Anyone Else Concerned With Disney Overbuilding?

[DanG]

In many ways I share the general mood on enthusiasm expressed on this board for the planned BCV and Eagle Pines DVC developments. But I was reading Frommer's Budget Travel the other day where the author in an article on budget accomodations noted that the combined All Star Sports/Movies/etc resorts had a current capacity of about 43,000, not including the new Pop Century resorts, which from what I understand will add a like number of rooms once completed.

This continued building of new hotel rooms and additional DVC developments and the associated traffic they will bring by hook (through the DVC point system) or by crook (marketing the parks to drive maximum hotel occupancy), combined with the tens of thousands of off-site rooms and Disney's abject failure to continue making the investments into improving or expanding their parks (in number or in quality) led me to consider a couple of questions I wanted to throw out to the Board:

Do you think the continued building of rooms without new attractions/parks will diminish your Disney experience (because of overcrowding) ?

Despite the recent increases in value, do you think all this capacity will reduce the value of your DVC investment?

DanG

[chris1gill]

Not to disagree with Frommer's, but no way are there 43,000 Disney resort rooms! There were 26,000, then add in the 200 from VWL & then howevery many rooms at AKL... At most, I'd estimate that at 28,000 rooms, plus pop century... I'm not worried about Disney overcrowding, they are going after people who stay off-site, by offering Pop Century & the All Stars... The people that need to worry are the hotels off site!!

[dvcdudes]

I don't worry about park overcrowding. I do however worry about Disney's faliure to expand or add more transportation to and from parks.
:mad:

[DanG]

The article didn't suggest 43, 000 rooms, but 43,000 people at those resorts. If your number of 28,000, excluding Pop Century, is right for all of WDW and we assume an average of 3.5 people per room, that provides a capacity of 89,000 on site guests (that gives a new meaning to early entry being a "perk").

I totally agree with you, Chris, that Disney's intention is to skim people from the off-site budget hotels. But that is the basis for my concern.

Off-site hotels are not going to sit empty just because Disney opens more on-site hotels that are closer to being competitive in price. They will reduce prices and advertise specials and do whatever they need to to raise occupancy. This means more and more people in Orlando with the same number of things to do.

BTW, I recognize that there will be attendance variations throughout the year, as there are know. I am just concerned that the hotel pie is continuing to grow during a recessionary economic time with no plans in the future to expand park capacity to include a new gate anywhere in the Orlando area.

[doubletrouble_vb]

Yes I am concerned. I think All-Stars is sufficient in the area of budget accomodations. A certain percentage of bookings is driven by conference travel & with the current outlook I suspect conference travel is going to be lower for the next year. I believe Disney is going to find themselves in the position of having put out a lot of capital without the return they thought they'd get.

On the plus side if EPV is slow to sell it should mean more availability for DVC in "high" seasons.

[PamOKW]

On the plus side if EPV is slow to sell it should mean more availability for DVC in "high" seasons.

If it's slow to sell it won't be available on points. Only inventory that is declared into DVC is open for DVC members to use.

[Scott5150]

The other thing to consider is that when going to Disney, your hotel bill is small in comparision with tickets and food and souviners. They could give rooms away for free and it would still be hard to significantly increase the attendance at the parks because of all of the other costs.

As long as Sept and October stay relatively quiet, I'll be happy.

Scott

[Eeyore2U]

I hope park expansion is on a burner somewhere..... I think this would balance lodging expansion. I think that IOA and US and SW help WDW with this. I know for the second year in a row we will take at least one day offsite when we go in Feb.

I also think that until the economy changes that occupancy rates will be lower than normal.

[Disney Adventurer]

Disney has continued to expand it's parks. AK is only what, 4 years old. Just like other businesses, Disney is in business to make money. I would find it hard to believe they would go off building resorts without conducting marketing studies, surveys and such to support such a a capital expenditure. As others have said, I believe they are first going after those staying off site. It is only my personal opinion, but as time goes on I believe you will see more perks for on-site guests as opposed to what Disney terms "day guests".

[prplcrzy]

Dan I see your concern but from everything that I have see Disney is pretty smart. If you open a new park and you don't have the rooms to back it up you will diminish the cost basis for the parks and then all of the ticket prices will rise substantially. They seem to know how many people it takes to occupy a park and they also seem to be adding a substantial amount of rooms. I have to say that the expansion of any business, even well run ones, will tend to concern and even disappoint some.

I think that they will add rooms until the parks get pretty crowded and they will probably add a park sometime in the near future, only time and the economy will tell. Who is to say that they are not already thinking of adding a park but that they haven't an idea or concept yet. It would be pretty foolish to leak or announce a new park until there are at least firm plans and concept to build one.

I think that they will evaluate the climate and try to time it in the best interest of the company and it's shareholders, and not the people who visit the parks. I love Disney too, but it seems to me that people forget this is a business, and a very serious and profitable one at that.

I have confidence that at some point they will come up with another concept that will hopefully knock our socks off and get plenty of people to visit. First, the people need to be visiting then the park will come.

That's my two cents!!!

P.S. I can't wait for the next park, I hope it's better than the Animal Kingdom.

[prplcrzy]

Dan I also want to apologize for not answering your questions.

Do you think the continued building of rooms without new attractions/parks will diminish your Disney experience (because of overcrowding) ?

Yes, I think that when the parks get crowded it does diminish the Disney experience somewhat. I also think that future expansion will alleviate that problem.



Despite the recent increases in value, do you think all this capacity will reduce the value of your DVC investment?

I think that the economy will ultimately set the price for anything and everything. Our free market system works and since the economy is good, people buy, demand increases, prices go up. Simple economics. The problem is if things go down the tubes that will affect values somewhat, but since Disney artificially keep the price of DVC where they want it through their "right of first refusal" ability I don't see the values going down much. I think that the shortened timeframe of the investment and the economy will shake the price out eventually.

There has been a lot of mention about a DVC II on the boards and I don't think that you will ever see it because of the direct effect it will have on all of our investments. It would devalue them so much and create so many lawsuits that they will never go there.

[Granny]

OK Prplcrzy...I'll bite.

What lawsuits do you see a DVC II creating? I bought into DVC with an understanding of what my rights are until 2042. I'm missing something because I don't see what a DVC II would do to my rights as a member.

If it makes my membership points less valuable, then I guess I'd have to live with that. I didn't buy as an investment to see my point value grow.

I'm not trying to sound sarcastic or anything. I just don't understand what lawsuits would come from DVC II.

Appreciate any clarification.


Granny

[prplcrzy]

Hi Granny,

These are real estate purchases, regardless of why you purchased. If I opened a DVC II and sold them for fifty years in the future and then also offered another product that I was selling and it had a forty year expiration, which would you buy if you were a consumer. Then say I wanted to sell my interest in DVC and I couldn't because of this new product that was being sold, I would in effect have my investment devalued. I am not an attorney but I know that they would probably love to attack the deep pockets that Disney has.

If there are any attorneys out there reading this, while you may not be able to make a successful case (or maybe you could), would this be great for a nuisance suit? Never mind the bad pr this would create.

[dvcdudes]

When I bought DVC, I always knew that the value of my DVC would eventually start to go down as we drew closer to the 2042 date. I don't see how anyone could have a lawsuit against Disney because they started a new program. The paperwork only guarrantees you YOUR home resort until 2042... Thats it.
I honestly don't think DVC II will make the value of DVC I go down... quite the contrary... I think it will actually make it go up.
If DVC II's price is $90-$100. then DVC I could go up to $80 and still be a bargain... This will be ok for a while but as I stated earlier, as 2042 draws closer, the value will have to go down.
JMHO.

[WebmasterDoc]

Then say I wanted to sell my interest in DVC and I couldn't because of this new product that was being sold, I would in effect have my investment devalued.

Those issues are all covered in our documents. If you purchased DVC (or any other timeshare) expecting to sell it for a profit, you have expectations 180º from the explicit language in the contract.

Currently, DVC has artificially supported the sales price for resales by exercising the right of refusal, but that will eventually end and the resale prices will return to "normal" for the industry, IMHO.

The 2042 end date, possibility of new resorts, possibility of a "DVC II" and more are all included in the POS included with our purchases. Deep pockets or not, I suspect it would be tough to successfully win a complaint on those issues.

[PamOKW]

I agree with Doc. All the documents are very explicit in detailing what we purchase. It is made very clear that it is for personal use and not an investment. It even warns against any expectations of renting for cash. There is also no guarantee if other DVC resorts being added or being available to earlier purchasers. If nothing else, Disney tried to cover every base in their documents.

[Goofy Fan]

I'm still trying to decipher the original question.

Quote:
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"But I was reading Frommer's Budget Travel the other day where the author in an article on budget accomodations noted that the combined All Star Sports/Movies/etc resorts had a current capacity of about 43,000, not including the new Pop Century resorts..."
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According to various sources, each All Star resort has 1,920 rooms (96 king, 1824 double). Even assuming 4 people in every room (1920 x 3 = 5,760 rooms), maximum capacity would be 23,040 people, almost half of the 43,000 figure mentioning budget accomodations. Could the 43,000 be the capacity for all WDW hotels, including the DD area?

Quote:
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"Disney's abject failure to continue making the investments into improving or expanding their parks (in number or in quality) led me to consider a couple of questions I wanted to throw out to the Board::
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What failure? Were MGM and AK failures? Were Test Track, Splash Mountain, Aladdin Ride, Rock n' Roller Coaster, Fantasmic, Dino-Rama (in progress), Disney Quest, etc. not attempts to improve or expand? Is there something wrong with the current "quality" or indications that Disney is no longer interested in quality? Why the use of the word "abject", defined as "contemptible, miserable, wretched"?

Quote:
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"Despite the recent increases in value, do you think all this capacity will reduce the value of your DVC investment?"
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What resorts have been built or completed since the opening of OKW? Hasn't overall resort room capacity increased since then? Hasn't the DVC value per point increased? Wouldn't it seem history suggests it will still increase?

[ducklite]

Some thoughts to ponder...

How many of you DVC owners are spending less and less time in the major theme parks and more time "resorting"? (I know we are...)

Including Pop Century, SOG, S&D, & camp ground cabins, but not including the campgound sites and hotel village properties, at an average capacity of 3.5 people per room, you still haven't hit the capacity of the MK. Is this WDW's way of forcing people to stay on site or be shut out?

Is Disney trying to do what Wal-Mart did and undersell the competition, digging deep into their pockets with loss leaders until the competition went bankrupt?

I'm not answering, just asking.

Anne

[Dean]

I agree that DVC II or whatever is not a liability from the standpoint of old DVC owners having a legal beef. There is no guarantee that any resort will be added to the "club" or frankly that any current DVC resort will continue in the club. While I think it's unlikely that any current resort would move out of DVC, if Disney were to no longer be the manager for those resorts they would not be continued in the club. We've discussed this before but DVC has no problem including a new resort in the club and the club then surviving the current 2042. I know that some disagree but I see nothing in the POS that would prevent DVC from continueing the club beyond the 2042 expiration for the current resorts.

The fact that one would be competing with a new DVC resort that might even have a longer life is irrelevent and part of the deal that we all bought into. Disney has even put language that would specifically protect them such as not buying as an investment, competing with Disney in renting and resales, etc.

[PamOKW]

I think Disney does build a variety of resorts to compete with the outside competition. But, there are currently more and more hotels being built offsite as well. If the demand continues and Disney doesn't build the resorts/hotels, someone else will.

[DanG]

I appreciate your efforts in helping to decipher (rather than deconstruct) my original questions. Clearly my question is intended to be provocative.

I think you are right that the total of 43,000 applies to the full Disney hotel capacity rather than the budget resorts (either that or applies to the capacity after Pop Century is built). In any event, the numbers are intended to be illustrative.

As to the "failure" comment, I stand by the suggestion that Disney has failed to maintain and improve its theme parks and attractions at an appropriate pace to meet the traffic it is driving by virtue of building all the resorts and DVC complexes. More specifically, I am referring to the future plans for improving the parks. There is no plan for a fifth gate or concrete plans for what could be considered a major attraction in any of the WDW parks. I am sure someone will correct me if I am wrong on this, but I don't believe I am.

As for the past improvements Goofy referred to, I would argue that many people were and continue to be disappointed by the Animal Kingdom-it is poorly laid out making small crowds feel large, the average person is finished touring in 4-6 hours, and costs $50. If it weren't in WDW few would ever go see it. And MGM and Splash Mountain? I love them, but they were built in the 1980s for crying out loud! How does that demonstrate Disney's current commitment? Disney Quest? Closed in CHicago. Aladdin and Dino Rama? Carny rides with characters slapped on. I'll give you Rock 'N Roller Coaster and Test Track, but the fact they stand out over the last five years is telling.

As for the increasing value of points, no one can seriously question that our points will decline in value sometime since they expire in 2042. I am also concerned that the demand for DVC is not endless. We have all been the beneficiary of DVC's popularity through increased resale prices. But how many people are so crazy about Disney that they (i) feel compelled to go at least once every year, (ii) must stay on property every time they go; (iii) want to lock in 40 years of vacations up front. We all did, but do you think there are hundreds of thousands more people that fit our profile who think its a good idea to lay out a lot of money for DVC during economically troubled times. I would suggest that the supply will catch up with demand soon after Beach Club sells out and that will be the breakpoint for when point decreases will start. That is why Eagle Pines will be a DVC II; so that Disney can differentiate it from the prior developments and avoid an apples to apples comparison to the resale market and start to lower the price support levels.

As for the DVC II, I am a lawyer and strongly believe that while DVC owners can file a suit, making an allegation that someone after me got a better deal would not support a winning case.

I apologize for my negativity, but I cannot ignore how current management is taking their eyes off of the great Disney franchise to focus on the broadcast transmission business at the expense of the core entertainment businesses (movies and themeparks).

As always, all this is just my opinion.

DanG

[fkj2]

I agree with an earlier poster that Disney wants the guest on Disney property from the beginning of their vacation until their return home.

Although new parks or additons would be nice, it would not surprise me if more guests will begin to go simply for vacation time. The population of our country is aging and some may be tiring of the go and bustle of running from park to park. You've already read posts here to that effect. Those guests will want the comfort of deluxe accommodations; the nicer restaurants, the spas, the perks that Disney's better resorts provide.

Disney, like all tourist attractions, has been studying demographics. They'll need to look forward to anticipate what an aging population will do for entertainment and plan around that.

[Goofy Fan]

DanG,

I agree, opinions are what make this board work, and we may agree to disagree. What caught my eye the most was your use of the word "abject" indicating more on your mind that your original post showed. It does spark curiosity as to why one would buy into DVC with such strong convictions, unless you've been a member from the beginning and are visualling recent trends. I think Disney considers quality and improvement very serious matters and never loses an eye for the future. That is what made Walt's dream come true and become what it is today. Also mentioned earlier were Universal Studios and other attractions that offer the competition to keep things moving. What Universal did with the 2 hotels and IOA pushed Disney's buttons if laziness had started to set in. The improvements in parks or rides no matter how small are subjective by age group but improvements nevertheless, and have been maintained pretty regularly. The amount of land that is still left untouched has to be on drawing boards as discussion topics or someone is not watching the ranch. Now that CA adds a second park at Disneyland, something feels like those drawing boards have writing on them.

As for the future value, it's probably somewhat overlooked by most of us as 2042 comes at an age when the majority of us are in rest homes or close to it. Granted, we are all passionate about passing down our estate. But I think it is a long enough time to easily savor the present or next few years worth of trips rather than looking at 2042. I'm of the opinion that I can't believe that 2042 signals the end of DVC. I think that putting all those resorts back into the overall resort bucket leaves a lot of empty rooms going forward.

Interesting topic.

[PamOKW]

More specifically, I am referring to the future plans for improving the parks. There is no plan for a fifth gate or concrete plans for what could be considered a major attraction in any of the WDW parks.

I have no idea what the Walt Disney Company is or is not planning. My guess is that they do have a business plan on the boards and are not sitting back to watch WDW deteriorate.

Not directly related to the parks, but I was reading how they are finalizing plans to have an X-treme sport facility at WWofS. This is to help draw the elusive teen population.

[prplcrzy]

Goofy I'm with you! In 2042 I think that's when we will see DVC II. They will resell all of the vacation club all over again and offer it to the people who currently own. Think about it, they already will have an audience who may or may not have had this passed to them through estates. These people will already be hooked and will probably be the first to line up to buy. This will be a major windfall for Disney because they will sell timeshares again and not have the associated construction fees. They may do improvements but won't have to shell out for a complete construction package. They will be able to sell it reasonably because they will have virtually no cost associated to it.

I think that Dan has a point though, nothing new at Disney with the exception of the rockin rollercoster and maybe a couple of other things is of the exceptional Disney quality. The AK is a perfect example of this. It is O.K. but I would not make it a destination park. It does O.K. because people buy multi park passes and want something esle to do.

Great question and I have enjoyed reading the opinions!

[prplcrzy]

Figment rules!!!

This may have been an annoying kis ride like It's a Small World, but this was the Disney type ride, the kids adored it. My daughter cried when I told her it wouldn't be there anymore. We were there the week before its demise and were smart enough to tell her when we got home. This was the Disney magic and I would love to see new rides that can captivate kids like that again.

[mikesmom]

Maybe we should take a look at the "big picture" also. Maybe there haven't been a great number of new parks or rides (however, I for one, love AK) but there has been a steady addition of "events" as I see it.

The Epcot Flower Fest and the Food & Wine Fest have both made WDW a destination during what were formerly slower seasons. If you think about it both of these events are geared very well to both the adult population and the repeat visitor (that's us!). Events that focus in on music, art, food, gardening etc., certainly appeal to the adult visitor and can be changed to maintain interest from year to year without a large capital investment.

I suspect Disney has increased their income by attracting adults during the "slow" seasons without having to add a thrill ride.

We certainly visit more - once in the summer for the family and at least once during the festivals for a break for DH and me.

[PamOKW]

I apologize for jumping in and out of this thread. I just went back to the original question about budget accomodations. I can't find complete figures on resort rooms but from what I could find I would think 26,000 rooms for all of WDW would come pretty close. All Star Sports has 1,920 rooms so 6,000 total All-Star rooms would probably be about right. CBR has approximately 2,100 and the combined PO/Dxl 3,000. I would guess CSR at 2,500. That brings moderates to about 8,000.

There are a lot of events for student groups held at WWofS. Many times they end up staying offsite. I think the location and pricing of Pop Century is going after this group. I'm pretty sure I even heard it mentioned that it would be convenient for people going to events at WWofS. I don't think the addition of rooms on site is necessarily going to increase the crowds in the park. It's just capturing more resort dollars.

As I started to say before, Disney doesn't want to stop building if Marriott is going to be putting up hotels on 535 or the Opryland opening at the backdoor. There are going to be rooms for more people whether Disney builds them or not.

[vernon]

I must comment on the thoughts of a "DVC 2" , I can't see it happening UNLESS it is a direct replacement to the current DVC and all the resorts under construction. For that reason I would guess that after 2020-25 I'd be suprised if there was any expansion to the DVC BUT coming 2035-40 half expect ( if the soundings went well) additional resorts to be commissioned that would come on line in and around 2042. The plans for the future of the original DVC would be know/announced previously. Given the time it has taken to sell the DVC to this point ( 10 years) even that may ambitious sales targets, so I'm not convinced Disney would like to have ALL the DVC inventory to sell AND have any new sites as well. On the other hand the publicity of having new resorts might help sales.

IMHO having a number of different "end dates" for differing DVC plans would make a sale of DVC to a third party almost impossible. While I don't think Disney would sell DVC, I also am certain they wouldn't limit that as an option if it were to be prudent at the time. I feel Disney's plan would be to "presell" the DVC 2 to DVC1 owners at a discount to what they announce DVC 2 will go up for sale for. Hoping they get a large take up to swallow the majority of the inventory. The could offer inducements like "buy 3 years in advance, get a 30% discount on 2042's price, 2 years ahead gets 20% and one year gets 10%"

Just hope I'm around to see it LOL.

[KLR-wlv]

How cool would it be if they turned the DVC properties into retirement home in 2042??? That's what I'm hoping!

[DanG]

I agree that we probably won't see a DVC II for the Beach Club. But given the planned number of units and extended timetable for expansion for Eagle Pines, I can't see new buyers laying out $90-100 points for as few as 35 years use. It becomes a less compelling financial model for purchase and Disney would start to have problems supporting the price on the other DVC developments.

I remember not so long ago members of this Board put a great deal of emphasis on the payback timeframe of a DVC purchase and typically people were finding 6 to 8 years payback on their investment when points were in the $50s (though I would argue with the rack rates as too high for calculating the payback; for most the accomodation costs would be lower, extending the payback time). Without doing the analysis, I would bet that payback on a Eagle Pines at $100 points would be closer to 12-14 years. With 35 years of usage that would be less compelling given the flexibility being given up by committing to DVC.

I also don't see where it will be all that confusing to buyers when the only difference is a different end date. And from Disney's perspective, it staggers the DVC inventory so not everything expires in 2042. They can start reselling DVC I in 2042 and when that inventory begins to runout, DVC II will be ready to come on the market.

There are so many compelling business reasons to shift to a DVC II, that I will be surprised if they can pull off DVC I for Eagle Pines.

I hope I am wrong, but I bet that I am not.

DanG

[KNWVIKING]

When MK first opened,was it perfect ? Hasn't it been an on-going,work in progress ? Ak is all of 3 yrs old. It's four major rides- Count Down,Rapid Ride,Tuff to be a Bug & the safari are every bit state-of-the-art Disney. Tarzan rocks is a great show. It's educational value is priceless. Kids love the play area. Is there room to improve and expand AK-absolutely. Is Disney doing so- absolutely. Personally I like being able to spend one relaxing day to see the entire park.

Also, IOA can in no way be compared to a Disney property. I guess it's great if you like unimaginative roller coasters that beat your head up & give you a headache for the rest of the day.Or a log flume ride that is only fun if you want to get soaking wet. That might sound like fun during the summer,but try it in the winter. Someone stated that Disney has added just "carny" rides lately. Does the Dumbo ride ever have an empty seat.How about the Tea Cups,or Merry Go Round. There is nothing wrong with adding timeless classic rides with a different theme if kids love to ride them. What about the new Space ride over in Epcot ? Do we see any other entertainment company making that kind of investment for just one ride ?

[PamOKW]

My feeling is that Pop Century is being built to support activity at WWofS. The addition of the Xtreme camp seems to indicate they do plan to use this area more.

Today's Orlando Sentinel has an article about Tampa's bid for the 2012 Olympics. The committee is here to evaluate their bid. Part of the plan calls for some events to take place in Orlando, including at WWofS. The Caribe Royale would be used as the satellite Olympic village for the athletes.

Anyway, the article contained hotel information. In the Orlando area there are currently 105,000 hotel rooms. They expect an additional 30,000 to be built by 2012. This includes the doubling of Caribe Royale from the current 2,800 rooms to 5,600 rooms. So, if Disney doesn't build, others will.

[KaraKW]

Hmmm...this is a very interesting topic. IMHO, I'm just concerned that WDW is building resorts and improving/expanding theme parks at an uneven pace...but I love WDW anyway!

Someone commented that they didn't think there were any major attractions in the works. I could be wrong but isn't EPCOT working on a NASA ride (in which riders will experience zero gravity/weightlessness)???? It was my understanding that this is going up where Horizons used to be. It's supposed to open in a few years, but I wouldn't be surprised to see it be delayed, delayed, delayed (a la Test Track)!

[HorizonsFan]

What about the new Space ride over in Epcot ? Do we see any other entertainment company making that kind of investment for just one ride ?

Just to clarify: Compaq is making most of the investment in Mission:Space, not WDC.

[Paul in CT]

No, I am not concerned about Disney "overbuilding" resorts. Remember, DVC is NOT an investment. I bought it because it appeared to be a good value for a prepaid vacation at a place I enjoy visiting frequently. The fact that the pont value has appreciated is just an added plus. :D

[DanG]

Paul, I agree that the investment benefits, if any, are incidental. I assume that most of us plan to hold our points through expiration in 2042. My greater concern is that the larger number of rooms, in and out of Disney World, will drive such large numbers of people to WDW (and the WDW marketing machine can rachet up the numbers), that the experience for which we have bought prepaid vacations through DVC ownership has been dramatically diminished.

Several have made the intriguing point that they enjoying their WDW vacations outside the theme parks. While I never have thought of Orlando as a vacation destination outside the parks, I can see where others do with all the resort and other amenities, and that at a different stage of my life, such a vacation could be just right.

The thoughts and comments have been great. I am still not convinced that Disney is overbuilding and that the overbuilding is a problem, but appreciate the other, different perspectives.

DanG