Major Disney Vacation Club Resale Restrictions
Last year, Disney Vacation Club implemented major restrictions on resale purchases. Going forward, contracts purchased for the original 14 resorts at Walt Disney World, Disneyland, etc. will only be able to use their points at those resorts. Effectively, this creates two tiers of DVC resorts. (Updated August 30, 2020.)
Stated different, any resale buyers will not be able to use their points at Disney’s Riviera Resort, Reflections — A Disney Lakeside Lodge (if it somehow isn’t cancelled), the Tower at Disneyland Hotel, and whatever else is built after that. Because obviously Disney isn’t going to stop building DVC anytime soon.
More significantly, buyers who purchase a resale of Disney’s Riviera Resort right now will only be able to stay at the DVC resort they purchased. While we’ve seen resale restrictions in the past, this is the harshest to date. It will unquestionably have significant ramifications. Here we’ll cover why it also matters to potential new members considering a direct purchase at Disney’s Riviera Resort…
In fact, the big downside of buying direct at Disney’s Riviera Resort is a handcuffed resale market. This will be the case because the ‘product’ will have significantly less utility once resold. Instead of being useable at every DVC resort (as would be the case for the direct buyer) it’s only useable at one resort (as would be the case for the subsequent resale purchaser).
This may not be a big deal for some people who plan on owning DVC forever, but savvy buyers will certainly balk at the prospect of their ‘investment’ dropping significantly the moment they ‘drive it off the lot,’ so to speak. In vehicle terms, this would be the equivalent of subsequent buyers not being able to drive a car on the highway. The initial buyer may not care so much–but they should because it impacts the value of their investment.
Admittedly, I was never in the market to buy at Disney’s Riviera Resort in the first place, but I certainly wouldn’t be now. There’s no price-point, no purchase incentive, etc., that could convince me Riviera is a smart buy before it has a few years to settle in price on the resale market. Without having any reasonable insight into its future resale value, Riviera is simply too risky.
When initially writing this post prior to this restriction taking effect, we wrote: “With a thriving point rental market and demand for both Walt Disney World hotels and Disney Vacation Club being higher than ever, I doubt these restrictions will have much of an impact on Disney’s Riviera Resort’s value in the short term. However, DVC is a long-term purchase and Riviera will certainly be the most vulnerable property when the economy isn’t as strong or if Disney’s popularity wanes.”
Well, that recession is now here. Following the multi-month closure of Walt Disney World, direct DVC sales have tanked and the point rental market is not currently thriving. Moreover, we are already in the midst of a recession that is disproportionately impacting the travel and tourism market. The general consensus among experts is that Walt Disney World won’t fully recover until 2023 at the earliest. On top of that, there’s an unresolved Disney Vacation Club Point Pool Problem that will have ramifications for 2021 and beyond.
Many prospective buyers of Disney’s Riviera Resort might think: “So what? I’m buying for the long term and don’t plan on selling.” Few people plan on selling when joining Disney Vacation Club, and yet the average duration of membership is not a lifetime–it’s well under a decade.
At a time when there’s unprecedented volatility and economic uncertainty, no one knows what the future holds. Those with stable employment right now may not have that in a few months or a year. That probably sounds a bit bleak and harsh, but these are the painful realities we must confront before making major purchases like Disney Vacation Club that require a long-term commitment and recurring payments.
Buying into Disney’s Riviera Resort direct from DVC at $195 per point would be a non-starter for me. I don’t know what my economic circumstances might be next year and might only be able to sell my Riviera contract for $100-$125 per point in 2021. Both unknowns are concerning, but the significant component is the much bigger issue.
By contrast, every other resort is a known quantity on the resale market, so to speak. Prices shift over time, but there are observable trends and established patterns. Pricing of other resorts will probably drop during a recession, but they’re not going to be subject to such a precipitous plummet.
As such, we would recommend sticking with the 14 ‘classic’ Disney Vacation Club resorts if you’re buying right now (in reality, we would strong recommend not buying at all right now and instead waiting 6 months or so). This is not a significant restriction for the classic resorts, but it will be for the new resorts once they start hitting the resale market.
Beyond the above considerations, our rationale for recommending the existing DVC resorts is simple: they’re in all the best locations at Walt Disney World. Disney Vacation Club has been added to every single monorail resort, and has nearly full coverage at the resorts near Magic Kingdom, Epcot, Hollywood Studios, and Animal Kingdom. There’s no way to beat the locations at the classic resorts and it’s unlikely that they’ll be topped thematically, either.
The most appealing attribute of the Riviera is the gondola. We’d argue this ‘amenity’ is bested by BoardWalk and Beach Club, which have Skyliner access but are also within walking distance of DHS and Epcot. If it is built, ‘Reflections’ is going to be a generic knock-off of the Wilderness Lodge properties…and that’s the best case scenario.
Unless Walt Disney World gets a fifth gate (I doubt I’ll see that in my lifetime), there’s currently a DVC resort everywhere that matters. The parcels being developed at this point are ‘consolation prizes’ of sorts. “Where will they build the next DVC?!” is such an open-ended question because there are no obvious locations.
Given how much of a boondoggle Aulani has been (with Hilton Head and Vero Beach doing only marginally better), don’t expect future stand-alone DVC development. Disneyland is another story entirely, and there are already plans moving forward there to add another tower to Disneyland Hotel.
However, the Grand Californian is already so difficult to book that you pretty much need to own there in order to get it, and the same will undoubtedly be true of the tower at Disneyland hotel and other California properties built there in the future. So, even those resale owners who aren’t technically subject to the restriction will be shut out from a practical perspective, anyway.
Disney probably has several rationales for implementing this restriction, but my suspicion is they believe that it will make direct sales easier. Right now, when a potential buyer brings up resale, the agent’s retort revolves around perks, ancillary benefits, and using DVC points on things that are a bad use of points, anyway.
The argument is now much more clear cut: if you buy resale, you won’t have full access to the Disney Vacation Club resort portfolio. As a scare tactic, there’s certainly value in that.
DVC guides are masterful salespeople. They will certainly be able to paint a rosy picture of Disney’s Riviera Resort, talking it up and how cool it’ll be to take a gondola from the resort to see Star Wars: Galaxy’s Edge. There will be an emotional appeal in this to some potential buyers. There shouldn’t be since Riviera is nothing special at all, but there will be.
I’d argue that there’s also tremendous potential for that to backfire. If someone is asking about resale in the first place, they are at least semi-informed. (Most potential buyers don’t even know there’s a resale market, much less the advantages of it.)
In his assessment, Nick Cotton posits a few other theories as to why Disney is implementing these restrictions: increasing buy-back margin, Disney being able to obtain more resorts in foreclosure, and increasing breakage revenue. While those are all plausible motivations, I think the most compelling explanation is the aforementioned ‘sales pitch scare tactic.’
Fear of missing out is a powerful motivator, and many potential buyers might be very reticent to purchase via resale if they don’t have the ability to use their points at Disney’s Riviera Resort and whatever future resorts are in the pipeline. I think this very well could be a miscalculation by Disney–my ‘fear of missing out’ lies more with dollars on the resale market if I ever wanted to liquidate my points. I’m less concerned about using points at future resorts when I already have 14 options, including every single ideal theme park-adjacent location at Walt Disney World.
If you’re considering joining DVC, first be sure to read our Ultimate Guide to Disney Vacation Club. If you still can’t decide whether membership is right for you, “try before you buy” and rent points from DVC Rental Store. If you are convinced a membership is for you, check out the discounted options at DVC Resale Market.
What are your thoughts about the major restriction taking affect for Riviera, Reflections, and beyond? Do you think this will have a negative impact on resale values, or is it too early to tell? Will this cause you to not purchase Riviera or Reflections? Any questions about the restrictions? Hearing from you is half the fun, so please share your thoughts in the comments below!
Wow, I am so glad we just bought our resale contract this past fall. Sounds like a lot of issues coming up for DVC.
I am even more concerned than you about the recent DVC moves. The 2020 points charts show a reallocation that increased the point cost for studios and 1Bedroom not balanced by a decrease in other rooms.
At VGF and SSR, where there are no dedicated studios and 1Bedroom, the increase is the highest. Also there are other concers, like the fact they’ve increased overall the 1BR which are the last category to book: why?
I’ve create a website to address all those concerns, I hope it can be useful to share the news to owners who don’t follow the specialized forums. https://www.whatswrongwithdvc.com/
I was concerned as well when Riviera was finally completed and these new restrictions took effect. The price for purchase into it or Aulani wasn’t even close to what I considered a fair price. So I called DVC and asked for OKW with an expiration that was extended and not the 2042 date. I purchased at $150 a point which was much better. The small amount of difference between resale and DVC price wasn’t all too far apart and would allow me to use future properties. Also, Riviera in my opinion is going to have a very low resale value in a few tears unless Disney lifts its restriction on that particular property.
I was wondering if anyone here knows the difference in dollars per point DVC owners can get for their contract selling on the resale market, vs Disney exercising their ROFR?
For the seller you still get the same amount as agreed on the sale if Disney exercises their right of first refusal, it’s just the buyer who gets screwed in the transaction in that they have to start all over again.
If Disney starts picking up the contracts like crazy, it could start to detract the buyers from even trying to buy and could hurt the resale market.
Wow!!! I would like to know if Disney is Disclosing these to the people buying new points.
I know it would be in the fine print but it needs to be spelled out to the uneducated buyer.
My 1st points purchase was back in 2001 from Disney at Wilderness Lodge and was a very good experience. Since then I have bought and sold multiple times on the secondary markets. I will buy again in the next recession because I made money on the ones I bought and held 3 years while using the point.
I will continue to buy the original 14 resorts as they hold all the DVC on the monorail and I don’t see the new resorts being as big of a draw to me or future resale as the original ones.
I do concur that with the new resorts being limited to only using points at the specific resort after its sold on the secondary market will take a huge hit to the resale price.
Someone I believe had mentioned Disney wanting to drive down the secondary market pricing for the new resorts and repurchase back more at a low price to resale with no restrictions. I agree with that assessment. Since I see the locations of new resorts being less desirable in the future Disney could be slowing down after 2-3 more DVC resorts. And Disney is looking for a new way to make cash without building new buildings.
Please just rent the points from a website like Davids Vacation Club Rentals for your DVC room stay. I cannot believe people spend all this money plus yearly maintenance fees to own a DVC.
We just stayed at the Boardwalk using “David’s” dvc rental points. This was our 3rd time renting and we loved it. Can’t imagine buying into the dvc when I can rent.
If nobody bought contracts, then there would be no points to rent…..
I have saved way more money by owning points than I ever would by renting points but we go a lot. We also bought our first contract when prices were a lot cheaper.
I say it’s the best of both worlds OR I can have my cake & eat it too! 😉
I’m just curious on your thoughts as to why Aulani is a boondoggle. If you’ve written about it I can’t seem to find your article.
The other comments here by Alex, DebC, and Cruzer address the 3 major reasons.
Ah, thank you!
Thanks for the post! I’ve been eagerly awaiting this one. I feel like this will eventually backfire on Disney. After reading this, I feel better about the changes. I wouldn’t mind being locked into the existing DVC properties. Boardwalk is probably my favorite place to stay and I also really enjoyed my stay at Saratoga Springs.
So my current situation: did a couple of years of research, then a couple of days before this news leaked, I put in an offer (and it was accepted) on SSR. Now my contract sits waiting in ROFR. My biggest fear is that Disney is going to buy back as many contracts as possible right now so that people like me will lose out on being grandfathered in, even though we submitted in time. Granted, if I REALLY want to stay at Riviera (currently don’t) or future resorts I could rent the points. What are your thoughts of those of us stuck in ROFR right now?
Unfortunately, I cannot offer any insight into your chances, but I’d have that same fear.
So, January 18th arrives and departs, and on January 20th, I realize I won the January 19th Powerball drawing. So, in February March or April, I go shopping for a DVC property, looking at both direct from Disney and the resale market.
So if I buy on the resale market from the 14 current DVC, I’m limited to those resorts, forever. No new DVC properties can ever be stayed at using points from my resale purchase property(ies).
And if I buy direct from Disney for the Riviera and Lakeside (sorry, Reflections is SUCH a stupid name), if I decide to resell the property I purchase, that resale buyer will only be able to stay at the property he/she/they purchased….but if they buy from and of the current 14, they’ll be able to stay at ANY of the current 14.
Okay, and I mean, WOW! The sheer incompetence of this proposal is breathtaking. Which means I see a correction coming before Riviera and Lakeside go on the market, and not for the good (for the resale market). I think the morons who came up with this have already had their corporate beheading and are (figuratively, one hopes) breakfast du jour for the carnivores at Animal Kingdom.
There’s going to have to some major disclosures at the act of sale, otherwise Disney might be incurring a potential significant legal liability. Not only that, if this stands, it actually makes the resale market more attractive in some ways that it already is: The resale market for the current 14 will remain strong, while the new orphan properties will stagnate and be diminish in value for resale worse than driving your new car off the lot. It’ll be like choosing between BMWs and Yugos.
“The resale market for the current 14 will remain strong, while the new orphan properties will stagnate and be diminish in value for resale worse than driving your new car off the lot.”
Just remember, Disney has the right of first refusal on all these resale sales. Meaning that they might very well be thinking ahead to the ability to scoop up these properties; they will have the ability to resell them at full price, and with no restrictions.
I think that buy back and control is closer to what is really going on. I believe you (Tom) had already stated in a previous post how the points market was flooded due to the Aulani points. People bought them but have no intention of going there consistently. With that said if this helps them gain greater control of the supply they will in turn be able better to control the pricing.
I would say look out rental market you are next. I can see restrictions like no one except you or those listed on your restriction list for more than a year can check in under said DVC account.
Hi Tom! We are considering purchasing and we’re leaning towards resale. Question for you- what keeps Disney from potentially changing this restriction to state any resale purchase (including original 14) is only able to be used at home resort? My concern is that if I purchase one of those 14 resale, that they’ll make this shift in the future and that it will demoniac my resale value. Secondly, can they change the “grand-fathered in” clause at any time? Is there a possibility that they could pull the rug from underneath us and say anyone whose ever purchased resale can only use at home resort?
They cant change the rules on those of us who already own resale because we all have contracts that state otherwise.
Do you really?
I’m fairly certain you only have contracts that state you have an ownership interest in a specific property and that extra benefits are subject to change.
Phillip – exactly. I’m concerned about the “subject to change” loopholes.
If I recall correctly from when I researched this, Disney is selling you an interest in a specific property. So if you buy at BLT, you can always use points at BLT. Using points at any other property in the world is filed under the subject to change benefits. It seems unlikely they would do that, but theoretically the day could come that you can only use points on that specific property, resale or not.
This is also how they can restrict resale to begin with — resale has ALL the rights afforded in the original contract, but these ancillary property benefits are not part of the contract. The contract is just for one property. They can’t restrict anything from the contract when it is resold, and they could impose these restrictions on direct buyers if they wanted to, at any time.
Thanks Phillip for the clarification! That’s what I was thinking as well but wasn’t certain.
I agree. For the educated consumer, this is a HUGE dis-incentive for purchasing at the new resorts. The high price of resale is one of the few things that really makes DVC a worthwhile purchase, unlike most other timeshares in the world. Any threat to those prices could really harm the new sales market as well. Very short-sighted, obviously.
I am curious as to how this will affect things when people’s deeds run out in 2042 and onward. I know that OKW had some type of simple and reasonable renewal, but from what I understand there is no guarantee on that happening and they could easily apply this theory and other to it. I am not readily in the market to buy, but thinking about it and really curious how other people feel about this. In my case I want wilderness lodge which I can either go to 42 with boulder ridge or longer with copper creek. On a yearly basis if they don’t renew copper creek looks better if it can be swung.
I plan on keeping my DVC contract forever, so resale issues aren’t likely to affect me. (I’ve visited WDW every other year since the late 80s and expect to continue until I’m doing it in one of those electric scooters, so I’m pretty much tailor-made for it.) But I’m curious about your describing Aulani in passing as a boondoggle. What’s up with it? I’ve had in mind to take a Hawaii trip using points there.
Probably because of the Jim Lewis debacle. They vastly underestimated annual fees there and had to cease sales until they resolved the problem. That’s why there are subsidised contracts.
It’s a great property but has been a financial mess for Disney. Been on sale for over 7 years and it’s hardly 50% sold. Probably will scare them off from trying any other off-site resorts.
The big issue is as mentioned above. They created a ton of DVC shares for a non-park resort. Most people who buy into DVC do so because they love Disney parks. As such, they’d want to invest money in a Home Resort at the parks for the 11 month booking privilege.
Those who bought Aulani shares are also likely not going to go to Hawaii every year–meaning more people competing to book points at WDW. People who bought at WDW didn’t buy to book at Hawaii, so there’s a chance they may book there only once or twice (or never!) during their contract.
So the problem is twofold: Aulani shares don’t sell as well as any WDW redort shares, PLUS all DVC owners are finding it more difficult to book rooms because of the non-WDW resort points flooding into the market.
Tom for your evaluation. Once again, your opinion is priceless! My opinion: Of all the changes to DVC ownership Disney has made, this is by far the most ridiculous!
It’s a perplexing move which SHOULD hurt direct sales of Riviera and future resorts. Of course it likely won’t, which just proves that a majority of direct purchasers are likely oblivious to the existence of the resale market (I’m sure Disney won’t highlight this new restriction unless someone asks them about resale first).
I absolutely agree with you. If anything, this move makes me more likely to buy one of the original 14 DVC resorts via resale. There is no way I’d want the risk of buying at the new resorts and have lower value on the resale market.
In my mind this would seem to hurt Disney far more than it would help it for these new properties. As you said, there is no way I am buying a property if the resale value is going to be severely handicapped because you can only use the points at that resort if sold. My only thought is that Disney assumes most of its buyers are ill-informed and spur of the moment people and they can slip this by them. Sad if that really is their opinion of most Disney fans, but probably one they have research to support.
Stupid and unnecessary rules.
Thank you Tom. I have been patiently waiting for your thoughts on this since the changes had been announced. Since you are an Attorney and DVC owner, I figured you would break it down the best for the rest of us.
I feel sorry for the pixie-dusted new buyer who buys into Riviera only to find out it is costing them more than they can really afford. So they try to sell it and wind up losing everything because they can’t sell it and just letting it go back to Disney.
As do I, but at the same time, it boggles my mind that someone would drop $20,000+ after only listening to a sales pitch and doing zero independent research. (And yet, plenty of people do exactly that every single day.)
I saw a complaint on the DVC Facebook page last week from someone who claimed they bought 525 points (!) for Aulani, and was mad he was unable to find availability for a full week of vacation time at a WDW resort in August.
I hope in my heart of hearts it was a fake.