Riviera Sales by the numbers (vs CCV) for 2019 - (December added 1/16/2020)

[Brianstl]

I agree with your analysis of how this would occur but disagree that it is the only way to eliminate the resale market. Read on...

You have a valid point. I happen to disagree, but I concede that there is a chance that your vision is correct and mine isn't. I see things differently though.

On one hand, it might make sense that Disney wants to see these contracts hold their value on the secondary market. @DougEMG suggested that DVC execs were dismayed upon hearing that the first RIV resale contract sold for $100. On the other hand, however, they have been clear that they do not want others profiting off of DVC. The only way to accomplish this goal is to suppress the resale prices of contracts. Up until the restrictions this was impossible because a resale contract was functionally the same as a direct contract. Demand was high and prices followed. However, this round of restrictions sets them on the road to price suppression, assuming they follow through with even more severe restrictions.

Case in point...I own at Marriott Grande Vista (which I bought in 2000 and could have had 300 points at Old Key West for the same price but we won't talk about that). I paid about $15,000 and right now if I wanted to sell it I could probably get about $2,000. So instead, I write it off as perhaps a dumb move, but in the meantime, we happily use it every year and stay in great accommodations for a fraction of what it costs to stay elsewhere. So I'm using the product exactly as it is intended by force: I simply don't have any alternative. Nobody is willing to give me anything significant for it because once it transfers to them it becomes so severely damaged that using it is quite difficult/restricted/expensive. I think THAT is what Disney is going for. DVC is a great product and the Riviera is by all accounts a beautiful resort. Disney wants you to buy it and keep it if for no other reason than you have no other alternatives. Remember, that is the only transaction they make money on, so everything they do is geared towards insuring that direct sales are the only DVC transactions that take place. The way they accomplish this goal is to make it so very unattractive that only a select few people who are adept at the timeshare game are willing to purchase. This, combined with restrictions, will suppress the resale prices. This means that owners won't be incentivized to sell and there is no real profit to be had.

One of the many obstacles they would have to overcome with this strategy is that right now a cheap resale contract could still be used as a rental points cow. As long as that is allowed, resale prices have a built-in floor based on profits generated from rentals. I don't know the legalities of how they would shut that down, but you can bet they are thinking about it. People are upset over the Riviera resale restrictions and I understand why. All I'm saying is that if you're upset now, just you wait. Those were only the tip of the iceberg.

I don't think their main goal is to drive down resale prices. I think that is a part of it, but I think the main goal is to discourage buyers from buying resale contracts with their only intent being to rent out points. Disney doesn't want to have to compete with their own properties anymore when it comes to booking hotel guest on site. It is meant to limit the options and time window people who buy a resale contract have when it comes to renting out those points.

 

[DougEMG]

I agree with your analysis of how this would occur but disagree that it is the only way to eliminate the resale market. Read on...

You have a valid point. I happen to disagree, but I concede that there is a chance that your vision is correct and mine isn't. I see things differently though.

On one hand, it might make sense that Disney wants to see these contracts hold their value on the secondary market. @DougEMG suggested that DVC execs were dismayed upon hearing that the first RIV resale contract sold for $100. On the other hand, however, they have been clear that they do not want others profiting off of DVC. The only way to accomplish this goal is to suppress the resale prices of contracts. Up until the restrictions this was impossible because a resale contract was functionally the same as a direct contract. Demand was high and prices followed. However, this round of restrictions sets them on the road to price suppression, assuming they follow through with even more severe restrictions.

Case in point...I own at Marriott Grande Vista (which I bought in 2000 and could have had 300 points at Old Key West for the same price but we won't talk about that). I paid about $15,000 and right now if I wanted to sell it I could probably get about $2,000. So instead, I write it off as perhaps a dumb move, but in the meantime, we happily use it every year and stay in great accommodations for a fraction of what it costs to stay elsewhere. So I'm using the product exactly as it is intended by force: I simply don't have any alternative. Nobody is willing to give me anything significant for it because once it transfers to them it becomes so severely damaged that using it is quite difficult/restricted/expensive. I think THAT is what Disney is going for. DVC is a great product and the Riviera is by all accounts a beautiful resort. Disney wants you to buy it and keep it if for no other reason than you have no other alternatives. Remember, that is the only transaction they make money on, so everything they do is geared towards insuring that direct sales are the only DVC transactions that take place. The way they accomplish this goal is to make it so very unattractive that only a select few people who are adept at the timeshare game are willing to purchase. This, combined with restrictions, will suppress the resale prices. This means that owners won't be incentivized to sell and there is no real profit to be had.

One of the many obstacles they would have to overcome with this strategy is that right now a cheap resale contract could still be used as a rental points cow. As long as that is allowed, resale prices have a built-in floor based on profits generated from rentals. I don't know the legalities of how they would shut that down, but you can bet they are thinking about it. People are upset over the Riviera resale restrictions and I understand why. All I'm saying is that if you're upset now, just you wait. Those were only the tip of the iceberg.

If one was designing the perfect DVC system from Disney's point of view what would you want?

The goal is only Disney makes money from DVC and they make as much as possible.

- Everyone forced to buy direct by making resale too unattractive to buy and use
- Buying back resale contracts whenever you wanted for ultra cheap to resell as direct contracts
- No renting allowed so there is no competition with your cash business and so owners have no options if they don't use the points themselves
- Making it so owners don't really use the contract for the full 50 years, see above
- Making it hard for owners to book so points go waste and thereby increase breakage income

 

[mustinjourney]

If one was designing the perfect DVC system from Disney's point of view what would you want?

The goal is only Disney makes money from DVC and they make as much as possible.

- Everyone forced to buy direct by making resale too unattractive to buy and use
- Buying back resale contracts whenever you wanted for ultra cheap to resell as direct contracts
- No renting allowed so there is no competition with your cash business and so owners have no options if they don't use the points themselves
- Making it so owners don't really use the contract for the full 50 years, see above
- Making it hard for owners to book so points go waste and thereby increase breakage income

that's great in theory -- but I'd venture to guess DVC sells so well (and at such high prices) because the resale market is so robust. I know for a fact we would not have purchased it at the price we paid had the resale market not existed.

So yeah -- they can try to hurt the resale market, but I think that is a shortsighted thing to do. Ultimately, it will make selling direct a much tougher proposition.

 

[kboo]

But the key difference is that there has never been a $60 resale to direct spread right out of the box. Prices have settled in at that range and more importantly, that range existed because Disney jacked up the prices of the direct resorts and resale prices ticked up slightly. It's not because resale prices are skyrocketing. VGF is amazing and resale prices continue to trend upwards. Poly is also an amazing resort but from a DVC standpoint it has its issues, and resale prices there are trending downward. Traditionally the gap between direct and resale is smallest at the beginning of the resale life cycle. If this holds true for Riviera then we should see that gap widen.

RIV's big issue, which is known to all/most resale buyers before they make an offer, is the resale restriction. Even as a direct RIV owner, that warrants a discount, and my hypothesis is that this is RIV's biggest "issue" and will have the biggest effect on its resale price. That said, this issue is different from issues that may crystallize later in the life of the resort (difficulty booking studios, for example, or young families buying thinking they'll stay in studios forever and then realizing they want some realistic 1-2br options). I agree that if the Skyliner fails, it will also become an issue with sales, both direct and resale. But hopefully they've done enough planning and research that the Skyliner won't fail.

Also as far as I know, we have an n=1 on that resale contract, right? Which most agree might not have been representative of a fully arms length deal. I hypothesize that RIV resale prices will start with a larger gap compared to direct (as compared to L14 resorts when they were in active direct sales and resales were popping up), but that they also won't trend downward so much. Put another way, a RIV resale contract is a different product altogether, and will be valued that way.

Good luck trying to compete to attempt to walk those reservations along with everyone else that buys points to rent. There are only a few resale contracts now and availability is limited in the first two weeks of September 2020 at Riviera in tower and standard studios.

Right now only something like 20% of the points have been declared. So there's an artificially low supply of rooms that can be booked on points.

Nobody is willing to give me anything significant for it because once it transfers to them it becomes so severely damaged that using it is quite difficult/restricted/expensive. I think THAT is what Disney is going for.

Agree. Or put in a bit more rosy way - with the resale restriction, RIV direct and RIV resale are two very different products and will appeal to different, perhaps non-overlapping, groups of buyers. Same with RIV resale and L14 resale. I could see a small RIV resale contract useful for someone who has grandfathered points elsewhere, who wants to use that RIV resale for split stays or particular long weekends during F&W, for example. RIV resale is not an option for someone who doesn't have any other DVC points, and should be considered as a supplemental contract.

One of the many obstacles they would have to overcome with this strategy is that right now a cheap resale contract could still be used as a rental points cow. As long as that is allowed, resale prices have a built-in floor based on profits generated from rentals. I don't know the legalities of how they would shut that down, but you can bet they are thinking about it. People are upset over the Riviera resale restrictions and I understand why. All I'm saying is that if you're upset now, just you wait. Those were only the tip of the iceberg.

I still think DIS users are a small minority of DVC owners, and I have seen so many posts on other social media from DVC owners who didn't understand how banking and borrowing worked (there was a user who thought that banking happened automatically and thought that since they hadn't been back to WDW in years, they now had 1000 points to use from their 160 point contract), or who just let points expire when they couldn't use them. Also - anyone who buys a contract w financing won't be able to make any money from renting - it would, for them, be a stopgap at best until they get another job, for example. So I think the people who might buy with the idea of *making* money from RIV to be few, I suspect that for some owners who bought on cash, it might make sense to rent points out rather than sell outright, if you could afford to.

Are there enough people willing to buy RIV to do spec renting that they will support a resale price of $120. I'm not sure that this is the case.

I don't think so, but I feel pretty sure that if life intervened and I couldn't take my December trip to WDW, I could probably rent my 3 nights in a 1br over New Year's weekend for a decent price - certainly I wouldn't lose money.

 

[ELMC]

that's great in theory -- but I'd venture to guess DVC sells so well (and at such high prices) because the resale market is so robust. I know for a fact we would not have purchased it at the price we paid had the resale market not existed.

So yeah -- they can try to hurt the resale market, but I think that is a shortsighted thing to do. Ultimately, it will make selling direct a much tougher proposition.

I think you are the exception that proves the rule. Remember, this is still a timeshare, sold while people are on vacation and fully immersed in the Disney Magic. I think less than 5% of owners are what we would consider savvy. This is still an emotional, impulse buy for the majority.

Agree. Or put in a bit more rosy way - with the resale restriction, RIV direct and RIV resale are two very different products and will appeal to different, perhaps non-overlapping, groups of buyers.

This is a good way of putting it. Heck, Disney might even be ok with this. But right now they are competing for the same buyers with resale companies. There's no way they are happy with that.

 

[ray3127]

I'd venture to guess DVC sells so well (and at such high prices) because the resale market is so robust. I know for a fact we would not have purchased it at the price we paid had the resale market not existed.

This is what I think Disney risks upsetting. The healthy resale (and rental) markets dramatically reduce the risk... They are "real options" for customers, for which we pay a price.

If the system was actually set up as Doug described above (I agree with that list, btw), I really can't see the pricing being what it is today. The further they drift towards that list, the greater the chance that they take down the entire system and it becomes "just another timeshare".

 

[ELMC]

This is what I think Disney risks upsetting. The healthy resale (and rental) markets dramatically reduce the risk... They are "real options" for customers, for which we pay a price.

If the system was actually set up as Doug described above (I agree with that list, btw), I really can't see the pricing being what it is today. The further they drift towards that list, the greater the chance that they take down the entire system and it becomes "just another timeshare".

I don't disagree with your thinking, but I think we are in the select minority. For what it's worth, "just other" timeshares have been in existence for decades and are doing quite well. I don't think the majority of people out there think like we do here on the DIS. I think what is significant to us is unknown to the masses. I don't think any of these changes are going to have that great of an impact on sales. Riviera will be the test of this theory, but if sales continue as they have then it's basically a green light for Disney to stay the course.

 

[zavandor]

I agree with your analysis of how this would occur but disagree that it is the only way to eliminate the resale market. Read on...

You have a valid point. I happen to disagree, but I concede that there is a chance that your vision is correct and mine isn't. I see things differently though.

On one hand, it might make sense that Disney wants to see these contracts hold their value on the secondary market. @DougEMG suggested that DVC execs were dismayed upon hearing that the first RIV resale contract sold for $100. On the other hand, however, they have been clear that they do not want others profiting off of DVC. The only way to accomplish this goal is to suppress the resale prices of contracts. Up until the restrictions this was impossible because a resale contract was functionally the same as a direct contract. Demand was high and prices followed. However, this round of restrictions sets them on the road to price suppression, assuming they follow through with even more severe restrictions.

Case in point...I own at Marriott Grande Vista (which I bought in 2000 and could have had 300 points at Old Key West for the same price but we won't talk about that). I paid about $15,000 and right now if I wanted to sell it I could probably get about $2,000. So instead, I write it off as perhaps a dumb move, but in the meantime, we happily use it every year and stay in great accommodations for a fraction of what it costs to stay elsewhere. So I'm using the product exactly as it is intended by force: I simply don't have any alternative. Nobody is willing to give me anything significant for it because once it transfers to them it becomes so severely damaged that using it is quite difficult/restricted/expensive. I think THAT is what Disney is going for. DVC is a great product and the Riviera is by all accounts a beautiful resort. Disney wants you to buy it and keep it if for no other reason than you have no other alternatives. Remember, that is the only transaction they make money on, so everything they do is geared towards insuring that direct sales are the only DVC transactions that take place. The way they accomplish this goal is to make it so very unattractive that only a select few people who are adept at the timeshare game are willing to purchase. This, combined with restrictions, will suppress the resale prices. This means that owners won't be incentivized to sell and there is no real profit to be had.

One of the many obstacles they would have to overcome with this strategy is that right now a cheap resale contract could still be used as a rental points cow. As long as that is allowed, resale prices have a built-in floor based on profits generated from rentals. I don't know the legalities of how they would shut that down, but you can bet they are thinking about it. People are upset over the Riviera resale restrictions and I understand why. All I'm saying is that if you're upset now, just you wait. Those were only the tip of the iceberg.

With a quick search I found high season weeks at Marriott Gran Vista for $1000. That's asking price, maybe I could get it for free. Is resale so restricted that it's nearly unusable?

 

[ELMC]

With a quick search I found high season weeks at Marriott Gran Vista for $1000. That's asking price, maybe I could get it for free. Is resale so restricted that it's nearly unusable?

I'm not nearly as well versed on that system as I am DVC, despite owning for close to 20 years (which actually goes towards proving my point that the majority of DVC owners are not like us here on the DIS). So to answer your question best I can (which is to say not very well) it's severely restricted as to location and time. If you want to qualify the points I think it would cost you in the neighborhood of another $5,000 and even still I think they are still marred a bit. I will say that several years ago MVC offered us about $2,000 for it and we declined. Not sure if that offer is even on the table anymore. But for now we get way more use out of it than $2,000 so we kept it.

 

[Brianstl]

Right now only something like 20% of the points have been declared. So there's an artificially low supply of rooms that can be booked on points.

But an even lower percentage of the available points have been sold so far.

 

[Great3]

If resale was so restricted, and there is no rental or transfer of points allowed, I would even paying $1000 for a DVC timeshare. I don't and won't got to WDW every year. But I am willing to pay $30K+ for a DVC timeshare with flexibility that has a healthy resale market / demand.

So yeah, DVC, I think DVC is going to hurt themselves at the end. However, as already point out, even this can be seen in a positive light, getting into DVC at a low price point.

Great3

 

[Great3]

I'm not nearly as well versed on that system as I am DVC, despite owning for close to 20 years (which actually goes towards proving my point that the majority of DVC owners are not like us here on the DIS). So to answer your question best I can (which is to say not very well) it's severely restricted as to location and time. If you want to qualify the points I think it would cost you in the neighborhood of another $5,000 and even still I think they are still marred a bit. I will say that several years ago MVC offered us about $2,000 for it and we declined. Not sure if that offer is even on the table anymore. But for now we get way more use out of it than $2,000 so we kept it.

You can't even qualify the points for a Resales Week at Marriott. So, all you can do on resale of Marriott, is use it during the same floating season weeks at that resort only, or trade thru II, which is actually pretty valuable because of the Marriott preference period in II. But yeah, it becomes a buy if only if you are really going to use it every year. If DVC comes down to that, I won't be buying into DVC anymore. At least all my points are at Aulani, that those points I want to use.

Great3

 

[Soap_1984]

Like many I am interested to see how it plays out. Disney could be upsetting what has been a very profitable ecosystem in dvc just to try and snag an extra few dollars that they are assuming they will get by slowly killing resale.

When you promote a healthy resale market it speaks positively about your product; one of reasons rofr exists. Someone who needs/wants to exit can do so and someone who wants in can get in when they otherwise cannot afford to (or they cannot rationalize direct because of lack of value as is currently the case for some). This continues the steady stream of people eager to continue paying dues and, guess what, coming to Disney world on a frequent basis.

I do not see the strategy here for disney and I do agree it seems shortsighted. They aren't going to support a floor on pricing if the market is flooded with riviera contracts; they have to pay for the dues and then resell the contracts which, it appears, they are having a bit of trouble selling once (let alone over and over again). Also, many have stated that the direct disney purchase is generally made at disney by someone who knows nothing; that person isn't buying resale anyway so how is it competing? If they don't make direct a good deal, how do they expect to sell direct to anyone who might otherwise buy resale (I.e. One of the hundreds of thousands who already own dvc, or those financially minded who want to save money).

If there was only direct I simply would not buy at this point, meaning I wouldn't add points and would come to Disney less; that's dvc benefiting in the short term and long term a big loss for disney because, excluding tickets and accommodations, I'm pretty sure I've spent $8k at disney the last three years over 3 trips. Without my original direct contract, I would go maybe once every 3-5 years...

 

[RivShore]

Given that Disney has come out and said that they don't like the resale market and they don't want anyone making money off of DVC besides them, I think this might be too much to assume. That said, if you have a fairly high risk tolerance the scenario you laid out is possible.

Curious, did DVC actually say this or are we just assuming that from their recent changes?

 

[ELMC]

Curious, did DVC actually say this or are we just assuming that from their recent changes?

Great question. It has been reported on here by several posters that their salespeople have been saying exactly this. I hope that anyone who has had such an experience could weigh in with more detail. That said, I also think it is safe to infer (not assume) that is the case given the preponderance of the evidence and their overall track record. In addition, they are a publicly-traded company not a philanthropic organization, so it stands to reason on its face that they would not be happy with third-party sellers profiting off of their products.

 

[ray3127]

Curious, did DVC actually say this or are we just assuming that from their recent changes?

My salesperson's direct words:

"(They) aren't happy with doing all the work and then a broker getting the business."

That's how they feel, but it doesn't ring true for me, because the brokers only make 5-9% on each deal. It's the seller that is getting the bulk of the $... Which is part of why people are willing to buy DVC; worst case they can get out...

 

[RivShore]

Great question. It has been reported on here by several posters that their salespeople have been saying exactly this. I hope that anyone who has had such an experience could weigh in with more detail. That said, I also think it is safe to infer (not assume) that is the case given the preponderance of the evidence and their overall track record. In addition, they are a publicly-traded company not a philanthropic organization, so it stands to reason on its face that they would not be happy with third-party sellers profiting off of their products.

Thanks for the reply and the "inference" makes sense. I would also love to hear the details of what people have heard.

I find this discussion oddly fascinating, trying to figure out the logic behind killing a robust resale market. In every other market, high resale is good for the OEM, and allows them to keep the original pricing stable. Why DVC would go the opposite way and push away new resale owners that would bring renewed spending to the parks, restaurants, and stores...it just does not compute in my brain.

 

[RivShore]

My salesperson's direct words:

"(They) aren't happy with doing all the work and then a broker getting the business."

That's how they feel, but it doesn't ring true for me, because the brokers only make 5-9% on each deal. It's the seller that is getting the bulk of the $... Which is part of why people are willing to buy DVC; worst case they can get out...

Wow, that really annoys me, especially being a DIS shareholder for decades. It's shortsighted and very siloed thinking for a company like Disney, where every division feeds sales for the other divisions. That DVC thinks they get no business from that sale is just plain wrong, when chances are that new owner will visit and spend like crazy in the parks. If their having to incur cost from those resale transactions then i have no problem with them trying to recoup some of it thru some kind of transfer/processing cost but to think the Disney company gets nothing out of that new owner is beyond stupid.

 

[ELMC]

Thanks for the reply and the "inference" makes sense. I would also love to hear the details of what people have heard.

I find this discussion oddly fascinating, trying to figure out the logic behind killing a robust resale market. In every other market, high resale is good for the OEM, and allows them to keep the original pricing stable. Why DVC would go the opposite way and push away new resale owners that would bring renewed spending to the parks, restaurants, and stores...it just does not compute in my brain.

Another great question. While there is certainly more to it than meets the eye, the short answer is that Disney, much like any other giant corporation, is highly compartmentalized. Said another way, DVC executives do not get credit, raises, bonuses, or anything else from higher spending in the parks, stores, restaurants, Minnie Vans, etc. etc. They are evaluated and compensated on how much DVC they sell, full stop. And while it doesn't ring true for every resale buyer in that for some the choice is resale or not to buy at all, they view every resale buyer as someone who is not buying direct. So any executive who is in charge of making these decisions cares about his org first and the company second. I agree it is not global thinking, but the company does not reward global thinking. Infinity War made two billion at the box office and yet Catherine Powell lost her job due to sluggish attendance in the parks. It's just the way it is.

Any peripheral benefits of a vibrant resale market making owners feel good about buying or perhaps even making the sale a bit easier pales in comparison to a buyer forking over $20,000 to buy DVC. And every time a contract sells on the resale market, that's another $20,000+ that they are not getting. And in their defense, there's nothing wrong with that. Like it or not, Disney is a publicly-traded corporation and they have a fiduciary responsibility to maximize profits for the shareholders. But ideally they would do this without fleecing their customers, and I think that is where the objections are coming from. People are starting to feel a little fleeced.

 

[Soap_1984]

Great question. It has been reported on here by several posters that their salespeople have been saying exactly this. I hope that anyone who has had such an experience could weigh in with more detail. That said, I also think it is safe to infer (not assume) that is the case given the preponderance of the evidence and their overall track record. In addition, they are a publicly-traded company not a philanthropic organization, so it stands to reason on its face that they would not be happy with third-party sellers profiting off of their products.

I agree they may not be thrilled with resellers but unlike other timeshares, disney benefits by creating traffic in the parks where disney makes more money. Traditional timeshares have to rip you off because that is their business model and they offer nothing else; disney should be willing (and was) to forgo making every last nickel on dvc contracts to ensure people are happy and coming frequently.

My salesperson's direct words:

"(They) aren't happy with doing all the work and then a broker getting the business."

That's how they feel, but it doesn't ring true for me, because the brokers only make 5-9% on each deal. It's the seller that is getting the bulk of the $... Which is part of why people are willing to buy DVC; worst case they can get out...

Isn't the work making the initial sale? Every resale was at one point sold by disney. It's like a developer; they don't care if they sell a house for $400k and then five years later the owner sells through a broker for $800k. The goal should be to make a sale that gets someone back to Disney more frequently than they otherwise would for decades; strong resale actually facilitates that imo because if it evidences anything, it is demand for the product (albeit the no - direct product).

I'm sure I sound like a broken record but the resale price indicates they created a great product, now they want to ruin the product to kill resale lol.