What happens when a DVC Property becomes “worthless”?

[TinkAgainU]

Hi all

I thought the dues were a direct reflection of the costs of running the resort - if dues exceed the cash price then the operation is insolvent ?

Can you reword this question? Not sure I understand what you believe, or what you are asking?

During the pandemic the resorts had no "cash" room rental income - I believe to avoid high expenses the resorts scaled back significantly - that kept DVC Dues from going skyhigh and saved Disney money on the Disney/NonDVC side of the resorts. Like any business, unless it is an insured event, without sufficient income (rentals or dues) in the long term, you scale back or shut down. I don't know what would happen to DVC memberships at that point - and guessing you'd need an attorney to sort out what the documents say, but Disney is a pro when it comes to CYA-Disney.

 

[DonMacGregor]

Can you reword this question? Not sure I understand what you believe, or what you are asking?

During the pandemic the resorts had no "cash" room rental income - I believe to avoid high expenses the resorts scaled back significantly - that kept DVC Dues from going skyhigh and saved Disney money on the Disney/NonDVC side of the resorts. Like any business, unless it is an insured event, without sufficient income (rentals or dues) in the long term, you scale back or shut down. I don't know what would happen to DVC memberships at that point - and guessing you'd need an attorney to sort out what the documents say, but Disney is a pro when it comes to CYA-Disney.

I believe the theory is this:

Say dues at VBR reach $25 PP, and it takes 20 points to reserve a room ($500). Based on the idea that dues really only represent operating costs, then the cost to operate that room is $500. In the "dues could become more than the cash rate" scenario, if Disney ostensibly rented that room for less than $500, they would be losing money or "insolvent", because they are renting the room for less than it costs to maintain it. Therefore, dues can never exceed the cash rate because the two rates still have the same base: the operating cost of the room.

The problem with that argument is that dues don't just represent operating costs, but also include capital reserves, etc.

 

[Leight19]

I believe the theory is this:

Say dues at VBR reach $25 PP, and it takes 20 points to reserve a room ($500). Based on the idea that dues really only represent operating costs, then the cost to operate that room is $500. In the "dues could become more than the cash rate" scenario, if Disney ostensibly rented that room for less than $500, they would be losing money or "insolvent", because they are renting the room for less than it costs to maintain it. Therefore, dues can never exceed the cash rate because the two rates still have the same base: the operating cost of the room.

The problem with that argument is that dues don't just represent operating costs, but also include capital reserves, etc.

I don’t know anything specific to vbr but I’d also add as general economics it may not be direct apples to apples if disney generates significant additional revenue at hotel outside of room cost. E.g. scenario could exist where they take loss on hotel room but make up on it with other food/merch/experience sales.

 

[RoseGold]

Personally, I would not want to buy VB right now at any price, and if I were an owner, I’d actively consider selling. You can still sell right now and buy a different DVC property with the proceeds, but owning at VB seems risky.

I completely agree. VB in particular has such crazy high dues that show no sign of stopping.

I'm always baffled by these "I heart Disney, who cares if it's worthless? posts." Completely missing the point. And that's not even the worst case scenario. The worst case scenario is common in timeshares, and it's where VB could be headed. You are the hook for dues until the foreclose, and if they become too expensive, this was a very bad idea. In many timeshares, the contract is worth zero, and you're still on the hook for dues. And your points cost more than the rest of the system. Yikes.

If VB becomes too expensive, even Disney association won't save it. It's not like people want to spend more on SAP either. Even if were free, I wouldn't be buying it right now.

 

[RoseGold]

A bit of a double whammy coming up for VB and HHI - not much time left on the deed plus the high fees certainly limits the market. But the low points charts makes them a great option for owners of other resorts to stay there.

This makes triple whammy. This resort just doesn't have a lot of points. This makes big expenses hurt even more in dues $/point.

 

[ML_LovesDisney]

It seems like the good thing about DVC is it expires after 50 years. Yes, annual dues may get expensive, but there is an end date and you can still use your points there for a vacation, so I don't see that as worthless.

 

[RoseGold]

It seems like the good thing about DVC is it expires after 50 years. Yes, annual dues may get expensive, but there is an end date and you can still use your points there for a vacation, so I don't see that as worthless.

I mean, I guess? By that logic, all those free timeshares on ebay are worth something too.

 

[Mrs p]

I believe the theory is this:

Say dues at VBR reach $25 PP, and it takes 20 points to reserve a room ($500). Based on the idea that dues really only represent operating costs, then the cost to operate that room is $500. In the "dues could become more than the cash rate" scenario, if Disney ostensibly rented that room for less than $500, they would be losing money or "insolvent", because they are renting the room for less than it costs to maintain it. Therefore, dues can never exceed the cash rate because the two rates still have the same base: the operating cost of the room.

The problem with that argument is that dues don't just represent operating costs, but also include capital reserves, etc.

Yes that would be my understanding - capital reserves are in effect long term running costs - my point being, a well run hotel should have the ‘dues’ element significantly lower than the cash price to be solvent

 

[ML_LovesDisney]

I mean, I guess? By that logic, all those free timeshares on ebay are worth something too.

The free timeshares on Ebay are typically ones that do not have an end date. We are edging closer (18 years) to the first true "expiration" of DVC. And Beach Club and Boardwalk are still being bought at high prices. So it's not really comparable to the example you're giving.

 

[RoseGold]

The free timeshares on Ebay are typically ones that do not have an end date. We are edging closer (18 years) to the first true "expiration" of DVC. And Beach Club and Boardwalk are still being bought at high prices. So it's not really comparable to the example you're giving.

We are talking about bloated dues making a timeshare a bad value, which is true in many timeshare systems outside DVC. Even in decent systems, there are individual resorts that are too expensive and are hard to get rid of because the dues are too high. No one wants those points, and why would you buy in using that property?

BC/BW have decent dues, and are completely different product than VB.

If any DVC resort's dues get high enough, it could be worthless or even a liability. We are speculating the first to do that could be VB

 

[ML_LovesDisney]

We are talking about bloated dues making a timeshare a bad value, which is true in many timeshare systems outside DVC. Even in decent systems, there are individual resorts that are too expensive and are hard to get rid of because the dues are too high. No one wants those points, and why would you buy in using that property?

BC/BW have decent dues, and are completely different product than VB.

If any DVC resort's dues get high enough, it could be worthless or even a liability. We are speculating the first to do that could be VB

I get that, but even if VB gets to $26/pp dues by 2042, and you own 200 points, $5200. That's still cheaper than most beach vacations I've priced out. 6 nights in summer in a 1 bedroom. Is it a great value? No. Maybe if you're in the rental game, it's more worthless. Just my opinion.

 

[TeamRiley]

The dues will be at least $50 pp by 2042

 

[Brian Noble]

There are two situations in which timeshares are "worthless". The first (and the most important) is if it is "under water"--defined as annual fees that exceed comparable rental rates.

This can happen in a weeks-based timeshare in a highly seasonal destination. In these resorts, each owned week pays ~1/50th of the ongoing costs (assuming two weeks held back for maintenance, etc.). But, the rental "values" of in-season weeks are signficantly higher than the rental values of off-season weeks. If the resort is very highly seasonal it is possible for the offseason owners to be under water, even though the high-season owners still get very good value.

When this happens, a seasonal weeks-based resort can enter a "death spiral" in which off-season owners stop paying and allow their units to be foreclosed. Those weeks can't easily be sold, and while the resort will try to rent them, the rental proceeds are not high enough to offset the lost fees. The lost income is then spread over the remaining owners. This pushes more weeks underwater, and those that were already underwater go farther under. More owners default, rinse, repeat. Eventually the resort ceases operations and is sold off, with the proceeds going to remaining owners.

There are a bunch of ways to deal with this. For example, several of the northern Michigan resorts originally sold their weeks as a bundle of two or more with a mix of seasons. So instead of some owners having a great deal and others a terrible one, every owner on average has a "good" deal.

However, the easiest way to do it is to sell as points rather than weeks. In a points-based resort, the weeks that are worth less in rental value also require less points to book. The weeks worth more in rental value require more points to book. If the points allocation is done with at least some care, then if the resort has any value at all, everyone has a more or less equal share in that value.

That's usually good, but it can be very bad. In this model, either the entire resort has value, or the entire resort is under water. If that happens, you get the same death spiral, but it happens much more quickly. The good news is that such underwater resorts are uncommon. This generally only happens to resorts that are in very "regional" destinations without much broader appeal, and that suffer significantly in comparison to any other options in the area. The latter happens because the owners want to keep fees low, so they don't invest much in refurbishments, etc. That's a strategy that can backfire if the resort falls too far behind the competition.

I suspect Vero will never get to that point. I took a quick look at other Hutchinson Island spots that appear to be of comparable quality (Expedia lists Vero as 3.5 stars, so I'm looking at "branded" 3 star or general 4 star properties), the all-in weekly rate is about $2-3K for a standard room w/not much of a view for early June. A standard-view "Inn room" that time of year is 104 points for a week, unsubsidized dues are $12.85, for a total cost of about $1,340. There's still a healthy gap between those, which is at least partly why Vero is still worth something on the secondary market.

Vero isn't the ideal location for FL Atlantic Coast---its a little too far north for snowbirds---but Hutchinson Island is still a decent draw. It's also unlikely that Vero will fall significantly behind the competition in terms of upkeep.

-----------------

There is another reason why a timeshare might be "worthless" (meaning: it has to be given away rather than sold on the secondary market)---there isn't enough organic demand in the secondary market to meet the supply of willing sellers. That can happen even if the timeshare itself "has value" from the rental-rate perspective, because timeshare is something that is sold, not bought. Very few people (outside of the DVC section of Disboards, TUG, etc.) wake up and decide they are going to go looking to buy a timeshare. If there isn't enough traffic in the market, it doesn't matter how much "value" the week holds--you aren't going to get a great price for it.

This is more likely to happen to resorts that are unbranded. Unbranded resorts are a problem because no one is going to go looking for one. Everyone knows Disney. The name automatically carries some sense of value and desirability. But "Generic Beach Resort" that isn't affiliated with one of the name-brand hoteliers? That's a much tougher sell---even if it is a perfectly fine resort, and the fees are less than area rental rates.

Even if this happens to a timeshare you own, it's not the worst thing in the world, because there will still be plenty of value in using it. Renting the same thing would cost more, and if you still want to go, great! If you no longer want to go, you can probably find someone among your social circle who would be wililng to take it off your hands--again, because it has value.

Even so, this is not likely to happen to Disney, because the fan base is large, passionate, and well connected. I can't think of another timeshare system with a dozen or so well-known brokers handling resales. That's not because they are worthless: Hilton, Marriott, Hyatt, etc. all have real value on the secondary market. But the Disney market is "just different," and I don't see that changing anytime soon.

 

[Mrs p]

There are two situations in which timeshares are "worthless". The first (and the most important) is if it is "under water"--defined as annual fees that exceed comparable rental rates.

This can happen in a weeks-based timeshare in a highly seasonal destination. In these resorts, each owned week pays ~1/50th of the ongoing costs (assuming two weeks held back for maintenance, etc.). But, the rental "values" of in-season weeks are signficantly higher than the rental values of off-season weeks. If the resort is very highly seasonal it is possible for the offseason owners to be under water, even though the high-season owners still get very good value.

When this happens, a seasonal weeks-based resort can enter a "death spiral" in which off-season owners stop paying and allow their units to be foreclosed. Those weeks can't easily be sold, and while the resort will try to rent them, the rental proceeds are not high enough to offset the lost fees. The lost income is then spread over the remaining owners. This pushes more weeks underwater, and those that were already underwater go farther under. More owners default, rinse, repeat. Eventually the resort ceases operations and is sold off, with the proceeds going to remaining owners.

There are a bunch of ways to deal with this. For example, several of the northern Michigan resorts originally sold their weeks as a bundle of two or more with a mix of seasons. So instead of some owners having a great deal and others a terrible one, every owner on average has a "good" deal.

However, the easiest way to do it is to sell as points rather than weeks. In a points-based resort, the weeks that are worth less in rental value also require less points to book. The weeks worth more in rental value require more points to book. If the points allocation is done with at least some care, then if the resort has any value at all, everyone has a more or less equal share in that value.

That's usually good, but it can be very bad. In this model, either the entire resort has value, or the entire resort is under water. If that happens, you get the same death spiral, but it happens much more quickly. The good news is that such underwater resorts are uncommon. This generally only happens to resorts that are in very "regional" destinations without much broader appeal, and that suffer significantly in comparison to any other options in the area. The latter happens because the owners want to keep fees low, so they don't invest much in refurbishments, etc. That's a strategy that can backfire if the resort falls too far behind the competition.

I suspect Vero will never get to that point. I took a quick look at other Hutchinson Island spots that appear to be of comparable quality (Expedia lists Vero as 3.5 stars, so I'm looking at "branded" 3 star or general 4 star properties), the all-in weekly rate is about $2-3K for a standard room w/not much of a view for early June. A standard-view "Inn room" that time of year is 104 points for a week, unsubsidized dues are $12.85, for a total cost of about $1,340. There's still a healthy gap between those, which is at least partly why Vero is still worth something on the secondary market.

Vero isn't the ideal location for FL Atlantic Coast---its a little too far north for snowbirds---but Hutchinson Island is still a decent draw. It's also unlikely that Vero will fall significantly behind the competition in terms of upkeep.

-----------------

There is another reason why a timeshare might be "worthless" (meaning: it has to be given away rather than sold on the secondary market)---there isn't enough organic demand in the secondary market to meet the supply of willing sellers. That can happen even if the timeshare itself "has value" from the rental-rate perspective, because timeshare is something that is sold, not bought. Very few people (outside of the DVC section of Disboards, TUG, etc.) wake up and decide they are going to go looking to buy a timeshare. If there isn't enough traffic in the market, it doesn't matter how much "value" the week holds--you aren't going to get a great price for it.

This is more likely to happen to resorts that are unbranded. Unbranded resorts are a problem because no one is going to go looking for one. Everyone knows Disney. The name automatically carries some sense of value and desirability. But "Generic Beach Resort" that isn't affiliated with one of the name-brand hoteliers? That's a much tougher sell---even if it is a perfectly fine resort, and the fees are less than area rental rates.

Even if this happens to a timeshare you own, it's not the worst thing in the world, because there will still be plenty of value in using it. Renting the same thing would cost more, and if you still want to go, great! If you no longer want to go, you can probably find someone among your social circle who would be wililng to take it off your hands--again, because it has value.

Even so, this is not likely to happen to Disney, because the fan base is large, passionate, and well connected. I can't think of another timeshare system with a dozen or so well-known brokers handling resales. That's not because they are worthless: Hilton, Marriott, Hyatt, etc. all have real value on the secondary market. But the Disney market is "just different," and I don't see that changing anytime soon.

Thanks for taking the time to set out the above, we won’t panic just yet!

 

[GrumpyInPhilly]

There are two situations in which timeshares are "worthless". The first (and the most important) is if it is "under water"--defined as annual fees that exceed comparable rental rates.

This can happen in a weeks-based timeshare in a highly seasonal destination. In these resorts, each owned week pays ~1/50th of the ongoing costs (assuming two weeks held back for maintenance, etc.). But, the rental "values" of in-season weeks are signficantly higher than the rental values of off-season weeks. If the resort is very highly seasonal it is possible for the offseason owners to be under water, even though the high-season owners still get very good value.

When this happens, a seasonal weeks-based resort can enter a "death spiral" in which off-season owners stop paying and allow their units to be foreclosed. Those weeks can't easily be sold, and while the resort will try to rent them, the rental proceeds are not high enough to offset the lost fees. The lost income is then spread over the remaining owners. This pushes more weeks underwater, and those that were already underwater go farther under. More owners default, rinse, repeat. Eventually the resort ceases operations and is sold off, with the proceeds going to remaining owners.

There are a bunch of ways to deal with this. For example, several of the northern Michigan resorts originally sold their weeks as a bundle of two or more with a mix of seasons. So instead of some owners having a great deal and others a terrible one, every owner on average has a "good" deal.

However, the easiest way to do it is to sell as points rather than weeks. In a points-based resort, the weeks that are worth less in rental value also require less points to book. The weeks worth more in rental value require more points to book. If the points allocation is done with at least some care, then if the resort has any value at all, everyone has a more or less equal share in that value.

That's usually good, but it can be very bad. In this model, either the entire resort has value, or the entire resort is under water. If that happens, you get the same death spiral, but it happens much more quickly. The good news is that such underwater resorts are uncommon. This generally only happens to resorts that are in very "regional" destinations without much broader appeal, and that suffer significantly in comparison to any other options in the area. The latter happens because the owners want to keep fees low, so they don't invest much in refurbishments, etc. That's a strategy that can backfire if the resort falls too far behind the competition.

I suspect Vero will never get to that point. I took a quick look at other Hutchinson Island spots that appear to be of comparable quality (Expedia lists Vero as 3.5 stars, so I'm looking at "branded" 3 star or general 4 star properties), the all-in weekly rate is about $2-3K for a standard room w/not much of a view for early June. A standard-view "Inn room" that time of year is 104 points for a week, unsubsidized dues are $12.85, for a total cost of about $1,340. There's still a healthy gap between those, which is at least partly why Vero is still worth something on the secondary market.

Vero isn't the ideal location for FL Atlantic Coast---its a little too far north for snowbirds---but Hutchinson Island is still a decent draw. It's also unlikely that Vero will fall significantly behind the competition in terms of upkeep.

-----------------

There is another reason why a timeshare might be "worthless" (meaning: it has to be given away rather than sold on the secondary market)---there isn't enough organic demand in the secondary market to meet the supply of willing sellers. That can happen even if the timeshare itself "has value" from the rental-rate perspective, because timeshare is something that is sold, not bought. Very few people (outside of the DVC section of Disboards, TUG, etc.) wake up and decide they are going to go looking to buy a timeshare. If there isn't enough traffic in the market, it doesn't matter how much "value" the week holds--you aren't going to get a great price for it.

This is more likely to happen to resorts that are unbranded. Unbranded resorts are a problem because no one is going to go looking for one. Everyone knows Disney. The name automatically carries some sense of value and desirability. But "Generic Beach Resort" that isn't affiliated with one of the name-brand hoteliers? That's a much tougher sell---even if it is a perfectly fine resort, and the fees are less than area rental rates.

Even if this happens to a timeshare you own, it's not the worst thing in the world, because there will still be plenty of value in using it. Renting the same thing would cost more, and if you still want to go, great! If you no longer want to go, you can probably find someone among your social circle who would be wililng to take it off your hands--again, because it has value.

Even so, this is not likely to happen to Disney, because the fan base is large, passionate, and well connected. I can't think of another timeshare system with a dozen or so well-known brokers handling resales. That's not because they are worthless: Hilton, Marriott, Hyatt, etc. all have real value on the secondary market. But the Disney market is "just different," and I don't see that changing anytime soon.

Just bookmarked another of your excellent essays. Thanks.

 

[kilik64]

Just bookmarked another of your excellent essays. Thanks.

Didnt know that was a thing, found it easily and bookmarked it too. So thanks for saying this.

Timeshare 201 course marked for that one.

 

[Johtull12]

Hi all

I thought the dues were a direct reflection of the costs of running the resort - if dues exceed the cash price then the operation is insolvent ?

They are, they won’t

 

[Spivey378]

It will have zero value at that time.

 

[Cfabar1]

There are two situations in which timeshares are "worthless". The first (and the most important) is if it is "under water"--defined as annual fees that exceed comparable rental rates.

This can happen in a weeks-based timeshare in a highly seasonal destination. In these resorts, each owned week pays ~1/50th of the ongoing costs (assuming two weeks held back for maintenance, etc.). But, the rental "values" of in-season weeks are signficantly higher than the rental values of off-season weeks. If the resort is very highly seasonal it is possible for the offseason owners to be under water, even though the high-season owners still get very good value.

When this happens, a seasonal weeks-based resort can enter a "death spiral" in which off-season owners stop paying and allow their units to be foreclosed. Those weeks can't easily be sold, and while the resort will try to rent them, the rental proceeds are not high enough to offset the lost fees. The lost income is then spread over the remaining owners. This pushes more weeks underwater, and those that were already underwater go farther under. More owners default, rinse, repeat. Eventually the resort ceases operations and is sold off, with the proceeds going to remaining owners.

There are a bunch of ways to deal with this. For example, several of the northern Michigan resorts originally sold their weeks as a bundle of two or more with a mix of seasons. So instead of some owners having a great deal and others a terrible one, every owner on average has a "good" deal.

However, the easiest way to do it is to sell as points rather than weeks. In a points-based resort, the weeks that are worth less in rental value also require less points to book. The weeks worth more in rental value require more points to book. If the points allocation is done with at least some care, then if the resort has any value at all, everyone has a more or less equal share in that value.

That's usually good, but it can be very bad. In this model, either the entire resort has value, or the entire resort is under water. If that happens, you get the same death spiral, but it happens much more quickly. The good news is that such underwater resorts are uncommon. This generally only happens to resorts that are in very "regional" destinations without much broader appeal, and that suffer significantly in comparison to any other options in the area. The latter happens because the owners want to keep fees low, so they don't invest much in refurbishments, etc. That's a strategy that can backfire if the resort falls too far behind the competition.

I suspect Vero will never get to that point. I took a quick look at other Hutchinson Island spots that appear to be of comparable quality (Expedia lists Vero as 3.5 stars, so I'm looking at "branded" 3 star or general 4 star properties), the all-in weekly rate is about $2-3K for a standard room w/not much of a view for early June. A standard-view "Inn room" that time of year is 104 points for a week, unsubsidized dues are $12.85, for a total cost of about $1,340. There's still a healthy gap between those, which is at least partly why Vero is still worth something on the secondary market.

Vero isn't the ideal location for FL Atlantic Coast---its a little too far north for snowbirds---but Hutchinson Island is still a decent draw. It's also unlikely that Vero will fall significantly behind the competition in terms of upkeep.

-----------------

There is another reason why a timeshare might be "worthless" (meaning: it has to be given away rather than sold on the secondary market)---there isn't enough organic demand in the secondary market to meet the supply of willing sellers. That can happen even if the timeshare itself "has value" from the rental-rate perspective, because timeshare is something that is sold, not bought. Very few people (outside of the DVC section of Disboards, TUG, etc.) wake up and decide they are going to go looking to buy a timeshare. If there isn't enough traffic in the market, it doesn't matter how much "value" the week holds--you aren't going to get a great price for it.

This is more likely to happen to resorts that are unbranded. Unbranded resorts are a problem because no one is going to go looking for one. Everyone knows Disney. The name automatically carries some sense of value and desirability. But "Generic Beach Resort" that isn't affiliated with one of the name-brand hoteliers? That's a much tougher sell---even if it is a perfectly fine resort, and the fees are less than area rental rates.

Even if this happens to a timeshare you own, it's not the worst thing in the world, because there will still be plenty of value in using it. Renting the same thing would cost more, and if you still want to go, great! If you no longer want to go, you can probably find someone among your social circle who would be wililng to take it off your hands--again, because it has value.

Even so, this is not likely to happen to Disney, because the fan base is large, passionate, and well connected. I can't think of another timeshare system with a dozen or so well-known brokers handling resales. That's not because they are worthless: Hilton, Marriott, Hyatt, etc. all have real value on the secondary market. But the Disney market is "just different," and I don't see that changing anytime soon.

These are great thoughts… They make sense to me, and I think VB is a very special resort in the DVC community, and in the wider community… Other VB hotels on the ocean go for considerably more, which also gives me hope…

What do you think the Post 2042 plan might look like for VB and HHI? I’m skeptical Disney will want to sell those points through again, but am unclear there would be demand for cash stays for all those rooms year round….

 

[john7994]

There are two situations in which timeshares are "worthless". The first (and the most important) is if it is "under water"--defined as annual fees that exceed comparable rental rates.

This can happen in a weeks-based timeshare in a highly seasonal destination. In these resorts, each owned week pays ~1/50th of the ongoing costs (assuming two weeks held back for maintenance, etc.). But, the rental "values" of in-season weeks are signficantly higher than the rental values of off-season weeks. If the resort is very highly seasonal it is possible for the offseason owners to be under water, even though the high-season owners still get very good value.

When this happens, a seasonal weeks-based resort can enter a "death spiral" in which off-season owners stop paying and allow their units to be foreclosed. Those weeks can't easily be sold, and while the resort will try to rent them, the rental proceeds are not high enough to offset the lost fees. The lost income is then spread over the remaining owners. This pushes more weeks underwater, and those that were already underwater go farther under. More owners default, rinse, repeat. Eventually the resort ceases operations and is sold off, with the proceeds going to remaining owners.

There are a bunch of ways to deal with this. For example, several of the northern Michigan resorts originally sold their weeks as a bundle of two or more with a mix of seasons. So instead of some owners having a great deal and others a terrible one, every owner on average has a "good" deal.

However, the easiest way to do it is to sell as points rather than weeks. In a points-based resort, the weeks that are worth less in rental value also require less points to book. The weeks worth more in rental value require more points to book. If the points allocation is done with at least some care, then if the resort has any value at all, everyone has a more or less equal share in that value.

That's usually good, but it can be very bad. In this model, either the entire resort has value, or the entire resort is under water. If that happens, you get the same death spiral, but it happens much more quickly. The good news is that such underwater resorts are uncommon. This generally only happens to resorts that are in very "regional" destinations without much broader appeal, and that suffer significantly in comparison to any other options in the area. The latter happens because the owners want to keep fees low, so they don't invest much in refurbishments, etc. That's a strategy that can backfire if the resort falls too far behind the competition.

I suspect Vero will never get to that point. I took a quick look at other Hutchinson Island spots that appear to be of comparable quality (Expedia lists Vero as 3.5 stars, so I'm looking at "branded" 3 star or general 4 star properties), the all-in weekly rate is about $2-3K for a standard room w/not much of a view for early June. A standard-view "Inn room" that time of year is 104 points for a week, unsubsidized dues are $12.85, for a total cost of about $1,340. There's still a healthy gap between those, which is at least partly why Vero is still worth something on the secondary market.

Vero isn't the ideal location for FL Atlantic Coast---its a little too far north for snowbirds---but Hutchinson Island is still a decent draw. It's also unlikely that Vero will fall significantly behind the competition in terms of upkeep.

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There is another reason why a timeshare might be "worthless" (meaning: it has to be given away rather than sold on the secondary market)---there isn't enough organic demand in the secondary market to meet the supply of willing sellers. That can happen even if the timeshare itself "has value" from the rental-rate perspective, because timeshare is something that is sold, not bought. Very few people (outside of the DVC section of Disboards, TUG, etc.) wake up and decide they are going to go looking to buy a timeshare. If there isn't enough traffic in the market, it doesn't matter how much "value" the week holds--you aren't going to get a great price for it.

This is more likely to happen to resorts that are unbranded. Unbranded resorts are a problem because no one is going to go looking for one. Everyone knows Disney. The name automatically carries some sense of value and desirability. But "Generic Beach Resort" that isn't affiliated with one of the name-brand hoteliers? That's a much tougher sell---even if it is a perfectly fine resort, and the fees are less than area rental rates.

Even if this happens to a timeshare you own, it's not the worst thing in the world, because there will still be plenty of value in using it. Renting the same thing would cost more, and if you still want to go, great! If you no longer want to go, you can probably find someone among your social circle who would be wililng to take it off your hands--again, because it has value.

Even so, this is not likely to happen to Disney, because the fan base is large, passionate, and well connected. I can't think of another timeshare system with a dozen or so well-known brokers handling resales. That's not because they are worthless: Hilton, Marriott, Hyatt, etc. all have real value on the secondary market. But the Disney market is "just different," and I don't see that changing anytime soon.

Absolutely enjoy your well reasoned and insightful responses! Your objective comments are worth reading and help cut through a lot of disinformation / bias.