Restrictions – how does it play out in the long run?

[Sally524]

Disney of course wants you to buy direct rather than resale to get the maximum sales. First it was “benefits” that one could only get with a blue card. The restrictions about where you could use your points is the latest method to increase direct sales. But will there be more direct sales due to this restriction in the long run?

If every buyer says I’m only going to do direct because I don’t want the restrictions and I want the benefits, what happens to resales? It seems logical that resale prices will go down. If resale prices go down more people will consider the resales worth the restrictions or lack of benefits. So, if someone purchasing today who was going to do a resale decides he wants direct to get the lack of restrictions and benefits, someone down the line who was going to buy direct will switch to resale because the price is so much better.

Over time will these restrictions really change the number of direct and resale purchases?

 

[Sandisw]

There is always going to be a resale market and a direct market. There will be buyers who find a current resort that work well for them and trading doesn't matter...so they won't care what happens. Assuming restrictions stay, it's going to be harder and harder to choose resale if one wants to have flexibility and stay lots of places.

DVD's goal is to keep their market healthy regardless of those who go resale and at some point, when the options for resale owners is much smaller, and only the less popular resorts become the bulk of what is there for trades, the savings of resale may simply not be worth it.

Right now, you have RIV and VDH...many resale owners might be fine being left out of those...but, by the end of 2024, there is a possibility it will be FW cabins and Poly tower as well. In 2042, the popular resorts of BWV, BCV, and BRV, are gone and potentially coming back restricted as well.

My concern would be that when those 2042 are gone, and the only near park resorts left for resale buyers are VGF, Poly, BLT and CCV, trading in to those will be harder for owners of places like SSR, OKW, AUL and AKV.

So, do I think they will harm direct sales in the long run? No, I don't....but I also think the resale market will be there for those who don't care about staying anywhere but their home resort and that will work well for them to save money.

To me, its like a value and deluxe resort...each has its pros/cons and some people are very happy with staying at the value resorts and locations and saving the money and others want what deluxe has to offer...both have their niche and I think that is what we will see with resale and direct DVC.

 

[starry_solo]

It depends.

 

[Dotluvsdisney]

It will be interesting to see! I love WL and PVB so very excited to have my home booking advantage there. As a resale buyer down the road, I think those contracts will be more appealing than a one resort only.

 

[Cfabar1]

I think there are so many unknowns about all of this. I think Sandisw makes a lot of really great points. Here are a few more that cross my mind:

- As resale restrictions increase, all resale values will likely not be valued equally - and we will see an even bigger disparity between resort resale values. For example, I would imagine Bay lake Tower resale restrictions to not be viewed that negatively by a buyer. Okay, well I can only stay at THIS resort, but it is on the monorail and steps away from the Magic Kingdom. It will be limiting, but that's okay. SSR, which is frankly largely sold on the premise or promise of being able to "trade up" to another resort, those resale contracts are likely to be worth even less.

- I think OKW after 2042 is a major open question. In so many ways. Does DVC think they can resell the huge amount of rooms that will be coming offline easily? What about SSR? AKL? The new DVC product has been frankly more in the vein of BW and BC - choice prime locations that are very easy to get to one or more parks without having to get on a bus.

- To that point, all the 2042 resorts coming offline at once will be a huge thing to work through. Nobody knows what will happen, but my goodness that is going to be a doozie, and I think that's why they tried to get ahead of it by doing the OKW extension, which was rife with challenges.

 

[Epcot Forever Forever]

Disney of course wants you to buy direct rather than resale to get the maximum sales. First it was “benefits” that one could only get with a blue card. The restrictions about where you could use your points is the latest method to increase direct sales. But will there be more direct sales due to this restriction in the long run?

If every buyer says I’m only going to do direct because I don’t want the restrictions and I want the benefits, what happens to resales? It seems logical that resale prices will go down. If resale prices go down more people will consider the resales worth the restrictions or lack of benefits. So, if someone purchasing today who was going to do a resale decides he wants direct to get the lack of restrictions and benefits, someone down the line who was going to buy direct will switch to resale because the price is so much better.

Over time will these restrictions really change the number of direct and resale purchases?

It’s an interesting thought exercise, because the added restrictions shouldn’t change the number of people looking to sell their contracts, and at the end of the day, either the number of buyers will equal the number of sellers at some price point, and Disney will have not changed the number of resale buyers at all, or the price will go to zero, kneecapping one of the most distinguishing characteristics of the product.

I hadn’t thought about it like that. But yes, it does in many ways seem entirely counterproductive.

 

[Royal Consort]

My prediction is that the psychology surrounding DVC will change. 'Buy where you want to stay' is a mantra that will become stronger. 'Member of one, member of all' will have less potency over time especially near the expiry of 2042s.

You see this happening with BCV, VGC, etc. People own there to stay continually. Therefore, resale buyers will a) pick their favourite resort to purchase and be happy only staying there or b) invest in several smaller resale contracts at different top resorts to alternate. Option B will still likely save you money over buying direct and somewhat circumvent the restrictions even though you aren't accessing the whole portfolio.

Will resale prices reduce substantially because of restrictions? I used to think they'd have to but now I question whether the existence within Walt Disney World will keep resale prices stable. Ultimately I think it's competitive price and perks that will drive people to direct. If the delta is significant, people will just buy smaller contracts resale to bank/borrow.

 

[Mikey15]

What’s interesting about this question, to me anyway, is Disney can already “create” new direct, non-restricted points for old resorts by utilizing their ROFR lever. If the restrictions hit a wall where low resale value is hampering direct sales, they can ROFR the low prices, sell them “direct” for a profit, and in doing so make sure the bottom never completely falls out of resale.

Overall economic conditions will continue to impact overall pricing levels, but the mechanics of the two markets of direct and resale can be managed & balanced by DVD to a large degree regardless of external forces.

Of course, the restrictions as designed for Riv and potentially future resorts are pretty sticky, and very much could result in a siloing of DVC properties, ones that don’t exchange easily to others, more like old school timeshares than the exchangeable points models that have actually grown more popular since DVC grew. As someone who’s more used to non-Disney timeshares than DVC, it seems like a step backwards in a way. But buy where you want to stay has always been the mantra for good reason. Resale SSR points have been the great SAP deal for a long time especially with their longevity, but there’ll be a good 20 years where they’ll likely have fewer options to sleep around at… especially if resale owners of those tradeable resorts have fewer options to trade out.

 

[Epcot Forever Forever]

they can ROFR the low prices, sell them “direct” for a profit, and in doing so make sure the bottom never completely falls out of resale

They can do that to a point. If they’re having trouble selling their own points, however, ROFRing more just gives them more points they can’t sell. And at a certain point if things were to ever turn south enough with the economy, no amount of ROFR will hold prices. Last 2 recessions (2020, late 2000s) Disney just stopped ROFRing anything at all. Presumably they were getting a deluge of points from foreclosures.

 

[Mikey15]

They can do that to a point. If they’re having trouble selling their own points, however, ROFRing more just gives them more points they can’t sell. And at a certain point if things were to ever turn south enough with the economy, no amount of ROFR will hold prices. Last 2 recessions (2020, late 2000s) Disney just stopped ROFRing anything at all. Presumably they were getting a deluge of points from foreclosures.

Yeah, I tried to point out I don’t think they can control market equilibrium pricing (that’s more macro factors) but they can pull enough levers to keep DVC points from being worthless… like my other timeshare weeks technically are. Like the foreclosure example, people sell those for $1 plus transfer cost just to get out of the dues obligation… even when things aren’t in recession.

Disney can’t ROFR every SSR contract that people have sold under $100pp in the last year to cut obligations in an inflationary environment, but they can accumulate enough to offer customers a “deal” for them like right now direct where their margin is something like 40-50%.

 

[CVG]

I'll only be going 4 or 5 times so the 10% discount card and lack of access to "exclusive" resorts is no issue for me. Even if it was then I'd just rent a stay.

 

[kristenrice]

I guess if you truly "buy where you want to stay", and resale prices are 40-50% less than direct, than even with restrictions, you can own at multiple resorts and still come out almost even without buying direct.

AKV resale, 200 points @ $125/pt = $25,000 + RIV resale, 250 points @ $137/point = $34,250 $59,250 Total
In this scenario, you would own 450 points and you would have 200 points to use at the O14 resorts and another 250 to use at Riviera.

Yes, it is true that you would be blocked from the VDH and all future resorts, as well as member benefits, so you could consider this "hybrid" option...

AKV resale, 200 points @ $125/pt = $25,000 + GFV direct, 250 points @ $217/point with incentives = $47,495 which would bring the total to $72,495...an extra $13,245. So, in this case, you would have to decide if the extra $13K is worth it to have 1) Access to the VDH and any future resorts, and 2) Access to Member Benefits. (*I used GFV as an example because it is cheaper and buying direct would give access to all of the resorts, including RIV)

Every person and every situation is different. I have a big issue with FOMO, but I don't believe it is "$13K big". I would have a very difficult time rationalizing the additional expense for something that is not tangible to me.

 

[bakerworld]

I think I read on this forum that the average DVC membership is 10 years. 10 years of vacations puts resale at the front of the bus. Personally, I am pushing for owning 20 years but recently it has occurred to us that we'll be maxed at 15. We're getting older and our knees aren't gonna take much more walking. I'm thinking in 3 years we'll be having a fire sale. LOL

We bought direct and our reality is direct is easy and immediate access to point use. No waiting. No uncertainty. "We have a need, a need for speed." We were willing to pay to be at the front of the DVC LL.

 

[thanxfornoticin]

I think I read on this forum that the average DVC membership is 10 years. 10 years of vacations puts resale at the front of the bus. Personally, I am pushing for owning 20 years but recently it has occurred to us that we'll be maxed at 15. We're getting older and our knees aren't gonna take much more walking. I'm thinking in 3 years we'll be having a fire sale. LOL

We bought direct and our reality is direct is easy and immediate access to point use. No waiting. No uncertainty. "We have a need, a need for speed." We were willing to pay to be at the front of the DVC LL.

I've read people talking about this before, and it's an interesting situation from our perspective. I guess when we bought (and then bought some more), we never did it with thoughts about selling it down the line. In some ways, our situation is easier, because our age is such that the 2042 expirations we bought originally coincide nicely with an age where it might be tougher to enjoy! But when we bought in the mid-90s, the idea of resale just didn't really exist. It's become quite the business, though!

Don't forget, Disney scooters might get you another 5 years of enjoyment!!

 

[Nursemanit]

I prefer a free market - it makes the contracts price reflect the market’s perceived value.

Excessive use of ROFR will eventually cause a market crash since it would create an artificial bubble.

I did not buy expecting profits from a sale - I never would have bought RR if resale gain was my objective. If my prediction is correct the resale value will stay at its current level since there is no other option for easy access to Epcot/DS.

If for example Disney shocked us and said Yacht Club will be converted to DVC - that will eventually cap RR resale value once the YC resort is sold out since resale YC would be more desirable than resale RR.

 

[Stargazer65]

It depends.

You are really going out on a limb with that bold prediction!

 

[Epcot Forever Forever]

have a big issue with FOMO, but I don't believe it is "$13K big". I would have a very difficult time rationalizing the additional expense for something that is not tangible to me.

Yep. I just feel like if I ever need to stay at some future resort I can pay cash or rent points and still have saved a giant pile of money.

 

[Epcot Forever Forever]

I think I read on this forum that the average DVC membership is 10 years.

You definitely read that here but it isn’t true, at least 70% of original OKW owners still own their contracts.

 

[Sandisw]

You definitely read that here but it isn’t true, at least 70% of original OKW owners still own their contracts.

To add to this, that average is only considering those who sell…but doesn’t consider those who don’t,

 

[Stargazer65]

I think the resale market will continue because there are always going to be people that don't mind being limited to one resort.

Take SSR in a hypothetical example:
Usually you hear that people mostly buy SSR resale for SAPs, but we bought SSR resale as one of our home resorts to stay there. So supposing SSR was restricted, and if you bought resale there, it was the only place you could use it. We would have still bought there. I'm sure I'm not the only weirdo SSR lover. Therefore, I'm projecting that the resale value won't go to zero. It may go down as the SAP market dries up, but it will settle out somewhere fairly respectable IMO, and I will probably add some more at some point.

(I was tempted to add on more SSR presently, but I also wanted more TRUE EPCOT RESORT points to supplement BLT, so I went VGF direct with the nice incentives right now)