December DVC Sales Tumble

[SpicyMcHaggis]

I'm in the process of looking into options and such for our first purchase and am considering resale as well as direct options. We plan on keeping the contract to term and handing it down, but even so resale pricing and restrictions are a consideration for us. Sometimes things happen, and being able to recoup some of our outlay is a big potential benefit if it is needed. I really like RIV and am hoping for some generous incentives this year similar to the AKV and VGF deals I missed before I was looking to own. But, if RIV and Poly2 are both on sale at the same time for a similar price and Poly2 is restriction-free, I'd probably take Poly2 due to the likelihood in my mind of it depreciating slower than RIV.

The points others have made regarding similar products being sold by other companies in comparison to the unrestricted offerings seem solid. The only question marks in my mind there are ROFR and their interest in executing that right, as well as offering something like points washing at some point which might increase the value of resale contracts. At this point I can't count on either having a material impact on pricing. Even if unrestricted properties lose sway over time and relative value as the 2042 resorts age out of the system, that leaves me no worse off than if I'd bought a restricted resort in the first place. So, it seems like the unrestricted properties with longer remaining contract durations are a safer way to go, and if both Poly2 unrestricted and RIV restricted are available direct, I don't see myself going with RIV even though I like the property itself quite a lot.

 

[DanCali]

Perhaps, except as the article also pointed out, In 2023 DVD had their best sales in 12 years so it would appear they aren't too concerned about either resale prices or restrictions.

Edit: I am referring to the underlying article for this thread, and that may not have been clear.

I don't know if they would have accomplished anywhere near that feat without VGF, an unrestricted resort. It remains to be seen what happens with Poly2.

resale prices or restrictions may not concern them now, although they observe every resale transaction via ROFR. It might concern them a lot more if Riviera resale prices drops below $80 (just throwing a number) and more and more direct buyers cite that as a primary reason they are not buying direct restricted resorts.

 

[BeachClub2014]

I don't know if they would have accomplished anywhere near that feat without VGF, an unrestricted resort. It remains to be seen what happens with Poly2.

resale prices or restrictions may not concern them now, although they observe every resale transaction via ROFR. It might concern them a lot more if Riviera resale prices drops below $80 (just throwing a number) and more and more direct buyers cite that as a primary reason they are not buying direct restricted resorts.

Most likely not, but I tend to believe that it has far more to do than just restrictions at Riviera. I know that the restrictions are the main culprit in all of your comparisons between VGF and RIV. There are so many other variables at play that were, in all likelihood, contributing to purchase decisions. Does restrictions at Riviera have an impact on sales? Sure, but I just don't believe them to be as impactful as others may think. DVD apparently doesn't think so either because they've added the same restrictions to VDH and now CFW.

 

[Sandisw]

Most likely not, but I tend to believe that it has far more to do than just restrictions at Riviera. I know that the restrictions are the main culprit in all of your comparisons between VGF and RIV. There are so many other variables at play that were, in all likelihood, contributing to purchase decisions. Does restrictions at Riviera have an impact on sales? Sure, but I just don't believe them to be as impactful as others may think. DVD apparently doesn't think so either because they've added the same restrictions to VDH and now CFW.

We also have to remember that they had to discount the resort quite a bit to get it to sell at that rate.

I think it brought in a lot of current owners who were resale and chose direct for that resort because it was basically the same price.

If restrictions were the end all be all of sales, RIV would have never have been able to out sell it in 2022.

I agree it plays some role but as you said, not enough that DVD cares as they would not have continued it.

 

[Sandisw]

I’ll add one more point about VGF…

If VGF resale had been $130, do we still believe people would have flocked to it? Just not sure they would have.

Maybe it was it getting unrestricted points that would be good everywhere and memhership extras that made it so popular and not the lack of resale restrictions that made it such a great deal?
M

 

[Cfabar1]

I’ll add one more point about VGF…

If VGF resale had been $130, do we still believe people would have flocked to it? Just not sure they would have.

Maybe it was it getting unrestricted points that would be good everywhere and memhership extras that made it so popular and not the lack of resale restrictions that made it such a great deal?
M

For us it was so many things!

It was:
- Future resorts (that was a big one)
- Membership extras
- Knowing if we move out of FL at some point that we will be able to continue having APs through DVC renewal
- an incredibly fair price (we had bought a small VGF contract earlier in 2023 for more $$/point than our 150 point purchase).
- The fact that, when we toured initially, we were in love with VGF - it held a lot of emotional weight to us, and was a preferred resort.
- Knowing if we sold, the restricted value would be lower

 

[Bearval]

Alright alright I’m big enough to admit I’m definitely wearing rose-tinted glasses when it comes to RIV and mudd-colored glasses when it comes to BLT, you’re all probably mostly correct in your assessments but @kboo did make an excellent point with this…

But I do see the overall appeal of BLT. I just really dislike the theming and unless I’m staying in TPV I can get better feels at VGF or PVB and enjoy my boat ride over to MK. I’m gonna need them to work some magic this next refurb. I’d also love to see a more mid-century theme like you mentioned.

We sold a AKL contract and bought a BLT for a difference of 12pp but gained 3 years and lower MF's. AKL maintenance fees in my opinion will go up at a higher rate due to the animals. My family actually likes staying at AKL ( we kept a small direct AKL just to keep the blue card) so we alternate each year. This coming June was to be a BLT stay but we were able to get a standard 2 bedroom at BCV at the 7 month window.

 

[Bearval]

I don't know if they would have accomplished anywhere near that feat without VGF, an unrestricted resort. It remains to be seen what happens with Poly2.

resale prices or restrictions may not concern them now, although they observe every resale transaction via ROFR. It might concern them a lot more if Riviera resale prices drops below $80 (just throwing a number) and more and more direct buyers cite that as a primary reason they are not buying direct restricted resorts.

Most buyers of timeshares never consider what the "resale" price is. They don't go into the purchase thinking about "selling" just buying. If they did most would have bought resale especially before all of the current restrictions are now in place. The same type of people who bought AKL direct before any restrictions were in place could have bought resale at almost 1/2 off. This is DVD's targeted customer.

 

[DanCali]

AKL maintenance fees in my opinion will go up at a higher rate due to the animals.

AKV dues levels are indeed probably somewhat higher due to the animals than what they would be otherwise. But what you say about the growth rate may not be accurate, at least percentage-wise.

In the past year (2023 to 2024) BLT dues growth was just 2.2% vs 3.1% at AKV, but that's just one year. Since its inception, AKV dues have grown by 4.1% annualized while BLT dues have grown by 5.2% annualized since that resort's inception. That's actually quite a big difference in favor of AKV over time. It's important to note that those numbers are "since inception" so they cover different periods for each resort, but these two opened just 2-3 years apart.

I pasted the info for just those 2 resorts below, but if you look at the entire table, BLT dues have grown at the highest rate since inception among the WDW resorts. Hopefully the lower growth rate at BLT in the past year is a sign of better things to come.



Source: https://www.dvcresalemarket.com/buying/annual-dues/

 

[Lorana]

AKV dues levels are indeed probably somewhat higher due to the animals than what they would be otherwise. But what you say about the growth rate may not be accurate, at least percentage-wise.

In the past year (2023 to 2024) BLT dues growth was just 2.2% vs 3.1% at AKV, but that's just one year. Since its inception, AKV dues have grown by 4.1% annualized while BLT dues have grown by 5.2% annualized since that resort's inception. That's actually quite a big difference in favor of AKV over time. It's important to note that those numbers are "since inception" so they cover different periods for each resort, but these two opened just 2-3 years apart.

I pasted the info for just those 2 resorts below, but if you look at the entire table, BLT dues have grown at the highest rate since inception among the WDW resorts. Hopefully the lower growth rate at BLT in the past year is a sign of better things to come.

View attachment 829918

Source: https://www.dvcresalemarket.com/buying/annual-dues/

BLT has to pay its share of transportation costs, which includes the monorail. I have to imagine - especially as it ages - that it is expensive to maintain. Plus buses and boats. Whereas AKV’s transportation costs are buses only.

I do think Animal Costs will be an ongoing concern if grain and food prices continue a sharp rise, but all these resorts we love with unique transportation options also have to pay for those options.

That said, BLT has 5.7 million points and AKV has 7.4 million, so AKV also has more points to distribute dues cost increases.

 

[kboo]

I've always pointed out that DVC sells what DVC wants to sell. You can go thru a presentation and hear only about one resort. If you aren't biting then they might bring others in response to why one isn't jumping in. If you're somewhat aware of DVC and inquire about one in particular that's something different but the general sales to people visiting most certainly are directed.

agree with this. When we added on to VGF last year, I reached out to our guide, who'd sold us Riviera direct back in 2019. I asked him about Riv, VGF and Aul since we had recently been to Aulani, also, so he gave us all the info. Still, there was a little pushing of VGF and I had to ask him which one was the "best price" and he did say Riviera, adding that it was because of the slightly longer contract length.

Based on this (https://*******.com/forum/threads/total-dvc-points-at-each-resort.9877/) there are 70M total points in the system pre BPK, VDH and Riviera, so maybe closer to 85M in total now. Assuming that 1% number you cite is correct, that's about 850,000 points that turn over annually in the resale market. Based on the article in post #1 in this thread, DVD sells about 2M points annually. So those 850,000 resale points that relatively informed buyers do not buy from DVD, can certainly make a difference to DVD in both directions. Changes in that mix can boost or depress their sales materially. Consider a scenario where you may get 1.2M points turning over resale and only 1.6M points in direct sales because those buyers who previously didn't use to care about resale prices now care and opt to go the resale route. Those guides and executives will not be happy with a 20% decline in sales.

I'm not sure there would be a 20% decline - I'm pretty sure there are people crunching numbers to figure out what % of "leakage" is acceptable, since DVC's ability to hold on to some resale value that isn't -0- is a point they do make for selling.

Another data point to consider - how much do they make on financing with direct sales? I know "no one" reading here finances their direct and resale purchases, but clearly many people do. That is a whole 'nother side of moneymaking that isn't as big a part of the resale biz.

Most likely not, but I tend to believe that it has far more to do than just restrictions at Riviera. I know that the restrictions are the main culprit in all of your comparisons between VGF and RIV. There are so many other variables at play that were, in all likelihood, contributing to purchase decisions. Does restrictions at Riviera have an impact on sales? Sure, but I just don't believe them to be as impactful as others may think. DVD apparently doesn't think so either because they've added the same restrictions to VDH and now CFW.

Yup - and most likely each buyer weighs the variables differently. Price is certainly one of them, but not overwhelmingly so in my case. Our most recent purchases were both direct:

2019:
RIV v. BLT(r): it was only a few thousand $ more to have a new home resort in an area we had always looked at; the model rooms and murphy beds were awesome. NYE trip in 2019 (coinciding with RotR newly opened) was priceless and well worth the "extra" spend.

2023:
VGF v RIV: Due to family circumstances and changes since 2019, we were looking at being in 2BR over the holidays to accommodate my dad. We had had a few years of Xmas stays on our VGF points by then, and knew we needed home resort points to get Xmas *and* knew we needed a lot of points for a 2br. Kids adore VGF, and DH and I might place RIV a tiny bit higher, but all of our direct and resale points can book RIV, so we saw more of a "need" to have VGF home resort than RIV since we are able to book RIV easier than VGF. I am still thinking about this and wondering if I made the right choice, because booking VGF over Christmas is no fun, and maybe we'd shift more time to RIV anyway? Overall, probably still the right choice for us, but we could have gone either way and been happy.

Other things I wonder about:
We do enjoy BWV and BCV a lot, and when we modify our stay at 7mo, those resorts are always at the top of our list as potential switches. If we'd bought there first, instead of BLT (all resale before 2019), we probably wouldn't have felt a need to buy RIV in 2019. Then again, I may have done what @Sandisw did (?) and sold our 2042 EP resort to buy RIV. What if ... ?

One thing I do regret:
not buying more BLT points when we first bought in. Direct benefits could be accessed with 25 direct points (!!!), and BLT was significantly undervalued as the only resort within walking distance of MK. Then again, if we had done that, maybe we wouldn't have bought big chunks pre-2019 VGF resale either. And our VGF resale was motivated purely on price - the BWV/BCV points were almost 2x as much as the VGF (super deal) we got because of the longer contract length.

 

[MerlinandtheMouse]

agree with this. When we added on to VGF last year, I reached out to our guide, who'd sold us Riviera direct back in 2019. I asked him about Riv, VGF and Aul since we had recently been to Aulani, also, so he gave us all the info. Still, there was a little pushing of VGF and I had to ask him which one was the "best price" and he did say Riviera, adding that it was because of the slightly longer contract length

They were definitely pushing VGF when we bought in last year, too (we ended getting both VGF and RIV) which is interesting because one would think VGF would be the easier sale all things considered.

I think the reason was 2-fold: one, they declared all of BPK from (edit: almost*) the start so DVD would have to cover all the dues for the unsold points, definitely not something they wanted to be saddled with for too long. And two, Riviera sells well on cash unlike the Grand Floridian so it worked in their favor to put more of the Grand on DVC members who will definitely sell it out and cover the costs and leave RIV with its slower trickle of declarations and sales so they enjoy the cash-side benefits, too.

 

[sndral]

…
I think the reason was 2-fold: one, they declared all of BPK from the start so DVD would have to cover all the dues for the unsold points, definitely not something they wanted to be saddled with for too long. And two, Riviera sells well on cash unlike the Grand Floridian so it worked in their favor to put more of the Grand on DVC members who will definitely sell it out and cover the costs and leave RIV with its slower trickle of declarations and sales so they enjoy the cash-side benefits, too.

Half of BPK was declared into DVC in March 2022. The remaining units were declared 3 months later in June 2022.
I’ve read things like “Riviera sells well on cash unlike the Grand Floridian” several times & can’t find any data to support this claim because Disney doesn’t report those numbers.
There’s simply no way to know the occupancy % at individual WDW resorts, let alone the % cash v. points rooms booked or to compare one resort’s cash bookings v. another’s because Disney doesn’t disclose those numbers. Disney’s 23Q3 earnings report pegged overall hotel occupancy at 90% & that’s as specific as it gets.
We can deduce that DVC resorts tend to operate at high room occupancy %s because we can see what’s not available when we look at the member booking engine.
We can deduce when cash bookings are down by looking at the amount & location of room discounts Disney offers. Currently they’re offering 35% discounts on cash bookings at both the Riviera & the GF (except club, so RPC, which are only 10%) compared to only 15% for Poly rooms & 10% for Poly villas, for example. 35% is historically a generous discount & based on the current offers I deduce that cash bookings are lower than Disney wants at both the Riviera & the GF non club rooms (and many other deluxe resorts) & that cash bookings are high at the Poly &, oddly, AKL Jambo (only a 10% discount offered there) & for club rooms.
This data doesn’t support the narrative that Riviera cash rooms are in high demand - if they were, the discount would be 10-15%, not the 35% it is. Given how few cash rooms there are at the Riviera, I’m actually surprised that Disney needed to offer such a high discount, based on what I read here about how in demand the resort is for cash bookings I’d assumed the discounts would be lower .

 

[Mattrg_2000]

I always like reading Paul Krieger’s monthly post on average sales prices https://www.dvcresalemarket.com/blog/dvc-resale-average-sales-prices-for-december-2023/

Question about the 2042 resorts mentioned above. What will the price per point be in say 2035? I feel like when you get within 10 years of the end, that the market will adjust to the true savings from renting to owning. Have you guys seen any number crunching on this, especially factoring in the cost of capital of the investment?

I was shocked to see BCV drop to $127/pt in October of 2023. What’s the value calculation in October 2035 with only 7 years left?

 

[DanCali]

I always like reading Paul Krieger’s monthly post on average sales prices https://www.dvcresalemarket.com/blog/dvc-resale-average-sales-prices-for-december-2023/

Question about the 2042 resorts mentioned above. What will the price per point be in say 2035? I feel like when you get within 10 years of the end, that the market will adjust to the true savings from renting to owning. Have you guys seen any number crunching on this, especially factoring in the cost of capital of the investment?

I was shocked to see BCV drop to $127/pt in October of 2023. What’s the value calculation in October 2035 with only 7 years left?

I am not aware of any analysis that can justify financially why BCV is worth about as much as PVB and more than BLT. BLT even has comparable points charts with its Standard view option.

Perhaps the option to walk 8 minutes to EPCOT IG for 18 years, and access to that BCV pool is more valuable than the option to walk 8 minutes to MK for 36 years? You can crunch the numbers all you want but in the end the resale prices are determined by supply and demand. It's worth what people will pay for it.

 

[MerlinandtheMouse]

Half of BPK was declared into DVC in March 2022. The remaining units were declared 3 months later in June 2022.
I’ve read things like “Riviera sells well on cash unlike the Grand Floridian” several times & can’t find any data to support this claim because Disney doesn’t report those numbers.
There’s simply no way to know the occupancy % at individual WDW resorts, let alone the % cash v. points rooms booked or to compare one resort’s cash bookings v. another’s because Disney doesn’t disclose those numbers. Disney’s 23Q3 earnings report pegged overall hotel occupancy at 90% & that’s as specific as it gets.
We can deduce that DVC resorts tend to operate at high room occupancy %s because we can see what’s not available when we look at the member booking engine.
We can deduce when cash bookings are down by looking at the amount & location of room discounts Disney offers. Currently they’re offering 35% discounts on cash bookings at both the Riviera & the GF (except club, so RPC, which are only 10%) compared to only 15% for Poly rooms & 10% for Poly villas, for example. 35% is historically a generous discount & based on the current offers I deduce that cash bookings are lower than Disney wants at both the Riviera & the GF non club rooms (and many other deluxe resorts) & that cash bookings are high at the Poly &, oddly, AKL Jambo (only a 10% discount offered there) & for club rooms.
This data doesn’t support the narrative that Riviera cash rooms are in high demand - if they were, the discount would be 10-15%, not the 35% it is. Given how few cash rooms there are at the Riviera, I’m actually surprised that Disney needed to offer such a high discount, based on what I read here about how in demand the resort is for cash bookings I’d assumed the discounts would be lower .

Tbh I don’t know where that statement come from either so that’s fair to call out, but it’s gone around a lot so I assume there is some data to back it up even if it’s older information.

I just did a cursory look (this is not a full sample set of data of course) at availability of every weekend (Fri-Mon) from now until the beginning of May and Grand Floridian has availability every weekend except 2 of them and Riviera is the opposite with no availability except 2 of them. Now this changes regularly, true and GF has a lot more rooms available then Riviera does but we’re talking about WDW flagship. I feel like I saw SSR, Old Key West and Animal Kingdom Lodge with less availability for those weekends so the amount of rooms available isn’t a factor at the other resorts. It seems like the cost is the prohibitive factor…expect not with the Riviera.

Discounts are given for many reasons I believe, so yes, it has to do with how much is available but also it’s often proportional to the cost of the rooms so Riviera and Grand almost always get the same discount, maybe at times a bit of both reasons, and others were not privy to.

It could just be the double whammy of too many rooms and too high of a cost but from the outside it does seem like GF has more consistent availability compared to Riviera.

 

[SpicyMcHaggis]

Question about the 2042 resorts mentioned above. What will the price per point be in say 2035? I feel like when you get within 10 years of the end, that the market will adjust to the true savings from renting to owning. Have you guys seen any number crunching on this, especially factoring in the cost of capital of the investment?

I was shocked to see BCV drop to $127/pt in October of 2023. What’s the value calculation in October 2035 with only 7 years left?

The value of the contract should over time decrease such that it amounts to a savings vs. the rack rate.

This is pure speculation/assumptions, but using points for a week stay tier 3 in a studio, assuming that the rack rate increases at 3.5%, that the maintenance increases at its historical 3.6%, the current cost per point to be $130, and that the ratio between the current cost per point compared to all potential future savings when comparing the rack rate to the maintenance cost required for the stay remains static over the years, I'd predict about $65/point in 2035, $50 in 2037, $35 in 2039, and $18 in 2041, all else equal.

The reality however could be drastically different if for example people decide that 7 more years isn't enough and start to unload their points in favor of buying newer contracts/points that won't expire, flooding the market and driving down prices. Alternately people could decide that it isn't worth it to sell and just hold to expiration, reducing the supply and driving up prices.

So, the real answer is that we'll see in 11 years.

 

[Mattrg_2000]

I did the math, the value of BCV in 2035 is $41 to $93 per point for rental of points or personal usage of points. Assumes 7 years remaining, time value of money 7%, dues, rental value of points, and discounted hotel rooms similar to today. No, I’m not a valuation expert, so go easy on me. Ha.

Should probably lower these values by $3-$7/point/year for the opportunity cost of the initial investment (ie: you won’t have $4.7k to $10.8k invested in the stock market). So $38 to $86 per point is the range.

We won’t see a ’crash’ but I predict the market starts to price this logic into resale purchases. Disney will likely have a calculation for ROFR and it will be a lot more sophisticated.

 

[Mattrg_2000]

The value of the contract should over time decrease such that it amounts to a savings vs. the rack rate.

This is pure speculation/assumptions, but assuming that the rack rate increases at 3.5%, that the maintenance increases at its historical 3.6%, the current cost per point to be $130, and that the ratio between the current cost per point compared to all potential future savings when comparing the rack rate to the maintenance cost required for the stay remains static over the years, I'd predict about $65/point in 2035, $50 in 2037, $35 in 2039, and $18 in 2041, all else equal.

The reality however could be drastically different if for example people decide that 7 more years isn't enough and start to unload their points in favor of buying newer contracts/points that won't expire, flooding the market and driving down prices. Alternately people could decide that it isn't worth it to sell and just hold to expiration, reducing the supply and driving up prices.

So, the real answer is that we'll see in 11 years.

I love this response. $65/pt in 2035. My calculation was a floor of $41 assuming you simply let a third-party rent the points for you for 7 years. Goes up to $93 if you pull every penny of savings from paying/using a hotel room. Market won’t be $45 or $93. I’m with you. I like $65/point!! All the caveats you listed and those to come from others. Ha.

 

[DonMacGregor]

Another data point to consider - how much do they make on financing with direct sales? I know "no one" reading here finances their direct and resale purchases, but clearly many people do. That is a whole 'nother side of moneymaking that isn't as big a part of the resale biz.