are DVC members subsidizing disney room rentals?

[Chuck S]

I'm trying to understand exactly what you mean by "subsidizing cash rentals."

When you consider that most of the cash rentals ARE put into cash inventory to offset the cost of member trades outside the system, Disney would not actually owe members anything, as the dues paid by the member that traded out would cover those costs.

As others have explained, some cash rentals come from breakage inventory...meaning units unreserved b y DVC members at 60 days before arrival. This is the smallest portion of inventory available for cash, and can be reclaimed by DVC for owners if they aren't already reserved for cash. A percentage of the revenue goes to offset our dues.

If you're asking does Disney make a profit from our dues, the answer is yes, there is a management fee percentage built into the dues... I think it is 12% that we pay Disney for their management.

Overall, to a certain extent, all timeshares that offer cash reservations do receive some minor funding (like housekeeping, etc.) from the owners, and I would expect DVC to be no different..it is part of normal timeshare operation. At the same time, DIsney also gives DVCers some perks, like AP discounts, shopping and dining discounts, so I think it is pretty much a wash overall, with the exception of the contracted management fee.

 

[Brian Noble]

Rather, it is understanding the DVC process for cost allocation between their room rentals, our DVC units and application of our annual assessments.

I think the issue may be that you do not understand where "room rentals" come from. At the sold out resorts, they generally come from either Members who do not use their points ("breakage") or Members who relinquish (some of) their points for non-DVC but Disney-owned vacation options. To pay for the latter, rooms backed by the relinquished points are rented, and the proceeds used to pay the cost of the cruise, guided tour, or hotel stay in question.

At resorts that are not yet sold out, the resort costs are divided based on how much of the inventory is "declared". Disney is required to pay the fraction of costs for the undeclared inventory (and is free to rent that inventory as they choose). They probably are also responsible for the costs of declared, but not yet sold inventory for so long as it remains unsold.

DVD keeps a certain percentage of the ownership of the resort rooms/reservation time, 2% to 4% of the resort even when sold out. It can rent the time represented by its retained ownership interest. It also, as mentioned above, can rent time equivalent to points traded out. For both of those events DVD does not actually pay dues.

The maintenance reserve is generally not included in the resort cost computations, and while the rooms backed by it may be rented, they would be treated as breakage as I understand it. (More often, it would actually be used for maintenance---for example, when the OKW buildings were closed for refurbishment that was booked against maintenance intervals.) The "traded out" points do not have dues paid by DVCMC/DVD, but the dues accruing to those points *were* paid by the Members who relinquished them. Likewise, "real breakage" is also backed by points for which Members paid dues, but did not use for any vacation option.

So, the short answer to your question is: "No, you are not subsidizing Disney's rental activities"...unless breakage time accounts for more than 2.5% of total time in the resort. You can get the details for what is *supposed* to be paid by each party in the public offering statement plus Florida timeshare law. As for what is *actually* paid...

my question has nothing to do with audited financials.

I think you are wrong here. To know whether Disney is "playing by the rules", you also need to know (a) what the books say and (b) whether or not they are accurate.

Ultimately, I understand what you are saying about trust-but-verify. And, if you are so inclined, you should start by carefully reading the Public Offering Statement. But, to really understand what is going on, you will need to invest a significant chunk of time---and you will never know for sure unless you are on the team performing the audit.

 

[JimMIA]

Troll alert.

 

[arthur06]

Troll alert.

However, this thread has brought out the HOF of the disboards!

I mean reading the posts, its almost like Mantle, Ruth, Williams, Cobb...

 

[Dean]

Agree. But at the same time, a layperson will not recognize procedural or accounting errors.

DVC isn't going to spoon-feed inconsistencies to anyone who stops by to look at the books. If something inappropriate is passing the auditors, it seems unlikely that even someone with an accounting background would learn much without spending many hours reviewing program operations and finances. And there are limits to the data that DVC will disclose.

There really aren't any limits to the data that DVC will disclose. There are great limits on the items that DVD will disclose however. One must separate the two. DVC will limit HOW they disclose the information. Essentially, as I understand what is required under FL law, they will disclose to you anything you request but you must go in person and you must specify what you want to see. DVD will not disclose much, esp contracts that come under their side.

Again, if all was based on trust, Disney would not have had us sign contracts nor use them to assure that we are meeting our DVC obligations. I am simply trying to understand how our contractual agreement is being administered. Help anyone?

No doubt trust only goes so far, however, if one doesn't either trust the timeshare or get a good enough deal to take a chance they will screw you, don't buy in to that system or really any timeshare. Also, one must understand the contractual language and setup. As is regularly proven on DIS, many people don't while making a lot of assumptions and/or accepting the statement of a timeshares sales person as if it were contractual.

Here's a simple formula. Assume they can and will change everything you like about the system over time. Another approach is to take the HOME RESORT POS and read it as if you would read a state law. That means figuring out what can and can't be allowed under such language. For some things there has to be language that specifically allows certain options and for others, there would have to be language that specifically prevents certain actions. I spent around 3 years on a State of FL council where we took a new law and crafted the rules from scratch to implement the law. It was a real eye opener seeing what you can and can't do in such a situation and dealing with the state legal department on a regular basis.

 

[Samaya]

I am concerned that we do not have the information to determine if what DVC members pay for points and maintenance subsidize Disney's cost to rent DVC units. For example, how many units are rented by Disney? Are DVC members
not able to get reservations because Disney has rented the rooms for its profit?
Do we subsidize the costs of the additional services room enters get?

Would appreciate comments and thoughts from all! Thank you.

Ref your question Do we subsidize the costs of the additional services room enters get?


In Feb 2010 we booked directly through Disney UK for 15-nights in a 1-bedroom at OKW during Nov 2010.

We were surprised that we received daily housekeeping just like in a regular hotel room, new towels, replenished coffee, sugar, soap, shampoo, washing powder, etc, remade bed and got rid of trash.

For a member requesting an extra Trash & Towel Service for a 1-bedroom I think it would cost about $20.00 per day while a full clean is $45.00 per day.

So I wonder if Disney transfers into the OKW accounts an amount to cover the additional costs like daily housekeeping that members don't receive for free?

 

[vicki_c]

Ref your question Do we subsidize the costs of the additional services room enters get?


In Feb 2010 we booked directly through Disney UK for 15-nights in a 1-bedroom at OKW during Nov 2010.

We were surprised that we received daily housekeeping just like in a regular hotel room, new towels, replenished coffee, sugar, soap, shampoo, washing powder, etc, remade bed and got rid of trash.

For a member requesting an extra Trash & Towel Service for a 1-bedroom I think it would cost about $20.00 per day while a full clean is $45.00 per day.

So I wonder if Disney transfers into the OKW accounts an amount to cover the additional costs like daily housekeeping that members don't receive for free?

Disney pays DVC for the use of that room (that's how DVC gets the money so a member can trade out to a cruise, Disney collection, etc.) - so yes, it stands to reason that PART of that payment includes the cost of providing services @ the resort.

 

[Lil' Grumpy]

troll alert? must be a time share wanting to deflect the real issue.

in dvc we trust, means to do things right...when it comes to
dues. isn't the primary purpose for dues is to maintain normal
"wear & tear" by owners using dvc properties. why wouldn't dvc
want to show how they are managing these funds? it isn't dvc
that i am concern with but the "people" in their organization.

it seem anytime an owner questions the ways things are being
done, a poster pops out of no where to "scolds" and redirect
the main issue. as an owner,
i always ask if the dvc workers are also owners.
so far 100%. so who making sure of their inside trading are
by the rules. [ like putting the rooster in charge of the
hen house].

by golly,i am alarmed of our first dvc experience. safety issues, where
i saw & heard inappropirate behaviors that made me concern for
my family safety. second, normal 'wear or tear"- bull! what we
saw was major damages to the building & our second room, +
"reports" from the workers where shower heads were stolen,
air mattress, tables covered with nail polish, so on & so........

two factors are worrisome. first, many of my questions & their
responses have been either inaccurate or ignored. second,
many of the responses here, [ covering many issues] are
inconsistent from person to person.

we pay dues. therefore, we have the right for accountability. when
workers tell me, that they are reporting vandalism but are being
told to ignore it... then our dues better not being used for this.
[ do you think the managers are paying it out of their salaries? ]

* specifically- the tile was destroyed in one elevator. the room
carpet was ruint. the appliances sustained major dents. the
light over the table was broken. the table top was destroyed. one
door stop was bent over, while the other was gone- leaving
a hole in the "ruint" carpet. ok? who going to pay for this?

it should have been those who did it in my ways of thinking.

 

[Figment2]

by golly,i am alarmed of our first dvc experience. safety issues, where i saw & heard inappropirate behaviors that made me concern for
my family safety. second, normal 'wear or tear"- bull! what we
saw was major damages to the building & our second room, +
"reports" from the workers where shower heads were stolen,
air mattress, tables covered with nail polish, so on & so........

Wow, all I can ask is where the heck have you stayed?! I've been a DVC member for over 10 years and although have seen "normal wear and tear" it was nothing as you described!

And safety concerns? I sometimes travel by myself and have always felt safe (even during a hurricane).

 

[Deb & Bill]

Wow, all I can ask is where the heck have you stayed?! I've been a DVC member for over 10 years and although have seen "normal wear and tear" it was nothing as you described!

And safety concerns? I sometimes travel by myself and have always felt safe (even during a hurricane).

You must have missed those posts. They stayed at BLT.

 

[Lil' Grumpy]

yes, blt. and there were many, many more damages.

as one can see by the door, where the doorstop was.

exit door , that was wide open without anyone around. i noticed when the door was closed, there was pretty large gap. anyone could "bang"
it opened.

it is obvious that this is a very expensive door. it has
been damaged not by normal "wear & tear", but by vandalism. i would
think security cameras would show who did this. no one is monitoring
the type of activities that was going on. so who being "stuck" with
the bill?

 

[Chuck S]

To me it looks like the damage is a combination of factors. Some of it may indeed be vandalism, but a lot of it also looks like poor contruction materials and craftsmanship.

DVD should be looking to the contractors and subcontractors for some remedies and replacements, as they did for the plumbing and broken pipes at BWV or BCV. Unfortunately, that can take some time and does not present itself well to the owners and guests of BLT.

I would have been tempted to contact the state timeshare board, if after contacting DVC, I did not feel I received adequate explanations of the situation. I also have to wonder if the "disappearing" shower heads are also more a case of poor materials, with water damage to the walls from seepage, more than a case of theft. As much as I think OKW could have done a substantially better job with the recent rehab, I'm glad I do not own at BLT.

 

[crisi]

The big thing you'd need to understand is how Disney sets up their cost accounting. I don't know, but let's say for example the complementary toiletries.

I'd imagine Disney Resorts (which are not DVC) buys toiletries for all the resorts in bulk. It probably, but may not, then charge each resort for toiletries as they are bought. (My company wouldn't do chargebacks for a situation like that though, so who knows if Disney does). Now, if they do chargebacks, do they treat BWV and BWI as two seperate resorts or as one for charge back purposes. There has been some evidence that at a shared resort some cost accounting treats BWV/BWI as a single resort (i.e. our transportation answer a few years ago implied that) but, as I recall, nothing in GAAP says they have to be consistant when it comes to this sort of cost accounting, so its possible some things treat BWI/BWV as two resorts and some charges treat them as one resort, and some charges are marketing expenses and some aren't billed back at all.

Now, lets say they do treat toiletries going to BWV as a seperate chargeback. Now, do they bother to track which toiletries go into cash rooms and which go into points rooms? If they do, then toiletries would not be subsidized by dues, but if they don't, then they would. But if the Boardwalk gets one big shipment of toiletries that is never billed into DVC at all because they don't bother to bill back toiletries, then CRO is subsidizing DVC in that case.

Now do that for laundry, transportation, maid services, pools, lifeguards, front desk staff. In the end you could spend hundreds of hours trying to understand where the money is all allocated, and I suspect you wouldn't have any idea at the end if its much better or worse than a wash. Disney itself probably doesn't have a good idea if its better or worse than a wash, as they probably don't consider it to be material.

 

[Dean]

The big thing you'd need to understand is how Disney sets up their cost accounting. I don't know, but let's say for example the complementary toiletries.

I'd imagine Disney Resorts (which are not DVC) buys toiletries for all the resorts in bulk. It probably, but may not, then charge each resort for toiletries as they are bought. (My company wouldn't do chargebacks for a situation like that though, so who knows if Disney does). Now, if they do chargebacks, do they treat BWV and BWI as two seperate resorts or as one for charge back purposes. There has been some evidence that at a shared resort some cost accounting treats BWV/BWI as a single resort (i.e. our transportation answer a few years ago implied that) but, as I recall, nothing in GAAP says they have to be consistant when it comes to this sort of cost accounting, so its possible some things treat BWI/BWV as two resorts and some charges treat them as one resort, and some charges are marketing expenses and some aren't billed back at all.

Now, lets say they do treat toiletries going to BWV as a seperate chargeback. Now, do they bother to track which toiletries go into cash rooms and which go into points rooms? If they do, then toiletries would not be subsidized by dues, but if they don't, then they would. But if the Boardwalk gets one big shipment of toiletries that is never billed into DVC at all because they don't bother to bill back toiletries, then CRO is subsidizing DVC in that case.

Now do that for laundry, transportation, maid services, pools, lifeguards, front desk staff. In the end you could spend hundreds of hours trying to understand where the money is all allocated, and I suspect you wouldn't have any idea at the end if its much better or worse than a wash. Disney itself probably doesn't have a good idea if its better or worse than a wash, as they probably don't consider it to be material.

I'm not sure how they count each component but they do allocate between each portion such as BWI & BWV. For transportation, they arrive at a cost then the allocate based on the usual density (average number of guests) of each unit type. I get the impression they use a standard formula for each unit type based on overall numbers rather than looking at individual resort variations. The real question is whether they use actual costs or try to make a profit for one division at the expense of others and I do not know that answer.

 

[crisi]

I'm not sure how they count each component but they do allocate between each portion such as BWI & BWV. For transportation, they arrive at a cost then the allocate based on the usual density (average number of guests) of each unit type. I get the impression they use a standard formula for each unit type based on overall numbers rather than looking at individual resort variations. The real question is whether they use actual costs or try to make a profit for one division at the expense of others and I do not know that answer.

And there is no guarantee that the formula used for transportation is extended to laundry, or toiletries. My experience with cost accounting in large corporations is that each formula was probably set up by a different organizational unit, and each is different - depending on who set it up and when and when it was last revisited. And that very often, they don't even bother with interdivisional chargebacks - there are probably a bunch of things that never show up on DVCs books that members take advantage of. So figuring out the cost accounting formulas for DVC vs. CRO as a whole is probably something not even Disney has undertaken. i.e. I don't think there is an answer to this question that would be accurate, even if you'd go through the audit reports.

Moreover, I'm not sure you'd want Disney to start looking too closely at their cost accounting for DVC holistically. I'm pretty sure Magical Express is a marketing expense that is just being extended to DVC members because "the buses are running anyway." Likewise, I'm pretty sure that the Dining Plan is not a break even proposition for Disney, but its subsidized by marketing to encourage people to stay on property - since Disney has large fixed expenses for the resorts and empty resort rooms are a huge drain on profits. If Disney were to look at their expenses holistically and figure out what benefits DVC members are taking advantage of without Disney getting the corresponding revenue increases, we might lose a lot more than we'd gain.

 

[spandelides]

Try the member team

 

[Lil' Grumpy]

things were reported while we were there [ member services]

concerns, came from the workers & how they felt frustrated trying
to keep up with the damages. & how they are being "blown off".

processing the damages. there were so much, that i kept finding
more & more q day. once one started to put the "pieces"
together, then the vandalism became evident.

for example, looking @ the carpet, realizing why they couldn't
shampoo it away. [ they done an extra cleaning-i forget what they
call it], no cleaning will ever work...it's melted rubber on the fabrics.]
noticed how long it is? they had to left the scooter & laid it
down to. all the major appliances were dented. the pull out draw
under the stove was bent so bad, that it no longer could be closed
properly. vandalism- these are things that should lasted the
life of the appliances.

the table top ? one of the worker does that type of work [ refinishing ].
he said it would cost more than the table...by the damages inflicted.
they were amazed @ some of the damages they are finding. what
it looked like to me, a kid take a metal car, and just beating the top.
also the picture of space mt. was destroyed. [ similar to the table tops.]

ok? our member service person is a sweetie, & has been working with us
because we had major problems with the dvc office workers. like in,
telling bold face lies. now she tells me they are on the same team.
[ i believe every thing , anyone tells me, until their behaviors starts
telling a different story.]

well, i have been documenting & learning the rules of dvc. in this
situation , she reassure me that owners will not be responsible for
this. however, it is her "sources" that have me concern. we are
dvc members. therefore, this is a dvc room? so when they decide
how these damages going to be repair, i think they used this
rationalization to charge owners. i am saying this is wrong. they know
who did these damages, & let them off the hook. now disney can
assumed the costs.

worst is what i saw going on. i am in the people business, & in fact,
write the policies. i know others may think some comments were
over the top, but in reality, 100% accurate. ignoring a problem will
not resolve it. if something happens bad then it will be an egregious
action -or lack of action. we will make sure we are never again on the
first floor, for safety reasons. not once did i see security ever making
rounds. [ i think they don't want too, ]

quality? i noticed that they put in some of the most expensive/top
of the line appliances. liked kohler for the tub.

 

[disneynutz]

Thank you and I agree that the next step is attending a meeting. However, my question has nothing to do with audited financials. I do not think Disney would do anything illegal. Rather, it is understanding the DVC process for cost allocation between their room rentals, our DVC units and application of our annual assessments. Any idea where I might get that information?

The meetings are tightly controlled and IMO they are more of a dog and pony show.

If your question, if you are allowed to ask it, moves into a area that makes management uncomfortable, you will be told that due to time constraints, your question will be answered after the meeting.

I'm still waiting for my answers from the 2009 meeting.

Bill