Any Chance DVC (or DVD) Could Go Bankrupt???

[artvandelay]

Is DVC, or DVD, a separate company under the Disney umbrella or just part of the Disney Corp? DVD and DVC are in the midst of it largest expansion ever with four new resorts under construction. I would think that in the current economic climate timeshare sales are down. I know Marriott's were down 40% last quarter.

So with a lot of money going out for construction, timeshare sales down, and credit tight, could they go bankrupt? If they did, what would happen to our ownership shares? Would TWDC bail them out?

Please don't flame me, it was just something that I thought of and wanted to see if anyone had any answers.

 

[Chuck S]

Is it possible? Sure, they are a separate operating company of the Disney umbrella, so legally DVD could go bankrupt. But I would bet it is extremely unlikely that Disney would let it happen.

However, we basically own the resorts, and could simply contract with a new management company for reservations, housekeeping, front desk, etc.

The problem would possibly arise for the resorts that share services with regular cash WDW resorts. The free standing resorts, like OKW, SSR, VB, and HHI would be fine. The biggest problem would be AKV Jambo House, as they would need to maintain access to those units located inside a structure that also houses other rooms. Even the rest of the "Blended" resorts, BCV, BWV, Kidani, BLT & VWL would not be a big problem as they are all contained in a separate building and could have separate check-in desks if needed, and they could operate separately from the connected resort.

 

[Spacemonkaay]

...

 

[Chuck S]

Chuck -- if I'm not mistaken (I could be missing something key here) we actually don't own anything. If you look at the documents, you'll see the term "leasehold" written in there. We really just have a 50 year leasehold interest in the property. There are different ways you can hold (or "own," as some say) property . . . fee simple, fee simple absolute, leasehold . . . may be worth Googling those terms. I learned that stuff in a real estate class but never used it cause all I did was leasing. )

Does anyone know if we also signed away our rights to make decisions as part of the condo association of sorts?

Can anyone verify or correct what I'm saying? Any attorneys out there on the Dis?

We don't own the land. We own a deeded interest in a particular physical unit built on the property. There are laws to protect that leasehold for timeshare owners in FL. The property can change hands, but the lease would be in force.

 

[tjkraz]

So with a lot of money going out for construction, timeshare sales down, and credit tight, could they go bankrupt? If they did, what would happen to our ownership shares? Would TWDC bail them out?

The timeshare industry as a whole is suffering a bit right now but so far DVC is largely immune. In the 1st quarter of this fiscal year DVC sales were up compared to 1Q of last year, and things appear to be purring along in the second quarter. I'm sure they would be much better if not for the economy, but an increase is still an increase.

As long as DVD continues to charge its current prices, I doubt there is any reason to worry. Pricing now is up about 10% from this time last year. And DVD skipped over the wintertime Friends and Family promotions they have run for the last 3 years.

DVC (the management company) is self-sustaining. It's funded by our dues plus a 12% fee which is largely profit for Disney. Some form of management company must continue to exist although Disney could farm it out to someone else. But as long as its more than paying for itself and they plan to remain in the timeshare business, I don't see why they would consider outsourcing.

 

[chris1gill]

Is it possible? Sure, they are a separate operating company of the Disney umbrella, so legally DVD could go bankrupt. But I would bet it is extremely unlikely that Disney would let it happen.

However, we basically own the resorts, and could simply contract with a new management company for reservations, housekeeping, front desk, etc.

The problem would possibly arise for the resorts that share services with regular cash WDW resorts. The free standing resorts, like OKW, SSR, VB, and HHI would be fine. The biggest problem would be AKV Jambo House, as they would need to maintain access to those units located inside a structure that also houses other rooms. Even the rest of the "Blended" resorts, BCV, BWV, Kidani, BLT & VWL would not be a big problem as they are all contained in a separate building and could have separate check-in desks if needed, and they could operate separately from the connected resort.

Chuck is almost technically correct. If DVC goes under, the resorts within it could be sold, but we would still hold rights to those resorts.

What Chuck is describing is actually a situation I've recently gone through. Our resort was ripping off the full time homeowners, we own our units, we just went through a different management company. But in DVC's case, a company would have to purchase the resorts.

 

[artvandelay]

The timeshare industry as a whole is suffering a bit right now but so far DVC is largely immune. In the 1st quarter of this fiscal year DVC sales were up compared to 1Q of last year, and things appear to be purring along in the second quarter. I'm sure they would be much better if not for the economy, but an increase is still an increase.

As long as DVD continues to charge its current prices, I doubt there is any reason to worry. Pricing now is up about 10% from this time last year. And DVD skipped over the wintertime Friends and Family promotions they have run for the last 3 years.

DVC (the management company) is self-sustaining. It's funded by our dues plus a 12% fee which is largely profit for Disney. Some form of management company must continue to exist although Disney could farm it out to someone else. But as long as its more than paying for itself and they plan to remain in the timeshare business, I don't see why they would consider outsourcing.

Thanks for the info. DVD and DVC are selling two unique resorts when it comes to timeshares. AKL has great facilities and the savanah. BLT is the only timeshare in Orlando where you can walk to the Magic Kingdom.