Will a Rental Crackdown Reset DVC Resale Prices?

[Sandisw]

Where does it say that?

There is nothing in the membership agreement that indicates they can implement a fee for changes. While they can control the home resort rules and regulations, I don't see that as being something they can do now.

If you look at the DVC Resort agreement that gives us trading rights to other DVC resorts, that clearly says a fee can be implemented if BVTC so chooses to do so for booking purposes.

So, IMO, its the absence of language that gives them the authority to penalize owners for making changes with a fee...when it does say we could expect a fee when booking other resorts....

 

[PCDisFan]

*EDIT* to remove specific reference.

They don’t need to shut down the rental market completely. If they just get rid of the major players that are. Buying, stripping, renting, and selling contracts they will make a huge impact. As far as I know there is really only one player doing that right now.

Exactly. I think this change is about specifically targeting one major abuser of the system.

If DVC cracks down it will force one player to change their business model. This would temporarily put some stripped contracts on the market, causing an oversupply, but stripped contracts already sell at a discount. I think you'll see a 10-15% impact on prices at specific resorts (AKV, BWV) in the short-term if Disney does take action.

 

[kboo]

I also think there’s a non-zero chance that DVC makes at least some of the brokers “an offer they can’t refuse” to mass purchase points at prevailing market value instead of forcing them to fire sale on the open market. With the possible exception of VGF, I think Disney can easily resell all points as direct at at least $30/pt above where they go on the resale market…potentially more if they are willing to be patient.

My only thought there - is why not let the ROFR process do their work for them, rather than make a single big (capital?) outlay of cash?

They a responsibility to run our program with reasonable level of support. If every modification requres a call, and they don’t increase staffing, you will hour or longer waits…like we did post Covid when staffing was short.

Owners were livid then and would be now for taking away something that doesn’t need to be taken away.

It’s a step backwards for a small problem that impacts a few room types and for a few key times of the year.

As an owner, would not be happy to see any change to the online system in that way.

wasn't the phone call the "old" DVC way to modify (I seem to recall having to do that...) ? I agree, all of these proposed changes might address one issue, but also cost more and have unintended consequences when, reading all these posts, this seems directed at a single "strip-n-flipper".

And - if there's a big influx of stripped contracts for sale because the strip-n-flipper decides this is not making them enough $, those contracts can sit (as they tend to do) and sell at a deeper discount. But I'm not sure that would affect all resellers, even. Presumably a single owner reselling might not strip their contract before putting it on the market, and loaded and semi-loaded contracts already sell at a slight premium. I've definitely seen a change in resale contracts for sale from when we bought our resale contracts (some from the strip-n-flipper, some not). Stripped contracts hold no appeal to me, at all, because they are usually somewhat overpriced once you factor in the 1-2 years of missing dues plus having to wait to close. Loaded contracts also don't value the loaded points enough, and are usually a good deal if you can find them. They were easier to find before. Maybe they'll be easier to find again.

 

[BeachClub2014]

There is nothing in the membership agreement that indicates they can implement a fee for changes. While they can control the home resort rules and regulations, I don't see that as being something they can do now.

If you look at the DVC Resort agreement that gives us trading rights to other DVC resorts, that clearly says a fee can be implemented if BVTC so chooses to do so for booking purposes.

So, IMO, its the absence of language that gives them the authority to penalize owners for making changes with a fee...when it does say we could expect a fee when booking other resorts....

Okay, thanks. So, in essence, there's also nothing written that prohibits them from doing so.

 

[MarkNC2Disney]

Haha, I own both, it’s a real pain but I’ve got the rooms I wanted 5 times out of 6.
Longest walk was 5 months, whew

You do you, but if this were my experience I’d sell out

 

[crvetter]

Okay, thanks. So, in essence, there's also nothing written that prohibits them from doing so.

With contracts it doesn't exactly work like that. Specifically when you are talking about a change in the use of the product. So given they explicitly detail it as a possibility in one section (the DVC Resort Agreement for the 7 month exchange) but not in the home resort booking documents it is unlikely they would be allowed to charge a fee. They wouldn't have felt the need to make it explicit in the one section if your interpretation was the one they intended (or would use).

We as a membership should push back against that too because that could create an opportunity for fees to be added whenever and wherever without cause if one truly believes because the contract doesn't say they can't explicitly that they can.

 

[NY Pirate Princess]

I think the new and more specific language in the trust contracts about renting is specifically related to the loss of money Disney sees in the buy full, strip with rentals, sell and repeat model that is rumored at least one commercial site. They don't care if i walk (I don't think I have the patience) or if I let my bestie use my stranded points as a "rental".

Walking is a symptom, not the disease.

Renting is a symptom too, and it's gotten away from Disney now. At least that's how I read the new language.

We shall see!

 

[BeachClub2014]

I think the new and more specific language in the trust contracts about renting is specifically related to the loss of money Disney sees in the buy full, strip with rentals, sell and repeat model that is rumored at least one commercial site. They don't care if i walk (I don't think I have the patience) or if I let my bestie use my stranded points as a "rental".

Walking is a symptom, not the disease.

Renting is a symptom too, and it's gotten away from Disney now. At least that's how I read the new language.

We shall see!

Definitely agree that we will see what DVC does.

Out of curiosity, what is the disease if walking and renting are symptoms?

 

[NY Pirate Princess]

Definitely agree that we will see what DVC does.

Out of curiosity, what is the disease if walking and renting are symptoms?

The disease to Disney is any place they are leaking money that is cost effective to stop.

For example, I don't think they would institute a policy of modifying reservations by phone because the labor costs would be prohibitive to any profit. Walkers would just call daily and hope to get a CM that would let them modify. Lots of money and busy work with little return.

Shutting down a company getting away with stripping value from DVC points on contracts and pocketing the profit could certainly benefit Disney's bottom line without a huge and permanent extra cost center.

 

[smileyanna]

Wouldn’t it destroy the rental market if DVC made an example of a dozen or so rental reservations, where a family showed up at Disney for their much anticipated vacation w rented points and DVC revoked their reservation? As a former renter, I wouldn’t take the chance regardless of how good the discount.

DVC doesn’t need to change the modification rules or even police the market - they just need to enforce the rules against paid rentals every once in a while.

 

[DVC Newb '23]

Wouldn’t it destroy the rental market if DVC made an example of a dozen or so rental reservations, where a family showed up at Disney for their much anticipated vacation w rented points and DVC revoked their reservation?

As soon as a suspect reservation/membership is linked to someone's profile in MDE then Disney would have contact information and would almost certainly reach out to advise of the cancellation to avoid that from happening.

 

[smileyanna]

As soon as a suspect reservation/membership is linked to someone's profile in MDE then Disney would have contact information and would almost certainly reach out to advise of the cancellation to avoid that from happening.

I think that would have roughly the same effect. Let's say Disney cancels a few (just a few!) reservations in advance. Or let's say Disney emails a couple of renters and says "FYI Disney reserves the right to cancel DVC reservations that have been rented as a commercial transaction."

Just giving the warning (or going through with it and cancelling a few reservations) makes renting an entirely different proposition - how does Davids or Rental Store survive? This alleviates the need for Disney to constantly police this market or change the current member services arrangements.

As to the OP's question - I think this would hurt resale prices, but I'm not sure. The reserve price would go down - right now there is a floor of how much our contracts are worth with the rental market. But resale prices are well above that, so it can't be that full time commercial renters are pushing up prices. Maybe there would be an initial drop?

 

[crisi]

As soon as a suspect reservation/membership is linked to someone's profile in MDE then Disney would have contact information and would almost certainly reach out to advise of the cancellation to avoid that from happening.

I have doubts they would. They REALLY don't want to get involved in a rental gone wrong - they certainly don't want to look like THEY had any part in it, or look like they are volunteering to make it right. Its far easier for them, as a corporation, to push that responsibility onto the owner, where it does belong for making reservations in violation of the contract and selling them in the knowledge they could be cancelled.

For the family who shows up reservationless, a CM who only knows "the reservation was cancelled, it looks like you aren't the owner of the points, you will need to contact the point owner, the system doesn't let me know why it was cancelled" is the ideal response from Disney's point of view.

 

[crisi]

...

Just giving the warning (or going through with it and cancelling a few reservations) makes renting an entirely different proposition - how does Davids or Rental Store survive? This alleviates the need for Disney to constantly police this market or change the current member services arrangements.
....

Brokers whose model is renting those "I can't use my points, but don't want to go through the bother of renting them myself" will be fine - this isn't going to catch them because Disney can't track that the reservation was made through them. And Disney is not - at this time - indicating they are going after those of us who rent because we are going to Mexico this year and won't use our points. However, if either of those firms owns a good number of points for rental in addition to acting as a broker - that could be a problem.

 

[geargrinder]

Cracking down on commercial renting to drop the resale price would be great for Disney if they intended to bring back ROFR in a significant way.

 

[crisi]

The disease to Disney is any place they are leaking money that is cost effective to stop.

For example, I don't think they would institute a policy of modifying reservations by phone because the labor costs would be prohibitive to any profit. Walkers would just call daily and hope to get a CM that would let them modify. Lots of money and busy work with little return.

Shutting down a company getting away with stripping value from DVC points on contracts and pocketing the profit could certainly benefit Disney's bottom line without a huge and permanent extra cost center.

But adding code that makes it impossible to drop only part of a reservation until say the ten month window has passed is possible and pretty cost effective. IF they see walking as a problem (and I don't think they do, walking doesn't hit their bottom line when done by members staying on their own points - renting does).

 

[kneely58]

Wouldn’t it destroy the rental market if DVC made an example of a dozen or so rental reservations, where a family showed up at Disney for their much anticipated vacation w rented points and DVC revoked their reservation? As a former renter, I wouldn’t take the chance regardless of how good the discount.

DVC doesn’t need to change the modification rules or even police the market - they just need to enforce the rules against paid rentals every once in a while.

To be clear, there is no rule against paid rentals. Section 5.1 of the DVC Membership Agreements (including CFW's) expressly allow renting, subject to the last two sentences (which in the past Disney has indicated will only be triggered if you're making 20+ third-party rentals):

5.1 Club Member Rentals. A Club Member may make a reservation to use a Vacation Home for the Club Member's own use, make their use available to family or friends or guests, or rent them solely through the Club Member's own efforts. Neither DVD's, DVCM's nor the Association's approval of a rental by a Club Member is required after a reservation has been made in the renter's own name, and Club Members are permitted to rent their occupancy rights on terms and conditions that they may establish. No rental assistance is being offered by the TWDC Companies. All renters must comply with the rules and regulations affecting occupancy, and the renting Club Member will be responsible for the acts or omissions of the renters, or any other person or persons permitted by the Club Member to use the Vacation Home. The TWDC Companies do not in any way represent or promote that a particular Vacation Home can be rented, or if it is rented, that any particular rental rate can be obtained for such rental. Except for DVD, DVCM, or any of the TWDC Companies, use of Vacation Homes and recreational facilities for commercial purposes or any purposes other than the personal use described in the [Condominium][Resort] Documents is expressly prohibited. "Commercial purpose" may include a pattern of rental activity or other occupancy by an Owner that DVCM or the Board determines constitutes a commercial enterprise or practice.

 

[Lorana]

rent them solely through the Club Member's own efforts

Hmmm, that might imply that DVC could go after sites that facilitate rentals on the owner's behalf, like David's, since it wouldn't be "solely through the Club Member's own efforts."

 

[kneely58]

Hmmm, that might imply that DVC could go after sites that facilitate rentals on the owner's behalf, like David's, since it wouldn't be "solely through the Club Member's own efforts."

It could, but based on the rest of the paragraph, it seems like what they're really trying to say there is just that Disney is not going to help you rent out your points.

 

[eandt]

To be clear, there is no rule against paid rentals. Section 5.1 of the DVC Membership Agreements (including CFW's) expressly allow renting, subject to the last two sentences (which in the past Disney has indicated will only be triggered if you're making 20+ third-party rentals):

5.1 Club Member Rentals. A Club Member may make a reservation to use a Vacation Home for the Club Member's own use, make their use available to family or friends or guests, or rent them solely through the Club Member's own efforts. Neither DVD's, DVCM's nor the Association's approval of a rental by a Club Member is required after a reservation has been made in the renter's own name, and Club Members are permitted to rent their occupancy rights on terms and conditions that they may establish. No rental assistance is being offered by the TWDC Companies. All renters must comply with the rules and regulations affecting occupancy, and the renting Club Member will be responsible for the acts or omissions of the renters, or any other person or persons permitted by the Club Member to use the Vacation Home. The TWDC Companies do not in any way represent or promote that a particular Vacation Home can be rented, or if it is rented, that any particular rental rate can be obtained for such rental. Except for DVD, DVCM, or any of the TWDC Companies, use of Vacation Homes and recreational facilities for commercial purposes or any purposes other than the personal use described in the [Condominium][Resort] Documents is expressly prohibited. "Commercial purpose" may include a pattern of rental activity or other occupancy by an Owner that DVCM or the Board determines constitutes a commercial enterprise or practice.

There you have it …