The Disney Vacation Club (DVC), Disney’s version of a timeshare program, recently announced a change that almost went unnoticed by me. In fact, if I hadn’t seen an article by Jason Garcia of the Orlando Sentinel, it probably would have gone unnoticed. Currently, there is no distinction between DVC contracts purchased directly from Disney versus contracts purchased on the re-sale market. Members receive the same benefits and perks. As of March 21, 2011, that is about to change. Under the Disney Vacation Club’s new policy, DVC contracts that are purchased as re-sales will no longer be able to use points to book Adventures by Disney vacations, Disney Cruise Line vacations, or stays at Disney’s non-DVC properties such as Walt Disney World’s Deluxe and Moderate resorts. Re-sales purchased after March 20, 2011 will still be eligible to stay at any of the Disney DVC properties and to use points to book a timeshare exchange.
It Doesn’t Affect Me, Does It?
My husband and I are DVC members and purchased both our original contract and our add-on as re-sales. We are grandfathered under this policy so we shouldn’t care about this change, or should we? I think we should and we do.
The primary reason we purchased our contracts as re-sales is that the resort we wanted as our “Home Resort” was closed, meaning that it was not being actively sold. It is a very popular resort and there is typically a waitlist for inventory to become available. We were also very specific about the number of points we wanted and the “Use Year.” We felt it was easier and quicker for us to purchase the contract we wanted as a Disney Vacation Club re-sale. Secondly, our re-sale contracts were significantly less expensive than if we had purchased directly from Disney.
Disney Loses a Bit of its Shine. This DVC change takes a little luster off the Disney brand for me. In a sense, re-sale owners receive a message that they are not valued as much and are not as deserving of the same benefits as those who either forked over more money directly to Disney or purchased points for the resort currently being sold even if it wasn’t the best fit their family. Re-sale owners pay the same annual dues and presumably spend the same relative amount in the parks on tickets, food, and souvenirs. If I purchased discount tickets from a vendor such as Undercover Tourist I would be dismayed if I was told I was not eligible for a perk such as FastPass. Taking advantage of a 40% off discount on Disney Resorts does not mean I receive less service than guests who pay rack-rate, nor should it. Being budget-minded should not detract from the magic of a Disney experience.
Devaluing My Purchase. The feeling in the blogosphere and forums seems to be that this is a move to boost Disney’s direct sales. Disney claims that “Our members just felt that that they should get more benefits when they purchase through Disney Vacation Club than those who purchase on the secondary market,” [Source: Orlando Sentinel] but I don’t buy it. Based on what’s been announced, buying direct will not give you great new additional benefits such as Free Dining during promotional periods; it’s simply taking perks away from others.
If people agree that having access to greater perks is worthy of a direct purchase from Disney than there will be less demand for re-sales. If I remember my Economics 101 from college, less demand means lower prices for the product. Most people look at resale values when making large purchases such as a home, car, or vacation property; we did. If the time comes when you have to sell for financial reasons, you want to be reasonably sure the value of your investment held up well. Will the resale values of DVC properties slip? We’ll have to wait and see.
What’s Next? This change should give DVC owners pause and remind them that per Disney the Home Resort Rules and Regulations “are revised from time to time.” Things such as banking and borrowing points, holding accounts, and booking windows fall under Home Resort Rules and Regulations. Do I expect member perks to change drastically? No, I don’t. However, I never considered the possibility that they would prior to this DVC change. Now, I have considered it. I do expect tweaks to the system from time to time. The best tweaks would be those that help Disney’s bottom line (they are a business, after all) but that also improve their customers’ experiences. The problem is I don’t feel this tweak benefits existing DVC members.
Our purchases, and perhaps those of many others, were based upon the assumption that Disney would not change the perks of ownership in too great a way; to me, this is a significant change. I think Disney could help itself in the PR department if it not only grandfathered re-sales prior to March 21, 2011 but all contracts sold prior to March 21, 2011. Existing owners could be reassured that the product they purchased will be a very similar product if they have to re-sell it.
Bad for Business?
Only time will tell but I think Disney will lose some direct sales from perspective buyers who don’t feel the DVC will hold its resale value as well as it once did. On the flip side, Disney may be able to pick up DVC inventory at reduced prices via the Right of First Refusal provision in DVC contracts. Disney can then turn a large profit when it re-sells them as a direct sale.
The DVC bills itself as “Timeshare Ownership With a Difference” and that difference is precisely what made us buyers. That’s why I found it particularly ironic that a Disney Vacation Club spokeswoman said “that the change aligns Disney with other time-share operators who impose similar restrictions on resales.” [Source: Orlando Sentinel] I hope this is not a hint of things to come. The DVC’s flexibility is crucial for us since we know our vacationing style will change as our children grow older. If potential buyers perceive this recent change as an opening salvo in a strategy to make the DVC more restrictive, I fear they will be less likely to become owners.
Beyond being a different type of timeshare, DVC is a brilliant strategy for Disney. With each sale, they are basically guaranteeing a revenue stream for the next few decades. DVC owners will visit every year or two and spend money on tickets, food, and merchandise. If they cannot visit due to financial constraints, they will likely rent their points to other guests who will also drop big bucks in the theme parks. Video game consoles are often a loss leader because companies will make significant profits on the games and accessories; I view DVC sales in a similar light. In a difficult economic period where Disney has had to provide deep discounts to prop up theme park attendance and with Universal nipping at its heels, converting guests to DVC buyers in order to guarantee future revenue, whether through direct sales or re-sales, should be top-priority. Nurturing a re-sale market that provides accessibility to their product that may not be otherwise attainable due to financial constraints seems to me to be good business.
Perspective DVC buyers will now have a more complicated decision to make. They can purchase direct from Disney at a price they may feel less-than-comfortable with in order to receive greater perks; they can purchase a re-sale and always wonder what future changes will be made to membership perks for re-sale owners, or they can choose the least risky option and not purchase at all. The third option would be the worst-case scenario for Disney.
*I have no background in business so feel free to dismiss my thoughts as nothing more than the random ramblings of one DVC member.
Lisa M. Battista is the author of Beyond the Attractions: A Guide to Walt Disney World with Preschoolers When she’s not chasing after her little ones, you can most likely find her at the beach or in the kitchen trying her hand at a new recipe. You can follow her on Twitter @DisneyExplorer or become a fan of Beyond the Attractions on Facebook.
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I think that this could backfire on DVC in ways unimaginable at this time. Those who have been grandfathered in are fine. The problem will be with those who will purchase in a few month’s time.