ROFR Buyback Clear Resale Restrictions?

[Dis_Ron]

Hi, first time poster here.

If Disney buys back resale restricted DVC points, like the Riviera, do they get to resell those direct without the restrictions?

If so, that seems wrong. They can drive down the customer’s resale value and buy them back really cheap.

Has anyone discussed this anywhere?

 

[erionm]

Hi, first time poster here.

If Disney buys back resale restricted DVC points, like the Riviera, do they get to resell those direct without the restrictions?

If so, that seems wrong. They can drive down the customer’s resale value and buy them back really cheap.

Has anyone discussed this anywhere?

Any points sold direct will not have restrictions. It doesn't matter how DVC got those points.

I really can't see anyone selling Riviera at a price low enough for DVD to exercise ROFR. DVD will exercise ROFR at sold out resorts if the selling price is low enough so they can make a profit when sold at direct pricing.

 

[Genie+]

It may seem wrong but it is written into the contracts that buyers sign. Basically take it or leave it. Don’t have to buy.

 

[GoingSince1990]

Thaf’s why I will never buy at resorts such as RIV or VDH. The huge difference in value between the points to a resale buyer (who can only use them at a single resort) versus the value to Disney (who can resell them as pristine, direct points) means that Disney will have a compelling incentive to ROFR every single resale contract. Which in turn could kill the private resale market for those points; why would anyone bother to put in an offer if they know Disney will ROFR the points and they will end up with nothing? And this would mean that instead of having a thriving and liquid resale market (which to me was a big selling point for DVC compared to “traditional” timeshares), those wanting to exit would end up being at the mercy of Disney.

 

[crvetter]

Thaf’s why I will never buy at resorts such as RIV or VDH. The huge difference in value between the points to a resale buyer (who can only use them at a single resort) versus the value to Disney (who can resell them as pristine, direct points) means that Disney will have a compelling incentive to ROFR every single resale contract. Which in turn could kill the private resale market for those points; why would anyone bother to put in an offer if they know Disney will ROFR the points and they will end up with nothing? And this would mean that instead of having a thriving and liquid resale market (which to me was a big selling point for DVC compared to “traditional” timeshares), those wanting to exit would end up being at the mercy of Disney.

For now, once 2042 hits and a bunch of the resorts expire (especially those that are highly desired), I suspect the only thing that will matter on the resale market is "Is this resort highly desired?" It won't matter at all because SAP will start to become very useless at that point in time except for the monorail resorts really. So RIV might become really popular then (especially depending what BCV and BWV turn into). Eventually when the resale market is restricted point (explicitly so RIV, VDH, CFW) or implicitly so (no more highly desirable resorts with free movement, most likely post 2042) you really won't see this argument anymore I suspect.

My biggest concern, though based on some analysis others have done, is that the resale amount of restricted points become so high that even resorts like SSR become hard to book at 7 months, which to be honest is a huge advantage of that resort existing (same with OKW to an extent). But the amount of resale points is pretty small compared to that of direct.

 

[Dis_Ron]

It may seem wrong but it is written into the contracts that buyers sign. Basically take it or leave it. Don’t have to buy.

I agree with that up to a point. Just because something is in a contract doesn’t mean it holds up in court.

I know nothing about time share laws, but it seems odd to be able to deed someone some share of a property where they arbitrarily get better resale value built in.

 

[AstroBlasters]

For now, once 2042 hits and a bunch of the resorts expire (especially those that are highly desired), I suspect the only thing that will matter on the resale market is "Is this resort highly desired?" It won't matter at all because SAP will start to become very useless at that point in time except for the monorail resorts really. So RIV might become really popular then (especially depending what BCV and BWV turn into). Eventually when the resale market is restricted point (explicitly so RIV, VDH, CFW) or implicitly so (no more highly desirable resorts with free movement, most likely post 2042) you really won't see this argument anymore I suspect.

My biggest concern, though based on some analysis others have done, is that the resale amount of restricted points become so high that even resorts like SSR become hard to book at 7 months, which to be honest is a huge advantage of that resort existing (same with OKW to an extent). But the amount of resale points is pretty small compared to that of direct.

My theory is that brokers will just open “point exchanges” where they match people looking to stay at a non-home resort for a middleman fee.

A DVC focused RCI if you will….

 

[erionm]

I agree with that up to a point. Just because something is in a contract doesn’t mean it holds up in court.

I know nothing about time share laws, but it seems odd to be able to deed someone some share of a property where they arbitrarily get better resale value built in.

The only thing you are guaranteed is the right to book at your home resort. Booking at a non-home DVC resort is technically an exchange and is not guaranteed.

 

[_auroraborealis_]

If this were Vegas, DVC is the house. House always wins. Or Mouse, if you'd rather.

 

[DanCali]

They can drive down the customer’s resale value and buy them back really cheap.

Disney did not invent these types of restrictions. Other timeshare companies have been doing it for a long time. The primary goal is probably to encourage direct purchases of a superior product, but the resale restrictions will inevitably adversely impact resale prices which also increases DVDs profitability via cheaper ROFR. Public companies like Marriott Vacation Club are very open about these type of restrictions in their SEC filings. I suspect developers wouldn't do it if they didn't think it benefitted them, but they also tend to be myopic and not think too far ahead.

There are many reasons why timeshares and timeshare developers generally have a bad reputation. DVC has managed to avoid this for the most part until now. If they start operating like other timeshare developers, they may still end up with the same reputation. Let's hope otherwise...

From MVC 2022 10K filing
(https://ir.marriottvacationsworldwide.com/static-files/85dc6038-682f-4e34-87f5-789e8c08111a)