DVC point balancing 2022 vs 2021

[DVCSunDevil]

The very best place to get that answer IMO is to talk to those at DVCM and let them go into detail about it all.

This entire situation and points shared here have forced me to learn a lot about the contract and timeshares in general and to be frank, taught me I was not as accurate in my understanding of it all as I thought I was. I’m fortunate to have some very good and knowledgeable friends who helped me make sense of it all.

Good points. I definitely plan to do that. But it's hard to get around the fact that the points increased and, according to the contract, they are not allowed to do that. I agree that a discussion with DVCM should be had by anyone that takes issue with this decision. However, DVCM is the one who made the decision so of course they are going to tell you/us things to support that decision. They are not impartial, but instead they are precisely the ones who's motives are in question by many on here. So it's not shocking for them to give very "believable" reasoning as to why they made these decisions. At the end of the day, they increased the calendar points for the year. If I break a written contract with someone I will probably have reasons A, B and C for doing so. But if the contract is written in black and white, do those reasons really matter? I plan on talking with DVCM, but the value of their explanation should be taken in context with their position in this entire situation.

 

[New Mouse]

Good points. I definitely plan to do that. But it's hard to get around the fact that the points increased and, according to the contract, they are not allowed to do that. I agree that a discussion with DVCM should be had by anyone that takes issue with this decision. However, DVCM is the one who made the decision so of course they are going to tell you/us things to support that decision. They are not impartial, but instead they are precisely the ones who's motives are in question by many on here. So it's not shocking for them to give very "believable" reasoning as to why they made these decisions. At the end of the day, they increased the calendar points for the year. If I break a written contract with someone I will probably have reasons A, B and C for doing so. But if the contract is written in black and white, do those reasons really matter? I plan on talking with DVCM, but the value of their explanation should be taken in context with their position in this entire situation.

Not to mention that you can bet if the shoe was on the other foot youd have legal knocking on your door and then forclosure on your dvc points.

 

[Leight19]

A few people posted about motives of DVC and I think the point really comes to what their incentives are. A lot of people get lost in thinking companies have evil motives but companies are collection of people each doing what they are incentivized to do. I asked previously as there are gaps in my understanding of what companies/groups control what parts of dvc but I’d liked to get a look at how responsibilites balance and what incentives are in place which could cause conflict of interest.

Imo there should be a group that does sales with direct interest to profit. They should be the ones who control direct prices, benefits, and how points are used to sell cash rooms. They may do things we don’t like as purchasers which is balanced against how customer satisfaction effects future sales but them having direct interest in maximizing profit would be valid as long as they don’t violate contracts we purchase.

There should be a second group that directly manages the dvc resorts. They should be the one that controls budget decisions/negotiates prices for service, defines point charts, and should be actively engaging members to make sure they have finger on pulse. Ideally they would have complete separate incentives without any motive for how much previous group makes on cash rooms. They should have sole motive of minimizing yearly maintenance fees while maximizing customer satisfaction to make sure dues are spent in way that makes sense and they don’t skimp in areas customers disagree with. In theory, they should also even represent us to push back against sales group/cash side of resorts when other parties make changes that materially effect how we use our points (something like lock off premium or changes to common services at cash/dvc mixed resorts). They should have no interest in revenue generation beyond maximizing the value of points each year in benefit of membership owners. If there is any cross over incentives between groups that control how points are balanced and groups that benefit from breakage the incentive structure is fundamentally flawed and well get this fuzzy bookkeeping that will ultimately lead to dvc members feeling like they are getting ripped off.

 

[drusba]

A few people posted about motives of DVC and I think the point really comes to what their incentives are. A lot of people get lost in thinking companies have evil motives but companies are collection of people each doing what they are incentivized to do. I asked previously as there are gaps in my understanding of what companies/groups control what parts of dvc but I’d liked to get a look at how responsibilites balance and what incentives are in place which could cause conflict of interest.

Imo there should be a group that does sales with direct interest to profit. They should be the ones who control direct prices, benefits, and how points are used to sell cash rooms. They may do things we don’t like as purchasers which is balanced against how customer satisfaction effects future sales but them having direct interest in maximizing profit would be valid as long as they don’t violate contracts we purchase.

There should be a second group that directly manages the dvc resorts. They should be the one that controls budget decisions/negotiates prices for service, defines point charts, and should be actively engaging members to make sure they have finger on pulse. Ideally they would have complete separate incentives without any motive for how much previous group makes on cash rooms. They should have sole motive of minimizing yearly maintenance fees while maximizing customer satisfaction to make sure dues are spent in way that makes sense and they don’t skimp in areas customers disagree with. In theory, they should also even represent us to push back against sales group/cash side of resorts when other parties make changes that materially effect how we use our points (something like lock off premium or changes to common services at cash/dvc mixed resorts). They should have no interest in revenue generation beyond maximizing the value of points each year in benefit of membership owners. If there is any cross over incentives between groups that control how points are balanced and groups that benefit from breakage the incentive structure is fundamentally flawed and well get this fuzzy bookkeeping that will ultimately lead to dvc members feeling like they are getting ripped off.

DVD is the sales entity and DVCM the resorts' managing entity. The resorts are officially run by each association but the association basically contracts all of its obligations and activities over to DVCM. DVD has absolute control to appoint all the members of the association boards and thus controls all contracts with DVCM. Terri Schultz, the head of DVC, is actually a DVD senior vice-president. Moreover, as I have found in dealing with DVC/DVCM in situations like the current one, the persons you talk on the phone for the phone meetings that are set are all actually employees of DVD.

Moreover, DVCM has an incentive to do things that minimize the services provided for making reservations, including MS and the reservation systems, and to raise total points applicable in a calendar year so as to maximize profit it receives including from breakage income.

MS Services and the reservation systems and management services are paid as follows: (a) there is a $1 per member per year DVC Reservation Compenent Fee; (b) DVCM gets paid 12.5% of the annual budget (not including taxes and the 12.5% fee in the calculation), out of which it pays for any home resort reservation services and reservation systems; (c) breakage income for renting the resort rooms goes first to offset 2.5% of the annual budget (not including taxes), next to cover all the costs of member services that relate to reservations of non-home DVC Resorts and non-DVC resorts, plus 5% of those costs (a built in profit), and then the remainder goes to DVCM to do with as it pleases. Result: if DVC were to spend $100,000 on member services and reservation systems in a year or $10 million dollars, your dues would not vary one penney because none of the payment sources for such services vary according to actual cost. And the more breakage income that is made in a year, the more profit DVCM can make.

Thus, from what I am aware, DVD actually controls everything and DVCM has an incentive to minimize MS services provided so it makes more profit from the 12.5% annual fee, and an incentive to increase total breakage income per year, which might be accomplished by raising total points applicable to a year.

 

[cm8]

Crazy question maybe? But in the event that they can just up and add phantom points, Can we also request a change to the breakage percentage that is paid to the membership as a whole as well? I think it’s past time the lousy 2 or 3% we get, be negotiated to something like 5 or 7% in our favor. If they can change the seasons, and reasons without a change of law, them changing our breakage shouldn’t require an act of congress either.

 

[Cabius]

Crazy question maybe? But in the event that they can just up and add phantom points, Can we also request a change to the breakage percentage that is paid to the membership as a whole as well? I think it’s past time the lousy 2 or 3% we get, be negotiated to something like 5 or 7% in our favor. If they can change the seasons, and reasons without a change of law, them changing our breakage shouldn’t require an act of congress either.

I think you’ll find that the only real power that we hold is the ability to sell our own contracts, and perhaps to tarnish the reputation of DVC with prospective buyers. (I got in very recently, but am not sure if I would recommend it at this point.)

 

[CSLucas]

I was supposed to have a call with DVC today, however the person(s) I was scheduled to meet with had an emergency and needed to reschedule.

My plan is basically to walk through Exhibit A which defines how points are created and valued. This one is from AKV:
View attachment 553051

There are a few takeaways for me here:

For real-estate interest formulation "demand days" (this is representative of a unit you own, by a percentage on your deed):
1. It clearly says "points" don't matter. The percentage of ownership does, and this is reiterated in this exhibit, in the POS, and in the deeds. Points are for a convenience of calculation - but you could say just as easy that a week stay costs "1%" of Unit 115C.
2. During initial point creation for the resort, DVC created initial "seasons". We don't know how many, and to be honest it doesn't matter (which to me becomes a realization later).
3. Each vacation home has a demand factor applied to it - this considers the type of vacation home (studio, one-bedroom, ext), if it contains a lock-off, and the view it has (standard, pool, ext). Note: that this is only a DESIRE ranking, not a SIZE ranking. Size of the home is accounted for later.
4. The demand factor is multiplied by the number of days in each season to give a studio, a one bedroom, and a two bedroom total number of "demand days" for each season.
5. Total "demand days" for all seasons of each vacation home type are totaled giving a total for the year.

Note before proceeding, that a "unit" is not a vacation home. There may (will?) be multiple vacation homes in a defined unit. For example, you may have a plex of one bedroom, two bedroom, and multiple studios within a single unit. The combination within each unit doesn't matter, since we're going to figure out the value of the unit based on the vacation homes it contains next. It is entirely possible that someone with 200 points owns 3% of unit 110A but another person with 200 points owns 1% of unit 110B because of the types and quantities of vacation homes within the unit, as well as their views.

5. For each vacation home in a unit (studio, one bedroom, two bedroom) - the quantity of each vacation home type is multiplied by "demand days" for the year - then added together to represent a total number of "demand days" in the entire unit.
6. When you are sold a deed, you are sold a percentage relative to the number of "demand" days in that unit, which are already weighted based on initially defined seasons, views, unit types, and other factors that represent the value of that unit.

Converting "demand days" to "points":
1. Again, this section says "points" don't matter and are only an easier way to account for the percentage of ownership against the "demand days" you purchased.
2. The percentage of "demand days" purchased are multiplied by the square footage in the unit to determine the total square footage owned relative to the unit's total space.
3. The owned square footage is then multiplied by some "constant number" (across the entire resort?) to determine the number of vacation points your "percentage of demand days" for a specific unit are worth.

The page goes on to say that the initial points for each home, on each day will be determined by projected demand and that they are allowed to reallocate them per the MSA which I've put below. I think most people have seen this before.

What the kicker is for me, is in the very last sentence of the last paragraph in exhibit A (above): "In any event, the total number of Home Resort Vacation Points can never exceed the total number of Ownership Interests in Units of which they are symbolic."

View attachment 553054

Exhibit A reads to me that regardless of anything in the MSA to the contrary, total points year to year can *never* increase. It doesn't matter if it's for holidays, seasons or anything - all of this would have to be done via reallocation. Your points were created by measuring a unit's value based on the number of days it can be used, projected demand (including holidays, seasons), view, vacation home type and quantity, as well as unit square footage. The only exception would be a leap year since you are creating additional "demand days" for each unit.

I know we've said a lot about "moving Easter" and things like that in this thread - but my own opinion is it just doesn't matter. Once the ownership interest is created, it's tied to the demand factor they used on those holidays and in those seasons forever, before points are even created. The only thing they can do is move points around. In order to create more points, they would have to increase one of the variables. Besides leap year, you don't get more than 365 days in a year. You can't go back and increase the demand factor against a unit, because it's a factor against ownership interest ("demand days", not "points"), and you purchased a percentage of a unit's total "demand days" - not a fixed quantity. Increasing the demand factor by 2x would just translate into you owning the same percentage of that increase.

Thanks for this- that is my understanding as well. IMO, the only way to "add points" would be the same as a stock split, with existing members being given a proportionate number of additional points on their existing contracts.

 

[dischris11]

Thank you all for this discussion and contacting DVC. I do not own yet but I'm on the verge of purchasing and this definitely concerns me. In all my research about owning DVC, it has always been explained that the amount of points in the resort is fixed so your purchase doesn't get diluted. I hope this is rectified. It is certainly concerning that they have tried fuzzy math a few times within the last couple of years.

 

[New Mouse]

DVD is the sales entity and DVCM the resorts' managing entity. The resorts are officially run by each association but the association basically contracts all of its obligations and activities over to DVCM. DVD has absolute control to appoint all the members of the association boards and thus controls all contracts with DVCM. Terri Schultz, the head of DVC, is actually a DVD senior vice-president. Moreover, as I have found in dealing with DVC/DVCM in situations like the current one, the persons you talk on the phone for the phone meetings that are set are all actually employees of DVD.

Moreover, DVCM has an incentive to do things that minimize the services provided for making reservations, including MS and the reservation systems, and to raise total points applicable in a calendar year so as to maximize profit it receives including from breakage income.

MS Services and the reservation systems and management services are paid as follows: (a) there is a $1 per member per year DVC Reservation Compenent Fee; (b) DVCM gets paid 12.5% of the annual budget (not including taxes and the 12.5% fee in the calculation), out of which it pays for any home resort reservation services and reservation systems; (c) breakage income for renting the resort rooms goes first to offset 2.5% of the annual budget (not including taxes), next to cover all the costs of member services that relate to reservations of non-home DVC Resorts and non-DVC resorts, plus 5% of those costs (a built in profit), and then the remainder goes to DVCM to do with as it pleases. Result: if DVC were to spend $100,000 on member services and reservation systems in a year or $10 million dollars, your dues would not vary one penney because none of the payment sources for such services vary according to actual cost. And the more breakage income that is made in a year, the more profit DVCM can make.

Thus, from what I am aware, DVD actually controls everything and DVCM has an incentive to minimize MS services provided so it makes more profit from the 12.5% annual fee, and an incentive to increase total breakage income per year, which might be accomplished by raising total points applicable to a year.

There is also much incentive to move into other parts of the Disney orgnaization, hence even those who may just make point charts per say... while they may not benefit from this role day to day you can damn well bet they are angling for a promotion and trying to get noticed by doing those things.

 

[lovethesun12]

I completely agree. We should hold DVCMC accountable when we believe they have done something they should not or when we want clarification for decisions.

The point I was trying to make is that people like me have stopped sharing specifics as to why we have come to a different conclusion because of comments like the one that was directed at me.

Thank you for sharing your opinion though. It's a good reminder that we need to look at all sides. After reading this thread I also have a lot of questions and decided to write them to get my questions answered as well.

 

[Mumof4mice]

Good points. I definitely plan to do that. But it's hard to get around the fact that the points increased and, according to the contract, they are not allowed to do that. I agree that a discussion with DVCM should be had by anyone that takes issue with this decision. However, DVCM is the one who made the decision so of course they are going to tell you/us things to support that decision. They are not impartial, but instead they are precisely the ones who's motives are in question by many on here. So it's not shocking for them to give very "believable" reasoning as to why they made these decisions. At the end of the day, they increased the calendar points for the year. If I break a written contract with someone I will probably have reasons A, B and C for doing so. But if the contract is written in black and white, do those reasons really matter? I plan on talking with DVCM, but the value of their explanation should be taken in context with their position in this entire situation.

Agree with this.

I would love to receive a reasonable explanation for the point inflation. I'd love to add more points, but DVD/DVCMC are forcing me to vote with my money.

To get a definitive ruling, the legality of season and base year changes would have to be contested in a court of law. So how did DVCM manage to convince long term members like @Sandi with good product knowledge and are even-handed in their comments, that total point inflation benefits the membership?

Here's my guess. DVCM will claim that the administrative cost of keeping the charts neutral in all years exceeds the cost of the point inflation. That members going through the charts with a magnifying glass, lodging complaints, cost the membership money.

While this is often the case in construction, where the more expensive contractor who completes the project earlier works out cheaper, cheap tiles cost more labor to install etc, it is not true for the point chart creation. Whether changes to the point charts are made in any one year, the charts need to be checked and audited. The fixed accounting and compliance costs do not change.

How hard is it, for example, to choose a base year that yields neutral points most of the time, and add an extra point to PVB SV studios in one of the seasons, in the few years where the point charts will "illegally fall below declared points"?! Is anyone going to reasonably believe that it would cost DVCM more than $600,000 (the retail value of the ~20k points) each year to accomplish that?

If DVCM claims it does, I'd really love to win that subcontract. I've been involved in commercial development for 20 years and DH has a J.D. Vote for us, we'll do it for $60,000!

Have an awesome weekend, All. Stay safe and well!

 

[andeesings]

I know enough to know when I'm WAY out of my depth, but I've literally just read all 20 pages in this thread and I'm clueless. Can someone explain this to me as if I were a child?

 

[SL6827]

If they get away with adding points now, how many points will they add for 2023? Or 2024, or 2030? It will never stop. Cooking them books.

 

[cm8]

I know enough to know when I'm WAY out of my depth, but I've literally just read all 20 pages in this thread and I'm clueless. Can someone explain this to me as if I were a child?

Basically, some of us members believe with what information we have been provided by management, that DVCM have decided to use phantom points (point amounts increased and as a result, less members will be able to book and use their points which would result in astronomical breakage income for Disney on the backs of the members) to increase the amount needed to use in the 7 seasons they made for UY 2022.

As such, some of us have questioned the legality of the changes made when it seems to go against the rules established when the membership was created.

It appears that the point chart changes(2022) shift to benefit Disney instead of benefiting us, the members.

Basically, but don’t quote me cause it’s more to this than what I wrote.

 

[Leight19]

I know enough to know when I'm WAY out of my depth, but I've literally just read all 20 pages in this thread and I'm clueless. Can someone explain this to me as if I were a child?

My simple summary is dvc has released point charts for 2022 with something like 0.5 to 0.7% more points then sold. People dug and found (as I understand) this is caused by the 7 season point charts which has fluctuation year to year of how many days are in each season based on where the holiday falls and number of weekend days. My understanding is if you apply point chart as written to 2035, the points match exactly with number of points sold. However, the 2022 point charts used in 2022 cost more points then sold at resort which means us owners can book less and dvc will get added cash rooms to rent through breakage.

 

[SL6827]

This is all to benefit Disney. They will continue to do this as long as they can get away with it. Even though I just got back from a quick trip and had a fabulous time, I know they no longer have any shame in doing what ever they can get away with doing to the customer to make a dollar. They no longer have one ounce of shame in them.

I just wonder how long it will take for the reputation of DVC to go the way of most timeshares? What we realize now others will realize at some point too.

 

[SL6827]

And what else makes me wonder if Disney will do this to pad their wallets, what else will they do or have done in regards to DVC? How honest are they with the dues? How much of the hotel operating cost of the resorts that are both DVC and normal hotels are the DVC members actually paying? Do you really know? Could you really know?

 

[Minniemoo15]

I know enough to know when I'm WAY out of my depth, but I've literally just read all 20 pages in this thread and I'm clueless. Can someone explain this to me as if I were a child?

This is how I explained it to my parents (who are also DVC owners):

Each resort point chart has a total number of points - which is, the number required to book every room every day of the year. For years, that total number on the point chart has hovered very closely to the number of total declared points (the number of points that members own).

The POS (the legal documents which govern how DVC is run) states that any increase of points for a day or week needs to be met by a similar decrease elsewhere in the chart. Because the total number of points did not change much from year to year - DVC was following this requirement.

However, in 2022 - many weeks increased and were not offset by similar decreases. Some users here did some excellent analyses and noticed that the overall point totals increased at all resorts by a wider margin than ever before.

This is an issue because there are now more points in the charts than total declared (or the number of points that members own). At my home resort of PVB, these extra points can book 2 studios every day of the year. And this will be year after year after year.

So - if there are more points in the chart than members own, who benefits ? The consensus is not members (with the point inflation, your points don’t go as far). Disney will likely benefit as they can now rent the rooms that will sit empty for cash at the high rack rates they charge and pocket this money.

This is how I understand the issue but I am far from an expert so someone please correct me if any of this information is not accurate.

 

[Cabius]

This is how I understand the issue but I am far from an expert so someone please correct me if any of this information is not accurate.

I think this is a very good summary without getting into the technical details of how they pull this off in a possibly letter-of-the-law legal way. (Basically, it depends on the fact that Easter bounces around from year to year, and the new point charts bump Easter week from a low-point season to a very high-point one, which is where the extra points come from.)

 

[Jelly563]

I purchased to travel in the fall, that is what works best for my family. We bought enough points to book grand villas. The new point chart in 2021 added 10 points per night to our room. We usually go 6 nights so that's an additional 60 pts.
After reading this forum, I said.... let me look at summer booking. Well, those nights cost much more than the fall time does so it looks like we are forced to stay less time then what we signed up for. That's detrimental to my membership. How can Disney fix that ??