getting extra pts to rent to cover MFs

[Goofy + 3]

Its three changes, none of which impact your "right" to rent, and suddenly DVC rentals are less attractive:

1) Magical Express is only available on CRO reservations or to DVC members with their member ID and guests traveling with the member.

2) Dining Plan is only available on CRO reservations or to DVC members with their member ID and guests traveling with the member.

3) Room allocations prioritize members before renters, RCI trades and guests. Members become less likely to end up with the room without a balcony, non requested HA rooms, or rooms with lousy views.

And none of them take more than writing a system report and putting in some processes and rules around a match between the name on the reservation and the name on the contract.

Crisi-
Are you saying these are changes that could be made or that they have already been made? I'm working with David right now and hadn't heard that Magical Express wasn't part of the deal.

 

[crisi]

Crisi-
Are you saying these are changes that could be made or that they have already been made? I'm working with David right now and hadn't heard that Magical Express wasn't part of the deal.

They COULD be made. Any time Disney wants to discourage rentals, they simply need to make a few relatively simple changes to policy and suddenly a CRO reservation looks a lot more attractive.

And they don't need to give us any notice. When they changed the valet parking perk, people discovered it when handed the bill.

 

[bighoo93]

While I think sometimes the degree of risk associated with buying DVC points with the intent to rent is overstated, risk unquestionably exists and I'm not sure the benefits are worth it. What you are really talking about here is deploying some capital to generate income that will defray (or cover entirely) the MFs for the DVC points you will use yourself. There are lots of ways to generate income on your capital investment, and no particular reason to favor renting DVC points over the others. One suggestion would be to invest that money instead in an income-generating mutual fund. The typical return may be somewhat less (or it may not be), but the hassle is entirely gone, and the associated risks can be much more limited. In fact, this is precisely what I do, but others may have a different preference.

BTW, I've rented my points when I can't use them and intend to do so under those circumstances in the future, but I didn't buy points with the intent to just rent them. So I am comfortable with the idea of renting my points, but not so much with buying them for that purpose.

 

[sam52]

I too have spent considerable time in the past assisting prospective 'renters.' Lots of 'back and forth' emails and phone calls. I only rent limited numbers of points when I can't use them. Getting to know renters from around the world has been fun and I have made some new friends.

 

[DougEMG]

Its three changes, none of which impact your "right" to rent, and suddenly DVC rentals are less attractive:

1) Magical Express is only available on CRO reservations or to DVC members with their member ID and guests traveling with the member.

2) Dining Plan is only available on CRO reservations or to DVC members with their member ID and guests traveling with the member.

3) Room allocations prioritize members before renters, RCI trades and guests. Members become less likely to end up with the room without a balcony, non requested HA rooms, or rooms with lousy views.

And none of them take more than writing a system report and putting in some processes and rules around a match between the name on the reservation and the name on the contract.

I doubt that 1 and 3 could ever be implemented because those are not perks, but 2 definitely could be.

Regardless, the current high purchase price does not make it worth the effort to buy extra points to rent out.

 

[Brian Noble]

Under most reasonable assumptions about opportunity cost, etc., the ROI on DVC rentals is not particularly good---the acquisition basis is too high. What's more, it's a lot harder to rent than you'd think, unless you go the broker route, and that cuts into your potential ROI even more.

If you want to become a timeshare landlord, there are lots of better choices. They aren't necessarily high-dollar rentals, but they have a much lower cost basis, making for better returns.

 

[HokieGCC]

I think the numbers work and it is potentially a sound method of covering your MF costs. It is reasonable to expect that as MF's go up so will rental rates so it kind of makes sense as a strategy. You can always get out of it by selling so it is not a very high risk either. I think the tiebreaker is if it would be "fun" for you to manage constantly renting points. If so, then I think it is a net positive. If not it is a net negative. You can probably find other investments that would do as good or even better to cover your points with a lot less work; however, the investment risk may actually be higher with stocks etc. than DVC. Generally I don't see a problem with it. I am a lean to not doing it because of the extra work of managing it (and taxes ...) but I can see why some folks do this.

 

[disneynutz]

I disagree. Renting points takes dollars directly out of the Mouse's pockets, so if the ever end up seeing it as a problem they have to solve, they'll change the rules again.

I don't see it that way. Someone will use the owners points, the owner, a friend or relative or a renter. Either way Disney still makes money on ticket media, food, extra events and any purchases on property.

Bill

 

[Deb & Bill]

I don't see it that way. Someone will use the owners points, the owner, a friend or relative or a renter. Either way Disney still makes money on ticket media, food, extra events and any purchases on property.

Bill

Nah, Bill, they will stay in the villa, eat groceries from Publix, swim in the pool, window shop without buying anything at DTD and not need tickets. Or get free tickets from going to a timeshare presentation offsite.

 

[crisi]

I don't see it that way. Someone will use the owners points, the owner, a friend or relative or a renter. Either way Disney still makes money on ticket media, food, extra events and any purchases on property.

Bill

But not as much as they would if Disney were renting them a hotel room.

Disney has a fiduciary responsibility to its shareholders to maximize shareholder value. Not to say "oh, that's enough money this year."

 

[Missyrose]

I don't see it that way. Someone will use the owners points, the owner, a friend or relative or a renter. Either way Disney still makes money on ticket media, food, extra events and any purchases on property.

Bill

But here's the thing, it does cost Disney money. Let's say in the original plans, DVC Member A planned to use his AKV points for a September 2014 stay and Person B has a reservation at POR for the same time.

If DVC Member A decides that they can't take that trip and decides to rent their points and Person B learns about renting points and rents DVC Member A's points (and cancels his POR reservation), the rental has cost Disney cash.

In the original plans, Disney would likely have seen some ticket/food money from DVC Member A and ticket, food and lodging money from Person B. But in the rental scenario, Disney only sees money from Person B's food and tickets.

 

[bighoo93]

But here's the thing, it does cost Disney money. Let's say in the original plans, DVC Member A planned to use his AKV points for a September 2014 stay and Person B has a reservation at POR for the same time.

If DVC Member A decides that they can't take that trip and decides to rent their points and Person B learns about renting points and rents DVC Member A's points (and cancels his POR reservation), the rental has cost Disney cash.

In the original plans, Disney would likely have seen some ticket/food money from DVC Member A and ticket, food and lodging money from Person B. But in the rental scenario, Disney only sees money from Person B's food and tickets.

No. If Disney had simply wanted to build more hotel rooms, they would have done so. A timeshare is a different business model, and they are surely not clueless about this. You make a tradeoff with a timeshare by getting the bulk of your money committed up front, along with presumably securing occupancy where you will earn all kinds of additional revenue. The "plan" is not to exploit (or perhaps encourage) vacancies so that you can double dip by renting a room you have already sold. There is no reason for Disney to avoid renting that additional capacity should it be there, but that is not part of the business model, and failing to do so is not in any way taking money from Disney or however you want to put it. I am sure they planned some amount of cannibalization (i.e., people who would have stayed at Disney hotels buying DVC instead). Again, this is a conscious choice of business model. It really makes no sense for them to plan, expect or feel entitled to rent a room they have already sold. If Disney were to start trying to do something about this, it would be a strong signal to me that someone doesn't know what they are doing.

 

[Dean]

I think the numbers work and it is potentially a sound method of covering your MF costs. It is reasonable to expect that as MF's go up so will rental rates so it kind of makes sense as a strategy. You can always get out of it by selling so it is not a very high risk either. I think the tiebreaker is if it would be "fun" for you to manage constantly renting points. If so, then I think it is a net positive. If not it is a net negative. You can probably find other investments that would do as good or even better to cover your points with a lot less work; however, the investment risk may actually be higher with stocks etc. than DVC. Generally I don't see a problem with it. I am a lean to not doing it because of the extra work of managing it (and taxes ...) but I can see why some folks do this.

I disagree about the amount of risk and would not assume one can sell and get out for a reasonable option later if this isn't working out. I would agree it is work and risk and one needs to understand this. IMO one needs a very high rate of return to make buying extra points to rent a reasonable option. IMO if it makes sense to buy an extra 200 points, it makes more sense to buy 5000 and make more money for the effort.

I don't see it that way. Someone will use the owners points, the owner, a friend or relative or a renter. Either way Disney still makes money on ticket media, food, extra events and any purchases on property.

Bill

Bill, I'd suggest that Disney would have made about the same amount on whoever occupied the room. DVD is a separate entity that must stand on it's own financially separate even from DVCMC, the resorts are also separate. Legally they can't prevent renting but each private rental is a potential lost retail booking, that some would not have paid the higher prices and maybe stayed off property is really irrelevant.

No. If Disney had simply wanted to build more hotel rooms, they would have done so. A timeshare is a different business model, and they are surely not clueless about this. You make a tradeoff with a timeshare by getting the bulk of your money committed up front, along with presumably securing occupancy where you will earn all kinds of additional revenue. The "plan" is not to exploit (or perhaps encourage) vacancies so that you can double dip by renting a room you have already sold. There is no reason for Disney to avoid renting that additional capacity should it be there, but that is not part of the business model, and failing to do so is not in any way taking money from Disney or however you want to put it. I am sure they planned some amount of cannibalization (i.e., people who would have stayed at Disney hotels buying DVC instead). Again, this is a conscious choice of business model. It really makes no sense for them to plan, expect or feel entitled to rent a room they have already sold. If Disney were to start trying to do something about this, it would be a strong signal to me that someone doesn't know what they are doing.

It's a balance. They can't legally prevent renting in most situations but that doesn't mean they have to like it or can't plan against it. To suggest they simply grin and bear it, saying they have no other choice and already made some money, is not realistic nor reasonable.