# Big DVC changes



## JudyS (Sep 18, 2007)

As some of you may have read on the Western Resorts board here, today Disney officially confirmed long-standing rumors that it is expanding its timeshare locations to include California, albeit with a very small number of units (50 "2 bedroom equivalents").  Disney's press release is at
http://www.disneylandnews.com/article_display.cfm?article_id=234&view_id=5829

This is only one of many recent major DVC changes.  Disney is also extending the RTU period on its original timeshare, Disney's Old Key West (at Disneyworld) from 2042 to 2057.  Current OKW owners will either have to sign away their rights to the extended period, or pay a fee (officially $25 per point, but rumored to actually be $15 a point initially, which I still feel is very high.  DVC rooms cost between 8 and about 200 points per night. )

Additionally, in the past couple of weeks, Disney has increased restrictions and fees (a bit) for using points outside of Disney's own properties. They have also changed the banking rules for points. (It's debatable which banking system was better for members, the old one or the new one.)  Disney has also increased marketing efforts for DVC, including opening their first model outside of Disney property (in a mall in Chicago.) 

Disney also currently has two properties in active sales, both at Disneyworld,  Saratoga Springs and Animal Kingdom Villas. Disney has really speeded up contruction on Animal Kingdom Villas, closing much of the Animal Kingdom hotel units so that parts of the existing resort could be converted to timeshare units ahead of the original schedule. 

Rumors are that there are two other new DVC resorts in the pipeline. Well-substantiated rumors say that the first DVC property on the Disney World Monorail is currently being built (the Villas at the Contemporary Hotel.)  Less substantiated rumors say that Disney plans a DVC property in Hawaii.

All-in-all, I think this points to a major expansion of the DVC system.  As an owner at Disney's Boardwalk Villas, I'm very excited.


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## Steamboat Bill (Sep 18, 2007)

I am very bullish on DVC.

My comments:

1. $15pp to upgrade OKW is CHEAP as this is only $1 pp per year. My suggestion, do it ASAP.

2. Only 50 2-bedroom units at Disneyland is too small. I wonder if that is a building restriction?

3. I hope the CR becomes a reality.


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## CaliDave (Sep 18, 2007)

Steamboat Bill said:


> I am very bullish on DVC.
> 
> 
> 2. Only 50 2-bedroom units at Disneyland is too small. I wonder if that is a building restriction?



I think its more of a land restriction, It doesn't even seem like they had room for this much of an expansion.


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## BocaBum99 (Sep 19, 2007)

Steamboat Bill said:


> I am very bullish on DVC.
> 
> My comments:
> 
> 1. $15pp to upgrade OKW is CHEAP as this is only $1 pp per year. My suggestion, do it ASAP.



You don't seriously believe what you've posted here, do you Bill?  If so, please lend me $1M.  I will pay you back $1.5M in 2042.


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## Steamboat Bill (Sep 19, 2007)

BocaBum99 said:


> You don't seriously believe what you've posted here, do you Bill?



Sure...anyone who owns DVC OKW will have their contract expire in 2042 and they own nothing...i.e. $0.00.

To get an extra 15 years added to their contract and additional 15 years use of DVC, it would only cost $1pp per year ($15pp / 15 years) as compared to buying AKV that are about $2pp per year ($100pp / 50 years).

Also the annual dues for OKW is much lower than the other resorts.

This is a good deal for current owners of OKW that are happy visiting Disney.


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## BocaBum99 (Sep 20, 2007)

Bill,

Your assessment ignores the time value of money.  The most relevant comparison you can make is between Saratoga Springs and Old Key West.

Since SSR and OKW are about the same from a demand point of view (e.g. the most available resorts in DVC at the theme parks), the only difference between the two resorts is that owners at one resort have an RTU expiration date of 2057 and the other is 2042.  So, the extra 15 years is identically equal to the price difference between today's market rate for OKW and SSR.  Today, it's about $8.  After the conversion, the resale values should be about equal.

So, it will cost DVC owners $15 today to get something worth $8 today.

THAT MAKES NO ECONOMIC SENSE.   The numbers only work in fantasyland.

I am sure that some owners will use your logic to make that purchase.  But, that is because they do not understand how to do a comparative market analysis.


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## CaliDave (Sep 21, 2007)

Boca,

Let me see if I get this right. If you plan to keep this ownership until it expires. (which I assume is the reason people would upgrade)

The $15pp you pay now. Actually has zero effect on your ownership for another 35 years?  If you took that $15 and put it in a CD for 35 years at 5%. You'll in essence be paying almost $80/pp or if it goes into the stock market at a 30yr average of 12%. You'll be paying $700.00 pp for a 15 year ownership? 

I'm not that great at this, so if I missed something, let me know.


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## Carl D (Sep 21, 2007)

I don't figure time value of money. If I did, I would also have to figure it in "reverse", as DVC will pay for itself in around 7 years. After that, you must figure the "time value of the money" which you throw away on Disney deluxe hotels for the following 43 years.
You see, everyone forgets to subtract the hotel costs from that pile of money just sitting there collecting interest.


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## BocaBum99 (Sep 21, 2007)

Carl D said:


> I don't figure time value of money. If I did, I would also have to figure it in "reverse", as DVC will pay for itself in around 7 years. After that, you must figure the "time value of the money" which you throw away on Disney deluxe hotels for the following 43 years.
> You see, everyone forgets to subtract the hotel costs from that pile of money just sitting there collecting interest.



Actually, I don't forget any of the costs.  In fact, I am one of the only ones who actually does a true apples to apples comparison.

The BEST market based comparison of what the 15 year extension is worth in today's dollars is to compare the average market price of an SSR package net of all points and adjusted for anniversary date against an equivalent OKW 2042 package.  That difference in price is what the extension is worth.  Someone on this board told me that that difference is about $8 per point.

So, in essence, Disney is offering owners a product that is worth $8 for $15/point.  That is about par for the course for timesharing.

The only people who will take this deal have no clue about how or desire to do a proper financial analysis.

Carl, since you don't care about time value of money, I'll offer you the exact same deal that I offered Steamboat Bill.  Give me $1M now and I'll give you $1.5M in 2042.  That should be a good deal in your book.  It's 50% more than I you gave me.


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## BocaBum99 (Sep 21, 2007)

Let me give you an example of what I mean.

Let's use the following examples:

Let's say that today a Saratoga Springs package goes for roughly $83/point on the resale market.  And, at Old Key West, it's about $75.

Once, the owner pays the $15 extension, does this mean that their new ownership is worth $90/point = $75 + $15 they just paid?

No, it doesn't because owners will purchase the Saratoga Springs points for $83 instead.  

The better option for the customer with the extra money is to purchase more new points at Saratoga Springs with the money instead of paying for something now that you won't be able to use for 35 years.  At least they could use the points now instead of waiting 35 years to use them.

This extension IS a good idea for Disney.  It provides a mechanism to sell the same product over and over again to customers over time.  It's brilliant from their point of view.

The problem is it opens pandora's box for once Bliss customers to start looking more closely at what they actually own.  Disney has basically sold owners on the concept that the RTU ends so far out that you practically own it outright.  So, we are taking it back, but you will be long gone by then.  That always happens with leaseholds.  But, when the RTU gets close to expiring and people start thinking about losing their ownerships, that's when all heck breaks loose.  Disney is very smart to have that break out now instead of 15 years from now.


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## Steamboat Bill (Sep 21, 2007)

I was comparing extending OKW to buying the new AKV, not buying a resale SSR.

AKV = $100pp and OKW resale = $75pp and SSR resale = $85pp, thus there is a $25pp spread and if you can upgrade your OKW to the same RTU expiration as AKV for $15pp then I think it is a good deal. 

Also, OKW annual Dues is MUCH lower than AKV.

Now if you decide to buy SSR (my current favorite best deal...search TUG for my posts on this) then the upgrade may not be worth it, but you MUST include closing costs with buying SSR resale and that adds about $500 to any deal , thus negating any savings.

I am still of the opinion, if you LOVE DVC and are a current DVC OKW member that bought OKW in the $60pp range, then upgrading your account for $15pp (and this may not be the firm price) is a pretty good deal. If you are not a DVC OKW owner, then I would focus on a SSR resale and try to get the best deal out there.

This upgrade plan may actually do more harm to current OKW owners than if the plan did not exist.


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## BocaBum99 (Sep 21, 2007)

Steamboat Bill said:


> I was comparing extending OKW to buying the new AKV, not buying a resale SSR.
> 
> AKV = $100pp and OKW resale = $75pp and SSR resale = $85pp, thus there is a $25pp spread and if you can upgrade your OKW to the same RTU expiration as AKV for $15pp then I think it is a good deal.
> 
> Also, OKW annual Dues is MUCH lower than AKV.



Therein lies the fallacy of your argument.  And, it proves my point that many do not know how to do a comparable market analysis.

You cannot compare AKV to OKW.  Those are apples and oranges in terms of products.  OKW and SSR are most alike.  Just like Beach Club and Boardwalk are more comparable as well.



Steamboat Bill said:


> Now if you decide to buy SSR (my current favorite best deal...search TUG for my posts on this) then the upgrade may not be worth it, but you MUST include closing costs with buying SSR resale and that adds about $500 to any deal , thus negating any savings.
> 
> I am still of the opinion, if you LOVE DVC and are a current DVC OKW member that bought OKW in the $60pp range, then upgrading your account for $15pp (and this may not be the firm price) is a pretty good deal. If you are not a DVC OKW owner, then I would focus on a SSR resale and try to get the best deal out there.



I love DVC and I love OKW as my personal favorite DVC resort in Orlando.  I would STRONGLY recommend anyone wanting to purchase additional OKW points to buy another smaller OKW 2042 package.

And, I would recommend STRONGLY that OKW owners hold their money in an alternate investment and wait until the 2057 OKW packages start emerging on the resale market.  I predict that the far better financial decision if everything plays out with the numbers described on this thread is to sell your current 2042 and buy a resale 2057.  You will save about $8/point.




Steamboat Bill said:


> This upgrade plan may actually do more harm to current OKW owners than if the plan did not exist.



This is not true.   OKW owners were already going to be harmed.  All Disney is doing now is focusing their attention on something they put their head in the sand about as they were trained by Disney.  Now, they are telling them to take it out of the ground and look around.

Disney is in essence telling them to take a bite out of the forbidden fruit (sorry about the mixed metaphor).  The potential downside is that they may no longer be ignorant and bliss.


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## Steamboat Bill (Sep 21, 2007)

BocaBum99 said:


> And, I would recommend STRONGLY that OKW owners hold their money in an alternate investment and wait until the 2057 OKW packages start emerging on the resale market.  I predict that the far better financial decision if everything plays out with the numbers described on this thread is to sell your current 2042 and buy a resale 2057.  You will save about $8/point.
> 
> Disney is in essence telling them to take a bite out of the forbidden fruit (sorry about the mixed metaphor).  The potential downside is that they may no longer be ignorant and bliss.



I will agree with you on the first point, but it may take several years for this to come on the market as they have not even upgraded any OKW yet to the new RTU.

I also agree with you on the second point as many DVC owners have been bamboozled by the "pixie dust" and are the LEAST objective people I have ever met.


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## Steamboat Bill (Sep 21, 2007)

BocaBum99 said:


> You cannot compare AKV to OKW.  Those are apples and oranges in terms of products.



DVC is "THE" product, not necessarily the individual resorts.

At 7 months before your desired DVC check-in date...all DVC properties are treated as "equals" in terms of trying to get a reservation at any of the DVC properties. The only difference at that point is the annual dues and there is a HUGE difference between OKW and AKV annual dues and VB for that matter.

The only advantage of owning at a particular location is getting the 11 month (4 extra months) window to make a reservation. This is usually necessary to get the HIGHEST in demand weeks like holiday and special events. These, by the way, are the times I avoid Disney.

I originally owned two 250 point contracts at VWL and never booked at the 11 month window, thus I sold them (for a $6,000.00 PROFIT) and bought 850 points at SSR in 5 different contracts. I like owning at SSR because they came up with a new RTU expiration (added 13 extra years) and the annual dues was much lower. 

I have stayed at every DVC property at least once and like SSR the least. Because I usually book my trips at the 7 month window, I get to choose where I want to stay and paid the least for my membership and the least for my annual dues. Now that's what I call "welcome home"


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## Carl D (Sep 21, 2007)

BocaBum99 said:


> The only people who will take this deal have no clue about how or desire to do a proper financial analysis.
> 
> Carl, since you don't care about time value of money, I'll offer you the exact same deal that I offered Steamboat Bill.  Give me $1M now and I'll give you $1.5M in 2042.  That should be a good deal in your book.  It's 50% more than I you gave me.


I have not looked at the extension of OKW to see if it is a good deal for me, but there are many people who have. There are some pretty smart folks, even those who do this stuff for a living, who feel it's a good deal after running the numbers. -- But I'm not here to argue that point.

I didn't mean to imply that I don't care about the time value of money. I just don't think it's relevent in this case since I would be spending all the money, and more, on the same product anyway. I wouldn't be investing that money, but rather drawing from it quickly for Disney deluxe hotel rooms. Once the money is gone I will be losing interest on the additional money I will have to pay for deluxe accommodations, that WOULD otherwise be invested.
That's different than giving you a million dollars. If I wasn't going to spend the million, than of course time value of money comes into play.


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## Steamboat Bill (Sep 21, 2007)

Carl D said:


> That's different than giving you a million dollars. If I wasn't going to spend the million, than of course time value of money comes into play.



While were on it...can I have a million too....I want to join Exclusive Resorts. I will promise to be your best friend and invite you to some nice locations (if you don't mind the guest room).


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## wuv pooh (Sep 21, 2007)

Carl D said:


> I didn't mean to imply that I don't care about the time value of money. I just don't think it's relevent in this case since I would be spending all the money, and more, on the same product anyway. I wouldn't be investing that money, but rather drawing from it quickly for Disney deluxe hotel rooms. Once the money is gone I will be losing interest on the additional money I will have to pay for deluxe accommodations, that WOULD otherwise be invested.



That's the beauty of the deal from a Disney stockholder perspective.  You receive NOTHING but I get the cash.  You would not be spending the money anyway because you already have your points.  What you get is an option for another 15 years worth of points in 35 years.  I would bet with Boca that if you invested this money in the S&P 500 for 35 years that you could purchase the points in 35 years at the then current price and still have a ton of cash left over.

It's funny because this is the reverse argument of the RTU which tells you not to worry about the expiration because the terminal value is zero.  Now they are selling you that "worthless" terminal value for another $15 - brilliant!!!!


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## Steamboat Bill (Sep 21, 2007)

ok I give up....

I was comparing upgrading a "current OKW DVC owner" to the new RTU as compared to buying a new AKV contract....the cost still seems reasonable to me, but I own all my points at SSR and already have the extended RTU (minus 3 years). Thus, I did not put on my calculus hat to crunch these numbers as it is irrelevant to me.

If you invested $3,000 ($15pp x 200 points) in a 35-year CD for 35 years (@ 5%), it will grow to about $16,548.05 (but you have to pay taxes).

However, the price of joining DVC will probably be $400pp in 35 years and the cost of one night at Disney will probably be $1500 per night.

Another strategy is to do nothing as most of the original OKW owners will be going to the "Big Magic Kingdom in the Sky" if you know what I mean before they ever get to the end of their RTU contract. I am NOT a believer in leaving a timeshare to my kids in a will.

I will follow this thread as I am interested in what people do....but I must bow out from the debate as I have NOT read all the fine print.


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## wuv pooh (Sep 21, 2007)

Steamboat Bill said:


> If you invested $3,000 ($15pp x 200 points) in a 35-year CD for 35 years (@ 5%), it will grow to about $16,548.05 (but you have to pay taxes).



Right, and if you discount this back to today at Disneys 10.6% ROI then the points "cost" them $487 or $2.43 each.  If you discount it at 7% then it is worth about $8, which is about where the market seems to value it.

Seems a little piggish to charge $15 for something that costs $2.43 or $8, but as a shareholder I will not complain.

Also, don't forget that this is the "special" price, the regular price is supposed to be $25 with a $10 discount :ignore:


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## Steamboat Bill (Sep 21, 2007)

wuv pooh said:


> Also, don't forget that this is the "special" price, the regular price is supposed to be $25 with a $10 discount :ignore:



$25pp is an absolute rip-off...just like the $10 per day Coke's at the water parks.


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## CaliDave (Sep 21, 2007)

Steamboat Bill said:


> $25pp is an absolute rip-off...just like the $10 per day Coke's at the water parks.



Thats something I didn't think of. If you stay on-site at DVC in California. You can easily go back to the room to get drinks, snacks, food. 

You can spend $200/day in the Park for a family


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## Carl D (Sep 22, 2007)

wuv pooh said:


> That's the beauty of the deal from a Disney stockholder perspective.  You receive NOTHING but I get the cash.  You would not be spending the money anyway because you already have your points.  What you get is an option for another 15 years worth of points in 35 years.  I would bet with Boca that if you invested this money in the S&P 500 for 35 years that you could purchase the points in 35 years at the then current price and still have a ton of cash left over.
> 
> It's funny because this is the reverse argument of the RTU which tells you not to worry about the expiration because the terminal value is zero.  Now they are selling you that "worthless" terminal value for another $15 - brilliant!!!!


With all due respect, I don't think you understood what I was saying.

I thought I made it clear that I would be spending the money on hotel rooms, not investing it for 35 years. Further more, if I had that money, I wouldn't have the points.

To say we get nothing couldn't be further from the truth. I get a lifetime of Disney accommodations. Is that "nothing"? Even better, I won't burden my heirs with a timeshare after I'm gone.

Some of us do put a high value on quality of life, where as some only put value on a dollar bill.


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## wuv pooh (Sep 22, 2007)

Carl D said:


> With all due respect, I don't think you understood what I was saying.
> 
> I thought I made it clear that I would be spending the money on hotel rooms, not investing it for 35 years. Further more, if I had that money, I wouldn't have the points.
> 
> ...



Carl - I understand your argument for a NEW purchase.  If that is how you choose to spend your money that is fine.  I made the same rationalization buying Marriott from the developer (which has let me use 907 DVC points over the last 5 years :rofl: )

For an EXTENSION you really are getting nothing.  You get no new points until 2043 so you still have to buy the hotel room, your quality of life is unchanged, only your wallet is lighter.  Disney has free use of your money for 35 years.  

It is purely a financial transaction of which will be the better way to purchase points in 35 years.  Given the fact that you might not even want the points then and the high cost, it appears more smoke and mirrors than magic to me.  YMMV.


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## Dman67 (Sep 24, 2007)

wuv pooh said:


> It is purely a financial transaction of which will be the better way to purchase points in 35 years.  Given the fact that you might not even want the points then and the high cost...



...or you're 75 - 80 years old and find that staying at Disney doesn't have quite the same appeal as it did 35 years ago.  Besides...who will want to stay at a resort that is 50 years old?  Purchasing points for OKW in 2042 will probably be a really good deal, either that or Disney brings in the bulldozers and creates "Disney's New Key West Resort".


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## grammy1pammy (Sep 24, 2007)

Many of the discussions about whether or not DVC is a good deal seem to leave out the "resale-ability" of this particular timeshare.  

When we bought DVC, we thought all our kids (3) would enjoy it for _their_ families. It turned out that only one of our children is as much of a Disney fan as we are. However, we are still going to WDW quite often every year.
When, and if, we're too old to go as often, possibly 10-15 years from now, we'll give her the option of inheriting _some_ of our points, and we'll sell the rest. Since we originally bought DVC in the '90s, we didn't spend close to the current cost. 

Even if the prices don't continue to rise for DVC resales, we'll still have made out quite well, since thanks to ROFR, DVC holds its value pretty well. We feel very good about what we've received vs the $ we put in.


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## acesneights (Sep 24, 2007)

That ignores the topic which is whether to spend $15PP for something you won't use in your lifetime. You're buying a 15 year extension for your grandchildren to stay at a 50 year old resort.

Stan


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## Seth Nock (Sep 25, 2007)

I did not realize this post was here and posted details of the meeting on the Hotel points board.  But now I have an interesting question.  How will this extension effect the resale market?  After Feb 29, 2008, there will be a 2 Old Key West products on the resale Market, 1 ending in 2042 and another ending in 2057.  If buying resale, which would people more likely buy?  What would the price difference be?  For argument sake, lets take the current resale prices of Saratoga Springs @ $81/point, Old Key West @ $69/point, Animal Kingdom @ 90/point, Beach Club @ $89/ point, Boardwalk @ $80/ point, Wilderness @ $78/ point Hilton Head @ $65/ point and Vero @ $60/ point.  These are pretty much accurate based on a price that should pass right of first refusal for an average (not banked point) contract. I know most people want to quote different (higher) prices, but please use these numbers for figuring, as these are pretty much accurate. The current difference between Old Key West and Saratoga Springs 12 year difference on ownership is about $12 or the same $1 / point that Disney is asking for the extension.


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## BocaBum99 (Sep 25, 2007)

If it were a free and open market, then the value of the 15 year extension would be equal to $12 given your example.

The issue is that Disney can maniupulate the market very easily to change these ratios. 

One person told me that difference in their analysis was $8/point.  You say it is $12.

Disney can easily make it $17 by NOT exercising ROFR on OKW 2042 inventory for 6 months while exercising SSR.

This really does feel like an anti-trust issue.  Any lawyers in the house?


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## Seth Nock (Sep 25, 2007)

Saratoga Springs expires in 2054; Old Key West will expire in 2057.


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## Steamboat Bill (Sep 25, 2007)

Seth Nock said:


> Saratoga Springs expires in 2054; Old Key West will expire in 2057.



I think MOST of us will be in the big "Magic Kingdom" in the sky by 2054....if you know what I mean.


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## grammy1pammy (Sep 25, 2007)

It's not a scientific survey, but on the Disboards, a poll amongst OKW owners shows that most won't be buying the extension. Many cite their age, lack of interest on the part of heirs, not wishing to burden the next generation with dues, etc. as reasons why they'll eventually sell some or all of their points.

IMO, DVC (and other timeshares) are bought similarly to a _first_ house: it's a "forever" thing at the time of purchase  . Yet how many timeshare owners are still in their first house? And like many houses, where and what you've bought will determine whether or not it was an "investment", or just someplace to enjoy while you've lived there.


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## ladycody (Sep 25, 2007)

I tend to agree that the extension seems a questionable value.  

Having said that...with regard to a regular purchase...I applaud the quote below.



> You see, everyone forgets to subtract the hotel costs from that pile of money just sitting there collecting interest.



Too many times I see the time value of money touted as a reason NOT to buy a TS...but in reality, that argument is only valid if one is willing to stay home and spend nothing on travel.... which is simply not an option for those of us who want to travel and enjoy life _now. _   The growth of money is negated by money spent (in ever increasing amounts) unless there _is _no money spent...and I thank you for pointing that out.


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## Seth Nock (Sep 25, 2007)

Maybe I should open a new post, but I am wondering how this will effect resale.  Someone buying in the next 10 years, would they buy resale ending in 2042 for $69/ point, resale ending 2057 for $84/ point, developer ending 2057 for $96/ point or Saratoga resale for $81/ point ending 2054 or Animal Kingdom for about $90 ending 2057.  I am trying to figure out what to advise my owners when they ask me if they should extend.


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## BocaBum99 (Sep 25, 2007)

For Disney owners, ignorance is bliss.  If you love it enough, price doesn't matter.

To me, Disney has given owners a bite out of the forbidden fruit.  They are giving them just enough knowledge to where their fundamental beliefs about the club are being questioned.  Some will see it as it is.  Some will keep their head in the sand.  Some will continue to be oblivious.

The real issue is that most people do not know how to determine the value of what they own.  So, they leave themselves open to being bamboozled.

I believe what Disney hoped is that their owners would not view this extension rationally.  They would just take it and do a straight line valuation of the points.  $15/point is great when you compare it to $70/point.  Wow, you get 15 more years when there is really only 35 years left.  15/70 = .21 whereas 15/35 = .42.  Wow, I am getting way more years than I am paying.

Disney owners should not be thinking about the end date of the RTU being so far out that it is virtually infinite and doesn't matter.  I know that's how many people think about it.  What they should acknowledge is that an extension of 15 years adds value to their current ownership.  They should do it if it adds more value than it costs.   They should avoid it when the cost is more than it adds.  It's really as simple as that.  Trouble is that only a small percentage of people know how to do the math to determine that.


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## JimC (Sep 25, 2007)

Seth Nock said:


> Maybe I should open a new post, but I am wondering how this will effect resale.  Someone buying in the next 10 years, would they buy resale ending in 2042 for $69/ point, resale ending 2057 for $84/ point, developer ending 2057 for $96/ point or Saratoga resale for $81/ point ending 2054 or Animal Kingdom for about $90 ending 2057.  I am trying to figure out what to advise my owners when they ask me if they should extend.



Good point Seth.  I believe that the DVC resale market is unique and really can not be easily compared to other timeshare markets.

Say in ten years I want to sell a 300 point contract. My guess when I bought into the program in 2002 was that the long slow decline in pricing on a 2042 contract would begin in 2008. (i.e. that this is the peak of the market for 2042 contract value). It is also possible that DVC thinks the same thing and this offer is to prevent that from happening.

So my guess is that my 300 point contract will net after commission around $10,300 in ten years. I am being conservative because my guess in 2002 for value for the contract today had been around $70 per point and it appears that contracts are going for a few bucks more. But let's leave that being as good a guess as any on what might have happened with no news from Disney on extensions. I have used a 90 day expected cycle from list to closing -- assuming no exigent circumstances like open reservations - as my target.

So now we have a new variable -- an extension. So let's say the discounted $15 price is offered. Then it takes $4,500 for me to add on the 15 years. So my question becomes how does the new variable affect the $10,300 that I anticipated might be available from my contract then. You could do this with any time-frame to sell -- now, six months, a year, two years, whatever. Will it be worth much less? Will it take 180 days or longer to move at any price?  If I take the extension is it to preserve value or is it throwing money away?

I have also modeled the extension on a standalone basis. I did this primarily to see what investment now would make sense on a buy and use basis.   Not that I have a prayer of doing this, but for a younger owner this might be a practical consideration.  So I projected future dues and hotel rate increases and factored in the opportunity cost of the money and came up with a $15 made sense and $25 was not worth it decision, but it was close to the indifference price of $22.  So I thought maybe I was close to the analysis DVC did in pricing this. Naturally the key elements are the assumptions -- what hotel rates formed the base (moderate standard rooms with a mixed value and regular season usage with a 17.5% average discount off rack rates), what inflationary factor did I use for dues (3.8%) and what inflationary factor did I use for hotel rates (4.2%) and what opportunity cost (6.6%). Pick different assumptions and you get different answers. But 50 year projections are wildly suspect anyway. 

And I could project a likely value of the extension on a standalone basis. But what happens when the two combine and we have a mix of 2042 and 2057 contracts at the same resort? I am not accepting, yet, the validity of looking at SSR or AKV because they have longer terms.  2054 for SSR and 2057 for AKV.  I don't consider them comparable resorts because both are still under construction and have vastly different themes, styles and locations.

I think this comes down to a SWAG and there may be no amount of analysis that is likely to improve ones decision-making on this.  But at least we get to have some fun discussing it all.


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## OnMedic (Sep 25, 2007)

JudyS said:


> Less substantiated rumors say that Disney plans a DVC property in Hawaii.



Now were talking! Where do I sign?


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## acesneights (Sep 25, 2007)

JimC said:


> Good point Seth.  I believe that the DVC resale market is unique and really can not be easily compared to other timeshare markets.
> 
> Say in ten years I want to sell a 300 point contract. My guess when I bought into the program in 2002 was that the long slow decline in pricing on a 2042 contract would begin in 2008. (i.e. that this is the peak of the market for 2042 contract value). It is also possible that DVC thinks the same thing and this offer is to prevent that from happening.
> 
> ...



300 points will net $10,300 in 10 years or $42 a point, sounds wrong to me. 

Stan


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## FLYNZ4 (Sep 26, 2007)

I think that Seth is on target wrt resale prices.   Below is a post that I made on Disboards yesterday in response to a poll of OKW owners asking if they would extend their contracts.    The vast majority seem to be saying NO they will not, and the predominate reason seems to be that they feel they will be dead in 2042.

Personally... I think this event marks DVC stopping the artificial price increase because of their ROFR.   It seems to me that those who extend their contracts will be able to continue to enjoy riding the ROFR "bubble"... and those who do not extend will see their value drop rapidly.

I think that owners of DVC are particularly sensitive to applying value not only to their own use... but also to passing this on to their children.   No company is probably better at marketing to parents than Disney.    I do NOT think the critical question will be "How old will I be in 2042"?    Instead... I think the critical question is "how old will the person who buys my contract (or how old will their children be)... in 2042.   My personal belief is that in a few more years... when DVC has only 25 years left... the vast majority of potential purchasers will view 2042 "too short" wrt their own mortality.

Anyway... the post below is copied from what I wrote on DisBoards in response to the poll.

/Jim
----------------------------------------------------------------------

I voted "other" because I purchased SSR... and hence none of the options pertain to my situation. I purchased SSR primarily because of the longer contract life.

I have also been predicting that contract extensions would occur... and the vast majority of you have been saying that I am wrong. To me it was always obvious that this would occur... the only variable was when DVC would offer this.

I personally think that the predominate reasoning of --- "I will be pushing up daisies in 2042" is based on emotion rather than analysis. None of us know for sure what the financial results will be... but I think that it is highly likely that your asset will be worth more than the "extension fee" if you decide to extend... as compared to an un-extended contract.

I also realize that most are feeling --- "I did not buy this as an investment". Once again... I personally feel this rationale is flawed. Regardless of why you purchased DVC... it is an asset that you own... and it is to your (and your heirs) benefit to have that asset be worth as much as possible... regardless if you plan to sell or not. You never know what your situation will be... so why do you want to have something that is worth less?

I believe that the reason that an extended contract will be worth more than one expiring in 2042 has little (or nothing) to do with the value of your ownership actually increasing in value. However... I do believe that all contracts that are not extended will decline in price. Slowly at first and then accelerating as the number of years decrease. There are currently about 35 years left in the current contracts. In 10 short years that will be down to 25 years. My belief is that anyone wishing to purchase a DVC contract at that time will find such a contract very unfavorable... because most of us view our mortality... and that of our children to be longer than that. Yes... us old folks will die off... but anyone interested in purchasing our memberships are likely to view our contacts as "damaged goods".

The reason that I always thought that DVC would offer these extensions is because it virtually allows them to "print money". The executives making this decision now will get credit for generating revenue... yet they will be long gone in 35 years when the contract extensions kick in. The other reason that I felt it would happen is because it has been obvious that the ROFR cannot continue to artificially keep resale prices high indefinitely. Hence... I suspect that DVC will pull the plug on ROFR at some point allowing resale prices to plummet. It will be easy to market against resale product once the useful life of the contract gets lower... IE: my 25 year example above. If you don't think it will happen at 25 years... then what about 20... or 15? How many of you would have honestly spent $20K (or whatever you paid) for a membership that would not outlive your expected lifespan? Furthermore, how many of you considered your children when deciding to purchase DVC. I suspect the majority of you did... afterall... Disney is marketed very effectively to trigger your parental needs to provide for your children.

I have no idea if everything will pan out exactly as I predict... in fact, I am sure that it will not. However, I am relatively sure that at the macro level... my analysis is fairly accurate. To believe otherwise would indicate that Disney does not understand effective marketing.

/Jim


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## Seth Nock (Sep 26, 2007)

FLYNZ4 said:


> I think that Seth is on target wrt resale prices.   Below is a post that I made on Disboards yesterday in response to a poll of OKW owners asking if they would extend their contracts.    The vast majority seem to be saying NO they will not, and the predominate reason seems to be that they feel they will be dead in 2042.
> 
> Personally... I think this event marks DVC stopping the artificial price increase because of their ROFR.   It seems to me that those who extend their contracts will be able to continue to enjoy riding the ROFR "bubble"... and those who do not extend will see their value drop rapidly.
> 
> ...



I have discussed the ROFR alot with my buyers as well.  For the most part, we came up with Disney VERY actively buying back the 2042 expiration date units.  Right now they seem to be buying most units selling for about $65/point or less.  Let's guess that they will continue to buy units to resell them for the new price of $96/point.  Would it make more sense for them to buy the 2042 units $65/ point, resell them @ $96/ point and show a $31/ point "profit" or buy the 2057 units @ $80/ point and show a $16/ point "profit".  They are not worried about showing their stockholders profits 35 years from now.  They want to show their stockholders profits right now.  My guess is they are more likely to exercise on the cheaper units.


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## Seth Nock (Sep 26, 2007)

acesneights said:


> 300 points will net $10,300 in 10 years or $42 a point, sounds wrong to me.
> 
> Stan



My guess would be about $54/ point - 10% commission netting $48.6/point, vs $73/point - 10% commission = $66/point.  However, if these are indeed the #s, then the the extension would not make sense.  What does everyone else think?  


Please use the figures in my example as base figures, as they are accurate based on the information I tend to see and I have been involved in brokering about 400 DVC contracts in the past 12 months.


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## JimC (Sep 26, 2007)

acesneights said:


> 300 points will net $10,300 in 10 years or $42 a point, sounds wrong to me.
> 
> Stan



Could very well be.  That is based on a model I developed in 2002 that I admit projected a value for 2007 that is slightly lower than what it is today.


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## FLYNZ4 (Sep 27, 2007)

Seth Nock said:


> I have discussed the ROFR alto with my buyers as well.  For the most part, we came up with Disney VERY actively buying back the 2042 expiration date units.  Right now they seem to be buying most units selling for about $65/point or less.  Let's guess that they will continue to buy units to resell them for the new price of $96/point.  Would it make more sense for them to buy the 2042 units $65/ point, resell them @ $96/ point and show a $31/ point "profit" or buy the 2057 units @ $80/ point and show a $16/ point "profit".  They are not worried about showing their stockholders profits 35 years from now.  They want to show their stockholders profits right now.  My guess is they are more likely to exercise on the cheaper units.


Seth,

It seems to me that the primary reason DVC exercises ROFR is to prevent the resale price from falling... so that it does not impact their primary business... which is to sell new units which probably costs them $26/point.   In other words... buying and selling resales is a cost of doing business.

They need to do this now to keep resales from impacting their primary business.     I think they understand very well that a resort expiring in 35 years still falls inside of a prospective buyers "mortality comfort zone".

Since you sell units, you probably have a good idea of the average age of buyers.   My guess would the average is 40s - early 50s... and of course there will be some younger or older.     Correct me if I am wrong... but I will assume an average age of 45... with children who are 10-15 years old.

I also expect that most people who buy DVC consider it not only for themselves... but also for their children's sake.   This is because Disney knows how to market to adults... hitting the "parental need to provide" nerve.

So a 45 year old prospective buyer would consider a 50 year contract as beyond their personal use... and supplying their children with "magical Disney memories" till they are 60-65... at which point they can take care of themselves.

At 35 years remaining... their kids will be 45-50 yo... which is still probably OK for a lot of people... especially since they are still within "taking the grandkids to WDW" time frame.

At about 25 years is the point that I think prospective buyers would start getting the heeby jeebies.  Their kids will be 35-40 yo and they may even miss out on the experience of bringing their grandkids to WDW.   This only gets worse as the contract length gets shorter.

The above is why I believe that people are making a mistake on valuing the extension in terms of their own mortality.   I think they should be viewing it in terms of the mortality of the people who will be buying their contract... people who on average will be 15+ years younger than themselves.

I think that DVC understands this very well.   Right now... they cannot effectively differentiate their new product from resale product... so they exercise ROFR to keep resale as a non-threat.   However... as the contracts get closer to expiration... ie: 25 years remaining... the resale product becomes much less of a business threat because they effectively market against a prospective buyers mortality fears.

I would love to hear your perspective since you probably talk to a lot of potential DVC owners.

/Jim


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## Seth Nock (Sep 28, 2007)

FLYNZ4 said:


> Seth,
> 
> It seems to me that the primary reason DVC exercises ROFR is to prevent the resale price from falling... so that it does not impact their primary business... which is to sell new units which probably costs them $26/point.   In other words... buying and selling resales is a cost of doing business.
> 
> ...




Actually, there tend to be 2 major categories of buyers.  One, is 25-30 years of age (usaully 2 children, interested in controlling their vacation costs).  For this category, price is the major factor.  They typically want to save the money up front (2042 expiration).  The second set of buyers are about 55- 70 years, buying to take the children and grandchildren.  They feel that if they "own" the vacation, their children will will include them in the vacations (otherwise, they may be left home).  This group might go for the 2057 expiration, or may figure that they won't need it beyond the 2042 date.  

At the meeting, I asked if the current owner does not agree to the current extension, will they be permitted future extensions.  I was told that they would be permitted future extensions.  This means that if a "young family" buys the 2042 expiration, in order to save $, they may choose to extendfrom the years 2057- 2072 (15 years from now, when they are more financially secure).  It will be strange though, they can own from now until 2042, Disney has ownership from 2042-2057 and they would own again from 2057-2072.


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## FLYNZ4 (Sep 28, 2007)

Seth Nock said:


> It will be strange though, they can own from now until 2042, Disney has ownership from 2042-2057 and they would own again from 2057-2072.


This last part seems very strange to me... and has to be a misinterpretation on their part of your question.    Assuming that an owner decides not to take this current extension...  but decides to extend some number of years down the road (assuming that it is offered)... it would seem that the most viable solution would be to charge that person more than someone who had previously extended... since that extension would be for a longer period of time.

Interesting data on your customer demographics.   I would not have expected a lot of buyers in the 25 year old range.   I can understand the secondary market of those that are older and more financially stable.   Thanks for the data.

What is really interesting is that I would have expected a lot of younger people to buy directly from DVC rather than resale because of the easy to acquire financing.   However... when I discussed this with DVC guides... I heard that most were older... with 40+ being the most popular age demographic.

/Jim


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## Seth Nock (Sep 28, 2007)

It is fairly easy to get financing on the resale market.  I am guessing that maybe people in their late 20s are more comfortable with buying on the internet than people in their 40s, but that is just a guess.

Regarding the extension, though, Disney claims that one who "opts out" now will be permitted to "opt in" to the next offerring.  This seemed very strange to me.


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## Steamboat Bill (Sep 28, 2007)

Seth Nock said:


> Regarding the extension, though, Disney claims that one who "opts out" now will be permitted to "opt in" to the next offerring.  This seemed very strange to me.



This is very strange indeed. I would probably not extend now.


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## spookykennedy (Sep 30, 2007)

Saying the extension on OKW is only worth $8 doesn't take into account resorts.  SSR is not OKW...When we purchased OKW resale we had the option of buying SSR but disliked the resort in almost every way and purchased OWK instead in spite of the different end dates...so to compare them both to me isn't accurate just based on when the contract ends.


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## JimC (Sep 30, 2007)

Seth Nock said:


> Actually, there tend to be 2 major categories of buyers.  One, is 25-30 years of age (usaully 2 children, interested in controlling their vacation costs).  For this category, price is the major factor.  They typically want to save the money up front (2042 expiration).  The second set of buyers are about 55- 70 years, buying to take the children and grandchildren.  They feel that if they "own" the vacation, their children will will include them in the vacations (otherwise, they may be left home).  This group might go for the 2057 expiration, or may figure that they won't need it beyond the 2042 date. ....



I think the largest first time purchaser group are in their 30s -- close to half, then 40s - about one quarter, then 20s and 50s plus taking up the balance.  

We were in the 40s category when we purchased with two grown children off at university.  Purchase reasons were preferred style of vacation and value for dollar spent.


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## Seth Nock (Oct 1, 2007)

JimC said:


> I think the largest first time purchaser group are in their 30s -- close to half, then 40s - about one quarter, then 20s and 50s plus taking up the balance.
> 
> We were in the 40s category when we purchased with two grown children off at university.  Purchase reasons were preferred style of vacation and value for dollar spent.



Most of my buyers with 2 grown children and no grandchildren tend to buy Marriott or Hilton rather than Disney. If they plan to trade the property, they like to know that it is deeded in perpetuity.  Most of my buyers have 2 young children or a few grandchildren.  They are more interested in being on Disney property, than having a deed in perpetuity.


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## vittoria (Oct 3, 2007)

The offer received in the mail today from the DVC was $15 per point to extend the OKW contracts to 2057, if purchased before the end of February.

Does the $15 vs $25 change whether anyone thinks this is a good idea or not?

Vickie


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## Steamboat Bill (Oct 3, 2007)

vittoria said:


> The offer received in the mail today from the DVC was $15 per point to extend the OKW contracts to 2057, if purchased before the end of February.
> 
> Does the $15 vs $25 change whether anyone thinks this is a good idea or not?
> 
> Vickie



$25pp is an absolute RIP-OFF!

Sell OKW and get ready for Hawaii DVC!


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## JimC (Oct 3, 2007)

Seth Nock said:


> Most of my buyers with 2 grown children and no grandchildren tend to buy Marriott or Hilton rather than Disney. If they plan to trade the property, they like to know that it is deeded in perpetuity.  Most of my buyers have 2 young children or a few grandchildren.  They are more interested in being on Disney property, than having a deed in perpetuity.



We also own MVCI, but not because of the ownership difference.  MVCI is a better value off Disney property.  I have reached the conclusion that a deed in perpetuity is more sales hype than actual value.


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## JimC (Oct 3, 2007)

Well now they announced the Hawaii project.  Resort and DVC at Ko Olina.

Disney unveils plans for 800-room Oahu resort


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## Steamboat Bill (Oct 3, 2007)

JimC said:


> Well now they announced the Hawaii project.  Resort and DVC at Ko Olina.
> 
> Disney unveils plans for 800-room Oahu resort



I guess DVC read my last post


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## vittoria (Oct 4, 2007)

I wouldn't consider it at $25 pp, but the offer from the DVC which arrived yesterday was for $15 pp until the end of Feb.   I'd like opinions on whether   extending the ownership the extra 15 years is worth it at $15 pp.

Thanks-

Vickie


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## Steamboat Bill (Oct 4, 2007)

One thing to consider is that OKW has the LOWEST annual dues of all the DVC properties and thus is the cheapest to own on a long term basis. When you consider California, Hawaii and amny more locations being added, OKW is a bargain that can trade into them at the 7 month window.

The $15pp is a "fair" deal, but not a great one. I would probably pass on this one as 2042 is still a long time away.


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## Seth Nock (Oct 4, 2007)

Steamboat Bill said:


> One thing to consider is that OKW has the LOWEST annual dues of all the DVC properties and thus is the cheapest to own on a long term basis. When you consider California, Hawaii and amny more locations being added, OKW is a bargain that can trade into them at the 7 month window.
> 
> The $15pp is a "fair" deal, but not a great one. I would probably pass on this one as 2042 is still a long time away.



2nd lowest.   Saratoga is the lowest.  Most of my buyers are passing.  I think I have about 5% extending.


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## Steamboat Bill (Oct 4, 2007)

Seth Nock said:


> 2nd lowest.   Saratoga is the lowest.  Most of my buyers are passing.  I think I have about 5% extending.



my bad....I own 850 SSR points and should know better.

I would advise saving your upgade money for the DVC Hawaii project.


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## barndweller (Oct 4, 2007)

I would guess that the maintenence fees at both the Ca. & Hawaii resorts will be quite high. Costs for everything in those two states are well above the national average, everything from water & electricity to wages for maids & gardeners is very high out here. And just keep rising at a rapid clip. Property taxes are high & are billed seperately on timeshares in Ca.


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## JimC (Oct 4, 2007)

I'm expecting that both purchase price and annual fees will be very expensive in Hawaii.  Anaheim will expensive, but probably less so than Hawaii.


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## JimC (Oct 4, 2007)

vittoria said:


> I wouldn't consider it at $25 pp, but the offer from the DVC which arrived yesterday was for $15 pp until the end of Feb.   I'd like opinions on whether   extending the ownership the extra 15 years is worth it at $15 pp.
> 
> Thanks-
> 
> Vickie



I believe that it merits consideration at $15.  One certainly can demonstrate it with reasonable assumptions regarding future room rates, DVC dues and factoring lost opportunity costs.  For a younger OKW owner who is likely to still be able to use the extra years I would consider it very hard because it gets you access to the program for fifty years at lower costs than the other options (AKV and to a lesser extent SSR).

If you are like us, early 50s, then it is more a question of how the extension will affect resale value and marketability.  Our evaluation is more along if we want to sell in ten years are we better off doing nothing or paying the extension fee.  So far I have not heard an overwhelmingly convincing argument either way.  So it will likely come down to a SWAG.

Another argument is this.  We bought with a "pre-paid vacation" perspective.  We will have offset the purchase price and opportunity costs by 2009 (seven years of ownership).  So if the membership is not worth very much in a few years in resale we are still way ahead on overall vacation value.  On that basis we would likely pass.


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## FLYNZ4 (Oct 4, 2007)

JimC said:


> If you are like us, early 50s, then it is more a question of how the extension will affect resale value and marketability.  Our evaluation is more along if we want to sell in ten years are we better off doing nothing or paying the extension fee.  So far I have not heard an overwhelmingly convincing argument either way.  So it will likely come down to a SWAG.


Jim,

Let's assume that you want to divest of DVC in a few years... do you think that there will be contracts available for resale with both 2042 and 2057 end dates?   Those will be your "competition".  What do you think the difference in price will be between the two types of contracts?

/Jim


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## Steamboat Bill (Oct 4, 2007)

FLYNZ4 said:


> Jim,
> 
> Let's assume that you want to divest of DVC in a few years... do you think that there will be contracts available for resale with both 2042 and 2057 end dates?   Those will be your "competition".  What do you think the difference in price will be between the two types of contracts?
> 
> /Jim



At that time probably $8-10pp difference between the two contracts.


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## Eli Mairs (Oct 5, 2007)

We probably won't live to see 2042, as we will be in our 90's.
However, we are seriously thinking of extending our membership for a couple of reasons.
We would like to pass it along to our children, their children and grandchildren, to carry on our tradition of Disney vacations. Our daughters grew up at Old Key West, and still love staying there, as adults. Even if they decided to rent out the points, they would make money. Imagine the cost of resort accommodation in 30-40 years.
If we ever do wish to sell, the additional years will probably have a positive impact on the selling price, keeping it more in line with the newer resorts. Those not extending will be the poor cousins.
By renting out this year's points, a good chunk of the cost will be covered, so it is not a big deal for us.
We bought in 1992, and have recouped our original cost several times over, so we're happy.


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## JudyS (Oct 5, 2007)

vittoria said:


> I wouldn't consider it at $25 pp, but the offer from the DVC which arrived yesterday was for $15 pp until the end of Feb.   I'd like opinions on whether   extending the ownership the extra 15 years is worth it at $15 pp....


I own at Boardwalk, not OKW, but if I owned at OKW, I would pass.  Disney is asking for money now for something they won't give you until 2042.

Seth mentioned that very few of his buyers are taking the extension, even at $15.  That's what I'm hearing on the DVC boards, too -- most people aren't taking the extension.

I'm of the mind that Disney primarily wants to extend OKW so that it will be more competitive with their newer properties that are "good" until 2057.  It seems to me that Disney is unhappy about current resale prices at OKW and are concerned low OKW resale prices will cut into new DVC sale.  Therefore, they have been accumulating OKW points via ROFR rather than let OKW resale prices drop.  Rumors are that Disney is sitting on 96,000 OKW points. My belief is that Disney will exercise its ROFR on any 2042 OKW contracts that sell for reasonable prices, and then re-sell them as 2057 contracts at a higher price point.  I think any income Disney gets from people extending is just gravy; it's not their main goal.


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## Steamboat Bill (Oct 5, 2007)

JudyS said:


> My belief is that Disney will exercise its ROFR on any 2042 OKW contracts that sell for reasonable prices, and then re-sell them as 2057 contracts at a higher price point.  I think any income Disney gets from people extending is just gravy; it's not their main goal.



I think this is the BEST explanation I have heard on this topic.


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## JimC (Oct 5, 2007)

FLYNZ4 said:


> Jim,
> 
> Let's assume that you want to divest of DVC in a few years... do you think that there will be contracts available for resale with both 2042 and 2057 end dates?   Those will be your "competition".  What do you think the difference in price will be between the two types of contracts?
> 
> /Jim



From what I have seen, resales hit the market within six months.  We already saw AKV resales before it opened.  So yes, I expect to see 2057 OKW contracts sometime in 2008.

If I could answer your second question with any assurance I would be a very happy camper!!!   I just don't know for sure and have not heard a convincing argument either way.


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## FLYNZ4 (Oct 6, 2007)

JimC said:


> From what I have seen, resales hit the market within six months.  We already saw AKV resales before it opened.  So yes, I expect to see 2057 OKW contracts sometime in 2008.
> 
> If I could answer your second question with any assurance I would be a very happy camper!!!   I just don't know for sure and have not heard a convincing argument either way.


Jim,

I also do not have a good feeling for what the resale difference will be between the 2042 and 2057 OKW contracts.   To me... IF (big IF) the gap gets extremely wide... that would be the primary reason to bother with the contract extension.

One thing seems clear to me:  As the remaining life drops to a lower number... which I estimate at about 25 years... then the "resale threat" to Disney decreases... and they may no longer need to keep the resale price artificially inflated as they do now via ROFR.   The basis of this agrument is because at some point in time... I think most new buyers will factor in their own mortality into the decision making process.   Once the lifespan of the new purchase is less than the buyer's expected lifespan... and to a lesser degree... the expected lifespan of their children... then I think it will be fairly easy for Disney to effectively market the newer properties against the ones with limited lifespan.

/Jim


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## bobh (Oct 8, 2007)

*Old Key West Extension*

I am in my 50's and will decline the offer to extend for something I can't use.
Any money I put into Disney will be for points I can use right now rather than pay for something that my family can't use for 35 years. My children can use my membership until they are 60 years old which should take care of the grandchildren as well. In addition, I do not want to saddle my kids with maintenance dues that far out in the future. It makes no sense for someone in my age group. Perhaps it might make sense to a younger owner. My complements to JudyS for an excellent explanation. I read the DVC Board for days and saw no explanation that captured what Disney is doing as well as her description.


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## bobh (Oct 8, 2007)

*Question for JudyS*

If Disney is sitting on 96,000 points does anyone have any idea how many total points are available at Old Key West. I am an owner and am sory to say I have no idea. Anyone?


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## Steamboat Bill (Oct 9, 2007)

96,000 points divided by 300 points per week = 320 weeks

320 weeks divided by 52 weeks = 6.15 timeshares rented year-round.

Considering OKW has over 300 rooms...this is hardly a drop in the bucket if the rumor is true.


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## bobh (Oct 9, 2007)

*Good point*

Steamboat Bill - your explanation sounds very logical. The number of rooms is easily determined but how did you come up with the 300 points per week. Is that just a reasonable estimate or have you done the math. I just took an average of the points for the premier season for accomdodations raging from studio to Grand Villa and came up with a maximum average of 375 points per week so I am estimating that your 300 point figure is probably very accurate if one did the math for the lower demand periods in the year. Thanks for the 
information.


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## Steamboat Bill (Oct 9, 2007)

The actual average for OKW 2 bedroom is closer to 280 points per week..I just rounded to 300.

There are 709 rooms at OKW and I assumed that only 1/2 are 2 bedrooms. Thus I estimated 300 rooms.

Either way, my estimate was very close that these 96,000 points (if they even exist) are a small number compared to the total.


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## JudyS (Oct 9, 2007)

bobh said:


> If Disney is sitting on 96,000 points does anyone have any idea how many total points are available at Old Key West. I am an owner and am sory to say I have no idea. Anyone?


I agree with Bill here, it's about the equivalent of 6 two-bedrooms, or so.

No, this isn't a big fraction of OKW.  It's not like Disney is going to have trouble balancing the MF budget because they own six units or anything.   However, at the other DVC resorts that have completed sales (at least the ones in Orlando) Disney doesn't seem to be sitting on much inventory at all.  For Boardwalk, Beach Club, and Wilderness Lodge, there is a waitlist for most months. The fact that Disney has inventory at OKW suggests that Disney is having trouble getting resale prices up to where they want, and is using ROFR to buy and hold inventory that would otherwise sell for less than what Disney finds acceptable.  

It also seems that Disney may run short of new points to sell.  They have a lot of projects in the pipeline (CA, HI, the new AKL buildings) but these won't be completed for a couple of years. Disney may not have enough inventory to sell during 2008. Extending OKW until 2057 gives them something they can market during 2008 to new buyers, without necessarily having to drop the price per point below that of AKL.


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## Steamboat Bill (Oct 9, 2007)

JudyS said:


> Extending OKW until 2057 gives them something they can market during 2008 to new buyers, without necessarily having to drop the price per point below that of AKL.



Judy continues to hit the DVC nail on the head in regards to the OKW extension as I agree with her analysis.

I don't read DISboards too often, so I don't know if this opinion is reflected over there.

I have been a DVC owner since y2k and have bought over 1,000 points. DVC is always in demand and the California and Hawaii projects will only add fuel to the fire.


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## JimC (Oct 9, 2007)

bobh said:


> If Disney is sitting on 96,000 points does anyone have any idea how many total points are available at Old Key West. I am an owner and am sory to say I have no idea. Anyone?



Just under 7.7 million points at OKW.  You can determine it from the annual budgets published by DVC.


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## Steamboat Bill (Oct 9, 2007)

JimC said:


> Just under 7.7 million points at OKW.  You can determine it from the annual budgets published by DVC.



96,000 points represents 1.25% of the total


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## JudyS (Oct 9, 2007)

Thanks for the vote of confidence, Bob & Bill!   



Steamboat Bill said:


> 96,000 points represents 1.25% of the total


Yeah, it's not that Disney owns a substantial portion of OKW.  But, extending OKW produces nothing but benefits for them. With those 96,000 points ending in 2057 instead of 2042, Disney can sell them at a higher price.  And, any contracts ending in 2042 that individual owners sell for a reasonable price can be snatched up via ROFR, turned into 2057 contracts, and sold at a higher price, preventing "low-cost" OKW resales from eating into Disney's developer sales. Plus, any income that comes in from existing OKW owners extending is pure profit for Disney right now; they don't have to deliver anything in exchange until 2042.  It's a win-win-win situation for them.


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## bobh (Oct 10, 2007)

*DVC Room Types & #*

I have never tried to personally verify this but this is what I have from the Disboards website:

OKW - 0 Dedicated Studios - 0 Dedicated 1Bdrm - 274 Dedicated 2Bdrm - 230 Lockoffs - 27 Grand Villas = 531 Units / 761 Max. Available Rooms

VB - 0 Dedicated Studios - 0 Dedicated 1Bdrm - 18 Dedicated 2Bdrm - 36 Lockoffs - 6 Grand Villas - 112 Inn Rooms = 172 Units / 208 Max. Available Rooms

HHI - 0 Dedicated Studios - 0 Dedicated 1Bdrm - 76 Dedicated 2Bdrm - 21 Lockoffs - 5 Grand Villas = 102 Units / 123 Max. Available Rooms

BWV - 97 Dedicated Studios - 130 Dedicated 1Bdrm - 0 Dedicated 2Bdrm - 149 Lockoffs - 7 Grand Villas = 383 Units / 532 Max. Available Rooms

VWL - 20 Dedicated Studios - 27 Dedicated 1Bdrm - 44 Dedicated 2Bdrm - 45 Lockoffs - 0 Grand Villas = 136 Units / 181 Max. Available Rooms

BCV - 36 Dedicated Studios - 20 Dedicated 1Bdrm - 78 Dedicated 2Bdrm - 74 Lockoffs - 0 Grand Villas = 208 Units / 282 Max. Available Rooms

SSR - 0 Dedicated Studios - 0 Dedicated 1Bdrm - 360 Dedicated 2Bdrm - 432 Lockoffs - 36 Grand Villas = 828 Units / 1260 Max. Available Rooms (based on proposed 18 buildings to be open in 2007) (( Currently there are 120 Dedicated 2BR , 144 Lockoffs and 12 GV's for a total of 276- 420 max))


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## JimC (Oct 11, 2007)

Extension revenues 7.7 million points times $15 = $115,500,000

Extension revenues 7.7 million points times $25 = $192,500,000

Most likely something like $162.5 million (with 1/3 converting under the discount, DVC retaining 3% and the rest sold at $25)

Figure what maybe three to four million dollars to undertake this (legal, printing and postage, filing fees, express delivery, owner follow up, overhead and management).

Not bad, not bad at all.


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## Don40 (Oct 29, 2007)

It is great that DVC has decided to open new resorts, but what will happen if they open 10 new resorts will they be able to maintain the ROFR policy.  More resorts will force more resale and as this accelerates can they maintain the price.  Vero Beach is much cheaper than the "Onsite" Disney property.  The reason DVC can maintain  and increase their price is the demand for the unique product, but with more locations that unique product starts to deminish IMHO. Food for thought.

Don


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