Disney time shares fuel a robust resale market

Needing cash for renovations as he prepared to put his house on the market, David Welty sold one of his Disney Vacation Club memberships at Saratoga Springs Resort & Spa.

He made a profit, selling for about $1,000 more than the original purchase price. Once settled in his new Ocala home, he bought another Disney time share this year based at a Hilton Head resort. Already familiar with the secondhand market from his recent sale, Welty bought through a company specializing in reselling Disney properties. Welty said he likely saved several thousand dollars on his purchase of about $13,000.

“It’s like getting a Mercedes at a Ford price,” he said. “It was well worth it to me to invest the time and research to save myself a heap of money.”

Welty is one of the many Disney fans who have created a thriving resale market for Disney’s time-share memberships.

Disney Vacation Club has a reputation for a high resale value. The company, which declined to be interviewed for this article, dominated a list released last month by time-share market research company Sharket assigning resorts a score based on resale volume and prices. Saratoga Springs, Bay Lake Tower at the Contemporary and Animal Kingdom Villas were among the top resorts.

“They’ve got a great product and of course their location within the theme parks helps,” said Bob Schmidt, Sharket’s chief data officer.

The number of resales rose from last year for Disney — as did all the time-share resorts in the top 25 list, according to Sharket. Prices rose for many as well.

Disney continues to focus on time-shares as a lodging option for its guests. Its latest project under construction is Copper Creek Villas & Cabins at Disney’s Wilderness Lodge. With more inventory on the market, it makes sense secondhand sales would rise too, said executives with Fidelity Resales, which deals in time-share memberships from companies including Disney Vacation Club.

“The resale market as a whole is definitely growing, and we are starting to see a more active and engaged resale market,” said Paul Rotter, who writes a blog for Fidelity. “It is becoming more of a presence in consumers’ and developers’ minds.”

Many people who buy secondhand go through companies such as Fidelity. Others bid on foreclosed deeds at auctions.

Over the past year, Disney has taken some actions making things a little tougher for secondhand buyers. It started using a nonjudicial foreclosure process, requiring auction bidders to attend in person rather than submitting bids online via the Orange County Clerk of Court’s office.

In April, Disney Vacation Club stopped benefits such as discounts and special event invitations for new members buying secondhand.

Some customers were upset. Still, “I think roughly 50 percent savings in the initial purchase price of buying resale more than adequately compensates … for the lack of those benefits,” Welty said.

Disney was one of the last major companies to eliminate such incidental benefits, said Howard Nusbaum, the American Resort Development Association’s chief executive officer.

In 2011, Disney stopped allowing secondhand buyers to redeem their points for nights in conventional Disney hotel rooms, cruise ship trips or vacations through its guided-tour operation.

Nusbaum said resales are an important part of the time-share economy.

“You have to have an aftermarket,” he said. “It is healthy. We’re not afraid of competition.”

One method Disney and other larger companies use to help control inventory is right of first refusal. Resale contracts must be submitted to the company, which can then buy the memberships at the offered price. Other larger reputable companies have a similar process, experts said. It allows them to have a level of control over the inventory and the market.

“They don’t want to see their properties on Craigslist and Ebay,” National Timeshare Owners Association Chief Executive Officer Greg Crist said.

Disney often also buys back its foreclosed properties.

Many companies also have buyback programs or preferred vendors to which they send customers looking to sell their time shares, Nusbaum said. For years, Disney has referred members to Fidelity if they want to sell. Disney has also begun referring customers to Vacatia, a California-based online marketplace.

How much people can save buying from other owners depends on several factors, including which property they purchase as their home resort. Units at the Polynesian, Bay Lake Tower and Grand Floridian are fairly new and are particularly prized because they are on the monorail route leading to the Magic Kingdom. So there’s a relatively small gap between resale and buying through Disney, said Nick Cotton, a former Disney Vacation Club sales guide who now owns DVC Resale Market.

Disney’s Animal Kingdom Villas, Saratoga Springs and Old Key West Resort seem to have some of the biggest differences in values between resale and buying direct today, Cotton said. They are large resorts with more inventory, he said, and “more supply always lowers the value.”