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Old 05-04-2013, 04:23 PM   #196
Dean
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... and this makes it sound like I arbitrarily demand proof of things for no particular reason just to be a pain in the neck (or some other place).
Not quite that arbitrary but I believe this is twice now where you've demanded proof when I disagreed with you without providing the same proof to support your opinion. It's really fine and I do sometimes enjoy a little back and forth up to a point. It's been a while since I've said this so I'll post it again here. Anytime you read something from me, assume it's my opinion. If it happens to be factual as well so be it but I tend to not try to convince people nearly as much as I used to mostly because they often don't want the info anyway. You'll see me post mostly to info about exchanges, other timeshare, rules, usage and principles. One of the things about timeshares is even for those in the know you have to piece things together from bits and pieces of info. Timeshare and exchange companies tend to hold their cards very tight. Various people will know more about certain subjects and others know more about other subjects. IMO that's really what makes timeshares and timesharing great, the people and sharing. So while this back and forth may be uncomfortable for some, it often has gems that the sideline people can use and those that want can move on.
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Old 05-04-2013, 05:53 PM   #197
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Just answering the original question here, nothing else.

I bought resale, a cheap contract with high dues. I looked at the increase % in dues over the last several years, took that average, upped it a little, and estimated the dues for the next several years. I added that to my total buy in cost -- due, closing costs, etc. I compared that to the current rental price I was paying for a DVC room and estimated the annual increase based on my history with the owner. I came up with a 4.8 year break even point. So after 5 years, my vacations only cost me the annual dues, which is still far less than renting points.

I also did a comparison to room rentals at Moderates and Deluxes straight from Disney (not DVC renting from them). That was about a 3.9 year payback.

Then I did a third calculation to see how long it would take for my annual dues to overtake the cost of renting points. It would take about 12 years before renting was probably cheaper than owing my contract. So between years 5 and 12, I get a really good deal on rooms and I sell my contract for one with lower dues. That money I recoup brings down those earlier numbers, but I didn't even account for that since you can't count on it.
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Old 05-04-2013, 06:08 PM   #198
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...educated and efficient markets, ...
I think this is a very valid point. The vast majorit of all timeshares are bought on impulse, that implies to me that people do not educate themselves properly before puchasing.

I also think that the DVC owners and people looking to own DVC that are on boards like this looking to become more educated are a very small minority of owners.
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Old 05-04-2013, 06:13 PM   #199
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As I said before, I think the issue that's being missed here is that timeshare really don't track any logical approach very well including economics. DVC MAY come closer than most but historically there's still been a significant void between what should be happening and what has/is happening. My view is that this is a mix of psychology and economics and that psychology is the larger factor beyond the logic of the economics.
I agree that it is a combination of economics and psycholog, with the vast majorit of timeshares being sold from the psychology side and for us board junkies the economic side. Which is the bigger group will tell you what factor is more important.
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Old 05-04-2013, 06:34 PM   #200
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Where you and I differ in our thinking (and again, not to be insulting but I'm not sure you've heard this point) is that I believe there is little to no established connection between the direct booking market and the DVC point rental market. I don't believe that direct booking prices influence point rental prices at all for two distinct reasons. First, the majority of Disney guests are completely unaware of Disney Vacation Club. Within that community that is aware of its existence, there is only a small percentage that is aware that point rental is even an option. They're can't be a demand if people don't know something exists. I don't believe that direct booking guests are creating any demand for rentals at all.
I would actually argue differently. I can't speculate how most people learn about DVC, but I learn about DVC because the Grand Californian rack rates cost $500 plus tax per night, and as I try to find cheaper ways to stay there, I found out about DVC and VGC.

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On the other side, people who are aware of point rentals are trying to get the best price per point based on what is available, either by trying to take advantage of distressed points or negotiating with posters advertising points. In my experience, they are not going on the Disney site, checking to see what the cost of a direct booking is, and then comparing that to renting points. They are only functioning within boundaries of the point rental market.
I agree with you that the rental price per point is mostly a function of supply and demand within DVC rather than direct booking prices. However I think direct booking price does have an effect on rental points in the long run. We are talking about products that are almost perfect substitutes.

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I simply don't believe that there is any connection between direct booking prices and point rental prices. They are two completely separate products operating in two completely separate markets with two completely separate customer bases. I am curious to hear why you think otherwise.
I am curious as to why you think direct booking and rental DVC are two completely separate customer bases. Just because the vast majority of direct booking customers are unaware of DVC rental option doesn't mean they are not driven by the same economic motives when they become aware of the option. Don't the DVC direct sales people try to pitch the savings by comparing to booking direct? Didn't we buy DVC because it's a cheaper way to stay at a Disney property? Then how can direct booking prices have no impact on DVC?
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Old 05-04-2013, 08:38 PM   #201
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I would actually argue differently. I can't speculate how most people learn about DVC, but I learn about DVC because the Grand Californian rack rates cost $500 plus tax per night, and as I try to find cheaper ways to stay there, I found out about DVC and VGC.
This is a valid point. My contention, however, is that you are in the minority. Friends of mine who know I own DVC and know what it is about still book directly through Disney or through a travel agent when they choose to visit. I would suggest that whatever motivated you to come to these boards and learn more about Disney and DVC is what motivated you to make this informed decision regarding your lodging. We DISers are a small minority of Disney fans out there, and the DVC board is a small subset of the DIS. My evidence of this is the fact that Disney continues to sell out of those $500 rooms with cash guests.

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I agree with you that the rental price per point is mostly a function of supply and demand within DVC rather than direct booking prices. However I think direct booking price does have an effect on rental points in the long run. We are talking about products that are almost perfect substitutes.
I agree that they are almost perfect substitutes. But I wonder how many people are actually aware of this. Obviously my position is that the number is very small. As always, I could be wrong about that. Like I said before, after reading The Ultimate Guide to WDW by Len Testa I found out about the benefits of rope drop and using a touring plan. I usually log all the superheadliners I want to experience and five or six other attractions within the first two hours of the park opening. You would think that most people would follow this strategy instead of waiting 45-90 minutes for a ride. But they don't. www.touringplans.com 's own research suggests that less than 1% of guests have been introduced to this information. Fastpass is about as easy as can be, but people jump on line to wait 60 minutes for an attraction that has a FP return time 70 minutes out. I have no idea why they do this, but they do. Perhaps it's a combination of not knowing and not caring. Just because something exists, doesn't mean people are going to take advantage of it. I think that the percentage of Disney visitors that are truly educated in all things Disney is very, very small.


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I am curious as to why you think direct booking and rental DVC are two completely separate customer bases. Just because the vast majority of direct booking customers are unaware of DVC rental option doesn't mean they are not driven by the same economic motives when they become aware of the option. Don't the DVC direct sales people try to pitch the savings by comparing to booking direct? Didn't we buy DVC because it's a cheaper way to stay at a Disney property? Then how can direct booking prices have no impact on DVC?
I agree with all the points you make above. I think you may have misinterpreted my position on this. A point was brought up that DVC point rental prices are influenced by direct booking prices. I don't believe this to be true. I think that the price of DVC point rentals are controlled by basic economic principles, among other things. I also think the point rental brokers have an enormous influence over the fair market value of rental points.

To answer your question, my opinion is that the vast majority of people who book Disney rooms direct have no knowledge of the option to rent points. I also think there is another group who knows about this but feels it is too risky. For the most part, though, once someone discovers this option, they typically cease being a customer who books direct. It is at that point that they either become point renters (and realize the savings to be had) or they become DVC owners (by comparing long term ownership to long term renting). Once they enter this space, they cease to become direct booking customers, in my opinion. That is why I feel they are two separate customer bases. One group has no knowledge, and the other group gains the knowledge and (for the most part) enters a different marketplace, the point rental market.

Disney is well aware of the point rental market, yet they rarely seem to react to it. If they did, I feel there would be a much smaller difference between cash room prices and the cost of staying in that same room using rented points.
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Old 05-04-2013, 10:21 PM   #202
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It would be interesting to have solid numbers on how many people know about DVC and also know that they can rent points. I think the numbers are really very small. If you watch closely to who is responding or asking questions on these boards, it is a rather very small community of faithful people. How many more people are out there that interested? What do you think; the top 5% or 2% of people can afford to even rent points from DVC owners? Or do you think that extends to the top 10% of our population?

Most people I know can certainly afford to own a contract yet they do not know or care about DVC and certainly do not know that they could rent points. In fact, a good majority of these people own cabins up at Tahoe and find Disney something they do once a year, if that.

Even when my friends ask me for information about DVC or Disney, in general, I never mention renting points.

I bought my contract in O8'. We go to Disneyland often without using our points. Even as they were building the villas at the Grand Californian the average CM knew nothing about DVC or the discounts I should have received from my card, even as I am holding a Portable Perks pamphlet. Certainly, this has changed, as of last February, I found much better educated CM's about DVC.

It would also be interesting to see demographically speaking how many people know about renting points from DVC owners. I would venture a guess that that number is even smaller in California than the rest of the country.

What will be more interesting as time passes, is whether more people become first time buyers of DVC as the economy improves; therefore not needing to rent points, or whether they choose to continue to rent points at a satisfying rate and amount to current DVC owners.
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Old 05-04-2013, 10:40 PM   #203
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To answer your question, my opinion is that the vast majority of people who book Disney rooms direct have no knowledge of the option to rent points. I also think there is another group who knows about this but feels it is too risky. For the most part, though, once someone discovers this option, they typically cease being a customer who books direct. It is at that point that they either become point renters (and realize the savings to be had) or they become DVC owners (by comparing long term ownership to long term renting). Once they enter this space, they cease to become direct booking customers, in my opinion. That is why I feel they are two separate customer bases. One group has no knowledge, and the other group gains the knowledge and (for the most part) enters a different marketplace, the point rental market.
Now I see what you mean by two separate customer bases, and I agree completely. You just described our path to revelation. We booked direct twice without knowing better, and about to do it a third time. We probably will still do it for this July 4th because we cannot become owners in time, but I don't think we will ever book direct again.

Earlier you said that DVC rental rates are determined by supply and demand within DVC point rental market, and I agree with that. However, I do think direct booking prices have a big influence on the DVC point rental market. I agree that only a very small percentage of people are aware of DVC, and an even smaller subset of that are aware of DVC point rental option. Let's put some arbitrary number, say 0.1% of disney visitors. When Disney raise direct booking rates, it's going to drive some people (like myself - $500 for a week night, are you freaking kidding me???) to look for alternatives, and eventually discover DVC. Since the vast majority of people are not aware of DVC rental option, small changes in awareness can mean big changes to the DVC point rental market. In my example, if an incremental 0.1% of people is interested in DVC point rental, then the demand pool in the DVC point rental market had just doubled. Of course I am just making up numbers, but I do think that awareness in DVC point rental is very low, and so directionally any incremental change in awareness driven by direct booking prices is going to be meaningful.
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Old 05-05-2013, 08:08 AM   #204
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I agree that it is a combination of economics and psycholog, with the vast majorit of timeshares being sold from the psychology side and for us board junkies the economic side. Which is the bigger group will tell you what factor is more important.
Even here where the info is available people can't get away from their emotions. You don't have to go far for proof, basically for the next post for someone that bought a full size contract retail at a resort available resale for access to the excluded options, financing or comfort level.

I wills say that for the average person not educated in such matters, DVC is much closer to a fluid system than most timeshares but still not that close.

Timeshares, including DVC overall, are sold, not bought and I believe that emotions are the largest factor but again even more so for non DVC than DVC buyers. I think a common mistake those of us make that frequent such boards is assuming everyone has a similar knowledge base and it's definitely not the case whether it be DVC or any other timeshare resort or system.

k3chantal, I'm sure DVD has that info, they just don't release it.
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Old 05-05-2013, 01:42 PM   #205
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Don't know if anyone mentioned this, but David's Rentals is now up to $14 a point. That can impact the calculations of renting vs buying. A lot of people predicted David's wouldn't increase for a while.
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Old 05-05-2013, 02:00 PM   #206
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Don't know if anyone mentioned this, but David's Rentals is now up to $14 a point. That can impact the calculations of renting vs buying. A lot of people predicted David's wouldn't increase for a while.
But the owner wouldn't get that much. David's will tend to get more because people will be more comfortable buying from a business than individual.
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Old 05-05-2013, 02:45 PM   #207
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Based on simple math of what we were spending and what we paid up front for DVC, our contract would pay for itself in about 4 years. However, I think we're probably going to break even sooner than 4 years.
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Old 05-05-2013, 03:08 PM   #208
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But the owner wouldn't get that much. David's will tend to get more because people will be more comfortable buying from a business than individual.
No sorry I wasn't clear. I meant that the price of rental is higher so payback would be quicker if you buy vs rent. It also indicates that renting will go up more than people had predicted which makes buy-in more attractive.
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Old 05-05-2013, 03:44 PM   #209
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Based on simple math of what we were spending and what we paid up front for DVC, our contract would pay for itself in about 4 years. However, I think we're probably going to break even sooner than 4 years.
Assuming you bought resale and have been paying rack rates, this is a definite possibility. As with any analysis, though, it's important that the numbers are honest and you are comparing apples to apples. If your old vacations were ten days but you only have enough points to stay for seven, or in a different sized room, then the numbers are skewed. I'm not saying this is the case with you, but I am naturally skeptical of analyses that have such short break even time frames.
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Old 05-05-2013, 05:02 PM   #210
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No sorry I wasn't clear. I meant that the price of rental is higher so payback would be quicker if you buy vs rent. It also indicates that renting will go up more than people had predicted which makes buy-in more attractive.
Thanks for clarifying. I'm not sure David's has that large an impact on the overall prices though. The price of rental is only higher if you rent from David's or similar or for around the same price. However one point that is valid is that IF (big IF) the rate of inflation is the same for both sides, this will favor buying because the rental price will be more per point than the maint fee. Basically that $5 will compound at a lower amount than $10 and the 2 curves will diverge. Historically this hasn't been the case but who know for the future.
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