Fate of 2042 DVC resorts?

[Jwaire]

Yes, but Disney seems to be making the calculation that they are converting hotel rooms (in prime properties) to DVC properties. That tells me, Disney’s metrics indicate profitability can be increased by shifting people to DVC instead of one-night stays.

They're only prime properties to us. These hotels (which I would argue are what make Disney World special) were built in a different era where you "go big or go home." They're huge and full of theming, but costly to run and take up a lot of land. Pre-COVID Disney couldn't fill these "Deluxe" hotels rooms consistently without discounting them substantially.

They're flipping them to DVC to get rid of inventory, offload maintenance costs on aging buildings and prop up resort P&Ls. It's not because they want week long stays from DVC guests. They want to sell 1/2 the number of rooms at twice the price per night of a pre-COVID stay.

Before the Polynesian was converted, those outer buildings would be half full on a typical stay (excluding the holidays). Grand Floridian was even worse. Wilderness Lodge was priced per night as almost the same as a moderate (just slightly above resorts like French Quarter and Riverside).

More demand with less supply equates to higher prices. Higher prices equates to more revenue. Add in lower expenses (less labor, less maintenance costs because now DVC members are helping pay, less amenities like boats, tours, transportation, etc.) to that higher revenue and you've got yourself a Chapek post-COVID business plan.

Cherish these properties. Eat at their restaurants and buy merchandise at their specific stores so Disney has the metrics to keep those amenities open.

We will never see anything like them again from The Walt Disney Company.

As for 2042, they're going to have to offer something. They need the maintenance dues and can't have all those points expiring in one swoop. Now, that's not to say the extension won't come with restrictions.

 

[Cfabar1]

The fate of Vero and HHI will be interesting…. I wonder who would even be interested in these properties. Maybe Marriott Vacation Club Would be interested in Vero, but it already has so many locations in HHI….

They are clearly built o be timeshares, and without significant investment would not make a tremendous amount of sense as a hotel property, unless as the national flagship for the Residence Inn, or something along those lines….

The other resorts will all be coming due 2042, I agree an extension of some sort seems likely, but it will be a tremendous amount of points to sell at that time…. And given the issues surrounding OKW extensions, I don’t know what type of process they will go through - most likely a new association.

If they decide to close some properties permanently, will they allow those new owners subsidized sale at other properties? One of the more interesting conversations…

 

[Narcoossee11]

I think DVC will 'start over' . Will look at each resort and access the value of each.
In the 90's , they did not know what to charge, now they do. Maybe a shorter contract time- 20 years ?

 

[PCFriar80]

I'll be 85 in 20 years so hoping that I outlive my BCV contract. I think I will, but nonetheless halfway through our contract I have no regrets. We timed it right from a lifestyle perspective and have some great memories, hopefully more to come!

 

[Cfabar1]

I’m hoping they do some sort of extensions…. I’ll be in my 50s, and would love to be able to re-up. Aulani expires around the time I’m in my mid-late 70s… that seems like a good time to quit DVC and enjoy other ventures.

 

[ajiuo]

I can’t imagine Disney offering an extension when they can just do a major referb. And then resell everything at full price. I think the best thing you could do is pick the right time to sell your contract and then use that money to help pay for a newer resort contract… then your kind of getting a discounted extension, in a way.

 

[TCRAIG]

I do not expect an extension on BC or BWV…points charts are just too good compared their Epcot ‘competition’ (ie. RIV)…what I do think will happen is for BWV to get a big refresh and new (higher) points chart…BC is so small that I can envision a tear down and new build - with a much higher points chart as well…

 

[sachilles]

I'm curious to find out what they'll do. They don't lack options. The land is developed and integrated into WDW and it's a prime location.
I would think boardwalk/beach club area would get redeveloped after 2042. Partially dismantle boardwalk, and rebuild a bit higher. Rent out what can remain in service as hotel rooms until a new structure can be sold off as the new hot DVC property. Similar to the concept of taking down part of CBR to build RIV.
I also think the various ideas of developing the spine of Epcot will play into the next option that presents itself on the beach club side.
As to Boulder Creek, I'm not sure what they do there. I think after expiration you renovate and resell, will maybe one more building along the lake behind the cabins, with perhaps a new dining option. They sell it as a new resort. Again rent the existing rooms will the new structure goes up.

As to the non WDW properties, I think that is a sell or lease off scenario.

Bottom line, I don't think an extension to existing contracts will happen, though I'd love it if it happened.

 

[Cfabar1]

They are going to need to sell a lot of points quickly. They might be able to renovate some of the buildings but there are so many points coming off the market all at once.

Beach club and Boardwalk I could see as most ripe for a major Reno that knocks them offline for a while. There are other resort properties right nearby they can direct guests.

If they keep Vero and HH I imagine they don’t do anything and just sell the points again. Not worth any investment beyond the annual dues. Maybe tweak the points charts slightly.

I think there will be major discounts for existing owners. Why wouldn’t you want to keep them in the system? But probably with some restrictions as to who qualified as an existing owner. Had to buy by such and such date or have to have at least x amount of direct points.

I’ll be curious whether those sales begin before or after the current contract expires. The timing will be fascinating to see

 

[sachilles]

The timing will be fascinating indeed. I think truth be told, they don't know what they want to do. I think they they've explored all the angles and don't see a clear winning direction.

 

[Sandisw]

Just think of all of the MF they would suddenly lose in 2042, 20 million points X 10 per point (rough estimate in 2042, probably more) is 200 million each year. I think Disney would have to come up with a plan to keep at least some of this cash flow continuing in the likes of offering small extensions for one of two of the 2042 resorts.

But if those resorts were to be shut down, the costs will be substantially less.

However, there will be nothing from preventing them from simply offering them for cash stays and not part of DVC until they have been updated and redone. They are not required to keep them DVC properties.

For example, shut down BCV and make it a new resort. Keep BWV and BRV villas open as a hotel.
In order to do an extension, though, they have to change the contract and ground leases and that would apply to all owners of that resort.

It’s why the OKW extension has been a failure and there are owners out there who never paid extra nor signed a quit claim deed who may end up with an extension for free.

 

[Cfabar1]

Can you explain how the OKW owners may end up with a free extension?

 

[Liquidice]

If they decided to do an "extension" they wouldn't extend the existing contract, they would just a sell a shorter DVC contract as a new condo association. So as an example BWV2 for 20 years at a reduced price and market it as an "extension" - they could come up all new point charts and not do anything - if they wanted. The contract would start in 2042 and run until 2062. That is assuming they want to do some kind of extension like that.

This is thanks to the OKW fiasco.

The only reason I think they might do it is to give them an option and increase their cash flow while refurbing the other resorts.

I said it in my earlier posts, but 3 WDW resorts all end at the same time - why not demolish BCV and build up into a tower, take BRV offline and fully refurbish it - and keep BWV as a short contract? Just throwing it out there as 20 years, could be whatever Disney decides. Then after the BWV contract ends they can refurbish it - or maybe tear down the entire Boardwalk structure and rebuild it. At that point it would be over 65 years old.

 

[Frederic Civish]

Looking at it from Disney's point of view, I don't see them selling an extension. How is it worthwhile to go to the trouble to make a sale, but not get the benefit of the WHOLE sale. It also doesn't make much sense to try to 'time the expiration' of all of their properties to the same year. That just gives them the headache of MORE properties to try to deal with at one time.

I think they will use this as an opportunity to evaluate DVC and their policies. They will possibly come up with some new plans and new ways of doing things and new expiration policies, going forward. Then they will resell Beach Club, BWV and others as NEW IMPROVED DVC Plans.

 

[starry_solo]

Honestly, I see them to be used as suites like extended stay hotels, while construction goes on to refurb and re-brand the new BCV and new BWV.

 

[Mikey15]

Heck, they'd probably be able to work some of their renos in (unless they're tearing things down and redoing completely) out of the dues of existing owners.

When a refurb happens, that budget is coming out of reserves that owners have paid into, right? One way to get those reserves to $0 by Jan 31, 2042 is by refurbing rooms in 2041...

 

[Cabius]

My assumption has always been that Disney's long-term goal is to have ~25 DVC resorts that expire ~every 2 years. That way they have plenty of time to sell out each new resort, one at a time, with a new one coming online just before the last one sells out. After that, they can just repeat the cycle for centuries without having to build new buildings, responding to increased demand by raising prices for new points. It's a self-sustaining money-printing machine.

Having a glut of resorts come free at once isn't ideal, so I assume that the 2042 resorts will see a variety of mechanisms designed to stagger their re-entry to the market. My guess is they'd operate them as hotels for a period of time, perform renovations where appropriate, and then re-list them one by one. They might offer an extension to owners if they don't want to pick up all that hotel inventory at once, but I know the legal machinations are complicated. (Maybe less of an extension, and more of a new 5- or 10-year year term marketed to current owners?)

Either way, the endgame for Disney is the same: churn baby churn.

 

[Cfabar1]

Yes I think the term extension many take to mean to be the OKW style extension, but I think is more likely is a ten to twenty year new contract that existing owners at first can choose to buy into for some of these resorts, and maybe later the general public as well.

 

[My Laughin' Place]

There are 5 DVC resorts that will all expire in 2042 (BCV, BWV, BRV, HHI, VBR).

Even if Disney sells off HHI and VBR, they potentially have 3 resorts that they would need to do something with.

If Disney did nothing and just decided to resell BCV, BWV and BRV - you suddenly have a lot of DVC points for sale, which could be a challenge to sell.

Theoretically BCV could be completely torn down and rebuilt as a larger tower, but BWV and BRV are attached to hotels and I don't see them tearing the entire structure down.

It would be a lot of capital investment for Disney to renovate all 3 buildings at the same time, not to mention it would mean a loss of income while they renovate.

It will really depend on what Disney's financial situation is around that time but I personally think Disney may have to take a different approach to the 3 WDW DVC resorts.

For example - what if they took BWV and offered a 20 or 25 year contract to existing owners of BCV, BWV and BRV? Not everyone will want that, but some people would buy in. Then they could sell whatever remains to other DVC members or the general public. BCV gets torn down and a brand new resort gets built in its place, and BRV perhaps becomes hotel rooms? Or BRV rooms could get a quick refurb like the Grand Floridian resort studios and be added to the CCV association with the additional points being sold similar to the way Grand Floridian works - there would be 26 years left on the CCV deed in 2042. Just thinking of how Disney could manage things.

I believe OKW is due to expire at the same time, unless the "one time offer" extension was purchased.

 

[TisBit]

I think there are a LOT of ideas here that are valid for what to do with the 2042 resorts and I think what will actually happen will be a combination of many of them. As pointed out, having that many points "expire" and then be up for sale again will be a nightmare and will take forever. I could see where either Beach Club or Boardwalk is "extended" and the other one is put into a major refurbishment and prepped to be sold again. They can then offer members of both resorts an "extension" or short contract, say 10-20 years at the other resort. Then when the extended boardwalk contracts are close to expiring, the new renovated beach club full contracts come online and owners buy there to stay in the system and the area they love. This similar strategy could happen with the other resorts too.

The points situation is only one of things Disney will be dealing with. Imagine the number of owners that will also fall off the rolls. While most on the Dis own multiple properties, most people only own one or two and try to use their points. These owners will suddenly have less points or no points at all and Disney will want to get them back in the system. Then you have the long term owners who may be "aging out" and no longer want their or use their DVC. But their kids/grandkids, etc who are using their points may want in. Just this last trip we were talking about DVC with my 18 year olds and how it would expire. My son said, wait what about me, I need to buy my own DVC?

So they will have to balance keeping people in the system, renovating some properties, not overwhelm the system with points and appease people (especially boardwalk/beach club) who are super fans of their resort/location.