Resale Restriction Scenario

[dvcsince93]

My point was not to blame anyone (other than maybe DVD), but that, in addition to DVD, many people play a role in the situation. And my point wasn't related to all people who stay outside their home resort. The ability to stay outside your home resort is a great feature of DVC. However, people who only stay outside their home resort have an effect on the availability at the smaller resorts.

I have no idea how many people do it- but there are a couple of themes on these boards that seem to indicate it happens.

First, there are numerous comments on this board where people put down SSR both directly and more subtly - to the point I see people post just to defend it. And yet, out of more than 35000 resales over the last 11 years, almost a third (10500) have been SSR. Its easy to see why, there are more points available and they are cheaper. However, because there are so many more points at SSR, should SSR owners choose not to stay there, the effect on the other resorts would be significant.

Second, there is significant stalking activity of the smaller resorts. I would think that if people owned at the resorts, they would reserve them at the 7-11 month time frame. I know that even if I didn't reserve at 11 months, I want to reserve before 7 mos and everyone else is shooting for the resort.

 

[katandmouse]

My point was not to blame anyone (other than maybe DVD), but that, in addition to DVD, many people play a role in the situation. And my point wasn't related to all people who stay outside their home resort. The ability to stay outside your home resort is a great feature of DVC. However, people who only stay outside their home resort have an effect on the availability at the smaller resorts.

I have no idea how many people do it- but there are a couple of themes on these boards that seem to indicate it happens.

First, there are numerous comments on this board where people put down SSR both directly and more subtly - to the point I see people post just to defend it. And yet, out of more than 35000 resales over the last 11 years, almost a third (10500) have been SSR. Its easy to see why, there are more points available and they are cheaper. However, because there are so many more points at SSR, should SSR owners choose not to stay there, the effect on the other resorts would be significant.

Second, there is significant stalking activity of the smaller resorts. I would think that if people owned at the resorts, they would reserve them at the 7-11 month time frame. I know that even if I didn't reserve at 11 months, I want to reserve before 7 mos and everyone else is shooting for the resort.

Does anyone know the total number of points at each resort? Do the total number of points at SSR represent 30% of all DVC resorts (excluding RIV and maybe CCV which hasn’t been available for resale very long)? If not, that’s a disproportionately large number of SSR contracts being sold - so there is some issue with SSR going on.

I think I remember a post when the RIV resale restrictions were first announced, someone reported that MS told them one of the reasons for the restrictions was to “quarantine failed resorts.”* I guess at first that seems to make sense - that a big issue is people buying resale points at the cheaper resorts (not just SSR, to be clear) but only intending to trade into other resorts at 7 months, making availability difficult for everyone. If DVC prevents resale buyers from accessing RIV, it lends RIV an air of exclusivity and gives all direct owners a better shot at reserving a room there. On the other hand, if the glamour fades and RIV tanks on the resale market, then those buyers can’t trade out anywhere - effectively quarantined!

However, that argument falls apart on closer inspection:
—On a DVC-system-wide level: As @dvcsince93 reported (thank you for sharing all the data you’ve found!), since DVC is constantly selling so many new contracts, the proportion of resale contracts to direct is actually very small (1-2% each year, or up to 12% in total if I follow correctly). So the number/percentage of resale purchasers trying to trade into all the different resorts is probably much smaller than we had assumed.
—That leaves how many direct purchasers also trying to switch resorts most of the time. As @KAT4DISNEY said, DVC sales guides push new resorts by offering the ability to trade into the resorts the buyer may actually desire (vs just buying them direct).
—In addition, DVC/DVD has created this situation where new resorts require more points to stay there, price per point has increased dramatically, they are allowing smaller minimum purchases, those contracts are being sold against units that contain bungalows/cabins/huge point carriers (that fewer new members have enough points to stay there)... which leads to more competition for smaller villas and more direct purchasers trying to switch into different resorts at 7 months.
—Now on a single resort level, it looks like up to 20% of owners could be resale (like OKW now), and the number may increase over time. As many people have said, quarantining members to one resort does not help others trading into that resort; it will actually make it more difficult. If they can’t trade out, others can’t trade in.

All this to say, I don’t buy the argument that restricting resale purchasers somehow helps open up availability for everyone else.

I do believe the restriction was done for profit - “to differentiate between direct and resale” (which is another reason DVC has given I think). I am upset that this profit is at the expense of owners’ ability to use their points, in contrast to prior member/resort agreements, and scapegoating certain members (whether resale or owners of a “failed” resort).


*https://www.disboards.com/threads/multi-site-pos-revision-dated-01-19-19.3734585/ (The failed resort discussion starts on page 2 and continues especially on page 3... and thanks to @crvetter for speaking to DVCM about this, and sharing with us.)

 

[crvetter]

Does anyone know the total number of points at each resort? Do the total number of points at SSR represent 30% of all DVC resorts (excluding RIV and maybe CCV which hasn’t been available for resale very long)? If not, that’s a disproportionately large number of SSR contracts being sold - so there is some issue with SSR going on.

I think I remember a post when the RIV resale restrictions were first announced, someone reported that MS told them one of the reasons for the restrictions was to “quarantine failed resorts.”* I guess at first that seems to make sense - that a big issue is people buying resale points at the cheaper resorts (not just SSR, to be clear) but only intending to trade into other resorts at 7 months, making availability difficult for everyone. If DVC prevents resale buyers from accessing RIV, it lends RIV an air of exclusivity and gives all direct owners a better shot at reserving a room there. On the other hand, if the glamour fades and RIV tanks on the resale market, then those buyers can’t trade out anywhere - effectively quarantined!

However, that argument falls apart on closer inspection:
—On a DVC-system-wide level: As @dvcsince93 reported (thank you for sharing all the data you’ve found!), since DVC is constantly selling so many new contracts, the proportion of resale contracts to direct is actually very small (1-2% each year, or up to 12% in total if I follow correctly). So the number/percentage of resale purchasers trying to trade into all the different resorts is probably much smaller than we had assumed.
—That leaves how many direct purchasers also trying to switch resorts most of the time. As @KAT4DISNEY said, DVC sales guides push new resorts by offering the ability to trade into the resorts the buyer may actually desire (vs just buying them direct).
—In addition, DVC/DVD has created this situation where new resorts require more points to stay there, price per point has increased dramatically, they are allowing smaller minimum purchases, those contracts are being sold against units that contain bungalows/cabins/huge point carriers (that fewer new members have enough points to stay there)... which leads to more competition for smaller villas and more direct purchasers trying to switch into different resorts at 7 months.
—Now on a single resort level, it looks like up to 20% of owners could be resale (like OKW now), and the number may increase over time. As many people have said, quarantining members to one resort does not help others trading into that resort; it will actually make it more difficult. If they can’t trade out, others can’t trade in.

All this to say, I don’t buy the argument that restricting resale purchasers somehow helps open up availability for everyone else.

I do believe the restriction was done for profit - “to differentiate between direct and resale” (which is another reason DVC has given I think). I am upset that this profit is at the expense of owners’ ability to use their points, in contrast to prior member/resort agreements, and scapegoating certain members (whether resale or owners of a “failed” resort).


*https://www.disboards.com/threads/multi-site-pos-revision-dated-01-19-19.3734585/ (The failed resort discussion starts on page 2 and continues especially on page 3... and thanks to @crvetter for speaking to DVCM about this, and sharing with us.)

I did speak with DVCMC about this issue and I was absolutely told the "quarantine failed resorts" (so I was the poster that started that discussion). However, I agree with your statements and the analysis here that a small number of resale owners exist within the system (so this "quarantine" doesn't actually work in any effective manner if this was the true reason). I also strongly feel (and let them know) that DVC was at fault for any resort they felt was selling "cheap" on resale because the resort was "less desirable" because they didn't create resorts with unique features and relied heavily on the trading at 7 months to sell (from reports on here it appears that SSR, for example, was mostly sold by DVC with this sales pitch).

Effectively I do think they are "quarantining" a "failed resort" but in a manner that, as you put it, is for profit (not a solution for availability at 7 months). They are removing from consideration, for a buyer that might want to buy the cheapest points to stay in 1 beds (or off season), the ability to stay at future resorts (thus giving a reason for that loss in value between the direct and resale). All to say I think DVC saw some resort with depressed values and needed a way to explain the depressed values (rather than admitting trading at 7 months is a huge gamble). In 10-15 years there will be very clear tiers within the DVC system (on the resale market) as more resale enter the L14 and 2042 looms. I'm guessing then DVC starts to make even more changes.

 

[KAT4DISNEY]

My comments were in response to comments based on transportation as limiting it to being non-Epcot. I mean BW and BC face each across the water and the IG doesn’t have a thing super unique when walking to it (well the skyliner will be changing and making it a bit more unique, walking up and seeing the cabins as entering I think that will be cool) and HS is a long walk with a view of buses when approaching the park. Though I agree the MK resorts are a bit unique in that everything centers a lake which makes the view easy. And if the skyliner is effective and become iconic it will elicit the emotions the monorails do eventually too (perhaps even enhancing the emotions at BC and BW to a higher level for some not just DRR).

As for DRR, you can see HS and Epcot from roof top restaurant (and some rooms) easily and both sets of fireworks will be visible from the grounds. And from a transportation perspective, the point I wanted to make, it checks similar boxes as the MK monorail resorts, just as convenient unique transportation (with the same capacity as a monorail and on average will probably have less wait times)

That the skyliner is a continuous system is a huge plus over the other transporation options that made walking so much more reliable.

 

[Frederic Civish]

Another problem with Riviera is this sense of exclusivity. Currently it is the only DVC resort on the gondola. Which gives it great access to Epcot and Hollywood studios. However, that is going to change in the near future. I am absolutely sure that over the next 5 to 10 years at the most Disney will end up installing gondolas pretty much everywhere and Connect all of Disney World together by a gondola network. Once that happens Riviera will just be another resort like many others. Pretty, but worth the extra expense, and the high room point costs?

Imagine the desirability of SSR if it had gondolas going south to Disney springs, over to Typhoon Lagoon and then on to Epcot on one hand and north to the Monorail and the monorail resorts, and the Magic Kingdom on the other hand. Or the same for old key west. Or Wilderness Lodge. They would probably be much more popular than Riviera

 

[dvcsince93]

Wow, a quarantine, of course... But I believe that to label some resorts as failed is an oversimplification of their purpose-they are going to try to change the market so that DVD really no longer competes with resale.

When you look at the resale prices (I don't know of any source of all resales prices but, e.g., DVC Resale Market blog includes one for their sales), you see that all of the resorts have a resale value that is 25-50% below the current DVD cost. While DVC has maintained great resale value, none of the resorts are maintaining a resale value that matches the DVD direct cost (nor in any rationale world could they).

For example, BCV and BWV are only selling at $130-150/pt far below the direct price of $225/pt. Even PVB is selling at $150-160/pt, which is well less than the $235/pt that DVD sells it for. As long as DVD keeps rolling out new resorts, resale prices will never be high enough for DVD so they want to "quarantine" the resale market and try to get people to pay their prices.

DVD is now saying- if you want points in our older resorts great- in order to exchange those older resort points for stays in our brand new resorts, you need to have paid what we think points are worth in our system. For example, they are fine with you trading into DRR with SSR points if you paid $160/pt for the SSR. The problem they see is when people pay $85-90/pt for SSR points and then want to trade-in to new resorts.

I still believe that DVC has grown enough that the problem of cheap points can effect availibility at the 7 month window. There have been about 11-13K resales of SSR, which if the average point purchase/contract is consistent, is more than 2 Million points. While 2M points is only 14% of SSR points, it is 67% of BCV points. Factor in similar numbers for the other large DVC WDW resorts-OKW, AKL and you get significant points sold at lower prices. It is unclear whether these points actually change the system. That is irrelevant, however, and not DVC's rationale.

The bottom line to DVD is that current resale points compete at 7 months with direct points that have been and are still being sold by DVD. DVD does still sell the ability to exchange as a really big part of DVC. DVD believes that competition is irritating to direct purchasers who paid more for their points, particularly when rooms are scarce.

So, voila, a quarantine is set up to separate direct from resale points:

Yes, they can better sell the value of DVC to purchasers of future resorts-they can say to future buyers that, going forward, everyone who exchanges into [insert any future new resort name here] resort as well as the other new resorts, will have paid what we at DVD believe is a fair value for that right.

Yes, it will hurt resale prices of DRR but they don't care since people who buy cheaper points won't be able to use those points for other resorts. By totally separating resale points from direct points, you really can't compare the resale value of the resort to the direct cost.

No, it won't kill the resale market. Those people who want cheaper points to stay at the new resorts can get them- but they won't be competing with direct purchasers for rooms at 7 months in other new resorts.

No, this won't do anything to address the 7 month shortage of rooms at smaller resorts, but it will set up a plan they think can sell to prospective buyers who are concerned with that issue.

Yes, they also know that most people haven't sold their contracts- and really want to encourage that.

Yes, they will make more money-they will get more DVD contracts and almost 2/3 of DVD sales include a DVD mortgage- something that resales can't provide no matter the cost. So if DVD is selling $1B in points, they are also providing $600M+ in mortgages at 10+% interest.

Yes, this allows DVD to make even more money by partnering with or setting up a resale partner at some point in the future to sell resale points- resale points you can exchange, at a higher price.

 

[Katie L]

Yes, they will make more money-they will get more DVD contracts and almost 2/3 of DVD sales include a DVD mortgage

Where did the 2/3 statistic come from? Love these numbers but I am curious your sources.

 

[kboo]

Wow, a quarantine, of course... But I believe that to label some resorts as failed is an oversimplification of their purpose-they are going to try to change the market so that DVD really no longer competes with resale.

When you look at the resale prices (I don't know of any source of all resales prices but, e.g., DVC Resale Market blog includes one for their sales), you see that all of the resorts have a resale value that is 25-50% below the current DVD cost. While DVC has maintained great resale value, none of the resorts are maintaining a resale value that matches the DVD direct cost (nor in any rationale world could they).

For example, BCV and BWV are only selling at $130-150/pt far below the direct price of $225/pt. Even PVB is selling at $150-160/pt, which is well less than the $235/pt that DVD sells it for. As long as DVD keeps rolling out new resorts, resale prices will never be high enough for DVD so they want to "quarantine" the resale market and try to get people to pay their prices.

DVD is now saying- if you want points in our older resorts great- in order to exchange those older resort points for stays in our brand new resorts, you need to have paid what we think points are worth in our system. For example, they are fine with you trading into DRR with SSR points if you paid $160/pt for the SSR. The problem they see is when people pay $85-90/pt for SSR points and then want to trade-in to new resorts.

I still believe that DVC has grown enough that the problem of cheap points can effect availibility at the 7 month window. There have been about 11-13K resales of SSR, which if the average point purchase/contract is consistent, is more than 2 Million points. While 2M points is only 14% of SSR points, it is 67% of BCV points. Factor in similar numbers for the other large DVC WDW resorts-OKW, AKL and you get significant points sold at lower prices. It is unclear whether these points actually change the system. That is irrelevant, however, and not DVC's rationale.

The bottom line to DVD is that current resale points compete at 7 months with direct points that have been and are still being sold by DVD. DVD does still sell the ability to exchange as a really big part of DVC. DVD believes that competition is irritating to direct purchasers who paid more for their points, particularly when rooms are scarce.

So, voila, a quarantine is set up to separate direct from resale points:

Yes, they can better sell the value of DVC to purchasers of future resorts-they can say to future buyers that, going forward, everyone who exchanges into [insert any future new resort name here] resort as well as the other new resorts, will have paid what we at DVD believe is a fair value for that right.

Yes, it will hurt resale prices of DRR but they don't care since people who buy cheaper points won't be able to use those points for other resorts. By totally separating resale points from direct points, you really can't compare the resale value of the resort to the direct cost.

No, it won't kill the resale market. Those people who want cheaper points to stay at the new resorts can get them- but they won't be competing with direct purchasers for rooms at 7 months in other new resorts.

No, this won't do anything to address the 7 month shortage of rooms at smaller resorts, but it will set up a plan they think can sell to prospective buyers who are concerned with that issue.

Yes, they also know that most people haven't sold their contracts- and really want to encourage that.

Yes, they will make more money-they will get more DVD contracts and almost 2/3 of DVD sales include a DVD mortgage- something that resales can't provide no matter the cost. So if DVD is selling $1B in points, they are also providing $600M+ in mortgages at 10+% interest.

Yes, this allows DVD to make even more money by partnering with or setting up a resale partner at some point in the future to sell resale points- resale points you can exchange, at a higher price.

Wow. This is about the clearest explanation of the issues I've been thinking about as well. Thanks! I don't think DVD ever meant to "kill" resale so much as to set up a "different" product. It will be interesting to see what 7mo availability at RIV looks like once all the points have been declared and the resort sells out, or is close to selling out. If 7mo availability becomes as tough as it can be for BWV and BCV at certain times of the year (let alone VGF and VGC, or CCV studios), then they will have achieved their goal.

The mortgage angle is one I've been thinking of but wasn't able to articulate either - early resales of RIV are going to be from owners for whom circumstances have changed, and who are likely financing and can't keep up with the payments. Those are the sellers who will have a pretty high floor for what they can sell for, because they'll have to come up with cash at closing.

 

[kboo]

Where did the 2/3 statistic come from? Love these numbers but I am curious your sources.

I'm guessing that you could look at recent sales by DVD on the OCC site and look at how many of them have a mortgage attached to it. I was eyeballing RIV sales a while back and it looked like >50% of the new, direct purchases were financed. Now, I get that some short term financing may be ok, depending on one's personal circumstances, but that's a huge chunk of change in mortgage/financing $$ even if 50% of direct purchases are financed.

 

[dvcsince93]

For the basic search going back to the 1800's -a little before DVC- you can a basic search by class of documents and name so for that you can search deeds granted by DVD and mortgages which are granted to DVD since Disney is actually lending the money.

For the time period from 1992-2019, there were :

368877 DVD Deeds
237798. DVD Mortgages

The website can provide much more detailed searches from 2008 to 2019, but the ratio was about the same:

From June 2008-2019:

180988 DVD Deeds
118561 DVD Mortgages

It surprised me that the 2/3 number went all the way back to 1992. It also explained another source of DVC income for Disney.

One thing that is very different about resale is that I only saw about 5000 Mortgages for 35000 deeds since 2008.

 

[Frederic Civish]

Wow, a quarantine, of course... But I believe that to label some resorts as failed is an oversimplification of their purpose-they are going to try to change the market so that DVD really no longer competes with resale.

When you look at the resale prices (I don't know of any source of all resales prices but, e.g., DVC Resale Market blog includes one for their sales), you see that all of the resorts have a resale value that is 25-50% below the current DVD cost. While DVC has maintained great resale value, none of the resorts are maintaining a resale value that matches the DVD direct cost (nor in any rationale world could they).

For example, BCV and BWV are only selling at $130-150/pt far below the direct price of $225/pt. Even PVB is selling at $150-160/pt, which is well less than the $235/pt that DVD sells it for. As long as DVD keeps rolling out new resorts, resale prices will never be high enough for DVD so they want to "quarantine" the resale market and try to get people to pay their prices.

DVD is now saying- if you want points in our older resorts great- in order to exchange those older resort points for stays in our brand new resorts, you need to have paid what we think points are worth in our system. For example, they are fine with you trading into DRR with SSR points if you paid $160/pt for the SSR. The problem they see is when people pay $85-90/pt for SSR points and then want to trade-in to new resorts.

I still believe that DVC has grown enough that the problem of cheap points can effect availibility at the 7 month window. There have been about 11-13K resales of SSR, which if the average point purchase/contract is consistent, is more than 2 Million points. While 2M points is only 14% of SSR points, it is 67% of BCV points. Factor in similar numbers for the other large DVC WDW resorts-OKW, AKL and you get significant points sold at lower prices. It is unclear whether these points actually change the system. That is irrelevant, however, and not DVC's rationale.

The bottom line to DVD is that current resale points compete at 7 months with direct points that have been and are still being sold by DVD. DVD does still sell the ability to exchange as a really big part of DVC. DVD believes that competition is irritating to direct purchasers who paid more for their points, particularly when rooms are scarce.

So, voila, a quarantine is set up to separate direct from resale points:

Yes, they can better sell the value of DVC to purchasers of future resorts-they can say to future buyers that, going forward, everyone who exchanges into [insert any future new resort name here] resort as well as the other new resorts, will have paid what we at DVD believe is a fair value for that right.

Yes, it will hurt resale prices of DRR but they don't care since people who buy cheaper points won't be able to use those points for other resorts. By totally separating resale points from direct points, you really can't compare the resale value of the resort to the direct cost.

No, it won't kill the resale market. Those people who want cheaper points to stay at the new resorts can get them- but they won't be competing with direct purchasers for rooms at 7 months in other new resorts.

No, this won't do anything to address the 7 month shortage of rooms at smaller resorts, but it will set up a plan they think can sell to prospective buyers who are concerned with that issue.

Yes, they also know that most people haven't sold their contracts- and really want to encourage that.

Yes, they will make more money-they will get more DVD contracts and almost 2/3 of DVD sales include a DVD mortgage- something that resales can't provide no matter the cost. So if DVD is selling $1B in points, they are also providing $600M+ in mortgages at 10+% interest.

Yes, this allows DVD to make even more money by partnering with or setting up a resale partner at some point in the future to sell resale points- resale points you can exchange, at a higher price.

As I've said before, if they want people to buy their points Direct, then they should be working to RAISE the price on the Resales, not lower them. If Direct price is $200 a point and Resales is $110 a point, then, of course people are going to buy resales. But, if Direct was $200 and Resales were $175 then a whole lot more people would buy Direct. Because the difference in price would not be enough to push people to resales. But, the LOWER they push Resales prices, the MORE people will want to buy Resales.

They cannot take away the contractual rights that people have, to use the currently existing DVC properties. When they sold those points, those points had access to the resort exchange, and the contract for those points said they could use them to reserve at all DVC resorts. It was in the contract for those points. It doesn't matter what Disney restricts in the future, the people who buy the Legacy DVC Resorts at Resale will always be able to use the Legacy Resorts. Disney cannot change the contract unilaterally. Second, if they start to put too many onerous restrictions on the usage of the points, it will adversely affect everyone, including those who purchase Direct, so, Disney will have trouble making too many changes to points sold at resorts in the past.

So, they will never be able to drive the price of resale points down enough to make them unattractive. In fact, just the opposite. Lower cost for DVC points at Resale means more resales. Higher cost for DVC points at Resale means more Direct purchases. The trouble is, I think someone at Disney thinks that SOMEHOW they can make the Resales so unattractive that very few people will want to buy them. But they can't and they won't ever be able to do that. It is self defeating. The lower they push the resale price, the more people will buy it.

 

[DougEMG]

As I've said before, if they want people to buy their points Direct, then they should be working to RAISE the price on the Resales, not lower them. If Direct price is $200 a point and Resales is $110 a point, then, of course people are going to buy resales. But, if Direct was $200 and Resales were $175 then a whole lot more people would buy Direct. Because the difference in price would not be enough to push people to resales. But, the LOWER they push Resales prices, the MORE people will want to buy Resales.

They cannot take away the contractual rights that people have, to use the currently existing DVC properties. When they sold those points, those points had access to the resort exchange, and the contract for those points said they could use them to reserve at all DVC resorts. It was in the contract for those points. It doesn't matter what Disney restricts in the future, the people who buy the Legacy DVC Resorts at Resale will always be able to use the Legacy Resorts. Disney cannot change the contract unilaterally. Second, if they start to put too many onerous restrictions on the usage of the points, it will adversely affect everyone, including those who purchase Direct, so, Disney will have trouble making too many changes to points sold at resorts in the past.

So, they will never be able to drive the price of resale points down enough to make them unattractive. In fact, just the opposite. Lower cost for DVC points at Resale means more resales. Higher cost for DVC points at Resale means more Direct purchases. The trouble is, I think someone at Disney thinks that SOMEHOW they can make the Resales so unattractive that very few people will want to buy them. But they can't and they won't ever be able to do that. It is self defeating. The lower they push the resale price, the more people will buy it.

Exactly, DVC is not like other timeshares, using the same sales and marketing like other timeshares doesn't make sense. You're never going to see a DVC contract for sale for pennies just to get rid of it. The value will always be there because of the location and no competition.

 

[Spartan86]

If 7mo availability becomes as tough as it can be for BWV and BCV at certain times of the year (let alone VGF and VGC, or CCV studios), then they will have achieved their goal.

Hey @kboo I want to understand your point. In one sense posts above agree DVD is reacting to the 7 month burden faced by direct purchasers by adding resale restrictions, yet your statement as I read it indicates that if RVV becomes a hot mess at 7 months (I certainly think it will initially) DVD will have “achieved their goal”.

Sort that out a bit for me would you?

Thanks

 

[zavandor]

There have been about 11-13K resales of SSR, which if the average point purchase/contract is consistent, is more than 2 Million points. While 2M points is only 14% of SSR points...

Your numbers are very interesting and very very surprising. If someone would have asked me to guess the percentage of resale owners at a resort like SSR which has been on the market for 15 years I would have answered more than double that.

 

[kboo]

Wow. This is about the clearest explanation of the issues I've been thinking about as well. Thanks! I don't think DVD ever meant to "kill" resale so much as to set up a "different" product. It will be interesting to see what 7mo availability at RIV looks like once all the points have been declared and the resort sells out, or is close to selling out. If 7mo availability becomes as tough as it can be for BWV and BCV at certain times of the year (let alone VGF and VGC, or CCV studios), then they will have achieved their goal.

The mortgage angle is one I've been thinking of but wasn't able to articulate either - early resales of RIV are going to be from owners for whom circumstances have changed, and who are likely financing and can't keep up with the payments. Those are the sellers who will have a pretty high floor for what they can sell for, because they'll have to come up with cash at closing.

Hey @kboo I want to understand your point. In one sense posts above agree DVD is reacting to the 7 month burden faced by direct purchasers by adding resale restrictions, yet your statement as I read it indicates that if RVV becomes a hot mess at 7 months (I certainly think it will initially) DVD will have “achieved their goal”.

Sort that out a bit for me would you?

Thanks

I *think* (although @dvcsince93 may be able to explain my thoughts better) what I meant was, if RIV is a hot mess at 7 mo, that means that DVD/the market/whatever has created an incentive to owning RIV points so you can book before it becomes a hot mess. If it's already a hot mess at 7mo before it sells out, then that's a great way to sell direct points. (And if it's a hot mess even after it sells out, then resale prices aren't going to dip that low either, because a knowledgeable resale buyer is going to buy those points also to avoid the 7mo mess.) I don't think DVD cares so much about ROFR and I think the resale restriction was meant to ease their burden on ROFR for future resorts.

The heavy ROFR on the L14 resorts, which are pretty tradable with each other, drove up resale prices on the L14 resorts, and particularly on the "more economical" ones that are frequently touted to be useful for trading, together with the developer credits on RIV, made the direct RIV price competitive with L14 resale. I suspect that future DVC resorts will have the same resale restriction, and then DVD will spend less and less time focusing on ROFR (and will primarily spend time on L14 ROFR).

Also let's not forget the 10% interest on 66% of the direct sales of ~6.5 million RIV points - at $170 pp, that's, uhhhh, 10% interest on financing $729 million.... There is a lot more $ to be made on direct sales and the financing associated with them; I don't think DVD cares that much about ROFR. The resale restriction on new resorts, and super inflated prices for direct points at older, sold out resorts is all so they don't need to deal as much with ROFR going forward.

 

[dvcsince93]

I am not sure how DVD would raise the price of contracts-unless they take over the resale market, they really can't control resale prices. People who sell because they have to will always accept what they can get when they need to sell and, as can be seen by the resales prices of even the most popular resorts, if people who want to sell, can sell for even close to as much as they paid, they see it as a win.

I also don't see DVD trying to take away rights from existing owners- they have grandfathered all of the changes made to date. Why make present owners angry. They are playing a long game- the first resorts revert in 2042 and by that time, they will have firmly set up a system where people don't expect that resales points have exchange ability.

I agree that resale prices will never go to 0-they still have exchange benefits for the O14 and for DRR, (and future resorts), it will settle on a value for DRR where people are willing to pay for just DRR access. While the resale market is not as big as I thought, it is significant and there are a number of companies that make their living off of DVC resale and people who want DVC for less cost. They have every incentive to make sure the market stays alive.

One last thing I hadn't thought of, is that lower prices will allow DVD to buyback, e.g.,DRR resale points without exchange benefits cheaper- which they can then turn around and sell direct with exchange benefits. So they can get whatever supply they want or need for less and make a bigger profit off of the sales, an who knows, may even get a mortgage on top of that..

 

[dvcsince93]

I agree with @kboo (and I appreciate the complement but I have learned that speaking for anyone only risks putting my foot in my mouth) that these changes make the ROFR for the new resorts irrelevant to DVD since we can't sell a DRR point that has exchange privileges, only DVD can. The only purpose I see for ROFR in DRR is to keep an inventory of points when it sells out.

They sold alot of points to alot of people, including me, when there was only one WDW resort. They can do it again: The New DVC+ - 14 Great Original DVC Resorts but 1 Even Better DVC+ Resort with more DVC+ resorts to come. Sort of Back to the Future.

 

[kboo]

(and I appreciate the complement but I have learned that speaking for anyone only risks putting my foot in my mouth)

I run that risk even trying to speak for myself.

 

[KAT4DISNEY]

I *think* (although @dvcsince93 may be able to explain my thoughts better) what I meant was, if RIV is a hot mess at 7 mo, that means that DVD/the market/whatever has created an incentive to owning RIV points so you can book before it becomes a hot mess. If it's already a hot mess at 7mo before it sells out, then that's a great way to sell direct points. (And if it's a hot mess even after it sells out, then resale prices aren't going to dip that low either, because a knowledgeable resale buyer is going to buy those points also to avoid the 7mo mess.) I don't think DVD cares so much about ROFR and I think the resale restriction was meant to ease their burden on ROFR for future resorts.

The heavy ROFR on the L14 resorts, which are pretty tradable with each other, drove up resale prices on the L14 resorts, and particularly on the "more economical" ones that are frequently touted to be useful for trading, together with the developer credits on RIV, made the direct RIV price competitive with L14 resale. I suspect that future DVC resorts will have the same resale restriction, and then DVD will spend less and less time focusing on ROFR (and will primarily spend time on L14 ROFR).

Also let's not forget the 10% interest on 66% of the direct sales of ~6.5 million RIV points - at $170 pp, that's, uhhhh, 10% interest on financing $729 million.... There is a lot more $ to be made on direct sales and the financing associated with them; I don't think DVD cares that much about ROFR. The resale restriction on new resorts, and super inflated prices for direct points at older, sold out resorts is all so they don't need to deal as much with ROFR going forward.

I think some of it is what "a hot mess" means. There are more comments recently from people who regret purchasing CCV because of the booking difficulties. If Riviera experiences the same for the studio category, which hopefully it won't because it is a larger resort with more studios, then having even more restrictions will be an even greater negative to a resale buyer. It's a wait and see on the studios but with higher direct prices there are a lot more people planning for them than have at older resorts that had lower buy in and/or lower point charts.

 

[kboo]

I think some of it is what "a hot mess" means. There are more comments recently from people who regret purchasing CCV because of the booking difficulties.

My reference to "hot mess at 7 mo" above specifically meant that it can be difficult to book at 7mo using other points, so that someone with grandfathered points would have difficulty booking at 7 mo (whether it's studio or 2br) and would then be looking at a small resale contract to use only at RIV.

But I agree, hot mess could happen at any time and due to various factors. As far as I understand, VGF studios can be hard to book at virtually any time of the year (and near-impossible to get for a lengthy period of time) at 7 mo in advance, too, but I don't hear a lot of people saying they regret buying VGF (as opposed to CCV). Why is that? Or is it because there is that much more pressure with CCV because of all the points sold against the cabins?

I was on the dvc news site earlier that was giving a breakdown of direct contracts and points sold, per month. for the sold out resorts, the average contract size is 100 points or less, and for the current resorts, and averaging 139 points for CCV and 145 points for RIV.