Why do we give our points away???

[Doctor P]

I frankly laugh everytime I see this type of thread. Perhaps we should start a thread and call it, "isn't WalMart stupid for selling their goods at prices that are below that that their competitors sell at?" The cost of points to an owner simply does not approach $10 per point. Therefore, an owner can be made whole and then some by renting at less than $10 per point. For those who are able to rent for more--more power to you. Indeed, it is also possible that those who are renting for the lesser dollar amounts actually end up making a higher profit (for a variety of reasons).

 

[Dean]

Originally posted by imgoingtodisney
the 186 pts came out of what we had - 170 was banked and then 16pts from this year. (dcl didnt cover any of it.) I dont see how anything came out of dues.
yes we contacted dvc and had to go through an exchange because all the dvc resorts were fully booked. If I had planned a WDW vaca it would have been 11months ago, not just 22hrs

If I'm not getting the correct impression, please forgive me. I'm assuming you got your points back from DCL and there were restored to full use with DVC. If that's the case, there is a cost to freeing up the points and restoring them. While it might not be a direct financial cost, those points had been given up to CRO for rental and potentially could have been rented out already. One must remember that DVC is separate from DCL who is separate from each resort. It's not simply a matter of shifting things around to accomodate this issue. Someone has to pay somebody else for each aspect of this. You seemed to imply you should have gotten the DC exchange for less points and that would have a substantial and direct affect on DVC finances. I assume you could have paid cash and used the points for other options like a future trip or rental, as Doc said.

Don't get me wrong, I feel for you and what happened and feel that DCL should do as much as they can to accomodate those affected. I don't think DVC is at fault in any way and should not be expected to cover any of this. Frankly, I'm a little surprised they didn't refund you at $5 pp rather than giving the points back for full use. What I don't believe is that DVL or Disney in general should be punished by those affected in terms of punative damages. To me, a full refund plus free stay at WDW and a 50% off coupon would fall in that category and I would not feel it appropriate.

 

[Dean]

Originally posted by Doctor P
I frankly laugh everytime I see this type of thread. Perhaps we should start a thread and call it, "isn't WalMart stupid for selling their goods at prices that are below that that their competitors sell at?" The cost of points to an owner simply does not approach $10 per point. Therefore, an owner can be made whole and then some by renting at less than $10 per point. For those who are able to rent for more--more power to you. Indeed, it is also possible that those who are renting for the lesser dollar amounts actually end up making a higher profit (for a variety of reasons).

And I laugh for different reasons. These include the idea that an owner should sacrifice for the potential good of other owners they've never met even though they are following the rules placed upon them by the system.

Value of a DVC points depends on the specifics but one way to look at it is this:

1 point at $84 pp = $2.15
dues about $4
lost revenue on $84, about $6.72 per year at 8%
interest paid on that $84 around $1.50 per year assuming 10 years at 12%

That could put the actual "cost" of a point at $14 or so per year based on todays new costs. Obviously there are some assumptions and if we use different assumptions, the numbers will change. When we bought and the price will vary. One might decide to use a different rate of return or ignore the interest costs of financing. Vacation habits and savings style will also affect an individuals situation significantly but not the cost that much. If one uses the exchange options, the costs will go up, if one compares to what the costs would have been using cash at WDW, the numbers will be all over the place. So I chose to look at the cost as a CPA would do and the value as a combination of the cost and usefulness I get out of DVC. The trouble is when you rent out you lose the usefullness portion and are left only with the cost equation.

If I look at my specific costs, I'm more in the range of $8.50 for my OKW points and almost $10 pp for BW. Of course I could look at the OKW and the fee tickets and figure I've got my money's worth but that wouldn't make sense from a financial aspect. I could also look at the cost of rooms that I don't pay for but again, that is usefullness and not true cost.

 

[RobDoc]

The lost revenue and interest on that money are important, but can't be used in this comparison unless you wouldn't be using any money to pay for a vacation. In most cases, you'd likely use all of the lost revenue (and therefore the interest) on accommodations...and then some.

A good means to compute the value of a timeshare is compute the cost of the lost revenue on the principal and compare that to what you'd spend for similar accommodations- you should also depreciate the principal amount by the number of years of ownership in the case of DVC. If you'd spend more than the interest revenue and depreciation, the timeshare is a good financial deal. If you'd spend less- then you may be better off without it.

 

[Maistre Gracey]

As Doc alluded to, if you figure lost interest income, don't forget to subtract the cost of accommodations from that money each year. Before you know it, there won't be much left to earn interest; certainly not for 40 years.

I do not figure lost interest income into the equation for several reasons. One reason is that I was that if I didn't buy DVC, I was ready to buy a Z06 Corvette. In other words, that loot would have been blown on some other luxury item, if not DVC.

If you do figure interest potential, in my opinion, 12% rate of return is too high. Don't forget that we must figure in all market performance years, not just the good ones. The mattres would have got a better interest rate over the last few years than many investments. I heard on a financial show just last night that if the Nasdaq were to grow at 30% every year, for the next 10 years, it will be where it was 2 years ago. In short, this is another reason why I choose not to figure lost interest income into the equation.

Anyway, some of us factor lost interest income in, and some don't. There is no right or wrong way, it's just whatever works for you.

Good luck.....

 

[Dean]

If you figure for rental, you must figure the lost income on the money you would have saved otherwise, or as in my case, the money I took out of savings. As I noted, there are many ways to look at this and assumptions to be made and they can be varied from as little as around $6 pp and as high as $14 with most in the middle. To truly look at the cost of points for a rental, assume you buy just to rent and then figure all the variables. The rest is a far more subjective and variable issue, one that would vary for every single member. Just like some would need to consider air fare and others only gas money.

Maistre Gracey. the assumptions were 8% income and 12% interest on the loan. Reasonable assumptions over the long haul.

 

[golfnut1264]

does anybody ever figure the savings by the buyer in the equation... cost to us should not be important as savings to the buyer..if i can get 50% off something i am not asking questions about how much it cost the person and i should not get more off because of the cost...disney is exspensive enough..any savings we can pass on should be appreciated and not debated by making the sellers feel like they are ripping someon off..someone posted points and he is willing to pay $9 a point which he stated he thinks is fair in his post..he was looking for a $4000 vaction and he thought it would be fair to pay $1700...Im sorry i dont see it..why people expect to get that kind of savings..remember to be fair to the seller also...

 

[CarolMN]

Originally posted by jade1
I beleive the weekends do sit empty like Rich said. We are guilty of that. But there are other areas of FL we like to visit, so it may as well be on the weekend. Evening the points would be bad if locals would fill up the weekends like Rich was saying. WDW needs to give an incentive to fill these rooms-or they will just continue to sit empty. FOTL at the parks on the weekends for staying on property using DVC points may be an option. That would bring in $200 a day from us in food and beverages and another $300 in passes that we now give to Universal. I'm just not sure what this would do to rental points or prices. Probably would go up because they would be more desirable and weekends would be used more also.

I do not think we need to give incentives for DVC members to use weekends. Many of the general public who rent DVC rooms from Disney/CRO prefer weekends to weekdays. As an example, nearly all the non-DVC WDW resorts were full on the weekend nights in December, yet weekdays were still available at a discount. When DVC members use points for a non-DVC option, DVC must rent out the equivalent number of rooms to pay for the "trade outs". I think it is great that "expensive" weekend inventory goes to CRO (more often than the weekday inventory seemingly preferred by members). IMHO, it's a win-win. Members get to trade out "less desirable" room inventory days and non-members get to rent on weekends.

FWIW, I don't think weekends at the DVC resorts "sit empty" all that often. If they did, DVC resorts would not have the very high year round occupancy rates that they do. There's a lot more to the inventory management picture than just members. And not all members "avoid weekends like the plague". JMHO. YMMV.

 

[d-r]

Originally posted by golfnut1264
..in august it would cost $2300 for a week at the bcv or bwv..that would cost 123 points for a week at $12 a point $1476..that is over a 35% savings..where else can you find that type of savings

Typically, walt disney world has not offered significant discounts in August. Maybe travel to wdw will pick back up and they won't offer them again this year, I don't know. I guess we will see in August, but my bet is that in August, well especially the last two weeks of August, there will be people who pay $1403.36 for a week at boardwalk inn or beach club, that is $179 a night plus 12%. I don't know though. But, fwiw, 35% savings wouldn't be enough, or would just barely be enough maybe, for me personally to rent points, ymmv. But I think this is the opposite of what Dean is saying here:

Taking the cheapest option available for a short period of time is not a fair comparison. It may be that at any one point in time one can find a better deal from CRO by using discounts available. That's true at almost any hotel.

The above example for August is regular season when discounts are traditionally rare. I compared January to January, because it is the time of our next trip - while the rates through cro are the lowest of the year, so are the points through dvc. And yes, discounts are not always available, but then renting points isn't always available either.

Don't get me wrong, if someone is willing to pay it fine, I just don't see it making a lot of sense. Actually, we are planning a trip in May, split four days at bwv, and then Thurs- Sat. night at a studio at wlv. If there is a $119 a night rate at wilderness lodge, then I think we will bank those wlv points and just go through cro with cash - it would be just about $400 with tax for 3 nights, not that much more than the dues payment on the 71 wlv points. For us, it might be better to bank the wlv points and use them next year for larger accomodation.

I have no doubt though that the value of those points will continue to rise over time, I'm just saying that one should think about the current context and value right now. Again, if somebody thinks they are getting a bargain at $12/point that is great, but I don't think their vacation habits are the same as mine.

DR

 

[keenercam]

Interestingly, I have had two people contact me about some points I have for rent who have offered no higher than $7/pt. The others have not come up with a number yet, but at least there are 5 other interested parties. One person said he often rents for $5/pt. that makes it difficult for the rest of us.

 

[golfnut1264]

i would never rent for $7 a point...you are losing money if you do..i see you bought bcv 2002 so you probably paid $75-$80 a point...if iknew now what i knew than i would not have bought in the dvc i would just buy points at lowball rockbottom prices of $5-$7 a point and have no risk or outlay of of money to buy points..If you have 400 points at a cost of $26000 and than 40 years of dues..you will spend $90000 over the next 40 years for points and dues not including interest on the loan to buy the points..at $5 a point you will be able to recover $80000 over the next 40 years and never use a single point...if you sell at $10 a point you wont even double your money in 40 years .. not really a great investment is it..that being said i am glad i bought the dvc becuase my intentions are to use 1/2 and sell 1/2 for 5 or 6 years than use them all myself for the remainder of the contract..if you dont want to make money than sell for $7..it would be cheaper for me to give the person $50 and just keep the points myself than to sell for $7 a point...people that sell points for whtever price or venue to sell whether it be here or ebay are not getting rich doing it..or is it a buisness the numbers just dont add up to be a buisness..I sold a few vacations on ebay and the people are thrilled they are able to stay at a deluxe resort at an affordable price..

 

[Dean]

Originally posted by keenercam
Interestingly, I have had two people contact me about some points I have for rent who have offered no higher than $7/pt. The others have not come up with a number yet, but at least there are 5 other interested parties. One person said he often rents for $5/pt. that makes it difficult for the rest of us.

There was a guy recently on the rent/trade board and on the DVC board talking up the $5 pp. I don't think there was any doubt he was trying to drum up someone to rent to at that price rather than a truly honest opinion as to the cost. Maybe it's the same person.

 

[fkj2]

Why not ask that person who finds someone to rent for $5 per point if he would supply them as references so that you know he is a good rentee. It would be interesting to actually find out how many such references he can offer.

 

[d-r]

This is Melissa here - not DR - I'm too tired to log off and log back on - what I think is most funny about all this is people who are renting points from a DVC'r don't care what our expenses are or if we're breaking even or losing money - that has no affect on them whatsoever. The only think that makes sense is if renting points is less then paying cash thru CRO. Depending on the rates available thru CRO - that is what will dictate more than anything what amount points are worth.

If someone won't pay what you want for your points or what you believe their worth - don't rent them. I seems to me losing the points all together would be the biggest cost of all.

Melissa

 

[Dean]

Originally posted by d-r
This is Melissa here - not DR - I'm too tired to log off and log back on - what I think is most funny about all this is people who are renting points from a DVC'r don't care what our expenses are or if we're breaking even or losing money - that has no affect on them whatsoever. The only think that makes sense is if renting points is less then paying cash thru CRO. Depending on the rates available thru CRO - that is what will dictate more than anything what amount points are worth.

If someone won't pay what you want for your points or what you believe their worth - don't rent them. I seems to me losing the points all together would be the biggest cost of all.

Melissa

And that's as it should be. We say how much we'll rent for and they say yes or no or vice versa. No reason to get upset over that issue. The thing that upset me in the past was those non members coming in and talking down the price while obviously trying to rent at that cheap price. To be honest, I have the same negative feelings when a member comes in and talks up the price while actively trying to rent.

 

[keenercam]

While I have no problem with people renting for whatever they decide is appropriate for them, I don't feel I should be compelled to rent for less than what I feel is a fair price, just because someone else has. It would be like my neighbor selling their house at 1/2 or 2/3 appraised value and having that affect the appraised value of my house (whether it is in the context of a sale or an appraisal for a re-fi or whatever, when people are looking at "comparables"). Unfortunately, as long as anyone is renting as low as $7/point, I will look like the greedy person for needing to get $9.50-10/point.

 

[brucec32]

Whoaaaa...ever hear of a thing called the free market? That's what makes it possible for all of us to afford to go to places like WDW in the first place. If someone wants to rent their points and it's within the rules, that's their business. They're not obligated to do anybody "a service". These are individuals engaged in commerce, not a collective. The DVC system seems to work pretty well for everybody.

If I join, I plan on using those 8 point off-season weekdays in studios, since my schedule affords me the flexibilty to do so. Why would I pay more than double in points just to stay on a weekend? Someone wanting a complete week or more of vacation at a busy time may have to split between two resorts, I guess. But I certainly think it's unfair to criticise anyone for choosing the cheaper times and also anybody who wants to make back some of their money by renting points they aren't using.

I did some quick math and at a 5% cost of money my wife and I could stay at a OKW studio in the off-season 6 weeknights a year (split into two short trips) for about the eqivilent of $60/night (counting tax savings over a hotel stay), or only 1 night/year during the busier times on a weekend. Different strokes for different folks, but for careful users the DVC is a no-brainer. Even if you only use it a few years. But eat up points on peak season weekend stays and you'll need to buy a ton of points and pay
correspondingly high maintenance fees.

As for members using weekdays and leaving weekend rooms vacant...I guess that would be a result of weekend rooms being "priced" too high for the market in terms of point cost. If Disney or anyone else wants usage evened out more, the solution would be to lower the point "cost" of weekend rooms, not limit members wanting to stretch their dollars the furthest. I personally hope that weekday rates stay low, subsidised by high weekend point costs.

Supply and Demand...people will demand more of a product at a lower price and less at a higher price.

 

[JohnnyII]

Hi everyone,


I'm a "newbee" as I just bought 200 points at $84 at BCV 2 days ago and while it's great we have the option of renting out points we can not use. I personally would not really be interested in renting out points, I have 3 kids and will be using all my points and will probably be looking to buy more.

The interesting thing I don't see mentioned much when factoring in the cost is the current value of your purchase. DVC has always had tremendous resale value as compared to other time shares. We only have 40 years left, but I would expect the resale value to hold steady for at least the next 20. It is quite likely that if I sell my DVC interest in 10 years I will be selling it for MORE than I paid. So my real cost is ONLY the cost of the dues and the lost interest on my money from the purchase minus what I would have spent on hotels during this period.

It is guite likely that my "true cost" of ownership the next 10 or so years will only be about $6 per point.

Just my .02 worth!

John