Why are weekends so much more expensive??

[DGuiltinan]

It seems like such a dramatic difference to me, for example 29 points for a Boardwalk studio on Fri - Sat, then 13 points the rest of the week...Wow... What hotel doubles their price on Friday night??


Is it easy to get a reservation for the days Sunday - Thursday, and not stay there on the expensive days, or are you forced to work those days into your reservation??

 

[dvc93cats]

even in the beginning fri & sat were always twice as much as Sun - thurs.

dvc say at the time that if the patterns changed they would change the points and have all days be the same. but they haven't - my guess and it is a guess is that they can sell these easier to Florida residents who would come for a weekend.

and no I have always (except once and I won't do it again) stayed Sunday thru Thursday night leaving friday morning.

 

[drusba]

This a subject that has been discussed before but it has been quite some time. The higher weekend points have resulted in many arranging Sun to Thurs trips and skipping weekends. DVD a few years back actually was considering lowering weekend while raising weekday points (which would be an allowed shift of points from one time to another without raising annual total) because weekday demand was significantly higher than weekend. The idea was floated and then not mentioned again. It is easier to get weekend days than weekday when booking late, e.g., at 3 months out for many times you will find weekdays taken but weekends still open, thus indicating as most believe that weekday demand outstrips weekend because of the point differences. Note, it is easy and permissible to get anything you want when booking 11 months out and you can reserve just weekdays.

Why the higher points? One explanation is that when setting up the program there was concern that Florida or other nearby resident DVC members would overuse weekend time if it was at points equal to weekday; thus the difference was designed to have the effect of equalizing weekend and weekday demand. If that was the reason for the point differential then it had the opposite effect intended as it increased weekday demand at the expense of weekends.

Personal view is that may have been one possible explanation when the program began with OKW in 1991 but not for its continuation when they set up BWV, VWL, HH and VB. One possibility I perceive is that it aids Disney in selling affordable 150 point contracts. 150 points can go a long way with only weekday use under the current point structure. If those weekdays and weekends had equal points that contract would not get as much use and thus have lesser appeal to a buyer.

 

[DGuiltinan]

I appreciate your reply. That has been bugging me for a while.... I'm glad to hear that you can easily book Sun - Thurs...

 

[WebmasterDoc]

This practice is standard in the Timeshare business. All point based timeshare resorts I'm aware of, use a similar "pricing" for their weekend costs.

As drusba suggests, it is designed to discourage local usage on weekends (most timeshares sell to people who live within a 200 mile radius.....DVC is an exception, as is Hawaii, Cancun, etc.). I do agree with drusba's suggestion that the current point charts may make the 150 minimum easier to sell, but I suspect that, if asked to vote, the membership would resoundingly reject any option to equalize the points.

As it is now, it basically discourages weekend (2 nite) trips for the majority of the year. With equalized point chart, someone within a 2 hour dirve could presumably get 8-10 weekend visits per year with a 200 point contract. If this became a common practice (IMHO- it would), then members who have to travel long distances might be unable to find a 7 day stay- since the weekends could be already reserved. As a result of the point charts- the oppposite has occurred and weekends are often available. I also suspect that these weekend nights are usually reserved on a cash basis- using the member points given up for non-DVC programs.

As for hotels NOT raising rates on the weekends- DVC resorts are not hotels- they are timeshares- and there is a difference. Also- many hotels actually lower rates on the weekends- since business travellers make up the bulk of the weekday travel and many hotels are pretty empty on weekends.

There are lots of considerations which go into the point charts. The DVC resorts are usually busier in early Dec than other WDW resorts- due to the lower points at that time. The point costs were developed to encourage and discourage usage at various times....and for the most part really seem to work quite well.

 

[Bigcat]

...and that is why I don't stay at DVC resorts on the weekends. I would rather book an outside hotel than use that many points!

 

[rbuzzotta]

Thanks for the explanation Webmaster Doc and drusba. I have wondered the reasoning behind the higher weekend points.

We stay Sun-Thurs go over to the WEst Coast of Fla for the weekend and back for another Sun-Thurs stay!!!

 

[TroyWDW]

Doc (or anyone else in the know),

Where does ALL of the revenue money go for the rooms that get rented out inside the 60 day breakage period. I know a portion of it pays for the housekeeping, etc.

But what business entity ultimately receives the net cash balance?

Troy

 

[DebbieB]

The income from breakage rooms goes back to the members in the form of a dues credit. When you get the annual budget, you will see a line for breakage income.

One place that I know of that charges more for weekends is Las Vegas. They are much busier on the weekends with people coming in from California and room rates are usually close to double.

 

[TroyWDW]

The income from breakage rooms goes back to the members in the form of a dues credit. When you get the annual budget, you will see a line for breakage income.

Isn't the amount of money that can go back to the members in the form of a dues credit capped at a maximum value. I believe the POS contract states that "The Association" can receive proceeds not to exceed 2.5% of the Condominium Operating and Capital Reserves Budgets in a calendar year.

What happens to the remainder of the revenue money that exceeds the budget cap (what business entity)?

Troy

 

[DeeP]

I live at the Jersey shore and we, like all other tourist areas, have hotel/motel rates at a much higher rate on the weekends then during the week. Areas that have a big business/convention trade like Phila, etc will do the oppostie and have lower weekend rates, higher weekday rates. It is all a matter of supply and demand. Most vacationers wil include 1 or 2 weekends in their travel plans just because it means taking less vacation time off from work but still having a longer vacation (that is why airlines charge more to fly weekends that mid week), and local guests can easily drive to WDW just for the weekend--thus the old supply and demand theory.
We as DVC members at BWV, always book Sun-Thurs, with maybe a very occasional Fri or Sat night, and then move to another WDW resort for the weekend nights. This enables us to get A LOT of use out of our DVC points and we also get to enjoy/experience all the other WDW resorts at a great AP cash rate. It works very well for us, it is like getting the best of both worlds!

 

[WebmasterDoc]

Where does ALL of the revenue money go for the rooms that get rented out inside the 60 day breakage period.

The "true" breakage rentals income does go into the DVC dues budget - but the reservations made with member points used for non-DVC reservations (Concierge Coll, Cruise, WDW Resorts) do not go into the DVC budget at all- those $$ are in the CRO pool and are used to reimburse CRO for the $$ used for these non-DVC ressies.

 

[drusba]

TroyWDW, you are correct about the cap. That amount of breakage income up to 2.5% of the resorts estimated operating and reserves budgets for the year goes back to offset dues. The Disney Vacation Club Management Company (DVCMC), which is the designated company in charge of managing the resorts and a sister company to the Disney Vacation Development Company (DVD), gets to keep most of the amount above that cap (it does have to pay costs of acquiring rentals plus 5% of those costs to the Buena Vista Trading Company, another sister company which is the company that acts as the rental agent to obtain rentals through CRO). Ultimately, you are looking at companies that are all part of Disney and reported as part of Disney's consolidated statements and any profit is thus ultimately Disney's

 

[RumpleMom]

It takes us 2 days to drive to WDW, so we stay 7-10 days. We don't avoid weekends after such a long trip.

 

[TroyWDW]

drusba, Thanks for your reply.

If I understand your statement correctly, the members get up to a maximum 2.5% of the breakage revenues (based upon the budget), and any excess above that amount (minus the 5%, housekeeping, etc.) goes back to DVCMC and ultimately onto the WDW Co. bottom line.


Is there anyplace that the 60-day breakage revenues is reported to the members. I see a line-item for "Breakage Income" on the Annual Operating Budget, but I'm not sure if that number represents the "capped" amount or it is suppose to represent the ENTIRE breakage income. It appears that it is the "capped" amount.

I did some quick math and I'm estimating that for 2001, the listed Breakage Income ($372,491 for BWV) would equate to about 3% of the rooms being rented out on the WEEKENDS ONLY. This seems like a very small percentage relative to some other documents that show much higher room availability in the breakage period.

Or to state it differently, my guess is that the Breakage Income is MUCH larger than $372,491 as reported on the 2001 Annual Operating Budget for BWV.

Are the TOTAL breakage revenues reported anywhere (or am I misunderstanding something)?

Troy

 

[WebmasterDoc]

my guess is that the Breakage Income is MUCH larger than $372,491

Keep in mind that the breakage income ONLY comes from unreserved member inventory. It does not include rental income gained from points used by members for non-DVC programs.

Since BWV seems to have a fairly high occupancy rate, I can easily assume that there is little unreserved member inventory at any time of the year- except for weekends....and therefore the amount of breakage income is probably just what it should be.

 

[drusba]

What you see in the annual budget is not even actual breakage income that goes to offset dues. The budget is an estimate. Thus, the number that appears there is the estimated breakage income for the upcoming year that will be used to offset dues. That number would be the 2.5% cap number or something lower. The total breakage income (or even its estimate) is not reported anywhere. It is possible (and I believe probable) that actual breakage income exceeds the 2.5% cap, but as Doc noted, breakage income applies only to rooms that are left unreserved and then are rented by DVCMC during the last 60 days before an applicable date. Even if you had 10% of the rooms for a given date unreserved 60 days or less before the applicable date, it is not that easy to get those rooms filled up by reservations in those last 60 days. Rentals of rooms to non-dvc members that have resulted from members exchanging their points out for non-DVC resorts are not part of breakage income. For example, if a member uses points to stay at GF, then the amount of time at a DVC resort that could be reserved for those points is rented and the income goes to Disney resorts less whatever agreed costs of exchange one of the DVD entities is entitled to keep by agreement with Disney resorts. Also, if I recall correctly when DVC did report occupancy rates, it was reporting rates of reservations by members using points and left out of the occupancy rate numbers everything else, including exchanges resulting in non-DVC member use and cash reservations by members. In other words, the figures you may have seen cannot tell you what percentage of the rooms were actually available as breakage units.

 

[TroyWDW]

drusba, Doc,

Thanks for your replies.

Yes, (I think) I understand what is meant by Breakage Income. That is why I'm explicitly stating "60-day breakage revenues" in my questions. I'm trying to exclude all of the other non-DVC exchanges from the discussion.

drusba: What you see in the annual budget is not even actual breakage income that goes to offset dues. The budget is an estimate. Thus, the number that appears there is the estimated breakage income for the upcoming year that will be used to offset dues. That number would be the 2.5% cap number or something lower.

Good. That makes sense.

drusba: Also, if I recall correctly when DVC did report occupancy rates, it was reporting rates of reservations by members using points and left out of the occupancy rate numbers everything else, including exchanges resulting in non-DVC member use and cash reservations by members. In other words, the figures you may have seen cannot tell you what percentage of the rooms were actually available as breakage units.

I was looking at some information that was showing approximately a 25% vacancy rate at BWV. From your statement, then that 25% includes breakage, non-DVC swaps, etc. Thus, the true number of Breakage Income rooms is somewhere between 0% and 25% for that year. I was very surprised to see this number so high.

Doing some quick math, if I assume that all 60-day Breakage Income comes from weekend rentals only (no weekday rentals) then the 2.5% cap ($371,491) will be reached with 3% of the weekend rooms rented out. The 3% rooms would equate to roughly 12 rooms for Saturday and 12 rooms for Sunday (this of course depends upon the size of the room and rental fee -- I'm making an approximate calculation).

From my uninformed knowledge base, it doesn't seem like such a daunting task for CRO to sell 12 weekend day rooms over the past few years of high demand. This is just my personal opinion and is not based upon any factual knowledge, and certainly the current climate is much different. I recall reading that WDW Co. had ~95% occupancy rates in the resorts over the past few years.


One absolute way of testing this premise would be to look at the actual Annual Operating Budget numbers.

a) If the actual Breakage Income is less than 2.5% of the total budget then we know that WDW Co. is not receiving additional revenues from the sale of the DVC rooms due to Breakage vacancies, and the total number of rented Breakage Income rooms is low.

b) If the actual Breakage Income is equal to 2.5% of the total budget then we know that WDW Co. is receiving additional revenues from DVCMC, we just don't know how much.



1) Does anyone have the actual budget numbers (Total Budget and Breakage Income) for BWV for year 2000?

2) Any thoughts on why DVCMC recently stopped reporting the occupancy rate numbers to its members?


Troy

P.S. Thanks for letting me ramble on with this discussion.

 

[normr]

As I have said before, I think at some point if people continue to avoid the weekends like a plague and only stay Sun-Thurs, then it is my opinion that at some point DVC will even out the points more by lowering the weekends and raising the weekdays, which would be fine for me since we always have to use weekends.

 

[drusba]

When I thought about it more I came to the same conclusion you probably have that breakage income is likely more than a million. If you just average 5% of the rooms per day as unreserved (probably a fair estimate when you average out a week that likely has more space unreserved on weekends than weekdays), you get about 20 rooms per night. Rent that at an average of $300 per room per night and you get $6,000 per day times 365 days equals almost $2.2 million a year. It could be higher, it could be lower, but it definitely is likely over $1 million.

That caused me to go back and reread the applicable sections of the POS, and I now know where I went wrong. We don't know the total breakage income but a lot more goes to offset dues than meets the eye. If you check your budget sections of the POS (or annual budget that you received) you will see that there is no budgeted amount of dues for Member Services. Thus, where does it get its money for employees, managers, computer systems, rent, etc.? The breakage income goes first to offset our dues charged up to 2.5% of total dues (not counting the property tax portion in that total). That amount would only be in the $300.000's. The breakage income goes next to the Buena Vista Trading Company in an amount that equals its costs of operation plus 5% of costs. The leftover goes to DVCMC and ultimately profit to Disney. Well, the Buena Vista Trading Company is Member Services. It receives no specific line item of dues to cover all its operations which includes sytems and employees for handling all reservations for DVC and for exchanges. Its payment for that service comes from the breakage income (its costs plus 5% of costs mentioned above). In other words, a large amount of the breakage income covers Member Serevices and we are not charged dues for its operations.

As to why they stopped reporting occupancy rates in the POS, the answer is simple. Applicable timeshare regulations were changed to eliminate the requirement of reporting it.