Direct pricing on "sold out" resorts has such a weird pricing structure

[sethschroeder]

So we have become interested in buying and I have been doing a bunch of research and running all the numbers. We have looked at buying at BWV and RV. I also started thinking about BLT just because we have 2 young kids coming up.

Now the weird part of all of this is that on a contract in the 100-150 point range the PPP at Riviera is $3.76 while at BWV it is $8.60. This mostly comes from the time remaining on the resorts. I understand the supply vs demand scenario of there potentially being fewer direct points available to sell but at the same time it seems that cost does not reduce based on time remaining on contract.

Do people have thoughts on all of this? Is the whole purpose of this to really push you in to the new resort? Or is this simply just a weird policy that someone didn't think through.

While right now we have 20+ years left on resorts I would have to think in 10 years time this is going to start effecting that pricing from direct Disney correct?

 

[_auroraborealis_]

s the whole purpose of this to really push you in to the new resort?

Yes.

It also reflects added costs to Disney to acquire the points at legacy resorts and maintain the contribution margin desired on their side.

 

[KAT4DISNEY]

Do people have thoughts on all of this? Is the whole purpose of this to really push you in to the new resort?

Yep! They make far more money on new builds than selling points they've reaquired thru ROFR. They used to be priced much closer. They do want buyers to purchase direct though so if someone really wants a "sold out" resort they will sell it.

 

[ScubaCat]

I also think it's to drive sales at the current "live" properties. For instance, BWV and BCV have to be priced higher than Riviera or some people might try harder to get into those instead. Obviously not all, but the margins would be greater.

 

[aoconnor]

It also reflects added costs to Disney to acquire the points at legacy resorts and maintain the contribution margin desired on their side.

Mostly this IMO. People decry the "insane" direct prices for VGF, Poly, BCV etc but really I think it's about the same markup as other resorts.

Small contracts trade at premiums, so using a few examples to buy 50 points resale vs direct:

AKV: ~$125 resale, $176 direct = 41% premium
SSR: ~115 resale, $160 direct = 39% premium
VGF: ~$175 resale, $245 direct = 40% premium
Poly: ~$155 resale, $225 direct = 45% premium
BWV: ~$135 resale, $190 direct = 41% premium
BCV: ~$160 resale, $225 direct = 41% premium

The markup appears to be pretty even. Of course, once you start looking at larger contracts which can be obtained for less per point the direct premium increases.

 

[sethschroeder]

Mostly this IMO. People decry the "insane" direct prices for VGF, Poly, BCV etc but really I think it's about the same markup as other resorts.

Small contracts trade at premiums, so using a few examples to buy 50 points resale vs direct:

AKV: ~$125 resale, $176 direct = 41% premium
SSR: ~115 resale, $160 direct = 39% premium
VGF: ~$175 resale, $245 direct = 40% premium
Poly: ~$155 resale, $225 direct = 45% premium
BWV: ~$135 resale, $190 direct = 41% premium
BCV: ~$160 resale, $225 direct = 41% premium

The markup appears to be pretty even. Of course, once you start looking at larger contracts which can be obtained for less per point the direct premium increases.

I am new here but is this not slightly inflated by Disney buying the contracts forcing higher resale sell prices? In a sense disney is creating the floor to the resale market. Although at the same time there are people on waitlists waiting for points supposedly.

Still 40% to files some papers, write a small check, and cash a larger check is still crazy good profit. You make a good point though.

I personally thought the pricing was strange simply because a 23 contract is essentially the same price per point as 50 year contracts.

 

[miTnosnhoJ]

The pricing is not that strange if you understand the time value of money. Most of the value of any DVC contract is front loaded in the first 10 to 15 years of the contract.
To get an intuitive understanding of this, think about how much you would be willing to pay today to get a 2 BR villa at VGF next year. It would probably be some discount from Disney’s rack rate.
Now think how much you would be willing to pay today to a get a 2BR villa at VGF in 45 years. The answer for most people would be “not much”.
You can do this analysis for every year of the contract. You will find that most of the value lies in the near term. This explains why BCV and BW retain so much value even when they only last 22 more years.

 

[IAmDis]

What do you guys recommend as to pushing them to sell you direct at an older resort? If I buy a BWV resale and want to add on whatever the minimum direct will be at the time, do I hardball with them and say I will ONLY buy direct if I can get them from my home resort? Will they contact me back with an offer from that resort, or will they immediately put me on a waiting list to be contacted IF they "find" some points for me?

 

[sethschroeder]

Just tell them this is what I want.

The guy I was working with didn't blink when I brought up boardwalk and simply stated there might be a waiting list but he could find out if I went forward.

 

[mustinjourney]

The pricing is not that strange if you understand the time value of money. Most of the value of any DVC contract is front loaded in the first 10 to 15 years of the contract.
To get an intuitive understanding of this, think about how much you would be willing to pay today to get a 2 BR villa at VGF next year. It would probably be some discount from Disney’s rack rate.
Now think how much you would be willing to pay today to a get a 2BR villa at VGF in 45 years. The answer for most people would be “not much”.
You can do this analysis for every year of the contract. You will find that most of the value lies in the near term. This explains why BCV and BW retain so much value even when they only last 22 more years.

Precisely. Pretty much everything after 15 years is pennies on the dollar....it really doesn't matter that much.

 

[mustinjourney]

What do you guys recommend as to pushing them to sell you direct at an older resort? If I buy a BWV resale and want to add on whatever the minimum direct will be at the time, do I hardball with them and say I will ONLY buy direct if I can get them from my home resort? Will they contact me back with an offer from that resort, or will they immediately put me on a waiting list to be contacted IF they "find" some points for me?

there is no hardballing with DVC. There is no negotiation. It's literally take what is offered or GTFO. The guides do not have any allowances for sprinkling pixie dust on you other than the FPs and mickey bars. If you want to negotiate -- go resale. You can negotiate every portion of that transaction.

ETA -- if you want your home resort -- just tell them you will wait until they have the points. Right now, it is not that hard for them to match the waitlist since they changed the rules on UYs with established contracts. They used to have to wait for a contract on ROFR that matched your UY, but they made a change to where they could alter the UY of a contract they bought back. So now they can basically take any contract back and then alter it to fill a waitlist request. This has resulted in more ROFRs...but also more waitlists being filled.

 

[lovin'fl]

They won't give you an issue. You may have to go on a WL. We added BWV 3 times to our already owned OKW and HHI. Had a 2 week wait for the 1st, a month for the 2nd and no wait the 3rd time we added.

 

[MickyLynn]

I will say this - we mentioned to 2 cast members last Saturday that we were deciding between BWV, OKW, and Poly. You would not believe the utterly maniacal glee that lit up their eyes when they heard BWV was available. I swear, it was like they were ready to drag race for pinks. Sometimes, the economy of a thing defies rational explanation. People just want it.