NEW VGF Building

[AvidDisReader]

But why? You keep saying quick return. They don't need a quick return in FY'22 when they will have 100% capacity in the parks, people with excess funds who haven't traveled in 2 years, and the 50th anniversary giving them pixie dust eyes.

If they want to make quick money they lower RIV and keep VGF high because VGF is going to sell regardless while RIV could sell out much quicker with lower prices.

The exception to this is if they announce by August that VGF will go on sale. Then I will think they are trying to cash in quick to get money dumped in to FY'21.

They have lost BILLIONS of dollars the last 14 months, and they are still several months away from being able to go full capacity on all parks thru out the world. So what I am saying is that this is a way to put a small dent (very small for Disney but still a dent) in the massive losses that they have suffered and will continue to suffer over the next several months. I am thinking big picture, as I agree with you that by the time the new GF is selling Disney will be at full capacity.

 

[CSLucas]

Well if they split it then you don't.

Also difference between white card VGF owners and white card DVC owners being able to book there. They could go for a hybrid where they allow all VGF owners to book there but future white card DVC (non-VGF) owners can only book the old building. If they do it then it would again be something that is only impacting new buyers of resale contracts.

I am not saying it will happen I am saying we should wait to see.

At RIV its not about locking out RIV resale owners from parts of RIV. Its about not letting white card points in or out for the rooms.

I also suspect it will be some sort of hybrid, but not quite that restrictive. I imagine any owner of a current O14 interest (including people who buy them later) will be able to book the new building as part of the requirement of bringing the new building into the existing condo association, but the new real estate interests (the points they are about to create and sell) will have the same resale restrictions as RIV (so they will only be able to book at VGF).

 

[Tiggerette]

I also suspect it will be some sort of hybrid, but not quite that restrictive. I imagine any owner of a current O14 interest (including people who buy them later) will be able to book the new building as part of the requirement of bringing the new building into the existing condo association, but the new real estate interests (the points they are about to create and sell) will have the same resale restrictions as RIV (so they will only be able to book at VGF).

So If I'm following this logic correctly and building on it:
- I have Legacy14/Original14 ownership at VGF. I can stay anywhere outside of the11/7mos restriction.
- Today, if I sell my ownership the buyer can stay anywhere outside of the 11/7mos restriction.
- My ownership is the same association as the new owners will be.

So I am very concerned about the following:
? Restrictions will apply to the association, not particular units.
? If the restrictions are such that resale buyers can only stay at VGF, then when I sell my ownership after restrictions are placed on the association, it sounds like the buyer can only stay at VGF. I could then only sell to the people who are okay with VGF being the only option.
? This kind of resort-stay restriction seems contrary to my contract, but I'm not clear whether my terms would flow down to the buyer of my ownership.

 

[Paul Stupin]

Just like none of us anticipated the announcement last week, I’m sure there will be unanticipated elements regarding the pricing and contracts as this project moves forward. You can bet every single decision Disney makes will be designed to maximize their profits and in some surprising way to undermine the resale market.

 

[Bing Showei]

However, white card vs blue card has nothing to do with your example. There are white card vs blue card members at every resort and a special assessment applies to all. The benefit is the accommodations you paid for staying usable. Some bought the "extras", some did not.

The challenge for me here is that this then calls into question the legality of the Riviera restrictions, which honestly I've never questioned much before. Blue card benefits are paid for by the Developer's marketing budget and I acknowledge they can strip that away as they choose and have since 2011.

When speaking to the trading restrictions however, that is covered by a portion of membership dues. By function of joining the existing Association (which Disney is stating Big Pines will do) Big Pines will pay the same dues as every other VGF owner, and trading into the exchange system is paid for by all owners/members of the Association by way of a portion of dues paid to the BVTC. Per the POS:

2.1 The Association, on its own behalf and on behalf of all of the Club Members at the Grand Floridan Villas, hereby enters into and agrees to be bound by the terms and conditions of this Agreement with the purpose of engaging BVTC to arrange for the assignment of the possession and use of the Grand Floridian Villas Vacation Homes by Club Members from other DVC Resorts and the possession and use of Vacation Homes at other DVC Resorts by Club Members from the Grand Floridian Villas through the DVC Reservation Component. In this regard, the Association shall be deemed to be the "corporate member" entitled to act on behalf of the Club Members with respect to all provisions of this Agreement. Each Club Member at the Grand Floridian shall expressly evidence acceptance fo the terms and conditions of this Agreement and the Disclosure Document by acceptance fo a deed conveying an Ownership Interest in a Unit.

TL;DR
The Association will act on the part of all Club Members at the Grand Floridian. Club Members are defined as:

1.10 Club Member shall mean the owner of record of an Ownership Interest.

So by joining the Association, Big Pines is bound by the terms of every other VGF owner, and as such, the terms every other VGF owner enters into an agreement for exchange into the BVTC.

It's important to note that:

7.2 In lieu of individual membership fees, the Association, as the "corporate member" on behalf of all Club Members at the Grand Floridian Villas, shall remit to BVTC each calendar year, an amount equal to $1.00 for each Club Member at the Grand Floridian Villas. This "corporate membership fee" shall be payable in arrears and shall be due on January 1st of the next year and past due on the January 31st of that year. The fee shall be based upon the number of Club Members owning Ownership interests at the Grand Floridian Villas as of December 31st of the year for which the fee is due.

So the fee paid to BVTC is based only on the number of owners (Club Members) of the Association. Presently, all owners, white or blue, are treated equally by the Association, as such it maintains its O14 status.

If the Developer is going to separate out Big Pine points so as to be able to restrict white card bookings from SSR resale, they need to create a new Association entirely (a la CCV). Otherwise, Disney is just riding on selling the "new VGF" on the benefit of having more than just studios (Buy VGF today and stay in studios, 1BRs, 2BRs, and GVs!).

All of this done at the expense to current owners by creating a class of VGF owners who can only book at VGF at the risk of locking themselves out should VGF book up all those cheap studios that they only bought enough points for outside of 11-7 month window.

The trading restrictions to me are dubious. By taking the 2019 resale restrictions on the road to an existing property, Disney will be putting the trading issues and how BVTC is paid for under a big spotlight. I'm not convinced that they will want that kind of attention.

 

[Ruttangel]

DVC loves the resale market, look at OKW, it can flip that for a 30% margin and get 15 years more dues.
If it really wanted to undermine the resale market then it needs to come up with some truly substantial perks (or truly substantial disincentive). Being able to book RIV and future resorts, no big deal until 2042.

 

[Paul Stupin]

So If I'm following this logic correctly and building on it:
- I have Legacy14/Original14 ownership at VGF. I can stay anywhere outside of the11/7mos restriction.
- Today, if I sell my ownership the buyer can stay anywhere outside of the 11/7mos restriction.
- My ownership is the same association as the new owners will be.

So I am very concerned about the following:
? Restrictions will apply to the association, not particular units.
? If the restrictions are such that resale buyers can only stay at VGF, then when I sell my ownership after restrictions are placed on the association, it sounds like the buyer can only stay at VGF. I could then only sell to the people who are okay with VGF being the only option.
? This kind of resort-stay restriction seems contrary to my contract, but I'm not clear whether my terms would flow down to the buyer of my ownership.

I don’t think any element of your ownership, or the way you use it, or the way the buyers to whom you sell it will use it, will change at all. If they do make any changes, and they may not, it would only affect new contracts being sold.

 

[Paul Stupin]

The challenge for me here is that this then calls into question the legality of the Riviera restrictions, which honestly I've never questioned much before. Blue card benefits are paid for by the Developer's marketing budget and I acknowledge they can strip that away as they choose and have since 2011.

When speaking to the trading restrictions however, that is covered by a portion of membership dues. By function of joining the existing Association (which Disney is stating Big Pines will do) Big Pines will pay the same dues as every other VGF owner, and trading into the exchange system is paid for by all owners/members of the Association by way of a portion of dues paid to the BVTC. Per the POS:


TL;DR
The Association will act on the part of all Club Members at the Grand Floridian. Club Members are defined as:


So by joining the Association, Big Pines is bound by the terms of every other VGF owner, and as such, the terms every other VGF owner enters into an agreement for exchange into the BVTC.

It's important to note that:


So the fee paid to BVTC is based only on the number of owners (Club Members) of the Association. Presently, all owners, white or blue, are treated equally by the Association, as such it maintains its O14 status.

If the Developer is going to separate out Big Pine points so as to be able to restrict white card bookings from SSR resale, they need to create a new Association entirely (a la CCV). Otherwise, Disney is just riding on selling the "new VGF" on the benefit of having more than just studios (Buy VGF today and stay in studios, 1BRs, 2BRs, and GVs!).

All of this done at the expense to current owners by creating a class of VGF owners who can only book at VGF at the risk of locking themselves out should VGF book up all those cheap studios that they only bought enough points for outside of 11-7 month window.

The trading restrictions to me are dubious. By taking the 2019 resale restrictions on the road to an existing property, Disney will be putting the trading issues and how BVTC is paid for under a big spotlight. I'm not convinced that they will want that kind of attention.

Convincing arguments! You may be right. I’m just saying don’t underestimate Disney’s ability to surprise us. As a current VGF owner who books exclusively one bedrooms, I’m not overly concerned about limited availability because the point charts for them are so high, and I think a huge percentage of the new buyers will be more interested in the studios. I also own at CCV, and the big complaint there is the limited studio availability even at 11 months. Everyone wants more studios! The new Disneyland Tower will be primarily studios as well, not 100% but almost.

One other advantage to the new building for all DVC VGF owners: It will bring new life and energy to the resort. Who knows what other ways they might spruce it up.

 

[CSLucas]

So If I'm following this logic correctly and building on it:
- I have Legacy14/Original14 ownership at VGF. I can stay anywhere outside of the11/7mos restriction.
- Today, if I sell my ownership the buyer can stay anywhere outside of the 11/7mos restriction.
- My ownership is the same association as the new owners will be.

So I am very concerned about the following:
? Restrictions will apply to the association, not particular units.
? If the restrictions are such that resale buyers can only stay at VGF, then when I sell my ownership after restrictions are placed on the association, it sounds like the buyer can only stay at VGF. I could then only sell to the people who are okay with VGF being the only option.
? This kind of resort-stay restriction seems contrary to my contract, but I'm not clear whether my terms would flow down to the buyer of my ownership.

I think restrictions will ONLY apply to new real estate interests being created (so only to the new points that don't yet currently exist). Disney can (in my opinion) restrict those new points so that only the original owner has trading benefits (like they did at RIV), but they cannot impose new restrictions on existing interests (anything that existed prior to RIV). Even if you sell your interest to someone else that doesn't change its contract terms, just the owner. I know I used this example before, but it is the easiest way for me to think of it (my husband is a developer, I was a title examiner, and both parents are lawyers)- if a neighborhood (VGF) if originally built with 500 homes, the covenants ruling those 500 lots will remain the same no matter who buys the house, resells the house, etc. BUT, say the developer decides to add in some previously unincorporated land, maybe as apartments. The people in those apartments still have to abide by the covenants of the original neighborhood as they apply to them, but they will no doubt have additional restrictions and also find there are places where certain parts of the covenants do not apply (e.g. square footage requirements) and so there will be an addendum providing for certain changes in the NEW section - those provisions have absolutely nothing to do with the 500 existing lots and won't affect them in the least. I realize it's not a completely apples-to-apples comparison, but the POS specifically gives Disney the ability to modify covenants for future expansions in much the same way that most covenants I have read give the developer the ability to do the same.

Edited to say: this is of course just my opinion. Disney is going to do what Disney wants to do and I'm not going to worry about it until the points go on sale (at which point I'm probably buying some with or without restrictions)

 

[Nabas]

Earlier on this thread, we discussed how adding 200 dedicated Studios will change how difficult it is to book a VGF Studio. Here's some background to explain this further.

Most DVC members can book something at their Home Resorts at 11 months. (Although there are exceptions to this.) The difficulty arises at 7 months, when DVC members can book at all DVC resorts.

At 7 months, all DVC members are on an equal footing when it comes to booking rooms. This tends to result in a bit of a mad scramble to book resorts at 7 months.

Although there are many factors affecting how hard it is to book at 7 months, some of the biggest contributors are:

• Resort Popularity - Some resorts are more popular than others.
• Time of Year - Late September to December tends to be the most in-demand time of year among DVC members.
• Room type - Studios tend to be booked first.
• Points Per Night - DVC members tend to book the least expensive rooms first. Standard View rooms tend to book faster than Preferred View rooms.
• Size of Resort - Larger resorts tend to be easier to book than smaller resorts.

With the above in mind, let's consider the following chart, which lists each WDW DVC (in order it was opened), along with its total number of DVC points and mix of rooms:



Notes:

• Points - The total number of points at each resort. (I don't have an exact number for the Riviera.) In general, resorts with more points tend to have more DVC members than resorts with fewer points.
• For SSR, I listed the Treehouse Villas as in the Cabins column.
• The Studio, 1BR, 2BR, Grand Villa, and Cabin columns represent the number of dedicated rooms in each category. These rooms can only be booked as specified in the category.
• The Lockoff column represents the number of 2-bedroom villas that can be booked either as a 2BR or as a Studio and 1BR. This means that the exact number of Studios, 1BR, and 2BR available at any one time depends on how members have booked these.
• Min represents the number of rooms if all lockoffs were booked as a 2BR.
• Max represents the number of rooms if all lockoffs were booked as a Studio and 1BR.

Currently, a VGF Studio is very difficult to book since the resort is small, the resort is popular, and there are no dedicated Studios.

The question becomes: Going forward, how difficult will it be to book a VGF Studio if 200 dedicated Studios are added?

Because of its popularity, VGF will remain in-demand. But with 200 dedicated Studios (compared to its current 47 lockoff Studios), a VGF Studio should become easier to book in the future.

As I mentioned previously on this thread, my primary interest is booking a VGF Studio in early May, before the end of the school year. This time of year tends to be somewhere in the middle of difficulty to book. Even though I don't own at VGF, I have been able to book a Studio there 3 times since they opened. With 200 additional dedicated VGF Studios, long term, I should have more success booking a VGF Studio in May than I have in the past.

 

[tjkraz]

VGF isn't in active sales so there has been zero push for it since it sold out in 2015 or 16. The main thing to keep in mind about DVC is that the majority is sold to people who haven't done much investigation but are having a marvelous trip and talk to someone at a kiosk about a tour. They are offered the resort that is currently in sales. They might be given the back up option that DVC is willing to offer if they are showing resistance to the one in current sales but I don't think guides ever volunteer info that they could purchase at any resort. They'll be steered away from old resorts as much as possible even when they do ask.

This. The most overlooked aspect of many sales discussions is the amount of influence the DVC sales Guide can exert. Barring some late change, May 2021 sales are going to show a surprisingly high percent of SSR and OKW direct sales. It's probably not accurate to twist that into "see, people would rather have OKW and SSR than Riviera due to resale restrictions!" Many times it just comes down to what DVC decides it wants to sell.

That said, I don't see a $255 VGF price scaling-up to 100k points per month. The current rate is a function of the scarcity of points + DVC's overall desire to sell Riviera to the big spenders. Nor do I think VGF is a property that demands a 30% premium over Riviera.

But it will be interesting to see how they approach the two resorts.

 

[tjkraz]

They have lost BILLIONS of dollars the last 14 months, and they are still several months away from being able to go full capacity on all parks thru out the world. So what I am saying is that this is a way to put a small dent (very small for Disney but still a dent) in the massive losses that they have suffered and will continue to suffer over the next several months. I am thinking big picture, as I agree with you that by the time the new GF is selling Disney will be at full capacity.

DVC has a lot of control over the sales pace via its pricing and promotions. Sales typically fall in the range of 150k - 200k points per month because DVC reads the market and predicts where to price to keep it in that range. If Riviera sales suddenly shot up to 400k in a month, they wouldn't be cheering their genius ability to sell more points, they'd be cursing the fact that they didn't raise the price sooner.

Grand Floridian may be able to command a higher premium than Riviera. But even if they were to sell 100,000 VGF points per month at $30 pp more than Riviera, that's only $3M per month in added revenue. And it slows the pace of Riviera, adding some interest (construction is financed) and other modest charges to DVC's overhead on RIV.

I see this as more of a big picture decision. The timing isn't ideal for DVC. They don't actually need more points for a couple years. But WDW doesn't want to invest money to refurb Big Pine Key as hotel rooms, and then change them over to villas in 2 years. And they also have no plans to continue work on Reflections or any other stand alone WDW DVC.

 

[tjkraz]

We can expect Disney to advertise VGF2 as Studio rooms to potential buyers. Overwhelmingly, those buyers initially will want Studios.

I guess the terms VGF1 and VGF2 are appropriate for pointing at the individual buildings. But they have no bearing on how DVC markets points. I see no reason why they wouldn't market the "Villas at Disney's Grand Floridian Resort & Spa" as having a mixture of Studio, 1B, 2B and 3B villas. That's exactly what it is.

Long-term, we simply don't know how VGF1 and VGF2 buyers will behave.

Nor does it really matter any more so than other DVC destinations. It's pretty well established that most resorts have higher Studio demand than larger villas. VGF could be the opposite. Maybe a handful of people eventually sell because they aren't able to book 1B and 2B villas as often as they'd like. That's not materially different than people selling other resorts because studios are never available.

We might end up with some VGF2 buyers deciding to stay at VGF1 one-bedroom villas, while some VGF1 buyers will decide to stay at VGF2 Studios. But the exact mix will depend on several factors, including the point chart at VGF2.

It's no different than every other DVC resort where the wants of owners doesn't exactly match the makeup of the resort's villas. Owners will adapt.

 

[CastAStone]

In April 2020, Disney took out a $5 billion line of credit. They need cash to pay that off.

Disney might net something around $100-$200 million from a conversion of one (small for Disney) hotel building. Every "little bit" helps.

Disney had $16 billion dollars in cash on hand in their last quarterly report (March 31)

No one thinks VGF is ever going to be easy to book.

I do. I think it will be relatively easy to get studios at VGF at 7 months in 4-5 years (after the Covid glut works itself down some)

They have lost BILLIONS of dollars the last 14 months, and they are still several months away from being able to go full capacity on all parks thru out the world. So what I am saying is that this is a way to put a small dent (very small for Disney but still a dent) in the massive losses that they have suffered and will continue to suffer over the next several months.

While the parks division has been losing money, Disney has turned a profit 2 quarters in a row.

 

[sethschroeder]

Profit
2015 - $8.38b
2016 - $9.39b
2017 - $8.98b
2018 - $12.6b
2019 - $11.05b
2020 - -$2.86b (negative)

They have lost BILLIONS of dollars the last 14 months, and they are still several months away from being able to go full capacity on all parks thru out the world. So what I am saying is that this is a way to put a small dent (very small for Disney but still a dent) in the massive losses that they have suffered and will continue to suffer over the next several months. I am thinking big picture, as I agree with you that by the time the new GF is selling Disney will be at full capacity.

They lost $2.86 and likely will erase most if not all of that by the end of FY '21. We are talking about a small number of the overall budget. In 2022 FY when you suggest the lower a price to sell it fast Disney is likely set up to be $5b+ in profit.

You say they are months away from full capacity well they are not selling VGF until after they are back at full capacity likely.

That said, I don't see a $255 VGF price scaling-up to 100k points per month.

Thing is they don't need to. They just need VGF to drive people to take the tour and then sell that person on RIV instead. RIV is likely to be around $210-$220 by when VGF opens.

 

[CastAStone]

Riviera Deluxe Standard View Studio is $751.72 on an average night this year through Disney including tax, and 19.41 points on average, a nightly value of $38.74 per point vs paying cash.

Grand Floridian Deluxe Standard View Studio is $854.56 on an average night this year through Disney including tax, and 21.57 points on average, a nightly value of $39.61, or a 2% better value per point than Riviera.

So someone explain to me why they think Disney will charge a 25% premium to provide a 2% value?

 

[Nabas]

I do. I think it will be relatively easy to get studios at VGF at 7 months in 4-5 years (after the Covid glut works itself down some)

This all depends on relative to what.

Relative to today? Sure, a VGF Studio will become much easier to book than it is today.

Relative to PVB? GVF and PVB generally require the same number of points per night. PVB has 360 dedicated Studios compared to VGF’s future 200. PVB probably will remain easier to book.

VGF will become easier to book than BCV, CCV, and possibly BRV and BWV. BWV Standard and Boardwalk views will remain tough to get, but with so many, I'm not as sure about BWV's Garden/Water view Studios. And, of course, BWV will remain extremely popular throughout all of F&WF.

SSR, OKW, and AKV should remain the 3 easiest to book.

Taken together, I think VGF Studios will end up somewhere in the middle of difficulty to book.

I am interested to read your thoughts.

 

[stwaldman]

Riviera Deluxe Standard View Studio is $751.72 on an average night this year through Disney including tax, and 19.41 points on average, a nightly value of $38.74 per point vs paying cash.

Grand Floridian Deluxe Standard View Studio is $854.56 on an average night this year through Disney including tax, and 21.57 points on average, a nightly value of $39.61, or a 2% better value per point than Riviera.

So someone explain to me why they think Disney will charge a 25% premium to provide a 2% value?

Agree with this sentiment, perhaps the only slight argument for a premium is # of points available (I'm not well versed in how much RIV inventory is left), but certainly not to justify a huge gap.

*Editing to acknowledge I also am not certain of the hotel cash room/breakage inventory, which also impacts rack rate and I'm sure the smart folks here may know a bit more on.

 

[andyman8]

The expanded VGF (since its the same DVC resort, I have a hard time calling it VGF2) could be an interesting trial balloon to a new build "expansion" at PV&B with 1, 2, and 3 bedroom units. I hear nothing's happening right now over at Luau Cove...

 

[Nabas]

I was just reading something on the DVC news website.

That website notes that concurrently active DVC resorts generally have been sold at the same price per point, with various discounts and incentives used to balance sales between resorts.

Meanwhile, Disney really has been selling the Riviera as an upscale resort with Skyliner access to two theme parks.

With the above in mind, I'm thinking VGF will open at the same price as RIV.