DVC sales down in July 2011

[htmlkid]

Go figure!!!!

Doesn't take a brain surgeon to figure out if you raise prices in a down economy that your sales will fall.

See article http://dvcnews.com/index.php/dvc-program/financial/1665-monthly-sales-data-for-july-2011

 

[drusba]

213K total is actually in line with sales averages this year: see http://dvcnews.com/index.php/dvc-program/financial/dvc-sales-statistics

The BLT pricing leading to a downturn appears to have been a conscious decision designed to assure there would still be some BLT points to sell during this fiscal year which ends October 1 while trying to see if AKV sales could be regenerated and sales reps must now be emphasizing it over BLT.

 

[htmlkid]

213K total is actually in line with sales averages this year: see http://dvcnews.com/index.php/dvc-program/financial/dvc-sales-statistics

The BLT pricing leading to a downturn appears to have been a conscious decision designed to assure there would still be some BLT points to sell during this fiscal year which ends October 1 while trying to see if AKV sales could be regenerated and sales reps must now be emphasizing it over BLT.

I've never know any business that would make a decision to slow sales on any product that is selling well....that logic doesn't make sense!!!!!

 

[tjkraz]

I've never know any business that would make a decision to slow sales on any product that is selling well....that logic doesn't make sense!!!!!

Timeshares aren't iPods or flat panel TVs. They aren't consumer products which can be chunked out by the thousands to an eager marketplace.

Timeshares require a great deal of resources to produce and market, and there is a finite audience for the product. And specific to BLT, there is only a tiny amount of that product remaining. DVC may continue to build other resorts but none will have the unique location, styling, view and amenities of BLT. Unless a second tower materializes someday, this is the end of timeshare sales at Disney's Contemporary Resort.

If you have 500,000 units of a product to sell, would you rather get $130 or $140 for each unit? In the case of BLT, they WILL get the $140 if that's what they are asking. It just takes a little longer. The question is whether the added revenue offsets a few more months of sales and marketing expenses.

Apparently the added revenue does outweigh the added expense.

 

[dizfan]

I've never know any business that would make a decision to slow sales on any product that is selling well....that logic doesn't make sense!!!!!

Sales volume and profit are different. Business is about profit, not sales volume.

Keep in mind DVD has a limited supply of BLT points left. They can sell the remainder for $100/pt inside of two months or they can sell the remainder for $150/pt over the rest of the year.

DVD has shifted the sales incentives to AKV and SSR. The higher price for BLT makes AKV and SSR appear to be a significantly better bargain.

Lastly, with VGF appearing to be the next WDW DVC property, raising the price for BLT sets the stage for the VGF to be priced higher.

 

[Brian Noble]

Sales volume and over profit are different. Business is about profit, not sales volume.

This, exactly.

BLT has less than 8% to go before it is "sold out". DVD is going to get every last penny they can for the remaining points. If that slows down total sales a little bit, so be it. They still have nearly all of Aulani, about 1/3 of AKV, and even a bit of SSR to sell as well.

 

[htmlkid]

Sales volume and profit are different. Business is about profit, not sales volume.

Keep in mind DVD has a limited supply of BLT points left. They can sell the remainder for $100/pt inside of two months or they can sell the remainder for $150/pt over the rest of the year.

DVD has shifted the sales incentives to AKV and SSR. The higher price for BLT makes AKV and SSR appear to be a significantly better bargain.

Lastly, with VGF appearing to be the next WDW DVC property, raising the price for BLT sets the stage for the VGF to be priced higher.

I agree that sales volume and profit are different, but Disney has been ramping up commericals which cost money to air, and increased advertising expense will eventually eat up profit if you don't sell it fast enough even if your selling it at a higher price.

 

[Brian Noble]

You could be right, and all the sharp-pencil folks at DVD wrong. But, if you are hoping for a non-trivial decrease in prices per point---particularly at BLT---I recommend not holding your breath.

 

[htmlkid]

You could be right, and all the sharp-pencil folks at DVD wrong. But, if you are hoping for a non-trivial decrease in prices per point---particularly at BLT---I recommend not holding your breath.

I'm not waiting, I bought resale.. I just don't understand disneys logic, but then they keep raising ticket prices and we keep showing up so they must know something I don't.

 

[dizfan]

I agree that sales volume and profit are different, but Disney has been ramping up commericals which cost money to air, and increased advertising expense will eventually eat up profit if you don't sell it fast enough even if your selling it at a higher price.

DenLo pointed out the commercials being run are the ones from last year, so the only expense is the air time (which is typically lower during August).

By the way, here's some informal numbers. Using a very small sampling of contracts (start and end of July 2010 and July 2011). The price per point paid is off slightly, but I didn't feel like going through several pages of contracts to determine the actual prices.

2010 OKW $90/pt, SSR $90/pt, AKV $112/pt, BLT $120/pt
July 2010 $22,657,332

2011 SSR $99/pt, AKV $120/pt, BLT $135 (some $130 and some $140 so I averaged to $135)
July 2011 $24,635,205

I used Wil's (wdrl) numbers for just those resorts because they were the ones that sold in that month).

 

[tjkraz]

I'm not waiting, I bought resale.. I just don't understand disneys logic, but then they keep raising ticket prices and we keep showing up so they must know something I don't.

In general, I think you're reading too much into it. DVC has a good track record of rotating its marketing efforts. They run special meetings at the theme parks, regional sales gatherings, infomercials, friends & family discounts, webcasts, free cruises, free annual passes, etc.

Varying the incentives and sales medium are intended to reach out to different audiences. Certainly some alternatives cost more than others but it's unreasonable to believe that sales will climb or fall in direct relation to the amount spent on each program (which is also a mystery to us.)

It was no mystery to Disney that BLT sales would suffer in the wake of a price increase. The decline may well have been greater than anticipated. If so, they'll adjust and go forward. They've already made one adjustment--instead of a flat $140 per point it's not $150 with "discounts" of $8-12 per point. Net price is identical for most but offering buyers some sort of discount tends to have a positive psychological impact.

In the end, there were still buyers ready and willing to pay the asking price--nearly 600 buyers (or 20 per day). If it takes DVC 5 more months to sell the last of BLT instead of 3 months, I suspect the higher profit margins will go a long way to softening the blow.

 

[wdrl]

Keep in mind that unsold DVC points are still capable of generating revenue for DVD's bottom line because DVD can convert the points to cash reservations. Even if the rooms are discounted or if "free" dining is offered, I imagine DVD can still turn a profit on the points. I just checked the Disney website and found that a BLT Lake View Studio for 4/1 - 4/8/2012 is $575 a night. The point cost for that week, which is in the Premier Season, is 199 points. That comes out to $20.22 per point.

I think Disney is in a pretty good position when it comes to its BLT holdings: It can sell the points for $140+, or rent them out for about $20.

 

[ValpoCory]

Sorry to have to ask, but what does DVD stand for? I assume one of the D's is Disney and the V is probably Vacation.

 

[DenLo]

Disney Vacation Development - they are the portion of the company that actually builds the DVC resorts and owns the unsold points at each resort. And this component must keep a minimum of 2% of the points per the Public Offering Statement (POS).

 

[tjkraz]

What most generically refer to as "Disney Vacation Club" is actually two separate entities.

Disney Vacation Club is the timeshare management company. They coordinate reservations, set budgets, collect annual dues, etc.

DVD = Disney Vacation Development. That is the legal entity which constructs the buildings and sells points to owners.

There are many other legal entities involved (condo associations, other Disney companies from which DVD leases the land, etc.) but that's a high level overview.

 

[U2FanHfx]

We thought about adding on but with the economy the way it is, we were not sure how smart more DVC points would be. At this time, being liquid or closer to it is something you need to look at.

PS - We can afford it, just not sure about the purchase at this time.

 

[gatorskin76]

I agree that sales volume and profit are different, but Disney has been ramping up commericals which cost money to air, and increased advertising expense will eventually eat up profit if you don't sell it fast enough even if your selling it at a higher price.

Keep in mind that those commercials would also serve the purpose of promoting DVC as a whole and not just BLT specifically. So if that commercial prompts someone to call they could always say "we no longer have BLT available, but let me tell you about AKV".

 

[cheezNE1]

I'm sure majority of the would be dvc owners looking to purchase BLT prbly doesn't belong in this forum. So the $150 with discount prbly seems like a good deal to them. A friend of mine went for the DVC tour recently and thought it was a pretty good deal and was thinking buying into BLT. That is until he found out how much i paid direct when it first came out and the resale that is available out there. So bottom line is, DVD knows what they're doing. I'm sure they have top notch management with their thinking cap on all the time.