Fast-tracked DVC Construction at Walt Disney World

[PortMickey]

Everything seems to be pointing to the next DVC resort being built at Walt Disney World. All the rumors and county filings of the Buffalo Junction DVC at River Country and the Blizzard Beach DVC rumors seem to confirm it. According to Disney's 4th Quarter Earnings Statement yesterday "Earnings at the theme parks and resorts fell 8% to $316 million on higher costs and decreased results at Disney Vacation Club"

decreased results at Disney Vacation Club - Why would that be?
Aulani is a beautiful resort and will be a success, but it is a hard sell for DVC salespeople to make it your home resort. Current DVC members will love it for a nice alternate location, but not home. But most people buy in because they go to WDW every year. If you want to go to Disney World for New Years, you pretty much can only get into your home resort. Disney Vacation Sales are down because for the first time in 15 years they do not have a Walt Disney World Resort to sell. I think they will fix that soon.

As soon as they get Aulani sold out, the next big DVC announcement will be a new DVC resort at Walt Disney World! What are your thoughts?

 

[pilferk]

Um...no WDW resort to sell?

Both BLT and AKV are still selling.

I think the economy (and the higher credit requirements) are likely to be as much to blame for the DVC drop as anything else. People are just not using that home equity (if they have any) or applying for big ticket credit (or qualifying for big ticket credit) like they were in past years. And that's going to sock the timeshare market pretty hard.

But I do think the Buffalo Junction rumor, at least, has legs.

 

[doconeill]

I think the River Country location, is more likely than the Blizzard Beach/DHS location, at least from a desirability standpoint (just my opinion). I don't know if they will use the Buffalo Junction theme though.

BLT is reportedly near selling out. Not sure the status of AKV, but the DVC model requires them to keep building inventory to keep the sales income.

And if the next announcement IS another WDW DVC resort, that could put the nail in the coffin of the DC project.

 

[jlewisinsyr]

Disney Vacation Sales are down because for the first time in 15 years they do not have a Walt Disney World Resort to sell. I think they will fix that soon.

What are you talking about. There are two active DVC WDW resorts for sale right now. Bay Lake Tower and Animal Kingdom Villas and neither are close to selling out. Sales at both resorts have been underwhelming when compared to the pie in the sky expectations that Disney made when they opened the resorts.

BLT is reportedly near selling out. Not sure the status of AKV, but the DVC model requires them to keep building inventory to keep the sales income.

Bay Lake Tower is not close to selling out, they haven't even declared all of the inventory yet, which they'd have to do if they were close to selling out. Disney Vacation Development (DVD) has a lot of money tied up right now between Aulani, Bay Lake Tower and Animal Kingdom Villas and although DVC is a cash cow, the worst action they could take right now is by building a new resort (although the time line might work if they're thoughts is one of the two WDW resorts will be sold out by the time it opens) because it will siphon off sales from the other two active sale resorts.

 

[doconeill]

Bay Lake Tower is not close to selling out, they haven't even declared all of the inventory yet, which they'd have to do if they were close to selling out. Disney Vacation Development (DVD) has a lot of money tied up right now between Aulani, Bay Lake Tower and Animal Kingdom Villas and although DVC is a cash cow, the worst action they could take right now is by building a new resort (although the time line might work if they're thoughts is one of the two WDW resorts will be sold out by the time it opens) because it will siphon off sales from the other two active sale resorts.

You are correct...my brain cells took a vacation. It was GCV, not BLT.

 

[ChrisFL]

It doesn't seem to matter, Disney seems to be high on building DVC resorts/addons more than anything else these days, and of course the DVC kiosks and signs are ubiquitous (best kept secret, HAH!)

 

[eliza61]

It may be that dvc's are a big cash infusion for the mouse. generally when you purchase you are pumping a wad of dough up front to the mouse. not sure.

They may be simply announcing them to start garnering interest.

 

[anthony2k7]

What are you talking about. There are two active DVC WDW resorts for sale right now. Bay Lake Tower and Animal Kingdom Villas and neither are close to selling out. Sales at both resorts have been underwhelming when compared to the pie in the sky expectations that Disney made when they opened the resorts.

i think he must have maybe meant that there is currently no new DVC WDW to market - they've spent what? 2 years at least marketting BLT/AKV and now the marketting of these is struggling.

They're not new, wonderful, under construction, openning soon - buy now quick!!! scenarios anymore.

 

[anthony2k7]

It may be that dvc's are a big cash infusion for the mouse. generally when you purchase you are pumping a wad of dough up front to the mouse. not sure.

They may be simply announcing them to start garnering interest.

i still have no idea how the DVC model works, unless/until the maintenance fees are going to shoot up over the next few years

 

[jlewisinsyr]

i still have no idea how the DVC model works, unless/until the maintenance fees are going to shoot up over the next few years

It works like any other timeshare model.

DVD builds the resort, then sells interest. The cost of building the resort is significantly less then what they sell the interests in.

After people buy the resort, the owner's pay dues, imbedded in the dues are the general costs to maintaining the resort, Disney does pay anything to maintain the resort on going.

There is a little more to it then that, but the cash infusion occurs at the sale, after that there is a much smaller on going income stream to Disney.

 

[yitbos96bb]

It works like any other timeshare model.

DVD builds the resort, then sells interest. The cost of building the resort is significantly less then what they sell the interests in.

After people buy the resort, the owner's pay dues, imbedded in the dues are the general costs to maintaining the resort, Disney does pay anything to maintain the resort on going.

There is a little more to it then that, but the cash infusion occurs at the sale, after that there is a much smaller on going income stream to Disney.

Not to mention the ability to rent out unused rooms at a certain juncture... not sure the details of WHEN they can do it or if the resort is compensated, but I'm assuming that even if the resort is compensated, Disney makes a nice profit off of it.

 

[RAD]

It works like any other timeshare model.

DVD builds the resort, then sells interest. The cost of building the resort is significantly less then what they sell the interests in.

After people buy the resort, the owner's pay dues, imbedded in the dues are the general costs to maintaining the resort, Disney does pay anything to maintain the resort on going.

There is a little more to it then that, but the cash infusion occurs at the sale, after that there is a much smaller on going income stream to Disney.

Plus they have something else that most other timeshares don't have, WDW. So beside the $'s from DVC they've got folks spending money on admission media, food, tours, etc to feed the Mouses pockets.

 

[nuts]

Plus they have something else that most other timeshares don't have, WDW. So beside the $'s from DVC they've got folks spending money on admission media, food, tours, etc to feed the Mouses pockets.

And in 50 years they get the resort back.

 

[RAD]

And in 50 years they get the resort back.

For my BWV 'ownership' it's only 32 more years before they get it back.

 

[skiingfast]

Plus they have something else that most other timeshares don't have, WDW. So beside the $'s from DVC they've got folks spending money on admission media, food, tours, etc to feed the Mouses pockets.

This is part of the interest in building the DVC resorts, but only applies at WDW and DLR, not Hawaii or Washington DC or the east coast beach resort, Vero and Hilton. But those offsite resorts build interest in DVC in general. You say having a timeshare at WDW is great, but will I want to go every year? Oh I can go to Hilton Head ever few years and now Hawaii and stay with Disney or I can trade and go to Europe, OK.

DVC in general sticks guests in one major way. Average WDW goes a couple times in thier life. Once as a kid, and once with thier kids. As stated buying park admissions, food, merchandise. DVC members end up going about every year. So, many more times than a typical guest, which is a real revenue multiplier.

And in 50 years they get the resort back.

They don't exactly get it back. Commercial stick buildings are built to last a half century. This is a standard number. So at 50 years, you would expect that the resort needs to be raised and then built again. Of coures this still cycles, they build it again and sell it to a new group of DVCers.

 

[doconeill]

i still have no idea how the DVC model works, unless/until the maintenance fees are going to shoot up over the next few years

It works like any other timeshare model.

DVD builds the resort, then sells interest. The cost of building the resort is significantly less then what they sell the interests in.

After people buy the resort, the owner's pay dues, imbedded in the dues are the general costs to maintaining the resort, Disney does pay anything to maintain the resort on going.

There is a little more to it then that, but the cash infusion occurs at the sale, after that there is a much smaller on going income stream to Disney.

There are actually two "parts" to DVC. There is the selling company - the one that builds the resorts and sells the fractions. This is called Disney Vacation Club Development, Inc.

Then there is the operations side - the one that gets the maintenance fees, breakage fees (income from rooms rented to guests through CRO) and pays for maintenance, Member Services, etc. This is called Disney Vacation Club Management Corp.

The latter can continue to operate fine even if DVC completely sells out.

The former would cease to have any income, aside from resales. If there is an uptick in DVC exercising ROFR on owners selling their points, that might mean that they don't have much to sell on the horizon...

They would need to make sure they have inventory to sell in the future to maintain their income.