Direct Purchase benefits announced!

[Chuck S]

I don't believe that it was "inevitable" that value would start to fall further then the economy called for if Disney had not intentionally devalued it.

Of course there will be a market after 3/20. But Disney's stated mission was to make that market far less valuable.

And yes annual dues have been skyrocketing. Look at the numbers:
Old Key West Resort, the oldest of the DVC resorts had dues of $2.51 in 1991 and in 2008 had dues of $4.56. That means it has averaged a 3.57% increase, compounded annually.
BoardWalk Villas went from $3.70 in 1996 to $5.04 in 2008, an average annual compounded increase of 2.61%.
Villas at Wilderness Lodge went from $3.62 in 2000 to $4.87 in 2008, an average annual compounded increase of 3.77%.
So on average dues have increased 3.3% a year. Over a 10 year span that is a 33% increase! What offset that impact to me was the basically stable value of my ownership. Disney has now acted to remove that stability.

The market for re-sale is obviously not so small that Disney didn't find it attractive to them to devalue re-sales.

As was pointed out Disney did not use ROFR because it would have cost them money. By not doing so Disney allowed a wider spread between the secondary market and direct sales. Then Disney decided that spread was to wide and hurting direct sales so they decided to devalue the secondary market.

If the posts here are accurate Disney is researching ways to further reduce the value of ownership.

I never said that Disney had to "prop up" re-sale values. But I don't want to see my ownership value go the way of many, many, many other timeshare re-sales that have been devalued to pennies on the dollar.

I would hardly call those percentages for dues increases "skyrocketing" considering what happened to Florida insurance rates during that time frame after several active hurricane seasons, and the increases in health care cost for employees.

The bottom line appears to be that IF you feel this change will dramatically impact what you perceive as the value of your ownership, the time for you to sell would be NOW.

 

[DebbieB]

And yes annual dues have been skyrocketing. Look at the numbers:
Old Key West Resort, the oldest of the DVC resorts had dues of $2.51 in 1991 and in 2008 had dues of $4.56. That means it has averaged a 3.57% increase, compounded annually.
BoardWalk Villas went from $3.70 in 1996 to $5.04 in 2008, an average annual compounded increase of 2.61%.
Villas at Wilderness Lodge went from $3.62 in 2000 to $4.87 in 2008, an average annual compounded increase of 3.77%.
So on average dues have increased 3.3% a year. Over a 10 year span that is a 33% increase! What offset that impact to me was the basically stable value of my ownership. Disney has now acted to remove that stability.

I wouldn't call that "skyrocketing". Ticket prices have gone up that much, so have hotel rates.

I keep an excel worksheet of my stays. An OKW 1 bedoom in 2000 was $371 incl tax in May, today it is $529, a 43% increase.

 

[jodifla]

I don't believe that it was "inevitable" that value would start to fall further then the economy called for if Disney had not intentionally devalued it.

Of course there will be a market after 3/20. But Disney's stated mission was to make that market far less valuable.

And yes annual dues have been skyrocketing. Look at the numbers:
Old Key West Resort, the oldest of the DVC resorts had dues of $2.51 in 1991 and in 2008 had dues of $4.56. That means it has averaged a 3.57% increase, compounded annually.
BoardWalk Villas went from $3.70 in 1996 to $5.04 in 2008, an average annual compounded increase of 2.61%.
Villas at Wilderness Lodge went from $3.62 in 2000 to $4.87 in 2008, an average annual compounded increase of 3.77%.
So on average dues have increased 3.3% a year. Over a 10 year span that is a 33% increase! What offset that impact to me was the basically stable value of my ownership. Disney has now acted to remove that stability.

The market for re-sale is obviously not so small that Disney didn't find it attractive to them to devalue re-sales.

As was pointed out Disney did not use ROFR because it would have cost them money. By not doing so Disney allowed a wider spread between the secondary market and direct sales. Then Disney decided that spread was to wide and hurting direct sales so they decided to devalue the secondary market.

If the posts here are accurate Disney is researching ways to further reduce the value of ownership.

I never said that Disney had to "prop up" re-sale values. But I don't want to see my ownership value go the way of many, many, many other timeshare re-sales that have been devalued to pennies on the dollar.

It's inevitable because the contract is dwindling. Each year there are fewer years on the contract.

ROFR kept the contracts higher than than they otherwise would be for years.

 

[JimMIA]

...Why would a rational person pay MORE to get an option to buy something that costs more with the option than the something costs without the option? (IMO, resale buyers as a group, are generally more informed & less emotional than direct buyers).

Two reasons. One, not all "rational buyers" have the same goals. And two, not all "rational buyers" adopt the same assumptions.

I personally have never used any of the options being taken away. But many DVC owners have, and many find value in those options -- whether the bean-counters among us think those options are "best uses" of DVC points or not. Who am I to say the value they obtain is not sufficient?

Another subset of that group is those prospective owners who don't want to preclude the possibility of a cruise, for example -- or just simply don't want the hassle of having to figure out which of their contracts they have to use for that purpose. (Can you imagine your chagrin if you want to stay at VWL at Christmas, but now find you used those points because only that contract could be used for a cruise?)

Regardless of whether I think a particular option is getting maximal value or not, my opinions are irrelevant to those owners who DO see value in those options.

The ASSumption is there will be a radical downward adjustment in resale prices on March 21.

First of all, that might or might not actually occur. When I see some folks stating that as a given, and other, very knowledgeable timeshare vets saying it will only be a blip on the radar, I'm pretty reluctant to make that assumption.

And secondly, as Tim correctly points out above, prospective buyers on March 21 may be looking at table scraps. I haven't thoroughly researched the offerings, but just scanning the listings, I find some good-looking contracts and some not-so-good-looking contracts. I'm no real estate genius, but I'm guessing the good-looking contracts will go first, beginning with the low-priced good-looking contracts and followed shortly by the properly-priced good contracts. I'm not sure what will be left on March 21.

 

[Sandisw]

king974:

Many on the boards claim that many (some even say most) direct buyers don't even look into resale and/or don't care about resale as they claim they are likely never going to sell (as I have said, I hope these people's lives continue without any possible financial issues that may cause them to have to sell). I find this absolutely baffling and amazing. If one buys 250 points at BLT for $110 that is a $27,500 purchase!! People buy home theater systems in the thousands and spend hours and hours researching which is the best. People spend hours reseaching what car to buy some of whom even think about resale. (Toyota's advertising talks about it.) The list goes on and on. To think that someone makes a $27500 purchase without wondering what would happen if they have to sell, makes no sense to me at all unless one has unlimited funds.

It's not that some of us didn't think about what would happen if we had to sell, it is simply that we weighed the pros and cons of spending money upfront to pre-pay for our vacations, or continue to pay a certain amount yearly. In my case, I decided it was worth the risk to pay $20,000 up front to own DVC, then to continue to pay $2000 - $3000 every year to stay in Disney hotels. But, just like I didn't expect to get any of that hotel bill back, I didn't expect to get any of my initial purchase back. Yes, if I had to sell prior to 5 - 7 years, it would make my DVC ownership more expensive than had I just stayed a cash guest, but that was a risk I was willing to take.

So I too feel this may come back to haunt DVC/Disney down the rode with direct sales. DVC /Disney may be surprised to find out that resale value actually may have been a very key unstated selling point. History shows that DVC held its value better then some other timeshares hence why some may not have hesitated to purchase. That may change down the road.

I have monitored DVC resale values for years. There has been nothing but the economy and supply and demand for me to be concerned about relative to the resale values of my two owner interests. This new rule potentially changes everything.

So, when you considered things, did you not consider what the resale value would be if Disney exercised all their rights? Did you not do a "what if" Disney restricts me to just what the POS says and that's a stay at my home resort and ask how that would affect resale value? Granted, they never have, but since it was within their right to do so, I would think anyone who was banking on having a resale value would have looked at all the scenarios.

In the meantime all we can do as owners is sell or hold on and hope that in the end it is not as bad as we expected.

Please remember, that we all have the right to define what DVC is and how it works for us. I have no reason to be upset with Disney because they have done nothing that is not within their right. Maybe I am in the minority, but I don't get upset in my life when someone does something they are entitled to do. Now, if Disney does something that is against the POS, then I will be upset. But, until that time, I went in, as I said, eyes wide open and only expect my DVC to give me what I was promised in my contract. Anything else is extra.

 

[adminjedi]

Please remember, that we all have the right to define what DVC is and how it works for us. I have no reason to be upset with Disney because they have done nothing that is not within their right. Maybe I am in the minority, but I don't get upset in my life when someone does something they are entitled to do. Now, if Disney does something that is against the POS, then I will be upset. But, until that time, I went in, as I said, eyes wide open and only expect my DVC to give me what I was promised in my contract. Anything else is extra.

Well said!

I would like to add:
There is nothing wrong with a business operating within its rights to make money. That is why they are in business. If they aren't making money, it isn't a business and eventually they will go out of business. That, my friends, is not good for anybody - the owners, the employees, or the customers!

 

[maminnie]

I don't believe that it was "inevitable" that value would start to fall further then the economy called for if Disney had not intentionally devalued it.

Of course there will be a market after 3/20. But Disney's stated mission was to make that market far less valuable.

And yes annual dues have been skyrocketing. Look at the numbers:
Old Key West Resort, the oldest of the DVC resorts had dues of $2.51 in 1991 and in 2008 had dues of $4.56. That means it has averaged a 3.57% increase, compounded annually.
BoardWalk Villas went from $3.70 in 1996 to $5.04 in 2008, an average annual compounded increase of 2.61%.
Villas at Wilderness Lodge went from $3.62 in 2000 to $4.87 in 2008, an average annual compounded increase of 3.77%.
So on average dues have increased 3.3% a year. Over a 10 year span that is a 33% increase! What offset that impact to me was the basically stable value of my ownership. Disney has now acted to remove that stability.

The market for re-sale is obviously not so small that Disney didn't find it attractive to them to devalue re-sales.

As was pointed out Disney did not use ROFR because it would have cost them money. By not doing so Disney allowed a wider spread between the secondary market and direct sales. Then Disney decided that spread was to wide and hurting direct sales so they decided to devalue the secondary market.

If the posts here are accurate Disney is researching ways to further reduce the value of ownership.

I never said that Disney had to "prop up" re-sale values. But I don't want to see my ownership value go the way of many, many, many other timeshare re-sales that have been devalued to pennies on the dollar.

Excellent post. The increase in confo fees were offset by the relative stability of the resale market within reason.

 

[maminnie]

For those of you who continue to advocate for DVC's position, is it fair to say that many of you bought at relatively reasonable per point costs versus what people have been paying over the last few years? (Many of you may have received payback years ago.) There has to be some explanation for your support of DVC.

To support a business' right to execute sound business plans is one thing, to watch and support a business who has openly (in USA Today) and purposely made attempts to devalue their owner's interests is another. These are the owners who are currently paying all the bills......

 

[DVCconvert]

maminnie-
just wondering, do you mostly use your points for cruises?

 

[maminnie]

maminnie-
just wondering, do you mostly use your points for cruises?

I have used my points a couple of times to cruise.

Mostly go to Disney World.

 

[vicki_c]

For those of you who continue to advocate for DVC's position, is it fair to say that many of you bought at relatively reasonable per point costs versus what people have been paying over the last few years? (Many of you may have received payback years ago.) There has to be some explanation for your support of DVC.

To support a business' right to execute sound business plans is one thing, to watch and support a business who has openly (in USA Today) and purposely made attempts to devalue their owner's interests is another. These are the owners who are currently paying all the bills......

We have been owners for less than 3 years. And I financed - LOL - so my payback hasn't even started yet! But the way I feel was best summed up by sandisw here, especially the parts I underlined:

It's not that some of us didn't think about what would happen if we had to sell, it is simply that we weighed the pros and cons of spending money upfront to pre-pay for our vacations, or continue to pay a certain amount yearly. In my case, I decided it was worth the risk to pay $20,000 up front to own DVC, then to continue to pay $2000 - $3000 every year to stay in Disney hotels. But, just like I didn't expect to get any of that hotel bill back, I didn't expect to get any of my initial purchase back. Yes, if I had to sell prior to 5 - 7 years, it would make my DVC ownership more expensive than had I just stayed a cash guest, but that was a risk I was willing to take.

The explanation for my support of DVC is that it doesn't affect me in any way that I can determine or care about. Period. I don't appreciate the insinuation that only those who recouped their initial investment a long time ago have a reasonable rationale to "support" DVC as you call it and that anyone else must be short-sighted, naive, uninformed, or anything else a few people seem to think (and not just directed at your most recent post, maminnie, but others' posts throughout the thread as well).

 

[maminnie]

We have been owners for less than 3 years. And I financed - LOL - so my payback hasn't even started yet! But the way I feel was best summed up by sandisw here, especially the parts I underlined:

It's not that some of us didn't think about what would happen if we had to sell, it is simply that we weighed the pros and cons of spending money upfront to pre-pay for our vacations, or continue to pay a certain amount yearly. In my case, I decided it was worth the risk to pay $20,000 up front to own DVC, then to continue to pay $2000 - $3000 every year to stay in Disney hotels. But, just like I didn't expect to get any of that hotel bill back, I didn't expect to get any of my initial purchase back. Yes, if I had to sell prior to 5 - 7 years, it would make my DVC ownership more expensive than had I just stayed a cash guest, but that was a risk I was willing to take.

The explanation for my support of DVC is that it doesn't affect me in any way that I can determine or care about. Period. I don't appreciate the insinuation that only those who recouped their initial investment a long time ago have a reasonable rationale to "support" DVC as you call it and that anyone else must be short-sighted, naive, uninformed, or anything else a few people seem to think (and not just directed at your most recent post, maminnie, but others' posts throughout the thread as well).

VickiC:

I never said any of that...you did.

 

[Chuck S]

For those of you who continue to advocate for DVC's position, is it fair to say that many of you bought at relatively reasonable per point costs versus what people have been paying over the last few years? (Many of you may have received payback years ago.) There has to be some explanation for your support of DVC.

To support a business' right to execute sound business plans is one thing, to watch and support a business who has openly (in USA Today) and purposely made attempts to devalue their owner's interests is another. These are the owners who are currently paying all the bills......

The "support" is that we all, including you, signed documents at the time of purchase detailing the rights/responsibilities of Disney/DVD and DVC to the membership, and we simply don't find it surprising, shocking, or contemptible that Disney/DVD/DVC chooses to exercise the rights we gave them via those contracts. I don't think many are actually applauding the changes, we simply realize that Disney is exercising the contractual rights we gave them.

Especially when you consider the vast majority of other timeshares have had similar direct purchase vs. resale programs in place for years.

 

[maminnie]

I find it very odd that people in general no matter when they purchased would support a company whose actions have the intent to purposely hurt their members.

 

[DVCconvert]

maminnie, I believe VickiC was quoting Sandisw

 

[Chuck S]

I find it very odd that people in general no matter when they purchased would support a company whose actions have the intent to purposely hurt their members.

That is twice now where you have stated as fact that it is their "intent to purposely hurt/devalue DVC Members." Again, distinctions between direct purchase and resale is the norm in the timeshare industry. If you purchased thinking DVC was something at it's core other than a timeshare, then that is your error. If you based your purchase on the assumption that resales would not or could not at some point have different usage rules for items not clearly spelled out in those contracts, it was a poor assumption on your part. Disney/DVD/DVC can not be held responsible for your wrong assumptions, only what is in our contracts. I actually think DVC has shown consideration to the membership by not making the resale changes retroactive, as some other timeshares have done.

 

[maminnie]

Remember some of us most surprised and disappointed by DVC's execution of this plan continually get attacked that we did not read our documents. Trust me.....I READ THE DOCUMENTS!!!! (I am the one who has the condo fee calculations through the life of my timshare. Unfortunately I was right and they are steadily rising at about 2.5 to 3%.) But once again there is nothing historically that caused resale prices to drop or rise except the economy, supply and demand and ROFR. There was no reason for me three weeks ago to think that my owner interest resale value could be compromised in the near future let alone possibly on or around March 21. For this I am deeply disappointed in DVC and it is forcing me to reconsider my owner interest. This was not at all my intent three weeks ago.

 

[tjkraz]

And yes annual dues have been skyrocketing. Look at the numbers:
Old Key West Resort, the oldest of the DVC resorts had dues of $2.51 in 1991 and in 2008 had dues of $4.56. That means it has averaged a 3.57% increase, compounded annually.
BoardWalk Villas went from $3.70 in 1996 to $5.04 in 2008, an average annual compounded increase of 2.61%.
Villas at Wilderness Lodge went from $3.62 in 2000 to $4.87 in 2008, an average annual compounded increase of 3.77%.
So on average dues have increased 3.3% a year. Over a 10 year span that is a 33% increase!

Now take a look at the components of those increases.

In 1991 the average gas price was $1.12 per gallon. In 2009 it was $2.73 per gallon. That's a 243% increase in 18 years. Our dues pay for theme park transportation, DME and even lawn care equipment.

In 1991 the average wage was $29k. In 2009 it was $39k. Dues pay the salaries for hundreds, perhaps thousands of Disney Cast Members.

Health insurance premiums saw double-digit percentage increases throughout most of the '90s and into the '00s. Again, CM insurance premiums covered by annual dues.

After hurricanes damaged the Central Florida area 6-7 years ago, property insurance rates went up. More dues impact.

DVC does have ultimate control over the budgets but in many cases, the only way to reduce dues is to cut back on services. They cannot put a freeze on wages. They cannot refuse to insure employees or the property. Disney has to pay prevailing fuel prices just like the rest of us.

The market for re-sale is obviously not so small that Disney didn't find it attractive to them to devalue re-sales.

Neither is the market so large that they expect this to destroy the resale market.

Don't lose sight of the fact that it costs Disney NOTHING to make this change. The booking options in question are not so beneficial as to cause a seismic shift in buying patterns. There aren't going to be a lot of people willing to pay $99 direct for SSR when they can get it for $60 resale. The Disney, Adventurer and Concierge Collections aren't worth $39 per point.

This is about making a small change which causes a small uptick in sales and costs DVC virtually nothing to implement.

I never said that Disney had to "prop up" re-sale values. But I don't want to see my ownership value go the way of many, many, many other timeshare re-sales that have been devalued to pennies on the dollar.

As long as Walt Disney World and Disneyland remain premier vacation destinations, there will always be demand for DVC points. You are worrying needlessly if you think contracts will be selling for $250 on eBay anytime soon. Even people who stick to the Value resorts during "free dining" would be lined up around the block to buy into DVC at $20 per point. In reality, prices will stay much higher than that.

 

[Chuck S]

Remember some of us most surprised and disappointed by DVC's execution of this plan continually get attacked that we did not read our documents. Trust me.....I READ THE DOCUMENTS!!!! (I am the one who has the condo fee calculations through the life of my timshare. Unfortunately I was right and they are steadily rising at about 2.5 to 3%.) But once again there is nothing historically that caused resale prices to drop or rise except the economy, supply and demand and ROFR. There was no reason for me three weeks ago to think that my owner interest resale value could be compromised in the near future let alone possibly on or around March 21. For this I am deeply angry and disappointed in DVC and it is forcing me to reconsider my owner interest. This was not at all my intent three weeks ago.

But, again, to assume that they could not or would not change resale perks or fail to exercise ROFR at some point was your error.

Reading the documents is one thing, assuming things not in those documents, is another.

Some people bought in assuming that the point charts would never be reallocated. Some people bought thinking DVC would never realign with RCI and drop II. Some people bought thinking resale prices would always be protected by ROFR, and that there would never be a distinction between direct and resale. All of which are erroneous assumptions made by the buyer, and not represented in the contracts.

 

[Sammie]

I find it very odd that people in general no matter when they purchased would support a company whose actions have the intent to purposely hurt their members.

I don't think anyone is supporting that. It is simply a case of different opinions on whether this action hurts the members.