"DVC 2.0" theory & 2042

[treygn]

After 18 months of pondering and wavering I finally decided to buy into DVC this past weekend (yea!). My partner, son, and I wanted to be as close as possible to HS, with Epcot a close 2nd. I didn't have the patience to wait another 18 months or 2 years to see how the new resell rules would play out at Riviera, so despite the 2042 end date, we bought at Boardwalk. The 2042 end date makes me nervous and if Riviera didn't have the new rules, we would have likely bought there (although, it didn't help that the Skyliner, the main link between Riviera and HS, was down during our trip).

The past couple days I have really been trying to figure out why DVC changed the rules starting with Riviera and I wonder, is it possible that it has something to do with establishing precedent regarding how Disney plans to handle the end of the 2042 contracts? Let me explain. From what I understand, the 2057 extension at OKW was a flop and has been an administrative nightmare. As such, many folks don't seem to think that DVC will offer extensions of existing contracts on other 2042 resorts, although the DVC salesperson selling me Boardwalk tried to convince me otherwise. However, DVC also may not want to lose these long-time loyal DVC members (and their maintenance fees). So, in lieu of contract extensions at beloved 2042 resorts, what if DVC instead offers new contracts at a substantially reduced rate to the owners at these resorts? Those owners who elect not to buy back in, well, DVC would just sell those contracts at the rack rate to new DVC members. The only way this could work would be if the new resell rules were in place; otherwise, existing owners could just buy at the reduced rates and turn around and immediately resell the contracts at a significant profit. By subduing the secondary resell market, Disney ensures that can't happen. Thoughts?

 

[Yinn]

After 18 months of pondering and wavering I finally decided to buy into DVC this past weekend (yea!). My partner, son, and I wanted to be as close as possible to HS, with Epcot a close 2nd. I didn't have the patience to wait another 18 months or 2 years to see how the new resell rules would play out at Riviera, so despite the 2042 end date, we bought at Boardwalk. The 2042 end date makes me nervous and if Riviera didn't have the new rules, we would have likely bought there (although, it didn't help that the Skyliner, the main link between Riviera and HS, was down during our trip).

The past couple days I have really been trying to figure out why DVC changed the rules starting with Riviera and I wonder, is it possible that it has something to do with establishing precedent regarding how Disney plans to handle the end of the 2042 contracts? Let me explain. From what I understand, the 2057 extension at OKW was a flop and has been an administrative nightmare. As such, many folks don't seem to think that DVC will offer extensions of existing contracts on other 2042 resorts, although the DVC salesperson selling me Boardwalk tried to convince me otherwise. However, DVC also may not want to lose these long-time loyal DVC members (and their maintenance fees). So, in lieu of contract extensions at beloved 2042 resorts, what if DVC instead offers new contracts at a substantially reduced rate to the owners at these resorts? Those owners who elect not to buy back in, well, DVC would just sell those contracts at the rack rate to new DVC members. The only way this could work would be if the new resell rules were in place; otherwise, existing owners could just buy at the reduced rates and turn around and immediately resell the contracts at a significant profit. By subduing the secondary resell market, Disney ensures that can't happen. Thoughts?

I don't think it has to be exclusive to the 2042 resorts for your theory to happen. The same could be said about Riviera resales competing with direct sales without the restriction in place. As it stands, Riviera and Aulani direct offers incentives in the form of either discounts or extra points. I just don't see Disney offering an even larger discount than those two for such a prime location with such high demand.

In the same manner, the amount of demand for those resorts makes me wonder if an upwards expansion may be in the future at those locations.

 

[lovin'fl]

Nope, the mouse won't sell anything at reduced rates. Aside from their faux reduced rates (with the incentives they offer). I mean I, as a 2042 owner, wouldn't consider buying back in at a next gen resort with these resale restrictions unless that 'reduced rate' was like 1/2 off and the mouse aint doing that. They would only offer the current $500+ off on 150+ point contracts crap they offer now to everyone. They might go to $600 off. Big whup!

 

[Dean Marino]

Deleted.

 

[Sandisw]

One of the reasons I have most like decided to sell a 2042 to buy st Rivera with my kids is the expiration date.

Of course, I own grandfathered points so having a smaller contract with Rivera and it’s restrictions is worth the net cost to exchange the points.

The way I figure it, based on the amount I could get for the contract I might sell compared to what I am paying for Rivera, I see it s a cheaper way to end up with a contract that has 28 years more life for my kids.

 

[chalee94]

So in lieu of contract extensions at beloved 2042 resorts, what if DVC instead offers new contracts at a substantially reduced rate to the owners at these resorts? Those owners who elect not to buy back in, well, DVC would just sell those contracts at the rack rate to new DVC members. The only way this could work would be if the new resell rules were in place; otherwise, existing owners could just buy at the reduced rates and turn around and immediately resell the contracts at a significant profit. By subduing the secondary resell market, Disney ensures that can't happen. Thoughts?

This is a common line of thinking but I don't understand it.

When DVC offered OKW extensions, they priced it at $25, discounted to $15 per pt for a limited time.

The resale market at that time put a value of around $7-8 per point on the extension.

A substantially reduced rate would have been $3-5 maybe.

Disney is not going to cut you a deal. They might offer $10 off per point on the $400 per point asking price in 2042. But nothing like what you are describing.

 

[_auroraborealis_]

4) Turn old property into Rentals.

Dean forgot 5, which is "Florida falls into ocean and no one wants a timeshare."

 

[chalee94]

What? I figure OKW might be an oceanfront resort by the mid 2030s.

That'll pump up my resale value, mos' def.

 

[_auroraborealis_]

What? I figure OKW might be an oceanfront resort by the mid 2030s.

That'll pump up my resale value, mos' def.

Or popular with people who miss the real KW, which will be underwater...

 

[treygn]

2042 will be here before you know it.

My DVC sales rep who owns at OKW told me she got the extension at $10/point which seems amazing for 15 more years. Even if she had a fuzzy memory, $25/point for 15 more years is still awesome. But that's beside the point, the bottom line is extensions didn't go over well and likely won't be offered. I just find it hard to believe that Disney will let thousands of DVC owners go at 2042 without some sort of amazing deal to entice them or their kids to buy back in. I don't care how well DVC sells new resorts, they will not be able to replace that many members in that short of a time. I'm sure they will have a strategy to retain members.

 

[chalee94]

2042 will be here before you know it.

My DVC sales rep who owns at OKW told me she got the extension at $10/point which seems amazing for 15 more years. Even if she had a fuzzy memory, $25/point for 15 more years is still awesome.

Time value of money.

It was $25 per point for points you would only start receiving in 35 years. The present value of those points was very close to zero that far out. Several OKW fans debated the value of paying $25 per point for points that you couldn't use for 35 years vs picking up a small resale for $75 per point for points you could use the next year. Would you extend your 250 point contract for $15 per point or pick up a 50 point resale at those prices?

Don't confuse the economics in 2007 with current dollar scenarios. That $15 per pt in 2007 would be a lot higher today given that the end date is closer plus quite a bit of "Disney inflation."

 

[alldiz]

Ok I’m sorry... late to the party.
What are the new rules on Riviera?
Thanks
Kerri

 

[Yinn]

Time value of money.

It was $25 per point for points you would only start receiving in 35 years. The present value of those points was very close to zero that far out. Several OKW fans debated the value of paying $25 per point for points that you couldn't use for 35 years vs picking up a small resale for $75 per point for points you could use the next year. Would you extend your 250 point contract for $15 per point or pick up a 50 point resale at those prices?

Don't confuse the economics in 2007 with current dollar scenarios. That $15 per pt in 2007 would be a lot higher today given that the end date is closer plus quite a bit of "Disney inflation."

What if you factor in the current scenarios? Since the resale restrictions didn’t exist then, what if they did?

Another words, what if that $15/pt extension was considered a direct buy, giving even resale contracts membership benefits. Would that change the consideration?

 

[Yinn]

Ok I’m sorry... late to the party.
What are the new rules on Riviera?
Thanks
Kerri

A resale on Riviera triggers a restriction so that the buyer can only stay atRiviera and no other locations.

 

[cw62803]

Crescent Lake is prime-time real estate. I can't imaging Disney is going to be very generous with discounts for people with expiring timeshares. That's why they put the expiration date in the deeds in the first place!

 

[Pooh12863]

Exactly, the contracts will end, DVD throws a reno on the joints, and people will be standing in line to purchase direct contracts at $800 a point.

 

[Madame]

Exactly, the contracts will end, DVD throws a reno on the joints, and people will be standing in line to purchase direct contracts at $800 a point.

I can't even imagine the price for BCV in 2042

 

[SG131]

Exactly, the contracts will end, DVD throws a reno on the joints, and people will be standing in line to purchase direct contracts at $800 a point.

Except that that would be a LOT of rooms to sell at once. I think disney has a few plans in the back of their minds and the biggest factor will be the economy at that point in time. If the economy is doing very well flip and sell. If the economy has tanked, try to get existing owners to hold on as long as they can. If its somewhere in the middle maybe flip and one at a time most definitely starting with beach club because that's where the most money to be had is.

I think if they offered me an extension at boardwalk with restrictions, I'd still take it. But I personally would never buy at Rivera with the restrictions. Boardwalk is such an in demand location I could see that contract holding the resale value despite restrictions. Plenty of people want the ability to book there during food and wine. I know Rivera is only a skyliner ride away, but its not the same as walking distance. I haven't bought with the intention of needing to sell, but you just never know what life will bring you.

 

[Pooh12863]

Except that that would be a LOT of rooms to sell at once. I think disney has a few plans in the back of their minds and the biggest factor will be the economy at that point in time. If the economy is doing very well flip and sell. If the economy has tanked, try to get existing owners to hold on as long as they can. If its somewhere in the middle maybe flip and one at a time most definitely starting with beach club because that's where the most money to be had is.

I think if they offered me an extension at boardwalk with restrictions, I'd still take it. But I personally would never buy at Rivera with the restrictions. Boardwalk is such an in demand location I could see that contract holding the resale value despite restrictions. Plenty of people want the ability to book there during food and wine. I know Rivera is only a skyliner ride away, but its not the same as walking distance. I haven't bought with the intention of needing to sell, but you just never know what life will bring you.

No need to flip them all at once, Disney can rent them as cash rooms until declared into the club.

 

[drusba]

DVD will not "extend" the life of a 2042 resort, like it did at OKW. If it wants to be able to restrict owners' rights, including all resale owners' rights to being limited to their home resort like at Riviera, and if it wants to be able to change the total points applicable to the resort and thus sell far more total points than currently exist at those resorts, which it can only do by actually lowering the current ownership interests and points owned by the existing members, DVD needs to make major changes to the terms of the exiting declarations of those pre-Riviera resorts, which it really can do only by creating new DVC resorts at those locations which have their own declaratiosn that are similar to those at Riviera. Thus, DVD's current plan is most likely to create new 50-year terms for those resorts once they expire in 2042, and every existing ownership contract at the resort will expire..

What it will likely do is offer, for a while, a discounted price to still existing owners in 2040 or 2041, after it issues new declarations to go into effect in 2042 (although that could also be delayed if it has any plan to do a major redo of the resort itself before selling it). I doubt that discounted price is going to be a major price difference from what new purchasers will eventually have to pay. One might argue a large discount should be offered because DVD should want to keep most of those former purchasers. Don't count on that argument. Most of those still existing purchasers in 2040 or 2041 will likely be those who purchased resale, and thus be members despised by DVD, so DVD will not think its owes them any favors. BCV and BWV are resorts with easy access to parks and BRV somewhat easy access. DVD is likely going to view the situation as selling new for 50-year terms may lose some sales from existing members, but those near park resorts will likely sell well and quickly, and the loss of some existing members can be overcome by sales generally.