gossip re DVC

[tjkraz]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.

Disney has convention facilities at Coronado Springs (a moderate) and that resort also has 40+ suites. I assume the CR convention facilities would tend to attract groups with larger budgets.

With WDW being such a popular family vacation destination, I assume many convention attendees take advantage of the ability to bring family members along. (I'm attending a conference at Portafino Bay in a few weeks and families are more than welcome.) Those combo convention / vacation families may embrace suites.

I wouldn't expect a big corporation to freely allow rank-and-file employees to book expensive suites on the company's dime, but higher-level employees or those working in lucrative professional occupations may not think twice. For many the cost would even be a tax deduction.

 

[asianway]

So youre saying the demand generators are there for 300 additional suites for the Contemporary Convention facilities?

 

[tjkraz]

So youre saying the demand generators are there for 300 additional suites for the Contemporary Convention facilities?

I'm not privy to the data that Disney has on hand so I can't even make an educated guess. Given what appears to be an increasing demand for suite / villa type accommodations in the hospitality industry, the great location at WDW and the presence of high-spending convention business, I'm certainly not going to dismiss the idea.

It's also worth noting that the plans filed for the project were DVC-style accommodations. If it is to be a cash-only resort, the "Studio" rooms in the plans are just standard guest rooms. Not all of the units being discussed are $700+ per night multi-room suites.

 

[Boardwalker]

I am not saying they won't ever add a DVC portion to Polynesian or Grand Floridian but I don't see it happening for a long time.

I have to agree, especially if the DVC at the Contemporary is a fact. That will be the MK/Monorail resort for DVC for WDW.
It seems to me they are trying to have DVC resorts at each of the major properties first... MK has OKW, VWL and probably the Contemporary. EPCOT/MGM has BWV and BCV. DTD has SSR. AKV for AK. I think they are saturating WDW at this point.
I bet they are going to try DL next, then maybe the international parks?

I have to admit I would be happier to see EuroDisney and Paris or I would be quicker travel to Hong Kong if I knew a DVC resort was there to be my home away from home... just having the kitchen would make it a whole different experience.

 

[Longhairbear]

...I bet they are going to try DL next.....

That is the impression I got from a DLR DVC kiosk. The CM said they would not be redecorating the DVC model there to reflect AKV units. They would only redo, if another new DVC came along.
The rumor here in CA, is a DVC/suites wing to be added to the GC, followed by a second DVC stand alone building on property. Keep in mind the rumored total rehab of the DLH, and other possible new Disney hotels here. There just might be a huge hotel, timeshare construction boom at DLR coming soon, despite the problems with the Anaheim city council.

 

[canda]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.

Many companies give you a convention budget, mine is 1500 a year or I can hold it over until next year and get 3000. (I can't hold it for more than a year) I can bring family, I just pay out of pocket for anything over and travel for my family.

So, my room and gas are paid for every 2 years at WDW. We split meals so my meals are paid for.

the only thing i pay for is park tickets and kids meals.

SO I guess either way, I am excited about the new facility because I will be able to use it for convention trips or my DVC trips (which are more fun).

 

[canda]

That is the impression I got from a DLR DVC kiosk. The CM said they would not be redecorating the DVC model there to reflect AKV units. They would only redo, if another new DVC came along.
The rumor here in CA, is a DVC/suites wing to be added to the GC, followed by a second DVC stand alone building on property. Keep in mind the rumored total rehab of the DLH, and other possible new Disney hotels here. There just might be a huge hotel, timeshare construction boom at DLR coming soon, despite the problems with the Anaheim city council.

Disneys Califorina Vacation Club and Public Housing Villas

 

[Donald is #1]

Hi everyone, I was with Goldilocks when she asked about any new DVC resorts. I was surprised when the CM mentioned both the Poly and the GF but he was very definite about all of the deluxes.

On the Contemporary, every CM that I spoke with except for the DVC CMs said that a DVC resort was being built at the Contemporary. They were even mentioning the height etc (18 storis).

From the DVC CM that I spoke with, he said that DVC is using the AKV to test out whether Concierge service will work for the DVC. We were talking about AKV and I mentioned that I was surprised at how few CL rooms were planned and how reasonable the points value seemed for CL. He said that it was basically a test to see if CL would work for DVC.

 

[pilferk]

I wonder where at the Poly they would put it? One side bumps up against TTC and the other the wedding pavilion.

The poly is the one I wonder about most too. It's limited in it's ability to expand out to the sides and it's the one theme you can't really do "across the street" (figuratively, like with AKV) because you really need direct access to the beach to make it "work". Maybe find a way to build "out" over the water? Naahhh, can't see that happening either.

 

[pilferk]

Convention goers are not staying in suites. Most companies will pay group rates for a regular hotel room, but certainly not Disneys suite rates.

Keep in mind, I fall squarely on YOUR side in this discussion...I don't think the building is a suites only building for the resort. I think it's either mixed use (and even then I have doubts) or DVC only.

But having said that, while you're right that the majority of convention folk arent' booking those suites, the vendors (for parties or afterhours "pitch" meetings), executives (for both stays, "schmoozing", and the like), and company reps (again, for parties, company meetings, entertaining vendors, and possibly recruiting) will book them.

Now, I'm with you. I don't think that demand is enough to fill 300+ suites entirely from the convention business they do. And I think, with the 4S resort going right across the lake, that the vacation guest market would have a hard time filling those suites too. I've not seen hard numbers either, but...from what we know....it doesn't appear, on the surface, to make much sense to build it as 100% as resort suite use.

 

[squidmo]

That is the impression I got from a DLR DVC kiosk. The CM said they would not be redecorating the DVC model there to reflect AKV units. They would only redo, if another new DVC came along.

Wow- that's the sort of news I like to hear! Since SSR is supposed to be sold out within the next year, this says to me that DVC is hoping to have something newer than AKV to show off in the next year. (I'm not suggesting they would actually be completed in a year, just announced, with construction in process). Ooohh, I'm so hoping O-meon is right and they will be announcing GCV next month!

 

[DramaTech]

Check this out...page 11 clearly states - "Proposed DVC Resort"

http://my.sfwmd.gov/cmsdk/content/ifs/apps/RegDocFolder/Applications/061106-23file2_ApplDocs_78670.pdf

 

[minnie61650]

The poly is the one I wonder about most too. It's limited in it's ability to expand out to the sides and it's the one theme you can't really do "across the street" (figuratively, like with AKV) because you really need direct access to the beach to make it "work". Maybe find a way to build "out" over the water? Naahhh, can't see that happening either.

At one time before WDW even opened Disney had plans to build the"Future" Persian Resort with most of the resort over the water of Bay Lake.

-------------------------------------------------------------------

Before the MK was even built plans were in place for 4 hotels to be on the monorail line.The Grand Floridian hotel is on the land that was set aside and dedicated to be the "Future" Asian Resort Hotel (A). The "Future"
Venetian (B) Resort was going to located between the Poly (5) and the Contemporary (8). A fifth hotel was going to build on a monorail spur which ended at the "Future" Persian Resort (C). That resort would be located just to east of the Mk and North of the Contemorary and would built with much of the hotel being on /over the water of Bay Lake. So even though the GF was not built until 18 years later a hotel was planned for that area at the same time the monorail was planned.

I got this picture and my info from my"The story of Walt Disney World"
Commemory Edition Book 1971.

 

[tjkraz]

Check this out...page 11 clearly states - "Proposed DVC Resort"

http://my.sfwmd.gov/cmsdk/content/ifs/apps/RegDocFolder/Applications/061106-23file2_ApplDocs_78670.pdf

Page 11 is actually the first page of a study completed by an outside firm called PSI. According to the cover letter on page 12 of the PDF, the study was originally proposed last May and completed in August. What we can't tell is if Disney changed their minds about the use of the facility between August and November.

All of the docs associated solely with the November permit filing omit any mention of DVC. Why? Since all of the reports have DVC mentioned, it's not like they would really be covering-up DVC's involvement. Why go from calling it DVC @ CR to "Disney's Contemporary Suites?"

One possible explanation is that the structure WAS slated to be a DVC development as of mid-2006, and then something changed. DVC instead received access to AKL and Disney has other plans for the new CR tower. It certainly wouldn't be the last time that Disney changed its course mid-stream.

Until there is an announcement, we'll just have to keep speculating.

 

[Budshark]

Disney guest rooms are far, FAR more profitable when sold on a cash basis rather than sold as DVC units. The key to getting DVC into a particular location...at least in current years...has been excess capacity.

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors -

1) The "today" profit from DVC is FAR greater than guest room nightly rates. $100/pt + MF creates a profit margin for Disney higher than the rack rates. Assuming a 1 bedroom that is 28 pts/night (at 4.50 MF) you would assume that Disney only got $126/night for the room. The rack rate might be $250-$350 for the room. But what happened to the $2,800 Disney got up front for that room when the original DVC points were sold? Oh yes - up front money for Disney.

2) DVC rooms are guaranteed sells. Disney got their upfront purchase, and they get their MFs. Whether you use the rooms or not is up to you. This is important in economic downturns, external factors (terrorist concerns), etc. While hotel rooms can see a sudden and immediate decrease in occupancy rates - DVC likely is much more stable. People won't walk away from their initial investment by refusing to pay MFs - Disney will just take the points and deed back and you'll have nothing - and Disney still got the upfront money. And now they can sell the deed again for full profit.

3) DVC rooms have a higher profit %. The overhead associated with a hotel room is higher than a DVC room. So although you might see the 'rack rate' as a higher number (say $300) than the DVC point number ($126) - Disney isn't investing the same amount of services and upkeep to the DVC room. So there may be an average of $25/night in DVC services, but $125/night in a hotel room. So the 'profit' differential isn't as big as it seems on the surface.

So the summary is: Don't assume that Disney makes a lot more on hotel rooms. But it is a balance - they need available rooms to satisfy the general public. If they convert everything to DVC the public will see Disney as being a 'club' that requires them to 'buy-in' if they want to stay. Probably not the opinion Disney wants.

 

[Machta]

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors -

1) The "today" profit from DVC is FAR greater than guest room nightly rates. $100/pt + MF creates a profit margin for Disney higher than the rack rates. Assuming a 1 bedroom that is 28 pts/night (at 4.50 MF) you would assume that Disney only got $126/night for the room. The rack rate might be $250-$350 for the room. But what happened to the $2,800 Disney got up front for that room when the original DVC points were sold? Oh yes - up front money for Disney.

2) DVC rooms are guaranteed sells. Disney got their upfront purchase, and they get their MFs. Whether you use the rooms or not is up to you. This is important in economic downturns, external factors (terrorist concerns), etc. While hotel rooms can see a sudden and immediate decrease in occupancy rates - DVC likely is much more stable. People won't walk away from their initial investment by refusing to pay MFs - Disney will just take the points and deed back and you'll have nothing - and Disney still got the upfront money. And now they can sell the deed again for full profit.

3) DVC rooms have a higher profit %. The overhead associated with a hotel room is higher than a DVC room. So although you might see the 'rack rate' as a higher number (say $300) than the DVC point number ($126) - Disney isn't investing the same amount of services and upkeep to the DVC room. So there may be an average of $25/night in DVC services, but $125/night in a hotel room. So the 'profit' differential isn't as big as it seems on the surface.

So the summary is: Don't assume that Disney makes a lot more on hotel rooms. But it is a balance - they need available rooms to satisfy the general public. If they convert everything to DVC the public will see Disney as being a 'club' that requires them to 'buy-in' if they want to stay. Probably not the opinion Disney wants.

This is fascinating! I wonder, also, if there are a couple of larger profit motives here, as well. First, by expanding DVC, Disney is pre-empting the larger Orlando timeshare market with an onsite offering that no one can duplicate. Secondly, in the overall profit scheme, by selling timeshares to DVC aficionados, you guarantee that they will come back and spend money at the theme parks year after year--a captive audience.

 

[asianway]

Dont forget, Walt disney Hospitality is pulling a hefty management fee, above industry standards, out of the Maintenance fees.

Also, the FF&E replacement amount seems very high as well. What happens in 2042 to any leftover money?

 

[disneynutz]

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors -

1) The "today" profit from DVC is FAR greater than guest room nightly rates. $100/pt + MF creates a profit margin for Disney higher than the rack rates. Assuming a 1 bedroom that is 28 pts/night (at 4.50 MF) you would assume that Disney only got $126/night for the room. The rack rate might be $250-$350 for the room. But what happened to the $2,800 Disney got up front for that room when the original DVC points were sold? Oh yes - up front money for Disney.

2) DVC rooms are guaranteed sells. Disney got their upfront purchase, and they get their MFs. Whether you use the rooms or not is up to you. This is important in economic downturns, external factors (terrorist concerns), etc. While hotel rooms can see a sudden and immediate decrease in occupancy rates - DVC likely is much more stable. People won't walk away from their initial investment by refusing to pay MFs - Disney will just take the points and deed back and you'll have nothing - and Disney still got the upfront money. And now they can sell the deed again for full profit.

3) DVC rooms have a higher profit %. The overhead associated with a hotel room is higher than a DVC room. So although you might see the 'rack rate' as a higher number (say $300) than the DVC point number ($126) - Disney isn't investing the same amount of services and upkeep to the DVC room. So there may be an average of $25/night in DVC services, but $125/night in a hotel room. So the 'profit' differential isn't as big as it seems on the surface.

So the summary is: Don't assume that Disney makes a lot more on hotel rooms. But it is a balance - they need available rooms to satisfy the general public. If they convert everything to DVC the public will see Disney as being a 'club' that requires them to 'buy-in' if they want to stay. Probably not the opinion Disney wants.

Here is another thought to add to the list. What about the points never used? How many members just let their points expire? How many are lost due to late banking? How many members end up paying cash because they can't get all of their resi on points? I bet the number is higher than we can imagine.

 

[tjkraz]

I agree that they seem to be filling excess capacity resorts by converting to DVC - but your thoughts about guest rooms being FAR more profitable seems to disregard 3 major factors...

Actually I didn't disregard any factors because I didn't go into any specifics.

I'm well aware that it is a very complicated equation. But let's take a look at some very basic numbers. If you take a typical Studio room using the point charts from BCV with a price of about $94 per point, the revenue to DVC for that unit is about $550,000. Now that's gross. I've heard that sales and marketing expenses can easily run 1/4 to 1/3 in the timeshare industry. You've got salaries for all of the salespeople (including those in the park and resort kiosks), support staff, legal staff, legal filing fees, website, marketing materials (paper, DVDs), charges for promotional items (free annual passes, dinner vouchers, gift cards, the cost of Developer's Points when appropriate), and on.

So in the end Disney maybe clears $400,000 - 450,000 on the sale of one unit.

Now, if that room goes for $400 per night and Disney is certain to rent it out for at least 335 nights per year (Disney's current 92% occupancy), the annual revenue is over $130K. Subtract even your $100+ per night to service the room and you're still netting nearly $100K per year. In 4-5 years you break even with the DVC profit, but as a cash room you continue to profit for another 45 years.

Fiddle with the numbers if you wish but it will only add a year or two to the equilibrium point.

Yes, DVC certainly has a place, particularly with regard to the guaranteed income stream. But Disney's bread and butter will always be the cash rooms.

 

[pilferk]

Now, if that room goes for $400 per night and Disney is certain to rent it out for at least 335 nights per year (Disney's current 92% occupancy), the annual revenue is over $130K. Subtract even your $100+ per night to service the room and you're still netting nearly $100K per year. In 4-5 years you break even with the DVC profit, but as a cash room you continue to profit for another 45 years.

Fiddle with the numbers if you wish but it will only add a year or two to the equilibrium point.

I'm not going to quibble with your conclusion....I'm not confident in either side...but you're not taking into account the increased investment revenue from getting the money "up front" (not to mention the money they make on financing, to boot). By taking the initial "up front" cost of DVC points, and investing it, I'd suspect that ROI significantly effects the balance of the equation.

The other thing to take into account: That $400 per night also has to cover significant expenses like maintenance, housekeeping, bell services, front desk, utilities, etc, etc .....something DVC member's maint fees take care of....+ all the same sorts of sales, marketing, and ancillary expenses DVC has to cover with "point cost". Surely you'd think, considering the expanded services, that would be more than 23% of the total revenue on a unit.