NEW VGF Building

[Bing Showei]

I wonder if this is a function of people just having extra cash during COVID and wanting to just add on to what they already have, or is this a function of the RIV restrictions/high point chart?

I would think that if it were the case that there was just more liquid sloshing around discretionary budgets, you would expect the % of units to non-actively sold out resorts to remain the same between the years.

Instead, total sold points were up, but the share of sold out resorts being sold was also up, in some cases three times what they were historically.

If owners’ buying patterns are changing (now predominantly buying where they already own as opposed to the new thing), the product currently being sold has to play some part. I don’t see how $6/point incentive on a select few resorts (or even $8/point earlier this year) only at 150+ points (minimum $25,000 “add on”)would move the needle as much as is observed.

That said, I agree there’s no way to know for sure what is playing out without looking at the sales on the individual contracts level.

I maintain however that despite a high price point, VGF, if left unrestricted, will sell out without issue.

 

[OKW Lover]

I am no lawyer, so I have no idea if this is actually legal. However, if you look at AKV, Jambo and Kidani are actually SEPARATE ownerships. Your contract is points at one or the other and specifies which resort you own at. I feel that the new VGF Big Pines building could fall into this - it's in the existing condo association the way Jambo and Kidani are both part of the same, but is a distinct ownership and thus could have its own contract terms -- including resale restrictions.

OTOH, if you look at OKW or SSR, they also designate ownership of a portion of a specific building. Yet DVC can't make a distinction between owner of the resort.

 

[hhisc16]

OTOH, if you look at OKW or SSR, they also designate ownership of a portion of a specific building. Yet DVC can't make a distinction between owner of the resort.

For example with the new VGF, would the owning of a new building start the number over?
(An example: I own a % of 3B at HHI. If they build HHI.2 for some reason, would it start over as 1A again for the new building?)
(Same example at VGF.2: do they start at 1A again?)

 

[Lorana]

OTOH, if you look at OKW or SSR, they also designate ownership of a portion of a specific building. Yet DVC can't make a distinction between owner of the resort.

All the resorts designate ownership of a certain % of a certain unit in a specific building.
What I mean is, your contracted points belong either to Kidani or to Jambo, even though you can use them interchangeable. Kidani and Jambo are actually separate DVC Home Resort ownerships but part of the same condo association. It is recorded on the deed itself, in the contract you sign, and shows up separately in your DVC account.

 

[KayKayJS]

Oh man. This might be a reason for us to buy direct.

 

[prs_14]

I would think that if it were the case that there was just more liquid sloshing around discretionary budgets, you would expect the % of units to non-actively sold out resorts to remain the same between the years.

Instead, total sold points were up, but the share of sold out resorts being sold was also up, in some cases three times what they were historically.

If owners’ buying patterns are changing (now predominantly buying where they already own as opposed to the new thing), the product currently being sold has to play some part. I don’t see how $6/point incentive on a select few resorts (or even $8/point earlier this year) only at 150+ points (minimum $25,000 “add on”)would move the needle as much as is observed.

That said, I agree there’s no way to know for sure what is playing out without looking at the sales on the individual contracts level.

I maintain however that despite a high price point, VGF, if left unrestricted, will sell out without issue.

I am sure others have said it before, but I think we are seeing Disney transition to a business model where, while they may always have "active" resorts for sale, they will happily add to that business by effectively re-selling all of their "sold out" resorts at certain price points. In the long term, unless you only want to have access to one DVC resort, you will have to buy direct from Disney. That's the bad news for buyers. The good news is that you can basically buy at any resort that you want (new or old). So now Disney gets that sale instead of the resale market, even if the profitability is lower. And, oh by the way, by reducing the value of all resales, Disney will be able to ROFR things up at lower prices over time, so the future profitability of selling "old" resorts will increase.

 

[zavandor]

It's mind-boggling to me that the response of the membership is that, yeah, those restrictions are probably illegal. Meh.

Creating any kind of traction on the 2020 point charts was very difficult. And it was an issue easy(-ish) to understand (almost all point charts went up, except 2BR, bungalows and cabins), affected 250k families and was contrary to everything DVC marketed before.
Disney declared that 2 dozens people complained, out of 250k owners.

Now at the time of that thread less than a 1000 resale contracts changed hands. Numbers very small and there wasn't anyone willing to take the lead of a class action.

I have a question for everyone dismayed that no one has done anything about it: what are you going to do, now that you know?

 

[Nabas]

I am sure others have said it before, but I think we are seeing Disney transition to a business model where, while they may always have "active" resorts for sale, they will happily add to that business by effectively re-selling all of their "sold out" resorts at certain price points.

The thing is, with sold-out resorts, DVC members are paying the operating cost of those resorts.

With active resorts, Disney is carrying the cost of those non-sold points.

So, yes, Disney is willing to sell you points at any resort, but it works better for them if you buy points at resorts they are actively selling.

 

[KAT4DISNEY]

I am no lawyer, so I have no idea if this is actually legal. However, if you look at AKV, Jambo and Kidani are actually SEPARATE ownerships. Your contract is points at one or the other and specifies which resort you own at. I feel that the new VGF Big Pines building could fall into this - it's in the existing condo association the way Jambo and Kidani are both part of the same, but is a distinct ownership and thus could have its own contract terms -- including resale restrictions.

I also fall into the camp that expects that DVC will create new categories for these studios, and expect them to be more expensive given the larger size for them.

It is deeded real estate so it has to have parameters that distinguish where/what you own. In most cases it's just units and then you need to look at the declarations to see where that is. At AKV they gave the buildings names probably because Jambo already was named but it just as easily could have been Bldg 1 & Bldg 2. Actually I think DVC has the booking engine incorrect in that it should just state AKV as your home resort. When Kidani was being built it made a difference because one was open and the other was not. People who owned Jambo points had their units declared and open and could use their points but there was overlap time while Kidani was being built but was not yet open so owners there could not use their points. Now the booking engine should just look at it as AKV. Your actual deed lists a unit, the percentage etc but the terms in both are the same because they comprise the AKV association. Depending on when the new VGF goes on sale there's going to be a bit of time where the current owners can be using their points for any dates but the new buyers will have to wait until the new units actually open but the POS covers that possibility and it doesn't make it separate from the association.

 

[prs_14]

The thing is, with sold-out resorts, DVC members are paying the operating cost of those resorts.

With active resorts, Disney is carrying the cost of those non-sold points.

So, yes, Disney is willing to sell you points at any resort, but it works better for them if you buy points at resorts they are actively selling.

Agreed - it's probably not as profitable. But, in the long run, when buying the "new" resort and the "old" resort all come with the same resale restrictions, people will go back to wanting the "new" resort anyway (new rooms, longer contract, etc.). It's just this interim period where people will still prefer "old" to "new". In 10 years, will someone want the resort with a contract that ends in (max) 40 years, or will they want the 50-year version? I think Riviera will have it the toughest, but, as we get further from January 2019, it will be easier for Disney to sell the new properties.

 

[fumanchu2488]

A few things that have been back and forth for me.

Sales price - there is lots of good data they have on the price they can sell these points for. It was previously priced at $255 when sold out and resale contracts are anywhere between $185 and $200 (with a few outliers). Those resales come with restrictions that new direct would not. Looking at that data, depending on what their goal is to sell out the resort, I would guess member direct pricing starts around $220 or $225 with some incentives. Which would put it right in the same delta other resorts are between direct and resale.

Incentives - personally, I would jump all over smaller point incentives on this resort. Like some others, I am newer to DVC and only own at RIV. I have been looking at a 50 - 75 point add on there, but since I have my trips planned out this year I am in no rush. If they were to offer something for a smaller add on I would probably jump

Availability - One thought that crossed my mind is that maybe all these studios will get gobbled up at 11 month mark and 1 BR and 2 BR will be more available at 7 month. Similar to what is going on at RIV. However, I have no idea how that works with all the weird lock off stuff.

 

[MomOTwins]

But I think the whole point is that these aren't O14 owners we are talking about - these real estate interests don't exist yet

Right, but I don't think anyone is saying DVC is restricting existing contracts. People who buy the new points in the new part of VGF that has yet to be declared into the condo association are not O14 owners as it pertains to those contracts (even if they have existing contracts that are O14)

Edited to say: I see now on the post you originally quoted that the poster posited that O14 might not be able to trade into the expansion - that I don't think is something Disney can legally do if it is part of the condo association. I think O14 will always be able to trade into all parts of VGF. But I absolutely see no reason DVC can't add restrictions to any new interests they are creating as long as they don't try to reach around and make new restrictions on existing interests

Nope, that's not what I was saying. I said the current O14 owners would be able to stay at Big Pine Key, but a person who subsequently buys resale from an O14 owner would not.

In fact, that is exactly what is happening on every other resale contact currently: any O14 member who purchased prior to 2019 or bought direct can stay at Riviera, but once any of them sells their contract on the resale market, the resale buyer cannot stay at Riviera. I fail to see any difference in that and saying that people who buy resale after summer 2022 cannot stay at Big Pine Key.

 

[AJollyHoliday]

Creating any kind of traction on the 2020 point charts was very difficult. And it was an issue easy(-ish) to understand (almost all point charts went up, except 2BR, bungalows and cabins), affected 250k families and was contrary to everything DVC marketed before.
Disney declared that 2 dozens people complained, out of 250k owners.

Now at the time of that thread less than a 1000 resale contracts changed hands. Numbers very small and there wasn't anyone willing to take the lead of a class action.

I have a question for everyone dismayed that no one has done anything about it: what are you going to do, now that you know?

Is there a way we can organize and voice concerns now before anything is released? Wouldn't Disney like to come out looking good rather than having looked like they made a wrong choice and had to back pedal?

 

[DSLRuser]

I suspect DVC will continue to "convert" hotel rooms to dvc like they did at poly, wilderness lodge. and now GF.

Much cheaper to convert a building then build. Disney gets all the profit on redo vs build. And it ensures occupancy remain high. Until the build a 5th gate...there is no reason to build any more stand alone DVC property. The don't need rooms, they need to ensure the rooms they have are full.

 

[4luv2cdisney]

So, when will we have actual information on this? If this is opening in 14 months - ish, wouldn't it start selling in a 4-5 months to current members?

 

[Brian Noble]

If they do this with no restrictions, how will Disney sell these new points?

They same way they used to before Riviera, and the same way Wyndham, Bluegreen, etc. do now: by having people in the sales role who are very good at their job.

It's not as though a sharp divergence between retail and secondary markets is suddenly a new thing.

 

[RoseGold]

I suspect DVC will continue to "convert" hotel rooms to dvc like they did at poly, wilderness lodge. and now GF.

Much cheaper to convert a building then build. Disney gets all the profit on redo vs build. And it ensures occupancy remain high. Until the build a 5th gate...there is no reason to build any more stand alone DVC property. The don't need rooms, they need to ensure the rooms they have are full.

Nope. This was all Covid. They want to convert new construction.

What they want is Jambo and VGF full of cash paying guests taking VIP tours, and freestanding DVC in some cheap location, like RIV or Reflections. But, the earnings calls have made it very clear that there is no money to build. This was a solution to get through the next 3-4 years with no DVC WDW construction.

It's a short term cash grab. But it's also far off enough to have something shiny to look forward to, and maybe by the end of 2022, they can have the plans together for Coronado 2 or whatever in a few years, so there's the next thing to look forward to.

This is 1.5, maybe 2M points, compared to 7M for Riviera. This is not the main event. Maybe they have to kick the can down the road with a Poly building, but this isn't the business model. The next DVC build will be a beast in some mediocre location with a chart higher than VGF. RIV almost hit VGF charts with nowhere near the location. The chart was doing the heavy lifting for RIV, and it will do it for the next build, and probably DL Tower.

 

[stwaldman]

Nope. This was all Covid. They want to convert new construction.

What they want is Jambo and VGF full of cash paying guests taking VIP tours, and freestanding DVC in some cheap location, like RIV or Reflections. But, the earnings calls have made it very clear that there is no money to build. This was a solution to get through the next 3-4 years with no DVC WDW construction.

It's a short term cash grab. But it's also far off enough to have something shiny to look forward to, and maybe by the end of 2022, they can have the plans together for Coronado 2 or whatever in a few years, so there's the next thing to look forward to.

This is 1.5, maybe 2M points, compared to 7M for Riviera. This is not the main event. Maybe they have to kick the can down the road with a Poly building, but this isn't the business model. The next DVC build will be a beast in some mediocre location with a chart higher than VGF. RIV almost hit VGF charts with nowhere near the location.

well, the next beast is DLT, which will wipe some of the taste of riviera sales off of everybody's tongues because they are meeting a demand that will exceed almost any cost.

I do think there is a fair question of how far will they press the envelope on developing another property "far" away from a park. While Riviera is dragging in part because of restrictions, its also hard to ignore it was the first WDW resort sold in several years that (sorry skyliner) isn't within a 4 iron of a park entrance. I don't know how their finance decisions get made, but I think they will have to give *some* pause to developing a completely new resort if there is recent experience saying it might sit there on sale for an extended period of time.

 

[stwaldman]

well, the next beast is DLT, which will wipe some of the taste of riviera sales off of everybody's tongues because they are meeting a demand that will exceed almost any cost.

I do think there is a fair question of how far will they press the envelope on developing another property "far" away from a park. While Riviera is dragging in part because of restrictions, its also hard to ignore it was the first WDW resort sold in several years that (sorry skyliner) isn't within a 4 iron of a park entrance. I don't know how their finance decisions get made, but I think they will have to give *some* pause to developing a completely new resort if there is recent experience saying it might sit there on sale for an extended period of time.

and yes, by "dragging", i probably should admit that they are probably still making a pretty penny on volume alone. again, i don't work in disney finance

 

[tjkraz]

Nope. This was all Covid. They want to convert new construction.

Every DVC location over the last 20 years—except for Kidani and the first part of VGF—involved subtraction of cash rooms for the addition of DVC. Whether it’s conversion or tear down and rebuild is up to the bean counters to determine.

The single biggest factor that derailed Reflections was the hundreds of hotel rooms included in the design. Hotel rooms Disney felt confident it could fill back in 2018, but no longer needs in the foreseeable future.

The timing of this move is being forced on DVC to some extent. They don’t need the inventory for summer 2022. But 200 more studios will be good for the program.