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- Aug 25, 2007
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Do you rent out your points yourself or use a “points broker”?
NOTE: Somehow, any discussion of renting points can quickly turn into a divisive conversation. Please don't let that happen. Let's have an interesting and helpful dialog in a friendly and respectful manner. I will try to present what I think is a fair and balanced view in this post. I have no hidden agenda. I'm just presenting my thoughts. So, let's keep this discussion interesting and engaging, shall we?
Personally, I have never rented out my points. I bought them for my vacations at Disney and apparently haven't got tired of going to Disney multiple times a year - year after year.
However, sometimes DVC members are unable to use all their points, either because they can’t take time off for a vacation or perhaps want to take a non-Disney vacation, and/or they’re looking for a way to offset the cost of annual dues. So, instead of banking the points, they choose to rent out their excess points.
If I had excess points, I would try to rent them out.
THE EVOLUTION OF DVC POINT RENTALS
In the early days of DVC, renting points was purely a private transaction between two individuals – the DVC owner and the renter. Both the owner and the renter had to handle all the legwork and due diligence themselves.
The very popular DVC Rent/Trade Board on DISboards was created to act as a sort of “classified ads” section to bring DVC members who had excess points together with people looking to rent points and save a lot of money – getting deluxe rooms for a moderate price.
In recent years, renting points has gone from relatively uncommon to a bit more mainstream practice. The DVC Rent/Trade Board on DISboards continues to pair up owners with renters.
In 2005, the first DVC “points broker” sprang into existence.
A points broker not only helps bring together owners looking to rent their excess points with guests wishing to book a reservation, they also require much less legwork by the owner – saving the owner the time it takes to talk with prospective renters, and from having to handle all the questions and issues that may occur with a rental transaction. It just makes renting your points more convenient.
A well-established points broker does a lot of advertising on the internet, and typically has more renters than points, so you may rent your points out faster as well.
WHAT ARE THE DOWNSIDES TO USING A BROKER?
The downside, of course, is the points broker doesn’t do this for free. They take a cut or portion of the rental proceeds as payment for their services. So, you won’t get as much cash for your points as you would if you rented them yourself.
The other difference is you’re pretty much locked into the standard payment plan the broker uses.
If I did rent out my points, I would likely use a broker, as the small fee is worth not having to bother with everything the broker will take care of for you.
WHY WOULD A RENTER USE A POINTS BROKER?
A potential renter is not required to do all the due diligence and precautions (noted in the DVC Rent/Trade Board sticky posts) when using a points broker. In fact, they can't do any due diligence, as they don't know who the owner is they are renting from. You work directly with a broker, and they take care of everything for you. It's almost like you're calling up Disney reservations and booking direct with Disney.
Except it isn't. Renting DVC points – whether directly or via a broker – still involves some risk. The risk is that the owner the broker is dealing with can still be flakey, and the renter could find themselves without a reservation. That risk is what gets the renter the great deal. If a renter wants more protection and stronger assurances, they can pay twice as much and book directly with Disney.
I believe many people looking to rent DVC points mistakenly believe that using a points broker somehow magically protects them from any risk. Despite the fact that using a points broker may feel like a more secure transaction, brokers don’t really give renters any more protection in the event of cancellation than using an owner directly. They do provide a guarantee that you won't lose your money.
A points broker offers more assurance than renting direct, but there are still risks - perhaps not losing your money, but of losing your reservation.
IS THE VOLUME OF RENTALS SHIFTING FROM INDIVIDUAL TRANSACTIONS TO BROKERS?
Despite the volume of individual transactions we get through the popular DVC Rent/Trade Board here on DISboards, I think the point brokers do a lot more volume these days than the volume of individual transactions.
It will be interesting to see the poll results from this thread. I would think that among those DVC members who know nothing about DISboards, a very high percentage use a points broker.
Things have changed. As I stated above, in the early days of DVC, renting points was purely a private transaction between two individuals. However, now, I believe that using a points broker is becoming more the standard rather than the exception.
WILL DIRECT RENTALS BECOME MARGINALIZED OVER TIME?
All this makes me wonder if direct rentals with individual DVC members will become more marginalized over time.
Yes, there are various DVC members who have been renting out points for years, and have established a solid reputation and relationships with people who would rather rent than buy.
However, more and more, other individual owners without that network who want to rent direct will have to compete on price. If I, as a non-member, see VGF available from a broker at a certain price and also available from an individual DVC member on the DVC Rent/Trade Board for the same price – which would I choose? I would surmise the average person would pick a broker, for the perception of security.
The only way the average person would go with a direct transaction with an individual DVC owner would be if it cost less. That’s why I sometimes see some DVC members complaining about people trying to get a bargain deal and offer a lowball price.
True, individual owners will most likely get repeat business from past satisfied customers. But unless they compete on price, will they draw in less new customers?
I think the point brokers own a large enough market share to collectively own the point rental market. They are, in fact, market makers who set the floor and ceiling prices for DVC rentals. Individual DVC owners have to set their prices based on the brokers.
The brokers just need to keep point rental costs less than paying Disney direct for a room, and high enough so that DVC owners are incentivized to use a point broker, while maintaining a healthy margin of their own.
Others will say that the point brokers won’t have points from new DVC resorts (VGF and PVB) to rent, so due to the law of supply and demand, owners have leverage and can raise prices, but I think that’s an incorrect assumption.
Remember, the average Joe DVC Member doesn’t know about the DVC Rent/Trade Board, and when he uses Google to rental he will discover and turn to a points broker to rent their points.
And there are a lot more average Joe DVC members than there are active DVC members on DISboards (despite the large size of the DISboards membership). All those Joe DVC members are going to use a points broker to rent their points.
So, points will be available from the brokers. Individual DVC owners won't have the market cornered.
Just like big, cheap Wal-Mart stores come into a neighborhood and competes successfully against small family businesses, so too will the large point broker companies come to dominate the point rental business.
An average Joe Renter will chose an established company with a web site and a full sales staff to answer their questions at any time - over an individual renter who doesn't have a dedicated staff and web site - unless the individual renter offers a lowball cost, or superior service. there has to be some differential.
OK, I've laid out my thoughts.
What do you think?
NOTE: Somehow, any discussion of renting points can quickly turn into a divisive conversation. Please don't let that happen. Let's have an interesting and helpful dialog in a friendly and respectful manner. I will try to present what I think is a fair and balanced view in this post. I have no hidden agenda. I'm just presenting my thoughts. So, let's keep this discussion interesting and engaging, shall we?
Personally, I have never rented out my points. I bought them for my vacations at Disney and apparently haven't got tired of going to Disney multiple times a year - year after year.
However, sometimes DVC members are unable to use all their points, either because they can’t take time off for a vacation or perhaps want to take a non-Disney vacation, and/or they’re looking for a way to offset the cost of annual dues. So, instead of banking the points, they choose to rent out their excess points.
If I had excess points, I would try to rent them out.
THE EVOLUTION OF DVC POINT RENTALS
In the early days of DVC, renting points was purely a private transaction between two individuals – the DVC owner and the renter. Both the owner and the renter had to handle all the legwork and due diligence themselves.
The very popular DVC Rent/Trade Board on DISboards was created to act as a sort of “classified ads” section to bring DVC members who had excess points together with people looking to rent points and save a lot of money – getting deluxe rooms for a moderate price.
In recent years, renting points has gone from relatively uncommon to a bit more mainstream practice. The DVC Rent/Trade Board on DISboards continues to pair up owners with renters.
In 2005, the first DVC “points broker” sprang into existence.
WHY WOULD AN OWNER USE A POINTS BROKER?A points broker not only helps bring together owners looking to rent their excess points with guests wishing to book a reservation, they also require much less legwork by the owner – saving the owner the time it takes to talk with prospective renters, and from having to handle all the questions and issues that may occur with a rental transaction. It just makes renting your points more convenient.
A well-established points broker does a lot of advertising on the internet, and typically has more renters than points, so you may rent your points out faster as well.
WHAT ARE THE DOWNSIDES TO USING A BROKER?
The downside, of course, is the points broker doesn’t do this for free. They take a cut or portion of the rental proceeds as payment for their services. So, you won’t get as much cash for your points as you would if you rented them yourself.
The other difference is you’re pretty much locked into the standard payment plan the broker uses.
If I did rent out my points, I would likely use a broker, as the small fee is worth not having to bother with everything the broker will take care of for you.
WHY WOULD A RENTER USE A POINTS BROKER?
A potential renter is not required to do all the due diligence and precautions (noted in the DVC Rent/Trade Board sticky posts) when using a points broker. In fact, they can't do any due diligence, as they don't know who the owner is they are renting from. You work directly with a broker, and they take care of everything for you. It's almost like you're calling up Disney reservations and booking direct with Disney.
Except it isn't. Renting DVC points – whether directly or via a broker – still involves some risk. The risk is that the owner the broker is dealing with can still be flakey, and the renter could find themselves without a reservation. That risk is what gets the renter the great deal. If a renter wants more protection and stronger assurances, they can pay twice as much and book directly with Disney.
I believe many people looking to rent DVC points mistakenly believe that using a points broker somehow magically protects them from any risk. Despite the fact that using a points broker may feel like a more secure transaction, brokers don’t really give renters any more protection in the event of cancellation than using an owner directly. They do provide a guarantee that you won't lose your money.
A points broker offers more assurance than renting direct, but there are still risks - perhaps not losing your money, but of losing your reservation.
IS THE VOLUME OF RENTALS SHIFTING FROM INDIVIDUAL TRANSACTIONS TO BROKERS?
Despite the volume of individual transactions we get through the popular DVC Rent/Trade Board here on DISboards, I think the point brokers do a lot more volume these days than the volume of individual transactions.
It will be interesting to see the poll results from this thread. I would think that among those DVC members who know nothing about DISboards, a very high percentage use a points broker.
Things have changed. As I stated above, in the early days of DVC, renting points was purely a private transaction between two individuals. However, now, I believe that using a points broker is becoming more the standard rather than the exception.
WILL DIRECT RENTALS BECOME MARGINALIZED OVER TIME?
All this makes me wonder if direct rentals with individual DVC members will become more marginalized over time.
Yes, there are various DVC members who have been renting out points for years, and have established a solid reputation and relationships with people who would rather rent than buy.
However, more and more, other individual owners without that network who want to rent direct will have to compete on price. If I, as a non-member, see VGF available from a broker at a certain price and also available from an individual DVC member on the DVC Rent/Trade Board for the same price – which would I choose? I would surmise the average person would pick a broker, for the perception of security.
The only way the average person would go with a direct transaction with an individual DVC owner would be if it cost less. That’s why I sometimes see some DVC members complaining about people trying to get a bargain deal and offer a lowball price.
True, individual owners will most likely get repeat business from past satisfied customers. But unless they compete on price, will they draw in less new customers?
I think the point brokers own a large enough market share to collectively own the point rental market. They are, in fact, market makers who set the floor and ceiling prices for DVC rentals. Individual DVC owners have to set their prices based on the brokers.
The brokers just need to keep point rental costs less than paying Disney direct for a room, and high enough so that DVC owners are incentivized to use a point broker, while maintaining a healthy margin of their own.
Others will say that the point brokers won’t have points from new DVC resorts (VGF and PVB) to rent, so due to the law of supply and demand, owners have leverage and can raise prices, but I think that’s an incorrect assumption.
Remember, the average Joe DVC Member doesn’t know about the DVC Rent/Trade Board, and when he uses Google to rental he will discover and turn to a points broker to rent their points.
And there are a lot more average Joe DVC members than there are active DVC members on DISboards (despite the large size of the DISboards membership). All those Joe DVC members are going to use a points broker to rent their points.
So, points will be available from the brokers. Individual DVC owners won't have the market cornered.
Just like big, cheap Wal-Mart stores come into a neighborhood and competes successfully against small family businesses, so too will the large point broker companies come to dominate the point rental business.
An average Joe Renter will chose an established company with a web site and a full sales staff to answer their questions at any time - over an individual renter who doesn't have a dedicated staff and web site - unless the individual renter offers a lowball cost, or superior service. there has to be some differential.
OK, I've laid out my thoughts.
What do you think?
LOL
Bill
