Penalized For Being Prudent

Sandisw

Moderator
Moderator
Joined
Nov 15, 2008
If the resorts open fairly soon, not having the previously borrowed points having to be used before they expire will help the situation going forward by reducing short term demand, since those returned borrowed points would no longer be in a use them or lose them status.

However, if the resorts remain closed past the date where those previously borrowed points would have expired, returning them will HURT the situation going forward.
Exactly,,,That is why I don’t think we are done seeing all changes. I think..said this a few times,,,this decision was made when they thought it might be a 2 week closure,

If, at anytime in the next month, DVCM determines they can’t sustain putting borrowed points back, they will stop! it’s all about the system, and trying to manage short term and long term, because they have never had to deal with a resort closure for close to 10 weeks, not to mention it being ALL 15 resorts at the same time.!
 

imjustafatkid

Earning My Ears
Joined
Feb 18, 2014
There is definitely a risk of owning DVC and becoming a timeshare owner,

I think that what is happening will play a role for future buyers, or even current owners, to decide the savings are worth it vs, staying a cash guest.
Knowing there are risks doesn't make this an acceptable situation. Part of the draw of owning a DVC timeshare is it has typically held value fairly well and can be resold without having to basically beg someone to take it off your hands (which is the case with basically every other timeshare). If they go through with throwing away people's banked points it will lessen that value because that is a pretty typical "timeshare" thing to do and not a pretty typical "Disney" thing to do.
 
  • CanadaDisney05

    DIS Veteran
    Joined
    Mar 20, 2017
    If I had to vote, I agree with the way Disney has handled it so far.

    • Save last years earnings and deposit those earnings in a bank. Then this year withdraw those banked earnings and combine those with this year’s earnings and pay for your vacation without going into debt.
    • Use this year’s earnings and take out a loan against next year’s earnings to pay for your vacation.

    While there is nothing wrong with option 2, I think most would agree option 1 is more financially prudent.
    The reason Option 1 is generally considered more prudent than Option 2 is because of a couple of key things that generally come along with loans:

    1) Interest: If your paying interest on the loan, then Option 2 is costing more than Option 1.
    2) Security: Depending on how the loan was structured, if you cannot pay off your debt, the debtor may be able to come after your assets. This creates a level of risk in Option 2 that is not there in Option 1.
    3) Liquidity: Having cash on hand always lowers your risk. This is the argument for going along with Option 2. Your spending someone else's money, and keeping your money safe.

    If the loan has a zero percent interest rate with no fees, or security, then in my personal opinion, I believe option 2 would be the more prudent option because of the liquidity factor.

    Now lets look at how these factors affect DVC:

    1) Interest: There is no interest on borrowed points. Using borrowed points does not cost more than using banked or current points.
    2) Security: The only "pay back" of borrowed points is the experience of missing a vacation the following year. You are not at a risk of losing assets if your financial situation changes.
    3) Liquidity: Unlike Personal Finance, liquidity is actually risky in DVC. This is because points have an expiration date, where as money does not. The longer you hold on to points, the increase likelihood you have of not being able to use them.

    Again, I know this is somewhat of an apple to oranges comparison, so please do not reply just to tell me that. However, I would like to hear what other member think of this post.
    You mentioned it yourself. Personal Finance and DVC Finance are apples and oranges. I figured I'd illustrate what differentiates them, because the differences in the economies is what makes the "prudent" strategy for each different. Without trying to sound too harsh, your not being "punished" for being "prudent". Your being "punished" for being "non prudent" in the DVC economy we are working in.

    On a good note, if your following the same strategy in your personal finances (where it probably matters more), your probably going to come out way ahead of the vast majority of others during this current economic climate.
     

    Sandisw

    Moderator
    Moderator
    Joined
    Nov 15, 2008
    Knowing there are risks doesn't make this an acceptable situation. Part of the draw of owning a DVC timeshare is it has typically held value fairly well and can be resold without having to basically beg someone to take it off your hands (which is the case with basically every other timeshare). If they go through with throwing away people's banked points it will lessen that value because that is a pretty typical "timeshare" thing to do and not a pretty typical "Disney" thing to do.
    Not to sound argumentive, but no one is throwing banked points away. This has nothing to do with Disney, it has to do with the timeshare laws that all properties follow in the state of Florida, including being held accountable to making sure supply and demand match.

    When you buy, you buy with the terms and conditions that go with your product. Banked points can only be banked once. Yes, DVCM has said they are trying to work out something for owners at risk. If they can, they will,

    While this may not be weather related, DVC resorts are located in Florida, prone to hurricanes, so the assumption should be thst there is always a risk that one could hit and you could lose points if you can’t use them. IMO, I think all owners should be aware of this before they buy.
     

    CanadaDisney05

    DIS Veteran
    Joined
    Mar 20, 2017
    Knowing there are risks doesn't make this an acceptable situation. Part of the draw of owning a DVC timeshare is it has typically held value fairly well and can be resold without having to basically beg someone to take it off your hands (which is the case with basically every other timeshare). If they go through with throwing away people's banked points it will lessen that value because that is a pretty typical "timeshare" thing to do and not a pretty typical "Disney" thing to do.
    What's important to note is that there isn't really much DVC can do. This is not a matter of DVC taking your points and converting them to profit for themselves. If they give you back the points you lose, then you are going to use those points to book a room next year. Since you now booked a room that you wouldn't have otherwise booked, there is one less room available for me to book. By giving you back your points from this year, it will force me to lose my points next year indirectly.

    If it's one person, one time, it doesn't create too much of an issue because there are enough people using their points for cruises, ABD, RCI, etc... that that room will become available for me again. But with the parks and resorts closing for what could be months, there won't be enough people trading out to create the room availability to absorb all of the excess points in the system. Nobody is profiting off of the situation. People are just losing. Just like the rest of society currently.

    I know DVC by reputation isn't like any other timeshare, but in reality it's just a creative way of doing the same thing as any other timeshare. If you own week 16 of Timeshare X, and now the resort is closed, they can't just give you another week later in the year. The room's are already full. They also can't just give you a cash settlement for that week, because the owner's themselves are the one's paying the operating costs, not the timeshare company itself. You would effectively just be paying yourself.

    Like it or not, the reality of owning real estate, is that it comes with assumed risks. While we can say that it was nearly impossible to predict something like Covid 19, the risks of the parks shutting down for many other reasons has always been discussed. This includes the unlikely risk that Disney itself at some point in time has to fold and the parks shutdown permanently.
     

    TraderSamWDW

    The Head Salesman
    Joined
    Feb 24, 2020
    I understand people's frustrations (I would feel the same way if I were affected) however, I think its unreasonable to expect some immediate remedy.
    The problem isn't over yet!
    What if this goes on for a year? It may not be likely, but there have been some models out there that suggest it could. Disney has to know how many points are out of balance, before they can figure out what course of action that can make work out mathematically.

    Disney knows how many points get "broken" every year, and it is from these points DVC could possibly make up the imbalance. What if 10,000,000 points get broken a year, but this last 6 months and they have to make up 20,000,000?

    There is a mathematical limit to how much of an imbalance DVC can correct. Problem is, as of this moment, they do not know how big that imbalance is and whether it is greater or less than that limit.
     

    Lumpy1106

    DIS Veteran
    Joined
    Jul 2, 2010
    You all bring up good points, but this is why I believe we, as in, Disney and the majority DVC owners who actually make decisions, need to find a creative way to make owners whole, or close to it. There are a ton of minimum point contracts out there that owners bought with the full intent to bank and borrow to go every other year, or maybe save up and do a big family trip in a larger unit. Not only does that option add value to what we own, but that also opens up the studios which we all know are in short supply. It makes more sense than the regular resorts sitting empty (a safe assumption in the near-term). Sure, maybe those people are staying at All Star Sports instead of the Grand Floridian but at least that's something. If it costs me an extra $.50 or a $1 more per point in dues this one time I can totally live with that. Keep in mind, I don't stand to lose much at all. I have 19 points banked I am using in addition to my current year points for a planned trip in August. Use year is Feb. so I can still bank my current year points, though I will lose the 19 banked points if I can't reschedule or rent the points by Feb. It wasn't a brilliant move on my part, I was just lucky. It doesn't seem right to me that someone else was not.

    All that said, I do feel like this needs to be done on the negotiated side, once we know what the full extents of the situation are. You can't offer to bank last year's points to the folks that are losing out on trips in April, because it will just make things a lot worse if this extends through the summer and those folks will be entitled to bank last year's points too. All of the above posters are right - there is a limit to how flexible DVC can be on its own. There are only so many available rooms within DVC.
     

    Sandisw

    Moderator
    Moderator
    Joined
    Nov 15, 2008
    You all bring up good points, but this is why I believe we, as in, Disney and the majority DVC owners who actually make decisions, need to find a creative way to make owners whole, or close to it. There are a ton of minimum point contracts out there that owners bought with the full intent to bank and borrow to go every other year, or maybe save up and do a big family trip in a larger unit. Not only does that option add value to what we own, but that also opens up the studios which we all know are in short supply. It makes more sense than the regular resorts sitting empty (a safe assumption in the near-term). Sure, maybe those people are staying at All Star Sports instead of the Grand Floridian but at least that's something. If it costs me an extra $.50 or a $1 more per point in dues this one time I can totally live with that. Keep in mind, I don't stand to lose much at all. I have 19 points banked I am using in addition to my current year points for a planned trip in August. Use year is Feb. so I can still bank my current year points, though I will lose the 19 banked points if I can't reschedule or rent the points by Feb. It wasn't a brilliant move on my part, I was just lucky. It doesn't seem right to me that someone else was not.

    All that said, I do feel like this needs to be done on the negotiated side, once we know what the full extents of the situation are. You can't offer to bank last year's points to the folks that are losing out on trips in April, because it will just make things a lot worse if this extends through the summer and those folks will be entitled to bank last year's points too. All of the above posters are right - there is a limit to how flexible DVC can be on its own. There are only so many available rooms within DVC.
    To be fair to yourself, you used banked points for an August trip, which left 5 months to use them up. Thats a decent cushion. Granted, even a cushion like that, if your travel plans won’t work, banked points are lost,

    But, that is the nature of banked points. No matter when you use them, they will always expire at end of UY..so, if your cushion is 5 month, or 10, you still have to use or lose if your original plans fall through.

    That is why the wisdom shared here on the DiS is always to understand the risk to points if you travel after banking window and toward end of UY. You are left with few options.
     

    dismedvc

    Mouseketeer
    Joined
    Oct 10, 2008
    If I had to vote, I agree with the way Disney has handled it so far.

    You mentioned it yourself. Personal Finance and DVC Finance are apples and oranges. I figured I'd illustrate what differentiates them, because the differences in the economies is what makes the "prudent" strategy for each different. Without trying to sound too harsh, your not being "punished" for being "prudent". Your being "punished" for being "non prudent" in the DVC economy we are working in.
    Well said. I knew when I posted it DVC is different than cash reservation and as you point out Personal Finance is different than DVC finance, but I was interested in what others thought of my imperfect analogy.

    The main issue I have is, if the closures last a long time (say 6 months or more) then making an exception to the rules and returning borrowed points back to their original future UY, DVC has caused a larger problem in the future. Given the current DVC attitude is to wait and see how long the closures last before making any more changes to the rules, it seems they really "jumped the gun" with their change to the borrowing rules. Since the beginning of DVC, (up until now) once banked, borrowed points were always subject to same restrictions as banked points.

    That is why I stated in my original post "That does not seem right".
    I still feel that way, despite @Sandisw talking about borrowed points represent different inventories than banked points.
     
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    Sandisw

    Moderator
    Moderator
    Joined
    Nov 15, 2008
    Well said. I knew when I posted it DVC is different than cash reservation and as you point out Personal Finance is different than DVC finance, but I was interested in what others though of my imperfect analogy.

    The main issue I have is, if the closures last a long time (say 6 months or more) then making an exception to the rules and returning borrowed points back to their original future UY, DVC has caused a larger problem in the future. Given the current DVC attitude is to wait and see how long the closures last before making any more changes to the rules, it seems they really "jumped the gun" with their change to the borrowing rules. Since the beginning of DVC, (up until now) once banked, borrowed points were always subject to same restrictions as banked points.

    That is why I stated in my original post "That does not seem right".
    I still feel that way, despite @Sandisw talking about borrowed points represent different inventories than banked points.
    To add, you may be right that returning borrowed points could become an issue...I guarantee if it does, you will see the practice stopped immediately. I predict by May 1st, it will be.
     

    dismedvc

    Mouseketeer
    Joined
    Oct 10, 2008
    To add, you may be right that returning borrowed points could become an issue...I guarantee if it does, you will see the practice stopped immediately. I predict by May 1st, it will be.
    Think of the outrage that will cause, with members whose borrowed points are not returned being irate that other members got their borrowed points returned but they did not. That is why I said I think they "Jumped the gun" before they know the full implications.

    ETA: pull a Yoda on purpose in your last sentence did you?
    (Corrected per Grumpy by birth's post #38)
     
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    marcyleecorgan

    DIS Veteran
    Joined
    Feb 12, 2017
    IMHO , if you pay upfront a set amount of money for using the service during a certain time period , and you cannot use the service during that time, it is more than fair for the provider to "bank" the payment. In your example of DVC, the bank you speak of is Time. You put this money aside to be used for a vacation stay, but it is put into an expiring and finite timeframe.
    I can totally understand why DVC cannot just en-masse, change the system. There are laws they have to abide to, because there is insurance involved, because it's real estate.
     

    Lumpy1106

    DIS Veteran
    Joined
    Jul 2, 2010
    To be fair to yourself, you used banked points for an August trip, which left 5 months to use them up. Thats a decent cushion. Granted, even a cushion like that, if your travel plans won’t work, banked points are lost,

    But, that is the nature of banked points. No matter when you use them, they will always expire at end of UY..so, if your cushion is 5 month, or 10, you still have to use or lose if your original plans fall through.

    That is why the wisdom shared here on the DiS is always to understand the risk to points if you travel after banking window and toward end of UY. You are left with few options.
    Yes, and I'm grateful for that, believe me. But let's get real here; there is not a single person posting here that even one month ago said, "worldwide pandemic - better make plans for that". These are unprecedented times that call for unprecedented solutions. I don't want to speak for anyone, but I do think it is time for DVC to just take a pause and not make decisions about how any of this is handled until we all know just how bad it is.
     

    Sandisw

    Moderator
    Moderator
    Joined
    Nov 15, 2008
    Think of the outrage that will cause, with members whose borrowed points are not returned being irate that other members got their borrowed points returned but they did not. That is why I said I think they "Jumped the gun" before they know the full implications.

    ETA: pull a Yoda on purpose in your last sentence, did you?
    Omg..the Yoda comment...made me laugh,

    Those that get upset, don’t get the system. At first, I didn’t think it made sense, but then when I got to thinking about why..future rooms..it does.

    Again, as soon as an opening date is announced, I predict all rules will be back to normal, including holding. Remember, they didn’t allow borrowed points returned for mid April and beyond until they announced closed “until further notice”
     
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    Sandisw

    Moderator
    Moderator
    Joined
    Nov 15, 2008
    Yes, and I'm grateful for that, believe me. But let's get real here; there is not a single person posting here that even one month ago said, "worldwide pandemic - better make plans for that". These are unprecedented times that call for unprecedented solutions. I don't want to speak for anyone, but I do think it is time for DVC to just take a pause and not make decisions about how any of this is handled until we all know just how bad it is.
    Of course, no one thought of a pandemic.

    But, there are many, many DVC owners here on the Dis that understand the risk of traveling late in the UY and purposely don’t travel then so they don’t ever have to worry about something happening that forces a cancellation, regardless of cause.

    So, while resort closure may not have been thought of, owners who make sure they don’t travel during point risky times do so on purpose. I own 3 UYs and deal with 3 memberships for this reason.

    Just making the point that every member makes Chooses on how and when they use their memberships. But, with time, DVCM will figure it all out.
     
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    sethschroeder

    DIS Veteran
    Joined
    Feb 24, 2013
    Not only do I agree with the OP, but I'd be on board with a one-time dues increase to help make the members who are losing points whole - say subsidizing stays at other on-site resorts that will undoubtedly be under-booked in the near term.
    Except why do I take on the risk for others?

    It's something you didn't plan for but what about those who went during Dorian this year? Possibly some people lost points there as well.

    I am fine with higher taxes because of the recent federal bills because that is someone's whole life. That is completely different than this.

    So now we likely have less availablity and you are saying I have to pay someone else because they lost points.
     

    Grumpy by Birth

    “I AM smiling.”
    Joined
    May 27, 2017
    I predict by May 1st, it will be.
    ETA: pull a Yoda on purpose in your last sentence, did you?
    Yoda - "I predict by May 1st it will be."
    Sandisw - "I predict by May 1st [comma] it will be.

    The comma makes all the difference (reminds of the joke about the panda who "eats, shoots, and leaves.").

    Plus you have to put the emPHAsis on the correct sylLAble.

    :rotfl2:
     

    tjm236

    Earning My Ears
    Joined
    Feb 14, 2017
    So, it is “fair” because the contract you bought is being adhered to, It states that the resort can be closed and you, as a legal owner, can be kept out if there is a state of emergency.
    Where does it address this? I'm not saying it doesn't, I just haven't been able to locate it. Although I'll admit that I didn't read every single word of the 100+ pages.
     

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