Anyone watch new DVC Show, intriguing though on Resale Restrictions

[AKNOTTS66]

So I was watching the new DVC Show on youtube last night by The Dis. They mentioned something i thought was interesting. They thought disneys endgoal might be with the restrictions.

That Disney wants to be able to eventually sell their own resale contracts. Makes sense. Have their own resale market website to sell resale contracts. Offer incentives to resell with them. Then sell an upgrade fee to remove the restrictions later if you want. Or also a fee to add memeber benefits to their contract. Disney knows resale is much cheaper and they are going to want a peice of the pie also so why not join them?
Incentives to buy resale through Disney could be a lot of different things. Safer from a new resale buyer point of view, faster processing of resale contracts, they could undercut commission of resale sellers and other perks.

Also this selling of an ugrade fee to remove the restrictions or add member benefits could bridge the gap in lost profits from resale. If this is in their plans down the line it might be why they arent too concerned with the restrictions in the long scheme of things as we are.
What’s everyone else's thoughts?

Heres the DVC Show episode link

 

[Grumpy by Birth]

Disney technically already has their own resale market. It's called ROFR. They can buy any resale contracts they want and then "resell" them at full-price direct. What would be the benefit of purchasing resales and then reselling them at lower prices?

 

[Royal Consort]

I cannot see Disney getting into the resale market. How could they justify their direct, newly built resorts when they sell the same product substantially cheaper on the side? It would compete with themselves and bring too much attention to an alternate market for the uninitiated. Disney dont want buyers to know the resale market exists. It helps them.

I do see an upgrade fee on the horizon though. Whether it's a pay-per-reservation exchange fee or blue card upgrade fee awaits to be seen.

 

[DVC BLT]

Restrictions impact owners only when they sell (I dont buy that it will impact booking, disney will not allow this as it will kill the DVC program), and buyers of resale (who will get cheaper points but restricted to 1 resort).

Restrictions help disney because people cant buy secondary market points to stay at new resorts, this is a new perk for buying direct to help justify higher pricing. It also keeps the price low so they can ROFR and resell those points direct for high margins. This 2nd point I think is the "new market" for DVC more than starting its own "resale" business. While legacy resorts still sell to some small extent, I would be curious how much more they would sell if they could buy the points cheaper and keep selling them direct with plenty of supply. Would they advertise / show them indefinitely? Needs to be confirmed, but at some point they need to transition to this because they are running out of property to develop. Roll forward 10-20 years (between now and 2042), where else can they build DVC? The skyliner was a clear attempt to increase the land value Riveria currently sits...this cant be done everywhere. DVC is a huge profit engine for the parks division, I think they want to buy your points when you sell and they want to sell them direct again. Just a "business" gut, no inside info...

 

[TexasChick123]

I cannot see Disney getting into the resale market. How could they justify their direct, newly built resorts when they sell the same product substantially cheaper on the side? It would compete with themselves and bring too much attention to an alternate market for the uninitiated. Disney dont want buyers to know the resale market exists. It helps them.

I do see an upgrade fee on the horizon though. Whether it's a pay-per-reservation exchange fee or blue card upgrade fee awaits to be seen.

I definitely think this is what’s going to happen. Why they are waiting to implement this fee to exchange into other resorts at 7 months is beyond me. Maybe they need to dot their i’s and cross their t’s, but it is coming. I would be truly shocked if this didn’t come to pass here within the next year or so. I think it would boost direct sales immediately.

ETA: Maybe they’re waiting for a lull in sales so that they can use this to boost them. The sales aren’t bad now. If the hype wears off, then they can swoop in and announce this new fee structure to trade at 7 months with resale points which may be one of a handful of benefits they include in their “upgrade package”.

 

[ehh]

I cannot see Disney getting into the resale market. How could they justify their direct, newly built resorts when they sell the same product substantially cheaper on the side? It would compete with themselves and bring too much attention to an alternate market for the uninitiated. Disney dont want buyers to know the resale market exists. It helps them.

Devil's advocate here: what if they sold Riviera (and Reflections and Disneyland Villas and...) 'forever' at whatever the going new-resort rate is, fueled by ROFR prices artificially depressed by restrictions?

Disney's currently engaged in the resale market already: selling sold out resort inventory grown via ROFR (and other means). They will take points on ROFR if they can sell those points at enough of a premium to justify it. But the equilibrium resale price for the high-demand resorts is too high for them to make it worth it because currently they have to price the sold out resort way above market, even way above the price for the new resort.

For prospective direct buyers, many resorts go for much higher prices than what's currently selling 'new'. Casual Disney family wants to purchase at Bay Lake? That's a $40/pt premium, there's no discounts, and they may need to wait for a waitlist. And then they find out it expires ~10yrs sooner than Riviera. Market conditions just pushed this family away. And because demand is reduced by the high prices, Disney doesn't feed the supply-side, either (if they did claim more via ROFR, their own costs would go even higher as equilibrium price would shift up).

They know how many people want to buy BCV/BLT/VGF/Poly/BWV and then are told the price, the potential waitlist, and then the sales conversation ends. But if a resort never stops selling at the ever-increasing going rate and could be bought 'forever'? Demand may be fairly steady. Key is reducing the equilibrium resale price so they can participate more in the resale market via ROFR.

It's also potentially a lot more revenue to keep selling the same points over and over. Revenue is currently tied to how quickly Disney can build, which may have to slow down in the future as prime locations are increasingly occupied. This can keep the money spigot on.

 

[BWoody]

I don't know how hot the market would be to pay a fee to upgrade restricted points to direct status on a permanent basis. I bought resale because it saved me a boatload of money. If I paid x amount of money per point to upgrade then I might as well have just bought direct from the beginning because it would make those savings disappear. If it is a per booking upgrade fee on the other hand, that might be more successful as long as it's not too expensive. I might consider like a $100 fee to book a new resort one off if there is a resort that interests me. Unfortunately at this stage, neither Riviera nor Reflections intrigues me. Hopefully the next resort will pique my interest or Reflections will surprise me after it is built.

 

[TexasChick123]

I don't know how hot the market would be to pay a fee to upgrade restricted points to direct status on a permanent basis. I bought resale because it saved me a boatload of money. If I paid x amount of money per point to upgrade then I might as well have just bought direct from the beginning because it would make those savings disappear. If it is a per booking upgrade fee on the other hand, that might be more successful as long as it's not too expensive. I might consider like a $100 fee to book a new resort one off if there is a resort that interests me. Unfortunately at this stage, neither Riviera nor Reflections intrigues me. Hopefully the next resort will pique my interest or Reflections will surprise me after it is built.

I also think a fee per reservation makes more sense. They could do it as $10pp for a reservation which varies based on the number of points you use or flat fee like $100, $200, $250, etc. The only issue I see with a flat fee is that if you are booking 2 nights in a studio somewhere else at 7 months versus a week in a 2BR somewhere else, it seems like the fee would be excessive for the studio and a bargain for the 2BR. This is why I think a “per point” fee makes more sense. Your fee is directly correlated to the amount of points you’re using/size of unit and length of stay.

 

[BWoody]

I also think a fee per reservation makes more sense. They could do it as $10pp for a reservation which varies based on the number of points you use or flat fee like $100, $200, $250, etc. The only issue I see with a flat fee is that if you are booking 2 nights in a studio somewhere else at 7 months versus a week in a 2BR somewhere else, it seems like the fee would be excessive for the studio and a bargain for the 2BR. This is why I think a “per point” fee makes more sense. Your fee is directly correlated to the amount of points you’re using/size of unit and length of stay.

Good point. Agreed!

 

[TexasChick123]

Yikes. Just doing some quick math, I was shooting way too high with $10pp.

If they charge per reservation, it makes the fee more digestible. If we go with $2pp, and you book a reservation for 100 points, it’s a $200 fee. That seems a lot more reasonable than a $2000+ upgrade fee. If you do that time and time again over the course of many years, you’re getting members to keep paying you these fees most likely far surpassing that initial ~$2000 you would've collected initially in the other model with the option to increase the pp fee at any time once they see what the market will bear. If you book a reservation which costs 200 points, we do this a lot with 1BRs and 2BRs, then you’re now at $400 to stay somewhere else. Maybe it’s worth it to you, and maybe it’s not, but it would be an option nonetheless with this model.

 

[Drewferin]

I love reading both sides of the upgrade speculation, however I think alot of this has to involve the legal statutes for time shares. I know other companies do it, but does the wording in all prior 14 DVC resorts prevent this upgrade type of thing from happening? The last thing DVC wants is a class action from members and giving them a massive black eye in the news and negative PR. Awarded damages could be massive.

The resale restrictions in my opinion will be taken to court when the right resale buyer gets pissed and has deep pocket and a high moral compass to set Disney right. In the end people buy DVC because it's different than Mariott or other timeshares. The moment DVC become "like" all others that's the moment the magic dies. Walt didnt want to be "like" other companies, he wanted something different and much better.

 

[Wakey]

Someone said on another thread they think they will introduce a deal to shift points- buy X number of direct and upgrade resale points. Alternatively charge a fee. I’m not convinced- they don’t want anyone buying resale. Remember Disney already takes resale, and sells direct- that’s what they want, total control. Offering to upgrade points- all that does is fuel the resale market in my view.
I was surprised when looking at ‘other’ timeshares recently that DIsney has already gone further than some big boys in limiting resale- so much for not another timeshare.

 

[Maistre Gracey]

In addition, someone pointed out on another thread ( @CarolMN ?) that if they offered an upgrade to blue card, would they then have to guarantee the perks? How would that work?

 

[Kaufeegurl]

Restrictions impact owners only when they sell (I dont buy that it will impact booking, disney will not allow this as it will kill the DVC program), and buyers of resale (who will get cheaper points but restricted to 1 resort).

Restrictions will eventually impact direct owners when making home resort reservations as resale contracts increase in percentage of all contracts. If resale buyers are only allowed to make reservations at their home resort that will make the 'pot' of owners making home resort reservations larger and make availability smaller. Competition for home resort availability at 11 months will be greater than any of the legacy resorts. Right now, the pressure of resort owners staying at their home resort is dispersed with the ability to book at other resorts at 7 months. It will be interesting to see how this plays out.

 

[johnb3]

Disney has a fee model in place already for RCI exchanges. They tack on $195 a week for a 1 bed. It likely would not even tax their knucklehead IT guys to just reuse that on a per reservation basis

 

[CLE2WDW]

Quick side note- I love the DVC show. It’s so informative and everyone is so insightful regarding DVC.
Now to the topic... after Reflections is built I think Disney will get down to solving the DVC market once and for all. The earliest contracts will have less than 20 years remaining and short of an unforeseen circumstance I don’t think there will be any new DVC properties on the horizon (at least at WDW). So yes, I think Disney rolls their sleeves up and puts a plan in place for the future of DVC. I’ve said it before that the next time they roll out new contracts they should do so not based off of “home resorts” but rather booking windows. An 11 month booking privilege would carry the highest cost per point. And a 5 month booking privilege would carry the lowest cost per point. Additionally, Disney will phase out the resale market by forcing all non-direct resale contracts into the 5 month window regardless of what window was originally purchased. If all resorts were equal the home resort wouldn’t matter but let’s face it they’re not. VGF is much nicer and better located than SSR and their resale point values reflect that. By leveling the market you create a new supply/demand dynamic of 1)ensuring you purchase enough points to book your favorite resort(s). 2)ensuring you purchase a booking window that gives you the best opportunity to book at those resorts during your desired time prefer to visit.

Here’s a quick example:
We all know that BCV studios have been in high demand for a while now and to book a week in a studio you need to have about 130 points available. Also, if you miss the 11 month window you will most likely be out of luck with booking a studio.
So under my proposed system you would need to A) Buy around 130 points and B) purchase the 11 month booking option at the highest cost per point.

 

[DVC BLT]

Restrictions will eventually impact direct owners when making home resort reservations as resale contracts increase in percentage of all contracts. If resale buyers are only allowed to make reservations at their home resort that will make the 'pot' of owners making home resort reservations larger and make availability smaller. Competition for home resort availability at 11 months will be greater than any of the legacy resorts. Right now, the pressure of resort owners staying at their home resort is dispersed with the ability to book at other resorts at 7 months. It will be interesting to see how this plays out.

As mentioned in my post, I dont buy this argument. It would mean that RIV and all future DVC resorts will become much more difficult to use and somewhere ending the program because people, like myself for example, would never buy again. It means the product is over. They are a successful company, with a keen eye for the bottom line, but are not used carpet dealers looking to kill each customer as they walk in the door. I believe they understand that customers have to be able to use the product they are selling in order for them to buy more, i know it sounds basic, but I think Disney has this part covered.

 

[Sandisw]

As mentioned in my post, I dont buy this argument. It would mean that RIV and all future DVC resorts will become much more difficult to use and somewhere ending the program because people, like myself for example, would never buy again. It means the product is over. They are a successful company, with a keen eye for the bottom line, but are not used carpet dealers looking to kill each customer as they walk in the door. I believe they understand that customers have to be able to use the product they are selling in order for them to buy more, i know it sounds basic, but I think Disney has this part covered.

I agree. They built it in to the RIV POS to make adjustments and I think that if % of resale owners becomes such that things are out of whack in hurting sales...they’ll do something

 

[mlittig]

If any of these ideas play out, I pray that all of us previous buyers will be grandfathered in If they ever start to charge a fee to change out a resort at the 7 month window, I will be more than happy to just stay put at my home resorts

 

[Wakey]

If any of these ideas play out, I pray that all of us previous buyers will be grandfathered in If they ever start to charge a fee to change out a resort at the 7 month window, I will be more than happy to just stay put at my home resorts

They can’t do it for the original resorts. It would be met with a swift lawsuit.