Upgrade deed from Resale to Direct?

[Jlo85]

I follow the Hilton timeshares in addition to DVC, and I've seen reports of Hilton offering to 'upgrade' a resale deed to a direct status-level, obviously for a hefty fee. It's kind of a trade up. I know Disney doesn't offer that currently (at least not that I'm aware of), but I'm curious if we see them ever doing that? I've seen rumors of paid membership extras, but it seemed more for the hotel-side than for DVC.

Seems like a revenue stream for Disney, but I know they don't as aggressively solicit sales and add-ons like the other timeshare brands. Would the public offering statements even allow it for such an upgrade process? Though, I'm sure Disney could revise the agreements and statements to allow it, if they wanted to.

 

[intamin]

I could see Disney offering it but you know if Hilton's offering it for a "hefty" fee, Disney's cost to upgrade resale to direct is going to be absurd just because it's Disney. The total would have to make the end result more expensive than just buying direct to begin with. I guarantee Disney won't be trying to give people a bargain to upgrade resale to direct as much as the general public would like for that to be the case.

If they made it a good deal to upgrade resale to direct, it will encourage people to buy resale and then just upgrade to direct down the road which is the opposite of what Disney wants. Think about the number of people who will buy resale and then down the line say nevermind I don't care about the perks. Disney wants your money in their pocket as soon as possible, not down the road. I think it's pretty evident what Disney thinks of the resale market with the resale restrictions in place.

 

[RoseGold]

This is called washing points, many timeshares do it. I thought DVC might do it peak Covid, when resale was priced so high and they needed cash, but they never did.

Instead, they ROFR and sell new contracts.

It's still possible, as we end up with dozens of flavors of DVC going forward. Instead of converting a whole contract, they could also swap some points for developer points, I suppose, for a charge.

 

[AstroBlasters]

Pretty long debates about this topic in other threads over the last year that boil down to:

1) They will never do it. Plenty of points to sell with new builds, ROFR, foreclosures.
2) They will do it if they are desperate for cash as a one-off.
3) They may do it at some point (no new resorts for sale?), and will charge a modest fee to encourage a high uptake rate and generate more immediate cash.
4) They may do it at some point (2042+), but will charge a really high fee to do it because it’s Disney and nothing they do is ever cheap.

 

[zavandor]

I follow the Hilton timeshares in addition to DVC, and I've seen reports of Hilton offering to 'upgrade' a resale deed to a direct status-level, obviously for a hefty fee. It's kind of a trade up. I know Disney doesn't offer that currently (at least not that I'm aware of), but I'm curious if we see them ever doing that? I've seen rumors of paid membership extras, but it seemed more for the hotel-side than for DVC.

Seems like a revenue stream for Disney, but I know they don't as aggressively solicit sales and add-ons like the other timeshare brands. Would the public offering statements even allow it for such an upgrade process? Though, I'm sure Disney could revise the agreements and statements to allow it, if they wanted to.

The Riviera POS explicitly includes this as an option for Disney in the future, but it has never been actually offered to the public.

 

[GoingSince1990]

Kind of makes sense that if they are doing ROFR at $X and selling direct points at $Y, why not cut out the middleman for those who want it, and “wash” points for a fee of $(Y-X), which has the exact same economics?

 

[Robbie Cottam]

If Disney were to do this they would include a “penalty” for not buying direct in the first place….

the resale price, plus the upgrade fee, will be more than if you had bought direct

 

[NVDISFamily]

Pretty long debates about this topic in other threads over the last year that boil down to:

1) They will never do it. Plenty of points to sell with new builds, ROFR, foreclosures.
2) They will do it if they are desperate for cash as a one-off.
3) They may do it at some point (no new resorts for sale?), and will charge a modest fee to encourage a high uptake rate and generate more immediate cash.
4) They may do it at some point (2042+), but will charge a really high fee to do it because it’s Disney and nothing they do is ever cheap.

I'd add random option/thoughts

5) They may allow customers buying enough direct points to also wash their dirty resale points for a reasonable fee. Perhaps something along the line if you buy this 200 point Villas At Pixar Place contract we'll wash those Riviera resale points for you for 20 bucks a point....

I've also posted a few crazy ideas about how DVC could offer a tiered rewards like program where one of the potential options was to wash points as needed (per booking) at a diminishing cost per point based on number of points purchased direct from DVC. Let's say you own 500 direct points you could wash your 200 SSR points for bookings to Riviera or VDH for 3 bucks a point but if you own 1k direct points you could wash at 1.50 a point or something like that....

I think they will do it at some point in the future when the direct vs resale has a larger gap (more and more restricted resorts) so then the demand if they offer the program will be there.

 

[Ruttangel]

One of the problems for DVC is that they created a perk limit of 25-150 points.

If they really wanted to they could say to get perks ALL your points need to be direct starting from tomorrow (grandfathering people in of course)

You have people with 25 points direct who might have 975 resale points with same perk access as someone with 500 direct points. They created this game and people exploit it, as they should!

 

[kanerf]

Just sell your resale contract and use the proceeds to buy direct.

 

[Jlo85]

I am curious if part of the reason DVC resale retains its value is explicitly because DVC doesn't "wash" points and mostly relies on ROFR for revenue on 'sold-out' resorts. If Disney could profit off upgrading resale owners (potentially multiple times, each time a contract is resold), it means less ROFR, it means lower resale prices for ROFR, which all benefits Disney.

My guess is it's probably more just an operational reason they don't do it. They're smaller than the other timeshare companies and just don't have the scale to pursue it. Like the stories about the "one lady" the runs ROFR, Disney is a pretty small shop in the timeshare biz from what I understand.

 

[Robbie Cottam]

I am curious if part of the reason DVC resale retains its value is explicitly because DVC doesn't "wash" points and mostly relies on ROFR for revenue on 'sold-out' resorts. If Disney could profit off upgrading resale owners (potentially multiple times, each time a contract is resold), it means less ROFR, it means lower resale prices for ROFR, which all benefits Disney.

My guess is it's probably more just an operational reason they don't do it. They're smaller than the other timeshare companies and just don't have the scale to pursue it. Like the stories about the "one lady" the runs ROFR, Disney is a pretty small shop in the timeshare biz from what I understand.

Disney retains its resale value because;
of what they have to offer, it disney after all
the rental market,
ROFR…

DVC resale has slipped, since ROFR has slowed.
personal I think you’ll see Disney exercising ROFR more as the cash flow start to re turn to normal , driving resale prices back up…

 

[DanCali]

The Riviera POS explicitly includes this as an option for Disney in the future, but it has never been actually offered to the public.

5) They may allow customers buying enough direct points to also wash their dirty resale points for a reasonable fee. Perhaps something along the line if you buy this 200 point Villas At Pixar Place contract we'll wash those Riviera resale points for you for 20 bucks a point....

I'm of the opinion that "point washing" is an inevitability with the new resale restrictions, and if it's an option in the Riviera POS, that makes it even more likely. And it doesn't have to apply to just RIV or new resorts - they can do it with resale O14 resorts, making those points eligible to book at all resorts, cruises etc. Moreover, I believe that it will not be as egregious as some speculate. It may cost in the beginning (because why not milk the people willing to pay?) but will eventually be a "free" incentive to get an informed buyer to buy (a lot of) a product that loses a majority of its value as soon as you buy it. For example, buy 300 points of the new shiny thing and we'll "wash" (any) 300 of your resale points. Maybe the "cost" will be making the direct buy at "rack rate" and foregoing other purchase incentives.

Marriott and Westin have been doing these types of incentives for many years. Both of those timeshare systems are very similar with their resale restrictions to what DVC seems to be morphing into. Moreover, the resale values of the direct product from those companies are generally abysmal either because the direct product is expensive or because the resale product is very restricted, or both. Those resale values are so depressed that most of those familiar with the resale market generally prefer to ignore the various "Elite Owner" tiers and "enhanced functionality" that come direct ownership and just buy resale. But when offered to spend ~$30K on a direct purchase and fully "requalify" 1-2 resale weeks into the system, giving them full functionality as if purchased direct, that becomes much more interesting to those potential buyers (I'm guilty of that too). And those "requalification" incentives have also gotten much better over time.

DIS is a public company with pressure to deliver earnings every quarter. "Point washing" is costless to them, but an easy way to get buyers who wouldn't otherwise buy to buy.

 

[RoseGold]

They may allow customers buying enough direct points to also wash their dirty resale points for a reasonable fee. Perhaps something along the line if you buy this 200 point Villas At Pixar Place contract we'll wash those Riviera resale points for you for 20 bucks a point....

I can totally see this as being a direct perk as the system gets increasingly complicated, and the various flavors don't play well with each other.

 

[RoseGold]

My guess is it's probably more just an operational reason they don't do it. They're smaller than the other timeshare companies and just don't have the scale to pursue it. Like the stories about the "one lady" the runs ROFR, Disney is a pretty small shop in the timeshare biz from what I understand.

SSR is the largest timeshare in the world. DVC has plenty of lawyers to write this up correctly, even if they actually do have to buy and sell the contract back, which they could right now.

This is something they try not to talk about. The million flavors of resale and grandfathering are confusing. But as the system keeps going on this path, it will get more complicated. People could be considering buying the RIV2 CB flip, but their RIV1 resale points won't work there, DVC might be forced to go down this path in the future because of how fragmented the system could be.

The simplicity of O14 is one of the main reasons it has held value in resale IMO. A more complicated and balkanized system is bad for resale, but maybe good for Disney? I mean that was the point of the restrictions, right, so point washing makes sense in the long term vision.

I mean this is Disney. Maybe they do a ONLY RIGHT NOW point wash for $80/point that only works one week, or maybe tie it to buying X points in new direct sales, and they'll print money.

 

[Sandisw]

My guess would be they will take a different approach and allow those with restricted points, at 7 months, to pay a per reservation fee to book the other resorts.

For example, OTU points are $20/pt. As a resale owners, you can pay, say $5 to $10/pt plus your points to book the other resorts.

If I want to use 100 resale RIV, it would cost me an extra $500 to $1000 that one trip.

 

[DonMacGregor]

SSR is the largest timeshare in the world.

That's not even remotely true, and it's by a long shot. Just down the street, Holiday Inn's Orange lake Resort has almost 2,500 rooms on a property that is almost 1,500 acres.

Regardless, the point was that DVC is tiny compared to other timeshare systems by every metric: number of points sold, number of owners, and number of resorts. While DVC has sold in the tens of millions of points, I don't think they've cracked 100 million points cumulatively yet, as they were at +/- 72 million total before RR and VDH and the additions to VGF. Other large timeshare systems have sold in the BILLIONS of points, and Wyndham Destinations alone has over 4 million owners worldwide.

 

[Genie+]

Wyndham Destinations alone has over 4 million owners worldwide.

Recently I saw 250,000 DVC… members or memberships? With most property being in lower east coast USA, not bad!

 

[RoseGold]

That's not even remotely true, and it's by a long shot. Just down the street, Holiday Inn's Orange lake Resort has almost 2,500 rooms on a property that is almost 1,500 acres.

I'm thinking of the board sponsor line that SSR is the most transacted timeshare in the world. Heard it more than once on some podcasts.

But even if all they had was SSR, Disney has plenty of lawyering/admin power to make washing points work, if they wanted to.

 

[Jlo85]

ChatGPT told me that DVC has 5.5% of the timeshare market and that Westgate Lakes is the largest Orlando-area timeshare in terms of villas. Elara in Vegas claims to be the largest. SSR is pretty large, though.