Q3: Direct Sales Down, Contribute to Lower Operating Income at WDW

[Jwaire]

"The decrease in operating income at our domestic operations was due to lower results at our domestic parks and Disney Vacation Club, driven by lower unit sales, partially offset by an increase at Disney Cruise Line."

https://thewaltdisneycompany.com/app/uploads/2023/08/q3-fy23-earnings.pdf

Not a surprise to those paying attention, yet I've never seen them call out DVC for contributing to a reduction in operating income at Walt Disney World in an earnings call.

Just how bad are direct sales this year?

Edit: Unit sales down 3% YOY, according to 10Q.

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001744489/000174448923000171/dis-20230701.htm

 

[maui22]

"The decrease in operating income at our domestic operations was due to lower results at our domestic parks and Disney Vacation Club, driven by lower unit sales, partially offset by an increase at Disney Cruise Line."

https://thewaltdisneycompany.com/app/uploads/2023/08/q3-fy23-earnings.pdf

Not a surprise to those paying attention, yet I've never seen them call out DVC for contributing to a reduction in operating income at Walt Disney World in an earnings call.

Just how bad are direct sales this year?

Edit: Unit sales down 3% YOY, according to 10Q.

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001744489/000174448923000171/dis-20230701.htm

That's interesting. Probably why they had such big promotions this summer.

 

[tom1944]

If there were no restricted resorts would that have made the difference?

 

[Jwaire]

If there were no restricted resorts would that have made the difference?

Also wondering if they're regretting the base price hike and restoration of blue card to 150 minimum now too?

3% YOY in a distressed economy isn't bad, IMO.

However, when you consider they have PVB 2 and the DVC Cabins at Fort Wilderness upcoming, not the best outlook either. Sounds like ROFR won't be coming back anytime soon.

 

[TheDailyMoo]

I've been listening in to Disney earnings calls for a long time and calling out DVC just seems so messed up. It's like the manager of a crappy team on a losing streak calling out the one All Star player because he had one bad game. Yeesh talk about the old adage of "What have you done for me lately"!

 

[john7994]

I've been listening in to Disney earnings calls for a long time and calling out DVC just seems so messed up. It's like the manager of a crappy team on a losing streak calling out the one All Star player because he had one bad game. Yeesh talk about the old adage of "What have you done for me lately"!

could also signal an impending leadership change for that unit - internal politics or otherwise - more common a practice than many might realize ...

 

[Sandisw]

If there were no restricted resorts would that have made the difference?

I don’t think it would make enough of a difference to move the needle, because the info shared was DVC being part of it, not all of it.

Plus, they have had VGF available for sale now for 17 months and the sale for that, an unrestricted resort aren’t strong in comparison to what resorts did in years pass. Plus, VDH has done pretty well so far…

I do think that the base price increase to $217 in December May have been just a bit too much and why we see the incentives we do.

 

[AstroBlasters]

Perhaps they should allow resale owners to pay $25 a point to make their points “direct” as a “one-off”. Boom, millions of dollars would appear!

 

[Royal Consort]

Also wondering if they're regretting the base price hike and restoration of blue card to 150 minimum now too?

3% YOY in a distressed economy isn't bad, IMO.

However, when you consider they have PVB 2 and the DVC Cabins at Fort Wilderness upcoming, not the best outlook either. Sounds like ROFR won't be coming back anytime soon.

When the company's hubris meets economic reality.

 

[NVDISFamily]

Perhaps they should allow resale owners to pay $25 a point to make their points “direct” as a “one-off”. Boom, millions of dollars would appear!

I'd make a small contribution to that pile of money....

 

[Cyberc1978]

Perhaps they should allow resale owners to pay $25 a point to make their points “direct” as a “one-off”. Boom, millions of dollars would appear!

It would give Disney some cash but maybe not that many.

A resale owner would ensure only to convert 150 points that way just to ensure he got the benefits. If he owns 300 points why make them all direct that wouldn't benefit him at all.

 

[Cyberc1978]

Sounds like ROFR won't be coming back anytime soon.

Well it depends on how Disney looks at it - you are properly right but sometimes you need to spend money to make money.

They could have a sale on some of the popular 2042 resorts. If they can ROFR the points for $100-$130 and sell them for $200-$220 then its still money in the bank and if the mouse need money that would be a way to get it.

 

[Sandisw]

Perhaps they should allow resale owners to pay $25 a point to make their points “direct” as a “one-off”. Boom, millions of dollars would appear!

They have worked hard for 11 years to make the products different. I don’t see them doing a short term solution to raise revenue and destroy long term goals.

Just as easy, IMO, to create aggressive incentives that get a resale buyer to buy direct or even a current owner add on direct.

Even if at the 150 level that people have been doing this past month with the VGF deal.

Selling one of those contracts got them $24k in gross sales. Lower that even more and it’s a potential winner.

And remember, to offer any type of up sell of points does require changes to the POS so it’s not as easy as it sounds. They have the power to make those rules..but I don’t see it being a thing until we see many more restricted resorts in the mix so any fee charged has some meat to it.

 

[Artemis Fowl]

I'd make a small contribution to that pile of money....

me too

 

[Stargazer65]

A resale owner would ensure only to convert 150 points that way just to ensure he got the benefits. If he owns 300 points why make them all direct that wouldn't benefit him at all.

It would if he wants them to stay at a restricted resort(s).

 

[pianomanzano]

Perhaps they should allow resale owners to pay $25 a point to make their points “direct” as a “one-off”. Boom, millions of dollars would appear!

I would do that in a heartbeat so that I could use my RIV resale points anywhere! Although I’m perfectly fine only using them at RIV for the price I paid.

 

[kboo]

Just as easy, IMO, to create aggressive incentives that get a resale buyer to buy direct or even a current owner add on direct.

All our resale points are grandfathered and still... We "needed" around 200 points (to be fair, I did transfer 200 points earlier this year rather than borrow them), and ended up going even higher than that, which made our guide have to rewrite the contracts 3x. And we split the points for each kid so it was 6 different contracts. Our guide was probably tearing his hair out.

Before summer incentives and VDH going on sale, I thought we were going to buy VGC resale. Now we will take our chances at 7 months for both VGC and VDH.

I think we are done now.

 

[TheDailyMoo]

At the rate the business and the economy are both going it would behoove them to start Poly2 very close if not at GF incentives to start no? I'm sure there are those that can't wait to jump on Poly2 even if it was 250 a point but it seems like they're going to need a jumpstart on sales to get to recouping their money. Not sure slow playing it will do them much good. Get as much cash infused back into DVD as fast as possible will be what they need.

 

[zavandor]

If there were no restricted resorts would that have made the difference?

As much as I hate the resale restrictions and would love to see them fail, I don't think they're the culprit for the slowdown.
If I have to guess, since on this forum there are more "I've bought direct because I want access to future resorts" than "I will not buy DVC because of the restrictions", they might even increase sales.

 

[RichVIII]

I think they dialed the base price a little high this time. Yes, they can adjust with discounts - but only on higher point contracts. The current member gradually adding on starts to question things. We would have added on but with some resorts at 50 point min and base price so high, I just signed a resale contract last week for over half the price.