DVCnews May direct sales article

[Sandisw]

One big issue with RIV resale is it eliminates a spur of the moment trip to WDW. If you buy direct, usually a room can be found somewhere in the 14 DVC resorts, but if only RIV there is a good chance you get shut out. I have on several occasions in the past 15 years of ownership where my wife and found we had matching days off. Quick search always turned up something--that is how we ended up at Old Key West for the first time. Own RIV resale and no dice.

And that is why it’s so important for owners who consider it to way those limitations.

It’s definitely going to be a product that may be less attractive to some owners.

 

[MyDogTink]

Random thought. What if upon expiration of WDW 2042 resorts, DVC creates DVC II, turns the expired resorts into new DVC II resorts and trading is only within DVC II resorts. So, buying direct today doesn’t necessarily guarantee ability to book at all future resorts.

 

[Mouseforward]

Random thought. What if upon expiration of WDW 2042 resorts, DVC creates DVC II, turns the expired resorts into new DVC II resorts and trading is only within DVC II resorts. So, buying direct today doesn’t necessarily guarantee ability to book at all future resorts.

They have not done it yet with Riviera or the cabins. I don’t think sales benefits from complexity and having multiple layers of what you can and can’t use with your points will hurt sales.

There’s a point when your customer just says this is too confusing and moves on.

DVC wants it nice and simple you purchased direct you can stay anywhere at seven months.

 

[airjay75]

This is an interesting comment about DVC/DVD slowly devaluing the product. I'm curious to hear more about how they've done so. It seems counterintuitive for a business to devalue its product base, but I'm not from the business world.

I presume Disney is merely prioritizing profit, as any for profit corporation is want to do. If the resale restrictions don’t have a meaningful effect on direct sales AND they can acquire resale contracts more cheaply through ROFR that they can then flip back into direct prices, it means more $$ for them.

 

[Brian Noble]

Random thought. What if upon expiration of WDW 2042 resorts, DVC creates DVC II, turns the expired resorts into new DVC II resorts and trading is only within DVC II resorts. So, buying direct today doesn’t necessarily guarantee ability to book at all future resorts.

That is entirely possible. Likely? I don't think so, but possible.

This is one of the reasons why I'm firmly in the camp of: "The only thing I am buying is what was guaranteed in the contract when I bought. Nothing else."

 

[BeachClub2014]

I presume Disney is merely prioritizing profit, as any for profit corporation is want to do. If the resale restrictions don’t have a meaningful effect on direct sales AND they can acquire resale contracts more cheaply through ROFR that they can then flip back into direct prices, it means more $$ for them.

Interesting thought. If I am understanding the premise of your post, DVD created the resale restrictions on new resorts to intentionally drive down the resale market on those resorts in order to repurchase points via the rofr process. Is that what you're suggesting?

 

[Kingkonig]

Interesting thought. If I am understanding the premise of your post, DVD created the resale restrictions on new resorts to intentionally drive down the resale market on those resorts in order to repurchase points via the rofr process. Is that what you're suggesting?

That’s what I think too. I know some podcasts suggest that most owners will eventually be “hybrid” owners, that isn’t what Disney wants. Sure a high resale value is an easier sell to some, but then you’re competing against your own product. If you limit resale benefits to virtually nothing, you buy back your points for next to nothing (but aren’t required to), and then can flip them for $250/pp

 

[airjay75]

Interesting thought. If I am understanding the premise of your post, DVD created the resale restrictions on new resorts to intentionally drive down the resale market on those resorts in order to repurchase points via the rofr process. Is that what you're suggesting?

Yep. And also to make direct purchases all the more attractive over resale contracts. More $$ for Disney, less money for resale brokers and sellers.

 

[Mouseforward]

I presume Disney is merely prioritizing profit, as any for profit corporation is want to do. If the resale restrictions don’t have a meaningful effect on direct sales AND they can acquire resale contracts more cheaply through ROFR that they can then flip back into direct prices, it means more $$ for them.

They are very bad at it. A couple years ago they ROFR a ton of SSR at top dollar or at least rate above $100 a point.

They could make a killing on OKW now - but they don’t. It must cost them more to arbitrage than we see.

 

[AstroBlasters]

Random thought. What if upon expiration of WDW 2042 resorts, DVC creates DVC II, turns the expired resorts into new DVC II resorts and trading is only within DVC II resorts. So, buying direct today doesn’t necessarily guarantee ability to book at all future resorts.

I’m going to choose to live in the moment and let 2042 me worry about such things.

 

[BeachClub2014]

Yep. And also to make direct purchases all the more attractive over resale contracts. More $$ for Disney, less money for resale brokers and sellers.

I doubt that DVD created resale restrictions to drive down resale prices to obtain resale points cheaply through ROFR. History has shown that DVD very rarely ROFR any resale contracts on resorts in active sales. I agree that the point of resale restrictions is to make direct purchases more attractive; however, this is accomplished through the very limited use of those resale points compared to unrestricted direct points.

 

[BeachClub2014]

That’s what I think too. I know some podcasts suggest that most owners will eventually be “hybrid” owners, that isn’t what Disney wants. Sure a high resale value is an easier sell to some, but then you’re competing against your own product. If you limit resale benefits to virtually nothing, you buy back your points for next to nothing (but aren’t required to), and then can flip them for $250/pp

I am not convinced that DVD is really all that concerned with the prices found in the resale market. History has shown that they very rarely ROFR resale contracts that are in active sales, and for the other resorts, it can be a total mystery as to their method for choosing which contracts to buy and which will pass through ROFR.

They don't seem to do much flipping by buying low on the resale market and then selling them as shiny new points.

 

[BeachClub2014]

They are very bad at it. A couple years ago they ROFR a ton of SSR at top dollar or at least rate above $100 a point.

They could make a killing on OKW now - but they don’t. It must cost them more to arbitrage than we see.

This assumes that there's a market for people to pay top dollar for OKW points. If that were true, then the resale market for OKW points would be priced higher. The other challenge to DVD is that if they spend capital to acquire resale points, to turn around and sell them as new contracts, they end up diluting the market and canibalize sales of their shiny new resorts.

 

[Mouseforward]

This assumes that there's a market for people to pay top dollar for OKW points. If that were true, then the resale market for OKW points would be priced higher. The other challenge to DVD is that if they spend capital to acquire resale points, to turn around and sell them as new contracts, they end up diluting the market and canibalize sales of their shiny new resorts.

That’s a logical thought process that doesn’t work in sales.

As a sales person if you’re selling a product at 225 a point for basic contract. And that’s just out of reach of your buyer. Do you want to send them to resale or do you want to offer that $150 point Key West contract that you happen to have on hand? After all the old Key West contract is what 12-13 years less than the Riviera contract. And most DVC buyers are already in their 40s the current generation just doesn’t have a lot of buyers in their 20s that can afford it.

I could sell the crap out of that, and you know that Key West contract will still get you a poly studio at seven months.

 

[BeachClub2014]

That’s a logical thought process that doesn’t work in sales.

As a sales person if you’re selling a product at 225 a point for basic contract. And that’s just out of reach of your buyer. Do you want to send them to resale or do you want to offer that $150 point Key West contract that you happen to have on hand? After all the old Key West contract is what 12-13 years less than the Riviera contract. And most DVC buyers are already in their 40s the current generation just doesn’t have a lot of buyers in their 20s that can afford it.

I could sell the crap out of that, and you know that Key West contract will still get you a poly studio at seven months.

I understand your point, but history has shown that DVD doesn't approach sales in that way. For first-time buyers, they push the flavor of the month and steer new buyers away from "sold-out" resorts. I bet that the points of sold-out resorts that DVD has in inventory go towards add-ons, not new customers.

Overall, I don't think DVD cares all that much about the prices in the resale market, and they are not buying back a large number of points to resell.

 

[Brian Noble]

They don't seem to do much flipping by buying low on the resale market and then selling them as shiny new points.

And that's partly becuase the resale market is not low compared to new stick-built resorts:

Post in thread 'Future of Riveria'

Feb 22, 2023

I think ultimately they would like to buy back all resale points and resell them directly.

Only at the right price.

The general rule of thumb in the timeshare industry is that the "cost of inventory" is at most somewhere between 1/4 and 1/3 of the total cost of the product you are selling. (The biggest cost component? Marketing at 40-50%.) That's cost not sales price. So even if they weren't making a dime of profit on any sale, it's better to build a shiny new resort than to ROFR a resale at anything more than about 1/3 of the direct price. Because there is...

• Brian Noble

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[atthebeachclub]

Random thought. What if upon expiration of WDW 2042 resorts, DVC creates DVC II, turns the expired resorts into new DVC II resorts and trading is only within DVC II resorts. So, buying direct today doesn’t necessarily guarantee ability to book at all future resorts.

I have definitely considered that this may happen.

 

[Mouseforward]

And that's partly becuase the resale market is not low compared to new stick-built resorts:

Post in thread 'Future of Riveria'

Feb 22, 2023

I think ultimately they would like to buy back all resale points and resell them directly.

Only at the right price.

The general rule of thumb in the timeshare industry is that the "cost of inventory" is at most somewhere between 1/4 and 1/3 of the total cost of the product you are selling. (The biggest cost component? Marketing at 40-50%.) That's cost not sales price. So even if they weren't making a dime of profit on any sale, it's better to build a shiny new resort than to ROFR a resale at anything more than about 1/3 of the direct price. Because there is...

• Brian Noble

• 

OKW was my example for this reason, with the magic 2042 to 2057 date change from resale to direct they could easily make 33% more

 

[Kingkonig]

I have definitely considered that this may happen.

Unless they reflip all of them at the same time, I have a harder time believing that they would. Not because they wouldn’t want to resell more points to people who already own, but because it makes selling some of these resorts harder. A significant sales pitch is how you’re buying into all the Disney resorts (not exactly true, but when has honesty in a timeshare sales pitch mattered?). If you’re opening with one or two resorts? A whole lot harder - about as hard as selling CFW resale.

 

[Mouseforward]

A whole lot harder - about as hard as selling CFW resale.

Ok it would not be that hard .....

I agree , BC is the only resort that could be sold as a standalone , people still buy BC resale today for > $135 a point. Thats $19 a point with buy in and MF. You gotta love a resort to pay that much.