The large number of new Aulani resale contracts??

[CastAStone]

If you are hard core dvc investor/believer why choose to flood the market with Aulani? If this is an Estate thing the settlement agent should be drawn and quartered.

I’m not saying it’s the most likely scenario but if they only owned Aulani, they’d only have Aulani to sell.

 

[AstroBlasters]

I’m not saying it’s the most likely scenario but if they only owned Aulani, they’d only have Aulani to sell.

Right, if Disney sent you a letter saying you violated your agreement and could no longer rent out points…. or maybe the commercial renter thinks that Poly2 is a better long term rental play….

 

[disneylandtour]

Right, if Disney sent you a letter saying you violated your agreement and could no longer rent out points…. or maybe the commercial renter thinks that Poly2 is a better long term rental play….

If there was such a letter, then why would they strip points (presumably for rental) before selling?

 

[stat]

If there was such a letter, then why would they strip points (presumably for rental) before selling?

If it were me and I couldn't rent out the points anymore, I'd book every room I could, invite everyone I knew (and liked), and throw a massive party. The sell the stopped contracts. So be on the lookout for a massive party at Aulani.

 

[DonMacGregor]

If there was such a letter, then why would they strip points (presumably for rental) before selling?

I suppose it also depends on UY. If the contracts were stripped some months ago, and that wave of reservations was what triggered the hypothetical letter from Disney, then I could see those contracts being put up for sale.

If I borrowed all of my 2025 UY points on one of my February UY contracts to make a reservation back in February, then I'd have been sitting on a "stripped" contract for over 8 months now.

 

[Philsfan77]

If there was such a letter, then why would they strip points (presumably for rental) before selling?

Is it possible they already had them up for rent when this all triggered and Disney basically said, keep the rentals, but stop what you're doing?

We are all speculating here, but coincidentally, the same broker who is dumping the largest portion of these Aulani Contracts was the largest renter of AKL Values and BWV standard views, and there was a thread specifically about this exactly 1 year ago today.

At that time, 44% of their 1300+ rentals were Value studios and BWV standard views. They probably had a disproportionate amount of Aulani Hotel rooms booked too, but I didn't even think to check that last year when this conversation was going on.

I've noticed a steep drop in their rate of these rentals over the last few months (down to 16% and dropping and their overall number of rentals has been dropping a bit as well (down about 400 from this time last year).

It was pretty obvious either they, or someone else who was primarily renting on their site was using scripts to pluck these highly sought after reservations (speculating of course because it can't be proven thats what they are doing). However, maybe Disney caught on or maybe someone pointed out to them, that others have caught on, and now here we are today with a massive dump of aulani contracts.

 

[VGCgroupie]

I think this is incredibly over-optimistic.

1) Cost per point per use of $10 is very unlikely. Even Aulani subsidized contracts are closer to $11 and absent a small dip during COVID they are cheaper than ever;

2) "Likely a LOT came from large and cheap resale contracts." - this is clearly not the case as nearly all the listings being discussed are 250 or lower sized contracts;

3) There's no accounting for the transaction/acquisition costs in the above cost per point. While they could have minimized this as a buyer, it's not zero;

4) The above assumptions are based on point rental prices going up at the same rate as annual dues. They have not thus far tracked that trajectory;

5) I think an average of $21/point is generous even if you might be "running" the business and renting direct (so you're not paying any commission). There will inevitably be breakage that will bring that down. Heck, the site with the largest number of these new Aulani listings is renting points for more than 10% below that for a glut of available reservations during the next 4 months;

6) Any benefit you gain from deducting "business" expenses is swamped by the fact you're not paying yourself any salary in the above model.

All things considered, maybe you're making a 9-10% return each year with your principle going to zero in year 36. Not something I'd personally be interested in compared to other passive investment alternatives. Now, if you could also perfectly time an exit from the market such that you recouped a decent portion of that initial capital (rather than holding to year 36 and taking zero), perhaps there is something there....and perhaps that's exactly what we're seeing.

My Aulani sub is sitting at $10.53pp. If I factor in extra points it's a little lower.

But I agree these numbers aren't something someone should just sink $750K into it, it's really just pointing out how/why there are many who do it.

 

[VGCgroupie]

Is it possible they already had them up for rent when this all triggered and Disney basically said, keep the rentals, but stop what you're doing?

We are all speculating here, but coincidentally, the same broker who is dumping the largest portion of these Aulani Contracts was the largest renter of AKL Values and BWV standard views, and there was a thread specifically about this exactly 1 year ago today.

At that time, 44% of their 1300+ rentals were Value studios and BWV standard views. They probably had a disproportionate amount of Aulani Hotel rooms booked too, but I didn't even think to check that last year when this conversation was going on.

I've noticed a steep drop in their rate of these rentals over the last few months (down to 16% and dropping and their overall number of rentals has been dropping a bit as well (down about 400 from this time last year).

It was pretty obvious either they, or someone else who was primarily renting on their site was using scripts to pluck these highly sought after reservations (speculating of course because it can't be proven thats what they are doing). However, maybe Disney caught on or maybe someone pointed out to them, that others have caught on, and now here we are today with a massive dump of aulani contracts.

This is super interesting!

 

[Philsfan77]

This is super interesting!

It is...I went back to check my comments on that thread to get a date, and it was last October.

 

[disneylandtour]

I think this is incredibly over-optimistic.

1) Cost per point per use of $10 is very unlikely. Even Aulani subsidized contracts are closer to $11 and absent a small dip during COVID they are cheaper than ever;

Clearly we're not talking purchase price today, but something acquired years ago. I have SSR points that are pennies above $10 per use.

2) "Likely a LOT came from large and cheap resale contracts." - this is clearly not the case as nearly all the listings being discussed are 250 or lower sized contracts;

I think you may have some of this confused. There are two different issues being discussed here. And you're confusing them or conflating them into one issue. (1) The Aulani contracts being dumped, which are mostly around the 100 to 200 point range. And (2) the person who has 8k points and is renting them out on the DIS boards. We don't know what point levels those points are at. But price speculation suggests that they could be larger.

3) There's no accounting for the transaction/acquisition costs in the above cost per point. While they could have minimized this as a buyer, it's not zero;

This is a fair point. I agree. But also amortized out over 35 or 40 years, this would be pennies per point use. A 200 point contract with a $600 closing cost with 40 years left would equal out to about eight cents ($.075) per point use. Again, if they're buying 100 point contracts it would be more, 300 point contracts would be less. I don't know how deeply this person thought through all this. But a set of large contracts at a very low PP rate would likely be the best path here.

4) The above assumptions are based on point rental prices going up at the same rate as annual dues. They have not thus far tracked that trajectory;

Fair point. Again, this is an unknown. I would wager that after new "lands" start appearing at WDW, rental prices will likely go up beyond inflation. Before that, yeah, things don't look awesome for rental. But again, that's speculation.

5) I think an average of $21/point is generous even if you might be "running" the business and renting direct (so you're not paying any commission). There will inevitably be breakage that will bring that down. Heck, the site with the largest number of these new Aulani listings is renting points for more than 10% below that for a glut of available reservations during the next 4 months;

Again, I think you're confusing two issues- the 8K renter is not attached to Aulani. This person has multiple contracts at WDW.

6) Any benefit you gain from deducting "business" expenses is swamped by the fact you're not paying yourself any salary in the above model.

Again, maybe. Depends on their situation. If you're an empty nester with a couple of empty bedrooms, using one as an office for a business likely doesn't detract from income elsewhere, unless you were going to rent that room, which most people don't. This would decrease business tax and potentially increase what was available for a salary or bonus for (presumably) the owner/employee.

All things considered, maybe you're making a 9-10% return each year with your principle going to zero in year 36. Not something I'd personally be interested in compared to other passive investment alternatives. Now, if you could also perfectly time an exit from the market such that you recouped a decent portion of that initial capital (rather than holding to year 36 and taking zero), perhaps there is something there....and perhaps that's exactly what we're seeing.

All this was was speculation as to how this could be a reasonable part-time job. Also, we're taking this person's word that they ONLY have 8k point, which is the maximum Disney allows across multiple resorts. Maybe this person has contracts under a couple of names. or business names. Again, the Aulani dump is a separate issue, but it's clear that business has significantly more than 8k points. Same could be true for the person posting on DIS.

 

[CastAStone]

Another possibility, is that the seller had been looking to dump his contracts for some time, for whatever reason, and the significant dearth of Aulani contracts on the market led him to believe that it was a good time to exit.

I mentioned back in 10/1 that I’d made up a new scoring system to help identify whether, based on the number of contracts for sale, prices at a given resort were likely to rise or fall (and named it RCABS).
A score of 100 should mean prices are going to stay stable for the next few months.

At that time Aulani had an RCABS score of 64, only VGF and Riviera were lower (and both of those scores should be met with skepticism in any case because they’re loaded with new points that wouldn’t be likely to be for resale yet). In other words, Aulani prices were likely to rise a lot, if the number of listed contracts didn’t change much.

Even with all these contracts now listed, Aulani only has an RCABS score of 113. That’s the same as Old Key West and less than half of the score of PVB and VB.

This scoring system is new so there’s no history to judge it on, but my expectation for an RCABS score of 113 would be very mild downward price movement over the next few months; an amount that probably wouldn’t be noticeable glancing through listings or the ROFR thread but would get picked up in sales data.

So honestly it was a pretty good time to sell.

 

[VGCgroupie]

Also to add... not in reference to the person on DIS renting 8000 pts, but rather to brokers renting out points. Brokers presumably obtain contracts at a much lower price up front than a normal everyday buyer, or even an 8000 point renter.

 

[Philsfan77]

Another possibility, is that the seller had been looking to dump his contracts for some time, for whatever reason, and the significant dearth of Aulani contracts on the market led him to believe that it was a good time to exit.

I mentioned back in 10/1 that I’d made up a new scoring system to help identify whether, based on the number of contracts for sale, prices at a given resort were likely to rise or fall (and named it RCABS).
A score of 100 should mean prices are going to stay stable for the next few months.

At that time Aulani had an RCABS score of 64, only VGF and Riviera were lower (and both of those scores should be met with skepticism in any case because they’re loaded with new points that wouldn’t be likely to be for resale yet). In other words, Aulani prices were likely to rise a lot, if the number of listed contracts didn’t change much.

Even with all these contracts now listed, Aulani only has an RCABS score of 113. That’s the same as Old Key West and less than half of the score of PVB and VB.

This scoring system is new so there’s no history to judge it on, but my expectation for an RCABS score of 113 would be very mild downward price movement over the next few months; an amount that probably wouldn’t be noticeable glancing through listings or the ROFR thread but would get picked up in sales data.

So honestly it was a pretty good time to sell.

I like a more scandalous story if we are guessing whats going on darnit!

 

[VGCgroupie]

I like a more scandalous story if we are guessing whats going on darnit!

Hahahaha same

 

[Brian Noble]

I suspect that if this was someone who was strategically selling as @CastAStone suggests, that they would have dribbled contracts out a little more slowly rather than dumping them all at once. This is the same strategy that e.g. ticket scalpers use--they never put all of their inventory up for sale at once, but instead release it at a measured rate to keep the sales price as high as possible.

 

[VGCgroupie]

I suspect that if this was someone who was strategically selling as @CastAStone suggests, that they would have dribbled contracts out a little more slowly rather than dumping them all at once. This is the same strategy that e.g. ticket scalpers use--they never put all of their inventory up for sale at once, but instead release it at a measured rate to keep the sales price as high as possible.

Seems that this would be the logical thing to do.

 

[CastAStone]

Yeah it’s just a theory

 

[lilsonicfan]

Could be that the seller is just churning contracts - maybe hoovered up a bunch of cheap Aulani contracts, booked a ton of rooms, rented them all out, now selling - maybe have hoovered up some Aulani subs lately and are just doing a trade.

 

[hhisc16]

Is it possible they already had them up for rent when this all triggered and Disney basically said, keep the rentals, but stop what you're doing?

We are all speculating here, but coincidentally, the same broker who is dumping the largest portion of these Aulani Contracts was the largest renter of AKL Values and BWV standard views, and there was a thread specifically about this exactly 1 year ago today.

At that time, 44% of their 1300+ rentals were Value studios and BWV standard views. They probably had a disproportionate amount of Aulani Hotel rooms booked too, but I didn't even think to check that last year when this conversation was going on.

I've noticed a steep drop in their rate of these rentals over the last few months (down to 16% and dropping and their overall number of rentals has been dropping a bit as well (down about 400 from this time last year).

It was pretty obvious either they, or someone else who was primarily renting on their site was using scripts to pluck these highly sought after reservations (speculating of course because it can't be proven thats what they are doing). However, maybe Disney caught on or maybe someone pointed out to them, that others have caught on, and now here we are today with a massive dump of aulani contracts.

This same broker/rental website has alot of aulani hotel room-standard view available to rent.
Along with Boardwalk-standard view studio and AKL-Value rooms.

I have been lucky to book a night or two with Value and BWV standard, but these amount for rent for the next 11 months is wildly alot!

 

[pzw90]

This same broker/rental website has alot of aulani hotel room-standard view available to rent.
Along with Boardwalk-standard view studio and AKL-Value rooms.

I have been lucky to book a night or two with Value and BWV standard, but these amount for rent for the next 11 months is wildly alot!

never mind the ~12 confirmed rentals that are being walked possibly (just filtering by checkin date and see some 9/18 and after)