Rumor: Disney shutting down rental brokers

[Minniesgal]

I don't think the problem is so much renters who don't have a vested interest in the resort, but in DVC allowing stuffing studios by adding the murphy bed. But since they are pricing themselves out of many buyer's ability to buy, they have to offer the stuffed studio solution.

I totally agree with this stuffing 5 into a studio suitable for 4 only at a push has to increase wear and tear.

 

[Brian Noble]

If "wallets on property" were all that mattered, Disney wouldn't be charging $400-1000 per night for traditional hotel rooms.

In the most recent quarter, they reported occupancy rates into the 90s.

Per room spending at our domestic hotels was up 9% and occupancy was up 3 percentage points, to 92%.​

 

[Brian Noble]

If keeping hotel rentals up were a priority then why is Disney converting the hotel rooms to DVC? I don't think they want to bother going after the DVC rental process but rather just fill it with DVC owners and let them rent the rooms. Shifts the upkeep and occupancy away from Disney.

DVC does two things for Disney. One: it moves some revenue from future stays into the quarter the contract is purchased, so it helps goose the quarterly results. Two: it serves as a risk hedge against future declines in travel demand. The latter is particularly obvious when you consider that in the post-9/11 decade, Disney did not build a single cash hotel room, but instead took cash rooms out of circulation to build DVC units. That lasted until AoA opened, but that serves a market (larger families) that Disney hadn't done much with on the cash side, but has been growing in the US.

 

[rg35]

Posted on Facebook? Must be true.

 

[tjkraz]

If keeping hotel rentals up were a priority then why is Disney converting the hotel rooms to DVC? I don't think they want to bother going after the DVC rental process but rather just fill it with DVC owners and let them rent the rooms. Shifts the upkeep and occupancy away from Disney.

It also shifts profits away from Disney.

If the last 25 years have shown us anything, it's that both DVC and cash hotel rooms have a role in the economics of Walt Disney World. Over the past 10-12 years they've converted maybe 1000 hotel rooms to DVC at the Contemporary, AKL and Polynesian. Not exactly a rapid pace.

Meanwhile the rise in DVC point prices is well documented. If Disney's endgame was to convert all hotel rooms to timeshare, they could easily afford to lower prices to $125-135 per point and sell at a much faster pace. Construction costs on DVC's recent projects run in the neighborhood of 15-20% of the sale price. Today's DVC is carefully positioned to maximize profits by selecting profitable destinations (attractive location, low build cost) and keeping prices high. DVC has traded volume for profitability.

Converting 300 Poly hotel rooms to DVC doesn't signify that hotels are no longer a priority. It just means that it was deemed the best solution to meet a variety of business needs. Poly has always been a popular hotel destination. History has shown that Disney is successful selling hotel rooms at the Poly for rates that exceed $450 per night for a Standard room and $600+ for theme park view.

Similar guest demand for 1/3 fewer rooms means even higher rates and less discounting.

 

[crisi]

Pulling 1000 hotel rooms also helps with that +90% occupancy rate, which also helps the story in the annual report. "Look at how good we've recovered" is what people end up reading, but they've removed capacity.