Why are points valued @ $10?

[jeankeri]

In looking at Concierge Collection & Disney Collection to determine value of those reservations, I was wondering who set the value of points at $10? While it makes the value of DVC great, it's not so great if used elsewhere. Also- when renting out points, $10 is a steal- especially when renters don't have to pay the 13% tax - or any part of that years maintenance. Makes me wonder why renters don't set $12 as a better price. Any thoughts would be greatly appreciated to help me wrap my brain around this one . I'm very new to DVC- closing on my resale is today .

 

[tamu91]

I'm not sure how the points in the Concierge and Disney collections are determined because in most cases, points needed to stay at other Deluxe properties onsite seems outrageous. There is no way I'm going to spend my points staying at other resort at WDW.
As far as the rentals are concerned, I think it's simple economics. There will always be someone willing to rent their points out lower than what we'd like to see for various reasons (i.e. banked pts. that they can't use, need $ desperately, last minute cancellations, etc.) and as long as we all have to rent the same points out to a limited audience, it will be a renter's market. Nothing wrong with it. Just a simple supply and demand economics.

 

[tjkraz]

How that number came into being is fairly irrelevant.

Right now, many, many people seem to have points available for rent at $10 each. Until the demand begins to exceed supply, I wouldn't expect that price to change.

Some people claim that they draw a hard line at $11 or 12, and are eventually able to find a willing renter. If that's the case, so be it. Otherwise, rental prices are staying right where they are.

 

[Happy Birthday Cat]

I think it's $10.00 because that is what Disney established for their Magical Beginnings buy back of points when you purchase a contract from them. It seems to have stuck in the rental market.

HBC

 

[Tiger926]

I as a new DVC member asked this same question last month, and I didn't really get a specific answer either and based on the two answers so far, this question still has not been answered. Since it's been asked again, it's obviously something that is of interest to many people (especially new DVC members), so I beg to differ that the $10.00 per point is irrelevant.

As an educator, I am someone who researches things to death (whether or not that is a good thing remains to be seen somethimes - LOL!), but as someone with extensive research training, I find it a very relevant fact. If it wasn't, then someone could just decide tomorrow that $15.00 per point is the going rate - this I suspect wouldn't work as somewhere along the line, the $10.00 per point thing came into being for a reason - I don't think it was just arbitrarily chosen. Now obviously I realize that this is where supply and demand would kick in, but I still feel it's relevant and interesting to ascertain how the $10.00 per point value came about - what factors went into this.

My DH and I are also trying to learn all that we can about our new purchase, and this is something that we find very interesting. That being said, are any of the DVC veterans willing to explain how or why $10.00 per point is the chosen point value at this time?

Tiger

 

[Happy Birthday Cat]

Originally posted by Tiger926
I as a new DVC member asked this same question last month, and I didn't really get a specific answer either and based on the two answers so far, this question still has not been answered.

Hey come on....I answered it. It may not be the right reason but at least it's a stab at why the price is $10.00.

it's $10.00 because that is what Disney established for their Magical Beginnings

HBC

 

[spiceycat]

I agreed Happy Birthday Cat - DVC set it at $10 a point - until they are offering more for the use of your points it will probably stay at $10 a point.

before then it was $8 a point.

the $1,500 you get for the use of your first points - done on 150 points.

 

[DVCconvert]

Now obviously I realize that this is where supply and demand would kick in, but I still feel it's relevant and interesting to ascertain how the $10.00 per point value came about - what factors went into this.

Well.....I don't think that rocket science went into this.

The way I look at it is this:
The high side of Fees is $4.25 per point. At $10 per point that affords a decent net profit to the rentor, (like 8%) and a decent savings when compared to rack pricing on the same unit/same location to the rentor. AND...it's an nice round number!

 

[jeankeri]

Thanks HBC. That seems as logical as anything- though not near what they should be valued at (based on per night rack rate) IMHO. I was thinking it was based on something more complex- the value of your points over the life of the contract, with maintenance, taxes, etc factored in. Maybe that's how DVC set the $10 value.
Anyways- thanks for the replies everyone!! And- how long ago was $8 the going rate?

 

[CVW]

You've already answered your own question. (Not surprising, considering you're someone with extensive research training! )

The price is $10 per point for the same reason the newspaper is fifty cents and gasoline is $2 per gallon.

Buyer and seller are both happy with that price. If we refused to sell for anything less than $20 per point we could get it.

That is if enough renters were willing to pay it.

If renters refused to pay more than $5 per point they could get it.

That is, if enough of us were willing to rent them.

As someone mentioned, some people have sold them for $12 and over. Others have sold for $8 and under.

Maybe a better question is: how can we owners drive the price up? One way would be to band together and refuse to sell for less than $15. (Otherwise known as collusion.)

A more likely way is to raise the owners' cost per point, therefore driving up the value of the property. (Better for Disney, worse for us.)

A better way (for us) would be to have Disney stop offering so many discounts on their resort rooms, which drives down the value of a DVC room. (Of course, Disney must not be filling their rooms, or they wouldn't be offering the discounts, therefore this plan would hurt them.)

The best way (for Disney AND us) would be to drive up the value of the resort so that millions of people would be begging to get on property. How can we do this? A couple of ways:

1) Move all of Disney to an oceanfront location on the coast of Kauai. You could rent for $30/point. Guaranteed.

2) Pay off the city councils of Orlando and Kissimmee to shut down all of the timeshares in this massively overbuilt market.

So there you have it. Short of relocation or bribery, or collusion, we're probably stuck pretty close to $10 per point.

Sincerely,

Someone else with Extensive Research Training

 

[PamOKW]

There is no "reason" for the price being $10 except for that's what the current market seems to bear. In fact, there's really no reason that the reservations need to be sold "per point" at all. Many people just sell a total vacation on E-Bay with no mention of points and let folks bid away on it -- "points" really have no relevance to a non-DVC renter.

It's probable that Disney offering $10 per point first set the bar at this level. However, Disney has sometimes offered $5 per point or $15 per point in Magical Beginnings. DVC itself says in the paperwork that points actually have no value -- they are just the mechanism for making reservations.

People are not in this for charity. There is risk and sometimes quite a bit of time and work that goes into setting up a rental. Someone just posted yesterday about being a little bit surprised by how much work it does take. I had the same feeling myself when I first rented and can't imagine trying to make it a "business". It would soon become a full-time job.

Dues are just one part of the cost that people should be getting back. People need to take into account what the original purchase cost them and get some return on that as well. Someone who purchased a full 50 year contract for $50 gets a fair return on $10 per point. Someone who paid $85 per point and will get 40 years use of the points and who may have financed as well, might want to look at whether they are getting a decent return on their points. If your back is against the wall and you will either get what you can or have the points expire you may sell cheaper. If you are deciding to try and sell the points or treat Aunt Harriet and Uncle George to a trip, you may not be so quick to let the points go cheap.

 

[spiceycat]

I think it was when VWL was open to DVC members. they offer the $10 per point for your first year point.

I know when I first started posting it was $8 a point sometimes it was $6 a point.

 

[Dean]

Actually the rental price was essentially set at $10-$10.50 pp a couple of years before the current MB program came into being and the trade in of $10 pp was offered. So DVC did not set the price but did contribute to it, IMO. The history is that rentals were at or over $10 pp starting as far back as 1996. The price actually went down slighlty to a solid $10 pp when the free park passes went away at the end of 1999. Prices had started to edge up when 9?11 happened. Prices held and went down slightly overall. Prices have edged up again with few people offering below $10 pp and quite a number at $11 and $12 pp now. With the recent price increases, I think we'll see prices continue to inch up, at least as long as the economy holds out.

The reality is that some owners are actually renting for much more, in the $15 to $18 pp by reserving Sunday to Friday, mostly studios and auctioning on ebay.

 

[DrTomorrow]

To both Tiger926 and jeankeri: The $10 price did not spring, fully formed, from the forehead of Walt the first time DVC points were rented. As others have said, a while ago per point rental prices were as low as $6 or $8; the current price of $10 is neither eternal nor involate.

I'd suspect that some folks have tried higher prices and had their points take longer to rent, and others have tried lower prices and had their points snapped up in such a hurry they they realize that they could have asked for more. I agree that Disney's "buy back your points for $10" programs have helped enshrine that figure in peoples' minds as a "fair" price.

I'd really like to see some data compiled on the correlation - if any - between rack rates and DVC rental point prices over time.

 

[jmatias]

I find this questions and the answers to be very interesting.

I've watched the rents boards for a while and noted the $10 average price. Also starting to see more people ask $11/$12 per point.

I rented my BWV points for $10 and had great response. The process was smooth and I'm planning on renting our points again.

I do however, get the "sense" of "hostile" feelings towards those who rent their points for more than $10. Maybe "hostile" is too harsh but I get the feeling that if I was to ask for over $10 I would be looked at in negative light. JMHO...

 

[Dean]

Originally posted by jmatias
I do however, get the "sense" of "hostile" feelings towards those who rent their points for more than $10. Maybe "hostile" is too harsh but I get the feeling that if I was to ask for over $10 I would be looked at in negative light. JMHO...

Actually I think hostile is too mild a word in some cases. But none of those that snap at you in that way are offering you points at the price they state is "fair", or worse, they think you shouldn't rent YOUR POINTS at all.

 

[tjkraz]

Originally posted by jeankeri
Thanks HBC. That seems as logical as anything- though not near what they should be valued at (based on per night rack rate) IMHO.

Depends on what days / seasons you are looking at. DVC has many more seasons than CRO, and the weekday / weekend variance impacts the "value" of points.

For example, a week in late July in a 2B at BCV would cost $3815 cash (with NO discounts, which is rare) or 350 DVC points. Renting points at $10 each would save you less than 10%, and includes the inherent risk that goes along with sending a total stranger a check for almost $4k. Oh, and daily housekeeping would run you another $200 for the week.

In most situations renting points at $10-11 each is a very good deal. In others, not so much.

 

[LIFERBABE]

I do however, get the "sense" of "hostile" feelings towards those who rent their points for more than $10. Maybe "hostile" is too harsh but I get the feeling that if I was to ask for over $10 I would be looked at in negative light. JMHO...

Jmatias,
I agree. I havent tried to rent points yet, but I do frequently check the RT board. There is a sense of $10 or else. I dont normally get into how much a point is worth, but I hesitate because the price is pretty much set. You cant even swim in SAB for $130 a night. And although $10 ppt is a nice round number, I have to think long before I give up banking them to rent them.
But then again I dont plan on having distressed points.

For example, a week in late July in a 2B at BCV would cost $3815 cash (with NO discounts, which is rare) or 350 DVC points. Renting points at $10 each would save you less than 10%, and includes the inherent risk that goes along with sending a total stranger a check for almost $4k. Oh, and daily housekeeping would run you another $200 for the week

Yes, but most renters don't rent weekend nights. It is mostly sun-thur. and during the week it is almost always a much better deal than going thru CRO.

 

[Tiger926]

Thanks for the info - great amount of info shared. That is why these boards are so cool!

Happy Birthday Cat - I didn't see your post (I guess I was writing mine), sorry if you took offence to my comment. I just found that the 1st two replies more explained why the points continued to be valued at $10.00, and not how that price came to be in the first place.

As an obessive planner and organizer (that is why I mentioned that I have lots of research training - I am obsessed with getting to the bottom of everything!), and new DVC member, I have learned, and continue to learn so much from these boards. Thanks to the op for asking such a great question!

Tiger

 

[LisaSt]

Quite interesting to read as for the DVC buy back of magical beginings our first years points at HHI were bought back at 13.00 a point by DVC. We have had no problems getting 12.00 a point for ours this year and we have rented out this years next years and have people wanting our 06 points.