They are fixed term leases so the market value on the current crop of properties is guaranteed to go down over time.
I think Carol's right.This is not a popular view but I expect that in the long term we will see a BIG decline. Right now prices are kept artifically high for timeshares by Disney's ROFR. If there are very few years left on the contract I don't expect Disney to keep "defending" the property and why would someone pay a lot of a short term ownership?
I really doubt that DVC cares at all whether we get any of our money back. They care about profit. The only reason why they exercise ROFR is to maintain a more narrow gap between new prices and resale. If the incentive ever goes away, you'll see big differences in ROFR practices.While the economy is currently lowering prices (I just sent in a contract for SSR today at $69/point), the economy is cyclical, and once Disney sees an uptirn coming, I'm sure they'll find many new ways to help us DVC members part with our money.
Disney's sales aren't affected by the price of contracts on the resale market. Just on the number of owners who choose to sell.If the lesson learned from this year's experience is that their sales don't suffer much, I'd look for them to continue to relax ROFR until they see a negative effect on their "new" sales...which might not ever happen.
Not necessarily true else there would be no reason for ROFR. DVD will sell more retail contacts if they can convey that the savings resale is relatively small comparatively and if they create uncertainty whether a given contract will pass ROFR. Certainly there is an inherent value with DVC that will prop up values to a degree. What ROFR does from a buyer standpoint is preclude the fire sale situations that we see with many timeshares.Disney's sales aren't affected by the price of contracts on the resale market. Just on the number of owners who choose to sell.
Disney's sales aren't affected by the price of contracts on the resale market. Just on the number of owners who choose to sell.
Not necessarily true else there would be no reason for ROFR. DVD will sell more retail contacts if they can convey that the savings resale is relatively small comparatively and if they create uncertainty whether a given contract will pass ROFR.
Not necessarily. Not everyone who buys resale would have bought retail without the option of resale. And the very differential between resale and retail keeps some people out of the market for retail even if they don't buy. Certainly if there are only 100 contracts for sale, people can only buy 100 contracts at that time but there will be another 100 next month.If 100 people are selling their DVC contract, that's 100 contracts Disney won't sell out of inventory. Disney won't lose more than 100 sales even if resale prices plummet. Nor can Disney keep from losing the 100 by propping up resale prices. At best, Disney can ROFR a contract which means they lose one less sale to resale. But they now have one more contract to sell, so it doesn't help them sell inventory at all.
Resale prices are set by the size of the market. Not the other way around. There are many reasons Disney uses ROFR. Trying to stop the loss of sales to resale isn't one of them.
But if we accept this scenario, then low resale prices actually help Disney. If there are 100 owners who want to sell, and prices are low enough to attract 50 bottom feeders, that takes 50 units off the resale market. Now instead of losing 100 sales from people willing to buy retail, Disney can only lose 50.Not necessarily. Not everyone who buys resale would have bought retail without the option of resale.
And that's how many contracts Disney loses. Doesn't really matter what the price is. Right?Certainly if there are only 100 contracts for sale, people can only buy 100 contracts at that time but there will be another 100 next month.
But Disney can't drive people away from the resale market. If 100 people need to sell their contract, then there will be 100 contracts sold. Disney can't prop up resale prices to eliminate those sales. If Disney tries to prop up prices to pull in the resale buyers, what are the resale sellers going to do? Shrug their shoulders and say, "oh well, I guess I won't sell." No, they'll just lower prices until they sell.ROFR isn't about making money on the resale but about keeping the differential to a manageable level and to create uncertainty, both effectively driving a portion of those looking at resale to retail.
I don't think we're far off our thinking but simply talking fine points here. There are those that would not buy except for the lower resale prices, we'll agree these do not affect DVC's retail sales directly though they still could indirectly. I think you're assuming that all contracts offered for sell will actually sell retail which is not true. There are many who never list due to info including the lower prices compared to what they paid, some contracts simply don't sell and a certain percentage will be bought ROFR which prevents at least one resale buyer each time, likely more because of behavior modification involved. I think you far underestimate the power of ROFR when used aggressively and DVD has used it aggressively at times, the rest of the time it simply prevents fire sales. Westgate has used ROFR to the point where many resale companies have refused to even list their units by insisting they get a sales commission as if they had listed them and by forcing ROFR rights where none legally existed.But if we accept this scenario, then low resale prices actually help Disney. If there are 100 owners who want to sell, and prices are low enough to attract 50 bottom feeders, that takes 50 units off the resale market. Now instead of losing 100 sales from people willing to buy retail, Disney can only lose 50.
And that's how many contracts Disney loses. Doesn't really matter what the price is. Right?
But Disney can't drive people away from the resale market. If 100 people need to sell their contract, then there will be 100 contracts sold. Disney can't prop up resale prices to eliminate those sales. If Disney tries to prop up prices to pull in the resale buyers, what are the resale sellers going to do? Shrug their shoulders and say, "oh well, I guess I won't sell." No, they'll just lower prices until they sell.
Market equilibrium forces are powerful. If 100 people need to sell, prices will be driven to whatever level is necessarily to clear the market. ROFR can't make that go away unless Disney wants to buy up every contract (which doesn't do them any good.) By creating some extra demand, Disney can nudge the equilibrium price a bit, but that's about it.
I was actually thinking through such a scenario. Disney could just ROFR every contract until all the major DVC resellers are out of business. They could get around market forces by destroying the market.I think you far underestimate the power of ROFR when used aggressively and DVD has used it aggressively at times, the rest of the time it simply prevents fire sales. Westgate has used ROFR to the point where many resale companies have refused to even list their units by insisting they get a sales commission as if they had listed them and by forcing ROFR rights where none legally existed.
1) People like it; they think it protects their investment. It doesn't matter whether it has as big an effect as people think. As long as people believe it does, it makes owning DVC more attractive.Given you don't think ROFR has much or any long term affect on retail sales or prices and it seems we agree they don't really make any money on those ROFR options purchased, what do you feel the purpose of ROFR is?
Could they fund such a move to corner the market given the dollars involved, I doubt it. Also, buying them all up wouldn't kill the resale market, if anything it'd increase it. They'd have to make it onerous as did Westgate to actually kill the market and the fall out for them has likely been far worse than if they'd simply smiled and waived. It has hurt them in so many ways that you could not have imagined. It's actually advantageous to a resale agent to have ROFR because they get double commissions often (on the ROFR and on the replacement one). Interesting approach though. I think in number 2 your saying much the same thing I have been saying, that it's perception as much as the reality. Thanks for an interesting conversation, it's good to have someone willing to discuss the nuts and bolts of some of the nuances involved, there aren't many here willing or interested in doing so and what I prefer to do over the frilly stuff that generally comes along.I was actually thinking through such a scenario. Disney could just ROFR every contract until all the major DVC resellers are out of business. They could get around market forces by destroying the market.
1) People like it; they think it protects their investment. It doesn't matter whether it has as big an effect as people think. As long as people believe it does, it makes owning DVC more attractive.
2) It provides for an orderly resale market. While I strongly believe equilibrium forces set overall market prices, it can be messy. Disney/ROFR greatly smooths things out and ensures that most trades happen within a fairly narrow band. An orderly secondary market makes DVC more attractive.
3) This is minor, but Disney needs points for various reasons. ROFR is a good mechanism to get them.