Maybe a long-term closure is better for Members...

[lawgator]

It occurred to me today that:

• It's hard for me to imagine operating the Parks under any form of social distancing.
• Some form of at least intermittent social distancing is likely necessary until herd immunity takes hold.
• Herd immunity isn't going to happen until a vaccine is developed or a sizeable fraction of the population has "earned" immunity by being sick, and probably recently so.
• Most folks are saying a vaccine takes 1.5 years to develop, test, and scale up. Even if we started in January, we are talking mid-Summer 2021.
• Getting everyone sick quickly seems to require over-running our health care system; probably not a good idea.

So, it is at least possible that the theme parks will not open for a long time. Cedar Fair, a company that operates mostly seasonal parks (Knott's is year-round, but none of the others are) has extended all of its 2020 Season Passes through the end of 2021. I don't think they do that unless they are writing off most of the 2020 operating season, and that doesn't end in most places until late October.

If the Parks are closed, how many people want to go to WDW? Even a DVC owner might think twice. Yes the lodging is "paid for", but transportation and food aren't.

On the other hand, if the resorts are mothballed for say, six months (or longer), there might be real cost savings in operations and those savings can be passed on in the form of lower dues. Looking at OKW's resort budget, and rounding a bit:

Administration & Front Desk: $0.82
Housekeeping: $1.50
Member Activities: $0.24
Transportation: $1.09

That's almost half of annual Dues. Forgo collection of some capital reserves (because there is no wear-and-tear) and a closure might well result in real savings to Members in the form of rebated/credited Dues. Some of that isn't going to be pure savings, there is probably some administrative work that still has to happen, but there might be other costs that go down to balance that: utilities would go down, and the management fee is a percentage of operating costs IIRC.

So, the question is: would you feel differently about a long term closure with points expiring if (a) the theme parks were closed anyway and (b) you'd get a non-trivial fraction of your dues rebated?

I totally agree with everything you said in this post. There is just no way to safely "social distance" in a theme park and are they going to disinfect every part of every ride that everyone touches each time? J.M. Barrie once wrote in Peter Pan, "There is a saying in the Neverland, that everytime you breathe, a grown-up dies." Perhaps he was just foreshadowing our current Disney Parks situation with a Peter Pandemic, but I hope not.

 

[Sandisw]

Also I believe (and tell me if I wrong or not) Disney is different than other timeshares as you ACTUALLY OWN a piece of property in Florida. So if all orders are lifted, legally you have a right to visit the property you own. Denying that right to visit with no "orders" in place can get a little dicey legal wise.

Again this is all on the LEGAL SIDE of things and nothing more.

Owners only have a ground lease until expiration. We only own shares of the building.

The POS is clear that emergency powers is what allows them to keep us out but it also requires them to keep it as limited as possible, That is why once the government deems it safe, I believe DVCM has to put in a plan to get at least DVC resorts open back up for reservations in what would be considered reasonable.

 

[Spridell]

Owners only have a ground lease until expiration. We only own shares of the building.

The POS is clear that emergency powers is what allows them to keep us out but it also requires them to keep it as limited as possible, That is why once the government deems it safe, I believe DVCM has to put in a plan to get at least DVC resorts open back up for reservations in what would be considered reasonable.

thanks

 

[taaren]

In a recent online article, which, I believe, was published by Forbes, an analyst stated that a domestic parks closure beyond September 1st could bankrupt the company. Moreover, the closure of movie theaters is having a significant negative effect as well. Last year, as of December 10th, Disney possessed 36.7% of the domestic market.

If you find that article, could you post/send me the link? I love to see economic analysis like that! I googled Forbes articles on Disney and couldn't find it but since you know more about what was in the article you'd probably have a better chance of finding it.

DVC resorts need to open as soon as they are allowed to. If parks remain closed longer, so be it. And if Disney refuses to open the DVC resorts when they are allowed to, they should be either sued or replaced as the management company of the DVC resorts.
Personally I'm not sure I would want to travel across the country just to visit the resorts, but others may.

I strongly suspect locals, or those of us in drive-able distance to the resorts would go. Don't get me wrong, I love the parks and would be sad to not use our APs, but the main reason we go is to spend time with friends and family in a beautiful resort with access to restaurants we don't have at home. Granted, half of those restaurants are in the park, but ... still worth it for DTD/hotel restaurants, even if that ends up being takeout in the room/by the pool.
I have a reservation over Memorial Day that I cancelled to move to Feb, and another one in July, but when the shutdown first happened my friend and I discussed whether we'd go if it was just the hotel, and for us the answer was an unequivocal yes. These particular trips were for us and our teens who are in the low-risk category for COVID, and after coming back we wouldn't visit the grandparents for two weeks. I'm still dithering about whether I'd fly one hour or drive six in July, which will depend on what procedures the airlines have in place at that time, etc.

 

[dsnymnkyuncle]

replacing the management team is possible is difficult but then if replaced would trigger a lot bad changes that would really adversely impact owners

Found this from Forbes

"Comparing the trend in Walt Disney’s (NYSE: DIS) stock over recent months with its trajectory during and after the Great Recession of 2008, we believe that the stock can potentially gain 35% once fears surrounding the coronavirus outbreak are abated. A detailed comparison of Disney’s performance vis-à-vis the S&P 500 is available in our interactive dashboard analysis, 2008 vs. 2020 Crisis Comparison: How Did The Walt Disney Company Stock Fare During Coronavirus Crisis Compared to S&P 500? "

 

[dsnymnkyuncle]

from the prior link, which is interesting in a more technical and less fun reading pov. Not mentioned in the article is a new 5 Billion loan I believe.

Survival Check
It will recover - however, a final check: Can The Walt Disney Company in fact stay solvent through the Coronavirus crisis?
Are cash from operations going to cover for interest expense and investments needed?

The company's debt shot up to $47 billion in FY 2019 due to the acquisition of Fox with the EBITDA being close to $16 billion, reflecting a Debt-to-EBITDA leverage ratio of about 3.0x. Though Disney's cash from operations decreased sharply in 2019, it is still at a comfortable position of $6 billion. In addition it also has a cash balance of $5.4 billion. Thus the company does not face any near term solvency or liquidity concerns

https://dashboards.trefis.com/data/...uring-Coronavirus-Crisis-Compared-to-S-P-500-

 

[Deb & Bill]

from the prior link, which is interesting in a more technical and less fun reading pov. Not mentioned in the article is a new 5 Billion loan I believe.

Survival Check
It will recover - however, a final check: Can The Walt Disney Company in fact stay solvent through the Coronavirus crisis?
Are cash from operations going to cover for interest expense and investments needed?

The company's debt shot up to $47 billion in FY 2019 due to the acquisition of Fox with the EBITDA being close to $16 billion, reflecting a Debt-to-EBITDA leverage ratio of about 3.0x. Though Disney's cash from operations decreased sharply in 2019, it is still at a comfortable position of $6 billion. In addition it also has a cash balance of $5.4 billion. Thus the company does not face any near term solvency or liquidity concerns

https://dashboards.trefis.com/data/...uring-Coronavirus-Crisis-Compared-to-S-P-500-

So Iger and Chapek give up their benefits for the year along with their salaries and it makes up half the debt.

 

[4evryoung]

The POS is clear that emergency powers is what allows them to keep us out but it also requires them to keep it as limited as possible, That is why once the government deems it safe, I believe DVCM has to put in a plan to get at least DVC resorts open back up for reservations in what would be considered reasonable.

But there is no obligation that I can see to provide any resort amenities other than occasional housekeeping. No obligation to provide food outlets, a pool or pool deck, a retail outlet, resort entertainment etc, valet parking, bell services and a whole host of other "normal" service provisions.

 

[Sandisw]

But there is no obligation that I can see to provide any resort amenities other than occasional housekeeping. No obligation to provide food outlets, a pool or pool deck, a retail outlet, resort entertainment etc, valet parking, bell services and a whole host of other "normal" service provisions.

Correct. They don’t have to provide it, But, whatever decision they make has to be in line with their obligations per the contract,

And, that indicates the powers are limited for resoet closures. So, will it be an easy task, no, But, what they don’t appear to have the right to do is keep DVC resorts closed simply because the parks are closed, when it has been deemed to be safer, by the government, to have them open.

 

[4evryoung]

And, that indicates the powers are limited for resoet closures. So, will it be an easy task, no, But, what they don’t appear to have the right to do is keep DVC resorts closed simply because the parks are closed, when it has been deemed to be safer, by the government, to have them open.

So, is it really in the membership's interest for the whole thing to go bump and collapse inwards if meeting the letter of the law creates conditions where the structure/economics and finances implode?

 

[dsnymnkyuncle]

But there is no obligation that I can see to provide any resort amenities other than occasional housekeeping. No obligation to provide food outlets, a pool or pool deck, a retail outlet, resort entertainment etc, valet parking, bell services and a whole host of other "normal" service provisions.

Actually it varies. "Disney’s Animal Kingdom Villas, A Leasehold Condominium, (the “Animal Kingdom Resort”) located at 4701 Osceola Parkway Lake Buena Vista, Florida 32830. The amenities include a pool, two hot tubs, two tennis courts, two shuffleboard courts and one-half basketball court. These facilities are Common Elements. An additional pool is available for use by Members through easements in the resort documents. See Part 1 for a description of the accommodations and the term of the Vacation Ownership Plan for this Resort "
https://disneyvacationclub.disney.g...-for-timeshare-contracts-01-29-2020-clean.pdf

 

[4evryoung]

Actually it varies. "Disney’s Animal Kingdom Villas, A Leasehold Condominium, (the “Animal Kingdom Resort”) located at 4701 Osceola Parkway Lake Buena Vista, Florida 32830. The amenities include a pool, two hot tubs, two tennis courts, two shuffleboard courts and one-half basketball court. These facilities are Common Elements. An additional pool is available for use by Members through easements in the resort documents. See Part 1 for a description of the accommodations and the term of the Vacation Ownership Plan for this Resort "

And they have closed these in the past for non-emergency reason without anyone blinking an eye.

 

[Sandisw]

So, is it really in the membership's interest for the whole thing to go bump and collapse inwards if meeting the letter of the law creates conditions where the structure/economics and finances implode?

The key here is that the POS talks about it being limited so whatever decision is made has to be supported by that,

I don’t think DVCM gets to decide to keep a resort shut down, and create further imbalance of the system, for reasons other than health and safety of the owners,

Yes, they have make decisions that are in the best interests of the owners of the resort, but it still has to meet the legal requirements of both FL timeshare law and the POS,

Sure, some members may decide they would rather have the resorts closed until all amenities were open and available. But, DVCM simply can’t just decide that unless they have the legal authority to make that decision,

So, yes, they need to follow the law and the aspects of the POS.

Of course, if there are government orders in place in terms of safety, then that alone allows them to push off the opening of the resorts.

 

[Tink10]

And they have closed these in the past for non-emergency reason without anyone blinking an eye.

Come on...who's going to question a Protein Spill, Code V or AFR.

 

[Sandisw]

And they have closed these in the past for non-emergency reason without anyone blinking an eye.

In all my trips, I have never been at any resort that had pools or other amenities closed that wasn’t because of safety or maintenance,

Can you expand on when it happened to you?

 

[Tink10]

In all my trips, I have never been at any resort that had pools or other amenities closed that wasn’t because of safety or maintenance,

Can you expand on when it happened to you?

I was making a little joke... Protein Spill, Code V or AFR. are all safety and/or maintenance related to bodily fluids

 

[Sandisw]

I was making a little joke... Protein Spill, Code V or AFR. are all safety and/or maintenance related to bodily fluids

Hahahahaha! That was funny!

 

[Tink10]

Hahahahaha! That was funny!

Sorry...I need humor right now

 

[4evryoung]

In all my trips, I have never been at any resort that had pools or other amenities closed that wasn’t because of safety or maintenance,

Can you expand on when it happened to you?

It happens all the time when they are "renovating" and closures can last for months. So clearly DVC can have resorts that are open but do not have working pools. They often offer an alternate pool, but there is nothing to say that they can't close the feature pools at Boardwalk, Yacht Club, Beach Club and others and just make a pool at Saratoga Springs available to guests.

 

[Sandisw]

It happens all the time when they are "renovating" and closures can last for months. So clearly DVC can have resorts that are open but do not have working pools. They often offer an alternate pool, but there is nothing to say that they can't close the feature pools at Boardwalk, Yacht Club, Beach Club and others and just make a pool at Saratoga Springs available to guests.

The point was the closures are always tied to safety or renovations, They can not remove access to pools permanently....which are considered common elements... that were part of the initial construction of the DVC resort without a vote from members,

Changes to the POS that are considered material can not be taken away like that, FL timeshare law has pretty strong language on what can and can not be added, modified, or removed without association owners approval,

So, the pool for the BCV villas could not be just closed, and owners told they have to go to SSR. It was built in the initial phase and thus, part of the ownership,

Now, they can open resorts and keep pools closed during this if they have health officials or government officials saying opening them is unsafe, whether due to the pool itself, or because it cant meet guidelines for social distancing,

But, no, DVD can not simply take away the common elements whe it is a material change to ownership.