Wondering about the "lock off premium"

[twinsouvenirs]

So I am reading the multi-site public offering statement before we send in our docs, and just wondering how the 'lock off premium' works in reality. It says it is for 'reservation purposes only'... but what does that mean functionally? Functionally, can they put more 'points on the board' than are accounted for because of this premium, or am I misunderstanding?

Also, it doesn't affect our decision but I was interested to see that DVC retains the right to charge non-Aulani DVC owners an exchange fee (cash, I am assuming) should demand be higher than anticipated relative to other resorts

 

[DisneyDenis]

Also, it doesn't affect our decision but I was interested to see that DVC retains the right to charge non-Aulani DVC owners an exchange fee (cash, I am assuming) should demand be higher than anticipated relative to other resorts

I hope not !!! Then DVC would charge Aulani DVC contracts for VGC or WDW bookings. It does not work that way . I can use my BWV points with no $95 fee for Aulani.

 

[tjkraz]

So I am reading the multi-site public offering statement before we send in our docs, and just wondering how the 'lock off premium' works in reality. It says it is for 'reservation purposes only'... but what does that mean functionally? Functionally, can they put more 'points on the board' than are accounted for because of this premium, or am I misunderstanding?

Would help if you could quote the entire passage. I THINK I know what you're getting at, but don't want to comment unless I'm certain. And I'm not going to dig through the entire POS to find the passage.

Also, it doesn't affect our decision but I was interested to see that DVC retains the right to charge non-Aulani DVC owners an exchange fee (cash, I am assuming) should demand be higher than anticipated relative to other resorts

Realistically, DVC could implement a whole host of fees if they desired. The $95 fee to book non-DVC properties (excluding DL) has only been around for 6-7 years. They could add fees for booking non-home resorts, fees for modifying reservations, fees for booking more than "X" reservations in a year, cancellation fees, etc. Many other timeshares have already gone down this road.

 

[Orsino]

I think I've been thinking about the same thing lately. If I'm understanding the OP correctly, the 'issue' is the disparity between renting a two bedroom versus renting one one bedroom and one studio. We all know that renting the entire two bedroom costs less points than renting a one bedroom and studio separately. I think the OP is referencing something that implies that Disney sells the lower point cost rather than the higher 1bed+studio cost.

For example, lets build a new DVC resort that has exactly one two bedroom lock off. We charge 50 points for one night in the two bedroom. We charge 40 points for the one bedroom and 20 points for the studio.

How many points are we allowed to sell per night? Is it 50 or 60?

If we sell 60 points then if everyone rents the room as a 2 bedroom, there will be people with points, but no inventory for them to rent. That seems like something that should not be legal.

My guess is that Disney sells the lower point price for lockoffs (2-bedroom cost) and that the "lockoff premium" refers to the fact that when one bedrooms and studios are rented, the "premium" puts points in Disney's pockets, which they can do something with and not violate the point cap. That's probably why Disney can offer 15$ extra points to complete a reservation. Those points came from 1 bedroom and studio reservations.
(Again, this is my guess as to how things work since it is the most logical and fair way to handle it).

 

[tjkraz]

If memory serves, according to the point declarations filed by Disney Vacation Development with the Orange County Comptroller, all lockoff villas are declared at the Two Bedroom point total.

 

[miTnosnhoJ]

Resurrecting this thread from 2013. Now we know! The lock-off premium is a way to circumvent the rule about keeping the total points the same in a reallocation. It has the effect of devaluing your points. Your points can be worth 20% less than they were last year. It is kind of like hyperinflation, if you are a user of studios and 1BRs.

 

[ziravan]

The concept that while DVC can change the cost per night in certain categories and seasons, they must keep the total number of points in balance within a resort, that has certainly been tossed by the wayside.

Apparently, DVC can not only inflate the cost per point, they can also inflate the point chart at will. The 2020 chart isn't a "reallocation"; it's an outright point chart increase.

"Well technically, that's not what happened..."

Sure.

Buyer beware.

 

[zavandor]

The concept that while DVC can change the cost per night in certain categories and seasons, they must keep the total number of points in balance within a resort, that has certainly been tossed by the wayside.

The POS says something different, the requirement is much more binding.
Reallocations can only balance the point within the same Vacation Home so that the total number of points needed to book a Unit remain constant.
So the 2020 charts violated the POS twice: moving points between Vacation Home types and increasing the lockoff premium.

 

[miTnosnhoJ]

The POS says something different, the requirement is much more binding.
Reallocations can only balance the point within the same Vacation Home so that the total number of points needed to book a Unit remain constant.
So the 2020 charts violated the POS twice: moving points between Vacation Home types and increasing the lockoff premium.

The VGF POS appears to explicitly permit changing the lock-off premium at will.

 

[zavandor]

The VGF POS appears to explicitly permit changing the lock-off premium at will.

But only the VGF POS, CCV who opened later doesn't have it.

 

[crvetter]

But only the VGF POS, CCV who opened later doesn't have it.

Doesn’t need the Lockoff premium language. It has dedicated studios and 1 bedrooms.

 

[mustinjourney]

I finally got around to running the numbers for Grand Floridian...in which ALL of the studios and 1BRs are part of the lock-offs. The effect that this had was that Disney was able to increase the number of points available by 3%. Those 83000 extra points have a street value of about $1.4 million dollars (at $17 a piece). Even more value for Disney if they sell them as cash reservations.

The top one was done operating under the assumption that all the studios would be rented out (obviously this doesn't always happen -- but certainly more studios are secured than 2BR lockoffs). The bottom chart is how the points are actually accounted for. In short, since all of the studios and 1BRs are part of a 2BR lock-off, for calculating points, Disney accounts for them as 2BRs...so when they do a reallocation, they only have to make sure that the 2BRs and grand villas even out.


What's scary about this is that this means that DVC could essentially do whatever they damn well pleased with the points for studios and 1BRs since they have ZERO effect on the overall points in the system.

 

[crvetter]

I finally got around to running the numbers for Grand Floridian...in which ALL of the studios and 1BRs are part of the lock-offs. The effect that this had was that Disney was able to increase the number of points available by 3%. Those 83000 extra points have a street value of about $1.4 million dollars (at $17 a piece). Even more value for Disney if they sell them as cash reservations.

The top one was done operating under the assumption that all the studios would be rented out (obviously this doesn't always happen -- but certainly more studios are secured than 2BR lockoffs). The bottom chart is how the points are actually accounted for. In short, since all of the studios and 1BRs are part of a 2BR lock-off, for calculating points, Disney accounts for them as 2BRs...so when they do a reallocation, they only have to make sure that the 2BRs and grand villas even out.


What's scary about this is that this means that DVC could essentially do whatever they damn well pleased with the points for studios and 1BRs since they have ZERO effect on the overall points in the system.

I've sent a letter specifically in relation to this question. Went out Certified Return Receipt directly to management. Hopefully they take the time to respond. Effectively though I can't see them going above BLT or PVB in cost. So those would be the limiting factors.