New DVC Rules for 2013?

[cbnsoul]

As long as Walt Disney World has land suitable for construction, building new will always be a more profitable approach than re-buying the old.

I guess that leads to the question, "What happens when there is nothing left to build?" I don't know the usual direction most timeshare companies take once this comes up but I'm sure the much more knowledgeable than I on this board do.

Does Disney become a reseller of ROFR contracts? Do they leave the market entirely? Eventually, even if they can build more resorts, they are going to start running out of interested parties to buy them. Demand isn't unlimited and they would have to be a lot closer to market saturation now then they were, say 5 or 10 years ago. Plus, unless you add on to existing DVC properties, your options other than a freestanding DVC resort are limited to the Poly and squeezing something next to the Yacht Club, unless they were to go the "Moderate" route.

 

[Apps]

I guess that leads to the question, "What happens when there is nothing left to build?" I don't know the usual direction most timeshare companies take once this comes up but I'm sure the much more knowledgeable than I on this board do.

Does Disney become a reseller of ROFR contracts? Do they leave the market entirely? Eventually, even if they can build more resorts, they are going to start running out of interested parties to buy them. Demand isn't unlimited and they would have to be a lot closer to market saturation now then they were, say 5 or 10 years ago. Plus, unless you add on to existing DVC properties, your options other than a freestanding DVC resort are limited to the Poly and squeezing something next to the Yacht Club, unless they were to go the "Moderate" route.

I imagine that once the classic resorts expire, they would tear them down and build again so they could sell more points. Buildings would be old and run-down by that point anyway.

 

[tjkraz]

I guess that leads to the question, "What happens when there is nothing left to build?"

From a land perspective, it's doubtful that will ever be an issue. DVD only needs to fill about 25 years with newer properties before ownership of the first wave of resorts begins to revert back.

Eventually, even if they can build more resorts, they are going to start running out of interested parties to buy them. Demand isn't unlimited and they would have to be a lot closer to market saturation now then they were, say 5 or 10 years ago.

This is the other issue, and it's manageable to a certain extent.

First, remember there are new families discovering the Disney parks every year. My kids are 12 and 9 now. In another 15-20 years, they may be starting families and purchasing points of their own.

IMO there's no reason to believe the market will ever be completely saturated.

The other issue involves profit margins. Every time DVC raises prices, they alienate a certain portion of the market. The pool of prospects grows smaller. However, with higher prices they also stand to make more on each sale.

For the sake of argument, let's assume that at $100 per point, DVC is making $50 in profit while the other $50 goes to cover construction and marketing expenses.

Raise the price to $150 per point and with the same $50 cost of doing business, they are pocketing $100 in profits. Essentially sales VOLUME could fall by half and they will still make just as much money.

In my opinion, this is exactly the formula DVC is following right now. Rather than making DVC affordable to a vast market, they are building smaller properties with much higher prices than we saw 4-5 years ago. The smaller properties lower Disney financial exposure in times of economic crisis (back in '08-09 they had no fewer than FIVE resorts under construction simultaneously when the economy crashed) and it reduces the impact of resales on the specific resort being marketed. Chances are VGF will be totally sold out in about 2-2.5 years before its contracts begin hitting resale sites in any volume.

Could they eventually run out of buyers? Perhaps. But all things being equal (economy) it's a market that will continue to grow as new families discover the Disney parks for the first time.

Plus, unless you add on to existing DVC properties, your options other than a freestanding DVC resort are limited to the Poly and squeezing something next to the Yacht Club, unless they were to go the "Moderate" route.

Off the top of my head, VGF, Poly, Ft. Wilderness, second Contemporary Tower and at least one stand-alone resort are in the mix at WDW. That's at least 15 years worth of sales right there. Something at YC or more BC units are a realistic possibility, too. Disneyland Hotel at DL will eventually happen. And Aulani is going to be selling for years to come.

They just need to get through to 2041-ish when BoardWalk, Beach Club, Wilderness Lodge and others can be sold all over again.

 

[Dean]

But if they have a wait list for a resort and no points to sell then the only supply source is the resale market. If you change the rules for the resale market and make it less appealing the price will go down. Disney is going to sell those points as a new contract with all the benefits and none of the restrictions put on someone who bought on the open market. They are not going to buy VWL points for $60 p/p and sell them for $60. They are going to charge $130.

For that situation and that one alone, it MIGHT work out for them but every single such transaction is in potential conflict with a retail sale. Plus they are not going to make any more on the sale than they would if they simply sold the new resort, usually less historically. Plus it has to be a sustainable model over time, just just for the time being. It's not as simple or profitable as I think you see it.

I guess that leads to the question, "What happens when there is nothing left to build?" I don't know the usual direction most timeshare companies take once this comes up but I'm sure the much more knowledgeable than I on this board do.

Does Disney become a reseller of ROFR contracts? Do they leave the market entirely? Eventually, even if they can build more resorts, they are going to start running out of interested parties to buy them. Demand isn't unlimited and they would have to be a lot closer to market saturation now then they were, say 5 or 10 years ago. Plus, unless you add on to existing DVC properties, your options other than a freestanding DVC resort are limited to the Poly and squeezing something next to the Yacht Club, unless they were to go the "Moderate" route.

I'm not aware of any timeshare developer who's gone the resale only or mostly route and I doubt we'll ever see one. Marriott has been heavy in to resales historically and have closed that division. Bluegreen sells the resales at a discount to retail and still have trouble moving them though there are other issues there related to price as well.

 

[LPnerd]

it's not impossible that it could be true.

but generally, it's a sales trick to convince suckers to pay extra to buy direct.

exactly what I was thinking.... I bought my points in 1998 vero beach. I had free hopper passes until 2001 and I lived in Fl. rofl... we went 3-4 days everytime the season changed to a lower point time. it was awesome! we took the entire family , 8 of us stayed in a two bedroom, and had passes for everyone!
we paid 10K for 250 points and if I go at the right time we can get 3 wks out of that.( we never stay Fri and sat) anybody know what those points would go for now??? Id love to find out.