Where is the DVC market going?

[joestein]

I think that some of the people on this board are blinded by Disney. Disney cares only about one thing and that is $$$$$$. They provide the "Magic" and so forth because they know that people will pay for it.

When the RTU period ends for the DVC resorts, there will be no extension, and I will tell you why, because there is no profit in extending the term.

There is only a limited amount of people who will pay the exhorbanet (sp?) amounts that DVC charges. DVC tends to have one resort at least half full before it starts another. As they keep building resorts they will run out of people who are willing to spend the cost to own DVC. They already have owners of the resorts that finish their RTUs hooked, otherwise they wouldn't be owners, and they will position them with a special "promotion" to become the new wave of customers to buy into their new resorts at that time. They will take the old resort and rip it down, and use it to expand or build a park or maybe just build a new timeshare resort and resell it.

 

[Dean]

If Disney is going strong in 2040, why would the resorts value not correlate with Disney’s success? DVC is simply a WDW accommodation, why wouldn’t its value be directly tied to WDW room rates?

timeshares rarely track hotel rates in any way even now. With only a few years left, the yearly fees themselves are likely to be as much or more than what the room rates might be. Add the risk and aggravation of closing and it simply won't be worth it. Even now if ROFR goes away you'll see a reduction in value.

 

[disney dumbo]

timeshares rarely track hotel rates in any way even now.

Hi Dean,

I'm trying to understand your comments... but you know I'm a little dumbo.

What does your statement above mean?

Sales? Rental? Nightly rates?

Could you be saying that DVC is cheaper than paying Disney hotel rates?
I've heard that one before!

For some reason... I don't think that's what you mean. Please elaborate.

the yearly fees themselves are likely to be as much or more than what the room rates might be.

Are you implying that Disney would inflate expenses for DVC MF? Or that Disney hotels will be immune to expenses that would raise the room rate? Help me understand how the MF will be more than room rates.

I'm not trying to argue... I really want to understand what you are saying.

Thanks!

 

[Shamus]

The last 2-3 years I doubt they will even be worth the closing and maint fees. My thoughts are that we're near the top for the 2042 resorts. I feel those that think they'll just keep going up related to hotel costs are kidding themselves. Timeshares rarely track hotel costs very well, even for places like Marriott.

If you don't think that the Disney Hotel costs will/do have a direct effect on DVC pricing then YOU are kidding YOURSELF. Disney Room Cost is a number DVC uses in their pricing analysis, and a number I'm sure most all DVC purchasers use in their valuation of the program. To imply that there will be no correlation between Disney hotel prices and DVC value is Absurd.

DVC is not Marriott and it is not a traditional time share. Stop trying to apply the traditional timeshare financial model to DVC ... It does not fit. Very few Timeshares are intertwined with a hotel to the extent that DVC resorts like BWV, BCV, and VWL are. To think that the value of a studio at BWV will not be somehow related to the cost of BWI room is ridiculous.

15 Years ago there were very very few seasoned timeshare owners who even gave DVC the slightest chance of being successful...........Why then did it succeed? .....Why is DVC so successful? ... Because it is all controlled by the HOUSE of the MOUSE.....And that makes all the difference!!!!

timeshares rarely track hotel rates in any way even now. With only a few years left, the yearly fees themselves are likely to be as much or more than what the room rates might be. Add the risk and aggravation of closing and it simply won't be worth it. Even now if ROFR goes away you'll see a reduction in value.

I'd like to see the mathematical projections you did to show yearly fees exceeding room rates.

As time draws closer to the end you will actually see the a stronger relationship between DVC value and Hotel cost! Why? Because the RISK of time will be almost zero.

Dean - You are very knowledgeable about DVC and the Timeshare Industry and I enjoy reading your comments ... but when it comes to this future valuation topic I have to respectfully disagree with your viewpoint.

SHAMUS

 

[Dean]

Hi Dean,

I'm trying to understand your comments... but you know I'm a little dumbo.

What does your statement above mean?

Sales? Rental? Nightly rates?

My reference was comparing the value of ownership to a comparable nightly rate from the hotels.

Are you implying that Disney would inflate expenses for DVC MF? Or that Disney hotels will be immune to expenses that would raise the room rate? Help me understand how the MF will be more than room rates.

I'm not trying to argue... I really want to understand what you are saying.

Don't worry about the questioning, it's all part of discussing this issue. I am not saying DVC would intentionally inflate but that the natural inflation will likely make owning as or more expensive that comparable non ownership options late in the game. Time will tell.

 

[Dean]

If you don't think that the Disney Hotel costs will/do have a direct effect on DVC pricing then YOU are kidding YOURSELF. Disney Room Cost is a number DVC uses in their pricing analysis, and a number I'm sure most all DVC purchasers use in their valuation of the program. To imply that there will be no correlation between Disney hotel prices and DVC value is Absurd.

I didn't say they wouldn't have an influence, of course they will. But there will be MANY other factors. DVC is certainly somewhat different when it comes to timeshares so there is no good direct comparison. However, if one looks at other high demand areas where there are a fair amount of timeshares, the costs of those timeshares is only moderately affected by the price of hotels in the same area. Even for DVC if one can do Sun-Fri, the price doesn't currently track.

DVC is not Marriott and it is not a traditional time share. Stop trying to apply the traditional timeshare financial model to DVC ... It does not fit. Very few Timeshares are intertwined with a hotel to the extent that DVC resorts like BWV, BCV, and VWL are. To think that the value of a studio at BWV will not be somehow related to the cost of BWI room is ridiculous.

See above but I do mostly disagree.

15 Years ago there were very very few seasoned timeshare owners who even gave DVC the slightest chance of being successful...........Why then did it succeed? .....Why is DVC so successful? ... Because it is all controlled by the HOUSE of the MOUSE.....And that makes all the difference!!!!

I'm not sure that's accurate. I am a seasoned timeshare vet and I bought in almost 15 years ago.

The other problem is that anyone who buys late will have the distinct possibility of a special assessment. Hopefully we all live to see how this all plays out.

 

[Amy5000]

The other problem is that anyone who buys late will have the distinct possibility of a special assessment. Hopefully we all live to see how this all plays out.

This quote really confused me at first b/c I assumed if there is a special assessment it will apply to everyone. But then I figured you meant that a person buying later won't be able to take the zen stance that they are spreading this cost out over a 40 or 50 year contract.

This, of course, leads me to my next question: Do they refurbish rooms out of MF fees or special assessments? How refrequently to they refurbish rooms? (I guess I was wondering what will happen close to the end of the contracts....)

 

[Dean]

This quote really confused me at first b/c I assumed if there is a special assessment it will apply to everyone. But then I figured you meant that a person buying later won't be able to take the zen stance that they are spreading this cost out over a 40 or 50 year contract.

This, of course, leads me to my next question: Do they refurbish rooms out of MF fees or special assessments? How refrequently to they refurbish rooms? (I guess I was wondering what will happen close to the end of the contracts....)

In theory they should do so out of ongoing fees but more than 1 timeshare has had special assessments for things that should have come under the ongoing fees. We just had a small SA for one of the Marriott's I use but it was for upgrading, not for usual maintenance. One I owned previously had a 33% increase in fees stating certain things that needed to be done implying it was a temp increase and should be rolled back later then 2-3 years later had a SA for things that were listed the first go around. No roll back and then had a second SA a couple of years later. Luckily I sold all of my units just prior to the first SA and bought back in just after the last one. No prior knowledge was involved on my part, just lucky for once.

The truth is I don't expect a SA for DVC but you never know. I didn't expect one for the Marriott either though I did successfully predict the last 4 resorts that Marriott cut loose with owners telling me no way would Marriott walk away from good HH resorts or Vail. And they especially wouldn't keep part of the resorts (5 resorts in one complex) and not all of them. I was correct on all counts.

Look at where we're at right now. Assume that OKW and SSR expired in Jan, 2010 so less than 3 years remaining. Points have a value somewhere between $10-12 per point and dues around $5 per point with closing of around $500. Would anyone go through buying just to get 2-3 years at most use, I don't think the savings would be worth it for any situation, esp. when one can rent or possibly get code type discounts. Time will tell.

 

[disney dumbo]

Look at where we're at right now. Assume that OKW and SSR expired in Jan, 2010 so less than 3 years remaining. Points have a value somewhere between $10-12 per point and dues around $5 per point with closing of around $500. Would anyone go through buying just to get 2-3 years at most use, I don't think the savings would be worth it for any situation, esp. when one can rent or possibly get code type discounts. Time will tell.

Time will definitely tell. And I know there are 100's of factors that will ultimately effect the selling price in the last years... and completely no way to determine that 34 years ahead. But this theory is a bit interesting to me... so to further our discussion...

using my earlier figures...

rack rate off season at Beach Club 1nt= roughly $355 studio or room

Say you pay $98/pt and only have 4 years left on contract = $24.50/point/year
Add todays MF approx. $5/pt = $29.50

Cost (in today's money) 12 points for studio = $354

If room rates escalate like I'm imagining they will (and I'm sure MF will go up too)... it still makes me think that even with just 4 years left on contract...
when selling your DVC contract you would probably get your $98 back and that's 30 years from now.

but adjusting them for closing cost and reducing years to 3 as you suggested...

Paying $98/pt and only have 3 years left on contract = $32.67/point/year
Add todays MF approx. $5/pt = $37.67 Add in closing cost $2.78/pt = $40.45/pt (I assume that someone would buy 60 points 12pt/studio x 5 days Sun-Thu... then they are buying 60 points for 3 years use... 60 x 3 = 180 total points $500/180 = $2.78/pt)

Cost 12 points for studio = $485.40

So you are right... you would not want to pay $98/pt for 3 years left on the contract... TODAY!

Just for fun... I figured what price you'd pay TODAY... if you'd only have 3 years left... to equal the rack rate... and that was $65.16/pt. Not bad... especially considering what so many folks paid that have used them for years!

Still I think this still holds true... if I bought at $98 TODAY... and have 31 years of use... and got $65/pt back... I'd be one thrilled person. Sure you might say... that's rack rate... so let's discount it 25%... that's still close to $50/pt. This doesn't even add in the high probability of rack rates INCREASING in 31 years. There's a huge discussion right there... wonder what room rates will be in 31 years????

Then let's look at rent.. and from today's boards... seems to be more people interested in renting than there are points available... so that's a good sign that demand is high! $12/point x 3 yrs left = $36/pt is what you get back after 31 years of enjoying points. I think I'd be pretty happy there too. But in 31 years, there is a high probability of rent rates increasing. I'm sure someone has tracked that too. Seems like I remember $8/point... already that would be a 50% increase. If JUST that amount happens it brings your rent up to $54/pt... 100% increase makes it $72... not too bad either.

So... I'm still of the opinion... $98 is a great buy TODAY!

Again... I know it's all a guess... and an opinion... and like you say... time will tell!

 

[Delaware Mike]

Disney Dumbo, Dean, et al... I've been reading your discussion with a lot of interest. Not to highjack your conversation, nor interrupt your flow, I have a couple questions.

Do you think future outside pressures (off-property hotel room rates, private home weekly rentals, et cetera) will influence future on-property room rates? With the escalation of on-property rates, Mr. Average John Q. Public may not be able to continually afford Disney rates and begin to stay off-property, looking elsewhere for cheaper lodging.

Room rates at say, CBR, WL, AKL, might be downward-influenced (or at least kept in-check) by outside pressures, which might affect per-point DVC costs as resorts close in on their life expectancies.

...your thoughts on yet another of those 100 things that might affect future events?

 

[rinkwide]

A decent place on I-Drive goes for $59 but you still can't get into the Boardwalk cheaper than $300.

 

[snappy]

Disney Dumbo, Dean, et al... I've been reading your discussion with a lot of interest. Not to highjack your conversation, nor interrupt your flow, I have a couple questions.

Do you think future outside pressures (off-property hotel room rates, private home weekly rentals, et cetera) will influence future on-property room rates? With the escalation of on-property rates, Mr. Average John Q. Public may not be able to continually afford Disney rates and begin to stay off-property, looking elsewhere for cheaper lodging.

Room rates at say, CBR, WL, AKL, might be downward-influenced (or at least kept in-check) by outside pressures, which might affect per-point DVC costs as resorts close in on their life expectancies.

...your thoughts on yet another of those 100 things that might affect future events?

I do think the massive building offsite has and will continue to affect WDW resort rates and possibly DVC point rental rates.

There seems to be so much available land in the vicinity of WDW, especially to the west. We have stayed in 4 different very nice offsite houses in that direction. It really worked for us since our kids were younger at the time. Now that the kiddos are older the access provided onsite by walking from the BW DVC's or by buses from the other DVC's is more appealing to us as we can let the kids take off on their own to a certain degree. Also, although we did it I did not really feel all that comfortable renting from individuals. There is a very real value I think to having points under your control (we have also rented DVC points 3 times now).

I think controlling the points, having the extra room and having onsite transportation will at least to some degree mitigate the excess supply of offsite choices.

 

[disney dumbo]

Do you think future outside pressures (off-property hotel room rates, private home weekly rentals, et cetera) will influence future on-property room rates? With the escalation of on-property rates, Mr. Average John Q. Public may not be able to continually afford Disney rates and begin to stay off-property, looking elsewhere for cheaper lodging.

Room rates at say, CBR, WL, AKL, might be downward-influenced (or at least kept in-check) by outside pressures, which might affect per-point DVC costs as resorts close in on their life expectancies.

...your thoughts on yet another of those 100 things that might affect future events?

Interesting question... My 2 cents goes with supply and demand rules. The hard part is defining supply (house vs luxury hotel vs theme hotel vs...) and demand (want to park by room vs want room by THE park vs want theme vs want to save money)... it's really comparing apples to oranges. Then... what are you willing to pay for those differences!??

What CBR, WL, AKL offers... including theme, location, amenities... is not matched presently by any off-property location IMHO. I would guess people will always pay more for them.

To a degree, I guess off-property lodging does keep the Disney prices in check... because we each have a budget (unfortunately)... but I might pay $ more for theme/location... and someone else might rather save $ to stay off-property. There would be a different magic $ number for each of us. But keep in mind, there is still a different minimally required amenities list in our choice of lodging... each has a $ value associated to it. That's why the same airplane can have 1st class, coach, and a bazillion different excursion fares and rules... and people buying each one... but yet departing and arriving at the same time.

You say on-property rates are escalating... that must mean there are plenty of people paying them. If demand is low... so will the price go. Definitely, people are always looking for cheaper lodging... that's why I'm DVC! It is really a plus for DVC if Disney rates keep going up.

As long as hotel prices are escalating... DVC should be celebrating... because it offers something to freeze the escalation!

 

[Dean]

but adjusting them for closing cost and reducing years to 3 as you suggested...

To be honest I think that trying to project out maint fees and hotel rates is actually far less helpful and likely FAR less accurate than just taking the general situation, that's why I didn't bite with your offer to do so. I'd go further to say that one cannot do so with enough credibility to even use the numbers that far out. Maybe over the next 5-7 years but not that far out, FAR too many variables and most on the negative side. Would you honestly buy today if there were only 2-3 years left, I doubt even most die hards would do so. I doubt most would go through the hassle for the minor savings.

Do you think future outside pressures (off-property hotel room rates, private home weekly rentals, et cetera) will influence future on-property room rates? With the escalation of on-property rates, Mr. Average John Q. Public may not be able to continually afford Disney rates and begin to stay off-property, looking elsewhere for cheaper lodging.

I do, I suspect most here would disagree. I think they are influenced now. If there were little good off site options for hotels and timeshares I think one could look at no Disney discounts, even higher Disney prices and likely $20-25 per point or more for rentals right now. In spite of what many here think, there is a large contingent that actually prefers to stay off site and a larger contingent that is happy to do so for the savings.

 

[nboicepardee]

Wanted to subscribe to this thread. Thank you!
Natalie

 

[joestein]

Interesting question... My 2 cents goes with supply and demand rules. The hard part is defining supply (house vs luxury hotel vs theme hotel vs...) and demand (want to park by room vs want room by THE park vs want theme vs want to save money)... it's really comparing apples to oranges. Then... what are you willing to pay for those differences!??

What CBR, WL, AKL offers... including theme, location, amenities... is not matched presently by any off-property location IMHO. I would guess people will always pay more for them.

To a degree, I guess off-property lodging does keep the Disney prices in check... because we each have a budget (unfortunately)... but I might pay $ more for theme/location... and someone else might rather save $ to stay off-property. There would be a different magic $ number for each of us. But keep in mind, there is still a different minimally required amenities list in our choice of lodging... each has a $ value associated to it. That's why the same airplane can have 1st class, coach, and a bazillion different excursion fares and rules... and people buying each one... but yet departing and arriving at the same time.

You say on-property rates are escalating... that must mean there are plenty of people paying them. If demand is low... so will the price go. Definitely, people are always looking for cheaper lodging... that's why I'm DVC! It is really a plus for DVC if Disney rates keep going up.

As long as hotel prices are escalating... DVC should be celebrating... because it offers something to freeze the escalation!

To say that the DVC resorts are not matched by off-site resorts is entirely incorrect. I can quickly name 3 or 4 resorts that easily surpass any DVC resort:

Hilton Grand Vacation Club - Seaworld
Hilton Grand Vacation Clulb - Internation Drive
Sheraton Vistana Villages
Wyndham Bonnet Creek (entrance is within Disney World).

I think that some of the DVC resorts have nice theming (not all), but so do other off-site resorts. Not to mention that DVC units are TINY, they don't even have a decent dining table.

On the other hand.... The DVC resorts have:

Magical Express
Disney Dining Plan
Disney Transportation (so - so, I am not a big fan of taking buses)

If you are planning to visit Disney and stay within Disney for your whole trip, DVC is great (Though, I would never buy it, I exchange into it through II). If I was planning a trip where we would go to other places (Seaworld, Universal, etc) and only some days at Disney, I would prefer to stay in one of the non-Disney resorts I listed previously.

BTW... You can rent these resorts at various places on the internet pretty cheap.

Joe

 

[disney dumbo]

To say that the DVC resorts are not matched by off-site resorts is entirely incorrect.

Oops... I'm sorry.
Didn't mean to be "entirely incorrect".
Note my comment "In My Humble Opinion."
It's great that you have resorts you love.
I support your ability to make that choice and your right to proclaim their superiority!

If you are planning to visit Disney and stay within Disney for your whole trip, DVC is great

Now THAT's what I'm talking about!
And maybe one day I'll just take that trip to Orlando and not go to Disney and LOVE staying at one of the resorts you've listed.

(Though, I would never buy it, I exchange into it through II).

In my slanted view... this is sort of like buying into it... again IMHO.

BTW... You can rent these resorts at various places on the internet pretty cheap. Joe

Thanks for the tip... I do like to save money... and stay in nice places.
Just curious... do you own at those resorts... or trade into them?

Sorry I seemed to offend you.

 

[disney dumbo]

Would you honestly buy today if there were only 2-3 years left, I doubt even most die hards would do so. I doubt most would go through the hassle for the minor savings.

Yikes Dean...
do I have to fast forward 31 years...
I'm having a hard time realizing it's April and not January! I'm interested in slowing down time... not speeding it up!

Then you mention...
die hards...
In the same sentence... you've made me think about 31 years in the future... the word "die" just about jumped off my computer!

Basically I'm saying to OP... $98 still looks like a good deal to me. I'm looking forward to good times for the next 34 year hopefully for me... if not... for the lucky buyer of my contracts.

 

[Dean]

Yikes Dean...
do I have to fast forward 31 years...
I'm having a hard time realizing it's April and not January! I'm interested in slowing down time... not speeding it up!

Then you mention...
die hards...
In the same sentence... you've made me think about 31 years in the future... the word "die" just about jumped off my computer!

Basically I'm saying to OP... $98 still looks like a good deal to me. I'm looking forward to good times for the next 34 year hopefully for me... if not... for the lucky buyer of my contracts.

$98 may look like a good deal now but will it be in the future, my guess is no for the 1942 resorts for most people. Anyone buying a timeshare should be considering the long term effect, risks and benefits or else they really should not buy. Obviously no one knows exactly what's going to happen but I feel many DVC members are pretty blind when it comes to the mouse plus they often make assumptions about timeshares that are rarely accurate.

 

[DVC Grammy]

If some of us DVCers are sensitive about our "investment"/indulgence in buying our Disney timeshares, what will those Four Season buyers feel like?
In comparison to the rumored cost of those, ours cost "bubkas"!