Intricate question regarding renting points

[78thrifleman]

This may end up being a convoluted question, but I will ask it as clearly as possible. If it's been asked already, sorry.

Originally, I told my wife if we needed to get rid of points, we could find someone who needed them, find out what hotel and when, and then book it for them, charging slightly under what Disney's rack rate would be.

EXAMPLE: Someone wants 1 week at Saratoga Jan 2-Jan 9 (assume it's Mon-Fri). We would go to the Disney website, punch in the #'s and see what Disney would charge.

Now, assume Disney would charge $3,500.
We would, in turn, charge those people $2700-$3000 for the points... they will still get a discount.

I then found out that it doesn't work that way, that people rent points by the dollar.

I've noticed that most people rent their points out for $9-11$ per point. How come they don''t rent the points for what they paid for them ie. $60/point?

Easy enough... I came to the realization that if someone needed to rent 200 points at $60/point it would cost them $16,000 for a vacation. That makes sense.

However, how did it become accepted practice to charge $9-$11 per point? At $9 per point for 200 points, that would net the seller $1,800 - far below what most resorts would cost.

Why arent' people renting points in the $14 range - 200 pnts at $14/pnt would be $2800 - still a pretty good discount. How did that 9-11 range become standard.

Invarriably, someone is going to reply, "You can charge whatever you want." But, in reality that is not true. If you charge above market price, no one will buy your product.

Hopefully i have presented you with a conundrum that will occupy your minds for hours and hours.

 

[Disney grandma]

Exactly what you said, if you overcharge noone will buy. There is no cancellation policy when renting points. We have rented twice before and held our breaths hoping noone would get sick at the last minute. We enjoyed our trips very much, but would not be tempted to rent points if they were priced too high. People who rent aren't in it to make money, basically to cover the cost of their fees regarding their ownership because they can't use their points for some reason or another.

 

[TiaMaria]

"What the market will bear"

 

[Hunclemarco]

I think that the per point price was determined at cost or a little under that, and not for any sort of profit, despite what would still be a discount from paying rack rates. I'm sure that someone who has been a member much longer than i could give a better exclamation.

 

[Monte Cristo]

"What the market will bear"

Agreed.

 

[78thrifleman]

"What the market will bear"

So then why don't we, as owners, drive the market up some more?

 

[LisaS]

Supply and demand dictate the price per point. For years the price/pt was $10. Given that annual fees go up about 3.5% a year, an increase in the going rate for rentals was overdue IMO and a couple of years ago it did finally move up to $12/pt. Then the economy tanked and I think a lot of members opted to rent their points. With a glut of points and savvy renters shopping for bargains, the price/pt fell back to $10.

It would be unreasonable to expect to rent your points for $60/pt. That is what you pay on the resale market to purchase a contract with points coming every year until 2042 or later depending on the resort. You cannot expect to rent one reservation for what you pay for the entire contract any more than you could expect to rent out your house for $200,000 a year (unless you live in a mansion in a gated community LOL).

So then why don't we, as owners, drive the market up some more?

You can ask for whatever price/point you want but there will always be someone who will advertise a lower price than you are asking in order to make the sale. They might be desperate to unload their points to avoid foreclosure on their home or maybe they are just looking to cover their dues and don't care about making a profit on the rental but just want to line up a renter quickly and get it over with.

 

[tay72699]

I can't say why people rent for the price that they do, but there are other things to consider when renting points as opposed to rack rate. No daily housekeeping with points is one of them and renters do not get to use any of the Member Perks. Rack rate is a more secure transaction with a cancellation policy. I'm sure there are many things that affect the price per point for rentling...bottom line is people want a deal.

 

[vicki_c]

I've noticed that most people rent their points out for $9-11$ per point. How come they don''t rent the points for what they paid for them ie. $60/point?

I know you answered this yourself, in a different way, but remember that $60 a point is the price you paid for the points for the entire contract length. So following up on your $16,000 train of thought, if your contract runs until 2047, for example, even using purchase price, you would logically have to divide it by the number of years in your contract, KWIM? So if you did that - you could rent your points for $60/37 years = $1-2 per point! Don't see anyone doing that, of course!

It is truly just market driven, as the others have said.

 

[vicki_c]

So then why don't we, as owners, drive the market up some more?

Because you can't get every DVC owner in the world to agree to do that. Which would be price-fixing in the business world, not sure about in "DVC world" - but it would never be possible - someone would always offer a lower price.

 

[vicki_c]

I'm sure that someone who has been a member much longer than i could give a better exclamation.

!!!!

I just wanted to give a better "exclamation"! (Sorry to tease you Hunclemarco - I couldn't resist!)

 

[LisaS]

Another issue affecting rental rates is Disney's own booking discounts. Over the past couple of years they have offered lots of deals such as "pay for 4 nights, stay for 7 nights", free dining, and hefty room-only discounts. As pointed out already, booking with Disney gets you daily housekeeping and a flexible cancellation policy and the peace of mind that you don't get when booking with a stranger you met on the Internet.

 

[Hunclemarco]

!!!!

I just wanted to give a better "exclamation"! (Sorry to tease you Hunclemarco - I couldn't resist!)

And that's why i love these boards so much!

 

[Rpsemont]

Lots of good answers alread, but thought I'd add an additional thought...

I financed my first point purchase, which was a few years ago, but was BWV points.I paid $89 per point; with finance fees included the cost of my purchase was $19301. At the time, I calculated the points on the contract to be 5700
(150 points times 38 years)
So in my SIMPLE math, my cost per point is $3.38
My Maintenace fees are/were around $5.50
SO in my mind, I value my points at about $9/point.

I use this thought process sometime swhen trying to decide if I'm going to stay on points or pay for a room with an AP discount.
If it takes 14 points for a saturday night, it's "costing " me $126 (14 times $9)
If I can get a Vaule resort for $65 or a moderate for $89 or $94 (and this has happended in the past) Sometimes I save my points and pay cash.

Of course, if you didn't finance, if you paid less, if your maintenance fees are lower, then your cost per point is lower too.

I have been a renter and a rentee. And think $10 can be high when I'm a renter, but low when I'm a rentee

It really does come down to supply and demand

 

[bumbershoot]

I know you answered this yourself, in a different way, but remember that $60 a point is the price you paid for the points for the entire contract length. So following up on your $16,000 train of thought, if your contract runs until 2047, for example, even using purchase price, you would logically have to divide it by the number of years in your contract, KWIM? So if you did that - you could rent your points for $60/37 years = $1-2 per point! Don't see anyone doing that, of course!

It is truly just market driven, as the others have said.

You said just what I wanted to say.

 

[DebbieB]

This may end up being a convoluted question, but I will ask it as clearly as possible. If it's been asked already, sorry.

Originally, I told my wife if we needed to get rid of points, we could find someone who needed them, find out what hotel and when, and then book it for them, charging slightly under what Disney's rack rate would be.

EXAMPLE: Someone wants 1 week at Saratoga Jan 2-Jan 9 (assume it's Mon-Fri). We would go to the Disney website, punch in the #'s and see what Disney would charge.

Now, assume Disney would charge $3,500.
We would, in turn, charge those people $2700-$3000 for the points... they will still get a discount.

I then found out that it doesn't work that way, that people rent points by the dollar.

I've noticed that most people rent their points out for $9-11$ per point. How come they don''t rent the points for what they paid for them ie. $60/point?

Easy enough... I came to the realization that if someone needed to rent 200 points at $60/point it would cost them $16,000 for a vacation. That makes sense.

However, how did it become accepted practice to charge $9-$11 per point? At $9 per point for 200 points, that would net the seller $1,800 - far below what most resorts would cost.

Why arent' people renting points in the $14 range - 200 pnts at $14/pnt would be $2800 - still a pretty good discount. How did that 9-11 range become standard.

Invarriably, someone is going to reply, "You can charge whatever you want." But, in reality that is not true. If you charge above market price, no one will buy your product.

Hopefully i have presented you with a conundrum that will occupy your minds for hours and hours.

Keep in mind CRO is regularly offering 40% off. So for $3,500 room, they have it for around $2,100, which includes daily housekeeping, liberal cancellation rules, no risk. $1,800 might be a reasonable price to rent.

 

[Sammie]

Booking with Disney involves no risk, daily housekeeping, discounts which can be up to 42% off, and easy cancellation.

Renting involves risk, no daily housekeeping, and no cancellation.

The price therefore reflects that.

 

[mickey&minniealways]

I thought it states in the rules that you cannot rent for profit.

 

[Sammie]

I thought it states in the rules that you cannot rent for profit.

You can't transfer points for profit, and you can't rent commercially.

 

[disneynutz]

IMO there is enough demand, rentals have increased each year. As long as people can save some money, they will rent.

The issue is that owners price their rentals all over the place. Due to several factors many members can't afford to take vacations and/or they are looking for income to pay their dues. Once you buy a contract, it's very difficult to let it go.

As a result, there will always be someone under cutting the going rate and there isn't a mechanism in place to get owners to increase their price.

Bill