DVC Right of First Refusal (ROFR): July ’18 Report

In the month of July, Disney exercised their right of first refusal (ROFR) on 32 of 245 Disney Vacation Club (DVC) contracts sold through the DVC Resale Market, representing 13.1% of the contracts sold. The waiver rate for July was 86.9%. With 32 buy backs, July 2018 represented the 4th consecutive month for 30 or more buy backs.

At 13.1%, July took a slight dip from the 13.5% seen in June.  The year-to-date (YTD) buy back rate for 2018 is now 9.7%, which remains more than double 2016’s rate of 4.4% and ahead of 2017’s rate of 6.9%.  The YTD waiver rate is 90.3%.

The chart below shows the relationship between the average selling price per point and the buy back rate from July 2017 through July 2018. Since April, we have observed consistency in both average DVC resale price and buy back rate when averaged among all resorts.  The average monthly DVC resale price across all resorts has remained between $111/pt. to $114/pt. since April.  Additionally, the monthly buy back rate has consistently stayed in a tight range since April, 11.9% to 13.6%.

What is Right of First Refusal (ROFR)?

For those new to the concept of Right of First Refusal, it is the option Disney Vacation Club has to purchase any resale contract after a sales price has been agreed upon, and the contract has been executed. Each contract must be forwarded to DVC for review.

DVC may take up to 30 days to review the contract. At their discretion, Disney may step in and purchase the property themselves at the terms agreed upon by the Seller and original Buyer. DVC then becomes the Buyer, and the purchase is complete. Once DVC is the buyer there is not an opportunity to come back with a better offer in hopes of still purchasing the contract.

Disney Vacation Club Resort Contracts Bought Back in 2018

Saratoga Springs, Animal Kingdom and Old Key West remain nearly 90% of all buy backs in 2018.  Despite those 3 resorts dominating the buy backs this year, we saw many Hilton Head contracts bought back in July.  Just in the month of July, there were 8 Hilton Head contracts bought back from 11 sales.  This is compared to only 3 Hilton Head buy backs from January through June.

This increase in buy back rate of Hilton Head may perhaps be attributed to a declining resale price of Hilton Head from late Spring into the Summer.  While other DVC resorts on average have remained flat or experienced increases in sales prices in 2018, the same cannot be said for Hilton Head.  January through April saw average resale prices of Hilton Head in the low to mid 80’s per point.  However, more recent data shows average Hilton Head sales in the upper 60’s to low 70’s per point.  This decline may have triggered an increase in Hilton Head buy backs as the direct price for Hilton Head is $121/pt.

Please refer to the graph below for the total amount of buy backs at each DVC resort for contracts sold by DVC Resale Market through the month of July in 2018:

Details on DVC Buybacks

In July, DVC Resale Market had buy backs of Animal Kingdom, Beach Club, Boardwalk, Boulder Ridge, Hilton Head, Old Key West and Saratoga Springs.

Details on the contracts bought back in July are below:

* Seller Provided Credit to Buyer for 2019 Points Used

Buy Back Rates for Disney Vacation Club Resorts

The table below shows the percentage of buy backs for all 7 different resorts purchased back in July:

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