Monthly Fees vs. Cost of OOP Room

[Lambekel]

How is this meaningless? Appears to be comparing apples to apples. Why would you compare to a hotel off of property when you don't use points for those? THat seems more meaningless to me. Or maybe I am misunderstanding...

This is exactly the kind of comparison I'm talking about. Unless you would actually pay $800 per night for that room, this is an absolutely meaningless exercise.

 

[marynvince]

. DVC is a very longterm financial committment.I haven't run the numbers, because to be honest, I am extremely skeptical of formulas and calculations designed to show that DVC saves an owner money. Most of those economic contortions are based on such crazy assumptions that I don't bother to read them.

I can tell you this, as a member for over 6 years whose 3 families have taken 29 DVC trips to various resorts -- it has NOT saved us money. It has increased the amount of money we paid to Disney. We have enjoyed every trip -- but it has not saved us money.

We bought DVC because we recognized it as a luxury purchase we would enjoy and could afford. If I had needed to justify it financially, I never would have purchased.

I think when people run the numbers, they want to make sure they can't get the same thing for less. I price shop with all large purchase, trying to get the best deal. Tell me when you buy a car you just pick the one you like and go pay sticker price? Most people just want to make an informed decision and know they spent their money wisely in their situation. There are certainly basic assumptions one can make, purchase price + MFs vs renting points. Depending on travel habits just comparing these 2, it would make sense to purchase vs. rent points.

You are right when you say broadbased that a DVC puchase does not save you money. But you can maximize your money's utility by purchasing wisely or not purchasing if your travel habits don't fit DVC

 

[DougEMG]

I like spreadsheets and running what if senarios in them. When looking at DVC I compared staying at various DVC resorts (7 standard rooms, AKV savanna, BLT lake and BWV preferred) in a studio vrs the rack rate from Disney at the times I travelled to see exactly what kind of a discount you were getting with DVC as compared to the discounted Disney offered.

Looking at 2 weeks, Dec 9-23 2012. The average number of points to stay in a studio was 199 points. The average rack was $7,013. If one rented points at $11/point, the saving over rack rate was 68%. Assuming real costs (buy in + MF) of $7/point that works out to a 80% discount. In both cases this is a lot more than the typical discount that Disney offers on deluxe rooms.


Looking at 3 weeks, Aug 12-Sept 02 2012. The average number of points to stay in a studio was 350 points. The average rack $8,606. If one rented points at $11/point, the saving over rack rate was 55%. Assuming real costs (buy in + MF) of $7/point that works out to a 71% discount. Certainly not as good as the Dec savings, but still better than any Disney discounts.

I also ran some other numbers for the same time periods comparing a stay a Port Orleans vrs the average for a DVC studio. In Dec the savings were 23% and 51%, while in Aug the savings were only 3% and 38%.

At the end of the day here's what it comes down to for me. I want to stay at BWV, I don't want to pay rack racks or even rack rates with a 35% discount, but I will gladly pay rack rates with an 70-80% discount to stay there. DVC lets me do this.

 

[Shazzasmd]

I think this is a question many of us wrestle with. We have just passed ROFR on our first contract - 160 points at VWL. Our intention was to also purchase a similar contract at BCV. I am now second guessing that decision and thinking about just booking BCV with cash (and the Florida Resident Discount) whe we want to stay there.

This is partially a financial analysis - do we really need a long term commitment of 300+ points? But it's also about flexibility, given we might occasionally stay at Poly or the GF and also have the option for Club Level stays.

We plan to stay at BCV sometime this year on cash or rental points, and I'll probably hold off until then. If we love it, purchasing more points may make sense. With respect to your decision, does it make sense to first buy a smaller contract - or maybe rent points? This probably isnt an option if you usually make one longer visit each year, but may work if you do multiple shorter trips.

Edit: I see in your first post you did say you are once a year folks. Maybe try renting points or paying OOP for a Villa Room to see how you like it?

 

[Goofy DVC]

I like spreadsheets and running what if senarios in them. When looking at DVC I compared staying at various DVC resorts (7 standard rooms, AKV savanna, BLT lake and BWV preferred) in a studio vrs the rack rate from Disney at the times I travelled to see exactly what kind of a discount you were getting with DVC as compared to the discounted Disney offered.

Looking at 2 weeks, Dec 9-23 2012. The average number of points to stay in a studio was 199 points. The average rack was $7,013. If one rented points at $11/point, the saving over rack rate was 68%. Assuming real costs (buy in + MF) of $7/point that works out to a 80% discount. In both cases this is a lot more than the typical discount that Disney offers on deluxe rooms.


Looking at 3 weeks, Aug 12-Sept 02 2012. The average number of points to stay in a studio was 350 points. The average rack $8,606. If one rented points at $11/point, the saving over rack rate was 55%. Assuming real costs (buy in + MF) of $7/point that works out to a 71% discount. Certainly not as good as the Dec savings, but still better than any Disney discounts.

I also ran some other numbers for the same time periods comparing a stay a Port Orleans vrs the average for a DVC studio. In Dec the savings were 23% and 51%, while in Aug the savings were only 3% and 38%.

At the end of the day here's what it comes down to for me. I want to stay at BWV, I don't want to pay rack racks or even rack rates with a 35% discount, but I will gladly pay rack rates with an 70-80% discount to stay there. DVC lets me do this.

Well said. I like this analysis. I like actual #s myself. I took our first 11 years of ownership starting in 1993 and found the following:

84 nights at DVC
$13,041 cost ( Actual MFs plus 11 years of buy in cost)
12 Nights in GV
44 Nights in 2BR
13 Nights in 1BR
15 Nights in S

Cost per night was $155.25

Don't think I could have done those accomadations OOP for that price.

 

[JimMIA]

How is this meaningless? Appears to be comparing apples to apples. Why would you compare to a hotel off of property when you don't use points for those? THat seems more meaningless to me. Or maybe I am misunderstanding...

The price of a hotel room is only relevant for comparison if you would PAY that price as the alternative to using DVC. If you really would typically pay $800 per night for a hotel room at WDW -- year after year after year -- then comparing the cost of DVC to that hotel room is valid.

If you wouldn't pay $800 -- and very few of us would -- it's a make-believe comparison. That's like saying I'm going to Europe for vacation because it's less expensive than space tourism.

Comparing DVC to an offsite hotel (or timeshare) is probably a more accurate comparison because it is a real option that most of us have used prior to buying DVC.

It's much more realistic to evaluate a full week in a two-bedroom at Wyndham Bonnet Creek for $800 than it is to compare an $800 per night hotel room that nobody would book. Lots of people get that deal at WBC and some get it for less. One of our regulars here got it for <$500 just a couple of months ago.

 

[wallygirl]

Thanks to everyone for your analysis and insights. We, as a family of 4, been able to stay at Poly for 40% and 45% off rack in a standard garden view room in a slower season. We are worried about the ever increasing MF's but even when you add that in to the resale buy in cost it is a lot cheaper than waiting for pin codes, discounts, etc... I really appreciate all the help Disboards has been!! We'll likely be on the lookout for a resale buy in of 160 at AKL come fall!

 

[Lambekel]

I don't think it makes sense to compare hotels off of property, because that is not what you are getting with points. And while $800 is probably the rack rate, and nobody pays rack rate, it is considerably cheaper to stay on property as a DVC member with points, than to pay OOP. And the price for these rooms will only go up. I do understand that the MF will go up also, but not to the extent of the rooms.

The price of a hotel room is only relevant for comparison if you would PAY that price as the alternative to using DVC. If you really would typically pay $800 per night for a hotel room at WDW -- year after year after year -- then comparing the cost of DVC to that hotel room is valid.

If you wouldn't pay $800 -- and very few of us would -- it's a make-believe comparison. That's like saying I'm going to Europe for vacation because it's less expensive than space tourism.

Comparing DVC to an offsite hotel (or timeshare) is probably a more accurate comparison because it is a real option that most of us have used prior to buying DVC.

It's much more realistic to evaluate a full week in a two-bedroom at Wyndham Bonnet Creek for $800 than it is to compare an $800 per night hotel room that nobody would book. Lots of people get that deal at WBC and some get it for less. One of our regulars here got it for <$500 just a couple of months ago.

 

[Lambekel]

Well said. I like this analysis. I like actual #s myself. I took our first 11 years of ownership starting in 1993 and found the following:

84 nights at DVC
$13,041 cost ( Actual MFs plus 11 years of buy in cost)
12 Nights in GV
44 Nights in 2BR
13 Nights in 1BR
15 Nights in S

Cost per night was $155.25

Don't think I could have done those accomadations OOP for that price.

Exactly my point! Definitely worth it!!

 

[rlmas]

I think some viewpoints are just different. Using my $800 example. I agree that I would not pay $800 or even a discounted price of $500. We would be at Port Orleans for $190 not offsite. If you want offsite, why even consider DVC? Having said that, I WANT to stay in that $800 room. DVC let's me
Do it for Port Orleans prices. It also let me ensure future trips while o know I have the discretionary dollars in hand. It sure is nice checking out and not getting a bill!!

 

[JimMIA]

I don't think it makes sense to compare hotels off of property, because that is not what you are getting with points. And while $800 is probably the rack rate, and nobody pays rack rate, it is considerably cheaper to stay on property as a DVC member with points, than to pay OOP. And the price for these rooms will only go up. I do understand that the MF will go up also, but not to the extent of the rooms.

I'm obviously not making my point very clearly.

My point is -- if you are trying to justify DVC financially (I didn't use that basis at all in my purchasing decisions) -- you have to compare the cost of DVC to an alternative you would actually, really use.

For example, Wallygirl above cites actually staying at the Poly with 40-45% discounts. If that would be their normal alternative to DVC, those hotel prices are a valid comparison.

For other families, however, even a discounted Poly rate would not be what they would do in the real world. Maybe they'd get discounted stays at a mod. Maybe they'd stay at a value. Maybe their alternative would be an offsite hotel, timeshare, or vacation home. The options are limitless. Whatever they would really do is a valid comparison.

But comparing DVC costs to cash prices of DVC villas, or to discounted or non-discounted onsite hotels -- when you would not actually pay those prices -- is a sham argument.

It's like saying I saved money buying a Honda because it was way less than an Escalade...which I never would have bought in the first place. By that logic, I saved a ton today because I didn't buy a Lear jet.

A much better approach, IMHO, is to do what GoofyDVC did above. Figure out what DVC cost...and then decide whether you got good value for your money. For a prospective buyer, what will it cost...what will you get for that...and is that good value for your family?

That's a real comparison without any phony math.

 

[joeyrose]

do not be too concerned about the 30-50 year commitment. you can always sell, lots of people do. i did once and broke even, that is i got all my trips for the maintenance fees only. you may lose some money when you sell, but dvc holds up better than any other timeshare out there. you can try it buying in a small resale contract, see if you like it, if not...simply sell it. my guess is that you will love dvc if you buy where you think you'd really like to stay.

 

[princessbride6205]

We are a family of 3 who prefer to stay Deluxe. So when we made our decision to purchase DVC, it was a comparison of the cost of a DVC studio room to a Deluxe standard room. We typically vacation during January or October, which have lower points needed than other times of the year. Also, we cash-purchased resale contracts that had banked points. So even with CRO or AP discounts at the Deluxes, we have come out ahead after just a few years.

 

[JimMIA]

do not be too concerned about the 30-50 year commitment. you can always sell, lots of people do. i did once and broke even, that is i got all my trips for the maintenance fees only. you may lose some money when you sell, but dvc holds up better than any other timeshare out there. you can try it buying in a small resale contract, see if you like it, if not...simply sell it. my guess is that you will love dvc if you buy where you think you'd really like to stay.

For the newbies, beware of a little trap built into rationales like this.

Many DVC owners who bought in the early days actually made nice profits when they sold a few years later. Others broke even, even after paying sales commissions. Those days are over, especially for people who buy direct.

In today's market, you can look at the ROFR thread, get an idea of what the average contract like yours is selling for, deduct 10% commission, also deduct anything you owe on the contract, and that is about what you would net if you sold today. For many people (probably most), that math gives you a significant loss -- not a break-even.

And for people who bought direct and financed, it may even mean they have to pay IN to close and net zero. Or, as we've seen over and over -- they may not even be able to afford to sell at all, and may be locked into their annual MFs.

That's today's picture. Each year you own, your net is going to be less, but then you'll also have an additional year to use DVC points.

In today's market, things are not as simple as "...simply sell it." If you're not sure about DVC and want to "try it," you'd better have a much sounder exit strategy than this.

 

[Lambekel]

Got it! Thanks for the clarification.

I'm obviously not making my point very clearly.

My point is -- if you are trying to justify DVC financially (I didn't use that basis at all in my purchasing decisions) -- you have to compare the cost of DVC to an alternative you would actually, really use.

For example, Wallygirl above cites actually staying at the Poly with 40-45% discounts. If that would be their normal alternative to DVC, those hotel prices are a valid comparison.

For other families, however, even a discounted Poly rate would not be what they would do in the real world. Maybe they'd get discounted stays at a mod. Maybe they'd stay at a value. Maybe their alternative would be an offsite hotel, timeshare, or vacation home. The options are limitless. Whatever they would really do is a valid comparison.

But comparing DVC costs to cash prices of DVC villas, or to discounted or non-discounted onsite hotels -- when you would not actually pay those prices -- is a sham argument.

It's like saying I saved money buying a Honda because it was way less than an Escalade...which I never would have bought in the first place. By that logic, I saved a ton today because I didn't buy a Lear jet.

A much better approach, IMHO, is to do what GoofyDVC did above. Figure out what DVC cost...and then decide whether you got good value for your money. For a prospective buyer, what will it cost...what will you get for that...and is that good value for your family?

That's a real comparison without any phony math.

 

[ELMC]

I'm obviously not making my point very clearly.

I think you are making your point clearly, if that helps. When I used to go online to price out a trip to WDW and see that it cost $800 a night to stay at BLT, I simply closed the browser. There was no way I was paying that.

When I went to the DVC sales presentation and my salesperson told me that I would break even in 7 years by buying at BLT, I simply closed him. (Well not really, but I certainly didn't put any stock in that comment).

If I wouldn't pay it then, it's not reasonable to use that as my basis for comparison. (And that's the point that Jim is trying to make). IMO people who compare DVC to rack rate for the purposes of justifying their purchase are doing so to make support a decision they have already made as opposed to do an actual analysis of the options. The numbers don't lie. But you certainly can make them say anything you want if you try hard enough.

 

[DougEMG]

I'm obviously not making my point very clearly.

My point is -- if you are trying to justify DVC financially (I didn't use that basis at all in my purchasing decisions) -- you have to compare the cost of DVC to an alternative you would actually, really use.

For example, Wallygirl above cites actually staying at the Poly with 40-45% discounts. If that would be their normal alternative to DVC, those hotel prices are a valid comparison.

For other families, however, even a discounted Poly rate would not be what they would do in the real world. Maybe they'd get discounted stays at a mod. Maybe they'd stay at a value. Maybe their alternative would be an offsite hotel, timeshare, or vacation home. The options are limitless. Whatever they would really do is a valid comparison.

But comparing DVC costs to cash prices of DVC villas, or to discounted or non-discounted onsite hotels -- when you would not actually pay those prices -- is a sham argument.

It's like saying I saved money buying a Honda because it was way less than an Escalade...which I never would have bought in the first place. By that logic, I saved a ton today because I didn't buy a Lear jet.

A much better approach, IMHO, is to do what GoofyDVC did above. Figure out what DVC cost...and then decide whether you got good value for your money. For a prospective buyer, what will it cost...what will you get for that...and is that good value for your family?

That's a real comparison without any phony math.

Totally agree with you here.

 

[DougEMG]

For the newbies, beware of a little trap built into rationales like this.

Many DVC owners who bought in the early days actually made nice profits when they sold a few years later. Others broke even, even after paying sales commissions. Those days are over, especially for people who buy direct.

In today's market, you can look at the ROFR thread, get an idea of what the average contract like yours is selling for, deduct 10% commission, also deduct anything you owe on the contract, and that is about what you would net if you sold today. For many people (probably most), that math gives you a significant loss -- not a break-even.

And for people who bought direct and financed, it may even mean they have to pay IN to close and net zero. Or, as we've seen over and over -- they may not even be able to afford to sell at all, and may be locked into their annual MFs.

That's today's picture. Each year you own, your net is going to be less, but then you'll also have an additional year to use DVC points.

In today's market, things are not as simple as "...simply sell it." If you're not sure about DVC and want to "try it," you'd better have a much sounder exit strategy than this.

I can't tell you the number of contracts at SSR and AKV I've bid on were the seller owed a loan still and needed/wanted to get the amount on their loan from the sale. Never once did I end up buying from a seller in this position.

 

[Missyrose]

I can't tell you the number of contracts at SSR and AKV I've bid on were the seller owed a loan still and needed/wanted to get the amount on their loan from the sale. Never once did I end up buying from a seller in this position.

A lot of the BLT contracts for sale on the resale market fall into this category too.

 

[DougEMG]

A lot of the BLT contracts for sale on the resale market fall into this category too.

I'm not surprised, BLT is just too expense for me

I've found that the older resorts like OKW, BWV, BCV and VWL are more likely to have owners without loans.