DVC – Why the Numbers Don’t Add Up for Me

Mark J. (NDD#102) (33 Posts)

Mark was born and raised in Fayetteville, WV. He first visited Disney World back in 1975 and was instantly hooked. He returned several times as a child and now brings his own family as often as possible. Being a new lawyer, however, that isn't as often as he'd like. Mark is married to Sherri, NDM#237.

I recently received an offer from Disney.  They would send me a free $25 gift card if I would call the number they gave me and listen to a 10-minute presentation on the Disney Vacation Club.  Never one to pass up anything free, I took them up on this offer.

I’ve looked at DVC before.  I really do like the concept of owning a little piece of Disney World.  And with us going there every year, it sounds like it might save us money in the long run.  But every time I’ve considered buying into DVC, I’ve never been able to see the cost savings.  At the time I received my offer, they were offering discounts of up to $20 per point purchased.  If there was ever a time to buy into it, this was it.

I made the phone call, and the sales pitch was very low key.  I was on the phone about 20 minutes.  The sales rep took my information and walked me through a few pages of their website, then promised to mail me some more information, which arrived a couple of days later.

Once the information packet arrived, I began to look at the numbers to see if I’d save any money by purchasing DVC.  Looking at the points per night chart for Animal Kingdom Lodge, it appears we’d have to purchase around 250 points in order to stay a week in a one-bedroom villa during the summer, when we typically go.  This would normally cost $30,000, but with the incentive Disney was offering, I would get $4,000 off.  I’d still have to put down 10 percent of the regular purchase price, or $3,000.  The discount would come off of the amount financed.  With Disney’s “preferred” financing rate of 11.75 percent, and a 10-year loan, I’d pay $326.67 per month, or $42,200 in all.  (All of my figures come from Disney’s information.)

In addition, I’d have to pay yearly dues.  In 2011, these dues were $1,253.58 a year.  They go up a little every year, but exactly how much is impossible to predict.  In order to make the math bearable, I just assumed the dues would remain the same, with the understanding that this would result in my figures being on the low side.  Over 45 years, I’d pay around $56,414 in dues.

The Animal Kingdom DVC contract gives you an interest in the property until 2057, or roughly 45 years.  So, with the $42,200 in principal and interest, combined with the $56,414 in dues, I’d pay $98,614 to cover my lodging for one week a summer for the next 45 years.  Considering that the dues amount will actually go up each year, this averages out to somewhere around $2,200 per year, with most of that being paid in the first 10 years.

So what would I pay if I didn’t buy into DVC?  It’s a little hard to say.  Disney will obviously raise its prices each year.  And some years I stay in a value, some years in a Deluxe, and some years (like this year) in both.  For 2012, a week in an Animal Kingdom Lodge standard view room during the summer would run us $2,222 with taxes.  That’s assuming rack rate, but I’ve never paid rack rate.  There’s always some sort of discount.  So let’s assume a 20 percent discount.  That’s pretty conservative; I’ve had as much as a 42 percent discount.  Knocking 20 percent off the price of the room puts the price for a week down to $1,778.  That’s one of the things Disney doesn’t like to point out.  Once you buy into DVC, free dining and other room discounts are gone.

But we all know Disney’s resort rates go up every year.  The $1,778 I might pay this year will surely increase every year.  I hate to think what it will be 45 years from now.  The advantage of DVC is that your price is locked in.  The other problem with this comparison, however, is that it assumes I stay at a room that costs as much as an Animal Kingdom standard view room every year.  I spend about half my vacations in a Value.  So my average weekly cost without DVC will probably be less.

Another problem I have with DVC is the lack of flexibility.  As a DVC member I’m either limited to the number of nights I can get with my points, or I have to buy additional points.  Without those restraints, I’m free to do as I did last summer and spend a week in a Value and a week in a Deluxe.  If money’s tight one year, I can just spend a week in a Value, or not go at all.  Once I commit to DVC, I’m paying that money every year whether I go or not.  Sure, I can bank my points or rent them to someone else, but that’s much more of a hassle in my mind.

When I explained my math to the DVC sales rep, he told me I wasn’t making a fair comparison—a one-bedroom villa has way more square footage than a room at the Lodge.  The fair comparison, he explained, was a Studio, with approximately the same square footage.  I disagree.  A Studio only has one bed and a foldout couch.  I want real beds, and to get that from a DVC, I need the one bedroom.

And this is the problem I have with DVC and their advertising.  They compare the price of a Deluxe Villa room (at rack rate) to what you’ll pay through DVC membership (minus dues) to claim that your DVC membership will “pay for itself” within a few years.  That’s a deceptive comparison.  The accurate comparison is what I will pay for lodging with DVC to what I will pay for lodging without DVC.  And what I would pay for lodging without DVC can be as little as $700 a week, if I stay at a Value with a decent discount.

Imagine that I normally buy a sedan valued at $20,000.  But my brother-in-law owns a car dealership and I always get a $5,000 discount.  Another dealership, however, is offering a tricked-out sports car with all the accessories, worth $50,000 for “only” $40,000.  If I buy the sports car instead of the sedan, did I save $10,000 or spend $25,000 more than I normally would?

Now, obviously a room at All-Star Music doesn’t compare with a one-bedroom villa at Animal Kingdom Lodge any more than a sedan compares to a fully-loaded sports car.  And money isn’t everything; otherwise, a Value would always beat out a Deluxe or Moderate room, or for that matter, an off-site room would always beat an onsite room.  I guess the difference is that when I compare the cost difference between staying off-site and staying onsite, the amenities I get—theming, location, Disney transportation—seem worth the price.  Likewise, the bigger room, better restaurants, better location, etc. that I get by staying at a Deluxe seem worth the extra price I’ll pay.  But to get a room with more floor space and no more beds, in essentially the same resort I can stay at otherwise, doesn’t seem worth the increase in price and decrease in flexibility.

So when might DVC pay off?  Well, as I said above, if that’s where you would be staying anyway, it definitely makes sense.  I can see it paying off if you have a large family of five or more and want to stay on property.  Or if you always stay at Deluxe properties, especially the higher-end resorts, like Contemporary or Grand Floridian.

Have I missed anything?  I’d like to hear from any DDl’ers who are DVC members.  Why did you buy into it?  Do you feel that it’s paid off economically?

Mark J. (NDD#102)

Mark was born and raised in Fayetteville, WV. He first visited Disney World back in 1975 and was instantly hooked. He returned several times as a child and now brings his own family as often as possible. Being a new lawyer, however, that isn't as often as he'd like. Mark is married to Sherri, NDM#237.

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