By The Numbers... Best case scenario availability will be bad for next 3 years, worst case as much as 9 years

[Tony]

Just to confirm this is correct. 15th Feb for 5 nights on the UK site, I can see villa cash availability at Saratoga, OKW, Boulder Ridge, Boardwalk, Riviera and Copper Creek. Going beyond the 11 month window the only availability is at Riviera, but this is a real "finger in the eye" for those left trying to shift points...

 

[DVCSunDevil]

I’m a numbers guy so I started thinking through the potential implications of the closures on future availability.

Extra Points:
There is currently about 68 million declared points, so every week the resorts are closed means an extra 1.3 million points go unused and will affect future availability. Let’s assume conservatively the resorts will be closed 10 weeks. That’s an extra 13 million points. I know some people are losing their points, but this is mostly limited to just those who have April and June use years and happen to book the last couple of months before their use year anniversary. Everyone else should have been able to cancel and bank, rebook, or transferred to RCI. So I think it’s at most about 1 million points that are being ”lost”. But this still means a 10 week closure will drown future inventory with 12 million extra points.

Extra Room Inventory:
Due to the 2 bedroom lock off premium, the resorts end up with more room nights than can be used by the owners points. Disney then rents these rooms out for cash and part of that goes towards paying resort expenses, but Disney keeps most of it. I did a rough calculation and realized that if all the 2 bedrooms were broken up into studios and 1 bedrooms it would create about 3.8 million points available for Disney to rent out. Now not all rooms get broken up, but given the high demand for studios I believe most of them do. Let’s say 70% are broken up and that would create about 2.7 million points that become available for Disney to rent out. In addition, some points just expire every year due to neglect or error. Let’s say it’s about 2%. That would add about 1.4 million points available to be booked. Together this means that if Disney stops selling these breakage points as cash rooms, there‘s a potential 4.1 million extra points a year that can absorb the extra points that are going to flood the system.

Availability and Dues Implications:
Availability will look bad until all these extra points are absorbed. Let’s assume it’s a 10 week closure and that’s 12 million extra points. If Disney stops selling cash rooms with the breakage(lock off) points I think it’ll take about 3 years for it to normalize (12 million / 4.1 million). If Disney keep selling the cash rooms with the breakage points it will take about 9 years to normalize (12 million / 1.4 million). Also if Disney stops selling the breakage points, everyone’s dues would go up about .15 to .20 as Disney passes some of that value back to the owners.

Scenario 1: Disney stops selling cash rooms using the breakage points until system is back in balance in 3 years and everyone pays .15-.20 more per point in dues for those 3 years.

Scenario 2: Disney continues selling the breakage points as cash rooms. Everyone keeps the breakage benefit for those 3 years but availability is bad for the next 9 years.

I’m hopeful Disney will do the right thing and go with option 1, but it’s a lot of money they would lose over those 3 years and I think they will most likely go with option 2. They could also create some other option where everyone could use the points for something else to absorb the points. Not as good a value as booking rooms(think cruises or booking other non DVC resorts), but that will still cost DVC something as nothing is free. I guess we’ll be able to tell if they chose option 1 if we see our dues go up do to the breakage offset in our dues going away.

I know there are several assumptions in my numbers, but let me know if anyone thinks of anything I might have missed.

I am failing to see how you got to 9 years as a worst case resort. That would make sense if the points people are losing didn't expire, but they do. DVC doesn't even know the extent of the "damage" yet because they don't know when they will be able to open. But the points they have lost in the closure are gone because they were tied to room inventory for that time period. There is no "making up" those lost stays. When talking about future availability, it really all comes down to the number of contract points that are in the system.

Each point in a contract basically has a total shelf life of three years: the original UY, the year previous (if borrowed), and the following year (if banked). The room inventory is tied to the UY points for that particular year, but there is a balance of banking and borrowing (and unused points) that keeps things pretty stabilized. And to take it a step further, points only have a two year use window if you are just talking about the future (would include current UY and the option to bank). No matter how long the closure lasts, the points still can still only be banked once. So let's say DVC decides to make everyone whole who lost points. Here's what that would look like:
- Those who banked points into this year but lost them because of park closures: DVC allows them to bank one more time into next year. This would affect next year room availability.
- Those with expired points from this year that weren't able to bank because they missed the banking window: DVC allows them to bank those points into next year. This would affect next year room availability.
- Those who borrowed points from next year but lost them because of park closures: DVC has already allowed these people to return points to their original UY. This will affect potentially the next two years because those points were going to be used this year and now have two more years in which they can be used.

So two years down the road, all the points from the affected contracts will have been used. The system would be back to normal. The $1M question is how many points can the system take on? Someone else on this thread posted a link to an article that I posted the other day that outlines how the system works and how DVC is evaluating it. It's all going to come down to how many days the resorts are closed. Once DVC knows this number, they will be able to come up with options. There is a lot of room to get creative with options that will enable the system to handle the additional points next year and the year after. And quite frankly, there are times of year when there are tons of available rooms...people may have to change what time of year they go to Disney for the next couple of years.

 

[Wakey]

Just to confirm this is correct. 15th Feb for 5 nights on the UK site, I can see villa cash availability at Saratoga, OKW, Boulder Ridge, Boardwalk, Riviera and Copper Creek. Going beyond the 11 month window the only availability is at Riviera, but this is a real "finger in the eye" for those left trying to shift points...

They need to stop it immediately.

 

[Sandisw]

Just to confirm this is correct. 15th Feb for 5 nights on the UK site, I can see villa cash availability at Saratoga, OKW, Boulder Ridge, Boardwalk, Riviera and Copper Creek. Going beyond the 11 month window the only availability is at Riviera, but this is a real "finger in the eye" for those left trying to shift points...

I wonder if these could be from trades that already happened? When someone uses points for cruises, etc., they pull DVC to offer for cash so they can pay that division.

But, for any other rooms, like breakage, those should not be offered until this whole situation is figured out.

 

[mgarbowski]

I am failing to see how you got to 9 years as a worst case resort. That would make sense if the points people are losing didn't expire, but they do. DVC doesn't even know the extent of the "damage" yet because they don't know when they will be able to open. But the points they have lost in the closure are gone because they were tied to room inventory for that time period. There is no "making up" those lost stays. When talking about future availability, it really all comes down to the number of contract points that are in the system.

Each point in a contract basically has a total shelf life of three years: the original UY, the year previous (if borrowed), and the following year (if banked). The room inventory is tied to the UY points for that particular year, but there is a balance of banking and borrowing (and unused points) that keeps things pretty stabilized. And to take it a step further, points only have a two year use window if you are just talking about the future (would include current UY and the option to bank). No matter how long the closure lasts, the points still can still only be banked once. So let's say DVC decides to make everyone whole who lost points. Here's what that would look like:
- Those who banked points into this year but lost them because of park closures: DVC allows them to bank one more time into next year. This would affect next year room availability.
- Those with expired points from this year that weren't able to bank because they missed the banking window: DVC allows them to bank those points into next year. This would affect next year room availability.
- Those who borrowed points from next year but lost them because of park closures: DVC has already allowed these people to return points to their original UY. This will affect potentially the next two years because those points were going to be used this year and now have two more years in which they can be used.

So two years down the road, all the points from the affected contracts will have been used. The system would be back to normal. The $1M question is how many points can the system take on? Someone else on this thread posted a link to an article that I posted the other day that outlines how the system works and how DVC is evaluating it. It's all going to come down to how many days the resorts are closed. Once DVC knows this number, they will be able to come up with options. There is a lot of room to get creative with options that will enable the system to handle the additional points next year and the year after. And quite frankly, there are times of year when there are tons of available rooms...people may have to change what time of year they go to Disney for the next couple of years.

I don't think this is right. I don't think the shelf life of points requires that everything must be back to normal in 3 years. Let's take someone who normally books exclusively with current year points, and never banks or borrows. This year they skip a vacation due to the virus and bank their points, creating an excess of points moving forward. Next year (call it Year 1), they use the banked points and bank the current use year. Their number of holdover points remains unchanged. In Year 2 they do the same, and again in Year 3, Year 4, Year 5, etc. This can go on indefinitely without any reduction of excess points. Will it? That requires a lot of assumptions, but there is no inherent requirement it stop after 3 years.

Now maybe they take longer trips (or extra trips) to get back into balance. But if there is a shortage of rooms, that's tough to do. OTOH, maybe a number of people who normally book Studios book 1BR because the room shortage forces them to do so in order to get anything. And because they have extra banked points they are able to book a 1BR when normally they could not. That could use their excess points up in a few years. But there also are only so many 1BRs. And you can spin a whole number of scenarios where some points get carried forward indefinitely and others get used up more quickly.

I believe OP tried to make an informed guess as to how this would play out, and while some of the specifics are almost inevitably wrong (there are so many unknowns and variables), it seems accurate in all of its basic structural assumptions.

 

[Grumpy by Birth]

So two years down the road, all the points from the affected contracts will have been used. The system would be back to normal.

All the points directly affected will have been used or expired... however, if members who were affected are the ones lucky enough to get availability and book rooms in the next year, others who weren't directly affected now have no inventory to book and will likely bank to avoid losing their points. This has the potential to extend the residual effects over a number of years. Will it take 9 years? I doubt it. But we could see tight availability for longer than just the shelf life of the points that were directly affected by the closures.

 

[Lumpy1106]

Thanks for the quick analysis. I have to say though, this is such a complex issue; I know our plan is, if our 5-night, August stay in a 1 br standard BLT is cancelled, we will bank the 2020 points and shoot for a 7 night, 2 br standard BLT for the same dates in 2021(and hopefully renting out the 19 points that I banked for this year's trip before Feb.). I think you will find that the "upgrade" trip will be more common than people deciding to squeeze in an additional trip, which would put extra demand on studios that were already impacted (which, if I am correct, is your primary assumption). One thing I have learned from this is I WON"T be banking any more points than I have to. lesson being; "Live life for today"? Sure, let's go with that.

 

[FSUSammy]

Thanks for the quick analysis. I have to say though, this is such a complex issue; I know our plan is, if our 5-night, August stay in a 1 br standard BLT is cancelled, we will bank the 2020 points and shoot for a 7 night, 2 br standard BLT for the same dates in 2021(and hopefully renting out the 19 points that I banked for this year's trip before Feb.). I think you will find that the "upgrade" trip will be more common than people deciding to squeeze in an additional trip, which would put extra demand on studios that were already impacted (which, if I am correct, is your primary assumption). One thing I have learned from this is I WON"T be banking any more points than I have to. lesson being; "Live life for today"? Sure, let's go with that.

Totally agree! We normally book studios and will likely look for a 1 bedroom going forward as an upgrade to burn extra points. I also plan on not banking a ton of points from now on either. Too much of a gamble.

 

[Wakey]

I wonder if these could be from trades that already happened? When someone uses points for cruises, etc., they pull DVC to offer for cash so they can pay that division.

But, for any other rooms, like breakage, those should not be offered until this whole situation is figured out.

Not sure Sandi, but I will be keeping a close eye on it and report back here if these rooms continue to pop up on the UK Disney site.

 

[4evryoung]

2) The cash savings to DVC from the extended closure. Staff have been furloughed and - probably most critically - there's no wear and tear on the apartments so refurb schedules can be pushed back accordingly. Appreciate the savings will be modest and know there are still fixed costs, but the option proposed in the first post which would see DVC not sell the villas for cash could become even more palatable if the costs can be lowered.

The restart costs may be substantial. How badly do unoccupied rooms deteriorate in the Florida climate if the AC is not running daily? Think mildew, damage to soft furnishing, mold in bathrooms. What has been the critter infestation in the grounds, or insect/roach incursions in the resorts without regular cleaning and foliage control? How bad is the bird poop developing on the balconies without weekly housekeeping? What state are the pools in? How much checking needs to be done to make sure legionnaires infection isn't present in under-used AC systems? The list goes on.

 

[CastAStone]

The restart costs may be substantial. How badly do unoccupied rooms deteriorate in the Florida climate if the AC is not running daily? Think mildew, damage to soft furnishing, mold in bathrooms. What has been the critter infestation in the grounds, or insect/roach incursions in the resorts without regular cleaning and foliage control? How bad is the bird poop developing on the balconies without weekly housekeeping? What state are the pools in? How much checking needs to be done to make sure legionnaires infection isn't present in under-used AC systems? The list goes on.

It would be mindbogglingly irresponsible for Disney not to keep the AC on at not just the resorts but all their buildings - maybe set to 77, but on. I have to imagine they're doing that. Security staff is still working at the resorts and presumably they're checking rooms periodically for issues.

 

[Heather07438]

Next year (call it Year 1), they use the banked points and bank the current use year. Their number of holdover points remains unchanged. In Year 2 they do the same, and again in Year 3, Year 4, Year 5, etc. This can go on indefinitely without any reduction of excess points. Will it? That requires a lot of assumptions, but there is no inherent requirement it stop after 3 years.

Yep. And then add in all the people who now see the advantages of borrowing. Many owners will change their style of point usage going forward.

On one side we'll probably see more people pulling points into the current year thru borrowing.
On the other side we'll see people perpetually banking because if they aren't able to find ideal availability, they'll only use what is expiring and bank the rest hoping for better options down the road.
How long will this play out?

 

[kmeurs521]

Maybe with the glut of points people will have after banking someone will actually book the Bungalows. That’ll eat a few hundred thousand points all by itself.

My family actually did this in 2018. We had a bunch of extra points from not doing much traveling and stayed in a bungalow for a week in May. It was awesome.

 

[KAT4DISNEY]

might DVCM be a subsidiary of DVD ?

It might as well be as most of the officers are the same people.

I am failing to see how you got to 9 years as a worst case resort. That would make sense if the points people are losing didn't expire, but they do. DVC doesn't even know the extent of the "damage" yet because they don't know when they will be able to open. But the points they have lost in the closure are gone because they were tied to room inventory for that time period. There is no "making up" those lost stays. When talking about future availability, it really all comes down to the number of contract points that are in the system.

Each point in a contract basically has a total shelf life of three years: the original UY, the year previous (if borrowed), and the following year (if banked). The room inventory is tied to the UY points for that particular year, but there is a balance of banking and borrowing (and unused points) that keeps things pretty stabilized. And to take it a step further, points only have a two year use window if you are just talking about the future (would include current UY and the option to bank). No matter how long the closure lasts, the points still can still only be banked once. So let's say DVC decides to make everyone whole who lost points. Here's what that would look like:
- Those who banked points into this year but lost them because of park closures: DVC allows them to bank one more time into next year. This would affect next year room availability.
- Those with expired points from this year that weren't able to bank because they missed the banking window: DVC allows them to bank those points into next year. This would affect next year room availability.
- Those who borrowed points from next year but lost them because of park closures: DVC has already allowed these people to return points to their original UY. This will affect potentially the next two years because those points were going to be used this year and now have two more years in which they can be used.

So two years down the road, all the points from the affected contracts will have been used. The system would be back to normal. The $1M question is how many points can the system take on? Someone else on this thread posted a link to an article that I posted the other day that outlines how the system works and how DVC is evaluating it. It's all going to come down to how many days the resorts are closed. Once DVC knows this number, they will be able to come up with options. There is a lot of room to get creative with options that will enable the system to handle the additional points next year and the year after. And quite frankly, there are times of year when there are tons of available rooms...people may have to change what time of year they go to Disney for the next couple of years.

As already mentioned if room availability is tight next year then it would prevent some from going that normally would have. And there are UY's that still can bank - it's not just the points lost for the April and June UY's. That pushes more than the normal banked points forward making increased difficulty the next year and so on. In addition if rooms are non-existent borrowing will be less because there aren't rooms to book. Less borrowing, more banking. It will take time for that to flow thru the system if DVC doesn't do something else to absorb the excess points.

 

[DVCSunDevil]

I don't think this is right. I don't think the shelf life of points requires that everything must be back to normal in 3 years. Let's take someone who normally books exclusively with current year points, and never banks or borrows. This year they skip a vacation due to the virus and bank their points, creating an excess of points moving forward. Next year (call it Year 1), they use the banked points and bank the current use year. Their number of holdover points remains unchanged. In Year 2 they do the same, and again in Year 3, Year 4, Year 5, etc. This can go on indefinitely without any reduction of excess points. Will it? That requires a lot of assumptions, but there is no inherent requirement it stop after 3 years.

Now maybe they take longer trips (or extra trips) to get back into balance. But if there is a shortage of rooms, that's tough to do. OTOH, maybe a number of people who normally book Studios book 1BR because the room shortage forces them to do so in order to get anything. And because they have extra banked points they are able to book a 1BR when normally they could not. That could use their excess points up in a few years. But there also are only so many 1BRs. And you can spin a whole number of scenarios where some points get carried forward indefinitely and others get used up more quickly.

I believe OP tried to make an informed guess as to how this would play out, and while some of the specifics are almost inevitably wrong (there are so many unknowns and variables), it seems accurate in all of its basic structural assumptions.

I think I see the point you are trying to make (and the point the OP was trying to make). But at the end of the day, the points being affected now can only be banked for 1 year. That's it. You stated "In Year 2 they do the same, and again in Year 3, Year 4, Year 5, etc. This can go on indefinitely without any reduction of excess points". That's not accurate, though. The inventory of points being affected by this closure can't be kicked down the road to year 3, 4 or 5. If people were lucky enough to bank their 2019/2020 points to next year, that's the furthest point in time the points can be used. After those points are either used or expired, that's where it ends really. Will inventory be super tight over the next two years because of the banked points and DVC moving borrowed points back into their original UY? Absolutely, 100%, without a doubt. But after those points are gone, they're gone. Future inventory is tied to the points for those future UYs. This shouldn't go beyond two years from now, and definitely not 9 years from now.

 

[DVCSunDevil]

All the points directly affected will have been used or expired... however, if members who were affected are the ones lucky enough to get availability and book rooms in the next year, others who weren't directly affected now have no inventory to book and will likely bank to avoid losing their points. This has the potential to extend the residual effects over a number of years. Will it take 9 years? I doubt it. But we could see tight availability for longer than just the shelf life of the points that were directly affected by the closures.

I see the point you are making, but I think it is flawed. The points and inventory being affected from this closure have an expiration date. There will no doubt be reduced availability from people banking their points into next year and DVC putting borrowed points back into their original UY. But the reduced availability will end once those particular points are either used or expired, which is either next year or the following year (following year for returned borrowed points that are possibly then banked into the UY that is two years from now). Once those points are gone, they're gone. The system will be back to normal. Now, if people were allowed to keep banking points indefinitely then there would absolutely be reduced availability for more than 2 years from now...even going to maybe 9 years like the OP stated. But that's not how the system works. The points that are being affected by this closure have a shelf life and can only affect availability during that shelf life, which is no more than two years down the road.

 

[DVCSunDevil]

It might as well be as most of the officers are the same people.


As already mentioned if room availability is tight next year then it would prevent some from going that normally would have. And there are UY's that still can bank - it's not just the points lost for the April and June UY's. That pushes more than the normal banked points forward making increased difficulty the next year and so on. In addition if rooms are non-existent borrowing will be less because there aren't rooms to book. Less borrowing, more banking. It will take time for that to flow thru the system if DVC doesn't do something else to absorb the excess points.

Yeah, I'm not disputing that. I have said that availability will be brutal over the next couple of years. But then it will re-stabilize. The lower availability shouldn't last more than two years because then the points affected by this closure (points that were banked as well as borrowed points that DVC put back to the original UY) will be "washed out" of the system. But the next two years could be tough for sure.

 

[mgarbowski]

I think I see the point you are trying to make (and the point the OP was trying to make). But at the end of the day, the points being affected now can only be banked for 1 year. That's it. You stated "In Year 2 they do the same, and again in Year 3, Year 4, Year 5, etc. This can go on indefinitely without any reduction of excess points". That's not accurate, though. The inventory of points being affected by this closure can't be kicked down the road to year 3, 4 or 5. If people were lucky enough to bank their 2019/2020 points to next year, that's the furthest point in time the points can be used. After those points are either used or expired, that's where it ends really. Will inventory be super tight over the next two years because of the banked points and DVC moving borrowed points back into their original UY? Absolutely, 100%, without a doubt. But after those points are gone, they're gone. Future inventory is tied to the points for those future UYs. This shouldn't go beyond two years from now, and definitely not 9 years from now.

We both agree that there will be too many points in the next 2 years. You seem to think it has to end in 2 years. It won't. This is my last attempt.

All of the numbers below are for purposes of discussion. I guarantee they are wrong. I have no idea what the actual numbers are. But the basic concepts are correct.
Again, assume a set of owners who never bank or borrow, until now. They always vacation using Current Year points. They have 100 point contracts and take 100 point vacations every year.
Let's say those owners bank 100k additional points banked from this year (Year 0) into next year (Year 1) than usual. The people banking those points will want to use them, and resume their normal usage pattern so they are not carrying those extra banked points and get back to using Current Year points. So those owners will try to take 2 vacations instead of one, or longer vacations, or stay in bigger rooms, or rent or gift their points to someone else to take a trip. But, there is only room in the system for 10% of those extra 100k points in any year. DVC just does not have the room capacity to handle all of them at once.

So in Year 1, 10k of the excess points will be used. Every one those affected owners take a 110 point vacation on average. Those trips use the banked points from Year 0 plus 10 points from Year 1. So those owners each bank 90 new Year 1 points that would not have been banked if not for the pandemic in Year 0.
In Year 2, another 10k of the excess points will be used. Every affected owner takes a 110 point vacation. Those trips use the 90 banked points from Year 1 plus 20 points from Year 2. So those owners bank 80 new points that would not have been banked if not for the pandemic in Year 0.
In Year 3, another 10k of the excess points will be used. Every affected owner takes a 110 point vacation. Those trips use the 80 banked points from Year 2 plus 30 points from Year 3. So those owners bank 70 new points that would not have been banked if not for the pandemic in Year 0.
In Year 4, another 10k of the excess points will be used. Every affected owner takes a 110 point vacation. Those trips use the 70 banked points from Year 3 plus 40 points from Year 4. So those owners bank 60 new points that would not have been banked if not for the pandemic in Year 0.

I'm going to stop here but this goes on for 10 years before the excess points are worked out of the system and all of the affected owners resume taking 100 point vacations so the usual 10k point/room surplus is back in the system and not being used in full every single year. Yes, the points banked from year 0 are gone, but who cares? There are still too many points chasing too few rooms.

It will in fact be much more messy than this, but as long as there is a limit to how much of the excess can be used the principle holds. Some lucky owners with extra points will use all of them, plus their current year points up in Year 1, and those owners will be back in balance. Or some owners who were not originally affected will want to splurge on a giant vacation and use some the the 10% available extra points. But that will mean other owners who won't be able to use any of their extra. And those owners will still carry extra points forward, because they will take 1 trip using their banked points, use 0 Year 1 current year points, and bank all of their Year 1 points instead of just 90% in the example above. Unless people get sloppy and forget to bank their unused points, only 10% of the excess points will get used every year, and force owners to bank new points they would not have banked otherwise.

Either this clears it up or not. I hope it does, but if not, I don't think I have it in me to try again.

 

[Grumpy by Birth]

I see the point you are making, but I think it is flawed. The points and inventory being affected from this closure have an expiration date. There will no doubt be reduced availability from people banking their points into next year and DVC putting borrowed points back into their original UY. But the reduced availability will end once those particular points are either used or expired, which is either next year or the following year (following year for returned borrowed points that are possibly then banked into the UY that is two years from now). Once those points are gone, they're gone. The system will be back to normal. Now, if people were allowed to keep banking points indefinitely then there would absolutely be reduced availability for more than 2 years from now...even going to maybe 9 years like the OP stated. But that's not how the system works. The points that are being affected by this closure have a shelf life and can only affect availability during that shelf life, which is no more than two years down the road.

I agree that the points directly impacted will expire, but I think you're downplaying the residual effect that lack of availability may have on other owners who weren't directly impacted doing more banking than they normally would (possibly no other choice), which could extend the effects longer.

 

[thptrek]

I have a March UY. I'll most likely bank all my 2020 points into 2021. That will buy me some time so as not to lose any points. I expect that the only DVC availability for the foreseeable future will be at my home resort and I'll have to book at the 11 month window.

I figure that this is just the way it will be for awhile.