Direct Purchase benefits announced!

[4Pluto]

Any timeshare should not be looked at as a financial investment that will garner a return on that investment, other than saving you some money on your trip via lower room rates.

With all due respect, while I understand that buying a timeshare is not an "investment", paying attention to resale value isn't foolish. When you buy a car, you don't expect to be able to sell it for a profit or "return on investment", but you would pay attention to what kind of resale value it may have in a few years and your decision on what car to buy may depend on how well that car keeps its value. When I bought into DVC, it had a many year history of good resale value (demonstrably better than its competitors and much discussed on TUG) and that was a consideration (not the largest but a consideration) over buying a Marriott timeshare in Orlando as was the fact that resale purchasers were treated the same as direct buyers.

At that time, BVC and BWV resales were selling for more than direct sales from Disney for SSR and Disney did not have inventory for all use years for those resorts. The consistent and overwhelming advice on these boards was to buy where you want to stay even if that meant paying more to buy resale for those resorts than buy direct for SSR. So while I understand that some of the posters on this thread feel that resale purchasers get what they deserve for buying at a discount, that wasn't necessarily the case for resale purchasers.

It is disturbing to contemplate that additional changes could include removing the ability (or "perk") to transfer to other DVC properties for resale purchasers. If direct purchasers could transfer into a resort but resale purchasers could not transfer out, there will be resale owners who won't have any ability to use their timeshare interest at all for certain use years. For example (and I exagerate to make the point), if twice as many direct purchasers wanted to trade into BVW than wanted to trade out, and resale purchasers were not allowed to, then demand for BVW will exceed supply and a lot of people are not going to get reservations at BVW that year and some of those people will be resale purchasers who have no ability (perk) to transfer to a different resort. At some point, that makes the resale value of a DVC interest no better than a lotto ticket (and again, I exagerate).

I'd really like to think that I would hold on to my ownership interest till death do we part (and I'm not rushing to that finish line), but I would feel foolish if I didn't at least contemplate the possibility that I would have to or maybe want to sell my ownership interest. Oddly, I think this change if it happened before I bought in would have made me more hesitant to buy direct than to buy resale. Much like the car, if it is going to lose value the moment you drive it off the lot, it makes buying resale where that loss is already priced into the car, alot more attractive.

Just my take.

 

[Garthilk]

Hmm,

So if a member buys a resale after the announced date for VGC and can't get into the VGC due to the fact there are so few rooms and it's sold out. The points are essentially worthless for Disneyland. Bummer.

 

[Chuck S]

With all due respect, while I understand that buying a timeshare is not an "investment", paying attention to resale value isn't foolish. When you buy a car, you don't expect to be able to sell it for a profit or "return on investment", but you would pay attention to what kind of resale value it may have in a few years and your decision on what car to buy may depend on how well that car keeps its value. When I bought into DVC, it had a many year history of good resale value (demonstrably better than its competitors and much discussed on TUG) and that was a consideration (not the largest but a consideration) over buying a Marriott timeshare in Orlando as was the fact that resale purchasers were treated the same as direct buyers.

At that time, BVC and BWV resales were selling for more than direct sales from Disney for SSR and Disney did not have inventory for all use years for those resorts. The consistent and overwhelming advice on these boards was to buy where you want to stay even if that meant paying more to buy resale for those resorts than buy direct for SSR. So while I understand that some of the posters on this thread feel that resale purchasers get what they deserve for buying at a discount, that wasn't necessarily the case for resale purchasers.

It is disturbing to contemplate that additional changes could include removing the ability (or "perk") to transfer to other DVC properties for resale purchasers. If direct purchasers could transfer into a resort but resale purchasers could not transfer out, there will be resale owners who won't have any ability to use their timeshare interest at all for certain use years. For example (and I exagerate to make the point), if twice as many direct purchasers wanted to trade into BVW than wanted to trade out, and resale purchasers were not allowed to, then demand for BVW will exceed supply and a lot of people are not going to get reservations at BVW that year and some of those people will be resale purchasers who have no ability (perk) to transfer to a different resort. At some point, that makes the resale value of a DVC interest no better than a lotto ticket (and again, I exagerate).

I'd really like to think that I would hold on to my ownership interest till death do we part (and I'm not rushing to that finish line), but I would feel foolish if I didn't at least contemplate the possibility that I would have to or maybe want to sell my ownership interest. Oddly, I think this change if it happened before I bought in would have made me more hesitant to buy direct than to buy resale. Much like the car, if it is going to lose value the moment you drive it off the lot, it makes buying resale where that loss is already priced into the car, alot more attractive.

Just my take.

Except that owners at a particular resort will always have a priority booking window over those that wish to trade in from another DVC resort. The POS guarantees at least a one month priority window. So as long as an owner (resale or direct) books during their home resort priority window, they should never lose out to an owner from another resort, much the same as it is now.

There are some parts of the DVC system that really can not change. But the outside collections are not a part of the DVC system, they are, indeed, a perk.

 

[Longhairbear]

The value I see in my contract is that what I spent initially, I would have spent on CRO over the years. I've already got my money's worth a few years back. If I sell now, and get anywhere near what I spent per point, I'm getting back money for vacations I already took. I'm not including the maintenance fees of course, but even that becomes a wash after the years roll on.
If we are all lucky enough to live to the end of our contracts, zip, done, it's over. We can't put our contract up for sale, there is no longer a contract.

 

[maminnie]

For those that are more knowledgeable then me regarding DVC and have thoughts on DVC's future building intentions of new resorts, could it be DVC's goal and objective to:

a) Minimize if not eliminate the costly building of new resorts (maybe they have reached the max that they can get for a point). I know I never would have bought at the current rates.

b) Put a plan in place to devalue members points.

c) Purchase devalued points through resale/ROFR.

d) Sell the points all over again at the price levels that appear to be a bit easier and still profitable to sell ($80 to $90 rather then over $100) with NO new building expenses. They can even extend the life of the older resorts.

Thoughts? I hate to think that this could be part of their plan, but as many continue to remind us, it is business.

 

[crisi]

For those that are much more knowledgeable then me regarding the contract terms and may also have thoughts on DVC's future building intentions of new resorts, I have two questions that have been troubling me since this was announced:

1) If DVC buys back via ROFR through the RESALE system/process, why wouldn't those points carry the same terms and conditions and inability to be used for the Disney Collection, Adventurer Collection, and Concierge Collection?? It is a RESALE purchase. Please don't anyone attack me, I know Disney can do just about anything they want. I just find it a bit disturbing that they would be given different rights as they are also a RESALE BUYER.

2) At this time, could it be DVC's goal and objective to:

a) Minimize if not eliminate the costly building of new resorts (maybe they have reached the max that they can get for a point). I know I never would have bought at the current rates.

b) Put a plan in place to devalue members points.

c) Purchase devalued points through resale/ROFR.

d) Sell the points all over again at the price levels that appear to be a bit easier and still profitable to sell ($80 to $90 rather then over $100) with NO new building expenses. They can even extend the life of the older resorts.

Thoughts?

They are not JUST the resale buyer. They are actually the owner. Of your points and mine as well. You and I are holding our points under a lease - we don't own them. By definition DVD has a different relationship with points than we do. They can break up a contract and redistribute the points for instance.

And yes, they could repurchase points for cheap and resell them for $100 per point. And maybe - if Dean is right about transitioning the program - thats part of the goal of this.

 

[maminnie]

They are not JUST the resale buyer. They are actually the owner. Of your points and mine as well. You and I are holding our points under a lease - we don't own them. By definition DVD has a different relationship with points than we do. They can break up a contract and redistribute the points for instance.

And yes, they could repurchase points for cheap and resell them for $100 per point. And maybe - if Dean is right about transitioning the program - thats part of the goal of this.

Crisi:

I revised my post to take out the first question, as after I thought about it I always knew the answer to that question even though it still disturbs me that they/DVC as a resale buyer are treated differently then us mere little members.

Regarding your answer to my second question, here we sit with quite possibly many of us members thinking that DVC is trying to devalue our memberships. What does this say about Disney/DVC, a company that many of thought was different and its timeshare would hold its value better then other timeshares?

At this point, I would really struggle with buying a direct membership at over $100 or even a resale over the course of the next weeks at $75 to $95 per point knowing that I too would be in the same boat as other members in the resale market after March 21 if I had to unfortunately sell at some point. I have been a member since the earlier days, so my per point cost was lower and I thankfully have no loan on it. So as DVC continues to take things away and revise things to their advantage, I am fortunately not as vulnerable as others. I feel sorry for those that are in a more difficult situation if the resale values happen to plummet as some here have speculated as a possibility.

The whole thing is very disturbing and disappointing to me. Because of the negative changes (enhancements) over the last few years and now this, there is a big part of me that wishes I had stayed out of the timeshare market. I had a friend that was considering purchasing. I have shared this with them and they are pretty confident that they will not proceed as they cannot purchase prior to March 21 through resale and will not pay over $100 to Disney.

 

[cseca]

With all due respect, while I understand that buying a timeshare is not an "investment", paying attention to resale value isn't foolish. When you buy a car, you don't expect to be able to sell it for a profit or "return on investment", but you would pay attention to what kind of resale value it may have in a few years and your decision on what car to buy may depend on how well that car keeps its value. When I bought into DVC, it had a many year history of good resale value (demonstrably better than its competitors and much discussed on TUG) and that was a consideration (not the largest but a consideration) over buying a Marriott timeshare in Orlando as was the fact that resale purchasers were treated the same as direct buyers.

...

I'd really like to think that I would hold on to my ownership interest till death do we part (and I'm not rushing to that finish line), but I would feel foolish if I didn't at least contemplate the possibility that I would have to or maybe want to sell my ownership interest. Oddly, I think this change if it happened before I bought in would have made me more hesitant to buy direct than to buy resale. Much like the car, if it is going to lose value the moment you drive it off the lot, it makes buying resale where that loss is already priced into the car, alot more attractive.

Just my take.

ITA

I know we don't ever want to have to sell them but if we do, of course we'd like the value to still be there. Or if God forbid something happens to me, I would want DH and my kids to be able to get some value if they ever need to sell it. And not just have the headache of trying to unload a lot of points for $1 so they won't have to pay the annual dues.

And I also agree that if DVC did not have the history or retaining good resale value as I said earlier we would've been A LOT more conservative in #s when purchasing the newer properties...

Anyways, I'm just glad someone else sees it the same way I do...

 

[maminnie]

ITA

I know we don't ever want to have to sell them but if we do, of course we'd like the value to still be there. Or if God forbid something happens to me, I would want DH and my kids to be able to get some value if they ever need to sell it. And not just have the headache of trying to unload a lot of points for $1 so they won't have to pay the annual dues.

And I also agree that if DVC did not have the history or retaining good resale value as I said earlier we would've been A LOT more conservative in #s when purchasing the newer properties...

Anyways, I'm just glad someone else sees it the same way I do...

Very good product and vacation opportunities/choices/alternatives, reputation, and moderate value retention were part of our purchase decision especially our add on contract. We also felt that Disney would treat its members right and fairly and had a strong tendency and reputation to do things right.

If resale values plummet and DVC starts scooping them up, the writing is on the wall as to what their real objective was. If their intention is to drive resale prices down to their distinct advantage, I will have little respect for the DVC/Disney organization.

 

[wdrl]

For those that are more knowledgeable then me regarding DVC and have thoughts on DVC's future building intentions of new resorts, could it be DVC's goal and objective to:

a) Minimize if not eliminate the costly building of new resorts (maybe they have reached the max that they can get for a point). I know I never would have bought at the current rates.

b) Put a plan in place to devalue members points.

c) Purchase devalued points through resale/ROFR.

d) Sell the points all over again at the price levels that appear to be a bit easier and still profitable to sell ($80 to $90 rather then over $100) with NO new building expenses. They can even extend the life of the older resorts.

Thoughts? I hate to think that this could be part of their plan, but as many continue to remind us, it is business.

Resale prices have been dropping for some time now. According to Donald Is #1's thread on ROFR activity, in 2008 BWV was selling on the resale market in the low $80s price range (see http://www.disboards.com/showpost.php?p=34447537&postcount=1755). Today's Timeshare Store's website shows 49 listings for BWV and quite a few are priced in the $60 range, and not a single one is priced over $78/point. Is this drop in BWV's price since 2008 due to some nefarious Disney plan to devalue Member's points? Or is it due to other market forces that have driven down the price of real estate holdings, including timeshares?

I predict that in 2012 or 2013 someone will compare the resale value of DVC points to their value as of December 2010 and will attribute the drop to Disney's decision to treat resales differently. But there are so many other factors that come into play, I doubt whether anyone will be able to state with objective certainty that any drop in resale values is due solely to the change.

 

[tjkraz]

For those that are more knowledgeable then me regarding DVC and have thoughts on DVC's future building intentions of new resorts, could it be DVC's goal and objective to:

a) Minimize if not eliminate the costly building of new resorts (maybe they have reached the max that they can get for a point). I know I never would have bought at the current rates.

b) Put a plan in place to devalue members points.

c) Purchase devalued points through resale/ROFR.

d) Sell the points all over again at the price levels that appear to be a bit easier and still profitable to sell ($80 to $90 rather then over $100) with NO new building expenses. They can even extend the life of the older resorts.

Thoughts? I hate to think that this could be part of their plan, but as many continue to remind us, it is business.

ROFR as the primary source of acquiring points is not a sustainable business model. Building new costs far less than the prices you see on today's resale market--think $10-15 per point. Disney could never justify using ROFR to pick up points at $60 each and then sell them for $100+. After you add in administrative and sales costs, profit on such transactions is fairly miniscule.

Prices aren't going to fall all that far because the benefits in question (Disney Collection, etc.) aren't worth THAT much--in fact they are worth zero $$ to many buyers.

History has also shown that aggressive ROFR on DVC's part causes an increase in resale prices.

 

[RobDoc]

The two are interchangeable in that decision made by one effect the decisions of the other.

I know there is a difference - and each has its distinct purpose- and I know they are two separate entities - however they do not exist in isolation of one another.

My apologies for incorrect usage.

I was trying to address your comment - "At the point that DVC STOPS building new resorts, maintenance fees will soar - or shoot directly through the roof. Because there has to be a revenue stream in addition to annual fees." - by pointing out the differences in the two separate entities and the fact that our annual fees do not provide income for DVD and that owners do have the ability to even remove DVC if we feel they are not doing a good job.

Sales revenue from DVD does not go to DVC and managment income from DVC (12%) does not go to DVD. DVC does not build resorts and there is no reason at all to believe maintenance fees in the future will be tied to anythng except operational expenses.

 

[RobDoc]

This could become an administrative nightmare.

I currently have a December UY, I thought I read on here or was told by a salesman that if I bought another cotract with a Dec UY they would role the 2 contracts into 1 number, after March if I buy resale does that mean I will now have 2 membership numbers or will they role them together, then how are they going to know which points I am using for what? If I have 2 can I tranfer the point from one to another to make a reservation?

If you purchase a resale contract with the same Use Year as your current membership, it is possible to have them combined into the same membership. They will still be tracked under individual account numbers within that membership. This is the case even when an add-on is purchased thru Disney. Points from the same membership may be used for the same reservation seamlessly and tracking those points (and contracts) is easily managed. You will even be able to see the information from each contract on the member website.

If you currently own 150 points in one contract and add-on another 50 points they will simply track the points used from each contract but you can effectively use all 200 points for the same reservation. If the points are for different resorts, they could only be combined at 7 months.

 

[Chuck S]

I had a friend that was considering purchasing. I have shared this with them and they are pretty confident that they will not proceed as they cannot purchase prior to March 21 through resale and will not pay over $100 to Disney.

Why? Unless your friend was planning on using points regularly outside the DVC system, resales after March 21 (assuming there is a price drop) can still be a very good way of purchasing into DVC. And I would not advise anyone to buy into DVC with the idea that regularly trading out of the system is a reasonable use of points.

In fact, it may make resales even more attractive to many first time purchasers. While I purchased direct many years ago, I have NEVER traded outside the system, and in fact, have never used my 345 annual points anywhere but OKW. If I were looking to add on, an inexpensive resale after March 21, would be a very attractive alternative.

 

[jarestel]

It seems that many people made some incorrect assumptions and flawed analyses regarding future values of their timeshare interests and have become upset that Disney/DVC won't guarantee a "golden parachute" for members wishing to exit the program. But faulty expectations of members aren't really Disney's problem. Time to make a new plan, Stan!

Still, I predict the next "Is DVC a good deal" thread will contain the usual overwhelming number of positive responses.

 

[LauraLea]

Why? Unless your friend was planning on using points regularly outside the DVC system, resales after March 21 (assuming there is a price drop) can still be a very good way of purchasing into DVC. And I would not advise anyone to buy into DVC with the idea that regularly trading out of the system is a reasonable use of points.

I feel as though the March 2011 date will be the cut-off date for any future direct vs. resale "enhancements". We all know more are coming and those enhancements will most likely be more undesirable. I cannot see DVC trying to manage various dates for when some perks were removed. Going forward this March date may be the ultimate cut-off for many more restrictions to resale bought points.

Laura

 

[lugnut33]

It seems that many people made some incorrect assumptions and flawed analyses regarding future values of their timeshare interests and have become upset that Disney/DVC won't guarantee a "golden parachute" for members wishing to exit the program. But faulty expectations of members aren't really Disney's problem. Time to make a new plan, Stan!

Still, I predict the next "Is DVC a good deal" thread will contain the usual overwhelming number of positive responses.

I don't think they are expecting a golden parachute. I just think they look at what the current value is of the points they own (what they could expect on the resale market) and see that the value is going down. I think it's a normal reaction for people to not be happy to see the value of their purchase fade away (of course time on a DVC contract will always be the eroding factor and there's no way around the value becoming 0 at some point due to time).

The car analogy is a good one. Over time a cars value will go down (same as DVC). Some cars devalue quicker than others (same as DVC resorts). However, if your friend borrows your car and totals it, there's a good chance that the car is worth nothing (you're still going to be out money if you have insurance). If DVC decides that profits are more important than member satisfaction and resales be damned, then that's like totaling the car because the value will be next to nothing (look at Wyndham resales).

Of course, I wouldn't mind if the resale market tanked, I might consider picking up another contract. Right now though I'm very glad I don't own a lot of points (170 bought resale), so no matter what happens I'm fine. I wasn't going to use the points for a cruise or the other stuff. Just going to use it at WDW. Plus I'm not selling soon.

However, what does concern me is the balance between turning a profit and greed that DVC seems to be weighing. It just seems that every change lately has been only based on increasing profits for DVC and advancing Jim Lewis's career. The one decision lately that was good for SSR members was the building of the THV, but even then Jim Lewis was upset by the decision to include them in the SSR inventory. Why? Because he had another plan to make more money off them.

Remember, the more DVC becomes less guest oriented and more like other time shares, the more resales are going to devalue. However, DVC absolutely doesn't care about resale value, why should they? They are in the business of selling new memberships, not protecting resale prices.

 

[Chuck S]

I don't think they are expecting a golden parachute. I just think they look at what the current value is of the points they own (what they could expect on the resale market) and see that the value is going down. I think it's a normal reaction for people to not be happy to see the value of their purchase fade away (of course time on a DVC contract will always be the eroding factor and there's no way around the value becoming 0 at some point due to time).

The car analogy is a good one. Over time a cars value will go down (same as DVC). Some cars devalue quicker than others (same as DVC resorts). However, if your friend borrows your car and totals it, there's a good chance that the car is worth nothing (you're still going to be out money if you have insurance). If DVC decides that profits are more important than member satisfaction and resales be damned, then that's like totaling the car because the value will be next to nothing (look at Wyndham resales).

Of course, I wouldn't mind if the resale market tanked, I might consider picking up another contract. Right now though I'm very glad I don't own a lot of points (170 bought resale), so no matter what happens I'm fine. I wasn't going to use the points for a cruise or the other stuff. Just going to use it at WDW. Plus I'm not selling soon.

However, what does concern me is the balance between turning a profit and greed that DVC seems to be weighing. It just seems that every change lately has been only based on increasing profits for DVC and advancing Jim Lewis's career. The one decision lately that was good for SSR members was the building of the THV, but even then Jim Lewis was upset by the decision to include them in the SSR inventory. Why? Because he had another plan to make more money off them.

Remember, the more DVC becomes less guest oriented and more like other time shares, the more resales are going to devalue. However, DVC absolutely doesn't care about resale value, why should they? They are in the business of selling new memberships, not protecting resale prices.

Actually, I think the treehouse property was included in the original SSR lease plats. It was just a question of whether of not they would be refurbished and added to the resort, or remain unused. Sort of like the property across the street at Vero. Only the way DVC did it this time, by slowly adding the treehouses, they would not have had to subsidize dues if they decided against them.

 

[Chuck S]

I feel as though the March 2011 date will be the cut-off date for any future direct vs. resale "enhancements". We all know more are coming and those enhancements will most likely be more undesirable. I cannot see DVC trying to manage various dates for when some perks were removed. Going forward this March date may be the ultimate cut-off for many more restrictions to resale bought points.

Laura

While legally they could probably make changes retroactively, if that was their long term plan, why would they have given any notice of the coming changes at all, and why not just go ahead and make those more drastic changes now?

Again, they are somewhat limited as to what they can change as far as the actual use of the timeshare. Any perks or outside destinations can change at any time for all members.

 

[jarestel]

However, DVC absolutely doesn't care about resale value, why should they? They are in the business of selling new memberships, not protecting resale prices.

We are in agreement here. DVD/DVC's focus is, and has always been, on getting people into the club, not on getting them out. That's kind of the business model of a timeshare anyway.