Does anyone know if they are planning on adding a DVC component to the poly? Just wondering.
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DVC and Poly?
- Thread starter mickeymatt
- Start date
DVC makes Disney money to do exactly what you said. By the time construction is finished the project has already been paid for by DVC members. As a rough estimate Bay Lake tower cost probably around 100-200m and will generate 600-800m in revenue.
That being said the DVC rooms do not add to continuing revenue over time, and are a 1 time shot in the arm. But they do not take money away from other projects, but rather add more money into the collective pot.
A better criticism would be this, DVC rooms are roughly profit neutral after the initial cash infusion. But the added guests do add more wear and tear and park overcrowding. These guests do not like other guests generate Disney revenue thru hotel room prices.
As to Poly DVC, who knows. But my guess would be no because Poly I think generally sells out its rooms. So there is no reason to convert existing longhouses, and there is very limited room to add more rooms that fit with the themeing. If you look at Google Earth there is really no way to do it, outside of filling in some of the water, or taking out the parking lot. But then the parking lot would be really far away from the Grand Ceremonial House.
DVC Mike
Well-Known Member
DVC guests continue to generate revenue for Disney year after year due to their spending on park tickets, souveneers, meals, recreation, etc.
carolina_yankee
Well-Known Member
There have been suggestions from engineers and such in the past that Disney has earmarked land at nearly every resort for a potential DVC. However, nothing seems to be in the pipeline at WDW beyond the current construction.
If there were to be a DVC at the Polynesian, I suspect it would be small - like VWL or BCV - and probably mean the end of the luau (space for new units).
One of the benefits of DVC is a guaranteed customer base for Disney, even in down times since the points are either going to be used by owners or rented out to someone else. While they don't make money off of hotels, Disney does make money off of the management fee and through dining, souvenir, and recreation purchases. DVC owners also tend to visit more frequently.
Dirk
If there were to be a DVC at the Polynesian, I suspect it would be small - like VWL or BCV - and probably mean the end of the luau (space for new units).
One of the benefits of DVC is a guaranteed customer base for Disney, even in down times since the points are either going to be used by owners or rented out to someone else. While they don't make money off of hotels, Disney does make money off of the management fee and through dining, souvenir, and recreation purchases. DVC owners also tend to visit more frequently.
Dirk
Oh, I think you'd be surprised at how much money they generate for Disney.
As your estimates illustrate, the revenues generated from initial sales are many times what the facility costs to construct. And that revenue estimate doesn't include interest on those who finance. 3/4 of all who buy into DVC finance the purchase through Disney. In the past Disney has been able to securitize that debt and immediately add more to the bottom line. In lieu of that, they are still collecting 11-15% interest on the loans for as much as 10 years.
Disney also earns a management fee for running the organization called "Disney Vacation Club". It's not a huge sum in the grand scheme of things (several million dollars annually), but it does add to the bottom line.
And as Mike pointed out, you have the virtually guaranteed revenue from return visits. Our family is quite happy with our WDW and DL vacations and visit a couple of times per year. But we certainly would not be spending $3000-4000 for even one trip per year as cash guests.
As for the Poly, it's probably inevitable...but quite far off at this point. DVC has four resorts actively selling now and a fifth under construction. The next announcement will probably be for a location at or near Disneyland since the Grand Californian addition is so small. At WDW, the best fit for a future resort is a second tower at the Contemporary to replace the South Garden Wing.
When they get to the Poly, I doubt they will try to retrofit those 40-year old (perhaps 50 by that time) aging longhouses. They could demolish several to make way for a new structure--perhaps as part of a resort-wide redesign. They could build on adjacent land or the current resort parking lot.
It's less a question of "how" than it is "if" or "when."
ClemsonTigger
Naturally Grumpy
Interesting thought, but I wouldn't hold my breath. When the next project comes along, I would agree with tjkraz that a second Contemporary tower would make the most sense. For those that don't like the styling....I think the new tower is far nicer than the garden wing buildings that look like military dorms.
While my first reaction was that there isn't room at Poly....reading other posts...I guess they could take the luau space, or some space near the ferry landing with minimal impact to the general site.
While my first reaction was that there isn't room at Poly....reading other posts...I guess they could take the luau space, or some space near the ferry landing with minimal impact to the general site.
The only problem I see with DVC at the poly is simply where are they going to put the thing. There simply is not a ton of room on the site.
My point about it being a shot in the arm is that compared to cash rooms, a DVC vacation generates less revenue over time. That is because 10 years from now Disney makes next to nothing on a DVC lodging, while a cash room has a profit margin attached to it. So a cash room vacation makes more money than a DVC one.
Now there is the generated revenue from ensuring DVC members vacation there every year. This is hard to calculate, but remember these additional vacations do not have the added profit of hotel rooms. These additional guests do not have their hotel room profits subsidizing park ticket prices. If an average disney vacation costs $4000, and you take out 1500 in lodging, then disney is only getting $2500 from which to take a profit from.
Here this is what I mean.
Poly 7 nights at 400 a nite == $2800
Contem DVC 7 nights studio == 140 points or so, or $14000 up front.
After 5 vacations the DVC no longer comes out ahead. Though the DVC maintence is paid for by DVC members, meaning we would have to find the real profit margin on a Poly room. At 400 a night I would guess Disney makes around 30-40% profit after hotel maintence etc. So that 2800 turns its about 800-1000 or so pure profit. So after 14-18 vacations the cash room comes out ahead, and DVC contracts last for 50 years. But Disney gets the 15 years of profits all up front.
Now that I think about it, the dvc maintence costs tell us how much it costs disney to run a hotel, as they cover all costs related to running the hotel. So Disney thinks between 3.7 and 4.5 is what it takes per point. 140 points times 4 is 560. So the cost of running a room to disney is only about 600 dollars a week, and Disney is charging 2800 a week at the poly. So disney's real profit might be more like 1800-2000 a week from those cash rooms, making DVC long term a bad idea, assuming you can sell those rooms at the cash rate. ( which is not safe assumption, there is only so many deluxe dollars to go around )
Mind you there is the added question of if Disney were to build more cash rooms at Poly could they sell them? DVC is a great marketing device to sell more rooms on property, and is the primary reason why I think it is a good idea for Disney.
Now there is the generated revenue from ensuring DVC members vacation there every year. This is hard to calculate, but remember these additional vacations do not have the added profit of hotel rooms. These additional guests do not have their hotel room profits subsidizing park ticket prices. If an average disney vacation costs $4000, and you take out 1500 in lodging, then disney is only getting $2500 from which to take a profit from.
Here this is what I mean.
Poly 7 nights at 400 a nite == $2800
Contem DVC 7 nights studio == 140 points or so, or $14000 up front.
After 5 vacations the DVC no longer comes out ahead. Though the DVC maintence is paid for by DVC members, meaning we would have to find the real profit margin on a Poly room. At 400 a night I would guess Disney makes around 30-40% profit after hotel maintence etc. So that 2800 turns its about 800-1000 or so pure profit. So after 14-18 vacations the cash room comes out ahead, and DVC contracts last for 50 years. But Disney gets the 15 years of profits all up front.
Now that I think about it, the dvc maintence costs tell us how much it costs disney to run a hotel, as they cover all costs related to running the hotel. So Disney thinks between 3.7 and 4.5 is what it takes per point. 140 points times 4 is 560. So the cost of running a room to disney is only about 600 dollars a week, and Disney is charging 2800 a week at the poly. So disney's real profit might be more like 1800-2000 a week from those cash rooms, making DVC long term a bad idea, assuming you can sell those rooms at the cash rate. ( which is not safe assumption, there is only so many deluxe dollars to go around )
Mind you there is the added question of if Disney were to build more cash rooms at Poly could they sell them? DVC is a great marketing device to sell more rooms on property, and is the primary reason why I think it is a good idea for Disney.
Seleucus:
You're right--cash rooms are more profitable in the long run. But they are more expensive to operate, too.
You are comparing apples-to-oranges in thinking that DVC dues accurately reflect the costs of operating cash rooms. Cash guests get daily housekeeping while DVC is on a less frequent scale. Cash resorts get refurbished MUCH more frequently than DVCs, which is a huge expense for Disney. Look at the major refurbishments occurring at resorts like the Beach Club and BoardWalk Inn. Old Key West has been around for more years than either of those locations. In 18 years there has yet to be a major refurb at a DVC resort.
And I think most DVC members would argue that the cash rooms receive better upkeep between refurbishments. Could be because they don't have the same near-100% occupancy that DVC resorts have or Disney spends more on them. Probably a combination of the two.
Disney must also work much harder to recruit guests to stay at its cash resorts. They spend millions annually on advertising. Commissions are paid out to travel agents on most reservations at its resorts. What does Disney spend to advertise Old Key West or the BoardWalk Villas? Next to nothing.
Discount programs frequently cut into the resorts' profit margins. Whether it's "Buy 4, get 7" or "Free dining", it's rarer and rarer that Disney can collect its full Rack Rates from guests.
And then there are the vacancies. Disney doesn't care if DVC rooms are left empty. The points are sold--if members choose not to use them it's no great loss to the Mouse. But even during good time Disney is lucky to see 90% average occupancy at its resorts. And that level is only reached with some form of discounts and incentives.
And let's not forget that Disney is earning interest on the DVC purchases--most frequently in the form of interest payments from those who finance. The average cash guest may spend more on his accommodations. But it comes in the form of a small downpayment followed by the remainder upon arrival. DVC buyers are giving Disney $20,000 (or more) up front, which Disney can invest. Or they are financing and paying Disney up to 15% interest on top of the steep buy-in price.
Cash rooms tend to generate more revenue but they also carry significantly higher expenses. And there is no guaranteed revenue stream from cash rooms--Disney has to keep earning new business to fill them.
DVC is easy business. Once they attract the customer, members pay all of the resort expenses. We even pay for the reps who take reservations, theme park buses, property taxes, and so on. There is little need to advertise DVC resorts, no need to immediately respond to changing design trends (flat panel TVs, duvets, etc.) and no commission split with travel agents. And they are pretty much guaranteed that DVC members will continue pouring money into the parks even when the economy is otherwise suffering.
You're right--cash rooms are more profitable in the long run. But they are more expensive to operate, too.
You are comparing apples-to-oranges in thinking that DVC dues accurately reflect the costs of operating cash rooms. Cash guests get daily housekeeping while DVC is on a less frequent scale. Cash resorts get refurbished MUCH more frequently than DVCs, which is a huge expense for Disney. Look at the major refurbishments occurring at resorts like the Beach Club and BoardWalk Inn. Old Key West has been around for more years than either of those locations. In 18 years there has yet to be a major refurb at a DVC resort.
And I think most DVC members would argue that the cash rooms receive better upkeep between refurbishments. Could be because they don't have the same near-100% occupancy that DVC resorts have or Disney spends more on them. Probably a combination of the two.
Disney must also work much harder to recruit guests to stay at its cash resorts. They spend millions annually on advertising. Commissions are paid out to travel agents on most reservations at its resorts. What does Disney spend to advertise Old Key West or the BoardWalk Villas? Next to nothing.
Discount programs frequently cut into the resorts' profit margins. Whether it's "Buy 4, get 7" or "Free dining", it's rarer and rarer that Disney can collect its full Rack Rates from guests.
And then there are the vacancies. Disney doesn't care if DVC rooms are left empty. The points are sold--if members choose not to use them it's no great loss to the Mouse. But even during good time Disney is lucky to see 90% average occupancy at its resorts. And that level is only reached with some form of discounts and incentives.
And let's not forget that Disney is earning interest on the DVC purchases--most frequently in the form of interest payments from those who finance. The average cash guest may spend more on his accommodations. But it comes in the form of a small downpayment followed by the remainder upon arrival. DVC buyers are giving Disney $20,000 (or more) up front, which Disney can invest. Or they are financing and paying Disney up to 15% interest on top of the steep buy-in price.
Cash rooms tend to generate more revenue but they also carry significantly higher expenses. And there is no guaranteed revenue stream from cash rooms--Disney has to keep earning new business to fill them.
DVC is easy business. Once they attract the customer, members pay all of the resort expenses. We even pay for the reps who take reservations, theme park buses, property taxes, and so on. There is little need to advertise DVC resorts, no need to immediately respond to changing design trends (flat panel TVs, duvets, etc.) and no commission split with travel agents. And they are pretty much guaranteed that DVC members will continue pouring money into the parks even when the economy is otherwise suffering.
Pioneer Hall
Well-Known Member
I think that the Polynesian would be the next logical spot for a new DVC resort, but I also agree with a previous poster that another contemporary tower would more likely be the next expansion (The Seven Seas Tower).
As others have mentioned, the Polynesian would be tough because of the limited space on either side of the resort. The resort has nearly no space for expansion, which would mean that either Luau Cove and some of the buildings there are taken down or the buildings closer to the TTC are removed. I also think that if they do this, you will see one much larger building similar to what you have at Wilderness Lodge or BCV. You won't have smaller longhouse style buildings that you have now. There just wouldn't be enough space for that given the size that they would need for villas that are 1+ bedroom.
Personally, I hope that the Polynesian and Grand Floridian are spared these expansions. With the Polynesians already near constant 90% occupancy rate, it would make transportation much more difficult for the MK area. The Grand Floridian, as the flagship, shouldn't see that kind of expansion either. I believe that it should be preserved as it is.
As others have mentioned, the Polynesian would be tough because of the limited space on either side of the resort. The resort has nearly no space for expansion, which would mean that either Luau Cove and some of the buildings there are taken down or the buildings closer to the TTC are removed. I also think that if they do this, you will see one much larger building similar to what you have at Wilderness Lodge or BCV. You won't have smaller longhouse style buildings that you have now. There just wouldn't be enough space for that given the size that they would need for villas that are 1+ bedroom.
Personally, I hope that the Polynesian and Grand Floridian are spared these expansions. With the Polynesians already near constant 90% occupancy rate, it would make transportation much more difficult for the MK area. The Grand Floridian, as the flagship, shouldn't see that kind of expansion either. I believe that it should be preserved as it is.
ClemsonTigger
Naturally Grumpy
Interesting points.
One of the reasons I haven't seriously concidered DVC is the confusion over points and times and whatever else has to be figured into a vacation....
But to throw one monkey wrench into your calculations....open rooms. Disney has been doing a pretty good job of using available DVC rooms as cash rooms. It seems to be pretty popular as many like the idea of multiple bedrooms, kitchens, laundry etc. (for prime prices) That has to add a nice little bump to the coffers.
The great thing about DVC is this, if you want to stay in deluxe hotel rooms for a lot less than you would pay normally, DVC rocks. If you want to save money and are fine with the all-stars, then DVC is not for you.
For example lets say you want to stay at the Contemporary for 1 week a year. 400 a night in the tower at least. 2800 a year times 10 and you get 28000. 140 points is 14000 up front and about 3.7 maintence over 10 years. So about 5000 in maintence costs. 19000 for 10 years of 1 week.
Of course All-star for 1 week is 560. Times that by 10 and its only 5600, and well as you can see the maintence costs alone are what a week in All-star costs.
For example lets say you want to stay at the Contemporary for 1 week a year. 400 a night in the tower at least. 2800 a year times 10 and you get 28000. 140 points is 14000 up front and about 3.7 maintence over 10 years. So about 5000 in maintence costs. 19000 for 10 years of 1 week.
Of course All-star for 1 week is 560. Times that by 10 and its only 5600, and well as you can see the maintence costs alone are what a week in All-star costs.
DVCOwner
A Long Time DVC Member
I find that it is funny that there are so many DVC haters on this BB. DVC is a cash cow for Disney. They make money on the sale of the units. They make money on the running of the units. They sale maid services that many who stay there purchase. They increase the number of people that attend the parks every day and pay for tickets. They spend a lot of money on food and other items purchased in the parks. They also encourage everyone to bring friends that may not visit Disney. I know that I for one would not go to Disney every year and this year I am bring 25 family and friends with me. That is going to put a lot of money into Disney’s bottom line.
The construction of DVC units takes no money from other projects, they are paid for be the sales. If Disney was not making money they would not build these units.
The construction of DVC units takes no money from other projects, they are paid for be the sales. If Disney was not making money they would not build these units.
ClemsonTigger
Naturally Grumpy
Not everyone here, but there are those that have to find someone to blame, and DVC is an easy target...:animwink: It can be irritating that there is a DVC stand around every corner of the property when there appears to be neglect at park upkeep or innovation (ignoring that they are different cost centers). DVC construction is going fast and furious while general hotel expansion/upkeep appears lacking. The lack of new attractions is also held up against that construction. There is also some degree of have's and have nots. DVC appears to some as a "priviliged group", and envied/scorned similar to the looks you get going through a FP line when standby is 2 hours. While some are vocal about their dislike, there are many members here like yourself who are happy members.
dizzney
Member
I agree with long time DVC member, We love DVC and are only sorry we didnt purchase earlier than 1999, we actually bought in at 220 at BWV, added to 275 and just bought another 100 in BLT. We dont want to stay in All Stars, we enjoy the space to relax in a one or two bedroom. We've taken family several times and they loved it also. We've had friends who bought at our recommendation.
SMRT-1Michael
Well-Known Member
would love to have Polynessian Villas!!! Ive always wondered if they could ever possibly do that.