ROFR Thread April to June 2022 *PLEASE SEE FIRST POST FOR INSTRUCTIONS & FORMATTING TOOL*

[Brian Noble]

The fire sale is coming boys.

I don't think so.

It makes no business sense to ROFR and actively resell at current prices, let alone at a lower price point. Active reselling (vs. passive "answer the phone with someone who wants to buy today at Resort XYZ" selling) takes time and energy. That time and energy is better spent selling the shiny new resorts, which cost less (and probably much less) to build than this inventory costs to re-buy. That's because the rule of thumb in the timeshare industry is that the cost of building the resort should be between 20-30% of the total costs in making a sale. (Marketing is, surprisingly, more expensive, at 40-50%).

On top of that, DVD has been actively closing what gap there might have been between the "cheaper" legacy WDW resorts and the actively marketed ones, through some pretty aggressive price increases. Turning that process around would be corporate whiplash even for Disney, which is not known for its consistency in marketing...

I suspect something else is going on that is stimulating organic demand for these resorts (i.e. the "passive sales" I mentioned above), but I don't for the life of me know what it might be. Maybe folks liquidated some investments in anticipation of a recession and are looking for something to do with the money? That seems unlikely, but I'm hard-pressed to think of another reason for doing this.

I could certainly be wrong. Wouldn't be the first time. But, I don't see it.

 

[Sandisw]

I think the new incentives will be very successful at VGF and RIV, but they're going to need to offload all these Big 3 points eventually.

At some point, yes. But as long as they can sustain sales with RIV and VGF, I say they hold on to those points and use for OTU points and cash stays. I am not yet convinced they need to get rid of them this year.

As I have mentioned many times, prior to Covid, sold out resort incentives were simply not a thing.

 

[CaptainAmerica]

It makes no business sense to ROFR and actively resell at current prices, let alone at a lower price point. Active reselling (vs. passive "answer the phone with someone who wants to buy today at Resort XYZ" selling) takes time and energy. That time and energy is better spent selling the shiny new resorts, which cost less (and probably much less) to build than this inventory costs to re-buy. That's because the rule of thumb in the timeshare industry is that the cost of building the resort should be between 20-30% of the total costs in making a sale. (Marketing is, surprisingly, more expensive, at 40-50%).

A few points here.

First, I don't think there are enough buyers calling them up unsolicited to buy a Big 3 property at an undiscounted price higher than what they'd pay at VGF or Riviera. I have to think they're accumulating points through ROFR faster than they can offload them (undiscounted) to Direct buyers.

Second, I don't think there's much marketing necessary to re-sell-out sold-out resorts. I don't need any promotional materials to be presented to me, all I'd need would be a tweet from Paul Krieger saying that OKW Direct is being offered for $150 @ 300 and I'd be beating down my guide's door to buy it. They've been exercising ROFR in volume for ROFR, but ROFR volume is nowhere near initial build volume. They wouldn't need to clear huge numbers of contracts, so the big marketing expense isn't necessary. They knocked $48 off of Bay Lake Tower in February and cleared their inventory in one month. It didn't require any marketing, the aggressive pricing was enough to offload the accumulated points, primarily (I'm guessing) to existing BLT owners and savvy members (i.e. us) who recognized the deal.

On top of that, DVD has been actively closing what gap there might have been between the "cheaper" legacy WDW resorts and the actively marketed ones, through some pretty aggressive price increases. Turning that process around would be corporate whiplash even for Disney, which is not known for its consistency in marketing...

The gap is actually inverse at the moment. It's cheaper to buy RIV and VGF2 than it is to buy SSR. That needs to break at some point or they'll be holding those SSR points forever.

I suspect something else is going on that is stimulating organic demand for these resorts (i.e. the "passive sales" I mentioned above), but I don't for the life of me know what it might be. Maybe folks liquidated some investments in anticipation of a recession and are looking for something to do with the money? That seems unlikely, but I'm hard-pressed to think of another reason for doing this.

@Sandisw is sick of hearing me say this, but I don't think they're buying the points because they want the points (whether to resell, or provide inventory for cash stays, or any other thing). I think they're buying the points to inflate resale prices and make Direct more appealing in comparison. They're not ROFRing SSR to resell SSR, they're ROFRing SSR to make SSR resale look expensive and drive people to VGF and RIV. The fact that they get to resell SSR at some margin is just gravy.

At some point, yes. But as long as they can sustain sales with RIV and VGF, I say they hold on to those points and use for OTU points and cash stays. I am not yet convinced they need to get rid of them this year.

Isn't Aulani more than enough to fuel OTUP?

As I have mentioned many times, prior to Covid, sold out resort incentives were simply not a thing.

Prior to COVID, they were building new resorts. Now they're not.

 

[Sandisw]

A few points here.

First, I don't think there are enough buyers calling them up unsolicited to buy a Big 3 property at an undiscounted price higher than what they'd pay at VGF or Riviera. I have to think they're accumulating points through ROFR faster than they can offload them (undiscounted) to Direct buyers.

Second, I don't think there's much marketing necessary to re-sell-out sold-out resorts. I don't need any promotional materials to be presented to me, all I'd need would be a tweet from Paul Krieger saying that OKW Direct is being offered for $150 @ 300 and I'd be beating down my guide's door to buy it. They've been exercising ROFR in volume for ROFR, but ROFR volume is nowhere near initial build volume. They wouldn't need to clear huge numbers of contracts, so the big marketing expense isn't necessary. They knocked $48 off of Bay Lake Tower in February and cleared their inventory in one month. It didn't require any marketing, the aggressive pricing was enough to offload the accumulated points, primarily (I'm guessing) to existing BLT owners and savvy members (i.e. us) who recognized the deal.


The gap is actually inverse at the moment. It's cheaper to buy RIV and VGF2 than it is to buy SSR. That needs to break at some point or they'll be holding those SSR points forever.


@Sandisw is sick of hearing me say this, but I don't think they're buying the points because they want the points (whether to resell, or provide inventory for cash stays, or any other thing). I think they're buying the points to inflate resale prices and make Direct more appealing in comparison. They're not ROFRing SSR to resell SSR, they're ROFRing SSR to make SSR resale look expensive and drive people to VGF and RIV. The fact that they get to resell SSR at some margin is just gravy.


Isn't Aulani more than enough to fuel OTUP?


Prior to COVID, they were building new resorts. Now they're not.

But they are building new DVC…202 new rooms for VGF, lots of points for VDH and the new Poly tower…all back on track to have the every few years something new may be coming out….so no shortage of new for the next 3 years at least.

So, now that they have those 3 new projects, and still have RIV and AUL, they just don’t need to offer discounts for sold out resorts, not like they did in the past year when it was just RIV and AUL.

OTU points have to come from declared points and just don’t think they keep that many AUL points in stock.

Typically, OTU points do not come from resorts in active sales either…so it makes sense to use those ROFR points instead.

All we know is that they dont need those resorts when they can offer better incentives on the active sales resorts where they have millions of points available.

 

[HIRyeDVC]

Flipping/upgrade, hmm
I paid $155 last May.

Me too but I don think it would sell easily in the current market. There are tons of BLT listings right now

 

[CaptainAmerica]

All we know is that they dont need those resorts when they can offer better incentives on the active sales resorts where they have millions of points available.

I know you love them, so it's hard for you to imagine, but a lot of people don't like those resorts. They have millions of points available at VGF and RIV, but I want zero of them.

You're viewing this situation as one with high cannibalization rates. The way you describe it, Person X decides they're going to buy DVC come hell or high water, they're going to buy Direct, and it's only a matter of whether they buy at VGF, RIV, or elsewhere. In that situation, yes, what you're saying is correct. Offering incentives at AKV or SSR would only cannibalize the sales they were going to make anyways.

But I'm not Person X, I'm Person Y. Person Y doesn't like VGF or RIV, he finds them stuffy. Person Y is savvy and knows that $200 for SSR is silly. Disney will only sell Direct to Person Y if they offer aggressive pricing at the Big 3. In doing so, they're only adding incremental sales, they're not cannibalizing sales they would have made anyways.

I want to buy direct, but I'm not going to buy a home resort that I hate and I'm not going to overpay for product that's objectively "worse" than the resorts that I hate.

 

[BeachClub2014]

@Sandisw is sick of hearing me say this, but I don't think they're buying the points because they want the points (whether to resell, or provide inventory for cash stays, or any other thing). I think they're buying the points to inflate resale prices and make Direct more appealing in comparison. They're not ROFRing SSR to resell SSR, they're ROFRing SSR to make SSR resale look expensive and drive people to VGF and RIV. The fact that they get to resell SSR at some margin is just gravy.

I'm thinking the very active ROFR action is for all of these reasons. It makes sense to use ROFR to inflate resale prices to make direct purchases more attractive. It also makes sense for DVC to maintain a pool of points in the sold-out resorts for direct sales, OTU, cash sales, etc. It could also be a long-term strategy to pull in points for direct sales in the future. Eventually, the points for Aulani, GFV2, Riv, and Poly2 will be gone. The question is whether they continue to build new resorts or if market saturation of "new" resorts/points dictates a shift in sales strategy to emphasize legacy resorts. There are only so many new DVC resorts you can build, right? So they need to sell something.

 

[CaptainAmerica]

The question is whether they continue to build new resorts or if market saturation of "new" resorts/points dictates a shift in sales strategy to emphasize legacy resorts. There are only so many new DVC resorts you can build, right? So they need to sell something.

I think that problem solves itself in 2042 when they can start selling the same portfolio all over again. They just need a few pieces to bridge that gap.

 

[arich35]

I think I finally convinced my wife to buy a smaller contract (100 points or so) but I have no idea where would be best at this point. Are SSR and AK still the best values? Or has Poly become a better value? The whole ROFR of it all makes it tricky

 

[Chia1974]

I think I finally convinced my wife to buy a smaller contract (100 points or so) but I have no idea where would be best at this point. Are SSR and AK still the best values? Or has Poly become a better value? The whole ROFR of it all makes it tricky

Poly is the most economical, follow by SSR/CCV/VGF. They won’t ROFRd VGF and rarely Poly.
I should add, Aulani subsidized is the most economical of any DVC.

 

[Mexacajun]

Poly is the most economical, follow by SSR/CCV/VGF. They won’t ROFRd VGF and rarely Poly.

Would be interested to see your calculations for this. I assume the VGF is the most economical given current resale prices we have seen. I have seen several priced below poly per point.

 

[RamblinWreck]

I know you love them, so it's hard for you to imagine, but a lot of people don't like those resorts. They have millions of points available at VGF and RIV, but I want zero of them.

You're viewing this situation as one with high cannibalization rates. The way you describe it, Person X decides they're going to buy DVC come hell or high water, they're going to buy Direct, and it's only a matter of whether they buy at VGF, RIV, or elsewhere. In that situation, yes, what you're saying is correct. Offering incentives at AKV or SSR would only cannibalize the sales they were going to make anyways.

But I'm not Person X, I'm Person Y. Person Y doesn't like VGF or RIV, he finds them stuffy. Person Y is savvy and knows that $200 for SSR is silly. Disney will only sell Direct to Person Y if they offer aggressive pricing at the Big 3. In doing so, they're only adding incremental sales, they're not cannibalizing sales they would have made anyways.

I want to buy direct, but I'm not going to buy a home resort that I hate and I'm not going to overpay for product that's objectively "worse" than the resorts that I hate.

If you take the average person who wants to own DVC but hates the Grand Floridian, I don't think it's too hard to sell them on buying Grand Floridian anyway.

You just tell them that they can use the points at all of the DVC resorts, including the ones that they do like, and the ones that they do like aren't on sale right now. I know that the resale market is very active, but it's not something most people know about.

 

[Chia1974]

Would be interested to see your calculations for this. I assume the VGF is the most economical given current resale prices we have seen. I have seen several priced below poly per point.

It’s price per point over the life of contract plus dues. Some Poly and VGF are sub $11 currently.

 

[BeachClub2014]

I think that problem solves itself in 2042 when they can start selling the same portfolio all over again. They just need a few pieces to bridge that gap.

Very true on the 2042 resorts, but that's still 20-years down the road. It will be interesting to see what will happen with new construction, if any, after Poly2. If there aren't a plethora of "new" points to sell, then they have to sell something.

 

[RamblinWreck]

I think I finally convinced my wife to buy a smaller contract (100 points or so) but I have no idea where would be best at this point. Are SSR and AK still the best values? Or has Poly become a better value? The whole ROFR of it all makes it tricky

Are there certain places you would prefer to stay, and certain room types?

I assume with a 100 point contract you are mostly looking at studios. Those may be hard to come by at many resorts if you don't have the 11 month booking window. If your plan is to stay in standard view studios, the most economical thing is for you to buy where you want to stay in my opinion. Because otherwise you're going to find yourself not being able to use your points the way you want to and having to stay in more point-expensive room categories or resorts you aren't happy with, which will just fuel the inevitable addon-itis.

 

[BeachClub2014]

I'm no huge fan of the Grand Floridian, but if they offered a $31 incentive on 200 points there, like at the RIV, then I would be awfully tempted to buy into GFV2.

 

[Chia1974]

Me too but I don think it would sell easily in the current market. There are tons of BLT listings right now

Yea, I know. My is 125 points, hopefully it’s easier to sell if I want to sell.

 

[Sandisw]

I know you love them, so it's hard for you to imagine, but a lot of people don't like those resorts. They have millions of points available at VGF and RIV, but I want zero of them.

You're viewing this situation as one with high cannibalization rates. The way you describe it, Person X decides they're going to buy DVC come hell or high water, they're going to buy Direct, and it's only a matter of whether they buy at VGF, RIV, or elsewhere. In that situation, yes, what you're saying is correct. Offering incentives at AKV or SSR would only cannibalize the sales they were going to make anyways.

But I'm not Person X, I'm Person Y. Person Y doesn't like VGF or RIV, he finds them stuffy. Person Y is savvy and knows that $200 for SSR is silly. Disney will only sell Direct to Person Y if they offer aggressive pricing at the Big 3. In doing so, they're only adding incremental sales, they're not cannibalizing sales they would have made anyways.

I want to buy direct, but I'm not going to buy a home resort that I hate and I'm not going to overpay for product that's objectively "worse" than the resorts that I hate.

Actually it has nothing to do with loving the resorts. It has to do with the strategy of DVD that I have watched over the years when a new resort came online.

They sold it with the notion that you can trade anywhere so home resort isn’t as big of a deal as we know it is.

You keep saying a lot don’t like those resorts..but the millions of points that have been sold contradict that. 93k points in April for RIV alone is not something to bulk at in todays world. Not to mention the owners who added on in record high numbers at VGF. So plenty of buyers choosing those resorts.

Now, I have no idea if they will change strategy but so far, they aren’t for the summer with these new incentives.

I just don’t see them needing at this point in time, with both VDH and Poly tower points coming on line in the next two years to rush to offer deals on sold out resorts, unless things tank like they did with the closure.

And, even with the deals at BLT and BWV, it didn’t raise the sales numbers overall i any tremendous way.

We just don’t see the demand for sold out resorts the same way. Sure, they are losing you and others like you who don’t like the resorts but it’s always been that way. I think for the right price, new buyers will be okay choosing those new ones for less and if not, pay the extra for the big 3 if it’s that important..or those buyers don’t buy direct.

None of us know why they do what they do for ROFR and it may be to prop up resale to guide people to direct. Just because I don’t think that’s a big reason doesn’t mean it isn’t. The only thing I know for sure is they have plenty of reasons and they change as time goes on. Their goal is to sell direct points by making resale inferior.

ETA. And if they really wanted to have that as an option they didn’t need to raise base price like they have in the last year on those resorts..left them at prices well below and let people have a choice. They didn’t. That tells me it just may not be a priority right now and for the time being don’t care if they are sitting on extra points at some resorts

 

[CaptainAmerica]

Very true on the 2042 resorts, but that's still 20-years down the road. It will be interesting to see what will happen with new construction, if any, after Poly2. If there aren't a plethora of "new" points to sell, then they have to sell something.

Coronado got Gran Destino and Caribbean Beach got Riviera, I wouldn't be shocked to see them rip out a chunk of Riverside for a new tower. Or maybe Reflections comes back.

 

[Mexacajun]

Actually it has nothing to do with loving the resorts. It has to do with the strategy of DVD that I have watched over the years when a new resort came online.

They sold it with the notion that you can trade anywhere so home resort isn’t as big of a deal as we know it is.

You keep saying a lot don’t like those resorts..but the millions of points that have been sold contradict that. 93k points in April for RIV alone is not something to bulk at in todays world. Not to mention the owners who added on in record high numbers at VGF. So plenty of buyers choosing those resorts.

Now, I have no idea if they will change strategy but so far, they aren’t for the summer with these new incentives.

I just don’t see them needing at this point in time, with both VDH and Poly tower points coming on line in the next two years to rush to offer deals on sold out resorts, unless things tank like they did with the closure.

And, even with the deals at BLT and BWV, it didn’t raise the sales numbers overall i any tremendous way.

We just don’t see the demand for sold out resorts the same way. Sure, they are losing you and others like you who don’t like the resorts but it’s always been that way. I think for the right price, new buyers will be okay choosing those new ones for less and if not, pay the extra for the big 3 if it’s that important..or those buyers don’t buy direct.

None of us know why they do what they do for ROFR and it may be to prop up resale to guide people to direct. Just because I don’t think that’s a big reason doesn’t mean it isn’t. The only thing I know for sure is they have plenty of reasons and they change as time goes on. Their goal is to sell direct points by making resale inferior.

ETA. And if they really wanted to have that as an option they didn’t need to raise base price like they have in the last year on those resorts..left them at prices well below and let people have a choice. They didn’t. That tells me it just may not be a priority right now and for the time being don’t care if they are sitting on extra points at some resorts

Coronado got Gran Destino and Caribbean Beach got Riviera, I wouldn't be shocked to see them rip out a chunk of Riverside for a new tower. Or maybe Reflections comes back.

Riverside makes sense. I would buy there.