Do declining DVC point sales signal a shift in sales strategy? About This Page:

[DVC Mike]

Looking at the total number of points sold by Disney Vacation Club from 2011 on, it is very apparent that there is a distinct downward trend in the number of points being sold by DVC year over year.

Over the same period, the cost per point to purchase direct from DVC has been going up and the point charts for the most recent DVC resorts show point inflation (it costs more points to book a reservation than it does at older resorts).

The inflated point charts and the falling quantity of points being sold also indicates a decline in the number of new DVC members that Disney Vacation Development is pulling in each year.

This seems to signal a shift in the sales strategy for DVC when compared to prior years. They are less focused on a volume business (more points at a lower price) and more focused on a smaller volume business at a higher price.

So, even though they are selling less points, they have a greater profit margin on every sale. Their strategy of converting existing hotel rooms into DVC units (at PVB and likely WL) reduces capital expenditures - decreasing the cost of the goods they are selling, resulting in a higher profit margin.

Perhaps their options for building more DVC units at WDW are growing smaller - at least in terms of the "low hanging fruit" where they can add DVC onto existing Deluxe resorts - and they realize their volume business is not sustainable, or at least not the best approach.

I've only included one chart here in this post. For the full set of charts and graphs, please see this post on DISBoards.

Point sales fell from 2.47 million in 2011 to 1.70 million in 2014.

[Thomhazel]

I am convinced it is more due to the fact they don't have the huge quantities of points to sell they had before.

Mind you in typing that I'm reminded of running economics at work. The faster you seek after investing the better your return always is so maybe that doesn't make sense.

Maybe Disney has priced out some of their target market? Or selling a lack of variety in the product so it appeals to less people

The other thing I'm thinking is that 2011 and 2012 were just as the economy improved again. Maybe people who had been planning on buying but were scared to during the worst of the recession starting buying again in 2010 causing a temporary spike.

[KimmyAnn1147]

This was an interesting read, thanks. I think it makes sense that they would consider a new strategy since the existing properties and feasible build options are finite.

[dsruton]

Originally Posted by DVC Mike

Looking at the total number of points sold by Disney Vacation Club from 2011 on, it is very apparent that there is a distinct downward trend in the number of points being sold by DVC year over year.

Over the same period, the cost per point to purchase direct from DVC has been going up and the point charts for the most recent DVC resorts show point inflation (it costs more points to book a reservation than it does at older resorts).

The inflated point charts and the falling quantity of points being sold also indicates a decline in the number of new DVC members that Disney Vacation Development is pulling in each year.

This seems to signal a shift in the sales strategy for DVC when compared to prior years. They are less focused on a volume business (more points at a lower price) and more focused on a smaller volume business at a higher price.

So, even though they are selling less points, they have a greater profit margin on every sale. Their strategy of converting existing hotel rooms into DVC units (at PVB and likely WL) reduces capital expenditures - decreasing the cost of the goods they are selling, resulting in a higher profit margin.

Perhaps their options for building more DVC units at WDW are growing smaller - at least in terms of the "low hanging fruit" where they can add DVC onto existing Deluxe resorts - and they realize their volume business is not sustainable, or at least not the best approach.

I've only included one chart here in this post. For the full set of charts and graphs, please see this post on MouseOwners.

Point sales fell from 2.47 million in 2011 to 1.70 million in 2014.

It defiantly has to do with economics, In plain language, they have made the buy in price point so high that many of their former buyers are either going the way of resales or just not buying altogether.
I still haven't figured out their thoughts on pricing. Many of the price increases in the past few years has boggled my mind. I would think that once they set a price per point for a resort they are building it would remain that price throughout sales.

[Brad]

Originally Posted by dsruton

I would think that once they set a price per point for a resort they are building it would remain that price throughout sales.

Why would you you think that? If they are able to sell the same product for even more money, why wouldn't they?

[HiddenMickey]

Originally Posted by dsruton

I would think that once they set a price per point for a resort they are building it would remain that price throughout sales.

This is done for all sorts of sales. I bought my home as one of the first in a new neighborhood. The prices edged up (for the same style home) every few months. It was incentive to buy sooner.

[KimandMark]

Given the constantly increasing numbers of owners (not all points buyers are new owners, but many are) would there would also be an increase in the number of resales (more owners total means an increase in those who want to sell too, right?). Does the resale market affect the Disney market? I can only get those new resort points via Disney, therefore there is some cache, if not reduced supply, to the prices of those points. Unlike a resale at, say, SSR or OKW that doesn't have the view, monorail or proximity. Disney would be able to charge a premium as Poly and GF are really more desirable for many.

Honestly, I don't know why they didn't build villas at the monorail resorts in the first place. I love AKV and BW and BLT but can't imagine why people want to stay at SSR or OKW (no offense to those that own there or like them--but I don't see the specialness I guess).

[Brad]

Originally Posted by KimandMark

Honestly, I don't know why they didn't build villas at the monorail resorts in the first place. I love AKV and BW and BLT but can't imagine why people want to stay at SSR or OKW (no offense to those that own there or like them--but I don't see the specialness I guess).

Personally, I think all resorts have something special to offer. When I stayed at OKW, it was solely to conserve some points. I wasn't expecting to like it much, but boy was I ever pleasantly surprised - the villas are absolutely gorgeous, and some of the views are quite beautiful as well (we lucked out with a stunning view). And I know that many members knock SSR, but don't forget that the Treehouses are there! If you've never stayed in one I highly recommend it, as it is truly a unique and peaceful experience. [For the record, I own only at BLT and AKV, so have no vested interest to boost OKW or SSR ).

To answer your first question ("why they didn't build villas at the monorail resorts in the first place"), of course only Disney knows and we can only guess. However, if you look at the evolution of DVC it is obvious that Disney really was not sure now successful their timeshare program would become. DVD was rather cautious with their first DVC resort (OKW), and it was overbuilt in terms of room size, and also the points costs per night is extremely low. I'm sure there also was the fear that DVC would take away potential hotel guests who no longer will pay full rack rate at their hotels, leading to lower hotel revenues. I guess what I'm saying, is that Disney was worried about cannibalizing its own revenues (since as DVC members we are paying cost for our accommodations and Disney makes zilch). As DVC has matured, I think Disney has realized that there is room for everyone and that all of us buy park tickets, t-shirts, plush toys and expensive meals. And on top of all this, we DVC members pick up part of the hotels' operating costs.