Great Wolf Resorts Reports Second Quarter 2007 Results

Second Quarter 2007 Highlights
* Reported Adjusted EBITDA of $11.5 million and Adjusted net loss per share of $(0.01), exceeding consensus analyst expectations for both measures.

* Increased Great Wolf Lodge(R) brand same store Total RevPAR by 4.8 percent, compared to the 2006 second quarter.

* Acquired 15.9 percent minority interest in the Great Wolf Lodge in Mason, Ohio, giving the company 100 percent ownership of that resort.

* Announced plans for construction of next Great Wolf Lodge resort to be built in the Charlotte, North Carolina market.

* Completed expansion of Great Wolf Lodge -Williamsburg, Virginia resort with opening of 10,000 additional square feet of meeting space and an outdoor miniature golf course.

* Began construction on an expansion project at Great Wolf Lodge - Traverse City, Michigan, which includes a 9,000 square-foot conference center, MagiQuest(TM) - a live-action adventure game, and an outdoor miniature golf course.

* Launched Scooops(TM) Kid Spa, an innovative and family-friendly service for young girls ages 8-12.

* Issued $28.1 million of Trust Preferred Securities, the net proceeds of which will be used for development of future resorts.

Great Wolf Resorts reported a 2007 second quarter net loss of $(1.7) million, or $(0.05) per diluted share, compared to a net loss of $(1.4) million, or $(0.05) per diluted share in the same period a year earlier.

Second Quarter Operating Results

"In the second quarter, our company continued to produce solid results in line with our financial guidance ranges for key operating metrics," said John Emery, chief executive officer. "The second quarter included our celebration of our Great Wolf Lodge brand's 10th anniversary in May with a month-long schedule of events. We used those events as an opportunity to impact consumer awareness of our brand and to help us build momentum as we entered the busy summer season."

The company reported Adjusted EBITDA of $11.5 million and Adjusted net loss per share of $(0.01) for the 2007 second quarter. Same store revenue per available room (RevPAR) in the quarter improved 3.9 percent, compared to the same period a year earlier.

"The second quarter saw the completion and opening of 10,000 square feet of additional meeting space at our Williamsburg property, to conclude a major expansion of the resort that also included 104 new guest suites and additional indoor waterpark space we opened earlier this year," Emery continued. "We look forward to the opportunities that our newly-expanded resort will offer in a strong market.

"Also, our new Mason resort which opened in December 2006 is still early in its ramp up period," Emery noted. "The resort's 40,000 square-foot, state- of-the-art conference center opened in March 2007 and we are excited about the potential of this facility in attracting group business to the property. We believe that booking large blocks of group business to a new facility such as ours requires a fair amount of lead time, so we expect the property will require some time to ramp up to our group business operating expectations. For leisure business, we have started co-marketing with the adjacent Kings Island theme park this summer, further building awareness of our brand in that market. With more than two million guests expected to visit Kings Island this summer, we should get significant exposure to many potential future guests. We expect this to help us as we continue to ramp up the property into 2008.

"Our upper Midwest properties - particularly our Traverse City and Sandusky resorts - continue to feel the negative effects of downturns in the local and regional economies and competition in those areas," Emery continued. "Challenges in the automobile-related industries have impacted consumer spending in these regions. We believe these markets can eventually be good long-term opportunities for us, but will remain difficult through at least the remainder of 2007.

"Our introduction of the Scooops Kid Spa creates a unique amenity for 'tweens' visiting our resorts," Emery added. "We have already added Scooops at seven of our locations and we expect to incorporate it into future resorts we develop as well. We feel that amenities like Scooops and MagiQuest, a live-action fantasy adventure game we currently have installed or in the process of installing at five of our resorts, further enhance the overall guest experience we provide and differentiate our brand from competitors. We continue to look for similar opportunities to broaden the appeal of our resorts to consumers."

Operating statistics for the company's portfolio of Great Wolf Lodge resorts for the 2007 second quarter are as follows:

                                    Same Store Comparison (a)

                         -----------------------------------------------

                            Q2           Q2          Increase (Decrease)

                                                   ---------------------

                           2007         2006            $           %

  ----------------------------------------------------------------------

  Occupancy                65.1%        63.4%          N/A         2.7%

  ----------------------------------------------------------------------

  ADR                    $240.34      $237.38        $2.96         1.2%

  ----------------------------------------------------------------------

  RevPAR                 $156.44      $150.53        $5.91         3.9%

  ----------------------------------------------------------------------

  Total RevPOR           $358.87      $351.66        $7.21         2.1%

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  Total RevPAR           $233.60      $223.00       $10.60         4.8%

  ----------------------------------------------------------------------







                                     All Properties Comparison (b)

                         -----------------------------------------------

                            Q2           Q2          Increase (Decrease)

                                                   ---------------------

                           2007         2006            $           %

  ----------------------------------------------------------------------

  Occupancy                62.0%        63.4%          N/A        (2.2)%

  ----------------------------------------------------------------------



  ADR                    $241.76      $237.38        $4.38         1.8%

  ----------------------------------------------------------------------



  RevPAR                 $149.87      $150.53       $(0.66)       (0.4)%

  ----------------------------------------------------------------------



  Total RevPOR           $361.70      $351.66       $10.04         2.9%

  ----------------------------------------------------------------------



  Total RevPAR           $224.22      $223.00        $1.22         0.5%

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  (a) Same store comparison includes only Great Wolf Lodge resorts that were

      open for the majority of the period of both Q2 2006 and Q2 2007.

  (b) All properties comparison includes all Great Wolf Lodge resorts that

      were open at any point during Q2 2006 or Q2 2007.

The All Properties operating statistics above for the 2007 second quarter reflect both the ramp-up of the company's Mason resort during its first full quarter of operations and a shorter school spring break season in 2007 due to the Easter holiday falling eight days earlier in 2007 as compared to 2006.

Construction Update

Construction of the company's 402-suite Great Wolf Lodge in Grapevine, Texas remains on schedule, with opening expected late in fourth quarter 2007. The company currently is evaluating options and costs for an expansion of up to 200 additional guest suites and 20,000 square feet of meeting space at the property and expects to formalize its expansion plans by the end of 2007.

The 398-suite Great Wolf Lodge in Grand Mound, Washington, owned by a joint venture between Great Wolf Resorts and the Confederated Tribes of the Chehalis Reservation, is approximately 50 percent complete and currently is expected to open late in first quarter 2008.

At its Traverse City resort, the company continues on construction of an additional 9,000 square feet of meeting space, which is scheduled to open at the end of 2007. "The meeting space construction currently underway at Traverse City and recently completed at Williamsburg demonstrates our increased focus on group business as a revenue growth opportunity," Emery noted.

Development Update

During the second quarter, the company announced plans to build an approximately 400-suite resort, to include a 95,000 square-foot indoor entertainment area and 20,000 square feet of meeting space, in metropolitan Charlotte, North Carolina. "This market is a natural extension of our brand into the South, following the success of our Williamsburg resort," Emery said. "We expect to break ground on construction of the resort by October and plan to open in the first half of 2009.

"We have not seen any significant construction or announcements in our existing and primary target markets of indoor waterpark resorts of the type or on the scale of a Great Wolf Lodge," Emery noted. "Much of the construction that has occurred recently has been smaller indoor waterparks, often attached to an existing hotel, in secondary and tertiary markets. These projects tend to be more like an enlarged swimming pool, are usually not extensively themed or branded, offer minimal amenities, and do not remotely approach the guest experience our resorts offer. We remain the only national indoor waterpark brand and continue to pursue our strategy to grow our brand awareness through high-impact development projects."

In July, Mall of America(R), located in Bloomington, Minnesota and the nation's largest retail and entertainment complex, announced that it has signed a letter of intent with the company to incorporate a Great Wolf Lodge resort as part of the mall's pending Phase II expansion. The construction of this resort is contingent upon the finalization and approval of Phase II plans, including state approval for infrastructure funding.

Emery said the company is actively negotiating for additional sites and remains optimistic that it will announce one or two additional resorts by year-end. "We have an active pipeline of potential projects in high-demand markets. Our primary focus is on the Mid-Atlantic, Southeast, Northeast and Northern California regions, where there are large population clusters that are within 180 miles of a potential resort."

In addition, the company has recently increased its focus on international development opportunities. In July 2007, the company announced Alissa (Nikki) Nolan has joined Great Wolf Resorts as executive vice president and managing director of international. She is focused on identifying investors and other third parties to develop indoor waterpark resorts outside of the U.S. "We have had expressions of interest in our brand from several international parties," Emery noted. "We expect that our international growth will come from selectively licensing the brand and providing third-party management. This growth strategy could generate substantial fee income for the company with much smaller equity investments than in our domestic projects."

Capital Structure

In the second quarter, the company issued $28.1 million of trust preferred securities (TPS) to help fund future development. The TPS have a maturity of 10 years, with interest fixed at 7.90 percent for the first five years, and are callable after five years with no prepayment penalty. "This was our second TPS offering," said James A. Calder, chief financial officer. "The offering enabled us to raise capital efficiently without diluting our equity holders or adding to mortgage debt. We expect to use the net proceeds for development of future resorts.

"We had $26 million of unrestricted cash available at the close of the 2007 second quarter and have no mortgage debt outstanding on two of our resorts, which gives us financial flexibility for future development," Calder commented. "As of June 30, nearly 97 percent of the company's long-term debt is effectively fixed with a weighted average interest rate of 7.2 percent and debt maturity of 9.5 years."

Key Financial Data
As of June 30, 2007, Great Wolf Resorts had:

* Total cash, cash equivalents and restricted cash of $31.1 million

* Total secured debt of $250.6 million

* Total unsecured debt of $80.5 million

* Weighted average cost of total debt of 7.2 percent

* Weighted average debt maturity of 9.5 years

* Total construction in progress for resorts currently under construction but not yet opened of approximately $108.8 million

Outlook and Guidance

"The third quarter is typically the largest Adjusted EBITDA contributor to our annual results," Emery noted. "We remain comfortable with our revised guidance for full-year Adjusted EBITDA range of $45 - $51 million.

The company provides the following outlook and earnings guidance for the third quarter and full year 2007 (amounts in thousands, except per share data):

                                          Q3 2007            Full year 2007

  --------------------------------------------------------------------------

                                        Low      High        Low       High

  --------------------------------------------------------------------------

  Net income (loss)                    $(700)  $1,300   $(10,200)   $(6,600)

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  Net income (loss) per diluted share $(0.03)   $0.04     $(0.34)    $(0.22)

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  Adjusted EBITDA (a)                $14,000  $17,500    $45,000    $51,000

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  Adjusted net income (loss) (a)        $500   $2,700    $(3,700)     $(100)

  --------------------------------------------------------------------------

  Adjusted net income (loss) per

   diluted share                       $0.02    $0.09     $(0.12)    $(0.00)

  --------------------------------------------------------------------------

The net income (loss) and adjusted net income (loss) amounts above include the effects of additional borrowings the company undertook in 2006 and 2007 to partially fund future development projects, the ramp-up of the company's Mason resort in its first year of operation and the significant expansions to the company's Williamsburg resort.



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