What's with all the OKW buybacks by Disney?

[AllieV]

Oy, if it's true that they're beginning a long journey of buy-backs for extensions, then buying at any of those named resorts will become difficult soon. If you do the math on the number of contracts at all those resorts and divide that by 30 years, how many do they have to buy back per year? I wouldn't think 20 per month would do it.

 

[dianeschlicht]

That said, I suspect it relates back to the failed OKW extension attempt a few years ago. DVC is sitting on a huge obligation which kicks-in come 2042 thanks to the millions of points which were not extended. Gradual ROFR will allow DVC to rid itself of many of those points without creating an immediate financial burden.

Overall ROFR is not a money-making business for DVC. But the margins are a bit higher when they can buy-back a 29 year contract and re-sell a 46 year contract.

I think this is not only the primary reason for ROFR being excercised on OKW contracts, I think it's the ONLY reason. Well, maybe also that there are quite a few people specifically looking for OKW. The debacle that Jim Lewis created when he wanted to extend a 50 year contract just 15 years into it is the real reason they are buying back now. They have to make up for the revenue they didn't get when so many of us said "no thank you" to the extension.

 

[ELMC]

I think we're overlooking something, and that is that in 2042 all of the OKW owners will simultaneously turn over their contracts to DVD (spread out over the different use years). DVD can then go and resell them without having to pay any acquisition costs. In 2042 each OKW sale will have a zero "cost of goods sold" amount. There are no construction costs, they will only have to pay marketing fees and maintenance fees for the time it takes for a new owner to come along and assume that responsibility. Now, pricing will be interesting because it is technically not a new property, but I think that if they had an initial offering at $70 per point direct, people would buy like crazy.

So really, when it comes down to it, is DVD panicking about the approaching 2042 deadline or are they looking forward to it?

 

[disneynutz]

Disney doesn't panic, they have a plan for everything.
I hate to keep harping about money and profit but that is their reason for what they do. If they can buy low through ROFR and sell to make an acceptable profit, they will do it. New sales make them the most money but if they have a demand or not enough new to keep them busy, they will sell older resorts.

Buying OKW, adding on the extended years and reselling would also make them more money.

Bill

 

[AllieV]

I was thinking that they were only ROFR'd OKW contracts that were at $50/point or less as well until I saw them ROFR on at $55/point.

Me, too; saw a pattern: BWV at 60, OKW at 50, HH at 40, VB at 30. But then a bunch got bought higher and some that were lower went through. Go figure.

 

[Breyean]

I think we're overlooking something, and that is that in 2042 all of the OKW owners will simultaneously turn over their contracts to DVD (spread out over the different use years). DVD can then go and resell them without having to pay any acquisition costs. In 2042 each OKW sale will have a zero "cost of goods sold" amount. There are no construction costs, they will only have to pay marketing fees and maintenance fees for the time it takes for a new owner to come along and assume that responsibility. Now, pricing will be interesting because it is technically not a new property, but I think that if they had an initial offering at $70 per point direct, people would buy like crazy.

So really, when it comes down to it, is DVD panicking about the approaching 2042 deadline or are they looking forward to it?

That's not really true. Some owners bought the extension, so they won't be handing back their points until 2057. Between 2042 and 2057 OKW might be a mess with fewer owners, but that might be made up by the demand to stay there by people who own at other resorts and want a bargain use of points.

Second, I wonder how much of the original building will remain as is once Disney takes back the property. For one thing, the buildings will be 5o-60 years old. There has to be a point where they would need a major overhaul, if not a tear down. Especially if DVC is going to resell them. Look at the Poly rumors of the building being completely destroyed and rebuilt.

Which leads to the next thing - OKW has to be the most spread out DVC property. Not only are the rooms large, but the open spaces, the golf course, only 2-3 stories high, etc. Anyone think a new DVC resort anywhere would leave so much open space or would they add more rooms? Again, the Poly rumors about the higher buildings and lees open space could be a hint.

And if DVC offered the "new" OKW points at $70, w/o restrictions on trading to other resorts, I shudder thinking about the affect this would have on booking at another resort where you don't have a home resort advantage.

 

[Sammie]

That's not really true. Some owners bought the extension, so they won't be handing back their points until 2057. Between 2042 and 2057 OKW might be a mess with fewer owners, but that might be made up by the demand to stay there by people who own at other resorts and want a bargain use of points.

Second, I wonder how much of the original building will remain as is once Disney takes back the property. For one thing, the buildings will be 5o-60 years old. There has to be a point where they would need a major overhaul, if not a tear down. Especially if DVC is going to resell them. Look at the Poly rumors of the building being completely destroyed and rebuilt.

Which leads to the next thing - OKW has to be the most spread out DVC property. Not only are the rooms large, but the open spaces, the golf course, only 2-3 stories high, etc. Anyone think a new DVC resort anywhere would leave so much open space or would they add more rooms? Again, the Poly rumors about the higher buildings and lees open space could be a hint.

And if DVC offered the "new" OKW points at $70, w/o restrictions on trading to other resorts, I shudder thinking about the affect this would have on booking at another resort where you don't have a home resort advantage.

What affect would this have.

It is not like they are adding any additional points to the system, these were already there; owned and used by previous members.

 

[wdrl]

A lot of people are assuming that DVD is exercising ROFR on OKW deeds so that they can be resold with the extended 2057 lease date. Has anyone confirmed whether the deeds being ROFRed are indeed only 2042 lease deeds? I know I haven't confirmed that piece of information.

 

[Breyean]

What affect would this have.

It is not like they are adding any additional points to the system, these were already there; owned and used by previous members.

You're assuming there will be no change to the resort, making more rooms in a very sparsely built area now, and that Disney will just sell the same number of points in 2042-2057 as they did in 1991 to whenever OKW sold out.

I'm assuming they will have to rebuild the resort, as I explained in my post, making it a lot more dense, thus adding a lot of rooms and thus points, into the system.

Plus, won't it be legally a new resort, so Disney can set a whole new points system more in line with the others in the DVC program. I'm betting GVs won't be between 47 to 81 points per night at the "new" OKW, but more like in the hundred per night like at most others are now.

They'll have more points to sell in that case, even if they leave the buildings as they are now, just by revising the points declared for the new resort. Add that to the possibility of actually adding more buildings and that could add up to a lot more points sold for the "new" OKW than there are now.

Unless they build a DVC cemetery or something on the OKW site.

 

[ELMC]

You're assuming there will be no change to the resort, making more rooms in a very sparsely built area now, and that Disney will just sell the same number of points in 2042-2057 as they did in 1991 to whenever OKW sold out.

I'm assuming they will have to rebuild the resort, as I explained in my post, making it a lot more dense, thus adding a lot of rooms and thus points, into the system.

What I've bolded above is almost exactly what I'm assuming. (Except that in 2042 I don't think they'll be selling 15 year contracts, I think they will be selling new 50 year contracts). I don't think that the buildings will need to be torn down. They will need to update and upgrade, as any hotel does, but that can all be done with maintenance fees. The frameworks and structures themselves should be fine for at least another go around. To that end, I wouldn't be surprised to see larger increases in maintenance fees from 2037-2042 in order to pay to get the resort ready for its new owners. Why incur the expense of rebuilding the entire resort when a) people love it as is and b) you can simply update it on the dime of existing owners?

We can table this debate for the next 25 years, then we'll see who was right.

 

[wdrl]

To that end, I wouldn't be surprised to see larger increases in maintenance fees from 2037-2042 in order to pay to get the resort ready for its new owners. Why incur the expense of rebuilding the entire resort when a) people love it as is and b) you can simply update it on the dime of existing owners?

DVD has promised it won't bill the non-extended owners for capital improvements made to OKW after January 31, 2042. I also think DVD is legally prohibited from doing as you suggested.

 

[ELMC]

DVD has promised it won't bill the non-extended owners for capital improvements made to OKW after January 31, 2042. I also think DVD is legally prohibited from doing as you suggested.

That's interesting. I'd like to know more about that. It's also interesting to see how they would differentiate renovations/updates from capital improvements. It all seems pretty grey to me.

 

[Sammie]

You're assuming there will be no change to the resort, making more rooms in a very sparsely built area now, and that Disney will just sell the same number of points in 2042-2057 as they did in 1991 to whenever OKW sold out.

I'm assuming they will have to rebuild the resort, as I explained in my post, making it a lot more dense, thus adding a lot of rooms and thus points, into the system.

Plus, won't it be legally a new resort, so Disney can set a whole new points system more in line with the others in the DVC program. I'm betting GVs won't be between 47 to 81 points per night at the "new" OKW, but more like in the hundred per night like at most others are now.

They'll have more points to sell in that case, even if they leave the buildings as they are now, just by revising the points declared for the new resort. Add that to the possibility of actually adding more buildings and that could add up to a lot more points sold for the "new" OKW than there are now.

Unless they build a DVC cemetery or something on the OKW site.

I did not assume anything, heck I could not follow where you were going to even assume.

I thought you were talking about the points they are taking back right now in ROFR, not talking about what is going to happen after the end date.

As to why they are buying them up, I figure they want them to sell to those wanting OKW.

 

[ELMC]

I did not assume anything, heck I could not follow where you were going to even assume.

I thought you were talking about the points they are taking back right now in ROFR, not talking about what is going to happen after the end date.

With all due respect, I have to agree. It was a bit difficult to follow your train of thought.

 

[wdrl]

You're assuming there will be no change to the resort, making more rooms in a very sparsely built area now, and that Disney will just sell the same number of points in 2042-2057 as they did in 1991 to whenever OKW sold out.

I'm assuming they will have to rebuild the resort, as I explained in my post, making it a lot more dense, thus adding a lot of rooms and thus points, into the system.

Plus, won't it be legally a new resort, so Disney can set a whole new points system more in line with the others in the DVC program. I'm betting GVs won't be between 47 to 81 points per night at the "new" OKW, but more like in the hundred per night like at most others are now.

They'll have more points to sell in that case, even if they leave the buildings as they are now, just by revising the points declared for the new resort. Add that to the possibility of actually adding more buildings and that could add up to a lot more points sold for the "new" OKW than there are now.

DVD cannot establish a "new" resort at OKW on February 1, 2042. Whatever changes DVD makes at OKW from 2042 to 2057, it will essentially be bound by restrictions in the current OKW Condominium Association agreement.

DVD will have to work with essentially the same point chart in 2042 as it has now. Remember, DVC points are a representation of a Member's real estate interest. There are specific formulas for each DVC resort that convert the square footage into a Vacation Club point value. In addition, there are formulas that equitably distribute the cost of maintaining common areas based on the relative sizes of the ownership interests. Basically, OKW has 7.6 million DVC points that represent the existing square footage at the resort. If DVD decides to tear down some buildings or add new buildings, the total number of points will change to maintain the current 'points/sq ft' ratio.

Here is another way to look at it. When DVD built and added Kidani Village to the AKV Condominium Association, it was obligated to use the points/square footage ratio that had already been established at Jambo House. Even though DVD retooled the two-bedroom vacation homes at Kidani by adding a third bathroom, a two-bedroom at Kidani had to be allotted the same number of points as at Jambo: 16,290 points. If DVD had set up Kidani as it own separate Condo Association, then it could have established a brand new points/sq ft ratio and, accordingly, a different point chart.

 

[Sammie]

With all due respect, I have to agree. It was a bit difficult to follow your train of thought.

Ok now you are really confusing me, not hard to do lately,

was "your" me or Breyan.

 

[ELMC]

Ok now you are really confusing me, not hard to do lately,

was "your" me or Breyan.

Sorry, Breyan, not you. I meant to multi quote and didn't.

 

[Sammie]

Sorry, Breyan, not you. I meant to multi quote and didn't.

Cool,

 

[tjkraz]

A lot of people are assuming that DVD is exercising ROFR on OKW deeds so that they can be resold with the extended 2057 lease date. Has anyone confirmed whether the deeds being ROFRed are indeed only 2042 lease deeds? I know I haven't confirmed that piece of information.

Not really "assuming", more hypothesizing and speculating.

And even if the theory is accurate, it's entirely possible they would ROFR a '57 contract at the right price, too.

You're assuming there will be no change to the resort, making more rooms in a very sparsely built area now, and that Disney will just sell the same number of points in 2042-2057 as they did in 1991 to whenever OKW sold out.

In legal terms, DVC extended the ground lease and end date of the condominium association to 2057. The only relevance of the 2042 date is that owners who did not pay the extension fee have already agreed to give the contract back to DVD effective 2/1/2042.

DVD / DVC is limited in what changes they can make because there is no 2042 reset button for OKW. The current POS and other governing documents now apply until 2057.

Plus, won't it be legally a new resort, so Disney can set a whole new points system more in line with the others in the DVC program. I'm betting GVs won't be between 47 to 81 points per night at the "new" OKW, but more like in the hundred per night like at most others are now.

Again, no. The point values established in 1991 now carry forward to 2057 due to the manner in which the condo association end date was extended. Reallocations are always possible but scrapping and re-writing the charts is not.

 

[AllieV]

If DVD decides to tear down some buildings or add new buildings, the total number of points will change to maintain the current 'points/sq ft' ratio.

Huh, interesting stuff. Question: does this points/sq ft ratio mean that OKW CANNOT rebuild some of the rooms smaller to follow that SSR trend? Or would it just mean that the smaller 1-br would cost fewer points (hence making okw even more popular)?