Is Dvc price too High?

[deerh]

With the state of the stock market lately, (WOW, today, down 390 points!). Do you think the $80\point is too high?
With the building of the Pop Century resort opening next year, is the market saturated? I have read this on another board. Do you think the prices of 69-79-89\night will have and effect on the DVC. I KNOW, no where near the nice rooms we are used too, BUT, how can you convience people to buy DVC for $12000+ dollars (dues) too! When people tell me Disney is too expensive at my work, I tell them to stay at all stars, etc, at $69\night, for 7 nights that is 500+ dollars. We pay more than than for 1 years dues!
I know that BCV is selling well, but as someone said, that may only be add-ons, wonder if they will slow now?
Some points to ponder:
1. Price too high
2. stock market, jitters of the economy
3.oversaturatation of market in WDW
4. People not traveling
5."Discounted" hotel rates IN WDW
Just wanted to know what the DIS thoughts are....
Thanks all.
deerh

 

[Richyams]

Wait till next year. BCV will be sold out, no more inventory!!!

Resales go past the $85 BCV sells out at. Resales by the opening of, the as of yet uninspiring, VDI could be at $90. This would allow DIsney to open VDI at $100 per point...that $100 per point would be easy to justify with a later, 2052, ending date.

This could set the stage for VEP to open at $115 or more.

THese difering ending dates would allow Disney to have a two tiered ROFR, The old resorts being supported at $75-80 and the newer resorts supported above $90.

I really wish we could take this post and put a link to it on the front page or something, just save it and see how close I am.

 

[Richyams]

By the way, I disagree, I think the price has a lot more upside to it.

 

[deerh]

Wait till next year. BCV will be sold out, no more inventory!!!

I disagree! With my raises at a low, everyone else too, profit margins low, companies on the outs, I see a different Disney product. I think that Disney will be reluctant to raise admission prices by much. (I think they will go up, but not the 3-5%). I also when I bought DVC, people were talking about hotel rates at WDW going up 8% per year, I don't think this will happen, as a matter of fact, the OPPOSITE has happened. Every Sunday in the Atlanta paper, big ads for WDW, at 69-89\day for weeks now. When was the last time that has happened? I think DVC is a good hedge against inflation, just NOT the same as 2 years ago or even 5 years ago. When you bought, you figured (admit it you did!), a 8% inflation rate on your "investment in DVC". All I am saying is, throw that out the window! I think 1-3% for the moment. When you sell your DVC, people are going to say, why should I buy for 15000 dollars, when I can stay for 69\night. Who knows, to fill Pop Century resort, the prices will be low as well. That is 5000 rooms to fill!! Again, not the same size rooms as ours, but who knows how this will pan out?
deerh

 

[Richyams]

I pay a little over $100 per night for an OKW Grand Villa.

People pay less than $50 a night for a one bedroom.

Of course these are after breakeven, but the savings and lodgings still make it a very wise decision.

While the stock market may be way down, employment, wages, productivity and the entire economy in general are up.

I see a big price increase coming in the manner I laid out.

My wife just got a big promotion, I am busier then ever, all I see is good things happening.....then again, I own almost no stock.

 

[mjs805]

If you compare DVC with the All Stars or the Moderates, you will always be able to make the argument for not buying DVC. However, you are comparing apples and oranges. As someone who grew up staying at the Polynesian, I wanted a way for my kids enjoy the deluxe accomodations that I did. Even with AP discounts for the Deluxe hotels (which one cannot count on getting for every trip), I saw DVC as an investment which was well worth it when compared to Deluxe prices. I also felt like if I did not buy DVC, I would always talk myself into staying in cheaper accomodations as I planned each trip. Now, I'm locked into DVC.

As far as the stock market and the economy goes, all of these things are cyclical. The economy will kick in eventually and Disney will not need to discount rooms and DVC will look like a great investment even at $85 or even $90 per point.

Just my two cents,

Mike

 

[Happy Birthday Cat]

The news is all about the stock market going down. Real estate has done very well in my part of the country and the bond market is booming. Not everyone has taken a beating in stocks. In two years it will be the other way around just as mjs805 says.

Is $80.00 to high? No because people are paying it.

While I am an avid reader of Rich's thoughts I rarely agree with him as much as I do on this subject. On this he's right. There I said it and lightning didn't strike.

HBC

 

[spruce]

If you think the minimum buy in for DVC is expensive, look at what Marriot gets in Hawaii, Hilton Head...300 or more DVC points would be a good comparison....spruce

 

[deerh]

I hope I am wrong in my assumption. I would like the price to go up, because it makes my 62\point when I bought it look good!
I guess my REAL concern was how the hotel rates in and around WDW are NOT going up, and would BWV, BCV, etc follow suit? If the price of BWV studio is 319\night in summer, will it be 320\night next year? Not the 8% increase we invisioned now is it?
That was my only concern. I agree, we bought DVC with the larger size units for comparision. Just hope I am wrong, and inflation, etc for the hotels goes back to "normal".
Thanks for all the feedback. I will Hold judgement on Rich and his "estimates". In one way I hope he is correct, in one way not.
He could be right, although 100\point I think Disney will try to stay away from for as long as possible, you know, 99.99 looks better than 100 dollars for something..... JMHO......
deerh

 

[fkj2]

I think many people are underestimating this credit bubble. When real estate unwinds, and I believe it eventually will, people will liquidate anything they can to keep their homes. People now perceive the housing market to be the new "safe" investment. Remember, they're revising the bankruptcy laws and people won't be able to just walk away from their debt.

While Disney's timeshare program may recover sooner than others, it will take longer than some may think, IF the real estate market follows the stock market down. It has recently been in both the print media and national tv news of how people are buying homes, over appraised, from a developer in cahoots with the appraiser.

Also, you have to look beyond just the simple buying/selling stocks. It's those lingering derivatives that are of concern to me, as well as a falling dollar and foreign traders as well. How long will foreign investers hang around as they watch their dollar denominated investments plummet in price?

You can never say never and I believe it prudent for everyone, investor or not, to pay attention to the fiancial system, not only nationally, but globally. Bin Laden may eventually get what he wanted all along: to destory the financial system and ruin us all.

 

[Richyams]

Waaaaay back when they first announced BCV the current price was still in the $60s. I predicted that BCV would open at $80-85 per point. I was scoffed at.

I think we should post my prediction as one of the "Important" announcements at the top of the page.

I think I will turn out to be right, I usually am.

VDI opens above $90, $100 if they change the ending date.

VEP opens above $100, I think $115 is the number with new ending date.

I will be very interested in the ending date. If anyone hears any rumors, let us know.

 

[deerh]

I think we should post my prediction as one of the "Important" announcements at the top of the page.

Why would a prediction be an "important announcement. Even Nostradomus didn't get top billing! LOL ( Well maybe in the tabloids)!
deerh

 

[gscott8075]

Even with all the bad stuff last year - 9/11 and the beginning of the bear market - BCV is on pace to be the fastest sell out on the heels of VWL which also sold out very fast.

Addons or not, people flooded to pay $80 pp - that was with a comparatively poor MB program. Even if most are addons, there are still a certain number of points to sell. New or existing members is not really relevant.

My guess is that DVC is kicking themselves for not making BCV more that $80.

I think Rich is right on -

Premium real estate for a vacation home has escalated well out of the world for many folks. A timeshare is the best way to own a "second home" for middle America.

I am surprised that the resale market has fallen a bit behind in price. With a negligible MB program, one would think a resale at a WDW resort would closer to $68-70. If the sky was really falling, there would be many more resales. Look at the listings - there are very, very few.

 

[PamOKW]

, people flooded to pay $80 pp

I don't think the flood came for the $80 pp. It came for the pre-sales which amounted to $70 pp. The knowledge that the price would soon be $80 was an incentive as well. It would be interesting to know whether the sales are keeping pace or have dropped off since the price increase. If they don't revise the MB offer, then sales probably are staying brisk. If we see an increase, that might be an indicator that sales are not quite as brisk.

I imagine, in retrospect, they realize that they probably didn't need to offer such a dramatic incentive for the pre-sales.

I expect the price to continue to increase but not soon. I think the economy, or at least people's perception of the economy, needs to improve before they raise the price again. I do expect that the price will have risen by the time DI opens.

 

[Richyams]

I realy think that the period of time with no inventory will have a great effect. It seems to me that most are overlooking that point.

Does anyone else see that as important as I do?

I really expect resales to take off when there is no inventory from Disney.

 

[erikthewise]

A real estate agent once told me "the market never lies". If people will pay $80/point, then that's what it's worth (at least).

Don't forget, the $80 price has only been fully in force for 3 weeks! It will take a little while to see what the effect is. (Many people who bought in June had the $75 price locked in.)

If demand does decrease, then DVD is certainly well-positioned to deal with it, having little or nothing to sell in 2003!

I think the building of Pop Century will have no effect on DVD sales. Those who join DVC have already rejected the Value resort alternative for reasons other than availability.

An interesting question is what happens if/when demand for DVC membership decreases. To what extent does the viability of DVC depend on a continuing influx of new members? In principle not at all, but I can't help but think that Disney would turn their attention elsewhere if it the revenue stream of new sales were to dry up.

 

[RobDoc]

Only time will tell if there will actually be a period of time with no inventory. Just as presales were made for BCV when VWL neared sell out, DVC could do the same for the DI project.

While resales could well see a price increase- there could well be little inventory (as appears to be the case at the present time.) Resales also depend on a different means of contacting potential buyers (like this website!) . The lack of onsite sales may cause some sellers to try to increase their asking price, but buyers still have to find the listing. If the kiosks disappear- even for a relatively short time- the huge DVC presence in the parks and in all WDW resorts will also be gone from the memory of potential new buyers.

I expect that DVC will again be creative with their ability to sustain some sort of onsite sales presence. I have to think that a period of time without any DVC sales would have a negative effect when the program is again restarted and thus, DVC will avoid having to close down the sales operation and later restart. DVC has worked very hard to earn interest from onsite guests (the DVC channel on all Disney resort TV's, kiosks, sales center) and I just can't imagine them allowing the program to stagnate- even for a short period of time.

Stay tuned!

 

[vernon]

Well the short answer to the question is, with BCV selling at such a rate, obviously not. Although I do think much of that has to do with the popularity of the resort and a truer test will be with the Disney Institute developement which has historically failed to grab the public's attention in any of it's former lives.

It's my own feeling that the demise of the stock market actually helps something like DVC to sell. OK if your money is TIED UP in stocks and you won't sell at a loss then people feel poorer and less likely to put more money into a project, but for those that have bailed out of their over priced shares the big question is what to do with your money. Putting it on deposit is a pretty poor idea, and the return on long bonds is at close to an all time low. The numbers on DVC, as an investment, make better sense the lower the cost of money. If you like to spend money on vacations I've yet to see a better way to "prepay" a lot of those costs. I really don't think it's fair to use the cost of hotel rooms this year as a guide for what's likely to happen in the future, Sept 11 was an extraordinary event and we all hope one that won't be revisitted.

With the falling $ it makes visiting outside the USA ( as well as buying imported goods) much more expensive, this has to be good for the local ( I struggle to use that phrase when refering to the US LOL ) economy. If America does hit a difficult patch, which currently with the exception of the stock market is at the very least arguable it is likely that America will look more to home for it's vacations and it's purchases. Historically America has always turned inwards whenever it faces these problems ( very sensibly IMHO) It makes little sense, IMHO , to impose steel tarriffs and barriers for imprted steel, if you allow the imports of finished goods ( made with the cheap steel not allowed to American producers) to go unabated. IF and it's a BIG IF, America does slide into problems I would think it's certain that if Y'all continue to buy imported durable goods at the current rate then tarriffs and import barriers will go up in those areas as well. Although I would expect to see a lot of advertising playing on "patriotism" and imploring everyone to "buy American" before you are forced to do so.

 

[CarolA]

The big problem with this whole idea is that it assumes you are trying to measure your DVC as an investment. Timeshares including DVC are proabably not something that would be considered a "good investment". You are buying a vacation and part of that is intangible so the question really only is "Is it worth it to you?"

 

[Shontell_Crawford]

I really enjoyed reading this thread, and will keep my .02 to myself.
I have one question for all the predictors:
What is going to happen to Vero?
Do you think Disney will hold off on launching the other resorts until Vero sells out?
How can they justify a longer lease (if it happens) on another property if Vero still hasn't sold out?

Just curious to hear some opinions on this particular resort.

Thanks!
Shontell