Disney executives worried about VGF sales?

[Phonedave]

Splitting hairs. Note I did say "virtually identical." We both know those take backs don't amount to much. It's still essentially the same product. Same booking windows...same nightly point cost...same dues...same expiration date...same level of service, etc.

Those rules may be enough to convince a few people to buy direct rather than resale. And that's exactly why they were created. But when we're talking about the nature of the DVC product, it's virtually meaningless.

Well to split hairs, you went on to say it was exactly the same, when clearly it is not. For a casual reader of these boards, who is in the process of gathering information on DVC, your post makes it seem as if there is no difference between the two. Virtually has become a buzz word and it gets inserted into language way too often. People take it to mean "exactly". That is how you tacitly define it in your coupled sentences below.

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4) When you buy the product "used" (resale), it's virtually identical to a "new" purchase. You can't compare to a new vs. used car purchase where the used alternative has years of wear-and-tear. Buying BLT points for $100 resale gets you exactly the same product as BLT direct for $165.
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But that is not the point. The point is that IS a difference. While not a big deal to many, it may be a deal to some. Also, just because there is not a big difference now does not mean there will not be a large difference in the future. There is very little outside of being able to use your points for a room that is specified in your contract. Many of the perks that people have come to expect are subject to the whim of DVC. DVC could very easly turn around and say the AP discount is a direct buyer only perk. To say it has not happend does not mean it could not happen.

-dave

 

[asianway]

Well to split hairs, you went on to say it was exactly the same, when clearly it is not. For a casual reader of these boards, who is in the process of gathering information on DVC, your post makes it seem as if there is no difference between the two. Virtually has become a buzz word and it gets inserted into language way too often. People take it to mean "exactly". That is how you tacitly define it in your coupled sentences below.

---------
4) When you buy the product "used" (resale), it's virtually identical to a "new" purchase. You can't compare to a new vs. used car purchase where the used alternative has years of wear-and-tear. Buying BLT points for $100 resale gets you exactly the same product as BLT direct for $165.
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But that is not the point. The point is that IS a difference. While not a big deal to many, it may be a deal to some. Also, just because there is not a big difference now does not mean there will not be a large difference in the future. There is very little outside of being able to use your points for a room that is specified in your contract. Many of the perks that people have come to expect are subject to the whim of DVC. DVC could very easly turn around and say the AP discount is a direct buyer only perk. To say it has not happend does not mean it could not happen.

-dave

I think Tim is smart enough to know trading into DCL or the concierge collection is a losing proposition, its almost a plus that you cant.

Consider that their Finance guys got fired for artifically deflating the dues at Aulani.

What if all the dues were deflated to a lesser extent(shorting capital reserves perhaps?) And now that a new management team is in place, this is the first resort with an accurate starting point for what the dues should be.

VGF being higher than BLT is extremely odd, especially with BLT having a dedicated pool plus its prorata share of the other pools. It is high rise concrete but still, if GF is costing more per point to stay, the dues per point should have been diluted and as such less or at least close.

Unless someone made another boo boo.

 

[Blufusion]

Disney cash room rates go up too. DVC dues have historically gone up about 3.5% a year. The cash room rate is higher and much higher in recent years. It really depends on what you use for inputs to your model. The variables are initial upfront cost of DVC, annual dues increase, cash room rate increase and return on your money if you invest it instead of buying in. When I ran through the numbers I assumed a 25% discount to cash rack rate. A maintenance fee increase of 3.5% a year, a cash room rate increase of 3.5% a year and a rate of return of 5% on my money if invested somewhere else. Using these assumptions the breakeven of buying at BLT vs staying at CR was 7 years. The breakeven is calculated by taking my initial investment of roughly $15,000 (169 points @$90 plus closing costs) and assuming I invest it earning 5% a year. Each year I add the earnings to my initial investment and remove the cost of staying at the hotel at the cash rate. After 7 years my initial investment would be used up and my account would go negative.

If you have a way to invest the cost of DVC and pay for a stay at a deluxe resort each year on just the dividends I would love to hire you as my financial advisor. A dividend yield around 4 to 5% is considered pretty solid with fed rates as low as they are. Considering the average room at CR goes for about $3,000 a week after sales tax I would need a $4,000 pre-tax return on my investment. That would be an almost 27% return. That would be one heck of a dividend. Maybe a mutual fund or individual stocks could appreciate at that rate, but one bad year (see 2008) and your investment would be seriously crippled. If you assume a 20% return on your investment the break even would be very far out, but you are also assuming a consistent return over a very long period of time in an extremely volatile market.

Is this for a 7 day week or a 5 day week. I love WDW But I started to see the decline in my value of going after 1997. For me and my partner it's not worth the value for us . We are Disney fans. But not enough to pay that much up front to say we have a place at WDW. For families that can afford this and pass it down I can see the value of that. For me and my partner we wanted to do my WDW bucket list of staying on property 6 days at the CR and do it like I have always wanted to. But we also didn't see the value for us.
1. There is nothing new for us as adults to enjoy there now. 2. Even with living in Florida and getting rates. It's still not worth it and basically. Disney has let WDW drop in my opinion in the value they used to offer. Instead of doing that . We went to Oahu for 8 days at a 5 star Marriott Resort . The Marriott Ko Olina resort right down the path from Aulani. Round trip airfare from Tampa for 2. Stayed in a Villa basically a time share and a 1 hr helicopter ride over the island. Total cost for all of it not per person was $4000.00. Just to let you know we get great rates because he works for Marriott. I went to Aulani one day to check it out. Yes it's a nice place . But the cost of staying there was ridiculous. I'm a Disney fan. But when I see they are gouging people just because it has the Disney name on it.
Forget it. For the cost of buying into the DVC . We could take 4 more trips to Hawaii and still have money left over. For those that like Disney and I was one of them went every year from 1985 to 1992. Then from 1997 to 2003 maybe 3 more times off property. Until Disney as a company makes more improvement to WDW. That means more rides for adults and not just for the kiddies. Next year we will be going back to Orlando. But this time again we won't be doing WDW at all. 1day at Kennedy Space Center. Their new Space shuttle Exhibit. 1 day at Sea World and 2 days at Universal. And yes we will be staying off property at the JW Marriott resort for about $100.00 a day for a $350.00 a night room.

 

[GoofGoof]

Is this for a 7 day week or a 5 day week.

I ran the numbers assuming a 7 day week in a studio. In reality 160 points will get you more than 7 days a year in a studio or with banking and borrowing you can probably swing a 1BR every other year with a studio in the off years. If you wanted to do 5 nights you could just buy less points.

I love WDW But I started to see the decline in my value of going after 1997. For me and my partner it's not worth the value for us . We are Disney fans. But not enough to pay that much up front to say we have a place at WDW. For families that can afford this and pass it down I can see the value of that. For me and my partner we wanted to do my WDW bucket list of staying on property 6 days at the CR and do it like I have always wanted to. But we also didn't see the value for us.
1. There is nothing new for us as adults to enjoy there now. 2. Even with living in Florida and getting rates. It's still not worth it and basically. Disney has let WDW drop in my opinion in the value they used to offer. Instead of doing that . We went to Oahu for 8 days at a 5 star Marriott Resort . The Marriott Ko Olina resort right down the path from Aulani. Round trip airfare from Tampa for 2. Stayed in a Villa basically a time share and a 1 hr helicopter ride over the island. Total cost for all of it not per person was $4000.00. Just to let you know we get great rates because she works for Marriott. I went to Aulani one day to check it out. Yes it's a nice place . But the cost of staying there was ridiculous. I'm a Disney fan. But when I see they are gouging people just because it has the Disney name on it.
Forget it. For the cost of buying into the DVC . We could take 4 more trips to Hawaii and still have money left over. For those that like Disney and I was one of them went every year from 1985 to 1992. Then from 1997 to 2003 maybe 3 more times off property. Until Disney as a company makes more improvement to WDW. and That means more rides for adults and not just for the kiddies. Next year we will be going back to Orlando. But this time again we won't be doing WDW ayr all. 1 day at Kennedy Space Center. Their new Space shuttle Exhibit 1 day at Seaworld and 2 days at Universal. And yes we will be staying off property at the JW Marriott resort for about $100.00 a day for a $350.00 a night room.

The first consideration when buying into DVC has to be that you plan on going at least every other year and you most likely would stay in a deluxe resort. If you aren't sure you want to return that frequently it's usually not going to be a good decision to buy. Trading in is not a great value so if you aren't going to use it at DVC its a bad value.

I plan to use my DVC every other year. With banking and borrowing 160 points gets me either a 2 bedroom for a week every other year in off season or a 1 bedroom for 7 to 10 days every other year. In the off years we like to visit other places. I prefer the condo with a kitchen and separate living space to a studio room so this works for us. My break even over paying cash for 1 week in a studio at CR every other year is about 7 trips or 14 years. In that time I will be getting a villa instead of a studio and after I "break even" I can either continue to use for just maintenance fees, rent the points out or sell my points. In 14 years my BLT contract will still have over 30 years left on it so it most likely will have some value.

Hawaii is great. Oahu was my least favorite of the 4 main islands, but Pearl Harbor is worth the trip alone. I have stayed at timeshare resorts on The Big Island and Kauai and they were both very nice. I have a very generous uncle who traded in his 2 bedroom timeshare in Florida for rooms for us on 2 separate trips.

 

[Blufusion]

I ran the numbers assuming a 7 day week in a studio. In reality 160 points will get you more than 7 days a year in a studio or with banking and borrowing you can probably swing a 1BR every other year with a studio in the off years. If you wanted to do 5 nights you could just buy less points.

The first consideration when buying into DVC has to be that you plan on going at least every other year and you most likely would stay in a deluxe resort. If you aren't sure you want to return that frequently it's usually not going to be a good decision to buy. Trading in is not a great value so if you aren't going to use it at DVC its a bad value.

I plan to use my DVC every other year. With banking and borrowing 160 points gets me either a 2 bedroom for a week every other year in off season or a 1 bedroom for 7 to 10 days every other year. In the off years we like to visit other places. I prefer the condo with a kitchen and separate living space to a studio room so this works for us. My break even over paying cash for 1 week in a studio at CR every other year is about 7 trips or 14 years. In that time I will be getting a villa instead of a studio and after I "break even" I can either continue to use for just maintenance fees, rent the points out or sell my points. In 14 years my BLT contract will still have over 30 years left on it so it most likely will have some value.

Hawaii is great. Oahu was my least favorite of the 4 main islands, but Pearl Harbor is worth the trip alone. I have stayed at timeshare resorts on The Big Island and Kauai and they were both very nice. I have a very generous uncle who traded in his 2 bedroom timeshare in Florida for rooms for us on 2 separate trips.

Our Helicopter trip was over the Memorial and seeing it from the air was just a moment. Then visiting it was just as good. It's make you very proud to be an Ameri

 

[GoofGoof]

Rather than start a new thread I just bumped this one up:

January had a big jump in DVC sales at VGF. There are now just over 34% of the total points sold and 75% of points are declared in DVC inventory.

http://dvcnews.com/index.php/dvc-pr...10-monthly-sales-update-sales-jump-in-january

Not sure if this was just a seasonal bump or if people bought now to get in before the price increases, but if sales continue at this pace they better hurry up with the Poly

 

[GoofGoof]

Except in the opening month, VGF & AKV sales were pretty close. Pretty bad for VGF considering AKV has been available since 2007.

This month, AKV sales were down to 61K. As at least you and I know (), people who buy direct often haven't done their homework and are susceptible to the sales pitch.

After VGF's poor showing, I'm guessing DVC guides were instructed to push VGF hard.

As of today, AKV is "sold out" even though Disney still has 250K points to sell, and all AKV incentives have been discontinued. Disney is doing all it can to boost VGF sales.

The DVCNews article did say they thought the steep increase in sales may have been a delay in filing deeds from December due to the holidays. If not they really must have lit a fire under the sales staff to have point sales go up 70% month over month. I'm not personally interested in buying at GF, but I am curious to see when DVC finally reaches a breaking point. I'm also looking forward to seeing how Poly sells in comparison.

 

[slappy magoo]

Yeah but if my kids end up with it and don’t want to pay the dues the villa is paid for and they can get something for it. They won’t lose any money but they will get something for it. When DVC expires they have nothing to get any money from. $30k or $40k for my kids is better than a kick in the head

I'm not saying that won't happen, but you should check out time shares on ebay. People are giving time share ownerships away. Not metaphorically. LITERALLY giving them away, for a dollar, or 5 dollars. They are saying "assume the maintenance fees and it's all yours, we'll even pay closing costs just pleeeeeeeease takeittakeittakeit! Take it off our hands! We don't want it! It sucks!...but it'll be perfect for you though..."

And there's a glut of 'em, there are plenty of these timeshare offers from all over the world. Except DVC.

If something happens to you, and your kids wind up with your timeshare property and decide they don't want it, it might take a long long time to find someone to take it off their hands, they might have to get next to nothing, if not absolutely nothing, for it, and they will continue to have to pay the maintenance fees until they do find a "buyer," or someone willing to assume ownership. Now, until they find a "buyer" they of course can use the timeshare themselves so it's not exactly a zero-sum game, especially if your timeshare has some flexibility and they can go places they'd like to go. But the idea that they might get 30k or 40k from selling your timeshare? It could happen but I wouldn't assume it will. Especially if the timeshare company in question has high maintenance fees associated with it.

To paraphrase phonedave, the bad thing about DVC is when your contract expires, you don't have anything to show for it. But the good thing is you no longer have any responsibilities to it, no costs to incur, it's a clean break.

 

[ParentsOf4]

And there's a glut of 'em, there are plenty of these timeshare offers from all over the world. Except DVC.

As long as Disney maintains its outrageously high rack rates for its Deluxe Resorts, DVC should retain its value.

Over the decades, inflation will play an important role in determining the price of DVC resales. As a result, resales should hold their value relatively well right up until a few years before they expire, beginning in 2042.

Because WDW's Deluxe Resorts are so expensive even with Disney's large discounts, there's only so low DVC can go. I'll use an example.

Historically, DVC annual Maintenance Fees (MF) and WDW hotel rack rates have increased by about 3% per annum.

In 2014, a cash Standard View room at the Boardwalk Inn for Spring Break averages to $581/night (including tax) for a week's stay. With an annual increase of 3%, this might be $780/night in 2024 or $5460/week. Even with a 30% discount (not guaranteed, especially for the more popular times of the year), this comes out to $3822/week in 2024.

2014 MF at Boardwalk Villas (BWV) is $6.01/point. In 10 years, this might be $8.08/point at 3% inflation. It takes 108 points to stay in a BWV Standard View Studio for one week during Spring Break, or $873/week in 2024.

In 10 years, the difference between renting and using DVC points might be about $2949 ($3822 – $873) annually.

Let’s assume a person wants to commit to a WDW vacation for only 5 years, a pessimistic duration given DVC's current pricing structure, and then just throw away their DVC membership, which also is unrealistic.

Theoretically, this person would be willing to pay up to $14,745 ($2949/yr X 5 yrs) for a 108-point DVC membership at BWV. Beyond the ancillary benefits of DVC membership, let’s assume they need a real financial incentive to purchase a DVC and to take into account other closing costs, so they’d only be willing to pay $10,000 for the actual points. At 108 points, this comes out to $93/point ($10,000 / 108) in 2024.

Currently, BWV is selling for around $83/point.

Obviously, $93/point in 2024 is not the same as $83/point in 2014 but, hopefully, this example demonstrates how DVC should retain much of its value as long as Disney does a competent job of maintaining demand for WDW and doesn't drastically change the way it prices its onsite resorts.

As long as people want to go to WDW and the economy doesn't tank, DVC resales should do reasonably well.

 

[flynnibus]

As long as people want to go to WDW and the economy doesn't tank, DVC resales should do reasonably well.

You forgot an important element... 'want to goto WDW frequently'

Hotels can demand high prices in one-off locations all over. Location, location, location. As long as there is a steady stream of new demand.. it's sustainable. But WDW/DVC is more than that.. you not only need to want to go but keep coming back frequently. That is a whole new level of 'demand'. "one and done..." mentality could very much undermine DVC well before the main Hotels and WDW. Hotels can be filled with new demographics... DVC is a much narrower audience.

I don't doubt those that fit the DVC model will get their money's worth... but I have far less confidence in resale value for those buying in now or the future.

 

[GoofGoof]

You forgot an important element... 'want to goto WDW frequently'

Hotels can demand high prices in one-off locations all over. Location, location, location. As long as there is a steady stream of new demand.. it's sustainable. But WDW/DVC is more than that.. you not only need to want to go but keep coming back frequently. That is a whole new level of 'demand'. "one and done..." mentality could very much undermine DVC well before the main Hotels and WDW. Hotels can be filled with new demographics... DVC is a much narrower audience.

I don't doubt those that fit the DVC model will get their money's worth... but I have far less confidence in resale value for those buying in now or the future.

The key is there are new kids born every day. As our "friends" around here love to point out WDW caters to the toddler crowd these days. That may be a huge negative for the "full grown adult" fanboys, but for families with kids under 13 WDW has never been better. That's a demographic that will be coming back for the foreseeable future and when the kids get too old for WDW the next generation of rug rats will be waiting to sign up. This isn't to say that DVC won't appeal to adults without children or young couples like it does today, but even if that demographic sours on the parks the families with young kids will keep coming back. And if you aren't buying that argument the foreign crowd seems to really enjoy the parks these days too. Another demographic who could potentially fill in if demand from the current owners should falter.

The DVC resale value itself is tricky to predict. The basic economics would tell you that your value should decline a buck or 2 every year and eventually go to zero when the contract expires. The real word is quite a bit more volatile. During the recent economic downturn resale values dropped a bunch especially on the older or less desirable resorts. However, prices are back well above where they were 3 years ago. One factor that has influenced this increase (besides an economic recovery) is the increasing price of direct from Disney points. In the future will direct point prices keep increasing? Likely and a positive for resale prices. Will DVC continue to build? Likely and a negative for resale prices. If Disney stops building in the future could demand outpace supply? Unlikely, but possible.

The other thing we have no insight into is what Disney plans to do with the DVC resorts in 2042 when the first batch of contracts expire. If they start buying points back from owners using either ROFR or through an open offer to owners and then start selling new contracts in say 2030 that extend to 2080 it will crush the resale market for existing contracts which expire in 2042. They could also try offering extensions again. A third option is they will let the contracts expire and convert them back to hotel rooms. How the expiring contracts are handled will dictate a large chunk of the resale value in the out years.

 

[tjkraz]

I don't doubt those that fit the DVC model will get their money's worth... but I have far less confidence in resale value for those buying in now or the future.

Exact dollar amounts are totally unpredictable. I would never recommend that anyone buy DVC--either direct or resale--with the expectation that it can later be sold for a specific return.

However, unless something completely unforeseeable occurs, DVC will never reach the point of so many other timeshares where it has to be essentially given away.

As long as Walt Disney World remains a viable vacation destination for tens-of-millions per year, DVC is the cheapest way to stay in deluxe on-site accommodations. And even if that specific market dwindles, there will be demand from people willing to rent the points to non-members. Simply put, there would be no reason to give away a DVC timeshare as long as the points can be rented out.

Dues will rise but since they are tied to resort operating costs, cash resort prices will rise much faster. Disney isn't going to rent out its hotel rooms for rates lower than what it costs to run the hotels, so DVC will always be the cheaper route.

 

[GoofGoof]

I didn't think this was worth a new thread so I gave this one a bump.

VGF exceeded 1 million points sold with 1.4 million to go. At a rate of about 100,000 points a month it should be sold out by next May....just in time to start selling Poly points. The sales of fixed weeks has almost trickled to a stop.

The big question is what's next? This time next year we should see ground broken on the next DVC resort. Poly isn't huge and should be a big seller.

 

[Blufusion]

Right - while with DVC Disney is getting it's capital back quickly, it is also a one shot profit (for the most part - forget re-sales). A Business has to show profit year over year. If DVC stops building, then it stops making profits.


-dave

That's the Problem. Disney is a quality product. And you pay for that. But no family here for me or my partner and I have done Disney WDW so much I don't see the value for me. Thats just me. I haven't been in 8 years now and the next trip is my last one. Don't hate Disney I loved all the trips I have taken.This one will be the bucket list of trips. Then after that no more. Just other places I want to see before I leave the old planet for Melmac and my cat. LOL! But I foresee that Disney is going to have to keep on building for future buyers of the DVC. Great for families I agree. But with that much cash at least make some improvements to the parks and make it worth the money for me to come back again. Not comparing Disney to Jim Bakker. But his Heritage USA . He offered more than he could build in many years. Don't see Disney failing at that They are Disney. But eventually the House of Cards will fall.

 

[TheBeastMom]

Or they can charge more just because it is the VGF. I guess there thinking could be if you can own a timeshare there you can afford the maintanence fee's?

PERHAPS....the are factoring in the upkeep of the Monorail because of the extra weight it will add to the trips?

It has already been reviewed that it the DVC there has no refreshments except a vending machine and there is no covered walkway to the other facilities of the restaurants, gift shops.

I'm not 'glammed' by their media to think this is a desired property when they have put this little into the DVC portion.