WDW resort going forward

[clsteve]

Remember also that the the seasons is very different than a competitor...

A private company whose primary stake holders are William Gates and Prince Alwed Al EuroDisney (who Eisner used to kiss goodbye and leave chocolates on his pillow when he went to work)

They also sold some of their $5 an acre property for the first time to a non controlled company...

Unlike the leased land that all retail and the Swan and Dolphin sit upon...

That was a quiet but major step for WDW...

And I think it was part of a concession on Disney's part to address specifically the "grand" problem.

I posted this when the 4 seasons was announced...it was a "white flag" on Disney service standards.

My take -

They are yielding the defined clientele to the four seasons and will over time continue to ease out of that "market" while running the most expensive 3 star in the US this side Maui...

Disney gets high money traffic in their guest areas without having to "tolerate" the costs that it requires...
The seasons gets huge international exposure due to traffic
and we all get to debate what's better.

Except the debate was over YEARS ago. I lived it and worked it...pay attention to the man behind the curtain...
There is no service argument..most of us agree.

But I contend that DOESN'T let disney off the hook to provide basic competency in service... For that price.

Even if they can do longterm cost cutting moves...like...I don't know... Say
Build a smallish DVC addition - with the potential to convert other "out buildings" (some would describe as outhouse buildings) In the future to meet "DVC demand"?

cause you know...we DVC can't get enough! Especially failed space conversion (Saratoga and "Jambo, everyone")

I get the "five star Disney" concept...but that is bought with blood from the mouse and that of mostly dead men...

You can appreciate the convenience and created ambience without burning your money at a higher rate and encouraging them...it is possible.
They do tons of feedback research...
Here's my suggestion - bomb the polls. Let them have it. Put it on the radar.

Because it was built with quality in mind. It must be maintained with quality service in mind...

That...IS the lodging industry. No matter what's out the window.

It's up to the consumer to demand at least the same return of the product as was offered prior...

And that doesn't mean that location can truly justify a $549 rack rate up from $329 in 2002
(I checked that 3 times because I couldn't quite swallow it)

It's like termite damage longterm...you can be quite content for along time and not question it...but then your house falls down and all of the sudden it becomes clear.
And what you knew is gone.

(I know I'm not convincing anyone...to be clear )

I'm with you.

I get people saying that they're paying for location - that still doesn't absolve Disney from providing 4+ star linens (incl. pillows), toiletries, fridges, room square footage, etc., for that price. No excuse for not doing so - besides letting them get away with it, of course.

And you're right - lot's of quiet, but significant changes going on in the WDW Resort side of the house - Seasons, Deluxe-to-DVC conversion, with DVC construction plugging right along.

Plus, Disney is very aware of how well the Loew's/Uni relationship is going. Makes you wonder what's on the horizon.

 

[lockedoutlogic]

Plus, Disney is very aware of how well the Loew's/Uni relationship is going. Makes you wonder what's on the horizon.

Disney has always "dabbled" in hotel operations...
They do so somewhat begrudgingly and they have never made any excuses for that. Since the Disneyland hotel. It is very much a necessary evil for them. But - like many things that I'm sure CMB and a his team of calculators loathe - the Disney brothers decided to run it themselves instead or trusting what they couldn't control.

The deal is that the accountants still see some value in running he hotels themselves...but it is not too educated of a guess to assume that the margin has closed drastically over time...raw materials, wages, Insurance, and particularly benefits have shrunk the piggy...

But the minute that formula goes from black to red - ch ch ch changes will come.

Am I saying that they will outsource hotel operations? Absolutely...and that seemed clear to me in hotel operations over a decade ago.

It started with "groupings"...consolidating housekeeping, engineering, recreation, phone centers, etc over multiple hotels...but that is really just the tip of the iceberg...

Training was dumbed down and appearance/ conduct standards eased ( they blamed the "unions"...dear god...like when they were "forced to take away the guaranteed, included gratuities from the dining plans...dear god), transfer rules opened up so anyone could work anywhere...also meaning any hotel can have staff making minimum...meaning one night at the Grand would cover the hourly wage (potentially) of your desk agent for a mind boggling 75 hours at their pay rate (not the full picture...but you get the point).

The magic band system could easily have been designed with staff reduction a primary goal...I never doubted that. That was an old agenda
From the 90's.

But the reality - as Disney knows - is that as long as it takes tens of thousands of employees to run the hotels...as it does and will continue...I believe outsourcing is only a matter of time.

Think anyone is watching the movement toward a 10-15 dollar national minimum wage more
Closely than Disney? Not at all. And they are working the political machine against it...no doubt. That would be huge - particular in parks and resorts.

So... Hypothetically...say they go to jw Marriott (example) about taking over operations. Marriott - being a travel business - values the properties and finds out that they are significantly overpriced for their service level...
And Disney then points out how good of a deal that is...and suggests they they do a 60/40 split on revenue because they are overpriced and inefficient...making them ripe for profit increases by reductions and modernization of services ( which Marriott could handle)...
Everybody wins at the rigged craps table.

Sounds like a good deal, no? Like maybe the plan all along for decades?

Or what if Marriott is too high brow? Right idea at the wrong price...
Maybe they need a chain operator that has experience in running everything from no tell motels all the way up through sub luxury similar to what the reality of grand Floridian or beach club runs at? Say maybe...the Intercontinental brand? At a payscale that is more "inline" with Disney's vision...

Check out holiday inn...
I'm just saying.

 

[lockedoutlogic]

Can someone shed some light onto the type of agreement that Disney has with FS? Does Disney own the land AND the building, or just the land?

Four seasons owns all of it. Disney yielded all of its standard "big brother" control.

That is significant.

As is the fact that Four seasons is a private enterprise...which means disney doesn't even have buying stock and exerting influence as an option either.

It is a legitimate partnership...independent but equal. Big brother can't use lease cancellation/eviction as the usual threat.

I also wonder if bonnet creek had never happened...would four seasons have come to pass?

Bonnet being one of the few losses in central Florida for TWDC.

 

[beer dave]

Wait, the monorail is a 44 year old Nixon era tram that USED to be included in the modestly priced hotels and tickets...
And it's falling apart

I reject the notion that somehow it's worth $200 drachmas a night.

Perhaps if they had expanded it to the other 60% of the property and it was exclusive to those spots...but they didnt.

I knew as soon as I mentioned the monorail that this is where it would go... I should have said " a category in such close proximity to" or "In walking distance of". I used the term "monorail loop" because it is a common description used to quantify the D deluxes.

Still skirting the concept of location... we cannot compare the cost of a 4 seasons to the cost of some of the Disney deluxes because 4 seasons doesn't have a resort in this category.


edit-- I posted this before the reading the three pages to follow. sorry for the redundancy.

 

[Lewisc]

I wouldn't consider what I proposed to be "collusion", but can see where one might draw the parallel. What I am suggesting is this: In order to "play" in our (Disney's) sandbox, you (Four Seasons) need to play by "our" rules, and here is the agreement in which the rules are defined.

The Sandbox in which the Four Seasons operates is on Disney-owned property, so depending on how their agreement is written, Disney may very well have some input into things such as pricing. Unless, of course, they are simply sub-leasing the land to Four Seasons for a hefty premium... then of course, that is a different story and what I proposed would, in fact, be collusion.

Certainly, Disney would not have the ability to control pricing of a "free standing" Four Seasons, but the fact that they own the land that the FS operates on, I would think there would be a chance of some control, depending on how their agreement is written. Can someone shed some light onto the type of agreement that Disney has with FS? Does Disney own the land AND the building, or just the land?

A landlord can't dictate pricing. Look at the some of the deals offered at the S/D. Look at the the deals being offered by the DTD hotels.

Other posters already addressed the Four Seasons. Disney sold the land.

 

[Reddog1134]

Disney has always "dabbled" in hotel operations...
They do so somewhat begrudgingly and they have never made any excuses for that. Since the Disneyland hotel. It is very much a necessary evil for them. But - like many things that I'm sure CMB and a his team of calculators loathe - the Disney brothers decided to run it themselves instead or trusting what they couldn't control.

Maybe I'm understanding you post incorrectly but I'm pretty sure the only hotels Disney ran while either of the brothers were alive were the Contemporary and Poly. And that was only for the 2 months Roy was alive after WDW opened.

 

[lockedoutlogic]

I knew as soon as I mentioned the monorail that this is where it would go... I should have said " a category in such close proximity to" or "In walking distance of". I used the term "monorail loop" because it is a common description used to quantify the D deluxes.

Still skirting the concept of location... we cannot compare the cost of a 4 seasons to the cost of some of the Disney deluxes because 4 seasons doesn't have a resort in this category.

edit-- I posted this before the reading the three pages to follow. sorry for the redundancy.

Listen...we generally agree...but I
Can't be on your kickball team on this one...

There Is no "skirting" of location at all. I'm limiting what can be assigned as a "fair value" to it.

Part of that is the monorail... And yes it is a draw and a reasonable fee is warranted. But that fee can't be a continual escalation in perpetuity on a paid off car. It's like starting a new mortgage on your house when you get the deed in the mail...or paying $500 a month for a 1959 ford galaxy...
Just doesn't make any sense.

The old crotchety Disney boys decided to build a footprint of a property wide rail system... Fairly Sure their accountants screamed not too...
So it's there and has been and will continue to be used to collect room revenue for foreseeable future.

Is that wrong? No. Do other people value that more or less than I do? No.

Should there be a customer imposed limit on how high that "surcharge" should be? My answer is absolutely... And why I preach it.

It's not whether you "mind spending the money"...that is group think that is damaging.

They are watching your passive credit wielding...your dollars are the ring and they are gollum. It is a thirst that can cannot be quenched.

I know it is sometimes shouting in the wind...but I cannot stress enough how we all need to take power as consumers and have REALLY fallen behind on this in the Iger era.
Like really bad.

Have to have a little fight in the old dog.

 

[lockedoutlogic]

Maybe I'm understanding you post incorrectly but I'm pretty sure the only hotels Disney ran while either of the brothers were alive were the Contemporary and Poly. And that was only for the 2 months Roy was alive after WDW opened.

I was referring more to the Disneyland hotel...

Which I believe was outside run under partnership in 1956, but old Walt grew frustrated with the acrimonious breakup of the original Partnership in 1958...and decided to run his own ship From now on.

That lead directly to the hotel division being "formed" in the swamp in the late 60's.

Eisner, in this respect, agreed
With that philosophy and ran with it...but even he decided it wasn't worth the hassle...and went to outside partnership...the result being a contentious episode currently know as the "swan and dolphin"

Unhappy with the lack of control...old mike violently whipped back and threw up 10 hotels in an impressive 10 year span.

So I'm thinking the end game is that Disney owns, builds, and maintains the hotels...but subs out all the operations.
They maintain veto/right of refusal on all decisions regarding business Impact...but strip themselves of the day to day employee costs - which is the goal.

Something they couldn't do with the not to be bullied Tischman Group and the 99 year leases.

You are correct that the actual Disney's didnt have much of a hand in resort running...
But decisions made in California and early Orlando are directly responsible for the 80s, 90s, 00s empire.

 

[Reddog1134]

I was referring more to the Disneyland hotel...

Which I believe was outside run under partnership in 1956, but old Walt grew frustrated with the acrimonious breakup of the original Partnership in 1958...and decided to run his own ship From now on.

The Disneyland Hotel was run by the Wrather Company until 1988. The wanted it but the owner would never sell. Finally, after he died, they bought his entire company.

 

[lockedoutlogic]

The Disneyland Hotel was run by the Wrather Company until 1988. The wanted it but the owner would never sell. Finally, after he died, they bought his entire company.

I understand that...but one of the numerous Disney biographies/business histories credited the early Disneyland hotel experiences with the backstory to Disney resorts... Just can't remember which one it was ???

But the theory make sense and jives with some of the other anecdotes - particularly in phase I WDW construction.
Remember that Disney "men" clashed heavily with architects and US Steel during design and construction of the contemp and poly as well...

They like total control... The primary reason why disney owns hotels.
Eisner - mentioned in the swan and dolphin saga - liked it too. Then he got old and a cheap...

Iger, and you would assume all Oscar de la rentas that will follow him, seems to care not for such things. IP...yes. Brick and mortar? Nope.

He's busy preparing for hi upcoming tandem golden parachute skydive with willow...
He's got bigger fish to fry.

 

[rteetz]

Maybe I'm understanding you post incorrectly but I'm pretty sure the only hotels Disney ran while either of the brothers were alive were the Contemporary and Poly. And that was only for the 2 months Roy was alive after WDW opened.

And originally Disney didn't even want to be in the Hotel business. Disney wanted the company that built the Poly and Contemporary to own and operate them. That soon changed when Roy saw that they weren't originally going to open in time for the MK opening. Roy then stepped in and said we will own and operate them to get them done in time. That is something todays disney doesn't do put more money out there to get things done sooner.

 

[clsteve]

So I'm thinking the end game is that Disney owns, builds, and maintains the hotels...but subs out all the operations.
They maintain veto/right of refusal on all decisions regarding business Impact...but strip themselves of the day to day employee costs - which is the goal.

This is what jumped out when I did the research for "The TDO Footprint Constraint".

It's a glaring locomotive when you look at the increase in headcount, benefits costs and pension plan liabilities since 2006 - almost all of that directly attributable the increase in Resorts footprint.

I'm surprised it hasn't happened already.

But, the Deluxe-to-DVC conversion makes even more sense as a precursor:

Deluxe have the biggest issue with occupancy, so a higher number of those rooms as DVC continues to decrease occ. rate risk, decrease expense line items, while increasing predictable income flow as unit sales percentages increase as a whole and by unit.

Risk aversion to both Disney and their prospective partner..

This raises a question to all of you DVC owners:

It would seem that Disney consolidating the DVC Points re-sale market in their favor would be a next logical and lucrative step to take once they hit a high unit sold percentage - it's definitely something an outsource partner would want firmly in their control since it's real money.

Just from a non-DVC owner looking from the outside in - is that something that concerns you - and could they even accomplish it?

 

[lockedoutlogic]

This is what jumped out when I did the research for "The TDO Footprint Constraint".

It's a glaring locomotive when you look at the increase in headcount, benefits costs and pension plan liabilities since 2006 - almost all of that directly attributable the increase in Resorts footprint.

I'm surprised it hasn't happened already.

But, the Deluxe-to-DVC conversion makes even more sense as a precursor:

Deluxe have the biggest issue with occupancy, so a higher number of those rooms as DVC continues to decrease occ. rate risk, decrease expense line items, while increasing predictable income flow as unit sales percentages increase as a whole and by unit.

Risk aversion to both Disney and their prospective partner..

This raises a question to all of you DVC owners:

It would seem that Disney consolidating the DVC Points re-sale market in their favor would be a next logical and lucrative step to take once they hit a high unit sold percentage - it's definitely something an outsource partner would want firmly in their control since it's real money.

Just from a non-DVC owner looking from the outside in - is that something that concerns you - and could they even accomplish it?

Indeed...

As far as consolidating the resale market...that is a matter of time. I think they have "tolerated" the third party resales to this point...
Like they used to with the ticket resale Booths on 192 and I-drive

They'll strike at some point. ROFR is a powerful ace in the hole.

It's already a bad deal with cost escalation...my advice to anyone is get a resale now if you are even remotely thinking of buying or adding.

As far as why they still run the hotels?
No right answer...but my guess is so they can fully outfit/max out DVC with autonomy.

Then any future new construction happens only they have huge demand... Possible work the fla legislature so they can pre sell the whole thing.

 

[dinolounger]

We've been owners for more than a decade.

We've been owners for much longer than that. And therefore have a sense of how incentives have changed over time, as well as when they get sweeter being a very good barometer of sales issues.

Area of residence doesn't matter a whole lot.

I guess no one told that to the members in New York State, who make up the largest % of DVC members nationwide and who according to my guide are showing no interest whatsoever in Aulani. For the same reasons I stated earlier: it's not attached to a theme park and much too far away. The latter is the interesting element, for if Disney had done its homework, it would have learned what time share firms have known for decades: it's always much harder to sell a property that's thousands of miles away.

 

[lockedoutlogic]

I guess no one told that to the members in New York State, who make up the largest % of DVC members nationwide and who according to my guide are showing no interest whatsoever in Aulani. For the same reasons I stated earlier: it's not attached to a theme park and much too far away. The latter is the interesting element, for if Disney had done its homework, it would have learned what time share firms have known for decades: it's always much harder to sell a property that's thousands of miles away.

Correct...
If you look at the member location distribution...the geographic "core" of DVC is Maryland, Pennsylvania, New York, New Jersey, Connecticut, Massachusetts and Rhode Island...

No question. Logical anyway...but to an extreme level.

I think aulani was hurt greatly by geopolitics...

First the recession...which always hurt the US dependent markets worse than they hurt the Us (ie Japan)

And second by ***ushima...which again, hurts Japan and their sales market.

Aulani must have been heavily focused on the Japan and Chinese market.
Hawaii is largely an impractical repeat
Location for the US...completely so for the DVC concentration from Chicago eastward.

They had to have thought that it would have to be more of a standalone sale than an addition to the existing base.
A little too far.

Besides...I thought the concept of Disney building a fake, themed Hawaii in Hawaii is somewhat laughable... And right inline with the goofball designer. If you're going to Hawaii...do you really want to stay at Disney? Lots of reasons not too.

From what i've read, Ko Olina is like the "playa del Carmen" or "roatan" of Oahu...

"Up and coming"...which means artificially created for tourists in the modern age...and that has a stench.

17 miles is a LONG drive to Honolulu on Hawaiian roads...is it not? (Have never been to Oahu...but that kind of drive on Maui is a near all day affair)

 

[ArwenMarie]

I know I am beating a dead horse at this point, but anyway...one can't compare the FS, Waldorf, Ritz, etc to CR/GF/Poly/BC/BW because of location. Those hotels have it and the other ones don't. The closest comparison might be S/D to BW/BC. S/D prices are indeed lower without the power of the Disney name and all of the discounts and all that. But the S/D would never get the prices even they charge if they weren't walking distance to two parks. So the S/D only proves the adage of location, location, location.

Regardless, the rack rates are still insane for what you get. But I think customers are already voting with their wallets. The Deluxes are empty enough to turn them over into timeshares. Near-constant discounts are running throughout the year. Even with Magical Express, occupancy resort-wide only runs at 80%. And the real evidence, imo, is the number of offsite accommodations that do a fine business as well.

 

[mikedoyleblogger]

Besides...I thought the concept of Disney building a fake, themed Hawaii in Hawaii is somewhat laughable... And right inline with the goofball designer. If you're going to Hawaii...do you really want to stay at Disney? Lots of reasons not too.

Th original version of California Adventure aside, I'm sure lots of people want a Disney-fied Hawaiian vacation, just like lots of people want a Disney-fied cruise. I think the point of Aulani was to give DVC members from other properties the chance to use their points in Hawaii to help Disney capture some of that market.

 

[lockedoutlogic]

Regardless, the rack rates are still insane for what you get. But I think customers are already voting with their wallets. The Deluxes are empty enough to turn them over into timeshares. Near-constant discounts are running throughout the year. Even with Magical Express, occupancy resort-wide only runs at 80%. And the real evidence, imo, is the number of offsite accommodations that do a fine business as well.

Correct...
And the move will be to convert as much as possible to DVC and then take the remaining rack rooms and INCREASE the prices even further.

To cater to the "upper" end of the clientele who care not for price at all...

Doesn't affect me or you? Yes and no...

So those that save or have non-unlimited means to buy the rooms at say the poly... What's remaining of the "upper middle class" will be forced to continue to pay escalating fees or...big "or"...
Will run into the DVC buzz saw. (More likely)

Doesn't affect you or me... The more the merrier?

Not quite...so now you have large spenders and committed mid to large spenders locked into decades of guaranteed travel...
How much do you think that pork belly at Citricos or the Grouper at Flying Fish will cost after the plan is complete?

Anyway...just something to nibble on...

I worry too much...I know the food will be better quality to justify the price...
And I'm an American... Which means the housing and stock markets are lock solid stable and I'm guaranteed a 10% annual increase in earnings and wages to throw at travel...

Cuz I'm living the dream, baby

 

[beer dave]

Listen...we generally agree...but I
Can't be on your kickball team on this one...

There Is no "skirting" of location at all. I'm limiting what can be assigned as a "fair value" to it.

Part of that is the monorail... And yes it is a draw and a reasonable fee is warranted. But that fee can't be a continual escalation in perpetuity on a paid off car. It's like starting a new mortgage on your house when you get the deed in the mail...or paying $500 a month for a 1959 ford galaxy...
Just doesn't make any sense.

The old crotchety Disney boys decided to build a footprint of a property wide rail system... Fairly Sure their accountants screamed not too...
So it's there and has been and will continue to be used to collect room revenue for foreseeable future.

Is that wrong? No. Do other people value that more or less than I do? No.

Should there be a customer imposed limit on how high that "surcharge" should be? My answer is absolutely... And why I preach it.

It's not whether you "mind spending the money"...that is group think that is damaging.

They are watching your passive credit wielding...your dollars are the ring and they are gollum. It is a thirst that can cannot be quenched.

I know it is sometimes shouting in the wind...but I cannot stress enough how we all need to take power as consumers and have REALLY fallen behind on this in the Iger era.
Like really bad.

Have to have a little fight in the old dog.

Well this turned into a good thread... About time. I was getting bored.

I guess I am somewhat removed due to the fact that I don't pay the rates they charge for the deluxes. I don't think about it much, but it does amaze me that people pay rack rate.

You are right that there is (should be) a ceiling for these prices, but somehow it still gets paid. My position is more to sit back and watch, hope the prices keep going up, so when I go there are less people. The problem seems to be that this is not happening... yet? Between DVC, Fl resident passes, and no airfare, I am far from being priced out

I really enjoy the insight /info dumped here from several of you who have a great/ interesting perspective, but unfortunately for you, you seem to be trying to lead a revolution that is far from happening.

 

[lockedoutlogic]

Th original version of California Adventure aside, I'm sure lots of people want a Disney-fied Hawaiian vacation, just like lots of people want a Disney-fied cruise. I think the point of Aulani was to give DVC members from other properties the chance to use their points in Hawaii to help Disney capture some of that market.

i hear you...

but then an "authentic hawaiian paradise" built out of concrete and fiberglass in...well...hawaii
still makes me chuckle.

And DCA was a little different...it was meant to encapsulate a bunch of different elements from and large, varying, and unique state inside one fence...
a little the same...but a much better idea in my opinion.