OKW extension brochure pictures

[married@wdw]

Putting a "value" on something means contemplating more than just the cash price. I asked myself the following questions:
1. Will I want to go to Disney after retirement (I'll be 67 in 2042)?
2. Would I be able to afford to pay cash to go?
3. Can I afford to buy into SSR, AKV or CRV now to get those added years?
4. Can I afford the $2250 to extend my OKW contract?

The first questions was easy. YES!!! My mother is 71-years-old and also an OKW owner. She and my dad used to go all the time, until my dad passed away two years ago. She just came back from a week with my neice. She's planning on going again next year with several of her friends. Obviously, she won't be extending her contract. BUT it certainly made me realize that my husband and I -- barring something tragic -- will still want to spend time at Disney after retirement.

BUT, would I be able to afford the cash prices after retirement. Most likely, no. We can't really afford cash prices now. We manage to vacation as frequently as we do because we maximize our points.

And I can't afford to purchase a decent number of points at a newer DVC resort now without selling OKW first. But we really don't want to do that -- with three nephews, two neices and another on the way, we really enjoy family vacation and there's nothing better than a Grand Villa at OKW for that!

That said, we can definitely scrounge up the money to extend our contract. I'd rather take the small chance now that I won't be using it, then the big chance later than I can't afford it when I finally have the free time to REALLY enjoy it! It's just that simple. The worst thing that can possibly happen is that I'll be out some money or my neices and nephews will have some great vacations after I'm gone!

I'm sure many will disagree. If it's not for you, then it's not for you. But I hope to live to a ripe old age, believe in Disney as they've steered me right so many times, and will enjoy OKW for as long as I can.

 

[Caskbill]

The comparison to the $92/$96 delta is invalid. The vast majority of OKW owners did not pay even close $92. It is closer to $60 a point. Even at that vastly reduced price, $15 for 15 years is still cheaper than the original price.

The reason we see the $4 delta is not because Disney is giving a discount to the extended contract, it is simply trying to push the extension. Having these units occupied until 57 is highly attractive to them.

While I believe the extension is under-priced at $15, I do agree that a short term value (under 10 years) may not be there. After that point the non-extended contract will surely be valued under the $15.


$96 per point for 49 years = $1.96 per point per year
$92 per point for 34 years = $2.71 per point per year
$15 per point for 15 years = $1.00 per point per year
$25 per point for 15 years = $1.67 per point per year

So even if at the highest price for a new contract existing owners are getting a significant discount. Am I missing something?

I think you're missing the time-value of the money.

Just to keep apples to apples, suppose you own 160 points at OKW. You do not extend but instead invest the $2400 and are able to get 8% return. In 35 years you'll have over $35K. That would be equivalent to almost $219/point.

Now at that time AKV, which expires in 2057, will have only 15 years left. No one at this time can even guess what resale prices might be both because of inflation, and the devaluation of AKV since it's in the final 30% of it's useful contract life. If at that time you could purchase AKV reslae for less than $219/point, then the OKW extension would be a bad idea. If on the other hand an AKV resale contract would be more than $219/point, then the OKW extension saves money.

Of course the real test would be for those who extend their OKW contracts. In the year 2042, those with 2057 extension dates can look and see what the resale value of their contracts is. If it's less than $219/point, then they lost money.

This is all hypothetical because no one can predict accurately inflation, resort devaulation, and ROI on investments. The numbers game can be played any number of ways.