DVC membership vs staying at Disney Resorts

[skunk]

By staying in BWV studio std view, I am able to take two trips per year, six days each. What does the spreadsheet calculate for 12 days/yr instead of 7?

 

[eliza61]

I calculated 10 years.

So I started with Mtnman44's post and factored in lost investment opportunities into the mix. You can see how I arrived at 10 years with Google spreadsheets:

(I can't post links yet....but here's the address if you want to see the spreadsheet)

//spreadsheets.google.com/pub?key=pI7lU3E3yBiVZyMZvLusJdw

There's a lot of cash tied up in DVC that is no longer earning money...

For example....after 1 year:

$14,560 with an average return of 5% would turn into $15,288
Add in the Maintenance Fee: $15,288 + $659.20 = $15947.20

That's $15947.20 cash you have in the bank because you did not buy DVC. Or $15947.20 you can spend on Disney Hotels if you did not buy DVC.

Now - we all still want to go to Disney -- so we will still have to pay something in order to stay at a nice deluxe hotel: $2,205

$15947.20 - $2,205 = $13,742.20

So if you factor in in lost investment opportunity...at the end of Year 1, you would've still been able to stay at a Deluxe Resort AND still had $13,742.20 cash in the bank if you had not bought DVC.

Using the spreadsheet to roll the clock forward...break-even doesn't occur until Year 10.

So the good news -- DVC is still a deal...but I think it will take 10 years rather than 7. If you factor in an investment rate of return of 8% instead of 5%, then it will take 13 years to break-even rather than 10 years.

---------------------------------

Closing Cost $0.00
DVC Points 160
Cost per Point $91.00
Maint Fee per Point $4.12
% Annual Maint Fee Increase 3%
% Hotel Price Increase 3%
% Investment Return 5%
Initial Disney Hotel Equivalent $2,205.00



Purchase Price $14,560.00

Investment vs. DVC
-------------------
1 $13,742.20
2 $12,837.14
3 $11,839.05
4 $10,741.87
5 $9,539.15
6 $8,224.10
7 $6,789.54
8 $5,227.88
9 $3,531.10
10 $1,690.74
11 ($302.15)

Remeber though, DVC's or time shares themselves are not Investment vehicles! Please do not purchase them as such. So we do not factor in the money lost by not investing it. The comparison should always be money in dvc vs. money vacationing the routine way.

 

[starbox]

Now - we all still want to go to Disney -- so we will still have to pay something in order to stay at a nice deluxe hotel: $2,205

Also, depending on what your accomodations are - I will have spent 22 nights in a DVC studio this year.

Compare that to a deluxe hotel room avg. 300$ night and I would have spent 6600 for the same trips. In one year.

 

[fwong]

Remeber though, DVC's or time shares themselves are not Investment vehicles! Please do not purchase them as such. So we do not factor in the money lost by not investing it. The comparison should always be money in dvc vs. money vacationing the routine way.

I'm not showing DVC as an Investment vehicle! And I totally agree -- it should NOT be considered an investment vehicle. After-all -- its a depreciating asset that we all know will hit ZERO dollars. We all know this because its in the contract - and it has an end-date where its worthless.

I'm showing a chunk of cash thats not tied up in DVC as having investment potential (as it should be).

How can you not factor in money lost by not investing it????

If you have $16,000 cash available..are you suggesting that it should sit under a mattress and earn 0% if its not being spent on DVC?

If that cash isn't being used for DVC...it should be earning something. And I even chose an extremely conservative 5% (even IngDirect and CitiGroup now gives a guaranteed 4%). I could haven chosen an S&P500 market average rate of like 11% (1970 - 2006 with dividends reinvested) -- then the numbers would look really out of whack.

(and btw, I just bought a contract on BCV via timeshare...so I'm not against DVC...I just wanted to enhance the spreadsheet to include something that needs to be factored into the money-calculations)

 

[fwong]

Also, depending on what your accomodations are - I will have spent 22 nights in a DVC studio this year.

Compare that to a deluxe hotel room avg. 300$ night and I would have spent 6600 for the same trips. In one year.

Right -- there's an infinite number of combinations. My spreadsheet is showing numbers based on Mtnman44's spreadsheet post. You have to start with something, and his seemed like a reasonable set.

How many points do you have which allows you to stay 22 nights annually in a studio? That can change things too.

 

[TenThousandVolts]

If you buy points at the new AKV, the studios and 1 bedrooms will sleep 5.

I thought it was just the 1 bdrms- are you sure?

 

[starbox]

Right -- there's an infinite number of combinations. My spreadsheet is showing numbers based on Mtnman44's spreadsheet post. You have to start with something, and his seemed like a reasonable set.

How many points do you have which allows you to stay 22 nights annually in a studio? That can change things too.

That was with 350 points (we got bonus points as an incentive) and included one full weekend. With 175 I can get 15 nights in a studio each year - which would cost approx. 4,500.

With studio vs. deluxe rooms and Sun-Thursday stays, you can make out like a bandito!!!!!!!!!!

 

[crisi]

No, but you could (and technically should) calculate the time value of money - I think ideally you should treat your $14000 initial investment as a vacation annuity at a rate of 6-8%. You'll still break even, it will just take longer.

However, cautions on this whole topic:

Don't buy DVC for the perks, none of them are contracted and they are subject to change. Tomorrow our AP discount or pool hopping could be gone. Doubtful, but possible.

Understand that probably MOST DVC members don't stay "like for like" - if you are currently staying in a single hotel room, you need to continue to stay in studios if you are looking at this as "savings." MANY MANY of us seldom stay in studios. DVC may change your vacation habits - you may decide that a one bedroom is what you will stay in. You may go more often (hard not to with that AP burning a hole in your pocket) and buy more points so instead of going to WDW once a year or so, you end up with three trips a year - and the airfare, food, etc. cost associated. You may decide that the points allow you to treat your friends and relatives and take guests - and once you commit to that one bedroom, a two bedroom filled with friends sounds doable. You may - having moved that hotel bill to "I can't remember when I paid it" and dues to "oh, they come out of my account every month" feel that the cash flow situation now allows more dining out. Having upped your Disney ante, you may feel that the parks need to be augmented - you've been there many times - with Cirque or Victoria and Alberts, or this year the kids will rent mouseboats.

 

[starbox]

You may - having moved that hotel bill to "I can't remember when I paid it" and dues to "oh, they come out of my account every month" feel that the cash flow situation now allows more dining out. Having upped your Disney ante, you may feel that the parks need to be augmented - you've been there many times - with Cirque or Victoria and Alberts, or this year the kids will rent mouseboats.

I have no idea what you mean.

(crisi is TOTALLY right; all the Disney "extras" start looking really, really tempting (and you'll probably get emails and magazines offering 10% discounts to sweeten the allure of the 200$ Cirque Du Soliel or 100$ tour), and the DDP (or DDE) has a mighty strong pull)

 

[dianeschlicht]

I thought it was just the 1 bdrms- are you sure?

My bad, you are correct.

 

[eliza61]

I'm not showing DVC as an Investment vehicle! I'm showing a chunk of cash thats not tied up in DVC as having investment potential (as it should be).

How can you not factor in money lost by not investing it????

If you have $16,000 cash available..are you suggesting that it should sit under a mattress and earn 0% if its not being spent on DVC?

It would have been spent on vacations most likely.

 

[SuzanneSLO]

And your rate of return on your cash should be your AFTER TAX rate. If you earn $1000, you will only have the balance after you pay Uncle Sam to use to stay at WDW. As a result, even 5% may be high for a guaranteed safe rate of return for the next 10 years. -- Suzanne

 

[mikesmom]

Well, if you really want to confuse things you can factor in the time frame and how you would have invested the money. We bought in 2000. After 9/11 the market took a real nose dive and our investments were in lousy shape to say the least. At some point over the next couple of years DH (the econ guy) looked at the investments and looked at the DVC (which at that point could have been sold for almost $20 more per point than we bought it for) and decided the DVC had been (temporarily, at least) a better investment than some of our stocks!

I'm not trying to make a case for DVC as an investment (it's NOT), but pointing out that if we had put the DVC money in our investment accounts in that time period we would have lost the money. So the time value of that piece of cash pretty much would have gone out the window. Theories in general can be helpful, but real life has a way of not behaving the way you would like it. The money spent on DVC not only has investment potential, it has loss potential.

 

[fwong]

And your rate of return on your cash should be your AFTER TAX rate. If you earn $1000, you will only have the balance after you pay Uncle Sam to use to stay at WDW. As a result, even 5% may be high for a guaranteed safe rate of return for the next 10 years. -- Suzanne

Historical annual average of the S&P 500 for the past 37 years is 6% even after taxes in the highest bracket.

disclaimer...past performance is no indication of future...blah blah blah....One could also argue that global warming is going to flood 1/3 of the state of Florida in the next 35 years and Vero Beach will go underwater. We just don't know...

The point of the modified calculation is that cash doesn't sit still if its not put into DVC -- and thats a factor that needs to be included in any of these types of comparisons. I made all parameters modifiable in my spreadsheet, and anybody is welcome to use it and enter their own favorite combination of numbers. If you don't agree with 5%, enter whatever you want to.

I'll be happy to share the spreadsheet with anybody

 

[fwong]

Well, if you really want to confuse things you can factor in the time frame and how you would have invested the money. We bought in 2000. After 9/11 the market took a real nose dive and our investments were in lousy shape to say the least. At some point over the next couple of years DH (the econ guy) looked at the investments and looked at the DVC (which at that point could have been sold for almost $20 more per point than we bought it for) and decided the DVC had been (temporarily, at least) a better investment than some of our stocks!

I'm not trying to make a case for DVC as an investment (it's NOT), but pointing out that if we had put the DVC money in our investment accounts in that time period we would have lost the money. So the time value of that piece of cash pretty much would have gone out the window. Theories in general can be helpful, but real life has a way of not behaving the way you would like it. The money spent on DVC not only has investment potential, it has loss potential.

I hear ya! Most of us took a hit in 2000-2002. But hindsight is always 20/20. Suddenly a 3% return at those fixed-rate of return savings accounts seems like a bargain in those years.

We all agree its not an investment. It's a pre-paid vacation plan. And the rate of savings varies depending on your unique situation.

 

[eliza61]

Ok, I think we all need to meet at the new villas AKL with our spreedsheets. After a few of those Zebra dome thingies I'll agree to any thing.

 

[1-407-WDWJUNKIE]

Regarding the cost figures - financing adds a lot to the cost per point. If you finance the purchase you should base your figures on the total cost of the buy in including interest.

One of the nice things about DVC being points based is you can in effect buy partial year. I just purchased my first contract - a measly 50 points BCV contract through resale. That is enough for a studio for seven days every other year. I plan on adding on more points as I can afford them (I have no desire to finance a large amount). But the point is, you can buy in very cheaply. And if you want to you can add on as you can afford to.

I don't figure we are actually saving money over say jumping on the best specials and staying in values or even moderates (40% off and Free Dining can be some exceptional values). What it does do is make staying at nicer accomodations in better locations affordable.

 

[Mtnman44]

You are correct. This comparison does not calculate any interest income for the "hotel" senario. It also doesn't not calculate the net present value of the DVC purchase or factor in any other calculation of the time value of money. Admittedly, there are many situations and variables that people must consider. In a nutshell, a chart like that should only be used to give a general picture of comparing what you would spend on Hotels vs. what DVC would cost.

You're right that if you had all the money up front, invested it, and used it to pay cash for hotel nights, then that would stretch out the break-even point. But then you have to figure on the taxes of the earned interest. Then you figure that you can't really compare a hotel room to a DVC villa, etc etc....Lots of details to figure out.

I calculated 10 years.

So I started with Mtnman44's post and factored in lost investment opportunities into the mix. You can see how I arrived at 10 years with Google spreadsheets:

(I can't post links yet....but here's the address if you want to see the spreadsheet)

//spreadsheets.google.com/pub?key=pI7lU3E3yBiVZyMZvLusJdw

There's a lot of cash tied up in DVC that is no longer earning money...

For example....after 1 year:

$14,560 with an average return of 5% would turn into $15,288
Add in the Maintenance Fee: $15,288 + $659.20 = $15947.20

That's $15947.20 cash you have in the bank because you did not buy DVC. Or $15947.20 you can spend on Disney Hotels if you did not buy DVC.

Now - we all still want to go to Disney -- so we will still have to pay something in order to stay at a nice deluxe hotel: $2,205

$15947.20 - $2,205 = $13,742.20

So if you factor in in lost investment opportunity...at the end of Year 1, you would've still been able to stay at a Deluxe Resort AND still had $13,742.20 cash in the bank if you had not bought DVC.

Using the spreadsheet to roll the clock forward...break-even doesn't occur until Year 10.

So the good news -- DVC is still a deal...but I think it will take 10 years rather than 7. If you factor in an investment rate of return of 8% instead of 5%, then it will take 13 years to break-even rather than 10 years.

---------------------------------

Closing Cost $0.00
DVC Points 160
Cost per Point $91.00
Maint Fee per Point $4.12
% Annual Maint Fee Increase 3%
% Hotel Price Increase 3%
% Investment Return 5%
Initial Disney Hotel Equivalent $2,205.00



Purchase Price $14,560.00

Investment vs. DVC
-------------------
1 $13,742.20
2 $12,837.14
3 $11,839.05
4 $10,741.87
5 $9,539.15
6 $8,224.10
7 $6,789.54
8 $5,227.88
9 $3,531.10
10 $1,690.74
11 ($302.15)

 

[Stevegriswold]

Wow,

Thanks for all the spreadsheets and info. So my original question has been answered and it sounds like a great deal.

If I stay at a DVC property 7-10 times instead of paying rack rate for a premium disney resort 7 to 10 times I basically break even and joining the club has been worth it. We plan on going at least that many times if not a bunch more and like the premium resorts but can't afford to pay the rack rates of almost $400 a night with tax on some.

So it looks like a DVC resale will be in my future.

Hey, saw the tagline above and made me wonder if Disney has any clubs in CA and if so are they also part of the DVC? If they don't have any DVC's in CA, any reason why not?

Thanks,
Steve

 

[hardingk]

Hi everyone,

We were in WDW this weekend and went to an open house. We are really interested, but are still deciding. What are some of the factors that persuaded you to join DVC?