Did Disney cut its own throat with new resale rule?

[rg35]

This is exactly why it is time to move on.........They don't care! Why would I want to continue to do business with a company who is only focused on the next sucker?

What sucker? The terms of purchase are clear to anyone looking to buy.

 

[mel&me]

I don't see it hurting them at all, When I originally purchased it was for the vacations not the resale value.
If I ever had to sell, I looked at it like it was a used car. I may have bought new but I am not going to get a new car price when I sell.
If I was buying, I would not expect to buy used and get the same as if it were new.
Its a luxury item, many luxuries loss value.

 

[Supplanter]

Respectfully, it is sold that way. Our purchase agreement, POS & MSPOS and even the Quality Assurance Checklist all made it very clear what was included in the purchase. What they changed is the population to which they are offering selected discounts.

Of course, that is still very disappointing. But it is not a material change to the product purchased - at least in the legal sense. We've never had the right to discounts and so never had the right to re-sell or gift them to someone else.

You're right, but its disappointing nonetheless that they would choose too remove the benefits selectively and not generically. Im in the middle of a purchase and its been awful hearing the benefits were gone, then that we'd be grandfathered then they were gone again and now back again. They weren't the primary focus and most of them are redundant with our annual passes, but it does bother me anyway.
If it was portrayed as a timeshare that had a membership to the club I guess I'd be less disappointed, but it just happens that they decided to split the two while my contact is pending. I guess I'm curious what it does to the value of the thing I just spent 25k on. If it means i couldve picked it up for 20k in a month Id be pretty disappointed

 

[CarolMN]

You're right, but its disappointing nonetheless that they would choose too remove the benefits selectively and not generically. Im in the middle of a purchase and its been awful hearing the benefits were gone, then that we'd be grandfathered then they were gone again and now back again. They weren't the primary focus and most of them are redundant with our annual passes, but it does bother me anyway.
If it was portrayed as a timeshare that had a membership to the club I guess I'd be less disappointed, but it just happens that they decided to split the two while my contact is pending. I guess I'm curious what it does to the value of the thing I just spent 25k on. If it means i couldve picked it up for 20k in a month Id be pretty disappointed

It appears that Disney has changed its mind again - so you may still be getting what you thought/hoped you were getting. From what has been reported by more than one poster, Disney will grandfather anyone who has a contract that was submitted to ROFR on or before 4/3/2016 (rather than requiring closure on or before 4/3/2016). Hope your contract is now grandfathered. Good luck!

 

[Brian Noble]

DVC has always artificially propped up prices by their ROFR.

Not quite. During the recession, they weren't ROFR'ing anything, even in the face of sharply declining resale prices. The market is still the market.

 

[Supplanter]

It appears that Disney has changed its mind again - so you may still be getting what you thought/hoped you were getting. From what has been reported by more than one poster, Disney will grandfather anyone who has a contract that was submitted to ROFR on or before 4/3/2016 (rather than requiring closure on or before 4/3/2016). Hope your contract is now grandfathered. Good luck!

Thanks! I was so frustrated with the back and forth I was ready to forget it all (fortunately I already had a deposit sent in and I wasn't willing to throw it away hahaha). Im happy we'll have the benefits assuming Disney doesnt snatch the thing from us, but its really about locking in prices on vacations. With minimum wage potentially continuing to climb inflation is gonna hurt in a couple years.

Plus we really like aulani and have been talking about going to Disneyworld. The value is there and I'm excited to start locking in some awesome trips.

 

[DougEMG]

I don't think this is going to have any long term effect on the resale prices. Ever since I've been coming here, the advice to all purchasers, direct and resale, has been to not count on any perks. If someone had been using the savings that a perk gave to make the numbers work out for them, then they probably shouldn't have been buying DVC (a timeshare) in the first place.

The one thing this does do is make it very clear that what you are buying is a room and a room only. These changes would definitely not stop me from buying resale in the future.

 

[Anal Annie]

I personally think that by DVC raising the direct prices so high that only the very rich can afford it they DROVE people to look for resales which fueled the market. I think they would have maintained a much higher direct sales market all along had they not priced themselves out of the average persons reach. We bought direct a long time ago - when prices were still affordable - prices have doubled in the past 10 years. That's CRAZY! I was not really aware of the resale market at the time we bought but after buying in and finding out about it always figured IF we ever got to the point where we wanted to (or could afford to) add on we'd buy resale. I WAS able to point my cousin to a resale after we bought and she bought prior to the initial restrictions so she's grandfathered in - but she paid like $20 a point less than what we paid - what a STEAL!! Since we still have our direct purchase we still could and we would be OK with the restrictions on the add-on points. I think the new restrictions might slow brand NEW buyers a little bit (I would want full benefits) but probably wouldn't affect other current owners like ourselves who are just looking to add on a few points.

 

[freediverdude]

I think people are mistaken if they think those monorail and Epcot resorts are going anywhere but way way up in price. There's only so many of those rooms, and demand will keep increasing over the years. My guide last month said they were expecting the direct price to be $200 in the next 2-3 years. When that happens there will no longer be any resales that Disney lets happen for less than $100, and probably even less than $120. Buy buy buy, even direct.

 

[Brian Noble]

When that happens there will no longer be any resales that Disney lets happen for less than $100, and probably even less than $120.

Don't count on that number. Industry standard is that the actual cost of construction is about 20%-25% of total sales price. For an ROFR to compete vs. stick built construction at a sales price of $200, it would have to be at about $40-$50 or so. ROFR is only used when they have a buyer on the line that they can't satisfy some other way.

 

[freediverdude]

Don't count on that number. Industry standard is that the actual cost of construction is about 20%-25% of total sales price. For an ROFR to compete vs. stick built construction at a sales price of $200, it would have to be at about $40-$50 or so. ROFR is only used when they have a buyer on the line that they can't satisfy some other way.

Well Disney is not industry standard, lol. And it's all about location, location, location. For them currently to be selling at $160 according to your math, which they have already passed that, we are already up to your $40.

 

[Dean]

Well Disney is not industry standard, lol. And it's all about location, location, location. For them currently to be selling at $160 according to your math, which they have already passed that, we are already up to your $40.

Historically Brian is right, roughly 50-55% construction and marketing which are normally divided fairly evenly. DVC might be a little higher on the construction but they're likely lower on the marketing. They'll be losing money AND competing with themselves if ROFR prices get too high. Of course there are other factors on ROFR and other factors on resale prices.

 

[Brian Noble]

Well Disney is not industry standard, lol. And it's all about location, location, location. For them currently to be selling at $160 according to your math, which they have already passed that, we are already up to your $40.

You miss my point. Disney has some finite amount of money to spend on DVC as an investment. They can spend that money by building new resorts, or ROFR'ing existing resorts. If the existing resorts are selling resale for more than 20-25% of their eventual sales price, Disney's capital is more effectively deployed by building new resorts, because the marginal value is better. If the existing resorts are selling resale for less than that threshold, then Disney's capital is better spent re-acquiring those resales.

It's exactly this math that led Wyndham to create the Ovation program, where they buy back deeds at a very marginal cost when an owner is ready to exit. That's not a favor to the owner---it's a good deal for Wyndham. Bluegreen and Diamond are doing similar things.

 

[freediverdude]

Well, good luck to you then trying to get a resale for less than $100 when that time comes. Right now I don't think that kind of choice comes into play for DVC, because there's high demand, they constantly plan to build the next property, and keep the prices high through ROFR here and there. For the foreseeable future the prices aren't going to be low enough for that choice of build vs. reacquire to come into play, they're doing both.

 

[Dean]

Well, good luck to you then trying to get a resale for less than $100 when that time comes. Right now I don't think that kind of choice comes into play for DVC, because there's high demand, they constantly plan to build the next property, and keep the prices high through ROFR here and there. For the foreseeable future the prices aren't going to be low enough for that choice of build vs. reacquire to come into play, they're doing both.

They could account for the marketing in the ROFR price so they're break even compared to selling new resorts might be roughly $80 per point (whether it's $70 or $90 doesn't really matter) just looking at this from a financial return on the dollars invested for ROFR. Of course if they have the points already sold the turn around can alter the break even point to a degree. DVD's main reason for ROFR isn't to make money on ROFR itself but to push people to retail rather than resale by price and uncertainty and in the last few years (real or perceived (mostly perceived) loss of value). Every ROFR point they buy then sell is somewhat in competition with their resorts in active sales and this is a negative. Their idea situation is where people buy retail and can't sell resale so that every buyer must buy from them. There are many ways DVC could differentiate itself retail vs resale beyond what's happened and many ways they could increase their sales that they haven't done yet. And while some of those are a little shady, most aren't.

 

[tb1972]

We're contemplating selling one of our three contracts. I wonder if the asking prices will be reduced? We haven't made a final decision yet and we may hold on to it if there's significant reduction.

 

[lovin'fl]

Came late to this party but we only bought a DVC timeshare BECAUSE it held a good amount of value if resold. We would never buy any other timeshare where you hear stories about having to give them away or sell them on Ebay for $1. So if I paid top dollar (like $165) to buy direct and then found out that to resell would lose the perks (thus be devalued), I'd be irked.

 

[JimMIA]

Next step will be to tier benefits based on the number of direct points you own. Own less than 150 points direct - no AP benefit.

That is certainly a possibility, and the gaping hole in the "buy a 25-point add-on to get the perks" strategy. There is certainly plenty of history in the timeshare universe of doing exactly that -- not as a method to punish or decrease resale purchases, but as a means to increase direct sales to get up to the perks threshold.

And it works like a charm -- Wyndham has done several versions of this strategy and is constantly moving the goalposts for VIP benefits. There's a reason why they do.

 

[ziravan]

That is certainly a possibility, and the gaping hole in the "buy a 25-point add-on to get the perks" strategy. There is certainly plenty of history in the timeshare universe of doing exactly that -- not as a method to punish or decrease resale purchases, but as a means to increase direct sales to get up to the perks threshold.

And it works like a charm -- Wyndham has done several versions of this strategy and is constantly moving the goalposts for VIP benefits. There's a reason why they do.

Depends on whether DVC would grandfather all the 25 point direct owners. I suspect they will, just because they'll most likely continue to grandfather current resale owners.

Buying a 25 point direct contract to be a member instead of a purchaser is probably the best strategy SO LONG AS ITS AVAILABLE.

My guess is 160 point minimum direct buy in to be a member instead of purchaser is coming, and sooner than later.

So. The gap in the 25 point strategy is - get it while you can....

Honestly, I suspect DVD will give a little time for fallout here to ebb, and for current resale buyers who might not pass ROFR, etc, to buy in at 25 points, but I personally expect a correction to that by year's end.

 

[JimMIA]

If I believed that a 25-point direct purchase would only give me the AP discount for a year or two, I certainly wouldn't buy those points. I can buy a LOT of APs for $106 more each with the amount I would save by NOT buying a small add-on.

Sure I'd have the points (and the annual dues), but if I don't need the points now, what is the point of buying them just to get a benefit that could go away a week after I close?

And not for nothing...we don't even know if DVC will allow small direct purchases to qualify for those perks. That's just an assumption. They could very well say no to people trying to circumvent their new policy based on small purchases (or even existing small direct holdings).