Monthly ROFR Data - UPDATED 05/07/2013

[DougEMG]

Seems like OKW is going to continue to be a hard resort to get as a resale.

Thanks for the update.

 

[ELMC]

Looks like they may be running low on points and/or they want to offer OKW as an alliterative for buyers who take issue with the new resort prices.

Bill

I wouldn't be surprised to see the same thing happen with other resorts as well (possibly SSR) until DVD has a lower priced initial offering. VGF certainly won't fit that bill.

 

[Disneybuckeye]

Glad to see they are not buying back VWL contracts. We are doing a small add on that will probabley be sent in for ROFR next week. The use month matched our current ownings and location and was exactly the number of points we wanted. I would be very sad if if was ROFR'd.

 

[Brian Noble]

The easiest explanation for OKW remains the split expiration date problem. DVCMC/DVD would presumably not want to suddenly own a substantial fraction of that resort come 2042.

 

[DenLo]

The easiest explanation for OKW remains the split expiration date problem. DVCMC/DVD would presumably not want to suddenly own a substantial fraction of that resort come 2042.

wdrl is my DH and we are driving to WDW as I type. Here is wdrl's reply.

Brian Noble raises a good point. However it appears DVD will ROFR 2057 deeds as well as 2042 deeds. Another factor that comes into play is price. Until November 2011 the OCC website showed the reacquisition price. DVD was picking up OKW deeds around $45 per point. If people are continuing to sell OKW today at those prices, it doesn't surprise me that DVD is willing to pickup OKW deeds so cheaply.

The master contract number for some of these OKW deeds indicates that the original buyer purchased in the early 90's. Some Members have owned OKW for 15 - 20 years. These members have already recovered their purchase price and they are willing to sell their deeds at an extremely low price.

 

[Brian Noble]

If people are continuing to sell OKW today at those prices, it doesn't surprise me that DVD is willing to pickup OKW deeds so cheaply.

It's not *that* cheap compared to new construction. Within the industry, construction cost is typically less than half of the total sales price. In some cases, it is much less than half. Wyndham, for example, spends 20-25% of the total sales price on construction, with marketing costs in the mid-40% range. You have to pay that sales/marketing cost every time you turn a deed, wether it is from a brand new resort, or a "resale". It's also probably easier to market the new/flashy resorts, *and* they sell for higher prices.

In short, ROFR is not necessarily the "free money" machine that it seems to be. DVC probably spends a little less on marketing and a little more on construction vs. Wyndham, but is not *too* far off that mix---particularly given the fact that DVC's units tend to be smaller *and* there are no land acquisition costs to speak of for WDW resorts. The land was all bought for a song years ago.

(Source for Wyndham's cost breakdown: page 36 of this investor presentation.)

 

[Cruznmore]

In short, ROFR is not necessarily the "free money" machine that it seems to be.

But think about it. The marketing costs are based on the new resorts, not the old ones. They have already sold that contract once (at least) and recouped all of the construction/marketing costs. There may be a commission paid to the guide that resells it (I'm assuming they work on commission) and the loss of MF while they are holding the points, but there are no other costs involved.

It is straight profit. They pick up an OKW contract at $45, the other costs might add $5/point or so, resell it for $100. That is a money maker for them. They are also picking up an additional 15 years of MF for every 2042 contract they pick up and resell.

Seems like a no brainer to me.

 

[Brian Noble]

They have already sold that contract once (at least) and recouped all of the construction/marketing costs.

But to sell the contract again, they have to attract another willing buyer. That doesn't happen by itself---it requires more work, and that work is marketing.

 

[Cruznmore]

But to sell the contract again, they have to attract another willing buyer. That doesn't happen by itself---it requires more work, and that work is marketing.

But they are already doing the marketing for Aulani, AKV, and BLT. There is no marketing around any other resort (GFV soon) in any of the docs I have received. We did get 1 piece of info on SSR in our packet because I specifically asked for it.

Unless someone else has seen something, there is no additional $$s spent on marketing any resorts other than the new ones.

Commission, yes. Major, or even minor marketing push? No.

I think it is the extra 15 years of MF that is driving the OKW pickups.

 

[Brian Noble]

Where do you think these OKW sales are coming from? There are really only two avenues. Neither is free.

The first is current owners who decide they want to add on at OKW. But, current owners are *constantly* marketed to at a low level. For example, Welcome Home Wednesdays. Many people talk about how their Guide "stays in touch." There are also the webinars, the old physical directories, and heck even the DVC website itself is, in part, marketing material. Essentially, any time you see the "THIS PROMOTIONAL MATERIAL IS BEING USED FOR THE PURPOSE OF SOLICITING SALES OF TIMESHARE INTERESTS" disclaimer, that's a marketing cost. No one thing is super expensive, but taken as a whole it's non-trivial, and it's spread over the entire ownership even though only a few people add on in any particular year.

The other avenue is people new to the program, who, for whatever reason, decide to buy at OKW rather than a "new" one. But, DVD spends a lot of money to get those people onto the tour---the ubiquitous kiosks in the parks, resorts, etc. etc. etc. And, if one of those "new owners" buys OKW, that means they are *not* buying the "new" resorts---so the marketing costs really get "charged" to that sale.

It's true that marketing to existing owners is less expensive than new owners---and the Wyndham presentation I linked to above gets into the differential for their system---but it is still not free. Wyndham estimates that for a new owner 58% of the total sales price is consumed by marketing costs. For an existing owner making a second (or subsequent) purchase, marketing drops to about 32% of the total purchase price. That drop comes from two places. One: the existing owner already understands the value proposition, so you don't need to spend the time (money) to explain it. Two: the existing owners tend to spend more per transaction, so the customer acquisition costs are amortized over a larger purchase. But, I'll bet that it is easier (and therefore cheaper) to sell an existing owner on a shiny new resort rather than on an existing resort. Just think back to the days when BLT opened, or even watch the breathless anticipation with which some are viewing VGF to see why this might be so.

Edited to add: however, I do agree with you about one of the driving factors. The 2042/2054 split is problematic for a variety of reasons.

 

[bighoo93]

But they are already doing the marketing for Aulani, AKV, and BLT. There is no marketing around any other resort (GFV soon) in any of the docs I have received. We did get 1 piece of info on SSR in our packet because I specifically asked for it.

Unless someone else has seen something, there is no additional $$s spent on marketing any resorts other than the new ones.

I pretty much agree with this. The larger point that must be understood is that DVC is marketing DVC. The resorts are a component of marketing DVC. For financial reporting and analysis, it makes sense to subtract your total marketing costs from your gross revenue or look at it as a percentage. But I think that is leading people to conclude that marketing "old" resorts have a specific cost associated with them.

Having inventory of "old" resort points on hand just allows them to capture sales to people who are priced out of the new resorts or want to add to their existing points at their home resort, or whatever other reason. These are sales that would otherwise be lost (either to resale or just never made). But DVC was already spending on this marketing. They do not incur marginal marketing costs in order to make that sale. That cost is already sunk, and if the customer is willing to spend $100 for an OKW point but not $150 for a new resort point, then that amounts to "lost" revenue if they don't have those points available for sale. The marketing cost is still spent (I'm not going to factor in cost of ice cream...).

 

[wishicouldgomoreofte]

wdrl is my DH and we are driving to WDW as I type. Here is wdrl's reply.

Brian Noble raises a good point. However it appears DVD will ROFR 2057 deeds as well as 2042 deeds. Another factor that comes into play is price. Until November 2011 the OCC website showed the reacquisition price. DVD was picking up OKW deeds around $45 per point. If people are continuing to sell OKW today at those prices, it doesn't surprise me that DVD is willing to pickup OKW deeds so cheaply.

The master contract number for some of these OKW deeds indicates that the original buyer purchased in the early 90's. Some Members have owned OKW for 15 - 20 years. These members have already recovered their purchase price and they are willing to sell their deeds at an extremely low price.

How does the member contract number indicate the purchase date?

 

[wdrl]

How does the member contract number indicate the purchase date?

DVD issues master contracts in sequential order, so it can give you a feel for when the deed was originally sold. The first OKW contract DVD sold was number Master Contract number 1.000. Today, new OKW master contracts numbers have exceeded 43000.000. When I see a ROFRed deed with a master contract number under 5000.000, I know the member probably bought that deed in the early 1990s.

When I first started tracking ROFR data, I often searched the Orange County Comptroller's database to cross check the information appearing on the warranty deed generated by the ROFR action with the original deed. The more I worked with the OCC database and with DVD deeds and other transactions, it was easy to see patterns on how DVD operates.

 

[saintstickets]

Quite often, Disney will exercise ROFR because they already have a buyer on their wait list. I called last year to purchase a small OKW add-on with an Aug UY and they did not have any points in inventory with that UY. I was told they would take my credit card number and then when something became available, they would make the purchase. I was also told that it probably wouldn't take more than 3 months before something was available. Considering the resale process takes roughly 6 - 8 weeks, it is my guess that sometimes they use ROFR to fulfill that person on the wait list. I did not want to have an open-ended buy order so I did not commit.

 

[dvcterry]

Quite often, Disney will exercise ROFR because they already have a buyer on their wait list. I called last year to purchase a small OKW add-on with an Aug UY and they did not have any points in inventory with that UY. I was told they would take my credit card number and then when something became available, they would make the purchase. I was also told that it probably wouldn't take more than 3 months before something was available. Considering the resale process takes roughly 6 - 8 weeks, it is my guess that sometimes they use ROFR to fulfill that person on the wait list. I did not want to have an open-ended buy order so I did not commit.

I don't know about this. I've been holding my breath on their waitlist for some time for VGC.

 

[Aladdin72]

My wife and I just purchased Direct at SSR for 175 pts with a March UY yesterday. That said, we went and did the tour (mainly for the fast passes), but at the end did exactly what was posted. Left our CC # with the intent if they received a contract we would buy. that was on Thursday 11/8, and we closed yesterday. we looked at several resale locations and the financing options as well for the purchase. The incredible thing was, because we bought and dictated our purchase location and use year we received our current year's(2012) points (and we have 2 weeks to decide to bank or use) and will receive our upcoming year's points obviously. We have a first payment due in Feb, and put down 15% to cover the 7 weeks of dues. Our monthly payment (10yr financing, but our finances will allow us to pay it off in Aug 2013), include the annual dues over 12 months. With us banking the points we essentially received 350 pts for March 2013 use, paid 55/pt, with the full benefits entitled.

This was by far cheaper than the currently listed prices of most regales at SSR for 63+ /pt, with no ROFR issues or anything.

I have to say I am extremely happy with this and will purchase our next round in Nov 2013 at OKW for 200 Pts and same UY. There was no downside to this purchase, you just have to be smart on the time to buy, make your intents known for what you want in terms of pts and UY and they (Disney) will accommodate you.

 

[disneynutz]

My wife and I just purchased Direct at SSR for 175 pts with a March UY yesterday. That said, we went and did the tour (mainly for the fast passes), but at the end did exactly what was posted. Left our CC # with the intent if they received a contract we would buy. that was on Thursday 11/8, and we closed yesterday. we looked at several resale locations and the financing options as well for the purchase. The incredible thing was, because we bought and dictated our purchase location and use year we received our current year's(2012) points (and we have 2 weeks to decide to bank or use) and will receive our upcoming year's points obviously. We have a first payment due in Feb, and put down 15% to cover the 7 weeks of dues. Our monthly payment (10yr financing, but our finances will allow us to pay it off in Aug 2013), include the annual dues over 12 months. With us banking the points we essentially received 350 pts for March 2013 use, paid 55/pt, with the full benefits entitled.

This was by far cheaper than the currently listed prices of most regales at SSR for 63+ /pt, with no ROFR issues or anything.

I have to say I am extremely happy with this and will purchase our next round in Nov 2013 at OKW for 200 Pts and same UY. There was no downside to this purchase, you just have to be smart on the time to buy, make your intents known for what you want in terms of pts and UY and they (Disney) will accommodate you.

I don't want to rain on your parade but you purchased current years points, 2012. They didn't give you anything extra although they tend to make you feel that they do as a sales tactic. They did extend the banking window for you but they have been doing that for anyone as a one time exception.

Did you use the Disney Chase credit card for the interest free financing for 6 months?

Another thought, did you have them break the purchase up into 50 points contracts in case you decide to sell some points later? Smaller contracts sell at a premium price and usually much faster than larger contracts. We just finished selling 8 contracts and the longest time from listing to selling was 3 days.

May I suggest that you use your SSR points to stay at the different resorts and buy your favorite to guarantee your ability to stay where you want. SSR and OKW usually have inventory available at less than 7 months where some of the other resorts don't.

Bill

 

[silmarg]

paid 55/pt

Ugh... I think the buy direct price is $110/pt for SSR

 

[dvcterry]

Ugh... I think the buy direct price is $110/pt for SSR

I thought it was $115. I was talking with my guide today about the different resorts. But don't quote me on it. But yeah $115 is what I was told. Then the prices are due to go up on Dec. 19.

 

[tww369]

I just got the email today! My resale purchase passed ROFR! I'm buying an AKV resale at 100pts per year for $6000, the total cost will be $6900. The wait wasn't nearly as long as my first purchase, submitted on Oct 23rd and passed ROFR on yesterday!