things i have learned and the value destruction of DVC

[dwight16]

things i have learned going though this process.
1. I will never prepay for a hotel room or vacation i order to get a cheaper rate this goes for DVC also last time i rent in order to save money
2. I will never do a non refundable rate in order for a cheaper rate.
3. if i do need more DVC points i will only look for an owner who will transfer the points to my dvc.

this situation has put DVC value and the system on how it works on the ropes. we all now own a ticking time bomb that we have to pay yearly fees on.
lets look at the value destruction
1. making reservations 7-11 months in advance how can you even attempt to plan going forward we lay out points that expire for something that far in advance and when the times comes we could be left with a closed resort and have no time to reschedule.
2. the rental market is now going to in shambles going forward only way going forward is money held in escrow and who do you trust for that?
3. if this happens again or does not go away moving your trip 6 months from now is going to be harder and harder. (a 6 month extension when people book 7-11 months out is pretty worthless IMHO)
4. this should turn off future buyers if they research what happened during this process and how it was handled by dvc.
5. i used to think of this as an asset but now it a liability. in terms of planning a head and securing future travel that is now up in the air for the next few years
6. i also believe the strength in the resale market will dry up as this goes on and on more people will be forced to let go and the people who are buying now will have bought....


how else do you think this has effect the value of DVC?

i hope i am wrong about this and things go back to normal but 10 or so weeks into it every day that goes by i am less confident

 

[davper]

1. You don't buy DVC if you plan to make reservations a couple of months out. I would only recommend DVC to anyone who is willing to start planning that far out.

2. The rental market will recover. It may not be the same players, but will recover.

3. I agree

4. Anyone planning to purchase DVC should be doing research before purchasing. If a once in 100 year event is enough to give you pause, then they should not purchase.

5. Time share has always been a liability and no one should ever look at it as an asset.

6. I completely disagree. While short term, we may see downward pressure on prices/demand, long term, people have short memories. I am hoping that there is a big downward pressure on prices I want to buy again.

 

[Ms.Minnie]

I have been a DVC owner for 20 years now and never before has anything like what we are currently going through happened. It is unfortune that so many have been negatively effected by this pandemic but I don't think this is anything that any of us foresaw including Disney. I still have confidence in DVC, it has been very good to/for me over the past 20 years and I for one am not ready to sell it short, count it out.

That being said I do think that we all have had our eyes opened and we all learned from this situation. For example how important a use year is and not waiting until the last minute to use your points. Prospective buyers should consider themselves lucky that this happened. They now have more information available to them then any of us had when we purchased our DVC.

 

[bwvBound]

things i have learned going though this process.
1. I will never prepay for a hotel room or vacation i order to get a cheaper rate this goes for DVC also last time i rent in order to save money
2. I will never do a non refundable rate in order for a cheaper rate.
3. if i do need more DVC points i will only look for an owner who will transfer the points to my dvc.

Love that you are thinking this through, documenting your thoughts and sharing with us for dialog. Thank you!

A mentor of mine often repeats, "Never say never; don't always say always; usually say usually. Be an extreme middle-of-the-roadist."
In that spirit, I've been trying hard since Sept 2001 to avoid non-refundable rates except when booking something so close to the last minute that my chances of cancelling had been reduced to 'exceptionally slim.' The cruise industry has been making a hard turn towards non-refundable fares and it drives me nuts. Our answer: We rarely book on the ship; we rarely book far in advance ... we are, once again, looking for "last minute" sailings.

As for DVC, I am not, yet, in a bad position with the closures. Yes, I've lost one vacation but my points could still be banked. I've been, since initial purchase, cautious (some might say paranoid) against booking beyond the banking window. Looking back, our points have served us well and supplied us freedom to visit WDW, Vero, Aulani and the Grand Cal far more often than we would have using cash reservations. Honestly, if paying the cash rates, a savannah view room at AKL would have been "once in a lifetime"; Aulani might have been the same and I doubt I would have ever justified staying at the Grand Cal when there are perfectly acceptable hotel properties nearby. Through DVC I've enjoyed rare luxuries ... more than once; more than twice, etc. I'm grateful.

I'm hoping you find balance that keeps you happy on multiple levels.

 

[Nappy1380]

1. You don't buy DVC if you plan to make reservations a couple of months out. I would only recommend DVC to anyone who is willing to start planning that far out.

2. The rental market will recover. It may not be the same players, but will recover.

3. I agree

4. Anyone planning to purchase DVC should be doing research before purchasing. If a once in 100 year event is enough to give you pause, then they should not purchase.

5. Time share has always been a liability and no one should ever look at it as an asset.

6. I completely disagree. While short term, we may see downward pressure on prices/demand, long term, people have short memories. I am hoping that there is a big downward pressure on prices I want to buy again.

+1 to this.

 

[n2mm]

I’ve lost 3 vacations (plus 3 cruises) but luckily DVC has offered to put borrowed points back, which I’m grateful for. I’ve always tried to avoid a trip too close to my end of use year, so that worked for me. I’m left with 300 banked points, but do have until March 31 to use so will be a snowbird in January, just hoping they reopen by 2021. I’ve never rented, never plan to, so no problem. My only negative is the lack of information, the reliability of information and the IT issues. The plus for me is forcing me not to use all my points this year, so will have some padding of points for several years.

 

[otterpop]

Why did you buy into DVC in the first place? Sounds like it was a bad and unwise investment for you.

 

[TiggerBouncy]

DVC is not an asset. If that is why you bought it, you should rethink your investment. I did not purchase DVC to make a profit. I did not purchase it to resell it. I could care less about the resale value or future value. As long as I still get to stay in my hotel on Disney property and there is a Disney world, DVC has it's value.

I would not judge the usefulness of the investment on a pandemic. A lot of people have lost a lot of things as a result of this. If your biggest problem is that you had to cancel a vacation or two and lose a few points, and that's a disaster in your world, you should spend a day in the shoes of the health care workers on the front lines, or the CM's who have been furloughed and are fighting to survive on raman noodle meals or the other millions who have lost their jobs.

The only questions really are:
* will there still be a Disney to go to? I am pretty sure yes.
* Will we still want to go there? If there is a Disney, then for people like me, yes.

That's it. DVC still makes sense and still has all of it's value that I paid for.

 

[AdamsMum]

I actually think DVC has handled the crisis quite well, given that this is an unexpected global crisis. There are many factors they have to consider when dealing with cancellations and closures that none of us had control over. They can't make it perfect, but I think they have tried to make it as painless as possible. Myself, I stand to lose some banked points, and my next trip will be more complicated to book. I'm one of the fortunate ones who's job has been declared essential (not health care - public housing), so my finances haven't been decimated and my health is still intact. I feel for people who have lost so much that it's given them a sense of "end of the world".
I believe this will pass, and I'll be back to Disney when I feel comfortable with it. I've owned for 13 years, bought it to keep, and I still love it.

 

[crisi]

We always do the calculations each trip - DVC and Disney or worldwide. So we say "if we never took this trip, how would it impact us" - sometimes we buy insurance, mostly we don't. Sometimes we decide not to take the trip - too much risk. But we did that with DVC - which we bought in 2002 - well aware that a terrorist attack could quickly change the nature of the program, but also knowing that we've managed to total a car without collision insurance on it during our lives and be out that money. To me, DVC has never been an asset - its always been a liability in that each year I pay dues. But I don't consider my ownership an asset at all, I never bother to include it on any sort of net worth statement. In 2001, people lost their vacation dollars with non-refundable vacations - and yet, the lure of a great rate had them come right back. Since we got our ROI on our investment probably five or six years ago or more, we are fine even if we skip a vacation and pay dues for nothing for a year or two. That's the "in it for the long term" part of timeshare ownership.

A lot of your current concerns were true back in 2002 - and DVC survived and expanded. A lot can be projected on the stock market, and yet after every collapse, the stock market returns - and people make the same stupid errors like investing in the company they work for - we didn't learn from Enron. For people who go through this "cancel reservations, be out money" thing it will stick, but there are far more people who are two or three years or more years away from buying DVC or renting a vacation where this will be "remember that time when."

This sort of thing with DVC/the economy/travel is cyclical. We had hit the point of irrational exuberance on the DVC board. Now we will hit a time of irrational cynicism. Then we will spend some time where we have rational pragmatism regarding DVC - that its a good deal for some - but carries risk, until once again we forget 2002 and 2009 and 2020 and go back to "THIS IS SUCH A GREAT DEAL FOR EVERYONE!!!!!!"

 

[Sandisw]

I am still as happy with DVC...probably more so...than I ever have been,

I bought for vacations...to be in my favorite place to visit..,and it still offers me that,

Yes, this situation has been frustrating but no more so than being stuck for 2 months not being able to do anything locally, I live in NY and my area is not seeing the same level of cases as NYC, yet our rules are the same,

I never went into this expecting it to hold value...and yet, it has, I do think one really needs to understand what DVC is and is not when they buy, and it isn’t for everyone.

However, nothing that DVC has done during the crisis has changed my views or expectations for what I own!

 

[Mickey of the Villages]

For years before we bought DVC we considered renting points. We never did. We could not get comfortable with the fact that we would be at the mercy of two strangers (the broker and the owner of the points) at the moment that we checked into the resort.

What if, for any reason at all, something went wrong with one of these parties, and there was no reservation. Let's say they made a mistake, let's say they intentionally took advantage of me, let's say any number of unknown things went wrong - then I would be left with my family and luggage and no reservation. We never even considered a pandemic. Or, what if my wife and I changed our mind on a vacation? Let's say one of us got sick, or there was a work issue, or any number of unknown reasons.

Owning DVC works for me. Renting does not. This is likely the reason that many of us own things (like our homes, cars, etc.) instead of renting them.

Your second list of 6 items (I believe) comes from real frustration at how this is working out. But I don't think this is going to burn down DVC, or the resale market, or even the rental market. In fact, I think it will make more people buy DVC which will translate into more resales. They will want to avoid these issues and uncertainty. Of course folks will continue to rent but with contracts that are more suitable to the risks of the process and with better (clearer) remedies for the renter and owner.

This will get better.

 

[Donna M]

I am very optimistic that this will all get better, as previous posters have mentioned, we have lived through some times that have really challenged the travel industry. And we have not had a major war, thank God! My family was very lucky with the closure, we ended our trip 5 days before the parks closed.

I've been keeping up with the threads, and there really doesn't seem to be a solution out there that will work for all parties involved. I'm sorry for the renters who are in a state uncertainty, and the owners who want to do the right thing but have their hands tied or will be losing points. It's tough for everyone.

We bought DVC for the vacations, which have been wonderful, not as an investment. It's all over their paperwork that this is a timeshare and not meant as an investment.

I strongly believe that we need to stay positive, look for the value, be hopeful, you'll feel better. There are plenty of other issues right now to deal with. If DVC loses too much value in your eyes, sell and be done with it.

 

[CaliAdventurer]

This too shall pass, bro.

 

[DVCPAT]

The value of DVC will always correlate with the market price for Disney hotel rooms. If demand for Disney drops, so will the resale price. If demand for Disney continues and they limit capacity, it’s possible the price could increase. It will depend on demand. Shanghai sold out in a few hours so limiting access could cause Disney prices to increase.

 

[chicagoshannon]

Probably shouldn't buy to rent out points. The only thing that bothers me about what DVC is doing is the banked point loss. We planned ahead (2 years really) and banked our points into this year so we could have a longer stay. Now if the resort isn't open we'll loose those banked points. That's a lot of money we'll loose.

Wyndham which we also own has let us not only put all the points forward but let us do it for free (there is usually a fee). They did a superb job handling this whole situation.

 

[rich dream vacations]

A simple explanation of why DVC has sustainability for both Disney and DVC owners:

DVC is similar to a strip mall. Disney retains ownership of the property assets (land and buildings. DVC owners pay for all the cost to maintain or improve their value (landscaping, repairs, taxes, insurance, etc). Plus DVC helps with the number 1 issue that hospitality property desire and that is maintaining high overall occupancy rates.

Plus Disney gets an upfront cash infusion plus an annual payment from each owner for 50 years.

DVC owners get vacation stays at deluxe resorts for half price and a lifetime of priceless family memories.

Yes this crisis has exposed some flaws but what other timeshare has this level of interest...correct answer is none...Disney maintains the quality of the investment by updating the resorts consistently and always adding new experiences to its parks.

 

[Travel60]

Like others said, DVC is not an investment. For us it is a semi-prepaid vacation that forces us to plan a vacation - use it or lose it. Otherwise, in our busy lives we might have looked up one year and said "oops, we didn't go anywhere this year." DVC has allowed/forced us to give our children and now our grandchildren memorable vacations and gave one child a honeymoon in Hawaii they probably could not have afforded. Hoping another child takes us up on the same offer next year. That said, DVC ownership is not a major financial position for us, more like icing on the cake, not the cake itself.

We made the decision early on to try to be in a borrowing position (using next year's points, not last year's). Sometimes, due to life events and non Disney trips, etc. that didn't work and we banked, but not often. Planning for two major trips this year, we did bank about 400 points last year to be used this year for a cruise and borrowed 400 from next year for part of the other trip. Neither has yet been cancelled but we expect both to be. Under DVC original rules, we would stand to lose all the banked points and be stuck with needing to use the borrowed points in a shortened use year. As I understand it, their tweak in the rules will allow us to move the cruise points to other Disney or RCI use and put the borrowed points back. More than I hoped for. I doubt we will be going on a cruise or to a theme park until an effective vaccine is widely available but a week at some of the available options is not a bad consolation.

Totally agree that their computerized systems are lacking - not just DVC, the whole Disney experience. I know Disney (as a whole) offers internships in many service areas. I have often wondered why they don't get computer engineering students into an internship to design and implement systems that actually work together, not the patchwork of legacy programs it seems to be.

 

[kniquy]

i hope i am wrong about this and things go back to normal but 10 or so weeks into it every day that goes by i am less confident

I think looking back a historical events can tell you how DVC will weather the storm. In the time after 9/11 and the housing market crash of 07-08 - yes there is a period of down turn in value but it has rebounded and then surpassed its previous values. If people can look at DVC in the long term, which it is a long term commitment then there should be confidence in how they will be in a year or so.

For those who bought with intention of renting out points to help cover costs - those are the people who are probably being affected the most. For members who use their own points for personal travel, DVC has come up with as fair of an option as possible. They couldn't just extend everyone's points for years out as it would affect availability for years. But with some extension and some limitation of borrowed points in the interim it should help the system normalize within a year.

I think with the borrowing restriction might actually encourage or force people to not travel, bank their points and push off trips that they wanted to take but can not take because they don't have full access to their points. If this borrowing restriction continues for a couple years I know it would affect some of our future plans, so we will have to get creative with our future plans.

Those who have bought more recently will also be the ones most shocked if resale prices drop, but those in it for 4-5 years + still can see a positive "investment" in what they have spent to buy in. I know DVC is not an "investment" but it does hold better value than most typical timeshares. I bought at the end of 2015 so just 5 years ago, even if the prices of my AK resale drop $10 pp I will still be up about $20-30 pp from what i bought at in 2015. And with vacations that we have taken I certainly can not complain about that.

 

[bwvBound]

Planning for two major trips this year, we did bank about 400 points last year to be used this year for a cruise and borrowed 400 from next year for part of the other trip. Neither has yet been cancelled but we expect both to be. Under DVC original rules, we would stand to lose all the banked points and be stuck with needing to use the borrowed points in a shortened use year. As I understand it, their tweak in the rules will allow us to move the cruise points to other Disney or RCI use and put the borrowed points back.

Accounts like yours will be interesting cases to watch. I hope it turns out well for you.