Somewhat complex purchasing question with cruise issue

[twinsouvenirs]

So to start, we are already DVC--have 270 points, 110 at GFV direct, 160 at SSR resale (no debate needed here, that ship has sailed ) We've heavily used our points and travel mostly in the off season. It's been a great choice for us and we know we need more points at some point to accommodate our growing kids and potential guests and new runDisney addiction.

So that's the background.

Scheduling our first cruise for next summer. It pains me to book in peak season but it's a birthday celebration and my husband insists on doing it somewhat contemporaneously so it is what it is.

I just took the common knowledge that cruises should be booked for cash not points for better value and booked through a TA. Then I checked with DVC member services... OMG it was a shocking amount of points to take our family.

The rough numbers (rounding) $12000 cash price, 1100 point cost.

The member services person was super helpful, and indicated we could just book one person, even one child (about 250 points) and pay the rest in cash (she indicated that would bring the cash price down to a little over 9k). I can see where this would help when/if we either travel less, or don't have the available cash, but as a young family that will definitely find a way to drag everyone to wdw again within the year I'm not burning a year of points to save 2k.

Which brings me to my question. If I am going to lay down 12k at disney, is there any financial tipping point where it would make more sense just to buy another contract to use the points for part of the cruise, even if we have to offset with cash? Or are the cruise point prices too high for that to make sense? I am pretty sure I can figure this out on a spreadsheet but I'm feeling lazy and wondering if someone else has considered this or done the math.

I keep feeling like spending 12k for a one time trip seems so ridiculous when the same 12k could yield us 120-140 more points (resale)

Also, I am aware of the new cruise restrictions on resale points but I am thinking we could use our existing points banked/borrowed for the cruise and just use the newly purchased resale points for dvc stays

 

[JHank44]

They are giving you a credit of ~$11/point for the cruise (12k / 1100). If you can buy points at resale cheaper than $11/point (however you want to calculate it), then you could save some money to use for the cruise. All that said, you can probably get more than $11/point renting out the points and then just book for cash. I think that is why everyone says to not use points for cruises. Ultimately, whether you buy another contract should be an independent decision of your cruise.

Also, can you use resale points for cruises anyways? I thought that might be part of the restrictions but I am new at this.

 

[supersnoop]

Only pre-2011 resale points can be used for cruises.

 

[KAT4DISNEY]

Instead of just straight out using points - rent out your points if you have excess that you can't otherwise use. You can get $13/pt for VGF or $12/point for SSR thru a broker with minimal work. If you were to rent out the 1100 points required for the cruise at $12/pt that would yield $13,200. If the cruise takes from your vacation time and use of the points it's another way to get paid back in some way. But once you consider what you pay in maintenance fees plus the purchase price it still makes little sense to buy points to use for cruising.

You're kind of mixing up vacations though with the thinking of the $12k buying 120-140 more points. That 120-140 points isn't enough to "pay" for a cruise which is what the purpose of the $12k is. I know I get sticker shock in looking at prices for a Disney cruise but when thinking about using the money for more points that's an either/or scenario, not a take the $12k, buy the points and all be able to go on the cruise with that $12k spent on points.

 

[bwvBound]

If going through David's service -- it doesn't matter where the points came from (direct/resale).

 

[LAX]

If going through David's service -- it doesn't matter where the points came from (direct/resale).

Based on how I understand it, the service is essentially renting your points through David's and they will apply the proceeds to a cash cruise reservation. The difference being David's will take care of everything for you. If one were to rent out the points through a broker anyway, why not just book the cruise on your own with the proceeds since you can then choose to use any TA you want and perhaps can even take advantage of any promo available (ie: onboard credits) which I am not sure would be available through David's.

LAX

 

[twinsouvenirs]

If going through David's service -- it doesn't matter where the points came from (direct/resale).

oooh never saw this service!!!!! thank you thank you

 

[twinsouvenirs]

Based on how I understand it, the service is essentially renting your points through David's and they will apply the proceeds to a cash cruise reservation. The difference being David's will take care of everything for you. If one were to rent out the points through a broker anyway, why not just book the cruise on your own with the proceeds since you can then choose to use any TA you want and perhaps can even take advantage of any promo available (ie: onboard credits) which I am not sure would be available through David's.

LAX

Also great idea!!

 

[Dean]

So to start, we are already DVC--have 270 points, 110 at GFV direct, 160 at SSR resale (no debate needed here, that ship has sailed ) We've heavily used our points and travel mostly in the off season. It's been a great choice for us and we know we need more points at some point to accommodate our growing kids and potential guests and new runDisney addiction.

So that's the background.

Scheduling our first cruise for next summer. It pains me to book in peak season but it's a birthday celebration and my husband insists on doing it somewhat contemporaneously so it is what it is.

I just took the common knowledge that cruises should be booked for cash not points for better value and booked through a TA. Then I checked with DVC member services... OMG it was a shocking amount of points to take our family.

The rough numbers (rounding) $12000 cash price, 1100 point cost.

The member services person was super helpful, and indicated we could just book one person, even one child (about 250 points) and pay the rest in cash (she indicated that would bring the cash price down to a little over 9k). I can see where this would help when/if we either travel less, or don't have the available cash, but as a young family that will definitely find a way to drag everyone to wdw again within the year I'm not burning a year of points to save 2k.

Which brings me to my question. If I am going to lay down 12k at disney, is there any financial tipping point where it would make more sense just to buy another contract to use the points for part of the cruise, even if we have to offset with cash? Or are the cruise point prices too high for that to make sense? I am pretty sure I can figure this out on a spreadsheet but I'm feeling lazy and wondering if someone else has considered this or done the math.

I keep feeling like spending 12k for a one time trip seems so ridiculous when the same 12k could yield us 120-140 more points (resale)

Also, I am aware of the new cruise restrictions on resale points but I am thinking we could use our existing points banked/borrowed for the cruise and just use the newly purchased resale points for dvc stays

There has never been a time in the history of DVC where buying points to cruise made sense. About the best one can do is break even (and that occurred in rare examples) when resale would work but now that it means retail at todays prices, that's not even possible. You'll have to decide the breakdown and whether it makes sense to use your points. Usually part points and part cash is the worst choice possible financially speaking unless you just hit something that's not discounted otherwise. Ultimately there are unique examples where the generalities break down somewhat. For anyone considering it I'd suggest they always get real numbers and compare.

 

[twinsouvenirs]

Thank you all! I did some rough numbers and it looks like we'd have to basically spend 20k+ to possibly "save" a few thousand, and by save I mean get those off of a resale contract that we then would have to pay dues on... I think we'll just be rare cruisers We really won't end up renting the points out because we want to use them in addition to the cruise.

 

[Dean]

Thank you all! I did some rough numbers and it looks like we'd have to basically spend 20k+ to possibly "save" a few thousand, and by save I mean get those off of a resale contract that we then would have to pay dues on... I think we'll just be rare cruisers We really won't end up renting the points out because we want to use them in addition to the cruise.

The reality is that the numbers you quoted ($11/pt) is a very unusual situation. So even comparing to a skewed and likely not reproducible value, you can to the correct conclusion this was not a reasonable return. Generally it's more in the $6-7.50 per point return. I assumed you were comparing apples to apples for the same cruise, group size and cabin category. For current owners who have the option and are looking at cruising, I'd look at all options to be sure you don't miss a unique situation but buying points to cruise is a 100% poor choice and it was 100% when resale could book cruises and DVC was much cheaper. Plus there are risks to using points for cruising that one must consider that are more than cash until you get to the cancelation window.

 

[bumbershoot]

So you booked the cruisethrough a TA, and it's around 12K. Just making sure.

Are you sure you have to take a Disney cruise? Plenty of people are "jumping ship" now that DCL has raised their prices so drastically and so quickly (especially for peak season). My family loves Royal more than DCL, for instance. Service is the same, just with different aesthetics (we prefer the sleek look of Royal ships) and without Mickey roaming (but many ships do have King Julien and other Dreamworks characters, which can be more fun depending on your outlook). Did you look around at other weeks in the same basic timeframe? Check out other staterooms?

 

[chalee94]

...you can probably get more than $11/point renting out the points and then just book for cash.

don't forget to take taxes into account.

while it may be swapping points for a cruise in your mind, if the IRS sees the cash coming in, they will simply see taxable income...

 

[twinsouvenirs]

Great points, all! And yep, positive it has to be a Disney Cruise. It's all about the kids clubs and Castaway Cay--we're Disney Kool Aid drinkers and not at ALL cruisers (this will be our first) and we have three little kids who are pretty obsessed and will have no clue who King Julien is (neither do I )... so it is basically only the DCL reputation that is getting us on a boat!

The comparison was definitely between the exact same deck placement/same category/etc.

Ah well, it was worth a shot! It's definitely some mental bias but spending on accommodations that don't have the illusion of some equity hurts.

 

[Dean]

don't forget to take taxes into account.

while it may be swapping points for a cruise in your mind, if the IRS sees the cash coming in, they will simply see taxable income...

Taxes would be at the marginal rate for the profit (price minus expenses, mostly dues) or roughly $12-13 per point after taxes return.