Why no rental inflation?

[crisi]

....both because the posts are well-reasoned and expressed....

Thank you - several of us (Carol, Tim and I) have had years of practice on this topic. For an encore, we will be happy to do "why are rooms available through CRO when I can't get them through Member Services" followed by "Why isn't anything available in Early December."

 

[trasor]

Page 1 of the RENT/TRADE thread has 27 people looking for reservations and 21 people looking to sell points. I think the supply and demand is there. I understand renting cheap when you have points that have to be used within a few months, but there are also people out there shopping well in advance.

I know that renting involves great faith on both sides but people enter into blind faith contracts every day. Look at the success of EBAY. To the renter, I'm not saying no one has never been scammed, but I do think that # has to be quite low. To own DVC costs a lot a money and to put out $20,000.00 so that I can scam you out of $2,000.00 makes no sense. As an owner, I think if the rental price was higher, you would be well paid for your time and effort and I think it would lend itself to the more serious shoppers and weed out those who "maybe might possibly want to vacation on maybe I think but I'm not sure this week at maybe but I've changed my mind this resort".

Disney created ROFR to maintain the value of their property and we have all paid handsomely to belong. That is why I think renting so cheaply
undervalues our piece of the magic.

 

[tjkraz]

Page 1 of the RENT/TRADE thread has 27 people looking for reservations and 21 people looking to sell points.

And how many of those 27 people are hoping to pay $8 per point rather than $12 or $15 or $20?

Before buying points we rented once for a Two Bedroom at Old Key West. Prior to deciding to rent our plan was to get connecting rooms at a moderate. Renting ended up costing us about the same, so we gave it a shot. If the price to rent had been 50% higher, we never would have done it. It may still have been a value compared to rack rates, but it was out of our budget and the moderate rooms would have gotten us thru the trip just fine.

You may be able to demonstrate that renting is still a value at $20 each but the market will still be MUCH smaller.

I know that renting involves great faith on both sides but people enter into blind faith contracts every day. Look at the success of EBAY.

Awful lot of differences, though.

Most bad eBay transactions don't have the potential for losses of over $1,000. A bad eBay transaction doesn't leave you standing in a hotel lobby with a pile of luggage and no reservation. eBay has a ranking system which can be used to evaluate sellers. On the DIS, I know some try to go by post counts but that's a far less accurate system. I have a ton of posts but have never rented out a single point. For the most part, people would be wrong to assume that I know much of anything about the rental process.

Besides, I'm not sure eBay is the comparison you really want since most people have probably been defrauded at some point. I'm far from a frequent buyer and I have had to file at least two grievances myself. And I have had many other transactions that didn't go as smoothly as anticipated due to the actions of the seller (slow shipping, wrong item shipped, wrong item described in listing, etc.)

Most people aren't willing to take similar risks when it comes to something as critical as vacation accommodations. People have thousands of dollars invested in airline tickets, car rentals and park tickets. Frankly it's not worth trying to save a few hundred dollars to incur the added risk of renting.

To the renter, I'm not saying no one has never been scammed, but I do think that # has to be quite low. To own DVC costs a lot a money and to put out $20,000.00 so that I can scam you out of $2,000.00 makes no sense.

Who is to say that every individual claiming to be an owner actually IS an owner?

And even if the number who have been scammed is "quite low", it isn't zero. By comparison, if you have a confirmed reservation booked thru CRO, you WILL get a room.

And just to be clear, I'm not bemoaning the entire rental process; just trying to illustrate a few of the (many) hurdles that differentiate renting from cash bookings. Saving money is just one aspect of the transaction. Even among people who are aware of renting (which is probably a small number of Disney guests in the grand scheme of things), many prefer the ease, safety and security of dealing directly with Disney even if it means a higher price.

So what you have is a relatively small market for renting in the first place. Raise prices, and that market will shrink. You may well be correct in suggesting that people don't NEED to offer points at $9-10 each. But to imply that the entire market could leap up to $14-15 and not miss a beat is purely speculation. I suspect demand would drop sharply and either prices would go right back down again or people would be left unable to rent their points due to a lack of takers.

 

[Deb & Bill]

... To own DVC costs a lot a money and to put out $20,000.00 so that I can scam you out of $2,000.00 makes no sense. ....

And then there are those who don't own DVC points, yet still find a way to make someone believe that they have DVC points and can make a reservation for a non-member. Or they rent out a relative's points. So no loss to them.

 

[kimberh]

If a DVC owner owns at a sought after resort and $12-$13 can't be received for the reservation, then something is wrong. There is a current one now for $15. with replies for dates to look for at AKV's. I saw it yesterday. For those buying now, I just don't get the $10.00, they are losing money.
I needed a point transfer, the DVC member with AKV replied back to me for $15.00 per point. This is way more than I am going to pay for a transfer, but I was glad to see that someone didn't mind asking for the money.

To the OP, if you want more than $10.00, you just ask for it. You don't get if you don't ask. You may have to go through a few more people, but you will rent those points.

 

[WALTSAGOD]

Actually DVC set the price.

DVC used to have a sales promotion called Magical Beginnings wherein they would allow members to "sell back" their first year's points in return for a discount off of the purchase price. The most prevalent buy-back prices were $8 per point and later $10 per point. THAT is how the $10 figure was most recently attached to rentals.

The biggest hurdle renting can never overcome is the reality that most transactions involve sending a total stranger hundreds or thousands of dollars for the promise of a hotel room. Every single person that has ever rented has had that moment where they wonder "what will I do if I get to the front desk and they don't have a reservation in my name???"

Other noteworthy differences:

1. Cancellation policy. Most rental transactions have no cancellation policy--or if they do allow people to cancel, it's contingent upon finding other dates or someone else to assume the reservation. CRO reservations vary but usually have 7-30 days to cancel and get a full refund.

Booking thru CRO is like buying a refundable airline ticket, a ticket that always costs more. Renting is like buying a nonrefundable ticket which is always cheaper.

2. Rentals typically require a large up-front payment with the remainder due well before arrival at the resort. Those terms are understandable given the manner in which the DVC member must commit his points. However, with CRO you can get by with a deposit equal to one night and the remainder due upon arrival.

3. Comparing to rack rates is dicey because who really pays rack rates these days? Right now Disney is giving away hundreds of dollars worth of free food to guests booking thru CRO.

4. Daily housekeeping for CRO reservations.

All of these factors will keep renting from truly going mainstream. And unless that ever happens (doubtful), a large portion of the rental market will always be people who just want to get rid of a few points as quickly and easily as possible. Many of those people bought in at prices a fraction of what they are today, and thus don't feel the extreme pressure to get a dollar or two more per point.

Supply and demand can't be helping things right now either. If the resale market is any indication, a lower percentage of DVC owners are using their points right now. Those who would rather not sell may be trying to rent their points and weather the storm. Meanwhile the number of non-members looking for rentals may be inching downward slowly. Increased supply combined with lower demand makes for lower prices.

Dues are still a long way from hitting $10 per point. IMO, they may have to approach $7-8 per point before people will really use it as a rallying point for raising their asking prices.

I usually cringe when I see people talking about buying more points than they need in order to rent a few. When it comes to renting, it's been a buyer's market for a loooooong time now.

Awesome answer.

 

[Rowaena]

This might be slightly off topic, but Disney also seem to be providing the tour operators with SSR and OKW cheaper than the moderates too.

This link shows that in the UK you can get SSR or OKW next year with the free DDP cheaper than CBR. What is going on?

Quite honestly at least for next year, Disney expects the same trend as this year: because the US is in recession and US people are completely spooked about losing their jobs (if they have not already) and paying higher prices for gas and food than they are used to (wages have stayed flat here when adjusted for inflation since 2000, but prices for virtually everything have been spiraling like crazy).... and the dollar has been tanking. So it is much more favorable for Europeans to travel here since they are getting a better exchange rate than they used to.

In other words, Disney, knowing Europeans are likely not going to be in as much financial distress as Americans, is making sure they continue to offer great packages to lure you over. Because it is a less frequent trip for Europeans, too, I suspect they also spend more here on souvenirs and such. Particularly with the dollar being so weak.

If Disney cannot fill the rooms with Americans, they'll fill it with foreign tourists - their goal is, quite simply, to be at 100% capacity year round.

 

[Rowaena]

As in all things, it must be down not just to convention or 'what people usually charge' but down to supply and demand... It happens to be the case that not all DVC buyers are people who can afford the cost up front and buy the number they end up using every year.
A lot of people buy using finance and if things get tight they try to rent points to pay the dues... or they don't use all of their points and rent them instead of them being lost... or, as someone mentioned above, some people buy them intending to rent (which sounds slightly wacky to me, but there you go)...

This all leads to there being plenty of points available to rent, for anyone who wants to rent them. If 'spare points' were a rare occurrence, the points-buying rate to get into a DVC resort for non-DVC people would surely be higher.

Aye all this plus a lot of people buy into DVC and then realize that all the "soft costs" still add up to a TON of money to make a yearly trip. Passes, food, and travel expenses, even with your room "paid for", still can be several thousand dollars for a family.

Since the economic downturn began last year and Disney started offering these crazy deals - such as the packages with a value to moderate room for a low rate, with park tickets and food thrown in for practically free - we have done the math and DVC, right now, is costing us a lot more than simply renting an on property hotel room would cost. We can't get free DDP, for example. Free DDP for a family of four for a week is at least an $800 savings when you include table service tips, and DVC members can't get it.

Right now we could buy a week at a moderate during bounceback with food thrown in, and spend less than we are paying for park tickets and food in our "paid for" DVC room.

Disney is hoping nobody notices this, or they won't be able to sell DVC points. Right now it makes no financial sense to do so unless you go peak season. Seriously - even if you pay the entire intial point cost in cash, and you're just sending in your $360 a year in dues- add the price of 4 park tickets for a week, and food for a week (use DDP prices if you wish, or add your a la carte costs) - you can't do better than the MYW with free dining unless you are eating PBJ and granola and using the water fountains for a week. The $1500 that the value MYW costs for a week during bounceback barely covers the cost of the park tickets for a DVC family and doesn't touch food.

Our one consolation is that we figure when the downturn is over (and it will end, all recessions do), Disney will go back to higher room rates, and stop giving away tickets and food. At that point DVC will be the deal again that it was when we made the decision to buy, unless they raise the annual dues to recoup the difference between DVC member layout and hotel visitor layout (and don't think they won't - they are capped by how much per year but they can and likely will begin raising them once the economy turns around a bit, and do it yearly).

It's hard not to be frustrated when I can't get a dinner reservation 170 days out, that I want to PAY MONEY for, because at 180 days at 8am, bajillions of "free dining" bouncebacks called up and booked the whole week. Not to mention the negative affect DDP has had on the menus - so many terrific dishes gone.

But you know what's interesting to me? That one year out, they are so confident that DVC owners will not book those rooms using points, that they are offering them as hotel rooms. Is DVC undersold - are there now not enough owners to keep the DVC resorts as full as there used to be? Or are DVC members just cutting back and not going to WDW as much because of the soft economy? Interesting to ponder.

 

[crisi]

But you know what's interesting to me? That one year out, they are so confident that DVC owners will not book those rooms using points, that they are offering them as hotel rooms. Is DVC undersold - are there now not enough owners to keep the DVC resorts as full as there used to be? Or are DVC members just cutting back and not going to WDW as much because of the soft economy? Interesting to ponder.

Keep in mind that Disney owns some points themselves - and may currently own more than they'd really like to own - if someone isn't paying dues then Disney can rent their points out and given the foreclosures in my neighborhood, it wouldn't surprise me if a fairly significant percentage of DVC owners were behind in dues. Plus points they own holding up the ROFR floor. Plus statistical history that lets them know that X-X% of owners are going to trade out their points to cruise or stay at DCL or.....

 

[5forDiz]

DVC doesn't place a cap on what can be charged for rentals. As far as DVC is concerned & i'm sure you are aware, points aren't supposed to be rented.
If we as owners make a decision to do something with points we can't utilize then there is no reason not to give it a shot and see if $15 - $20 or more per point flies.
Unfortunately, don't think at this present time those prices will ; as other posters here have said. I would think at present time it would need to be a unique set of circumstances such as being able to book at 11 month window and getting exactly the reservation wanted.

 

[tjkraz]

As far as DVC is concerned & i'm sure you are aware, points aren't supposed to be rented.

The POS expressly permits DVC rentals.

 

[jamstew]

I've paid $12-$14 for rented points, mainly because I found two owners that I really liked and trusted. In fact, these ladies are the reason I now own DVC. I'd probably never have bought without the wonderful experiences with the rentals and being able to see the different resorts

 

[kimberh]

I paid $14.00 per point when I rented 3 years ago. It was worth it to me to have a trusted owner that knew what she was talking about. I never would have paid it from a new person that did not have the answers I needed. This is what made me seek information about DVC. I still saved over CRO. I wanted VWL, she was able to get this resort for me. I would not have paid it for a resort that I did not want to stay at. I would have booked through CRO. I feel the desired resort has a lot to do with a successful rental at the right price.

 

[5forDiz]

The POS expressly permits DVC rentals.

Yes true. Meant to say for commercial purposes but then again what exactly defines commercial purposes ? IMHO a couple per year as many of us may have done either as rentor or rentee wouldn't cross the boundary into commercial purposes. But always wonder and am bit wary of dvc's position being subject to change - will they consider 2 - 4 reservations in other names to be for commercial purpose instead of 20 they offer up as an example ( per '08-'09 vacation planner) ?
Not a legal eagle but seems lot of gray area.

< Also I realize I didn't express what I wanted to say correctly to the op (about DVC placing a price cap per point on rental ) - and that is DVC does not involve itself in any way with the particulars ( such as pricing, etc. ) of these arrangements made between a member and another member or a member and non-member party. No doubt with AKV-Kidani in the near future & possibly BLT prices will take a jump. >