Unfairness to DVC Members?

[disney0505]

We have been contemplating purchasing at BLT. I figured we would rent points from a member and stay there to see how we like it prior to purchasing. It looks like all off the dates in October for DVC are booked for every room category. If I check through Disney under a cash reservation there is plenty of availability for all room types other than Grand Villa’s. It seems like DVC members are getting the shaft here. Let’s say no one books those cash reservations, will Disney release these rooms to DVC members for point stays? If this were the case, I would imagine that many waitlists would come through at the last minute. Would Disney actually leave these rooms empty if no one booked them on cash as opposed to letting a member use them?

 

[erionm]

Only about half of the units in BLT have been declared in to the condo association. Only those declared can be reserved using points.

 

[drusba]

It involves separate inventories. BLT is still selling. Members at this point probably own less than half the units which means members can book less than half the available time while Disney, which still owns all the other units, gets to rent the rest. And Disney is under no obligation to "give" what it still owns to the members for use even if Disney cannot rent the space and I suspect Disney will not do so.

Moreover, even after BLT "sells out," Disney will still own a portion of the units (about 2% to 4%) and it will have thr right to rent out that percentage of the avaialble time. Also, when members trade out to go elsewhere, Disney gets to rent that time (measured by points) that the member has given up. Also, at 60 days out from a date, anything DVC time note reserved by a member can be rented by Disney to the public. In other words, even after a "sell out" Disney will have separate inventory that can it rent and that members are not entitled to reserve.

 

[disney0505]

So, as more units are purchased and declared new rooms for points will open up? Does Disney set aside a certain portion for cash? Any idea what percentage of units are declared by other resorts?

 

[chalee94]

There are two separate inventories -- one for booking with cash and one for booking for points.

Anyone can book a cash reservation via Disney CRO, and DVC members can book one via DVC MS at a 25% discount, subject to availability. There are four major sources of inventory for cash reservation:

Exchanges: The number one source of cash rooms is actually from the Member inventory. This occurs when members exchange/trade outside of the DVC resorts. This includes using your points to book the Disney Collection (hotels at the Disney theme parks and the Disney Cruise Line), Concierge Collection, and the Adventurer Collection. When a member trades outside of DVC, the points used to book the outside reservation are assigned to DVD to rent out. This does not apply to the World Passport Collection.

Undeclared: These are the units that have been built by the developer that has not yet been declared into the condominium association. Since DVD controls these units, they may be rented out for cash reservations

Breakage: Another source of cash reservations includes Member inventory that has not been reserved by members using points. Any Member inventory not reserved by members using points is made available to Disney CRO at the 60-day mark for cash reservations by the general public. This is actually beneficial to DVC members, in that the association earns “breakage” income on these rooms rather than letting them sit empty.

ROFR: Another source of cash reservations is the inventory of declared points owned by DVD. These points are typically acquired by the ROFR process. Since DVD owns the points, they can rent them out.

 

[DVC Mike]

Absolutely no unfairness here at all. We can book rooms that are part of DVC using points. Rooms that haven't yet been declared into DVC can only be booked using cash.

 

[Chuck S]

So, as more units are purchased and declared new rooms for points will open up? Does Disney set aside a certain portion for cash? Any idea what percentage of units are declared by other resorts?

Disney generally retains a 4% to 5% ownership interest in all DVC resorts for maintenance issues. If those rooms are not needed for maintenance, they are available for cash. But there are other ways that a room is turned over to cash reservations.

If a member uses points for a trade into the Disney Collection, cruise, Adventures by Disney or Concierge Collection, a room is turned over to cash reservation. The cash income is used to offset the cost of the trade. These rooms can not be reclaimed for point reservations.

A previous poster already mentioned undeclared/unsold inventory in newly constructed resorts.

Points re-acquired by DVC through defaulted contracts or exercising their Right of First refusal on resales also adds to cash availability. These points can also be used for promotions (aka Developers points), give aways and contests...whatever Disney/DVC wants to do with them until they are sold as an add-on or new contract.

60 day breakage inventory is another cash venue, though the least likely way for rooms to be turned over to cash. If, at 60 days out, DVC rooms are not reserved on points, they are turned over to cash reservations. This breakage inventory can be reclaimed for point reservations if not already rented on cash. A portion of the income from breakage is used to offset our dues.

 

[disney0505]

It makes sense now. Thanks for all of your help.

 

[drusba]

As more inventory is declared into the system and sold, the potential exists that a waitlist position can open up but of course if one were to call now for October and get on a wait list, that person could well be behind hundreds of others on the waitlist asking for one or more of the same days and same room category as that person.

As to percentage of units declared, for the sold out resorts, it is all units with Disney retaining a 2% to 4% interest in each unit. There was a running list in a post somewhere on these boards for AKV keeping track of new units declared and though I do not know the actual percentage still undeclared and unsold, it is very large (probably close to 50%). For SSR, they are selling the Treehouse units and my guess is Disney still owns 75% or more of those. Note that Disney can also get inventory back even after resort is sold out via a foreclosure or excercise of right of first refusal on a resale and thus at any given time, it usually owns more than that 2% to 4% that it always retains. What it does is usually sell again what it may get back through foreclosure or excercise of ROFR and as aresult it is usually still selling interests at the "sold out" resorts.

 

[wdrl]

In the current case of BLT, DVC members may actually have an advantage. Through July 15, 2009, DVD has declared 124 2-bedroom (dedicated and lockoff) villas and 9 grand villas for the DVC. The membership has access to that many villas when booking stays on points. However, through early last week, it appears that DVD has yet to sell any points for 20 2-bedroom villas and 1 grand villa that have been declared. I base this statement on the fact that property deeds have not yet been recorded by the Orange County Comptroller for these specific units. If DVD really wanted to, it could have declared fewer units for the DVC, thereby letting DVD retain more for cash reservations.

In the case of SSR, DVD has declared 30 of the 60 TreeHouse Villas for the DVC. I haven't tracked SSR deeds, so I don't know how many of the THV-related SSR points have actually been sold by DVD. I suspect, though, that DVD has declared far more THV units than they have sold SSR points.

Here is the link to a thread discussing the composition of BLT: http://www.disboards.com/showthread.php?t=2212548