Point renters

[MrInfinity]

It's interesting how people jumped on @ThunderMountain for sharing his thoughts. The "You must be mad at..." replies are funny. These sites may be the way of doing things now, but things will change over time. Some things people think they understand about timeshares are way off. For one, it is not a goal of a timeshare to be 100% booked. It is actually the opposite. Kind of like when Target sells a gift card, their goal is not to hope that 100% of gift cards sold get used -- they are expecting a certain portion to go wasted, and that money becomes profit to them.

Think about selling leftover days on multi-day tickets... You can make the same argument how Disney doesn't care who uses the days as long as they go used they're happy-- but that's wrong. Disney would much prefer that those unused days simply expire -- and they find ways to crack down on it. That way the buyer buys their own tickets from Disney and they've sold tickets twice. Same thing with selling ADRs. You can't argue that "Disney doesn't care who uses the ADR as long as their table gets filled" they simply do not want people paying other people for ADRs. That is money leaving the system to a middleman. Same thing w rentals. Disney would actually prefer the points just expire. The traveler is still going to go to WDW. They will just buy their stay from Disney. Or they will buy in to DVC.

Someone made the good point above that these sites make "the system" (aka our / owners ability to optimally use our points) more efficient. And that's true. But more efficient has the side effect of more efficiently filling up the high-desirability rooms at 7 months. So it's at best a double-edged sword. Yes you can liquidate your points easier when you don't want them... but when you want to stay you'll see less availability because of the ease of others ditching their points. If they don't exist and it is harder to rent out points, then there would be more availability.

@ziravan is right on, in that if Disney wants this to be a process, then they will create an exchange and they'll own the process. It is not good for them to have 3rd parties skimming off of exchanging points that lead to people not booking stays with Disney direct.

 

[Dean]

Doesn't matter if you do the PR right. Publicize the cease/desist (They can demand without following through) with a comment that DVC is considering freezing points turned over to brokers (would only violate rules if they actually did it) and reserves the right to cancel said reservations without notice at any time.

DVC doesn't have to do anything but CONSIDER such a move to put the broker market into complete disarray.

Do we know of anybody actually caught up in the 20 reservation rule?

The issue is Disney is not going to put anything in writing or as policy that they are pretty sure they can't back up legally. That's not to say they're always right, they weren't back in 1998/9 when they first said you couldn't borrow points for OKW and get tickets on those borrowed points. I'm sure there are things they could try in this situation but I tend to agree that if they felt they could have, they would have.

 

[ziravan]

By setting up its own exchange, DVC could make serious money in at least 4 ways I can think of off the top of my head.

Assume Disney buys at 14 and sells at 18. But Disney doesn't sell at 18 to just anyone but only to other members at the 11 montb window.

1. DVC makes money on the bid-ask spread of 14/18. If I own BWV and want to book 100 Poly points at 11 months, I can spend $1800 to do so (on points DVC spent $1400 to acquire), or I can trade into this exchange $1800 of my own points at $14/point and that would be 129 points. Now Disney has 129 BWV points it can sell other members for $2322 or trade for more points.

2. Disney would effectively tie up every point members want to get rid of into an exchange system for other members. Whatever is left over they liquidate as defacto CRO at 7 months. They'd be selling those points at least $4/point over what they paid for them and probably much more. At 7 months, DVC doesn't have to offer points at $18/point to the rest of the world, they've already cornered the rental market. There would no longer be enough points floating around outside of the exchange for non-DVC members to routinely use. So DVC would dump those points into CRO just like they would if you traded out for a cruise or something else.

3. DVC would effectively kill its competitors off for its real CRO nights. In doing so, they kill off access to rental points for non-DVC members. Oh it's still allowed but why would members do that when they can sell into the exchange for reasonable rates and no effort?

4. An 11 month exchange system would be a huge selling point and by limiting access to the exchange to direct and grandfathered buyers, DVC would now be offering a substantial benefit to buying direct over resale. It'd change the equation.

Imagine an exchange system like the season ticket trading on sport teams home web pages. Members can log in, see what's available, and buy/trade for it on the spot. Just like one time use points, once you buy them, they're yours, in your account for you to manage.

 

[Dean]

By setting up its own exchange, DVC could make serious money in at least 4 ways I can think of off the top of my head.

Assume Disney buys at 14 and sells at 18. But Disney doesn't sell at 18 to just anyone but only to other members at the 11 montb window.

1. DVC makes money on the bid-ask spread of 14/18. If I own BWV and want to book 100 Poly points at 11 months, I can spend $1800 to do so, or I can trade into this exchange $1800 of my own points at $14/point and that would be 129 points. Now Disney has 129 BWV points it can sell other members for $2322 or more points.

2. Disney would effectively tie up every point members want to get rid of into an exchange system for other members. Whatever is left over they liquidate as defacto CRO at 7 months. They'd be selling those points at least $4/point over what they paid for them and probably much more. At 7 months, DVC doesn't have to offer points at $18/point to the rest of the world, they've already cornered the rental market. There would no longer be enough points floating around outside of the exchange for non-DVC members to routinely use. So DVC would dump those points into CRO just like they would if you traded out for a cruise or something else.

3. DVC would effectively kill its competitors off for its real CRO nights.

4. An 11 month exchange system would be a huge selling point and by limiting access to the exchange to direct and grandfathered buyers, DVC would now be offering a substantial benefit to buying direct over resale. It'd change the equation.

Imagine an exchange system like the season ticket trading on sport teams home web pages. Members can log in, see what's available, and buy/trade for it on the spot. Just like one time use points, once you buy them, they're yours, in your account for you to manage.

Others have tried this in one way or another and failed whether it be rentals or sales. Basically they get greedy and it has no real effect on rentals just like it doesn't on sales. They already run a rental service in terms of cash exchanges and it's hugely inefficient. A % of the rooms don't sell and CRO expects a hefty commission. If they did it, expect to get maybe $7-8 per point in return for each one rented out. And if they sold the rooms more cheaply, such a system would be in competition with their cash rooms, esp if they rented to non members. Could they do it, sure though likely not well; would they do it, I don't see any way in the world they could fit it in to their current systems and thinking.

 

[ziravan]

Others have tried this in one way or another and failed whether it be rentals or sales. Basically they get greedy and it has no real effect on rentals just like it doesn't on sales. They already run a rental service in terms of cash exchanges and it's hugely inefficient. A % of the rooms don't sell and CRO expects a hefty commission. If they did it, expect to get maybe $7-8 per point in return for each one rented out. And if they sold the rooms more cheaply, such a system would be in competition with their cash rooms, esp if they rented to non members. Could they do it, sure though likely not well; would they do it, I don't see any way in the world they could fit it in to their current systems and thinking.

They could torch an effort to poach the rental market and offering $7-8/point would surely not be successful. It'd have to be a high enough bid/ask to kill off the outside market.

I guess the real question will be how badly DVC thinks the rental market is hurting its model and if they desire to quash it.

Honestly, as hot as the rental market has become, my guess is that DVC is very interested in doing something about it.

Sports teams didn't put season ticket sellers on their own home pages because they wanted to be in the scalping business. They did so to kill off the scalping business.

 

[ziravan]

5th reason. If you're buying and you need 100 points for the week you want to go every year, guide:

"I know you need 100 points for 6 nights at CCV each year, but if you buy a few more points, at 130 points you could stay at CCV or trade out at 11 months for equivalent stays elsewhere, if available."

Potential customer, "Yeah, but how often is that?"

Guide, "Let me log in and show you."

~~~~

There'd be a fairly decent incentive to inflate the number of points a potential member is thinking of buying in anticipation of participating in an exchange.

Not only would there now be a real advantage to buying direct over resale, there's a real advantage in inflating the number of points to buy.

 

[ziravan]

Sorry to hijack the thread but the OP suggested that the rental market is making things more difficult for owners.

I'm sure DVC agrees that it's not optimal to have the rental market explode. I was just gaming out an alternative.

It has me thinking about it and thinking it through.

So. Let's say I own BWV and want to stay at Poly at 11 months. In an exchange that's actually a 2 step transaction, acquiring the points on the exchange and acquiring the reservation. Both have to be available.

So DVC would have to make it a two step inclusive process, much like borrow to book. Until you leave the landing page, you can undo the transaction, after you leave the transaction is final.

Find the points you need and then push them into the reservation you want as part of the same multi-step transaction. You don't have to commit until both are available and you have them both on a 20 minute booking hold.

In fact I'm fairly certain that it would be in DVC's best interest in such a program to try to tie the points off into reservations whenever possible.

DVC would also probably need to limit an exchange to 10 months out to prevent Poly owners from using AKV exchange points to book value studios or using BWV points to book standard F&W rooms at 11 months. Those home resort priorities should still matter.

 

[Dean]

They could torch an effort to poach the rental market and offering $7-8/point would surely not be successful. It'd have to be a high enough bid/ask to kill off the outside market.

And more wouldn't be enough profit for them to fool with. They'd want a spread of at least 25-40% after any expenses and commissions to even think about it. That was largely my point, anything that created enough profit to fool with wouldn't squash the rental market.

 

[crisi]

Doesn't matter if you do the PR right. Publicize the cease/desist (They can demand without following through) with a comment that DVC is considering freezing points turned over to brokers (would only violate rules if they actually did it) and reserves the right to cancel said reservations without notice at any time.

DVC doesn't have to do anything but CONSIDER such a move to put the broker market into complete disarray.

Do we know of anybody actually caught up in the 20 reservation rule?

And open themselves up to a lawsuit for restriction of trade. They aren't about to do that. Had they done it when the broker market was small, they might have a chance, but there are now enough brokers making enough money, that Disney would likely find itself in court. Disney is very court adverse, because court creates bad PR.

 

[MrInfinity]

such a system would be in competition with their cash rooms, esp if they rented to non members.

Such a system is already in competition with their cash rooms. When an owner rents out his timeshare, he is competing with Disney for some random customer's dollar. When he gets it, Disney lost it. The difference if Disney owns the process is that then they control the competition. They would standardize it and set the prices.

Just like with ADR sniping. When it was small practice, it flew under the radar, nobody cared. When it got big and several websites started charging for the process and making it "a thing" then Disney went after it. Same thing is destined for this process. It was fine when it's truly just an owner renting to an average Joe because they meet up on a message board. But once it becomes a business making millions skimming each transaction for profit, Disney is going to take note and evaluate options. Thus I think we'll see changes to this over the next few years.

1. DVC makes money on the bid-ask spread of 14/18. If I own BWV and want to book 100 Poly points at 11 months, I can spend $1800 to do so (on points DVC spent $1400 to acquire), or I can trade into this exchange $1800 of my own points at $14/point and that would be 129 points. Now Disney has 129 BWV points it can sell other members for $2322 or trade for more points.

If this were to become a system, I would use it. Likely extensively. Even at a 18-14 exchange, I would do it for the variety. OTOH, I would never utilize a rental system because I would not be willing to put my vacation trust in essentially two 3rd parties.

 

[Dean]

Such a system is already in competition with their cash rooms. When an owner rents out his timeshare, he is competing with Disney for some random customer's dollar. When he gets it, Disney lost it. The difference if Disney owns the process is that then they control the competition. They would standardize it and set the prices.

This is different. If done in a way to be workable, it would be a much larger scale than renting is now. It would be in direct competition, rentals really aren't to any significant degree now.

If this were to become a system, I would use it. Likely extensively. Even at a 18-14 exchange, I would do it for the variety. OTOH, I would never utilize a rental system because I would not be willing to put my vacation trust in essentially two 3rd parties.

But that's not where it would be. Would you do it if it were an $8 spread which is more realistic.

 

[ziravan]

Whether DVC makes a killing on an $18/14 bid/ask is a small part of the equation. The BIG money is moving the available pool of points to rent into a member's only exchange and excluding non-members from access to the points.

Now. Non-members are left with 2 options 1. CRO (When is free dining again?) or 2. Buying into DVC. Win-win for Disney.

DVC would probably end up with thousands of points to sell to non members at 7 months, but they aren't going to be selling points to non-members. They'd be using those points to sell CRO reservations at the prevailing rate.

Getting rid of the rental market for non-members would be the jackpot. Creating a member's only benefit would just be incidental icing.

 

[Dean]

Whether DVC makes a killing on an $18/14 bid/ask is a small part of the equation. The BIG money is moving the available pool of points to rent into a member's only exchange and excluding non-members from access to the points.

Now. Non-members are left with 2 options 1. CRO (When is free dining again?) or 2. Buying into DVC. Win-win for Disney.

DVC would probably end up with thousands of points to sell to non members at 7 months, but they aren't going to be selling points to non-members. They'd be using those points to sell CRO reservations at the prevailing rate.

Getting rid of the rental market for non-members would be the jackpot. Creating a member's only benefit would just be incidental icing.

They've already proven they aren't able to turn points into cash efficiently enough to make it workable with the current cash exchange options. The number of points they'd be able to rent is likely to be small. And they aren't about to spin their wheels with that small of a profit, they'd be far too greedy. I've seen rental and resale options over the years and never seen one that's sustainable. Historically my info suggests 20-25% of points will unsold and CRO will take another 25%. If they truly wanted to get rid of the rental market, there are other ways they could do it rather than throwing funds in a nickel and dime well.

 

[Deb & Bill]

And you forget about Disney IT. They would have to come up with a system to make this all work. But they really want to sell you multi-year use points, not more than 24 OTU points.

 

[crisi]

And you forget about Disney IT. They would have to come up with a system to make this all work. But they really want to sell you multi-year use points, not more than 24 OTU points.

Yeah, the profit for Disney is in the upfront sale. I suspect once that is made, they don't really care who uses the points. The hotel rooms aren't currently sitting empty - and the ones that have been are being converted to DVC units.

This is one of those situations where its a problem for a certain segment of the membership, a benefit to another segment of the membership, but I really suspect Disney sees it as a neutral. Otherwise, Disney would take steps - they could undercut the rental market with promotions and specials. They could limit benefits to non-members staying on points. They could up the risk for the member by requiring a member credit card on every use of the member's points for damages or non-payment of bills (which would make people think twice about renting. The member already guarantees the room because Disney will hold their points - but if its obvious that is the case, it will discourage people who don't want the risk). But frankly, there isn't that much in it for Disney.

 

[Regan117]

I guess that makes me the devil for renting points at the 11-month window.

 

[Deb & Bill]

I guess that makes me the devil for renting points at the 11-month window.

Aw, bless your heart.