Island Tower at Polynesian Villas & Bungalows

[atthebeachclub]

There's a reason why Disney is only building DVC accommodations, and not cash...It acts as a financial safety net even during bad times. In addition, it's an immediate financial benefit to the bottom line by pulling those cash bookings forward in the form of large contracts. They know at the end of the day they've got those rooms "occupied" for the next 40+ years, and now they can make up the cash hotels by getting you with tickets, merch, food, and whatever other revenue streams the future may hold.

Plus you no longer have to remind these people to visit with advertising dollars. They’re coming back! Year after year.

 

[disneylandtour]

Right? I think a couple of months ago I would've pulled the trigger on another 150 direct points to move up to 2BR range (I currently have 350, a mix of direct and resale).

But now, I'm thinking about the fact that I can probably get 250-300 points at CCV or SSR for the same price, and weighing whether it makes more sense to just have two larger contracts that I leapfrog (banking/borrowing and using each one every other year).

Decisions, decisions...

CCV resale vs Poly direct is my conundrum as well. Depends on incentives.

 

[maui22]

There's a reason why Disney is only building DVC accommodations, and not cash...It acts as a financial safety net even during bad times. In addition, it's an immediate financial benefit to the bottom line by pulling those cash bookings forward in the form of large contracts. They know at the end of the day they've got those rooms "occupied" for the next 40+ years, and now they can make up the cash hotels by getting you with tickets, merch, food, and whatever other revenue streams the future may hold.

Converting rooms to DVC also reduces their hotel supply. Reducing discounted rooms during slower times.

During the Great Recession, CBR was completely closed for a period. Replacing a couple CBR buildings with Riviera means they lose far less money if another extreme recession hits. Guests who had CBR booked were in some cases upgraded to GF rooms.

 

[Kailunkat]

Plus you no longer have to remind these people to visit with advertising dollars. They’re coming back! Year after year.

And when you don't remind them and they forget - Profit!
I'm sure there is no place to find this out, but I would love to know how much they pocket per year in expired/unused points.

 

[eticketplease]

Of course they make money after they have sold the points! They had Cash room inventory previously that now have 100% occupancy. Let's say the average unsold inventory on the cash side was 10%. They can make 10% more food revenue, drink/alcohol revenue, souvenir revenue and can hold people in/at the parks for longer to keep spending that money - all with zero overhead because of the dues/MF. I think they come out way ahead with DVC. Yes, it's less of a price gouge than the cash rooms - but it's also a different market/demographic.

All great points but nothing to do with my reply to the other poster about making money on points and dues.

They still take in roughly $200 a night when you factor points and dues. And I can regularly book villas at DVC resorts that “sold out” with cash.

I never said they never made any money off a DVC member afterwards.

I know they make money off of us returning year after year with tickets, food, merch and splurging for extras that the once in a lifetime guest is not normally doing.

Please explain to me how they are making money on the DVC points we have already purchased as the PP had mentioned.

ok not an accountant but they don’t make money once they have sold the points. The dues are not really making money but they do help with the fact that Disney is no longer responsible for all of the staffing and upkeep of the resort.

The rooms that you can book at sold out DVC is because Disney is renting the 2% of points they are required to hold and points acquired if someone exchanged for a cruise or the Disney collection.
If you look at these sold out resorts online a lot of the accommodations are not available to use cash for.

 

[Kailunkat]

Please explain to me how they are making money on the DVC points we have already purchased as the PP had mentioned.

Well I consider the money they make on all of the other things (food, merch, tours, tickets) to be part of the DVC revenue. DVC locks people in to taking their vacations at a Disney owned property (WDW, DL, Cruise, Adventures). Clearly they like the value proposition or they wouldn't keep making DVC resorts or converting units.

If you want a direct points to profit exchange after contract close then I would again mention the expired/unused that happen every year. Disney still has the points sold but can allow others to book the room instead - thus profiting twice on any unused but previously sold points.

You could also point to the fact that they advertise exchanging points for cruises and Nat Geo adventures. They market those options as good alternatives to staying onsite, offering flexibility, but if you have ever read about the exchange rates or done research on it then you will know that in most cases (and certainly in the case of a direct buy situation) the guest is on the losing end of those exchanges. The DVC point to cruise exchange is a clear profit line for them.

 

[squirrel30]

CCV resale vs Poly direct is my conundrum as well. Depends on incentives.

I weighed this when they announced that Poly would be with the current Association.

CCV resale longer contract
lower price even if they give incentives to Poly Tower. CCV selling at around $135pp
less congestion PVB/PT is going to be busy and I would dread the monorail ride in the mornings.

 

[ocdb8r1]

I agree with all these posts on the "synergistic" benefits/revenues Disney makes from DVC for all the other vacation revenue they may get from DVC members (F&B, park tickets, other experiences, being able to sell/rent rooms for any "breakage" (last minute unused rooms)....etc). However, I just want to point out that on a standalone basis (accommodations alone), DVC is an incredibly profitable product both for the initial cash injection and on an ongoing basis. As has been mentioned, they guarantee a 98% occupancy rate for each sold out resort for the life of that resort contract (the annual dues are paid whether people actually use/occupy those points or not). This rate would be unheard of for any regular type of hotel accommodation. In addition, they drastically reduce the capital cost that would normally exist for any normal resort development by "selling" those points (very quickly recouping all the initial capital costs to develop the resort).

ok not an accountant but they don’t make money once they have sold the points. The dues are not really making money but they do help with the fact that Disney is no longer responsible for all of the staffing and upkeep of the resort.

Please explain to me how they are making money on the DVC points we have already purchased as the PP had mentioned.

As to this specific point, they do in fact make money off the dues; annual dues are not comprised solely of hard operating costs for each resort. Disney is collecting a "management fee" for each DVC resort which is nearly pure profit. There are likely some amorphous DVC administration costs that it must cover, but most direct resorts costs are otherwise built into the dues to covering staffing/administration. In 2017 for BLT the management fee represented 11.3% of the annual dues (DVC info did a budget breakdown that year).

 

[squirrel30]

All great points but nothing to do with my reply to the other poster about making money on points and dues.




I never said they never made any money off a DVC member afterwards.

I know they make money off of us returning year after year with tickets, food, merch and splurging for extras that the once in a lifetime guest is not normally doing.

Please explain to me how they are making money on the DVC points we have already purchased as the PP had mentioned.

I think they also make money from points with people trading those points in for Adventure by Disney and Cruises then either selling them for 1 time use points or using the rooms for cash sells.

 

[Salokin]

The resort monorail should be for poly only given you can easily walk to mk from the other two resorts, who’s with me ha?!

 

[CastAStone]

Disney is collecting a "management fee" for each DVC resort which is nearly pure profit

I agree they make money here but just having worked in large companies for as long as I have I doubt it’s anything approaching pure profit. They have a booking system that, like all software, presumably costs a shocking amount of money to run, they have to pay their well paid executives, plus the actual costs of managing. Maybe they make 50%, maybe they make 30%, I doubt though they’re making anything approaching like 80%+ where I’d call it pure profit.

Also even for all the resorts combined, it’s a drop in the bucket. Maybe $40M? They make that on Genie+ every month (and Genie+ is pure profit)

 

[walt34]

Also even for all the resorts combined, it’s a drop in the bucket. Maybe $40M? They make that on Genie+ every month (and Genie+ is pure profit)

Why would Genie+ be pure profit? It requires software changes, CM at the LL entrances and highly paid managers to come up with the next, even worse system.

 

[zavandor]

DVC also contracts other Disney units for almost everything. They don't hire bus drivers or housekeepers, they contract them from Disney. In those fares there can be some additional profil. Budgets are audited, so it cannot be daylight robbery, but I would expect not being insignificant.

 

[mamaofsix]

So true!

View attachment 891676

We were in BPK on opening day, and this is what it was like two days later.
A fun wake up call each morning in our theme park view room.
(I took that picture at 6:48am)
We still had a great trip.
.

And there were a ton of guests complaints / customer recovery measures that occurred those first few weeks due to the construction. If you read the GFV thread, there were a lot of gift cards being handed out, guests moved elsewhere, and even points refunded. I would imagine Disney would like Poly2 to be as complete as possible this time around. But who knows.

Riviera was in much better shape when it opened.

 

[eticketplease]

As to this specific point, they do in fact make money off the dues; annual dues are not comprised solely of hard operating costs for each resort. Disney is collecting a "management fee" for each DVC resort which is nearly pure profit. There are likely some amorphous DVC administration costs that it must cover, but most direct resorts costs are otherwise built into the dues to covering staffing/administration. In 2017 for BLT the management fee represented 11.3% of the annual dues (DVC info did a budget breakdown that year).

Fair point I just didn't imagine it being $200 a night as the other poster had stated.

 

[eticketplease]

Well I consider the money they make on all of the other things (food, merch, tours, tickets) to be part of the DVC revenue. DVC locks people in to taking their vacations at a Disney owned property (WDW, DL, Cruise, Adventures). Clearly they like the value proposition or they wouldn't keep making DVC resorts or converting units.

If you want a direct points to profit exchange after contract close then I would again mention the expired/unused that happen every year. Disney still has the points sold but can allow others to book the room instead - thus profiting twice on any unused but previously sold points.

You could also point to the fact that they advertise exchanging points for cruises and Nat Geo adventures. They market those options as good alternatives to staying onsite, offering flexibility, but if you have ever read about the exchange rates or done research on it then you will know that in most cases (and certainly in the case of a direct buy situation) the guest is on the losing end of those exchanges. The DVC point to cruise exchange is a clear profit line for them.

Yup I mentioned the points being exchanged and the 2% they hold for breakage to allow them to use those points.

The point is Disney owns those points!! They are required to hold 2% and once someone makes an exchange they are their points and no longer the members points.

As far as DVC/DVD goes as far as I know it does not include Food etc as part of their revenue but Disney certainly makes money on us staying on points with those purchases.

My statement are again on them making money on our points once we have purchased them as indicated in the post quoted below.

It’s an accountant trick with money. It pads their yearlies and pushes it forward. They still take in roughly $200 a night when you factor points and dues. And I can regularly book villas at DVC resorts that “sold out” with cash. They play a wise game

 

[hhisc16]

"Direct sales for the new Island Tower are expected to begin in late September or early October."
@DVCResaleMarket

 

[pkrieger2287]

"Direct sales for the new Island Tower are expected to begin in late September or early October."
@DVCResaleMarket

I mean... I guess I should say they are assumed to begin by that time. I think we will all be pretty surprised if DVC doesn't have this thing churning cash by October. We are all aware of the excitement regarding Island Tower here and in the broader DVC community. But DVC should also be thinking about how this is the biggest DVC travel season, and the other 99.9% of Members who visit this time of year, I'm sure, would be easy sells for an add-on with the tower.

 

[hhisc16]

I mean... I guess I should say they are assumed to begin by that time. I think we will all be pretty surprised if DVC doesn't have this thing churning cash by October. We are all aware of the excitement regarding Island Tower here and in the broader DVC community. But DVC should also be thinking about how this is the biggest DVC travel season, and the other 99.9% of Members who visit this time of year, I'm sure, would be easy sells for an add-on with the tower.

that is true!
especially with Oct 1 as the new fiscal year!

 

[ocdb8r1]

I agree they make money here but just having worked in large companies for as long as I have I doubt it’s anything approaching pure profit. They have a booking system that, like all software, presumably costs a shocking amount of money to run, they have to pay their well paid executives, plus the actual costs of managing. Maybe they make 50%, maybe they make 30%, I doubt though they’re making anything approaching like 80%+ where I’d call it pure profit.

There is literally a line item for nearly each of the above items you mention. Costs are charged for booking/reservations support, management staff...etc (separate from the management fee). Yes, I agree there are some ethereal "management" costs perhaps not caught somewhere by the individual line items, but I would argue it is minuscule. What "well paid executives" costs are not covered by the sales and development side of the organization (where that majority of their efforts are focused). Again, there may be some element of their work focused on the (post sale) "management" of the resorts....but it is minimal.

Also even for all the resorts combined, it’s a drop in the bucket. Maybe $40M? They make that on Genie+ every month (and Genie+ is pure profit)

It's a bit over $50M a year, but I agree it's not an outlandish amount. However, the question was whether DVC makes any money on each point after it's sold (even if the point is used solely for intended occupancy). The fact is they do and it represents 11-12% of your annual dues fees. As has been widely discussed, this is on top of all the other ancillary/synergistic benefits and revenues Disney derives from DVC from all the activities mentioned above.