DVC vs Value resort analysis

[dmunsil]

Just when you thought it was safe to return to the DIS DVC boards...

Some folks mentioned that generally DVC pencils out to be cheaper than staying in a Moderate or Deluxe resort, but not in a Value. I was curious how that worked out and how close the numbers are, so I compared staying in a standard room at Pop Century (the resort MouseSavers says is the best value) to buying points and staying at Saratoga (which we all think is probably the best value in DVC).

I factored in a 10% discount on the Pop rooms, because if you plan ahead enough you can usually get at least the AAA discount of 10%. Sometimes you can get a better discount, but rarely above 15%, and sometimes you can't get any discount, like at peak periods. If I move the average discount to 15% it doesn't change the analysis much.

The net result is that the Pop room costs an average of $1,063 per week, and it would cost an average of 120 points to stay in a studio at SSR for a week, so the cost per point is $8.86, factoring in the 12.5% room tax and a 10% discount. Since SSR dues are $4.81, the dues are cheaper than the discounted cash price. So the Net Present Value (NPV) of the DVC contract is positive; i.e. you should be willing to pay something for it in order to get the discount.

If we assume that dues and cash room costs will go up at 3.2% per year (which is approximately their historical average), and the time value of money is 4.5% (which is a little lower than people have historically gotten in bond index funds), then the NPV of a single point of SSR is, coincidentally enough $130.68, almost exactly what Disney is charging. I swear I didn't massage the numbers to make that come out.

Obviously, if you really didn't care whether you stayed at Pop Century or SSR, then this would tell you not to buy SSR, because why would you pay $130 to get a stream of discounts that is worth exactly $130 today if all your assumptions hold up and you use it consistently for 41 years? Those assumptions might not hold up. You might not use it consistently. Et cetera. But if you can get SSR points at, say, $65, the proposition looks much more attractive.

If you are more pessimistic about the time value of money and want to do the comparison against a return of 3%, then the NPV of SSR becomes $172.

What if we want to compare against staying offsite? I compared to several decent offsite hotels that are on the MouseSavers preferred list, and it looked to me from spot checking that their prices average about 40% lower than the Value resort rack rates. So we could model that as just a 40% discount, and then the value per point becomes $5.91, which is still more than the SSR dues, so you're still getting a discount. It's a tiny discount, so the NPV of a point now comes out to $46.74.

So assuming you believe my assumptions are reasonable, if you really don't care whether you stay onsite in a deluxe studio or offsite in a nice hotel room, you should still be willing to buy DVC if you can get the points for significantly less than $46, because you should save money over the long (very long) haul.

One other thing that I can do with the spreadsheet is look at the cumulative NPV of the stream of discounts over the years to answer the question of how many years it would take to "pay off" the initial buy in.

So for example, with the assumptions I mentioned at the beginning, it would take a full 41 years to pay off a $130 buy-in of SSR. If you bought in at $65/point, though, it only takes 20 years to pay off the buy-in. And if you change your interest rate assumptions to 3% and pay $65, it only takes 16 years to pay back.

Of course, all this is a contrived example just to make a point, which is that DVC can be a reasonable value even if you compare it to staying in Disney Value Resorts. It even has some value (though not what Disney is charging) if you compare it to staying offsite.

 

[boogabuzz]

Wow! That was a lot of info to absorb.

We had always stayed with family members who were members. I guess you could say, after several times staying at deluxe villa resorts, we've been spoiled. We stayed in a one bedroom at Art of Animations back in the fall. We stayed on a Fl res rate and it was $310 for 1 night(sat). We hated it!! Don't get me wrong, it is a very cute resort.. My 4 year old loved that we were in the Cars building. But it was loud, chaotic, small(the room, bed, furniture) and NOT what we were used to. Needless to say.. That was the deal breaker. We joined within a month after that.

My point is there's no way someone can compare a value resort to a deluxe villa resort. You don't even get seperate shampoo and conditioner in the value resorts. No thank you!

 

[greengeen]

It seems pointless comparing deluxe villas to value rooms. Really.

 

[lilpooh108]

Wow! That was a lot of info to absorb.

We had always stayed with family members who were members. I guess you could say, after several times staying at deluxe villa resorts, we've been spoiled. We stayed in a one bedroom at Art of Animations back in the fall. We stayed on a Fl res rate and it was $310 for 1 night(sat). We hated it!! Don't get me wrong, it is a very cute resort.. My 4 year old loved that we were in the Cars building. But it was loud, chaotic, small(the room, bed, furniture) and NOT what we were used to. Needless to say.. That was the deal breaker. We joined within a month after that.

My point is there's no way someone can compare a value resort to a deluxe villa resort. You don't even get seperate shampoo and conditioner in the value resorts. No thank you!

What didn't you like specifically about the AoA suite? We were thinking of trying it one of these days on an arrival day. Is the furniture all plastic-y? It looks kinda plastic-y.

 

[disneybass]

It seems pointless comparing deluxe villas to value rooms. Really.

You beat me to it. I was just going to say that you have to be joking to try to compare Pop to SSR.

 

[lilpooh108]

I think the analysis is interesting

 

[dmunsil]

Obviously it's silly to compare Pop to SSR in some ways. But sometimes you'll see people ask about whether they should consider DVC, when they've always stayed in Value resorts to save money. The usual advice is that they won't save money with DVC, but they will get much nicer accommodations. I'm just trying to point out that they probably will save some money, or at least not spend significantly more money, and get nicer accommodations.

And of course if you buy resale, you'll clearly and unambiguously save money with DVC over staying in a Value resort. Or, as folks here so often point out, you won't actually spend any less money, you'll just go to WDW more often or stay longer.

 

[SFlaDisneyfans]

Thanks for the info. It meshes pretty well with what I had looked at. I used my Fla resident rates and the cheapest possible rates (Sun-Thurs) at 77 per night plus 12% tax. I then factored in my price of 64 per point on my SSR resale contract and also used the lowest cost season for a studio for the same nights. The DVC out performed the value resort in my cost analysis after including all the estimated factors (such as MF, estimated inflation etc).

Your mileage may vary (and probably will), I was looking specifically at my price points and the like.

 

[Dean]

It seems pointless comparing deluxe villas to value rooms. Really.

It isn't pointless because this is the exact choice many buying in are facing, value or value/moderate alternating to buying DVC.

Personally I think 15% discount is the minimum I'd use and that 20% is more reasonable for those not routinely going high times, by the time you factor in codes and FD, 10% is too low IMO. I'd also assume a break even on the Time Value of the money at 10 years to control long term risk, absolutely no longer than 20 years. The long terms risks of a timeshare, even DVC, is just too great. Of course as soon as you move to retail or a much higher cost option, the numbers skew dramatically in favor of the value, cost wise.

As for off site, I think another comparison cat to consider is non DVC timeshares like Wyndham, Marriott, Hilton or Bluegreen among others. Granted it's more difficult to compare cleanly to a studio or single value room but one can get a 2 BR off site (and or multiple weeks) for around the prices you're quoting or just a little more.

 

[boogabuzz]

What didn't you like specifically about the AoA suite? We were thinking of trying it one of these days on an arrival day. Is the furniture all plastic-y? It looks kinda plastic-y.

Yes. In fact, that is exactly how my family described the place. Plastic-y!

There are no balconies. Walls were paper thin. Linens with cheap and stiff. Pools are decorated cute, but boring with no slides. The quick service was CHAOS! 10PM we went to fill our drinks and it was loud and crowded in there. Crazy! Bell service took an hour to get our luggage to us. It just seemed like one turn off after another.

 

[JimMIA]

As for off site, I think another comparison cat to consider is non DVC timeshares like Wyndham, Marriott, Hilton or Bluegreen among others. Granted it's more difficult to compare cleanly to a studio or single value room but one can get a 2 BR off site (and or multiple weeks) for around the prices you're quoting or just a little more.

One very common example is Wyndham Bonnet Creek.

Renting a week from an owner (either directly or through a service), you can easily get a 2 BR deluxe for less than $1,000...usually in the $700-$800 range. That's a cash rental -- NO acquisition cost and NO ongoing MFs to worry about.

I use WBC because those rentals are discussed daily over on the Orlando Hotels and Attractions board and the numerous quotes give me confidence in their accuracy (although some do pay more).

 

[boogabuzz]

It isn't pointless because this is the exact choice many buying in are facing, value or value/moderate alternating to buying DVC.

Personally I think 15% discount is the minimum I'd use and that 20% is more reasonable for those not routinely going high times, by the time you factor in codes and FD, 10% is too low IMO. I'd also assume a break even on the Time Value of the money at 10 years to control long term risk, absolutely no longer than 20 years. The long terms risks of a timeshare, even DVC, is just too great. Of course as soon as you move to retail or a much higher cost option, the numbers skew dramatically in favor of the value, cost wise.

As for off site, I think another comparison cat to consider is non DVC timeshares like Wyndham, Marriott, Hilton or Bluegreen among others. Granted it's more difficult to compare cleanly to a studio or single value room but one can get a 2 BR off site (and or multiple weeks) for around the prices you're quoting or just a little more.

I think anybody considering and opting for the AoA route over SSR(or one of the other DVC resorts) obviously hasn't stayed in a DVC resorts to see the difference. Obviously DVC is not in everyones budget. Anyone contemplating a DVC membership needs to consider the amentities they are comparing. Really, it's like opting a piece of chuck over a filet. No comparison.

 

[Missyrose]

I think anybody considering and opting for the AoA route over SSR(or one of the other DVC resorts) obviously hasn't stayed in a DVC resorts to see the difference. Obviously DVC is not in everyones budget. Anyone contemplating a DVC membership needs to consider the amentities they are comparing. Really, it's like opting a piece of chuck over a filet. No comparison.

No one is comparing the value of a Pop rom vs. an SSR studio, everyone on these boards know how much nicer the studio is. But in another thread someone had mentioned that they had calculated a break-even point on a DVC purchase as compared to their typical value vacations. There were doubters, so Don did the calculations to show people it can be done.

It's a purely financial comparison, nothing more.

 

[Dean]

I think anybody considering and opting for the AoA route over SSR(or one of the other DVC resorts) obviously hasn't stayed in a DVC resorts to see the difference. Obviously DVC is not in everyones budget. Anyone contemplating a DVC membership needs to consider the amentities they are comparing. Really, it's like opting a piece of chuck over a filet. No comparison.

It depends on what you're comparing. For dollars and savings, my view is you compare what you would have spent to what you would spend with DVC, preferably in the unit type you'd get with DVC. It may be that DVC gives you more value for a comparable amount but I think it depends on specifics but it represents a considerable commitment and long term obligation/risk. IMO a moderate is a far better comparison to a DVC studio and 2 rooms to a 2 BR. I'm not sure the comparison is a large a difference as you're last statement though, esp for AoA or Pop.

 

[traceyg]

I guess it depends on how you vacation...

After staying at deluxe resorts we became snobs about the All Stars and Pop. Don't get me wrong, there's absolutely nothing wrong with them. Given a choice we splurged and stayed at deluxe resorts. Then I found out about renting and we did that a few times. Then we decided that instead of being at someone's mercy of making our reservation, keeping our reservation, changing things if something went south, etc etc that we would rather just own.

If you look at the hotels as "just a room to sleep" then there's no argument that any of the resorts are good. If you want to fix your own meals and have access to a laundry facility and stay at an upgraded resort then DVC is a good thing. We have 5 kids so anytime we go we have to rent at least two rooms. After comparing the cost of two value resorts and meals for 7 people (3 of which are chow hounds) it was more feasible to just buy into DVC. With the completion of two family trips we've almost recouped the initial purchase price if you compare the price of the rooms (with point rentals) and not having to pay the meal fees for our group. If you compared it with renting two rooms at PoP it would take longer to justify our expenditure.

When I have friends who ask my opinion on Disney accommodations the first thing they ask is "on-site or off?" Then you get into which category of resort if you stay on property. Yes, there are so many other ways to stay cheaper. We just prefer to be immersed for one and then having amenities also.

If we never break even on our contract, which truly wasn't the reason we bought, DVC is really about investing in Disney vacations. I'm good with that if that's all that it ever turns out to be.

 

[BestDadEver]

Wow! That was a lot of info to absorb.

We had always stayed with family members who were members. I guess you could say, after several times staying at deluxe villa resorts, we've been spoiled. We stayed in a one bedroom at Art of Animations back in the fall. We stayed on a Fl res rate and it was $310 for 1 night(sat). We hated it!! Don't get me wrong, it is a very cute resort.. My 4 year old loved that we were in the Cars building. But it was loud, chaotic, small(the room, bed, furniture) and NOT what we were used to. Needless to say.. That was the deal breaker. We joined within a month after that.

My point is there's no way someone can compare a value resort to a deluxe villa resort. You don't even get seperate shampoo and conditioner in the value resorts. No thank you!

And this is why I don't use hypotheticals and just compare my value to rack rates .

 

[DisneyGal24]

Just when you thought it was safe to return to the DIS DVC boards...

Some folks mentioned that generally DVC pencils out to be cheaper than staying in a Moderate or Deluxe resort, but not in a Value. I was curious how that worked out and how close the numbers are, so I compared staying in a standard room at Pop Century (the resort MouseSavers says is the best value) to buying points and staying at Saratoga (which we all think is probably the best value in DVC).

I factored in a 10% discount on the Pop rooms, because if you plan ahead enough you can usually get at least the AAA discount of 10%. Sometimes you can get a better discount, but rarely above 15%, and sometimes you can't get any discount, like at peak periods. If I move the average discount to 15% it doesn't change the analysis much.

The net result is that the Pop room costs an average of $1,063 per week, and it would cost an average of 120 points to stay in a studio at SSR for a week, so the cost per point is $8.86, factoring in the 12.5% room tax and a 10% discount. Since SSR dues are $4.81, the dues are cheaper than the discounted cash price. So the Net Present Value (NPV) of the DVC contract is positive; i.e. you should be willing to pay something for it in order to get the discount.

If we assume that dues and cash room costs will go up at 3.2% per year (which is approximately their historical average), and the time value of money is 4.5% (which is a little lower than people have historically gotten in bond index funds), then the NPV of a single point of SSR is, coincidentally enough $130.68, almost exactly what Disney is charging. I swear I didn't massage the numbers to make that come out.

Obviously, if you really didn't care whether you stayed at Pop Century or SSR, then this would tell you not to buy SSR, because why would you pay $130 to get a stream of discounts that is worth exactly $130 today if all your assumptions hold up and you use it consistently for 41 years? Those assumptions might not hold up. You might not use it consistently. Et cetera. But if you can get SSR points at, say, $65, the proposition looks much more attractive.

If you are more pessimistic about the time value of money and want to do the comparison against a return of 3%, then the NPV of SSR becomes $172.

What if we want to compare against staying offsite? I compared to several decent offsite hotels that are on the MouseSavers preferred list, and it looked to me from spot checking that their prices average about 40% lower than the Value resort rack rates. So we could model that as just a 40% discount, and then the value per point becomes $5.91, which is still more than the SSR dues, so you're still getting a discount. It's a tiny discount, so the NPV of a point now comes out to $46.74.

So assuming you believe my assumptions are reasonable, if you really don't care whether you stay onsite in a deluxe studio or offsite in a nice hotel room, you should still be willing to buy DVC if you can get the points for significantly less than $46, because you should save money over the long (very long) haul.

One other thing that I can do with the spreadsheet is look at the cumulative NPV of the stream of discounts over the years to answer the question of how many years it would take to "pay off" the initial buy in.

So for example, with the assumptions I mentioned at the beginning, it would take a full 41 years to pay off a $130 buy-in of SSR. If you bought in at $65/point, though, it only takes 20 years to pay off the buy-in. And if you change your interest rate assumptions to 3% and pay $65, it only takes 16 years to pay back.

Of course, all this is a contrived example just to make a point, which is that DVC can be a reasonable value even if you compare it to staying in Disney Value Resorts. It even has some value (though not what Disney is charging) if you compare it to staying offsite.

Agreed! DH and I had made 3 trips to WDW, all at values. This was from 2005-2012. We noticed our rates kept going up thru the years, even with discounts. We bought DVC and are thrilled with it! We visited relatives at AOA (we split between BLT/AKL) and the resort was cool but we didn't feel like we were missing out on anything!

 

[csharpwv]

For anyone who owns DVC, understands how it works, and know how to get the most value for the $$$ - the value proposition is simple.

Am I going to book a Disney vacation every year and pay what Disney is asking, or am I going to 'control' my costs by making an incredibly large financial outlay (for most families), and going on the Disney 'payment plan'... DVC.

At the end of the day, Disney Vacation Club allows members to control their costs, and take advantage of being IN the magic 24 hours a day while visiting.

When it comes to comparing a value resort to anything else - there is no comparison beyond cost. They are very very limited service resorts with no 'value added' amenities.

Value is value is value - the main motivation is value. Disney wanted to make things easier on families... AND keep them on their property... to control their spending.

NOW... let's compare a Deluxe Villa Resort to a Deluxe Resort.

Let's look at service - especially at Saratoga Springs and Old Key West - where you enter to 'lobby' when you check in, and if all goes well, you won't be back to the lobby until the end of your stay to catch Magical Express.

The resorts are built to lack the level of service of a resort like the Contemporary or the Grand Floridian where you will likely pass through the lobby at least once or twice a day.

I hadn't stayed at a Deluxe resort since we bought DVC until last month - and the level of service at a Deluxe resort is nothing like staying in a DVC villa. With daily housekeeping service, upgraded in-room amenities, turn down service, etc etc etc....

A DVC Member is essentially a moderate guest staying in a deluxe resort...

HOWEVER, I'm not saying that's a bad thing - I'm just saying that there really isn't a comparison for being a DVC member.

We stay at "Deluxe" properties - but we aren't really paying for... and aren't getting "Deluxe" level service.

Staying at DVC Resorts that are attached to Deluxe resorts softens that 'un-deluxe' edge - like BCV, VWL, BWV... but even BLT is a little different due to the location.

Now, let's move on the VGF.... the room decor, finishes and fixtures, and location of THAT particular resort really do set it apart from every over DVC resort. The only one that comes close in terms of fit and finish is BLT - and that's even a stretch in some ways.

When you compare VWL, SSR, BWV, BCV... those rooms are all nearly identical except for decor. I stayed at SSR and BCV on a recent visit - and honestly forgot where I was when I woke up in the middle of the night.

The floor plan is nearly identical!

I'm glad that the last few resorts they have built have been a departure from such a cookie-cutter mentality. And honestly the soft goods update to Saratoga really did help - it took the pastel flair out of the rooms some, and the darker warmer colors really gave the rooms a bit of masculine feel... but not too much!

Anyway - I've rambled - nothing to compare a DVC stay with, it isn't value, moderate, or deluxe!

 

[myzel]

IMO if you have to go through that much trouble to justify not purchasing DVC then you don't have money to waste. I have to make decisions for my business every day. This is vacation time not ROI time.

 

[dmunsil]

Personally I think 15% discount is the minimum I'd use and that 20% is more reasonable for those not routinely going high times, by the time you factor in codes and FD, 10% is too low IMO.

I'm not saying you're wrong, but I have trouble going beyond 15% for a few reasons:

- Some parts of the year (peak holiday seasons, essentially) there are no discounts of any kind.
- Even during moderate seasons, not everyone is able to get a discount room, or not for their whole stay.
- The discounts tend to be higher for deluxe resorts than for value.

There are exceptions, and during low season you can sometimes get as high as 25% off for certain value rooms (usually the more expensive ones), but that's not common at all.

My sister (who owns MouseSavers.com) tells me that these last few years have been a relative bonanza of room discounts because of the sour economy. She expects that Disney is going to be stingier with the discounts when the economy picks up. I mean, the future is hard to predict, but she's spent over 10 years obsessing about the best discounts, so I tend to trust her instincts. She said she wouldn't go higher than 10% off as an assumption. I think she's being extra conservative, but she's the expert. My basic rule of thumb: don't assume you know more about Disney discounts than my sister.

To some extent it depends on the person. If you're a discount maven and plugged into all the sources of info, and willing to keep checking for discounted rooms and be flexible on dates, you'll be able to get higher discounts, maybe 15% on average for a Value resort. Some people will try briefly to find some kind of discount and get 5-10%, and perhaps only average 7% over time. The naïve person just goes on Disney's web site and takes what they can get.

I'd also assume a break even on the Time Value of the money at 10 years to control long term risk, absolutely no longer than 20 years. The long terms risks of a timeshare, even DVC, is just too great. Of course as soon as you move to retail or a much higher cost option, the numbers skew dramatically in favor of the value, cost wise.

I agree. When you stretch NPV out more than 10 or 15 years, uncertainty goes waaaaay up. A conservative valuation would only go out maybe 15 or 20 years, and if the numbers look good, the rest of the years are gravy.

Granted it's more difficult to compare cleanly to a studio or single value room but one can get a 2 BR off site (and or multiple weeks) for around the prices you're quoting or just a little more.

Hmmm... seems like the nicer timeshares that you can book by the night are doing a 2 bedroom for $130-150. So you mean they're similar in price to a value room? If so, I agree. They tend to be further out, though.

Is there any way to book Wyndham Bonnet Creek for cash by the night? Or do you have to rent from an owner? I couldn't find a booking site for them, but maybe I'm just not looking in the right place.