Will Disney ever drop ROFR

[nickspace]

Sometimes ROFR is viewed as a pain in the neck to those buying resale. However it does keep the value of DVC higher. Would Disney ever drop ROFR thus endangering the value of DVC resale values?

 

[jarestel]

If there comes a time when DVC is no longer intending to build and sell new timeshares, they would probably no longer have an interest in exercising ROFR on the properties. I would imagine as long as they have new product to sell, they'll be active in the ROFR area though.

 

[Brian Noble]

No chance. It's only a benefit to Disney---they don't have to exercise the right, but they'd be foolish to cede it.

As an aside, the micro-economists will tell you that ROFR actually *depresses* values slightly in an efficient marketplace, because the rightsholder never has to bid competitively for a purchase. And, the resale market is getting to be fairly efficient: there are well-known brokers and a viable ecosystem. Indeed, if Disney was hoping to prop up prices with it, they have failed---resale prices have dropped substantially over the past year or two, and if anything, Disney is exercising less often, not more. A broker tracks sales data on another board, and I don't think he has seen any resort other than BCV has had ROFR exercised on a regular basis for months now. Granted, he's not seeing all of them, but he's seeing a pretty substantial set.

 

[Goofy DVC]

I think as the older resorts get closer to the contracts expiring Disney will not exercise ROFR. JMHO.

 

[bookwormde]

Disney will continue ROFR as long as they view it as financially beneficial to them.

bookwormde

 

[joandegennaro]

Don't they ROFR those contract that they have people waiting for? Example: We purchased direct from Disney for OKW Oct UY. When we were ready to add on there were only 40 points available in that UY. I took 25 (most likely would have taken 50 if they had that much but wanted increments of 25 or 50) as that was what fit into my plans of smaller contracts for giving even amounts to the kids later. If they have purchasers ready, willing, and able to pay the higher amount in order to get the extended contract with little or no wait time in turn around why wouldn't they then exercised the ROFR on a contract that fits the UY they need?

Yes it sucks for the person who is ROFR'ed but the seller gets what they were willing to sell for anyway so no disappointment there. I don't see any extended contracts with my UY needs which is one reason I went direct with Disney, the other is when I decide to do something I'm not very good at the waiting game, I need it settled ASAP! I'm not the type that could go through the waiting required with resale and as such I have to pay the premium which I am willing to do.

 

[JBx3]

Although ROFR is in place, disney has not acted on this in any normal way since late fall of 2009 and maybe early Jan. 2010. They are currently loaded with new product, maybe to much in this economy and with this, they really do not want to take back any points for sure. Not only have prices on resale fallen in the last year or two but in just a few shorts months some resorts are down $10.00 or more per point. That is pretty quick spiral.

Some have also said that they will buy back only when resales criss cross their high seasons, such as Turket day thru New Years due to the fact their interest and traffic pick up those time periods, so stocking points could be easier for them to unload again for a profit? I kinda get this but do not understand it completely?

ROFR is too big of a selling point for their direct sales, so I agree, they will not ever drop it, and maybe only cease to use it at older resorts not going up for extensions.

 

[drusba]

I think as the older resorts get closer to the contracts expiring Disney will not exercise ROFR. JMHO.

The closer you get to the end, the far more likely owners are not even going to be able to sell their interest for anything of value much less implicate ROFR. Nevertheless, I can picture a no-extension scenario where owners in last two years of contract try to sell for the price they would rent the points over two years and Disney gobbling those up to take them out of the market so it can rent the units itself at a higher rate.

 

[JimMIA]

I agree with this

If there comes a time when DVC is no longer intending to build and sell new timeshares, they would probably no longer have an interest in exercising ROFR on the properties.

and this...

Disney will continue ROFR as long as they view it as financially beneficial to them.

My fearless prediction is that once the economy turns around (no time soon, but it will eventually), Disney will eventually add DVCs at Poly and Grand Floridian. Once those are sold out, whether they continue ROFR will depend on whether they have anything to sell. Many timeshare companies have never used ROFR, and yet they continue to sell timeshares and build new ones.

I don't think ROFR is here forever, although I also agree with Brian that they don't actually have to exercise ROFR to have an effect on resale prices. So I think there will be a gradual wasting away of ROFR, not an abrupt halt.

 

[Dean]

Don't they ROFR those contract that they have people waiting for? Example: We purchased direct from Disney for OKW Oct UY. When we were ready to add on there were only 40 points available in that UY. I took 25 (most likely would have taken 50 if they had that much but wanted increments of 25 or 50) as that was what fit into my plans of smaller contracts for giving even amounts to the kids later. If they have purchasers ready, willing, and able to pay the higher amount in order to get the extended contract with little or no wait time in turn around why wouldn't they then exercised the ROFR on a contract that fits the UY they need?

Yes it sucks for the person who is ROFR'ed but the seller gets what they were willing to sell for anyway so no disappointment there. I don't see any extended contracts with my UY needs which is one reason I went direct with Disney, the other is when I decide to do something I'm not very good at the waiting game, I need it settled ASAP! I'm not the type that could go through the waiting required with resale and as such I have to pay the premium which I am willing to do.

The main reason for ROFR is to protect the retail price, not to pick up cheaper contracts. They make far more money on new sales than they do on ROFR points. It's intended mostly to keep people guessing and to drive sales to retail.

 

[joandegennaro]

The main reason for ROFR is to protect the retail price, not to pick up cheaper contracts. They make far more money on new sales than they do on ROFR points. It's intended mostly to keep people guessing and to drive sales to retail.

While I understand this, we were not interested in the current active DVC properties. If we weren't able to buy in at OKW we most likely wouldn't have gone with DVC. I think Disney just wants people purchasing into DVC even if it means they have to buy back contracts and resell them at a profit. my thinking was if they have a waitlist of desired UY at particular resorts you may find a lot of ROFR's being exercised.

 

[Dean]

While I understand this, we were not interested in the current active DVC properties. If we weren't able to buy in at OKW we most likely wouldn't have gone with DVC. I think Disney just wants people purchasing into DVC even if it means they have to buy back contracts and resell them at a profit. my thinking was if they have a waitlist of desired UY at particular resorts you may find a lot of ROFR's being exercised.

I'm sure they consider it but it's not an active goal to buy X resort because people are asking for it. However, the reverse is likely true, that they are less likely to buy back contracts that they would have to sit on.

 

[nickspace]

I spoke with someone yesterday that was offered 2 timeshares for free which means they have less than a zero value. They are not even worth the cost of the maintenance fees to this person. That is why this person is willing to unload them for no cost. With Disney's ROFR I feel that our purchase is somewhat but not entirely likely to retain some value. If I sold my contracts today I would loose some money but not all my money.

ROFR protects the consumer and DVC.

 

[Dean]

I spoke with someone yesterday that was offered 2 timeshares for free which means they have less than a zero value. They are not even worth the cost of the maintenance fees to this person. That is why this person is willing to unload them for no cost. With Disney's ROFR I feel that our purchase is somewhat but not entirely likely to retain some value. If I sold my contracts today I would loose some money but not all my money.

ROFR protects the consumer and DVC.

There are many timeshares that are worth less than the fees. However, there are also many people that don't understand their product and don't get the value they could if they tried. That someone was offered timeshares for free doesn't necessarily mean they were worth nothing though they may be.

ROFR doesn't make DVC worth more, it's the inherent product that preserves the value. From a buyers or sellers standpoint ROFR prevents fire sales and creates a floor for sales. However, one of the results and one that's intended, is it drives many away from resale when the process gets too cumbersome or the price difference is not great enough to justify the risks and aggravations.

 

[Brian Noble]

The main reason for ROFR is to protect the retail price, not to pick up cheaper contracts

I'm not convinced of this. Disney has not been exercising ROFR much over the past several months, *despite* a rapidly increasing spread between retail and resale price. Likewise, plenty of other systems without ROFR have held their retail prices in the face of near-zero resale value, albeit through other means.

Interestingly, Marriott has ROFR on most of their resorts, and had *never* exercised it in a year or more. However, this month, as they moved to points---and inventory can come from anywhere because "points are points"---suddenly they have started exercising again, to obtain cheap inventory.

 

[Dean]

I'm not convinced of this. Disney has not been exercising ROFR much over the past several months, *despite* a rapidly increasing spread between retail and resale price. Likewise, plenty of other systems without ROFR have held their retail prices in the face of near-zero resale value, albeit through other means.

Interestingly, Marriott has ROFR on most of their resorts, and had *never* exercised it in a year or more. However, this month, as they moved to points---and inventory can come from anywhere because "points are points"---suddenly they have started exercising again, to obtain cheap inventory.

Obviously there are many factors and the economy is certainly one of them. You can only sit on so much inventory.

 

[disneynutz]

As time goes on Disney seems to taking on the attributes of other timeshares.

The only property that they are buying back is BCV, apparently because there is a waiting list for points.

Bill

 

[gkrykewy]

I'm not convinced of this. Disney has not been exercising ROFR much over the past several months, *despite* a rapidly increasing spread between retail and resale price. Likewise, plenty of other systems without ROFR have held their retail prices in the face of near-zero resale value, albeit through other means.

Just curious: for which resorts are you seeing a rapidly increasing spread between retail and resale? I watched resale prices fall pretty significantly during 2009 (since we were planning to buy more points), but it looks to me from my less frequent checks during 2010 that prices have been fairly stable recently. If anything, SSR prices seem to have ticked up.

 

[Alexander]

I think as the older resorts get closer to the contracts expiring Disney will not exercise ROFR. JMHO.

This is my thought as well.

Disney will continue ROFR as long as they view it as financially beneficial to them.

bookwormde

This too is exactly the way of a business and Disney is afterall a business!