Disney's Long Term DVC Strategy

[Patmcpsu]

I noticed that these boards tend to look at things from the buyer's perspective, and make their predictions based on that (namely, future demand). However, Disney is the one who actually holds most of the cards. They control supply, they determine which membership levels get which perks, they get to hold special events/giveaways, etc.

The trend I noticed is that Disney doesn't like a flourishing resale market. Their moves over recent years have punished resale buyers - increased point minimums for DVC-Y, resale restrictions. The only knob they haven't turned much has been ROFR (which would require them to make a big financial commitment).

Meanwhile, they are slowly giving more to direct buyers: the new member lounge in MK, Membership Magic Beyond.

I predict that this trend will continue. Direct benefits are safe, and if anything, will be enhanced. Any benefit changes that DVC makes will be to punish resale buyers.

 

[ark101]

I wouldn't call it 'punishing' but they certainly are trying to separate the direct vs resale product so a buyer can justify the direct prices. As direct prices keep climbing, they probably saw this as necessary because resale pricing would have a ceiling and the difference in direct and resale prices will keep growing.

 

[Patsaizan]

What I find interesting is DVC will purchase your contract back, at a greatly reduced rate. Example, I asked how much they would buy back my GFV contract (100 points, March use year, full loaded) and was offered $111 per point. I could safely get at least $160 per point on the resale market. In the end, I am keeping the contract. Wanted to sell it to buy Poly, but it would be too much of a hassle for me. Point is - an offer like that would push me to sell my contract on the resale market.

 

[kanerf]

Like many, I have a blended DVC portfolio. I have more than enough retail points for benefits and the bulk is in resale so that I can stay where I want when I want. I think that this is the best way to go. Buy your retail on the best deal you can get, usually when a new resort is opening (looking at you Lake Shore) and then add on resale when you see deals.

 

[muppets3d]

What I find interesting is DVC will purchase your contract back, at a greatly reduced rate. Example, I asked how much they would buy back my GFV contract (100 points, March use year, full loaded) and was offered $111 per point. I could safely get at least $160 per point on the resale market. In the end, I am keeping the contract. Wanted to sell it to buy Poly, but it would be too much of a hassle for me. Point is - an offer like that would push me to sell my contract on the resale market.

They seem to be ROFR'ing VGF right now so it would probably sell for a good bit more than $160 tbh.

 

[muppets3d]

I wouldn't call it 'punishing' but they certainly are trying to separate the direct vs resale product so a buyer can justify the direct prices. As direct prices keep climbing, they probably saw this as necessary because resale pricing would have a ceiling and the difference in direct and resale prices will keep growing.

Agreed, it's not punishing resale. They aren't taking anything away from resale - they get exactly what the contract describes. They're just not offering anything extra.

 

[DonkeyHoTay]

Agreed, it's not punishing resale.

Looking at it from a resale owner's perspective and watching the growth of perks to direct owners without them coming to resale owners, I can see the punishment view - especially when resale owners pay the same dues per point that direct owners pay. The dues alone should be a pathway to washing resale points for at least some direct benefits. But hey! I'm not in charge.

 

[muppets3d]

Looking at it from a resale owner's perspective and watching the growth of perks to direct owners without them coming to resale owners, I can see the punishment view - especially when resale owners pay the same dues per point that direct owners pay. The dues alone should be a pathway to washing resale points for at least some direct benefits. But hey! I'm not in charge.

Dues do not pay for perks - purchasing direct points is what pays for perks.

 

[pkrieger2287]

It's a situation that doesn't have an easy answer, I'm afraid. Current DVC leadership seems to operate under the general premise of "DVC Resale is the devil." There's definitely a push to reclaim market share; they believe they have lost a lot to the resale market when, in fact, it appears to me that the issue lies with their undertrained cast members and guides who can't sell the product without truly "selling." I feel like the average experience of most guides these days is less than five years, which doesn't provide them with a wealth of knowledge about the product. However, the problem is that as they target the resale market, they negatively impact the overall value of the product. The current direction could eventually render it comparable to other timeshares—this means that DVC loses its key market differentiation: its ability to maintain market value and break away from the stigma and mold of traditional timeshares.

 

[muppets3d]

It's a situation that doesn't have an easy answer, I'm afraid. Current DVC leadership seems to operate under the general premise of "DVC Resale is the devil." There's definitely a push to reclaim market share; they believe they have lost a lot to the resale market when, in fact, it appears to me that the issue lies with their undertrained cast members and guides who can't sell the product without truly "selling." I feel like the average experience of most guides these days is less than five years, which doesn't provide them with a wealth of knowledge about the product. However, the problem is that as they target the resale market, they negatively impact the overall value of the product. The current direction could eventually render it comparable to other timeshares—this means that DVC loses its key market differentiation: its ability to maintain market value and break away from the stigma and mold of traditional timeshares.

The key market differentiation is the location. No other timeshare system will get you a villa in the Disney bubble. There is no way Disney will lose that.

People don't buy timeshare worried about resale value. If they did, Westgate Resorts would have gone out of business decades ago.

 

[starsaber25]

People don't buy timeshare worried about resale value. If they did, Westgate Resorts would have gone out of business decades ago.

BUT Westgate has the stigma of a typical timeshare because it is pretty much worthless on the resale market. A big selling point is with a thriving resale market DVC can argue that they aren’t the typical timeshare company. DVC retains value.

No matter which way you slice it the majority of people out there think of DVC as the evil word Timeshare. We know different because we know the product. But if there isn’t a resale market for it then it coulr be as worthless as some of the others. Yes Disneyworld is an argument for it to retain value. But isn’t the beach in Hawaii? The beach in Aruba?

 

[starsaber25]

Oh and I can absolutely get into a Disney property with my Marriott Timeshare.

 

[chicagodisneyguy]

I don't think DVC minds the "flourishing" resale market. I think the fact that the contracts retain as much of their value as they do allows Disney comand the high direct prices they charge. If resale contracts were trading in the $20 to $50s the math wouldn't really ever make sense to go direct at current levels. DVC would lose a lot of direct sales to resale if BLT or BWV was trading at $50. To compete they'd have to lower their direct prices and that wouldn't benefit them. Sure, DVC would love RIV resale to be $50 and direct to be $250. But at $50 pretty much everyone of us would be a buyer....even with the restrictions.

I could see DVC try to depress the resale market if they ever wanted to get really aggressive in selling contracts sold out properties. But with the differing expiriation dates I think they would only focus on certain resorts in certain cases. And it's hard to minipulate/depress just one or two resorts. To make any changes they really need to change the whole system.

I do think the more perks direct gets the widder the direct to resale spread could go. But at the end of the day in a normal (non-recession) market I think there will always been a thriving resale market that Disney will have a very hard time depressing...especially in regards to the original 14 resorts. Once those all revert back to Disney and the new trust/restricted system is the main system, all bets will be off. But I doubt I'll be around to see it....and if i am I won't care.

 

[AstroBlasters]

It's a situation that doesn't have an easy answer, I'm afraid. Current DVC leadership seems to operate under the general premise of "DVC Resale is the devil." There's definitely a push to reclaim market share; they believe they have lost a lot to the resale market when, in fact, it appears to me that the issue lies with their undertrained cast members and guides who can't sell the product without truly "selling." I feel like the average experience of most guides these days is less than five years, which doesn't provide them with a wealth of knowledge about the product. However, the problem is that as they target the resale market, they negatively impact the overall value of the product. The current direction could eventually render it comparable to other timeshares—this means that DVC loses its key market differentiation: its ability to maintain market value and break away from the stigma and mold of traditional timeshares.

“DVC resale is the devil”….

I’m going to have to let that sink in….

 

[muppets3d]

BUT Westgate has the stigma of a typical timeshare because it is pretty much worthless on the resale market. A big selling point is with a thriving resale market DVC can argue that they aren’t the typical timeshare company. DVC retains value.

No matter which way you slice it the majority of people out there think of DVC as the evil word Timeshare. We know different because we know the product. But if there isn’t a resale market for it then it coulr be as worthless as some of the others. Yes Disneyworld is an argument for it to retain value. But isn’t the beach in Hawaii? The beach in Aruba?

DVC is just a timeshare. They call it a club or membership or whatever but that doesn't change anything, it's just words. The reason there are tons of worthless beach timeshares is there are 5 other beach timeshares beside that one. There is only one timeshare on Disney property, and as long as Disney parks are among the most popular travel destinations in the world that will always have appeal.

Oh and I can absolutely get into a Disney property with my Marriott Timeshare.

Sure but we aren't talking about Interval International or other exchange programs here. We're talking about the actual properties. There will never be a Mariott Vacation Club property built in the Disney bubble unless somehow Mariott buys DVC from Disney, I guess. Stranger things have happened, but I really don't see that happening any time soon.

 

[DonkeyHoTay]

Dues do not pay for perks - purchasing direct points is what pays for perks.

No. Purchasing direct points offsets the developer's cost to build the resort. Perks is a different department - marketing. Dues offset maintenance cashflow, and the developer cares a lot about cashflow.

My point is DVD could show some more appreciation for dues maintenance cashflow they continue to get from resale owners to whom they did not have to market or sell anything - especially when other timeshare programs have some direct owners that abandon their contracts (and their dues payments) altogether because their products have no resale value.

Just my $0.02, but it wouldn't cost much to develop a program to appeal to (thank?) resale owners for staying on brand, keeping the value of the product high and writing those dues checks every year. Would not have to be free! Even if it was MMB for more money than direct owners pay, that would be a step in the right direction. Said another way, DVD is missing a profit opportunity by not appealing to resale owners in some way.

 

[NY Pirate Princess]

If Disney didn't value the resale market, it would end.

It absolutely makes sense to make Disney lovers (like myself) crazy to buy Direct by offering interesting perks. Relatively low cost items for Disney that compel those of us with massive Disney FOMO to think long and hard about buying direct contracts at 150 points. However, most of the perks for me are emotional and my financial decisions are not.

Disney's long term DVC strategy is pretty clear to me. Convert as much high cost hotel rooms to DVC as possible while building as much new DVC property as the market will allow. When was the last WDW cash property built? And Art of Animation doesn't count as a lot of it was built and left vacant. Opened in 2012 for those that disagree with my thought that it doesn't really count! Grand Destino was just a tower add on to existing resort. So Pop opening in 2003 was the last new build of cash resort properties? A lot of DVC conversion and new build since 2003.

 

[Brian Noble]

I have said this many, many times, but I will say it again: Disney does not need a "flourishing resale market" in order to sell developer points. Marriott points are worth approximately 20-25% when selling them---and even that might be a little high right now. Wyndham points are worth 10% or less. Neither company has any trouble at all selling timeshare interests.

Why? Because most people who are buying a timeshare are not thinking about selling it. They are on vacation, having the time of their lives, when a helpful Guide explains to them how they can bottle this magical feeling "at today's prices" for the next four or five decades, for themselves and their loved ones.

That seems shocking to this corner of the Disney online ecosystem, because we are deeply verserd in how this all works. But, we are not at all representative of the typical DVC owner, let alone prospect. If you don't believe me, spend some time talking about the product in the hot tub and see what you hear.

the developer cares a lot about cashflow.

They do. But the management fee is peanuts in the overall ecosystem. They care much more....MUCH MUCH more....about selling. Timeshare developers are in the business of selling timeshares. They are not first and foremost property managers. Those are called "property managers." And, there are some in the ecosystem. Grand Pacific Resorts is probably the best example that comes to mind.

They do not need to keep resale owners loyal to the brand. They do not care if you keep your contract or sell it to someone else. That's because you will keep paying Dues until you get rid of it, or you will be foreclosed upon. And if you don't use it, that's good for Disney, because it flows to breakage---and Disney already exceeds the breakage level they pay to the associations, so every marginal unused room represents risk-free profit.

 

[Chili327]

Sure but we aren't talking about Interval International or other exchange programs here. We're talking about the actual properties. There will never be a Mariott Vacation Club property built in the Disney bubble unless somehow Mariott buys DVC from Disney, I guess. Stranger things have happened, but I really don't see that happening any time soon.

I think they meant Swan and Dolphin are Marriot and in the most ideal location possible inside the bubble.

 

[byurick]

......

That seems shocking to this corner of the Disney online ecosystem, because we are deeply verserd in how this all works. But, we are not at all representative of the typical DVC owner, let alone prospect. If you don't believe me, spend some time talking about the product in the hot tub and see what you hear.

......

This 100% I've chatted up random folks in standby lines at the park who are wearing DVC merch, I've yet to find a member that actually has a clue how it works. People on this board often fail to see we are the ones in a bubble about DVC knowledge, the rest of the world doesn't care to educate themselves.