For Those Who Like To Play With The Numbers

[PamOKW]

I thought others might like to see this Vacation Predictor from Sunterra. I'm not sure if all their figures are legit but it drives home the point about rates increasing.

I plugged in a current 7 day a year vacation at $110 per night with a 12% tax rate and 6% inflation for 50 years (like SSR). It comes out to a lifetime spending on vacations of close to $2 million. It also has today's $110 per night room running $27,200 in 2054.

Vacation Predictor

 

[JimC]

A room today that costs $110 per night will cost $705 per night in 2041 with 5.1% annual inflation (the actual long term Disney resort average rate increase).

Using that program, a $110 per night rate, a 6% inflation factor, they say $6984. I calculate it to be $950. Their program increased each year's rate by 12% instead of the 6% inflation I submitted. I don't know what they are doing but it is wrong.

 

[pumpkinboy]

Hmm, given that current inflation, as measured by the CPI is running below 2%, and that is largely thought to overestimate real core inflation, Sunterra's options of 6%, 8%, 10% or 12% are pretty fanciful (now if those were interest rates, it would be a different story). But it does make their product look good. If they let us put in 2-3% we might get a better look.
But then again, finance wonks like me and Jaysue have been doing this type of calculation anyway, and are constantly updating our spreadsheets to make sure it all still makes financial sense. Sunterra is undoubtedly using this to lure people into paying the outrageous premiums to buy new at their resorts , when ppl would be far better off letting someone else take the haircut and buying resale (fortunately, DVC keeps our resale prices propped up thru ROFR).

 

[brivers222]

Dang, so in 2054 a room that costs $110 per night will cost me $35,000 per night. Something tells me that either these calcuations aren't true to life or there are going to be some really crappy hotel rooms in the future. I mean a todays room for $110 has practically nothing. I can't imagine paying 35,000 a night for that same quality room YIKES!

 

[PamOKW]

I thought the numbers seemed a little outlandish -- but it was kind of fun seeing them "pop up". (Also says something about DVC sales tactics versus some other timeshare companies and how "timeshares" got a bad name.)

 

[helenabear]

I had a similar spreadsheet made up by a financial planner for my DVC... I changed the numbers and with tax, a rate of $110 will be about $2100/night in 50 years with a 6% increase. So for 50 years spending 11 nights/year with tax I calculate a lifetime spending of about $400K.

At 3% (which really resorts historically go up about 5% from what I've read) it is much lower at $524/night with a total of about $152K spent

At 12% you do get about $32K/night spent with $3.25 million spent (again 11 nights at that original $110... just picked 11 since that is average for me)

Amazing how the interest rates change it all.

 

[Montana Disney Fan]

They boost their numbers by only allowing us to go as low as 6% annual inflation which isn't low enough.

Here is the average over the past 10 decades (by decade).

Click ---> Inflation Rates By Decade

3.8% is the Average Inflation of the past 100 years.


Here it is for the past 10 years (by year).

Click --> Inflation Rates By Year

 

[ear_poppin]

The figures are false.

The rate of $121 at 6% inflation would increase by $7.26 making the next year $128.26 NOT $135 as quoted.


Another example....$715 at 6% would increase by $42.90 totalling $757.90 and NOT $800 as quoted!


$3106 increasing by 6% would increase by $186.36 totalling $3292.36 and not $3478 as quoted.

They have increased the rate well over the rate of inflation quoted just to make the figures look good....no wonder there is the ridiculous figure at the end !

Denise

 

[Montana Disney Fan]

Originally posted by ear_poppin
The figures are false.

The rate of $121 at 6% inflation would increase by $7.26 making the next year $128.26 NOT $135 as quoted.


Another example....$715 at 6% would increase by $42.90 totalling $757.90 and NOT $800 as quoted!


$3106 increasing by 6% would increase by $186.36 totalling $3292.36 and not $3478 as quoted.

They have increased the rate well over the rate of inflation quoted just to make the figures look good....no wonder there is the ridiculous figure at the end !

Denise

I missed that. Good catch Denise!!

 

[tjkraz]

For what it's worth, Allearsnet.com has started posting 2005 rates for WDW resorts. Average increases are 2-3%, with most room categories / seasons being in the 3% neighborhood.

But, there's also the issue of discount codes which muddy the waters. WDW could adjust the value of it's AP codes to further alter the revenue stream to their liking--particularly if the parks continue to perform as well as they have recently.

 

[pmcpmc]

we survived.

 

[jaysue]

It is amazing what some companies will try and do to scare people into buying something they may not need or be ready to buy - not very impressive indeed

One thing that keeps thing easy is to remember the rule of 72 - to apply it you take the expected inflation rate - let's say 3% for example

Take 72 divided by 3 and you get 24 - this would be the number of years roughly for the price of something to double

So if we assume 3% inflation as steady state the room that costs $250 today is $500 in 2028 and $1000 in 2052

If you assume 6% inflation, the doubling period is every 12 years
$250 today is $500 in 2016 and $1000 in 2028 and so on

12% inflation = doubling every 6 years etc

Sunterra is not being very clear in their comparison and calculations - caveat emptor!

thanks
jaysue

 

[Montana Disney Fan]

jaysue. I'm gunna use that 72 rule. Thanks.

PS. I'm gunna act like I've known about it all along


I mean...