Jim Lewis Fired from WDWCo

[dianeschlicht]

Here's hoping the new management can turn DVC around and again make it the premier timeshare operation it once was

We can only hope!

 

[nytimez]

Here's hoping the new management can turn DVC around and again make it the premier timeshare operation it once was

If the reports are true, the firing had nothing to do with the direction/tone/approach/maintenance anything else -- just a big-time screwup that's costing the company money.

So... I wouldn't expect anything to change on the surface for most of us.

 

[hakepb]

The contract also outlines how much they can legally raise those dues in a year. I think (but am not sure) it's around 15% per year. Other posters can correct me if that figure is wrong.

I doubt the difference will be double...MAYBE $1 a point more (so 25% difference-ish).

What DVC can do is raise those paying the higher rate of dues 2 to 4% per year (the normal increase), and YOURS the full 15%, until they hit equilibrium. Or, rather, make you pay more of the difference (lowering the credit they provide) between your dues and the "corrected" dues.

IF they're going to offer a "two tier" system, I'm pretty sure it's in their rights to do so, in order to close that gap, and unify the system.

Can a timeshare legally increase one members dues at a higher percentage than another member?
Ie your legally defined unit had a fire, so your dues are going up 15% but your next door neighbor only goes up 4%? I think all members share all costs.
I think VB works because every unit pays the same dues, its just the subsidized dues are billed to DVD and the member.

 

[mjc2003]

$1 per point can be a pretty hefty difference. Doing some VERY rough math, it looks like each 2 BR equivalent unit has AROUND 23,347 points into it (that's roughing out view, etc...so it's a REALLY rough estimate). Now, using the Aulani stated # of 2 BR equivalents (481), that would mean a difference in dues revenue (assuming sell out) of roughly $11,229,907 per year.

Eleven million dollars a year seems pretty hefty.

And that doesn't even take into account the hurdles (and ill will) they now have to deal with concerning the Hawaiian government.

I certainly appreciate how a dues shortfall would accumulate and quickly become a problem for DVC, that's kind of my point.. My question was, didn't he realize this and how was he gaining by it? I guess he thought it would sell faster, but I find this hard to believe. If the dues at Aulani were $1 more per point, I don't think that would kill sales. But then again, who knows what he was shooting for. Maybe he was financially incentivized to sell out in 18 months, or 30 months or whatever.

 

[White_Sox_Fan]

While $1 a point seems inconsequential if you figure a 3% increase per year for 50 years it comes to an additional $22,560.00 in dues over that time on a 200 point contract.

 

[jennypenny]

I know people who have been fired by Disney and given no severance. Not hourly employees, either.

Wow. The mouse is meaner than I thought.

I still wonder why all 3 were fired on the same day. I guess that's why I'm wondering if the issue is more than Hawaii. What would a DCL exec have to do with that? And if they aren't related, why would Disney fire them the same day? And so publicly?

Curiouser and curiouser...

 

[hakepb]

I certainly appreciate how a dues shortfall would accumulate and quickly become a problem for DVC, that's kind of my point.. My question was, didn't he realize this and how was he gaining by it? I guess he thought it would sell faster, but I find this hard to believe. If the dues at Aulani were $1 more per point, I don't think that would kill sales. But then again, who knows what he was shooting for. Maybe he was financially incentivized to sell out in 18 months, or 30 months or whatever.

That $11mil / year might mean a $220 mil 50 year annuity for the subsidy. Was Jim and other execs planning on getting a great BLT sell-out bonus this year, knowing that annuity was going to kill DVC profitability next year?

 

[pilferk]

Can a timeshare legally increase one members dues at a higher percentage than another member?
Ie your legally defined unit had a fire, so your dues are going up 15% but your next door neighbor only goes up 4%? I think all members share all costs.
I think VB works because every unit pays the same dues, its just the subsidized dues are billed to DVD and the member.

Again, if you create 2 separate sub groups of dues payers, you can treat them differently (since, technically, they're going to have signed different contracts).

You couldn't treat two owners, in the same group, differently. But you CAN treat the two groups/contracts differently. I'm not saying Disney will..only that they COULD.

They could also trash the old contracts and start over with new paperwork (stating the credit amount and duration) OR have all current owners sign a contract addendum (or receive a full refund of purchase price and dues paid to this point) in order to get everyone under the same terms LONG term.

The method at Aulani sounds slightly different than the one at VB (though maybe it's just semantics in the article). If DVC is issuing a credit for dues...THEY are not being billed. The owner is billed for the full amount of dues, and DVC issues a credit to cover the shortfall between THEIR contracted dues price and whatever the NEW contracted dues price is. Again, in practice, though, they may adopt the VB method and it could just be the way the article is explaining it.

VB is slightly different in the hows and whys, though, too.

 

[pilferk]

I certainly appreciate how a dues shortfall would accumulate and quickly become a problem for DVC, that's kind of my point.. My question was, didn't he realize this and how was he gaining by it? I guess he thought it would sell faster, but I find this hard to believe. If the dues at Aulani were $1 more per point, I don't think that would kill sales. But then again, who knows what he was shooting for. Maybe he was financially incentivized to sell out in 18 months, or 30 months or whatever.

The difference between $690 in annual dues (assuming a 160 pt contract) and $850 in annual dues (or about 8,000 + differences in increases over 50 years) is, I think, a substantial one....especially psychologically during the sales process. That's 57.50 vs 70.83 per month.

He may NOT have thought it would sell faster. It COULD have been an accounting mistake that he then tried to cover up and sweep under the rug.
Or, he thought it would make enough of a difference (especially considering DVC members are going to be on the hook for resort taxes when staying there AND parking) to spur sales. We won't know til more info comes out.

 

[Breyean]

They could also trash the old contracts and start over with new paperwork (stating the credit amount and duration) OR have all current owners sign a contract addendum (or receive a full refund of purchase price and dues paid to this point) in order to get everyone under the same terms LONG term.

This is what I keep coming back to. I expect my Guide to call any time and say something like, "We had a slight change in your Aulani contract so we're sending you a new one. Just sign it and return it. No big deal. Thanks."

In my case, and I bet a bunch of us earlier Aulani buyers, I used the points already. Haven't yet taken the vacation, of course, but I couldn't take it w/o the Aulani points.

So would we have any option other than just accepting whatever changes Disney makes in the contract and agreeing to the new terms?

 

[pilferk]

This is what I keep coming back to. I expect my Guide to call any time and say something like, "We had a slight change in your Aulani contract so we're sending you a new one. Just sign it and return it. No big deal. Thanks."

In my case, and I bet a bunch of us earlier Aulani buyers, I used the points already. Haven't yet taken the vacation, of course, but I couldn't take it w/o the Aulani points.

So would we have any option other than just accepting whatever changes Disney makes in the contract and agreeing to the new terms?

IF they chose to go that route (and it might be a slippery one), yes. You could likely opt out of the contract, get a full refund of the purchase price and whatever you've paid, thus far, for dues. BUT, you'd have to relinquish your points....and you'd be no better off because to "rebuy", you're going in at the new dues rate.

You could TRY to negotiate...but I doubt you'd have much luck getting anything other than the terms offered in the addendum. Maybe they'd throw in some token thing (like they did with OKW folks that didn't want to extend but had to pay a notary) to sweeten the pot...but likely they would do that for everyone and not on a case by case basis.

Short answer: If you WANT the points and the terms are acceptable to you, sign the addendum. If the terms aren't acceptable, tell Disney you want your money back because you feel they've violated the original contract and the terms of the addendum are not acceptable to you. I don't recall anything in our POS or contract that says they have the right to modify the contract without consent in relation to stuff like this...but I haven't seen an Aulani contract to say for sure it's NOT different (I'd be shocked if it is).

Again, all this ASSUMING Disney went that route.

They could, just as easily (and probably in a much more CS friendly manner), maintain the current contract, raise your dues the same amount as everyone else (2% - 4% per year) who buys in going forward, and give you a dues credit in perpetuity to cover the shortfall.

You just don't know until it all shakes out.

 

[paulh]

If the reports are true, the firing had nothing to do with the direction/tone/approach/maintenance anything else -- just a big-time screwup that's costing the company money.

So... I wouldn't expect anything to change on the surface for most of us.

cut the head off and the body stays the same
Paul

 

[tjkraz]

Can a timeshare legally increase one members dues at a higher percentage than another member?
Ie your legally defined unit had a fire, so your dues are going up 15% but your next door neighbor only goes up 4%? I think all members share all costs.
I think VB works because every unit pays the same dues, its just the subsidized dues are billed to DVD and the member.

Aulani would work the same way...same dues for all but a select group would see their final number reduced a bit due to a subsidy from the developer.

I could see this going several ways:

1. Perpetual subsidy based upon difference between $4.31 and re-calculated dues. If the final number for 2011 is $5.00, the early buyers would get a $.69 subsidy (perhaps inflation adjusted) from now until 2062.

2. Subsidy that is gradually reduced. Not sure how legal that would be but Disney could try to float it past members, hoping nobody would challenge.

3. Some sort of one-time payout to compensate for misinformation provided during sales process. This would be the best way to sort of sweep it under the rug and have the entire debacle forgotten in a few years.

Of course, all buyers would also have grounds to terminate the agreement if they chose to do so. But they'd have to pursue this quite soon, not use any of the points, etc.

Will be very interesting to see how Disney approaches this. If they contact members and give them options (including selling-back the points) or just decide on one approach and apply to all.

I still wonder why all 3 were fired on the same day. I guess that's why I'm wondering if the issue is more than Hawaii. What would a DCL exec have to do with that? And if they aren't related, why would Disney fire them the same day? And so publicly?

The Sentinel has Jim Heaney's title as "senior vice president and chief financial officer of Disney Cruise Line and travel operations". I've been lead to believe that DVC fell under his umbrella--probably the "travel operations" part.

As for why Disney would do this "so publicly", they didn't do it publicly. There's simply no quiet way of firing 3 high level execs at a company that employs 60,000 in one metropolitan area. Disney did it as quietly as they could. First reports were from other employees who got wind of the terminations and then it leaked to the media.

I certainly appreciate how a dues shortfall would accumulate and quickly become a problem for DVC, that's kind of my point.. My question was, didn't he realize this and how was he gaining by it? I guess he thought it would sell faster, but I find this hard to believe. If the dues at Aulani were $1 more per point, I don't think that would kill sales.

Hard to judge since we're just speculating about numbers. Final variance could be $.50 per point, $1, $2, etc.

Regardless, as I said in another post I think a key to Aulani's success was going to be selling it as "a way to get into the system." With BLT dues at $3.89 and VGC at $4.07, I would expect Grand Floridan to be in the same neighborhood. Having Aulani at $4.31 already makes it something of a tough sell.

Put it this way: If Grand Floridian has dues in the $4 - 4.50 neighborhood and Aulani ends up at $5 - 5.50, Aulani is going to be a REALLY tough sell. Perceptions can be altered by charging less up-front for the Aulani points, but that also impacts the profitability of the project. Disney spent $120 million on the land alone--an expense that's pretty much absent for any of its theme park resorts.

I don't think this bodes well for a future DVC in National Harbor.

 

[ppiew]

Good Luck to Karl Holz. DVC is VERY fortunate to have a man of his caliber ready and "ABLE to take the reins of this mess! No better choice could have been made.

 

[jennypenny]

The Sentinel has Jim Heaney's title as "senior vice president and chief financial officer of Disney Cruise Line and travel operations". I've been lead to believe that DVC fell under his umbrella--probably the "travel operations" part.

Didn't know that. Still a tough firing if JL is really to blame here.

Regardless, as I said in another post I think a key to Aulani's success was going to be selling it as "a way to get into the system." With BLT dues at $3.89 and VGC at $4.07, I would expect Grand Floridan to be in the same neighborhood. Having Aulani at $4.31 already makes it something of a tough sell.

It's hard not to wonder now if those dues are artificially low.

 

[tjkraz]

Didn't know that. Still a tough firing if JL is really to blame here.

We can only assume that each played some role in the current situation. Disney doesn't have a track record of frequently terminating senior VPs without severance.

It's hard not to wonder now if those dues are artificially low.

Budgets are reviewed by an external auditor so I suspect those two are reasonably safe. In fact, it could have been this audit process which revealed the inconsistencies with Aulani.

The low dues at BLT and VGC are a function of the higher point charts. Most nights cost 15-25% more points than other resorts like BCV or BWV. More points means each point incurs a smaller share of the dues liability.

That said, some of the furnishings at BLT represent an ongoing issue and may require changes sooner than anticipated. Still, a single Two Bedroom villa at BLT represents about 19,000 points. Even if they have to replace every stick of furniture, the cost could be spread over several years (via reserves) and the per-point charge would not be all that noticeable.

 

[been2marceline]

Even if the current owners were granted, in perpetuity, a credit that would make their original dues equal to the amount on the contract, that credit has to be funded from somewhere.

Is DVC going to run Aulani with a minimized, yet still negative budget?

Doubtful - why run the resort if its not going to make money?

Are they going to have the later owners subsidized the credit by increasing the dues to cover the anticipated cost plus the original owners credits?

Doubtful and possibly illegal.

With this knowledge of the dues problems - I wouldn't buy it period.

This is going to be ugly....

 

[tjkraz]

Even if the current owners were granted, in perpetuity, a credit that would make their original dues equal to the amount on the contract, that credit has to be funded from somewhere.

Is DVC going to run Aulani with a minimized, yet still negative budget?

Doubtful - why run the resort if its not going to make money?

Are they going to have the later owners subsidized the credit by increasing the dues to cover the anticipated cost plus the original owners credits?

Doubtful and possibly illegal.

With this knowledge of the dues problems - I wouldn't buy it period.

This is going to be ugly....

Similar situation occurred with Vero beach and Disney has been subsidizing dues for over 15 years. In that case, Disney intended on building the resort much larger but later scaled back its plans due to lack of demand. The subsidy is representative of the reduction in scale from the original project plan communicated to early buyers. As of 2011, the Vero subsidy is at $1.47 per point.

As for the finances, Disney receives a fee for operating the DVC program. The fee is equal to 12% of most budgeted annual expenses. DVC can cover the subsidy out of their portion of those recurring revenues. There are only a few thousand people who will get the subsidy.

This situation is definitely a black mark on the entire DVC program but I don't view it as any impending signs of disaster for Aulani owners.

 

[mjstaceyuofm]

If the reports are true, the firing had nothing to do with the direction/tone/approach/maintenance anything else -- just a big-time screwup that's costing the company money.

So... I wouldn't expect anything to change on the surface for most of us.

I have some hope. Usually with a shake-up like this, the new guy (figurative term in the case of Ms. Bilby) wants to come in and put their stamp on things. Aside from her and Mr. Holz fixing this dues thing, the quickest way for her to put a positive spin on this thing with existing members is to do some quick-fix things at the resorts like cleanliness, better front-line cast members, timely check-ins, etc. It may take a while to achieve all the pie in the sky things our collective Disboards DVC fandom has thrown out there for her to consider, but the aforementioned items are easily achievable and should be right up there with fixing this dues issue.

Honestly, there's some damage control that needs to be done and aside from rectifying the dues issue, I think she needs to work expeditiously to earn some goodwill and grace from the members.

Also, Jim Lewis et al may have been fired over this dues flap, but my experience in situations like this tells me Mr. Holz and other Disney execs at his level will want everything that was under Mr. Lewis to be reviewed to make sure there are no other skeletons in the closet. They may see a pattern of practices that aren't Disney quality that the new regime will want to get right with members.

There are some that seem to think we are getting a better DVC leader in Ms. Bilby than JL ever was. Hopefully that translates into some of the things we've been clamoring for as DVCers recently...

 

[Sammie]

It should be interesting to see how this all shakes out. Now hearing all this it makes me wonder even more about the OKW rehab. There should have been sufficient funds in the reserve to do a full remodel, and yet they did it on the cheap by refinishing furniture as opposed to replacing it, and left hard surfaces in place, etc. Wonder what more happened under Mr. Lewis' regime.

And the fact he insisted that BLT use the cheaper furnishings even though the committee to pick them recommended not to. Have to wonder if that money went somewhere else.

I have felt for some time that money that was suppose to be going to housekeeping and maintenance was not being used properly.