Direct purchase becoming less attractive

[skier_pete]

...and the follow-on question is: How did those resources come to be available if the average real wage has been stagnant? In other words, on average, the average person's discretionary income has not grown in constant-dollar terms, but the price of admission definitely has.

I suspect the answer to that is that real income growth has not been distributed uniformly, and has increasingly concentrated in the upper income strata. In this case, average is just the wrong measure, because instead the population is splitting into two groups. One (the upper-middle-class and above) is growing much faster than real inflation; the other is barely keeping pace. There have been some exceptions to that in the last year when real wage growth was a thing, but only recently.

I think what has happened is that while the % of the population with enough disposable income to go to Disney has gone down, the number of people with enough disposable income has stayed the same. Part of that is wealth imbalance but part is population growth. The US population went from 281 Million in 2020 to 345 million today.

If you said 15% of the US population in 2000 could afford a disney trip - that's 42 million.
if you said only 10% of the US population could afford it today - that's still 35 million people.

That's a drop between the two but only a difference of 7 million people which is only 2 % of today's population. And Disney has not really done anything to expand capacity between 2000 and today.

And in fact Disney has seen a drop in overall attendance since COVID return and you can bet a part of that is because of pricing. Overall attendance was at 58 million in 2019, and was only 49 million last year. Do we really not believe some of that has to do with pricing out people?

 

[davidhr]

As someone who lived 30+ years overseas, I’d add that a “not small” % of WDW visitors are international. It was expensive to have a Disney trip 10 years ago in my home country currency, but it was manageable for a family with a mean income. These days that would be impossible to afford with the mean income in my home country, it’s just absurdly expensive with the currency exchange.

So I bet international visitors from countries with not so great currency vs the US dollar have decreased significantly.

 

[disneylandtour]

As someone who lived 30+ years overseas, I’d add that a “not small” % of WDW visitors are international. It was expensive to have a Disney trip 10 years ago in my home country currency, but it was manageable for a family with a mean income. These days that would be impossible to afford with the mean income in my home country, it’s just absurdly expensive with the currency exchange.

So I bet international visitors from countries with not so great currency vs the US dollar have decreased significantly.

Whether intended or not, I really think that the significant shift at the Disney parks is from casual tourists to those who deeply identify with Disney entertainment as lifestyle fans If you're coming as casual tourist, Disney World or Disneyland is tremendously expensive. If, however, you go two or three times a year and know the ropes, it's far less expensive. There's annual passes, inexpensive-but-nice hotels just off property, Mear's, various dining strategies (including having basic groceries shipped to the room), off-peak ticket deals, various free dining offers, etc., etc. But hardly anyone who is a casual tourist knows about these things or how to effectively use them. So one of the other things that has been affected is the frequency of visitation.

I believe your 49M number accounts for visitors to the Florida parks combined. First of all, it's not 49 unique visitors. It's 49 clicks on a turnstile (or tapstile) over four parks. And let's say that the average person visits three parks on a trip. That would bring it down to 16M unique visitors, most of whom visits multiple parks over multiple days. But let's say that in those number there's a group that has two trips to WDW in a year--a number that I think is pretty close to 20%, which include deep fans but also Florida/Georgia/Alabama/Carolina regional guests. Let's say that this group accounts for about 6M turnstile clicks. And let's say that also in that larger group of 49M are Orlando-area pass holders who on average spend 10 days in the parks each year. In California, local papers have estimated that the passholder group is 50% of visitors, in Florida I think it's around 10% of visitors on any day. So that would be about 5M. And once those are pulled out, I think the actual number of traditional one-off tourists is around 30-35% of the overall turnstile clicks.

Or to put this simply: Disney ain't stupid. Disney appears to be making the case that frequent visits are a very good deal for the consumer (based on per visit costs) and is actively trying to shift more over to the frequent camp from the general tourist camp. My guess is that Disney believes the frequent visitor group is going to prove to be more profitable (or at least create more revenue) longterm than endlessly marketing to the traditional tourist group. For example, as a "fan,"I get multiple emails from Disney each week to let me know about various sales/services/opening/etc. These emails cost them next to nada. Add into this: people who identify as Disney fans will also check blogs, websites, podcasts, Vlogs, etc., and inform themselves without Disney having to do much work, other than to comp in some reporters and influencers. To attract traditional tourists, Disney needs to place web/magazine/TV/etc. ads, which is costly and reduces the per-visit profits they receive from this group of customers.

I would love to hear other's breakdown of similar numbers and comments on this trend. But I think this is generally the marketing shift that has been happening since around 2010.

 

[aammtt20]

Access to post-2042 resorts is the big reason I'm starting to think about a blue card. I don't need an in-park lounge, especially if there's a wait. I can buy my own iced tea elsewhere. The Villain's lounge has sorta turned into a series of upsell options for members. And the other extras (free "treat" at Jollywood, various late-night events in the parks, etc.) aren't worth the 50% to 125% up-charge of direct. But all of the EPCOT walkables expire 2042. That seems significant. The Monorail loop resorts will be open to all (presumably) for a long time. But being blocked out of whatever is over by EPCOT would be an issue for me. Again, that's still 18 years away. And sometime in there, there's going to be a decent sale on a resort I like.

That's the reason I added on some Poly direct points when they went on sale together this Oct. Not enough for blue card benefits, but just enough so I could borrow and bank some stays together at restricted resorts going forward. I had always been a resale only DVC'er for the savings, but I'm in my 30's now and I started thinking about a future without the Epcot area resorts when they expire, which gave me the push to buy a little direct contract so that I'm never locked out of a resort I might want to stay at going forward.

 

[Sandisw]

Access to post-2042 resorts is the big reason I'm starting to think about a blue card. I don't need an in-park lounge, especially if there's a wait. I can buy my own iced tea elsewhere. The Villain's lounge has sorta turned into a series of upsell options for members. And the other extras (free "treat" at Jollywood, various late-night events in the parks, etc.) aren't worth the 50% to 125% up-charge of direct. But all of the EPCOT walkables expire 2042. That seems significant. The Monorail loop resorts will be open to all (presumably) for a long time. But being blocked out of whatever is over by EPCOT would be an issue for me. Again, that's still 18 years away. And sometime in there, there's going to be a decent sale on a resort I like.

Just a clarification. Having DvCY or blue card is not what gives you access to new resorts.

It is the DVc resort agreement for the new resorts and how they enter BVTC as a new resort.

As long as that resort remains part of BVTC for trading, the ability to use points at that resort at the non home resort booking window.

Membership extras are incidental and those can go away any time. Someone can buy direct points below 150 and not get the DVC Y benefits, but those new points are still eligible at new resorts.

So, if a resale owner adds on 50 points today, they will be able to use those 50 points everywhere, even though they don’t have DVC Y or blue card benefits.

 

[disneylandtour]

Just a clarification. Having DvCY or blue card is not what gives you access to new resorts.

It is the DVc resort agreement for the new resorts and how they enter BVTC as a new resort.

As long as that resort remains part of BVTC for trading, the ability to use points at that resort at the non home resort booking window.

Membership extras are incidental and those can go away any time. Someone can buy direct points below 150 and not get the DVC Y benefits, but those new points are still eligible at new resorts.

So, if a resale owner adds on 50 points today, they will be able to use those 50 points everywhere, even though they don’t have DVC Y or blue card benefits.

Thanks for the clarification. I was simply indicating that blue card was simply an effort to acquire direct points with the main benefit (for me) being able to use those direct points at restricted resorts.

 

[BamaGuy44]

I don't think it's any more or less attractive than it has been the last few years. Maybe a little less right now due the semi-death of the ROFR monster and other factors bringing resale prices down some.

 

[Brian Noble]

And Disney has not really done anything to expand capacity between 2000 and today.

I agree with your post overall, but would quibble with this. There have been no new gates since '98, but the parks that do exist have all seen expansion--and in some cases that has been significant. Even the replacements have generally replaced low-traffic attractions with more popular ones, and while that doesn't add capacity in theory it does in fact; those queues are more full more often, pulling people off of the midways.

 

[BeachClub2014]

I would add: the vast majority of DVC buyers (especially first-time buyers) don't even know about the resale market. They simply talked to someone at a DVC booth or on a ship, maybe went to a presentation (and got a crappy backpack), and then bought.

I agree with you on this point.

Another point often overlooked in the everlasting discussion/debate over direct purchasing versus resale purchasing is that there is no resale market when new resorts come online for sale. If you want to own at that specific resort, then direct is really the only option. When we first bought Beach Club, it was a brand-new resort, and no resale points were sitting around to be purchased at a discount.

 

[bdrex28]

As a DVC resale owner the perks given to direct owners have zero influence on me and at the price I paid for the Resale contract vs Direct I can easily make up for those perks in other ways. The lounge stuff has never been anything I care about even if I think it's funny that only direct members are eligible.

What's funny is that in March of 2020 I was about 30 seconds from my wife and I buying Direct for 250 pts at Riviera. But...Covid literally was beginning during that trip and we decided to wait. Frankly, I'm glad I did and we ended up buying resale. As mentioned above, I had ZERO idea you could even buy resale at that time.

The ONLY reason I would remotely consider buying direct is for new resorts, but since I like so many of the existing resorts it doesn't matter to me as I can just stay at one of the already established properties. We love BWV and it's proximity to Epcot and HS and you can't get much closer. So.....direct has zero appeal to me.

 

[disneylandtour]

As a DVC resale owner the perks given to direct owners have zero influence on me and at the price I paid for the Resale contract vs Direct I can easily make up for those perks in other ways. The lounge stuff has never been anything I care about even if I think it's funny that only direct members are eligible.

I think Disney just created a very interesting situation with those lounges. Presently it's $99 to have front-of-the-line access to them for those with member "extras." And at Disneyland, I can see a situation where very few will get in on most days with out the $99 pass and at WDW, it'll probably be an issue over the holidays and other peak times. I don't think this will happen this year, but at some point, someone over at DVD has got to ask, how many $399 or $499 annual lounge memberships can we sell those who bought resale. And sure, throw in the Villains Lounge. If the answer is 2k--at $499--then that's a $1M for doing nothing other than what they are already doing. DVD is clearly looking for ways to leverage income--and if that is the goal, there's a big untapped bucket of resale owners, a chunk of whom will buy into that scheme for fairly elevated rates.

 

[🍀TwinsMom]

IDK if direct is more or less appealing with the new program. I view it as a take-it-or-leave-it option. The OTUP and Memory Maker may prove helpful one year. The discounted mid week tickets may be a good deal, depending on how they're priced. Buying a Sorcerer AP on points (doubtful, but you never know) may be a deal. Front-of-the-line lounge access is not a BIG deal, but could be nice if/when they open the DVC lounge in MK.

Really, we bought direct because Riviera IS where we wanted to stay, the points loaded instantly, and we don't want to be locked out of any possible new resorts. While I don't love the aesthetics of the outside of the new buildings, I think they've really nailed the interiors of the new tower rooms. I am excited with the Poly tower having extra bathrooms. We love the Riviera room interiors. I'm Cabin curious and looking forward to Reflections, and I really feel like 2042 will be here before we know it. I'm not up in arms over the DVC add-on. So long as we can get Sorcerer AP with the direct purchase, that's the main "perk" we use, and even then, the value is diminishing for us, so now we're going every other year and more baller versus more frequently.

 

[marmentrout85]

Always been skeptical about whether the premium for buying direct is worth it. But the new introductions of paid, tiered DVC member perks and the increase in the sorcerer’s pass price are kind of a nail in the coffin, right?

Kind of reminds me of how the airline loyalty programs have gone downhill - packed lounges and fewer perks as the membership increases.

I wouldn't say any of the newest news has changed how I feel about buying direct.

Unless an offer for RIV comes along that's better than this past Spring-Summer incentives or if they happen to heavily incentivize Poly like sub-$180 for 150pts then we're probably good and will continue to stick with resale.

We're also super lucky to have a family member who has direct points they don't use very often, so we're sort of covered with any new resorts that pop up that we all want to try out.

Now, if they happen to build another resort between now and 2042 that's walkable to parks then you might change my mind.

 

[DVCsloth]

I think VGF and Riviera are two examples recently where adding on direct was the way to go IMO.

 

[ocdb8r1]

Whether intended or not, I really think that the significant shift at the Disney parks is from casual tourists to those who deeply identify with Disney entertainment as lifestyle fans If you're coming as casual tourist, Disney World or Disneyland is tremendously expensive. If, however, you go two or three times a year and know the ropes, it's far less expensive. There's annual passes, inexpensive-but-nice hotels just off property, Mear's, various dining strategies (including having basic groceries shipped to the room), off-peak ticket deals, various free dining offers, etc., etc. But hardly anyone who is a casual tourist knows about these things or how to effectively use them. So one of the other things that has been affected is the frequency of visitation.

I believe your 49M number accounts for visitors to the Florida parks combined. First of all, it's not 49 unique visitors. It's 49 clicks on a turnstile (or tapstile) over four parks. And let's say that the average person visits three parks on a trip. That would bring it down to 16M unique visitors, most of whom visits multiple parks over multiple days. But let's say that in those number there's a group that has two trips to WDW in a year--a number that I think is pretty close to 20%, which include deep fans but also Florida/Georgia/Alabama/Carolina regional guests. Let's say that this group accounts for about 6M turnstile clicks. And let's say that also in that larger group of 49M are Orlando-area pass holders who on average spend 10 days in the parks each year. In California, local papers have estimated that the passholder group is 50% of visitors, in Florida I think it's around 10% of visitors on any day. So that would be about 5M. And once those are pulled out, I think the actual number of traditional one-off tourists is around 30-35% of the overall turnstile clicks.

Or to put this simply: Disney ain't stupid. Disney appears to be making the case that frequent visits are a very good deal for the consumer (based on per visit costs) and is actively trying to shift more over to the frequent camp from the general tourist camp. My guess is that Disney believes the frequent visitor group is going to prove to be more profitable (or at least create more revenue) longterm than endlessly marketing to the traditional tourist group. For example, as a "fan,"I get multiple emails from Disney each week to let me know about various sales/services/opening/etc. These emails cost them next to nada. Add into this: people who identify as Disney fans will also check blogs, websites, podcasts, Vlogs, etc., and inform themselves without Disney having to do much work, other than to comp in some reporters and influencers. To attract traditional tourists, Disney needs to place web/magazine/TV/etc. ads, which is costly and reduces the per-visit profits they receive from this group of customers.

I would love to hear other's breakdown of similar numbers and comments on this trend. But I think this is generally the marketing shift that has been happening since around 2010.

This doesn't resonate with me or reflect my experience. I don't see Disney "shifting" it's targeted visitor group based on frequency, but rather getting better at tailoring marketing to the visitor group it feels you fall into. I don't doubt that you get plenty of marketing that feels like Disney is focused on a frequent visitor group - they have identified you as such a visitor and are tailoring the content they push to you in such a way to maximize return on your attendance pattern.

On the flip side, Disney still does an enormous amount of marketing to casual, once (or less) a year long-term visitors. Look at the cultivation of both the Brazilian and UK market. The UK continues to get a multitude of products focused and tailored to Brits who can spend two full weeks in Florida, including special tickets, special hotel packages and other special offers. The same can be said for Brazil, who is also seeing it's first D23 event this year (and yes, I know D23 goes beyond just "parks & experiences" but you can bet there will be a LOT of emphasis on how that market can enjoy Disney World).

I also don't believe Disney is focused on "turnstile clicks" and maximizing them (without maximizing revenue). Pushing a strategy that gets more people through the park gates, but sees them staying offsite, eating elsewhere/in accommodation and spending less in the parks to "save" to be able to do multiple visits doesn't make business sense to me. On the contrary, the one trend I have observed is Disney's commitment to maximizing the in park experience for those willing to spend more and being more committed to increasing pricing even if there is a cost in attendance. In short, Disney is quite happy to make 100mn from 10,000 attendees vs making 100mn from 15,000 attendees and knows that the former provides a better overall "experience" for its guests. Yes...that means it will start pricing some families out of the experience. However, I believe the solution is to increase capacity (via higher capacity rides and shows) and continue on the "tiered" offering, providing a "less than ideal" experience (but at least an option) for those unable or unwilling to pay for premium upgrades such as Lightening Lane Premier.

 

[dvc lover 1970]

Disney is not the same company I purchases into close to 20 years ago. I would not have purchased DVC direct today. However I do have a good amount of points now and have enjoyed years of memories. MF's are rising faster than the florida humidity and perks are evolving - I do not agree with the tiered memberships. I have always felt we all pay the same MF's so I don't care if someone bought resale or direct (yes all my point are either direct or grandfathered so does not affect me) they should have the same access to perks. Now we have tiered perks for the blue card. Yes, I will probably purchase this - at the current price. If they increase the price - I am not buying again. Totally agree direct is less attractive

 

[bakerworld]

Buying Direct is just easy and fast. Yes, we paid a lot but we had use of our points immediately. We love the Poly and hadn't been able to touch it until it became part of DVC. For us the upside of DVC that never goes away is being able to stay in all the different venues. At our initial purchase of DVC the biggest persuader was when the guide showed us all the amenities included in the venues.

 

[muppets3d]

I think we pay enough, the extra $99 is an insult. Is what we pay already not ample? They can get bent, I will never pay it.

 

[Sandisw]

I think we pay enough, the extra $99 is an insult. Is what we pay already not ample? They can get bent, I will never pay it.

The $99 fee is at least giving owners real products and options. It’s not just asking owners to pay an extra $99 for nothing in return.

But, it’s definitely not going to be for everyone.

 

[muppets3d]

The $99 fee is at least giving owners real products and options. It’s not just asking owners to pay an extra $99 for nothing in return.

But, it’s definitely not going to be for everyone.

You already have to have direct points (or at least, grandfathered points) to be eligible. So you've already paid DVC much more than you otherwise could have. There is no real good reason why they have to charge extra, other than to thumb their nose at us.