Do you think minimum direct points required will ever go down?

[Ashlotte]

We are in the ROFR process for our first account. I probably would have considered buying a small account direct for the perks if the minimum was still 25-75 points, but the 150 minimum buy in is a huge amount. I can't imagine this is a wise or sustainable business plan for Disney. We waited until all of our finances were in order before buying this luxury purchase (no debt other than mortgage, which will be paid off this year, college and retirement accounts well funded). Are they just banking on attracting people who finance and don't pay cash, so the total amount doesn't feel as overwhelming? Just hoping the very wealthy will also happen to be Disney fans that want to vacation at Disney forever? It seems like having such a big minimum buy in severely narrows their potential pool of customers and drives people to resale who might have otherwise bought a smaller amount of point directly. I am having a hard time understanding how this is a good business decision. Do you think this has slowed sales at all? Do you think they would ever go backwards and lower the amount?

 

[thanxfornoticin]

I find it hard to believe they would ever lower it again. They seem to be more intent on restricting the Blue Card benefits, and with so many people grand-fathered in from before the changes, it doesn't sound logical to me they'd change course. But you never know!

 

[CaptainAmerica]

Most people are buying at least enough points for one-week-in-a-studio, which is right around the 150 anyways. What Disney didn't want people doing was buying 25 points to get benefits, then buying 125 points (or however many) via resale.

 

[Ashlotte]

Most people are buying at least one-week-in-a-studio points, which is right around the 150 anyways. What Disney didn't want people doing was buying 25 points to get benefits, then buying 125 points (or however many) via resale.

I can see that logic. But it still seems that they would overall be selling less points, as people are driven to resale completely, when otherwise they might have bought at least some direct points. I don't see the benefits being substantial enough for a lot of people to justify that jump, but I could be wrong.

 

[CaptainAmerica]

I can see that logic. But it still seems that they would overall be selling less points, as people are driven to resale completely, when otherwise they might have bought at least some direct points. I don't see the benefits being substantial enough for a lot of people to justify that jump, but I could be wrong.

I THINK, but obviously can't say for certain, that most Direct buyers have absolutely no idea what the resale market looks like or even that it exists.

 

[JGINPL]

I would love for the minimum to drop back down to 25 points, that would be about the only time I would buy direct anytime soon.

 

[Ruttangel]

It went from 25-150 in quite a short period of time (maybe 3 years).
I actually think they could have done a promotion of selling 50 for the 50th anniversary to entice more sales but ultimately they are only after the big sales and not small volume from people sitting on the fence.
They could also be creative and make the minimum 50pts for AUL to try and stimulate interest in the resort now it's under 40 years left.
But, it seems inevitable that when PVB2 is released it could be 175-200.

 

[CarolMN]

I think the minimum for a new member to buy direct at DLT might be less than 150, but I do not think the total required to qualify for Membership Extras will ever go below 150. That is more likely to increase, IMO.

 

[tjkraz]

A decade ago during the lending crisis, the Orlando Sentinel reported that 75% of all DVC purchases were financed. This is nothing resembling "investment advice" but DVC is a rather low risk purchase since resale values keep increasing. The greatest risk comes in the first 2-3 years where the seller may not recoup what they still owe on the mortgage.

Interest adds cost to the purchase. But the question some buyers must ponder is whether it makes more sense to buy DVC + some amount of interest vs continuing to pay for cash vacations while saving to pay in full. If someone forecasts a full 10 years to pay off the mortgage, obviously there are danger signs. But in reality it's a sliding scale where every buyer must find their personal comfort level.

 

[kilik64]

A decade ago during the lending crisis, the Orlando Sentinel reported that 75% of all DVC purchases were financed.

Im shocked it was even that low. Wonder where it lands now. Closer to 90% would be my guess currently, especially with the 150 min as a first time buyer.

 

[dvc lover 1970]

It depends on the economy. As long as people will pay they will keep it at 150. As long as people will pay they will keep it where it is.

 

[CarolynFH]

Are they just banking on attracting people who finance and don't pay cash, so the total amount doesn't feel as overwhelming?

I think this has been one of their sales hooks - "You can stay here for just $xxx a month!!" And it has long been felt by some of us that one cause of the intense competition for studios was the low minimum initial buy-in for new members (it dropped from 230 points in 1991, to 160 points, then 100 points, then as low as 25 or 50 points), coupled with the increase in the number of points required per night, which meant that many members owned only enough points to stay in studios for just a few nights, not even an entire week.

 

[kilik64]

People having too few points is one reason for the intense studio competition, but even with people who have enough, its a BIG jump in point cost to move to a one bedroom. We'll be gunning like majority seems to for studios mainly, even though we have enough points for a one bedroom for when we go at our home resort.

Lots of people turn into a cheap miser when it comes to spending their dvc points lol.

 

[SleeplessInTO]

People having too few points is one reason for the intense studio competition, but even with people who have enough, its a BIG jump in point cost to move to a one bedroom. We'll be gunning like majority seems to for studios mainly, even though we have enough points for a one bedroom for when we go at our home resort.

Lots of people turn into a cheap miser when it comes to spending their dvc points lol.

Agreed. I thought when I got more points I’d stay in 1 bedrooms and not do studios anymore, even during high point seasons.

Turns out, nope. Extra points just means I book an additional week in studios.

Oh well, can’t complain about an extra week at Disney.

 

[RamblinWreck]

A decade ago during the lending crisis, the Orlando Sentinel reported that 75% of all DVC purchases were financed. This is nothing resembling "investment advice" but DVC is a rather low risk purchase since resale values keep increasing. The greatest risk comes in the first 2-3 years where the seller may not recoup what they still owe on the mortgage.

Interest adds cost to the purchase. But the question some buyers must ponder is whether it makes more sense to buy DVC + some amount of interest vs continuing to pay for cash vacations while saving to pay in full. If someone forecasts a full 10 years to pay off the mortgage, obviously there are danger signs. But in reality it's a sliding scale where every buyer must find their personal comfort level.

As someone who does work in the world of investment advice, I would never describe it as "low risk". For the vast majority of people, the amount of money "invested" in DVC is going to be a very substantial part of your overall portfolio, as most people just don't have that much in savings and investments.

There are a number of reasons why it's a very risky investment, and far riskier than other kinds of real estate. The obvious ones being:
1. You are investing in a frivolous thing. Nobody needs to go to Disney World, and nobody needs to stay at Deluxe resorts when they do go to Disney. Anything that puts a squeeze on people's ability to spend on nonessential items is bad for your investment.
2. You're investing not only in a single company, but a single part of one division of that single company. You just don't know. Maybe the entire company is on the brink of collapse and is hiding it through fraudulent accounting that the world is currently unaware of. Maybe the brand will tank itself through some scandal or maybe some investments will work out horribly. Maybe Disney keeps adding so many resorts to the DVC lineup that there isn't enough demand to meet the supply.

As far as putting your money into the hands of a single corporate entity goes, I guess Disney could be looked at as a relatively safe bet. But there is definitely a lot of risk.

And by the way, that risk works both ways. Say Disney parks continue to become more and more in-demand, and they keep adding amazing attractions that keep people hooked. And inflation drives real estate prices sky high, etc. You can be continuing to go to Disney world for cheap compared to everyone else, or you can pocket a nice return.

 

[wnielsen1]

I would love for the minimum to drop back down to 25 points, that would be about the only time I would buy direct anytime soon.

Current members can add-on 25 point contracts if:

• Adding on to existing membership (same UY and same names on the deed)
• Not financing through Disney (otherwise the minimum is 50)
• Adding on any resort except CCV, RIV and VGF (the minimum is 50 for these)

 

[Ashlotte]

I THINK, but obviously can't say for certain, that most Direct buyers have absolutely no idea what the resale market looks like or even that it exists.

I can say that I have seen this in my fifteen years with our other timeshare. So often people come on our FB page excited and asking questions and are told by everyone to quickly rescind the contract to buy resale instead.

 

[Ashlotte]

Im shocked it was even that low. Wonder where it lands now. Closer to 90% would be my guess currently, especially with the 150 min as a first time buyer.

I have to imagine there are a lot of spur of the moment buyers who buy in while on vacation and swept up in the magic. We just aren't buying on credit people, so writing a check for $30k vs $42k feels very significant. I can see that if it was just a matter of your payment going up a few dollars it wouldn't feel like a big difference.

 

[tjkraz]

As someone who does work in the world of investment advice, I would never describe it as "low risk". For the vast majority of people, the amount of money "invested" in DVC is going to be a very substantial part of your overall portfolio, as most people just don't have that much in savings and investments.

I would classify it as "low risk" strictly from the standpoint that there is a narrow period of time during which one would typically find that the resale value of their contract is less than the mortgage. We have 30+ years of DVC history to support the idea that resale values continue to climb. And as that's happening, the balance on the mortgage is declining.

The "risk" is whether DVC ends up costing more apples-to-apples vs a Disney deluxe hotel stay. I suspect we could document the ability to vacation on DVC points for as little as 4-5 years, sell for current market price and not have spent any more than retail for comparable Disney accommodations. Keep it longer and you're saving money vs rack, with the potential to sell at any time.

Yes Disney vacations are frivolous, and DVC even more so. I suspect the overall cost of the vacation is one of the better understood aspects of the purchase. Do I think people will forego vacations entirely--even Disney vacations--if they don't have $30k sitting in the bank? no.

Maybe the entire company is on the brink of collapse and is hiding it through fraudulent accounting that the world is currently unaware of. Maybe the brand will tank itself through some scandal or maybe some investments will work out horribly. Maybe Disney keeps adding so many resorts to the DVC lineup that there isn't enough demand to meet the supply.

If there are readers who share these concerns, then I agree DVC is not the best choice for them.

 

[RamblinWreck]

If there are readers who share these concerns, then I agree DVC is not the best choice for them.

If I want to have a fake argument with someone who pretends people are saying something other than what they are saying, I'll sign up for Twitter.