Disney to sell their DVC unit?

[RivShore]

Jim Hill sounds like a broken clock….

https://www.disboards.com/threads/who-is-jim-hill-disney-historian.2920598/

So looking back at that thread, i was reminded that Len Testa lentesta actually posts here somewhat regularly. How about some more color commentary here Len?

 

[RoseGold]

A week after the initial podcast and not a SINGLE other media or Disney source or any other blogger, podcaster, YouTuber or anyone else has made any comment or allusion to the subject.

You expected Disney to announce it at the 50th fireworks show? Leaking to Testa makes sense to me. Here we are talking about it.

Since Covid, Disney’s own actions have shown DVC isn’t a priority. IMO, this rumor makes sense in the context of the way Disney is handling DVC. There are a lot of Blue Card loyalists here who are hiding their eyes to the truth. Meanwhile, DVC cancels construction, destroys Blue Card perks, and takes all the staff off the ship, like it’s sinking. With or without Testa, obviously they are looking into options that don’t involve putting more money into DVC.

 

[Chuck S]

You expected Disney to announce it at the 50th fireworks show? Leaking to Testa makes sense to me. Here we are talking about it.

If it were some sort of intentional leak, it would've been "leaked" to more bloggers by now. And still, there's very little profit to be gained by any company that could even pay the $Billion or so Disney would want for DVC. The numbers just aren't there. They'd have to pay a continuing fee to use the Disney brand, contract with Disney transportation, maintenance, housekeeping, and staff services to keep that Disney brand. And then follow Disney standards for those services only to have many of the properties revert to Disney in 20 years. They'd have to take over the land leases, and negotiate for new onsite leases to build new resorts. Sales of new contracts is where the immediate money is, management income is incidental, and would be cut into by licensing costs, staffing, and so forth. Not an easy sell to most corporations. They'd also have to buy out Disney's retained ownership interest in the resorts, or continue to allow Disney to profit directly from renting cash rooms at the resorts.

 

[DonMacGregor]

You expected Disney to announce it at the 50th fireworks show? Leaking to Testa makes sense to me. Here we are talking about it.

Once again, completely missed my point (or you just love creating strawmen). The fact of the matter is NO ONE on any platform ANYWHERE else has heard the rumor, heard something similar, or even brought it up in conversation

Of course, I made zero mention of any “official” announcement, and I’m reasonably confident it’s clear I was talking about other rumor sources specifically, but when you’re building a straw man…

 

[RoseGold]

Once again, completely missed my point (or you just love creating strawmen). The fact of the matter is NO ONE on any platform ANYWHERE else has heard the rumor, heard something similar, or even brought it up in conversation

With or without Testa or whatever blogger you find reputable, this rumor makes sense. Of course Disney should be at least considering everything, and its current actions are departing from previous DVC plans and standards in ways no one expected, even in rumors. I never would have believed when I bought that DVC would have an embarrassingly unprofessional level of customer service.

Just because X blog isn't talking about it, doesn't mean it isn't at least on the table as possibility. We are owners (well renters?) of these resorts, and we need to be aware of all of the risks, including those coming from inside the house.

 

[RanDIZ]

DVC must’ve been doing alright for them to make the decision to build Riviera. After that Reflections was in the works. Had Covid not been thrown into the mix, construction would be underway leading to the 2022 projected opening. So it’s hard to believe Disney is going to just bail on DVC unless it’s actually losing them money. They obviously made the VGF2 decision. Maybe that’s the new direction for now and we see one of the Port Orleans resorts converted. It’s probably gonna be a wait and see approach before moving forward on any new DVC or even the thought of bailing on it altogether.

 

[RanDIZ]

With or without Testa or whatever blogger you find reputable, this rumor makes sense. Of course Disney should be at least considering everything, and its current actions are departing from previous DVC plans and standards in ways no one expected, even in rumors. I never would have believed when I bought that DVC would have an embarrassingly unprofessional level of customer service.

Just because X blog isn't talking about it, doesn't mean it isn't at least on the table as possibility. We are owners (well renters?) of these resorts, and we need to be aware of all of the risks, including those coming from inside the house.

I agree. Everything is def always on the table in a business. I also did not expect this poor level of experience with MS, specifically the extremely flawed website.

 

[Westerlin]

While only one place has reported this I believe DVC Fan did say something major is changing with DVC i their last episode. I really don’t think they will sell, but I am sure everything is on the table.

 

[CanadaDisney05]

With or without Testa or whatever blogger you find reputable, this rumor makes sense.

It's been brought up numerous times in this thread already, but here we go again. Their isn't really much of value for Disney to sell to a third party. The buyer would get:

1) the right to ROFR.
2) the small inventory of ROFR'd contracts.
3) the remaining unsold Aulani/Riviera points.
4) the ability to merge the DVC resorts into their own system, allowing trades with their other resorts.
5) maybe they could include the land that the resorts sit on plus the buildings, but they wouldn't be able to profit on those for 20 to 48 years.
6) the right to build future resorts under the DVC brand (they would still have to buy/lease the land from Disney or somewhere else and pay all.of the construction costs).
7) the small profit from management fees that we pay in our dues.

Everything listed above is small potatoes. Keeping DVC doesn't really cost them much considering the owners cover the vast majority of the costs. No prospective buyer is going to offer up enough to move any sort of needle for Disney. The whole thing seems like a lose/lose for everyone.

The only way this makes sense is if it's part of a much larger package. For example, if DVC was included in a deal where Disney sells off its entire hotel business. Then I can see it happening. But that is 100% hypothetical. There is no credible source suggesting that.

 

[RoseGold]

If legacy DVC is such a burden and management makes no money (which I don't believe), then DVC is left holding a bag of aging resorts and competing with itself with a legacy product that doesn't make money.

If that's true, it makes even more sense to split old resorts off of BVTC and keep old points from competing with all those RIV points or whatever the next one will be. DVC's heavy buyback of SSR/OKW shows it at least has short term plans to keep the legacy WDW properties going, but off-site hotels seem particularly vulnerable. And SSR/OKW could still leave BVTC. All of these plans would make owners furious, but none of them would particularly surprise me.

But I don't see any reason to think the management profit is small. Disney is not into small profits. Besides, the management fee hasn't changed and boy has service. If Disney isn't competent to run these hotels, outsourcing management makes sense to me.

 

[bumbershoot]

The podcast itself is a reliable source, well-connected and often correct. Even without confirmation, a rumor from this source is worth discussing.

And from what others said, the reliable source is reliably mentioning a conversation he heard between three people entirely unrelated to Disney, talking about what-ifs.

That is not disney. It's not 3 people discussing the deals that disney brought to them. It's finance people just shooting the breeze.

I also did not expect this poor level of experience with MS, specifically the extremely flawed website.

Always expect crap websites from Disney. ALWAYS.

Seattle has housed their IT for ages. My ex knew some of those managers. None of them knew a thing about disney, and refused to chat with me about their issues. They hired young interns who knew nothing about disney. One of the smartest 18 year olds I have known, whose family has done disney trips for his whole life, applied there and was turned down because he knew too much about it. They knew he would likely fight back if told to do something weird with the site. He ended up being hired by the sheriff's department to revamp their IT, then got in with amazon and his rise was meteoric. By the time he was 22 he was solidly on his way to VP level. And this wasn't in the late 90s when that was normal. So, yeah, Disney hires people who don't care. Never expect a functioning website from disney; less heartbreak that way!

 

[Hjs33]

It just surprises me that people are actually taking this seriously and are worrying about this obvious attempt to get viewers to watch some podcast. The idea that Disney, who has always gone out of their way to control what happens in and around their parks, would just all of a sudden flip and give up control of some of their most well known and valuable resorts seems just too ridiculous. So we’re supposed to believe Disney is going to turn over The Poly and Grand Floridian over to another owner? Or split it between two operators? How would that work with Disney and Marriot(or whoever) workers working right next to each other. How would you split up something like Copper Creek and Wilderness Lodge? I could see them doing something with the non-park resorts, because they are not connected to the parks they like to control so much, but most likely not until they expire.

Plus as someone who works in the investment field I know that this is not how this would work. A bunch of investment bankers would not be talking in public about a serious deal. If it was in anyway a serious deal, or even just a pitch, it would be given a code name like Project “Horizon” and that is all anyone would refer to it…. even while in the office. You don’t want word to get out and sink your deal or potentially have a competitor find out and try to out bid you.

Relax everyone…. Nothing to see here.

 

[sethschroeder]

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.

Not really. RIV is currently selling 65% of the points monthly while a proper selling resort is going to be around 70-75% of points. While you might get a small uptick in total sales you likely would also see a reduction in other resorts selling as well. Additionally RIV was already outpacing CCV prior to shutdown in April 2020 its just the change in world events has impacted DVC sales as a whole. (Plus we have had how many price increases and min point changes)

I'm surprised at all the responses here acting like a small conversion of an aging VGF building shows commitment. The building had to be renovated anyway, and this is a small project, maybe 2Mish points.

Its their primary resort on property. It would be weird for them to convert the resort just to sell it off.

This is the salient point: there is no investment being made by DIS in the future of DVC.

I would say giving a larger control stake to DVC in their premier property is Disney showing they are unlikely to be thinking about selling.

 

[BennyBoyWrench]

My friend linked the podcast to me, and I was initially alarmed (yeah, rumours, but where there's smoke there's fire). Ultimately do we care who owns the things we buy? Do you care Jeep is owned by Stellantis? Do you care your bank sold your mortgage to somebody else? That the USA is owned by China? (Kidding on the last one). If my contract lets me stay in a Deluxe Resort a couple of minutes away from the Magic Kingdom, for way less than the cash price of staying in that same resort, then I don't care who manages it. As for the other perks people are afraid of losing: get the Disney Credit Card, and I don't suppose Disney owns that either.

 

[Sparky984]

My friend linked the podcast to me, and I was initially alarmed (yeah, rumours, but where there's smoke there's fire). Ultimately do we care who owns the things we buy? Do you care Jeep is owned by Stellantis? Do you care your bank sold your mortgage to somebody else? That the USA is owned by China? (Kidding on the last one). If my contract lets me stay in a Deluxe Resort a couple of minutes away from the Magic Kingdom, for way less than the cash price of staying in that same resort, then I don't care who manages it. As for the other perks people are afraid of losing: get the Disney Credit Card, and I don't suppose Disney owns that either.

Yes I do care. A lot. My personal experiences would steer me away from buying a Ford or anything they make because there was a widely known issue (of which there’s now a class action lawsuit for) which Ford refused to step up. Honda sent me a 10 year extension on a faulty engine part, regardless of miles and it saved me from needing to buy a new car. I expect that different companies have different standards and goals. I expect Disney, who trains other companies in how to be successful customer service agents would treat me better as a customer (and owner) than my local six flags.

The Walt Disney World Resort, if owned in part or whole by anyone else, with different motives, standards and goals could absolutely impact whether we want to vacation there. It could happen if it never changes hands too, though I find that less likely of an outcome, it’s still possible.

 

[RoseGold]

The more I think about it, the more I think selling DVC would help current owners.

Pre-Covid, the plan was to keep pumping out mediocre location beasts of hotels, like Riviera, with escalating costs and charts, hundreds of rooms, millions of points. If consumers have reached the limit, and Riviera is just too expensive, that plan won't work.

There's no way Disney will allow some other company to make a new timeshare and peddle it in the parks. If Disney is shutting down the whole operation, kind of like how it is right now, there's no new construction. Assuming someone can run these competently, that makes old resorts worth more and more, like resale value has done since Covid.

If there's no new construction, it's game over. I just can't imagine Disney trying to be a resale broker and setting up a bunch of kiosks for a $60 spread on SSR points, managed by Marriott, so you can get a sweet merch discount and trade into Riviera.

I don't see an exit strategy for the whole model. Eventually, the point cost and the charts will be too high. Maybe it's there now?

I can see a Golden Oak Vacation Club working, a very expensive version that actually gets special treatment. No kiosks needed.

Thanks for coming to my TED talk. Buy where you want to stay LOL.

 

[Brian Noble]

I expect Disney, who trains other companies in how to be successful customer service agents would treat me better as a customer (and owner) than my local six flags.

Maybe. Maybe not.

Disney is at best a competent hotelier. In my experience, they are a notch below one of the better business class brands, e.g. Westin. The staff is pleasant, and manages routine things well, but they are generally incapable of solving all but the simplest problems without some sort of intervention.

There are at least a couple of different timeshare management companies that would be a solid upgrade over DVCMC. Marriott and Hilton are definitely on that list, and there are arguably a few others.

 

[TiggerBouncy]

I guess I am confused - couldn't Disney just sublet out the management of the hotels (housekeeping, front desks, etc) but retain ownership in DVC itself? It's DVCMC just a sublease anyway? Why would they have to sell all of DVC is the problem is just management?

Although that still doesn't make a lot of sense. Why would Disney retain all of mousekeeping for the majority of their hotels, but not for the remaining DVC portion? Efficiency comes with scale. Down-scaling your operation rarely gains efficiency unless what you are offloading is a different type of task (like if they were contracting out all mousekeeping for all locations).

The rumor does not make sense to me.

 

[Maistre Gracey]

Maybe. Maybe not.

Disney is at best a competent hotelier. In my experience, they are a notch below one of the better business class brands, e.g. Westin. The staff is pleasant, and manages routine things well, but they are generally incapable of solving all but the simplest problems without some sort of intervention.

There are at least a couple of different timeshare management companies that would be a solid upgrade over DVCMC. Marriott and Hilton are definitely on that list, and there are arguably a few others.

Nit timeshares, but you reference hotels… actually Westin.
I would dare to say very few here, if any, have stayed in more hotels than I have.
Now, I’m not talking about the Four Seasons, but you did mention Westin. I’ll put Marriott and many Hilton products in that class.
Those *hotel* employees act as such. They likely don’t make a huge salary, and they are there for the job.
Nothing like I’ve ever experienced at a Disney hotel, which is NOTICEABLY different.
Trust me, Disney service certainly has its short comings, probably due to the reduction of traditions training over the years, but it’s still better than the average hotel.

Source: Me. Over the last 31 years have lived roughly 13 years in a hotel room.

 

[Brian Noble]

I suppose the difference might be what we mean by “service.” I don’t particularly need someone to offer a saccharine smile with “Have a magical day” while they check me in. Professional courtesy is just fine. I do hope it takes less than two days to replace a broken dishwasher that won’t drain and has foul-smelling water in the bottom of it. I do expect the front desk to help redirect a mis-delivered package so I don’t have to drive across property and get it myself. Heck I even expect that employee to figure out what other hotel corresponds to that other address rather than just shrugging…albeit with that saccharine smile.

I have only done about three (non-vacation) weeks a year over the last 30 in hotel rooms, but another three weeks a year in timeshares, Disney and non. So my three and a half years pales in comparison to your authoritative 13. But over that time, Disney has been nothing special and often pales in comparison…except when it comes to the final bill.