Investor Speculation - Disney could buy Great Wolf Lodges

[crazy4wdw]

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.

 

[jimh13432]

yuck..........

Great Wolf Lodge, the Wal-Mart of the family vacation industry. My apologies for insulting Wal-Mart.

 

[nyyankeegirl]

We took our kids to Great Wolf in Williamsburg, VA this past January. No, it is definately not Disney, but the kids had a great time. Where else can you go in the middle of the winter, with a short drive, and swim the whole weekend? It's a great concept when you have the winter blues!

 

[barreloflaughs]

Great Wolf stinks:

http://www.depweb.state.pa.us/news/cwp/view.asp?a=3&q=518248

And this Poconos location overlooks scenic Route 80. Not quite a backwoods experience.

On the plus side, it is in Scotrun. The exit sign for 'Scotrun' is often mispronounced by folks unfamiliar with the area. Sophomoric hilarity generally ensues....

barrel

 

[annie1995]

We love Great Wolf Lodge! Great place to beat the winter blues when you can't go to Disney! We have a suprise trip for the kids in a few weeks!

 

[Tigger031266]

Great Wolf are nice hotels. I have visited 2 of them both in WI. I think Disney would have to change a lot to make it into a Disney experience. They would have to be significantly changed judging by how disney is selling this idea. I am thinking Disney will want to be the best:

- New restaurants (ESPN's, Night clubs)
- New Rides
- Additions
- Staff training
- Shopping
- Spa's
- Much higher prices per night
- Advertising and marketing
- ...

 

[patsal]

Great Wolf are nice hotels. I have visited 2 of them both in WI. I think Disney would have to change a lot to make it into a Disney experience. They would have to be significantly changed judging by how disney is selling this idea. I am thinking Disney will want to be the best:

- New restaurants (ESPN's, Night clubs)
- New Rides
- Additions
- Staff training
- Shopping
- Spa's
- Much higher prices per night
- Advertising and marketing
- ...

Much higher price! The last quote I got was for a regular family room (not any fancy suite stuff) and it was just below $500. per night. 2 nights would have been $985--too steep for me for a two night stay.

 

[starwood]

When we went there 2 years ago I just kept thinking how Disney could do it so much better.

 

[Grumpy_Disney_Dad]

Great Wolf Lodge is great but expensive. As far as being the "Wal mart" of vacations, they have tried to do the same thing Disney has done by creating anatmosphere in their hotels. Granted they dont succeed nearly as well as Disney does but it was a valid attempt. We often go to the one in Williamsburg and find that if you can sneak up for a midday trip, youcan often get rooms as low as $80. If you are forced to go on a weekend be prepared to pay astronomical amounts of $$. Personally I would love to see Diseny buy them and add more magic. I wonder how the people of VA would react to that after they gave Disney the finger in Northen VA.

 

[splash327]

We just spent three days at the Great Wolf in the Poconos. It wasn't bad mid-week but weekend is big $$. I thought they were close to Disney on theming but were missing just a few things here and there. The food was lacking and the prices were comparable to a Disney Character meal. The kids had a great time though and want to go back.

Mark

 

[Mari annie]

Are nice places, stayed at both

Let's face it everyone, once you have been to Disney/Universal nothing can compare..........right?! (family travel that is)



4/10 FL SUNSHINE!!!

 

[kribit]

We've never been there, but the pictures look OK. I'm not sure I could stand being in an inside water park. I have a hard time going to any other amusement type place anyway (Busch, Hershey, etc...) because let's face it, no one does it like Disney.

 

[stitchgal]

We love Great Wolf Lodge; we've been to the one in Williamsburg several times and just got back from the one in the Poconos. Sure, it isn't Disney but my family still has a great time. Has anyone noticed how the song in the audio animitronic lobby show (what my daughter calls the moose show) sounds a lot like Circle of Life?