Disney promotions and DVC "buyer's remorse"

[PoohsGang]

Hey there hi there ho there...

Anyone who's been on this forum for a bit has seen the occasional gripe from DVC owners that they can't take advantage of a "spectacular" deal like free dining or deep room discounts because of their DVC membership.

I am not asking if YOU think it's unfair, though I suppose I can't stop you from expounding on that question if you so choose.

I'm also not asking whether or not you think those "spectacular" deals are all that spectacular, considering the lesser quality or more crowded they often make the resorts.

My question is: Do you think that perception that some people have might be part of the rapid devaluation of DVC points in the resale market?

2 years ago, it was much more common to see people selling their points in, say, BCV for 90 bucks or more per point. Now it's not uncommon to see people selling BCV memberships for the low-to-mid-70s per point. Hilton Head below 50 a point! And some people already seem to be dropping their AKV memberships to $80pp and below.

I know a lot of this is just the harsh economic times in which we live. But those harsh economic times are what's fueling the deeper discounts we've seen lately, which I suspect makes some people regret buying DVC, which in turn makes them sell for less than they would have a few years ago, perhaps even taking a loss from their initial payments. And that sort of resentment, as shortsighted as it may seem to some of us, will only get worse until/unless the economy turns around.

What think you?

You really want to know what I think????? Huh Slappy??????

 

[Erin_Akey]

The only way the Disney discounts are better than what you get with a DVC membership is if you stay in value resorts. And for a family of more than four, that is still more expensive because you would need two rooms.

Here is why it works for my family and why the discounts through DVC are better:

1. we have four kids at home and all get annual passes for WAY less than the typical park hopper price of maybe 5-7 days through disney vacation packages

2. dining- tables in wonderland is 20% off ALL food and beverage. The dining plan is WAY too much food for most people. If we want a small meal or to share something etc. we can and still get our 20% off on all food and alcohol etc.

3. frequency- we can now go four to five times a year on our points and spend way less. there are also other discounts- hubby and i each get 20.00 off the price of the entry fee for the half marathon.......

It all really depends on your personal situation and how and how often you vacation. We live 7 hours away and just next weekend, our kids are gone camping with grandpa- well mommy and daddy made a quick call and there is a room available at boardwalk and so we are sneaking away for the weekend with an overnight bag and all we will spend is gas and food and make GREAT memories.

 

[slappy magoo]

You really want to know what I think????? Huh Slappy??????

Sure. Just because your opinions often come across as ill-informed & presented in a hostile manner doesn't make them any less valid than anyone else's.

 

[tampabrad]

I would assume that people who buy into DVC already know that there are AP discounts and other promotions offered throughout the year.

 

[dizzney]

I would assume that people who buy into DVC already know that there are AP discounts and other promotions offered throughout the year.

Yes we do, but when it adds up, our DVC discounts are better. We're heading down in August just DH and I, got our BW view room, have our DVC Annual Passes (bought last trip) our TIW card 20% off dining and we've got ressies at Victoria and Alberts on our anniversary and that takes TIW, all the trip is costing us is food and airfare (and got a good deal on JetBlue). Hoping like in Dec09 and Jan10 they offer the 20% off discount for shopping we got with our annual pass.

 

[Thrill]

Many who get "buyers remorse" when seeing the public offers are assuming that the public offers are better than the long term benefit of owning DVC.

Each needs to do the math for themselves, because depending on their family makeup and vacation style, the value proposition will be different.

Exactly. DVC hasn't been too appealing over the past few years because Disney's been giving out the meal plan for free. A stay in a value resort is often times cheaper than using DVC when you factor in the free meal plan. Granted, this isn't a help to those who are members and therefore, already paying, those who are staying without passes, people who would rather stay in a DVC villa than a value room, people who don't need to take advantage of the meal plan, those staying in holiday seasons, etc. It's also notable that stays on points at Disney's Vero Beach and Hilton Head Island resorts are much cheaper than paying cash, so members might end up getting better value out of their points staying at one of those resorts.

Like I said, even at this moment, there are many exceptions to the value of the deals given to cash resorts over DVC. In a year or two, the economy should be better, and the deals won't be offered so often, making DVC the better value in more cases. Granted, it's not going to stay that way all the time, I'm sure the economy is going to fluctuate in the next 30 or so years, but I think DVC is a better long term deal to someone who is willing to commit to going to Disney often. Depending on where the points are (Vero Beach and Hilton Head are more vulnerable to a storm than WDW resorts, for example, and could see huge maintenance increases) DVC is probably going to be more effective when spending is high. Annual dues are, to my knowledge, required to only cover the fees to run the resort, and the point values for a weekly stay cannot change at a given room in a given resort. Disney can't bring up dues a dollar per year because they feel like it, unless they wanted to alienate owners by doing unnecessary work (only to increase dues by 15% annually), which isn't going to give Disney much benefit in any way. Perhaps in a theoretical high spending time, Disney decides to increase the cash price of a stay, while bookings at DVC resorts on cash increase. The high sales of DVC rooms result in stable, and potentially lower, annual dues, and the few deals on cash stays mean that DVC members get more bang for their buck.

 

[Todd L]

Hey there hi there ho there...

Anyone who's been on this forum for a bit has seen the occasional gripe from DVC owners that they can't take advantage of a "spectacular" deal like free dining or deep room discounts because of their DVC membership.

I am not asking if YOU think it's unfair, though I suppose I can't stop you from expounding on that question if you so choose.

I'm also not asking whether or not you think those "spectacular" deals are all that spectacular, considering the lesser quality or more crowded they often make the resorts.

My question is: Do you think that perception that some people have might be part of the rapid devaluation of DVC points in the resale market?

2 years ago, it was much more common to see people selling their points in, say, BCV for 90 bucks or more per point. Now it's not uncommon to see people selling BCV memberships for the low-to-mid-70s per point. Hilton Head below 50 a point! And some people already seem to be dropping their AKV memberships to $80pp and below.

I know a lot of this is just the harsh economic times in which we live. But those harsh economic times are what's fueling the deeper discounts we've seen lately, which I suspect makes some people regret buying DVC, which in turn makes them sell for less than they would have a few years ago, perhaps even taking a loss from their initial payments. And that sort of resentment, as shortsighted as it may seem to some of us, will only get worse until/unless the economy turns around.

What think you?

We have been really happy with our decidsion to buy into The Dvc.

However, We purchased from the secondary market and Not directly from Disney so we saved a considerable amount of Money!!

We also take advantage of any discount we are able too especially Annual Passes and Dining!!

In the End we would wind up Going every year either way so It just makes it a little nicer for us to stay at The Dvr resorts.

Our Biggest regret is that we miss Staying at Pofq !!

 

[GoofGoof]

This is something I asked in another DVC thread but it was never answered. Has any one calculated the break even point (if there is one) of DVC accounting for 30%-40% discounts on rooms vs full price?

If you don't discount the rooms at all and compare to rack rates at a deluxe resort your break even will likely be between 5 and 7 years depending on buying direct vs resale, the resort, the interest rate you use and the annual increase rate for both dues and cash room rates. Compard to rack rats DVC is very attractive.

Most people I have heard talk about calculating break even around these parts usually use a discounted rack rate. I personally used 25% off rack since I couldn't always get a higher discount when I wanted to go. If the best offer you can get is free dining it works out to about a 25% discount for a family of 4 over the rack rate.

There are many variables that go into the break even calculation so it becomes a pretty personal discussion, but here are my estimated variables I used and my break even point. I was buying 160 points at BLT resale for around $15K after closing costs.

Interest rate for time value of money = 5%
Maint fee increase = 3.5%
Cash room rate increase = 3.5%

1) Compared to the rack rate for a 1 week stay in a lake view tower room at CR for regular season ($4,161 after 12.5% tax) the breakeven for buying DVC assuming the inputs from above is 5 years.
2) With a 25% discount off of rack the breakeven is 7 years
3) With a 40% discount off of rack the breakeven is 10 years

Depending on which resort you pick and which room type the results are very different and adding in a discount off of rack will generally push the breakeven out. Buying direct from Disney at $165 per point for BLT would have also significantly pushed out my breakeven from 7 years (assuming a 25% discount) to 13 years.

 

[GoofGoof]

Exactly. DVC hasn't been too appealing over the past few years because Disney's been giving out the meal plan for free. A stay in a value resort is often times cheaper than using DVC when you factor in the free meal plan .

I agree with your post in general, but there are a few things I don't agree with. DVC is never going to be a money savings vs staying at a value resort. Vs a moderate you may save some money over the long run, but you will have to be very patient. VS a deluxe resort, now we're talking.

Annual dues are, to my knowledge, required to only cover the fees to run the resort

Absolutely true. It's actually FL timeshare law. They can only charge for costs to run and maintain the resorts. Per the DVC contract they are limited to 15% per year, but it can and always has been less since DVC has been around. The average dues increase based on historic rates is around 3.5% a year, but it fluctuates between resorts and by year.

the point values for a weekly stay cannot change at a given room in a given resort.

Not technically true. They can change the point value for a room, but they must keep the total points for the year at that resort the same. For example, at BLT a year or 2 ago they changed some of the rooms from MK view to LV which reduced the points needed for those rooms and they had to increase points at the other MK view rooms to offset this and keep the total BLT points the same.

The high sales of DVC rooms result in stable, and potentially lower, annual dues, and the few deals on cash stays mean that DVC members get more bang for their buck.

This is true. Even when Disney buys back points through ROFR or because of defaults they can rent the room equivalent out to cash customers through the regular WDW reservation desk and a piece of that cash paid goes back to the DVC resort to cover the costs (essentially they get the equivalent of the DVC dues from the cash someone pays to rent the room).

 

[olinecoach61]

My guess is that the value of points being resold has fallen because of the economy. People have less money to spend on vacation so the demand falls, hence lower prices. It should rebound eventually.

 

[GoofGoof]

Hey there hi there ho there...

Anyone who's been on this forum for a bit has seen the occasional gripe from DVC owners that they can't take advantage of a "spectacular" deal like free dining or deep room discounts because of their DVC membership.

I am not asking if YOU think it's unfair, though I suppose I can't stop you from expounding on that question if you so choose.

I'm also not asking whether or not you think those "spectacular" deals are all that spectacular, considering the lesser quality or more crowded they often make the resorts.

My question is: Do you think that perception that some people have might be part of the rapid devaluation of DVC points in the resale market?

2 years ago, it was much more common to see people selling their points in, say, BCV for 90 bucks or more per point. Now it's not uncommon to see people selling BCV memberships for the low-to-mid-70s per point. Hilton Head below 50 a point! And some people already seem to be dropping their AKV memberships to $80pp and below.

I know a lot of this is just the harsh economic times in which we live. But those harsh economic times are what's fueling the deeper discounts we've seen lately, which I suspect makes some people regret buying DVC, which in turn makes them sell for less than they would have a few years ago, perhaps even taking a loss from their initial payments. And that sort of resentment, as shortsighted as it may seem to some of us, will only get worse until/unless the economy turns around.

What think you?

It's hard to say exactly, but I think the economy plays a part, but is probably not the whole story. Some of it is also poor decision making on the part of owners.
1) People who really couldn't afford DVC bought in and then the dues went up but their pay didn't and they couldn't afford it any more. The cost of airfare has also gone up a lot as did WDW park tickets and food. Some people who bought in may not have the money to afford the whole vacation package anymore even if they can afford the dues. Lodging is only a portion of the total vacation cost.
2) Some people can still afford it, but don't want to go to WDW anymore. Maybe they had a non-economic life change like their kids grew up, they got divorced, got married, had a kid, got sick something like that.
3) Some people don't like WDW anymore. The declines people around here talk about got to them and they are opting out by selling. Sad, but probably true.
4) another group may be cashing out a less popular resort for a newer one. Maybe a 10 year owner of OKW decided to sell their points resale and put the cash towards a contract at BLT since its a newer resort, has a longer contract, has lower dues or they don't want to risk waiting for the 7 month window and missing out.

I bought my DVC contract resale and I did wonder why the people who sold it were selling. Not that it really matters to my use of the points and I never met the people in person, but I was hoping they sold for a positive reason just for their sake. I know I would be sad if I had to sell my DVC

 

[ParentsOf4]

My guess is that the value of points being resold has fallen because of the economy. People have less money to spend on vacation so the demand falls, hence lower prices. It should rebound eventually.

Yes, prices have fallen. For example, in 2008, BWV points were selling for around $77/pt. Last year it was below $65/pt. Prices seem to have stabilized since 2011.

Eventually prices will have to decline once again but upward pressure will contain as long as Disney increases its direct sales price. Again using BWI, direct sale prices are $130/pt. Conversely, BWV contracts now have "only" 29 years left on them. In 29 years, these contracts must go to $0. 29 years still is a long time. I suspect most are not too worried about where they will be vacationing in 30 years. But as the years tick away, eventually the remaining time on the contract is going to exert significant downward pressure on price.

 

[GoofGoof]

Yes, prices have fallen. For example, in 2008, BWV points were selling for around $77/pt. Last year it was below $65/pt. Prices seem to have stabilized since 2011.

Eventually prices will have to decline once again but upward pressure will contain as long as Disney increases its direct sales price. Again using BWI, direct sale prices are $130/pt. Conversely, BWV contracts now have "only" 29 years left on them. In 29 years, these contracts must go to $0. 29 years still is a long time. I suspect most are not too worried about where they will be vacationing in 30 years. But as the years tick away, eventually the remaining time on the contract is going to exert significant downward pressure on price.

I think the logic of years left makes sense. If there are 29 years left on contracts at BWV and you can buy them for low $60s you are paying roughly $2 per point per year. At the rate of $2 per point per year the price for BLT (47 years left) should be about $94 which seems about where it is. The logic seems to work for BCV, WLV, BWV and BLT. The logic fails when you compare to "less popular" resorts like OKW, SSR and AKV. When you use the points per year SSR is the best bargain. They should be $82 based on 42 years and $2 per year, but you can buy them for in the $60s. That combined with low fees makes SSR a good bargain.

I know this is a flawed analysis, but of you wanted to use it to ballpark the numbers, the value of the contracts should in theory drop $2 per year until they reach $0 if all other variables were held constant (they are not - which is what makes it a flawed analysis).

 

[DVCOwner]

Here is my feelings on the cost of points going down. I did not buy into Disney Vacation Club as an investment; I purchased it so I could visit Walt Disney World once every one or two years with my whole family and lots of friends. So it does not matter to me what the selling price is. Now if I want to add additional points from the resell market; I would want them as low a price as Disney Vacation Club would allow without using its right of first refusal.

 

[GoofGoof]

Total agreement with the rest - but 5% TVM? I want to know who you bank with... . You might get that in the stock/casino world, but the FED has insured that you won't get over 1.5% in anything backed up by insurance... even at Ally Online . We COULD invest in stocks.... but I trust Cyprus more .

The fact that the "FED Mandated Interest Rate" is so LOW is one of the reasons we bought into DVC... when we get spit returns? Hey, I would rather give Disney the Capital .

I agree. I did buy in a few years back when maybe 2 to 3% was possible. The 5% is conservative for sure. I guess maybe I could have started out in a mutual fund and then pulled cash out as needed. Over the past few years an after tax 5% rate for a mutual fund is reasonable.

 

[Phonedave]

I agree. I did buy in a few years back when maybe 2 to 3% was possible. The 5% is conservative for sure. I guess maybe I could have started out in a mutual fund and then pulled cash out as needed. Over the past few years an after tax 5% rate for a mutual fund is reasonable.

I have to agree. %5 is not unreasonable at all. For a bank account - yes. For just about any other investment vehicle, I would be disappionted in a %5 yearly return.

-dave