DVC Direct Sales Strategy Changing?

[DVC Mike]

http://i235.*************************************Sales/DirectSalesStrategy.png

Looking at the total number of points sold by Disney Vacation Club from 2011 on, it is very apparent that there is a distinct downward trend in the number of points being sold by DVC year over year.

Over the same period, the cost per point to purchase direct from DVC has been going up and the point charts for the most recent DVC resorts show point inflation (it costs more points to book a reservation than it does at older resorts).

The inflated point charts and the falling quantity of points being sold also indicates a decline in the number of new DVC members that Disney Vacation Development is pulling in each year.

This seems to signal a shift in the sales strategy for DVC when compared to prior years. They are less focused on a volume business (more points at a lower price) and more focused on a smaller volume business at a higher price.

So, even though they are selling less points, they have a greater profit margin on every sale. Their strategy of converting existing hotel rooms into DVC units (at PVB and likely WL) reduces capital expenditures - decreasing the cost of the goods they are selling, resulting in a higher profit margin.

Perhaps their options for building more DVC units at WDW are growing smaller - at least in terms of the "low hanging fruit" where they can add DVC onto existing Deluxe resorts - and they realize their volume business is not sustainable, or at least not the best approach.

Look at the charts below and chime in with your thoughts.

Point sales fell from 2.47 million in 2011 to 1.70 million in 2014.

http://i235.*************************************Sales/AnnualDirectPointSales_zpstvn2whg8.png
Raw data courtesy of Wil Lovato (wdrl)​

Here is a more detailed breakdown of DVC Direct Sales from Jul 2010 through September 2015. I find this interesting.

http://i235.*************************************Sales/DVCDirectSales_3.png
Raw data courtesy of Wil Lovato (wdrl)​

For the last half of 2010, BLT dominated sales.

http://i235.*************************************Sales/DVC_Points2010.png
Raw data courtesy of Wil Lovato (wdrl)​

In 2011, while BLT was the clear leader, there was still a substantial number of points being sold at both SSR and AKV, so there was broad appeal to various people with three different themed resorts.

http://i235.*************************************Sales/DVC_Points2011.png
Raw data courtesy of Wil Lovato (wdrl)​

In 2012, AKV surprisingly takes the lead, with both BLT (supposedly "sold out" by the end of 2011) and SSR market share shrinking.

http://i235.*************************************Sales/DVC_Points2012.png
Raw data courtesy of Wil Lovato (wdrl)​

In 2013, AKV maintains it's lead, but BLT and SSR largely disappear (SSR was supposedly "sold out" in 2012). Meanwhile, VGF goes on Sale and grabs a large market share.

http://i235.*************************************Sales/DVC_Points2013.png
Raw data courtesy of Wil Lovato (wdrl)​

In 2014, AKV shrinks dramatically (as it was "sold out" in late January), and 2014 sales are largely just one resort - VGF.

http://i235.*************************************Sales/DVC_Points2014.png
Raw data courtesy of Wil Lovato (wdrl)​

So far in 2015, VGF maintains the lead, but the expectation is that since VGF is now "sold out", 2015 will look like 2014, with one resort dominating - PVB.

http://i235.*************************************Sales/DVC_Points2015_1.png
Raw data courtesy of Wil Lovato (wdrl)​

Including Aulani in the 2015 stats shows this:

http://i235.*************************************Sales/DVC_Points2015a_1.png
Raw data courtesy of Wil Lovato (wdrl)​

http://i235.*************************************Misc/MiscDiscPolls.png

Purchasing DVC

• What was your purchase philosophy when choosing your home resort(s)?
• Headed up or down with your points?

DVC Resorts

• Favorite thing you love, and what you most dislike, about your home resort?
• Which DVC resorts have your favorite cocktail lounge/bar?
• How much time do you spend at the resort versus the parks?
• Which DVC Resort is your favorite for watching the MK fireworks?

Renting Points

• Do you rent out your points yourself or use a “points broker”?

Using Your DVC Membership

• Do you still call Member Services?
• Out of points, but you still want to go to Disney?
• Which room sizes do you book the most?
• Do you still experience obsessive Disney planning?
• How much of your vacation time do you spend at Disney?

Just for Fun

• How did you pick your DISboards User Name?
• Are you a "lurker" on DISboards? If not, what caused you to de-lurk?
• How long have you been a DVC member?
• How old were you when you first became a DVC member?
• What is your family status?

 

[Minniesgal]

I think slower sales in 2014 was deliberate. I think points were priced to sell slowly so they didn't run out before Poly was ready

I also think they have massively messed up with the studios only thing at the poly and that could slow sales further now it is their main product at WDW

 

[joannjoe]

I totally agree with Minniesgal

 

[disneynutz]

New management?

Bill

 

[joannjoe]

It has to be the specials they are running.

 

[wdrl]

I also think they have massively messed up with the studios only thing at the poly and that could slow sales further now it is their main product at WDW

Just curious, but what sort of sale numbers would you have expected to see if DVD hadn't "massively messed up with the studios only thing" at PVB?

 

[Minniesgal]

Just curious, but what sort of sale numbers would you have expected to see if DVD hadn't "massively messed up with the studios only thing" at PVB?

Closer to or even higher than VGF

 

[wdrl]

Closer to or even higher than VGF

Sales data is based on deeds recorded by DVD with the Orange County Comptroller, which usually shadows the actual sales date by 2-4 weeks. VGF sales started in May 2013 and by mid-April 2015 it appeared DVD was no longer actively marketing sales for that resort. Looking at recorded sales for July 2013 through April 2015, VGF averaged 105,440 points a month.

Now that VGF is out of the way, DVD seems to be concentrating its marketing efforts on PVB. In June 2015, PVB sold 107,067 points.

It will be interesting to see if PVB sales continue at that pace or if June is just an aberration.

I should have all of the sales data for June 2015 ready for publication on the DVCNews by next week.

 

[DVC Mike]

In June 2015, PVB sold 107,067 points. It will be interesting to see if PVB sales continue at that pace or if June is just an aberration. I should have all of the sales data for June 2015 ready for publication on the DVCNews by next week.

Wil,


Since you've been collecting and publishing this data for quite some time, I'd be very interested to hear your thoughts.

 

[DenLo]

AKV was officially sold out in January 2014 so there was no longer a cheaper option for direct sells. I expect DVC lost a number of sales to the resale market at that point and other deciding getting "Free" dining was a better deal. For 2015 VGF was running out of points by April 2015 as people were reporting that they couldn't get certain UYs without waitlisting.

Sales of the Poly never had the pre-opening mad dash because of multiple reasons: disappointment that there are no 1 or 2BR villas by current owners, disbelief that DVC was not making a connecting studio a booking category, disgust by Poly cash fans that DVC will ruin their beloved resort so they never even checked to see what DVC was all about, the fear that the bungalows would block all views of the lake, the high opening price with no discounts, and the sticker shock for the point per night costs. That was a lot of negatives.

People have more to spend in 2015 with the economy improving and buying into DVC at the Poly can still look attractive to newbies when they don't know they could still buy BWV for less money direct, or the even cheaper on the resale market. We all know that the guides don't tell newbies they could buy at an older resort (unless asked) but the guides do emphasize the newbie can buy the Poly and book another resort using their Poly points at the 7 month mark. And current owners that love the Poly are rethinking and buying small contracts at the Poly for short stays.

 

[drusba]

In 2011, there were five still "new" properties being sold: AKV, BLT, Aulani, VGC, and the Treehouses, By 2012, you were basically down to Aulani, AKV, and some BLT (most purchased there before 2012). In last half of 2011 and then through 2012 (and continuing thereafter), DVD proceeded incrementally to make massive price increases (about 40% total), apparently designed to assure that when it put VGF on sale in early 2013, its price would look like a bargain to BLT, when in fact it was a great increase over what most of BLT sold for. By 2014, the "new" resorts were down to Aulani, AKV (almost sold out), and VGF, all at very high prices. Aulani has never been a "hot" property and AKV at its 2014 price was not really a reasonably priced "cheaper" option from VGF for many new potential purchasers. Result is that points sold have decreased over the period 2011 through 2014, but undoubtedly the chart Disney is actually looking at for that time period is total dollar sales not total point sales and I am fairly certain that chart shows an increase every year from 2011 to 2014, and thus DVD feels justified in making its huge price increases over the last few years.

 

[DVC Mike]

In June 2015, PVB sold 107,067 points. It will be interesting to see if PVB sales continue at that pace or if June is just an aberration.

Good question. Who knows?

 

[wdrl]

I think disneynutz sums up the situation quite succinctly: New management, or at least a new marketing strategy. During the Jim Lewis regime, Disney gave the green light to several projects -- BLT, AKV, VGC, Treehouse Villas, Aulani -- that were actively marketed at the same time. These projects alone brought 27 million points into the DVC system. With such a huge inventory of points to sell, DVD offered all sorts of incentives, referral discounts, free cruises, free points, etc. It required new members to buy a minimum of 160 points or so. Remember, it even had DVC preview centers in New York and Chicago to drum up business.

Now, things are different. Since 2011, only two DVC projects have started up (VGF and PVB) and they are bringing only 6.5 million points into the DVC system. Unlike before, it appears DVD has purposefully timed the selling of these two resorts so that they do not overlap. It looks like DVD doesn't want sales at one resort cannibalizing sales at another resort. With fewer points to sell to the general public, DVD is selling them at a higher markup. It has never offered discounts on VGF, not even to Cast Members, and it looks like that strategy is continuing with PVB. DVD has also relaxed the minimum buy-in for new members from 160 points in 2009 and 2010 to as little as 50 points today.

Essentially, I think DVD has matured from a company that did a volume business to a company that is focusing on greater profit margins on a smaller, scaled back operation.

 

[DVC Mike]

VGF sales started in May 2013 and by mid-April 2015 it appeared DVD was no longer actively marketing sales for that resort. Looking at recorded sales for July 2013 through April 2015, VGF averaged 105,440 points a month.

Now that VGF is out of the way, DVD seems to be concentrating its marketing efforts on PVB.

I would have expected a bigger bump in VGF sales once the Poly plans were announced, and those unhappy with the lack of 1-BR units would now buy elsewhere. While VGF did pretty good in 2015, it's nothing spectacular when compared to 2014.

 

[DVC Mike]

Essentially, I think DVD has matured from a company that did a volume business to a company that is focusing on greater profit margins on a smaller, scaled back operation.

So, they made a conscious decision to reduce inventory and raise prices - as well as convert more hotel rooms rather than build a lot of net new structures - in order to maintain their revenue stream. in terms of the overall annual revenue, do you think DVC's profits are down, flat, or rising?

 

[tjkraz]

In prior years they sold more product at a lower price.

Now they are selling less product at a higher price.

I think the strategy is pretty obvious. While we may never be able to say that Walt Disney World has run out of suitable land for development, they are starting to run short of economical alternatives--existing properties where they can shoehorn some DVC villas without having to build anew.

With limited resources available, it makes sense to ration the supply and charge a higher price.

Disney has full access to these numbers and many more. If they were primarily concerned about volume, they could easily goose sales with incentives & discounts. DVC raised prices in June 2014 and again in February 2015. Those increases wouldn't have occurred if they were so worried about volume.

 

[disneynutz]

AKV was officially sold out in January 2014 so there was no longer a cheaper option for direct sells. I expect DVC lost a number of sales to the resale market at that point and other deciding getting "Free" dining was a better deal. For 2015 VGF was running out of points by April 2015 as people were reporting that they couldn't get certain UYs without waitlisting.

Sales of the Poly never had the pre-opening mad dash because of multiple reasons: disappointment that there are no 1 or 2BR villas by current owners, disbelief that DVC was not making a connecting studio a booking category, disgust by Poly cash fans that DVC will ruin their beloved resort so they never even checked to see what DVC was all about, the fear that the bungalows would block all views of the lake, the high opening price with no discounts, and the sticker shock for the point per night costs. That was a lot of negatives.

People have more to spend in 2015 with the economy improving and buying into DVC at the Poly can still look attractive to newbies when they don't know they could still buy BWV for less money direct, or the even cheaper on the resale market. We all know that the guides don't tell newbies they could buy at an older resort (unless asked) but the guides do emphasize the newbie can buy the Poly and book another resort using their Poly points at the 7 month mark. And current owners that love the Poly are rethinking and buying small contracts at the Poly for short stays.

IMO we often forget to realize that the vast majority of DVC buyers and owners do not read the DIS or DVC News so they don't even know that PVB is only studios so they would not greatly affect sales.

According to DVC they still process 50% of the reservations with many of those members not using a computer.

Bill

 

[supersnoop]

I think they priced it to avoid that spike. I'd be interested to see a chart showing revenue, rather than points sold. Prices are up 20%-60% over that time period. I'd expect some decreased demand based on that pricing, but increased revenue.

 

[DVC Mike]

I'd be interested to see a chart showing revenue, rather than points sold.

Wouldn't we all?

 

[disneynutz]

Wouldn't we all?

Using your numbers can't you just use the average selling price? The result will make us better understand why DVC management focuses on selling more than running the DVC.

Bill