Wisconsin Dells – Hotel Market
Over the past decade, Hotel Source, Inc. has successfully completed the majority of the hotel sales within the Wisconsin Dells. The secret to our success in the Wisconsin Dells is one of our greatest strengths: market-specific expertise, which enables us to uncover value for hotel owners as well as hotel purchasers.
As the Midwest’s premier resort destination, the Wisconsin Dells has steadily grown in popularity. Once a place that attracted visitors primarily in the summer months, the Wisconsin Dells has blossomed into a year-round destination in recent years, increasing its appeal across various visitor demand segments during its non-peak months.
Best known as the “Waterpark Capital of the World”, the area is home to such well-known hotels as the Kalahari Resort and Convention Center, Black Wolf Lodge, and Wilderness Resort. In recent years the Wisconsin Dells has broadened its appeal with the addition of new attractions including world-class spas, golf courses, national retailers, a destination outlet shopping mall, live theatres, a large movie theatre complex, upscale condominiums, and a casino.
There are approximately 8,000 hotel rooms in the Wisconsin Dells area, situated within more than 130 properties. The hotel supply can be segmented into four property types:
- Resorts with waterparks
- Hotels with water attractions
- Hotels without water attractions
- Franchised limited-service hotels
Each hotel type offers unique features that represent value to hotel buyers, but also pose operational challenges. Having successfully completed hotel transactions in many different Wisconsin Dells property type segments, Hotel Source, Inc. is able to anticipate and overcome market objections and transactional challenges that are specific to Wisconsin Dells hotels.
Camelot Hotel & Suites
This property, which was foreclosed on along with the Diamond Hotel, was built in 1999 and offered 113 rooms as well as 20,000 square feet of water attractions. Through an aggressive marketing campaign targeting owner-operators and regional ownership/management groups, Hotel Source, Inc. was able to procure numerous offers including one from a group with proven development and management experience in similar markets, who planned to reposition the hotel as a Holiday Inn Express. The property traded at a 2.8 room revenue multiplier.
This 75-room Comfort Inn was built in 1994, and was owned by its original developer until Hotel Source, Inc. completed the sale. The three-story property included an indoor swimming pool and breakfast room, and enjoyed a strategic location just off I-90/94. The new owner planned to significantly upgrade the property to comply with current Comfort Inn franchise requirements. The property sold at a 3.0 room revenue multiplier and an 8.2% capitalization rate.
The 81-Room Diamond Hotel was built in 1988, and an addition was completed in 1993. This non-branded property enjoyed a prime location in the middle of “the strip,” but had suffered from few capital improvements, until it became uncompetitive in the market and went into receivership. Hotel Source, Inc. was engaged by the California-based lender who foreclosed on this property. Through the creation of a competitive bidding environment, the hotel traded to an owner-operator, who added a Rodeway Inn franchise affiliation, at an 8% capitalization rate and a 5.4 room revenue multiplier.
Howard Johnson Antiqua Bay Resort
The 228-room, full-service former Holiday Inn was built in 1980 with an addition completed in 1987. The property offered more than 35,000 square feet of water attractions and a Green Mill franchised-restaurant, but suffered from lack of capital improvements and almost no net operating income from which to service debt. Hotel Source, Inc. was able to procure a buyer from Chicago after an exhaustive search of full-service and waterpark hotel owners throughout the country. Ultimately, the buyer was able to benefit from a timely closing just prior to the market’s peak season.
Built in stages between 1965 and 1996, the 49-unit Riviera Suites was a well-located hotel within the Wisconsin Dells market. The previous owners had devoted a tremendous amount of time and attention to this asset, giving it great curb appeal, employing savvy marketing and investing heavily in upgrades year after year. Although the hotel was generating a strong net operating income, the owners were operating the property from their home base in Milwaukee and wanted to deploy their resources into real estate closer to home. Many of the suites were oversized accommodations of between 500 and 800 square feet, and even the original small “motel” units benefited from the addition of fireplaces and whirlpool spas. Although priced aggressively, the property ultimately traded in five months at a 2.8 room revenue multiplier, a 13.4 capitalization rate and $48,651 per unit.
Built in 1997, this 62-room property was constructed near I-90/94, adjacent to the popular Crystal Grand Music Theatre. The property benefited from its national franchise recognition and standardized room product. Unfortunately, the regional management firm that owned and operated the hotel was unable to generate sufficient cash flow to warrant keeping it. Through an aggressive targeted marketing approach, the property sold to a “hands-on” owner-operator who saw tremendous upside in the property. It traded at a 6.9% capitalization rate, 3.33 room revenue multiplier and $35,484 per room.
This 124-room property, built in 1981, enjoyed an excellent location that provided interstate visibility and numerous dining and retail outlets within the immediate vicinity. The Super 8 was owned by a large regional management company headquartered in the Midwest that had refocused its primary business away from hotel ownership. By contacting Super 8 owners and owners of other similarly franchised hotels across Wisconsin and the Midwest, Hotel Source, Inc. was able to find an owner-operator group aggressively looking to grow its portfolio, who ultimately purchased the property at a 2.6 room revenue multiplier and an 8.4% capitalization rate.
Polynesian Isle Hotel & Suites
The 66-room Polynesian Isle Hotel & Suites is a limited-service hotel that was built in two phases in 1986 and 1989. The property offers comprehensive amenities that include indoor and outdoor swimming pools, whirlpool, sauna, kid’s playroom and an oversized two-story lobby. At the time of the sale, the Polynesian Isle was in Receivership and was being operated as a seasonal, overflow hotel for the adjacent 225-room Polynesian Resort. The property was purchased by a regional hotel group.