Who thinks Saratoga Springs is overpriced at $95?

[HookdonWDW]

Originally posted by tjkraz
if I were to discover DVC for the first time in June, 2004, I certainly couldn't argue that the prices were unreasonable.

Sure you could... you can always find a way to make an argument... you just might not win!!

 

[Desperado]

Who thinks Saratoga Springs is overpriced at $95?
I'd have to say I do, especially givien it's distance from the parks, and close proximity to DD hotels.

 

[timC]

IMO there is was just not enough value added to DVC to cover these increase over the past 5 years, from $65 to $95 in 5 years.

What additional consumer value did we realize in those 5 years?
1) Two resorts added to the system: BCV, SSR.

It's hard to put a price on this...but lets start with $10pp

2) DVCII contract extension for years 2042-2054.

10 years ago, the contracts they were selling were just as long as the contracts they are selling today...but they were selling them for $59. Today $95 - Added Value = $0

3) Some benefits added, offset by other benefits that have been removed.

I don't even remember what they are.... Added value = $0

What what is the cost to consumers for this added value? $30pp.
What accounts for the delta? PROFIT!!!

Sorry. I just don't see it.

 

[tjkraz]

Originally posted by timC
IMO there is was just not enough value added to DVC to cover these increase over the past 5 years, from $65 to $95 in 5 years.

(snip)

2) DVCII contract extension for years 2042-2054.

10 years ago, the contracts they were selling were just as long as the contracts they are selling today...but they were selling them for $59. Today $95 - Added Value = $0

I think you're being a little unfair on this item. You started your analysis looking at the last 5 years, and then reverted back 12 years.

If you stick with a comparison of the price and product 5 yrs ago (1999?), then new owners are legitimately getting 7 additional years' worth of ownership.

I also think you would need to add some cost-of-living component to your analysis. At 3% annually, you would add more than $10 per point to your calculations over 5 years (if my math is correct).

In the end, I still think it's unfair to even make such comparisons. Will the price increases negatively impact the add-on market? Yes, they probably will. Those with a knowledge of the price history have good reason for a bit of sticker shock.

But if I walked into WDW tomorrow, met with a DVC Guide for the first time and was told the price was $95 per point, I suspect I would still be purchasing. DVC is still a GREAT deal that pays for itself in a fraction of the overall contract length.

Those who purchased at much lower price levels should justifiably be patting themselves on the back for the great deal they received. But as a DVC member and a Disney shareholder, I certainly can't fault DVC for attempting to get maximum value for their product.

 

[timC]

I think you're being a little unfair on this item. You started your analysis looking at the last 5 years, and then reverted back 12 years.

If you stick with a comparison to 5 yrs ago (1999?), then new owners are legitimately getting 7 additional years' worth of ownership.

My point is that DVC was able to sell a similar length contract for a much lower price. Based on this, I don't agree that they can now claim there added value that's worth more.

Regarding inflation... Sure. But we just went through a resession, and Disney has enornous buying clout... They should have been able to manage inflation much better than then index.

I certainly can't fault DVC for attempting to get maximum value for their product.

Internal to Disney, value = profit. How much profit does DVC need?

Let me say...yes there are still plenty of buyers out there. But, it's like the state of sports today. The best seats are always sold out, but have you looked at the prices of those tickets?

At what point will Disney priced DVC beyond the reach of their prime WDW market... the family?

 

[SleepyatDVC]

Personally, I think that SSR is getting over priced. But is the higher price justified? Maybe yes. Probably.

I agree with previous posters that Disney probably had to slow the sales down substantially.

From a "DVC old timers" perspective, the location of SSR is not the "best." It's a great location, no doubt, but it's not as convenient to the parks as the Epcot/MK DVCs and not as spacious (and "cheap") as OKW which is just around the corner. So, why pay so much more?

BUT... from a DVC marketing perspective, the location of SSR is the BEST!

OKW is private and secluded - which is very much a part of its charm. But because of this, not many people even knew about it - out of sight, out of mind. The locations of BWV, VWL, and BCV are more "visible" but at the same time they are also "invisible," blending seamlessly into their corresponding resorts. Only people staying at WL or the Epcot resorts or patronizing the restaurants in those areas will even see the DVC resorts, and even if they do, they might just assume that they were part of the hotel complex.

Over the past few years, Disney certainly has stepped up the advertising blitz which helped sell DVC effectively. Who hasn't seen the DVC channel and stumbled over the numerous DVC kioks? Not to mention that the DVC logo seems to be all over the World.

But when you do the parks commando style, the last thing you want to do is stop by those kiosks. They pretty much rank last after the bathrooms (which are quite popular only through biological necessity.) Only a limited few have the time to spare to spend a few hours to "tour" or "visit" the actual DVC resort being sold. And it is a large monetary investment to make if you don't have the time to "see" it.

Which brings us back to the SSR location... could any location be as perfect to market?!!!!

It is a sight to behold from over by DTD. Most people at DTD are out of the commando mode already. They are spending their down time shopping, eating, strolling along... when they spy this beautiful complex going up across the lake.

Can't you just imagine at DTD - "Hey, what's that over there? It's beautiful. DVC? What's that? Buying a piece of the magic? Wouldn't that be great? Hey, where can I find out more? The kiosk over there? Thanks. How much is it? Really? Tell me more..."

SSR - obviously a separate, new spanking development to attract attention and interest; in a great location visible to the right demographics at the right time (leisure mode).

If this is your first exposure to DVC, it would certainly be impressive and attractive. The fact that there are other DVC locations you can stay at after the 7 month window would just be icing on the cake.

WE might think SSR is over priced because we know MORE. For first timers who don't have the history of information we have, it may seem worth it in order to stay at the beautiful resort inside the Magic!

I don't doubt (now) that SSR is flying off the shelves and they do need to slow down sales!

Another thing... from a Disney point of view (again pure speculation.) SSR is obviously phase one of DVCII. So, they may be raising the price "slowly" to gear up for the other DVC reosrts they have planned too. Any DVC additions to existing WDW resorts will be substantially smaller like BCV. I think they learned that they sold out too fast. The demand for a monorail DVC resort would probably be extremely high! If the price wasn't high enough, it could potentially sell out in less than a year. Heck maybe even in pre-sales - look at SSR.

Well, that's my 2 cents for the day...

 

[SleepyatDVC]

Originally posted by timC
My point is that DVC was able to sell a similar length contract for a much lower price. Based on this, I don't agree that they can now claim there added value that's worth more.

Well, DVC's claim of added value would probably be that there are now 5 total WDW DVC resorts with more to come (natural assumption with DVCII start up) that you will be able to stay at versus only 2 or 3 DVC resorts just a few years ago.

 

[joepoe]

Originally posted by OneMoreTry
The points seem to be far outpacing inflation. Am I right? Even the housing market.

Do you think Disney may be cashing in on the low interest rates? Ie. many buyers look at the monthly payment. If interest is low, they can tolerate a higher principal.

We bought BWV in '98 at 62.75- that's a price increase on the average of 10% a year.

 

[monarchsfan16]

Personally I don't think that SSR is worth the price increase. I'm glad that my mom bought in in February this year, but I do not think that SSR will be that great, compared to what the other DVC, and Disney resorts have to offer. Personally I go to Disney as a theme park commando. I don't want to spend all day waiting for the bus; there are better things to do be doing. Most of the other DVC resorts have a much better location, not to mention more amenities. Those of us who are kids staying at these resorts typically don't want to spend a day in the spa. I'm not even sure that SSR was worth the current price per point, even with the extra 12 years and everything else. I'm hoping that even though it is our home resort, that is not where we will be spending the majority of our Disney trips.

 

[jarestel]

I think you have to remember back to when you initially purchased DVC. If you paid $70 - $80 plus for your first points, you probably didn't know ( or care ) that a short time earlier people were purchasing points in the $50s and $60s. I'm sure some of the DVC old-timers thought we were nuts to be paying 70 - 80 per point. But if that's the price, and if people want it (which I think they do) then that's what they will pay. If nobody buys at $95, the price will go down, but I don't think we'll be seeing price decreases anytime soon.

 

[mtheiss]

The price will never cease to rise. We bought at $72/pt in 2001 minus a $5 Magical Beginnings discount. It has gone up $23 (30%) in 3 years, which is crazy, but you know, people keep buying and it sells out.

The best deal is to be a Cast Member (local Disney Store's count), you get 15% off plus the Magical Beginnings incentive, so it would be $65/pt.

SS is basically $1.9/pt for the length of the contract
FWL was $1.75/pt for the length of the contract

If you look at it that way, it is not as bad, only a 10%increase.

 

[timC]

Well, DVC's claim of added value would probably be that there are now 5 total WDW DVC resorts with more to come (natural assumption with DVCII start up) that you will be able to stay at versus only 2 or 3 DVC resorts just a few years ago.

I'll acknowledge there's more value in DVC, with the addition of resorts... I gave it an arbitrary value of $10pp.

However, that might even be generous. This value is for "goodwill", associate to our trade "perk". My DVC contract gives me rights to my home resort only, and trading out to other resorts on the network is a privilege that DVC can revote at any time (albiet not likely).

No... I still think we're overpriced here, and that's a shame. Like a lot of entertainment options these days, the true fan is being priced out of the market.

 

[Desperado]

Even though there are more resorts, the latest addition is fairly far away from the parks and right near the dd Disney traffic and hotels. The proximity to Pleasure Island is nice, but it still seems overpriced at $95.

Maybe the purchases before were just such a better deal, and SSR is getting more towards the right price. BCV and WLV certainly sold out very quickly.

Maybe it's just supply and demand. If they can get $95, why not?

 

[freediverdude]

I agree with another poster who mentioned about preparing us for the monorail DVC. It sounds like they're raising the price on SSR so that when the unbelievably high price is announced for the monorail DVC, people won't balk at it. Not that the monorail one should be that high so that many people can't afford it, but they realize the value people will put on that one, and so they know they could probably ask a very high price and still get it, for that particular location. Eisner strikes again.

 

[Desperado]

It may not be as complicated as all that. SSR is selling, people will still buy at the $95 price, even though other owners think it's too high. Long term owners probably thought my $65 price was too high.

I think location creates the value. If DD is a desired proximity, then the DDR location is for you.

A monorail DVC would be nice, an extension of Contemporary. I don't see it, seems like a cash resort would be a bigger money maker.

 

[ford family]

Paying $95 for SSR may or may not be good value.
But how about having to pay $95 for an add-on at DVC1 resorts for points acquired by Disney exercising its ROFR? That sounds expensive compared to resale prices. Maybe DVC will raise its intervention prices in line with the new level for SSR to boost resale prices.
Should DVC introduce a two-tier pricing structure to reflect the 12 year difference in the contract length? At some point it will have to either do just that or abandon its involvement in the DVC1 secondary market.

ford family

 

[timC]

But how about having to pay $95 for an add-on at DVC1 resorts for points acquired by Disney exercising its ROFR? That sounds expensive compared to resale prices. Maybe DVC will raise its intervention prices in line with the new level for SSR to boost resale prices.

Good point.

Have we ever seen true market value for DVC? ROFR seems to artificially prop it up.

What would the market pay for DVC out on e-bay if ROFR wasn't there to protect the price? If you look at other timeshare systems out there, I believe the resale values fall significantly.

So. Is $95 a market driven price, or a Disney imagineered one.

 

[ClarabelleCow]

All I can say is I feel pretty good oabout my purchase, I bought resale in 2002 for 66 a point including closing at VWL, and the going price through DVC was 78.00, a good deal then and an awsome deal now!!! Though Still kicking myself for not buying in 1991 at 49.00!!! Just couldn't comprehend the whole points thing, maybe it was age!!

 

[BWVDee]

Originally posted by ford family
Should DVC introduce a two-tier pricing structure to reflect the 12 year difference in the contract length? At some point it will have to either do just that or abandon its involvement in the DVC1 secondary market.
ford family

They have already taken this step with the new price for SSR rising to $95.00 and the other resorts selling for less.

SleepyatDVC
Excellent points on Disney's choice of location for SSR. I never thought of it that way and it does make a lot of sense. This was probably a big factor in why the Eagle Pines resort was nixed and replaced with SSR.

 

[tjkraz]

Originally posted by ford family
Paying $95 for SSR may or may not be good value.
But how about having to pay $95 for an add-on at DVC1 resorts for points acquired by Disney exercising its ROFR? That sounds expensive compared to resale prices. Maybe DVC will raise its intervention prices in line with the new level for SSR to boost resale prices.

My impression has always been that DVC would be LUCKY to break-even on ROFR, and that they mostly did it to keep the gap between new and resale pricing as close as possible.

Let's say DVC exercises ROFR at $70 on 150 points at BCV. That will cost them $10500. At $84 per point, they would get $12600 reselling those points. That's a margin of $2100.

Now the "x" factor--closing costs. And the unknown quantity is how many points constitutes the "typical" add-on. If those 150 points are resold by DVC to 3 members each wanting 50 points, then DVC has to pay closing costs a total of FOUR times:

1 - Acquire points via ROFR
2 - Sell 50 to buyer "A"
3 - Sell 50 to buyer "B"
4 - Sell 50 to buyer "C"

We're talking about $1200 - 1600 in closing costs. That leaves virtually nothing to cover all of the other administrative functions involved with reselling the points.

While I'm sure DVC wasn't taking a loss on every resale, I don't believe it was a big profit center for them.

Only time will tell what happens. Maybe two-tiered pricing is coming. Maybe DVC will begin to adjust its ROFR level. With the new senior management in place at DVC since last fall, we are bound to see little tweaks in the program operation here and there.