Doomsday scenario for resale purchasers

[RaymOOOnd]

Tell me if this is conceivable:

-- Riviera is the first among a new series of resorts, the owners at each of which, like Riviera, are able to use their points for lodging at ALL DVC resorts both pre- and post-Riviera.

-- Fewer people purchasing direct contracts for the Riviera resort, "Reflections", and as-yet unannounced resorts will sell them on the resale market, given that they'll very likely command lower prices (for reasons discussed here ad nauseam relating to the inability to use their points for stays at other resorts). These buyers will, however, get tired of staying predominantly at their home resort over the course of a full 50 years. Increasingly, they'll use their points at 7 months (or whatever the interval later becomes) to stay elsewhere -- quite often I'd think at places with better locations than the newer resorts such as VGF, Poly, etc.

-- Say we're 10-15-20 years from now and there have been another several new resorts touting the same resale restrictions as Riviera contracts. Resale owners of an original 14 resort will be faced with a unidirectional flow of DVC2 direct buyers into their own original 14 resorts -- a flow which will become more pronounced with each new construction.

-- Resale purchasers of anything pre-Riviera become practically unable to book at anything but their home resorts, given the unidirectional flood at the 7 month window (which has been referenced already to be worsening with time -- although if my scenario is worth anything, the current situation will pale in comparison).

(One could argue that older resale owners of the original 14 could still use their points for DVC2 resort stays (the flow then not being truly unidirectional), but over time these older contracts will on average change hands at a higher rate than the DVC2 contracts...any sale from this point forward causing the contracts to lose their grandfathered status.

For those of us looking to pick up a few more points via resale: more important than ever to buy where you want to stay?

 

[JETSDAD]

While it is important to buy where you want to stay, I don't think this will have much of an effect. Right now nearly all points are able to be used at Riviera. Most people buying Riviera are also going to want to stay at their home resort to try it out over the next few years. As time goes on and fewer people are able to trade into Riviera, fewer people are also going to be able to trade out of Riviera due to their resale restrictions.

 

[jerseyduke]

If I am understanding you correctly, I would say I do not think so. I think there will be a mild effect, but nothing catastrophic.
First, while I am a believer in the 'buy where you want to stay' philosophy, it is a totally incomplete statement. It should be "Buy where you want to stay assuming you are going to book more than 7 months out" - but maybe that is implied.

What I think will actually help is that all the Riviera resale contacts will be UNABLE to book elsewhere period. For you to book at a non home resort you are, in essence, trading with an owner at that resort. All Riviera resale owners will be unable to trade out to another resort, so we are now going to have a group of owner that, for the first time, can only book at their home resort. It will take some time, but once you get enough critical mass of Riviera resale contracts, I actually think it will be hard to swap INTO Riviera, not so much the other way around.

I am curious as to what percentage of outstanding points in the entire system are resale points.

 

[ELMC]

I think that what you laid out makes sense and could theoretically happen, and it might be mildly inconvenient, but probably not at a critical mass necessary to be catastrophic. And don't forget that there are the original 14 users out there who have no intention of ever using their points anywhere but their home resort anyway.

 

[DougEMG]

These resale restrictions are definitely going to change how and when bookings occur.

Resale owners at post-L14 resorts are going to have to book early to ensure they get something, forcing direct owners there to book early if they want to stay at their home resort. This could end up creating a feedback loop so that the entire resort gets book very early, leaving nothing to trade out at 7 months.

Right now Disney doesn't have to worry about balancing points trading in and out of resorts as all points are equal. Are they going to create some kind of balancing process so that points that can't be traded out then can't be taken by people trading in. For example, pretend that all Riviera owners are resale owners, no points can trade out. Will DVC still allow points from non-Riviera resorts to trade in or will everyone be blocked from trading in since no one can trade out? At this point I don't think Disney has said what they are doing, so my assumption is they will keep with the status quo, meaning anyone non-Riviera points can trade in, effectively screwing over Riviera owners who as there won't be enough rooms left for them to book.

I see this change as causing a total mess in 5-10 years once there are a significant amount of resale owners that fall under these new restrictions.

 

[ELMC]

These resale restrictions are definitely going to change how and when bookings occur.

Resale owners at post-L14 resorts are going to have to book early to ensure they get something, forcing direct owners there to book early if they want to stay at their home resort. This could end up creating a feedback loop so that the entire resort gets book very early, leaving nothing to trade out at 7 months.

Right now Disney doesn't have to worry about balancing points trading in and out of resorts as all points are equal. Are they going to create some kind of balancing process so that points that can't be traded out then can't be taken by people trading in. For example, pretend that all Riviera owners are resale owners, no points can trade out. Will DVC still allow points from non-Riviera resorts to trade in or will everyone be blocked from trading in since no one can trade out? At this point I don't think Disney has said what they are doing, so my assumption is they will keep with the status quo, meaning anyone non-Riviera points can trade in, effectively screwing over Riviera owners who as there won't be enough rooms left for them to book.

I see this change as causing a total mess in 5-10 years once there are a significant amount of resale owners that fall under these new restrictions.

Let's all bookmark this thread and check back in five to ten years. It will certainly be interesting!

 

[LAX]

These resale restrictions are definitely going to change how and when bookings occur.

Resale owners at post-L14 resorts are going to have to book early to ensure they get something, forcing direct owners there to book early if they want to stay at their home resort. This could end up creating a feedback loop so that the entire resort gets book very early, leaving nothing to trade out at 7 months.

Right now Disney doesn't have to worry about balancing points trading in and out of resorts as all points are equal. Are they going to create some kind of balancing process so that points that can't be traded out then can't be taken by people trading in. For example, pretend that all Riviera owners are resale owners, no points can trade out. Will DVC still allow points from non-Riviera resorts to trade in or will everyone be blocked from trading in since no one can trade out? At this point I don't think Disney has said what they are doing, so my assumption is they will keep with the status quo, meaning anyone non-Riviera points can trade in, effectively screwing over Riviera owners who as there won't be enough rooms left for them to book.

I see this change as causing a total mess in 5-10 years once there are a significant amount of resale owners that fall under these new restrictions.

For the current DVD management at least, they probably won't care about "trade imbalance" as any unused points essentially go to DVD/DD's bottom line. Thus, if DRR becomes a hit and more owners want to trade in, DVD can careless if the resale DRR owners get "locked out." Or if DRR becomes a bust and more owners want to trade out, DVD also doesn't care if the post-Jan 2019 L14 owners get "locked out."

LAX

 

[RamblinWreck]

For the current DVD management at least, they probably won't care about "trade imbalance" as any unused points essentially go to DVD/DD's bottom line. Thus, if DRR becomes a hit and more owners want to trade in, DVD can careless if the resale DRR owners get "locked out." Or if DRR becomes a bust and more owners want to trade out, DVD also doesn't care if the post-Jan 2019 L14 owners get "locked out."

LAX

Wouldn’t they prefer that the points actually get used? Empty rooms just means fewer people buying stuff in their parks. Is there any real benefit to them when points get wasted?

 

[MaoriWhoLovesDisney]

I'm definitely interested to see what the effect will be, but I don't think it would be catastrophic. As the old resorts get recycled, I wonder if they'll be added to the pool of resorts that DRR resale people can book into?

 

[MaoriWhoLovesDisney]

Wouldn’t they prefer that the points actually get used? Empty rooms just means fewer people buying stuff in their parks. Is there any real benefit to them when points get wasted?

Either way, DVD can move unbooked rooms into cash inventory at the 60 day mark. #TheyGetTheirMoney

 

[ELMC]

Wouldn’t they prefer that the points actually get used? Empty rooms just means fewer people buying stuff in their parks. Is there any real benefit to them when points get wasted?

Either way, DVD can move unbooked rooms into cash inventory at the 60 day mark. #TheyGetTheirMoney

This. But also, we know that the Disney corporation is extremely compartmentalized. While they all exist under the same umbrella, divisions are often pitted against each other to compete for resources and they have their own revenue targets. DVD's main goal is to sell DVC units. They could not care less how much those occupants spend in the parks. Those concerns are held only by those whose responsibility it is to oversee multiple divisions (ie C level executives) but they are typically not that hands on that they are making decisions to connect those dots. Everyone seems happy up front, but from my reading, experience, and discussions with CMs I can tell you that not everyone gets along all the time or is working towards the same goal. Just like any other company on the planet.

 

[Great3]

For the current DVD management at least, they probably won't care about "trade imbalance" as any unused points essentially go to DVD/DD's bottom line. Thus, if DRR becomes a hit and more owners want to trade in, DVD can careless if the resale DRR owners get "locked out." Or if DRR becomes a bust and more owners want to trade out, DVD also doesn't care if the post-Jan 2019 L14 owners get "locked out."

LAX

Yes, this is the part that worry's me in the long run. One side may end up getting locked out, it's possible, but we won't know until 10-20 years later. I am going to guess the post Jan 2019 L14 owners get locked out first, until such time as there is more RR resales. All direct RR and future resorts owners will be able book the L14, but no future resales can book RR or other future DVC resorts. I think there are more direct buyers than there are resales buyer. This is the part I wonder about, off all the DVC contracts currently, what % are direct purchased contracts, and what % are resale contracts.

Great3

 

[LAX]

Either way, DVD can move unbooked rooms into cash inventory at the 60 day mark. #TheyGetTheirMoney

DVD/DD gets "double dip" when DVC villas are booked through cash. Both money for the villas and occupants to spend money at the parks. I am sure DVD/DD would rather want the points go unused.

LAX

 

[mab2012]

Tell me if this is conceivable:

-- Riviera is the first among a new series of resorts, the owners at each of which, like Riviera, are able to use their points for lodging at ALL DVC resorts both pre- and post-Riviera.

-- Fewer people purchasing direct contracts for the Riviera resort, "Reflections", and as-yet unannounced resorts will sell them on the resale market, given that they'll very likely command lower prices (for reasons discussed here ad nauseam relating to the inability to use their points for stays at other resorts). These buyers will, however, get tired of staying predominantly at their home resort over the course of a full 50 years. Increasingly, they'll use their points at 7 months (or whatever the interval later becomes) to stay elsewhere -- quite often I'd think at places with better locations than the newer resorts such as VGF, Poly, etc.

-- Say we're 10-15-20 years from now and there have been another several new resorts touting the same resale restrictions as Riviera contracts. Resale owners of an original 14 resort will be faced with a unidirectional flow of DVC2 direct buyers into their own original 14 resorts -- a flow which will become more pronounced with each new construction.

-- Resale purchasers of anything pre-Riviera become practically unable to book at anything but their home resorts, given the unidirectional flood at the 7 month window (which has been referenced already to be worsening with time -- although if my scenario is worth anything, the current situation will pale in comparison).

(One could argue that older resale owners of the original 14 could still use their points for DVC2 resort stays (the flow then not being truly unidirectional), but over time these older contracts will on average change hands at a higher rate than the DVC2 contracts...any sale from this point forward causing the contracts to lose their grandfathered status.

For those of us looking to pick up a few more points via resale: more important than ever to buy where you want to stay?

I think there are quite a few flawed assumptions here, starting with the idea that fewer owners will want to sell due to lower resale prices. People sell for lots of reasons, but the two biggest have to be a change in vacation preference / patterns (which can itself have any number of causes), or a change in financial circumstances. In either case, most owners aren't going to hold onto their contracts and continue to pay ever-increasing maintenance fees on account of lower resale values. They'll sell for whatever they can get. High resale values might be a secondary factor for some sellers, but it's probably rarely the primary driver.

I do think that the new restrictions are going to cause issues for many owners, and certainly devalue the DVC product over the long term, but I don't think legacy owners (resale or otherwise) are going to bear the brunt of it. Or at least not until after the 2042 resorts close. As the number of original resorts starts to decline, resale owners at those resorts will have fewer options and might start to feel the restrictions more acutely. But that's quite a long way out, and by then both the lifetime and value of their own contracts will be limited, so it'll be a relatively short-term problem.

 

[BroganMc]

You're also assuming resale buyers are just buying points without regard to Home Resort. The bargain hunters looking for 7 mos' bookings. That has not been my experience. I've purchased 6 resale contracts. Each has been at a resort I wanted the 11 mos booking priority. I've only traded out to a resort I didn't own a couple times, just to experiment. Mostly I'm happy at my 3 Home Resorts and plan my trips accordingly.

Now I do think Resales will suffer in future. That will suppress prices a bit which will in turn encourage purchasing from those looking for Home Resort priority. Vero Beach and Hilton Head will take the biggest hit, followed by Aulani.

I'm not sold on the Riviera location or the rumored River Country/Reflections. All my Home Resorts have an ability to walk to some venue (Magic Kingdom, Boardwalk/EPCOT/DHS, Disney Springs). Any resort that relies solely on transportation is at the mercy of that transportation.

 

[Bearval]

These resale restrictions are definitely going to change how and when bookings occur.

Resale owners at post-L14 resorts are going to have to book early to ensure they get something, forcing direct owners there to book early if they want to stay at their home resort. This could end up creating a feedback loop so that the entire resort gets book very early, leaving nothing to trade out at 7 months.

Right now Disney doesn't have to worry about balancing points trading in and out of resorts as all points are equal. Are they going to create some kind of balancing process so that points that can't be traded out then can't be taken by people trading in. For example, pretend that all Riviera owners are resale owners, no points can trade out. Will DVC still allow points from non-Riviera resorts to trade in or will everyone be blocked from trading in since no one can trade out? At this point I don't think Disney has said what they are doing, so my assumption is they will keep with the status quo, meaning anyone non-Riviera points can trade in, effectively screwing over Riviera owners who as there won't be enough rooms left for them to book.

I see this change as causing a total mess in 5-10 years once there are a significant amount of resale owners that fall under these new restrictions.

I think there are quite a few flawed assumptions here, starting with the idea that fewer owners will want to sell due to lower resale prices. People sell for lots of reasons, but the two biggest have to be a change in vacation preference / patterns (which can itself have any number of causes), or a change in financial circumstances. In either case, most owners aren't going to hold onto their contracts and continue to pay ever-increasing maintenance fees on account of lower resale values. They'll sell for whatever they can get. High resale values might be a secondary factor for some sellers, but it's probably rarely the primary driver.

I do think that the new restrictions are going to cause issues for many owners, and certainly devalue the DVC product over the long term, but I don't think legacy owners (resale or otherwise) are going to bear the brunt of it. Or at least not until after the 2042 resorts close. As the number of original resorts starts to decline, resale owners at those resorts will have fewer options and might start to feel the restrictions more acutely. But that's quite a long way out, and by then both the lifetime and value of their own contracts will be limited, so it'll be a relatively short-term problem.

I don't think any resorts will close. I feel all of the recent moves are just some more long term planning for DVC for when the contracts start getting close to expiring. They will start with OKW since this resort already has two expiration dates. When the bottom beings to fall out of the contracts , say when there is only 5 to 10 years left on OKW 2042. DVC with buy them up dirt cheap, repackage them and sell contracts for OKW with expiration date of 2057 ( they already do this but when the contracts are getting close to expiring they will really be cheap). For the other resorts that will expire in 2042 but only had 40 years when new they will do the same thing, buy them up when there is only 5 to 10 years left since these will be hard for people to sell and then repackage them as "new" contracts with new expiration dates of either 2057 or 2067. Of course you would have to use direct purchase points or grandfathered ones to stay in the resorts that have the extended expiration dates. If you bought resale after Jan 2019 you are SOL.

 

[we"reofftoneverland]

I agree that they are now creating a dysfunctional system. And I do not think they really know what they are doing or even have a viable plan. They are literally creating problems. Ultimately it is bad management meddling unnecessarily in a successfully functioning system. Why would you make dramatic changes to a product as successful as dvc? In ten years, I wouldn't be surprised to see another management team try to reverse some of these changes.

 

[_auroraborealis_]

For the other resorts that will expire in 2042 but only had 40 years when new they will do the same thing, buy them up when there is only 5 to 10 years left since these will be hard for people to sell and then repackage them as "new" contracts with new expiration dates of either 2057 or 2067.

Not actually that easy. They cannot extend a resort until after 2042, as they need to do a new land lease. This was their big mistake with OKW. When you extend the land lease, it extends for all existing owners. Any 2042 OKW owner has legal basis to fight in 2042 if they have not signed a quit claim for this reason.

Disney will not make this mistake again. They will let all 2042 expire and then do a new land lease and new entry to the condo association to represent all rules in place at that time. Extension while 2042 owners are still in play doesn't allow that.

 

[BWV Dreamin]

I think that what you laid out makes sense and could theoretically happen, and it might be mildly inconvenient, but probably not at a critical mass necessary to be catastrophic. And don't forget that there are the original 14 users out there who have no intention of ever using their points anywhere but their home resort anyway.

We still need to stay at BLT, SSR, BCV. But once that happens we’ll be staying mostly at our home resorts. Bought them for a reason!

 

[Bearval]

Not actually that easy. They cannot extend a resort until after 2042, as they need to do a new land lease. This was their big mistake with OKW. When you extend the land lease, it extends for all existing owners. Any 2042 OKW owner has legal basis to fight in 2042 if they have not signed a quit claim for this reason.