As it opens new attraction, Disney prepares to cut capital spending

[Dixie Springs]

The Disney Cruise is a nice 'break' from WDW, while still enjoying the quality & magic that brought us to WDW in the first place. Yes, the DVC kiosks lurk, just don't make eye contact. Waiting for the DVC kiosks in TDS.

[Ian]

well glad I missed it then. Seems every time I walk past one in the parks i get a sales pitch. Kinda like when you see the kiosks in the mall and they want to put some miracle cream on your hands and you can't find a a place to hide so you walk by as fast as you can looking the other way... That is how I feel when I see them in the parks.

Just tell them you already own. They don't handle add-ons (your guide does), so as soon as you say you already own they completely ignore you.

[Jared]

Weird. I've never been accosted by an overly aggressive DVC salesman. Either I'm lucky or really good at ignoring them.

[Buttercup]

What's the biggest difference between Universal/IOA and Walt Disney World?

Land. Universal has very little land surrounding its theme parks in Orlando. WDW already owns tens of thousands of acres in undeveloped land surrounding 4 of the most famous (their current condition notwithstanding) theme parks in the world.

If Universal wants to increase revenue/profits in Orlando, its best option is to add new attractions, and make their parks more popular.

But the most cost effective option for Disney to increase revenue/profits at WDW is to sell land. Since they don't want to actually part with title to the land, thus avoiding the tacky development of the property by third parties (a la DisneyLand), they are renting it instead. Thus the proliferation of DVC properties. Expect more of the same in the future. It's easy and makes huge profit margins compared to investing in really expensive new attractions.

On the other hand, What does DisneyLand and California Adventure have in common with Universal Orlando. You guessed it; very little land surrounding the parks. Disney has no other choice but to invest in the parks themselves if they want to increase revenue there.

I don't know if it was exactly what Walt foresaw when he chose to buy so much land in Florida, (I know he wanted to avoid tacky cheesy over-development across the street from the parks), but the current management certainly sees gold in that there swamp!

All these billions we want Disney to spend on the parks has to come from somewhere. If DVC rakes some of that in, then I say go ahead and develop DVC resorts. Just as long as that's not the ONLY thing they develop.
I'm of the mindset that sometimes California is going to get all the new toys, and sometimes Florida is. Sure, you can argue that all of the new Fantasyland expansion in Florida isn't bringing us any huge thrill rides, but that doesn't mean it's a waste. I'm looking forward to the theming and ambience they're creating. That's something Disney does REALLY well, unlike most other parks. I'd say that's worth the money they're spending on it. I agree that DHS and Future World could use a big facelift as well, but it can't all happen at once. Gotta sell some more DVC memberships to save up for those big refurbs!

[BrerGnat]

Weird. I've never been accosted by an overly aggressive DVC salesman. Either I'm lucky or really good at ignoring them.

Me neither! They always just approach us to ask if our kids want some stickers. That's IT! We always take the stickers, thank them, and keep walking. They never even TRY to lure us otherwise.

[sportsguy2315]

During my CP, I only talked to one DVC person...and that was because he was from a town an hour away from where I grew up. No pitch, just talking about home.

[DizneyFreak2002]

The people at the DVC carts are not aggressive... The only time they ever talk to you is if you approach their kiosk and start skimming the booklet they have out... And even then its usually "Hi, my name is Soupy Sales. If you have any questions, I'll be more than happy to answer them." They they pretty much try to look busy... And the only time I ever seen them talking to people who aren't by the kiosk is when they say hello to passersby or maybe wave at a little kid, as Disney employees tend to do...

[Quadstriker]

I've never seen a DVC associate be anything but friendly, polite, and helpful.

[DizneyFreak2002]

I've never seen a DVC associate be anything but friendly, polite, and helpful.

That is exactly what they are... And as Nat said, maybe they chat it up with your kid, give them stickers, and all that "magical" jazz... But harping on you go listen to them??? Nah, they aren't that...

[March Hare]

All these billions we want Disney to spend on the parks has to come from somewhere. If DVC rakes some of that in, then I say go ahead and develop DVC resorts. Just as long as that's not the ONLY thing they develop.
I'm of the mindset that sometimes California is going to get all the new toys, and sometimes Florida is. Sure, you can argue that all of the new Fantasyland expansion in Florida isn't bringing us any huge thrill rides, but that doesn't mean it's a waste. I'm looking forward to the theming and ambience they're creating. That's something Disney does REALLY well, unlike most other parks. I'd say that's worth the money they're spending on it. I agree that DHS and Future World could use a big facelift as well, but it can't all happen at once. Gotta sell some more DVC memberships to save up for those big refurbs!

I agree they need to sell DVC memberships but soon supply is going to be larger that demand and at that point they will have to depend on park profit so the upkeep is just as important. They go hand in hand if they parks go down hill then they will have more trouble selling memberships. Would many people buy a DVC membership if it was sold buy Six Flags probably not it is just a amusement park not a destination like WDW. I will say it again I am not saying they have to spend $6 billion just enough to make sure the parks don't go down hill. They just need to slow down on building the DVC properties and use that money to repair what needs to be repaired and make sure that they are not looking run down.

[Ian]

I agree they need to sell DVC memberships but soon supply is going to be larger tha demand ....

That's my fear with DVC. They're going to over-build. The other thing that concerns me is that they've become so reliant on that income stream that if it dries up what will they do then?? I can't even imagine the budget cuts that would follow a collapse of the DVC revenue stream!

[DizneyRox]

Isn't that the beauty of DVC? All they need to do is sell it, Members take care of the rest. Disney would never just buy back a contract out of the goodness of their hearts, the only way they would get it back is through a foreclosure, and they can somewhat control that if they really wanted to.

The initial build is covered by the purchase pric, and upkeep is paid for through dues. If non-members top staying in themI assume they can just raise the dues.

The only real way out of the contract is just just let it lapse in 2042 (or whenever your contract expires).

[WRWDisney]

While Disney will never lose to Universal they take too long on a lot of their popular movies. Cars was a huge success in 1995. It is 2012....

Hate to be picky, but your are 11 years early. Cars was released in the US in June of 2006. Cars 2, five years later. Cars Land, a year after that (or only 6 years after the first film was released) (just a couple of weeks after the Disney acquisition of Pixar was completed).

Hate to nit-pick but Toy Story, the very first Pixar feature came out in 1995, Cars was the 7th.

[Ian]

Isn't that the beauty of DVC? All they need to do is sell it, Members take care of the rest. Disney would never just buy back a contract out of the goodness of their hearts, the only way they would get it back is through a foreclosure, and they can somewhat control that if they really wanted to.

The initial build is covered by the purchase pric, and upkeep is paid for through dues. If non-members top staying in themI assume they can just raise the dues.

The only real way out of the contract is just just let it lapse in 2042 (or whenever your contract expires).

True ... I guess there really is very little risk to Disney with DVC. They already got their money and yeah the owners pay for the rest.

[Quadstriker]

The only real way out of the contract is just just let it lapse in 2042 (or whenever your contract expires).

There's a resale market too.

[DizneyRox]

There's a resale market too.

Yes, but someone else is then assuming the upkeep of the resorts. It is very hard to get Disney themselves to take back that responsibility. As mentioned, it would have to be through foreclosure, etc, even then they will just sell those points back out.

A good gauge is the likelyhood of Disney pulling out the ROFR in resales. I haven't heard anyone post that they DID NOT make it through that, and there are some incredibly prices resales. Even the limited booking ability of resale points hasn't seemed to impact the resale market. Disney DOES NOT want to hold DVC points, and as much as they want you to beleive that they are running gangbusters and there's a limited time left to own [insert your favorite DVC resort here]. The truth is the recent DVC properties have taken much longer to sell out than they led on (at least during the sales pitches).

[Ian]

A good gauge is the likelyhood of Disney pulling out the ROFR in resales.

If you think about it, it doesn't make very much sense for Disney to exercise ROFR when they have inventory to sell of their own.

Our guide told us they typically only exercise ROFR on some of the older, more desirable properties (like BCV, BWV, etc.) so they can maintain a small inventory of those points to sell when buyers aren't interested in any of the newer properties.

[Disney Hungarian]

That's my fear with DVC. They're going to over-build. The other thing that concerns me is that they've become so reliant on that income stream that if it dries up what will they do then?? I can't even imagine the budget cuts that would follow a collapse of the DVC revenue stream!

It is like watching a train wreck. I don't want to see what happens, but can't look away. Disneyland was profitable, so they went to build WDW. WDW did fine with the MK. Profits were good. Disney passes and Epcot is built, without the foresight that Disney had. Major plan changes happened. MGM opened. AK opened. Now you just have to look at the business differences between DL and WDW to see the problem. DL does not have the major infrastructure expenses that WDW has. WDW has its own water system, road system, and transportation system. Not to mention all of the landscaping of all of the developed areas, ME and their own fire depts. DL has a fraction of these costs. To put it in a somewhat odd perspective. WDW has the 7th largest navy in the world. Ticket prices are not that much different between DL and WDW, and WDW has make the money to pay for all of this somehow. The hotels help, DVC has been a cash cow for WDW. I'm afraid to look when that goes off the tracks, but can't turn away.

[ChipNDale79]

It is like watching a train wreck. I don't want to see what happens, but can't look away. Disneyland was profitable, so they went to build WDW. WDW did fine with the MK. Profits were good. Disney passes and Epcot is built, without the foresight that Disney had. Major plan changes happened. MGM opened. AK opened. Now you just have to look at the business differences between DL and WDW to see the problem. DL does not have the major infrastructure expenses that WDW has. WDW has its own water system, road system, and transportation system. Not to mention all of the landscaping of all of the developed areas, ME and their own fire depts. DL has a fraction of these costs. To put it in a somewhat odd perspective. WDW has the 7th largest navy in the world. Ticket prices are not that much different between DL and WDW, and WDW has make the money to pay for all of this somehow. The hotels help, DVC has been a cash cow for WDW. I'm afraid to look when that goes off the tracks, but can't turn away.

The hotels help a lot, WDW charges 2 or 3 times what offsite hotels pay and people choose to stay on property. These hotels help pay for a large portion of the things you mentioned. There's a lot more things to spend your money on at WDW than there are at DLR, I have no idea, but I would be the profit margin at both resorts are nearly the same.

[DizneyRox]

If you think about it, it doesn't make very much sense for Disney to exercise ROFR when they have inventory to sell of their own.

Exactly why I tell people to lowball DVC resales. Disney most likely isn't going to use it unless it's extreme and they figure they can unload it quickly enough to make a decent property. In reality, the difference between $46 and $45 a point on a 100 point contract is... you guess it, $100. $5 a point is 'only' $500.

If I really needed to sell my contract, I probably wouldn't let $500 stand in my way. From a seller perspective, I don't care if the actual buyer buys it or Disney does. Either way, I sold it. And from a buyer perpective, well, there's a ton of properties out there, Disney won't buy them all!

ROFR is just a tool to scare folks. It means nothing...

I'm sure someone at Disney just had a heartattack reading that! It's true though...