The Spirited Seventh Heaven ...

[ParentsOf4]

First, let me say I agree with pretty much all that you said there. Not trying to be argumentative. Just love a good DVC discussion. I especially agree about Disney not believing in their own parks. The only part I question is whether DVC is purely a cash grab with no thought for the future or is it an attempt to secure revenue in that volatile and unpredictable climate you are referring to.

Everything you say is true about the internet allowing people to find alternatives. Renting points, staying off site, finding discounts all make the hotel stay market extremely unpredictable and under a traditional format Disney would have to fight tooth and nail to keep their share. But under their current model with DVC, they have a steady and predictable stream of dues coming in that gives them some security where they otherwise wouldn’t have any. No matter how many times people resell those contracts and no matter how many times people stay at their DVC hotel and go to Universal, someone is still paying those dues. And that will not change for another 30 years or so. If there is another recession, people will still pay their dues. If war breaks out and people don’t travel, people will still need to pay their dues. If there’s a zombie apocalypse and society crumbles….well maybe then there won’t be dues, but you get my point.

All that being said, I agree that this emphasis on DVC allows them to ignore the parks. I wish it didn’t. I’m a DVC owner and I love owning it. But I also recognize the harm its doing to other parts of the property.

WDW's hotel occupancy rate has never dipped below 70%, even during the 12 months following 9/11.

Even in the worst of times (so far), the steady income from WDW's deeply discounted 4300 separately bookable DVC rooms pales in comparison to a 70% occupancy at WDW's 24,000 non-DVC rooms.

DVC is not about a steady stream of income. It's a short-term money grab.

 

[71jason]

Spirited Thursday Morning Musings:

A very close friend was at EPCOT last night and reported very slow crowds saying Soarin only had a 40-minute standby wait in early evening.

Having spent the past couple days at Universal, I can say the same. Richters shut down early Tuesday night due to lack of crowds--despite a highly anticipated ride soft opening a couple hundred yards away--and the crowd felt light last night. The hyped Express was practically a walk-on from 4 pm on.

I-4 traffic hasn't been particularly bad either. Certainly not Fourth of July week bad.

Seems like the makeover to DD has quietly (why would you talk about it?) fallen behind schedule

An Apple store alone not enough to convince high-end restaurants and retailers to cater to lifestylers and the stroller brigade?

I know there has been loads of drama over the opening of Diagon Alley and the Hogwarts Express, but I think UNI has sorta dropped the ball. In this era of social media, people are going to expect soft openings and going to chat and post about them. Disney went through this with the kiddie coaster recently. It's part of life. You either don't have them at all and make it clear that nothing opens until a set date, or you have loads of security that tells folks they have to move it along, or you deal with crowds that look like Black Friday folks at the Wal-Mart.

I completely agree. By all accounts things got out of hand Monday night, and there were threats of security again last night. A huge part of the problem is Universal's history of being cute, during Hogsmeade and Transformers softs telling guests they wouldn't happen right up to the minute they did--even as TMs were putting up temporary queues. They have lost all credibility.

 

[Pumbas Nakasak]

Never to early to plan ahead,

Free dining in 2015 for UK folks, probably need to announce it now cause itll take that long to save the money to pay the rip off taxes.

Edit: For the hard of thinking Im not blaming Disney for our incompetent government. Though Im sure most will have watched Disney movies with their nannies before being shipped off to boarding school, so there is a link.

 

[Bolna]

WDW's hotel occupancy rate has never dipped below 70%, even during the 12 months following 9/11.

Even in the worst of times (so far), the steady income from WDW's deeply discounted 4300 separately bookable DVC rooms pales in comparison to a 70% occupancy at WDW's 24,000 non-DVC rooms.

DVC is not about a steady stream of income. It's a short-term money grab.

Love your analysis of DVC, I totally agree.

But I think there is even an additional component in this which is so dangerous: They have become addicted to that short-term money they get. They need to keep generating these profits, otherwise their revenues are down. If they stopped selling DVC suddenly a large revenue stream that does not cost a lot to generate will be missing from their annual report. Won't look good and I am sure Mr Iger has no interest in having to explain that.

 

[Gomer]

WDW's hotel occupancy rate has never dipped below 70%, even during the 12 months following 9/11.

Even in the worst of times (so far), the steady income from WDW's deeply discounted 4300 separately bookable DVC rooms pales in comparison to a 70% occupancy at WDW's 24,000 non-DVC rooms.

DVC is not about a steady stream of income. It's a short-term money grab.

Alright, I’ll concede. Cash grab is the intent. But I am still curious what kind of impact those dues do have on Disney’s bottom line.

I wonder, do you happen to know the numbers on what percentage of income DVC dues makes up vs non DVC hotel bookings? Also curious how much Disney makes booking DVC rooms not on points? The prices they charge for the villa’s are ridiculous, but I’ve more than once known someone who booked that way (before I had a chance to warn them not to). If people think Grand Floridian is overpriced, they should try paying cash for a 1BR villa.

I’m guessing Disney doesn’t make these numbers public. But I am curious as to what the impacts of that steady source of income is.

 

[stlphil]

WDW's hotel occupancy rate has never dipped below 70%, even during the 12 months following 9/11.

Even in the worst of times (so far), the steady income from WDW's deeply discounted 4300 separately bookable DVC rooms pales in comparison to a 70% occupancy at WDW's 24,000 non-DVC rooms.

DVC is not about a steady stream of income. It's a short-term money grab.

To add a bit to this, there is very little profit for Disney in DVC maintenance fees. The fees can only cover actual expenses plus a relatively small management fee.

Another way to look at this is that the initial buy-in is a small fraction relative to the total of the low-profit maintenance fees over the course of the contract. (As an aside, I always laugh when DVC is explained to newbies on message boards, and they are told that there is an up-front purchase price and after that it is "just" maintenance, as if that is a pittance when actually it is the bulk of the overall cost).

 

[Gomer]

To add a bit to this, there is very little profit for Disney in DVC maintenance fees. The fees can only cover actual expenses plus a relatively small management fee.

Another way to look at this is that the initial buy-in is a small fraction relative to the total of the low-profit maintenance fees over the course of the contract. (As an aside, I always laugh when DVC is explained to newbies on message boards, and they are told that there is an up-front purchase price and after that it is "just" maintenance, as if that is a pittance when actually it is the bulk of the overall cost).

That was sort of my point though. DVC hotels never have to worry about losing money. That part is covered by their dues. A non-DVC hotel if occupancy ever fell to critical levels might have to close its doors or shutter entire sections of the hotel. A DVC property is predictable in that there is little to no risk of ever going in the red as expenses plus a little extra are built in and set regardless of market changes.

 

[CDavid]

Why would you walk out of a movie halfway through? I never understood that. You already paid for two hours, why not view the complete package and then make an assessment on its quality. It would be like going to MK, walking down main street and then leaving because there are no rides.

If there were no rides, I'd imagine most people would indeed leave the Magic Kingdom. You don't pay $99 admission to shop and eat in a themed area; Guests are there for the attractions. Similarly, if the interest in continuing a movie is so low that getting in your car and driving away sounds like more fun, why force yourself to sit through it?

Now, the number of DVC rooms has exploded while the Internet has changed everything.

As we’ve seen with eBay, the Internet acts as a bridge between buyer and seller, making it much easier to find products from secondary sources.

What this means for DVC is that not only is it much easier to purchase DVC memberships through resale, it’s also much easier to rent DVC points from current members.

The Internet has had a profound effect on pricing, enabling the customer to readily find alternatives to WDW’s outrageous direct prices.

Where Disney still has a monopoly (e.g. theme park ticket & food prices), they can raise prices aggressively with little fear of how consumers might react.

However, where Disney has to compete (e.g. hotel stays), sales have been adversely affected.

I'm curious, can Disney legally stop (or at least severely restrict) the renting of DVC points? If members cannot rent to just anyone they don't know, this would prevent much of the competition. Not the way any of us would like to see them address the issue, but from Disney's perspective it is a growing problem.

 

[Stevek]

I'll just leave this here:

Perhaps the smallest marching band ever.

 

[PrincessNelly_NJ]

I'm curious, can Disney legally stop (or at least severely restrict) the renting of DVC points? If members cannot rent to just anyone they don't know, this would prevent much of the competition. Not the way any of us would like to see them address the issue, but from Disney's perspective it is a growing problem.

But how would they do it? They would have to add some sort of stipulation that says reservations must be made in the name of the DVC owner or/and require ID from that owner upon check in...

 

[Gomer]

If there were no rides, I'd imagine most people would indeed leave the Magic Kingdom. You don't pay $99 admission to shop and eat in a themed area; Guests are there for the attractions. Similarly, if the interest in continuing a movie is so low that getting in your car and driving away sounds like more fun, why force yourself to sit through it?

I think you are missing my point. Watching only one half of a movie is like judging MK based only on Main Street. Hence the no rides comment. I think it’s unfair to judge any art form without completing the experience as it was intended. Leaving early is your prerogative, but I don’t think you can judge the film as bad or good. Because you didn’t experience the entire thing.

Another example. If you walk into a restaurant and order the filet, but then pour ketchup on it. You can’t really review the chef’s work, because you didn’t experience it as it was intended. It’s your right to do whatever you want to that steak, but don’t then go around telling others the restaurant was bad as your opinion is not valid based on your incomplete experience.

 

[Stevek]

I know there has been loads of drama over the opening of Diagon Alley and the Hogwarts Express, but I think UNI has sorta dropped the ball. In this era of social media, people are going to expect soft openings and going to chat and post about them. Disney went through this with the kiddie coaster recently. It's part of life. You either don't have them at all and make it clear that nothing opens until a set date, or you have loads of security that tells folks they have to move it along, or you deal with crowds that look like Black Friday folks at the Wal-Mart.

But did the drop the ball on purpose? All the chatter across social media has only built up the anticipation for the official opening. If they really did want to squash it, they could have. Gotta believe they are loving the attention and aren't going to let a few fans, whom have alot of time on their hands, ruin that.

 

[homerdance]

To add a bit to this, there is very little profit for Disney in DVC maintenance fees. The fees can only cover actual expenses plus a relatively small management fee.

Another way to look at this is that the initial buy-in is a small fraction relative to the total of the low-profit maintenance fees over the course of the contract. (As an aside, I always laugh when DVC is explained to newbies on message boards, and they are told that there is an up-front purchase price and after that it is "just" maintenance, as if that is a pittance when actually it is the bulk of the overall cost).

^This is Spot on, but also the "Defrayed" cost of operations of the resort for the shared resorts. Even though Disney can only make a "modest" management fee on the DVC, they can use the fees to pay for upkeep and maintenance of the shared facilities. When you look at the bottom line and you have things like Storm Along Bay, the animals @ AKL, the boardwalk, upkeep of the resort grounds, parking facilities, restaurants, shops, roads, transportation (all types) being reduced by adding some DVC units, the short term money grab has some long term benefits too. I personally believe this the reason you don't see another stand alone DVC being built, and why all of the Deluxe hotels adding DVC.

One thing that I recently discussed with a fellow DVC member, was that with current rates they charge for initial buy in for the "Deluxe" resorts, Disney is setting themselves up to add a "Moderate" price point that will be significantly less than what is being charged for BLT/GFV/PVV but still financially viable for Disney. Not saying they will convert/add rooms from the Mods to DVC, but they are in a place that the pennies might add up right to do it.

 

[Quinnmac000]

I walked out of Frozen and I'm not even ashamed. Some movies despite of how much you paid to go see it just aren't worth it.

 

[Gomer]

Have you ever seen Random Hearts with Harrison Ford? After fast forwarding through twenty minutes of walking and talking, talking and walking I was done. I'm a person who likes to watch movies all the way through but there are limits. If one person wants to walk out of a movie because they don't like it, that's their prerogative and staying to the end probably won't change their mind into thinking they are glad they stayed.

Watching Transformers X all the way through isn't going to change my mind that I wasted 3 hours.

Staying may not change your mind. But it also might. And I did say you have the right to walk out, but you can’t then turn around and say it’s a bad movie when you don’t know if it could have been redeemed.

Trust me, I’ve sat through some stinkers in my time. I used to work in a movie theater and had to check the prints for each movie as we got them in. So, every Thursday night I’d do an all-nighter watching every piece of excrement committed to film. The worst of the worst. And yes, many are awful and you can tell from the beginning. But there are some that surprise you as you go along and turn out better than you thought, or reveal themes or twists that you didn’t know were there.

I once had a conversation with someone who told me they hated the Usual Suspects. I said, “Really you didn’t love [the big ending]”. They said: “oh, I stopped watching half way through” Them leaving that movie half way through made them unequipped to form an opinion as they had missed too much. (Leaving spoilers out of this anecdote for anyone who may not have seen the movie)

 

[asianway]

^This is Spot on, but also the "Defrayed" cost of operations of the resort for the shared resorts. Even though Disney can only make a "modest" management fee on the DVC, they can use the fees to pay for upkeep and maintenance of the shared facilities. When you look at the bottom line and you have things like Storm Along Bay, the animals @ AKL, the boardwalk, upkeep of the resort grounds, parking facilities, restaurants, shops, roads, transportation (all types) being reduced by adding some DVC units, the short term money grab has some long term benefits too. I personally believe this the reason you don't see another stand alone DVC being built, and why all of the Deluxe hotels adding DVC.

One thing that I recently discussed with a fellow DVC member, was that with current rates they charge for initial buy in for the "Deluxe" resorts, Disney is setting themselves up to add a "Moderate" price point that will be significantly less than what is being charged for BLT/GFV/PVV but still financially viable for Disney. Not saying they will convert/add rooms from the Mods to DVC, but they are in a place that the pennies might add up right to do it.

Almost 100% on target. Dues money cannot be directed to pay for upkeep on revenue generating areas of the resort like shops or restaurants. Unless the members saw that revenue as a reduction of their dues.

Those dues are paid into a 3rd party homeowners association that is responsible for maintaining the villa portion of the resort and do not show up anywhere on TWDC books

 

[seascape]

DVC sacrifices long-term profits for short-term profits. Since executives making these decisions tend to focus on their current year's bonuses (which are tied to short-term profits), building more DVC is an easy decision.

DVC works on a points system. It takes a certain number of points to book a room. There are 2 costs associated with DVC: purchase price and annual Maintenance Fee (MF). Both are best thought of in terms of price-per-point.

I'll use the Boardwalk Villas (BWV) as an example.

BWV opened in 1996 at a purchase price of $65/point. It currently takes 108 points to book a Standard View Studio for a week at BWV during the summer or spring break, which means someone would have had to spend $7020 back in 1996 (ignoring small ancillary costs) in order to purchase enough points to book that room today.

That $7020 looked great to the bottom line in 1996. Disney executives would have received nice bonuses back then.

However, there are long-term consequences.

With the current BWV MF at $6.01/point, a BWV Standard View Studio costs a DVC member $649/week or less than $93/night including tax!

At today’s WDW prices, you can’t find a Value Resort room for $93/night with tax in the summer.

What corporate Disney did with BWV was sacrifice profits for decades in order to realize substantial profits back in 1996.

Even though current DVC purchase prices are much higher than they were in 1996, DVC continues to sacrifice long-term profits for short-term profits.

The Villas at the Grand Floridian (VGF) opened in 2013. Its current buy-in is $165/point. Crunching the numbers, a purchase today requires $27,885 for enough points to stay a week in a Standard View Studio during the summer. Annual dues for that room work out to $914/week or less than $131/night.

That $27,885 makes the 2014 numbers look great but that $131/night in 2015 (and 2016 and 2017 and ...) for a Grand Floridian room, well, that doesn’t look so great.

When there were a limited number of DVC rooms, DVC filled a niche market. Some consumers were interested in an Orlando timeshare and Disney was wise to cash-in on that.

The problem at WDW today is that the number of DVC rooms has proliferated tremendously. DVC now has 4300 separately bookable rooms. These compete directly with Disney’s 5600 Deluxe Resort rooms.

Disney hasn’t built a single Deluxe or Moderate Resort since the Animal Kingdom Lodge opened in 2001. Meanwhile, they’ve added another 2600 separately bookable DVC rooms!

In recent years, the DVC resale and point rental market has boomed even as Disney’s hotel occupancy rates have declined. DVC is cannibalizing Disney’s highly profitable hotel stays.

Signs point to an improving Orlando tourist economy, which will hide DVC’s sins for a few more years. As a result, expect more DVC to be built.

Pandora might take 6 years from announcement to opening, but new DVC resorts will take considerably less time.

DVC does not pay the hotel tax. Because its deeded as a timeshare the hotel tax is not applicable and Disney does make money on the annual fees. Disney transportation makes a profit on what they charge the DVC for their services. Disney laundry also makes a profit as does house keeping and check in/out. Everything Disney or any other Timeshare company does is at a profit. Then to top it off after paying for the initial construction, upkeep and everything else after 50 years we give our timeshare back to to Disney for free. What a deal. Short term huge profit, 50 years of annual profits and then get to sell it all over again with a second time costs basis of 0. What a wonderful deal for Disney. Now, I have to admit I own 350 points and even though I know It is as great a deal as some other timeshares, I wanted what it offers my wife and I. It is not a good financial deal in anyway. It is a great deal for Disney in both the long medium and short terms but I wanted it and bought it on the resale market. Finally in another 28 years they can and will start selling the same resorts over and over again. So all they need is about 6 more resorts and they will be done building timeshares.

 

[truecoat]

So a 200 ft volcano water park? Sounds like construction starts soon. Wondersea Island, Volcano Bay? What will be the final name of this park?

 

[suburbianj]

Never to early to plan ahead,

Free dining in 2015 for UK folks, probably need to announce it now cause itll take that long to save the money to pay the rip off taxes.

Edit: For the hard of thinking Im not blaming Disney for our incompetent government. Though Im sure most will have watched Disney movies with their nannies before being shipped off to boarding school, so there is a link.

It is a joke what the uk government charges for APD,but i live in Scotland,and from what i have been told,APD will be halved in scotland by the end of next year. Northern Ireland already has complete control over there APD as they are competing with Dublin and Shannon airports,whereas in Scotland,Manchester is our biggest rivals,for us to fly to Florida next spetember from Glasgow was going to be £450 more expensive than if i was to fly from Manchester! P.S. We booked from Glasgow,wife couldn't hack a three hour drive each way on top of the flight ,me personally,would have loved the extra moolah in my empty pockets

 

[Gomer]

There are movies out there that end up different than what they appear but they are few and far between. You usually get what you see.

For the sake of argument let's take District 9, it appeared to me early on that it was taking a more horror approach. About the time they were looking to cutting off poor Wikus' alien arm, my wife walked out and went to a different movie. The tone and direction of the movie changed from there to a different film when Wikus went on the run, in my opinion. I still can't convince her to watch it, those scenes of his transformation were too much for her. Can you really say that not walking out of the Lego movie would have changed their mind on how they liked it? If there are elements or a style that you don't like in the first place, how is the ending going to change your mind.

I never finished Random Hearts but I can tell you that it's a bad movie.

How do you know though? How do you know what will be a District 9? I saw Random Hearts way back in 1999 but I honestly don’t remember it at all, so I can’t judge that one. I haven’t seen the Lego movie yet, but from what I understand this movie does take a significant turn in the second half which can drastically sway people’s opinions of the movie. It’s a kids movie that you would never expect that from. It’s a perfect example of how you never know what’s going to come in the second half of the movie. This can also happen in the reverse. Having seen the first half of Pixar’s “Up” I was ready to call it their best ever. After watching the second half devolve into a standard animated caper (albeit a good one) it altered my view of the movie significantly leaving it in the middle of the pack of Pixar films for me.

You are correct that if you determine that you don’t like certain aspects of a movie, like the level of violence, you can decide it’s not for you and turn it off. But that still doesn’t give you the right to say it’s a bad movie. Just like you not liking the first half of Random Hearts doesn’t give you the right. You forego the right to provide a review of its quality if you don’t watch the entire thing.

If you and your wife were in a conversation with others and District 9 came up and she started telling these other people how bad of a film it is, would you butt in and say, “well you didn’t actually watch the entire movie dear, it’s actually quite good” or would you let her convince others not to see this movie because of her opinion on the first 45 minutes? Ok, maybe that’s a bad example as I would never suggest correcting your spouse in public if you want to remain married.

But, in your case with Random Hearts, you can say you didn’t like the beginning so you chose not to finish it. But your opinion that it is a bad film holds no weight with me because you haven’t seen the movie. Only a portion of it. Admittedly, it very well may be a bad movie. I just can’t take your word for it.

Wow, I can honestly say I never thought I'd see the day where I get in an online debate about the quality of Random Hearts. How did we get here?