Disney Vacation Club Registers Timeshare Trust Product

Back in August 2023, Disney Vacation Development registered a not-for-profit corporation by the name of Palmetto Trust Association, Inc in the State of Florida. The Board of Directors of Palmetto Trust Association closely mirrors the current board for Disney Vacation Club, including Senior VP and General Manager Bill Diercksen, Yvonne Chang, Shannon Sakaske and Alison Armor. Also included is Steve Whittington who is listed as Director of the new corporation and holds the title of Director, Strategy and Development for Disney Vacation Club. 

The Articles of Incorporation suggest DVC plans to create a separate Trust product to market Disney Vacation Club points. Other timeshare developers like Wyndham have introduced Trust products in recent years. Trusts can offer some benefits to buyers, while streamlining the sales process for developers--particularly with respect to hard-to-sell destinations. 

Disney's Riviera Resort

Under the current Disney Vacation Club framework, buyers purchase a deeded interest in a specific resort. Owners can make reservations at their Home resort--the location they own--up to 11 months prior to arrival. Other DVC resorts can be booked 7 months in advance, pending availability. Other features like the cost of annual dues and the ending date of the ownership are also tied to this Home location. 

Under a Trust arrangement, points from multiple resorts could be placed in the Trust with buyers given access to utilize all of the underlying accommodations. So what are the benefits of a Trust over the current deeded real estate purchase? We need to stress that this discussion is purely hypothetical as DVC has not released any details regarding a new ownership option.  

That said, some of the advantages to a timeshare Trust could include:

• 11 month booking access to multiple resorts. At a mimum, we would expect DVC to add points to the Trust representing all of its unsold properties. That currently includes Aulani, Disney Vacation Club Villas, Disney's Riviera Resort and The Villas at Disneyland Hotel. And in 2024 the list will expand to include Disney's Polynesian Villas & Bungalows via the new tower currently under construction and The Cabins at Disney's Ft Wilderness Resort. With some number of points from all of those resorts in the Trust, members of the Trust would hypothetically have 11-month booking access to all 5 locations. The list could even expand to other resorts if DVC wishes to add points that it reclaims via Right of First Refusal and foreclosures, or offer owners the option to convert their deeded contracts to the Trust. 

• A Trust product could solve DVC's problem of what to do with Disney's Hilton Head Island Resort and Disney's Vero Beach Resort in 2042. DVC has historically struggled to sell points at resorts away from its theme parks. The two resorts currently represent about 3 million DVC points combined. With resorts like Riviera and Disneyland Hotel often selling at a rate of 50,000 - 75,000 points per month, a slower selling Hilton Head and Vero could take a decade or more to re-sell beginning in 2042 under the current deeded system. While many members enjoy staying at the two resorts, there is limited appeal to owning there. Escalating annual dues and lack of interest in owning these resorts has lead many to speculate that Disney would close or sell-off the properties when their current contracts expire in 2042. However as part of a Trust, nobody would actually be purchasing points tied to these two locations. The resorts would simply join the list of destinations bookable at 11 months, while giving DVC 3 million additional Trust points to market. 

• This could even pave the way for additional non-park destinations. Over the years, DVC has surveyed owners about interest in many popular locations including New York City, Washington D.C., Las Vegas, Lake Tahoe and Colorado ski country. Based upon the performance of Hilton Head, Vero and Aulani--which has now been actively selling for more than 13 years--the odds of Disney building more resorts outside of Disneyland and Walt Disney World seem incredibly remote. But like the Hilton Head and Vero dilemma, what if they can add another non-park location without actually having to sell points tied to that facility? 

• The Trust may also solve DVC's problems with the extended contracts at Disney's Old Key West Resort. Back in 2009 DVC offered Old Key West owners the opportunity to extend their ownership from 2042 to 2057. A large number of owners chose to not take advantage of this offer, meaning that DVC is set to recoup millions of Old Key West points in 2042 which are only valid for another 15 years. In theory, DVC could roll these extended contracts into the Trust in 2042, giving them more Trust points to sell along with the corresponding Old Key West availability. 

Aulani, Disney Vacation Club Villas

• DVC could always sell 50-year participation in the Trust. One of the more confusing elements of buying into DVC is the stated ending date of each contract. A resort like Aulani may be appealing to buyers, but its 2066 expiration date offers owners 12 fewer years of ownership compared to Disneyland Hotel. Trust participation need not be tied to these resort expiration dates. The critical element is maintaining equilibrium between points in the Trust and points sold to owners. If DVC "sells" Trust access equal to 5 million points, it simply must ensure that 5 million points worth of accommodations in that Trust. In theory, the specific resorts could change over time as new resorts are built, Old Key West extended contracts are added in 2042, Aulani expires in 2066 and so on. From a marketing perspective, if someone buys into the Trust in 2024, they gain access until 2074. If they purchase in 2025, they own until 2075. DVC could even offer a shorter ownership span to better suit some families, while adjusting the price accordingly.

From a sales perspective, DVC could market the Trust as 11-month access to multiple resorts and a flat 50 years of ownership, while eliminating the pain of choosing a single Home destination and having their ownership at preferred locations expire as little as 18 years from now. In theory, DVC could even add some number of points for resorts like Disney's Beach Club Villas and Disney's BoardWalk Villas to the Trust, and market the ability to book at 11 months without dwelling on the reality that their status is unknown as of January 31, 2042. 

So what are the drawbacks to a Trust?

• The single biggest issue for owners--perhaps the only issue--is villa availability. Right now, if you own a deeded interest at Riviera, you are only competing with fellow Riviera owners to book at 11 months. It can already be difficult to book the lower-priced Standard View rooms and the Tower Studios, all of which are in limited supply. If a portion of the resort is moved into the Trust, all Trustees would have access to those rooms at 11 months creating even greater competition for this subset of Riviera villas. The same would be true of other high-demand accommodations like standard view at Aulani, garden rooms and grand villas at Disneyland Hotel and so on. Additionally, if DVC decided to add 1% of Beach Club to the Trust by reclaiming points via ROFR, they could market Beach Club as being part of the Trust. But all Trust buyers--perhaps thousands of owners--would only have access to 1% of all Beach Club availability year-round. Simply put, far more owners would have 11 month booking access to a variety of rooms which are already exceedingly popular. 

• We are assuming that DVC would continue to offer both the Trust product and their traditional deeded interest. Could the two competing purchase paths cause confusion among buyers? Maybe, maybe not. DVC could shift its primary focus to the Trust and only pivot to the deeded option if conversations with the buyer take the discussion in that direction. A sales pitch of "you can book all of these resorts at 11 months, others at 7 months and will own for 50 years" is still rather straightforward. Many buyers have little interest in understanding the inner workings of a timeshare system. 

It's worth noting that availability changes for current deeded owners should be minimal. We do not anticipate that DVC could force current owners into the Trust. (Though they could offer current owners an upgrade path if they wish to join the Trust.) Going back to our Beach Club example, if 1% of points are added to the Trust and DVC retains 2%, the remining 97% of all availability will be offered to deeded owners of Disney's Beach Club Villas at 11 months. 

The Villas at Disneyland Hotel

Certainly DVC could offer tangible perks and benefits exclusively for those who agree to join the Trust. Historically, DVC has offered the same perks to all owners who purchased at least 150 points direct, regardless of resort or size of ownership. Even as perks were eliminated from resale buyers back in 2016, legacy owners were grandfathered into those programs. 

Again, it's worth reiterating that all of this information is purely speculative at this stage. When (if?) Disney Vacation Club decides to introduce a Trust product, we have no idea which resorts will participate, if reservations will change from the traditional 11/7 months, what perks and benefits will be included, how long participation will last, the cost to buy-in and so on. There may or may not be an upgrade path offered to current owners, even resale buyers who currently have some limits to when and where they can use their points. 

Disney Vacation Club has not formally announced any plans for this Trust option. We will continue to monitor for any further developments.