Gaming Seen to Suffer After Storms

Gaming company third-quarter earnings are being pounded by the devastation of hurricanes Katrina and Rita, although the effect is likely to wash out in the long run, analysts said Thursday.

Attendees of the World Waterpark Association's 25th annual symposium last week spent five days here checking out new pressurized spray guns, wave pools and sun shades intended for use at aquatic play areas around the country.

Despite that local setting, it's safe to assume those products won't be cooling off customers at a new Las Vegas-area water park anytime soon, though plans for a new Wet 'n Wild -- and perhaps a second competing park -- are advancing toward a 2007 debut, industry sources said.

Excluding upgraded resort pools such as Mandalay Bay's "beach" and smaller, municipal pools with a handful of slides, the Las Vegas Valley just completed its first summer without a major water park since 1984, the year before Wet 'n Wild opened on the Strip near the Sahara.

That vacancy makes this an attractive market to water park operators, said Gina Kellogg, communications director for the Overland Park, Kan.-based World Waterpark Association. Southern Nevada's population is rapidly approaching 2 million, and the city draws more than 37 million annual visitors, including 10 percent who bring children or teens too young to patronize casinos.

"Most major cities can accommodate a water park. In fact, most already have at least one," Kellogg said. "It seems unlikely that one will not come into a market of this size at some point."

But Jim Dunn, director of architecture and engineering with Aquatic Development Group, echoed a widespread sentiment when he said rising land values have so far prevented another from opening here.

A stand-alone water park would need at least 20 acres to house a 10-acre park and required amenities such as parking and support structures, Dunn said. Property near the Strip has recently sold for as much as $20 million an acre, while commercially viable land elsewhere in the valley typically costs $1 million or more per acre.

"Would people really want to invest in something that can be used for just 100 days a year, or in something that can make money all 365?" said Dunn, whose Cohoes, N.Y.-based company develops water parks, aquariums and community swimming centers.

Increased land values ultimately doomed Wet 'n Wild, which regularly hosted 500,000 annual visitors over its 20-year run. But the long-standing aquatic playground was built on 27 acres of land its operators did not own, and the landowner is now pursuing a more-lucrative development.

In August 2004, Archon Corp., a Las Vegas-based gaming company, ended months of speculation when it told Wet 'n Wild's operator, Palace Entertainment, to vacate at the end of the 2004 operating season. Archon reportedly hopes to build an aquatic-themed megaresort on the site, though some believe the company may sell the property or jointly develop it with another gaming company.

Archon representatives did not return calls seeking comment.

Shortly before the park closed, Wet 'n Wild general manager Mike Fijas said Palace Entertainment was "committed to this market," which fueled rumors his company would seek to build elsewhere in the valley. This week, an executive with the Newport Beach, Calif.-based company said details of a new Las Vegas Wet 'n Wild site could become public by year's end.

"We're a lot closer than we were six months ago," Vice President Chip Cleary said from Long Island, N.Y., where he oversees the company's Splish Splash water park and several other aquatic attractions.

Palace Entertainment has located a site it believes offers locals easier access than Wet 'n Wild's predecessor while still remaining attractive to out-of-town visitors. Still, no property has been purchased, and Cleary added hyper-inflated land costs remain a key obstacle.

If land is acquired this year, Cleary said the new Wet 'n Wild would again be an outdoor park that operates 90 to 100 days each year beginning in spring 2007. He promised a fresh design with updated rides selected through customer feedback surveys.

An industry source who asked not to be named also said a major U.S. operator is close to securing a Las Vegas site it believes could support a major water park, provided it can acquire land for $750,000 an acre or less. That below-market price is tenable, the source added, because such an attraction would work well with other amenities already in place.

The unnamed park would operate an extended schedule, possibly April through October, to take advantage of Southern Nevada's warm desert climate, the source said. It would likely take at least a year to build a park once a site is purchased.

In the United States alone, water parks make up a $1 billion annual industry that's rapidly growing, Kellogg said. In 2003, the World Waterpark Association estimated the more than 1,000 active parks in North America drew more than 70 million guests; attendance grew by 3 percent per year from 1999 through 2003.

Much of that expansion occurred next to existing amusement parks, where operators have built water parks at costs similar to those of a new roller coaster. "And the water parks can accommodate more people," Kellogg said.

Many municipally owned pools are also adding more water park-style slides and play areas, and hotels and motels across North America are adding small indoor water parks to attract guests and ensure they stay longer. Madison, Wis.-based Great Wolf Resorts is a key player in that sector, as is InterContinental Hotels Group, which hopes to add indoor water parks at many Holiday Inn locations.