Could someone please explain DVC to me like I'm five?
I understand that the concept is pre-paying for future Disney vacations (or at least the stays at Disney resorts -- do those stays include park passes?), but I get lost in the details. Answered above.
The points get converted to nights at each hotel. How is the conversion defined? Does it vary by hotel (e.g., I'd assume that the hotels that charge more in dollars per night would also charge more in points.). Does it vary over time (e.g., If a hotel charges X points per night this year, could they decide to charge 2X or 3X points 5 or 10 years in the future)? As shown above, every resort has a "Points Chart" which tells you how many points are needed for each night at each resort, based on the size of the villa (room), and the time of year (season).
Each resort has a finite number of points, which is equal to the number of points that would be needed to rent every room for every night of the year. For example, in really simple terms, if a resort had 10 rooms, and it cost 15 points per night to rent each room, the total points sold at that resort would be 54,750 (10x15x365). That total will never change. So, while they can move points around (as mentioned above), usually to adjust for holidays like Easter that move, or as travel trends change, if they increase the number of points to rent one category of villa, they have to reduce the points needed to rent a different category. The charts must always balance out.
What does it mean that Adam bought points "at" certain properties? Is the purchase price and value of every point equal? Can points be used at any property, or only where they were purchased? DVC sells deeded interests at each of their resorts, and that ownership is represented for purposes of reserving rooms, as points. The DVC system has an internal exchange, which means (barring a couple of recent exceptions), points from any resort can be used at any other resort. The main difference being what is referred to as "home resort advantage". If you buy at Aulani, for example, you can secure reservations at Aulani up to 11 months out, but can only secure rooms at the other DVC resorts at 7 months out. The same goes for all other resorts: the 7/11 rule applies to all. The four months gives owners at their "home resort" extra time to book rooms before everyone else can.
Can you buy as many points as you want? Is there a minimum amount required to buy every year? Is there a maximum? Do points ever expire if they aren't used by a certain date? You don't buy points every year. You buy a number of points (for example, the 250 that Adam bought at Aulani), and are allocated that number of points each year for the life of the contract. In other words, Adam will get 250 points each and every year of the life of that contract, until it expires in 2062 (so he actually "bought" 9,750 points, or 250 points each year, for the remaining 39 years of his contract). The current maximum an individual may have in a single membership is 4,000 at one resort, or 8,000 points over all resorts.
Points must be used during the year they are issued, unless they are "banked" into the next year (by a certain, very clearly defined date that never changes). Points can only be moved forward one year, then they must be used, transferred out into another time share exchange, or they are lost. Points can also be "borrowed" from the next year as well, if a member decides they need a few more points for a longer trip or bigger villa.
What are the maintenance fees that go along with the points? Do those vary based on the quantity of points and where they were purchased? Membership fees or "dues" are unique to each resort, and are based on a breakdown of expenses published each year in December. For example, in 2023, a Riviera owner (like Adam) will pay $8.50 per point, whereas an owner at Grand Floridian will pay only $7.33 per point.
How does the "contract" work? Some have quoted a date far in the future, and I'm not clear on what happens at that date. Each resort has a finite end date. For the original DVC resort, Old key West, that date is January 31, 2042. For the newest resort, the Villas at Disneyland Hotel, that date is January 31, 2074. The contract duration, when new, is typically 50 years. Whether you buy your contract (points) directly from Disney, or via the resale market, every contract at a resort ends on the same date. When the resort hits that expiration date, the ownership interest simply reverts back to Disney.
My suspicion is that he is preparing for his eventual retirement by prepaying for his vacations -- and writing them off on his taxes (which we all know doesn't mean that he gets them for free, but it does mean that he doesn't pay tax on the money he spends on the points -- essentially netting himself a sweet ~30% discount) because he talked about it in his videos. I just don't know enough about the world of DVC to understand all the intricacies.
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