Resale is not just cheaper but now a superior product

[Bearval]

Honestly, I think the very BEST strategy for Disney - to GET THE MOST MONEY (best price) from their DVC Direct sales, and TO GET THE MOST SALES VOLUME from their DVC Direct sales - would be to Build up/Push up the price of RESALES! Why? Because you know they are not going to lower the price of their own Direct Sales points. So they need to raise the price of their 'Competition.' By building up the price of Resales they minimize the difference between the cost of Resales and Direct sales, and since their Direct Sales points have more value ( - The Security of buying Direct from Disney, the Speed with which the transaction can be completed, the Perks which come with Direct sales, etc. - ) more people will then be willing to gravitate FROM purchasing Resales, TOWARDS purchasing Direct sales. If the Resale price was high, and the difference between Resales and Direct sales was only 15%, then buying Direct would make absolute sense. If the difference in price were 20%, it might still make sense to buy Direct, but it would make less sense, therefore fewer Direct sales. If the difference in price between Direct sales and Resales is 50%, then buying Direct would make absolutely no sense at all, and Resale would be the best choice.

Now, I realize Disney DOES NOT control the price of Resales. But they have some input into it, by controlling ROFR and Perks/Benefits, and similar things, including how they treat Resale owners in general. And they do have some other things that they could undoubtedly think to do, to increase Resale contract values. By doing whatever they can to increase the value (and thus the cost) of Resales, they can push up the price to help support their own high prices (by having Resales provide a floor/foundation of value), and they can help shift that balance point where high Resale costs induce people to buy Direct!

The only reason resale prices are as high as they are is because current resale buyers do not consider the restrictions currently in place worth the extra money to buy direct. With the new restrictions going forward for Riviera ,DVD is attempting to change that thinking. The spread between resale is and direct pricing for Riviera is going to be greater than the L14 but so are the benefits. People will pay for that, just not me, Plus after Riviera sells out and if resale is cheap enough DVD can ROFR contracts repackage them as direct sales and make the same profit margin as a new resort.

 

[Chrisv28]

The new Riviera resort looks cheap and very terribly laid out. Honestly, I couldn't care less about those resorts! If I get ROFR'd, I would still likely buy a resale DVC and then if I decided to stay at one of the newer resorts, I would just rent/trade my points to stay at them..

 

[Jack_Sparrow_NJ]

The only way they could affect the price of resale is to either increase demand or decrease supply. Both would cost them a ton. To increase demand, they would have to build less new resorts and make less points available on their end, or make the benefits of resale almost equal to direct. Either "solution would hurt their bottom dollar. Decreasing supply would either mean that they make it so less people sell (the only way they could 'ensure' this is by doing something like giving out free APs to DVC owners, or something extreme along those lines), or by ROFRing a ton of contracts, even ones they don't want.
I'm sure they looked into all of these possibilities, analyzed how much money they would make off of them, and then decided that their current plan is the best one for them.

They increase the demand for resale by every time they raise direct prices

 

[MB_01]

Is there anything that says they can't do this with resales for the original 14? Maybe they are trying this to see what it does to resale prices at the Riviera before they try and roll it out across the rest of the resorts?

 

[CarolMN]

Membership in the Club is the way we book non-home resorts. Membership in the Club is attached to the deed, and for the 14 existing resorts, that can't be changed. It is part of the documents members sign at purchase.

We will see something different in the purchase documents for the Riviera and probably the DVC resorts built after that.

 

[Frederic Civish]

The only reason resale prices are as high as they are is because current resale buyers do not consider the restrictions currently in place worth the extra money to buy direct. With the new restrictions going forward for Riviera ,DVD is attempting to change that thinking. The spread between resale is and direct pricing for Riviera is going to be greater than the L14 but so are the benefits. People will pay for that, just not me, Plus after Riviera sells out and if resale is cheap enough DVD can ROFR contracts repackage them as direct sales and make the same profit margin as a new resort.

Changing the ability that Resale contracts have, to use or not use other resorts, does differentiate the two products to a higher degree, and it makes Disney Direct seem to be more worth it. But, 3 things might come into play here, and I'm not sure that Disney chose the 'best play.'

1. People might not feel like Riviera and Reflections ARE worth more, with the changes. Why? Because the resale contracts for L14 Resorts won't be able to use Riviera, but Riviera Resale won't be able to use them. This makes Riviera Resale worth LESS than L14 Resal - L 14 might be worth more, especially in comparison to Riviera Resales, I know that Disney is thinking about their DIRECT sales, but I think they also need to keep in mind the Resales that will come from those Direct sales. I know Disney doesn't want to think about those resales, but they WILL HAPPEN. Most people will look at a 50 year contract and wonder whether they will be able to keep using it for 50 whole years. And they will wonder what they might do with the contract if their health or financial circumstances change. It isn't all just 'mindless buying.' It is an awful lot of money and most people will seriously think about resales. Now, if they recognize that resales for Riviera will be at low prices, maybe it will induce them to be less likely to buy in the first place. So the net result might actually be a decrease in sales.

2. People who do hear about this, and how such a core function is being changed, will be less likely to trust Disney. Less trust means less sales. Why buy from someone who you think is likely to kick you in the teeth down the road? Why not go buy from a reseller, who will give you a lower price, thus softening the blow if Disney changes things, because you will have spent less money. So you lose less.

3. Lower price for L 14 means that they are even MORE competitive for Direct Sales, not LESS competitive. This is like playing football and scoring for the other team. Disney may have made a mistake.

 

[DougEMG]

Changing the ability that Resale contracts have, to use or not use other resorts, does differentiate the two products to a higher degree, and it makes Disney Direct seem to be more worth it. But, 3 things might come into play here, and I'm not sure that Disney chose the 'best play.'

1. People might not feel like Riviera and Reflections ARE worth more, with the changes. Why? Because the resale contracts for L14 Resorts won't be able to use Riviera, but Riviera Resale won't be able to use them. This makes Riviera Resale worth LESS than L14 Resal - L 14 might be worth more, especially in comparison to Riviera Resales, I know that Disney is thinking about their DIRECT sales, but I think they also need to keep in mind the Resales that will come from those Direct sales. I know Disney doesn't want to think about those resales, but they WILL HAPPEN. Most people will look at a 50 year contract and wonder whether they will be able to keep using it for 50 whole years. And they will wonder what they might do with the contract if their health or financial circumstances change. It isn't all just 'mindless buying.' It is an awful lot of money and most people will seriously think about resales. Now, if they recognize that resales for Riviera will be at low prices, maybe it will induce them to be less likely to buy in the first place. So the net result might actually be a decrease in sales.

2. People who do hear about this, and how such a core function is being changed, will be less likely to trust Disney. Less trust means less sales. Why buy from someone who you think is likely to kick you in the teeth down the road? Why not go buy from a reseller, who will give you a lower price, thus softening the blow if Disney changes things, because you will have spent less money. So you lose less.

3. Lower price for L 14 means that they are even MORE competitive for Direct Sales, not LESS competitive. This is like playing football and scoring for the other team. Disney may have made a mistake.

Disney does huge amounts of data mining. They know exactly what percent of buyers buy on impulse while on vacation, what percent buy resale, how many current owners normally add on at a new resort, how long owners hold their contracts, etc. Just as we can predict what the effect of resale price of Riviera are going to be compared to L14 resale prices, I'm sure that they can as well. So how is this benefitting Disney, what is that they want?

My guess is that they want an additional hock to increase the number of people that buy direct and not cancel after 10 days. Telling a new potential owner that only by buying direct will they be able to book at other resorts is probably going to convince enough people to buy direct compared to what they will lose from existing owners adding on. In all likelihood even if buyers are aware that there is a resale market, they probably won't understand it well enough to realize that the Riviera is going to have a lower resale value, so that won't stop them from buying. That potential owner isn't going to understand how trading works, all they will know is that resale owners won't be able to trade, so that means less competition for them when trading.

 

[Frederic Civish]

In all likelihood even if buyers are aware that there is a resale market, they probably won't understand it well enough to realize that the Riviera is going to have a lower resale value, so that won't stop them from buying. That potential owner isn't going to understand how trading works, all they will know is that resale owners won't be able to trade, so that means less competition for them when trading.

I will agree with what you say here, with respect to SOME potential owners. Many moons ago, in another life, I sold Timeshare, and timeshare sales were almost all to uninformed people who were on a vacation and having fun. Very few people ever researched timeshare and came in saying, "Hey, I've been reading about this, so, tell me about . . ." And when I say very few I mean I NEVER saw it. But things are different today. More and more, people are technologically savvy. They have an auxiliary brain (their phone) in their hands. More and more people will CHECK IT OUT ONLINE before they buy. So the day of the uninformed buyer is dying slowly. And you CANNOT search DVC in google without seeing information about RESALES. If you decide to do any research at all, then you will see valuable information about resales, and you will even run across boards like this.

So, I'm not saying that Disney won't get SOME advantage from what they have done. I just think they will get less than they think, and their advantage is likely to be temporary. When they realize that, what are they going to do next? What other changes are they allowed to throw at us? Because one thing is sure, it seems that if Disney CAN do something to hurt DVC members, then they WILL do something to hurt DVC members. As long as it benefits THEM. Greed isn't always smart.

 

[freediverdude]

I really don't see how the Riviera resales can't end up lower. You will have some people who do decide they want to always stay at Riviera, but I would think most people would place a value on the flexibility of being able to stay at the first 14 resorts. Maybe also a certain number of people who want the later end date, that may start to come into play later, but for now, except for wanting to stay at Riviera, I don't see why a resale buyer would buy Riviera.

 

[Bearval]

Changing the ability that Resale contracts have, to use or not use other resorts, does differentiate the two products to a higher degree, and it makes Disney Direct seem to be more worth it. But, 3 things might come into play here, and I'm not sure that Disney chose the 'best play.'

1. People might not feel like Riviera and Reflections ARE worth more, with the changes. Why? Because the resale contracts for L14 Resorts won't be able to use Riviera, but Riviera Resale won't be able to use them. This makes Riviera Resale worth LESS than L14 Resal - L 14 might be worth more, especially in comparison to Riviera Resales, I know that Disney is thinking about their DIRECT sales, but I think they also need to keep in mind the Resales that will come from those Direct sales. I know Disney doesn't want to think about those resales, but they WILL HAPPEN. Most people will look at a 50 year contract and wonder whether they will be able to keep using it for 50 whole years. And they will wonder what they might do with the contract if their health or financial circumstances change. It isn't all just 'mindless buying.' It is an awful lot of money and most people will seriously think about resales. Now, if they recognize that resales for Riviera will be at low prices, maybe it will induce them to be less likely to buy in the first place. So the net result might actually be a decrease in sales.

2. People who do hear about this, and how such a core function is being changed, will be less likely to trust Disney. Less trust means less sales. Why buy from someone who you think is likely to kick you in the teeth down the road? Why not go buy from a reseller, who will give you a lower price, thus softening the blow if Disney changes things, because you will have spent less money. So you lose less.

3. Lower price for L 14 means that they are even MORE competitive for Direct Sales, not LESS competitive. This is like playing football and scoring for the other team. Disney may have made a mistake.

Disney is in it for the long haul and will just wait out the L14 until the contracts begin to expire. We have a life that will end, Disney is a company that will go on forever if managed properly. DVD is trying to make the new resort contracts worth less, most buyers of timeshares don’t think about what they will do down the road a few years if they have to or want to sell, if people did , no one would ever buy a timeshare built and sold by any company.