FALSE RUMOR : Point add-on minimum going up to 100 for all resorts not just BLT!

[Simba's Mom]

There is post on a different board, not a DisBoard, this morning saying that the minimum add on at ALL resorts through DVC is going to be raised to 100 points on January 15th. The poster quotes his CM. Has anyone else seen this post? Do you think there is any truth to it? No one has refuted the claim as of now, Sunday 9AM Eastern.

I've seen that post on another board. I think there may some truth to that. although I hope not.

 

[CarolA]

I Work in Retail and have always lived by the philosophy that I would rather "get a fast nickle then a slow dime". Turn your inventory! Unless Disney is outgrowing its operation, which I highly doubt, I don't get the logic in limiting sales.

Disney is selling a FIXED ASSET. It's not like stuffed animals at the park stores! Your plan is to have lots of inventory. DVC is a high cost limited number asset. Not the same model at all. Would you sell your house for half price just to "turn the inventory"?

 

[arthur06]

Disney is selling a FIXED ASSET. It's not like stuffed animals at the park stores! Your plan is to have lots of inventory. DVC is a high cost limited number asset. Not the same model at all. Would you sell your house for half price just to "turn the inventory"?

My intent wasn't for Disney to lose money in turning inventory. Rather there is a cost associated per point that Disney must achieve. If BLT is $112 per point retail, obviously that is not a cost, cost may be somewhere around $50 to $90 per point, and the rest is profit. Maybe BLT is coming in over budget, hench the increase in points required and additional cost. But the true cost is probably broken down per point. If 100 points has a true cost say $9000, wouldn't 25 points have a true cost of $2250. Either way Disney achieves a required retail per point.

My feeling is that the increase is based solely off of exclusivity. There is a sort of "club" type feeling to belonging to DVC. At some point you have to keep people out. There is also a cash "rack" rate at Disney Hotels. If a week at AKL on a cash ressie is more expensive then a 40 point resale, why would anyone pay cash???

 

[Ksp]

I will miss having the option to add-on in small increments - our finances just don't allow for the larger point add-ons right now - who knows what the future will bring?
Do the smaller add-ons really devalue our ownership in DVC? I think it could slow some growth . . . but not of new members buying in to DVC. They would not be buying small point amounts, anyway. The only people this would seem to affect (clue me in here, if I'm off target) are the existing owners that might want to increase their points.

Where is the good here?
Is this going hand in hand with the new club they were just test-surveying? I saw the thread this week asking some members to choose names (Club 91, Commodore Club, etc.) for a possible club that is for higher point members who also have referred others to DVC.

 

[wendyinoc]

My intent wasn't for Disney to lose money in turning inventory. Rather there is a cost associated per point that Disney must achieve. If BLT is $112 per point retail, obviously that is not a cost, cost may be somewhere around $50 to $90 per point, and the rest is profit. Maybe BLT is coming in over budget, hench the increase in points required and additional cost. But the true cost is probably broken down per point. If 100 points has a true cost say $9000, wouldn't 25 points have a true cost of $2250. Either way Disney achieves a required retail per point.

My feeling is that the increase is based solely off of exclusivity. There is a sort of "club" type feeling to belonging to DVC. At some point you have to keep people out. There is also a cash "rack" rate at Disney Hotels. If a week at AKL on a cash ressie is more expensive then a 40 point resale, why would anyone pay cash???

I agree with the "rack rate" vs buying 40 pt contract. It makes sense to buy a small contract then pay the rack rate. I see why they would do this and overall costs. It does cost them more to have small contracts and it maybe made sense in the beginning. Now that they are expanding probably not. I just requested to buy more points!! This news put me over the edge. I only need 50 points so I guess I will have to buy now.

 

[Dean]

A question for Dean.......is there any other benefit derived from this move other than administrative cost savings? Does it do anything to enhance the ownership of DVC?

From a members standpoint I doubt it has much benefit. Maybe a slight savings on admin and management costs and maybe a very slight shift away from studios. Possibly more other specials if you add on in the future. The potential "costs" to present members are more if you would like to add on less than 100 points or even in increments to total 100 or more and potentially the loss of future resorts IF this slows sales to existing members. I'm making the assumption that you will no longer be able to buy 4*25 to total 100 but we shall see.

Well the 'reason' we were told about in increases in the min buy in was they wanted to make it so that if you wanted to use the 'outside' disney places (II soon to be RCI) that you would be able to have a week at where ever you wanted to go.. How true that is, or if it was just another CM story that gets told who knows..

That's bull. Only roughly 3 % of members exchange to II or RCI historically and there's no requirement or expectation. Even mentioning it more than a factual summary of the rules in terms of how many points to buy is somewhat disingenuous by the sales rep to suggest this is the reason for any such increase clearly says you have either an ill informed or a dishonest rep and I'd look for someone else. If this were the case the minimum to buy would likely be far higher and/or they'd target the points associated either with exchanging or a full week at a DVC resort.

Of course but given that DVD is making points available for sale, hitching up a caboose to a current member's train should be one of the most efficient ways to sell and service those points.

Further, someone said this is a good move because DVD should not undersell its product just because the economy is bad. That makes no sense to me - the 25- and 50-point add ons are full-price, no-incentive, no-developer-point income.

I read elsewhere a theory that this is tied into the renewed relationship with RCI.

Given NONE of the minimum purchase limits in the past have been related to exchanging and that I can't think of any possible relationship to exchanging other than the guides incorrectly saying it's related, I doubt this has ANYTHING to do with exchanging, much less RCI. I don't have DVD's numbers but this will save them admin costs and it will spur some sales now even if it costs them a few sales in the future. Going from 25/50 straight to 100 does seem a little odd to me. Why not first stop the 25 and make it 50 and see what happens esp since they already have a limit in place at that level for financing. Or make it 50/100 with a min of 100 if you finance. I suspect this move will also allow them to trim their sales staff slightly. It does make me wonder if HI will be it for DVC resorts. Or it could mean sales are still pretty good and their trying to make sure they have a steady system in place and not get into the situation like a few years ago with a system and almost nothing to sell for a time.

Right I know that. Sloppy shorthand.

I wasn't trying to get picky however in this case the distinction is important. In your thread I quoted and the one you quoted and were responding to, there were elements of the equation that were mostly related to DVD and others that were mostly or totally related to DVC. Costs related to selling including the guides, financing, legal accounting, closing and the like are only related to DVD with the only cross over being that DVD doesn't pay full overhead on their on site operations. After the sale (retail or resale), it's totally related to DVC and maint costs and DVD could care less other than if they are missing out on sales and when they have to tell potential members what the maint fees are.

 

[ClarabelleCowFan]

Until I see an official announcement or hear it from my CM, (I sent an email to my CM today) I refuse to believe that DVC has made this dramatic change in such a short time and with so little warning during the Holiday season. IMHO if this is true it is a game changer for po' folks like me!

This change doesn't take place until January 15, 2009 so it is after the holiday season.

Wouldn't there be some benefit to the guides if suddenly people thought they would have to purchase a small contract soon or forfeit the chance? Seems it might create a flurry of small purchases at a time when sales might otherwise be down.

If DVC is actually going to increase the minimum for all resorts, it seems they would have a good reason that outweighs perceived negatives. Maybe they benefit most from larger contracts and are willing to forgo the smaller sales at this time to save points for larger sales in the future.

Our guide told us that is the case now - there is a flurry of activity with owners adding on smaller point contracts before the deadline.

For those in doubt, call your guide and ask. I see no reason why ours would not be truthful about this.

 

[Melani]

Until I see an official announcement or hear it from my CM, (I sent an email to my CM today) I refuse to believe that DVC has made this dramatic change in such a short time and with so little warning during the Holiday season. IMHO if this is true it is a game changer for po' folks like me!

So far it's only a rumor spread by one Guide.

Has anyone called their Guide to find out if this is true?


Do they know (assuming it is true) how this would affect resales of small contracts? Wpuld they just be ROFR'd?

 

[twinklebug]

This is bad news for me. I just purchased a 50 point BWV contract and was planning to slowly add on in small increments. I'm a single public school teacher, so I just don't see myself having an extra $10,000 lying around anytime soon to meet the new minimum. Oh well, back to the drawing board...


Melissa

I'm pretty much in the same boat - single mom, bought AKV with hopes of adding on VWL in 30 pt increments as time goes on and I have the cash available. I guess I'll have to rent/transfer in if I want that 11 month advantage (That's one bene of being in the system already) - or wait years for that DVC fund to build up again.

 

[snowbunny]

Would you sell your house for half price just to "turn the inventory"?

Who's talking about half price? A 50-point member add-on is full price, no incentives. What kind of incentives are going to pop up after January to try to entice members who would have added on those small contracts with no sales effort whatever, to add on 100 points?

 

[snowbunny]

Costs related to selling including the guides, financing, legal accounting, closing and the like are only related to DVD with the only cross over being that DVD doesn't pay full overhead on their on site operations. After the sale (retail or resale), it's totally related to DVC and maint costs and DVD could care less other than if they are missing out on sales and when they have to tell potential members what the maint fees are.

Like many corporatations, each business unit has their own objectives, which are not always sympathetic although all are supposed to be working toward the greater good, aka shareholder value. In this case I really have to wonder who is watching the big picture, with the resort side literally giving away rooms (yes on a short term basis! so don't give away DVC but don't make it HARDER for people to pay full price for a piece of it). Who can look at the discounts on offer now for every WDW resort and think 100 or more DVC points makes perfect sense?
Thanks for the comments, very helpful.

 

[WilsonFlyer]

So far it's only a rumor spread by one Guide.

Has anyone called their Guide to find out if this is true?


Do they know (assuming it is true) how this would affect resales of small contracts? Wpuld they just be ROFR'd?

Did you read my post?

 

[dismedvc]

My feeling is that the increase is based solely off of exclusivity. There is a sort of "club" type feeling to belonging to DVC. At some point you have to keep people out.

I agree, and that is what the initial minimum purchase requirement was designed to accomplish. However, by letting members who already owned the initial minimum purchase small add-ons, and then allowing them to sell just the small add on to non-members, Disney, probably unintentionally, lost that control.

Obviously, there is nothing Disney can do, other than ROFR, about existing small point contracts. However, if Disney now wants to make it so there are no new small point contracts that could potentially allow someone to become a new member by purchasing less than the initial minimum required number of points on the resale market, I wish that they could find a way to do that while still allowing existing members, who have already met the initial minimum, to continue to add on small amounts of points.

I do not know the legal particulars, maybe Dean knows, but it seems Disney somehow could (should?) allow existing members who already own more than the initial minimum to add on small point contracts, but then somehow restrict the individual resale of those small point contracts to new members.

For example, if a member wanted to sell a small point add on they purchased after January 15th 2009, they could be restricted to either reselling it as part of an overall "bundle" that totaled at least the initial purchase minimum number of points, or if they were reselling less than that initial minimum number of points they would be restricted to only being able to resell those points to existing members. I’m sure the time-share store or any other resale broker could handle that, and it seems a lot of re-sales are already being bought by existing members.

Again, I do not know the legal ramifications, and some members might not like those restrictions on the resale of future small point add-ons, but the opportunity to continue to buy small point add-ons, even if they had those restrictions would be preferable to not being able to buy them at all. It would be the member’s choice.

Any thoughts?

 

[Dean]

Like many corporatations, each business unit has their own objectives, which are not always sympathetic although all are supposed to be working toward the greater good, aka shareholder value. In this case I really have to wonder who is watching the big picture, with the resort side literally giving away rooms (yes on a short term basis! so don't give away DVC but don't make it HARDER for people to pay full price for a piece of it). Who can look at the discounts on offer now for every WDW resort and think 100 or more DVC points makes perfect sense?
Thanks for the comments, very helpful.

As I tried to say, this may be in DVD's and the shareholders best interest overall. The question is quantity vs price and how it relates to the underlying costs of doing business both now and in the future. I don't think it's necessarily good or in DVD's best interest to sell those smaller contracts. We simply don't have the info they have to look at to make that decision. Still, it does open the door for other specials. And if they were to make some of the perks retail purchase related, it does fix that issue to a degree.

I agree, and that is what the initial minimum purchase requirement was designed to accomplish. However, by letting members who already owned the initial minimum purchase small add-ons, and then allowing them to sell just the small add on to non-members, Disney, probably unintentionally, lost that control.

Obviously, there is nothing Disney can do, other than ROFR, about existing small point contracts. However, if Disney now wants to make it so there are no new small point contracts that could potentially allow someone to become a new member by purchasing less than the initial minimum required number of points on the resale market, I wish that they could find a way to do that while still allowing existing members, who have already met the initial minimum, to continue to add on small amounts of points.

I do not know the legal particulars, maybe Dean knows, but it seems Disney somehow could (should?) allow existing members who already own more than the initial minimum to add on small point contracts, but then somehow restrict the individual resale of those small point contracts to new members.

For example, if a member wanted to sell a small point add on they purchased after January 15th 2009, they could be restricted to either reselling it as part of an overall "bundle" that totaled at least the initial purchase minimum number of points, or if they were reselling less than that initial minimum number of points they would be restricted to only being able to resell those points to existing members. I’m sure the time-share store or any other resale broker could handle that, and it seems a lot of re-sales are already being bought by existing members.

Again, I do not know the legal ramifications, and some members might not like those restrictions on the resale of future small point add-ons, but the opportunity to continue to buy small point add-ons, even if they had those restrictions would be preferable to not being able to buy them at all. It would be the member’s choice.

Any thoughts?

I wouldn't agree that the numbers are based on playing to people's emotions for joining a "club" but rather to set points trying to find the best mix of profit overall. Larger points sales means more profit per points but less sales. DVD can go through that equation for new buyers and add ons and the set points will be different but you can bet it's above 25 points per sale. As for what DVC/DVD could legally do, there really is a lot. Technically about the only thing you're guaranteed is the ability to reserve if available 11 months out at your home resort. I don't think they could restrict sales if not in the contract up front but they could going forward just like the ROFR is general and the current contractual language for CM. But what they could do is restrict perks and add ons by size or by origin of purchase or both. I personally don't think what the members think will have a lot to do with the decisions.

 

[DanenRox]

More power to those who have an extra $5,000 lying around....they will be able to jump into this "last chance offer". I don't know about the rest of you, but this economy is reaching into every aspect of our household. This is not a time for extravagance. I think it clearly defines DVC's mission statement if in these times they are going to raise their bar. It's like hearing about an athlete that isn't content with a 6 year 45 million dollar contract...wants to hold out for more. It leaves a lousy taste in your mouth, no? DVC can try to reach deeper into my pocket but they are going to find that there is nothing there.

Like many others, I would have done a 50 pt add-on some day........

 

[flatzkids]

Wow, information overload! I'm new here so I'm trying to absorb as much as possible. My mother bought 200 pts. on site when we were there in Oct. We are in the proccess of buying resale. By reading these posts, I'm guessing that there is a big difference in a 200 pt. contract and a small pt. add on. We thought for sure that DVC would execute their ROFR but they didn't. That fact is leading me to believe that they were more concerned about the larger pt. contract than the money they were turning down by not using ROFR. We got a great deal that even surprised some at Time share store.

 

[snowbunny]

I don't know about the rest of you, but this economy is reaching into every aspect of our household.

Like many others, I would have done a 50 pt add-on some day........

How many people have built a full set of Waterford crystal one or two goblets at a time? A lot. What if Waterford said there will be no more single pieces for sale, it's a full set or nothing - if you have to ask, you can't afford it!

I completely agree that whatever thinking went into this decision (and others give more credit than I for an actual plan beyond simply ramping up 4th quarter sales), it's not about how people feel. It's business.

But sometimes a business decision makes people feel bad. And that can end up having an unintended effect on the Disney brand.

 

[Melani]

This is really odd but my guide told us (we met with him Thurs to see the BLT models) specifically (I asked) that the 100 minimum only applied to BLT. Maybe he hasn't gotten the word yet.

so it's probably just a rumor. Not to panic.

What would stop several people fro, splitting one contract, other than the logistics of reservations?

 

[Anal Annie]

So far it's only a rumor spread by one Guide.

Has anyone called their Guide to find out if this is true?

Do they know (assuming it is true) how this would affect resales of small contracts? Wpuld they just be ROFR'd?

I contacted my guide about it after I read this thread this afternoon. As I hoped, since nobody has reported received anything in writing about this, he confirmed that it is just a rumor running its course. As of right now, the only increase in minimum points is at BLT. Appears that nothing else happening on January 15 except the price increase at AKV.

 

[BWV Dreamin]

I contacted my guide about it after I read this thread this afternoon. As I hoped, since nobody has reported received anything in writing about this, he confirmed that it is just a rumor running its course. As of right now, the only increase in minimum points is at BLT. Appears that nothing else happening on January 15 except the price increase at AKV.

Another poster, earlier in the thread, also had their guide tell them the same info about all resorts upping the minimum add-on when they added on to BLT. Two different guides telling the same thing. HOpe we get some clarification.