2042 end dates?

[BlueGreen5]

They can adjust point charts to meet supply and demand, but the total points sold for the resort can not change.

So, they can make some nights more, but others have to be less. With a new resort, they can set the rates at what they want and then get the total that way.

But, if overall demand were to increase relative to supply (say the unthinkable, like a catastrophic fire at AKV), nothing would prevent them from raising the point cost across the board without a corresponding reduction, right?

 

[Sandisw]

But, if overall demand were to increase relative to supply (say the unthinkable, like a catastrophic fire at AKV), nothing would prevent them from raising the point cost across the board without a corresponding reduction, right?

If part of a resort was to burn down and they rebuild, those points would still be set by the initial totals as that would simply be replacing the units.

If they decided not to rebuild those units, then owners of those specific units
would be given their share of the proceeds.

After that, DVD could decide to add a new phase and build new units..like what has happened with PVB tower…and then they can make those rooms whatever price they want but if similar rooms already exist, they’d need to take that into consideration.

Basically, they can’t raise the total of points at a resort unless they add new rooms to go with them.

 

[DonMacGregor]

I think people keep missing the point by focusing on how many points would be introduced in 2042 and whether the market could support it. The issue isn't points, it's rooms.

On February 1, 2042, every single WDW 2042 ROOM will need to convert to cash, or be shut down for what will, without any doubt, be a significant period of reconstruction/rehabilitation. If the resorts stay open for any length of time after 2/1/42 without an extension of some sort, that's a huge uptick in cash inventory for a company that has been reducing cash rooms (or at least the percentage of cash rooms) rather than increasing their numbers.

And it will be an extended period of time. We're not talking about sticking a Murphy bed on a wall at a 12-year-old CCV, we're talking about significant repairs/upgrades to buildings that will be nearing 50 years in age. To make matters worse, two of the three Disney-owned resorts on Crescent Lake will be affected (BWV to a massive extent). Can you imagine what that huge uptick in capacity would do to cash rates?

Whether they extend or start a trust, they will still be faced initially with a MASSIVE drop in membership dues that would be going towards maintenance and upkeep and in the case of every 2042 resort, apportioned shares of resort transportation and other costs that the hotel side would have to absorb 100%. All of the shared costs for MA and MS would also need to be re-allocated to the other remaining resorts until whatever replaces the 2042's is up and running and generating MF revenue. And even if they do convert them to a trust, with the argument that all trust points can be used at any trust resort, those costs for maintaining those 2042 resorts while they are converted/refurbished/demolished and rebuilt, especially the ones that share facilities with a hotel, will still need to be paid by someone. What's the sales pitch? "You aren't buying points at BWV2.0 or BCV2.0, you're buying into the Crescent Springs Vacation Club Trust, and you can use your points at any Trust Resort (although some percentage of your pooled membership dues are still going towards maintenance and services at 3 Trust Resorts you can't actually access until we're done rebuilding them)"?

** I'm not including OKW because it's been extended and let's assume the people still holding 2042 contracts will be in a very small minority by then and just SOL. HHI and VBR are gone as far as I'm concerned.

ETA: As a mental exercise, BWV has 4.8 million points. If we're generous and say Disney retains 5% that still leaves us over 4.6 million points, or $40M in member fees for 2024. If the DVC side of BWV ended today, and all those rooms were shut down or converted to cash, some part of that $40 million would still have gone to support shared services across DVC/DVD and that lost revenue would have to be absorbed by other resort dues. And, now the hotel side would be on the hook not only to fill those rooms, but also come up with the lost MF revenue that goes to common services at the resort. That money is guaranteed if it's a DVC villa, regardless of whether the room is filled or not (although they almost always are), but only comes in if a cash room is occupied. BRV is obviously much smaller and likely would have a much smaller effect on DVC revenue as a whole and WL specifically, but the BWV effect would be significant. BCV would be somewhere in between.

 

[NY Pirate Princess]

Whew @DonMacGregor that's a lot!

I don't feel SOL with my baby resale okw contract. I bought it to learn how to play in this sandbox and it's already served me well.

I think Beach is torn down and rebuilt as a tower with views unless the Epcot parking lot DVC property is more than blue sky.
BWV operates as full cash while Beach is under construction.HHI and VB are gone.
OKW gets chopped up into workforce housing, cash rooms, and the new Bluey lodging! No guesses on boulder ridge.

 

[DonMacGregor]

Whew @DonMacGregor that's a lot!

I don't feel SOL with my baby resale okw contract. I bought it to learn how to play in this sandbox and it's already served me well.

I think Beach is torn down and rebuilt as a tower with views unless the Epcot parking lot DVC property is more than blue sky.
BWV operates as full cash while Beach is under construction.HHI and VB are gone.
OKW gets chopped up into workforce housing, cash rooms, and the new Bluey lodging! No guesses on boulder ridge.

BY SOL I mean that I don't think the number of owners still holding 2042 expiry contracts will be large enough to pursue any sort of litigation against Disney to force an extension of their contracts to 2057.

 

[NY Pirate Princess]

BY SOL I mean that I don't think the number of owners still holding 2042 expiry contracts will be large enough to pursue any sort of litigation against Disney to force an extension of their contracts to 2057.

I agree.

Even if it is pursued by the time everything is litigated it will be 2057 anyway.

 

[BrianLo]

I think people keep missing the point by focusing on how many points would be introduced in 2042 and whether the market could support it. The issue isn't points, it's rooms.

I think we largely understood that. Those terms (points and rooms) are mildly synonymous and were obviously being used quite interchangeably. Not for lack of understanding. I think the broader point was being made that as long as they don't head into a major glut of unsold DVC into 2042, they really are not in a worse predicament than they are today.

BWV 383
BCV 282
BRV 181

CFW 350 (349 unsold)
Poly 222
RIV 120 (72 Undeeded + ~48 unsold)

I'm excluding the beach resorts because they are probably being turfed, but obviously also partially cancelled out by Aulani. OKW hopefully will be migrated mostly by then. This would have been a much different story if OKW wasn't extended.

If you take one or two of the resorts offline for a couple years to majorly rethink or rebuild them, the inventory also gets rolled out over a few years. Plus there's feasibly a sales tactic where they offer expiring members a new contact at a fairly discounted rate - if they are nervous. Finally, they also have the ability to flip deluxe cash inventory ahead of time. Sort of the BPK VGF scenario in the 2030's.

They really aren't going to be in a cash inventory crisis... as long as they don't enter 2042 with 3 other unsold resorts with massive inventory, of course.

I do agree though that it's fairly straining on Crescent Lake all at once. Beach Club flip might get quickly rushed and then they take their time with a Boardwalk rethink.

 

[DonMacGregor]

I think we largely understood that. Those terms (points and rooms) are mildly synonymous and were obviously being used quite interchangeably. Not for lack of understanding. I think the broader point was being made that as long as they don't head into a major glut of unsold DVC into 2042, they really are not in a worse predicament than they are today.

BWV 383
BCV 282
BRV 181

CFW 350 (349 unsold)
Poly 222
RIV 120 (72 Undeeded + ~48 unsold)

I'm excluding the beach resorts because they are probably being turfed, but obviously also partially cancelled out by Aulani. OKW hopefully will be migrated mostly by then. This would have been a much different story if OKW wasn't extended.

If you take one or two of the resorts offline for a couple years to majorly rethink or rebuild them, the inventory also gets rolled out over a few years. Plus there's feasibly a sales tactic where they offer expiring members a new contact at a fairly discounted rate - if they are nervous. Finally, they also have the ability to flip deluxe cash inventory ahead of time. Sort of the BPK VGF scenario in the 2030's.

They really aren't going to be in a cash inventory crisis... as long as they don't enter 2042 with 3 other unsold resorts with massive inventory, of course.

I do agree though that it's fairly straining on Crescent Lake all at once. Beach Club flip might get quickly rushed and then they take their time with a Boardwalk rethink.

But the only way they avoid any of those predicaments is, as you say, if they "don't head into a major glut of unsold DVC into 2042". I don't see any logical way that they can avoid it. In order to ensure that doesn't happen, they'd have to stop building any new resorts for a good 3 or 4 years prior to 2042, AND make sure they are successful in selling those resorts out (or getting pretty close) prior to 1/31/42. That's a big ask. No new resorts to avoid a glut of points in 2042 means no new shiny thing to sell for a good stretch of time (the 3 or 4 years prior to avoid a glut, plus however long after 2042 it takes to bring the refurbed/reconstructed "2042" resort replacements online).

As I said in my original post, there are obviously options open to them and I think they will need to choose something other than "They'll just set up a new trust/land lease and sell new 50-year contracts at a billion dollars per point" (which is absolutely what many have suggested they will do). I simply say it's not that clean.

Also, I think a cash inventory glut is the lesser of their concerns. I think the drop in MF revenue, particularly as it affects shared resources and services at the resorts will be a bigger factor. For argument's sake, the transportation budget for BWV for 2024 is $2,802,140. That's BWV's share of the total Boardwalk transportation cost. If they shut down BWV tomorrow, the hotel side would have to absorb that $2.8M that the villas were paying through member fees. If, in the interim, they switch all of the villas to cash, they no longer have that guaranteed MF revenue to pay for those shared services, but they still need to be paid for. Now the hotel side has to keep the villas filled 100% of the time on cash or face a shortfall to pay for those previously shared services. Sure, they could send a few less busses due to the reduction in rooms, but how much can they really reduce it? The boats on the other hand serve other resorts, so that service and its related cost won't go down at all. Right now, they can take whole blocks of rooms offline for refurbs and the MF's just keep rolling in. Post 1/31/42, there are no more MF's and any room they take offline isn't generating revenue and helping to pay for those services. Same goes for any other shared resource or service like common area maintenance, front desk and bell services, non-guestroom cleaning and housekeeping, etc. Back of the napkin math would suggest those shared costs could be as high as $7-$8M per year (the 2024 budget total is $29M, of which $9M is housekeeping, with another $10M devoted to DVC-specific programs leaving the remaining $10M covering budget items shared with the hotel side).

 

[walt34]

But the only way they avoid any of those predicaments is, as you say, if they "don't head into a major glut of unsold DVC into 2042". I don't see any logical way that they can avoid it.

Let's discuss this. One obvious answer would be that they need to find a way to start selling earlier than 2041. At least with their existing sales channels, they would not be able to sell all of these points within a year. The question is who would be a good target group for selling a use right that only starts in 2042 but is willing to buy years earlier?
Existing owners have advantages and disadvantages for this:
Pro: They are familiar with the properties and might still love it, even without a major refurbishment
Con: They will probably be older as a group than the average DVC buyer and might not be willing to commit for another 50 years

An option would be to sell shorter lived contracts to existing owners (e.g. 10 years), that start in 2042 but could be sold much earlier - e.g. 2035. The disadvantage would be that DVD would have to sell these points again in 10 years time (which would be a cost factor for DVD). But they could keep the cost low for the short lived contracts by selling them mostly by email.

This would be one way to stretch out the sale of these points.

 

[NY Pirate Princess]

What about the idea that some have floated that Disney will restrict banking and borrowing in the last few years of the 2042 expiry resorts? And possibly decouple them from the whole portfolio by restricting the ability to trade out?

This strategy could be used to compel the mf to be paid prior to the last use year or lose access to the points.

For example, BWV could be restricted in the last 4 contract years to BWV stays. No trading in from other resorts. Flip the cash side into new DVC during that period. Sell discounted points to BWV devoted owners with unknown points charts and room configuration pushing FOMO. If there are no shiny new properties for sale at this time, it could drive those direct prices through the roof and set the bar for insanely high costs for Beach revival.

I fully expect Hilton and Vero to be decoupled the last 5 years relieving pressure on WDW and DL resorts.

 

[Sandisw]

What about the idea that some have floated that Disney will restrict banking and borrowing in the last few years of the 2042 expiry resorts? And possibly decouple them from the whole portfolio by restricting the ability to trade out?

This strategy could be used to compel the mf to be paid prior to the last use year or lose access to the points.

For example, BWV could be restricted in the last 4 contract years to BWV stays. No trading in from other resorts. Flip the cash side into new DVC during that period. Sell discounted points to BWV devoted owners with unknown points charts and room configuration pushing FOMO. If there are no shiny new properties for sale at this time, it could drive those direct prices through the roof and set the bar for insanely high costs for Beach revival.

I fully expect Hilton and Vero to be decoupled the last 5 years relieving pressure on WDW and DL resorts.

Flipping the cash side is certainly an option they can take on so it can open as new when the 2042 ends.

But they can’t sell it without known point charts since that all has to be determined before sales even begin.

I think they will find a way to make it work and coordinate it all so that those rooms don’t all sit empty or only being for cash stays.

 

[walt34]

Flipping the cash side is certainly an option they can take on so it can open as new when the 2042 ends.

Would flipping the cash side not generate more points that need to be sold rather than less? Also, for many resorts, the cash side has the more appealing views (e.g. BCV) so they might not want to 'move' DVC there.

 

[CastAStone]

Would flipping the cash side not generate more points that need to be sold rather than less? Also, for many resorts, the cash side has the more appealing views (e.g. BCV) so they might not want to 'move' DVC there.

I really, really don’t think the number of points to sell in 2042 is going to be an issue.

Heck, Disney has proven over the last 2 years that they are fine to build resorts that will force them to sit on points forever. It is certainly not the typical timeshare business model, but they seem okay with it!

 

[walt34]

I really, really don’t think the number of points to sell in 2042 is going to be an issue.

Heck, Disney has proven over the last 2 years that they are fine to build resorts that will force them to sit on points forever. It is certainly not the typical timeshare business model, but they seem okay with it!

Hm, I'm not sure. They might already be renting out rooms at all of the 2042 resorts but suddenly renting out 100% as direct bookings? This would surely lead to huge discounts and a lot of unused inventory, wouldn't it?

 

[NY Pirate Princess]

Would flipping the cash side not generate more points that need to be sold rather than less?

You were discussing the drop in MF in 2041/42. Flipping bwv cash side to dvc prior to expiration allows new MF to begin around 2042.

New resort points will need to be available when 5 full resorts and part of OKW age out. Many owners on this board have multiple contracts at various home resorts. I believe there are many owners outside the dis that own only one contract at a 2042 expiry property. A subset of those owners will be in the market for replacement points.

Also, for many resorts, the cash side has the more appealing views (e.g. BCV) so they might not want to 'move' DVC there.

I didn't think of and agree with this.

The location of crescent lake resorts is the draw for me, not the actual properties. I wonder if Disney will flip one crescent lake property to all cash with perhaps rooms in the trust if that structure works for them? Incentive for some educated buyers to buy into trust products?

 

[NY Pirate Princess]

Hm, I'm not sure. They might already be renting out rooms at all of the 2042 resorts but suddenly renting out 100% as direct bookings? This would surely lead to huge discounts and a lot of unused inventory, wouldn't it?

And think about OKW. As I understand it all the 2042 rooms will need to be cash rooms until 2057 unless they find some way to consolidate 2057 units into buildings without 2042 contracts.

 

[walt34]

You were discussing the drop in MF in 2041/42. Flipping bwv cash side to dvc prior to expiration allows new MF to begin around 2042.

I still don't get it. DVD will have all of BWV available in 2042 and nobody paying the maintenance fees but for those points that they manage to sell again. Why would they need more?

I didn't think of and agree with this.

The location of crescent lake resorts is the draw for me, not the actual properties. I wonder if Disney will flip one crescent lake property to all cash with perhaps rooms in the trust if that structure works for them? Incentive for some educated buyers to buy into trust products?

My point is that the cash side of BC arguably has nicer views than BCV. The location is pretty much the same. Not sure Disney would want to switch this around.

 

[DonMacGregor]

You were discussing the drop in MF in 2041/42. Flipping bwv cash side to dvc prior to expiration allows new MF to begin around 2042.

Certainly a possibility, but they'd be sitting on an entire resort filled with just "resort studios" and nothing else. It works at VGF because the original building balances it out (somewhat) with a mix of room types, but I'm not sure how well an entire resort with zero 1 or 2BR villas would sell, regardless of its location. At best they could possibly do a flip like they did at Big Pine Key and spread out the flip out over time to keep as many cash rooms online as possible, but they couldn't do a CCV-type conversion because that would require a huge block of rooms to go down during each phase (cutting in connecting doors, re-framing walls, running plumbing and electrical for full kitchens, etc.). It's still at 50-year-old building at that point, so it would still need a ton of work.

It's fun to see the discussion appreciating the less obvious challenges and complexities that DVC will face in 2042.

 

[NY Pirate Princess]

I still don't get it. DVD will have all of BWV available in 2042 and nobody paying the maintenance fees but for those points that they manage to sell again. Why would they need more?

I don't think DVD will be able to turn BCV, BWV, or OKW resorts into new contract sales with a 40 to 50 year timeline without gut rehab or demo/rebuild. Adding the owners at HHI and VB with points they use now for WDW or hybrid stays, that's a lot of expired contracts all at once.

If DVD thinks they will paint the rooms and resell them for 40 years with vastly inflated point charts and CFW dues then I concur.

 

[CastAStone]

Hm, I'm not sure. They might already be renting out rooms at all of the 2042 resorts but suddenly renting out 100% as direct bookings? This would surely lead to huge discounts and a lot of unused inventory, wouldn't it?

Yes, if I weren’t convinced that they’re going to bulldoze and rebuild at least one if not all three of the resorts they plan to replace.