Cheap DVC?

[Anthony1971]

Please also remember that the only thing your contract guarantees is the ability to book at the resort you purchased for X amount of years. This leaves DVC open to build anywhere they would like and shut out existing and or new contracts from booking at any existing or new resort(s) other than the one owned at. In the end no DVC location is off the limits and NO modifications to the point system need to made.

 

[Millionaire2K]

Please also remember that the only thing your contract guarantees is the ability to book at the resort you purchased for X amount of years. This leaves DVC open to build anywhere they would like and shut out existing and or new contracts from booking at any existing or new resort(s) other than the one owned at. In the end no DVC location is off the limits and NO modifications to the point system need to made.

True. Disney could build whatever and say enjoy.

 

[Dean]

So does anyone think Disney will ever offer a cheaper DVC buy-in at it's Moderate or Value resorts?

Maybe once ALL the deluxe resorts have DVC options they start adding DVC rooms at moderate and possible Value resorts?

At first I was thinking this would hurt more expensive DVC resorts. But what if they added extra "rules" to the lesser DVC resorts. Like maybe a smaller window to book outside of their resort tier.

value DVC :
$80 a point
5 month booking window outside of value resorts

Moderate DVC :
$110 a point
6 month booking window outside of moderate resorts

Thoughts?

This has come around a few times. Likely the best discussions came when the part that's now AoA was sitting empty and unused. Even then my take was that all the rumors originated with members, not even to the level of a bus driver. My take then and now is that I doubt they will but I believe it's doable if they chose to go that route. Marriott tried this a number of years ago by offering a lower cost/lower quality product for a reduced price. They originally announced 4 resorts (Orlando, Branson, Gatlinburg & I forget #4). Orlando and Branson was built but at a reduced scale and the other 2 never saw the light of day. The rooms were smaller, non whirlpool tube, formica countertops and the like. They were grossly unsuccessful though I think the concept was valid. I feel they simply go greedy and over priced them. If one wanted to compare the 2 levels, a quick visit to Marriott's Harbour Lakes and Grande Vista in Orlando will give you the contrast. Originally they had kept them separate with a crossover but when they failed, Marriott simply rolled them into the MVCI

I've long held that DVC could build OKW/SSR type resort attached to the moderates and no miss a beat. I also feel there are easy ways to incorporate a less upscale resort(s) into the system without much or any issue. I do not feel the comparisons of luxury expectations or ways to allow bidirectional access to be roadblocks at all.

 

[RobDoc]

... Likely the best discussions came when the part that's now AoA was sitting empty and unused. ...

DVC did actually consider using one of those unfinished buildings for a resort, but abandoned the idea years ago. They have lots of pie-in-the-sky discussions all the time and few ever make it beyond that level of consideration.

Some, like the Ft. Wilderness resort, Manhattan, and Eagle Pines (which has now become Golden Oak) actually made it to the planning stage and beyond and still failed to come to fruition. Early on, DVC had suggested resorts in Newport, CA and in CO. The Newport property was later sold to another timeshare company (Marriott?).

 

[WilsonFlyer]

People can buy-in at less points? That could be an advantage.

Not everyone can afford $10,000+. So maybe a value DVC can have a buy-in of as low as 25 points?

Disney does have an affordable buy-in to DVC. It's called the resale market and the free market drives it.

DVD's job is to keep the product desirable and special. Not for us, for Disney. If it loses those two qualities, it loses its perceived value and the result will almost inevitably be its real value as well. It's what happens to most all other timeshares.

While I certainly don't consider myself or any other DVC owner elitists, the reality remains that this is not today's little league. This is the real world. We keep score by bank accounts. Not everybody gets a trophy at the end of the year. Not everybody gets to play just because daddy paid the entry fee, and not everybody gets to buy a Ferrari.

It's not Disney's job to make it affordable to everyone, most importantly; it's not their job to make it affordable in everyone's opinion.

Those statements may not please some people, but it doesn't change the facts. Sorry.

 

[AmyB2006]

Your model assumes that all DVC members book at exactly 7 months or before, or at least I could substantiate that in your example. It would devalue it for me because we typically book at 3-4 months out (Not all the time but most) because we simply are not at a point in our lives where we can plan further out.

I would raise immortal cain if someone that bought for substantially less than me could book my resorts essentially before I had a chance to get what I wanted.

I know this may not make sense.

It'll never happen. The outcry from DVC I would be unbearable. I could see booking "down" but a new system that allowed booking up would be extremely difficult to implement and keep it fair in my opinion.

Makes perfect sense, and I for one would be outraged as well.

If they did start selling DVC at the moderate and value resorts, then they should not be allowed to book at the deluxe resorts. Value shouldn't be allowed to book at moderate.

It's not Disney's job to make it affordable to everyone, most importantly; it's not their job to make it affordable in everyone's opinion.

Those statements may not please some people, but it doesn't change the facts. Sorry.

Agreed again.

 

[Dean]

The Newport property was later sold to another timeshare company (Marriott?).

Marriott's Newport Coast Resort. The other property actually further along than Manhattan, was the CO location which I believe is where Hyatt's Beaver Creek resort is now (not totally sure though).

Makes perfect sense, and I for one would be outraged as well.

If they did start selling DVC at the moderate and value resorts, then they should not be allowed to book at the deluxe resorts. Value shouldn't be allowed to book at moderate.

As I suggested, without going into details, there are a number of methods to incorporate such a model into the club. Two of the more likely are to simply have the "cheaper" options cost less points in a way that has it the same per point and to create a new system with a crossover option and delay. They will not simply sell cheaper points and allow them to count the same as far more expensive points, at least not outside the parameters in place now where there is already some variability.

 

[SpaceMountain77]

It's not Disney's job to make it affordable to everyone, most importantly; it's not their job to make it affordable in everyone's opinion.

I agree.

The moderate/value question is analogous to asking if Acura, BMW, Cadillac, Infinity, Lexus or Mercedes-Benz will likely produce a new crossover, sedan or SUV for less than $20,000. If any brand/company has upper-market success, then it is highly unlikely for that company to go downmarket, unless necessitated by market conditions. It is simple economics.

 

[Mickey'sApprentice]

I agree. The moderate/value question is analogous to asking if Acura, BMW, Cadillac, Infinity, Lexus or Mercedes-Benz will likely produce a new crossover, sedan or SUV for less than $20,000. If any brand/company has upper-market success, then it is highly unlikely for that company to go downmarket, unless necessitated by market conditions. It is simple economics.

I have taught Principles of Macro and Micro Economics for the last 15 years. Specifically, where is this rule in economics?

Wal-Mart has made a fortune selling down market.

PS, I do agree with you on some level, but as an economist...you are interested in TR-TC = Total profit which is where MR=MC.

You can sell less at a higher price or more at a lower price.

Now, with a fixed plant size like you have in Central Florida, you can only sell so much product before you create a fire hazard. With this limit on sales, you choose to sale at the highest price possible to still reach capacity.

Different companies set different strategies, and common sense says that a seller will sell at the highest price possible for a given product, but your statement about selling down market is a strategy not an economic law.

 

[tjkraz]

You can sell less at a higher price or more at a lower price.

Of course, we have no way of knowing how much Disney would sell at a lower price.

Using your numbers ($80 per point for a value DVC), you're speculating that they would sell for roughly half the cost of VGF now ($160). But the point charts would also have to be lower to compete with "Deluxe." Otherwise, there's little justification for buying a value DVC at full price rather than a Deluxe DVC resale. And it has to compare favorably to the nightly costs of the Deluxes if those owners are ever to stay there. (e.g. Nobody is going to pay 15-20 points per night for ASMo DVC if OKW is 10ppn and SSR 12ppn.)

Fewer points per night means fewer points to sell. So essentially it's a double-whammy on the profitability: less to sell at a smaller price.

Digging deeper, can they really build a Value DVC for half the cost of a Deluxe? Doubtful. Sales and marketing expenses--which can represent half the total cost of a timeshare--would be roughly the same for Value and Deluxe.

And, of course, you're giving buyers and opportunity to get into the program for less money. Buyers who may be ready, willing and able to buy 160 VGF points at $165 each could instead opt to buy 100 value points at $80. Revenues lost.

A value DVC would theoretically open up newer markets but is it enough to offset all of the above?

 

[Mickey'sApprentice]

I wasn't trying to make a point for or against a discounted DVC system. I was just saying that "always go for the high price strategy" is business strategy and NOT economics and is situational not law.

 

[SpaceMountain77]

I have taught Principles of Macro and Micro Economics for the last 15 years. Specifically, where is this rule in economics?

While earning my graduate degree at The University of Chicago, which is currently ranked as one of the top graduate schools for economics, we frequently discussed branding and market strategies in industrial organization.

 

[Mazz519]

Will never take off.... I paid 67 a point for my first 300 pts and I would be very upset if someone who bought in at a lower level was able to book and box me out of the Deluxe resorts.... If they ever did do something like this it would have to be that you can only stay at the value resorts....seems only fair

 

[tjkraz]

I wasn't trying to make a point for or against a discounted DVC system. I was just saying that "always go for the high price strategy" is business strategy and NOT economics and is situational not law.

Sorry, I confused you with OP so some of my comments in the last post may have seemed a bit misdirected.

Unlike many other businesses, one of the issues at play here is that DVC must live with whatever decisions it makes for up to 5 decades. If Apple releases a low-cost iPhone 5c...and it bombs...they discontinue the hardware, rethink their strategy and move forward.

If DVC introduces a lower-priced resort option, all current and future owners must deal with the ramifications for the next 50 years. Regardless of the sales pace, impact on 11/7 month reservations, impact on resale values, impact on member satisfaction or any other rules / guidelines introduced surrounding the launch, it will remain a part of Disney Vacation Club until the contract ends. It's a change which would be impossible (or very, very difficult) to un-do.

There are higher-ups in DVC who today wish they could take a mulligan on things like the size of SSR (too many rooms) and its nightly point costs (higher than OKW for smaller villas.)

 

[Mickey'sApprentice]

While earning my graduate degree at The University of Chicago, which is currently ranked as one of the top graduate schools for economics, we frequently discussed branding and market strategies in industrial organization.

I admit that I did not get my MBA from a top graduate school like University of Chicago, but you did not state that you have a background specifically in economics, but more generally in business.

Please forgive me for throwing my education around. I submit that it was uncalled for by both of us. If you wish to further discuss credentials, I welcome your PM.

 

[Dean]

If DVC introduces a lower-priced resort option, all current and future owners must deal with the ramifications for the next 50 years. Regardless of the sales pace, impact on 11/7 month reservations, impact on resale values, impact on member satisfaction or any other rules / guidelines introduced surrounding the launch, it will remain a part of Disney Vacation Club until the contract ends. It's a change which would be impossible (or very, very difficult) to un-do.

There are higher-ups in DVC who today wish they could take a mulligan on things like the size of SSR (too many rooms) and its nightly point costs (higher than OKW for smaller villas.)

Which is true for each and every new resort and even major changes at existing resorts. I'd agree with SSR as an example but it's largest impact is likely the impact at the 7 month window. Still, I remain convinced that a "normal" DVC at a moderate or even value location OR even a true moderate/value DVC are options easy to fit into the system if the powers decide to go that direction. I believe the rumored and leaked FW location fits that very scenario as did SSR itself. While I doubt it'll happen for other reasons, I'd think any new resort would be more likely a regular part of the system than a separate system with a crossover even for a value DVC.