Breaking Even

[crisi]

I disagree. You can make the decision to go ever two or every three years and still make DVC work. You could even go less often thanks to the thriving rental market. Just rent out your extra points when you don’t want to (or can’t afford to) go.

I think you have missed what I'm trying to say. DVC assumes that you have a long term commitment to Disney - if not every year, every two or three (we are every other year people and its worked great). But you are making that commitment up front when you purchase the points. Backing out of that commitment is not necessarily free - monetarily or emotionally. Its much cheaper to back out of a intended Disney vacation you will make sometime next year - or five years from now, than it is to back out once you own DVC. And its almost certainly cheaper to back out of all the intended Disney vacation you intend to take in the short term if you don't own DVC than it is to find out your circumstances have changed and you can no longer afford Disney trips for a few years. Particularly during the first five or so years of ownership.

 

[hlhlaw07]

I generally agree with everything that has been said. I should have been more clear in my original question. I agree that it probably should not be factored into whether you should purchase DVC. I look at calaculating break even as something fun to do after purchasing, not to justify purchasing.

 

[DougEMG]

Prior to owning DVC our trip would cost us about $8,000/year. As soon as we owned DVC, we started spending about $15,000/year on our Disney trips. So is DVC saving me money or costing me even more money?

It is actually doing both.

I'm going for much longer trips and staying in much nicer rooms/resorts than before and it is costing me less money than if I paid cash or rented points, so technically I'm saving. But I'm still spending more money than prior to owning DVC, so I now have less money in my pocket then I did before, so I'm not really saving anything!

Owning DVC and going to WDW makes me happy and I can afford it, which is all that really matters. Other than I wish I had of bought more points 3-4 years ago.

 

[frabjous]

There is a very big difference between each one time trip to Disney and a commitment to a DVC contract that is going to cost you $20k up front and then the cost of Disney and dues every year. If you make the decision each year "can I afford to go to Disney" and go, that's a whole different decision than "can I afford to regularly go to Disney for the foreseeable future."

Anyone seriously looking at DVC isn't looking at single once in a lifetime trips, nor are they looking at value resorts. Since a week long deluxe accommodation trip is ~ 10k, they are already committing (or planning to commit) a significant amount of money into Disney. The OP wasn't looking for a lecture on personal financial responsibility, and why would anyone on a random travel internet forum where the participants have zero data on their finances.

When someone posts about the break even point, they are long past the basic financial question of can I afford this, and are looking into how much it's worth.

 

[frabjous]

Prior to owning DVC our trip would cost us about $8,000/year. As soon as we owned DVC, we started spending about $15,000/year on our Disney trips. So is DVC saving me money or costing me even more money?

It is actually doing both.

I'm going for much longer trips and staying in much nicer rooms/resorts than before and it is costing me less money than if I paid cash or rented points, so technically I'm saving. But I'm still spending more money than prior to owning DVC, so I now have less money in my pocket then I did before, so I'm not really saving anything!

Owning DVC and going to WDW makes me happy and I can afford it, which is all that really matters. Other than I wish I had of bought more points 3-4 years ago.

Well said, but Disney doesn't force you to spend a dime more than your DVC obligation, nor do they force you to buy more points. The whole reason any of us do that is because we are happy with the value of the purchase.

 

[DougEMG]

Well said, but Disney doesn't force you to spend a dime more than your DVC obligation, nor do they force you to buy more points. The whole reason any of us do that is because we are happy with the value of the purchase.

I'm sure they must be putting pixey dust in the air and that is what is making me spend all that money.

 

[crisi]

Anyone seriously looking at DVC isn't looking at single once in a lifetime trips, nor are they looking at value resorts. Since a week long deluxe accommodation trip is ~ 10k, they are already committing (or planning to commit) a significant amount of money into Disney. The OP wasn't looking for a lecture on personal financial responsibility, and why would anyone on a random travel internet forum where the participants have zero data on their finances.

When someone posts about the break even point, they are long past the basic financial question of can I afford this, and are looking into how much it's worth.

You need to read closer. I am not talking about a once in a lifetime trip - I am talking about each decision to travel being independent without DVC - where DVC creates an interdependence on your decision to travel. And, I have said several times that these post don't usually address the OP, but address the unknown reader

And your second point is completely wrong - over and over again people have asked about break even long before they have answered the basic question of can I afford this.

 

[Bing Showei]

The OP wasn't looking for a lecture on personal financial responsibility, and why would anyone on a random travel internet forum where the participants have zero data on their finances.

I think a lot of your outrage at @crisi's very sensible and measured responses stems from a fundamental perspective difference on how these discussion boards function, or the general way people will use these forums. There is much more value and information in a thread to the broader community than just to the OP.

Some of the most experienced members of this board have this perspective and have gone so far as to specifically address the OP, and then separately, the others reading, as in this example:

I've read over the thread but will respond to the first post. Either way I'd likely get the same UY UNLESS one has a specific plan for travel that makes significantly different UY or separate contracts a major plus. Even if it's more difficult to find and/or a little more expensive. For others reading, one option before you did the retail add on would have been to wait and look at the new resort to possibly cover both considerations. One point would be that I get the sense you're cutting it too close on the number of points.

Most posters don't separate that out so explicitly and assumes the a much broader audience is watching.

When someone posts about the break even point, they are long past the basic financial question of can I afford this, and are looking into how much it's worth.

Time and time again it's evident that the "Purchasing DVC" board is one of the first stops a person makes on their research journey. You see questions all the time about "What is a UY?" Or broad questions like "Resale or Direct?"

The sales pitch to me from DVD when I took an on-site tour last year was that "you will break even in 6 to 7 years." My guide said those nine words verbatim. She went on to say that the house is "willing to take a loss" after that with my DVC because it gets me into the parks. Neither statements are true. As soon as you sign, the house wins (financially).

Having the notion of breaking even and saving money on DVC is no indicator of extensive research or knowledge, it's baked right into the product and sold as a function of "buying a piece of the magic."

More to the point, the same people who are conflating UY and 7/11-month bookings, are reading this and other posts in this forum, as well. And to them, a clear picture of the financials involved in DVC ownership may not yet exist. They are the ones who may benefit from a differing perspective on what I see as the fallacy of "breaking even."

On of my favorite posts of all time:

DVC is basically a luxury purchase. I agree that we have enjoyed being DVC members, but we are probably spending 2 to 3 times what we were before. But we are also enjoying Disney more.

Rather than focus on cost savings, I would make sure everything else is in good shape before considering DVC.
1) You can pay cash.
2) You are on track to have a fully funded retirement.
3) You are on track to pay for college for the kiddies.
4) You have paid down all consumer debt except possibly your mortgage.
5) If you were to lose your job or have a financial setback, you have an emergency fund.

If you can answer yes to all this, then DVC is something you should consider as an alternative to buying a boat, a house in the mountains, or other luxury purchases that may interest you.

If you come every year and stay at deluxes, then there is some cost savings. If you only come every other year, the cost savings diminishes because of the time value of money. If you like mods or values, then there may be no cost savings for you.

 

[crisi]

The sales pitch to me from DVD when I took an on-site tour last year was that "you will break even in 6 to 7 years." My guide said those nine words verbatim. She went on to say that the house is "willing to take a loss" after that with my DVC because it gets me into the parks. Neither statements are true. As soon as you sign, the house wins (financially).

If the second statement was true, there would be no Vero Beach, HHI or Aulani. None of those resorts do anything to get people into the parks.

 

[Deb & Bill]

If the second statement was true, there would be no Vero Beach, HHI or Aulani. None of those resorts do anything to get people into the parks.

My feeling is that those were built for the members who really wanted to travel to Disney most of the time and other locations every one in a while. Like DVC's own version of RCI and II.

 

[crisi]

My feeling is that those were built for the members who really wanted to travel to Disney most of the time and other locations every one in a while. Like DVC's own version of RCI and II.

They were built because Disney thought they could make money off of them. They would have not been built if Disney was taking any sort of loss because people who stay there are not going to the parks.

 

[Matty B13]

Just look at the Poly, one of most sought after resort with a cult following (tikiman) with very high cash rooms and they still converted 3 buildings to DVC.

 

[mustinjourney]

Just look at the Poly, one of most sought after resort with a cult following (tikiman) with very high cash rooms and they still converted 3 buildings to DVC.

Kind of interesting that Disney has chosen to convert hotel rooms into DVC for the last three new builds. Poly, CCV and Riviera (suppose this one is a hybrid since it isn’t a straight conversion).

This tells me that they believe DVC members are a solid investment for them since they are choosing to spend money to gain DVC capacity at the expense of hotel capacity.

 

[MolonLabe]

Most "breaking even" calculations involve staying at the DVC resort by purchasing points vs buying a contract.

I was NEVER able make anything "break even" because I didn't limit myself to DVC points. For example I'd look at Contemporary TPV vs BLT TPV. For a non monorail resort I'd look at being able to get a 2,000sqft house off site w/ private vs DVC at at least half the price, if not 1/3rd.

DVC is really just prepurchasing your vacations. You really aren't buying, your contract expires and you have nothing when it's all over so the idea of "ownership" isn't a real thing. Disney has managed to out ponzi scheme the traditional time share in that regard.

With all the money you are wasting or as DVC calls it, investing, you'd be better off buying a small house near WDW and renting it out via VRBO (or similar) and hiring a property manager when you are out of town and staying in that the weeks you are in Orlando. Then you actually own the property at the end and you can sell it or actually leave it to your children.

I get the DVC draw for some, I get that some people just don't understand and I also get that some people don't care.

Since you are concerned about breaking even and want to stay (presumably) exclusively on WDW property, the easiest way for you to figure out if you break even is to:
1- take your purchase price and divide it by the years you'll have on your contract, yes I'm ignoring the fact that you should figure the lost money to interest payments if you aren't paying cash for it and the lost interest if you'd invested that money but I'm trying to keep it easy. That's your base price per year.
next
2- add the yearly maintenance fees.

For us and looking at BLT TPV vs a TPV at Contemporary during the first week of December and assuming at least a 20% room discount based on AP, bounce back or seasonal offers, we came out at saving a few hundred dollars a year by staying at Contemporary. We also did a comparison for moderate as well, same deal.

Things to consider, room rates rise every year but typically not as much as the yearly maintenance fee. DVC rooms are generally bigger but if you want bigger, why aren't renting a house 10-15 minutes outside of the gates for 1/2 to 1/3rd the price? No one stays at WDW for the room sizes lol.

At the end of the staying deluxe or moderate all you have are memories, just like the DVC. If you actually owned anything at the end of your contract, DVC would have a draw for us. It doesn't, it's just a lease.

Also, for us, when you stay DVC you can't get free dining. We like to hit the first week of December every other year because it almost always has free dining and that saves us (4 people) a truck load more... also depending on if we have AP's that year and usually we time the free dining package as the week we upgrade base tickets to AP's

As a family that spends about 4 weeks a year at the parks I've worked every number possible. DVC is a losing proposition no matter how I work it.

 

[MolonLabe]

Kind of interesting that Disney has chosen to convert hotel rooms into DVC for the last three new builds. Poly, CCV and Riviera (suppose this one is a hybrid since it isn’t a straight conversion).

This tells me that they believe DVC members are a solid investment for them since they are choosing to spend money to gain DVC capacity at the expense of hotel capacity.

Correct, you have people paying for the rooms lump sum for next 20,30 or 40 years and then paying to upkeep them on top of it and at the end of their contracts Disney gets their week back. It's pure genius. Diabolical genius but genius none the less.

 

[linzjane88]

Things to consider, room rates rise every year but typically not as much as the yearly maintenance fee

I may be totally wrong but I thought when we were crunching numbers a few years back considering DVC that I had read hotel room rates increase more than DVC dues historically?

 

[MolonLabe]

I may be totally wrong but I thought when we were crunching numbers a few years back considering DVC that I had read hotel room rates increase more than DVC dues historically?

If you take one or two single years as your bench mark, you can definitely show that but if you are averaging over 5 years, maintenance fees exceed the hotel rate increases in any period over that. Disney also takes the increases based on full rack rate at the comparable Disney resort too. Disney math

Basically you are looking at at least 3.5% increase in fees per year excluding any unexpected repairs and refurbishments. i.e. if that last close call with a hurricane had come through and ripped the roof off your DVC, you'd see additional fees because of it, those deductibles don't pay themselves. Granted Orlando doesn't get hit with the full brunt of most tropical storms but if a sinkhole opens under your DVC, you are facing a lot more than 4% that year. Average yourself over your 45 year contract and eventually something is going to give.

 

[4luv2cdisney]

Most "breaking even" calculations involve staying at the DVC resort by purchasing points vs buying a contract.

I was NEVER able make anything "break even" because I didn't limit myself to DVC points. For example I'd look at Contemporary TPV vs BLT TPV. For a non monorail resort I'd look at being able to get a 2,000sqft house off site w/ private vs DVC at at least half the price, if not 1/3rd.

DVC is really just prepurchasing your vacations. You really aren't buying, your contract expires and you have nothing when it's all over so the idea of "ownership" isn't a real thing. Disney has managed to out ponzi scheme the traditional time share in that regard.

With all the money you are wasting or as DVC calls it, investing, you'd be better off buying a small house near WDW and renting it out via VRBO (or similar) and hiring a property manager when you are out of town and staying in that the weeks you are in Orlando. Then you actually own the property at the end and you can sell it or actually leave it to your children.

I get the DVC draw for some, I get that some people just don't understand and I also get that some people don't care.

Since you are concerned about breaking even and want to stay (presumably) exclusively on WDW property, the easiest way for you to figure out if you break even is to:
1- take your purchase price and divide it by the years you'll have on your contract, yes I'm ignoring the fact that you should figure the lost money to interest payments if you aren't paying cash for it and the lost interest if you'd invested that money but I'm trying to keep it easy. That's your base price per year.
next
2- add the yearly maintenance fees.

For us and looking at BLT TPV vs a TPV at Contemporary during the first week of December and assuming at least a 20% room discount based on AP, bounce back or seasonal offers, we came out at saving a few hundred dollars a year by staying at Contemporary. We also did a comparison for moderate as well, same deal.

Things to consider, room rates rise every year but typically not as much as the yearly maintenance fee. DVC rooms are generally bigger but if you want bigger, why aren't renting a house 10-15 minutes outside of the gates for 1/2 to 1/3rd the price? No one stays at WDW for the room sizes lol.

At the end of the staying deluxe or moderate all you have are memories, just like the DVC. If you actually owned anything at the end of your contract, DVC would have a draw for us. It doesn't, it's just a lease.

Also, for us, when you stay DVC you can't get free dining. We like to hit the first week of December every other year because it almost always has free dining and that saves us (4 people) a truck load more... also depending on if we have AP's that year and usually we time the free dining package as the week we upgrade base tickets to AP's

As a family that spends about 4 weeks a year at the parks I've worked every number possible. DVC is a losing proposition no matter how I work it.

Interesting. We have always used the free dining discount in the past. The calculations I just ran a few hours ago comparing my upcoming DVC stay vs the rates on WDW website for Pop and POR have me about break-even with Pop and saving quite a bit compared to POR. I'll stay at BWV for the same as Pop! The difference? We need 2 rooms making FD a less awesome discount for us than it used to be. Even running #s based on 4 people in one room, we come out slightly ahead staying BWV on points vs staying at POR. And this is true even though I bought direct and very recently. If I'd bought a few years ago and resale, I'm quite certain DVC would come out far far ahead. Another thing is that our #5 person cannot get the discounted APs. If we were a true family of 5 with all qualifying, we'd be be even further ahead. (And yes, I'm aware POR technically sleeps 5, but we are all 16 and up. No thank you!)

 

[MolonLabe]

Interesting. We have always used the free dining discount in the past. The calculations I just ran a few hours ago comparing my upcoming DVC stay vs the rates on WDW website for Pop and POR have me about break-even with Pop and saving quite a bit compared to POR. I'll stay at BWV for the same as Pop! The difference? We need 2 rooms making FD a less awesome discount for us than it used to be. Even running #s based on 4 people in one room, we come out slightly ahead staying BWV on points vs staying at POR. And this is true even though I bought direct and very recently. If I'd bought a few years ago and resale, I'm quite certain DVC would come out far far ahead. Another thing is that our #5 person cannot get the discounted APs. If we were a true family of 5 with all qualifying, we'd be be even further ahead. (And yes, I'm aware POR technically sleeps 5, but we are all 16 and up. No thank you!)

That is interesting. Are you sure you are calculating your yearly cost and fees together?

 

[4luv2cdisney]

I may be totally wrong but I thought when we were crunching numbers a few years back considering DVC that I had read hotel room rates increase more than DVC dues historically?

I don't think you're totally wrong. A quick google tells me (just using 1 example) BWV had dues of $3.70 in 1996 and they are $6.55 in 2018. They have not doubled. I keep all my old trip paperwork and in 2007 my room at POP had a rack rate of around $90 (too lazy to go digging, but I'm pretty sure). The trip I just priced out was $180 / night. So, without even putting pen to paper, BWV dues did not double in 22 years. Pop room rates did in about 10.