Estimate of BCV price per point at End of Contract

[kidren21]

Hey all, I've been wondering about what the price per point for Beach Club Villas would be in the last year of the contract, and this is my attempt at coming up with rough estimates.

I welcome others to try to come up with a rough guess based on forecast rack rates, annual dues, etc. Curious to see other estimates.

Analysis:
PART 1
Assuming that anyone would want to go through the trouble of buying a BCV contract for the last year, I believe the price they would pay would be capped by the rack rates for DVC villas that final year. In other words, they wouldn't pay more than it would cost to just rent the room with cash.

In 2019, for Fall (choosing Sep 10-20 for this analysis), the BCV room rack rates for 7 nights is $4298.
Assuming the annual increases for rack rates stay at 2-3%, the rack rate would be $7399.31 for 7 nights in 2041.
Then taking into account the 20% discounts that Disney gives off of rack rates, this means that stay would be $5919.45 in 2041.

PART 2
Now comes the part were we calculate the BCV price per point based off of the 2041 rack rate for BCV.

Assuming the point chart stays the same at 107 points for a 7 night stay, we need to consider the annual dues for someone buying this 1 year contract. Taking the 2019 dues for BCV and increasing by 7% a year on average, would mean a $30.75 due per point in 2041, which at 107 points equals $3290.25 in dues for the buyer.
They would also need to pay for the closing costs (this is a total guess but I assumed $600 today * 5% increase per year for this service) of about $1755 in 2041.
The total so far 3290.25+1755 = $5045.55 So that leaves $873.90 that the price of the contract for 107 points could be before it becomes more expense than just paying cash.

So $873.90/ 107 points = $8.17 pp for BCV in 2041.

So that is my best guess. In the final year of the BCV contract, the price per point would be valued at something less than $8.17 .

 

[BillPA]

ZERO, it will be gone on Jan 31, 2042

 

[kidren21]

ZERO, it will be gone on Jan 31, 2042

Opps meant 2041 price. Edited for correct year.

 

[Cyberc1978]

IMO in the last years of the 2042 contracts they won’t be worth much if anything.

No one is willing to pay 8$ per point just to break even, if you can’t get a decent saving buying then the price of the contract will drop until you do get a decent saving.

Owners wishing to sell might need to offer incentives during the last years. During the last years it could be much more worthwhile just renting your points.

 

[kidren21]

IMO in the last years of the 2042 contracts they won’t be worth much if anything.

No one is willing to pay 8$ per point just to break even, if you can’t get a decent saving buying then the price of the contract will drop until you do get a decent saving.

Owners wishing to sell might need to offer incentives during the last years. During the last years it could be much more worthwhile just renting your points.

Agreed, I just wanted to quantify what "not worth much" would mean so I decided to go through the exercise of calculating it.

As you mentioned, a buyer would need a discount to make it worthwhile to go through the hassle of buying. Let's say they would need a 15% discount from what they could rent with cash, to make it worthwhile. In this scenario, the total cost of the contract including maintenance dues and closing costs would need to be equal to $5031.53 (15% off of cash reservation of 5919.45). Since the dues and closing costs already account for $5045.55, then the price of each point would be worth 0 dollars!

Now in reality, there is a benefit to buying the contract even at $8.17 per point, since the buyer would get booking priority that a person reserving via rack rates would not get. So even at break-even, the buyer gets a major benefit.

Thanks for pointing that out though. I think it mathematically shows that the price per point would be between $0-$8.17 depending on the discount a buyer would demand.

 

[zavandor]

The value will be zero. We do not know how bookings will be managed in the last year, but there is a chance that many people will not be able to use their points because of lack of availability. This risk alone will make the contract value drop to zero.

 

[skier_pete]

The only way the contract will go for much of anything in 2041 is if Disney announces it is giving contract extensions at a discounted rate for existing owners.

However, I don't think Disney will do this - The point value per night at BCV is too low. Disney will put out a new point chart in 2042 that raises the point value per night by at least 30%. (I.E. a 16 point night will now be 22 points per night.) And then it will resell the whole resort at $280 a point (price in 2042).

The best you can say is that if you already own a contract there - they might give you a buyer incentive discount of $20 a point - in which case maybe someone buys you contract, but I bet even there they will have a caveat when they announce it that you have to be an owner of record since Jan 2040 or something like that.

 

[skippytx]

280 a point? Probably closer to 500 a point. I wish I was joking.

I don't see them extending BWV or BCV. They're not like OKW, where you're not going to put anything else there. The property they are on is stupid valuable. They'll either convert them to hotel rooms, or resell the resort brand new. You can 100% forget about any sort of extension deal like they attempted at OKW.

 

[Great3]

With closing costs, and time to wait for actual closing, and the demand for a discount to do better than break even, I say it's pretty much $0, I seriously doubt people will take the time to actually go thru with a purchase during the last year. I know I wouldn't even bother.

Great3

 

[mustinjourney]

why did you assume MFs increase of 7% and rack rates increasing at 3%? Given the last 25 year history -- you have those two backwards.

 

[CarolMN]

Opps meant 2041 price. Edited for correct year.

Still zero. Agree with zavandor. There will probably be more points than available nights for the last year or so due to way use years are set up. Who would buy something that one may not even be able to use?

 

[Deb & Bill]

Just rent out that last reservation that uses the points and you have your price. Kind of like seeing the last Illuminations or NYE at the parks.

It will be close to zero otherwise.

 

[BillPA]

If you sell, you will be in the hole. Estoppel fees, closing cost... Renting is a good idea.