Riviera Direct

[CastAStone]

I did the per point math for those resorts when I was deciding where to get my 100 points direct. At the 100-point mark, with current add-on incentives, they were, least-to-most expensive:
SSR, CCV, PVB, RIV, OKW, BLT, AKV

This was the (price per point/years left) + annual dues per point

So there's a couple of reasons I don't love this math.

1. It ignores the difference between Direct and Resale. PVB/BLT are about $100 more Direct than resale. SSR/OKW/AKV are only about $65-$70 more Direct than resale. If one is buying some points resale and some direct I think the most important number becomes the upcharge they're paying for the direct points, not the price/year.
2. It assumes that 2067 has the same value as 2021. There is a lot of risk in 2067. One may not be alive. One may develop issues with TWDC. The parks may become terrible. Florida's average high may be 116. I think it's a mistake to treat the inherent value of the out years as highly as the years in front of us
3. Money in the future is less valuable than money today. People don't love this reality because it makes the math on all DVC purchases worse, but its a mathematical fact proven out over centuries, not an opinion.

In any case, I've posted this before, but here is my valuations of DVC direct purchases per point per year, and and the difference between direct and resale. Renting points through David's is currently $20/point, which is a good reference point if you assume you get zero value from the blue card (the resale prices used in the below are on the aggressive side, FWIW).

 

[Where'sPiglet?]

So there's a couple of reasons I don't love this math.

I figured you wouldn't. You like Advanced Math and I like Super Basic Math.

I do very much appreciate all your charts and data points, along with the ones @i<3riviera has shared.

 

[sethschroeder]

This was the (price per point/years left) + annual dues per point

One thing I think you have to account for is just a slight decrease in RIV compared to others. I would suspect about 2-3% savings per year for the next 2 years at RIV on MFs then standard increases. This is based on historical savings coming out of opening of a resort that usually maps through the 3rd year.

You can choose to use or not because it is an informed guess but still a guess in the end.

My guess would be in 2022 or 23 (COVID might delay it a little bit) we would see difference from RIV:

3% Change Over 2 years

Animal Kingdom Villas	($0.17)​
Aulani Hawaii (Pre July 27, 2011)	($1.66)​
Aulani Hawaii (Post July 27, 2011)	$0.53​
Bay Lake Tower	($1.33)​
Beach Club Villas	($0.81)​
Boardwalk Villas	($0.49)​
Grand Californian	($1.31)​
Grand Floridian	($1.35)​
Hilton Head	$1.35​
Old Key West	$0.01​
Polynesian	($1.10)​
Riviera	$0.00
Saratoga Springs	($1.13)​
Vero Beach	$2.43​
Wilderness Lodge (Boulder Ridge)	($0.05)​
Wilderness Lodge (Copper Creek)	($0.41)​

2% Change Over 2 years

Animal Kingdom Villas	($0.33)​
Aulani Hawaii (Pre July 27, 2011)	($1.79)​
Aulani Hawaii (Post July 27, 2011)	$0.36​
Bay Lake Tower	($1.47)​
Beach Club Villas	($0.96)​
Boardwalk Villas	($0.65)​
Grand Californian	($1.44)​
Grand Floridian	($1.48)​
Hilton Head	$1.16​
Old Key West	($0.16)​
Polynesian	($1.24)​
Riviera	$0.00
Saratoga Springs	($1.27)​
Vero Beach	$2.23​
Wilderness Lodge (Boulder Ridge)	($0.21)​
Wilderness Lodge (Copper Creek)	($0.56)​

 

[RoseGold]

@CastAStone coming in with the big boy math! Surprised to see VB at such a good value direct!!! Who knew?

The insane dues make it a non-starter for SAP, but an interesting artifact of the math.

 

[sethschroeder]

Money in the future is less valuable than money today. People don't love this reality because it makes the math on all DVC purchases worse, but its a mathematical fact proven out over centuries, not an opinion.

So I understand this but also don't from the perspective that pricing will go up in the future. So the requirement of purchasing a contract in 2042/54/57 will have went drastically up again. (And when I mean up I mean after inflation is accounted for)

That being said you also do your math based on investing the "saved" amount while I would never be investing that money but instead likely putting it in to some other aspect of "life improvement" as I have investments both short term and long term.

We talked about this before but I think it comes down to how safe you want to play it. You have a chart showing annual increase as well on pricing but that chart lacked the link to point charts which also go up with new resorts. In comparison I would like your math expectations based on 1996 purchase of BWV and if you would be ahead or behind if you needed to repurchase a new direct contract today.

 

[CastAStone]

@CastAStone coming in with the big boy math! Surprised to see VB at such a good value direct!!! Who knew?

The insane dues make it a non-starter for SAP, but an interesting artifact of the math.

It’s so cheap to start with! Assuming they avoid another direct hurricane hit, It won’t be too many years until the math on VB and HHI starts to favor them as SAP options - eventually there are few enough years of dues left that the cheapness of the buy in outweighs the dues. We’re not there yet.

 

[CastAStone]

So I understand this but also don't from the perspective that pricing will go up in the future. So the requirement of purchasing a contract in 2042/54/57 will have went drastically up again. (And when I mean up I mean after inflation is accounted for)

That being said you also do your math based on investing the "saved" amount while I would never be investing that money but instead likely putting it in to some other aspect of "life improvement" as I have investments both short term and long term.

We talked about this before but I think it comes down to how safe you want to play it. You have a chart showing annual increase as well on pricing but that chart lacked the link to point charts which also go up with new resorts. In comparison I would like your math expectations based on 1996 purchase of BWV and if you would be ahead or behind if you needed to repurchase a new direct contract today.

I am certain that a 1996 purchase of BWV was an outright bargain and you’d be way ahead today having bought vs having to rebuy and you are absolutely correct with your criticism of my math that it assumes DVC inflation close to CPI. I will take a look at how to adjust for a higher factor - I think the historical rate is unsustainable but I am thinking 3.5% CAGR is probably in the ballpark (~1.5% above inflation).

 

[striker1064]

Assuming they avoid another direct hurricane hit,

I have a meteorology background.

Let's do this.

 

[CastAStone]

I am certain that a 1996 purchase of BWV was an outright bargain and you’d be way ahead today having bought vs having to rebuy and you are absolutely correct with your criticism of my math that it assumes DVC inflation close to CPI. I will take a look at how to adjust for a higher factor - I think the historical rate is unsustainable but I am thinking 3.5% CAGR is probably in the ballpark (~1.5% above inflation).

PS comparing DVC from launch to early BLT sales vs DVC today is a bit apples and oranges. It was an outrageous bargain for a very long time, and at some point Iger et al decided they were leaving a lot of money on the table, and now it’s bargain-ness is more in the range of a good deal than an outrageous bargain.

 

[CarolynFH]

I am certain that a 1996 purchase of BWV was an outright bargain and you’d be way ahead today having bought vs having to rebuy and you are absolutely correct with your criticism of my math that it assumes DVC inflation close to CPI. I will take a look at how to adjust for a higher factor - I think the historical rate is unsustainable but I am thinking 3.5% CAGR is probably in the ballpark (~1.5% above inflation).

Yep, in late 1997 we paid $62.50 pp after incentives, roughly $100 pp today per a quick internet inflation calculator.

PS comparing DVC from launch to early BLT sales vs DVC today is a bit apples and oranges. It was an outrageous bargain for a very long time, and at some point Iger et al decided they were leaving a lot of money on the table, and now it’s bargain-ness is more in the range of a good deal than an outrageous bargain.

Our one week in a VGF standard view 1-BR in February cost pretty much the same as our Thanksgiving week in a BWV preferred view 2-BR when we bought.

So I’m truly glad we’re not buying today, direct or resale.

 

[sethschroeder]

PS comparing DVC from launch to early BLT sales vs DVC today is a bit apples and oranges. It was an outrageous bargain for a very long time, and at some point Iger et al decided they were leaving a lot of money on the table, and now it’s bargain-ness is more in the range of a good deal than an outrageous bargain.

I think this is my point though we don't know what will happen when they stop building resorts and instead start flipping resorts in 2042. I am sure if we go back 10 years during the last recession everyone said "see Disney can't keep going up forever" and now here we are 10 years later and people will say it again.

WDW is in a unique situation of having complete control in the area around the parks.

If you look more recently Disney has even made an effort to move resorts between "tiers" getting Pop/AOA in to the low side of Moderate and getting Destino Tower in to the low side of Deluxe and leveling portions of CBR to move it to DVC.

Now this absolutely could flatten and it be a "below average" deal. What I am saying though is I can lock in where it long term is a below average deal or it could go the way that it has been and be a good deal when we look back 20-30 years and people are sitting with CCV/RIV contracts.

 

[CastAStone]

So I understand this but also don't from the perspective that pricing will go up in the future. So the requirement of purchasing a contract in 2042/54/57 will have went drastically up again. (And when I mean up I mean after inflation is accounted for)

That being said you also do your math based on investing the "saved" amount while I would never be investing that money but instead likely putting it in to some other aspect of "life improvement" as I have investments both short term and long term.

We talked about this before but I think it comes down to how safe you want to play it. You have a chart showing annual increase as well on pricing but that chart lacked the link to point charts which also go up with new resorts. In comparison I would like your math expectations based on 1996 purchase of BWV and if you would be ahead or behind if you needed to repurchase a new direct contract today.

I am certain that a 1996 purchase of BWV was an outright bargain and you’d be way ahead today having bought vs having to rebuy and you are absolutely correct with your criticism of my math that it assumes DVC inflation close to CPI. I will take a look at how to adjust for a higher factor - I think the historical rate is unsustainable but I am thinking 3.5% CAGR is probably in the ballpark (~1.5% above inflation).

Here is what it looks like if I replace the ~2% inflation factor I had in the model with a 3.5% inflation factor, which adjusts the net savings rate to 4.8% (just because you would spend the money on something else doesn't mean that you couldn't choose to save it, and thus by spending it now you are still costing your future self that money). As you can see it penalizes the 2042 resorts while overall showing better economics for DVC across the board. Riviera remains the 3rd best "deal" after SSR and OKW (e).

I would say this chart is only better than the one I posted above for comparing the resorts that may expire before you want to stop doing DVC (and then drive a repurchase) with the resorts that will outlast your will to travel.


People are welcome to quibble with the resale prices; changing them by a couple bucks doesn't make a huge difference.

 

[Duckbug.Ducktales]

Here is what it looks like if I replace the ~2% inflation factor I had in the model with a 3.5% inflation factor, which adjusts the net savings rate to 4.8% (just because you would spend the money on something else doesn't mean that you couldn't choose to save it, and thus by spending it now you are still costing your future self that money). As you can see it penalizes the 2042 resorts while overall showing better economics for DVC across the board. Riviera remains the 3rd best "deal" after SSR and OKW (e).

I would say this chart is only better than the one I posted above for comparing the resorts that may expire before you want to stop doing DVC (and then drive a repurchase) with the resorts that will outlast your will to travel.

View attachment 526110
People are welcome to quibble with the resale prices; changing them by a couple bucks doesn't make a huge difference.

Ooh then if one got RVA for less than $170 it's an even better deal!

 

[sethschroeder]

I replace the ~2% inflation factor I had in the model with a 3.5% inflation factor

I am not sure we are on the same page. I am talking about a repurchase of a new direct contract at expiration of the current contract. Maybe this covers that?

Future state purchase would encompass two things 1) price per point 2) point chart requirements. This would still only account for 1/2 of the equation on figuring out how much a future new contract would cost. What you are figuring out is at the end of 20-30-40 years how much money you have saved or spent extra. Thats great but saving $10k is no benefit if its costs $20k more to buy a like for like contract (same stay in the same resort or similar "level").

This math likely doesn't matter for those who are in their 40s/50s/60s/70s but it does matter for us who are in the 20s/30s with a plan of Disney trips every 1-2 years for the next 50-60 years.

Also most of this really has too much of a potential change that its hard to get anything really concrete anyways on a new contract purchase that far out in the future.

One other calculation would be mapping all resorts to the 2054 expiration and "expected" resale value. Would this skew the numbers potential with having the ability to sell off BLT/CCV/RIV vs an expired contract at SSR. Lots of different ways to slice data with none of it really being the "best" way that encompasses all the variations.

 

[i<3riviera]

͏

 

[Duckbug.Ducktales]

RVA: sleep around points of the future!

except the whole can’t use them at any resort but RVA if bought resale ... but minor thing right?

Absolutely a very minor thing and everyone on this site agrees that the resale restrictions don't matter

 

[CastAStone]

Future state purchase would encompass two things 1) price per point 2) point chart requirements. This would still only account for 1/2 of the equation on figuring out how much a future new contract would cost. What you are figuring out is at the end of 20-30-40 years how much money you have saved or spent extra. Thats great but saving $10k is no benefit if its costs $20k more to buy a like for like contract (same stay in the same resort or similar "level").

My assumption is that you’re buying a resort in the future that existed in 2020 or else why bother making a comparison?

Also most of this really has too much of a potential change that its hard to get anything really concrete anyways on a new contract purchase that far out in the future.

You and I have very different reactions to this fact. I think it should make you more conservative in your current purchase.

One other calculation would be mapping all resorts to the 2054 expiration and "expected" resale value. Would this skew the numbers potential with having the ability to sell off BLT/CCV/RIV vs an expired contract at SSR. Lots of different ways to slice data with none of it really being the "best" way that encompasses all the variations.

I can try!

 

[havoc315]

All these posts about the "value" are really speculative. No matter your current age, the further you look into the future the greater the uncertainty.

I'd discourage anybody from really assigning such distant values. Further, re-sale restrictions leave the future value of the Riviera very much as an unknown. (likely to retain re-sale value worse than prior resorts, but how much worse? At what level would Dis exercise their right of first refusal?)

Instead, I'd ask --- Based on the price being paid now, will you likely "get your money's worth" over the next 10-15 years? I'd look at any value beyond that time frame as "bonus" including the potential to re-sell after 10-15 years. [Even 10-15 years has a lot of uncertainty... we could have rolling pandemics destroying travel for the next decade. A personal tragedy could destroy your anticipated vacations).

For those truly looking to maximize your dollar over the next 50 years... don't buy DVC. Invest your money wisely and pay cash for vacations.

 

[sethschroeder]

My assumption is that you’re buying a resort in the future that existed in 2020 or else why bother making a comparison?

So my comparison is in 2070 which was "cheaper"?
BCV Resale -> BCV Direct (2042) -> 2070
RIV Direct -> 2070

Another comparison might be:
SSR Resale -> SSR Direct (2054) -> 2070
RIV Direct -> 2070

Its the future state direct purchase (because "everything" will have resale restrictions) which I am looking at.

I can try!

So its the Direct purchase on BCV/SSR above that is hard to predict. I had outline increases regarding point charts previously so possibly that can be used to partially predict future point chart requirements. I know you have some math on direct sale price points. Both of these combined could in theory create the requirement.

Maybe I will take a stab at the two as well later.

 

[CastAStone]

So my comparison is in 2070 which was "cheaper"?
BCV Resale -> BCV Direct (2042) -> 2070
RIV Direct -> 2070

Another comparison might be:
SSR Resale -> SSR Direct (2054) -> 2070
RIV Direct -> 2070

Its the future state direct purchase (because "everything" will have resale restrictions) which I am looking at.



So its the Direct purchase on BCV/SSR above that is hard to predict. I had outline increases regarding point charts previously so possibly that can be used to partially predict future point chart requirements. I know you have some math on direct sale price points. Both of these combined could in theory create the requirement.

Maybe I will take a stab at the two as well later.

You're comparing the resorts on my chart to the resorts that aren't on my chart/don't exist. I'm unclear on what exactly you object to - look at the chart: BCV is the worst value and Riviera is 3rd best. That seems to be what you're arguing.

Another comparison might be:
SSR Resale -> SSR Direct (2054) -> 2070
RIV Direct -> 2070

The math on the 2nd chart is intended to provide like for like comparisons. So if you read the resale column, that should be a fair comparison of BRV Resale -> CCV Resale (2042) -> 2070 vs CCV Resale (2020) -> 2070. If you read the Direct column, you can compare SSR Direct (2020) ->Projected Direct Price of whatever they're selling in 2054 -> 2070 to BRV Direct -> Projected Direct price of whatever they're selling in 2042 ->2070.

The one thing it isn't useful for is a direct to resale or resale to direct purchase cycle.

It's basically a compressed version of the following math. Say you want backpacks to last for the next 10 years. You can get a cheap one at Walmart for $10 that will last a year or an $50 one at Eddie Bauer that will last 5 years. Both increase in price at 3.5% a year. Each works out to $10/year. But if you buy the Walmart one and pocket the difference you'll spend less money in the long run (the 2020 dollar value of everything you spend at WM works out to $87 vs $93 at EB; if you divide that by 10 years, it's $8.70 and $9.30; this is (pre dues) the number that appears in the 2nd to last column on my chart).