Great Wolf Resorts Inc. (WOLF) the largest owner, operator and developer of indoor water parks and other family-oriented activities in North America, announced recently that it has entered into a license and management agreement with McWhinney, a diversified real estate company.
As per the agreement, McWhinney will construct the Great Wolf Lodge resort in Garden Grove, California. The resort will be owned by a joint-venture and Great Wolf will earn a license fee for use of its brand name and management fees for operating the resort on behalf of the owner. Great Wolf will also receive a minority equity interest for its guidance on development related matters.
The development of the resort is expected to start in 2011. Upon completion, it will feature 600 suites as well as an approximately 30,000 square feet of meeting space, a 100,000 square feet indoor water park and other additional facilities. The completion of the resort will be hindered if finance for the construction is not obtained or regulatory approval is not received.
This is Great Wolf’s first California resort. Management views the location as an attractive opportunity to improve its profitability. Moreover, Great Wolf will be able to enhance shareholders’ return as growth through licensing increases its brand recognition and reduces capital requirements.
The city manager of the City of Garden Grove will provide financial benefits to the resort and build the nearby parking area as the new resort will encourage more tourist visits.
Great Wolf’s primary competitor is Cedar Fair LP (FUN).
We maintain a Zacks #3 Rank on the stock, which translates into a short-term Neutral recommendation.
Great Wolf is the largest owner, operator and developer of drive-to family resorts featuring indoor water parks and other family-oriented activities in North America. Great Wolf owns and operates its family resorts under the Great Wolf Lodge and Blue Harbor Resort brands and is a fully-integrated resort company with in-house expertise and resources for resort and indoor water park development, management, marketing and financing.
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