First Riviera ROFR

[Brian Noble]

You might be right that resale restrictions haven’t hurt sales, but you might not.

Disney did not create restricted resorts because they thought they would be harder to sell. Disney also has the data on tour flow and conversion rates both before and after this model was introduced.

 

[Carouselofplanning]

Disney did not create restricted resorts because they thought they would be harder to sell. Disney also has the data on tour flow and conversion rates both before and after this model was introduced.

That doesn’t mean the data is all good.
Cabins isn’t working out so far and Island Tower ended up not being its own association or trust. And sales of Riviera have slowed.

 

[havoc315]

There is no “evidence” as you like to say of what a typical direct buyer considers or even who the typical direct buyer is. What is the percentage of existing owners versus new customers? What information do they have? What did they consider in their decision? You might be right that resale restrictions haven’t hurt sales, but you might not. It’s almost entirely speculation on both sides of the argument because none of us is privy to actual data that could quantify the effect. I think there is some sales data to suggest sales might have been hurt and some sales data (like the VGF months you pointed out) that may suggest the opposite.

The biggest and most conclusive data: Disney is continuing the restrictions moving forward. If they were hurting sales, Disney would stop doing it. When New Coke tanked, Coca Cola went back to the original.

If the restrictions were hurting direct sales, then Disney wouldn’t be putting them into new resorts.

 

[havoc315]

I'm upset that, as a buyer, your options are:

1. Buy direct and sell at an especially big loss because resale value is depressed by restrictions.
2. Buy direct and never sell - which sounds great on paper, but very hard to accomplish (to the point that I was hesitant to list it as an option).
3. Buy resale and be limited to your home resort.

I understand that people have bought direct at O14 resorts which now have lower resale value than RIV, but those resorts are due to other factors which weren't done for the deliberate purpose of hurting the customer.

I understand being upset by the change. But remember, most timeshares become nearly worthless at resale. And I think you underestimate the number of people that never sell, just pass the contracts on to their kids. (That’s still my plan, keep my contracts for another 10-20 years, and then hand them down).

 

[Tumnus]

I'm upset that, as a buyer, your options are:

1. Buy direct and sell at an especially big loss because resale value is depressed by restrictions.
2. Buy direct and never sell - which sounds great on paper, but very hard to accomplish (to the point that I was hesitant to list it as an option).
3. Buy resale and be limited to your home resort.

I understand that people have bought direct at O14 resorts which now have lower resale value than RIV, but those resorts are due to other factors which weren't done for the deliberate purpose of hurting the customer.

Why would number 2 be "very hard to accomplish"? Buy direct and never sell to me is the default option.

 

[Patmcpsu]

Why would number 2 be "very hard to accomplish"? Buy direct and never sell to me is the default option.

If you're buying direct, the remaining contract length is usually 45-50 years. If the average ownership length of a DVC contract is 7-8 years (I keep hearing that number referenced, but never properly cited), that means a contract changes hands an average of 4-6 times over the course of its life. I'm aware there are cases where contracts change hands zero times, but that's the outlier.

 

[Brian Noble]

If the average ownership length of a DVC contract is 7-8 years (I keep hearing that number referenced, but never properly cited)

That's because it is wrong. That was a "study" done of deeds acquired by resale, and it was done years ago. It does not measure the length over which deeds not sold were held, and over time you'd only expect the average length to get longer.

Edited to add: If someone were to come to me to suggest they only wanted to own DVC for 7-8 years, I would tell them to rent.

 

[Brian Noble]

I'm upset that, as a buyer, your options are:

1. Buy direct and sell at an especially big loss because resale value is depressed by restrictions.
2. Buy direct and never sell - which sounds great on paper, but very hard to accomplish (to the point that I was hesitant to list it as an option).
3. Buy resale and be limited to your home resort.

I think there is a third option, which I will call Option 1.5:

Buy direct, hold it long enough to have gotten what I consider good value based on the vacations I have taken, and dispose of it when I am done. Maybe I get a few dollars back then, maybe I don't, but if I do it is found money.

It is true today that if you buy RIV today and sell it tomorrow, it will cost you significantly more than if you buy and sell PVB. Is that true if you buy today but sell 20 or 25 years from now? Maybe. My bet is "You'd still lose more, but the gap has narrowed." But that's just a bet, and I am not a betting man.

Either way, I do not care what my DVC deed is worth in 20 years, and I hope to use it for vacations until at least that point, more or less. If I do, I will have considered it a good value, even if I have to give it away. If I end up having health issues that prevent me from traveling between now and then, I may lose a little more. On the other hand, I won't be spending money on other travel expenses, so it doesn't matter.

For me, timeshares are a consumable toy, not an asset.

 

[Carouselofplanning]

I understand being upset by the change. But remember, most timeshares become nearly worthless at resale. And I think you underestimate the number of people that never sell, just pass the contracts on to their kids. (That’s still my plan, keep my contracts for another 10-20 years, and then hand them down).

The gripe is that DVC was never supposed to be most timeshares. It was supposed to be different. More guest friendly. That’s clearly no longer the strategy. The current leadership is fully in the “this is just a plain ole timeshare” boat now. Because of the addiction to financing all hotel construction through it.

 

[Carouselofplanning]

I think there is a third option, which I will call Option 1.5:

Buy direct, hold it long enough to have gotten what I consider good value based on the vacations I have taken, and dispose of it when I am done. Maybe I get a few dollars back then, maybe I don't, but if I do it is found money.

It is true today that if you buy RIV today and sell it tomorrow, it will cost you significantly more than if you buy and sell PVB. Is that true if you buy today but sell 20 or 25 years from now? Maybe. My bet is "You'd still lose more, but the gap has narrowed." But that's just a bet, and I am not a betting man.

Either way, I do not care what my DVC deed is worth in 20 years, and I hope to use it for vacations until at least that point, more or less. If I do, I will have considered it a good value, even if I have to give it away. If I end up having health issues that prevent me from traveling between now and then, I may lose a little more. On the other hand, I won't be spending money on other travel expenses, so it doesn't matter.

For me, timeshares are a consumable toy, not an asset.

Whether what they did is working or not or somewhere in between, your ultimate point is good advice. Whatever one complains about regarding the evolution of DVC, practically speaking, today, it’s best to evaluate it as something worth nothing when you are done with it. If it still makes sense then do it. If not, don’t. If you get money back when you are done that’s a bonus. I wish it were different and there are many reasons why it should be but it’s not.

 

[Tumnus]

If you're buying direct, the remaining contract length is usually 45-50 years. If the average ownership length of a DVC contract is 7-8 years (I keep hearing that number referenced, but never properly cited), that means a contract changes hands an average of 4-6 times over the course of its life. I'm aware there are cases where contracts change hands zero times, but that's the outlier.

As others said, that is a statistic for those who sell, not those who buy. We don't know what percentage of members sell, we also don't know if that old stat was ever accurate as it was put out by people motivated to get others to sell, the resale brokers.

If you assume 7.5 years average for those who sell and 40 years average for those who don't, if only 25% of members sell (which I would say is probably high), then the average length of holding is about 32 years. "What percentage of members sell" is the big unknown variable, but it's definitely not 100% (which would need to be true for the 7 to 8 years to be right) and it's not 0%. Most likely the majority of buyers do not sell.

 

[Carouselofplanning]

As others said, that is a statistic for those who sell, not those who buy. We don't know what percentage of members sell, we also don't know if that old stat was ever accurate as it was put out by people motivated to get others to sell, the resale brokers.

If you assume 7.5 years average for those who sell and 40 years average for those who don't, if only 25% of members sell (which I would say is probably high), then the average length of holding is about 32 years. "What percentage of members sell" is the big unknown variable, but it's definitely not 100% (which would need to be true for the 7 to 8 years to be right) and it's not 0%. Most likely the majority of buyers do not sell.

They still changed the rules for a reason. People are reselling enough that it impacted their direct sales.

 

[airjay75]

I wonder how many direct sales Disney lost pre-RIV from people who took a tour, got the pricing, went home and did some research and realized they could basically get the same thing for cheaper on the resale market and all they’d lose is a handful of blue card benefits they didn’t care about too much.

Disney may well have looked at that and thought, well, we could choose the carrot or the stick to get rid of this problem. We could either boost direct benefits which will cost money (the carrot) OR we could impose resale restrictions which will cost us nothing (the stick). And, if the stick works, it will have the added benefit of depressing the resale market and we can actually make more money down the road recycling points.