Do you think the low economy will have an affect on DVC resale prices?

[chris4disney]

I know that Disney has ROFR to try to keep resale prices in check, but I'm wondering if the economy continues to be crappy do you think that will have an affect on DVC sales? I'm guessing that if Disney's DVC direct sales decrease that they will let lower priced resale contracts get thru ROFR just to sell some contracts. If this becomes more true as time passes this year, do you think that maybe in 6-12 months that it will be a good time to buy into DVC? Or do you think Disney will continue to increase the price of DVC regardless of the economy?

 

[salmoneous]

My guess...

First, I don't believe ROFR has a major impact on prices (lots of folks disagree - been debated many times - no need to rehash).

The biggest thing that will influence resale prices - by far - is not the economy, but CRV. I feel pretty confident about that. What I don't feel confident about is which way CRV will drive prices.

Scenario 1: CRV pumps new excitement into DVC. With new points going for $110, resale becomes an even bigger bargain, increasing demand and increasing prices.

Scenario 2: CRV doesn't increase the overall demand for DVC too much, but does shift that demand away from the existing resort and onto CRV. Less demand for older properties = lower resale prices.

My gut tells me Scenario 1, but I wouldn't bet on it.

 

[mnra]

I am new to the post area but have been a member of OKW since 93 and Boadwalk since 03. Love them both but have found nearly impossible to get what I want at boardwalk. That is another story but why do people think disney extended the OKW contracts for 15 more years. I didn;t elect to do it since I will be 85 when my current contract ends in 2042 and my kids will be in there 50's. So figured they might be in a position to afford the due.

 

[White_Sox_Fan]

I know that Disney has ROFR to try to keep resale prices in check, but I'm wondering if the economy continues to be crappy do you think that will have an affect on DVC sales? I'm guessing that if Disney's DVC direct sales decrease that they will let lower priced resale contracts get thru ROFR just to sell some contracts. If this becomes more true as time passes this year, do you think that maybe in 6-12 months that it will be a good time to buy into DVC? Or do you think Disney will continue to increase the price of DVC regardless of the economy?

Lowering the ROFR price really doesn't do Disney any good in my mind. Resale contracts do not put $$ in their pocket, plus it increases incentive to buy resales over the product Disney is trying to sell.

 

[chris4disney]

Lowering the ROFR price really doesn't do Disney any good in my mind. Resale contracts do not put $$ in their pocket, plus it increases incentive to buy resales over the product Disney is trying to sell.

I'd have to disagree on your comment about resale contracts no putting money in Disney's pocket. Yes, initially they do not make any money on the contract sale, but a person buying a resale contract is committing to vacationing at a Disney resort for years to come. Disney will make their money and then some for the next 40-50 years by selling park tickets, food, recreation, etc.

 

[Anthony1971]

Most people who will buy DVC stay on Disney property at least once a year and have the money to do so. It would seem in bad economies people are looking for ways to save money and one way is to buy a timeshare if preserving a vacation with nice accomadations every year is important. For every person DVC may lose to the economy it will have 2 who will continue to stay at Deluxe resorts paying cash. Disney just needs to tap these potential buyers --- Think the new rumored DVC addition to CR much less how they can other ways they will think of. I do not feel the economy will make DVC any cheaper, it may not get any more expensive if things get really bad, but I would bet the price will continue to go up as usual and so will resale. Other forces may effect resale and retail but those are different topics and less likely then this topic at this point in time.

 

[ClarabelleCow]

As long as DVC can be purchased by people outside the country (not sure the correct terms!!) the price of resales won't go down. The euro is at I think 1.58 per every US $$$. That in itself is a huge incentive to buy DVC, so as long as DVC keeps selling, no reason to lower the ROFR price? Does this make sense to anyone?

 

[tjkraz]

I'd have to disagree on your comment about resale contracts no putting money in Disney's pocket. Yes, initially they do not make any money on the contract sale, but a person buying a resale contract is committing to vacationing at a Disney resort for years to come. Disney will make their money and then some for the next 40-50 years by selling park tickets, food, recreation, etc.

Once the points are sold ("new" by Disney) SOMEBODY is going to be using the points and paying for all of the things you mention. That somebody could be the original purchaser, second owner, third owner, someone renting the points, etc.

I think it's fair to say that Disney doesn't earn much from resales. They may ROFR the contract for $15-20 less than the amount at which they re-sell, but most of that will be lost via administrative fees and sales expenses.

ROFR is sort of a necessary evil in that it keeps prices higher than they may otherwise be, and helps DVC service the audience of members looking to add points at specific resorts.

As for the question of the economy, I don't think the impact will be terribly dramatic. There are already some signs--the volume of resale contracts appears to be up; DVC hasn't raised prices in nearly 18 months now. But I don't think they will be entering fire sale mode anytime soon.

Disney may let a few lower-priced contracts go thru ROFR but that's tough to really quantify. Those who post on the DIS are only a sampling of all resale buyers. And many buyers seem to be more content making "safe" offers rather than testing the lower limits. Even if DVC decided (internally) to lower its ROFR threshold by a couple dollars on certain resorts, would we really notice?

 

[Darkside]

This recession or slow down or what ever the economists are calling our economy at this time has not affected Disney at all. Disney is in fact doing 2-3% better than the industry average (S&P 500 theme parks, entertainment) 2-3% is not a big number, but this is a huge margin in this industry. On a personal note, I am finding the parks are more crowded and reservations are harder to get. I just made a reservation in July and as I was speaking to the the rep in MS, she said that they really needed more units to rent. hope this helps.

 

[crisi]

Hasn't in the past. What Disney has done in the past.....

Keep ROFR up.
Delay opening new resorts, slow building, declare inventory slower.

However, in past recessions there also has been less supply.

 

[DisFlan]

This recession or slow down or what ever the economists are calling our economy at this time has not affected Disney at all. Disney is in fact doing 2-3% better than the industry average (S&P 500 theme parks, entertainment) 2-3% is not a big number, but this is a huge margin in this industry. On a personal note, I am finding the parks are more crowded and reservations are harder to get. I just made a reservation in July and as I was speaking to the the rep in MS, she said that they really needed more units to rent. hope this helps.

I have a feeling we're seeing a frenzy of attendance at Disney and other theme parks this year because a lot of folks think it'll be the last time for awhile. They're afraid they won't be able to afford it next year - and maybe the year after that.

DisFlan

 

[Brian Noble]

Possibly. An alternative explanation is that Disney is not exactly cheap in the first place, and so it attracts guests for whom an extra $1/gallon at the pump isn't anything more but a minor annoyance.

But, even accounting for the fact that Easter moved into Disney's Q2 from Q3, they were still up in attendance and guest spending.

 

[goldilocks_63]

Demographics to Disney are changing...

First all all, with the FX (foreign exchange) rate, it is now desirable for Europe and Canada to come.

Secondly, because of gas prices, there is now a segment that used to go to Hawaii or Europe for vacation, and are now "downsizing" to going to WDW.

SO the low end segment may be squeezed out, but there are plenty of replacements from overseas / Uber Rich.

JMHO, Goldi

 

[Pootle]

SO the low end segment may be squeezed out, but there are plenty of replacements from overseas / Uber Rich.

JMHO, Goldi

Mmmm, maybe, but I'm not so sure. I've been flying over to North America from the UK 3 or 4 times a year for the past 10 years or so (and twice a year in the 10 years prior to that; not just to WDW though) and whilst the exchange rate with the pound/dollar is still great for us, things are changing here. Specifically our housing market is in decline, prices of utilities and petrol/gas rising (ring a bell?) and lots of families are really starting to feel the pinch. My friends are starting to discuss price rises/cost of living (and they are not poor) in a way I've not experienced for decades.

If, as I expect, in addition to less disposable income we see a substantial rise in air fares due to fuel prices, I think there will be a contraction in Disney's UK market (which is considerable).

Whether all this gloom will affect the DVC resale price I don't know. I rather think it depends upon Disney's support of ROFR. What I do expect is more availability of points for rent still at bargain prices as people can no longer afford to visit so often.

Hopefully not mine though