What Happens When Contracts Expire?

[Dean]

Do you agree all the use years (Feb to Dec) added all up equal the number of points to book the resort from 2/1 to 1/31? That is exactly the requirement by Florida law and the contract. So I’m not reading anything into it. This is exactly the one to one right required by Florida law. I’ve completely ignored lockoff premium (assuming all lockoffs booked as 2 beds). If one doesn’t plan to use all their points properly then yes they will lose out. But that simply doesn’t mean the protections don’t exist in the law or contract.

Your contention is that banking will be the issue (but I got lost because you then seemed to suggest even the current year’s points were an issue). I agree and I think they may start to phase banking down to some degree.

No, my contention is that when you consider points that are not banked or borrowed with overlapping use years there simply are not enough villas to handle all the points. That’s a mathematical fact. They would have to run the resort another 5 to 6 months to allow all the points to be used

 

[crvetter]

No, my contention is that when you consider points that are not banked or borrowed with overlapping use years there simply are not enough villas to handle all the points. That’s a mathematical fact. They would have to run the resort another 5 to 6 months to allow all the points to be used

I guess this where we would have to disagree. There is exactly enough points (as required by Florida law). However to be used to book the resort borrowing would need to be enabled or offer later use year points to be obtained earlier (but that is borrowing).

I would be interested to see the mathematical facts for this. When you sum the total points in each use year (for all owners) it equals to the number of points to reserve the entire resort for a year (which for practicality purposes is 2/1 to 1/31 based on the first use year being Feb).

 

[KAT4DISNEY]

No, my contention is that when you consider points that are not banked or borrowed with overlapping use years there simply are not enough villas to handle all the points. That’s a mathematical fact. They would have to run the resort another 5 to 6 months to allow all the points to be used

The entire resorts points are held within each year. They are divided up into various UY's but they equal what the requirements are to book the resort. Actually, with the lock-off premium they are less than what is required to book the entire resort. It would be quite the puzzle but it cannot be too many points - that's impossible if they have not oversold the resorts.

 

[Mikey15]

While we’re basically debating a moot point as there will be non-expiring resorts for expiring owners to book with their points too, I agree with crvetter and Kat.

The points allocated to Feb-Dec UY owners for the 2041 use year are no more than what is required to book those expiring resorts in their entirety from Feb 1, 2041 to Jan 31, 2042. Getting hung up on when a UY’s points normally expire doesn’t change the underlying math.

 

[KAT4DISNEY]

While we’re basically debating a moot point as there will be non-expiring resorts for expiring owners to book with their points too, I agree with crvetter and Kat.

That is very possibly what they are relying upon - the other resorts and options to trade into.

 

[Frederic Civish]

While we’re basically debating a moot point as there will be non-expiring resorts for expiring owners to book with their points too, I agree with crvetter and Kat.

Let's assume they build one more new DVC resort every 4 to 5 years for the next 25 years. That means 4 or 5 more resorts, beyond Reflections, by the time we hit expiratons. And I think Disney will have purchased enough ROFR of OKW that OKW will ALL essentially be 'Extended' by then, so not many units will expire at OKW. Between HHI, VB, BC, and BWV, Boulder Ridge, there are about 1400 'rooms'. Nine of the Legacy 14 will NOT be expiring, and to them let's add Riviera, Reflections and 4 additional new DVC Resorts. That is 15 resorts. If they have an average of 400 units per resort, that would be 6000 rooms (units) that will be available for use in the last year, by all the owners, including the owners of the expiring resorts. Even if the owners of the Expiring resort have banked up to about 1/3 of their points into the last year (a dubious possibility) then that would mean that there would only be about 500 'excess' units needed, really, between ALL of the resorts. At the most. If Disney encourages the owners at all the other resorts to Bank as many points as possible, in the last year of the expiring contracts, then that would probably open up way more than enough rooms for the last year. If Disney disallows banking in the last 2 years by the expiring resorts, then there won't even be that many points needed.
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[zavandor]

The entire resorts points are held within each year. They are divided up into various UY's but they equal what the requirements are to book the resort. Actually, with the lock-off premium they are less than what is required to book the entire resort. It would be quite the puzzle but it cannot be too many points - that's impossible if they have not oversold the resorts.

I used to think the same as Dean, but you and Crvetter made me think about it and I now think you're right.
To explain it, let's suppose that from now on banking and borrowing is suspended completely and every owner will try to book a reservation as early as possible in their UY. So owners of a February UY will all try to book in February and if they don't succeed they'll book in March and so on. To make the example simplier, let's suppose that point distrubution among the 8 UY is higher in the earliest months.
Since more points have been sold for February than those available to book the resorts for that month, there will be a spill over of Feb. owners who will have to book in March. Similarly, only some of the March owners will be able to book in March, some will have to book in April. The spill over will continue until May, there is no May contract, so this month will soak some/most of the spillover. And so on, until December, in this month there will still be not enough room for December owners so they'll have to use their points in January, but by the end of January every owner will have booked a room. It must be this way, because of the one-to-one Florida law, there must be enough rooms from February to January to accommodate all owners.

Banking and borrowing complicates things, because while there are enough rooms to allow all 2041 points to be used, there might be some points banked from 2040 that haven't been used. And also, members won't use their points as soon as possible, they might try to keep them and book in the fall because it's their favorite time of the year. So there might be some fierce competition for the last fall and some owners might end up without a room and wasting their points, I really cannot see this as a big issue because:
- people will know there is this risk and they'll actually try to use their points as soon as possible, leaving space for the risk takers. This is what I'd do: if allowed, I'll try to borrow my 2041 points and use them as soon as possible
- the lockoff premium removes quite a few points from the system (Disney might make a bit less money from breakage in the last couple of years, but who cares?)
- owners will still be able to use their points at other resorts. For the 2042 resorts, SSR will be there to soak points if owners cannot book their favorite resort. More of a problem for SSR and OKW resale owners going forward

What confused me was thinking about the December UY owners (like me). We usually have 12 months to use our points, while in 2014 we'll have only 2. But this doesn't mean there aren't enough rooms to accommodate our points, theoretically, until January there are enough rooms to accommodate everyone (unless everyone bank their points)

 

[Dean]

I guess this where we would have to disagree. There is exactly enough points (as required by Florida law). However to be used to book the resort borrowing would need to be enabled or offer later use year points to be obtained earlier (but that is borrowing).

I would be interested to see the mathematical facts for this. When you sum the total points in each use year (for all owners) it equals to the number of points to reserve the entire resort for a year (which for practicality purposes is 2/1 to 1/31 based on the first use year being Feb).

Maybe you can convince yourself. Take a villa that's a single unit, like at 3 BR at AKV or a bungalow at Poly, and figure out how many points that unit puts into the DVC system. Then figure out how many points it takes to reserve that villa for a full year starting with the Feb, 2041 UY. What you'll find is that those points alone would fully book that unit for a full year (depending on variations of the given year compared to the base year). But then you realize that 2040 points can reserve during that year as well and for every point that does reserve during that time leaves no availability for the 2041 points to reserve. You could do this for an entire resort, the answer is the same. The reasons are several but include because they gave full points initially when people bought but didn't have the full UY, they allowed points to be banked as late as the last day of the UY and when there were days not reserved along the way that could have been.

Where I think you're missing the point if you're only looking at 2041 points and not accounting for the overlapping 2040 points that can (and will) be reserving during that calendar year.

As I said, there are other variables and a number of ways to handle the issue that should make it not a large problem but I'm sure not everyone will be happy.

I think you're over reading Florida law. FL law and the POS deal with the big picture. If you looked at the entire 50 years as a group and assume 100% efficiency then it should work out exactly but that is not the reality. FL nor the POS guarantees you availability the last year, they only guarantee you the ability to attempt to reserve subject to availability.

 

[Dean]

While we’re basically debating a moot point as there will be non-expiring resorts for expiring owners to book with their points too, I agree with crvetter and Kat.

The points allocated to Feb-Dec UY owners for the 2041 use year are no more than what is required to book those expiring resorts in their entirety from Feb 1, 2041 to Jan 31, 2042. Getting hung up on when a UY’s points normally expire doesn’t change the underlying math.

IF it were a single resort then the system could likely absorb it but when you figure it's all of the 2042 resorts I do not believe the system can simply absorb all of those points but the point was there mathematically are not enough villas. Your statement that the 2041 points should equal those needed to reserve it accurate but it also ignores the 2040 points that can be used during that time and that is the basic for my statement.

 

[crvetter]

Maybe you can convince yourself. Take a villa that's a single unit, like at 3 BR at AKV or a bungalow at Poly, and figure out how many points that unit puts into the DVC system. Then figure out how many points it takes to reserve that villa for a full year starting with the Feb, 2041 UY. What you'll find is that those points alone would fully book that unit for a full year (depending on variations of the given year compared to the base year). But then you realize that 2040 points can reserve during that year as well and for every point that does reserve during that time leaves no availability for the 2041 points to reserve. You could do this for an entire resort, the answer is the same. The reasons are several but include because they gave full points initially when people bought but didn't have the full UY, they allowed points to be banked as late as the last day of the UY and when there were days not reserved along the way that could have been.

Where I think you're missing the point if you're only looking at 2041 points and not accounting for the overlapping 2040 points that can (and will) be reserving during that calendar year.

As I said, there are other variables and a number of ways to handle the issue that should make it not a large problem but I'm sure not everyone will be happy.

I think you're over reading Florida law. FL law and the POS deal with the big picture. If you looked at the entire 50 years as a group and assume 100% efficiency then it should work out exactly but that is not the reality. FL nor the POS guarantees you availability the last year, they only guarantee you the ability to attempt to reserve subject to availability.

I think you are confused with the overlapping use years. The points sold in an entire year are split among the use years (February to December) the points in all those Use years combined are the exact number to book the entire resort from 2/1 to 1/31. It appears from your comment that you believe a single Use Year has enough points to book an entire resort. The simplest explanation is that DVC sold X points for the entire resort, which was the amount needed to book the entire resort, they than put Y points in each Use Year. The sum of all Y points over all Use Years equal X. So all the 2041 use years summed is X.

Yes, a use years points expire on a rolling system, but that is immaterial to them being able to book the entire resort, which a single use year can not.

You can see on DVCNews exactly what I’m saying in the distribution of Use Years and they all sum to the total points for the entire resort. https://dvcnews.com/index.php/dvc-p...ear-distribution-charts-updated-february-2018

 

[Mikey15]

IF it were a single resort then the system could likely absorb it but when you figure it's all of the 2042 resorts I do not believe the system can simply absorb all of those points but the point was there mathematically are not enough villas. Your statement that the 2041 points should equal those needed to reserve it accurate but it also ignores the 2040 points that can be used during that time and that is the basic for my statement.

People don't just bank from 2040, they also borrow from 2041 too. They don't just stay at their expiring resorts, they book at others too.

I really think this is much to-do about a non-issue.

 

[4luv2cdisney]

I can see banking restrictions but not borrowing. Of course some owners will be shut out of their home resort if everyone's borrowing, but the 7 month window should provide rooms for them. Also, I think they are going to have to allow the full year for points to expire despite the resort end date. You can't tell an owner of a Dec UY they can't borrow and here's your Dec 2041 points....you have 60 days to use them. If they literally shut down the resort on January 31, of course you'd have no home resort priority.

Which brings us back around to dues and $$$ in reserves. Could they use the reserves to operate thru November 2042 to allow the last points to expire? So, your Dec UY people can still book as always (11 mo). No modifications allowed. You're not an owner anymore, no 2042 dues but nobody gets $ back, nobody can trade into the resort that's not using home resort points, doors close 11/30/2042 (when all points have expired) for the big remodel. Disney makes plenty of money because owners are technically paying the expenses but they will have plenty of unbooked rooms to sell.

I would also think they'd offer owners an option to "cash out" their 2041 points toward a new purchase. Basically (if it were today) maybe every point you forfeit earns you a $15-20 discount on a new contract somewhere else.

 

[Frederic Civish]

What confused me was thinking about the December UY owners (like me). We usually have 12 months to use our points, while in 2014 we'll have only 2. But this doesn't mean there aren't enough rooms to accommodate our points, theoretically, until January there are enough rooms to accommodate everyone (unless everyone bank their points)

And actually, if you borrow points from the last year or two, in essence removing them from the 2041 year, and bringing them into the 2040 year, then you can have 14 months to use those points. I think that with a little planning and a modicum of thought, there is no need for there to be any problem in the last year. On the other hand, how many human beings actually pay attention and think?

Another consideration: As you get towards the last few years of the expiring contracts, there will be people who will be 'falling by the wayside.' In other words, they won't be planning to vacation at Disney World, due to age, health, death, loss of interest after so many years, or many other possible reasons. There will be a significant number of points that people will simply NOT try to use in the last year or two. Normally, if someone has decided that they aren't interested in Disney World anymore, they would sell their points on the resale market, but the resale market for those resorts is likely to be very minimal in the last 4 years or so.

As has been pointed out, many people who don't plan to use their points, and who can't sell them, will just default on their membership fees in the last few years. This will open up SOME space for points that won't be used, but not as much as you might think, since Disney will be hot to grab those 'in default' points and rent them out, if they can.

 

[Dean]

I think you are confused with the overlapping use years. The points sold in an entire year are split among the use years (February to December) the points in all those Use years combined are the exact number to book the entire resort from 2/1 to 1/31. It appears from your comment that you believe a single Use Year has enough points to book an entire resort. The simplest explanation is that DVC sold X points for the entire resort, which was the amount needed to book the entire resort, they than put Y points in each Use Year. The sum of all Y points over all Use Years equal X. So all the 2041 use years summed is X.

Yes, a use years points expire on a rolling system, but that is immaterial to them being able to book the entire resort, which a single use year can not.

You can see on DVCNews exactly what I’m saying in the distribution of Use Years and they all sum to the total points for the entire resort. https://dvcnews.com/index.php/dvc-p...ear-distribution-charts-updated-february-2018

The quote actually proves the point. If one totals up the 2041 points, those alone can book the entire resort starting 1 Feb, 2041 (ignoring banking/borrowing). However, there are going to be 7 use years that overall starting in Feb as well. The key part is that it's not just the 2041 points but also 2040 UY points that can book in 204 (without banking/borrowing).

People don't just bank from 2040, they also borrow from 2041 too. They don't just stay at their expiring resorts, they book at others too.

I really think this is much to-do about a non-issue.

That's fine, I acknowledged early on there were other factors.

 

[crvetter]

The quote actually proves the point. If one totals up the 2041 points, those alone can book the entire resort starting 1 Feb, 2041 (ignoring banking/borrowing). However, there are going to be 7 use years that overall starting in Feb as well. The key part is that it's not just the 2041 points but also 2040 UY points that can book in 204 (without banking/borrowing).

While agree that some 2040 points will be used to book into 2041, it ignores the other side in order for the resort to have been booked fully in 2040 some 2039 (overlapping Use Year and banking) and 2041 (borrowing) points would have been used. Thus reducing the points in 2041. If Disney limits banking, which I suspect they will, for the last 3 years then this is a non-issue (removing the excess points from banking) and will be less of an issue if they keep allowing one to borrow, which I suspect they will allow.

This is immaterial that an individual will be given 2041 Use Year points which was my original point to be made. Disney will still provide them, whether the user has plans to use them or not. However, it doesn't negate the fact that they will be given and will be able to be used (as I've stated they need to allow borrowing in the final year).

 

[Dean]

While agree that some 2040 points will be used to book into 2041, it ignores the other side in order for the resort to have been booked fully in 2040 some 2039 (overlapping Use Year and banking) and 2041 (borrowing) points would have been used. Thus reducing the points in 2041. If Disney limits banking, which I suspect they will, for the last 3 years then this is a non-issue (removing the excess points from banking) and will be less of an issue if they keep allowing one to borrow, which I suspect they will allow.

This is immaterial that an individual will be given 2041 Use Year points which was my original point to be made. Disney will still provide them, whether the user has plans to use them or not. However, it doesn't negate the fact that they will be given and will be able to be used (as I've stated they need to allow borrowing in the final year).

My point remains the same. There are not enough villas mathematically to use up all of the 2041 points and part of the 2040 points without some type of drain otherwise even without banking or borrowing. That is simply a fact. How it will be handled is another matter and I suspect it will be a combination of issues including limiting banking. Personally I doubt there will be enough other drains on the points to avoid some type of additional limitation such as a lottery, the ability to opt out (? without dues) or worst case scenario, a free for all with some being left out not that dissimilar to 1999 at OKW.

There is still no guarantee that one will get all points in 2041, there's nothing in the POS or FL statute that says that. They will have to have some type of limit and prorating the points is one thing they could do both procedurally and legally.

 

[crvetter]

I think we will have to disagree on these points. Will be interesting to see how it all plays out.

 

[Mikey15]

My point remains the same. There are not enough villas mathematically to use up all of the 2041 points and part of the 2040 points without some type of drain...

Your concern centres around 2040 use year points that don't expire until calendar 2041 (even without banking them) and I get it, but there are drains in the system; lots of them.

From the link crvetter posted earlier:

Most resorts seem to have a high% of their points as December UY. Why is that? Part of the reason is the end of December is one of the biggest point-sinks of them all and people seem to like buying December use years with December stays in mind,

How much of 2040's points are truly going to be chasing 2041 use? That's your concern, so it's worth analyzing. February UY 2040 points all have to be used by Jan 31, 2041 unless banked, so those probably won't cause much grief. March, April, June, even August, September, a lot of those points will be used in 2040, whether at home resort or switched out in 2040. October and December points are really what you're narrowing down to. Even then, there are drains in the system. People will borrow 2041 points to book home or elsewhere in 2040. People will use 2041 points at other resorts. For this to really be a problem and for prorating to even be a consideration, there'd have to be some sort of mass movement of people wanting to not stay at their expiring home resorts in 2040 but wanting to stay there in 2041. It's one of those things that's possible in theory but unlikely once you boil it down.

 

[DougEMG]

What we have is the 12 month UY for points not matching up with the 12 month calendar year for MF which is what is causing all the problems/issue. Points per calendar year match up with the points that were sold, but they don't match up with the borrowing, current and banking 12 months booking windows. So what is going to happen in the last year? I have no idea, and I bet DVC hasn't thought that through either and if they have, they'll probably change their mind at least a dozen times in the next 20+ years.

As an example, in 2041 with a DEC UY, will a member pay all of their MF but only be able to use their points for Dec 2014 and Jan 2042 (this assumes DVC does some limiting around borrowing/banking in the last year or two)? If so, why would a member bother paying their MF as there is a good chance that they won't be able to book anything.

How is trading into other resorts going to work? I would think in the last year of an expiring resort you would have to maintain a balance between points traded in and traded out of the resort that was expiring. Something that DVC doesn't have to worry about right now (at least until resales start at the Riviera).

Maybe Disney will just start selling BWV2 right away when BWV1 expires and BWV1 owner will be able to use their last years points at BWV2. This seems like an easy solution and then pushed the problem off for another 50 years.

 

[Dean]

I think we will have to disagree on these points. Will be interesting to see how it all plays out.

What happens to your theory when 30-40% of the time between 1 Feb, 2041 and the ending date is booked with 2040 points.

Your concern centres around 2040 use year points that don't expire until calendar 2041 (even without banking them) and I get it, but there are drains in the system; lots of them.

From the link crvetter posted earlier:

Most resorts seem to have a high% of their points as December UY. Why is that? Part of the reason is the end of December is one of the biggest point-sinks of them all and people seem to like buying December use years with December stays in mind,

How much of 2040's points are truly going to be chasing 2041 use? That's your concern, so it's worth analyzing. February UY 2040 points all have to be used by Jan 31, 2041 unless banked, so those probably won't cause much grief. March, April, June, even August, September, a lot of those points will be used in 2040, whether at home resort or switched out in 2040. October and December points are really what you're narrowing down to. Even then, there are drains in the system. People will borrow 2041 points to book home or elsewhere in 2040. People will use 2041 points at other resorts. For this to really be a problem and for prorating to even be a consideration, there'd have to be some sort of mass movement of people wanting to not stay at their expiring home resorts in 2040 but wanting to stay there in 2041. It's one of those things that's possible in theory but unlikely once you boil it down.

It's roughly 6 months of points total ending 30 Nov but all but 1 UY will have points that could be used during a 2041 UY. I believe I was clear that I was referring to the specific mathematical situation and I am aware there are other issues. The point remains there simply are not enough villas to book ALL of the 2041 points and some 2040 points that are overlapping. Whether the other issues will make this a non problem remains to be seen.

What we have is the 12 month UY for points not matching up with the 12 month calendar year for MF which is what is causing all the problems/issue. Points per calendar year match up with the points that were sold, but they don't match up with the borrowing, current and banking 12 months booking windows. So what is going to happen in the last year? I have no idea, and I bet DVC hasn't thought that through either and if they have, they'll probably change their mind at least a dozen times in the next 20+ years.

As an example, in 2041 with a DEC UY, will a member pay all of their MF but only be able to use their points for Dec 2014 and Jan 2042 (this assumes DVC does some limiting around borrowing/banking in the last year or two)? If so, why would a member bother paying their MF as there is a good chance that they won't be able to book anything.

How is trading into other resorts going to work? I would think in the last year of an expiring resort you would have to maintain a balance between points traded in and traded out of the resort that was expiring. Something that DVC doesn't have to worry about right now (at least until resales start at the Riviera).

Maybe Disney will just start selling BWV2 right away when BWV1 expires and BWV1 owner will be able to use their last years points at BWV2. This seems like an easy solution and then pushed the problem off for another 50 years.

Exactly.

Even if one looks at the entire life of the contract, there have been more points in play than there were villas ignoring lockoff premiums, lost points and the like. But as a whole it's a very tiny proportion and with the other drains, likely not an issue. However, without some type of formal adjustment that issue will very likely be magnified the last year but realistically the last few years. I'm sure they'll work it out, I'm not worried about that. But that's not to say everyone will be happy about it, esp if they don't want to pay dues on points they end up not being able to use or if they can't get a reservation that works the last year. My best guess today is stop banking the last 2-3 years, ask for voluntary loss of points for no fees and limit breakage the last couple of years. But they could easily let the membership just reserve and the points one can't use, no fees. I think it's unlikely they'll put people in a position to pay points that they can't use but you never know.