Any thoughts AKV Direct Question

[kenspidey]

Will Disney discount AKV direct in the near future to dump the remaining points there to focus on Grand Floridian. They can't be moving much there at the current prices.

 

[dmunsil]

They're moving plenty of contracts at AKV (604 for AKV compared to 821 for VGF in August). AKV will be sold out by early next year. They don't need any more discounts.

So no one knows what they'll do, but I think chances of seeing any new incentives on AKV are very slim.

 

[StaciMay]

I thought AKV was sold out as of a few weeks ago.

 

[disneynutz]

Will Disney discount AKV direct in the near future to dump the remaining points there to focus on Grand Floridian. They can't be moving much there at the current prices.

Disney doesn't discount DVC prices. They raise them $10 per point, then if sales slow, the take off $5 per point so you are really paying more, not less.

Bill

 

[kenspidey]

They're moving plenty of contracts at AKV (604 for AKV compared to 821 for VGF in August). AKV will be sold out by early next year. They don't need any more discounts.

So no one knows what they'll do, but I think chances of seeing any new incentives on AKV are very slim.

At the current prices I just don't understand it.

 

[Deb & Bill]

At the current prices I just don't understand it.

When they started selling points for $100 a point, I didn't think they would get any takers. But they have gotten lots of them.

 

[dmunsil]

At the current prices I just don't understand it.

Well, everything about WDW has gone up in price. Cash rooms, tickets, food, etc. Why wouldn't DVC points?

In many ways the original prices for DVC were a huge, huge bargain, but people didn't know that at the time. Now with 20-ish years of hindsight everyone can see that the initial buyers got a screaming deal, and now people are more willing to buy in. The value is now "proven" and thus the risk feels lower.

If you extrapolate a reasonable increase rate for Disney hotel rooms and DVC dues and work out how much money you will save over the years until expiration, DVC is still a great deal even at the $165/point they want for Bay Lake and Grand Californian. It's actually an even better deal at $150/point for Grand Floridian, and probably a similar deal for Animal Kingdom (incentives make the point cost a little lower, but it has a slightly earlier expiration).

So I tend to think that DVC point prices have risen because the price was rising toward whatever its natural value plateau is. They were underpriced in the past and are now probably relatively normally priced, compared to the rest of the timeshare industry and given the large premium Disney gets for WDW on-property hotels.

I would be surprised if DVC points go up much faster than hotel room prices going forward. The payoff time frame for DVC at direct prices is already pretty long.

Even an optimistic scenario, where you only stay in studios (which are the most point-efficient relative to cash prices), it still takes 10-11 years to pay off if you compare against 20% discounted deluxe hotel rooms.

I tend to think that once the time horizons get beyond about 15 years people will balk. To buy into something that is basically a pre-paid hotel program that absolutely will not pay off for 15 years seems kind of crazy.

But what do I know? Disney sprinkles pixie dust on stuff and it sells. If the market will bear it, they will raise the price.

 

[kenspidey]

very good post and I know you are right, but I just can't understand why people will pay 150 a point for AKV when you can get virtually the same thing for $80. So happy I got my extended OKW for 68 and Vero for 37 both fairly loaded less than 4 months ago. Prices are nuts right now.

.

Well, everything about WDW has gone up in price. Cash rooms, tickets, food, etc. Why wouldn't DVC points?

In many ways the original prices for DVC were a huge, huge bargain, but people didn't know that at the time. Now with 20-ish years of hindsight everyone can see that the initial buyers got a screaming deal, and now people are more willing to buy in. The value is now "proven" and thus the risk feels lower.

If you extrapolate a reasonable increase rate for Disney hotel rooms and DVC dues and work out how much money you will save over the years until expiration, DVC is still a great deal even at the $165/point they want for Bay Lake and Grand Californian. It's actually an even better deal at $150/point for Grand Floridian, and probably a similar deal for Animal Kingdom (incentives make the point cost a little lower, but it has a slightly earlier expiration).

So I tend to think that DVC point prices have risen because the price was rising toward whatever its natural value plateau is. They were underpriced in the past and are now probably relatively normally priced, compared to the rest of the timeshare industry and given the large premium Disney gets for WDW on-property hotels.

I would be surprised if DVC points go up much faster than hotel room prices going forward. The payoff time frame for DVC at direct prices is already pretty long.

Even an optimistic scenario, where you only stay in studios (which are the most point-efficient relative to cash prices), it still takes 10-11 years to pay off if you compare against 20% discounted deluxe hotel rooms.

I tend to think that once the time horizons get beyond about 15 years people will balk. To buy into something that is basically a pre-paid hotel program that absolutely will not pay off for 15 years seems kind of crazy.

But what do I know? Disney sprinkles pixie dust on stuff and it sells. If the market will bear it, they will raise the price.

 

[dmunsil]

very good post and I know you are right, but I just can't understand why people will pay 150 a point for AKV when you can get virtually the same thing for $80. So happy I got my extended OKW for 68 and Vero for 37 both fairly loaded less than 4 months ago. Prices are nuts right now.

Well, Disney sold over 600 contracts of AKV last month. Not all of those people could buy resale, as there were only 44 resale contracts. If everyone knew about resale, the prices for resale would rocket up to somewhere near the price for direct and stay there. And Disney would still sell nearly 600 contracts and there would be maybe a handful more resale contracts (because a few people who would like to sell if the prices went up would get off the sidelines). In fact, Disney might sell more direct, because the ultra-high resale prices would validate the direct prices in the mind of the buyers.

There's a part of me that thinks Disney is missing out by not encouraging people to check out resale. It would drive resale prices up without significantly impacting resale volume, which would be the very best way for Disney to demonstrate that they're giving people a good deal. When resale is much cheaper than direct, direct looks like a lousy deal. That might sour people on the whole concept rather than getting them to buy direct. They don't want to buy resale because it's messy and takes a long time and they can't get exactly what they want. They don't want to buy direct because it's clearly a bad deal relative to resale prices. So they do nothing.

 

[kenspidey]

Well, Disney sold over 600 contracts of AKV last month. Not all of those people could buy resale, as there were only 44 resale contracts. If everyone knew about resale, the prices for resale would rocket up to somewhere near the price for direct and stay there. And Disney would still sell nearly 600 contracts and there would be maybe a handful more resale contracts (because a few people who would like to sell if the prices went up would get off the sidelines). In fact, Disney might sell more direct, because the ultra-high resale prices would validate the direct prices in the mind of the buyers.

There's a part of me that thinks Disney is missing out by not encouraging people to check out resale. It would drive resale prices up without significantly impacting resale volume, which would be the very best way for Disney to demonstrate that they're giving people a good deal. When resale is much cheaper than direct, direct looks like a lousy deal. That might sour people on the whole concept rather than getting them to buy direct. They don't want to buy resale because it's messy and takes a long time and they can't get exactly what they want. They don't want to buy direct because it's clearly a bad deal relative to resale prices. So they do nothing.

Over 600 contracts??? This boggles my mind. Don't any of these people have the internet? One good day of searching and you could feel completely safe with a resale purchase. If resale was only $10 or so less a point or you were only doing a 25 point add on I could see buying direct for the ease of it....but double? ....and 15 times as many contracts sold direct. Boy, Disney's marketing machine is awesome.

 

[jerseyduke]

They're moving plenty of contracts at AKV (604 for AKV compared to 821 for VGF in August). AKV will be sold out by early next year. They don't need any more discounts.

So no one knows what they'll do, but I think chances of seeing any new incentives on AKV are very slim.

Where did you get this data? Not questioning it, just wanted to see it, I was hoping to catch it in my dvcnews e-mail but it wasnt there. I like seeing how many contracts, points, etc were sold at each resort every month.

 

[dmunsil]

Over 600 contracts??? This boggles my mind. Don't any of these people have the internet? One good day of searching and you could feel completely safe with a resale purchase. If resale was only $10 or so less a point or you were only doing a 25 point add on I could see buying direct for the ease of it....but double? ....and 15 times as many contracts sold direct. Boy, Disney's marketing machine is awesome.

But that's my point - all 600 of them couldn't buy resale because there were only 44 contracts available to purchase. Maybe that could go up to 50 or so if every potential seller got in the act. Resale is severely supply-constrained, and direct is not.

So if everyone knew about resale, the prices for resale would be much, much higher. I don't know how high, but higher. People are getting these great prices on resale specifically because there aren't always enough buyers each month to keep the price up. Lots of people don't know there is such a thing as resale. Most people don't read the DIS boards. And if all 600 buyers tried to buy resale last month, the majority of them would out of luck. They'd see the (high) prices and very low inventory and go back to Disney, probably feeling much better about their direct purchase.

Where did you get this data? Not questioning it, just wanted to see it, I was hoping to catch it in my dvcnews e-mail but it wasnt there. I like seeing how many contracts, points, etc were sold at each resort every month.

I get it from the OC Comptroller's web site by doing searches on deeds. Wil Lovato at DVC News does a regular post where he analyzes the same info, but he goes deeper and does more work to get actual points sold. But anyone can run a quick search and get an idea of how many contracts were sold for a particular resort. And I like to try to slice and dice the numbers in other interesting ways, like trying to figure out an approximate selling price for the resale and ROFRed contracts.