Breakage income is what is generated by DVC's renting unreserved rooms to the general public beginning 60 days out from arrival date. Part of the annual net breakage income becomes a set-off of dues. However, the maximum set-off is 2.5% of the annual dues budget for a DVC resort (without counting toward the total annual dues a number of things in the budget). The amount above that 2.5% then goes to cover the annual costs, plus a 5% amount above such costs (i.e., a profit), of the Buena Vista Trading Co, the DVC entity responsible for trade-out reservations, including members reserving non-owned DVC resorts at 7 months out and trading out to Disney hotels and RCI. BVTC's only other income is the fees charged for trade-outs and a $1 per member annual dues charge called the DVC Reservation Component in the dues. After covering BVTC's costs plus 5%, any remaining breakage income goes to DVCM Ltd. (the designated management company for each resort, and is basically just additional profit. I was informed many years ago, even before the existence of the bungalows at Poly, that the annual breakage income usually exceeds that 2.5% that goes to offset dues and that amount that goes to BVTC.
What you will see today is that for many times of the year. particularly times between mid-Jan and late Sep, that there are openings at the bungalows and cabins at 60-days out, which often then disappear during that 60-day breakage period.
Nothing, except profit economics, required Disney to include the bungalows or cabins as part of DVC. Disney could have just made those hotel rental units. However, from a profit vantage making them DVC units made far more sense: (a) as hotel units all the costs of construction could be recovered only by renting the bungalows and cabins; as DVC Units all the costs of construction are recovered by sales of the units, and sales also result in many profits above the costs of building the units; (b) as hotel units, all the costs of annual maintenance and repair and long-term refurbishments would be Disney's responsibility, recoverable only from rentals; as DVC Units almost all of the costs of maintenance and repair of the bungalows and cabins are paid by the members, through annual dues, even though they are not using the units; (c) having those units as DVC adds hugely to the potential of profits from breakage income after selling most of the points for those units to purchasers who were buying only enough points to be able to get studios, e.g., it was highly likely when sold that Disney knew that not many members would buy to get the bungalows for a week every year, which had an average purchase cost of points needed per week of about $200,000.
