Every couple of years, The Walt Disney Company seems to target its most loyal customers. They modify the rules of the Disney Vacation Club (DVC) to reduce the program’s value even more. It’s a befuddling practice that the company just did again. Here’s how DVC just changed and why it’s terrible for members.
The Rules Change
Image: DisneyDVC members who logged into their accounts on January 7, 2019, were in for a rude awakening. They received this message:
“Update to Disney Vacation Club Resort Access for Contracts Not Purchased Directly from Disney
Effective January 19, 2019, only Members who purchase directly from Disney will be able to use their Vacation Points at the 14 existing Disney Vacation Club Resorts or future Resorts—such as Disney’s Riviera Resort or Reflections – A Disney Lakeside Lodge. Resale contracts purchased for the existing 14 Disney Vacation Club Resorts will only be able to exchange Points into those 14 Resorts.
This change does not apply to contracts purchased prior to January 19, 2019. Contracts gifted to family members will continue to have the same Resort access as before the ownership transfer.
The eligibility rules for Membership Extras and RCI access remain unchanged.
The Buena Vista Trading Company Disclosure Guide has been amended accordingly.”
Image: DisneyThe precise wording of this message glosses over the malevolence of the message. From this point forward, anyone who purchases a DVC contract via the resales market will have fewer membership privileges. I mean a LOT fewer in one specific example. Let’s get into the specifics.
A quick overview of the current system
Image: DisneyThe current structure of the DVC program is simple. You buy a set number of DVC points for a few thousand dollars. Each year, you may exchange some or all of these points for a hotel stay at any of Disney’s DVC resorts, all of which are in the Deluxe Tier. As examples, all three monorail resorts, Disney’s Grand Californian Resort & Spa, Disney’s Beach Club Villas, and Disney’s Animal Kingdom Villas are DVC properties. The program truly includes the best Disney resorts in America.
A grand total of 14 resorts are currently part of the DVC lineup, and a 15th will join in the fall of 2019. It’s this 15th resort that has become the sticking point. The rule change impacts resales purchases at Disney’s Riviera Resort more than any other property.
Historically, your DVC membership entitles you to hotel stays at all participating properties. Technically, you buy a real estate interest in a single property such as Disney’s Old Key West Resort (OKW). With this purchase, you gain access to all 14 resorts that are currently open. You would use your OKW points to book a room at any participating DVC resort.
What’s different now?
Image: DisneyUnder the new rules, anyone who buys a resale contract from this point forward has certain limitations. From now on, when you purchase an ownership interest in one of the original 14 properties, you may only exchange DVC points for a stay at one of these hotels.
Conversely, should you buy a resales contract at the Riviera, you may only exchange DVC points for a stay there! The belief is that when Disney introduces Reflections – A Disney Lakeside Lodge in 2022, it will have the same constraints. I should stress that the change only applies to resales contracts, though.
In other words, prior to 2019, your ownership interest at Old Key West came with the option to exchange your DVC points anywhere. That’s no longer true. Your OKW points are still good at any of the original 14 resorts. You cannot use them at the Riviera Resort, though.
Image: DisneyThe change seems subtle, but it’s insidious. Disney has created a divide between original owners and direct DVC members vs. future resales buyers. Anyone who bought a resales contract prior to January 19, 2019, gets grandfathered in. The people who buy via resales after that are cut off in a strange way.
Should members want a contract at the Riviera or Reflections, their purchase comes with a strange operating cost. These future buyers won’t have the option to stay at one of the original 14 resorts. Realistically, those are the properties with the best locations.
If you believe the maxim that real estate is location, location, location, Disney’s already added their strongest properties to the DVC program. Future members won’t get to stay at these resorts.
Image: DisneyConversely, anyone who buys via resales for one of the original 14 DVC properties is cut off from staying at the new ones. Due to this rules change, guests must choose. That wasn’t true during the first 18 years of DVC membership.
At the moment, the choice isn’t difficult. Riviera will be the only DVC resort with this constraint until 2022. By buying an ownership interest here, you’re choosing between staying at one DVC property or the other 14. Who would pick the one?
This philosophy underscores the oddity of Disney’s decision. In the short term, they’ve added a huge negative to a potential points purchase at the Riviera. Even members who buy direct will worry, as the resales market for the Riviera is automatically damaged by the new DVC rule.
Why did Disney change the rules?
Image: DisneyYou may wonder why this rules change only applies to resales. The answer is simple. Disney receives no money from resales purchases. Conversely, a buyer receives the same primary benefit of DVC membership from resales ownership. They get that ability to stay at Disney’s Deluxe resorts for “free,” using only their DVC points.
Disney must discourage potential customers from using the resales market whenever possible. Otherwise, they’d lose out on a tremendous amount of business. After all, Disney charges MUCH more for the same points purchased directly.
At the time of publication, a direct ownership interest in DVC costs roughly $50 more per point and sometimes much more. You’ll pay thousands of dollars more for a direct contract than one bought on the resales market. Savvy shoppers know that buying directly borders on a waste of money.
Disney changes the DVC program rules on occasion to alter this perception. They provide more benefits to direct members while eliminating them for resales buyers. It’s annoying and causes the latter group to feel like second-class citizens in the DVC program.
Does Disney have something else in mind?
Image: DisneySome speculation suggests that the Riviera and Reflections could become part of a new group, a kind of DVC 2.0. While I believe people are getting ahead of themselves on this point, I’ll quickly explain the concept.
Many timeshares have changed over time, devaluing the membership benefits of longtime members. They’ve created a second class of their timeshare program, preventing early joiners from benefiting from the introduction of newer resorts. It’s a shady practice, the kind that gives timeshares such a terrible reputation.
Over the years, Disney has eschewed any and all connections to standard timeshares. Their sales agents aren’t even allowed to describe DVC as a timeshare due to the negative stigma attached to that word. Hopefully, the fears of a DVC 2.0 are unfounded for this reason.
Image: DisneyOtherwise, Disney’s done precisely what low-class timeshares are prone to do, reducing the quality of membership for long-term members. It’s something to watch carefully in the coming months and years. We likely won’t know for sure until Reflections opens in 2022.
In the interim, this is a terrible look for Disney. They’ve just damaged the perceived DVC value of the Riviera before it even opens. They’ve also left a sour taste in the mouths of hundreds of thousands of DVC members, many of whom purchased via direct resales.
Disney’s gambit is a dangerous one that actively alienates loyal customers. It seems like an unforced error to me, something that looks good on a spreadsheet but has no positive outcome for a business.
