Thats how I see it, a business exchange, but a “gaurenteed” one because they are in the same “club”.
To be fair to Disney they went for a long time with no parks. Now they have just one of their two. They have made it pretty long before they got to layoffs. WDW at 30-50% capacity cannot support both parks. So the normal strategies probably don’t apply.
Just playing some devil’s advocate.
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I don’t disagree, it is just that I think they could take steps to increase their revenue and I don’t understand them not taking at least some of those steps.
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It’s all very confusing.
Folks will get mad if they drive up crowds, but can they afford to offer more without more ticket sales?
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I dont think they can. They took a big hit. They have a lot of projects in the works that they cant abandon all.
I mean - to get revenue, you need more spenders.
You could offer more to attract more people.
But
If they open up to more visitors, they could LOSE them bc they aren’t comfortable coming.
It’s a slippery slope.
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Right but the resorts are open, well most are. So they are providing the rooms for use. They aren’t fully booked so many people have chosen to Bank their points and use them next year.
So take Member A, who is a teacher. he can only travel at certain times. If he is unable to book a room at those times even at 11 months out due to too many people trying to book, he cannot sue DVC for breach of contract. He would be told to travel at another time. The fact he can’t without losing his job is irrelevant.
The fact I cannot use my points because the border is closed is irrelevant, I cannot claim breach of contract.
Equally the fact that Carla from Ohio cannot book for the dates she wants to travel in December 2021 doesn’t mean she can sue them either.
And it would almost impossible to prove that you were unable to book a room at any time in 2021. I mean I will support anyone who can provide concrete evidence that every room was booked every single day of 2021 in their case.
But neither I nor @PrincipalTinker were debating about them opening the resorts. The resorts are open.
We’re saying DVC do not guarantee you can book a room. And although having extra points floating around is clearly going to cause an availability issue, it is extremely unlikely anyone will be able to sue them for breach of contract over availability as long as the resorts remain open. Unless they can prove that every room is booked for every single day.
Is that legit? An AP for 5 people is $719? I’ve never looked into the cost before.
That’s a per person Gold pass for FL resident or DVC.
I meant $719 each for 5 people vs. 2 7 day tickets each for 5 people.
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Gotcha!
My only incentive right now is that you’re in the Disney bubble where safety precautions are taken seriously.
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For all practical purposes without getting into a lot of corporate structure mumbo jumbo, if they are all under control of the parent Walt Disney Co, they all ultimately do whatever Walt Disney Co says. They will likely be recording transactions between legal entities at an “arms length” to protect legal entity status, but they would still be under common control. (I haven’t researched in depth, just a peek at structure listed in Wikipedia and what I remember seeing here and there.)
(I may have been in the US corporate accounting office of a Fortune Global Top 10 in a former life. I went through a LOT of napkins! 
)
Can anyone remember the details of the re-opening plan that was given to the…county (I think) to approve? Was there anything about not offering those incentives in there? Or perhaps a “gentlemen’s agreement”? I’m wondering if there was possibly some nudging done to not offer them to try to give some business to other local hotels to keep them afloat?
Question, although Disney controls all, can one subsidiary decide to take control of an asset of another subsidiary?
This question came up from what every DVC owner understands from our contracts: DVC takes ownership of the resorts as the points are sold. WDW Parks and Resorts maintains ownership of some of the points at each resort, and WDW as well as DVC will have additional points through exchanges by members, and other agreements. At no time, can Parks and Resort (subsidiary) decide to take over DVC inventory (a separate subsidiary) without some sort of asset exchange?
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I’ll circle back to your specific questions in a bit. Need to finish reading some of the links first. But I re-read this entire thread, and here are my takeaways.
I’m not the Disney expert y’all are, and while I observed a LOT of corporate strategy, I didn’t drive it, but I tried to blend what I know of both.
Disney has REALLY deep pockets. Ridiculous lines of credit and financing alternatives available. So I would presume that they are focusing more on long range viability and profitability. Keeping that focus and then make short term decisions. They aren’t living on a razor-thin cash margin with limited financing options like, say, a restaurant chain, may be.
So they are trying to balance all of these priorities (not in order of importance):
- Protect the brand. This is super important.
They don’t need an outbreak traced to Disney. Comply with expectations and then some. Going slowly on reopening allows them to monitor how things are going. The nature of this pandemic is it takes 4-8 weeks to see the results of actions.
And there is also an element of randomness involved that can only be realized over time. (If there is a 1 in 100 chance for an outbreak to occur on any given day at a given activity level, it may take the full 100 days to encounter it.)
There’s also the need to manage the level of customer dissatisfaction. And the ability to pivot is highly valuable at the moment. People may be annoyed they can’t book their favorite restaurant. They will likely be more annoyed if they have it booked and they get cancelled. So Disney is going to try to leave themselves options. Which is seriously annoying to us planners. The more people are allowed to book in advance (ADRs, FP), the greater the opportunities for disappointment. (And they may be planning to bring those back with changes, but needed IT to get the re-open changes done first).
- Protect the assets. Physical assets, but also core talent/knowledge.
Yes, they probably consider seasonal workers and recent hires expendable. I didn’t read their lay-off details, but selective early retirement is a good tool for reassuring employees that you’re not totally heartless, and allows you to control how much talent exits. Employee morale matters, so the employees that remain need to feel like there was an attempt to do what could be done.
- Protect infrastructure that they need to operate at full capacity in the future.
This conceivably includes local government services but also other local businesses and suppliers. When things get back to normal, yes, they want to keep Disney hotels full, and I haven’t looked at how much Day guests contribute to their bottom line, but if they also want those Day guests to come spend money, they actually need the other hotels in the area to survive. I’m wondering if this might be a factor in not offering on-site incentives. How important is it to their ultimate bottom line that other area hotels survive? There could possibly also be a touch of camaraderie to this. I know our local restaurants are thinking a bit more cooperatively and less competitively than they usually do.
More people staying at Disney might preserve X additional jobs, but those people staying offsite might protect Y jobs there, and Y might be greater than X.
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Maintain contractural obligations where the consequences of breaking them outweigh the costs to fulfill. This could be driving any number of behaviors. They likely have scores of contracts beyond DVC that we have no idea about.
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Keeping all of the above in mind, that’s when you get to the actual decisions around maximizing short term profits/minimizing losses (trade offs between discretionary costs and revenue levels) and around current demand levels (and what tweaks could be made to change demand).
Really long winded way of saying they aren’t just sitting there weighing short term dollars in and out.
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My two cents: Disney doesn’t know what it is doing just like the rest of us. Disney is reacting to the situation as it unfolds. It is impossible to be proactive when there are so many unknowns and factors beyond their control. They have to cut costs to keep the business afloat. They could try to increase revenue, such as with extra ticketed events, but then people will complain that they are gouging people during a pandemic. It is a no-win situation.
As far as the benefits for on-site guests, I’m guessing that is primarily about profitability with the resorts fairly empty compared to in the past. I also suspect that the new cancellation policies make those reservations less reliable than in the past.
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Well, that was interesting. I’ve never really dug into how the back office accounting for timeshares was structured. So, keep in mind that my corporate accounting background is in the oil industry and in Texas (not Florida) and this was just skimming a lot of information, so my explanation may be off a bit in the terminology and the nuances, but hopefully it helps.
You will likely need coffee or a stiff drink or two for this.
Key point: Disney Vacation Club (“DVC”) is not a specific “who” (legal entity) but more of a “what” (the terms used in the various documents are property/product/project/program/plan, but it is never referred to as a company or subsidiary). Note your contract is not with DVC, it is about DVC. Your contract is with DVD.
Here are the questions I think you were interested in:
- What is the relationship between Disney and Disney Vacation Club?
- How are DVC transactions handled?
- Who has control over DVC and who benefits from its performance?
From what I could glean quickly-ish from free websites, I think this is a rough idea of the relevant legal entities involved. (I saw references to a few more, but I think they might be “pass through” entities so don’t really impact the overall concepts.)
There are a lot of “players” involved:
DVD is a wholly owned Disney subsidiary. This is who your DVC contract is with. I believe their holdings would include undeclared inventory units at DVC properties, unsold DVC points related to declared units, and repurchased DVC contract points. They are subject to dues/assessments for their points just like any other DVC owners.
Each DVC property has a resort owners condominium association. These are independent legal entities (not subsidiaries owned by Disney), but they are under the control of DVD. (Ex. Disney’s Animal Kingdom Villas Condominium Association, Inc.) You become a member when you sign a DVC contract.
DVCMC is a wholly owned Disney subsidiary that is hired as a management company by each of the resort owners condominium associations. (Or DVCHMC for the Hawaii ones.)
So I think there are few different types of transactions going on.
For undeclared inventory units (units that have not yet been entered into the DVC program), DVD gets the “cash” if the units are rented out. I would suspect they use the Central Reservations function (that I think is part of WDPR?) to accomplish this, but I’m not positive on that. They would settle up between themselves on that (and would likely have any number of ways of doing this since they are both within the wholly owned Disney structure).
Also, I believe DVD would be entitled to rent out units for cash using any points they own (just as other DVC members can sell their points to others), likely again DVD would use Central Reservations.
Then there’s “breakage income”. This is what happens when there are declared DVC program rooms that go unused by DVC members and Central Reservations rents them out to non-members. I didn’t dig into the documents to verify this is exactly how that works, but this discussion sounds like it aligns to what I’ve seen mentioned:
TL;DR - The resort owners condominium associations get some of the breakage income, but not all of it, towards offsetting their expenses. I suspect the rest ends up on the books of DVD after taking out fees from Central Reservations.
The above discussion also mentions that when DVC members make exchanges for stays outside of DVC, the related DVC inventory is rented out to pay off the non-DVC resort. I suspect that happens on the books of either BVTC or DVD, because I didn’t see it in the budget for the resort owners condominium associations (just “fee paid to Buena Vista Trading Company for providing the exchange component of the Club central reservation system”).
I’m not sure if that covers all the transactional activities you were interested in @PrincipalTinker ?
From a control standpoint, all of these entities are wholly owned by Disney EXCEPT the resort owners condominium associations so would be under Disney’s control (specifically D’Amarco and the Disney Parks, Experiences, and Products leadership team).
And the resort owners condominium associations are under the “practical” control of DVD per the document excerpt above, so they are also under the control of D’Amarco and his leadership team.
Strategically, impacts to the earnings of DVD from all these different activities (plus their initial sales of point contracts) are going to play into their decision making, likely proportional to how their income compares to the rest of Disney Parks, Experiences, and Products
So, even though the resort owners condominium associations are “off the balance sheet” of Disney, how they are impacted by decisions will also impact DVD (and also Disney’s reputation) so they won’t be entirely disregarded. And Disney could also be on the hook for mismanagement charges against DVCMC or DVD if there were major issues.
Note: I believe the actual properties remain on the books of WDPR, and the DVC portions (units and common areas) were “leased” (or similar term term depending on property) to DVD. DVD then sells “an undivided real estate interest” in a unit and its share of the common areas to the DVC member. (See bottom of page 5 at link below.) The contract is between DVD (not DVC) and the DVC member.
https://disneyvacationclub.disney.go.com/media/dvc/languagespecific/eng/member/condominium-association-notices/2018/2018-Condo-Notice-AKV-&-AKV2.pdf
So to finally circle back to responding specifically to this paragraph, I think its DVC members (not DVC) that take ownership of the real estate interest as points are sold, and it’s DVD that retains ownership of some points at each resort. I don’t think the resort owners condominium associations ever hold points, nor does the DVC “program”.
Did I answer your question(s) or just make it worse? @PrincipalTinker
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I think you have. Wow! That was great reading (and a big napkin!). To circle back to my final quote- DVD maintains ownership of the points/inventory and there would be a cash exchange for the available inventory with parks and resorts?
I asked a question on a DVC podcast last weekend because I was wondering about the DVC staff laid off last week. The response was that our dues pay salaries for resort staff but not the guides or the staff that write the contracts. There is some confusion if we also fund member services. It seems like the most of the financial services and contract people are “Disney “ staff?
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As complaints about wait times, lack of food options, and shorten hours increase. I am even more confused about their current business model.
Guests will complain but come?
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