Does Disney dilute DVC points by ‘topping up’ resales?

[Chrisizzle]

I posted a question for a DIS DVC Show topic that asked what prevents Disney from selling more points or otherwise diluting the value of existing members.

In watching the DVC Shows, it sounds like Disney does just that when they redeem a Right Of First Refusal on a property that has all their existing points drained. The show hosts have mentioned often that Disney will “top up the points” before reselling.

So, let’s say a given resort has 1,000 points distributed equally among 10 members in 2019. Everyone uses their points on vacations. Then, two members decide to sell their empty memberships and Disney exercises ROFR.

If Disney “tops up” those accounts and resells in the existing Use Year, there are now 1,200 points to spend in 2019. That dilutes the value of owners and makes reservations harder since one deed will book two vacations in 2019. An analogy could be an airline overselling 20% of their seats.

It’s true that would only effect the 2019 use year because everything resets to a total of 1,000 points in 2020. However, a constant rotation of resales with ROFR means excess points from “topped up” memberships each year.

Does this happen? or am I misunderstanding what “top up” means?

 

[crvetter]

Disney is topping them off using points they own, if that is what they are actually doing. Any comments on DVC "topping off" is technically speculation, as Disney could be purposefully buying some of those contracts to hold onto for sale down the line a bit when future points become available. But in short they do not dilute anything as the workings of the point system is heavily regulated by Florida and something like that would not fly; however, they are free to use the minimum 2% points they own any way they wish.

 

[jerseyduke]

As I see it, disney would be using points they own.
When disney exercises ROFR it is almost always on resorts that are not actively being sold. In May they "resold" 2000 Boardwalk points - I took a high number, most resorts were less. How many points are in BWV? a few million? Lets say they did top off as you suggested and introduced an additional 1000 points into the 2019 year. Do that every month, 12 months, that us 12,000 "topped off" points in a pool of MILLIONS.

If they do "top off" which I think is speculation, it is such a minuscule percentage it would not even be an issue.

I think the bigger effect is that Disney is required to maintain a 2 percent ownership interest. If they ROFR a totally stripped contract - say an April UY with 0 in 2019 and 0 in 2020 - it still counts toward their ownership, even though they have no current points.

Disney often gives additional points to new purchases at new resorts (Rivera) but Disney still owns the vast majority of that resort.

 

[_auroraborealis_]

Matter cannot be created or destroyed. Disney is not creating new points after declaration. All those points existed. It is a matter of who owned them.

 

[vacationer1954]

If I remember correctly, Disney always retains 4% of the points.

 

[_auroraborealis_]

If I remember correctly, Disney always retains 4% of the points.

Legally in Florida, it's 2%. But generally, it can be more. Just not less. And they can use their points just like any other owner can.

 

[KAT4DISNEY]

Does this happen? or am I misunderstanding what “top up” means?

You're misunderstanding. DVC also has points they own and that would be the pool they are pulling from. Even topping off a drink just comes from another existing source! There are times when DVC can't sell a contract until the points are there and there's been at least 1 period I know of where they decided that rather than waiting they would still go ahead and sell the direct contracts but people wouldn't receive the current points. They did not do that too long and now seem to take the direction of waiting to sell until the current points are there. If they otherwise have them they can sell it right away with current points.