Please, sell me on DVC

[CanadaDisney05]

I’m hoping someone can help me get a better understanding of what the main benefits of DVC are. I feel like I’ve done my research, but something is still not clicking. I keep hearing how great of a value it is. I keep wanting to believe it’s a great value. But from my understanding, the benefits may not really be worth the cost. Here is my analysis. Please sell me on why I am wrong:


Quantitative:


I made up an example to have some numbers to look at.


Assumptions:


Home Resort: Boardwalk

Points to Purchase: 60

Price Per Point: $135

Maintenance Fees: $7.17

Disney’s Inflation Rate: 4.5% (This is an assumed rate of inflation of maintenance fees & cash prices)

Actual Inflation Rate: 2%

Nights to Stay: 7 Nights every other year

Contract Expiry: 2042

Time of Stay: Summer Months


Using these assumptions, I came up with an average cost of the room to be $261 per night in today’s dollars. I looked up the same room type for this current summer, and it is going for about $340 per night. So you are getting a long term savings of roughly $79.00/night


To take this even further, I calculated a Net Present Value of future cash flows comparing the savings on the same room to the cost of DVC. With the assumption that you can earn 6% if you invested the same funds, it would take an additional upfront investment of $7,280 to be able to fund the same trips through cash purchases.


You can make the conclusion from a monetary viewpoint that you would likely come out ahead by purchasing DVC if you regularly stay at deluxe level resorts. The breakeven point would be staying at resorts that roughly cost about $240 per night in today’s dollars. This is roughly the cost of a moderate resort. If you were to regularly stay at anything below that, DVC would end up costing you more.


Qualitative:


The qualitative benefits of purchasing into DVC is that you get a deluxe level resort for the price of a moderate level resort. From what I understand, Disney does not upkeep the DVC sections of the resorts to the same standards that they keep the hotel sections. You also do not receive daily housekeeping. So if you regularly stay at moderates, you really have to decide whether regular housekeeping is worth more to you than the benefits that come with staying at a deluxe resort.


Another thing to keep in mind is that buying into DVC reduces your liquidity, as well as forces you to be a slave to anything and everything Disney. While on the surface this sounds fine (pathetic, I know), if Disney decides to increase the prices of their park tickets, or annual passes, or food, you have no way out. If the quality of the experience care and upkeep of the parks and hotels decreases, you have no way out. If you want to go on a vacation away from Disney, your vacation funds are tied up.


While I do understand you can always sell your DVC or rent your extra points, this does not come without its own costs. There are commission fees. If Disney becomes a less desirable destination, the selling price of your DVC will decrease. If Disney implements even more restrictions on resales, your investment value decreases. When you rent your points you will not recoup the full value you spent on them.


I think the biggest drawback is that using DVC almost always limits you to staying at the same resort over and over with very little flexibility due to the availability past 7 months. It also forces you to plan your vacation almost a year in advance.


In conclusion, with all of the drawbacks to the purchase of a DVC, I would expect a larger discount than $79/night.

 

[Brett Wyman]

1. Most of summer "Magic Season" is 132 points for a garden view at BWV. It is 108 points for standard but you have to be fast.
2. DVC rooms are updated at separate times from regular resort rooms, but are certainly not less up kept. For instance at Wilderness Lodge both of the DVC properties are in better shape than the regular rooms.
3. True you don't not get house cleaning everyday. its supposed to be your home away from home. If you want house cleaning everyday, DVC is not for you.
4. You sound like you have a lot of issues with Disney so maybe not a great candidate to buy a long term vacation club from them ? : )
5. Are you investing funds from the vacation you would take if you didn't go to Disney?
6. With a Disney Visa or Annual pass you may very well be able to get similar long term discounts.
7. Some of the DVC authorities on the site will be by shortly with tons of equations on what the long term cost vs savings is.

 

[CanadaDisney05]

1. Most of summer "Magic Season" is 132 points for a garden view at BWV. It is 108 points for standard but you have to be fast.

Good to know. Will have to change my calculations.

2. DVC rooms are updated at separate times from regular resort rooms, but are certainly not less up kept. For instance at Wilderness Lodge both of the DVC properties are in better shape than the regular rooms.

This makes me feel better.

3. True you don't not get house cleaning everyday. its supposed to be your home away from home. If you want house cleaning everyday, DVC is not for you.

Is this just for the villas? Or does this include the studios?

4. You sound like you have a lot of issues with Disney so maybe not a great candidate to buy a long term vacation club from them ? : )

Lol. I actually don't have any issues with Disney. I very much am a fan of WDW and DL. But I also know that there is always the potential that Disney can price me out. I'd fear being locked into something if it forces me to spend more than I would feel comfortable with.

5. Are you investing funds from the vacation you would take if you didn't go to Disney?

Take the money you would invest into DVC (including maintenance fees), and then withdraw from that fund every other year to cover your hotel cost.

6. With a Disney Visa or Annual pass you may very well be able to get similar long term discounts.

Are the annual pass discounts better than the current public discounts? There seems to be discounts all of the time, so I actually used the discounted rates in my analysis. You can argue whether this is fair or not, but IMO they seem to be readily available if you atleast have some flexibility.

7. Some of the DVC authorities on the site will be by shortly with tons of equations on what the long term cost vs savings is.

Nobody has a crystal ball. But you can make some educated guesses that should get you fairly close. IMO, I wouldn't want to make a large financial commitment without atleast figuring out a best/worst/most likely scenario.

Thanks!

 

[bwvBound]

The key missing ingredient is an economic recession. Those doing best had money set aside to purchase DVC points when [resale] prices were lowered by outside influences.

 

[CanadaDisney05]

The key missing ingredient is an economic recession. Those doing best had money set aside to purchase DVC points when prices were lowered by outside influences.

That is a key ingredient. Thanks for the input

 

[AdamsMum]

I don't know about the price you researched, I get $545 a night for both a BWV studio, and a BWI room. Even with a 25% discount that comes to just over $400 per night 3rd week in August. You then pay 13.5% or 12.5% tax on that room price.

In my case it wasn't just a financial decision. You have to love it. They make changes regularly that are often hard to take as you will read on other threads.

As an owner since 2007 I paid substantially less for my points than today's prices...resale or direct. Even back in 2007 I wondered if I was making the right decision, but I loved the Boardwalk area and the common areas of the hotels, and we were already going to Disney almost every year. I wasn't looking at the opportunity value of the money, or the present value of the price of a room in 20 years. My eyes glaze over when I start to read those posts (math was never my thing). Anyway, I swallowed hard and went ahead with it.

It isn't an investment, it's a timeshare. If you don't love it, I don't think you would ever be satisfied, and it's too much money to pay for something that doesn't give you joy.

ETA: I just found your Summer Room Offer - got $344/night in July, no availability in August when I was checking. I think that's a great deal. It doesn't change my opinion of who should buy though. If you are looking at it solely for financial reasons, you should be really careful. Then again who knows what it could cost for a room in the future.

 

[michelleiada]

Purchasing DVC was the best money we have ever spent. However, back when I purchased, I paid $68 per point for BCV and $75 per point for AKV, and I paid cash for both. We always get two bedroom villas that cost about $1200 per night cash through Disney. I have long recuperated my initial investment and all my stays now are simply what I pay for annual dues. And if I sold, I could sell for a lot more than what I paid. I love my DVC.

 

[bwvBound]

Ah, @michelleiada brings out another key ingredient: anticipation that one can resell their holding, some years in the future, recapturing some, all or even more than the original outlay. That recapture might completely change the present calculations.

 

[_auroraborealis_]

I'd also point out that BWV is one of the worst value DVC purchases out there right now. Certainly, if you want to be booking BWV you need to own there, and there are savings over cash pricing for the next 23 years, but because it is a 2042 expiration the overall value is pretty low on a pure economic basis.

Because you priced BWV, I wouldn't assume recouping value in resale if you sell in 10-15 years, either.

 

[DisneyOutsider]

To be honest, 7 nights every other year is a really small contract. I'd typically recommend DVC to people staying at least one week every year. Suddenly your $80/night savings starts looking a lot better at that volume.

If you're not someone who's going to plan your vacation at least 8 to 11 months out, DVC is probably not for you.

If you're not impressed with the DVC accommodations and service, definitely don't buy DVC.

The numbers worked overwhelmingly in my favor for DVC because we take multiple trips per year, and we refuse to stay in the Value resorts. Very few things in this world make us happier than waking up at the Polynesian Village.

 

[cvjw]

Honestly, I don’t see a great value to DVC at today’s direct prices. We purchased years ago for about a third of today’s prices. With the maintenance fees climbing every year and the constant changes to the DVC rules, we would not buy in again today if we had it to do over again.

Only you can decide if DVC works for your family. It is smart that you are thinking things thru so completely.

 

[Brett Wyman]

To be honest, 7 nights every other year is a really small contract. I'd typically recommend DVC to people staying at least one week every year. Suddenly your $80/night savings starts looking a lot better at that volume.

If you're not someone who's going to plan your vacation at least 8 to 11 months out, DVC is probably not for you.

If you're not impressed with the DVC accommodations and service, definitely don't buy DVC.

The numbers worked overwhelmingly in my favor for DVC because we take multiple trips per year, and we refuse to stay in the Value resorts. Very few things in this world make us happier than waking up at the Polynesian Village.

Frequency of trips is a good point. Renting points may be a better option for OP based on the infrequency of stays. You still get the "deluxe at moderate pricing" room. The inability to cancel or reschedule is the only real downside.

 

[disneynutz]

Nothing to sell. Decide if you like the DVC resorts and rooms and want to stay there. Do your numbers assuming that you will get $0 if you sell. If the numbers make sense and you have the cash, learn as much as you can before buying and don't buy with emotion.

Bill

 

[ljmiii]

When people ask me if they should buy DVC I ask three questions in return, "Do you plan on visiting WDW at least once every two years for at least the next 10 years?", "Can you plan at least 7 and ideally 11 months in advance", and "Do you really want to pay a premium to stay 'on property'?" Only if the answer to all of these questions is 'Yes' should you buy.

As for location, OKW extended, SSR, and AKV are the 'value' buys at the moment. But if you like BWV buy there - I can't imagine paying thousands of dollars to stay somewhere I don't really like for the next 20 or so years. Since you are looking to stay in a studio in summer I wouldn't count on being able to book at 7 months anywhere but OKW, SSR, and maybe AKV. You might get into somewhere else...but you should think of it as a nice surprise not something 'guaranteed'.

 

[crvetter]

Since you are looking to stay in a studio in summer I wouldn't count on being able to book at 7 months anywhere but OKW, SSR, and maybe AKV.

Not to discount this as I follow the buy where you want to stay (a majority of the time) mentality. However, summer is considered a time to have the least demand for DVC rooms (higher point costs). I was planning a trip over the 4th this year and I had my pick of resorts for a studio (less standard/boardwalk at BWV and value/concierge at AKV and BCV). But you are right you shouldn’t always plan on that being the same and it requires flexibility in dates at 7 months. For instance if DVC rebalanced the seasons for point costs this would likely change. Or even SWGE could change everything next year.

For the OP this might be of interest. https://www.disboards.com/threads/p...-studios-1-bedrooms-june-2018-update.3689931/

 

[Bing Showei]

Nothing to sell. Decide if you like the DVC resorts and rooms and want to stay there. Do your numbers assuming that you will get $0 if you sell. If the numbers make sense and you have the cash, learn as much as you can before buying and don't buy with emotion.

Bill

Amen, Bill. Preach it.

As AdamsMum pointed out, no one should be looking at a Disney timeshare as an investment. It’s a luxury purchase. Buy it to use it.

If you’re like most owners, you won’t save a dime. You’ll end up going more often and spending much more than you would if you had to decide every year to spend the money on a cash room. The rational mind tends to kick in at that point. Who the hell wants that getting in the way of pure escapism?

Like any other timeshare, a Disney timeshare should be viewed as a sunk cost. If nothing else, with the latest restriction, Disney has thrown up a giant neon sign that says exactly this.

”Buy a Disney timeshare to use and enjoy. We will be the only ones making money on it from here on out.”

Don’t be lulled by stories of those who bought in dirt cheap and can sell on a profit today. Those same people would never buy in today because the math is nowhere near as favorable.

I like the parks. I like staying on site. I like staying in 1/2 BR accommodations. A Disney timeshare works for me.

If I was just interested in saving money, I’d be doing it wrong.

 

[Philsfan77]

When we were deciding between buying or not...we looked at a lot of the same things you are mentioning (mainly because we were buying more on emotion, and my FIL kept advising to look at the financial benefits of it and see if there are any). Some of our reasoning was based solely on assumptions for pricing (never ideal to assume, but with a possible 50 year deed, you kind of have to), and we looked at it from owning for the full duration of our deed (we ended up buying at CCV so 49 more years). I certainly get your point on looking at current rack rates, but historical trends will tell you that Disney rack rates continue to rise for cash rooms. One of the things we looked at was how much rooms cost roughly 50 years ago versus today, and in most cases the rates have increased 5-6 times what they were back then. We certainly aren't assuming rates will jump 5-6 times over the course of our ownership (can't see a standard room costing 2-3K a night), but we did assume a modest doubling in price as our average rate we used over the course of 50 years. Ultimately the idea of having a locked in rate with today's pricing (that is good for the next 50 years - god willing I'm still alive to enjoy it and if not my kids and future grandkids will hopefully be able to) proved valuable enough to us to buy.

 

[CraigInPA]

Frankly, I think you missed renting DVC points as an option. It's zero up front commitment, leaving the bulk of your cash to be invested to grow at 6% (your figure). You'd spend, on average, about twice the cost of maintenance fees, and you'd have the flexibility to go when you want. Doing very careful math (i.e., in my head, so it's probably wrong), it would take 10 week-long trips for you to recoup the initial outlay of cash needed to buy DVC. With your plan to go every other year, you're looking at 2038 to break even. Since BWV expires in 2042, you won't save a whole lot before the right to use period ends. It gets even worse if you calculate your 6% annual growth of capital over 20 years. You'd need 15 week-long trips to break even.

The metrics change when you're looking at a yearly trip, instead of every other year, and at other resorts with longer use periods remaining.

 

[Minniesgal]

I will be in the minority here but I think DVC starts to bring value when you use the 1 and 2 bedrooms not the studios.

For us with 3 kids we stopped using hotel rooms years ago and won't go back. We were using offsite condos, but DVC gives us a 2 bedroom we think is a reasonable price. The cooking and laundry facilities are a must for us.

If we planned on using hotel rooms we would have just continued in a moderate hotel room.

 

[Bing Showei]

Ultimately the idea of having a locked in rate with today's pricing (that is good for the next 50 years - god willing I'm still alive to enjoy it and if not my kids and future grandkids will hopefully be able to) proved valuable enough to us to buy.

Sadly this isn’t true for a couple of reasons.

One, the rate you pay now is based on what ADs are today for your points. Looking at OKW, as it has the longest data set, ADs have outpaced inflation. Yes, rack rates have outpaced even that, but given what a dollar bought in 1991 vs. what a dollar buys today, you have not locked into rates by buying a Disney timeshare. That’s a line the Disney uses to sell timeshares.

Two, given what the retracted reallocation showed us, the buying power of the membership, wholesale, can be reduced with the lockoff premium. So even if the former situation were true, that your points locked you into a certain buying power when you bought in (which again, it doesn’t), Disney have proven they have a money-making tool at their disposal, and more importantly a willingness to use it, that will reduce that buying power overnight. Or more likely, gradually over several years.