Is DVC over-expanding?

[dizfan]

Perhaps I am a naive. One thing I like about DVC is that the end of life date on the contracts gives Disney incentive to make sure the resort and system keep on working.

All the DVC contracts have an expiration date. After that time, Disney owns the property again. That is worth billions to Disney.

At some point there may not be a reason to expand. Instead, it may be wiser to let the contracts expire and sell at the 2043 price. Take $160/pt and a 4% price increase per year (which is small compared to the last couple years) and the price per point will be around $500/pt in 2043.

I know we all like to say we are owners. Reality is we are renters.

 

[xipetotec]

I am concerned (as a DVC member who is planning on 30 more years of visits) that DVC is expanding too much.

As long as the economy is doing well it's not a problem. However, if too many members begin to have problems paying their dues, there will not be enough money for upkeep. The real problem would occur when those members can't sell because the market is saturated with millions and millions of points. Even if they drop their sale prices, potential buyers would be reluctant to take on the maintenance fees in a bad economy.

DVC would be faced with hundreds of accounts in arrears with no money coming in and a bunch of aging resorts that need to be maintained.

(As a WDW lover, my concern is that the magic is being diluted by steel and concrete, however well-themed.)

I am more worried about potential crowds this could bring. They aren't just converting, they are adding whole wings to resorts. I think it's great that we have the option of going to all these new places with our points ( or adding on ). But if these fill up, in addition to the regular non-dvc resorts... WDW is gonna be PACKED ...

 

[drusba]

I am concerned (as a DVC member who is planning on 30 more years of visits) that DVC is expanding too much.

As long as the economy is doing well it's not a problem. However, if too many members begin to have problems paying their dues, there will not be enough money for upkeep. The real problem would occur when those members can't sell because the market is saturated with millions and millions of points. Even if they drop their sale prices, potential buyers would be reluctant to take on the maintenance fees in a bad economy.

DVC would be faced with hundreds of accounts in arrears with no money coming in and a bunch of aging resorts that need to be maintained.

(As a WDW lover, my concern is that the magic is being diluted by steel and concrete, however well-themed.)

Getting back to the original post, it seems the potential parade of horribles mentioned already occurred. Following the crash of 2008 and through 2009 and 2010, there were a large number of members who could not pay their dues, thousands of foreclosures, Disney lost its ability to package the DVC loans and sell them to banks or investment companies because the market for that died, the resale inventory skyrocketed, and resale prices dived. So what has Disney done since 2008? For some time, it aggressively rented rooms, including many DVC rooms, at significant discounts; continued its annually renewable guarantee to pay any amounts needed for operations, maintenance and repair in excess of dues charged and collected from the members, which guarantee allows Disney not to have to contribute to dues annually up front for the portions of the resort it owns; finished one (AKV) and built three new resorts (BLT, Aulani and VGF); raised purchase prices astronomically and still has brisk sales; and completed significant refurbs on all the older resorts. I hope that I never have to go through another economic crash like that one again in my lifetime and if that one did not destroy all that is DVC, it is hard to imagine that any more normal recession in the future will.

 

[tjkraz]

I am more worried about potential crowds this could bring. They aren't just converting, they are adding whole wings to resorts. I think it's great that we have the option of going to all these new places with our points ( or adding on ). But if these fill up, in addition to the regular non-dvc resorts... WDW is gonna be PACKED ...

Hotel construction has little impact on theme park crowds. When Disney builds a new hotel, the goal is to draw new business away from the off-site hotels.

New hotels and DVCs may give guests additional options, but they don't add a significant number of guests to the parks.

 

[Theaberdeenkid]

I wish they expanded/changed out attractions half as much.

 

[Goofy DVC]

I am more worried about potential crowds this could bring. They aren't just converting, they are adding whole wings to resorts. I think it's great that we have the option of going to all these new places with our points ( or adding on ). But if these fill up, in addition to the regular non-dvc resorts... WDW is gonna be PACKED ...

Looks like it's time for a 5th park!

 

[Goofy DVC]

Getting back to the original post, it seems the potential parade of horribles mentioned already occurred. Following the crash of 2008 and through 2009 and 2010, there were a large number of members who could not pay their dues, thousands of foreclosures, Disney lost its ability to package the DVC loans and sell them to banks or investment companies because the market for that died, the resale inventory skyrocketed, and resale prices dived. So what has Disney done since 2008? For some time, it aggressively rented rooms, including many DVC rooms, at significant discounts; continued its annually renewable guarantee to pay any amounts needed for operations, maintenance and repair in excess of dues charged and collected from the members, which guarantee allows Disney not to have to contribute to dues annually up front for the portions of the resort it owns; finished one (AKV) and built three new resorts (BLT, Aulani and VGF); raised purchase prices astronomically and still has brisk sales; and completed significant refurbs on all the older resorts. I hope that I never have to go through another economic crash like that one again in my lifetime and if that one did not destroy all that is DVC, it is hard to imagine that any more normal recession in the future will.

Very well said.

 

[sweetdana]

I think they're talking about points creep with new resorts. I think one can argue that it happened with GF and maybe others already.

I agree BW stand view is cheaper than SSR standard almost always..

It is not to say you cannot stay at your home resort say with your 160 allotment and mostly get the same aprox 9 days.. but as each resort is built 160 will get you fewer and fewer days.

I am using 69 vac points for a stand view in Feb for a studio.. it is almost as much as 1 bed room value at AK (75). lake view is more. but comparing lk to sav it is still more than club level by 15 points. If each resort increases like this, you will have less nights using non home resorts.

 

[LPnerd]

this is what we figure on... when the maintance points exceed what it would cost to rent a two bedroom condo I'll sell, until then, the most important and expensive part of any vacation I take is the least of my worries , instead of wondering where we will stay and will it be clean.
also, adding a tower to Contemporary, or a few villas at the poly is hardly building new resorts. They have to do something because at peak times they are running out of rooms to fast... and even mod times can be tough unless you want to stay at Saratoga, which we do not. I doubt we see an entire resort at WDW until Saratoga and Hawai are sold out and with gas prices and airfares, tats no time soon.

 

[Dean]

this is what we figure on... when the maintance points exceed what it would cost to rent a two bedroom condo I'll sell, until then, the most important and expensive part of any vacation I take is the least of my worries , instead of wondering where we will stay and will it be clean.
also, adding a tower to Contemporary, or a few villas at the poly is hardly building new resorts. They have to do something because at peak times they are running out of rooms to fast... and even mod times can be tough unless you want to stay at Saratoga, which we do not. I doubt we see an entire resort at WDW until Saratoga and Hawai are sold out and with gas prices and airfares, tats no time soon.

It's unlikely you'd be able to sell at that point if that ever happens. My view is there comes a time when it's not worth the costs and hassle for the transfer even if there are some savings to be had. That's likely the last 2-3 years. IF dues outpace savings, I doubt there will be any sale options.

 

[jerseyduke]

Hotel construction has little impact on theme park crowds. When Disney builds a new hotel, the goal is to draw new business away from the off-site hotels.

New hotels and DVCs may give guests additional options, but they don't add a significant number of guests to the parks.

Exactly. People do not "not go" to the world because of a lack of accommodations.

There are only so many people able/willing to go to WDW. If they want more people in the parks, they have to outdo the competition, i.e. IOA in particular.

Time for another park. They have added one about every 10 years anyway.

 

[SpaceMountain77]

I will be in my 60s when the original BCV, BWV, HH, VB and VWL contracts expire in 2042 and 80s when my contracts expire. If any additional resorts are added in the upcoming years, then I will likely be a resident of the Haunted Mansion by the time those contracts expire.

I am more than happy with my home resorts and if the classic resorts are resold in 2042 and nightly points are excessive, then I will gladly spend the last 15 years of my contract enjoying nightly sunsets on our savannah.

 

[Greysword]

If any additional resorts are added in the upcoming years, then I will likely be a resident of the Haunted Mansion by the time those contracts expire.

I bet DVC could sell that as a timeshare option, too.

 

[LPnerd]

a 5th park, or fix magic Kingdom with more than upgraded meet and greets, and lower ticket prices.
we went in june and stayed at Saratoga... went to downtown dis to see a movie, in the IMAX, spent one day at IOA and one at universal. In dec. my granddaughter is singing one weekend in the candlelight thing at epcot. we will get the one day one park, and then we have VMCP tickets and that's it. we might go to sea world, or maybe a water park if its warm enough ( Dec is iffy), but we're not going to the parks like we used to. MUCH to expensive to justify it for us. BUT we find plenty to do! love the activities in community halls.

 

[SpaceMountain77]

I bet DVC could sell that as a timeshare option, too.

You know Disney would make a mint if guests could have their urns added to the library, crypt, or mausoleum.

 

[OneMoreTry]

"I got mine, now close the door"? I see this type of thing all the time where I live. People move into the area, buy a house, and then want the local government to limit development of new homes.

This sounds a little bitter, huh? Kind of misses the whole point.

There are lots of points out there to buy without more new DVC resorts.

 

[tjkraz]

This sounds a little bitter, huh? Kind of misses the whole point.

There are lots of points out there to buy without more new DVC resorts.

DVC sells 100,000 - 150,000 points every month...in addition to what already changes hands on the resale market. Prospective owners would decline if DVC were not actively marketing the product, but it wouldn't take long for the number of interested buyers to exceed available resale points.

 

[ssawka]

This sounds a little bitter, huh? Kind of misses the whole point.

There are lots of points out there to buy without more new DVC resorts.

I apologize if OKW is your home resort. If not, I wonder if you would feel differently if Disney had decided that DVC was big enough prior to your home resort being built.

 

[Mickey'sApprentice]

Getting back to the original post, it seems the potential parade of horribles mentioned already occurred. Following the crash of 2008 and through 2009 and 2010, there were a large number of members who could not pay their dues, thousands of foreclosures, Disney lost its ability to package the DVC loans and sell them to banks or investment companies because the market for that died, the resale inventory skyrocketed, and resale prices dived. So what has Disney done since 2008? For some time, it aggressively rented rooms, including many DVC rooms, at significant discounts; continued its annually renewable guarantee to pay any amounts needed for operations, maintenance and repair in excess of dues charged and collected from the members, which guarantee allows Disney not to have to contribute to dues annually up front for the portions of the resort it owns; finished one (AKV) and built three new resorts (BLT, Aulani and VGF); raised purchase prices astronomically and still has brisk sales; and completed significant refurbs on all the older resorts. I hope that I never have to go through another economic crash like that one again in my lifetime and if that one did not destroy all that is DVC, it is hard to imagine that any more normal recession in the future will.

Very good. I have to admit when I read the first post, I had to check and see if it were written in 2007. I'm ready for this crappy economy to get going again, but fear that we are living the new normal.

 

[OneMoreTry]

I apologize if OKW is your home resort. If not, I wonder if you would feel differently if Disney had decided that DVC was big enough prior to your home resort being built.

I do own at OKW.

My problem as a member is only concern about decline of the resorts should DVC outbuild its capacity to care for the them should the economy fail again in the future -- personally I think there will likely be bigger economic problems in the future than what we just saw over the past 5 years.

My concern about overbuilding in general was largely triggered by the ugly Grand Floridian addition. I don't care whether it was DVC or not.