News Disney Riviera Resort announced

[Sirwalterraleigh]

I don’t disagree on any of this. We broke even well before 10-15 years, but it does depend on your analysis inputs and how accurate they end up being. It is still a money save for the right customer... just not as much money or as many customers, perhaps...

I’m in boat too...

But the direct prices are insane. I got the link from the salesman a couple weeks back and saratoga...that one...is $162.

Just insane. At first I thought that the new rules would kill the resell market. Now I think there might be a run on it.

But now I know their plans beyond the 2042 “drop dead” date...

End it. There will be no point at the price levels to lock themselves into a contract.

 

[andysol]

IMHO if you can’t break even in 10 to 15 years it is a lot more difficult to justify the purchase even though the contract lasts much longer.

I'd love to see someone argue they can break even in 10-15 years with the current direct prices. When you take into account opportunity cost (which almost no one does), the rate at which our dues are increasing, and any downturns in the market where you're still obligated to pay increased dues (while rack rates would be heavily discounted), you aren't going to get there. Sorry.

But if a DVC salesperson can sell someone on it where they actually think they'll break even in that timeframe, more power to them.

 

[Sirwalterraleigh]

I'd love to see someone argue they can break even in 10-15 years with the current direct prices. When you take into account opportunity cost (which almost no one does), the rate at which our dues are increasing, and any downturns in the market where you're still obligated to pay increased dues (while rack rates would be heavily discounted), you aren't going to get there. Sorry.

But if a DVC salesperson can sell someone on it where they actually think they'll break even in that timeframe, more power to them.

I crunched numbers extensively at $73 a point and I got reasonable return...

But not 3-400% where $200 a point gets there.

I agree with you.

 

[MickeyMinnieMom]

I'd love to see someone argue they can break even in 10-15 years with the current direct prices. When you take into account opportunity cost (which almost no one does), the rate at which our dues are increasing, and any downturns in the market where you're still obligated to pay increased dues (while rack rates would be heavily discounted), you aren't going to get there. Sorry.

But if a DVC salesperson can sell someone on it where they actually think they'll break even in that timeframe, more power to them.

I don't think you're right -- I know you aren't in my case, even if I purchased at today's prices. It all depends on how you'd travel without the timeshare.

What do you mean by opportunity cost in this context? Other things they could spend their leisure dollars on? If they're quite sure they want to spend them in WDW, I'm not sure what the relevant opportunity cost is.

 

[andysol]

I don't think you're right -- I know you aren't in my case, even if I purchased at today's prices. It all depends on how you'd travel without the timeshare.

What do you mean by opportunity cost in this context? Other things they could spend their leisure dollars on? If they're quite sure they want to spend them in WDW, I'm not sure what the relevant opportunity cost is.

Opportunity cost is just that. You have $40k you're going to throw towards DVC. OK, you have to have that cash as financing that would mean you should be institutionalized. So that $40k wouldn't just sit in a mattress, it would be invested. And if you're calculating a 10-15 break even price, that's a long-term investment period to ride cycles of ebbs and flows in the stock market, real estate, etc.

TLDR; you aren't just calculating $40k investment = how long does it take for me to recoup $40k? It's how long does it take for me to recoup $40k + investment/opportunity cost?

If you think you can justify the current prices, I'd love to see you break it down. I think you'd be surprised, once you truly factor in all the costs, just how unrealistic it likely is.

Note: I own at 3 DVC resorts and I'm thrilled I bought when I did. I love being an owner. No plans to sell. But I also don't lie to myself to try to justify buying it as an "investment". Even though my points are worth significantly more than I paid for resale after the 2008 crash. That's just buying low and being able to sell high. I mean, I've never even paid dues as I rent enough to cover my annual fees + a little. So my stays have all been 100% free if I were to sell my contracts today even for what I bought them for (which would be ROFR'd instantly).

Today's direct prices are insane and you simply can't justify it mathematically. Emotionally? Sure. Can't argue that. But mathematically? Nope. If someone wants to prove me wrong, mathematically, I'd love to see it.

 

[MickeyMinnieMom]

Opportunity cost is just that. You have $40k you're going to throw towards DVC. OK, you have to have that cash as financing that would mean you should be institutionalized. So that $40k wouldn't just sit in a mattress, it would be invested. And if you're calculating a 10-15 break even price, that's a long-term investment period to ride cycles of ebbs and flows in the stock market, real estate, etc.

TLDR; you aren't just calculating $40k investment = how long does it take for me to recoup $40k? It's how long does it take for me to recoup $40k + investment/opportunity cost?

If you think you can justify the current prices, I'd love to see you break it down. I think you'd be surprised, once you truly factor in all the costs, just how unrealistic it likely is.

Note: I own at 3 DVC resorts and I'm thrilled I bought when I did. I love being an owner. No plans to sell. But I also don't lie to myself to try to justify buying it as an "investment". Even though my points are worth significantly more than I paid for resale after the 2008 crash. That's just buying low and being able to sell high.
Today's direct prices are insane and you simply can't justify it mathematically. Emotionally? Sure. Can't argue that. But mathematically? Nope. If someone wants to prove me wrong, mathematically, I'd love to see it.

Got it -- you're thinking about rate of return from wherever you would have kept that decreasing pile of $$ parked over time until you spent it on vacations, since you're paying up front. In our analysis when we purchased, we just assumed savings account, because that's ACTUALLY where we were leaving that particular bucket of $$ during a crazy time for the markets. We had enough that we left in the market, some in real estate, etc. But yes -- one should factor that in.

In reality, depending on the time period, you could have saved money parking it in DVC vs. the stock market (!!), or had a major opportunity cost from not having it invested.

 

[andysol]

In reality, depending on the time period, you could have saved money parking it in DVC vs. the stock market (!!), or had a major opportunity cost from not having it invested.

Hah- if we only had that hindsight, right?

But when you're talking long-term investments like 10-15+ years, it's safe 99% of the time.

The math just doesn't work anymore. There's a reason the majority of new DVC buyers finance it... because they're ignorant with money and/or making a completely emotional decision. Again, I can't argue the emotional element, which is real. But no one can argue the math part. Trying to is just lying to yourself with today's prices.

Could you imagine buying at $200+/point and the market drops finally? The fact we've gone this many years without a significant dip is relatively unprecedented. It is coming. It certainly will in a 10-15 year period. And when Disney is throwing ~$200 deluxe hotel rates out there again a la 2008-2010 (Note: that was before the massive additions of new hotels we have/are getting now), all of the "rack rate" calculation can be thrown in the garbage. Hell, we might be paying more in our dues than the nightly discounted rate at some point. To think that impossible or even unlikely, is putting our heads in the sand. Our resale values will tank during that time too.
For me, personally, I'll buy more points then. One of my biggest "Disney regrets" is not buying more points in 2009.

All of these factors have to be considered. It's not if, it's when.

 

[MickeyMinnieMom]

Hah- if we only had that hindsight, right?

But when you're talking long-term investments like 10-15+ years, it's safe 99% of the time.

The math just doesn't work anymore. There's a reason the majority of new DVC buyers finance it... because they're ignorant with money and/or making a completely emotional decision. Again, I can't argue the emotional element, which is real. But no one can argue the math part. Trying to is just lying to yourself with today's prices.

Could you imagine buying at $200+/point and the market drops finally? The fact we've gone this many years without a significant dip is relatively unprecedented. It is coming. It certainly will in a 10-15 year period. And when Disney is throwing ~$200 deluxe hotel rates out there again a la 2008-2010 (Note: that was before the massive additions of new hotels we have/are getting now), all of the "rack rate" calculation can be thrown in the garbage. Hell, we might be paying more in our dues than the nightly discounted rate at some point. To think that impossible or even unlikely, is putting our heads in the sand. Our resale values will tank during that time too. For me, I'll likely buy more points then.

All of these factors have to be considered. It's not if, it's when.

I take your points. As with any forecasting it involves a lot of guesswork, though, obviously. When I look back and calculate when we actually broke even based on when we purchased, it's around 7 years.

Now, I should also say that we did NOT finance -- paid cash up front -- that obviously makes a difference as well. And if we weren't DVC owners, we'd be the ones getting two connecting rooms MK view at the Contemporary (like we just did over the holidays for a few days) -- so at minimum that's my comp in reality (I'll stipulate for those who think that's idiotic that we're idiots, if that makes things easier ). That makes a difference in the calculation as well.

I haven't really sat down and crunched the numbers carefully at $225 a point (what I've been told BLT is going up to!). Rough back of the envelope, if that money was just sitting in a savings account otherwise, I arrive at 10-11yrs with our family's comps. So like I was saying, not nearly as good -- but still a good deal for the RIGHT customer... (but this does NOT assume a big market drop that would make our comps much cheaper than current rack, let's say, or a higher rate of return on otherwise invested funds) I just think that over time, there are fewer really RIGHT customers for this... though Disney continues to find more and more buyers...

Thx for the chat btw -- nice to hammer it out a bit in such a civil way... and on the INTERNET of all places?!?!?

ETA: Just one more thing to add: I worked in timeshare for a brief period many years ago, and based on that experience we ignored salvage value altogether in our decision-making to be very safe. DVC has held its value quite well, but if we sold for even $1 when/if we stop using it we'll be ahead of our assumptions. As of right now, SSR and BLT resale is still ridiculously solid. Will be interesting to see what happens over time given these new practices.

 

[bigrigross]

Or you know, dont worry about the break even time and instead look it from a yearly price. Take my OKW contract for example. I paid 17,500 for it direct from disney. If I put my yearly dues for $8.00 dollars (2018 dues were 6.72 for OKW) for 43 years to average out the cost over the years. Then add it to what I paid for the points. It comes out to $1409 a year to stay at a Deluxe hotel for easily 7 nights. When I stayed at POR in 2017, it costed us nearly 1600 dollars for 7 nights. Now its even more expensive to stay at POR and that was with the 15% discount at the time.

To stay at OKW which is the cheapest cash room for DVC, it would cost around 2K for the week. Or I take my 125 points and book at BLT for 102 points in december for 7 nights and that would cost me $3239 a night after the 25% discount for deluxe rooms. So long as you are seeing savings every year, your hitting the break even point. Those room prices keep getting up there in price. And im not talking about creeping. Its jump climbing from year to year. Its nice to have a price stay somewhat constant from year to year.

And just to be fair. I did finance my original amount of points from disney. But I paid it off in less than a year. Also I bought in 2017 for 141 a point (or so).

 

[Rteetz]

From Bioreconstruct

 

[GoofGoof]

Just insane. At first I thought that the new rules would kill the resell market. Now I think there might be a run on it.

I think the new rules will make the resale market on legacy resorts go even higher. Most of the prime locations at WDW are already taken with the original DVC resorts and people love having the option to trade in for a monorail resort or one of the EPCOT resorts for F&W. As long as the direct prices keep rising resale will always seem like a bargain.

 

[GoofGoof]

I'd love to see someone argue they can break even in 10-15 years with the current direct prices. When you take into account opportunity cost (which almost no one does), the rate at which our dues are increasing, and any downturns in the market where you're still obligated to pay increased dues (while rack rates would be heavily discounted), you aren't going to get there. Sorry.

But if a DVC salesperson can sell someone on it where they actually think they'll break even in that timeframe, more power to them.

You can’t calculate a break even without factoring in opportunity cost. Assuming you plan to go to WDW regularly you have 2 scenarios, either buy in to DVC with an initial cash lump sum payment or set that money aside and over time take from that money to pay cash for a Disney hotel room. In option 2 that initial upfront money wouldn’t have been buried in the backyard so it earns some return. In my case I used 5% which I think is a pretty conservative number and much higher than the average bank account would earn. You might be able to get a higher return investing wisely on stocks but you would be regularly taking money out to pay for rooms plus you have to factor in the tax you pay on the earnings. One bad December in the stock market could also wipe out a big chunk of your lump sum too (see last month)

Rack room discounts are also tricky to factor in. Not everyone travels at times where good discounts are traditionally offered. If you do then it makes it much harder to break even with DVC if you assume the discounts will continue indefinitely. As @MickeyMinnieMom said it’s different for each person so while less people can find a break even point there are still people who can depending on their travel habits. Most people also calculate break-even vs a studio hotel room, but if you are only interested in staying in a 1 bedroom condo you can break even much faster. The rack rate on 1BRs is pretty high so even with a seasonal discount DVC will still probably break even in 10 years or under even with $200 direct prices. In this case you have to compare buying to the DVC point rental market. Then the math goes pretty unfavorable for buyers.

 

[Creathir]

You can’t calculate a break even without factoring in opportunity cost. Assuming you plan to go to WDW regularly you have 2 scenarios, either buy in to DVC with an initial cash lump sum payment or set that money aside and over time take from that money to pay cash for a Disney hotel room. In option 2 that initial upfront money wouldn’t have been buried in the backyard so it earns some return. In my case I used 5% which I think is a pretty conservative number and much higher than the average bank account would earn. You might be able to get a higher return investing wisely on stocks but you would be regularly taking money out to pay for rooms plus you have to factor in the tax you pay on the earnings. One bad December in the stock market could also wipe out a big chunk of your lump sum too (see last month)

Rack room discounts are also tricky to factor in. Not everyone travels at times where good discounts are traditionally offered. If you do then it makes it much harder to break even with DVC if you assume the discounts will continue indefinitely. As @MickeyMinnieMom said it’s different for each person so while less people can find a break even point there are still people who can depending on their travel habits. Most people also calculate break-even vs a studio hotel room, but if you are only interested in staying in a 1 bedroom condo you can break even much faster. The rack rate on 1BRs is pretty high so even with a seasonal discount DVC will still probably break even in 10 years or under even with $200 direct prices. In this case you have to compare buying to the DVC point rental market. Then the math goes pretty unfavorable for buyers.

The other factor is the whole, obligation to go thing.
Some view this as a negative, I view it as a positive. It makes you want to use your points and do a trip ever year or every other year.

You’re not going to make money on it. But if you love going to Disney, this is a terrific way to get enveloped in the magic once every other year if not every year.

 

[GoofGoof]

The other factor is the whole, obligation to go thing.
Some view this as a negative, I view it as a positive. It makes you want to use your points and do a trip ever year or every other year.

You’re not going to make money on it. But if you love going to Disney, this is a terrific way to get enveloped in the magic once every other year if not every year.

True. That’s one of the non-financial benefits of membership. Because of the robust rental market the obligation to go should never be viewed as a financial negative. If for some reason you cannot afford a trip to WDW one year or just don’t want to go you can rent your points out for double or more what you pay in maintenance fees.

 

[Creathir]

True. That’s one of the non-financial benefits of membership. Because of the robust rental market the obligation to go should never be viewed as a financial negative. If for some reason you cannot afford a trip to WDW one year or just don’t want to go you can rent your points out for double or more what you pay in maintenance fees.

Exactly.
My folks own points and we go much more than we did in the past, and went from staying almost exclusively offsite to onsite everytime.

And they nor us would change it.

If the cost for entry wasn’t so high, my wife and I would have bought in by now as well.

 

[flyerjab]

True. That’s one of the non-financial benefits of membership. Because of the robust rental market the obligation to go should never be viewed as a financial negative. If for some reason you cannot afford a trip to WDW one year or just don’t want to go you can rent your points out for double or more what you pay in maintenance fees.

We bought in at GFV when it opened and have never regretted it. We even added on more points direct through DVC. We never looked at it as an investment nor do we intend on selling. It is a vacation destination for us that we go to multiple times each year. It makes it affordable for us. My wife and I will probably buy at Riviera, most likely the tower studio. It will be a great long weekend resort location for us. We don’t spend time in our resort room so the room size isn’t a factor.

 

[ToTBellHop]

I would NEVER buy here (being on the monorail line or within walking distance of a park is more valuable to me), but I’m sure we will stay here at some point (if no MK resort, Beach Club, or BoardWalk are available...). Glad we bought resale contracts while we could still use them everywhere. Resales are less appealing now and buying direct is just crazy. Happy we joined DVC, because if we hadn’t, we certainly wouldn’t now.

 

[MickeyMinnieMom]

 

[Missing20K]

Good link. Not sure it clears anything up regarding theming, try as it might.

Is it European, Southern European, or Mediterranean? I mean technically the Mediterranean borders Southern Europe which is technically in Europe. I guess this is the result when the task is "create a resort based on Walt's European travels". At least to me, that seems like that was the mandate.

 

[disneyfireman]

wow..love it. We don't own DVC but love the properties..