How Many Years are Left at Original DVC Resorts?

[tjkraz]

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.

Yeah, but I think the point is...how many people will really care about the value plummeting? Or, at the very least, how many care enough to spend MORE dollars to try and stave off the effects?

We all bought into DVC with the knowledge that our contracts are likely to expire on a fixed date either in 2042 or 2054. I'll be 72 in 2042. The mere suggestion that I would be interested in paying $3000 to extend a 300 pt contract beyond age 72 would be laughable to me. If I were to give DVC another $3000 it would be for a 35 pt add-on that I can enjoy over the next 40-50 years.

With regard to maintaining resale value, I'm not about to make decisions on the premise that they MAY help maintain the value of the asset if I choose to sell the contract. I have no intention of selling my contract--I bought it to use it. If the time should come that I'm forced to sell, then I'll take the prevailing market value and look back fondly on the years of vacations that our family has enjoyed. If my heirs are left to sell the contract, then best of luck getting whatever they can--I won't be around to fret over it.

If you're really curious, start a poll for owners of each resort. I'd be shocked if more than 50% of OKW owners would pay $10 per point to extend to 2054. Personally I think it will be closer to 30%. Maybe I'm wrong.

 

[DrTomorrow]

Yeah, what tjkraz said!

 

[timC]

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

I can understand why they would want to maintain resale values in the near term, to maintain price parity with SSR. ROFR seems to be working effectively to prop up resales. But long-term, why would Disney care about the resale value of DVC properties? I would think they'd be far more interested in getting there hands on those properties... rather than make a few bucks on contract extensions.

 

[FLYNZ4]

I can understand why they would want to maintain resale values in the near term, to maintain price parity with SSR. ROFR seems to be working effectively to prop up resales. But long-term, why would Disney care about the resale value of DVC properties? I would think they'd be far more interested in getting there hands on those properties... rather than make a few bucks on contract extensions.

Tim,

My assumption is that DVC will want to continue to sell new timeshares perpetually, hence they have a business interest in keeping resale values high... or more accurately... preventing the population from having access to low resale prices (it is ok if DVC ROFR's them up cheap).

Also... there are at least 3 distinct markets... each with significant revenue potential.

1) New DVC sales to new customers
2) New DVC sales to existing customers via add-ons
3) Contract extensions to existing customers.

Optimizing all 3 are ways to maximize revenue. Instituting #3 is probably the best method to maximize profit... since the costs of implementing the program are miniscule.

As far as "getting their hands on those properties". I do not think that is a very big deal... because DVC can keep building new properties nearly endlessly. There is a lot of space in WDW... and DVC sales are obviously profitable enough to sustain new development. They would be better off continuing to sell the existing properties via contract extensions, since it would be a largely non-overlapping market with their other businesses.

An important point to consider is that the liability associated with the contract extensions will be carried by a different management team than those making the decisions to offer the extensions, and those enjoying the revenue growth. As distasteful as you may consider it... a lot of business decisions are made for this type of reason. In this particular case... I do not think that it is short term profit taking... I think it is a sound business decision that they will inevitabley make.

/Jim