Trying to find the value in DVC

[canabrits2]

I had a friend who is a CPA and an awesome numbers guy over the other night with his wife and kids. He and his family are huge Disney fans and have gone down the last 3-4 years. I told him about DVC, he had heard of it, and seen it, but never really looked into it.

So after dinner, the kids were playing video games and the wives were in the kitchen chatting we sat down with my laptop and proceeded to crunch numbers in EXCEL based on annual dues, my initial investment and the current cost of a standard room at the Beach Club Resort, because that is where we have points and that is where we will always stay. We assumed a 4.2% annual increase in dues and a 3% annual increase in room rates.

We also assumed a 17 year window...don't know why, just didn't take it out to 2/1/2042. You have to assume you are going to go every year.

This is what we got for lodging only:
Total 17 year NPV, net present value, to spend 1 week at the beach club
$60,423.48 versus an NPV of $29979.12 to initially buy and pay dues for DVC.

NPV is the present value in today's dollar of what you would have in your pocket if you chose not to do the option. SO in this case you would need twice as much in hand to book with cash versus points.

Also keep in mind: IT IS NOT AN INVESTMENT, IT IS PREPAID VACATION. DVC offers an economical way to stay at DELUXE resorts. The numbers do not make sense if you are comparing DVC to Value resorts.

I hope this helps. Give me some time, I will modify the spreadsheet for a 2 bedroom and post results if you'd like. PM me.

YOMICKEY

OMG. That is the best explaination and believable breakdown I've seen and I'm new to researching DVC as a possible option. I'm an Excel person so thank you. Those savings based on the standard room at Beach Club example are awesome. Even if you assumed going every second year, it's still a savings. What are the current annual dues??

 

[YoMickey]

Thanks. I just paid a little over $1000 for 200 points. I think annual dues are $5.15 per year for BCV.

I had done it long hand 5 years ago and new a little about EXCEL prior to discovering DVC but he really was able to put it into perspective for me.

Things to keep in mind though.

You have to compare the same week using the rack rate. If you compare Premier Season using DVC points to Adventure Season with Free dining or some kind of bounce back promo it becomes difficult to consider all of the scenarios. There may be times when it doesn't make sense but they are few and far between.

Mentioning this usually dooms the thread but sometimes people finance their points at an unfavorable rate. We did not consider paying interest on DVC payments. This is assuming you are paying Cash out of pocket for your initial investment.

....and another thing....I find the points economical for DVC resorts only. I've priced out Adventures by Disney and also using points for a Disney Cruise. I don't see value yet and would welcome any similar calculations for that type of point use. Have you priced a Disney cruise? $$$ OUCH!

I wish you well in your decision. We're actually looking to add on 50-100 pts in the next year since the kids are getting older.

and here is a link from a previous poster, I haven't tried it yet. maybe today, I'll see how close they are.
http://www.mouseplanet.com/8739/A_Di...on_Club_Primer

 

[Dean]

Thanks. I just paid a little over $1000 for 200 points. I think annual dues are $5.15 per year for BCV.

I had done it long hand 5 years ago and new a little about EXCEL prior to discovering DVC but he really was able to put it into perspective for me.

Things to keep in mind though.

You have to compare the same week using the rack rate. If you compare Premier Season using DVC points to Adventure Season with Free dining or some kind of bounce back promo it becomes difficult to consider all of the scenarios. There may be times when it doesn't make sense but they are few and far between.

Mentioning this usually dooms the thread but sometimes people finance their points at an unfavorable rate. We did not consider paying interest on DVC payments. This is assuming you are paying Cash out of pocket for your initial investment.

....and another thing....I find the points economical for DVC resorts only. I've priced out Adventures by Disney and also using points for a Disney Cruise. I don't see value yet and would welcome any similar calculations for that type of point use. Have you priced a Disney cruise? $$$ OUCH!

I wish you well in your decision. We're actually looking to add on 50-100 pts in the next year since the kids are getting older.

and here is a link from a previous poster, I haven't tried it yet. maybe today, I'll see how close they are.
http://www.mouseplanet.com/8739/A_Di...on_Club_Primer

IMO, using rack rates (DVC or DCL) is a comparison that significantly over estimates the actual cost and/or value of a given option. It's an interesting exercise but it's essentially never reality for a cruise and it's rarely reality for a DVC stay. It's essentially like using MSRP on a vehicle purchase. Even with discounted DVC numbers one significant question is whether one would pay that much, I think for most people the answer is no. There is one member on DIS that routinely was paying for suites prior to DVC, for them it is a more fair comparison.

 

[YoMickey]

Yes there are going to be discounts and promos and wild stories of "I got this suite for $50 per night" but for the most time, we travel when the kids are off of school, Easter, Thanksgiving, Christmas. I think they call those "blackout dates" and they get pretty darn close to rack rates during the Premier season. Plus I see alot fo people using moderate prices instead of deluxe prices.

It's nearly impossible to pin down the price so I used the rack rate for comparison. Throw me some numbers of what you think a 1 bedroom villa will rent for copared to getting 2 attatched rooms at the Beach club and I'll re-run the numbers or we can go studio to 1 bedroom.

Last fall we were out of points and stayed for $325 per night during the free dining. I figure at $325 per night plus 12% tax minus the dining savings of around 750 for the week it is better to pay cash.

Playing with my formula's I get it to balance out at $290 per night plus tax to get a room rate to equal buying points 5 years ago at $90/point. Throw in free dining or some bounce back disount and DVC doesn't make sense. Keep in mind free dining and bounce back promos are blacked out when we want to travel.

I have a headache now. Too mnay numbers for a Sunday afternoon.

 

[Dean]

Yes there are going to be discounts and promos and wild stories of "I got this suite for $50 per night" but for the most time, we travel when the kids are off of school, Easter, Thanksgiving, Christmas. I think they call those "blackout dates" and they get pretty darn close to rack rates during the Premier season. Plus I see alot fo people using moderate prices instead of deluxe prices.

It's nearly impossible to pin down the price so I used the rack rate for comparison. Throw me some numbers of what you think a 1 bedroom villa will rent for copared to getting 2 attatched rooms at the Beach club and I'll re-run the numbers or we can go studio to 1 bedroom.

Last fall we were out of points and stayed for $325 per night during the free dining. I figure at $325 per night plus 12% tax minus the dining savings of around 750 for the week it is better to pay cash.

Playing with my formula's I get it to balance out at $290 per night plus tax to get a room rate to equal buying points 5 years ago at $90/point. Throw in free dining or some bounce back disount and DVC doesn't make sense. Keep in mind free dining and bounce back promos are blacked out when we want to travel.

I have a headache now. Too mnay numbers for a Sunday afternoon.

There are extreme assumptions on both sides that are unrealistic. IMO, using rack rates as the assumption is just as unreasonable as using $50 a night for studio. Some years there likely won't be any discounts and others they may be 40% and include free dining. I think there is a reasonable happy medium from a numbers standpoint. Even then it assumes you'd pay cash for DVC or an on property suite from a cash cost standpoint. That is actually the more out there assumption for many people than the cost of the DVC unit itself. You can use what ever numbers you want, my point is that if you use rack rates for DVC you are significantly over estimating the actual costs and therefore any potential savings. Personally I think that an assumption of a 20% discount is about the highest reasonable number to use, 25% is likely even better. Using rack rates for the cruise (since it was previously included in the comparison) would over estimate costs by somewhere in the neighborhood of a third over with some variation depending on cabin category. I think your dining savings are high for most families as well but that will vary more per person than the rooms costs will.

The other flaw I've seen is people try to use low inflation for dues and high inflation for rooms.

 

[YoMickey]

Dean

With all due respect, I hate to disagree with a guy with over 22 thousand posts, I'm sure you have a huge amount of information to share and respect your view but I gotta know how you think comparing rack rate to points during spring break is unreasonable. Thanksgiving, Christmas, and New Year's would be the same thing.

I just checked, April 2, 2010 to April 9, 2010 and a BCV Studio is $470 per night and last I checked we're still in a recession, and there's no discount I'm aware of. Where do I find the 20-25% discount? It'd still be over $350/nt., that's if we can find a discount. IT'S 180 points for a studio. At 350 cash versus points it still makes sense. In fact it makes sense down to 290/nt. After that you are getting close to a toss up.

As for being high on the dining, 3 people over the age of 10 at $40 =120, plus 1 kid at $12 = $132 x 7 or $924 It added up to more than I thought. What am I missing here?

I'll sell 200 BCV points tomorrow if you show me that your more conservative numbers don't work. Do you own DVC points?

 

[Dean]

Dean

With all due respect, I hate to disagree with a guy with over 22 thousand posts, I'm sure you have a huge amount of information to share and respect your view but I gotta know how you think comparing rack rate to points during spring break is unreasonable. Thanksgiving, Christmas, and New Year's would be the same thing.

I just checked, April 2, 2010 to April 9, 2010 and a BCV Studio is $470 per night and last I checked we're still in a recession, and there's no discount I'm aware of. Where do I find the 20-25% discount? It'd still be over $350/nt., that's if we can find a discount. IT'S 180 points for a studio. At 350 cash versus points it still makes sense. In fact it makes sense down to 290/nt. After that you are getting close to a toss up.

As for being high on the dining, 3 people over the age of 10 at $40 =120, plus 1 kid at $12 = $132 x 7 or $924 It added up to more than I thought. What am I missing here?

I'll sell 200 BCV points tomorrow if you show me that your more conservative numbers don't work. Do you own DVC points?

There will always be exceptions but I doubt all of one's trips will be during times there are no discounts though if you want to use this approach you'd have to use the points tables for premier. Some years there will be discounts, others there will not. I don't think it's hard to find a discount in that range many years but in part I was accounting for the fact that not all trips are likely to be in DVC units, that is one of the problems of the comparison IMO.

Here is info from Mousesavers. It's likely that Easter week is excluded.

January-August Savings of up to 45% Off

Stay dates: 1/1/10 to 6/3/10. Get a 25%-45% discount off regular "Rack" rates. Percent off varies by resort type and length of stay. Use code QNY. Some dates will be blocked out. Rates not available for all dates and resorts.

Save 25% at Disney Value Resorts when you stay 1-4 nights; save 30% when you stay 5 nights or longer
Save 30% at Disney Moderate Resorts when you stay 1-4 nights; save 35% when you stay 5 nights or longer
Save 35% at Disney Deluxe Resorts when you stay 1-4 nights; save 40% when you stay 5 nights or longer
Save 40% at Disney Deluxe Villa Resorts when you stay 1-4 nights; save 45% when you stay 5 nights or longer
Stay dates: 6/4/10-8/14/10. Get a 25%-40% discount off regular "Rack" rates. Percent off varies by resort type. Use code QNY. Some dates will be blocked out. Rates not available for all dates and resorts.

Save 25% at Disney Value Resorts when you stay 1 or more nights
Save 30% at Disney Moderate Resorts when you stay 1 or more nights
Save 35% at Disney Deluxe Resorts when you stay 1 or more nights
Save 40% at Disney Deluxe Villa Resorts when you stay 1 or more nights

And I realize that not all years will have such large discounts, that's why I used 20-25% which I feel is a reasonable average but if you wanted to use say 10% I could see that choice. On dining, I think it's more variable from family to family but there is a cost to dining in that must be considered as well. As for owning, I've owned since 1994 and as many as 885 points though we own less now. Actually most of my stays at DVC resorts the last few years costs me between $300-450 for the week, not per day, all in 1 or 2 BR units. Over the last year we were in a 1 BR last May at OKW, a 2 BR in Oct at OKW and two 1 BR (one Savannah and one standard) at AKV actually over Thanksgiving.

Using rack rate is the best case scenario for value and I feel it is unrealistic to think this would always be your cost. The question then obviously becomes what to use as comparison. Actually IMO using DVC rates at all is a poor gauge of savings unless you would have paid cash for DVC rooms or suites if you didn't own DVC. Using any adjusted DVC rate is more of a gauge of value than true savings. In my book savings and value are different but both worth looking at when making such judgements.

 

[staceymay00]

It really boils down to how much a person is truly willing to spend paying cash instead of owning DVC. Some people really will pay $400-$500 a night, or even more, to stay at a deluxe WDW resort. I don't fall into that category, at least not right now. I'm willing to go up to about $300 a night to stay at a deluxe on site resort and that requires a good discount.

We are staying at the Polynesian the first week in April for $286 a night plus tax. Discounts for that week were originally blacked out but bookings must be down so they recently added those dates. I also could have gotten a standard room at BC, which I'd prefer over a studio, for even a little less. We were not originally planning to stay at a deluxe resort due to no discounts, but we switched when we got the discount.

Even when I consider a discounted deluxe standard room rate I still find value in buying DVC. We won't break even as fast as if I had assumed rack rate, but it will save us money over time, plus I know in the future we won't see big discounts at the times we typically travel and we will be staying in a 1BR instead of a standard room. We could break even much more quickly if I assumed rack rate but we would not be paying that. I have a friend who had been paying rack rate year after year at a deluxe during Christmas and decided to buy DVC. For them assuming rack rates they were actually paying to determine their break even point makes sense.

DVC can still be a good value on paper even if you don't assume rack rate, it's just not breaking even after 3 or 4 vacations (I think that is what DVC advertises if my memory is correct). At least that is what my spreadsheets told me, so we went ahead and made an offer on a resale contract.

 

[DVCGeek]

Instead of calculating for estimated break even, I like to look at the "cost" to me for each individual stay, then I can compare it against whatever rates I choose. Here are my calculated costs {explanation below} for stays I or my relatives have either already taken or at least have booked using my DVC membership:

10/23/2009 - VWL studio for 3 nights [58 points]: $91.15 nightly

11/29/2009 - BLT lake view studio for 6 nights [98 points]: $90.15 nightly

1/30/2010 - BLT Magic Kingdom view studio for 6 nights [127 points]: $123.38 nightly

2/1/2010 - BLT standard view studio for 3 nights [45 points] (my parents joined us): $91.86 nightly

2/2/2010 - another BLT standard view studio for 3 nights [45 points] (my wife's parents joined the group!): $91.61 nightly

2/8/2010 - VWL studio for 3 nights [42 points] (Yes, my parents actually did go back less than a week later!): $67.56 nightly {No 2009 dues on that contract's points}

------

6/8/2010 - AKV Jambo std. view studio for 3 nights [33 points] (my parents again): $53.08 nightly {No 2009 dues on that contract's points}

10/16/2010 - VGC studio for 5 nights [97 points]: $115.55 nightly

12/6/2010 - AKV Jambo value view studio for 3 nights [27 points] (my parent's 4th trip to WDW in calendar 2010; I'm jealous...): $62.22 nightly

===============

So based on our actual out the door effective nightly rates (apples to apples comparison would require you to add tax to your cash price and also internet if you use it {DW & I do; our parents did NOT}, but you could deduct extra housekeeping if that matters to you {none of us feel the need for daily service}), I think we are saving a LOT of money using DVC than we would have with cash at anything comparable on property.

To calculate those values, I divided my purchase cost (including interest on my BLT contract; paid cash for the others) by the number of points and by the number of use years and then added in dues. That gives me my cost per point for a given use year.

Using those costs per point and multiplying by the number of points for a ressie, and then dividing by the number of nights, I get these effective rates above.

 

[DISNEY FIX]

Hey DVCGeek is there any chance you could change how you have your signatures laid out. It is a real pain to read you wonderful posts the way it is currently set up running all the way across the page.

 

[staceymay00]

Instead of calculating for estimated break even, I like to look at the "cost" to me for each individual stay, then I can compare it against whatever rates I choose. Here are my calculated costs {explanation below} for stays I or my relatives have either already taken or at least have booked using my DVC membership:

That looks like another good way to determine the cost of DVC accommodations.

The initial purchase price of the points we are hoping will pass ROFR is $2.24 per point when spread over 32 years. MFs this year are $4.88 per point. For dates we typically travel a 1BR at OKW is going to average about 30 points a night, so our cost for a trip this year is about $214 a night. More than an off site condo, but less expensive than a standard WDW deluxe room even with a good discount.

 

[sssteele]

Usually my wife and I travel to WDW alone, and stay DVC in a studio. A 1 BR villa is substantially more points and sleeps 4-5, depending on the DVC resort. The two bedroom, sleeping up to 8 people is not the same point total as a studio and 1BR combined - it's a great deal by comparison. Too bad I didn't have more than one child. We have rented two studios on occasion when our son, daughter-in-law, and grandchilren have accompanied us, and once had a 2BR lock-off at BWV, but the washer/dryer, kitchen, and jacuzzi tub just don't seem to be worth the extra points. If you plan to travel to WDW every year, I'd say DVC is worth serious consideration.

 

[LaurenT]

I find it hard to believe it would take you 15-20yrs to break even on 300pts.

300pts x $110per point = $33,000 (resale you could get 500pts for that same $33k or 300pts for 20k)
/15yrs or /20yrs
= $2200 or $1650 7nights per year on room only

You are really only paying $1650-2200 for 7nights at the Poly every single year? That's a 30-40% discount off rack rate every year.

DVC is certainly for large families. We are a family of 6 and get the 2bedrooms each time. I'm not willing to pay CRO prices for the villas and I'm not staying in suites esp not those family suites at the All Stars. Being piled in top of each other is not my idea of a vacation! LOL

I also wanted to add that even if you did find yourself not being able to go one year and had no use for banking the points, DVC, as opposed to other timeshares, is really very easy to rent out..you could even have the sponsor, Dave, here do it for you and still get $10 per point. So, that yuear that you couldn't go, your 300 points would get you $3,000 - way more than your dues.

 

[CoachG]

For a family of 6 used to staying in deluxe resorts, it's hard to imagine DVC not being a good fit financially if you're go at least every other year if used for DVC resorts only. In the past I would have qualified as not long weekends but the recent changes make that a non issue at present. While I would suggest that most people over estimate when their break even point is, I think 15-20 years is likely a bit long if you make reasonable assumptions. You should be between 10 and 15 years for most situations, maybe less if you go with a cheaper option. You might push 15 or more years if you buy retail though. You might buy a smaller contract and "try it out" then hold out for a possible Poly option for later.

Thanks everyone for the replies - seems we brought home an unwanted souvenir from our trip (the whole family has been sick) so I'm just now catching up with the thread.

We're not a family of 6 yet - right now its 5 and our fourth baby is due later this year and the last two years we have stayed in just one room at the Poly and both times on the buy 4 get 3 free deal. Had it not been for that deal I doubt we would have ever stayed there. Staying there of course made us fall in love with the resort (especially being able to use the monorail) but I know that paying full rack rate for one room there would be pushing it let alone trying to pay for two.

With the fourth child we could still stay in one room at the Poly since those rooms sleep 5 + 1 infant but I'm not assuming that those kinds of deals would be available in the future so when I looked at the numbers I was assuming two rooms at a moderate. Granted two rooms at a mod isn't the same space as a 2BR villa but we don't need the kitchen (we love the DDP and all the great places to eat) and while the washer/dryer would be nice its not really something we use more than once on a trip anyways.

I think that's the hardest part in the comparison for me - I'm not really looking at it as what would it cost to rent the villa outside of DVC or anything like that - I'm only looking at it from the standpoint of what does my family need on the trip. We stay deluxe right now because we got a great deal on the room and we were willing to pay the higher price (heavily discounted of course) for the luxury of being on the monorail and the great theming of the resort.

I certainly appreciate all the replies and keep them coming. I have a question on the "home resorts" and on the points in general.

If you purchase say two different resale contracts for 100 pts each at two different resorts do you get the 11 month priority at either resort or can you only have one "home" resort? I know its nothing but rumor and speculation but DVC at the Poly would be really appealing to me and I would certainly want that as our home resort if it ever happened.

Second, if you purchase say 100 pts but need 300 to stay can you rent 200 from someone else or even from Disney for one trip to go along with your 100? Is that an economical way to do it because I do worry about purchasing too many points based on our family size and the way we have traveled the past 3 years. We've gone each of those years but there's no way to know for sure we would go every year or that the kids would want to go every year and at some point all the kids of course will be grown and moved out and we wouldn't need all those points if just the two of us want to go then.

Thanks for all the input!

 

[staceymay00]

I am no expert but I know you can buy points from another member and have them transferred into your account. You can only have one transfer in or out a year, I think. You could rent points also but the rented reservation would be in other owner's name. You get 11 month booking for home resort but only for the points at that resort. You'd have to wait until 7 months to use points from the other resort. You could have two contracts and bank pts every other year to stay at each home resort every other year with 11 month booking.

A couple of posts above I calculated that the points we are hoping to get will cost $7.12 this year (initial purchase price spread over 32 years plus MFs). One week that is appealing to us for a WDW trip is Thanksgiving. This year a 1BR at OKW that week is 193 pts (so 193 x $7.12 = $1374) and a 2BR is 260 pts (so $1851). Rack rate at Poly for a standard garden view room is about $3465. Even with a 40% discount it would be $2080, and I'm not expecting that kind of discount Thanksgiving week year in and year out.

Needing a 2BR definitely does make things more expensive, but if you must stay on site I think DVC can still make sense. We have three kids so a 1BR will work, although one day I'd like to have enough points for a 2BR. Now if you are willing to go off site, there are some very nice homes and condos located very conveniently to WDW. That option could certainly cost less than DVC even over many years.

Good luck and congrats on baby #4.

 

[DVCGeek]

Hey DVCGeek is there any chance you could change how you have your signatures laid out. It is a real pain to read you wonderful posts the way it is currently set up running all the way across the page.

I'd be happy to consider a change and actually just tried something. My previous sig is here:

=============================

*=~> 17 trips to WDW + 2 to DL (& counting!) || Owner @ DVC's BLT, VGC, AKV, & VWL + D23 first day Charter Member <~=*

and the new "current" version should be below. Does that help and/or would you give more specific specific suggestion(s)?

Thanks!

=============================

 

[DVCGeek]

Oh, and just in case the above one is still wrapping or something at your screen resolution, here is a post WITHOUT my prior sig embedded to see the "normal" result...

 

[CoachG]

You get 11 month booking for home resort but only for the points at that resort. You'd have to wait until 7 months to use points from the other resort. You could have two contracts and bank pts every other year to stay at each home resort every other year with 11 month booking.

So really if you want to book 11 months out then all the points should be in the contract(s) of the place you want to stay at then, right? Or could you just book the resort with borrowed points from contract #1 and then at 7 months "unborrow" those points and use the points from contract #2 to do it or do they treat each contract as something totally separate as opposed to one big pool of points you own?

 

[DVCGeek]

So really if you want to book 11 months out then all the points should be in the contract(s) of the place you want to stay at then, right? Or could you just book the resort with borrowed points from contract #1 and then at 7 months "unborrow" those points and use the points from contract #2 to do it or do they treat each contract as something totally separate as opposed to one big pool of points you own?

At 11 months yes, you must use contract(s) with that home resort.

You are never allowed to "unborrow" points; once points are borrowed that's it; they remain in the Use Year they were borrowed to (and can NOT be banked either).

At 7 months ALL points [under your membership #] are treated as one big pool and you can (and I have) used them interchangeably for any of your contracts. For example, I've mixed things and used 3 points from my VGC contract and 49 from my BLT one on a single reservation made less than 7 months from arrival.

What some people do is take current use year points (2010 for example) from contract #1 and also borrow next year's points (2011) from that contract to make a reservation in 2010 at 11 months out. Assuming contract 2 has a different home resort, bank 2010 points for it and then in 2011 make a reservation at 11 months out using 2010 & 2011 points.

Hope that helps!

 

[Anal Annie]

We're only a family of 3 (so we use studios) and only have 250 points but over the course of the past year we were able to do a 4 n long weekend over Memorial Day last year, then we had 7 nights at BCV followed by 3 nights at Vero last August. Now on this years points we have 6 nights booked at Kidani in 2 weeks (a premium season) and then 7 nights in August at HHI. And our SSR dues for these 250 points are only around $1,100 / year. Never ever if it weren't for DVC would we have been able to take 5 vacations within 15 months for $2,200 in dues. Yes, of course there are other expenses - we have AP's which exp. in May but we're getting our 3rd trip on them this month. I snagged airfare early so that was really our only out-of-pocket biggie for this next trip - where else could we go for a week over spring break for only $600?? Our lodging & park tix are covered already. This trip is the gravy on top.

Bottom line - no way it's going to take us more than 6 or 7 years to recover our contract price.