Increased value at BWV or BCV?

[Jelly563]

Why wouldnt Disney just request top dollar for cash reservations at these resorts ?? I'm sure there would be no problem booking.

 

[skier_pete]

Why wouldnt Disney just request top dollar for cash reservations at these resorts ?? I'm sure there would be no problem booking.

The reason they converted so many resorts to DVC is that they cant sell out their resorts. Resorts like poly and wilderness lodge were only running 70% occupied. By converting to DVC they take 50 years of profits all at once, get the DVC members to foot part of the expense of running the resort, and increase occupancy %. Ever wonder why they have built only one new hotel in the last 15 years yet keep building DVC? They'd way rather take those resorts and pull those profits right away.

 

[GrumpyInPhilly]

BTW - I don't think this is an argument against them selling all these resorts at once.

1) OKW is already extended to 2057 - they have no choice here but to sell 15 year extensions. They'll likely do this at some lower price point ($50/point) for people that want short-term benefits of DVC. I suspect in 2057 that OKW just closes down. It doesn't fit to the current (and future) DVC model.

2) The other three (BCV, BWV, BRV) are simply refurbished and put back on the market as Disney's "new" resorts in 2042. Sure 12.1 million points will last them 5 years or longer. But think about it this way - Riviera might cost them $300 million to build (plus the gondola) and they're gonna make 6.7 million x $188 = $1.26 Billion, so roughly a billion in profit. Let's say they spend $200 million in 2042 money to refurb those 3 resorts. By then they're selling at $300 a point - that's $3.6 BILLION dollars on a $200 million investment. If it takes 5 years to sell them, who cares. The profit margin will be huge.

In fact, they'll likely want to stretch it over a period of time. There will be a point where DVC is "built out". The ultimate point (and not in most of our lifetimes) is when they start recycling all these resorts one at a time. Minimal cost and maximum profits.

I will agree though I would be surprised if they really have a plan in place right now. Corporations typically have a 5 year plan - not a 25 year plan. DVC MAY have a plan out a little longer than that, but it isn't more than a 10-year plan. They are too concerned about what happens in the now.

It is also fully possible they start re-selling those resorts to existing owners in say 2040. I will hopefully be around to see what happens to my BWV contract! (I'll be 72 in 2042 when it expires.) And I admit I could see a future were I extend it. It's a small contract (75 points) and even at $300 a point I might consider it to give to my daughter. Of course on the new points charts It'll probably only give me 3-4 nights a year. (Right now we can get 6-7 in a standard view studio in the fall.)

If you have a minute, could you enlighten me about OKW?

 

[crvetter]

The reason they converted so many resorts to DVC is that they cant sell out their resorts. Resorts like poly and wilderness lodge were only running 70% occupied. By converting to DVC they take 50 years of profits all at once, get the DVC members to foot part of the expense of running the resort, and increase occupancy %. Ever wonder why they have built only one new hotel in the last 15 years yet keep building DVC? They'd way rather take those resorts and pull those profits right away.

This is true but I do wonder what the occupancy rates of the Epcot resorts are, I suspect fairly high compared to the MK resorts which had a glut of cash rooms for years, until the DVC conversions. Currently the Epcot Deluxes are half the amount rooms (less Swalphin) than the MK deluxes.

So likely any place they could take on more cash rooms would probably be the IG Epcot resorts especially with the enhancements coming to Epcot and those at HS. Also this highly profitable location is why I don’t think either of the two there will ever see an extension unless the economy collapses hard (and harder than 2008).

 

[ljmiii]

The reason they converted so many resorts to DVC is that they cant sell out their resorts. Resorts like poly and wilderness lodge were only running 70% occupied...

Do you happen to have occupancy rates for other WDW resorts? I'm curious if this is a MK vs EPCOT thing (as crvetter suggested) or a 'cratering of the middle' thing (i.e. GF, Yacht, Pop, and All-Star are at 99%), or something else.

I had been looking at the Paid FP+ brouhaha from a DVC owner's perspective. But I don't know what to make of reducing the value of WDW resorts by introducing paid FPs and expanding the number of non-Disney resorts that get 60 day FPs if WDW resorts only have 70% occupancy.

 

[ljmiii]

If you have a minute, could you enlighten me about OKW?

OKW originally had an RTU date of 2042 but WDW extended DVD's lease until 2057. In turn, DVD tried to sell extensions to DVC owners for those 15 years...but it was something of a fiasco.

The $64,000 question is how many of those OKW points are still 2042? Any OKW contracts that are resold direct through Disney emerge with 2057 contracts. We have a rough idea of how often DVC contracts are resold. But I haven't seen anything that has detailed information - e.g. are most contracts resold or is there a large group of contracts that never hit the resale market and another bunch that get churned. And of those that are resold how many are ROFR'd (and thus turned into 2057 contracts).

The difference between 33% or 66% of OKW expiring in 2042 is around 2.5 million points - much more than all of BRV and almost the size of BCV.

 

[skier_pete]

If you have a minute, could you enlighten me about OKW?

Disney's original concept for DVC was affordable vacation homes on property. In the 90s, Disney really had no idea how much it could charge for on property stays. BCV, BWV are in prime locations but very low point costs. It wasn't really until Bay Lake Tower that Disney realized the opportunity they had on their hands.

Disney's current model of DVC is luxury vacation homes at slightly less than luxury prices - deluxe amenities and easy access to at least one of the theme parks. BCV, BWV will easily fit this model. WLV with a nice re-do can as well. OKW will not. Can you imagine them asking for $188 a point for OKW today? There's a reason OKW is $156 direct for a 2057 year end contract, and Boardwalk is $190 for a contract that ends 15 years sooner.

Now, I can't really predict the future - perhaps they will choose to keep OKW as part of the DVC family and just sell it at a lower point price in 2057. No-one really knows. But if they continue to keep DVC as luxury living I just don't see where OKW fits in the picture. In fact while not half the problem that is SSR, I would consider OKW to be another resort that a lot of people buy cheap to stay elsewhere, which is REALLY the biggest problem of DVC system causing resorts to be hard to get at 7 months.

 

[skier_pete]

Do you happen to have occupancy rates for other WDW resorts? I'm curious if this is a MK vs EPCOT thing (as crvetter suggested) or a 'cratering of the middle' thing (i.e. GF, Yacht, Pop, and All-Star are at 99%), or something else.

I had been looking at the Paid FP+ brouhaha from a DVC owner's perspective. But I don't know what to make of reducing the value of WDW resorts by introducing paid FPs and expanding the number of non-Disney resorts that get 60 day FPs if WDW resorts only have 70% occupancy.

I haven't looked at it recently. You can actually find the year end report that lists the occupancy rates for all the Disney resorts. I remember back when the Poly was being converted that resort was one of the lower ones at around 70-75%. Wilderness lodge was also in the 70-80% range. Most of the other deluxes run better at 80-90%. The mods are usually around 85%, and the values are around 90-94%. That's the reason they started converting the deluxe resorts to DVC. Reduce the number of available rooms increases occupancy rates without lower prices, and those decreased rooms are paid for by DVC members.

 

[GrumpyInPhilly]

Disney's original concept for DVC was affordable vacation homes on property. In the 90s, Disney really had no idea how much it could charge for on property stays. BCV, BWV are in prime locations but very low point costs. It wasn't really until Bay Lake Tower that Disney realized the opportunity they had on their hands.

Disney's current model of DVC is luxury vacation homes at slightly less than luxury prices - deluxe amenities and easy access to at least one of the theme parks. BCV, BWV will easily fit this model. WLV with a nice re-do can as well. OKW will not. Can you imagine them asking for $188 a point for OKW today? There's a reason OKW is $156 direct for a 2057 year end contract, and Boardwalk is $190 for a contract that ends 15 years sooner.

Now, I can't really predict the future - perhaps they will choose to keep OKW as part of the DVC family and just sell it at a lower point price in 2057. No-one really knows. But if they continue to keep DVC as luxury living I just don't see where OKW fits in the picture. In fact while not half the problem that is SSR, I would consider OKW to be another resort that a lot of people buy cheap to stay elsewhere, which is REALLY the biggest problem of DVC system causing resorts to be hard to get at 7 months.

Thank you.

 

[Carolynleanne]

BCV is 100% our favourite resort but with the high cost and limited years left we can’t justify it. Also what I love most about BCV is the quiet walk to Epcot... I worry this is a thing of the past with the gondolas opening. We are looking into purchasing AKV, which we enjoy and would be happy to stay at - especially with the price and years left

100% agree.

 

[philbrody]

BTW - I don't think this is an argument against them selling all these resorts at once.

1) OKW is already extended to 2057 - they have no choice here but to sell 15 year extensions. They'll likely do this at some lower price point ($50/point) for people that want short-term benefits of DVC. I suspect in 2057 that OKW just closes down. It doesn't fit to the current (and future) DVC model.

2) The other three (BCV, BWV, BRV) are simply refurbished and put back on the market as Disney's "new" resorts in 2042. Sure 12.1 million points will last them 5 years or longer. But think about it this way - Riviera might cost them $300 million to build (plus the gondola) and they're gonna make 6.7 million x $188 = $1.26 Billion, so roughly a billion in profit. Let's say they spend $200 million in 2042 money to refurb those 3 resorts. By then they're selling at $300 a point - that's $3.6 BILLION dollars on a $200 million investment. If it takes 5 years to sell them, who cares. The profit margin will be huge.

In fact, they'll likely want to stretch it over a period of time. There will be a point where DVC is "built out". The ultimate point (and not in most of our lifetimes) is when they start recycling all these resorts one at a time. Minimal cost and maximum profits.

I will agree though I would be surprised if they really have a plan in place right now. Corporations typically have a 5 year plan - not a 25 year plan. DVC MAY have a plan out a little longer than that, but it isn't more than a 10-year plan. They are too concerned about what happens in the now.

It is also fully possible they start re-selling those resorts to existing owners in say 2040. I will hopefully be around to see what happens to my BWV contract! (I'll be 72 in 2042 when it expires.) And I admit I could see a future were I extend it. It's a small contract (75 points) and even at $300 a point I might consider it to give to my daughter. Of course on the new points charts It'll probably only give me 3-4 nights a year. (Right now we can get 6-7 in a standard view studio in the fall.)

I'll also be 72 in 2042 and thinking about the contracts. I'm in for 1000+ points at BWV across several contracts at an average of $68 per point. My kids, who still love going are 16&20, but I don't envision grand kids for at least 10-15 years. Taking the profit now, or in the next 5 years, is a very viable option. Holding through 2042 and selling the points on the resale market, which nets about 6k per year, is also a choice in years we don't want to go. Either way the days of 10 day summer trips at 2 bedrooms are soon to be a thing of the past with school, jobs, etc.