Annual fee too much for DVC?

[changjoe]

Hi everybody, I am new to the board, and is seriously considering joining DVC. The only thing holding me back now is the annual fee. From what the rep told me, he said for the last 10 years, the annual fee has increased 4% annually. After some excel calculation, if this year's annual fee is $500, then in the 19th year the annual fee would be about $1000, and 30th year would be $1500.

Can someone explain to me how this is a good deal?

 

[jarestel]

Hi everybody, I am new to the board, and is seriously considering joining DVC. The only thing holding me back now is the annual fee. From what the rep told me, he said for the last 10 years, the annual fee has increased 4% annually. After some excel calculation, if this year's annual fee is $500, then in the 19th year the annual fee would be about $1000, and 30th year would be $1500.

Can someone explain to me how this is a good deal?

The annual fees over the life of the contract will be far more than the initial purchase price. Maintenence fees are used to keep the resort in fairly predictable shape from year to year and to pay for services ( housekeeping, transportation, taxes, etc ). As prices do tend to increase over time, this makes sense as everything else will also increase over that time frame, including our salaries. ( hopefully :>) )

 

[gjw007]

Hi everybody, I am new to the board, and is seriously considering joining DVC. The only thing holding me back now is the annual fee. From what the rep told me, he said for the last 10 years, the annual fee has increased 4% annually. After some excel calculation, if this year's annual fee is $500, then in the 19th year the annual fee would be about $1000, and 30th year would be $1500.

Can someone explain to me how this is a good deal?

By itself, that is a very distressing number. But it is also meaningless unless compared with alternatives. To determine whether it is a good deal for you, you need to look at the total cost, initial price plus total of the maintenance feees, over the life of the ownership. You then compare this with the total cost of staying in motels and the increase in hotel rates over the same period. If you stay in Hotel 6s, clearly it is not a good deal. If you stay in more upscale hotels, it becomes a very good deal. The above is assuming that the number of points you own is equal to the number of days that you would stay in a hotel. If you have excess points, if you don't use them, it is an expense. If you rent the unused points, it lowers the cost of ownership. As you can see, there are numerous variables to determine if it is a good deal for you or not. In general, if you stay in Deluxe hotels at Disney, it is a good deal over the life of the contract.

 

[lovewdwdvc]

I guess that the comparison that I use is Poly.

We stayed there on our honeymoon in 1983. It was wonderful and we thoroughly enjoyed the resort. I think that the room charge for one night was $70-90 range. I think that the same room now would be $250-300 (not sure though).

If room rates continue to climb like they have in the past we will be really happy with 4% at DVC.

What do all of you think?

 

[changjoe]

The reason why I am not sure if it's worth it, is because it basically cost $2212 per year for it. here is the math:

For 210 points:
Initial purchase: 19000 (with SSR Savings)
Total Annual Fee: 91600 (with 4% of annual increase)
Total cost: 110600

Cost per year: $2212.

Just recently I spent 5 nights at AKL (savena view), and that was about $250 per night. So for those 5 nights it was about $1250. Does anybody know how many nights at AKL can I get with 210 points?

 

[changjoe]

If room rates continue to climb like they have in the past we will be really happy with 4% at DVC.

What do all of you think?

Then it would be a good deal.

 

[Blue&Gold]

Using the same 4% benchmark, a hamburger costing $5 today will cost over $16 in 30 years... I still plan on eating.
Not to be too flippant, this is one of the many factors you should consider before taking the plunge, but make an apples to apples comparison. Your salary, savings, etc will also be in those hypothetical 2035 dollars.

 

[lovewdwdvc]

changjo another thing that we are thinking about is not holding our DVC for 50+years. WE are looking at the fact that the people who bought at OKW 10+ years ago are now selling their DVC for about 40% more than they initially paid for the DVC and have used it for the those years. It is definetly a risk but it is a risk that we are enjoying. And we might as well enjoy "using" the money too.


Now if they would only give us all of the free tickets that were given to the origional OKW investors.

 

[lllovell]

The reason why I am not sure if it's worth it, is because it basically cost $2212 per year for it. here is the math:

For 210 points:
Initial purchase: 19000 (with SSR Savings)
Total Annual Fee: 91600 (with 4% of annual increase)
Total cost: 110600

Cost per year: $2212.

Just recently I spent 5 nights at AKL (savena view), and that was about $250 per night. So for those 5 nights it was about $1250. Does anybody know how many nights at AKL can I get with 210 points?

Ok, now take that $1250.00 you paid for a standard hotel room (not a DVC room which at a minimum the studio rooms are much nicer than standard hotel rooms, with a balcony on each room, a kitchenette, a real bathroom, etc - the one and two bedrooms and grand villas don't even compare) and multiple that times a 4% increase per year....

The next 50 years at AKL would cost you $190,834.00.

Your DVC purchase would save you $80,000.

That said, the AKL isn't a DVC hotel so you can't stay there as you would the 5 on site resorts or Hilton Head or Vero Beach...(edited to add - you CAN stay there on points - its just very points intensive to stay at a non-DVC hotel on site at WDW)

We own 250 points and not using them SUPER frugally - but only going during the week, etc - this year we are going to have gotten the following from our points.

5 nights Studios - Old Key West
5 nights Studio - Old Key West
5 nights One Bedroom - Saratoga Springs
Thurs - Sat night (3 nights) - Hilton Head

18 nights - one of which is a weekend (although in Jaunary - very low season for Hilton Head - still a nice get away in my eyes!)

They just don't compare to me!

 

[lovewdwdvc]

chango If you really want to stay at AKL then do not buy DVC because the exchange is not very good. But if you want similar accomodations at a DVC you can get two weeks in a studio for 210 points. That seems to me to be a fair comparison.

That is in 2005 dollars and by your comparison, you would have the same amount of $ to spend 50 years from now. I think.

I am no accountant. obviously

 

[changjoe]

AKL was very nice indeed, but I don't plan on going back there every year. I would like to try out different resorts. I was simply using it as a comparison - perhaps a bad one.

 

[disneyberry]

[SIZE=+0]Hi, I just wanted to comment that 210 points isn't really comparable to 5-nights of AKL.

For 210 points: every year, you could theoretically book 15 to 16 (or more) weeknights in a studio at any DVC resort. That's 3 times more nights. Even if you booked weekend nights, it's at least 10 nights per year, which is still twice as many nights as what you were comparing.

The math for financial analysis of DVC just can't be done that simply, especially 'cause most of the time, people are comparing apples to oranges. (Not to mention you really should consider the time value of money. ) The closest Disney regular resort room to DVC would probably be comparing a BWI hotel room to BWV Studio (same idea at BC or WL). Take those rates and run the numbers again. Good luck.[/SIZE]

 

[lovewdwdvc]

blue and gold ----------I am thinking about buying hamburgers now and keeping them for the next 30 years

 

[Dean]

One can only make the numbers work if you plan on staying at DVC resorts almost all, if not all your trips. And at least go neutral or light on weekends. Plus one would have to be staying on property in a moderate or higher to make a reasonable comparison. IMO, comparing AKL cash to 210 points is not a reasonable comparison. If you want to compare a deluxe to DVC, compare the number of points you would use for a deluxe DVC in a studio for the same nights, say BWV or BCV. That's between 60 & 106 points if you exclude Premier time. Say an average of around 80-100 points needed yearly to round it off. Buy in price around $6400-8000 and yearly fees about $400-500. IF you do Sunday to Friday DVC is a steal. If you do 5 days over a weekend, the non DVC resort will come out ahead in most cases.

IMO, given the commitment involved, DVC has to be a clear and definite winner for YOUR situation to be worth considering. If it's at all close, the risks and negatives are too great to make it worthwhile. The exception being those that can and will truly take advantage of the annual pass discounts in a big way.

 

[JimC]

Hi everybody, I am new to the board, and is seriously considering joining DVC. The only thing holding me back now is the annual fee. From what the rep told me, he said for the last 10 years, the annual fee has increased 4% annually. After some excel calculation, if this year's annual fee is $500, then in the 19th year the annual fee would be about $1000, and 30th year would be $1500.

Can someone explain to me how this is a good deal?

OKW fees have gone up 3.1% compounded annually since early 1990s. Resorts rates during same period have gone up 5.1%. Review this write up for more cost analysis:

http://www.mousesavers.com/dvc.html#dvc

More information also available here:

http://allearsnet.com/acc/dvc.htm

 

[DebbieB]

I look at it this way. I have 250 points which gets me 11 nights in a 1 bedroom per year (6 at BWV in early Dec, 5 at OKW in May). The rack rate is over $400 per night. My dues are about $1,100, so for 11 nights that's $100 per night. If you amortize out the original purchase ($14,750 in 1999), that's about $350 per year or about $32 per night. So I'm getting a $400 room for about $132 a night. Seems like a good deal to me!

 

[Caskbill]

You can't just take DVC and figure 4% inflation for dues, calculate the total cost over 30 years, and then compare that figure to TODAY'S hotel room. Comparing what the price of something in 30 years will be makes no more sense than comparing today's rate to what it was in the 1970's. That's like saying today's DVC is much more expensive than a Motel 6 was 30 years ago when it was only $6.00/night.

If your AKL room is $250/night today, or as you said you got 5 nights for $1250. then in 30 years, at 4% inflation, that $250 becomes $810/night, or $4054 for your same 5 nights.

In the long run, DVC will be much cheaper. Put it another way. Counting dues only, and figure about $4/point today, during mid-season you can get a Studio at OKW for 10 points/night. So that's 10 times $4, equals $40. Now, say next year it goes up 4%, so dues become $4.16/point. Thus the same room at 10-points/night is now $41.60 for the night. A net increase of $1.60 per night.

Now your AKL room is $250 for a night. It goes up the same 4% for next year, so that's now $260/night, or a net increase of $10, which is over 6 times as much an increase in actual dollars as the DVC room.

Look 5-years down the road, with 4% annual increases, your $4.00/point becomes $4.87/point, or $48.70 for the 10-point Studio. A net increase of $8.70 over today's $40 price.

The AKL room at the same 4% goes from $250 to $304/night, or a net increase of $54/night.

For the 5-day week in 5 years, your DVC room will cost you $43.50 more than today ($8.70 x 5). But the AKL room will cost you $270.00 more than today. ($54 x 5)

Continue this on for 30 years and you'll see the big difference.

 

[DMDSTPRGIL]

I think most of us know by now that U can go to Disney and stay in a motel for the cheep if that's the way U want to go. For some it's all they can afford.Years ago that'a all my wife and I could afford. Till we bought into DVC. We could never have afforded to stay at the BWV's and pay rack rates. Even a studio is close to $500 a night during March. We ended up buying in and kept adding on. we now have 654 points. Some we paid$62 then $65,then $67 and the last $75 a point. When I sat down with the numbers it came out to costing us around $4000 a year with the purchase price and the points.I didn't bother to compound the rise in dues or the rise in the rack rate,one cancels out the other. We will be going to Disney a total of 6 times this year. When I added up the rack rate for the prices of all the types of rooms we are staying in this year with tax it comes out to $13,131. Now even with a really great discount of 50% off the rack rate,which I have never seen, that comes out to $6500. It's still a good savings. And something I never counted on is that even though there are less years left for BWV points they are selling for more and more each year on the resale market,$85 a point right now.I don't plan on keeping them all for the full term.The other great thing about the DVC is that I pay my dues by the month. So when it's time to go I'm not coming up with that big credit card bill to pay for the room.U need to use your points at a DVC resort to get the value,it doesn't pay if U use it at other locations.

 

[deide71]

For me the deciding factor was the one and two bedroom prices. I have a family of five, and although I love my kids, I don't enjoy sleeping in the same room. To get comparable accomadations we either have to get two ajoining hotel rooms on property (hard to come by and more expensive, also no kitchen), or rent a townhouse off property, which is very inconvenient.

Sure, I can get a clean townhouse in Kissimmee for 150/nt now, but then I have to rent a car, drive in traffic, pay to park, and take a tram and a monorail to get to MK.

Also, DVC is the only timeshare I have researched where the resale value has historically appreciated. Theoretically You could buy pts in SSR now, use for the next ten or so years, and possible resell for your purchase price or more at that time. You stayed for the price of your dues. Granted it is a risk, but you should see what my stocks have done lately.

Hey, even if I calculated wrong, I'll get great vacations with my family while my kids are young, that's priceless to me.

 

[changjoe]

thank you all for all the insights, a lot of it helped me see the value of joining DVC and how it can save!

i have decided to join SSR for 210 points