Just warning you. I'm really not this much of a pessimist, just giving a strong Devil's Advocate position against DVC...
I have thought about buying over the last 6-9 months. I think the issue have always come down to being locked into a relationship with a company that always has the power to:
1) Dramatically decrease the value of the product or services offered, as much and any time they wish.
NO they do have to justify it to the membership and a certain percentage of due are for long term maintence: roof replacement etc.
2) Dramatically increase yearly fees as much as they wish, any time they wish.
No there is a cap and by all means use that number when making decisions.
3) Forcing DVC Members to pay said fees with little recourse except what the market is going to bear.
Why would you just not sell it likely at a profit? Or else you could have Disney take it over.
4) Simple Math: $20 thousand invested in the market over 40 years = $1 million
Oh yea investing in the stock market is a sure thing. People never lose money there
.
5) Big Companies can and do go
Bankrupt!!!
See response to 4 above Just as likely with any of your investments Unless you plan to keep it under the mattress.
If you locked yourself into any company's product back in 1968, would you feel ok about it now, 40 years later? Those Dow components from 1968 must ring a bell: Anaconda Copper? Woolworth's? Johns-Manville? Bethlehem Steel? Anyone? Anyone? Bueller?
Really, when was the last time you really went into a Sears
Last weekend DH needed some tool Actually my Dad could name a few locals that would have made in a mulitmillionair. Yes many go under but many have greatly increased in value
How would Disney fill the parks and hotels if a gallon of gas climbs to $10 by 2013? $20 in 2018? $40 in 2028?
Isn't gas already over $9 a gallon in Europe and it does not stop them from coming.
So how will be get down there if gas is rationed? I was very young in '73, but I remember waiting with my mom in the 1979 gas lines pretty well. I paid about a $1 a gallon ten years ago, and that was before 1.3 billion Chinese and a billion Indians
wanted automobiles like we have now, so those prices and limits may not be too crazy. Yes, there will be technological advances, like hydrogen or electric, but we would all have to buy those new cars with that new technology= less money. And electric cars cannot go long distances without recharging.
I would expect to more mass transit then as well as many technology increases.
Being more cash strapped few people will get to Orlando. Disney weakens, as other sources of revenue, especially from their advertising and tourism assets, falter. More people can't afford the travel, stop buying DVC memberships, and those that do, try to sell their DVC memberships. Disney initially tries to support that market through 1st refusal, but with little money coming in from their parks
Isn't park attendance at an all time high even with the economy right now, and other diversified assets, they quickly get into a liquidity crisis. They lay off cast members. Services deteriorate. Disney cannot continue to support operations, much less the DVC market, and files for bankruptcy protection. More DVC owners, unable to travel across the country to Orlando, try to sell.
Or they would just use there points for other destiations closer to home No buyers await, (as they are not buying property a tangible assess or property, but a vacation), so the DVC market crashes.
Yes we would probably switch to one long vacation instead of once a year.
BUT there will be one place where Disney can always make money.
In fact, as much as they want, i.e. DVC Annual Maintenance Fees!!!
Oh yes, that's right, DVC members are contractually obligated to pay for their vacations/maintenance fees year after year, no matter what they want or can afford, and to the $ amount that Disney designates!!! NOT
And to get out of this timeshare... I mean vacation club, what does the DVC member have to do? That's right, file for Bankruptcy!!! Now the DVC member is really in it deep!
A lot, and I do mean a
whole lot, happens over 40 years, especially to a corporation, and market forces may kill it. Or everything may ultimately wind up being great for Disney over the next 40 year, and this may be a gross overestimation of the risk. There are clearly unforseen barriers and advances in technologies, but you can't count on it.
When I was 8, they said I'd be wearing a jetpack. Maybe I'll finally get one.
For me, I'll sleep better keeping the cash free and have the
option of going or not going to Disney whenever I please or whenever I can afford to, or not, whatever the case may be.
Doomsday is right. Let's see, no one expected gas to be at $3.76 a gallon but you know what Disney is still packed to the gills, in fact according to the Wall street Journal last tuesday, Diseny's 1st & 2nd quarter profits are up 22%. Bottom line, Americans will always take vacations and if you look around you will find this so called recession has not impacted the malls or restuarants very much
Yes, for us, DVC is our luxury. It allows us to vacation as often as we like and in accomodations that are comfortable to us. But you are right......not everyone makes the right decisions for their circumstances. But if someone were to find themselves over-their-head with DVC and their budget it is fairly easily rectified. The resale market is booming. Liquifying the contract usually shows a slight profit or at least a break-even from the original sale.
