Getting to DVC

Discussion in 'UK DVC Discussion' started by Celestine, Jun 24, 2003.

  1. Celestine

    Celestine DIS Veteran

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    DH & I are seriously considering the DVC, but are struggling to make the maths pay as flights seem to be as dear as buying a package. Which companies give good flight rates, or how do you get there without breaking the bank each time? Based on this years prices it would take us nearly all the 39 years to break even (admittedly that is not using the brochure price for DVC property, but a 4* hotel none the less). Any info/advice etc. greatly received.
     
  2. PoohBears#1fan

    PoohBears#1fan Mouseketeer

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    Hi Celestine,

    When we were doing the figures for DVC we compared prices with packages for lower end hotels, higher end off-site hotels, budget Disney hotels & deluxe Disney hotels. (hours spent in front of various spreadsheets!!! lol)
    It was only when we compared against on-site property that it becomes a good deal - we bought in as we want to stay on-site in the DVC accomadation and when you compared against that, it's a fantastic deal and we break even after around 4-5 years.

    For us, it was a choice between buying DVC or staying off-site each year as these would cost around the same over the duration of the DVC membership, no comparison IMHO.

    If you want to stay in on-site fantastic accomadation then DVC is a great buy, if you just want to get to Orlando every year and your location isn't your top priority then I don't think it's the way to go.
     
  3. vernon

    vernon DIS Veteran

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    If you're using off site accommodation as your comparison then it's going to be a little harder to work the numbers. But if you look at off site points systems, similar to DVC, or more regular style "timeshare"then they are likely to be cheaper. You pay a premium for being on site that is true of the "timeshare" aspect as well as the hotels. If you want to do a realistic financial you do need to compare apples to apples, JMHO.

    It is worth remembering that over the last couple of years there has been some massive discounts on hotel room rates, IMHO those discounts will not be as aggressive in the future when the economy picks up. If the economy doesn't pick up then , IMHO , there will be a lot of "rationalising" of hotel capacity in Orlando as those hotels will not be able to run in the long term on occupancy rates at these levels. Reduction in the capacity of the hotel market is going to also have the effect of correcting the over supply. I believe either way the current huge over supply of hotel rooms ( and the huge discounts this causes) is not something that will last more than 2-3 years.

    When I was looking to buy in I took best case and worst case scenarios and played around with them. Looking at seasons as well as breaking down weekend and weekday use. I calculated that by buying a slightly lower number amount of points than I initially thought I'd need and using them ahead of their "due date of use" it increases the financial benefit. I was lucky in that my first years trip we had relatives coming with us. By booking a 2 bedroom instead of the 1 bed that I would have otherwise done ( borrowing points from the upcoming year) and "charging" the reli's a very fair rate for the extra bedroom ( I charged them basically what a hotel room at the All Star would have cost) I was able to get back a substantial amount of the initial outlay ( and the relatives got a better quality hotel with the added benefit of access to the full kitchen and laundry facilities). By running your account so you are borrowing from the upcoming year it means your "benefits" (i.e. savings in hotel charges) come almost a year ahead of when you should be budgeting for them. In terms of the "numbers" this means that if you use an inflation rate of 5% to calculate the cost of finance/loss of earnings and you're cost of hotels would be say £1400 a year ( 14 night @£100 a night) then your cost of finance will be about £70 a year less. Granted that doesn't sound much but when you compound interest over 50 years £70 a year makes a sizeable sum.

    I used a slightly different way to calculate the "value", I believe, from most people, but I found it removes a lot of the "imponderables" from the equation. I took the amount that DVC cost me and added the running costs annually. Then I deducted what I believed my hotel cost would have been for a similar holiday. It took me about 6 years to pay off the initial capital and after that I am left with the cost of dues ( about $4 per point) as my only cost. With a studio at OKW costing on average 10 points a night for weekdays that puts me in paying $40 a night for a room. Now granted at the moment on things like hotwire it's possible to get a room at a 3* hotel in Orlando for that amount ( although on the hotel you pay tax, OKW points don't attract tax) it's arguable as to whether that represents a "saving" in financial terms but with the room rate at OKW somewhere in the range of a MINIMUM of $150 and that's at a very tough time inthe hotel market I believe it does show a saving. To illustrate how I worked things out.

    Jan 1 1993) outlay £10,000 to DVC.
    April visit to DVC (add interest of £125 to cost for 3 months at 5% so actual cost £10,125)
    Cost of hotel room for my family would have been £1500+£750 from relis. Take hotel cost of £2250 from £10,125 to leave actual cost of £7750 as of end of April. to calculate cost as of end of Dec 1993 add interest of £290 so "real cost" at end of Dec 1993 was £8040+dues cost £460 so left with cost of £8500.

    I then continued those type of calculations for each ensuing year, using a hotel inflation cost of 8% which was the historical average. So for example the following year with interest on the capital sum reduced to £425 from £500 the year before ( 5% on £8500 instead of £10000) and hotel cost increasing from £1500 to £1620 it means the capital cost at the end of the second year was £7875. The next year we had relatives come again so there was again another £750 "earned" so by the end of year three the "cost" came in at £6250.
    I was lucky enough that DVC threw in free passes for half the occupancy of your unit so that saving also massively skewed my figures in favour. IMHO that was worth at least £500 a year.
     
  4. Celestine

    Celestine DIS Veteran

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    Thank you for the replies. DH & I have decided to visit the DVC properties during our visit in October & then make our final decision, but as things now stand, it is looking positive.
     

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