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WHAT'S WRONG WITH DVC

Has the 2020 reallocation gone too far?

Points have been created out of thin air, studios are paying for the failure of bungalows and cabins with the reallocations that fails to address real demand distribution.

Why has DVCMC violated members trust and why should they be stopped?

 
 
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DVC is just another timeshare

When Disney announced in 1990 they were going to build a timeshare resort, Disney fans were taken by surprise. At the time, "timeshare" was a synonym for shady businesses that would scam their customers selling expensive timeshares, with high maintenance fees and no way out of the system since they were worth pennies just after the ink dried.

Could Disney overcome that?

For nearly 30 years the answer has been a resounding "Yes".

There have been ups and downs, like when Aulani opened and DVC set the maintenance fees too low in order to boost sales: the state of Hawaii forced Disney to increase them to a reasonable level and subsidize existing contract for 50 years.

But that was an episode and the managers involved in that fiasco left DVC shortly after (fired?). DVC mostly proved to be a good timeshare to own. Most importantly, DVC kept the highest resale value of any timeshare. During the 2008 world recession, other timeshares could be bought on Ebay for $1, with the owner paying all expenses, just so they could get rid of them, DVC still was sold for sizable amounts. I bough my contracts for $50 per point and since then the value of my contracts doubled, some resorts like Beach Club Villas or Boardwalk Villas nearly tripled!

Some of the owners who bought direct at the earliest resorts could now resell their contracts for more than they paid for them and even the latest resorts sold at crazy high retail prices now see a modest loss on the resale market.


Everything is going to change on January 19th 2019.


One of the biggest resale brokers has leaked the news that new restrictions are going to be put in place from that date.

DVC will be split in two, the existing 14 resorts will still be part of the existing Vacation Club: resale buyers of contracts at those resorts will still be able to book any of the other Legacy 14. However they will not be able to trade into the newest resorts.


Riviera is scheduled to open in fall 2019 and it will be the first resort to belong to DVC2. Resale buyers at the Legacy 14 will not be able to trade into Riviera. Resale buyers at Riviera will only be able to book Riviera and not trade into any other DVC resort, past or future. The same will happen to resale purchaser at Reflections, the resort that will follow Riviera as the 16th DVC resort.

Direct buyers of any resort will enjoy a privileged membership and they'll be able to trade into any other DVC resort.


Existing members will be grandfathered into the new system and will be able to trade into the new resorts without restrictions. But the biggest impact is on future Riviera direct buyers.

Copper Creek Villas is currently sold for $182 per point, with incentives that can bring that price down to $163. On the resale market, those contracts have been selling over $150 per point. A 10-20% loss is not bad at all for a timeshare. But resale buyers at Copper Creek will be able to trade to all Legacy resorts. Riviera resale buyers will be restricted only to book Riviera and nothing else.

That will still hold some value, but it's easy to see the value of Riviera contracts plummet once they get on the resale market. It wouldn't surprise me if Riviera contracts will be sold for under $50 a point.


This means Disney will be able to scoop those contracts using their ROFR (Right of First Refusal) at a lower value and resell them for a greater profit. Good news for Disney, but bad news for all those owners unlucky enough to buy Riviera and find out they purchased something that lost 75% of its value in a second.


This is not a business model we would normally associate with the Disney brand. For years we, as owners, have thought we were somehow protected by the Disney brand, that such a large company would never associate themselves with the practices of more shady timeshare developers.

The time of innocence is over, DVC is just another timeshare.

 

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