DVD and undeclared Units (how they get room inventory to hold for sales tours)

I was at Aulani last week, and took a quick tour of the 3BR grand villas and a 2BR-lockout unit. (We were staying in a 1BR unit.) They didn't have any dedicated 2BR units available for tours.

I got to thinking about how they would have some rooms available to show (specifically the grand villas that I know are in high demand), when there were no room categories available to book for this week, according to the resort availability tool. Having read some other posts about DVD declaring inventory into the timeshare, I think what is going on is roughly this:

DVD declares a percentage of resort points (via the internal accounting of Units) into the timeshare. Those points can be sold. The total room nights those points represent are made available for members to book. Say 50% of the Units are declared, then 50% of the villas on a given night would be available for member reservations?

DVD retains exclusive control over the undeclared Units and the points they represent. DVD may rent out rooms covered by these points for cash, or do other things with them.

While a resort is not sold out/has undeclared Units in it, members may not be able to reserve all the DVC villas on a given night--only the portion of the rooms that are covered by the declared Units are available to members. But the specific rooms available could be anywhere in the resort? Asked another way, I think the Units represent undivided fractional ownership interests in the whole set of villas at the resort, not a specific subset of the villas?

The net of this is that, because DVD has some undeclared Units available, it can take villas out of service to use for sales tours/model villas? And the remaining villas represented by these Units can be rented for cash.

Later, when a resort is fully sold, DVD may have declared all of the Units, thus all villas are available for member reservations? Or perhaps it holds one or more Units in reserve so that it has flexibility to take villas out of service for maintenance, sales, etc.?

Does that match the reality of the legal structure of the timeshare, and the way DVD manages the resorts when they are still selling points and after they say it's sold out?

DVD has access to undeclared units, as well as unsold points (still owned by DVD) in the declared 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.

Only a fraction of Aulani is sold to members so DVC/DVC has access to a huge portion of that inventory. Most of it is rented for cash, so there is usually a lot of cash inventory available to members and non-members until a resort approaches sell-out. Even at "sold out" status, TS are required by law in FL to retain 2% of the inventory unless that law has changed in recent years. Traditionally DVC held about 4%.

Knowing that most of Aulani is NOT sold to members means they have a ton of inventory to either rent or use for sales. Btw, DVC pays for any units they retain for sales use. And it's generally close to rack rate. Weird but they don't get some giant discount.

One thing a lot of members don't understand about availability is why in a sold-out resort there is no points inventory but there may be cash availability. That is because as members exchange their points for any non-DVC resort the same amount of member inventory that reservation requires is moved from member to developer inventory in order to rent it for cash to pay for the non-DVC res. The exception is exchanges through RCI or formerly II (boy, do I miss II!!). In those cases they inventory is booked on the member's points and then given to RCI for said exchange.

That's not fancy explanation but in a nutshell why inventory may look skewed at times…. DVC Mike's definitions put it very aptly and succinctly.

DVC Mike said:

DVD has access to undeclared units, as well as unsold points (still owned by DVD) in the declared 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.

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In addition, there is "breakage". When an owner decides to use points outside the DVD resort (i.e. for a cruise) the equivalent unit becomes available for cash reservations.

OKW Lover said:

In addition, there is "breakage". When an owner decides to use points outside the DVD resort (i.e. for a cruise) the equivalent unit becomes available for cash reservations.

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Does breakage also refer to points being used outside the home resort, but within DVC? Or is that considered some other term (equal exchange of some sort)? I'd guess this is not breakage, since the reservation at another resort comes out of member inventory at the resort, and the same # of points remain bookable somewhere in the home resort's inventory?

jtkboston said:

Does breakage also refer to points being used outside the home resort, but within DVC? Or is that considered some other term (equal exchange of some sort)? I'd guess this is not breakage, since the reservation at another resort comes out of member inventory at the resort, and the same # of points remain bookable somewhere in the home resort's inventory?

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That's a good question. I don't know the correct answer but I'm sure somebody will be along shortly with the info.

OKW Lover said:

In addition, there is "breakage". When an owner decides to use points outside the DVD resort (i.e. for a cruise) the equivalent unit becomes available for cash reservations.

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Yep, that is all covered in this thread.

jtkboston said:

Does breakage also refer to points being used outside the home resort, but within DVC? Or is that considered some other term (equal exchange of some sort)? I'd guess this is not breakage, since the reservation at another resort comes out of member inventory at the resort, and the same # of points remain bookable somewhere in the home resort's inventory?

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Points for DCL and the like is not breakage but exchange related. Breakage is resort specific but can actually be anticipated and taken by DVCMC up to 11 months out though it's related to inventory available at 60 days out or less. All exchange transactions are resort specific to a degree but at 7 months out those points can be used for other resorts in exchange for the home resort. For example, a VGF member might trade for RCI and DVC might deposit SSR. There are a few situations where the deposit must be resort specific but not many with the current setup.

If DVD decides not to rent part of their inventory and save it as a showplace room they can. I am pretty sure at Aulani they have been showing the same 2BR lockoff for awhile (on the 10th floor) and possibly even the same Grand villa on the same floor. Definitely beautiful views.

DenLo said:

If DVD decides not to rent part of their inventory and save it as a showplace room they can. I am pretty sure at Aulani they have been showing the same 2BR lockoff for awhile (on the 10th floor) and possibly even the same Grand villa on the same floor. Definitely beautiful views.

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Sounds like what they showed us this week! 10th floor, Waianae tower, ocean/valley views