The value of a point?

[rkold]

Hi! I'm sure this has been asked and answered before, so I hope it is OK to ask again. I'm curious how exactly a point is valued? I'm curious in terms of trying to compare what is a good use of my points. i.e. If it's 34 points a night to stay at the Disneyland Hotel in CA, is 34 points the equivalent of a CRO of $340? Is it the $442 it might cost to rent a night of 34 points for $13 a point? Is it less?

I guess I'm curious to how do you figure out when it makes more sense to book with points via using cash (assuming you have both) I've seen people say that is makes more sense to rent points and use the money to book a cruise, but are they basing the point values off what they might get renting or is there an accepted value of what points should be able to purchase.

Thank you in advance

 

[disneynutz]

IMO the value of a point is what you can rent it for.

As far as using points for anything other than a DVC point stay, Disney sets the required points at a level that is a premium use of points.

Bill

 

[Deb & Bill]

Officially, DVC says points have no cash value. Except for the one time use points up to 24 that they will sell you once per UY.

 

[crisi]

There are a lot of ways to do it as value is subjective. On is to use the rental rate. One is to value it as an equation of amortized purchase price plus dues. Another way would be to figure that if you've owned for a while, you have ROI on the purchase price, and just use dues. If you use the first, trading and cruises don't tend to be a good deal. If you use the last, then they often are a great deal.

 

[drusba]

Rental value would be typical but you have to deduct something for the costs and hassles of renting. Probably best to gauge it through what you could rent points for through a broker who assumes most of the costs and hassles of renting like David's; amount you actually get not the higher amount he charges to the renter and that appears to currently be $11 per point. If you are trying to determine value for trading out to a non-DVC Disney hotel, you will also have to add, to make a comparison, the $95 fee it costs to do the trade. In the usual case, that fee plus the points at $11 per point adds up to more than you would pay for like accomodations at a Disney hotel if just paying cash through Disney's CRO.

 

[rkold]

IMO the value of a point is what you can rent it for.

As far as using points for anything other than a DVC point stay, Disney sets the required points at a level that is a premium use of points.

Bill

I guess I am trying to figure out if in the case of the California hotels, is it a premium or not? I had originally just assumed it was and booked my stay via Orbitz since it seemed like it made more sense to bank our points for next year since we know we go to WDW a lot. But now I'm starting to wonder after seeing another thread if I was too quick to just ignore the option of using points.

Officially, DVC says points have no cash value. Except for the one time use points up to 24 that they will sell you once per UY.

No, I can also see that as well. But officially, Party Card for Sorcers of the Magic Kingdom are not supposed to have a cash value either and that doesn't stop people from selling them on eBay.

There are a lot of ways to do it as value is subjective. On is to use the rental rate. One is to value it as an equation of amortized purchase price plus dues. Another way would be to figure that if you've owned for a while, you have ROI on the purchase price, and just use dues. If you use the first, trading and cruises don't tend to be a good deal. If you use the last, then they often are a great deal.

These are really good ways to think about it, thank you. Originally, in my mind I thought of points being worth $10, but then most people seem to rent from $11-$13 here and I know David's is $14. On the other hand David's needs to make some sort of profit to stay in business and I imagine even the people here are valuing their points at $11-$13 for a specific reason.

Rental value would be typical but you have to deduct something for the costs and hassles of renting. Probably best to gauge it through what you could rent points for through a broker who assumes most of the costs and hassles of renting like David's; amount you actually get not the higher amount he charges to the renter and that appears to currently be $11 per point. If you are trying to determine value for trading out to a non-DVC Disney hotel, you will also have to add, to make a comparison, the $95 fee it costs to do the trade. In the usual case, that fee plus the points at $11 per point adds up to more than you would pay for like accomodations at a Disney hotel if just paying cash through Disney's CRO.

But in the case of the Disneyland Hotel (or Paradise Pier) I'm pretty sure there is no $95 fee. (Probably because in WDW there are lots and lots of DVC options, while in California, the # of DVC units is very limited.) So I guess I am trying to figure out is the 34 points per night (for our dates) inflated/a premium? Or is it the same price I am getting from Orbitz? Is it actually a good deal because it includes parking fees? We're going in under a week, so I doubt we will try changing it, but now I'm curious.

Our trip to CA was very last minute and originally we were not even necessarily visiting Disney, we were just visiting family.

 

[BirdsOfPreyDave]

I'll start by saying that I personally never plan to use any of my points anywhere other than a DVC resort. We know we'll always have a DVC trip planned in the near future, and DVC resorts are always going to be the best use of the points. We'd therefore simply rather use cash for any other type of trip.

However, I completely understand that doesn't work for everyone. A previous poster mentioned several different calculations to determine the value of a point.

Amortized Purchase Price + Maintenance Fees

My immediate and first thought was to compare a non-DVC resort use of points to what the points actually cost me. (((Total Purchase Cost) / Number of Points) / Number of Use Years) + Annual Dues

So for our SSR contract that we purchased in 2006:
* 250 points cost us $24,500
* Our last use year before the resort closes will be 2053. That means we'll have received points in 49 use years.

$24,500 / 250 / 49 = $2 per point per year.

SSR maintenance fees are currently $4.81 per point. So in 2013, the actual out-of-pocket value of each point I use is $6.81.

This is the amount I compare to the CRO price quotes for the same room to convince myself what a great idea it was to purchase DVC.

Maintenance Fees Only

If you've had your contract for a while, perhaps you feel that you've already earned back your initial buy-in. Your ongoing annual costs consist only of your maintenance fees.

In my case with our SSR contract, that would be $4.81 per point.

Rental Value

At the same time, I see that David's (dvcrequest.com) is offering members $11 per point. So if I'm not adverse to dealing with a rental, I could value each point at that higher rate. This becomes the "should I rent my points and use the cash to buy the other vacation I want?" question.

The decision lies somewhere in this spectrum

So compare the cost of the vacation you're thinking about trading for in the context of this spectrum.

If the cost is above $11 per point, you're getting a fantastic rate. Book the vacation through DVC using your points without feeling any guilt.

If the cost is below the amortized cost + maintenance fees ($6.81 per point in my case), the exchange is a less-than-optimal value. You spent more on the points than you would have spent for the vacation.

If the cost is below the cost of your maintenance fees ($4.81 per point in my case), you've got an awful deal because you're not even recouping your DVC cash outlay in just this single year.

Better than nothing

Also keep in mind, though, that if you're not able to use, bank, or rent your points, their value is zero. Better to use them for a poor exchange than to lose them.

 

[crisi]

I guess I am trying to figure out if in the case of the California hotels, is it a premium or not? I had originally just assumed it was and booked my stay via Orbitz since it seemed like it made more sense to bank our points for next year since we know we go to WDW a lot. But now I'm starting to wonder after seeing another thread if I was too quick to just ignore the option of using points.

So if next year, you didn't have enough points to take the trip you want to take because you used them in California, how will you supplement? Because that is what the points are worth -since you have an intended use for them. Stay on cash? Rent from another owner?

 

[AnnaS]

For me - it really depends on the number of points I have at the time, how much vacation time I can take that year, do I want to spend the extra cash at the time, etc. etc.

We bought all our contracts a long time ago and paid cash - of course the value could be the rental rate especially if I planned to take the time and hassle of renting them. I have never done that and won't say that I would never do that because circumstances can always change in the future.

So for me - I value them at what my maintenance fees are. Average $5. a point.

If you are comfortable with your decision/plan/thoughts - don't over think it. It's great to have a few options. Choose the one that is best for you, financially or otherwise.

 

[abner1776]

As an accountant, I could say the value of a point is my amortized cost plus maintenance fees which would be somewhere in the $6.75 range.
At the same time the value of a point is the ability to send my niece and her family to WDW at a cost they can afford while trying to pay back my brother for everything he did for me before he passed away.

 

[cwdefouw]

Another way to look at is... What dollar value are getting for your points?

Whenever I book a stay on points, DVC Resort, concierge collection, cruises, etc. I always try to get the dollar value for the stay, if I had paid in cash. If I had to pay the $95 booking fee, I subtract that from the cash value and divide by the number of points that I used.

Some accomodations are easy to get a cash price for, others are not so easy, so I have to estimate occasionally, but I always get a cash value of some kind that goes on my spreadsheet.

For instance, cruises have averaged $7.14 of value per point over the 11 years that we have been using points for cruises. Cruises pretty much always stay in the $6.50-$7.50 range, but have been trending a little higher over the last couple of years.

DVC stays vary greatly, average is $18.56 of value per point over the 14 years we have been members. The low was $12.86 and the high was $38.26. We typically travel in off season and stay in studios or one bedrooms.

Incidently, in my experience the lowest value DVC accomodations have been at the BWV and BCV in the early 2000's (not sure of reason, could be my numbers are off) and the highest values have been in the last few years at BLT and AKL. We have not stayed at OKW, VWL, VGF, VB, HH or Aulani

Obviously it is easy to see why most agree that cruises are not the best use of DVC points for those trying to get maximum value.

This is how I determine the "Value" of my points. For us the dues are just another monthly payment like the cable bill, so I don't factor that in to the value that I am getting for my points. I do factor in the dues when I calulate our total "Break Even" point by adding everything that we paid (Initial purchase, added fees, mortgage interest, dues etc vs the total cash value of the vacations that we have taken and estimate values for vacations and dues for the next few years).

Disclaimer: This is just how I come up with a number, I am not stating this is the best way to do it, I am sure there are better ways.

 

[rkold]

I'll start by saying that I personally never plan to use any of my points anywhere other than a DVC resort. We know we'll always have a DVC trip planned in the near future, and DVC resorts are always going to be the best use of the points. We'd therefore simply rather use cash for any other type of trip.

However, I completely understand that doesn't work for everyone. A previous poster mentioned several different calculations to determine the value of a point.

Amortized Purchase Price + Maintenance Fees

My immediate and first thought was to compare a non-DVC resort use of points to what the points actually cost me. (((Total Purchase Cost) / Number of Points) / Number of Use Years) + Annual Dues

So for our SSR contract that we purchased in 2006:
* 250 points cost us $24,500
* Our last use year before the resort closes will be 2053. That means we'll have received points in 49 use years.

$24,500 / 250 / 49 = $2 per point per year.

SSR maintenance fees are currently $4.81 per point. So in 2013, the actual out-of-pocket value of each point I use is $6.81.

This is the amount I compare to the CRO price quotes for the same room to convince myself what a great idea it was to purchase DVC.

Maintenance Fees Only

If you've had your contract for a while, perhaps you feel that you've already earned back your initial buy-in. Your ongoing annual costs consist only of your maintenance fees.

In my case with our SSR contract, that would be $4.81 per point.

Rental Value

At the same time, I see that David's (dvcrequest.com) is offering members $11 per point. So if I'm not adverse to dealing with a rental, I could value each point at that higher rate. This becomes the "should I rent my points and use the cash to buy the other vacation I want?" question.

The decision lies somewhere in this spectrum

So compare the cost of the vacation you're thinking about trading for in the context of this spectrum.

If the cost is above $11 per point, you're getting a fantastic rate. Book the vacation through DVC using your points without feeling any guilt.

If the cost is below the amortized cost + maintenance fees ($6.81 per point in my case), the exchange is a less-than-optimal value. You spent more on the points than you would have spent for the vacation.

If the cost is below the cost of your maintenance fees ($4.81 per point in my case), you've got an awful deal because you're not even recouping your DVC cash outlay in just this single year.

Better than nothing

Also keep in mind, though, that if you're not able to use, bank, or rent your points, their value is zero. Better to use them for a poor exchange than to lose them.

Wow, thank you for laying out your formula and thoughts so concisely. This really helps me tremendously.

We bought at the VGF (in Oct) so our rates is higher than yours, but having a formula like that to calculate out rates truly helps. For one thing, I was curious if when we now book DVC were we "saving" money or at the very least getting closer to our break even point and this makes it a lot easier for me to see. It really helps confirm to me we made the right decision to buy now, as even at $13 a point, I was saving about 50% by booking DVC vs. CRO.

So if next year, you didn't have enough points to take the trip you want to take because you used them in California, how will you supplement? Because that is what the points are worth -since you have an intended use for them. Stay on cash? Rent from another owner?

We were going to have to either borrow from our next UY or really start considering buying another smaller contract via resale. >>; (Which would also give us a 2nd home resort.) You are right though in that we do always have intended uses for the points, and as it is, we're probably going to be short in the next UY. ATM, we travel to WDW a lot. It's a relatively affordable and easy flight from where we live, and I love escaping to somewhere warm in the Winter. It's a much easier trip with DD vs where I really want to go, so for now, it's Disney while I wait for DD to get older and give up naps. But thank you, those are also really good points.

For me - it really depends on the number of points I have at the time, how much vacation time I can take that year, do I want to spend the extra cash at the time, etc. etc.

We bought all our contracts a long time ago and paid cash - of course the value could be the rental rate especially if I planned to take the time and hassle of renting them. I have never done that and won't say that I would never do that because circumstances can always change in the future.

So for me - I value them at what my maintenance fees are. Average $5. a point.

If you are comfortable with your decision/plan/thoughts - don't over think it. It's great to have a few options. Choose the one that is best for you, financially or otherwise.

I think partially, I wanted to start feeling good about whether we were saving money on our Disney trips, and using BirdsofPreyDave's tells me that if we're going to continue going to WDW so often, DVC really is benefitting us.

Our DVC ownership is new, barely a month old, but like you we also paid cash and so will just have to pay the maintenance fee in the future, and as a monthly payment it's really no different than some of our other bills.

But thank you, I think I do have a tendency to overthink things.

As an accountant, I could say the value of a point is my amortized cost plus maintenance fees which would be somewhere in the $6.75 range.
At the same time the value of a point is the ability to send my niece and her family to WDW at a cost they can afford while trying to pay back my brother for everything he did for me before he passed away.

I just want to say how wonderful I think it is that you can do something for your niece and her family. Thank you also for your perspective. My mom decided to buy the membership for us because she wanted to be able to go on nice vacations with me and DD, her only grandchild. Life can be short and spending time with family is really important.

Another way to look at is... What dollar value are getting for your points?

Whenever I book a stay on points, DVC Resort, concierge collection, cruises, etc. I always try to get the dollar value for the stay, if I had paid in cash. If I had to pay the $95 booking fee, I subtract that from the cash value and divide by the number of points that I used.

Some accomodations are easy to get a cash price for, others are not so easy, so I have to estimate occasionally, but I always get a cash value of some kind that goes on my spreadsheet.

For instance, cruises have averaged $7.14 of value per point over the 11 years that we have been using points for cruises. Cruises pretty much always stay in the $6.50-$7.50 range, but have been trending a little higher over the last couple of years.

DVC stays vary greatly, average is $18.56 of value per point over the 14 years we have been members. The low was $12.86 and the high was $38.26. We typically travel in off season and stay in studios or one bedrooms.

Incidently, in my experience the lowest value DVC accomodations have been at the BWV and BCV in the early 2000's (not sure of reason, could be my numbers are off) and the highest values have been in the last few years at BLT and AKL. We have not stayed at OKW, VWL, VGF, VB, HH or Aulani

Obviously it is easy to see why most agree that cruises are not the best use of DVC points for those trying to get maximum value.

This is how I determine the "Value" of my points. For us the dues are just another monthly payment like the cable bill, so I don't factor that in to the value that I am getting for my points. I do factor in the dues when I calulate our total "Break Even" point by adding everything that we paid (Initial purchase, added fees, mortgage interest, dues etc vs the total cash value of the vacations that we have taken and estimate values for vacations and dues for the next few years).

Disclaimer: This is just how I come up with a number, I am not stating this is the best way to do it, I am sure there are better ways.

Thank you, I understand what you mean about maintenance fees just being another bill like the cable. Our fees are actually what we use to pay for our two cell phones before switching to another plan. ^_^;

Our next two trips I know what the CROs are (my in laws were thinking of joining us so I looked up the CROs) and even at $13 a point we were saving about 50% vs a CRO. I've no idea what our Oct trip is going to cost since I've not even seen a CRO for VGF yet.

TBH, I'm not sure we are going to cruise and I don't think we will turn in points for things other than DVCs for the most part. It's just in the case of our occasional trips to Disneyland and my goal trip of Tokyo Disney where we might end up using points outside the DVC system.


Thank you everyone for all your responses, I do truly appreciate it and I hope you all have a lovely Thanksgiving!

 

[gdrj]

I'm sure the accountants with all their values are correct.

For me it would be much simpler, If I pay cash for the regular hotel room, I still have all my points for an extra DVC stay

More seriously when I look at value I look at how many points it takes to stay in a hotel and vs how many for a DVC resort. If it costs more points to stay in a hotel than a DVC per night (which it does) it is not a value for me. No matter what the dollars, points, maint fees etc say.

For me it is all about how many days I can stay.