Newbie, Non-member Question

[txmomto1]

Hello DVC'ers!

Will anyone who loves talking about DVC sell me on the value of it? I love the idea of it... but don't really get it. Also, do you know any of the financing terms through Disney?

 

[Caskbill]

There are so many things about the 'value' of DVC.

But the one that is most valuable, and mentioned the least, is that DVC is a huge hedge against inflation. This is because the number of points to stay at a DVC-resort is basically fixed. Compared to a hotel room that goes up in price every year.

Suppose you own DVC and stay in a Studio that costs 12 points/night. Your Maintenance fees are $4/point, so effectively that room costs you $48/night.

A regular WDW hotel room at a moderate may be $150/night plus tax or about $168/night.

You can equate the up-front costs as purchasing DVC as applicable to that $100/night difference. After a few years they have balanced out.

But, when you throw in inflation, DVC starts saving you considerably more.

Let's say inflation runs at 4% for the next 5 years. Your $4/point dues would then be $4.86/point, but the room is still 12 points, so you're effectively paying $58.32/night, an increase of $10.32/night.

Now the $150 hotel room also goes up at 4% inflation for 5 years. At that time, including tax, the room is $203.50/night, an increase of $35.50/night.

If you looked at a 5-day week, the DVC-room has increased $51 for the week, while the hotel room went up $177.50 for the week.

Now go another 5 years, or 10 years, and the difference really starts to show.

Many have done various spreadsheets and the 'payback' is around the 6-9 year timeframe. After that it's real savings.

Not factored in are things like money you'd get back if you sold your contract after 5 years, or 10 years. Also loss on investment (or interest payments if you finance, etc).

Also not factored is weekends. DVC villas require more points on weekends than on weekdays. But the hotels are also changing to have higher rates on weekends now too.

Anyway, that's the 'basic' dollars analysis. Everyone else can explain the other 'values' to ownership.

 

[Mtnman44]

Boiled all down, it is basically the ability to prepay for decades worth of WDW accomodations, locking in a large portion of the expense at today's prices.

When used every year to stay at WDW, it quickly becomes much more affordable vs. staying at Disney deluxe properties every year. Icing on the cake is the upgrade from hotel rooms, to condo style units with kitchens, bedrooms, living rooms, washer dryer, etc.

Truthfully, it really only makes financial sense if your vacation habits include going to wdw every year or big trips every other year.

 

[hellerjw]

I think it depends on how you are defining the word "value".

If you are referring to "financial value" then the reasons the others have mentioned certainly apply. I think one thing that isn't always considered in the DVC vs. cash room cost analysis is the 12% in taxes that get tacked on to each cash room stay. You will have maintenance costs associated with your DVC membership, but once you payoff your intial investment, that's the only cost you will have. It really is a good hedge against inflation IF you plan to own and use it over the life of the contract.

If you are referring to "emotional/mental value" then that is more of a personal decision. We are new members ourselves and one of the key deciding factors for us is how we perceived our DVC membership as being a hedge against the "commando raids" we were forced to do before DVC. In other words, it will allow us to take a slower pace when we are at WDW because we know we will be back soon. We don't have to feel like we have to do every park and every attraction in a week's time just to get our money's worth.

I have always considered DVC to be a luxury, not an investment. If we at some point down the road have to sell our membership (heaven forbid) we will most likely not lose money on it, and may even make a little profit. However, this never even weighed into my decision. It is a large upfront and ongoing cost with no real expectation of monetary return as you would expect in a traditional investment.

We were going often enough to WDW and with growing kids and the need for larger accomodations DVC membership made financial sense to us. We will recoup our initial investment in about 5 years. After that, we will have something that we can continue to enjoy for the next 45 years at a cost far below cash rates, which gives a boost to the emotional/mental side of things.

Everyones reasons for joining are a little different. It is a luxury item, not a necessity. You can do better from a cost perspective staying in the value resorts and doing the latest promotional deal. However, if you tend to stay in the moderate-to-deluxe resorts, go at least every other year, and most imporatantly can afford it, then its worth looking into.

Hope this helps

 

[FinsUp!]

We purchased our DVC membership in 1999 and the "value" for my family has been being able to take family vacations to very nice places more than once a year. We live in Atlanta, GA and are able to make 3-4 Disney trips each year. Once we learned how to bank/borrow and really use the points, we have done well. In June of 2006 we spent 6 nights at the Disneyland Hotel in CA, then we (4 us of) spent 2 nights at SSR in January 2007 followed by a 3 day Disney Magic cruise and we are going to Wilderness Lodge in July 2007 for 5 nights. We have never had any problems using the points. I just love my DVC membership!

 

[wildernessDad]

I think one thing that isn't always considered in the DVC vs. cash room cost analysis is the 12% in taxes that get tacked on to each cash room stay. You will have maintenance costs associated with your DVC membership, but once you payoff your intial investment, that's the only cost you will have. It really is a good hedge against inflation IF you plan to own and use it over the life of the contract.

hellerjw makes an excellent point. I want to add that because Disney owns a portion of the DVC rooms, it is to their advantage to keep maintaince and other costs low.