The value of a DVC point to Disney

[JohnnyII]

I was reading the thread about cruising on points -vs- cash and I was playing around with how Disney values points. The conclusion I am coming up with is that the current DVC point charts hurt us in trade outs, etc...

The reason I say that is the huge difference between weekend and weeknight stays.

The way I understand it is that when you give Disney your 400 points for a cruise they then can convert those points into cash reservaions at DVC resorts. Now when Disney rents out DVC resorts , I would guess that they rent out a lot of weeekend nights (Because weekend nights would be more popular to cash renters).

Because of the high point difference many DVC members only rent out Sun-Thurs which leaves lots of Fridays and Saturdays for Disney to rent for cash.

The problem is that if some one pays Disney $450 for that 2 bedroom BCV Villa, Disney is redeeming between 60-106 points for that room on a Friday or Saturday. In essence, they are getting considerably LESS than $10 per point on the weekend cash reservations. This HURTS us when we trade points for accomodations outside of DVC.

I may have this all wrong, but I really believe that this is why Disney values our points significantly less than we do. If weekend nights were closer to week nights in terms of point cost, the value of a point to Disney would go up.

Anyone else have any thoughts on this?

-John

 

[disneyberry]

<font face="times" size="+0">but the cash rate is the same regardless of weekend vs. weekday, and if a BCV 2bdrm goes for $890 rack rate in Peak season (which costs around 40 points for a weekday, 75 points for weekend) then Disney is getting over $22/point for a weekday rental, and over $11/point for a weekend rental. i'm a little confused where you get the $450 figure from?

also, i don't necessarily agree that we can assume Disney mostly rents out weekends. we really have no data to prove that... so assuming that Disney rents some weekdays as well, the average rental price is still probably pretty high. </font>

 

[JohnnyII]

Obviously I am making some assumptions here. The $450 is just what I am using as an average as I don't think that Disney rents too many DVC units out for the rack rate. I could be wrong, but I would doubt it.

As to the weekends, again I am assuming, but Sunday - Thursday book pretty quickly with member reservations, right? Many members book the weekends with cash, right? Most often they get a 25% members discount also right? Not allways, but often. The point is the members have significantly LESS utilization on the weekends tan they do during the week. So, Disney is renting those nights out for cash.

Also, I would guess that MOST people going down on a cash vacation spend the weekend there? In fact I would BET that the majority of nights rented for cash at DVC resorts ARE Fridays and Saturdays and I would also be willing to bet that the average rental rate is well BELOW the rack rate. Just look at the AP rates and the codes that are always out. Virtually no one pays the rack rate anymore. There is just too much abvailability these days.

-John

 

[vernon]

As Disney is a "for profit" company, they do have some bright people working for the company, they understand the system and the DVD management company have a fiducary duty to work on behalf of the membership I would think it unlikely that Disney exclusively rent out spare "points" at the worst possible rate either to themselves or on the behalf of the membership.

I understand where you coming from on this, but I think it has more to do with the fact the "non DVC resorts" don't give DVC discounted room rates than DVC's inability to manage it's use of points in an efficient manner. I might be persuaded that it's a combination of events that include a less than optimum ability to raise revenue from point "rentals" but I think you're over-simplifying things a little.

 

[Dean]

From what I've gotten from DVC over the years, they value our points at about $5 pp. One of the things that hurts DVC members form a trade out stand point (CC, DCL, DC, etc) is that DVC admin takes a back seat to members and tries to rent out times that are not use by members, this means lower demand times. I think it's fair to assume that this means more weekends are rented out for cash and as such, it does devalue the points more than other options would. On the flip side, the weekends are more likely to be rented out so I suspect it's a wash or close to it overall.

 

[jaysue]

Wow, Dean, if you are correct that they value points at about $5 that barely covers maintenance fees

That would lend some interesting angles to an analysis of trade out values and economic drivers of the exchange models

Has anyone actually called CRO/WTDC to book DVC accomodation types and ask for the AP rates

For example, AKL for Apr-July cycle is being quoted AP rates at $115 off of rack price - this is whether it is a standard view room or savannah view room - i.e. it is a flat discount not percentage based

Would that be the same with DVC room types - so that 2BR BCV at rack price of $XXX is AP quotes at $XXX - $115 (the "deluxe" resort discount)?

thanks
jaysue

 

[joepoe]

Originally posted by jaysue
Wow, Dean, if you are correct that they value points at about $5 that barely covers maintenance fees


thanks
jaysue

Gee, who pays the maintenance fees? Not Disney.

Because Disney charges so very many points for a cruise (as an example) they have lots of points to re-sell and make up the revenue lost on the cruise PLUS make a tidy profit, I am sure.

 

[wdwstar]

Has anyone actually called CRO/WTDC to book DVC accomodation types and ask for the AP rates

actually i had it was around this past jan. i ask cro for a ap rate for easter in a 2 bedroom at the bcv and yes, it was available $460 plus tax , i was shocked , i didnt book because i was actually getting info for christmas. then we talked about christmas and she said to call as soon as the ap codes come out.

i called ms a secured a 2 bedroom for christmas( jan. night stay) until i get my points straigthen out, and i was quoted 1010.00 plus tax for one night, if i use points 30 points.

 

[d-r]

I'll give you an example. We were planning to fly in on Sunday, but the flight was cheaper for Sat. APril 17 so we took it. That Saturday night in a studio at wlv is 43 points. I called the CRO cash line, and with an AP discount, that same studio is ~$220 including tax for the Saturday night.

So what the op is saying, I think, is this. Disney has that studio in its inventory for cash reservations that night, and they are offering it at 220. (Now Disney keeps 5% of inventory, but that inventory could also come out of someone booking a cruise or non-dvc resort with points). So, on this night for Disney the value is 43 points = $220. The next night, 13 points = $220. The OP was saying that cash reservations are probably more likely on the weekend. I know I made cash reservations for that Saturday night!

Comparing dvc rates to rack rates isn't a good comparison, because nobody pays rack rates.

 

[tjkraz]

Originally posted by JohnnyII
Many members book the weekends with cash, right?

Well, I think that is open for debate. When we bought-into DVC it was with the intention that our DVC points would cover ALL of our lodging costs with VERY few exceptions.

If you've already spent tens-of-thousands of dollars to invest in DVC, I just don't see the logic of paying hundreds more for a weekend cash stay. No, you wouldn't always get the magical $10 per point value, but if you've got the points, why not use them?

I know people talk about renting points and then paying cash for things like cruises. But I don't know that it would be worth the time and effort of renting a handful of points to pay cash for weekend stays.

More frequently I seem to read about people staying off-site or at lesser accommodations during the weekends. We did this ourselves once, staying at Sierra Suites on a Saturday night when we did not even arrive in Orlando until after 7pm.

The point is the members have significantly LESS utilization on the weekends tan they do during the week. So, Disney is renting those nights out for cash.

I think it's a little more complicated than that. My understanding is that the higher point values for weekends were implemented to balance supply with demand. Someone correct me if I'm wrong, but I believe the original point charts at OKW had less of a disparity between Weekday and Weekend points. But that caused demand to exceed supply on the weekends as DVC members would flock to Orlando for short weekend stays.

If my understanding is correct, part of the OKW point reallocation that occurred 7-8 years ago included making weekends more "expensive" to alter the demand patterns.

When DVC sells points at a resort, they sell enough such that every room could be booked year-round on points. Granted there is shuffling that occurs due to things like banking and borrowing of points, Magical Beginnings, points going into holding, and even people who may lose their points that are not used.

But, DVC has had ample opportunity--every time a new resort opens--to rebalance the weekdays and weekends. Certainly, on some level, they must be satisfied with the level of equilibrium that currently exists between point stays on the weekdays and weekends.

 

[JohnnyII]

Originally posted by tjkraz
But, DVC has had ample opportunity--every time a new resort opens--to rebalance the weekdays and weekends. Certainly, on some level, they must be satisfied with the level of equilibrium that currently exists between point stays on the weekdays and weekends.

I agree. I think Disney is satisfied with the balance, or what I believe is an imbalance.

The net effect is to leave more weekend nights open, which are DEFINITELY easier for Disney to rent through CRO. Several times I have called for reservations only to be told that Sunday thru Thursday are booked (for point ressies), but SURPRISE Friday and Saturday are available!!!

Of course they are available. Because many members avoid those high point nights like the the flu!

Disney then gets to rent those nights out for cash, but because they are high point nights their net $$$ per point are lower than one might think. Certainly lower than they would be on a Sunday-Thursday rental.

Of course all of this are just my thoughts and opinions. I suspect that Disney hat not released member weekend usage recently, if ever. Someone please correct me if I am wrong on that point.

Although members own 95% of the points, I would be extremely surprised if they use more than 50-60% of weekend nights.

Anyway, I know why DVC set the point charts the way they are and I am not saying that I would be in favor of closing the gap between weekends and weeknights, but if they did, I think our exchange rates with DVC, etc...would be much better since Disney would get more bang for the bck with our points.

-John

 

[vernon]

D-R said

Comparing dvc rates to rack rates isn't a good comparison, because nobody pays rack rates.

It is my impression that when DVC rents resort rooms on behalf of members, the rate "charged" is at pretty much full "rack rate", it's one of the reasons that the points cost of those rentals is so high.

 

[Dean]

Originally posted by vernon
D-R said It is my impression that when DVC rents resort rooms on behalf of members, the rate "charged" is at pretty much full "rack rate", it's one of the reasons that the points cost of those rentals is so high.

It's a discounted rack rate. I don't know what the discount is or if it varies by season. I'd venture a GUESS of about 10-15% overall discount.