Calculating the savings with DVC

Do you actually ever pay rack rate? Calculate the "savings" based on the trending discounts that have happened over the years during the time you typically travel.

I have yet to see any potential savings because we use the military discount which is 40% for Deluxe/DVC.

DVC is on the back burner until such a time as Disney decides to discontinue all discount offers.

In the 90's when economy tanked, disney started up lots of discounts to get bodies into the parks. One of which was the current Armed Forces offer. It's a nice perk for active/retired w/20 years of service. IMO A shame it's not extended to those who served in active combat, sigh. Dems the breaks & pool of veterans is likely far too large.

It's a contract between WDW & the DoD and it does need to get renegotiated every year. Only once do i remember reading the offer was delayed to book until the contract was resolved.

It's a great perk, enjoy it while it lasts:). There's always SoG if it does disappear someday.
 
IMO there are only 2 ways to reasonably calculate the savings or added value of DVC. Those are what you'd pay if you didn't own DVC or the private rental price. In my view using DVC rack rates is a fools comparison unless one would have paid cash directly. One would compare that to the "cost" which is the upfront cost, dues indexed for inflation, any interest paid and the Time Value of Money/Opportunity cost. So it's a comparison of the cost to the savings using these variables. So the long term cost of 100 SSR points resale plus dues is somewhere in the $80K range. I used a return of 4.5% and dues inflation at 3% and used 2053 as the end point. Using Rentals and the same inflation, the savings is somewhere in the $20K range in future dollars using $15 per point. So roughly breaking even if you add in the long term risk but you do have more control and more options but also more commitment and long term risk.
This is true - and too hard to do as a back of the envelope analysis, so I usually do a combination of looking at what I'd be paying for a well-discounted (25-35%) deluxe hotel room (since that's what we'd book on cash, or the cost to rent a comparable studio. The drawback to both, though, and worth considering somehow in the calculation, is that 1- cash hotel room discounts and pin codes usually don't come out until <6 mo to travel, aren't guaranteed, and require you to be pretty flexible with dates. AND they're past the good point rental window, so you have to have decided you'll do a cash reservation rather than rent points; 2- if renting points, you do typically get home booking advantage at "all" the resorts, but you'd need to find an owner renting at or before the 11 mo window AND willing to look immediately for your room type, so you have a lot less control.

We realized that our previous pattern of traveling at low cost and low crowd times wasn't going to work once our kids entered school, and we would have to plan well in advance. Thus the drawback to DVC (plan 11 mo in advance) wasn't as much a liability and could actually work in our favor. We actually considered going to WDW over April/Easter break but couldn't justify the price by the time we looked (in February, I know). Rooms were super expensive and flights were about $600 per person. So we did a short weekend trip within driving distance and had a blast anyway.
 
I set up a fairly simple spreadsheet where I can enter/edit various buy in prices, current dues, and number of yearly points and generate an effective price/point/year. I use a 3% growth rate in dues. I then compare the 10, 15 and 25 year totals to evaluate various scenarios with one another, mostly to compare possible resale contracts (as opposed to calculation of long term cost savings). I have added further calculations for a small direct add on (25-30 pts.) to see how that affects future pricing as well. I have mostly looked at SSR and AKV numbers. My price/point/year estimates are remarkably similar across varying price points for a given number of points and resort - as is said here often, a few bucks per point gets lost in the mathematical minutiae in the out years. Most of the scenarios I have evaluated generate yearly per point costs below average current rental prices at about the 8-9 year point. Lowest price/point/year is at about the 25 year point after which the 3% dues inflation begins to drive the cost slowly upward again to the end-of-contract year. It has been an interesting study. I don't think it has convinced me to buy in so much for future savings - those may come - but instead it has given me a glimpse into the cost of owning the experience. That's where the value judgement comes in for each of us - does the perceived value outweigh the cost?
 

Historically there have been discounts but more off season.
This is true - and too hard to do as a back of the envelope analysis, so I usually do a combination of looking at what I'd be paying for a well-discounted (25-35%) deluxe hotel room (since that's what we'd book on cash, or the cost to rent a comparable studio. The drawback to both, though, and worth considering somehow in the calculation, is that 1- cash hotel room discounts and pin codes usually don't come out until <6 mo to travel, aren't guaranteed, and require you to be pretty flexible with dates. AND they're past the good point rental window, so you have to have decided you'll do a cash reservation rather than rent points; 2- if renting points, you do typically get home booking advantage at "all" the resorts, but you'd need to find an owner renting at or before the 11 mo window AND willing to look immediately for your room type, so you have a lot less control.

We realized that our previous pattern of traveling at low cost and low crowd times wasn't going to work once our kids entered school, and we would have to plan well in advance. Thus the drawback to DVC (plan 11 mo in advance) wasn't as much a liability and could actually work in our favor. We actually considered going to WDW over April/Easter break but couldn't justify the price by the time we looked (in February, I know). Rooms were super expensive and flights were about $600 per person. So we did a short weekend trip within driving distance and had a blast anyway.
That's why I'd use 20% discount for cash rooms. 10% is almost ubiquitous but 30% isn't that uncommon. For those where DVC may make sense, a private rental comparison is likely the best option.
 
I have to agree with other posters: owning DVC has resulted in more Disney trips for us than we would otherwise have taken if we didn't own.... that includes annual passes, dining, Disney merchandise, etc.

No surprise all the new resort construction at Disney has been and continues to be DVC. They know what they're doing!
 
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Crisi it's all how you look at it. You are saving money. In fact, you are saving money five or six extra times per year! :) Before DVC we spent a lot of money to go to Disney. Now we spend half as much five times as often. That works, right?

Only if you think you are "saving" when you buy a pair of shoes half off that you don't really need and wouldn't have bought if they weren't on sale. :)

People have heard me say this before - if you have to save money on DVC to make it work, it isn't a good choice. Its when the answer to "how do you calculate savings (or return)" doesn't make any difference and is simply a fun exercise in math that DVC makes sense. In that case, go for your answer - or icc's highest rack rate.

And yeah, I'm an accountant - its a fun game in math.

The problem becomes that over the years I've seen a lot of people less financially literate use the "savings" that other people - more knowledgeable about such things - have posted - without understanding the other components - opportunity cost, risk, behavioral changes - and they were the ones that got themselves in trouble when the economy went South.

If you want to do this in a business like fashion, figure out your annual costs to own, your anticipated annual spend without DVC, your interest rate for time value of money (if you don't understand time value of money - don't start answering the question until you do). Then put that inside of the context of risk (what happens if I lose my job, have to cancel trips, there is a terrorist attack at Disney, airfare goes through the roof), opportunity costs (if I didn't spend this money/time on Disney, what would I do with it - keeping in mind the not fun parts of adulting like retirement savings - and also the vacations you won't have time to take if you are at Disney instead of a bus tour of Napa Valley Wineries) and likely (and less likely) behavioral changes - you should have a four slide presentation to show your partner (if you don't have a partner, the exercise still helps you think it through for yourself) - only one which talks about how much money you are going to save. You can add a fifth slide if you want - one that talks about "we don't save that much, there is risk, there might be other things to spend our money on - but look at the value we are going to get putting the kids in a different room, or taking my mother, or 'enforcing' vacation time - whatever the non-tangible pros are - that add value. Because that is where the value lies in DVC - not in how much you don't spend, but in how what you do spend adds to your enjoyment. And if its affordable to you, with all those opportunity costs and risk factors accounted for, it doesn't make any difference if the Mouse ends up with a few extra of your dollars or you have a few extra left in your wallet. And if owning DVC isn't affordable to you, its a pair of shoes half off that you didn't need and are now eating ramen to pay for - even if the shoes were a good deal.
 
When calculating my imaginary savings owning DVC I use current rental rates as a comparison. And the reason I say imaginary savings is that prior to owning DVC we would go to WDW once a year, get a 10 day park ticket and stay at a moderate, usually with free dining. Now we go about 4 weeks in a year and buy annual passes. So I'm pretty sure we actually spend more at Disney now than we did before. No regrets at all and now I just tell myself my cost per day are really low.
 
i didn't really look at savings.. i just had to have it!!!!! lol

no but seriously, we took into account how WDW (Star Wars land, etc) is expanding and how much we love going... what resorts we like to stay at (so far we've only stayed at moderate and value - now we own at Poly & closing on VGF). we used to go during free dining, and now its changed so much this year i'm glad we bought in when we did!
if you go and map out a vacation at the DVC resort you will be staying at just regularly (not through DVC), you will immediately see the savings!
 
So is it still worth it if you're only going to travel once every 1-2 years for ten days? We're from the West Coash so WDW isn't a mere 2-3 hour flight away. It's 6 hours! There's no way we'd be flying there 2-3 times a year. We'd likely do WDW every 1-2 years and try to mix it up within aulani.
 
So is it still worth it if you're only going to travel once every 1-2 years for ten days? We're from the West Coash so WDW isn't a mere 2-3 hour flight away. It's 6 hours! There's no way we'd be flying there 2-3 times a year. We'd likely do WDW every 1-2 years and try to mix it up within aulani.

We go every other year and find its a good value. It just isn't about saving money for us - for us its really about having an affordable (for us) way to put the kids in a different room. The frequency of your trips doesn't make any difference - as long as you use points at least every other year and understand banking and borrowing.

There are other ways of doing that - from renting a house off site to staying at the cabins at Ft. Wilderness to booking a suite, this one is our sweet spot.
 
So is it still worth it if you're only going to travel once every 1-2 years for ten days? We're from the West Coash so WDW isn't a mere 2-3 hour flight away. It's 6 hours! There's no way we'd be flying there 2-3 times a year. We'd likely do WDW every 1-2 years and try to mix it up within aulani.
The evaluation method is the same though the savings or cost is simply half as much than EY. You would want to include Aulani in your calculations. EOY is a little more complicated because of the banking/borrowing issue. 10 days EOY would be roughly the same as 5 days EY though it sounds like you'd be somewhere in between, possibly more if you do 2 out of 3 years at WDW plus Aulani at times.
 
When calculating my imaginary savings owning DVC I use current rental rates as a comparison. And the reason I say imaginary savings is that prior to owning DVC we would go to WDW once a year, get a 10 day park ticket and stay at a moderate, usually with free dining. Now we go about 4 weeks in a year and buy annual passes. So I'm pretty sure we actually spend more at Disney now than we did before. No regrets at all and now I just tell myself my cost per day are really low.
Yes, but as a DVC owner you are saving 20% on all your merchandise...so you're really coming out ahead. :)

Seriously, though, my comments here and to Crisi are tongue in cheek. As DVC owners we spend much more at Disney than we did prior to owning DVC. But the value for the dollar spent is higher and the experience is better; that is why we own. Frankly, if we had to sit down and figure out if we could afford it or not, we wouldn't have bought DVC. Our DVC (and Disney trip) money comes from discretionary funds, and if we didn't spend it on DVC we would spend it on other trips or fancy toys or ridiculously expensive bottles of wine that nobody actually needs to drink, etc. etc.
 
Yes, but as a DVC owner you are saving 20% on all your merchandise...so you're really coming out ahead. :)

Seriously, though, my comments here and to Crisi are tongue in cheek. As DVC owners we spend much more at Disney than we did prior to owning DVC. But the value for the dollar spent is higher and the experience is better; that is why we own. Frankly, if we had to sit down and figure out if we could afford it or not, we wouldn't have bought DVC. Our DVC (and Disney trip) money comes from discretionary funds, and if we didn't spend it on DVC we would spend it on other trips or fancy toys or ridiculously expensive bottles of wine that nobody actually needs to drink, etc. etc.

The wife and daughter end up spending more buying stuff when we get the 20% discount. There have been previous years I've had to buy an extra suitcase to bring all there stuff home. Now I do like the increase discount for food this year :)
 
Yes, but as a DVC owner you are saving 20% on all your merchandise...so you're really coming out ahead. :)

Seriously, though, my comments here and to Crisi are tongue in cheek. As DVC owners we spend much more at Disney than we did prior to owning DVC. But the value for the dollar spent is higher and the experience is better; that is why we own. Frankly, if we had to sit down and figure out if we could afford it or not, we wouldn't have bought DVC. Our DVC (and Disney trip) money comes from discretionary funds, and if we didn't spend it on DVC we would spend it on other trips or fancy toys or ridiculously expensive bottles of wine that nobody actually needs to drink, etc. etc.

I agree. I don't even consider if I am saving money or not. We paid cash for our points that did not cause a change to our current lifestyle. I know basically what my dues will be every year so I can plan for that payment easily. Going to Disney and staying at the Boardwalk or Wilderness Lodge makes me happy. Knowing every time I leave I will be coming back soon makes me happy. You can't put a price on that.
 
Haven't been here in a while, but just thought I'd share my experience, because it appears to be much different from everyone else here. I purchased my DVC points ~5 years ago, and it has worked out extremely well financially for me over this short time. What happens in the future...who knows? The value of the points I purchased has increased by ~45% on the open market. The cost of renting points (my alternative) has increased more rapidly than my annual dues, so I have saved even more on my individual trips than I had estimated that I would. And the spread on intermediary point rentals has shrunk, so I've also recouped more than expected in those years that I have not been able to use my own points. I don't have a ton of points and take multiple trips per year, so my situation is probably a lot simpler than most who are posting here. But it has allowed me to vacation at DVC resorts for less than it would have cost if I did not buy DVC points, and that's really all I was trying to do.

Again, my situation is different from some here, but I can't imagine not taking this into account when purchasing. I already knew I wanted to take regular trips to Disney and stay at DVC resorts, so the question was only whether I could do that less expensively through buying DVC points or not. I would never buy them without having at least thought about that and been able to figure out that the odds were on my side, and that the downside was something I could handle if it happened. It's worked out so far. The odds were on my side. I don't know if I would quite say I was just lucky, but I'm sure my calculation would not be as favorable if I were buying now.
 
Lawd, some of this is way over my head.:teeth:Since I can't seem to find where Disney will ever offer any discounts at Hilton Head, I am just going to take their rack rates, after taxes of course and compare them to what I will probably pay with DVC.
 
I prefer to use current rental rates rather than rack rate for comparison. ROI should be around year 9.

That's if you don't plan on selling your contract after X amount of years, when there is still value. We plan on owning for ~20-25 years and then selling. I factor in a interest rate of 2.9% annually, with a loss of 10% at time of sale, in comparison to purchase price, minus an additional 8% commission to the broker.
 
That's if you don't plan on selling your contract after X amount of years, when there is still value. We plan on owning for ~20-25 years and then selling. I factor in a interest rate of 2.9% annually, with a loss of 10% at time of sale, in comparison to purchase price, minus an additional 8% commission to the broker.
I wouldn't plan on selling. But you know life, never say never.
 



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