Disney to sell their DVC unit?

[Brian Noble]

But investing $$$ in a project in return for advertising is very different than purchasing & controlling real estate, with or without the land included.

True, but it seems to have worked out for Four Seasons.

 

[Brianstl]

That is not pure profit because that is what pays the expenses of DVMC. Running that company, paying salaries if people like CMs who answer phones, etc.

But, being a flat fee it means anything over and above the actual expenses is profit. So, if it took 20 million..and that’s a random number.. to find and run DVMC, then yes, that extra $23 M would indeed be profit.

Actually, it is pure profit as all expenses are paid separately out the budget and not the management fee paid to DVC. Members at Saratoga alone will pay over $8 million for administration and front desk services.
https://disneyvacationclub.disney.g...iation-notices/2020/2020_Condo_Notice_SSR.pdf

 

[Westerlin]

I am sure DVC is looking at every possible option as any responsible business would. And in the end they will do whatever makes the most financial sense to them. I don’t really think it will happen but I am sure it is being discussed from time to time.

 

[CanadaDisney05]

Actually, it is pure profit as all expenses are paid separately out the budget and not the management fee paid to DVC. Members at Saratoga alone will pay over $8 million for administration and front desk services.
https://disneyvacationclub.disney.g...iation-notices/2020/2020_Condo_Notice_SSR.pdf

I almost guarantee there are costs associated with that management fee. The other expenses that are paid are the direct costs. The management fee covers the overhead + profit.

 

[Brianstl]

I almost guarantee there are costs associated with that management fee. The other expenses that are paid are the direct costs. The management fee covers the overhead + profit.

Liability insurance for the officers of DVD/DVMC doesn’t even come out of the management fees. If you read the description of cost that is paid separately under the insurance cost along with workers comp insurance cost.

 

[CanadaDisney05]

Liability insurance for the officers of DVD/DVMC doesn’t even come out of the management fees. If you read the description of cost that is paid separately under the insurance cost along with workers comp insurance cost.

Just a few examples, I don't see things like directors costs, accounting costs (I see audit, but no internal accounting), human resources costs, IT infrastructure aside from booking system office, office costs, payroll costs, etc.... I imagine the management fee covers all of these

 

[Sandisw]

Actually, it is pure profit as all expenses are paid separately out the budget and not the management fee paid to DVC. Members at Saratoga alone will pay over $8 million for administration and front desk services.
https://disneyvacationclub.disney.g...iation-notices/2020/2020_Condo_Notice_SSR.pdf

I think you are confusing two different things. We pay for the operation of the resort itself. That $8 million for front desk and administration is for the resort itself and is provided by Disney via the property management agreement. DVCMC is not in charge or responsible for anything to do with the running of the resort directly.

We pay DVMC to oversee running of the program itself. All the CMs who answer the phones at MS to help owners use their membership are employed by DVCMC and therefore their salaries and benefits come from the management fee.

The cost to run the DVCMC office is paid by the management fee, and whatever other expenses they have to as a company.. So, the salaries of people who are employed by DVMC, like the new Senior VP, are paid from that management fee.

So, when you see things like administration or insurance, it’s for the actual resort and not those in administration at DVCMC. Same thing with accounting. It’s the accounting department who does the budgets at the resorts. The accounting department who handles things like dues, etc. is different and is paid by the management fee.

So, DVCMC has its own expenses as a company that have nothing to do with those other expenses to operate the resort that are listed in the annual dues statements.

 

[Maistre Gracey]

If by "recent" you mean "since Epcot opened," then yes. Nearly all of the pavilions had an external corporate (Future World) or government (World Showcase) sponsor.

No. It’s always been there, but it’s steadily accelerated over the ye years.
But I think you knew that.

 

[sndral]

The Swan and Dolphin are the daily reminders why Disney should never sell prime real estate. Disney would LOVE to get these pieces of real estate back. Can't see them giving any control of BLT to anyone. And the SSR property is incredible value. Heck, I imagine someone approaching Disney

I‘m not so sure that Disney is so eager to get the Swolphin back, if they were why did they let them build this? https://www.marriott.com/hotels/travel/mcokc-walt-disney-world-swan-reserve/

 

[mustinjourney]

Wait for three hours for someone to answer the phone and tell me DVC cares about branding. Hit those dwarves again and think about how that website is doing for the branding. Check out that sweet $0 Incredipass discount and tell me they care about DVC. I got quoted 7 days to combine reservations.

This rumor makes sense to me in the context of DVC's obvious service decline and complete gutting of things like TOTW and Moonlight Magic.

Marriott runs the Swolphin and a massive timeshare operation. I'm sure they could figure out how to make a website, hire someone to answer the phone and the emails, and run DVC better than the current level. The suggestion was not even that it would be permanent, just a temporary handover. That makes me even more nervous about the value of my contracts.

it just doesn't make a lot of sense to me since I'm assuming DVC is a cash cow for disney (why else would they be converting VGF to DVC?).

Only way this temporary handoff makes sense is if they're intentional trying to tank the market so they can buy back a bunch of contracts on the cheap...hoard the points, and after gaining control again, have a ton of inventory to sell at an immense profit.

But are they that crafty?

 

[mustinjourney]

Ehhh it seems pretty specious to me. The main reason they give for selling it is the glut of banked points? Thats an issue sure, but an insurmountable one to where you'd want to sell the division I dont think.

Unless you're Bob2 and want to have cash to buy a sports betting outfit for the synergies that provides with ESPN, but really I dont think Disney would need to drum up that much cash to do that deal, sports betting is still in its infancy for being legal in more and more states, surely an all stock deal would get that done without the need for any actual cash to change hands.

not to mention I would think Disney could borrow that cash from banks -- it was reported last year that banks were still willing to float them, so I don't know why that would change now?

 

[mustinjourney]

I'd argue that the conversion of GF hotel into DVC is the short term filling that hole in the P&L that they were discussing. Riviera sales continue to lag, and they know selling more VGF will be a hit. Fills a gap NOW, while they figure out the mid to long term for DVC. The Disneyland Hotel DVC will be a hit...but after that?? Who knows...

sadly -- if they would just lift the resale restrictions on RIV, then I would presume that many of their problems would go away and that thing would sell like hotcakes.

 

[mustinjourney]

I certainly believe they are exploring it, and have probably explored it in the past. DVC is a way for Disney to bring in capital. If they are running out of places to build or feel the market is getting saturated, DVC will have filled its potential from a balance sheet perspective. Running DVC isn't the profitable part for Disney. The end life of the resorts is going to be a logistical issue they might as well make someone else's.

I don't know about that -- without DVC -- I'd never have bought an annual pass...and probably would be going once every 3 or 4 years. And I'm not sure if I'd be staying at deluxe resorts either.

I'm sure I can't be the only one -- and when you factor in all of the other food costs and golf/spa things that DVC members partake in -- pissing off your most loyal fanbase is not a smart, long-term move (not to mention how much DVC members proselytize to friends/family).

 

[mustinjourney]

If this is actually going to happen, it is probably a good explanation for the buy back letters Disney sent out. A new owner would like to have a wide range of resort inventory to sell when they take over.

I'm pretty sure those buyback letters for OKW have more to do with tidying up the 2042/2057 issues more than anything.

 

[mustinjourney]

From experience, Accenture guys can't keep a secret and don't know where to talk shop. I once learned about a major and highly confidential platform change at a company where my husband worked from sitting next to people who didn't know to keep their mouths shut at lunch. I went home and said "I overheard..." and my husband blew a gasket. A month ago I sat next to a guy on an airplane who was working on an acquisitions powerpoint for a big company acquiring a small company (which you've heard of) which there isn't any public releases on (it may never happen - early in my career I did a lot of M&A work - it usually doesn't happen).

my business organizations (biz org) law professor once stated in class -- "if you are ever having lunch in Manhattan and overhear investment bankers discussing an M&A deal -- the first two calls you should make are (1) to your stock broker and (2) to me."

 

[CarolMN]

My theory is that this rumor was started to distract everyone from the abysmal website - and I include the entire IT experience with that abysmal experience (DVC, MDE app, ADRs, ticketing, and probably Genie whenever that begins). This thread is generating many more posts that the former leader (current state of the IT), LOL.

And FWIW, the DVC website is paid for out of the budgeted amount for DVCMC. We only have it because DVCMC didn't want to hire the number of MS CMs it would take to handle all the calls generated as a result of the growth of DVC.

As entertaining as this thread seems to be, it's all based on a rumor and no one who posts here knows anything for sure. It's all pure speculation and I for one am not making any decisions based on stuff people make up.

 

[Yinn]

I didn't read through all 14 pages, but is it possible the discussion is more about structuring?

I'm not an expert on this so bear with me please...

Disney as a company has evolved over time. It currently competes in multiple markets with a market cap of 315B.

The theme parks division is competing with the likes of SIX which holds a 3.7B market cap.
The streaming division has quickly ramped up to compete wit the likes of NFLX with a 273B market cap.

Then there's the studios division, property management, land leases, etc.

Is there stock value to be unlocked by splitting of DVC as say an REIT? Either directly in market cap value, or indirectly ratio of capital or operational spending, etc that can lead to perceived value?

Is it possible this isn't so much a DVC dump, but rather unlocking shareholder value where Disney could still retain majority control but it would be able to create legal protections and unlock financial value by splitting it?

 

[The Jackal]

How about this ?

Disney sells 2 large standalone DVC resorts , the benefit for the buyer is that they get OKW and SSR (including the land it sits on) - Disney as part of the deal would unload Aulani, HHI, and VB. Since all of these properties are complete standalone , it would be an easy and relatively clean break from the rest of DVC? The buyer would get property onsite at WDW to build on or resell eventually , as well as adding the other properties to their timeshare network. Disney would get a cash infusion and keep their most valuable properties that are shared with cash resorts like poly , GF , etc

Maybe to sweeten the pot Disney would include the port orleans resorts - which would represent a giant piece of on property land extending from Port orleans , to OKW, to SSR

Thoughts ?

Ummmm your missing one. RIV. They other ones have very little to no money to be made. Since RIV isn’t sold out yet. That is where a company can make money. I do not see WDW ever selling a resort. There is too much money to be made by them. Heck in 20 years just think how much BCV and BWV will be selling for a point @ 20 points a night for a studio. $$$$$$$$$

 

[kes601]

How about this ?

Disney sells 2 large standalone DVC resorts , the benefit for the buyer is that they get OKW and SSR (including the land it sits on) - Disney as part of the deal would unload Aulani, HHI, and VB. Since all of these properties are complete standalone , it would be an easy and relatively clean break from the rest of DVC? The buyer would get property onsite at WDW to build on or resell eventually , as well as adding the other properties to their timeshare network. Disney would get a cash infusion and keep their most valuable properties that are shared with cash resorts like poly , GF , etc

Maybe to sweeten the pot Disney would include the port orleans resorts - which would represent a giant piece of on property land extending from Port orleans , to OKW, to SSR

Thoughts ?

And what about those who bought into SSR and OKW? You can't annex us from the the DVC properties, we bought into DVC just as others did.

 

[mlayton14]

Ummmm your missing one. RIV. They other ones have very little to no money to be made. Since RIV isn’t sold out yet. That is where a company can make money. I do not see WDW ever selling a resort. There is too much money to be made by them. Heck in 20 years just think how much BCV and BWV will be selling for a point @ 20 points a night for a studio. $$$$$$$$$

point taken , I guess my point is that if Disney really wanted to reduce its exposure to DVC there would probably be a good business case for the buyers available , especially if land were included in the deal to repurpose or build new