Disney Vacation Club adjusts 2010 Vacation Points charts

[dd08]

No you didn't.....I am the one who thinks they did it for money!! We don't even know if Disney lost ANY sales due to this change. We all really know NOTHING! One constant is that Disney is hurting....big, big, time. They need to generate revenue, how ever the vehicle.

I shouldn't be getting into this, and in today's world I understand why people are jaded.....

But, how do you see this as a move "to generate revenue?"

I know the popular, yet completely unfounded opinion on this thread is that they did it to sell add-ons, however.....

Most resorts are sold. GCV (which is and would have sold quickly anyways), AKV (which is probably mostly sold), THV (which isn't THAT many more points) and BLT are the only truly active ones.

DVC/D can't just generate new add-on contracts for BWV, OKW, BCV, etc as these resorts are already sold out.

In regards to the new resorts that aren't sold, the total number of points aren't increasing so therefore they aren't going to sell "more" or generate more revenue from this.

The ONLY thing IMO, that could be questioned is why BLT is the solitary resort that requires a minimum of 100 points to add-on.

Maybe I'm missing something here, but I just dont' see how this is was done "to generate more revenue"

BTW - don't take it personally, I've asked this question to other people who have said this and have yet to receive a response to my recollection. Just wondering what (if??) I'm missing

 

[BWV Dreamin]

I shouldn't be getting into this, and in today's world I understand why people are jaded.....

But, how do you see this as a move "to generate revenue?"

I know the popular, yet completely unfounded opinion on this thread is that they did it to sell add-ons, however.....

Most resorts are sold. GCV (which is and would have sold quickly anyways), AKV (which is probably mostly sold), THV (which isn't THAT many more points) and BLT are the only truly active ones.

DVC/D can't just generate new add-on contracts for BWV, OKW, BCV, etc as these resorts are already sold out.

In regards to the new resorts that aren't sold, the total number of points aren't increasing so therefore they aren't going to sell "more" or generate more revenue from this.

The ONLY thing IMO, that could be questioned is why BLT is the solitary resort that requires a minimum of 100 points to add-on.

Maybe I'm missing something here, but I just dont' see how this is was done "to generate more revenue"

BTW - don't take it personally, I've asked this question to other people who have said this and have yet to receive a response to my recollection. Just wondering what (if??) I'm missing

Hey, I'm all about discussion! Well, lets just first state that no resort is "truely" sold out. Again, we have no figures, but you can still ask to purchase sold out resorts. If one must waitlist for them, Disney will simply ROFR some on the resale market, and make profit on the waitlist sale. Many, many BLT posters have already stated they would purchase more points if it was under the 100 pt. minimum. So with time, they will eventually add-on or look for BLT resale (unless Disney ROFR's the smaller contracts). Getting past the emotional "I'm never gonna add-on again" statements, eventually, to continue their desired vacation habits, they WILL add-on. Ok, so are we talking mega bucks in six months? No, but a little here, a little there, etc. will add up over time. Lets not forget future sales....now requires more points for stays. Don't know why the picked BLT for no samll add-ons. Maybe they are setting up a future precedent.

 

[dd08]

Hey, I'm all about discussion! Well, lets just first state that no resort is "truely" sold out. Again, we have no figures, but you can still ask to purchase sold out resorts. If one must waitlist for them, Disney will simply ROFR some on the resale market, and make profit on the waitlist sale.

Actually, in terms of "sold out," I meant the initial offerings so they are "sold out" yes you can buy resale via DVC or another entity.....So DVC decides to change the 2010 charts just to make a relatively small number of sales via resales? Not a good business decision and one I don't think they would have made. Especially considering that they sell the ROFR contracts they obtained at $104/point. People can still buy cheaper elsewhere......Their "bread and butter" are selling to the "new" resorts, that's why they push those and not the "small" number of contracts they have obtained via ROFR. Looking at it from a business perspective, I just don't see the logic here.

Many, many BLT posters have already stated they would purchase more points if it was under the 100 pt. minimum. So with time, they will eventually add-on or look for BLT resale (unless Disney ROFR's the smaller contracts). Getting past the emotional "I'm never gonna add-on again" statements, eventually, to continue their desired vacation habits, they WILL add-on. Ok, so are we talking mega bucks in six months? No, but a little here, a little there, etc. will add up over time. Lets not forget future sales....now requires more points for stays. Don't know why the picked BLT for no samll add-ons. Maybe they are setting up a future precedent.

I agree (and stated originally) that the BLT minimum is odd, but BLT is just one resort out of 4 that they are selling right now. I can add on to AKV for only 25 points, so if this point chart change was this grand master plan to get me to buy more points that I didn't "need" why not increase the minimum on AKV to 100? Just doesn't make sense. Sorry

Again, just discussing, not arguing, but the logic presented by people here stating this was just to increase sales doesn't appear to be valid.

 

[White_Sox_Fan]

We all have our opinions but I don't think that they are going to make any real money on add-on's at existing resorts. Let's say they ROFR a BCV contract for around $80.00pp. They turn around and sell you a 25 point contract for $106pp. That's only $650 gross to Disney. By the time all the paperwork gets done they probably lose money.

 

[BWV Dreamin]

We all have our opinions but I don't think that they are going to make any real money on add-on's at existing resorts. Let's say they ROFR a BCV contract for around $80.00pp. They turn around and sell you a 25 point contract for $106pp. That's only $650 gross to Disney. By the time all the paperwork gets done they probably lose money.

I guess the real question is just how many points does Disney sell annually? We don't have those figures....I have read though that they sell many, many more points than on the resales market. So while WE may not think there is much revenue generated, we really have no way of knowing this. Even if some revenue is added, again, in conjuction with other cost savings measures (like laying off 600 Disney excecutives), its all a culminating effect.

 

[tjkraz]

We all have our opinions but I don't think that they are going to make any real money on add-on's at existing resorts. Let's say they ROFR a BCV contract for around $80.00pp. They turn around and sell you a 25 point contract for $106pp. That's only $650 gross to Disney. By the time all the paperwork gets done they probably lose money.

Very true. Yes, this approach allows DVC to effectively re-sell something it already sold once. But don't ignore all of the dollars paid out to re-acquire that asset in the first place. "New" sales are far more profitable than the ROFR / re-sell game.

And I still don't see the reallocation as being driven by potential add-on sales. When you whittle down all of the people who are not going to add, you get to a pretty small market. I have a report which states that DVC finances 75% of all purchases. By and large we are not talking about a group that will collectively shrug its shoulders and commit to a 50-100 pt add-on simply to maintain their current standards. In this thread alone we've had many people state that they will reduce their trip frequency, shorter their trips by a day, book smaller rooms, take fewer family members, spent more time off-site, visit in cheaper seasons, and so on.

If there is any sales benefit to DVC, I think it comes in the form of making those small resale contracts less appealing. I think DVC is torn between accommodating member needs for small add-ons vs. the volume of those add-ons which make it to the resale market. IMHO, the sales benefit comes in that a 160-pt initial purchase now seems a lot more reasonable than buying 80-100 via resale.

If DVC were worried about the economy, IMO we would be seeing a lot more attractive incentives than we are now. The current $5 and $6.25 off are the smallest cash incentives we have ever seen. Meanwhile DVC just raised the base price an unprecedented 8% from $104 to $112. Where are the free annual passes? Where are the $500 gift cards? Nothing about the current pricing + incentives suggests that DVC is hurting for sales.

 

[tjkraz]

I guess the real question is just how many points does Disney sell annually?

In 2007 DVC had revenues of approximately $375 million. Assuming that figure is based upon the $104 published rate for points, it would be about 3.6 million points in '07.

A separate source reports that DVC sales were up 18% in 2008.

Not sure what that's supposed to tell us, though... White_Sox_Fan is right that ROFR is not a very lucrative business for DVC.

If DVC buys-back BWV at $85 and re-sells for $106, they've grossed $21 per point on the transaction. On a 25-pt contract that is $525. On 50 pts that is $1050.

Then you need to deduct closing cost x2 (first to re-acquire the points, then to re-sell) and all of the administrative overhead associated with the sale. Costs to write-up the contract, sales salaries / commission, etc.

DVC stands to make a few dollars on the largest contracts and will probably lose on the smaller ones.

 

[BroganMc]

Very true. Yes, this approach allows DVC to effectively re-sell something it already sold once. But don't ignore all of the dollars paid out to re-acquire that asset in the first place. "New" sales are far more profitable than the ROFR / re-sell game.

Is it anymore than the cash layout of constructing and carrying a new resort? Think about it. On a resale contract there are no construction costs. Maintenance fees have been paid by existing members until ROFR, then carried on again by new add-on buyers.

So while the price differential between ROFR and resale may only net them around $600-700 for a smaller contract, perhaps that is as much as they'd get from a new construction less startup costs. It's doubledipping for DVC with only paperwork as the overhead expense.

If DVC were worried about the economy, IMO we would be seeing a lot more attractive incentives than we are now. The current $5 and $6.25 off are the smallest cash incentives we have ever seen. Meanwhile DVC just raised the base price an unprecedented 8% from $104 to $112. Where are the free annual passes? Where are the $500 gift cards? Nothing about the current pricing + incentives suggests that DVC is hurting for sales.

To play Devil's Advocate here, there does seem to be quite a bit of "koolaid" thinking driving DVC sales of late. What with BLT opening for sale right at the beginning of the Recession bubble burst, then a rate hike and point hike. It's as if those in management are living in a reality a year outdated when sales boomed and the economy was strong. By all accounts, sales have slumped in regards to reaching their quarterly quotas. But instead of looking at the realities of the world at large, managers are concentrating on the deceptive influence of a few new sales for long-awaited resorts.

There had existed a market for BLT and VGC for years just waiting for those resorts to open. Sales Guides predicted BLT would sell out within 6 months due to all its pre-sale "blue sky" hype. Those buyers were just waiting to pull the trigger on a sale. But once they all buy, will DVC be able to stay competitive in the timeshare market? It seems that they have hung their hat solely on sales as a measure of success. So when they meet market saturation will the DVC bubble burst as well and hard reality set in for managers?

What concerns me most about the program in the last year or so is how disenfranchised the membership is becoming. Management seems to have forgotten they have entered into a partnership with owners. What happens if members lose their affection for the program and start selling off en masse? Sure DVC can handle the few resale contracts on the market now, but what if that resale tops 50% of membership? Can they keep up with ROFR on that many contracts at a profitable rate?

 

[BWV Dreamin]

What concerns me most about the program in the last year or so is how disenfranchised the membership is becoming. Management seems to have forgotten they have entered into a partnership with owners. What happens if members lose their affection for the program and start selling off en masse? Sure DVC can handle the few resale contracts on the market now, but what if that resale tops 50% of membership? Can they keep up with ROFR on that many contracts at a profitable rate?

What if they don't move via resales....what happens if they all just "walk away" like with housing? That could put a real big hurt on Disney.

 

[tjkraz]

Is it anymore than the cash layout of constructing and carrying a new resort? Think about it. On a resale contract there are no construction costs.

The Bay Lake Tower has been cited as being a $110 million construction project. According to my quick calculations DVC will sell more than 6 million points. That makes construction costs at BLT less than $18 per point--a fraction of the +/- $85 it cost to re-acquire via ROFR in my example.

To play Devil's Advocate here, there does seem to be quite a bit of "koolaid" thinking driving DVC sales of late. What with BLT opening for sale right at the beginning of the Recession bubble burst, then a rate hike and point hike. It's as if those in management are living in a reality a year outdated when sales boomed and the economy was strong. By all accounts, sales have slumped in regards to reaching their quarterly quotas.

Who are the "all accounts" being cited here?

What concerns me most about the program in the last year or so is how disenfranchised the membership is becoming. Management seems to have forgotten they have entered into a partnership with owners. What happens if members lose their affection for the program and start selling off en masse? Sure DVC can handle the few resale contracts on the market now, but what if that resale tops 50% of membership? Can they keep up with ROFR on that many contracts at a profitable rate?

Don't delude yourself into thinking that the select opinions you read on the Internet are in any way representative of "the membership." The number of DVC owners who frequent these message boards is pretty small (10% may be high) and an even smaller percentage has posted to actually share an opinion. How many people do you think have posted on this thread? Maybe 200-300? And that's out of 300,000 members...

Market Metrix performs independent quarterly customer satisfaction surveys within the hospitality industry. As of 3Q 2008 (last data published) DVC continued to be the leader in the timeshare category with a satisfaction rating over 90%. They maintained that through the banking changes (fall '07), through the glassware issues (spring '08), through the booking policy changes (summer '08), and so on.

Reading this thread it's quite apparent that some folks have had their own bubble burst by DVC. But come on--that's not exactly a new phenomenon. DVC (and Disney as a whole) has been gaining and losing customers for decades.

Will DVC's approval rating dip in the near future? Perhaps. This is a pretty big issue that will seemingly impact a lot of members. But a lot of folks got pretty worked-up over other changes in the last 2 years and DVC's approval remained steady.

No matter what business you choose--Microsoft, Apple, Sony, Marriott, General Electric, McDonald's--if you look hard enough you'll find these little pockets of disgruntled folks who think that business can do no right. I think we (and yes, I include myself) are the equivalent for DVC. We get so caught up in overanalyzing every single move that we lose sight of the big picture.

And perhaps more importantly, despite making claims that DVC has lost touch with its membership base, we should consider that WE may be the ones who have no idea what our fellow members want/need/desire. It's certainly OK to say "I don't like this change", but 50% of owners considering selling?!?! Come on, now.

Emotionally I was as stunned by the reallocation as anyone else. But intellectually it makes perfect sense. But DVC isn't a house or a car or a piece of land with a single owner. There is no democracy in place to vote on how it should be governed. The resorts are all shared property and DVC exists to help protect the interests of all owners--not just those of us who are ticked-off because our usage went up.

 

[White_Sox_Fan]

The Bay Lake Tower has been cited as being a $110 million construction project. According to my quick calculations DVC will sell more than 6 million points. That makes construction costs at BLT less than $18 per point--a fraction of the +/- $85 it cost to re-acquire via ROFR in my example.

I wonder if that is the $110M construction cost includes all the fit out. The furnishings, artwork, decorations, appliances, TV's, utensils, cookware, etc. I think the final total for all this work would be more than $110M.

I also wonder how much Disney spend on marketing, sales, etc.

 

[DVC92]

Actually, it really isn't all that "discretionary". It says they SHALL, not that they may at their discretion. Shall = must, not "if they want to."

In my POS, it specifically states that "In order to meet the clubs members' needs and expectations as evidenced by fluctuations in use day demand at a given DVC resort experienced by DVC during a given calendar year, DVC may in its sole DISCRETION increase or decrease the vacation point requirement for a given use day...." It goes on to say that the right to reallocate is reserved solely for adjusting the reservation system to accommodate member demand. Thus, the adjustment is a discretionary right and the only reason DVC can legally give to support the adjustment is predicated on balancing, whether it is true or not.

 

[Chuck S]

In my POS, it specifically states that "In order to meet the clubs members' needs and expectations as evidenced by fluctuations in use day demand at a given DVC resort experienced by DVC during a given calendar year, DVC may in its sole DISCRETION increase or decrease the vacation point requirement for a given use day...." It goes on to say that the right to reallocate is reserved solely for adjusting the reservation system to accommodate member demand. Thus, the adjustment is a discretionary right and the only reason DVC can legally give to support the adjustment is predicated on balancing, whether it is true or not.

The POS says DVC has the right to do it, Florida Timeshare law says it SHALL (must) be done. State law trumps POS.

 

[DVC92]

The POS says DVC has the right to do it, Florida Timeshare law says it SHALL (must) be done. State law trumps POS.

DVC complied with the Fl. statute by providing a regulation to make the adjustment at whatever time they deemed necessary and within their sole discretion. When, and if, they make such an adjustment is clearly within their discretion. You may argue they failed to comply with the Fl. law, but the state of Florida approved their regulation for handling an adjustment.

 

[White_Sox_Fan]

I'm actually going to agree with DVC92 on this one. The statute, which has been referred to several times, states:

Prior to offering the multisite timeshare plan, the developer shall create the reservation system and shall establish rules and regulations for its operation. In establishing these rules and regulations, the developer shall take into account the location and anticipated relative use demand of each component site that he or she intends to offer as a part of the plan and shall use his or her best efforts, in good faith and based upon all reasonably available evidence under the circumstances, to further the best interests of the purchasers of the plan as a whole with respect to their opportunity to use and enjoy the accommodations and facilities of the plan. The rules and regulations shall also provide for periodic adjustment or amendment of the reservation system by the managing entity from time to time in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations and facilities existing at that time within the plan. The person authorized to make additions and substitutions during the term of the multisite timeshare plan shall also comply with the requirements of this subsection in ascertaining the desirability of the proposed addition, substitution, adjustment, or amendment and the impact of same upon the demand for and availability of existing plan accommodations and facilities.

All the statute says is that the rules shall allow for readjustment from time to time. Obviously the DVC POS does allow for this readjustment which they have chosen to implement.

I still believe that this was a necessary move that will better the membership as a whole.

 

[T-i-double-g-err]

DELETED - Not sure it really said what I thought it did... My bad.

 

[drusba]

Can't believe ROFR is looked as a significant source of profit. Undoubtedly some, but my impression has always been that ROFR has been used mainly to make sure the price does not become too low. If it was highly profitable, you would see them doing ROFR far more frequently than they have. Also, I do not look at the current changes as being intentionally done to generate more sales even at BLT or AKV and now SSR, for which they are still selling new points. I suspect they really did the change under a belief that they needed to decrease demand for weekdays and hopefully raise it for weekends somewhat. They will accomplish at least the former because those who bought enough only for Sun through Thurs night trips will now simply not be able to book as many days/trips as they used to be able to book, and even many who bought more points than that are going to be giving up some days somewhere because of higher point costs -- example: even those who had enough points to do the 12 night trip, arrive on Sunday and leave on a Friday with one weekend in between will find themselves losing a day without more points .

However, I also believe that they did not think through all the issues. The assumption made that Disney does so and has lawyers who must have been advising them on everything is something that very often does not occur in big corporations. Sure their lawyers were involved, and, knowing what really occurs, those lawyers told them they could probably make the change but also noted there were some risks (that quite frankly is the usual opinion given by in-house lawyers on almost anything) and the particular lawyers involved may have been looking at the point chart change without looking at or even knowing of everything else, such as the the planned move to raise the minimum add-on at BLT to 100. Where I feel they dropped the ball is focusing on whether they can do the change while overlooking some particular issues. The main one I see is BLT. They should have had the initial point chart be what the 2010 chart is now if the change was coming. To sell to those purchasers under the impression that no change was close to being made is an oversight that amounts to being misleading. The POS (and the statute) speaks to making a change based on the actual reservation experience Disney has had at a resort and for BLT there was none so management dropped the ball there. Then the ultimate of "I really forgot to think this through" move came when they raised the minimum add-on for BLT to 100 points just before announcing the point chart change; that is management acting thoughtlessly, unless you want to believe that DVD really sat down and said "Let's see how we can really screw the BLT purchasers." I do not look it as they planned this out to do harm to owners but instead as a series of acts where they missed a few key points (and I have been involved in matters with Fortune 500 corporations enough times to know this occurs far more often than people may believe and Disney is not immune).

It will be interesting to see what they do now on the issue. For example, they could alleviate their mistake by doing something like allowing BLT buyers to add-on 10 point minimums if they bought before the announced change. However, I suspect they will do what many corporations do when they have acted poorly -- dig in their heels and assert they did nothing wrong. That itself often occurs because to do otherwise means someone in upper mangement has to admit to an error and that is too often impossible for them to do.

 

[toocherie]

Can't believe ROFR is looked as a significant source of profit. Undoubtedly some, but my impression has always been that ROFR has been used mainly to make sure the price does not become too low. If it was highly profitable, you would see them doing ROFR far more frequently than they have. Also, I do not look at the current changes as being intentionally done to generate more sales even at BLT or AKV and now SSR, for which they are still selling new points. I suspect they really did the change under a belief that they needed to decrease demand for weekdays and hopefully raise it for weekends somewhat. They will accomplish at least the former because those who bought enough only for Sun through Thurs night trips will now simply not be able to book as many days/trips as they used to be able to book, and even many who bought more points than that are going to be giving up some days somewhere because of higher point costs -- example: even those who had enough points to do the 12 night trip, arrive on Sunday and leave on a Friday with one weekend in between will find themselves losing a day without more points .

However, I also believe that they did not think through all the issues. The assumption made that Disney does so and has lawyers who must have been advising them on everything is something that very often does not occur in big corporations. Sure their lawyers were involved, and, knowing what really occurs, those lawyers told them they could probably make the change but also noted there were some risks (that quite frankly is the usual opinion given by in-house lawyers on almost anything) and the particular lawyers involved may have been looking at the point chart change without looking at or even knowing of everything else, such as the the planned move to raise the minimum add-on at BLT to 100. Where I feel they dropped the ball is focusing on whether they can do the change while overlooking some particular issues. The main one I see is BLT. They should have had the initial point chart be what the 2010 chart is now if the change was coming. To sell to those purchasers under the impression that no change was close to being made is an oversight that amounts to being misleading. The POS (and the statute) speaks to making a change based on the actual reservation experience Disney has had at a resort and for BLT there was none so management dropped the ball there. Then the ultimate of "I really forgot to think this through" move came when they raised the minimum add-on for BLT to 100 points just before announcing the point chart change; that is management acting thoughtlessly, unless you want to believe that DVD really sat down and said "Let's see how we can really screw the BLT purchasers." I do not look it as they planned this out to do harm to owners but instead as a series of acts where they missed a few key points (and I have been involved in matters with Fortune 500 corporations enough times to know this occurs far more often than people may believe and Disney is not immune).

It will be interesting to see what they do now on the issue. For example, they could alleviate their mistake by doing something like allowing BLT buyers to add-on 10 point minimums if they bought before the announced change. However, I suspect they will do what many corporations do when they have acted poorly -- dig in their heels and assert they did nothing wrong. That itself often occurs because to do otherwise means someone in upper mangement has to admit to an error and that is too often impossible for them to do.

Having been in-house counsel for a major corporation I totally agree with you--most decisions are made on the basis of "can this come back and bite me in the rear?"--answers are oftentimes equivocal and a lot of opinions are made in a vacuum. I'm sure that the question went out to the legal department--can we change the point structure? and the answer that came back (with the appopriate memo) was yes, citing the provisions in the POS and--if the lawyer was really on his/her game, the applicable Florida statutes that required the changes. However, it was probably a different counsel who answered the question about whether the BLT points could be increased to 100 minimum and probably a third who was consulted about the increase in point cost. Personally, if I were advising Disney and knew all the BLT facts I would also on the QT agree to let a BLT owner increase the number of points below 100--in the long run it will save DVC money and maybe preserve what goodwill is left for that member who now feels like they've been taken.

 

[LIFERBABE]

The assumption made that Disney does so and has lawyers who must have been advising them on everything is something that very often does not occur in big corporations. Sure their lawyers were involved, and, knowing what really occurs, those lawyers told them they could probably make the change but also noted there were some risks (that quite frankly is the usual opinion given by in-house lawyers on almost anything) and the particular lawyers involved may have been looking at the point chart change without looking at or even knowing of everything else, such as the the planned move to raise the minimum add-on at BLT to 100. Where I feel they dropped the ball is focusing on whether they can do the change while overlooking some particular issues. The main one I see is BLT. They should have had the initial point chart be what the 2010 chart is now if the change was coming. To sell to those purchasers under the impression that no change was close to being made is an oversight that amounts to being misleading.

I agree also.
To say they considered all the facts relative to the case is a huge assumption. Jim Lewis admitted that they handled the OKW extension wrong, despite having all this "wisdom".
A few other things they handled wrong also or flat out lied about. To say that because they have this army of lawyers on their side who should have advised them of all aspects, and that they are infallible or within their right is wrong.
Someone knew all the facts and decided it was worth the risk to proceed. Doesn't mean they were right.

 

[Dean]

It is still a discretionary power of DVC to reallocate. The statute merely forced inclusion of a regulation to empower the managing entity to reallocate.

I also never claimed to have any evidence to support the reallocation was done for the purpose of making money. I have said we don't know. There is no evidence to support any conclusion.

There is other language that states in essence they must manage DVC for the benefit of the members as a whole. And there is a lot of evidence to suggest weekends were out of balance and becoming more so. As I've said on this thread before, if I truly though the reasons were manipulative and mostly money oriented, I'd be out of here.

DVC makes little money on resale points other than as it keeps prices up and those points compete with a sale out of their active selling resorts.

To play Devil's Advocate here, there does seem to be quite a bit of "koolaid" thinking driving DVC sales of late.

Without Koolade this site, DVC and likely Disney itself would not exist. It's interesting what happens when some have their Mickey glasses removed and then go overboard much like a reformed addict.