Riviera Sales by the numbers (vs CCV) for 2019 - (December added 1/16/2020)

[zavandor]

Points are not going to drop to $80 for riviera. It’s just not going to happen. The value is there at $120 for rental purposes.
Now if the sky liner is a permanent failure, all bets are off.

The value is there for SSR too, but during the last recession some contracts were sold under $50pp.

 

[AvidDisReader]

Everyone likes to refer back to the last recession and the mortgage meltdown. I have worked in the mortgage industry for about 40 years and it took a lot of forces that built up over the prior 20 years for what occurred. It would take me a post of over 10 pages to go over everything that had to go wrong and did for that to happen. There will be a recession in the future, since we as a society never learn from our mistakes. When, I have no idea--1 year or 3 years or even more. The thing is, to make a decision on the value of RIV based on future recession is like buying a lottery ticket and expecting to win the big one - the odds are not good. Even if there is a recession, it could be more of a small economic down turn that lasts only a few months rather the recession of 2006 that lasted several years.

 

[mustinjourney]

The value is there for SSR too, but during the last recession some contracts were sold under $50pp.

to be fair -- that was 10 years ago, it was the worst recession in 90 years, and disney prices are way up since then...so even if we go south here, I don't think we'll be seeing those prices again.

The big thing to realize is that right now, buying Riviera direct you can get for less than $180 a point with incentives pretty easily. If resales are at $120 -- that is a $60 spread. That is consistent with just about every other resort right now...so the doom and gloom is really overstated.

And for the record -- I'm somewhat perverse in that I bought direct points (got $170 effective price) -- but I am also hoping sales are slow, so that they'll be forced to change their ways.

 

[kboo]

I was going to point out that this wasn’t what I signed up for, that the pre-2019 product is what made owning Disney’s timeshare worth considering. But we know none of that matters because you’re right. You’re right in both what you see happening in the future and what needs to be done for one to “win” in that environment. These restrictions won’t fail and sales will chug along. Foot traffic alone sells enough to keep Disney’s timeshare profitable.

Every time there is a perceived slight by Disney to the ownership, whether it’s the reallocation or these restrictions, I make noise, blather from atop my soapbox, send some emails, make some phone calls, and then... I settle into how in practice, this still works for my family. I justify staying in the game because these changes don’t really effect me or my use of the timeshare. Worst of all, I can afford the real impact of these changes.

The idea of broad ownership advocacy is quixotic at best; delusional is probably more accurate. The water temperature rises and we all become desensitized to its implications.

Only quoting @Bing Showei, but wow this thread turned DARK. I don't necessarily disagree - I think these are dystopian times, not just for Disney but in other areas.

And for the record -- I'm somewhat perverse in that I bought direct points (got $170 effective price) -- but I am also hoping sales are slow, so that they'll be forced to change their ways.

Me too. I got around $165/166 - effective price when I bought. Although I also hope the resale restrictions will be rolled back, I doubt that they will be. I hope I am proven to be a pessimist. But I agree with @ELMC.

 

[Bing Showei]

I have worked in the mortgage industry for about 40 years and it took a lot of forces that built up over the prior 20 years for what occurred. It would take me a post of over 10 pages to go over everything that had to go wrong and did for that to happen.

That’s the thing about black swans, no one sees them coming and it only seems obvious (the aggregate sum of calamities) after the fact.

I don’t think anyone sees another housing crisis happening. My primary concern lands squarely on the second largest economy in the world; a dishonest, paper economy based on obfuscation, unverifiable data, with a media machine controlled by the government. Couple this with the injection of capital by the the government in the form of easy money to doctor GDP growth, and you have a fun little Chinese tinderbox with fuses tethered to every other world economy.

The thing about globalism (and I make no commentary on this except that it is the prevailing world order) is that we are so intertwined that now your neighbor’s **** becomes your ****. Don’t get me wrong, we’ve got our own set of disconcerting, dirty realities in our own economy, but it’s the devil you don’t know that worries me most.

 

[ELMC]

Points are not going to drop to $80 for riviera. It’s just not going to happen. The value is there at $120 for rental purposes.
Now if the sky liner is a permanent failure, all bets are off.

So it's not going to happen...unless the skyliner fails. But other than that it's not going to happen? Or are there other qualifiers that could also make it happen? Even though it's just not going to happen.

I'm being flip, but to be serious for a second, I disagree with your assertion that the value is there for $120 for rental purposes. That's a ten-year break even if you are buying strictly to rent. I think the conversation has been had on here a few dozen times as to why that timeline is a bit too long for that to be a good idea.

I don't think Riviera resale prices at $80 are impossible or even a doomsday scenario. You disagree, and that's what makes America great. But I don't think you can say that it's "not" going to happen, because none of us really know.

to be fair -- that was 10 years ago, it was the worst recession in 90 years, and disney prices are way up since then...so even if we go south here, I don't think we'll be seeing those prices again.

The big thing to realize is that right now, buying Riviera direct you can get for less than $180 a point with incentives pretty easily. If resales are at $120 -- that is a $60 spread. That is consistent with just about every other resort right now...so the doom and gloom is really overstated.

And for the record -- I'm somewhat perverse in that I bought direct points (got $170 effective price) -- but I am also hoping sales are slow, so that they'll be forced to change their ways.

True. But the key difference is that there has never been a $60 resale to direct spread right out of the box. Prices have settled in at that range and more importantly, that range existed because Disney jacked up the prices of the direct resorts and resale prices ticked up slightly. It's not because resale prices are skyrocketing. VGF is amazing and resale prices continue to trend upwards. Poly is also an amazing resort but from a DVC standpoint it has its issues, and resale prices there are trending downward. Traditionally the gap between direct and resale is smallest at the beginning of the resale life cycle. If this holds true for Riviera then we should see that gap widen.

 

[ELMC]

Only quoting @Bing Showei, but wow this thread turned DARK. I don't necessarily disagree - I think these are dystopian times, not just for Disney but in other areas.



Me too. I got around $165/166 - effective price when I bought. Although I also hope the resale restrictions will be rolled back, I doubt that they will be. I hope I am proven to be a pessimist. But I agree with @ELMC.

Every party needs a pooper that's why y'all invited me.

Sorry to be so grim, folks. I'm really much more cheerful in real life.

ETA: I was thinking about it and my post that is being perceived as a bit dark was actually intended to be optimistic. Anyone who has read any of my posts in the past year has seen that I've been pretty bearish on DVC recently. I think the greed factor has taken over and the valuations in every aspect of DVC have skyrocketed out of control. The scenario I laid out was a way for me (and people who think similarly) to still engage in a DVC system that is more appropriate for their needs and desires. That's a good thing. I guess the dark part comes from the fact that it will require the complete annihilation (I'm being hyperbolic) of the resale system in order for it to happen. I guess if that happens then we will see if all these people saying they don't care about the resale value of their contracts because they just want to use them are being honest.

 

[CarolMN]

What if they change the 11 month booking window to say 9 months for resale and keep 11 months for direct?

From the beginning I did push back against the common assumption they couldn't do what they did with Riviera (before we saw the details) because they would do it with a new agreement. What you are proposing is modifying our current agreements, something that DVC hasn't attempted to do to the detriment of the owners. The only major one, I know of, was the change made to the agreements to allow for the change of UY which I find to be in the betterment of every owner and DVC alike.

I do trust they won't likely give resale and direct owners different home resort priority periods to all existing resorts because of the changes required and Florida wouldn't take too kindly to it. I also find it highly unlikely that Florida would ever approve a new resort with this rule, but I won't say never since Disney has a lot of pull. Is this something that current timeshares do? I haven't heard of any like that; the current resale restrictions I've heard similar to other timeshares, but never modifying the home resort priority period.

this is my fear and why I bought another resale contract. If they did this - it would kill the resale market. If you were both locked into your home resort AND you weren't allowed to book at 11 months, you better really like 1-bedrooms in the summer.

I cannot find anything in the BWV (Position Offering Statement (POS) or the Multi-site POS that would allow DIsney to differentiate between BWV owners based on how they acquired their membership. (So they cannot legally establish a different booking window for BWV resale points than is established for BWV direct points).

ETA: I think the same can be said for all of the other L14 DVC resorts.

 

[Brianstl]

Points are not going to drop to $80 for riviera. It’s just not going to happen. The value is there at $120 for rental purposes.
Now if the sky liner is a permanent failure, all bets are off.

That assumes the same rental value per point as other resorts. I don't think that is going to be the case for resale Riviera. First, you are limited to Riviera which is a point hungry resort. It makes any stay there more expensive. Second, if Riviera books up early like the Crescent Lake resorts you will be limited to only renting points to people that can book many months out. Both those things reduce the demand for those points and in turn that reduces the value of those points.

 

[mustinjourney]

That assumes the same rental value per point as other resorts. I don't think that is going to be the case for resale Riviera. First, you are limited to Riviera which is a point hungry resort. It makes any stay there more expensive. Second, if Riviera books up early like the Crescent Lake resorts you will be limited to only renting points to people that can book many months out. Both those things reduce the demand for those points and in turn that reduces the value of those points.

It’s a fairly safe bet that spec rentals during food and wine for standard view and tower studios would both be in fairly high demand. Non-riviera owners aren't going to be getting those reservations during F&W.

Tower studios are 12 points and standard are 16. I'm quite positive you can move those for $225 and $300 per night on the rental market, considering Disney is charging something like $500 and $600 for these rooms. Assuming that is correct, then you're looking at $18+ per point...which yields about a $10 per point per year cash stream. if you got those points at $120 via resale, you'll be making about 8% return on your money...and the best part is that the underlying asset (assuming you bought resale), is likely to go up or at least stay the same value for the foreseeable future. There aren't many stocks that kick out 8% cash dividends and maintain their value.

 

[skier_pete]

I do admit I do not think that Riveria drops to $80 unless several others do. I don't see being locked into Riviera for 50 years to be considered a lower than say owning BRV for 22 years. That said, I still think it lands in the lower price tier within 5 years for sale.

 

[ELMC]

I'm quite positive spec rentals during food and wine for standard view and tower studios would both be in fairly high demand. Non-riviera owners aren't going to be getting those reservations during F&W.

Tower studios are 12 points and standard are 16. I'm quite positive you can move those for $225 and $300 per night on the rental market, considering Disney is charging something like $500 and $600 for these rooms. Assuming that is correct, then you're looking at $18+ per point...which yields about a $10 per point per year cash stream. if you got those points at $120 via resale, you'll be making about 8% return on your money...and the best part is that the underlying asset (assuming you bought resale), is likely to go up or at least stay the same value for the foreseeable future. There aren't many stocks that kick out 8% cash dividends and maintain their value.

Given that Disney has come out and said that they don't like the resale market and they don't want anyone making money off of DVC besides them, I think this might be too much to assume. That said, if you have a fairly high risk tolerance the scenario you laid out is possible.

 

[skier_pete]

Given that Disney has come out and said that they don't like the resale market and they don't want anyone making money off of DVC besides them, I think this might be too much to assume. That said, if you have a fairly high risk tolerance the scenario you laid out is possible.

Disney is stuck then - because they can only eliminate the resale market one way, and that is to buy back every contract themselves. However, doing this will drive the resale prices up, and therefore they will not profit much from the resale contracts - AND a resale contract they buy and sell direct is eliminating the sale of a new contract. So while Disney COULD do this - they are unlikely to do it.

DIsney's ideal world is HIGH resale prices with significant differences between resale and direct. This is why I don't understand the strategy of this resale restriction. It will drive resale prices DOWN on the newer resorts, the opposite of what they want. I admit them changing policy back is unlikely, but if they realize they've hurt themselves with it, they would certainly consider rolling it back - of course due to "Guest Demand".

 

[Brianstl]

I'm quite positive spec rentals during food and wine for standard view and tower studios would both be in fairly high demand. Non-riviera owners aren't going to be getting those reservations during F&W.

Tower studios are 12 points and standard are 16. I'm quite positive you can move those for $225 and $300 per night on the rental market, considering Disney is charging something like $500 and $600 for these rooms. Assuming that is correct, then you're looking at $18+ per point...which yields about a $10 per point per year cash stream. if you got those points at $120 via resale, you'll be making about 8% return on your money...and the best part is that the underlying asset (assuming you bought resale), is likely to go up or at least stay the same value for the foreseeable future. There aren't many stocks that kick out 8% cash dividends and maintain their value.

Good luck trying to compete to attempt to walk those reservations along with everyone else that buys points to rent. There are only a few resale contracts now and availability is limited in the first two weeks of September 2020 at Riviera in tower and standard studios.

 

[ELMC]

Disney is stuck then - because they can only eliminate the resale market one way, and that is to buy back every contract themselves. However, doing this will drive the resale prices up, and therefore they will not profit much from the resale contracts - AND a resale contract they buy and sell direct is eliminating the sale of a new contract. So while Disney COULD do this - they are unlikely to do it.

I agree with your analysis of how this would occur but disagree that it is the only way to eliminate the resale market. Read on...

DIsney's ideal world is HIGH resale prices with significant differences between resale and direct. This is why I don't understand the strategy of this resale restriction. It will drive resale prices DOWN on the newer resorts, the opposite of what they want. I admit them changing policy back is unlikely, but if they realize they've hurt themselves with it, they would certainly consider rolling it back - of course due to "Guest Demand".

You have a valid point. I happen to disagree, but I concede that there is a chance that your vision is correct and mine isn't. I see things differently though.

On one hand, it might make sense that Disney wants to see these contracts hold their value on the secondary market. @DougEMG suggested that DVC execs were dismayed upon hearing that the first RIV resale contract sold for $100. On the other hand, however, they have been clear that they do not want others profiting off of DVC. The only way to accomplish this goal is to suppress the resale prices of contracts. Up until the restrictions this was impossible because a resale contract was functionally the same as a direct contract. Demand was high and prices followed. However, this round of restrictions sets them on the road to price suppression, assuming they follow through with even more severe restrictions.

Case in point...I own at Marriott Grande Vista (which I bought in 2000 and could have had 300 points at Old Key West for the same price but we won't talk about that). I paid about $15,000 and right now if I wanted to sell it I could probably get about $2,000. So instead, I write it off as perhaps a dumb move, but in the meantime, we happily use it every year and stay in great accommodations for a fraction of what it costs to stay elsewhere. So I'm using the product exactly as it is intended by force: I simply don't have any alternative. Nobody is willing to give me anything significant for it because once it transfers to them it becomes so severely damaged that using it is quite difficult/restricted/expensive. I think THAT is what Disney is going for. DVC is a great product and the Riviera is by all accounts a beautiful resort. Disney wants you to buy it and keep it if for no other reason than you have no other alternatives. Remember, that is the only transaction they make money on, so everything they do is geared towards insuring that direct sales are the only DVC transactions that take place. The way they accomplish this goal is to make it so very unattractive that only a select few people who are adept at the timeshare game are willing to purchase. This, combined with restrictions, will suppress the resale prices. This means that owners won't be incentivized to sell and there is no real profit to be had.

One of the many obstacles they would have to overcome with this strategy is that right now a cheap resale contract could still be used as a rental points cow. As long as that is allowed, resale prices have a built-in floor based on profits generated from rentals. I don't know the legalities of how they would shut that down, but you can bet they are thinking about it. People are upset over the Riviera resale restrictions and I understand why. All I'm saying is that if you're upset now, just you wait. Those were only the tip of the iceberg.

 

[DougEMG]

Every party needs a pooper that's why y'all invited me.

You need to take another trip to WDW and cheer up

 

[DougEMG]

I'm quite positive spec rentals during food and wine for standard view and tower studios would both be in fairly high demand. Non-riviera owners aren't going to be getting those reservations during F&W.

Tower studios are 12 points and standard are 16. I'm quite positive you can move those for $225 and $300 per night on the rental market, considering Disney is charging something like $500 and $600 for these rooms. Assuming that is correct, then you're looking at $18+ per point...which yields about a $10 per point per year cash stream. if you got those points at $120 via resale, you'll be making about 8% return on your money...and the best part is that the underlying asset (assuming you bought resale), is likely to go up or at least stay the same value for the foreseeable future. There aren't many stocks that kick out 8% cash dividends and maintain their value.

Are there enough people willing to buy RIV to do spec renting that they will support a resale price of $120. I'm not sure that this is the case.

 

[mustinjourney]

I think THAT is what Disney is going for. DVC is a great product and the Riviera is by all accounts a beautiful resort. Disney wants you to buy it and keep it if for no other reason than you have no other alternatives. Remember, that is the only transaction they make money on, so everything they do is geared towards insuring that direct sales are the only DVC transactions that take place.

Having people going to Disney that are sick of going to disney is not a smart long-term strategy. Those people will go just for resort only stays, and/or will not spend as much on souvenirs or tickets. While this isn't a concern for DVD as an entity, disney parks certainly would not like this at all.

If you really want to go tin-foil hat -- these restrictions could help DVD directly by allowing them to get cheaper ROFR contracts. Think about it -- they rarely ROFR the newer resorts b/c the prices are usually only about $30-$40 less than direct pricing -- but if the new resorts see $60+ price differences immediately, then once Disney sells out of its existing inventory, they should be able to have a nice steady supply of cheaper resale contracts for the foreseeable future if the demand is still there.

 

[mustinjourney]

Are there enough people willing to buy RIV to do spec renting that they will support a resale price of $120. I'm not sure that this is the case.

my point was even at what most people consider to be a high price point for resale, you could still make a good profit just renting the points out.

 

[ELMC]

If you really want to go tin-foil hat -- these restrictions could help DVD directly by allowing them to get cheaper ROFR contracts. Think about it -- they rarely ROFR the newer resorts b/c the prices are usually only about $30-$40 less than direct pricing -- but if the new resorts see $60+ price differences immediately, then once Disney sells out of its existing inventory, they should be able to have a nice steady supply of cheaper resale contracts for the foreseeable future if the demand is still there.

Actually, I don't think this is "tin-foil" hat at all, I think this is what is going to happen. Remember, profit margin on direct sales is somewhere in the neighborhood of 75%. It's been suggested that this is why they prefer to sell new resorts than ROFRd resale points at a lower margin. But if resale prices really plummeted that far then Disney could have a steady supply of resale points to package as direct (again) at the original profit margin.

my point was even at what most people consider to be a high price point for resale, you could still make a good profit just renting the points out.

Back before you joined the DIS there were tons of conversations on here about this strategy. It was deemed risky, but doable, and many tried. As it turns out it was a huge win because resale prices doubled in a seven-year period on top of the rental income. However, it's a much different marketplace right now. If we are on a pricing bubble as I have suggested, then there's a chance that you get your 8% annual returns but if you lose 30% of your purchase price over that ten year period how well did you do really? This strategy is wholly dependent on preservation of principal because in order for this to work you need to sell at some point in time. I'm not sure that is as safe a bet as it once was. If you were to simply buy RIV today and rent it out for 50 years the numbers would suggest that would be a terrible investment.