My FP+ Park Strategy WILL SAVE ME ALMOST $20,000!!!

[cakebaker]

In another post you mentioned your ability to return to the resort while the rest of your family remained at MK. I see that as one of the biggest benefits to staying on site

It's huge for us now that we travel with a toddler. The convenience of being able to leave without impacting everyone else is really nice.

 

[SmithSmith]

Today's current AP resort offer on the Annual Passholder's page:

View attachment 2373

No, that's the general public offer. It's pretty obvious, because why would an AP need theme park tickets?

 

[Laketravis]

No, that's the general public offer. It's pretty obvious, because why would an AP need theme park tickets?

Yeah, that is strange - but you can try it yourself if you go to their website. I clicked on MyDisneyExperience, then "Annual Passholders", then "Passholder Resorts Special Offers", and that's the page it brought up.

Okay, so I wasn't logged in - let me see what happens - different screen now, my bad! But it's not 37% anymore for deluxe, it's 35%. And still 35% for moderates (that's really good).

So back to the original question. If occupancy is running so high why the need for such high room discounts?

 

[SmithSmith]

Yeah, that is strange - but you can try it yourself if you go to their website. I clicked on MyDisneyExperience, then "Annual Passholders", then "Passholder Resorts Special Offers", and that's the page it brought up.

Okay, so I wasn't logged in - let me see what happens - different screen now, my bad! But it's not 37% anymore for deluxe, it's 35%. And still 35% for moderates (that's really good).?

Thank you!

 

[jade1]

Considering the continued level of new DVC activity, it must be substantial. What a smart move to have guests almost completely subsidize constructions costs; once WDC got a taste of that they haven't been able to stay away from the buffet.

It's great for first adopters like yourself, starts to suck for those who are late to the party.

Other big chains have begun to sell off their time-share units; once constructed and amortized they aren't as profitable to maintain with all of the hospitality overhead. The big bucks come from unit sales. At some point DVC could be deemed fully built out and WDC decides to sell if off to the highest bidder.

Agreed, I just meant it when I hear that WDW resorts are not going up in price and/or still offering discounts-I wonder if the overall "resort income" has indeed gone up and by how much-when you factor in DVC sales and dues. My guess is it's gone way up-and indeed rooms (even all the additional ones built with DVC) have filled right along with it-but I'm just guessing.

 

[cakebaker]

Yeah, that is strange - but you can try it yourself if you go to their website. I clicked on MyDisneyExperience, then "Annual Passholders", then "Passholder Resorts Special Offers", and that's the page it brought up.

Okay, so I wasn't logged in - let me see what happens - different screen now, my bad! But it's not 37% anymore for deluxe, it's 35%. And still 35% for moderates (that's really good).

So back to the original question. If occupancy is running so high why the need for such high room discounts?

I read something a while back about their thoughts on discounts- Once you start, it's incredibly difficult to pull back. They'd love to go back to the days of rack rate, but I'm guessing those occupancy rates would drop like a rock. However, people would rather pay 500 for a room and get a 20% discount than pay $400 rack rate- it's the idea of saving rather than really saving that hooks people. I think Disney knows this too.

 

[Laketravis]

Agreed, I just meant it when I hear that WDW resorts are not going up in price and/or still offering discounts-I wonder if the overall "resort income" has indeed gone up and by how much-when you factor in DVC sales and dues. My guess is it's gone way up-and indeed rooms (even all the additional ones built with DVC) have filled right along with it-but I'm just guessing.

I hear ya. The thing is though that hospitality margins are fickle. Higher occupancy means higher support costs and at astronomical occupancy rates it starts to put pressure on margins. More housekeeping, more maintenance, more admin, more customer service, more free transportation costs, more comp's and partial refunds to unhappy guests who were somehow inconvenienced, etc. For the same reason there's a floor to discounts because at a certain point it makes more profit sense to leave the room empty there's a limit to margins that gets compromised when occupancy shoots up. I think the sweet spot is in the low 80's so if they continue to kiss 90% I'm curious to see how Disney reacts. Do they build more? Do they raise rates even higher but keep giving discounts so the illusion is it's still a great deal? It's really a dichotomy much like the attraction situation - you can only fit so many people on 7DMT in a day, at some point you have to build more.

 

[Laketravis]

I read something a while back about their thoughts on discounts- Once you start, it's incredibly difficult to pull back. They'd love to go back to the days of rack rate, but I'm guessing those occupancy rates would drop like a rock.

Good point. McDonald's has wanted to ditch the Value Menu for years but they can't.

 

[jade1]

I hear ya. The thing is though that hospitality margins are fickle. Higher occupancy means higher support costs and at astronomical occupancy rates it starts to put pressure on margins. More housekeeping, more maintenance, more admin, more customer service, more free transportation costs, more comp's and partial refunds to unhappy guests who were somehow inconvenienced, etc. For the same reason there's a floor to discounts because at a certain point it makes more profit sense to leave the room empty there's a limit to margins that gets compromised when occupancy shoots up. I think the sweet spot is in the low 80's so if they continue to kiss 90% I'm curious to see how Disney reacts. Do they build more? Do they raise rates even higher but keep giving discounts so the illusion is it's still a great deal? It's really a dichotomy much like the attraction situation - you can only fit so many people on 7DMT in a day, at some point you have to build more.

Which is why they like the dues IMO over traditional costs they would have had to pay. I'm not sure how much those bring in-but it must be a lot towards those exact things you listed (and way less housekeeping), again something I have no idea on but can make an educated guess that is a quite beneficial to WDW.

 

[Laketravis]

Which is why they like the dues IMO over traditional costs they would have had to pay. I'm not sure how much those bring in-but it must be a lot towards those exact things you listed (and way less housekeeping), again something I have no idea on but can make an educated guess that is a quite beneficial to WDW.

And they have the legal option and ability to raise those dues, right?

 

[jade1]

And they have the legal option and ability to raise those dues, right?

Yep that as well.

 

[Toad_Passenger]

I read something a while back about their thoughts on discounts- Once you start, it's incredibly difficult to pull back. They'd love to go back to the days of rack rate, but I'm guessing those occupancy rates would drop like a rock. However, people would rather pay 500 for a room and get a 20% discount than pay $400 rack rate- it's the idea of saving rather than really saving that hooks people. I think Disney knows this too.

This is what happened to JC Penney. They brought in a guy who decided to go with "everyday low prices" like Wal-Mart, thinking people would prefer instant low prices over discounts. It turned out bad. They went back to higher retail prices, but with weekly sales. Even though the end prices were similar, their sales rebounded because, well, people like to feel like they are getting a discount.

 

[Laketravis]

This is what happened to JC Penney. They brought in a guy who decided to go with "everyday low prices" like Wal-Mart, thinking people would prefer instant low prices over discounts. It turned out bad. They went back to higher retail prices, but with weekly sales. Even though the end prices were similar, their sales rebounded because, well, people like to feel like they are getting a discount.

Ron Johnson. Came from Apple and was going to transform JCP. I stopped going there when he pulled that stunt and haven't been back since. Discovered Kohl's.

 

[Cormoran]

I did a little bit of digging through Disney's financials I've found the numbers and some clues to what's going on. Sorry if this includes a lot of numbers.

The 89% occupancy rate is for Fiscal Year 2015 Quarter 1 (FY15Q1). This is compared to 81% occupancy FY14Q1 and 81% for FY13Q1. Disney's Fiscal year runs Approximately October - September (Technically the Fiscal year/Quarter ends on the last Saturday of the month). So these results are for basically Oct-Dec. This is for Domestic "Theme park and Resorts". So would include WDW, Disneyland, and the hotel portion of Aulani. Without more time, I can't tell if it include occupancy on the cruise ships or not. Their results are in the segment. The other piece of information to throw into the mix is the number of rooms available to rent. This is varies slightly from year to year based on how many DVC members trade out but changed significantly because of the Poly Longhouses getting converted to DVC on the negative side and Aulani Hotel (non DVC) rooms getting completed on the positive side. So looking at just Q1 results (in thousands of room nights).

FY15Q1: 89% occupancy * 2,591 room nights = 2,306 room nights rented
FY14Q1: 81% occupancy * 2,620 room nights = 2,122 room nights rented
FY13Q1: 81% occupancy * 2,623 room nights = 2,125 room nights rented

So, the 89% occupancy rate is a huge increase but that is partly because the cut room nights available because of the Poly DVC conversion. Had the conversion not been going on it would still be an impressive 88%. It's still almost 200,000 more room nights rented. Also, this is just 1 quarters results. FY13's occupancy rate for the whole year was 79% and FY14's Occupancy rate was 83%.

Disney had a stellar Halloween/Thanksgiving/Christmas season this year in terms of onsite hotel stays domestically. If you look back Historically, Disney likes running in the upper 80's to lower 90's in terms of occupancy rates. The lower numbers for FY13 and FY14 could be because of Art of Animation and filling up because of it.

Wow, this is very impressive . Thanks! Are you available for income tax returns?

 

[Cormoran]

This is what happened to JC Penney. They brought in a guy who decided to go with "everyday low prices" like Wal-Mart, thinking people would prefer instant low prices over discounts. It turned out bad. They went back to higher retail prices, but with weekly sales. Even though the end prices were similar, their sales rebounded because, well, people like to feel like they are getting a discount.

I think JCP is in the tank again. Didn't they declare bankruptcy? Instead of doing all of these sales events, maybe they should've worked on getting unique merchandise! That's another thing I find really annoying: I want to spend money at Disney. I want to buy souvenirs, but I can never find anything! OK rant over!

 

[cakebaker]

This is what happened to JC Penney. They brought in a guy who decided to go with "everyday low prices" like Wal-Mart, thinking people would prefer instant low prices over discounts. It turned out bad. They went back to higher retail prices, but with weekly sales. Even though the end prices were similar, their sales rebounded because, well, people like to feel like they are getting a discount.

I remember this well. The problem I saw was their everyday prices were just bland- the theory works well if you're thinking of shoppers who pay rack prices, but I'm a sales shopper all the way. Slightly cheaper prices all the time are not better than shopping off season with heavy discounts. I'm pretty good at not succumbing to the idea of a discount- it really has to be a great price for me to buy-

Vacations aside- I'm pretty frugal.

 

[Cormoran]

I read something a while back about their thoughts on discounts- Once you start, it's incredibly difficult to pull back. They'd love to go back to the days of rack rate, but I'm guessing those occupancy rates would drop like a rock. However, people would rather pay 500 for a room and get a 20% discount than pay $400 rack rate- it's the idea of saving rather than really saving that hooks people. I think Disney knows this too.

This strategy sounds right. It will probably keep their rooms filled. I think a lot of people choose off property because it's easier on their budgets. I would rather spend less on a single vacation if it allows me to do more vacations.

 

[johde]

Wow, this is very impressive . Thanks! Are you available for income tax returns?

I'm not a tax person. Digging through 10K's and 10Q's are one thing. Doing taxes are something else. I'm good enough at taxes to go most of my families but that's about it.

Now THAT'S some great research!!

You'd think that would call for rate increases going forward, not big discounts?

Going back further and looking at full year results instead of quarterly' (Once again in thousands of room nights)
2005 83% 9,587 room nights (83%East Coast 90% West coast)
2006 87% 9,644 room nights (86%East Coast 93% West coast)
2007 89% 9,424 room nights (89%East Coast 92% West coast)
2008 89% 9,376 room nights (90%East Coast 88% West coast)
2009 87% 9,549 room nights (87%East Coast 80% West coast)
2010 82% 9,629 room nights East/west split stopped
2011 82% 9,625 room nights
2012 81% 9,850 room nights
2013 79% 10,558 room nights
2014 83% 10,470 room nights

2006-2008 they had high room occupancy rates yet still had large discounts. In their conference call several years ago they talked about scaling back on the discounts and they have. As others have said, Free Dining is now Quick Service at the Values. The times of the year that offer free dining have been reduced slightly. In addition to that, rack rates that those discounts are based on have increased substantially. In 2005, a value season Standard View room at the CBR was $134 or $934 for the week. For 2015 that same room is $182 Sun-Thu and $201 on the weekend or $1,312 for the week. That's a 40% Increase. CPI has risen 23% over the same time frame.

 

[Laketravis]

2006-2008 they had high room occupancy rates yet still had large discounts. In their conference call several years ago they talked about scaling back on the discounts and they have. As others have said, Free Dining is now Quick Service at the Values. The times of the year that offer free dining have been reduced slightly. In addition to that, rack rates that those discounts are based on have increased substantially. In 2005, a value season Standard View room at the CBR was $134 or $934 for the week. For 2015 that same room is $182 Sun-Thu and $201 on the weekend or $1,312 for the week. That's a 40% Increase. CPI has risen 23% over the same time frame.

Just like boiling a frog, huh? Throw him in cold water, slowly turn up the heat, and he has know idea..........



.

 

[johde]

Just like boiling a frog, huh? Throw him in cold water, slowly turn up the heat, and he has know idea.......... .

I know you're talking about staying at a condo. But let's look at the other extreme. May 10-15, The Grand Floridian costs $428 a night for an outer building garden view. The cheapest "deluxe" I could find is a studio at OKW or SSR for $239 a night. (Both prices with spring discount). For $239 a night you can book the Waldorf Astoria Orlando for the same dates (including resort charge). I've stayed at OKW (it's my home DVC resort), I like OKW, but I'm guessing the Waldorf Astoria is just a little bit nicer. Free transportation to the parks seems to be every 30 minutes to the MK and once an hour to the other resort On a Schedule. So, it doesn't come as often but you when to show up to catch the shuttle. The Four Seasons is $359 a night with a 20% early booking Discount.