Time-shares becoming bigger part of Disney's lodging portfolio

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Time-shares becoming bigger part of Disney's lodging portfolio

http://www.orlandosentinel.com/business/os-disney-timeshare-20141229-story.html

Time-shares becoming bigger part of Disney's lodging portfolio

Disney timeshares

George Skene, Orlando Sentinel

By Sandra Pedicini
Orlando Sentinel
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Walt Disney World Resort,
University of South Carolina

Time-shares a growing part of Disney's lodging options
December 29, 2014

Time-share suites are becoming a larger part of Walt Disney World's lodging portfolio..

The resort's number of hotel rooms has shrunk as its Polynesian Village Resort converts rooms in three of its buildings into 360 new time-share villas. It's the resort's largest-ever conversion of hotel rooms into units for its growing Disney Vacation Club.

Disney said in a statement it will continue to offer a wide variety of both hotel and vacation-club accommodations "to meet guest and market demand for expanded options."

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Disney's move can help it get more use out of its rooms while growing its time-share business more quickly and inexpensively than building from scratch. It also gives Disney flexibility, since units that aren't being used for time-share can still be rented out as typical hotel accommodations.

"When you look at the financial model, time-share is the way to go," said Scott Smith, a hospitality instructor at the University of South Carolina. "It's a big moneymaker for the industry."

Other companies such as Hilton also have converted hotel rooms.

Disney World now has about 23,000 hotel rooms, according to its SEC filings. It has about 3,000 time-share units in eight resorts throughout Disney World that are considered deluxe properties.

Disney Vacation Club, which started in 1991, has properties in Vero Beach; Hilton Head Island, S.C.; Hawaii; and Disneyland.

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@bclomptwihm_ (Purchase or...Rent!) Indeed; our family purchased 300 points at Old Key West in 1994 and had a great great time (including a cruise for 8 days), then sold them in 2003 (I moved back to Orlando, and needed the cash for a house.) We ended up selling the points for $13,000 MORE than...

VancouverJeemer143

at 2:06 PM December 29, 2014

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The time-share division had a rough few years as the industry slumped during the economic downturn and Disney struggled with fallout from financial miscalculations made for its Hawaiian Aulani resort. In 2013, though, Disney highlighted its time-share business for contributing to profit growth " for the first time in more than five years. In its last quarter, Disney said sales decreased from the prior year, attributing that to the high bar set by Villas at the Grand Floridian Resort & Spa in 2013. That project was new construction.


Disney time-shares also meet growing demand for amenities such as kitchens, washers and dryers that time-shares typically provide. The apartmentlike lodging is popular with multigenerational families vacationing together, and experts say international travelers could also be driving growing demand.

Many of Disney World's time-shares were newly constructed. Disney has converted some hotel rooms, including part of the Animal Kingdom Lodge a few years ago, but not to the extent seen at the Polynesian. Converting rooms, Disney said, helps offer the popular time-shares more quickly and inexpensively.

It can also boost occupancy.

Average time-share-resort occupancy last year was 77 percent, compared with 62 percent for hotels, according to the American Resort Development Association.

"It comes down to that highest and best use of the real estate," said Amy Gregory, an assistant professor at the University of Central Florida's Rosen College of Hospitality Management whose specialties include resorts and time-share.

Since the units are owned, Gregory said, people consider using the rooms "kind of like a 'free vacation.'?" And that increased occupancy means more people spending money at restaurants, shops and theme parks throughout the resort.

"It makes sense to put money into a resort where your guests are repeats," Smith said.

Disney could be deciding to make better use of rooms in hotels where it is seeing or expects to see lower occupancy levels as new competition opens, said Tim Krasniewski, publisher of DVCNews.com, an independent website that covers Disney Vacation Club.

When building new time-shares, "you're taking business away from your hotels, unless you're really in a growth mode," Krasniewski said. "I don't think they would be converting all these rooms if there were people paying $500 a night to stay in them."

Disney's overall domestic hotel-occupancy rate was last year was 83 percent, compared with its peak of 90 percent in 2008. The recession took a toll, but the occupancy rate also has been affected by additional rooms created as new hotel properties have opened.

Disney said it is adding time-share to diversify, not to offset a decline in hotel-rental revenue, and its decisions are being made on guest preference and long-term growth potential. Disney pointed out the Polynesian " which will still have several hundred traditional hotel rooms " remains particularly popular because it is on the monorail route. Disney has also added time-share villas at its other monorail-route hotels " Grand Floridian and Contemporary " as well.

Disney World's last new hotel, the lower-priced Art of Animation, opened in 2012. New budget hotels are under construction at Flamingo Crossings, on the western edge of the resort, but Disney is not operating those.

Krasniewski said he would not be surprised to see other hotel-room conversions at the Grand Floridian and Wilderness Lodge. Both already have separate buildings dedicated to time-shares on the property.

But though the time-share industry is strong, Gregory said, "I don't necessarily see them [Disney] taking down a whole bunch of hotels all of a sudden and turning them into time-share."

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Thanks Colonel!

We've got a story about this in the post queue coming up soon. I think that the DVC increase is interesting at a time when other time shares tend to struggle. How do you feel about it?

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I think DVC are in a league of their own. I own another timeshare at a string of resorts in Mexico. They are gorgeous resorts. I wish DVC were more like them. Marble palaces with all the finest fixtures, service like you are a VIP, true gourmet restaurants, and set on some of the most beautiful beaches you've ever seen. But I couldn't give it away if I decided to sell. Luckily, I have no need or desire to sell.

Disney on the other hand has actually appreciated in value. I bought DVC Beach Club and DVC Boardwalk for $73 and $60 per point respectively. If you follow the DVC resale market, you'll know that they sell for considerably more than that. And that is after 12 plus years of use.

You should never buy a timeshare as an investment, but DVC has held its value very well, at least for me.

If you love WDW and you are going to go every year anyway, you can stay at great resorts for a pretty decent price. You make an upfront investment and over the long run you will come out way ahead. Just follow the advice of "buy where you want to stay".

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I must agree with the lack of VIP treatment at DVC Resorts. The dwindling perks like valet, housekeeping, and lack of unique resort areas in the GF addition make me sad. I would love to see them be able to strike a balance bwteen making DVC special once again and just getting folks to pre-pay for their hotel rooms.

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Housekeeping is a really sore point. If you've read my last two trip reports you know that my rooms have had some issues to say the least.

The labor in Mexico is so much cheaper that it's not fair to compare, but the rooms are quite literally spotless.

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Interesting article. I am always surprised at how easily Disney sells their timeshares. Each time we've crunched numbers, it just doesn't make sense for us. However; we do not typically travel to WDW every year so it would not be a smart purchase.

It isn't for everyone, but everyone I know who does own a DVC contract, loves it. If I had 50K just sitting in the bank with nothing to purchase, I would totally buy a Disney timeshare. It isn't even the purchase price that turns me off...it's the maintenance fees. Although, our travel agent had a smart idea. They purchased 10 DVC contracts years ago and they just rent points to guests. I think they do pretty well from renting points each year. It pays for the contract AND the maintenance fees.

DVC has allowed guests to stay deluxe without the deluxe price. You can rent points for a week for the half the cost of booking a regular room through Disney. That part, I do like!

I do agree that if you spend thousands on a timeshare, you should be treated like a VIP.

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The Colonel wrote:
Housekeeping is a really sore point.

Yeah, for me too, though I try not to complain it really does bother me. I would happily see a bit of a raise in dues to have the things that have been voted out in the past come back again. I'm in the minority though.

I mean really, if my dues were raised $1 per point it would be an extra $185 annual, roughly $15.40 a month for me. I usually get about 7 nights a year from my points, 3 in a Studio, and 4 in a 2 Bedroom. I pay roughly an extra $240 a year for full housekeeping services as is. I know that it's not a huge difference, but it's the principal of the thing. I also think that if the housekeepers were in the rooms more often that more maintenance issues would be reported and taken care of in a timely manner. Valet is also a sore point for me, when we bought it factored into our decision, however by the end of the year, before we even got to use our points, it was gone. Very disappointing.

OK laugh rant over.

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Eeyore wrote:
Although, our travel agent had a smart idea. They purchased 10 DVC contracts years ago and they just rent points to guests. I think they do pretty well from renting points each year. It pays for the contract AND the maintenance fees.

Do you know if they've had any trouble from DVC about renting out so many points? I thought read somewhere that you're not technically allowed to do that--I think it was on the DVC website or in my contract or some other place that's pretty official. Because the thought or establishing my own DVC rental company by purchasing a ton of points certainly crossed my mind...especially given the profit margin on retail point rentals.

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There are people running substantial businesses renting out points. I don't think its enforced at all.

For $50K you could buy about 700 points on the resale market- I doubt you need that if you don't even go once per year.

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alicemouse wrote:
Eeyore wrote:
Although, our travel agent had a smart idea. They purchased 10 DVC contracts years ago and they just rent points to guests. I think they do pretty well from renting points each year. It pays for the contract AND the maintenance fees.

I thought read somewhere that you're not technically allowed to do that--I think it was on the DVC website or in my contract or some other place that's pretty official.

That is correct, this is specifically disallowed in the DVC contracts. I know that it was covered at length by our Guide when we purchased. That being the case, we're dancing on the edge of WDWFG TOS with this discussion.

This is the point where I come put my MOD hat on and say "This is a no-no! Don't do it. Nothin' to see here folks, move it right along." mickey

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alicemouse wrote:
Eeyore wrote:
Although, our travel agent had a smart idea. They purchased 10 DVC contracts years ago and they just rent points to guests. I think they do pretty well from renting points each year. It pays for the contract AND the maintenance fees.

Do you know if they've had any trouble from DVC about renting out so many points? I thought read somewhere that you're not technically allowed to do that--I think it was on the DVC website or in my contract or some other place that's pretty official. Because the thought or establishing my own DVC rental company by purchasing a ton of points certainly crossed my mind...especially given the profit margin on retail point rentals.

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The Colonel wrote:
There are people running substantial businesses renting out points. I don't think its enforced at all.

For $50K you could buy about 700 points on the resale market- I doubt you need that if you don't even go once per year.

Yea. I was more looking at buying direct from Disney. It is def. more expensive than buying resale.

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Kristen K. wrote:
The Colonel wrote:
Housekeeping is a really sore point.

Yeah, for me too, though I try not to complain it really does bother me. I would happily see a bit of a raise in dues to have the things that have been voted out in the past come back again. I'm in the minority though.

I mean really, if my dues were raised $1 per point it would be an extra $185 annual, roughly $15.40 a month for me. I usually get about 7 nights a year from my points, 3 in a Studio, and 4 in a 2 Bedroom. I pay roughly an extra $240 a year for full housekeeping services as is. I know that it's not a huge difference, but it's the principal of the thing. I also think that if the housekeepers were in the rooms more often that more maintenance issues would be reported and taken care of in a timely manner. Valet is also a sore point for me, when we bought it factored into our decision, however by the end of the year, before we even got to use our points, it was gone. Very disappointing.

OK laugh rant over.

Not sure if this is applicable to you, but if you have a handicapped badge you get free valet, also if you use your TiW card you get free valet too.

I completely agree with you re the housekeeping. I would rather my dues rise slightly and the rooms properly taken care of.

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You only get free valet with the TIW card if you show a valid receipt for the restaurant you dined at.

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MrHub wrote:
You only get free valet with the TIW card if you show a valid receipt for the restaurant you dined at.

Yep awesome

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Our Very Merry 24 nighter Nov/Dec 15
Watson's go West May 15
The one with all the birthdays Oct 14 4 Big Birthdays and a Vow Renewal thrown in
The OMG trip June 14 30th Birthday present from the hubs
Girly trip March 14 A last min cheapy week
September 13 our first all DVC stay
TR May 2013 the last min bargain trip offsite
Oct 2012 TR with a cruise!big family trip featuring the beach club, AKL, the dream and a villa offsite
TR on a budget May - June 2011offsite condo
TR Sept - Oct 2010 big family trip in an offsite villa