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.

 

[Judique]

Well, there are many owners who bought RiV inspite of restrictions because of the value they get staying there because that is the important element.

Many of us also bought with resale value being a bonus…meaning, if we sell and get any of the purchase price back, it’s a win.

So, I don’t know how things will play out, but as long as the parks exist, DVC timeshares will have a resale value that is going to be better than others as you get all the onsite perks of being a cash guest.

We shall see how it all plays out.

I'm pretty sure I'll get all my cash outlay back if I sell soon. I don't intend to sell at all, but predominately owning Boardwalk Villas (56.95 a point) and Beach Club (whatever it was when it first opened) No Worries. Very few points at Vero and HH.

I also believe the resale price for these two will start dropping sharply in the next couple of years. I could conceivably sell and become an offsite person. I've been reading and listening to Brian for a long time, and then he mystified me by buying Riviera. Up until then I was of a mind to pick up a couple of traders and try to get into SSR or OKW on occasion. Now I can see that I can get local Marriotts right on their website dirt cheap during my preferred travel months. I also stayed at Wyndham Grand for cheaper than anything at Disney fairly recently.

Bottom line, I don't ever recommend buying in to friends in my age group and as for family, right now they stay on my ownership and although they like it they are not the same kind of Disney Fanatic we seem to be on these boards. It has worked for me based on my particular circumstances.

Every so often I'll get nutty and start thinking of buying more Poly after reminiscing about past trips. Bad idea for me. I don't need it and it's not the same as when I first used to arrive at the portico, have my luggage unloaded onto a golf cart and be whisked away to Hawaii smelling the scent of gardenias as we drove along. As my mind lives more in the past I really hope my kids step in if I get too reckless with their future inheritance.

 

[Judique]

I agree that people need to consider all aspects of the decision and why I think it’s unwise to buy expecting it to hold resale value.

The point was more that people have bought RiV, myself included, and VDH, because they enjoy the resort enough to overlook resteictons.

And, from DVDs perspective, making resale an inferior product is what will help them continue to sell new DVC resorts direct.

Restrictions meant nothing to me with Riviera. It was that you had a resort on its own little island where you couldn't really walk anywhere and had to ride a bus or swing in the air to escape if you didn't have a car. Have stayed there to try it out on a few occasions and have dined there at all the food places including Topolino and like the product. I just feel sort of hemmed in while I'm there. Will stay again if I feel like it but only for a day or two. It's always one of the easiest places to get.

 

[Judique]

I think it might be true for true for VDH but I suspect Riveria will end up dropping significantly from its current resale price. It’s even low now for a resort of its quality and popularity and its new .

I think that in 5-7 years it won't matter that there are restrictions and that Riviera will start holding its price higher as the 2042's dwindle (and it gets a refurb) and direct prices keep rising with the inevitable restrictions. The product was always a timeshare with all that goes with that but for about 30 years Disney was able to sell the 'club' idea.

 

[Judique]

There is one other way: adding enough FUD to the private owner rental market to severely curtail demand. Wyndham has done this successfully, and Disney has mumbled in this direction.

I'm sure that's coming.

 

[walt34]

I'm sure that's coming.

What might this look like?

 

[Judique]

What might this look like?

@Brian Noble detailed a lot of the steps Wyndham took in the past. The one thing I absorbed is that it seemed pretty thorough with regard to how owner's renting out was hobbled. Perhaps he would be willing to repost his knowledge. My thoughts are that as more resorts become restricted and DVC has moved towards the industry norm they will insert stronger language in their contracts to benefit their side. They are pretty much guaranteed to have an edge so long as they keep the parks viable. It's all about money, corporate money and Disney is no different. We just get sold the pixie dust angle and we like it.

 

[Brian Noble]

What might this look like?

The easiest way: Cancel a few rentals from very obvious mega-renters at the last minute. Let the affronted and very angry guests do your dirty work for you by complaining to high heaven how their DVC rental went south. You don't have to do that very many times before you crater demand. Most other owners will side with the developer over the mega-renter, because mega-renters are the boogeyman for availability problems.

Disney so far has not been willing to play hardball in this way, and it would require a fairly willing mis-read of corporate culture to go that far. But the developers who have done so have found it very successful. Other medium-to-large scale renters suddenly find it difficult to get customers, and enough liquidate to drop rental flow significantly.

(There are some pretty good resale deals when this happens, too.)

You can also freeze mega-renter accounts, which does help some, but not nearly as much as throwing a curveball to demand.

 

[walt34]

The easiest way: Cancel a few rentals from very obvious mega-renters at the last minute. Let the affronted and very angry guests do your dirty work for you by complaining to high heaven how their DVC rental went south. You don't have to do that very many times before you crater demand. Most other owners will side with the developer over the mega-renter, because mega-renters are the boogeyman for availability problems.

Disney so far has not been willing to play hardball in this way, and it would require a fairly willing mis-read of corporate culture to go that far. But the developers who have done so have found it very successful. Other medium-to-large scale renters suddenly find it difficult to get customers, and enough liquidate to drop rental flow significantly.

(There are some pretty good resale deals when this happens, too.)

You can also freeze mega-renter accounts, which does help some, but not nearly as much as throwing a curveball to demand.

Thank you!

 

[Brian Noble]

Disney does not like making guests angry, even justifiably. So I think it would take a lot for them to get there.

However, Disney is generally not shy about going to the mattresses when they think someone is profiting off of their work, and/or exploiting a loophole. See: the DAS court fight. So, if they wanted to make life miserable for a handful of high-profile mega-renters, that would not take as much activation energy, namely: freeze some accounts, and dare the owners to take up a very long, expensive, and painful lawsuit.

 

[IsDVCForMe?]

Universal is about to get the Disney fans if Disney keeps up these restrictions.

 

[DVCsloth]

I guess the secondary dvc rentals take away from people renting directly from Disney is the issue? It probably makes it more difficult for dvc members to get some of the more popular dates as well.

 

[Brian Noble]

Universal is about to get the Disney fans if Disney keeps up these restrictions.

I love Universal. I’ve owned annual passes there several different times. Heck I even really like Regular Old Amusement Parks, having continuously had an all-parks season pass to Cedar Fair (now including Six Flags) for twenty years give or take.

I’m about as far from “Only Disney Will Do” as you can get.

And even *I* don’t believe this.