I wanted to provide some more detail in specifically the questions I want to understand; and the logic I've used to come to each conclusion so that we can be as productive as possible during our short phone call. This reading is going to take some time - for that, I apologize.
For reference, I have attached a PDF document which includes the
point chart and room counts for every resort under management by DVCMC and compares the total point costs at 100% occupancy between use years 2021 and 2022. Use periods in green represent a point decrease, while use periods in red represent an increase. Starting on page 2 will be most interesting to you all where it breaks it down by resort. The math in the attached PDF will detail the calculation used to determine that Animal Kingdom Villas has increased by about 22K points, Old Key West has increased by about 29K points, Saratoga Springs Resort has increased by about 55K points. Including the remaining resorts results in a total system increase of about 206K points for Walt Disney World properties, and an aggregate total increase of 171K point increase for all resorts in DVCMC's management. The decrease for the aggregate total of all resorts is due to a few non-Disney World properties actually seeing a decrease in point costs year-to-year. If you see anything wrong with the math, please let me know.
I wanted to focus on Animal Kingdom Villas, since that's where I own - but I'll be honest that going back a number of years can get overly complex due to the huge amount of declarations and what appear to have been modified views year-to-year. I'm going to stick with more semantic questions for this resort. For reference, I am using the POS for AVK available here:
AKV POS Rev. 12_30_13 (disney.com). Below is my understanding of various sections reflective of how DVCMC is allowed to manage point reallocation. I think this is important to address my question because any point here which I have incorrectly described could be what I am missing.
The two main sections in the above referenced POS I believe cover point increases are:
- PDF page 179: Exhibit "A" - Real Estate Interest and Point Formulation
- Vacation Ownership Plan Real Estate Interest Formulation
- Vacation Ownership Plan Home Resort Vacation Point Formulation
- PDF page 193 - 194: III. Operation of the Vacation Ownership Plan
- Operation of the Home Resort Reservation Component
- Vacation Points
- Home Resort Vacation Point Reservation Values.
This is my understanding of: Exhibit "A" - Real Estate Interest and Point Formulation - Vacation Ownership Plan Real Estate Interest Formulation
1. As reiterated in this exhibit, in the POS, and in the deeds. Points are for a convenience of calculation; you could say just as easy that a week stay costs "1%" of Unit 115C - for example.
2. During initial point creation for the resort, DVC created initial "seasons". I don't know what they were, but I'm not sure it affects my question in any way.
3. Each vacation home has a "demand factor" applied to it - this considers the type of vacation home (studio, one-bedroom, ext), if it contains a lock-off, and the view it has (standard, pool, ext). Note: that this is only a DESIRE ranking, not a SIZE ranking. Size of the of the vacation home is accounted for later.
4. The "demand factor" is multiplied by the number of days in each season to give a studio, a one bedroom, and a two bedroom a total number of "demand days" for each season.
5. Total "demand days" for all seasons of each vacation home type are totaled giving a total for the year for each vacation home type.
Note before proceeding, that my understanding is a "unit" is not a vacation home. There may (will?) be multiple vacation homes in a defined unit. For example, you may have a plex of one bedroom, two bedroom, and multiple studios within a single unit. The combination within each unit doesn't matter, since we're going to figure out the value of the unit based on the vacation homes it contains next. It is entirely possible that someone with 200 points owns 3% of unit 110A but another person with 200 points owns 1% of unit 110B because of the types and quantities of vacation homes within the unit, as well as their views (which affect desirability, and thus the demand factor).
6. For each vacation home in a unit (studio, one bedroom, two bedroom) - the quantity of each vacation home type is multiplied by "demand days" for the year - then added together to represent a total number of "demand days" in the entire unit.
7. When you are sold a deed, you are sold a percentage relative to the number of "demand" days in that unit, which are already weighted based on initially defined seasons, views, unit types, and other factors that represent the value of that unit.
This section also says in the very last sentence of the last paragraph of Exhibit A: "
In any event, the total number of Home Resort Vacation Points can never exceed the total number of Ownership Interests in Units of which they are symbolic."
This is my understanding of: Exhibit "A" - Real Estate Interest and Point Formulation - Vacation Ownership Plan Home Resort Vacation Point Formulation
1. Again, this section reiterates "points" are only an easier way to account for the percentage of ownership against the "demand days" you purchased.
2. The percentage of "demand days" purchased are multiplied by the square footage in the unit to determine the total square footage owned relative to the unit's total space.
3. The owned square footage is then multiplied by some "constant number" (across the entire resort?) to determine the number of vacation points a "percentage of demand days" for a specific unit are worth.
The page goes on to say that the initial points for each home, on each day will be determined by projected demand and that DVCMC is allowed to reallocate them per the MSA.
This is my understanding of: III. Operation of the Vacation Ownership Plan - Home Resort Vacation Point Reservation Values
1. Earlier on this page, it again states points are a convenience method of accounting.
2. DVCMC established vacation points based on various factors (which I already covered above in greater detail from Exhibit A).
3. Points owned by a club member will be fixed and symbolic of their ownership percentage within a unit.
4. Points were initially crafted based on a 365 day calendar witch special alignment for high-demand periods which would match to what Exhibit A indicated.
5. "During the Base Year the total number of Home Resort Vacation Points required to reserve all Vacation Homes during all Use Days in the Condominium must always equal, and be symbolic of, the total number of Ownership Interests owned by Club Members of the Condominium".
6. Any excess availability (this, I would understand to be ONLY created due to leap year since the 365 day "base year" calendar already includes all days of the year, and therefore all holidays and considerations thereof - but also inclusive of "demand days" not used by membership) will be subject to breakage.
7. DVCMC is allowed to adjust Home Resort Vacation Point requirements on a use day by up to 20% from the previous year, "provided, however, that the total number of Home Resort Vacation Points existing within a given Unit at any time may not be increased or decreased because of such reallocation".
8. DVCMC can do more than a 20% per-day adjustment for special occasions.
9. "Any increase or decrease in the Home Resort Vacation Point reservation requirement for a given Use Day pursuant to DVCMC's right to make this Home Resort Vacation Point Adjustment must be offset by a corresponding decrease or increase for another Use Day or Days".
10. Except for special occasions, more than a 20% per-day adjustment would need a vote of 60% of members.
11. DVCMC could perform maximum leveling to effectively get rid of weekend and seasonal premiums.
Earlier I mentioned how difficult Animal Kingdom Villas was to calculate; Saratoga Springs is a much easier resort to look at because it has significantly fewer room types and declarations over it's life. From public record, SSR appears to have 14,029,212 points sold in it's resort (inclusive of DVD's 2.5% required ownership).
This is what the total bookable points looked over the last few years, for reference:
2019: 14,031,216
2020: 14,071,430 (LEAP YEAR)
2021: 14,041,340
2022: 14,096,212
This is the key takeaways from my readings of the POS, that I want help reconciling:
Exhibit A reads to me that regardless of anything in the MSA to the contrary, total points year to year can *never* increase. It doesn't matter if it's for holidays, seasons or anything - all of this would have to be done via reallocation. Member's points were created by measuring a unit's value based on the number of days it can be used, projected demand (including holidays, seasons), view, vacation home type and quantity, as well as unit square footage. The only exception would be a leap year since then there are additional "demand days" for each unit due to the extra 24 hour period. These go to breakage; that makes sense. The immediate following year, the total bookable points should go back to a normal 365-day total.
Once the ownership interest is created, it would seem to me to be tied to the demand factor used for computing holidays, seasons, and weekends within the base-year forever. This calculation occurs at the ownership interest level, before points are even created. The only thing DVCMC appears to be able do is move points around to accommodate for a holiday moving to another day/week (or for whatever other reason DVCMC determines). In order to create more points, DVCMC would have to increase one of the variables used in calculation. Besides leap year, you don't get more than 365 days in a year. You can't go back and increase the demand factor against a unit to produce more points, because it's a factor against ownership interest ("demand days", not "points"); and since members own a percentage of a unit's total "demand days" - not a fixed quantity, increasing the demand factor by 2x would just translate into members owning the same percentage of that increase.
My main question is: How is DVCMC determining their ability to increase total bookable point requirements year-to-year?