The Vilification Of Renting?

[Dean]

I agree with every word of this. Anyone calling precisely at MS opening at exactly 11 months is doing nothing more than taking advantage of their home resort booking window. I have no problem with an owner calling at that time for a real rental reservation for a real customer.

But I'm still against the practice of speculative rental bookings. Speculative rental bookings are purely commercial, and they unfairly penalize legitimate DVC owners trying to book family vacations. Speculative rental bookings take availabilty away from DVC families and sell it to non-owners months later for profit. I don't agree with that practice.

Other than the emotional component, I see no difference is the two situations.

 

[DVC Mike]

But I'm still against the practice of speculative rental bookings. Speculative rental bookings are purely commercial, and they unfairly penalize legitimate DVC owners trying to book family vacations. Speculative rental bookings take availabilty away from DVC families and sell it to non-owners months later for profit. I don't agree with that practice.

Jim, I agree with you 100% on the topic of speculative bookings!

I am not against transferring of points between DVC members. I am not against renting of excess or unusable points to non-DVC members. I don't have a problem with members renting confirmed reservations that they initially had intended on using, but now something has come up that prevents them from doing so.

I do have a problem with members booking choice reservations with the intent of never using them, but with the sole intent of selling the reservations for profit.

A reservation made for rental purposes is likely to be held for many months awaiting a non-member who is interested in the specific date / resort / room size that has been booked. I don't think anyone objects to people booking trips for actual use, nor do they object to rental transactions where a room is booked as a result of a request from the renter. It's the speculative renting that rubs people the wrong way.

I feel this practice is detrimental to other DVC members, as it hurts their chances of booking those "choice" reservations themselves.

It’s undeniable that if people stop pre-booking reservations for the sole purpose of renting months down the road, more people will be successful at booking their preferred accommodation at 11 or 7 months.

 

[ralphd]

If the shoe fits.............

We have not had a problem getting a reservation. We have always been able to get a reservation for the requested week - and the only time we did not get the requested resort is when we wanted a last minute reservation.

The system is basically fair to all.

This is a non-issue to us!

 

[JimMIA]

Other than the emotional component, I see no difference is the two situations.

I'll be the first to admit that my objection is not only emotional, but also selfish!

 

[Dean]

Jim, I agree with you 100% on the topic of speculative bookings!

I am not against transferring of points between DVC members. I am not against renting of excess or unusable points to non-DVC members. I don't have a problem with members renting confirmed reservations that they initially had intended on using, but now something has come up that prevents them from doing so.

I do have a problem with members booking choice reservations with the intent of never using them, but with the sole intent of selling the reservations for profit.

A reservation made for rental purposes is likely to be held for many months awaiting a non-member who is interested in the specific date / resort / room size that has been booked. I don't think anyone objects to people booking trips for actual use, nor do they object to rental transactions where a room is booked as a result of a request from the renter. It's the speculative renting that rubs people the wrong way.

I feel this practice is detrimental to other DVC members, as it hurts their chances of booking those "choice" reservations themselves.

It’s undeniable that if people stop pre-booking reservations for the sole purpose of renting months down the road, more people will be successful at booking their preferred accommodation at 11 or 7 months.

There are only a given # of rooms so the same # of people will be successful either way. You're going on the premise that a given usage pattern deserves a priority, efectively that one member deserves a priority over another not given in the rules and I would challenge that premise. Every single reservation is one that goes to the benefit of that member regardless of the reason they reserve. The only thing another member owes the rest is to follow the rules and laws in place, where they differ, the laws take precedence. As I said the rest is simply an emotional response because one usage feels better than another. Timeshares are a case of the early bird gets the worm. Those that learn how the system works and plans ahead will likely be far more successful than the rest. We don't need any rules or protections for those that can't or want plan ahead. EVERY SINGLE RESERVATION ONE MAKES HAS THE POTENTIAL FOR HURTING ANOTHER MEMBER, that's why the words "subject to availability" are so important.

The bottom line is that renting is allowed, as it should be as long as Disney themselves are doing it. Trying to create nuances where it's OK in one situation but not in another makes no sense. Lets change the discussion slightly to that of exchanging with II and assume that DVC members could now be a regular member of II. In that case the exact week and resort you give to II will determine your trade power and therefore your chance of success or not on any given exchange. Would you feel that a member that reserves a better week or resort to exchange fits into the same category as one who reserves and then rents later? I would look at them as exactly the same, and that can and does happen now for those that do private exchanges or use the independent exchange companies.

 

[Dean]

I'll be the first to admit that my objection is not only emotional, but also selfish!

Exactly, nuff said as that is the truth, the whole truth, for those that feels renting is OK some of the time. There is no other explanation though they'll try to convince otherwise. And while some would prefer there were no renting at all, though they likely wouldn't admit it, the rules state specifically one can rent. BTW, you can tell those that feel renting shouldn't be allowed because they'll say things like only to other members or for the dues only, etc.

 

[JimMIA]

As I said the rest is simply an emotional response because one usage feels better than another.

I don't think it's a question of what "feels better."

I think it's a totally subjective opinion that one member's family vacation reservation is more in keeping with the intent of DVC, and less in conflict with the intent of DVC, than another member making reservations (albeit clearly within the rules) on a speculative basis to rent for profit. I'm emotionally and subjectively saying that my family reservation is more noble than a speculative rental reservation, even though we both play by the same rules.

Is that logical? Nah, of course not. Am I comfortable with my illogical, emotional position? Yep.

 

[Dean]

I don't think it's a question of what "feels better."

I think it's a totally subjective opinion that one member's family vacation reservation is more in keeping with the intent of DVC, and less in conflict with the intent of DVC, than another member making reservations (albeit clearly within the rules) on a speculative basis to rent for profit. I'm emotionally and subjectively saying that my family reservation is more noble than a speculative rental reservation, even though we both play by the same rules.

Is that logical? Nah, of course not. Am I comfortable with my illogical, emotional position? Yep.

Your honest about it and I appreciate and respect that. I can fully see one having that emotional response as I think it's human nature. But in the end logic and rules have to be the final authority.

 

[disney-super-mom]

A little OT, but you know what's kind of funny about this from my perspective.

The last few years I've come to know many of you on the DisBoards. I've learned much about DVC from all the great information you all provided to me. I've been interested in purchasing DVC for the last three years now, but that "right time" hasn't come for me yet. So, although I've been around for awhile and feel almost like a member of the DVC family, I'm still an outsider. It's kind of like being at a DVC meeting hall, but I'm not allowed inside yet (since I'm not a member), and so I attend the meetings by listening through the doorway.

So last year when I rented points (for the first time) from a very nice veteran DisBoard member (who rarely rents out points), and knowing how many of you feel about renting, I actually felt kind of bad.....almost like I was doing something wrong. I tried to justify it in my mind since it was for a short 4 night trip to WDW for just DH and I (our very first trip to WDW), and we wanted to check out DVC, the resorts, and the parks, to determine if it was all something our family would enjoy. However, I still felt bad (or maybe I felt guilty) about renting points nonetheless.

I guess I wanted to respond about this because the title of the thread is "The Villification of Renting", and that's how I felt when I rented points.....I felt like the villian. (Well, not a villian, but I felt that by renting, I was betraying some of my online DVC DisBoard friends who I KNOW don't approve of renting at all.)

Anyway, I know all of this is pointless to the conversation here. I just wanted to share.

 

[DVC Mike]

Your honest about it and I appreciate and respect that. I can fully see one having that emotional response as I think it's human nature. But in the end logic and rules have to be the final authority.

I agree that it is more an emotional response to be OK with renting in general but to be against "speculative booking". To me, it's an issue of fairness, and that's where the emotional response against this practice comes from.

But, as we've seen recently, the rules can be changed. I can see DVC implementing new rules that attempt to reduce "speculative booking".

 

[bcpage]

Your honest about it and I appreciate and respect that. I can fully see one having that emotional response as I think it's human nature. But in the end logic and rules have to be the final authority.

It's seems that you mistake the current rules as being somehow "final". It is certainly a logical position to be against speculative bookings as defined in this thread and it's entirely possible to have a rule in the POS that specifically states that speculative bookings are not allowed.

So I think that it's a bit disingenuous to basically say that the "rules are the rules". We all know that the rules can and do change and there is no valid reason for anyone to state that speculative bookings should always be allowed, no matter what. If it's determined that speculative bookings are against the spirit of the rules, then why can't they be outlawed? Having said that, the question of how to enforce that rule would be a problem.

 

[snowbunny]

Other than, a non-member can get an BCV studio for the same that they pay for a value resort. Why pay Disney for the value resort when they can stay at the BCV and swim at SAB or walk to two themeparks?

I agree with this completely, which is why I posted the link from Mousesavers, which urges readers to rent from DVC owners "for deluxe lodgings at a fraction of the cost."

What I was responding to was the conjecture that Disney somehow monitors point rental rates and whether they are high or low, with the implication being that if rental rates are higher Disney managers would be happier.

That is only true in the sense that if rental rates were close to CRO rates, there obviously would be less rental activity. Which is simply never going to happen because in that event, no one is going to rent from a stranger on the internet if for close to the same rate they can get cancellation, housekeeping, and the rest of the benefits associated with CRO.

 

[DVC Mike]

I'm not home to review the documents and won't be for over a week (Oahu/Maui). This option applies only to the rules and regulations and not the Bylaws or other sections which specifically state renting is allowed and includes the references of change that I alluded to earlier. One has to realize that there are several components to the POS, some are informational only and not truly part of the formal POS even though included with it.

Dean,

My point is that DVC is well within their rights to revise the rules and reservation system to implement changes that would curtail "commercial renting" and "speculative booking".

I agree with you that renting is allowed in the POS and DVC would probably face legal challenges if they attempted to put a blanket "renting is not allowed" statement in the rules.

Mike

 

[kimberh]

I agree with this completely, which is why I posted the link from Mousesavers, which urges readers to rent from DVC owners "for deluxe lodgings at a fraction of the cost."

What I was responding to was the conjecture that Disney somehow monitors point rental rates and whether they are high or low, with the implication being that if rental rates are higher Disney managers would be happier.

That is only true in the sense that if rental rates were close to CRO rates, there obviously would be less rental activity. Which is simply never going to happen because in that event, no one is going to rent from a stranger on the internet if for close to the same rate they can get cancellation, housekeeping, and the rest of the benefits associated with CRO.

What I was referring to was, If rental rates were higher, than more people would rent from CRO than from DVC owners. DVC owners are obviously hurting the bottom line. As you have pointed out, even the books are advertising that non members should contact DVC owners to get a Deluxe room at a fraction of the cost. This cannot make Disney happy. When you can get a Deluxe room at the price of a high value, that is crazy, then there are non owners still trying to barter the room down to the cheapest price possible, some owners cave in to the pressure and rent the room even cheaper. Disney has set their prices, DVC owners are under cutting them, now what would you do, if you were Disney?

When I bought 2 years ago, my saleman (not guide) told me that if I ever had a year that I did not use my points, I would be able to rent/transfer them for $10.00 per point. It took me all of 2 months to realize that I was giving my points away at that price. Remember, that I was brand new, had not really read the boards, even though I had joined years earlier. I feel this is part of the problem, new owners are being given this as a guide to use. It is hurting the bottom line of Disney, whether We want to think that Disney cares what we rent our points for, I feel they do. How many reservations a year are being taken a year from CRO?

 

[Dean]

It's seems that you mistake the current rules as being somehow "final". It is certainly a logical position to be against speculative bookings as defined in this thread and it's entirely possible to have a rule in the POS that specifically states that speculative bookings are not allowed.

So I think that it's a bit disingenuous to basically say that the "rules are the rules". We all know that the rules can and do change and there is no valid reason for anyone to state that speculative bookings should always be allowed, no matter what. If it's determined that speculative bookings are against the spirit of the rules, then why can't they be outlawed? Having said that, the question of how to enforce that rule would be a problem.

They could certainly make changes but the delima DVC has is that renting is expressely allowed and the commercial renting exclusion very vague until recently. They had to come up with a definition that essentially everyone would agree was reasonable including lawyers. So if you're saying it could go to 15 then 10 then 5 then 2, the answer is simply no. Given the wording of the rules, which would require a vote of the actual members to change in this case, I see no way they could bar renting or make a distinction about a given type, as long as CRO is also renting them. Could they come up with end run rules to try to do the same thing, certainly. And like most of those type rules, they would almost certainly hurt the members more than renters.

As for the rules being the rules, rules change over time, such is the nature of timesharing. Most changes are not for the good of the majority of the membership. One has to be willing to learn and adapt. For Marriott it meant I went out and bought ultimately 3 additional weeks to have reservation priority to the tune of an additional $45K. It also meant I sold 3 OKW contracts to wean down our points from 885 to 433 and even then I still may sell my BWV contract in the future and simply keep the 100 AKV points to have access to concierge and member perks.

 

[Plutofan]

I was wondering why Disney might be tightening the restrictions on renting so I decided to calculate a rough estimate of how much Disney could be making off breakerage income. Breakage inome that goes to reduce our dues is limited to 2.5% of the budget. The numbers that I am using come from the 2008 budgets. I did not have access to VWL budget so I estimated the numbers from the 2007 budget. There are a total of approximately 35,466,954 points outstanding. In case you were wondering that is approximately $2,523,450,404 that us members have paid Disney, based upon the orginal selling price, for those points. I have some experience with breakage on cash cards purchased by people for their own use. On these there is approximately a 5% breakage (unused). I will assume that breakage is 3% for points and I will assume Disney will sell the points for $15 per point which we know is low.

Total points 35,466,954
Breakage 3%

Breakake points 1,064,009

Price per point for rental $15

Total rental proceeds $15,960,129

Amount going to reduce dues
per the budgets 3,492,933

Total retained by Disney $12,467,196

This is purely an assumption but it gives you an idea how much renting off these points could mean to Disney. Just a thought...
__________________

 

[Plutofan]

In addition to break age income Disney makes money on management fees and does not pay dues on points held in inventory. You can find all of this information disclosed in the annual budget.

 

[drusba]

Just some random views most of which I posted elsewhere but thought I add here:

1. When you purchase DVC, you buy a real estate interest in a "unit." A unit is usually a group of rooms and the purchase is similar to purchasing a condominium. The rooms are called "vacation homes" in the official documents to distinguish them from the unit and the actual real estate purchase you make. Points are deemed to be symbols that represent your real estate interest. The documents declare that points have no monetary value. Thus, though everyone perceives their points have value, from a legal standpoint, they have none. It is the real estate interest itself that has value. To maintain that legal lack of any monetary value in points, the documents also declare that you cannot transfer points for value, in the form of money or otherwise. In other words, you cannot transfer points for money because such an act would be giving points a monetary value when they are deemed to have none. Have that is all that is probited -- the act of transfering points for money. That does not prohibit rentals.

2. The documents declare that you can rent or lease any portion of your real estate interest subject to the rule against doing so for a "comercial purpose" and a commercial purpose can include a pattern of rental activity from which DVC could conclude that you are acting as a "commercial enterprise." Recently DVC adopted the 20 reservation rule creating a presumption that you are violating the commercial purpose rule if you make more than 20 reservations per year. That was an interpretive rule (and one allowed if it is reasonable and not arbitrary to enforce the commercial purpose rule, which it would likely be found to be) to give DVC some objective test that DVC personnel (including those rather low paid persons who answer the phone and control our lives) could apply without trying figure out for themselves what is meant by commercial purpose. It also gives DVC something it can put into the computer and the computer can spit out a deviation report on a member when the count rule is broken. You can't put the words "commercial purpose" into the computer and expect it to tell you anything. Note, it only creates a presumption so you can still try to show to them when you make that 21st reservation that you really haven't been engaging in a pattern of rental activity. That fairly high number of 20 and the lack of an absolute cut-off at 20, which leaves you the opportunity to explain otherwise and still go over 20, is actually what keeps the rule from ever being declared unreasonable or arbitrary. The number is high enough that it unlikely will effect many people. The new interpretative rule also restates that you cannot transfer points for value

3. DVC also recently adopted the one transfer rule. That is actually not a new rule. From the start of DVC and then for most of the years of its existence, the rule was that you could make only one transfer per year. The rule allowing multiple transfers was a change made about four years ago and thus all they have done now is go back to the old rule.

4. DVC cannot pass rules that alter material rights granted under the contracts and disclosure documents. For example, they can't change the rules to say you can only use your points in your use year month or that it can sell more points than it would take to fill the resort for a year. By law, renting is deemed a material provision of a timeshare but restrictions are allowed. Whether they could prohibit renting all together is subject to question, but the one thing they must do if they want to restrict renting at all is put any restrictions in the disclosure documents that you receive when you buy. If the rental restriction is not in the documents you received when you bought, they can't change it for you (or anyone else who received the same documents when they bought). The new rules, however, are not really a change. The "commerical purpose" rule is still the same. The new rules are interpretative. Also note, though in a few places in the offical documents, DVC spouts the right, in its absolute discretion, to change certain rules, that is inapplcable to any material rights. Also, it is a facade. DVC management is, by law, a fiduciary of its members. It must act in making any changes to rules or regulations in the best interests of the members and cannot base changes on what would be favorable to Disney as opposed to members. That doesn't mean all members must like any chages made but it does mean that any changes must be for a reason that is considered to be in the best interests of the members as a whole.

5. Why the 20 reservation rule and reversion back to one transfer per use year? The internet is partly to blame. Without it, there would be no real rental market and thus no reason to be concerned about rentals. What was going on is that a market developed and there was at least the perception that there were a number who had essentially gone into the business of renting DVC, buying large numbers of points (circumventing total point limits of 2,000 per resort, 5,000 total, by having more than one person purchase) and renting all the time. Some proof of the truth of that perception was at least that there appeared to be persons on the internet who were always offering rentals including on ebay and the rent portion of this site and there were many rental offers for hard to get times like Christmas time, meaning the renter was probably making numerous reservations for hard to get times at 11 months out and then renting that time. (Even this site recently changed its rules for posting rentals by prohibiting such if you attempt to post already existing reservations for a specific time far in advance of that time).

6. That perceived or real rental activity caused many to complain, particularly the activity of getting hard to get times and renting them out. For a long time DVC did nothing and possibly for a long time the problem was more of a perception rather than real problem. But at some point fairly recently, DVC must have concluded that it had a problem that needed some action. Some here have expressed the belief that DVC's latest rules were put into effect to protect Disney's own rental market. I think not. In any event, I am certain DVC would never admit that was the purpose or that it did it for any reason except to act in the best interests of the members. If it said it took the recent action to protect Disney's own rental interests, it would be conceding that it breached its fiduciary obligations by acting in Disney's own interest rather than the interests of the members, subjecting it to the risk that any such rules would be voided and a possible risk of fines. In other words, we should assume that the new rules are designed to address the problem created by members who apparently are in the business of renting and thus violating the rule against a "commercial purpose" and that the problem was noticeable enough that it was effecting other members ability to reserve rooms.

7. So basically what we have now is a DVC that is actually trying to enforce the "commercial purpose" prohibition. In that vein, the enforcement ultimately goes through rather low paid MS representatives who handle reservations. What we have is the usual problem that creates. Those MS personnel have been told of the new rules and that DVC is trying to crack down on commercial renters. Most of them don't really understand all the issues and we will have situations where they start doing things that are "creative" but incorrect.

8. Will the new rules actually rectify any rental problem that they are desigend to address? I don't know for sure. The one transfer rule (the old one now new again) does help minimize that form of rental which can be done without the risk of cancellation. The 20 reservation rule probably will have some impact but it depends on how many different persons are in one group of renters. Also, the rule does not actually address the thing that was most complained about -- people making ressies for prime times 11 months out so they can rent it. Moreover, it could even generate more rental activity. By negative inference the rule tells people they can rent as long as they don't excede 20 a year and thus those who rented somewhat could actually became a little more active. In any event, they give DVC what I think it mainly wanted, an objective test that would pass any legal challenge and it shows to members DVC is taking action for what was preceived to be problem of monumental proportions.

 

[Dean]

I was wondering why Disney might be tightening the restrictions on renting so I decided to calculate a rough estimate of how much Disney could be making off breakerage income. Breakage inome that goes to reduce our dues is limited to 2.5% of the budget. The numbers that I am using come from the 2008 budgets. I did not have access to VWL budget so I estimated the numbers from the 2007 budget. There are a total of approximately 35,466,954 points outstanding. In case you were wondering that is approximately $2,523,450,404 that us members have paid Disney, based upon the orginal selling price, for those points. I have some experience with breakage on cash cards purchased by people for their own use. On these there is approximately a 5% breakage (unused). I will assume that breakage is 3% for points and I will assume Disney will sell the points for $15 per point which we know is low.

Total points 35,466,954
Breakage 3%

Breakake points 1,064,009

Price per point for rental $15

Total rental proceeds $15,960,129

Amount going to reduce dues
per the budgets 3,492,933

Total retained by Disney $12,467,196

This is purely an assumption but it gives you an idea how much renting off these points could mean to Disney. Just a thought...
__________________

Disney doesn't make anything, that income goes directly back to the club to reduce fees.

In addition to break age income Disney makes money on management fees and does not pay dues on points held in inventory. You can find all of this information disclosed in the annual budget.

This is not c/w my understanding. DVC doesn't pay dues on common areas but does pay on the points they own directly from the CFO for DVC Sep, 2006

Drusba, a very nice summary of the situation, overall I'd agree with in in it's entirity.

 

[Plutofan]

Disney doesn't make anything, that income goes directly back to the club to reduce fees.

This is not c/w my understanding. DVC doesn't pay dues on common areas but does pay on the points they own directly from the CFO for DVC Sep, 2006

Drusba, a very nice summary of the situation, overall I'd agree with in in it's entirity.

According the the yearly budget only a maximum of 2.5% of breakage goes back to offset dues. Also it is also in the budget that Disney does not pay dues on inventory in return Disney gurantees that they will cover certain costs over budget.

The budget states under breakage income "The Association is entitled to receive, as breakage income, the proceeds of such rentals not to exceed 2.5% of the aggregate of the Condominium Operating Budget".

The annual budget states that DVD has agreed to guarantee to each Purchasher and Owner that they will only be required to pay an assessment for operating expenses of $x per vacation point. In consideration of this guarantee and persuant to Florida law, DVD will be excused from the payment of its share of the expenses which would have been assessed against its unsold Ownership Interests during the term of the guarantee.

The above information relates to the unsold points that Disney has at each DVC. I would conclude from this that Disney does not pay dues on points that it holds from exercising ROFR. These are just my my thoughts...