DVC Financial Analysis

[WolfpackFan]

I know folks go thru this exercise periodically, but I thought I'd run the figures myself. I know I'm not taking into account the future value of money, the rising cost of lodging or the rising cost of dues, etc. but here is my rough analysis. If I've missed anything, please let me know.

With Magical Beginnings we will be paying $74 per point. For 150 points that is a total of $11,100.

With 150 points just as an example we could spend 6 nights at a resort during June using only 1 weekend night and 4 nights during January using no weekend nights - that gives 10 nights of lodging with 150 points. Figuring that these resorts are Deluxe resorts, at a minimum the nightly cost if you paid out of pocket would be $200/night. Most of the resorts are even higher than that. For 10 nights that means it would cost $2,000 per year.

Now you have to figure in your annual dues, around $500+/year. So subtract out of the 10 nights, 3 nights to cover annual dues. So that means you would be recovering 7 nights at $200/night out of the original cost, this would total $1400/year. Take the total cost of $11,100 and divide by $1400 and you come out with 8 years.

What this mean is after 8 years we are staying free for the next 32 years. Not a bad return on investment and it would be even better if you based it upon staying in a 1 bedroom unit rather than a studio. They are much, much more expensive, so if you had the points it would be an even quicker payoff.

I just thought this was interesting. Sounds like a no-brainer decision to me.

 

[GoofyBanker]

I guess NC guys think alike cause I used a similar mental process prior to purchasing DVC. Enjoy!

 

[Coach Rick]

I went through that also, but in the end it just gave me a headache. Disney is where it's at for me. We love everything Disney, so this was a great fit. Yes the math working out helps, and it would have to, otherwise they probably wouldn't be around too long. I appreciate your hard work so I don't need the asprin again.

 

[laceemouse]

It's a little more complicated for us! We have 4 kids so we will always have to get a 2 bedroom. Our points don't buy as many nights, BUT, we would have to have 2 hotel rooms, which is still not as nice and comfy as DVC units. In the end, our love of Disney and staying on-site won us over!!

 

[lenshanem]

http://www.disboards.com/showthread.php?s=&threadid=356087

I went through the same thing not so very long ago. Here's my thread...

Good luck!

 

[Disney Doll]

My DH(who is an Associate Manager of a real estate office) went through similar gyrations to justify the purchase, and came up with the same conclusion.

Basically, you ar paying 2003 prices for a vacation you will be able to stilllll take in 2025, 2030, 2040 etc. The return on your investment improves once you actually pay off the loan.

I let him play with the numbers for a while, but I told him that I didn't care how much he played with the numbers, as long as in the end, we bought it!!!!!!

 

[FriendsOfEeyore]

Here is a little different take...

As an Accountant, I like to stay, how should we say... CHEAP! If you look at staying at moderate compared to a dvc (this is what I did).

We will spend approx 11 nights each each year (well 15 if you are the IRS asking how many nights). If you assume that a moderate on average with some discounts will cost $130 per night (if we can a deluxe, say the WL or AKL at this rate, we would take those instead of a moderate). We bought 200 points ($16,800). Dues are approx $800 per year. Our total cost basis is approximatly $48,800 (16,800 + 800*40 years). I used $84 per point, eventhough we did use MB because my examples are for 40 years. So in our case we get...

$130 * 11 (nights) = $1,430 per year. $48,800 / $1,430 = about 34 years repayment. We have weekends in our plans, if we didn't it would a lot shorter. This is the worst case scenario for us, based on us staying in a moderate. Obviously, it is a better deal, when it is compared to a deluxe (which is a better comparison $225 *11 = 2,475 or $48,800 / 2,475 = about 20 years). We were trying to look at how we would stay, if we did not have dvc. Sorry, if these numbers don't look as good as some of yours, but this is how I look at it.

I think that some people do not properly account for the maintenance fees. They are the LARGEST part of your purchase, no matter the number of points (150pts * 40years* $3.97perpt = $23,820). Some others want to consider the interest when financing this purchase. However, the IRS will allow you deduct the interest if you stay at a vacation home / time share for at least 15 nights per year. Therefore, the interest charges are kind of irrelevant. Then, there are some that like to look at the investment or opportunity cost of this transaction. I say this is Disney..... YOU CAN NOT MEASURE THE ACTAUL ROI OF A DISNEY VACATION.

So, in conclusion, we bought DVC with a possible cost recovery life of 34 years BECAUSE WE LOVE DISNEY!

Edward

 

[Pa@okw95]

The problem with all these figures is that they assume everything wil remain the same otherwise. I have been a member for 8 years now and took 15 vacations down there. Here is the kicker in all this--I never would have gone down there 15 times if I were not a member of DVC. Every trip costs cash. Then there is the factor that WDW is changing-also you change everyday also. WDW can get a little tiring after a while- I stopped flying down there because of the treatment the airlines give us, so I have to drive, that represent more hotel stays. I also stay at other hotels when I get down there which adds to the cost. We never cook, and I mean never-more costs. Then there is the shopping that goes on when we are down there. I have to tell you that buying into DVC is not a savings when you take into consideration all the other factors. Now having said this, I am still happy about the fact I bought back in 95 when we had free tickets for 5 years, oh yes there is another factor park tickets. It never ends, it is an expense not a savings.

 

[Wags]

Pa@OKW,

after reading your response I don't know if you are truly pleased with your purchase, and would recommend it, or are just being very honest. Or maybe you don't like the competition that more members present so you paint a bleak picture.

You say

"Now having said this, I am still happy about the fact I bought back in 95 when we had free tickets for 5 years, oh yes there is another factor park tickets. It never ends, it is an expense not a savings."

Is that the only reason you justify the cost or, if you had to do it all over, starting today, would you?

Maybe you are just very pragmatic, I guess I'd like someone to tell me this is a "no brainer", but it's probably not that easy. There is no perfect model for the analysis. I guess a lot of it depends on one's bias. If you are convinced it's a good deal, you will find a way to justify the expense. If I have to convince the DW it's a good deal, I guess just telling her "it's Disney" we're going to love it (and we do), just isn't going to cut it. I like details, what's the bottom line? Does anyone really know?

If you know you going to go at least every other year I guess it makes sense, correct? But what do you do when the kids are older and don't want to go with you anymore, I guess you can go with friends (do you charge them), but how long do you really do that, does the pace of your visits continue?

 

[Snowgod]

Whwn I am sitting on the balcony of our DVC resort, the last thing on my mind is the ROI.

 

[FriendsOfEeyore]

I would think that if I am sitting on my balcony on a DVC vacation, I would be thinking about my ROI. And my ROI would be off the charts! Relaxing On Investment.

 

[lenshanem]

Wags, I also got a couple posts when i was looking into DVc that almost seemed like they didn't want me to join! But, I'd say the other 98% were much like me. They love Disney and have enjoyed their DVc purchase. It was a scary leap, but I think we're really going to enjoy it. I've already planned out four trips! One with my Mom and girls at Christmas time, one for my hubby and his buddies for Braves spring training, the otehr for summer vacation with just my immediate family and last a trip to VB with my Mom and the girls again! Can't beat that!!! And that si all in one year!
FYI- I sent you an email earlier.
Best of luck...

 

[OneMoreTry]

With 5 kids we always get a 2BR. I use points for weeknights and pay for weekends -- we usually stay 6 nights so I pay for one night. I've always received a DVC discount on the cash nights. If I didn't get a discount I'd probably use points.

Anyway. Point is -- at this rate I break even in about 5 years at OKW. 7 years if I use more points for weekends.

Financially, I think DVC points have done better over the past 3 years than the stock market. I could sell them for more than I paid (resale).

But the main reason I bought them is so that when we leave DW I know we have a place to come back to next time!!

 

[RatherBeGolfing]

Has the number of points needed per night increased over the past few years, or remained constant?

If my 150 points gets me 10 nights next year say. But in 2005 it might only get me 9 nights, then 8, etc. Then, the value of my 150 points kind of erodes as the pointes-needed-per-night increases.

I'm sure the rack rates and discounted rates will be going up, just like the cost of bread and butter, so there is no way to avoid inflation. I just hadn't seen anyone figure this into their ROI calculations yet.

I'm planning on taking the plunge this month at BCV and, like others, don't care too much about the ROI. For $11,100 I can't even buy 1/2 a decent car that will last what 8 years maybe.....

Larry

 

[WDWfantasy]

Has the number of points needed per night increased over the past few years, or remained constant?

If my 150 points gets me 10 nights next year say. But in 2005 it might only get me 9 nights, then 8, etc. Then, the value of my 150 points kind of erodes as the pointes-needed-per-night increases.

Depends what part of the membership you are referring to. As far as DVC properties the points will always stay the same. The point requirements can be reallocated within a given year but the total points for a particular resort for each year will always stay the same. Meaning that if the point requirements are made higher for one particular season then they will have to lower the point requirement in another season to offset the change.

If you are talking about all of the other opportunities that DVC allows; Disney Collection, Concierge, World Passport, Adventurer Collection, those point requirements will probably continue to inflate as the years go by.

Basically your guaranteed your value within your DVC properties only. With all of the other vacation opportunities your point value will MOST LIKELY "erode" over time. I won't even touch the topic of renting points out in order to do all the other vacation opps. by paying cash as time goes by. That tends to be a HOT TOPIC. But someone else might talk about it....

 

[JimC]

The points for DVC resorts is constant. They may reallocate but the they must zero out any adjustments. They did that in mid 90s, I believe. Then they increased points for Adventure season, particularly weekends. The other seasons saw reductions to net zero.

Points for all other collections change each year or two. I suspect they generally go up.

 

[wdeversole]

RBG -

Disney can readjust the points needed to book a room for a particular night, but the total points needed for the year cannot change.

In other words, if they raised the points needed for one season, a corresponding reduction would have to take place somewhere else.

I believe I have read that this only happened once, and the changes were very minor.

 

[Pa@okw95]

Wags--I never gave any thought to the cost when I purchased-once I found out it would cost about the price of a car I bought into it. I never knew how many points I would need so when they sent me a video, the example on the video was 270 points so that is what I bought. What I thought I was buying into was an elite resort--it is not of course, but I still like it and the Florida weather in the winter makes it a very enjoyable place to stay. Knowing what I know now I would not buy into DVC. But back in 95 I did not realize the direction WDW was going. I will end up going down there and never setting foot in WDW. I enjoy OKW enought to spend my winters down there. These boards are dominated with people who for whatever reason care about the price, etc. I never did.

 

[Cruelladeville]

I bought DVC 6 years ago, at $54 per pt, and now the resales are in the mid to upper 70's, so I am happy with my investment. My stock market investments have gone down by 25% during the same amount of time, so DVC seems like a good value to me. We have always gone to Disney, though, so this was a cheap way to vacation for my family.

For those who say "what will we do with DVC when the kids are grown/"--shame on you! If my DH said that to me, I'd seriously think of divorcing him! It sounds like your spouse was good for baby-making, but you don't want to be around them once baby-making is past. Believe it or not, there are LOTS of things to do at Disney besides taking the kids there. It's a top destination for honeymooners, for example, so think of DVC as an investment in romance once the kids are gone. I guarantee that you will get a big added investment if you tell your spouse that buying DVC is an investment in a romantic hide-away--at least that's what we use it for!

 

[BCVOwner2002]

Our DS is 17 and we just purchased last year. His age never played a factor into our decision but he did factor into the number of points we purchased. DH and I want to vacation every year but would like to be able to give DS some time at WDW with friends so we purchased 270 and added on 300. That should be enough for now or at least until I win the lottery! LOL! Annmarie