Calculating point value by the mathematically impaired - does this make sense?

[sparkspeak]

I'm trying to make a fair cost comparison between point and cash stays (without comparing apples to oranges) by determining actual per point value for a specific stay. Using the mythical "standard" of $10 per point, a per point value of less than $10 indicates justification for a cash stay, assuming points will not expire. Does this make sense?

1. Find the published DVC room rate for the season
2. Assume a 30% discount (package, AP rate, AAA, etc.)
3. Add 11.5% tax

4. Divide by number of points needed to say in the same room & season
5. Subtract current per point maintenance fee to determine net per point value

___________________
Example A
1) $329 BWV Studio May 19-23
2) $230 discounted room rate
3) $256 discounted room rate including tax
$1024 Total cash cost for 4 nights

4) $19.69 13 points per night (Sun-Thur) Total 52 points
5) $15.69 net value of points for this stay ($4.00 maint, per point)

___________________
Example B
1) AK Savanna view room May 19-23
2) $200 quoted Annual Pass discounted room rate
3) $223 discounted room rate including tax
$892 Total cash cost for 4 nights

4) $6.37 35 points per night (Sun-Thur) Total 140 points
5) $2.37 net value of points for this stay ($4.00 maint, per point)
____________________
Example A indicates a wise use of points and Example B indicates that a cash stay would be the better value.

 

[JimC]

Similar to one I did. If you can rent points for $10 each and the room with tax is less than 10 times the number of points then cash is better. I think you will find that outside of the DVC system renting points and paying cash is more cost effective. There may be exceptions, but as a general rule I believe it holds.

We bought figuring that we would recoup our investment within 5 to 10 years. We figured the worse case as one beroom villas for the moderate hotel room price.

 

[sparkspeak]

I'm not really interested in renting my points (thinking of adding on!), I just want to use them efficiently. Based on my usage so far (2 years), the payoff will be in 3 to 4 more years. I just wondered if my calculations were logical.

 

[Dean]

I think that is a fair comparison but is only a small snapshot. Some seasons will have different values. Weekend stays by themselves will have far lower values and if you add in weekends to you stay, the value pp will decrease.

Some (my self included) would figure the lost earnings on the money paid for DVC, others would not.

 

[Poorman]

So Dean, I should figure on the average 20% loss on my investments for the last 3 years????
Wow, I did good getting my points. If I had bought those contracts 3 years ago I would only have lost half of what I did. Hind sight is always 20-20.


Regards, Rich

 

[sparkspeak]

Originally posted by Dean
I think that is a fair comparison but is only a small snapshot. Some seasons will have different values. Weekend stays by themselves will have far lower values and if you add in weekends to you stay, the value pp will decrease.
Some (my self included) would figure the lost earnings on the money paid for DVC, others would not.

I also did a worksheet showing lost investment income and estimated hotel & maintenance increases. But for this calculation, I took actual values (and seasons) for my usage so far. [ppv=per point value]

9.98 ppv OKW 2br; 3 weekday 2 weekend
9.70 ppv BCV studio; 1 week
10.12 ppv VWL 2br; 5 weekdays
14.16 ppv BWV studio; 1 week
12.62 ppv BCV 1br; 5 weekdays

And . . . based on my original purchase price, I have used approximately 1/3 of my investment in DVC usage. Lost earnings on a declining investment balance (assuming I spent cash for vacations) are not included.

 

[Caskbill]

One thing easily forgotten is that if you rent out points, the income you receive is subject to income taxes. It's no different than if you were a landlord renting an apartment.

To do it right you have to figure the actual profit you make from renting. That would be net rental minus your actual costs. Best to see a tax advisor on that one.

 

[sparkspeak]

One thing easily forgotten is that if you rent out points . . .

I'm not interested in renting points, I'm just trying to justify my purchase.

 

[Dean]

Originally posted by Poorman
So Dean, I should figure on the average 20% loss on my investments for the last 3 years????
Wow, I did good getting my points. If I had bought those contracts 3 years ago I would only have lost half of what I did. Hind sight is always 20-20.


Regards, Rich

No, if you figure this you must do it for 40 years. Still 8% over the long run seems reasonable. Obviously it depends on what type of saver/investor you are and how you tend to vacation and pay for vacation. There are many other factors as well.