DVC sales growth ideas

[TheHuns]

I bring this up every time I see the idea of resale getting direct benefits through a fee. It’s a decent deal for members, but a bad idea for Disney because it leaves money on the table.

The more economically sound (and less complicated) option would be a promotional period where existing members, who do not currently qualify for membership extras, can qualify with an add-on of 50 or 75 (something less than the current 100 point minimum) direct points at select resorts.

That setup benefits Disney by generating revenue through real estate sales. It benefits excluded resale members by giving them an opportunity to stay at future resorts (with those add-on points) and enjoy the other benefits. Everyone wins!

 

[TCRAIG]

Wonder if Disney will adjust their financing numbers in order to increase sales?

 

[sethschroeder]

I bring this up every time I see the idea of resale getting direct benefits through a fee. It’s a decent deal for members, but a bad idea for Disney because it leaves money on the table.

The more economically sound (and less complicated) option would be a promotional period where existing members, who do not currently qualify for membership extras, can qualify with an add-on of 50 or 75 (something less than the current 100 point minimum) direct points at select resorts.

That setup benefits Disney by generating revenue through real estate sales. It benefits excluded resale members by giving them an opportunity to stay at future resorts (with those add-on points) and enjoy the other benefits. Everyone wins!

I am not sure what money is really left on the table. Yes there is some but there is also some gained to possibly offset it.

Its $190 for 100 points or $175 for 150 points at RIV currently. It was even cheaper in the past when RIV launched (possibly getting cheaper in the future if things don't pick back up).

The thing is a member might get 100 points and call it a day getting that blue card. If you had an "upgrade" it could be a requirement for you to upgrade all your points for say $75-$100/point. In addition it would also solve the dilemma that some might have about buying new resorts where they can't use 100/200/500 other points they own.

Disney already does ROFR to turn around and sell sold out resorts for $50-$75 of profit (well not right now but they were). By allowing upgrading this possibly shifts people to buy direct since they will have to pay the fee anyways.

It might also solve the issue of Disney needing to ROFR and sit on any inventory. They can instead allow members to sell off as low as they want (we are already on a slow decrease in pricing) and Disney can swoop in only when they will make a killing.

 

[TheHuns]

I am not sure what money is really left on the table. Yes there is some but there is also some gained to possibly offset it.

Its $190 for 100 points or $175 for 150 points at RIV currently. It was even cheaper in the past when RIV launched (possibly getting cheaper in the future if things don't pick back up).

The thing is a member might get 100 points and call it a day getting that blue card. If you had an "upgrade" it could be a requirement for you to upgrade all your points for say $75-$100/point. In addition it would also solve the dilemma that some might have about buying new resorts where they can't use 100/200/500 other points they own.

Disney already does ROFR to turn around and sell sold out resorts for $50-$75 of profit (well not right now but they were). By allowing upgrading this possibly shifts people to buy direct since they will have to pay the fee anyways.

It might also solve the issue of Disney needing to ROFR and sit on any inventory. They can instead allow members to sell off as low as they want (we are already on a slow decrease in pricing) and Disney can swoop in only when they will make a killing.

The target demographic for this promotion would likely be the younger DVC owners who had purchased a 50-150 point resale contract. The people that can’t, or don’t want to, drop ~$20,000 to double their contract size for a gold annual pass/Epcot lounge.

Disney could theoretically make a lot of money by charging $75-$100/point for an upgrade, but would anyone pay? We’re talking about $7,500-$10,000, at a minimum, to upgrade resale points for member benefits. On that low end, you make that back through the savings of 10 years of Gold APs for a family of 4. When you look at 300 point contracts the number is so high ($22,500 - $30,000) that the 100 point minimum is the cheaper bet, as you mentioned.

I'm an owner of a 60 point contract going every other year and I'm in a position to add on if I want to go annually. Under the current system, I have absolutely no incentive to add any direct points on because it is more expensive than resale and I'd need to spend $20,000 to see any benefit.

I'd be much more willing to pay $11,000 for 50 Copper Creek points than $12,300 to upgrade my current contract and add enough points to bring me to 100. ($4,500 upgrade for 60 points + $7,800 for 40 Riviera points). One of those options is really easy to implement within the current structure of DVC. The other is complicated and requires more resources to put into effect.

 

[sethschroeder]

The other is complicated and requires more resources to put into effect.

Lets be honest any change would require resources.

Doing an add-on purchase requires way more resources than just purchasing an upgrade. The add-on is a real estate transaction with all of those requirements. Doing an "upgrade" has no connection to your real estate interest and can just be a simple contract between you and Disney.

I also didn't notice before that you said require an add-on less than 100 points. There is really 0 reason to do that because the group who didn't have a chance to get that without any strings is tiny.

I came in since the minimum was raised but in 2018 it was still 25 and raise to 75 then last year it was raised from 75 to 100. Doesn't make much sense to give an incentive for 2 years worth of new resale owners and it actually hurts their new sale pitch of buying 100 points right off the bat for first time buyers.

 

[TCRAIG]

40 points at RIV isn’t going to get you much even with going EOY

 

[sethschroeder]

I have an idea out of left field what about a special AP option. Maybe it could be called like Gold AP for DVC members? That might go over well?

I kid but part of what got me to cancel my recent contract to purchase CCV was based on the fact that Gold AP is not even for sale right now. Have to think it will be back but way to big of a risk to just assume for me.

At this point I am a hard no again on direct purchase. If they dropped the prices it might reopen my eyes. With BWV dropping to $100/point or less though on the resale market it has me thinking about that in the future instead though.

40 points at RIV isn’t going to get you much even with going EOY

Ya and they really want to eliminate those small contracts it seems. I think partly because they know long term they hurt direct add-on purchase likelihood.

 

[TheHuns]

40 points at RIV isn’t going to get you much even with going EOY

That's exactly why I think an upgrade isn't necessarily that great of an idea. Even in my situation where I have under the minimum benefit for direct, the cost/benefit is so out of whack that it benefits no one but Disney. Even in situations where someone owns 100 resale points it is a bad proposition. What resale owner is going to pay $10,000 for benefits that could go away at any point? Not nearly as many resale owners that would pay $10,000 to add on 50 points to get more points and benefits that could go away.

Lets be honest any change would require resources.

Doing an add-on purchase requires way more resources than just purchasing an upgrade. The add-on is a real estate transaction with all of those requirements. Doing an "upgrade" has no connection to your real estate interest and can just be a simple contract between you and Disney.

I also didn't notice before that you said require an add-on less than 100 points. There is really 0 reason to do that because the group who didn't have a chance to get that without any strings is tiny.

I came in since the minimum was raised but in 2018 it was still 25 and raise to 75 then last year it was raised from 75 to 100. Doesn't make much sense to give an incentive for 2 years worth of new resale owners and it actually hurts their new sale pitch of buying 100 points right off the bat for first time buyers.

I have an idea out of left field what about a special AP option. Maybe it could be called like Gold AP for DVC members? That might go over well?

I kid but part of what got me to cancel my recent contract to purchase CCV was based on the fact that Gold AP is not even for sale right now. Have to think it will be back but way to big of a risk to just assume for me.

At this point I am a hard no again on direct purchase. If they dropped the prices it might reopen my eyes. With BWV dropping to $100/point or less though on the resale market it has me thinking about that in the future instead though.

When I'm talking about resources, I mean back end resources. Some IT infrastructure, some market based, mostly legal. What does Disney need to do on a technical level to make this switch? Is it as easy as updating a flag labeled "resale" on a given contract? Is it a fixed or variable price? How much legal liability would Disney be exposing themselves to by making a program, targeted exclusively to timeshare owners, charging $75-$100/point for benefits that they say can be taken away at any point? Is this legal in Florida, California, Hawaii, and South Carolina? Would creating that option open up a legal argument against the separation of direct and resale purchases?

An add on purchase is something done routinely. Closing costs and fees are established. Prices are established. Existing members can already purchase minimum add-ons of 25 points (according to the current prices on DVC News). Disney has historically raised and reduced the minimum points required for purchase. According to Steve Russo in a 2009 article on MousePlanet, Disney originally set the minimum at 150, raised it to 160, and appeared to raise it to 200 in for Bay Lake Tower. I didn't know DVC existed in 2009, so this is, unfortunately, one of the best sources I had after a minute of Googling.

The point is that a fee associated with a "contract upgrade" has the potential to be a legal mess. Temporarily reducing the minimum member benefits point threshold for existing resale members sounds like a quick and easy way to get people like me to buy 50 points at list price.

 

[sethschroeder]

An add on purchase is something done routinely.

Except everything you mentioned about legal would be required for this as well before you sold that add on. So there is no change there.

As far as IT they simply would reload the contracts in the system as direct likely or would flag it like all the different member levels that already exist with points and such (flagging is how they likely would have to do it for the add on option as well).

Is this legal in Florida, California, Hawaii, and South Carolina?

Again this is not part of the timeshare real estate transaction. Disney has tons of lawyers though.

Existing members can already purchase minimum add-ons of 25 points (

Not at all resorts.

The point is that a fee associated with a "contract upgrade" has the potential to be a legal mess. Temporarily reducing the minimum member benefits point threshold for existing resale members sounds like a quick and easy way to get people like me to buy 50 points at list price.

Supposedly other time share offerings out there already do this. Marriott or Hilton or someone based on others feedback.

Even in situations where someone owns 100 resale points it is a bad proposition. What resale owner is going to pay $10,000 for benefits that could go away at any point?

People already do that today. Also things like booking at Riviera, DLV, and in the future the resold 2042 resorts are unlikely to go away.

Add in the fact you can save on gold passes.

Disney had the 25 and 75 point requirement. They just changed it less than a year ago from 75 there if they do anything they would just roll back the requirement as the pool of possible buys is tiny and not worth the effort likely, maybe in 10 years though during the next recession.

 

[zakdavid]

Not a chance of 1. The legal issues of OKW make it clear this is not an option. When you extend the land lease, all contracts extend. Whether someone pays or signs or not.

So what is happening with the 2042 OKW contracts?

 

[sethschroeder]

So what is happening with the 2042 OKW contracts?

If people didn't sign the quit claim there is a chance they get a free extension. It is a mess.

Any "extension" though in the future would simply be a new contract it would not be directly attached to the current contract other than simply the current members possibly getting first crack or a discount.

 

[Sandisw]

They raised the minimum to get blue card benefits to 100 last fall, but certainly could see if go back to 75 if they wanted.

I think any upgrade system that they did would be buying matching number of direct points and it qualifies the resale points for all resoets,

So, if you own 100 resale point contract, then you buy a 100 point direct contract and now all 200 are eligible.

But, with Reflections shelved, I don’t think they are in any rush to change things right now. As I mentioned, they can offer a great cash discount on the unsold rooms at RIV to more than cover operating costs of those not being part of DVC.

 

[CastAStone]

So what is happening with the 2042 OKW contracts?

If people didn't sign the quit claim there is a chance they get a free extension. It is a mess.

Any "extension" though in the future would simply be a new contract it would not be directly attached to the current contract other than simply the current members possibly getting first crack or a discount.

For most people the contracts will revert to Disney on 2/1/2042 and Disney presumably will resell them.

The people who never signed anything, never sold their contracts, and are still alive, which is going to be a small number of people, may as noted above take Disney to court.

 

[zakdavid]

Wonder if Disney will adjust their financing numbers in order to increase sales?

Heres hoping for 0% APR

 

[zakdavid]

They raised the minimum to get blue card benefits to 100 last fall, but certainly could see if go back to 75 if they wanted.

I think any upgrade system that they did would be buying matching number of direct points and it qualifies the resale points for all resoets,

So, if you own 100 resale point contract, then you buy a 100 point direct contract and now all 200 are eligible.

But, with Reflections shelved, I don’t think they are in any rush to change things right now. As I mentioned, they can offer a great cash discount on the unsold rooms at RIV to more than cover operating costs of those not being part of DVC.

They make more money renting rooms than selling the stake?

 

[Sandisw]

They make more money renting rooms than selling the stake?

Right now, AP discount is around $360 or so a night for studios.. My point was that not selling doesn’t mean no income. They have a way to cover their share of costs...and I’m sure profit..while they sell.

There is no rush, IMO, of making decisions to change their entire model of resale restrictions right now when they can generate income for the 65% of rooms not declared.

 

[zakdavid]

Right now, AP discount is around $360 or so a night for studios.. My point was that not selling doesn’t mean no income. They have a way to cover their share of costs...and I’m sure profit..while they sell.

There is no rush, IMO, of making decisions to change their entire model of resale restrictions right now when they can generate income for the 65% of rooms not declared.

Got it, thanks! Yah thats actually a big discount from what they were trying to charge for those rooms cash earlier in the year. I bought Riviera and I know you did too. I am fine with the restrictions and agree they won't rush to change them

 

[Sandisw]

Got it, thanks! Yah thats actually a big discount from what they were trying to charge for those rooms cash earlier in the year. I bought Riviera and I know you did too. I am fine with the restrictions and agree they won't rush to change them

Another thing to add is that it seems like they are in no rush to open all their resorts so having rooms at RIV while keeping AKL and WL closed is also a plus too...especially if they continue to discount!

 

[zakdavid]

Another thing to add is that it seems like they are in no rush to open all their resorts so having rooms at RIV while keeping AKL and WL closed is also a plus too...especially if they continue to discount!

good point It is gonna be interesting to stay in CC and Jambo with just the DVC side open

 

[Brianstl]

I am not sure what money is really left on the table. Yes there is some but there is also some gained to possibly offset it.

Its $190 for 100 points or $175 for 150 points at RIV currently. It was even cheaper in the past when RIV launched (possibly getting cheaper in the future if things don't pick back up).

The thing is a member might get 100 points and call it a day getting that blue card. If you had an "upgrade" it could be a requirement for you to upgrade all your points for say $75-$100/point. In addition it would also solve the dilemma that some might have about buying new resorts where they can't use 100/200/500 other points they own.

Disney already does ROFR to turn around and sell sold out resorts for $50-$75 of profit (well not right now but they were). By allowing upgrading this possibly shifts people to buy direct since they will have to pay the fee anyways.

It might also solve the issue of Disney needing to ROFR and sit on any inventory. They can instead allow members to sell off as low as they want (we are already on a slow decrease in pricing) and Disney can swoop in only when they will make a killing.

Disney isn't excising ROFR anymore and won't be for a longtime. They have already discounted their inventory of points they accumulated through ROFR.