Very Interesting DVC Rumors

[rugrats2001]

Then again the new couches at the new resorts are around $92 to $104, OKW is $73.

I thought that DVC charges considerably more than $73 per point for OKW?

 

[jade1]

I thought that DVC charges considerably more than $73 per point for OKW?

DVC maybe does, but the drop down above of resales is much cheaper.

 

[rugrats2001]

DVC maybe does, but the drop down above of resales is much cheaper.

In that case, SSR should be quoted at $80 p/p

 

[BWV Dreamin]

Ok, here are some nagging questions about this thread. All please chime in with any comments :

1). Extending expiration time 15 years. What would benefit Disney by doing this? Raise immediate cash to help out with lack of MF's/vacancies at OKW, test the DVC population to see how many would be willing to pay for this and at what price, a reason to increase MF's, give the allusion that your contract will be more valuable in the long run compared to the upfront add on fee.
2.) What are some projected resale values based on a 15 yr. add on? No one has explored this yet.
3.) Won't there still be a market for those that want a cheaper contract? Just like with 50 pt. contracts that sell at more/pt. than longer contracts, whose to say this couldn't evolve with the 2042 contracts? The new contracts will be marketly more expensive, but whose to say 2042 will deflate 60%? Theres always that chance of getting more per point now for the 2042 contracts than the current price now, vs. the new 2057 contract price.

 

[tjkraz]

Ok, here are some nagging questions about this thread. All please chime in with any comments :

1). Extending expiration time 15 years. What would benefit Disney by doing this? Raise immediate cash to help out with lack of MF's/vacancies at OKW...

I don't understand where you're coming from here. All of the points at OKW (at least thru 2042) have been sold. Whomever holds those points pays the dues. The dues don't need any "help."

Vacancies have no bearing on the situation. The dues cover operating expenses for the year with the assumption that the resort will be booked solid every night.

...test the DVC population to see how many would be willing to pay for this and at what price...

I think it's much more than a test. DVC can (and has) run surveys to test the market to a large degree. Extending a one-time offer isn't much of a test since there are no mulligans. If Disney were to open sales for an undetermined time and fiddle with the pricing as they attempt to reach sales goals, that would represent more of a trial-and-error effort.

...a reason to increase MF's, give the allusion that your contract will be more valuable in the long run compared to the upfront add on fee.

Dues are based upon actual operating costs at the resorts. The only possibility for adjustments here would be if Disney needed to increase the capital improvements budget to help sustain the resort beyond 2042. Such an increase, IMO, would be in the single digits (as in just a few pennies per point, if anything.)

2.) What are some projected resale values based on a 15 yr. add on? No one has explored this yet.

Nobody even knows what DVC would charge at this point. The price point many owners would ask would vary greatly depending on whether Disney tries to charge $10 vs. $25 per point for the add-on.

3.) Won't there still be a market for those that want a cheaper contract? Just like with 50 pt. contracts that sell at more/pt. than longer contracts, whose to say this couldn't evolve with the 2042 contracts? The new contracts will be marketly more expensive, but whose to say 2042 will deflate 60%? Theres always that chance of getting more per point now for the 2042 contracts than the current price now, vs. the new 2057 contract price.

I'm sure there will be a market for the shorter contracts. What remains to be seen is how the forces of supply and demand influence the situation when the dust settles. For instance, if only 20% of OKW owners choose to extend their contracts yet 50% of buyers would prefer the longer contract, the sale price for the longer contracts will fetch higher rates and tend to sell much quicker.

As for the question of why DVC is considering this move, I'll just repeat what I said a few pages ago. Looking at approximate sales trends, it appears that DVC will have exhausted its supply of SSR and AKV (Jambo House) points nearly a year before Kidani Village is ready to open. Offering the extensions to OKW contracts gives DVC the ability to also extend the contracts that THEY hold (via ROFR). In effect, it would allow DVC to actively sell 50-year contracts at OKW for several months in mid-2008 leading up to the point where they can start selling Kidani Village.

Contract extension revenues would be just icing on the cake.

 

[BWV Dreamin]

I don't understand where you're coming from here. All of the points at OKW (at least thru 2042) have been sold. Whomever holds those points pays the dues. The dues don't need any "help."

Vacancies have no bearing on the situation. The dues cover operating expenses for the year with the assumption that the resort will be booked solid every night.



I think it's much more than a test. DVC can (and has) run surveys to test the market to a large degree. Extending a one-time offer isn't much of a test since there are no mulligans. If Disney were to open sales for an undetermined time and fiddle with the pricing as they attempt to reach sales goals, that would represent more of a trial-and-error effort.



Dues are based upon actual operating costs at the resorts. The only possibility for adjustments here would be if Disney needed to increase the capital improvements budget to help sustain the resort beyond 2042. Such an increase, IMO, would be in the single digits (as in just a few pennies per point, if anything.)



Nobody even knows what DVC would charge at this point. The price point many owners would ask would vary greatly depending on whether Disney tries to charge $10 vs. $25 per point for the add-on.



I'm sure there will be a market for the shorter contracts. What remains to be seen is how the forces of supply and demand influence the situation when the dust settles. For instance, if only 20% of OKW owners choose to extend their contracts yet 50% of buyers would prefer the longer contract, the sale price for the longer contracts will fetch higher rates and tend to sell much quicker.

As for the question of why DVC is considering this move, I'll just repeat what I said a few pages ago. Looking at approximate sales trends, it appears that DVC will have exhausted its supply of SSR and AKV (Jambo House) points nearly a year before Kidani Village is ready to open. Offering the extensions to OKW contracts gives DVC the ability to also extend the contracts that THEY hold (via ROFR). In effect, it would allow DVC to actively sell 50-year contracts at OKW for several months in mid-2008 leading up to the point where they can start selling Kidani Village.

Contract extension revenues would be just icing on the cake.

Thanks for your insightful thoughts....always enjoy reading these. Well, we don't really know that all of the points are sold, we don't know how much inventory Disney is holding to resell. And what better way to gain immediate liquid capital to start the refurbishing process?

 

[tjkraz]

Well, we don't really know that all of the points are sold...

No, but we do know about how SSR has been selling since its introduction. Someone here was tracking sales via the deeds that are recorded on the Orange County real estate website. As of early summer there were about 2 buildings (46 units each) left to sell at SSR. Historically it has taken them about 3 months to sell a single building.

Factor in the parallel sales at AKV and the relatively small number of rooms that are part of the first phase of sales there (around 120 units) and it's reasonable to think they will exhaust the current supply of AKV and SSR points by early-to-mid 2008, which is roughly 9-12 months before the Kidani Village buildings will begin to open. Given that there are limitations on how early a developer can begin to sell units that are still under construction, I suspect they need the 50-year contracts at OKW to supplement sales for a few months.

And what better way to gain immediate liquid capital to start the refurbishing process?

If you're referring to DVC refurbishing OKW, part of our annual dues includes contributions to a reserve fund which will be used for refurbishments and repairs at necessary intervals. Even if DVC were to discover that the accommodations needed to be refurbished on a schedule ahead of original estimates, they would respond by increasing the reserve contributions.

In other words, any funds received in return for the contract extensions goes right into Disney's pockets. They have no obligation to re-invest dollars into the properties from this point forward. The developer has to construct the original dwellings that are marketed to owners, but after the sale is complete it falls to the member dues to maintain the facility. It's no different than buying a home...you get what is presented at the sale and then down the road it's up to the new owner to replace the roof, seal the driveway, trim the hedges and so forth.

 

[pilferk]

Just to add: They've moved up the "fully open" timetable of Jambo (according to the members site) from May '08 to late Jan '08. My wholly unfounded assumption is they've sped up the pace because of brisk sales, and their need to add inventory to sell.

Not sure if that will mean ANYTHING in relation to Kidani's opening (I'm thinking it MAY mean we see Kidani open a bit sooner than Spring '09...maybe as early as late '08/VERY early '09)...we'll have to wait and see, but it certainly seems to support tjkraz's opinion they're going to "need inventory to sell", IMHO.

 

[kend58]

The source orginally quoted in the opening post for this thread has weighed in with the following additional information:


Quote starts here:
Just off the phone with a very nice and very chatty MS-Advisor.

I will not name her to protect her.

This is my first contact with her, so these are pure rumor, but very, very NICE!

1) OKW extention will be $25.00 per point, *UNLESS* you extend before 02/28/2008, take $10.00 off per point, so $15.00pp ($1.00 more than my guess).

2) OKW will add a new booking category for near Hospitality House (and possibly other categories)

3) Pool Tables will be added to some OKW GVs!!!

4) She said the CRV announcement is being delayed until SSR sells out. They are still not sold out. She is the first MS-Advisor to admit to CRV. No hints or word games, she just flat out admitted to CRV.

5) No booking categories at SSR yet. (See tjkraz, I asked for you!)

1, 2 & 3 are to be announced in next vacation magic.

Again, this is a new unproven source, but I felt like I could trust her!
Quote ends here.

FWIW I think this pricing and timing make sense from DVD point of view

 

[dwelty]

The source orginally quoted in the opening post for this thread has weighed in with the following additional information:


Quote starts here:
Just off the phone with a very nice and very chatty MS-Advisor.

I will not name her to protect her.

This is my first contact with her, so these are pure rumor, but very, very NICE!

1) OKW extention will be $25.00 per point, *UNLESS* you extend before 02/28/2008, take $10.00 off per point, so $15.00pp ($1.00 more than my guess).

2) OKW will add a new booking category for near Hospitality House (and possibly other categories)

3) Pool Tables will be added to some OKW GVs!!!

4) She said the CRV announcement is being delayed until SSR sells out. They are still not sold out. She is the first MS-Advisor to admit to CRV. No hints or word games, she just flat out admitted to CRV.

5) No booking categories at SSR yet. (See tjkraz, I asked for you!)

1, 2 & 3 are to be announced in next vacation magic.

Again, this is a new unproven source, but I felt like I could trust her!
Quote ends here.

FWIW I think this pricing and timing make sense from DVD point of view

Kend58, Great info. Did she say anything more about DVC at DLR announcement?

 

[kend58]

Kend58, Great info. Did she say anything more about DVC at DLR announcement?

I haven't heard anything new re DLR DVC - lots of discusion about Oct 1 announcement but nothing "new"

 

[OneMoreTry]

I look at it like I'm rentiing a car. The car comes with a full tank of gas, and I leave it with a full tank...
The resort comes with a new couch, and I leave it with a new couch.

We've paid for exactly what we've used.

MG

But you paid for the new couch to begin with. Somebody didn't pay for it before you. That would be like having to fill up the tank at the beginning AND the end.

I'll pay for what I used, but I ain't gonna be using it after 2042. Let the next owner "buy in" to that just like I did.

 

[OneMoreTry]

....

I'm sure there will be a market for the shorter contracts. What remains to be seen is how the forces of supply and demand influence the situation when the dust settles. For instance, if only 20% of OKW owners choose to extend their contracts yet 50% of buyers would prefer the longer contract, the sale price for the longer contracts will fetch higher rates and tend to sell much quicker.

......

I think the effect on price will be largely determined by how it effects ROFR -- at least at this point. I predict the extended contract prices will go up a bit and the non-extended will go down a bit. I still won't waste my money on the extension.

Buying in would be all in DVC's favor. They need the cash flow and this will give them some. The present value of my $15 is worth way more in terms of what I can get in other investments. By 2042 that will be well over $100 plus it will be liquid without selling my points. I doubt my return in DVC would be worth even half that.

 

[BWV Dreamin]

I think the effect on price will be largely determined by how it effects ROFR -- at least at this point. I predict the extended contract prices will go up a bit and the non-extended will go down a bit. I still won't waste my money on the extension.

Buying in would be all in DVC's favor. They need the cash flow and this will give them some. The present value of my $15 is worth way more in terms of what I can get in other investments. By 2042 that will be well over $100 plus it will be liquid without selling my points. I doubt my return in DVC would be worth even half that.

Well said! We have nothing to base any return on this 15 yr. extension, yet there will be much hype about it, just as Disney wants. While some continue to call this an "investment", we all know the value at the end of the contract!

 

[byoung]

I would extent my BWV points.

 

[keys2kingdom]

The source orginally quoted in the opening post for this thread has weighed in with the following additional information:


Quote starts here:
Just off the phone with a very nice and very chatty MS-Advisor.

I will not name her to protect her.

This is my first contact with her, so these are pure rumor, but very, very NICE!

1) OKW extention will be $25.00 per point, *UNLESS* you extend before 02/28/2008, take $10.00 off per point, so $15.00pp ($1.00 more than my guess).

2) OKW will add a new booking category for near Hospitality House (and possibly other categories)

3) Pool Tables will be added to some OKW GVs!!!

4) She said the CRV announcement is being delayed until SSR sells out. They are still not sold out. She is the first MS-Advisor to admit to CRV. No hints or word games, she just flat out admitted to CRV.

5) No booking categories at SSR yet. (See tjkraz, I asked for you!)

1, 2 & 3 are to be announced in next vacation magic.

Again, this is a new unproven source, but I felt like I could trust her!
Quote ends here.

FWIW I think this pricing and timing make sense from DVD point of view

Where did you find this? I searched Tony's id over at Tagrels and couldn't locate this post. I'm assuming it's a direct quote from him, correct?

ETA: Never mind, found it! MO.com

 

[OneMoreTry]

I would extent my BWV points.

Yeah, but you'll probably be alive in 2052.

 

[LisaS]

Yeah, but you'll probably be alive in 2052.

Yep, and he will still byoung.

 

[keys2kingdom]

Yep, and he will still byoung.

Good one Lisa!

I, however, will bold.

 

[LisaS]

I, however, will bold.

Me too!