Fate of 2042 DVC resorts?

[MICKIMINI]

I could see tearing down some of the buildings at OKW and rebuilding them higher with elevators, maybe adding parking on bottom floor, and then reselling the points. They’d have to keep enough of the old buildings to accommodate those who extended their points, but eventually they could replace the whole property with higher density buildings. Not sure how well that idea could work at other resorts though.

That is similar to our thinking. It will be interesting to see how it all pans out. We own 2042 and 2057. The landscaping is so lush at this point and the footprints of the buildings are large. Parking underneath and elevators would allow a larger footprint and easy access. We didn't think of that!

 

[Liquidice]

I understand that the points for the 2042 resorts all expire in January 2042. What I was confused by is the reference to those 20 million points "hitting the market." They don't hit the market, they go away.

My reference to DVD needing to be selling something in 2035 was not meaning that they were going to sell either a BWV2 or BCV2 using the same rooms, that cannot happen. But they have to be selling something as that's what they do.

I think they will build a whole new resort somewhere in the Yacht or Beach Club area to be actively selling as the legacy BCV and BWV expire. That would give them active sales in the Epcot area and allow for a refurb at the legacy resorts a few years down the road. That real estate is too prime to not leverage.

Gotcha -- there is an assumption is that they will want to resell those points - I guess the simple way of looking at it is that Disney now has re-assumed ownership of some prime property on WDW and they will need to do something with it. If they want to flip them all right away - they would be stuck with a lot of DVC resorts to be selling at the same time.

I guess if Disney's cash flow is really good in 2042, they could sit on the 3 properties and take the time to refurb all of them and then sell them at different times.

My thought was that they would want to do this as soon as possible, so if there were a way to take 1 or 2 of the resorts "off the table" quicker and gain some cash flow, I would guess they would do this to reduce the amount of work they need to do all at the same time.

One way would be to sell a new shorter deed with a smaller price in 2041/2042 for a BWV2 (just a hypothetical example). That would take BWV off the table in 2042 and they could focus on demolishing BCV and building a tower and maybe refurbing BRV.

 

[gharter]

As an owner at BWV, I would expect when 2042 arrives, all the contracts expire. They will do a major refurbishment and then resell them direct. I don't see them trying what failed miserably at OKW.

 

[FlynnRiderSwitch]

Just think of all of the MF they would suddenly lose in 2042, 20 million points X 10 per point (rough estimate in 2042, probably more) is 200 million each year. I think Disney would have to come up with a plan to keep at least some of this cash flow continuing in the likes of offering small extensions for one of two of the 2042 resorts.

 

[jade1]

Just think of all of the MF they would suddenly lose in 2042, 20 million points X 10 per point (rough estimate in 2042, probably more) is 200 million each year. I think Disney would have to come up with a plan to keep at least some of this cash flow continuing in the likes of offering small extensions for one of two of the 2042 resorts.

Yea it will be interesting.

Looking at just BCV.

3 Million Points at $10 is $30 Million per year.

But 282 Rooms at $600 (probably closer to $1,000 per night average by then, especially since some/most are 1 and 2BR) per night is $60 Million per year ($100 Million per year at $1,000/night).

YC/BC have 1,150 rooms, so adding 282 isn't that much more to fill.

I don't see why they wouldn't just make it hotel rooms.

It's a Hotel paid for/built by owners and kept up as well.

 

[FlynnRiderSwitch]

Yea it will be interesting.

Looking at just BCV.

3 Million Points at $10 is $30 Million per year.

But 282 Rooms at $600 (probably closer to $1,000 per night average by then, especially since some/most are 1 and 2BR) per night is $60 Million per year ($100 Million per year at $1,000/night).

YC/BC have 1,150 rooms, so adding 282 isn't that much more to fill.

I don't see why they wouldn't just make it hotel rooms.

It's a Hotel paid for/built by owners and kept up as well.

Great point, if they just make those DVC villas hotel rooms that would be more revenue than just yearly MF but then you are shrinking the number of DVC resorts. But that probably won't be an issue for DVD because who knows how many additional DVC towers and resorts will be built by then, most or all with the 2019 restrictions in place. Sounds like in the long run Disney will benefit.

 

[kdm31091]

A lot of the reason IMO it failed at OKW was because it was so far ahead of time. Asking for money in 2007 for something you get no benefit out of until 2042 is a hard sell. Life is unpredictable. Hedging bets that you’d want to use it post 2042, 35 years out, I can see why people didn’t want to.

If a 10 or 15 year moderately priced extension is offered in 2040 or so, I can’t see how it would fail or be unpopular.

That said, I’m more thinking they will make new contracts and give current owners a modest discount or maybe a small advanced window on purchasing, but that’s about it. But 20 years is a long time. Things could change. If new sales are very poor in 2042, they may offer cheap extensions... who knows?

I’d enjoy the 20 years of vacations left at the resorts and not worry too much. It’s still quite a long time.

 

[gharter]

I would agree that it appears they offered it too soon. Few people look that far ahead.
If they offer it at 5 years out, they may have more interest.
Or they could end the contracts, remodel the building and sell it as a "new" resort at a higher price.
But, there are so many things that could change between now and 2042.
For us, we will be old enough at that time, that we won't care about renewing, unless our kids want the contract.

 

[huskies90]

It will be interesting at Old Key West since there are folks who did extend. I bought a small 50 point contract direct back in 2015 and my expiration is also 2057. So assuming they do nothing as many have speculated, a good chunk of the point inventory will expire in 2042 and some other quantity of points will still be going to 2057. I wonder what that does to the inventory system and Disney's plans for that property after 2042...

 

[DVC Sue]

Do you mean that 20 million points are expiring all at once? The points from 2042 resorts aren't hitting the market unless I am misunderstanding something.

DVC will have to have some resort(s) in active sales in the 2035-2042 window, I would think. I can't imagine a scenario where the 2042 resorts expire on January 31st and immediately go back on sale under some new iteration on February 1st.

This makes a lot of sense to me. That’s a lot of points to sell at once- not to mention the loss of the annual dues.

 

[tjkraz]

It will be interesting at Old Key West since there are folks who did extend. I bought a small 50 point contract direct back in 2015 and my expiration is also 2057. So assuming they do nothing as many have speculated, a good chunk of the point inventory will expire in 2042 and some other quantity of points will still be going to 2057. I wonder what that does to the inventory system and Disney's plans for that property after 2042...

Some easy options include renting the excess rooms out to cash guests, selling the points as one-time-use points or using them for promotional offers attached to a new purchase at a different resort (e.g. "buy at the new-and-improved Disney's BoardWalk Villas, opening in 2043, and we'll give you one year's worth of points to use at Old Key West!") Some have speculated that Disney could keep enough rooms to satisfy those who extended and start demolishing the rest. That could involve eliminating resort amenities which are documented in the POS, so I'm unclear about what latitude they have there. Either way, I'd expect that after 2042, remaining owners will still have access to enough buildings to satisfy DVC's availability commitment, plus all of the key resort amenities (hospitality house, restaurants, main pool and one or more quiet pools, etc.)

Disney could also aggressively re-open the extension offer for people who get to 2040/2041 and realize that they aren't ready to let go, but also don't want to commit to another 50 years.

 

[jade1]

This makes a lot of sense to me. That’s a lot of points to sell at once- not to mention the loss of the annual dues.

They could all become rentals day 1, which is far more revenue than dues. Then they could decide to start allocating sections/inventory for new DVC contracts (or extensions) if they want. Or renovate sections at a time to start reselling.

 

[Cfabar1]

Yes, but Disney seems to be making the calculation that they are converting hotel rooms (in prime properties) to DVC properties. That tells me, Disney’s metrics indicate profitability can be increased by shifting people to DVC instead of one-night stays.

I could also see Disney selling the new contracts right away, and beginning substantial refurbishments for the first few years of the contracts. This would allow them to use dues to finance the renovations in a meaningful way.

 

[tjkraz]

Yes, but Disney seems to be making the calculation that they are converting hotel rooms (in prime properties) to DVC properties. That tells me, Disney’s metrics indicate profitability can be increased by shifting people to DVC instead of one-night stays.

For the last 30 years, disney has made room for both guests. It's something they will always been looking at. A single hotel room rented out 365 nights per year for 50 years is far more profitable than a one-time DVC sale. Whenever it comes time for a new DVC project they'll consider hotel occupancy, future rate projections, the cost of converting hotel rooms vs building new for DVC, etc.

I could also see Disney selling the new contracts right away, and beginning substantial refurbishments for the first few years of the contracts. This would allow them to use dues to finance the renovations in a meaningful way.

Timeshare laws & licensing will restrict most bad behavior.

If you look at the point charts from the '42 resorts, most are dramatically lower than newer resorts. For that reason alone, any second sale of BWV, BCV, etc will have revised point charts. That means a new condo association, new licenses, etc.

The wrap-up of the '42 resorts will include capital reserves contributions drying up so that owners aren't funding any projects beyond the end of their ownership. Disney will embark on some major or minor renovation--at their own expense--to prep the resorts for a second sale. Then it will get licensed as a new timeshare entity and be available for purchase with (presumably) new 50 year contracts.

 

[gharter]

Do you mean that 20 million points are expiring all at once? The points from 2042 resorts aren't hitting the market unless I am misunderstanding something.

My understanding is yes they are. It doesn't matter when you purchased the contract. A contract that expires in 2042, expires in 2042 whether you owned it for 30 years or 1 year. No idea, if it will be spread over a year for use year or they all expire Jan 1, 2042 or Dec 31, 2042. Either way, 2042, you no longer own at that resort.

 

[New Mouse]

My guess is Disney offloads the DVC brand to Marriott or similar around that time. Make the money by leasing your product to someone else. Sit back, do nothing, collect profits.

 

[CarolynFH]

No idea, if it will be spread over a year for use year or they all expire Jan 1, 2042 or Dec 31, 2042

Our BWV contract states specifically that our ownership ends on January 31, 2042. So no leeway there, legally.

For the last 30 years, disney has made room for both guests. It's something they will always been looking at. A single hotel room rented out 365 nights per year for 50 years is far more profitable than a one-time DVC sale. Whenever it comes time for a new DVC project they'll consider hotel occupancy, future rate projections, the cost of converting hotel rooms vs building new for DVC, etc.

I think they’ll also consider the benefit of having DVC owners cover costs of maintaining resorts even when they’re closed, such as during the pandemic. Or when they’re under-utilized - I’ve read (cannot confirm) that GF’s occupancy rates were down, and now that BPK is DVC, maintenance of that building is off the GF Resort books and onto the DVC owners at VGF.

 

[tjkraz]

My guess is Disney offloads the DVC brand to Marriott or similar around that time. Make the money by leasing your product to someone else. Sit back, do nothing, collect profits.

I don't see that happening unless Disney divests itself of the hotel business entirely. Selling off management of DVC would essentially make Disney partners with an outside entity in mutually operating each resort facility. To use your example of Marriott, handing over the keys to DVC alone would give a competitor unprecedented insight--and influence--into how Walt Disney World and Disneyland operate.

Sure there are headaches involved in operating the Disney hotels and timeshares, but those headaches are necessary in order to both maintain control and maximize profits. Not even Marriott would pay for that business unless the deal guaranteed them a significant profit margin.

 

[gharter]

Our BWV contract states specifically that our ownership ends on January 31, 2042. So no leeway there, legally.

Thanks. Our contract in the lockbox, so not easy to get to or look at.

 

[psimon]

I have asked DVC many times (the last being when I bought into VGF) what is going to happen in 2042 (I also have OKW and BWV). Their answer was that they are just kicking the can down the road now, since everyone there now won't be there in 2042. They aren't worrying about it! Those people will figure it out! Lousy policy, but that is their thought process!