Please explain value of dvc

[tmorse6570]

I've attended a marriott timeshare (now called vacation clubs) and even looked into the disney point system, but still cannot see how purchasing one of these could possibly save money. You pay 12-15 thousand up front, 700 per year maintenance and you only get about 7 days in a deluxe resort each year? Why not just buy an annual pass and shoot for discounted rooms? What exactly is the advantage of paying up front?

 

[eva]

We bought in 97 so our savings will be a bit more than if you purchased now, but here goes. We have 200 points that cost us $12,625. With interest the total will be $15,725. For 45 years of dues we will be paying about $30,000 based on current trends. Total with dues: $45,725 (for 45 years of vacations). Divide that by 45 years you get $1016 a year. Now if all we were getting for our $1016 was a week in a deluxe resort we may not be saving too much, although with current rate hikes at WDW we would probably make a killing in a few years. But for our 200 points we get a week in a 2-bedroom at OKW. For $1016 that is already a killing. To stay in a 2-bedroom costs about $500 a night. I always think of it as paying for 2 nights and getting 4 free. After the kids are gone we will stay in 1-bedrooms for longer periods of time. They are much nicer than any deluxe resort we have ever stayed at in WDW plus they will cost us a lot less in the long run. I know that people argue about what we could have done with $12,625 but we would have probably used the money for WDW trips anyway. I doubt very seriously that we would have invested it. With DVC we get 45 years of great trips verses maybe 8 years of WDW trips staying in a deluxe resort.

 

[tmorse6570]

Why thank you eva! That explaination was much more pleasant and informative than sitting through a 4 hour sales pitch.

 

[SueM in MN]

eva gave a really good explannation, so I won't re-explain that, just give some more info.
We had been coming to WDW once a year for a number of years already by the time we bought in to DVC in 1993. We stayed at CBR the first year it opened and the regular (not value season) room rates were $69, $79 and $89 per night, depending on view. As we saw rates begin to creep up, we thought about high high they were likely to go in 10 years. It is still posssible to get lucky with a special rate, but those are few and far between and we didn't want to be stressing about finding a good rate each year. Besides, with DVC, we have a home type environment, not just a room to go back to. The first few times you go to WDW, you don't spend much time in your room, but after a few years, it gets to be vacation just to sit on the porch at OKW and watch the golfers or feed the ducks. ü

SueM in MN
Co-Moderator of disABILITIES

 

[kem330]

A comment on the DVC sales pitch- it is very low key and certainly not 4 hours unless you want it to be. It's more a presentation of the program and will it be worth it or not to you. As far as justifying- if you have a family of 5 or more and you find yourself paying $300-$400/night x 2 rooms at a deluxe resort, DVC is an incredible bargain (not to mention $ saved with kitchen for meals & snacks). We now get a 2 BR villa for $212 -363/night for a week or less if we stay week nights only at BWV - these rooms rent for $600 - 900/night.

 

[BobH]

I bought 240 points. I agree that the larger accomodations are spectacular. Due to our family situation we currently use the studios more often because we have older children that we send to OKW with their friends. As an example my daughter is going for 6 nights/7days in June for 88 points.
My wife and I will be going somewhere late in the year and I will still have some points should my son decide he would like to go. Using DVC this way we get almost 3 vacations a year out of the system for a little over $700 in maintenance fees.
Granted we may have to borrow a few points but it allows the family more vacation time than we would otherwise be able to afford right now.

 

[Werner Weiss]

A calculation of timeshare economics is more complicated than simply dividing the purchase price by the number of years of usage and adding the yearly fee to get a yearly cost.

You should consider the lost investment value of the capital that is tied up in the timeshare. For example, a $12,000 investment that returns 5% after taxes represents $600 per year.

You should also consider the inflation factor. Today a 2-bedroom condo at OKW rents for around $600 per night including sales tax (depending on the season). But not too many years from now, it could cost $1,000 per night or more. Of course, the maintenance fees will also go up with inflation (although Disney has done a good job so far keeping the average increase minimal) -- but the maintenance fees are low compared the nightly rental cost of a DVC condo. Because of the inflation factor, timeshare economics often improve over time.

As others have said, DVC makes the most sense if you stay at DVC resorts, but it's nice to have the option to stay at non-DVC resorts at WDW as well as all over the country through the DVC Concierge Collection.

Other factors to consider are:

• What would you spend on vacations if you weren't a DVC member?
• Are you reasonably sure that your job and personal commitments will allow you to plan vacations well ahead of time with little or no chance that you'll need to cancel at the last minute?
• Do you consider the "use it or lose it" nature of any timeshares (including DVC) to be a burden or a "nice problem to have?"

The economics of DVC have worked out very, very well for us. We could sell our DVC points for more than we paid. The maintenance fees and "lost investment opportunity" have been far less than the benefit we received (especially because we bought at a time when we received free park passes through the end of 1999, a sales incentive which is no longer offered).

Timesharing -- whether Disney, Marriott, or a cheap resale of a lower tier timeshare -- isn't for everyone. But for people who like to stay in spacious condos in great locations, it can be an excellent way to spend ones vacation dollars.

-----
Werner Weiss, Curator of Yesterland, featuring discontinued Disneyland attractions

 

[Dennis the WDW Menace]

The above explainations are excellent. We bought in '93 and at that time knew that we were going to be taking vacations for about 4 weeks each year. We knew that WDW was going to be our prime spot to vacation and the DVC plan gives us both WDW and choices of other places. We determined that if we paid for these vacations ourselves that our hotel or resort bill each day, looking at the mod. priced rooms, would be about $120 on adverage. Now I think it has gone up to about $150. With DVC we adverage about $82 per day for our 1 BdRm at OKW and we get so much more that a hotel room for our money. We use our points to the max each year and have enjoyed all of our visits, all over the US. The bigest factor in you decision is what you will use your timeshare for and if it fits into your vacation plans. It is like a vacation savings plan for us and it does make us go on vacation where we did not in years past.

 

[eva]

Werner Weiss, thanks for giving some insite on the investment value for the purchase price. We didn't consider it in our caluculations because I know that we would have spent the money and not invested it. We have so much taken from each paycheck for investing and we wouldn't have increased that if we didn't purchase. We just would have spent it on trips and other things. We did consider inflation when we did our calculations in 97. That year the moderates went up 18% but we used a 9% increase in our spreadsheet. We found that we were saving money within a few years if we compared using a studio to a moderate hotel room. Of course we always stay in a 1 or 2-bedroom so it is a bit harder to compare (apples and oranges type of thing).

 

[alexcturner]

Also consider that DVC is a real estate deed, so if you do not have a second home then DVC can be deducted on your taxes. This offsets some of the other costs.

 

[Terry Sheehan]

You said- "Why not just buy an annual pass and shoot for discounted rooms?"

Well to me that is the best reason for DVC. Never again will I have to "shoot for the discounted room". I use to go nuts trying for the best price out there, now I just call and make the resie!

Terry

 

[Caskbill]

All good answers above.

To try to make it simple, compare as best we can apples to apples. Using OKW (my home resort for which I have numbers), compare a Studio to a regular WDW resort hotel room. Using mid-season as an average, and a 7-day week (We all know a 5-day stay Sun-Thurs is MUCH cheaper yet), compare the maintenance cost increases since I purchased in 1993.

1993 7-nights = 100 pts,
.....maintenance fees = 2.56/point = $256
.....Total $256/week or average = $36.57/night

2001 7-nights = 98 pts,
.....maintenance fees = 3.13/point = $307
.....Total $307/week or average = $43.85/night

That's an increase of only $7.28/night over 8
years.

Also, in many cases, part of the maintenance fees (the real estate taxes) are deductible from income tax. In a 28% bracket, the 2000 real estate taxes of $0.69/point = $0.19/point tax deduction, which reduces the $43.85/night average to $41.20/night.

Also, the initial purchase does represent an 'investment' that has grown in value. I could have had that money in the market (who knows what it would be worth right now?), but as a DVC membership, I could sell my points TODAY for 25% more than I paid for them. (I know this because I just bought 100 more points OKW at resale, and the resale price is going up steadily). So my original 'investment' has grown at an annualized growth of about 3%/year, not great, but not a total loss. (Keep in mind however that this would diminish to zero if you keep the points all the way to 2042, but by then, the money you saved on rooms would be much more that the total you paid)

Finally, consider what you can get besides a Studio. Use your points on a 1-BR, 2-BR etc, and considering only the point maintenance costs, you're still paying much less than standard rooms at regular WDW resorts, but getting a much more luxorous accommodation.

Last, consider the taxes on a regular WDW resort room, 11% !!

Yes, there is a very good value in owning DVC.

Caskbill

 

[Mojomanny]

We just bought into DVC (VWL) for 185 points.

We plan this will allow us to take a minimum of a 7 day Disney trip every other year alternating between the parks and the cruise.

Economics work like this. Points cost us roughly $5.50 per year including maintenance fees.

1 week at a 1 bedroom in VWL is 270 points or cash equivalent of $1485. Same room without DVC is $3255. Point cost will increase due to maintenance fee increases but this will be no where near the rate of inflation for room rates. BTW - You as a DVC owner you also do not face the 11% tax on the room!

7 Day cruise is currently 480 points or cash equivalent of $2880. Our cruise cost us $3300 plus another $375 in fees. This is less of a sure thing year to year since DVC has to negotiate with DCL the point values for each year.

This plan allows our 4 1/2 year old son to go to WDW every four years and allows him to grow into the different aspects of each park as he get older. It also will avoid him from getting complacent or (perish the thought!) bored by having to go to Disney again.

Oh and by the way, when he gets older, we can go more often with a studio without him. And then our grandkid(s) can come down!

We can also go elsewhere using our points


Just my 2 cents

[This message was edited by Mojomanny on 04-08-01 at 05:44 PM.]

 

[Bennet]

I'm a banker. When we bought into DVC I ran all kinds of fairly scary numbers. Hey it's a banker thing. If I put'm here I would get bounced from the boards. But maybe this will help.

I did tons of discounted cash flow and time value of money stuff. What I found was I got deluxe accommodations at moderate prices.

But DVC isn't an economic investment, it is an investment in your family. Mine loves Disney World, planning, going, looking at the pictures and videos. We made an ibvestment in DVC an our return is the good times we have had and will have.

This thread covered some of this same ground:
http://wdwinfo.infopop.net/OpenTopic/page?q=Y&a=tpc&s=40009993&f=14009194&m=768097918#580092028

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