Future of Disney and future of DVC

[WolfpackFan]

I hope this doesn't stir up too much controversy but it is something that concerns me as I wrestle with the decision whether to buy or not. I am concerned about the apparent overall decline in Disney in general and if it would eventually have any effect on a DVC membership. For instance, lately WDW has been offering some mighty good discounts on stays in regular rooms. You can get rooms this fall in several of the Deluxe hotels for less than $150/night. Then if you read over on the Resorts board, you keep hearing about all of these horror stories of folks who have received very bad treatment from CM's at various resorts or at CRO. Other things I've noticed - we've had two major malls open in our area lately, neither included a Disney Store and in fact the Disney Store was closed in a mall in our area recently. In general, I just get a picture of a company in trouble. Should I be concerned about buying into DVC in this environment? Also, being able to get Deluxe resorts at $150/night really does cut back on the financial benefit from buying DVC. I wonder how long these deep discounts will continue? If this is a new model for doing business in the future, that definitely makes me think twice about buying.

 

[Richyams]

It is a crap shoot to assume that you will find those discounts for the next forty years.

Even if I was assured of finding good discounts for the next forty years, it doesn't match staying in a one bedroom or larger unit.

Disney, as with all things in business goes in cycles. I just don't Disney as in trouble or on a ling downhill slope.

Usually, prices are a good indication of health. Is DVC selling at an all time high now?

 

[Doctor P]

I'm not worried. Disney as a company has some weak spots, but it also has some strengths. The travel industry is still way down, and Disney is feeling its share of the pain. In the long run, I am betting on Disney surviving and thriving.

 

[sandieb]

I am concerned about the apparent overall decline in Disney in general and if it would eventually have any effect on a DVC membership.--------
Hi, I am not a business expert (I am a nurse and can treat all kinds of boo-boos), but I can say that our stocks are down in every category. Isn't Disney's performance in line with that of other travel industry related companies? Wouldn't we expect this to change as the economy recovers?
I have nothing but good experiences to relate after a 9 day stay last May. We stayed in the Fort Wilderness Cabins, and we toured the parks daily. All of the Disneyworld employees we met went out of their way to make our trip enjoyable. The grounds and facilities were wonderful. Based on our experience, our tour of the DVC offerings, and desire to share this terrific vacation experience with our children and grandchildre, we bought into DVC. If our experience had been less positive, I am sure we would have made a different decision.
Of course make your own decision, but I am very happy with mine. Sandie B., Freeland Maryland

 

[RweTHEREyet]

Actually, Wolfpack fan, we have had 2 Disney Stores to close in our area, one in Cary and one in Durham. However, the one at Crabtree is seeing a tremendous increase in business as a result of the other 2 stores closing. Just proves that a Disney fan will find Disney stores and merchandise no matter how far they have to travel to shop.

 

[jcodespoti]

I agree with Rich. The way things are in the economy its just tough for such a large entertainment company to make the stock price move up. With ABC in the tank ratings wise the can't demand high rates for advertising, with the job market in flux nobody wants to shell out large sums of cash to go to ANY park (Six-Flags thought the might have a good summer...wrong).
I bought DVC because I don.t want a "regular" room (even at a deluxe resort) for $150 a nite. Also There is more in Central Florida than WDW (I just swore!!!) Its a nice base to have and all four resorts are awesome.


Joe in CT

 

[timC]

The farther forward you look, the less you can predict and therefore the greater the risk.... In 30 years what will Disney company be in to; what about the aging population and it's effect on WDW; will Disney even own WDW in 30 years; maybe the themepark concept will die out completely; maybe your family will move on to some other vacation attraction...who knows.

Right now, the travel/vacation industry is in a down cycle. The good thing about cycles, however, is there is usually a recovery. America loves to have fun, so I'm confident there will be a recovery.

Near-term (next 10 years + ) DVC works for my family, our livestyle, and WDW will continue to be a fantastic place to be. I have 100% confidence in my purchase.

One more thing... Disney also seems to see good times ahead for DVC too. Look for the construction cranes at WDW...they are all building DVC resorts! As a business Disney loves DVC, as a consumer...so do I!

 

[jimmytammy]

I think Disney is in things they do for the long haul. They make sure, in fact they typically go overboard with R&D before they do anything. The biggest flop I have seen them make was with GO.com their internet provider.

We are still new to DVC but I still feel Disney as a whole is a very STRONG company including DVC. I would take the opinions of those veteran DVCers who have seen the ups and downs of DVC. I know I value their thoughts and opinions very much, in fact I wish I would have known about this website before we bought just to have gotten their expertise on the subject. I probably would have bought sooner.

Remember this also, it aint gettin any cheaper, another reason to kick myself. I waited more than a yr. to purchase and the price went up. Dont second guess yourself too long.

We go to Dis store in Greensboro most of the time but have visited the store in Durham that recently closed. Employees at Greensboro store told me that Disney will probably open a store at the new mall at Southpoint in Durham although it may be 2 yrs. The reason being, Disney does research on the market and sees how the other stores at the new mall do financially before they put a store there. Sounds like smart business to me.

And by the way, GO WOLFPACK!!!!!!!!!!!!!!

 

[Granny]

WolfPackFan....I'd be less than honest if I said that I never worry about Disney's financial woes or whether they will be able to maintain their current standards.

But we bought into DVC anyway. First of all, WDW and the resorts, while experiencing softness in attendance and bookings, continue to be a strong source of profit for Disney.

Second, in its 10 years of existence, DVD has shown no signs that they intend to let the DVC homes become less than first class. Witness the refurbishing, especially this year at BWV.

Third, I agree completely with Richyams in that comparing the hotel room rate to buying DVC is missing the point somewhat. DVC provides *better* accommodations than even the nicest deluxe resort. $150 a night is a great price but does anyone honestly think that will become the norm for the future?

Lastly, DVC has a benefit that is not necessarily financial. It forces me to take vacations...not just the quick trips I used to squeeze in and felt like I needed a vacation when it was over. I mean quality vacations, at a much slower pace, in a beautiful setting to allow the family to stay together for a week or so without living on top of each other.

Best wishes in your decision process. It's a big investment, but most of us just wish we had done it sooner than we did.

 

[JSjoquist]

Just another angle on the status of Disney as a company. I know that there are a lot of people (me included at times) that are not totally happy with the performance of Michael Isner, however, in our local paper yesterday there was a report that Isner recently bought over 10 million dollars worth of Disney stock at historically low prices.

I doubt that Isner would be buying up such a large block of stock unless the comapny as a whole was solid and would be around for a long time.

As for buying into DVC, what other folks here have said is oh so correct, 40 years from now it's worth 0 (depending on what the company decides to do at that point, but I don't expect to be worrying about it since I'll be over 80 and my kids and (gasp) grand-kids will have had many fun trips long before that !!). You're pre-paying for 40 years of vacations, and if you're like me, you'll stay at levels you wouldn't if you were having to pay for them each time. Enjoy it, have fun, and remember you only go around once in life . . . .

 

[Goofy Fan]

Do your math first, then ask yourself is it worth it. Remember, travel is down everywhere post 9/11. DD hotels can be had for $25 per night. If you think that you can get that bargain for the next 40 years during Value Season, you might convince yourself that DVC isn't worth it.

Using your example of a Deluxe resort for $150 per night + taxes (with discounts right now this looks like a room at the Contemporary Garden Wing or a Courtyard WL), you would pay approx. $1,200 for 7 nights. If (BIG If, Impossible If?) by chance room prices happen to stay at $150 per night for the next 40 years, you would wind up paying $1,200 per year for 40 years or $48,000.

7 nights in Value Season (DVC Choice Season) at OKW would require 172 points for a 1 BDR. Remember with DVC, you never have to worry about points going up for the next 40 years. Let's say you can find a resale at OKW for $70 per point, which is a little on the high side right now as most resales are in the $65 per point range, but lets say $70 per point. That comes to $12,040 for 172 points for the next 40 years. Thrown in dues for $3.77 per point, and you'll pay $648.44 per year or $25,937.60 for the next 40 years. Your total cost amounts to $37,977.60.

Seems you would overpay by more than $10,000 for 7 nights a year at the Contemporaryy Garden or Courtyard WL for the next 40 years. Some people would then say they only go once every other year. Well, just divide by 2 on both ends and you're overpaying by $5,000+ for the next 40 years.

Again, your hypothesizing that room rates will never, ever go up over the $150 per night. Doing a little research on WDW room rates over the years will show you how much they have risen in past years. And don't forget the accomodations as others have pointed out. At the Contemporary or WL, you get a hotel room with 2 queen beds and a TV. Since the 172 points I used as an example was a 1 BDR at OKW (actually a better comparison would be a studio for 82 points for 7 nights, but let's play out the 1 BDR), you get a master bedroom suite with king bed, TV, jacuzzi, full kitchen with utensils, living room, dining area, patio, washer/dryer, second TV, and sleeper sofa.

Getting back to your question:

Also, being able to get Deluxe resorts at $150/night really does cut back on the financial benefit from buying DVC.

So, isn't this the old apples and oranges comparison exercise? This is why we buy DVC. We see the next 40 years, not this fall when travel is down post 9/11 and discounts are enticing people to travel again.

 

[littlestar]

The economy always goes through cycles. When we got married in 1979, the economy was not too great. The early 80's were pretty bad, too. Mortgage rates up around 18% if I remember right. Tight job market, etc.

We financed our Disney points. I felt better not paying up front the whole amount. The way we are using our points, we are getting three trips a year. We added up what we would have spent for three trips in one year at a deluxe and believe me, we are not paying that much in payments and dues! We do pay extra on our 10 year financing through Disney (plan to pay it off in four years). But, like I said, I felt better not paying for all of it up front. I like leveraging the money. We will break even at about four years. Even IF Disney got into trouble after four years, we would come out even.

Something else to think about on Deluxe discounted room rates. After kids reach age 18, you are charged an extra $25.00 a night for each adult over age 18 in the room over the first two adults. That was going to add $50.00 a night to our Deluxe hotel stays. Even if I snagged a $150 to $180 a night "deal" I still had to tack $50 more on a night.

 

[ralphd]

1. The DVC resorts are a separate corporation and will be owned by the members until January, 2042.
2. Disney is going through the same financial problems as the entire travel and entertainment industry.
3. Vivandi ( parent company of Universal) is in much worse shape than Disney. Disney is evaluating the Universal assets that may be of interest because Vivandi will have to divest itself of several operations.
4. The Disney board may make some changes in the Disney management group. That happens when corporate performance is below market expectations.
5. Think Disney has handled the problems since 9/11 as well as could be expected. We were in the parks on 9/11 and were at WDW in July when Epcot had the power problem. Think Disney and the CM's did a very nice job handling both situations.

We do not have any concern about our DVC investment. As a matter of fact, we have purchased Disney stock since the drop and may purchase more later.

ralphd

 

[manning]

Timc, your right about that. I remember an older family member (I was young then) say "you make all these long term plans, get everything in place and know you made all the right decisions. Then life happens and changes everything. Just do the best you can and don't worry about it"

Life time planning is like corporate five year planning. The second year you make another one. Take your best educated guess and don't worry much about it. I'll guarantee you one thing, life will happen.

 

[Lisa P.]

This is a good question and it does come up once in a while. There's no guarantee that discounts will continue. There's no guarantee that they won't either. You kind of have to look at how you'd expect to vacation in the near future (next 5-10 years) and make a judgment call based on that.

Here's a question that I've never seen answered. It would require a real "financial person" to answer adequately, not just a regular, number-crunching, curious person, like me. If Disney were to continue to offer deeply discounted rooms for, say another 2 years, then for, perhaps 1 out of 3 years in the future.... which would be the better strategy? Buying now and locking in today's rates? Or buying later, after Disney presumably recovers and the discounts dry up and DVC rates have gone up too but one has kept the use of their own money in that time rather than tied it up with DVC?

Does that even make sense? I guess that I just wonder sometimes whether it's wise to buy without being certain. DVC and other timeshares will still be there in a few years.

Also, regarding that Smart Money article, it was posted on TUG that the author tried to locate very dissatisfied, disgruntled owners via a posting on TUG. In at least one telephone interview, she was allegedly not interested in hearing anything positive and did not include any positive information from that person in her report. Also, her information about how RCI works was flawed. Perhaps she wanted a more sensational piece than just reporting stories of all the wonderful memories people have created with their families via timeshare ownership.

 

[mapny]

I don't think of my DVC membership as an investment, but rather as a way to pre-pay for vacations. I have financed my purchase a OKW (5 years left to pay) and will be financing my purchase at BCV over 10 years also. Since joining in 1997, I have taken three trips to WDW, a Magic cruise and stayed two nights at The Plaza and two nights at the Shelburne Murray Hill, both in NYC. I NEVER would have done any of those if I were paying for lodging all at once, rather than a set amount every month. I also would NEVER have been able to afford the Magic cruise and wouldn't even have considered every staying at The Plaza. In addition, on one of my trips to WDW, we were able to take my sister with us as a 50th birthday present. I realize that I will own nothing tangible in 40 years, but will have had many fun and memorable vacations. That's more than worth it for me.

 

[Mai Ku Tiki]

And for those who are fairly pleased with the $150 p/nite for Deluxe rooms, remember....those same rooms were $35 p/nite in 1972.....30 years ago!!! Where will they be in 40 years????

 

[goldenbear]

The most important thing about the DVC or any timeshare is to not look at it as investment or even a money saver. It more of vehicle to "force" you to take future vacations in extremely well-designed accomodations that offer you the ability to stay in more than a basic hotel room if you choose. My thought has always been that if Disney goes under then the world will be pretty much hosed up anyways.

 

[Lisa P.]

Mai Ku Tiki, the same could be said for timeshare ownership and maint fees, 30 or 40 years from now. Back in 1972, they didn't cost nearly what they do today either. It's easy to justify the financial decision to buy into DVC when one would normally pay $200-$450 per night to stay at a Disney hotel without DVC. But it gets trickier when one is looking at $150 per night and no $10,000-$25,000 purchase price. JMHO.

 

[SlyHubby]

Originally posted by Lisa P.
Also, regarding that Smart Money article, it was posted on TUG that the author tried to locate very dissatisfied, disgruntled owners via a posting on TUG. In at least one telephone interview, she was allegedly not interested in hearing anything positive and did not include any positive information from that person in her report. Also, her information about how RCI works was flawed. Perhaps she wanted a more sensational piece than just reporting stories of all the wonderful memories people have created with their families via timeshare ownership.

That may very well have been the case. I also recently contacted the editor/author of an article (on another subject) from another magazine to contradict their story line. They weren't very much interested in hearing the opposing side to their story. Isn't proper journalism supposed to be "unbiased" and give a fair perspective of both sides of the story?