Trying to Understand the cost of DVC per night

[DebZip]

I was just reading on this site wonderful information about the DVC, but I am still a little confused.

For Disney's Old Key West (OKW) resort, the cost is $140 per point and you have to buy 100 points up front.

According to the points per night chart (I printed out next year's instead of this year's), OKW is 10 points a night (Su-Thu) for Deluxe studio, so at $140 per point, is that $1400 for one night?
Is this right?
Why would I pay that when Florida resident price is $228 (based on this year/same time frame)

Can someone please enlighten me if I have it wrong.

 

[Dreamin192]

I have a 100 point contract at the Poly. I get 100 points a year. You pay a set amount per point but you only pay once. So, I paid $171 a point, but I get to use those points for the next 49 years. So really I'm getting 4900 points over the length of my contract.

 

[calleger]

You are not buying into a club that enables you to buy points to be used at the resort. You are buying real estate. The points are used as a representation of that purchase. You inform Disney when you intend to use your interest in the property and your points are updated accordingly.

When trying to compare rental cost to DVC I used this basic formula:

Final cost of points(purchase price + interest from any loans)/total points (yearly allotment x total years of ownership[Final Year of contract - First year of ownership]) + yearly dues = approx. actual cost per point

I then took that cost per point and multiplied it by the amount of points I would be using on the room of choice.


disclaimer: I am not, nor do I pretend to be, an accountant. I assume this basic equation is missing some elements.

 

[NS8VN]

Right, as Dreamin192 said, this is a timeshare where you buy in and get 100+ points a year for at least as long as the land contract is for (and probably longer as they will often be renewed). We own 300 points of SSR that we paid $170/point for. So each year we get 300 points to use for any DVC resort, DCL cruise, or Disney Adventures we want. We can also bank them for future years or exchange them on RCI for other destinations. So it is a big upfront cost but over time you save money. I think Consumer Reports did the math and including upkeep you break even after about a decade and after that you are net positive. Don't forget to factor in annual dues as well, which range about $5-6 per point. But as an example we are staying at BLT in January for 40 points a night, a room that rents for nearly $900 a night in the same time frame. With the annual dues factored in we are saving almost $700 a night, so it adds up over the years.

 

[drusba]

You need to do a lot more research into DVC before deciding to buy (or not to buy), including getting info on the resale market where prices are a lot less than from Disney. The price per point you pay is a one time price to get the same amount of points annually for a period of many years; for OKW when buying from Disney the contract is good until 2057 and thus for that $140 per point one time charge, you would get 100 points every year to make a reservation every year until 2057 when the contract ends.

That means your actual reservation cost per night is likely about $100 a night, if you use 10 points a night, in current dollar value when you consider you will have 40 like visits over the next 40 years. However, cost of ownership and nightly cost is not really that cheap as you also have to pay annual dues, currently $6.01 a point for OKW and those tend to rise a little annually. You may want to start your research by going here:
http://www.disboards.com/threads/dvc-resource-center.3516203/

 

[DebZip]

Thank you all for your explanations. Previously I read about people buying more points, so I was not aware of receiving the hundred points every year without further payments (aside from annual fees).
So for the initial $14000 for OKW, that covers my 100 points every year until the end of the purchase contract in....2057.....41 years of getting 100 points every year.
Am I comprehending this right? I'm sorry about my math comprehension, I am more of a history girl than math.
The dvc-resource thread is where I was initially reading.
I think my next step is to order a DVC brochure & DVD and then speak with a rep. I love Disney, want to live in Disney, but I just couldn't understand the cost-effectiveness of the DVC versus just getting a hotel room. Hopefully more reading here will help me to understand. The DVC has been on my mind off and on since its conception.

 

[bumbershoot]

So for the initial $14000 for OKW, that covers my 100 points every year until the end of the purchase contract in....2057.....41 years of getting 100 points every year.

Yes.

I think my next step is to order a DVC brochure & DVD and then speak with a rep.

I think that's your LAST step. Seriously, those are *sales* brochures and people. They aren't *info* people.



People buy more points in two ways.

1. One Time Use points, which you can get at $15 per point, up to 24 (25?) points per Use Year. I have purchased them when I have banked and borrowed and used current and am just a few away from what I need.

2. You find that your vacations are going over what your points give you. We have 160 points and that's been great since 2009. Until the last couple months I haven't once thought "we should buy more points", but then a couple trips have me wishing. But we aren't going to continue that level; Disney annoys me more than it thrills me at this point, and the stays we have booked aren't necessarily for the themeparks, but because we'll be in the area (rundisney-related and pre/post-cruise-related) and hey, we have DVC.


But you don't buy more points every year in order to keep staying there.

 

[chalee94]

OKW (Extended) contracts expire on Jan 31, 2057 so realistically, 2056 is the last year of expected use.

But yes, you are actually paying for 100 pts per year for 40 years. So $14k divided by 4000 pts is $3.50 per pt. (I would adjust for present value as paying $14k upfront hurts a lot worse than $3.50 per pt per year. )

You'd also owe annual dues - currently $6 per pt per year but they tend to increase every year.

Upfront costs of $14k are like the costs to purchase a house. Annual dues are like ongoing costs to maintain the house (HOA fees, utilities, furniture, property taxes, insurance, mowing, plumbing, etc.)

But for weeknights in low season at OKW, you can see how the numbers ballpark to less than a moderate hotel room plus tax...

But you do need to take some time to learn the system and see if it might work for you.

 

[DebZip]

OKW (Extended) contracts expire on Jan 31, 2057 so realistically, 2056 is the last year of expected use.

But yes, you are actually paying for 100 pts per year for 40 years. So $14k divided by 4000 pts is $3.50 per pt. (I would adjust for present value as paying $14k upfront hurts a lot worse than $3.50 per pt per year. )

You'd also owe annual dues - currently $6 per pt per year but they tend to increase every year.

Upfront costs of $14k are like the costs to purchase a house. Annual dues are like ongoing costs to maintain the house (HOA fees, utilities, furniture, property taxes, insurance, mowing, plumbing, etc.)

But for weeknights in low season at OKW, you can see how the numbers ballpark to less than a moderate hotel room plus tax...

But you do need to take some time to learn the system and see if it might work for you.

Thank you, I am really better understanding all this. I wish I understood it a few years ago. I plan to do a lot more reading though, but I think I am getting to the understanding that I need to decide yea or nay.

 

[_auroraborealis_]

So, to use your example of OKW direct (which is not a good purchase, IMO) and 100 points:

$140 per point over 40 years = $3.50 per point per year.
Annual dues, current, are $6.01 per point.

Current annual cost of ownership is $9.51 per point per year.

You can do all sorts of complex 2.5% dues increase per year calculations if you'd like to show the impact of dues inflation.

So, the cost of ownership of 100 points of OKW purchased direct would be $951 for this year. 100 points would buy you a week in a Studio in Dream Season, more in Adventure/Choice, and less in Magic/Premier seasons. In any season, it would get you less than a week in a larger unit, or in studios other resorts at 7 months (generally).

Purchased via resale, the same OKW points would have an annualized cost of $8.10-8.50 per point for the current year.

 

[com_op_2000]

... I think my next step is to order a DVC brochure & DVD and then speak with a rep. I love Disney, want to live in Disney, but I just couldn't understand the cost-effectiveness of the DVC versus just getting a hotel room. Hopefully more reading here will help me to understand. The DVC has been on my mind off and on since its conception.

OP, I agree with the PP who stated that this should be your last step:
You are doing the right thing by doing your research up-front.
Read these threads on the DIS and understand the following terms:
UY
MF
HR
11 month and 7 month booking windows
Concierge Collection
RCI
CM
MS
Direct vs resale
Rule of 4
Once you have a full understanding of these terms.
Then read some more.

 

[cedricandsophie]

I am not financially astute by any means. We have over 1400 points at seven resorts. Most purchased resale. We buy on emotion. We love Disney without much thought to the overall price. And I know we are lucky and blessed to be able to do that without incurring debt. So because it's paid for for me it's about seeing how much value we can get out of our points each year compared to our annual dues. In may we went to aulani for 10 days, our fourth trip and stayed in s one bedroom ocean view. We have stayed about 35 nights at aulani over the last 4 years always in an ocean view. At a minimum of 1000 a night we would have spent over 35000 on rooms just for aulani. Would we have done that without DVC points? Never. But we can. I once figured that over a 9 month period we had used or given away 80 days at Disney. At an average of 500 a night because some were at aulani, plus four nights in the ocean front cottage at vero and many other nights in at one bedroom and often two bedroom villas at other resorts we own like Boardwalk, wilderness, animal kingdom, Okw and Boardwalk, we would have spent at least $40000 on those rooms. Again would we have done that without dvc? No.

We can vacation in the best rooms for as long as we want without concern. And we can give points to our kids. We never use for the cruise because it seems like a better use for our points. Bottom line most financial experts would say we don't buy in a fiscally responsible way. But we sure get our use out of them.

 

[Dreamin192]

OP, I agree with the PP who stated that this should be your last step:
You are doing the right thing by doing your research up-front.
Read these threads on the DIS and understand the following terms:
UY
MF
HR
11 month and 7 month booking windows
Concierge Collection
RCI
CM
MS
Direct vs resale
Rule of 4
Once you have a full understanding of these terms.
Then read some more.

Agreed. When we met with the rep a few weeks ago on our trip and bought in he didn't have a whole lot to tell us because I had already researched a lot and knew it would work for us. You new to look at how you vacation, how often and where you stay, what you spend, etc to figure out if it makes sense in the long run.

 

[_auroraborealis_]

Also, frankly, call them Guides all you want, they are timeshare sales personnel. Never trust them to be 100% transparent with you. The staff vary on their honesty levels, widely.

When they tell you "you can always book another resort at 7 months!" it's true, but not a complete statement. What resort and room type you can book will absolutely depend on time of year and room type desired.

When they tell you "you can trade for RCI and cruises!" they don't tell you what those point charts look like and how unlikely your 100-point buy gets you anywhere.

etc.

 

[Dean Marino]

All I can relate is what WE do....

We know what our initial DVC investment was... all cash. We know, year to year, what our Dues are. When we joined DVC? We put together a simple EXCEL Spreadsheet.

For each trip, we SNOOP to find out what the REAL Rack Price is for any particular trip. We take our Dues Point cost for that year, and allocate it over that years trips. The difference between discounted rack (REAL rack), and our cost based on dues, gets subtracted from our initial investment price, which continues to go down quickly.

You see - you really save NOTHING until your initial investment is paid for. The time required for this varies. In our case? "Break Even Over Discounted Retail Price" will occur 5 years after our initial investment. For some? This can take 8 years.

I have not bothered with the "Time Value of Money" component due to the silly returns that about $28K over 5-10 years yields these days. At about 4% return - we would have seen about $6000 worth of return on the initial investment. I'll refine the spreadsheet to reflect this as we near "break even" - could push us out to 7 years.

The take away - one saves ZERO from DVC INITIALLY. It's critical to determine HOW the upfront cost is paid for, ABOUT haow long "Break Even" will take, and to IGNORE published "Rack Rates" - using published DISCOUNTED RATES as your guide.

Now - what happens AFTER "Break Even"? You make out like a bandit . We have not HIT Break Even. When we do, our nightly cost, at our Home Resort, will be ABOUT $100 per night. TYPICAL public discounted cost is about $325 per night.

For all of this to happen.... we have to hit "Break Even" FIRST. As you can see, these calculations depend on YOUR particular needs, and vacation habits - as well as some significant GUESSING about projected "Real Rack" based on current room discount trends. But bottom line? DVC really IS a multi year commitment, before you see one CENT of real savings.

 

[supersnoop]

Is this right?

Nope. You missed the part where the points are annual for 50 years.

 

[chalee94]

Nope. You missed the part where the points are annual for 50 years.

this would be true for the poly, not for OKW...

OKW expires in Jan 2042, unless it has been extended - which all direct OKW sales have been - in which case OKW expires in Jan 2057.

 

[Baklava]

Also, frankly, call them Guides all you want, they are timeshare sales personnel. Never trust them to be 100% transparent with you. The staff vary on their honesty levels, widely.

When they tell you "you can always book another resort at 7 months!" it's true, but not a complete statement. What resort and room type you can book will absolutely depend on time of year and room type desired.

When they tell you "you can trade for RCI and cruises!" they don't tell you what those point charts look like and how unlikely your 100-point buy gets you anywhere.

etc.

Your guide didn't show you those charts? Ours did and walked us through what was a good deal and what was less advantageous. We knew a fair bit of what he told us from doing our research ahead of time, but we liked that he told us outright that there might be better ways to do a cruise than using our points.

 

[_auroraborealis_]

Your guide didn't show you those charts? Ours did and walked us through what was a good deal and what was less advantageous. We knew a fair bit of what he told us from doing our research ahead of time, but we liked that he told us outright that there might be better ways to do a cruise than using our points.

As I said: The guides vary on their honesty/transparency. I think we've all seen various reports from people on what they were told/understood.

 

[suebeelin]

I was just reading on this site wonderful information about the DVC, but I am still a little confused.

For Disney's Old Key West (OKW) resort, the cost is $140 per point and you have to buy 100 points up front.

According to the points per night chart (I printed out next year's instead of this year's), OKW is 10 points a night (Su-Thu) for Deluxe studio, so at $140 per point, is that $1400 for one night?
Is this right?
Why would I pay that when Florida resident price is $228 (based on this year/same time frame)

Can someone please enlighten me if I have it wrong.

As the others have mentioned, you are allocated points every year (for which you pay maint fees per point) until the expiration of the contract after your initial outlay/purchase.

However, I would recommend highly that you buy resale UNLESS The Polynesian is the resort you choose to buy. It is the only resort, IMO, worth purchasing direct through Disney.

I believe Okw is selling for $70-90, depending on the expiration date of the contract.l (2042 or 2057). As a result, you could conceivably save up to $50pp if you buy resale. Since you live in Florida, the restrictions on a dvc annual pass/TIW on resales is not going to apply to you. However, the member exclusive events and access may be of interest, and worth the additional expense.

http://www.disboards.com/threads/ro...ost-for-instructions-formatting-tool.3497913/

Again, I highly recommend poly of buying direct. Hope this helps.