gossip re DVC

[goldilocks_63]

Hi,

I asked a CM what the next DVC would be, and was told Contemporary.

Then, this tidbit.

They plan on putting DVC at all the deluxe resorts.

Really? I said.... Like which ones?

Polynesian, and Grand Floridian, was told are in the works as well, down the line. And they're putting in a 4 seasons (this we already heard about).

This is gossip, and no I won't say who/what/where/when/or how, just take it for what it's worth, which is an interesting but unconfirmed UFO siteing.

Goldi

[WendyinNC]

Contemporary and Poly. My dream come true!

[CTtwins]

I just returned, last night, from our trip to WDW... :cool1:

We've all heard the rumors and see the plans.. but they keep denying it!!

I was going to get on the boards to see if someone posted more specifically about the construction at the contemporary..... It is a HUGE area they are working on - between the existing hotel and the MK... does someone know what that is..? :confused3 It is certainly large enough to be another building! When I asked a DVC guide, they acted coy and did not give a straight answer... she giggled when I mentioned the photos being on the boards...

hmmmm :rolleyes1

[CTtwins]

of the construction site while I was riding the monorail..

but I don't know how to post them...

I could e-mail them to someone if you'd be willing to post them... pm me if you're interested..!

[Ksp]

Hmmmm, indeed.;) DVC at all the deluxe resorts? :banana:

[tink_about_it]

THE POLY!:woohoo: :woohoo: :woohoo: :dance3:

[Chuck S]

I wonder where at the Poly they would put it? One side bumps up against TTC and the other the wedding pavilion.

[keishashadow]

Wouldn't surprise me if they just rehab a floor or building of Poly/Grand FL & call it DVC...the faithful will be happy.

Then perhaps build a few more smaller buildings in keeping with theme of each resort.

[tjkraz]

While I'm sure DVC has at least a basic outline of what it could do at each of the Disney resorts, whether the resorts unit lets them act on any of those plans is what really matters.

Disney guest rooms are far, FAR more profitable when sold on a cash basis rather than sold as DVC units. The key to getting DVC into a particular location...at least in current years...has been excess capacity. For example, Disney couldn't fill the rooms at the Disney Institute so they closed it and SSR was born. AKL was built with 1300 guest rooms, many of which sat empty night-after-night. Thus we get AKV. If the CR project is DVC units, it's replacing the North Garden Wing which was most recently used to host military guests during the SoG rehab. For the most part, that wing was also excess capacity.

As for the Poly and Grand Floridian, I've never heard of either having occupancy issues...particularly the Poly. If they can continue to get $400+ per night from cash guests, that's the way to go. :thumbsup2

One unknown is what impact the new Four Seasons development might have on the Grand Floridian. The GF was designed to be the flagship Disney resort, but they were never willing to spend what was necessary to earn truly elite status. If the Four Seasons becomes the destination of choice for the rich and powerful, occupancy at the GF could easily fall-off and pave the way for DVC to acquire some existing rooms.

[TenThousandVolts]

We sa all the construction at CR - they have a ton of underground utilitiy pipes, tubes or conduits (or whatever they are called) laying around the cleared spot. My DH said- hey- the peolple on the Disboards would like to see a picture of that- I said- we have all seen it already :) ;)

[asianway]

If it happens at Poly, some of those 1971 Longhouses will be history. Im sure DVC will remember how easy the North Wing came down

[DVC Grammy]

While I'm sure DVC has at least a basic outline of what it could do at each of the Disney resorts, whether the resorts unit lets them act on any of those plans is what really matters.

Disney guest rooms are far, FAR more profitable when sold on a cash basis rather than sold as DVC units. The key to getting DVC into a particular location...at least in current years...has been excess capacity. For example, Disney couldn't fill the rooms at the Disney Institute so they closed it and SSR was born. AKL was built with 1300 guest rooms, many of which sat empty night-after-night. Thus we get AKV. If the CR project is DVC units, it's replacing the North Garden Wing which was most recently used to host military guests during the SoG rehab. For the most part, that wing was also excess capacity.

As for the Poly and Grand Floridian, I've never heard of either having occupancy issues...particularly the Poly. If they can continue to get $400+ per night from cash guests, that's the way to go. :thumbsup2

One unknown is what impact the new Four Seasons development might have on the Grand Floridian. The GF was designed to be the flagship Disney resort, but they were never willing to spend what was necessary to earn truly elite status. If the Four Seasons becomes the destination of choice for the rich and powerful, occupancy at the GF could easily fall-off and pave the way for DVC to acquire some existing rooms.

If DVC is put only in under-used resorts, why did they build the BCV and VWL? Were the YC/BC and WL also under-utilized? :confused3 And why did they build the BWV at the same time as the BWI instead of waiting to see if the BWI would be nearer to full capacity?:confused:
If it's about capacity only, why did they bother building OKW, the flagship DVC, instead of tearing down the treehouses and building there? :confused3

I can see your point re: AKL and the DI, but IMO, that criteria doesn't seem to easily fit all the others.

[Mahusky]

Where are they going to put a 4 Seasons?

[Sammie]

If DVC is put only in under-used resorts, why did they build the BCV and VWL? Were the YC/BC and WL also under-utilized? :confused3 And why did they build the BWV at the same time as the BWI instead of waiting to see if the BWI would be nearer to full capacity?:confused:
If it's about capacity only, why did they bother building OKW, the flagship DVC, instead of tearing down the treehouses and building there? :confused3

I can see your point re: AKL and the DI, but IMO, that criteria doesn't seem to easily fit all the others.

yes there was a time when both BC and WL were closing floors due to lack of occupany, DVC gave them year round occupancy.

I am not saying they won't ever add a DVC portion to Polynesian or Grand Floridian but I don't see it happening for a long time, 10-20 years. Even then I think they would do as they did at AKV and simply add some existing rooms to the buildings already there, as I see no logical place to build another wing.

[Sammie]

Where are they going to put a 4 Seasons?

Past Fort Wilderness on the outer edge of Eagle Pines golf course.

[tjkraz]

As for OKW and BWV, those projects were completed long before WDW was overbuilt. Off the top of my head, Coronado Springs, Animal Kingdom Lodge and Pop Century all opened after OKW and BWV. That's over 6000 (a full 1/4 of all Disney-owned rooms currently available) rooms right there.

Even the All-stars, which opened in late 1994, came well after OKW (1991) and after construction had begun at BW.

[DebbieB]

I just returned, last night, from our trip to WDW... :cool1:

We've all heard the rumors and see the plans.. but they keep denying it!!

I was going to get on the boards to see if someone posted more specifically about the construction at the contemporary..... It is a HUGE area they are working on - between the existing hotel and the MK... does someone know what that is..? :confused3 It is certainly large enough to be another building! When I asked a DVC guide, they acted coy and did not give a straight answer... she giggled when I mentioned the photos being on the boards...

hmmmm :rolleyes1

Legally, I don't think DVC guides can say anything, even if it's true. They could lose their jobs.

[canda]

My feeling is that the current 655 rooms is much to small for the the large convention facility that it has.

We have in my town a 100,000s/f convention center with over 1000 guest room hotel.


Wishful thinking aside, It just does not add up to DVC's favor when you look at the needs of the resort. It needs an upscale suites on cash to help with its conventions. (conventions make much more money than vacation stays and timeshare)

[asianway]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.

[CTtwins]

Legally, I don't think DVC guides can say anything, even if it's true. They could lose their jobs.


Yes, I agree...
(certainly why I would never mention a name!)

but it never hurts to ask! and it's a bit of fun to watch them squirm a little!! :laughing: tee hee!! It must feel like a really big secret to keep - if they actually know what is going on.. sometimes it sounds like they only hear rumors like we do.. :confused3

[tjkraz]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.

Disney has convention facilities at Coronado Springs (a moderate) and that resort also has 40+ suites. I assume the CR convention facilities would tend to attract groups with larger budgets.

With WDW being such a popular family vacation destination, I assume many convention attendees take advantage of the ability to bring family members along. (I'm attending a conference at Portafino Bay in a few weeks and families are more than welcome.) Those combo convention / vacation families may embrace suites.

I wouldn't expect a big corporation to freely allow rank-and-file employees to book expensive suites on the company's dime, but higher-level employees or those working in lucrative professional occupations may not think twice. For many the cost would even be a tax deduction.

[asianway]

So youre saying the demand generators are there for 300 additional suites for the Contemporary Convention facilities?

[tjkraz]

So youre saying the demand generators are there for 300 additional suites for the Contemporary Convention facilities?

I'm not privy to the data that Disney has on hand so I can't even make an educated guess. Given what appears to be an increasing demand for suite / villa type accommodations in the hospitality industry, the great location at WDW and the presence of high-spending convention business, I'm certainly not going to dismiss the idea.

It's also worth noting that the plans filed for the project were DVC-style accommodations. If it is to be a cash-only resort, the "Studio" rooms in the plans are just standard guest rooms. Not all of the units being discussed are $700+ per night multi-room suites.

[Boardwalker]

I am not saying they won't ever add a DVC portion to Polynesian or Grand Floridian but I don't see it happening for a long time.

I have to agree, especially if the DVC at the Contemporary is a fact. That will be the MK/Monorail resort for DVC for WDW.
It seems to me they are trying to have DVC resorts at each of the major properties first... MK has OKW, VWL and probably the Contemporary. EPCOT/MGM has BWV and BCV. DTD has SSR. AKV for AK. I think they are saturating WDW at this point.
I bet they are going to try DL next, then maybe the international parks?

I have to admit I would be happier to see EuroDisney and Paris or I would be quicker travel to Hong Kong if I knew a DVC resort was there to be my home away from home... just having the kitchen would make it a whole different experience.

[Longhairbear]

...I bet they are going to try DL next.....
That is the impression I got from a DLR DVC kiosk. The CM said they would not be redecorating the DVC model there to reflect AKV units. They would only redo, if another new DVC came along.
The rumor here in CA, is a DVC/suites wing to be added to the GC, followed by a second DVC stand alone building on property. Keep in mind the rumored total rehab of the DLH, and other possible new Disney hotels here. There just might be a huge hotel, timeshare construction boom at DLR coming soon, despite the problems with the Anaheim city council.

[canda]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.


Many companies give you a convention budget, mine is 1500 a year or I can hold it over until next year and get 3000. (I can't hold it for more than a year) I can bring family, I just pay out of pocket for anything over and travel for my family.

So, my room and gas are paid for every 2 years at WDW. We split meals so my meals are paid for.

the only thing i pay for is park tickets and kids meals.

SO I guess either way, I am excited about the new facility because I will be able to use it for convention trips or my DVC trips (which are more fun).

[canda]

That is the impression I got from a DLR DVC kiosk. The CM said they would not be redecorating the DVC model there to reflect AKV units. They would only redo, if another new DVC came along.
The rumor here in CA, is a DVC/suites wing to be added to the GC, followed by a second DVC stand alone building on property. Keep in mind the rumored total rehab of the DLH, and other possible new Disney hotels here. There just might be a huge hotel, timeshare construction boom at DLR coming soon, despite the problems with the Anaheim city council.



Disneys Califorina Vacation Club and Public Housing Villas :hippie:

[Donald is #1]

Hi everyone, I was with Goldilocks when she asked about any new DVC resorts. I was surprised when the CM mentioned both the Poly and the GF but he was very definite about all of the deluxes.

On the Contemporary, every CM that I spoke with except for the DVC CMs said that a DVC resort was being built at the Contemporary. They were even mentioning the height etc (18 storis).

From the DVC CM that I spoke with, he said that DVC is using the AKV to test out whether Concierge service will work for the DVC. We were talking about AKV and I mentioned that I was surprised at how few CL rooms were planned and how reasonable the points value seemed for CL. He said that it was basically a test to see if CL would work for DVC.

[pilferk]

I wonder where at the Poly they would put it? One side bumps up against TTC and the other the wedding pavilion.

The poly is the one I wonder about most too. It's limited in it's ability to expand out to the sides and it's the one theme you can't really do "across the street" (figuratively, like with AKV) because you really need direct access to the beach to make it "work". Maybe find a way to build "out" over the water? Naahhh, can't see that happening either.

[pilferk]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.

Keep in mind, I fall squarely on YOUR side in this discussion...I don't think the building is a suites only building for the resort. I think it's either mixed use (and even then I have doubts) or DVC only.

But having said that, while you're right that the majority of convention folk arent' booking those suites, the vendors (for parties or afterhours "pitch" meetings), executives (for both stays, "schmoozing", and the like), and company reps (again, for parties, company meetings, entertaining vendors, and possibly recruiting) will book them.

Now, I'm with you. I don't think that demand is enough to fill 300+ suites entirely from the convention business they do. And I think, with the 4S resort going right across the lake, that the vacation guest market would have a hard time filling those suites too. I've not seen hard numbers either, but...from what we know....it doesn't appear, on the surface, to make much sense to build it as 100% as resort suite use.

[squidmo]

That is the impression I got from a DLR DVC kiosk. The CM said they would not be redecorating the DVC model there to reflect AKV units. They would only redo, if another new DVC came along.


Wow- that's the sort of news I like to hear! Since SSR is supposed to be sold out within the next year, this says to me that DVC is hoping to have something newer than AKV to show off in the next year. (I'm not suggesting they would actually be completed in a year, just announced, with construction in process). Ooohh, I'm so hoping O-meon is right and they will be announcing GCV next month!

[DramaTech]

Check this out...page 11 clearly states - "Proposed DVC Resort"

http://my.sfwmd.gov/cmsdk/content/ifs/apps/RegDocFolder/Applications/061106-23file2_ApplDocs_78670.pdf

[minnie61650]

The poly is the one I wonder about most too. It's limited in it's ability to expand out to the sides and it's the one theme you can't really do "across the street" (figuratively, like with AKV) because you really need direct access to the beach to make it "work". Maybe find a way to build "out" over the water? Naahhh, can't see that happening either.

At one time before WDW even opened Disney had plans to build the"Future" Persian Resort with most of the resort over the water of Bay Lake.

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

Before the MK was even built plans were in place for 4 hotels to be on the monorail line.The Grand Floridian hotel is on the land that was set aside and dedicated to be the "Future" Asian Resort Hotel (A). The "Future"
Venetian (B) Resort was going to located between the Poly (5) and the Contemporary (8). A fifth hotel was going to build on a monorail spur which ended at the "Future" Persian Resort (C). That resort would be located just to east of the Mk and North of the Contemorary and would built with much of the hotel being on /over the water of Bay Lake. So even though the GF was not built until 18 years later a hotel was planned for that area at the same time the monorail was planned.

I got this picture and my info from my"The story of Walt Disney World"
Commemory Edition Book 1971.



http://i11.photobucket.com/albums/a175/minnie61650/YGP32D4disneyfuture.jpg

[tjkraz]

Check this out...page 11 clearly states - "Proposed DVC Resort"

http://my.sfwmd.gov/cmsdk/content/ifs/apps/RegDocFolder/Applications/061106-23file2_ApplDocs_78670.pdf

Page 11 is actually the first page of a study completed by an outside firm called PSI. According to the cover letter on page 12 of the PDF, the study was originally proposed last May and completed in August. What we can't tell is if Disney changed their minds about the use of the facility between August and November.

All of the docs associated solely with the November permit filing omit any mention of DVC. Why? Since all of the reports have DVC mentioned, it's not like they would really be covering-up DVC's involvement. Why go from calling it DVC @ CR to "Disney's Contemporary Suites?"

One possible explanation is that the structure WAS slated to be a DVC development as of mid-2006, and then something changed. DVC instead received access to AKL and Disney has other plans for the new CR tower. It certainly wouldn't be the last time that Disney changed its course mid-stream.

Until there is an announcement, we'll just have to keep speculating.

[Budshark]

Disney guest rooms are far, FAR more profitable when sold on a cash basis rather than sold as DVC units. The key to getting DVC into a particular location...at least in current years...has been excess capacity.

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors -

1) The "today" profit from DVC is FAR greater than guest room nightly rates. $100/pt + MF creates a profit margin for Disney higher than the rack rates. Assuming a 1 bedroom that is 28 pts/night (at 4.50 MF) you would assume that Disney only got $126/night for the room. The rack rate might be $250-$350 for the room. But what happened to the $2,800 Disney got up front for that room when the original DVC points were sold? Oh yes - up front money for Disney.

2) DVC rooms are guaranteed sells. Disney got their upfront purchase, and they get their MFs. Whether you use the rooms or not is up to you. This is important in economic downturns, external factors (terrorist concerns), etc. While hotel rooms can see a sudden and immediate decrease in occupancy rates - DVC likely is much more stable. People won't walk away from their initial investment by refusing to pay MFs - Disney will just take the points and deed back and you'll have nothing - and Disney still got the upfront money. And now they can sell the deed again for full profit.

3) DVC rooms have a higher profit %. The overhead associated with a hotel room is higher than a DVC room. So although you might see the 'rack rate' as a higher number (say $300) than the DVC point number ($126) - Disney isn't investing the same amount of services and upkeep to the DVC room. So there may be an average of $25/night in DVC services, but $125/night in a hotel room. So the 'profit' differential isn't as big as it seems on the surface.

So the summary is: Don't assume that Disney makes a lot more on hotel rooms. But it is a balance - they need available rooms to satisfy the general public. If they convert everything to DVC the public will see Disney as being a 'club' that requires them to 'buy-in' if they want to stay. Probably not the opinion Disney wants.

[Machta]

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors -

1) The "today" profit from DVC is FAR greater than guest room nightly rates. $100/pt + MF creates a profit margin for Disney higher than the rack rates. Assuming a 1 bedroom that is 28 pts/night (at 4.50 MF) you would assume that Disney only got $126/night for the room. The rack rate might be $250-$350 for the room. But what happened to the $2,800 Disney got up front for that room when the original DVC points were sold? Oh yes - up front money for Disney.

2) DVC rooms are guaranteed sells. Disney got their upfront purchase, and they get their MFs. Whether you use the rooms or not is up to you. This is important in economic downturns, external factors (terrorist concerns), etc. While hotel rooms can see a sudden and immediate decrease in occupancy rates - DVC likely is much more stable. People won't walk away from their initial investment by refusing to pay MFs - Disney will just take the points and deed back and you'll have nothing - and Disney still got the upfront money. And now they can sell the deed again for full profit.

3) DVC rooms have a higher profit %. The overhead associated with a hotel room is higher than a DVC room. So although you might see the 'rack rate' as a higher number (say $300) than the DVC point number ($126) - Disney isn't investing the same amount of services and upkeep to the DVC room. So there may be an average of $25/night in DVC services, but $125/night in a hotel room. So the 'profit' differential isn't as big as it seems on the surface.

So the summary is: Don't assume that Disney makes a lot more on hotel rooms. But it is a balance - they need available rooms to satisfy the general public. If they convert everything to DVC the public will see Disney as being a 'club' that requires them to 'buy-in' if they want to stay. Probably not the opinion Disney wants.


This is fascinating! I wonder, also, if there are a couple of larger profit motives here, as well. First, by expanding DVC, Disney is pre-empting the larger Orlando timeshare market with an onsite offering that no one can duplicate. Secondly, in the overall profit scheme, by selling timeshares to DVC aficionados, you guarantee that they will come back and spend money at the theme parks year after year--a captive audience.

[asianway]

Dont forget, Walt disney Hospitality is pulling a hefty management fee, above industry standards, out of the Maintenance fees.

Also, the FF&E replacement amount seems very high as well. What happens in 2042 to any leftover money?

[disneynutz]

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors -

1) The "today" profit from DVC is FAR greater than guest room nightly rates. $100/pt + MF creates a profit margin for Disney higher than the rack rates. Assuming a 1 bedroom that is 28 pts/night (at 4.50 MF) you would assume that Disney only got $126/night for the room. The rack rate might be $250-$350 for the room. But what happened to the $2,800 Disney got up front for that room when the original DVC points were sold? Oh yes - up front money for Disney.

2) DVC rooms are guaranteed sells. Disney got their upfront purchase, and they get their MFs. Whether you use the rooms or not is up to you. This is important in economic downturns, external factors (terrorist concerns), etc. While hotel rooms can see a sudden and immediate decrease in occupancy rates - DVC likely is much more stable. People won't walk away from their initial investment by refusing to pay MFs - Disney will just take the points and deed back and you'll have nothing - and Disney still got the upfront money. And now they can sell the deed again for full profit.

3) DVC rooms have a higher profit %. The overhead associated with a hotel room is higher than a DVC room. So although you might see the 'rack rate' as a higher number (say $300) than the DVC point number ($126) - Disney isn't investing the same amount of services and upkeep to the DVC room. So there may be an average of $25/night in DVC services, but $125/night in a hotel room. So the 'profit' differential isn't as big as it seems on the surface.

So the summary is: Don't assume that Disney makes a lot more on hotel rooms. But it is a balance - they need available rooms to satisfy the general public. If they convert everything to DVC the public will see Disney as being a 'club' that requires them to 'buy-in' if they want to stay. Probably not the opinion Disney wants.

Here is another thought to add to the list. What about the points never used? How many members just let their points expire? How many are lost due to late banking? How many members end up paying cash because they can't get all of their resi on points? I bet the number is higher than we can imagine.

[tjkraz]

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors...

Actually I didn't disregard any factors because I didn't go into any specifics. ;)

I'm well aware that it is a very complicated equation. But let's take a look at some very basic numbers. If you take a typical Studio room using the point charts from BCV with a price of about $94 per point, the revenue to DVC for that unit is about $550,000. Now that's gross. I've heard that sales and marketing expenses can easily run 1/4 to 1/3 in the timeshare industry. You've got salaries for all of the salespeople (including those in the park and resort kiosks), support staff, legal staff, legal filing fees, website, marketing materials (paper, DVDs), charges for promotional items (free annual passes, dinner vouchers, gift cards, the cost of Developer's Points when appropriate), and on.

So in the end Disney maybe clears $400,000 - 450,000 on the sale of one unit.

Now, if that room goes for $400 per night and Disney is certain to rent it out for at least 335 nights per year (Disney's current 92% occupancy), the annual revenue is over $130K. Subtract even your $100+ per night to service the room and you're still netting nearly $100K per year. In 4-5 years you break even with the DVC profit, but as a cash room you continue to profit for another 45 years.

Fiddle with the numbers if you wish but it will only add a year or two to the equilibrium point.

Yes, DVC certainly has a place, particularly with regard to the guaranteed income stream. But Disney's bread and butter will always be the cash rooms.

[pilferk]

Now, if that room goes for $400 per night and Disney is certain to rent it out for at least 335 nights per year (Disney's current 92% occupancy), the annual revenue is over $130K. Subtract even your $100+ per night to service the room and you're still netting nearly $100K per year. In 4-5 years you break even with the DVC profit, but as a cash room you continue to profit for another 45 years.

Fiddle with the numbers if you wish but it will only add a year or two to the equilibrium point.


I'm not going to quibble with your conclusion....I'm not confident in either side...but you're not taking into account the increased investment revenue from getting the money "up front" (not to mention the money they make on financing, to boot). By taking the initial "up front" cost of DVC points, and investing it, I'd suspect that ROI significantly effects the balance of the equation.

The other thing to take into account: That $400 per night also has to cover significant expenses like maintenance, housekeeping, bell services, front desk, utilities, etc, etc .....something DVC member's maint fees take care of....+ all the same sorts of sales, marketing, and ancillary expenses DVC has to cover with "point cost". Surely you'd think, considering the expanded services, that would be more than 23% of the total revenue on a unit.

[Budshark]

Now I can say you did disregard a factor :lmao:

The per point MF profit from DVC year over year.

Using your numbers and a swag at averaging... a studio BCV for an average of 20 pts/night for 335 nights a year would earn Disney $31,000 in MF.

So if Disney "nets" 100K/yr for renting - and we subtract 31K/yr for DVC MF - it takes a bit longer to "recover" the initial DVC surge in investment through renting (~7 years). (I'm assuming a 500,000 net because your subtraction for the DVC marketing is a bit unfair since you did not provide an equal "marketing" overhead for the renting side of the business). And again - like you said this is a complex equation, because that "surge" of investment buy-in for DVC generates returns for Disney through other investments, growth, etc.

Also, this is just keeping the numbers consistent. The sell-rate for all points a popular DVC resort is actually closer to the 95-98%. The occupancy rate is irrelevant. The hotel rooms could sit empty - but the points have still been sold. In addition as mentioned above - a DVC resort is particularly resilient to economic downturns and other concerns. This is of prime importance to the hotel industry after 2001 (building a base guaranteed cash flow).

Again - interesting discussion but its all based on trying to "guess" what Disney is going to do with a piece of property... :rotfl:
And the best part is - they've already decided what to do - they're probably just watching to see what theories we can conjure up! :stir:

[bwvBound]

Maybe find a way to build "out" over the water? Poly-DVC-Units over the water?? Oh, my DH would jump on that so quickly!!

[canda]

I think I am getting a headache:headache:

[Machta]

I think I am getting a headache:headache:

Wait, wait! We haven't even tried to figure in the cost of construction of the deluxe resorts versus the villas! And then we can have fun talking about the amortization schedule they must have used on the north wing of the Contemporary! We could have fun for years with this!

Or, we could just go sit outside our nice little BCV one-bedroom with a hot cup of tea.

[Budshark]

Wait, wait! We haven't even tried to figure in the cost of construction of the deluxe resorts versus the villas! And then we can have fun talking about the amortization schedule they must have used on the north wing of the Contemporary! We could have fun for years with this!


I sense sarcasm!!! :mad: I KNOW that wasn't directed towards me! :lmao: :lmao:

So are you all saying you don't want to talk about the various financial implications, possible investment returns and tax considerations involved in a DVC vs. Hotel discussion? I can't think of a better thing to do! :teacher:

Although I did just get word that we are in the system for our BWV resale - so discussion about sitting on a balcony does sound pretty good! :cloud9:

[hellerjw]

What about the costs associated with insiders purposely leaking false rumors on these boards vs. rumors that turn out to be true years from now :)

[Machta]

I sense sarcasm!!! :mad: I KNOW that wasn't directed towards me! :lmao: :lmao:

So are you all saying you don't want to talk about the various financial implications, possible investment returns and tax considerations involved in a DVC vs. Hotel discussion? I can't think of a better thing to do! :teacher:

Although I did just get word that we are in the system for our BWV resale - so discussion about sitting on a balcony does sound pretty good! :cloud9:

No, by all means, let's drive ourselves crazy! Has anyone figured out how to post charts & graphs yet? We need visuals! And then sit on the balcony!

[pilferk]

I sense sarcasm!!! :mad: I KNOW that wasn't directed towards me! :lmao: :lmao:

So are you all saying you don't want to talk about the various financial implications, possible investment returns and tax considerations involved in a DVC vs. Hotel discussion? I can't think of a better thing to do! :teacher:

Although I did just get word that we are in the system for our BWV resale - so discussion about sitting on a balcony does sound pretty good! :cloud9:

You know what....I have to agree here.

Talking about sitting on our balcony at AKV DOES sound a heck of a lot nicer than debating financials.

:)

I think I'll continue down that path and leave the money discussions for another time.

[jodifla]

At one time before WDW even opened Disney had plans to build the"Future" Persian Resort with most of the resort over the water of Bay Lake.

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

Before the MK was even built plans were in place for 4 hotels to be on the monorail line.The Grand Floridian hotel is on the land that was set aside and dedicated to be the "Future" Asian Resort Hotel (A). The "Future"
Venetian (B) Resort was going to located between the Poly (5) and the Contemporary (8). A fifth hotel was going to build on a monorail spur which ended at the "Future" Persian Resort (C). That resort would be located just to east of the Mk and North of the Contemorary and would built with much of the hotel being on /over the water of Bay Lake. So even though the GF was not built until 18 years later a hotel was planned for that area at the same time the monorail was planned.

I got this picture and my info from my"The story of Walt Disney World"
Commemory Edition Book 1971.



http://i11.photobucket.com/albums/a175/minnie61650/YGP32D4disneyfuture.jpg

OMG! I had this poster on my walls for years. I got it during my first trip back in '72.

[3DisneyKids]

Just subscribing....

[poohmomof5]

I am a self confessed math geek and I work with real estate and financials for a living. I also travel with my business to conventions too. So this is so much fun...speculating on the cost of maintaining resorts, the issue of real money now vs. speculative money in the future, suites vs. standard accomodations and who would pay for what.

What a blast! I am not sure where I fall into the argument right now, but I know that I have stayed at the Contemporary last year in an expensive newly remodeled room and I wasn't really thrilled with anything except the view of the fireworks every night and the walking to MK! There was NO storage in the room, the quick service place was small and didn't have much selection, the pool was fun for the older kids, but the toddler couldn't do anything. So, I think a new building would breathe alot of life into that place!

But, occupancy rates, real cash vs future business etc is really fun to speculate about!

I'm dreaming about our first visit home to AKL inSept right now...:cloud9:

Poohmom :hippie:

[tjkraz]

I'm not going to quibble with your conclusion....I'm not confident in either side...but you're not taking into account the increased investment revenue from getting the money "up front" (not to mention the money they make on financing, to boot). By taking the initial "up front" cost of DVC points, and investing it, I'd suspect that ROI significantly effects the balance of the equation.

There is interest to be accounted for on both sides of the equation. Disney vacation packages require down payments at the time of booking and even room-only reservations require a deposit equal to one night's stay.

I suspect the interest to be earned by DVC is greater, but again that's just one of many unaccounted-for variables.

Another significant variable would be average guest spending. Let's compare a DVC family with enough points to spend 3 weeks per year at WDW to three cash-paying families each spending a week in a Deluxe cash room.

The DVC family has APs. The three families each have to buy 7-8 day MYW passes. The DVC family has access to a kitchen in their room. Aside from having a few snacks in the room, the cash families will most likely be eating at Disney restaurants all trip long. And who is likely to spend more on souvenirs--the DVC family who is on their 10th or 50th or 100th trip, or the three non-DVC families making their occasional trip to WDW.

The other thing to take into account: That $400 per night also has to cover significant expenses like maintenance, housekeeping, bell services, front desk, utilities, etc, etc .....something DVC member's maint fees take care of....+ all the same sorts of sales, marketing, and ancillary expenses DVC has to cover with "point cost". Surely you'd think, considering the expanded services, that would be more than 23% of the total revenue on a unit.

Well, the dues cover the maintenance, housekeeping (albeit on a lesser schedule), bell services, etc. Dues would also cover sales and marketing expenses to the point that it includes the operators who take guest reservations--DVC provides that service, too, via our dues.

The only things I can think of not covered by our dues would be actual advertising and the daily housekeeping. As far as advertising goes, I don't think any of us even know whether the resorts get charged for WDW advertisng. I don't think I have EVER seen hotel-specific ads, so the question is whether each hotel is asked to make some contribution for the generic "Walt Disney World" commercials, web banner ads, and so forth.

DVC dues tend to run about 20-22% of the cash cost of the same room. So how much higher would it be at cash resorts just to add advertising and daily cleaning costs? :confused3

[tjkraz]

NoThe per point MF profit from DVC year over year.

Using your numbers and a swag at averaging... a studio BCV for an average of 20 pts/night for 335 nights a year would earn Disney $31,000 in MF.

So if Disney "nets" 100K/yr for renting - and we subtract 31K/yr for DVC MF - it takes a bit longer to "recover" the initial DVC surge in investment through renting (~7 years).

The Maintenace Fees are not "profit". They cover the operating expenses of the resort. When I went from $130K in revenue to $100K in profit (approx, of course) on the cash room, that put the cash and DVC on equal footing--net of fairly identical operating expenses.

(I'm assuming a 500,000 net because your subtraction for the DVC marketing is a bit unfair since you did not provide an equal "marketing" overhead for the renting side of the business).

Marketing for individual Disney resorts is a whole different animal from DVC. The cash resorts don't have full-time staff taking people on tours of guest rooms. The cash resorts don't have dozens of sales booths all over WDW (and DCL, and HHI, and Vero, and a mall in Chicago) staffed 18 hours per day. The cash resorts don't give out free meal vouchers or annual passes or baseball caps or beach towels. The cash resorts don't have a full-time legal staff to process purchase agreements and record deeds.

For that matter, Disney doesn't even market its resorts on their own. They market the entire "World" and we have no way of knowing how much (if any) of those costs would even get charged back to the resorts.

And again - like you said this is a complex equation, because that "surge" of investment buy-in for DVC generates returns for Disney through other investments, growth, etc.

Cash resorts would similarly earn interest (albeit at a lower volume) off of down-payments for vacation packages and room-only reservations.

Cash resorts also increase their rates by 3-5% annually. That rate almost always exceeds inflation, meaning that a higher percentage of the revenue is going to Disney as the years progress.

Also, this is just keeping the numbers consistent. The sell-rate for all points a popular DVC resort is actually closer to the 95-98%. The occupancy rate is irrelevant. The hotel rooms could sit empty - but the points have still been sold. In addition as mentioned above - a DVC resort is particularly resilient to economic downturns and other concerns. This is of prime importance to the hotel industry after 2001 (building a base guaranteed cash flow).

My assumption was a DVC resort sold 96% to members vs. a cash resort able to obtain a 92% occupancy. Clearly there is a challenge in reaching that 92% occupancy.

But even in the portion of my post that you quoted, I indicated that resort occupancy is king. DVC at the AKL made sense because they weren't coming close to 92% occupancy. By comparions, I would hold my breath waiting for Disney to convert Poly rooms to DVC. I suspect that resort runs well above 92% on average, as does the post-refurb Contemporary.

Again - interesting discussion but its all based on trying to "guess" what Disney is going to do with a piece of property... :rotfl:
And the best part is - they've already decided what to do - they're probably just watching to see what theories we can conjure up! :stir:

Well, you're the one who challenged my words so I'm simply trying to explain the rationale, and I stand by my comments. If Disney can fill a cash room with a guest 90+ percent of the time at several hundred dollars per night, that room is going to earn them a lot more revenue over a 50 year period than selling the room as DVC points.

Obviously the challenge is in consistently filling that room. Selling someone 300 DVC points and knowing they will return year-after-year is low risk, low reward. Trying to put a different family in a room 48 weeks out of the year is high risk, high reward.

[asianway]

You are leaving out the management fee Disney collects from the DVC resort, Disney does profit during the entire term of the ground lease.

[tjkraz]

You are leaving out the management fee Disney collects from the DVC resort, Disney does profit during the entire term of the ground lease.


Some of that management fee will offset expenses incurred on the cash side. For example, it's my understanding that the management fee covers the expenses of what we know as "DVC": Member services reps taking phone calls, accounting collecting member dues, etc.

I would assume it a wash since many of those functions are duplicated on the cash resort side. But one could also argue that some portion of the management fee is an expense incurred by DVC members which is NOT present in cash resort budgets.

[asianway]

No.....the management fee is just that, a fee on top of the actual expenses charged back to the association

[tjkraz]

"Management Fee - Fee paid to DVCMC for providing management services (including home office expenses) to the Association according to the Property Management Agreement. The fee is equal to 12% of the total operating budget exclusive of real estate taxes, transportation fees and the management fee. "

If the management fee doesn't include the costs associated with operating the DVC program itself, I'd be curious to hear which budget category you believe they are in.

[asianway]

What I am saying is that it is not a wash, there is a profit built in there. To the extent that they can operate more efficiently than 12%, they will keep any overage.

[tjkraz]

What I am saying is that it is not a wash, there is a profit built in there. To the extent that they can operate more efficiently than 12%, they will keep any overage.

I would agree with that statement. :thumbsup2

[Budshark]

Well, you're the one who challenged my words so I'm simply trying to explain the rationale, and I stand by my comments. If Disney can fill a cash room with a guest 90+ percent of the time at several hundred dollars per night, that room is going to earn them a lot more revenue over a 50 year period than selling the room as DVC points.

Obviously the challenge is in consistently filling that room. Selling someone 300 DVC points and knowing they will return year-after-year is low risk, low reward. Trying to put a different family in a room 48 weeks out of the year is high risk, high reward.

Whoa... I wasn't challenging your words... its all good - just different opinions. Sorry you took it that way... :goodvibes

But... I will say you are understating what it takes to maintain the Disney resorts. Last I checked, Disney did a lot of "spending" to fill those rooms (free Magic your way upgrades, free DDP, other perks). They often discount rooms, sell package deals, etc. When was the last time Disney "discounted" points for a DVC room or offered up free ticket upgrades or DDP for DVC members who stayed during certain times of the year?

But again - nothing personal, I just wanted to make sure that we gave even billing to DVC room profitability vs. saying that a rental room had FAR greater profit potential... I would agree there is greater profit potential in a rental room - but its just that. Potential - not guaranteed.

(And I stuck to my promise with no math or interest discussions in this post! :upsidedow )