How COVID-19 Is Impacting Disney Vacation Club (And All Timeshare) Owners

The current crisis surround COVID-19 has hit businesses and individuals across the world.  While it might be hard to make a concrete argument about which industry is hurt most by the novel coronavirus, it’s fair to say that there aren’t many at all affected in the unique way the travel industry is.  Massive infrastructure such as airplanes and hotels sell a time and a place.  If an airplane sits empty today, it can’t sell twice as many total “seat miles” tomorrow.  Same with hotel rooms.  Today I wanted to spend some time looking at the timeshare space, specifically Disney Vacation Club.  If you’re interested in other COVID-19 articles I’ve written, you’ll find a sampling of those below:

• Another Big Move: Hyatt Extending Elite Status And Award Certificates
• SPECIAL GUEST: Hear Nomadic Matt Talk About His Experience Testing Positive For COVID-19
• Airbnb Taking a Beating During Coronavirus Pandemic
• Big Move: Hilton Extending Elite Status And Adds Flexibility to All Reservations
• United Airlines Is Flying 84% of Their Seats Empty Today
• Should You Travel During the Coronavirus Crisis?
• Marriott Furloughs Two-Thirds of Their Corporate Employees
• How Many Airlines Have Stopped Flying Completely in the Coronavirus Crisis?
• Will Disney Have Special Discounts When Their Parks Reopen?

I think everyone is familiar enough with timeshares as a general concept.  Individuals buy a small portion of property (their share) for future vacations.  They come in many shapes and sizes.  Disney Vacation Club (DVC) offers points-based program, as opposed to traditional timeshares where you generally own a specific week at a specific property.  Owners of a Disney Vacation Club property generally have a certain number of “points” allotted each year as opposed to a week.  Those points can be exchanged for a day or a week (or longer) in a studio, 1-bedroom, 2-bedroom or 3-bedroom villa.  Each property has a maximum number of points available to book all the rooms on all available dates.  In the interest of full disclosure, I am a DVC owner.  I own a chunk of points at Bay Lake Tower at Disney’s Contemporary Resort, right alongside the Magic Kingdom.

The DVC COVID-19 Problem

Like many hotels around the world, DVC resorts in Florida are currently closed.  And, this is where the problem lies.  Disney Vacation Club isn’t worried about selling rooms at a DVC property next week or next month, per se.  They want to sell points that they haven’t sold yet at new resorts like Riviera Resort.  But, in a property where they’ve already sold all the points, it’s the owners of those points that currently feel like a cat in a room full of rocking chairs.  As my friend Cliff pointed out, this article by DVCNews.com lays out the problem. The short version, in bullet points:

• Every day a DVC resort is closed, there’s a certain number of rooms that can’t be occupied by owners.
• As each day of closure goes by, owners have more and more points available.
• With the current closure dates, DVC owners will have significantly more points to redeem than there are rooms available before their points expire.
• Because these are timeshare properties, DVC owners continue to have dues/maintenance fees they are responsible for, even if they can’t use their points.

Potential Solutions For DVC Owners

Tim, the author of the article, makes some solid points about ways Disney could solve this problem.  They have other resorts that they could open up space at to help spread out some points.  And, Disney could also let DVC owners redeem points to stay at Disney hotels.  As the author points out, Disney has some unique ways to solve this problem that other timeshare developers may not have at their disposal.

To understand how to solve the problem, Disney needs to know how big the problem is.  They certainly have the math on how many points go unused each year and how many points are unsold at certain properties.  There’s also a good chance that Disney will have availability at some of their hotels when the current crisis resolves enough to allow leisure travel (and for the theme parks to reopen).

What Disney Should Do To Solve The DVC COVID-19 Problem

As a property owner at DVC, I’d sure love it if they’d just let everyone’s points roll forward forever with no expiration date.  I’d also like a pony for Christmas.  And, a Gulfstream with a healthy amount of prepaid fuel. In reality, I don’t think Disney should do anything, at least for quite some time.  There are some factors that still need to work themselves out:

• There will be a higher rate of foreclosures/sales of DVC timeshares in the months to come than normal.  People who have borrowed money to pay a loan on DVC points may default.  They may also try to sell for low prices if they can’t cover their maintenance fees.  In rare cases, they may try to convince Disney to take back the points.
• Disney has inventory at a number of resorts. The last time I looked at purchasing more points, I believe DVC was selling at most resorts, including Animal Kingdom, Bay Lake Towers and Saratoga Springs.  Disney is active on the resale market, buying up old contracts so they can resell them.  Nobody is buying a timeshare right now, so that inventory could be added to the existing capacity in places like Riviera and Aulani to help out members.  That would come at little cost to Disney.
• Some folks won’t have the money to take vacations due to loss of income or will be scared to travel.  Many DVC owners are diehard Disney fans, but the wallet can only afford what’s actually in the wallet.  And, folks with underlying health conditions may be unable to travel for quite some time.

When I say Disney should do nothing now, I really mean nothing.  It was suggested in the article that Disney could restrict borrowing points.  Owners are allowed to “borrow” points from a future year into the current year.  Allowing members to do this would exacerbate the current issue.  But, I don’t think now is the time for Disney to step in and restrict some members to potentially help others.

The Final Two Pennies

The 50th anniversary of Disney World is coming up next year.  That will create more demand than normal at Disney World, though nobody knows what the new normal will be in 2020.  It’s important to remember that Disney really has no obligation to help DVC owners.  We purchased our timeshares knowing these risks existed.  Sure, most of us couldn’t envision something this catastrophic.  That doesn’t mean Disney pulled the wool over our ours, nor does it mean they “owe” us something.

Disney is in a unique situation, in more ways than one.  They’re hemorrhaging cash on theme parks that are shuttered.  They have thousands of empty hotel rooms.  And, they’ve had to delay movie debuts because theaters are closed. The financial impact on Disney will be tremendous and there hasn’t been a bailout for them weave it’s way through Congress just yet, nor have I heard much about a Disney bailout (I mean, the airlines got one).

Disney is also uniquely situated with a reputation and the resources to help DVC owners in a way that really no other timeshare developer in the world can.  Just because they can help doesn’t mean they should.

How Do You Think Disney Should Help DVC Owners?

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