Multi-Site POS Revision Dated 01/19/19

[TK-Tampa]

Doesn't Disney realize that 'driving down the price of Resales' will be ultimately unsuccessful as a strategy? They can drive it down as far as possible, and it still won't help them with Direct Sales. Why? First, because there IS inherent value in DVC points. They can be used to stay at DVC resorts. Even if that resort is ONLY Riviera, when the price is low enough, people will buy it, just so they can save money at Riviera. When that happens, Disney will once again lose the sale. Someone will look and say, "Hmmmn. I could buy 100 Rivera points Direct (or Reflections, or whatever they are selling then) or, for the same amount of money I can get 400 points at resale, and stay four times as long. Duhh!" In fact, when that happens, Riviera Resale will be so appealing that Disney will lose and lose and lose.

I think a strategy of trying to take away value from Resales, and drive the price down, is idiocy. THE MARKET WILL ALWAYS SELF ADJUST, because there IS value there and when the price is right, it will always be very attractive. Meanwhile, there will be a lot of people looking at Riviera or Reflections or whatever and saying right from the beginning, "I'm NOT going to buy there, Direct from Disney! Why would I? I love the resorts. I like staying at them, but Disney is NOT treating their owners nice, and they are driving Resale prices down. If I buy Resale instead, then I can NEVER lose money, because it won't go down any more, AND I will get more points, too."

I just don't understand how all the 'smart people' at Disney are not seeing this? They can NEVER beat the Resale market by attacking the Resale market. If they want to win, they can only make their own product worth more, and more attractive. And if that also causes Resale prices to rise, that will be EVEN BETTER for them. Higher Resale prices tip the balance towards Direct prices.

I don't think they care either way. I suspect their goal is to make huge profits on the sale of Riviera and they are likely looking at Reflections, as well. Together, those resorts will have in the neighborhood of 10 million points to sell in the next 4-5 years. That's a lot to unload. If they kill the competition, they get sold faster and and make bigger profits.

They would probably argue that this is better for all members because it gives them a bigger motive to build more resorts.

 

[DougEMG]

Doesn't Disney realize that 'driving down the price of Resales' will be ultimately unsuccessful as a strategy? They can drive it down as far as possible, and it still won't help them with Direct Sales. Why? First, because there IS inherent value in DVC points. They can be used to stay at DVC resorts. Even if that resort is ONLY Riviera, when the price is low enough, people will buy it, just so they can save money at Riviera. When that happens, Disney will once again lose the sale. Someone will look and say, "Hmmmn. I could buy 100 Rivera points Direct (or Reflections, or whatever they are selling then) or, for the same amount of money I can get 400 points at resale, and stay four times as long. Duhh!" In fact, when that happens, Riviera Resale will be so appealing that Disney will lose and lose and lose.

I think a strategy of trying to take away value from Resales, and drive the price down, is idiocy. THE MARKET WILL ALWAYS SELF ADJUST, because there IS value there and when the price is right, it will always be very attractive. Meanwhile, there will be a lot of people looking at Riviera or Reflections or whatever and saying right from the beginning, "I'm NOT going to buy there, Direct from Disney! Why would I? I love the resorts. I like staying at them, but Disney is NOT treating their owners nice, and they are driving Resale prices down. If I buy Resale instead, then I can NEVER lose money, because it won't go down any more, AND I will get more points, too."

I just don't understand how all the 'smart people' at Disney are not seeing this? They can NEVER beat the Resale market by attacking the Resale market. If they want to win, they can only make their own product worth more, and more attractive. And if that also causes Resale prices to rise, that will be EVEN BETTER for them. Higher Resale prices tip the balance towards Direct prices.

I agree with you that there is a limit to how low Disney can drive the price of resale down because other people will step in to buy for their own use or for the purpose of renting out the points.

I bought during the last recession. The first contract I bought for myself. It had extra points on it that I wasn't going to use and I ended up renting them out. After running through multiple scenarios on the potential for renting I started buying contracts. Lots of contracts. I was low-balling contracts, making multiple offers every week for a couple of years. During that time I got to know a number of other people that were doing the exact same thing. We were all looking to scoop up points at cheap prices. If resale prices ever crash again, buyers like that will step in to set the floor.

What sets the price for resale is how much it costs to pay cash for a similar room from Disney. Next is the number of years left on the contract, but that is still a distant 2nd for now.

 

[DougEMG]

If I was Disney and wanted to stop anyone from buying resale ever I would try and set up the booking window for resale owners such that there was no availability for them to ever use their points.

Direct owners book at home resort at 11 months
Direct owners book at non home resorts at 7 months
Resale owners book at home resorts at 6 months
No booking outside home resorts for resale owners

This of course would be done based on member feedback.

 

[Frederic Civish]

If I was Disney and wanted to stop anyone from buying resale ever I would try and set up the booking window for resale owners such that there was no availability for them to ever use their points.

Direct owners book at home resort at 11 months
Direct owners book at non home resorts at 7 months
Resale owners book at home resorts at 6 months
No booking outside home resorts for resale owners

This of course would be done based on member feedback.

Yeah, and only because members 'Request it.' ("Please, Mr Disney. I'm a member. I bought through Resale, but I'm a member. Would you please restrict me from using my DVC Points? Please keep me from hogging up all the good reservations, so that those people who pay more, because they bought Direct, and who are more worthy, can book what they want, instead. Oh, thank your for being of such service to us.")

 

[Cyberc1978]

That’s more likely than an $80 fee because it serves a dual purpose of killing off resellers. But not $10.

Let’s say $30/point and DVC ROFRs anything less than $30 below what it’s reseller is charging. Then, there’s no profitable gap between generic reseller and DVC sponsored reseller.

Let’s say “Official DVC reseller” charges $150/point for BLT with $30 going to DVC. If DVC ROFRs anything less than $120/point, then resellers really only have a market of $30 and that doesn’t come with benefits. Because DVC is setting the floor and not the ceiling, anybody selling is only going to get $120. Period. Official reseller is offering $120 to market points, other brokers will have trouble selling above $120 and getting buyers.

DVC has the choice of turning their sub $120 ROFR contracts around as direct points or dumping them off on official reseller.

Most likely, at that point, DVC turns over its entire “sold out” resort business to its approved reseller.

Many assume or close to it that Disney want to do away resale as it impacts the sale of direct points. For sure there is some impact to direct sales. If you are looking to buy CCV then your best course of action could be direct (as of now) as the prices on a stripped contract vs loaded isn't that big as you could rent the points you dont need to offset the cost. Also the smaller contracts resale go quickly and are higher priced. If you are however looking at other resorts then the situation is quite different. Problem is that Disney dont have availability at all resorts in all UY's. So even with a set price floor Disney or the "approved reseller" might not be available to help you. That could potentially increase the price on those resorts above the floor. True the new owners wouldn't get the same benefits.

There have been talks about the "flexible use year" that Disney recently wrote about. How that will play out in the future I dont know or if it will mean anything.

All your points work at all resorts today. But Disney is essentially saying that they can arbitrarily restrict any owner's access to any other than their home resort any time they want, including 11 month privileges. That is what is a bit troublesome to me.

They just happen to be making a distinction between direct and resale with their last statement. I can certainly see how this can be perceived as a win for many. But if ever you ever decide to sell, Disney has made the choice to take some of the money you might have made and put it directly in their pocket. They are doing this by giving lesser rights to the future owner you sell to. Those rights that are lost by the new buyer go directly to Disney.

I'm not saying that Disney legally can make the distinction between direct and resale buyers when it comes to a booking perspective for the L14 resorts. Lets assume they can for sec.

If new resale buyers were locked into their home resort, then at some point in the future we will start to see an impact to direct owners. Why? - The new resale owners will only be able to book the home resort and when the number of resale owners are big enough then they will ofc book up the resort, effectively shutting out anyone not being an owner including direct owners.

If resale owners are treated inferior to direct owners when it comes to booking windows then I foresee Disney risking lawsuits - also the resale price for any owner would tank.

 

[zavandor]

If resale owners are treated inferior to direct owners when it comes to booking windows then I foresee Disney risking lawsuits - also the resale price for any owner would tank.

They could introduce the rule only for Reflection going forward.

 

[Cyberc1978]

They could introduce the rule only for Reflection going forward.

I agree but at some point the problem would be the same. Direct buyers being unable to book because of resale owner having booked up the resort.

 

[zavandor]

I agree but at some point the problem would be the same. Direct buyers being unable to book because of resale owner having booked up the resort.

It they allow direct members to book at 11 months, resales at 8 months and direct members at other resorts at 7, then direct would have a 3 months advantage over resale.
If they get rid of the guarantee to have 1 month advantage against owners at other resorts, they could allow resale owners to book only their own resort only at 6 months as others suggested, practically setting the value of resale contracts to zero. Not sure if it's legally possible.

 

[Nuclear Monkey]

It they allow direct members to book at 11 months, resales at 8 months and direct members at other resorts at 7, then direct would have a 3 months advantage over resale.
If they get rid of the guarantee to have 1 month advantage against owners at other resorts, they could allow resale owners to book only their own resort only at 6 months as others suggested, practically setting the value of resale contracts to zero. Not sure if it's legally possible.

If something like that does happen, what do you think Disney's plan is for all the financed contracts in default?

 

[Cyberc1978]

It they allow direct members to book at 11 months, resales at 8 months and direct members at other resorts at 7, then direct would have a 3 months advantage over resale.
If they get rid of the guarantee to have 1 month advantage against owners at other resorts, they could allow resale owners to book only their own resort only at 6 months as others suggested, practically setting the value of resale contracts to zero. Not sure if it's legally possible.

I dont think they legally can make that change at least not to the L14 resorts. Maybe its possible with Rivera. Even if they could make the change, the resale price would tank and direct owners couldn't sell their interest.

 

[zavandor]

If something like that does happen, what do you think Disney's plan is for all the financed contracts in default?

Take them for free and resell them.

I dont think they legally can make that change at least not to the L14 resorts. Maybe its possible with Rivera. Even if they could make the change, the resale price would tank and direct owners couldn't sell their interest.

I'm only thinking about new resorts. If they really can modify anything in the POS for new resorts and still add them into the club, there is literaly no limit to what they can do (but I still don't think they can, BTW). The existing L14 couldn't be modified this way until expiration, the one month advantage is in the POS and removing it (causing a crumble of resale value) would certainly be considered against members interests, a lawsuit would be an easy win.

 

[TexasChick123]

I highly doubt they’ll take away the 1 month guaranteed booking woundow from owners at any resort. If you cannot sell your timeshare at all, as no one would buy that, it would affect direct. Who would buy direct at ~$200pp if they cannot unload it? They can’t ROFR anything without a buyer wanting it. This is a silly scenario IMO. I think they just want a piece of resale. All these doomsday predictions are premature IMO.

 

[zavandor]

I highly doubt they’ll take away the 1 month guaranteed booking woundow from owners at any resort. If you cannot sell your timeshare at all, as no one would buy that, it would affect direct. Who would buy direct at ~$200pp if they cannot unload it? They can’t ROFR anything without a buyer wanting it. This is a silly scenario IMO. I think they just want a piece of resale. All these doomsday predictions are premature IMO.

Windham continued to sell timeshares at full price during the recession, while on Ebay owners were selling them for $1 and paying closing costs. They were actually paying other people to get rid of them.
Will Disney go to this extent? Probably not. But they might. Everyone buying DVC should understand their contract could be worth nothing tomorrow and they should be happy with that or they shouldn't buy.

 

[ziravan]

Windham continued to sell timeshares at full price during the recession, while on Ebay owners were selling them for $1 and paying closing costs. They were actually paying other people to get rid of them.
Will Disney go to this extent? Probably not. But they might. Everyone buying DVC should understand their contract could be worth nothing tomorrow and they should be happy with that or they shouldn't buy.

I bought 399k Wyndham Plus Points on eBay over 3 contracts for $1200 total during that time.

Hard to do now with Ovations. Owners can now just give their contracts back to Wyndham and walk away. And Wyndham resells them as Access points.

 

[miTnosnhoJ]

Doesn't Disney realize that 'driving down the price of Resales' will be ultimately unsuccessful as a strategy? They can drive it down as far as possible, and it still won't help them with Direct Sales. Why? First, because there IS inherent value in DVC points. They can be used to stay at DVC resorts. Even if that resort is ONLY Riviera, when the price is low enough, people will buy it, just so they can save money at Riviera. When that happens, Disney will once again lose the sale. Someone will look and say, "Hmmmn. I could buy 100 Rivera points Direct (or Reflections, or whatever they are selling then) or, for the same amount of money I can get 400 points at resale, and stay four times as long. Duhh!" In fact, when that happens, Riviera Resale will be so appealing that Disney will lose and lose and lose.

I think a strategy of trying to take away value from Resales, and drive the price down, is idiocy. THE MARKET WILL ALWAYS SELF ADJUST, because there IS value there and when the price is right, it will always be very attractive. Meanwhile, there will be a lot of people looking at Riviera or Reflections or whatever and saying right from the beginning, "I'm NOT going to buy there, Direct from Disney! Why would I? I love the resorts. I like staying at them, but Disney is NOT treating their owners nice, and they are driving Resale prices down. If I buy Resale instead, then I can NEVER lose money, because it won't go down any more, AND I will get more points, too."

I just don't understand how all the 'smart people' at Disney are not seeing this? They can NEVER beat the Resale market by attacking the Resale market. If they want to win, they can only make their own product worth more, and more attractive. And if that also causes Resale prices to rise, that will be EVEN BETTER for them. Higher Resale prices tip the balance towards Direct prices.

If they drive the price down, they can exercise ROFR and launder the points back to direct status.

 

[Frederic Civish]

I highly doubt they’ll take away the 1 month guaranteed booking woundow from owners at any resort. If you cannot sell your timeshare at all, as no one would buy that, it would affect direct. Who would buy direct at ~$200pp if they cannot unload it? They can’t ROFR anything without a buyer wanting it. This is a silly scenario IMO. I think they just want a piece of resale. All these doomsday predictions are premature IMO.

I agree. Disney can't make those kind of new restrictions to the L14. And they can't make changes to their new resorts in the future, to give them an advantage over the L14, since that would lead to lawsuits from the L14. All they could do is Restrict the use at future resorts, which would harm those resorts, but not the L14. This will decrease their Direct sales since people will see that they aren't getting as much benefit, including resale benefit, by purchasing Direct.

You are also right that they will not exercise ROFR unless they can make enough profit for them to consider it worthwhile. They cannot use the ROFR to control the market, only to influence it. AND, this would NOT put the 'non-Disney Certified' brokers out of commission, because those non-Disney brokers STILL get paid their commission on ROFR sales. In fact, any attempt to do this would probably be looked at as a godsend to the regular brokers.

If they COULD find some way to drive down Resale prices, that would just make Resale more worthwhile to purchasers and, once again, people would be buying the Resale, rather than the Direct, because the Resale would be an even better deal.

Windham continued to sell timeshares at full price during the recession, while on Ebay owners were selling them for $1 and paying closing costs. They were actually paying other people to get rid of them.
Will Disney go to this extent? Probably not. But they might. Everyone buying DVC should understand their contract could be worth nothing tomorrow and they should be happy with that or they shouldn't buy.

But the 'Pennies on the Dollar' collapse in Timeshare resale prices will NEVER happen to DVC. Why? Because 10 points can get you a Value Studio at AKL and 15 points can get you into some other studios. 25 points will get you a very nice, desirable Studio and date, and it would be comparable to something that Disney rents for $600, AND, you could use those points year after year. So, by that standard, $600 divided by 25 points means that each point is worth $24 per year, or $240 over 10 years. So do you really think the price of Resale could ever sink to the levels of other Timeshares? Ain't gonna happen, so long as people still want to vacation at Disney World.

 

[zavandor]

But the 'Pennies on the Dollar' collapse in Timeshare resale prices will NEVER happen to DVC. Why? Because 10 points can get you a Value Studio at AKL and 15 points can get you into some other studios. 25 points will get you a very nice, desirable Studio and date, and it would be comparable to something that Disney rents for $600, AND, you could use those points year after year. So, by that standard, $600 divided by 25 points means that each point is worth $24 per year, or $240 over 10 years. So do you really think the price of Resale could ever sink to the levels of other Timeshares? Ain't gonna happen, so long as people still want to vacation at Disney World.

That's not what I was commenting about.
Someone said that DVC will not do anything to harm their resale value too much because otherwise people wouldn't buy direct. Looking at the past, this is not true. Maybe in the age when everyone has a smartphone this is not true anymore, but worthless timeshare were being sold full price just a few years ago. I used to think DVC wouldn't introduce restrictions that would make the resale value plummet, because a strong resale market is one of the selling points of DVC. Well, I was wrong and I think Riviera resale will be affected a lot by the new restrictions.
If you buy direct at $180 and you think it's convenient because you can resell for $150 if you need to, if the value falls to $50 you'll be upset. If you have a loan on it and you cannot keep up the payments because you lost your job, it could cause you real harm.

 

[ziravan]

That's not what I was commenting about.
Someone said that DVC will not do anything to harm their resale value too much because otherwise people wouldn't buy direct. Looking at the past, this is not true. Maybe in the age when everyone has a smartphone this is not true anymore, but worthless timeshare were being sold full price just a few years ago. I used to think DVC wouldn't introduce restrictions that would make the resale value plummet, because a strong resale market is one of the selling points of DVC. Well, I was wrong and I think Riviera resale will be affected a lot by the new restrictions.
If you buy direct at $180 and you think it's convenient because you can resell for $150 if you need to, if the value falls to $50 you'll be upset. If you have a loan on it and you cannot keep up the payments because you lost your job, it could cause you real harm.

The issue isn’t “pennies on the dollar”. The issue is that every WDW DVC resort sold so far has held its value over time.

Whether the resort went on sale for $60 or $170, history shows that buying a new WDW resort direct is a good deal because over time, it holds almost all its value.

I paid $165 for Poly in 2015. I could have paid $160 if I had acted sooner. I can get $145 of that now and probably the full $165 back if I hold onto it for 10 years:

The cost to own is MFs and time value of money. The time value of money part is minimal if I was going to be plunking down a few grand each year in rooms anyway.

Look at Aulani. I could pay $160ish with discounts today and sell it tomorrow for $110. But that split keeps Aulani from selling out. The other resorts in that price range sold as new in that price range.

If Riviera “only” devalues to $110, then DVC has another perennial seller on its hands, a resort that will take a decade to sell out. (And if that’s not the case for Riviera because there’s a disconnect between cause and effect, it certainly will be the case with Reflections.)

Pennies on the dollar isn’t the problem. DVC’s current pricing is built on its resale market following along. $110 will be a disaster for Riviera and/or going forward, it will shake the faith in the entire system: maybe DVC is just another timeshare where spending tens of thousands of dollars on the product is substantially unrecoverable after my 10 day rescission period is up. . .

 

[Bing Showei]

Pennies on the dollar isn’t the problem. DVC’s current pricing is built on its resale market. $110 will not only be a disaster for Riviera, it will shake the faith in the entire system going forward:

Maybe DVC is just a timeshare where spending tens of thousands of dollars on the product is unrecoverable after my 10 day rescission period is up. . .

No one knows how Riviera will be devalued yet. The example often brought up is that most VGC/BCV owners would gladly pay the same resale prices they pay today if they were told they could only stay at their home resort. We could see that same scenario play out at Riviera. A lot will depend on how great the resort ends up being and how well the Skyliner operates to get folks to DHS/Epcot. And right now, that's a big fat theta.

But potentially great resort aside, I'm not sure how much resale factors in for most people who buy direct at the DVC Preview Center by way of the in-park kiosks and promises of ice cream, FPs, and gift cards. That first sale is the only sale Disney needs to put one in the win column. As soon as a point is signed for on the Mickey head line, that point is going to support that resort for life, no matter how many hands it passes through.

The biggest risk would be a tarnished timeshare reputation, and my hope as a "member" is that disney recognizes this enough today before it affects the product tomorrow.

 

[TexasChick123]

No one knows how Riviera will be devalued yet. The example often brought up is that most VGC/BCV owners would gladly pay the same resale prices they pay today if they were told they could only stay at their home resort. We could see that same scenario play out at Riviera. A lot will depend on how great the resort ends up being and how well the Skyliner operates to get folks to DHS/Epcot. And right now, that's a big fat theta.

But potentially great resort aside, I'm not sure how much resale factors in for most people who buy direct at the DVC Preview Center by way of the in-park kiosks and promises of ice cream, FPs, and gift cards. That first sale is the only sale Disney needs to put one in the win column. As soon as a point is signed for on the Mickey head line, that point is going to support that resort for life, no matter how many hands it passes through.

The biggest risk would be a tarnished timeshare reputation, and my hope as a "member" is that disney recognizes this enough today before it affects the product tomorrow.

Exactly. As I keep pointing out, I have yet to use my VGF points to stay anywhere but there. We just bought a VGC contract. I paid $165pp (still very high IMO, but the market sets the price). I didn't pay that price to stay at other resorts with those points. I completely concede that having flexibility is very nice and a huge bonus, but I don't plan on ever using my VGC or VGF points to stay anywhere except at those two resorts. If I was told that I could only use any of my points at only my home resort, I would be very angry to have the ability to book elsewhere at 7 months taken away, but I wouldn't rush to sell my points as I bought where I want to stay. I paid a premium for the ability to book relatively hassle free at 11 months out at all of my home resorts as well as not having to partake in the 7-month scramble.