Why is renting points so "cheap"

[LordAthens]

In reference to comments made by the few posters who would like to start a rental price-busting cartel:

As for chilling out, what's with the 'tude...we own the points & will dispose of them in whatever manner we choose. Anyone with average intelligence would agree with the wisdom of a transfer between members before renting to the general public, if only not to be troubled w/a problem renter who wants filet for hamburger prices.

Good luck in your quest for fire-sale points...you've certainly made a stellar impression...sure you'll be duly recognized on the rental board.

I'll have to assume you were aiming that at me, since I was the only person that mentioned "chill out".

You really should re-read my posts. I'm not sure how you could have possibly taken it that way, but I certainly wasn't agreeing with kidskid.

Again, if you would have fully read my posts, I posted my reasons for wanting to rent. I certainly don't want filet for hamburger prices. My cost comparision makes that rather evident. Additionally, I as the renter takes a huge risk by renting. I'm not sure who's looking for "fire-sale" pricing here, except for kidskid. But I really don't think anyone is taking that poster serious at this point anyhow. I have no desire to rent below $10, as I said I have a hard time paying more when the "going rate" is $10.

Like I said, please re-read my posts before you go bashing someone.

 

[Johnnie Fedora]

This seems to imply that you rent reservations ("the individual wants what I have"), not simply points; is this correct?

Thanks.

I have done both. I have also rented out points before the 11-month window, and between the 7-11 month window at my home resort(s). Renting early is the best way to rent, only serious planners will commit that early. When I rented points early, the first four contacts were the four DISers I rented to. I would only rent less than 7 months out if I had to (for finacial reasons) or if I had an existing reservation I couldn't use.

 

[SonicLogic]

Both my wife and I have been regular visitors to WDW since the 1970's. We make about 4 or 5 trips per year and we never go during peak seasons. We enjoy staying in different resorts. Sometimes we stay offsite and sometimes we stay onsite. We have rented DVC points and we have rented other timeshare resorts such as Orange Lake.

During our "salad days" we stayed in places like Motel 6 and even slept in the car. Over the years, we learned the ins and outs of resorts at and around WDW. The plain fact is that WDW resorts are way overbuilt and discounts on accommodations abound. So, we just pick and choose the best deals we can find. Sometimes renting DVC points is a good route to go but I don't make a habit of it because I like to look for the best deals and stay in various resorts.

Anyone remember the Courtyard by Marriott deals at Hotel Plaza Blvd? $20.03 a night for a room! Personally, I don't care what rates are available to the masses. Also, I have never rented DVC points from anyone on this board. I don't even look at the rent/trade board. DVC rental points are widely available via real estate agents. Also, the Internet is generally not a good place to look for WDW resort discounts IMO.

In my experience, the best way to find good discounts is to network with the resort industry people. We know several people that work for the major resort chains in Orlando and we know some people that work for WDW and we know some area real estate agents, etc. We check in from time to time and get the scoop on the best deals. Scheduling is not a problem for us since we have the freedom to visit WDW at the drop of a hat if we so desire.

As for renting DVC points, they will continue to become a better value each year as their value drops. Since the DVC is a leased timeshare (rather than owning property) the point value decreases with every tick of the clock. The bottom will drop out in 2032 (10 years before the termination) and the defaults will hit record numbers. Until then, DVC point renters will continue to get good discounts.

 

[RobDoc]

...

As for renting DVC points, they will continue to become a better value each year as their value drops. Since the DVC is a leased timeshare (rather than owning property) the point value decreases with every tick of the clock. The bottom will drop out in 2032 (10 years before the termination) and the defaults will hit record numbers. Until then, DVC point renters will continue to get good discounts.

At this point in time, the "value" of DVC points has steadily increased since DVC began in 1991. Resale "value" is much greater than even a few years ago when contracts could easily be purchased (and pass ROFR) for $50 per point. Those same points can be sold now for $75+. While the resale "value" will likely diminish at some point in time (2032 could be a good guess) , the rental value will still be tied in some fashion to the reservation rates charged by Disney for cash reservations - just as they are now. The resale "value" will only diminish when Disney drops it's floor for ROFR- until that happens, the "value" of DVC points will continue to be determined solely by what Disney will allow - the market is NOT in charge of resale values- only rental values.

While there are certainly some self described experts in finding heavily discounted rates (mostly at off site locations), there are few sources for similar bargains at the Disney owned onsite resorts. Renting from a DVC member is one of those sources.

 

[lark]

Other than for a very very few particular timeshares, market rate for rentals is much more closely tied to maintenance fees than to comparisons with what it would cost to obtain the unit or a similar unit from another source.

It's just the market. 1.5 to 2.5 times MFs is basically industry standard, all across the board, for timeshares. Why should DVC be different.

Look anywhere. You want a 2 bed room at the four seasons aviara in Carlsbad, California? To rent a hotel room alone from the four seasons for a week would be around $3800. To rent a 2BR would be astronomical. Yet you can find dozens of rentals from $2500 to $3200 -- right around 1.8 to 2.2 times maintenance fees.

The other problem is that disney itself is undercutting you by themselves renting the very same units. Other than unique situations where WDW does not itself have inventory, an owner will find it very hard ever to rent for more than the best deal a renter can get through WDW. Rack is the totally wrong comparison. Anyone saavy enough to know to look to rent DVC points is saavy enough to understand codes, how to use the dining package to save money, how to use the various promotion codes on tickets, how to use annual passes, etc. that WDW uses to cut the costs of rooms anywhere from 15 to 30 percent off rack.

For Friday to Sunday, particularly for the larger rooms, $10 per point is already starting to scrape up against the cost that a saavy customer can get through disney -- it's even worse when you figure that DVC owners can't offer dining or free "plus" features on MYW tickets, etc., like WDW can when it competes with owners for the very same inventory (not to mention, daily maid service, which for the ultra saavy consumer may matter).

Yes, you should be able to pick off $11 or $12 from some renters, but ultimately, 2.5 times MFs is always going to be the ceiling. If MFs ever get raised, that's when the value of points will raise. I'm not necessarily saying that's how it should be -- so don't jump on me -- I'm just saying that unless all renting owners can get together and form a seller's cartel (just kidding, don't commit felonies or violate anti-trust law), that's what it's going to be.

One other thought -- there's another ceiling on the cost of rental points. The higher the cost, the more likely that someone is to just purchase DVC. Even if you could artifically raise the cost of points to something like $13 to $15, it would only work in the short term. The rental market would quickly dry up, supply would exceed demand, and those looking to dump points to avoid losing them would start having firesales in desparation, and the floor would go artificially low for a couple of years. It's just a market, like anything else.

 

[Deb & Bill]

... For Friday to Sunday, particularly for the larger rooms, $10 per point is already starting to scrape up against the cost that a saavy customer can get through disney -- it's even worse when you figure that DVC owners can't offer dining or free "plus" features on MYW tickets, etc., like WDW can when it competes with owners for the very same inventory (not to mention, daily maid service, which for the ultra saavy consumer may matter)...

I've always thought it was crazy to just do the Sun thru Fri reservation. Instead of "renting out points", why not rent out a reservation? So instead of 85 points (5 nights) at $10 a point, use $1200 for a seven night reservation. I never could understand the reason to only go for five nights. Points only make sense to a DVC member. Of course, many members don't like to use points for a Fri or Sat night either. We do it all the time, we don't look at the number of points we use on the weekend. We just go to WDW and base our reservation on the fact we either have the points or we don't.

DVC members might not be able to "offer" features that CRO can, but we do have kitchens with stoves, microwaves, washers and dryers. Don't they count for anything? DVC resorts do not compare to value or moderate resorts. Even deluxe resorts don't really compare to DVC resorts, unless you only get a studio.

But then, I don't plan to ever rent out my points. I've got enough family and friends that we could give them to if we couldn't go.

 

[SonicLogic]

At this point in time, the "value" of DVC points has steadily increased since DVC began in 1991. Resale "value" is much greater than even a few years ago when contracts could easily be purchased (and pass ROFR) for $50 per point. Those same points can be sold now for $75+.

An increase from $50 to $75+ per point in 14 years time is an obvious indication that the value has gone down. Based upon normal monetary inflation, $50 in 1991 is now worth $71 in 2005. Of course, real estate values in the greater Orlando area have far outpaced monetary inflation.

As an example, would you be pleased if you purchased a house in 1991 for $50,000 and found that in 2005 it was only worth $75,000? I know I wouldn't be happy because that house should be worth $119.000 at a minimum. You see, real estate values (including timeshares) in the Orlando area have gone up an average of 6.4% per year since 1991.

However, the DVC has barely exceeded normal monetary inflation. Keeping pace with inflation is not a gain by any stretch of the imagination. Therefore, the DVC has lost value in comparison to other real estate comparables in the area. Of course, that is to be expected since the DVC is a lease program and not fee simple property ownership. It would be unreasonable to expect that a leased resort would appreciate in value. Since leased units run out, they depreciate with time.

I think we all know that the DVC is not an investment instrument. It's a very expensive prepaid resort room package deal. IMO and experience, most people that buy the DVC have little knowledge or understanding of the timeshare industry. We need to dispense with this notion that the DVC has gone up in value. It has not and will not.

 

[Mcmouse]

I've always thought it was crazy to just do the Sun thru Fri reservation. Instead of "renting out points", why not rent out a reservation? So instead of 85 points (5 nights) at $10 a point, use $1200 for a seven night reservation. I never could understand the reason to only go for five nights.

I am renting 123 points for a week in a studio. Where I could rent a lot less points if I only wanted to stay 5 days. The owner I'm renting from is still getting the same $$/point whether I rent 123 or 96 and they make more $$ money that way. I think some people either only rent out part of their points so they don't use up the weekend points (they need them for another trip)?
But for me, if I'm going to spend all the airfare to fly out there and purchase tickets etc. I don't want to stay only 5 days.

Mike

 

[crisi]

DVC members might not be able to "offer" features that CRO can, but we do have kitchens with stoves, microwaves, washers and dryers. Don't they count for anything? DVC resorts do not compare to value or moderate resorts. Even deluxe resorts don't really compare to DVC resorts, unless you only get a studio.

I don't spend a lot of time looking at the rent trade board, but when I do, the overwhelming number of renters are looking for studios. When I'm on the budget board or the resorts board and someone brings up DVC there are two possibilities - six people (too many for POR) or "you could rent DVC points and stay in a Deluxe hotel for a moderate or less rate."

 

[lark]

DVC members might not be able to "offer" features that CRO can, but we do have kitchens with stoves, microwaves, washers and dryers. Don't they count for anything? DVC resorts do not compare to value or moderate resorts. Even deluxe resorts don't really compare to DVC resorts, unless you only get a studio.

I was actually trying to compare apples to apples. My point was that I can rent the very same DVC home away from home resort, with its kitchen and washer and dryer directly through disney.

Just to do a quick comparison, I just priced out, on the disney web site, a one week stay at the BCV -- Saturday to Saturday (check in on Saturday for 7 nights; the classic family vacation) -- in a one bedroom villa. Using the current packages available just on the web site, I get a price of $3700 for a family of 4. That includes a 10-day park hopper, with park hopping and plus features.

The value of the ticket is $1100. Which means if I were to rent from a DVC member, I would never pay more than $2600 for the one bedroom villa. Why should I? I can get the same exact thing from Disney, with daily maid service. Plus, if I rent through disney directly, I get the opportunity to add the dining plan, which can save me even more money.

The same 1BR villa is 252 points, which would be $2520 at $10 a point.

And that's just a deal that I found in 5 minutes using the disney web site. It doesn't even begin to scratch the surface of all the fancy ways that people on the resort codes and dining boards have for saving money, by using APs and e-mail codes and stuff.

So my point is that disney itself is keeping the rental value of the points down. If I'm just renting for Sunday to Thursday, it definitely changes things, but I think getting more than $10 a point when disney is basically renting them out to anyone who comes along at that rate anyway is going to be tough.

 

[RobDoc]

An increase from $50 to $75+ per point in 14 years time is an obvious indication that the value has gone down. Based upon normal monetary inflation, $50 in 1991 is now worth $71 in 2005. Of course, real estate values in the greater Orlando area have far outpaced monetary inflation.

If you are looking at DVC , or any timeshare, as an investment, with an expectation of appreciation, then your "value" assessment may be correct- however, it is not an investment and I certainly never anticipated any appreciation when I purchased. The fact that I can presently sell it for more than I paid is a huge plus, IMO.

You have also based your assumptions on incorrect information. While $50 was the original cost in 1991, I purchased two resale contracts at $50 per point in 1999 and can now sell them 6 years later for more than $25 per point higher. That is a far better return on my non-investment than you gave me credit for. In addition, most timeshares have never increased in sale value- unlike DVC.

In addition, during that time I have taken many vacations to WDW using those points. Let's use 10 nights in a 1BR each year as an example (it's actually been many more nights than that for the points purchased at $50 in 1999). The 10 nights include 6 weekdays and 4 weekend nights- the point cost is 256 points at OKW in September and January and early December. Dues remain less than $4 per point- but I'll use $4 to illustrate - fees on those 256 points have cost less than $6144 over the 6 years- 60 nights in a 1BR villa. There have been no other costs involved for these accommodations.

The points could be readily sold today at $75 (an OKW resale recently failed ROFR at $80) . The "profit" on the sale is more than the dues cost. When adding in realtor commission and subtracting the tax deductions on the property taxes from the actual annual fees paid- the cost of those 60 nights is basically zero and I'll get my entire initial cost returned to me. When I include the discounts offered to DVC members during that same time, my savings are very noticeable, as we have been able to take advantage of the discounts at TDS, restaurants, DD stores, LOS park admission and now AP. In addition, we got free park passes thru 1999 - the initial 10 day trip of ownership of this specific contract. I can conservatively price my 60 days of accommodations at $200 per nite (rack rate is much higher and discounted rates were not that low either- even if you rented from a member)- affording me a savings of at least $12,000 (very conservative est.) on my "investment "of $12,800 in 1999. (I'd place my actual savings closer to $20,000, but will use the lower numbers for the sake of this discussion.)

I'll take that return any day- especially over this particular 6 year period.

 

[keishashadow]

I'll have to assume you were aiming that at me, since I was the only person that mentioned "chill out".

You really should re-read my posts. I'm not sure how you could have possibly taken it that way, but I certainly wasn't agreeing with kidskid.

Again, if you would have fully read my posts, I posted my reasons for wanting to rent. I certainly don't want filet for hamburger prices. My cost comparision makes that rather evident. Additionally, I as the renter takes a huge risk by renting. I'm not sure who's looking for "fire-sale" pricing here, except for kidskid. But I really don't think anyone is taking that poster serious at this point anyhow. I have no desire to rent below $10, as I said I have a hard time paying more when the "going rate" is $10.

Like I said, please re-read my posts before you go bashing someone.

No bashing, just MO...comments not directed to you; moreso to the general comments of renters thinking they can strong-arm members for cut-rate points. I certainly gathered from your thread that you are reasonable in your expectations in renting; specifically - a fair & equitable exchange.

Although $10 is the predominate going rate, eBay (as well as the rental boards) feature many confirmed res. at desireable times at a much higher rates. It all comes down to supply & demand.

Certainly don't think any renter can accuse the owners of "price gouging" when you compare the total cost to rack rate. The extremely discounted price, more than compensates for the risk involved in renting. You are provided a confirmed confirmation number for the reservation &, if you pay with a credit card, you also are afforded monetary protection if any fraud is involved.

Enjoy the magic.

 

[kidskid]

10 a point is a good deal. I have been happy renting out points from a seller at this rate but feel the owners have been short changing themselves. All my calculations show me renting points is significantly cheaper then owning DVC. This thread was started inside a thread becuase iI felt the points were being rented for 10 bucks were below owners cost.

By the way I am a DVC member. I would not sell my membership since it provides "value" for me. If I had to do it again would. I was being sarcastic with the 6.70 point post.

 

[Deb & Bill]

...Just to do a quick comparison, I just priced out, on the disney web site, a one week stay at the BCV -- Saturday to Saturday (check in on Saturday for 7 nights; the classic family vacation) -- in a one bedroom villa. Using the current packages available just on the web site, I get a price of $3700 for a family of 4. That includes a 10-day park hopper, with park hopping and plus features.

The value of the ticket is $1100. Which means if I were to rent from a DVC member, I would never pay more than $2600 for the one bedroom villa. Why should I? I can get the same exact thing from Disney, with daily maid service. Plus, if I rent through disney directly, I get the opportunity to add the dining plan, which can save me even more money.

The same 1BR villa is 252 points, which would be $2520 at $10 a point.

....

So, if Disney charges the same price per night (they don't charge less for weekdays vs weekends), members should figure what Disney would charge for the 7 nights, prorate it for 5 nights, reduce the rate a bit, and the person renting would still have a great value. If you just pay per point, Sun-Th is always going to be cheaper via DVC than CRO.

Well, I just did what you did. I picked a week in early May. Same number of points as you had 252 for the week. A one bedroom at BCV. 10 day ticket with no expiration, etc. The price was $4434. The ticket (2 people) was about $750. Subtract 750 from 4434 and you get 3684.

You could still the exact same ticket when you checked in. At $10 per point you need 368 points vs 252 points. Go for 5 days (3684 x 5/7) and you get 2631. Still only need 140 points for the 5 nights. 2631 divided by 140 and you get more than $17/point.

Even adding full cleaning, you are getting a fantastic bargain.

 

[mikesmom]

Just to confuse matters further..

WAY too many people are making comparisons to rates they got (or "heard" someone got) since 9/11. That horrible event caused panic in the Tourism industry and everybody was offering deals to get people to travel.

Yes, the offsite hotels were offering $20.03 (by the way, that particular one was a short lived mistake, although the hotels stood behind it), just to get bodies in the door. Disney was offering some great discounts, although you had to have an AP, live in a particular state, etc. You also had to move pretty fast. Those discounts are fading fast now that tourism is back up. Read the other boards and you will see lots of folks fussing because the AP discounts are limited, because they have to book discounted rooms way ahead, etc. Also there are lots of cries and moans because the rooms desired just aren't available at any rate. Many people say "the Internet showed it, but when I tried to book it, I got a NOT AVAILABLE". You even see folks on the Rent/trade board state that they want to rent points because they "just refuse to pay rack rate and that is all that is available".

Yes, if you want to make a career out of looking for discounts, can move fast and be very flexible with travel dates and room desires you can do better than rack rate. Most people do not have a relationship with the travel industry or have an unlimited amount of time to spend searching.

 

[lark]

So, if Disney charges the same price per night (they don't charge less for weekdays vs weekends), members should figure what Disney would charge for the 7 nights, prorate it for 5 nights, reduce the rate a bit, and the person renting would still have a great value. If you just pay per point, Sun-Th is always going to be cheaper via DVC than CRO.

Reduce the rate a bit? I think it needs to be a significantly better bargain to rent through a DVC member than from disney itself.

There are a few problems with your May example -- the primary one being that you picked rack. If you think rack is the right comparison, I'm never going to convince you otherwise. People with things to sell always think they're worth more than the people who want to buy them. But the reality is that the guy who thinks his rookie Micky Mantle card is worth $10,000 is the guy that takes it home from the card convention where others are selling it for $8,000. But to get back to my point, anyone saavy enough to be renting points is saavy enough to know that even with just AAA, he gets a 15 to 20 percent off rack.

The point with my example is that so long as there's some time when renting through disney is as cheap as or better than $10 per point for a week vacation, it's going to be very very hard for people who rent points to do better any time of year. Sorry it's the case, but it just is.

 

[lark]

Yes, if you want to make a career out of looking for discounts, can move fast and be very flexible with travel dates and room desires you can do better than rack rate. Most people do not have a relationship with the travel industry or have an unlimited amount of time to spend searching.

Not trying to be argumentative here. I have never rented DVC points, and probably never will, so more power to you the more you can get. But, as I said, you're going to be hard pressed to find any timeshare anywhere that rents for more than 2.5 times MF.

But to the point -- I've been to WDW many times and have never paid rack, other than a day-of reservation for one night at BWI. I don't have unlimited time, nor do I have a connection with the travel industry. Home away from home gets a 15 percent discount or 20 percent during value just for having AAA, and it's not like AAA discounts are ever hard to get, particularly if you have a second choice resort. To take the example above for a 7-day at BWV for rack of $3600, anyone in the world could get that same deal in May for $3080 just with AAA. Of the several times I've gone to WDW, I've always gotten at least a AAA discount, and about half the time, I've been able to apply a code later for an even better discount. It did not take anything other than checking mousesavers and the DIS boards (the same DIS boards people use to rent points, so it's not like they don't know where to find them) once a week starting about 5 months before my travel.

 

[Johnnie Fedora]

So, what is the biggest discount you've otained with AAA/codes/etc. Has it approached 50%-60% of rack rate, especially if you include sales taxes? DVC rentals often go for that discount range M-F.

 

[lark]

So, what is the biggest discount you've otained with AAA/codes/etc. Has it approached 50%-60% of rack rate, especially if you include sales taxes? DVC rentals often go for that discount range M-F.

About 28 percent plus a ticket discount. But that's unusual.

I won't post anymore on this thread. I'm not trying to be argumentative. I thought the original question was why $9.50 to $11.00 seems to be the going rate. My answers, again, are (1) MFs are much more crucial to setting timeshare rental rates than comparisons of what the rooms would otherwise be available for, and (2) disney itself is cannibalizing the rental market.

It's turning more into a debate about whether points SHOULD be $10. That's a different question, and one I'll stay out of. The market isn't right or wrong, it just is. I don't really have an opinion whether or not $10 is fair. (Ok, I do, but I'll keep it to myself.) This, though, is a board for owners; I understand that and also expect I know what most owners would say. Just understand that if you had a board of primarily renters, they'd probably have a well-supported answer the other way. Peace.

 

[qgallo]

OK, OK, OK, so the renters want it for nothing and the buyers want to make a fortune. Check out BCV during summer months for a studio. Rack rate for 7 nights is $2692.76. It takes 134 points from a DVC member to rent the same room at the same time at the same resort. At $10 a point , that comes to $1340 for the week. Now you say nobody pays rack price. True. But the DVC price is over 50% off rate rate. Dont have to use AAA or any codes. So tell me is $10 a point a good price for the RENTERS or the BUYERS that have paid a premium price for a Disney timeshare. If I am a renter then I would jump for joy. If I am a owner renting out points then I would be wondering what in the he__ is going on. I have never rented or sold points. I do own DVC. The owners that are selling points are the ones that are making owning DCV questionable.