POLL: The OKW contract extension offer -- NOT just for OKW owners.

[Mtnman44]

I'm sure ROFR has some effect on prices but don't forget that market demand DOES have an effect on disney's ROFR price. Disney could not continue to use ROFR at X price level unless they knew there were sufficient buyers to justify that expense. Hence, the buyers in the market can affect upward or downward of disney's ROFR. In a simple view, Disney is just another buyer in the market.

If Disney stopped ROFR alltogether tomorrow, would it affect resale prices. Yes. How much? I have no clue. I tend to think, however, that although some motivated sellers would under-price for quick sales, the majority of sellers would continue to ask and get the highest price possible which seems to hover 10 to 15 pts per dollar under whatever DVC is selling direct for.

Whether you believe it or not, ROFR does keep the prices high. Artificially and greatly so? Maybe not. But look at the reports of ROFR being used. Obviously THOSE sales are at "lower than market value", right? Or what Disney deems "lower than market value". So, obviously, there are owners and buyers out there willing to sell at less....and many walking "the ROFR line".

So, without ROFR, and if that were left to run rampant, owners might not have a choice than to sell for less...because competition amongst sellers would force them to. NOW there is a "do not cross" line, artificially set by Disney. I don't think there's any way you can argue that ROFR has no effect on prices...there's just too much evidence to the contrary. How GREAT that effect is I suppose you can question, but the fact Disney excercises ROFR fairly regularly is proof enough that it does have an effect.

As to what effect the 2057 contracts will have on the market, we'll have to wait and see. But I certainly don't think you can ASSUME there will be NO effect, or minimal effect, just because there is a "small" difference between OKW and SSR resales right now. It MAY be the difference between 2042 and 2057 contracts is minimal. It may not. But there WILL be a difference.....it's just a matter of what it will be.

 

[mla973]

We are new owners as DH and I just purchased BWV this year. We will be 78 in 2057. I don't have much experience with DVC, but I think this sounds like a viable option, and if it were extended to other resorts, I would seriously consider it.

While there has obviously not been an offer to extend BWV, I'm looking at it like this: Let's assume a current minimum of 160 points, so for $15 per point ($4800), we could have 15 more years of WDW vacations. If the point values never change, then the value of the 15 additional years compared to the likely sky-high resorts rates in those later years, the $4800 is a bargain for those who plan to continue traveling to WDW through that contract's lifetime.

Given the new "Disney villa" rack rates where a BWV studio w/ a BW view costs $500 per night in holiday season, $4800 doesn't sound like that much more for an extra 15 years of vacations.

 

[JimMIA]

I'm sure ROFR has some effect on prices but don't forget that market demand DOES have an effect on disney's ROFR price. Disney could not continue to use ROFR at X price level unless they knew there were sufficient buyers to justify that expense. Hence, the buyers in the market can affect upward or downward of disney's ROFR. In a simple view, Disney is just another buyer in the market.

I agree with some of this, but Disney is far from "just another buyer." Disney is the 800-pound gorilla sitting in the corner! While supply and demand certainly play a major role in the prices, Disney sets the floor below which nothing goes by exercising ROFR. And over the years, they have shown a willingness to purchase enormous numbers of points to maintain that floor. I remember a couple of years ago when they offered more than 10,000 ROFR'd OKW points for sale.

Disney doesn't ROFR to maintain the market value of resale. They ROFR to prevent too great a disparity between resale and "new" prices. Keeping resale prices in the same general ballpark with "new" prices is the device that lets them get $104 a point. If they let resale prices seek their own level, they couldn't get enough for "new" points to make it worthwhile to build new properties. ROFR is all about "new," not resale.

IMHO, this extension offer is possibly as much about providing more resale value to existing properties as it is about revenue generation. If they can get us to pay to increase the intrinsic value of older contracts, prices may hold themselves up enough to reduce the amount of ROFRing Disney has to do.

 

[pilferk]

I'm sure ROFR has some effect on prices but don't forget that market demand DOES have an effect on disney's ROFR price. Disney could not continue to use ROFR at X price level unless they knew there were sufficient buyers to justify that expense. Hence, the buyers in the market can affect upward or downward of disney's ROFR. In a simple view, Disney is just another buyer in the market.

If Disney stopped ROFR alltogether tomorrow, would it affect resale prices. Yes. How much? I have no clue. I tend to think, however, that although some motivated sellers would under-price for quick sales, the majority of sellers would continue to ask and get the highest price possible which seems to hover 10 to 15 pts per dollar under whatever DVC is selling direct for.

Absolutely true...demand has an effect, too. It's sort of symbiotic. But demand isn't "artificial", like ROFR is.

The point is that DVC has a "crutch" that can (and has) been used to keep prices at a specific level. I don't think anyone can argue that.

What would happen without ROFR? Again, you're right. We don't know. The problem is, the only real examples we have are the "other" timeshares available out there. It's tough to draw a direct comparison....since I know that objection is going to come up, I'll agree with it now. BUT it's not a completely invalid comparison. MOST timeshares resale at noteably less than they "retail" for. With DVC, that certainly has not been the case, historically. That's certainly something to consider when looking at just how much of an effect ROFR (or the possibility of ROFR) has had.

 

[pilferk]

I agree with some of this, but Disney is far from "just another buyer." Disney is the 800-pound gorilla sitting in the corner! While supply and demand certainly play a major role in the prices, Disney sets the floor below which nothing goes by exercising ROFR. And over the years, they have shown a willingness to purchase enormous numbers of points to maintain that floor. I remember a couple of years ago when they offered more than 10,000 ROFR'd OKW points for sale.

Disney doesn't ROFR to maintain the market value of resale. They ROFR to prevent too great a disparity between resale and "new" prices. Keeping resale prices in the same general ballpark with "new" prices is the device that lets them get $104 a point. If they let resale prices seek their own level, they couldn't get enough for "new" points to make it worthwhile to build new properties. ROFR is all about "new," not resale.

Thanks Jim....you said it much better, much clearer, and much more succinctly than I did...but made the exact point I was going for!

 

[JimC]

Take a look at the relase prices of SSR vs OKW - about $5/point. It pretty much inconceivable to me that the resale price of OKW 2042 would be more than $15 more than OKW 2057 anytime soon.

I'm not sure that OKW and SSR comparison is a good one to make. SSR end date will be earlier, it is not yet sold out and while it is the only other large standalone DVC resort -- it is not at all similar in design concept.

I don't have a handle on how to estimate the change in value yet. Intuitively it should affect value, but estimating the amount of the differential is another matter.

 

[JimC]

No, I've said many times "we'll be old when the contract expires and aren't interested in passing it to the kids."

I am amused by how much has been made about SSRs later expiration date as a point when recommending which resort to purchase. I hope there won't be a lot of unhappy SSR owners who only bought for the additional years when OKW (or BWV or BCV or SSR) gets extensions. Hopefully, people purchased the resort they LIKE today, not the resort that they believed would be the only one functioning in 40 years.

We are in the same position -- but if there is a material difference in the value of the contract with the extension, it may be worthwhile.

As to the SSR later date -- it really was a matter of where the best value was when they purchased and how old they were (how likely they would benefit from the longer contract). Another strategy that could work for some is to buy the best deal then sell in 10 - 15 years and buy again the newest best deal.

 

[CarolA]

I considered it for resale value only. But the truth is I never bought expecting to even break even on the sale. (DVC is a timeshare and I used the basic rules of "timeshare" devaluation LOL!) So... no money from me LOL!

 

[spinaltap]

If you look at it as a $1 per point per year investment (using $15 per point over 15 years) you could rent them for $10 a point per year using today’s rental charge (which would probably be higher in 2042). That is a 10-fold return on your investment. Just a thought.

 

[salmoneous]

If you look at it as a $1 per point per year investment (using $15 per point over 15 years) you could rent them for $10 a point per year using today’s rental charge (which would probably be higher in 2042). That is a 10-fold return on your investment. Just a thought.

Except there are those pesky maintenance fees to consider. So it's put aside a buck today. Get nothing for 35-50 years. Then maybe - if Disney doesn't change too much, if the DVC resorts don't change too much, if the tax laws and collection systems don't change too much - you'll be able to do a bunch of work and rent out those points for a 5.5:1 return. Doesn't sound worth it to me.

If going for an investment/money-making renting opportunity, I think you are *much* better off buying at a resort for which you can rent the points today and next year, and the next, etc than it putting down money that is useless for 35 years.

 

[JimMIA]

Except there are those pesky maintenance fees to consider. So it's put aside a buck today. Get nothing for 35-50 years. Then maybe - if Disney doesn't change too much, if the DVC resorts don't change too much, if the tax laws and collection systems don't change too much - you'll be able to do a bunch of work and rent out those points for a 5.5:1 return. Doesn't sound worth it to me.

I'm sitting here trying to get a visual of me in 2042, on some kind of wild space phone that transmits thoughts over water molecules in the air or bounces them off moonbeams or something, trying to arrange a rental. I'm having trouble getting availability; then when I get ressies, they change their dates; then when we get the dates finalized, they want to re-negotiate the price; then they don't really want to give a deposit, but they will if I let them make it in four payments; then...

At least I'll have the consolation of knowing I only paid a buck a point!

 

[Mtnman44]

I think we are pretty much in agreement on it. However my point was that Disney's ROFR price really isn't artificial, it's real and it is set by the market. The same as their price of a DVC purchase or even the cash rental rate of any of their resort rooms. Why doesn't disney charge $130 pts for a DVC purchase? $200? Why is the ROFR price at SSR around $84 right now? If DVC has the ability to artificially set it, why not make it $95 or $104? My point is, they are limited in what they set the ROFR price at based on what they know they can resell it for while recouping the costs to resell it (both real and opportunity). In other words, the buyers in the market (the demand) have significant impact on the ROFR price.

As to the speculation on resale value if ROFR was gone. You are right, it is very tough to say. Our best guage is in fact other upper tier timeshare programs. It's a very weak comparison however, almost to the point of being worthless in my opinion. DVC has no direct competion and there is such limited supply, that I believe it can hold its value better than any other timeshare out there currently. This is apparent on II where an II member can trade their normal timeshare to almost any other program including Marriott etc but almost never to DVC. There are plenty of good timeshare resorts in Orlando to chose from but none are Disney and on property except DVC. That is what I mean when I say there is no real competition for DVC, not directly anyway. For this reason, I don't think resale prices would tank like they do for other timeshares. There is simply no real alternative that offers you exactly the same thing.

Absolutely true...demand has an effect, too. It's sort of symbiotic. But demand isn't "artificial", like ROFR is.

The point is that DVC has a "crutch" that can (and has) been used to keep prices at a specific level. I don't think anyone can argue that.

What would happen without ROFR? Again, you're right. We don't know. The problem is, the only real examples we have are the "other" timeshares available out there. It's tough to draw a direct comparison....since I know that objection is going to come up, I'll agree with it now. BUT it's not a completely invalid comparison. MOST timeshares resale at noteably less than they "retail" for. With DVC, that certainly has not been the case, historically. That's certainly something to consider when looking at just how much of an effect ROFR (or the possibility of ROFR) has had.

 

[jarestel]

With Disney in the game as a threat to exercise ROFR, buyers are competing with one another as well as the 800 pound gorilla (Disney) threatening to yank the contract if the price isn't in an acceptable range. Once Disney leaves the game, buyers no longer will need to be concerned with ROFR and so it becomes the sellers who are now competing with each other for buyers.

And the price will fall. Good luck to those who believe ROFR does not artificially inflate resale values.

 

[ransom]

With Disney in the game as a threat to exercise ROFR, buyers are competing with one another as well as the 800 pound gorilla (Disney) threatening to yank the contract if the price isn't in an acceptable range. Once Disney leaves the game, buyers no longer will need to be concerned with ROFR and so it becomes the sellers who are now competing with each other for buyers.

And the price will fall. Good luck to those who believe ROFR does not artificially inflate resale values.

Exactly my thinking.

Disney has an effectively infinite capacity for buying back points at and below the ROFR price. So anyone who wants to buy them at that price is out of luck. The only buyers left are the ones who are willing and able to pay more than the ROFR price. So that's where the price stays - above ROFR.

As an aside, I find it interesting how Disney has created these 2042 through 2057 points out of thin air and at no cost to them (we all know who will be paying to keep the resorts running those years), yet they apparently expect to be able to sell them to people for real money. Amazing! It's even better than selling bottled water.

 

[OneMoreTry]

....
As an aside, I find it interesting how Disney has created these 2042 through 2057 points out of thin air and at no cost to them (we all know who will be paying to keep the resorts running those years), yet they apparently expect to be able to sell them to people for real money. Amazing! It's even better than selling bottled water.

This is why I have already posted and will continue to post vehemently AGAINST buying these points. I am amazed that anyone would consider it. It is a RIP OFF and Disney laughs all the way to the bank. (I sincerely believe management is joking about how people will fall for this.)

All you'd be getting is 15 years of USED Pixie Dust which as we all know will NOT MAKE ANYONE FLY even if they believe!!

I have never been so AGAINST anything Disney before -- even the fact that everything at WalMart now has a Disney character on it.

 

[CarolMN]

To me the question boils down to the difference in resale value between a 2042 contract and a 2057 contract.

Who thinks that a 2057 contract will sell for $15 per point more than a 2042 contract?

I do not. So no extension for me!

 

[Judique]

We are new owners as DH and I just purchased BWV this year. We will be 78 in 2057. I don't have much experience with DVC, but I think this sounds like a viable option, and if it were extended to other resorts, I would seriously consider it.

While there has obviously not been an offer to extend BWV, I'm looking at it like this: Let's assume a current minimum of 160 points, so for $15 per point ($4800), we could have 15 more years of WDW vacations. If the point values never change, then the value of the 15 additional years compared to the likely sky-high resorts rates in those later years, the $4800 is a bargain for those who plan to continue traveling to WDW through that contract's lifetime.

Given the new "Disney villa" rack rates where a BWV studio w/ a BW view costs $500 per night in holiday season, $4800 doesn't sound like that much more for an extra 15 years of vacations.

It would be $2400 and no it doesn't sound like a lot, but I wouldn't pay it.

By the time I'm finished with my 2042 points I'll be 35 years older. My kids can buy something and take me somewhere they choose to pay for! After all they've had Disney on my dime for all those years up to 2042.

 

[JimMIA]

Pixie Dust...which as we all know will NOT MAKE ANYONE FLY even if they believe!!

WILL TOO!!!

Seriously, though...of the three changes, this is the one where it surprises me that anyone would have strong feelings. (Not questioning the sincerity of your feelings, but I just don't get those feelings.)

I don't like the $95 fee, even though I'm not affected by it. I don't like the change in the banking deadlines, because it hurts my family.

But the contract extension -- to me, at least -- is just a business decision. A lot of people have been wondering what would happen in 2042 -- now we know. Disney is making us an offer. Like it? Buy it. Not interested? (My team, incidentally) Don't buy it.

I also think the real value to Disney is not so much the revenue they will generate now, but the increased revenue they will generate later when they ROFR OKW resales at $80, make them 2057 contracts at zero cost, and then sell them for $104 per point. (to say nothing of the thousands of points they probably have in inventory already) To me, that's a bigger win for the Mouse (or Rat, if you prefer) than the $15 they'll get from the current owners who take them up on the option.

They just built a "new" DVC resort without spending a penny!

 

[Island Mouse]

If DVC offers the same deal for BWV, I would definitely extend. I just became a BWV owner this year, so if DVC offers the extension there it would mean we could get a full 50 years use out of our BWV contract. We bought where we wanted to stay (BWV) rather than having a longer contract (SSR or AKV) so this would be a good thing for us.

 

[OneMoreTry]

To me the question boils down to the difference in resale value between a 2042 contract and a 2057 contract.

Who thinks that a 2057 contract will sell for $15 per point more than a 2042 contract?

I do not. So no extension for me!

Even if it DID sell for $15 more it wouldn't be worth it, because the money would not be liquid. It would be tied up and unavailable to you unless you chose to sell your points.

I don't want to sell my points and I DO want that $7500 available should I need it.

There is NO GOOD REASON to buy the extra time unless you want to dream about those 15 years when you're drifting off to sleep at night. That's not worth $7500 to me.