Wasn't it
@ParentsOf4 making a point earlier in the thread that DVC rooms are being rented out at a very low cost? I think that is the reason behind the high costs of trading out. I mean, even if you would want to use your points for a moderate at WDW (you can) you end up paying I think about double as you would for a studio. The reason being that they take the value of your points to make up the room rate. Of course this makes it a great deal for WDW as they take your DVC points at their face value but then proceed to rent out a DVC room at their incredibly high rates.
And actually, there are a few incidents when using DVC points for cruises can make sense, especially if you want to go on a popular cruise on kind of short notice. With the way prices for the cruises go up if lots of rooms are being booked, there will be a point when using points becomes more economical. Of course one could say, if the cruise is already that expensive, is it really worth that?
I believe the point I was making is that for DVC, Disney's revenue from that room is extremely high for one year (i.e. the year the DVC points are purchased) and then very low for the next several decades.
The relatively poor value offered to DVC members for exchanging their DVC points has to do with how little they pay annually after the initial purchase.
People (understandably) approach the problem from the buyer's perspective. However, to understand why trading out is not a good use of DVC points, they also should consider Disney's point of view.
The purchase price effectively is one-time revenue for today's corporate Disney. (Yes, I know, Disney will begin reclaiming points in 2042.) After the purchase is made, Disney only collects the annual Maintenance Fee (MF). It doesn't matter if DVC members spent $165/point to purchase DVC in 2012. In 2014, Disney has to model their 2014 business based on MF paid in 2014.
From Disney's perspective, DVC members who own at Bay Lake Tower (BLT) provide revenue of $4.78/point in 2014.
During the summer, it takes 153 DVC points to rent a standard room at Port Orleans Riverside (POR), which works out to about $104/night using those BLT points. That's a great rate for POR. From a cash flow perspective, Disney is being generous with the exchange.
However, for that same summer week, that DVC member can get a standard view BLT Studio for 139 points, or about $95/night.
The question is whether someone would prefer BLT for $95/night or POR for $104/night.
Even if BLT was full, SSR almost never is. They could use 120 points for SSR or the equivalent of $82/night.
So, $82/night for SSR or $104/night for POR?
For DVC members, the savings are built into DVC resorts.
With a little bit of planning, a BLT DVC member could easily rent out their points to someone else for $11/point. At $11/point, they'd collect $1683 on 153 DVC points. That works out to $240/night for 7 nights. The question then becomes what else could they purchase for $240/night.
Relating this back to this thread, when Disney creates DVC rooms, they effectively hand over future revenue to DVC members. If they want, DVC members can use this revenue to rent their points and compete directly with Disney's Deluxe Resorts.
Someone renting these points from a DVC member at $11/point pays only $218/night for a standard view BLT Studio. Clearly, that's a rate that Disney won't match, which means Disney loses most of that business. (Remember, Disney only collects $95/night. The rest is pocketed by the DVC member, never mind that Disney almost certainly could have filled that room at $250 or perhaps even $300/night.)
As Disney
adds DVC rooms, they make it increasingly difficult to fill their existing Deluxe Resort rooms.
The easiest way around the problem is to
convert existing hotel rooms to DVC rooms. By converting rooms, Disney reduces inventory, allowing it to keep the prices of the remaining Deluxe Resort hotel rooms high.
This is why the rumor that Disney is considering converting existing WL hotel rooms to DVC makes sense. Half the rooms to be converted are empty anyway; might as well repackage them and sell them as DVC. Disney gets a big cash payout now, a guaranteed (smaller) revenue stream for decades, and the ability to raise room rates on the remaining WL hotel rooms.
