Most Economical Resort

[CanadaDisney05]

DVC Resale Market has a ranking of the most economical resorts on their website, however I never thought their methodology made any sense. It uses a very simplistic approach that doesn't take into consideration Time Value of Money. This leads to over valuing resorts that have high purchase prices, but low maintenance fees. I went back and used the same methodology, except I factored in things like expected US inflation, and increases to maintenance fees. Here are my results:

Assumptions Used:

Maintenance Fees increase on average by 4% annually.
US Inflation Rate is 2%
Purchase Price used is DVC Resale Market's average resale purchase price for April 2019.
Initial Maintenance Fees are the 2019 amounts.

Resort	Cost Per Point (My Calculation)	Ranking (My Calculation)	Cost Per Point (DVC Resale Market)	Ranking (DVC Resale Market)
Saratoga Springs	11.89	1	9.31	1
Boulder Ridge	12.98	2	11.58	10
Old Key West	12.99	3	11.75	11
Bay Lake Tower	13.06	4	9.94	2
Grand Floridian	13.45	5	9.97	3
Animal Kingdom	13.65	6	10.33	6/7
Grand Californian	13.94	7	11.10	9
Hilton Head	14.01	8/9	11.99	12
Polynesian	14.01	8/9	10.02	4

Boardwalk	14.25	10	12.91	14
Beach Club	14.42	11/12	12.98	15
Aulani	14.42	11/12	10.33	6/7
Vero Beach	14.69	13	12.52	13
Copper Creek	15.09	14	10.37	7

It's important to note that these results don't factor in things like point charts, or any non-quantitative measures of desirability. It is strictly an average cost per point available over the duration of the contract.

Edit: I can't figure out how to fix the second table to match the first.

 

[crvetter]

I’ve posted this a few times too so very similar to my results, except I didn’t get CCV to be the most expensive, if I recall correctly. I’m assuming this is the discounted average annual MF? Discounting by inflation? Also do you factor any opportunity cost into the initial purchase price? This is kind of tricky if you are doing the discounted average annual MF because it does lead to higher values for longer tenor resorts. Basically would over inflate something like CCV compare to say BRV. It’s sort of not an apples and orange comparison because of this. Do you have thoughts how to handle that? That was something I couldn’t figure out.

I’ve long argued that DVC resale market’s chart makes no sense and shouldn’t really be used for decisions. Also I will say that factoring in the point charts is very important as this really only gives a small picture and really is useful if you don’t ever plan on using the 11 month home resort advantage, which was another complaint I had on their reports. Once you factor in the average points per night for a room type the order changes substantially, which then assumes you will be using the home resort advantage period.

I’ll follow up and post the average nightly point costs for a resort for a given room type today. Which can than use the info above to show if you plan on using home resort advantage the differences. Basically VGC, VGF, and PVB become the top three because of it.

 

[CanadaDisney05]

I’m assuming this is the discounted average annual MF? Discounting by inflation? Also do you factor any opportunity cost into the initial purchase price?

I am discounting future maintenance fees by inflation. I do not factor in any opportunity cost as that number can vary greatly based on individuals.

This is kind of tricky if you are doing the discounted average annual MF because it does lead to higher values for longer tenor resorts. Basically would over inflate something like CCV compare to say BRV. It’s sort of not an apples and orange comparison because of this. Do you have thoughts how to handle that? That was something I couldn’t figure out.

My thought is that it makes sense to over inflate longer duration resorts. If inflation of maintenance fees outpace US inflation, the later years become more expensive (in discounted dollars). This may offset by greater savings amounts on hotels in the future, but I was more interested in the cost side of things for this specific analysis. The cost savings in the future will change based on the individual (stay at allstars, stay offsite, don't travel at all, stay at Saratoga, stay at Grand Floridian, etc....), and doesn't change based on resort purchased.

I’ve long argued that DVC resale market’s chart makes no sense and shouldn’t really be used for decisions. Also I will say that factoring in the point charts is very important as this really only gives a small picture and really is useful if you don’t ever plan on using the 11 month home resort advantage, which was another complaint I had on their reports. Once you factor in the average points per night for a room type the order changes substantially, which then assumes you will be using the home resort advantage period.

I definitely agree with this. The purpose of this analysis was really to get an idea of what you are paying to have access at the 7 month window. Things like resort preference (which is where the point charts come into play) are hard to quantify. It is by no means a complete analysis of where to buy.

I’ll follow up and post the average nightly point costs for a resort for a given room type today. Which can than use the info above to show if you plan on using home resort advantage the differences. Basically VGC, VGF, and PVB become the top three because of it.

Thanks. That would be interesting. I assume you mean that VGC, VGF, and PVB become the top three most expensive?

 

[crvetter]

Thanks. That would be interesting. I assume you mean that VGC, VGF, and PVB become the top three most expensive?

Correct yeah because their point charts are very expensive.

I definitely agree with this. The purpose of this analysis was really to get an idea of what you are paying to have access at the 7 month window. Things like resort preference (which is where the point charts come into play) are hard to quantify. It is by no means a complete analysis of where to buy.

Yeah if it really is for "sleeping" around points then the analysis does make sense. Just if you plan on using home resort priority, most of the time, those point charts matter. For instance VGF is rated pretty low to "sleep" around but very high to stay at its home resort, which depending on when traveling a purchaser could be "forced" to stay at their home resort even if intending to "sleep" around.

My thought is that it makes sense to over inflate longer duration resorts. If inflation of maintenance fees outpace US inflation, the later years become more expensive (in discounted dollars). This may offset by greater savings amounts on hotels in the future, but I was more interested in the cost side of things for this specific analysis. The cost savings in the future will change based on the individual (stay at allstars, stay offsite, don't travel at all, stay at Saratoga, stay at Grand Floridian, etc....), and doesn't change based on resort purchased.

I would say if you are using different tenors for a resort it is important to note that CCV is for 48 years whereas the others start to roll down quite a bit. I wasn't really against the analysis just thought it was important to notate that BRV is valued on holding a contract until 2042 whereas CCV is holding a contract until 2068 thus the discounted average annual MF for CCV is "amplified" by a much larger factor than that for BRV. Effectively the analysis works well if someone is aware that each contract was evaluated with a different tenor. The only way I could think of "normalizing" it for the different tenors is the cost of reinvestment would need to be considered. Take for instance BCV and DRR one is for 2042 and the other 2070, if the purchaser intends to hold past 2042 then BCV maybe come less desirable because the cost to reinvest back into DVC at the point will be very high, especially when prices seem to have outpaced inflation (resale slightly and direct much so).

Overall though thanks for the analysis, glad to see others pushing it out there and highlighting the simplicity of the calculations published by DVC Resale Market. It seems many places push the most economical resort without the full implications of that analysis. Then of course even the resale places are pushing this idea without any regard to actual availability outside your home resort during different times of the year. Hopefully more buyers see the boards to look at info like this you published and the availability posts.

 

[katandmouse]

Thanks for sharing all this!

I’ll be interested to see the point cost factors too.

 

[sethschroeder]

I don't understand why you would take out inflation, I still am required to pay the full price regardless if my salary lags or exceeds inflation. I also think it's missing the important part of point requirements for Studios, 1BR, 2BR per the resort being measured. As a great example with AKV you can grab value Studios which are drastically more point efficent that would not be available at 7 months when SSR is able to book the resort.

To be honest this board in general always seems to want to discount inflation when in reality you still need to pay that money. You should adjust your available spending money not what things cost.

 

[CanadaDisney05]

Correct yeah because their point charts are very expensive.

Yeah if it really is for "sleeping" around points then the analysis does make sense.

I would say if you are using different tenors for a resort it is important to note that CCV is for 48 years whereas the others start to roll down quite a bit. I wasn't really against the analysis just thought it was important to notate that BRV is valued on holding a contract until 2042 whereas CCV is holding a contract until 2068 thus the discounted average annual MF for CCV is "amplified" by a much larger factor than that for BRV. Effectively the analysis works well if someone is aware that each contract was evaluated with a different tenor. The only way I could think of "normalizing" it for the different tenors is the cost of reinvestment would need to be considered. Take for instance BCV and DRR one is for 2042 and the other 2070, if the purchaser intends to hold past 2042 then BCV maybe come less desirable because the cost to reinvest back into DVC at the point will be very high, especially when prices seem to have outpaced inflation (resale slightly and direct much so).

This is my personal opinion, but I felt that the "if you want to hold on to a contract for a longer period of time" issue was more of a non-quantitative item. It's pretty hard to quantify for the reasons you stated. I'd categorize it in the same way that everyone has individual preferences for where they want the 11 month advantage. All very important factors that need to be included in the decision making process, but you can't really quantify the value on a broad perspective.

For an individual analysis, I like your method of estimating the buy-in price to get back into DVC in 2043. I would also factor in the discount on cash rates for the room/resort of preference.

 

[crvetter]

I don't understand why you would take out inflation, I still am required to pay the full price regardless if my salary lags or exceeds inflation. I also think it's missing the important part of point requirements for Studios, 1BR, 2BR per the resort being measured. As a great example with AKV you can grab value Studios which are drastically more point efficent that would not be available at 7 months when SSR is able to book the resort.

To be honest this board in general always seems to want to discount inflation when in reality you still need to pay that money. You should adjust your available spending money not what things cost.

You have to discount not because of your salary or anything. Simply the discounting is done to normalize it to a dollar value that makes sense to you. If I said I could give you $50 today or $100 in 20 years you really wouldn't know which to take because what does $100 in 20 years buy you. So the discounting by inflation is meant to "normalize" to the value of a dollar today (it's purchasing power). What you are referring to is the analysis of whether or not you can afford DVC, which I don't think this post was meant to tackle. If you wanted to do that you should look at the inflation you expect for your salary and then discount that based on inflation too. The reality is your salary can lag inflation but inflation exists and things get more expensive; in this case it would be basically getting a pay cut each year if your salary doesn't rise by inflation.

 

[CanadaDisney05]

I don't understand why you would take out inflation, I still am required to pay the full price regardless if my salary lags or exceeds inflation.

In any given year your salary may lag, or exceed inflation. But over the long-term (not accounting for things like retirement, new jobs, job promotions, etc...), your salary should increase pretty close to inflation. If not, your quality of life will drop dramatically which doesn't really make sense.

I also think it's missing the important part of point requirements for Studios, 1BR, 2BR per the resort being measured. As a great example with AKV you can grab value Studios which are drastically more point efficent that would not be available at 7 months when SSR is able to book the resort.

I mentioned this in another post, but I felt that doing that was a non-quantitative issue. Preferences for different types of rooms and resorts is not something that can be measured. Your preference for something specific definitely belongs in your personal decision making analysis though. It just can't be applied broadly.

To be honest this board in general always seems to want to discount inflation when in reality you still need to pay that money. You should adjust your available spending money not what things cost.

Adjusting your budget vs adjusting the cost is the same net exercise. I have $100 to spend on something today and in 10 years it will cost $250.

In 10 years that $250 is equivalent to $100 today or...
My $100 budget today will be worth $250 in 10 years..

Edit: Just as a followup, if you have a specific preference for a room type, you can always do the same type of analysis based on the amount of points you have to purchase. Keep in mind at 7 months, all of that goes out the window. All points are equivalent at that point.

 

[crvetter]

Thanks for sharing all this!

I’ll be interested to see the point cost factors too.

I'll try to add this today if @CanadaDisney05 isn't planning on doing so before I merge the numbers with mine.

Out of curiosity @CanadaDisney05 would you mind doing your analysis method with Riviera too, just assume direct pricing costs.

 

[Brett Wyman]

Why is deed expiration year not factored in? That changes things drastically in my view as due to that I don't even consider any 2042 resorts.

 

[CanadaDisney05]

I should mention that going through this exercise has started to change my mind on where to purchase. I have a young family so I can foresee us travelling to WDW quite a bit over the next 20ish years. As we start approaching retirement, it's hard to tell whether or not we will still have the desire. We travel in the summer, and would like to try the different resorts so that 11 month booking window isn't too big of a deal. We just wanted to find something economical.

I've been keying in on Saratoga contracts because they seemed to be far and away the most economical. While the longer contract does improve odds of better resale value should I wish to get out, I've been a bit gun shy of committing to something too long term.

Boulder Ridge is starting to look more appealing to me. SSR and Animal Kingdom (which have some of the lower studio point charts) will likely always be available at the 7 month window (I have some flexibility), but atleast with Boulder Ridge we would have priority availability at Wilderness Lodge. Given that the economics aren't much different than Saratoga, this is appealing to me.

 

[crvetter]

Why is deed expiration year not factored in? That changes things drastically in my view as due to that I don't even consider any 2042 resorts.

It is factored in for the way you would view the information. It's just that different expiration dates weren't considered to make a more apples to apples comparison. But each of the numbers presented is the average expected cost per point if the contract is held to expiration, thus the 2042 have analysis only going until then and the others going to their expirations. So you can cross off the 2042 resorts in your case.

 

[CanadaDisney05]

I'll try to add this today if @CanadaDisney05 isn't planning on doing so before I merge the numbers with mine.

Out of curiosity @CanadaDisney05 would you mind doing your analysis method with Riviera too, just assume direct pricing costs.

Riviera = 17.39 per point.

Obviously the biggest difference is we are using direct pricing at $188 per point. I used $8.31 per point for maintenance fees as well as I believe this is what I saw on the DVC website.

 

[crvetter]

Boulder Ridge is starting to look more appealing to me. SSR and Animal Kingdom (which have some of the lower studio point charts) will likely always be available at the 7 month window (I have some flexibility), but atleast with Boulder Ridge we would have priority availability at Wilderness Lodge. Given that the economics aren't much different than Saratoga, this is appealing to me.

Boulder Ridge is a great buy right now because of its unique situation of being at WL with CCV being the new kid on the block depressing it's price and limiting the buy back that Disney was doing on it. In 2 years it gets the same level of refurb that Saratoga is getting starting this summer so the sofa Murphy bed and I assume keeping the bunk size pull down in the studio that SSR won't have.

Riviera = 17.39 per point.

Obviously the biggest difference is we are using direct pricing at $188 per point.

Yeah I was curious on the number thanks.

 

[CanadaDisney05]

Boulder Ridge is a great buy right now because of its unique situation of being at WL with CCV being the new kid on the block depressing it's price and limiting the buy back that Disney was doing on it. In 2 years it gets the same level of refurb that Saratoga is getting starting this summer so the sofa Murphy bed and I assume keeping the bunk size pull down in the studio that SSR won't have.

Quick update. Looks like it may be hard to come by smaller contracts at Boulder Ridge. I really only need about 100 points, and almost everything I'm seeing on the resale sites is 200 points plus. I'll have to keep my eye out.

 

[BillPA]

You should also factor in the number of points required for your typical stay.
ie: a studio for a week in magic season: at Poly is 169-199 CCV/WL is 127 SSR is 106-127
So you can see it's not just the cost per point, but how many points you need for your stay.

What matters is where do you want to stay, saving at a resort you don't like...is that really saving???

 

[CanadaDisney05]

You should also factor in the number of points required for your typical stay.
ie: a studio for a week in magic season: at Poly is 169-199 CCV/WL is 127 SSR is 106-127
So you can see it's not just the cost per point, but how many points you need for your stay.

What matters is where do you want to stay, saving at a resort you don't like...is that really saving???

Mentioned it in several other posts, but this method eliminates the resort/room preference. It is simply a comparison of points at the 7 month booking window when all points become equal. But for sure, things like point charts, room availability, resort preference should all be factored in to your personal decision making process. This is not an all encompassing decision making chart.

 

[BillPA]

So your plan is to never stay at the resort you buy, just at 7 mo, look for somewhere you can stay?

 

[CanadaDisney05]

So your plan is to never stay at the resort you buy, just at 7 mo, look for somewhere you can stay?

Personally, my plan would actually to book at 11 month at my home resort as a backup. Then at 7 month look to move my reservation so that I can try out the different resorts.

But for this analysis, the purpose was to look at the economics of owning the different resorts. It doesn't factor in things like personal preferences. When you actually make the decision of where to purchase, all of these things should be part of your decision making process. I am not suggesting that everyone should purchase SSR. Economics are only one factor in the decision making process. How much of a factor varies by person.