Monthly ROFR Data - UPDATED 05/07/2013

[wdrl]

As disneynutz points out, my ROFR database is compiled from free information available to the public from the Orange County Comptroller and Indian River County websites. Although similar information is also available for Aulani and Villas of Grand Californian, the Hawaii Bureau of Conveyances and the Orange County, California Clerk-Recorder's Office charge $1.00 a page to view deeds filed with them.

[SpaceMountain77]

Why has there been such little interest in obtaining VWL contracts and points? Only 2 contracts were retained since 2010? Does DVC still have a lot of VWL points in its inventory? Something else?

[disneynutz]

Originally Posted by SpaceMountain77

Why has there been such little interest in obtaining VWL contracts and points? Only 2 contracts were retained since 2010? Does DVC still have a lot of VWL points in its inventory? Something else?

I don't think that anyone can know for sure. VWL is a smaller resort and maybe the owners tend to sell less.

Bill

[wdrl]

October 2012 saw more deeds and points reacquired by Disney Vacation Development via the ROFR process than any other month since June 2010 when I started tracking this data. As has been the norm since August 2011, more deeds and points were reacquired for Old Key West than for any other DVC resort. In October, DVD reacquired 29 OKW deeds containing 5,817 points -- the largest number of deeds or points reacquired in a single month from any DVC resort.

EDITED: Coincidentally, DVD sold 4,886 OKW points in October 2012.

[disneynutz]

Looks like they may be running low on points and/or they want to offer OKW as an alliterative for buyers who take issue with the new resort prices.

Bill

[DougEMG]

Seems like OKW is going to continue to be a hard resort to get as a resale.

Thanks for the update.

[ELMC]

Originally Posted by disneynutz

Looks like they may be running low on points and/or they want to offer OKW as an alliterative for buyers who take issue with the new resort prices.

Bill

I wouldn't be surprised to see the same thing happen with other resorts as well (possibly SSR) until DVD has a lower priced initial offering. VGF certainly won't fit that bill.

[Disneybuckeye]

Glad to see they are not buying back VWL contracts. We are doing a small add on that will probabley be sent in for ROFR next week. The use month matched our current ownings and location and was exactly the number of points we wanted. I would be very sad if if was ROFR'd.

[Brian Noble]

The easiest explanation for OKW remains the split expiration date problem. DVCMC/DVD would presumably not want to suddenly own a substantial fraction of that resort come 2042.

[DenLo]

Originally Posted by Brian Noble

The easiest explanation for OKW remains the split expiration date problem. DVCMC/DVD would presumably not want to suddenly own a substantial fraction of that resort come 2042.

wdrl is my DH and we are driving to WDW as I type. Here is wdrl's reply.

[QUOTE]Brian Noble raises a good point. However it appears DVD will ROFR 2057 deeds as well as 2042 deeds. Another factor that comes into play is price. Until November 2011 the OCC website showed the reacquisition price. DVD was picking up OKW deeds around $45 per point. If people are continuing to sell OKW today at those prices, it doesn't surprise me that DVD is willing to pickup OKW deeds so cheaply.

The master contract number for some of these OKW deeds indicates that the original buyer purchased in the early 90's. Some Members have owned OKW for 15 - 20 years. These members have already recovered their purchase price and they are willing to sell their deeds at an extremely low price.[QUOTE]

[Brian Noble]

If people are continuing to sell OKW today at those prices, it doesn't surprise me that DVD is willing to pickup OKW deeds so cheaply.

It's not *that* cheap compared to new construction. Within the industry, construction cost is typically less than half of the total sales price. In some cases, it is much less than half. Wyndham, for example, spends 20-25% of the total sales price on construction, with marketing costs in the mid-40% range. You have to pay that sales/marketing cost every time you turn a deed, wether it is from a brand new resort, or a "resale". It's also probably easier to market the new/flashy resorts, *and* they sell for higher prices.

In short, ROFR is not necessarily the "free money" machine that it seems to be. DVC probably spends a little less on marketing and a little more on construction vs. Wyndham, but is not *too* far off that mix---particularly given the fact that DVC's units tend to be smaller *and* there are no land acquisition costs to speak of for WDW resorts. The land was all bought for a song years ago.

(Source for Wyndham's cost breakdown: page 36 of this investor presentation.)

[Cruznmore]

Originally Posted by Brian Noble

In short, ROFR is not necessarily the "free money" machine that it seems to be.

But think about it. The marketing costs are based on the new resorts, not the old ones. They have already sold that contract once (at least) and recouped all of the construction/marketing costs. There may be a commission paid to the guide that resells it (I'm assuming they work on commission) and the loss of MF while they are holding the points, but there are no other costs involved.

It is straight profit. They pick up an OKW contract at $45, the other costs might add $5/point or so, resell it for $100. That is a money maker for them. They are also picking up an additional 15 years of MF for every 2042 contract they pick up and resell.

Seems like a no brainer to me.

[Brian Noble]

They have already sold that contract once (at least) and recouped all of the construction/marketing costs.

But to sell the contract again, they have to attract another willing buyer. That doesn't happen by itself---it requires more work, and that work is marketing.

[Cruznmore]

Originally Posted by Brian Noble

But to sell the contract again, they have to attract another willing buyer. That doesn't happen by itself---it requires more work, and that work is marketing.

But they are already doing the marketing for Aulani, AKV, and BLT. There is no marketing around any other resort (GFV soon) in any of the docs I have received. We did get 1 piece of info on SSR in our packet because I specifically asked for it.

Unless someone else has seen something, there is no additional $$s spent on marketing any resorts other than the new ones.

Commission, yes. Major, or even minor marketing push? No.

I think it is the extra 15 years of MF that is driving the OKW pickups.

[Brian Noble]

Where do you think these OKW sales are coming from? There are really only two avenues. Neither is free.

The first is current owners who decide they want to add on at OKW. But, current owners are *constantly* marketed to at a low level. For example, Welcome Home Wednesdays. Many people talk about how their Guide "stays in touch." There are also the webinars, the old physical directories, and heck even the DVC website itself is, in part, marketing material. Essentially, any time you see the "THIS PROMOTIONAL MATERIAL IS BEING USED FOR THE PURPOSE OF SOLICITING SALES OF TIMESHARE INTERESTS" disclaimer, that's a marketing cost. No one thing is super expensive, but taken as a whole it's non-trivial, and it's spread over the entire ownership even though only a few people add on in any particular year.

The other avenue is people new to the program, who, for whatever reason, decide to buy at OKW rather than a "new" one. But, DVD spends a lot of money to get those people onto the tour---the ubiquitous kiosks in the parks, resorts, etc. etc. etc. And, if one of those "new owners" buys OKW, that means they are *not* buying the "new" resorts---so the marketing costs really get "charged" to that sale.

It's true that marketing to existing owners is less expensive than new owners---and the Wyndham presentation I linked to above gets into the differential for their system---but it is still not free. Wyndham estimates that for a new owner 58% of the total sales price is consumed by marketing costs. For an existing owner making a second (or subsequent) purchase, marketing drops to about 32% of the total purchase price. That drop comes from two places. One: the existing owner already understands the value proposition, so you don't need to spend the time (money) to explain it. Two: the existing owners tend to spend more per transaction, so the customer acquisition costs are amortized over a larger purchase. But, I'll bet that it is easier (and therefore cheaper) to sell an existing owner on a shiny new resort rather than on an existing resort. Just think back to the days when BLT opened, or even watch the breathless anticipation with which some are viewing VGF to see why this might be so.

Edited to add: however, I do agree with you about one of the driving factors. The 2042/2054 split is problematic for a variety of reasons.