I mean at this point, why is anyone buying direct?

[AstroBlasters]

I didn’t buy direct for moonlight magic but did like that it would be available for me. After trying to get a ticket multiple times last year with no luck, I have to say that the idea of that event left a bad taste in my mouth.

That sounds like my wife and I after trying multiple days to be on the app at 7am EST to get a virtual que slot for RISE in 2021. Our kids were very disappointed and eventually my wife and I just got ticked off. Vacations shouldn’t start the day off with that much stress and disappointment.

 

[havoc315]

So I asked this question because I was wondering what happens to DVC if people do not keep buying direct?

1 -- Reduce direct prices. At some price, people will buy..
2 -- Use resale restrictions + ROFR to make re-sale unappealing.

Combine 1 and 2 as necessary until you have the balance of direct sales you want.

Of course, most people purchase while visiting Disney, without ever researching the re-sale market as an option. And that ignorance is Disney's ally as well.

But now fast forward to the late 2030's, early 2040's... Direct purchase gets you access to 20+ resorts. Re-sale of a legacy resort locks you out of the newest resorts, on short contracts, and covering only about 9 out of the 20 resorts.. re-sale of the non-legacy are 1-resort-only contracts. So at that point, buying direct becomes a massively different product than buying re-sale.

 

[tjkraz]

So I asked this question because I was wondering what happens to DVC if people do not keep buying direct? And I was thinking, if I were buying now, I would not buy any direct points.

You're overthinking it. Why do people keep buying Worldmark or Bluegreen timeshares direct from the developer? Timeshares thrive on uninformed buyers. Many people who buy DVC never know about the resale option. Some who do still buy direct anyway. Fortunately, DVC's value us unlikely to ever drop as precipitously as some others in the industry.

Moonlight Magic? On the rare occasions when they do have them, they are just too hard to get to.

Thousands of people get into Moonlight Magic every time it's offered. It may require some flexibility in planning to align one's trip. And yes, there is a lottery system with regard to the tickets. But thousands of members still attend every event.

And most startling to us— the contracts we bought for specific purposes? We just end up using everything everywhere. The RIV points we bought? We find every time we go to book it we are put off by the point chart and use the points somewhere else.

Some of the highest priced DVC accommodations are filled with members every night. There are people who happily pay to stay in VGF, Riviera, Poly Lake view, BLT theme park view, Cabins, Grand Villas, etc.

The key point to remember is not everyone behaves the same way as you or I. We can spend all day making spreadsheets to prove that the perks are valueless, Direct purchase is throwing money away and SSR Standard View is superior to Grand Floridian theme park view. Others disagree and will act accordingly. Don't try to explain the unexplainable.

For every thread that begins "I don't understand why people buy direct" there's another which reads "look at DVC blocking us white card plebes from (event/lounge/discount/resort)" Take solace in the fact that you did what was right for you.

 

[AstroBlasters]

1 -- Reduce direct prices. At some price, people will buy..
2 -- Use resale restrictions + ROFR to make re-sale unappealing.

Combine 1 and 2 as necessary until you have the balance of direct sales you want.

Of course, most people purchase while visiting Disney, without ever researching the re-sale market as an option. And that ignorance is Disney's ally as well.

But now fast forward to the late 2030's, early 2040's... Direct purchase gets you access to 20+ resorts. Re-sale of a legacy resort locks you out of the newest resorts, on short contracts, and covering only about 9 out of the 20 resorts.. re-sale of the non-legacy are 1-resort-only contracts. So at that point, buying direct becomes a massively different product than buying re-sale.

I noticed you didn’t mention them doing anything to actually improve the perks that come with “direct purchases”. The current mania of travel spending will not last forever.

What if they put in writing that people could purchase an annual pass at the same rate as in-state passes in CA and FL if points were direct? None of this changeable “membership magic”.

I think it’s highly likely that they use a “demand lever” by doing a one time cash grab or an annual fee to “wash” resale points at a future date when parks and hotels are not bursting at the seams. There is too much potential money not to.

 

[Brett Wyman]

Can’t the same be said about resale owners? (I’ve been both). A lot of pride about saving more than others, when probably that’s not the main driver for them.

IMHO, both are wrong and right. People have different priorities

Pride isn't tangible. Saving 20k is. I see a clear delineation.

 

[havoc315]

I noticed you didn’t mention them doing anything to actually improve the perks that come with “direct purchases”. The current mania of travel spending will not last forever.

No need to do that. And they have been very clear that they don't feel the need to include "extras"

What if they put in writing that people could purchase an annual pass at the same rate as in-state passes in CA and FL if points were direct? None of this changeable “membership magic”.

I think it’s highly likely that they use a “demand lever” by doing a one time cash grab or an annual fee to “wash” resale points at a future date when parks and hotels are not bursting at the seams. There is too much potential money not to.

That "wash" is ROFR. That's all they need to do, they already do it. They buy-back those re-sale points cheaply and sell then back as new.
So they might ROFR Bay Lake Tower at $150 per point then sell it direct for the current price I believe of $265 per point. In the wash, they make $115 per point.

They won't ever offer some cheap "wash" for re-sale owners, which would undermine their ability to sell direct at the much higher price. (Why should I pay $265 for direct, when I can just pay $160 plus a $10 wash fee?)

The money for Disney will always be selling direct points for as much as possible.
In terms of cash grab -- There were rumors a few months ago that DVC owner perks would be available for an "add on fee."
Likely limited to direct buyers --- So direct point owners would be invited to spend even more, to get additional perks. (Likely ticket discounts, maybe a Table in Wonderlands dining card type thing, access to special events).

 

[supersnoop]

Ask your tax guy - but mine said that point-for-point swaps have no tax liability unlike renting your points. Yes, it rarely works out equally so there will be some taxable $ changing hands but usually less than 15 points. VGC has to be 1st or 2nd in desirability. Zoom and Webex make this so easy since you can book together.

As always with the IRS, do only what you’re comfortable defending. I’m under the impression that swapping points would count as barter income and you’re still on the hook for taxes on the fair market value.

 

[tjkraz]

I noticed you didn’t mention them doing anything to actually improve the perks that come with “direct purchases”. The current mania of travel spending will not last forever.

Aside from the current blip regarding annual passes, member perks have been steadily improving.

The AP discount was first introduced about 15 years ago. Access to the Gold / Sorcerer pass was added about 7-8 years ago. The merchandise discount launched about 10 years ago as 10% off and was later upped to 20%. When I first joined, restaurant discounts were only offered at about 2 dozen locations. Now we save 10% at pretty much every table service.

Moonlight Magic started as a couple events at the waterparks around 2015 and continued to grow until derailed by the pandemic. The EPCOT lounge just opened in 2016. More recently members got 25% discounts on Disney After Hours. The Halloween Meet and Treat in 2022 was brand new. Events at TOTWL are new. Additional lounge is opening at Disneyland later this year.

What if they put in writing that people could purchase an annual pass at the same rate as in-state passes in CA and FL if points were direct? None of this changeable “membership magic”.

Residents don't actually receive discounts, they have access to passes which are priced lower and heavily blacked-out. I don't like the idea of extending those passes to DVC owners because it stands to upset the point charts. The same seasons and weekdays which require fewer points to book would then be the only ones with AP access. Not a good formula.

I think it’s highly likely that they use a “demand lever” by doing a one time cash grab or an annual fee to “wash” resale points at a future date when parks and hotels are not bursting at the seams. There is too much potential money not to.

Yes, some mechanism for upgrading resale points to "blue card" status would be an easy cash grab for DVC. However it stands to hurt direct sales and also makes more people eligible for the direct perks. If we take a high-demand event like Moonlight Magic, the fewer people who can book, the better the result for those who qualify. If DVC continues to sell new points AND provides a means for upgrading resale to qualified points, MM and similar events just get harder and harder to book.

Not saying they won't offer such an upgrade path. But there's an obvious downside for those who are paying full-freight for those benefits.

 

[Sandisw]

I noticed you didn’t mention them doing anything to actually improve the perks that come with “direct purchases”. The current mania of travel spending will not last forever.

What if they put in writing that people could purchase an annual pass at the same rate as in-state passes in CA and FL if points were direct? None of this changeable “membership magic”.

I think it’s highly likely that they use a “demand lever” by doing a one time cash grab or an annual fee to “wash” resale points at a future date when parks and hotels are not bursting at the seams. There is too much potential money not to.

The decision to offer those perks, including ticket guarantees, are not up to DVD. They are negotiated with another division and even if they want to play nice this year, nothing prevents them from changing their mind next year...as is happening right now with the suspension of APs.

And, they can’t make perks part of the POS either as they are incidental benefits which are governed by FL timeshare law,

So, while they can increase offerings if they can, the only real power they hold is ROFR and resale restrictions.

 

[AstroBlasters]

Yes, some mechanism for upgrading resale points to "blue card" status would be an easy cash grab for DVC. However it stands to hurt direct sales and also makes more people eligible for the direct perks. If we take a high-demand event like Moonlight Magic, the fewer people who can book, the better the result for those who qualify. If DVC continues to sell new points AND provides a means for upgrading resale to qualified points, MM and similar events just get harder and harder to book.

Not saying they won't offer such an upgrade path. But there's an obvious downside for those who are paying full-freight for those benefits.

Do you really think most direct buyers would know the difference if Disney did a “one time” point washing?

I wonder what the max pp some people would be willing to pay…. Let’s say $20pp. I bet Disney would make at least $250 million (12.5m points washed) and it would cost them almost nothing. That could be quite tempting in the right economic environment.

 

[Sandisw]

Do you really think most direct buyers would know the difference if Disney did a “one time” point washing?

I wonder what the max pp some people would be willing to pay…. Let’s say $20pp. I bet Disney would make at least $250 million (12.5m points washed) and it would cost them almost nothing. That could be quite tempting in the right economic environment.

The problem with that is that it defeats the purpose of making resale and direct different enough if it costs very little to”wash” points.

I think we would be more likely to see them do something that allows people to pay a one time fee per reservation to allow them to book the restricted points

 

[AstroBlasters]

The problem with that is that it defeats the purpose of making resale and direct different enough if it costs very little to”wash” points.

I think we would be more likely to see them do something that allows people to pay a one time fee per reservation to allow them to book the restricted points

As long as it’s not a standing offer, then it should have 0 impact on direct sales.

If they came out and said any points owned before 01/31/2023 can be washed for a one time $20pp charge then they would make an absolute fortune. Let people “finance it” and you would get a lot of interest income as well.

It would also be too late for people who are not already in the ROFR system because you could not clear ROFR and closing by then.

It could be the equivalent of selling out an entire new build with $0 in building costs or ongoing overhead.

It would cost them less than a hundred bucks in soda syrup at the lounges per day and add a lot more people who would be eligible to pay for TOTWL.

 

[Sandisw]

As long as it’s not a standing offer, then it should have 0 impact on direct sales.

If they came out and said any points owned before 01/31/2023 can be washed for a one time $20pp charge then they would make an absolute fortune. Let people “finance it” and you would get a lot of interest income as well.

It would also be too late for people who are not already in the ROFR system because you could not clear ROFR and closing by then.

It could be the equivalent of selling out an entire new build with $0 in building costs or ongoing overhead.

It would cost them less than a hundred bucks in soda syrup at the lounges per day and add a lot more people who would be eligible to pay for TOTWL.

If they wanted to keep TOTWL available to all, they could have kept it as it was. As it is, the events are selling out many nights.

Now, they certainly gave themselves the power to do it when they put restrictions in play…

But, I just don’t see DVD deciding to go that route and not making it a hefty price.

 

[AstroBlasters]

If they wanted to keep TOTWL available to all, they could have kept it as it was. As it is, the events are selling out many nights.

Now, they certainly gave themselves the power to do it when they put restrictions in play…

But, I just don’t see DVD deciding to go that route and not making it a hefty price.

I’m sure you are right. But I bet there is an executive somewhere making the case that if the avg member holds a contract for 7 years and half of resale members would “wash” the points at the time of purchase and that there is a way DVD can make $$$.

Example of the pitch:

1) Hypothetical 4 million total VDH points available. @ $217pp they make $868m (less construction costs).

2) Each contract is sold on avg 7x (7yr holding) over the life of the contract and 50% of resale buyers pay $20pp (+inflation) to “wash” the points. That would be an extra $280m. Right now they are making $0 off those contracts.

3) Rinse and repeat at every other resort and I just found you BILLIONS.

4) Shouldn’t hurt direct sales because most direct buyers make emotional purchases while covered in pixie dust anyways.

 

[sethschroeder]

Go look at availability right now for October - November 2023. Every WDW resort has Studio, 1B and 2B rooms available for nearly all dates. Those rooms won't all fill up right before the 7 month window.

A good portion of them will. We just went through the holiday season where people are not paying attention and not planning 2023 vacations yet.

No APs.

We have APs, just renewed them, and just added the 3 year old for the first time to a new AP that will be activated when we get to WDW this year.

The AP math is what allowed me to pull the trigger on the direct side but I also bought RIV when it was $155/point after incentives.

 

[sethschroeder]

I think the big thing is just look at the numbers right now I can get instant access to RIV for 150 points for:
$32,184.15

I went to the board sponsor to look up a couple 150 point contracts:
BLT - $26k
BWV - $20k
CCV - $24k
VGF - $26k
Poly - $24k
RIV - $21k
SSR - $17k

You essentially are paying an extra $6k over equally long contracts at resorts close to the main parks. Then you are paying another $6k for getting an extra 20 years on the contract (over BWV). Finally you are paying $3k to not be at SSR hoping to book another resort at 7 months.

So you are coming in to the equation looking at BLT/VGF/POLY its $6k for a longer contract, the only one next to Epcot, and you do get the benefits (no new APs today but you might think they are coming).

The math isn't that far off plus you need to account for getting your contract instantly and booking your first trip (plus a welcome home stay if you need it likely).

Now where the difficult part comes in is if you wanted BWV or SSR as a starting point the hill is a little too steep to climb likely (if you know about resale).

 

[supersnoop]

Do you really think most direct buyers would know the difference if Disney did a “one time” point washing?

I wonder what the max pp some people would be willing to pay…. Let’s say $20pp. I bet Disney would make at least $250 million (12.5m points washed) and it would cost them almost nothing. That could be quite tempting in the right economic environment.

I imagine it’s more about brand integrity. If Disney was willing to do it, and they might have been under Chapek, I’d expect the price to be $100 to $130 per point. No way it’s anywhere near $20.

 

[zavandor]

Do you really think most direct buyers would know the difference if Disney did a “one time” point washing?

I wonder what the max pp some people would be willing to pay…. Let’s say $20pp. I bet Disney would make at least $250 million (12.5m points washed) and it would cost them almost nothing. That could be quite tempting in the right economic environment.

If Disney will ever offer point washing, it'll be more in the region of $80 - $100pp. To make sense (from their perspective) it would have to be a bit higher than the difference between resale and direct. Resale prices are going down at the moment, so for a while the differential is probably going to be too high to even offer something like this.

 

[tjkraz]

I’m sure you are right. But I bet there is an executive somewhere making the case that if the avg member holds a contract for 7 years and half of resale members would “wash” the points at the time of purchase and that there is a way DVD can make $$$.

Example of the pitch:

1) Hypothetical 4 million total VDH points available. @ $217pp they make $868m (less construction costs).

2) Each contract is sold on avg 7x (7yr holding) over the life of the contract and 50% of resale buyers pay $20pp (+inflation) to “wash” the points. That would be an extra $280m. Right now they are making $0 off those contracts.

3) Rinse and repeat at every other resort and I just found you BILLIONS.

4) Shouldn’t hurt direct sales because most direct buyers make emotional purchases while covered in pixie dust anyways.

Your numbers are very off. Over the last 2 years, only about 1.5 million points were re-sold for the 10 WDW resorts (ex Riviera). That's less than 3% of the 55M points. Half of them were taken via ROFR, which Disney can then re-sell with the perks bundled.

Over that 2-year span, only 750k points have been re-sold privately which are excluded from the perks. Many buyers are people who already have other perk-eligible contracts and would not be interested in paying to "wash" these points. DVC makes more than $20 per point by exercising ROFR and re-selling, and they make FAR more by building and selling new.

DVC's answer to all of this is: "If you want the perks, buy 150 points from us and then you're welcome to go wild on resales." It doesn't make sense to undermine their direct sales efforts by offering a cheap upgrade path. Get 500k points to upgrade at $20 each and generate about in revenue $10M. That's about 1.5 weeks of "new" points sales.

EDIT: There was a formula error in a spreadsheet I was looking at. 2 year totals are approximately 1.6M points resold privately and 1.1M ROFR. Combined, about 5% of all points at WDW resorts excluding Riviera.

 

[AstroBlasters]

If Disney will ever offer point washing, it'll be more in the region of $80 - $100pp. To make sense (from their perspective) it would have to be a bit higher than the difference between resale and direct. Resale prices are going down at the moment, so for a while the differential is probably going to be too high to even offer something like this.

Then no would do it and they miss out on billions in revenue. The whole point would be to make it low enough that they are likely to make money on most resale transactions whereas right now they are making $0.

I read all the time that most direct buyers don’t even know resale exists, so I don’t understand the “brand integrity” argument.

There used to not even be a difference between direct and resale, so they are essentially making revenue on something that makes the product operate how it was originally designed.