Morgan Stanley Forecasts Small Sales Growth in '09

Financial News & Pricing

A January 2009 report issued by Morgan Stanley Research North America forecasts 2009 sales for Disney Vacation Club and reveals some interesting facts regarding 2008 sales and the percenage of contracts typically financed through Disney.


The 28-page report covers all of the The Walt Disney Company but a small passage specifically addresses Disney Vacation Club's role and expected revenue growth:

A swing factor to FY2009 parks growth will be Disney Vacation Club. There is a significant amount of new inventory available in FY2009 however it is uncertain how the macroeconomy may affect sales. DIS recognizes vacation club revenue on a percentage of completion basis for units that have been sold. DIS has historically financed approximately 75% of vacation club sales and then securitized the notes. A pullback in financing by DIS could hurt sales, although the company has not commented on any changes in financing terms. Alternatively, DIS could finance the sales but be forced to hold the notes on its balance sheet which would tie up capital. We have forecasted a small increase in vacation club for FY2009 vs. an estimated 18% growth in FY2008. 

As noted above, Disney finances about 75% of all purchases and changes in their lending practices resulting from the current credit crisis could negatively impact sales.  Lower credit approval figures would lower sales volumes.  

According to the Morgan Stanley report, Disney Vacation Club sales grew by 18% in 2008 and they project a somewhat lower increase for 2009.

DVC recently raised prices 8% for points at Disney's Animal Kingdom Villas.  2009 will also see continued sales for the Bay Lake Tower at Disney's Contemporary Resort, the start of sales at the Disneyland-based Grand Californian Hotel and additional points at Disney's Saratoga Springs Resort & Spa courtesy of 60 new Treehouse Villas.