Old Key West Helps Direct Sales Rise Slightly in April 2024

[BrianLo]

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.

Ok got it. So we just don't have the same outlook on the end point of resale prices.

So if I could go through time and guarantee you the RIV resale floor was actually 130$ 7-10 years from now and the OKW-E was at 110$ under a minimally inflated future, you'd buy RIV for 95$ preferentially over OKW-E at 115.

 

[DonkeyHoTay]

Ok got it. So we just don't have the same outlook on the end point of resale prices.

Particularly for contracts with resale restrictions. My outlook for them is dire, and I think it will take a few more years for the resale market value to reflect it.

So if I could go through time and guarantee you the RIV resale floor was actually 130$ 7-10 years from now and the OKW-E was at 110$ under a minimally inflated future, you'd buy RIV for 95$ preferentially over OKW-E at 115.

With a guarantee like that, I would have bought 2400 Riviera direct points instead of OKW. Even the guide selling me OKW acknowledged the resale restrictions were a mitigating factor at time of Riviera sales pitch - can only assume other qualitative factors around owning Riviera were driving the 72k points sold in April. I just don't think the future is bright for Riviera resale value - but the 72K new Riviera point owners in April clearly have different views, or don't care about resale value.

 

[BrianLo]

With a guarantee like that, I would have bought 2400 Riviera direct points instead of OKW.

Ok perfect, that makes way more sense to me. Didn't mean to come off snappy, it just wasn't adding up what factor differences we were arguing over, that's why it seemed like you just hated the resort.

 

[DonkeyHoTay]

Ok perfect, that makes way more sense to me. Didn't mean to come off snappy, it just wasn't adding up what factor differences we were arguing over, that's why it seemed like you just hated the resort.

I think Riviera is beautiful! Really looking forward to staying there and trying out that gondola thing.

But... I can't own any contracts there. My brain cannot get over the resale restrictions. Obviously 72K point owners have a different view on ownership. Have to wonder if I'm in the minority on this resale restrictions thing....

 

[DonkeyHoTay]

... 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..

Yes.

 

[Brian Noble]

I've seen what these restrictions do in other timeshare systems over time

Which one(s) do you have in mind?

I ask because I cannot think of another timeshare system with a mix of home-restricted and non-home-restricted resorts, in which the restricted resorts have fundamentally lower value vs. the non-restricted ones.

I can think of systems (HVC neé Diamond) where resales are both home-resort(-group)-restricted and basically worthless. I can also think of systems (Marriott) where deeded weeks sold resale have to be re-qualified with a (non-trivial) purchase to be brought back into the point-based club, but are not worthless. There are also plenty of examples in which resales are not home-resort-restricted but are essentially worthless.

From what I can see, timeshare resale values being driven to zero have a lot more to do with supply/demand market size imbalances and/or a negative value on a rental proceeds basis. Wyndham is a good example of the former. There are a LOT of Wyndham owners, some fraction of whom are looking to sell, but there is not enough organic demand to support (much) in the way of a price floor. That's despite the fact that most of the ownerships have a positive value when considering annual fees vs. potential rental proceeds (equivalently, costs). Any number of older, independent resorts are examples of the latter. If you can rent the stay for less than it costs to own there, there is no rational reason to buy. There are even some Marriott weeks in this camp. For example, some of the off-season Orlando-area weeks are underwater, and have value only as traders, if that.

I predict that the floor on RIV (a) is going to be determined by its rental proceeds value, and (b) will not go to zero or even get close.

 

[DanCali]

Which one(s) do you have in mind?

I ask because I cannot think of another timeshare system with a mix of home-restricted and non-home-restricted resorts, in which the restricted resorts have fundamentally lower value vs. the non-restricted ones.

The best comparison I have is the Vistana (Westin/Sheraton) timeshares with the "mandatory" vs "voluntary" resorts.

(TUG FAQ here: https://tugbbs.com/forums/threads/s...-to-timesharing-or-starwood-start-here.63224/)

The "mandatory" ones are a handful of resorts where the points transfer on resale and can be used similar to the O14. Resale buyers can use those points to exchange to any other resort in the system, including voluntary ones (would be equivalent to O14 resale owners also being able to also exchange into RIV and VDH)

The "voluntary" resorts are more similar RIV and VDH where owners can only use their ownership at that particular resort and trade through II. As a deeded week though, they can only book 7 nights and check in on Fri, Sat or Sun only (although that part later changed with "flex" points products that are also voluntary).

A lot of the Vistana and Marriott timeshares are now less desirable due to the exorbitant MF increases over the past 2 years (~30%) and the resale market is now more flooded with listings than usual impacting all resale prices. But historically, and probably today too, you could have made some of the following comparisons for timeshares in the same season and similar locations:

- Sheraton Vistana Villages (first 2 "mandatory" phases) in Orlando has much higher resale prices than Sheraton Vistana Villages (the later "voluntary" phases) and Sheraton Vistana Resort (also "voluntary") in Orlando.

- Westin Kaanapali and Westin Kaanapali North ("mandatory") on Maui have much higher resale prices than Westin Princeville ("voluntary") on Kauai.

- Westin Kierland Villas ("mandatory") in the AZ desert has much higher resale prices than Westin Mission Hills and Westin Desert Willow ("voluntary") in the CA desert.

 

[DanCali]

I predict that the floor on RIV (a) is going to be determined by its rental proceeds value, and (b) will not go to zero or even get close.

I agree with you on that. Even if restricted, it has value in using at at ~$9 in dues when rental values are $18-$22 and cash rental values even higher. But the value of the option to use it to trade to other Orlando, CA or HI resorts (and Vero and HHI) is missing, and that option also has quite a bit of value.

It won't go to zero, but it wouldn't surprise me to see it sell at half the resale value of PVB and VGF, despite the lengthier contract. You'd have to really love RIV (or get a very attractive price) to buy it resale when you can buy VGF or PVB resale and trade to a bunch of other nice resorts/locations over the next few decades. Yes, some of those exchange options go away in 2042 - but you can raise a child from birth to college in that time...

 

[tidefan]

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.

In terms of OKW vs. RIV, you are also talking 13 year difference in contract price...and it is a different resort. The point being that restrictions may matter to some, and I am sure have played some role in the sales, but VGF did not sell like hot cakes until DVD made it pretty much the same price as resale....had it only been about restrctions vs not, then RIV would never had sold more points than it ever.

It will be the same with PVB tower....I think the first few months will be large numbers, and then it will settle in if it is priced higher than RIV....and my guess is the same as with VGF, PVB tower would have sold not much differently with restrictions, because, again, its Poly.

Wait, I thought VGF went on sale for $145/pt in May 2013 and sold out by April 2015

 

[Sandisw]

Wait, I thought VGF went on sale for $145/pt in May 2013 and sold out by April 2015

We are talking about the resumption of sales in 2022 when it sold at the same time as RIV. Not its initial sales data.

 

[tidefan]

We are talking about the resumption of sales in 2022 when it sold at the same time as RIV. Not its initial sales data.

Well aware, hence the at the end of the sentence.

I see that my attempt at sarcasm was futile...

 

[Sandisw]

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?

Obviously none of us know why they do what they do, but as I said, I think the numbers took them off guard and didn’t expect it to sell it that quickly…they may have wanted it to be sold out closer to the beginning of 2024, it went quicker.

All we know for sure is they chose to make VGF last year the least expensive option for active resorts, which tells me that is the resort they wanted to push to get it to sell..

It’s the same right now with CFW….its sales are bad, and yet, they are not heavily discounted….

 

[Nabas]

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

And you could buy AKV resale in 2011 for $50 per point!

2009 to 2012 were a terrible time for DVC.

 

[Brian Noble]

The best comparison I have is the Vistana (Westin/Sheraton) timeshares with the "mandatory" vs "voluntary" resorts.

That's a good example. I haven't followed the Westin market that closely, but I was under the impression that the differences were not that large on the three Hawaii resorts. The Voluntary Orlando resorts are close to zero, but that is at least part to do with Orlando, where the Mandatory resort has some value by virtue of its ability to escape Orlando. RIV doesn't have that same problem, but the Cabins might. I haven't done the math yet, but I don't know if the high dues are compensated by the low point chart or not.

This is also a good moment to mention that I never consider resale value when buying a timeshare. Instead, I ask what's the break-even time considering only the use of that timeshare, assuming a zero salvage value. After that, salvage is found money--and if it is many years in the future, the NPV of that found money is a lot lower than it appears at first blush.

 

[mort1331]

And you could buy AKV resale in 2011 for $50 per point!

2009 to 2012 were a terrible time for DVC.

Maybe terrible for DVC,,,but not us buyers. Especially us Canucks when the dollar was at par then too...

 

[maui22]

I wasn't sure where to post the information. I believe DVD just declared units 16A-E into Riviera's inventory.

I sent a message to DVCNews so they can review the documents.

https://www.disboards.com/threads/d...nto-the-riviera-resort.3947301/#post-65526928

 

[HyperspaceMountainPilot]

I wasn't sure where to post the information. I believe DVD just declared units 16A-E into Riviera's inventory.

I sent a message to DVCNews so they can review the documents.

https://www.disboards.com/threads/d...nto-the-riviera-resort.3947301/#post-65526928

Would they immediately be added to DVC inventory? How long is that delay? When do I start stalking the site for 7m availability?

 

[CastAStone]

Would they immediately be added to DVC inventory? How long is that delay? When do I start stalking the site for 7m availability?

It happens all at once. May the force be with you/odds be ever in your favor

 

[HyperspaceMountainPilot]

It happens all at once. May the force be with you/odds be ever in your favor

If it happened the availability for fall got snapped up pretty fast!

 

[MerlinandtheMouse]

I wasn't sure where to post the information. I believe DVD just declared units 16A-E into Riviera's inventory.

I sent a message to DVCNews so they can review the documents.

https://www.disboards.com/threads/d...nto-the-riviera-resort.3947301/#post-65526928

Wow didn’t they just declare a significant chunk of inventory a few months ago? Like a good amount more than what was actually sold? I wonder if that means they’ve had a really good May