02 May DVC 2019 Resale Restrictions & How It Affects You
Since January 19, 2019, Disney Vacation Club has implemented certain resale restrictions. Resale contracts purchased for the 14 original, or “classic” DVC resorts can only be exchanged into any of the 14 classic DVC resorts. Members of DVC properties such as Disney’s Riviera Resort, Reflections – A Disney Lakeside Lodge, which is slated to open in 2022, and any upcoming DVC launches will be restricted from booking at the 14 classic resorts using points. However, members will still be able to redeem their Disney Vacation Points through RCI, the timeshare vacation exchange network that gives you access to approximately 4000 world-class resorts around the globe.
Resale contracts purchased at Disney’s Riviera Resort will grant the member access to only the Riviera Resort within the DVC network, but absolute access to resorts through RCI will remain. The same will be the case for Reflections — A Disney Lakeside Lodge.
What Are Your Best Options?
As someone who is contemplating purchasing a DVC resale contract now, what are your best options? Consider buying resale contracts for the classic resorts. All 14 of the DVC’s classic resorts are conveniently located around Disney’s amazing theme parks, with most of them nestled right in the Walt Disney World Resort in Florida or the Disneyland Resort in California.
Just imagine the convenient access to Disney’s magical theme parks—the fantastic opportunities to meet well-loved Disney characters, the entertaining parades for you and the family, and dreamy ventures into Disney’s world of attractions.
The reality is, as long as Disney doesn’t build additional theme parks, which has been the case in the US since 1998, it’s hard for newer and future DVC resorts to compete with the location and appeal of the 14 classic resorts. Location has been a defining selling point for most of the DVC resorts. Today, Disney’s Animal Kingdom Villas, Copper Creek Villas & Cabins at Disney’s Wilderness Lodge, Disney’s Beach Club Villas, etc. remain more popular than ever.
There is also the possibility of future DVC properties being built beyond the vicinity of a Disney theme park, like Aulani in Hawai’i.
Who Is Most Affected By DVC’s Resale Restrictions?
Direct purchasers of Disney’s Riviera Resort and future DVC properties, if and when they decide to sell their contracts on the resale market, will have to consider how Disney Vacation Club’s resale restrictions will impact the resale value. It’s too soon to tell.
If direct purchasers of the Riviera keep their contract until the deed expires, which is until 2070, they will not be affected. However, based on real-life numbers, we know that most direct purchasers tend to only keep their contracts between five and 15 years—a fraction of the number of years on the deed!—and will ultimately opt to resell their contract, which makes them susceptible to these restrictions as a contract that only consists of the Riviera may affect its resale value in the DVC resale market.
Other considerations for potential buyers of Riviera resale contracts to keep in mind are the limitations on your bookings. Not only will you not be able to stay in the other 14 of Disney Vacation Club’s popular resorts, you also run the risk of being placed in a tight spot when Riviera bookings for the dates you want are all booked up and you have limited vacation options to explore.
Being a DVC member means having to consider the resale value of your contract and the possible restrictions that come with them, and that is why we recommend resale contract buyers consider resale contracts for any of DVC’s 14 classic resorts. That way, if you do decide to opt out of your DVC deed, you can do it with peace of mind, that your resale value won’t run the risk of being affected by these DVC resale restrictions.
Why Would Disney Vacation Club Implement These Resale Restrictions?
That could only be answered by the “powers-that-be” at DVC. There are a few possible explanations to why Disney Vacation Club would implement these DVC resale restrictions. One clear motivation is to increase the number of direct DVC sales, but as we’ve mentioned earlier, purchasing a direct DVC contract for resorts built from the time of Riviera onward will be tricky to navigate for the buyer, if and when they decide to sell it on the resale market. Other financial benefits for Disney Vacation Club that may be the driver of these resale restrictions include:
- Increasing the Buyback Margin of DVC
As seen in the case of the Riviera resale contracts, the resale value may not be as enticing due to the resale restrictions. In this case, Disney emerges as the winner when they exercise their Right of First Refusal, as they will have a larger profit margin. As DVC continually raises the direct price of Riviera, the lower buyback prices will work in DVC’s favor as contracts are returned to Disney and then resold at the full direct price.
- DVC Acquiring More Contracts Through Foreclosure
Instead of competing with DVC resale, Disney Vacation Club will receive the contracts back as they foreclose. Most direct DVC contracts that enter the resale market were financed, and if the resale value of the contract does not cover what the DVC member owes, the DVC member might have no choice but to face foreclosure proceedings and lose their contract, as it reverts back to Disney Vacation Club.
- Creating Opportunities for DVC to Profit from the Breakage Period
What’s the breakage period? It’s the period 60 days prior to a reservation date. Any DVC inventory that hasn’t been reserved before by the breakage period is able to be rented to non DVC members. If Members are restricted to using their points on only their home resort, more points are likely to not be used due to availability issues. This allows Disney Vacation Club to pick up more inventory during the breakage period, driving more revenue to DVC’s bottom line.