Why do non DVC points keep going up?

[Bexx]

I realise that it's considered a bad use of points, but living in the UK it's great being able to use points at Disneyland Paris. I have reconciled myself to the fact that these will just keep going up, but would be interested to know why? And where, if anywhere, will it stop?! Will there come a time when it's really not an option to look at anything other than staying in the DVC resorts, and will Disney stop using it as part of their promotion of DVC?

Jusr curious to hear some opinions.

 

[Geebs]

OUr guide explained to us how using points outside of Disney works. ( i'm not sure out Disneyland Paris works). DVC has to pay cash to the resorts/hotels that we trade into. For example, If you stay at the Plaza in New York City..it costs approx $400 a night which disney pays them in cash. To generate the cash, Disney needs to have someone exchange in(they wouldget $$ from thier home resort) or have someone pay cash for their stay.

i hope that this helps

 

[Bexx]

Thanks Geebs - I sort of understand how it works. But what I don't understand is why the points have to keep increasing year on year. Okay so it costs a fair amount of points to trade out and DVC has to make sure that it's can generated enough cash by having more rooms free to sell at the DVC resorts than it actually needs to cover the cost of the hotel the DVC member wants to stay at. But while the cost of that hotel will go up slightly each year, so will the cost of the studio or larger that they will selling for cash at the DVC resort.

So as long as they know that they will always have three studios freed up to sell in exchange for paying for a room at DLP, why do the point values actually have to go up for trading out, because their use at the DVC resorts are guaranteed at the same level until 2042.

Does this all make sense!

 

[vernon]

I hope that much of this has to do with the fact Disney is running a long way below capacity at the moment, due to a number of external circumstances. While you may be "freeing up" 3 studio nights, if the hotel is only running at 65% occupancy there is a good chance they will only be able to rent out 2 of those 3 nights.

I agree with your opinion Bexx, I hope that this is a reaction to a extraordinary circumstance. A reaction that will not be long lived and that will be reversed as the market at WDW improves, although, being a cynic, I'll have a small wager that the prices decrease a hell of a lot slower than they increase.

 

[PamOKW]

I think the reason points have been going up lately is because of the overall problems of the tourist industry. The hotels DVC is dealing with (including the Disney ones) must be charging DVC close to rack rate or a minimal discount. Now, we all know that Disney and other hotels are actually deeply discounting rooms. This is the competition DVC faces when renting out "our" points. When the hotel rates return to normal levels I would hope the outside points would also stabilize.

Example (not using actual costs):

You trade 60 points to go to Disneyland Paris. DVC will sell these as 4 nights in a BWV studio. Disneyland charges DVC $300 a night for your two night stay. DVC must come up with $600

DVC rents out the 4 nights of studios at rack of $280. They take in $1,100. This covers your $600 stay plus the costs to DVC for housekeeping, overhead, etc. on the studio. Everyone is happy.

Why do points go up?

DVC discovers they can't get the $280 rack rate. They are able to get $180 a night for the studio. They take in $720. This pays for your stay but they come up $100 short on the costs they need to cover for the housekeeper etc. back at DVC.

When they figure out the points for next year, Disneyland Paris says they will keep the rate the same but DVC adds points because they have actually "lost" money on trades this past year. Next year your trip to Disneyland Paris will cost 68 points.

Once the business turns around and they can once again get $280 per night for the DVC room, the point costs may stop increasing.

 

[PamOKW]

LOL! Vernon you posted while I was writing my novel.

You said what I was trying to, much more succinctly! Thanks.

 

[Bexx]

Thanks both for your replies. Just glad that I've got the right end of the stick about this, and wasn't being totally naive - which happens quite a lot!! As I said, I'm not too bothered about increases just for the next few years, but after that - who knows? It would be nice to see a decrease at some point, albeit probably a slow one as you said Vernon. But just for it to level out for a while would be good!! Otherwise DVC would have to take any reference to exchanging out of it's video - or one day admit that "your purchase of 200 points will get you one night at the Plaza"

 

[Richyams]

There have been decreases.

Way back in 95, 96 or 97(can't remember)....it was during that market crash, I think that was Oct '97....yeah, thats it. We crusied, back then it was Carnival, either The Big Red Boat or just a regular Carnival cruise.

When making reservations, I had noticed that the points had come down pretty dramatically from the previous year and since we were booking the cruise so far in the future, they had a point chart that hadn't been released yet that had even lower points. We ended up moving two levels higher in room catagory and paid cash for the kid.

This was a time when the hotels were full, things were good, tourism was up, DVC rooms were in demand, points required to trade out were going down.

I cruised, so I remember that pretty clearly, I believe I remember other things going down also....I believe there were decreases in WOD and some of the other things.

Points required to trade out can and have gone down and I believe they will again in the future.....Vernon is right though, just as Gasoline shoots up in price and then slowly drifts downward, we will probably see the same thing with trade out points.

 

[sparkspeak]

So, when occupancy is low, discounts are high; then it's more economical to pay cash for non-DVC stays -- unless your points will expire?

 

[PamOKW]

Sparkspeak -- Basically, that's true. However, you have to consider using what you've already paid for vs. buying more (i.e., using cash instead of points). You always get the most for your points at a DVC resort.

Bexx -- The points needed to stay at WDW did stay fairly stable for quite a few years. The combination of breaking it into different views and concierge and also the decline in tourism made the points increase quite dramatically for some time periods. Hopefully, they can at least keep WDW resorts fairly stable down the road.

 

[Richyams]

Pam, I think you are wrong. I think that as tourism picks up, the points will go down.

Disney can sell a one bedroom at BWV for more than they can sell a regular room at the Cont, when the demand is there, they will want more points. The only way they can get more points is to make trading out more attractive, they do this by lowering the points.

I even think that the speed may be faster than I suspected. As soon as the demand increases, they will want more points, we may even see some "Point Specials".

They won't do it out of the goodness of their hearts, its won't be out of a sense of loyalty, it will simply be $$$$$.

 

[Dean]

I agree with the explanations but there is one other piece of the puzzle. That is the contract price DVC can get at the other DC, CC, DCL and adventure options. Unfortunately, it doesn't appear DVC has gotten as good of a price discount lately compared to the industry slowdown. That means the prices on the front end are too high and the returns when DVC rents out the units don't cover as much as they would otherwise.

From what I can gather with the last round of negotiations with the DC hotels, DVC was held up and looked at as a cash cow. The discounts given to DVC by the other Disney hotels were not reflective of the market or the other discsounts being offered. DVC had to make a choice to play hardball or take what was offered. I think they made the wrong choice but many on this board and DVC members in general would rather have poor value options than to lose some of the options playing hardball.

I feel DVC has failed the members in this area, but that's just my opinion.

 

[JimC]

Dean are you saying that Disney handles its internal pricing as if each operating group were a separate unaffiliated business? I wonder if that is the best way to use the Disney properties? I know it is a widely used operational method and that many believe that it makes each unit compete more effectively. It just strikes me that internal competition could, at times, not work in favor of the overall business.

If DVC has to negotiate internally, then I think they should insist on "most favored nation" status and get rates as good as are given to anyone else.

 

[Dean]

Originally posted by JimC
Dean are you saying that Disney handles its internal pricing as if each operating group were a separate unaffiliated business? I wonder if that is the best way to use the Disney properties? I know it is a widely used operational method and that many believe that it makes each unit compete more effectively. It just strikes me that internal competition could, at times, not work in favor of the overall business.

If DVC has to negotiate internally, then I think they should insist on "most favored nation" status and get rates as good as are given to anyone else.

That's my understanding but who really knows. From what I'm told, each WDW resort is a technically separate business. That does not mean the the negotiations were handled individually. It's possible and likely that there is a management team that coordinates these issues. Still, I'd like to see DVC insist on a more reasonable exchange rate. I do see it from the other resorts standpoint in that they are giving a blanket "discount" that may cover times that are slower but also higher demand. IMO, the seasons structure should take care of this.

 

[erikthewise]

It was not so long ago (2001 point tables) when it was a perfectly sensible option to use points to stay at other WDW resorts, at least on weekdays. There was even an item on the Mousesavers site suggesting that non-members rent points in order to stay at non-DVC resorts, because they could save money doing so! Perhaps that had something to do with the large point increases in the 2002 tables. It would be nice to return to that situation, but I'm not holding my breath.

 

[Dean]

Originally posted by erikthewise
It was not so long ago (2001 point tables) when it was a perfectly sensible option to use points to stay at other WDW resorts, at least on weekdays. There was even an item on the Mousesavers site suggesting that non-members rent points in order to stay at non-DVC resorts, because they could save money doing so! Perhaps that had something to do with the large point increases in the 2002 tables. It would be nice to return to that situation, but I'm not holding my breath.

Personally when a regular hotel room cost as much as a 2 BR at a DVC resort, it was never a good value, just worse now even than it was then.

 

[Bexx]

The points needed to stay at WDW did stay fairly stable for quite a few years.

And then rose sharply just as I bought into DVC!! I have to admit that the smaller amount of points required to stay at DLP when I first looked into DVC did help my decision to buy, and then I got a bit of a shock when the new point tables came out.

 

[Shamus]

Pam,

I am confused by your Example:

----------------

"You trade 60 points to go to Disneyland Paris. DVC will sell these as 4 nights in a BWV studio. Disneyland charges DVC $300 a night for your two night stay. DVC must come up with $600

DVC rents out the 4 nights of studios at rack of $280. They take in $1,100. This covers your $600 stay plus the costs to DVC for housekeeping, overhead, etc. on the studio. Everyone is happy."

-----------------

The housekeeping is covered by the dues associated with the 60 points, No?

The only expense to DVC is the $300 plus minor additional reservation/bookkeeping expenses.

They charge us $75 for non WDW trades to cover that expense.


Anyway,

If a Disneyland Paris room is $300 and a BWV room is $300 the points should be equal provided DVC maintains 100% Occupancy on Rentals.

The only justification I see for DVC to charge more points is to offset the sub 100% occupancy rate for rentals or to offset changes in the cash prices.



Shamus

 

[LeftyES]

----Snip----
The housekeeping is covered by the dues associated with the 60 points, No?

The only expense to DVC is the $300 plus minor additional reservation/bookkeeping expenses.

They charge us $75 for non WDW trades to cover that expense.
-----Unsnip----

I would figure that technically our dues only cover a fraction of the housekeeping expenses since staying on points entitles you to T&T service every 4 days and full housekeeping every 8. Paying cash (or plastic ) for your room entitles you to cleaning every day.

Still, it would be nice for the points to go down for a change....

 

[d-r]

the disneyland paris points include lenght of stay tickets for everyone in the room as well though.

But that is kind of weird, because it would cost the same if you one person in the room or four.

DR