Interesting Chat with DVC Executive Office yesterday

[Chuck S]

The one argument I would make on your post (which is probably very accurate), is that even though the audience is captive, its also among the most loyal and (although I lack the stats to confirm) I would bet one of the most consistent spenders. So even though DISNEY already has the lodging portion, by offering some more perks, potentially DVCers could make MORE trips, spend a longer time on a trip, spend more at the parks, etc. Ultimately, it could lead to more points purchased.

That would be the justification.

However, knowing the way Disney has acted in this regard over the years, my guess is you are right on your predictions.

Consistent? Perhaps, so.

However, if you compare the spending habits of a consistently returning DVCer per room night to the in-park spending pattern of the one time, or occasional, cash resort guest, the cash resort guest would almost surely be substantially more. And business tend to look at that daily total as well as the overall pattern per customer. Daily pattern = immediate return, returning guest less immediate return, but a long term dependability. Business need both. And the more points a person owns, likely the more that individual spend long term, justifying both the current cash resort discount programs and a tiered reward type program for high point owners.

But, as others have said, it would need to be funded outside of dues.

In fact, administratively, the small point owners are costing the higher point owners more in dues because they equal more mailing, etc. This could also be used as justification for the perks.

That said, I am not anywhere near a 1000 points, I have just under 350, so I likely would not be considered an "upper tier" owner.

To those that think it would not be legal to grant, say, an 8 month non-home resort window vs a 7 month non-home window to high point owners, based that dues pays for the reservation/MS system, I disagree. It cost the same for MS to make a reservation at 8 months as it would at 7 months, so there would essentially be no increase in costs, other than to flag the account in the computer. And the new system may already be capable of that.

 

[TisBit]

Consistent? Perhaps, so.

However, if you compare the spending habits of a consistently returning DVCer per room night to the in-park spending pattern of the one time, or occasional, cash resort guest, the cash resort guest would almost surely be substantially more. And business tend to look at that daily total as well as the overall pattern per customer. Daily pattern = immediate return, returning guest less immediate return, but a long term dependability. Business need both. And the more points a person owns, likely the more that individual spend long term, justifying both the current cash resort discount programs and a tiered reward type program for high point owners.

But, as others have said, it would need to be funded outside of dues.

In fact, administratively, the small point owners are costing the higher point owners more in dues because they equal more mailing, etc. This could also be used as justification for the perks.

That said, I am not anywhere near a 1000 points, I have just under 350, so I likely would not be considered an "upper tier" owner.

To those that think it would not be legal to grant, say, an 8 month non-home resort window vs a 7 month non-home window to high point owners, based that dues pays for the reservation/MS system, I disagree. It cost the same for MS to make a reservation at 8 months as it would at 7 months, so there would essentially be no increase in costs, other than to flag the account in the computer. And the new system may already be capable of that.

I am not sure that there is even a cost associated with the perks. If they have a discount for a specific restaurant, does DVC pay for this perk? Or is it just an agreement between the two. If they discount tickets or dining plan, the only issue would be if they have to reimburse for the other portion. I doubt DVC pays $100 or even a portion of any AP discount that a member buys.

I completely agree with you on the booking aspect as well. The fact that one group can book earlier than another does not increase costs, MS is already paid and on standby. Now, if they opened a special call center or such, there could be an increased cost, but even that can be justified if it is used for other purposes.

I am not sure the law even requires that every member must have access to a particular item in order for it to be funded with dues....as long as it is used by at least a portion of the membership and not just the general public, etc. Look at Concierge level service, does DVC have to seperate out the money they pay to provide it outside of regular DVC dues? Someone at AKV might never stay at Concierge, but there is money being spent on it and not every member has access. Just because there has not been an exclusive perks in the past does not mean that they can't be incorporated somehow, if other timeshares are doing it it can't be difficult to deal with the funding portion.

Either way, Disney knows how to play a shell game with money to show that it was done however they need to do it (use developer marketing money, etc).

T

 

[Chuck S]

I am not sure that there is even a cost associated with the perks. If they have a discount for a specific restaurant, does DVC pay for this perk? Or is it just an agreement between the two. If they discount tickets or dining plan, the only issue would be if they have to reimburse for the other portion. I doubt DVC pays $100 or even a portion of any AP discount that a member buys.

I completely agree with you on the booking aspect as well. The fact that one group can book earlier than another does not increase costs, MS is already paid and on standby. Now, if they opened a special call center or such, there could be an increased cost, but even that can be justified if it is used for other purposes.

I am not sure the law even requires that every member must have access to a particular item in order for it to be funded with dues....as long as it is used by at least a portion of the membership and not just the general public, etc. Look at Concierge level service, does DVC have to seperate out the money they pay to provide it outside of regular DVC dues? Someone at AKV might never stay at Concierge, but there is money being spent on it and not every member has access. Just because there has not been an exclusive perks in the past does not mean that they can't be incorporated somehow, if other timeshares are doing it it can't be difficult to deal with the funding portion.

Either way, Disney knows how to play a shell game with money to show that it was done however they need to do it (use developer marketing money, etc).

T

I don't think any of the current discount perks are funded, they are given as an incentive to increase the business/use of the particular entity offering the discount.

The funding was the reason given for discontinuing the valet perk, and I would consider the concierge level as a booking category, not a "perk" so it is funded by dues, and thus requires more points to stay there. In otherword, the concierge level offering is part of the physically sold timeshare, not a perk.

 

[DVC Grandpa]

Put me into the camp that would advocate perks which would be something all members could take advantage of…discounted tickets, corporate 12% or FL residence prices would be a easy and one I believe would be consistent with the $100 discount given for the AP. The AP is a good deal but there are DVC members that can not take advantage of that perk. If you have kids and grandkids and the points to for accommodations’, the tickets still can be one thing that torpedoes any plan to gather at Disney for any reason. We have had family reunions at Disney all 19 of us, but as grandkids get older, and there are more of them, prices increase and going to Disney with everyone becomes something done in the past. I think Disney is about family and kids so let’s advocate “perks” that can assist in generate more family friendly gatherings, whatever that may be.
PS, yes, I may be one who would benefit in any tiered benefit program but I would rather forgo those perks for getting ones that all members can use which will make it easier for families to take that trip to Disney.

 

[RAD]

4) Tiered benefits being discussed - he would not offer any specifics on this, only said it was actively being discussed.

That one has me a bit worried if it's the one based on the number of points someone owns. All the current benefits are opened to all the owners, I'd hate to see a 'class' system of benefits be implemented.

 

[WDWMom]

I am not sure if you are calling me a liar or what, but the CM said everything that I posted to me. He did, in fact discuss at length #1-3 with me. He was very nice and informative, and stated all things very rationally. He told me that he couldn't discuss the specifics of the tiered plan, but that it was actively being discussed in the office. Will any of these things come to be? Who knows, but if they did, I would certainly buy more points to take advantage of them. Just like my family takes advantage of the AP discount so that we can take 2-3 trips per year.

I was not referring you, sorry if it came off that way. I totally believe what you said

The comment by WDWMom is not in reference to what you shared. It was in reference to the fact that Brian and I believe that the things mentioned in your listing #1-3 are in fact the very type of thing that will be part of a tier system. He simply did not formally state that this would be included in a tier system.

No, but he said he couldn't discuss what was being said about the tiered benefits so what he did discuss with the OP SHOULD NOT be about tiered benefits. It's pretty simple logic.


I am also reasonably sure he did not state that #1-3 would be offered to every member either.

I never said or insinuated as such


A tier program is coming. There is only so many things that DVC can reasonably offer and the type of things listed are the type of things they can offer.

Sammie is correct. I was pointing out that their reasoning was flawed and using your original post to prove my point. Not saying they couldn't be correct, but just not according to your post. They have no basis to their reasoning other than opinion, where you were posting a conversation that they can't prove has no merit.

 

[Brian Noble]

I have no reason to doubt you but if true DVC must have been very stupid. People lose their jobs. Get divorced. Have different priorities. Resale should have been anticipated. All they have to do is exercise their ROFR a lot for a few months. The companies that broker DVC sales will get tired of wasting their time.

I think what Sammie was alluding to was not the fact that resale exists. Rather, it is the growing spread in prices.

That said, your point still holds. Timeshare is an impulse purchase that requires a lot of marketing to sell at developer prices. Almost no one wakes up in the morning thinking: "You know, today I think I will obligate myself to pay for the operation and upkeep of luxury condo lodging for the next 40 years, and spend tens of thousands of dollars for the privilege." Sure, a *few* do---and those are the people who go into the purchase decision with research and careful thought. They are also the people who know about and increasingly consider resale. But, most people buy because they were on vacation, decided to go on a tour, and got caught up in the idea of bottling this "vacation magic" feeling and reliving it forever "at today's prices." In other words, developer demand is manufactured, but resale demand is organic.

As the system grows, the supply of resale points grows also, for exactly the reasons you state above. But, unless the *demand* for resale points keeps up, eventually prices *have to* diverge. In the early years of the program, resale demand did keep up---largely, I think, due to long-time Disney visitors that predated the existence of DVC. But, it seems as though we may be past that now. DVC hasn't been Disney's best kept secret for at least five years. If there are more than a handful of established fans who haven't at least thought about DVC, I'd be surprised. Instead, I think DVC is more or less resigned to marketing to relatively new guests, or existing members as add ons.

And, I don't think the developer/resale price split is purely due to the economy, though that is a significant part of it. The recession has disproportionally impacted folks on the lower end of the economic ladder, and that's not where DVC's core market sits. Folks higher on the food chain have been seeing recovery in their specific corners of the universe; for example, tech companies are once again poaching talent from one another, driving up salaries for people who work in that space. And, if you read WDRL's excellent threads here or at DVCNews, you'll see that the *pace* of retail sales has been surprisingly strong. I do think that the dip itself caused a lot of boats to start leaking, and DVC contracts got put on the chopping block. But, for the most part, the damage there has been done and we should be past that and back to "regular" levels of default/resale/etc.

So, I think at least part of the spread between developer and secondary markets is due to the inevitable outpacing of resale contracts available vs. organic demand for those contracts, as a side effect of system growth. If the Powers that Be at DVC did not anticipate that this was inevitable, someone should be fired.

And, Disney isn't about to create demand for those contracts to increase prices! Instead, as Sammie suggests, they might continue to devalue resale in various ways. The only other tool they have is ROFR, but that requires capital. Growth of the resale market means they need to expend even *more* capital to move the resale prices appreciably to tip the supply/demand curve. Then, those points have to be resold to someone else to realize return on that capital invested. But, Disney has already invested a bunch of capital elsewhere---in Aulani, AKV, and BLT. That money is already gone and they need to realize a return on that investment before they can turn around and invest it again. They are at least considering building over by Ft. Wilderness or the Grand, based on permits for which they've applied. If they do, the money spent developing those properties is money that can't be used to ROFR contracts. Not even Disney has unlimited resources.

Further, if they do go on an ROFR spree, they have to contend with a *growing* pool of points, at "old" resorts. I'm going to guess that it is easier to sell the newer, shinier resorts with their stainless appliances and granite countertops to those who aren't already members. Existing members might be more willing to buy at "old" resorts as add ons. But there are only so many existing members who want to add on, and at the moment foreclosures seem to be sufficient to fill that space. The exception seems to be BCV, where they still do ROFR and resell on a small scale

At least, there are only so many Members looking to add on today---a tiered benefits system might be a way to stimulate demand amongst current members to add on, giving Disney an outlet for ROFR'd contracts, and enabling them to ROFR more with the same amount of capital on hand via a shorter buy/sell cycle. So, tiers might give them a big lever to work with to deal with both the demand *and* supply problems at existing resorts.

He's clever, that Mouse!

 

[Lil' Grumpy]

well i think this is normal, pending on the side of the fence your
on.


the bottom line, there's are real potentials for changes. i believe
the op was expressing what the guide told her because of all
the things been going on with resales.


since disney is only human, then they are likely to respond to
factors effecting their incomes, so they would be interested
in protecting those bringing in the most money.

many resales bragged about how much they saved & not so nice
comments toward disney guides. [ why should i pay you $5,000
more when i can switched out @ 7mos?-ha! ] but owners paying
more , don't realized the differences in prices? don't kid yourself.
if guides are aware of this, why wouldn't they report changes
needed so they can "sell" the differences , @ higher prices? if
something can be sold [ like certain types of rooms] , do you
think dvc guides be willing to do it?

one piece of information i heard repeated over & over, was how
many previous owners @ ssr were selling so they could then buy
blt. [ from dvc personnel]. so why would they be doing that
when they are losing money? i am thinking to be where they
want to be @ the 11mos booking & for the up-coming changes.
i think they are well aware, they paid more than resales, &
repeating this when using their requests.

as for us, we didn't buy our blt points to make money. we didn't buy
for any tier benefit. nor did we buy for a status symbol of any kind.
the reson we did, was to spend our disney vacations @ wdw, next
to magic kingdom- for years to come. and for safety reasons
from those tours groups with self- control issues.

i don't think those buying ssr resales [ per example],& then demanding
the best rooms @ blt is a good argument. especially, when many
new blt owners were previously owners @ ssr/ or elsewhere. my
guess, they already have the insights of the best ways. i think any
tier changes will recognize what is already being done. esp.
if they can be use to promote new sales.

so what the op stated, has strong merits.

 

[Sammie]

I was not referring you, sorry if it came off that way. I totally believe what you said




Sammie is correct. I was pointing out that their reasoning was flawed and using your original post to prove my point. Not saying they couldn't be correct, but just not according to your post. They have no basis to their reasoning other than opinion, where you were posting a conversation that they can't prove has no merit.

Actually my comment is not based on opinion but conversations with DVC management about the upcoming changes and pretty sure conversations with the same CM the OP is quoting. And actually the comments shared with the OP do not prove Brian and I are wrong. The CM said these discounts may be offered and did not state in what format. They could be offered to all and they could be part of a tier program. Just because he said he could not discuss the specifics of the tier program does not mean the things mentioned are excluded. It simply means he is not able to go on record as saying anything definitely.

But as TJ has stated many times, my comments are based on recent conversations and with DVC that could change at any time.

 

[maburke]

Edited to add: I would not be too surprised to see TIW made available to DCV Members eventually. It's a classic upsell disguised as a discount, and that's right in line with the other discounts Disney offers. When I have it, I am "saving" money, but when I don't have it, I might re-think that extra sit-down meal that we don't really need.

Now that's what I'd like to see, and my guess is that's where they should go with the tiered structure. Nevermind the change in access to reservations that would tick other members off, or discounts that would cost the mouse money. Give access to those perks that are now limited-access, and voilà, you have us paying for more points just so we can pay for more perks. Another one is access to the AK tours that are currently only available to concierge guests. People here have posted about reserving one night in an AKV Concierge studio and not even staying in it, just so they can do the tour.

 

[Lewisc]

The resale brokers could care less if DVC exercises ROFR since the seller will still get his agreed upon price and the broker will still get the commission agreed upon. The buyer is the only one with nothing in the end and they can still move on to the next resale or purchase directly thru Disney.

You're, obviously, right. I forget the fact that the broker still gets the commission.

I'd think the fact that, unlike other timeshares, DVC units hold their value for resales is a positive not a negative.

Couldn't Disney just offer to buy at a price slightly above the ROFR and cut out the broker? At least for units like BLT and BCV which DVC could presumably sell.