History question: Why are 1-bedrooms "priced" so high?

[skier_pete]

Bottom line, based on the square foot total point allocation, is that in setting up the point charts, DVC made the 2BRs less costly, and for some of the resorts (like BWV, BCV and VWL), made both the studios and 1BRs proportionally more expensive than the square foot model, and actually made only the studios at OKW and BLT more expensive than their square foot value. In other words, What Disney actually did was make the 2BRs a "bargain" in relation to the studios at OKW and BLT but not in relation to the 1BRs, and in relation to both the studios and 1BRs at BWV, BCV and VWL.

You know, @drusba - you are always super-knowledgeable, and I have to say - this was an excellent summary of the reasoning. It's not so much that they are overcharging for the 1-BRs, though in some cases they are, but it's more they are undercharging for the two bedrooms!!! Thanks!

 

[Dean]

I for one am tired of DVC fooling around with the points, and making changes to the interior of the units. We have seen 3 points changes, a major change in banking rules and every time they remodel you have to go out side to tell which resort you're in. I'm sorry so many didn't know what the purchased, but those of us that did know and understand the rules are getting fed up with all the changes. JMHO

Bill, it is about understanding what we bought into. A large part of that understanding is that there will be changes. Contractually DVC is required to rebalance if the demand is too far off within other limitations some of which are referenced above. In addition, they drug their feet for about 5 years before they did the second reallocation in the system. I know some wouldn't like such a change, and I doubt it'll happen, but IMO, it should.

 

[skier_pete]

I am not trying to suggest with this thread that they should rebalance...again just curious about the history of why they are priced the way they are.I would even agree they should probably be priced about twice that of a studio - but not 20-25% more than that as they are in many cases.

 

[jerseyduke]

there must be legal reasons that enable them to sell more points based on the rooms.
You would 'expect' that a 1 bed room and a studio for a week would be the same number of points as a 2 bedroom lock-off (since that is what it is), but it is not.

Also, IMHO, the jump from a studio to a 1 BR is much greater than from a 1 BR to a 2 br in terms of amenities, not sleeping capacity. A full kitchen is a pretty big deal to a lot of people.

It simply costs more to construct a kitchen than it does a bedroom. Kitchens and bathrooms are the most expensive rooms, and a 1 BR has a nicer bathroom than the studios do (so a more expensive one), and a kitchen. The biggest difference between 1 studio and a 1 BR is that common room/kitchen area. It costs a lot more to build that then it does to build the bedroom which is the studio

 

[Dean]

there must be legal reasons that enable them to sell more points based on the rooms.
You would 'expect' that a 1 bed room and a studio for a week would be the same number of points as a 2 bedroom lock-off (since that is what it is), but it is not.

Also, IMHO, the jump from a studio to a 1 BR is much greater than from a 1 BR to a 2 br in terms of amenities, not sleeping capacity. A full kitchen is a pretty big deal to a lot of people.

It simply costs more to construct a kitchen than it does a bedroom. Kitchens and bathrooms are the most expensive rooms, and a 1 BR has a nicer bathroom than the studios do (so a more expensive one), and a kitchen. The biggest difference between 1 studio and a 1 BR is that common room/kitchen area. It costs a lot more to build that then it does to build the bedroom which is the studio

Part of the jump is the fact the studios are under supplied. Compared to say a Marriott studio in the area, there are far less amenities in DVC than the Marriott. Other than they set the points and the issues referenced above, I don't see any legal issues. The individual components of the lockoffs may not be protected at all in resorts that don't have dedicated smaller villas.

 

[mustinjourney]

I am not trying to suggest with this thread that they should rebalance...again just curious about the history of why they are priced the way they are.I would even agree they should probably be priced about twice that of a studio - but not 20-25% more than that as they are in many cases.

What I find most interesting is that the true market shows that 1BR should be priced significantly lower than double a studio.

I realize it's not quite apples to apples, but Booking the CRO rooms thru Disney are priced significantly different

For example, I just picked a random week for BLT. Standard view studio is $518. The standard 2BR is $1000 a night. Not sure what a 1 BR would be since they weren't available that week, but in the past I recall them being around 50% more than studios.

In my opinion, they priced the DVC points according to rough cost estimates, and the CRO rooms are priced according to market demand.

 

[skier_pete]

The one thing you CAN'T argue - 1 bedrooms are the LEAST in demand size rooms.

And I would argue that at least in part this is due to the point cost structure. If 1-bedrooms were 50-75% more than studios, I would be strongly considering them. Because they are 100%-125% more than a studio, I don't consider it. And I suspect at least SOME of the 1-bedroom usage is because people are forced into them by the fact the studios are sold out.

 

[mustinjourney]

The one thing you CAN'T argue - 1 bedrooms are the LEAST in demand size rooms.

And I would argue that at least in part this is due to the point cost structure. If 1-bedrooms were 50-75% more than studios, I would be strongly considering them. Because they are 100%-125% more than a studio, I don't consider it. And I suspect at least SOME of the 1-bedroom usage is because people are forced into them by the fact the studios are sold out.

completely agree with you. We were forced to book 1 BRs last fall b/c that was all that was left during F&W by the time my points got loaded into my account. I really do like the 1 BRs a lot more than studios, just not sure that I like them 2x as much.

 

[kapicka]

What about considering the opposite question - why are studios so "cheap" in comparison to other room types? This could be so that they can get people to buy in to DVC. When they sell 100 points and that will get you nearly a week off-season in a studio it seems like a great value. Then you stay in a 1-bedroom at some point and want to go at Christmas or Summer one year and realize you are going to need to buy more points.

 

[DougEMG]

The one thing you CAN'T argue - 1 bedrooms are the LEAST in demand size rooms.

And I would argue that at least in part this is due to the point cost structure. If 1-bedrooms were 50-75% more than studios, I would be strongly considering them. Because they are 100%-125% more than a studio, I don't consider it. And I suspect at least SOME of the 1-bedroom usage is because people are forced into them by the fact the studios are sold out.

I agree with you. At the current point cost, 1 bedrooms don't interest me. I'd much rather stay for twice as long. And if the 1 bedrooms were only 50-70% more I'd also be more tempted to book them.

 

[skier_pete]

What about considering the opposite question - why are studios so "cheap" in comparison to other room types? This could be so that they can get people to buy in to DVC. When they sell 100 points and that will get you nearly a week off-season in a studio it seems like a great value. Then you stay in a 1-bedroom at some point and want to go at Christmas or Summer one year and realize you are going to need to buy more points.

This may be true as well...keeping studios relatively low as a sales point, but figuring that people will buy more points to stay in a 1-bedroom. I think this theory worked a lot better at the old price points of DVC though - being $170 a point, not a lot of people are going to have an extra $30,000 to more from a studio to a 1-bedroom.

 

[Dean]

The one thing you CAN'T argue - 1 bedrooms are the LEAST in demand size rooms.

And I would argue that at least in part this is due to the point cost structure. If 1-bedrooms were 50-75% more than studios, I would be strongly considering them. Because they are 100%-125% more than a studio, I don't consider it. And I suspect at least SOME of the 1-bedroom usage is because people are forced into them by the fact the studios are sold out.

Another thing that can't be argued, though some want to try, is that DVC has a contractual responsibility to rebalance if things get too far out of balance. As I read the POS that would include between studios and 1 BR as long as they don't change more than 20% per year and match the minimum requirements to be able to reserve a studio for one night at the contractual number of points.

 

[PaintsWithAllTheColors]

Another thing that can't be argued, though some want to try, is that DVC has a contractual responsibility to rebalance if things get too far out of balance. As I read the POS that would include between studios and 1 BR as long as they don't change more than 20% per year and match the minimum requirements to be able to reserve a studio for one night at the contractual number of points.

Interesting... do they have any specific language that qualifies and/or quantifies what "too far out of balance" would mean?

 

[Dean]

Interesting... do they have any specific language that qualifies and/or quantifies what "too far out of balance" would mean?

I'm not at home to review the POS wording right now but it's a little vague though it clearly states they have the responsibility to do so if there is such a pattern. And while they haven't done so in general, there's nothing in the wording that would limit rebalancing between villa sizes that I've seen other than as mentioned. Plus for resorts with no dedicated smaller villas, they would have even more control and less limits. The POS I've seen do have some type of wording as referenced earlier in this thread about being able to reserve villas at least one night for a given number of points but even that is minimally limiting with the different seasons. Clearly we don't want them doing so on a whim so they should have clear patterns and make any changes in a purposeful and thoughtful manner. It's costly, difficult and time consuming for them to do a reallocation so it shouldn't be done lightly. But it should be done when the situation calls for it. The only rebalancing between villa sizes I can think of is the THV so there is precedence as well. IMO DVC has a history of feet of clay in such matters worrying too much about people complaining when are clearly doing the right thing though they seem to have been less so the last few years.

 

[drusba]

As to making adjustments, there is a Florida Statute, section 721.56(6) that requires the reservation system to be set up "to further the best interests of the purchasers of the plan as a whole with respect to their opportunity to use and enjoy the accommodations and facilities of the plan." It also requires that there be rules established by the timeshare developer to "provide for periodic adjustment or amendment of the reservation system by the managing entity from time to time in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations and facilities existing at that time within the plan." See the last paragraph on this page: http://www.leg.state.fl.us/Statutes...ing=&URL=0700-0799/0721/Sections/0721.56.html

The Disney Vacation Club Membership Agreement, which is attached as Exhibit F to the Declarations (actual exhibit number may vary among the resorts), of which you should have a copy, has a long provision, section 3.3, that sets out reasons and rules for making point adjustments. It provides: "In order to meet Club Members' needs and expectations as evidenced by fluctuations in Use Day day demand at the Condominium experienced by DVCMC during a given calendar year, DVCMC may, in its discretion, increase or decrease the Home resort Vacation Point requirements for reservation of any given Use Day within a given Vacation Home during the given calendar year by any amount not to exceed twenty percent (20%) of the Home resort Vacation Points required to reserve that Use Day during the previous calendar year." It then provides that any increase of a Use Day must be offset by a like decrease elsewhere so that total points for the resort do not increase or decrease. It also provides that DVC's right to make adjustments is reserved to "accomodate Club Member Demand." It then sets out what is referred to as the minimum reservation right in that members in the condominium will always be eligible "to reserve ... at least (1) Use Day" (and it varies per resort, but for Copper Creek, the new resort, it is) for a studio 18 points, 1BR 36 points, 2BR 46 points, GV 122 points, and cabins 115.

Whether these somewhat broad and vague statements of requirements and powers actually require DVC to lower points needed to reserve 1BRs because they have much lower demand than other rooms is subject to dispute. The combination of the statute and rules really seems to leave DVC with a lot of discretion as to whether changes of any kind will actually be made.

 

[skier_pete]

I don't think they are likely to shift the points balance between studios and 1-bedrooms. I would suggest that if they ever did a major shift, it would be to rebalance between the different seasons.

Right now the relatively low point seasons of Oct/Nov and early Dec are far and away the most popular times for booking. This was initially driven by price, but now occurs because of all the fall/holiday events. I could see someone in DVC deciding that they should shift this season to be more expensive and make other times of year (say Feb-May non-holiday) LESS expensive, to try and discourage the issue they are having with rooms booking up at 11 months.

 

[CarolMN]

......(snip).........Right now the relatively low point seasons of Oct/Nov and early Dec are far and away the most popular times for booking. This was initially driven by price, but now occurs because of all the fall/holiday events. I could see someone in DVC deciding that they should shift this season to be more expensive and make other times of year (say Feb-May non-holiday) LESS expensive, to try and discourage the issue they are having with rooms booking up at 11 months.

I don't think it will make that much difference in demand unless they increased those seasons by more than they are allowed in one year. We sure wouldn't change the times we go even if the point cost increased up to the annual limit. Of course, they could make a larger change over several years, but even swapping Adventure Season costs for Magic Season costs wouldn't make us stop going during F&W or December. My guess is that there are more DVC members like us than not.

Since only certain booking categories (usually the least expensive options) are booking up right at the 11 month window, increasing the costs might actually INCREASE the demand for those booking categories. Rather than change the timing of their visits, members who routinely choose more expensive villas may decide to book the lower cost options - i.e., get a studio instead of a 1 bedroom, or try for a standard instead of a preferred.

FWIW, I don't see an issue at 11 months (except for VGF studios sometimes) and as HP would say, I'm "not all that fussed" about 7 month booking challenges.

 

[BillPA]

My POS, from 1993 says no more than 10% adjustment. But they have already ignored that with past changes.

 

[Dean]

As to making adjustments, there is a Florida Statute, section 721.56(6) that requires the reservation system to be set up
"to further the best interests of the purchasers of the plan as a whole with respect to their opportunity to use and enjoy the accommodations and facilities of the plan." It also requires that there be rules established by the timeshare developer to "provide for periodic adjustment or amendment of the reservation system by the managing entity from time to time in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations and facilities existing at that time within the plan." See the last paragraph on this page: http://www.leg.state.fl.us/Statutes...ing=&URL=0700-0799/0721/Sections/0721.56.html

The Disney Vacation Club Membership Agreement, which is attached as Exhibit F to the Declarations, of which you should have a copy, has a long provision, section 3.3, that sets out reasons and rules for making point adjustments. It provides: "In order to meet Club Members' needs and expectations as evidenced by fluctuations in Use Day day demand at the Condominium experienced by DVCMC during a given calendar year, DVCMC may, in its discretion, increase or decrease the Home resort Vacation Point requirements for reservation of any given Use Day within a given Vacation Home during the given calendar year by any amount not to exceed twenty percent (20%) of the Home resort Vacation Points required to reserve that Use Day during the previous calendar year." It then provides that any increase of a Use Day must be offset by a like decrease elsewhere so that total points for the resort do not increase or decrease. It also provides that DVC's right to make adjustments is reserved to "accomodate Club Member Demand." It then sets out what is referred to as the minimum reservation right in that members in the condominium will always be eligible "to reserve ... at least (1) Use Day" (and it varies per resort, but for Copper Creek, the new resort, it is) for a studio 18 points, 1BR 36 points, 2BR 46 points, GV 122 points, and cabins 115.

Whether these somewhat broad and vague statements of requirements and powers actually require DVC to lower points needed to reserve 1BRs because they have much lower demand than other rooms is subject to dispute. The combination of the statute and rules really seems to leave DVC with a lot of discretion as to whether changes of any kind will actually be made.

There is another section on demand rebalancing, I'll have to go back and look at the wording.

My POS, from 1993 says no more than 10% adjustment. But they have already ignored that with past changes.

Apparently they amended to 20% at some point if it was 10% in 1993 and they haven't ignored that because it's 20% per year.

 

[BillPA]

never mind