Declining the 15 extra years

[salmoneous]

so that about an average of $10

No, it's not. You are misreading the data.

Let's go to the ROFR thread data (it's the best we have). Ideally I should match them up - figuring in banked points, who pays financing, size of the contract, etc. But, to be lazy, here are the most recent sales to pass ROFR:

OKW: $77, 74, 75, 74, 78
SSR: $80, 80, 84, 82, 81

That ain't a $10/point difference.

Now if you want to match things up contract by contract - and adjust for size, banked points, closing costs, etc. go right ahead. I watch resale prices very closely. I'm a pricing geek who has matched things up carefully in the past. And I assure you the price differential between comparable contracts is not $10/point. (At least you've backed off the $10-20/point).

I'm not saying Disney *should* have priced the extension at $5/point. Just that the market price is a lot less than $15/point. As such, it won't be surprising if a majority of folks turn down the offer. Now, there will be folks for whom $15/point feels like a good deal. Those folks should certainly take the offer. But most folks - as evidenced by resale priced - don't put that much value on the extra 15 years.

 

[Mtnman44]

Let me just help you a little. You are not paying $15 per point. You are giving DVC your money right now for a change to your contract that will occur in 35 years. So. let's say a 200 point contract @ $15 per point is $3,000. Instead of handing over that money to DVC if you invested at moderate risk with a 10% return, 35 years from now that $15 extention cost you over....are you sitting down?....$76,000! That is $380 per point. That is the cost of the extention at that level of return. Even at the risk-free rate of return of 5%, at 35 years that extention would cost you $15,700 ($78 per point). Now, these time-value calculations are also relevant to a normal DVC purchase of course with the major difference being that with a normal purchase you start getting returns (in vacation savings) immediately and thus the purchase begins to "pay for itself".

This is isn't twisting the numbers, this is just math. Paying now for for benefit in 35 years is simply a very expensive way to do this. You are right, $15 per point for 15 years would be a great deal, IF it were the year 2040 right now. Of course, things are totally different for someone who doesn't currently own at OKW. They can purchase an extended contract and spread the increased cost over 50 years of "returns". But for a current OKW owner, the cost increase is really only spread over those last 15 years. Will the savings over the cash costs - minus the maint fees be high enough to cover the $15,000 to $76,000 cost of the extention? By the way, assuming a 3% annual increase, those last 15 years of maint fees are going to total about $47,000 at that point. Everyone has to make their own decision I suppose.

actually I dont agree at all

I looked myself at the resales and they were anywhere from $10-20 more per point for basically the exact same contracts between OKW & SSR. once those extensions go into place, not only will the extended ones sell for more what they are now but I expect the non extended to start selling for less than they are now.

It will never be 20 years until that $15 difference is noted, sorry but never.

you can twist the numbers all you want, throw every possibility out there that may happen, but you will never convince me that $15 a point for 15 years is a bad deal if you think you are going to have some use for the points, it really is one of the most ludicrous things I have ever heard

 

[cc1075]

OK - I just finished reading this entire thread - my head was swimming. I agree we bought in 1996 and were middle aged at the time - - not so much middle aged anymore, it doesn't make sense. I could buy 187 points at any other resort for the same amount as the extension to OKW would cost me and use and enjoy those points now with my family. I would pay dues, etc on the extra 15 years and never get to use the points - death will come first. I could also take the money it would cost to buy the 15 years, invest it now, and leave it to my daughter to cover all dues for the future of the contract.

I called my salesman - very simple - he put it in the computer that I was rejecting the offer - explained the paperwork would come from Disney - no problem - no hassle. Now I will wait and see.

 

[OKWKirt]

I read through all of these comments and it seams people are looking at the refusal incorrect. It is my understanding we are not signing to decline the offer, we are signing over our rights to use OKW for the 15 years. My take is the land lease, infrastructure, etc. has been extended for 15 years and either we except and pay for the 15 years or we must "deed" over to DVC the use of those 15 years. That makes me think a notorized document would be required.

 

[sjdisneywedding]

Let me just help you a little. You are not paying $15 per point. You are giving DVC your money right now for a change to your contract that will occur in 35 years. So. let's say a 200 point contract @ $15 per point is $3,000. Instead of handing over that money to DVC if you invested at moderate risk with a 10% return, 35 years from now that $15 extention cost you over....are you sitting down?....$76,000! That is $380 per point. That is the cost of the extention at that level of return. Even at the risk-free rate of return of 5%, at 35 years that extention would cost you $15,700 ($78 per point). Now, these time-value calculations are also relevant to a normal DVC purchase of course with the major difference being that with a normal purchase you start getting returns (in vacation savings) immediately and thus the purchase begins to "pay for itself".

This is isn't twisting the numbers, this is just math. Paying now for for benefit in 35 years is simply a very expensive way to do this. You are right, $15 per point for 15 years would be a great deal, IF it were the year 2040 right now. Of course, things are totally different for someone who doesn't currently own at OKW. They can purchase an extended contract and spread the increased cost over 50 years of "returns". But for a current OKW owner, the cost increase is really only spread over those last 15 years. Will the savings over the cash costs - minus the maint fees be high enough to cover the $15,000 to $76,000 cost of the extention? By the way, assuming a 3% annual increase, those last 15 years of maint fees are going to total about $47,000 at that point. Everyone has to make their own decision I suppose.

again then why are you buying dvc at all. current points are around $2 per point per year, these are at $1

I am not one who agrees with whole, you aint getting anything for 35 years deal. You already have the points, you are adding value to those.

 

[simzac]

I read through all of these comments and it seams people are looking at the refusal incorrect. It is my understanding we are not signing to decline the offer, we are signing over our rights to use OKW for the 15 years. My take is the land lease, infrastructure, etc. has been extended for 15 years and either we except and pay for the 15 years or we must "deed" over to DVC the use of those 15 years. That makes me think a notorized document would be required.

The contract I signed just last year when I bought my resale at OKW states that my contract expires in January, 2042. Why then do I need to sign anything else beyond that date when I have no rights to OKW stays anyway Are you saying that the contract I have in my desk is null and void?

 

[sjdisneywedding]

No, it's not. You are misreading the data.

Let's go to the ROFR thread data (it's the best we have). Ideally I should match them up - figuring in banked points, who pays financing, size of the contract, etc. But, to be lazy, here are the most recent sales to pass ROFR:

OKW: $77, 74, 75, 74, 78
SSR: $80, 80, 84, 82, 81

That ain't a $10/point difference.

Now if you want to match things up contract by contract - and adjust for size, banked points, closing costs, etc. go right ahead. I watch resale prices very closely. I'm a pricing geek who has matched things up carefully in the past. And I assure you the price differential between comparable contracts is not $10/point. (At least you've backed off the $10-20/point).

I'm not saying Disney *should* have priced the extension at $5/point. Just that the market price is a lot less than $15/point. As such, it won't be surprising if a majority of folks turn down the offer. Now, there will be folks for whom $15/point feels like a good deal. Those folks should certainly take the offer. But most folks - as evidenced by resale priced - don't put that much value on the extra 15 years.

well I can agree with most everything you note, but the contract price differences. Im not pretending I watch them very closely as you may but I have seen differences in very similar contracts ranging from a couple of dollars to about $19. Im not syaing the average is 19 nor is is a couple dollars, frankly who knows maybe its 5-10 if you watch it for awhile.

but regardless I expect that difference to grow as well with the extensions

I guess im in the minority and thats ok, its ultimately everyones else's own money so they have to make the call

 

[JimC]

Let's keep the tone of this debate civil and respectful of each other's views. Some of the posts are getting argumentative.

Thank you.

 

[OKWKirt]

The contract I signed just last year when I bought my resale at OKW states that my contract expires in January, 2042. Why then do I need to sign anything else beyond that date when I have no rights to OKW stays anyway Are you saying that the contract I have in my desk is null and void?

No, I would not say your contract is null and void. I read real quick and set aside the info I received, guess I need to find that card and send back in. My thoughts are all of our RTU contracts were until 2042 and now they have voted to extend them until 2057. We can agree, pay, and have the RTU until 2057 or we can decide not to do this and sign over the RTU to DVC for 2042-2057. We continue to use our points until 2042 and that is when we have signed over to DVC the RTU.

 

[Caskbill]

What about this scenario:

You want to get a new car. You go to your favorite dealer and find just want you want. You decide on a 3-year lease arrangement. You pay $2100 up front and agree on $xxx per month.

Fast forward one year. You're happy with your car. The dealer decides to change your lease to 4 years instead of 3 years. You will have to pay an additional $700 right now (1 year into a 3 year lease) to 'activate' the 4th year.

If you don't want the 4th year, you must sign affidavits to that and have them notorized, and return them to the dealer. If you don't, the dealer will take back the car (not allowing you to use it), until you complete the paperwork.

The fact that in 3 years you wanted to get a different car, or were not going to get another car at all (deciding to use public transportation) is irrelevant. The dealer has just unilaterally decided to change your 3-year lease to a 4-year lease.

You must pay $700 Right NOW, even though the 4th year is still 2 years away. Also, since the car will be older during the 4th year, maintenance and upkeep will probably cost you more.

So, how many of you would want to lease a car from this dealer?

Just trying to put perspective on everything.

 

[sjdisneywedding]

What about this scenario:

You want to get a new car. You go to your favorite dealer and find just want you want. You decide on a 3-year lease arrangement. You pay $2100 up front and agree on $xxx per month.

Fast forward one year. You're happy with your car. The dealer decides to change your lease to 4 years instead of 3 years. You will have to pay an additional $700 right now (1 year into a 3 year lease) to 'activate' the 4th year.

If you don't want the 4th year, you must sign affidavits to that and have them notorized, and return them to the dealer. If you don't, the dealer will take back the car (not allowing you to use it), until you complete the paperwork.

The fact that in 3 years you wanted to get a different car, or were not going to get another car at all (deciding to use public transportation) is irrelevant. The dealer has just unilaterally decided to change your 3-year lease to a 4-year lease.

You must pay $700 Right NOW, even though the 4th year is still 2 years away. Also, since the car will be older during the 4th year, maintenance and upkeep will probably cost you more.

So, how many of you would want to lease a car from this dealer?

Just trying to put perspective on everything.

good point and I completely agree, the way they are going about it stinks

you dont think they have some type of legal reason put forth by their lawyers that is forcing this type of paperwork?

I just find it very odd that DVC would want to make it this difficult on their members and I would assume more difficult on themselves as well.

just cant see whats in it for them by making it difficult, I doubt people are going to extend just to avoid the hassle of not extending. If anything it seems its ticking people off to the point where they may lose people because of it.

 

[Caskbill]

Here's another thought. Is this a 'good deal'?

DVC offers to extend AKV contracts to the year 2157. That's an extra 100 years. The cost is only going to be $100/point. That's only $1 per point per year. The same offer of the current OKW extension of $1/point/year.

If you own 200 AKV points, all you have to do is pay DVC another $20,000 right NOW, and you can start enjoying those extra years beginning February, 2057!

I can't wait...

For what it's worth, $20,000 invested today, and returning 8%, would be over $1 million by 2057, the first year you actually get to use the points you just 'extended'.

 

[JimC]

What about this scenario:

You want to get a new car. You go to your favorite dealer and find just want you want. You decide on a 3-year lease arrangement. You pay $2100 up front and agree on $xxx per month.

Fast forward one year. You're happy with your car. The dealer decides to change your lease to 4 years instead of 3 years. You will have to pay an additional $700 right now (1 year into a 3 year lease) to 'activate' the 4th year.

If you don't want the 4th year, you must sign affidavits to that and have them notorized, and return them to the dealer. If you don't, the dealer will take back the car (not allowing you to use it), until you complete the paperwork.

The fact that in 3 years you wanted to get a different car, or were not going to get another car at all (deciding to use public transportation) is irrelevant. The dealer has just unilaterally decided to change your 3-year lease to a 4-year lease.

You must pay $700 Right NOW, even though the 4th year is still 2 years away. Also, since the car will be older during the 4th year, maintenance and upkeep will probably cost you more.

So, how many of you would want to lease a car from this dealer?

Just trying to put perspective on everything.

But an auto lease is a contract whose terms cannot be unilaterally changed by one party. Our DVC interests are controlled by a contract that stipulates that DVC can change unilaterally. This is something we all knew when we bought.

I just don't quite get the fuss over this issue. They put together an offer and a process. The material told us our options. If you want it, pay for it. If not then sign over the rights. Doesn't seem like all that complex to me.

If I could use it or had children who wanted it, then the $15 seems ok. I don't meet those tests and am not convinced (yet) that I need to do it to preserve marketability. I expect to make my final determination a couple of weeks before the deadline then respond.

I am not expecting a nightmare with paperwork. I could be wrong. But in the seven DVC contracts I have bought, not one has been difficult.

 

[Caskbill]

But an auto lease is a contract whose terms cannot be unilaterally changed by one party. Our DVC interests are controlled by a contract that stipulates that DVC can change unilaterally. This is something we all knew when we bought.

That's correct Jim, but the point was more of a 'how would you feel' IF ....etc.

They apparently can also just shorten the contract. How would everyone feel if they changed the expiration to 2010 instead of 2042?

The point is there's a right way and a wrong way to handle things. They handled this one wrong, big time. I have no doubt this is simply a way to increase Disney bottom line income, with no appreciable costs to them. The fact is they could easily have waited until 2032 or later and then made extensions possible. At that point members would have a better understanding of their future travel plans, and whether an extension would work for them or not.

There is absolutely no need to offer the extension in 2007!

Finally, I would like to know where in our DVC contracts it says they can unilaterally make changes. I know some changes required a vote by the membership. I guess this is not one of them?

 

[disney54us]

But an auto lease is a contract whose terms cannot be unilaterally changed by one party. Our DVC interests are controlled by a contract that stipulates that DVC can change unilaterally. This is something we all knew when we bought.

I just don't quite get the fuss over this issue. They put together an offer and a process. The material told us our options. If you want it, pay for it. If not then sign over the rights. Doesn't seem like all that complex to me.

If I could use it or had children who wanted it, then the $15 seems ok. I don't meet those tests and am not convinced (yet) that I need to do it to preserve marketability. I expect to make my final determination a couple of weeks before the deadline then respond.

I am not expecting a nightmare with paperwork. I could be wrong. But in the seven DVC contracts I have bought, not one has been difficult.

I think the fuss started when people started discussing the offer just wasn't worth it for them. I don't know why anyone would take it personally, if most were discussing the negatives for them and are original OKW owners, no harm done (from what I could see). The majority felt, age wise it was not a wise investment. For those who felt it was a move they wanted to make, each member has to evaluate there own situation. The bottom line is, this offer was made to OKW owners and they need to decide what is best for them. If and when this offer is made in years to come, for DVC resorts that followed and those members want to extend great. To have this thread go on and needing Mod's to tell us to chill, especially when it seems the questioning was coming from those who don't own in OKW and this offer does not effect them is going to far (INMHO). Yes, everyone was excited when the rumor threads started, hey it's OKW, do you remember when, but I think most after doing the math decided to opt out. For those who chose to extend, then I'm sure it was based on what worked for them.

 

[sjdisneywedding]

Here's another thought. Is this a 'good deal'?

DVC offers to extend AKV contracts to the year 2157. That's an extra 100 years. The cost is only going to be $100/point. That's only $1 per point per year. The same offer of the current OKW extension of $1/point/year.

If you own 200 AKV points, all you have to do is pay DVC another $20,000 right NOW, and you can start enjoying those extra years beginning February, 2057!

I can't wait...

For what it's worth, $20,000 invested today, and returning 8%, would be over $1 million by 2057, the first year you actually get to use the points you just 'extended'.

laugh all you want, its probably a deal I would think pretty hard about -- 150 years of rooms for my heirs for a mere 20K more (granted WDW may be long gone, but it may be long gone in 10 years). So you are willing to pay 20K for 50 years, but not 40K for 150 years?

but whats the probable room rate at that point for a deluxe resort

whats woyld that room rate be after the 100 years are up

see how far that returned investment actually gets you

also, you chose to use quite an extreme example, which I would not consider the OKW extension to be whatsoever

 

[Deb & Bill]

Neiiiiiggggh. (death rattle of a horse).

 

[salmoneous]

Our DVC interests are controlled by a contract that stipulates that DVC can change unilaterally. This is something we all knew when we bought.

To me, this is one of the biggest reasons to watch the deal very carefully. Our contract with Disney gives them a great deal of power. We all accepted the deal hoping and trusting that Disney wouldn't use that power inappropriately.

The OKW extension has opened a lot of eyes to the power Disney has. Yeah, we all knew it, but sometimes things aren't real until we actually see them in action. If Disney has the power to enact this OKW deal, what else do they have the power to do? Could they do a similar deal, but without a buyout clause. Could they have done it without the discount? Can Disney just say, "We decided you will buy 15 more years at $25/point - pay up"? We don't know.

That's the other big thing that's leaving a bad taste in my mouth. We still don't know all the details on how this is going to work. For instance, is a reserve fund going to be collected from folks with 2042-expiring contracts to pay for post 2042 maintenance expenses?

This whole reminds me think of Darth Vader's line to Lando, "I am altering the deal; pray I don't alter it any further." When I bought DVC, I thought I got in bed with the Mouse, not Darth Vader.

Overall, I still am very satisfied with DVC. And, for all I know, the OKW will turn out to be a great offer. We just don't know enough at this point to evaluate the whole deal. It's worth watching *very* carefully.

 

[disney54us]

Why does it seem to bother some, that most of us have decided that this would not be a wise investment? If you are a OKW owner and this has been offered then you need to decide if this will be worth the investment for you. Keyword folks, OKW owners! so to see constant back and forth when I believe (could have misread) from someone who has no ownership in OKW and wants to do a #'s trip on the majority of us who decided against, sorry I must be missing something . If and when this offer comes around to the later built DVC resorts, and you think it is such a great offer go for it! In the mean time, please let dead horses lie! Clue, the mod's have suggested this already.
OKW owner proud, but declining!

 

[LIFERBABE]

To me, this is one of the biggest reasons to watch the deal very carefully. Our contract with Disney gives them a great deal of power. We all accepted the deal hoping and trusting that Disney wouldn't use that power inappropriately.

The OKW extension has opened a lot of eyes to the power Disney has. Yeah, we all knew it, but sometimes things aren't real until we actually see them in action. If Disney has the power to enact this OKW deal, what else do they have the power to do? Could they do a similar deal, but without a buyout clause. Could they have done it without the discount? Can Disney just say, "We decided you will buy 15 more years at $25/point - pay up"? We don't know.

That's the other big thing that's leaving a bad taste in my mouth. We still don't know all the details on how this is going to work. For instance, is a reserve fund going to be collected from folks with 2042-expiring contracts to pay for post 2042 maintenance expenses?

This whole reminds me think of Darth Vader's line to Lando, "I am altering the deal; pray I don't alter it any further." When I bought DVC, I thought I got in bed with the Mouse, not Darth Vader.

Overall, I still am very satisfied with DVC. And, for all I know, the OKW will turn out to be a great offer. We just don't know enough at this point to evaluate the whole deal. It's worth watching *very* carefully.

I agree 100%

Just because they can, doesnt make it right. I try to deal with reputable, honorable companies and dont mind paying for it. Just because they have a big stick, doesnt mean they should beat us over the head with it.
I love my DVC also and have had many wonderful vacations, but this move by DVD, lets me know that I need to limit my exposure to these man-made assessments, because I believe next time, they are not going to give us a choice.
So those wishing, should be careful what they wish for

Caskbill, I also agree with the intent of your examples. Thank you for breaking it down. And to answer your question, no I do not want to deal with a company like that and have ended my dealings with many shady companies. This move by DVD is shady and If I was not already a member, I would not be a member.
DVC should be ashamed and we as members should be concerned.