ROFR Thread July to Sept 2023 *PLEASE SEE FIRST POST FOR INSTRUCTIONS & FORMATTING TOOL*

[HIRyeDVC]

My rather uninformed opinion on all this is this: a healthy resale market does not only appeal to resale consumers, but maybe even more to the direct consumer. I don’t know what Disney tells a prospective buyer, but I assume somewhere in the details is, if for some reason you no longer need your contract, you can sell fairly easily unlike any other timeshare. Probably their last resort in their sales tactic, as Im sure they’re in no hurry to say “hey if you don’t care about the perks/restrictions, you can get this for half the cost over here.”. You pull rofr out from under resale, like it has been now, it drops the floor, but this is a coarse correction, right?, after the post-COVID cost escalation? Certainly with the addition of a good amount of inventory to this very limited market, unless you find some new buyers, these prices are the norm and likely will drop some, closer to what was seen 5+ years ago. My opinion, rofr certainly comes back in Full force, but not until the floor is reached, and like we’ve seen with GFV, I think we have to see good direct deals moving forward. Just too much supply in the future not to. Again, just my uninformed take on a niche market. I’m not going to pretend I know what’s going in DVC’s head.

I used to think this way too but have come to believe it was wishful thinking on my part. As an owner, I desperately want to believe that our DVC purchases were sound financial decisions, despite people saying never to buy as a financial investments. DVC used to be a unicorn timeshare product that amazingly maintained its value. But I believe that was mainly possible because DVC was a limited niche product. But Disney has saturated the product immensely the last 10 years and are continuing to do so. I’m afraid DVCs actions the past 11 years as @Sandisw mentioned was strategic and purposeful to destroy the resale market that has always been their biggest competitor.

 

[DanCali]

Do other traditional timeshares stop selling specific resorts once they’ve all sold out?

Technically, yes - they can't sell something they don't have.

But it's a bit more complex with other developers because the larger ones like Marriott and Vistana (Westin/Sheraton) have evolved from selling weeks products to selling points products. So, while they officially no longer sell weeks, they may exercise ROFR on resale weeks in order to dump those weeks in a real estate trust and then sell that week as part of the points offering. And sometimes, when it suits them, they a manager might magically find a week to sell to a prospective buyer if the situation warrants it.

But ROFR with other developers is a generally very profitability-oriented - I've had a Marriott week fail ROFR at $17K, renegotiated the deal, and it passed at $18K. If they bought that week at $17K and sold it as points, they would have made 4.5x their money. And when they exercise ROFR on Marriott points at ~$3 and sell for ~$14 it also implies a 4.5x to 5x profit. DVC resale prices are (still) way too high to support that kind of profitability via ROFR.

 

[DonMacGregor]

Oh my goodness, someone’s actually in the rofr office.

 

[Sandisw]

My rather uninformed opinion on all this is this: a healthy resale market does not only appeal to resale consumers, but maybe even more to the direct consumer. I don’t know what Disney tells a prospective buyer, but I assume somewhere in the details is, if for some reason you no longer need your contract, you can sell fairly easily unlike any other timeshare. Probably their last resort in their sales tactic, as Im sure they’re in no hurry to say “hey if you don’t care about the perks/restrictions, you can get this for half the cost over here.”. You pull rofr out from under resale, like it has been now, it drops the floor, but this is a coarse correction, right?, after the post-COVID cost escalation? Certainly with the addition of a good amount of inventory to this very limited market, unless you find some new buyers, these prices are the norm and likely will drop some, closer to what was seen 5+ years ago. My opinion, rofr certainly comes back in Full force, but not until the floor is reached, and like we’ve seen with GFV, I think we have to see good direct deals moving forward. Just too much supply in the future not to. Again, just my uninformed take on a niche market. I’m not going to pretend I know what’s going in DVC’s head.

I have never had a DVC guide nor a kiosks CM mention resale value in their conversations and to be honest, many downplay the question.

Meaning, they will avoid the topic and when asked directly simply said, yes there is one big here is what you risk buying that way.

 

[HIRyeDVC]

Technically, yes - they can't sell something they don't have.

But it's a bit more complex with other developers because the larger ones like Marriott and Vistana (Westin/Sheraton) have evolved from selling weeks products to selling points products. So, while they officially no longer sell weeks, they may exercise ROFR on resale weeks in order to dump those weeks in a real estate trust and then sell that week as part of the points offering. And sometimes, when it suits them, they a manager might magically find a week to sell to a prospective buyer if the situation warrants it.

But ROFR with other developers is a generally very profitability-oriented - I've had a Marriott week fail ROFR at $17K, renegotiated the deal, and it passed at $18K. If they bought that week at $17K and sold it as points, they would have made 4.5x their money. And when they exercise ROFR on Marriott points at ~$3 and sell for ~$14 it also implies a 4.5x to 5x profit. DVC resale prices are (still) way too high to support that kind of profitability via ROFR.

Perhaps DVC is shifting towards this strategy? If resale values tank, their ROFR profit margin would mirror those of other traditional timeshares?

 

[jason423]

https://www.dvcresalemarket.com/blog/dvc-right-of-first-refusal-report-rofr-july-23/

Even our sponsor can’t make of what’s happening. If ROFR is truly dead, and people keep buying these direct contracts, perhaps Disney truly doesn’t care (nor should they) about what happens to their product in the resale market. I always thought the robust resale market and maintaining resale value was one of the lasting appeal of DVC. But if people continue to buy all these direct contracts despite a really favorable resale buyer’s market, they’re doing something right to market the FOMO because God certainly knows the direct perks are not worth it. Thoughts?

My assumption would be that they do not care that much about the contracts holding value. Even before the most recent incentives I was always amazed at how many people buy direct and I think its more just how easy it is, the fact it is through disney itself, and perhaps just lack of knowledge that drives sales. Now I think the most recent incentives seemed more targeted specifically at resale buyers, trying to get then to become blue card holders which seemed to work. GF at $160ish is lower than most resale contracts at the same resort just a few years ago and not much more than buying resale now. For someone looking to add on, or potentially flip out of their old contracts and get no restrictions in the future its a good deal.

I think one of the main things will be to see if the Poly2 is or is not restricted. The fact that they decided to add restrictions with RIV really changed the whole resale dynamic and RIV certainly doesnt hold the same resale value as other unrestricted resorts that run for a long time. Once some of the 2042 comes off line that will likely only hurt resale further as it really diminishes inventory.

 

[Sandisw]

My assumption would be that they do not care that much about the contracts holding value. Even before the most recent incentives I was always amazed at how many people buy direct and I think its more just how easy it is, the fact it is through disney itself, and perhaps just lack of knowledge that drives sales. Now I think the most recent incentives seemed more targeted specifically at resale buyers, trying to get then to become blue card holders which seemed to work. GF at $160ish is lower than most resale contracts at the same resort just a few years ago and not much more than buying resale now. For someone looking to add on, or potentially flip out of their old contracts and get no restrictions in the future its a good deal.

I think one of the main things will be to see if the Poly2 is or is not restricted. The fact that they decided to add restrictions with RIV really changed the whole resale dynamic and RIV certainly doesnt hold the same resale value as other unrestricted resorts that run for a long time. Once some of the 2042 comes off line that will likely only hurt resale further as it really diminishes inventory.

While RIV may not be as high as some think it should be, it certainly does sell for higher than some WDW resorts which do not have restrictions.

So, it will definitely be interesting when the 2042s are gone..which reorient popular bear park resorts..and replaced with restricted resorts..or potentially it even replace at all.

 

[HIRyeDVC]

My assumption would be that they do not care that much about the contracts holding value. Even before the most recent incentives I was always amazed at how many people buy direct and I think its more just how easy it is, the fact it is through disney itself, and perhaps just lack of knowledge that drives sales. Now I think the most recent incentives seemed more targeted specifically at resale buyers, trying to get then to become blue card holders which seemed to work. GF at $160ish is lower than most resale contracts at the same resort just a few years ago and not much more than buying resale now. For someone looking to add on, or potentially flip out of their old contracts and get no restrictions in the future its a good deal.

I think one of the main things will be to see if the Poly2 is or is not restricted. The fact that they decided to add restrictions with RIV really changed the whole resale dynamic and RIV certainly doesnt hold the same resale value as other unrestricted resorts that run for a long time. Once some of the 2042 comes off line that will likely only hurt resale further as it really diminishes inventory.

I agree with everything except for the value of Riviera resale. I think Riviera resale has done pretty well considering the restrictions. Many have sold at similar prices to CCV and BLT, which are MK resorts without restrictions and still have long contract life remaining. Perhaps it’s still too early to judge Riviera resale since so few are available on the resale market. Maybe Riviera direct owners will flood the resale market in 7 years like BLT owners are doing now.

 

[AwfulWaffle]

Oh my goodness, someone’s actually in the rofr office.

I wish they would rubber stamp mine while they are stopping in and visiting!

 

[npatellye]

I wish they would rubber stamp mine while they are stopping in and visiting!

Same!

 

[Sandisw]

I agree with everything except for the value of Riviera resale. I think Riviera resale has done pretty well considering the restrictions. Many have sold at similar prices to CCV and BLT, which are MK resorts without restrictions and still have long contract life remaining. Perhaps it’s still too early to judge Riviera resale since so few are available on the resale market. Maybe Riviera direct owners will flood the resale market in 7 years like BLT owners are doing now.

Another thing to consider is that if RIV resale begins to go much lower, you may end up with owners who decide its not worth selling at such a low price and keep it longer and just use, or maybe rent out points instead....that could keep the supply down which may help temper the loss.

I know that we decided, when we added on RIV contracts, both direct and resale, that they would be the last contracts we sold if we had to downsize....

 

[smileyanna]

I actually think it’s not coming back at all.

There is no question that DVC is shifting its direct/resale incentive plans, as @Sandisw has laid out.

But the current ROFR hold is likely far more tied to Disney's cash issue than the DVC division's micro strategy. Likewise, DVC isn't choosing to sell its flagship resort for $160/point to enhance the relative value of direct contract sales vs resale. The company needs money, and has put a freeze on certain kinds of spending.

Where ROFR goes in the longer term is more interesting, and here I agree with @Sandisw that DVC will be less interested in propping up the resale market than they were. Who knows how low the 2042 resorts go - but just like owners might hold on to their RIV contracts and rent their points out, so will owners at resorts with favorable points charts.

 

[aceshigh73]

There is no question that DVC is shifting its direct/resale incentive plans, as @Sandisw has laid out.

But the current ROFR hold is likely far more tied to Disney's cash issue than the DVC division's micro strategy. Likewise, DVC isn't choosing to sell its flagship resort for $160/point to enhance the relative value of direct contract sales vs resale. The company needs money, and has put a freeze on certain kinds of spending.

Where ROFR goes in the longer term is more interesting, and here I agree with @Sandisw that DVC will be less interested in propping up the resale market than they were. Who knows how low the 2042 resorts go - but just like owners might hold on to their RIV contracts and rent their points out, so will owners at resorts with favorable points charts.

You have to figure Dis will stop Rofr on the 2042 resorts eventually (not that they are now anywhere) but you have to figure once inside what? 15 years ? ppl will see the endgame and will stop buying resale (esp at then absurd prices they are going for) at bcv and bwv. I know we have looked at a few 150+ pt contracts and said “no way we are spending $20k for 18 years.” Even though our Disney run might be over by then, it still makes little sense.

 

[DanCali]

Perhaps DVC is shifting towards this strategy? If resale values tank, their ROFR profit margin would mirror those of other traditional timeshares?

They can't control resale values. But I think they are definitely making new resorts much less appealing to buyers on the resale market (relative to O14) and it will inevitably impact resale prices over time. But it'd have to be a pretty big crash to get to a 4x or 5x profit from ROFR (that would put resale values in the sub $50s) and I view that kind of price as highly unlikely because resale prices are probably also supported by cash value for DVC stays and rental value for DVC points.

 

[HIRyeDVC]

All great points. Cash rack rates and DVC rental market will also drive overall trends. If rack rates continue to be high for resorts like GF, BC, and RIV, then that might be a good enough incentive for owners to hold onto their contracts and rent instead of selling for cheap. I agree that the current lack of ROFR probably has more to do with Disney’s lack of cash. But unless they can figure out a way out of this streaming mess, I can’t see how Disney could maintain profitability other than the parks, which is also seeing declines in revenue. I think we all need to come to terms with the end of the “revenge travel” era that bloated Disney’s overall demand, including DVC.

 

[JackosinDIS]

https://www.fidelityrealestate.com/blog/july-2023-average-dvc-resale-price-per-point/

Prices do still seem to be fairly stable though (if not trending up slightly)…. Despite the lack of ROFR

 

[smileyanna]

You have to figure Dis will stop Rofr on the 2042 resorts eventually (not that they are now anywhere) but you have to figure once inside what? 15 years ? ppl will see the endgame and will stop buying resale (esp at then absurd prices they are going for) at bcv and bwv. I know we have looked at a few 150+ pt contracts and said “no way we are spending $20k for 18 years.” Even though our Disney run might be over by then, it still makes little sense.

But with the market dynamics you are describing, ROFR is irrelevant.

 

[HIRyeDVC]

Riviera is $135pp while CCV is $134pp. So much for resale restrictions impacting value.

 

[sparkle022]

sparkle022---$135-$10617-65-AKV-Sep-0/22, 17/23, 48/24, 65/25-seller pays MF ‘23- sent 7/17

Update!

sparkle022---$135-$10617-65-AKV-Sep-0/22, 17/23, 48/24, 65/25-seller pays MF '23- sent 7/17, passed 8/4

 

[Sandisw]

Riviera is $135pp while CCV is $134pp. So much for resale restrictions impacting value.

I think what we may be seeing is the market settling in for the near park resorts like BLT, CCV, and PVB now that ROFR is not happening. I think it even explains the drop in BWV and BCV.

With RIV, it was not impacted bt ROFR so it settled in for different reasons.

I also think that much of what happens with the resale market is still based on the specific resort, how much people want it and that the other things, like restrictions can be overcome if the resort is popular.

For example, I bet restrictions would be much more of an issue in impacting price for SSR or OKW…