Recent DVC ROFR Activity

[ParentsOf4]

DVC Right Of First Refusal (ROFR) activity appears to be picking up once again. There are several pieces of information when, taken together, indicate 2013 may not be like 2012.

Throughout 2012, Disney infrequently exercised ROFR except at Old Key West (OKW). However, it appears Disney has started 2013 much more aggressively.

Recently there was a change in DVC leadership, with Ken Potrock assuming the helm on February 1. Perhaps this change was more than administrative and signaled a change in DVC’s direction.

Prospective DVC buyers are reporting Disney is once again exercising ROFR more aggressively, particularly at the Boardwalk Villas (BWV) where, it seems, resales are once again being claimed through ROFR. Earlier this year, Disney offered theme park ticket incentives for BWV, an unusual move for an older DVC resort. (BWV opened in 1996.) Reportedly, these sales were so brisk that Disney’s entire BWV inventory was depleted. Consequently, Disney began to aggressively exercise ROFR at BWV, where the direct sale price is now $130/point while the resale price in 2012 sometimes was below $60/point. Folks now are reporting that Disney is exercising ROFR on BWV contracts that are over $70/point. Increased ROFR activity is being reported at other properties as well.

On March 20, Disney raised the direct sale price on most of its DVC properties. Some properties increased by over 30% while the aforementioned BWV increased from $115 to $130/point (a 13% increase). This increase might have created a spike in demand, as prospective buyers rushed to lock in at old prices.

Until the Villas at the Grand Floridian (VGF) opens in 2014, Disney has no new DVC properties to offer and instead has focused advertising the Animal Kingdom Villas (where Disney still has over 1 million points available) and Aulani (Hawaii). These two resorts, along with Bay Lake Tower, are Disney’s newest DVC properties. Based on recent activity, it is possible Disney will use this interim period to sell points at its older DVC properties.

With a slowing improving economy and no new DVC properties to sell, Disney once again appears poised to become more aggressive with ROFR in 2013. It will be interesting to watch if this trend continues after VGF opens.

 

[LuvtheGoof]

Actually, I'm surprised they haven't exercised it more often. BWV and BCV are VERY popular, and a lot of people wish to purchase directly from Disney, instead of resale. It seems that Disney, even with the costs involved, would make quite a bit of money by buying back contracts at $70, and selling again at the old BWV price of $115, much less at $130. I have heard that you can be on the waitlist for quite awhile for some of the more popular properties when you ask to buy direct from Disney (you can buy ANY property direct from Disney - even sold-out properties). So a disclaimer here. We already own 360 points, but when we add-on (and we will!!), it will be through Disney only, despite the price difference. We are just too leery that Disney will further erode the benefits that people buying resale will get. Imagine, if you will, that Disney offers the PAP discount again this year for the same $399 as last year, but ONLY to those who bought their contracts direct from Disney? They can legally do this, even if it angers a percentage of owners, since the PAP discount is only a "perk", and not a "right". While I do not think this particular situation might arise, there is simply no telling what they might do in the future. The bean counters will figure that the percentage that may try to sell their contracts for this reason would be small and insignificant to them. And DVC then doesn't have to spend as much on the "perk", since not everyone would be eligible. They really do crunch numbers like this in big corporations. It is sad, and I do hope that things like this never happen, but I'm not willing to take that chance.

Oh, I do have to say that we LOVE being DVC members!!

 

[GoofGoof]

Actually, I'm surprised they haven't exercised it more often. BWV and BCV are VERY popular, and a lot of people wish to purchase directly from Disney, instead of resale. It seems that Disney, even with the costs involved, would make quite a bit of money by buying back contracts at $70, and selling again at the old BWV price of $115, much less at $130. I have heard that you can be on the waitlist for quite awhile for some of the more popular properties when you ask to buy direct from Disney (you can buy ANY property direct from Disney - even sold-out properties). So a disclaimer here. We already own 360 points, but when we add-on (and we will!!), it will be through Disney only, despite the price difference. We are just too leery that Disney will further erode the benefits that people buying resale will get. Imagine, if you will, that Disney offers the PAP discount again this year for the same $399 as last year, but ONLY to those who bought their contracts direct from Disney? They can legally do this, even if it angers a percentage of owners, since the PAP discount is only a "perk", and not a "right". While I do not think this particular situation might arise, there is simply no telling what they might do in the future. The bean counters will figure that the percentage that may try to sell their contracts for this reason would be small and insignificant to them. And DVC then doesn't have to spend as much on the "perk", since not everyone would be eligible. They really do crunch numbers like this in big corporations. It is sad, and I do hope that things like this never happen, but I'm not willing to take that chance.

Oh, I do have to say that we LOVE being DVC members!!

Interesting theory, but not likely to happen. In the history of DVC they have never taken away a benefit from a current member whether purchased direct or through resale. When the "perks" for those that bought resale were reduced it was only for new resale purchases, everyone who already bought in were grandfathered in. I know that they legally could revoke priveledges for people who bought resale in the past, but they could also legally only offer the perks to new members who buy at say GFV or whatever new properties they sell and exclude any current owners (both people who bought direct and resale). Neither scenario seems likely, but both would be legal and serve the same purpose of adding an incentive to buy new points while reducing the cost of the promotion. At the end of the day a healthy resale market is a positive for DVC since it makes potential buyers more comfortable that they can get out of their contract if their financial or personal circumstances change.

 

[GoofGoof]

DVC Right Of First Refusal (ROFR) activity appears to be picking up once again. There are several pieces of information when, taken together, indicate 2013 may not be like 2012.

Throughout 2012, Disney infrequently exercised ROFR except at Old Key West (OKW). However, it appears Disney has started 2013 much more aggressively.

Recently there was a change in DVC leadership, with Ken Potrock assuming the helm on February 1. Perhaps this change was more than administrative and signaled a change in DVC’s direction.

Prospective DVC buyers are reporting Disney is once again exercising ROFR more aggressively, particularly at the Boardwalk Villas (BWV) where, it seems, resales are once again being claimed through ROFR. Earlier this year, Disney offered theme park ticket incentives for BWV, an unusual move for an older DVC resort. (BWV opened in 1996.) Reportedly, these sales were so brisk that Disney’s entire BWV inventory was depleted. Consequently, Disney began to aggressively exercise ROFR at BWV, where the direct sale price is now $130/point while the resale price in 2012 sometimes was below $60/point. Folks now are reporting that Disney is exercising ROFR on BWV contracts that are over $70/point. Increased ROFR activity is being reported at other properties as well.

On March 20, Disney raised the direct sale price on most of its DVC properties. Some properties increased by over 30% while the aforementioned BWV increased from $115 to $130/point (a 13% increase). This increase might have created a spike in demand, as prospective buyers rushed to lock in at old prices.

Until the Villas at the Grand Floridian (VGF) opens in 2014, Disney has no new DVC properties to offer and instead has focused advertising the Animal Kingdom Villas (where Disney still has over 1 million points available) and Aulani (Hawaii). These two resorts, along with Bay Lake Tower, are Disney’s newest DVC properties. Based on recent activity, it is possible Disney will use this interim period to sell points at its older DVC properties.

With a slowing improving economy and no new DVC properties to sell, Disney once again appears poised to become more aggressive with ROFR in 2013. It will be interesting to watch if this trend continues after VGF opens.

I do find the economics behind DVC to be pretty interesting. I agree with your theory that Disney is probably filling some time between projects by reselling older resorts. They have to have a large sales staff that was ramped up to sell BLT, AKV, SSR and Aluani but they need something to sell now that DVC is in a bit of a lull. What is interesting is GFV is pretty small compared to AKV or SSR so it should sell relatively fast. I wonder when we will start hearing about the next project. If nothing "breaks ground" by the time they start selling GFV we may see a sustained period of ROFR exercises and direct sales. Should be interesting to watch.

 

[GoofGoof]

I do find the economics behind DVC to be pretty interesting. I agree with your theory that Disney is probably filling some time between projects by reselling older resorts. They have to have a large sales staff that was ramped up to sell BLT, AKV, SSR and Aluani but they need something to sell now that DVC is in a bit of a lull. What is interesting is GFV is pretty small compared to AKV or SSR so it should sell relatively fast. I wonder when we will start hearing about the next project. If nothing "breaks ground" by the time they start selling GFV we may see a sustained period of ROFR exercises and direct sales. Should be interesting to watch.

I'm quoting myself - just read the article on GFV and it looks like it will be much smaller than even BLT. Maybe somewhere around 2 to 2.5 million points. Even if they jack the price to $200 they probably won't take long to sell.

 

[bgraham34]

I'm quoting myself - just read the article on GFV and it looks like it will be much smaller than even BLT. Maybe somewhere around 2 to 2.5 million points. Even if they jack the price to $200 they probably won't take long to sell.

I have no desire to buy at GFV especially given the high price of the points. I am happy I bough resale 5 years ago.

 

[Sneezy62]

Actually, I'm surprised they haven't exercised it more often. BWV and BCV are VERY popular, and a lot of people wish to purchase directly from Disney, instead of resale. It seems that Disney, even with the costs involved, would make quite a bit of money by buying back contracts at $70, and selling again at the old BWV price of $115, much less at $130. I have heard that you can be on the waitlist for quite awhile for some of the more popular properties when you ask to buy direct from Disney (you can buy ANY property direct from Disney - even sold-out properties). So a disclaimer here. We already own 360 points, but when we add-on (and we will!!), it will be through Disney only, despite the price difference. We are just too leery that Disney will further erode the benefits that people buying resale will get. Imagine, if you will, that Disney offers the PAP discount again this year for the same $399 as last year, but ONLY to those who bought their contracts direct from Disney? They can legally do this, even if it angers a percentage of owners, since the PAP discount is only a "perk", and not a "right". While I do not think this particular situation might arise, there is simply no telling what they might do in the future. The bean counters will figure that the percentage that may try to sell their contracts for this reason would be small and insignificant to them. And DVC then doesn't have to spend as much on the "perk", since not everyone would be eligible. They really do crunch numbers like this in big corporations. It is sad, and I do hope that things like this never happen, but I'm not willing to take that chance.

Oh, I do have to say that we LOVE being DVC members!!

But wouldn't the points you already have entitle you to to perks like the PAP and other discounts? I've been thinking about DVC for my family and would only consider resale. If something happened like say they end up giving more fastpass+s to Direct purchasers and took away all discounts from resale buyers, then one would simply add on 25 points direct. Those 25 points would be entitled to the same benefits as any other direct purchase wouldn't they? I'm not trying to argue against your decision to buy everything direct, just trying to understand how Disney could treat some direct points differently from other direct points. Maybe they could make a minimum number of direct points entitled to perks? Are the 360 points you already have direct or resale?

 

[ParentsOf4]

A change to a DVC perk is not done to "punish" an existing DVC member; it is made to improve future DVC direct sales. Disney generally accomplishes little by decreasing a perk for one class of existing DVC member (e.g. resales) while keeping it for another class (e.g. direct sales). That's why it makes sense to grandfather in perks. No reason to upset existing members.

A perk (e.g. valet parking at BWV) might be eliminated because it's too expensive and DVC members don't want it impacting annual Maintenance Fees but that's different than restricting existing perks to some members only.

 

[LuvtheGoof]

But wouldn't the points you already have entitle you to to perks like the PAP and other discounts? I've been thinking about DVC for my family and would only consider resale. If something happened like say they end up giving more fastpass+s to Direct purchasers and took away all discounts from resale buyers, then one would simply add on 25 points direct. Those 25 points would be entitled to the same benefits as any other direct purchase wouldn't they? I'm not trying to argue against your decision to buy everything direct, just trying to understand how Disney could treat some direct points differently from other direct points. Maybe they could make a minimum number of direct points entitled to perks? Are the 360 points you already have direct or resale?

They have grandfathered in anyone who currently owns, and I hope that never changes. All of our points were bought direct from Disney years ago. So far, only new resale purchases have any restrictions, and I hope that doesn't change either!

 

[LuvtheGoof]

Interesting theory, but not likely to happen. In the history of DVC they have never taken away a benefit from a current member whether purchased direct or through resale. When the "perks" for those that bought resale were reduced it was only for new resale purchases, everyone who already bought in were grandfathered in. I know that they legally could revoke priveledges for people who bought resale in the past, but they could also legally only offer the perks to new members who buy at say GFV or whatever new properties they sell and exclude any current owners (both people who bought direct and resale). Neither scenario seems likely, but both would be legal and serve the same purpose of adding an incentive to buy new points while reducing the cost of the promotion. At the end of the day a healthy resale market is a positive for DVC since it makes potential buyers more comfortable that they can get out of their contract if their financial or personal circumstances change.

All very true! When they restricted new resale buys to only DVC properties, it indicated a shift in attitude. I just hope it doesn't go any farther. They will absolutely want the resale market to be healthy, since they buy them back, and resell at a higher cost, giving them more profit on the same points!

 

[ParentsOf4]

Data from the Orange County Comptroller (OCC) website shows Disney’s Right of First Refusal (ROFR) activity picked up in March. During of the previous 12 months, Disney exercised ROFR mostly at OKW, with only limited ROFR activity elsewhere. The most recent month showed high ROFR activity at OKW, SSR, BWV, and BLT. ROFR activity was much lower at AKV, BCV, and VWL. (Note it takes a few weeks to close so the OCC website typically reflects the previous month’s activity.)

DVC reseller websites currently have many listings for SSR, AKV, BLT, and OKW but relatively few for BCV, BWV, or VWL. Median resale asking prices are $97/point at BLT, $85/point at BWV, $81/point at BCV, $78/point at AKV, $75/point at VWL, $73/point at SSR, and $65/point at OKW.

AKV is the only WDW DVC Disney is actively marketing although it is possible to buy at other DVC resorts. Disney sold old over 130,000 AKV points in April and Disney is down to less than 1 million points remaining out of over 7 million AKV points. Disney is offering incentives to purchase at AKV, including discounts and free theme park tickets, and this has helped recent AKV sales. It appears Disney is trying to sell AKV before offering points at the Villas at the Grand Floridian (VGF), which is scheduled to open later this year. Disney’s direct price is $145/point but, with incentives, it is possible to buy at AKV for under $130/point.

Most AKV resales are asking in the $70-to-$80 range but buyers are making it through ROFR as low as $60/point. Based on high ROFR activity at OKW, SSR, BWV, & BLT along with low inventory availability at BCV, BWV, & VWL, AKV offers perhaps the best opportunity to buy via resale at this time.