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.

 

[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.

 

[RobDoc]

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.