Wanting Riviera but not its resale restrictions

[Paul Stupin]

My understanding is that it has not hindered direct sales at all. It's only a "thing" in the minds of the DVC fanatics on message boards. You'd be surprised -- a high proportion of DVC sales are borderline impulse purchases made after a DVC tour. Lots of people don't even realize a re-sale market exists. It's almost 2 universes: On these message boards, re-sale buyers may outnumber direct buyers. But once you leave this message board, most buyers are direct buyers.

Sales were hurt tremendously by Covid -- the parks shut down for 3 months of what would have been the prime sales period (right after the grand opening), and the ability to do full sales tours still hasn't returned. Pre-Covid, Riviera sales were exceptionally strong.

The last pre-Covid month:

https://dvcnews.com/dvc-program/financial/news-34867/4723-direct-sales-data-for-february-2020

Here’s the thing. It’s a brand new resort, people are excited about it, its beautiful, and for a lot of people that eclipses any concern with resale restrictions. They just want to own it.

But there’s usually a wave of selling that occurs after the first seven years. And when a flood of those contracts ultimately hit the market five years from now, and specifically when first time resale buyers realize what the restrictions actually mean, I think there’s a chance the price could plummet.

That said, I’m no expert, it’s just my opinion, and I could be totally wrong! But, as I’ve mentioned earlier, I don’t think the argument that Riviera contracts are currently holding up well means anything. Too soon. And I’m not sure there’s going to be a whole bunch of new resorts that will convince resale Riviera buyers to give up any opportunity to book the original 14.

 

[zobel0022]

Here’s the thing. It’s a brand new resort, people are excited about it, its beautiful, and for a lot of people that eclipses any concern with resale restrictions. They just want to own it.

But there’s usually a wave of selling that occurs after the first seven years. And when a flood of those contracts ultimately hit the market five years from now, and specifically when first time resale buyers realize what the restrictions actually mean, I think there’s a chance the price could plummet.

That said, I’m no expert, it’s just my opinion, and I could be totally wrong! But, as I’ve mentioned earlier, I don’t think the argument that Riviera contracts are currently holding up well means anything. Too soon. And I’m not sure there’s going to be a whole bunch of new resorts that will convince resale Riviera buyers to give up any opportunity to book the original 14.

In 5-7 years how many people are going to be lining up to buy 2042 contracts? All of a sudden the length of Riv outweighs the restrictions if you are thinking of buying for long term.

 

[Sandisw]

Here’s the thing. It’s a brand new resort, people are excited about it, its beautiful, and for a lot of people that eclipses any concern with resale restrictions. They just want to own it.

But there’s usually a wave of selling that occurs after the first seven years. And when a flood of those contracts ultimately hit the market five years from now, and specifically when first time resale buyers realize what the restrictions actually mean, I think there’s a chance the price could plummet.

That said, I’m no expert, it’s just my opinion, and I could be totally wrong! But, as I’ve mentioned earlier, I don’t think the argument that Riviera contracts are currently holding up well means anything. Too soon. And I’m not sure there’s going to be a whole bunch of new resorts that will convince resale Riviera buyers to give up any opportunity to book the original 14.

I definitely agree that we don’t know long term resale value of RIV. But, we can’t say the market for it now means nothing.

It is commanding some decent prices which most of us predicted would not happen from the start, myself included.

Why? Because it is a great resort, and owners are willing to add to their membership to be able to book here, I think we forget that it’s not an either or situation. Someone can own both and have the best of all worlds.

The bigger issue for making assessments on the sales of RIV is what happened with the pandemic. We just don’t know yet if that is still playing a role. I am here now and talked with a few different people who are on cash stays who were considering it and quite a few yesterday surrounding the tour desk.

The other part we don’t know is if the same level of selling will happen if the value drops. People may just decide to hang on to it and then rent.

I do think it will settle lower than current. But, at one time I would have said under $100. Now I think we will see it between $115 to $120 ish.

 

[T-i-double-guh-er]

And I’m not sure there’s going to be a whole bunch of new resorts that will convince resale Riviera buyers to give up any opportunity to book the original 14.

Riviera resale buyers only get to stay at Riviera, regardless of there being a bunch of new resorts or not.

 

[T-i-double-guh-er]

What should be a major concern for DVC management is the percent of direct points at RIV compared to total sold. For May it was 44% and for June 48%, so customers are preferring the shorter terms of existing resorts to RIV.

I think the percent of sales is influenced by the fact that DVC is running open houses, offering incentives, and encouraging sales of the older resorts. In the past you might have had to push a guide to sell you a "sold out" resort instead of the current offering. Right now they have guides in the lobbies at Animal Kingdom, Beach Club, etc. ready to give you an immediate tour at those properties. The new resorts have never had to compete with the sold out resorts like that before.

 

[Paul Stupin]

In 5-7 years how many people are going to be lining up to buy 2042 contracts? All of a sudden the length of Riv outweighs the restrictions if you are thinking of buying for long term.

I think you're right about the 2042 resorts. I was referring more to the newer ones with much later expiration dates, which will still have long term viability.

 

[Paul Stupin]

Riviera resale buyers only get to stay at Riviera, regardless of there being a bunch of new resorts or not.

I definitely agree that we don’t know long term resale value of RIV. But, we can’t say the market for it now means nothing.

It is commanding some decent prices which most of us predicted would not happen from the start, myself included.

Why? Because it is a great resort, and owners are willing to add to their membership to be able to book here, I think we forget that it’s not an either or situation. Someone can own both and have the best of all worlds.

The bigger issue for making assessments on the sales of RIV is what happened with the pandemic. We just don’t know yet if that is still playing a role. I am here now and talked with a few different people who are on cash stays who were considering it and quite a few yesterday surrounding the tour desk.

The other part we don’t know is if the same level of selling will happen if the value drops. People may just decide to hang on to it and then rent.

I do think it will settle lower than current. But, at one time I would have said under $100. Now I think we will see it between $115 to $120 ish.

All good points! I was mistakenly assuming the resale points could be used at newer, potentially spectacular resorts down the line as well. In my mind, their value then could diminish with each successive new resort. For some, that would be a deal breaker. They'd be shut out of all the new stuff, and all the old stuff.

Still, agreed, the resort is great, my wife and I had a great stay, and will definitely return in the future. And if you plan on holding the direct points for years and years, as I do with those I've bought at other resorts, none of this is an issue. And it will still be a viable add on to existing members.

 

[Paul Stupin]

One other interesting piece of info I just read. 35 Riviera resale contracts were sold in 2021. Not sure that's enough to draw many conclusions, either positive or negative.

 

[AvidDisReader]

I think the percent of sales is influenced by the fact that DVC is running open houses, offering incentives, and encouraging sales of the older resorts. In the past you might have had to push a guide to sell you a "sold out" resort instead of the current offering. Right now they have guides in the lobbies at Animal Kingdom, Beach Club, etc. ready to give you an immediate tour at those properties. The new resorts have never had to compete with the sold out resorts like that before.

Why do you think this is? Surely the resort is beautiful. Could this be that just maybe buyers are smarter than many on this thread and others give them credit for? Someone above posted that most DVC purchases are impulse purchases--at the cost of 150 points I just do not believe that I believe that anymore. No, I think consumers are smarter and comparing everything: Cost, point charts, length of contracts, AND resale restrictions.

 

[Bearval]

One other interesting piece of info I just read. 35 Riviera resale contracts were sold in 2021. Not sure that's enough to draw many conclusions, either positive or negative.

Just people looking to get out of an impulse purchase. These people are lucky they bought a DVD timeshare and can get a big chunk of the money back and not just pennies on the dollar like other timeshares.

 

[Paul Stupin]

Just people looking to get out of an impulse purchase. These people are lucky they bought a DVD timeshare and can get a big chunk of the money back and not just pennies on the dollar like other timeshares.

That’s the great thing about DVC. Asides from the maintenance fees, when you sell there’s a good chance you can get back your initial cash outlay. But that hasn‘t been proven yet for Riviera, because it’s too soon. We love the CCV Cabins and the Grand Floridian, and would probably be happy just staying there. But I still like the option to go elsewhere. Some of the extra points we use at Aulani, where one bedroom availability is usually pretty good. And depending upon the dates, there is availability at WDW.

Right now, Riviera is one of the nicest and most beautiful. And the newest. But it won’t be forever. A redesigned Reflections, or some amazing new resort on the Monorail loop, could wind up giving it some real competition in 4-5 years. Or Disney could wind up bulldozing another chunk of the Caribbean Beach to give Riviera a new neighbor, which would also have access to the Skyliner. Anything is possible.

And any of these situations might make it more difficult to sell a Riviera resale contract, which would deny the buyer access to anything newer, cooler, and equally if not more beautiful, as well as Aulani, DLT, and everything else. When buying direct at Riviera, with no plans to sell, none of this matters. But if an “exit strategy” means something, the resale restrictions make it risky. Not as risky as buying a 2042 resort, which I’d never do. There’s a chance, though, that CCV or VGF, or other non 2042 resorts, might retain more value.

 

[Bearval]

That’s the great thing about DVC. Asides from the maintenance fees, when you sell there’s a good chance you can get back your initial cash outlay. But that hasn‘t been proven yet for Riviera, because it’s too soon. We love the CCV Cabins and the Grand Floridian, and would probably be happy just staying there. But I still like the option to go elsewhere. Some of the extra points we use at Aulani, where one bedroom availability is usually pretty good. And depending upon the dates, there is availability at WDW.

Right now, Riviera is one of the nicest and most beautiful. And the newest. But it won’t be forever. A redesigned Reflections, or some amazing new resort on the Monorail loop, could wind up giving it some real competition in 4-5 years. Or Disney could wind up bulldozing another chunk of the Caribbean Beach to give Riviera a new neighbor, which would also have access to the Skyliner. Anything is possible.

And any of these situations might make it more difficult to sell a Riviera resale contract, which would deny the buyer access to anything newer, cooler, and equally if not more beautiful, as well as Aulani, DLT, and everything else. When buying direct at Riviera, with no plans to sell, none of this matters. But if an “exit strategy” means something, the resale restrictions make it risky. Not as risky as buying a 2042 resort, which I’d never do. There’s a chance, though, that CCV or VGF, or other non 2042 resorts, might retain more value.

If I was younger I would have bought RIV direct when the incentives were really good and I believe you only needed 100 for blue card. I would have bought two 100 point contracts so I could eventually transfer a qualified contract to them. The real value in DVC is the consumption of the product.

 

[Paul Stupin]

If I was younger I would have bought RIV direct when the incentives were really good and I believe you only needed 100 for blue card. I would have bought two 100 point contracts so I could eventually transfer a qualified contract to them. The real value in DVC is the consumption of the product.

I might have as well! Yes, the real value in DVC is enjoying it, building memories, and knowing you’ve guaranteed it being a part of you and your family’s life for as long as you want…in a beautiful resort.
PS. That still doesn’t change my worries about the resale restrictions.

 

[Tiberella626]

I will likely pick up 200 pts at RIV before the current incentive ends. Current members can get 200 points for $181 a point and they will give me 2020 points. So that's a full 50 years of points.

I posted my spreadsheets in another thread I stated. I compared it to CCV due to the length of contract, but at $225 a point direct, it didn't make sense. I think Pete and the gang are right they are raising direct pricing on other resorts to make RIV appealing additionally it's having the effect of driving up resale which also makes a direct RIV purchase cheaper than a resale grand flo and almost the same as BLT and poly (dvc resale market June report). Why would I buy those resale when I can get a full 50 years with full privileges for about the same price, if not less when you factor in fully loaded points.

I do not love the restrictions, it puts a stain on what would be a wonderful resort. It is hard to want to sign a 50 year contract when over the last 5 years or so DVC management has made some really poor decisions.

I say all this to say, I can't see a world in which I can't use 200 points a year or bank and borrow or whatever. I don't see us needed to sell this contract, if we did need to sell we would just sell our resale contract. As a fall back plan, I would be more likely to rent the points rather than sell the contract, if the values don't hold up.

 

[Bearval]

I am not so sure they are raising prices on other properties take RIV more attractive. I think they are raising the prices to levels where they are making the same profit whether it is selling RIV or one of the older resorts direct.

 

[DRT-eagle]

There are only three ways to use points to stay at RIV. You have grandfathered points purchased resale prior to January 2019. You own direct points at any resort, including RIV. You buy resale points at RIV.

Buying resale at any other resort now, locks you out of RIV. Buying RIV resale locks you out of everything else. So, if you want both options, you have to buy direct, or buy an L14 resort and then add on more points either direct or buy a RIV resale.

Of course, if you just want to stay there on occasion, you simply can rent your points and pay cash but not as easy as using ones own points. We love the resort and decided it was worth it to buy resale points, even with the restriction of only using them there. We also own direct RIV points as well as grandfathered SSR points that are good there as well, so we have the best of all worlds!

Or you rent out you points to someone and rent points from someone else. This is not hard people, all the points have about the same value. they think they are going to accomplish something by doing this, but this board allows you to move between resorts with just a little work. What their biggest concern is people were buying resale at Saratoga or Key west and then staying at the expensive places.

 

[RoseGold]

What their biggest concern is people were buying resale at Saratoga or Key west and then staying at the expensive places.

This wasn't their concern at all. They are still direct selling an insane amount of SSR and OKW points and buying through ROFR to do it. I mean like selling as much RIV as "sold out" OKW/SSR.

Their concern was crushing resale so they aren't competing with themselves. Maybe it will work, maybe it won't. I know I wouldn't have bought DVC at all if it didn't have the kind of resale it does. I'm good with the O14, but it's clear RIV+ is a different product.

If you bought direct AND financed, then it dropped like a rock when you drove it off the lot and financed it. The worst possible mathematical combination. That's how there are so many DVC foreclosures.

 

[Sandisw]

Or you rent out you points to someone and rent points from someone else. This is not hard people, all the points have about the same value. they think they are going to accomplish something by doing this, but this board allows you to move between resorts with just a little work. What their biggest concern is people were buying resale at Saratoga or Key west and then staying at the expensive places.

Thats true. But I was referring to owners using their own points.

Cash stays are also an option. But renting is not for all people and some just don’t want to deal with it.

Personally would not buy with that being what I had to do to stay at a resort I wanted to semi regularly. For once in a great while, I’d just pay the cash rate and

 

[Brian Noble]

I think they are raising the prices to levels where they are making the same profit whether it is selling RIV or one of the older resorts direct.

They probably aren't there yet. Rule of thumb in the industry is that the cost of construction is about 20-30% of the total cost of sales---marketing is 40-50% of it. Even if they made *no* profit, that means they'd need to ROFR at a point lower than about 1/3 of the sales price to beat out the margin of a shiny new resort.

 

[Bearval]

They probably aren't there yet. Rule of thumb in the industry is that the cost of construction is about 20-30% of the total cost of sales---marketing is 40-50% of it. Even if they made *no* profit, that means they'd need to ROFR at a point lower than about 1/3 of the sales price to beat out the margin of a shiny new resort.

They pretty much have a near zero marketing budget for the legacy resorts.