What happens to the big giant point hole we just created?

[rkdahl]

I got to thinking about the DVC member cruise and the thousands upon thousands of points it consumes from all us DVC members. You figure 300-400 points per cabin at 800+ cabins and WOW thats a lot of points from members that just went poof. Granted some used cash...but what if they didn't?

How does that translate into vacancies at the resorts. Does that mean that there will be lots more rooms open next year than if the cruise didn't exist? And what if one year, every DVC member at all the resorts went on a cruise or Concierge Resort or on the Adventure program or stayed in a non-DVC Disney hotel somewhere? Would the DVC resorts just sit there empty or available for rent? Or does that that hit up against the member vs non member inventory discussion? Just curious how that all evens out.

Just got to thinking about this...now I'm all confused and ready for my IRS 1040 forms in Janurary!! Curious what others might think?

 

[Deb & Bill]

They are all staying at the BCV during the summer.

 

[DrTomorrow]

They are all staying at the BCV during the summer.

Boy, the hallways are really going to be taking a beating!

 

[crisi]

They are turned over to CRO and rented for cash to recoup the costs of "renting the ship" - though I doubt anyone here knows exactly how it works - i.e. which weeks, which resorts, or which room sizes are made available and when.

 

[bullpup12564]

They are turned over to CRO and rented for cash to recoup the costs of "renting the ship" - though I doubt anyone here knows exactly how it works - i.e. which weeks, which resorts, or which room sizes are made available and when.

Do you think WDW would have discounts on these rooms since there might be a lot available or do you think they will charge top dollar?

If points were turned in for a cruise would WDW have the 11 month booking advantage with them? Since CRO knows the resort's peak periods these points could be very profitable if used correctly.

On the other hand, could we see Disney renting OKW studios at discounts to use up the points quickly and cheaply.

 

[DebbieB]

Keep in mind that DVC needs the money from these rooms to pay for the cruise rooms. So they probably would not want to offer deep discounts on them. I think they will throw them in with the other rooms and offer discounts as they offer other room discounts, such as AP rates or code rates.

 

[Scratch42]

Maybe that's why peeps are getting SSR for Christmas at $38.00 for the night!

janet

 

[PamOKW]

Any member that takes a cruise or uses their points for any non-DVC option in effect turns those points over to DVC to "pay" for their trip. DVC in turn rents out DVC accomodations to get the cash to really pay for the trips. I'm a little fuzzy as to exactly when/how/where but some how they have to turn "points" into cash. The 11/7 month rule doesn't apply to DVC.

We better hope that they don't need to deeply discount or let rooms go empty. If they do, the next point chart will require more points for non-DVC options. If they can turn 8 points into $250 that goes a long way towards paying for a room or ship cabin. If they can only turn 8 points into $100, next year they may ask for 16 or even 20 points to cover the same non-DVC trip.

 

[Dean]

We better hope that they don't need to deeply discount or let rooms go empty. If they do, the next point chart will require more points for non-DVC options. If they can turn 8 points into $250 that goes a long way towards paying for a room or ship cabin. If they can only turn 8 points into $100, next year they may ask for 16 or even 20 points to cover the same non-DVC trip.

But they do. I've been told that only about 75% of the rooms reserved on points and given for rentals through CRO have been rented over the years. Plus CRO, or at least a non DVC entity, takes a cut of every rental. That's why it costs almost twice as much as it really should for these other points exchange options. And why it's still better to give a member a 25% discount than turning it over to CRO.

 

[RobDoc]

I think it's important to remember that even though the "market" may determine the value for renting DVC points by members, MS has placed a true "value" on the points each year and that is our maintenance fee. While members seem to rent points anywhere from $7- $15 per point, MS received something in the $3 - $5 range (depending on resort) for those same points and uses that value when pricing the non-DVC options.

Many feel that the non-DVC options are overpriced by assigning the $10 "value" to their points as a benchmark. From the viewpoint of MS, the point "value" of $4 (+ or -) is what DVC actually received for the point and what they must recoup to pay for the non-DVC option.

The value of the points used for non-DVC options may be in the eye of the beholder. Regardless, points used for the cruise do create CRO opportunities for cash reservations. I agree that DVC will get a better value by allowing members to get the 25% discount on those rooms vs allowing CRO to heavily discount the rooms.

 

[chipscinderelly]

Many of the DISers on the DVC Cruise paid cash for the cruise or did a combo of cash/points (that's what we did) so it may not create as much of a hole as anticipated.

 

[Dean]

I think it's important to remember that even though the "market" may determine the value for renting DVC points by members, MS has placed a true "value" on the points each year and that is our maintenance fee. While members seem to rent points anywhere from $7- $15 per point, MS received something in the $3 - $5 range (depending on resort) for those same points and uses that value when pricing the non-DVC options.

Many feel that the non-DVC options are overpriced by assigning the $10 "value" to their points as a benchmark. From the viewpoint of MS, the point "value" of $4 (+ or -) is what DVC actually received for the point and what they must recoup to pay for the non-DVC option.

The value of the points used for non-DVC options may be in the eye of the beholder. Regardless, points used for the cruise do create CRO opportunities for cash reservations. I agree that DVC will get a better value by allowing members to get the 25% discount on those rooms vs allowing CRO to heavily discount the rooms.

I'll have to agree with Doc's end point but for totally different reasons. The maint fee is simply the cost of running the resort and is not inherently related to value. However, DVC does appear to have selected a value of about $5 per point which I'm sure is based on their expected end income when they rent the points in the form of rooms through CRO or the member discount.

 

[CarolA]

Many of the DISers on the DVC Cruise paid cash for the cruise or did a combo of cash/points (that's what we did) so it may not create as much of a hole as anticipated.

I agree. I think that a larger portion then folks realize pay at least one party member in cash....

 

[rkdahl]

Thanks for the responses.

I agree quite a few folks may have used cash for the member cruise. I was trying to look at all the thousands of points that get 'consumed' each year outside of the DVC resorts, at it has to be a large number. And what was happening to offset that. Some interesting ideas have surfaced.

I'm curious Dean and Doc, how did you arrive at the value (approx $5) of the non-DVC options? So going with your theory, if we could somehow increase DVC revenue on non-member (no points) used rooms, our point costs for non-DVC options would be less. Is that correct?

Not that we have any control over that but I'm just trying to understand the logic here. Thanks!!

 

[bicker]

The maint fee is simply the cost of running the resort and is not inherently related to value.

Exactly. In reality, Disney has indeed set the value, but it isn't the maintenance fee, but rather the room rate they rent our rooms for when they have them in their inventory. The fact that DVC rentals go for less is a testament to how good of a deal it is to rent from a DVC member.

 

[Dean]

I'm curious Dean and Doc, how did you arrive at the value (approx $5) of the non-DVC options? So going with your theory, if we could somehow increase DVC revenue on non-member (no points) used rooms, our point costs for non-DVC options would be less. Is that correct?

Not that we have any control over that but I'm just trying to understand the logic here. Thanks!!

My view is set by two methods. One is looking at what I could get the same thing for myself using cash and dividing by the number of points published as the cost. This usually ranges from about $4.5-6.75 per point. It only gets down to the lower end when there are inherent specials like FL resident rates. And only gets higher if you are in a period when there are no discounts but the program has access. Like special seasons at CC, high occupancy cruises or if you try to reserve a cruise late when the discounts are gone. I'm also assuming that DVC can get a better price than I could as an individual. Thus what might return a value of $6 or more pp might only cost them $5. Besides DVC in the past has told me they use this number though I'm sure it varies every year. Given the system in place there are two factors. One is what cash DVC ends up with from the points and the other is what it costs them in cash for the option. I don't think they don't have a lot of control over the income pp. They simply reserve rooms, give them to CRO and see what they get back. Then next year they take the amount for the year and divide the dollars by the number of points used and determine the value of a points for next year. I'm sure they look at trends over more than just one year and try not to vary the points year by year any more than they have to. They likely also create a reserve fund in case they get a lot less one year than they anticipated.

The main way they can alter the ratio is by negotiating better cash prices. Something they haven't been willing to do very well, at least with other Disney arms (I'd rather have less options that are a much better value). They other way to alter the formula is by reserving rooms they can more easily rent and for a higher price, something they haven't generally been willing to do. And I think that's the right approach because those would be more in demand and higher occupancy periods and that approach would affect member access to the resorts. The proverbial catch 22.

 

[RobDoc]

...
I'm curious Dean and Doc, how did you arrive at the value (approx $5) of the non-DVC options?

I based my analysis of the "value" on what DVC has members pay for the points each year. I realize that there are inherent economic factors (price paid, interest paid on loans, lost interest on purchase monies), but simply put- DVC can place the "value" at what we paid for the points for the year - 2006 dues range from $3.98 - $5.27 per point - so from my viewpoint, that is the value MS uses when setting the "cost" of the non-DVC options.

I realize that this is a simplified analysis - there are certainly other factors used since the accounting system used probably isn't a direct cash relationship, especially within the Disney Collection options. For the Concierge and Adventure Collections, I imagine there is some negotiation for cash payment for reservations made by DVC members. IMO, it would be difficult for DVC to justify paying more for those options on a per point basis than they received from the member in fees for the points.

 

[ClarabelleCow]

The only thing I can add to this thread is everytime I take a look, I read it quick and see BIG GIANT POT HOLE!!! (not point hole!!) And think something gave way at WDW!!! Guess I have been in the Northeast too long!!!