Future of Riveria

[Hiddenmickey2009]

I agree. I think it has been too long for them to drop the restrictions- unfortunately.

What I am
Purposing is that would Disney allow you to only stay at future Disney resorts with the Riveria resale. Think of it like the first 14 resorts were “first generation DVC resorts” the next resorts starting with Riveria and on to poly and others are considered “second generation and that is what the Riveria resale could be used for

 

[tjkraz]

The location stinks...

How many other DVC resorts offer faster, more efficient transportation to two theme parks than HS + Epcot via Skyliner? I'll hang up and listen.

...the rooms are just ok...

Would love to see your list of all the resorts which you believe have better rooms than Riviera. The galley kitchen isn't necessarily my favorite but other than that, it checks all the same boxes as others. The furnishings are higher quality than what has been installed in other locations in the past. As always, specific decor is quite subjective.

I totally understand those that wonder about the future of RIV. It seems to have a cult following but otherwise most are underwhelmed.

"most"

 

[Brian Noble]

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 profit, the break-even point is probably quite a bit lower than that. So, in the current market, Disney would always make more money by building new than ROFRing something.

And, if you think about it, that makes sense. This condo in Celebration is about $350/sq.ft., and that's on the high end of condos in the area. Remember: that's the sales price, not the cost of construction. So let's say it cost $300/sq.ft. to build (and it probably didn't), and that Riviera's costs are similar. A 2BR at Riviera is 1,250 sq.ft. in round numbers, so we are guesstimating that unit cost $375,000 to build. That isn't probably exactly correct, but it is not off by more than a factor of two.

A 2BR at Riviera averages 410pts/week. Let's round down and call that 400. There are 50 sold weeks per year, so that's 20,000 points per 2BR. The cost of construction is therefore $18.75/point. Even if we are off by a factor of two, a Riviera resale would need to be below $38/point before it is cheaper than building new.

Disney is not ROFRing because it is a cheap source of inventory. It's not cheap. At all.

It is incremental, though. You can't build a resort 1/100th of a condo at a time, but you can ROFR 200 points. So there is some value in being able to buy ("build") things on a drip-drip-drip basis, because that's also how you sell. But it's not more profitable to do it that way.

Which brings me back to "They want to resell all the points, but only at the right price." Ultimately, the right price is $0, because all of these contracts expire. Refurb, rinse, repeat.

 

[havoc315]

If resale value crashes this could affect direct sales as well.

1 -- Not if it's an entirely different product. If people are willing to pay $200 per point for direct and $0 for resale, that's fine with Disney.
2 -- For many other timeshares, resale is nearly worthless. Yet, they are still able to sell direct.

 

[pianomanzano]

I'm happy either way. We own 100 points RIV resale and 150 RIV direct along with other resale points at other resorts. Prior to adding on the RIV resale points, the RIV direct points became de facto restricted points for us since those were the only points we could use at RIV we only wanted to use them there, which wasn't really a problem b/c we love RIV. Now with the RIV resale points, we use all of them up first for our RIV stays to free up our direct points to combine with our others for longer stays and/or bigger rooms. If they suddenly got rid of resale restrictions (which I highly doubt they would do), then I got a bargain on additional SAPs with home priority at a resort that we love that are good until 2069. If not, happy to continue booking 11 months out for RIV-only stays!

 

[BamaGuy44]

I totally understand those that wonder about the future of RIV. It seems to have a cult following but otherwise most are underwhelmed.

"Most" are underwhelmed, other than a cult following? Based on what? There are some that love it, some that don't similar to all the other resorts it seems to me. I don't care who likes what, it's mostly subjective. Weird to assume your individual opinion is some kind of general consensus, though.

 

[wildviper]

My wife and I toured the Riviera and it’s now one of our favorite resorts. We are considering a DVC membership at the RIV.
What are the resale restrictions being discussed?

 

[AnnaKristoff2013]

My wife and I toured the Riviera and it’s now one of our favorite resorts. We are considering a DVC membership at the RIV.
What are the resale restrictions being discussed?

If you buy Riviera resale you can only ever book at Riviera, not at the other DVC resorts. If you buy direct, you don't have this restriction, however the existence of that restriction may significantly diminish the resale value of your direct points should you ever choose to sell it. Historically DVC resale values have held up quite well (and early buyers have actually been able to sell at a profit, something that is unheard of in the timeshare world). These restrictions are likely putting an end to that.

 

[UberClaire]

My wife and I toured the Riviera and it’s now one of our favorite resorts. We are considering a DVC membership at the RIV.
What are the resale restrictions being discussed?

If you buy Riviera resale, you can only use the points to stay at Riviera. If you buy Riviera direct and eventually sell the contract, the buyer can only use the points to stay at Riviera. That tends to make the resale value of Riviera lower.

 

[havoc315]

It is incremental, though. You can't build a resort 1/100th of a condo at a time, but you can ROFR 200 points. So there is some value in being able to buy ("build") things on a drip-drip-drip basis, because that's also how you sell. But it's not more profitable to do it that way.

Excellent analysis. One other potential factor -- ROFR provides them a means of fine tuning cash room inventory. For the last 20 years, they have mostly found that they had too many deluxe cash rooms (for the desired occupancy rate at the desired price), and thus have reduced deluxe room inventory by converting to DVC. (BLT, CCV, Poly and VGF2 are all conversions of cash rooms to DVC). But they can overtime fine tune their cash room inventory by pulling back a few rooms with ROFR.

 

[Brian Noble]

That's true, but it is still an expensive way to use capital because the re-acquisition cost is so high. Assuming that capital is finite (and it is) there might be better uses to which to put it.

My guess is that this is a side-effect of Disney's decentralized accounting practices. If capital is "stranded" in DVD (if, say, the GFV refurb came in under budget, or the Poly construction has been delayed due to the labor market, deferring costs to future quarters) they may as well use it for something. But that also requires the involvement of WDTC, another unit.

 

[Sandisw]

I'm happy either way. We own 100 points RIV resale and 150 RIV direct along with other resale points at other resorts. Prior to adding on the RIV resale points, the RIV direct points became de facto restricted points for us since those were the only points we could use at RIV we only wanted to use them there, which wasn't really a problem b/c we love RIV. Now with the RIV resale points, we use all of them up first for our RIV stays to free up our direct points to combine with our others for longer stays and/or bigger rooms. If they suddenly got rid of resale restrictions (which I highly doubt they would do), then I got a bargain on additional SAPs with home priority at a resort that we love that are good until 2069. If not, happy to continue booking 11 months out for RIV-only stays!

This is me! I have both direct and resale and do the same thing! We know we will stay pretty much every trip unless something happens to change that.

We go enough that using them isn't an issue, and if something happens, like I have shared, we do what we just did. Used the 56 banked RIV resale points I had to use to go one night in a GV, even though it was 4 of us, with the other VGF direct points I had to use up as well!

 

[Sandisw]

My wife and I toured the Riviera and it’s now one of our favorite resorts. We are considering a DVC membership at the RIV.
What are the resale restrictions being discussed?

People have already shared about the resale restrictions, and its impact on the value if you were to ever sell. The other piece about restrictions is that current resale buyers of all the other resorts can not stay at RIV.

So, if you want to stay at RIV, and any future resorts, you must buy direct points. We own both direct and resale because we love the resort. We were not worried about what the value might be when and if we sell down the road since we bought to use.

Being that a resale buyer will only be able to use it at RIV, it is likely to shrink the buyer pool who might be interested, which could mean getting somewhat less. But, if DVD continues with these types of resale restrictions on future resorts, then RIV won't be an outlier anymore and things should settle in.

 

[AnnaKristoff2013]

Excellent analysis. One other potential factor -- ROFR provides them a means of fine tuning cash room inventory. For the last 20 years, they have mostly found that they had too many deluxe cash rooms (for the desired occupancy rate at the desired price), and thus have reduced deluxe room inventory by converting to DVC. (BLT, CCV, Poly and VGF2 are all conversions of cash rooms to DVC). But they can overtime fine tune their cash room inventory by pulling back a few rooms with ROFR.

BLT was a conversion? Wasn’t BLT purpose-built as DVC rooms?

 

[Sandisw]

BLT was a conversion? Wasn’t BLT purpose-built as DVC rooms?

It was a ground up build, but they knocked down the north garden view rooms at the CR to build it. So, in that sense, it was removal of cash rooms to a DVC building...

 

[tom1944]

I think Riviera is beautiful but with the limited points I will initially have the point chart chases me to other resorts

 

[Jlo85]

I think the restrictions are less about ROFR and more about foreclosures. Disney gets to write-off the default and then sell it again at the direct price. That foreclosures are now handled privately through mediation where Disney is the only bidder just makes it more profitable for them.

 

[havoc315]

BLT was a conversion? Wasn’t BLT purpose-built as DVC rooms?

Not room conversion but a building replacement -- They knocked down one of the Contemporary Garden buildings to build it. So it was a loss of a couple hundred cash rooms.

 

[RoseGold]

The ticket conflict shows that DVC's objective (selling points) collides with Parks objective (selling tickets). DVC wants Blue Card to matter. But Parks doesn't want cheapskate DVC members bringing a PBJ, or cheap APs.

Parks has put DVC in a terrible spot right now, I can't think of many who should be buying in direct right now.

I bought in 2019, and I knew this was coming. But DVC already feels like a completely different product than I bought into. It is becoming more and more timeshare-y, by design. And, hey, if those other guys can sell trash, I'm sure DVC can keep those sales coming.

 

[Cfabar1]

ROFR serves many purposes….

Just a couple…

Disney needs a “floor”… they can’t have people buying contracts for $1 and selling them right after their trip for the next fellow.

Disney can use the floor of ROFR to make sure the types of people buying DVC are the types of people they want as customers in the parks buying lots of stuff.

I find of all the timeshare schemes, having restrictions on the properties to be not that bad at Disney. Why?
If I buy Marriott resale and am stuck going to the same hotel at HHI every year, I might feel disappointed I can’t use my points to stay in Texas or China or wherever….

If I buy DVC resale and am stuck only going to Riviera every year it doesn’t mean I can’t enjoy the main purpose of my visit (and purchase) which are my frequent trips to WDW. It might be “sad” to not go to AKV, but at least I can go to AK, or can still book a dinner at GF, etc. In a weird way, because the scope of the network is so small, the resale restrictions aren’t that meaningful.

I think restrictions are here to stay For Riviera and for future resorts. Poly 2 might be an exception like VGF was. I still maintain DVC is on a slow march towards a Marriott Vacation Club scheme, and that will include a way to “wash” points into direct points eventually among other changes. By 2044 the program is going to look unrecognizable Compared to today, which is already so different from the original promise of the “Disney Vacation Club” when it launched.

I also agree the “term” of your DVC membership is going to shrink down from 50 years. I think that was something VGF helped accomplish, as would Poly2 being in the same association.

I think DVC has reached peak growth for a while, which means profitability is going to come from offering members less and charging more.