Multi-Site POS Revision Dated 01/19/19

[TexasChick123]

if they do, you can count on that fee going up YOY.

Have in mind that the fee will be payable by direct buyers too not just resales buyers.

I don’t think so about direct. This will be one of the things they use to distinguish direct from resale during the sales pitch. It will be a benefit you get as a direct buyer that you must pay for as a resale buyer. That’s what I think will happen anyway which doesn’t make it true.

I do agree that the fee will probably be nominal to start and slowly (or maybe quickly) creep up. I really don’t think they want to kill the resale market. I think they just want a piece of it.

 

[crvetter]

if they do, you can count on that fee going up YOY.

Have in mind that the fee will be payable by direct buyers too not just resales buyers.

I think if they do this it would likely be resale buyers only. If they do this to direct that tanks the sales pitch. It’s more likely they just charge a per point fee (likely one time) to upgrade to full privileges. This is something they put in the Riviera POS already as something they could do. They also said someone could be a full member simply by buying direct points too.

 

[MB_01]

There will probably be a fee paid to DVD to be able to trade into other resorts at 7 months. Maybe as little as $5pp or as high as $20pp. They want a piece of the resale pie they feel they’re missing. We should all know very soon.

If they told me I could become a "direct" member for an upgrade cost of $2500 for all my points I'd probably just give them my CC number and go for it ($5/pt option). If the bill was $10000 I'd just buy another 100 points resale ($20/pt option)! If they implemented something like this I'd guess their number would be more toward the $20+ number. Otherwise wouldn't they just drive more people to resale? i.e. 200 AKV points resale for $105/pt + $5/pt upgrade = $110 vs $176 direct and I don't have to be a second class citizen any more? I bet they will want to squeeze us for a much bigger number...

 

[zavandor]

If they really implement the "purification fee" for resale points, my guess is that it'll very high. in the region of $80+. They cannot make it more convenient to buy resale and then "purify", if anything it should cost more.

 

[crvetter]

If they really implement the "purification fee" for resale points, my guess is that it'll very high. in the region of $80+. They cannot make it more convenient to buy resale and then "purify", if anything it should cost more.

Yeah I agree with the region of $80 which is about the spread between resale and direct for the sold-out resorts. So that seems like a reasonable guess. I could see them do "specials" at times when the economy isn't as well to get an influx of cash.

 

[ziravan]

Yeah I agree with the region of $80 which is about the spread between resale and direct for the sold-out resorts. So that seems like a reasonable guess. I could see them do "specials" at times when the economy isn't as well to get an influx of cash.

Nobody would buy. At that price point, there's no reason to go resale; the better option would be to buy direct IF you were going to also "purify" your purchase.

That said, the people buying resale NOW are doing so to save that $80 bucks. They aren't going to buy resale and then turn around and fork over the difference between resale and direct.

No. There's no market at that price, or to the extent that there is, that market already exists and is the same subset of people willing to buy sold out resorts direct right now.

 

[crvetter]

Nobody would buy. At that price point, there's no reason to go resale; the better option would be to buy direct IF you were going to also "purify" your purchase.

That said, the people buying resale NOW are doing so to save that $80 bucks. They aren't going to buy resale and then turn around and fork over the difference between resale and direct.

No. There's no market at that price, or to the extent that there is, that market already exists and is the same subset of people willing to buy sold out resorts direct right now.

I wasn't suggesting the market and how it would be created. Only that the $80 from the current pricing between direct and resale makes sense. Whether this creates a market or not is up to DVD and how they spin it.

Also during recessions this could end up being an advantage (if resale points drop really low and DVD needs cash and drops the fee).

 

[Cyberc1978]

I don’t think so about direct. This will be one of the things they use to distinguish direct from resale during the sales pitch. It will be a benefit you get as a direct buyer that you must pay for as a resale buyer. That’s what I think will happen anyway which doesn’t make it true.

I do agree that the fee will probably be nominal to start and slowly (or maybe quickly) creep up. I really don’t think they want to kill the resale market. I think they just want a piece of it.

I think if they do this it would likely be resale buyers only. If they do this to direct that tanks the sales pitch. It’s more likely they just charge a per point fee (likely one time) to upgrade to full privileges. This is something they put in the Riviera POS already as something they could do. They also said someone could be a full member simply by buying direct points too.

They would have to treat all members equally when it comes to trading out at 7 months at least for the L14 resorts. So if they want to charge $5 for doing it, but everyone would have to pay. Also Rivera owners wanting to trade into L14

 

[zavandor]

Nobody would buy. At that price point, there's no reason to go resale; the better option would be to buy direct IF you were going to also "purify" your purchase.

That said, the people buying resale NOW are doing so to save that $80 bucks. They aren't going to buy resale and then turn around and fork over the difference between resale and direct.

No. There's no market at that price, or to the extent that there is, that market already exists and is the same subset of people willing to buy sold out resorts direct right now.

Look at it from DVC point of view.
Let's say it costs them $50 pp to build and sell a resort. Not sure the exact amount, but probably not far from that. If a contract is sold on average for $180pp after incentives, then their net gain is $130pp. Why should they sell you an option to have the same exact contract for a much smaller profit? The idea is for them to crush the resale market so everyone buys direct so they can get their $130pp margin.

From a buyer point of view: you decide to buy Riviera to stay at Riviera and happy to pay $100 for a small contract there resale, with no plan to purify. Then Disney opens a couple of resorts you like much more than Riviera, you now have the choice to sell the Riviera contract, take a loss on the sale of the contract and buy direct points at $200pp. Of you could purify your points for $80-$100. A bargain.

 

[crvetter]

They would have to treat all members equally when it comes to trading out at 7 months at least for the L14 resorts. So if they want to charge $5 for doing it, but everyone would have to pay. Also Rivera owners wanting to trade into L14

I think what we are referring to is a fee to lift the restrictions on the resale contract. So the L14 resale buyers to trade into Riviera would have to pay the fee and Riviera resale owners would have to pay the fee to trade into all resorts.

 

[skier_pete]

Yeah I agree with the region of $80 which is about the spread between resale and direct for the sold-out resorts. So that seems like a reasonable guess. I could see them do "specials" at times when the economy isn't as well to get an influx of cash.

Yes - it's an interesting idea - but nearly impossible for them to pull off.

If they make it so it's comparable to direct - why would you ever do it? Pay $135 / point for BLT contract and then $80 / point for the full member status? Why not buy direct at $188 in that case?? which is plain crazy. If I buy a 200 point contract I'm going to pay $16,000 so that I can get a $100 discount on an AP and trade into Riviera?

But if they make it lower - then it drives people away from direct purchases? If you can get direct benefits for say $30 / point then why not just buy AKV at $100 / point and add on the benefits. Why would Disney want this? They'd just be better off buying back more contracts and reselling them at a lower price than what they have now?

So I agree - they do this, they probably set a pretty high price point. Maybe not enough to completely discourage use - but up in the $60 - $80 per point range.

Edit: The fee would make a heck of a lot more sense for Riviera resale owners that L14 owners, since L14 owners are only losing out on one resort (for now) while Riviera are losing out on more.

 

[Cyberc1978]

I think what we are referring to is a fee to lift the restrictions on the resale contract. So the L14 resale buyers to trade into Riviera would have to pay the fee and Riviera resale owners would have to pay the fee to trade into all resorts.

aaarh, in that case I agree with you

 

[crvetter]

Yes - it's an interesting idea - but nearly impossible for them to pull off.

If they make it so it's comparable to direct - why would you ever do it? Pay $135 / point for BLT contract and then $80 / point for the full member status? Why not buy direct at $188 in that case?? which is plain crazy. If I buy a 200 point contract I'm going to pay $16,000 so that I can get a $100 discount on an AP and trade into Riviera?

But if they make it lower - then it drives people away from direct purchases? If you can get direct benefits for say $30 / point then why not just buy AKV at $100 / point and add on the benefits. Why would Disney want this? They'd just be better off buying back more contracts and reselling them at a lower price than what they have now?

So I agree - they do this, they probably set a pretty high price point. Maybe not enough to completely discourage use - but up in the $60 - $80 per point range.

Which is why I said the spread between resale direct is likely price point, which you seem to agree with later in your message, to discourage buying resale. Though, thinking about this, it could create a market easily for those on Waitlists for BCV, VGC, or VGF that want to buy direct but the waits are too long. So those people already want to pay the "sold-out" rates and would be willing to do this to skip the waitlist line. My message wasn't to suggest a market but was to just agree the point would need to be rather high and $80 seems reasonable because that is already the price point that DVD is setting Resale vs Direct approximately (and nets a higher margin because ROFR comes at a cost).

Though this method could create an opportunity for a huge influx of cash later down the line if they need to. Say 1-5 years, which is likely the next recession to happen, a bunch of resale buyers are sitting on restricted points and the economy is in the tank. DVD could (and probably will need cash) offer for a "discount" to all those resale buyers for a limited time to pay to make their points whole. So in a recession, which seems very likely, if the cash is needed DVD could do a "sale". My second point only applied to this case and would only be given to current resale owners as of a certain date. I don't see them offering past a "limited" time offer because they then diminish direct sales.

 

[Katie L]

Edit: The fee would make a heck of a lot more sense for Riviera resale owners that L14 owners, since L14 owners are only losing out on one resort (for now) while Riviera are losing out on more.

This is the trick. It's the long game. They can't wait for these L14s to expire. I think they've overestimated the value of DVC (hello $200+ prices) but they still think there will be buyers. When they started DVC, timeshares had a nasty reputation. They've established the brand - 25 years in, it is NOT a nasty brand. A win. So how do they increase profits? Differentiate to justify their massively insane direct prices.

What they are missing is the tarnished brand. We'll buy an L14 - but we won't consider a new resort the way they treat DVC now. We really debated buying L14 - but appeal of WDW with a 2 y/o and a 4 y/o is absolutely there for the next 10+ years. If they've managed to tank the resale market by then, no harm no foul for us - if we sell, we'll appreciate whatever we can recover from our sunk cost. This is not an investment - and I've never viewed it that way.

There's also the legal aspect - did folks who signed many years ago agree to arbitration? The legal aspect seems harder to prove - though I appreciate the analysis done in this thread a whole lot (I'm sure brokers and DVC appreciate it too... but they're being quiet. ) They're destroying the broker market more than the resale market, or attempting to, and it's nasty.

Then again, they've been pricing the middle class out of WDW for 20 years. Why stop now?

 

[skier_pete]

Which is exactly why I said the spread between resale direct is likely price point, which you seem to agree with later in your message, to discourage buying resale. Though it could create a market easily for those on Waitlists for BCV, VGC, or VGF that want to buy direct but the waits are too long. So those people already want to pay the "sold-out" rates and would be willing to do this to skip the waitlist line. My message wasn't to suggest a market but was to just agree the point would need to be rather high and $80 seems reasonable because that is already the price point that DVD is setting Resale vs Direct approximately (and nets a higher margin because ROFR comes at a cost).

Though this method could create an opportunity for a huge influx of cash later down the line if they need to. Say 1-5 years, which is likely the next recession to happen, a bunch of resale buyers are sitting on restricted points and the economy is in the tank. DVD could (and probably will need cash) offer for a "discount" to all those resale buyers for a limited time to pay to make their points whole. So in a recession this seems very likely if the cash is needed. My second point only applied to this case and would only be given to current resale owners as of a certain date. I don't see them offering past a "limited" time offer because they then diminish direct sales.

Oh - I was definitely agreeing with you - just going through the thought process of what Disney would want out of it. everything Disney does is predicated on direct sales, so they would be unlikely to make any choices with this that would threaten direct sales. As @zavandor pointed out - if Disney is making $130 pp profit on new unit sales, they don't want to make any sales that make less than that. That's why they raised resorts like the Poly and VGF up to $200+ on direct buys - this way they only buy-back contracts that they can sell and still make $100 pp profit. So, ya I only see them doing this at some outrageous price point that would only makes sense - as you say - to someone that wants to pay direct pricing but can't find the contract they want. Disney still makes their profit, buyer gets what they want.

 

[crvetter]

Oh - I was definitely agreeing with you - just going through the thought process of what Disney would want out of it. everything Disney does is predicated on direct sales, so they would be unlikely to make any choices with this that would threaten direct sales. As @zavandor pointed out - if Disney is making $130 pp profit on new unit sales, they don't want to make any sales that make less than that. That's why they raised resorts like the Poly and VGF up to $200+ on direct buys - this way they only buy-back contracts that they can sell and still make $100 pp profit. So, ya I only see them doing this at some outrageous price point that would only makes sense - as you say - to someone that wants to pay direct pricing but can't find the contract they want. Disney still makes their profit, buyer gets what they want.

Sorry just was trying to say I agreed with you too, oops. It will be interesting what Disney does when resale tanks, if it does. If resale tanks for Riviera it could tarnish their other resorts in the area on the cash side. All the sudden DVC, which are marketed as Deluxe, are being sold are super cheap rates bringing down the Disney brand. Also it could create higher competition for Disney to fill the cash side if an entire resort fails because people could buy simply for renting out, which wouldn't need to be as high to make a profit (their only method to currently stop this is ROFR super cheap points but they only have so much cash for this). I maintain there has to be some base level of resale that DVD is willing to accept for DVC resorts, which IMO why we are seeing BLT ROFR really high lately, because they felt the 130's that were slipping through to be too low for the resort, which also makes it hard to justify the high direct prices for BLT and new resorts coming online.

Though this is all speculation by me to try and understand why they are doing, which seems to be as much as a fruitless effort as figuring out how they ROFR contracts on a consistent basis.

Edit: What if Disney is planning for a problem of building new DVC resorts after Reflections? They are running out of land that is marketable and affordable without huge infrastructure investments. I'm assuming by the time they sell out Riviera and Reflections we are looking at 2025-2026, is that even reasonable? I'm not sure since these are likely to be on the BLT size scale not the half as small CCV so I imagine they might take longer. so perhaps 4 years each per resort pushing us to 2027-2028.

 

[CraigInPA]

What if Disney is planning for a problem of building new DVC resorts after Reflections? They are running out of land that is marketable and affordable without huge infrastructure investments. I'm assuming by the time they sell out Riviera and Reflections we are looking at 2025-2026, is that even reasonable? I'm not sure since these are likely to be on the BLT size scale not the half as small CCV so I imagine they might take longer. so perhaps 4 years each per resort pushing us to 2027-2028.

BLT-2 on the site of the current convention center is frequently mentioned as a future project.

On the original topic, DVD/DVC has to be cognizant of the potential for negative press regarding the "Disney" brand. If the restrictions and other games they may contemplate in the future tanks the resale value of DVC points down to pennies on the dollar, they will have an army of DVC "ambassadors" change from being proponents of being members to telling everyone to stay away from DVC. Articles written about how points which originally cost $225 being worth nothing (or even half of their original value) does not enhance the Disney "brand". I work with a really huge company, and you cannot imagine how much "brand" matters to them.

 

[TK-Tampa]

If sales of Riveria tank? They simply, magically grant all owners access to the L14 and sales will soar. Disney has put themselves in a no-lose situation financially. Even if they are eventually forced to treat all owners equally and/or have to pay out damages/fines, they will still be way ahead. This all may be an exercise to see what will stick and what won't. It is even possible that they are anticipating a lawsuit. If they win, then the coast will be clear to do whatever and whenever they want. If they lose, the damages will not be great since relatively few owners will have actually been harmed.

 

[Aron1012]

I finally received my call today from Member Relations in response to email I sent last Tuesday. The lady was pleasant but seemed to be making the call only because she had to. She said it was to follow-up to the email, but then didn't even ask one question. I started by asking her why they were doing this. Her answer was very simple and straightforward that it was to drive more direct sales. Frankly I was somewhat caught off guard with that answer. I really expected her to say it was based on member feedback that they had told others.

At that point I decided to follow-up with a question that I had planned on avoiding, and that was who exactly she worked for? She said she was with DVC member services and her team was focused on member feedback. So then I asked her if that "team" worked for DVD, DVCMC, or TWDC? She basically avoided that question even though I asked it two more times. She kept going back to DVCMC is an arm of the DVC division as a whole. Next I made the mistake of stating that I thought DVCMC was supposed to be our fiduciary that worked on behalf of the member's best interest so why would they care if DVD sold more direct points? The conversation pretty much shut down at that point and she said my questions would have to be forwarded on to Legal/Compliance. I told her that was fine and I would like to speak with them.

Before we ended I circled back to some of the issues that we have discussed here about the reputational and brand hit they were creating with these decisions. I told her that DVC members are some of the best salespeople DVD has and that at least 3 people in our circle had bought direct points because we told them how great it was if planning to go regularly. I also pointed out resale is a key back-up plan for members considering purchasing direct that they could at least sell it for a reasonable price. I also brought up that when a member stops using their points they also aren't coming to the parks and spending money or going to restaurants. By allowing a healthy resale market new energized owners are brought into the system that are excited to come spend with TWDC. She didn't have much response at all to that and was clear she had fulfilled her duty by calling and was content to move me on to Compliance for the rest.

 

[crvetter]

I finally received my call today from Member Relations in response to email I sent last Tuesday. The lady was pleasant but seemed to be making the call only because she had to. She said it was to follow-up to the email, but then didn't even ask one question. I started by asking her why they were doing this. Her answer was very simple and straightforward that it was to drive more direct sales. Frankly I was somewhat caught off guard with that answer. I really expected her to say it was based on member feedback that they had told others.

At that point I decided to follow-up with a question that I had planned on avoiding, and that was who exactly she worked for? She said she was with DVC member services and her team was focused on member feedback. So then I asked her if that "team" worked for DVD, DVCMC, or TWDC? She basically avoided that question even though I asked it two more times. She kept going back to DVCMC is an arm of the DVC division as a whole. Next I made the mistake of stating that I thought DVCMC was supposed to be our fiduciary that worked on behalf of the member's best interest so why would they care if DVD sold more direct points? The conversation pretty much shut down at that point and she said my questions would have to be forwarded on to Legal/Compliance. I told her that was fine and I would like to speak with them.

Before we ended I circled back to some of the issues that we have discussed here about the reputational and brand hit they were creating with these decisions. I told her that DVC members are some of the best salespeople DVD has and that at least 3 people in our circle had bought direct points because we told them how great it was if planning to go regularly. I also pointed out resale is a key back-up plan for members considering purchasing direct that they could at least sell it for a reasonable price. I also brought up that when a member stops using their points they also aren't coming to the parks and spending money or going to restaurants. By allowing a healthy resale market new energized owners are brought into the system that are excited to come spend with TWDC. She didn't have much response at all to that and was clear she had fulfilled her duty by calling and was content to move me on to Compliance for the rest.

This was probably just the first "fielding" phone call to see if they could answer your questions. Considering they couldn't your question will be forwarded above. As for the reason them doing the Resale Restrictions I was 100% told it was simply to drive direct sales, but was also told it was to prevent the view of members that "cheap" points have the same access as "expensive" points at the 7 month mark. Which is probably true and likely the real answer. So I think what you were told was 1 in the same just they left out why it was needed to drive direct sales. But the implication I was given was DVD viewed some resorts as successful and not hurting direct sales while other resorts weren't and hurt direct sales.

As for the person that called she did work with DVCMC (Member Services) who you will now be getting a call from is DVD, no longer DVCMC, though they are the same physical people, but very much separate legal entities.