Commerical Use Policy Update - New Thread!

[Sandisw]

When dvc sells a room for cash to a cash paying guest they make money, versus when we book a room using our points and rent it out ourselves. So it would seem to me that dvc would want to eliminate excessive renting because they will presumably earn income. Some guests that would have rented points will book the room for cash directly from Disney instead.

Disney hotel division makes money when someone books for cash vs rentals.

DVC makes money by renting out inventory booked with their own points, from trades, and breakage.

But, if what you mean is that DVCs goal would be to limit owners renting to create more breakage because owners will let points expire?

Possibly? But that would disappoint me to hear that is the reason.

We do know that the trades for APs is definitely taking points based inventory out of the system so DVC can pay for the ticket and IMO, it was done to give owners an alternative to renting when they have extra points.

They should enforce commercial purpose clause…but I don’t think they want to take away owners rights to rent, when they have stated they don’t want to either.

 

[Brianstl]

The board is the one that gets to define commercial purposes though any way they want. They give DVCMC the authority to enforce

Unfortunately, there is also something in the contract that basically gives them the option to not enforce things

As owners, we don’t have the right to view what types of reservations actually exist and by whom so in the end, only the boards assessment counts.

That doesn’t remove the fiduciary duty they have to act in the best interest of the members and the property. They have a responsibility to direct DVCMC to enforce their policy and to be transparent in how they made any determination that it wasn’t a problem. Just saying it doesn’t mean it it isn’t a problem. They don’t have to share the reservation information with you but they have to be transparent with the steps they take to make sure the policy they implemented isn’t being violated and commercial renting isn’t an issue.

 

[Sandisw]

I've no doubt that what they sent you is the official policy and guidance for cast members, as of today.

If they are internally working on an updated policy or finalizing one through legal, there is no reason for them to disclose this ahead of time. It would only result in a litany of questions and emails which they won't answer and serves no useful purpose. I doubt they are contractually obligated to notify owners of a future policy change since the language in almost all documents probably already illudes to this.

If there is one in the works, we'll know when they want us to know.

Any amendments to the documents require them to file those amendments and they have a requirement to notify owners of certain changes.

Off the top of my head I can’t remember the specifics but it outlines it in FL 721.

And yes, I understand people believe that they might be updating something but no evidence to support that they intend to.

IMO, it seems less likely than before getting this because of the changes they did do in June.

 

[Sandisw]

That doesn’t remove the fiduciary duty they have to act in the best interest of the members and the property. They have a responsibility to direct DVCMC to enforce their policy and to be transparent in how they made any determination that it wasn’t a problem. Just saying it doesn’t mean it it isn’t a problem. They don’t have to share the reservation information with you but they have to be transparent with the steps they take to make sure the policy they implemented isn’t being violated and commercial renting isn’t an issue.

I’ll play devils advocate here.

If the board has stated it’s not a widespread problem and that they are addressing it, wouldn’t that be notifying owners?

They are required to provide owners with the written policy when requested which now know they comply with when sent via certified letter…

But, besides telling owners that they monitor accounts for compliance and act when they see it, I can’t find anything that requires them to give owners anything more specific.

The only time they have to detail things to owners is when they are accusing them of a violation and an owner is entitled to an explanation of what “pattern of rental activity” was identified.

But, I don’t know they have to give specifics ahead of time unless they choose to.

It still comes down to some people believe this is a major issue and others do not..

So far, the board has only identified the intent to go after large point owners who rent frequently.

And, for all we know, they have…I do know that I have been told by MS, a few times now that accounts that are identified as being an issue are referred to the business division for review.

So, if certainly sounds like they have started.

 

[Tatebeck]

I didn't realize there was a new thread until this morning! Hosted a large 4th of July party so I was busy! So I read through it all, and I agree with some of the other posters about parts of this.

It would be very strange for high level CM supervisors on a call to tell you very specific information about renting up to the amount of the yearly dues for it not to mean anything at all. It sounded like multiple supervisors on record said the same thing. They could have just pointed us to the same 20 reservation policy they just sent or just read the rules back to us again about patterns/frequent rentals if they wanted, but they didn't. And if the ONLY policy/rules about commercial renting is simply the 20 reservation rule, then the "renting up to the amount of your dues being okay" would be pretty useless info anyway.

So with this response of the new(er) and still in place 20 reservation rule for their response to member requests for a commercial renting policy, I still think I will end up being correct in my thinking however many pages ago in the last thread. They may still be using the 20 reservation or "multiple reservation rule" from 2011, but are now implementing/enforcing other new or pre-existing rules (whether public policies or unpublished internal measures) to weed out the worst and most definite commercial renters.

I too think like some of the other posters that the reason they sent out the old 2011 policy is either because they may still be working on an official change, or (more likely in my mind) because they didn't want to go through the process of changing it when even with that hard rule they can still use other activity that at DVCs discretion reasonably could be seen as commercial renting (like renting your points out for more than your dues for a net profit for the year) to discipline commercial renters.

They also may not have wanted to box themselves into making another hard rule when it comes to smaller members who make less than 20 reservations so that they would not be forced to discipline a member who doesn't own that many points that needs to rent them all out for a year or two due to life throwing a wrench in their plans.

This also gives them leverage to still discipline members (if they wished to) who are obviously trying to skirt and barely stay under the hard 20/multiple reservation rule but still rent out all of their points every year.

So a member with 2000 points renting them all out every year over 19 reservations may still be caught up for likely renting for far more than their dues or other unwritten metrics they may use to reasonably identify commercial renting

 

[Brianstl]

If the board has stated it’s not a big problem and that they are addressing it, then they have let owners know.

I don’t believe there is any requirement that they most tell owners, beyond providing them with the written rules as to what the steps are?

We know from the past they send letters or contract owners who may be in violation. Beyond that, I don’t think the board has to tell us anything.

If the board has stated it’s not a big problem and that they are addressing it, then they have let owners know.

I don’t believe there is any requirement that they most tell owners, beyond providing them with the written rules as to what the steps are?

We know from the past they send letters or contract owners who may be in violation. Beyond that, I don’t think the board has to tell us anything.

Fiduciary duty goes beyond just the law. That is because you are always responsible to act only in the best interest of those you are acting as fiduciary to when it comes to the discharge of your fiduciary role. I am a trustee on a pension plan and as result a I have a fiduciary duties. Included in those duties is a responsibility to ensure that we have procedures in place to make sure the policies we have adopted are being followed and to direct those that we assign responsibility to act on the plan’s behalf to enforce those policies when acting on the plan’s behalf. If plans members have concerns one of the policies isn’t being followed, just telling the members it isn’t a problem isn’t good enough. We have to be transparent with them about what procedures we have in place to make sure the policy in question is being followed and how it is determined they are being followed.

If we don’t do those things we can be held personally liable.

 

[Sandisw]

I didn't realize there was a new thread until this morning! Hosted a large 4th of July party so I was busy! So I read through it all, and I agree with some of the other posters about parts of this.

It would be very strange for high level CM supervisors on a call to tell you very specific information about renting up to the amount of the yearly dues for it not to mean anything at all. It sounded like multiple supervisors on record said the same thing. They could have just pointed us to the same 20 reservation policy they just sent or just read the rules back to us again about patterns/frequent rentals if they wanted, but they didn't. And if the ONLY policy/rules about commercial renting is simply the 20 reservation rule, then the "renting up to the amount of your dues being okay" would be pretty useless info anyway.

So with this response of the new(er) and still in place 20 reservation rule for their response to member requests for a commercial renting policy, I still think I will end up being correct in my thinking however many pages ago in the last thread. They may still be using the 20 reservation or "multiple reservation rule" from 2011, but are now implementing/enforcing other new or pre-existing rules (whether public policies or unpublished internal measures) to weed out the worst and most definite commercial renters.

I too think like some of the other posters that the reason they sent out the old 2011 policy is either because they may still be working on an official change, or (more likely in my mind) because they didn't want to go through the process of changing it when even with that hard rule they can still use other activity that at DVCs discretion reasonably could be seen as commercial renting (like renting your points out for more than your dues for a net profit for the year) to discipline commercial renters.

They also may not have wanted to box themselves into making another hard rule when it comes to smaller members who make less than 20 reservations so that they would not be forced to discipline a member who doesn't own that many points that needs to rent them all out for a year or two due to life throwing a wrench in their plans.

This also gives them leverage to discipline members who are obviously trying to skirt and barely stay under the hard 20/multiple reservation rule but still rent out all of their points every year.

So a member with 2000 points renting them all out every year over 19 reservations may still be caught up for likely renting for far more than their dues or other unwritten metrics they may use to reasonably identify commercial renting

Opinion here…I do think that the verbal information I was given could be insight that the way they will use the 2011 policy this time around is differently then in the past.

As we discussed before, their prior interpretation and enforcement went by the book…cancel over 20, leave under 20 alone..which is why owners stayed below 20.

Now, it could end up being be more of monitor at any level, give owners fair warning that their memberships look suspicious, remind them of the written policy or other metrics and then act if an owner doesn’t change course.

I honestly don’t think this was updated because I don’t think the board believes it needed to and who knows, maybe they even found out that legally, it might be better to just leave it as is, and add to what they can use with it.

There were rumblings elsewhere that some might try to go after them for changing it or that the FL 718.111 might tie the boards hands?

What better way to avoid it then it just keep policy as is and add another metric, like a dues cap? Or any other metric.

The rule that they don’t have to confirm or can cancel reservations with transferred points if they feel it’s commercial is a big one To combat those flip and strip buyers for sure.

Those would seem to work pretty well together in stopping the large point owners commercially renting.

 

[Sandisw]

Fiduciary duty goes beyond just the law. That is because you are always responsible to act only in the best interest of those you are acting as fiduciary to when it comes to the discharge of your fiduciary role. I am a trustee on a pension plan and as result a I have a fiduciary duties. Included in those duties is a responsibility to ensure that we have procedures in place to make sure the policies we have adopted are being followed and to direct those that we assign responsibility to act on the plan’s behalf to enforce those policies when acting on the plan’s behalf. If plans members have concerns one of the policies isn’t being followed, just telling the members it isn’t a problem isn’t good enough. We have to be transparent with them about what procedures we have in place to make sure the policy in question is being followed and how it is determined they are being followed.

If we don’t do those things we can be held personally liable.

I am sure in the case of that the level of transparency is huge but I am not sure to what degree they must disclose things to us.

We pay them to manage the program and to remove them is virtually impossible.

This group is a very small sample of the memberships and honestly, not representative of where most owners are in this.

If anything, based on what I am seeing elsewhere , they have upset a lot more owners with the way MS is handling this, especially when telling owners you can only book for family and friends, etc.

Ultimately it will come down to how satisfied the memberships as a whole is with whether DVC is acting appropriately.

 

[Brianstl]

I am sure in the case of that the level of transparency is huge but I am not sure to what degree they must disclose things to us.

We pay them to manage the program and to remove them is virtually impossible.

This group is a very small sample of the memberships and honestly, not representative of where most owners are in this.

If anything, based on what I am seeing elsewhere , they have upset a lot more owners with the way MS is handling this, especially when telling owners you can only book for family and friends, etc.

Ultimately it will come down to how satisfied the memberships as a whole is with whether DVC is acting appropriately.

Timeshare board members are considered to be acting as fiduciaries to the people that have an ownership interest. They serve as fiduciaries to all of those owners and not just the opinion of the majority of those owners. The fact it is virtually impossible to remove them doesn’t release them from their fiduciary duties to the owners.

 

[HyperspaceMountainPilot]

If I purchase 100 points and use them to make a reservation for myself, and the John Doe family pays Disney cash for a room at WDW, then Disney has made money on the point sale as well as the cash room. Plus, I am on property during my point stay spending money on other things (food, merch, theme park tickets, etc.), and the John Doe family is also spending money on those things as well during their cash stay.

If I purchase 100 points and rent them to the John Doe family, then Disney has only made money on the point sale, and the John Doe family is paying ME to stay in a room at WDW. Further, only the John Doe family is spending that extra money on food, merch, etc. as I am not staying at WDW since my rented my points to John Doe.

+1 to everything Don said in his post, but also, if you look at elementary economic principles of supply and demand, if another 100 rooms are available (especially at bargain basement rates!) each night from renters, Disney needs to lower their prices across all rooms to adjust demand (when roughly constant) with supply (way more rooms available from people routinely renting for personal profit combined with periodic rooms from members who can’t use all of their points in a given UY)… this increase in rental supply didn’t matter for a few years post-pandemic when revenge travel crowds were mobbing WDW at any price point…but now we are seeing a lot of headwinds for WDW visitors (restrictions in travel visas, international tourists concerns about U.S. immigration, domestic economic softening, etc.) and Disney is putting out heavy discounts on its hotels to fill them…so thousands of rented deluxe studios is hurting the $DIS bottom line.

Now, as mentioned above, DVC has fiduciary duties to its members/owners— but failing to enforce its foundational prohibition against commercial enterprise owners is failing to uphold its duty to members and Disney management’s fiduciary duty to stockholders, so it should be a no brainer…and waiting until the 21st rental just doesn’t cut it. It’s not hard (at all) to stay below 20 rentals while blowing 4000 or more points in a year…it is a little harder to hit 4000 if you’re determined to make $30/pt in profit, but you can still clear 1500 points of very high profit rentals easily with less than 20 reservations…and the way to do that is to squeeze out owner-users at holiday seasons.

 

[Sandisw]

Timeshare board members are considered to be acting as fiduciaries to the people that have an ownership interest. They serve as fiduciaries to all of those owners and not just the opinion of the majority of those owners. The fact it is virtually impossible to remove them doesn’t release them from their fiduciary duties to the owners.

I get that…I know they have a fiduciary responsibility.

Even when they are acting in that capacity it doesn’t ensure all owners will agree with the decisions.

So, if the membership as a whole supports the actions of the board and believes they are acting that way, then they have met their duty.

 

[Sandisw]

+1 to everything Don said in his post, but also, if you look at elementary economic principles of supply and demand, if another 100 rooms are available (especially at bargain basement rates!) each night from renters, Disney needs to lower their prices across all rooms to adjust demand (when roughly constant) with supply (way more rooms available from people routinely renting for personal profit combined with periodic rooms from members who can’t use all of their points in a given UY)… this increase in rental supply didn’t matter for a few years post-pandemic when revenge travel crowds were mobbing WDW at any price point…but now we are seeing a lot of headwinds for WDW visitors (restrictions in travel visas, international tourists concerns about U.S. immigration, domestic economic softening, etc.) and Disney is putting out heavy discounts on its hotels to fill them…so thousands of rented deluxe studios is hurting the $DIS bottom line.

Now, as mentioned above, DVC has fiduciary duties to its members/owners— but failing to enforce its foundational prohibition against commercial enterprise owners is failing to uphold its duty to members and Disney management’s fiduciary duty to stockholders, so it should be a no brainer…and waiting until the 21st rental just doesn’t cut it. It’s not hard (at all) to stay below 20 rentals while blowing 4000 or more points in a year…it is a little harder to hit 4000 if you’re determined to make $30/pt in profit, but you can still clear 1500 points of very high profit rentals easily with less than 20 reservations…and the way to do that is to squeeze out owner-users at holiday seasons.

Just to clarify…the current commercial use policy does not require them to wait until the 21st rental…any and all reservations count that an owner is connected to in anyway.

 

[HyperspaceMountainPilot]

Just to clarify…the current commercial use policy does not require them to wait until the 21st rental…any and all reservations count that an owner is connected to in anyway.

I didn’t mean to imply otherwise—but if your current interpretation of Disney’s policy is accurate such that they can’t stop commercial renters before a 21st reservation (which is contrary to my own legal analysis of the POS but don’t intend to relitigate once again), Disney would be tacitly approving the first 20 rentals for profit without any personal, which could easily be over 10,000 points a year.

Editing to address your edit—“I know you believe that the current policy of 20 is too high, but isn’t still up to the board to choose what that definition is?”— no, absolutely not. If the board is allowing 100% of points to be rented over 10,000 points a year, it has not adopted a reasonable definition commercial renting and is failing to uphold its enforcement duties under the POS. Whether or not current owners “are happy” in their ignorance of how much commercial activity is taking place, does not stop it from being a breach of fiduciary duty.

I value my relationship with Disney and have managed to make my own ownership work within the rules of the current system (including by refusing to by BWV for my personal use and always booking VGC and BCV at 11mo) so I’m not going to sue them to enforce, but I bet there are other plaintiffs lawyer-owners who may be reading updates and gearing up a suit either on behalf of DIS shareholders or member/owners for the current state if Disney is truly not enforcing anything at all or only at 20+, when that means thousands of point contracts are always rentals, year after year.

 

[IMMkXLVI]

When dvc sells a room for cash to a cash paying guest they make money, versus when we book a room using our points and rent it out ourselves. So it would seem to me that dvc would want to eliminate excessive renting because they will presumably earn income. Some guests that would have rented points will book the room for cash directly from Disney instead.

Or, stay elsewhere is the cash price Disney sets is higher than they'd want to pay.

Conversely, someone renting points to secure a reservation might become so enamored with the whole experience that they become owners themselves. It could go either way. We stayed off site at our other timeshare when we visited in 2/24 but fell in love with the Grand Floridian when we would go in the mornings for breakfast. We enjoyed the parks so much that we spoke with an onsite agent in Epcot and by the time we got home, knew we wanted in.

Had I known then that we could have stayed at Grand Floridian by renting from an owner, we'd have done it. Then again, we never heard of Grand Floridian before 2/24.

 

[IMMkXLVI]

Any amendments to the documents require them to file those amendments and they have a requirement to notify owners of certain changes.

Off the top of my head I can’t remember the specifics but it outlines it in FL 721.

And yes, I understand people believe that they might be updating something but no evidence to support that they intend to.

IMO, it seems less likely than before getting this because of the changes they did do in June.

They have to file with the state only when they wish to make the change to policy. Not while they draft the language and terms.
They can draft and redraft that for weeks, months or years before deciding to make the change.

I suspect this will be a very fluidic process. Testing to see if the subtle changes implemented are enough or if additional measures are warranted. They may very well already have a set of escalating rules ready to implement in the event commercial renting is not curtailed.

I tend to think Disney as a whole which includes DVC/DVD plan the long game. Thinking 5 moves ahead, not just one.

In any event, we'll be the last ones to know and only when they want us to.

 

[Sandisw]

I didn’t mean to imply otherwise—but if your current interpretation of Disney’s policy is accurate such that they can’t stop commercial renters before a 21st reservation (which is contrary to my own legal analysis of the POS but don’t intend to relitigate once again), Disney would be tacitly approving the first 20 rentals for profit without any personal, which could easily be over 10,000 points a year.

What I said was that the policy says that owners can make as many reservations they want up to 20.

So, as written, the rules allow for any combination of 20.

If they want to prevent owners from getting to 20, then I do rhink they would be required to change that wording.

Just like holding penalty… they can increase it if they feel too many owners are canceling at the last minute…which a lot of these commercial renters do…but I can’t beleive DVC can decide to put points into holding outside 31 days unless they actually change what the HRR says.

I see this the same way. If it says you can make 20, with no qualifiers, then you get to do that.

Now, if a owner gets to 20, then there appears to me to be indications that the won’t take the same stance as before which was let all 20 stand.

Nothing in the policy to prevent them from flagging a membership when there are certain number or % of reservations in the names of others, notifying an owner that it appears the number is high, remind them of the 20 reservations rule and put owner on notice.

Now, could the board decide to continue with the same commercial use policy of the 20 reservations rule and just ensure they do a better job of actually enforcing it? Which might mean an owner holds 19?

They could definitely do that and then we all get to decide if we agree or disagree with their decision if that is what they decide.

But, ultimately we all have to accept with whatever policy they land on, whether it’s sticking with the 2011 one or a new one.

ETA: No one owner is allowed to be attached to more than 8000 points so given that, even if all they do is enforce the current offical policy, to stay under 20, at 19, each reservation would have to average over 400 points.

And, if the principal of an LLC had their own personal membership, any of those would count against the 20 for the LLC and vice versa.

IMO, I suspect that they didn’t enforce agaonst owners but just memberships and that’s how they got around things.

 

[DVCPAT]

DVC makes income when a guest books a room for cash vs they make nothing when we use our points, because our dues only cover maintenance and upkeep.

I understand Disney makes money with cash bookings.
Maybe the DVC renter doesn’t want to pay inflated room rates? Maybe the choice is a DVC rental, bonnet creek or off site?

 

[Sandisw]

They have to file with the state only when they wish to make the change to policy. Not while they draft the language and terms.
They can draft and redraft that for weeks, months or years before deciding to make the change.

I suspect this will be a very fluidic process. Testing to see if the subtle changes implemented are enough or if additional measures are warranted. They may very well already have a set of escalating rules ready to implement in the event commercial renting is not curtailed.

I tend to think Disney as a whole which includes DVC/DVD plan the long game. Thinking 5 moves ahead, not just one.

In any event, we'll be the last ones to know and only when they want us to.

To add, I did follow up asking them to confirm that if the board were to amend any policy, or the POS, including the $HRR, that amendments would be formally sent to the state and then made available to owners once done

And that I will request this again in October, after the September HOA.

ETA: I keep checking the website because that is where amendments show up…in the Collateral Documents section of our account that holds the POS for the resorts owned.

So far, last one is from December in relation to transfers.

 

[muppets3d]

I understand Disney makes money with cash bookings.
Maybe the DVC renter doesn’t want to pay inflated room rates? Maybe the choice is a DVC rental, bonnet creek or off site?

DVC/Disney is not getting hotel revenue with rentals at all right now, so if they can capture even a small percentage of ex-rental revenue then that's money in the bank for them. Even if 95% of those ex-rental guests choose to stay offsite and only 5% book direct, that's 5% they didn't get before.

 

[DougEMG]

If I am understanding things correctly the major change is that the 20 reservations limit is now across all memberships your name is on where as before it was only per membership. Now this is a big change but will it hit commercial renters or regular owners more?

I have 5 different memberships because I have bought different UY and when my daughter turned 18 I started adding her to our contracts. Each of those things caused different membership numbers, not because I was trying for different memberships. Having different memberships is a bit of a pain.

Anyone know a commercial renters and how they have structured their memberships and buisness. Anyone want to take a guess. I kind of feel that anyone running this as a business is going to figure out how to stay under the radar even with this change.

On the bright side my VDH contract was okayed by DVC so I was able to book my April 2026 trip to DL, first visit in over 15 years.