(This post is very long)
A. Rental Problems Were Previously Fixed.
In the mid-2,000’s, and partly as a result of the ease with which information concerning rentals could be placed and acquired on the internet, DVC actually developed a rather serious rental problem. There were members who acquired control of far more points than the 2,000 per any one resort and 5,000 total that a member could own, and went into the business of renting reservations, including concentrating on reservations at the time for rooms with high demand during high demand periods, such as Christmas week and first two weeks of December.
Beginning in 2007, DVC took steps to rectify that problem. Though some thought otherwise, there existed (and still exists) a POS rule that limited a member to owning no more than the maximum amount of points even if he bought multiple ownership interests, i.e., different memberships having different use years. Nevertheless, a member did have ways of accumulating control of a lot more points at the time, particularly: (a) a member could not do both a transfer-in and a transfer-out in the same use year, but he could either do an unlimited number of transfers-in, or, alternatively, tranfers-out in a use year; (b) any member could become an associate member of another owner’s membership and thus have the power to make reservations using that membership. The ones who went into the business of renting reservations did both by entering into agreements to split rental proceeds with other members in return for those members transferring points to the renting member or agreeing to add the renting member as an associate member to the other member’s account, or both.
The 20-reservation rule interpreting the “commercial purpose” restriction was the first step taken by DVC to minimize the predatory renter problem. Two more significant changes were made thereafter. The transfer rule was changed to allow only one transfer per use year, either in or out, but not both (that had actually been the original rule when DVC was created in the 1990’s). The other change was to limit any owner’s associate membership to another member’s account to a total of four memberships. During that time, DVC actually notified a number of members of their probable violation of the rules. The predatory rental problem that existed for high demand rooms and times was greatly reduced.
Over the years, as a result of creating more resorts with much higher per points needed per night to reserve a room, the maximum number of points a member can own has increased. It is currently 4,000 at any home resort and 8,000 total. That is a combination total, e.g.; any combination of members used to create reservations cannot own more than 4,000/8,000 total, and that combined total cannot be exceeded by a member owning more than one membership, by a member and a family member having separate memberships, by setting up a corporation, by forming a partnership with another member, or agreements with another member to jointly use points.
B. The Modern Reservation Problems.
Despite the prior changes which greatly minimized the rental problems, some believe renters, particularly members renting already confirmed reservations through the brokers, such as the
DVC Rental Store, are a main reason for rooms not being available such as at 11-months out for high demand studios and high demand times. (I note here that the 11-month issue for any studios is generally limited to WDW resorts; for non-WDW DVC resorts, studios are typically readily available at 11-months out year round except that the hotel rooms at Aulani sometimes have the issue, mainly caused by the low number of such rooms.) I looked through the 582 confirmed reservations for rent on the
DVC Rental Store site mentioned in an earlier post by ehh. All such reservations were made by individual members and not by DVC Rental using some mammoth number of points it owns. Most resorts and room sizes are included, including many reservations for SSR which seldom has reservation issues even at 7-months out. Though most are for studios, there a lot of 1BR reservations, and 1BRs are typically available well after other rooms fill. Sixty of the reservations were for time in the next 30 days, meaning ones the members probably had to give up for personal reasons and will suffer having all the points going into holding if no one takes the reservation. Moreover, about 80% of all the reservations were for time within the next 7 months, during DVC’s moderate demand season at WDW which is never as bad as the fall season, and includes the lowest demand times of the year. Probably some are members who, despite all the restrictions, are using their membership to rent points to make profits, but the restrictions that have already been created minimize the potential effect, and what I saw appears more like many members just trying to rent out reservations they probably intended to use, and cannot, or members likely having extra points, including banked points accumulated as a result of the covid restrictions, and trying mainly to recover some maintenance fees. I think the biggest surprise was the high prices DVC Rentals was trying to get for the reservations (members still only get the $16 or $18 a point regardless of the price chosen by DVC Rental), which included high prices for those reservations within the next 30 days. I suspect a lot of the members are going to be disappointed by failing to achieve rentals.
I have not reviewed the 1750 confirmed reservations, mentioned in the same post, offered on a competitor’s site since the site name is not provided, but I suspect the group is like the DVC Rental group (although I would hope the asking prices are lower). That number of confirmed reservations up for rental is not concerning. It is asserted to be .8% of all studio inventory, a low percentage and even lower if you consider that those reservations are spread over 10 to 11-month period and thus the percent of all studios being offered for rental at any given point in time would likely be lower. Moreover, there are well in excess of 200,000 DVC memberships (there were more than that in Jan 2019 when a new total was provided in the Riviera POS before it actually went on sale). Even having several thousand member reservations up for rent over a period of almost a year is minuscule.
Today the 11-month reservation issue is far worse than it was 13 years ago when the country was just starting out of the Great Recession, e.g., before then AKV value studios had little to no 11-month issue, and BWV standard view studios, which had the worst problem, had an 11-month issue mostly just for only some of the time during the high demand “fall” season that ran from late Sep to marathon weekend in Jan -- it is now a year-round issue. The actual main causes are several and have nothing to do with renter’s renting confirmed reservations, and include:
Beginning at the tail end of the Great Recession and over a period of 10 years, DVD/DVC took actions that have resulted in the percent of total ownership interests being owned by those having mainly just enough points to book studios to rise significantly, and took other steps to increase studio demand, Including: (a) at the tail end of the Great Recession, DVD did away with the 160-point minimum purchase rule for new members, lowering it to 100 and even lowering it to 50 or 75 at times, e.g., many new owners were added to AKV when the minimum required purchase was 75 points, helping to create the very high excess demand that now exists for value studios; (b) despite the Great Recession, an inflation rate that for the next ten years after the recession was less than 2% per year, and the fact that average incomes did not significantly rise over that period, DVD, over a ten year period, greatly raised purchase prices for points, by over 100% for popular resorts; moreover, the actual effective increase was more for newer resorts built, such as Poly, VGF, Aulani, VGC, and eventually Riviera, because those resorts started with per night point requirements that were significantly higher than the historical resorts; (c) with Poly and CCV, DVD added many hugely point expensive bungalows and cabins, giving it the ability to sell most of those extra points to the vast majority of purchasers who were purchasing only enough points to regularly get smaller rooms, particularly studios; (d) at least partly to help it sell points it recovered via exercising ROFR for resales and via foreclosures, it redid the studios at BWV, BRV, and BCV to include a less than twin-size bed that pulled out of a cabinet, allowing members to book five into those studios rather than the previous four; since those changes BWV standard view studios have completed their evolution into rooms that are now booked right at 11-months out essentially year-round; BRV studios went from almost always being available at 7-months out during the DVC moderate season (mid-Jan to late Sep) to one where those studios are now booked full before 7-months out much of that time; BCV studios went from part of the time being gone at 7 months-out during that moderate season to now seldom being available.
C. Even If the Alleged Rental Problem exists, the Wyndham Solution Would Not Be
Chosen.
From my understanding, what Wyndham has done is create a rule for various holiday seasons under which members who reserve rooms with points to be occupied by the member (and guests accompanying the member) have priority over reservations made by members for others. That rule includes not just rentals but also reservations made for friends or family. The rule does not actually prohibit the member from making reservations for others, but provides that it can be cancelled at any time before the arrival date in favor of a member actually using the room. For example, if a member, as a wedding gift for his daughter makes a reservation well in advance of the wedding for the new couple to stay at Wyndham, they could be told on their wedding day, the day before the trip, that they have no room because it is now filled by a member who is going to be in the room.
I do not know what the Wyndham POS’s actually provide but I believe the DVC provisions involving the right to rent as a personal use right, and its first come first serve rule, would prevent any such “solution” to DVC’s having a rental issue around holidays. A case for which the web address is provided in a earlier post,
Bluhm v. Wyndham, has no real relevancy to the issue. That case did not deal with the terms of a POS but instead a settlement agreement entered into with a member who owned 8 million points and was making hundreds of thousands of dollars via rentals (apparently Wyndham has no point maximums for members, a factor that has likely been a major cause of its rental problems), who had been blocked from making reservations using Wyndham’s online reservation system, the Extra Holidays Program. Under the settlement, he agreed to sell back 3 million of his points, and agreed to no longer engage in any “commercial conduct of any kind” involving the use of his remaining points, “including any commercial rental” of his retained points through Extra Holidays Program, which he could use only for his personal reservations. Evidence showed that the parties, including Bluhm, understood the agreement to prohibit him from doing any rentals for the purpose of making profits and that he was limited to using the online system for personal reservations only or reservations merely designed to cover maintenance fees. Bluhm was suing because, after the settlement, he instead was making profit-making reservations with the online system and claimed he did not understand he could not. The court found the agreement and the evidence provided on the making of the agreement precluded such a belief.
As I noted in a prior post, the DVC POS expressly includes the right to rent (with no limitation on purpose for doing so) in the definition of personal use. The prohibition against the member using the membership for a commercial purpose is designed to prevent members from being in the business of renting, not from occasionally doing some rentals to recover maintenance fees or even some profit doing rentals. That concept is further supported in the POS by its numerous references to "commercial" units, which are solely units at the resort specifically used by businesses, such as restaurants and stores.
Moreover, this thread has thus far overlooked that DVC already has a built-in remedy in the POS if holiday (or even other times) times have excess reservation demand. The remedy is set out in the Home resort Rules and Regulations and named a “Special Season Preference List” (hereinafter SSPL). The only time an SSPL was ever used was in the 1990’s to 2,000, for the WDW resorts at the time for the period Dec 23 through Dec 31. The SSPL worked as follows:
Before the 11-month reservation period opened for any particular resort designated for a SSPL, members from any resort could request a specific reservation for a room at the resort for all or part of the special season created. For that Christmas season, DVC allowed reservation requests to begin almost two years before the applicable Christmas season. Note that meant owners of the resort and owners of other resorts could make the request for a resort such as BWV beginning almost two years before the applicable Christmas season.
For any given resort, a member could make only one such room request, thus limiting any members who were renting to one reservation request each. If more than one resort was on the SSPL, a member could also get on the SSPL for that other resort. Beginning 14 months before the designated season, DVC would start calling those listed in the order of their getting on the list and ask them if they are keeping the reservation. If they answered yes, they got it. If they answered no they would be would be taken off the list. If the member did not answer but got a voice mail, the member had to call back quickly or lose the reservation. If rooms filled that way, calls would end and no one could reserve at 11-months out unless a cancellation happened thereafter.
Though this never occurred at any given time before starting to make calls, DVC could actually change the SSPL to just doing a lottery system where all the persons getting reservations would be chosen randomly from the ones who got on the list.
As long as a member got on the list early for his home resort, he had a good chance of getting the desired reservation, but even then the member would still be competing not just with renters (who were safely limited to one reservation request per resort) but members from other resorts, and a member’s place-in-line could be rendered moot by DVC switching to the lottery system.
The modern SSPL rules are similar to those that existed in the 1990s but with a major change. Owners of a resort who submit a request by the end of 13 month before the special season will get on the list before owners of other resorts who can get on the list beginning 12 months out. However, DVC could alternatively just switch to the lottery system that does not favor home resort owners.
Bottom-line: even if, as some believe, there is a real problem with excess rentals being done for high demand resorts and rooms during high demand times, the remedy DVC would likely choose is an SSPL, the one the POS actually allows..
