Break-Even Point?

[BraveMom3]

I've been reading in several posts about people's break-even points. I'm curious how everyone arrives at this. In my case I just bought 190 points at VWL for $14,250. My three children and I have been going to WDW every year for the last 5 years, and last year it finally became clear to me that I would definitely come out better with DVC on my accomodations. For our 14 night stay in May/June 2001, I spent almost $3500 for WL, BC, and CSR. So even if I split our 2 week stays 50/50 between a deluxe (our favorite of course) and a moderate I would still be spending $3000 with rate increases. Based on that figure, adding in my annual dues($691.00 for the current year) to my purchase of $14,250, I come up with a break-even point of about 6 years [$14,250 + $4146($691 x 6 yrs.)=$18,396 divided by $3000 = 6.13 years] From there on my accomodations are costing me my dues only, about $700 currently. Not bad for a two week stay at WDW in a DVC resort!! Although I realize that we can't foresee the future, and can't be absolutely sure we'll continue to want to spend every year at WDW, you can always sell your points, or rent them.

Anyway, I realize that I'm rambling. I'm new at this, so does this sound about right to you DVC experts out there?!

150 days and counting 'til our first trip "home"

 

[spiceycat]

mind came at 2.5 years for the first points - I have added on 6 times since.

 

[vernon]

It's difficult to be exact because there are SO many variables. You're cost of borrowing/earning potential is one , maximising use of points is another. I can fully understand why people can come up with break evens anywhere between 3 and 10 years depending on those variables. In my case I work conservatively and on "worst case" scenarios and AT THE ABSOLUTE WORST I estimated 6 visits/years was my break even. The reality was probably closer to 4 ( on a "like for like" basis )but I did visit WDW every vacation when if I hadn't bought into DVC I'd probably have had a couple of cheaper ones somewhere along the line.

 

[Granny]

As pointed out by vernon, break-even depends on a lot of things. For one thing, I would never visit WDW twice in one year without a DVC ownership. So my break even will be sooner than the alternative which would have been less frequent trips.

In my case, I figured break even at about 6-7 years.

Those who joined in the early years got the free park admissions until 1999, so their break even was REALLY fast!!! (can you tell how jealous I am?)

 

[DVCDAVE]

I believe you are right on the money using the variables you considered. I calculated it the same way when purchasing, comparing a deluxe resort to DVC. However, in hindsight this is wrong ! It is comparing an apple and an orange. Yes both are fruit, but they aren't the same !

Last year my boss here at work went to WDW and stayed at a BWV 2 BR, paid cash for 10 days in April, and the bill was close to $9,000. We had spent 10 days in a 2 BR at BWV in March on points. Using the same room as a base and comparing room for room, (cash vs. points), you can calculate a break even of about 3 years (this may vary due to travel seasons and room size). I have now concluded that the only way to calculate the breakeven is to use the same room as the base and compare the off the self cash cost of that room vs. your DVC expense measured in points used.

 

[Granny]

Originally posted by DVCDAVE
I have now concluded that the only way to calculate the breakeven is to use the same room as the base and compare the off the self cash cost of that room vs. your DVC expense measured in points used.

DVCDAVE....the only problem with this analysis is that it isn't really realistic for me. I mean, I would never stay at a DVC lodging without being a member....way out of my budget. So I did the comparison vs. a deluxe resort, which is what we have stayed at. Yes, it is apples and oranges, but it more accurately reflects what costs I would have incurred without DVC.

I guess another way of looking at it is, if DVC memberships were sold as points to stay at a deluxe resort (instead of the great accommodations we actually get), it would still be a good deal for us.

 

[dianeschlicht]

We figured 2.5 years break even for our first points and then we added on 150 more, so didn't figure that out, but your calculations sound about right to me. We did not finance, so it was easy for us to figure it out. We were spending $3-5000 per trip, so that part was easy too. We also bought at a much lower per point cost than is currently charged.

I can't imagine we will ever get tired of going to WDW! We love taking friends and family with us. It lets us see it through new eyes!

 

[DVCDAVE]

GRANNY; Sorry for the late reply. Had to get the boys to do there homework, and off to bed. I happened to agree with you to a degree. And as I confessed earlier, I used your method too when deciding to purchase. In hindsight, I realized that one should look at the unit and all of its amenities and assign a cash value to it. Disney has done that for us through its cash ressie system, then we in turn should calculate our expenses (purchase price plus dues) and calculate a breakeven point. In this manner, the method compares the cost recovery on the exact same unit as opposed to another resort of differing size and amenities.

I fully understand what you are saying, but your method is simply calculating the break even of traveling down the hotel path vs. DVC. Mine is comparing paying cash for a DVC room (with all its size, comfort, and amenities) vs. purchasing.

The good news, is my method should shorten the breakeven compared to yours, and we will all feel better about our decision to buy

 

[DisneyKidds]

BraveMom - As you can see, there are a lot of variables. I agree with your analysis for the most part. However, you do need to figure on inflation. Your $700 dues will go up 2 - 3 % each year. That $3,000 hotel bill will go up as well.

As far as your break even, I think your calculation of 6 years of 2 week visits sounds pretty good. We are in the process of buying 2 DVC resales and I calculated my breakeven at about 12 years. We are buying 375 points and will make 1 eight night trip each year. If we bought less points and/or went for two weeks a year it would probably cut our break even in half.

As for my method - and I agree with GRANNY - I compared the total cost of DVC (purchase plus dues) to what we would have spent on hotels had we not done DVC. For us that was a mix of moderate and deluxe hotels like you used. I used similar inflation for dues and hotels, and I figured on getting 20 - 30% discounts on hotel rooms. Like VERNON I went for worst case scenario. If hotel inflation outpaces dues inflation, or if hotel discounts don't materialize, our break even would be shorter.

DVCDAVE - if I calculated it the way you suggest and compared DVC to deluxe hotels at rack rates our break even would be about 6 years. BraveMom's would be shorter under that method, too. However, I believe the apples to oranges comparison in this case makes more sense as it reflects reality. We would never pay rack rate at a deluxe if we had to pay cash .

Just remember BraveMom, all during those 6 years (or shorter) it takes to get to break even you will be in nicer accomodations .

Now I'm rambling.......

 

[Granny]

Well, no matter what variables you use or what you compare against, the bottom line is the break even is a heck of a lot faster than 40 years!!!

 

[DVCDAVE]

I do agree, and always haved, that the break even point is about six years when comparing it to a disney hotel room. My point is that the cash outlay used for that room is not representative of what you get with a DVC room, therefore, one is justified in using the off the rack cash rate for the DVC room in calculating the breakeven rate, which should work out to about 3 years. The latter comparision is the most realistic.

The reason I think the method using a hotel room rate is inacurate, is that some one might be using a off site Holiday inn rate of $29 a night, and trying to calculate a break even. That calculation could put a break even out beyond the 40 year mark. They could also justify that formula just as easily by saying they would never pay to stay on site for a room. this comparison is NOT realistic.

As with any comparison, I believe the strongest argument is always made when comparing items of like or similar quality or comfort (in this case). To compare a DVC (1 or 2 BR ) Home Away from Home with a deluxe or moderate hotel room isn't accurate. Now, a more accurate comparison may be to compare a DVC studio with a deluxe hotel room as the accomodations are more similar.

In any rate, its a fair, or more than fair deal to buy DVC if you plan on vacationing at WDW at least every other year. On this I think we agree.

 

[BraveMom3]

Thanks for all the responses everyone. Helps to "firm up" my justification to join. In my mind it's sort of like buying a home as compared to renting. At least if you decide that you don't want it anymore, you can still get something out of it (sell or rent points), instead of burning that cash you spend on rent!!

145 days and counting!!!

 

[Tom and Jen]

A key factor I have found is to be sure to calculate your passes.

If you go a couple of times ayear, or twice within 12 consec. monthes then annuals are th eway to go but also include your length of stay pass price. When staying onsite that is all included so deduct it from the package price to figure what you are paying for the room.

The more people you travel with also is a factor.

T.

 

[DaveH]

From what I can tell as a new DVC member last may. There are 2 ways at looking at your breeak even point.

1. Is what you would have spent if you were not a DVC member and where and for how long you stayed there. For me that would be at the All Stars. For me at in the area of $100 a night including the 11% room tax.

2. What the rack/discount rate you could have gotten for each time you spent at a DVC resort. I do not know the current rate for a DVC room but I would expect in the area of $200 a night or more.

I am glad I bought into DVC and plan on having plenty of great trips to WDW and other places using my points. I find it hard to say my break even point is where I would have spent that kind of money for a lot lesser place to stay than where I am staying. Just a thought for everyone.

 

[Tom and Jen]

Ya know.......?!

As I have sat at this tube in front of me and read the many posts amongst the numerous threads I have come across (I have read and posted more in the past 3 days than ever before) and thought about this "breakeven point" and realized........ though probably not being said for the first time, that my breakeven is affirmed EVERY time we bring guests down with us and see the smiles on their faces.

T.