Why Would Disney Ever Stop ROFR?

[crisi]

Remember that long term, the future owner is them. Towards the end of contract life, if they don't extend contracts, they are going to be interesting in buying back EOL contracts at lowest possible cost. I'm sure they have financial analyst working on where the ideal point in the curve is to drop ROFR.

They could extend the life of the contracts on the resorts for a price - which will help support ROFR.

Also, demand for DVC is not infinite. There will come a point where DVD has built as many units as the market can support (or the land Disney owns around WDW can support). Then DVC loses their main motivator for maintaining pricing via ROFR - supporting the cost of new contracts.

 

[carlbarry]

Remember that long term, the future owner is them. Towards the end of contract life, if they don't extend contracts, they are going to be interesting in buying back EOL contracts at lowest possible cost. I'm sure they have financial analyst working on where the ideal point in the curve is to drop ROFR.

They could extend the life of the contracts on the resorts for a price - which will help support ROFR.

Also, demand for DVC is not infinite. There will come a point where DVD has built as many units as the market can support (or the land Disney owns around WDW can support). Then DVC loses their main motivator for maintaining pricing via ROFR - supporting the cost of new contracts.

Suppose the world-wide economy continues to tank, and people stop traveling as much. Or suppose people lose interest in theme parks. I'm sure that Disney does studies as to demand, and builds accordingly. But there are some contingencies that can't be predicted.

 

[DVCERSINCEDAY1]

Certainly, the things you mention affect demand, and I shall leave it to Disney to market accordingly. Meanwhile, Disney continues to build new resorts and it continues be in its best interest to exercise ROFR on old properties, regardless of whether or not the ROFR program is/is not profitable. And, I truly believe that Disney has more magic up its sleeve regarding these matters that we mortals can comprehend...my money is on Disney in the long run to come up with products to keep current and future consumers happy and spending money in its parks and resorts, including DVC.

 

[Maistre Gracey]

But, I do think it is dangerous to think that the ROFR floor will never drop significantly---it has to, because DVC is an RTU. The only question is when.

The unique difference with DVC is that there are Disney hotels that support the resale price.

I highly doubt you will ever see VWL sell for the equivelent of $50/night, when the hotel it's attached to is selling for $400... The market forces just won't allow it.

In the future, closer to the end of DVC, the market will determine the resale value of DVC, not ROFR.

MG

 

[Dean]

Timeshares that do NOT have ROFR re-sell for 10% of what the developer is asking. That is the key reason Disney was brilliant to use ROFR: it artificially props up he price of timeshares. I'm sure Disney did not want to be in the situation of "suckering" people to buy timeshares from them that are available elsewhere for 1/10 the price. This definitely would not fit their corporate image.

Some timeshares do, others do not. What ROFR does is prevent the firesales which tend to drag the prices down somewhat. But good products with good companies still sell for a reasonable value as a rule (Marriott, Hyatt, Hilton, Westin, etc).

 

[chalee94]

helpful educational link for some:

http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation

note that offsite DVCs, which are in lower demand, have much lower resale values. DVC is clearly not interested in ROFRing those contracts merely to support "owner morale."

 

[DVCERSINCEDAY1]

Again, "owner morale" (i.e., owners satisfied with their DVC ownership) is in Disney's best interest. These consumers do add ons, recommend DVC to others, and talk up the brand in general (e.g., on these boards).

Marketing Concept: Marketers achieve their own objectives by satisfying their target market

Satisfied consumers are critical. Love for the brand goes beyond that. Disney excels in producing both desirable responses in their target market. To suggest that this occurs by happenstance or only in the short-run ignores Disney's demonstrated long-term marketing prowess in general and in DVC in particular....still going very strong now for 16+ years.

 

[spiceycat]

do you really think that Disney will allow anyone to buy DVC for less than what DVC can rent it for.

that would silly.

Disney is a business.

they will do what is right for them - not us. and if you can buy a DVC resort for less than staying in a value resort - that is stupid. It won't happen.

go ask on tug - some of them still believe that it will happen - but others have given up and brought DVC.

if you want DVC then buy it now - the prices might not keep going up - but can't see Disney letting the ROFR go - to kept the rental prices of the non-DVC resorts up - they must not allow DVC resorts to go below that price.

so far they haven't.

now some people are happpy offsite - but others want to be onsite.

if you are happy offsite there are several Orlando timeshares that sell for $2,000 or less.

if you must be onsite then DVC is the only choice.

 

[chalee94]

do you really think that Disney will allow anyone to buy DVC for less than what DVC can rent it for.

i would agree that this is a better argument to me than "owner morale" (as if VB has a lower ROFR floor price than OKW because DVC has less regard for VB owners.)

 

[BWV Dreamin]

i would agree that this is a better argument to me than "owner morale" (as if VB has a lower ROFR floor price than OKW because DVC has less regard for VB owners.)

You are putting an "emotional" slant on this statement. There are financial reasons for ROFR levels, not emotional. I love the VB resort, and if they ever did separate from Disney, I will have gotten alot of vacations on the cheap with the resales price I paid, plus hopefully would be given an option to "buy" as a fully deeded property purchase, not "in time" as we are deeded now. I feel I really have nothing to lose.

 

[chalee94]

You are putting an "emotional" slant on this statement. There are financial reasons for ROFR levels, not emotional. I love the VB resort, and if they ever did separate from Disney, I will have gotten alot of vacations on the cheap with the resales price I paid, plus hopefully would be given an option to "buy" as a fully deeded property purchase, not "in time" as we are deeded now. I feel I really have nothing to lose.

i'm not clear how you "took" my comment, but my point was that VB's resale prices are set by market forces...including lower demand due to more restricted access to wdw.

i don't find the argument that "DVC uses their ROFR out of concern for owner morale" to be convincing at all. i don't think DVC ROFRs a BCV contract at $60 while letting the VB contract go at the same price because they are more concerned about "propping up" BCV owners' resale prices.

 

[BWV Dreamin]

i'm not clear how you "took" my comment, but my point was that VB's resale prices are set by market forces...including lower demand due to more restricted access to wdw.

i don't find the argument that "DVC uses their ROFR out of concern for owner morale" to be convincing at all. i don't think DVC ROFRs a BCV contract at $60 while letting the VB contract go at the same price because they are more concerned about "propping up" BCV owners' resale prices.

Ok, not talking with any emotion here... I am simply saying that demand has some factor into the rofr's, but Disney allows such levels based on other financial factors. What they are? Let's not bury the dead of HHI and VB yet. Have you looked at SSR resales lately? Also AKV's? DVC does not care about our emotion. They care about their numbers. Dean would be the best one to explain the ROFR's history and future probabilities. Dean, you out there?

 

[chalee94]

Ok, not talking with any emotion here...

i'm not upset or emotional at all. i'm not even technically arguing with you, since we mostly seem to agree. (i agree that DVC does care mostly about their numbers.) i'm just a little confused as to what you think i meant...

VB and HHI are fine to own - especially if you intend to stay there - but if DVC does stop exercising ROFR, i do suspect VB and/or HHI would be first.