Dvc club question

[boyd2284]

So if u were interested in purchasing someone else's dvc membership on top of mine. Would I benefit with lower pricing as opposed to buying through Disney? Or does it ultimately go through Disney either way? I heard if someone sells their package to someone else then Disney still has the final say if it goes through.

 

[chalee94]

Disney has right of first refusal (ROFR).

If I offer to sell to you for $50 per point, Disney gets to look at the deal before it goes through. If they think it's a great deal, ROFR allows them to step into the place of the original buyer and purchase the contract themselves. If they don't want to buy it, the deal goes through as planned.

For the seller, ROFR is a nonissue. The deal goes through either way.

The primary goal of ROFR is to discourage me from buying resale, as ROFR delays the process and if Disney takes the contract, I have to start all over.

But resales are at lower prices than direct regardless.

 

[kniquy]

I heard if someone sells their package to someone else then Disney still has the final say if it goes through.

Yes, DVC has the option to buy all contracts which are changing hands. So like PP mentioned you couldn't try and sneak a deal through cheap because DVC will buy it. The only time i think they keep their hands out of things if there is a gratuitous transfer between family members - so a parent giving a contract to a child. I do think there are strict guidelines with this type of transaction.

 

[boyd2284]

So why wouldnt Disney just buy Everytime?

 

[Mommb]

So if u were interested in purchasing someone else's dvc membership on top of mine. Would I benefit with lower pricing as opposed to buying through Disney?

It will usually be less expensive to purchase a Disney Vacation Club membership from a current owner than to purchase directly through Disney. However, there are some benefits that are available only to members who purchased through Disney, such as purchasing discounted Annual Passes and attending special member events. If you already own points purchased through Disney, you would qualify for these member benefits, but if you own only points purchased through resale, you would not.

So why wouldnt Disney just buy Everytime?

If Disney Vacation Club purchases the points, they will then need to find buyers for them. If DVC lets the points be purchased by someone else, then Disney gets the benefits of the buyer visiting the resorts, buying park tickets, purchasing food and souvenirs, etc. sooner without having to do more sales and marketing. So, if the sale price is close to what DVC could get from selling the points, DVC will typically let the sale go through. If the sales price is much lower than what DVC could get, then DVC may decide it's worth their effort to purchase and then sell the points.

 

[chalee94]

They have a lot of cash but they don't have unlimited cash.

They can sell a lot of contracts but if demand is low for certain resorts, they don't want to have those points sitting in inventory - they would rather a resale buyer take it and pay the maintenance fees.

Their profit margin from new developments is something like 80%. Reselling ROFR contracts isn't going to be close to that profitable.

Keep in mind that Disney also takes back some foreclosure inventory for much cheaper than ROFR.

 

[jerseyduke]

So why wouldnt Disney just buy Everytime?

Disney is currently selling Riviera Resort which they built. Just a guesstimate, but lets say it cost 35$ per build. That is, they are selling something for 180$ they paid 35$ for. Why buy something for 120 to sell at 180?

Also, its just business. Why would they want to tie up cash in excessive inventory? Businesses want "just in time inventory", they want the last of what is being sold being taken just as they are getting their new supply in. It lower's their carrying cost.

Think of it this way - a store selling widgets has 10 of them - their ideal goal is to be getting a new shipment of these widgets in just as a customer is purchasing the very last one. They dont want 10 more right away when they already have 10 - thats money they can not do something else with.

Its the same for Disney. They push the new/current resort because it is their highest profit margin. If they pushed all resorts equally, the points would be spread out more equally across all the resorts. They would then have to 'buy back' (ROFR) more points on the resale market to meet their sales. They would be selling less of those Riviera points that the maybe paid 35$ each for, and selling more Beach Club points that they just bought back at 135$. Which would you rather do?

 

[boyd2284]

Disney is currently selling Riviera Resort which they built. Just a guesstimate, but lets say it cost 35$ per build. That is, they are selling something for 180$ they paid 35$ for. Why buy something for 120 to sell at 180?

Also, its just business. Why would they want to tie up cash in excessive inventory? Businesses want "just in time inventory", they want the last of what is being sold being taken just as they are getting their new supply in. It lower's their carrying cost.

Think of it this way - a store selling widgets has 10 of them - their ideal goal is to be getting a new shipment of these widgets in just as a customer is purchasing the very last one. They dont want 10 more right away when they already have 10 - thats money they can not do something else with.

Its the same for Disney. They push the new/current resort because it is their highest profit margin. If they pushed all resorts equally, the points would be spread out more equally across all the resorts. They would then have to 'buy back' (ROFR) more points on the resale market to meet their sales. They would be selling less of those Riviera points that the maybe paid 35$ each for, and selling more Beach Club points that they just bought back at 135$. Which would you rather do?

So is your point that Disney won't always buy back individual offers? You made it sound like it's not in their best interest to buy anything back. Just to push the new resorts

 

[jerseyduke]

So is your point that Disney won't always buy back individual offers? You made it sound like it's not in their best interest to buy anything back. Just to push the new resorts

Yes, that is exactly my point.

It is in Disney's best interest to have people only want the newest resort, but thats just not the case. People still want Beach Club, Boardwalk, etc.

That being said, if someone insists on an older resort, and that is the only sale disney can make to them, of course, then it is in their best interest to make the sale, and if that requires them to ROFR a resale contract then they would/should.

For example, lets say that Disney has no one interested in buying Animal Kingdom Lodge from them. Disney has their 2% ownership requirement easily me - in fact a surplus beyond that.. An AKV contract enters the RORF process at a price that is "in line" with the resale market. Why would they buy it? The have no one they can sell it to. (and they have other AKV points that they could sell if the need arises)

Disney will not always buy back individual offers. They may, they may not, depending on their needs. Currently they pass on a lot more contracts than they take.

 

[boyd2284]

Thanks. I appreciate the explanation. I now understand it more. The way it was first explained to me was that Disney would simply buy every rofr period if it's even a dollar less than originally sold for. You made much more sense

 

[chalee94]

You made it sound like it's not in their best interest to buy anything back. Just to push the new resorts

If ROFR frustrates a certain percentage of resale buyers into giving up and paying full price for a retail purchase, then it is doing its job.

ROFR is not primarily about making money on the resale of that ROFRed contract. In a way, it is a means of pushing the new resorts.

(Not sure who was "explaining" ROFR to you, but that was way off the mark. During the Great Recession, Disney didn't ROFR much of anything at all for a couple of years. The demand was down and they couldn't resell the contracts so they let almost everything, including some fire sale deals, go through.)

 

[The Jackal]

Thanks. I appreciate the explanation. I now understand it more. The way it was first explained to me was that Disney would simply buy every rofr period if it's even a dollar less than originally sold for. You made much more sense

Most resorts are selling on the resale market for more than they originally sold for. OKW was originally sold for something like $55-60. It sells in the $95-100 range on the resale market.

 

[stewart715]

There is a small market for direct points at 'sold out' resorts (these are people who either don't know about the resale market or don't care about the price difference). They buy back based on their needs. They make money of off of these contracts but ultimately it helps existing members who want more points and they are not going to direct you to the resale market. So they waitlist you and then strategically buy back contracts based on their needs. Their main profit center is new resorts, but they are not going to sell sold out resorts without making some money.