First Riviera ROFR

[pzw90]

Someone correct me if they have more info. I'd be very happy to learn more. But I believe that when Disney ROFRs contracts, they can only resell points under certain unit numbers into new contracts. For example, if DVD has 100 points in a RIV Unit 14a and and 100 points in Unit 11b, they cannot combine them into a new 200 point resale contract. They can only resell the points under their original unit numbers. (Generally, I think what DVD tries to do is something similar to this: have target units where they want to amass points so that the combined points in a single unit can be chopped up and resold any way DVD likes--if you buy resale with a target unit number, that is contract is more likely to be ROFRed). So 25, 50, and likely 100 point contracts, under this plan, don't help DVD that much, unless they are in a target unit. But a 400 point contract in a single unit gives DVD some possibilities in terms of how they can resell those points. DVD is probably also pivoting over to ROFR for RIV as points are pretty close to being sold out now. So beyond the low price--there have been other low price RIV resales--I think that very large number of points was attractive for DVD. That's my guess as to why this got nabbed and other contracts did not.

I don't know how much they are targeting units. The sheer amount of contracts they get through foreclosure (48 since 7/1 when checking OCCompt site with Disney as Grantee, deed only, and Riviera in remarks) gives them a healthy variety of units. Maybe then use ROFR to top off if the right unit comes up. Maybe they have some internal threshold to have at least xxxx amount of points available at all times in case a sale comes up.

 

[muppets3d]

Everyone keeps saying Disney’s ROFR and restricted resort strategy is a long-term cash cow. Personally I think they are playing with fire. The number of people willing to buy DVC direct is already tiny and the ones willing to do it at today’s prices with these restrictions is even smaller. You can only trick so many people into overpaying before the word gets around.

If Riviera and other restricted resorts keep tanking in resale value that kills one of DVC’s strongest selling points “I can sell later and only take a small hit.” If people see a 50-60% percent haircut the second they walk away from the closing table they are going to think twice before buying direct.

The reality is most owners do not keep their contracts for life. The average ownership is about eight years. Life changes. People sell. If their resale options are crippled a lot will simply never buy in. And these restrictions just make the original fourteen resorts even more desirable on the resale market while the restricted ones get treated like the timeshare version of a used Kia.

Sure Disney might squeeze some short term wins by forcing people into direct sales but the long game looks shaky. Resale buyers often turn into direct buyers later kill that entry point and you dry up part of your own pipeline. And if the business model relies on an endless stream of fresh customers willing to overpay with no viable exit that’s not a strategy it’s a ticking clock.

But what do I know I am sure Disney had a bunch of people smarter than me run full financial analyses and projections.

I mean, other timeshare systems have no problem selling points that are absolutely worthless - can't even give them away - after the ink dries on the contract. So what you're saying might sound good but it's just not rooted in fact.

And I am firmly convinced that "the average length of a contract is 8 years" is one of those snapple facts that someone made up and enough people repeated until it's accepted as truth. There is no proof whatsoever of that. If that were true, OKW would have cycled through it's owners a couple times now - but there are many day 1 owners still around.

 

[airjay75]

I mean, other timeshare systems have no problem selling points that are absolutely worthless - can't even give them away - after the ink dries on the contract. So what you're saying might sound good but it's just not rooted in fact.

And I am firmly convinced that "the average length of a contract is 8 years" is one of those snapple facts that someone made up and enough people repeated until it's accepted as truth. There is no proof whatsoever of that. If that were true, OKW would have cycled through it's owners a couple times now - but there are many day 1 owners still around.

That's the thing about DVC - even with the resale restrictions, you can still get rid of your contracts without losing everything. And there's a robust rental market. And these are timeshare properties at one of the most popular tourist attractions in the world. Sure, all those things could change, but it still makes DVC much more attractive than your average timeshare. Was DVC an even more attractive product without the resale restrictions? Absolutely. But it is still a product that retains significant value and will allow people to talk themselves into purchasing it if they want it.

 

[disneylandtour]

But what do I know I am sure Disney had a bunch of people smarter than me run full financial analyses and projections.

From what I've seen, the long-timers tend to be creative and frontline cast members and managers. The usual business, legal, and tech support tend to rotate through Disney the same as they do at every company. I'm sure these financial projections are fairly solid for a few years (i.e. short term) but less reliable for 10+ years (i.e. long term) as by that time, the people who did these projects and their managers will be long gone and the problem of what to do now will fall to someone else. But those short term gains helped everyone in the DVD unit--until they jumped to another job.

 

[eticketplease]

$89pp still too high. Don’t see how you could go the life of the contract without stranding some points due to the restrictions. Or would II be a release valve?

They still have the option of buying OTUP as long as something is available at 7 months to help not leave points stranded.

 

[muppets3d]

$89pp still too high. Don’t see how you could go the life of the contract without stranding some points due to the restrictions. Or would II be a release valve?

Considering you don't have Saratoga Springs as a backup plan, you'll have to be very meticulous to book all of your vacations within the 11 month window. Riviera in particular has decent preferred view availability at 7 months but that comes at a hefty points penalty for what is still not a great view.

 

[eticketplease]

The number of people willing to buy DVC direct is already tiny and the ones willing to do it at today’s prices with these restrictions is even smaller.

I rather do it at today's prices than tomorrows...
We all know they just keep going up.

 

[eticketplease]

If Riviera and other restricted resorts keep tanking in resale value that kills one of DVC’s strongest selling points “I can sell later and only take a small hit.” If people see a 50-60% percent haircut the second they walk away from the closing table they are going to think twice before buying direct.

You obviously are a more educated person looking at DVC.
I'm not aware of Tours where anyone is mentioning sell your contract down the road.
DVC is looking to sell what can be not what can you do if something happens down the road.

 

[Brian Noble]

You can only trick so many people into overpaying before the word gets around.

You would think so, but if that were true, Wyndham would never sell another point again. Yet, they do, and often. I've been a member of TUG for about 20 years now, and for every single one of those 20 years I've been reading people predict that easy information about resale markets would kill the timeshare developer sales model.

It has yet to happen.

hat kills one of DVC’s strongest selling points “I can sell later and only take a small hit.” If people see a 50-60% percent haircut the second they walk away from the closing table they are going to think twice before buying direct.

That's a selling point now. It doesn't have to be, and there can be others. A sales agent's job is to figure out what facets of the product appeal to the potential customer, and hightlight those.

If Disney's long-term strategy with restricted resorts is to keep the resale market low (by comparison to the O14 resorts) so they can regularly buy and flip them back into direct,

The price at which ROFR competes with stick-built resorts is probably a lot lower than most people think. I did a back-of-the-envelope calculation a while back. Cosntruction costs have probably gone up since then, but still.

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

• 

That's the thing about DVC - even with the resale restrictions, you can still get rid of your contracts without losing everything. And there's a robust rental market.

The latter is the more important part. As long as dues are lower than the cost to rent on the open market, there is value in owning. That does not necessarily mean you can realize that value in selling---that requires a pool of willing buyers. The DVC ecosystem is more liquid than most, but it doesn't have to always be that way, and the "rental floor" may or may not continue to hold up, depending on how aggressive Disney becomes in curbing commercial renting.

I bought RIV direct. I assumed that the salvage value would be $0 when I was done with it, and still do. I don't care what the resale value is, because the money I spent buying it is gone. If, for some reason, I sell it for more-than-zero, that's just found money.

 

[Brian Noble]

DVC is looking to sell what can be not what can you do if something happens down the road.

This is 100% true.

I say this a lot, but it bears repeating. Timeshare is a product that is sold, not bought. That seems really strange to people here on the "Purchasing DVC" board, because we are a collection of people who woke up one day and decided to commit ourselves to decades of paying for the maintenance and upkeep of a very small fraction of a vacation condo.

Almost no one does this.

Instead, most buyers are on vacation, having the time of their lives, and a helpful Guide explains how they can bottle this magical feeling for their family to experience, over and over again, for years to come. No one in that moment is thinking about selling. They are thinking about all the great vacations they will take, and the vacations that their kids and grandchildren will be able to take, even if neither exist yet. The other factor in this is that timeshare is an aspirational purchase. For most buyers, it is something that allows them to upgrade their vacation experience, and to do so affordably with a low monthly payment.

Someone who has just made the decision to buy is feeling pretty good about the purchase. They are not about to go looking for reasons that this decision was a bad idea, because that's not how humans work. We might get a half-dozen people a month---maybe---at TUG asking if they should rescind any timeshare purchase anywhere. And, most of those are existing TUG members!

 

[eticketplease]

And these restrictions just make the original fourteen resorts even more desirable on the resale market while the restricted ones get treated like the timeshare version of a used Kia.

Just like the used Kia can still get you from point A to point B, The restricted resale resorts still provide a place to lay your end at the end of the night inside the WDW/DL bubble.

On 2/1/42 we will have 9 O14 resorts left: SSR, AKL, OKW, BLT, VGC, AUL, VGF, PVB and CCV.
When LSL comes online we will be up to 4 restricted resorts, RIV, VDH, CFW and LSL.
In the 10+ years after LSL is put up for sale I'm sure we will have at least 1 more resort built which would put the restricted resorts at half of the O14 or more.

It doesn't matter if the resort is restricted or not to me if I like it I will buy it.

 

[Brian Noble]

And, a final note on all of this.

I am sitting in the Sapphire Lounge at SAN, waiting to fly home after a week at Club Wyndham Harbour Lights, booked via RCI exchange. This was a fantastic location. It sits at the top end of the Gaslamp District on Fifth Avenue. We walked to a ballgame at Petco Park, a Gipsy Kings concert at Rady Shell, and the touring version of Shucked at the Civic Theater. Balboa Park (including the Zoo), Mission Beach, La Jolla, Torrey Pines State Beach, and Coronado island are all easy drives from here. If DVC ever moves back to RCI, it is worth your consideration.

However, that's not the interesting part for this conversation. The interesting part is that the sales floor is in a fishbowl easily seen from the guest elevator. Nearly every time we were headed somewhere during the day, there was a prospect on the floor, and usually several.

This is not a large building. At all. Frankly I was surprised with how much tour flow they were able to generate at such a small location.

For Wyndham, the stock resale points are worthless, and generally you have to give them away, sometimes even paying the closing costs as the "seller". You can sometimes get a few bucks for a deed, but only if it has lower-than-average maintenance fees.

Yet, they still keep selling.

 

[eticketplease]

I am sitting in the Sapphire Lounge at SAN

Keep enjoying those CSR benefits until you downgrade

 

[Brian Noble]

I will confess they are tempting me. I am out of comped SkyClub visits for the year, and still have at least one more round trip for this Medallion Year.

 

[Brian Noble]

It also occurs to me that if I add on before the end of the 3x travel bonus, I can reap a nice large pile of URs. I used some from the last purchase to rent a BMW 228 this week. Fun car, and I got it for only a few bucks over the standard rate. Alamo/National must have been overweight in sports cars this week.

And it's Welcome Home weeks....

 

[maui22]

I wonder if Riviera faces an impact on three fronts:

• Selling for 6 years now and likely needs 12+ months to sell out. (Keep in mind deeds Disney gets back add to their inventory. DVCNews direct sales data only reflects deeds going out. Deeds coming back in prior to sold out mean it extends the sell out date.) Disney may be receiving a higher number back simply because Riviera resale prices make it harder for some who took out loans to get out. Restrictions make it easier for Disney to get points back because people may be underwater due to lower resale prices.
• Disney rarely uses ROFR while in active sales. Generally, it's only when their is an extreme bargain (see the Riviera and Aulani contracts @pkrieger2287 has mentioned in various locations).
• It's also the first restricted resale resort. Reason I mention this is because restrictions make resale purchase less valuable to many. https://www.dvcresalemarket.com/blog/dvc-resale-average-sales-prices-for-july-2025/

This puts additional pressure on those who need to sell their direct purchase contracts. Started at $188 base price in 2019. When looking at resale prices, that's one of the steepest drop off from the initial price that I recall.

Look at initial prices all the way from OKW ($51/pt) through CCV (last unrestricted $176/pt?).
Other examples only because resale prices have dropped for them. Aulani ($120? initial price) and VB ($62.75 initial price).

Curious what others think?

 

[havoc315]

I'll just share one other thought that I shared on the ROFR thread. If Disney's long-term strategy with restricted resorts is to keep the resale market low (by comparison to the O14 resorts) so they can regularly buy and flip them back into direct, that will go a long ways to ameliorating the concern that some people have had about all the resale owners booking everything up at 11 months. The restricted resorts could well end up with much smaller percentages of resale owners than the O14. I have always thought there are other reasons to think this concern was overblown, but this is a potentially significant one.

Excellent point.
In fact, Disney can’t just keep building new resorts — at some point, you run out of room or you run out of demand.

At some point, Disney may start to rely on “flipping” contracts for new direct sales more than constantly having new resorts to sell.

 

[havoc315]

You would think so, but if that were true, Wyndham would never sell another point again. Yet, they do, and often. I've been a member of TUG for about 20 years now, and for every single one of those 20 years I've been reading people predict that easy information about resale markets would kill the timeshare developer sales model.

It has yet to happen.


That's a selling point now. It doesn't have to be, and there can be others. A sales agent's job is to figure out what facets of the product appeal to the potential customer, and hightlight those.


The price at which ROFR competes with stick-built resorts is probably a lot lower than most people think. I did a back-of-the-envelope calculation a while back. Cosntruction costs have probably gone up since then, but still.

This is true except for one important point: volume.

If there is market demand for 3 million points at $200+ per point, Disney will achieve much bigger profits just building a new resort.

If there is demand for only 500 points at $200+ per point… Make a lore more sense to ROFR a couple $100 contracts than to build a whole new resort.

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

• 

The latter is the more important part. As long as dues are lower than the cost to rent on the open market, there is value in owning. That does not necessarily mean you can realize that value in selling---that requires a pool of willing buyers. The DVC ecosystem is more liquid than most, but it doesn't have to always be that way, and the "rental floor" may or may not continue to hold up, depending on how aggressive Disney becomes in curbing commercial renting.

I bought RIV direct. I assumed that the salvage value would be $0 when I was done with it, and still do. I don't care what the resale value is, because the money I spent buying it is gone. If, for some reason, I sell it for more-than-zero, that's just found money.

 

[Brian Noble]

True, and my linked post mentions that.

 

[Brian Noble]

at some point, you run out of room or you run out of demand.

It won’t be demand absent some black swan event. They keep making families with kids in Disney’s target market.

And there is quite a bit of room. Plus they get to start recycling resorts in about 16 years.