Still sitting on the fence

Here's a summary of my analysis of why I think for most people DVC does not make sense:

We'll use the following assumptions, which are mostly generous to DVC:

-You are paying cash for your points, if you are financing them the numbers will look even worse.

-$100 dollars per point (this is actually probably NOT generous for DVC like the other numbers, but it makes the math easy and isn't very far off)

-$5 dollars per point per year in maintenance fees.

-15 points per night to stay in a studio (this is VERY generous)

- No closing costs (again generous)

So if I want to take a Disney vacation for 10 nights per year every year for the next 50 years in a studio and want to commit to that right now here are how the numbers work out:

15 points per night x 10 nights = 150 points
150 points x $100 per point = $15,000 membership cost
150 points x $5 per point maintenance fee = $750 per year maintenance fees.

So if I'm paying cash with no closing costs I will put $15,000 and pay $750 per year in fees. What everyone forgets in their analysis of the cost of DVC is the TIME VALUE of that $15,000. So if I had instead of buying a DVC membership had just put that $15,000 in a CD at 4% interest, I would make $600 per year. So just with the time value of the money and the $750 per year in maintenance fees I'm paying $1350 per year for my 10 night vacation. But of course there's also the matter of the $15,000.

So assuming that I get all 50 years and manage to use all my points for a 10 night stay every single one of those years, I will get 500 nights of usage out of my investment. So taking my $15,000 and dividing it by those 500 nights I get another $30 added to my nightly price, which was already $1350 divided by 10 nights = $135. Adding that $30 per night brings me to $165 per night.

So I'm paying $165 a night if I manage to use every single one of my points over the next 50 years. If I have a family crisis and don't go one year or just lose interest then the cost skyrockets. But of course what you also have to remember is you're not comparing apples to apples. A night's stay in a studio is not the same as a night's stay in the hotel room. Your housekeeping service is diminished, you have a smaller bed and less space. There are of course some benefits that offset those, but I receive most of those from my annual pass and Disney Dining Experience card anyway, both of which make sense to purchase if I'm going to stay at WDW for 10 days.

So in the best case with the cheap price of 15 points per night, I might be getting $165 of value out of my investment by making this commitment. With my annual passholder discount I can come near those prices for superior rooms, with better perks just by booking a room, and if you plug in more realistic numbers like 18 points a night the numbers get dramatically worse.

I'd rather just put my 15k in the bank, use the $600 per year in interest to fund my visit, pay the $750 out of pocket plus whatever (small) difference there is in price and have the freedom of going when and how I want, staying in a nicer room with housekeeping and have $15,000 at the end. Plus if I decide I prefer to do something different with my vacation money in 10 years, I'm not bound to Disney owned properties. I can use that $1350+ to go to Indonesia if I decide I get tired of Disney (not necessarily likely, but who knows).

Its not so much that the price doesn't work out to make no sense at all ($165 a night is okay I guess), but that it doesn't work out to be enough of an improvement to give up all that flexibility.

165 per night seems pretty reasonable to me. Or am I missing something?

That all makes a remarkable amount of sense, and when you take into consideration the fact that points-per-room are often higher than 15 per night (especially on weekends and during pead seasons), your points are even more valid.

However, one consideration that wasn't taken into account is that Disney's hotel rates are raised dramatically every year. A room at the Coronado Springs that just a few years ago cost $130 per night now costs $149 during value season! With costs rising by $20 per night in just a few years, imagine what you'll be paying in 50 years!

DVC guarantees that points-per-night will never go up, so it will cost you the same amount of points to stay for 10 days at AKV in 2050 as it will in 2008. I.E., in 2050, while your vacation still costs you $165 a night, your neighbor at the AKL is now paying at least $600+ per night. At LEAST.

I supose there wouldn't be a debate if everything was clear. So if the maintenance can go up is there a limit on how much they can go up? Can I sign a contract to pay them for 50 years and then have them go up to 1 GAZILLION dollars?

Thanks for posting that great breakdown! It really shows that you need to visit Disney a lot before it actually worth it. I think I'll be saving my $15,000.

We bought 150 at Vero in 2000 and 100 at Wilderness Lodgein 2002. We had a family reunion in 2002 and stayed at VWL in a 2 bedroom for 5 days Sun-Thurs. That one stay would have cost us half of what we paid for all the 150 Vero points. Our dues haven't gone up much at all. We bought another 150 at Saratoga took a 7 day Caribbean cruise with points in 2006 after we took two four day cruises, one in 2003 and another in 2007. We have completely broken even on our original investment and we will die before our points expire.

It's the very best investment we have ever made.

Anything that surprised you one way or the other? Also, how were the Wilderness Lodge Villas? Did you relax in the Iron Spike room? (We LOVE the Iron Spike Room)

We were doing calculations today to figure out what it would cost to be able to stay at WDW year round.

We seriously considered going this route too since we visit the World so often but we did the math and figured that staying in one of the resorts each year was actually a bit cheaper than doing this.

While this is a VERY attractive offer and didn't have too many cons, we decided to pass on it for now. I guess it all depends on what you are looking for, ya know?

I think you also have to take into account that a LOT of people buy DVC on credit and don't pay outright. Based on income, expenses, etc, that can be a risky buy. Many folks treat it like a mortgage on a vacation home, but lots of hidden costs go into a disney vacation that you wouldn't get on a vacation home (park tickets, souvenirs, hard ticket events, expensive restaurants--though you could just eat in your villa every day, etc.).

I'm always scared to see folks take a leap on that kind of investment without knowing what emergencies are around the corner.

One thing I've definitely noticed is I've never met anyone who regretted buying them.

Just another thought. We paid with discounts $57 per point for our first 200 BWV points in 1999 and could now sell them on a resale for about $80 that's a 40% increase in our initial investment and taxable at the capital tax gain rate.

Yes DVC is by nature a depreciating asset because of the original 50 year lease. And here's another though if you can't make a trip you can rent the points very easily for $12 per point, $5.00 per point for dues is a good number so you better your self by $7.00 per point. 200 points x $7.00 is $1400.00 income, or about 12.5 % using $ $11,400 our original cost.

Timeshare is not for everyone, but we found it was life changing, exciting and the feeling we're coming back and thank God we have the major expense behind us of the major purchase. To date we own 1200 DVC points three weeks in the marriott vacation system in Hawaii, giving us six weeks of locked of use in mvci and this is all going to be our second home once retired. Not bad living. Yes everything has a little hair in it.

But to quote Walt Disney

" Happiness Is Really Just A State Of Mind It Just Depends On How You Look At Things"

Enjoyed the thoughtful conversation

True. But who's going to make such a huge investment and say "eh; that wasn't my smartest buy." LOL

Probably one of those things where once you buy it, you convince yourself you wanted it.

Anyway, I just heard the other day that Disney won't "confirm" that the Contemporary construction is for DVC Villas! How crazy is that?

We're building a large high-rise connected to the Contemporary Resort? Are you sure? We can neither confirm nor deny...