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Disney’s Right of First Refusal (ROFR) is always a hot-button topic in the DVC realm. Especially in the post-COVID era, things have been harder to predict but we have seen some trends worth watching. But what exactly is Right of First Refusal? We’ll explain, and then go into the details about the trends we’re seeing.
To put it simply, Right of First Refusal is Disney’s option to buy a DVC contract from the seller at the same terms as agreed by a buyer after a contract has been executed. For example, I agree to buy your DVC contract for 100 points at Bay Lake Tower for $150 per point. That’s a super cheap price, as most contracts sell for $180 or more per point. If you and I (as seller and buyer) sign a contract for $150 per point, Disney has the right to review the sales contract and decide whether to let the sale proceed, or step in and buy the points at the agreed-upon price for itself, thus thwarting the good deal I as the buyer thought I was getting. Disney addresses the ROFR concept in the DVC FAQ but doesn’t go into a lot of explanation.
Why would Disney want to do this? There are several reasons. The first and most basic is to keep DVC prices high. The lower the price for resale, the more attractive the resale market becomes versus buying direct from Disney. As we’ve seen, Disney keeps hiking the per-point prices of new contracts, sometimes several times per year. The closer the resale price is to the price Disney is charging, the more likely interested buyers will buy direct from Disney. The bigger the difference, the more sales Disney will lose to the resale market. So it is in Disney’s financial interest to keep the resale prices high, and exercising its ROFR keeps the resale prices higher.
Another reason Disney would want to buy back points is so that they can resell them at a higher price to current DVC members. Most older DVC resorts have long been sold out, but when current DVC members find that their needs have changed and they want more points, Disney wants to have some on hand to sell. This is called an “add-on” contract and Disney makes it super easy for existing members to add on more points. But in order to do this, Disney needs to have points available to sell. It can get these points by buying back contracts via ROFR.
This ends up being really frustrating for resale buyers because they might find the perfect contract for their needs, make an offer, the seller can accept the offer, and then BAM Disney buys the contract out from under them. Then they have to start all over again. That’s why it is important to know the trends with recent ROFR buybacks. We’ll talk about the recent trends, but if you’re the kind of person that hates statistics, we recommend consulting with the experts at DVC Resale Market, who know this stuff like it’s their job (because it is). They’ll always be able to give you the best advice about the likelihood that Disney will exercise ROFR at any given price.
The ROFR trend was significantly disrupted by COVID. Between a huge slump in travel, and DVC members possibly trying to unload DVC contracts that they didn’t want to use, Disney exercised its ROFR quite often in 2022. However, the ROFR activity in 2023 dropped dramatically. This may be due to more inventory coming online with The Villas at Disneyland Hotel starting sales last year. When new resorts begin selling, DVC salespeople have more incentive to push the newest resorts even to members who want to add on. It may also be the case that DVC sales have slowed due to macroeconomic factors and so DVC doesn’t want as much inventory on hand.
In any case, the dramatic drop in ROFR means that now is a great time to buy a resale DVC contract. In the last three months, the chance of a DVC contract being bought by Disney is less than one half of one percent (0.5%). That’s so incredibly low as to almost be a non-issue when contemplating an offer price for a DVC contract.
If you’re ready to jump in to the wonderful world of DVC membership, get the best deal on a DVC contract from our friends at DVC Resale Market, which is staffed by many former DVC cast members who know the ins and outs of buying into DVC.
If you’re not sure about DVC just yet, I recommend trying out the DVC resorts and see if they’re for you. If you’ve always stayed at the All-Stars, a DVC resort can make a big difference in your vacation. To find out just how big of a difference, and whether you think it’s worth it, you can rent DVC points for your next Disney trip. This gives you the opportunity to stay at a DVC resort just like a DVC member, but without buying into the system just yet. If this sounds like a great idea, contact our friends at DVC Rental Store to book your next resort stay in one of the many DVC resorts at Walt Disney World, Disneyland, or Hilton Head Island, Vero Beach, or even Hawaii!
The post Disney Vacation Club ROFR: What Is It and Why Is Now a Great Time to Buy? appeared first on WDW News Today.