Mousesavers "BASH" DVC!!

[deerh]

I was reading mousesavers.com about DVC and ran apon this:


I think this is a "SLAM" against DVC!!

DVC membership generally is not worth considering unless you have the upfront cost in the bank (in other words, you don't have to borrow it) and you plan to vacation at Walt Disney World every year. When considering a DVC membership, it's a good idea to get out a calculator and add up the initial buy-in cost, the annual dues times the number of years your points will be active (be sure to account for annual dues increases*), and any interest you would be paying. Divide by the number of years you'll get out of the membership to calculate your "true" annual cost. (Of course, that doesn't include the lost interest you would have earned on the money you paid up front for the membership!)
For many people, it just doesn't add up. If you put the same amount you would have "invested" in buying a DVC membership in the bank earning interest, and each year add the same amount of money you would have paid in DVC fees, you'll probably have enough to take a nice annual vacation at Disney (or elsewhere) -- plus that money remains liquid and available in case of emergency. However, for some people a DVC purchase is a way of committing to an annual Disney vacation, and that may outweigh any financial considerations. Only you can determine if DVC membership makes sense for your situation.
You may find that renting DVC points from an owner is actually a better deal than buying a DVC membership. See below for information on how to rent points.
*The effect of these annual dues increases on your total cost should not be underestimated! Old Key West Resort, the oldest of the DVC resorts (thus having the longest track record) had dues of $2.51 in 1991 and now has dues of $3.86. That means it has averaged a 3.12% increase compounded annually. Some of the newer resorts have averaged even higher annual increases.
"Compounded annually" means that each year's increase is added to the total dues the previous year, not the original rate you were paying when you bought in. So if your 2005 dues at Saratoga Springs Resort are $3.83 and go up 3.12%, your new dues in 2006 would be $3.95. If those new dues of $3.95 per point go up 3.12%, your new dues in 2007 would be $4.07, and so on. Thus, the total grows exponentially. At 3.12% compounded annually, your current $3.83 per point dues would slowly rise to $17.26 per point by 2054!

Quoted DIRECTLY from Mousesavers!!

Just want your opinions!
Deer H

 

[Tina]

Sounds like Mary hasn't discovered the magic of DVC yet. Oh well, less competition for my room/resort of choice!!

 

[Zurg]

Doesn't seem like such a bash, it says run the numbers and consider the time value of money. Not sure her suggested techinque is up to snuff from a correct financial prespective but the basic idea that you should look before you leap is sound.

The idea of inflation needs to be worked into the cash side of the comparison too.

 

[chrissyk]

They are discounting a big factor when they state that opinion. DVC "Home away from home" accomodations are normally more spacious than a hotel room, have kitchens, etc. If I wanted to stay in a normal hotel room for every visit, then I might tend to agree with them. However, I want the extra space, and I'm glad to pay the rising dues to have that right.

I do agree that I would not finance DVC or any other vacation, but that's just me. Some people might also find this worthwhile, so to each their own.

 

[Happy Birthday Cat]

I don't see it as a slam. It's just trying to get people to do the math before purchasing and to look at some things that they may not otherwise think of, like the cost of borrowing.

That being said, it does leave out some important facts to compare; like the cost of hotel rooms going up every year and the point cost remaining the same and the end of discounts like the AP discount that most of us are familiar with. It also leaves out the added value of owning DVC. Every one of my contracts could be sold for more today than when I purchased them (a couple for a lot more).

I realize that all this could change tomorrow but the whole picture needs to be looked at when deciding on whether to purchase DVC or not.

HBC

 

[DisFlan]

I like Mary's site and I've used it. But the nature of her site would be more likely to generate more DVC point renters than buyers. It's a site that, in general, promotes the deepest vacation discounts possible. DVC doesn't really fit her "discounted WDW vacation model".

From her point of view, buying into DVC may not seem like a prudent investment. If that's her opinion, she's entitled to it. I doubt it's going to affect sales much.


DisFlan

 

[agotta]

I don't know if I would see it as a slam, but it definitely didn't promote DVC. We bought in laste year, financed and are glad we did. With the vacation we are taking in January, we would have spend $4000! And we still will have 48 years let. Totally worth it to us. Mary doesn't go into enough detail and doesn't balance the pros and cons. She doesn't even discuss the pros. A lot of non-DVC members I think share this view. Just not educated.

 

[Johnnie Fedora]

I think it's also suggested on her site to just rent points. That's the cheapest way to enjoy DVC at 50-70% off rack rate.

 

[Pa@okw95]

Back when the truth about DVC was told this was exactly what was said and figured about DVC. But now with the DVC sales people actually selling this as a savings and people actually buying into the pitch, you don't see this kind of figuring much anymore. It was nice to see it again. This type of thing was on these boards years ago, that was before the great savings hoodwink.

 

[tjkraz]

I think the first paragraph is useful information, but it degrades severely from there. At best, it's a lopsided analysis, showing only one side of the story. For example, it highlights the compounding impact of member dues. Sure, going from $4 to $17 sounds pretty bad.

But what isn't mentioned is that a deluxe resort room costing $300 today will cost $1239 per night in 2054 with the same 3% compounding increase in rack rates. Getting an OKW studio for $136 per night (8 pts x $17) sounds a lot better to me.

For years the best argument against DVC for frequent guests was (IMO) Annual Passholder rates. I don't know how recently this info was updated on Mousesavers, but it seems ironic given the recent changes to the AP program.

 

[KJHawley]

To be fair, she does point out a lot of the positives- the discounts, better rooms, etc.- right before the quote mentioned above.

On one hand, she does have a point. I've been doing the math myself, and I figure that I'd want to use about 65 points a year- 5 nights (Sun-Thurs) in a studio in June, at 13 points a night. I would have to buy 75 points: that would cost me about $6000. If I invested $6000 and made 5% a year in interest, that would be $300 a year "lost" to the DVC in interest.
Then you add in dues: at approximately $4 a point, that's another $300 lost. So, I'm spending about $600 each year.
If I don't buy into the DVC and rent points instead, that would cost me 65 points at $10 per point, or $650 per year.
So, I can rent points for $650 per year, or own for $600- it's about the same, but renting lets me skip the big initial investment. I also get the flexibility of skipping years when I want to, going to different resorts, etc. Of course, this does not account for the fact that I may not always be able to find points to rent, cancelling/changing the reservation is difficult if not impossible, and I lose out on the DVC discounts. So, for now I'll be a renter. At some point, however, if I find myself going every year, making the DVC investment would certainly save me the time and hassle of renting points.

On the other hand, the DVC is a hands-down no-brainer if renting is not an option. A studio at the BCV in early June is $345 per night for 5 nights plus 11% tax, or over $1900! That's more than three times as much! Even when factoring in lost interest and dues, the DVC pays for itself in ten years (or ten visits).

I know there are a million threads out there that break down the various costs, but as was mentioned above, you really have to do the math yourself. Even as a non-member and current renter, I can see how the DVC would be totally worthwhile if you're going to visit Disney more than 2-3 times a decade.

 

[TinkABoutIt]

Wouldn't it be nice if Disney locked in your dues for the year you purchase...so if I bought today, my dues stay the same for the life of my contract.....it's not like they don't have enough buying in all the time....

 

[tjkraz]

I agree renting is a very viable option, but it almost seems to be an afterthought in the article quoted. Although there are zero numbers to support the argument (other than the figures on annual dues which appear to be largely included for shock value), the impression I get in the first half of the article is that the author is condoning paying cash for rooms vs. DVC purchase + dues.

Renting points can be great, but we decided against it as a long-term strategy for two reasons:

1. Uncertainty of the marketplace. That $10 fee you quoted is quickly becoming a memory. What will points rent for in another 10 years? 20 years?

2. Being members gives us full control of our points. We don't have to go through a third-party to change resorts, change dates, etc.

And then there's the reality that a DVC contract does have value of its own. I our finances went south tomorrow, I could sell my SSR points for more than I paid less than two years ago (based upon the listings at TTS.)

 

[tjkraz]

Wouldn't it be nice if Disney locked in your dues for the year you purchase...so if I bought today, my dues stay the same for the life of my contract.....it's not like they don't have enough buying in all the time....

Sorry, it doesn't work that way. Our dues pay 100% of the operating costs of the resort, so they will be subject to inflationary increases over the life of the contract.

The money DVC / DVD receives for those buying points is the only real profit they have after constructing and marketing the program. These monies are certainly not insignificant, but they are the reason Disney has a growing interest in DVC.

 

[CarolA]

I am the first to admit that I am not sure DVC makes financial sense for me. HOWEVER, you also have to consider the investment in yourself and your family... hard to put a price tag on that.

 

[Granny]

I like Mary's site and I've used it. But the nature of her site would be more likely to generate more DVC point renters than buyers. It's a site that, in general, promotes the deepest vacation discounts possible. DVC doesn't really fit her "discounted WDW vacation model".

This pretty well sums up what I was going to post. You have to remember...getting the inside scoop on WDW resort discounts and off-site hotel deals is a BIG part of Mary's web site. I agree that buying DVC is not "doing WDW on the cheap".

I've read this part of her site before, and found it to be mildly misleading, but the basic premise of doing your homework is the same thing we tell all prospective buyers here.

The only part that bugs me a bit is to tell people to rent points instead of buy. I guess if someone doesn't go to WDW every year, renting points is a good solution. But even at $10 a point, it wouldn't take many trips to WDW to make point renting a bad financial way to visit WDW.

 

[JimMIA]

Mary's opinion sounds like pretty good common-sense advice to me, although I would quibble with the "pay cash or don't even think about it" concept. I'd rather see young families pay 9.75% interest to DVC than pay 18-21% on their credit cards for hotel rooms. Just because someone's not buying DVC doesn't mean they are not financing their vacations.

The MBA in me also wants to plow into her time-value/present-value computations (There's always a nit to pick), but her general thoughts are pretty reasonable.

As much as we love DVC, I think we all recognize that it is not for everyone.

 

[Y-ASK]

Why loose money in interest payments to your Bank or Disney when you can pay yourself back with a Loan against your 401K? Now this is not for everyone but in my case I'm seeing a 7.5% return on my investment in myself . Which is alot better than the returns I have been seeing over the last five years.

Y-ASK

 

[agotta]

Mary's opinion sounds like pretty good common-sense advice to me, although I would quibble with the "pay cash or don't even think about it" concept. I'd rather see young families pay 9.75% interest to DVC than pay 18-21% on their credit cards for hotel rooms. Just because someone's not buying DVC doesn't mean they are not financing their vacations.

The MBA in me also wants to plow into her time-value/present-value computations (There's always a nit to pick), but her general thoughts are pretty reasonable.

As much as we love DVC, I think we all recognize that it is not for everyone.

Keep in mid that that part of that 18-21% is bed tax and helps fuel the CVB and local tourist economy. Now of course with Disney and Universal being in Orlando, they don't need it as much as other cities, but where do you draw the line? I don't think the OP's point was whether or not DVC is for everyone, but more that the article was deceiving.

 

[thelobstershanty]

I don't see it as a slam. It's just trying to get people to do the math before purchasing and to look at some things that they may not otherwise think of, like the cost of borrowing.

That being said, it does leave out some important facts to compare; like the cost of hotel rooms going up every year and the point cost remaining the same and the end of discounts like the AP discount that most of us are familiar with. It also leaves out the added value of owning DVC. Every one of my contracts could be sold for more today than when I purchased them (a couple for a lot more).

I realize that all this could change tomorrow but the whole picture needs to be looked at when deciding on whether to purchase DVC or not.

HBC

ITA with every point you made.