Increasing hotel costs everywhere except….

[Gr8scott]

Sorry if already covered but It seems that vacation accommodation costs everywhere are going up and up and up in North America, yet the cost of DVC resale contracts as well as points rentals are on a steady decline. Please share any thoughts as to why this is happening as inquiring minds want to know.

 

[cbailey1616]

Its interesting, people say they don't look at these as investments but the prices behave a hell of a lot like the overall equities market.

I think we are seeing a typical mean regression. There was a lot of buying pressure in 2020-2022 from ROFR and excess cash that artificially increased the prices. Both are gone now so they will naturally drop.

 

[bbeagle]

Initially, a DVC contract is 50 years. Many contracts now have less than 18 years left. Every year the contract becomes less valuable as it has less years.

You'll see their values decline every year until 2042, when they will be worth $0.

 

[sethschroeder]

I am not sure rental prices are going down. If they are at all then I would chalk it up to seasonality as right now you are renting out at 7 months next summer which is a higher point requirement time so the value of the points compared to cash rooms isnt as large as the fall.

 

[DanCali]

I am not sure rental prices are going down. If they are at all then I would chalk it up to seasonality as right now you are renting out at 11 months next summer which is a higher point requirement time so the value of the points compared to cash rooms isnt as large as the fall.

It's also possible that there are more owners who are in greater need of immediate cash and willing to rent out points at lower prices than what others are asking. Seeing those listings/postings can at least create an impression that rental prices are lower, and maybe they are indeed lower on average.

It's interesting to compare with Marriott, which has switched to a point system almost 15 years ago, but the vast majority of owners who rent out confirmed reservations made with points do so on a $/night or $/week basis rather than $/pt. The $/pt is the "currency" used for point transfers, but almost nonexistent so for confirmed reservations.

 

[john7994]

Seems like a very loose correlation to me largely for the number of reasons that someone might sell their DVC contract. If the immediate need is cash due to inflationary pressures (which also causes accommodation cost to rise) - this might be a fit. Or, for those that feel overall costs of a Disney Vacation is no longer accessible for them? Don’t know. Seems like a hammer looking for a nail to me.

 

[maui22]

I like to look at the historical Disney World discounts to get an idea if Disney hotels are hurting or not.
https://www.mousesavers.com/historical-information-on-walt-disney-world-resort-discounts/

Rising Disney hotel discounts means more competition for DVC prices.

 

[Gr8scott]

I am not sure rental prices are going down. If they are at all then I would chalk it up to seasonality as right now you are renting out at 7 months next summer which is a higher point requirement time so the value of the points compared to cash rooms isnt as large as the fall.

I don’t disagree that the asking price for DVC rental prices may only be down slightly or plateaued, but I am curious as to what prices are being offered/paid.

I will say that through rental agencies the prices being paid to owners are for sure lower. They may fluctuate a buck or two here and there but overall members are getting less for their points to rent in years past. My assumption is that more members are renting out points which is creating a supply greater than demand scenario.

 

[Gr8scott]

For example I just compared the numbers for room at the Contemporary vs Bay Lake tower theme park view (only room available at the Contemporary) for 03Feb2024-10Feb2024. Assuming $18/pt for Bay Lake the cost of stay would be $3006.00 vs $6657.74 for the Contemporary. Over 2X the cost seems like a huge difference.

 

[Bearval]

Sorry if already covered but It seems that vacation accommodation costs everywhere are going up and up and up in North America, yet the cost of DVC resale contracts as well as points rentals are on a steady decline. Please share any thoughts as to why this is happening as inquiring minds want to know.

DVC is a timeshare that is starting to begin to "act" like a timeshare in regards to losing value as the remaining years on the contract goes down. It is one of the better run and more desirable timeshares out there and that is why it is worth significantly more than just " pennies on the dollar" but it still is a timeshare.

The economy would be another factor affecting the resale and rental pricing decreases. Inflation has hit everyone pretty hard which leaves less disposable income for luxury purchases especially if you are going for a loan for a DVC contract or if you have an adjustable home loan on your primary residence and were hit with a loan rate adjustment. People who had adjustable mortgages at 2.5% to 3.5% went to 4.5% to 5.5% and very well will go to 6.5% to 7.5% the year after that. This leaves less money to spend on renting a Deluxe Villa at Disney.

Over saturation of the DVC product, there are less buyers out there for DVC direct and resale which would be why DVC is not using ROFR as it has in the past and is not artificially inflating the value of resale DVC.

 

[HyperspaceMountainPilot]

It’s also worth noting that Disney has continued to ratchet up prices for park admission, Genie+, etc., so for many vacations, your major cost is the hotel and F&B, but for Disney World trips, the park admission itself costs more per day for large families than hotel/timeshare and food combined. Those additional climbing costs are probably putting pressure on Disney hotels and rentals as a trip trends out of reach for many.

 

[AstroBlasters]

Interest rates, higher maintenance fees, less remaining years on contracts, higher theme park ticket/food prices, Florida politics, Lower child birth rate, market saturation, new resorts with resale restrictions….

Take your pick….

 

[Gr8scott]

Interest rates, higher maintenance fees, less remaining years on contracts, higher theme park ticket/food prices, Florida politics, Lower child birth rate, market saturation, new resorts with resale restrictions….

Take your pick….

Wouldn’t all of the economy related issues apply to regular non-Disney hotel rooms as well? It seems that those rates are going up while DVC rental prices are going down. This is the main point I find curious but all good replies.

We are in the process of planning a vacation (not to Disney for a change) and over the course of the last month the average room rates for the resorts we are targeting have increased about 10%, and all price levels of rooms are still readily available.

I certainly can see how the previously mentioned over-saturation of the DVC products plays a role, especially as they continue to add properties without expanding the parks in parallel.

 

[AstroBlasters]

Wouldn’t all of the economy related issues apply to regular non-Disney hotel rooms as well? It seems that those rates are going up while DVC rental prices are going down. This is the main point I find curious but all good replies.

We are in the process of planning a vacation (not to Disney for a change) and over the course of the last month the average room rates for the resorts we are targeting have increased about 10%, and all price levels of rooms are still readily available.

I certainly can see how the previously mentioned over-saturation of the DVC products plays a role, especially as they continue to add properties without expanding the parks in parallel.

The only economy related one I mentioned was interest rates and that primarily impacts people financing DVC, which wouldn’t apply to a hotel cash rate.

 

[Gr8scott]

The only economy related one I mentioned was interest rates and that primarily impacts people financing DVC, which wouldn’t apply to a hotel cash rate.

Apologies as I was referencing multiple economy related posts in my response. I should have quoted those as well.

 

[disneylandtour]

BLT prices, since summer, have been dropping fast.

 

[AstroBlasters]

Apologies as I was referencing multiple economy related posts in my response. I should have quoted those as well.

Gotcha!

I think that everyone that has disposable income is a potential hotel customer, but a much smaller part of the population (Disney fan, disposable income, predictable vacation schedule, has the capital to purchase, doesn’t already own any or enough points, OK scheduling 7-11m in advance, generally speaking likes Theme Parks) wants to buy into DVC and has the financial resources to be able to do it.

 

[emchen]

Sorry if already covered but It seems that vacation accommodation costs everywhere are going up and up and up in North America, yet the cost of DVC resale contracts as well as points rentals are on a steady decline. Please share any thoughts as to why this is happening as inquiring minds want to know.

First, I think that points rental costs have not gone down. I started renting out points with Davids as well as the forum at Disboards this year and see no evidence of a decline.

Second, I do see a general decline in resale contract prices. That is of minimal significance given the perpetually increasing cost of annual dues. Also keep in mind, the resale and rental markets remain a drop in the bucket of the overall DVC market.

Third, many speak of interest rates and the macroeconomic impacts, but at the end of the day, any fluctuation to the DVC resale market and rental market are influenced, by far, by the microeconomics of DVC (base price, restrictions, live sales, incentives). But that’s just what think!

 

[we"reofftoneverland]

Sorry if already covered but It seems that vacation accommodation costs everywhere are going up and up and up in North America, yet the cost of DVC resale contracts as well as points rentals are on a steady decline. Please share any thoughts as to why this is happening as inquiring minds want to know.

Easy. Less people want to go to Disney. If you treat your customers like garbage and insist on destroying the product they love, they leave. No more magical day. No more disney music on the TVs. No more happy cast members. No more decent management. No more wholesome stories that have a basic story arch. Just postmodern management and postmodern stories that go nowhere and teach questionable values. That’s why we’re at Universal right now. Happy cast members and presentable, genuine management that doesn’t give you a forced smile. But it’s a big world. UO is just one place. Lots of other vacation options. Even DVC members are over it. That’s why all the rentals and sales.

 

[TheDailyMoo]

Gotcha!

I think that everyone that has disposable income is a potential hotel customer, but a much smaller part of the population (Disney fan, disposable income, predictable vacation schedule, has the capital to purchase, doesn’t already own any or enough points, OK scheduling 7-11m in advance, generally speaking likes Theme Parks) wants to buy into DVC and has the financial resources to be able to do it.

That was exactly us in our situation this year. All of the above applies. It really is a very niche product when you step back from our little fandom.