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?

26 thoughts on “DVC – Why the Numbers Don’t Add Up for Me

  1. We became members because we were spending the same amount on lodging on a per year basis as what we were able to finance our membership for.  We hit our break even point in less than 5 years, even when including annual dues.  Now, with the membership paid off, I can stay in a 1 BR Villa at Bay Lake Tower for a week for what I spend in dues alone- which is around what I would pay for a value resort for the same time frame.  I could even stay longer if I chose other DVC resorts and room types that use fewer points.  So far, been very pleased with flexibility as well. 

    At the same time, 5 years ago, their preferred interest rate was 10.5%. 
    If it is 11.75% now, then its time to look at alternate financing
    methods.  Even HELOC’s are running at 5 and 6%.

    The thing is that I think the buy-in from DVC is rather high now.  Looking into the resale market as a way to get into DVC is a better idea, even if the memberships being sold on the resale market have some extra restrictions.

    DVC may have its pros and cons.  For some, it may not be a good fit.  And that is OK. We researched it for at least 3 years before buying in.  And for us – it is starting to pay off.  I just wish I did it sooner when the buy-in was less.

  2. I have debated the cost vs. the value of DVC as well.  It doesn”t seem to add up for our family either when you factor in the interest rates. 

  3. It took us more than 10 years to become members because with financing it makes the break even point longer and for us harder to justify. When we could finally pay cash for the points was when we joined.  This was just a few years before the prices skyrocketed. It also only makes sense for someone who vacations in a Disney deluxe resort on a yearly or bi yearly basis. For those who prefer the values or stay in them frequently then it is harder to make the numbers work. DVC is definately not for everyone even those who love Disney.  It is simply a pre-paid hotel room for the next 40-50 years, nothing more.  As mentioned free dining and room discounts are gone. We love our DVC and it has afforded us the opportunity to go to WDW more often and to bring others along with us. However the direct pricing has gone up so much that the resale market is really the best way to go. Disney has put some restrictions on those purchases in the last year but nothing that would stop me from moving forward with a resale purchase if we decide to add on to our current membership. For anyone who is interested in DVC it really is important to do your homework. It is a long term financial commitment that can work out to your advantage but you have to research it very carefully to make sure it would work for you.  For us personally it was a great decision and we are thrilled with our membership.

  4. I came to the same conclusion you have.  I also didn’t like the point rollover or point loss part of DVC they don’t talk about.  We also came new plan.. move to FL.. its a win win  lol

  5. We joined DVC in 2009. It took us almost 2 yrs of reviewing the info and numbers over and over and over and… I still have my little notebook where I worked and re-worked the numbers. But at the end of the day, even with the dues and their annual increase, it just made sense. We bought in at a number of pts that we new would cover the normal 3 trips we try to take each year (1 5-day and 2 3-day weekend trips) and have already seen us breaking even. Even with our annual passholder discounts, we aren’t paying any more a year on DVC membership (monthly payment + dues) than we were on our trips. Actually we’re making a bit of money as we have friends that would travel with us on the longer trip. They were so attracted to our ‘discount’ on the rooms that we now book a room with our pts for them (sometimes we share a villa) and they pay us. 

    At the end of the day, we joined DVC because it was the best way for us to vacation the way we wanted. Since we were paying the deluxe/moderate rate anyways, it just made sense. Plus there are times we’ll visit WDW but never step foot in a park. On those trips, I definitely want to be in a deluxe resort.

    I believe it comes down to your personal preferences. If you take the upgrade option because it’s “only $50 more” then DVC is for you. If you opt to do Disney on a Dime, then it’s probably not. For us, a vacation is about enjoying ourselves, splurging a little since we’re frugal at home.

  6. We have yet to purchase into the DVC, but as you have, we have looked at it often.  For us, we enjoy the ability to splurge on our vacations.  It would allow us to stay at a deluxe level resort, all the time.  We wouldn’t go if we could only stay at a Value because we were not comfortable with the room size.  It felt as though the walls were closing in, and the lack of amenities was a sore spot.  The one thing that you should consider is other DVC resorts.  To my knowledge, the Animal Kingdom Lodge has the HIGHEST yearly dues because of the animals there.  You are paying for their upkeep.  On the flip side, if BLT is available still, and I don’t think it is, they had the LOWEST yearly dues because the area surrounding the building is all concrete and there is little landscaping to care for.  With some of the new rumors of new DVC resorts coming it might be worth, waiting to see where and what they are going to be offering, or as already stated, buy resale.

    We moved to the area a little over a year and a half ago, and it has been great living so close.  For us, we are still considering joining DVC because it would allow us to go to Aulani, Hilton Head, or for that matter a slew of other world class resorts worldwide.

  7. I definitely didn’t buy because of cost savings. I pay way more for accommodations with DVC than I used to spend without. But…I’m not a smart person with money in general and I love being a DVC member. I didn’t join thinking I was going to be saving money. For me, it was more of a way to set aside my vacation dollars throughout the year…I’m locked into budgeting for vacation accommodations, I’m obligated.

  8. My family bought DVC in 1991, back when it first started with only one resort. Since then, we’ve added points, so we now have Old Key West, Saratoga Springs, and Bay Lake Tower points. Each year, my family of 6 goes for Thanksgiving and then various other smaller trips throughout the year. We’re all annual pass holders.

    When we first bought, it was because we were starting to have to stay in multiple rooms and Disney couldn’t guarantee attached rooms. The one-bedroom option that DVC offered meant that our whole family could stay together. Now that’s we’re older, we get the two bedroom, and it’s perfect for inviting extra friends. We never have to worry about not having enough room for all the friends that might join us.

    The annual fee is different for each resort. Bay Lake Tower has a much a lower annual fee than Old Key West, because it’s a much smaller property. However, Disney really uses that annual fee. I’ve seen the Old Key West rooms be completely upgraded with state-of-the-art kitchens, new hard wood floors, and gorgeous updated furnishings. 

    If you only go once a year or sometimes not at all; if you prefer the value resorts, then it’s not for you. It’s not for everybody. However, I know that without DVC we wouldn’t go as much as we do, and visiting WDW a lot is the reason my family can have such a relaxing and fun vacation, without the stress of needing to do everything. Also, I have Bay Lake Tower points that will be transferred into my name when my parents can no longer use them. How cool of a present is that to give to your children? Disney vacations for life with the room basically already paid, awesome.

  9. That brings up a point I edited out of my blog due to it running long…we looked at the housing market in the Orlando area and could buy a condo or townhouse (that we would own forever, not just for 45 years or so) for only slightly more than the lifetime cost of DVC.  Of course, that’s not taking into account real estate taxes, insurance, and utilities…

  10. A really well written post – thank you for sharing.  I have always thought about DVC year after year – but there always seems to be some kind of discount I can use be it annual pass or even friends I have that are cast members – so as of yet I’ve been able to avoid it – but I imagine it will be something I look into annually. Thanks again for taking the time to share!

  11. Wow, everyone, thanks for reading and thanks for all the comments!  Your input and experiences have added so much to the discussion. The two main takeaways for me are 1) DVC doesn’t work for everyone.  It depends on your individual preferences and vacation habits.  And 2) If you do decide to take the DVC plunge, you might save considerable money by buying resale, waiting until you can afford it without financing, or both.

  12. Amazing write-up! This could aid plenty of people find out more about this particular issue. Are you keen to integrate video clips coupled with these? It would absolutely help out. Your conclusion was spot on and thanks to you; I probably won’t have to describe everything to my pals. I can simply direct them here!

  13. I bought into a DVC timeshare a year ago and I have no regrets. I did the math, research the timeshare, looked at my lifestyle and what I’ve spent in the past and for me it is paying off and will continue to. Vacations are expensive. I’m not concerned about how much this is going to cost me in 45 years because I don’t believe in debt. I paid for my timeshare right up front. No interest or principal payments. With a timeshare, if you can’t afford to buy it up front in cash, don’t buy it. It won’t pay for itself. Six trips to my home resort staying in a one bedroom ocean view Villa for a week will pay for this timeshare and what I paid. That’s not taking into consideration the dues and the flight to my timeshare but all in all, this works for me. As mentioned, I truly believe that if you cannot pay for a timeshare up front without financing, forget it. I cannot imagine in this economy being enslaved by this debt and I doubt Suze Orman would approve it! Meanwhile I’m heading to Hawaii in a few months to work on my tan. I cannot wait. Aloha!

  14. And I’d like to add that the main reason I considered DVC is because they have places outside of Disney you can go to all over the country; Europe, Brazil, Germany, the Caribbean (Mexico), Costa Rica, etc. Italy was my draw. The fact that I can not only stay in the States but travel abroad with my points was a perk. DVC has much much more than your average timeshare. They know how to do a timeshare and the agent that sold me the timeshare stays close whenever I have questions. When they say, “Welcome home!” they mean it. This is one big happy family that I’m glad to be a part of it. The happiest place on earth ;).

  15. Two things I didn’t see pointed out. DVC members don’t pay the 12.5% resort tax each time they stay. Also, if you wanted out of the deal say in 20 years, I did the math and it is favorable: Old Key West originally sold for about $41 when brand new in 1991. Inflation from then to now averaged 2.6% per year. Now, Old Key West is on the resale market for about $68-70, which roughly equals the inflation over that time period. In other words, you should be able to get out of the deal, not making a profit, but not losing a lot of money or being stuck with a contract you don’t want, if the 50 year horizon is scaring you. I would also suggest looking at buying a smaller contract and banking the points the times you are able to get the huge room discounts. It is this one time when I couldn’t get the room discount after 5 years of always getting the discounts that is having me consider that approach of joining, buying small and banking when I can’t get the discount.

  16. We bought into DVC after our honeymoon there. We knew we would be going back. We only purchased 110 points initially. We used the Disney Credit card.. This way we earned points on the purchase price. During our negotiations with them we asked for 3 years of points. the previous year the current year and access to the next year. The initial trip we took was bringing 10 family members to animal kingdom lodge at prime time Christmas to new years. In 2009 the cost if we stayed there without dvc would have been approximately 8k.

    We did not use any form of financing, We paid off the credit card within 6 months (and banked the reward points from the credit card. In 2011 we added on 60 points. We bought old key west and saratoga springs, old key west most rooms have 2 queen size beds. These rooms are also lower on points and annual dues for when bring friends or relatives with us.

    Upfront, We bought for 90, and 95 dollars a point. By doing less then 100 a point we were able to maximize and use our finances wisely.
    Total I have less then 16200.00 invested in my DVC plan between my two purchases.

    We also buy annual passes

    for the two of us its less then 875
    My annual dues are less then 900.

    We go for extra long weekends Friday thru Tuesday, sometimes short weekends leave Thursday come back Sunday.
    We go 4 to 6 times a year.
    We also buy the tables in wonderland so we can get 20% off
    My Disney cost are less then 1875 a year

    It cost me less then 500 a trip on average and that’s including gas to get there (9 hours away)
    I cant go on vacation any cheaper then that.

    I do not feel obligated to go Disney at all, I have looked into using the points all over the world. I am looking forward to going to hawaii with the mouse.

  17. i bought on the resale market, bought 246 points yearly for about 12k, annual dues are about an extra $1500 per year. Considering that a 1 bedroom goes for about 700/night and we have the property for the next 28 years, we come out ahead. Yes it was money up front, but 246 points is good for about 10 nights in a 1 bedroom at board walk currently going for $496/night on a special (normally $692/night) and roughly the same amount of points as a 1 bed standard view at AK. Based on that math, on a 10 night, 1 bedroom stay in slow season, we save $3000/year if we keep prices equal over the next 28 years, which is not the cases prices will go up and point values will stay the same. My way of looking at it, buying direct from Disney is like throwing money away, your purchase price does not even hold its value on the resale market. Resales are the way to go, you get a much better price and makes it economically worth it!

  18. wow i did not realize OKW went for so little years ago. However I must say this isn’t something to bank on considering newer villas like AKV or BLT. they are selling on the resale market for between $75-90/ per point at AKV and about $95-105/per point and BLT taking a loss to the $135+ they originally went for and the $165+ they are going for now. maybe in 20 years things will be better and this also might be a symptom of the economy too? but something to point out.

  19. I bought into DVC in 2006 in SSR for me it’s a no brainier we are staying in SSR in December 2015. If I were to book it through a travel agent it would cost me $15,000 dollars more for 14 days. The saving this year alone pays for the initial cost. Plus if you do not want to go to Disney you can rent them out and put the money towards a different vacation.

  20. I know this discussion is from 4 years ago, but it’s still relevant today and so I thought I’d throw in my 2 cents. I know quite a few people who own DVC and the truth is there are a lot of different ways to own. A have one friend who bought direct, at about $160.00 a point (he purchased 160 points at the Villas of Grand Floridian). The reason he purchased there was because he always had trouble making Reservations there and with owning there, it’s no longer an issue, for him it wasn’t so much about what it costs, it was more about access.
    I have another friend that bought a small 100 point contract at Beach Club Villas, on the resale market a few years ago for around $60.00 a point or about 6K (these days those go for over $100.00 a point) Her kids LOVE that sand bottom pool and it’s enough points for her to do a full week in a 1BR Villa every other year. (She alternates each year between Disney and Universal Studios)
    Another friend bought a Tiny contract at Hilton Head, (just 25 points). He never stays there, but just uses his membership to “Transfer In” points from others in years when he wants to go. As an example, he paid someone last year 5K to “Transfer In” 400 Points from Bay Lake Tower. Utilizing that, he booked a 3BR Villa with a Magic Kingdom View to celebrate his daughters 13th Birthday party where she’s bringing a few of her friends.
    Myself, I purchased a 220 point contract for just under 9K at Vero Beach Resort. The contract had 220 points banked from the previous year and the first year I had the contract I utilized it to stay in a 1BR Villa with a full kitchen at Bay Lake Tower for 4 days, then later at Animal Kingdom, again in a 1BR Villa – with a Savanah View I might add, then in the first week of Dec. at a 1BR Villa at the Wilderness Lodge (always wanted to stay there during Christmas and see that massive tree they put up in the lobby). I added up the cost of staying at those resorts that first year and it worked out to over 12K! Sure I had to borrow a few points from the following year, but I was thinking I wasn’t going to renew my annual pass the next year so that was OK. The next year, I banked all my points and this year, we’ve combined points with friends to do a 3BR Villa. It’s all a lot of fun and I’m doing things I’d never had been able to afford to do in the past, so to me it’s all worth it… and it’s worth it to my friends who all own in different ways.

  21. The costs of a DVC are the following:

    1a. Points. 100 points purchased via resale at $75/pt is $7500.
    1b. Opportunity cost (or interest) of money spent on points. For those of us paying cash currently this is very low. I could use the cast to pay down my 3.175% mortgage(actually about 2.5% after tax deductibility) or invest it and make not even 2%. So call it 2.5%

    2. Cost of annual maintenance fees. on 100 points (required to rent a studio for a week off-season) that might be $700 a year.

    3. The principal, the value of the points, will be returned to me if I sell them later. Only if I keep the points so long the expiration date approaches will they fall in value. I won’t. I’ll use it maybe 10 years then sell when there is 20 or more years left and people still perceive it as a long term purchase, not borrowing the points which revert to disney. And since the early 2000’s when I looked into it, points bought on resale have risen quite a bit in value. But call this a wash.

    So, to stay a week at Old Key West or Saratoga Springs in early December, I pay $700 in fees plus opportunity costs of 2.5% x $7500, or
    $187.50. Total annual cost is $887.50. This works out to about $127/night to stay in a DVC studio room that would be $350 or more if booked from Disney. Even other deluxe resorts will be about that much or more. So it costs the buyer about ONE THIRD if done right. Plus closing and transfer costs on the purchase.

    You could go every other year, banking points, and upgrade your room, and still be paying 1/2 to 2/3 of the regular cost. But only if you buy resale points at the right price, resort, and such. A smart purchase will save. An easy one (buying from DVC directly) may not.

    More grandiose needs and big rooms may change the numbers considerably, as will traveling at peak periods.

    The key to making this pay is buying points with say, 30 years remaining, using them for about 10 years, then selling them to a buyer who will still see 20 years of value and pay near full price. And remember, since the early 2000’s, resale points have gone UP in value, not down. As Disney keeps raising prices on new points (now about $140 or so?) your resale points will rise too. Your big exposure is to Disney raising maintenance costs faster than inflation. But even having done that, it’s still less than regular room rate increases.

  22. Just read your article, old I know, but interesting. You seemed to be comparing the cost of a studio cash, with a 1 bed that costs twice the price? You certainly cannot book a 1 bed for the figures quoted! More like $5000 a week now in 2017. Also you don’t have to go every year, you can bank and borrow points, but more importantly you can rent your points out at roughly $8 a point after dues. There is a massive demand for rental points, even at this hefty mark up, so this shows how much annual dues cost is below best cash price. You can rent your points normally within a day or two, with minimal effort using David’s etc, pocketing a very tidy profit if you cannot or do not want to go. There is no doubt a DVC saves serious cash on the cash price of rooms, but much better to buy resale at a cheaper resort (Disney now selling new contracts at new resorts at $185 a point, you can get a fully loaded resale Saratoga for around $75, Disney sell this direct for $140!) and not get finance, as buying direct and on finance pushes back return on investment massively. Within 3 trips my contract has paid for itself, then it’s dues cost only per annum, and if I rent I make $900 a year, all until 2054.

  23. A studio in the lodge is roughly the same size as a studio in the DVC (think the DVC could be a bit bigger). DVC effectively replaces one bed with a sofa bed, so you have the option. It also has a kitchen some DVC studios have two full bathrooms, and 5 sleeping surfaces, and the kitchen, so generally much better than a room I the normal hotel. You are then comparing that normal room, to a 1 bed DVC which has a large kitchen, normally 2 full baths, a king bed, a queen bed, sofa bed and often also a chair bed (very comfy, sleeps an adult) or Murphy bed. These will generally be more than twice the size of a normal room in the hotel, and have many more amenities including a full washer and dryer, dishwasher, full kitchen etc. If you paid cash for one of these to Disney you would normally be looking at twice the cash price of that standard hotel room- and with very good reason. So your price comparison doesn’t make much sense really. Most families of 4 (even better if you are 5 as DVC takes 5 in most studios, the standard hotel rooms generally do not) would put the kids on the queen size sleeper sofa and chair and thus quite happily compare the price of the standard hotel room with the superior (aside if you have a preference for a second bed rather than the sleeper sofa) DVC room, and thus half your DVC price. Room rates have also risen a lot since this article was written.
    Totally agree if you don’t think DVC works for you, don’t buy, but I do think your thoughts didn’t fully account for the realities of the situation and different options- see my post below. Regards.

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