Originally Posted By TP2000 So... A few other boards and the Orlando Sentinel are reporting that DVC President, Jim Lewis, was outright fired from his post this past Friday. Not only that, but that Aulani DVC sales have been suspended indefinitely. The strong rumor is that DVC didn't secure the proper permits and government approval from the state of Hawaii to be operating and selling timeshares. The short term answer to that problem is that all DVC sales, and all mention of DVC sales, has been suspended immediately. It's also the reason why Jim Lewis was simply let go on Friday, without so much as the obligatory "to spend more time with his family" memo like other deposed and disgraced Disney execs have received (See: Cynthia Harris and her infamous and instant "to spend time with family" departure in October, 2003). Aulani opens in barely two weeks. And now they can't sell DVC timeshares there? What happens to the people who already bought their DVC timeshare at Aulani? Will Hawaii allow them to occupy this facilty this year? Will Disney pay a fine? Be in legal trouble? Be allowed to relaunch Aulani DVC sales at some point in the future? This appears to be a monument goof up on the scale of Light Magic and Disney's California Adventure. How on earth can you not get the permits taken care of? As for me, I have to chuckle. I went on a DVC tour last year at the Grand Californian. And even though they tripped over themselves to avoid saying the word "timeshare", and they did that cheesy Disney-MAGICAL!-Dreams-Enchantment shtick, I still got the same smarmy and slightly icky feeling I've gotten from other timeshare pitches and/or sleazy car salesmen. I passed on the "opportunity" to buy a timeshare with DVC, and I doubt I will ever reconsider. But what happens to Aulani? Does it revert to being entirely a hotel property now?
Originally Posted By TP2000 Here's the Sentinel article with the brief statement from Disney. <a href="http://articles.orlandosentinel.com/2011-08-13/the-daily-disney/os-disney-vacatuion-club-executive-ou20110813_1_disney-vacation-club-resorts-chairman-tom-staggs-parks-and-resorts-business" target="_blank">http://articles.orlandosentine...business</a>
Originally Posted By leemac We heard nothing about this so I'm guessing it was a sudden and shift move. I gather he was told, had his security pass and company car keys removed then escorted from the building - literally dumped on the sidewalk. Lewis was untouchable under Weiss - he protected all of those guys despite the fact that they were woefully awful executives. I've no idea if there is any truth in the permits issue - that would be a momumental PR disaster if it is true - but if so then he needed to go. Sales have been very soft for Aulani - the problem is that WDP&R can't afford for the resort to underperform - the entire outside-the-berm strategy is built on Aulani's business case being executed correctly. God help us all if it does tank.
Originally Posted By Bolna I had seen reports in recent weeks that Aulani was no longer being sold by DVC. There even seem to have been people who signed up for Aulani, but when they received the final paperwork to sign it was for AKV. So it seems like this issue had been known for at least a little while before they made the decision to let Lewis go. I guess the big question will be who will be the new person to take over.
Originally Posted By Bolna <<the problem is that WDP&R can't afford for the resort to underperform - the entire outside-the-berm strategy is built on Aulani's business case being executed correctly>> Lee, what exactly is the "outside-the-berm-strategy"? I understand that Aulani is a huge project, but your post makes it sound that it is a starting point for more resorts like it?
Originally Posted By TP2000 There's already two other DVC resorts outside of the "berm"; in Hilton Head, South Carolina and in Vero Beach, Florida. Hilton Head DVC opened in 1996, and Vero Beach DVC opened in 1995. This Aulani concept isn't new or unusual as far as DVC and hotel rooms outside the berm are concerned. Although it's interesting that Disney is trying to spin it this way. Most likely this fabricated spin is part of Burbank's Politically Correct move to pacify the growing Hawaii independence and secession movement by falling all over themselves to "honor the culture" and try to minimize the honest underlying image of a big mainland corporate culture strip-mining the islands for profit to pulpy white suburbanites from Seattle and Salt Lake. That said, something has gone very wrong with Aulani in the final weeks before opening, obviously.
Originally Posted By Bolna <<Most likely this fabricated spin is part of Burbank's Politically Correct move to pacify the growing Hawaii independence and secession movement by falling all over themselves to "honor the culture" and try to minimize the honest underlying image of a big mainland corporate culture strip-mining the islands for profit to pulpy white suburbanites from Seattle and Salt Lake. >> Well, if you want to appear to honor the culture it would help to get the necessary permits as well...
Originally Posted By leemac <<This Aulani concept isn't new or unusual as far as DVC and hotel rooms outside the berm are concerned. Although it's interesting that Disney is trying to spin it this way.>> Strictly you are entirely right - however there is something very different about building a five star resort in a standalone location rather than two small DVC mid-tier hotels that are both driving distance from the World. Everything is riding on Aulani's performance - DC and the White Mountains projects are depending on the success of Hawaii. This has the potential to be a game-changer for WDP&R.
Originally Posted By RoadTrip Is there really that big a down side? I would think Disney could operate it quite profitably as a standard hotel even if they couldn't sell it as a DVC. Obviously, it would not return their investment as quickly as if it were DVC. On the other hand, wouldn't income over the long term be higher? I obviously have no knowledge of details on this, but it seems to me Disney operated hotels quite profitably for years before DVC came along. Given the current economy, it's not a great time to be selling high-end real estate.
Originally Posted By TP2000 Looking over the amenities and vibe of Aulani, I definitely do not get the Five Star image. It's attractive looking, and aimed squarely at the family market, and I could maybe give it four stars, although when using an international point of reference it's really 3.5 stars. But five stars? No way. Not now, likely not ever. It's got two restaurants, a pool snack bar and one cocktail lounge. One restaurant is the usual and very predictable "upscale" place, and the other is a family buffet. You won't get locals driving out to Ko Olina to dine at the upscale restaurant with the tourists, and that says it all. It'll have the usual Disney four-star "deluxe" service from CM's not trained all that well and who have been told a cheesy smile and proper nametag placement is more important that actually knowing how to anticipate and deliver service to a guest before he even knows he wants it. Try this: Check in and spend one day at the Grand Californian and experience their service. Then drive 30 minutes south and check in and spend one day at The Montage in Laguna Beach (let alone Pelican Hill or the Laguna Ritz), and experience the level of polish and profesionalims you get there for the same price, with a view of the ocean instead of a ferris wheel or working class slums with a police helicopter hovering overhead. I can be generous and say Aulani is four stars, just because it's new and it's MAGICAL!. But five stars? Disney doesn't even know where to find the fifth star at any of its properties, let alone actually deliver on such a claim. ;-)
Originally Posted By SuperDry <<< I can be generous and say Aulani is four stars, just because it's new and it's MAGICAL!. But five stars? Disney doesn't even know where to find the fifth star at any of its properties, let alone actually deliver on such a claim. ;-) >>> And, the only 4-star property they had at WDW, they purposefully let slide to 3 stars in order to save money once they realized that guests would come anyway.
Originally Posted By SuperDry <<< Is there really that big a down side? I would think Disney could operate it quite profitably as a standard hotel even if they couldn't sell it as a DVC. Obviously, it would not return their investment as quickly as if it were DVC. On the other hand, wouldn't income over the long term be higher? I obviously have no knowledge of details on this, but it seems to me Disney operated hotels quite profitably for years before DVC came along. Given the current economy, it's not a great time to be selling high-end real estate. >>> But Disney has to Increase Shareholder Value regardless of the economy. You've already answered your own question: despite operating the WDW hotels profitably for years, they started to and have never stopped promoting DVC sales. The up-front cash nature of a DVC sale helps the bottom line much more than this year's hotel sales for the same family. To the extent that that family will pay less in future years is not a problem as long as another family can be found to purchase another DVC ownership in future years.
Originally Posted By FerretAfros Isn't that more-or-less the definition of a ponzi scheme? Sounds like a great business model for one of the most high profile arms of a multi-billion dollar multi-national company.
Originally Posted By SuperDry Also, I find it interesting that Aulani was built with only 56% of the units being DVC, with 44% of them being hotel rooms. I know that DVC always has sold unbooked inventory as hotel rooms, but has there been any DVC property built with anywhere near 44% of the rooms dedicated for non-sale hotel rooms? I think this may be a different model than in the past, although the fact that it's stand-alone no doubt has a lot to do with it. <<< Everything is riding on Aulani's performance >>> That being the case, the placement of the Aulani seems to be a bit of a gamble. Nothing has really been that successful over time on Oahu outside of Waikiki. It seems that tourists either a) stick to Waikiki, or once they've outgrown that, b) advance to a neighbor island where all the 4- and 5-star resorts are, as well as almost all of the non-Waikiki moderates, condo rentals, and timeshares are. I'm sure that part of the argument is ease of access: there is non-stop air service to Honolulu from far more places than any of the neighbor islands, plus you can run sales tours with just a shuttle bus from Waikiki and book impromptu tours with a kiosk there. But to plan to fill 44% of the rooms in the long term as regular hotel rooms (plus much more initially until DVC gets sold out) in that location? I'm sure this has been discussed ad nauseum with plenty of PowerPoint decks, expert studies, and so on. I'd sure like to see what their data looked like and to have heard the discussions.
Originally Posted By SuperDry <<< Isn't that more-or-less the definition of a ponzi scheme? Sounds like a great business model for one of the most high profile arms of a multi-billion dollar multi-national company. >>> In a ponzi scheme, it's the purchasers who end up with the short end of the stick once the plan collapses under its own weight. Later purchasers are used to fulfill what was promised to earlier purchasers, which I don't think is the case with DVC. With DVC, the seller, not the buyer, runs the risk of bad things happening to them should the business model rely too heavily on ever-increasing or even just continued level sales should the market at some point not support it. But if that were to happen, that shouldn't be much of a problem for existing owners, as the resorts should more or less be self-supporting with their maintenance fees. So, not quite a ponzi scheme.
Originally Posted By leemac <<Also, I find it interesting that Aulani was built with only 56% of the units being DVC, with 44% of them being hotel rooms. I know that DVC always has sold unbooked inventory as hotel rooms, but has there been any DVC property built with anywhere near 44% of the rooms dedicated for non-sale hotel rooms?>> BoardWalk's split is virtually 50:50 in terms of room number (378 in the Inn and 383 at the Villas). However DVC was an afterthought at BW - it was originally all hotel inventory.
