DVCers Subsidizing Disney?

[movie77]

Disney's quarterly numbers are out and profits and revenues are down, but inline with estimates. This caught my eye:

"Deep hotel and ticket discounts at Disney's domestic theme parks pulled in visitors, raising attendance by 3 percent, but sliced revenue by 9 percent and profits by 19 percent."

So we have to pay the same prices as always and face more crowded conditions with people getting deep discounts? So basically Disney's most loyal customers that purchase DVC and come back year after year actually subsidize the rest of visitors.

 

[Chuck S]

How do you figure that this means DVC is subsidizing the rest of the visitors? What "deep ticket discounts" are they talking about? Everyone pays the same price for MYW tickets from Disney, and in fact DVCers get $100/$125 discounts on APs. And, in truth, our resort stays with DVC equate to a 60% to 70% discount over the life of the membership. The difference, as with any timeshare, is they get their $$ upfront, vs. having to advertise discounts off of rack rate for the cash hotels.

I would bet the average DVCer spends less time in the parks over the course of a 7 day visit than a cash "once in a lifetime" guest. I know we don't go to a park daily, especially if we stay in a studio, as we schedule a couple of afternoons to do laundry and go off-site.

Also, DVCers are more likely to buy tickets from a discounter than directly from Disney as part of a package.

And don't forget, part of their profit is down because they no longer have a buyer for packaged DVC financed mortgages. So they have to wait longer for their $$ than last year.

 

[tecodis]

How do you figure that this means DVC is subsidizing the rest of the visitors? What "deep ticket discounts" are they talking about? Everyone pays the same price for MYW tickets from Disney, and in fact DVCers get $100/$125 discounts on APs. And, in truth, our resort stays with DVC equate to a 60% to 70% discount over the life of the membership. The difference, as with any timeshare, is they get their $$ upfront, vs. having to advertise discounts off of rack rate for the cash hotels.

I would bet the average DVCer spends less time in the parks over the course of a 7 day visit than a cash "once in a lifetime" guest. I know we don't go to a park daily, especially if we stay in a studio, as we schedule a couple of afternoons to do laundry and go off-site.

Also, DVCers are more likely to buy tickets from a discounter than directly from Disney as part of a package.


And don't forget, part of their profit is down because they no longer have a buyer for packaged DVC financed mortgages. So they have to wait longer for their $$ than last year.

Well said!


The last topic is probably one of the biggest impacts year over year for DVC!

 

[Brian Noble]

The value proposition of DVC for the purchaser is pretty simple: lock in future stays at a specific price point. Hotel rates will fluctuate with supply and demand, driven by the overal economic conditions. DVC dues will fluctuate with the actual costs of running the resort. Some of that is also influenced by economic conditions---as the economy heats up, you need to pay your housekeepers more to keep them, etc.---but less so.

In a sharply down economy, hotel rates have to drop, because rooms are sold as they come. DVC dues don't change (much) because the costs of running the resort don't change (much). On the other hand, in a rising economy (i.e. "normal") hotel rates tend to ratchet faster than inflation, where as dues should track inflation more closely.

Add to this the fact that you are effectively getting a "bulk purchase" discount on your lodging---in part because you are putting all the money up front, and in part because you are committing yourself to many nights in advance.

So, DVC performs better relative to hotel rates in a strong economy, and not as well in a weak one, but should still perform better than night-by-night rentals unless the economy collapses so far that what our Disney vacations cost becomes the least of our worries.

 

[DebbieB]

Disney doesn't profit on dues. Unless you bought this year, the original purchase price isn't going into this year's profits. I don't see where we are subsidizing the rest of the visitors.

All I know is I'm in a room in early December for 6 nights (BWV 1 bedroom) that has a rack rate of $500 per night, total $3000. It's 155 points, so dues for this year approx. $800. No way I'm paying $3000 (but I could get "free" dining). But $108 a month for dues for 250 points is affordable (original price paid off long ago). That's the beauty of DVC, don't have to come up with money to pay for a room everytime.