How much is the lack of AP sales affecting DVC?

[mz-s]

This simply isn't an accurate characterization.

Disney's average guest spending measures look at the entire vacation experience: lodging, meals, park admission, souvenirs, recreation, etc. Consider:

DVC members have kitchens or kitchenettes in every villa; infrequent guests are eating nearly every meal at a disney restaurant. DVC members have old MagicBands, t-shirts, popcorn buckets and other trinkets. When it comes to high-end experiences like Bibbidi Bobbed Boutique, VIP tours, building lightsabers and building droids, DVC members might do that once or twice. Meanwhile every single infrequent guest who walks through the gates is a candidate for these upsells. Passholders / DVC have likely ridden most attractions dozens of times. Who do you think is more apt to buy Genie+? Someone who has a "been there, done that" attitude toward attractions or someone who hopes to do anything-and-everything during what could be their only visit?

Add all of this up and DVC owners' average spending is undoubtedly on the low side. Especially so when given discounted Annual Passes as an admission option.

While a DVC member or pass holder may give Disney the same or more revenue over the course of the year (debatable), Disney must expend far more resources to cater to that individual. Pre-covid, this was Disney's playbook. They would happily pack 70,000 - 80,000 guests into the MK in hopes that each of them would at least buy a turkey leg or a soda while there.

Post COVID, Disney claims it is placing greater emphasis on improving the guest experience. Anecdotally, if Disney only wants to cap MK attendance at 50,000 guests on a typical day--in the interest of providing shorter lines, less crowded walkways, etc.--there's logic in favoring those who spend more each day of their visit.

A DVC member might make the claim "I spend $10000 per year on annual passes, DVC dues and other vacation expenses. Disney should want my business!" Problem is those dollars are likely buying 2-3 weeks of time at WDW annually. Right now, Disney's philosophy is that they would rather replace you with 3 families easy spending $15k for a week's visit. Or more precisely, at least get the DVC owner to spend more on their tickets (MYW vs AP).

Despite the price increases and policy changes, demand for Disney vacations continues to be strong. When you have a lot of people willing to visit, tough decisions have to be made about how to filter those crowds. Rise of the Resistance can only accommodate about 15k - 18k riders per day. If you have 30k paying $100+ to visit the park and half of them cannot ride, it's a problem.

We'll see how Disney's policies are tweaked if attendance starts to take a downturn. But let's not pretend that day guests are relegated to eating mayonnaise sandwiches and buying Walmart souvenirs after paying for their hotel and tickets. There are plenty of people with money to burn visiting WDW.

I guess DVC points and dues are free huh

 

[LPnerd]

I guess DVC points and dues are free huh

no, the are not! LOL In fact they go up even where there is no need and I have to wonder if that wasn't the plan all along?
I would also like to point out, ?ask, if disney food was better, don't you think the DVC mom's would enjoy a vacation from the kitchen as well? Kitchens came in handy the first few years , back in the 90's as a way to have late night snacks, breakfast, and maybe one meal in a week long stay.
Now I'm using the kitchen for almost every meal because the food from disney is at an all time low. It's all super salty, the sauces at one place are the same as the next and that means only one thing, they are all using premade crap full of preservatives! NO thanks, I can make that myself for 1/4 of the price. I'll stick to ice cream, dole whips, and cook simple meals in my room. I have money, I prefer not to waste it on barely edible food.

 

[tjkraz]

I guess DVC points and dues are free huh

The dues mostly cover operating expenses. Disney gets the management fee, which amounts to about $.50 - .60 per point for WDW resorts. That's not all "profit" since it covers operations of the entire DVC program (member services, member accounting, website, etc.) Everything else collected as annual dues is paid out over the course of the year.

As for the initial buy in, that's a decent chunk of change. But the reality is via DVC, members are already getting a discount on our accommodations. That contributes to the lower guest spending among DVC.

Put it this way: Imagine Disney operates one DVC villa and one hotel room. The villa allows DVC to sell about 9000 points at $200 per point, with owners able to stay there for the next 50 years. The hotel room is filled with cash guests paying $600 per night, 350 nights per year for the next 50 years. Care to guess which one is more profitable?

Don't get me wrong--there is still a place for DVC. DVC is fast cash with Disney able to earn interest off of the up-front. With hotel rooms, Disney has to pay all operating and maintenance costs which eats into the revenue stream. It must also work harder to fill hotel rooms including advertising, travel agent commissions, discounting when necessary, etc.

Still I'm guessing hotel rooms produce 2-3x as much profit over the 50 year span on the room alone. And for all of the reasons listed above, people in those hotel rooms tend to spend more on other aspects of the vacation experience.

I think Disney still values DVC itself and the monies spent by owners. Still, given high demand for the theme parks across the board, that hasn't dissuaded them from trying to boost the admission dollars spent by DVC owners. We'll see if that changes down the road.

 

[notatallmagic]

As a former out of state AP holder who pre-Covid was strongly considering DVC - the lack of new AP purchases was a deal breaker for us. Haven't considered it since.

 

[Brian Noble]

DVC plays two (or depending on how you count, three) important roles for TWDC.

First, DVC generates return-on-capital much faster than building a hotel and putting it into operation. This generally more than makes up for the fact that the rooms are ultimately discounted, because Disney can re-invest that capital in less than a decade*, rather than leaving it tied up in the physical plant of the hotel.

Second, DVC creates a captive audience--or at least, a "sticky" one. Those guests require much less marketing effort to get them to come back to spend money on a Disney vacation.

Third, DVC shifts the risk of changes in travel demand from the company to individual owners. During economic contractions, DVC Members are more likely to keep coming back, because the lodging is already "paid for." This third is really a combination of the first two, but maybe worth thinking about separately.

However, DVC (and the resort hotels more generally) are treated as a separate business from the theme parks. DVC and the hotels do not exist without the Parks---at least not in their current form---but still must stand alone. The Parks are measured by attendance and the revenue directly generated by that attendance: admission revenue plus in-park spend. The hotels are measured by something called RevPAR, or "Revenue Per Available Room-night;" that metric combines occupancy and average rate into one number.

DVC is yet a separate business. Timeshares are usually measured on two things: total tour flow (the number of people who do a sales presentation) and gross VOI sales ("Vacation Ownership Intervals"--for DVC, this would be total revenue from points sold). Results are sometimes presented in "Volume Per Guest" or the VOI sales divided by number of tours given.

-----
*: Offer void in Hawaii.

 

[HIRyeDVC]

Put it this way: Imagine Disney operates one DVC villa and one hotel room. The villa allows DVC to sell about 9000 points at $200 per point, with owners able to stay there for the next 50 years. The hotel room is filled with cash guests paying $600 per night, 350 nights per year for the next 50 years. Care to guess which one is more profitable?

Don't get me wrong--there is still a place for DVC. DVC is fast cash with Disney able to earn interest off of the up-front. With hotel rooms, Disney has to pay all operating and maintenance costs which eats into the revenue stream. It must also work harder to fill hotel rooms including advertising, travel agent commissions, discounting when necessary, etc.

Still I'm guessing hotel rooms produce 2-3x as much profit over the 50 year span on the room alone. And for all of the reasons listed above, people in those hotel rooms tend to spend more on other aspects of the vacation experience.

I agree for the most part. I just think Disney the company is so big that each divisions are in competition with one another for profits, and not necessarily working together for the greater good of the Disney company as a whole. DVD's sole purpose is to build DVC resorts, sell them ASAP, make profits, and build more DVC resorts. Disney Hotels, please correct me if I'm wrong, fall under DPEP, who have their own agendas and profit goals separate from DVD. I wholeheartedly agree that selling cash hotel rooms for 50 years is probably much more profitable than selling 50 year DVC contracts. But that doesn't mean Disney won't build more DVC resorts. I guess my point is, the Big Disney company may not care as much, which division is making how much money how fast. As long as they are making money? Executives may value tourists over locals and DVCers because they spend more money in the parks. But I don't think Disney wants to get rid of any group of fans. They want us all, and they want to keep the parks crowded.

 

[Pinnochio]

How much is the lack of AP sales affecting DVC?​

Well, for what its worth it stopped this guy from adding on to his DVC portfolio....

 

[Brian Noble]

I wholeheartedly agree that selling cash hotel rooms for 50 years is probably much more profitable than selling 50 year DVC contracts.

Depends on what you mean by "profitable."

Imagine two parallel universes. In one, Disney builds a cash hotel, operates it for 50 years. In the other Disney builds exactly the same building but sells it as DVC with a 50 year lease. It is plausible that the profit in Universe One exceeds that in Universe Two, and at the end of 50 years, Disney has exactly the same building it owns.

But there is one other important difference: In Universe Two, Disney gets its capital back much more quickly, and can use that capital to build another building and sell it as DVC as well. Heck, they might be able to do that two or three times in the 50 years.

Now which one is more profitable?

 

[HIRyeDVC]

Depends on what you mean by "profitable."

Imagine two parallel universes. In one, Disney builds a cash hotel, operates it for 50 years. In the other Disney builds exactly the same building but sells it as DVC with a 50 year lease. It is plausible that the profit in Universe One exceeds that in Universe Two, and at the end of 50 years, Disney has exactly the same building it owns.

But there is one other important difference: In Universe Two, Disney gets its capital back much more quickly, and can use that capital to build another building and sell it as DVC as well. Heck, they might be able to do that two or three times in the 50 years.

Now which one is more profitable?

I don't disagree. The wording I used wasn't definitive. In fact, I have no evidence to support either or. My larger point was that at the end of the day, Disney probably doesn't care who is more profitable, as long as they are BOTH profitable.

 

[Brian Noble]

Disney probably does care about which one is profitable faster, thanks to the vagaries of quarterly reporting for public companies.

 

[HIRyeDVC]

Disney probably does care about which one is profitable faster, thanks to the vagaries of quarterly reporting for public companies.

Perhaps. But some divisions, by nature, profit faster than others. DPEP, profits on a daily basis selling tickets to the parks that have been built decades ago. DVD on the other hand, takes years to design and build a resort, before it can start selling and earning profits. Does this mean Disney cares less about DVD than DPEP? Perhaps a little because Parks has ALWAYS been a golden goose for Disney. The engine that drives it all. But it doesn't mean Disney will get rid of, or prioritize less, what DVD will be doing. To be honest, I don't even know what we're debating about anymore. All I'm saying is, Disney is happy as long as all their divisions are making profits, unlike Disney+ and streaming.

 

[DeeBee3]

This simply isn't an accurate characterization.

Disney's average guest spending measures look at the entire vacation experience: lodging, meals, park admission, souvenirs, recreation, etc. Consider:

DVC members have kitchens or kitchenettes in every villa; infrequent guests are eating nearly every meal at a disney restaurant.

Just wanted to clarify that for someone like me, this is not accurate. Studios have a microwave and beverage cooler. Only thing I do is reheat food I bought at a Disney restaurant or from the quick serve in the hotel. So, the majority of the time I am spending alllllllll of the money at Disney except for the occasional snacks I keep in the room. However, I do realize that many can use the 1-bedrooms and larger which do have the kitchen.

 

[tjkraz]

Just wanted to clarify that for someone like me, this is not accurate. Studios have a microwave and beverage cooler. Only thing I do is reheat food I bought at a Disney restaurant or from the quick serve in the hotel. So, the majority of the time I am spending alllllllll of the money at Disney except for the occasional snacks I keep in the room. However, I do realize that many can use the 1-bedrooms and larger which do have the kitchen.

When discussing large groups, it's always about how the majority behave. I too have taken DVC trips where every meal was eaten in a disney restaurant. But as a whole, DVC members are far more apt to spend less in restaurants than cash guests who do not have full kitchens in their hotel rooms.

 

[tjkraz]

This is going to be a really unpopular opinion, but please hear me out. As a long time DVC owner, and a FL. resident we have seen so many changes through the years, however none have totally ruined our happy place like the past few years. WE used to stay on property sometimes, even after we moved about 17 min. away, for a staycation. No more. The prices killed it for us, even the fl. resident pass is no longer worth it IMHO, due to the price gouging in every other area.

Not unpopular. Unfortunately your response is exactly what Disney expects. With excessively high demand for the theme parks, Disney knows that raising prices will help reduce some of that demand. And that's what they've done.

Circa 2019, Disney's playbook was to pack as many people into the parks as possible. At most there were only 4-5 days per year when any attendance limits were imposed. Even then they were phased restrictions which blocked certain guests from entering MK or Epcot for a few hours on days like NYE or Easter. Aside from that, they openly sold annual passes and MYW tickets and had no barriers to entry.

Today they claim to be more interested in reducing those crowds. And methods of forcing that change have been higher prices, no APs and using Park Pass for reservations. For the next 8 straight days, no Park Pass reservations are being accepted for Magic Kingdom. 4 of those days also have limits on Hollywood Studios and/or Animal Kingdom.

Make no mistake: with lower prices, Annual Passes for sale and no Park Pass attendance caps, this week's crowds would be even larger. Perhaps significantly larger. Up to fire codes or whatever absolute maximums exist. That's not what Disney wants right now. It's willing to turn away some business so that those who are still willing to pay will (hopefully) have a better experience.

It's unfortunate that you've found yourself unable to justify the prices. But I'm not sure what else we expect Disney to do when demand keeps rising.

 

[HIRyeDVC]

Not unpopular. Unfortunately your response is exactly what Disney expects. With excessively high demand for the theme parks, Disney knows that raising prices will help reduce some of that demand. And that's what they've done.

Circa 2019, Disney's playbook was to pack as many people into the parks as possible. At most there were only 4-5 days per year when any attendance limits were imposed. Even then they were phased restrictions which blocked certain guests from entering MK or Epcot on days like NYE or Easter. Aside from that, they open sold annual passes and MYW tickets and had no barriers to entry.

Today they claim to be more interested in reducing those crowds. And methods of forcing that change have been higher prices, no APs and using Park Pass for reservations. For the next 8 straight days, no Park Pass reservations are being accepted for Magic Kingdom. 4 of those days also have limits on Hollywood Studios and/or Animal Kingdom.

Make no mistake: with lower prices, Annual Passes for sale and no Park Pass attendance caps, those crowds would be even larger. Perhaps significantly larger. That's not what Disney wants right now. It's willing to turn away some business so that (hopefully) those who are still willing to pay will have a better experience.

It's unfortunate that you've found yourself unable to justify the prices. But I'm not sure what else we expect Disney to do when demand keeps rising.

Ouch. Talk about unpopular opinions. Truth hurts. But must be said. Disney isn't a public service. It's a business. And Walt Disney would NOT be turning over in his grave. He's dead!

 

[nalabear]

We're heading over there tonight for the week. Just happened to be Tron opening week too. Entire week is MK sold out already so will be able to gauge 'full parks' vs our last WDW visit - Dec 2019 with ROTR opening month and holiday week pre reservations.

DVC is the quick $$$ returns and captive audience that will itself morph. DVC clearly doesn't mind the DVC rental market and so far it hasn't impacted the Disney hotel occupancy either. If Disney is able to continue selling DVC, rentals, and per capita up .... nothing will change their current course of action.

 

[andreas272]

Its the same savings its always been, a discount on pre-purchased rooms at Disney locations.

I'm fairly new to this board and time-shares and staying at Disney hotels, but did Disney offer annual passes to guests who stayed at the hotels or did they always have to purchase day passes?

Reading between the lines it seems that before Covid you could have bought an AP if you bought even a little time share contract, but if you stayed at the hotel side regularly you could only buy passes that were available to the general public?

 

[tjkraz]

I'm fairly new to this board and time-shares and staying at Disney hotels, but did Disney offer annual passes to guests who stayed at the hotels or did they always have to purchase day passes?

Reading between the lines it seems that before Covid you could have bought an AP if you bought even a little time share contract, but if you stayed at the hotel side regularly you could only buy passes that were available to the general public?

Annual Passes were always available to everyone. They were expensive, but if you could squeeze two week-long trips under a single pass, you probably paid a little less than two sets of MYW tickets. Anything more than that was basically "free."

Of course, you still had to pay for hotel / DVC, transportation, food, all at Disney prices. Regular visits to WDW have long required a significant amount of disposable income.

 

[Epcot Forever Forever]

I'm fairly new to this board and time-shares and staying at Disney hotels, but did Disney offer annual passes to guests who stayed at the hotels or did they always have to purchase day passes?

Reading between the lines it seems that before Covid you could have bought an AP if you bought even a little time share contract, but if you stayed at the hotel side regularly you could only buy passes that were available to the general public?

You could only buy the Silver pass if you were DVC or a Florida resident. No one else was allowed. It was several hundred dollars cheaper than the Gold pass that was available to everybody, and excluded Easter and Christmas, so it worked for approximately 95% of DVC owners. Several hundred dollars of savings on the silver pass times a family of 4 times 10 years = the difference between direct and resale pricing for most resorts.

 

[Sandisw]

You could only buy the Silver pass if you were DVC or a Florida resident. No one else was allowed. It was several hundred dollars cheaper than the Gold pass that was available to everybody, and excluded Easter and Christmas, so it worked for approximately 95% of DVC owners. Several hundred dollars of savings on the silver pass times a family of 4 times 10 years = the difference between direct and resale pricing for most resorts.

DVC was never eligible for the silver pass. We could get the gold, and then it’s replacement Sorcerer before the pause…

Only other option was the full price AL available to every guest.