Why is cruising such a bad use of points?

[Jillpie]

We have been thinking of taking a 7 day Magic cruise a year from now (family of five) and using two years worth of points for it. If we just go to Disney every year or so, and decide to skip a year to do this cruise, is it such a bad way to use the points? I know I'll still have to kick in some cash to pay for it as we won't be going in value season. But to be able to go on a cruise and not have to pay the full price for the five of us, how can that be wrong? Please explain.

 

[DisneyKraZy]

I, personally, do not think it is a bad use of points. We took our family of 4 on an incredibly, wonderful 7 day western cruise 2 summers ago, booked all on points. Both my husband and I feel that it was a GREAT way to use our points. We would not have been able to afford the cruise any other way. We always look at dvc as our prepaid vacations of sort. We get a wonderful vacation and do not have to fork out a ton of money at one time.

I say, "Go for It!". You will not regret it!

 

[MiaSRN62]

We also booked a Disney cruise on points last year. We used 2 years of points also and paid partial cash. There were 6 of us in 2 cabins---brought my mil along. Had a wonderful time and don't regret using the points. The points were an easy, quick way for us to book the cruise. My mil had just been diagnosed with lung cancer and we knew her traveling days were growing short. We're so glad we could do the cruise last year because had we waited until this year, I don't believe my mil would have been able to make it. She's grown so weak and frail from the chemo & radiation treatments and several surgeries. DVC points made, what may very well have been our last time to vacation with her, possible. The memories will last a lifetime.
We do have another cruise booked (Magic) for 11/04 on cash. We got such a nice price with DU for early booking that we couldn't resist. We're extending our vacation by staying at OKW for 4 nights prior to the cruise too.

 

[Poorman]

If you rent your points out and pay cash for the cruise you will probably save enough to pay for your flights to the cruise. Do the math. Get a price for the cruise,paying cash from a travel agent such as Tim Lasison over at Yahoo DVC talk. Figure $10.00 pp.
I know you can save some money. If you want convience. Go with the points for the cruise.

Good luck.

 

[Caskbill]

Poorman basically said it. The 'cash' value of the points exceeds the 'cash' value of the cruise.

If you only consider the 'cash' value of the points to be what the maintenance costs are then it's closer. Or if you don't want to hassle with selling points, then the convenience may work for you. But in reality you should be able to rent out the points and receive enough cash to pay for the cruise directly and still have cash left over.

It's similar to hotel rooms. Example, I recently got a quote for Jan 2004, weekend, at the Polynesian, garden view. It was $240/night. If I really worked at it, I could probably find a better value than that.

On points it's 67 points/night. Value points at $10 each and that's the same as $670/night, or 134 points for the weekend( or $1340.00 value). Those same points in January will get you about 13 nights in an OKW studio, or 6 nights in a 1-B/R with points left over.

67 points for a Poly room that goes for $240 cash is equivalent to getting $3.58 /point. Not really a good value.

As Poorman said, do the math for the cruise.

 

[eva]

You will definitely get mixed answers on this one. We think it is worth using the DVC points. We took a 3-day cruise this past May and decided to rebook and take the whole family this next May. The Magical Rates that they were offerring for a 7-day Eastern for this May was $1,349 (tax not included, with tax it is nearly $1,500) per person in a cat 6. We are paying 174 points per person for the cat 6. I know that a lot of people will say that you could rent the points for $10 each and make $1,740 to pay for the cruise. I guess if you don't pay taxes on the rent money that you collect then you would be ahead $240 per person. Unfornunately, a tax specialist that I have talked to has said that you must pay income tax on that rental money. We pay about 30% tax. So that now brings the $1740 down to $1218. If we paid taxes on the rental money we would actually be losing money on the deal if we rented out our points. Plus I don't need the hassle. I only wish that we had enough points to book all three cabins we have reserved on points.

 

[Caskbill]

eva makes a good point and it goes to show that the circumstances will be different for everybody. For some it will be a better use of points, while for others it will not.

That's why it's important for you to do the math for your own situation and decide for yourself.

You've gotten a lot of advice here and that should help you decide what's best for you.

Good luck and let us know how it works out for you and your specific situation.

P.S. eva, how did you get cat 6 for 174 points for 2004? My Vacation Planner book that we all received shows 174 points for category 7. With cat 6 it's 186 points. At 186 points that's equivalent to another $120/person if you rent out the points.

That comes out to $360/person difference between the cash rate and point rental (IF you get $10/point)

Also, as far as paying income taxes go, I don't think you would have had to pay taxes on the full $1740. Technically it should only be on the profit you make, so if your dues are $4 then you made $6 profit, or $1044 which would be taxable, not $1740. Also I believe you can also factor in the investment cost of the initial purchase for the points as a base value somehow. Say you paid $80 for a point for 40 years, that's a net investment of $2/point per year. Selling 1-year's points had a cost basis of $2, so that brings your 174 point, $10/point sale down to taxable $696 profit, or at 30%, $208 in taxes. So after paying the $1500 cash price, selling the points, paying income taxes, you'd receive a net gain of $152 cash /person. Of course you would need to verify with an actual tax advisor when determing true profit.

Of course, now factor in the 'hassle' factor and decide from there.

Anyway, it does go to prove that the situation if different for everybody, and probably constantly changing.

 

[Richyams]

We've used weekend AKL concierge points, probably could have gotten three rooms had we rented out those points and paid cash. Points are much easier. We cruised once years ago on points and will again.

 

[WDWLVR]

For your best value points should be used at designated DVC resorts. When we bought into DVC we looked at it as an investment in vacactions. We've cruised on points and we cruised on cash. All depends on how we wanted to use our points that year. You have to figure what is best for you as well.

As I said a long time ago some may think that staying at night at the Plaza on points would be a waste, but if it is something you always wanted to do then go for it. The "experts" can debate this to death, but I honestly feel that points should be used for what makes you happy!

 

[jcodespoti]

The best use of your points is the way you see fit to use them. They are your points enjoy them and have fun.


Joe in CT

 

[Lisa F]

The best use of your points, without a doubt, is for a studio at OKW during either adventure or choice season, sunday through thursday and checking out on the weekends. Doing this, 160 points would get you an entire month (well 20 weekdays at least). BUT you would have to potentially stay in a smaller room tahn you like (if you like 1 bedrooms), potentially stay at a resort you don't care for (if you prefer to stay at the other resorts), move out on the weekends (what fun, especially to do it *4* times in a single vacation) and go during a season you don't want to go during (if you prefer to go say when christmas decorations are up or during the food and wine festival or during some other time of year). I'm sure there are people who can make the absolute best use of their points as far as maximizing nights at WDW vs the number of points spent. There are probably a lot more people who do some of the above but not all of it, many of whom do it because that's the way they LIKE to vacation.

Personally, we prefer to stay at BWV, stay in a 1 bedroom, stay checked in on the weekends and travel during foood and wine festival so we will never get the "best use" out of our points... but that's not why we bought them. We bought them to enjoy them. Perhaps you could "do better" by renting out your points but the potential hassle and risk is more important to me than saving a few bucks. If I were THAT interested in saving a few bucks on my vacation there is no way I would have bought into one of the most expensive timeshares out there.

 

[crisi]

As others have said, it depends on you and how you value your points and the hassle.

We elected to pay cash for our cruise.

1) We only have 150 points. So we'd need to bank and borrow to cruise on points.

2) We really didn't want to skip a year (we only go every other) at Disney - cruising on points would have meant missing a Disney trip.

3) We have the cash available to cruise without needing to rent out the points.

so we are cruising on cash, saving our points to take another trip ourselves, and doing both.

Now, if I had 400 or 500 points, we may have made a different decision. But if I had 400 or 500 points, I wouldn't have had the cash on hand to cruise.

 

[Disney Enthusiast]

The main reason I got into DVC was to make my husband take a break once a year. He usually digs his heals in when it comes to leaving his work and going on vacation, but once he is there, we ALWAYS wish we went more and for longer periods of time. He's a great vacationer.... it's just getting him there is the problem.

Hence we have points now which we will lose if we don't use them. Money is an issue for us, but not as much in this situation. Time is more of an issue for us. We vacation once every other year, and now because of DVC, once a year. If we go on vacation, we're going to use our points rather than save them for another vacation because there is no other vacation. So if it gives us a free cruise, even if we are paying more for the cruise w/ our points, then so be it. It's still free. It's not like we can travel again where the points can go further. It reminds me of what my husband says about sales. Yeah you might save 25%, but you are spending 75%. You might save $ on the cruise by paying cash instead of points, but then you are spending more cash, when you already outlaid the money for the timeshare.

I understand the Dis Members who check out on the weekends and stay in studios so they can visit on more trips and stay longer periods and would do the same if we could afford the time. But we can only get away once a year. The point system makes us go on vacation, and our room is paid in full, even if we are getting a bad deal. But that'll work for my family's situation.

As far as selling the points and taking that money and paying for the cruise..... good idea. But for me, it would probably be too much of a hassle. Thinking about the taxes and the stress of trying to sell would be a pain for me. I would make myself do it if I were to make a ton of money, but if the amount is minimal, I don't think I'd bother. And I just talked to my cousins at a Family Holiday Party who have owned BWV since the beginning and I was stunned to hear they use their points for cruises and everything else. They love the flexibility and knowing they are going somewhere every year too. It's a guarantee.

So this is just a different way of looking at it. I agree that whatever makes your family happy is the best possible choice. I'd love to stay for a month and would sleep in a cabana on the beach if I could. But that wouldn't work in our situation. So do what's best for you, and it has to be right.

 

[Doctor P]

It also depends on when you look to book a cash cruise. By the time we were within three or four months of our cruise, we wouldn't have had enough cash to pay for it by renting our points. IF you book your cash cruise VERY early, IF you are willing to rent your points (and keep in mind that banked and borrowed points can't be transferred to other members), and IF you are able to get $10+ per point and not have any problems with the transaction, then you can come out quite a bit ahead by renting your points (usually). We chose to cruise on points--that had been our plan since we bought into DVC. We have used our points primarily, though, at DVC resorts.

 

[Jimbo]

We were considering a 7 day cruise (2 cabins) for next October, over Halloween. We called AAA to see what the cash cost would be. This was probably 15 months before we would have cruised, so there were early booking discounts involved.

When I compared the cash rate to the number of DVC points required - about 740 points - I concluded that DVC was giving me only about $6.95 per point. AAA throws in a few "freebies" like mugs and free soda for all, but I disregarded that, BTW.

We decided not to take the cruise for other reasons, but if we had decided to go through with it we would have definitely paid cash. I would have sold my points on the rental board. Since I don't like a hassle, I probably would have asked for $9 per point and only dealt with people that wanted 200 or more points. I can tell you that at $9, I would be bombarded with prospects.

So I could have sold 520 points or so and gotten the same cruise as if I used 740 points via MS. It never occured to me that there would be any taxes; has anyone ever rented points and reported them on their taxes? It also would have allowed us to lock up the rooms of our choice several months before we would have been eligible to book using points.

Everybody's situation is different, and if you don't book early it's less of a slam dunk. But had we sold our points and paid cash, I would still say that we "used" our DVC points for the cruise. We just wouldn't have used MS as our travel agent.

 

[ClarabelleCow]

If I used points on the cruise I wanted to take -

DVC wanted $4,803.00 for the cruise

if I used points for the 2 kids, its would cost me $2,974.00 plus $75.00, and I would bank 23 points

If I used points for 1 adult and paid cash for the 2 kids and 1 adult, it would cost $2,596.00 plus $75.00 and I would have to borrow 29 points.

so, either $4,803.00, $2,974.00 or $2,596.00 if Iwent through Disney.

I just got off the telephone with Costco, I could bank my 175 remaining 2004 points and pay cash for the entire trip, they would book me a CAT 4 room for $3,383.40, this is everything except insurance.

Not a bad deal, if I rent my points for $10.00 per point, the trip would cost $1,633.40, even better!!!

 

[AnnaS]

We have cruised twice since buying DVC. We had two cat. 11 rooms (I asked if available and paid for an upgrade at the terminal for our last cruise, which I did - only if cabins were very close too). We paid with cash and points for both cruises. We plan on doing the same thing for our July '05 cruise. I know without DVC, we would not be cruising every two years. I do not want to bother with renting unless I had absolutely no choice and risked loosing points. My dh does not have "any" paid vacation time so we would not be able to add another major vacation same year had I paid all cash for a cruise. I think in 2006, we are tentatively (I say that now), going to take a break from WDW and cruising - we will try an exchange regardless of wether we get same 5 star accomodations. (Of course, we would love to).

 

[kcashner]

When I bought in, I calculated the cost of a point based on my purchase price and dues. If I use that figure, it is cheaper to cruise on points than I could buy the cruise for in cash...however, it's only a little cheaper.

If I rent out my points for $10 per point (I've never done this, but I hear that's a going rate), then I can make money on the deal and cruise for a lot less by paying cash.

 

[Nick@ VB+OKW]

Originally posted by Jimbo
It never occured to me that there would be any taxes; has anyone ever rented points and reported them on their taxes?

I really doubt to many renters (if any) report this on there taxes.

 

[Towncrier]

We've done it both ways. Our first cruise was entirely on points, but only because we had a bunch that we had to use. We purchased a resale and had a LOT of banked points that were going to expire if we didn't use them. The "point" cruise cost us 725 points for a Cat4 stateroom with 3 adults and 2 kids. The cash price for that cruise would have been around $7200, so I figured that we broke even.

Since then we've cruised 3 more times, each time paying cash rather than using points. The major advantage to booking with cash is the ability to latch on to the occasional "deal" that Disney throws out to the cruising public. The point cost of a cruise is determined at least a year in advance and, from what I've observed, is very inflexible in regards to DCL special deals. If you book a Disney cruise through a travel agent (like DreamsUnlimitedTravel.com for example), and Disney lowers the cost of the cruise, you can reap the benefit of a less expensive cruise.

If, on the other hand, you have tied up all your vacation money in DVC, your only recourse is to use points for the cruise (unless of course you want to rent out those points).

I made the mistake of telling my wife that it was "stupid" to pay cash for a cruise and that it was better to spend that money on points that could be used year after year. She holds me to that statement every time I bring up the subject of a cruise. Fortunately, the occasional bargain cruise does show up from time to time and I have been able to convince her that my thoughts on spending points versus cash on a cruise have changed.

Good luck with your decision. As you can see, this is not a black and white choice.