what happens in 2042

[ralphd]

Remember our DVC is a very profitable part of the Disney business plan.

Think BCV will retain the 2042 expiration date.

Also believe Disney will want to retain the present member base for the existing DVC resorts for as long as possible. It is 'probable' that they will draw up a plan to retain the current memberships beyond 2042.

The contract extension offer will be in line with the new expiration for Eagle Pines.

The offer will have to be attractive enough to entice us to extend our memberships in (as Dean said) what will become older resorts. Note that Disney has set up reserves to handle future maintenance expenses.

The DVD business plan will assume a certain percentage of the Eagle Pines sales will be to existing DVC members. Agree it will probably be a smaller percentage than VWL and BCV.

Interesting isn't it????????

Think there is an answer in the above opinions!

ralphd

 

[Dean]

Looking at this from a business perspective. If I were DVD and Eagle Pines is still in the works, I'd extend BCV to 50 years from the start selling date then have Eagle Pines with the same expiration of say 2052 or even a little longer. I'd find some gimmick to activites at Eagle Pines like a themed pool, golf package or the like. I'd then offer those that added on there say at least 100 points to extend their total membership to end in 2052. Once the resort was mostly sold out, I'd then offer current members with expirations of 2042 to extend for around 15% of the then current sales price, at least for the on property locations. I'd likely not do the same for HH and VB, but I'm sure others would.

One item is that to run the big organization that MS and DVC has become (and it will get worse) takes a lot of money. The problem of funding that from only one or 2 resorts will be difficult. It's hard to decrease spending enough once things have been running for a while, just ask the government.

 

[EROS]

Originally posted by Dean
It's hard to decrease spending enough once things have been running for a while, JUST ASK THE GOVERNMENT.

You got that right

 

[KNWVIKING]

..... Ditto,Ditto,Ditto.

We have told our two boys for years not to look for an inheritance,we're spending everything.

We did let them pick their colleges- one in Boston,one in Rochester, but they busted their humps in high school so we didn't let cost rule the decision.

Already converted one bedroom to a den.Making plans for the 2nd.

We plan on selling the house when the youngest graduates in 4 1/2 yrs and heading either to FL or AZ.

And I'm not sure about oatmeal but I think cream-of-wheat travels nicely thru a straw.

 

[mikek]

dean-

'from a business perspective'-

I dont get your point- why would they add years to BCV when it will most likely sell out fast itself. People say they plan to have pre-sales, it's small, and the resort accross the way sold out pretty quick. Why sweeten the pot? They have been jacking the prices up and up at a rate i think faster then inflation, yet reportedly sales trend up and up and up....

Seems the price is pretty elastic (or is that inelastic- i slept through most of econimics...). In other words they havent hit the price line yet where 'the invisible' hand slows down sales- even with less and less value in years

Did you mean more years in exchange for a hefty price increase? That i could see making sense.

 

[ralphd]

DVC sales has a long waiting list of members for BCV. Some will obviously drop off because of the economy (and other reasons). They expect it to sell pretty quick.

ralphd

 

[Dean]

mikek, My point was that if Eagle Pines is still on it will almost certainly have a new expiration date and it doesn't make sense to have only one resort ending at a later date. I don't see how they could sell that one without an extension of the current deadline. The inherent costs of the system would be too great. I'd look at the big picture. May as well go ahead with BCV and expand the length of usage at the same time either upping the price or stimulating sales. I don't think for a second that BCV will sell out that quickly. True, it's a small resort but WLV sales are slowing down somewhat and I'd be surprised if BCV sold nearly as quickly. True there will be an initial push from those either wanting to add on or waiting for that resort opening to purchase but after that things will settle down.

True, if their plan was to offer an extension to current members, it wouldn't matter that much. They would accomplish the same goal in the long run. If not, they will want a larger member base to spread the expenses out once teh current resorts drop out.

 

[mikek]

oh- i just assumed it was a given that they would offer extensions. As you said- it would be hard to have just one resort like that.

As far as how long it takes to sell out BCV- you probably know better than me.

 

[plain crazy]

in thinking this through, remember that the "value" of extending ownership from 2042 for, say, another ten years is pretty small in 2002 dollars.
let's say hypothetically that a point is "worth" $10/year to the holder. the present value of that point over the next forty years (i.e. to 2042) at a discount rate of 7% is about $133. now let's assume that the life of the point is extended an extra ten years, to 2052. the present value of that point over the next fifty years at the same discount rate is about $138, or only 3.8% more.
so what? what does this mean? among other things, it implies that either dvc will wait until they need the cash (which could be many years in the future), and charge much more for the extension (of course each point holder will have had the use of his/her cash for that same period of time), or if dvc has attractive uses for the capital now, it can extend for very little cost per point.
more bluntly, this also means that if dvc charged anything beyond a nominal sum for the extension, it would be a rip-off. and although many people may not have a background in the analytics of discounted cash flow, enough people do that i think word gets out about what is a good deal, and what is not.
incidentally, the analysis is not very sensitive to the discount rate you choose, provided you use the same rate in both scenarios.
**********************
just a few more thoughts to confuse the discussion.

 

[Dean]

mikek, there is a provision in the POS for an extension but the last 6 months is the first indications from the DVC side that it is even being considered. There are a lot of reasons to think they would extend IF THEY HAVE OTHER RESORTS WITH A DIFFERENT AND LATER EXPIRATION. There are some drawbacks though. I'm sure the determining factor is DVC's estimation of what percent of owners would extend and how much they could get. I'd guess that DVC would need around 40-50% participation in order to make it worthwhile. They'd then need either to sell the rest again or just rent out the remaining inventory. I wouldn't think a major sales push would be reasonable and if they still have new sales at the time (which I doubt), they'd be competing with themselves.

I'd agree that there's no reason to extend BCV on it's own but looking at the whole picture, it makes sense if they will have a new resort with a different expiration, just do it all now and pick ONE new date.

plain crazy, I would just look at this in terms of todays dollars and assume the inflation, etc would take care of itself. The trouble is that 50 year old wood structures in FL don't hold up all that well. Even if they extend it for free, it might not be a good deal depending on the yearly fees at the time. I'd assume say about $1.00-1.50 per year per point which is in line with current sales prices. That's equivilent to $75 per point for 50 years. I think you must look at it like a new purchase at the time. Basically buying 10 years at X price. It remains to be seen if it'll be offered and if it will be a good deal or not for the consumer.

 

[plain crazy]

dean:
i agree that if you were extending at or near the end of the original term you'd have to look at it as a new investment. and at that point it might have some measurable value associated with it, in 2042 dollars. my only point was if, for some reason, dvc offered extensions today it would be worth very little money in today's dollars, just because the benefit is 40+ years in the future. this is just a simple reflection of the time value of money.

 

[legs22]

Too bad you pay all that money and It's only yours until 2042. I bought a timeshare in Key West and I have the deed and own it forever to pass on to my kids. I trade to anywhere in the world (RCI has more choices than II), or I can rent it out (and have a Disney cruise paid for, for me and my DD4).
What are the advantages to owning at DVC? What are the price ranges? I can only imagine, since it's Disney.

 

[Dean]

Originally posted by legs22
Too bad you pay all that money and It's only yours until 2042. I bought a timeshare in Key West and I have the deed and own it forever to pass on to my kids. I trade to anywhere in the world (RCI has more choices than II), or I can rent it out (and have a Disney cruise paid for, for me and my DD4).
What are the advantages to owning at DVC? What are the price ranges? I can only imagine, since it's Disney.

I own both DVC and other timeshares and find each have their own positives and negatives. DVC is for staying at a DVC resort and not reasonable if that's not the buyers main goal. For flexibility and WDW usage, DVC is the better choice by far.

For exchanging and stays in the Keys, other timeshares ar better choices. As for the length of ownership, I think it's somewhat irrelavent. 40 years left is enough to make it a moot point. I can't think of anywhere I'll want to be in 40 years, I'll just be happy if I'm alive and well. Also, there are few timeshares I want to own that are 50 years old and that includes DVC and Marriotts. As for price, you usually get what you pay for. I own timeshares I gave somewhat more than I did for DVC and others I gave a fraction of that amount. Each fits my needs in their own way and all 8 weeks are worth on the immediate resale market more than I gave for them including my 2 DVC contracts. 5 weeks I own are deeded, 2 DVC contracts expire in 2042 and my MX week expires in 2033 and I bought it after DVC.

 

[slimplaw]

I'll be in my 80's. Actually, I am waiting for them to offer a retirement home plan. I'd be delighted to buy in to a retirement plan in about 15 to 20 years and work somewhere at WDW 1 or 2 days a week.

 

[legs22]

Dean-
Thanks for your timeshare expertise. Is it true that in 2042 DVC ownership reverts back to Disney? That's what I thought I read on one of these info threads. Does Disney give you any money when this happens? Would you sell before ownership reverted back to Disney? But then if there wasn't much time left- who would want to buy it?
Thanks. Just trying to understand all this.

 

[TXTIGGR]

Werner ... LOL.

What a thought, oddly enough very likely.

So ... everyone make sure you bring your kids,
grandkids, and their friends to WDW.

Take them to B&C for a "Kitchen Sink", let them
ride the slide through the clown at BW til it's dark,
and run back to ride Rock'n Roller Coaster "just
one more time".

In short, have fun!

With any luck, that should ensure whatever
guy or gal makes that decision based on
"value" and not purely economics.

-TXTIGGR

 

[Dean]

Originally posted by legs22
Is it true that in 2042 DVC ownership reverts back to Disney? That's what I thought I read on one of these info threads. Does Disney give you any money when this happens? Would you sell before ownership reverted back to Disney? But then if there wasn't much time left- who would want to buy it?
Thanks. Just trying to understand all this.

DVC does revert back to Disney on 31 Jan, 2042, if it's not extended. No residual value. If you sell late, I'm sure the return will be slight. Still, likely the best investment I've ever made.

I own 8 timeshare weeks to include Marriott, DVC, MX and Aruba. They are all a great value in their own right. I think the Royals in Cancun are the only timeshare that will reportedly give you back money at the end of the time. This remains to be seen if it will actually happen, though come 2006, we should get a pretty good idea as the first Royal, VCI, will expire then. Remember that purchase price per se is not the most important factor in value of a timeshare resort, quality, yearly fees, how well it fits your needs are all more important. I know of weeks they will give you as long as you pay the yearly fees, still not a good deal. DVC used appropriately and for the right family is the best deal going. I also own at Marriott's Grande Ocean which I like just as well but for different reasons and a different vacation experience.

Unfortunately the party line on TUG is anti DVC and anti Disney. The idea that DVC is a bad deal becaues it's RTU with now 40 years left and that the Royals or Marriott Aruba or Marriott Custom House are great, is frankly hypocritical. I could also care less whether Grande Ocean is deeded. At least with a RTU, someone can simply walk away at some point with no hassles, no special assessments and no yearly fees on a 50 year old property.

 

[legs22]

What is RTU?

 

[RobDoc]

RTU= Right To Use. We don't actually own the property, but own the Right to Use it until 2042.

 

[DVCajun]

gmboy95, you crack me up!!! Those are my sentiments exactly! I didn't buy into DVC so my children and grandchildren could go to WDW after I'm gone! If that happens, so be it, but I'm certainly not happy about it! I want to enjoy every year there myself! I too plan to spend every penny I have -- if possible at Disney World!!!!

Maybe they'll institute a Bingo night for us. heehee