2042 end dates?

[DonMacGregor]

I don't think DVD will be able to turn BCV, BWV, or OKW resorts into new contract sales with a 40 to 50 year timeline without gut rehab or demo/rebuild. Adding the owners at HHI and VB with points they use now for WDW or hybrid stays, that's a lot of expired contracts all at once.

If DVD thinks they will paint the rooms and resell them for 40 years with vastly inflated point charts and CFW dues then I concur.

Yes, if I weren’t convinced that they’re going to bulldoze and rebuild at least one if not all three of the resorts they plan to replace.

Now we're talkin'. I know the whole "Haha! DVC will just create a new land lease, and sell new 50-year contracts for (fill in ungodly per-point price) starting February 1st" claim wasn't a consensus opinion (but it was an opinion if less hyperbolic), but the more you peel the onion and look at 2042's effect on membership dues, the number of remaining points in the system versus number of villas, cash room inventory and rack rates, and how many other legitimately "new" resorts DVC will be selling up to and right after 2042, it becomes a far more complex problem. Not to mention the already discussed aesthetic and other impacts on the Crecent Lake area specifically.

ETA: Don't forget about little BRV!

 

[walt34]

Yes, if I weren’t convinced that they’re going to bulldoze and rebuild at least one if not all three of the resorts they plan to replace.

I'm also convinced they'll rebuild at least one of these.
But it seems there are several problems that need to be resolved - not just one.

One of them is how are you going to sell millions of points that will mostly be available to use at the same time in 2042.
Another one is that some of the buildings are too old to sell for another 50 years. But rebuilding all of them at the same time from 2042 to 2044 is probably not an option.

I believe the second question can be addressed with a trust and right to use structure, because you can switch out the units (as you are rebuilding them) over time and still sell the points for 50 years right from the start.

The first question seems more difficult but options to mitigate have been discussed. Like also offering shorter-lived contracts to existing owners who might be interested in extending but would not be willing to commit to another 50 years. These might be much easier to sell (and thus at a lower cost to DVC) than the usual contracts.

 

[CastAStone]

Now we're talkin'. I know the whole "Haha! DVC will just create a new land lease, and sell new 50-year contracts for (fill in ungodly per-point price) starting February 1st" claim wasn't a consensus opinion (but it was an opinion if less hyperbolic), but the more you peel the onion and look at 2042's effect on membership dues, the number of remaining points in the system versus number of villas, cash room inventory and rack rates, and how many other legitimately "new" resorts DVC will be selling up to and right after 2042, it becomes a far more complex problem. Not to mention the already discussed aesthetic and other impacts on the Crecent Lake area specifically.

ETA: Don't forget about little BRV!

Well if they would like a seasoned business problem solver who already knows a lot about their business to devise a long term strategy to ensure those potential problems don’t become real life business issues, it’s not THAT hard to figure out my real name, and my resume is on LinkedIn.

 

[walt34]

Well if they would like a seasoned business problem solver who already knows a lot about their business to devise a long term strategy to ensure those potential problems don’t become real life business issues, it’s not THAT hard to figure out my real name, and my resume is on LinkedIn.

If they continue with their current ways of working they'll give you a call in autumn of 2041.

 

[LoveToDisney]

I think they will shutter all BW, both the Inn side and the villas at 2042 so the whole complex can be totally rebuilt with the new style villas that will be popular at that time. They will get top dollar back in sales. I’m guessing the whole place will be DVC and they will hold back a percentage to use for retail reservations. It could even be called something else entirely. Everyone will be eager to purchase because of location and the whole cycle will begin again. That’s what makes “leasing” so great for Disney.

 

[DonMacGregor]

I think they will shutter all BW, both the Inn side and the villas at 2042 so the whole complex can be totally rebuilt with the new style villas that will be popular at that time. They will get top dollar back in sales. I’m guessing the whole place will be DVC and they will hold back a percentage to use for retail reservations. It could even be called something else entirely. Everyone will be eager to purchase because of location and the whole cycle will begin again. That’s what makes “leasing” so great for Disney.

It's an interesting proposal, and one that makes economic and practical sense (given the age of the buildings and changing preferences in hotel/resort accommodations).

Like everything else, it presents its own challenges, like literally half of Crescent Lake completely closed off for 2 or 3 years due to construction (think the current Poly Tower site and extend it the entire length of the south side of the lake.

 

[walt34]

I think they will shutter all BW, both the Inn side and the villas at 2042 so the whole complex can be totally rebuilt with the new style villas that will be popular at that time.

Quite possible and even likely. But they can hardly do this for BC at the same time, let alone for all of the 2042 resorts, can they?

 

[Sandisw]

Would flipping the cash side not generate more points that need to be sold rather than less? Also, for many resorts, the cash side has the more appealing views (e.g. BCV) so they might not want to 'move' DVC there.

Not if they decide not to redo the BWV back into DVC.

It doesn’t have to become one. So, IMo, they could just decide to flip them.

Now, it may not make sense at BC to convert to cash…but just saying there are lots of ways that DVd can approach what happens without it necessarily meaning that all those rooms ar empty.

One thing out of the box is that DVD keeps them, moves to the trust, and then uses them for trades by other DVc owners for a fee.

Endless possibilities IMO.

 

[jason423]

I think people keep missing the point by focusing on how many points would be introduced in 2042 and whether the market could support it. The issue isn't points, it's rooms.

On February 1, 2042, every single WDW 2042 ROOM will need to convert to cash, or be shut down for what will, without any doubt, be a significant period of reconstruction/rehabilitation. If the resorts stay open for any length of time after 2/1/42 without an extension of some sort, that's a huge uptick in cash inventory for a company that has been reducing cash rooms (or at least the percentage of cash rooms) rather than increasing their numbers.

And it will be an extended period of time. We're not talking about sticking a Murphy bed on a wall at a 12-year-old CCV, we're talking about significant repairs/upgrades to buildings that will be nearing 50 years in age. To make matters worse, two of the three Disney-owned resorts on Crescent Lake will be affected (BWV to a massive extent). Can you imagine what that huge uptick in capacity would do to cash rates?

Whether they extend or start a trust, they will still be faced initially with a MASSIVE drop in membership dues that would be going towards maintenance and upkeep and in the case of every 2042 resort, apportioned shares of resort transportation and other costs that the hotel side would have to absorb 100%. All of the shared costs for MA and MS would also need to be re-allocated to the other remaining resorts until whatever replaces the 2042's is up and running and generating MF revenue. And even if they do convert them to a trust, with the argument that all trust points can be used at any trust resort, those costs for maintaining those 2042 resorts while they are converted/refurbished/demolished and rebuilt, especially the ones that share facilities with a hotel, will still need to be paid by someone. What's the sales pitch? "You aren't buying points at BWV2.0 or BCV2.0, you're buying into the Crescent Springs Vacation Club Trust, and you can use your points at any Trust Resort (although some percentage of your pooled membership dues are still going towards maintenance and services at 3 Trust Resorts you can't actually access until we're done rebuilding them)"?

I think these are all big points which is why Disney has to really think this out. It is always easier to convert existing customers at some point while they are customers than finding completely new ones. Having 3 resorts essentially "go dark" for a few years would really leave them with a ton of costs and three resorts to fill. Even though BWV and BC are super desirable locations its going to take time to sell them especially after a large percentage of the owners decide they don't need to buy again after a few years away from owning in the first place. Basically it is going right back to square one with trying to sell out a new location.

If they do have to go the complete tear down and rebuild route I wonder if they could get creative with a trust concept. Link the 3 2042s and perhaps one other resort (OKW if enough 2042 existed, maybe a poor selling property if not) and then stagger the rebuilds, giving owners the ability to book 3 while one goes under construction and plan out a schedule that keeps three options online while only one goes dark. But it would be hard to imagine Disney just taking 3 properties completely offline at the same time and thinking it is a good idea.

I

 

[LoveToDisney]

When they take the 2042 properties “offline” in 2042, the points from those resorts are also not in circulation. Someone mentioned in years past that DVD may even require one to only stay in their own 2042 resort with points near the end and we may not be able to bank or borrow near the end. A LOT of owners of the 2042 resorts are older and the fact the lease is ending will not matter. Those who wanted longer leases have had many options later to buy into. Having BW shuttered to rework will only advertise constantly that a new premium DVC is being built and those seeing the construction will be eager to purchase….just as we were 20+ years ago.

 

[DonMacGregor]

When they take the 2042 properties “offline” in 2042, the points from those resorts are also not in circulation.

Which is actually a problem, not a benefit. MF's at those hybrid DVC/cash room resorts help pay for common services shared with the hotel side. See my example above regarding MF's at BWV. At BWV yes the hotel side might, in some scenario, have all of the DVC rooms available for cash bookings, but they don't have the guaranteed MF's coming in regardless of whether rooms are occupied or not. Sure DVC-specific costs will be eliminated, but the shared services and costs will still exist, and someone has to pay for those.

Having BW shuttered to rework would create nearly 1,500 feet of construction fencing (and likely shut down the entire south side of Crescent Lake. I'm not sure that is the kind of advertisement for a new resort that DVC wants. We've seen how much bellyaching came with shutting down just the walkway between Poly and GF to build the new Poly Tower. Now you're going to shut down the entire side of Crescent Lake?

I'm not saying it can't or won't happen. I'm just saying there is no Pixie Dust solution.

 

[LoveToDisney]

Which is actually a problem, not a benefit. MF's at those hybrid DVC/cash room resorts help pay for common services shared with the hotel side. See my example above regarding MF's at BWV. At BWV yes the hotel side might, in some scenario, have all of the DVC rooms available for cash bookings, but they don't have the guaranteed MF's coming in regardless of whether rooms are occupied or not. Sure DVC-specific costs will be eliminated, but the shared services and costs will still exist, and someone has to pay for those.

I’m assuming they will totally shutter BW because of what you are saying…no cost sharing…and build a totally new DVC resort to sell. BCV is so much smaller, it can be shuttered by itself and BC/Yacht Club take over the cost that it shared before BCV opened while it gets renovated and preps for resell or changed to retail.

 

[DonMacGregor]

I’m assuming they will totally shutter BW because of what you are saying…no cost sharing…and build a totally new DVC resort to sell. BCV is so much smaller, it can be shuttered by itself and BC/Yacht Club take over the cost that it shared before BCV opened while it gets renovated and preps for resell or changed to retail.

Exactly. It's a "live by the sword, die by the sword" kinda thing. Disney likes having DVC components in their hotels because those member fees and revenue are automatic and they can dump a bunch of operating costs onto DVC as "shared" expenses. Sorta works the opposite way though if you later shutter that DVC component and either tear it down to rebuild or convert it back to cash rooms.

I definitely think the effect would be significantly less at BCV and BRV given their relative sizes compared to the cash side of their respective resorts. I think those resorts come into play when you start adding up all of the points disappearing in 2042 and you look at how much shared administrative costs/operating expenses they support at DVC/DVD (and of course the profit Disney takes out of those fees paid). Remember, Disney makes money off the initial sale of points, the ability to take points as breakage and sell as cash rooms, and the ongoing fees paid per point for administrative services. Plus, in THAT scenario you do need to include all the points disappearing at HHI and VBR.

 

[TheDailyMoo]

I think people keep missing the point by focusing on how many points would be introduced in 2042 and whether the market could support it. The issue isn't points, it's rooms.

On February 1, 2042, every single WDW 2042 ROOM will need to convert to cash, or be shut down for what will, without any doubt, be a significant period of reconstruction/rehabilitation. If the resorts stay open for any length of time after 2/1/42 without an extension of some sort, that's a huge uptick in cash inventory for a company that has been reducing cash rooms (or at least the percentage of cash rooms) rather than increasing their numbers.

And it will be an extended period of time. We're not talking about sticking a Murphy bed on a wall at a 12-year-old CCV, we're talking about significant repairs/upgrades to buildings that will be nearing 50 years in age. To make matters worse, two of the three Disney-owned resorts on Crescent Lake will be affected (BWV to a massive extent). Can you imagine what that huge uptick in capacity would do to cash rates?

Whether they extend or start a trust, they will still be faced initially with a MASSIVE drop in membership dues that would be going towards maintenance and upkeep and in the case of every 2042 resort, apportioned shares of resort transportation and other costs that the hotel side would have to absorb 100%. All of the shared costs for MA and MS would also need to be re-allocated to the other remaining resorts until whatever replaces the 2042's is up and running and generating MF revenue. And even if they do convert them to a trust, with the argument that all trust points can be used at any trust resort, those costs for maintaining those 2042 resorts while they are converted/refurbished/demolished and rebuilt, especially the ones that share facilities with a hotel, will still need to be paid by someone. What's the sales pitch? "You aren't buying points at BWV2.0 or BCV2.0, you're buying into the Crescent Springs Vacation Club Trust, and you can use your points at any Trust Resort (although some percentage of your pooled membership dues are still going towards maintenance and services at 3 Trust Resorts you can't actually access until we're done rebuilding them)"?

** I'm not including OKW because it's been extended and let's assume the people still holding 2042 contracts will be in a very small minority by then and just SOL. HHI and VBR are gone as far as I'm concerned.

ETA: As a mental exercise, BWV has 4.8 million points. If we're generous and say Disney retains 5% that still leaves us over 4.6 million points, or $40M in member fees for 2024. If the DVC side of BWV ended today, and all those rooms were shut down or converted to cash, some part of that $40 million would still have gone to support shared services across DVC/DVD and that lost revenue would have to be absorbed by other resort dues. And, now the hotel side would be on the hook not only to fill those rooms, but also come up with the lost MF revenue that goes to common services at the resort. That money is guaranteed if it's a DVC villa, regardless of whether the room is filled or not (although they almost always are), but only comes in if a cash room is occupied. BRV is obviously much smaller and likely would have a much smaller effect on DVC revenue as a whole and WL specifically, but the BWV effect would be significant. BCV would be somewhere in between.

I like many others never thought there would be a chance for any extension offered by Disney considering the OKW debacle however this argument of yours has made me think there is now a non-zero chance at the possibility that it happens. Would it be both BWV and BCV or just one of them who knows but I can see a pathway for it happening if done correctly and with full support.

 

[BrianLo]

But the only way they avoid any of those predicaments is, as you say, if they "don't head into a major glut of unsold DVC into 2042". I don't see any logical way that they can avoid it.

That's very much in their control though. You don't build a giant Tower two years beforehand. Outside of some massive event, their sales volumes have been reasonably predictable.

They can pretty comfortably run their rooms down into less than 100 or >2 million points reliably if they plan things correctly. If they undershoot for some reason there are fairly minor small-scale DVC projects that could go through late in the game. Yatch Club most obviously comes to mind to at least have some of Crescent lake up and running in DVC prior to 2042. In later years it would be easy to flip a VGF building or a Poly building a bit ahead of time of their resort expiring as well to get a head start on the new association. If they wanted.

Now the hotel side has to keep the villas filled 100% of the time on cash or face a shortfall to pay for those previously shared services.

Wouldn't it just have to be a percentage occupancy whose total cash rates exceeds total maintenance fees? That might be as low as 30-40% for some of the more expensive resorts. They don't remotely need to fill the resort to 100% occupancy, if they can do that they would happily not convert a single unit to DVC ever again.

It is a big company and a huge hotel division. They can easily absorb it. While somewhat messy, we are talking fairly minuscule amounts of rooms on the broader scale. It's just awkward for Crescent Lake. Two hotels expiring at the same time in the same area is sloppy.

 

[NY Pirate Princess]

They don't remotely need to fill the resort to 100% occupancy

Booking as close to 100% of all hotel rooms is required for profit margins. Otherwise there wouldnt be an ever changing list of rooms on third party booking sites and the Hub for CMs.

It is a big company and a huge hotel division. They can easily absorb it. While somewhat messy, we are talking fairly minuscule amounts of rooms on the broader scale. It's just awkward for Crescent Lake. Two hotels expiring at the same time in the same area is sloppy.

Disney can easily absorb renting all the DVC rooms in boardwalk, beach club, old key west 2042, and boulder ridge on February 1, 2042?

 

[DonMacGregor]

Wouldn't it just have to be a percentage occupancy whose total cash rates exceeds total maintenance fees? That might be as low as 30-40% for some of the more expensive resorts. They don't remotely need to fill the resort to 100% occupancy, if they can do that they would happily not convert a single unit to DVC ever again.

That depends. If the BWV (easy example) transportation budget is based on a certain number of busses per day, and a calculated share of the Friendship Boats, etc., then losing the $2.8 million that the DVC side of the resort pays would have to make a significant impact. BWV is unique because the hotel side and DVC are pretty equally sized, so you have to assume that $2.8 million is right around half of the transpo budget for the whole resort. Closing down most (or all) of the DVC rooms eliminates that guaranteed revenue stream and puts the whole transpo budget on the hotel side (where it isn't guaranteed). That's why they like converting hotel rooms to DVC: they can saddle DVC with some percentage of all the shared services and its guaranteed money, no matter how many rooms are occupied on a given night.

In the case of transpo, what could they cut to reduce that $5.6 million dollar cost? Reduce the number of busses? By half ? Make them come every 45 minutes instead of 20? And the Friendship Boats? They can't very well say "hey only every third boat will now dock at BW because they aren't paying their share of the cost"? They might be able to reduce some costs, but the operation of that cost center, plus a few others that are shared (general resort maintenance, pools, security, etc.) probably can't simply be cut in half.

It is a big company and a huge hotel division. They can easily absorb it. While somewhat messy, we are talking fairly minuscule amounts of rooms on the broader scale. It's just awkward for Crescent Lake. Two hotels expiring at the same time in the same area is sloppy.

It's a big company, but they are separate divisions that charge each other down to the penny.

 

[BrianLo]

That depends. If the BWV (easy example) transportation budget is based on a certain number of busses per day, and a calculated share of the Friendship Boats, etc., then losing the $2.8 million that the DVC side of the resort pays would have to make a significant impact. BWV is unique because the hotel side and DVC are pretty equally sized, so you have to assume that $2.8 million is right around half of the transpo budget for the whole resort. Closing down most (or all) of the DVC rooms eliminates that guaranteed revenue stream and puts the whole transpo budget on the hotel side (where it isn't guaranteed). That's why they like converting hotel rooms to DVC: they can saddle DVC with some percentage of all the shared services and its guaranteed money, no matter how many rooms are occupied on a given night.

In the case of transpo, what could they cut to reduce that $5.6 million dollar cost? Reduce the number of busses? By half ? Make them come every 45 minutes instead of 20? And the Friendship Boats? They can't very well say "hey only every third boat will now dock at BW because they aren't paying their share of the cost"? They might be able to reduce some costs, but the operation of that cost center, plus a few others that are shared (general resort maintenance, pools, security, etc.) probably can't simply be cut in half.

It's a big company, but they are separate divisions that charge each other down to the penny.

Oh I see! You are talking about all the rooms also being totally offline. I was talking about if the DVC rooms were opened for cash booking, but just not yet sold to new members/owners yet.

Ya, it's a lot of inventory they need to take offline at once.

 

[BrianLo]

Disney can easily absorb renting all the DVC rooms in boardwalk, beach club, old key west 2042, and boulder ridge on February 1, 2042?

Ya. I'm not saying they are happy about it, but we're only talking like 1-2% of their entire portfolio. They currently now have more rooms blocked off, they frequently close entire wings to juice their occupancy percentages. This achieves a similar purpose.

It's more a temporary inconvenience for a company on that scale, than a massive issue. Of course it compounds if the hotel business in 2042 is facing other sources of booking weakness, which it certainly could.

 

[DonMacGregor]

Oh I see! You are talking about all the rooms also being totally offline. I was talking about if the DVC rooms were opened for cash booking, but just not yet sold to new members/owners yet.

Ya, it's a lot of inventory they need to take offline at once.

Right, we talked about that earlier and why it also doesn't make any sense to shut down all 2042 resorts simultaneously. I think most people are coming around to the realization that the 2042 resorts will need extensive remodel/reconstruction/demolition in order to satisfy a new buyer of a 50-year contract in 2040-something. If flipping does (and likely will) require shutting down the DVC wings completely, doing them all at once makes no sense. Several people also wonder if it wouldn't be more practical, given the size of the BWV DVC component, to jus knock down Boardwalk completely and start from scratch.