DVC plans to target commercial renters

[CastAStone]

I don't usually toot my own horn but figured I would share this one here. Multiple times during this week's condo meetings, members of the board openly spoke out against commercial renting by large point owners, saying "We are actively pursuing plans to go after those people and stop that behavior."

More here, with additional direct quotes from board members who spoke out during the discussion:

https://dvcnews.com/dvc-program-men...mmercial-renting-walking-during-condo-meeting

Just seeing this 17 days later but Thank goodness.

 

[Brian Noble]

To amplify on this point:

(b) they can get rentals cheaply enough so they don't need to buy.

Suppose I can consistently get a rental for $20pp. That's not impossible. Compare that to, say, owning direct at Riviera. It costs ~$200/pp net, and that's including a strong incentive. I pay ~$9pp on Dues, so I'd be paying $11pp less to own than to rent. That's a 5.5% return on my $200 investment. That is not good. Then throw in the fact that the contract is worth about 1/2-2/3ds the sales price once the ink dries, and things get hard to justify in a hurry.

You can make a slightly better case for the Poly, but only just. CFW is much harder.

That doesn't mean you can't justify it--you just need a long-enough payoff window, because only your dues component is subject to inflation. But, the window is measured in more-than-single-digits years.

 

[Nabas]

(b) they can get rentals cheaply enough so they don't need to buy.

I suspect this has a lot to do with it.

It’s pretty easy to find (for example) a guaranteed Animal Kingdom Lodge stay for $300 per night.

Why hand Disney tens of thousands of dollars, or go further into debt, when you can book a DVC room (with no long term commitment) for the price of a Moderate Resort?

I also suspect websites advertising Deluxe Resort stays for 50% or more off rack rate are making it difficult for Disney to fill their Deluxe Resort rooms at the prices Disney wants. Sure, they can fill them mostly but only after offering big discounts.

But I also suspect Disney is listening to feedback from members. Members have told them they don’t like walking (which has very little impact on Disneys bottom line). And members have also told Disney that they are frustrated that they cannot get the most popular rooms because these are being listed on commercial DVC rental websites.

Disney has said they are looking into both. In other words, it’s not only about the financial impact on Disney.

 

[CastAStone]

I think spec renting is main source or actually the only source the problem.

1000% yes for owners. Maybe less so for Disney.

 

[nalababybear]

To amplify on this point:

Suppose I can consistently get a rental for $20pp. That's not impossible. Compare that to, say, owning direct at Riviera. It costs ~$200/pp net, and that's including a strong incentive. I pay ~$9pp on Dues, so I'd be paying $11pp less to own than to rent. That's a 5.5% return on my $200 investment. That is not good. Then throw in the fact that the contract is worth about 1/2-2/3ds the sales price once the ink dries, and things get hard to justify in a hurry.

You can make a slightly better case for the Poly, but only just. CFW is much harder.

That doesn't mean you can't justify it--you just need a long-enough payoff window, because only your dues component is subject to inflation. But, the window is measured in more-than-single-digits years.

You're making the case for not owning and renting out To which I agree and those entering DVC to do this for a business needs to scrape the resale market of distressed contracts to make it profitable at the commercial level -- or cut out the middleman like the large scale folk are doing.

The math is simple HARD to justify for the squeeze required at the small scale.

We rent out to bide our time to larger family usage when the grandkids arrive.

DVC ownership is a long term commit, and that's why Disney has to be careful on the unintended consequences of defining commercial usage. If Disney adopts many of the suggestions and permutations floated upthread, it could potential put a chill and exit of folk that are the best asset for DVC -- DVC owners loving to talk about DVC.

 

[DVCPAT]

I suspect this has a lot to do with it.

It’s pretty easy to find (for example) a guaranteed Animal Kingdom Lodge stay for $300 per night.

Why hand Disney tens of thousands of dollars, or go further into debt, when you can book a DVC room (with no long term commitment) for the price of a Moderate Resort?

I also suspect websites advertising Deluxe Resort stays for 50% or more off rack rate are making it difficult for Disney to fill their Deluxe Resort rooms at the prices Disney wants. Sure, they can fill them mostly but only after offering big discounts.

But I also suspect Disney is listening to feedback from members. Members have told them they don’t like walking (which has very little impact on Disneys bottom line). And members have also told Disney that they are frustrated that they cannot get the most popular rooms because these are being listed on commercial DVC rental websites.

Disney has said they are looking into both. In other words, it’s not only about the financial impact on Disney.

An interesting stat would be comparing how much a DVC renter spends in WDW compared to a DVC member. If renters spend more in WDW , Disney will not curb commercial renting.

 

[nalababybear]

I suspect this has a lot to do with it.

It’s pretty easy to find (for example) a guaranteed Animal Kingdom Lodge stay for $300 per night.

Why hand Disney tens of thousands of dollars, or go further into debt, when you can book a DVC room (with no long term commitment) for the price of a Moderate Resort?

I also suspect websites advertising Deluxe Resort stays for 50% or more off rack rate are making it difficult for Disney to fill their Deluxe Resort rooms at the prices Disney wants. Sure, they can fill them mostly but only after offering big discounts.

But I also suspect Disney is listening to feedback from members. Members have told them they don’t like walking (which has very little impact on Disneys bottom line). And members have also told Disney that they are frustrated that they cannot get the most popular rooms because these are being listed on commercial DVC rental websites.

Disney has said they are looking into both. In other words, it’s not only about the financial impact on Disney.

Disney deluxe resorts consistently sell out. It even sells out of cash DVC side. That's not the issue -- it's the moderate hotels.

Disney listens all the time; how much they act and do tangible changes -- varies.

Walking will not go away even if the large commercial players are exited. Demand outstrips supply by large margins. Think AKL value will suddenly become readily available? Those VGC studios at 7 months lasting more than a minute at 800AM? The membership is 250,000 strong. Walking won't change unless they change the rules to slow walking like hard breaks before demand times and/or lottery on specific days (which I can see returning)

 

[Nabas]

An interesting stat would be comparing how much a DVC renter spends in WDW compared to a DVC member. If renters spend more in WDW , Disney will not curb commercial renting.

Yes, if that's how Disney views it.

If it were my business, I'd want both streams of revenue, what Disney refers to as Per Room Guest Spending (which includes the room rate plus money spent at the hotel). Often, more than half of PRGS comes from the room rate itself.

If I don't use my DVC point, then Disney can rent that room at 60 days (i.e. breakage). As a result, I pay for the maintenance of a room that Disney sells to someone else.

But if I rent that room, then Disney loses a lot (most) of that PRGS revenue.

 

[Nabas]

Walking will not go away even if the large commercial players are exited. Demand outstrips supply by large margins. Think AKL value will suddenly become readily available?

When I see a website that, at the moment, is offering 76 confirmed AKV Value Studios for rent, I view this as 76 DVC members who are being denied access to these 76 reservations by an apparent commercial entity. If a commercial entity, then this would be a violation of the contract we signed.

If Disney investigates this and determines these 76 reservations are distributed among (say) 38 DVC members, then no problem. However, if Disney determines these 76 reservations ultimately are held by a single entity, then problem.

I am optimistic Disney will get to the bottom of this and, as they have said they will do, resolve the issue with commercial renters.

 

[nalababybear]

An interesting stat would be comparing how much a DVC renter spends in WDW compared to a DVC member. If renters spend more in WDW , Disney will not curb commercial renting.

This. Then again, as mentioned upthread; Disney is compartmentalized into divisions. So how much noise coming out of the C-suite to change things at DVC division matters.

So I suspect Csuite is hearing DVC rentals impacting hotel division operations at moderate level -- then gives DVC marching orders to look into this and stop the impacts.

If parks comes back and says, hey, the 'desirable' park goer mix and per person spend coming from DVC has changed for the worse due to changes, C-suite folk will query DVC division ' hey what's up, your folk aren't spending anymore' and DVC board will hit their heads against the wall cause they culled out the rentals and higher paying per person mix.

All of this happens in our company and drives folk nuts. Wouldn't be surprised that it scales with Disney

 

[nalababybear]

When I see a website that, at the moment, is offering 76 confirmed AKV Value Studios for rent, I view this as 76 DVC members who are being denied access to these 76 reservations by an apparent commercial entity. If a commercial entity, then this would be a violation of the contract we signed.

If Disney investigates this and determines these 76 reservations are distributed among (say) 38 DVC members, then no problem. However, if Disney determines these 76 reservations ultimately are held by a single entity, then problem.

I am optimistic Disney will get to the bottom of this and, as they have said they will do, resolve the issue with commercial renters.

No problem -- for whom and from whom?

To the DVC membership still outside looking in -- they are still going to complain not having access to value rooms readily. Those 38 DVC members were lucky enough to get the room and perhaps may not complain. They will continue to be drowned out by the 100s of those saying -- the change wasn't enough -- we want the value rooms!

Disney then adjust and call them - standard rooms.

 

[CanadianDVC2024]

I am torn between a rock and a hard place because I do rent about half my points each year which covers the cost of my dues for all my contracts. That being said, I own a fixed week 47 contract without the 10% premium at VGF. I feel like fixed week contracts are going to have excellent resale value in the future if they put measures to block walking and put a lottery system in place for popular dates.

 

[Brian Noble]

You're making the case for not owning and renting out

No. I'm making the case for not buying from the developer and renting from another owner instead.

Buying from the developer and renting is a horrible investment: it is a 5.5% income stream, pre-tax, plus a significant loss of capital and a fair amount of risk, because the return is highly sensitive to the market rental rate. You can get 4.5% risk-free right this second in a 10-year treasury.

Equivalently: buying from the developer instead of renting is difficult to justify, especially if you don't know that your time horizon is at least ten years. If renting is undercutting DVD's sales efforts, then DVD is going to do something about it.

Owning will pay off if you own it long enough vs. renting, because the costs of owning (probably) grow more slowly than rents. Plus the math is different (and more favorable) for resale.

 

[Sandisw]

When I see a website that, at the moment, is offering 76 confirmed AKV Value Studios for rent, I view this as 76 DVC members who are being denied access to these 76 reservations by an apparent commercial entity. If a commercial entity, then this would be a violation of the contract we signed.

If Disney investigates this and determines these 76 reservations are distributed among (say) 38 DVC members, then no problem. However, if Disney determines these 76 reservations ultimately are held by a single entity, then problem.

I am optimistic Disney will get to the bottom of this and, as they have said they will do, resolve the issue with commercial renters.

I think this is where some of us fall. DVC should be looking into whether a membership is being used as what most would agree is in the business of renting.

But, if, all of those exist in a way that crosses a lot of owners, then each of those owners wouldn’t be in violation.

That is why, IMO, you are not going to see DVC try to declare that the rental of any specific room to be part of what makes a membership a business.

I do think they are going to find ways to tighten up what a pattern is and how to apply it to memberships both yearly and over multiple years.

IMO, reviews will happen much sooner than the 20 reservations threshold that was put in play all those years ago.

 

[xdan0920]

I am happy to hear you never had to rent points. I hope you have always been able to use up your points. That is great!

We have had years when for one reason or another we could not go and did not want to lose money, so we rented. It is allowed. During covid we sent our son and DIL as many times as they wanted to use up points and even sent them to Aulani. In the past couple years we've sold several contracts because we knew my parent's are aging, our son and DIL are doing more European trips and we just built a new home. We spent 5 weeks at WDW in 2022 and gave our son and DIL almost two weeks with us the same year. We spent as many points as we could and still ended up renting some points so not to lose them. We will wait until 2026 to travel to WDW again since we are now under 200 points. Life just gets in the way sometimes.

It is important IMO to allow members a reasonable amount of rentals. Bots do not count and should be squashed.

I disagree. Especially on what would be considered reasonable. Renting half your points to pay dues? Unreasonable. Sending your brother and his family, reasonable.

Whether it’s against the rules isn’t for us to decide, it’s up to DVC, but personally I think it falls under for profit commercial usage. There are many of these owners on Disboards, that’s all I’m saying.

Agree 100%

And members have also told Disney that they are frustrated that they cannot get the most popular rooms because these are being listed on commercial DVC rental websites.

Bingo. If you are listing on a commercial website you are violating the rules. IMO.

I am torn between a rock and a hard place because I do rent about half my points each year which covers the cost of my dues for all my contracts.

You are a commercial renter. Using your over bought points to pay your dues.

 

[xdan0920]

And, FWIW, I understand why Mods and owners of the Dis would not want the boat rocked. That’s a pretty busy subforum…

ETA….

It’s 1p on a Sunday and 3000 dvc points have been listed for rent so far today…

 

[Sandisw]

And, FWIW, I understand why Mods and owners of the Dis would not want the boat rocked. That’s a pretty busy subforum…

Just an FYI, the mods here are free to share our own opinions about topics and are in no way influenced to support one thing or another.

My thought on rentals has always been indifferent because I bought understanding that it’s part of it, but most importantly that DVC sets the way in which it enforces whether an owners is using their membership outside the rules.

While you think renting half your points makes you running a business, I do not. Using a commercial site to rent is also not something I see as making a difference in whether you are running a business or not.

If I rent one rental a year and use a broker, not sure how that turns my membership into a business?

And, that is the threshold that to be met when I look at my contract. Plus, each of us is in contract with DVC and not any other owner.

That is why I don’t care if people rent…its not my business what another owner does and whether or not they have chosen to violate the terms of their contract. Thst is up to DVC.

My only expectation is that it’s a consistent enforcement of whatever rules are in place.

ETA: just to add, some statements by the board at the meeting recognized that owners may rent to offset dues or when they might not be able to go that year, etc.

So, they certainly seem to recognize that certain actions might fall under the “okay” column.

 

[MICKIMINI]

I disagree. Especially on what would be considered reasonable. Renting half your points to pay dues? Unreasonable. Sending your brother and his family, reasonable.

Agree 100%

Bingo. If you are listing on a commercial website you are violating the rules. IMO.

You are a commercial renter. Using your over bought points to pay your dues.

I am pretty sure you have me confused with another disboard poster...

 

[nalababybear]

No. I'm making the case for not buying from the developer and renting from another owner instead.

Buying from the developer and renting is a horrible investment: it is a 5.5% income stream, pre-tax, plus a significant loss of capital and a fair amount of risk, because the return is highly sensitive to the market rental rate. You can get 4.5% risk-free right this second in a 10-year treasury.

Equivalently: buying from the developer instead of renting is difficult to justify, especially if you don't know that your time horizon is at least ten years. If renting is undercutting DVD's sales efforts, then DVD is going to do something about it.

Owning will pay off if you own it long enough vs. renting, because the costs of owning (probably) grow more slowly than rents. Plus the math is different (and more favorable) for resale.

Renters aren't owners. Different folk. Renters CAN become owners once they get the taste and start crunching numbers. As you said >10 years.

Timeshares, even DVC, makes a poor investment vehicle. At scale it can work. At the individual level, the simplicity is what makes it worthwhile to keep and even dump when done with the relative resale value maintained. That is rather unique for timeshares. Disney knows this.

Will they inadvertently kill the golden goose?

 

[xdan0920]

I am pretty sure you have me confused with another disboard poster...

Did I mis-quote you?