Published: April 26, 2015 at 9:03 PM
What IS a Timeshare?
Timeshares began as condominiums that each had multiple owners. Today, this model is often referred to as "fractional ownership," where you might own a 1/16th stake - or around three weeks per year - of the condo. You "shared your time" with the other owners of your unit. Originally, timeshare owners actually owned specific weeks of the year, and could only own the unit during those weeks. Eventually, timeshare developers started selling 1/52nd shares - meaning one week each year - and invented the concept of "floating weeks," where you could schedule your use and not be fixed to a specific week each year.
The point of all this is that with a timeshare, you actually own a piece of deeded real estate, representing a fraction of the total number of units and weeks available at the facility. Trade systems like Interval International and Resort Condominiums International (II and RCI, respectively) evolved that let your swap your ownership and stay at a different location, but you always owned that fractional piece of real estate wherever you bought it. Newer timeshare brands often express your ownership in terms of points, "charging" a certain number of points to stay in specific types of rooms, during specific seasons. Those "point systems" also allow you to own less than a full week of time, if you like. You could, for example, buy enough points to visit for 11 days every year, instead of having to buy either 7 or 14 days as weeks. But in almost all cases, you actually own a fractional piece of real estate forever.
Sounds very similar to Disney Vacation Club, but there's a key difference.
The new DVC bungalows at Disney's Polynesian Village Resort, which opened this month at Walt Disney World. Photo courtesy Disney
The DVC Difference
Disney originally was reluctant to let the word "timeshare" anywhere near their vacation ownership product, because the industry has a terrible reputation for high-pressure, deceptive sales practices. Certainly not something Disney wanted to be a part of! Disney also had a unique problem: ownership implies control. Disney certainly didn't want to give up control over its Walt Disney World real estate, because the company's exclusive ownership helps it maintain de facto control of the property's legal government.
So DVC isn't really a timeshare. Instead, it's what I like to call a "prepaid vacation program." Essentially, you are buying a certain amount of "usage" in the system, and that usage expires after a given period of time. You're renting, more or less, not buying. Disney remains the landlord and property owner, under a complex set of legal relationships they created with the DVC development division.
So under DVC, you buy a set of points. You pay for that up front, either in cash or through a financing arrangement - that is, a loan. You get your point allocation annually on a specific day, and you can "spend" your points to stay at Disney hotels. Each different type of hotel room, at each resort, during one of five seasons, has a point "cost." You can also use your points to "buy" other types of vacations, including Disney Cruise Line reservations, reservations at non-DVC hotels owned by Disney, and even at a selection of properties not owned by Disney.
Disney's Aulani, a DVC property on Oahu in Hawaii. Photo courtesy Disney
DVC: How it Works
When Disney builds a new DVC resort, or converts an existing hotel to the DVC program, it invests the property with a fixed number of points. That number represents all possible rooms during all possible seasons. If you were to plop down enough cash to buy ALL of those points, you'd basically own the hotel. But we're talking tens of millions of points per hotel, so it would be a LOT of cash!
Disney then divvies up the points, assigning them to different room types and seasons. The trick is that Disney can't ever add more points to that hotel unless they add more rooms to it - the points, once declared, are fixed. Disney CAN rearrange the points, up to a certain percentage every so often. They can make one kind of room more "expensive," for example, but to do so another type of room has to get "cheaper." The points can be shuffled, but they'll always add up to the same total number.
So there's a fixed number of points in the system, which means a specific property is "sold out" when all of its points have been purchased. In reality, Disney withholds a certain number of points for itself, which it then uses to sell cash reservations at the property.
When you buy your points, you're therefore buying them from a specific resort, and that's said to be your "home resort." Disney lets you make reservations, using your points, at that resort up to nine months in advance. You can use your points at other DVC locations up to six months in advance, meaning people who "own" at a particular resort get a three-month advantage. That's an important fact, because if you prefer to stay at once resort, you want to own your points from that resort, so that you'll get the extra three-month window.
If you choose not to use some or all of your points for a given year, you can "bank" them into the following year. You can also "borrow" from the subsequent year, dragging points into the current year. Thus, you can have up to three years' worth of points at your disposal. For example, let's say you own 200 points. You could bank your 2015 points into 2016, and borrow your 2017 points into 2016, giving you 600 points total to use in 2016. These bank/borrow transactions are permanent, and can't be un-done. Any given point can only be banked/borrowed one time, meaning once it's banked into the next year, it has to get used in that year or be lost forever.
The DVC Bay Lake Tower, located next to the original A-frame building of Disney's Contemporary Resort
What About the Expiration?
When Disney creates points by building or converting a resort, they assign an expiration date to those points. The original DVC resort points expire in 2042; newer properties were set to expire in 2056. That date is adjusted constantly for new resorts as they're built, and Disney always has the option of selling extensions - something it did for Old Key West owners, who could spend a bit more money to extend their points from 2042 to 2056.
On the expiration date, the points vanish from your control, and revert to Disney, who can then re-sell them. So you don't "own" your points as you would in a timeshare; you're merely renting them for a period of time.
So That's the Overview
Those are the basics of how DVC works. There's a lot more to consider, like the finances, buying direct from Disney or from a previous DVC owner, and so on. We'll explore those topics in future "DVC FAQ" articles.
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