Concerned about the Future of the DVC resale

[pacmanmp]

Now that we are hearing about the new changes coming to the member benefits, I am left thinking about the future of DVC resale. I personally believe that disney would love for the resale market to just go away and you have to come to disney to buy DVC. Now I am a new poster to the boards but have been a dvc member for several years. What I am concerned about is that disney is starting to make changes more rapidly and I am worried at some point they will do something that will kill the resale market. I think they took a big step in that direction with RR. I am not saying this latest change will make a big difference in the status quo, but am worried about what they will come up with next. I feel like they are doubling down after the RR changes. I know all DVC members have a good chunk of money invested in DVC and for me one of the biggest selling point was that unlike other timeshares, If things change in you life, you can get a good chunk of the purchase price back. I am wondering if anyone else has these concerns or what everyone thinks about the future of resale. Thanks

 

[ELMC]

All very valid concerns. I don't think you need to worry too much, and here's why. DVC resorts are still awesome, expensive, and in high demand. As long as those variables persist, DVC will always have resale value. Granted, the lack of flexibility will probably lead to a decrease in prices, but I don't think it will go down to zero. Resale buyers will just have to be more specific with their ownership vis-a-vis where they want to stay, and that kind of rigidity comes with a discount. But ownership will still maintain a significant value, especially for those who do not care about staying elsewhere or what the current perks happen to be. What you should be more concerned about is the fact that the deeds expire. At that point the contracts do go down to zero, the only question is how we get there: steep drop-off or steady decline?

 

[skippytx]

I'm not really worried. DVD wants a healthy resale market, but they also want to push folks towards buying new properties direct where they make a ton of money. ( I speculate they make 60% profit or more off a DVC site). As long as the economy stays healthy, and the cost of WDW hotels keeps going up, DVC resale should stay strong. It might weaken from its current high, but I'm not worried about having a worthless contract like most other timeshare systems.

I understand why they're imposing the limits they are. I might not like or agree with them, but I get it.

 

[pacmanmp]

I would agree with you. I don't think they will go down to zero till close to contract expiration but if they loss 50 percent that will be a big hit to a lot of people.

 

[Louis morrell]

Strange game. Drive the price of your competition down thereby making it harder to compete with them. I just don't see the logic. I am sure there is a price point Disney would like to see for resale contracts. I would think that point would be higher rather than lower. But what do I know I am just a simple country boy.

 

[WEDinspired]

I think it is a strategy that Disney is doing for a few reasons: 1) to keep money flowing in to DVC Direct market and to keep the value of “DVC” to be relevant. Think about it, the value of time shares would eventually plummet if there wasn’t standard value to buy in for what people report as the “perks” of DVC. 2) It also is a way for people who really want to have a blue card along with those perks to actually invest in Disney Vacation Club instead of buying a 25% amount for the card and buying the other 75% in resale. Granted it’s not a lot, however it still more going back into Disney’s account vs resale. 3) I might be crazy, perhaps there is more to come with being a Disney Direct DVC member that would give justification as to why the cost is going up. There has to be something to offset the increase. 4) it could be that they are not moving as much as they anticipated and now to entice people to buy more, they raised the minimum to get in.

At the end of it all, we are not in the board meetings, not privileged to have access to the business plan, and obviously have no idea what their motive is. Time will tell.

 

[KAT4DISNEY]

Strange game. Drive the price of your competition down thereby making it harder to compete with them. I just don't see the logic. I am sure there is a price point Disney would like to see for resale contracts. I would think that point would be higher rather than lower. But what do I know I am just a simple country boy.

That has tended to be the easiest reason to go direct vs resale - little price difference. It's why new resorts will long be recommended to purchase direct even once there starts to be a fair amount of contracts on the market. Unless they are priced low enough to have some sort of significant difference people continue with direct because of the ease of it. Unless Disney parks closes up DVC will have resale value. That in many cases it's gone up in price was a bonus and shouldn't have ever been counted on - ie, I'd hope it wouldn't be a significant loss of any sort to owners. It may not be a profit but shouldn't be costly to their retirement or anything.

 

[stuartsong]

Each time DVC put restrictions on resale, there were concerns about the future prices of the current DVC resorts. I had same concerns, but kept telling myself that it does not affect me if I keep my points. I have kept my points and added more. Prices have only gone up. I am not going to worry. It's so much more easy to just enjoys my points.

 

[Ruttangel]

Disney could kill the resale market by always taking ROFR (at a price they enforce), only way for new buyers would then be direct.

 

[Matty B13]

(at a price they enforce)

They can't do that..... it's called a free market.

 

[Bing Showei]

Disney could kill the resale market by always taking ROFR (at a price they enforce), only way for new buyers would then be direct.

I don’t see Disney stockpiling points they need to RE-sell on top of their actively sold properties, all the meanwhile paying dues on all those points, as a strategy a publicly traded company would seriously consider.

As owners, we guarantee that that property’s bills will be paid for the next 23+ years. The money is in selling new properties once and then picking up and moving camp. Rinse and repeat.

 

[TiggerBouncy]

Each time DVC put restrictions on resale, there were concerns about the future prices of the current DVC resorts. I had same concerns, but kept telling myself that it does not affect me if I keep my points. I have kept my points and added more. Prices have only gone up. I am not going to worry. It's so much more easy to just enjoys my points.

This is me. Although I find the restrictions and future value of the contract interesting, I am not really worried. I purchased DVC so I could use it - not so I could sell it. It is a nice perk (and important) that it doesn't become a burden like other time shares and that I can back out of it. I don't even want the money I paid into it necessarily since I have been using it. I just don't want to be "locked in" to having the pay yearly fees that I can't afford. I.E. if I can sell it and make any kind of money, I am happy.

It's nice to see that's the case, and as others have pointed out, I think as long as there is a WDW, there will always be a resale market. I don't see Disney ever letting it get to the point where contracts can't be sold and customers are locked into high maintenance fees like some time shares as it would be horrible for their brand.

 

[BrerRabbit1119]

I share some of your concerns about new restrictions, which is why my wife and I opted to buy into DVC now as opposed to waiting any longer than we already have.

But on the optimistic side, I think Disney realizes it would not be in their interest to complete "kill" the resale market. As others have mentioned, one of the great selling points for DVC is that there is a market for resale. When a guide is faced with someone who has concerns about buying DVC, they can confidently say if you needed to sell it down the line you would have no problem doing so on the resale market. This is a big differentiator from other timeshares where you would be forced to either take a bath on it or call one of those "get our of your timeshare" companies to try to negotiate an exit. I don't believe Disney would ever want to be in that position with their properties or the DVC brand, which is largely positively viewed.

 

[ray3127]

I'm concerned as well, and (like @BrerRabbit1119) decided to jump in before it gets worse.

I spoke with my guide yesterday and asked about this new 100-point minimum. He essentially said that DVD does all the work, but then resale brokers get the business, and DVD is trying to recapture as much of that as possible.... that response puzzled me a bit, and I'm still not sure what to make of it.

If DVD really wanted to kill the resale market, they could just set a price for each resort that you could trade your points back at (perhaps a certain % of the current direct price). But obviously they won't do this, because then they are shouldering the risk of owning more points than they want to.

Which is why DVD *needs* the resale market. What I don't understand is why they seem to be so antagonistic towards the resale market when that market is such an important cog in the system. That's the disconnect I can't get around, and why I don't quite understand my guide's answer from yesterday. But knowing that DVD needs the resale market does assuage my concerns to a degree.

 

[skier_pete]

I will fully admit I just recently added a resale contract to me to my desired point because I believe they could continue to put in further resale restrictions.

Understand though - Disney's ideal world is high resale prices with significantly different benefits. I think (and time will only tell on this one) that they misjudged the resale restrictions on Riviera, because I suspect the resale price will land much lower than they want it to be. I think they were hoping that most direct buyers wouldn't be concerned with this - so they'd keep buying, and most buyers or resale would like the resort enough to keep the price up. Not sure either of these ideas are going to work out.

One thing that people didn't grasp for what it was was Disney raising all the old resort DIRECT prices last year, putting some high demand resorts up to $225-240 a point. Even I missed it at the time until the effect took place. They did it in order to drive resale prices UP.

back to the topic at hand - what else Disney could do. I am terrified (and understand I have ZERO insider knowledge on this) that the next shot for resale restrictions could be to make it so resale buyers can't book at 11 months at their home resort - only at say 10 months. This is my view would turn resale (and in turn DVC in general) into a complete non-starter for me - but I no longer am certain that Disney won't do it. So I bought another contract, and now I know I am safely at a point quantity that is more than enough to do what I want every year and then some.

 

[Lumpy1106]

My Father-in-Law has a timeshare with Marriott. With that one, he "can" go to other Marriott properties but it is difficult to switch and he loses value. For that reason he pretty much stays in the same property on the same week every year. DVC seems to be headed that direction with the RIV restrictions, especially when you consider that studio rooms that are difficult to book in the < 7 month window.

Two other things differentiate DVC though;
1) the Marriott timeshare has NO expiration date. That's NOT a good thing! That means that, even after he passes, we have to keep paying the dues (though I do think there is a way to go through the legal process and forfeit the contract).
I think more importantly though;
2) There is no resale market. Marriott will not buy it back and there is no way for someone else to buy it from you (at least no conventional way). I am not sure about this, but I also do not think he can legally rent out his week to a 3'rd party.
So, while Disney may seem like they are losing out on sales to resale owners or rentals to third parties, without these differences DVC would actually lose a lot of value. After all, nobody wants to be stuck with anything, even Disney, and the after purchase, positive word of mouth you see in the DIS boards and elsewhere would be non-existent.

 

[chalee94]

I spoke with my guide yesterday and asked about this new 100-point minimum. He essentially said that DVD does all the work, but then resale brokers get the business, and DVD is trying to recapture as much of that as possible.... that response puzzled me a bit, and I'm still not sure what to make of it.

What is confusing?

DVD builds the resort, hires "guides" and puts up signs advertising DVC. When you purchase direct, Disney appreciates the money you bring to the table.

If you hit hard times with job loss, divorce or health issues (or just lose interest in WDW) and decide to sell your contract, you are - in a sense - asking someone to give you money for your contract that they might have given directly to Disney. Disney sees you as an opponent to crush.

Other timeshares have decided to damage resales to the point where they are only worth pennies on the dollar, but if they have ROFR, they still have the option to pick up cheap inventory when it suits them. If owners have trouble finding a buyer, that's on them. This is the "industry standard" which has given timeshares a bad name, and this is where Disney seems to want to go. It might create problems with current owners, it might cause educated potential buyers to steer clear of what appears to be just another sleazy timeshare scam...but as long as uneducated buyers keep walking into the sales center and smiling at the shiny pictures, then it means more money for Disney, at least in the short term. (The long term question is whether shady timeshare practices would damage the brand overall.)

 

[ray3127]

Disney sees you as an opponent to crush.

As I went on to say, I believe the healthy resale market is an important cog in the entire system. Without it, I don't believe Disney could charge the direct prices they are charging. I believe DVD needs the resale market, so attempts to crush it don't make sense to me.

As I also said, if they want to ensure they get a piece of it, then set up a formal system that does so. In the absence of that, the resale market is the mechanism to dispose of unwanted contracts.

Everybody says that DVD's initial vision for this was that people would buy and hold for 50 years. If that was their vision, then they never counted on the ability to sell old resorts a second time. They make more than enough on the initial build-out. Of course they'd want to capitalize on resales, but I don't think that attacking your current customer base to do so is wise.

The amount of value Disney's customers place on "goodwill" is also enormous; as giant corporations go, I trust them to do right by its customers more than most. And statements like my guide made hurt that goodwill. I don't think that treating current DVC members as "an opponent to crush" if they need to sell is a wise way of looking at things.

So yes, the remark from my guide was confusing.

 

[Lumpy1106]

back to the topic at hand - what else Disney could do. I am terrified (and understand I have ZERO insider knowledge on this) that the next shot for resale restrictions could be to make it so resale buyers can't book at 11 months at their home resort - only at say 10 months. This is my view would turn resale (and in turn DVC in general) into a complete non-starter for me - but I no longer am certain that Disney won't do it. So I bought another contract, and now I know I am safely at a point quantity that is more than enough to do what I want every year and then some.

FWIW - I had a kiosk DVC guide at DCA tell me that this was already the case, only she said 7 months, and this was for all resale contracts. Now, I understand this info is about as good as if I had talked to the guy at the churro cart, but I think you'd see a fire sale with people getting out of DVC if this ever turned out to be true.

 

[chalee94]

My Father-in-Law has a timeshare with Marriott.

2) There is no resale market. Marriott will not buy it back and there is no way for someone else to buy it from you (at least no conventional way). I am not sure about this, but I also do not think he can legally rent out his week to a 3'rd party.
So, while Disney may seem like they are losing out on sales to resale owners or rentals to third parties, without these differences DVC would actually lose a lot of value. After all, nobody wants to be stuck with anything, even Disney, and the after purchase, positive word of mouth you see in the DIS boards and elsewhere would be non-existent.

Marriott timeshares are complicated but some of this is inaccurate.

There is a resale market (just not one with an ecosystem like DVC). Marriott will rarely buy back certain resort weeks directly - if the situation suits them - but they typically have ROFR available as an option also.

If you own a timeshare week, you have the right to rent it (but as above, there's no system of brokers like David with Marriotts). It's more complicated and takes more legwork.

But when Disney is selling direct, most new buyers aren't asking about what happens if they need to get out. Many will look at the shiny pictures, enjoy the positive vibes and generally not find out about the negative word of mouth until they come here to find out why they are taking such a hit when they need to resell.