Is renting points causing point prices for other WDW hotels to increase?

[CarolMN]

In another post re 2002 Disney Collection Points, Pam OKW makes this interesting observation:



"I sure hope they distribute the point charts soon. If they are making big jumps like that people may need to change their plans.

Changes in point charts has always been a possibility but I can't recall it happening in the past.

My theory is that by renting points out to strangers at a rate that undercuts Disney, we are doing ourselves a disservice. If people can come here or to E-Bay etc. and book a room at a DVC resort for 1/2 what Disney is charging, they will do it. Then Disney has to work that much harder to book the rooms members have turned over in exchanges. They have to lower their prices. Then they don't have the cash to give to the resort where the trade was made.

People have reported booking a 2 bedroom at OKW for December at $269 per night. The rack rate is $459 and if they get the discount after 12/20 that's versus the rack rate of $730. Now, the rack rates are comparable to GF rack rates and would be an even exchange. If Disney is only getting half the rack rate for the room, they can't do an even exchange with the GF and will have to increase the points they charge DVC members to stay in the other resorts.

I appreciate people being stuck with points from time to time but I really think the widespread rental of points is hurting everyone. It is setting up a secondary market for the resorts that works against the DVC balance. Just MHO...."



I must admit that this perspective has never occurred to me and I'd like to know what the rest of you think.

I'm also wondering if widespread renting will negatively impact our dues. If enough $$ aren't recovered from the rooms that are available due to trades out, won't our dues have to go up? If there is merit to this supposition, I hope it is a "slow economy" phenomenon.

Pam - Hope you don't mind that I quoted you - I thought this topic deserved a post of its own. Carol

 

[Bumpy]

I couldn't begin to speculate about the reasoning behind the increase. I am really not sure if renting points is the cause. I can't beleive it is that wide spread to impact Disney's bottom line. The discounts that we have seen this year are to competetive for even DVC'rs to compete with. I do know that I was intending to do another add on while at Disney at the end of this month, however, given this new information I seriously do not think I will. We have enough points for our DVC location spots I wanted a little more flexibility with other options. If this is the trend then I doubt we will have the flexibility to cruise or stay anywhere else. I think this will cause the 11 month booking window to become more important as people will likely stick to only DVC properties. I am to say the least very disappointed to hear of this and consider my investmant in vacations much more limited now!

 

[vernon]

IMHO NO

Firstly it is uneconomical to use DVC points at other resorts even the moderates are in the 20s for points, you can rent "regular" WDW hotels for less than #of pointsX$ 10. I don't EVER remember seeing anyone renting points out for anything other than a DVC room.

Secondly, If rental of points were an issue, raising the number of points required for a WDW hotel would, if anything, make people LESS LIKELY to use them for a WDW hotel booking , therefore there would be more points flapping about that people weren't using. This would in turn lead to more people wanting to rent out their points not less. If Disney wanted to put something into place to slow the use of points being used to rent they would make it MORE attractive for owners to use their points themselves not less. JMHO

 

[ripleysmom]

I think that the reason that the number of points went up is because they ARE getting less money for DVC properties. If they're getting less money for the room then it stands to reason that they would need more rooms, hence more points, to make up the price. Does that make sense?

They may be using rack rates in order to determine what the trade-off amount will be. That, of course, will be their undoing but who knows....

They certainly are not making it as easy for DVCers to make the trade. Also this does not bode well for the cruise line point requirements...

 

[PamOKW]

Hi all! I haven't seen the point charts yet so I'm not sure whether every resort in every season has gone up or not. Covamn, on the other thread, stated that the GF in January has gone up approximately 60%.

Vernon, I'm not saying that they raised the points to prevent people from using the WDW resorts or to discourage a DVC'er renting out points. And I agree that non-DVC resorts are never the best use of points. If the 60% increase is across the boards it would be just about pointless to use DVC points.

My point (more like a rough idea) was that they probably raised the points to equal the size/number of DVC accomodations DVD must rent for cash to pay off the resort where the member has gone. (Ripleysmom's first paragraph says the same thing.)

Example (not using actual costs):
For one night at the GF DVD must "pay" the GF $375
They charge the member points equal to a two-bedroom at the Boardwalk. They will rent this through CRO for $425.

This year they are only able to charge $289 for a 2 bedroom at BWV through CRO due to decreased demand. Some nights they do not rent it at all.

When the point chart is established for the upcoming year, they decide they must charge the members points equal to a one-bedroom and a two-bedroom to cover their costs. Through CRO they rent the one-bedroom for $199 and the two-bedroom for $289 giving them $489 to cover the $375 costs.

It seems as if they had to raise the points due to decreased demand/what they can charge for rooms at DVC resorts. Maybe this is primarily due to the overall decrease in tourism. I'm just wondering if the fact that someone can go on the Internet and make arrangements with a member is syphoning off those who would otherwise be booking through CRO and helping to keep member non-DVC trading costs down.

I may not be explaining this very well but I hope this makes it a little clearer. It's just conjecture. Without all the data we can't really tell what's going on.

 

[vernon]

I agree that's what they do Pam, but IMHO it's more likely to hotels would "book" standard hotel rooms as opposed to the larger ( cheaper per point units) and more difficult rooms to shift ( for cash purposes). For example if a moderate ( at 24 points a night for example) is used to DVC bookings that Mod can get 4 nights at OKW ( I'll bet that the moderate gets 3 nights and DVD gets the fourth for "admin" but that's a different matter). Even at a slow time the cash price for a studio ( 8 points a night) is going to be enough to cover them. I would be 100% certain the agreement is done in such a way that neither DVD or the hotel concerned takes ANY RISK on occupancy in points exchanges. Disney was very thorough in putting together the DVC, they wouldn't leave a potential loss maker lying around waiting to happen. JMHO but I don't think there is anything more sinister than the hotels are trying to "scalp" a little extra in a tough year to make budget. I think it will kick em in that pants, but that will be the future and the manager concerned is worried about having a job next year, not how he's going to keep it next year LOL

 

[Joeblack]

Pam:

Your reasoning is correct if the price for a GF room is actually $375. However, these days you can get a $254 rate at the GF ($189 for AP holders), while the best rate I have been able to find for a 2 bedroom at BWV is $349.

I believe (and hope) that the news about the price jump in the Disney Collection is a mistake.

 

[Covman]

As the one who started the ball rolling on the point increase concerns, I do feel compelled to remind everyone that I have one single data point (Adventure Season at the Grand Floridian) that showed the dramatic increase.

Like JoeBlack I hope that the high percentage change I got hit with is not indicative of a high percentage jump across the board, but we won't know until we see the charts for 2002 for all the hotels and time periods.

 

[PamOKW]

I know that I can't prove or disprove anything with this theory because we don't know all the factors....including what price the resorts is charging DVD for a trade. It does seems as if the discounting is happening all over WDW and you'd think they'd continue to swap a room for a room, rather than trying to "raise" the price a DVC member must "pay".

As Covman has cautioned, we don't know for sure whether the raising of points is across the board or only in certain instances.

And, of course, third....we don't really know how prevelant member to stranger rentals are. When someone rents to a person they know, they are most likely enticing someone to take a WDW trip they might not have taken otherwise. When you rent to someone from the boards or E-Bay it is a person who is planning to head to WDW and is just looking for the best possible deal. I just think we might be pulling people away from CRO who might help keep the World of Resorts option going for us.

 

[KNWVIKING]

I'm a little confused by this thread,but I believe people are worried that renting points at a low price is causing WDW to raise point levels. I think when it comes to our points,the only thing Disney doesn't want to see happen is them not get used. Disney has already gotten paid for every single point out there thru our purchase price.Our dues are written in stone. The only profit left for Disney to make is to have those points used to stay on property where they know we will spend,spend,spend. If we don't use our points,they loss money.If we rent our points to first time visitors for $10.00 per pt,Disney hasn't lost a dime.IMO they will actually make more bucks from fresh renters who will probably spend more $$$ then us seasoned veterans.

 

[RobDoc]

My understanding of this situation is that Disney does not even know how many reservations have been "rented" by DVC members. Even though members are supposed to inform DVC of any rental, in practice I suspect that few admit to the rental.

If anything, one reason for raising the point costs for non-DVC resorts would be to make sure that the $$ are recouped to pay for the room. It is apparent that there is ready availability at all DVC resorts during some time periods (at least for this year). Every time a DVC member "exchanges" to a non-DVC (whether onsite or Concierge Collection) the points used must be rented by DVC to pay the non-DVC resort. Unused points be members cost DVC nothing- as the dues have already been paid by the member, but unused points used for an exchange are certainly a cost to DVC (and it's membership).

To have a better opportunity to recoup these points, rasing the point cost at non-DVC resorts allows for a larger margin.

JMHO!

 

[KNWVIKING]

", but unused points used for an exchange are certainly a cost to DVC (and it's membership)."

Can you explain the cost to DVC.
If non-DVC resorts are raising thier point value I think greed has more to do with it then renting.

 

[PamOKW]

Let me try again....

When a DVC member uses their points at a WDW Resort that Resort must be "paid". I believe payment is made by renting out the DVC room the member has given up and those monies are transferred to the resort. For example, I stay at the GF. The GF wants $250 per night for that room. By renting out a two bedroom, DVD takes in $300. The DVC member must give up the equivalent of a two-bedroom to stay at the GF.

DVD discovers they can no longer get $300 for a two-bedroom. They are only getting $150 per night. They must now ask the DVC member to give up the equivalent of 2 nights in a 2-bedroom for every night they stay at the GF.

The reasons they are no longer able to charge as much for the DVC room are probably many. I'm just suggesting that one of those reasons might be the "underground" rental system that has been set up on the Internet syphoning off some of the people who used to rent directly from Disney at a higher price. DVC is a delicate balance and anything that strays too far from the "personal use" may create problems for the overall system.

This is purely an idea I'm throwing out. Heck, we don't even know yet how widespread the change in the point system is yet.

 

[Dean]

I think giving renters credit for any changes is unreasonable. It's such a small percentage as to not be worth even keeping up with. To say that renters can affect the prices would be unreasonable even in the worst case scenario. The number of points for any "cash" exchange like DC, DCL, CC will be determined by the administrative costs to DVC and room costs of paying the destination resort and how much DVC would rent the points for that were given up by the member.

Even if renters could affect the cost, this system would encourage owners to rent out more ofter if the cost of convenience exchanges like DC were increased.

 

[RobDoc]

Can you explain the cost to DVC.

I think Pam has covered it pretty well, but in review....

The cost of the exchange room (whether it's at the GF or the Plaza) is paid by DVC by the income from renting the points "paid" by the member. The income is derived from the cash reservation at a DVC resort.

If some of those points remain unused, that represents lost income- yet the GF (or Plaza) must still be paid by DVC. At some times, DVC (or CRO or Disney) has to make the decision to offer incentives (DC, AP, XYZ codes) to entice guests to reserve these rooms at the DVC resorts and thus recoup the cost of the member's exchange.

By raising the point costs for these non-DVC exchanges (some is to cover a fee increase at the non-DVC resort) DVC also has a better chance to minimize the effects of the possibility of unused exchange points.

I still don't see any relationship between any increase and rental activity. IMO, there is not enough evidence of rental activity to throw anything out of balance for Disney. It's also possible that some of the rentals which occur would have otherwise stayed off-site- a rental which Disney wouldn't have received anyway.

 

[PamOKW]

Okay, my idea is probably off the wall. And if WDW keeps offering reduced prices, anyone in the point rental business for profit is going to be out of business any way. If rentals are being done by 25 out of the 60,000+ members it probably isn't impacting. If it's 6,000 out of 60,000, then maybe it does. (This is the same as the extra folks in a room....if .05% of guests are doing it there is little impact. If 10% of guests are doing it, there's a problem.) But, we have no way of knowing and have to trust DVD is keeping an eye on things.

It'll be interesting to see what the new point schedule will be and what, if any, justification DVC offers for the large increases. I agree that the need to suddenly have to "pay" so much more to another WDW resort doesn't make sense. The WDW resorts would be demanding rack rate from DVC members yet offering tremendous discounts to all other WDW guests.