90 minutes with DVC

[WebmasterDoc]

This afternoon, I had the pleasure of spending about 90 minutes with a friend who is a CM at DVC. We discussed many aspects of DVC and I gained a new respect for the issues faced by DVC in their relationship with Disney itself.

We talked about the Disney Collection, Concierge Collection, the DVC website and the various discounts negotiated for DVC members. It appears that there are many tiers of management (beyond DVC itself) and WDW operations, which are involved with decisions that, on the surface, might seem to be fairly simple and uncomplicated. These "outside” influences play a significant role in the end product that we ultimately see. Few of these programs actually represent the original goal of our DVC staff, but are more the result of the multitude of influences that affect the final presentation.

My assumption about the economic influence of the new point chart for the Disney Collection was incorrect. The ability (or inability) of CRO to rent out DVC points used for non-DVC reservations was NOT an ingredient in the 2002 listings. The needed points are determined by the room charges offered for DVC use by the other resorts. The influence of the non-DVC revenue considerations on the Disney Collection was an area I had grossly underestimated in my prior understanding of the issues involved in that program.

While I am certainly not privy to most aspects of these negotiations, it is certainly clear to me that DVC does not have carte blanche to operate within many other components of the corporation. This fact truly influences the ability to provide some of the very issues we discuss here every day.

I’m confident that our DVC staff and Board truly have the best interests of the membership in mind with their efforts on a daily basis. At some time, many of the programs designed for us will come to fruition and in the form proposed by DVC.

I also got a verbal glimpse of some of the future plans for DVC members, which DVC does have control over. ……No, I don’t have anything to share about BCV or VEP or pass discounts (except that DVC is NOT satisfied with the current status of that program), but our DVC staff does have some great ideas and programs which will affect our ability to interact directly with those making DVC decisions.

Stay Tuned!














:D

[ripleysmom]

Doc, it would appear that what I believed, which is that the increase in point requirements for non-DVC resorts was a dollar decision made by Disney to maximize what they are getting for their hotel rooms in an economic downturn, was spot on. I also knew that this decision did not come from DVC, since the increase makes using this option much less attractive.

[lsutigger]

Thanks for the information. As in all business decisions, there are many varibles at work. Sometimes more knowledge helps in understanding the situation. Doesn't mean you have to like it, but it may help you to understand. Thanks again for taking the time from your vacation to chat with your friend and for the sharing the information.

[PamOKW]

Thanks for the insights Doc.

I'm not following what you are saying about the increase in Disney room rates. I think you are saying that the Disney resort says that they are charging $X for the room. DVC then sets the points to attain that cash amount. However, I still don't see how that caused a need for the drastic increases. DVC isn't paying more than rack rate are they? I'm not arguing. I'm just truly not following what you are saying.

[WebmasterDoc]

DVC then sets the points to attain that cash amount.

My understanding is that there is a formula used by DVC to convert the cost of the room to the points needed. I wasn't given any specific information about what these costs are or how the formula is applied (my contact was NOT involved with any of the negotiations), so I have no idea how the final figure was created beyond the simple explanation I was given. Sorry I don't have any more detail to offer! :(

From the impression I have, the term "negotiation" is probably defined differently what than my dictionary provides. It sounds as though it may have been decidedly one-sided.

[PamOKW]

Thanks Doc. As always, we don't have all the puzzle pieces. I understand that DVC may want to do things that aren't permitted by the other divisions. (A few years back they seemd to be skimping on landscaping -- but the same was true at all the WDW resorts.) At least it's good to know that they realize that the members want/deserve more, they just haven't been able to give it to us.

[stlrod]

What you also need to consider is that the value of the what you are trading (points) in exchange for a room in the DC is not as high as it was last year and that Disney needs to charge more points to make up the difference. Let me explain. Let's say a BWV owner (slightly deranged) wants to go to WDW for Xmas but stay at the GF. He trades his points for GF. Now Disney "owns" those points and needs to sell a room to someone else. Due to the economic slowdown, Disney has lowered its prices at the resorts to fill rooms. Most people would choose 50% off rack-rate at a deluxe Disney resort over a BWV at full rack rate. Therefore, in order to get rid of those points, Disney needs to compete with itself by reducing the price of room for which it received by using the owner's points. Thus, someone like me comes along and grabs a 2BR over Xmas at less than half the rack rate. How can Disney make-up for the loss of revenue which would normally be expected from those points? By collecting more points from the owner who traded. I wouldn't be surprised if following a very high occupancy year, the points needed to get in to the DC goes down.

[WebmasterDoc]

As always, we don't have all the puzzle pieces.

That about says it all, Pam!

The conversation today was really an eye-opener for me. There are so many components and levels of management that are involved with every decision made at DVC (and most other areas within Disney). I had naively assumed that Disney somehow behaved differently than other large (huge) corporations, but realize now that there are many constants in the business world.

As a DVC member, I found some of these things to be annoying and bothersome....as a Disney stockholder, I found the same issues to be reassuring.

The many divisions within Disney have a certain amount of autonomy, but all have a responsibility to be profitable- even when dealing with each other. DVC has no special status in this regard, despite their immense success.

[PamOKW]

stlrod -- Your theory is what I had thought. However, Doc's conversation indicated that the price for the DVC rooms doesn't enter into the equation (or at least wasn't the primary factor). I can't figure out what is actually going on that caused the drastic increases. It sounds like DVC had to either accept this program or not. These large increases after 10 years of stability just don't make sense to me. If Disney is looking to DVC members to pay rack rate (or more) while the rest of the world is paying discounted rates it just seems like abuse of a loyal customer base.

[WebmasterDoc]

stlrod, that had been my thinking previously, but found today that the current economy was not a consideration for the 2002 point chart.

That would explain how some dates went down and in other DVC options (like Concierge Collection) there was little or no change in the required points. If the economy was a consideration, all points would most likely have increased.

[WebmasterDoc]

Disney is looking to DVC members to pay rack rate (or more) while the rest of the world is paying discounted rates

While I doubt that DVC is paying more than rack rate, the other resorts must base the charge on their expectations for any given time period, not on where the actual going rate ends up. In this regard, I suspect that DVC has little to bring to the table in terms of an incentive for the GF to lower it's rates.

It seems that most members do NOT use the Disney Collection and therefore it does not comprise a significant source of revenue for the DC resorts. Yes, they will get paid for the room, but why should they offer a discounted rate to DVC when they MAY be able to get rack rate from other guests. Most discounts are not offered until a few months before a date, the DVC rates are contractual and must be honored for the entire year. I'm NOT trying to defend the charges- just playing devil's advocate.

The final decision for us as DVC members, is are the charges more than we are willing to pay or is the rate acceptable? I know what my response would be!

[stlrod]

Doc, I hadn't noticed one important paragraph of your first message (as a lawyer, I should read the whole thing--hopefully, I'll be more careful in reading over the DVC purchase papers I received today.) Still, I have a hard time believing that the ecomic factors were not a consideration. As you noted, each division has a responsibilty to be profitable. the only way the Disney Division that rents resort rooms can be profitable is charge more points for its rooms. If it lowered them for DVC members, members would go to the resort rooms and that division could end up w/empty DVC rooms. I think the Concierge rooms are more likely to stand on their own. My guess is that Orlando is probably going to see the most dramatic impact of the economy on tourism--oh well, better for us who love Orlando. I am anxious to see what happens with the Disney California points. My suspicion is that we are going to see a split between Disneyland Hotel and Paradise Pier with lower points for Paradise Pier.

[kem330]

First off Doc, Thank you for spending the timea nd energy to provide us with this information! I'm with Pam, it doesn't make sense that DC points went up in low season and down in some higher seasons- If there is more availability in Jan and lower rates, you would think that would be passed on to DVC. Likewise I think the Easter points or some weekends went down a little which makes no sense since they have no trouble renting the rooms then. Sounds like a bureaucratic nightmare! It's funny that a branch that has been so profitable for Disney is treated like a poor relation sometimes. Sounds like they could use a little management shake up. One doesn't cut one's nose to spite one's face! Well it's reassuring that the DVC management is looking out for us! Thanks again!

[WebmasterDoc]

It's funny that a branch that has been so profitable for Disney is treated like a poor relation sometimes.

I agree, but suspect that the other divisions may feel that DVC won't be made profitable at their expense. Unless DVC directly affects their bottom line, there is no real incentive to offer any real discount.

[kem330]

now I get it! It makes perfect sense from the other divisions point of view- in a way- except they don't seem to get that we support them also- especially the theme parks and restaurants- but I can see it doesn't benefit the resorts division too much to offer us a deal. Sounds more like jealous stepsisters!!!;) ;) fighting over who gets a bigger piece of the pie. Hard to see the whole picture isn't it ? (even for us as well)

[wdwnut]

Thank you Doc for reporting some "concrete" tidbits rather than the rumor/hearsay that has been circulating. I think we all appreciate the time and effort you put into keeping us up to date and informed. thanks again.

[Dean]

Thanks Doc, interesting post. I too would be surprised if both sides of the equation weren't considered for the DC in spite of what you were told. Also, I can't see where WDW would benefit if more points were used as the income from the points would go to the DVC and not other WDW companies. The only benefit for other WDW areas would the be cash price paid for the DC rooms.

It would also seem to me that if the Board is not acting in good faith for the benefit of the members that they are violating the trust we've placed in them as well as violating their fiduciary responsiblity as members of the board. I also suspect that what you've proposed is happening is in violation of the Laws of the State of Florida. Sounds like I might just need to make a local phone call downtown to the state office that oversees timeshares and make an official inquiry about these issues. I believe that the recent and past reductions and substitutions in furnishings are in violation of the contract and POS as well along with a few others concerns, so I've been thinking of making that call anyway.

Regardless, I still believe that if DVC would only be willing to offer the other WDW hotels that gave them a "fair" exchange rate, the others would take notice. If there were a more reasonable and equitable program, more members would take advantage of it. I do realize that DVC needs to work within the WDW as a whole and that at times there needs to be give and take along with compromises on both sides of the table.

[prplcrzy]

Hey Doc,

Great post! Just wondering what you meant by the DVC is not currently happy with the discount program. Was it your friend that wasn't happy about the program or the DVC. Did he mention if they were attempting to negotiate new discounts or if this was not a possibility? Did he mention what they thought would be a good discount? Do they have any pull at all?

[dvcdudes]

Just adding my name, so I can keep track of this thread.

[WebmasterDoc]

Just wondering what you meant by the DVC is not currently happy with the discount program.

The impression I got was that they (the DVC staff) would like to have a DVC rate for AP's- better than what is available thru DC. This seems to be something which the staff discusses almost daily and suggests at every opportunity.

Was it your friend that wasn't happy about the program or the DVC.

Good question! I know he is not satisfied personally with what we have now. The "DVC" we all talk about is not any one person...it is a combined effort of the operations staff and the members. They really do listen to what we have to say (and they do read this board as a barometer of the membership). The staff seems to have lots of ideas to benefit the membership and the program in general. These ideas have to be supported by other areas within the company in order to be implemented.

The website is a perfect example of this. The DVC staff would love to have an interactive site, with discussion board and online account access. That was the direction it was headed with the announcement last fall about "early 2001". In between, there were some decisions made outside of DVC, which in effect ended the project for the time being.

I also suspect that what you've proposed is happening is in violation of the Laws of the State of Florida.

Dean, just curious what you think has been violated?

[Dean]

Dean, just curious what you think has been violated? Doc, I will need to check specifics to be better informed. There were several areas that I wondered if weren't in violation of the state laws. One was the idea that there are outside forces acting and that therefore DVC and the board were not acting in the best interest of the members. Another was that there have been downgrading, substitutions and deletions to the villas, especially at OKW, in regards to minor amentities like toasters, shower curtains, coasters and the like. A third is that the POS (in some places) requires control to be shifted to the members and that has not happened.

Let me be clear on my position lest anyone might misinterpret. I am very happy with DVC and it is functioning for what I bought it for (to stay at DVC resorts). I feel that overall the current Board is in a better position to carry DVC for the long haul that without the current makeup. However, I have never been happy with the Board and senior management and their approach. I continue to feel there should be direct member representation to the Board and that this is required by the POS. Legally, the Board members have a duty to act in the best interest of DVC and the members, not what's best for Disney in general. I continue to feel that to offer programs with little or no value as part of the DVC is insulting and inappropriate though not necessarily illegal. The DC has always fit into this description and does so even more currently.

Having feelings and concerns are not the same as having a legal case. Even if there are technical violations, proving them would be difficult. It would be my hope to inprove the circumstances not just create a lot of hassle for myself or DVC. I am concerned however that things are not going the path that I want to see long term and have basically decided it's time to try to affect that path by the means available to me. It would be my goal to have a positve influence in the long run.

[WebmasterDoc]

If you mean the "outside" influences I mentioned in the original post here, I was referring to the other Disney divisions which DVC has to involve to provide discounts and other "extra" (non-contractual) components for members. IMO, these aspects, while certainly a nice addition, are not contractual features of my membership.

The immutable point structure of each resort and the maintenance of each resort are the contractual obligations I look for DVC to maintain for me. If a worthwhile discount at a restaurant or park may be obtained, I'm happy to enjoy that also, but I look at that as above and beyond what I have paid for. Since we all have different comfort levels, I don't expect that every negotiated discount will appeal to every member. There are many available right now which I have never used as they don't appeal to me as a value. I look at the offerings of the DC in the same way. The value has never appealed to me, but some have enjoyed the option- at least in the past.

I do agree that member involvement on the board is needed. There is certainly an outline to implement that in my POS, but it also appears that a movement to make that happen must come from the membership and maybe the present board has no obligation (or motivation) to "force" the membership to move in that direction. I'm not sure there is any provision which "requires" a shift to the membership, just a means to allow member participation.

As for the changes in amenities, I'm still unclear what you refer to. Toasters still are still here - I'm looking at one right now. There are still shower curtains in the studios and coasters and other linens are available by request. The decor items (artificial trees, etc.) are certainly gone, but I don't think those items would make for a convincing complaint.

[vernon]

Thanks Doc for taking the time to 1) talk with people within DVC and 2) for sharing some of your thoughts on those meetings.

I can see how it is possible for some of the internal divisions within Disney (the other hotels) to have "bushwhacked" the DVC board/negotiators and presented them with a "take it or leave it" scenario on DC points. Without time to react I would think it likely they accepted what was offered and , HOPEFULLY, will go back with a plan for the future which is more workable for the membership. Possibly a naieve hope but IF that was the case I'd like to know which of the hotels were the most "difficult". I think it is pretty easy to work that out by looking at the differents points charges though LOL

Thanks again Doc,

[prplcrzy]

Hey Doc,

What do you think we could do to convince the other forces inside Disney that we should get a better discount or other things if they have no incentive to do so? I get the impression that we are the black sheep of the family, we make them money but no one wants to give up anything meaningful to the members for plunking down the large chunk of change to "remember the magic". I love my membership, I just added 350 points to the OKW and am looking forward to enjoying that resort soon, it just seems that they really are not concerned if we are happy. I'm not referring to the people at the DVC like your friend, I'm referring to the other forces that don't want to give anything up. Clearly from your post, if it was in the hands of your friend, we would all have the discounts we would like and probably more.

I understand the need to change things that are not working or that just need to be adjusted on a periodic basis, The impression that I get from all of the posts I have read is as follows-

The Dvc offered great things like free passes and other cool stuff at the beginning because it was a new program and they wanted to introduce it to the public and get the word spread. Sales grew but not at a blistering pace and they continued to offer great stuff, just not the park passes. Then, in the last couple of years the sales have gone through the roof and they feel that the program is pretty self sufficient and that they no longer have to bend over backwards to please the membership, because they are just going to go to the World and that they will spend money anyway. Now, they seem to be adjusting things either to it's right value, or they perceive a captive audience and are trying to squeeze more out of us instead of trying to make us feel like we are special members like they did in the past. I don't perceive a major drop off in services although the wait times at MS are longer to call (I called twice yesterday (Friday) and waited 25 and 20 minutes respectively an hour apart.) I don't think that they owe us anything, but if you think about it, the DVC is nothing more than a hotel financing scheme without having to go to a bank and get the money and without paying interest on it. The members pay for the building of the hotels and to maintain them, and in 2042 they can do what they like. We all get to enjoy these accomodations while paying for this and when they figured out they could make money off of us while getting us to finance their hotels they are beginning to get greedy. I don't mean by sticking it to us, but by not doing right by us. If they really took care of the members with these discounts and expanded programs, they really would have a base for a few different things. First, if they resold the DVC again in 2042, they would have a huge windfall of cash without doing anything and without even trying to sell it to the members because they would be so happy they would line up to buy it again. Most of the original buyers will have passed it down in the family and/or sold it to someone who will be enjoying it. They wouldn't even have to spend any money on marketing because the positive word of mouth would be so powerful they wouldn't have to so anything but sit back and collect money. or they could just book the hotel rooms and make a ton of cash on that as well, but that would be subject to the whims of the economy at any given time. I'm just saying that by doing right by us now and in the future will do nothing but guarantee them future business. Tehy should think about expanding the offerings to just do right by us for building their hotels for them.

[Doctor P]

Thanks for all the information, Doc!

[Dreamfinder2]

Facinating stuff, this thread. As we move closer to our down payment goal (late October if VWL is still available; if not, we'll just hold out for BCV), it's been SO important for us to get the most bang for the buck. What has ultimately swayed us is just a simple comparison of DVC to other timeshare options, and we've found that there's just no way to do an apples to apples comparison. There just isn't a better option that fits our wants and desires. We first took a look at what is now OKW nine years ago, and just simply talked ourselves out of it. Yep, we blew it. And, frankly, there are a lot of perks that are no longer available. Since then, though, 4 new properties have been added with two more in the chute, and that's not too shabby. There have been several posts lately about "no taxation without representation," and there is definitely a whiff of just that. What I have to keep reminding myself is that DVC is just one chunk of a huge conglomerate, and in the ivory towers of the mighty there are counsels being kept we'll probably never know nothing of. It sounds to me as though the DVC middle management genuinely wants to do right by us, but only have so much clout. More power to ya, Dean, if you want to see if there has indeed been some infidelity to the POS. I continue to have a naive trust in Disney; if someone besides Paul Pressler was running the parks, I'd feel a lot better. And Doc, thanks for being such a great advocate for owners. I sure do appreciate the "sentry duty" being rendered by so many to make sure we're protected.
Having said all that -- WDW is still my favorite "journey's end."

[Dean]

OK, it was mixers, coasters, placemats and cloth napkins. Plus many of the flower arrangementsf and a downgrade of the quality shower curtains once seen at OKW.

[one_cat]

Doc - I think I speak for everyone here that we are indebted to you for taking the time and effort to track this information down.

You talked about the fact that discounts are contracted for - my very limited understanding of contracts is that there must be a give and take on both sides for a contract to exist. Does that mean that we as DVC members somehow pay for these discounts through other means? If a favorable AP rate could be negotiated does that mean that our dues would have to rise to pay for the associated "cost" of the contract?

[PKS44]

First it should go without saying, but it should be said again and again anyway-- Doc, Thank you for what you are doing...

Next- it would help alot if everyone understood HOW the DC hotels arrangement with DVC works...Is it points given to DC to sell as rooms for $$$ for that hotel??? Is it some prenegotiated rate of cash from DVC which then rents out the rooms left at DVC for cash to DVC? These details would help everyone have a better understanding of how and why things change and maybe settle some of the tempers down a bit...

As for discounts- sure it helps DVC to get us discounts and I am glad they do, as Doc said. The selling of this idea is not to get more positive vibes about DVC though--- the idea is to get more MONEY FOR DISNEY as a whole...Example:
20% off at some restaurant gets more people eating at a restaurant than were eating there before (you hope) and maybe they come again without the discount, but even if they don't the mark up is so high on food they come out ahead anyway...
This brings me to my next point -HOW DVC convinces Parks to give DVC a break on admissions- IF the sentiments posted here are a true representation -No one, no one here said give me a break on admissions to save me money. What they said was I want to spend my money on something other than admissions...A DVC has say $100 to spend a day- if it is $50 on admissions then that leaves $50 for food/etc.. If admissions are discounted by 40% to $30 that leaves $70 for food/etc... Now here is the sell- Disney has to make way WAY MORE profit on $70 of food sales than on $50 of admission sales. Profit margins soar. IF DVCers are being disingenous and don't increase in park spending at least some--then it won't work out for Disney and they drop the program. I think it's worth a try.

Finally-Dreamfinder2- You don't have to wait for BCV- you can still buy OKW BWV and VWL anytime by clicking on this board's sponsor (or at least one other site I won't advertise here because they are not sponsoring this board- but you can email me if you want it.) RESALES are easy and will be more likely to get you that bang for the buck you say is important to you!

Paul

[WebmasterDoc]

If a favorable AP rate could be negotiated does that mean that our dues would have to rise to pay for the associated "cost" of the contract?

One_cat: That would be one option to get such a discount. The "free" pass program was like that. DVD had to pay about $35 every time one of those passes was used at a park. A contract can also be gained if DVC can convince "parks" (I don't know the name of the division) that a DVC discount will benefit them......and that's the big challenge, as they apparently are tough to convince. Yes, DVC is a profitable component of Disney, but so are the parks. I certainly have a minimal understanding of "contract" law- perhaps someone else can elaborate the fine points.

PKS44: Apparently resort rooms go into a "pool" at CRO. There are no DVC rooms in this pool until a member uses points for a non-DVC reservation. Those points, representing a room reservation, are then placed in the pool for a cash ressie. CRO then has the responsibility to rent the room- not DVC. The other resort is compensated from the pool and DVC contributes the points. The point costs are the negotiated component of the transaction.
As for the park admission- I'm not convinced that restaurant or merchandise profits are greater than admission profits. Once a park reaches a certain level of admission, it costs little more for the next 2,000 (pick a number) guests who enter. Those extra guests represent 100% profit for that division. Unless we can convince "parks" that a discount will attract a group who otherwise wouldn't visit a park, then a discount may be difficult to come by. DVC is working to find the means to convince. All of the arguments we have discussed here have been used already and "parks" apparently remains unconvinced. Why discount something you're already getting without a discount??

[baileybrad]

Really good information, Doc and others. The evaluation on the profits gained by park admissions and the lack of a good reason for a decent discount for DVCers really is a tough argument to make. If the DVC were sold out with no future properities on the boards with their potential buyers in the wings it would be a somewhat more convincing argument that members are growing tired of the parks and need a better enticement to visit them and spend additional cash in the process.

The truth of the matter is that even though a good many longtime members lament the reduction/cutbacks of which Dean and others have so rightly spoken ....newer and future members have no knowledge of what they may be missing and are not bothered by these things in the least. And as long as many members cry out that "we don't use this or that and we don't want our dues to rise because of the DVC supplying things that we don't use" management will continue, in some folks eyes, to "cheapen" the quality of the resorts from what many have experienced in the past. And by constantly implying and requesting that our dues be kept low, we give them the impetus and ready made reason to do so with the built-in excuse to use our own words against us...we are just trying to keep operational costs down like you have asked us to do, whether that is the true driver or not.

Folks are certainly entitled to have an opinion on any and all things. That being said my biggest gripe about some of the responses on the DVC board is the attitude that because I/we don't use/need/want, fill in the blank _______, it is somehow not necessary or it just gets in my way. And because we are all entitled to our opinions, I just wish we could all realize that just because I/we don't utilize a particular service or amenity that doesn't mean it is somehow worthless or unneccessary. I have to believe that, in general, the DVC folks are attempting to look out for our best interests and will continue to try to do the things that are in the overall best interest of the members. It is good to have a dose of reality supplied by Doc through his contact that it is not always an easy fight. Even though, we as members, have a vested interest and can sometimes be a bit bias in our affections for the DVC, when it comes to timeshare programs, the DVC is one of, if not the best. I don't think that this happened by accident. Some credit has to be given to the DVC management folks. Naive maybe but just an opinion. The one thing that I see repeated on these boards is that, we as members, feel that we are taken for granted. It appears that this is definitely true when it comes to many other parts of the Disney beast. Hopefully, DVC management can come up with some solutions in this on-going battle against the dark side. Er wait, now that REALLY was naive, wasn't it?:)

[PKS44]

Again- thanks to Doc for outstanding analysis and information...

On the DC point changes-- it should be clear to everyone now why the points have changed in low seasons like January...If CRO has to try to rent out a BWV room in January -it is harder for them to command as much $$$ as they might get for the room the DVCer took from them (the general public does not see the DVC resorts as better than the GF despite the extras)-at the same time they get no $$$ from the DVC point users -many of whom travel in January to take advantage of the "low" season-who take those DC rooms. I am sure the same goes or will go for DCL.

As to the park admissions- good point Doc..Until WDW shows a marked drop in attendance below break even point the margins are better for the admissions. Still the 10% discount of LOS shows that there is at least some give on the admissions side because the demand on the DVC was not what they were looking for...if/as that demand slackens as DVC members withdraw from buying current admission media at current prices-only then will a better discount be offered.

Paul

[PamOKW]

BWV room in January -it is harder for them to command as much $$$ as they might get for the room the DVCer took from them (the general public does not see the DVC resorts as better than the GF despite the extras)-

I don't agree with this. I think many people would see the difference between a two-bedroom at BWV and a regular room at the GF. I think the general public is becoming very aware of the Home Away from Home options.

The other missing factor is why what has worked in the past, has suddenly stopped working. I still don't think we have the answer and I don't think we ever will.

[PKS44]

PamOKW wrote: "I don't agree with this. I think many people would see the difference between a two-bedroom at BWV and a regular room at the GF. I think the general public is becoming very aware of the Home Away from Home options. "

It is not just that people see a difference. It has to do with how many want that difference. The market demand for a 2 bedroom is lower than for a GF room...

[PamOKW]

Not to argue a point....I'm not sure that it is accurate to say that demand for GF rooms is greater than for BWV. There are currently drastic reductions at the GF with rooms going for $199 or less per night. I think the decrease in demand for WDW rooms is pretty much across the boards. In fact, BWV rooms may have greater demand from folks attending meetings and conferences at the BW, Y&B, or SW&D convention centers looking for overflow space. I do see a difference if the resort is getting the current market price for a DVC room versus a published but pretty much unattainable price for a GF (or other WDW resort) room. There's an ad in today's paper for 40% off WDW packages. If DVC has to pay 40% more than the market rate, then I guess we would be paying 40% more in points to stay. That's what seems to be happening. We already pay a premium to stay at the resort in terms of what we "trade" and now we are also paying an additional premium while others are getting deep discounts. Just isn't right but there isn't much we can do about it.

[jennybobenny]

Great thread. I've said it before and I'll say it again ;) - the DIS needs to fund Doc's trips to HH & WDW. He comes away with so much information, his vacations could be considered fact-finding missions. We appreciate it Doc. :)

[PKS44]

I really don't want this to be an argument, either. I really thought once Doc explained how the system between CRO and DVC works it would settle down some of the dissatisfaction, but apparently not....As I understand it, the $$ price that CRO can get for a room at GF(or YC,BC, whatever) does not really determine how many DVC points they will want for a stay. The factor that determines the points is how much $$ CRO can expect to get from renting out BWV, OKW or VWL...Since January is not a big time for WDW especially larger family groups for WDW-not many people want a 2BR...Those current discounts on DC rooms actually cut across the board-from GF thru any DVC rooms rented out by CRO. They can't expect people to pay rack rate at DVC if they could get 40% off at any DC hotel...so CRO has to mark DVC way down, too... and they have to have availability issues the same as any DVC member looking to use points. Also weekends are probably the easiest for DC to rent out in January, but that same weekend day at DVC "costs" CRO more points, but they cannot charge more to the general public who expect hotel rates that are the same every night...I don't blame CRO at all for making the changes. Look over at the Rent/Trade boards- points as low as $6/pt up to $14pp (rarely gotten)--usually around $10pp. So if that is the current market rate for points, why should CRO expect those points are worth more to them? Those $320/night GF rooms translate in reverse for them to anywhere from 32 points/night (average) to 53 points/night to compensate them...Even if they have to discount those GFrooms by 40%-the points equivalent comes to 19 to 32 points per night...
Paul

[Dean]

PKS44, maybe I read too much into Doc's post. I got two things from his info about the DC and other related items. I heard him say that the price CRO or DVC can get for the DVC room was not a factor and that there were outside WDW forces telling DVC to charge more than they would have otherwise needed to based on market forces. While I don't believe what he was told is completely accurate, I believe he truthfully reported what he was told. There obviously must be consideration given to both sides of the equation to include the price that can be had for the DVC rooms and what DVC must pay for the exchange option.

Your points about weekends costing more points but renting for the same price and that off season will rent for less partly because less families therefore less demand for larger units, are good ones.

I don't believe that DVC rentals affect the price for the DC, etc; too small of a factor. I'd love it if they took the $10 pp rental as the basis, even at rack rates. The trouble is that the points for GF and most of the other options average out to around $5-6 pp at best based on rack rates and less than $5 pp if you take discounts into account. There have almost always been discounts and at a time when there are more and larger discounts available, raising the price seems unreasonable. I do not believe that the DVC resorts are overall more difficult to rent or rent for a larger discount, compared to Deluxe or Moderates at WDW.

[vernon]

Is there anything that says CRO has to "rent out " the DVC points at the same time/dates that DC bookings are made? ( i.e. if a DVC member books a DC stay in February does CRO HAVE to use the coresponding number of DVC points those dates, within a month, at anytime ?)

I can see why it makes sense for the membership for the points to be used "off season" ( keeps the resorts free for us) but I would have thought if using the points to make money was of primary concern there were better times of year to use them. JMHO

[Dean]

Originally posted by vernon
Is there anything that says CRO has to "rent out " the DVC points at the same time/dates that DC bookings are made? ( i.e. if a DVC member books a DC stay in February does CRO HAVE to use the coresponding number of DVC points those dates, within a month, at anytime ?)

I can see why it makes sense for the membership for the points to be used "off season" ( keeps the resorts free for us) but I would have thought if using the points to make money was of primary concern there were better times of year to use them. JMHO Obviously, DVC can decide what days and unit sizes they want to rent out. Remember also that any move on their part to use less points or get a higher demand week using the points they have to rent, will affect members. For example, they could rent them all out for Xmas or other holidays and do well but it would reduce availability for members at high demand times. So there are obviously compromises to be made in this area.

[WebmasterDoc]

there were outside WDW forces telling DVC to charge more than they would have otherwise needed to based on market forces.

I can't find any of my posts in this thread where I said that, so I apologize if that was the impression I gave. I WAS NOT told that DVC had to charge "more than they would have otherwise needed". I was told that DVC does not decide these charges on their own and does not have the responsibility for the reservations using these points once they are converted to "Reservation Status" by a DVC member.

Once points are used for a non-DVC reservation, CRO has a maximum of 11 months to use them...and in most cases much less than that. That is the reason we can't even make a DC reservation (or any other non-DVC) within the last 60 days of a use year- CRO needs reasonable time to utilize the points.

My statements were intended to point out that the point charts for non-DVC resorts are not created solely by DVC. There is significant influence from other "interested" parties within the company. In order to offer these options, DVC must have cooperation of these other corporate entities. The value of each and any DVC option must be weighed by us as individual members. Just because one member feels that a point cost is too high at GF doesn't mean that another member won't still make the same reservation....and be happy with the decision.

One man's heaven..............

[Dean]

Sorry Doc if I mispoke or misinterpreted. I guess what I heard you typing is that there were other forces besides the simple cost and income at work.

[WebmasterDoc]

I guess what I heard you typing is that ........


I'll try to type more quietly in the future! Shhhhhhh! ;)

[JonHM]

Thanks, Doc, not only for your investigative work ;), but for your fine and in-depth reporting of it as well! And thanks to everyone else who has taken part on this thread, great back and forth!

[PamOKW]

There are so many variables it is hard to know what is really happening. I totally understand the concept of DVC rooms bringing in less cash than last year when they are rented. That is true of all WDW rooms (and probably most hotel rooms around the country). However, if that were the simple equation, then the point costs for The Plaza, The Biltmore, etc. should also have gone up dramatically. In fact, I'd expect these outside hotels to go up before a WDW hotel.

Also, the number of points can be divided up by CRO any way possible. They don't need to rent a two-bedroom. they could rent 2-4 studios instead. They also have the flexibility to spread it over different seasons.

Just sticking within the same season I'll try to look at it again.

2001 --
Weekday in January cost 26 points. This is enough points to rent a studio at OKW for 3 nights (plus 2 points left over). Rack rate for the GF Lagoon View is $380. Rack rate for the OKW Studio is $244 . That would bring $732 for the $380 room. Assuming a 40% discount on the OKW room that would still bring in $438 for the $380 room (which when discounted 40% is worth $228).

For 2002 they are asking 41 points which is equivalent to 5 nights in a studio (plus 1 point). That brings in $1,220 for the $380 room. Discounted 40% that's $732 for the $380 room which can most likely be had for $228-$199 per night.

The points could be broken out other ways as well...the 41 points could get 2 nights in a 1-bedroom plus 1 studio night or almost 2 nights in a 2-bedroom. Any way you break it out, the $380 full rack rate can be covered and multiples of a $199 a night GF room can be covered.

As Doc indicates, maybe they will continue to charge these amounts as long as there is a member willing to pay. JMHO, maybe they decided to continue the program in name only just to have it to point to as an example. It is there to be used even if prohibitively expensive.

The cost relation seems out of whack. Even if they are letting rooms go empty and losing points at the DVC resorts the ratio of points to costs is extremely high. The other WDW resorts have not suddenly increased in value versus the DVC resorts. The fair market values are still roughly equal.

[Synonymous]

It sounds to me like the best way to think of things is to consider DVC, other Disney resorts, the parks, etc., each as separate companies, with their own incomes and profits. They deal with each other by necessity, but they aren't going to hurt their own profitability by giving things away to other divisions. Any discounts DVC members get on parks, non-DVC rooms, restaurants, or recreation has to be supported by a good business case for the division giving the discount.

DVC, naturally, wants to get the best disocunts and perks it can for us, because such things increase DVC's appeal and profitability. The other divisions, though, couldn't care less about DVC's profitability.

Somewhere there must be a division that looks to the overall profitability of the Disney empire and, one would think, has the Big Picture in mind. But, although DVC may be very profitable, how big are those profits in the overall scheme of a billion dollar company? I would guess (and that's all it is) that profits from DVC are dwarfed by profits from the theme parks. They are probably even much less than the profits from the numerous non-DVC resorts. So there wouldn't be much incentive for the upper Disney management to go out of its way to make sure DVC gets perks at the expense of the other divisions.

[caverill]

Thanks for the information Doc!!!! You sure have great connections.

We just joined in 2000, so I don't have a lot of history on DVC.

I just don't see what the big deal is about the points at non-DVC resorts raising. One of the reasons we purchased DVC was to protect ourselves against the raising cost of staying on-site.

In 1994 we paid $ 119 a night at DxL, in 1999 we paid $169. This was the reason we joined DVC.

It shouldn't be a huge suprise that the points to stay at non-DVC resorts increased and will need to increase over the next 40 years.

If you really want to stay at non-DVC resorts, you may be better of paying cash and using your DVC points in another way.

Just my thoughts....

[Dean]

I received a returned a call today to MS about some info I had previously requested and was interested to find out some additional info that may apply to some of this. First, DVC only rents out about 75% of the rooms given to CRO. Second, DVC values our points at basically $5.64 per point for OKW, or basically the price divided by the term plus the yearly fees.

I also learned something else and that is that anyone who gets an exchange can call MS and get dining reservations, do requests and the like.

[PamOKW]

Clark -- Not knowing the history is why you don't see a concern. A system has been in place for nearly 10 years to effect the trade between a DVC room and other WDW resort rooms. Only minor changes of a point or two have ever occurred. The trade included a premium use of points to stay at the WDW resort. This year there has been a fairly dramatic shift in points needed to stay at these non-DVC resorts. Curiously, points to stay at resorts not owned by DVC haven't experienced these dramatic shifts so the idea that the price for DVC rooms went down so low that they can't pay for a WDW non-DVC room doesn't seem to hold.

It's not earth shattering but it is disconcerting to have a radical change with little explanation.

It would be like the dues. We know they can legally go up 15% in a year but for the last 5 years they have stayed stable. If you open this year's bill and it is up 15% you might want to have some explanation other than "because we can".

[PKS44]

The market is a wonderful thing.
If the DC is too expensive, few DVCers will utilize it. PamOKW's calculations suggest that the DC exchanges were nicely profitable for CRO, but now they are being gluttonous. If true, then they will either laugh all the way to the bank, or they will come back down to earth with lower points so they can get their hands on those supposed profits again.
If you don't like it-stay at home (I mean your DVC home).

I personally doubt that PamOKW's calculations are a fair representation. First, there is nothing like the demand for GF rooms anywhere on WDW property. That is why they command the most money, and the most points of all resorts. Certainly the market demand is NOT equal to OKW, no matter how much "better" it is...Dean says CRO ends up eating 25% of the DVC points they hold. So let's take those 2002 pts--41 points used for a GF weeknight (the most likely time a DVCer will use points) knock down to 31 pts they will get to use Most people using CRO want a Fri and a Saturday, especially in January. Those 31pts won't cover it (20pt/night) It's 1.5 weekend nights at maybe $200/night or $300. Now some of that 25% loss is based on the inability of CRO to book weekday rooms, I'm sure, so the calculation is overly harsh. But it is easy to see how 26 pts would not be worth it to the GF. I suspect the real answer for what the market will bear and be profitable for CRO is somewhere between 26 and 41/weeknight.

Paul

[PamOKW]

I agree this is like putting together a puzzle without all the pieces. I'm not sure how they use points that come from a Vero or a HHI Home Resort owner. Whether they must be used at those resorts or can be transferred to other DVC resorts.

However, even if you feel GF is booked solid (then why the $199 December rates this year?) it still doesn't explain the changes in the other Deluxe resorts. Even the Moderates and Ft. Wilderness are running high.

Regular Season rate for Ft. Wilderness is 27 points. Rack Rate is $254. Currently discounts range from $134 to $149.

Points for Ft. Wilderness are 19 weekdays. Using Dream Season as a "medium" point to compare....that would be equivalent to 2 nights in an OKW Studio (short 1 point). Rack rate is $269 so that is more than double in a rack-to-rack comparison. Currently OKW studios are available at a discount of $179. That's still $358 to cover a Rack Rate of $254 and a "real" cost as low as $135.

Poly WV is 44 points Su-Thurs. Rack Rate $405 and discount price of $229. 44 points will get more than 4 nights in an OKW studio or almost 2 weekend nights. At 4 times $269 or even 2 times $269 the costs are covered easily. Using the OKW discount of $179 the discount to discount cost is easily covered and the rack rate is pretty much covered as well. The two weekend nights at discount would fall short of the rack rate but $139 above the discount at the Poly. If a DVC member booked a weekend night it would cost 79 points or the equivalent of 3 weekend OKW nights or nearly 8 weekday nights.

There isn't much point in belaboring this. It is a drastic change and I imagine it will cut down in member usage during most of the year. Maybe it's better to let rooms go empty or to drastically reduce them rather than to continue to provide an option to DVC members. I'm just saddened to see this happen but it won't really have that much direct impact on me. I'll stop playing the broken record and move on to other topics.

[TroyWDW]

I think Synonymous has the correct thought process. Each entity (Parks, the Resorts, etc.) is a separate profit center for Disney. Each business manager is trying to maximize the profitability of their business unit. The business managers at the Grand Floridian have little interest in the satisfaction of DVC members regarding the Disney Collection program.

For example, DVC approaches the Grand Floridian to obtain a one year contract for DVC members to stay at the GF in 2002. The GF business managers then quote prices (in dollars, not DVC points!) that must be paid by DVC for each stay. The DVC folks then have a choice, accept or decline the contract.

At my company, we call this the "Fear and Greed" negotiation.

The seller is attempting to be as greedy as possible and setting the price as high as possible, to the point where the buyer will almost walk away and not sign the contract.

The buyer is trying to instill fear in the seller that we will walk away if they don't lower the price. The buyer pushes the seller to the point where the seller almost walks away.

(Note that in this negotiation, the price of the home resort DVC room has no impact on the contract between DVC and the Grand Floridian.)

Assuming that DVC actually utilizes a large number of rooms at the other Disney Resorts, then
we could have expected the price for the Grand Floridian to go down in 2002. With a soft business climate, DVC should have been able to negotiate a lower price. We should have tracked with the other market prices.

But, if DVC uses a small number of rooms at the other Disney Resorts, then we have very little negotiating power. The "Fear" side of the equation is very small and the managers at the GF can raise the price and we have to take it or leave it. Big customers get discounts, little customers get price increases.

The DVC managers could have walked away from the contract, but then we wouldn't have any ability to stay at the Grand Floridian. Instead, they apparently negotiated the best deal they could and gave us the option to decide for ourselves whether to stay at the GF. Imagine the response from the DVC members if DVC had announced that there would be no Disney Collection in 2002 due to the high prices that the other Disney Resorts wanted.


The DVC folks have a fiscal responsibility to translate the monetary costs of the contract into DVC points. My uneducated guess is that DVC did not change this translation process and that the increase in points in 2002 is due to the increase in the contract price point with the other Disney Resorts. I believe this is the statement that Doc relayed to us.

It appears that for 2002, Greed won out over Fear.

Troy

[kem330]

PKS- I respectfully disagree with your logic that GF is more expensive because it is more in demand. It is higher in cost because it is the most upscale place on property in the eyes of Disney. It is more luxurious and well located and therefore more expensive to stay there. But I wonder which resort truly is in higher demand ?

[PKS44]

I believe GF is the most expensive for the same reason anything is expensive- because the seller can get away with it. If the demand for the place were not high enough the price would come down...It could be the most upscale place in the universe and still not command a high price if people were not willing to pay that price. That is how I am defining demand, not by the total number of people requesting a place. The All Stars probably would be the most in demand by such a calculation...
I think TroyWDW's logic is mistaken in that it contradicts what Doc tells us is the process...DVC does not negotiate a cash price. DVC deposits the DVC points to CRO for the reservation at any nonDVC hotel. CRO has 11 months to use those points at a DVC hotel. CRO collects the cash for that reservation.

Paul

[prplcrzy]

I think that Troy's assessment of the situation is pretty close. That is the way all negotiation goes. If there is no bargaining power on one side it is not really a negotiation, is it? It's more of a take it or leave it attitude and they obviously had to take it. Look how mad everyone is about the rise in points to use the DC. How do you think everyone would have reacted if they said we are not offering it any more?

[Dean]

Unless DVC is willing to walk away from the table or list only the resorts that give an "appropriate" price, there is little leverage.

[PKS44]

What none of us knows is what the Profit is to CRO to offer the DC to DVC...If they were making any money on the deal and they push the prices too high- then people won't use the DC and they will LOSE...If they were not making a profit- then they had no choice but to push prices higher. This is something that will change over the next several years, the "invisible hand" will work it all out. In the meantime if you are unhappy you have a very easy way to show that-stay in your DVC home instead. I really don't see that as such a sacrifice.

[prplcrzy]

pks44,

I see your point, I was just trying to point out that there is really no negotiation if one side holds all of the cards. There never will be negotiations with the DVC for anything, it will just be a take it or leave it kind of thing. I have no problem with my home resort, but I would like to see them offer meaningful things to the DVC members, after all we did (and are doing) something for them. They (Disney, not DVC) are not doing anything for us because they don't have to. If they don't have to they won't, not very magical if you ask me.