Question about ROFR

[rachaelg]

I understand that not a single offer was taken at ROFR last month by Disney, but since I'm pretty new to all of this, can someone tell me a little more about how Disney determines which contracts they are going to buy back? I understand that they buy up contracts that are priced too low. Do they take number of points into account? Like, would they be more likely to buy up a contract for 50 points priced at $100 per point (just an arbitrary scenario) vs. a contract at that same resort for 200 points priced at $100 per point?

 

[JETSDAD]

I understand that not a single offer was taken at ROFR last month by Disney, but since I'm pretty new to all of this, can someone tell me a little more about how Disney determines which contracts they are going to buy back? I understand that they buy up contracts that are priced too low. Do they take number of points into account? Like, would they be more likely to buy up a contract for 50 points priced at $100 per point (just an arbitrary scenario) vs. a contract at that same resort for 200 points priced at $100 per point?

Nobody really knows. They buy what they have buyers for and can make money on but the process involved in their decision making is a mystery.

We also don't know if no contracts were taken, just that one broker has reported that they didn't have any taken (likely a good sign that contracts aren't being bought back but not a guarantee that everything willake it through).

 

[hlhlaw07]

There is a reason that “drunk monkey” is used very often when referring to process of ROFR. There is no rhyme or reason to ROFR. Only Disney knows, and they aren’t talking.
One day you could see an overpriced contract get taken, and the same day you will see one priced $10/pt lower pass ROFR. It’s a drunk monkey that makes the decision.

 

[Sandisw]

The information out there that has been posted about ROFR is from that one brokers sales. We don’t know for sure if there were none taken from anywhere else,

However, no one knows for sure the criteria, but lots of speculations, I definitely think more is going through now and lower prices won’t trigger it like it did just a month ago, My BWV contract that I sold just passed at 115.50 which was lower than what we have seen,

 

[gharter]

As noted, nobody knows the full criteria of how they decide what contracts to take under ROFR. And Disney will never release their criteria.
My best guess is 2 fold.
1 - a contract that is selling too cheap most likely will get taken as Disney can make easy money off that contract (this is assuming Disney has the money to do this. This may explain why they took no contracts last month).
2 - Demand for direct purchases for a resort. When they have more direct purchase demand, more contracts are likely to be taken.

 

[chunks]

It’s all about the money. Can Disney make money by taking it back. In this environment, they likely don’t have many direct buyers and thus won’t buyback.

 

[ColonialMouse]

There are two ways WDW can make money here. One is to buy the contract and sell it to someone for more. The other is to let the contract sell and have yet another person locked into coming to WDW on a regular basis.

If they can ROFR and then immediately sell points direct, obviously they would do that; it's free money. While I think they could make money by ROFRing any lowball contracts now and reselling them in a year or two, I suspect they are expecting low attendance and a slower market for more timeshares. So they would have unused points for a couple of years. So rather than holding onto timeshare points until they can sell them for a small profit, I think they'd rather increase their attendance by letting them sell for low prices and then making money on the tickets etc.

(Like everyone else, I'm just making a random guess. Just thinking about what would make WDW as a whole the most money.)

There's another possible option here that they would start ROFRing lowball contracts in order to shrink the pool and deal with the point surplus, especially if the closure continues through summer. I really can't see them doing that, as it shrinks attendance. I can think of all sorts of things they might do first from stretching banking rules to relaxing booking on Disney Collection.

Bruce

 

[Lumpy1106]

It’s all about the money. Can Disney make money by taking it back. In this environment, they likely don’t have many direct buyers and thus won’t buyback.

DIrect sales offices are closed. If they bought it back right now they'd have to hold on to it until the offices open again - at least.

Do they take number of points into account? Like, would they be more likely to buy up a contract for 50 points priced at $100 per point (just an arbitrary scenario) vs. a contract at that same resort for 200 points priced at $100 per point?

The smaller contract will sell for more - and be more likely to be bought back. Reason being, people will buy a contract thinking they need a certain # of points, then the realize it's not quite enough. If you buy direct, you can name the size contract you want (remember that you need 100 direct points, and combination, to get the direct benefits). If you buy resale, it may be a while before you see a small contract that matches your resort/UY, etc. My speculation; Disney knows this and they'd rather these smaller contracts weren't floating around on the resale market. Otherwise, why would they care? They can sell you whatever # of points you want in any combination, change the UY, etc. a 200 point contract is the same as 2 100 point contracts to them.

On the flip side, you'd rather have two small contracts than one large one to give yourself flexibility. Today you might have 2 kids and want at least a 1br. As those kids grow and move on you might only want a studio. If you have one large contract you'd have to sell the whole thing. Two small contracts - no problem, sell one, keep what you want. That small contract will sell at a premium too. You will often times see families buy separate equal contracts that they will use and then give to their kids as they move on too. You can't do that with one large contract, even if you buy it direct.