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Old 04-17-2020, 10:02 PM   #1
DukeLaw11
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Default Is David's Solvent? Why are they threatening owners? Should owners start cancelling?

After reading some recent messages, I'm somewhat concerned that David's is on the cusp of insolvency. In addition to not paying owners the remaining funds due for cancelled reservations (something brokers initially said they'd do), I've now read several reports that letters are being sent to owners threatening legal action if initial payment funds are not returned, citing "frustration of purpose."

Respectfully, that's not how this should work. Nowhere in any owner agreement does it say that the DVC owner forfeits any portion of the agreed upon contracted price if the rental is cancelled by a disaster or other event outside of the control of the owner.

To the contrary, all of the brokers list the reservations as non-refundable points purchases. Owners are required to do modifications that are possible and make dining plan and magical express reservations, but I have seen nothing that makes owners liable for losses caused by forces beyond their control. Very simply, that's not what they contracted for. Owners who have points expiring in June are not "being made whole" by having worthless points returned to them.

David's has been making a 15% margin on these rentals for more than a decade. So, if David's wants to make things right with renters, David's should do that themselves instead of threatening frivolous legal action. In theory, they should be in the best position to do that. Which leads to my hypothesis:

1. David's, like all brokers, is bleeding money right now because they're paying a 12 person staff to essentially do crisis control, and have extremely limited incoming cash flow.

2. But, unlike other brokers, David's has also overextended themselves through extreme advertising and maintenance costs in order to remain the market leader.

3. Even though the points are technically non-refundable, David's was getting especially killed by Bank and PayPal complaints; perhaps enough to put their merchant accounts at risk (especially since they're a Canadian company doing almost all of their business through international transactions).

4. Faced with this reality, they came up with their "travel voucher" program, which, for them, is a win-win-win. First, they can slow down and spread out the flow of renter complaints. Second, they can mitigate some losses by doing "dollar for dollar" exchanges because their prices have gone up (simply put, a dollar now doesn't get as many points as it did 11 months ago). Third, if they end up going under, they can take all the money on their way out because the funds won't be frozen due to owner complaints.

5. Finally, despite the contention just last month that owner's "wouldn't be left holding the ball," David's not only left them with expiring and useless points, but also didn't pay them as agreed, and threatened them if they didn't repay the initial payment.

In sum, this was a mess that no-one predicted, but that David's in particular seems almost desperately trying to push onto owners.

It seriously makes me wonder as an owner if David's is going to pay me for my reservations with them over the summer. Are they going to close up shop in the middle of the night and keep everyone's money? It sounds ridiculous; until you consider that they're currently breaching agreements with owners IMO and then threatening the owners to boot. There's a strong sense of desperation there.

I seriously wonder if I'd be better served cancelling the reservations I'm currently holding and give David's their initial payment back (and rent somewhere else), as opposed to letting them potentially stiff me, and leave me with worthless points, like they've shown a total willingness to do in recent days. It's pretty shocking how fast they went from having what I considered to be a good Broker response, to having the absolute worst. Something seems to be going on there.
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Old 04-17-2020, 10:12 PM   #2
a1000monkeys
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Quote:
Originally Posted by DukeLaw11 View Post
After reading some recent messages, I'm somewhat concerned that David's is on the cusp of insolvency. In addition to not paying owners the remaining funds due for cancelled reservations (something brokers initially said they'd do), I've now read several reports that letters are being sent to owners threatening legal action if initial payment funds are not returned, citing "frustration of purpose."

Respectfully, that's not how this should work. Nowhere in any owner agreement does it say that the DVC owner forfeits any portion of the agreed upon contracted price if the rental is cancelled by a disaster or other event outside of the control of the owner.

To the contrary, all of the brokers list the reservations as non-refundable points purchases. Owners are required to do modifications that are possible and make dining plan and magical express reservations, but I have seen nothing that makes owners liable for losses caused by forces beyond their control. Very simply, that's not what they contracted for. Owners who have points expiring in June are not "being made whole" by having worthless points returned to them.

David's has been making a 15% margin on these rentals for more than a decade. So, if David's wants to make things right with renters, David's should do that themselves instead of threatening frivolous legal action. In theory, they should be in the best position to do that. Which leads to my hypothesis:

1. David's, like all brokers, is bleeding money right now because they're paying a 12 person staff to essentially do crisis control, and have extremely limited incoming cash flow.

2. But, unlike other brokers, David's has also overextended themselves through extreme advertising and maintenance costs in order to remain the market leader.

3. Even though the points are technically non-refundable, David's was getting especially killed by Bank and PayPal complaints; perhaps enough to put their merchant accounts at risk (especially since they're a Canadian company doing almost all of their business through international transactions).

4. Faced with this reality, they came up with their "travel voucher" program, which, for them, is a win-win-win. First, they can slow down and spread out the flow of renter complaints. Second, they can mitigate some losses by doing "dollar for dollar" exchanges because their prices have gone up (simply put, a dollar now doesn't get as many points as it did 11 months ago). Third, if they end up going under, they can take all the money on their way out because the funds won't be frozen due to owner complaints.

5. Finally, despite the contention just last month that owner's "wouldn't be left holding the ball," David's not only left them with expiring and useless points, but also didn't pay them as agreed, and threatened them if they didn't repay the initial payment.

In sum, this was a mess that no-one predicted, but that David's in particular seems almost desperately trying to push onto owners.

It seriously makes me wonder as an owner if David's is going to pay me for my reservations with them over the summer. Are they going to close up shop in the middle of the night and keep everyone's money? It sounds ridiculous; until you consider that they're currently breaching agreements with owners IMO and then threatening the owners to boot. There's a strong sense of desperation there.

I seriously wonder if I'd be better served cancelling the reservations I'm currently holding and give David's their initial payment back (and rent somewhere else), as opposed to letting them potentially stiff me, and leave me with worthless points, like they've shown a total willingness to do in recent days. It's pretty shocking how fast they went from having what I considered to be a good Broker response, to having the absolute worst. Something seems to be going on there.

Is there a “force majure” clause in the agreement? What does it say?

I’ve recommended David’s to others but this is an unprecedented event. If I were holding a summer reservation I would cancel.
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Old 04-17-2020, 10:23 PM   #3
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Is there a “force majure” clause in the agreement? What does it say?

I’ve recommended David’s to others but this is an unprecedented event. If I were holding a summer reservation I would cancel.
No, they did not have the clause in their contracts.

They've re-written it now and added it.
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Old 04-17-2020, 10:23 PM   #4
CarolA
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I met him several years ago. His business supports an extravagant lifestyle and several family members. I seriously doubt he was saving or preparing for any business downturn.


But unless he’s been even more proficient in spending than I would’ve expected, the math on his business means he should have been making a lot of money. And considering he supposed to have 30% of the money withheld to pay owners at checkin but is now demanding owners repay him while not repaying renters...... I’m beginning to wonder if this wasn’t a Ponzi scheme. If he’s been over spending the funds and planning on continued cash flow to keep the game up there could be a problem. If his whole process was to spend everything he had and the 30% you were owed when the renter checking in was actually not from that renter but from other renters who were months away from check in, when Disney shut down the Ponzi scheme collapses. I’m sure people are sweating right now because they don’t know what’s going to happen. So there’s no cash coming in. And yet he still has a staff to pay and he probably still has some other liability


I’m an auditor by training and I’ve done some forensic audits, not a lot but some. And everything about this is ringing alarm bells. Feels like it’s either intentional fraud or the accounting management was totally wrong. Either way it generally doesn’t end well

Last edited by CarolA; 04-17-2020 at 10:34 PM.
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Old 04-17-2020, 11:46 PM   #5
aznosredna
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I currently have points rented out through Dave. At least to this point, I have not experienced what has been described. Two (2) reservations were right at the beginning of the panic. I received the 30% even though they got cancelled.

Dave has since rerented the points and I made new reservations for their new client in October.

The next 2 reservations will be the first part of May. Time will tell what will happen. If the get cancelled, I will be willing to set up new reservations for them.

While they have asked if I was willing to refund, they have not been forceful and actually acted grateful that I was willing to make new reservations.
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Old 04-18-2020, 12:03 AM   #6
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Old 04-18-2020, 12:04 AM   #7
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As your first post, I question your motives for pursuing this in this forum.
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Old 04-18-2020, 12:41 AM   #8
DukeLaw11
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Originally Posted by Malmel View Post
As your first post, I question your motives for pursuing this in this forum.
I've been on here since 2015. This is my first post because I don't just post things on the internet for attention, and this is the first time I've had an issue to discuss that hasn't already been debated ad nauseam.

My motive for posting is that I'm pissed that they're threatening and stiffing owners, and I'm concerned as to where this leads down the road.
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Old 04-18-2020, 01:13 AM   #9
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If I'm an owner -- I personally wouldn't worry about being sued by them to recover whatever few thousand dollars they might try to get. They are physically located in Canada. Are they really going to go through the hassles of an international lawsuit?

And to what end?

You don't spend a few thousand dollars to go to court to win a few thousand. Not to mention collecting the judgment would be an absolute nightmare.

In addition to all of that, I just don't think going after owners is a good long term business strategy. Suing owners would be horrifically bad for their image. Without owners supplying points for them to rent out -- they have nothing to sell.
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Old 04-18-2020, 01:24 AM   #10
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I was honestly wondering about Dave's as well. They are not answering their phones, or responding to emails. I tried to get in touch with them about looking to ask about the points for cruises transfers, but its been two weeks and nothing.

Wondering if any other brokers do a similar cruise for points exchanges.
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