Disney Vacation Club’s Point Pool Problem

Due to the multi-month closure of resorts at Walt Disney World, Disneyland, and beyond, Disney Vacation Club has a “point pool problem.” Here we’ll address DVC’s current policies, how this problem will play out, why occupancy rates will be significantly higher for DVC than hotels, and potential solutions. (Updated December 28, 2020.)

For starters, DVCMember.com has posted a Travel Alert that includes “Temporary Updates to Our Cancellation Policy.” Looking ahead to better days, Disney Vacation Club has added flexibility to its normal rules and policies given the unique circumstances of this crisis.

As part of Disney Vacation Club’s continued efforts to provide flexibility during these uncertain times, DVC has modified temporary policies regarding expiring Points. April, June, August, September and October Use Year Points that are set to expire in 2020 and that were used for reservations during the closure period have been extended for one year from the current expiration date.

Additionally, Disney Vacation Club Members who want to borrow points to complete a reservation will temporarily only be able to borrow up to 50% of their future Use Year Points per contract. Doing this will help manage inventory and accommodate more Members who want to schedule their vacations for the next couple of years.

Unsurprisingly, this has led to a lot of questions and potential issues in 2021 and even 2022. With the future still uncertain and Walt Disney World operating in a state of “temporary abnormal” through at least Spring 2021, many DVC members are postponing trips. That coupled with the closure has created a problem that will linger for the next couple of years…

If my math is correct, there’s a total of roughly 75.85 million Disney Vacation Club points across all units at all resorts, including the ones outside of Walt Disney World. However, that includes undeclared points, including over 4 million at Disney’s Riviera Resort. That means the actual number in circulation is likely just shy of 70 million points.

It’s important to include the non-WDW resorts like Aulani, Hilton Head Island, Vero Beach, and the Grand Californian in this analysis, as those supplies of points do impact demand at Walt Disney World resorts (VGC much less so than the other three).

We won’t fixate on that point here, as it’s something covered in our Why is Disney Vacation Club Availability So Limited? post from a couple of years ago. Actually, what’s covered here is somewhat of an outgrowth of that discussion. The same ideas apply as there.

Essentially, we have a scenario where the entirety of Disney Vacation Club points represent the water in a pool, and the entire inventory of DVC rooms represent the pool itself. Normally, the water comes pretty close to filling the pool, with a bit of space at the top.

Now imagine lifting up all of that water, losing a bit to splashing, shrinking the size of the physical pool by ~25%, and then attempting to deposit the water back into the pool. You couldn’t. There’s now more water than there is physical space in the pool, meaning over 20% would overflow and be gone forever. (Well, since we’re talking about water, it’d actually evaporate or soak into the ground, but you get the idea.)

If that’s too conceptual, let’s explain with a simplified example. Let’s assume one of the DVC resorts at Walt Disney World has 12 million points (none do–bear with me). Setting aside borrowing and banking rules, which tend to normalize over the course of time, that means 1 million points are available and must be used during each month of the year.

If the resort is closed for two months, the 2 million points of room inventory from that period are gone forever. However, the supply of outstanding points is not. This means that the available unused points for the year exceeds room availability by millions of points. Hence the pool example, and also why it’s going to be incredibly slim pickins’ for DVC availability the next couple of years unless Disney steps in and somehow remedies the situation.

That was our example back when the resorts were still closed and we anticipated they’d remain that way for 2 months. The actual closure ended up being almost exactly 3 months, so the math changes a bit. That’s not the major issue that alters the calculation, though.

Instead, it’s the fact that Disney Vacation Club resorts are not operating at anywhere close to their normal occupancy rate. This is something that shouldn’t be surprising, but we didn’t factor into our original analysis. Over the summer, most DVC resorts were likely lucky to crack 50%.

Things have picked up since then, but during the fall–which would normally be peak EPCOT Food & Wine Festival “season” and a popular time to book–there was ample availability at the Crescent Lake Resorts.

We’ve regularly booked last minute reservations to exhaust our point supply ahead of this problem, including just last week when we had a ton of potential options only a few days ahead of time. That was during Christmas week. 

Although availability is slimmer in March and April 2021, that’s not the case for January and February 2021 when there’s still plenty of options only a few weeks in advance. It’s also worth noting there that at one point this summer, Christmas 2020 was more solidly booked.

As the dates drew nearer and it became clear face masks would be required and other options were temporarily paused, cancellations piled up. The same will likely occur for Easter and Spring Break 2021 if more doesn’t return to normal at Walt Disney World.

That’s the problem facing Disney Vacation Club right now. There is some breakage, but normal occupancy is above 95%. Aside from holidays and other select dates, DVC is nowhere near that right now, and hasn’t been since pre-closure in March. The normal occupancy rate allows for refurbishments or even the occasional closure due to a hurricane, but not the resorts being shuttered for several months.

One thing that’s worth pointing out here is that Disney Vacation Club resort occupancy is higher than standard hotel rooms at Walt Disney World, and doesn’t fluctuate much at all based upon travel seasons or most external variables. DVC occupancy will remain elevated without as much regard to the outside world for an obvious reason–DVC members already have pre-paid for their room, so they have something to lose by not using it.

This disparity between hotel and DVC occupancy rates also presents what we feel is the most plausible remedy for the situation. Basically, these hotel rooms represent a second pool that isn’t totally full, and it’s an even bigger pool than the one described above! Rather than spilling water all over the ground, we could put most of it back into the now smaller pool, and the other ~20% into the larger pool.

In non-pool terms: if there’s surplus inventory at the resorts around Walt Disney World, let Disney Vacation Club members use that via some sort of conversion rate that resembles point charts (or simply dump unsold hotel rooms at sister resorts into the DVC booking system).

Right now, many hotels around Walt Disney World are still closed, with more reopening in Spring and Summer 2021. However, some are still without return dates, period. (See 2021 Walt Disney World Hotel Reopening Dates for specifics.)

Accordingly, it may not seem like Walt Disney World intends to adopt this hotel-inventory solution when it comes to Disney Vacation Club’s point pool problem. However, given that the problem has not materialized yet (see occupancy discussion above) but likely will in Summer or Fall 2021, it would be premature for such a solution to be deployed.

Of course, there’s a cost to doing this in terms of staffing, maintenance, and burden on infrastructure. However, all of that should be relatively minor. The key is that there’s little opportunity cost, meaning that these rooms likely would go unfilled otherwise. Since hotel rooms are perishable inventory, there’s little downside to this approach.

In fact, there’s arguably considerably more upside than downside. Filling rooms that will otherwise sit empty fosters goodwill among DVC members. That’s positive both from a “future customer” perspective (getting them to add-on to their contracts) and also preventing them from becoming “former owners” who sell their contracts, further flooding the market during the recession. (Which has a ripple effect of consequences for Disney–none of them good.)

There’s also the matter of guest spending. Empty rooms are not spending any money on park tickets, food, merchandise, and so forth. Giving up these rooms as a goodwill gesture means Disney Vacation Club members–who already had tens of thousands of dollars to purchase DVC in the first place–have bigger budgets to blow on all of those things.

As for when Walt Disney World’s hotel occupancy might return to normal, it could take years. Literally. Travel experts are predicting it’ll take until 2022 or 2023 for the industry to fully bounce back, and that’s just leisure travel. Business and special events could take even longer (Walt Disney World did a lot of conventions and youth sporting events, neither of which are likely to return in significant form in 2021.)

Post 9/11, Walt Disney World closed 16% of its resort rooms, removing them from the inventory entirely (and thus artificially bolstering the occupancy rate). Disney did not release occupancy rates for those periods, but the Walt Disney Company’s 2002 Annual Report (see page 55) paints a clear picture of the double-digit declines. Across all of Central Florida, hotel occupancy plummeted to 44% (Disney’s numbers track with local trends, but are typically higher).

During the Great Recession, the situation was somewhat similar, albeit not as pronounced. Americans didn’t fear traveling, many just couldn’t afford to do so. At the lowest point, operating income for Disney Parks & Resorts was down 50% to $171 million, from $339 million a year earlier. However, Walt Disney World used aggressive discounts to hold hotel occupancy at an incredibly respectable 89% (all per the Los Angeles Times).

Walt Disney World is a much more sophisticated operation than it was nearly two decades ago in the aftermath of 9/11. As such, I would not expect things to be as dire now as then. Today’s scenario does otherwise bear closer resemblance to 9/11, as that encompassed both travel fears and financial uncertainty, whereas the Great Recession was solely the latter.

Suffice to say, there should be a significant hotel room surplus that could theoretically be allocated to Disney Vacation Club without much opportunity cost. At least for 2021 through early 2022–long enough to address this point pool problem.

We should also reiterate and stress that this is simply our idea of a possible solution. It’s definitely not official, nor is it even a rumor. However, it seems plausible and is one of two workable solutions (the other being to declare the rest of Disney’s Riviera Resort as a cushion). At some point, the excess “water” (point supply) would overflow the free space in the larger pool, too.

About the only other “solution” is the status quo, which is essentially to grant flexibility to banking and borrowing rules, but not to address the inventory of rooms. Legally, there’s nothing more they’re required to do. Owners agreed to the rules of the game when buying, and we are the ones positioned to eat the loss if Disney does not intervene.

That’s how Disney Vacation Club has handled the shortage of availability created by the Aulani folly, but the key difference there is that the cause is more opaque and the result is not as pronounced. The present situation is more problematic, and the longer some resorts remain closed or under-utilized, the more availability is going to dry up and competition will grow more fierce for the limited inventory that remains available come Summer 2021 and beyond. Disenchanted DVC members are not in Disney’s best interests, which pretty much necessitates some sort of solution. We think metaphorical pool hopping is it. For continued updates in this ongoing DVC point pool saga, subscribe to our free email newsletter.

Thinking about joining DVC? First be sure to read our Ultimate Guide to Disney Vacation Club. This covers the pros & cons, resale v. direct, how much money you’ll save, and other important things to know before taking the plunge. If you still can’t decide whether membership is right for you, “try before you buy” and rent points from DVC Rental Store. If you are convinced a membership is for you, check out the discounted options at DVC Resale Market. Planning a Walt Disney World trip? For comprehensive advice, the best place to start is our Walt Disney World Trip Planning Guide for everything you need to know.

YOUR THOUGHTS

Do you have any ideas as to other possible solutions to this Disney Vacation Club point pool problem? Think DVC will do something to remedy this issue? Have you lost points as a result of this? Had trouble finding DVC availability for later this year? Do you agree or disagree with our assessment? If you’re an existing Member, what do you think? Share any questions, tips, or additional thoughts you have in the comments!

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