Did another DVC meeting

[dreamfinder]

I don't think they could take points out of the pool like that...

I don't know if they are really taking them out of the pool. DVC just then owns the points and can use them for cash rentals. Or simply sit on them, which would seem strange as it only costs them money. It's no different than if a guest chose to not use their points. I think that as long as the total number of points at the resort didn't change, they would be ok. If they chose to build a new building, and then charge the guests they sold the new/old points to to pay for it, I think they can. What happened to the points allocation when they added the treehouses at SSR? Are they separate but equal so that the total points at SSR didn't change, and the treehouses have their own points? Or did they add those to the point total? That would give some indication of what they can do.

 

[flynnibus]

I don't know if they are really taking them out of the pool. DVC just then owns the points and can use them for cash rentals. Or simply sit on them, which would seem strange as it only costs them money. It's no different than if a guest chose to not use their points. I think that as long as the total number of points at the resort didn't change, they would be ok

Yes, if they just held the points.. but you were suggesting taking out and adding something else. I'm not sure..

But from the treehouses, we can see they can ADD property and add more points to the existing resorts.

http://dvcnews.com/index.php/resort...ws/1629-more-treehouse-villas-declared-at-ssr

But my searching (limited) hasn't seen anything about taking inventory out of the system..

 

[GoofGoof]

I don't know if they are really taking them out of the pool. DVC just then owns the points and can use them for cash rentals. Or simply sit on them, which would seem strange as it only costs them money. It's no different than if a guest chose to not use their points. I think that as long as the total number of points at the resort didn't change, they would be ok. If they chose to build a new building, and then charge the guests they sold the new/old points to to pay for it, I think they can. What happened to the points allocation when they added the treehouses at SSR? Are they separate but equal so that the total points at SSR didn't change, and the treehouses have their own points? Or did they add those to the point total? That would give some indication of what they can do.

When they buy points back through ROFR they will rent the rooms for cash if they can while they hold the points to cover the costs. Cash rented rooms vary year to year and that is partially due to inventory held by DVC either from ROFR or new u its not yet sold. BLT had an increase in dues this year partially due to less cash rentals. But, if they buy the points back and then knock down the buildings or do a major refurb the rooms wouldn't be available to rent during that time so it wouldn't work.

 

[GoofGoof]

And you could also stop going to WDW.

For me, the big thing is, simply not knowing how many points we'll need as time goes on. There are too many variables:

-We could buy too many points and not need them as time goes on. We won't need as large a room as we need now, and we may not go for 2 weeks.
-We could buy too few points and not have enough for the next few years.

I will say this though, and take it for what's worth. Everyone I know on a personal level that has owned DVC, has sold it. Now granted, it's only a handful of people, but that speaks volumes to me.

I see your dilemma. You would have a pretty serious outlay of cash upfront. It's always easier to add more points later than sell extra points.

There is a pretty active resale market so I don't think your friends are alone. I think one of the biggest factors is people fail to consider just how expensive everything else is at WDW. Lodging is only a fraction of the total cost of a trip.

 

[ScoutN]

There is a pretty active resale market so I don't think your friends are alone. I think one of the biggest factors is people fail to consider just how expensive everything else is at WDW. Lodging is only a fraction of the total cost of a trip.

See, I factored that in before I purchased at 21 mind you. Tickets go up up up and although DVC gets a great AP deal I do not have the desire to go into WDW parks more than twice per year even as my AP covers it. Especially now with a lack of offerings being created within the resort. My family is locked into SWP&E's EZ pay for a Platinum Pass (two years all parks in the company) at the 2004 rate. I love visiting AQ, SWO, and BGT on a regular basis but lodging was the holdup from me doing it more. I now plan a trip specifically for those parks (trip 12 days from now) although I'll prob do an EMH night. My October trip is built around Uni HHN and BGT HoS, two nights at each and up in the air for MNSSHP. For me there is more offered than just WDW parks and visiting/dining in complex. I might be the exception to having easy access to other parks in the area but if I were not in the position I am with SWP&E passes then there is a good chance I would not have bought it... or at least at 21.

 

[DVCOwner]

Fair point. You could also start taking the bus or just walk.

I think the first major bullet point on most people's list is you have to compare DVC to deluxe resorts. If you are likely to stay at value or even moderate in the future the economics probably don't work. One of the major uncertainties around DVC is you have to make the assumption you will be going to WDW at least until you hit your breakeven point. If something comes up in the first few years that prevents you from going and you sell you will lose money.

I do not think this is always a fact. When we purchased DVC I was compairing the way we travel. We always travel in a group and needed at least two rooms and sometimes three. So we looked at what it would cost for two moderate rooms vs one two-bedroom DVC. We could use the master bedroom, put the boys in the living room area and give the girls the second bedroom. At that time with young kids that did not like to eat out, we also use the kitchen a lot to redue food cost.

 

[GoofGoof]

I do not think this is always a fact. When we purchased DVC I was compairing the way we travel. We always travel in a group and needed at least two rooms and sometimes three. So we looked at what it would cost for two moderate rooms vs one two-bedroom DVC. We could use the master bedroom, put the boys in the living room area and give the girls the second bedroom. At that time with young kids that did not like to eat out, we also use the kitchen a lot to redue food cost.

Fair enough. It is a very personal decision and has to be based on your own travel needs. I was speaking in generalities, but I did say "most people's list". There are so many variables to how people use DVC, how many points people own and how much they paid for the points there is no way to say anything for sure. I did the math comparing DVC to moderates (with a discount on the rack rate) and the break even for me is pretty long (I think 20+ years). I never looked at 3 moderate rooms vs a 2 bedroom, but I imagine the breakeven is much sooner. I can't see how anyone could figure out a breakeven compared to value resorts.

I agree with your food point 100%. When I go I will almost always be staying in a 1 or 2 bedroom so the kitchen is a huge plus. I probably won't cook a huge dinner but with the exception of character breakfasts we will probably eat breakfast in the room most days and we will have plenty of drinks and snacks. It can definitely save you hundreds on a trip. I also like to have a few 6 packs in my fridge to unwind with at the end of a long day.

 

[DVCOwner]

We are heading down to WDW this October and we have a group of 19 people going. We are staying at the BWV and have two two-bedroom and two studios. Three different people using points. If we where staying in normal rooms we would need 8 rooms to house the same group. We are also having two dinners and five breakfast in one of the two-bedroom suites for the whole group. We normally have several lunches in suite, but this being during the Wine and Food Festival we will be spending more time eating at EPCOT. So for the way we travel I do not think we could do a comparison of cost. I do not think we could do the things we want to without DVC. So even if I could stay at "rack rate" and save money, I would not want to.

 

[captainkidd]

We are heading down to WDW this October and we have a group of 19 people going. We are staying at the BWV and have two two-bedroom and two studios. Three different people using points. If we where staying in normal rooms we would need 8 rooms to house the same group. We are also having two dinners and five breakfast in one of the two-bedroom suites for the whole group. We normally have several lunches in suite, but this being during the Wine and Food Festival we will be spending more time eating at EPCOT. So for the way we travel I do not think we could do a comparison of cost. I do not think we could do the things we want to without DVC. So even if I could stay at "rack rate" and save money, I would not want to.

Of course you could. That's what the Magical Gatherings department is for, if they still do those.

I think that's a big thing for me. Last 2 trips, I've stayed in a 1 bedroom villa, and will continue to do so, but haven't eaten 1 meal in the room.

 

[tjkraz]

My theory is that some of the downward price movements that began in 2008 were a direct result of the "great recession". People who already owned lost jobs and had to sell combined with less people renting points. Disney stopped aggressively buying through ROFR because they didn't want to be stuck with a lot of excess inventory.

I agree the economy was one of the big factors which contributed to resale declines. Not so sure about ROFR. ROFR has always been spotty and inexplicable. Even without a threat of ROFR in the pre-2008 resale market, I'm not convinced that sellers would have lowered their asking prices dramatically.

IMO the other big factor was simply an overvaluing of older resorts...particularly in the 2005-2007 timeframe.

From late 2003 through 2006 the ONLY resort that DVC actively marketed was Saratoga Springs. Then Animal Kingdom was added in 2007 to late 2008. And while both have their fans, neither resort set the marketplace on fire. They both lack a close proximity to a theme park. And both are dramatically larger than other popular destinations, making them easier to book at 7 months.

In that 2005-2007 timeframe, resale buyers overvalued the likes of BoardWalk, Beach Club and Wilderness Lodge. The 2042 ending dates of those resorts gave buyers 30-40% less time on their contract than a purchase at SSR or AKV. Yet, resale prices for BCV, BWV and VWL circa 2007 were within a few dollars of DVC's direct prices for SSR and AKV.

Then came Bay Lake Tower. And Grand Californian, perhaps to a lesser degree.

Suddenly buyers seeking that "close to a theme park" destination could get a contract 18 YEARS longer than BCV, BWV or VWL. And thanks to the 2008 / 2009 economy, early Bay Lake Tower prices were pretty darn attractive.

So you had the double whammy of an economy that dumped a lot of points on the resale market PLUS the "hot" resale destinations (BWV, BCV, VWL) were no longer hot anymore with new competition from BLT and VGC.

Continued ROFR wouldn't have helped because there simply weren't enough buyers looking to purchase 33-34 years of BCV at $90+ per point when they could get 50 years of BLT or VGC for $95-100 per point. IMO, the resale prices we see today aren't the result of a depressed marketplace. Instead they are a better indicator of what 30 years' of ownership should actually buy.

 

[GoofGoof]

I agree the economy was one of the big factors which contributed to resale declines. Not so sure about ROFR. ROFR has always been spotty and inexplicable. Even without a threat of ROFR in the pre-2008 resale market, I'm not convinced that sellers would have lowered their asking prices dramatically.

IMO the other big factor was simply an overvaluing of older resorts...particularly in the 2005-2007 timeframe.

From late 2003 through 2006 the ONLY resort that DVC actively marketed was Saratoga Springs. Then Animal Kingdom was added in 2007 to late 2008. And while both have their fans, neither resort set the marketplace on fire. They both lack a close proximity to a theme park. And both are dramatically larger than other popular destinations, making them easier to book at 7 months.

In that 2005-2007 timeframe, resale buyers overvalued the likes of BoardWalk, Beach Club and Wilderness Lodge. The 2042 ending dates of those resorts gave buyers 30-40% less time on their contract than a purchase at SSR or AKV. Yet, resale prices for BCV, BWV and VWL circa 2007 were within a few dollars of DVC's direct prices for SSR and AKV.

Then came Bay Lake Tower. And Grand Californian, perhaps to a lesser degree.

Suddenly buyers seeking that "close to a theme park" destination could get a contract 18 YEARS longer than BCV, BWV or VWL. And thanks to the 2008 / 2009 economy, early Bay Lake Tower prices were pretty darn attractive.

So you had the double whammy of an economy that dumped a lot of points on the resale market PLUS the "hot" resale destinations (BWV, BCV, VWL) were no longer hot anymore with new competition from BLT and VGC.

Continued ROFR wouldn't have helped because there simply weren't enough buyers looking to purchase 33-34 years of BCV at $90+ per point when they could get 50 years of BLT or VGC for $95-100 per point. IMO, the resale prices we see today aren't the result of a depressed marketplace. Instead they are a better indicator of what 30 years' of ownership should actually buy.

This seems like pretty sound logic. I agree that BLT and now Grand Floridian which have premium locations and longer contracts probably hurt the value of the other resorts. One thing that is difficult to figure out is BLT which is only 3 or 4 years old seems to have a decent number of available for resale units priced in the low to mid 90s. I think the resort opened at $112 per point and is now up to $165. Whoever is selling has to be selling at a loss (big loss in some cases). If Disney is selling points at $165 now why not ROFR the resales at $90 and resell for $165. It seems like a $75 spread would be too good to pass up and since they have so few ponts left to sell it should be easy to resell them pretty quickly. I am surprised they don't use ROFR to keep BLT above $100 just to justify the cost of buying direct. Maybe they are just banking on people not knowing that the resale market is out there.

 

[captainkidd]

This seems like pretty sound logic. I agree that BLT and now Grand Floridian which have premium locations and longer contracts probably hurt the value of the other resorts. One thing that is difficult to figure out is BLT which is only 3 or 4 years old seems to have a decent number of available for resale units priced in the low to mid 90s. I think the resort opened at $112 per point and is now up to $165. Whoever is selling has to be selling at a loss (big loss in some cases). If Disney is selling points at $165 now why not ROFR the resales at $90 and resell for $165. It seems like a $75 spread would be too good to pass up and since they have so few ponts left to sell it should be easy to resell them pretty quickly. I am surprised they don't use ROFR to keep BLT above $100 just to justify the cost of buying direct. Maybe they are just banking on people not knowing that the resale market is out there.

I have to say it again - $165 per point????? I'm just shell shocked by that number. To think you can buy resale at literally 1/3 of the price....

 

[tjkraz]

One thing that is difficult to figure out is BLT which is only 3 or 4 years old seems to have a decent number of available for resale units priced in the low to mid 90s. I think the resort opened at $112 per point and is now up to $165. Whoever is selling has to be selling at a loss (big loss in some cases).

In the first half of 2009 DVC's sales incentives pushed prices down into the $90s. I suspect that's why prices have found that floor.

If Disney is selling points at $165 now why not ROFR the resales at $90 and resell for $165. It seems like a $75 spread would be too good to pass up and since they have so few ponts left to sell it should be easy to resell them pretty quickly.

DVC isn't selling much at the $165 price point. Right now that rate for BLT serves the following two purposes:

1. It makes AKV and Aulani look good at $135 (less incentives.)
2. It sets the table for what will surely be a high Grand Floridian price.

There may come a day when DVC gets more aggressive on BLT resales but given the points they currently own and millions more with VGF soon available, there is really no need to pay even the $90 per point to acquire more.

Look at it this way: If you have a year's supply of toilet paper sitting in your closet, does it really make sense to buy even more next time it goes on sale for half price?

DVC could always begin to ROFR BLT (or any other resort) at any time of their choosing. Right now they don't need additional points inventory to meet their needs so why spend the hundreds-of-thousands of dollars it would require to even send a ripple through the resale marketplace?

I am surprised they don't use ROFR to keep BLT above $100 just to justify the cost of buying direct. Maybe they are just banking on people not knowing that the resale market is out there.

That's exactly the case. Like the rest of the timeshare industry, DVC's business is coming more and more from the uneducated consumer.

When you look at developers like Bluegreen or Wyndham, you could buy their product for pennies on the dollar resale. But they are still successful at marketing newer properties to people for prices in the tens-of-thousands. In 2012, DVC's sales approach may be different from the others but the fact is they will only thrive via consumers who don't know you can buy resale for 1/2 the price.

 

[captainkidd]

Right now the spread between direct sales and resales is huge. I stopped in at the BWV sales office last week. They asked me how much I paid for resale and seemed genuinely surprised when I told them the price. It was nice to see they hadn't lost their touch and did a good job of explaining all the advantages of a direct sale (everything except price), making resales sound really scary!

I stopped in there a few weeks ago and told the guy what the current pricing for some re-sales was. He all but called me a liar.

 

[ScoutN]

In the first half of 2009 DVC's sales incentives pushed prices down into the $90s. I suspect that's why prices have found that floor.

As I am sure you are aware, the CM discount was allowing certain direct sale points below that last year... and a more recent offer had some near that earlier this year.

 

[tjkraz]

As I am sure you are aware, the CM discount was allowing certain direct sale points below that last year... and a more recent offer had some near that earlier this year.

I was specifically referring to Bay Lake Tower. Points could be had via direct purchase in the $90s circa 2009 but it hasn't been close to that in recent years.

 

[ScoutN]

I was specifically referring to Bay Lake Tower. Points could be had via direct purchase in the $90s circa 2009 but it hasn't been close to that in recent years.

Ahh I gotcha. Yea, the lowest even with a CM had to have been the other offer earlier this year. The price hike in the past 18 months has been unreal.

 

[GoofGoof]

As I am sure you are aware, the CM discount was allowing certain direct sale points below that last year... and a more recent offer had some near that earlier this year.

Wow. Cast members get a close to 50% discount. I never knew that. I may need to apply for a job down there if I decide to buy more points.

 

[ScoutN]

Wow. Cast members get a close to 50% discount. I never knew that. I may need to apply for a job down there if I decide to buy more points.

Didn't specify resort

 

[GoofGoof]

Didn't specify resort

Got it now. I went back and re-read the last couple of posts. Glad I didn't turn in my resignation letter.