NEWS: DVC cuts sales associates' base pay

[DVC Mike]

From the Orlando Sentinel:

Disney Vacation Club, as it attempts to sell more inventory than ever amid a recession that has sapped time-share sales, has cut the base pay of its front-line sales staff by 10 percent.

But the Walt Disney Co.'s Celebration-based time-share unit has also boosted bonus amounts for employees who reach certain sales targets. The shift is an attempt by Disney to make time-share positions more incentive-driven and less hourly based.

The changes, announced to employees last week, affect approximately 100 "advance sales associates" or ASAs. Those are the workers stationed at the ubiquitous Vacation Club sales kiosks scattered throughout Disney's theme parks and hotels, whose job is to convince prospective customers to take tours in a main sales center.

"We have made changes to the pay structure among our advance sales associates to allow us to provide more reward and recognition to top performers," Disney Vacation Club spokeswoman Rena Langley said earlier this week. She said the changes are designed to make Vacation Club salaries "competitive in the industry and also to get great results."

Disney Vacation Club, like other time-share developers, has been bruised by a global recession in which consumers have cut back on big-ticket luxuries such as time shares and banks have become more reluctant to buy up time-share mortgages. At the same time, Disney is attempting to sell interests in four just-opened time-share properties, including three at Walt Disney World and one at Disneyland in California.

Under the changes, according to employees who have been briefed on them, the hourly pay rate for Vacation Club ASAs has been reduced by 10 percent. Employees say entry-level pay for ASAs, before the pay cut, began around $11 an hour.

But those workers are now eligible for larger bonuses based on the number of people they persuade to take full sales tours. Disney also plans to begin paying quarterly bonuses to employees who finish in the top half of their teams in sales.

The problem, some employees say, is that reaching the levels required for the higher bonuses is exceedingly difficult amid the worst economic environment Vacation Club has yet faced.

Another bonus has also been made bigger but harder to attain: Workers say they used to get an extra $100 if 10 percent or fewer of the tours they booked for the main center were "solo" -- for instance, a couple where one person decides to take the tour while the other opts to stay behind in a park or at a hotel. Such tours are much less likely to result in a sale.

Now workers can get $200 -- but only if 5 percent or fewer of the tours they book are solos.

"They've made it more difficult for us to make a living," said one Vacation Club employee who asked not to be identified for fear of losing his job. "Nobody will ever make back the money they lost."

Disney says the changes are not designed to reduce overall costs. Langley said Vacation Club's overall compensation budget has not been reduced.

 

[bobbiwoz]

I think that's worse than members loosing valet parking, but money has been tighter in our family this year too.

Bobbi

 

[jlewisinsyr]

Bull you know what to DVC, it is about saving money, its all about saving money. If sales are down, your not going to put in place a system that will increase your costs through a bonus pool. By doing this you can move your expenses from fixed to variable and reduce the variable pool realizing many are not going to make up the difference.

Think about it, if the average salary of these positions is $13.00 (figuring starting is $11.00 and 5 years of 3% increases and 5 years average tenure rounded up), a 10% cut is $1.30/hour multipled by 2,080 hours (40 hours a week for 52 weeks with paid vacation). Multiply it by 100 positions you have a nice pre-benefit save of over a quarter million dollars. Add 40% for taxes, benefits, rent, risk and insurance (average rate - some companies approach 50% - 60% of salary) and your looking at almost a $380,000 save for one year.

I'm all for variable pay for performance compensation, but these individuals are not true sales people and they are not high level positions that deserve a large percentage of their pay being tied to variable compensation. I know my office 10% of my salary is variable, I'm not in sales, but I have a title that supports that level of variable pay. Most people who would be similar in positions in my organization have only 4% of their pay tied to variable comp.

This could be a start of DVC turning into one of the "other timeshares" in terms of sales tactics and pushy representatives or it could result in greater turn over and even less knowledge on the pre-sale front, resulting in poor customer service and even further reduced sales once people go from park to sales office.

 

[BWV Dreamin]

I work for local government. Our budgets are in the negative for the next three years due to no fault of our own. We are looking at pay cuts accross the board. I don't see where DVC is doing anything different than any other business trying to stay solvent in these tough times.

 

[Dean]

Reduing pay and increasing performance incentives is a very good and powerful tool to weed out low performers, give all employees a chance to step up their game and to give high performers a chance to excel and reap the financial benefits of their abilities. This move isn't likely about saving money as much as it is getting more performance for around the same money. In the timeshare industry these type positions are called OPC's (Off Premises Contacts). The difference for DVC is they are actually employees rather than contract or independent as they are for most timeshares.

 

[Chic]

I think this is Disney "indirectly" admitting that BLT sales are not as good as they're trying to make us believe.

 

[Crystal_27]

This could be a start of DVC turning into one of the "other timeshares" in terms of sales tactics and pushy representatives or it could result in greater turn over and even less knowledge on the pre-sale front, resulting in poor customer service and even further reduced sales once people go from park to sales office.

Yup - that was exactly my thought, and, from some reports we've been reading on The DIS, I think that some of those "tactics" have already started.

 

[Mickey'sApprentice]

Yup - that was exactly my thought, and, from some reports we've been reading on The DIS, I think that some of those "tactics" have already started.

Yep!

 

[lugnut33]

I hope it won't be like walking down the Strip in Vegas?

 

[Chic]

I'm thinking that, after BLT sales are complete, we will see either a decline or even a halt in DVC resorts being built in Orlando. Face it, there will eventually be a plateau when the amount of tourists visiting Disney will have more than enough resort choices. Too many resorts equals too many empty hotel rooms. Also, I'm sure that Disney realizes as the contracts start to expire at the DVC resorts, they will need to be sold all over again. Disney absolutely has to have the owners' maintenance fees in order to allow these resorts to survive. The expiration of Old Key West is just around the corner and it is a huge resort with an astronomical amount of revenue needed for upkeep. My prediction is new contracts will be for sale at OKW sooner than we think. Hopefully, the offers will be quite attractive since the resort has already been sold once.

 

[dizney4us]

I'm thinking that, after BLT sales are complete, we will see either a decline or even a halt in DVC resorts being built in Orlando. Face it, there will eventually be a plateau when the amount of tourists visiting Disney will have more than enough resort choices. Too many resorts equals too many empty hotel rooms. Also, I'm sure that Disney realizes as the contracts start to expire at the DVC resorts, they will need to be sold all over again. Disney absolutely has to have the owners' maintenance fees in order to allow these resorts to survive. The expiration of Old Key West is just around the corner and it is a huge resort with an astronomical amount of revenue needed for upkeep. My prediction is new contracts will be for sale at OKW sooner than we think. Hopefully, the offers will be quite attractive since the resort has already been sold once.

2010 is just around the corner...2042 is still a LONG way away. Don't rush it! Please!

 

[Coach81]

Kiss the "no pressure, no hype, laid-back style" of Disney DVC goodbye! Say hello to.. YOU MUST BUY NOW.. YOU MUST BUY NOW sales tactics!!!! Glad I'm already in...

 

[disneynutz]

I work for local government. Our budgets are in the negative for the next three years due to no fault of our own. We are looking at pay cuts accross the board. I don't see where DVC is doing anything different than any other business trying to stay solvent in these tough times.

In some of our countries worst economic times, Disney still posted over a 800 million dollar profit last quarter. I think that the boys at the top love money too much and they get off on exercising control and taking home outrages pay checks.

Bill

 

[dianeschlicht]

Reduing pay and increasing performance incentives is a very good and powerful tool to weed out low performers, give all employees a chance to step up their game and to give high performers a chance to excel and reap the financial benefits of their abilities. This move isn't likely about saving money as much as it is getting more performance for around the same money. In the timeshare industry these type positions are called OPC's (Off Premises Contacts). The difference for DVC is they are actually employees rather than contract or independent as they are for most timeshares.

I agree, however, I think it also means DVC sales personell are going to be much more "high pressure" than we are used to.

 

[twinklebug]

Considering that many other companies have reduced pay from 5-20%, I don't see this as that big of an issue. It hurts, yes & I feel for them (the less you make to start with, the more that pay cut hurts) But in the end they do have the bonuses there waiting for them, something most companies have done away with all together on top of the pay reductions (for now).

"They've made it more difficult for us to make a living," said one Vacation Club employee who asked not to be identified for fear of losing his job. "Nobody will ever make back the money they lost."

I agree. Although the government is telling us that inflation is in the negative, I can only think of one thing in life who's price has dropped from last year: Gasoline, and that's just because it was horrendously over inflated to start with. Every other thing in life has increased in cost. I believe the only ones seeing this "deflation" are the corporations themselves - but they're all still crying poor. Hmm. So who is seeing it?

I also wonder if any of these companies plan on reinstating our original pay rates. My company told us it was temporary but never said how long "temporary" was.

 

[eliza61]

Reduing pay and increasing performance incentives is a very good and powerful tool to weed out low performers, give all employees a chance to step up their game and to give high performers a chance to excel and reap the financial benefits of their abilities. This move isn't likely about saving money as much as it is getting more performance for around the same money. In the timeshare industry these type positions are called OPC's (Off Premises Contacts). The difference for DVC is they are actually employees rather than contract or independent as they are for most timeshares.

My concern Dean is now this will force DVC sales associates to turn to those othe sleezy high pressure sales tatics. How could it not? When you are forced to reach excessively high sales goals in order to get a bonus or now, in order to make a decent salary, you do and say what you have to in order to get the customer to sign.

No different than bankers who made all those "alternative" mortgages to people or a used car salesman. Very sad, because one thing I loved about it was that when we took the tour it was about as low keyed as you can get. I forsee that changing.

 

[MouseMomx2]

I'm thinking that, after BLT sales are complete, we will see either a decline or even a halt in DVC resorts being built in Orlando. Face it, there will eventually be a plateau when the amount of tourists visiting Disney will have more than enough resort choices. Too many resorts equals too many empty hotel rooms. Also, I'm sure that Disney realizes as the contracts start to expire at the DVC resorts, they will need to be sold all over again. Disney absolutely has to have the owners' maintenance fees in order to allow these resorts to survive. The expiration of Old Key West is just around the corner and it is a huge resort with an astronomical amount of revenue needed for upkeep. My prediction is new contracts will be for sale at OKW sooner than we think. Hopefully, the offers will be quite attractive since the resort has already been sold once.

OKW owners were offered an extension of their contracts. We took them up on it and paid $15 per point to extend our OKW membership for 15 years. As disney4us said, 2042 is nowhere near "around the corner" but those of us who extended now have and expiration that is after those that bought at SSR or AKV.

As for the pay cuts, I see no problem with it. Everything is cyclical. We are now in difficult economic times. Companies (and Disney is first and foremost a company) need to do what they can to make their divisions profitable.

 

[dcamdad]

OKW owners were offered an extension of their contracts. We took them up on it and paid $1 per point to extend our OKW membership for 15 years. As disney4us said, 2042 is nowhere near "around the corner" but those of us who extended now have and expiration that is after those that bought at SSR or AKV.

As for the pay cuts, I see no problem with it. Everything is cyclical. We are now in difficult economic times. Companies (and Disney is first and foremost a company) need to do what they can to make their divisions profitable.

I certainly hope your $1 per point is a typo. Originally the OKW extension offer was $25 per point with a $10 per point incentive from DVC leaving a net of $15 per point

 

[keishashadow]

My concern Dean is now this will force DVC sales associates to turn to those othe sleezy high pressure sales tatics. How could it not? When you are forced to reach excessively high sales goals in order to get a bonus or now, in order to make a decent salary, you do and say what you have to in order to get the customer to sign.

No different than bankers who made all those "alternative" mortgages to people or a used car salesman. Very sad, because one thing I loved about it was that when we took the tour it was about as low keyed as you can get. I forsee that changing.

I respectfully disagree...while i handle mostly referrals now; i (and most of my independent operator co-workers) was able to reach both my professional and personal goals while working exlusively on sales commisions as a Realtor (some commerical, mostly residential). The system is unique in that many discover after a year or two that the job isn't for them and move onto their life's work.

Perhaps this more competitive situation will inspire a system increasingly geared to referrals/bigger incentives to members who make the initial contact? Referrals are the bulk of most real estate activity. While i realize the TS market is different than traditional type, a sale is a sale.

My point is that while many of their current staff may jump ship, the new hires could easily be seasoned, semi-retired real estate professionals looking to supplement their retirement incomes who aren't looking for benefits.

 

[Chic]

As I give the pay cut and incentive change more thought, I believe it may result in a positive outcome for both current and future DVC members. I, along with many others, have experienced the problem of a DVC Guide not returning calls or e-mails. Maybe now they will be a little more proactive knowing that it can affect their pocket book.