Does Lack of ROFR Degrade Your DVC Ownership?

[AstroBlasters]

Wait until they get past the Hulu purchase…

 

[Sandisw]

Isn't that a problem for people who purchase many years from now? I just bought this year and even if my contract is worth zero and only has the ability to stay at SSR after 2041 I have gotten enough benefit from the contract to make it worthwhile.

For you, because you went in with that mindset, it will work out great. But, there are people who bought wanting and needing the resale value to be there, and will be frustrated when it is not and the product they bought isn't even giving them the use they thought they would....

So, with lack of ROFR and the potential loss of value on resale, it may have the domino effect later on....I think that is why it is always wise to buy SAP's, if you want them, at a place you are okay staying at if you can't go elsewhere...and go into it not expecting to get your purchase price back....

 

[Sandisw]

I do agree that when the 2042 resorts are gone resale buyers will have fewer options than before and that could impact the prices for less desirable resorts.

But the risk is also that direct owners will be impacted by the restrictions. Meaning resale buyers buy Riviera and only book riviera and therefore there are no availability when we get to the 7 months window for other direct owners to trade into. But that’s regardless of ROFR or not.

Well, the number of direct owners will always outweigh by large margins those who own resale at a resort and while yes, resale owners can't move, many direct ones can, and they will have the new resorts to choose from as well, especially that all resale points bought now, and since 2019 will be out of the pool for booking...and that is a far great pool of points than the resale points that will exist at the restricted resorts....

But, the point of how lack of ROFR plays a role is that without it, the value may go low enough that owners won't bother trading out, and of course, it will be like they are restricted...even if they are technically not...

As I said, I will be surprised to see it back because I think DVD will be fine if the resale value of contracts start dropping to be in the $80 to $120 range, on average, for the resorts....

But just my own thoughts…DVD has been known to surprise everyone.

 

[Unclelude]

What *might* be the underlying reasons for them stopping ROFR concern me more ...

Seems like for at least FY23 they stopped spending on buybacks... <insert all the stuff about the company having problems - streaming, movie flops etc... July 1 2014 DIS stock was ~$89 ... today its ~$86 > I fear a bit for Disney as a whole... if the magic goes away, it all goes away... Will be interesting to see what FY24 brings.

 

[kilik64]

Color me surprised not one of the rofr has no bearing on price crowd has posted in this thread.

As already stated, I think it’s one of 2 things. Either company cut expenses related to upcoming Hulu Comcast buyout or it’s strategy and rofr is not going to be used much going forward.

I lean more toward option 1, wait until after Hulu and see what they do. Could be option 2 but won’t know until sometime next year. Think they are on the hook for Hulu in q1 to be done?

 

[take36]

A small silver lining to ROFR's going through is that is more points in the "restricted" category.

 

[Bearval]

I do agree that when the 2042 resorts are gone resale buyers will have fewer options than before and that could impact the prices for less desirable resorts.

But the risk is also that direct owners will be impacted by the restrictions. Meaning resale buyers buy Riviera and only book riviera and therefore there are no availability when we get to the 7 months window for other direct owners to trade into. But that’s regardless of ROFR or not.

Qwners of Aulani are going to take the biggest hit unless they bought to go to Hawaii every year. Everybody is going to book a room at their home resort prior to the 7 month window opening up just to ensure they get a room. People who own less popular resorts (SS, OKW, AKL ) will pretty much be "stuck" at their home resort with minimal options to find a room at a more popular resort when the 7 month window opens.

 

[Bearval]

What *might* be the underlying reasons for them stopping ROFR concern me more ...

Seems like for at least FY23 they stopped spending on buybacks... <insert all the stuff about the company having problems - streaming, movie flops etc... July 1 2014 DIS stock was ~$89 ... today its ~$86 > I fear a bit for Disney as a whole... if the magic goes away, it all goes away... Will be interesting to see what FY24 brings.

I feel one of the reason why DVD has stopped ROFR contracts is that they don't want to compete against themselves for selling all the points they have for the new resorts. If they ROFR an existing contract then there is no one to pay the MFs until they resell it and it will add to the inventory they need to sell. I do see them coming back and only ROFRing the newest resorts when they are sold out since these contracts will have the greatest restrictions they can remove and resell as unrestricted. Also there will most likely be a pretty large spread in the resale and direct pricing that it will be a cash cow for them.

 

[Robbie Cottam]

DVD makes their money on selling new resorts and if they keep inventing new incentives or bringing back old ones to push sales, they will make a sale sure, but the profit will continue to go down.



I read several times that DVD don't care about the resale value, but IMO they need to care just a bit because if resale value tanks, who would you buy DVC points direct if the points are worthless after signing the contract? After all its a much better conversation to say that you can always sell you ownership down the road for a decent value if you don't want it any more.

The points would not be worthless, you just could not sell them….. their value would be in your ability to use them….

Although, DVC has alway had an exit strategy, it was never a sure thing…..

a DVC purchase has alway been a 50 year contract. With the greatest benefit coming to the owner later in the contract…..

DVC has always been a long game, not a short term thing….

free money, and a roaring economy, created a profitable resale market….

time have changed. And so has the resale market….

those in it for the long game most likely don’t care, but will see the resale market come back

but those in is for the long game will also gladly pay you pennies on the dollar for your short sightedness …..

buy into a falling economy,

 

[Brian Noble]

Color me surprised not one of the rofr has no bearing on price crowd has posted in this thread.

Sure I have.

Well, I don't think it has no impact, but I do think it has much less impact than the average board member.

 

[Robbie Cottam]

A small silver lining to ROFR's going through is that is more points in the "restricted" category.

That might be Disney strategy too.....

Restricted, expiring points means resale is further different product from direct....

Resale may quickly become a second class,

At which point Disney can control the market, unless you are ok with staying at "one" resort and not having access to the "new" ones...

 

[gmi3804]

I wonder if ROFR will kick in when market gets flooded with Pete's upcoming fire sale points divestitures. I can't see him being able to pay the dues on the many (tens of thousands?) points he claimed to have, many of which were purchased at the height of the market, let alone being able to pay off the huge loans he took out to buy them.

 

[Bearval]

Color me surprised not one of the rofr has no bearing on price crowd has posted in this thread.

As already stated, I think it’s one of 2 things. Either company cut expenses related to upcoming Hulu Comcast buyout or it’s strategy and rofr is not going to be used much going forward.

I lean more toward option 1, wait until after Hulu and see what they do. Could be option 2 but won’t know until sometime next year. Think they are on the hook for Hulu in q1 to be done?

I don't think ROFR drives up the price of resale, the economy , supply and demand does. You had a ton of free money, pent up demand and low interest rates for over 3 years . Now there is no free money, pent up demand has diminished and interest rates have been climbing. People are being priced out of the resale market so there is less competition so the resale prices have to drop to find that buyer. If DVD was exercising ROFR right now they would be doing it at the same prices contracts are going for right now.

 

[tom1944]

When I started researching the product, I saw ROFR as a one-way street to be used only for Disney's benefit.

 

[Robbie Cottam]

When I started researching the product, I saw ROFR as a one-way street to be used only for Disney's benefit.

ROFR is always only of benefit to the party the can exercise it.
ROFR is not unique to Disney

 

[Cyberc1978]

The points would not be worthless, you just could not sell them….. their value would be in your ability to use them….

Although, DVC has alway had an exit strategy, it was never a sure thing…..

Sorry poor choice of words, with DVC you have always been able to recoup most of your money, but maybe those days are gone, and its true that the greatest benefit comes with your usage of the points.

a DVC purchase has alway been a 50 year contract. With the greatest benefit coming to the owner later in the contract…..

DVC has always been a long game, not a short term thing….

free money, and a roaring economy, created a profitable resale market….

time have changed. And so has the resale market….

those in it for the long game most likely don’t care, but will see the resale market come back

but those in is for the long game will also gladly pay you pennies on the dollar for your short sightedness …..

buy into a falling economy,

The resale market have always been strong, but after the pandemic it went crazy.

Now we are seeing a decline in resale prices most likely caused by the lack of ROFR but also the inflation.

Disney is currently providing discount of 25-30% when you book their hotels and they wouldn't do that if it was easy peasy to fill them.

Seen from Disney perspective why acquire more points through ROFR if there is already a problem filling the resorts as is.

Long game or not, I think that ROFR will come back at a later time when, Disney is able to fill their hotels without too much discounts and more people comes back to the parks. Right now park crowds is lower compared to a few years ago. That could be the high entrance prices, the economy, the expensive hotel prices or people deciding to go somewhere else.

 

[take36]

but those in is for the long game will also gladly pay you pennies on the dollar for your short sightedness …..

buy into a falling economy,

I agree but am wary if the economy is bad enough to be selling for pennies on the dollars then the parks and resorts would also be struggling leading to bigger discounts on rack rates which will decrease the amount I am “saving” with dvc. Or maybe I lose my job and I can’t afford to go at all!

 

[gmi3804]

Disney is currently providing discount of 25-30% when you book their hotels and they wouldn't do that if it was easy peasy to fill them.

Seen from Disney perspective why acquire more points through ROFR if there is already a problem filling the resorts as is.

The resorts and DVC departments are separate entities. DVC units have traditionally gotten booked at almost 100%. If they have too may units to sell, that will stop someday, but that day hasn't arrived yet, so it's still in their best interest to ROFR when the market prices dictate it.

 

[Robbie Cottam]

Sorry poor choice of words, with DVC you have always been able to recoup most of your money, but maybe those days are gone, and its true that the greatest benefit comes with your usage of the points.



The resale market have always been strong, but after the pandemic it went crazy.

Now we are seeing a decline in resale prices most likely caused by the lack of ROFR but also the inflation.

Disney is currently providing discount of 25-30% when you book their hotels and they wouldn't do that if it was easy peasy to fill them.

Seen from Disney perspective why acquire more points through ROFR if there is already a problem filling the resorts as is.

Long game or not, I think that ROFR will come back at a later time when, Disney is able to fill their hotels without too much discounts and more people comes back to the parks. Right now park crowds is lower compared to a few years ago. That could be the high entrance prices, the economy, the expensive hotel prices or people deciding to go somewhere else.

Disney can acquire points when ever the need them......
The have no need to hold inventory when they can just acquire it....
I promise you, if I called my guide and requested a contract he didn't have, Disney would ROFR it.... there is no downside for them....

Disney's "problem" filling hotels has less to do with Disney losing it's way over the last few years, and more to do with the fact people in this county can't afford food right now....

I also don't concede that all Disney resort are being offered at a 30 percent discount. I looked into a stay at GF recently, and the price hadn't gone up since last year, but it hadn't really gone down either.

I forget the exact numbers, but I made another post about it, still realizing a substantial savings over publish pricing using my points,

I'm 18 years into my SSR contracts and 15 years into my BLT contract.... They are both paid for / paid for themselves, a few times over........ HOW DO YOU DEGRADE FREE?

The average American has to choose between putting gas in their car, or food on the table.... A 10,000 dollar Disney vacation does not fit into the metric.

However, the finance companies are still lending money to purchase DVC. Resale and direct..... So the bank thinks the value is still there....

I have "recouped" all of my cost at my contract at SSR and BLT, with only my RIV resort still being paid for.
Even If I were to purchase SSR today at $110 per point I could recoup my investment in 12 years....leaving me 18 years to use it for free....

I'm actually surprised someone isn't purchasing SSR, BLT, CCV, BR, etc on speculation...... Rent the points for a year or two then sell...

There is no doubt ROFR will come back when it has value to Disney....

The fact that Disney is not exercising their rights in the contract have little to no bearing on what the market will bear....

Right now, our economy is putting downward pressure on the value of luxury items... When the economy changes, when gas isn't climbing daily, when people aren't worried about putting food on the table..... You will see the price of DVC return

 

[Robbie Cottam]

I agree but am wary if the economy is bad enough to be selling for pennies on the dollars then the parks and resorts would also be struggling leading to bigger discounts on rack rates which will decrease the amount I am “saving” with dvc. Or maybe I lose my job and I can’t afford to go at all!

all valid points, but you still have to live your life.....
It's not like we "ALL" can just hide in the basement and hope everything is ok....