Why Does it Cost More Points Each Year?

[Happy Birthday Cat]

It seems pretty simple to me but I'm sure it isn't.

If the cost of the cruise or a room (at the Polynesian for example) doesn't go up in dollars from one year to the next, why do the number of points for that same thing automatically increase? I'll even take it one step further. If the cost of the room at the Polynesian or the cruise does increase wouldn't there be some corresponding increase in the value of our points to Disney (my room at the BWV would also cost more making my points more valuable to them), therefore making it not necessary to raise the number of points needed for a crusie or a WDW hotal room?

I get the feeling that when DVC and WDW "negotiate" over the cost per point, they simply take it for granted that it will be more points when in fact, it shouldn't necessarily be that way and that we will always accept it.

On the cruise we were just on, we were told that DVC is now the biggest single travel agency that DCL deals with. Could you imagine what deals they could work out if they were actually separate companies?

Any thoughts?

HBC

 

[Chuck S]

As you know, the trade out are re-negotiated annually. Factors that may affect the points involved could include...

1) History of MS/CROs ability to re-rent the rooms those points represent at a DVC resort. If not a lot of folks want to stay at a DVC resort for cash, it is harder for DVC to recoup the cost.

2) Cost involved in the "trade out" have risen, employee benefits, insurance, etc.

3) Since "points" have no actual value, but are simply a means of reserving time...the trade value of a "point" is set arbitrarily.

I'm sure other factors also influence the "trade value" of a point. They are also probably based on the "rack rates" of the property that the member trades into.

 

[jaysue]

I wonder if the liquidity and depth of the rental market for points has taken away enough ressies that might have gone to CRO/WTDC for cash that the value of our points is being impacted from a trade perspective?

Having said that I think DVC is getting the short end of the stick in the "negotiations"

HBC, your logic is sound IMO, if the room rates are not moving why are the points going up......

thanks
jaysue

 

[Granny]

HBC....I guess what I take for granted is that these "negotiations" between two Disney entities are really an exercise in negotiating what will make the most money for Disney. Though we don't plan on using the Disney Collection or the DCL options, it is disconcerting to see them "point-priced" through the roof.

My guess is that Disney figures they don't need this "perk" to sell new DVC units anymore, and instead of discontinuing it, they are just making it harder to justify each year.

I guess that sounds jaded...but sitting back and watching this the past few years, it's hard to apply any kind of logic to the dramatic point increases we've seen.

Just MHO.

 

[Happy Birthday Cat]

I guess that sounds jaded...but sitting back and watching this the past few years, it's hard to apply any kind of logic to the dramatic point increases we've seen.

My thoughts exactly Granny. The price of hotel rooms and the cruise has not gone up (I'm paying less per cabin next year than for what I paid a year ago because of on-board discounts and credits). Which means the value of our DVC rooms has dropped every year for the last few.

Having said that I think DVC is getting the short end of the stick in the "negotiations"

jaysue: No doubt about it. Can you imagine an independent travel agent "negotiating" these increases?

History of MS/CROs ability to re-rent the rooms those points represent at a DVC resort.

ChuckS, I have to agree that this is one thing we don't know but the volume of business that DVC does should dictate things and they are doing a lot right now with WDW because of the 79,000 members. DVC also has built in costs that we already pay for. That should provide a fairly even trade off on the other points you make.

HBC

 

[Tagrel]

We are cruising in July, and are NOT using points directly! Just a little bit of legwork and research shows what an expensive use of points a cruise really is.

By booking my cruise early (over a year in advance), I got excellent rates that are much cheaper than even the 'discounted' and incentive prices now available.

DVC wanted 752 points + $75 booking fee.

At the going rate of $10 per point, I saved over $2000!!! on this cruise. Those 200 saved points can pay for another 6 nights at the Boardwalk. (Which we are VERY much looking forward to!)

I'm thinking that as long as members continue to use these inflated points for cruises, etc. Disney will continue to raise the point costs. Its too bad that DVC isn't more on the members side during negotiations. From the steady decline of point values each year, it seems the DVC properties are not holding their 'value' against cruises/other resorts as well as one might hope.

Guess I'm jaded on this subject too, Granny!

 

[DebbieB]

I think part of the equation is the amounts DVC can get for renting rooms at the DVC resorts with the points they get from the member for the trade. Disney in general has been offering different code & AP rate discounts to fill rooms. They recently sent an e-mail to AP holders with an offer for an OKW studio for $169 for May & June. That's about 40% off. I think DVC can rent the studios but the 1 & 2 bedrooms are very expensive when paying cash. It's much cheaper to rent points from a member for weeknights. For example, OKW in May is 100 points for a 1 bedroom for Sun-Thurs, at $10/point that's $1,000. The AP rate is $301 incl tax, which would be $1,505. Rack rate would be $2,146.

 

[Nick@ VB+OKW]

Originally posted by Tagrel
I'm thinking that as long as members continue to use these inflated points for cruises, etc. Disney will continue to raise the point costs. Its too bad that DVC isn't more on the members side during negotiations.

The above statement is very true.................

I was also going to book a cruise with DVC points( extra banked pts) and since we just cruised in Feb, we were going to get the discounted pts for booking with-in 3 days of getting off the ship.

But using pts for 3 adults in a catagory 6(4 day cruise) for Feb 20,2005 was going to be 462 pts.
Booking with cash through DreamsUnlimited was $2975. So I rented 300 pts to one individual($10 pt) and paid cash for the cruise

Advantages through DU............
1.$100 rebate
2.No $75 booking fee
3.Can cancel with full refund up to 30 days out
4.Saved 162 pts
5.Got 3000 FF miles by charging cruise on cc
6.can also book up to 18 months out....instead of 11 months

 

[MrShiny]

I think the thing t remember is that from Disney's perspective, points are worth less every year because there are more of them.

So while the cruise price might not be going up, Disney thinks it needs more points to equal the same amount, because potentially there are more people out there who could trade points.

Say for example (and these are just made up numbers), there are 1,000,000 points out there in DVC hands.

Say a cruise is $5000 retail so Disney sets it at 500 points.

Now a new DVC resort opens, and there are another 500,000 points on the market.

Points are now effectively worth 50% of what they were before, so to get an equivalent "value" of points, the cruise line would ask for 750.

 

[Nick@ VB+OKW]

Here is another intresting article about cruise prices rising in the USA Today..........I guess it comes down to supply and demand.

http://www.usatoday.com/travel/destinations/2004-03-18-cruise_x.htm

 

[CaptainMidnight]

Supply and demand. The more DVC rooms there are, the harder it is to trade them out for a cruise. And, the demand for cruises is high, why shold they cut DVC a deal. Time to sock it to DVCers. Why not, it's all about $$$.

Continuing growth of DVC hurts our bargaining power to trade into other accomodations. I hope at some point, perhaps with SSR DVC growth is stopped (except for maybe a california destination, which is unlikely). There's a point where continued growth is detrimental. You can see that now for cruises where your better off renting your points and purchasing the cruise. Makes one wonder why individually a member can make that better deal, but as an organization the DVC points aren't worth as much. There's a problem there.

 

[jaysue]

Originally posted by CaptainMidnight
Makes one wonder why individually a member can make that better deal, but as an organization the DVC points aren't worth as much. There's a problem there.

The problem is that DVC is owned by disney and it is 2 parties at non arms length in negotiation

Well, the remedy is for anyone who wants to take a cruise and is a DVC member to rent points and pay with cash

This would fulfill demand for DCL and work at the margin against CRO/WTDC/WDW since they would be competing again at the margin with rack/discount rates versus cheaper rented rooms

thanks
jaysue

 

[debm]

My understanding is that even though DCL can requre more points to book a room on the ship because rates are going up---even though you CAN get good cash deals----the actual point rates for villas rented on DVC property stay approximately the same. That was one question that we went over indepth before we purchased DVC. For example, someone purchases 150 points and they can buy a 1 bedroom for 22 points in 2004, does that mean 10 years from now it MAY cost 35 points for that same room?? Sometimes the points do change a couple or are altered depending on the season but for the most part they stay the same. Someone at DVC just explained to me that the rack rate on the DVC property rooms for those that just pay cash just went up 15% like the DCL cabins went up 15%. They have to negotiate with DCL for those rooms for us. I do agree though that it is looking better and better to cruise with cash. We got a pretty good deal with onboard booking with points but this is the last one that we will do with points. I plan on doing onboard booking with cash on our May cruise.

 

[jaysue]

At a DVC resort, points can be reallocated between seasons, weekends to weekdays etc. but the TOTAL number of points at the resort cannot be changed.

So for example DVC could lower the Fri/Sat points and increase the Sun-Thu points for a room - for example lower Fri & Sat by 5 pts each for 10 point decrease and increase Sun-Thu 2 pts each night for a 10 point increase for flat change

thanks
jaysue

 

[Happy Birthday Cat]

Originally posted by Nick@ VB+OKW
The above statement is very true.................

I was also going to book a cruise with DVC points( extra banked pts) and since we just cruised in Feb, we were going to get the discounted pts for booking with-in 3 days of getting off the ship.

But using pts for 3 adults in a catagory 6(4 day cruise) for Feb 20,2005 was going to be 462 pts.
Booking with cash through DreamsUnlimited was $2975. So I rented 300 pts to one individual($10 pt) and paid cash for the cruise

Advantages through DU............
1.$100 rebate
2.No $75 booking fee
3.Can cancel with full refund up to 30 days out
4.Saved 162 pts
5.Got 3000 FF miles by charging cruise on cc
6.can also book up to 18 months out....instead of 11 months

We did almost the same thing as you Nick. We were on the 7 day cruise this past Presidents' week and booked while on board and received a 10% discount plus a $200.00 credit per room. We also rented out the points to pay for it and I'm gald we did when I now look at the points it would have taken to go on the cruise.

HBC

 

[ILPHIL]

Or does it seem that having one part of the Disney conglomerate negotiating with another part of the Disney conglomerate on the supposed behalf of a 3rd party (us) to be just a bit of a conflict of interest?