Fall Direct Incentives

[AstroBlasters]

We got a low floor standard view that mostly shrubs (and maintenance people walking by below)— but most of the preferred views are views I would be annoyed to have paid extra for…I do think the dead on view is the waterside on higher floors is charming.

There really isn’t much of a point difference…. a day I was looking at in August it was 23 points vs 26 points.

 

[HyperspaceMountainPilot]

There really isn’t much of a point difference…. a day I was looking at in August it was 23 points vs 26 points.

So 3 points times (dues+ToT+$200/50) is about $48? Does that sound right? Look, I think paying an extra 3 points is still probably a win v DLH or VGC cash rates, and I guess PP cash rates are nuts now that it’s undergone a facelift. That used to be the value hotel with some of the nicest views. Anyway, I would be happy to pay an extra $50/night for a nice view, but I would be annoyed to spend an extra $50/night and get a view that’s about the same or worse than a standard view…but I also don’t spend more than a few minutes looking out my window each day when staying at DLR.

 

[AstroBlasters]

So 3 points times (dues+ToT+$200/50) is about $48? Does that sound right? Look, I think paying an extra 3 points is still probably a win v DLH or VGC cash rates, and I guess PP cash rates are nuts now that it’s undergone a facelift. That used to be the value hotel with some of the nicest views. Anyway, I would be happy to pay an extra $50/night for a nice view, but I would be annoyed to spend an extra $50/night and get a view that’s about the same or worse than a standard view…but I also don’t spend more than a few minutes looking out my window each day when staying at DLR.

Ok, so by that logic 23 points is $368 and 26 points is $416… and includes parking.

But wait…. those 23 points cost you $208pp…$4784 upfront… so using a RFOR of 4% = an additional $191….so the VDH SV is $559….

26 points = $632….

Current cash price for DLH Standard View hotel room + tax on the same night in August is $593 + $40 for parking so $633…

and sometimes (though generally not when we can travel) there are rack rate discounts in the hotel side….

Westin, 2 queens, no view for the same night is $526 with tax + $35 for self park… so $561…

Of course, part of the value of DVC is that over time you’ve long forgotten your DVC buy in and only have the $11.50ish (adjusted for inflation) in dues and TOT on those 23 points… so it feels like $264 a night with Disney math.

 

[VGCgroupie]

Ok, so by that logic 23 points is $368 and 26 points is $416… and includes parking.

But wait…. those 23 points cost you $208pp…$4784 upfront… so using a RFOR of 4% = an additional $191….so the VDH SV is $559….

26 points = $632….

Current cash price for DLH Standard View hotel room + tax on the same night in August is $593 + $40 for parking so $633…

and sometimes (though generally not when we can travel) there are rack rate discounts in the hotel side….

Westin, 2 queens, no view for the same night is $526 with tax + $35 for self park… so $561…

Of course, part of the value of DVC is that over time you’ve long forgotten your DVC buy in and only have the $11.50ish (adjusted for inflation) in dues and TOT on those 23 points… so it feels like $264 a night with Disney math.

You had me at Disney Math

 

[HyperspaceMountainPilot]

Ok, so by that logic 23 points is $368 and 26 points is $416… and includes parking.

But wait…. those 23 points cost you $208pp…$4784 upfront… so using a RFOR of 4% = an additional $191….so the VDH SV is $559….

26 points = $632….

Current cash price for DLH Standard View hotel room + tax on the same night in August is $593 + $40 for parking so $633…

and sometimes (though generally not when we can travel) there are rack rate discounts in the hotel side….

Westin, 2 queens, no view for the same night is $526 with tax + $35 for self park… so $561…

Of course, part of the value of DVC is that over time you’ve long forgotten your DVC buy in and only have the $11.50ish (adjusted for inflation) in dues and TOT on those 23 points… so it feels like $264 a night with Disney math.

Wait, are we double counting the buy in cost here or are you just making it much more expensive than I had it by dividing upfront cost by ~50?

In any event, we routinely stay at the Westin on the weekend for less than $400 a night (though it’s more like $450 with tax and parking). Usually we have a much better view than VDH preferred— but there’s an extra 5-10m of walking.

 

[AstroBlasters]

Wait, are we double counting the buy in cost here or are you just making it much more expensive than I had it by dividing upfront cost by ~50?

In any event, we routinely stay at the Westin on the weekend for less than $400 a night (though it’s more like $450 with tax and parking). Usually we have a much better view than VDH preferred— but there’s an extra 5-10m of walking.

I was comparing the properties based on pricing for August 5th. So the Westin rate I quoted was directly from their website and was for there most basic double queen room with no view.

I don’t think I was double counting the buy in. I was using your number of $48pp and then adding an additional TVM based on a risk free rate of return of 4%.

So: $208pp buy in * 23 points = $4784.

$4784 x 4% RFROR = $191

So start with your calculation of 3 points Buy In + Dues + TOT = $48

23 points a night therefore = (23/3) * $48 = $368

Add the $191 TVM to $368 and you get $559 per night for SV studio

 

[AstroBlasters]

For comparison at Grand Cal:

26 points for a studio.

$225 buy in/ 35 years is $6.43 a year
Dues are $8.55

($8.55 + $6.43) * 26 =$390

Add in TVM of ($225 * 26) * 4% =$234.00

$234 + $390 =$624.00

So the currently posted prices for August 5th:

VDH Studio SV = $559
Westin 2Q no view= $561
VGC Studio = $624
VDH Studio PV = $632
DLH 2Q SV = $633
Grand Cal = $950+

Or…. they are points… basically free! Hooray!

 

[Mikey15]

I was comparing the properties based on pricing for August 5th. So the Westin rate I quoted was directly from their website and was for there most basic double queen room with no view.

I don’t think I was double counting the buy in. I was using your number of $48pp and then adding an additional TVM based on a risk free rate of return of 4%.

So: $208pp buy in * 23 points = $4784.

$4784 x 4% RFROR = $191

So start with your calculation of 3 points Buy In + Dues + TOT = $48

23 points a night therefore = (23/3) * $48 = $368

Add the $191 TVM to $368 and you get $559 per night for SV studio

I don’t think it’s adding value to look at it this way. If you’re borrowing money to purchase the points, sure, factor in the interest cost. If you’re pulling out of savings (or funds that would otherwise be saved), it does theoretically make sense to factor in what you would have made on that money somehow, but what you’ve provided is looking at year 1 and year 1 only, of a multiyear vacation plan.

Even if you want to cut it off and only look at the first 5 years or something, you should take off from the $4,784 the cash outflow for a night at Weston each year. If you’re avoiding that $500 or whatever each year of the comparison period, then your net difference in year 1 outflow would be ~$4,284, or $171.36 at RFROR.
But then in years 2, 3, 4, 5, your cash outflow owning the points is the $368, where it remains $500 or whatever for a cash rate hotel room. On a net basis you’re out flowing less cash each subsequent year, which gradually reduces the basis amount for your 4% opportunity cost factor.

 

[AstroBlasters]

I don’t think it’s adding value to look at it this way. If you’re borrowing money to purchase the points, sure, factor in the interest cost. If you’re pulling out of savings (or funds that would otherwise be saved), it does theoretically make sense to factor in what you would have made on that money somehow, but what you’ve provided is looking at year 1 and year 1 only, of a multiyear vacation plan.

Even if you want to cut it off and only look at the first 5 years or something, you should take off from the $4,784 the cash outflow for a night at Weston each year. If you’re avoiding that $500 or whatever each year of the comparison period, then your net difference in year 1 outflow would be ~$4,284, or $171.36 at RFROR.
But then in years 2, 3, 4, 5, your cash outflow owning the points is the $368, where it remains $500 or whatever for a cash rate hotel room. On a net basis you’re out flowing less cash each subsequent year, which gradually reduces the basis amount for your 4% opportunity cost factor.

I agree with you and have run and posted cash flow based analysis in the past and invite you to do the same if you think it would provide value to the thread. I found that most people wanted to keep things pretty high level.

I was simply riffing off of @HyperspaceMountainPilot’s number on the delta between 23 and 26 points being worth $48.

 

[Mikey15]

I agree with you and have run and posted cash flow based analysis in the past and invite you to do the same if you think it would provide value to the thread. I found that most people wanted to keep things pretty high level.

I was simply riffing off of @HyperspaceMountainPilot’s number on the delta between 23 and 26 points being worth $48.

Okay. High level is fine, but my issue was high level with the premise of only looking at year one when comparing to a product (vacation ownership plan) where the cash-basis savings only materialize over time:


I can throw details at you if you prefer. HMP used a cost per point per year based on a full 50 year ownership, and even with the simple version of that calculation the $48 per night is directionally correct. The annual additional cash expenditure appears to be $37 in real (constant) dollars, plus the impact over time of the upfront purchase:

 

[AstroBlasters]

Okay. High level is fine, but my issue was high level with the premise of only looking at year one when comparing to a product (vacation ownership plan) where the cash-basis savings only materialize over time:
View attachment 902337

I can throw details at you if you prefer. HMP used a cost per point per year based on a full 50 year ownership, and even with the simple version of that calculation the $48 per night is directionally correct. The annual additional cash expenditure appears to be $37 in real (constant) dollars, plus the impact over time of the upfront purchase:
View attachment 902336

I get the spreadsheet. Bottom line for you is it’s a 30 year breakeven vs a $500 hotel room assuming a 4% RFOR.

For fun, run VGC vs a $500 hotel room with the lower dues and no TOT and a $225pp buy in over 36 years.

 

[HyperspaceMountainPilot]

I get the spreadsheet. Bottom line for you is it’s a 30 year breakeven vs a $500 hotel room assuming a 4% RFOR.

For fun, run VGC vs a $500 hotel room with the lower dues and no TOT and a $225pp buy in over 36 years.

I am too lazy to do the math or even follow it, but I am very curious to hear the answer.

 

[Mikey15]

I get the spreadsheet. Bottom line for you is it’s a 30 year breakeven vs a $500 hotel room assuming a 4% RFOR.

For fun, run VGC vs a $500 hotel room with the lower dues and no TOT and a $225pp buy in over 36 years.

Technically that 30 year point where it goes to black is where the present value of the cash flows of buying VDH vs. spending $500/night on a hotel room goes positive, even considering you could earn 4% on the upfront purchase amount risk-free in a CD.

So if you stayed in that studio every year for 30 years, vs staying in a $500 hotel every year for 30 years, you eventually see the present value of the cash you put out “returned” to you. In the convoluted way of comparing it to stashing the purchase price in a CD and gradually using it for $500/night hotel stays...

It’s actually year 9 on that sheet where the PV of cash flows divided by the nights dips below $500 and into $4xx, so that’s where you “break even” for purchase vs hotel.

I am too lazy to do the math or even follow it, but I am very curious to hear the answer.

See ya real soon!

 

[nerdboyrockstar]

Maybe it's that the back side of this hotel has the worst views of any DVC anywhere (yep, here's your view of a parking lot that bleeds out into endless urban sprawl hemmed in by a gray layer of distant smog).

And that was my Preferred View.

 

[HyperspaceMountainPilot]

Technically that 30 year point where it goes to black is where the present value of the cash flows of buying VDH vs. spending $500/night on a hotel room goes positive, even considering you could earn 4% on the upfront purchase amount risk-free in a CD.

So if you stayed in that studio every year for 30 years, vs staying in a $500 hotel every year for 30 years, you eventually see the present value of the cash you put out “returned” to you. In the convoluted way of comparing it to stashing the purchase price in a CD and gradually using it for $500/night hotel stays...

It’s actually year 9 on that sheet where the PV of cash flows divided by the nights dips below $500 and into $4xx, so that’s where you “break even” for purchase vs hotel.


See ya real soon!

So the break even is actually year 9?

 

[nerdboyrockstar]

Maybe my value for DVC is skewed because I own at Riviera and Disney charges $1,000 a night there regularly for a Studio? Also using points at VDH over Christmas which is also being sold cash for over $1,000 a night. That adds up QUICK. No fancy math or charts necessary. For me, DVC is paying for itself every time I stay at these resorts and don't pay these rates that I would, honestly, never pay.

 

[Mikey15]

So the break even is actually year 9?

At a 4% discount rate and assuming the same 4% inflation in Dues/TOT/hotel cost, 9 years is where the present value of the cash to buy & use VDH points becomes lower than the present value of the cash to stay in a $500/night (all-in, so $4xx+tx&fees) hotel for 9 years.

There’s still the caveat of “but would you actually stay in a $500/night hotel each year for 9 years or would it be an every other year thing?” that we have to be realistic about.

 

[VGCgroupie]

View attachment 902739
At a 4% discount rate and assuming the same 4% inflation in Dues/TOT/hotel cost, 9 years is where the present value of the cash to buy & use VDH points becomes lower than the present value of the cash to stay in a $500/night (all-in, so $4xx+tx&fees) hotel for 9 years.

There’s still the caveat of “but would you actually stay in a $500/night hotel each year for 9 years or would it be an every other year thing?” that we have to be realistic about.

I haven’t been following all the numbers but I was calculating some of my own numbers last night and realized the 2 bedroom at VDH is $2,000 a night for my stay in Feb . This is how I want to roll. I don’t want to roll at Hyatt or Sheraton. So my break even will be much sooner. Also calculated a studio in Feb. That would put my break even much farther out, but personally I would still be staying on property never off site, that’s just not the way I want to vacation.

Personally I think there’s a stronger argument to be had for staying at Pop or Aoa vs buying DVC over in WDW. I don’t think DL has a good comparison staying cheaper is a completely different experience.

 

[Mikey15]

Personally I think there’s a stronger argument to be had for staying at Pop or Aoa vs buying DVC over in WDW. I don’t think DL has a good comparison staying cheaper is a completely different experience.

Resale’s a better deal at WDW than the DL options too, at least. At $100 resale and 29 years left, Saratoga Springs is about $11.60 pppy. For a 15pt/night Preferred Studio in early December that’s $174/night, which is probably better than Pop taxes-in for the same period (granted Disney Springs location vs Skyliner).

Granted my offsite 2 bed timeshare works out about the same per night as that Studio, so there’s definitely more “cheaper alternative” variety down east.

 

[tx911]

Sorry if this has been answered previously, but does anyone know if they are offering Magical Beginnings on any properties this cycle? I have heard they are not on Poly, but wasn't sure about Riviera, etc.