Disney's Long Term DVC Strategy

[IsDVCForMe?]

Only got through about half of these posts but man this is good. Have to keep looking back at past threads

 

[OKW Lover]

I'm wondering if DVC will buyback more points through RFR. It seems to be a financial win for the company is more than one way. Obviously they make money on the spread between the RFR price and what they get when they re-sell the points at today's price. But they also benefit by raising the pricing bar on resales which would drive more people to direct purchases.

 

[intamin]

I'm wondering if DVC will buyback more points through RFR. It seems to be a financial win for the company is more than one way. Obviously they make money on the spread between the RFR price and what they get when they re-sell the points at today's price. But they also benefit by raising the pricing bar on resales which would drive more people to direct purchases.

@Brian Noble wrote a comment awhile back explaining why but the general gist of it was it is far more profitable for them to sell new resorts than to buy contracts back in ROFR and resell them as direct. I'm sure that it will increase their profits selling back through ROFR having restrictions but it's not the slam dunk that people think it is when compared to opening a new resort and selling brand new inventory

 

[OKW Lover]

@Brian Noble wrote a comment awhile back explaining why but the general gist of it was it is far more profitable for them to sell new resorts than to buy contracts back in ROFR and resell them as direct. I'm sure that it will increase their profits selling back through ROFR having restrictions but it's not the slam dunk that people think it is when compared to opening a new resort and selling brand new inventory

I agree that it's more profitable for them to sell new properties. That's certainly correct. It's also correct that they don't make as much selling back ROFR'd properties. But they could be making more from those ROFR'd properties.

 

[Sandisw]

I agree that it's more profitable for them to sell new properties. That's certainly correct. It's also correct that they don't make as much selling back ROFR'd properties. But they could be making more from those ROFR'd properties.

When you look at the sales numbers for sold out resorts, there simply doesn’t appear to me to be that big of a market.

It still costs them to buy and unless it’s resort low VGC where they might have a long list of buyers wanting it direct, it doesn’t seem to be enough of a profit for them to have adopted that strategy.

 

[walt34]

When you look at the sales numbers for sold out resorts, there simply doesn’t appear to me to be that big of a market.

It still costs them to buy and unless it’s resort low VGC where they might have a long list of buyers wanting it direct, it doesn’t seem to be enough of a profit for them to have adopted that strategy.

This might change a bit when the first resale-restricted resort sells out. It offers a higher spread between direct price and ROFR-cost to Disney. Not quite the profit margin they get from newly built resorts, but better than before. They might keep selling those resorts more actively - especially if they have nothing else in the area.

 

[airjay75]

This might change a bit when the first resale-restricted resort sells out. It offers a higher spread between direct price and ROFR-cost to Disney. Not quite the profit margin they get from newly built resorts, but better than before. They might keep selling those resorts more actively - especially if they have nothing else in the area.

I had similar thoughts. It gives Disney more flexibility - maybe they’ll use it, maybe they won’t.

I could also see periodic flash sales of restricted resorts being more successful than periodic flash sales of the O14. Take the current SSR sale and the CCV one they had last incentive period. They’re not terrible if you’re looking for blue card benefits, but resale still offers quite the discount AND gets you access to the O14, so gotta really want those points to be direct to jump on those. For restricted resorts, well, sure, the resale discount will always be there but you’re getting access to so many more resorts if you go direct - the premium is much more worth it.

The trust will add even more flexibility if they want to ROFR and resell direct because there will be no more need to match units - only the price and points available will matter.

 

[Sandisw]

This might change a bit when the first resale-restricted resort sells out. It offers a higher spread between direct price and ROFR-cost to Disney. Not quite the profit margin they get from newly built resorts, but better than before. They might keep selling those resorts more actively - especially if they have nothing else in the area.

That is a very good point and maybe that will shift DVDs strategy.

We have already seen them taking some RIV in ROFR, so it could end up happening, given that the two products are vastly different.

The O14 are really not at this point.