Why is it that the Wisconsin Dells area is the water park capital of the world?

I went to the Wisconsin Dells as a kid. It was the hokiest sort of tourist trap you could ever imagine. All those same places I went to as a kid (Fairytale Garden, the Wonder Spot, etc.) are still there, almost unchanged. In the ensuing 30 years, what has changed are water parks. Now, everywhere you look there are enormous water parks, one right next to the other.

Why should this be? The climate is not particularly well suited to water parks, since it is only warm enough for them a few months a year. (Thus, the emergence of the indoor water park which is becoming more and more common there.)

Once you have 10 huge water parks, you wouldn’t think building the 11th would make that much sense, but apparently it does.

One explanation is that by putting all the water parks in the same place you are able to attract water park connoisseurs who wouldn’t come without an agglomeration of water parks. That is what Branson, MO has done with country music. I don’t think that is what is going on at Wisconsin Dells, though.

A second explanation would be that there is something about the area that gave it an advantage in producing water parks, like Napa Valley and wine. Again, I don’t see any evidence for this.

So does anyone understand why there are so many water parks at the Dells?

(If it is anything like the puzzle I posed about why children no longer deliver newspapers, I’m sure blog readers have the answers.)


711buddha

No magic.

Its as simple as having a waterpark in the hotel being a competitive advantage over a hotel that doesn't.

Once one had it, they all followed. Might as well ask why national chain hotels have pools.

Its not just Wisconsin Dells anymore either. The twin cities area (MN) has three major water parks now.
http://www.waterparkofamerica.com/
http://www.grandrios.com/
http://themeparks.about.com/gi/dynamic/offsite.htm?site=http://www.valleyfair.com

That's just the private ones. There are a number of municiple ones, and further from the cities even more.

Waterparks are not that rare anymore.

Bill Tancer

Your post reminded me of a topic that I studied in college, around spatial competition as it related to gas stations and their proximity to one another. Have you ever wondered why you can drive for miles without running across a gas station and then encounter an intersection with four stations.

Business instinct would tell you that you would have greater price elasticity with greater distance to other stations (and thus better margins), but I remember coming across some reasearch that said the opposite... there was more variability in gas price the closer stations were to one another. I believe the theory behind this counter-intuitive finding was that proximity allowed stations to differentiate on other factors (car wash, convenience store, brand)

Perhaps that might explain the water park sceneario in Wisconsin Dells, that introducing more water park options to the consumer in close proximity allows incoming water parks greater pricing flexibility then if they had opened a new water park in another town?

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Jack5150

Interesting question Steven, it would appear that the Wisconsin Dells is to water parks what Las Vegas is to gambling.

Granted the northern part of Wisconsin seems an unlikely place to build water parks. But what is so attractive about going into the middle of the desert to throw away your life's savings?

dkusleika

One thing I never understood about economists is that they give everyone else too much credit. You say

"Once you have 10 huge water parks, you wouldn't think building the 11th would make that much sense, but apparently it does."

presumably because you think economics will trump human stupidity. I think it will too, but sometimes it takes time. You might look back at the Dells in 10 years and note that half of the waterparks are closed because it just couldn't support them.

Which brings me to the Tijuana Zebra Theory. If you walk through Tijuana, you'll see a lot of donkeys painted to look like zebras. You can sit on the donkey and have your picture taken. What zebras have to do with Northern Mexico is beyond me. At some point, there were no painted donkeys in Tijuana. Then, one day, someone with a donkey and a surplus of black and white paint had an idea. A few days later he was raking in the dough on a street corner. His peers took note and within a week or two there were a couple dozen painted donkeys in the area. None of the Johnny-come-latelys considered developing an original idea, they just saw someone making money and decided to get their piece of the pie.

To be sure, the barriers to entry for the waterpark industry are higher than the painted donkey industry, but it's proportional to the standards of living in Wisconsin and Tijuana. People who own land in the Dells have to develop it to make money from it. Rather than coming up with an original idea (or stealing an idea from another destination that isn't already in Wisconsin) they simply see what works in the area and they copy it.

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no way out

Three reasons why the dells do well.

1.People can meet family at the dells, and rent cabins.

2.People in the north love water.

3.Kids always have something to do.

Oh, yeah by the way people from all over the world come to the Dells. I met a guy from Portugal there once, he had taken four years of english.

Don't you think everything is a bit over priced at the Dells?

amotiwalla

This is highly unscientific, solely based on 7 summers going to Wisconsin Dells as a child and 1 visit as an adult with a keen sense of irony.

The waterpark developers understand that a single waterpark becomes boring to kids after 1, or max, 2 days (Noah's Ark deserves two days). So, even though the other waterparks basically offer the same waterslides, to a kid, it feels like a completely new adventure.

I guess this is why the parks have come together to offer a multi-pass ticket that allows people to park hop. Otherwise, the Dells would be a very quick trip for 1 or 2 days, instead of the 4 or 5 days we spent there as kids.

polachns

It can be explained by Hotelling's Location Model.

(good explanation in Mathematics for Economics by Hoy, Livernois, Mckenn, Rees, and Stengos pg. 137)

seamusmccauley

The pre-existing cluster of waterparks serves to reduce the marketing cost to the developer of a new waterpark considerably - he doesn't have to attract waterpark fans to Dells per se, he just has to make sure that people who would be coming there for the waterparks anyway know that his, newest park is the best. And it must be relatively trivial for a new waterpark to incorporate the best or most popular features of the existing parks into the build, so his really will be the best. This competition to provide the best park is sufficient incentive to keep building new parks, and I'd expect it to reduce the value of the old ones. Next stage should be the oldest parks being pulled down and replaced with new ones.

talkstosocks

You see this same phenomenon with many other types of businesses. In Southbridge, MA, all the car repair shops are right next to each other. The gas stations mentioned by a previous user. Car dealers are the easiest to notice I think. All of these are car related though.

Maybe it's gotten to the point that so many people are travelling to Dells for the water parks that a new one is guarenteed to get business even with so many others so close.

DW

When I lived in Jakarta, I needed to buy a new toilet. Jakarta has over 10 million people. Nearly all the toilet stores were in two highly concentrated shopping areas.

labelscar

I run a blog at Labelscar.com that's all about the retail industry, and specifically shopping malls, and I've noticed a similar trend there. Improbably, the malls that seem to be the most successful are the ones that are clustered near one another, not the ones that tend to be in an isolated portion of the metropolitan area without much competition. It seems that areas develop a reputation as shopping districts, which means that people come to them even when they do not have a specific store in mind. Malls outside of those shopping districts seem to fail, while it is not uncommon to see two successful malls adjacent to one another.

abraxas

When I was younger, Noahs Ark was "The Water Park". In time came family land, which although not as good as Noahs Ark, offered some difference at a reduced rate. While kids would nag their parents to take tem to Noahs Ark, they may settle on Family Land, a less expensive alternative still at the Dell's.

The indoor water parks additionally provided an alternative (year round) and some exclusivity, an attrative alternative to those who can afford this (FIB's anyone?).

The Dell's remains the destination for water park fun, the various alternatives attract a broad range of visitors though cost, variety, and features.

Additionally, there is the "out-doing the neighbors" factor. People like to do something their neighbors have not, which then motivates their neighbors to add the same experience to their Done List.

adubey

Why speculate when you can ask Google?

Google knows everything "Wisconsin dells history" returned this:

http://themeparks.about.com/cs/waterparks/a/dellsindoor_2.htm

billhelm

It's almost exactly equidistant from two major population centers - Chicago and Minneapolis. They also have more indoor water parks than outdoor now... for year round fun.

Soggy

I live in the Wisconsin Dells area and IMHO comments 1 and 14 have the most relevant answers. The cluster is so pronounced because this is a very young industry and was "invented" (or at least developed) here and once your competition has a pool or air conditioning or a mult-million dollar water park you either follow suit or you will soon be renting reduced rate rooms to water park employees instead of full price to the tourists.

The rest of the country is building water parks like crazy and many of them are designed and built by companies from the Dells area. The local parks are constantly adding new and more amazing rides so even though the Dells monopoly on water parks is over, the head start and huge investment they have still draws the crowds.

The Dells area has a "premier resort tax" which adds a half cent to the local sales tax. It doesn't pay for the parks but it does pay for a lot of the public utilities. There's also a motel room tax which goes to the Dells Visitor's Bureau huge (and successful) advertising campaign.

Of course the real reason for the rapid expanion of the Water Park Industry is customer satisfaction. You'll understand if you ever take a kid to one, it's like Christmas morning.

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jvin248

The Dells are only three hours out of Chicago (#3 largest US city) and were a natural summer vacation destination before the waterparks. And seeing the previous post and doing a quick map check they are 3-1/2 hours out of Minneapolis.

Due to glacier lake deposits, Wisconsin, Minnesota ("ten-thousand lakes"), and Michigan ("water , winter, wonderland") attract a lot of people that love water sports. The people were nearby due to working in or supporting manufacturing (Chicago was/is #2 in nation for manufacturing). Investors in Dells area also had Chicago wealth to draw on for construction experiments.

johnruexp

I took my kids to the Dells a grand total of ONE TIME, which was all I needed.

The question occurred to me while looking at the the LOOONG lines and high prices - - and this was right after I'd finished reading FREAKONOMICS - - that perhaps a great deal of the Dells' appeal comes from consumer ignorance. If you total up the amount of money spent getting to the Dells from, let's say, Chicago; then add hotel; ride tickets; attractions tickets; overpriced food, etc. you're looking at a SUBSTANTIAL chunk of change spent for an experience that has more to do with waiting in line than anything else (have you SEEN the lines for those water slides?) You could take the same amount of money and go on a cruise.

The place is congested, car-choked, full of musty attractions - - yet it is constantly jam-packed. THAT would be a great enigma to investigate in a book of documentary...

Jeff_Ack

Car dealerships are an example of vendors of imperfect substitutes locating near each other. Consumers prefer this arrangment because you get easy comparison shopping for different types of cars. All else held equal, most people will shop where there are more stores. While this may cause per-car profits to decrease, they make it up in volume.

As far as the gas stations go, in addition to the obvious possibility that gas stations locate near each other because they both choose a location that is near a lot of consumers, perhaps it is because, all else held equal, people perceive a location with two gas stations being a more reliable source of inexpensive gas than a location with one gas station because of the effects of competition.

For the waterparks, perhaps it is because there are economies of scale in industries that support the waterparks. For example, advertising of the city, nearby restaurants, tourism information, infrastructure to support tourism, additional police. As stated above, this is a location which is nearby a lot of people who like water. Also, perhaps land and water are relatively cheap. Finally, it could be that there is a labor force in the area with specialized knowledge that is available (for example, it's less expensive to pay experienced lifeguards a little more money to switch to your park than it is to find and train potential lifeguards)

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aljones15

In response to Soggy the premier resort tax wasn't introduced till 1998 almost 20 years after the explosion of parks.

http://www.dor.state.wi.us/faqs/pcs/premier.html

the tax was expanded in 2005
http://www.findarticles.com/p/articles/mi_qn4196/is_20050823/ai_n14914133

maybe just location/bunching + revenue sharing?