Requesting clarification on DVC

[Lisa P.]

There are certainly many intangible factors that make a purchase worthwhile to certain people. No question about it. And many good points have been made about making sure that you are comparing reasonable alternatives. I would add that what is a reasonable alternative to DVC for one family may not be for another. It's only pertinent to a new buyer to compare what THEY would do with DVC vs. without DVC.

If you are going to strictly look at the figures, there are more things to consider than mentioned. For one, DVC requires a substantial upfront purchase. Renters DO NOT have to pay thousands upfront. Further, anyone who has ever financed a large purchase knows that the interest paid can easily more than double their cost. So if you are going to compare apples to apples, consider whether YOUR purchase would be for cash (in which case, you are losing an investment opportunity and would consider "opportunity cost") or with financing interest added in the DVC costs column.

Another concern is that the maint fees can, in fact, go up faster than inflation with owned/leased, managed, timeshare property. It may be unlikely but it's certainly not impossible. DVC's management company builds a profit into the budget for themselves. This is reasonable but members have absolutely no control over it. Unlike many other timeshares, where owners eventually form a POA/HOA to oversee budget and management decisions, DVC retains these rights for themselves throughout the duration of the contracts. Barring criminal activity, it's extremely unlikely that DVC members would ever vote out DVC as the management company. This may be a very good thing... or not, depending on your perspective.

Thirdly, hotel room rates will continue to rise, only as the market permits. When the market waffles, they offer deals. Shortfalls in the resort budgets are made up by profits in other areas of Disney's empire or they simply shut down parts of the resorts. DVC will not do this. DVC maint fee rates will continue to rise with inflation - salaries, benefits packages, insurance premiums, taxes, management fees, resort bus service as determined by WDW Resorts, other services required by the associated hotels (WL, BC, BW) - whatever they cost, the members are billed. So even though maint fees have risen at a slightly lower rate than hotel rack rates in the past, this is NO guarantee that this trend will continue.

I am not anti-DVC in any way. It's a great program for the right people and the resorts are terrific! But looking at the numbers, we found that it would actually cost OUR family far more money in the long run than alternatives that suit us as well or better. So look at how it would work for YOU and decide. There are tens of thousands of families who love it and it's great for them. You may be another one. Or you may not. We're not.

 

[pogopossum]

as for getting bored with disney, that is entirely up to how you use your points. we have stayed at the hilton head resort twice and vero beach once, and were very happy with both of these resorts for vacation.

we have also gone on four cruises with dcl on points and have been very happy with these vacations as well.

we have also stayed at the big cedar lodge near branson twice, as close to a disney resort as we've ever seen outside of the disney family, and stayed in downtown chicago once. so you can take a break from disney once in awhile, although a lot of dvcers think this is blaspheme, but being in the mid-continent, we wouldn't have bought without this option.

 

[Caskbill]

DVC is a great hedge on inflation. At the same inflation rate, the dollar increase in DVC dues is far smaller than the dollar increase in rack rates.

Think of it this way, if you were renting your house at $1200/month, and leasing your car at $300/month, and both went up by 3% next year, which would have the largest actual cash increase? Obviously the house, as it would have an increase of $36/month, while the car had an increase of only $9/month.

Over time, this difference gets larger and larger, each year.

To get the closest apples to apples, consider a DVC Studio (which is still better than a hotel room). Let's say your studio is at SSR, and mid season runs 112 points for a 7-day week. At roughly $4/point, that's a $448 vacation.

Now, let's say a WDW hotel is $150/night, so that's a $1181 (including tax) for the week.

Suppose both go up by 3% inflation for the next 40 years. So in 2046, SSR fees are 13.44/point, and the 112 point weeks vacation now runs you $1505.

But the WDW hotel, for the same 7 days, will be $3969.

In your OP you were comparing to today's dollars and not to inflated dollars.

If you compare to other rooms today, then in 40 years:
$200/night today goes up to $755/night (including taxes) in 40 years.
$250/night today = $944/night (including taxes)
$300/night today = $1134/night (including taxes)

So maybe in 40 years, the average of $215/night for the SSR Studio will seem better.

In fact, if you took the exact same vacation every year for the next 40 years, your total DVC dues payments would be $35,241. (Not including your original purchase)

The WDW hotel that's $150/night today, would total you $92,221.
The WDW hotel that's $200/night today, would total you $123,894
The WDW hotel that's $300/night today, would total you $185,842.

Just something to think about.

And, all the other benefits as others have mentioned.

 

[Didney Daddy]

Let's also not forget that one of the best advantages of DVC is availability. If you can plan 7/11 months in advance it is almost certain you are going to get what you want in terms of location. Not always, but very likely.

This type of access to the best of Disney properties is a huge value in and of itself. We love the fact that at the 11 month window we can book our beloved BCV and we have never been turned down even at Thanksgiving, Christmas, New Years, Spring BReak, Summmertime, Halloween or 4th of July. We have done them all.

 

[mydogdrew]

There are certainly many intangible factors that make a purchase worthwhile to certain people. No question about it. And many good points have been made about making sure that you are comparing reasonable alternatives. I would add that what is a reasonable alternative to DVC for one family may not be for another. It's only pertinent to a new buyer to compare what THEY would do with DVC vs. without DVC.

If you are going to strictly look at the figures, there are more things to consider than mentioned. For one, DVC requires a substantial upfront purchase. Renters DO NOT have to pay thousands upfront. Further, anyone who has ever financed a large purchase knows that the interest paid can easily more than double their cost. So if you are going to compare apples to apples, consider whether YOUR purchase would be for cash (in which case, you are losing an investment opportunity and would consider "opportunity cost") or with financing interest added in the DVC costs column.

Another concern is that the maint fees can, in fact, go up faster than inflation with owned/leased, managed, timeshare property. It may be unlikely but it's certainly not impossible. DVC's management company builds a profit into the budget for themselves. This is reasonable but members have absolutely no control over it. Unlike many other timeshares, where owners eventually form a POA/HOA to oversee budget and management decisions, DVC retains these rights for themselves throughout the duration of the contracts. Barring criminal activity, it's extremely unlikely that DVC members would ever vote out DVC as the management company. This may be a very good thing... or not, depending on your perspective.

Thirdly, hotel room rates will continue to rise, only as the market permits. When the market waffles, they offer deals. Shortfalls in the resort budgets are made up by profits in other areas of Disney's empire or they simply shut down parts of the resorts. DVC will not do this. DVC maint fee rates will continue to rise with inflation - salaries, benefits packages, insurance premiums, taxes, management fees, resort bus service as determined by WDW Resorts, other services required by the associated hotels (WL, BC, BW) - whatever they cost, the members are billed. So even though maint fees have risen at a slightly lower rate than hotel rack rates in the past, this is NO guarantee that this trend will continue.

I am not anti-DVC in any way. It's a great program for the right people and the resorts are terrific! But looking at the numbers, we found that it would actually cost OUR family far more money in the long run than alternatives that suit us as well or better. So look at how it would work for YOU and decide. There are tens of thousands of families who love it and it's great for them. You may be another one. Or you may not. We're not.

Just want to highlight a few comments here:
1. I would never finance a timeshare purchase but even so at 10% amortized over ten years your interest would amount to about 59% of the purchase. "Easily more than double your cost" is over the top to say the least.
2. The upfront cash needs to be considered in the form of the time value of money which is often overlooked by members on these boards. However, you can't reference the opportunity cost of paying up front and ignoring the future payments made for alternative accomodations without DVC. Setup a spreadsheet with a row for each year of ownership vs. same for outlays for other accomodations and discount to todays dollars.
3. I agree that owners are subject to inflation risk on the dues while the cash rooms must reflect supply/demand. This can be good or bad. In the long run I think we are slightly exposed in this area as owners but we do have inflation potection on room itself which is a huge advantage. Where is the DVC budgeted profit coming from? These transactions are audited every year.
4. Finally, we have seen appreciation in the value of our points over the years that actually exceeds the amount we have paid in dues for the same period. Now I don't expect that to continue but it generally safe to say that folks who bought DVC during the first ten years of the program who still own today are generally pleased.

 

[the who #3]

there is another consideration that i have not seen mentioned.------ how much is the relaxation, pleasure and, yes, mental and emotional aspect of your vacation worth? that is basically what a vacation is all about.

i have found that as my grandchildren grow older and larger, we need a little more room to spread out while sleeping, dressing and preparing for the next days activies. i don't know about everyone else, but i find the price of more than one room at a deluxe resort is becoming too high for a grandmother to afford.

we can and do use the ddp and find that is a great savings and makes the decision of where to dine much easier, with the plan we can dine anywhere we want. we also don't have to pack as many clothes since we have a washer and dryer right in our villa. how much nicer can you make it without taking your own maid and butler with you.

thats what i call a real vacation.

 

[the who #3]

to supermanfan,

i just returned from adventures by disney viva italia trip. (these trips can be paid for by dvc pts.) it was just fantastic and very different from wdw. i did not use my points this time but will the next adventures by disney trip i take, and i will take another one. they are well worth it.

there was nothing boring or same-ol-same-ol about touring from one end of italy to the other.

 

[tjkraz]

Where is the DVC budgeted profit coming from? These transactions are audited every year.

The "Management Fee" is budgeted annually at a fixed 12% of all other expenses except taxes and transportation. It's specified right in the POS.

Those funds would cover most of the overhead of the DVC management program itself (accounting, reservations, website, etc.) with the remainder going into DVC's pockets as profit.