Does DVC really save you money?

[gscott8075]

I would agree with everyone - here is my perspective as a satisfied former DVC owner.

In the 90's, my kids were born and my wife and I were enamored with all things Disney. It was the golden era of the Little Mermaid, Lion King and Beauty and the Beast. We went to WDW every year. We had the princess dolls. VHS tapes. We were a Disney Family. The kids started getting older. We became hooked on Disney Cruises. Toy Story and Pixar solidified the experience. Then, we met John Lassiter, creator of Toy Story and Pixar on one of the cruises. We spent an hour talking to him. He drew Woody cartoons for the girls. In 2000, we met President Carter on the Wonder and inadvertently had breakfast with him on the last day of the cruise. Just incredible experiences - courtesy of the Mouse!

We bought OKW and the spacious rooms and resort area were amazing. Then a funny thing happened. On our way back to Maryland, we stopped at Hilton Head to check out the DVC resort. And we fell in love with the resort and the island. We bought HHI points. The kids wanted to go there and not WDW. We sold OKW. Priorities changed. We were able to save several thousand versus the cash price on a Mediterrean cruise. We stayed in Hilton Head a dozen or more times. Loved it. Bad things happened along the way - point chart re-allocation caused Sun-on to increase 40 points. Rule changes. Certain activities we enjoyed went away. Went to WDW in 2016 with my now adult kids - and we realized we enjoyed going other places more - and saw how expensive the parks were.

So, we decided to sell both of our HHI contracts this year. Everyone in the family agreed. It was the right time. Looking back, I can say the following:

- Part of the reason we bought was because we wanted to be 'part' of Disney. To 'own a piece of the magic' as it were. We didn't - we bought the right to 41 years of points - Disney is just a company and we are just customers.
- We saved a substantial sum of money versus paying cash for similar accommodations.
- We spent a lot of time planning and never lost a point.
- I cannot say we would have taken the same number of vacations in HHI or WDW but for DVC.
- We had world class experiences on every trip.
- If we did not have DVC, we would likely have stayed in hotel rooms instead.
- We were able to recoup our initial purchase of points + a small profit when we sold.
- If I was considering DVC today, I would not buy - the cost per point and the MF fees are just too high to justify.
- We believe we got out at the right time for a 2042 resort.

 

[CanadaDisney05]

People often talk about when the payback is, and how much money will DVC save. Lots of discussion about time value of money. To me, that’s treating it like an investment, which it’s not.

I think it’s more appropriate way of evaluating DVC is to look at it like a luxury purchase. If you were buying a Ferrari, you wouldn’t ask about break even. You would ask about what it costs today, and compare renting, leasing, and buying.

The hard part about DVC is what do this years points cost. For BWV, with 23 years you can’t just divide $125 by 23 years. A point you can’t use for 23 years is worth much less than a point you can use today.
It’s easy to see that by comparing the resale price of regular OKW to extended OKW. Those extra years only cost about $8.

Based on OKW, I come up with points are worth 6% less for each year you have to wait to use them. So for BWV at $125, that’s about $10 for this years points. Plus dues, you are at $17.

For a 2br std view at BWV tonight, if it was available would be 48 points.

So the DVC cost for that room today is $816 if you buy resale. How does that compare to renting points, or for regular room?

Just like the Ferrari, once it’s paid for you only have to maintain it. And the last year you own it costs you the least.

I think if I was buying a ferrari, I would consider what the cost of leasing (or long term rentals) would be before deciding to purchase it.

All vacations are luxury items. Nobody is going to suggest that you will be wealthier by buying DVC. But DVC is an investment in reducing future vacation costs. The decision to purchase DVC is about 95% monetary. If it costed less to book DVC rooms a la carte, nobody would buy DVC.

 

[Minniesgal]

Heck no it spends you money cos you go more often and stay longer

 

[glamdring269]

It really just depends on how you look at it. We go every other year, and would have regardless, so I would argue that it does indeed save us money, especially when we opt to go the studio route and sell the points every other year. We "buy" our resort flexibility at 7 months by opting for a 1BR if studios are not available. This even opens up BWV/BC to us during F&W. In full transparency, we also bought our contract when the market was at near rock bottom a few years back. (Should have bought more...)

 

[karen4546]

This is probably just Disney math but .... imo it will save us if we plan on vacationing at least once a year. We enjoy mostly Deluxe resorts and have Platinum APs. AKL is our favorite but we booked 2 studios at BCV for September 2019. I just completed our May 2020 reservation for a value studio and a Club Level Studio at Jambo house. I have paid $450/night for club level at AKL with an AP discount and in April $280 with AP discount. We had 300 points we could use between these 2 vacations (September and May). When we bought this year we got 2018 points. So, we borrowed from 2019 to complete the booking. Now, when we buy more points (resale) then I will rethink how we use them.

We paid $176/point - 100 points and then we also paid our prorated dues. But, this year we have those 2 studios at BCV that were acquired with a little pixie dust. (welcome home booking)

 

[wariokartel]

As many have said, this depends completely on individual habits. Since you already stay at the higher level accommodations Disney offers you are more likely to benefit. I will say that anyone who says that DVC is not an investment is wrong. When you buy into DVC you are putting a large lump sum (and fees over time) with the expectation that over time you will get more value (monetary or otherwise) for that money than doing something else.

If you are looking at DVC as a means of "locking in a vacation at x Disney resort" then you should quantify what that is worth to you. Determining if it is a good investment would be the value of DVC (value of rooms and locking in / the cost of ownership) compared to the value of doing something else with your money.

Below I have copied an excerpt from an email that I sent to the podcast as a comment to a show a while back. I haven't adjusted the numbers for this particular case, but the values in the equations can be adjusted for whatever you want. I have been meaning to create a simple webpage that makes it easier, but haven't had the time. There are also refinements to these that I would like to make, but on the whole they stand up.

____

How much money are my DVC points worth?

I think that this is a question that can be answered fairly easily. The dollar value of your points can be derived from what money you are not spending that you would have spent anyway.

ex. I am a person that stays are Port Orleans Riverside the first week of December every year. I want to mimic that behavior with with Copper Creek. It cost 107 points for a week at the beginning of December. For this person, the value of their points for be:

[cost to stay at PO]/[number of DVC points used]

Assuming PO cost $250 a night:

1750/107 = ~$16.35 per point

I think the tendency for people would be to compare their deluxe DVC property against the cost of staying at another deluxe resort. I think that is not appropriate because each person should be evaluating DVC according to their own consumption habits and not according to perceived lifestyle that they do not have.

How can I know if it is worth buying DVC instead of renting hotel rooms?

Using a simple geometric series we can determine what the cost difference between renting hotel rooms and paying for DVC are over a given period of time.

ex. I am going to assume someone stays at PO every year for a week in early December. They want to know what the value of buying Copper Creek would be for the same trip. I am assuming they buy 110 points for the sake of ease. For the sake of example, I am assuming 5% hotel cost increase a year while DVC annual dues increase about 7% per year according to Disney. So after 20 years, how much money will I save?

(equation doesn't format well via email)

[cost of 20 years of stays at PO] - [20 years of annual dues] - [cost of contract]

(([cost of one week at PO]x(1-[rate of hotel increase]^[number of years]))/(1-[rate of hotel increase])) - ([Cost of annual dues]x(1-[rate of annual dues increase]^[number of years]))/(1-[ rate of annual dues increase ])) - [cost of DVC contract]

((1750x(1-1.05^20))/(1-1.05)) - (817x(1-1.07^20))/(1-1.07)) - 21270
=~ 57,865 - 33493 - 21270 = $3,102 of cost savings

You could also include the value of resale which would could be added as a positive amount after the cost of contract. You can use similar to the above to calculate the number of years until "breakeven."

What about renting points?

Let's make the same assumptions as above, but instead of renting a hotel room you rented points.

ex. I want 110 points at Copper Creek. Over 20 years, what is the cost savings I get by buying rather than renting? I will assume that the rental price of points increases at the same rate (7%) as annual dues and use $17 as rental cost per point in year 1.

110 x 17 = $1870 to rent 110 points

Same equation as before:

(([Cost of renting]x(1-[rate of rental increase]^[number of years]))/(1-[rate of rental increase])) - ([Cost of annual dues]x(1-[rate of annual dues increase]^[number of years]))/(1-[ rate of annual dues increase])) - [cost of DVC contract]

((1870x(1-1.07^20))/(1-1.07)) - (817x(1-1.07^20))/(1-1.07)) - 21270

= ~76,661 - 33,493 - 21,270 = $21,898 cost savings over 20 years

The reason that this cost savings is so much more than PO is due to a higher cost inflation compounding over time and a slightly higher starting cost. It is more likely that the cost to rent will increase at a slower rate that the cost of maintenance fees so this saving will be much smaller, but you can input whatever your own assumptions are.

What about opportunity cost?

With DVC you are making a big up front investment in hopes that you will gain long term value. Because of this, just comparing room cost against each other is not an appropriate measure of value. If you are spending $21k on DVC today, what are you not doing with that money?

ex. Instead of buying DVC, I save my $21k and instead place it in a CD account. Let's assume a modest average of 1.5% interest on that account which I can get from Wells Fargo today and I withdraw from that account once a year to pay for my Disney hotels.

The equation for this is more involved than I wanted to dive into as a thought experiment, but there is a useful tool for this already

https://www.bankrate.com/calculators/savings/savings-withdrawal-calculator-tool.aspx

ex. After 20 years, how much money will I have left if I withdraw a set amount from a 1.5% APY savings account.

Starting Amount: 21k (roughly cost of DVC contract)
Years of Withdrawals: 20
Rate of Return: 1.5%
Periodic Withdrawal: 1218.60 (this is the average difference over 20 years of annual dues vs PO)
Frequency: Per Year
Interest: Compounded Annually

You can see from the graph that you would run out of money right around in year 20. This would mean that over 20 years, if you utilized a savings account for the same money as DVC you are able to minimize the cost benefits of DVC in that time frame. This particular analysis is bias towards DVC because the periodic withdrawal would be backloaded in reality which allows better compounding and the rate of return is much lower than what a motivated saver could find with a couple hours work.

 

[Daisy1940]

Everybody is different, but point 2 caught me a little there. People who primarily stay in the cheaper resorts may be doing it because they offer a better value, not because they can't afford to spend the extra money needed for deluxe accommodations.
Before trying, and eventually buying into, DVC, I had visited 9 times prior, staying on property for 8 them, and only one of those trips had even been in a moderate.
That sort of visitor, as long as they can afford to pay for DVC, is a great candidate because then it is not all about saving money on future vacations, but is more about paying to upgrade them without paying the deluxe hotel prices they never would have paid otherwise.
In just 2 years of DVC ownership, it has cost me a lot more than beforehand, but I have gotten a much different and more pleasant experience on my vacations than I had gotten before as well.

This is the exact reason we are currently buying DVC. We can afford deluxe several weeks a year but would rather put that money elsewhere. The sticker price of deluxe never seems to offer good value for us compared to other ways to spend our money. DVC will allow us nicer accommodations than we would otherwise pay out of pocket for.

 

[Heather07438]

Our family likes to go once a year, that may change. We recently took a serious look at buying DVC, crunching costs and considering pros/cons. For us it still makes sense to rent DVC points.

1. We would not be able to pay the full contract upfront. Interest will eat the savings over renting. Right here, this is all that necessarily matters to our situation.
2. Even compared to buying full upfront, renting points doesn't cost more than ownership before the 15 year mark or more (tho we do lose the perks).
3. Renting affords more flexibility with future vacation interests and personal finances.

The outcome of our decision rests on rental market stability. Some owners will always need to temporarily offload points but Disney could possibly upset that market.
We're willing to pay a bit more for huge gains in flexibility. Instead of owning and being a captive audience, Disney will need to continue enticing us and I'm sure they'll have no problem

 

[CanadaDisney05]

2. Even compared to buying full upfront, renting points doesn't cost more than ownership before the 15 year mark or more (tho we do lose the perks).

While I agree with the rest of the post, your numbers may change significantly if you compare renting to the resale market (instead of direct purchasing). Depending on the variables you use, your break even will probably be in the 7 to 10 years depending on resort.

 

[Heather07438]

While I agree with the rest of the post, your numbers may change significantly if you compare renting to the resale market (instead of direct purchasing). Depending on the variables you use, your break even will probably be in the 7 to 10 years depending on resort.

You are right on that, and we considered 50+/-pts resale purchase followed by 75 pts direct for the perks. We probably only need around 125pts to fulfill our stay style w/ 1 child 17yo.

We rented 8day April '18 AKL-SV for $12.50/pt thru ebay and were very satisfied (close to 50% off rack rate iirc). Ebay would scare many ppl but we did our best to protect ourselves going in and the gentleman renting turned out to be great. Next on our list is likely BW or BLT and we don't mind sifting thru existing resv's to rent or having less than 6months notice to get a better deal.
Our preferred stay before considering the DVC world was Moderate with some type of discount. For the same budget, renting pts bumps us into a better category.

It's baby steps for us, lol. We have upgraded with no extra cost by renting. For now we'll need to get son thru college and hope to catch DVC direct offering a great deal after we're ready.

 

[MICKIMINI]

It wasn’t written from the point of view that guests at Values or Moderates couldn’t afford DVC. It’s the point you brought up—the Values and Moderates offer such a great value** that you may not save any money with DVC. Since studios get snapped up quickly, if you’re in a 1 bedroom, you’re generally looking at 210-250 points for a week. And let’s say you have 150 points. So year 1 you don’t go and probably pay $1,000 for maintenance fees and $560 per year for buying the points spread over the life of the contract with no financing charge because you bought your points with cash. Year 2 is your week at WDW. Still have to pay another $1,560 for that year. You’re looking at $445 per night with DVC, rolling over 50-80 points a year, which works out to “free lodging” once every 4-5 years. A Value or Moderate will almost always be cheaper than that.

**Given the price points at Disney these days, it’s hard to say that the Values and Moderates are great value when you can stay off property for so much cheaper
[/QUOTE

We bought OKW in 1996 after staying at Music...we bought 230 points and have continued to buy/sell over the years when we felt it beneficial. Spacious villas, covered porches and better theming are worth it to us...it's not all about money and going cheaper - to us anyway. Those two weeks a year are to be savored as we are frugal the other 50.

 

[Deb & Bill]

You are right on that, and we considered 50+/-pts resale purchase followed by 75 pts direct for the perks. We probably only need around 125pts to fulfill our stay style w/ 1 child 17yo.

We rented 8day April '18 AKL-SV for $12.50/pt thru ebay and were very satisfied (close to 50% off rack rate iirc). Ebay would scare many ppl but we did our best to protect ourselves going in and the gentleman renting turned out to be great. Next on our list is likely BW or BLT and we don't mind sifting thru existing resv's to rent or having less than 6months notice to get a better deal.
Our preferred stay before considering the DVC world was Moderate with some type of discount. For the same budget, renting pts bumps us into a better category.

It's baby steps for us, lol. We have upgraded with no extra cost by renting. For now we'll need to get son thru college and hope to catch DVC direct offering a great deal after we're ready.

You need to watch out for those Ebay and other sites selling RCI trades. That's illegal by RCI and DVC rules and they can cancel the reservation on you.

 

[Heather07438]

You need to watch out for those Ebay and other sites selling RCI trades. That's illegal by RCI and DVC rules and they can cancel the reservation on you.

Ooh that's good to know, thanks. I figured since legit websites rent DVC pts there wouldn't be an issue.
per https://disneyvacationclub.disney.go.com/faq/points/renting/ This looks like DVC allows renting, but not in a commercial capacity which they can conclude from rental activity (ie- the owner never uses their own pts). Maybe the DVC site itself spells it out better than that.

 

[crvetter]

Ooh that's good to know, thanks. I figured since legit websites rent DVC pts there wouldn't be an issue.
per https://disneyvacationclub.disney.go.com/faq/points/renting/ This looks like DVC allows renting, but not in a commercial capacity which they can conclude from rental activity (ie- the owner never uses their own pts). Maybe the DVC site itself spells it out better than that.

Correct DVC rental of the points is allowed. Currently commercial renting is defined as 20 or more reservations in a rolling 12 month window, this is when they will audit your account to see if commercial rentals are occurring. As for RCI they are not allowed to be rented, so if another timeshare owner (Hilton, etc) trades into DVC they are not allowed to rent that out.

 

[Deb & Bill]

A few clues to RCI trades include the note that a fee must be paid when you check in (like $190 or $95). Also, they usually are Sat to Sat or Sun to Sun. They are usually advertised for a full cost, like $1500 instead of $17 a point for 200 points. Finally, most are Saratoga Springs one bedroom villas.

 

[skier_pete]

I accidently posted this in another thread but was meant for here:

Here's what I know - factoring buy-in plus MF - I'm paying $411.14 for 3 nights at Boardwalk Villas this October (Sat-Tues) That $137.05 a night with no tax AND also I don't pay for parking (though I won't have a car).

Now I probably wouldn't be flying to Disney for a weekend without owning DVC and having such a cheap room - so I can't say that I am "saving" money.. But I did a quick search on the same 3 nights at Boardwalk and it would cost me $1647.00 to get a cash room for the 3 nights. Again, I would never, ever pay that - so I'm not really SAVING $1,200. I'm really just upgrading my lifestyle. Instead of having NO trip to Boardwalk/WDW, I am having a 4 day/3 night trip to BWV for $411.