Old Key West Helps Direct Sales Rise Slightly in April 2024

[DanCali]

Then why did RIV outperform VGF for 4 to 5 months in 2022? It certainly had restrictions so for those months, people certainly had no issue with them...it also sold pretty well from opening December 2019 until the pandemic, with restrictions...so those people obviosuly were okay overlooking them.

If you have RIV and VGF selling, one at $161 and one at $167, then VGF gets the edge, not simply because it lacked resale restrictions, but because it was VGF, and was about the same price as buying it resale. I'll even go as far to say that if they had restrctions, people would have still bought those points at that price.

I think you just answered your own question about RIV outperforming VGF at some points in 2022 (also in the context of my prior post)

I think that demand is affected not just by the selling price but (maybe more so) by the difference between the resale and direct price. Most people would pay "something extra" to get direct points vs resale and that "something extra" will be greater for Riviera because the Riviera resale point product is highly restricted.

For example, I might be willing to pay an extra $15/pt to get direct VGF points vs VGF resale, and I might be willing to pay an extra $30/pt to get direct Riviera points vs Riviera resale (keeping in mind that VFG resale prices are higher than RIV now, but may not have been that much higher 2-3 years ago).

Is it fair to say that RIV resale prices during those times in 2022 were in the $140s range and VGF in the $150s? If that's the case, it makes the case for a direct buy a much closer call between those two resorts, especially given the restricted RIV resale product.

Unfortunately, reality is catching up with the restrictions and RIV resale in the $110s in 2024 (which is no doubt strongly related to the restrictions) makes the direct product less appealing. And if that trend with resale prices continues the direct product will become even less appealing.

 

[BrianLo]

For example, I might be willing to pay an extra $15/pt to get direct VGF points vs VGF resale, and I might be willing to pay an extra $30/pt to get direct Riviera points vs Riviera resale (keeping in mind that VFG resale prices are higher than RIV now, but may not have been that much higher 2-3 years ago). So if they priced VGF at $220 and RIV at $190 I couldn't care less about either one of them as a direct buy. But if the priced VGF at $170 and RIV at $160, I'd consider buying VGF direct and not Riviera.

I agree with your point, but I’m confused by your conclusion. The existence of resale restrictions are supposed to make direct more valuable indeed. It’s supposed to drive consumers to direct.

Your math is backwards though. A RIV at 160$ pp is actually worth 25$ more than a VGF one at 170$.

I have less context here since we're relatively new owners. But one thing that comes to mind is that these things should be normalized to the size of the owner base.

I suspect a large part of the direct sales are to existing owners adding on. @CastAStone said (post #20) that current Riviera sales are comparable to AKV in 2011. But is that comparison fair? How many new owners do you have since 2011 with new resort sales of AUL, VGF, PVB, and CCV all coming after that? All those new owners are potential add-on buyers. So I would definitely expect the monthly sales volumes of subsequent new resorts to rise substantially vs. 2011 just based on that factor. It's not happening with RIV or VDH.

This is a valid point indeed. But sales volume have been better than VGF-1 was for a window and the first year of Poly sales as well. In fact the first year of RIV in 2019 were significantly, significantly higher than Poly was over 2015. As membership grows so does the resale pool.

 

[DanCali]

I did not say that. I pointed out AKV sold 50K points per month in 2011. Riviera has averaged ~80K points per month YTD.

Fair enough...

But why pick AKV and not BLT as a comp, which opened in 2009 and pretty much old out in about 3 years selling 100K-150K points per month? Riviera is nowhere near that even not adjusting for owner base size...

 

[DonkeyHoTay]

Tbf that has a lot to do with the prices. Would you have purchased OKW direct if it was at $165?

My decision to stay away from Riviera had nothing to do with price. Even if Riviera was $95 per point direct, I would not have bought any points at Riviera. If OKW direct was at $165, I would not have bought them either - I would be the proud owner of a bunch of resale contracts at AKV, BLT and others.

 

[vdangelo239]

Riviera is selling normally for a DVC resort at this phase of its lifecycle. A decent comp in point count is AKV, which averaged just 50K points a month in 2011.

The riviera sales are bad story is just not supported by data, and never has been. In its first year of sales it sold more than CCV had in its first year. Then a pandemic happened. Then VGF 2 went on sale, and VGF sold basically at the same rate as Riviera while they were on sale together, trading which sold more quarter to quarter based on which had better incentives. Is it the best selling resort ever? No. It’s squarely in the middle though.

I think they're quite pleased with Riv being sold through 60/70% of the resort at this stage....they need it to be on sale...imagine if they only had the Cabins at this point and whatever older resort they put on fire sale similar to what they just did w OKW?

I think a similar trend continues here with OKW to continue ROFR - convert as many to 2057 as they can....and continue w similar Riv incentives...because even if Riv incentives get a bit worse - very likely it will still be much cheaper than PVB2 and will have a longer contract period - making it appealing to people at its current rate of sale pace.

 

[DanCali]

Your math is backwards though. A RIV at 160$ pp is actually worth 25$ more than a VGF one at 170$.

My math for that example was in the the context of prevailing resale prices for each of the resorts...

If I'm willing to pay $15 more for VGF direct vs resale prices, and resale prices are $155 and direct price is $170, then direct becomes interesting.

If I'm willing to pay $30 more more RIV direct vs resale, and resale prices are $115 and direct price is $160, then direct is not interesting enough (especially since my personal opinion is that resale prices have not bottomed out).

 

[BrianLo]

I have less context here since we're relatively new owners.

I think this might help you visualize better what your are missing

First 12 months of sales

Resort	Year	Total	Avg	12th month	%
VGF-1	2013	1,185,447	98,787	121,733	123%
Poly	2014	858,535	76,867	76,445	99%
CCV	2017	764,119	63,676	141,452	220%
RIV	2019	1,372,002	114,399	185,000*	167%
VGF-2	2022	895,414	74,617	41,549	55%
VDH	2023	661,127	55,094	20,517	37%

The last column is a summary of what was happening to sales at the 12 month mark, RIV headed into the pandemic. It's mostly to highlight how VGF-2 and VDH look "ok" in terms of their average, but actually were falling off a cliff. Poly would go on to start moving way more sales volume after the first year.

Healthy resorts build in their sales cycle.


I mean the argument isn't even that RIV sales are "fine" - they are actually currently fine if you ignore every single distractor. RIV sales were in fact excellent if you actually want to acknowledge the pandemic and all the sales distractors it has subsequently faced.

 

[CastAStone]

Fair enough...

But why pick AKV and not BLT as a comp, which opened in 2009 and pretty much old out in about 3 years selling 100K-150K points per month? Riviera is nowhere near that even not adjusting for owner base size...

Precisely because it sold out in three years. It never had a year 5.

Look they’re all snowflakes. You can’t compare them perfectly. RIV is selling better than SSR, AKV, AUL, VDH, CFW, and worse than Poly, BLT, VGF, VGC, and CCV*. That doesn’t shout to me “resale restrictions are killing this resort”, it says, to me at least, “this resort isn’t in the Magic Kingdom Resort Area”.

*we don’t have data that I’ve seen for anything before SSR

 

[BrianLo]

My math for that example was in the the context of prevailing resale prices for each of the resorts...

If I'm willing to pay $15 more for VGF direct vs resale prices, and resale prices are $155 and direct price is $170, then direct becomes interesting.

If I'm willing to pay $30 more more RIV direct vs resale, and resale prices are $115 and direct price is $160, then direct is not interesting enough (especially since my personal opinion is that resale prices have not bottomed out).

Ah I see what you mean. But that's an intrinsic issue with the differences in the values of the resort. I do not disagree that VGF was economically quite viable, because its resale is so high.

I think on one end you are saying you think inherently restrictions make a 15$ per point difference on the resale market, which I agree with. But then also undermining yourself and saying it's going to drop the resale prices by some unknown future amount further.

I agree, it makes a difference of 10-15% in the resale price. I think as that factors into direct buyers decisions who are mostly uniformed, it's pretty much negligible.

But we are not arguing how we'd act as informed buyers, we are trying to parse how the market would react. Claiming that the market is being turned off by RIV because of resale restrictions on contracts for a second purchaser I disagree with whole heartedly. In fact I think it actually drives more buyers to direct contracts that before, which is the whole point and the whole reason DVD engages in that strategy still. Which doesn't mean I "Like" restrictions. I just think they are completely overblown as a factor.

 

[DonkeyHoTay]

Was just remembering something my guide said to me during sales process - he told me that Riviera was a tough sell for all the guides due in no small part to the resale restrictions. But, those guides managed to sell almost 72K points in April! Maybe I'm on an island with this opposition to contracts with resale restrictions.

 

[DanCali]

I think this might help you visualize better what your are missing

First 12 months of sales

Resort	Year	Total	Avg	12th month	%
VGF-1	2013	1,185,447	98,787	121,733	123%
Poly	2014	858,535	76,867	76,445	99%
CCV	2017	764,119	63,676	141,452	220%
RIV	2019	1,372,002	114,399	185,000*	167%
VGF-2	2022	895,414	74,617	41,549	55%
VDH	2023	661,127	55,094	20,517	37%

The last column is a summary of what was happening to sales at the 12 month mark, RIV headed into the pandemic. It's mostly to highly how VGF-2 and VDH look "ok" in terms of their average, but actually were falling off a cliff. Poly would go on to start moving way more sales volume after the first year.

Healthy resorts build in their sales cycle.


I mean the argument isn't even that RIV sales are "fine" - they are actually currently fine if you ignore every single distractor. RIV sales were in fact excellent if you actually want to acknowledge the pandemic and all the sales distractors it has subsequently faced.

Yes, but RIV was the first resort with resale restrictions. Arguably, most DVC owners didn't initially know or think about how that would impact resale prices down the road and there wasn't really an active resale market to give much indication in the first 12 months.

Now that we're getting a better idea that those resale restrictions indeed do decimate resale values, a good test would be how the Poly Tower would sell it was was not in the same association and had the resale restrictions. I hope that test doesn't materialize because I may actually buy it direct if it's unrestricted and the incentives are good!

 

[maui22]

I think the sale went faster than expected...but still, I think they realized that at the rate it was going before they brought back the MB program and incentives, its sel out could be too close to PVB tower sales, not to mention the cabin sales, and wanted to get it out of "active" sales" in time.

If the promotion was driven by selling out VGF before PVB sales start, they could have done so while making more money. It wasn't a case of the summer promotional incentives or nothing. They could have done so with smaller incentives.

All I'm trying to point out is there were surely more factors than just PVB tower.

For example, CFW was the shiny new object that came out not long after VGF sold out. Might Disney have wanted to sell out VGF to start CFW sales? Did they even know what the CFW dues were going to be prior to the VGF summer sale?

 

[BrianLo]

My decision to stay away from Riviera had nothing to do with price. Even if Riviera was $95 per point direct, I would not have bought any points at Riviera. If OKW direct was at $165, I would not have bought them either - I would be the proud owner of a bunch of resale contracts at AKV, BLT and others.

When we are trying to parse out a particular topic, layering on your personal opinions about the resorts quality are not particularly helpful.

95$ per point at RIV would be obscene. You can easily turn around and resale them for higher. Refusing them at that price has nothing to do with economics and everything to do with just not liking the resort. Which is fine, but it is bogging down the conversation with opinions that are not marked as such.

Yes, but RIV was the first resort with resale restrictions. Arguably, most DVC owners didn't initially know or think about how that would impact resale prices down the road and there wasn't really an active resale market to give much indication in the first 12 months.

Now that we're getting a better idea that those resale restrictions indeed do decimate resale values, a good test would be how the Poly Tower would sell it was was not in the same association and had the resale restrictions. I hope that test doesn't materialize because I may actually buy it direct if it's unrestricted and the incentives are good!

Honestly... you guys have just clearly made up your minds and are trying to argue your logic backwards to fit. The vast, vast majority of purchasers are not owners. The market hasn't really magically become more informed. Direct is never really a good deal. Resale restrictions impart some actual value in a direct contract over a resale one beyond the Blue Card Benefits.

This is getting cyclical - you are refusing to acknowledge a single piece of data presented to you.

 

[Brian Noble]

they’re all snowflakes

This.

There are many factors that contribute to how well one resort sells vs. another: the presence (or absence) of home resort restrictions, price, dues, point charts, theme, location, room quality, and (probably most importantly) what the guides happen to be pushing at the time.

And those are all factors that are time independent. For those on sale at different times, throw in variance in the economic climate, the ebbs and flows of tourism to Orlando, and the changes in how resales have been treated.

My opinion is that of all of those factors, the presence (or absence) of home resort restrictions is pretty far down the list and nearly negligible as a negative factor. I have lots of reasons for that, but they are better explained elsewhere. Heck, it's even possible that it is a marginally positive factor: If you really want points with that home resort, and you want to use your points directly at other DVC resorts once in a while, there is only one place to buy those points.

But, that's just my opinion. There are lots of opinions about whether or not home resort restrictions "really matter"---probably as many opinions as there are DIS-DVC posters. Furthermore, it's not hard to find data that appears to support whatever opinion someone might hold. That's probably evidence that it is not particularly material and that other factors matter more, but what do I know?*

At the end of the day, there is only one opinion that matters, and that's the consensus opinion of the various DVC executives responsible for the P&L for the business. So far, the evidence suggests that said opinion is, at worst: "Home resort restrictions are fine, actually." Why? Because (a) each new association from RIV forward has them and (b) those associations have not gone on a fire sale.

--------------
*: As it happens, I know a little something about forming a "conclusion" first and then finding "evidence" to support it after, because it's one of the few ways a PhD student can convince me to give them a failing grade on their qualifying exam. As @BrianLo put it:

you guys have just clearly made up your minds and are trying to argue your logic backwards to fit.

 

[DonkeyHoTay]

When we are trying to parse out a particular topic, layering on your personal opinions about the resorts quality are not particularly helpful.

LOL! You must be fun at parties. I didn't offer any personal opinions about the quality of Riviera as a resort. I said I had a problem with resale restrictions. On an unrelated note, I will be staying at Riviera regularly - I like the place!

95$ per point at RIV would be obscene. You can easily turn around and resale them for higher. Refusing them at that price has nothing to do with economics and everything to do with just not liking the resort. Which is fine, but it is bogging down the conversation with opinions that are not marked as such.

LOL, I guess you're just gonna have to deal with conversations that get bogged down? My refusal at $95 is about the resale restrictions which I just don't want to own. I feel the same way about VDH and CFW - resale restrictions equals no sale for me, and I have been an avid cash guest of the cabins at Fort Wilderness for almost two decades.... looking forward to using points instead.

 

[Brian Noble]

(b) those associations have not gone on a fire sale.

And, thinking about it, even this is scant-at-best evidence, because of all of the other time-dependent factors. Any sharp discounting is much more likely to be due to changes in economic climate or Orlando tourism.

But, at the end of the day, we here at DIS resurrect this debate after every single monthly sales data report. However, month after month, the Powers That Be continue not to abandon the home-resort restriction strategy.

 

[DanCali]

I think on one end you are saying you think inherently restrictions make a 15$ per point difference on the resale market, which I agree with. But then also undermining yourself and saying it's going to drop the resale prices by some unknown future amount further.

I'm not really saying the resale restrictions make a $15 point difference on the resale market in terms of resale prices. I actually think all of these restricted resorts will eventually be at sub-$100 because I've seen what these restrictions do in other timeshare systems over time. Just give it 6-8 years to have a steady state resale market...

What I said is:
I'd pay an extra $15 more for VGF direct vs VGF resale (same for pretty much an O14 resort I'd want to own).
I'd pay an extra $30 more for RIV direct vs RIV resale, because the resale product is more restricted.
You can also interpret those numbers more as "how much would you pay DVC today to turn your resale VGF or RIV contract into a 'direct' product in the computer system?"

How much I'm actually willing to pay for a direct contract is a moving target based on those respective resale prices, which are set by supply and demand.

At current RIV resale prices ($115) I might pull the trigger at $145 direct RIV. But if RIV resale prices fall to $80 in 3 years, I'd be willing to pay just $110 for the direct product at that point, while still maybe willing to pay $170 for a direct VGF contract if resale prices stayed where they are today (say ~$155). Of course if I do think RIV resale prices will continue to drop, I'd also take that into account and maybe not quite shell out $145 today for the direct product. But it's not like it's being offered at that price anyway...

 

[BrianLo]

LOL! You must be fun at parties. I didn't offer any personal opinions about the quality of Riviera as a resort. I said I had a problem with resale restrictions.

LOL, I guess you're just gonna have to deal with conversations that get bogged down? My refusal at $95 is about the resale restrictions which I just don't want to own. I feel the same way about VDH and CFW - resale restrictions equals no sale for me, and I have been an avid cash guest of the cabins at Fort Wilderness for almost two decades.... looking forward to using points instead.

I'm confused. Is it a moral stance then? Because your are not arguing economic logic.

Direct RIV points aren't restricted. If you are guaranteed to be able to resale them for higher than what you bought them for, what is the hold up?

The only logical hold up is fear of not being able to recuperate your value in the resale market. Or a quandary with the resort. Or a misplaced belief that somehow this will force DVD's hand to undo the consumer unfriendly policy (a moral stance).

 

[BrianLo]

I'm not really saying the resale restrictions make a $15 point difference on the resale market in terms of resale prices. I actually think all of these restricted resorts will eventually be at sub-$100 because I've seen what these restrictions do in other timeshare systems over time. Just give it 6-8 years to have a steady state resale market...

What I said is:
I'd pay an extra $15 more for VGF direct vs VGF resale.
I'd pay an extra $30 more for RIV direct vs RIV resale, because the resale product is more restricted.
You can also interpret those numbers more as "how much would you pay DVC today to turn your resale VGF or RIV contract into a direct product in the computer system?"

How much I'm actually willing to pay for a direct product is a moving target based on those respective resale prices.

At current RIV resale prices ($115) I might pull the trigger at $145 direct RIV. But if RIV resale prices fall to $80 in 3 years, I'd be willing to pay just $110 for the direct product at that point, while still maybe willing to pay $170 for a direct VGF contract if resale prices stayed where they are today (say ~$155). Of course if I do think RIV resale prices will drop, I'd also take that into account and maybe not quite shell out $145 today for the direct product.

That makes sense, we just disagree on the end point of the unknowable future.

I think the resale value is bound by what you can book at the 11 month window first and foremost and subsequently what you can book at the 7 month window. The resale floor on RIV has far more to do with RIV being inevitably a semi-desirable resort long term. I just don't have as strong as a belief as you do that the resale values are dropping as deeply as you think they will.

Said another way, I think true restrictions on VGC would impact its resale value by approximately 0%. RIV the 15$pp that you allude to or 10-15% and then a resort like SSR maybe even as deeply as 30%. I think the restriction policy will really hurt an 'undesirable'. Which VDH and RIV are not particularly.

 

[DonkeyHoTay]

I'm confused. Is it a moral stance then? Because your are not arguing economic logic.

Direct RIV points aren't restricted. If you are guaranteed to be able to resale them for higher than what you bought them for, what is the hold up?

The only logical hold up is fear of not being able to recuperate your value in the resale market. Or a quandary with the resort. Or a misplaced belief that somehow this will force DVD's hand to undo the consumer unfriendly policy (a moral stance).

My issue is with the value of Riviera contracts on the resale market. Today, the average resale is in the low $100s pp. Even if I could buy them direct at an absurd price of $95 pp, I would not want to hold a contract whose future value is tainted by resale restrictions, rendering future resale values even more compromised.