Trying to understand DVC

[holden]

Hello! We (me, DH, DD10, DD6) are frequent travelers to Disney. We have done week long trips and long weekends - usually once a year. We always book with some kind of discount (free dining, RO discount, etc.), but I'm trying to understand how DVC is a better deal (if, in fact, it is).

Let's say I buy two 150 pt. contracts at $150/pt (thinking ahead to possible Poly pricing, since that is where we would buy). We like to travel with family/friends and can foresee brining the girls' friends in the future so the extra points would come in handy. We'd also like two contracts so we can leave them to our kids. Contracts would cost $45,000 (not including closing costs).

Maintenance fees should run around $2000/year (just rounding the number off since we don't know the exact # yet). The contracts would be for 50 years. Assuming NO increase in fees, that's $100,000.

$145,000 seems like a lot of money to spend on Disney hotel rooms. At today's prices, a room at the Poly would run around $5000/week (give or take). That means (at today's prices), we would have to go 29 times to break even.

I know that room prices will increase each year, but as the kids get older I don't think we will go as frequently. Ideally, it would be nice to go with them and their families someday. I'm figuring there will be a span of time where we don't go as often, but then resume going later.

Am I figuring something wrong? Does anyone have a formula for increasing room rates to make a real "apples to apples" comparison? We are torn about purchasing when Poly is offered. It is our favorite resort and we always said we would buy DVC there, but the #s don't make much sense to me. It seems like DVC is much more money than just paying for a good deal (i.e. free dining, RO discount, etc.). Plus, some of those deals include tickets and food.

Any thoughts would be helpful. Thanks!

 

[Minniesgal]

DVC probably won't save you money and buying the way you describe almost certainly won't

If you like hotel rooms, frequently get a discount, and want to use DDP to me you aren't ideal DVC candidates

We bought DVC not to save money against a Hoyle room but to make a DVC 2 bedroom villa affordable for us. We cook in the room, I do laundry everyday and we spend time just chilling in the room.

Also we have never paid $150 for points. We have a few direct point which did cost a pretty penny but most of our points were bought resale for less than $100 per point.

In your case I'd carry on looking for discounts or free dining

 

[holden]

DVC probably won't save you money and buying the way you describe almost certainly won't

If you like hotel rooms, frequently get a discount, and want to use DDP to me you aren't ideal DVC candidates

We bought DVC not to save money against a Hoyle room but to make a DVC 2 bedroom villa affordable for us. We cook in the room, I do laundry everyday and we spend time just chilling in the room.

Also we have never paid $150 for points. We have a few direct point which did cost a pretty penny but most of our points were bought resale for less than $100 per point.

In your case I'd carry on looking for discounts or free dining

That's kind of how I'm leaning. We don't usually do the dining plan (only when it's free), but we aren't interested in cooking in the room either. The laundry is nice to have in the room , but I throw in a load when we are at the pool. We would only be interesting in Poly (so we could book 11 mos. in advance), hence the higher price per pt. The hotel rooms at the Poly are a great size, and the ability to sleep 5 there is nice.

Perhaps we aren't good candidates for DVC

 

[magicaldisney]

You can not combine free dining with DVC reservations so if that is important to you DVC won't work for you.

 

[Paula Sedley-Burke]

We paid a lot less for our points ( SSR ) I think that is the problem now. 150 dollars is a lot! we go at least once a year and buy an annual pass which DVC members get at a discount. We then figure our visits so we get two vacations out of one pass by going slightly earlier the following year before it expires. This makes it a lot cheaper in fact this year we got 3 visits!

We have always used our points but when you don't you can rent them out. I have in fact rented from the boards when we run out of points as we love the DVC rooms so much!

If you have your heart set on the Poly and would not consider another resort which is fair enough I also don't see it adding up.

 

[HippieChickadee]

assuming they don't get rid of this-

DVC is worth it for us JUST for the ability to purchase annual passes. (We live in NY)

This past year I went to disney world 5 times. I paid $399 for a DVC annual Pass. We only have a small contract so the maintenance fees are low.

We would have paid about $400 EACH TRIP (5 times) if it weren't for the annual passes.

We only have enough points to stay on points 1 time a year and the others we stay at values.

totally worth it for that discount if you go often like us. If they ever get rid of that option, we would probably sell.

 

[tjkraz]

A few points:

1) Your math is somewhat flawed because you are using the full 50 years worth of (estimated) dues to reach a calculated break-even point of 29 years. You won't pay 50 years' of dues in 29 years.

You'll get more accurate numbers if you run a side-by-side comparison of paying cash for 50 years vs. 50 years of DVC ownership.

2) I would recommend applying a 3% annual inflation to both the Poly room rates and DVC dues. Since the Poly rates are so much higher than DVC dues, the cash price will increase at a greater pace. I've been a member for more than 10 years now and that 3% figure for both dues and room rates is pretty realistic. (Yes, there will come a day when a Disney hotel costs over $1000 per night and DVC dues are more than $10 per point, per year.)

3) Do you actually need 300 points? If not, then your comparison is flawed right there. A Grand Floridian Standard View Studio is only 125 points for an entire week in January, September, October, most of November and half of December.

If you want an honest comparison, you need to make sure the numbers are as close to apples-to-apples as possible. If your usual vacation pattern is one week per year in a standard hotel room, you should be comparing to the number of points it would cost for the same mount of time in a DVC studio.

4) Since DVC is a deeded real estate holding, it DOES maintain some value until the contract ends. It's difficult to calculate that future value, but as long as there is demand for Walt Disney World lodging, there will be resale demand for DVC contracts. Point being, you're not spending $45,000 up front which can never be recouped. If you go 20 years and then decide you don't want/need the points anymore, they can be re-sold to return some of the initial investment.

DVC is not a good fit for everyone but at least make sure analysis is logically sound before deciding.

 

[com_op_2000]

IMHO, Do not buy Poly when it opens.
Wait until the resales start hitting the market about a year or two after opening, then find one for much less cost per point.
Then see if the monies work out for you.
In the mean time, when the resort opens try renting a reservation at Poly just to be sure you like the decor, style, etc of the DVC villas in place of the hotel rooms.

 

[disneynutz]

If DVC didn't make money for Disney, it wouldn't exist.

Disney has a great following and IMO some people buy DVC just because Disney told them that they should. For some DVC makes sense, for others it doesn't and that is one of the reasons that there are so many resales.

Owning a DVC interest forces you to vacation every year or so or causes you to do something with the points or you lose them.

As you know Disney vacations are not inexpensive, my last study using 300 BCV points has us spending $250,000 plus over 30 years to vacation at WDW using the BCV points.

I suggest that you decide how often you plan on vacationing at WDW during the next 30 to 50 years, look at the numbers and decide if it's doable. If it is than start looking at the rules, restrictions, policies, and cost of the different resorts.

Bill

 

[Nabas]

A3) Do you actually need 300 points? If not, then your comparison is flawed right there. A Grand Floridian Standard View Studio is only 125 points for an entire week in January, September, October, most of November and half of December.

If you want an honest comparison, you need to make sure the numbers are as close to apples-to-apples as possible. If your usual vacation pattern is one week per year in a standard hotel room, you should be comparing to the number of points it would cost for the same mount of time in a DVC studio.

I liked your entire post but this is the point that leaped out at me as well.

The OP mentioned a room at the Poly for $5000/week. That's $714/night. Looking at the Poly rack rates, that's roughly the rate (including tax) of a Garden View during peak Easter week. It's a good comparision because WDW doesn't usually offer discounts for peak periods.

Now looking at the VGF point chart (assuming the DVC at the Poly will have a similar point structure as VGF), it's 227 points for a Standard View Studio during Easter.

Now, revisiting the math:
- 227 points X $150/point = $34,050
- 227 points X $6/point/year (a high MF) X 50 years = $68,100
- Total: $102,150

As you note, inflation plays an important role. If you assume 3% price increases (roughly where WDW has been for a few years), then the absolute dollar gap between DVC MF ($1362 in the first year) and the Cash Room Only ($5000 in the first year) grows every year.

I have an Excel spreadsheet that factors in inflation. When I punch in all the numbers, it's 10 years to reach the break-even. It's still a long time but not 29 years.

P.S. Comparing it to renting DVC points from someone else, the break-even point is about 20 years. For the OP, renting DVC points (227 points/year X $14/point = $3178/year) might be the way to go.

 

[tjkraz]

IMHO, Do not buy Poly when it opens.
Wait until the resales start hitting the market about a year or two after opening, then find one for much less cost per point.

I don't want to derail the discussion too much but unless you're predicting the next recession, this really shouldn't be the case.

Look at resale prices today. Pretty much across the board, prices are very close to the initial offering rate for each resort. SSR first sold at $79 and today people are asking mid-$70s. BLT was around $110 after incentives (and actually dipped quite a bit lower due to the economy) and there are resales for $100-110. Same thing for BWV and AKV. BCV and VGF are probably higher than their initial direct pricing due to high demand.

I expect VGF to follow similar trends. Initial price was $145 per point and it's already up to $150. By the time VGF resales hit in any great quantity, direct pricing will probably be $160 or more.

Why would sellers list their points for significantly less than they paid? I certainly wouldn't want to take a loss on my DVC contract if it could be avoided.

Resales will always be lower than CURRENT direct pricing, but I don't think the "wait a couple years and pay much less per point" advice is going to pan out.

 

[disneynutz]

Another issue is that life changes.

In the honeymoon phase of DVC ownership you are just happy to own a part of Disney. Later you might find a different resort that you like better than your home resort. As your WDW experience grows, spending all day every day in the parks may start to get old and you really start to enjoy your resort and other WDW offerings.

With a family you might be interested in a certain size room at a certain resort. You might get tired of Disney, the kids grow up, your employment changes, you get the idea, so your needs change.

My point is, expect change and expect to sell, buy, and probably lose most of the money spent on your DVC contracts. In the end if you walk away with any money you are ahead IMO.

Bill

 

[holden]

All very interesting and valid points. We have a lot to think about and discuss. I'm still not convinced it's for us, and maybe that's my answer.

While I do see us returning to Disney annually/bi-annually for the next few years, I also see that pattern dying off as the kids get older and we travel to different places.

Thanks so much for everyone's info. It really does help in our decision making.

 

[Judique]

assuming they don't get rid of this-

DVC is worth it for us JUST for the ability to purchase annual passes. (We live in NY)

This past year I went to disney world 5 times. I paid $399 for a DVC annual Pass. We only have a small contract so the maintenance fees are low.

We would have paid about $400 EACH TRIP (5 times) if it weren't for the annual passes.

We only have enough points to stay on points 1 time a year and the others we stay at values.

totally worth it for that discount if you go often like us. If they ever get rid of that option, we would probably sell.

You do know that you can buy an annual pass without DVC? It costs a bit more, but still worth it for multiple trips even without DVC.

 

[disneynutz]

All very interesting and valid points. We have a lot to think about and discuss. I'm still not convinced it's for us, and maybe that's my answer.

While I do see us returning to Disney annually/bi-annually for the next few years, I also see that pattern dying off as the kids get older and we travel to different places.

Thanks so much for everyone's info. It really does help in our decision making.

Look at the numbers based on the length of time that you think that you will be wanting to vacation at WDW. Buying a DVC interest doesn't have to be a life long commitment. Assume a 10% broker fee when you sell.

Bill

 

[Deb & Bill]

OP, you also have to consider what is going to be at the Polynesian. Right now, the details aren't that clear. I've heard GVs over the water and studios in the renovated buildings (Tahiti and one other). For members like us who usually stay in a one bedroom, that isn't appealing to us at all.

 

[com_op_2000]

I don't want to derail the discussion too much but unless you're predicting the next recession, this really shouldn't be the case.

I know!
IMHO, the prices will have to come down from where they are at due to less years remaining on the contracts. I do not believe that most people will pay a high price for a contract with less than 5, 10, 20, etc years left on them (less possible time for ROI) meaning not enough years to recover the initial cost.
The OKW original contracts expire in 2042, once we pass the 25 year left on them point I believe that most people who decide to sell will be getting less per point. The only reason they would remain high is if Disney exercises ROFR a lot and turns those contracts in to ones that expire in 2057.

 

[bwvBound]

$145,000 seems like a lot of money to spend on Disney hotel rooms. At today's prices, a room at the Poly would run around $5000/week (give or take). That means (at today's prices), we would have to go 29 times to break even.

Just checking -- are you really assuming you'd use your points for a DVC studio unit vs 1BR unit? The DVC 1BR unit, or better the 2BR unit with your two children, is a vastly different experience than staying in a hotel room.

 

[tjkraz]

I know!
IMHO, the prices will have to come down from where they are at due to less years remaining on the contracts.

Sure they'll come down eventually.

I was more concerned with your suggestion that OP would find Poly points "for much less cost" a couple years after they go on sale. Unless something is happening with the economy (unpredictable), that is extremely unlikely to occur.

We're 29 years away from the expiration date and people are still paying $85+ per point for BWV and $100+ for BCV. Those are at or above original selling prices.

Prices will eventually decline. But it's unlikely people who sell their Poly points within a couple years of buying will take a bath on the deal.

 

[holden]

Just checking -- are you really assuming you'd use your points for a DVC studio unit vs 1BR unit? The DVC 1BR unit, or better the 2BR unit with your two children, is a vastly different experience than staying in a hotel room.

I think until our kids get a little older, yes will will stay in a studio. We are used to the Poly rooms that have 2 queens and a daybed. It's plenty of room for the 4 of us and would be fine when DD10 brings a friend in the future (we are thinking of a girl in particular whom we have known since she was 2 - she's like a niece to us). Besides, we are only in the room to sleep and shower/get ready.

I do see needing a 1br or 2br in the future, hence my estimation of getting a lot of points. It's also nice to be able to bring family along and put them in a separate studio.

We have a vacation home down the shore, so we do have vacations where we have lots of space. Disney vacations, for us, are going to the parks and lounging by the pool, not hanging out in the room.

I'm also trying to think long term - of my kids using it someday on their own with their families. That's why we keep going back and forth on whether or not to purchase. I see my aunt (who owns DVC with my cousin) going with her kids and grandkids often and think of how much fun that would be to do with my kids/grandkids in the future.