Question on BWV points

[crisi]

With those expectations...you'll never be disappointed. So there's that.

The reality is that it was a really great product for 20 years...now it's a different product. Individual opinions vary...that's cool.

But don't give me the legalese argument, please? It's the go to everytime somebody points out potential flaws in DVC...which roughly translates to "I'm not willing to think that maybe MY DISNEY is trying to screw me".

We see lots of variations on this. Just call it a difference of opinion ...not citizen kane.

I've always thought, and used, those arguments as the polar opposite of how you see them. Of course Disney's contracts are one sided. Of course they want to maximize profits and have profit motivation. They are a corporation. Their main purpose as an entity is to provide shareholder value. Any less than what they do would be negligent of their fiduciary duty." It isn't making an excuse. Its stating the reality of doing anything contractual with any corporation in America. I'm someone who has done a lot of corp to corp contract work - and it isn't like Microsoft's standard paper is protecting their CUSTOMERS or that you can expect them to ignore contract terms on your behalf when they do a software audit. i.e. "Of course Disney is trying to screw me. And caveat emptor."

 

[lockedoutlogic]

I've always thought, and used, those arguments as the polar opposite of how you see them. Of course Disney's contracts are one sided. Of course they want to maximize profits and have profit motivation. They are a corporation. Their main purpose as an entity is to provide shareholder value. Any less than what they do would be negligent of their fiduciary duty." It isn't making an excuse. Its stating the reality of doing anything contractual with any corporation in America. I'm someone who has done a lot of corp to corp contract work - and it isn't like Microsoft's standard paper is protecting their CUSTOMERS or that you can expect them to ignore contract terms on your behalf when they do a software audit. i.e. "Of course Disney is trying to screw me. And caveat emptor."

Disney has been successful because they did things that went beyond the strict "what's good for the stockholders" mentality over their history.

Even Michael Eisner did. Do you think the needed to build all that stuff at boardwalk? No...they could have done 1/3 as much and been fine. But now that ingrained in the mental ties to the property and will be forever.

Corporations that care only for stock price always fall...it is a 100% certainty. There has to be intelligence and balance.

 

[crisi]

I would tend to disagree with that. I've been following Disney as a business - not as a consumer - for something like 35 years. They always have the bottom line at heart - their strategy for getting to that bottom line changes - sometimes they are focused on a high budget, high quality experience - hence the investment in the Boardwalk, which came during one of those periods in time. Sometimes they've been focused on number of people they serve - lower margin/higher volume - that was when the value resorts were added. Sometimes - as now - they cut costs while increasing prices ( because their revenues aren't as expected and they've had higher than expected investment expenses (Shanghai) and they have a brand that they've proven will take some abuse and hold up when they return to a more quality strategy. If you are getting something out of Disney thats "extra" its because they want more money out of you and see it as an investment towards future spending.

 

[_auroraborealis_]

One of the reasons so many things are being updated now (or are waiting on update, HI FUTURE WORLD) is because they deferred a LOT of capital investment. It's hard to claim that Future World right now reflects the good of the visitor.

 

[lockedoutlogic]

I would tend to disagree with that. I've been following Disney as a business - not as a consumer - for something like 35 years. They always have the bottom line at heart - their strategy for getting to that bottom line changes - sometimes they are focused on a high budget, high quality experience - hence the investment in the Boardwalk, which came during one of those periods in time. Sometimes they've been focused on number of people they serve - lower margin/higher volume - that was when the value resorts were added. Sometimes - as now - they cut costs while increasing prices ( because their revenues aren't as expected and they've had higher than expected investment expenses (Shanghai) and they have a brand that they've proven will take some abuse and hold up when they return to a more quality strategy. If you are getting something out of Disney thats "extra" its because they want more money out of you and see it as an investment towards future spending.

I'm not suggesting for a second that Disney...including the brothers...wasnt about money...

Not for a second. But what has made Disney an exceptional success is that the have managed to mask that fact by balancing a lot of factors...not just fighting the money angle. Sometimes you pick your battles for the longterm.

 

[Dean]

Disney has been successful because they did things that went beyond the strict "what's good for the stockholders" mentality over their history.

Even Michael Eisner did. Do you think the needed to build all that stuff at boardwalk? No...they could have done 1/3 as much and been fine. But now that ingrained in the mental ties to the property and will be forever.

Corporations that care only for stock price always fall...it is a 100% certainty. There has to be intelligence and balance.

I would argue that Disney has been successful because they created an illusion, as much as reality, that they're consumer friendly and they've established a reputation that is likely not completely accurate, that they are consumer friendly. And I would argue they are not nearly as good or reasonable as they were at one time but they still offer a nice product even if it's not nearly as nice as it was at one time. Obviously it's not a black and white issue though. Put another way, I think the balance you reference is more illusion than reality.

 

[lockedoutlogic]

I would argue that Disney has been successful because they created an illusion, as much as reality, that they're consumer friendly and they've established a reputation that is likely not completely accurate, that they are consumer friendly. And I would argue they are not nearly as good or reasonable as they were at one time but they still offer a nice product even if it's not nearly as nice as it was at one time. Obviously it's not a black and white issue though. Put another way, I think the balance you reference is more illusion than reality.

I completely agree...but the illusion can't be maintained with iger's price policy and obsession for quarterlies...not longterm

 

[crisi]

I completely agree...but the illusion can't be maintained with iger's price policy and obsession for quarterlies...not longterm

I don't think its a long term strategy.

 

[lockedoutlogic]

I don't think its a long term strategy.

Once a company becomes obsessed with their stock price...it's like crossing the rubicon...

You cross the bridge as it's burning.

And the reason Disney is falling down that well is that is too widely held - as in there are no block owners of stock that dictate corporate policy on the directors (see: Disney, Roy E.)

And...executives pay is tied to profit (which it shouldn't be)...because they only care about the company until the doorknob tickles the backside...

 

[crisi]

I would disagree on all of that as well. Disney has been obsessed about their stock price since the 1980s. Some would say its all been downhill from there - but they've had good years and bad years (I've owned Disney stock since the early eighties myself - off and on - it isn't my best investment - it hasn't been my worst. I think I own some now, but if I still do its a few hundred shares, not much at all. I find it much more interesting as a business case than as an investment - or as a customer). And plenty of good companies are widely held - most blue chip companies are widely held. And almost all publicly traded companies have executive pay tied to profit as a metric. That has also been common for longer than I've been alive.

 

[lockedoutlogic]

I would disagree on all of that as well. Disney has been obsessed about their stock price since the 1980s. Some would say its all been downhill from there - but they've had good years and bad years (I've owned Disney stock since the early eighties myself - off and on - it isn't my best investment - it hasn't been my worst. I think I own some now, but if I still do its a few hundred shares, not much at all. I find it much more interesting as a business case than as an investment - or as a customer). And plenty of good companies are widely held - most blue chip companies are widely held. And almost all publicly traded companies have executive pay tied to profit as a metric. That has also been common for longer than I've been alive.

Yeah...but are those GOOD things? I'm not denying their existence...

We definitely disagree on a fundamental level...no foul.

But with every passing day I'm more convinced that reality and the stock market never cross paths...

The only difference between vegas and the NYSE is that Siegfried and Roy don't dig New York

 

[Dean]

I completely agree...but the illusion can't be maintained with iger's price policy and obsession for quarterlies...not longterm

IMO from a dollar per point standpoint DVC passed reasonableness about $40-50 per point ago. I see timeshares sold routinely for tens of thousands that are worth pennies. Certainly there is a breaking point on price and service but I don't see that the target audience has thrown up the white flag yet and if they do, DVC will adjust, regroup and push on.

 

[crisi]

Yeah...but are those GOOD things? I'm not denying their existence...

We definitely disagree on a fundamental level...no foul.

But with every passing day I'm more convinced that reality and the stock market never cross paths...

The only difference between vegas and the NYSE is that Siegfried and Roy don't dig New York

My whole point in this thread is that they aren't good things - or frankly bad things - they are things - resulting from Disney's corporate self interests. And when people start using the legalese reasons, it isn't an excuse on behalf of Disney, its a statement about the reality - one often without judgement. From a stockholder perspective, these are good things. If you are a Disney exec, these seem to be very good things. If you are a Disney consumer who expects Disney to behave differently because they are Disney, these are bad things. Since I've never really expected much different out of Disney, some of their choices are personally disappointing, but I don't think any of them raise to bad - with the exception of the issues I have overall with corporate culture - but that isn't a Disney problem.

 

[lockedoutlogic]

My whole point in this thread is that they aren't good things - or frankly bad things - they are things - resulting from Disney's corporate self interests. And when people start using the legalese reasons, it isn't an excuse on behalf of Disney, its a statement about the reality - one often without judgement. From a stockholder perspective, these are good things. If you are a Disney exec, these seem to be very good things. If you are a Disney consumer who expects Disney to behave differently because they are Disney, these are bad things. Since I've never really expected much different out of Disney, some of their choices are personally disappointing, but I don't think any of them raise to bad - with the exception of the issues I have overall with corporate culture - but that isn't a Disney problem.

I don't disagree with you much...current realities are realities.

I'm just not sure longterm things can stay the same. The world/domestic/consumerism market cannot continue on the current trajectory because the lack of widespread purchasing power. You have to have customers to afford your products to make boo koo bucks for the shareholders.

For now...bread and circuses...in 20, 10, maybe even 5 years? The management is not positioning itself well for any hiccups.

You seem to be stock knowledgeable...did you read about just how close to catastrophe the whole enchilada came to being obliterated in 2008? Some analysts/economists estimated it was a matter of HOURS from total collapse.

That's a tad scary for the American nuclear family member...nobody is "prepared" for that with your etrade account.

What did Disney do then? They started to reinvent the wheel...and that is fiscally irresponsible. Started this "luxury" nonsense. Increasing base prices under cover of temporary gimmick discounts. That dog don't hunt. They can't invest for that type of clientele because it costs Too much overhead and the stock holders won't allow it. And they price their core clientele out...it's s middle class phenomenon...period. Very longterm stupid. Their DVC policy is equally silly if you take yourself outside of the moment. Obviously rack sales are a problem...hence the conversions...and obviously DVC sales are more of a problem than we know because they triggers the resale discrimination last year. Have you talked to anyone who's done this? They've been downright nasty about it. It's tacky/low rent. Nobody told you to raise the costs 10% a year for 10 years, numbskulls...you're fault. Slow and steady is economically a better philosophy.

But you know stocks...no such thing as less profits or revenues...it will not be tolerated. All hell breaks loose...and if the numbers say that: just change the numbers and "twist" the narrative a little.

I think their endgame is to outsource the rack operation and to completely saturate the timeshares. If that happens, it won't matter what the "legalese" of the contracts says...they'll be worth about as much as Weimar Deutschmarks...

 

[Dean]

I'm just not sure longterm things can stay the same.

One thing to be certain in timeshares is things DO change and almost always in a negative fashion. Like stocks, the best decisions are made on the buy because you've factored in as many variables and given yourself as much upside as possible and reduced the downside risk to a point it's reasonable. The problem with most people when they buy is they are basically assuming best case scenario, BTW, using the current assumptions and situation is essentially the same as best case scenario. There is a commitment, risk and downside which one needs to consider and to be able to weather as much as possible.

 

[lockedoutlogic]

One thing to be certain in timeshares is things DO change and almost always in a negative fashion. Like stocks, the best decisions are made on the buy because you've factored in as many variables and given yourself as much upside as possible and reduced the downside risk to a point it's reasonable. The problem with most people when they buy is they are basically assuming best case scenario, BTW, using the current assumptions and situation is essentially the same as best case scenario. There is a commitment, risk and downside which one needs to consider and to be able to weather as much as possible.

No doubt...

One of my pet peeves (I've been known to have a few)...is you see a lot of defense of DVC's price increases over the last 8-10 years because of the assumption that "it's selling...so the price must be right and the increases are justified"

Particularly with timeshares...I don't see it as necessarily equating.

 

[Dean]

No doubt...

One of my pet peeves (I've been known to have a few)...is you see a lot of defense of DVC's price increases over the last 8-10 years because of the assumption that "it's selling...so the price must be right and the increases are justified"

Particularly with timeshares...I don't see it as necessarily equating.

It's their sandbox and they've sold it, even after the price crossed over my line of reasonableness and leaving a lot of options on the table related to sales, I doubt they're at the edge of the cliff but even if they are, they can adjust. I don't see that anyone else has the right to tell them what they should charge and so far, they've not had any signifiant trouble selling. Heck they sold SSR retail. Poly will likely have issues but for other reasons than price or put another way, I don't think we can use the Poly as support for the price being past the point where sales are going to stop. I don't think CCR will have much of an issue. One thing to note with DVD is they are often overly optimistic with sales. This was absolutely the case with VB & HH and with BRV(VWL) and IMO, it was that and not the actual sales that cost us the additional options.

 

[CarolMN]

This has turned into a very interesting discussion! Thank you!