Riviera Resale Values

[sndral]

Because resale will be cheaper and DIS and other forums have proven there are way too many cheap people buying DVC and in 20 years nothing will change.

I would argue that in the past there were too many fiscally wise people choosing to buy DVC via resale rather than wasting money on the exact same product at much higher direct sales prices. Then DVC began to devalue the resale product, if that trend continues and they succeed in devaluing the product enough those resale buyers will be driven away, whether that’s to buying direct or not I can’t predict, but either way resale prices go down. Whether the current restriction on resale Riviera buyers will be enough to drive that price down, who knows. Clearly your pool of potential resale buyers w/ Riviera is limited to those who want to stay there & pretty much only there (excepting those who’re willing to do the whole rent their own out, rent someone else’s points dance.)

...
And as a side note, I highly doubt DVC will stop allowing renting of points. They would seriously have a revolt on their hands. They always say they do what benefits the owners, which is exactly what they are supposed to be considering when making decisions. So if they disallowed point renting, how would that benefit owners that can't use their points? It wouldn't. To think that DVC may stop allowing point renting in the future is, IMO, worrying about nothing. I don't see that happening.

It might not benefit owners who can’t use their points because of personal/financial issues, but not allowing renting might benefit owners who can’t use their points at 11 months because there’s too much demand driven by rented points. I’ve read people here and elsewhere explaining their strategy to buy/rent points to ‘finance’ their own vacations or other rental schemes, if DVC decided to shut them done I don’t think there’d be a revolt. We know there’s an imbalance in small point contracts v. studio availability resort wide, especially at places like VGF & at CCV & the Poly w/ the massive point carrying units like the cabins & bungalows, so demand for certain unit types is already higher than supply at some resorts in some seasons. The safety valve is that owners can almost always find a villa somewhere at 7 months, even if only at SSR or by hoping around in a split stay. Riviera resale owners cannot, it remains to be seen whether this will be enough of an issue to drive Riviera resale prices down - my crystal ball is broken @ the moment.
I do recall that resale prices went down in the housing melt down & DVC did not use ROFR to prop them up.

 

[Spark65]

I would argue that in the past there were too many fiscally wise people choosing to buy DVC via resale rather than wasting money on the exact same product at much higher direct sales prices.

I can't really agree with the fiscally wise part I think fiscally wise people as a whole don't buy timeshares to begin with. Emotional people buy timeshares that's a fact and the people who crunch numbers to make it work really aren't being conservative just foolish hoping things will work to their favor moneywise in the end.

I laugh to think how many people who spend money buying vacations and timeshares look at it as a money making scheme after using it for years.

 

[sndral]

I can't really agree with the fiscally wise part I think fiscally wise people as a whole don't buy timeshares to begin with. Emotional people buy timeshares that's a fact and the people who crunch numbers to make it work really aren't being conservative just foolish hoping things will work to their favor moneywise in the end.

I laugh to think how many people who spend money buying vacations and timeshares look at it as a money making scheme after using it for years.

That was partly uttered tongue in cheek to contrast w/ the reference to ’cheap people’ lol. But I agree, vacation decisions are motivated by many things not tied to financial planning. I did run numbers before I first bought to see if I could invest what it would cost and generate enough income to pay for deluxe rooms at WDW going forward, since that was an era when I was heavily socking money into investments for retirement and was curious, but it didn’t pencil out for me.

 

[Mrs p]

No, drives up the product value long term, from their perspective. Drives up the value of direct purchase over resale. They don’t care if they devalue resale. Point is to discourage resale in the long term.

I agree, but it’s rare for a large company to intentionally devalue the price for an intended long term gain. I am surprised they look that far forward!

 

[DVCSunDevil]

I can't really agree with the fiscally wise part I think fiscally wise people as a whole don't buy timeshares to begin with. Emotional people buy timeshares that's a fact and the people who crunch numbers to make it work really aren't being conservative just foolish hoping things will work to their favor moneywise in the end.

I laugh to think how many people who spend money buying vacations and timeshares look at it as a money making scheme after using it for years.

Even people who are "fiscally wise" go on vacations. I disagree that only "emotional" people buy timeshares. DVC isn't for everyone and there are certainly owners who overextended themselves buying into DVC because they were "emotional" about Disney, but there are also those people for whom DVC makes a lot of sense from a fiscal standpoint. Consider someone who fits this criteria:
- vacations in WDW at least every other year
- prefers to stay in deluxe resorts when they visit WDW
- is liquid enough to pay for their DVC purchase immediately without financing, and the purchase cost didn't really affect their financial standing
For these people, DVC is actually a fiscally wise purchase. The amount of money spent on WDW vacations over the next 20 years without DVC would cost a lot more than the vacations with DVC.

 

[Starport Seven-Five]

I laugh to think how many people who spend money buying vacations and timeshares look at it as a money making scheme after using it for years.

Not money making, just losing less. A vacation is a discretionary purchase like many others we have in our day to day life.

 

[princesscinderella]

Not money making, just losing less. A vacation is a discretionary purchase like many others we have in our day to day life.

I agree with this! We live in a modest home even though we could afford a McMansion and drive Toyota. We choose instead to spend our money on experiences and travel is a big part of that. DVC was a no brainer for us, but our initial points purchases were cheap resales in 2012 & 2013. Our goal is to take our kids to all 50 states, we’ve done 25 so far. I don’t care to keep up with the Joneses, just make the right decisions for my bottom line. We semi embrace the Fire movement and hope to retire at 50. If you are struggling with credit card debt a DVC purchase isn’t a good choice.

 

[Ginamarie]

I agree with this! We live in a modest home even though we could afford a McMansion and drive Toyota. We choose instead to spend our money on experiences and travel is a big part of that. DVC was a no brainer for us, but our initial points purchases were cheap resales in 2012 & 2013. Our goal is to take our kids to all 50 states, we’ve done 25 so far. I don’t care to keep up with the Joneses, just make the right decisions for my bottom line. We semi embrace the Fire movement and hope to retire at 50. If you are struggling with credit card debt a DVC purchase isn’t a good choice.

Agreed- travel is always a part of our budget. Some people may think that is silly but it’s important to us. We finally bought into DVC recently because with four kids, hotels at WDW were getting expensive. We had been renting points to stay at OKW or SSR and it was pricy. DVC should save me money on accommodations in the long run. It’s like buying myself a discount on future vacations, and that’s fine with me.
I’m 42 now and semi-retired. We have no credit card debt. I have a mortgage that will be paid off in another 15 years or so. If I’m headed into full retirement and just worrying about real estate taxes, DVC dues and utilities (etc), I’m in pretty good shape!

 

[Brian Noble]

I agree, but it’s rare for a large company to intentionally devalue the price for an intended long term gain. I am surprised they look that far forward!

But Disney isn't devaluing the price of their product, because their product is new point sales. They are devaluing the competition for their product---because every resale on the secondary market is someone who might have bought from Disney instead.

 

[CmdrThor]

But Disney isn't devaluing the price of their product, because their product is new point sales. They are devaluing the competition for their product---because every resale on the secondary market is someone who might have bought from Disney instead.

They are also devaluing their supply chain lowering their cost for ROFR

 

[Mrs p]

But Disney isn't devaluing the price of their product, because their product is new point sales. They are devaluing the competition for their product---because every resale on the secondary market is someone who might have bought from Disney instead.

Mainly yes, but if Riviera wound achieve a higher price direct now without the future restrictions - then they are sacrificing profits today in the hope of long term gains against resale. People keep saying if it were not for the resale restrictions they would buy direct.

 

[Mrs p]

They are also devaluing their supply chain lowering their cost for ROFR

That’s a good point, unintended or intended consequence ?

 

[CmdrThor]

Mainly yes, but if Riviera wound achieve a higher price direct now without the future restrictions - then they are sacrificing profits today in the hope of long term gains against resale. People keep saying if it were not for the resale restrictions they would buy direct.

A very small minority of people are saying they aren't buying direct because of the resale restrictions. The vast majority of buyers either don't know and ignore the information if and when it is told to them during the purchasing process, or they don't care because they think they will never sell their contract. People buy for the allure of staying in a deluxe resort at a discount year after year.

 

[Mrs p]

A very small minority of people are saying they aren't buying direct because of the resale restrictions. The vast majority of buyers either don't know and ignore the information if and when it is told to them during the purchasing process, or they don't care because they think they will never sell their contract. People buy for the allure of staying in a deluxe resort at a discount year after year.

Probably, each to their own - I over analyse things

 

[Brian Noble]

if Riviera wound achieve a higher price direct now without the future restrictions - then they are sacrificing profits today in the hope of long term gains against resale

I believe the marginal negative impact on direct sales is negligible. There are plenty of timeshare developers with resale values at or below 10% of sales price who have no trouble selling at comparable rates/prices. Timeshare is an aspirational product that is sold not bought, and the vast majority of buyers (a) have no idea that a resale market exists, let alone what the prices are and (b) are not particularly looking for reasons why this purchase that they have convinced themselves of is a bad idea.

 

[Brian Noble]

They are also devaluing their supply chain lowering their cost for ROFR

They have a ways to go to get there. In the industry generally, the cost of construction is 20-30% of the cost of sales. In comparison, the cost of marketing is 40-50% of the cost of sales. It's much cheaper for Disney to build a shiny new resort than to re-acquire points via ROFR, and I believe the latter only happens to satisfy organic demand for "sold out" resorts that take little to no marketing effort to close.

 

[havoc315]

I agree, but it’s rare for a large company to intentionally devalue the price for an intended long term gain. I am surprised they look that far forward!

Not that rare for Disney... they mostly play the long game. (though like all companies, they occasionally become short sighted).

My guess: They have seen increased re-sale in recent years, eating away at direct sales. This makes sense as the "supply" of pre-owned DVC has grown. There is a huge supply AND variety of re-sale offerings. Meanwhile, I suspect demand has grown more slowly than supply. That's the thing when you have a product that lasts 50 years!! You sell it to the core audience one time -- and they don't have to buy again in their lifetimes! (sure, they might add on some points... but it's not the same as buying a new phone or new car every few years).

So looking at shrinking demand for direct purchases... they had to find a way to promote direct purchases.

And they are likely starting to look forward to 2042... Post 2042, DVC will be very different than it was pre-2020. We are in a 20 year transition period.

 

[Mrs p]

They have a ways to go to get there. In the industry generally, the cost of construction is 20-30% of the cost of sales. In comparison, the cost of marketing is 40-50% of the cost of sales. It's much cheaper for Disney to build a shiny new resort than to re-acquire points via ROFR, and I believe the latter only happens to satisfy organic demand for "sold out" resorts that take little to no marketing effort to close.

And here I am considering a direct purchase if my BCV gets ROFR’d -

I believe the marginal negative impact on direct sales is negligible. There are plenty of timeshare developers with resale values at or below 10% of sales price who have no trouble selling at comparable rates/prices. Timeshare is an aspirational product that is sold not bought, and the vast majority of buyers (a) have no idea that a resale market exists, let alone what the prices are and (b) are not particularly looking for reasons why this purchase that they have convinced themselves of is a bad idea.

would this be the case if Reflexti

Not that rare for Disney... they mostly play the long game. (though like all companies, they occasionally become short sighted).

My guess: They have seen increased re-sale in recent years, eating away at direct sales. This makes sense as the "supply" of pre-owned DVC has grown. There is a huge supply AND variety of re-sale offerings. Meanwhile, I suspect demand has grown more slowly than supply. That's the thing when you have a product that lasts 50 years!! You sell it to the core audience one time -- and they don't have to buy again in their lifetimes! (sure, they might add on some points... but it's not the same as buying a new phone or new car every few years).

So looking at shrinking demand for direct purchases... they had to find a way to promote direct purchases.

And they are likely starting to look forward to 2042... Post 2042, DVC will be very different than it was pre-2020. We are in a 20 year transition period.

interesting - do you think they thought about 20 year leases on all new DVC - they could keep us coming back then !

 

[Mrs p]

And here I am considering a direct purchase if my BCV gets ROFR’d -

would this be the case if Reflexti

interesting - do you think they thought about 20 year leases on all new DVC - they could keep us coming back then !

Sorry - keep cutting off sentences-need a bigger phone!

 

[DougEMG]

I believe the marginal negative impact on direct sales is negligible. There are plenty of timeshare developers with resale values at or below 10% of sales price who have no trouble selling at comparable rates/prices. Timeshare is an aspirational product that is sold not bought, and the vast majority of buyers (a) have no idea that a resale market exists, let alone what the prices are and (b) are not particularly looking for reasons why this purchase that they have convinced themselves of is a bad idea.

Will the generation of kids growing up today change how they buy timeshares? Will they be better informed customers and be more hesitant to buy a product that goes to $0 as soon as they walk out the door? Taking my daughter as an example, she looks up reviews of everything before she buys something.