Tiered Benefits

[Brian Noble]

Maybe, but what language specifically suggests that everyone has the *same* window? Everyone has at least the one month advantage, but that's not the same thing as everyone has the same advantage.

The other thing to ask: does the POS have a general escape clause, something about "these terms may be changed at the sole discretion of blah blah blah..."? If it does, then Disney can do pretty much whatever it wants. Some Members may pursue a legal challenge, but they very likely won't win more than a token concession, because the POS has always allowed for such changes. The timeshare industry is rife with precedent on this point.

 

[Dean]

Maybe, but what language specifically suggests that everyone has the *same* window? Everyone has at least the one month advantage, but that's not the same thing as everyone has the same advantage.

The other thing to ask: does the POS have a general escape clause, something about "these terms may be changed at the sole discretion of blah blah blah..."? If it does, then Disney can do pretty much whatever it wants. Some Members may pursue a legal challenge, but they very likely won't win more than a token concession, because the POS has always allowed for such changes. The timeshare industry is rife with precedent on this point.

I am not aware of examples where I know enough specifics where the actual reservation window was changed after the fact without the consent of the members (and without specific contractual power) to affect one group over another related to this issue. Technically Bluegreen and Marriott are not examples of changing the reservation window to favor retail over resale without member approval, in Marriott's case NEITHER the old or the recent change would fail that test. I would venture to guess, without any actual knowledge, that Wyndham gave themselves more power in the conversion to points some years ago that would specifically allow such flexibility. I BG's case and most other points systems, one is a trust member and BG is the technical owner of the deed but even then they didn't change the reservation window, only access to the WL.

As to the POS, I would hold that there would have to be specific wording that would allow such a change unilaterally, not wording the prevents it, which is the legal standard that Public Offering Statements are generally held to as are FL statues. I do not see it even though, as you allude to, they do have total control over the reservation system.

Here are a few excerpts from FL Statue 721 that seemed to have some applicability. The second one would suggest to me that the option would have to be included in the POS for each affected property and I would contend that such a change after the fact would not pass legal muster without an actual vote of the membership.

(12)(a)In addition to any other rights granted by the rules and regulations of the timeshare plan, the managing entity of a timeshare plan is authorized to manage the reservation and use of accommodations using those processes, analyses, procedures, and methods that are in the best interests of the owners as a whole to efficiently manage the timeshare plan and encourage the maximum use and enjoyment of the accommodations and other benefits made available through the timeshare plan. The managing entity shall have the right to forecast anticipated reservation and use of the accommodations, including the right to take into account current and previous reservation and use of the accommodations, information about events that are scheduled to occur, seasonal use patterns, and other pertinent factors that affect the reservation or use of the accommodations. In furtherance of the provisions of this subsection, the managing entity is authorized to reserve accommodations, in the best interests of the owners as a whole, for the purposes of depositing such reserved use with an affiliated exchange program or renting such reserved accommodations in order to facilitate the use or future use of the accommodations or other benefits made available through the timeshare plan.

A cross-reference to the location in the public offering statement of the description of any priority reservation features which may affect a purchaser’s ability to obtain a reservation in the component site.

(6)Prior to offering the multisite timeshare plan, the developer shall create the reservation system and shall establish rules and regulations for its operation. In establishing these rules and regulations, the developer shall take into account the location and anticipated relative use demand of each component site that he or she intends to offer as a part of the plan and shall use his or her best efforts, in good faith and based upon all reasonably available evidence under the circumstances, to further the best interests of the purchasers of the plan as a whole with respect to their opportunity to use and enjoy the accommodations and facilities of the plan. The rules and regulations shall also provide for periodic adjustment or amendment of the reservation system by the managing entity from time to time in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations and facilities existing at that time within the plan. The person authorized to make additions and substitutions during the term of the multisite timeshare plan shall also comply with the requirements of this subsection in ascertaining the desirability of the proposed addition, substitution, adjustment, or amendment and the impact of same upon the demand for and availability of existing plan accommodations and facilities.

YMMV, that's why I said I was taking the info overall. Plus, as I noted, I'm sure there are ways to back door into all of these options if they so chose. We'll see, regardless it sounds like it might be a little while longer before we get any specifics (if ever).

 

[dvc_john]

The other thing to ask: does the POS have a general escape clause, something about "these terms may be changed at the sole discretion of blah blah blah..."?

I believe there is. I'm at WDW now, so I can't look up anything in the POS. But IIRC, the change to reservations from check-out day to check-in day was contrary to what was described in the POS, but there was a statement in there somewhere that said they can pretty much do whatever they want.

 

[DVCGeek]

An interesting concept is tying such thoughts to extensions of existing resorts.

That also crossed my mind...

Here are a few excerpts from FL Statue 721 ...

I find this part in particular:

to further the best interests of the purchasers of the plan as a whole with respect to their opportunity to use and enjoy the accommodations and facilities of the plan

may open grounds to challenge a priority reservation period for some. Would that really be beneficial to purchasers [plural] as a the whole? Regardless of me ending up a have or have not, my gut response is that no, it is NOT better for the whole ownership... But then again, I'm no lawyer!

 

[Laurabearz]

I wish they would just go ahead and do what they are going to do and be done with it....

 

[Deb & Bill]

I wish they would just go ahead and do what they are going to do and be done with it....

Well, they probably had no idea what they were going to do and were just wating for all the DIS to come up with the plan.

Like Roz, "they're watching. Always watching. "

 

[a742246]

Whew.......... after reading some of these posts, all I can say is......
"I like going to WDW": with or without the politics.

 

[Laurabearz]

Well, they probably had no idea what they were going to do and were just wating for all the DIS to come up with the plan.

Like Roz, "they're watching. Always watching. "

I am just hoping to be Grandfathered in whatever they do, since most of our 870 points are resale...

But we own 870 because we love to chill at Disney... that was true in 2002 and it holds true to us today.

UNLESS I loose the first booking window for BWV because I bought our 270 points there resale... love my standard view for food and wine... then I would cry... cry cry cry

 

[curan69]

So what's the definition of resale. If a deed is re-written for a contract is that resale? You have all these Contracts that don't expire for decades and an aging population. Unless Disney ROFR a lot more won't every contract currently in existance become a resale sooner or later?

 

[csharpwv]

Legally - I don't think they could do anything to members who currently own -whether they became members direct or via resale. I think if you own points right now - you will always own those same points and those some points will always work just how they have always worked.

I for one subscribe to the resale e-mails - just like watching the regular real estate market - I like to see what my 'stake' is worth.

There will come a time - 1/31/2042 to be exact - that DVC contracts will start expiring (Old Key West non-extended contracts). What will DVC do with all of their properties then? Just let them sit and collect dust while falling in?

I think not!

While that may seem like light years from now - it will happen. Right around 31 years from now.

Does this have anything to do with the current state of resales?

I think so - instead of offering DVC contracts for 'sold out' resorts at their original expiration date - I think DVD could offer contract extension opportunities to NEW members.

I think DVD is somewhat foolish for not doing some variation of this now.

Imagine for a moment if you will...

Prospective new member tours DVC...

BLT and Aulani and currently available...

Guests honeymooned at Wilderness Lodge years ago and LOVE that resort...

It's sold out....

DVC Guide: Well, since you want to own at that particular resort - but the incentives are very good on BLT right now - let me check the Villas at Wilderness Lodge inventory that we have bought back through our aggressive Right of First Refusal process.

Guests: That sounds great!

(DVC guide checks system)

DVC Guide: Well - it looks like you are in luck - there is a 100 point contract at VWL with the same use year as the points that you would be buying at BLT! Since you are buying a new property - and a sold out property - we are going to give you a few options on pricing of both contracts.

Guests: OK Great!

WHY in the world DVD doesn't buy back every contract under the current going rate - and offer those points to current members at slightly above the ROFR price I'll never know!

Had we been given the option of buying points at BOTH AKV AND VWL we would have JUMPED on that!

I think DVD needs to give their members a better reason to add on.

DVD would not LOSE money buying all points back that are below going rate. They may have excess points on hand - but current members who would LOVE to add on at Beach Club aren't willing to pay almost as much as they did for their original points.

We own three contracts - two purchased direct - and the other through resale. We would have bought direct if the price would have been the same. But - we got a great small contract - at $55 lower than current price per point. That's hard to argue. We saved nearly $5,000 by buying a re-sale contract.

With all the economic trouble of recent years - resale prices have dropped - but direct sale prices have increased. Suppy was higher than demand - and yet DVD kept building!

There are only a few scenarios where that makes sense - one of them being you have a plan to change the supply/demand numbers.
The other option being you take control of the entire supply and demand chain.

There were some ROFR'd contracts that DVC could have easily resold to current members at better prices that what they passed on.
AKV going on the resake market for the low $70's
BLT going on the resale market for low $90's
BCV going on the resale market for mid $70's
HHI going on the resale market for $40 per point!

DVC/DVD needs to step up their resale/ROFR game and capture those points - and offer then to old and new members alike.

If you are a current member - would you add on 100 points at HHI for $45.00 per point?

OR DVC could use those ultra-low buy backs as their incentives for new members. But 160 at BLT $113 per point- and get another resort at $75.00 per point.

While yes that hurts their NEW sales numbers - it protects the value - and keeps members - old and new alike VERY happy!

Thoughts?

 

[Dean]

I believe there is. I'm at WDW now, so I can't look up anything in the POS. But IIRC, the change to reservations from check-out day to check-in day was contrary to what was described in the POS, but there was a statement in there somewhere that said they can pretty much do whatever they want.

There is a statement that says they can change the reservation system without input, I personally do not interpret that as allowing for a discriminatory system unto itself but I would agree that by itself, it doesn't necessarily prevent one either.

 

[dianeschlicht]

Legally - I don't think they could do anything to members who currently own -whether they became members direct or via resale. I think if you own points right now - you will always own those same points and those some points will always work just how they have always worked.

I don't think that's necessarily true. Just ask some of the folks with RCI 5 crown resorts who did NOT pay to upgrade to the points system when it was offered. They definitely are not getting the same value from their original purchase unless they paid for the upgrade.

instead of offering DVC contracts for 'sold out' resorts at their original expiration date - I think DVD could offer contract extension opportunities to NEW members.

I think DVD is somewhat foolish for not doing some variation of this now.

I totally agree with that thought as well.

 

[Dean]

I don't think that's necessarily true. Just ask some of the folks with RCI 5 crown resorts who did NOT pay to upgrade to the points system when it was offered. They definitely are not getting the same value from their original purchase unless they paid for the upgrade.

But they are still getting the underlying option they paid for, same for Marriott.

 

[tjkraz]

Legally - I don't think they could do anything to members who currently own -whether they became members direct or via resale. I think if you own points right now - you will always own those same points and those some points will always work just how they have always worked.

Booking windows are one thing. There are certain changes seemingly prohibited by the POS and others which seem to fall into a gray area. And even then, the question becomes whether anyone would feel bold enough to mount a costly legal challenge.

But in terms of other items that would be classified as perks, I see no reason why DVC would have to treat all owners identically regardless of when the purchase occurred. If they want to give free refillable mugs, FastPasses or priority room assignments to a certain group of individuals, I don't see where it violates any terms of the POS as long as all owners are still receiving the benefits they were guaranteed.

WHY in the world DVD doesn't buy back every contract under the current going rate - and offer those points to current members at slightly above the ROFR price I'll never know!

I think you're trivializing some of the costs associated with re-acquiring and re-selling those points.

When DVC ROFRs a contract at $60 per point, then they've spent $60 per point before sales & legal to acquire. Even if they can re-sell for $80--a 33% mark-up--they have only earned $20 per point to cover all marketing expenses plus profits.

On the other hand, the Bay Lake Tower cost about $100-120 million to develop. Based upon the number of points available at the property, that's roughly $12-15 per point for the acquisition costs. If they sell at a net $110 per point--about a 900% mark-up--$95+ goes to cover marketing expenses with the being rest profit.

And don't underestimate what it costs to market the DVC points. The single biggest item is likely salaries and benefits for the actual DVC Guides plus the folks manning the booths at parks & resorts and all of the administrative support staff. Marketing brochures, TV & radio advertising, print ads, web-based advertising, legal, Doorway to Dreams sales centers, webcasts, model rooms, daily gatherings at the Top of the World Lounge, FastPasses, tote bags, baseball caps, and so on.

Frankly I'd be surprised if DVD can break even making just $20 per point re-selling an ROFR resale.

New resorts not only have the benefit of much higher margins but they also lock-in buyers for a longer period. As you point out, whey they sell VWL points the buyer is only committed to Disney for the next 31 years. With a BLT commitment, they are locked-in for 50 years.

DVD may be losing some business via buyers who are committed to a specific sold out resort. But IMO that is business they are willing to sacrifice. Many of those buyers will still purchase the most sensible option being actively marketed (i.e. AKV instead of VWL; BLT instead of BWV.) Disney would rather put the full court press behind new resorts with a 900% price mark-up--and risk losing some sales--rather than settle for the 30% mark-up on a resale.

 

[dizfan]

Isn't DVD also responsible for the dues while points are in their inventory?
If this is correct, it would be another reason for DVD to only use ROFR when they have buyers for the sold out resorts.

 

[bookwormde]

"But in terms of other items that would be classified as perks, I see no reason why DVC would have to treat all owners identically regardless of when the purchase occurred. If they want to give free refillable mugs, FastPasses or priority room assignments to a certain group of individuals, I don't see where it violates any terms of the POS as long as all owners are still receiving the benefits they were guaranteed."

It is not the POS that is the issue it is if the changes to the POS violate Florida time share regulations. The big one is the requirement to manage in the best interest of the majority of the members not a minority and certainly not for the benefit of DVD.

POS is just an implementation document, not a regulatory standard.

So yes if a benefit is given to the majority of members it would not violate this portion of the regulations.

While often these issues end up in civil court, It is very easly to file a regulatory challenge, and from what I have found the regulators are more than happy to take up filings which have any resonable merit.

bookwormde

 

[drusba]

Isn't DVD also responsible for the dues while points are in their inventory?
If this is correct, it would be another reason for DVD to only use ROFR when they have buyers for the sold out resorts.

Not directly. DVD has a choice under the law. It can either pay dues on the portion of the units it owns or, alternatively, when it issues an annual budget, it can guareantee to the members that there will be no special assessments (with some exceptions for disasters) during the year. DVD has chosen to do the guarantee every year so it actually pays no dues. However, the dues are actually based on the costs as spread between all units including the shares owned by DVD so though it does not actually pay dues DVD is likely absorbing a portion of the resort costs for units it owns because total dues from members likely comes up short for the entire year's costs, but is unlikely absorbing a full share per point-- why else would it do the guarantee unless it was the better deal for it -- except perhaps in last two years it may be coming close to doing so if, as it appears, there have been a lot more foreclosures and thus a loss of members not paying dues because of economic conditions.

 

[tjkraz]

It is not the POS that is the issue it is if the changes to the POS violate Florida time share regulations. The big one is the requirement to manage in the best interest of the majority of the members not a minority and certainly not for the benefit of DVD.

POS is just an implementation document, not a regulatory standard.

So yes if a benefit is given to the majority of members it would not violate this portion of the regulations.

While often these issues end up in civil court, It is very easly to file a regulatory challenge, and from what I have found the regulators are more than happy to take up filings which have any resonable merit.

bookwormde

I'm sure that fairness will set limits on changes which Disney Vacation Club is able to make in the administration of the program. However, if Disney Vacation Development wishes to extend additional benefits to select owners--at their own expense--they have ample leeway to do so.

 

[Dean]

It is not the POS that is the issue it is if the changes to the POS violate Florida time share regulations. The big one is the requirement to manage in the best interest of the majority of the members not a minority and certainly not for the benefit of DVD.

Once again, these requirements ONLY apply to the physical timeshare itself and not the reservation or other perks and not any exchange system including other DVC resorts. Even then, if they have given certain flexibility within the POS for certain changes, it might not protect even then.

Not directly. DVD has a choice under the law. It can either pay dues on the portion of the units it owns or, alternatively, when it issues an annual budget, it can guareantee to the members that there will be no special assessments (with some exceptions for disasters) during the year. DVD has chosen to do the guarantee every year so it actually pays no dues. However, the dues are actually based on the costs as spread between all units including the shares owned by DVD so though it does not actually pay dues DVD is likely absorbing a portion of the resort costs for units it owns because total dues from members likely comes up short for the entire year's costs, but is unlikely absorbing a full share per point-- why else would it do the guarantee unless it was the better deal for it -- except perhaps in last two years it may be coming close to doing so if, as it appears, there have been a lot more foreclosures and thus a loss of members not paying dues because of economic conditions.

While I know this options exists and DVC includes the wording in the POS to qualify, it is my understanding they do pay dues on the points they own. Also, even if they didn't, I'm not sure that flexibility would extend to contracts bought back.

 

[bookwormde]

Dean,

No this standard applies to all items managed by DVC including perks that they negotiate or offer directly from dues.

bookwormde