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Old 01-19-2015, 08:42 PM   #1
DVC Data
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Question Why can I book a DVC room using cash but not points?




A common question from some new DVC members occurs when they try to book a DVC resort - typically less than 7 months in advance - using their DVC points through Member Services or DVCMember.com and they find no availability.

However, when they go to the Walt Disney World reservation web site, they'll see the same room available for the same time.

Quote:
My wife and I are trying to book a DVC stay in October. It seems that every single resort in the entirety of WDW is completely blocked out. We're on a waiting list right now in order to find a room. Oddly enough, I go on wdw's website and do a search for cash and every single place is available. I don't understand how this could be. What kind of BS is that? A DVC MEMBER can't get a room there because they are all "full" but if I want to pay cash I can? I can't wait to get through to DVC and see how they try to explain away that one.
Quote:
I'm trying to make a reservation for the end of January, and there are basically no rooms available. I call Member Services today, and they tell me that there is a cash room available for a discount at BWV (where we want to stay), but there are no DVC rooms available. How is that possible and how is that even fair?
Quote:
I called MS on Saturday.... Nothing available for point stays at either BLT, BCV or BWV during my time period...BUT...IF I want to pay "rack rate" on the Disney web site...there's plenty of availibility for villas and at ALL 3 resorts...studio,1, 2 bdrm. Boy....does that make my blood boil!
Quote:
I am FUMING!! I have been trying to get into the BWV from 10/4-10/10 for awhile now, waitlisted and calling DAILY to check availability only to be told that there is nothing available at ALL and I just went onto the WDW website to (out of curiosity) request a room only reservation at the Villas. To my extreme shock I saw that they not only had studios available but one bedrooms as well!!! What is going on?? Does Disney block off a certain number of DVC rooms to give to the public when PAYING members are waitlisted for the same rooms? How is that right? I think it's incredibly unfair that my family will not get our choice of resort when we've paid thousands of dollars to join DVC while someone else can just go online and book the exact one bedroom villa that I want.
This leads the member to question what is going on. Is Disney unfairly holding back rooms to rent via cash? Why can't I book a DVC room that is clearly available - using my points?

In a nutshell, no, Disney isn't breaking any rules or cheating us. Well then, what is going on?






There are different, completely separate inventories of rooms – one that can be reserved using points and another that may be reserved using cash. Rooms fall into these different inventories for various reasons.

Especially important for newly opened DVC resorts, there is a distinction between Declared and Undeclared inventory that provides Disney with cash inventory.
  • Declared (or Member) inventory can be reserved with Vacation Points. These are vacation homes associated with ownership interests that have been purchased by members and declared into the Condominium Association. Declared inventory is initially available only to members.
  • Undeclared (or Developer) inventory can be reserved on a cash basis. These are the vacation homes owned by DVD that have not been declared into the Condominium Association.
As an example, as I write this in January 2015, Disney has announced the Polynesian Villas & Bungalows - consisting of 20 bungalows and 360 studios. However, only 10 of the bungalows and 142 of the studios have been "declared" so far and can be booked by members using points. For now, the other units can only be booked using cash. DVC will declare more villas for the member inventory as it sells more of the resort's points.






What are the sources for inventory for cash reservations?
  • Exchanges: The number one source of cash rooms is actually from the Member inventory. This occurs when members exchange/trade outside of the DVC resorts. This includes using your points to book the Disney Collection (hotels at the Disney theme parks and the Disney Cruise Line), Concierge Collection, and the Adventurer Collection (but not trading via RCI). When a member trades outside of DVC, the points used to book the outside reservation are assigned to DVD to rent out. These rooms cannot be booked using points, as they effectively already have been. If I use my points to book a Disney Cruise, DVC has to pay DCL for my trip. They get the money to pay DCL by sending a room to CRO to rent to the general public. If the room was left in DVC inventory for booking by points, where is DVC going to get the money to pay DCL? This room, in a sense, is being used by a member, even though they're not physically there. It's being used to pay for their non-DVC vacation. This is how we're able to get stays at other resorts on our points, so it's a good thing for members. If DVC didn’t do this, we would have to remove the option to use our points at Disney hotels, Disney Cruise Line, Adventures by Disney, etc. Many members appreciate having those options available to them, even if they may not be the best use of points.
  • Breakage: Another source of cash reservations includes Member inventory that has not been reserved by members using points. Any Member inventory not reserved by members using points is made available to Disney CRO at the 60-day mark for cash reservations by the general public. This is actually beneficial to DVC members, in that the association earns “breakage” income on these rooms rather than letting them sit empty. Otherwise, our dues would go up.
  • ROFR: Another source of cash reservations is the inventory of declared points owned by DVD. These points are typically acquired by the ROFR process. Since DVD owns the points, they can rent them out.
  • Undeclared: As mentioned above, these are the units that have been built by the developer that have not yet been declared into the condominium association - part of the Developer inventory. Since DVD controls these units, they may be rented out for cash reservations
  • Retained by DVD: Finally, there is the “no less than 2%” of inventory that has been retained by the developer. This is usually used to schedule regular maintenance and refurbishment at a particular resort, but can quite possibly be rented out as cash reservations if not needed for maintenance.

Again, the vast majority of cash reservations come from members exchanging their DVC points to book outside of DVC.

Clear as mud?



Last edited by DVC Data; 06-24-2015 at 06:18 AM.
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Old 01-19-2015, 09:12 PM   #2
tink711
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Excellent description. I had figured out some of this reading other threads. However, having it all in one single post explained so clearly is wonderful and I feel like I understand it better now. Thanks for taking the time!
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Old 01-19-2015, 09:16 PM   #3
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You need to make this a STICKY!
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Old 01-19-2015, 09:37 PM   #4
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I appreciate all the info you are explaining for us in simpler terms. I have been "printing" them up for future reading when I can no longer try to explain it to my grown children... (just the conversation about 11 month window versus Use Year for example...)
Hope this is a good place to insert. I have been wondering for a long time if Disney keeps the really nice choice room locations for cash rentals hoping to increase a potential sale. My common sense says ultimately new member is a good thing for us all.
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Old 01-24-2015, 09:50 AM   #5
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Thank you, Mike, for posting this.
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Old 01-25-2015, 04:17 AM   #6
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Making sense of the system at last. Thank you for clearly explaining how it works.
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Old 01-29-2015, 12:16 PM   #7
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Default Nice explanation...

----------------< Well said and explained >------------
It's nice to learn the finer details of the Disney Business organization.


Quote:
Originally Posted by DVC Mike View Post
A common question from some new DVC members occurs when they try to book a DVC resort - typically less than 7 months in advance - using their DVC points through Member Services or DVCMember.com and they find no availability.

However, when they go to the Walt Disney World reservation web site, they'll see the same room available for the same time.









This leads the member to question what is going on. Is Disney unfairly holding back rooms to rent via cash? Why can't I book a DVC room that is clearly available - using my points?

In a nutshell, no, Disney isn't breaking any rules or cheating us. Well then, what is going on?

There are different, completely separate inventories of rooms – one that can be reserved using points and another that may be reserved using cash. Rooms fall into these different inventories for various reasons.

Especially important for newly opened DVC resorts, there is a distinction between Declared and Undeclared inventory that provides Disney with cash inventory.
  • Declared (or Member) inventory can be reserved with Vacation Points. These are vacation homes associated with ownership interests that have been purchased by members and declared into the Condominium Association. Declared inventory is initially available only to members.
  • Undeclared (or Developer) inventory can be reserved on a cash basis. These are the vacation homes owned by DVD that have not been declared into the Condominium Association.
As an example, as I write this in January 2015, Disney has announced the Polynesian Villas & Bungalows - consisting of 20 bungalows and 360 studios. However, only 10 of the bungalows and 142 of the studios have been "declared" so far and can be booked by members using points. For now, the other units can only be booked using cash. DVC will declare more villas for the member inventory as it sells more of the resort's points.

What are the sources for inventory for cash reservations?
  • Exchanges: The number one source of cash rooms is actually from the Member inventory. This occurs when members exchange/trade outside of the DVC resorts. This includes using your points to book the Disney Collection (hotels at the Disney theme parks and the Disney Cruise Line), Concierge Collection, and the Adventurer Collection (but not trading via RCI). When a member trades outside of DVC, the points used to book the outside reservation are assigned to DVD to rent out. These rooms cannot be booked using points, as they effectively already have been. If I use my points to book a Disney Cruise, DVC has to pay DCL for my trip. They get the money to pay DCL by sending a room to CRO to rent to the general public. If the room was left in DVC inventory for booking by points, where is DVC going to get the money to pay DCL? This room, in a sense, is being used by a member, even though they're not physically there. It's being used to pay for their non-DVC vacation. This is how we're able to get stays at other resorts on our points, so it's a good thing for members. If DVC didn’t do this, we would have to remove the option to use our points at Disney hotels, Disney Cruise Line, Adventures by Disney, etc. Many members appreciate having those options available to them, even if they may not be the best use of points.
  • Breakage: Another source of cash reservations includes Member inventory that has not been reserved by members using points. Any Member inventory not reserved by members using points is made available to Disney CRO at the 60-day mark for cash reservations by the general public. This is actually beneficial to DVC members, in that the association earns “breakage” income on these rooms rather than letting them sit empty. Otherwise, our dues would go up.
  • ROFR: Another source of cash reservations is the inventory of declared points owned by DVD. These points are typically acquired by the ROFR process. Since DVD owns the points, they can rent them out.
  • Undeclared: As mentioned above, these are the units that have been built by the developer that have not yet been declared into the condominium association - part of the Developer inventory. Since DVD controls these units, they may be rented out for cash reservations
  • Retained by DVD: Finally, there is the “no less than 2%” of inventory that has been retained by the developer. This is usually used to schedule regular maintenance and refurbishment at a particular resort, but can quite possibly be rented out as cash reservations if not needed for maintenance.

Again, the vast majority of cash reservations come from members exchanging their DVC points to book outside of DVC.

Clear as mud?
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Old 01-29-2015, 02:14 PM   #8
Don Munsil
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Quote:
Originally Posted by DVC Mike View Post
Breakage: Another source of cash reservations includes Member inventory that has not been reserved by members using points. Any Member inventory not reserved by members using points is made available to Disney CRO at the 60-day mark for cash reservations by the general public. This is actually beneficial to DVC members, in that the association earns “breakage” income on these rooms rather than letting them sit empty. Otherwise, our dues would go up.
I'd just point out that breakage revenue only goes to offset dues up to a limit (2.5% of the operating costs of the resort and capital reserves), and all DVC resorts hit that limit every year. All breakage income over that level goes to DVD as profit, in amounts which are not reported (at least not to us).

And I feel very confident that the dues are set at a profit-maximizing level, not at the actual cost of running the resort. No other major timeshare system sets dues at the actual costs (unless they're in real trouble), and Disney has some of the highest dues in the industry. There's no way the cost structure at WDW is that much higher than the costs for Hilton or Marriott or Starwood. So if they didn't have breakage, the dues might go up (to get to a different profit-maximizing level), but not by the amount of the lost breakage.

I just think as owners we should not fall into the trap of thinking that everything we want improved will just end up costing us more in dues. Lots of people seem to think Disney "passes on" the cost of running the resort to the owners. In fact, Disney is running a for-profit business and is making very good money year after year from DVC dues; we should expect good service, including reasonable wait times from member services, a good working web site, quality housekeeping, etc.
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Old 01-29-2015, 02:23 PM   #9
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Mike, if you keep summarizing all of the "top ten thread" issues what will we talk about???

Thanks!
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Old 01-29-2015, 05:05 PM   #10
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Quote:
Originally Posted by Don Munsil View Post
I'd just point out that breakage revenue only goes to offset dues up to a limit (2.5% of the operating costs of the resort and capital reserves), and all DVC resorts hit that limit every year. All breakage income over that level goes to DVD as profit, in amounts which are not reported (at least not to us).

And I feel very confident that the dues are set at a profit-maximizing level, not at the actual cost of running the resort. No other major timeshare system sets dues at the actual costs (unless they're in real trouble), and Disney has some of the highest dues in the industry. There's no way the cost structure at WDW is that much higher than the costs for Hilton or Marriott or Starwood. So if they didn't have breakage, the dues might go up (to get to a different profit-maximizing level), but not by the amount of the lost breakage.

I just think as owners we should not fall into the trap of thinking that everything we want improved will just end up costing us more in dues. Lots of people seem to think Disney "passes on" the cost of running the resort to the owners. In fact, Disney is running a for-profit business and is making very good money year after year from DVC dues; we should expect good service, including reasonable wait times from member services, a good working web site, quality housekeeping, etc.
Yep Don. Agree with much of what you said.

However, if DVCMC weren't allowed to rent out Member inventory that has not been reserved by members using points, rooms would sit empty.

If you take a look at the Poly Annual Dues breakdown post, it shows breakage income of $0.10-0.12 per point.

My point was, if DVCMC wasn't allowed to rent out these rooms, our dues would most likely go up that much per point.

Whether DVCMC is arranging cost effective service arrangements with it's suppliers (in this case, mostly it's parent and sister companies within Disney) is another topic I didn't try to address in my first post in this thread.
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