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What will Disney do about the resorts expiring in 2042 ??

Lensman

Premium Member
I nearly spit out my coffee when I read this. Imagine. $70 a point for 15 years. Jesus.
If the new contracts are going to be $200 for 50 years, it averages $4.00 a year. So 15 years should be less than $60.00.
But if I look at the rental value of about $8 a point net of annual dues, 15 years is $120. Account for a little time-value-of-money discounting and $70 doesn't look unreasonable.

Using a discounted utility model, it wouldn't be unreasonable to have half of the "value" of your DVC purchase to be represented by the first 15 years of stays vs the last 35 years. Obviously there's a lot of fudge factor in that because we're talking about perception of value instead of discounted cash flow.

If anyone isn’t sure whether Disney will resell the resorts when the contracts expire in 2042 here’s one big reason I think they will....almost 10M points (at the 3 WDW resorts) at today’s price of $200 is $2 billion in sales. Assuming the price goes up by 2042 it could be $3 to $4 billion in sales.
:greedy::greedy::greedy::greedy::greedy::greedy::greedy::greedy::greedy::greedy:
And that's not even accounting for the possible increase in density and the resulting increase in the number of points sold in the new resorts.
 

seascape

Well-Known Member
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But if I look at the rental value of about $8 a point net of annual dues, 15 years is $120. Account for a little time-value-of-money discounting and $70 doesn't look unreasonable.

Using a discounted utility model, it wouldn't be unreasonable to have half of the "value" of your DVC purchase to be represented by the first 15 years of stays vs the last 35 years. Obviously there's a lot of fudge factor in that because we're talking about perception of value instead of discounted cash flow.


And that's not even accounting for the possible increase in density and the resulting increase in the number of points sold in the new resorts.
Most people do not net $8.00 for renting. Most people use Davids or DVC Rental Store and gross amount $13.50 a point or net about $6.00. That would mean paying $150 a point at a 2042 resort is a money loser. It is even worse if you discount future revenue for inflation. So the question is, is DVC a good buy? I still answer yes because I love WDW. However, besides having DVC points I also have Wyndham points and can annual pass. In many ways I think Bonnett Creek is a much better value. It only lacks the Disney Transportation System but as a passholder I get free parking so it doesn't matter that much.
 

GoofGoof

Premium Member
Most people do not net $8.00 for renting. Most people use Davids or DVC Rental Store and gross amount $13.50 a point or net about $6.00. That would mean paying $150 a point at a 2042 resort is a money loser. It is even worse if you discount future revenue for inflation. So the question is, is DVC a good buy? I still answer yes because I love WDW. However, besides having DVC points I also have Wyndham points and can annual pass. In many ways I think Bonnett Creek is a much better value. It only lacks the Disney Transportation System but as a passholder I get free parking so it doesn't matter that much.
Depends on your home resort. Davids pays $14.50 for premium resorts beyond the 7 month window and $13.50 for non-premium or inside 7 months. BLT MFs are $6.40 and is considered premium so renting beyond the 7 month window that’s $8.10 profit over MFs. Same ballpark for GF, Poly and BC. On the low end OKW is not premium and has MFs of $7.23 so closer to the $6 amount. The rest are in the middle with higher MFs but premium rentals so closer to $7 profit or SSR with lower MFs but not premium.
 

tigerlight

Well-Known Member
Not to sound morbid but, really? Who has a clue what the world will be like in 2042?

Miami could be literally underwater, as could other massive chunks of Florida. War? Disease? Economic collapse due to massive debt?

Each and all of these things could happen and science/history would suggest some are likely to happen over the next 23 years! Any of them happening could profoundly impact our society - and by extension DVC/WDW.

The value (and future) of the DVC program will depend heavily on external forces far beyond the gates of WDW.

Internally: bad management, new competition, security issues, even changing tastes... and many other factors could also dramatically impact the value (and future prospects) of Disney/DVC...

Ask this question again in 15-20 years...
 

Lensman

Premium Member
Most people do not net $8.00 for renting. Most people use Davids or DVC Rental Store and gross amount $13.50 a point or net about $6.00. That would mean paying $150 a point at a 2042 resort is a money loser. It is even worse if you discount future revenue for inflation. So the question is, is DVC a good buy? I still answer yes because I love WDW. However, besides having DVC points I also have Wyndham points and can annual pass. In many ways I think Bonnett Creek is a much better value. It only lacks the Disney Transportation System but as a passholder I get free parking so it doesn't matter that much.
Depends on your home resort. Davids pays $14.50 for premium resorts beyond the 7 month window and $13.50 for non-premium or inside 7 months. BLT MFs are $6.40 and is considered premium so renting beyond the 7 month window that’s $8.10 profit over MFs. Same ballpark for GF, Poly and BC. On the low end OKW is not premium and has MFs of $7.23 so closer to the $6 amount. The rest are in the middle with higher MFs but premium rentals so closer to $7 profit or SSR with lower MFs but not premium.
Just to clarify, I was using "$8 a point net of dues" as the equivalent amount I would have to pay to stay at a DVC resort if I didn't own. I should have made that clear.

The idea is that if I want to stay at DVC every year for 15 years, I have two choices:
  1. Rent points every year at $8 a point, net of dues. I was thinking $16 at David's - $8 dues.
  2. Buy @FCivish3's hypothetical $70 15-year points.
Everyone can play around with the numbers within the ranges that @seascape and @GoofGoof talk about to see what theoretical values they come up with for 15-years of DVC points. I'm just saying that $70 isn't unreasonable if your intention is to use the points every year for staying at a DVC resort. I'm not addressing the case where you are purchasing DVC direct with the intention to rent out the points through a points rental storefront.
 

GoofGoof

Premium Member
Not to sound morbid but, really? Who has a clue what the world will be like in 2042?

Miami could be literally underwater, as could other massive chunks of Florida. War? Disease? Economic collapse due to massive debt?

Each and all of these things could happen and science/history would suggest some are likely to happen over the next 23 years! Any of them happening could profoundly impact our society - and by extension DVC/WDW.

The value (and future) of the DVC program will depend heavily on external forces far beyond the gates of WDW.

Internally: bad management, new competition, security issues, even changing tastes... and many other factors could also dramatically impact the value (and future prospects) of Disney/DVC...

Ask this question again in 15-20 years...
I’m fairly confident that the external factors you describe are not likely to happen in the next 23 years.
  • Orlando is in the center of FL so unlikely to be underwater. I think we probably have more than 23 years before the rest of FL is underwater too, but who knows.
  • Disease is not likely to put WDW out of business.
  • Neither is war. WDW opened during the Vietnam war and survived 9/11 when people were terrified to fly despite a large number of guests arriving by airplane. Unless there is a land invasion of FL or God forbid a nuclear holocaust, war will not greatly impact WDW.
  • Economic collapse due to massive debt...that one is more complicated but still unlikely to happen in the next 23 years. There’s still plenty of bandaids that can be applied to keep things going well past that time. Any economic downturn could impact WDW and DVC but both survived the most recent recession and 9/11 which was a terrible time for tourism in general.
Your internal factors are far more likely to have a more dramatic impact. Especially bad management and changing tastes. WDW thrives on nostalgia but that model is hard to sustain as new generations are less attached to the past. Management needs to have the vision to keep updating the parks to keep them fresh while still keeping an eye on the history. They also need to strike a balance between provide value for guests and profits. Will the huge recent price increases have a negative impact long term? If attendance suffers will they double down on the parks and invest more to keep them strong or will they cut costs to achieve short term financial goals?
 

tigerlight

Well-Known Member
I’m fairly confident that the external factors you describe are not likely to happen in the next 23 years.
  • Orlando is in the center of FL so unlikely to be underwater. I think we probably have more than 23 years before the rest of FL is underwater too, but who knows.
  • Disease is not likely to put WDW out of business.
  • Neither is war. WDW opened during the Vietnam war and survived 9/11 when people were terrified to fly despite a large number of guests arriving by airplane. Unless there is a land invasion of FL or God forbid a nuclear holocaust, war will not greatly impact WDW.
  • Economic collapse due to massive debt...that one is more complicated but still unlikely to happen in the next 23 years. There’s still plenty of bandaids that can be applied to keep things going well past that time. Any economic downturn could impact WDW and DVC but both survived the most recent recession and 9/11 which was a terrible time for tourism in general.
Your internal factors are far more likely to have a more dramatic impact. Especially bad management and changing tastes. WDW thrives on nostalgia but that model is hard to sustain as new generations are less attached to the past. Management needs to have the vision to keep updating the parks to keep them fresh while still keeping an eye on the history. They also need to strike a balance between provide value for guests and profits. Will the huge recent price increases have a negative impact long term? If attendance suffers will they double down on the parks and invest more to keep them strong or will they cut costs to achieve short term financial goals?
Look I think everyone hopes you are right... but my point is none of us really knows what the world will be like in 2042. A LOT could change by then.

Also - I never meant to imply Orlando will be underwater. But just imagine, if ONLY Miami is uninhabitable (and that would mean LOTS of other places are, too...) then the economic consequences of that would be absolutely astronomical. Billions (maybe trillions) worth of real estate worth nothing... and that kind of shock would have a profound effect on the entire world to the extent that WDW would be affected.

Oh and a pandemic flu could absolutely stop travel for a long time and put WDW out of business.
 

GoofGoof

Premium Member
Look I think everyone hopes you are right... but my point is none of us really knows what the world will be like in 2042. A LOT could change by then.

Also - I never meant to imply Orlando will be underwater. But just imagine, if ONLY Miami is uninhabitable (and that would mean LOTS of other places are, too...) then the economic consequences of that would be absolutely astronomical. Billions (maybe trillions) worth of real estate worth nothing... and that kind of shock would have a profound effect on the entire world to the extent that WDW would be affected.

Oh and a pandemic flu could absolutely stop travel for a long time and put WDW out of business.
I think everyone talking about 2042 gets that it’s a long time away and lots could change. In my opinion it’s still worth discussing and should go without saying that all discussion is under the assumption that the world as we know it will not have ended by then.

Not to split hairs, but a pandemic of flu could in theory happen next year. That’s got nothing to do with waiting 23 years. By that logic we shouldn’t bother talking here about anything not opening or going on in the next 6 months because WDW could be closed due to a flu outbreak.
 

Lensman

Premium Member
I think everyone talking about 2042 gets that it’s a long time away and lots could change. In my opinion it’s still worth discussing and should go without saying that all discussion is under the assumption that the world as we know it will not have ended by then.

Not to split hairs, but a pandemic of flu could in theory happen next year. That’s got nothing to do with waiting 23 years. By that logic we shouldn’t bother talking here about anything not opening or going on in the next 6 months because WDW could be closed due to a flu outbreak.
I agree. Besides, it's a lot more fun discussing the hypothetical of what might happen with the 2042 resorts than discussing how it might not matter due to various hypothetical apocalyptic scenarios. :)
 

Ralphlaw

Well-Known Member
The expiring resorts are HHI, Vero Beach, Beach Club, Boardwalk Villas, and Boulder Ridge. Old Key West is NOT expiring, it has already been extended to 2057, but a large number of people will be giving up their rights to use it, after 2042. Only those who paid for the extension will still have it.

Disney will most likely sell off HHI and Vero Beach. The are not that popular, they are not that profitable, they are worth less per point than other resorts, and there is no real reason to keep them, since their original purpose was to help Disney broaden and expand DVC, but they failed in that, for the most part. ALSO, Disney has undergone a change in philosophy, from making DVC into an amazing timeshare that would serve all 'Vacation Club' owners, into a much more focussed, money making pipeline funneling people directly into Disney World. Perhaps the main reason Disney is likely to sell them off, is because they drag down the value of DVC points. This makes it harder for Disney to sell the more expensive points at other resorts. So HHI and VB probably don't need to be a part of the future of post 2042 DVC.

BCV, BWV and Boulder Ridge have a total of about 1000 units between them. A bit more units than are in the resorts of OKW and AK (both of which have a little over 700 units), but significantly less than SSR, with 1300 units. Disney will probably take all three of those resorts and immediately start renting the units out, while reselling them as quickly as possible, as new DVC units. They might remodel some, but DVC Membership Dues should have maintained them in excellent shape, and they pretty much will be ready to turn around and be rented or sold almost immediately. Why would Disney tear them down and go to the additional expense of building new units when the currently existing ones will be doing just fine? I know that we, as American's expect that buildings will be new, but that is just because of the 'brief' age of our country. I was recently in Europe where many fine hotels have been in use for over 200 years, as hotels, and are still doing just fine. I don't see why Disney would need to tear down buildings that are only 50 or 60 years old.

It is not clear how much of OKW is owned by people who have extended, and what percentage is going to expire, but there will probably be a not insignificant portion of it that will be looking for new owners after 2042. On the other hand, Disney has been exercising ROFR on Old Key West at the rate of about 80 contracts per year. Clearly, if they keep this up for 10 years, then through their ROFR they will end up converting most of the 'expiring contracts' into 'non-expiring contracts,' since most of them will have been extended by 2042. 80 per year for 10 years is 800 units, which is more than the total number of units at OKW. Still, however many unextended units remain, those units will be added to the sales inventory, BUT, they will be short term sales of 15 years or so. I DO believe that Disney will try to sell them, just in order to avoid paying the Maintenance Fees, but they won't be able to sell those points for full price. And if they think current 'Resales' with discounted prices is adversely affecting their more expensive Direct sales, then I see OKW at 15 years as being an even bigger problem. There are certainly many people, who would jump on an OKW contract giving them 15 years for $70 per point, rather than a more expensive 50 year contract somewhere else at $200 per point (equivalent, adjusted for inflation). So, unless they 'convert' most of the expiring contracts into extended contracts by then, it could be a problem for them. My guess is that they are doing just fine, by picking up OKW with ROFR at the rate they are, and so this probably won't be a problem.

So that still leaves the question of what they will do with BCV, Boardwalk and Boulder Ridge in 2042. I think it is likely that Beach Club will just be converted into a 'Villa Hotel.' It is a very desirable location and they will almost certainly NEED the hotel rooms by then. And they will put the Boardwalk and Boulder Ridge units on the DVC market, while also using many of them as hotel rooms in the intermediate timeframe. If they are not trying to sell BCV as DVC, then they other resorts will give them a total of around 700 'new DVC units' to sell. This is quite manageable. And with proper planning and preparation, and by not building any more DVC units in the last 4 years before 2042, I really don't see Disney having any problems. DVC will be 'refreshed' and will continue to go on as it has before.
Yeah, what FCivish3 said.
 

Ralphlaw

Well-Known Member
Also, who is going to pay a bunch of annual maintenance fees when you only have a couple years left in your ownership? In order not to lose those owners, DVC will likely start offering new points or extensions around 2030 to 2035 or so. By that point, by the way, it'll be the original owners' children and grandchildren who'll be making the buy or sell decisions.
 

Lensman

Premium Member
Also, who is going to pay a bunch of annual maintenance fees when you only have a couple years left in your ownership? In order not to lose those owners, DVC will likely start offering new points or extensions around 2030 to 2035 or so. By that point, by the way, it'll be the original owners' children and grandchildren who'll be making the buy or sell decisions.
I think people will pay their maintenance fees no matter what because you need to in order to be able to use your points or rent them out. And these points are usable not only at your home resort, but to any other resort.
 

GoofGoof

Premium Member
I think people will pay their maintenance fees no matter what because you need to in order to be able to use your points or rent them out. And these points are usable not only at your home resort, but to any other resort.
As long as you can still rent the points out for more than double the maintenance fees there would be no economic reason to not keep your account current.
 

helenabear

Well-Known Member
Also, who is going to pay a bunch of annual maintenance fees when you only have a couple years left in your ownership? In order not to lose those owners, DVC will likely start offering new points or extensions around 2030 to 2035 or so. By that point, by the way, it'll be the original owners' children and grandchildren who'll be making the buy or sell decisions.
They learned their lesson with extensions. Not going to happen. New points yes, extensions no.
 

GoofGoof

Premium Member
Could be. But I wonder if current owners would get first dibs or discounts when the new points go on sale.
I would assume a pretty good discount. I think existing owners with expiring points would be a primary target for the sales guys. People who own and still want to own will likely want to buy new points. Only question is if they are long time owners will they survive the sticker shock from seeing how much the points cost.
 

helenabear

Well-Known Member
Could be. But I wonder if current owners would get first dibs or discounts when the new points go on sale.
Not much based on history. They've often done the current owners get the price before they hike it again to the general public. If they are reselling, we have to look at a new POS for a new resort with new end year.
 

helenabear

Well-Known Member
Just to add, reading through the POS that is out and about on the internet, it looks like no DVC2 or the like. I'm not sure where we can link to directly but lots of info is come out about it. It's a distinction for RRV but nothing massively separate.
 

seascape

Well-Known Member
I have 100 points purchased resale at the Boardwalk. I would be interested in an extension of 15 to 20 years. Given the current resale price is just over 100 a point I would be willing to pay $40 to $50 a point today but only if they became full points. I pruchased after the first set of reduced benefits for resale customers so I can't trade into cruise line and Adventures by Disney. Not a big loss or something I know I will use but it would be nice to have full benefits. Another money grab Disney could come up with is to offer any resale customer the ability to upgrade resale points to full points for something like $10 a point. I know I would do that for all my resale points.
 

nickys

Premium Member
I have 100 points purchased resale at the Boardwalk. I would be interested in an extension of 15 to 20 years. Given the current resale price is just over 100 a point I would be willing to pay $40 to $50 a point today but only if they became full points. I pruchased after the first set of reduced benefits for resale customers so I can't trade into cruise line and Adventures by Disney. Not a big loss or something I know I will use but it would be nice to have full benefits. Another money grab Disney could come up with is to offer any resale customer the ability to upgrade resale points to full points for something like $10 a point. I know I would do that for all my resale points.
I think the new POS for future resorts that came out in the last couple of days says something about being able to charge resale owners a fee for them to be able to “purchase” trading rights into the “legacy resorts” (my wording) plus other non-legacy resorts. Not sure if that would cover all direct perks but it’s interesting they have included it.
 
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