||228.02||1.2%|
The ADR and RevPAR that Great Wolf generates is much higher than the overall hotel industry average, which as of August 2008 had an ADR of US$107.64 and RevPAR of US$76.60 according to Smith Travel Research. This is consistent with the indoor waterpark resorts, as U.S. Realty Consultants report that occupancy of indoor waterpark hotel and resorts ranging from 5% to 30% over non-waterpark hotels, and average daily rates ranging from $20 to $150 higher. 
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As Great Wolf mainly targets regional customers located within driving distance of the resorts, far from suffering from the economic downturn, Great Wolf's occupancy rates have actually increased more than 5% to 65.3% in Q2 2008 compared to the same time last year.A US economic slow down, caused by the 2007 subprime mortgage crisis, has affected entertainment budgets and discretionary spending in 2008. Consumers are switching from expensive air travel vacation destinations to cheaper, regional vacation spots in what has been termed 'staycations' since people stay close to home. A TripAdvisor survey has indicated that with rising airline ticket prices caused by increasing oil prices, more than 50% of Americans changed their summer travel plans to lower-cost alternatives.
The number of indoor waterpark destination resorts (defined as hotels that have a waterpark of at least 10,000 square feet) has grown from 41 in 2006 to 49 in 2008. An additional 15 new indoor waterpark projects are projected to open in 2008. In particular, the competition within Great Wolf's markets Wisconsin Dells and Ohio Sandusky has increased steadily, as the total area of waterpark space within those regions has grown an average of 31% from 2003 to 2007. Besides these independent developers, Great Wolf will also face competition from a number of other larger resort operators that are developing indoor waterparks for their existing resorts.. Revenues from its Sandusky property have already decreased since 2005 as a result of increased competition in the area.
Great Wolf's resorts compete with other forms of family vacation travel, including theme parks, waterparks, amusement parks and other resorts located near these types of attractions.  Most of these competitors are relatively small, privately owned companies that operate regionally.
In most of the regional markets Great Wolf operates in there are few other family entertainment resorts featuring indoor waterparks due to the high entry-costs associated with building the resorts. However, the company faces direct competition from other similar indoor waterpark destination resorts in the Wisconsin Dells, Sandusky, Mason and Traverse City areas.
Great Wolf's main regional competition include:
Although there is no other national chain of indoor waterpark resorts, Great Wolf competes with other resorts and travel companies that also target the family vacation market.
Great Wolf's national competition includes:
Six Flags (SIX):Six Flags operates 20 regional theme parks across the U.S., including in Virginia and Pennsylvania, the regional markets where Great Wolf also operates. The theme parks offer thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and retail outlets.Although Six Flags does not provide lodging services, it attracts the same target market (families who wish to vacation close to home) as Great Wolf.
Cedar Fair, L.P. (FUN):Cedar Fair is one of the largest regional amusement-resort operators in the world. The company owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels. The amusement parks and resorts are located across the country, including in Ohio, Pennsylvania, Michigan and Virginia, all markets where Great Wolf competes. In 2007 it earned a total revenue of US$986.97 million.