Sunday, March 14, 1999

Aquarium aims to make profit and help region

---

Developers want wellspring of growth

BY JOHN J. BYCZKOWSKI
The Cincinnati Enquirer

Worker measures for installing water spouts on 21-foot model of humpback whale. (Patrick Reddy photo) | ZOOM |

        There's something magical about water. Chattanooga, Tenn., has seen it. Build a unique public aquarium, draw 1 million-plus visitors annually, and voila!, $500 million in hotels, restaurants and other development follows. Greater Cincinnati is looking hopefully for the same magic.

        In May, the Oceanic Adventures Newport Aquarium opens its doors. Its developers are hoping to draw schools of tourists — 1 million to 1.5 million visitors annually — and owners of the region's hotels, restaurants and other attractions aim to lure some of that traffic for themselves.

        “We believe not only will it create demand for lodging and visitation to the city, but will also be another reason why someone would consider staying an extra day,” said Michael Conway, vice president of Winegardner & Hammons of Blue Ash, which operates five hotels in Greater Cincinnati.

Aquarium, bottom, is nearing completion. (Glenn Hartong photo) | ZOOM |

        The privately owned, for-profit Newport Aquarium needs to succeed on three levels. First, it must hit its attendance targets and be profitable. Second, it must anchor further development in Newport, something that's already happening. And third, it must give tourists another reason to visit Cincinnati, helping attendance at the city's museums, the zoo, the Reds and other local attractions.

        Barry Rosenberg, a partner in the aquarium development group, said he'll judge the success of the aquarium not only by the turnstile count, but also “by the impact that something like this will have on the community.

        “Our idea was to bring the oceans and the rivers of the world to an area that's a relatively landlocked community,” he said. The Newport Aquarium will be a success, he said, if it entertains and educates about marine life, but also if it creates new hotel business and helps attendance at other area attractions.

INFOGRAPHIC

Top Tristate attractions

        There's great optimism over the Newport Aquarium because there have been some huge success stories in other cities. Mike Morey, head of Morey & Associates, a market research firm that specializes in cultural institutions, said other cities have found aquariums draw new tourists and new dollars to an area.

        It makes a region's tourism pie bigger “because it's something new. There will be people who want to go there and see this new thing.” said Mr. Morey, whose survey worked helped build the business plan for the Newport Aquarium. “It happened in Monterey, it happened in Baltimore. It certainly happened in Newport, Ore., and it happened with the Aquarium of the Americas in New Orleans.”

        But aquariums need to be more than tanks with fish to stay afloat financially, said Dick Lyon, of the Lyon Group of Pacific Palisades, Calif., a financial consultant for leisure projects. It's important financially that an aquarium be “sized appropriately,” he said. Figure out how many people an aquarium might draw, and then structure the aquarium to be supported financially by that many people.

        Mr. Rosenberg, one of the managing partners of Aquarium Holdings of Northern Kentucky, which owns the aquarium, said many aquariums run up their cost by erecting landmark buildings. The Newport Aquarium is intended to be spectacular inside, not outside, he said, and that's why it cost $40 million — including a $10 million investment by the city — instead of $100 million.

        The Tennessee Aquarium in Chattanooga opened in 1992 at a cost of $42 million, with another $10 million in improvements around it funded by state and local governments. It has four levels, 130,000 square feet of space, 400,000 gallons in its aquariums and 24 exhibits.

        The Newport Aquarium, by contrast, has two levels and 100,000 square feet of space, but its 64 exhibits hold 1 million gallons of water.

        “It's a very efficiently designed building,” Mr. Rosenberg said. “It's not an I.M. Pei Louvre building. It's not where we spent our money. People are coming here for the exhibits, and we have world-class exhibits.”

        Though a private, for-profit entity, the aquarium is getting a substantial public subsidy. The City of Newport spent $10 million to acquire the site, prepare it and pour the concrete pad for the aquarium, and must provide parking facilities. Under the current arrangement, the city will get $1 million a year in rent from the aquarium. That will soon change: The adjacent Newport on the Levee development will buy out the city's obligation for about $12 million, Mr. Rosenberg said.

        In addition, the aquarium can get a refund of state sales taxes generated of up to $7.5 million over 10 years — 25 percent of the building's $30 million cost — under a tourism development act. To qualify, the aquarium must draw 25 percent of its attendance from outside Kentucky.

        If not for those subsidies, “I don't think we would have been able to pull the project together,” Mr. Rosenberg said.

        Mr. Rosenberg is confident the aquarium will draw 1 million or more visitors, paying $13.75 for adults and $8.50 for children 12 and under. Market studies indicate 30 percent or more of the visitors will be from outside the Greater Cincinnati area. The Tennessee Aquarium in Chattanooga had 1.1 million visitors last year, drawing from an area with 300,000 people and 8.5 million within a three-hour drive. Newport, by contrast, sits in a region with 1.8 million people and 10.5 million within a three-hour drive, Mr. Rosenberg said.

        With that many people coming to Newport, more development is expected and is in fact under way. Along with the $40 million aquarium is the adjacent $120 million Newport on the Levee development, scheduled to open in fall 2000 with 300,000 square feet of theaters, stores and restaurants, and an $11 million 3D IMAX theater.

        Nearby will go the Peace Bell, and planned are the Millenium Tower and a Woodstock-themed restaurant. There's a spot reserved for a new hotel to the east of the aquarium, and two more pads for development on Riverboat Row.

        The city is also seeking an $18 million federal grant to fund the $48 million relocation of 202 public housing units from a 15-acre triangle of land at the mouth of the Licking River. Newport Economic Development Director Patricia Wingo said the city sees that site as prime for high-density commercial use. That could conceivably represent tens of millions of dollars in new development.

        The aquarium “is a generator,” Ms. Wingo said. “It adds legitimacy. ... Having a development of this caliber opens us up to future development, quality development.”

        Certainly Chattanooga's experience with the Tennessee Aquarium doesn't discourage this thinking. “We had some worries, about the number of people that would attend, and would it pay for itself, and would it spur other development,” said Jim Bowen, vice president of the city's RiverValley Partners, private not-for-profit development agency. “I think it has exceeded anyone's grandest dreams,”

        Mr. Bowen points to $500 million in other development spurred by the success of the Tennessee Aquarium. “There's two new hotels, other new attractions like a 3D IMAX theater, a children's museum,” he said.

        “Even the most ardent naysayer, you don't hear them anymore when they talk about the aquarium,” Mr. Bowen said. “They've gone on to being against other things.”

        Beyond Newport, many hope this means better days ahead for the region's tourism industry. The question is whether the aquarium just grabs off its share of local tourism, or whether it helps make the region's tourism pie bigger.

        The aquarium “is an outstanding complement to the other attractions in the area,” said Rex Repass, president of MarketVision Research in Blue Ash, a marketing research firm with a specialty in tourism. “The more potential attractions people have to visit, the more likely they are to stay, rent another hotel room and have a greater economic impact.”

        What kind of buzz the aquarium creates is important to its success at a tourism draw. Mr. Lyon said aquariums tend to be a 1¹/₂-hour to 2¹/₂-hour experience. An aquarium needs to be good enough to make people want to get in their cars and drive two hours or more and then pay $12 or more per head to see them.

        Mr. Repass said it helps that there are no other aquariums in a 100-mile radius of Cincinnati.

        Winegardner & Hammons' Mr. Conway said the company has seen aquariums help tourism in two cities where it operated, Baltimore and Corpus Christi, Texas.

        “We believe it will create demand for lodging and visitation to the city,” and will give people visiting Greater Cincinnati for the Reds or Kings Island a reason to stay another day and spend more money, Mr. Conway said.

        Indianapolis has its Children's Museum, Columbus has its Center of Science and Industry. “The aquarium is something that will be very popular” because it's unique in the region, Mr. Conway said.

        The benefit of an aquarium is that it's a year-round attraction, where Kings Island, the Reds and the zoo are good for about 120 days a year. Mr. Lyon said an amusement park might get 35 percent of its total annual attendance in just one month. The peak month for a year-round aquarium, by comparison, might be 16 percent of its annual total. “That helps the tourism industry by smoothing it out a little,” he said.

        Mr. Rosenberg said he's anxious for the aquarium to work with other local attractions. “It's our intention to work very closely with the zoo in marketing,” he said. “There may be visitors who come to the aquarium that might not think about going to the zoo, and there are ways we can cross-promote, cross-market.”

        Far from being worried about competition, Cincinnati zoo officials welcome the aquarium. “We think it's great, honest to goodness. We think it's going to strengthen the region,” said Donna Oehler, director of marketing at the Cincinnati Zoo. The zoo already sells tickets in packages with Kings Island and the Cincinnati Reds.

        “At heart, most Americans look to do things with their families,” she said, and a Cincinnati weekend with visits to the zoo and the aquarium seems a natural. “I think there's some great synergies there,” she said.

        But Mr. Morey pointed out that aquariums are not mass-market attractions. They tend to attract a higher demographic: 20 percent of adult attendees have graduate degrees, and 15 percent have household incomes above $100,000.

        “They're drawing people who have money in their pockets and can spend it,” he said. Restaurants do well next to aquariums, he said, and the Newport Aquarium will have many near it.

        Right now, aquariums are hot. Looking up and down the road from Chattanooga, the Newport Aquarium is five hours away, Ripley Co. is building one in Gatlinburg just an hour away, and there's talk of one in downtown Atlanta, which sends Chattanooga a half million visitors a year.

        Mr. Bowen said he's not worried. Aquarium exit surveys show “people want to go to the next one,” he said. “As long as they're all done well, and they're not just copies of one another, they'll do well.”

       

---

Aquarium aims to make profit and help region
Quick-fix for computers
Do you want your WebTV?
Oil of Olay in living color important to P&G
Planned giving now her business
Resources available for family businesses
TIPSHEET
SMALL-BUSINESS DIARY
Purchasers of electric bicycles feel Zappy
PRICIEST HOMES