A Ripple Effect for Increased Revenue
How Arcades Are Adding to the Fun at Waterparks

September 1, 2013 No Comments

A day at the waterpark no longer just involves sliding down slides, lounging in the lazy river and maybe making a trip to the snack bar. Arcades have become an integral part of the waterpark experience, not only providing an amenity so children, and adults, have something different to add to the overall experience, but to provide financial rewards, which could be significant.
Even more so than many arcades, ones that are located inside waterparks attract a wide demographic, from children to grandparents.
The Edgewater Hotel & Waterpark, a 35,000-square-foot indoor waterpark and resort in Duluth, Minn., features a 2,000-square-foot arcade, according to Director of Aquatics Tor Anderson.
“We have a variety of ages playing different games,” said Anderson, whose company hires an outside vendor to provide and maintain the machines. “They company we work with does a great job of giving us variety in our games, which is key to attracting that diverse crowd. Some are suited toward an older audiences, while some can be played by a child who is just a couple of years old. That balance is important to drawing people in.”
Michael Zehnder, general manager for the Bavarian Inn Lodge, which features an indoor waterpark and “mega-arcade” in Frankenmuth, Wis., actually has a name for the type of arcades they offer.
“We call it a family-room style of waterpark, and the reason we describe it in that fashion is that we have waterslides and interactive pools and spas spread throughout the facility, but we also have video games and merchandising games and redemption games spread throughout the waterpark, as well,” he said. “We don’t have a small 2,000- or 3,000-square-foot arcade. We have tens of thousands of square feet of gaming for all ages.”
They include 120 video and redemption games along with everything from a mini golf course to kiddie rides, trains and cards.
“What we found is that people are happy in a waterpark in a closed environment if they have something else to do, or other things to do. And that model has been very successful. Even in the Ratskeller, a convenient place for food and a bar, there are games inside there as well. And we offer a family-room environment, which means there are couches and tables and chairs and lounging areas adjacent to games.”
The Z Fun Factory, an entertainment center that features the outdoor Wayne’s Water World in Yuma, Ariz., mostly attracts gamers from teenagers and below, according to Executive Chef and Manager Jay Walker.
“The games we have are targeted for them,” Walker said. “Most of them are redemption games. I was just talking to the person who manages our game inventory and I was telling them I would like to see some old-school arcade games in here because I would like to see more adults in there. I think that’s important.”
Kalahari Resorts & Conventions, which has locations in Wisconsin Dells, Wisconsin, and Sandusky, Ohio, tries to appeal to the entire family with its game selection, according to co-owner Travis Nelson.
“But the sweet spot is that pre-teen and early teen age group,” he said. “But we also see a great deal of younger moms and dads involved in the arcades and playing games. And then there’s also grandma and grandpa in there playing.”
Kalahari also uses a model that has games located beyond the arcades.
“Our theme park is about 100,000 square feet, and any square footage not covered by an attraction has a game on it,” Nelson said.
The Bavarian Inn Lodge and Waterpark is constantly rotating games.
“What’s great about us is that we are considered a test facility for new games that come out,” Zehnder said. “We are a year-round business with high volume and multi-generational families coming here, so we have a great base of customers, so the gaming companies want to see how their games do here before rolling them out elsewhere. We want to keep it fresh and have something new each time. We want to entice and retain.”
The Fun Factory also rotates them in regularly, and Walker said he would like to do that even more.
“We have about 50 games, and some of them are a little outdated that we are currently in the process of updating,” Walker said. “If you don’t update them, they just don’t make the money they used to. They get old fast. Plus, they start breaking down and that creates another headache. So we move stuff in and out as much as possible.”
“You have to be on top of it,” Nelson added. “We work with a group that brings in the latest and greatest all of the time. And you have to do that because that’s what kids want to play. It’s essential.”
Redemption, in fact, seems to be popular for most arcades.
“It’s very important,” Anderson said. “It gets people in the door. In the past, they might not have stopped, but when they play for something, they stop in and want to try to win something.”
“I think one of our attractions is how we handle our redemption games,” Walker says of the Fun Factory. “In our case, we don’t offer tickets. We have cards that you swipe to load money onto them, like Dave & Buster’s. They electronically put game points on cards when you play games. So you don’t have to carry around a bucket of tickets. Plus, if you don’t want to redeem them, you can keep your cards and keep accumulating points on there until you have enough for you want after multiple visits.”
Walker said redemption games rule at Fun Factory.
“Anything with building points on their cards is a winner for us,” he added. “They don’t care what game it is. If they have the opportunity to get tickets, then they are up for playing it.”
Nelson agreed about Kalahari: “We have a pretty wide variety of games, but we do best with redemption. They are the most popular. But of course, you want that wide variety to please everyone.”
Location is essential when looking to draw people into waterpark arcades.
“We have an arcade located right outside the waterpark so people have to pass it to get to the waterpark,” Anderson said. “The pathway to the waterpark wraps right around the arcade.”
At both Kalahari waterparks, location was well thought out.
“One of our tricks of the trade is to make sure our visitors have to walk through the arcade to get where they want to be,” Nelson said. “So there are games in the traffic pattern at both locations. You don’t want to make it hard for them to spend money at your arcade. We have one main arcade in both of our resorts, and we have two in Wisconsin, one near the entrance of the waterpark and one on the other side of the park.”
But location isn’t the only way waterpark managers lure customers into arcades.
“What we’ve done with our company that owns the games and leases the spot, Midwest Coin,  at the hotel is we offer free plays and bundles into some packages,” Anderson said. “So you basically get a voucher to receive tokens. We do that more in the offseason where you can do a seasonal thing like ride a train we have here, get a pizza and some arcade tokens for one price. It entices them to hopefully see the arcade and spend more money there that day or as the weekend goes on. If you give a little away for free, it can get people in the door to spend some more time there during their stay. We also have tournaments where families and everyone can sign up and compete against each other in certain games for prizes to create something new and different and an excitement in there, while once again introducing them to our arcade. A lot of times, kids like the arcade so much they want to go in there before they even go to the waterpark. If you have a situation like us where we don’t own the machines, it’s important to have that kind of relationship with your vendor. We opened in 2005 and they are the only company I think we have ever used.”
The Bavarian Inn Lodge and Waterpark also offers popular promotions.
“Whether it’s group sales bundling tokens into special packages or us offering room deals that include tokens at various levels, we are always marketing our arcade,” Zehnder said. “I remember when Dance Dance Revolution was popular, we always had competitions and one year we sent someone to nationals in Texas and he won.”
Changing games consistently is critical to a waterpark arcade’s success.
“We get a statement weekly from the company we use as to how much each game is making and then make adjustments, if necessary, to bring in different games that can make it more profitable,” Anderson said. “You have to have something new to catch the eye, so with us, there’s always something happening with moving games in and out. The company we work with is constantly monitoring it.”
Zehnder said it’s important to stay on top of revenue.
“Every month we look at our revenue per square foot by game,” he said. “So if it occupies 8 square feet, we see what’s the revenue based on location and size and then rotate them in and out monthly. “Then quarterly, we do full sweeps and take out 12 and bring in 12 or so.”
The bottom line is that waterpark arcades can be as successful as the effort put into them.
For Edgewater, the arcade does make some decent revenue, but management sees it as more of a bonus for guests than a profit center.
“I think it’s more of an amenity,” said Anderson, whose waterpark has a lease agreement with an outside company that also gives the waterpark a portion of sales. “It’s something for families to do and a feature for them to do when they are here that makes them want to come back and hopefully stay longer.”
At the Bavarian Inn Lodge and Waterpark, the arcade is a major revenue producer.
“It is one of our top revenue-producing departments,” said Zehnder, whose company also uses a vendor, Alpha Amusements of Sterling Heights, Mich. “Rooms are the highest, then food and beverage, and then arcades are right there.  We have a great partnership with the company we work with. They are a family operated business like we are, and anytime you can work with a family business is a bonus.”
“We have a family entertainment group that actually runs the games for us in a partnership where we receive a percentage of revenue and do very little work,” Nelson concluded. “We want the games to be fun and part of the whole experience, but it is very financially beneficial. It is certainly a great amenity, but it’s also a decent part of our business.” -

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