# Why are cash and point ratios different?

Discussion in 'Purchasing DVC' started by dmunsil, Jun 8, 2013.

1. ### dmunsilDisney Uber-Nerd

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While I was doing all the fiddling with NPV (Net Present Value) of DVC I noticed that the point values are nearly (but not exactly) proportional to square footage. A lot of the resorts seem to be based on a system of similar-sized boxes, where one box is a studio, two boxes is a one-bedroom, three boxes is a two-bedroom, and six boxes is a grand villa. In those resorts, the point cost for a one-bedroom is roughly 2X a studio, a two-bedroom is 3X a studio, and a grand villa is 6X a studio. Look at Boardwalk for an example of this.

However, the cash prices don't follow this at all. For example, Boardwalk villas for cash during "regular" season, whatever that is, are \$417, \$586, \$945, and \$2039, respectively, which makes the ratios (with a studio as 1X) 1X, 1.4X, 2.3X, and 4.9X.

The odd one out is the studio. If the studio was \$340, the ratios would be roughly similar to the points ratios. However, that would make a studio lower in price than a room at the Boardwalk Inn, which would be problematic. A standard view Boardwalk room is the same price \$417, which makes the studio kind of a steal for a cash customer. Right? It's slightly bigger, and has a microwave and refrigerator, and I assume access to the DVC laundry. Is there a downside to a DVC studio relative to a regular hotel room?

I'm not sure what to make of this. My NPV calculator says that the one-bedroom has the lowest cash/point ratio and the studio has the highest. The two-bedroom is closer to the one-bedroom than the studio.

Perhaps there's just waaaay more demand for simple hotel rooms and a studio is a very equivalent substitute, which drives up their price. There isn't as much call for a fancy multi-room apartment for cash customers, so Disney can't get double or triple the price.

I have no conclusion about all this. It's just more food for thought.

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There may be a minimum cash price? Just a guess.

4. ### CarolMNDVC Co-ModeratorModerator

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Total point value is set when the resort opens - BWV opened in 1996. I suspect cash prices have changed a lot since then. There have been a small number of point re-allocations, but the changes were mostly between the cost of a weekday night vs a weekend night. DVC is limited by contract in what it can do to point values. The objective is to keep the resort at or near 100% occupancy, 365 days per year.

Cash prices are set differently and IMO, related more to what other resorts charge (and seasonal crowd levels) than than any relationship to points or square footage. Note that point seasons are not the same as cash seasons.

For me, the bottom line is that Disney tweaks the cash rates & discounts regularly to get the most revenue it can out of those rooms. I think you are trying to compare different kinds of apples.

5. ### lovesdumboDIS Veteran

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I like the regular rooms at BWI better than the studios. The reg rooms sleep 5 with 2 real beds and a daybed. Reg rooms feel bigger because they don't have the kitchenette but they still have fridge & coffee maker. Reg rooms also have a desk.

6. ### DebbieBDIS Veteran

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Studios are good for a couple with the queen bed and sleeper sofa but not for unrelated adults. I'd rather have the 2 queen beds and daybed if I was there with friends.

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I've done a studio with a friend staying on my points. As I paid for the room with points she slept on the pull out bed and I got the regular bed. If we did it again I would book OKW with the two queen beds though.

8. ### dmunsilDisney Uber-Nerd

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Hey, what's not fun about comparing different kinds of apples?

I agree, though there's a little part of me that says they "should" be similar, because I'm used to markets where a discrepancy like that wouldn't be so large and wouldn't persist. You wouldn't think I would need a reminder that the world of DVC and hotel rooms is not a perfectly efficient market.

I'm thinking to myself, "Go long hotel rooms and short DVC studios! Or wait...is it short hotel rooms and long DVC studios?"

Too much reading investing books, clearly.

Right, of course. I forgot about the pullout and the desk. As it turns out, I just checked cash prices for rooms and studios at some of the resorts that have both, and in several cases the room is a little more expensive than the studio. Not by a lot, but more. So it seems like the cash demand for studios isn't quite as high as for regular rooms. Especially given that they have massive numbers of rooms and relatively few studios available for cash.