Soft September for DVC Direct Sales

[num]

This isn't horrible news for people like me looking to get into it.

 

[HIRyeDVC]

WDW still hasn't recovered from the pandemic. Attendance is still way down. Riviera sales were on par with other recent DVC resorts until the March 2020 shutdown.

It's simply too early to read too much into recent direct sales.


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Nice graph. Where is this from?

 

[Nabas]

Nice graph. Where is this from?

Data is from dvcnews.com.

 

[davidl81]

RIV pricing has gone up significantly since 2020, pretty consistently. Seems like lack of sales is the desired goal. This fits with the overall lack of construction. It’s not like they want to sell through RIV/VGF2 when nothing new is coming.

I thought RIV sales had been higher before lockdown, I don’t think I realized DVC was holding the bag on as many points as it is.

Business does not work like that. DVC does not want to sit on investment money. The longer a resort takes to sell the lower the return on that capital is, and the longer that Disney has to wait to redeploy that capital. There is basically no business case for wanting something to sell slowly.

 

[rubybutt]

Business does not work like that. DVC does not want to sit on investment money. The longer a resort takes to sell the lower the return on that capital is, and the longer that Disney has to wait to redeploy that capital. There is basically no business case for wanting something to sell slowly.

Only if the property isn't cash flowing. We really don't know the IRR of DVC vs cash rooms.

 

[RoseGold]

Disney needs to price this to move. They need it.

Business does not work like that. DVC does not want to sit on investment money. The longer a resort takes to sell the lower the return on that capital is, and the longer that Disney has to wait to redeploy that capital. There is basically no business case for wanting something to sell slowly.

If that were true, they would have discounted RIV or Aulani points. People would hold their nose and buy those properties if pricing was right. Disney is sitting on these points because they want to be.

VGF is such a small project, it doesn’t even move the needle. Pricing it sky high might help unload some Aulani.

 

[limace]

They are definitely not holding the bag. The resort is selling out on a cash rental. Maybe they don't want to sell the points? But then why would they transfer cash rooms to DVC at VGF? I am curious to know what Disney really thinks about this.

I don’t know what cash sales are like at RIV but we’ve been definitely hearing for months that they are slow at GF, so they may think they’ll do better with VGF.

 

[zavandor]

Next month will see slow sales as well. Contracts are recorder up to 2-3 weeks after the sale. So October report will include at least a couple of weeks of September sales, when the parks were dead.
Until the sale center at SSR reopens it's not possible to judge Riviera sales. There they push Rivieea not even telling people other resorts are available. Currently people tour a demo room at the resort they're staying, it's natural they then enquire about buying there.

 

[HIRyeDVC]

I don’t know what cash sales are like at RIV but we’ve been definitely hearing for months that they are slow at GF, so they may think they’ll do better with VGF.

This trend isn’t new. Cash stays have been historically low at all deluxe resorts because they are so expensive. Most deluxe resort guests have moved onto owning DVC so it’s only natural that Disney is converting deluxe hotel rooms to more DVC, hence WL, Poly, AKL Jambo, etc. I won’t be surprised if Disney follows the same strategy with Yacht Club. It costs Disney far less to convert existing hotel rooms than to build from scratch. And considering the slow sales of Riviera, this trend may continue. I wish they’d convert more hotel rooms from Grand Californian but I’m guessing the demand on the cash side is very high at that resort.

 

[lovethesun12]

WDW still hasn't recovered from the pandemic. Attendance is still way down. Riviera sales were on par with other recent DVC resorts until the March 2020 shutdown.

It's simply too early to read too much into recent direct sales.

I agree. Traveling to WDW right now is still just too complicated for a lot of people (I'm referring mostly to international). We won't be able to go until the quarantine requirements for our workplaces are lifted.

We recently introduced vaccine passports here and I'm really hoping that will make travel easier (hoping quarantines/etc might start to be dropped).

I have plans to purchase DVC direct but am unable to (due to our laws/regulations) unless I purchase in Florida.

 

[Bearval]

Not too surprising in my mind. Number of guests at the resorts were down significantly in Sept. Oct should be the best month of the year when it is reported. If not, then buckle up. Also we now know why some many AKV contracts got ROFR'd

What was the reason for so many AKV contracts being taken ?

 

[StoweFoSho]

Only if the property isn't cash flowing. We really don't know the IRR of DVC vs cash rooms.

Agreed. I'm sure the Riviera is doing just fine on the cash side, but we can't really tell. The benefit for Disney right now on cash sales is that they don't really have to offer any discounts because of demand for travel. Construction costs are still high and adding a new resort isn't good financial sense when you can't fill the flagship resort that you have. I think Disney is just fine with sitting on the points that they have and ROFRing what they need to offer alternatives. They have enough internal metrics to tell them when you increase direct prices. And every time that they do, you'll see a small spike in sales as hold-outs try to squeak in before the official increase.

The only addition of VGF2 is that they'll have three properties to present to buyers with incentives. Each one offers something different to the buyer, and at 150 point minimum for a first-time buyer they'll move plenty of points during the 18 month anniversary.

 

[davidl81]

Agreed. I'm sure the Riviera is doing just fine on the cash side, but we can't really tell. The benefit for Disney right now on cash sales is that they don't really have to offer any discounts because of demand for travel. Construction costs are still high and adding a new resort isn't good financial sense when you can't fill the flagship resort that you have. I think Disney is just fine with sitting on the points that they have and ROFRing what they need to offer alternatives. They have enough internal metrics to tell them when you increase direct prices. And every time that they do, you'll see a small spike in sales as hold-outs try to squeak in before the official increase.

The only addition of VGF2 is that they'll have three properties to present to buyers with incentives. Each one offers something different to the buyer, and at 150 point minimum for a first-time buyer they'll move plenty of points during the 18 month anniversary.

I think VGF2 will sell really well unless it’s priced too high. It will be interesting since normally DVC opens sales for new resorts (on property) right around the same time that sales are finishing for a past resort. That graph earlier in this thread shows it well. VGF2 may be one of the first times a resort goes on sale that will directly compete with another on property resort that is still in the middle of its sales life (assuming RIV doesn’t sell out till 2023ish). I need to go look back and see when SSR THV’s were offered, that may be the closest comp.