Confirmed:Classic Resorts To Increase to $130/pt. On March 20th

[Sur]

All I think to be true is dramatically shooting yourself in the foot by severely affecting the resale market would not be beneficial.

People need to sell, often over finances. Holding onto a DVC timeshare and not using it decreases the profits from being there at Disney.

The restrictions placed in 2011 doesn't affect the profits obtained through visiting "home". If I were clairvoyant (Claire-like), I'd want to increase traffic at the happiest place on Earth.

 

[WebmasterDoc]

All I think to be true is dramatically shooting yourself in the foot by severely affecting the resale market would not be beneficial.

People need to sell, often over finances. Holding onto a DVC timeshare and not using it decreases the profits from being there at Disney.

The restrictions placed in 2011 doesn't affect the profits obtained through visiting "home". If I were clairvoyant (Claire-like), I'd want to increase traffic at the happiest place on Earth.

I hope you realize that there is no longer anyone named Claire at the top of DVC.

DVD's mission has nothing to do with increasing traffic at the happiest place, the mission is making a huge profit selling timeshares and nothing more - regardless, Claire is not running the show any more.

 

[Sur]

My name is Claire.

 

[dbs1228]

I fail to see how anyone can think resale prices will ever rise. Every year that goes by are 1 less years worth of points to use on a contract that has an end date. Even if the prices stayed the same over the next dew years, the actual dollar amount you are paying per point actually goes up.

I would have thought the same thing except I bought a fully loaded contract in 2010 SSR for 59.00 PP - rented the banked points out immediately for 10.00 PP which was our plan so for us we felt we paid 49.00PP - regardless we used 3 years of points and just sold the contract for 63.00 PP!

Not the norm I am sure but I have seen prices go up and down BWV is another example a year or so ago there were a bunch selling in the mid 50.00's or less now they seem to be low to mid 60's and they are getting harder to get!

 

[lilpooh108]

the FW project likely to be 15 million points, the Poly rework, possibly 5 million points and other on site "rumors" like near HS which would likely be 25 million points.

WHAT???!!! Where are you getting this info from?

 

[lilpooh108]

$102/pt. You need to call guide for waitlist info. It varies by use year.

Thanks. Now I'm deciding between a small VWL or a GFV when it comes out. Hmm...decisions decisions. I really hope there aren't more resale restrictions. I just sold a small BWV and I'm kinda sad about it. If they restrict resales even more I'll be kicking myself for selling.

 

[bookwormde]

WHAT???!!! Where are you getting this info from?

Numbers come from best estimates of number of 2br units based on plans or available space for DVC "style" times the typical number of point that a 2br generate for a full year.

Locations come from "logical rumors" and found plans, while adding some business plan modeling and sales flow analysis.

It is really pretty simple math

 

[Brian Noble]

All I think to be true is dramatically shooting yourself in the foot by severely affecting the resale market would not be beneficial.

But, it turns out that every timeshare developer does this---including, in some small way, DVC. So, either every timeshare developer is just flat out wrong, or it's not such a bad idea after all.

 

[macemc12]

But, it turns out that every timeshare developer does this---including, in some small way, DVC. So, either every timeshare developer is just flat out wrong, or it's not such a bad idea after all.

I know quite a few that have other timeshares and to say they are jealous of our DVC purchase is an understatement. The resale market for our purchase is one of reasons. Other timeshares are worth almost nothing after purchase and was a deciding factor for us for our DVC purchase. I can't see Disney altering resales too much. They have a brand image to protect.

Sent from my iPad using DISBoards

 

[heynowirv]

My name is Claire.

 

[wdrl]

Contracts at the classic resorts prior to SSR (except for OKW extended contracts) expire Jan 31, 2042 so less than 29 years remain on those contracts.

I agree that increasing the price of those resorts to $130 with less than 29 years remaining on the contract doesn't make sense.

But it can make sense if you consider the current rack rates charged by Disney for these villas. At $130 a point, a person buying BWV or BCV can still save money over rack rates, even though it may take about 10-12 years to recover the initial purchase. Since the lease continues for another 17-19 years after the initial costs have been recovered, it can still make sense for a buyer to purchase these resorts.

Keep in mind that for some purchasers the number of years remaining on the leasehold is an insignificant factor. Instead, for some buyers the key variable is their perceived "window of use", which might be only 10 to 15 years in length. I bought BLT and AKV in 2009, and due to my age I know I'll expire before either lease expires. However, I knew when I bought that I could get at least 10-15 years' worth of use out of by deeds. I crunched the financial numbers on buying into the DVC and decided I could come out ahead by becoming a member versus paying cash rates.

There is another way to look at price increases that we, as members, sometimes ignore. Even if DVD doesn't sell a single BWV or BCV point at $130, it doesn't mean those points go to waste. Unsold points controlled by DVD are converted into cash reservations. According to the Disney website, a 7-night cash stay in a one-bedroom villa at BWV from 6/16/2013 to 6/23/2013 will cost $573/night excluding tax. The point cost for that stay is 220 points. Thus, DVD is getting about $18.23 gross revenue on each point. If DVD can get the same revenue for the next 29 years, each BWV point could generate $528 in gross revenue to TWDC.

 

[CarolMN]

....(snip)........There is another way to look at price increases that we, as members, sometimes ignore. Even if DVD doesn't sell a single BWV or BCV point at $130, it doesn't mean those points go to waste. Unsold points controlled by DVD are converted into cash reservations. According to the Disney website, a 7-night cash stay in a one-bedroom villa at BWV from 6/16/2013 to 6/23/2013 will cost $573/night excluding tax. The point cost for that stay is 220 points. Thus, DVD is getting about $18.23 gross revenue on each point. If DVD can get the same revenue for the next 29 years, each BWV point could generate $528 in gross revenue to TWDC.

That's true, but at least in the past few years, it has been difficult to get DVC villas rented without some significant discounts. Of course since the current discounts seem to be decreasing in both percentages and quantity, this is probably a more significant factor going forward than it has been in the recent past.

 

[csharpwv]

The timing doesn't even make sense right now. Consider:

* Grand Floridian is preparing to debut, and will not be available via resale in mass quantities for 18-24 months. Direct sale will be the only real option.

* AKV is now over 90% declared (likely over 88% sold). This webcast may be sufficient to push sales within a stone's throw of "sellout."

* Aulani sales are unspectacular but even in the best of circumstances it was always going to be an 8-10 year project. And resale restrictions won't help Aulani.

* Most importantly, DVC sales are chugging right along. Total point sales for 2012 calendar year were down a bit (8%) over 2011 CY but Disney more than made up for that with higher prices and reduced sales overhead (closing DTD locations, fewer costly incentives like free cruises & APs.)

Right now DVC has no compelling reason to bend more buyers toward direct purchase when:

1) They are still putting up good numbers from the uninformed buyers who don't know about resale.

2) Current members still buy small contract add-ons direct because they are so difficult to find resale. Giving a little nudge like this webcast pricing doesn't hurt, either.

3) Direct purchase will be the only practical way to buy/add Grand Floridian for the next couple of years.

As a member with 4 home resorts, we have purchased two direct, and two via resale. The patter for those purchases was Direct, Resale, Direct, Resale.

Out most recent resale was before the changes/restrictions to resale - we made our offer just before the changes were announced, and closed after the deadline. But since we had passed ROFR before the deadline - we were good to go.

The reason for purchasing the way we have - we wanted out first sale to be direct- we received great promotions (we purchased in the Fall of 2008 when the economy was literally gasping for air). So the promotions gave us better pricing than if we had purchased resale - plus we were able to make a reservation right away. In addition - we LOVED out guide! She was fantastic, no pressure, very helpful - and she still remains to be a great guide!

We purchased a small resale contract at SSR when the Treehouse Villas were announced - it will really fit our needs a few years down the road. Since it was small contract (under 100 points) - we got it for slightly more than SSR is selling today. The seller was motivated - and split the difference between asking and offer price - which is less than what we were planning to pay.

Next - our BLT points. We bought BLT direct because of the absolutely incredible incentives... once again - the economy was forcing DVC to sell BLT way below what they had planned... and offering the 7 night cruise incentive on TOP of that!

Our next purchase, our last purchase... and our most recent purchase was at Hilton Head Island. I kept an eye on resales for almost a year and could never find that I wanted. Then finally I just called our guide to see what direct pricing was for HHI, and if there was anything available for our use year. Our guide was out on a cruise - so I was passed along to another guide who REALLY wasn't all that magical. His advice - buy resale. Yeah, that's basically what he said. They didn't have our UY available - and there was a 6 month waiting list for it. At that time direct pricing for HHI was around $85 I think.

So we were a little more patient and then BAM what we wanted his the market - we offered a price WAY below ($25.00+) their asking price per point, and they returned our offer price plus $500... We couldn't believe it! So we paid less than $2.00 more per point than what our offer price was.

So while it may seem like people buying direct are 'uninformed' - that isn't the case.

We won't buy resale again if we do buy points - we don't want points that are stripped of aspects of use vs. direct points.

I think Disney is going to start offering contract extensions AND they are going to further restrict resales. It is only smart business for DVC/DVD.

If Disney can buy $60 resale contracts via ROFR and resell them for twice that price... OF COURSE THEY WILL! It's pretty easy math

There are so many rumors of projects in the pipeline - Poly and Fort Wilderness - just to name two...

Disney has to move forward with development or this business line that they have created will cease to exist as a business line for them.

How many more resorts can they build? How much more can they charge?

Only time will tell that...

But in the meantime, I hope they keep their head on their shoulders and don't do anything that is going to be detrimental to current members!

 

[Brian Noble]

Other timeshares are worth almost nothing after purchase and was a deciding factor for us for our DVC purchase. I can't see Disney altering resales too much. They have a brand image to protect.

You mean except for the altering of resales they've already done, right?

Don't fool yourself. DVD does not care about the resale market, except to the extent which it makes it more complicated to sell new contracts at developer prices. That's why the current restrictions exist: to generate just enough Fear, Uncertainty, and Doubt (FUD) to confuse potential purchasers who have some idea that resale exists.

That's true, but at least in the past few years, it has been difficult to get DVC villas rented without some significant discounts.

The average purchaser does not know this. And, the "Guides" are not going to go out of their way to tell them.

 

[tjkraz]

So while it may seem like people buying direct are 'uninformed' - that isn't the case.

By and large, of course they are.

Buying direct makes sense in some situations. Small add-ons, in particular. Also when new resorts are being offered. But DVC isn't selling 100,000+ points in AKV every month at $120-130 each to buyers who know they could buy resale for $60.

If Disney can buy $60 resale contracts via ROFR and resell them for twice that price... OF COURSE THEY WILL! It's pretty easy math

Try this math: Construction costs on recent resorts run about $20 per point.

So given a surplus of "new" inventory, why would DVC reacquire points at $60 each when they already have millions of points on the books for which they paid only $20?

To put it in more relatable terms, if you have a 12 month supply of toilet paper in your closet and a store runs a 50% off sale, do you run out and get even more? The correct answer is "no" because you just don't need additional TP right now and there will ALWAYS be another sale. (If you answered "yes", please seek professional help.)

If DVC doesn't have sufficient inventory, it does make sense to ROFR at certain prices. It helps if they have buyers on a waiting list for certain resorts and Use Years.

But Disney isn't going to aggressively seek out ROFR because building new resorts is ALWAYS more profitable than buying and re-selling the old.

 

[intertile]

To put it in more relatable terms, if you have a 12 month supply of toilet paper in your closet and a store runs a 50% off sale, do you run out and get even more? The correct answer is "no" because you just don't need additional TP right now and there will ALWAYS be another sale. (If you answered "yes", please seek professional help.)

If you had an emergency, you'd certainly be happy to have that extra tp! A tp shortage during an emergency is a messy affair.

But seriously your example is flawed for one reason. DVC regularly has wait lists at the sold out resorts. ROFR is done most probably when there is a backlog of customers waiting. Its a slam dunk for Disney that has absolutely no extra cost or waiting. Whereas the new construction has more profit, but takes much longer to sell. In addition with new construction dvc needs to find the customers, while reselling the old they have them waiting. A company like Disney is in a position to have the capital to do both.

 

[tjkraz]

But seriously your example is flawed for one reason. DVC regularly has wait lists at the sold out resorts.

In my experiences, DVC does not often have waitlists at older resorts.

Two most common are BCV and VGF. And as we have seen, even those two are allowed to pass through ROFR unless they meet certain pricing criteria.

At most resorts, DVC has a regular supply of reacquired points which come in via foreclosures and the extremely low ROFR recaptures. They don't need to be terribly aggressive in order to meet member needs.

And given the administrative costs involved in reselling contracts, they are not the "easy money" that some would like to believe.

 

[intertile]

In my experiences, DVC does not often have waitlists at older resorts.

Two most common are BCV and VGF. And as we have seen, even those two are allowed to pass through ROFR unless they meet certain pricing criteria.

At most resorts, DVC has a regular supply of reacquired points which come in via foreclosures and the extremely low ROFR recaptures. They don't need to be terribly aggressive in order to meet member needs.

And given the administrative costs involved in reselling contracts, they are not the "easy money" that some would like to believe.

I can't argue this, because my only point of references for wait lists are these boards and my guides comments. I also have no clue what administrative costs are involved. I was using simple logic to make my point. From a purely business perspective using my own business as a reference...we normally work on a 50-100% markup in my industry, that being said if a customer walks in off the street and says to me I'll purchase abc product that i saw at your competitor from you if you can give me a discount, i will often make the sale at a lower mark up. I equate it to finding money in the street. The sale took no effort or time and is what i call "free profit". The $60/point was what i considered disney's "free profit". Maybe it is, or maybe it isn't...if we really knew the answer we'd also know when VGF were going on sale.

 

[Alice Sr.]

But it can make sense if you consider the current rack rates charged by Disney for these villas. At $130 a point, a person buying BWV or BCV can still save money over rack rates, even though it may take about 10-12 years to recover the initial purchase. Since the lease continues for another 17-19 years after the initial costs have been recovered, it can still make sense for a buyer to purchase these resorts.

Keep in mind that for some purchasers the number of years remaining on the leasehold is an insignificant factor. Instead, for some buyers the key variable is their perceived "window of use", which might be only 10 to 15 years in length. I bought BLT and AKV in 2009, and due to my age I know I'll expire before either lease expires. However, I knew when I bought that I could get at least 10-15 years' worth of use out of by deeds. I crunched the financial numbers on buying into the DVC and decided I could come out ahead by becoming a member versus paying cash rates.

I agree but also think that we are not looking at the whole picture. It's not just DVC inventory that can drive the price of points it's the total rooms available at WDW. I saw an article that said FL tourism is up, if demand allows WDW to raise the room rates and the points per DVC room is for the most part stationary then the price per point needs an adjustment.

 

[Sammie]

I think what some forget is that DVC/DVD is a business that sells timeshares.

They are not in the business of selling park tickets, merchandise, or filling restaurants; that is another division of Disney's job.

They will do whatever is necessary to sell timeshares, and if that means adding on restrictions to resale, they will do that.

Time will tell if they feel it is needed to increase direct sales.