OKW extension brochure pictures

[midnte0708]

I found it funny that the brochure they sent out to extend has all "older" people's pictures in it.

Several pictures.....one an elderly couple having what looks like a grand time, a couple pictures show a grandfather with grandaughters, another looks like 3 generations.....grandmother, daughter & grandaughter having a great time walking around.

Obviously they are trying to sway people to stop thinking they will be "too old" to benefit and get them to thing "Look at the fun I can have at 70 or 80 years old!


As hard as I try to find a benefit in extending I just can't. They try and make the extension appear as a bargain with the $10 discount BUT they are only charging $4 more per point to extend their own contracts!!!! $92 to $96!!

So if I did extend and had to sell for some reason in the near future I would not get my $15 back....maybe $5 of my $15. I think I would rather spend the $3k it would cost to extend and buy AKV points. Then I could at least use them now. Of course the down side is more dues!

 

[BobH]

I can understand that Disney wants to protect how they price their new units by not having older resorts hold them back. And it is not just Old Key West resales that are price significantly lower than the new stuff Disney is selling. I just checked the Timeshare Store and all the 2042 resorts are selling in the $80 range. Hilton and Vero are below $70. what I very much resent is that Disney is picking the pockets of the current OKW owners with their $15 offer. I think that it should be a lot lower than that. If Disney wants to keep loyal owners for many years to come they should treat us all better. They could still protect thier price structure by extending OKW to 2057 without beating up on current owners.

 

[Deb & Bill]

Why didn't they add the DVC coffin and cemetary? The lighthouse light was a little over the top, though.

 

[tjkraz]

I just checked the Timeshare Store and all the 2042 resorts are selling in the $80 range. Hilton and Vero are below $70. what I very much resent is that Disney is picking the pockets of the current OKW owners with their $15 offer. I think that it should be a lot lower than that.

I'm confused. If adding the extra years to OKW will bring its value from "below $70" to "the $80 range", doesn't that fact alone validate the $15 extension figure?

I guess I just don't get all of the rightous indignation over the extension and related fees. If you aren't going to use the years...don't extend. It's that simple. We all know we bought timeshares with fixed ending dates and it's a given that the contract values will shrink as those ending dates approach.

I do think that the extension is overpriced by a few dollars, but when it comes to Disney the same can be said of the t-shirts, hamburgers and refrigerator magnets. This isn't exactly groundbreaking territory.

 

[simzac]

I'm confused. If adding the extra years to OKW will bring its value from "below $70" to "the $80 range", doesn't that fact alone validate the $15 extension figure?

I guess I just don't get all of the rightous indignation over the extension and related fees. If you aren't going to use the years...don't extend. It's that simple. We all know we bought timeshares with fixed ending dates and it's a given that the contract values will shrink as those ending dates approach.

I do think that the extension is overpriced by a few dollars, but when it comes to Disney the same can be said of the t-shirts, hamburgers and refrigerator magnets. This isn't exactly groundbreaking territory.

Good point. I do not feel like I am being forced to extend at all, and I'm not going to do so.

 

[CPTJAK]

Not sure why people are upset, Disney does not have to offer an extension if they do not want to?

Plus it costs $0 to not extend?

If you believe that you can give this to someone younger at a later date when you no longer want to go than I believe $15 is not a bad deal and infact may be a great bargain in 20-30 years.

It's all good!

 

[BobH]

Saratoga Springs is selling for $94 per point (when you include the $10 discount). At my age it makes far more sense to take the money that I would use to extend and buy current Saratoga points that I & my family can use right now and until 2054 rather than put the money into something that I can't use for 35 more years when I am over 100 (HA!) and my children are over 80 years old. I also do not wish to saddle my children or granchildren with paying an unknown amount of money for maintenance dues later on in life. I admit that if you are in the right age group this deal may make sense to you. It does not make sense to me.

 

[Steve@BWV]

The comparison to the $92/$96 delta is invalid. The vast majority of OKW owners did not pay even close $92. It is closer to $60 a point. Even at that vastly reduced price, $15 for 15 years is still cheaper than the original price.

The reason we see the $4 delta is not because Disney is giving a discount to the extended contract, it is simply trying to push the extension. Having these units occupied until 57 is highly attractive to them.

While I believe the extension is under-priced at $15, I do agree that a short term value (under 10 years) may not be there. After that point the non-extended contract will surely be valued under the $15.


$96 per point for 49 years = $1.96 per point per year
$92 per point for 34 years = $2.71 per point per year
$15 per point for 15 years = $1.00 per point per year
$25 per point for 15 years = $1.67 per point per year

So even if at the highest price for a new contract existing owners are getting a significant discount. Am I missing something?

 

[Lisa P.]

Not sure why people are upset, Disney does not have to offer an extension if they do not want to? ... It's all good!

Some may be upset because the resale price of the existing (non-extended) contracts will become less competitive than they were before the offer came along. OKW contracts without the extension are devalued because they are now going to be compared with other contracts at the same resort with an extension.

If Disney is looking to create cheap external inventory (i.e., no building expenses) for themselves to repurchase, this is an excellent way to do so. They win with a greater profit when buying back on a lower ROFR for the old contracts or they win by collecting the extension fees. Either way, they win.

But how about the members? If they extend and keep it, they pay good money today for something they won't get to use for 35 years (and who knows what will be happening in their life in 35 years?!?!). If they extend and resell it, they will not get the full $15/point back in higher resale prices. If they don't extend, the ROFR floor is likely to drop significantly, devaluing their ownership. Any way, there's potential for the member to lose money.

For people who have purchased DVC as a prepaid vacation plan, who see Disney as a successful business with whom they enjoy doing business for vacation planning and who don't care about ROFR matters, this is probably all just a lot of unnecessary chatter. They won't be bothered by these matters and they'll probably see this offer as just another option.

But for people who bought DVC with the idea that they could resell at any time, probably without risk of loss, or who tend to see Disney as somehow benevolent more than business-minded, this "offer" may be quite disturbing. It is wholly and completely a business matter for Disney. ROFR is never done for the sake of the buyer, though many who resell do benefit from the artifically sustained resale pricing. But ultimately, ROFR benefits the one who gets that Right - the original seller - in this case, Disney.

This situation simply illustrates why it is so important for timeshare buyers to learn and understand what they are purchasing before they buy. If a person goes into it with their eyes wide open (not dusty from Pixies, not glossy from Magic ), changes like this don't bother them. They will not feel betrayed or threatened or bothered by a good business decision made by the developer or management company to support their profits and solvency. They will be assured that they are doing business with a strong company. Consequently, they can continue to enjoy what they purchased without regret - a nice, prepaid vacation plan with resorts they enjoy! JMHO.

 

[Lisa P.]

The vast majority of OKW owners did not pay even close $92. It is closer to $60 a point. Even at that vastly reduced price, $15 for 15 years is still cheaper than the original price...

$96 per point for 49 years = $1.96 per point per year
$92 per point for 34 years = $2.71 per point per year
$15 per point for 15 years = $1.00 per point per year
$25 per point for 15 years = $1.67 per point per year

So even if at the highest price for a new contract existing owners are getting a significant discount. Am I missing something?

I'm not sure the price per point for an extension can be reasonably compared with the price per point for a new purchase.

After all, the price per point for a new purchase permits you to use the points immediately and every year for the rest of the contract. The price per point on an extension gives an interest free loan to Disney for 35 years during which you get absolutely no benefit (unless you sell, perhaps, or you could still lose part of the $15/pt on resale pricing), followed by 15 years usage rights at a distant, future time, when we have no idea what life will bring, whether Disney will still be competitive or interesting or even solvent... it's loaded with intangibles and unknowns.

How can these two scenarios be compared, side by side? The price per point is in dollars in both but the benefit derived from each expenditure is worlds apart, IMO.

 

[DVC92]

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[DVC92]

I'm confused. If adding the extra years to OKW will bring its value from "below $70" to "the $80 range", doesn't that fact alone validate the $15 extension figure?

I guess I just don't get all of the rightous indignation over the extension and related fees. If you aren't going to use the years...don't extend. It's that simple. We all know we bought timeshares with fixed ending dates and it's a given that the contract values will shrink as those ending dates approach.

If it were that simple, there wouldn't be any indignation.

First, everyone did enter into a contract with a fixed ending date that they agreed upon with DVC. Now, DVC is tearing up your contract and unilaterally forcing a new one upon you with the threat of a lien if you don't deed it back to them. What if you are building a new house, and the builder adds a new wing on it without your contractual consent and bills you for it at settlement, how would you feel? Just this action alone should incense anyone.

Second, if you don't extend, you will be required to pay yearly a portion of your annual dues into a reserve fund that is now necessary for an additional 15 years. Also, any monies remaining in the reserve fund will no longer be divided between owners upon termination of OKW in 2042 (currently there is $18 million in it). There may also be special assessments for major upgrades to the Club for those additional 15 years which may not have been required.

Also, if you don't extend, the value of your property may decrease sooner than expected since you will now have to compete with members and DVC selling 2057 contracts. If DVC exercises their ROFR on all 2042 contracts to resell them at the 2057 rate, prospective buyers will stop making offers for 2042 properties since they know it is a waste of their time. We may not be able to resell since their is no ROFR without an offer.

Even if you extend for $15/pt, you are immediately losing money if DVC is only increasing their value by $4/pt. This is losing propositon for eveyone except Disney. This action, even if legal, is in no member's interest 35 years out. In my opinion, Disney now realizes that the original OKW owners had too magical a deal and wants to squeeze a little more out of our pockets.

 

[BobH]

My point is that Disney is choosing an action that devalues the worth of the 2042 contracts a lot sooner than any of us expected. I have never worn rose colored glasses regarding my DVC ownership but I think they might have waited til at least the halfway point of the contract before they started playing these games. Only the resale prices of the 2042 contracts will tell the tale regarding where we all stand. I would have been a lot more supportive of their plan if they had charged the current members the same $4 per point that they are adding to the value of the contracts they are now selling as the previous poster indicated.

 

[Steve@BWV]

DVC92, I am not trying to single you out, only argue the points others have expressed and you happen to have bundled nicely.

If it were that simple, there wouldn't be any indignation.

First, everyone did enter into a contract with a fixed ending date that they agreed upon with DVC. Now, DVC is tearing up your contract and unilaterally forcing a new one upon you with the threat of a lien if you don't deed it back to them. What if you are building a new house, and the builder adds a new wing on it without your contractual consent and bills you for it at settlement, how would you feel? Just this action alone should incense anyone.
.

Not the same. If you do not wish to extend you do not have to. DVC is not forcing you to accept a new end date, only an option to. There is no further funding needed from the current owners.

Second, if you don't extend, you will be required to pay yearly a portion of your annual dues into a reserve fund that is now necessary for an additional 15 years. Also, any monies remaining in the reserve fund will no longer be divided between owners upon termination of OKW in 2042 (currently there is $18 million in it). There may also be special assessments for major upgrades to the Club for those additional 15 years which may not have been required.

This does represent some problems for DVC. They will need to keep dues separate. Those contacts that end in 42 will need to be refunded monies appropriate to the original contract. We are required to return the resort in the same condition we purchased it in. Any money placed in a reserve fund by will need to be refunded (or never taken) in 42. This is a good point I did not think of.

Also, if you don't extend, the value of your property may decrease sooner than expected since you will now have to compete with members and DVC selling 2057 contracts. If DVC exercises their ROFR on all 2042 contracts to resell them at the 2057 rate, prospective buyers will stop making offers for 2042 properties since they know it is a waste of their time. We may not be able to resell since their is no ROFR without an offer.

This is a dynamic free market. OKW competes with all DVC resorts specifically as well as the timeshare industry in general. It is never a static market. Also, one can reasonably argue, the value of a standard OKW contract does not decrease only and extended contract increases. While demand decreases for standard contracts so will supply. These two factors must be taken into consideration. I expect very little loss in value for a non-extended contract. We are getting near the point where the length of the contract will become unattractive. This alone would have begun to drive priced down with respect to the extended resorts.

Even if you extend for $15/pt, you are immediately losing money if DVC is only increasing their value by $4/pt. This is losing propositon for eveyone except Disney. This action, even if legal, is in no member's interest 35 years out. In my opinion, Disney now realizes that the original OKW owners had too magical a deal and wants to squeeze a little more out of our pockets.

I do not believe Disney has placed a $4 value on the extension. Rather they are punishing those who do not wish it when a new contact is purchased. The $92 price is much too high for the remaining 35 years when there are other resorts available for the 50 for a minimal price difference.

Bob argues he will be over 100 when the extended OKW contacts end so he might as well buy SSR. Bob, you will still be over 100. Also, paying $94 for points today includes paying for those points in use 35+ years from now, same as the OKW extension. That is why it is not $15 a point. We are not paying for points every year. If we did the price per point would be a lot higher.

Finally, this is a timeshare. There is no obligation to Disney to maintain a value to members beyond what was in the contract. On the other hand, Disney IS obligated to its shareholders to increase value.

 

[tjkraz]

If they extend and resell it, they will not get the full $15/point back in higher resale prices. If they don't extend, the ROFR floor is likely to drop significantly, devaluing their ownership.

You just contradicted yourself. If the ROFR floor drops significantly, then the disparity between extended and non-extended will certainly be $15.

 

[tjkraz]

First, everyone did enter into a contract with a fixed ending date that they agreed upon with DVC. Now, DVC is tearing up your contract and unilaterally forcing a new one upon you with the threat of a lien if you don't deed it back to them. What if you are building a new house, and the builder adds a new wing on it without your contractual consent and bills you for it at settlement, how would you feel? Just this action alone should incense anyone.

That analogy doesn't even come close to mirroring this situation.

Second, if you don't extend, you will be required to pay yearly a portion of your annual dues into a reserve fund that is now necessary for an additional 15 years. Also, any monies remaining in the reserve fund will no longer be divided between owners upon termination of OKW in 2042 (currently there is $18 million in it). There may also be special assessments for major upgrades to the Club for those additional 15 years which may not have been required.

Do you know any of this definitively or are you simply speculating? What source are you citing that has confirmed any of the above?

Also, if you don't extend, the value of your property may decrease sooner than expected since you will now have to compete with members and DVC selling 2057 contracts. If DVC exercises their ROFR on all 2042 contracts to resell them at the 2057 rate, prospective buyers will stop making offers for 2042 properties since they know it is a waste of their time. We may not be able to resell since their is no ROFR without an offer.

I hope you see the folly of using statements like "value...may decrease sooner than expected" when referring to a timeshare. We aren't exactly talking about a CD or a treasury note here.

Your logic is flawed as well. If there is no offer / ROFR on the older contracts, DVC has no points to sell their 50-year contracts. DVC is not going to allow the marketplace to fall into a mode such that offers on 2042 OKW contracts evaporate. That would hurt them as much as owners.

Even if you extend for $15/pt, you are immediately losing money if DVC is only increasing their value by $4/pt.

That's a specious argument. The only reason DVC is raising its prices by only $4 is because they were vastly overpriced prior to the extension. Exactly who was paying $92 per point to buy 35-year OKW contracts from DVC??? Answer: nobody.

The $96 price point is necessary because it's the same price being offered for 50-year contracts at AKV. DVC can't justify charging more than that right now.

The valid consideration is whether the longer contracts will fetch an additional $15 per point on the resale market. Personally I think it would be foolish to extend solely for speculative reasons. That same money used as an investment vehicle will have a much greater return in the long run.

Bottom line: Extend if you plan to use it (or leave it to someone else to use.) Don't try to turn a timeshare into a profit-making venture.

 

[Lisa P.]

...represent some problems for DVC. They will need to keep dues separate. Those contacts that end in 42 will need to be refunded monies appropriate to the original contract. We are required to return the resort in the same condition we purchased it in. Any money placed in a reserve fund by will need to be refunded (or never taken) in 42.

Why do you think members with expiring contracts would be entitled to a refund of dues at the end of their contracts? Is this something which is defined in the contract? I've never heard of this.

Over the years, this has been a common concern for people who do not like Right-To-Use timeshares. The developer is free to get the resort in tip-top or even upgraded condition at the members' expense in the final years of the RTU contracts and there is significant incentive for them to do so. While the RTU contract is worthless at the end of the deal, the property may become all the more valuable.

 

[Lisa P.]

If they extend and resell it, they will not get the full $15/point back in higher resale prices. If they don't extend, the ROFR floor is likely to drop significantly, devaluing their ownership.

You just contradicted yourself. If the ROFR floor drops significantly, then the disparity between extended and non-extended will certainly be $15.

Not really. If the extension leads to a widening disparity in pricing between 2042 OKW contracts and 2057 OKW contracts, let's say, from a $4 difference to a $10 difference, then both circumstances could be true.

In this example, those who paid $15 more per point to extend would only recoup $10 per point (of that) in the resale. Those who opted out would find their contracts are labeled as the kind to avoid, devaluing their ownership and selling for a couple dollars less per point or needing to market harder and longer in order to sell. What may have sold easily independently may become more difficult to sell without a broker (and their commission of thousands).

 

[DVC92]

Do you know any of this definitively or are you simply speculating? What source are you citing that has confirmed any of the above?

DVC has not made any statements relating to a two-tiered reserve fund for 2042 vs. 2057 owners.

If the Condominium terminated as contractually stated in 2042, the following citations should control:

Chapter 718.117 of the 2007 Florida Statutes controls termination of Condominiums.

Article II, Section 2.4 of The Declaration of Condominium defines Association Property.

Article II, Section 8.4 of The Declaration of Condominium defines each owner's share of the Common Surplus.

However, the Condominium will no longer terminate in 2042. Therefore, the reserve funds will not have to be disbursed in 2042.

 

[DVC92]

Your logic is flawed as well. If there is no offer / ROFR on the older contracts, DVC has no points to sell their 50-year contracts. DVC is not going to allow the marketplace to fall into a mode such that offers on 2042 OKW contracts evaporate. That would hurt them as much as owners.

DVC will want as many 2042 contracts as they can resell for a profit. That's just common sense. The problem is that if they start to use their ROFR rights to purchase all 2042 contracts on the resale market when another buyer makes an offer, such offers for 2042 contracts will dry up since prospective purchasers will know making an offer is a waste of time. If no offers are made, no ROFR opportunity exists for DVC to purchase 2042 contracts. Theoretically, this would destroy the resale market as it currently exists for 2042 contracts. I guess Disney could make direct offers to owners wishing to dispose of their ownership interests. Maybe Disney will be charitable and allow 2042 owners to deed their ownership interest back to Disney for free just to escape future annual assessments (Owners might have to pay Disney $30 for recording the new deed).