As with many of you – I am fascinated with the idea that Riviera sales may be affected by the resale restrictions to enough of a degree that they decide to rescind it. Of course, I am talking about the restriction that says that resale contracts at Riviera can only stay at Riviera. In my opinion, this change implemented at the beginning of 2019 hurts not only resale owners but direct owners as well, because it results in lower resale values for these contracts.
There is no predicting with certainty what Disney might do, but a review of direct sales data may at least give us a hint as to the effect of the resale restrictions.
So, what I did was collect data from the last three years of sales. All this data was collected from the very reliable source of www.dvcnews.com, who publishes the amount of points sold across all the resorts (excluding Aulani) each month. I gathered data for the last three years 2017-2019. Sales data typically lags by 30 days or so, so, for instance, December 2019 sales data is actually representing November 2019 dates.
To ensure that data was not being skewed by the economics of direct pricing, I started by checking to see what sales levels were for all three years. The first chart below shows monthly sales for 2017-2019, with lines representing the average monthly sales for the year.
We can see a fairly consistent pattern throughout the year, with sales high in January and March through June, then tapering off in the second half of the year. Outliers occur of course, like when Copper Creek went on sale March 2017, or Riviera came into the system in March of last year. 2019 actually has the highest average monthly sales at 189,900 points, with 2017 only 1,200 points less, and 2018 being 8,300 points lower. The conclusion is that sales in 2019 are not weaker than the previous two years. In fact, they if anything are slightly stronger.
But these charts include all resort sales – not just new resorts. Over the last three years, we’ve seen three resorts on the market sold as “New” direct sales: The Polynesian, Copper Creek, and Riviera. Our second chart shows monthly sales for new resorts from when they came on-line to the point at which Disney raised the Direct prices and stopped selling them as NEW.
You can see that Copper Creek and Polynesian were selling together for almost a year, while Copper Creek only overlapped with Riviera for about 5 months. The combined sales of all “new” resorts are represented by the black dots, and it should be noted that the last 4 months of sales have been the lowest in the last three years. With the information from these two charts – we next looked at new resort sales compared to overall sales. This gives us another interesting chart.
The three-year data shows a pretty strong trend. From the start of 2017 through July 2019, sales of “new” resorts versus the “classic” resorts were ranging between 77% and 90%, with an average around 82%. Starting in August of 2019 though there was a big dip that coincides with when Copper Creek went off the market. Suddenly, there was a significant uptick in “classic” resort sales while Riviera sales languished. We decided to test this by looking at Saratoga sales over the last three years.
This data is really something – Saratoga sales have SPIKED in the last 4 months, each month being in excess of 10,000 points. These are the only 4 months out of the last 36 that show sales over 10,000 for the month.
So, what is the story this data is telling us. The factual conclusions we can make is (a) 2017-2019 total sales were fairly consistent, (b) Riviera sales since launch have been about 20% lower than Poly and CCV sales were in years just prior, and (c) lower Riviera sales have coincided with higher direct sales at the other WDW resorts during the same time period.
At this point, we have to move from the Kingdom of “fact-land” through the “realm of speculation”. In my view – this shows pretty strongly new members have been buying other resorts in preference of Riviera, even though Disney has over the last two years significantly RAISED the direct prices on those resorts. I can only see three potential reasons for this.
(1) Riviera sales are low because the resort was not yet open, and people would rather buy a “known” property.
(2) There is something about the Riviera resort that people don’t like, whether the point charts, the location, the theme, or the Skyliner, that is hurting sales.
(3) Riviera sales are being hurt by the resale restrictions.
So the good news for Disney is that the first reason is going away – the resort is now open and people can see the resort for themselves. Starting with next month’s sales, this potential cause is eliminated. This will leave the other two reasons going forward. The next six months of data will tell us if reason #1 was the real problem.
However, if the data trend stays the same, Disney will have a decision to make. Do they live with the weaker new resort sales or do they consider retracting the resale restrictions. You might say that Disney could consider there not to even be a problem. Sales remain strong, even if Riviera sales are soft. But Disney MUCH prefers new resort sales to old resort sales, and current pacing says Riviera could take 5 years or more to sell out, which is pretty clearly not what Disney was hoping with Reflections set to open in 2022.
So what do you think? If the data continues to track as is, does Disney make a policy change? Or do they just “ride it out”? When it comes to knowing what Disney will do, your guess is as good as mine.
My guess is Disney will ride it out. DISboards is full of users saying they won’t buy in due to the resale restrictions and as beautiful as Riviera is, I wouldn’t buy in because those points are devalued immediately. This would be the only resort where I would suggest purchasing in full vs financing because if you ever needed to sell, you would be taking a HUGE loss. This makes Riviera direct buyers think twice before having to sell.
But who knows… maybe Disney will surprise us and come to the realization that they are only hurting themselves. Great article Pete!
We added 500 points at Riviera to our existing points because we weren’t worried about resale. We have invested in DVC over the years with a plan to have enough points at retirement to spend a few months in various DVC properties and not have to worry about upkeep on a second home. We stayed at Riviera for two weeks over Christmas this year and absolutely loved it. The location was great, close to Epcot and DHS. The property is beautiful and Topolinos is a wonderful restaurant. We have been members for over 12 years and this staff is probably the most professional of any property we have ever stayed at, which is almost all of them. With all that being said i see how the resale restrictions can hurt this resort as well as all future resorts. I think Disney will end up loosening the restrictions in the future.
Understand I am not saying anything bad here about the resort itself – just looking at how sales are going and what effect – if any – the resale restrictions might be having.
Thank you for another brilliant analysis, Pete! I enjoy all of the articles on dvcfan.com, but these “nerdy” (said with respect) articles are my favorite. 🙂 I also agree with you and think it is too soon to speculate. Although the data is showing a given point in time, I am interested in the 2020 March Rivera sales. Looking at your beautiful graphs (I really do appreciate them), 2020 March sales will be a significant variable as the Rivera will have been opened for four months, the Spring Break vacations will have occurred (always occurring in the month of March), and it will have coincided with the highest sales month of the year in past years. My hats off to you, Pete!!
Agree – I think the next 3 to 6 months will tell us a ton about what Disney can expect for long-term sales for Riviera.
One thing I didn’t see you mention from the DVCNews data is that for the same like to like time periods, Riviera (just under 900,000) outsold both Polynesian (702,639) and Copper Creek (513,225), and that is with the longest sales cycle pre-resort opening. It has performed fine and I don’t really see any effect of the new restrictions, at least yet. Now that the resort is open and we have entered into the traditionally busy season, time will tell. If sales do not increase significantly during this first half of the year like others did, it may support the idea that there is a problem, either with the resort or with the restrictions.
This is why I included a chart showing sales across multiple resorts. Yes, Copper Creek early sales were lower, but you must remember that during that time the Poly was still the primary focus of sales. So if you look at the second chart, you can see during that time while Copper Creek was only running about 50-70K per month, Poly was still selling even more. And the early data March-July shows the same thing, so reasonably strong data, but the last 5 months are worrying. As you and I both say, the resort wasn’t yet open, so that may mean nothing – if we see a spike in sales in the first half of next year, that will be a good indication that the restrictions aren’t having a big effect. Only time will tell.
Pete, first and foremost, this is an outstanding analysis of the issue. Love the graphs.
I think Disney’s first move will be to provide resale buyers of Riviera the opportunity to pay up and have the restrictions removed. That response will dictate their next move.
Thanks again Pete!
One Disney bread crumb to follow is to see what new Riviera incentives are put into place after the price hike goes into effect on Jan 28th. If the incentives are less ideal than they are today, it could be argued that Disney is happy enough with how things are going. If incentives get better, then that might indicate expectations aren’t being met.
That was a great article and analysis. Thank you for all your hard work and research in putting it together.
As a longtime BCV owner who has been feeling the negative effects of more points in the marketplace leading to more and more difficulty getting in at my home resort, I was happy with the restrictions they placed on RR resale points. I recognize that it makes selling RR more difficult for owners but caveat emptor – buyer beware and bewarned.
This is true – the resale restrictions benefit the owners of the older resorts much more than they benefit the direct owners of Riviera – making it an odd decision indeed. (And maybe while direct sales at older resorts are so high.)
Pete you should be working for DVC! Excellent research & analysis!
Do you know any openings?
I do not care for Riviera at all, the rooms are fantastic, but the actual resort is like any hotel, the low floor standard rooms face a wide bland car park and road, the restrictions totally put me off (why should I take a hit to line DVDs pockets?) and the points per night are way too high for the underwhelming resort on offer. Some will love it, but my wife and kids refuse to even try it. I think they need to lift the restrictions, people are not stupid and will not buy. No one buys expecting to sell, but you are foolish if you buy not anticipating you may sell.
The grand floridian didnt require incentives to sell it.
I think you will need to revisit this in 2 months, and then it will be more reflective of the trend. I don’t think it can be strssed enough that the fact that Poly and CCV were known quantities affected the sales levels. I think RIV sales are going to be just fine and the restrictions will stick. So many people are posting about buying after having a chance to stay there, so that is why I htink the next few months will be telling. I bought a modest amount of points in July fully understanding the restrictions and am fine with it.
I also think that the rise in Saratoga Springs purchases is at least partly due to their recent renovations – which look fabulous! I feel that this cannot be overlooked as part of the reason for their surge over the last 3-4 months. I absolutely loathed the Saratoga decor and setup before the renovations (it was like my grandma’s old basement in terms of decor – and it didn’t have an end table on one side of the bed!) – especially after Pop’s thoughtful renovation with end tables and outlets everywhere and the queen sized beds/murphy bed. This makes me actually want to stay there again. So yeah – I think it played a part in that statistic.
“So what do you think?” I think you are amazing. Thank you for the time, energy and thoughtfulness that went into this post. Your contributions to this blog, the boards, groups are so valued. Thank you. Also, hoping it’s #3.
Thank you so much for your analysis, Pete! As usual I love how you lay everything out. One thought though: what’s this uptick in classic resorts doing to ROFR? Disney’s got to be getting their inventory from somewhere, and at a certain point they will have exercised their option enough that the profit won’t be there to see these resorts at the current (already inflated) prices.
I can’t say for certain but anecdotally the number of contracts being ROFRd has been going up. This is part of what keeps driving resale prices up. I do think that is part of DVCs strategy as well – bring resale prices up so that direct looks a lot more reasonable. It’s hard to believe I paid $74 for an AKV contract in 2014 and $112 last year for the same contract with 5 less years on it.
I’m just waiting for RIV resale 50-75% off because of these restrictions. Then I’ll pick up some on resale. 😄
Do your numbers above include all sales (both direct and resale) or just direct from Disney?