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Is DVC in Trouble? We Asked the Experts. Here's What They Said.

On April 4, 2016, The Walt Disney Company accepted that the Disney Vacation Club had lost some momentum due to competition. Resales services and points rental companies had siphoned off too much money, so the company acted to limit the competition. Disney restricted the rights of resales members moving forward, requiring proof of a DVC membership card to attain what they call Membership Extras.

The end result of this dramatic change is that direct DVC purchase is no longer equal to resales purchase, at least theoretically. Do customers care about Membership Extras and the other changes, though? Rather than speculate on my own, I went to the source. I’ve interviewed a series of professionals employed in the cottage industries involving the Disney Vacation Club. They’ve been kind enough to offer their thoughts on a series of pressing issues involving the changes.

The roundtable of contributors includes (in alphabetical order): Nick Cotton of DVC Resale Market, Scott Ferraioli of DVC-Rental,  Paul Little from DVC Rental Store, and Kinn Tutas from Resales DVC. For clarity, Mr. Cotton and Mr. Tutas sell used DVC contracts, the way I've historically recommended potential DVC members purchase contracts. Mr. Ferraioli and Mr. Little rent DVC points as I suggested Disney vacationers should consider in this article. I want to add that I also offered Disney a chance to comment, but Rebecca Peddie, the company’s Manager of Public Affairs, politely declined to participate.

What was your reaction to the announced changes to the DVC program?

Image: Disney

Kinn Tutas: My reaction to the DVC removal of member benefits and perks was "not surprised at all” except for the many years it took DVC to finally announce and implement the changes.

Paul Little: I can't say that it was unexpected. With earlier changes to the DVC member's benefits in mind, I was in a way expecting Disney to further degrade those benefits and amenities that members who purchase via resale are able to enjoy.

Scott Ferraioli: We had heard that there were some changes coming but were surprised with how suddenly they took effect. In the past when DVC made a change, they gave [members] a chance to grandfather in by a certain date.  The new changes were already set in stone by the day that they were announced. That was the biggest surprise.

As someone whose business depends on DVC's public perception, did you take the news as positive or negative for your company?

Image: Disney

Nick Cotton: As a company that welcomes new Members to the club every day, you always want to be able to provide those new Members with as many benefits as possible. So, as a reseller you certainly don’t want to see additional restrictions, but at the same time there is an understanding that anything that is defined as “incidental” and “removable” is just that.  

Scott Ferraioli: DVC has already made changes to Resale contracts in the past (removing the ability to book cruises and the Concierge Collection to name a few).  Due to the lower price to buy into DVC through Resale, it makes sense that they would have to limit some items to try to even the playing field.  Any time you lose benefits it's not a good thing, but the stuff they took away still doesn't negate the huge savings from purchasing Resale.

Paul Little: I did not really view the changes as a negative for a member purchasing via resale. The greatest benefit to a resale buyer is the money savings when compared to purchasing directly from Disney. This savings far outweighs the benefits that were taken away. In a way, I did view it as a negative for Disney from a PR and program standpoint. The benefits change was no doubt instituted in order to deter a potential member from purchasing via resale and instead to purchase direct. I personally don't see this as accomplishing that goal. I think a better approach would have been for Disney to exercise their Right of First Refusal more broadly. While it would not put an end to resale purchases, it would send a message to buyers that the contract that they have put an offer on will more than likely get claimed by Disney instead.

Kinn Tutas: I agree that public perception for DVC is extremely important for the entire industry. I also know that the public’s passion for Disney is very forgiving. There was neither a positive nor negative affect on our company, as this is not the first time DVC has made changes. At that time, most owners reacted negatively, but DVC's announcement forced owners to examine the true value for becoming a member. The majority understood more clearly and remembered they purchased based on the incredible savings at the “deluxe" resorts compared to renting from Disney.

What’s the general response you’ve received from customers? Have you lost/gained business over this?

Image: Disney

Kinn Tutas: As to be expected, the initial response was quite negative. Once the consumers started to understand that the difference in resale prices compared to DVC direct greatly outweighs the incidentals being removed, including the annual pass discounts, it settled down very quickly. We did not have a single purchaser cancel based on the changes.

Nick Cotton: Initially, the very first week there was a spike in business, as I believe all the discussion made more people aware that there was a resale market. Since then, there has been very little, if any, measurable business lost or gained.  I think the vast majority of people that join Disney Vacation Club fully understand that they are buying DVC to save thousands of dollars on accommodations, and through buying resale they can greatly increase those savings even more.  People generally understand they are not buying DVC because of something that is “incidental” to the Membership such as a 10% savings on t-shirts. 

Moreover, you don’t want to purchase something for a benefit that may or not be there tomorrow.  My team sometimes uses the example that when you purchase a home, your primary reason for purchase shouldn’t be because you really like the neighbor down the street, as they could move away at any time.  If the neighbor stays there for life, great, but if not, you are still happy with the home you purchased. 

Paul Little: If anything, these changes have increased our business slightly. Some members whose intent to purchase resale are now choosing to rent DVC points instead of making the choice between a resale contract with fewer benefits or paying much more to purchase directly from Disney.

Scott Ferraioli: The market seemed to pause for a few weeks while everyone started to worry.  Then, like any unpopular change Disney makes (to the ticket prices, dining plan changes, etc.), within a month everything had blown over and went back to business as usual.

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There are 4 comments.

Seems clear that this will depress resale value of DVC memberships further as now the buyers are getting less value for their money. I do wonder if this will damage the overall resale market as members become less willing to resell their memberships as they get less and less return on those sales. May perk up the point rental market as those that have memberships decide to keep the membership and just sell off their points every year instead of taking a huge loss on resale.

So, "no" then.

I don't think DVC is in trouble. Their sales figures indicate Disney still makes a substantial profit on selling DVC Further restricting benefits brings DVC in line with other timeshare companies.

Scott also sells resale, and is awesome !

Just a note that basically all these folks have a vested interest in saying "no". Three are in the business of selling used contracts with the benefits stripped. I can tell you that on social media, I have seen people think twice about it, or who have decided to buy a small direct contract and then resale (which alone reduces demand on resale, and thus the value). For us, we wouldn't have bought resale without the perks. They can muse about a 10% discount, but whats really important to us are things like the Ticket/AP discounts, heck even the meal plan discount could be important to DVC owners. Think about a gold DVC AP, the savings for a family could be as much as $1000 a year over buying full priced APs, it could even be more. Now calculate that over the duration of a contract, 40 years ? That's $40 000 on TOP of the other less flashy discounts, but they do all add up. If you are deciding between 20 000 direct from disney or 10 000 resale while giving up potentially $40 000 in AP savings ... ??? Now sure Disney COULD get rid of that benefit at any moment, and but its not the same as buying a house for a neighbor, its more like buying a house including the view out the back, like a nice forest or something. Its possible the forest will be bought and cut down, but its been there for years, just like the benefits for APs. Lots of people buy the house because its go no rear neighbors....

That being said, there is obviously a huge value in resale, but I think the value has been decreased.

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