Would you join a lawsuit against DVC to stop/revert the 2020 reallocation?
- Thread starter zavandor
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Incorrect. Both the DVC Public offering statement and Florida timeshare statutes state that Lockoff villas are to be counted as Two Bedrooms for purposes of balancing the point charts to ownership.
DVC has always charged a “premium” when booking Studio + One Bedroom separately (higher price for the two rooms than booked as a single Two Bedroom villa) and there is nothing in the current statutes which place limits on the amount of this “lockoff premium.”
There is no requirement that the point charts balance under any any assumed percent of rooms booked as lockoffs.
If this “lockoff premium” loophole were increasingly abused by timeshare managers, I could see it drawing the attention of regulators. Perhaps the statutes would be amended. But I’m not sure that one adjustment in the 29 year history of DVC is going to prompt any response whatsoever.
I’m reluctant to pass any judgement whatsoever because I don’t have access to any of the underlying data. I don’t routinely check the online booking engine to see what’s reflected, and even if I did, all we can really glean is whether a villa type is fully booked (no availability) or not fully booked (some availability.)
We can’t tell if a villa typed is booked to 99% occupancy or 20% occupancy. We cannot tell how quickly rooms of different types are booking. We can’t see the underlying trends of Standard views vs Preferred views, seasonal changes in demand, weekdays vs weekends and so on.
As I look at the changes, these adjustments occurred almost across the board:
- Studios up
- Two Bedrooms down
- Adventure, Choice and Premier seasons up
- Magic and Dream seasons down
Oh, and there’s also a restriction that any given day can change by no more than 20% from year to year.
Since everything has to balance in the end, it’s very likely that some of the point assignments did not necessarily fall exactly where demand would dictate. As such, some of the One Bedroom rates may be set where they are just to get everything to balance. Those increases could be collateral damage of implementing the more urgent adjustments.
Beyond that, ask me for an opinion when the 2021 charts are released. Since some of the Studio changes are brushing up against the 20% cap, it’s possible that we see more changes the following year.
ParkHoppers
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Looking at the online booking engine regularly actually gives you enough data to see most of the trends you are saying we can’t see. Certainly which type of room is booked first, second,third.....and when you can’t get a villa it’s booked 100% right? Knowing those two things is enough to see what DVC is probably trying to do. So far I think Dean is in the right ballpark on intent. We will see.
Wakey
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I knew 1 beds and studios were more expensive, I didn't realise they could increase the points on them to what they want, without balancing elsewhere. Neither did 99.9% of other people. If you did, congratulations, you were in a miniscule minority.
I don't have a problem with 1 beds and studios being more expensive separately, I have no problem with points balancing to meet demand and supply. What I'm really concerned about, by someone who not only has access to Skier Pete's charts, other charts and my own weekly observarions is this suggestion that DVCMC can increase studios and 1 beds basically to what they want.
I simply cannot understand why they'd put 1 beds up in the interests of members. Looking at the SSR chart, there is significantly more increase than decrease from what I can tell.
What I was aware of was the regular questioning that 1 beds were already too expensive- which just got worse.
It is obvious that putting studios and 1 beds up could financially benefit DVD. Not saying this is why it's been done, but I'm still waiting for the explanation and data and an explanation why this was purposely not dealt with at the members meeting.
What I also can't understand is why all members are not highly concerned about the fact that the 1 beds and studios forming lockoff (all of them at SSR) could just be increased every single year with no corresponding decrease. This is extremely concerning to me and I'd like to see assurances from DVCMC as to what their intentions are in this regard.
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Wakey
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And how much has been created at SSR Dave where all the 1 beds and studios are lockoff? Could you do that one? I'd guess at least 75% are booked as 1 beds and studios.
Tjkraz already did it for SSR in the 2020 thread. If memory serves me right, it's around 450k points created out of thin air.
I have found this:
http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0721/0721.html
I think this is the statute applicable to DVC.
It's a gigantic document, so I haven't read it word by word but I searched for keywords. Searching for "lock", I found only this definition:
“Timeshare unit” means an accommodation of a timeshare plan which is divided into timeshare periods. Any timeshare unit in which a door or doors connecting two or more separate rooms are capable of being locked to create two or more private dwellings shall only constitute one timeshare unit for purposes of this chapter, unless the timeshare instrument provides that timeshare interests may be separately conveyed in such locked-off portions.
If I read this correctly, a Grand villa which has multiple rooms separated by doors is considered a single Timeshare Unit. However the last sentence is not clear to me, how should it be interpreted? The key word is "conveyed".
It could see two possible meanings:
- if a bigger unit can be separated in locked-off portions, then all of them are Timeshare Units
- if a bigger unit can be separated in locked-off portions, then the developer can apply the definition of Timeshare Unit to each locked-off portion, but he is not required to
This is the key law requirement:
“One-to-one use right to use night requirement ratio” means that the sum of the nights that owners are entitled to use in a given 12-month period shall not exceed the number of nights available for use by those owners during the same 12-month period. No individual timeshare unit may be counted as providing more than 365 use nights per 12-month period or more than 366 use nights per 12-month period that includes February 29.
The only reference I found to a point based systems is:
If ownership or use of the timeshare plan is based on a point system, a statement indicating the circumstances by which the point values may change, the extent of such changes, and the person or entity responsible for the changes.
So i guess that the sentence above talking about a maximum number of days can be translated into points and becomes the rule saying that points needed to book the unit all year around cannot exceed the number of point that represent the ownership interest sold.
I couldn't find any mention to a lockoff premium, saying that the locked-off portions of a bigger unit can be assigned a bigger cost of the unit booked as a whole.
I couldn't find any rule about reallocations, and specifically any rule allowing to increase the lockoff premium.
A Unit as declared by DVC includes often many separate 2bedroom lockoff. If you interpret the law to require that only the Timeshare Unit point cost of the bigger unit counts for the one-to-one use right requirement, than that is not at 2BR level, but it is at the bigger unit level.
If that is true, that leaves a big hole in the legislation. Let's think about a resort made of many buildings like OKW or SSR, but where each building is identical. A developer, could after the resort is sold out, introduce a new booking category "Building" which correspond to the unit. Then he could set the cost of booking the building to the points declared, then double the cost to book all vacation homes in that building. I dont' think it makes sense that the law allows this.
Also, going back to the first paragraph I've quoted.
No individual timeshare unit may be counted as providing more than 365 use nights per 12-month
If the unit is split into the locked-off components and each component is assigned a locked-off premium, for example saying that to book one week in a studio one has to use 8 days of the time they purchased, then over the year could provide more than 365 worth of nights.
The counter argument is that the lockoff premium has been there since the beginning and in 25 years it has never been challenged. So it is possible that laws allowing it are written somewhere else. It would be important to find where such rules are written, because in the same document they might be rules regulating it (for example it might be possible to set it to a maximum %, or it might not be possible to increase it after the first point chart is set).
@tjkraz you said the Florida timeshare statutes state that Lockoff villas are to be counted as Two Bedrooms for purposes of balancing the point charts to ownership, can you please point me to the right document where that is written? Thanks
In Exhibit G, they use "in its sole, absolute and unfettered discretion" a few times:
- in chapter 3.3, first paragraph, referring to the creation of the first point chart
- in the second paragraph of 3.3, saying that they can reallocate increasing and decreasing points within a Vacation Home, provided the total number of points that exist in a Unit cannot exceed the amount declared. Followed by the next paragraph where they say that an increase must be balanced by a decrease in another Use Day
- in 3.4, point g where they say they can change the Home Resort Rules and Regulations document. The HRR&R document deals with booking procedures, banking and borrowing, point charts cancellations, wait lists. Did you know this states they can create a Preference lists that can override the first-come-first-serve booking system, i.e create a VIP system?
- in 4.2.b where they say they can increase or decrease the home resort priority period, but it must be at least one month
- in 4.3, they can increase or decrease the breakage period, but no more than 90 days
- in 4.6, they can limit the ability to bank and borrow (this will probably come into force when the resort expiration date will near)
- in 7.2 where they say they can amend the Exhibit G and the HRR&R. Any change has to be notified to the members either direct (mail, email, fax...) or via a newsletter
So, while DVCMC has the right to change the agreement, it its current form it doesn't allow to reallocate the point charts at will.
Currently, there are limits on their power to reallocate the point charts. If they change that, they have to communicate it to all members. They might add the notice to the annual condominium report or send an email. Any change made without communicating it to members is void.
Of course they cannot change it so it violates Florida law, so there is still a limit to what they can do.
Unrelated, but paragraph 5.1 talks about rentals, it says a Vacation home cannot be divided into smaller vacation homes, so given the context of the paragraph I think this prohibits the subletting of the studio component of a 2BR lockoff. Someone suggested they could do this to save points because of the lockoff premium.
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Dean
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As Tim noted, BWV has more protections than most with both 1BR and studio dedicated villas.
We don't know the % now and won't after this is done. Disney considers this proprietary. But it doesn't matter where it is or ends up in total numbers, only the relative % before and after. There's no doubt 2 BR % will go up, the only question is how much and will it compensate for the other changes.
It doesn't matter if you or anyone else understood this was the case, what matters is what the legal interpretation of the state statutes, state rules and POS says. It's clear that any limitations, wherever they end up, are to the non locked off villa only other than the 20% year over year restriction.
The FL statue quoted is clearly defining a unit (villa to DVC, not the same "unit" as in the POS) as all lockout's being counted as a single unit. It gives the developer more flexibility but no additional restrictions to do so.
What do you mean? Is a studio part of a 2br lockoff a timeshare unit or only a dedicated studios is a timeshare unit, for the FL law?
DaveNan
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To put a value on this for DVCMC.
In my estimate for Kidani, the total points available are 5,593,331.
My understanding is that DVCMC can sell 98% of those 5,481445 and hold 111,866 in their possession. Let's assume repair and refurb make those unavailable.
If we assume a 75% S/1BR and 25% 2BR of the lock-offs usage the 2019 available points was 5,863,706 and the 2020 is 5,978,832.
Since DVCMC only sold 5,595,331 points, the excess number for 2019 was 270,395 and for 2020 is 385,521.
Even with the reserve still going to repair/refurb, if those excess points are used for cash reservations at $25 to $30 per point (a 12 point studio night reserves for $300-$360) that means at $25 per point in 2019 the excess points generate $6.76 million and in 2020 $ 9.64 million.
In my estimate for Kidani, the total points available are 5,593,331.
My understanding is that DVCMC can sell 98% of those 5,481445 and hold 111,866 in their possession. Let's assume repair and refurb make those unavailable.
If we assume a 75% S/1BR and 25% 2BR of the lock-offs usage the 2019 available points was 5,863,706 and the 2020 is 5,978,832.
Since DVCMC only sold 5,595,331 points, the excess number for 2019 was 270,395 and for 2020 is 385,521.
Even with the reserve still going to repair/refurb, if those excess points are used for cash reservations at $25 to $30 per point (a 12 point studio night reserves for $300-$360) that means at $25 per point in 2019 the excess points generate $6.76 million and in 2020 $ 9.64 million.
Dean
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Only the dedicated unit, the lockoff is counted as a single unit in its entirety as I understand it and as quoted in the statute info you posted.
Matty B13
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DVC might be trying to push people who have been cramming 5-6 people into the studios or 1 bedrooms. I know for my family of 5 that we specifically wanted 2 bedrooms which was much cheaper than buying 2 hotel rooms and you get a full kitchen and living room included, which is much better that staying in hotel rooms.
This would also create less wear and tear on the rooms, since fewer people would be in them.
I know a lot of people were hit hard by this reallocation, but for my family it was a nice relief from having to use 350-500 points for a single week during Magic Season. So it has benefited some members. Especially since most people who go during Magic Season travel with kids during school vacations, and the airlines jack up the prices on flights those weeks as well.
That being said, I would have thought that all the Fall Frenzy months would have been molded into a season just below Magic Season, and they would have lowered the 1 bedrooms to push people to those from the studios.
Wakey
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I've no problem some going down, some up if it's justified.
What I've a major problem with is points being manufactured out of thin air, full stop, but moreso if it doesn't benefit members.
I'm still waiting on the explanation and data.......
Wakey
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Thanks, hadn't spotted that. Could be C$11m manufactured out of thin air then on rentals. Nice work if you can get it.
RobDoc
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You have chosen a great example in this case. While GVs in all DVC Resorts do have doors between various rooms in the villa, the GV has only ONE entrance to the entire villa (SSR is an exception to that where the upstairs does have outside access to make that floor HCA accessible).
It sounds like you are suggesting that any interior door makes that area a separate Timeshare Unit.
Using the logic applied to your GV example above, all Studios (Dedicated or Lockoff) could be reserved as a 2 room villa due to the pesky door connecting two or more separate rooms.
In ALL Lockoff 2BR villas regardless of the resort each Studio and 1BR component will have an exterior door (in addition to the interior connecting doors). Each will also have independent access to a kitchen area (either mini-kitchen for the Studio/2nd BR component or the main full kitchen for the 1BR component).
None of the GVs have accessory kitchens for the 2nd and 3rd BRs you are trying to declare as three 1BR villas.
It is easy to single out a paragraph from a 'gigantic document' and apply it to a principle you wish to use to defend a position, but the interpretation of that paragraph still needs to be logical.
Turn the Page
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That is how I interpreted it also.
I'm sorry but this is the opposite of what I was trying to say. I've not been clear, but I wrote: "If I read this correctly, a Grand villa which has multiple rooms separated by doors is considered a single Timeshare Unit". Reading the law, it is 100% clear that a GV is one timeshare unit and that dedicated 2BR, 1BR and studios are all each one timeshare unit.
My doubt is only on a 2BR lockoff, because of the sentence: "unless the timeshare instrument provides that timeshare interests may be separately conveyed in such locked-off portions".
This is my interpretation: the Marriot Resort near Disneyland Paris (the one that was for a period rumored to became DVC) is made of all 3BR units that can be locked-off into a studio and a 2BR. The resort is a traditional week timeshare and has sold contracts for 3BR (that the owner can lock off), but also for 2BR and studios separately. In that case, since the 2BR and studios portion have been conveyed separately, they are, according to this definition, timeshare units in themselves. (now, the resort is in France non in Florida, so that law doesn't apply, but it's just to make an example, I do not know other timeshare resort in the US a part from the DVC ones).
For a points timeshare I have no idea what that means and I was in fact asking for the correct interpretation. It can be either: since the studio and 1BR are part of the point charts and can be booked separately, I think one could say that they are timeshare units according to the FL law.
I think the word "conveyed" in legal terms has a specific meaning, I tried to make a search but it's such a generic term that it's not easy to narrow it down.
In the context of that document, a Timeshare unit is completely different from what the POS defines as a Unit. Reading the definitions, I have not found a clear correspondence with the DVC unit, maybe a Timeshare plan, but that seems to be more general.
What do you think the sentence "unless the timeshare instrument provides that timeshare interests may be separately conveyed in such locked-off portions" means?
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