I wonder what happened to the person who came up with the idea for Disney to enter the timeshare business, well over 23 years ago? I hope he got a big bonus, as DVC has been a very successful (and profitable) venture by the Walt Disney Parks and Resorts division.
I bet back in the early 1990’s, Disney most likely greeted the creation of a timeshare on Walt Disney World with great uncertainty and risk.
On December 20, 1991, the “Disney Vacation Club” resort opened on Walt Disney World property. This resort, with its waterfront village of colorful, clapboard-sided vacation villas, created a new type of accommodation. For the first time, guests had access to an on-property resort with multiple bedrooms, several pools, a general store, various children’s play areas and outdoor barbecue grills.
The first members bought ownership in “The Disney Vacation Club” with no guarantee that additional resorts would ever be built.
On October 1, 1995, Disney’s second DVC resort opened in Vero Beach, Florida and on March 6, 1996 their third resort opened on Hilton Head Island, South Carolina. In addition, a fourth DVC was under construction at WDW that would become the Boardwalk Resort.
It was now time to give the first DVC resort a unique identity to separate it from the rest. So in January 1996, the name was officially changed to Disney’s Old Key West Resort.
Here we are now with 13 resorts available and certainly more in various stages of design and development. We’ve seen DVC expand to Disneyland and Hawaii.
Note: Anyone interested in a more detailed look back at DVC can read A brief history of the Disney Vacation Club.
For all the income they make on management of existing DVC resorts, it is a drop in the bucket compared to what they make selling new points. So, for the DVD business model to work, there has to be a continued stream of more resorts to sell.
What does the future hold for DVC? How long can their current business plan be successful?
EXPANSION NEAR THEME PARKS
I’ve joked that Walt Disney once said:
When you look at their possible paths forward at Walt Disney World, let’s first look back at the approaches they’ve used thus far:
- Add on a DVC Building to a deluxe resort – this has been their most common approach, and it’s been used at resorts such as VWL, BCV, AKV, VGF, and BLT
- Convert existing hotel rooms at a deluxe resort to DVC – This was used at AKV-Jambo House, PVB, and now it appears VWL
- Build standalone DVC resorts (OKW, SSR) – This model was used on the very first DVC, as well as the largest DVC. Will they take this approach again? It seems unlikely to me.
- Build a new combined resort – This was done when they constructed the Boardwalk Resort as BWI and BWV – when they created the second DVC at WDW. This also seems unlikely.
The first two options appear to be Disney’s present strategy at WDW.
DVD will always need to sell a DVC property that’s close to a park, so the conversions of Deluxe hotel rooms and additions of new buildings will continue.
Rumored expansions include:
- Yacht & Beach Club – Disney is less likely to convert the Yacht club side due to the thriving convention business they get, so it’s more likely they may convert some BC rooms to DVC.
- Fort Wilderness – Leaked plans show DVC has considered this option
- Caribbean Beach Resort – Rumors have said part of this resort may be converted to DVC
- Coronado Springs Resort – Same rumors here
- DVC near DHS (Star Wars Themed?) – This rumor is that DVC might construct a new DVC near DHS, along with plans to build a Star Wars and Toy Story lands.
- Second BLT Tower?
By converting hotel rooms to DVC, Disney gains a lot of short-term gains by selling the ownership interests, and also puts off the risk of future hotel occupancy problems. They get maintenance and capital repairs covered, and also earn a tidy profit on the management fees.
And in doing so, as they shift rooms from hotel to DVC, they are reducing the deluxe inventory.
The challenge will be what happens to their revenue stream when they run out of deluxe rooms to convert prior to 2042. Starting in 2042, will they rehab those expired DVC resorts and turn around and sell them again? Or, more likely, will they take the approach they did with OKW and sell extensions years before the resort actually expires?
There’s a ceiling on demand at WDW. I don’t know where it is, but I don’t think there is demand for a million DVC units at WDW. Whatever the ceiling may be, will DVC hit this ceiling at the present rate of development before 2042?
And they can’t keep putting up new DVC buildings indefinitely, right? Not without adding capacity to the theme parks and transportation systems.
How long can this go on?
EXPANSION OUTSIDE OF PARKS
In the early days of the Disney Vacation Club, there was a focus on developing DVC resorts outside of the Disney theme parks, with resorts opening in Vero Beach in 1995 and Hilton Head Island in 1996. Vero Beach was not the success Disney had hoped for, and HHI was successful but small.
Thus far, Aulani, while a fantastic resort, has been a slow seller.