Looks like no changes in restrictions on resales this year?

Discussion in 'DVC-Mousecellaneous' started by 312BillB, Dec 13, 2012.

  1. bighoo93

    bighoo93 Mouseketeer

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    And you are right, it is a depreciating asset. When people say they are "making an investment" in DVC they are not talking about buying and selling it at a profit. But they are talking about buying an asset that they expect will provide them with a tangible return. Primarily savings on future lodging, but also other potential discounts. Thinking of it as an investment is entirely appropriate, and I think it is a wise approach to consider whether the return is worth it to your own particular situation.
     
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  3. csharpwv

    csharpwv DIS Veteran

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    Our first DVC purchase was in 2008 - we purchased for under $100 a point with incentives and such.

    We have since made three more DVC purchases, one more direct, and two resales.

    Our best value was our Hilton Head Purchase at $41.85 per point - yes, the MF's are a lot higher per point at HHI, but we LOVE LOVE LOVE that resort and look forward to using it for many years to come. We have stayed in a 1 BR, 2BR, and a 3BR Grand Villa. It is such a great departure from WDW, and they do a really great job with the activity programming, and keeping the resort beautifully maintained!

    Our most expensive purchase was BLT at around $97 a point - plus we received a 7 night cruise, plus $$ off per point as incentive.

    Here is the entirety of the problem of with the price of DVC:

    When DVC was first started, inventory was limited to one resort - demand wasn't high, because it truly was Disney's best kept secret. Then they added resorts, raised prices, amped up marketing, built resorts, added features... built resorts, raised prices, raised prices, raised prices.....

    The volume of product available for purchase is larger than the volume of cash in hand consumers ready to buy (retail or resale).

    Classic economics - supply is larger than demand, so Disney has to spend a vast amount of resources to create a false sense of demand, artificially raise prices, and then market a false sense of value with the urgency of 'by now, prices are going to go up!'

    DVC is a leased product with an end date - what happens when that product expiration date is reached?

    They have already given OKW owners the option to extend their contract - will that become a regular thing?

    How will all of that effect resale prices?

    There has to be one of two things happen to stabilize the value of DVC:

    1 - DVC has to stop building to equalize supply and demand
    2 - DVC has to charge a high transfer fee to make resales full value.
    (for instance a $2,500 transfer fee that would grant buyers access to ALL of the exchange options available through direct purchase - instead of limiting the options on resales, Disney could capitalize the process)

    Presently Disney makes nothing from a resale - I don't even know if there is a transfer fee in place. (Does anyone know?)

    Disney has to make the opportunity to profit from resales in some way by bringing the price of resales closer to the price of direct purchases - they can't do that by price per point, but they can through fees and such - they just haven't gotten smart about the whole thing.

    As previous posters have said - the December meeting would never be the time to announce changes....so... stay tuned! :happytv:
     
  4. bighoo93

    bighoo93 Mouseketeer

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    They do not have to do this at all. There is no reason that Disney needs to profit from secondary market resales any more than a homebuilder needs to profit from resale of a house. Building resorts and selling them on a limited space of real estate is not a perpetual profit model (unless you can spread it out until the leases expire...). That's just the way it goes. Fortunately, Disney takes in $42 billion in revenue annually across many different businesses.
     
  5. CRobin

    CRobin DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    Probably not today, but 5 years ago you could have made a few bucks if you had bought resale around 1999-2002 and decided to sell. Maybe not enough to cover the commission, though.

    Sent from my iPad using DISBoards
     
  6. spruce

    spruce DIS Veteran

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    Five years ago I could have sold all my direct purchase points across three different resorts for more than I bought them for.
     
  7. bighoo93

    bighoo93 Mouseketeer

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    That's great. But it isn't something you can count on. Intrinsically, there was less value with 5 fewer years of use remaining. Random market fluctuations can work out, but it doesn't make sense to plan on that.
     
  8. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    In a sense, however, the timeshare demand is to such a small group that market forces don't work very well. There are simply far too many people out there where timeshares would be a perfect option for them that they either don't know about them or have discounted them for various often inaccurate reasons.

    I don't think it even comes up to the level of a rumor, more speculation only. It is my opinion that the POS is a contract between DVC and it's members and that there is no provision within that contract that would allow for this restriction based on qualified or unqualified points. I believe the only way one could be restricted to a single resort is if that resort ceases to be a member of the club. The same answer applies to the issue of any difference between reservation lead times.
     
  9. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    It's certainly possible to buy DVC and resell at a profit but you need to buy below usual market value. I've done it and I've turned down contracts where I could have made a profit but didn't think it was enough to justify the hassle.
     
  10. spruce

    spruce DIS Veteran

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    I know, in fact selling a timeshare at a profit is usually unheard of. My point through this thread is rofr propped up the value of resales for years. The economy and dvc's reduced use of rofr killed the inflated resale value one used to be able to get. The value to a timeshare owner is in using their timeshare over the long term. The disparity between new and used contracts in the industry is huge, some simple research will prove that out. The industry has responded by limiting perks, access, whatever from resales to encourage new sales. There's nothing wrong with that, it's business. Many resale buyers across the industry have suffered these restrictions. Why wouldn't Disney impose larger sanctions against resale buyers? The downside of this to direct buyers is that it kills the direct buyers resale value (mine to). I don't view my dvc as something for sale l view it as prepaid lodging where I get my best value using it for the entire term of the lease. Anything short of that and the benefits of my initial outlay is reduced. In October I had 16k worth of rack rate rooms for like 650 points dues was less then 4k and 19 family members had a blast...... That's where my value in dvc lies. It's the intangible that gives dvc the value for me not whatever price it would resell at as I have no intention of selling. Dvc proved to be cheaper and less hassle then the 2nd home I bought in South Florida which I used less and will be closing on it's sale in a couple of weeks.
     
  11. bighoo93

    bighoo93 Mouseketeer

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    I disagree, I think there is something wrong with it. Disney owns and operates a great many hotels, if they wanted to expand that business and make continuing revenues on the use of new facilities, they should have built out more hotel rooms for cash reservations. Instead, they chose to build and sell timeshares. This is a different business model. You get all your money up front, and in exchange you don't take in more revenue (other than annual fees) in the future. This is a business decision, and Disney made it consciously because they know how to run hotels and they could have just kept doing that. They sold the timeshares, so yes, I think there is something wrong with then adding restrictions after the fact that destroy resale value. It is wonderful for you that you never plan to sell. Neither do I. But maybe the widow I bought my resale contract from never planned to sell either. Sometimes it happens. If Disney adds these restrictions, they are inarguably taking away value from owners, even those who never realize it.

    And I don't really give a hoot that other timeshare companies do this. That doesn't make it right, it just shows why the timeshare industry is viewed with such general scorn and distrust. But Disney isn't a timeshare company. They bring in $42 billion in revenue on an annual basis across a large number of businesses. You might argue that a predominantly timeshare company needs to bleed every drop of revenue they can, even if it means screwing their owners. As long as they get that signature and the money, they don't really care. After all, people already don't trust timeshares. Disney has reason to care. DVD is a wholly-owned subsidiary and a minor part of their revenue (I don't know the exact number, but their entire business unit makes about $12 billion and that includes ALL resort and park revenue, so DVD revenue is well below that figure). Disney has an extraordinarily valuable brand to protect that goes WAY beyond their timeshares. So 1) they don't need to pull customer-hostile stunts like other timeshares because it is a small part of their revenue and 2) they don't want to risk their brand over this kind of thing. DVC gets people to the resorts, where they spend a ton of money that mostly goes to Disney.

    I don't pretend to know what Disney is going to do, I just don't think it would be wise for them to put severe restrictions on resale (or ban renting points, another suggestion that I often see promoted and defended here). Disney has a different business than any other timeshare company.
     
  12. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    If you take the stance that Disney can't reward those they make the most money off of by offering options not available to everyone and extend that to other companies, there really are very few companies you can deal with. Many resorts offer discounts to one group over others and VIP type programs are all over the place including essentially all dept stores, airlines and most restaurants. I'd assume you have a problem then with Disney offering discounts to pass members or those from certain states or companies including perks to DVC members not available to others. IMO, using the terms right or ethical or fair in the same paragraph as timeshare is the definition of oxymoron. Anyone who can't stomach the "inequalities" in timeshares, including DVC, likely shouldn't participate at all. Those other timeshares you don't care about sell retail for tens of thousands of dollars that one can buy resale for pennies on the dollar. Some of them are publicly traded companies and do quite well.
     
  13. bighoo93

    bighoo93 Mouseketeer

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    I never said that. I stand by the things I actually did say.
     
  14. BestDadEver

    BestDadEver New DVC Member

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    I bought direct . I don't look at it that way . I would love to see more restrictions on resale . I am not worried about the price when I sell . I am more concerned with the price PP direct getting driven up because people buying resale .
     
  15. spruce

    spruce DIS Veteran

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    You are welcome to disagree and I am not attempting to sway your opinion. You do make valid points based on Disney being Disney. That's why my only developer timeshare purchase was Disney. You may not give a hoot about other timeshare models but surely dvc, maybe not Disney, is looking at those models. I expect future changes to their model. It's truly the only constant in the industry whether we want them or agree with them. If dvc does make changes, what are we going to do, boycott, sell or learn to utilize the new system to our best advantage? Some will have a better advantage and I agree with that except for a tier system that hurts direct purchasers. Buying has it's costs, some are known and some are not. The resale has a tremendous value in cost acquisition but could limit use. Again, we don't have to agree with it but it is important to understand it when making a decision to buy. I recommend that any buyer spend time here and on TUG so that they understand the good, bad and ugly of timeshares. I've been on both since around 97 when I first got Internet. Maybe you are right, and I hope so, that Disney will trump dvc but I doubt it, I've seen too much over the years. Timeshares are sleezy, dvc put a mouse and theme parks on theirs and for the most part delivered delivered a quality product.
     
  16. htmlkid

    htmlkid Gold DCL Member / SSR DVC Member

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    You should be worried about the resale price. Say you purchase 200 points at $150 a point for $35000 and 5 years later your either not using them anymore or for some financial reason you want to sell and due to increased restrictions DVC turns out to be like every oter timeshare where you can purchase it on eBay for a $1 your now out all your initial investment and depending on how often you used it you probably paid twice what you could have just renting rooms for cash,

    Now you purchase the same amount of shares for $150 and 5 years later with no additional restrictions you can sell for $75 a point. You have recouped 1/2 your initial investment and still enjoyed the resorts and a reasonable overall cost.

    Resale restrictions hurt everyone ... And If you think being able to book a cruise on points is a good use of points you should seriously look into your overall cost of that cruise using points. It sometime costs you double what it would paying cash or just renting the points and then using the cash to pay for the cruise.

    Don't get me wrong I love dvc but I am amazed how people book overpriced member cruises using point when it's costs them double to triple the usual rate just to get a $10 gift in their room. And Disney calls that a benefit of purchasing direct...
     
  17. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    If I understood correctly you said there was something wrong with them rewarding retail buyers and downgrading resale buyers. I simply took the principle and expanded it across a larger slice of life. If it's wrong in this instance, it's wrong in all the example I alluded to and many more and for the same reasons.
     
  18. DougEMG

    DougEMG DIS Veteran

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    No matter what restrictions DVC puts in place, as long as staying at your home resort is a better deal than booking onsite with cash, those restrictions are not going to stop people from buying resale.

    If we accept that most direct buyers do so while on vacation and are not well informed about what they are buying (don't mean to insult anyone that does buy direct) then Disney needs to convince more of those people to buy while they are at the sales pitch. What's the best way to do this? Extra benefits, VIP tiers, etc? I have no idea. A simple tactic would be to offer benefits that would be hard to put a cost to.

    There isn't anything they could offer that would convince me to buy direct given how cheap resale costs are. And if resale prices collapsed I'd be tempted to buy even more points. I want my points to use just at Disney, but maybe I'm not the type of person DVC should be trying to sell to.
     
  19. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    While I doubt they will offer enough to matter, it is my opinion that there is a level of benefit that would get everyone to consider buying retail if they could afford it and valued DVC.
     
  20. bighoo93

    bighoo93 Mouseketeer

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    As I've said before, I don't accept that Disney needs to worry about the resale market at all. Until someone can at least show some ballpark calculations and numbers with facts and reasonable assumptions, it is all just conjecture. I do not at all blame direct buyers who want more benefits because they paid more for essentially the same thing. But that doesn't mean I agree that is deserved.
     
  21. bighoo93

    bighoo93 Mouseketeer

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    Retroactively decimating resale value for both direct and resale purchasers is a customer-hostile move. I don't think it is necessary to extrapolate that to larger slices of life to understand or discuss it. I just don't accept it as OK or necessary. If they want to start adding value to direct purchasers, that would be a smarter and customer-rewarding move. Again, I'm not sure they need to do this at all either. But if they are suffering and need to promote sales at their prices, adding value is a better way to go.
     

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