Has DVC Stalled the Parks and Created Complacency in TDO?

[Master Yoda]

Doesn't WDW rent out some DVC rooms directly to the general public?

Yes. It is actually required that they rent a certain percentage to the public.

 

[TinkerBelle8878]

I've often thought this was the case. The only thing that seems to be always announced as being planned and actually built are the DVCs. Hyperion Wharf? nope. But Bay Lake Tower, its up and running.

Meanwhile, WOL in Epcot is gone but the building's still there for conventions (just wrong on so many levels) , Imagination is in need of a major upgrade, it took years and years after the paving over of 20k to build TLM. That was a rumor since that closed. Yet the only thing that seems to be definite are the DVCs. All this worry and outrage over the Avatar land in AK, I have doubts that it will never be built. There will be a DVC announced, probably for Poly (which just seems wrong to shoehorn these everyplace), and that will be built instead. AK will get a playground and that will be that.

Even the Pop 'Legendary Years' was left to ruin until it was changed into the new AoA. They should've taken care of that and turnd that into a DVC to save it from being such an eye sore.

And yet the prices keep going up for tickets because 'they can'. Maybe its just me but I see within the next decade or so, the pendulum swinging in the other direction. It happened with the housing boom. And this isn't even an actual unit that a person owns.

My parents sat through a whole presentation back when this was being test marketed. And the two things they came away with was, with no free park tickets or not actually owning a unit, why would they put so much money into this? What would be the return and they only have points to sell back off. No actual property.

As we've seen it spread, with the kiosks in all th parks and the large towers going up next to resorts, someone in charge needs to refocus. Instead of announcing DVC Poly or lord knows what next, announce much needed rides and attractions in the parks.

 

[GoofGoof]

DVC definitely is preventing an expansion of Disney hotel rooms (other than value resorts). The bulk of the money invested to build the DVC resorts is recovered when the units are sold so I don't know why that would stop them from spending on the parks. If anything you could argue that if they tied up capital in building traditional hotel rooms they would have less free cash flow to spend on parks.

2 of the last 3 DVC resorts built were is CA and HI so they would not help WDW attendance. I doubt that management's strategy is to sell a bunch of timeshares and then invest nothing in the parks since they have guaranteed customers. That really makes no business sense. Even if the total gets to 20% of total park guests you are still risking throwing away 80% of your customers. It does seem based on this year's ticket increase that they are looking for ways to make more people interested in DVC. I would not be surprised to see more of that in the future. I am a DVC owner so maybe that is wishful thinking too.

 

[GoofGoof]

I've often thought this was the case. The only thing that seems to be always announced as being planned and actually built are the DVCs. Hyperion Wharf? nope. But Bay Lake Tower, its up and running.

Meanwhile, WOL in Epcot is gone but the building's still there for conventions (just wrong on so many levels) , Imagination is in need of a major upgrade, it took years and years after the paving over of 20k to build TLM. That was a rumor since that closed. Yet the only thing that seems to be definite are the DVCs. All this worry and outrage over the Avatar land in AK, I have doubts that it will never be built. There will be a DVC announced, probably for Poly (which just seems wrong to shoehorn these everyplace), and that will be built instead. AK will get a playground and that will be that.

Even the Pop 'Legendary Years' was left to ruin until it was changed into the new AoA. They should've taken care of that and turnd that into a DVC to save it from being such an eye sore.

And yet the prices keep going up for tickets because 'they can'. Maybe its just me but I see within the next decade or so, the pendulum swinging in the other direction. It happened with the housing boom. And this isn't even an actual unit that a person owns.

My parents sat through a whole presentation back when this was being test marketed. And the two things they came away with was, with no free park tickets or not actually owning a unit, why would they put so much money into this? What would be the return and they only have points to sell back off. No actual property.

As we've seen it spread, with the kiosks in all th parks and the large towers going up next to resorts, someone in charge needs to refocus. Instead of announcing DVC Poly or lord knows what next, announce much needed rides and attractions in the parks.

For me DVC not being a traditional timeshare was a positive. A traditional timeshare has deeded property that you own indefinitely (real estate investment). With DVC you have a finite end point and the market value will be somewhat based on the number of years left. Being at WDW it is pretty certain that Disney will not let the buildings fall into disrepair and there will always be demand to trade into them. I have seen some cases of traditional timeshares where people just want to get out of paying fees and offer to give the timeshare away just to get rid of it. With right of first refusal that really can't happen with DVC.

There are a few pretty good websites out there that detail out all of the pros and cons of buying in. I would suggest checking those out rather than listening to the sales pitch. I know it's not for everyone and I'm not trying to be defensive but rather just throwing out my thoughts and reasoning behind it. Sorry for hijacking the thread. I did reply to the original post too.

 

[MickeyPeace]

You don't commit to the time. That is how long your lease lasts. You can sell it if you do not want it any longer.

Yes you can sell it if you don't want it but not back to Disney. They will not buy it back.

You have to go to a secondary market that deals in reselling. Disney does not get involved in resale.

This also means you could take a loss if there is not a strong buyer or no buyer at all.

 

[ParentsOf4]

Yes you can sell it if you don't want it but not back to Disney. They will not buy it back.

You have to go to a secondary market that deals in reselling. Disney does not get involved in resale.

This also means you could take a loss if there is not a strong buyer or no buyer at all.

Regarding DVC, Disney has a "Right of First Refusal" (ROFR). Once you find a seller for your DVC membership, you must submit your contract to Disney for approval. If Disney feels that the offer is too low, Disney will purchase it instead. This is Disney's way of making sure prices on the secondary market (a.k.a. "resales") doesn't go too low. I assume to protect the value of the DVCs that Disney is selling. Disney will "resale" these re-purchased contacts but at a much higher price than you can get on the secondary market.

There are 3 major advantages to purchasing a DVC:

1. Because it's Disney, it holds it value relatively well. Many other timeshare contracts can be found on websites for $1, people trying to get rid of the timeshare they bought into. Some DVC properties are actually worth more than what people paid for them. Most can be purchased on the secondary market for about 60%-90% of what they originally sold for and are a lot cheaper than buying directly from Disney. Purchasing a DVC directly from Disney has gotten very expensive.

2. If you wish to sell your DVC, it will sell quickly on the secondary market, assuming you have priced it reasonably. When a DVC doesn't sell quickly, it's usually because the seller is trying to get top-dollar and is willing to wait a bit longer for a better price. There continues to be a strong demand for DVC on the secondary market.

3. If you visit WDW at least once every 2 years, DVC is a cheaper way of staying at a Deluxe Resort. (But it usually takes a multi year commitment to realize this savings.)

It does seem that in the last 15 years or so, Disney is building more DVCs than anything else at WDW. I assume because these are highly profitable. In this sense, it does feel that development of rides and parks has slowed down considerably since DVC started to become popular in the late 1990s.

 

[wolf359]

It is possible the Vacation Club has played a part in the perception that park growth has stalled, but I think there were several other things that had a greater and more noticeable impact.

First, I think the WDW "Building Boom" of the late 80s - early 90s was too much too fast. One, it set an expectation for constant multiple building and expansion projects that no company could or should continue forever. While there have been new attractions or updates going on throughout this "stall" nothing can compare in scope with what was going on from 1988-1998.

Two, it created such a large infrastructure to maintain that I don't think the company fully realized how expensive all that building would be in the long run. Had all of that construction been done on a more conservative time frame I think we'd still have all that we have today, but the company would have been better prepared for the impact each addition had on the property overall.

I think the addition of 20 years worth of new things in the span of 10 years justified (even if only in their minds) the need for rest by the end of the 90s.

After that seemed to be an unfortunate domino effect of bad circumstances: The failure of California Adventure, Eisner's loss of interest in the theme parks which led to slashed budgets, and topped off with the sudden sharp drop in travel post 9/11. Even with the rocky economy of the last several years the company has still continued building, but many of those projects seem to be firmly in the "less exciting" category, especially restaurants and Vacation Club.

 

[montyz81]

TDO did not even exist when Walt died.

You missed the point. The driving force behind creativity for Disneyland was Walt. That made it's way to FL and of course the other parks after that. They basically just recreated what was done in DL with some differences. My point was that creativity and imagination became strangled more so after Walt died. Reading his biography told me that he never cared how much things cost. He figured Roy would figure it out. From that date forward, that notion reversed, save for maybe Epcot Center. Cost became a huge driver in if something got created. I get that is how companies should be run, but somehow Walt made it work the other way around. It just isn't so in today's day and age. Creativity and imagination is severely strangled by cost. I only say that cause I hear so much that comes out of Disney Imagineering but never see it completely come to fruition in the parks. The SSE Refurb is one example. Hyperion Warf is another. Westcot is the biggest example of all.

 

[epcotisbest]

You missed the point. The driving force behind creativity for Disneyland was Walt. That made it's way to FL and of course the other parks after that. They basically just recreated what was done in DL with some differences. My point was that creativity and imagination became strangled more so after Walt died. Reading his biography told me that he never cared how much things cost. He figured Roy would figure it out. From that date forward, that notion reversed, save for maybe Epcot Center. Cost became a huge driver in if something got created. I get that is how companies should be run, but somehow Walt made it work the other way around. It just isn't so in today's day and age. Creativity and imagination is severely strangled by cost. I only say that cause I hear so much that comes out of Disney Imagineering but never see it completely come to fruition in the parks. The SSE Refurb is one example. Hyperion Warf is another. Westcot is the biggest example of all.

DVC and TDO did not exist in 1966. How one affects the other is what the original post is about.

 

[ParentsOf4]

It is possible the Vacation Club has played a part in the perception that park growth has stalled, but I think there were several other things that had a greater and more noticeable impact.

First, I think the WDW "Building Boom" of the late 80s - early 90s was too much too fast. One, it set an expectation for constant multiple building and expansion projects that no company could or should continue forever. While there have been new attractions or updates going on throughout this "stall" nothing can compare in scope with what was going on from 1988-1998.

Two, it created such a large infrastructure to maintain that I don't think the company fully realized how expensive all that building would be in the long run. Had all of that construction been done on a more conservative time frame I think we'd still have all that we have today, but the company would have been better prepared for the impact each addition had on the property overall.

I think the addition of 20 years worth of new things in the span of 10 years justified (even if only in their minds) the need for rest by the end of the 90s.

After that seemed to be an unfortunate domino effect of bad circumstances: The failure of California Adventure, Eisner's loss of interest in the theme parks which led to slashed budgets, and topped off with the sudden sharp drop in travel post 9/11. Even with the rocky economy of the last several years the company has still continued building, but many of those projects seem to be firmly in the "less exciting" category, especially restaurants and Vacation Club.

Great post! You brought up several points I hadn't considered.

I wonder if FLE and Avatarland are corporate Disney's attempt to restart building in the parks (i.e. more than a ride or two here & there). Until I actually walk through these and form my own opinion, it's unclear to me whether they represent real growth or simply replacements. (20,000 Leagues Under the Sea was closed and never replaced, Snow White's Scary Adventure was shuttered, while too little is known about Avatarland.)

 

[Jimmy Thick]

That 'notion reversed' you mention is a direct result of Michael Eisner. Eisner often spoke of his "singles and doubles" strategy to movie and TV making. Basically, make a bunch of cheap movies and shows that are moderately successful. Don't try for the home run. Eisner drove that philosophy throughout corporate Disney, including the theme parks, to the point where Roy Disney's (Walt's nephew) resignation letter in 2003 included:

As I have said, and as Stanley Gold has documented in letters to you and other members of the Board, this Company, under your leadership, has failed during the last seven years in many ways:

...

The timidity of your investments in our theme park business. At Disney's California Adventure, Paris, and now in Hong Kong, you have tried to build parks "on the cheap" and they show it, and the attendance figures reflect it.

Eisner saved Disney, don't believe too much into one sided stories by people with grudges.



Jimmy Thick-There are many.

 

[montyz81]

Eisner saved Disney, don't believe too much into one sided stories by people with grudges.[/I]

Perhaps he did, I think what Roy complained about is that he ran the company as if he was always trying to save it. At some point, you have to start investing back into the company and improve the product even more... See Carlos Ghosn.

 

[Phonedave]

Some Misconceptions.


1) DVC is not a "401(K)" program for Disney - a locked in long term gain. DVC makes NO money off of the yearly dues. They make all of their money off of building and selling resorts. Dues go toward upkeep and the cost of running the DVC - thats it. By law, a timeshare cannot profit off of dues (over the long term). If anything, it is a commitment on Disney's part as well, to keep providing the DVC resport you bought into for the lifetime of your contract. IF they start to slack off, thats what the time share holders meetings are for.

2) Building DVC units does not funnel money away from the park. That is not how a business such as TWDC works. DVC and Parks are two seperate entities with seperate budgets, targets, and requirements. DVC is building more DVC units because DVC is selling units, which creates more free cash for DVC and allows them to bulld more units. DVC is a well run unit (Aluani planning not withstanding) with a great sales force, a unique product, and builds a strong sub-brand within the Disney umbrella. Disney parks and resorts seems to be focused on expense cutting as opposed to revenue generation.

IF anything, DVC may begin to pressure Parks & Resorts into stepping UP their game by saying "look, we have a great product that sells. People love the DVC resorts, they love the DVC brand, but they are getting sick of being repeat customers to your stale parks. Stop relying on the one visit in a lifetime customers, and start concentrating on the repeat crowd, which is our common demographic"

-dave

 

[MickeyPeace]

It is possible the Vacation Club has played a part in the perception that park growth has stalled, but I think there were several other things that had a greater and more noticeable impact.

First, I think the WDW "Building Boom" of the late 80s - early 90s was too much too fast. One, it set an expectation for constant multiple building and expansion projects that no company could or should continue forever. While there have been new attractions or updates going on throughout this "stall" nothing can compare in scope with what was going on from 1988-1998.

Two, it created such a large infrastructure to maintain that I don't think the company fully realized how expensive all that building would be in the long run. Had all of that construction been done on a more conservative time frame I think we'd still have all that we have today, but the company would have been better prepared for the impact each addition had on the property overall.

I think the addition of 20 years worth of new things in the span of 10 years justified (even if only in their minds) the need for rest by the end of the 90s.

After that seemed to be an unfortunate domino effect of bad circumstances: The failure of California Adventure, Eisner's loss of interest in the theme parks which led to slashed budgets, and topped off with the sudden sharp drop in travel post 9/11. Even with the rocky economy of the last several years the company has still continued building, but many of those projects seem to be firmly in the "less exciting" category, especially restaurants and Vacation Club.

These are definitely valid points to consider. Thanks for providing another viewpoint.

I still would like to see a hold put on DVC and some money poured into fixing Epcot, adding to AK and doing anything to HS. Beyond maintenance.

 

[njDizFan]

^^^ Agreed good post. One thing though...I would love the DVC members to vocalize any issues they may have with maintenance or staleness but really they have no rescourse, they are stuck there for 50 years.

 

[ParentsOf4]

Perhaps he did, I think what Roy complained about is that he ran the company as if he was always trying to save it. At some point, you have to start investing back into the company and improve the product even more... See Carlos Ghosn.

In his resignation letter, Roy Disney thought Eisner and Frank Wells (died in 1994) did a great job for the first 10 years. I think it's generally accepted that Eisner saved the Walt Disney Company from take-over in 1984. I'm not sure this counts as "saving" the company. Disney (and the theme parks) would have existed as the Disney brand but would have been under the umbrella of a larger corporation.

IMHO, Disney's pre-1984 corporate culture had stagnated. Unless you've been alive long enough, you might not realize that there was a time when Disney was decidedly un-cool, even among children.

However, after 1994, Roy (and many others) thought Eisner was a disaster. This is why Eisner ultimately was ousted. I suggest you read Roy's letter. It's available on the Internet.

 

[MickeyPeace]

^^^ Agreed good post. One thing though...I would love the DVC members to vocalize any issues they may have with maintenance or staleness but really they have no rescourse, they are stuck there for 50 years.

Not to derail the thread but that brings up an issue about DVC that I had when considering it.

Maintenance costs are the responsibility of DVC members not Disney correct? That to me is a money loophole in the "fixed points" system, a loophole that favors Disney.
The one time fee and points that you buy are fixed so that it appears to be a good deal for guests decades down the line. Your cost for purchasing points can never increase. (essentially after figuring out the system).

But maintenance costs can change at any time. That means theoretically that Disney can always get more money from DVC members if they choose.

Plus Disney saves money in only having Mousekeeping clean your room every four days. Conversely members aren't paying for Mousekeeping so are they really getting a deal or cost cutting when it comes to that.

Personally, I prefer the freedom of staying in any resort I choose, not just DVC. I always find good rates. Often much cheaper than DVC. (I just stayed at Saratoga for $150 a night).

I like having Mousekeeping daily because it feels more like a vacation. (And I don't want to pay extra for it like DVC)

I also may change over the years and may visit WDW less, who knows. I don't want to be locked in and have to sell on the resell market.

This and more, so for some it works. For me, I'll like things the way they are with out it.

Maybe one of the DVC members here can chime in about the maintenance and if I got it correctly.

 

[GoofGoof]

Not to derail the thread but that brings up an issue about DVC that I had when considering it.

Maintenance costs are the responsibility of DVC members not Disney correct? That to me is a money loophole in the "fixed points" system, a loophole that favors Disney.
The one time fee and points that you buy are fixed so that it appears to be a good deal for guests decades down the line. Your cost for purchasing points can never increase. (essentially after figuring out the system).

But maintenance costs can change at any time. That means theoretically that Disney can always get more money from DVC members if they choose.

Plus Disney saves money in only having Mousekeeping clean your room every four days. Conversely members aren't paying for Mousekeeping so are they really getting a deal or cost cutting when it comes to that.

Personally, I prefer the freedom of staying in any resort I choose, not just DVC. I always find good rates. Often much cheaper than DVC. (I just stayed at Saratoga for $150 a night).

I like having Mousekeeping daily because it feels more like a vacation. (And I don't want to pay extra for it like DVC)

I also may change over the years and may visit WDW less, who knows. I don't want to be locked in and have to sell on the resell market.

This and more, so for some it works. For me, I'll like things the way they are with out it.

Maybe one of the DVC members here can chime in about the maintenance and if I got it correctly.

OKW is the oldest timeshare so the most history. Their annual fees have increased at an average of 3.2% per year. The other DVC resorts vary, but the range was between 3 and 3.6% increase. Typically it appears that the fees at the newer resorts don't go up much the first few years when they are still selling them then have a year or 2 of adjustment. Fees also vary by resort so you have to keep that in mind too. DVC has the right to raise fees based on need, but as someone pointed out earlier there are timeshare laws so they can't just boost rates to cover other costs not related to the property. If you compare this average fee increase to the average increase at the deluxe resorts it is probably pretty comparable or maybe a little lower depending on who you talk to. It is possible the rates could go up as time goes on since the history is rather short compared to the length of contracts.

One interesting component to resales is that the market for the older units that expire in 2042 is holding steady in the $55 to $70 per point range. Those contracts have 30 years to run. If you buy into BLT now and use it for 18 years until 2030 there will still be 30 years left and if the rates hold up you should in theory be able to get $60 per point when you sell. If you bought on the secondary market at $90 that represents a loss of $30 per point or roughly 1/3 of your investment. Some would call this selling at a loss (if I buy a stock for $90 and sell for $60 it is a bad loss). In this case you have to figure in the 18 years of vacations you got with just paying maintenance fees plus your loss of $30 per point. It really is not a loss. You are going in assuming you are never going to get back what you put in.

 

[Computer Magic]

It is possible the Vacation Club has played a part in the perception that park growth has stalled, but I think there were several other things that had a greater and more noticeable impact.

First, I think the WDW "Building Boom" of the late 80s - early 90s was too much too fast. One, it set an expectation for constant multiple building and expansion projects that no company could or should continue forever. While there have been new attractions or updates going on throughout this "stall" nothing can compare in scope with what was going on from 1988-1998.

Two, it created such a large infrastructure to maintain that I don't think the company fully realized how expensive all that building would be in the long run. Had all of that construction been done on a more conservative time frame I think we'd still have all that we have today, but the company would have been better prepared for the impact each addition had on the property overall.

I think the addition of 20 years worth of new things in the span of 10 years justified (even if only in their minds) the need for rest by the end of the 90s.

After that seemed to be an unfortunate domino effect of bad circumstances: The failure of California Adventure, Eisner's loss of interest in the theme parks which led to slashed budgets, and topped off with the sudden sharp drop in travel post 9/11. Even with the rocky economy of the last several years the company has still continued building, but many of those projects seem to be firmly in the "less exciting" category, especially restaurants and Vacation Club.

You make some good points. After Eisner and Wells took over, they realized WDW was under utilized and invested a boat load on money causing what you called the "Building Boom". Wells death was a huge impact and Eisner started to draft being left on his own. WDW goes into safe mode

Disney became scared after 9/11 seeing how their businees dropped over night. Once again Disney goes into safe mode.

I think DVC is a safe mode for the company. A promise of money for 50 years from the guest.

I think safe mode equals equals stagnant.

 

[menamechris]

Some Misconceptions.


1) DVC is not a "401(K)" program for Disney - a locked in long term gain. DVC makes NO money off of the yearly dues. They make all of their money off of building and selling resorts. Dues go toward upkeep and the cost of running the DVC - thats it. By law, a timeshare cannot profit off of dues (over the long term). If anything, it is a commitment on Disney's part as well, to keep providing the DVC resport you bought into for the lifetime of your contract. IF they start to slack off, thats what the time share holders meetings are for.

2) Building DVC units does not funnel money away from the park. That is not how a business such as TWDC works. DVC and Parks are two seperate entities with seperate budgets, targets, and requirements. DVC is building more DVC units because DVC is selling units, which creates more free cash for DVC and allows them to bulld more units. DVC is a well run unit (Aluani planning not withstanding) with a great sales force, a unique product, and builds a strong sub-brand within the Disney umbrella. Disney parks and resorts seems to be focused on expense cutting as opposed to revenue generation.

IF anything, DVC may begin to pressure Parks & Resorts into stepping UP their game by saying "look, we have a great product that sells. People love the DVC resorts, they love the DVC brand, but they are getting sick of being repeat customers to your stale parks. Stop relying on the one visit in a lifetime customers, and start concentrating on the repeat crowd, which is our common demographic"

I agree with some of your points, but others I disagree with.

Although DVC may not funnel money away from the parks, it still funnels away resources - like people and decision making. If there are high-level meetings and concentration on DVC (which is obvious at the rate they have been built) - well, those are meetings, brainstorning sessions, reports, and discussions that are not directed at the parks and entertainment. The sudden focus and reliance on DVC has created an unequal balance at the resort. It is obvious that all the effort, concentration, and money (yes, the company is still forking over money to do focus groups, business analysis, paying professionals to handle it all), then all that energy is not going into anything else. After all...there are only so many hours in a day, and only so many people at the top who can give the greenlights.

As far as stepping up their game BECAUSE of DVC? I tend to think the opposite. Those in DVC are locked in, unless they are lucky enough to find someone to buy from them. If Disney announced tomorrow annual passes will be raised to $1,500, and no DVC discount, all perks are wiped out - the vast majority of DVCers will fork it over, because whether they like it or not, they are financially commited already.