Multi-Site POS Revision Dated 01/19/19

[crvetter]

Also I think an argument could be made about what would be the point of Riviera resale owners being club members if this happens. They wouldn't get one single benefit of being club members, no reservation component, no member perks. What would be the point of them being called club members other than having a card with their name on it. This would call into question the meaning of the club.

That’s the shady part to me that I referenced and losing goodwill. While I think Disney is yes operating within the law but quite contrary to the intentions of the original crafters of the documents. Same as when they decided that adjustments to the point charts were no longer seasonal.

One benefit is any resale owner is a member so if they decide to remove the restrictions, which they said they can, I would assume they might have the opportunity to “pay” or maybe for “free” to gain back the DVC Reservation Component, which essentially I think they are setting up as a pay for play model for the resale owners.

 

[Matty B13]

One benefit is any resale owner is a member so if they decide to remove the restrictions, which they said they can, I would assume they might have the opportunity to “pay” or maybe for “free” to gain back the DVC Reservation Component, which essentially I think they are setting up as a pay for play model for the resale owners.

Which will devalue resale contracts even more, because no one would pay for a resale contract + perks payment which is more than direct pricing.

 

[crvetter]

Which will devalue resale contracts even more, because no one would pay for a resale contract + perks payment which is more than direct pricing.

I think the pay for play model drives down future resorts resale prices but also provides a floor to them because people know they could pay to play if Disney adds it.

But I still think the changes are generally unwelcome and lack goodwill. I just don’t see the devalue argument because adding Riviera didn’t make the prices drop for the L14 (evident that they are still selling for the same price) just reduced appreciation, which is limited because they decided to restrict access to future resorts. But if you remove Riviera to a DVC2 appreciation limitations are identical, might be worse because the DVC1 resorts (if a pay of play model is introduced) might never have been granted that access. But I see Disney deciding to operate more shady could hurt its brand which in turns hurts your resale value because people are less likely to trust Disney so in this one aspect it hurts resale but as owners there isn’t much we can do to stop that. Same as if they operate the parks in a manner to damage their brand.

Though in reality how much has the contracts appreciated when you compare the cost of rooms at Disney inflating over time. Essentially how much value is derived from the fact it guarantees a room vs the right to exchange. I would think much more is the value of the room when you consider the higher priced resale contracts are at resorts where members tend not to trade out and and room rates at those resorts are some of the highest.

 

[Katie L]

But I still think the changes are generally unwelcome and lack goodwill. I just don’t see the devalue argument because adding Riviera didn’t make the prices drop for the L14 (evident that they are still selling for the same price)

Prices haven't dropped dramatically, but they have dropped.

 

[crvetter]

Prices haven't dropped dramatically, but they have dropped.

I'd personally disagree with this, looking at the ROFR threads I see consistent pricing. However, the reason I consider it not to be devaluing L14 resorts is considering these two cases: 1) DVC without Riviera what would the prices be and 2) DVC with Riviera and its restrictions. I think contracts for the L14 to be identical in value with these 2 cases because the same access is being provided to the person purchasing, thus my comment all their restrictions did was limit any appreciation, which when I bought I was told not to base any decision on access to future resorts, I believe the Multi-Site POS still says this.

The part I find concerning is that Disney can do all this within their rights and has refrained from doing so for 25 years. Now they are starting to flex their muscles so down the line they can start going after old direct buyers too I would assume. So Disney is tarnishing the DVC brand and buying where you want to stay is now more important than ever. The more calls/emails DVC gets from members (resale and direct) that express disappointment and their feelings it is tarnishing the DVC name (saying they can't recommend DVC to family/friends anymore) the more likely you get DVC to do something.

 

[skier_pete]

One thing people are ignoring in the devaluing point:

That as resorts expire, the newer resorts in the L14 will likely drop off the L14 as they are re-purposed/re-sold. For example, if I buy a resale contract at the Poly today, i can still go into all 14 resorts. In 2042 (which is yes still 23 years away) 6 of those resorts drop off the list. By 2060, I can only use my resale Poly contract at VGF, Poly and CCV. This is presuming that a new issue of points at these old resorts doesn't maintain the trade ability. (I imagine THAT will be a lawsuit as well.)

It brings to the point of - what truly is the percent of owners that are resale. Do we really know? I remember this mention from earlier in the thread...

I feel pretty confident whatever terms one buys in at will roughly stay the same for the duration of the ownership of that contract. It's "cheaper" for DVC to grandfather existing owners and wait for natural attrition of the owners (Y stated the sell rate is "single digit to low double digits". Probably resort and economy dependent.)

...but is that an annual attrition rate? because that would actually be a huge attrition.

 

[crvetter]

One thing people are ignoring in the devaluing point:

That as resorts expire, the newer resorts in the L14 will likely drop off the L14 as they are re-purposed/re-sold. For example, if I buy a resale contract at the Poly today, i can still go into all 14 resorts. In 2042 (which is yes still 23 years away) 6 of those resorts drop off the list. By 2060, I can only use my resale Poly contract at VGF, Poly and CCV. This is presuming that a new issue of points at these old resorts doesn't maintain the trade ability. (I imagine THAT will be a lawsuit as well.)

It brings to the point of - what truly is the percent of owners that are resale. Do we really know? I remember this mention from earlier in the thread...



...but is that an annual attrition rate? because that would actually be a huge attrition.

That isn't really a devaluation aspect but limiting appreciation of your contract, which is a bit different, IMO. Under the case of not adding Riviera to DVC you will see the exact same effect, thus showing it is limiting appreciation rather than devaluing your contract. To say it is devaluing your contract would be to explicitly state adding Riviera (with it's restrictions) explicitly made your contract less value. However, what people seem to be saying adding Riviera (with Restrictions) vs adding Riviera (without Restrictions) devalued your contract, which is actually more a restriction on appreciation in value of your contract not devaluing, because to devalue implies it is worth less than it was prior to Riviera being added which isn't the case.

Though DVC may be devaluing our contract through brand tarnishing which is totally possible, which I have explicitly brought up to DVC. Though everyone should definitely express their opinions to DVC since the hive-mind collective is more likely to come to a solution to the problem and get DVC to consider a change. Which is exactly why I think the 2020 point charts were changed. There were disagreements there on what was and wasn't allowed but everyone contacted DVC with their opinions and struck some sort of nerve with DVC.

 

[Aron1012]

I'm not saying they changed our agreement in fact I've argued the opposite they BVTC may now in violation with our agreement with them (that new resort's resort agreements be substantially similar to ours, though this is a weak may, IMO). What I was arguing is that they didn't take any deeded rights away; however, BVTC might be in violation of our contracts only based on the requirement that new resorts be substantially similar to ours. Essentially I'm saying any suit would be against BVTC since they admitted (without approval of DVCMC as dictated by our Resort Agreements) into the Club a resort who wasn't substantially similar to ours. And the outcome of such a suit may lead to Riviera being removed or the other resorts being removed. Either of which BVTC has the right to do per our Resort Agreements. I would lean towards Disney closing to be a bit more hardline on this issue because they were laying the ground work for a while.

Working off the Multi-Site POS that I have from November 2017:

§III.1.b states "Membership in the Club is an appurtenance to each Ownership Interest in accordance with the terms of the applicable DVC Resort Documents and DVC Resort Agreements" - This doesn't define the access to the DVC Reservation Component only states that Club Membership, as defined in the Resort Documents and Resort Agreement, can't be removed from the Deed, which currently DVC has argued they aren't doing.

§III.2.b states "Club Member's rights to reserve Vacation Homes at DVC Resorts through the DVC Reservation Component are set forth in the DVC Resort Agreement for each DVC Resort and in the Disclosure Document" - This is the section that tells us how the DVC Reservation Component works and what our rights as club members are. Focusing First on the Disclosure Document

BVTC Disclosure Document:

II states "This Disclosure Document is provided for the purpose of explaining the reservation rights afforded to Club Members through the DVC Reservation Component. Club Members may only access DVC Resorts, other than their Home Resort, through participation in the DVC Reservation Component in accordance with the terms and conditions of this Disclosure Document." - So this states that the Disclosure Document is the governing body of how the DVC Reservation Component works.

III.1 states "Since availability of the DVC Reservation Component is part of the services offered through the Club, membership in the Club is necessary for a person to access and use the DVC Reservation Component. Membership in the club is an appurtenance to all Ownership Interests at DVC Resorts..." - This is not saying the Club Membership is guaranteed access to the DVC Reservation Component. So looking for that in

IV.1 states "A Club Member may voluntarily participate in the DVC Reservation Component to reserve available Vacation Homes in DVC Resorts other than their Home Resort." - This is finally where it says as a Club Member you have the right to book at other resorts than your own. However, as noted this right isn't attached to your Deed but is a right that was granted to Club Membership.

Now can they amend the BVTC Disclosure Document:

The Multi-Site POS states in §III.2.b "BVTC, in its sole, absolute and unfettered discretion, may change the terms and conditions of the Disclosure Document. These changes may affect a Club Member' right to use, exchange and rent the Club Member's Ownership Interest and may impose obligations upon the use and enjoyment of the Ownership Interest and the appurtenant Club Membership" - So BVTC can absolutely modify it in particular that modification could effect your right to "exchange" your Ownership Interest, this is precisely what Disney has done.

So what changes did they make to the BVTC Disclosure Document (which they maintained the right to amend and remember they don't have a fiduciary responsibility to us)

III.1 now states "....membership in the Club is not a guarantee of access to the DVC Reservation Component as set forth in the DVC Resort Agreement and this Disclosure Guide"

III.3 was updated to add all the restrictions were added and you can review the documents attached for this restrictions.

So all in all I think they modified the BVTC Disclosure Document properly, a right BVTC maintained, to allow them to say the access to the DVC Reservation Component isn't guaranteed as a club member. And BVTC isn't a fiduciary so has no responsibility to act in our best Interest. Now what about DVCMC who is a fiduciary are they in violation, no, because according to our Resort Agreements BVTC in it's own discretion (independent of ours) reserves the right to associate any new resorts as long as it is substantially similar to ours. So my point made earlier is that DVCMC in theory should be suing on our behalf to void our contracts with BVTC, but is that what most club members would actually want or would they want Riviera removed or our Resort Agreements modified.

Now as for modifying the Resort Agreements CCV has added language to specifically allow this in Exhibit G Section 10.3 "BVTC, in its discretion, may change the terms and conditions of this Agreement and the Disclosure Document." - This specifically grants them rights to change the Resort Agreement and reaffirms the right to change the Disclosure Document, which they already defined in the Multi-Site POS and Disclosure Document, which our Resort Agreement was subject to. So for CCV at least they were allowed to do what they wanted. As for the other resorts can they I'm not sure since 10.3 doesn't exist in those and haven't skimmed through the POS completely but I suspect there is language in their somewhere that says they might. Also they may not need to if Riviera is "substantially similar" now that they separated the access to the Reservation Component from the Club Membership in the Disclosure Document. But the substantially similar part is still the issue I find concerning, but I suspect members would likely not win this battle since Disney seems to have prepared itself fully for this, by removing DVCMC's say in any changes thus removing the fiduciary protection.

To be honest I can't see in any of the Resort Agreements where they state the right of the DVC Reservation Component is dictated directly in it. Though it does have the following language to suggest the groundwork for what they did

5.1 ".....DVC Reservation Component shall be made in accordance with this Agreement and the Disclosure Document as promulgated or amended from time to time by BVTC."
6.2.d "BVTC does not anticipate that the rules and regulations governing reservations among the DVC Resorts will be affected by adding additional resorts as DVC Resorts. However, BVTC has reserved the right to amend the Disclosure Document..." Again they have reaffirmed their right to do so merely stating they didn't anticipate they would which is a far cry from saying they wouldn't.

Both of the above two section existed in the Resort Agreements all the way back to the Boardwalk Villas (being the second. I suspect that OKW is slightly different having been the first resort and was a bit more difficult to follow since it said DVD would be the one responsible for trading, so I assume it might have an Resort Agreement executed at some point with BVTC).

All in all I think an argument with Disney would be a goodwill argument as best and I think the legal arguments are much harder to win than the 2020 Point Reallocation. At least on that part you had the overarching fiduciary obligation to give weight to the argument the Members didn't want it and it wasn't in their best interest. Here you can't rely on that because all changes were reserved to be made by BVTC without input by DVCMC. And overall I think the changes were done in the confines of what was legal but was shady that is for sure.

Thanks @crvetter for the detailed response. I do see a little more where you are coming from, but I still wouldn't go so far as to say those changes would hold up in court. If these were all independent companies I think it would have a good chance of holding water. The fact that these companies are so intermingled would definitely play a factor in any potential case. I'm certain that Disney would argue the lawsuit would need to be separated out, but I don't believe a judge would see it that way. But that is an unknown until tried in court.

I tend to believe that they cannot start to distinguish between members when it comes to usage of the reservation system (member extras are completely different), because you are correct it could very easily become older direct owners next that are targeted. What's to prohibit them from saying all owners prior to 2020 have to pay a $50/point fee to be able to use the exchange system even within the L14 if that agreement can be amended with BVTC at any time?

 

[crvetter]

Thanks @crvetter for the detailed response. I do see a little more where you are coming from, but I still wouldn't go so far as to say those changes would hold up in court. If these were all independent companies I think it would have a good chance of holding water. The fact that these companies are so intermingled would definitely play a factor in any potential case. I'm certain that Disney would argue the lawsuit would need to be separated out, but I don't believe a judge would see it that way. But that is an unknown until tried in court.

I tend to believe that they cannot start to distinguish between members when it comes to usage of the reservation system (member extras are completely different), because you are correct it could very easily become older direct owners next that are targeted. What's to prohibit them from saying all owners prior to 2020 have to pay a $50/point fee to be able to use the exchange system even within the L14 if that agreement can be amended with BVTC at any time?

I do agree with what you are saying that since BVTC is comingled with DVC and DVCMC they could all be intermingled in a lawsuit. Unfortunately these changes will be harder (not impossible) to fight in court only because BVTC has no requirements to work on our behalf such as DVCMC, but like you said not tested yet so could very well work.

My bigger concern is exactly what you say in the final paragraph. In theory Disney has set some precedence of the desire to change these, because of complaints about people who know nothing about DVC financial aspect (they will be upset when they need to sell). Though the leaked image of Reflections seems to suggest they learned their lesson and are making resorts compelling (though this is a cash hotel too so I'm sure that drove their decisions somewhat) which is all they need to do to keep people buying direct, IMO.

 

[CraigInPA]

I dont think Disney would threaten the nuclear option. That would significantly lower demand for all future sales. However, they may consider delaying sales of the Riveria as they should be able to sell out those rooms for cash for at least a year.

Imagine the depth and breadth of coverage about "DVC ending early" and "Disney cancels vacation club" that would occur. The "nuclear option" is already likely off the table due to the damage to the brand and the value of the stock.

 

[ziravan]

Imagine the depth and breadth of coverage about "DVC ending early" and "Disney cancels vacation club" that would occur. The "nuclear option" is already likely off the table due to the damage to the brand and the value of the stock.

Especially when the far easier solution would be to follow the rules long since established, admitting Riviera into the club on substantially similar terms of the L14, and as a necessary result, reversing course on the latest restrictions.

 

[Aron1012]

Those of you who reached out to Yvonne's office how long did it take to get a response? I sent me email on Tuesday and haven't heard anything other than the automated response they received the messaged? Any other time I have contacted Disney I got a response within 48 hrs and almost always within 24 hrs.

 

[miTnosnhoJ]

On page 17 of the new Disney Files magazine they mention this about the Membership Agreements. I wonder what shenanigans this refers to:

Flexible Use Years

Many Members on wait lists to add on at previously sold-out resorts have expressed challenges finding ideal use years. With that feedback in mind, Disney Vacation CLub has enhanced its inventory systems and updated select resorts’ Membership Agreement documents to be consistent across all resorts. (You haven’t lived until you’ve curled up by the fire with a glass of wine and a good Membership Agreement document). The updates are designed to give existing inventory use-years more flexibility to better meet the needs of all Mambers. Other updates to these documents allow Members to receive key notifications electronically for more efficient delivery.​

 

[Madame]

On page 17 of the new Disney Files magazine they mention this about the Membership Agreements. I wonder what shenanigans this refers to:

Flexible Use Years

Many Members on wait lists to add on at previously sold-out resorts have expressed challenges finding ideal use years. With that feedback in mind, Disney Vacation CLub has enhanced its inventory systems and updated select resorts’ Membership Agreement documents to be consistent across all resorts. (You haven’t lived until you’ve curled up by the fire with a glass of wine and a good Membership Agreement document). The updates are designed to give existing inventory use-years more flexibility to better meet the needs of all Mambers. Other updates to these documents allow Members to receive key notifications electronically for more efficient delivery.​

Which « select » resorts would that be? I may be reading into it, but that wine bit seems mocking to me.

 

[Matty B13]

On page 17 of the new Disney Files magazine they mention this about the Membership Agreements. I wonder what shenanigans this refers to:

Flexible Use Years

Many Members on wait lists to add on at previously sold-out resorts have expressed challenges finding ideal use years. With that feedback in mind, Disney Vacation CLub has enhanced its inventory systems and updated select resorts’ Membership Agreement documents to be consistent across all resorts. (You haven’t lived until you’ve curled up by the fire with a glass of wine and a good Membership Agreement document). The updates are designed to give existing inventory use-years more flexibility to better meet the needs of all Mambers. Other updates to these documents allow Members to receive key notifications electronically for more efficient delivery.​

This would be nice...... but I'm guessing it only applies to contracts directly bought through DVC.

Maybe they are rethinking the need for UY's and just go with yearly allotments.

This would help my family out, if it applied to resale contracts, maybe all the reservations booked with multiple UY contracts is causing a lot of issues with the reservation system.

 

[miTnosnhoJ]

This would be nice...... but I'm guessing it only applies to contracts directly bought through DVC.

Maybe they are rethinking the need for UY's and just go with yearly allotments.

This would help my family out, if it applied to resale contracts, maybe all the reservations booked with multiple UY contracts is causing a lot of issues with the reservation system.

It implied that they could ROFR one use year and convert that inventory to be sold in another use year. But I may be reading too much into it.

 

[TexasChick123]

It implied that they could ROFR one use year and convert that inventory to be sold in another use year. But I may be reading too much into it.

I read it the same way. Interesting indeed.

 

[crvetter]

I read it the same way. Interesting indeed.

Same that’s the way I read it too. I think the use years are probably going to be important when we get closer to the end of contracts and likely won’t do away with them.

 

[wdrl]

On page 17 of the new Disney Files magazine they mention this about the Membership Agreements. I wonder what shenanigans this refers to:

Flexible Use Years

Many Members on wait lists to add on at previously sold-out resorts have expressed challenges finding ideal use years. With that feedback in mind, Disney Vacation CLub has enhanced its inventory systems and updated select resorts’ Membership Agreement documents to be consistent across all resorts. (You haven’t lived until you’ve curled up by the fire with a glass of wine and a good Membership Agreement document). The updates are designed to give existing inventory use-years more flexibility to better meet the needs of all Mambers. Other updates to these documents allow Members to receive key notifications electronically for more efficient delivery.​

I don't know how DVC will administer this change (heck, I'm not even sure I understand what they are talking about), but this could make things a lot easier for Members wanting to add on points.

Here is how I hope this feature could work:

Currently, a Member's account can have one or more deeds, but all deeds have to have the same Use Year. If a Member adds a deed with a different UY, then a new Member account must be established. If a Member wants to use points from both accounts to fund a reservation, they have to either 1.) transfer points from one account to the other; or 2.) book two consecutive reservations, using points from one account for the first few days and then points from the second account for the remaining days. Both options create more work and have some drawbacks.

Another issue with the current system occurs when a Member wants to buy an add-on deed. The Member may want to add on 100 September UY points, but DVD doesn't have 1000 points available in that UY. Even if DVD might have a lot of points available in the other UYs, it can't give the Member what they want.

With a Flexible Use Year system, the only change DVC would make is allow a Member's account to have deeds with different Use Years; the deeds no longer need to be for the same UY. Since the deeds are all housed in the same account, there would be no need to transfer points in order to make a reservation that uses points from multiple deeds that don't have the same UY. Also, the Member could make a single reservation even though the points have different UYs.

A Flexible Use Year system would be a great benefit for Members who are trying to add on more points and are currently on a wait-list with DVD. The Member who is looking for 100 September UY points might be on a wait-list for weeks or months. But their wait-list might could through a lot sooner if DVD had 100 August or October UY points available.


I do not see this as a way for DVD to ROFR points that are in one Use Year and then repackage them as points belonging to another Use Year. However, this change would lessen the significance of the Use Year concept. A recurring question posted on these boards involves the pros and cons on owning deeds with different UYs. To an extent, some of the drawbacks to owning different UYs are lessened, if not eliminated.

I doubt DVC would start issuing yearly allotments and totally eliminate Use Years. However, there is nothing magical about having eight Use Years. Why not have six UYs, or four, or 12? Old Key West was the only resort where DVD tried to have an equitable balance of points within the each Use Year. Since then, every resort has had an imbalance in the UY point distribution.

 

[Katie L]

I doubt DVC would start issuing yearly allotments and totally eliminate Use Years. However, there is nothing magical about having eight Use Years. Why not have six UYs, or four, or 12?

Maybe a dumb question... But why have use years at all?