New Definition of Rental Activity?

[sndral]

Fascinating. I wonder if this is just precautionary or if they really mean to reinforce it. How would we even know?

Much as we learned that over 20 rentals was presumed to be commercial, those exceeding that number were sent letters & posted on SM about them.
I don’t expect any overt action until they amend the POS for all resorts & it’s possible they won’t. The cabins are a small DVC resort likely to have a devoted fan base & are a new ownership model, so maybe DVC has unique availability concerns w/ that resort.
But, if DVC is serious & this ultimately is applied to all resorts, here’s how it could play out.
I’d expect it to start with cease & desist letters to websites involved in facilitating rentals such as the board sponsor, David’s, other rental sites, & fan sites w/ a rental component such as Facebook groups, possibly DIS. Followed by seeking injunctive relief against those who don’t comply.
I’d bet DVC already has some targets ID’ed, like folks buying, stripping, & flipping contracts. Those folks will likely find their accounts frozen.
They’ve made it clear from the language used that they’ll be scrutinizing reservations made in non owners names. I wonder if they’ll walk back the informal 20 threshold to a lower number. At whatever number the threshold is, individual owners exceeding it will likely get inquiries & if the explanations aren’t satisfactory accounts frozen, & reservations cancelled.
A pattern of changing the lead guest (which is necessary when renting confirmed reservations) might likewise trigger an inquiry & a cancellation.

 

[DonMacGregor]

Much as we learned that over 20 rentals was presumed to be commercial, those exceeding that number were sent letters & posted on SM about them.
I don’t expect any overt action until they amend the POS for all resorts & it’s possible they won’t.

Do you think, given that all resorts fall under the multi-site POS, that an amendment is imminent, given that the Master Declaration for this resort already contains this revised language? Otherwise, wouldn’t there be an inequity between the resorts vis a vis what members can and cannot do regarding points rentals? Never mind that the Master Agreement for CFW would be more restrictive than the POS governing that same resort. Could the two documents co-exist with one more restrictive than the other?

I think some people will look back longingly at the mythical 20-rental threshold as this new “pattern of activity” standard seems to me to be designed to give them latitude to apply a much (much) lower threshold. The number could be closer to 2 than 20 for some renters.

 

[sndral]

Do you think, given that all resorts fall under the multi-site POS, that an amendment is imminent, given that the Master Declaration for this resort already contains this revised language? Otherwise, wouldn’t there be an inequity between the resorts vis a vis what members can and cannot do regarding points rentals? Never mind that the Master Agreement for CFW would be more restrictive than the POS governing that same resort. Could the two documents co-exist with one more restrictive than the other?

I think some people will look back longingly at the mythical 20-rental threshold as this new “pattern of activity” standard seems to me to be designed to give them latitude to apply a much (much) lower threshold. The number could be closer to 2 than 20 for some renters.

I‘ve given up on trying to predict DVC’s next steps. The resale restrictions were a big surprise to me, this new Trust an even bigger surprise.
My recollection of the existing language in the declarations/POS is that it is pretty vague & DVC has a great deal of flexibility in how they interpret & enforce the no commercial activity, so they may not even need to amend the existing language, just change their interpretation/enforcement of what constitutes commercial activities. IMO they’ve never really enforced that clause as currently worded, so we’ll see if that changes.

 

[MerlinandtheMouse]

It isn't just the DVC resale market....its also their market for hotel rooms. If Disney want to get $600 a night for a room, they can't compete with people who want to rent what is perceived as nearly the same room for $300.

I don't think this is about members who can't book their studio at BCV in October eleven months out or find it really hard to get into Grand Floridian at seven months.

I didn’t even think of this but you make a great point. DVC rentals are taking from both sides, maybe even more from hotel/cash side because the points are already paid for so they already got there money there but these rentals are actively taking away someone who would normally have no choice but to book directly with Disney with cash but instead choose the cheaper (if riskier) rental site.

I wonder if there’s a world where they create their own rental system. I’m not sure there’s much of a benefit to offer both full priced cash rooms and also discounted DVC rentals but maybe they could create a system where they set the base renting fees for renters ($16-$24/pt) depending on the resort and then turnaround and “sell” those rooms as normal cash bookings, so it increases their inventory of full-priced available rooms. Not sure this makes any sense to anyone or if it even makes any sense for disney to do such a thing. But they’d have the monopoly of the renters market at that point to do (or not do!) as they wish

 

[MerlinandtheMouse]

But, if DVC is serious & this ultimately is applied to all resorts, here’s how it could play out.
I’d expect it to start with cease & desist letters to websites involved in facilitating rentals such as the board sponsor, David’s, other rental sites, & fan sites w/ a rental component such as Facebook groups, possibly DIS. Followed by seeking injunctive relief against those who don’t comply.
I’d bet DVC already has some targets ID’ed, like folks buying, stripping, & flipping contracts. Those folks will likely find their accounts frozen.
They’ve made it clear from the language used that they’ll be scrutinizing reservations made in non owners names. I wonder if they’ll walk back the informal 20 threshold to a lower number. At whatever number the threshold is, individual owners exceeding it will likely get inquiries & if the explanations aren’t satisfactory accounts frozen, & reservations cancelled.
A pattern of changing the lead guest (which is necessary when renting confirmed reservations) might likewise trigger an inquiry & a cancellation.

If they choose to pursue this (and I really think it’s still very much IF), then this could really shake up a lot of things and would have huge ripple effects across the DVC world. Though I wouldn’t mind stopping rental sites from walking a much-desired reservation for the sole purpose to quickly turnaround and rent it for cash, I worry this could be the beginning of losing whatever little power we had as individual owners. Is that a bit dramatic of a conclusion?

 

[Ruttangel]

Until Disney does something it’s just words,

imagine if one day you can only give points back to Disney and they give you a dues rebate on them….but they then use the points for commercial activity

 

[HyperspaceMountainPilot]

I see a few others beat me to it, but cracking down on commercial rentals would be a win-win for Disney (and its shareholders) because the rental market is now big enough that travel experts and bloggers routinely direct their audience to rent for “deluxe access at half the price”— which absolutely puts pressure on pricing and occupancy for its deluxe resorts (and probably its moderates). Meanwhile, it’s become harder to book the most desirable dates —whether low point rates or holiday breaks—for home resort owners (and nearly impossible for SAP points users) to book more than a few nights at a time. Yes, it pushes some of us to just blow more points on $$$ categories but others get frustrated with the system and stop buying points or sell their contracts. One of the major reasons I am not considering VDH at this time is that I suspect availability will suck once it sells out, even within the home resort window. Finally, if it’s harder to rent/transfer points, more wasted points will expire, which leads to more profit for Disney (or perhaps they offer to “buy them back” at roughly 1/2 what you could get renting).

The restrictions on transferring points for commercial purposes is the only change I’m personally not looking forward to— I was just thinking to myself yesterday, why would I buy one time use points from Disney around ~20 when I could buy them from a SSR seller at $16.

 

[Hubalorian]

I am curious, if they don’t make the rental restrictions retroactive, what this means for future resorts? I would be very surprised if they created the new rules just for the cabins and not the brand new poly tower opening in the very near future. I think rental activity would be far more likely at the poly tower than the cabins. If they do not make it retroactive, it may give even more credit to @Sandisw theory of Poly2 being in PVB association BUT sold through the trust. It gives them resale restrictions and the new rental restriction language which seems important now.

I would just be shocked if they decided the cabins would be a rental problem but not the PolyTower

 

[nlenguyen]

With the travels agents with tours got banned from Disney, could they do the same with those associated with rental sites? I don't see how they could do that because most of the sites don't have the parties names involved. Plus they can't ban the member from staying at the resort, only can restrict their points I guess???

 

[Sandisw]

I am curious, if they don’t make the rental restrictions retroactive, what this means for future resorts? I would be very surprised if they created the new rules just for the cabins and not the brand new poly tower opening in the very near future. I think rental activity would be far more likely at the poly tower than the cabins. If they do not make it retroactive, it may give even more credit to @Sandisw theory of Poly2 being in PVB association BUT sold through the trust. It gives them resale restrictions and the new rental restriction language which seems important now.

I would just be shocked if they decided the cabins would be a rental problem but not the PolyTower

I think anything is possible and I do think whether the wording is updated elsewhere, they can apply it to rentals in general.

But, with the guide who mentioned that the wording is the big difference with CFW…trust association and not condo..and that they didn’t know how PVB would be worded but it would still work the same,,,still gives me pause that they very well could incorporate the trust for Poly tower sales.

 

[Sandisw]

With the travels agents with tours got banned from Disney, could they do the same with those associated with rental sites? I don't see how they could do that because most of the sites don't have the parties names involved. Plus they can't ban the member from staying at the resort, only can restrict their points I guess???

DVC is only going to be able to review and manage the actual accounts of owners, including accounts owned by the rental agencies or resale brokers.

As you mention, they won’t know whose points or confirmed reservations are being g advertised and the business doesn’t have to disclose.

However, they will know the dates and
Night be able to monitor that way? But, regardless of the way this is written in terms of applying to all owners, I believe the target I will be the business entities who are now buying and renting for themselves, not the individual owners.

And, if you are in violation of your contract, then I believe than can start proceedings to take it back?

 

[tom1944]

We can hope it’s not simply window dressing. But I don’t think the biggest players are going to alter their activities one bit until Disney takes overt action.

I was thinking the same. And if Disney does you might see an influx of resale contracts come on the market.

 

[lowlight]

As you mention, they won’t know whose points or confirmed reservations are being g advertised and the business doesn’t have to disclose.

Forensic accounting brought down the biggest names in the mob and terrorism. With the data Disney has access to, I’m certain they know exactly who the targets are already. It’s likely a few dozen entities that are the worst of the worst.

 

[crisi]

I‘ve given up on trying to predict DVC’s next steps. The resale restrictions were a big surprise to me, this new Trust an even bigger surprise.
My recollection of the existing language in the declarations/POS is that it is pretty vague & DVC has a great deal of flexibility in how they interpret & enforce the no commercial activity, so they may not even need to amend the existing language, just change their interpretation/enforcement of what constitutes commercial activities. IMO they’ve never really enforced that clause as currently worded, so we’ll see if that changes.

This is my guess. They didn't put this language in here for no reason. And they aren't going to bother with a process that is just for the cabins - separate processes are hard and expensive. If they enforce it, it will get enforced without amending the vague language at other resorts, but pointing to the new language as "this is it."

 

[crisi]

I didn’t even think of this but you make a great point. DVC rentals are taking from both sides, maybe even more from hotel/cash side because the points are already paid for so they already got there money there but these rentals are actively taking away someone who would normally have no choice but to book directly with Disney with cash but instead choose the cheaper (if riskier) rental site.

I wonder if there’s a world where they create their own rental system. I’m not sure there’s much of a benefit to offer both full priced cash rooms and also discounted DVC rentals but maybe they could create a system where they set the base renting fees for renters ($16-$24/pt) depending on the resort and then turnaround and “sell” those rooms as normal cash bookings, so it increases their inventory of full-priced available rooms. Not sure this makes any sense to anyone or if it even makes any sense for disney to do such a thing. But they’d have the monopoly of the renters market at that point to do (or not do!) as they wish

Well, there are going to be a LOT of cheap points headed for ROFR that Disney can buy. They can then perhaps move these into the trust to sell a "resort package" where members get access to some BCV rooms at eleven months if they are part of the trust, or they can use the language in the first part of that statement to just rent those rooms for cash.

 

[crisi]

DVC is only going to be able to review and manage the actual accounts of owners, including accounts owned by the rental agencies or resale brokers.

As you mention, they won’t know whose points or confirmed reservations are being g advertised and the business doesn’t have to disclose.

However, they will know the dates and
Night be able to monitor that way? But, regardless of the way this is written in terms of applying to all owners, I believe the target I will be the business entities who are now buying and renting for themselves, not the individual owners.

And, if you are in violation of your contract, then I believe than can start proceedings to take it back?

If they really go after it (and I doubt they'd go this far) they could subpoena records for any intermediaries, threatening to sue them for facilitating the contract violation if they don't comply. I don't think they'd do that - or if they ever get there it will be AFTER they've addressed the people who own thousands of points. I think also that what the DISBoard does, which is facilitating small scale rentals, is only a problem for those members whose rentals on this board constitute a pattern - its easy enough to see who ALWAYS has points to rent.

 

[kilik64]

My biggest question is what does enforcement look like and then what are the knock on effects from that?

If the biggest offenders get caught holding the bag and cant do rentals, do you then get a flood of resale contracts driving down the resale market?

Could end up with a lot of fun and interesting unintended (or heck maybe intended on dvc's part) consequences.

 

[Hubalorian]

My biggest question is what does enforcement look like and then what are the knock on effects from that?

If the biggest offenders get caught holding the bag and cant do rentals, do you then get a flood of resale contracts driving down the resale market?

Could end up with a lot of fun and interesting unintended (or heck maybe intended on dvc's part) consequences.

I have to wonder if DVC may want to floor the market by enforcing these rules. Gain potentially a ton of cheap points for their purposes. Maybe the trust? Maybe “renting” those points? Maybe “fire selling” the points bought back from ROFR. It will be interesting to see what happens over the next few years.

 

[Sandisw]

If they really go after it (and I doubt they'd go this far) they could subpoena records for any intermediaries, threatening to sue them for facilitating the contract violation if they don't comply. I don't think they'd do that - or if they ever get there it will be AFTER they've addressed the people who own thousands of points. I think also that what the DISBoard does, which is facilitating small scale rentals, is only a problem for those members whose rentals on this board constitute a pattern - its easy enough to see who ALWAYS has points to rent.

I don’t see any legal way they can force the business to turn over records.

The contract is with the owner and that who whom they could go after to prove they are not in violation of any of the terms

They have no reason to involve the broker to go after an owner because once they flag the account of any owner, it becomes the owner to prove that they aren’t up to doing what they have been flagged as doing.

 

[drusba]

The new restrictions are in the CFW declarations and DVC Membership Agreement and DVC Resort Agreement. As to be enforceable against pre-CFW DVC members, there are serious doubts they can be applied to such members. The new restrictions created are not in the prior POS's, and could require an amendment to the prior declarations that would require the actual vote of the members.

Under the prior declarations, the restriction was limited to a commercial purpose, which could be found if there were a pattern of rental activity that the association, in its reasonable discretion, could conclude constitutes a commercial enterprise or practice. Commercial enterprise is a legal term that means being in the business of doing something.

DVD could argue that the new listed restrictions simply conform with the prior restriction, but there is a major problem with the new terms. Under the prior POS's, any decision made by the association (or possibly DVCM) had to be "reasonable," i.e., the members could challenge whether the decision was correct.

The new terms take away all of the member's rights to challenge a decision by declaring the association (or DVCM) "shall be the sole determiner of any use or activity that does not constitute personal use or constitutes commercial use." Declarations §12.1.3. Thus, for example, the association or DVCM could find, under the new terms, that making three reservations in a year for persons other than family members is a violation, and the member could not challenge it, even with evidence that the reservations were made for friends of the member who paid no rent to the member.

Such absolute power clauses in contracts are not favored by courts, and a court could easily find that the new rules make a material change to rights of pre-CFW members, which change can only be made via an actual vote of the members.