Does Lack of ROFR Degrade Your DVC Ownership?

[Epcot Forever Forever]

I have been a DVC member since 2007 and have never seen them go to “0” ROFR contracts for as long as they have gone this year. ROFR has been essentially non existent since January.

There was Mid-March -> the second week of August, 2020 where they took absolutely nothing, and then a very lengthy period in 2010-11 (maybe a full year?) where they only took BCV, so the other resorts were safe.

So we’re close to the record AFAIK but still a ways from if-not-Beach-Club-it’s-fine window of the distant past.

 

[BWV Dreamin]

There was Mid-March -> the second week of August, 2020 where they took absolutely nothing, and then a very lengthy period in 2010-11 (maybe a full year?) where they only took BCV, so the other resorts were safe.

So we’re close to the record AFAIK but still a ways from if-not-Beach-Club-it’s-fine window of the distant past.

I guess I forgot about 2010-11. That is when I got my incredibly cheap 150 pt VWL ( now BRV) resale for $53/pt. Boy those were the days.

If I remember correctly, those cheaper prices were only $20-30 points lower than asking price. Now, the disparity seems much wider.

 

[Cyberc1978]

Just bumping this thread as there have been talks in the ROFR thread about what the lack of ROFR will do to the value of your ownership.

Since this thread was posted in May there still haven't been any taken contracts - not to my knowledge at least.

To stick to the topic, how low do you believe the resale prices go for the resorts with the lack of ROFR?

IMHO as long as Disney can fill their hotel rooms then people can see the value of owning and then the resale prices or value will stay somewhat strong without ROFR. But when Disney can't fill their rooms and need to provide a discount of 20-30% or more just to fill the rooms then the current value need to go down otherwise what is the point of owning if you don't get a reasonable value out of your ownership. Furthermore without ROFR there really isn't a price floor and some resorts will see a lower price than others.

On top there is the rental prices, they more or less follow the rack rates and the discounts. If Disney gives you a higher discount then the renters must too.

Additionally could the lack of ROFR just be Disney who owns too many points already and need the cash, hence why they are selling VGF and others with the high incentives? So ROFR will resume at a later time when points has been sold and Disney has increased their cash pile.

 

[pianomanzano]

Additionally could the lack of ROFR just be Disney who owns too many points already and need the cash, hence why they are selling VGF and others with the high incentives? So ROFR will resume at a later time when points has been sold and Disney has increased their cash pile.

I think there’s a lot of reasons. They bought back way too many points last year (at very high prices) and aren’t selling enough direct at those resorts to warrant continuing ROFR, especially for SSR and AKL. So some market corrections are going on. They also need to finish selling off VGF before Poly Tower and the cabins come online, as more choices complicates things for prospective members). They’re also seeing way less demand for travel and DVC in general.

 

[Sandisw]

As I shared, I have a feeling we won’t see it come back at all. Once they have more than two restricted resorts selling, the differences will be harder to ignore.

I also believe DVD would be fine if they sold minimum contracts to owners but in higher volume. I mean, look at it now…bring back magical beginnings, add some nice incentives and you have a jump in sales of people doing the 150….

Having said that, I do think that the near park resorts will have a floor without it, just like those at active selling resorts do when it doesn’t exist,

It seems to me we may have hit it for many of the resorts….with sellers deciding that on their own.

It’s also why I believe the robust resale value that has been constant in years past won’t continue. We don’t care because we view anything we can sell our contract for is a bonus.

I believe that when DVD uses ROFR it is because they have a reason to want the points and it goes beyond just having a buyer waiting in the wings.

I do find it interesting that it kicked into being a big thing after they decided to give away a lot of their own points to owners who lost them during the closure.

But, I agree that occupancy on the cash side plays a role because the points owned are used for cash stays….one thing that could come in play…if things are soft, then maybe they start using DVC inventory for upgrades and lower rooms available on the cash side….and shift around CMs, etc.

 

[Cyberc1978]

As I shared, I have a feeling we won’t see it come back at all. Once they have more than two restricted resorts selling, the differences will be harder to ignore.

I also believe DVD would be fine if they sold minimum contracts to owners but in higher volume. I mean, look at it now…bring back magical beginnings, add some nice incentives and you have a jump in sales of people doing the 150….

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.

Having said that, I do think that the near park resorts will have a floor without it, just like those at active selling resorts do when it doesn’t exist,

It seems to me we may have hit it for many of the resorts….with sellers deciding that on their own.

It’s also why I believe the robust resale value that has been constant in years past won’t continue. We don’t care because we view anything we can sell our contract for is a bonus.

I believe that when DVD uses ROFR it is because they have a reason to want the points and it goes beyond just having a buyer waiting in the wings.

I do find it interesting that it kicked into being a big thing after they decided to give away a lot of their own points to owners who lost them during the closure.

But, I agree that occupancy on the cash side plays a role because the points owned are used for cash stays….one thing that could come in play…if things are soft, then maybe they start using DVC inventory for upgrades and lower rooms available on the cash side….and shift around CMs, etc.

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.

 

[Bearval]

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.

DVD's target audience is the first time buyer that doesn't have a clue resale exists because if they did a portion of them would buy resale in the first place and save ~ 50%.

 

[Sandisw]

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 same people who buy a timeshare from other developers who have a product that doesn’t hold value,

My guess is the vast majority of buyers of DVC do not even consider what they can sell it for when deciding to become owners. I honestly don’t believe DVD needs to care. I think they have a unique product over other products in that they are onsite properties. Plus, they can’t market resale value as a selling point….and they don’t.

As long as parks exist, there will be buyers. And I think as long as they price the new resorts appropriately they won’t have trouble selling them.

Look at VDH…selling fine…what I see as a new model is DVD offering more new options vs one main resort in active sales…doing this means they won’t need to put the sold out resorts on sale any longer.

And, while VGF was existing, it’s new rooms put it back into the new category.

 

[Cyberc1978]

Another thing to consider, at some point I assume DVD have sold out all new resorts and are unable to build new ones. I don’t know how much land they own but either way I guess there is a limit for just how many resorts Disney can fill.

 

[Brian Noble]

if resale value tanks, who would you buy DVC points direct if the points are worthless after signing the contract?

I don't know. Ask Wyndham owners, whose points drop to about five to ten cents on the dollar, if not less. Heck even Marriott owners see their points drop to something like 20% of their retail price the instant the ink on the contract dries.

In other words, plenty of timeshare developers are able to sell inventory at eye-popping prices despite the fact that resales have little to no value. I suspect that's because the typical timeshare buyer is not thinking about selling, they are thinking about the decades of family vacations that they and their children, grandchildren, etc. will be taking together. That's probably true for most DVC buyers, too, though Disney does have one potential liability, as it is seen by many as a place to go with your kids. Once the kids grow up, many folks imagine Disney will be in the rear view mirror.

I've said this before (and maybe even in this thread) but timeshare is a product that is sold, not bought. Most buyers have no idea what the resale market looks like. Timeshare is also an aspirational purchase--you are buying, in part, an affordable way for your family to take better vacations. Most people aren't thinking about what happens when they don't want to do that anymore, because who doesn't want to take better vacations?

 

[Cyberc1978]

I don't know. Ask Wyndham owners, whose points drop to about five to ten cents on the dollar, if not less. Heck even Marriott owners see their points drop to something like 20% of their retail price the instant the ink on the contract dries.

With the risk of sounding naive I don’t think Disney is like any other timeshare company, but if you are right and Disney end up like all the other TS companies then prices will see a significant drop from the current levels.

 

[BeachClub2014]

There are likely as many answers to whether the lack of ROFR degrades ownership in DVC as there are total owners. Everyone is likely to view this slightly differently. For us, it does not. Having a robust resale market with relatively high prices is/was great; almost a security blanket in the event we had to sell. Like others, I think that DVC will not be bringing back ROFR anytime soon, which has some (many?) owners a little nervous, especially those who see their ownership as an investment. If you combine the lack of ROFR with a potential slowdown in the rental market (assuming a slowdown of park visits and great cash deals directly from Disney), we may see some owners start to fret.

Even contemplating these potentials (inevitabilities?) reinforces the old mantra of buying where you want to stay, and owning DVC is a hedge against inflation on future room expenses. Nothing more.

I see rough waters ahead for many owners who didn't use this approach when buying. Of course, I could be totally off the mark, too.

 

[Cyberc1978]

Even contemplating these potentials (inevitabilities?) reinforces the old mantra of buying where you want to stay, and owning DVC is a hedge against inflation on future room expenses. Nothing more.

I see rough waters ahead for many owners who didn't use this approach when buying. Of course, I could be totally off the mark, too.

Why do you believe that owners who didn’t buy where they wanted to stay might face problems in the future?

I mean the availability or lack thereof is what it is regardless of ROFR.

 

[Cyberc1978]

There are likely as many answers to whether the lack of ROFR degrades ownership in DVC as there are total owners. Everyone is likely to view this slightly differently. For us, it does not. Having a robust resale market with relatively high prices is/was great; almost a security blanket in the event we had to sell. Like others, I think that DVC will not be bringing back ROFR anytime soon, which has some (many?) owners a little nervous, especially those who see their ownership as an investment. If you combine the lack of ROFR with a potential slowdown in the rental market (assuming a slowdown of park visits and great cash deals directly from Disney), we may see some owners start to fret.

Personally I think a park slow down would be great as there often as too many people and the lines are too dang long. I know for Disney it would be bad, unless they still see the bottom line continue to grow regardless of a slow down.

For the rental market I can see in various Facebook groups that the market is very much alive but it seems that the prices at least for dates and resorts has come down. Currently Disney is also offering both 25%-30% on select bookings so renters would demand a lower price.

 

[Sandisw]

Why do you believe that owners who didn’t buy where they wanted to stay might face problems in the future?

I mean the availability or lack thereof is what it is regardless of ROFR.

I think it’s more about people who went in with a mindset that DVC was a good bet to get your money back and wanted/needed it to in order to make it work. I have always thought it was risky to expect purchase prices back…

Where I see the restrictions and lack of ROFR playing a role is that when resale buyers bought less expensive to trade, it may not be as easy when you don’t have as many popular resorts left.

Granted. We are still 18 1/2 years away, but when those really popular resorts are gone….resale buyers who may have bought SSR, OKW or AKV expecting to easily trade out to places like BLT, PVB, and CCV, may not see it happen the same was as those owners may not go anywhere when they don’t have Epcot area resorts to choose from.

If those resorts become easier to get due to no ROFR, more will buy there as though they are restricted.

 

[BeachClub2014]

Why do you believe that owners who didn’t buy where they wanted to stay might face problems in the future?

I mean the availability or lack thereof is what it is regardless of ROFR.

I mean this more from the sense that many owners bought resorts that they did not love based on the potential resale value at some point down the road or intended to rent points regularly to cover dues, etc. None of which has anything to do with availability.

 

[BeachClub2014]

Personally I think a park slow down would be great as there often as too many people and the lines are too dang long. I know for Disney it would be bad, unless they still see the bottom line continue to grow regardless of a slow down.

For the rental market I can see in various Facebook groups that the market is very much alive but it seems that the prices at least for dates and resorts has come down. Currently Disney is also offering both 25%-30% on select bookings so renters would demand a lower price.

This was what I was referencing. I think many owners depend on a robust rental market, and if that market begins a downward turn, then what does that mean for them? I don't think the rental ,market will ever go away, but I do see the potential for saturation and prices to depress, especially when Disney deeply discounts rooms.

 

[Cyberc1978]

This was what I was referencing. I think many owners depend on a robust rental market, and if that market begins a downward turn, then what does that mean for them? I don't think the rental ,market will ever go away, but I do see the potential for saturation and prices to depress, especially when Disney deeply discounts rooms.

I think that would be an issue too, but wouldn’t that mostly impact owners who either book 7 months or owner at less desirable locations?

Also if Disney need to give high discounts to fill their rooms it could impact the rental market but I think it depends on the rack rates, they tend to go up year over year and the rental market does not.

But I agree it Disney discounts their prices too much it will definitely impact the rental prices.

 

[Cyberc1978]

I think it’s more about people who went in with a mindset that DVC was a good bet to get your money back and wanted/needed it to in order to make it work. I have always thought it was risky to expect purchase prices back…

Where I see the restrictions and lack of ROFR playing a role is that when resale buyers bought less expensive to trade, it may not be as easy when you don’t have as many popular resorts left.

Granted. We are still 18 1/2 years away, but when those really popular resorts are gone….resale buyers who may have bought SSR, OKW or AKV expecting to easily trade out to places like BLT, PVB, and CCV, may not see it happen the same was as those owners may not go anywhere when they don’t have Epcot area resorts to choose from.

If those resorts become easier to get due to no ROFR, more will buy there as though they are restricted.

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.

 

[tom1944]

I think it’s more about people who went in with a mindset that DVC was a good bet to get your money back and wanted/needed it to in order to make it work. I have always thought it was risky to expect purchase prices back…

Where I see the restrictions and lack of ROFR playing a role is that when resale buyers bought less expensive to trade, it may not be as easy when you don’t have as many popular resorts left.

Granted. We are still 18 1/2 years away, but when those really popular resorts are gone….resale buyers who may have bought SSR, OKW or AKV expecting to easily trade out to places like BLT, PVB, and CCV, may not see it happen the same was as those owners may not go anywhere when they don’t have Epcot area resorts to choose from.

If those resorts become easier to get due to no ROFR, more will buy there as though they are restricted.

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.