Interesting line in Disney's Q4 results

[Wedgeh]

The increase at Disney Vacation Club was primarily driven by sales of The Villas at Disney's Grand Floridian Resort & Spa, which is a higher margin property.

Given my DVC ownership means a lot more to me (and is worth rather more!) than my shareholding I'm not sure how I feel about this. If it just reflects a high point cost I'm OK with that - people can choose to pay it, or not. If there's some kind of corner cutting going on, that's more concerning, but I don't think that's the case as all the reports make the resort look stunning. I personally wasn't so sold on the studio which with just DW and myself removed any plans of an add-on, but the 1-bedrooms up look great.

 

[disneynutz]

VGF is a very small resort so IMO it cost less to build but it is selling at a high price, thus the high margin. I expect the end price to be around $165 per point.

Bill

 

[crisi]

Construction prices have remained relatively stable, while Disney has increased the selling price for resorts by 50%. Of course its a higher margin resort. Disney has found a cash cow and they are milking it.

The expensive part of the building is not the furnishings (including things like carpet and countertops), its getting the building there in the first place. And that doesn't really change no matter how fancy you make it (unless you are putting in gold toilets or something).

 

[drusba]

The only thing higher margin means is that there is a higher percentage difference bewtween the sale price and cost of the producing the units from other resorts. The VGF accomplished the higher margin by (a) having a very high price per point (many forget that almost all of BLT was actually sold during the time when the price per point ranged from $112 to $120; i.e., its current $165 price really means nothing to the selling out of the resort or Disney's margin for such sales when it was selling new, and (b) having a very high per night point cost, meaning it is selling a lot more points per unit that any of the other resorts. When you combine those concepts, VGF is actually selling in a range that is about 40% or higher than BLT did. Unless construction costs went up 40% since 2009, you are going to have a higher margin.

 

[Brian Noble]

I did the math at one point, and a VGF studio sells for the equivalent of approximately $3,000 per square foot.

 

[Sur]

A bargain compared to around here!!

 

[tjkraz]

The financial results are comparing 4Q 2012 to 4Q 2013.

In 4Q 2012 they were selling Aulani (high land acquisition and construction costs) and AKV (noticeably lower nightly point costs than VGF) for around $120 per point.

In 4Q 2013 they were selling VGF for $150 per point.

It costs more to spend a night in each room at VGF (giving them more points to sell for each unit constructed) and the per-point cost is up about 25% from a year ago. So yeah, the margins on VGF are much higher than either Aulani or AKV.

 

[Hibernians]

location, location, location (and theme)