Executives
Kimberley K. Schaefer - Chief Executive Officer
James A. Calder - Chief Financial Officer
Nikki Sacks - ICR
Analysts
David Loeb - Baird & Co.
William Marks - JMP Securities
Unidentified Speaker
William Crow - Raymond James
[George Kelly - Stifel Nicolaus & Co.]
Hayley Wolff - Rochdale Securities
Great Wolf Resorts Inc. (WOLF) Q2 2009 Earnings Call Transcript August 4, 2009 5:00 PM ET
Operator
Good day everyone and welcome to the Great Wolf Resorts' second quarter 2009 earnings conference call. As a reminder, today’s call is being recorded.
Now, for opening remarks and introduction, I would like to turn the call over to Ms. Nikki Sacks with ICR. Please go ahead.
Nikki Sacks
Thank you. Welcome to Great Wolf Resorts second quarter 2009 earnings conference call. Great Wolf Resorts released their second quarter 2009 results and I hope you have had a chance to review the press release. If you did not receive a copy, you can call 703-435-6293 and we will be happy to fax or email a copy to you.
You also may view a copy of the release at the Company's website, www.greatwolf.com by clicking on a corporate site at the bottom left of the page and then clicking on the news releases at the bottom.
A replay of this conference call will be held later today through August 11, 2009 by dialing 1 888-203-1112 or for international callers, 1 719-457-8020 using reference number 4258389.
In compliance with the SEC’s Safe Harbor guidelines, certain statements that might be made during today’s conference call could be considered forward-looking and subject to certain risks that could cause results to differ materially from those projected.
Those statements may include, but are not limited to, estimates of the Company's future revenues, earnings and development activities. I refer you to the Company's SEC filings for further information on the factors that could cause actual results to differ from any estimates.
Now, I would like to introduce Kim Schaefer, Chief Executive Officer and Jim Calder, Chief Financial Officer who will provide you with some insights into the Company's second quarter 2009 financial and operating results.
I will now turn the session over to you Kim.
Kimberley K. Schaefer
Thanks Nikki. Good afternoon everyone. During the second quarter, Great Wolf Resorts continued to show relative strength increasing our adjusted EBITDA to $17 million, which was ahead of our guidance. The 23% improvement in the second quarter of 2009 came primarily from four sources: strong results from our new and expanded properties, return and referral guests, our team focusing on cost control, and a stronger than forecasted spring break period, a traditionally strong demand generator for our resorts which fell in the second quarter in 2009 compared to the first quarter of 2008.
Let me briefly discuss our same store operation. I will focus this discussion on our Generation II Resorts and total same store results. The Generation II properties are generally larger resorts that better represent the Company’s current resort development model and contributing more than 80% of the Company’s adjusted EBITDA. For reference, Generation I is still reported in our operating statistics in our supporting tables.
For the second quarter, same store RevPAR for our Generation II Resorts was down 7.6% in the quarter or 5.2% on a constant dollar basis. This decline was the result of a 3.6 percentage point drop in occupancy combined with a 2.7% reduction in average daily room rate.
The decline was primarily due to relative weakness in a week day period but is typically weighted to its corporate groups and discount at leisure guests. Our leisure weekend and holiday periods are staying strong.
Year to date to the second quarter, weekend occupancy was up 2.3% compared to the prior year. Approximately 90% of our room revenue in the quarter was from leisure guests. The balance of our group business, which was actually up 2 percentage points in occupancy. The increase in group occupancy was driven primarily by our strong group quarter at Grand Mound which was compared to their grand opening quarter in 2008 was relatively little group based on the books. Additionally, while we did see a decrease in corporate groups’ midweek, we saw a larger increase in leisure groups coming Thursday through Sunday.
With these results, we are continuing to outperform the broader hospitality industry. According to Smith Travel Research, US hotel industry RevPAR was down 19.5% compared to our 8% decline in our total same store properties. This performance reaffirms Great Wolf’s business model as a drive through destination resort in this environment.
This is further illustrated in the average length of stay at our resorts, which was slightly increased over prior year as many people are taking their vacations closer to their home. I do not need to reiterate how the economy has impacted consumer spending and against this backdrop our resorts offer a distinctive, family oriented experience with the high level of amenities and services that provide excellent value within a convenient driving distance.
An additional consequence of economy is a continued tightening of the booking window. In this year’s second quarter, 65% of our bookings were made within 30 days of the stay compared to 57% last year. Additionally, the call volume at our call center has increased on Thursdays and Fridays as more people are still making last minute decisions.
On a same store basis for our total portfolio and for our Generation II properties, we saw a decline in ancillary spend of approximately 75 and 190 basis points respectively. Interestingly, guests are not completely coming back but they are just altering their choices. In particular, while traffic and revenue at our sit down restaurants is down year-over-year. The snack bars and Pizza Hut have seen increases.
Enhanced value is add-on packages which we now sell online have increased 201% in revenue year-to-date over prior year. As I mentioned, part of our EBITDA growth in the quarter was driven by the successful expansion and openings that are not included in our same store results.
First is our Grapevine in Texas resort which we expanded with a new state of the art, 20,000 square foot conference center and an additional 200 rooms. The expanded resort opened in January and its performance had exceeded our expectations. In particular, our group room revenues at the resort are almost 2.5 times what they were a year ago and our peak weekend periods are filling the additional 200 rooms that we added.
Second, we had a grand opening for our newest facility in Concord, North Carolina. This is the resort with 402 rooms and 20,000 square foot conference center. It is still early, but even in this environment, I am pleased to say that it is contributing positive EBITDA and it is held pace with Williamsburg occupancy during its first summer of operation in 2005.
One of the strongest testaments to our business is the strength of our repeat and referrals business. In contrast to the declines in occupancy, our same store repeat and referral guests were up 4% overall and 5% respectively in our Generation II Resort. We locate many of our resorts and areas that are proven destinations with other demand generators. These characteristics along with our unmatched water park and unique activities targeted to families do give them a reason to come back for a fun and affordable getaway.
We have also kept the sharp eye on our cost controls due to the environment and to improve our efficiency as the cycle turns. Our focus on evaluating controllable expenses is resulting in improved food, labor, and utility costs primarily by combining or eliminating certain positions and using our consolidated buying power for products and commodities.
Importantly, we have made these changes keeping the priority of the guests experience in mind. Despite these reductions, our customer service scores continued to remain high. In fact our recent guest satisfaction scores were the highest they have ever been during the second quarter which was attributable to the great teams that we have in place in our resorts and their complete focus on our guests.
Looking ahead, we expect the operating environment to remain difficult but that will continue to outperform the broader hotel industries for the remainder of 2009 based primarily on our ability to provide a short duration high quality vacation for families.
We remained focus on increasing cash flow by driving growth through operational improvements and increase visits to our resorts. We recognized the challenges and the dynamic nature of the current environment and as such we are taking a more short term approach to our marketing and promotional plans and adjusting them as appropriate to help drive bookings.
Into the third quarter, on the leisure side, we have been more proactive in our promotions to previous guests and are seeing positive results in terms of booking pace and length of stay. We have also increased our flexibility on the group opportunity to put more groups into the resorts to build the base and expect continuing positive results in this area.
In the near term, our priority is to manage our existing capital structure while identifying opportunities for longer term growth through joint venture and licensing arrangements. Subsequent to the end of the second quarter, we expanded the maturity on our Mason loan which Jim will discuss and as a result, we have no debt maturities outstanding until mid-2011. This gives us the chance to focus on overall capital structure and the opportunities that may present themselves.
With respect to joint growth opportunities, we confirmed that we are not making any material commitments to this or any projects but we will continue to finalize our transaction with Mashantucket Pequot Tribal Nation to build near their Foxwoods Casino.
We are also working to secure an equity partner in conjunction with the land so we are project ready when the lending market is open again. Great Wolf has a great brand and a great operating model. With 13 resorts, we believe there is still meaningful opportunity to expand our footprint.
As we have previously discussed, we have adjusted our approach to our future development opportunities. We expect that our future development projects will be structured as joint ventures or 100% license and management projects which can provide the most efficient use of our capitals while capitalizing on our brand, model and operating expertise. Our operating model continues to produce strong cash flow.
With the completion of the Concord property, our capital expenditures are down, our cash is up and this will allow us to use this free cash flow to strengthen our balance sheet.
Now, I will turn over to Jim.
James A. Calder
Thanks Kim. I will briefly discuss our operational performance in the second quarter, our debt liquidity position and then conclude with our guidance for the third quarter.
Our second quarter adjusted EBITDA increased by 23% to $17.3 million ahead of the top end of our guidance. These better than expected results were driven primarily by the strength of our new and expanded resorts along with tight cost controls.
Additionally, the year-over-year growth as Kim spoke to was due in part to the shift in eastern spring break which fell in the second quarter of 2009 compared to the first quarter of 2008.
Same store RevPAR for all of our Great Wolf Lodge brand properties in the second quarter was $144, an 8% decrease in the prior year. Total revenue per occupied room or RevPOR which includes revenue from rooms, food and beverage and other amenities was $356, a 2.1% decrease from the 2008 quarter.
For our Generation II properties, same store RevPAR was $172, a 7.6% decrease in the prior year and total RevPAR was $393, a 2.8% decrease from the 2008 quarter. These results which were better than the overall hotel industry or even better when looked at in constant dollars. For example, Gen II same store RevPAR declines only 5.2% in constant dollars in the prior year.
Now, turning to cost, we have been extremely focused on managing the expenses that we can control. The three categories on our statement of operations that comprise these costs are resort departmental expenses, SG&A, and property operating costs. Taken as a whole as a percentage of total revenues, these costs declined by 360 basis points to 68.3% in the second quarter.
Similarly, our adjusted EBITDA margin defined as adjusted EBITDA divided by total revenue expanded by 300 basis points year-over-year in Q2. Some of this expansion can be explained by operational leverage due to our higher total revenues from our resorts, which is due in large part to our new Concord resort that opened in March 2009 in the 200-suite expansion of our Grapevine resort in 209. Along with the calendar shifts of spring break have benefit this year’s second quarter.
This better than industry performance was the result of our streamlining efforts. We literally have evaluated every position and expense at each of our resorts and in corporate. With an approach designed to find ways to maximize the efficiency of our labor and other operating costs. We have also made significant adjustments to our corporate staff over the past year. Primarily, relating to development conditions in light of our modified growth strategy.
Now, turning to our balance sheet and liquidity, as of the end of the second quarter, we have no remaining construction related payments for our Grapevine or Concord resorts. Additionally, with no current development plans, we have no meaningful long term capital commitments for construction or development of new properties.
Like a lot of companies in the current capital market environment, we have been extremely focused on strategies to increase liquidity and manage/extend our debt maturities.
I am very pleased to say that we have taken care the only substantial debt maturity that we have between now and mid-2011. As we announced yesterday, we have successfully negotiated an extension of the maturity date to July 2011 on both our Mason and our Grapevine loans.
The extended Grapevine loan will now bear interest on a rate of the LIBOR plus 400 basis points with a minimum rate of 7% per annum. The extended Mason loan will continue to bear interest at a rate of LIBOR plus 425 basis points, with a minimum rate of 6.5% per annum.
With these loan extensions, we are much more comfortable with our liquidity position and this extension hopefully gives us adequate time to wait for some stabilization or recovery of the lending markets.
We will now turn out attention to strategies to address our future maturities. Importantly, in the meantime, we will also continue to be aggressive and maintain strong cash flow from operations. We were successful in that front in the quarter, once again, driving adjusted EBITDA above the top end of our earnings guidance range.
With regard to capital expenditures, we spent approximately $4 million for the first six months of the year on maintenance or routine CapEx and expect an additional of approximately $3 million through the remainder of this year. Our total CapEx for the first six months of the year totaled $46 million, so we expect a total spend of about $49 million for the full year.
The vast majority will now spend so far 2009 related to the completion of our new Concord resort and the 200-suite expansion of our Grapevine property, both that which opened this year.
Looking ahead with our adjusted approach development focusing on joint ventures, licensing and resort management transactions, we anticipate meaningfully lower CapEx in the next few years. As of the end of the second quarter, we had $23 million of unrestricted cash available.
Turning now to guidance, we expect the operating environment to remain challenging but then our appeal as a convenient vacation alternative for families will continue to prove attractive.
In the third quarter, our booking lead time window and length of stay are slight currently pacing slightly ahead of last year. As we have been more aggressive with our previous guests with early booking promotions as well as length of stay opportunities. We are forecasting adjusted EBITDA in the third quarter in the range of $20.5 million to $23.5 million. Assuming same store RevPAR declines approximately 8%.
For the full year, we have narrowed our average range by increasing our low end assumption for adjusted EBITDA due to our better than expected performance in the first half of 2009. Our updated guidance for full year 2009, adjusted EBITDA is $61.5 million to $66.5 million.
In summary, we have taken the right steps to ensure sufficient liquidity. We have right sized our cost structure. We have improved our operational efficiency and we are continuously enhancing our guest experience. Our approach to growth has changed in this environment but we believe that opportunities remain substantial.
Interest in our brand or a family resort concept remained strong that we will continue to focus on furthering our leadership position in the industry in order to drive cash flow and shareholder value overtime.
And with that, operator, our prepared remarks are concluded and we will now open up for questions.
Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of David Loeb - Baird & Co.
David Loeb - Baird & Co.
I just have a couple, first off, well done on the financing, it sounds like you bought yourself a lot of breathing room.
Kimberley K. Schaefer
Thanks David.
David Loeb - Baird & Co.
You are welcome. But given what you said about your capital constraints and your desire to wait on further development or reliance on indenture partners, are you looking at management contracts or other ways to expand your operating platform and do you think there will be opportunities to buy distressed assets when you find yourself more comfortable with making additional investments?
James A. Calder
I will take a stab at that one. It is a great question. As we spoke, our growth model has changed substantially over the past year from a self development model to looking very much at management contracts, management licensing opportunities, joint venture opportunities. Those are really our growth avenues going forward as we see it today some combination of those.
So, I guess, in short response, if a management only opportunity arose I think it is certainly something that we would certainly evaluate and be interested in looking at. In terms of distressed assets, we have now looked at that specifically as a strategy right now. We are very much focused on the Great Wolf brand itself and making sure we maintain those strict brand standards and the level of quality and experience that our guests have come to expect at one of our resorts.
That is not to say we might not ever look at that sort of thing but primarily now we are focused on the strategy I spoke of and primarily on just the Great Wolf Lodge brand within that.
David Loeb - Baird & Co.
To follow up on that Jim, does that mean that the box that your competitors may be operating, that may be experiencing financial distress that it would be very hard to convert that into a box that would operate as efficiently or meet your brand standards as a Great Wolf?
James A. Calder
I do not think it would be necessarily tremendously difficult. It is something we have not done in the past. I think it is something we are capable of doing but our strong preferences to make sure the box and the entire experience is from day one crafted to be with our vision of what is Great Wolf experience should be. I do not think a conversion is by any means out of the question. I think it is certainly within our capabilities of doing that but it is our primary focus right now.
David Loeb - Baird & Co.
I see. And one more operational question, you have clearly done a great job on pulling costs out of the system. How much more of that is there to do and as you start to lap periods where you have done cost cutting, do you think it would be able to continue to show improving margins in a difficult environment?
Kimberley K. Schaefer
Well, I will take a stab at that one. David, a great question and certainly something that we talk about everyday. We have talked about it and that we have got to be flexible and we have got to look at all of our options. I think we have done the first round of looking at what we can do to operate more efficiently, but this is just going to be a way of business for us, I mean everyday we are challenging the team to see what we can do to improve our margins, how can leverage our experience as well as the consistency of what we have got within our brand to buy better.
So, I do think that there is a lot of that you have seen we are able to show year-over-year, the savings in that but I think that we are going to continually push to see what we can do to improve our way of doing business. So, it is going to be an ongoing process.
Operator
Your next question comes from the line of William Marks - JMP Securities.
William Marks - JMP Securities
First question I have was just on your new loan covenant. Did the tangible net worth of $180 million requirement change?
James A. Calder
Yes, with the extension we have, we have adjusted the tangible net worth covenant on our extended Mason and Grapevine loans.
William Marks - JMP Securities
I am sorry. So, is there a new figure then?
James A. Calder
Yes. It is now $100 million.
William Marks - JMP Securities
It is $100 million, okay. And what other changes were there?
James A. Calder
In terms, well, the point overall, the primary changes are really the standard changes, economic changes are really what we have described I think in terms of the rate and the length. Other than that, well, let me backup a second. As we discussed in the press release yesterday, we have now extended a corporate guarantee in cross collateralization of $30 million on the Mason loan, a cross collateralization with the Grapevine property that that was $15 million prior to this extension.
So, sort of the way we look at it was what we would commit to $15 million cross collateralization commitment this year for extending out here basically another two years, we increased that by another $15 million. We thought that was a reasonable tradeoff, I think, in today’s environment and certainly gives us a lot of breathing room over the next two years.
So, the rate changes the maturity date extension which obviously is the critical primary thing does and the corporate guarantee cross collateralization increased from $15 million to $30 million. I think those are the major changes from the amendments, the amended loans.
William Marks - JMP Securities
Okay. And where was your net worth at the end of the quarter?
James A. Calder
Let me look at it while we are talking here, Will I have got a draft here. I think it is approximately $235 million in tangible net worth.
William Marks - JMP Securities
Okay. It seems like you gave in the new figure of $100 million, it seems like a pretty big discount where you are now which it is nice to have that room on one hand but why would you need to go that low, I guess. I mean you will take it, I am sure but…
James A. Calder
Well, it is basically that. We just thought we needed adjustments so 100 was a nice round number.
William Marks - JMP Securities
Right, okay. I know next year is pretty far to look out and I am just trying to get a feel. Are there any indicators, I guess you do not let alone three weeks probably hard to look out towards next year, but maybe we will just focus on this year and look at pricing power and is there a reason to think that in the summer people are maybe more accurate in obtaining market share because people who would have flown or driving to vacations whereas maybe the fall, winter the slower seasons, people were not going to fly and maybe they will drive to vacations anyway so you do not have as much power because there is not much of new customer base coming in?
Kimberley K. Schaefer
Will, it is interesting that the trends, I think as best as I understand this is that the trends that we are seeing this year really in simplistic terms are the peak has stayed peak. So, we do find that those weekends I think as we reported year-to-date, our weekends were actually up 2.3% and really we always consider them functionally full anyway. So, they are just a little stronger both Friday night and Sunday night.
So, I think what we are seeing is that the Great Wolf vacation as far as being traded into, I think it is definitely happening. We are not seeing any different trends for summer versus what we did for spring break, Christmas vacation or type of things.
So, our expectation how we are looking at the business right now is that any of the time when the kids are out of school we are going to continue to look at those strong occupancy times. As you have seen, we have given up a little bit of rates not much in these peak times but a lot has to do with the ADR, leaving the discounts, open a little bit longer just because the booking window is a little bit shorter and so the yielding on that has definitely scrunched a little bit but I think that we feel very confident in how this business model is performing and it is interesting to be talked about it last year with high guest prices. We have talked about this year with the economy and guests are still making time and finding the relevance for Great Wolf vacation.
I hope, Will, did that answer your question?
William Marks - JMP Securities
Yes. I think that is fine.
Kimberley K. Schaefer
I hope, we will see how next year goes.
William Marks - JMP Securities
Right. And now, Jim I think, could you get back me on that quarter end tangible net worth?
James A. Calder
I believe it is around $235 million. We will be filing our 10-Q here in the next day or so and so the numbers will be exact on that.
Operator
Your next question comes from the line of [34.45] - Telco Trading.
Unidentified Speaker
A couple of quick questions, going back to the extension, in your prior guidance you were planning on making a $50 million payment on the Mason loan obviously to get rid of the corporate guarantee and a cross collateralization, is that still the case for this year? Are you still year marking in $15 million to go towards that Mason or halfway there now?
James A. Calder
As of this point, I would anticipate our expectations we would not make that $50 million pay down this year. We will evaluate that as the year goes along and a way to get opportunities and the cash flow obviously and our overall liquidity need, but my best guess at this point would be that we will not make that pay down this year.
Unidentified Speaker
Okay, fair enough. And then secondly in your prior conference calls, you kind of broke down your guidance based on same store growth or decline rather and the return, you are expecting on the Concord and Grapevine expansion. Correct me if I wrong, I think it was like 5% to 8% decline in same store RevPAR and a 3% to 5% return on the Concord resort and Grapevine expansion. Is that still the case? Are you expecting a better return on the expansion in the new resort?
James A. Calder
Yes. I think for full year, I do not have the last couple notes in front of me but I think we have talked about the RevPAR decline of approximately 68% on a full year basis for 2009. We still think that is a reasonable range across to forecast. It is where to what we have baked into our overall forecasting for the remainder of 2009 and in terms of return expectations on the invested value on Concord and Grapevine, I think you are correct. I believe we have also spoken around 5% again this first year of ramping sort of year return and I believe that percentage is still reasonable also and is about the midpoint of what we think into a range for the rest of the year.
Unidentified Speaker
Okay. And just heads up, Jim, I am going to come back to you in the next conference call and see if you can give a second year projected return on those assets.
James A. Calder
I will do when Kim projects RevPAR.
Operator
Your next question comes from the line of William Crow - Raymond James.
William Crow - Raymond James
A couple of questions here, Jim, any more preopening in the third or fourth quarter to come?
William Crow - Raymond James
Bill, with regard to preopening costs, we do not expect anything significant. Our preopening costs line also includes if we have capitalized costs on potential projects that we now have decided that we will not pursued because of our change in gross strategy or change in focus in a certain area. But having said that, I do not anticipate any material preopening costs for the rest of the year and I think that is what we have presented on our projections.
William Crow - Raymond James
Yes, okay. And then I think you answered this in the prepared remarks but there is no more debt to be added in the balance sheet related to the Concord or Grapevine expansions, is that correct?
James A. Calder
I think there is a very minor draw still to do on our Concord and I think we have one or two draws still to do after June 30 and I believe that is totaled about $1.5 million. Right, so that should be the only additional debt after June 30.
William Crow - Raymond James
Okay. And then what update can you give us on the sale of your JV interest in the mid-western properties? That was not completed. That was not finalized. Is that correct?
James A. Calder
That is right, Bill. As we disclosed on the last earnings call, I think just before that call we have signed an agreement with CNL lifestyle properties. CNL lifestyle property is our partner in the joint venture that we have that holds our Wisconsin Dells, Wisconsin, and Sandusky Ohio resorts, they earn about 70% of the JV. We own about 30%. We have on the contract for them to purchase our 30% interest, equity interest for $6 million.
We have not yet closed that transaction. We do expect that to close here in the third quarter, Bill.
William Crow - Raymond James
So, no change to expectations?
James A. Calder
No change to expectations. That is correct.
William Crow - Raymond James
Kim, I think last quarter we talked briefly about opportunity that potentially divests an asset. I know the Poconos resort was kicked around given the assumability of the debt. Any update that you could provide?
Kimberley K. Schaefer
We have talked about that. As far as the Poconos goes, the property is still listed per sale and it is an ongoing process. We do not have any offers on the resort so we continue to operate as a high performing asset.
I think now that we have the Mason loan extended, it really gives us the chance now to go through and as a capital structure really sit down and figure out what we want to do and how we want to look these assets going forward. So, I think now is the time to really start looking at the whole portfolio overall.
William Crow - Raymond James
Alright, and then one final question, Kim, you and I have talked about it in the past. I am sure you can be able to give me a good answer here. But there was a discussion that maybe you loss the lower 20% or 25% of your demographic demand, side of things because of the economy, but maybe you also got another 20% or 25% of people that you would otherwise picked up to trade it down. Any sense out there that you are regaining some of the people that maybe they are increasing consumer confidence or people starting to spend a little more? Are those people coming back or is that something you just cannot tell?
Kimberley K. Schaefer
Well, I think in the second quarter, it was probably hard to call because we saw the same kind as we did in the first quarter where our mid-week non-peak period like May and early June. We are pretty consistent. Those are really the reasons for our decline in occupancy. So, it still feels like that was the case.
As we looked to summer, we did see that our length of stay that our overall booking period actually did pick up a little bit with some of the promotions and how we are inclined to drive the business but it does still like that vacation option for people did kick back in. What we do not know yet is that the previous guests who use to come in the middle of the week can take advantage of the discount or they come in now in the summer and paying peak period.
It feels like it is still those guests who can afford to take the vacation, it is not an alternative for some of those other guests. So, I think that you will be able to see this fall what happens to some of those guests, does consumer confidence comes back.
I think the other thing that we have seen, Bill, is again of last minute bookings, Thursday and Friday being the largest percentage increase on booking days so people are coming for Thursday and Friday for the weekend.
William Crow - Raymond James
Okay. Finally, and you may have said it has been a long day. But the Concord is it in line with your expectations before you opened? Is it running ahead behind where are you?
Kimberley K. Schaefer
Concord, it is right where it is supposed to be. The demand is meeting our expectations. It is contributed to EBITDA what it was supposed to contribute for second quarter. What we have compared it to is Williamsburg because they both opened beginning of April, Williamsburg obviously in 2005. So, we are using that as a pay sheet and it really has a very similar pace to Williamsburg even in this market condition.
So, we are actually very pleased with outgoing. It is a great team.
Operator
(Operator Instructions) Your next question comes from the line of [George Kelly_43.17] - Stifel Nicolaus & Co.
[George Kelly - Stifel Nicolaus & Co.]
Just a couple of questions for you, modeling questions, first, can you give an average number of rooms during the quarter? The one that I have been using in your work right so I guess you can give that out.
James A. Calder
George, yes, I do not have that that sort would in front of me but I will tell you what we will get back here right after this call, either Alex Lombardo or myself can try to help you with those numbers.
[George Kelly - Stifel Nicolaus & Co.]
Okay, great. And then secondly, it looks like there is a weekend September to win rooms and a lot of properties are closed. I am wondering if that is like a scheduled annual sort of maintenance for the water parks or what that could be.
James A. Calder
George, you are actually correct. Every year at overall properties, we undergo a pretty thorough sort of annual shutdown maintenance process, which we generally do the week or the week after Labor Day, right after the end of the summer season. So, if you are seeing non-availability across the Board at a number of resorts that would be wise because of that routine shutdown particularly last four or five days in each of our resorts and it is kind of standard annual process for each of those resorts.
[George Kelly - Stifel Nicolaus & Co.]
Okay. That makes sense. And then are similar properties still seeing some mid-week, closings too or is that something that is sort of faded?
Kimberley K. Schaefer
I think that for the mid-week business especially for some of the Generation I smaller property that is still going to be part of what we look at and make individual decisions on how much business we think will be on the books. The nice thing is that we do not lose those customers, if we shutdown on the Tuesday or Wednesday, we just push them to Monday or Thursday and actually it is a better experience if we can have more guests in the hotel at any one time.
Operator
(Operator Instructions) Your next question comes from the line of Hayley Wolff - Rochdale Securities.
Hayley Wolff - Rochdale Securities
Just a couple of questions, first on the cost savings, I mean impressive margin expansion particular in declining RevPAR. Are these types of savings that are going to be institutionalized so even in business starts to get better, there is going to be this discipline on driving margins?
Kimberley K. Schaefer
Yes. What we have done is had a series of meetings with the general managers. I think it was a very thoughtful process. I think it is the best way to say it is to really look at the changes and the lessons that we have learned over the last 12 years in reevaluating how we run our resort.
So, a lot that comes from really just good business practices that in times when we were growing so fast, we probably just did not have the chance to go back and reevaluate. So, I gave a lot of credit to the team for being as diligent as they are and really utilizing everybody in the Company to figure out how we save. So, Hayley, a long answer to that is yes we believe that these are changes that we stay in place. We have rewritten job descriptions and training programs to reflect those changes.
Hayley Wolff - Rochdale Securities
Okay. Next question, as you have changed the marketing mix in the current environment and you try to get more of repeat by giving them certain promotions, what have you learned about advertising mix going forward and what has been the most effective means of bringing customers in?
Kimberley K. Schaefer
Absolutely, we do love our previous guests and they are the bread and butter of those early bookings. Direct to marketing, we have seen great responses. The year-over-year increases in performance, not only for direct mail but also with email now into the previous guests but we also do a lot of targeting to new guests as well. With that allows us to do is really control the messaging but also the timing. As we know that the marketing or the booking window has condensed, it really allows us to talk to those guests at the right time and segment them appropriately.
Hayley Wolff - Rochdale Securities
And where you are getting the new guests list, to the email list?
Kimberley K. Schaefer
The new guests list we worked with our new guests, hold on Hayley. We worked with our advertising agency to find those lists and we profile our guests as far as looking at how the guests are coming to our lodges now and what are the types of consumers step up that profile.
So, profiling is done very standard, how we have always done our business and as far as how we do when we go to a new location as well. We look at the type of guests who come to our lodges and overlay that menu business as well. We still continue with the broadcast media, radio friends that type of thing as well and that is also a driver for our new guests to drive them to our website.
Remember, 99% of all of our bookings come either through our website, which we continue to enhance or directly to our call center.
Hayley Wolff - Rochdale Securities
Are you going wider out the population now that people are looking more towards lower cost vacations and drive through, seen the concentric rings widen out?
Kimberley K. Schaefer
We have and it maybe because of where our locations are located where we have our locations, the major populations for Williamsburg will still be Washington DC as well as the Carolina. Poconos is still going to be New York and Philadelphia. So, I think that we are kind of encompassing those rings with those major metropolitan markets when we build these locations.
So, we have not seen a significant shift. The most significant trends that we have seen this summer have really then the length of stay and again we get in a little bit earlier booking period this summer. So, I think those are the two positive trends that we have seen.
Hayley Wolff - Rochdale Securities
Okay. And then last question, can you talk a little bit about your two returns as you start to get into that for Grand Mound and if you can sort of parse out great volume for your expansion?
James A. Calder
Hayley, in terms of year two return, it is a little bit difficult in this environment. What we normally underwrite with any of our development is a low teen like a 13% unlevered EBITDA total return over a total cost. I do not know exactly what we are attracting to be quite honest with you on Grand Mound and Grapevine which where year two right now.
I would suspect that due to the conditions we are in when we under wrote these things I am pretty confident we did not forecast an 8% RevPAR decline for example in any particular year. I would think that our returns are below what we have initially underwritten them before. Primarily because of the economic conditions widespread right now, not because of the quality of the asset or the quality of the business proposition there.
So, I would think we are tracking lower than what we have forecasted but I do not know exactly what we are tracking.
Operator
There are no questions at this time. I will now turn the call back to our presenters for any additional or closing remarks.
Kimberley K. Schaefer
Thanks. We are pleased that Great Wolf Lodge brand continues to offer value proposition for families to enjoy our 5000 pack members have done a great job of staying focus on delivering that experience while watching the bottom line. As always, I thank them for their dedication and passion to the Company.
Thank you for your interest in Great Wolf Resorts and we look forward to updating you on our progress again next quarter.
Operator
And with that ladies and gentlemen, that will conclude today’s presentation. Thank you for joining. You may now disconnect.
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