Total Cost of Ownership Analysis?

[camack7827]

Ok, so I know DVC is right for my family because we're Disney nuts. Now that that's out of the way, has anyone ever completed any kind of TCO for all of the resorts?

Initial Purchase price + Maintenance Fees (+3% year over year) over 50 years? I'll get into it if nobody else has, I figured I'd ask here first rather than reinvent the wheel.

Thanks in advance!
Chris

 

[delmar411]

just very quickly, OKW with a purchase price of $101 (I believe that it what it is now) for 220pts with MF rising 3% over the next 49yrs would be:

$131107.98 lifetime

or

$2622.16 per year

 

[Coach81]

Ouch!!!!

 

[bgraham34]

Dont forget it 49 years it will probably be 1k a night for a stay in a Disney resort. If not more.

 

[Brian Noble]

You may also want to consider opportunity cost on the purchase price.

I think Mary Waring's spreadsheet is a good basis for your own analysis.
http://www.mousesavers.com/dvc.html#opportunity

 

[rstackjd]

I'm not sure if this is what you're looking for, but I did a spreadsheet to calc a Net Present Value analysis before we bought in that looked at the cash outlay (without financing considerations) and estiamted benefit each year for the 50 years of the contract. The comparison was against a Moderate resort for 7 days annually. Assumed 2.5% annual increase in dues and a 4% annual increase in moderate resort prices. Obvously, time of year makes a difference as to Moderate resort prices.

If you drop me an e-mail at rstackjd@yahoo.com I'll send you a copy. Don't know how to attach a file to a thread.

Bob

 

[camack7827]

So usually, I give too much detail, in this case I gave too little. So here you go:

My wife and I were holding out for BLT, we wanted it simply for location and accessibility to the MK while our kids are little (DD1 and DS3). Considering that, the Contemporary theming isn't really our thing, our kids will grow up quickly relative to the length of the contract, and current incentives on AKV are nice and the resale market dipping a bit... we're now leaning towards jumping in now rather than if/when BLT is announced.

So, our hearts have made the purchase into DVC, and since we're really not particular about where we stay other than wanting to stay close to the Magic Kingdom in the short term, my head is telling me to make the purchase that makes the most sense fiscally. My sister and BIL own at SSR, and though they've gone down 1-2 times a year since 2004, I think they've only stayed at SSR once.

So what I am looking for, and was not able to find using the search function, was a Total Cost of Ownership breakdown comparing all of the DVC resorts. Wanting an apples-to-apples comparison, I made up a little spreadsheet using:

• Current Maintenance Fees increasing 3% annually
• The average resale purchase price (per point) that was figured from the ROFR thread in this forum
• Assuming a 270 point purchase for each resort, totalling the purchase price plus the maintenance fees through 2042

Yes, I know cutting them all off at 2042 skews the results, particularly for SSR. My thoughts are that extensions will be offered similarly to how OKW was extended. Assuming you/I take the extension, the maintenance fee increases continue to increase across the board at the same rate, it should be a wash. So, here are the results for *my* TCO spreadsheet through 2042 when purchasing via resale today:

• AKV - $101,052
• SSR - $88,934
• BCV - $99,649
• BWV - $101,547
• VWL - $99,559
• OKW - $92,038
• VB - $108,522
• HHI - $100,081

If for nothing else, the results highlight how maintenance fees can make up a rather significant discrepancy in purchase price. If you are interested, I've shared/published the full spreadsheet on Google Docs here (hopefully the link doesn't get stripped out):

http://spreadsheets.google.com/pub?key=pXOpS57eMoPEBlnpkjZ1dSw

Thanks,
Chris

 

[rstackjd]

I made up a little spreadsheet using:

• Current Maintenance Fees increasing 3% annually
• The average resale purchase price (per point) that was figured from the ROFR thread in this forum
• Assuming a 270 point purchase for each resort, totalling the purchase price plus the maintenance fees through 2042

Yes, I know cutting them all off at 2042 skews the results, particularly for SSR. My thoughts are that extensions will be offered similarly to how OKW was extended. Assuming you/I take the extension, the maintenance fee increases continue to increase across the board at the same rate, it should be a wash. So, here are the results for *my* TCO spreadsheet through 2042 when purchasing via resale today:

• AKV - $101,052
• SSR - $88,934
• BCV - $99,649
• BWV - $101,547
• VWL - $99,559
• OKW - $92,038
• VB - $108,522
• HHI - $100,081

If for nothing else, the results highlight how maintenance fees can make up a rather significant discrepancy in purchase price. If you are interested, I've shared/published the full spreadsheet on Google Docs here (hopefully the link doesn't get stripped out):

http://spreadsheets.google.com/pub?key=pXOpS57eMoPEBlnpkjZ1dSw

Thanks,
Chris

LOL - I see you are a spreadsheet geek as well (welcome brother!) Nice job.

As for the buy now or wait for BLT - I'd say buy now! But that's just me. I am finding the that 11 month Home Resort priority thing could be a big deal, so I think the general concensus statement I heard - BUY WHERE YOU WANT TO STAY - makes a lot of sense.

Good luck!

 

[Brian Noble]

If for nothing else, the results highlight how maintenance fees can make up a rather significant discrepancy in purchase price.

I believe your analysis is flawed, as you are valuing all amounts in present-value dollars, despite applying inflationary adjustments to dues. For a real present-value comparison, you need to discount future-year payments by an (assumed) inflation rate.

At that point, you can get pretty much any answer you want by choosing different rates for inflation and dues adjustments.

 

[camack7827]

I believe your analysis is flawed, as you are valuing all amounts in present-value dollars, despite applying inflationary adjustments to dues. For a real present-value comparison, you need to discount future-year payments by an (assumed) inflation rate.

At that point, you can get pretty much any answer you want by choosing different rates for inflation and dues adjustments.

Thanks for the input Brian but I think maybe I wasn't clear on my intent. While I'm sure there are many economic factors I'm not calculating in, I'm looking for a simple comparison between resorts over time. My "total cost of ownership" should probably be prepended with "relative". While I want the numbers to be accurate relative to one another, that really is the extent of my interest in detail. Not caring about lost opportunity, or accounting for inflation or worried about net present value whatsoever.

What I am interested in is keeping my time investment in that spreadsheet to a minimum.

Going back to your original post about calculating opportunity cost (great info and great link by the way):

To be honest, for me, I don't see any room for figuring lost opportunity on a luxury purchase. If I were to approach every large (luxury) capital expenditure from the perspective of pure investment, there is no way I would make a purchase like DVC. Let's take it a step further, factor in the explosive increase in fuel/airfare costs, standard increases for park passes, meals, etc. The lost opportunity of the initial purchase + dues only tells half the story. While I think everyone should approach an investment and commitment as large as DVC with research and responsibility, DVC is an emotional purchase. Let's face it, the *smart* thing to do would be to bank the initial purchase price, then use the return on that investment to help subsidize the cost of your trips to Disney.

Bottom line, I *think* I got what I'm looking for in the relative costs. Personally, I've decided that DVC is right for myself and my family, the costs are within reason for me financially. The joy I'll get from planning trips, the memories I'll make with my kids (and Grandkids) while on those trips, is definitely worth the total cost plus 7%... not accounting for inflation.

 

[camack7827]

LOL - I see you are a spreadsheet geek as well (welcome brother!) Nice job.

As for the buy now or wait for BLT - I'd say buy now! But that's just me. I am finding the that 11 month Home Resort priority thing could be a big deal, so I think the general concensus statement I heard - BUY WHERE YOU WANT TO STAY - makes a lot of sense.

Good luck!

My two best friends are spreadsheets and bullet points. Thanks for the spreadsheet, it makes total sense and has been very helpful.

On the "buy where you want to stay" comment, I've also heard "Don't buy where you don't want to stay". I think that seems to make more sense to me now, but I'm afraid as membership climbs, the home resort booking window will become more and more important.

My biggest problem is, I really don't know where I want to stay!

Chris

 

[Mtnman44]

He's right. you can't adjust for inflation for only one half of the comparison.

You could also eliminate the projected dues inflation and just compare everything in todays dollars and costs.

I believe your analysis is flawed, as you are valuing all amounts in present-value dollars, despite applying inflationary adjustments to dues. For a real present-value comparison, you need to discount future-year payments by an (assumed) inflation rate.

At that point, you can get pretty much any answer you want by choosing different rates for inflation and dues adjustments.

 

[Brian Noble]

While I'm sure there are many economic factors I'm not calculating in, I'm looking for a simple comparison between resorts over time. My "total cost of ownership" should probably be prepended with "relative". While I want the numbers to be accurate relative to one another, that really is the extent of my interest in detail. Not caring about lost opportunity, or accounting for inflation or worried about net present value whatsoever.

That's fine, but your comparison is (potentially) wrong, because you are over-weighting dues. The above poster's idea of just adding N years of dues at current levels would be more accurate.

On the other hand, if you think I'm completely wrong, then I have a proposition for you. You loan me $10,000 today. I'll pay you back $1,000 a year for the next ten years. At the end of the ten years, we'll be square, right?

 

[camack7827]

That's fine, but your comparison is (potentially) wrong, because you are over-weighting dues. The above poster's idea of just adding N years of dues at current levels would be more accurate.

On the other hand, if you think I'm completely wrong, then I have a proposition for you. You loan me $10,000 today. I'll pay you back $1,000 a year for the next ten years. At the end of the ten years, we'll be square, right?

wow....

 

[TSMIII]

You may also want to consider opportunity cost on the purchase price.

I think Mary Waring's spreadsheet is a good basis for your own analysis.
http://www.mousesavers.com/dvc.html#opportunity

A good analysis, especially with the various scenarios for different lengths of stay, resorts, etc.

However, it should be noted that no consideration was made for capital gains or ordinary income taxes (dependent upon individual situation) on the investment which would effectively reduce overall ROI and likely produce a shorter life on the investment.

 

[drakethib]

Here is MHO.

If anyone thinks DVC will save money, I think they may have fallen off a limb.

Most people will end up making more trips and / or staying longer thus costing you more money. (It has for us any way).

I think of DVC as an expense. Period. I will not get a return on my money unless I rent (risky IMHO) and or possibly sell.The money I paid for DVC is gone. I don't expect to get any of it back.

What DVC has offered me and my family is some awesome vacations, good times relaxing in the room (I am not one of those all we do is sleep in the room people), and an excuse to make more trips.

If anyone really wants to get down and dirty with numbers I think we can all come up with our view or theory.

At the end of the day, it is just how and where you want to spend your vacations. You can either eat a can of sardines or King Crab, they both will fill your belly, it is just want you want out of a meal.

To me, it was money well spent.

 

[oakmanner]

Could not have said it better!


Dennis-

 

[camack7827]

Here is MHO.

If anyone thinks DVC will save money, I think they may have fallen off a limb.

Most people will end up making more trips and / or staying longer thus costing you more money. (It has for us any way).

I think of DVC as an expense. Period. I will not get a return on my money unless I rent (risky IMHO) and or possibly sell.The money I paid for DVC is gone. I don't expect to get any of it back.

What DVC has offered me and my family is some awesome vacations, good times relaxing in the room (I am not one of those all we do is sleep in the room people), and an excuse to make more trips.

If anyone really wants to get down and dirty with numbers I think we can all come up with our view or theory.

At the end of the day, it is just how and where you want to spend your vacations. You can either eat a can of sardines or King Crab, they both will fill your belly, it is just want you want out of a meal.

To me, it was money well spent.

Well said, very well said. As I stated in my original (and a couple of subsequent) post, I've decided emotionally that this is the right purchase for us, I've lined things up fiscally to the point where DVC can be a reality for us, and now that I've decided against BLT when it comes online, I'm looking to find out what the best bang for the buck is when comparing the various options on the resale market. Unfortunately, the thread has been hijacked/derailed into something terribly different.

I have what I want, came up with it myself, and believe it serves it's purpose. I felt it was decent info and tried to give a little something back by sharing. If you disagree, miss the point, etc... it certainly is well within your rights to say so. To be honest, the most helpful thing to do would be to edit the work that I've done and share it, but I realize that sometimes it's just easier to talk about it rather than fix it. For those that see the point, agree with my thinking, see what I'm trying to do here... high five.

Chris

 

[kikiq]

I think of DVC as an expense. Period. I will not get a return on my money unless I rent (risky IMHO) and or possibly sell.The money I paid for DVC is gone. I don't expect to get any of it back.

What DVC has offered me and my family is some awesome vacations, good times relaxing in the room (I am not one of those all we do is sleep in the room people), and an excuse to make more trips.

To me, it was money well spent.

Exactly our reasoning. As my DH says, it is also a guarantee for him to take a vacation every year, since we have already spent the money. And after our first trip home to SSR this summer, we have no regrets.

 

[Brian Noble]

wow...

Does that mean you think my loan proposition is fair, or is not fair? If you think it is fair, then by all means use your analysis to make your decision. If you think it isn't fair, then at least hear me out.

To be honest, the most helpful thing to do would be to edit the work that I've done and share it, but I realize that sometimes it's just easier to talk about it rather than fix it.

That's reasonable. Another poster already gave what I think is the easiest approach to correct the error: just use the current dues figure, multiplied by N years, rather than increase them by inflation. That way, you treat both the purchase price and the dues in present-value dollars.

Using this technique with your assumptions, the resorts from most to least expensive, are:

VBR: $16,613 + $1,520 * 35 = $69,813
AKV: $25,631 + $1,247 * 35 = $69,276
BWV: $22,372 + $1,310 * 35 = $68,222
BCV: $24,065 + $1,250 * 35 = $67,815
VWL: $22,343 + $1,277 * 35 = $67,038
HHI: $18,784 + $1,345 * 35 = $65,859
OKW: $20,210 + $1,188 * 35 = $61,790
SSR: $21,676 + $1,112 * 35 = $60,596

That's a different order than you come up with, which was:
VBR, AKV, BWV, HHI, BCV, VWL, OKW, SSR

Now, you could argue that dues might increase faster (or slower) than inflation, and so dues should play a larger (or smaller) role in the total cost of ownership. And, I'd be fine with that. You could also argue that you might expect a higher (or lower) rate of return if you'd used the purchase price for something else. Again, I'm okay with that. But if you treat the purchase price only in present-year dollars, and the dues in then-current dollars, you are making a mistake.