future dvc contracts staggered expirations

[sjdisneywedding]

what do you think the possibility is that future dvc contracts will expire in staggering years?

its seems like it makes more sense that if dvc is more firmly set in place and plans to be around for quite some time that they would use staggered expiration years for all new contracts/resorts

seems it would be easier to sell the contracts since they would start with 50 years as opposed to 49 minus whenever its built from now.

Also seems like it would be easier to make decisions at expiration time as to what to do for the dvc resort. Meaning easier to decide once every 5 or 6 years(or whatever the time frame was between 2 resorts) whether to start anew with the expiring resort than having to decide what to do with 4 or 5 or 6 expiring resorts all in the same year.

at some point they are going to have all these dvc resorts expiring (except SSR) and they cant just decide at that point to start extending or reselling every one of the resorts, thats way too many contracts to sell at once and therefore dvc would either be losing money on maintenance fees for keeping the resort open or on other costs associated with keeping it closed.


if the expiration was staggered they could easily start selling that resort again with a new contract life and have plenty of time to sell it out before the next was due for expiration.
anyone ever have any thoughts on this

 

[Caskbill]

I don't think you'll see that. Just would present too many problems.

Suppose when OKW was built it was sold that way and let's just say it took 10 years to sell originally and sold at the rate of 10% per year. (Just to keep the numbers simple)

Now in 2042 it would be 50 years old and 10% of the memberships would expire. Suppose nobody wanted to buy into a 50 year old complex? That would mean 10% went unused, but the remaining members still had to make up the missing maintenance dollars. Five years later you're down to 50% membership.

Continue that for several years. Eventually you get to where there's just 10% of the members left, but DVC would be forced to keep the resort open to meet contract obligations.

I don't know if people would be interested in buying a resort already 50-60 years old with a new contract that goes until the resort is 100 years old. Just look at the lifespan of the fancy hotels in Las Vegas. Things change too much in 50 years. The resort will be old.

As an example, there's a turn of the century resort in SouthCentral Indiana that at one time was total luxury, with spas and natural springs. It has survived and is still a spa, and golf course, and is doing well. While the rooms have been kept up, there are still radiators for heat. Window Air Conditioners (because there is no central heat/cooling duct system in place). Electrical was an add-on with the wires on the outsides of the walls under metal 'runners'. The rooms are small compared to today's standards. I don't even remember if there were closets. Bathrooms had been made over several times over the years, but nothing compared to something like the DVC bathrooms were use to today.

Who knows what technologies are going to occur over 50 years? Will the resort and the rooms be obsolete? They're already had to retrofit OKW to keep up with technology (putting high speed internet connections into the rooms). What happens with new technologies that emerge but that can't be easily retrofitted? That's when the rooms become old-fashioned.

No, they'll keep the contracts all with the same expiration. That gives them lots of options. If people still want to stay there, they can sell new contracts. They can just rent out rooms via CRO if they want. Or then can tear the whole obsolete complex down to the ground and start over with the type of resort that people want in the year 2042. Just think of the Disney Institute as a good example of that. It didn't last that long at all, and now it's gone with the 'modern' SSR in it's place.

How many of us would be interested in purchasing a 50 year contract today for a resort that was built in 1955?

Just MHO.

 

[Dean]

If, and I repeat if, there are any more DVC resorts, I think you can bet they will expire the same as SSR for any that start selling in the next 10 years or so. The real question is whether DVC will offer extensions to the current members. And while I think DVC will want to do so in principle I don't see any way they can work it out logistically.

 

[ralphd]

If, and I repeat if, there are any more DVC resorts, I think you can bet they will expire the same as SSR for any that start selling in the next 10 years or so. The real question is whether DVC will offer extensions to the current members. And while I think DVC will want to do so in principle I don't see any way they can work it out logistically.

Agree with you Dean!

ralphd

 

[tjkraz]

If, and I repeat if, there are any more DVC resorts, I think you can bet they will expire the same as SSR for any that start selling in the next 10 years or so.

I agree too. BCV opened in 2002 and retained the original 2042 expiration date. If DVD can get away with only selling 40 years of ownership at all-time high prices, more power to them.

 

[sjdisneywedding]

I don't think you'll see that. Just would present too many problems.

Suppose when OKW was built it was sold that way and let's just say it took 10 years to sell originally and sold at the rate of 10% per year. (Just to keep the numbers simple)

Now in 2042 it would be 50 years old and 10% of the memberships would expire. Suppose nobody wanted to buy into a 50 year old complex? That would mean 10% went unused, but the remaining members still had to make up the missing maintenance dollars. Five years later you're down to 50% membership.

Continue that for several years. Eventually you get to where there's just 10% of the members left, but DVC would be forced to keep the resort open to meet contract obligations.

I don't know if people would be interested in buying a resort already 50-60 years old with a new contract that goes until the resort is 100 years old. Just look at the lifespan of the fancy hotels in Las Vegas. Things change too much in 50 years. The resort will be old.

As an example, there's a turn of the century resort in SouthCentral Indiana that at one time was total luxury, with spas and natural springs. It has survived and is still a spa, and golf course, and is doing well. While the rooms have been kept up, there are still radiators for heat. Window Air Conditioners (because there is no central heat/cooling duct system in place). Electrical was an add-on with the wires on the outsides of the walls under metal 'runners'. The rooms are small compared to today's standards. I don't even remember if there were closets. Bathrooms had been made over several times over the years, but nothing compared to something like the DVC bathrooms were use to today.

Who knows what technologies are going to occur over 50 years? Will the resort and the rooms be obsolete? They're already had to retrofit OKW to keep up with technology (putting high speed internet connections into the rooms). What happens with new technologies that emerge but that can't be easily retrofitted? That's when the rooms become old-fashioned.

No, they'll keep the contracts all with the same expiration. That gives them lots of options. If people still want to stay there, they can sell new contracts. They can just rent out rooms via CRO if they want. Or then can tear the whole obsolete complex down to the ground and start over with the type of resort that people want in the year 2042. Just think of the Disney Institute as a good example of that. It didn't last that long at all, and now it's gone with the 'modern' SSR in it's place.

How many of us would be interested in purchasing a 50 year contract today for a resort that was built in 1955?

Just MHO.

sorry I didnt mean having contracts expire in staggering years within each resort I meant per resort. meaning all of SSr will expire in 2054 then for ex

say CR villas built in 2009; so that entire resorts contracts would expire in 2059

the next built in 2011 and expires in 2061

so on

I think would make it easier to avoid all the problems you mention above

SSR would probably need a major overhaul in 2054 so at that time they could choose to begin rehab and have it ready for say 2060 or choose to tear it completely down or whatever.

point being they wouldnt have say 5 or 6 resorts all expiring in the same year to deal with.

 

[mochabean]

If, and I repeat if, there are any more DVC resorts, I think you can bet they will expire the same as SSR for any that start selling in the next 10 years or so. The real question is whether DVC will offer extensions to the current members. And while I think DVC will want to do so in principle I don't see any way they can work it out logistically.

Dean,
Why don't you think they will be able to work out extensions? Since the contract legally expires, DVC would have to make all new contracts, and they could then sell contracts in shorter increments, such as 2 or 4 or 6 year increments. Any of these would effectively be an "extension" if sold to existing members. This would work out well for DVC because it would allow them to do an extensive refurbishment to a few buildings at a time, such that when all the contracts for a certain building expire, they close it for an extensive refurbishment. This allows them to close a number of buildings for up to a year and do an extensive refurbishment while the sales force then resells these buildings to new members. In this way, the salespeople get to market the refurbished buildings as all-new, while existing members get short extensions which serves to pay the dues on those old buildings until they are scheduled to be refurbed in the years after 2042.

Granted, this scheme would work best for OKW, it's tough to imagine what they would do at BCV or BWV or VWL without shutting the whole place at once.

I am just trying to figure out what would be a resonable thing for DVC to do in 2042, but who knows, maybe they will just bulldoze the whole thing and build a brand new resort.

 

[Caskbill]

sorry I didnt mean having contracts expire in staggering years within each resort I meant per resort. meaning all of SSr will expire in 2054 then for ex

say CR villas built in 2009; so that entire resorts contracts would expire in 2059

the next built in 2011 and expires in 2061

so on

I think would make it easier to avoid all the problems you mention above

SSR would probably need a major overhaul in 2054 so at that time they could choose to begin rehab and have it ready for say 2060 or choose to tear it completely down or whatever.

point being they wouldnt have say 5 or 6 resorts all expiring in the same year to deal with.

OK, Guess I misunderstood. That's a slightly different scenario. So if it took 5-years to build and sell a resort, the first buyers would get 50 years, while the last buyers would get 45 years. But the next resort built resets to 50 years.

That would certainly work, but there would be a couple of issues to be worked out. With resort "A" not quite sold out with 45 year contracts left, why wouldn't people buy at resort "B" if it starts with 50 years? Thus stealing all of resort "A"'s buyers. Of course they could cover that by holding the purchase price for resort "A" at one price, and setting "B" at a different price.

The other issue would be the use of points in non-home resorts and how that would work, especially if they had to sell two resorts at different prices. Imagine the complaints if someone could buy 45 years at resort "A" at $100/point, and then use all their points to stay at resort "B" which costs $110/point. That would not make the resort "B" owners too happy.

 

[JimC]

Caskbill,

Isn't that what is happening now with SSR? Two tier pricing? The "old" resorts go for $89 and SSR is at $95? Couldn't the home resort advantage handle the buy cheap at the old resort and stay at the "new" resort problem.

Maybe the each resort with its own 50 year schedule would make sense going forward. It would at least not leave Disney with a so many resorts coming off contract all at once.

When the contracts expire does Disney get to keep the balance in the reserve accounts? I forget how that is treated in the documents? My guess is yes. So they have resorts with the capital costs paid for by the initial point purchases, a reseve for future refurbishment from a portion of the member's dues dedicated to that purpose and only maintenance costs to cover from rentals. Maybe they don't have as much of a problem as I initially thought.

 

[Dean]

Dean,
Why don't you think they will be able to work out extensions? Since the contract legally expires, DVC would have to make all new contracts, and they could then sell contracts in shorter increments, such as 2 or 4 or 6 year increments. Any of these would effectively be an "extension" if sold to existing members. This would work out well for DVC because it would allow them to do an extensive refurbishment to a few buildings at a time, such that when all the contracts for a certain building expire, they close it for an extensive refurbishment. This allows them to close a number of buildings for up to a year and do an extensive refurbishment while the sales force then resells these buildings to new members. In this way, the salespeople get to market the refurbished buildings as all-new, while existing members get short extensions which serves to pay the dues on those old buildings until they are scheduled to be refurbed in the years after 2042.

Granted, this scheme would work best for OKW, it's tough to imagine what they would do at BCV or BWV or VWL without shutting the whole place at once.

I am just trying to figure out what would be a resonable thing for DVC to do in 2042, but who knows, maybe they will just bulldoze the whole thing and build a brand new resort.

I think DVC would like to extend them, especially if they don't build several more resorts, and I don't think they will. They have to make it workable for Disney and for the current owners. IMO, I think they'd have to come up with a way where somewhere around 80% of owners would extend to even think about it. That means it'd have to be dirt cheap to get it done 20-30 years from the end, maybe $5-10 pp at the most. Even if they gave it away, it might be a little tough to get that percentage of members to sign on.

If they only go 50%, it wouldn't be worth keeping the place running and I think it's very unlikely Disney will operate the Timeshares themselves as a mixed use option for 12 additional years. I simply can't see them waiting to the end and trying to sell them all over again. Don't kid yourself, if Disney is planning on keeping them open they'll have them in tip top shape at our expense when they take over.