The Riviera Restrictions

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Unlike other content on this site this article is an opinion piece by Andy, and it may have inconsistencies and inaccuracies. But it is correct at time of writing (Sept 2020).

When Disney Vacation Club (DVC) announced the new resale restrictions on the Riviera resort a lot of people were taken aback that they would heavily restrict the rights of resale owners. The changes indicate a new direction for DVC and a glimpse into the future of new resorts, especially since DVC is starting construction on a new tower at Anaheim.

While a lot of the DVC owner community are, with good reason, heavily against the restrictions I don’t actually think its all doom and gloom. I’m going to go over some of the common issues people have and give my view on why I don’t think it is a “end of the world” change.

“The resale value of Riviera points will be a lot lower than other resorts due to the restrictions.”

No one can dispute that Disney timeshares retain their value and that a very large resale community has built up around this value. While DVC dislike the resale community they’re never been overtly aggressive against resale owners, the new terms could be seen as one of the first moves against them.

DVC have a right of first refusal (ROFR) on all resale contracts, in that they have a set time period before a contract closes to say that they are buying the contract rather than it being sold to the buyer. DVC have used this in the past to vacuum up contracts that are cheap, and then repackaged the points as part of their direct sale outlet, which in turn keeps the resale market value high, as people want to avoid DVC buying up their dream contracts.

So look at this way, resale isn’t a great prospect with the restrictions and this suppresses the market value of the points. This provides DVC with more chance to buy back contracts and in turn give them more inventory to use as breakage (cash rooms) and sell as direct contracts for a profit. You have to remember once DVC sold those points for the first time they’ve paid off the value of the construction, any profit they make from buying at ROFR and reselling as direct will be all profit.

“Availability will suffer as more owners are restricted to only booking their home resort.”

The biggest clause of the resale restrictions is that they can only book their home resort and can’t book at any of the other 14 resorts, but new resale contracts for the existing 14 are also restricted from booking Riviera and newer resorts.

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.

Disney Vacation Club Statement – 7th Jan 2019

With this in mind, as time goes on and resale contract circulate, the pool of points that can be used at Riviera will drop as people sell on their existing 14 resort contracts. Existing long term owners and new direct owners will still be able to take advantage of the newer resorts, and direct owners of Riviera will still be able to take advantage of all resorts.

Its safe to assume that DVC has done the numbers and knows the exact number of contracts that are direct and resale. Once Riviera “sells out” I don’t see it getting worse over time, if anything i’d expect the availability to get slightly better over time, but I don’t see it as the 11 month death match that people seem to think will happen.

“Riviera is a poison chalice offering”

The restrictions on resale can feel strict, but really it comes down to Disney trying to increase direct purchases and allowing for Riviera to be more of a continuous sale opportunity rather than a sell out and wait.

Don’t get me wrong, Riviera isn’t really everyone’s first choice of a new DVC purchase. The target market is definitely not the large family units like the other 14 resorts, the décor may not be “Disney” enough for some people, but it brings some interesting options forward for a new segment of the market that wasn’t really serviced by DVC before.

DVC seems to want to encourage long term, direct purchased, ownership. By getting people to purchase direct they’ll profit more, obviously, but now with the restrictions supressing the resale price I expect to see Riviera buybacks higher than any other resorts. I’ve previously told people who asked about buying DVC that you need to think about the long term, are you going to buy then cash out in 4-5 years? then its probably not the purchase for you, likewise if you’re buying it as an investment then you really need to understand that DVC isn’t an investment.

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