Direct Purchase benefits announced!

[palaemon]

From what I can tell, most people here aren't too upset with the actual change itself. It's what is to come - "what's next?"

Since this hasn't officially started, I'm sure no one really can answer this, but here goes.

Once the change is made, and there are 2 kinds of members/points/contracts, can Disney make further changes to just one class of members?

I guess anything is possible, but with this change they grandfathered everyone in and gave people 2 months to deal with the coming change.

If I bought resale after Mar. 20th, I think I'd be pretty confident that any further division would occur for new resales and not retroactive.

I mean think about it. This change was purely for sales of new direct contracts. They effectively fell into line with the other big TS and now their sales people have an answer to the dreaded "resale" question.


Also, I don't agree with the Automobile analogy. When you buy new, you get a new car. Up till now, the only difference between new and resale DVC was less $$ for resale or more years for direct. Buying a used car is still a used car.

 

[csharpwv]

You may be confusing and interchanging DVD (Disney Vacation Development) and DVC (Disney Vacation Club). The former is responsible for the development and sales of properties to be included in the DVC family. The latter is the management company who handles the day-to-day operation of the resorts and associated programs. By contract, DVC receives a fixed 12% of the operating costs for each resort (excluding property taxes) and by FL law, those costs must reflect the actual costs of running the resort. That revenue stream has nothing to do with building new resorts.

In addition, the owners of each resort have the power to replace DVC as the managing entity by a vote of those owners. Doing so would exclude those owners from DVC and thus limit those owners to their own resort and any other exchange oppportunities their "new" management company is able to negotiate agreement with. The "new" resort management would be free (and obligated) to negotiate for any services they wish including (but not limited to) transportation, security, maintenance, housekeeping, laundry, landscaping, recreation, front desk, reservations and any perks they would be interested in providing for their owners. Those owners would no longer have access to DVC Member Services or the Member website, but could set up (at their own expense) online booking. The mechanism is outlined in our documents that would allow owners to make such change.

Enjoy!

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.

 

[msd1962]

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?

 

[csharpwv]

From what I can tell, most people here aren't too upset with the actual change itself. It's what is to come - "what's next?"

Since this hasn't officially started, I'm sure no one really can answer this, but here goes.

Once the change is made, and there are 2 kinds of members/points/contracts, can Disney make further changes to just one class of members?

I guess anything is possible, but with this change they grandfathered everyone in and gave people 2 months to deal with the coming change.

If I bought resale after Mar. 20th, I think I'd be pretty confident that any further division would occur for new resales and not retroactive.

I mean think about it. This change was purely for sales of new direct contracts. They effectively fell into line with the other big TS and now their sales people have an answer to the dreaded "resale" question.


Also, I don't agree with the Automobile analogy. When you buy new, you get a new car. Up till now, the only difference between new and resale DVC was less $$ for resale or more years for direct. Buying a used car is still a used car.

I think you missed the point of the analogy - it wasn't comparing new/used - it was comparing the price of new - to the price of used - and the depreciation that happens between the two points.

It wasn't comparing the two physical products side by side - the PP's analogy is comparing the pricing strategies and quality - and how one effects the other.

 

[jsivigny]

Well as a prospective buyer of an small initial contract I plan on waiting until after 3/20. I am assuming the prices will drop a little ($2-$10 pp) but no where near 1/2 as was mentioned earlier there is still to much value in the product. Now I am buying a small contract to go every other year for 7 days. So I would have never had enough points to go on a cruise or something.

However I think Disney is making the same mistakes the US Auto companies made in the 90s and early 2000s. There are many reasons why they were in financial trouble and GM/Chrysler went bankrupt and Ford almost, but one of them was the horrible resale values of their cars. These companies did anything that pushed sales of new cars (discounts, fleet sales etc) disregarding what it did to current and future owners resale values of these cars. Enter Honda and Toyota that were disciplined in their sales, and next thing you know the Civic and the Camery had great resale values and in turn more customers, which then led to bigger discounts on the Big 3 vehicles dropping their resale even lower, a vicious cycle that has taken years to get out of. Now granted Disney doesn't have any real competition b/c nobody can build property on their land, so this is not really an apples to apples comparison but the lesson I think Disney needs to becareful of is that if you mess with resale values to much, you hurt your current/future customers and eventually hurt your direct sales.

Great analogy....If I'm a prospective buyer of a new Timeshare and I know that if something comes up in the future and I can expect to lose a large % of my Financial Investment (make no mistake, it's a financial investment) if I need to sell, then I would think twice about buying. Why would someone buy a Chevy and lose 30% of it's value the moment you drive it off the lot? By keeping Resales strong, people will know that they will have long term value and be willing to make the initial purchase. Like Honda, people will pay MORE up front, if they know they won't get hurt too bad on the Resale market.
In fact, Toyota and Honda PROMOTE the fact that they have high resell values as a Sales tactic. That's like saying...go buy a Used Car instead of a new one. But...it works and they sell lots of cars, despite a strong demand for their resales.

If Disney's entire business model is to prey on "uninformed consumers" to sell Direct, that is flawed and unsustainable. Resales have dropped recently due to no other reason then the Economic conditions today. Disney cannot dictate price levels, even with ROFR. Only market forces do that. Supply and Demand. Think about it, if there was such a HUGE demand for so called low-price resales, don't you think supply would dry up and cause eventual price increases?

Long term...Disney just devalued their product and devalued all of our Financial Interests.

The other factor that drives Resale prices down is the term limit. Each year a Contract MUST be worth less, given that it has less time remaining. Maybe Disney didn't think through the impact that would create on the spreads between New and Resale Contracts..10-15-20 years out...which is where we are today.

 

[nyck]

Timeshares are only an investment in YOUR FUTURE VACATIONS, nothing more, nothing less. To think otherwise is just foolish and those folks who are counting on making money selling need a wake up call. You get out of it what you use of it. If I was given the choice as a new buyer with these new rules in place, I would buy directly from Disney. Sorry, but not too many people want a "limited" membership and since it is an investment in future vacations, people may want the OPTION of using the points in the furture on cruises or when they can't get a room at VGC and need to use the points at Disneyland Hotel. Most look at that as a waste of points, but really it isn't if you have enough points to do it and you plan on keeping it for 20-30 years. Lots of people don't want the headache of renting points, and a lot of owners are not on these boards. I didn't even know this existed for years after I bought BCV. Now if I want to add on, I may do it resale since I have enough points for anything right now. But if I was brand new after March 20, I would buy direct.

 

[Sammie]

In my mind the best comparsion is DVC is like renting a car. You get a nice car and it's nice to use because it's new and it is taken care of but when you turn it in, you get nothing for it. The value was in the using of it.

I understood that completely when I bought DVC and I was happy to rent vacations from them until 2042, but the difference is when I rent a car the company I rent from keeps that car in great shape for me.

I am very unhappy with DVC for pushing sales and yet not getting the exisiting product that I using in tip top shape.

It is going to be very hard for members to be sales people for DVC and make referrals on a product many will now they can sell if that have to and is not well maintained.

Our dues have not decreased but the cleaniness and maintenance of the rooms have. There was a time that no one reported a room problem, it was the exception. But now more and more are having problems with things broken, not clean, damaged and even at the very new resorts such as BLT.

 

[crisi]

Well you can tell that I don't agree. Since when do we let the interests of big corporations come before the people that made them big?

I'm not saying that they shouldn't make a fair profit but they are making cut after cut after cut while raising prices across the board and restructuring the DVC to deliberately hurt the resale value and the members that made the DVC a success.

All the time. Corporations have a legal obligation to their shareholders in terms of financial stability. They don't have the same obligation to their customers.

In some ways, its intrinsically a bad bet to make a 50 year contract with a corporation. 50 years is a long time in the life of a corporation. Get your value out of it in a shorter timeframe.

 

[tjkraz]

Well you can tell that I don't agree. Since when do we let the interests of big corporations come before the people that made them big?

Every day of the week and twice on Tuesday.

Since when does Apple care that my iPhone 4 is worth less on eBay when they release the iPhone 5?

When did prescription drug companies start caring about patients who can't afford the latest and greatest wonder drugs?

Can you honestly think of any corporate policy decisions which are based upon the betterment of customers rather than a profit motive? Heck, Walt Disney gave his people only a year to build Disneyland and opened the park with soft pavement and non-functional drinking fountains. Even Walt was a businessman.

If Disney's entire business model is to prey on "uninformed consumers" to sell Direct, that is flawed and unsustainable.

That's probably reason #1 why Disney is looking for ways to add value to direct sales.

One of the common sentiments here is that Disney's direct prices are too high. Now, I'm a couple decades removed from Econ 101 but I do have a rudimentary understanding of supply and demand.

Seems to me that lower direct sale prices would also shift business from resale to DVC. Lower demand for resale gets us back to the same place--resale prices fall. Only difference there is Disney makes less money in the process and thus has less incentive to support DVC going forward.

 

[tiggerrr]

Well you can tell that I don't agree. Since when do we let the interests of big corporations come before the people that made them big?

I'm not saying that they shouldn't make a fair profit but they are making cut after cut after cut while raising prices across the board and restructuring the DVC to deliberately hurt the resale value and the members that made the DVC a success.

That's capitalism. In addition to the some of the other comments, the thing to keep in mind is that your PAST contribution to income is completely irrelevant to the company (and the shareholders). It has to be about the future revenue stream. If you own today, you'll be paying your dues. If you sell, the new buyer will pay the dues. That's locked in, so it's not about your current ownership anymore.

The only hurt to Disney is if there are current owners who might have done an add-on direct, who no longer will, because of this action. If you were going to buy resale and no longer will, it's irrelevant (see above). That gets balanced off by Disney's belief that more people will buy direct now. I'm skeptical, but that's it. This is entirely about who the next buyers are, not the current ones.

It's not nice, but it is business.

 

[Dean]

DVC may have done themselves a a bit of a dis-service as well....this may deter some people from also buying direct from DVC as there are significant negative ramifications if they want or have to sell in the future on the resale market. As we know, there are unfortunately many people in the position of having to sell at this point.

Very disappointed in this latest change and the lack of a fair and adequate amount of time to make a good decision as to what to do with our vacation interest as they call it. Nothing surprises me from DVC at this point......

I'm sure some won't buy related to this but overall it's likely that they will be able to have a more efficient sales process and a larger profit. I'm starting to wonder if the next step might be a replacement system with the points held in trust and NO home resort priority.

Technically, I believe the contract incorporates the POS which references that perks may be established. Therefore, any existing perks are bestowed upon members only as a result of having an ownership interest stemming from the contract. Since any particular contract is inclusive of the perks that are presently available, and as you say, a resale buyer assumes the limitations of the contract they are purchasing, the established perks for that contract should legally pass to the buyer.

When I used the word contract, I wasn't referring to the actual contract one signs but rather than contractual situation that the POS creates. The written separate contract really doesn't add any protections or limitations outside the POS. I believe the POS simply acknowledges that perks may occur and may go away and that DVD/DVC/DVCMC have complete control.

So I am sitting here wondering... if there are less points to use on what is "excluded", won't that leave more points to use on DVC resorts and thus perhaps make it harder to get a reservation?

Likely the reverse. First, it should make those that can trade for cash type option more efficient thus hopefully lowering the points costs of such trades and bringing them into a reasonable return (hopefully). At worst case scenario you simply increase the number of points looking for DVC rooms at the highest demand times, but not overall.

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?

Computers can track this fairly easily. Other companies do it and track which points are banked, borrowed, qualified, etc as well.

 

[Sammie]

I'm starting to wonder if the next step might be a replacement system with the points held in trust and NO home resort priority.

Dean, can you explain this further.

 

[Sandisw]

I think a lot of folks are looking back at the apparent profits made by those who purchased DVC early on (especially at Boardwalk and BCV) who were later able to sell off some of their contracts at a higher price, and are assuming that they will be able to realize the same type of gain with their own purchases. For instance, those who purchased at BWV back in 1996 and sold during 2010 paid $65/point, enjoyed the resort for 14 years, and then sold for an average of $75/point. Those folks obviously did well on their purchase and ended up making money in the long run, thus creating the perception that DVC was an investment rather than an entertainment purchase.

The contracts they were offering for resale were attractive to potential buyers because they still had significant time left before expiration. Additionally, the overall demand for DVC properties had increased significantly from when they purchased. Disney had expanded and even added another park since their original purchase, the concept of timeshares had become much more familiar to the general public, and Disney's advertising was more aggressive. Disney built the buyers' desire and resale offered a cost-effective purchase alternative.

Buyers that acquired those contracts, however, will be in a very different situation down the road. When I purchased my resale contracts, I knew I could get full enjoyment out of them during my lifetime. Afterall, 2042 is still 31 years away... and I think I may have gotten my fill of Disney by the time I'm 81 years old! But, if I wanted to sell these contracts 14 years from now, a potential buyer would only have 17 years left. It's clear to me that any of these resale contracts I purchased do not have the potential to be resold at a profit or perhaps not even at all. They are not an investment to me, but a lifetime gift (and obligation) for our family. The story might be different for a newer resort, if you can snag one at a good price through resale, but I certainly would not count on it.

Very well said! We went through the same type of thought process, although we bought BLT direct and did pay a pretty nice premium for the contracts.

But, I really bought it as a way to invest in my family, without any thoughts that I could sell for a profit, or even for anything. As many have said, most timeshares are worth nothing once you own so I always figured any price I got for it down the road, IF I had to sell, was a bonus.

 

[chalee94]

Dean, can you explain this further.

that is what marriott has done recently.

not sure how it would work in DVC's case since they already had a pt system in place.

 

[Dean]

Dean, can you explain this further.

The concept is they would convert any developer controlled inventory to such a trust and they could offer current owners the change to say extend and convert for a fee if they wanted. It would essentially make every home resort your home resort in they eyes of the member. There are obvious downsides to members but a lot of potential upside as well. Two things I've learned is that timeshare can spin anything to their advantage and that most Disney fans will believe almost anything coming from Disney. It gives new life to any 2042 resort and gives Disney total control to remove any resorts they want when the current expiration is reached for that given resort while keeping the club itself in place.

that is what marriott has done recently.

not sure how it would work in DVC's case since they already had a pt system in place.

Actually I think it would be easier than Marriott. They take the points back that are cheap enough ROFR, convert existing developer owned inventory and any new resorts. All you have to do is track the points separately but they have to do that anyway, esp now with this change.

 

[nukker7]

Can I get a WHOOT WHOOT! Little intense in this thread.
Not crazy about the change but, I bought to go to Disney. They haven't taken that away......

 

[zebsterama]

Thanks for making me aware of what DVC was doing today.

I had just decided to add on and was in the process of purchasing points. I called my reseller and backed out.

No matter what I think this will not help increase resale prices. I never intend to use points for anything other than Disney World, so for me it makes sense to wait 6 months or so for a purchase and see what happens to resale prices.

If I get a lower price then, good for me. If not, I doubt I will pay anymore than I would have paid today.

I bet the phones at all the resellers were ringing off the hook all day. People like me backing out, other people trying to buy!

I feel the same way. I have a feeling that prices may not drop heavily, but they will likely drop none the less.

 

[papamouse1]

So I am sitting here wondering... if there are less points to use on what is "excluded", won't that leave more points to use on DVC resorts and thus perhaps make it harder to get a reservation?

Well, I'm not sure if I am misreading your post or what, but I think your point is valid.

What I hear you asking is now that people won't be able to use their points for certain things, they will need to use them for the other resorts which means more ressies for them and less availability overall... is that accurate?

It is a valid point. Here's an example. GCV in California is a small resort and the only DVC resort at DL. So some people use their points to stay at PP or DLH. But now that anyone who buys resale can't book at DLH or PP, then they will be forced to use their pints at GCV which in turn will make the ressies there more difficult to get.

Even though the impact of "resale" owners on the overall load on the accepted Disney resorts CAN actually happen, I think the impact will be marginal at best.

IMO, the biggest impact will come in regards to using points for DCL. There seems to be a sizable number of DVC owners who do this (including me).

But in the end, the impact will still be marginal.

 

[csharpwv]

I just want to make sure the PP is clear that Disney Cruise Line IS included in the restriction as DCL is part of the Disney Collection which will not be available to resale owners who close after March.

I may have read your post wrong - but I wanted to make sure it was clear.

 

[wdrl]

So I am sitting here wondering... if there are less points to use on what is "excluded", won't that leave more points to use on DVC resorts and thus perhaps make it harder to get a reservation?

I don't think so. If a Member trades their points to use on the Disney Collection, The Adventurer Collection, or the Concierge Collection, the corresponding villa is now part of the Disney cash inventory and no longer available for other DVC Members to use for points-based reservations. If the Member has resale points purchased after March 20, 2011, the Member will use those points to book a villa. Either way, other Members will not have access to the villa. Thus, this change will not improve or lessen the availability at DVC resorts.