TooTall...
well...its a little more complicated than that.
First, in reality, DVC doesn't often "pullback" rooms off their inventory and sell them through CRO.
Contractually, they pretty much keep them available for the DVC...because remember: when you buy points - you sign a contract that you buy an actually percentage of a specific unit ( i think i'm like 297A at saratoga). And buy florida law, a certain number of dvc rooms are always available at rack.
so that's not really a parachute for them when it comes to empty rooms.
Out of curiosity.... I wonder what the percentage of rooms that are filled long in advance by DVC owners and point renters? Timeshares are odd thing. I understand the system (I own offsite), so the deeds (or leases in DVC's case) to state that the owners own and have the ability to use the parts of the resort that were sold to the public. BUT.... the reality is there are certain aspects that do end up making things a bit more complicated which will result in either empty rooms, or DVC basically reselling the room (either thru CRO, or allowing owners to 'rent' points directly from them). Not every owner is going to make it to a DVC property every year.... so a certain percentage of of the ownership interest is wasted from people who didn't use their points before they expired.
then you also have the DVC owners who decide it utilize their points for other things, like Disney Cruises, etc... which means Disney gets control over those points for that use year.
And that's without even getting into the whole banking thing.
As for the average cost of room vs. rack rates, True, Disney may not necessarily be making as much profit over the life of the contract, but they aren't losing money either. First off, Most of the resort amenities people associate with the resort, are actually part of the hotel the resort is associated with. (off the top of my head, there are only 2 standalone DVC resorts...OKW [the original] and SSR... right?). As such, many of the maintenance and upgrade concerns for those resorts are covered by the hotel's budget, not the Timeshare resort budget.
Also, Disney isn't going to lose any money directly off the DVC membership. Your Annual Fees are tied directly into the budget for the resort. Upkeep, refurbs, even staffing, are all covered in the budget which is then broken up and spread out across the entire ownership base of that resort. I'd honestly be surprised if there wasn't also a line-item in that budget for Disney's Management services for also keeping tabs and staffing the reservations at the resorts, on top of all the services which Disney is basically contracting with itself to handle. (I know with my timeshare ownership, I actually get a copy of the resort's total budget, with a breakdown of what the total cost-per-point on maintance fees will be. Since DVC is a lease however, I don't know if they follow the same procedures).
To be perfectly honest, Comparing your DVC cost per year to the rack rate isn't even really fair. While the DVC cost may better reflect to actual costs to Disney for the room and resort, the Rack rates are not only going to have to include Disney's costs for the promotions they use to fill that room (so include the cost of the
DDP for everyone in the room if you paid out of pocket), The payback for the cost of building the resort in the first place [with interest.... DVC resort construction is covered in the buy-in, so technically they are paid off much quicker than the regular hotels/resorts], but also the required profit margins for the 'Resorts' side of Parks&Resorts that they need to make the investors happy on Wall street.
Which kinda brings me to another intereting facet that if it's not already impacting DVC, It will eventually..... Disney's tendency of late (and wall street in general) to be more beholden to the stockholder and instant profit, than long term viability or investment in the future. DVC is under the "Parks and Resorts" banner, but it is it's own profit center/division within that group. Because of the way Timeshare's are built/designed, The general operating costs of the resort once they have ended the sale phase are covered under the annual dues paid by the owners. There really isn't a lot [or any] profit margin there. That means that all the profits for the Timeshare (DVC) division are gained thru the sales phase. Construction, Sales/marketing costs, and all profit are gained from selling the inventory available in the resort you built. Once you sell out that inventory, you have absolutely no way to make any real money, unless you build someplace new to sell. In a way, it could almost be considered pyramid schemey in it's operation, and in WDW's case, it's also somewhat parasitic. DVC is making a TON of money for the company right now, and that's why they continue to sell it. The problem is that in order to continue making that money, they need to keep building properties. If you look at DVC's attempts at Stand alone properties, it's pretty obvious that the draw is pretty much their park-based properties, so by both necessity and ease of sales, They continue to build around the parks.
This is leading to some GREAT profits for DVC, and Parks&Resorts at this time. But.... The downside is that their customer base is largely guests who currently stay in the onsite hotels/resorts. [people wishing to travel outside Disney, there are better/cheaper timeshare options. Even in the orlando area, there are cheaper/better options than DVC for a home-base to visit the area attractions.... so DVC's best customers are going to be that 'I can only stay onsite!' crowd]. So the end result is that DVC is going to end up hurting the profitability of the Florida parks at some point. There is no way around this. [and might even also help explain the rack rate increases way beyond the rate of inflation]. You are taking away the onsite hotel/resort guest who are paying to stay nightly onsite over the long term, for the short term profits. There will come a point where DVC will have overbuilt, just like the surrounding Orlando resort area already has experienced. This will cause dropping sales since they won't be able to maintain the same level of sales they have managed for quite awhile. So sometime in the future, inevitably, Disney will see a significant drop off in Park and Resorts profits as a direct result of the major DVC profits they are raking in now. [Which will also mean they'd have to manage more money from surviving profit centers, such as higher ticket prices, higher food/merch profit margins, and even higher profit margins on the rack rate of rooms.]
I also wouldn't be totally surprised if we started seeing DVC Annual fees get a significant bump around this time as well. We've seen other non-Disney timeshares have their Maintenance Fees jump once the sales phase has ended as the Developer ended up subsidizing part of the Resort's operation/maintenance in order to improve their ability to sell their inventory. Since DVC is also locked into many Disney Services, you could see Disney start charging the resort more for those services in order to make more money from the resort's guest/owners. (Services such as Disney Transportation, Mousekeeping, Reservations, and even Front Desk services).
Then again...... Since Disney is doing Leases, maybe they just plan to maintain profitability in the future by reselling the intentory they already built...
Unless you are a monorail resort guest who does not prefer the bus system....especially hot months.
I'm not sure I would be too thrilled to pay Grand Floridian costs, arrive and be told we will be enjoying the magical scenic route on the bus.
They managed to maintain the monorail for 40 years without cutbacks in service. So why now....what are they saving $$$$$ on? Staff or maintenance.
Well, There are a couple recent factors which I can see causing more trouble with the system vs. the past.
1. With the increasing crowds, longer hours, and EMH, Disney has been running the trains longer and harder over the course of a year than they did in the past. With train to the barn cycle time, during the busiest times of year the system may only have 2-3 hours of downtime a night.
2. The current trainsets is already older than the first gen trainsets.
This is on top of any cutbacks that were made.
