Disney executives worried about VGF sales?

[ParentsOf4]

dvcnews.com had a fascinating article suggesting that sales at WDW's latest DVC, The Villas at the Grand Floridian (VGF) are lagging far behind expectations:

http://dvcnews.com/index.php/dvc-pr...-concerned-about-recent-grand-floridian-sales

Not surprisingly, buyers are citing the combined high purchase price, high annual Maintenaice Fee (MF), and high numer of points needed per night.

Those who were watching the DVC market were pleasantly surprised by the starting price of $150/point. With Bay Lake Tower (BLT) at $165/point, many were expecting VGF to start above that.

However, many have been taken aback by the initial high MF ($5.41/point) and high points per night (ranging from 17 to 43 points per night for a Studio).

For some perspective, a sample July one-week stay in a Lake View Studio works out to:

- BLT: $4.50/point X 153 points/week = $689/week
- VGF: $5.41/point X 199 points/week = $1077/week

In this sample, VGF is 56% more than BLT!

After many years of price increases that far outpaced inflation, perhaps direct DVC sales have finally reached a tipping point.

Or perhaps corporate Disney needs to stop sitting on its duff and start building something new at the theme parks that's worth visiting.

 

[dreamfinder]

How does the cost of a normal room at the two locations compare? I agree completely that 17 pts for a studio during slow season is crazy. I can't see any reason to justify the extra points per night, never mind the inflated maintenance costs on opening. Does the maintenance/upkeep of the GF area really cost that much more than the other locations?

 

[ParentsOf4]

How does the cost of a normal room at the two locations compare? I agree completely that 17 pts for a studio during slow season is crazy. I can't see any reason to justify the extra points per night, never mind the inflated maintenance costs on opening. Does the maintenance/upkeep of the GF area really cost that much more than the other locations?

Comparing rack rates of comparable Lake View rooms at the Grand Floridian and the Contemporary for a 1-week stay during the 4th of July:

- Contemporary: $4087
- Grand Flordian: $4835

In other words, a Cash Room Only (CRO) room at the Grand Floridian is 18% more than the Contemporary.

Yet the DVC room is 56% more!

Even for Disney, the hubris displayed by DVC executives boggles the mind.

 

[willtravel]

Makes ya kinda wonder what Poly Dvc will be like. Not trying to derail VGF topic. Just thinking...........

 

[willtravel]

How does the cost of a normal room at the two locations compare? I agree completely that 17 pts for a studio during slow season is crazy. I can't see any reason to justify the extra points per night, never mind the inflated maintenance costs on opening. Does the maintenance/upkeep of the GF area really cost that much more than the other locations?

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?

 

[dreamfinder]

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?

Except that maintenance fees are required to (by law I believe) be an accurate reflection of the costs to maintain/run the portion of services attributed to the timeshare property. So if the maint fees are say $1 higher at open than BLT, that would have to indicate that the costs of maintaining the grounds/providing of services for at GF cost roughly 20% more than at BLT. And in my (somewhat limited) experiences at GF I can't say that the staff was 20% better, so maybe the upkeep of the decor and grounds cost 20% more?

 

[Disneyhead'71]

For $2300/month, you can rent a 4 bedroom, 3 bath house. Screened in pool/hot tub with built in gas grill, and granite/stainless kitchen. Just off of Disney property. For $5000 you could winter at WDW.

 

[Master Yoda]

Here is a possibility....Put the product out at an inflated price and see who bites. If no one does, start dropping the price.

Personally, I think Disney has an over inflated view of the GF. The call it their "flagship resort" and while it is that from a restaurant, amenities, etc, standpoint I have just never seen it that way from a guest popularity standpoint. Sure there are plenty of guests that love the place, but I have seen far more that love the Poly, WL and the Contemporary much, much more.

 

[Tonka's Skipper]

Well stated post Master Yoga!

 

[willtravel]

Here is a possibility....Put the product out at an inflated price and see who bites. If no one does, start dropping the price.

Personally, I think Disney has an over inflated view of the GF. The call it their "flagship resort" and while it is that from a restaurant, amenities, etc, standpoint I have just never seen it that way from a guest popularity standpoint. Sure there are plenty of guests that love the place, but I have seen far more that love the Poly, WL and the Contemporary much, much more.

I'd hate to be the one who bought at the higher price though, only to find out afterwards they are now cheaper........

 

[Master Yoda]

I'd hate to be the one who bought at the higher price though, only to find out afterwards they are now cheaper........

So would I, but it happens in pretty much every market and real estate/timeshares are no different. In some cases you make out by buying early if popularity exceeds projections. It looks like the opposite is true in this case.

 

[GoofGoof]

How does the cost of a normal room at the two locations compare? I agree completely that 17 pts for a studio during slow season is crazy. I can't see any reason to justify the extra points per night, never mind the inflated maintenance costs on opening. Does the maintenance/upkeep of the GF area really cost that much more than the other locations?

BLT has 5.7 million points while VGF has only around 2.5 million. Having less than half the total points probably has some impact on the fees being higher. The larger the resort the easier it is to spread costs. For instance if they have 2 people at the BLT check-in they won't have just 1 at GFV so the expense is the same but it's spread over half as many points. Same goes for some of the programs and services offered through the community hall. Certain expenses like housekeeping should be mostly variable so they should not be higher.

 

[GoofGoof]

I think the points per night are a bigger issue than the fees. You need more to stay the same amount of time. People don't want to have to shell out that kind of cash upfront or finance that much more to buy in.

 

[DVC Mike]

For some perspective, a sample July one-week stay in a Lake View Studio works out to:

- BLT: $4.50/point X 153 points/week = $689/week
- VGF: $5.41/point X 199 points/week = $1077/week

In this sample, VGF is 56% more than BLT!

I think point inflation has been going on for the past few years. For the same time frame, OKW is 106 points, while BCV is 134.

The point chart inflation has really gone up with BLT, VGC, Aulani and now VGF.

 

[DVC Mike]

I think the points per night are a bigger issue than the fees. You need more to stay the same amount of time. People don't want to have to shell out that kind of cash upfront or finance that much more to buy in.

Well, those of us who like the Grand Floridian and can afford to buy in, will.

I think the announcement of the DVC at the Poly last month impacted some VGF sales.

 

[GoofGoof]

I think point inflation has been going on for the past few years. For the same time frame, OKW is 106 points, while BCV is 134.

The point chart inflation has really gone up with BLT, VGC, Aulani and now VGF.

Agreed, but the question is do people view the price difference as justified or worth the extra spend. In other words is it worth it to spend 25% more to stay at BCV over OKW? For many people (me included) the answer is yes. You can walk to 2 of the 4 parks plus have access to the restaurants and entertainment of the Boardwalk within walking distance. As Master Yoda pointed out Disney may have overvalued The Grand Floridian. If people don't view it as being worth the 56% increase over CR it could be a tough sell.

 

[GoofGoof]

Well, those of us who like the Grand Floridian and can afford to buy in, will.

I think the announcement of the DVC at the Poly last month impacted some VGF sales.

Yep. It was unfortunate timing. If people were turned off by the price point they may be waiting to see what Poly point charts look like. With the waterfront bungalows I can't imagine the points will be cheap. The studio rooms could be slightly more reasonable and more in line with BLT. The maintenance fees will likely be high with the small number of rooms being built/converted.

 

[Phonedave]

Those who were watching the DVC market were pleasantly surprised by the starting price of $150/point. With Bay Lake Tower (BLT) at $165/point, many were expecting VGF to start above that.

However, many have been taken aback by the initial high MF ($5.41/point) and high points per night (ranging from 17 to 43 points per night for a Studio).

The two go hand in hand though. The cheaper you make the cost per point, the more the point cost per night has to be.

Lets say I am a poor businessman and i build a timeshare and sell it just to break even. It is a 10 room unit and it cost me $36,500 to build. Being a 10 room unit means there are 3650 room nights to rent. If I make those rooms 1 point a night, then I have 3650 points to sell. To break even, they have to be $10 each. Now, if I want to make the points cheap, then I can sell 36,500 of them for a $1 each, but then I have to make my rooms 10 points per night.

DVC has the added problem of trying to keep the point "value" in line with other DVC properties.

I wonder how much the VGF cost to build - not the buildings themselves, but what sort of payments that DVC had to make to WDW Resorts Division for the property (or whatever division holds that land).

As far as yearly dues, I don't see what costs so much more. True, the total cost is divided by a lower number of points, so the cost per point goes up, but it is not as if the resort has anything that would require extensive money to maintain (unlike Kidani Village savannah for example)


-dave

 

[dreamfinder]

As far as yearly dues, I don't see what costs so much more. True, the total cost is divided by a lower number of points, so the cost per point goes up, but it is not as if the resort has anything that would require extensive money to maintain (unlike Kidani Village savannah for example)

This is a clearer summation of what I was wondering before. Is the grass seed at GF hand seeded one by one? Or the lawn manicured with scissors? Any upfront costs should be covered under the initial point sales, so the fees are just covering maintenance and upkeep. Or maybe they are deciding to proactively replace light bulbs and the roof before its actually needed? So they are banking now rather than later?

 

[Phonedave]

This is a clearer summation of what I was wondering before. Is the grass seed at GF hand seeded one by one? Or the lawn manicured with scissors? Any upfront costs should be covered under the initial point sales, so the fees are just covering maintenance and upkeep. Or maybe they are deciding to proactively replace light bulbs and the roof before its actually needed? So they are banking now rather than later?

Exactly - Going over in my head, I can't imagine what costs more. Housekeeping and cleaning maybe a bit (cleaning the lobby may take a few extra people) but grounds keeing, mechanical systems, capital expenses (paving, roof replacements, etc), and guest services should not be any more than at other resorts.

it will be interesting to look at what the breakdown in the contract is. DVC MIke bought in, he should have that available to him (or it should be somewhere on the internet)

-dave