November 2022 Direct sales.

[Brian Noble]

The rule of thumb in the timeshare world is that cost of construction is about 1/4 to 1/3 of cost of sales. Maybe a bit less. If that’s also true for Disney (I bet it is) then ROFR even at half price of retail is less profitable than building a shiny new resort.

 

[Roughians_satchel]

Except, if they continue adding new resorts with it and more and more resale owners are not allowed to trade, it will absorb some of that.

For example, when the 2042 resorts end, if they come back restricted, there will be a lot of rooms opening up to direct buyers so it could end up not as difficult as one thinks.

Yes! I go back to the original wording for Riviera: "Effective January 19, 2019, only Members who purchase directly from Disney will be able to use their Vacation points at the 14 existing Disney Vacation Club Resorts or future Resorts--such as Reflections--A Disney Lakeside Lodge."

It says restrictions are for future "Resorts". Even if we don't see restrictions on Poly2 or VDH, I don't think they're abandoning them since these are both new builds on EXISTING resorts. They will continue to use them for brand new resorts like a Reflections, like the rumored Venetian area on Bay Lake, or like the 2042 resorts (which will be completely resold and likely re-themed/updated.)

 

[Epcot Forever Forever]

The real question is will BLT2 be in its own condo association in 2027.

 

[bianca]

We will see what happens with the reduced VGF price. But unless it flips and VGF starts to double the sales of RIV, it’s really surprising.

Certainly part of the reason RIV outsold VGF is the price but I don’t think that can really explain the 2:1 difference. It may simply be that “resort studios” weren’t a winner.

Both of my grown children did the DVC tour last week at both VGF and RIV with the intention of buying. They have both overwhelmingly chosen RIV as their new home resort. They hated the GF for so many reasons and are excited about RIV. The resort studios were a total turn off, as they have spent many years in larger accommodations, including this trip of 9 days in a GV. Turns out that the kitchenette was very important to them. RIV does have the nicest studio on property in our opinion.

 

[Anthony Vito]

Imagine a car manufacturer saying, “We’re going to do what we can to reduce the value of your purchase if you try to sell it.”

You mean like going into the finance office to sign all the paperwork to buy the car to be told, "Your car's going to lose 10-20% of its value the minute you drive it off the lot, so buy this Gap Insurance." (Okay, not exactly on point, but couldn't resist.)

 

[Nabas]

You mean like going into the finance office to sign all the paperwork to buy the car to be told, "Your car's going to lose 10-20% of its value the minute you drive it off the lot, so buy this Gap Insurance." (Okay, not exactly on point, but couldn't resist.)

DVC loses 10-20% of its value the moment you buy the points.

Disney is going beyond that.

I don't understand the strategy. Resale always has been only a small fraction of the market, while strong resale prices support strong direct sale prices. (I understand some restrictions, which come out of DVD's budget. Why pay for (for example), Moonlight Magic for those who did not buy from DVD?)

 

[Cfabar1]

I’d be curious if resale as a percentage of sales has increased substantially…. I’d imagine the internet has made it easier than at the beginning. That may be why DVD feels the need to show a bigger value chasm between direct and resale points.

 

[havoc315]

I’d be curious if resale as a percentage of sales has increased substantially…. I’d imagine the internet has made it easier than at the beginning. That may be why DVD feels the need to show a bigger value chasm between direct and resale points.

I don't know if resale has increased as a percentage, but I can say decisively that the market supply of re-sale points has increased dramatically over the years.
After all, resorts and points keep getting added, but none have been retired yet (apart from some limited ROFR).

So I suspect Disney is looking at the ever-growing supply of re-sale points and finding ways to make that supply less competitive with direct purchasing.

 

[BamaGuy44]

The real question is will BLT2 be in its own condo association in 2027.

Don't forget YCV (Yacht Club Villas) when it comes online in 2029. Same association as BCV or new?

Disclaimer for anyone new to the board: YCV is not really a thing (yet), but I'm trying to speak it into existence!

 

[havoc315]

Don't forget YCV (Yacht Club Villas) when it comes online in 2029. Same association as BCV or new?

Disclaimer for anyone new to the board: YCV is not really a thing (yet), but I'm trying to speak it into existence!

Obviously this was a joke but it got me thinking...
The logic of making CCV it's own association was partly that there were only about 25 years left on BRV...
The logic of adding VGFII to the VGF association was likely partly that there were still plenty of years left -- 42 more years.

But as RIV sales have been exceeding VGF sales, I wonder if Disney will conclude that length contract was meaningful. Is 48 years vs 42 years one of the reasons that RIV has been beating VGF..
And if Disney does believe the somewhat shorter contract is hurting VGFII, does it impact what they do with POLY tower?
In other words, do somewhat disappointing sales of VGFII push Disney to make Poly tower it's own association with a new 50 year contract, believe it will sell better than a 42 year contract?

 

[EYL]

But as RIV sales have been exceeding VGF sales, I wonder if Disney will conclude that length contract was meaningful. Is 48 years vs 42 years one of the reasons that RIV has been beating VGF..

With the sudden shift in incentives, where RIV is now priced a tad higher than VGF, I believe Disney concluded that the cheaper one will outsell the more expensive one.

 

[Sandisw]

With the sudden shift in incentives, where RIV is now priced a tad higher than VGF, I believe Disney concluded that the cheaper one will outsell the more expensive one.

I can’t wait to see December sales to see whether the incentives flips the numbers or if they become closer in sales.

 

[EYL]

I can’t wait to see December sales to see whether the incentives flips the numbers or if they become closer in sales.

Me too! It might flip it, but I think total sales will drop. Just a guess on my part...

Psychology comes into play when buying something this expensive while walking in the parks. When you say the cost *was* $207, "but look at what it is with the incentives" and it goes below the $200 mark, you got people hook, line, and sinker. But when you price something for $217 and then give them a few dollars incentive for a 150-point buy-in, it's still "over $200". Will the same people buy-in at that time? This is why everything out there costs $X.99 rather than the whole number - $199.99 looks much more attractive than $200.00 even though the difference is just 1 penny.

 

[Epcot Forever Forever]

Me too! It might flip it, but I think total sales will drop. Just a guess on my part...

Psychology comes into play when buying something this expensive while walking in the parks. When you say the cost *was* $207, "but look at what it is with the incentives" and it goes below the $200 mark, you got people hook, line, and sinker. But when you price something for $217 and then give them a few dollars incentive for a 150-point buy-in, it's still "over $200". Will the same people buy-in at that time? This is why everything out there costs $X.99 rather than the whole number - $199.99 looks much more attractive than $200.00 even though the difference is just 1 penny.

Yes I think this is true to some extent (certainly a large body of pricing research has proved the existence of “cliff prices”, which is what you’re referring to), but I wonder if those cliffs aren’t at $30,000, $35,000, etc, moreso than $199 (or even Disney never talks about savings per point to new buyers, they talk about “Save $5,000”.

Or maybe the cliff price they’re targeting is a monthly payment

 

[havoc315]

With the sudden shift in incentives, where RIV is now priced a tad higher than VGF, I believe Disney concluded that the cheaper one will outsell the more expensive one.

Yes. We will see. But given Riviera was selling DOUBLE VGF when it was cheaper… unless VGF sales now double Riviera sales, it means there was more than just price per point at play.

 

[Nabas]

Yes. We will see. But given Riviera was selling DOUBLE VGF when it was cheaper… unless VGF sales now double Riviera sales, it means there was more than just price per point at play.

RIV, after all, is an entire building dedicated to DVC.

VGF2 (aka BPK) feels more like an afterthought at the Grand Floridian, which is primarily dedicated to cash guests. It’s not a particularly inspiring arrangement.

 

[vjbhatia7782]

I just purchased the Grand Floridian Contract because of the incentives were too hard to pass up. This resort is going through a huge refurb for the lobby and rooms and the new Mary Poppins themed rooms are elegant and gorgeous. Plus the maintenance fees are the lowest and its the Disney the flagship property with the best potential to maintain value long-term. think you will see VGF sales increase and will sell out before Riviera. I still cant believe people will buy into Riviera with such severe resale restrictions and potential hit it will take on the resale market.

 

[Epcot Forever Forever]

I can’t wait to see December sales to see whether the incentives flips the numbers or if they become closer in sales.

Here is sales by week since 10/2; definitely some convergence. First chart is points and second is contracts. This week is obviously just 2 days.

This of course is delayed ~2 weeks vs the actual sale date - there’s less than 10 contracts so far with the $217 price so far.

 

[kboo]

Wait till we see the months coming up in 2023...an enormous economic crunch is coming and will reflect in future sale numbers.

I think this, more than anything else, will influence sale numbers ... and resale prices.

It may simply be that “resort studios” weren’t a winner.

We stayed in Boca Chica (?) in a lagoon view/TPV on cash back in 2016, which made us love the resort. The "two real beds" and larger rooms may have been a selling point before the OG refurb, but the Murphy beds are as comfortable as a regular bed, and you have the flexibility to use it as a couch. On top of that I prefer the bathroom layout in the OG studios, which has two showers. And refrigerators, and microwaves and toasters....

Since you own at RIV and VGF, which one do you prefer? Just curious.

I know this wasn't directed at me, but I love them both. They have a similar vibe but in different parts of WDW. Riviera feels more peaceful; VGF more bustling. Often like to start at the bustling area (MK, VGF) and then wind down at Riviera, spend more relaxed time strolling at EP and snacking, watching shows, etc.

For instance, if you own resale points and Riviera, and don't make a reservation within your priority window, you could easily be shut out of a room, especially studios, at different times of the year.

I think this is a concern that is voiced a bit much - there are certain times of the year (Christmas, New Years) where it is really hard to get a standard studio, and to some extent a standard 2br. But most other times, if you are on at 8am on your date, you'll get what you want. And if not, I have always had the wait list come through. (knocks wood) Riviera standard studios and tower studios go quickly any time of the year, but not always on the first day at 8am.

This is already the case at many resorts at different times of the year. Try getting into BCV or BWV during Food & Wine.

I'm so glad they extended F&W to start in August now. We've had pretty good success getting into BCV in late August and also April.

Two comments on this:

1) Resorts don't resell at nearly that pace. Over the last 22 months, 0.74% of SSR points changed hands via resale. For BLT it's 0.71%. For AKV it's 0.93% (Three resorts chosen at random.)

2) Anecdotally, many owners book their home resort at 11 months anyway. And surely people who buy a restricted resale do it because they have great affection for the resort. I don't think it's realistic to suggest that someone who buys a restricted resale would act completely different if not for the restrictions.

EDIT: One more point to add to my list...

Yes, your hypothetical VGF direct buyer could find some lesser amount of RIV availability due to the restrictions. But the offset is the RIV resale owner is unable to use his/her points to book OTHER destinations, thus increasing that pool of availability. If your RIV resale owner cannot use his/her points to book BCV, BLT, Poly and others, 7 month availability in those locations will increase for owners who can access.

^^ I agree with that bolded statement - the people who ascribe to "buy where you want to stay," and even "buy where you wouldn't mind staying," will most likely book at/around 11 mo at their home resort. If you're willing to stay in 1br, then a viable option is still to book a shorter stay in a 1br and WL the studio. Or be willing to book a preferred view for more points. I think it's rare the case that ALL rooms in all categories in the resort book out at 8am, 11 mo ahead. Came close to that for VGF Christmas week 2021 and it still sorted itself out within a week.

 

[kboo]

Here is sales by week since 10/2; definitely some convergence. First chart is points and second is contracts. This week is obviously just 2 days.

This of course is delayed ~2 weeks vs the actual sale date - there’s less than 10 contracts so far with the $217 price so far.
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I wonder what the full December report will look like - Christmas and New Year's will bring a lot of people into the parks.
(I also wonder whether this chart will follow interest rates or another US economic health metric)