What Happens When Contracts Expire?

[zavandor]

I believe I was clear that I was referring to the specific mathematical situation and I am aware there are other issues.

My interpretation of the sentence "mathematically there are not enough rooms to be booked with the available points" is that there is no possible configuration in which all the points can all be used.
If there is at least one combination that allows everyone to use their points, then mathematically, there are enough rooms for everyone, which is what is true for DVC. Actually, thanks to the lockoff premium, since we can assume at least some of the lockoff will be booked as studios and 1BR, then there are even more rooms than points.

Is there a risk for a few people to loose their points? Yes, if they do not plan in advance and take the risk to use them late in 2041 or in January 2042 and if a lot of people will try to do that.
This board is full of people saying they're constantly in borrowing mode and end up buying an add-on. Judging from the posts, there are far fewer people who are in constant banking mode, those probably end up selling since they seem less excited in using their membership. Disney knows exactly if this is true and if they need to do something to avoid a 2041 point clash.

If:

BANK is the number of points that will be banked from UY 2040 into 2041
BORROW is the number of points that will be borrowed from UY 2041 into 2040
LOST is the number of points let to expire by members
LOCKOFF is the number of additional points needed to book studios and 1BR lockoff

then in 2041, there will be more points than rooms only if:

BANK > BORROW + LOST + LOCKOFF

(this formula has an easy solution if BANK = 0, ie if Disney removes banking in the last year)

I would say that a lot of members will be aware of the risk of loosing points in the final year and Disney should write to members to make the message clear. But while before reading this discussion I though there was a good chance I would have lost my Dec 2041 points, now I'm far more confident that the risk is low (for me, educated member).

 

[CarolMN]

If they increase the kick-off premium enough, it won't be a problem, right?

 

[Dean]

If they increase the kick-off premium enough, it won't be a problem, right?

There you go, don't you just love autocorrect LOL.

 

[DougEMG]

If they increase the kick-off premium enough, it won't be a problem, right?

That would then make it a benefit for members

 

[DaveNan]

I was thinking for once bungalows and cabins would be tough to get as members have points to burn.

 

[amcnj]

Could the questions about there possibly being too many points in owners’ hands versus the rooms available be remedied by Disney buying up but not reselling points for a few years near the end, keeping them as a relief valve for owners point reservations, and renting out the rooms when they can?

 

[Mikey15]

Could the questions about there possibly being too many points in owners’ hands versus the rooms available be remedied by Disney buying up but not reselling points for a few years near the end, keeping them as a relief valve for owners point reservations, and renting out the rooms when they can?

That's indeed another drain in the system. I can't imagine they'll be selling too many direct points the last few years, but they still have financial incentive to RoFR if resale is low enough and they can use the points for cash reservations.

 

[Dean]

Could the questions about there possibly being too many points in owners’ hands versus the rooms available be remedied by Disney buying up but not reselling points for a few years near the end, keeping them as a relief valve for owners point reservations, and renting out the rooms when they can?

There are 2 buckets of points here. One unsold that should be between 2-4% and used primarily for maintenance. The other ROFR points, they'll just reserve them and rent, they will likely NOT donate them to the system.

 

[sky2823]

What if at 10 years remaining Disney offered 20 pts for every 100 points (or some other conversion or at 5 yrs etc) you owned at a new resort with a 50 yr contract?

I’m not sure if there are legal issues with this...

It seems like at some point towards the end that there will be a place on the life curve of the contract where this will be a “win win” situation for both Disney and DVC members

 

[chalee94]

It seems like at some point towards the end that there will be a place on the life curve of the contract where this will be a “win win” situation for both Disney and DVC members

Not sure how this makes any sense. Disney has the legal right to take the property back at the end of the contract period for free and, after adjusting the point charts upward, sell at a premium. There is no incentive for Disney to offer a significant discount when resorts like BCV and BWV will be in high demand for new purchasers.

 

[sky2823]

I’m saying buying owners out prior to it closing and converting them into a new resorts.

10 years of OKW is worth X per point
Disney offers a buyout in that range.

Disney could even pull a profit on it, while existing owners are offered points in a new resort.

No brokers fees etc...

There is a way for Disney to make money on it and there is a way possibly to offer existing owners a way into a new resort.

It doesn’t make a lot of sense to me to let every owner to fall off a cliff.

People didn’t think it made sense for Disney to create a tiered resort system, but they are doing it

I highly doubt things will go as planned

 

[Frederic Civish]

Could the questions about there possibly being too many points in owners’ hands versus the rooms available be remedied by Disney buying up but not reselling points for a few years near the end, keeping them as a relief valve for owners point reservations, and renting out the rooms when they can?

There are 2 buckets of points here. One unsold that should be between 2-4% and used primarily for maintenance. The other ROFR points, they'll just reserve them and rent, they will likely NOT donate them to the system.

Disney is in the business of making money. Holding out points for members, to make it 'nice' for them to use their points in the last few years does not make them any money. Instead, I could just see Disney saying something like, "Banking is not allowed on any expiring property during the last 2 years of a contract." Or some modification to allow partial banking. But even if they do nothing and people can't use up their points, it isn't any skin off Disney's nose. Other than whatever outcry there might be from unhappy people who suddenly discover that they can't use up all their points.

You can be sure that Disney will let ALL of the current properties expire WITHOUT an extension, UNLESS they decide to try extensions in order to 'stagger' the termination dates of the various resorts. Maybe they might offer extensions that run 1 year to 5 years. But they will only do this if it won't hurt their own Direct sales market. They won't offer extensions, just to offer extensions, or just to 'serve their members' because they tried the Extension Experiment and it didn't work that well. Certainly, it seems that it brought little value to Disney, other than to move Key West out of the large expiring group and kick its expiration 15 years down the road.

Disney is probably salivating at the idea that in a mere 23 more years, they will get some well maintained, well situated resorts back, that they can then sell for pure profit. No need to build them, or rebuild them, or anything.

 

[Jelly563]

The last few years of membership we will see SSR finally booking up with people needing to "use em or lose em".

 

[iheartglaciers]

You can be sure that Disney will let ALL of the current properties expire WITHOUT an extension, UNLESS they decide to try extensions in order to 'stagger' the termination dates of the various resorts. Maybe they might offer extensions that run 1 year to 5 years. But they will only do this if it won't hurt their own Direct sales market. They won't offer extensions, just to offer extensions, or just to 'serve their members' because they tried the Extension Experiment and it didn't work that well. Certainly, it seems that it brought little value to Disney, other than to move Key West out of the large expiring group and kick its expiration 15 years down the road.

It'll be interesting to see what they do. I think in theory it makes sense to extend a couple of resorts to stagger the expirations. But in practice, it seems messy (like with OKW), so not sure how they would do it.