Disney to sell their DVC unit?

[RoseGold]

Which leads me to believe that this is nothing more than clickbait.

This rumor makes more sense to me than Disney becoming a resale agent and competing with itself over slim margins. The current buyback strategy maybe gets a spread of $70/point. It's not enough compared to developer points and it's blocking buyers for the next big build, which would make money. Yet resale keeps going up. Removing points is a good way to push people to RIV and end this ridiculous run on resale.

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.

It's interesting the buybacks didn't go out to SSR and did go to OKW. I would picture DVC holding OKW, because of its resale advantage adding years, and selling SSR, which is just so huge. I'm not feeling real confident about my SSR right now. It's such a beast of a property. If I had AUL, I would feel a lot worse. AUL is an obvious target to me, and it's desirable to a timeshare company because it still has so much developer inventory.

 

[crisi]

What changes? Honest question because really nothing changes between selling or not selling IMO.

Banked and borrowed points, mostly. A possibility of a flood of resales hitting the market starting soonish. What do DO with the resorts. The second doesn't really change, the first does because managing through the end of the resorts won't be Disney's problem

 

[DonMacGregor]

Rumor has it he heard it from a bus driver......................................

Actually, it was Len Testa's "friend" in an undisclosed (but major financial) city who conveniently happened to be sitting at a table next to three guys who happened to be investment bankers who also happened to be from three different investment firms (and he apparently happens to know who they are and the names of each of their firms), and they happened to be talking about DVC, and Len Testa's friend just happened to conveniently overhear them.

Solid source, maybe more so than even a bus driver.

 

[EM Lawrence]

So lets say theoretically, the rumor is legit and Disney does want to sell DVC, take the cash from the sale and do something else with it. If a Marriott or Hilton timeshare group bought DVC, could we see a scenario where the existing owners of those timeshare groups could book DVC rooms with their points?

 

[Westerlin]

So lets say theoretically, the rumor is legit and Disney does want to sell DVC, take the cash from the sale and do something else with it. If a Marriott or Hilton timeshare group bought DVC, could we see a scenario where the existing owners of those timeshare groups could book DVC rooms with their points?

That is the scary part, I imagine they could, and we could book into a Hilton or whatever. Really it would just be a financial loss for me when I tried to sell it.

 

[Brianstl]

Actually, it was Len Testa's "friend" in an undisclosed (but major financial) city who conveniently happened to be sitting at a table next to three guys who happened to be investment bankers who also happened to be from three different investment firms (and he apparently happens to know who they are and the names of each of their firms), and they happened to be talking about DVC, and Len Testa's friend just happened to conveniently overhear them.

Solid source, maybe more so than even a bus driver.

You can make fun of how it got to Testa, but Testa has a solid track record. My guess is at this point it is probably just Disney exploring their options when it comes to quick ways to pay down debt and to free more cash for streaming productions. Which were two priorities Chapek laid out in his Goldman conference.

 

[DonMacGregor]

You can make fun of how it got to Testa, but Testa has a solid track record. My guess is at this point it is probably just Disney exploring their options when it comes to quick ways to pay down debt and to free more cash for streaming productions. Which were to priorities Chapek laid out in his Goldman conference.

I wouldn't call it "making fun", I would call it an amazing set of impractical circumstances, bordering on the impossible, that raises a logical sense of incredulity. Oh, and none of what I said was factually incorrect, based on Testa's prefacing of the story.

 

[Westerlin]

It does make financial sense to discuss it. It would more than likely solve a lot of problems for Disney at the expense of Disney's loyalist fans. That has never seemed to be an issue for them.

They want to focus on occasional guests not yearly ones,

 

[bumbershoot]

three guys who happened to be investment bankers who also happened to be from three different investment firms ...and they happened to be talking about DVC

And that's where this rumor started? Because 3 business people were talking about DVC?

 

[RoseGold]

I wouldn't call it "making fun", I would call it an amazing set of impractical circumstances, bordering on the impossible, that raises a logical sense of incredulity. Oh, and none of what I said was factually incorrect, based on Testa's prefacing of the story.

So ignore the (fake?) backstory. Testa is well-connected and it’s not like he’s going to out his actual source. The rumor makes total sense to me, even if attributed to “anonymous source.”

 

[DonMacGregor]

And that's where this rumor started? Because 3 business people were talking about DVC?

Apparently, they were talking about it at a table next to a guy that Len Testa knows, and who knew the three guys, where each worked, and happened to overhear their conversation.

 

[DonMacGregor]

So ignore the (probably fake) backstory. Testa is well-connected and it’s not like he’s going to out his actual source. The rumor makes total sense to me, even if attributed to “anonymous source.”

Ok, I'll buy that the rumor started somewhere, possibly somewhere credible. But why tank the credibility of your story by fabricating such a Rube Goldberg of a origin, when a simple "sources I can't identify right now" provides far more legitimacy?

I'd be more likely to believe that a couple of guys, trying to sniff out an opportunity to either make some dough through arbitrage, or spitballing some pitch to a client such as Marriott or Hilton, were overheard in some sort of "So, I've looked at the financials and what if Disney were pitched an offer to sell their timeshare division to a third party, how could we pitch that to our guys? type discussion.

 

[Brianstl]

I wouldn't call it "making fun", I would call it an amazing set of impractical circumstances, bordering on the impossible, that raises a logical sense of incredulity. Oh, and none of what I said was factually incorrect, based on Testa's prefacing of the story.

Except that Testa actually knows personally many of the people who would be involved in these types of discussions from his days working at AMEX.

 

[Westerlin]

So ignore the (fake?) backstory. Testa is well-connected and it’s not like he’s going to out his actual source. The rumor makes total sense to me, even if attributed to “anonymous source.”

I agree with this, I work in finance, I imagine Disney wanted this to get out to see what kind of response it would get. DVC is not a focus point or priority for current leadership at Disney. No surprise there.

 

[RoseGold]

Ok, I'll buy that the rumor started somewhere, possibly somewhere credible. But why tank the credibility of your story by fabricating such a Rube Goldberg of a origin, when a simple "sources I can't identify right now" provides far more legitimacy?

Thats how I read this origin story. The next part is wisdom from an anonymous hedge fund guy at Starbucks, which is an obvious joke. It’s not like he’s going to say it came from Jerry, the CFO’s assistant.

 

[_auroraborealis_]

They want to focus on occasional guests not yearly ones,

Beyond that, they want to focus on streaming over tourism revenue. They see a ceiling on share of market for theme parks that is much closer and lower than the ceiling they see in streaming, particularly in a connected global economy with increased pressures on international travel.

 

[DonMacGregor]

I agree with this, I work in finance, I imagine Disney wanted this to get out to see what kind of response it would get. DVC is not a focus point or priority for current leadership at Disney. No surprise there.

This I could see too. I just don't see DVC occupying that level of importance on Disney's balance sheet right now.

 

[Westerlin]

This I could see too. I just don't see DVC occupying that level of importance on Disney's balance sheet right now.

That's a really good point. I am not sure with the banked points out there they would get that much money for it anyway. Assuming they would just be selling the contracts and DVC business, not the real estate. I would guess they would not be too keen on actually selling the properties located at Disney World and Disneyland anyway.

 

[EM Lawrence]

Testa has access to a lot of inside information that he chooses not to share, or is unable to share. He knows way more than he publicly reveals. Even with the squishy origin story and the speculative tone he took, the fact that he spent 15 minutes of his podcast discussing this, instead of the topic he was scheduled to discuss, seems very significant to me. I'm concerned about this, and I'm honestly fighting the urge to sell my points right away. But even if the scenario he discussed is all going to happen, there are still a lot of unknowns about how it would all play out for owners. I will say, even the thought that this could be legit is a dark mark against the Chapek era. We all know what Chapek is all about, and it is not keeping loyal fans content.

 

[Sparky984]

If run by a third party, the only dvc “perk” (white or blue) may be the room location.