Disney re-starts some Aulani time-share sales after Hawaii approves 33 percent fee increase

The Walt Disney Co.

The Walt Disney Co. has been given permission to raise its fees by 33 percent for those who buy time-shares at its new, US$850 million resort in Hawaii, as the company attempts to fix a financial error that cost 3 Central Florida executives their jobs.

The approval, granted Thursday by Hawaiian state regulators, clears the way for Disney to resume time-share sales at Aulani, a massive hotel and time share that opened August 29 west of Honolulu on the island of Oahu.

“We have resumed closing sales for Aulani in Hawaii and hope to follow suit in our other sales locations shortly,” said Rena Langley, a spokeswoman for Disney Vacation Club, the company’s Celebration-based, time-share arm.

Disney must now submit updated consumer-disclosure materials to regulators and other states. The company will begin with Florida, California, New York, and Illinois, its most-important sales markets.

Disney suspended Aulani time-share sales on July 9 after an internal investigation found that executives had underestimated the annual dues it needed to charge time-share buyers to cover the resort’s operating expenses. The discovery sparked concerns within Disney that Aulani would eventually face an operating loss or would have to jack up its dues in later years, potentially alienating customers.

Disney said the error was the result of an unintentional miscalculation. Still, the company fired three people over the mistake: Jim Lewis, the former president of Disney Vacation Club, and 2 finance executives who had previously worked in the time-share unit.

Documents approved Thursday by Hawaii revealed for the first time the magnitude of the error. Disney initially set dues at US$4.31 for every time-share “point” purchased by a customer. (Disney Vacation Club sells points that can be redeemed at various times of the year and at different destinations, rather than specific units and time intervals.)

Now, however, Disney will charge US$5.73 per point โ€” a 33 percent increase.

The increase works out to about US$180 more per year for someone who buys just enough points to spend a week in a studio unit at Aulani during the slowest time of the year. It would add almost US$850 more a year for someone who buys enough points for a week in a 2-bedroom, ocean-view room during the busiest parts of the year.

Disney won’t say how many buyers have already purchased points in Aulani, which first went on sale in July 2010. The company says those buyers will get an annual credit towards their dues to account for the new price discrepancy. The resort will have 481 time-share villas and 359 hotel rooms.

Aulani is a hugely important project for Walt Disney Parks and Resorts and the division’s hopes for future growth in North America. If it is successful, the company hopes to build more such standalone resorts or smaller, niche theme parks in secondary markets away from its world-famous, multi-park resorts in Central Florida and Southern California.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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