DVC Direct Economics

[SL6827]

How many years does it take to break even with direct pricing now?

 

[tom1944]

Once Poly is announced for sale I might take a look at the point chart and consider 50 to 75 direct points initially.

Just dip my toe

 

[Epcot Forever Forever]

How many years does it take to break even with direct pricing now?

That depends on what kind of room you stay in, what time of year you go, and how much you value having your money in your pocket instead of tied up in something. Anywhere from 5 years for VGF if you stay in studios and go at the very cheapest times of year and mostly stay on weekdays and would otherwise have kept the money in a sock drawer to absolutely never if you mostly stay in 1 bedrooms on weekends in the fall and think you could otherwise have made 5%+ with that money in the market or in CDs or whatever.

 

[Duckbug.Ducktales]

It also depends on what you are comparing to. Cash rates for the same DVC room, DVC rentals for the same room, cash rates for regular hotel rooms at the same Disney resort, cash rates for another Disney resort where you normally would have stayed (moderate or value), or off property rates.

 

[disneyfan123]

That depends on what kind of room you stay in, what time of year you go, and how much you value having your money in your pocket instead of tied up in something. Anywhere from 5 years for VGF if you stay in studios and go at the very cheapest times of year and mostly stay on weekdays and would otherwise have kept the money in a sock drawer to absolutely never if you mostly stay in 1 bedrooms on weekends in the fall and think you could otherwise have made 5%+ with that money in the market or in CDs or whatever.

Honestly, I find this argument unhelpful. Yes, spending money on vacations or entertainment will never make "financial sense", versus investing those funds into some sort of growth vehicle (savings/stocks/etc.). But these are two totally different things. You could ask yourself the same thing for any purchase; "Should I spend $10/month on Netflix, or would it be better financially to put that $10 into savings?" The savings is always the better "financial option" if the goal is simply to amass greater quantities of money. But then you have to ask, what's the point of accumulating wealth if you aren't going to use any of it? The question is how long does DVC take to pay-off, vs. booking the same rooms at a cash rate. That's the question at hand. Questions on whether or not it makes personal sense to buy into DVC (direct or resale) is a separate question, and even the answer to that question is nuanced and differs from person to person.

As for me, I just rant the numbers and my upcoming 2 bedroom stay at SSR and VGF in Jan/Feb is costing me about $485/night for SSR and $680/night for VGF. Those rooms would be over $2k/night, and even if you factor a 30% discount (if it were available), I'm still ahead of the game.

 

[nalabear]

Comparing an investment vs consumption product is kind of silly; agreed. One CAN compare how savings itself FUNDS the consumption one intends with Disney and by doing that model, the breakeven time for direct roughly pencils out to about 30years at 50 year contract commit.

So if one intends to hold this disney product for essentially most of own lifetime, send it to the next generation, then it will make sense to buy direct with its extra membership benefits.

As a resale, most numbers pencil out much sooner at 10-15 years typically. That math works a lot better for many on a consumption model and commit.

Also remember, if you plan to pass this product onwards, please remember to FUND the annual fees. Not much of a great gift if there's a yearly due for usage IMHO.

 

[Traveling on cc points]

Honestly, I find this argument unhelpful. Yes, spending money on vacations or entertainment will never make "financial sense", versus investing those funds into some sort of growth vehicle (savings/stocks/etc.). But these are two totally different things. You could ask yourself the same thing for any purchase; "Should I spend $10/month on Netflix, or would it be better financially to put that $10 into savings?" The savings is always the better "financial option" if the goal is simply to amass greater quantities of money. But then you have to ask, what's the point of accumulating wealth if you aren't going to use any of it? The question is how long does DVC take to pay-off, vs. booking the same rooms at a cash rate. That's the question at hand. Questions on whether or not it makes personal sense to buy into DVC (direct or resale) is a separate question, and even the answer to that question is nuanced and differs from person to person.

As for me, I just rant the numbers and my upcoming 2 bedroom stay at SSR and VGF in Jan/Feb is costing me about $485/night for SSR and $680/night for VGF. Those rooms would be over $2k/night, and even if you factor a 30% discount (if it were available), I'm still ahead of the game.

I don’t find that answer unhelpful. There really is no way to answer the question without knowing how the potential buyer would spend the points or if they would be paying cash for a deluxe resort if they didn’t buy in.

Many people (myself included) wouldn’t spend $900 a night for a studio so I don’t claim that is what I saved when I use my points. I look at it like I get to stay in nicer accommodations for a price that I am willing to pay per night.

 

[RoseGold]

For example, wouldn’t surprise me at all if Riviera and VDH are pretty easy to get at 7 months in the future given there won’t be any competition from resale at any of the original 14 (in the case of VDH I also expect way more people than VGC to consider using points at WDW at least occasionally).

Not if DVC keeps up the pace of building. If resale in general, but especially restricted resale is cheap enough, because DVC is focused on a billion new projects, then more and more buyers will be trapped in RIV. Resale RIV always is at least worth a Disney room, so it's not worthless. But restricted resale could be a whole lot cheaper than DVC in the future. We aren't there now, but it could happen. Restricted buyers will be booking way far out and the competiton for cheaper rooms will be brutal.

As intended, they are different classes of products.

 

[Epcot Forever Forever]

You could ask yourself the same thing for any purchase; "Should I spend $10/month on Netflix, or would it be better financially to put that $10 into savings?"

Not the same at all. If Netflix offered a “Netflix for life” promotion for $500, what the breakeven point was for it would be the entire basis for whether or not one should buy it, and whether that money is coming from putting less into retirement or from not going to a steakhouse for a month would make a big difference in that calculation!

 

[disneyfan123]

Not the same at all. If Netflix offered a “Netflix for life” promotion for $500, what the breakeven point was for it would be the entire basis for whether or not one should buy it, and whether that money is coming from putting less into retirement or from not going to a steakhouse for a month would make a big difference in that calculation!

My point is assuming DVC cost X amount of dollars, and that money would be spent either on DVC or retirement savings, is not a good argument to make. Obviously using that X amount for investments is always a better option than spending it, regardless of the amount spent, from a strictly financial perspective. The question isn’t whats best for my net worth/retirement, either investing or DVC, its, I am thinking of spending on DVC, what’s the break even number on a direct purchase.

Even with the Netflix example, there is no need to bring in the second question you raise about where the money comes from, it’s simply am I going to get my moneys worth from that upfront cost?

The question of where the money comes from is an entirely different question; an important one, but a different one. Many people conflate the two, when we don’t really need to.

 

[Epcot Forever Forever]

My point is assuming DVC cost X amount of dollars, and that money would be spent either on DVC or retirement savings, is not a good argument to make. Obviously using that X amount for investments is always a better option than spending it, regardless of the amount spent, from a strictly financial perspective. The question isn’t whats best for my net worth/retirement, either investing or DVC, its, I am thinking of spending on DVC, what’s the break even number on a direct purchase.

Even with the Netflix example, there is no need to bring in the second question you raise about where the money comes from, it’s simply am I going to get my moneys worth from that upfront cost?

The question of where the money comes from is an entirely different question; an important one, but a different one. Many people conflate the two, when we don’t really need to.

Would you say paying cash is the same as financing? It’s the same exact concept.

You can choose not to include a cost of capital in your calculation if it makes you happy but if you did it in a finance class you’d fail the exam at every program in the country.

I’m glad you’re happy with your purchase and I don’t care to persuade you not to be; for those who are using these boards to try to figure out what to do next, i do think it’s important to get this right.

 

[RoseGold]

My point is assuming DVC cost X amount of dollars, and that money would be spent either on DVC or retirement savings, is not a good argument to make. Obviously using that X amount for investments is always a better option than spending it, regardless of the amount spent, from a strictly financial perspective. The question isn’t whats best for my net worth/retirement, either investing or DVC, its, I am thinking of spending on DVC, what’s the break even number on a direct purchase.

But that's not the argument. The argument is that 20K can fund your vacations on what it's making in the market, as opposed to a 20K depreciating "asset." It's not like the choices are retirement or timeshare.

Sure, if 20K in the market is worth nothing, DVC math is easier. But we all know that's not true.

 

[upritbass]

Obviously using that X amount for investments is always a better option than spending it, regardless of the amount spent, from a strictly financial perspective.

"Obviously"? Do all 'investments' pan out? Do you know the future? We made a profit on AKL. If we sold our VGC points now, we would be >$30k ahead.

 

[disneyfan123]

But that's not the argument. The argument is that 20K can fund your vacations on what it's making in the market, as opposed to a 20K depreciating "asset." It's not like the choices are retirement or timeshare.

Sure, if 20K in the market is worth nothing, DVC math is easier. But we all know that's not true.

"Obviously"? Do all 'investments' pan out? Do you know the future? We made a profit on AKL. If we sold our VGC points now, we would be >$30k ahead.

Well, parking it in a guaranteed return investment would pan out, and financially speaking, at some point all DVC contracts will be worthless, whereas the investment will be worth more.

 

[nalabear]

"Obviously"? Do all 'investments' pan out? Do you know the future? We made a profit on AKL. If we sold our VGC points now, we would be >$30k ahead.

That is a rare case. DVC does indeed buck the trend of timeshare ownership were there's an actual argument for cost effectiveness and even a possible argument on appreciation investment.

Resale can make a stronger argument.

DVC Direct - it's a stretch and bet in a down market with heavy incentives. Right now -- that's not it. Not yet at least.

 

[take36]

I don’t find that answer unhelpful. There really is no way to answer the question without knowing how the potential buyer would spend the points or if they would be paying cash for a deluxe resort if they didn’t buy in.

Many people (myself included) wouldn’t spend $900 a night for a studio so I don’t claim that is what I saved when I use my points. I look at it like I get to stay in nicer accommodations for a price that I am willing to pay per night.

It use to be the pitch was deluxe for the price of a moderate. That made sense to me as I was staying some all stars and mostly moderates with some deluxe when I was lucky. Why not smooth it out with the best accommodations Disney offers (though not quite these days with the housekeeping schedule and no real access to club level) at moderate pricing?

I lose some in terms of flexibility and time value of money but the savings I see and feel each time. Then it was save 50% off deluxe, still a significant amount of money (for me) but now as the prices have shot up its like 30% discount and with all these seasons and "optimizing" the point schedules its harder to keep track and find a time where you optimizing your own points to maximize your savings.

It's easier now to stalk for the regular promotions (like last years dis plus promotion) and get the same or even more savings then my dvc! Looking at this summer they have gflo rooms for 550, epcot area rooms for under 500, and copper creek for 400! Great deals for families!

 

[longboard55]

A couple of things. If you are willing to stay offsite in a cheap hotel, dvc will be more expensive. Not sure about the 5% cost of money because Disney points increase in value. And if you want to compare a one bedroom, I found one at a moderate resort with taxes at $1200. One bedrooms are not cheap.

 

[take36]

A couple of things. If you are willing to stay offsite in a cheap hotel, dvc will be more expensive. Not sure about the 5% cost of money because Disney points increase in value. And if you want to compare a one bedroom, I found one at a moderate resort with taxes at $1200. One bedrooms are not cheap.

I like the Art of Animation 1BR if I really need the space and am on a budget.

 

[NorCalFanatic]

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[bakerworld]

I find it telling that up until 2015 DVC said their savings was 70% and now I think their marketings says 40%. When I see that I often think with the Passholders discount of 35% is 5% savings worth the investment.