Annual dues increase verses hotel rate increase - Which will win?

[nderh2o]

I am STILL looking into purchasing a DVC membership and am trying to reconcile the financial value.
As I calculate it, the average dues increase (for all resorts) since 2000 is about 4.3%. If this continues, SSR (currently 4.12/point) will be over 6.50/point in 10 years - I undestand the increases aren't necessarily linear but if the current trend holds, this is where they will end up. Over 22.00/point by the end of contract.
DVC ownership is hands-down a better value verses moderate resort stays over the immediate future (3-5 years) but I am not so sure that the price increase in moderates will outpace the increase in annual dues (no change in price over the last two years)? Anybody have any insight/opinion. I am looking for numbers here. I want to make a financial case as to why DVC is the way to go. I have seen calcs where people have utilized 6% as the effective annual increase in the price of a moderate over the life of a DVC contract. That seems extremely excessive.
Any help would be appreciated.

 

[crisi]

Here is the bet you are making - will that moderate room go up more or less than dues. 4% of $4 is less than 4% of $150 (or whatever a moderate room goes for), so figure out what your dues rate is for a night and ($4.20 a point x # of points for a room) - if that's less than the moderate room rate, you'll likely come out ahead.

Remember DVC can't raise the dues rate for profit by law. They are legally obligated to be "good guardians" of our dues. There is no such law controlling the profit they can make on the hotel side. My guess is that DVC points will go up less each year than the hotel side - since they'll have similar operating expenses but DVC's profit is capped.

 

[CarolMN]

Have you seen this thread yet?

DVC membership vs staying at Disney Resorts

Within the thread is a link to a section of the Mousesavers website. There are a few examples of resort price increases there that you may find interesting.

Good luck with your calculations.

P.S. We just assumed that resort rooms and DVC dues would increase at approximately the same rate. Also FWIW, a lot of people find out that DVC does not save them money. That's mostly because they end up going more often, staying in larger accommodations and/or inviting friends and family to accompany them. They never would have done any of those things before DVC, LOL. So all your numbers & spreadsheets will be for naught if you don't hold to your pre-DVC pattern and assumptions!

 

[nderh2o]

Thanks for the perspective.

Contrary to what some of my friends may think of me from the way I talk, I am an ultraconservitive financial risk taker when it comes to the money I actually see in the form of take-home pay (not including auto w/d for investments, etc).

The bottom line is, my wife and I love Disney and we became hooked on the villa style accomidations when we got a super secret code in the mail for a stay in a 1BR at OKW two years ago with a 1, 3, and 5 year old. I can't stand using a bed as my primary piece of furniture when I am on vacation. We just got back from 9 nights it POR in a single room with a 3, 5, 7 year old now and, it was fun but no chance to relax in the room. Not my idea of an ideal vacation.

Ever since then we have been considering membership in the DVC. Everything that I have see thus far says that it is the best deal out there for on-site accomidations but I am still trying to rule out "the catch." So far I haven't found one but I will keep looking for a few more days and then make the decision.

 

[nderh2o]

Carol,
I understand that we will, in all likliehood be going to WDW more often that our current every other year trip if we join the DVC but I wouldn't even consider this when determining savings. It would not be such a terrible thing to have to tell the kids that we have to go to WDW more often. We have already had to break the news that if be buy now that it would mean we would have to go next June due to current points remaining from 2007 on the contracts we are looking at. You should have seen the sad faces when they heard that.
I am only performing my comparison of a studio verses a single room. Seems to be the only equivalent comparison. Once you start looking at more than a studio, the equivalent non DVC accomidation would be cost prohibitive.

 

[CarolMN]

Carol,
I understand that we will, in all likliehood be going to WDW more often that our current every other year trip if we join the DVC but I wouldn't even consider this when determining savings. It would not be such a terrible thing to have to tell the kids that we have to go to WDW more often. We have already had to break the news that if be buy now that it would mean we would have to go next June due to current points remaining from 2007 on the contracts we are looking at. You should have seen the sad faces when they heard that.
I am only performing my comparison of a studio verses a single room. Seems to be the only equivalent comparison. Once you start looking at more than a studio, the equivalent non DVC accommodation would be cost prohibitive.

I agree with everything you've said - just didn't want you to over stress on the "savings" aspect. But with 3 children, you probably shouldn't be using a studio for comparison, anyway. (And only the only mod that accommodates your family in one room is POR).

With 3 children, you won't be able to stay in a DVC studio once the youngest turns 3. MS is very strict about occupancy for studios (Max is 4 persons plus an infant under the age of 3. You get a portable crib for the infant).

5 people are officially allowed in the AKV 1 bedrooms (unless it is a value category 1 bedroom). MS has recently been allowing 5 in the other DVC resort 1 bedrooms, but there is no extra bedding provided for the 5th person - you 'd have to bring an aerobed or something similar for the extra person.

Just a few more things to think about -

 

[LisaS]

Everything that I have see thus far says that it is the best deal out there for on-site accomodations but I am still trying to rule out "the catch." So far I haven't found one but I will keep looking for a few more days and then make the decision.

I think you already found "the catch", namely that the dues will be the greatest expense over time. If hotel rates go up at a similar rate and eventually become too expensive for your vacation budget, you can opt not to go. If you buy into DVC and the dues become too expensive, you're still obligated to pay them until you can sell your contract. Calculate what your dues are likely to be over the years and make sure you are comfortable with those numbers.

Although many have sold their contracts for more than what they paid for them, I went into this assuming that if I hold the contracts for a long time, they will be worth less than I paid for them due to the declining years. But I will have long since broken even on this purchase so I won't be "out" any money. I will have had many wonderful vacations for less than AP rates at the deluxe hotels we used to frequent.

 

[Ecjc]

I am very conservative with money also (we usually stay at value resorts). I was putting the numbers on paper over and over when we finally came to the conclusion that this should not be looked at as a "money saver" but as a luxary. This is our luxary and our treat to ourselves and our family. So even if you don't save money in the long run it may be well worth it.

 

[lisaviolet]

OP:

I didn't notice how many points you are thinking of buying. But if it is over 160 think about splitting it up into smaller contracts. Then if the dues do become worrisome, in comparison to the increase at the resorts, then you could easily sell off contracts.

Best of luck with your decision.

I smiled with your "bed as primary furniture" comment. I love the DVC units for three things: couches and chairs (no OKW studio for me), balconies (came from mods and values) and above all kitchens and kitchenettes. I can't stand to eat out all the time. Love to hang out.....

Carol is so right. We bought in 2005. We have been nine times! Nine times! I always dreamt about DVC while I waited for the best time financially but I never thought I would go nine times in two years. Didn't save a lot of money. But sure had a lot of fun. As did friends and family. Which is such a wonderful part of DVC. To bring friends and family for free makes you feel so rich.

 

[ScottOKW2K]

Ever since then we have been considering membership in the DVC. Everything that I have see thus far says that it is the best deal out there for on-site accomidations but I am still trying to rule out "the catch." So far I haven't found one but I will keep looking for a few more days and then make the decision.

Take your time. When I first started looking in DVC I researched for *two* months before I even felt comfortable telling the wife that this was something we should look into. It took her another two months before she was comfortable enough to say "yes" or "no". Needless to say, the answer was yes and we have added on once since our original (resale) purchase. One of the best decisions that we've ever made !

 

[Goofy DVC]

Hope this helps.
These are real #s not assumptions.
I took my costs for the first 11 years as members(All MF + 11years of buy in cost) Total =$13,041 (WE bought in 93 The price then, don't ask, you'll be sick). We spent 84 nights at DVC resorts.
12 nights GV
44 nights 2 BR
13 nights 1 BR
15 nights Studio
We've hosted 34 different family members and friends.
Notice that we rarely stay in a studio, usually get it along with GV or 2BR.
No disrespect intended studio lovers but I spend to many nights in hotel rooms on business. I want some room!
The cost for us per night was $155.25.
$13,041 divided by 84 nights.
If you ask me that's a great deal for those accomadations.

 

[dianeschlicht]

Hope this helps.
These are real #s not assumptions.
I took my costs for the first 11 years as members(All MF + 11years of buy in cost) Total =$13,041 (WE bought in 93 The price then, don't ask, you'll be sick). We spent 84 nights at DVC resorts.
12 nights GV
44 nights 2 BR
13 nights 1 BR
15 nights Studio
We've hosted 34 different family members and friends.
Notice that we rarely stay in a studio, usually get it along with GV or 2BR.
No disrespect intended studio lovers but I spend to many nights in hotel rooms on business. I want some room!
The cost for us per night was $155.25.
$13,041 divided by 84 nights.
If you ask me that's a great deal for those accomadations.

Great analysis! The best part of that $155.25 per night is that you paid the same thing no matter what the size the accommodations were! The studios OR the GVs!!!

 

[hellerjw]

Dont forget the 12% in taxes that get added onto every cash room stay. That isn't something that is a factor in the DVC side of the calculations since the dues already cover any taxes.

 

[LarryM]

One of the things I have'nt seen mentioned, sorry if I missed it is what the room tax rate will add per night. I believe it is now between 10-15% a night. On a 150 a night rate that would be 15-22 extra a night.
The way I figured out it was right for us was I took the going room rate for a DVC studio minus 30% to account for discounts such as annual pass and the like. I then added up all of our stays since we bought in Jan, 2000 and saw how it came towards are orignal investment for 450 pts.(2 contracts)
Six years later we are now well pass the principal amount. now basically we are staying for however long our points last for the cost of our annual dues.

 

[jarestel]

It's difficult to predict with any certainty where prices will be in 20 - 40 years. Many things could happen to change the landscape as we know it today. But assuming things remain somewhat constant, if the price of a resort room becomes unacceptably high, a non-owner simply chooses not to vacation at WDW. A DVC member is still obligated to pay the dues (or find someone to take over the payments) if the dues become unacceptably high.

As with any purchase, it's best to make decisions based on the facts you know today rather than on the guesses and assumptions you predict will happen tomorrow.

Good luck!