RoFR back??

[ocdb8r1]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1) totally clueless....I don't think we'll ever know unless you somehow get ahold of someone from DVC willing to give you a straight line on their thinking;

2) If they were smart, they would go back to being aggressive with ROFR and develop a long-term strategy for profiting from the spread between ROFR and what they are able to maintain for retail pricing. The problem I see is that DVC is starting to fall into the "traditional" timeshare trap by relying on new inventory to drive sales and revenues. New inventory will almost always be cheaper to develop compared to ROFR will cost them....but adding it without discretion will eventually outstrip demand. I feel we're approaching the saturation point (and may tip over it with PVB2 and FW coming online and the economy softening). To me, a better long-term strategy would be to focus on keeping the product somewhat exclusive and taking the lower (but more sustainable if done in a managed way) profits from the spread between ROFR and retail.

Don't get me wrong, the big timeshare developers (like MVC) are starting to realize this as well, and one could argue MVC has clearly shifted from developing new inventory to recycling existing inventory by flipping ROFR resales, foreclosures and "requalification" fees (whereby you're resale purchase products regain all the "direct" purchase benefits via payment of a fee). DVC could go down this route....but I feel they're missing a trick by not maintaining a value floor with ROFR and limiting overall inventory (by NOT developing new resorts). DVC could really continue to maintain it's reputation as "not a traditional timeshare" if they combined the above suggested approach with "redevelopment" of existing inventory as each resort contract "expires" they could create a nice long-term revenue center...but it would be at the cost of some greater immediate profits relying on cheaper "new resort" inventory. It's also hard to predict the pressure on DVC to "convert" WDW hotel inventory into DVC to reduce WDW hotel capital costs (which creates a unique dynamic that isn't easy to factor into Disney's wider financial picture).

 

[Sandisw]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

#1 to keep us guessing….
#2 I am indifferent on this as which ever way it goes, it benefits either one as a seller or a buyer. In one way, I think them not using it allows the market to be what both buyers and sellers agree is a fair value…and takes the influence ROFR has on some of the resorts pricing.

 

[JackosinDIS]

@pkrieger2287 my view is
1) they were just letting us know they were still there and reminding resale buyers that the risk still exists in a vague hope it will have some effect in resale prices (without having the budget to actually use ROFR to create a price floor)
2) ROFR should be used to protect the resale value for both direct and resale buyers. DVC is an exclusive product which stands out from its competitors not only because of the location of the resorts, but because of the ability to have an ‘exit strategy’ should you need one, which doesn’t leave you massively out of pocket.

 

[thelionqueen]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

Looking forward to the show!
1. No one knows obviously, but, imo, the had to. Required to show the world that the ROFR risk is still a functioning part of the resale process. Going completely dormant for as long as they did, made speculation reach legendary heights. The one thing the ROFR monster had going for it was its unpredictability. Not buying anything back for so long changed that most important aspect of the reselling process.

2. I think the long term strategy should focus on the value and reputation of DVC as a whole. Meaning, of course focus on direct selling resorts, but do so in a way that also recognizes resale owners vs alienating the two owner types. Stop “punishing” resale buyers. For example, restrictions. Imo the single worst idea since DVC started. It creates separate value for the same overall product. The value should be based on organic factors such as, the brand, the economy, length of ownership, cost of dues, etc. Punishing resale buyers also automatically decreases the value of restricted resorts and hurts the product’s value overall.

Honestly they need to stop building new resorts until 1 sells out. That was done originally with the exception of one close to selling out so the next went up for sale. Having 4 or more active resorts selling at once creates unnecessary confusion for perspective buyers than having just 1.

Don’t build DVC in any states other than CA or FL.

Add perks to direct sales instead of taking them away from resale buyers. Although they’re “extra” and can be discontinued at any time, they’re a benefit of buying direct & should be. Disneys portfolio is so vast it’d be easy to add random perks of direct ownership that would cost them very little and not affect the timeshare component. Such as.. offer 1 day of the dining plan for free for every 5 nights you stay in DVC points as a blue card owner, a magnet of your resort, extra dining/merch discount occasionally, etc.

I firmly believe their strategy re: resale restrictions is a disaster..as well as now a glut of inventory which now they need to move hence the VGF promotion. Bring back the basics and make ownership valuable.

 

[Robbie Cottam]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1. I think they had buyers direct …. To stirring the pot, to keep us all guessing, see how the market would react…. Are all valid SWAG answer…

2. Profitability! Protect their product! Protect their Brand…

If RIV start selling for about the cost of two cash rooms , their product is worthless …

 

[Sandisw]

@pkrieger2287 any more ROFRs??

 

[Stargazer65]

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

1) Remind us that getting a resale contract is never a sure thing.
2) RoFR any contract other than mine!

 

[Epcot Forever Forever]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1) looking to fill some Fixed Week requests?
2) buy back what they think they can sell in the near future and no more. Why tie up precious capital in points? If they want to do that they should just build some more hotels.

 

[aceshigh73]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1) So they can sellout VGF before Poly tower comes online. No resales = ppl buying direct. They will use the ROFR contracts as cash reservations maybe?

2) They should exercise sporadically to keep the market healthy. Clearly they need to be able to make a profit on cash reservations or flipping a contract, but who's buying a 2042 or even OKW/SSR/BLT at these direct prices?

 

[pkrieger2287]

@pkrieger2287 any more ROFRs??

Nothing at this time! - I'll definitely report back if I hear of any!

 

[E2ME2]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1) - Firing a shot across the bow of the resale market, to maybe raise the floor on resale prices and to have buyers that are on the fence hop off to the Direct side.
2) - I think it will stabilize after the US economy stabilizes. Unfortunately, that might not be soon.......

 

[intamin]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1. I think it has to do with Disney ensuring that resale prices don't drop too low. Even just taking a few contracts here and there is all that is needed to manually inflate the cost of resale, thereby decreasing the difference in price per point. They don't have a significant amount of cash on hand so they shouldn't be buying every low cost contract out there but they really don't need to. Them ROFRing just a few contracts helps decrease the delta between direct and resale prices. When the delta is like 100 dollars between Old Key West resale and OKW direct, I'm going to pick resale every time. But when there's only a 20-30 dollar per point difference between direct and resale VGF, Poly, BLT, CCV I'll pick direct just to avoid resale restrictions and also receive benefits. Them buying back a couple VGF contracts in the 130s-140s makes resale sellers think they can continue to sell their contracts for that much which will lead to more people buying direct because the difference is so small.

2. Disney's long term strategy for ROFR should be to throw in a few ROFRs here and there to keep the difference between the costs not too far different. Like I said, they don't need to purchase that many and they probably can't. They should also ideally be spreading out their periods of ROFR instead of going on a nearly 8 month hiatus like they just did. One ROFR every month or two and people would still respect ROFR instead of treating it like it's completely gone. If they are going to ROFR a whole bunch of contracts, it should be on resorts that have a large delta between resale and direct and have a long amount of time left on the contracts so it's enticing for people to buy direct. They shouldn't be ROFRing BWV/BCV/BRV because of the expiration date and few people buy direct for those resorts unless you're Paul Krieger . The ones they should go after they have been like AKV, BLT, Poly, VGF, CCV and even RIV because those are the ones that people are likely to request to buy direct.

 

[Genie+]

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

1) I think there’s some combo of criteria they use to single out contracts. Direct demand on sold out resorts, forecasted valuations, cash room demand, projects and impacts, price. Where they target changes over time.

Why did Copper Creek continue to get taken once the last rofr pause started? An interesting theory around here is Unit numbers and how that may also affect rofr choices. If they have 75pts CC in Unit 2B, do they need more Unit 2B inventory to make the 150pt sale? This could answer why one contract gets through at a lower price when a higher is taken.

I’m not convinced recent rofr activity is solely to raise the resale floor. Might play a part.

2) Long term I think they’re trying to position themselves to prop up direct and get a cut in the after market. If there’s big money to be made on their product outside of direct, try to steer profits and control back to themselves.

There is a point the new resort market risks saturation. Other resorts are getting closer to expiration. And then there’s an ever-growing resale market as more and more points move around the system. Old rofr strategies become obsolete. Restrictions prepare to fill in the ebbs and flows of developer profits with value-added aftermarket.

 

[TheDailyMoo]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1. All I know is that as soon as I sent my first contract to ROFR for AKV at $100pp the very next week they ROFR'd two AKV contracts at $100pp. Granted they were almost double my points but I thought for sure that was the end of that! But mine just passed along with a few others I believe in that time span. And honestly...I think if they ROFR'd it I may just have said forget it and gone direct. I honestly wouldn't be surprised to see AKV direct be a part of an incentive program starting September 12th.

2. Depends...is this assuming they still have any cash left in the coffers for ROFR? I'm sure they have their crack team of data analysts on the case debating the merits of spending cash in this high inflationary/high interest rate environment to buy back product or basically let the resale market go all "Lord of the Flies" on itself. I'm just happy they let me have my AKV!

 

[maui22]

Hey Everyone - Now that a few weeks have passed, I wanted to ask two questions to assist with an upcoming DVC Show on this topic:

1) Why do you think Disney recently bought back several contracts?
2) What do you think Disney's long-term strategy with ROFR should be?

Thanks for your help!

1) Because we submitted our first resale purchase to ROFR days before Disney decided to buy a few contracts back. Definitely increased the anxiety levels.
2) If prices fall so low that Disney can ROFR and sell for a decent quick profit, they should use it. Either pending buyers or offer a promotional buying period for the resort. However, most of the time I think Disney should simply purchase a few every month or so just to put a bit of scare into the online community.

 

[maui22]

Isn't Disney somewhat at the mercy of manipulation for sold out resorts and ROFR.

I knew someone who once bought direct. They had DVD send the contract to them. They had signed it, but waited 2 months to return the documents. Disney honored that contract (points in the unit and UY). DVD had to sit on the points in that contract and not try to sell them to anyone else during that time or the contract would have needed to be torn up and redone because they cannot exceed the specific number of points assigned to any declared unit.

Someone could tell DVD they want to buy a 1000 points in a single contract for a specific UY at AKV. Disney needs to either have or use ROFR to acquire 1000 points in a unit that was assigned that UY.

 

[Sandisw]

Isn't Disney somewhat at the mercy of manipulation for sold out resorts and ROFR.

I knew someone who once bought direct. They had DVD send the contract to them. They had signed it, but waited 2 months to return the documents. Disney honored that contract (points in the unit and UY). DVD had to sit on the points in that contract and not try to sell them to anyone else during that time or the contract would have needed to be torn up and redone because they cannot exceed the specific number of points assigned to any declared unit.

Someone could tell DVD they want to buy a 1000 points in a single contract for a specific UY at AKV. Disney needs to either have or use ROFR to acquire 1000 points in a unit that was assigned that UY.

With sold out resorts, I bet that buyer would be on a waitlist for an extremely long time if not froeevrr for DavD to be able to squire that many points in a unit.

More likely, that buyer would be sold the points deeded to multiple units to make up the total since they’d be well above the minimum for contract size.

DVDs goal isn’t to sell sold out resorts which is why they have a base price so high. Now, in recent years they seem to have offered incentives for them, but ideally, they want to sell the active resorts.

 

[Robbie Cottam]

Disney, has alway had the right to OWN the resale market...

They cover very easily Snatch any contract that is say less than 160 per point and resale for whatever profit they would like....

I'm the original Blue card fan, but even I will not be adding at BLT at 295 a point..... If that is truly what Disney needs to sell "used" BLT points for for them to make a profit, it is not worth it for Disney to run the resale.....

Instead, Disney is pretty much hands off in the resale market, letting it add value to all of our points...

Lets, be honest, weather you consider DVC and monetary investment or not, it is nice to know you have an exit strategy.....

Without the resale market Disney losses that intangible, that weather Disney markets it or not, we all know is there.

That having been said, Disney can not let their product sell like penny stocks.

People were talking that ROFL is OVER!!! Well the mouse just reminded us all, that He is watching and listening and that Disney isn't K-mart.... Well at least not yet....

I wouldn't be surprised if:

We didn't see any more ROFR for a while,
We see a lot of them at RIV if it starts selling much lower,
We see a lot of them of the over-all value of DVC and or the brand starts to drop,

As much as I think it would be interesting, and good for my bottom line.....
I don't think Disney will ever take over the resale market,
They may have also let prices slump so that they could buy inventory cheaply, for Presidents day sale.... or maybe pre summer.....

If Disney is going to buy back and resell a lot of points, these bargain-basement prices that you all have don'e the work for, only benefit that little mouse.

 

[Robbie Cottam]

Isn't Disney somewhat at the mercy of manipulation for sold out resorts and ROFR.

I knew someone who once bought direct. They had DVD send the contract to them. They had signed it, but waited 2 months to return the documents. Disney honored that contract (points in the unit and UY). DVD had to sit on the points in that contract and not try to sell them to anyone else during that time or the contract would have needed to be torn up and redone because they cannot exceed the specific number of points assigned to any declared unit.

Someone could tell DVD they want to buy a 1000 points in a single contract for a specific UY at AKV. Disney needs to either have or use ROFR to acquire 1000 points in a unit that was assigned that UY.

In theory, Disney Could buy sell 1000 points out of the 2 percent that they have to hold back, so that the sale is all from one unit, and cover the 2 percent with multiple other contracts, if Disney wanted the sale...

However, I think Sandisw is correct in saying Disney would transfer 1000 points in multiple contracts..... In one use year.... If at all....

If all the points are in a single use year the fact that they are in one contract would only HURT the buyer in the long run....

You are never going to sell a 1000 point contract for anywhere near what ten 100 points contract would bring..

 

[maui22]

With sold out resorts, I bet that buyer would be on a waitlist for an extremely long time if not froeevrr for DavD to be able to squire that many points in a unit.

More likely, that buyer would be sold the points deeded to multiple units to make up the total since they’d be well above the minimum for contract size.

DVDs goal isn’t to sell sold out resorts which is why they have a base price so high. Now, in recent years they seem to have offered incentives for them, but ideally, they want to sell the active resorts.

Makes sense they would try to sell multiple contracts from multiple units. If it were a GW for a contract, they must come from the same unit though.