Why is everyone so concerned with the new Poly tower

[Sandisw]

Is this confirmed? I found this thread that suggests Disney did exactly this in 2020 at Poly: https://www.disboards.com/threads/w...to-stop-revert-the-2020-reallocation.3726101/

I've seen a lot of speculation that part of the intent of the tower is to bring down the point requirement for the bungalows.

There are some who believe it can only be done across units…and that is what need to stay point neutral in terms of the chat.

A unit is usually made up of several rooms and some units at Poly do include both studios and bungalows, so that would mean points can shift between the two.

However, Poly tower will be new units and even if the same association, some still believe you can’t shift in that way.

I have researched it and can’t find a definitive answer that discussed points charts for use vs points for sale

They can’t sell more than assigned to a unit..but not as clear when adjusting charts to balance out demand.

They did shift points at SSR between treehouses and the rest.

For DVC to have done it, they at least believe that it’s within the rules but it’s never been challenged either.

Now, people are more aware so if they try with bungalows and the tower, It might get much more pushback.

Even if they could, I don’t see it because they still have to balance total points at the whole resort. And if the tower chart is already a bit higher, not sure they would want to make it even higher shifting some bungalow points or start with less points attached to the initial chart so they can shift later on.. and that would require less point to sell from the start.

 

[RoseGold]

I've seen a lot of speculation that part of the intent of the tower is to bring down the point requirement for the bungalows.

This just doesn't make sense to me. Poly1 studios are priced correctly, very close to VGF. Bungalows are 5x the price and about 20% of the points.

Even cutting the bungalows prices by 20% just wouldn't do much to the studios. It's a discussion of a few points because there are so many Poly1 studios.

And why would Disney want to bring down the price? They like things costing more, they like selling more points.

 

[CaptainAmerica]

Can’t move points across units.

They can and they have. When Saratoga Springs split their categories into Standard and Preferred, they did exactly that.

 

[RoseGold]

They can and they have. When Saratoga Springs split their categories into Standard and Preferred, they did exactly that.

But they didn't reallocate into Treehouse, which is what adding to Poly would be.

 

[CaptainAmerica]

And why would Disney want to bring down the price? They like things costing more, they like selling more points.

Depending on how you read the membership documents, there's an argument to be made that they're obligated to balance demand within the home resort booking window. So if Poly studios were selling out right at 11 months but Bungalows were readily available at 7 months, some would argue that Disney must rebalance the points charts to even out the supply-demand imbalance.

Of course, none of this matters because Poly studios don't sell out right at 11 months.

 

[Jlo85]

And why would Disney want to bring down the price? They like things costing more, they like selling more points.

My only thought is that the bungalows are the most expensive DVC room at any property. It’s more expensive than the grand villa at VGF. And I really doubt that was intentional because the bungalows are pretty basic in comparison. Definitely not luxurious enough to be charging that many points IMO.

Also, from what I can tell there are some limitations as to how expensive Disney can make the studios based on Florida law. My understanding in the POS is that they can never make it too expensive that a member MUST buy add-on points in order to afford a week stay under Florida law. Not a lawyer, but it might be a situation where they legally have to rebalance the bungalows elsewhere to avoid making the studios too expensive.

 

[Sandisw]

My only thought is that the bungalows are the most expensive DVC room at any property. It’s more expensive than the grand villa at VGF. And I really doubt that was intentional because the bungalows are pretty basic in comparison. Definitely not luxurious enough to be charging that many points IMO.

Also, from what I can tell there are some limitations as to how expensive Disney can make the studios based on Florida law. My understanding in the POS is that they can never make it too expensive that a member MUST buy add-on points in order to afford a week stay under Florida law. Not a lawyer, but it might be a situation where they legally have to rebalance the bungalows elsewhere to avoid making the studios too expensive.

I have read the FL timeshare code in depth and I don’t remember seeing anything to that effect.

Developers decide the plans of what they will charge for each room size and then create the chart based on a one to one right to use based on a 365 or 366 year when determining how many points to sell for the project.

DVDs standard has been square footage in determine the cost of each room. The bungalows were determined by them, so that was intentional. They wanted them to be as costly as they currently are because if they didn’t, they would have assigned fewer point to them to start.

That move allowed them to provide a unique product but also add a lot of points to PVB to sell.

The POS states they can set minimum number of nights that can be required..and right now iI think it is set at 5…but also says exaclty how many nights a certain number of points will get you per year for each room size. For example, for PVB, an owner is guaranteed to be able to reserve at least one use day for each 22 points they own in the SV studio, 26 for the lake view, and 147 for the bungalow…this info is in thr DVC membership agreement.

So, someone who bought in at the 100 minimum years ago, has to be guaranteed at least 4 days per year cost those levels…subject to availability to actually get.

The POS also allows for a maximum reallocation with means every day is the same for each room size as well and that can be found in the multi site POS.

Like I shared, some of the PVB units were declared with studios and bungalows which is why points can definitely cause some movement, but right now, DVD determined what to sell for PVB and are limited in what they can legally do to reduce the bungalows because of that maximum reallocation chart.

 

[Roughians_satchel]

My only thought is that the bungalows are the most expensive DVC room at any property. It’s more expensive than the grand villa at VGF. And I really doubt that was intentional because the bungalows are pretty basic in comparison. Definitely not luxurious enough to be charging that many points IMO.

Also, from what I can tell there are some limitations as to how expensive Disney can make the studios based on Florida law. My understanding in the POS is that they can never make it too expensive that a member MUST buy add-on points in order to afford a week stay under Florida law. Not a lawyer, but it might be a situation where they legally have to rebalance the bungalows elsewhere to avoid making the studios too expensive.

It would make sense then for the new tower to be added to the current association - they could make the one/two bedrooms more expensive to absorb the pressure to keep the studio's affordable for a week. They clearly can't shift the points higher for the bungalows if they already are at the most expensive category.

 

[Sandisw]

It would make sense then for the new tower to be added to the current association - they could make the one/two bedrooms more expensive to absorb the pressure to keep the studio's affordable for a week. They clearly can't shift the points higher for the bungalows if they already are at the most expensive category.

The only thing with that is shifting any current PVB points to the tower Could result in them having to sell fewer points for the tower because total points for the whole resort still needs to balance if it’s all one.

The bungalows get booked eventually, many times for cash, so I personally don’t think DVC sees it as a problem. Even if they roll in to PVB, it doesn’t make a whole lot of sense to make 1 and 2 bedrooms so high just to lower bungalows that could have been less to start with if they wanted them to be.

 

[sethschroeder]

Why would they stop ROFR’ing PVB if the new Poly2 tower is a separate association?

They stopped ROFR’ing VGF before VGF2 went on sale as the same association.

I checked and VWL was being ROFR'd through CCV sales and leading up to.

Thing with POLY is we dont know if they won't ROFR or if the resale price is simply too high when they have foreclosures giving them points.

Isn’t that basically what they did with PVB?

PVB was a brand new DVC. Now its basically what they did with CCV though. Thing is CCV was inside of existing hotel room space it was not an increase in the number of guests on property.

The majority want studios - very few people want 1br - the 1BR don't sell out until there are no studios left. Look at the ratio in DLT - Poly 1 has the largest studios at WDW.

There is no math to say "majority" as we have no actual booking data just availability. For all we know its 95% Studios vs 5% 1BR or its 55% Studios vs 45% 1BR.

We can say there is more demand for studios though.

The main issue is simply that the jump from Studio to 1BR is fairly significant and not exactly well balanced.

 

[DonMacGregor]

We talked about how BPK is a cash-grab, but the reality is Disney is still cash poor right now. So, part of this will probably depend on how desperate for cash they are in early 2024.

Well, their cash on hand at the end of 2Q 2022 (June 30) was $13B, down 20% from the prior year ($15B) and well off the historically high number in 2020 of $17B, but those high numbers are massive increases over the prior pre-pandemic years where cash on hand averaged around +/- $4.5B ($5.4B in 2019, $4.1B in 2018, $4.0B in 2017, $4.6B 2016)

Disney's free cash flow for 2021 was $2B, down from 2020's $3.6B, but again 2020 numbers were up 234% from the prior year (2019) at $1.1B, which in turn was down from 2018's $2B.

So yes, cash on hand and free cash are down, short term, but nowhere near being off pre-pandemic levels and nowhere approaching "cash poor" status.

 

[Jlo85]

I have read the FL timeshare code in depth and I don’t remember seeing anything to that effect.

Sorry you're right, I think I was misreading that Disney expects buyers to buy a seven (7) use day ownership interest. Though, that is interesting to think about. If Poly has the most expensive studios already, and the tower will likely be the same if not more expensive because of theme park views. I wonder if Disney will have to up the minimum buy-in from 150 in theory if that is their practice. And seems more likely if a separate (more expensive) association.

So yes, cash on hand and free cash are down, short term, but nowhere near being off pre-pandemic levels and nowhere approaching "cash poor" status.

You're right, though from what I can tell the huge cash infusion in 2020 was a line of credit. And cash flows are going in a negative direction. If they weren't having cash issues, it questions why they needed a 'cash grab' like BPK. I think there's an assumption with the end of the pandemic that cash flows will return to profitability. We shall see!

 

[bryaalre]

Well, their cash on hand at the end of 2Q 2022 (June 30) was $13B, down 20% from the prior year ($15B) and well off the historically high number in 2020 of $17B, but those high numbers are massive increases over the prior pre-pandemic years where cash on hand averaged around +/- $4.5B ($5.4B in 2019, $4.1B in 2018, $4.0B in 2017, $4.6B 2016)

Disney's free cash flow for 2021 was $2B, down from 2020's $3.6B, but again 2020 numbers were up 234% from the prior year (2019) at $1.1B, which in turn was down from 2018's $2B.

So yes, cash on hand and free cash are down, short term, but nowhere near being off pre-pandemic levels and nowhere approaching "cash poor" status.

Just to add to this, Disney also has a huge debt load (over $50B) that they overtook thanks to the Fox merger as well as borrowings during the pandemic. So far this fiscal year has seen the debt load drop over $3B. They are aware of this debt and want to drive it down to more manageable levels. They are also on the hook for at least $9B to buyout Comcast's ownership interest in Hulu in 2024 and so they will need cash on hand to help finance that deal.

Disney as a company is fully focused on growing Disney plus as big as possible. Currently its to the detriment of profits and cash flow. Through 9 months of this fiscal direct to consumer offerings (Disney Plus, Hulu, Espn Plus, etc.) have lost over $2.5B with last quarter losing over $1B. Once Disney incorporates the soon to be price increases and ad tier in Disney Plus, this segment will start to see contracting losses and will become breakeven in 2 years (per Disney).

Disney is not cash poor but i do think they have been doing cheaper things lately that will net a return faster. I'm hoping the poly tower does not feel like a rush job or a cookie cutter project as I am interested in buying points in it when it becomes available.

 

[DonMacGregor]

You're right, though from what I can tell the huge cash infusion in 2020 was a line of credit. And cash flows are going in a negative direction. If they weren't having cash issues, it questions why they needed a 'cash grab' like BPK. I think there's an assumption with the end of the pandemic that cash flows will return to profitability. We shall see!

I just don't see where BPK could be considered a "cash grab" (a theme you keep revisiting). They have something like 2 million points to sell, over a period likely to be in the 36 to 48 month time frame (assuming that the new Poly and DLH towers don't extend it out to closer to 60 months). That's $400M spread over 4 years in a best-case scenario, (a really slow "grab" at best) for a company with a market cap of $175B. Easy money? Absolutely. Desperate cash grab? Not so much.

I agree that the focus is on proactively reducing the Fox debt load and expanding the Disney+ platform to levels outlined on the numerous investor calls, etc. and not some desperate effort to raise cash.

 

[Sandisw]

Sorry you're right, I think I was misreading that Disney expects buyers to buy a seven (7) use day ownership interest. Though, that is interesting to think about. If Poly has the most expensive studios already, and the tower will likely be the same if not more expensive because of theme park views. I wonder if Disney will have to up the minimum buy-in from 150 in theory if that is their practice. And seems more likely if a separate (more expensive) association.

You're right, though from what I can tell the huge cash infusion in 2020 was a line of credit. And cash flows are going in a negative direction. If they weren't having cash issues, it questions why they needed a 'cash grab' like BPK. I think there's an assumption with the end of the pandemic that cash flows will return to profitability. We shall see!

They don't have to sell buyers something to get 7 days...that is not required within a points based timeshare. All that is required is the language that I quoted that says for X amount of points you own, you are guaranteed to get this many nights in each type of room...which covers those that buy less than that, especially with the resale market.

The Home Resort Rules and Regulations makes note depending on what someone owns, they may not be able to exchange out to II (or RCI) because many of those are 7 night trades.

But, as long as new buyers are shown the point charts when buying, and what the minimum will get them, DVD has met its requirement. It is one reason why they did allow BLT owners when it first went on sale, and its point chart was updated before it even opened, to add on small contracts...below 25 points....because of it.

The minimum purchases has changed a lot over the years...it was 230 when OKW debuted...it went down from there...it was 160 in 2009 when I bought BLT and at some point, they lowered it to 100 points....the 150 only came back into play in 2021...and remember, minimum to buy and minimum for membership extras have not always been the same...though they are now.

I really believe that BPK happened to help fill the gap since Reflections was scrapped and it was an easy thing to do...flip a current building, do minimal updating, and make it part of DVC....they announced it in May 2021, and didn't start renovating until Feb/March 2022, with opening June 2022...and of course, sales not until March 2022 for owners...that is a pretty short timeframe for it all.

ETA. IIRC, There is something in the POS that mentions they can put in a minimum number of nights but it can’t exceed 5 nights..I’ll see if I can find that language.

 

[CaptainAmerica]

Where on Earth is everyone getting this "theme park view" idea from? Did Disney publish something along those lines? This building is going to face East, not North, and "theme park view" would be a huge stretch IMO. I think we'll see Standard and Lake, same as PVB1.

 

[Sandisw]

Where on Earth is everyone getting this "theme park view" idea from? Did Disney publish something along those lines? This building is going to face East, not North, and "theme park view" would be a huge stretch IMO. I think we'll see Standard and Lake, same as PVB1.

It’s like the rest of this thread..speculation!!!

 

[CaptainAmerica]

It’s like the rest of this thread..speculation!!!

Some speculation is reasonable. "I think Poly 2 will be the same association as Poly 1 because that's how they handled VGF" is reasonable speculation. "I think Poly 2 will be a different association than Poly 2 because it's a fresh build from scratch" is reasonable speculation.

"What if they make every room Theme Park View and charge 46 points per night for a Studio in September" is not reasonable speculation.

 

[Sandisw]

Some speculation is reasonable. "I think Poly 2 will be the same association as Poly 1 because that's how they handled VGF" is reasonable speculation. "I think Poly 2 will be a different association than Poly 2 because it's a fresh build from scratch" is reasonable speculation.

"What if they make every room Theme Park View and charge 46 points per night for a Studio in September" is not reasonable speculation.

While the design may make it seem unlikely that a TPV classification will happen, no one knows for sure that DVD won’t do that for some of the rooms, Heck they originally classified 2nd floor rooms at BLT theme park when it opened and those had to be adjusted.

 

[CaptainAmerica]

While the design may make it seem unlikely that a TPV classification will happen, no one knows for sure that DVD won’t do that for some of the rooms, Heck they originally classified 2nd floor rooms at BLT theme park when it opened and those had to be adjusted.

I'm not saying they definitely won't, I'm just pushing back on the implication that they definitely will.