Over the years, I’ve discussed the pros and cons of Disney Vacation Club membership. I’ve also evaluated resales purchase as a strategy for saving money on the upfront costs associated with joining the DVC club. A few weeks ago, the situation became a bit more fluid when The Walt Disney Company announced that they were changing some of the rules for DVC member benefits. Customers who purchase via the resales market are no longer eligible for the same rights and privileges as those who buy directly through Disney.
The rhetoric on this topic has heated up since the announcement. Some folks love the changes, while others resent that Disney altered the rules after the fact on what is essentially a real estate investment, the second time they’ve done so. Even those unaffected by the tweaking of DVC’s benefits rules hold strong opinions on the subject. Now seems like the perfect time to evaluate DVC membership under the new rules system. Here are four things you need to know about DVC in the era of different benefits for different members.
You get what you pay for
Image: Disney
The fundamental change in DVC’s structure involves resales purchase. Historically, a person who buys direct enjoys virtually the same entitlements as someone who gets a “used” contract. Think of the latter category in the same way as buying something off of eBay that is still in its original plastic wrap. You’re (presumably) paying less for the model, but you’re getting the same item in the same state. The only time this isn’t true is when the DVC points you purchase are already spent for the current year. Even then, you’ll acquire your points either the next year or, at worst, the one after that. When you buy DVC via resales, you purchase precisely the same product for a much cheaper price.
That’s the problem Disney has faced over the years. Since the product they sell is an ownership interest, they must follow the real estate laws of the land, and especially the ones in the states where they own/sell properties. As a potential buyer, why would you pay thousands of dollars more for the same product if other options exist? Only a fool seeking a parting from his own money would choose the more expensive option.
For this reason, the resales market has consistently undercut Disney’s direct sales of DVC membership. That’s the basis of the company’s recent announcement that two sets of rules are now in play. Customers who purchase through Disney receive the same entitlements such as store, annual pass, and restaurant discounts. These privileges are known as Membership Extras. The only way to gain access to them now is either as a grandfathered DVC owner prior to April of 2016 or to buy through Disney.
From this point forward, the discount resales purchases no longer qualify, which creates a sort of second class citizenry among DVC members. While real estate companies involved in the resales market pondered the value of Membership Extras, it’s fair to say that all other things being equal, every DVC owner would like to have them. Today, some members don’t, which has created a market inequality. Does this imbalance tip the scales toward direct DVC purchase? I will explore that in a later article with some DVC experts. What’s germane for now is that direct membership DOES have its privileges.
No, really. You get what you pay for.
Image: Disney
Still, all the irrefutable fact is that Disney Vacation Club membership offers tremendous value. At this point, DVC dominates the timeshare industry. It’s not specifically in numbers, sales, or occupancy rates where they’re a class above their competitors, although Disney excels in each of these areas. Instead, it’s in customer satisfaction.
Recent research suggests that Disney claims the finest timeshare resort in the world…and the next six as well. Yes, that sounds crazy. Yes, it’s absolutely true. Sharket.com is an established timeshare market research firm. They recently published a list of the top 25 timeshare resorts of 2015. They culled this list from more than 1,400 properties worldwide. Employing a metric they call the Saleability Score™, Sharket identified only eight resorts worthy of a perfect score under their grading. Seven of them are DVC properties. When you consider membership in the Disney Vacation Club, no stronger argument exists than this one.
Sharket identified the best global timeshare options based on their popularity as well as their value on the resale market. The site itself explains why they prioritize resale value in their metric. “A strong resale value tends to be the byproduct of a good timeshare program with a happy owner base. “
They add the following: “”Robust resale demand clearly points to a solid timeshare program.” says Bob Schmidt, Sharket’s Chief Data Officer. “It shows buyers still want to own at these resorts even when removed from the emotional aspects of purchasing directly from the developer.””
Image: Disney
The best timeshare property in the world according to Sharket is Disney’s Saratoga Springs Resort & Spa. The other six DVC properties with perfect grades are (in alphabetical order): Disney’s Animal Kingdom Villas, Disney’s Bay Lake Tower at Disney’s Contemporary Resort, Disney’s Beach Club Villas, Disney’s Boardwalk Villas, Disney’s Old Key West Resort, and The Villas at Disney’s Wilderness Lodge. DVC claimed two additional spots in the top 25 with The Villas at Disney’s Grand Californian Hotel & Spa and Disney’s Vero Beach Resort.
The math of this achievement is staggering. Out of the 13 DVC properties available, nine finished among the top 25 timeshares in the world. Disney left only 16 spots for everybody else. In case you’re wondering, the lone non-DVC timeshare to earn a perfect score was Hilton Head Grand Vacations Club Eagle’s Nest Beach Resort at Marco Island, Florida.
Also, what differentiated Saratoga Springs from the other DVC resorts was that it claimed more than 800 timeshares sold during the timeframe Sharket tracked. That’s more than the second and third best performers, Disney’s Bay Lake Tower at Disney’s Contemporary Resort and Disney’s Old Key West Resort, combined. In looking at the entire list, what’s clear is that DVC timeshares maintain their value in a way that no other such enterprise can match. As demonstrated through Sharket’s research, the median price of their timeshare resales obliterates the competition.
A dollar today versus a dollar tomorrow
Image: Disney
With the elimination of the Membership Extras perks for resale members, an evaluation of direct purchase vs. resale is no longer cut and dried. In my prior evaluation, I noted that the only true benefits of direct purchase involved the usage of DVC points for Disney cruises. That practice has always been an abysmal use of points since a member can make more money renting their points and then using those earnings to purchase the cruise. The other advantage of direct ownership prior to 2016 was the ability to book at other Disney locations that also came with steep points costs. In other words, buying direct was cosmetically the same as buy via the resales market.
Today, the issue is a bit more opaque. A person purchasing DVC membership directly through Disney must invest a minimum of $5,500, which buys 50 points at Disney’s Vero Beach Resort or Disney’s Hilton Head Resort. With those points, you could vacation every other year at a Disney property for the upfront fee plus a recurring annual maintenance fee of $300-$350.
Purchasing a used contract through the resales market would add 100 points for about $6,500. In other words, for $1,000 more upfront, you’d get double the points. I suspect that most savvy consumers would lean toward the latter offer, all other things being equal. It would double the amount of Disney vacation time for about $20 a year over the lifetime of the timeshare.
The catch now is that things aren’t equal. Membership Extras such as annual pass discounts are no longer available to DVC resales buyers. All that these timeshare owners receive are the points themselves. Some theme park tourists are fine with such transactions. Others rightfully feel a bit slighted by Disney’s decision. The good news is that a compromise option exists.
Two great tastes that go great together
Image: Disney
At this point, Disney execs are satisfied with the changes they’ve made. They haven’t closed any loopholes yet, which means that some DVC members are investigating a sort of Plan B. The key to gaining access to all Membership Extras is owning a DVC membership card. From this point forward, Disney only hands those out to people who purchase directly through them.
One of the unheralded aspects of membership is that two types of purchases exist. Customers who are not DVC members must purchase at least 50 points at all times. Occasionally, that number is 100 points. The policy forces an investment of more than $10,000 in many instances.
Disney fans seeking a discounted method to enjoy all the benefits of DVC membership have a method to do so. Once they’ve bought a contract via the resales market, they can purchase 25 points directly through Disney, which would get them a membership card. It would make them both a direct buyer AND a resale buyer at a cost of at least $2,750 but no more than $4,500. It’s a hefty price to receive a few Membership Extras. Given that the savings on an annual pass through DVC can be $150 per person each year, it’s something potential buyers should at least explore by crunching the numbers. Whether the benefits justify the cost is a choice that’s in the eye of the beholder.
The rules of the Disney Vacation Club have only changed dramatically twice in 25 years. It’s regrettable that the 2016 modifications seem so customer unfriendly, the polar opposite of how people generally perceive Disney as a company. The result of these alterations is that everyone has to do some new calculations to determine whether DVC is for them and, if so, whether to purchase directly from Disney or through the resales market.
