Direct vs Resale - Length of contract considerations

[LAX]

It does get complicated, esp when you realize that you're still going to go on vacation so you might use part of those funds along as well. IMO however, to ignore the issue of the TVM/Opportunity cost is not reasonable.

Perhaps "ignore" was the wrong choice of word. I was well aware of TVM/OC, but it would have been too complicated for me to factor into the decision. I know there is an opportunity cost on literally every single decision I make in life, particularly the big ticket items, and to ponder what I can potentially do otherwise every time would just add unnecessary stress/worry.

LAX

 

[Dean]

Perhaps "ignore" was the wrong choice of word. I was well aware of TVM/OC, but it would have been too complicated for me to factor into the decision. I know there is an opportunity cost on literally every single decision I make in life, particularly the big ticket items, and to ponder what I can potentially do otherwise every time would just add unnecessary stress/worry.

LAX

It's complicated to calculate in detail but not so much to at least consider it.

 

[ziravan]

Regarding BCV and BWV, I think the worm has turned on the "OKW Extension Problem".

If DVD offered an extension on those two resorts comparable to the one they offered at OKW, they'd get significant buy in.

I'd jump at the chance. Not necessarily because I'd use those out years but because it would secure the value of my contract.

All the concerns raised by this thread would disappear with a 15 yr extension.

That wasn't nearly as big a concern with OKW owners then as it will be in the next decade with the other 2042 resorts.

That said, I don't expect any extensions to be offered.

 

[Dean]

Regarding BCV and BWV, I think the worm has turned on the "OKW Extension Problem".

If DVD offered an extension on those two resorts comparable to the one they offered at OKW, they'd get significant buy in.

I'd jump at the chance. Not necessarily because I'd use those out years but because it would secure the value of my contract.

All the concerns raised by this thread would disappear with a 15 yr extension.

That wasn't nearly as big a concern with OKW owners then as it will be in the next decade with the other 2042 resorts.

That said, I don't expect any extensions to be offered.

I go back and forth on wether they'll do it, I'm around 50/50 but if they do, they'll have to offer it later or completely differently than they did OKW. I think all the other WDW properties would do better than did OKW (and would have at the time) if they did offer a similar extension type then the question will simply be pricing. Of course a similar program done now would be significantly more than the OKW extension was. If they did it now for the 3 remaining on property 2042 options, it'd likely be $50 pp or more as the discounted price. As we get closer that price will rise slowly because the access time will be closer. I doubt they want the entire set back at one time with down time for refurbishment though. I'm starting to feel selling it largely to the members as a new resort or even a new system of say 25 or 30 years late in the course might be best. That way they can sell it new at close to full retail prices and offer a discount to the current members. That price might then be similar to any new resort but have discounts build in.

 

[crisi]

You've hit upon the "OKW Extension Problem".

What's today's value of points 25 from now?

To consider that, the time value of money, which we routinely set aside in these discussions, becomes paramount. A CCV property worth $150/pt for 28 yrs of contract in 2042 isn't worth nearly that much today.

In real terms, when you're looking at $176 for 50 yrs vs $105 for 25 yrs, the value for point over the life of the contract might be equal, but you're frontloading much of that CCV cost in today's dollars.

For a 100 point contract, that CCV contract is costing you $17,600 and the BCV $10,500 in 2017 dollars.

In that case, I think you could make the argument that spending $10,500 today and investing $7,100 for the next 25 yrs in order to buy a replacement contract in 2042 might be a much better deal.

Especially if you were to decide in 2042 that you were done.

That brings up an interesting idea for those that want to play with the thought of diminishing value on contracts. Buy a contract at BCV now, put the money you would have spend direct aside. In 20 years, the Poly will be where BCV is now in terms of lifespan, and you might get a good deal on it - if you still want to own.

But that "if you still want to own" is a kicker. Fifty years is a long time. My advice is to make sure you want it for the next ten before buying. By that time you will have gotten your ROI out of the contract, and any salvage value is gravy. A lot can happen in ten years - people lose jobs, change careers, decide that they want to live a simplier life. People divorce, they die, they get ill. Children are born, elementary school age children leave for college. And (gasp!) people get tired of Disney - and Disney itself changes. If you know what your life will be in ten years with some certainty, you have an excellent crystal ball. If you are right on what it will be in fifty years, you are clairvoyant and don't need DVC, you'll make enough money in the stock market to pay cash for whatever your heart desires.

 

[LAX]

I go back and forth on wether they'll do it, I'm around 50/50 but if they do, they'll have to offer it later or completely differently than they did OKW. I think all the other WDW properties would do better than did OKW (and would have at the time) if they did offer a similar extension type then the question will simply be pricing. Of course a similar program done now would be significantly more than the OKW extension was. If they did it now for the 3 remaining on property 2042 options, it'd likely be $50 pp or more as the discounted price. As we get closer that price will rise slowly because the access time will be closer. I doubt they want the entire set back at one time with down time for refurbishment though. I'm starting to feel selling it largely to the members as a new resort or even a new system of say 25 or 30 years late in the course might be best. That way they can sell it new at close to full retail prices and offer a discount to the current members. That price might then be similar to any new resort but have discounts build in.

I am a relatively newcomer when it comes to DVC analysis, so I might be way off. I just can't see how DVD would do any form of extension as long as it doesn't allow them to change the nightly point requirements. BCV and BWV are just in such prime locations for them not to charge premium level of points (especially BWV). Just look at the monorail resorts. I would even argue BCV and BWV may actually be in a better location since they are walkable to two parks. I don't know how much refurbishment is needed to sell them as "new", so I don't know how much down time would be needed. Perhaps it can be done in phases unless a complete tear down and rebuild is considered, which obvious would change the equation.

LAX

 

[Dean]

I am a relatively newcomer when it comes to DVC analysis, so I might be way off. I just can't see how DVD would do any form of extension as long as it doesn't allow them to change the nightly point requirements. BCV and BWV are just in such prime locations for them not to charge premium level of points (especially BWV). Just look at the monorail resorts. I would even argue BCV and BWV may actually be in a better location since they are walkable to two parks. I don't know how much refurbishment is needed to sell them as "new", so I don't know how much down time would be needed. Perhaps it can be done in phases unless a complete tear down and rebuild is considered, which obvious would change the equation.

LAX

To do that would require closing down BCV and starting BCV II and would likely reduce the % of current owners interested. One benefit would be guaranteed participation, no down time so no lost revenue or additional expenses where they're paying the dues or it's sitting empty or unused. If they close and raise the points they'll have to do a major refurbishment which means it's closed so that's on their dime. If they extend in any way, any upgrades are on the owners dime for those that extend and they could do so without any villas out of service. IMO the guaranteed participation of the % that extend would be a good enough reason to do so. The actual profit from a higher points chart is pretty marginal when you look at the overall process. Either way I doubt they'll change the points other than possibly doing away with standard view at BWV if they close it down and start with BWV II.

 

[jagron11]

This thread is getting very interesting. I appreciate the insights from such experienced owners. I an feeling much more comfortable with the shorter contract. It seems that the only real regret is not purchasing earlier but that's life. I'll hit some of those other threads comparing BWV and BCV. There seems to be some real value there, at least within the parameters and desires of my crew. I know one son preferred BWV because of the boardwalk entertainment and midway games. We want proximity to Epcot, entertainment, good pool, restaurant options....not just food court.

 

[LAX]

To do that would require closing down BCV and starting BCV II and would likely reduce the % of current owners interested. One benefit would be guaranteed participation, no down time so no lost revenue or additional expenses where they're paying the dues or it's sitting empty or unused. If they close and raise the points they'll have to do a major refurbishment which means it's closed so that's on their dime. If they extend in any way, any upgrades are on the owners dime for those that extend and they could do so without any villas out of service. IMO the guaranteed participation of the % that extend would be a good enough reason to do so. The actual profit from a higher points chart is pretty marginal when you look at the overall process. Either way I doubt they'll change the points other than possibly doing away with standard view at BWV if they close it down and start with BWV II.

If DVD can somehow manage to minimize down time, it would be a fairly easy decision. Even then, I don't see DVD worrying about "guaranteed" participation as they shouldn't have any problem selling them to newcomers (or perhaps even former owners). If DVD manages to sell out PVB at those point requirements (eventually), BCV/BWV shouldn't have any problem with similar point levels. With so many resorts having the same expiration, I don't see them refurbishing all to resell at the same time. It will be interesting to see how DVD handles them.

LAX

 

[Dean]

If DVD can somehow manage to minimize down time, it would be a fairly easy decision. Even then, I don't see DVD worrying about "guaranteed" participation as they shouldn't have any problem selling them to newcomers (or perhaps even former owners). If DVD manages to sell out PVB at those point requirements (eventually), BCV/BWV shouldn't have any problem with similar point levels. With so many resorts having the same expiration, I don't see them refurbishing all to resell at the same time. It will be interesting to see how DVD handles them.

LAX

I don't see it as a slam dunk. To sell BWV, BCV and VWL (BR) as new all at one time, likely with a reduced market by shutting out a portion of current owners is an issue. I don't think they'd be able to jack up the price AND points at the same time and not refurbish first. Having a certain % of automatic sales counts for something. We'll see but depending on how they decide to approach it, we may have some clues in the next few years.

 

[LAX]

I don't see it as a slam dunk. To sell BWV, BCV and VWL (BR) as new all at one time, likely with a reduced market by shutting out a portion of current owners is an issue. I don't think they'd be able to jack up the price AND points at the same time and not refurbish first. Having a certain % of automatic sales counts for something. We'll see but depending on how they decide to approach it, we may have some clues in the next few years.

Down down for refurbishment is certainly a major consideration. Perhaps DVD would offer a short extension (5-10 years?) at BCV while it redo BWV. Once BWV is done, then redo BCV. As for the others (BRV, OKW, HHI, & VBR), I don't think DVD has as much leverage. That's why I think DVD will try to squeeze as much as it can out of those two prime resorts.

LAX

 

[ziravan]

Down down for refurbishment is certainly a major consideration. Perhaps DVD would offer a short extension (5-10 years?) at BCV while it redo BWV. Once BWV is done, then redo BCV. As for the others (BRV, OKW, HHI, & VBR), I don't think DVD has as much leverage. That's why I think DVD will try to squeeze as much as it can out of those two prime resorts.

LAX

This is what I think they'll do. I think they may offer 3-10 yr extensions to spread out the end dates and then go into all the 2042 resorts on property and create a 2nd DVC entity 25 yrs apart.

I think VWL is going to be the model.

If it takes 2 yrs to sell, then VWL, BCV and BWV represents 12 yrs worth of sales out of 50 to be on a continual loop.

Eventually they'll get to perpetual product to sell.

I have no idea what they'll do with VB and HH in 2042.

 

[CarolMN]

IMO, DVC is a luxury purchase and is about personal enjoyment. That's why I believe that it's most important to buy where you want to be. (I am assuming that one goes and will continue to go to Disney on a regular basis for at least the foreseeable future and that one has good reason to believe the family will have the disposable income to afford Disney vacations as well as the disposable income to make the initial purchase).

If the assumptions are true, my advice is to focus most on what you want out of a vacation and not get caught up in all the "value" & "best case" calculations for resort choices. The good feelings one gets on getting a good deal fade very quickly when the family is staying at the "good deal" wishing they were somewhere else. The good feelings fade very quickly if you can't go when you want to go because there is no room at the inn at the time you want to go. The good deal falls apart if you can't get a studio or can't get the less expensive views you were counting on.

IMO, the WDW & VGC contracts will have value until the last year - as long as the parks & on site Disney resorts remain a popular vacation destination. Of course I am assuming that Disney will continue to raise resort prices at the rate of inflation (at least) and that DVC fees will go up at the same rate (or less). As long as people want to go to Disney and stay on site, there will be people willing to take a chance on a DVC rental to save 40%-50% over Disney prices.