The race to worthless

[CarolynFH]

Aside from delinquency, could an owner not simply surrender the contract back to Disney? I thought I had read on these boards that such a thing happens, though infrequently.

Disney does foreclose on contracts that are delinquent on dues and/or on mortgage payments when financed through Disney. There have been threads here in the past about how to buy a foreclosed contract.

Also, I suspect but can’t prove that if an owner called Disney, explained they can’t or won’t pay any more, and offered to deed back their ownership in lieu of Disney going through the foreclosure process, Disney would take it back (for free, no payment on Disney’s part).

And finally, per Florida law, if an owner defaults on TS mortgage or dues, the timeshare developer can take back the TS property but can’t go after the owner for the amount owed.

The above would apply to the WDW resorts and to VB. I don’t know what foreclosure and other applicable laws are for TS in South Carolina, California and Hawaii.

 

[2010dvcfan]

I think it's possible DVC will revamp the points charts and sell the resorts all over again, that decision is probably years away from a final decision. Alot can change with a company and product in next 15 years. I don't see any extensions being offered; the money will be in new contracts at current prices for the market then who knows $275-$300 a point maybe.

I imagine all of that will revolve around how well they protect the BRAND towards the end of the 2042 resort current contracts.

 

[Cfabar1]

I think it's possible DVC will revamp the points charts and sell the resorts all over again, that decision is probably years away from a final decision. Alot can change with a company and product in next 15 years. I don't see any extensions being offered; the money will be in new contracts at current prices for the market then who knows $275-$300 a point maybe.

I imagine all of that will revolve around how well they protect the BRAND towards the end of the 2042 resort current contracts.

I think there will be some revamping of the points charts, but overall they have kept something resembling integrity in terms of the prices they charge at the resort and the points per night.

I do think BW and BC could see their points charts adjusted up - say to BLT levels. I feel like GF and Poly have to set the standard for highest points charts. If a standard view at OKW costs the same as a Standard view at VGF that will cause major issues within the system that would hurt the integrity of the brand. But they could go that route...

Personally I think there will be a trust that you can purchase for the properties. It will give them flexibility. I would imagine, depending on how the trust is structured, there might even be a way to say have VB and HHI start in the trust, but reserve Disney the right to sell the resorts when it is time. I know people have talked about these properties being sold, but I think both of them will struggle to find a buyer. I would imagine historically Disney would also require the properties be demolished or be close to downright unrecognizable from the Disney experience.

 

[OKW Lover]

I think there will be some revamping of the points charts, but overall they have kept something resembling integrity in terms of the prices they charge at the resort and the points per night.

Any revamping of the points chart has to be done between seasons. The total points for a year cannot change. Only the number of points/night can be changed and an increase in one season will have to be offset by a decrease in another season.

I do think BW and BC could see their points charts adjusted up - say to BLT levels. I feel like GF and Poly have to set the standard for highest points charts. If a standard view at OKW costs the same as a Standard view at VGF that will cause major issues within the system that would hurt the integrity of the brand. But they could go that route...

DVC points charts can't be adjusted up without some corresponding drop in points for a different season.

 

[CarolynFH]

Any revamping of the points chart has to be done between seasons. The total points for a year cannot change. Only the number of points/night can be changed and an increase in one season will have to be offset by a decrease in another season.

DVC points charts can't be adjusted up without some corresponding drop in points for a different season.

That’s IF the current condominium association is still in effect. If DVC allows the 2042 resorts to end on 1/31/2042 as scheduled, a new condo association can begin the next day (or the resort can become part of a trust) with an entirely new points chart, completely unrestricted by the previous points chart.

 

[OKW Lover]

That’s IF the current condominium association is still in effect. If DVC allows the 2042 resorts to end on 1/31/2042 as scheduled, a new condo association can begin the next day (or the resort can become part of a trust) with an entirely new points chart, completely unrestricted by the previous points chart.

Correct. And the current members will have no investment in them at that point.

 

[CarolynFH]

Correct. And the current members will have no investment in them at that point.

Exactly. DVC can make any changes they want, based on their business projections and plan at that time. I hope to see what they do, but I won’t be a DVC owner after 1/31/42.

 

[Maistre Gracey]

Won't Disney still come after you for the dues in court? In those situations, it might be better to sell your DVC contract with $2,000 dues for -$500.



Yes but if there are many many sellers and YOU need to get rid of your contract TODAY then logically you'll offer the lowest price you think will be accepted immediately.

The people in these situations aren't trying to make an optimal, long-term decision, they're trying to get out of a cash crunch ASAP.

But the question was not about an emergency sale.

 

[VGCgroupie]

Was off the boards for awhile, long thread so I haven't read through. My vote is VB, since I wouldn't want a VB contract for $5 per point currently.

 

[Bearval]

I am not going to lie to you all, I am worried.

Part of the appeal of DVC is that it maintains its value. Or at least some value. No matter what, you’ll be able to unload it.

If there’s even one worthless resort, you really can’t say that anymore. And I’m concerned we’re headed that way.

First take Vero Beach. Dues are high and getting higher. They increased over $1 per point last year and are now nearly $14. Meanwhile, renting points at VB can be done via a broker for as low as $19, and if you rent out points with David’s or DVC Rental Store, you’re only going to get $14-$16 per point.

If you can’t rent out your points for enough to cover dues, is there any value left? This seems very likely to happen in the next 5 years.

And if there is, once non-owners can rent points for cheaper than owners MFs, is there any value left? It seems plausible this could eventually happen as well, as point rental prices are fundamentally tied to WDW, not VB.


And then there’s the Cabins at Fort Wilderness. What will resale look like for those? A resale owner will be locked in to Only vacationing at the cabins, in one room type, forever, no matter how much their family changes, no matter if they decide they want to have a restaurant nearby, no matter if they wind up needing a scooter, no matter what.

The appeal of that seems incredibly narrow. At least direct owners can occasionally use the points at Old Key West or whatever.

I don’t doubt that the initial resale contracts will sell for real money, but what happens when there’s 20 contracts for sale at once? What happens when there’s 50? I’m incredibly concerned that we will see the contracts selling for peanuts and potentially eventually nothing at all. Even if there’s value vs renting points or paying cash, the commitment I think will be intimidating; there’s timeshare all over the globe that you can buy for less than you can rent a week. Will there be one at WDW?

Anyway, happy Friday.

This is all part of the master plan to kill off the resale market. Disney will exercise their ROFR on bottom dollar contracts and resell them as direct points with no restrictions.

 

[Bearval]

I think the Vero Beach price collapse is only going to happen a few dollars after the rental cross-over, which itself I think will be slightly deferred by rental agencies coming up with a VB rental premium (to preserve supply). So at least a few years away.

But I do feel VB will have a price collapse prior to 2041. Maybe not all the way down to $0, but potentially something nominal like $2-5/pt. There will still be a market of buyers who don't want to deal with the hassle of renting, making the ownership premium worth it.

As for CFW, ugh. As it is, it's a hopeless resort in terms of sales (I'm quite looking forward to a stay later this year). It's entirely possible that there's nominal value resale contracts even sooner than VB, but we'll need to see a few things first: 2025 and 2026 dues. If these manage to stay flat, it'll hold off some doomsday stuff a little bit.

CFW's only hope, and by this I mean DVD's only* hope for CFW, is Reflections getting lumped into the same association/trust/flippity-floppity-floop. Sure, this will bring some dues dilution and CFW owners will be able to have more than 1 accommodation, which will make CFW itself more appealing, but the real magic trick here is masquerading the CFW points as REF points. It's the only way they'll find a dance partner.

* DVD does actually have another option here: incentives along the lines of "50 CFW Points FREE with purchase of 200 Poly Points". I'd be curious how many 199pt Poly contracts sell with this. (this would also guarantee $0 resale contracts)


Dang, every CFW owner selling at once, huh? Harsh.

$2 to $5 pp can be than zero if you add up all the fees to buy and or sell a contract.

 

[Bearval]

All of the DVC contracts will have value until the day they expire.

If you are buying any timeshare you should assume all of your initial investment is gone and you will get nothing back.

Most people who buy DVC probably don’t know about a resale market.

I would avoid buying any timeshare if writing off all of your investment isn’t an option for you.

Timeshares are a consumable product where the best value is in using it. People got spoiled when they were able to sell it for more than they paid for it ( not counting the time value of money here) when they no longer had the need ( children grown) or desire to go to WDW as frequently.

 

[Bearval]

I think there will be some revamping of the points charts, but overall they have kept something resembling integrity in terms of the prices they charge at the resort and the points per night.

I do think BW and BC could see their points charts adjusted up - say to BLT levels. I feel like GF and Poly have to set the standard for highest points charts. If a standard view at OKW costs the same as a Standard view at VGF that will cause major issues within the system that would hurt the integrity of the brand. But they could go that route...

Personally I think there will be a trust that you can purchase for the properties. It will give them flexibility. I would imagine, depending on how the trust is structured, there might even be a way to say have VB and HHI start in the trust, but reserve Disney the right to sell the resorts when it is time. I know people have talked about these properties being sold, but I think both of them will struggle to find a buyer. I would imagine historically Disney would also require the properties be demolished or be close to downright unrecognizable from the Disney experience.

I kind of feel that VB and HHI will get sold off when the contracts expire. The cost of maintaining a beach resort along with the ever increasing cost of flood (hurricane) insurance along with these resorts not being near the parks will make these a hard sell with their huge MF's.

 

[MartyParty]

I kind of feel that VB and HHI will get sold off when the contracts expire. The cost of maintaining a beach resort along with the ever increasing cost of flood (hurricane) insurance along with these resorts not being near the parks will make these a hard sell with their huge MF's.

Agree with this.

When DVD first started, as a traditional timeshare they were considering all sorts of locations not just at the parks. But as DVC took off near the parks, that become the focus. Able to sell at higher prices per point, offset on site property maintenance expenses with annual dues, higher percentage of guaranteed customer returns to the parks to spend more money, etc. The synergies fit the classic Disney model of multi-channel marketing.

Back to the topic, I could see VG getting to near zero first. Seems to be more love and demand for a Hilton Head stay over VB. Thinking of human nature, I would guess VB gets close to zero somewhere around 5 years or less (2037+).

What's tricky is what will the hotel costs be at WDW? If you could buy 200 points at $10/pt ($2000) plus $20/point annual maintenance dues ($2000) that would be $4000 for year one with purchase and then $2000 thereafter for annual maintenance dues. That would be a lot of points even for 1-3 years (2040+) of stays on the cheap vs a Disney DVC cash studio stay at $500/nt? $750/nt? $1,000/nt? I know were talking VB but those cheap points have typically been used at WDW.

Will see....

 

[Bearval]

Agree with this.

When DVD first started, as a traditional timeshare they were considering all sorts of locations not just at the parks. But as DVC took off near the parks, that become the focus. Able to sell at higher prices per point, offset on site property maintenance expenses with annual dues, higher percentage of guaranteed customer returns to the parks to spend more money, etc. The synergies fit the classic Disney model of multi-channel marketing.

Back to the topic, I could see VG getting to near zero first. Seems to be more love and demand for a Hilton Head stay over VB. Thinking of human nature, I would guess VB gets close to zero somewhere around 5 years or less (2037+).

What's tricky is what will the hotel costs be at WDW? If you could buy 200 points at $10/pt ($2000) plus $20/point annual maintenance dues ($2000) that would be $4000 for year one with purchase and then $2000 thereafter for annual maintenance dues. That would be a lot of points even for 1-3 years (2040+) of stays on the cheap vs a Disney DVC cash studio stay at $500/nt? $750/nt? $1,000/nt? I know were talking VB but those cheap points have typically been used at WDW.

Will see....

In 10 years at the current rate ( rounded up to 7.86%) of increase the MF's will be $29.54 per point.

 

[CraigInPA]

Maybe I had lower standards back then (mid-'70s, early-'80s), but EVERYTHING at Disney Resorts was top-tier, from greetings, to cleanliness, to service to... you name it. There was a freakin' "topiary row" between MK and extending all the way to in front of CR, pretty much visible only from the monorail.

I really miss the person standing out front whose only job was to say "Welcome Home", greet you by name (because you were coming off a magical express bus provided for free, they knew who was on each bus), and get you assistance with your luggage and the check-in process if you need it.

On topic: CFW's initial maintenance fees are astronomical. But, if you look at the history of recent fees at other newish resorts, you'll see a trend where Disney's initial maintenance fee typically changes by a few pennies over the first five years of the resort's life, and then starts a climb upwards again. Will $14 per point be so terrible in five years? I suspect it will, since there are still maintenance fees on other resorts currently sitting at about $6. Even extrapolating a 10% increase each year (5% has historically been typical), in five years those $6 current maintenance fees would still be under $10.

If you are thinking a $14 maintenance fee is a high percentage of the rental price per point from a broker, you're right. But, compared to what a CFW cabin will rent for through Disney, using all those undeclared points, it's a money maker (for Disney). I'm not sure that Disney will really care if they sell any CFW points as long as the rentals continue to occur.

For comparison, look at the Poly's Bungalows. There's almost always a bungalow available for cash, through breakage or through Disney's own points. You can also see this at Aulani. The resort is selling very slowly, but Disney isn't upset because they can rent the rooms for cash bookings. They're raking it in there, and likely see CFW as another way to do the same thing.

 

[CastAStone]

General response to several posts: I tend to think that, absent a devastating hurricane (Possible!), HHI will never hit the dues-rental cost tipping point, although it may get close. Its dues are indeed high, but they’re still meaningfully lower than VBs.

 

[peder]

But the question was not about an emergency sale.

There are tons of emergency sales today that we don’t always see, but they are very important for establishing the average price. No buyer is going to spend more for a contract than necessary, so they’ll take the lowest price for points every time. If the market is flooded with emergency sales like during a recession, then the emergency price is the market price.

 

[tom1944]

If you are buying a small contract- say 50 points would you have less concern about the maintenance fees?

 

[Chili327]

This is all part of the master plan to kill off the resale market. Disney will exercise their ROFR on bottom dollar contracts and resell them as direct points with no restrictions.

But resale value is what makes DVC different from regular timeshare, so they essentially are just reverting back to a “timeshare” so it becomes the same old story where timeshares are a ripoff.?

In 10 years at the current rate ( rounded up to 7.86%) of increase the MF's will be $29.54 per point.

7% is a little extreme don’t you think.? (are you saying increase avg?)