rental concerns

[Sunnyore]

I’m not against renting points, but man, when I see a listing for runDisney marathon weekend posted at 11 month booking, it really irks me. Sure, I get that the owner has the right to grab those rooms as anyone else. And I get it’s a popular weekend and not every owner will get the reservation they want. But it’s extra annoying that they also have to compete against people wanting to maximize their profit. I don’t see this any different from those people that bought 50 figment Loungeflys to sell on eBay. Luckily I don’t do marathons but I still have to walk some of my trips just to assure I get the dates and rooms I want.

 

[Jwaire]

It happens often. People complaining "there is literally nothing available" and then someone checks and there are a lot of openings.

But there's not an AKL Concierge, AKL Value, BLT Standard, AUL Hotel, BWV Standard, RR Standard, RR Tower, CCV Studio or GCV, etc. available at 7 months and I wanted it!

 

[DaveNan]

But there's not an AKL Concierge, AKL Value, BLT Standard, AUL Hotel, BWV Standard, RR Standard, RR Tower, CCV Studio or GCV, etc. available at 7 months and I wanted it!

And many of those aren't even available at 10.99999 months, but I still want them at 7 months......

 

[CarolMN]

I’m not against renting points, but man, when I see a listing for runDisney marathon weekend posted at 11 month booking, it really irks me. Sure, I get that the owner has the right to grab those rooms as anyone else. And I get it’s a popular weekend and not every owner will get the reservation they want. But it’s extra annoying that they also have to compete against people wanting to maximize their profit. I don’t see this any different from those people that bought 50 figment Loungeflys to sell on eBay. Luckily I don’t do marathons but I still have to walk some of my trips just to assure I get the dates and rooms I want.

Lots of DIS DVC posters agree with you.

Sadly, there's no way to prevent this that won't result in negative consequences for other DVC Members or create a lot of extra work for Member Services.

 

[Cyberc1978]

Another thing to consider is that Disney is one of the largest points owners and RENTER.

Of course Disney rent their DVC reservations on their website, but they ALSO rent their points to you and me as owners.

Everytime we call to get the OTUP thats a point rental, just like every other owner. I bet Disney is doing way more than 20 rentals per year

That could also play a role on why Disney is not doing more about rentals because if they did, it would also hurt themselves.

 

[Brian Noble]

I don't have time to dig up the precise language in the POS, but I'd bet money that the definitions are such that the commercial use prohibition does not apply to DVD.

 

[KAT4DISNEY]

I don't have time to dig up the precise language in the POS, but I'd bet money that the definitions are such that the commercial use prohibition does not apply to DVD.

Technically the "commercial use" language is in a vein of don't run a business out of a room. That continues to get confused with renting language.

 

[GoingSince1990]

Another thing to consider is that Disney is one of the largest points owners and RENTER.

Of course Disney rent their DVC reservations on their website, but they ALSO rent their points to you and me as owners.

Everytime we call to get the OTUP thats a point rental, just like every other owner. I bet Disney is doing way more than 20 rentals per year

That could also play a role on why Disney is not doing more about rentals because if they did, it would also hurt themselves.

Also the "magical beginnings" promotion was essentially "we will sell you a contract and you can rent out all of your first years' points, to us".

 

[CarolynFH]

Everytime we call to get the OTUP thats a point rental,

Actually, it’s a point transfer - the OTUP appear in your account with their own home resort and UY, same as if I transferred points to you. You’re in control of how those points are used. (DVD gets to collect $ from us for those points, whereas I’m not supposed to collect $ from you, but that’s another issue.)

A rental is when the owner makes a reservation with their points and someone else pays them money to make them the guest. The guest doesn’t control the points, the owner does.

 

[drusba]

I don't have time to dig up the precise language in the POS, but I'd bet money that the definitions are such that the commercial use prohibition does not apply to DVD.

You are correct. The rule against renting for commercial purposes is deemed inapplicable to DVD. For example, the "use restriction" paragraph in the POS, which states a commercial purpose includes a pattern of rental activity from which the Association can conclude that the activity of the member constitutes a commercial enterprise, states that the paragraph does not apply to DVD.

Likewise, the Condominium Rules and Regulations, which also sets out the commercial purpose limitation on members' rentals, states that the limitation is inapplicable to both DVD and DVCM.

What I find peculiar is that some have noted above that there are professional renters who have set their memberships up as one owned by a corporation, such as an LLC. Those members have apparently overlooked one of the limitations in the beginning part of the POS. Though generally the declarations and condominium rules state that members can lease their DVC interests, there is a special provision in the Public Offering Statement Text section at the beginning of the POS which distinguishes between individual members and members that are "corporations or other business entities," and states that the use of the vacation homes for such members is limited to that corporate member's directors, officers, employees and principals. That appears to preclude members that are corporations, including LLCs, from renting their DVC interests, except possibly for rentals to directors, officers, employees, and principals.

 

[Brian Noble]

Technically the "commercial use" language is in a vein of don't run a business out of a room. That continues to get confused with renting language.

It's a confusion that many other timeshare developers have made, with the same language, as a justification for clamping down on renting.

I don't put it past Disney to do the same. Anyone who thinks Disney will somehow not take the liberties with interpretation that all of the others have is being very generous.

 

[_auroraborealis_]

The popularity of AKV Value as confirmed bookings is so silly. They ask for $25+ pp and you can get a real rental of SV for less.

 

[Philsfan77]

I appreciate having the option to rent dvc. As an owner who cannot afford as many points as the trips I’d like to take, I benefit from the kind folks who rent me their extra points, especially when they even pay the dues!!?

However, I’m convinced there must be a group of room walkers who grab up all those highly coveted AKL value studios to hoard for rent as a “confirmed reservation”

This is pretty accurate for AKV values. One of the bigger rental brokers has roughly 1200 confirmed rentals on their site. Of those 1200 they have 433 (over 33%) are tied to Jambo house. Of those 433 at Jambo House 367 are AKV values. I’ve been following this for a few months now and a lot go live on the site shortly after the 11 month window. There are a couple stretches where 7-10 values are listed on their site covering 1 day. When there are only 18 of them, and one rental broker has 10 listed for a given date it more or less confirms your suspicions.

 

[DonMacGregor]

This is pretty accurate for AKV values. One of the bigger rental brokers has roughly 1200 confirmed rentals on their site. Of those 1200 they have 433 (over 33%) are tied to Jambo house. Of those 433 at Jambo House 367 are AKV values. I’ve been following this for a few months now and a lot go live on the site shortly after the 11 month window. There are a couple stretches where 7-10 values are listed on their site covering 1 day. When there are only 18 of them, and one rental broker has 10 listed for a given date it more or less confirms your suspicions.

C'mon. Everyone knows those are just poor, unfortunate members who had to cancel their trips last minute, or were in danger of losing their points, but thanks to a serendipitous combination of luck, timing, and Pixie Dust, somehow managed to secure the majority of some of the most rare and difficult rooms on property to reserve.

 

[crisi]

You are correct. The rule against renting for commercial purposes is deemed inapplicable to DVD. For example, the "use restriction" paragraph in the POS, which states a commercial purpose includes a pattern of rental activity from which the Association can conclude that the activity of the member constitutes a commercial enterprise, states that the paragraph does not apply to DVD.

Likewise, the Condominium Rules and Regulations, which also sets out the commercial purpose limitation on members' rentals, states that the limitation is inapplicable to both DVD and DVCM.

What I find peculiar is that some have noted above that there are professional renters who have set their memberships up as one owned by a corporation, such as an LLC. Those members have apparently overlooked one of the limitations in the beginning part of the POS. Though generally the declarations and condominium rules state that members can lease their DVC interests, there is a special provision in the Public Offering Statement Text section at the beginning of the POS which distinguishes between individual members and members that are "corporations or other business entities," and states that the use of the vacation homes for such members is limited to that corporate member's directors, officers, employees and principals. That appears to preclude members that are corporations, including LLCs, from renting their DVC interests, except possibly for rentals to directors, officers, employees, and principals.

All of this is pretty clear that according to the contracts in place, Disney can rent points as much as they want AND can limit our ability to do so.

And I find the LLC thing strange as well - and an indication that at this juncture Disney just plain old isn't that interested in members renting out their points. To me, this issue isn't "could they clamp down" (they could), or even will they clamp down, but what happens when someone at Disney who has authority decides this is a problem that needs to be fixed. (And whether we think its its a problem is sort of irrelevant).

(The plus side for a lot of people who like scooping up bargains - if Disney ever does go after the "commercial renters" there are likely to be a lot of cheap resale points available - I suspect the 2042 resorts would loose value a lot quicker since I think their resale price is set based off rental income, not personal use value.)

 

[Brian Noble]

whether we think its its a problem is sort of irrelevant

Maybe not entirely.

I've been following the rental saga with Wyndham almost from the day I first bought points--and that's pushing 15 years ago now. Most of the steps they took were targeted to extreme cases, much in the same way as the 20 reservation limit, the one-transfer rule, or the limit on Associate Members did.

For example, they limited the number of reservations at a single resort that could be held by one owner to 10 or 10% of the resort, whichever was smaller. This rule was put in place largely due to a specific owner who was booking dozens and dozens of rooms each holiday weekend at the Wisconsin Dells resort with an indoor waterpark. A change in how credit borrowing worked was mostly in response to a single owner who had made a nice business out of buy-strip-flip. They put (large) limits on free guest certificates for high-status owners that used to have an unlimited number, targeting a handful of mega-renters.

But, most of those changes were around the edges, and day-to-day owners never noticed.

That all changed post-pandemic when all of a sudden Wyndham got VERY VERY SERIOUS about curbing renting: A couple of big policy changes: owner priority periods that limited guests at more popular resorts during peak times, plus no longer offering VIP benefits on reservations booked with resale points. That was combined with a very aggressive campaign of sending cease-and-desist letters to owners they thought were renting "commercially," along with following up with real teeth for those who neither ceased nor desisted. Most of the larger Wyndham renters on TUG either cut way way back on what they were doing, or out of the business entirely and liquidated holdings.

Reading between the lines and watching the tea leaves at the time, I'm convinced a big reason why that happened was a sharp increase in owners angry that they couldn't get the reservations they wanted. How much of that was due to renting vs. post-panedemic revenge travel among owners with a year or two worth of banked unused points is not clear. But, there was a lot of vocal, negative attention focused on renters. If that vocal attention made it to the sales floor in a way that reduced conversion rates, then that's an easy explanation for how seriously Wyndham took this in a short period of time when they mostly never cared except for the egregious cases.

I can imagine the same thing happening to DVC as the rental ecosystem continues moving away from a price-per-point model to a confirmed-reservation model. And, that evolution is inevitable, because you can get better margins on specific room categories than you can with generic points. Of course, it just so happens that those rooms are all studios, and that also happens to be the room category that sold out first even before this change.

If owners complain more loudly about availability, and blame the spec renters for it in a way that shows up on the sales metrics, then that will get DVD's attention, and they will get to work.

 

[RapunzelRN]

When there are only 18 of them, and one rental broker has 10 listed for a given date it more or less confirms your suspicions.

That is insane and really frustrating

 

[DanCali]

Also the "magical beginnings" promotion was essentially "we will sell you a contract and you can rent out all of your first years' points, to us".

I realize your point was about DVCs ability to have rentals with those points. But technically the MB is more like a discount in purchase price in exchange for starting your usage later. The asset you are buying will be available to you later and you get a discount of about $2000-$2200 per 100 points. But that distinction matters because If it was a "rental of points" there would be tax consequences immediately in the form of rental income. If it is treated as a discount in purchase price it reduces the cost basis and tax consequences would matter in the form on a capital gain/loss only if you sell down the road.

 

[KAT4DISNEY]

I realize your point was about DVCs ability to have rentals with those points. But technically the MB is more like a discount in purchase price in exchange for starting your usage later. The asset you are buying will be available to you later and you get a discount of about $2000-$2200 per 100 points. But that distinction matters because If it was a "rental of points" there would be tax consequences immediately in the form of rental income. If it is treated as a discount in purchase price it reduces the cost basis and tax consequences would matter in the form on a capital gain/loss only if you sell down the road.

DVC refers to it as a rebate. The buyer does have to pay MF's if any are applicable though and DVD/DVC states they have the exclusive rights to rent the points etc. The points do hit your account and then DVC transfers them out to their bucket.

ie - if it were actually what is normally defined as a rebate or a discount the points would not hit your account and you would not have the defined responsibility for any MF's. It is possible they are mislabeling it.

 

[DanCali]

DVC refers to it as a rebate. The buyer does have to pay MF's if any are applicable though and DVD/DVC states they have the exclusive rights to rent the points etc. The points do hit your account and then DVC transfers them out to their bucket.

ie - if it were actually what is normally defined as a rebate or a discount the points would not hit your account and you would not have the defined responsibility for any MF's. It is possible they are mislabeling it.

Since dues are based on calendar year, your MFs are the same whether you choose MB or not. I suspect the points hit your account because that's the "normal process". The MB shows as a manual adjustment in the transaction history. The rebate check is like any other rebate check that arrives in the mail from a manufacturer (not "instant rebate").

They do refer to it as a rebate (not rental income). The fine print states this in terms of tax treatment:


The term "rebate" is specifically addressed in IRS Pub 551 (page 5):




Please note this is not tax advice, nor am I a tax advisor. But I suspect that if the MB triggered rental income tax, it would not be such a popular option.