Right of First Refusal (ROFR) is one of the most nerve-wracking parts of the resale contract purchasing process. During that step, Disney has the opportunity to buy back the contract from the seller for the same price that the buyer offered. This is how Disney increases its inventory of points to sell, particularly at resorts that are no longer actively being sold (i.e., resorts other than Riviera, Aulani, Grand Floridian, and Disneyland Hotel).
If Disney exercises ROFR, the buyer has to start from the beginning and find a new contract to purchase. This process may seem long and tedious, but ROFR does serve a purpose in the realm of Disney Vacation Club.
What’s Happening with ROFR Now?
The DVC community affectionately refers to the “ROFR monster,” and for a while it seemed to have fallen into hibernation mode, minus a few snacks. For half of 2023, little buyback activity was enticing to prospective DVC members and those looking to add on points. Finally in August, Disney started buying back a few contracts again.
Why Should Members Be Happy that the ROFR Monster Has Awakened?
Sure, we are all excited when contracts pass ROFR and someone gets a new contract. However, the flip side to that is the low price floor in recent months. The DISboards ROFR thread shows some contracts priced under $100/point for Old Key West and Saratoga Springs that passed ROFR! Part of what separates DVC from the typical timeshare is its ability to retain value or even increase in value. ROFR is the mechanism by which Disney prevents the price of DVC points from falling too low. If the ROFR monster were to continue its slumber, it could impact the value of our contracts.
For now, it seems that there’s enough demand for resale contracts that prices wouldn’t plummet without ROFR. Nevertheless, should there be an economic downturn and demand decreases, resale contract prices could fall further if ROFR pauses again. Although not every member purchases DVC as an investment, DVC’s strong resale value helps make it more appealing than other timeshares.
While we can’t tell for sure how long DVC will continue exercising ROFR, we do know that DVC has plenty of points in inventory. Currently, Aulani, Riviera, Grand Floridian, and Disneyland Hotel are all actively on sale. Within the next year or so, they will also have points for the Polynesian tower and Fort Wilderness cabins. With so many points from actively selling resorts, DVC may not need to exercise ROFR as frequently as it has in the past. This is especially true for the older DVC resorts since sales of points from sold-out resorts only make up a small portion of direct sales. Moreover, direct contract sales have been waning, so there is less of a need for DVC to buy back contracts.
ROFR has only paused a few times in the past, such as during the pandemic. Time will tell whether ROFR’s current appetite is temporary or if DVC is actually shifting its strategy.
Marcy
August 23, 2023I agree with what you said but also wonder if it has to do with the fat that Disney has been making as much money with its movies and Disney + so may somewhat financially strapped. As they have so many they are currently selling and will be the Poly next year it would maybe not pay to buy more.