Trying to figure Out Room Costs

[WDWNY]

Out of curiosity I wanted to see how much our rooms are costing us and want to compare them to other rooms at WDW.

Am I missing a cost?

Annual Due X # of points used for stay
+
Initial buy in cost / (number of annual points X number of years left on contract from the time you purchased) to get the cost per point from initial buy in X # of points used for stay

One of my trips is coming out to around $140 a night which seems low (not complaining)

 

[DebbieB]

Out of curiosity I wanted to see how much our rooms are costing us and want to compare them to other rooms at WDW.

Am I missing a cost?

Annual Due X # of points used for stay
+
Initial buy in cost / (number of annual points X number of years left on contract from the time you purchased) to get the cost per point from initial buy in X # of points used for stay

One of my trips is coming out to around $140 a night which seems low (not complaining)

Sounds right. I've figured about a 65% discount on my Boardwalk studios.

 

[mustinjourney]

only problem with your analysis (and this is a big problem) is that you are not taking into account the time value of money. In short, you are valuing the initial payment evenly over the course of the contract...which is a serious flaw. In order to do a proper calculation, you have to factor in a discount factor and essentially amortize out your initial payment over the course of the contract. So that BWV contract at $100 a point for the next 25 years is not $4.00 a year -- but more like $8 this year, $7 next year, $6 the third year and after a few years, it drops to nothing...since in 25 years, $4 dollars is practically nothing in today's terms.

https://en.wikipedia.org/wiki/Time_value_of_money

https://www.khanacademy.org/economi...-tutorial/present-value/v/time-value-of-money

 

[miTnosnhoJ]

I agree with mustinjourney that the time value of money is important.

If you have a good business calculator, you can crunch the numbers.

However, a good, quick and dirty way to crunch the numbers is to assume that 90% of the value occurs in the 1st 10 years, then 10% of the value occurs in the remaining years. (Ask yourself, how much am I willing to spend today to get a hotel room in 50 years?)

So for example, buy in at $50,000. 90% is $45,000. Divide by 10 = $4500 per year. Then add Maintenance Fees. Then divide by # of points.

In my case, the cost per point came in at about 14.75. Then add MF of $5.89 per point to get $20.65 per point. (VGF). Resale cost per point will be lower. (In my case $18.90/point)

So five nights in a studio at VGF is costing me $2000 or $400 per night. This is a nice discount on the hotel rooms at VGF, although certain times of year and for conventions, rates may be lower than that in the hotel. Six nights in a 2 BR costs me $1350 per night. A 2 BR Suite in the hotel would cost me from $2500 to $3500 rack rate, depending on time of year. But I could rent it, if I could find an owner, for $15.00 per point (or $985/night)

 

[kniquy]

90% of the value occurs in the 1st 10 years

I don't get why would you calculate it like this? It is not like a vehicle which would obviously depreciate significantly in the first few years of ownership -- this particular time share holds pretty good value.

In your example you are putting most of your buy in cost in the first 10 years -- what if, in your example, that contract was sold after 15 years of ownership for $35,000 (a pure estimate ) so for those 15 years your initial buy in of 50,000 - 35,000 = 15,000 - so your cost per year to own would have been $1000 per year plus whatever your yearly MF cost were. Your example of front loading the value doesn't make much sense. There is the opportunity to recoup some of your initial buy in if sold down the road - so how could you lose or use up 90% of your value in the first 10 years -and why 10 years?

 

[mustinjourney]

I don't get why would you calculate it like this? It is not like a vehicle which would obviously depreciate significantly in the first few years of ownership -- this particular time share holds pretty good value.

In your example you are putting most of your buy in cost in the first 10 years -- what if, in your example, that contract was sold after 15 years of ownership for $35,000 (a pure estimate ) so for those 15 years your initial buy in of 50,000 - 35,000 = 15,000 - so your cost per year to own would have been $1000 per year plus whatever your yearly MF cost were. Your example of front loading the value doesn't make much sense. There is the opportunity to recoup some of your initial buy in if sold down the road - so how could you lose or use up 90% of your value in the first 10 years -and why 10 years?

His use of "value" doesn't refer to the intrinsic worth of the asset. He's purely talking about value in terms of the value of the money today vs. 15 years from now. The 90% was just a shorthand way to easily calculate the value of each point each year for the first 10 years. Not sure what he was using as his internal rate of return, and I'm too lazy to calculate it, but the premise is essentially that due to factors such as opportunity costs and inflation, a dollar spent today has much more purchasing power than the same dollar 15 years from now.

 

[chalee94]

I don't get why would you calculate it like this? It is not like a vehicle which would obviously depreciate significantly in the first few years of ownership -- this particular time share holds pretty good value.

We’re talking about the time value of money – it’s not an issue of depreciation.

If you could pay for a $50,000 DVC contract either 1) with $50k upfront or 2) with $1,000 per year over 50 years, the concept of the time value of money says you will choose option (2) every single time. It just hurts a lot more to give up $50,000 all at once today in exchange for value in the future. And you want to start getting that value back sooner rather than later – so while 10 years is a ballpark number that would vary based on personal expectations of risk and returns, it’s driving at the notion that payback in the “far” future introduces a lot of uncertainty and doesn’t add a lot of value for most folks – so I wouldn’t be willing to give up $50,000 if all you are offering is that same $50,000 returned back to me in 15 or 20 years…I would only give up a small fraction of that amount for that expected return in the future.

So calculating the value of DVC as if you were paying $1,000 per year for 50 years instead of $50,000 right now is a falsehood. It simplifies the math but it’s easy to see (by considering whether you really think that $50k now = $1k per year over 50 years) that they are not at all equivalent.

But yes, if you expected to sell DVC in 10 or 15 years and wanted to calculate your cost based on your estimated resale value at that point, that would change your calculation a bit, I agree. But if you are planning to hold to expiration, then it is still valid to front load most of the costs into the first 10-12 years as suggested… (But at the same time, remember that past performance is no guarantee when it comes to DVC holding its resale value.)

 

[supersnoop]

You really have to calculate the initial purchase like an annuity. You're paying a lump sum up front, and receiving an inflation-adjusted benefit each year in return.

In my opinion, you can just multiply the dues out over time. You shouldn't have to figure the time value of those, since the time value should be based on inflation, and the dues should increase at the same rate as inflation. Or you can use some other rate. As long as the rate of return and the rate of growth are the same, the time value of money is irrelevant.

 

[miTnosnhoJ]

I don't get why would you calculate it like this? It is not like a vehicle which would obviously depreciate significantly in the first few years of ownership -- this particular time share holds pretty good value.

In your example you are putting most of your buy in cost in the first 10 years -- what if, in your example, that contract was sold after 15 years of ownership for $35,000 (a pure estimate ) so for those 15 years your initial buy in of 50,000 - 35,000 = 15,000 - so your cost per year to own would have been $1000 per year plus whatever your yearly MF cost were. Your example of front loading the value doesn't make much sense. There is the opportunity to recoup some of your initial buy in if sold down the road - so how could you lose or use up 90% of your value in the first 10 years -and why 10 years?

In 10 years, there is still value, but the remaining value is (once again) concentrated in the next 10 years.

My analysis assumes you would keep the timeshare for the lifetime of the resort, but this analysis would still work if you were planning to sell.
Lets do a thought experiment. Let's go in 50-50 on 250 points at VGF. The cost is (say) $140 per point resale. So the cost is $35,000. So we each pay half = $17500.
I get the 1st 10 years of usage, and you get the next 10 years of usage. At year 20, we will sell for $35,000 and split the proceeds. I will even pay the MF for the 1st 10 years, and you can pay for the next 10 years.
Would you take that deal? Most people would not, because of the time value of money. But if the out years are just as valuable as the current years, my offer makes sense.

 

[mustinjourney]

In 10 years, there is still value, but the remaining value is (once again) concentrated in the next 10 years.

My analysis assumes you would keep the timeshare for the lifetime of the resort, but this analysis would still work if you were planning to sell.
Lets do a thought experiment. Let's go in 50-50 on 250 points at VGF. The cost is (say) $140 per point resale. So the cost is $35,000. So we each pay half = $17500.
I get the 1st 10 years of usage, and you get the next 10 years of usage. At year 20, we will sell for $35,000 and split the proceeds. I will even pay the MF for the 1st 10 years, and you can pay for the next 10 years.
Would you take that deal? Most people would not, because of the time value of money. But if the out years are just as valuable as the current years, my offer makes sense.

and if someone is amenable to taking that deal -- let me know and we can buy some more points....with me taking the first 10 years of use of course.

 

[DebbieB]

All I know is I had 4 nights at Poly in a lake view studio and 7 nights in a boardwalk view studio this year, 207 points total. Paid $1,545 dues for 250 BWV points (banked rest). No matter how you look at it, great deal.

 

[Dean]

I don't get why would you calculate it like this? It is not like a vehicle which would obviously depreciate significantly in the first few years of ownership -- this particular time share holds pretty good value.

In your example you are putting most of your buy in cost in the first 10 years -- what if, in your example, that contract was sold after 15 years of ownership for $35,000 (a pure estimate ) so for those 15 years your initial buy in of 50,000 - 35,000 = 15,000 - so your cost per year to own would have been $1000 per year plus whatever your yearly MF cost were. Your example of front loading the value doesn't make much sense. There is the opportunity to recoup some of your initial buy in if sold down the road - so how could you lose or use up 90% of your value in the first 10 years -and why 10 years?

I look at it like a high risk investment and use return of principle over the first 10 years. We really don't know what the long term outcome is going to be and there is quite a bit of risk with any timeshare including DVC, anything else is best case scenario IMO. It may truly be a liability rather than an asset at some point. I also look at the TVM/Opportunity costs but realize that PART of the money short term would be used up for the vacation anyway. I use 4.5% on the money paid up front and that comes from assuming half the up front costs would be used up anyway within 5 years and half would be over 5 years. I then assume MM rates on the short term money and 8% after taxes on the long term money.

 

[kniquy]

high risk investment and use return of principle over the first 10 years

I also look at the TVM/Opportunity costs but realize that PART of the money short term would be used up for the vacation anyway

The way i look at our purchase of DVC is that the money is gone for the purpose of vacations -- there is no other opportunity or use of that money for other investments for possible future gain. It is like grocery shopping you buy your groceries, the money is gone and then you use your items purchased. I can't do anything else with the $200 that i just spent on those groceries. That money was purposed for groceries so just like DVC our money bought our vacations for the next 40 years --- our investment on that purchase will not be a monetary gain, but a gain of family time and memories with our kids and hopefully our grand-kids down the road. I think some people look at money for only further monetary gain -- when money can be used for items we use, need or just for enjoyment. I guess it is getting the right balance of saving for the future and having money for pleasure.

Would i rather sit at home and see my 9K gain or lose in stocks or other investments or would i rather use that toward family enjoyment -- I would choose the latter every time. I think when you try and take the spin of over analyzing what you could have done or the potential for that DVC money you lose sight of why you purchase it.

 

[Dean]

The way i look at our purchase of DVC is that the money is gone for the purpose of vacations -- there is no other opportunity or use of that money for other investments for possible future gain. It is like grocery shopping you buy your groceries, the money is gone and then you use your items purchased. I can't do anything else with the $200 that i just spent on those groceries. That money was purposed for groceries so just like DVC our money bought our vacations for the next 40 years --- our investment on that purchase will not be a monetary gain, but a gain of family time and memories with our kids and hopefully our grand-kids down the road. I think some people look at money for only further monetary gain -- when money can be used for items we use, need or just for enjoyment. I guess it is getting the right balance of saving for the future and having money for pleasure.

Would i rather sit at home and see my 9K gain or lose in stocks or other investments or would i rather use that toward family enjoyment -- I would choose the latter every time. I think when you try and take the spin of over analyzing what you could have done or the potential for that DVC money you lose sight of why you purchase it.

But those extremes are not the only choices and likely not the best choices IMO. Here's an analogy. Say you have the opportunity to book a Disney suite for half the current price plus 10 years worth of inflation but the stay is 10 years in the future and must be paid today. That's effectively what we're doing as DVC members. There are a lot of other choices besides paying rack rates for Disney or not vacationing at all. A timeshare is a long term commitment, one that could come back to bite anyone who participates. In a word, it represents risk.

 

[Judique]

I've stayed in all types of DVC rooms but primarily studios.

When I bought in, the prevailing comments were that after 5-6 years you were seeing an actual discount on your lodging from your initial lay out.

Based on this thinking since I've been an owner over 16 years, some of my studios have cost me as little as $30 a night - 6 point studios at Hilton Head in January - to $80 a night for my upcoming November 2017 Food and Wine stay at Boardwalk Villas. (That's an approximate average on the dues for the 78 points)

The biggest 'inflation' I see is when I want to stay at VGF or BLT and I have to pay double the points for the same size accommodation because the rooms are now more expensive to buy and build. Fortunately I still LOVE to stay where I bought - BWV - but because it is so popular I often take a room elsewhere when I don't book right at 11 months - and I have to then suffer the effect inflation has had on building the newer resorts.

Something clicked and I remembered to book my room this morning! So, my points will go further this year!

And oh yes, I almost forgot the little item that I at present can sell and get a small ROI on my original BWV buy in since my points were purchased at $56.75. But I don't see any point in ditching DVC at the moment.

 

[DebbieB]

I've stayed in all types of DVC rooms but primarily studios.

When I bought in, the prevailing comments were that after 5-6 years you were seeing an actual discount on your lodging from your initial lay out.

Based on this thinking since I've been an owner over 16 years, some of my studios have cost me as little as $30 a night - 6 point studios at Hilton Head in January - to $80 a night for my upcoming November 2017 Food and Wine stay at Boardwalk Villas. (That's an approximate average on the dues for the 78 points)

The biggest 'inflation' I see is when I want to stay at VGF or BLT and I have to pay double the points for the same size accommodation because the rooms are now more expensive to buy and build. Fortunately I still LOVE to stay where I bought - BWV - but because it is so popular I often take a room elsewhere when I don't book right at 11 months - and I have to then suffer the effect inflation has had on building the newer resorts.

Something clicked and I remembered to book my room this morning! So, my points will go further this year!

And oh yes, I almost forgot the little item that I at present can sell and get a small ROI on my original BWV buy in since my points were purchased at $56.75. But I don't see any point in ditching DVC at the moment.

I agree. I always said the only place that would make we want to give up BWV would be GF. But when the time came, it made no sense. I bought BWV at $65, VGF was more than double plus the points per night were double. I did grab 4 nights in a studio when it first opened. Nice, but I'll keep my BWV.

 

[Judique]

I agree. I always said the only place that would make we want to give up BWV would be GF. But when the time came, it made no sense. I bought BWV at $65, VGF was more than double plus the points per night were double. I did grab 4 nights in a studio when it first opened. Nice, but I'll keep my BWV.

I've now tried all the Monorail DVC's and will be returning to Poly and BLT in early March. Had to cancel January at BWV because I've got another granddaughter on the way. Of the three BLT has the most appeal for me because I can walk to MK. I guess I value proximity to the parks quite highly. Of course couldn't even touch that week in a standard studio at BWV - I think I saw 1 night available and that was it.

 

[DebbieB]

I've now tried all the Monorail DVC's and will be returning to Poly and BLT in early March. Had to cancel January at BWV because I've got another granddaughter on the way. Of the three BLT has the most appeal for me because I can walk to MK. I guess I value proximity to the parks quite highly. Of course couldn't even touch that week in a standard studio at BWV - I think I saw 1 night available and that was it.

That's the beauty of DVC. I've stayed at all the WDW DVC except SSR, plus Grand California with my BWV points. I stayed at the Poly in 1996 and didn't care for it. I wanted to try the DVC so we stayed there in May and I really liked it! The location is close to the TTC so it made it easy to get to MK and Epcot. Enjoyed Captain Cooks and Trader Sams. I can't say there's a DVC that I didn't like.

 

[Anal Annie]

We bought 250 points at SSR 10 years ago this month - although not as much of a steal as some of your older BWV points we "only" paid $86 / point. Compared to the current price per point it was a real bargain. We've had some pretty darned fantastic trips over the past 10 years. We could not afford to buy in now at todays prices. We have tried all of the DVC resorts now except VGF (it's just too point intensive for the amount of points we own). We utilize studios and usually have 2 or 3 trips per year - another reason we just can't "afford" VGF. I considered doing a split stay there next summer with 5 n at SSR & 3 n there but those 3 nights alone would cost enough more that it would knock nights off of being able to do what we want on our next 2 trips so we'll postpone it for another year. We'll stay there eventually but we can't afford to do it in "magic" season. It will have to be some time when we go during "choice" season or something. I figure the value of our VGC and Aulani trip alone was worth a pretty good chunk of our purchase price. At this point 10 years in we've more than recovered our initial purchase price of $21,500 and I think our annual dues at SSR are reasonable. My math is pretty simple on it and works for me - no need to get out the amortization schedules. $21,500 divided by 10 years is $2,150 / year. Add to that our dues of approx. $1,300 / year (in round numbers) and we've spent $3,450 / year on vacations. If we've managed to scrape 19-21 days / year on average out of our points we've averaged about $172.50 per night on our accomodations. I think that's a pretty good deal for them considering that some have been pretty nice (Poly, Aulani, VGC).

 

[CarolMN]

That's the beauty of DVC. I've stayed at all the WDW DVC except SSR, plus Grand California with my BWV points. I stayed at the Poly in 1996 and didn't care for it. I wanted to try the DVC so we stayed there in May and I really liked it! The location is close to the TTC so it made it easy to get to MK and Epcot. Enjoyed Captain Cooks and Trader Sams. I can't say there's a DVC that I didn't like.

Agree - we haven't stayed at any DVC resort that we didn't like and I liked the PVB a lot, too. However, it's very difficult to pay those nightly costs, when we can get a 1 bedroom SV at the BWV for about the same cost. Glad I experienced PVB, BLT & VB, but will probably not stay at any of them again due to the nightly point cost, which exceeds the BWV's by quite a bit. Still love BWV the best and will continue to stay there pretty much exclusively.