Why Don't Disney Do ROFR Before Resale

[Jkarrows]

Sorry if this has been asked before, i have tried to find a thread on this but had no luck.

Just putting it out there to others but why does Disney not do ROFR before people advertise the points for resale, this would then mean all contracts that are being offered have passed Disney who have said no thank you.

It would then mean all contracts for sale would have passed this stage.

The seller contacts Disney and says for example, i have 100 points at Old Key West with a April use date with this amount of points available on this date and i want 100 Dollars per point.

Disney then look and go yes or no.

The seller then sells for a 100 dollars per point, if they want to reduce the amount they ask for then they would have to go back to Disney and start again but at least whats for sale can be sold rather then having to wait the 30 days for Disney to say no and star the process over again.

I might be missing something here but it would just streamline the process.

 

[Fireline]

Edit. Answered the wrong question.

 

[CarolMN]

I don't think DVD has any interest in making resale "easy" or convenient/quick for a buyer. Repeated reviews for ROFR would take DVD employee time and that costs money.

Also, DVDy certainly doesn't want to pay more to take a contract than they absolutely have to and therefore, they let the owner and prospective buyer to do all the negotiating before they get involved.

FWIW, I do not think a "set" price is in either the seller's or the buyer's best interest.

 

[LuigiSpice]

I would assume there is no benefit to them to take back all these contracts. If they have no one on a wait list wanting it, it could just sit in their inventory and they are no longer collecting the yearly fees.

 

[Dean]

Their goal isn't to get the points back but to drive new buyers to retail and to avoid the fire sale. They have bought back directly at times but it's been well below the usual ROFR price the times I seen it posted.

 

[Jkarrows]

I would assume there is no benefit to them to take back all these contracts. If they have no one on a wait list wanting it, it could just sit in their inventory and they are no longer collecting the yearly fees.

Then they can just refuse and allow them to go to resale, the amounts they would see throughout the year would give them a steady supply of ones they could accept.

Just my view.

 

[Jkarrows]

Their goal isn't to get the points back but to drive new buyers to retail and to avoid the fire sale. They have bought back directly at times but it's been well below the usual ROFR price the times I seen it posted.

This is the point, if people knew what Disney would buy back at then the whole process would be so much easier, i think like another poster has put, Disney do not want it to be easy to resell but then why did they just not allow resell and buy them back in the terms and conditions of contract.

Seems they are happy to take but not give a little.

If the points to buy direct were not so high i am sure the resell market would not be there in the first place.

Fine balancing act.

 

[Jkarrows]

I don't think DVD has any interest in making resale "easy" or convenient/quick for a buyer. Repeated reviews for ROFR would take DVD employee time and that costs money.

Also, DVDy certainly doesn't want to pay more to take a contract than they absolutely have to and therefore, they let the owner and prospective buyer to do all the negotiating before they get involved.

FWIW, I do not think a "set" price is in either the seller's or the buyer's best interest.

You say it will cost time, but they have to review them anyway so there is no more time involved unless someone wants to drop there asking price then Disney could simply state any re-submissions would involve a admin fee of X amount.

I think your right on they do not want it to be easy, so why allow it in the first place.

 

[Jkarrows]

Also one other point Disney may have more sales as people who may want to buy into a resort currently go on a waiting list awaiting resale point to come available via Disney ROFR but by the contracts going to Disney first they would clear out all there back orders and have some buffer stock, some people will just not wait and move on but Disney would have them to sell straight away.

 

[Dean]

This is the point, if people knew what Disney would buy back at then the whole process would be so much easier, i think like another poster has put, Disney do not want it to be easy to resell but then why did they just not allow resell and buy them back in the terms and conditions of contract.

Seems they are happy to take but not give a little.

If the points to buy direct were not so high i am sure the resell market would not be there in the first place.

Fine balancing act.

They don't want you to know, they purposefully want to keep people guessing so they'll be more likely to avoid the uncertainty and buy retail. Plus if they do buy it they want to get it as cheaply as possible, not just under a certain price.

 

[Jkarrows]

They don't want you to know, they purposefully want to keep people guessing so they'll be more likely to avoid the uncertainty and buy retail. Plus if they do buy it they want to get it as cheaply as possible, not just under a certain price.

For sure, i wonder ow many potential sales have been lost by them not having the location the buyer wants, in past years i walked away from a deal as they told me 6 to 12 months to get the points i wanted at the resort i wanted and they kept trying to push a resort i did not want as my home resort.

Took me another 4-5 years before I thought about buying again.

If i am one person how many others have waled out the DVD showroom doors without a purchase not to come back.

 

[JETSDAD]

It would likely more than double their workload and cause even more delays, with nothing gained on their side of things. How many contracts are listed that never sell? How many contracts are listed that sell at the exact terms of the listing? They would then be giving approvals for every over priced listing that has zero chance of selling at the list price, only to have to review it again later on. Even appropriately priced listings may end up with some negotiated terms such as who covers closing costs or MF's.

 

[JETSDAD]

With regards to it increasing their sales, they can do that every single day as it currently exists and yet they choose not to. When the review occurs doesn't help with that. Every single day contracts are being accepted and sent in for ROFR for all the resorts. If they wanted to be filling the requests they could ROFR those contracts already. They choose not to.

 

[rg35]

It's just an impractical idea.
Disney has no way of knowing what resale contracts are up for sale until they are submitted for ROFR.

To proactively do ROFR would mean setting up the infrastructure to do so, and processing every resale contract whether it's going to sell or not. It would also take out the buyer/seller negotiation process. It's a lot of extra work and cost for no benefit to Disney.

It just doesn't really make a lot of sense on several levels.

 

[_auroraborealis_]

Disney do not want it to be easy. That's the key here.

If you call Disney and say you want to sell, they may offer to buy. The price they will offer is well below market.

 

[Firebird060]

Heres the thing, Disney cant legally stop you from Reselling anything, so they couldnt have it in the contract and also Disney doesnt want to be in the bussiness of buying back points. The emptier the DVC Property the more Disney has to pay on taxes and maintence. The reason Disney has the rofr is so a the market cant completely drop out on the properties, they can make it so the property has a minimum value and they can manipulate that to there purposes. Disney buys back DVC only for good reasons that benifit them. When Disney buys a really cheap contract the do it to protect the value of the brand, when Disney buys back contract that are close to whatever value they assign to the points, its either to maintain a threshold of intrest in Cash offer rooms or its to back fill requests add on points and small contract points, you see disney charges a premium to Add points from "sold out" resorts, this is the more lucrative point of business for them. If Disney was to buy back all contracts, they would have to much stock and would have to sell it at lower fee, Disney would then also have more of a financial responsibility for those properties. DVC exsists only to benefit Disney much more then its there to Benefit the guest or buyer. For every Point Disney sells on a DVC contract, it means they have less of a burden for the Property solely, this allows them to save money on resorts in the long run and possibly completely pay off the cost of owning, building and running the resorts, with a healthy profit by the end of the contract time. Its really not a bad racket that Disney has going on. They have the demand and the location, yes DVC resorts take alot of upfront capital to build and maintain but if I can build a new resort with 300 rooms, Which is what the Riveria has and spend about 50 million or a bit more on construction without counting the gondola station to build it. I could then make available say maybe 3.1 to 3.5 million points. Which is about how many Points Beach Club has and they have slighly lower room count, but bigger rooms. and Say I charge $188 per point. The amount I could make is above 580 million in sales alone without counting maintence fees each year. I easily made 10 times my investment without considering costs of selling and staffing the resort, which yes lets be generous lets say it costs me 180 million to staff for the length of the contract without counting the maintence fees per point which Disney is allowed to increase over time which could easily pay for the staffing needs. I am still makeing 250 million in profit once the resort is fully up. Thats great money, but now say I have to buy and keep reselling those points, There is much more staffing requirements and risk in owning them. If I had another economic down turn, I could easily be left with a load of points with no interested buyers and lots of costs I would have to take more of a burden on. Thats a big risk. Right now the Theme Parks are booming and people are coming in droves, so yes it might be easily to keep reselling these points at a premium but DVC is also a great insurance policy for Disney, because even durring a down turn you know these resorts are going to be paid for purely on maintence fees. Less risk and a better reward.

 

[CraigInPA]

The idea of pre-listing ROFR isn't a workable one. Let me give you the answer as an example:
Lois Smith contacts DVC and says she wants $150 per point for her 100 AKV points.
DVC responds "No thank you"
Lois puts the points up for sale at $150 per point.
No one is interested.
Lois reduces her price over and over.
Lois gets an offer for $100 per point after a year of declining asking prices, which she accepts.
DVC says "But wait... we said no at $150 per point. At $100 per point, we want them."
This is why pre-listing ROFR isn't a workable idea.

Now, let's flip it on its head.
Lois Smith contacts DVC and says she has 100 AKV points, and wants to know what they will pay?
DVC says "$100 per point"
Lois says "No way, I want $150 per point!"
Lois lists them for sale at $150 per point.
No one is interested.
Lois reduces her price over and over.
Lois gets an offer for $100 per point after a year of declining asking prices, which she accepts.
DVC says "But wait... we said we want them at $100 per point."
This is another reason why pre-listing ROFR isn't a workable idea.

 

[Dean]

For sure, i wonder ow many potential sales have been lost by them not having the location the buyer wants, in past years i walked away from a deal as they told me 6 to 12 months to get the points i wanted at the resort i wanted and they kept trying to push a resort i did not want as my home resort.

Took me another 4-5 years before I thought about buying again.

If i am one person how many others have waled out the DVD showroom doors without a purchase not to come back.

Or looked at the other way, how many people bought the resort in active sales because they weren't offered or didn't have a given sold out resort. Even at half price, they're not really making much if any money on the resale bought ROFR. The hard costs of building a resort is usually in the 50% range of the sale price, the rest is profit and marketing. And they are geared to sell the active resort. Any sale otherwise for a different resort just delays that sellout. The idea that it's simply a windfall for the developer is incorrect.

 

[Jkarrows]

Or looked at the other way, how many people bought the resort in active sales because they weren't offered or didn't have a given sold out resort. Even at half price, they're not really making much if any money on the resale bought ROFR. The hard costs of building a resort is usually in the 50% range of the sale price, the rest is profit and marketing. And they are geared to sell the active resort. Any sale otherwise for a different resort just delays that sellout. The idea that it's simply a windfall for the developer is incorrect.

It is a win win for Disney, Sell DVC points at marked up costs, cover build costs ect in these point sales, then later buy the sames points via ROFR only at reduced value and then resell at new marked up market value above the original sale price of day one making profit on the points again.

It is a Win Win.

 

[Dean]

It is a win win for Disney, Sell DVC points at marked up costs, cover build costs ect in these point sales, then later buy the sames points via ROFR only at reduced value and then resell at new marked up market value above the original sale price of day one making profit on the points again.

It is a Win Win.

That's just it, it's not. They're focus is on selling a current resort and anything off of that is a distraction. I think you're assuming most won't buy the new resort or they'll sell a lot more points if they do so but that's not really the case. They'll make a little here and there they wouldn't have and sell a FEW more points but at considerable aggravation and very little overall profit. The main reason really reason for ROFR is simply to sell retail.