A bit disappointed DH is a numbers guy

[moredisneyplease]

I agree MOST with the inflation approach on this matter. Of course I love my DVC and want more and more and more but when push comes to shove I'm doing this so that I'll be able to go 15 years down the line when prices are no where near where they re now......and then 30 years and then 45, etc etc.

 

[Disney_Villain]

anyone else on here good with numbers and can give me some other rationale?

Try this article from DVCNews.com:

Exactly how do I save money using DVC?

http://dvcnews.com/index.php?option=com_easyfaq&task=view&id=55&Itemid=148

 

[Brian Noble]

Here's a numbers-centric approach. A numbers guy would laugh out loud at the DVCNews article, because it values all amounts in interest-free terms. Anyone with more than a high school exposure to economics will balk instantly.

Here's one that works even for the MBAs in your life. First, figure the "carrying cost" of a point. I amortize points at 8% of the purchase price per year, which covers both the fact that Disney is an RTU, and accounts for the time-value of money. You can pick the interest rate that you prefer, but 8% is pretty conservative (particularly given the market's current position!)

For example, consider a purchase at AKV today at $96. For round numbers, let's use $100 per point. So each point has an "amortized cost" of $8 per year.

Add that to the annual dues. Dues at AKV this year are $4.71.

So, the total cost "per point" is $12.71. So, one week in a Savannah View room in Magic Season, which requires 135 points, where those points "cost" 135*12.71, "costs" a total of $1,715.85.

Now, you need to know the pre-tax effective nightly rate for that room. The post-tax nightly rate is the total divided by 7, or $245.12. Tax for WDW resorts is 13%, so divide that by 1.13 to get a pre-tax rate of a bit under $217.

Compare that to a Moderate room. Magic Season for DVC is usually either Peak or Summer season for WDW Moderates. A Moderate room with a preferred view will run anywhere from $199-$225 per night, depending on season and weekday/weekend. So, for approximately the price of a Moderate preferred view room, you're getting a Deluxe-class room in a preferred view category instead. That's a nice free upgrade.

Alternatively, compare it to a regular Savannah view room at AKL. During Magic Season, those rooms are either in Regular or Peak season. Those rates range from $345-$430 per night. So, looking at things this way, you're getting a discount of anywhere from 33%-50% per night.

Even in the first year, you're doing really well. But wait, it gets better: as inflation pushes prices up, the ENTIRE room rate for cash rentals is subject to inflationary pressure, but only the DUES portion of a DVC membership is. So, over time, your savings for owning vs. renting is only going to go up.

Honestly: for anyone who is accustomed to staying in Moderate or better rooms on property one week per year, on average, it would be foolish not to buy DVC.

 

[dvc at last !]

This is a lot of info a/k/a this is a lot of thinking !
Thanks.

 

[AlexTina]

Show him my worksheet it makes a few assumptions that I know will change like the number of points per stay, number of nights per stay, and resort for each stay. But for the sake of numbers it works for me. BTW I was an accountant prior to becoming a SAHM so I have this incredible need to see things/numbers written down on paper and I play with numbers a lot! It's some weird personality disorder that seems to aflict accountants

Assuming an April UY and a purchase of 185 points

April 2008 = 185 pts. banked to 2009
April 2009 = 185 pts.
total = 370

5/09 vacation = 260 pts. 8 night AKV Savanna
110 4/09 points bank to 2010

4/10 = 185 pts.
+ 110 banked from 2009
Total = 295

5/10 vacation = 220 pts. 8 night AKV stnd.
75 points bank to 2011

4/11 = 185 pts.
+ 75 banked from 2010
total = 260

5/11 vacation = 220 pts. 8 night AKV stnd.
40 points bank to 2012

4/12 = 185 pts.
+ 40 banked from 2011
total = 225

5/12 vacation = 220 pts. 8 night AKV stnd.
5 points bank to 2013

4/13 = 185 pts.
+ 5 banked from 2012
total = 190
+ 30 points borrowed from 2014
total = 220

5/13 vacation = 220 pts. 8 night AKV stnd.

4/14 = 155 pts.
+ 65 points borrowed from 2015
total = 220

5/14 vacation = 220 pts. 8 night AKV stnd.

4/15 = 120 pts.
+ 100 points borrowed from 2016
total = 220

5/15 vacation = 220 pts. 8 night AKV stnd.

4/16 = 85 pts.
+ 135 pts. borrowed from 2017
total = 220

5/16 vacation = 220 pts. 8 night AKV stnd.

4/17 = 50 pts.
+ 170 borrowed from 2018
total = 220

5/17 vacation = 220 pts. 8 night AKV stnd.

4/18 = 10 pts.
+ 178 borrowed from 2019
total = 188

5/18 vacation = 188 pts. 8 night AKV Value 1 bdrm.

4/19 = 7 pts.
+ 181 borrowed from 2020
total = 188

5/19 vacation = 188 pts. 8 night AKV value 1 bdrm.

4/20 = 4 pts.
+184 borrowed from 2021
total = 188

5/20 vacation = 188 pts. 8 night AKV value 1 bdrm.

4/21 = 1 point

take a year off and start all over again, LOL...

Based on this I will be taking an 8 night vacation once a year for the next 11 years just using my initial point purchase of $17760.00 + MF's for the next 11 years which brings my total close to $27000.00 over the next 11 years. We are a family of 5 so we have to stay at either GF, Poly, Contemp, one of the DVC resorts, or get 2 rooms at a moderate or value. Since the Poly is our favorite out of the 3 monorail resorts that is where we would likely stay had we not bought DVC. If we stayed at the Poly for 8 nights once a year for the next 11 years at rack rate late may/early June our total out put would be approx. $39,500.00. So I feel that this is definately a value for our family. If we were a family of 4 or less maybe it wouldn't be such a great value, but for us it works well. Keep in mind I have not accounted for increases in MF's or resort rates.

BTW. I am totally new to this hence the "need" to work the numbers over and over, LOL.. If I've got it wrong feel free to correct me.

Tina

 

[crisi]

Honestly: for anyone who is accustomed to staying in Moderate or better rooms on property one week per year, on average, it would be foolish not to buy DVC.

With the following caveats:

1) You will continue this pattern.
2) DVC will not entice you to change this pattern (you lose any savings the minute you fall for that jaccuzzi tub)
3) You do not finance (or manage to finance for a low rate and short term if you must finance)
4) You anticipate stable or increasing income for the period you own DVC
5) If you sell DVC before you get your ROI on it (Return on Investment) you will be able to sell it for enough to make up the ROI.

 

[Brian Noble]

Agreed on all points.

(Though those 1BRs are really really nice. )

 

[Dean]

In a sense he's right up to a point. The real answer is likely somewhere in between. It's not so much that DVC inflates the costs for DVC cash stays but simply that Disney in general thinks a lot of itself and rightly so. The only realistic way to do this is to look at your past trips and experience and compare. If you normally stay on property at a moderate or higher and don't do long weekends, the numbers really should work out assuming you'll use the points only at DVC, do full weeks or S-Friday type stays, and don't finance. If you normally stay off property, are looking at long weekends, have to finance or are planning to use points for non DVC stays, the numbers will not work out.

 

[vicki_c]

He says 1500 can't be fair market value. Once Disney fills the rooms with DVC they don;t care about filling the other rooms so they overcharge for them to make DVC members feel like they get an exceptional deal.

I am not a numbers person, but this makes no sense to me.

Fair market value is whatever the market will pay.

Disney doesn't "fill" all the rooms with DVC - that's why some are eventually released to CRO for cash bookings. And CRO also has their own pool of DVC rooms to book. And I'm sure many of the rooms are booked for the rack rate. Not all, because of bounceback offers and the like. But lots.

So, if people are willing to pay the rack rate, how can it be considered not fair market value? It is what it is, and if you call up to make a reservation and don't have a code or a bounceback offer or something, you're going to pay the rack rate.

 

[marshmallow]

If they sell if for a price and people pay it.........

I remember when rooms at the Grand Californian went for half of what they go for now. And they are always booked now......

 

[djmeen]

If they sell if for a price and people pay it.........

I remember when rooms at the Grand Californian went for half of what they go for now. And they are always booked now......

Funny enough, it was after three trips in three years to Disneyland staying at the GC that the wife and I realized we could've paid for DVC points just with what we spent on those rooms!!!!

I'll also echo what someone else said in that the biggest benefit is that we are "forced" to take a great vacation every year....

Added bonus that we always seem to be sharing some of the magic with family members, like being able to take my parents last June with us. It was my dad's last vacation before passing away and something we probably wouldn't have been able to manage if we didn't already own DVC.

Those are the priceless parts of the "investment" for me. And I didn't even need a spreadsheet....

 

[kikiq]

I'm married to a workaholic engineer, and it's all about the numbers. I did the one two punch last year. One: The "look" with the comment "you need a vacation at least once a year" and the question "Where do you want to go for our anniversary?" He says, "Hawaii or WDW" WDW?!?!
We live 20 minutes from DLR, so spent the actual day of our anniversary at DLR, had dinner at Storytellers AND THEN set up a DVC tour the next day.
He ended up not going because of meetings, but agreed to check out the DVC resorts while on our anniversary trip to WDW. We stayed a week at the Poly. Visited all the resorts, he liked what he saw but wasn't convinced.

#2 punch: Returned home, I had prepaid our Poly reservations so he didn't see the bill THEN showed him the bill, he says, "call our guide, I need to see the numbers" With the SSR discount last fall AND some additional AP incentives at the time, he was interested. He then asked how much this trip we had tentatively planned with our extended family this year would cost at the Poly. Let see...3 garden view rooms for a week, even with AP discount...close to $8000. So add up the anniversary trip and this summer trip both at the Poly...more than 1/2 the cost of DVC.

He did ask me yesterday to see how much it would cost to stay at the Poly without any discount. 1 garden view room was $3400/week!

 

[Lisa P.]

OP, you may find that some folks here may be rather fiercely pro-DVC and perhaps you'll consider that when evaluating responses. It sounds to me like your DH is using plenty of common sense in looking at this purchase carefully before diving in.

FWIW, I think it's actually quite a fair comparison to consider WL and AKL when making a cash comparison. The studio units at these resorts are not that different from the hotel rooms at the same resorts. In both cases, they're smaller than the rooms at some of the older deluxe properties. Also, the studio rooms at SSR may be a reasonable comparison with CSR, IMHO, since the amenities at these two spread out resorts are quite similar, except for the golf course - if that doesn't matter to your family. But to make an apples-to-apples comparison, I'd compare the costs on the same dates as I'd most like to stay on vacation:

DVC points-cost of a Studio Villa plus daily housekeeping charges vs. cash rates at a garden view room plus room taxes.

I suspect that cost of daily housekeeping service (which is provided to nightly cash guests) is rolled into the cash price, making it seem higher. Our family does not care for the intrusion of daily housekeeping but for many families, this is an adjustment and ought to be considered. The extra inroom amenities of a kitchen, jacuzzi tub and washer/dryer in larger units also bring up the price and it's harder to compare.

I was very impressed by the quality of materials used in the construction of the DVC units compared to what I have generally seen. I told my DH that if we ever purchased I would buy DVC because they have structured the situation to protect the investment.

Since these resorts will be returned to Disney at the end of the RTU contracts, it makes perfect sense that they'd want to protect their own investment. It also begs the question... will they increase maint fees in the final years of these contracts to ensure that these resorts are returned to Disney's rental inventory in pristine condition? With a 15% annual cap, it's possible to see substantial increases in annual dues over just a few years. Or will they allow the condition to slide toward the end, if they determine that they'd plan to bulldoze and re-build on prime real estate? They may do one of these or they may do neither - just thinking...

 

[ckg]

My wife is a Disney nut and her family is especially Disney nuts. I on the other hand am more moderately so particularly when it comes to a competive product like a timeshare. When we bought at SSR in 05 I crunched the numbers hard to see if it made sense for our situation. I never really believed the pays for itself in 7 trips or whatever the saying was as there are many factors to make that happen as is the case in most marketing slogans.

As was mentioned here though one thing I really liked was that the only piece that could go up was the annual dues/maintenance and taxes. The actual lease was fixed (with interest if you use a note). In looking at the trends of how much maintenance would go up a year, I think the trends show about 3-5 percent a year. Only that part was subject to go up and even accounting for that over the 40-50 years of the lease it made a lot of sense overall.

We have a note on the lease so our earlier years are more costly but our overall cost per vacation year is pretty darn low for what we are getting.

I have to say too that I do not agree with the "Deluxe" nature of the resorts. I would say they are moderate (like Marriot or Sheraton not Ritz Carlton or St.Regis). That is cool for us. What I really like is the flexibility it offers versus traditional fixed timeshares in room size and stay requirements and amenities (wash to clean bathing suits and pack less, kitchen to not waste $ on breakfast eggs/cereal we can stir up ourselves so we can splurge on dinner) compare to a regular hotel.

I happen to work for a major hotel company and my last preference is to use my very nice discount to crowd in a hotel room.

 

[crisi]

Lisa has some good points - when you start comparing DVC to Moderate or Deluxe hotel rooms, you need to keep in mind that it isn't an apples to apples comparison.

If you WANT daily maid service, paying for it through DVC is going to make your costs a LOT higher.

If you WANT DVC for the kitchen/laundry/extra bedrooms, DVC is going to get a lot more expensive.

If you WANT two queen beds, hotels are a better bet - only OKW has two beds in their studios - the other resorts have a queen and a pullout.

If your plans are subject to change at the last minute - that CRO cancellation policy is a LOT nicer than the DVC one.

On the other hand, if you are the type to cook in your room - the kitchen may save you in dining costs. If you are doing a lot of coin op laundry, DVC has free (bring your own detergent) laundry - (in room for everything but studios, but in a studio you can use the laundry room).

And, more importantly, if you don't care about thing like two beds and mousekeeping, are going to stay in studios, and if you limit yourself to low points weekday nights - you can save quite a bit over CRO rates. The real place Disney gets you with DVC is few of us end up using DVC to SAVE money - we are seduced by the kids in a different room, the ability to affordably bring guests, the jacuzzi tub, getting an extra trip out of those APs.....

 

[ssrmouse]

For OP:

When I first looked into DVC in 2004, I had the same concerns that your DH had regarding fair value of a DVC stay using rack rates. Their prices seemed really high to me. Plus, there is usually some discount available, so no one should be paying rack rates.

I've been lurking on disboards for about 5 years now, and when questions like yours come up, I frequently see comparisons to rack rates when crunching numbers. The Guides (salespersons) do this too, saying you will break even in 4 to 7 years.

I took a different approach. Look at the DVC Rent / Trade board. You can always rent for $10 a point (by the way, this price hasn't changed in 5 years, and it doesn't make any sense to me, but that's a separate topic).

Anyway, so if renting, the cheapest you could stay at an OKW studio for 1 week is approximately $800.

At the time I did my "rent vs. buy" analysis, I figured my "break even" date would occur about 12 years after purchase.

Hope this helps your DH take a different perspective on DVC ownership.

 

[WDWmom08]

Plus, there is usually some discount available, so no one should be paying rack rates.

We went to Disney for one week in mid-May. We booked the trip when the packages were first announced for 2008 in April of '07 and held our breath for a discount. And low and behold we got one the day our balance was due. It saved us $300 on a $4100 package. So yes you may get 'some' discount but I think they are definitely over-played and over-promised. Our garden view room at the GF after tax ran us $470/night. It may not be the full rack rate but use that for your comparrison and you'll break even long before year 12.

 

[DVCERSINCEDAY1]

If I don't use my Disney points one year, I can typically rent the points to pay for just about any other trip I might want to make. In fact, that is my Plan A...to use my Disney points/money for vacations wherever I feel like going that year. In buying the DVC points, I force myself to consider vacation plans, but I am not constrained to going to DW each and every year. I did do an exchange through II once (studio)...will never do that again. II has nothing to offer in exchange that I couldn't rent from an owner direct/cheaper with the rental money from my DVC points.

And, as a numbers person who has owned most years since 1993, DVC is a good deal just about anyway you figure it, except when one makes unrealistic assumptions about using the money in others ways (e.g., pie-in-the-sky return on stocks).

 

[birmantaz]

Thanks everyone for the input. I really value all the thoughtful responses. I have some more research to do....

 

[ssrmouse]

In response to WDWmom08, clarification on my own initial analysis, and my own actual costs:

I've never stayed in a GF garden view or an OKW studio. But if you think that these rooms and resorts are comparable, then you're right, you'd be way ahead to buy into DVC.

My estimated 12 year "break even" included consideration for lost investment opportunity, at my historical rate of return (not pie-in-the-sky estimates). It was based on trips scheduled for Magic or Premier seasons, and in 1 bedroom villas.

If I were to take lost investment opportunity out of my equation, my "break even" occurred just two years after my purchase (using my "rent vs. buy" analysis).

For the "numbers people," here's my data (excluding lost investment opportunity):

INITIAL PURCHASE IN APRIL 2004 (FOR DEC 2004 USE YEAR)
Purchase 160 Points @ $89 / Point $14,240
Less DVC Credit of $5 / Point -$800
Financing Costs (1 year at 4.95%, for 50% of purchase price) $197
INITIAL PURCHASE PRICE $13,637


ANNUAL DUES
2004 $153
2005 $581
2006 $689
2007 $662
2008 $662
TOTAL ANNUAL DUES PAID $2,747


TOTAL COST OF OWNERSHIP TO DATE $16,384


THEORETICAL SALE
Sell 160 Points at $80 / Point $12,800
Estimated Closing Costs -$450
NET FROM THEORETICAL SALE $12,350


THEORETICAL NET COST OF OWNERSHIP TO DATE $4,034


VACATIONS TAKEN
12/15/04, 2 Bedroom, 5 nights 197 points
12/20/04, 1 Bedroom, 3 nights 66 points
2/19/06, 1 Bedroom, 5 nights 135 points
2/20/06, Studio, 3 nights 39 points
2/18/07, 1 Bedroom, 5 nights 135 points
TOTAL POINTS USED FOR VACATIONS 572 points

TOTAL VALUE OF VACATIONS AT $10 / POINT $5,720

I didn't intend to scare off the OP's DH with my original post. I just wanted to share my own experience and concerns at the time that I was considering purchase.

Actually, I really wish that we would have bought back in 2000, but I couldn't afford it at the time.

CaskBill touched on some other benefits of ownership. Others include dining discounts.

For us, our biggest savings has been found in buying 10-day, non-expiring park passes whenever we have the money to spare. This has been a great investment for us. It seems like the price of park passes increase 20% per year. That's better than investing in the stock market.

Anyway, good luck to the OP in convincing her DH.