How Many Years are Left at Original DVC Resorts?

[Dopey13]

How many years are left at the original DVC resorts. Are there any plans on what they are going to do once this expires?

 

[dianeschlicht]

There's 38 years left. I doubt we will know much about what is happening after that until it gets a bit closer! I'll be 95 then, so I doubt I'll care much!

 

[Happy Birthday Cat]

If they have a plan for what happens after that, they aren't saying.

HBC

 

[spiceycat]

January 31, 2042 is the finally day for the originally ones

 

[FLYNZ4]

I think they will be selling contract extensions long before the time runs out. It will be more profitable than printing money... and that is something that Disney likes doing. I also think that it will be good news for those who own any of the original DVC resorts (prior to SSR).

/Jim

 

[DrTomorrow]

My guess is that they'll tear 'em down and build new - maintenance on a 50-100YO building has to be quite high, and after 50 years, even the DVC resorts will be suffering from "Tomorrowland / Contemporary Resort" design fatigue.

 

[FLYNZ4]

Dr T,

I do not think that rebuildind them after 50 years, and offering contract extensions are mutually exclusive.

For example: They can offer contract extensions now that the resorts are 25% expired... again at 50%, 75%. That way, they get a continuous revenue stream from the existing customer base.... and the existing customers get to maintain an ownership in a property which has the potential to maintain a perpetual level of equity, rather than havinging their equity drop to zero (which must otherwise happen with any RTU).

In 2042, some percentage of the people (lets assume 30% for sake of argument) will have never extended. At this poiint, Disney can extensively rebuild the entire property, by only working on the 30% of the property "at a tiime" since that is the amount that reverted back to their ownership...

I just think that the abiility to "resell" the same condos to the same people is such a strong business model that DVC will do it. I think doing this is a very common occurance when the ownership is a RTU (like disney) vs something that is deaded perpetually.

A similar example is the hangar where I keep my airplane. I purchased it as part of a condo association... We own the hangars, but the airport owns the land and has extended us a 30 year lease. Over time of course... our condos would be worth zero dollars... and the price would really start to plummet as the term of our lease declined. Instead, we renegotiate the lande use lease every 10 years or so... This way the airport gets another infusion of cash that they would otherwise have no way of realizing for 20 more years... and we get to keep our buildings longer, and the value of our property continues to icrease rather than decline. The appreciation in our property has vastly exceeded the amount of our lease extensions.

I think it will be a good deal for everone when and if DVC does this. If they do... I will probably convert my SSR shares into one of the Epcot resorts... unless there is a new one that I like even more. If for some reason DVC does not do this (unlikely in my opinion)... then I will probably sell my SSR shares in another decade or so when DVC offers a new property with a new 50 year lease. That way, I could be doing my best to own assets that are apreciating rather than depreciating.

BTW, I still would not buy into a resort that I did not enjoy. I like SSR a lot.. but I would like BCV or BWV slightly more. However, the 50 year lease was a swing factor for us... for the reasons that I described above.

/Jim

 

[DrTomorrow]

Dr T,

I do not think that rebuildind them after 50 years, and offering contract extensions are mutually exclusive. [...]

ITA with this in general.

There are, however, a few issues that I'd be uncomfortable with. Disney can either rebuild a new resort or refurb the existing one. If they rebuild, unless they guarantee that the "new" resort will be just like the "old" one, I'd never commit to a contract extension on a TBD resort. While your airport, I assume, remains substantially unchanged over the decades [runways, lights, fueling area, hangers], the look and feel of a "new and different" DVC resort would be a big deal to me - and I suspect many DVC owners. [See the SSR - love it / hate it threads]. At the very least, I'd want to see specific plans, drawings, color & furniture schemes, etc. before re-upping for a DVC resort. I'd hate to plunk down $50,000 in 2029, then find out in 2050 that my home resort will be the Pretty Princess Palace, with enough pink frills and lace to fill a castle.

If they do refurb, I'd be concerned about the condition of the buildings and the potential for significant MF increases; I've been in a few 75 YO houses that barely hung together. Plus, even though I do love SSR, I'm not sure if I'll be ready for another 50 years of it....

Finally, Given the fact that anyone who has purchased DVC will be at least 68 when the first 50 year deed expires, I'm not sure how many people will want to extend their lease for a time period during which they will die. Yes, some may treat it as a real-estate investment, and a few will want to "pass it on" to family or friends, but I'd rather leave the $$$ to my son and let him spend it the way he wishes.

It will be interesting to see what happens, as it's really quite difficult to predict 50 to 100 years into the future. All of our discussions assume ceteris paribus; all other things being equal. It's quite possible that the idea of a physical theme park will seem as quaint and outdated to the folks of 2042 as black-and-white TVs and computer punch cards do to us.

Be well!

 

[tjkraz]

I think it would be much easier to offer extensions at BWV, BCV and VWL given their association with pre-existing hotels. Those sites seem to be higher on the "desirability" list, and Disney could always rent the applicable number of rooms for cash if they do not get 100% of owners to extend.

OKW would be a much larger gamble. They would need to set a price point that would guarantee a high percentage of owners would take advantage of the offer. If only 30% of OKW owners agree to extend, that leaves Disney with an awful lot of points (and rooms to try and rent for cash) for 12 more years.

I also have a fear that the OKW theme will feel outdated after 50 years. Disney may simply decide they want to go a different direction with that piece of land.

 

[FLYNZ4]

At the very least, I'd want to see specific plans, drawings, color & furniture schemes, etc. before re-upping for a DVC resort. I'd hate to plunk down $50,000 in 2029, then find out in 2050 that my home resort will be the Pretty Princess Palace, with enough pink frills and lace to fill a castle.

I think they will execute the extensions by keeping the resorts the same... Most of the resorts have a "timeless" aspect to them. Clearly there is room for new construction techniques, new materials for realisitic themeing, more upscale furnishing etc that would still fit with an existing theme.

The places that Disney has had the biggest problems with are those with forward looking themes... like Tomorrowland, and the Contemporary Resort. The problem of course, is that they quickly become "yesterday's verson of tomorrow". None of the DVC resorts currently have the issue of necessarily becoming dated.

Finally, Given the fact that anyone who has purchased DVC will be at least 68 when the first 50 year deed expires, I'm not sure how many people will want to extend their lease for a time period during which they will die.

I don't think this has anything to do with lifespan. It has to do with the value of our equity. I am 52 years old... yet SSR's 50 year contract was much more attractive than BWV's 38 year contract. Both are clearly long enough for my usuable lifespan of using WDW.

However, BWV RTU is 25% consumed, where SSR is 0% consumed. If we assume that the value of new DVC properties continues to rise... then the value of our existing investments has the potential to rise as well, but also has to be degraded by the amount of the RTU that has been consumed. I think that it is a testiment to DVC that the values have actually increased during the first 25% of the term. I don't know of any other timeshare where this has happened. Clearly this cannot continue indefinately because at the end of the RTU, the value will be zero. Given this historical information, it would seem obvious it is more advantageous to own DVC during the first 25%, rather than the last 25%. Of course, we do not know what is going to happen in the future, and anyone who plans to own any timeshare as a financial investment is almost certainly going to be dissapointed. Still, it makes intuitive sense to me that owning early, is better than owning late.... hence I purchased SSR. I do not plan to own SSR across the full 50 year life of the contract... but I do hope to own other DVC properties in the future... selling SSR to help capitialize the new purchases. By continually owning during the "first 25%" of the RTU, I am hoping that my losses will be minimal... and if history repeats itself, I might not lose anything at all.

Of course... once DVC decides to offer contract extensions to other resorts... then the above agrument (choosing SSR) becomes less important... because everyone then has the opportunity to protect their errosion of their equity.

/Jim

 

[Dean]

There is a logistical issue with offering extensions. To do so DVC would need a HIGH percentage to buy in, I'd think at least 75% but likely closer to 85-90%. And I'd think the price has to be a no brainer to do so, under $10 per point in todays dollars, likely much less. And no incentive to do so until DVC is essentially through selling the new resort(s). Of course they could tie it to a new purchase.

 

[FLYNZ4]

Dean,

I do not think they would need a high percentage of people to extend... but if they did offer an extension, I think a huge percentage of the people would do so.

For everyone that does not extend... DVC would reclaim the points in 2042, and could then resell them at the full amount to new buyers. In the mean time... for everone who does extend, DVC gets to cash in even sooner.

I think the financial rewards to DVC would be so great, that I cannot believe that it will not happen... with the greatest of Disney Marketing... "Magical Extensions... giving the magic of WDW for generations to come!"

/Jim

 

[Dean]

Dean,

I do not think they would need a high percentage of people to extend... but if they did offer an extension, I think a huge percentage of the people would do so.

For everyone that does not extend... DVC would reclaim the points in 2042, and could then resell them at the full amount to new buyers. In the mean time... for everone who does extend, DVC gets to cash in even sooner.

I think the financial rewards to DVC would be so great, that I cannot believe that it will not happen... with the greatest of Disney Marketing... "Magical Extensions... giving the magic of WDW for generations to come!"

/Jim

IMO, DVC would not be able to make any money selling 12 years worth of points to new owners thus my belief that a large percentage need to buy in. Remember that about 50% of any timeshare sales price is not hard assets. For them to sell DVC, they'd have to get somewhere around $40 pp in todays dollars just to break even, no way they'd ever get anywhere near that.

 

[timC]

Assuming Disney is interested in growing their WDW resort business, and perhaps expand their overall presence in the vacation/travel industry (including DVC expansion beyond WDW)...the DVC member base can grow substantially. By 2041, the existing DVC1 properties would be prime development sites. And there could be a large base of newer members waiting for an opportunity to buy into the heart of "classic" WDW.

Assuming this, why would DVC mess with a contract extensions? Beginning in 2041, they should renovate/rebuild on the existing sites. Introduce new DVCx contracts, at full market prices, and follow 12 years later with SSR... Perhaps they can work a deal with WDW or 3rd party, to rent any resorts awaiting their appointment with the wrecking ball.

 

[mydogdrew]

There is a logistical issue with offering extensions. To do so DVC would need a HIGH percentage to buy in, I'd think at least 75% but likely closer to 85-90%. And I'd think the price has to be a no brainer to do so, under $10 per point in todays dollars, likely much less. And no incentive to do so until DVC is essentially through selling the new resort(s). Of course they could tie it to a new purchase.

I agree, the present value of those 12 years is approximately the value of one year in todays dollars. Based on current rental rate, $10 is a reasonable expectation.

As far as years to go, I'm still not clear on when we recieve our last allotment of points? I understand that 1/31/2042 is the last date to use - doesn't that mean that 2041 is the last year of points? If you buy resale, you can get 2003 points banked so I figure that's 39 years to go.

 

[FLYNZ4]

IMO, DVC would not be able to make any money selling 12 years worth of points to new owners thus my belief that a large percentage need to buy in. Remember that about 50% of any timeshare sales price is not hard assets. For them to sell DVC, they'd have to get somewhere around $40 pp in todays dollars just to break even, no way they'd ever get anywhere near that.

Dean,

The 50% figure is a timeshare industry average (actualy 50-75%) based on the large incentives that most timeshare companies offer just to lure people into the sales center. I would think that Disney's marketing costs are substantially less because of the lack of free gifts and other incentives.

However... in any case... this would not be a case of marketing to new sales prospects. This would be much lower cost to implement because they would offer the "deal" to existing customers, and they could sit back and rake in the cash.

I also do not necessarily agree with the $10/point figure. I think a more probably extension rate will be something close to the difference in price between the current sales price for new properties, and the original sales price.

So for example... if you bought your orignal contract for 65 dollars several years ago... I think that DVC might offer you an extension for say $20 pp bringing your contract end date to 2054... the same as SSR. For the person who is doing the contract extension... they are still paying less than someone who buys new at SSR ($85 vs $95), and has the same long contract of the new buyer... and has also been able to use DVC for several years. Thus... I think that a higher price can (and will) be justified by DVC.

This is all speculation of course. Let's wait a couple of years and see if this comes to pass. My bet is that it will.

/Jim

 

[DrTomorrow]

I guess that I still can't get my mind around the concept that a large percentage of DVC owners will want to make a purchase that extends significantly beyond their lifetime. It's one thing to make the decision to spend most of the rest of your life taking vacations at WDW; it's something else entirely to decide that that's what your heirs will want to do, too. For example, I'll be 93 (or pushing up daisies) when my SSR contract expires; I have no desire to extend it, no matter how low the price per point.

Plus, there is still no guarantee that Disney will continue it's ROFR efforts indefinately; and IMHO, once they stop, the price will plummet like most other timeshares.

I too look forward to what the next few years will bring. May we live in interesting times....

 

[spiceycat]

I don't think that WDW will allow the DVC resort to plummet - they can rent the DVC villas and I think that is what will happen.

dean and some others of you will say that would be impossible. but I put my money on Disney and I really think in 2042 it will still be home sweet home - now I will probably be gone.....

 

[FLYNZ4]

Plus, there is still no guarantee that Disney will continue it's ROFR efforts indefinately; and IMHO, once they stop, the price will plummet like most other timeshares...

Dr T,

Of course, offering contract extensions should be a very effective technique preventing the value from plummeting... which is yet another reason why it is in DVC's best interest to offer extensions.

Another way of saying the same thing... if they do not offer extensions... then the price is 100% guaranteed to plummet... there really is no other alternative.

/Jim

 

[Dean]

Dean,

The 50% figure is a timeshare industry average (actualy 50-75%) based on the large incentives that most timeshare companies offer just to lure people into the sales center. I would think that Disney's marketing costs are substantially less because of the lack of free gifts and other incentives.

However... in any case... this would not be a case of marketing to new sales prospects. This would be much lower cost to implement because they would offer the "deal" to existing customers, and they could sit back and rake in the cash.

I also do not necessarily agree with the $10/point figure. I think a more probably extension rate will be something close to the difference in price between the current sales price for new properties, and the original sales price.

So for example... if you bought your orignal contract for 65 dollars several years ago... I think that DVC might offer you an extension for say $20 pp bringing your contract end date to 2054... the same as SSR. For the person who is doing the contract extension... they are still paying less than someone who buys new at SSR ($85 vs $95), and has the same long contract of the new buyer... and has also been able to use DVC for several years. Thus... I think that a higher price can (and will) be justified by DVC.

This is all speculation of course. Let's wait a couple of years and see if this comes to pass. My bet is that it will.

/Jim

I'm sure it's a little lower, maybe 40% on a new contract. Even though they don't do the OPC and big incentives, they also have a larger sales staff and more overhead than most. I'd venture for DVC to actually make a reasonable profit, they'd have to make at least $20 pp above costs in todays dollars. Plus, I think you've mixed the two components. If DVC does it with minimal staff to current owners, it' have to be cheap enough for them to agree, and I don't think anything above $10 pp in today's dollars will cut it. To sell as new contracts will take creating a new sales staff as I don't see DVC selling new resorts in 25-30 years. And to do it now would only be able to go with current members. But we shall see and we have plenty of time to discuss it a few more times before things play out.