For those of us that would love great themming and would like to see it close by to set a new high level standard of themming in the area, lets cross our fingers this happens!

Great Wolf Uncaged

By Rick Aristotle Munarriz

February 28, 2007

Folks are coming back to Great Wolf Resorts (Nasdaq: WOLF), bringing suitcases loaded with bathing suits and spending money. The company's fourth-quarter report offered encouragement on that front. Occupancy and revenue per available room shot upward, thanks to strong seasonal programs in what has typically been a dead quarter for family-oriented resorts.

Revenue rose by 25% to hit $34.2 million, fueled by new locations, expansions to existing lodges, and a 9.6% spike in revenue per available room throughout its properties. The company posted a net loss of $1.61 per share, but that was mostly due to a one-time goodwill impairment charge. On an adjusted basis, the company actually broke even.

When you bank on young families to fill up your resorts, you expect the last three months of the year to be soft. Kids are back in school, save for the holiday break in late December. So the woodsy lodges with huge indoor waterparks are usually packed over the weekends, but barren during the week. In the latest quarter, 52% of Great Wolf's rooms were spoken for, an improvement over the 50% occupancy rate a year earlier. Don't worry, things pick up over the summer and spring breaks. (Occupancy clocked in at 73.4% during the third quarter.)

Great Wolf's relative success in the final period of 2006 can be attributed to the strength of seasonal promotions. Howl-o-Screen in October and the month-long Snowland celebration in December appear to have done the trick.

Great Wolf's near-term plan is to enhance existing locations. Adding new watery attractions, and taking a page out of rival Kalahari's playbook by adding miniature golf courses, should help make the resorts better all-in-one destinations.

The more, the better, because competitors are closing in. InterContinental's Holiday Inn chain has been adding small indoor waterparks to some of its locations. Theme park operators Six Flags and Income Investor pick Cedar Fair have also joined the mix, each watching over an indoor waterpark resort adjacent to one of its amusement parks. Even Disney hinted at a future of building indoor waterpark resorts as a way to create stand-alone locations in key markets.

Should this make Great Wolf investors nervous? Maybe it should be comforting to know that the industry is validating its niche. Will buyout buzz circulate that Disney will acquire Great Wolf on the cheap, as a way to get up to speed quickly? That's not the way the family-entertainment giant usually plays this game, but it's an interesting suggestion.

All Great Wolf can do for now is keep its hotel guests happy and its shareholders happier. Unfortunately, the near-term outlook won't set investors' hearts aflutter. The company's outlook calls for a loss in 2007. That's acceptable in this early stage of the hotelier's growth cycle, but it would be nice to see the chain's popularity translate greater profitability. Let's get some of that suitcase money to hang around on the way to the bottom line.

Hey-- I suggested that in a post a few weeks ago when we were talking about Disney's regional plans

I've thought for a long time that Great Wolf would make a great acquisition target for someone. (Personally, I thought GWL would have made a better long-term strategy choice for CF than Paramount Parks did!)

GWL is the market leader in indoor waterparks, and they have a great quality product. But they're cash poor and have a relatively low market cap (around $300M), so they make a great target.

In my opinion, GWL has service, theming, hygiene, and offerings on par with Disney. Hence, Great Wolf would fit very well in the Disney family.

Is Mickey Mouse coming to Mason?

I agree about Great Wolfs Lodges theming and other amenities is pretty good, but as one who has stayed at both place on site, the GWL while does a good job it falls way short of amazing theming that Disney often produces. I love the GWL and will continue to stay there as they meet and exceed my expectations for lodging and for family time activities. I think because of the good job that GWL has done I think it would be a great choice for Disney to possibly expand upon.

My earlier comment about the theming in the area was more slated towards the seasonal so called theme parks up here in the north. I would personally love to see a company like Disney or Busch Gardens come to the Midwest and show some of these so called Theme Parks what theming really is.

It all makes sense, that is for Disney to acquire Great Wolf. Also it would help Disney establish them self in other tourist markets, making it possible for a new Disney park outside of FL and CA.