I've run the numbers in the past and was getting ready to do so again when I stumbled across this write-up on Mousesavers:
http://www.mousesavers.com/dvc.html
I think it's very well done! It'd recommend reading this thoroughly if you are considering buying into DVC.
Here's a few highlights:
In the following scenarios, DVC purchase beats investing the money (buy-in amount plus annual fees)
and paying cash for your annual vacations:
- You vacation for 10 nights every year in a Deluxe resort or DVC Studio unit at full "rack rates." In this scenario, you'll start saving money after 8 years or less of DVC ownership. In fact, if this is your vacation style, DVC is still a good deal even if you would only stay 10 nights in a DVC Studio every other year and throw away 50% of your points (though it will take longer to break even -- about 21 years).
- You stay 10 nights at a Deluxe resort each year, with a 25% discount (approx. 13 years to break even).
- You stay 7 nights at a Deluxe resort each year at full "rack rates" (approx. 13 years to break even).
- You vacation for 10 nights each year at a Moderate resort, paying full "rack rates" (approx. 20 years to break even).
- You rent 160 points from a DVC owner each year, starting at $11 a point, for at least the next 24 years.
- You vacation for 10 nights each year at a Moderate resort, with a 20% discount (approx. 42 years to break even).
DVC purchase is not cost-effective in the following scenarios:
- You vacation 7 nights per year at a Moderate resort, paying full "rack rates."
- You rent 160 points every other year from a DVC owner, starting at $11 a point.
The break-even amount in 2008 dollars seems to be around $1500. If you would normally average less than that per year for your accommodations, DVC is probably not going to save you money. If you spend more than that per year, on average, and you can afford to write a check for the buy-in amount, it's worth considering a DVC purchase.
One last note on this topic: the scenarios above do not take into account
a major benefit to investing the money instead of spending it on a DVC membership: your money remains liquid and available in case of emergency or changes in your financial situation. If you invest the money and want to stop vacationing at Disney World, you can easily divert the money to other uses.
Long-Term Issues
DVC contracts last a long time. Will you still want to go to Disney World every year, 25 years from now? 35 years from now?
A DVC owner who became a member 12 years ago mentioned to me that she might not make the same decision today. One thing she didn't consider, she now realizes, is that your lifestyle changes over time. When she became a member, she had small children and went to Disney World every year. Now her kids are in college, and she says when that tuition bill arrives, she sometimes regrets owing $2000 in annual DVC dues.
If your lifestyle changes, you get tired of Disney vacations, or you suffer financial reverses, the dues can become a burden. Then you're faced with selling your membership, or renting out your points to cover the dues. Realistically, there is a reason why there are always DVC resales available -- people do get in over their heads, or just change their minds.
DVC has retained its value better than most timeshares, mainly because Disney has aggressively participated in buying back resales under its "right of first refusal" clause, keeping the resale prices propped up. Currently resellers are typically getting about 75% of current retail prices, once they pay the associated sales costs.
However, as DVC memberships get closer and closer to their expiration dates, it's likely that resale prices will drop. If you are contemplating the purchase of a resale for one of the resorts that expires in 2042, bear in mind that the resale value might drop significantly at some point, particularly since there is a competing DVC resort (Animal Kingdom Lodge Villas) that doesn't expire until 2057. Given the success of DVC, there is every reason to expect that additional resorts will be built, with later and later expiration dates.
Best Candidates for DVC Membership
DVC membership might make sense if you meet most or all of these criteria:
- You have the cash in hand to pay all of the upfront costs of membership without borrowing.
- The cost of dues does not appear to present a financial hardship based on your current expectations.
- You vacation at Walt Disney World frequently: ideally at least once every two years.
- You plan to continue staying at Disney World far enough into the future to make the membership at least break even.
- You prefer to stay in Deluxe or DVC accommodations and/or you stay a long time (10 days or more per year).
- You are able to plan your vacations well in advance -- ideally 7 to 11 months out.
Conclusion
Buying a DVC membership is a rational, financially viable option for some people: namely people with the cost of the initial purchase already sitting in the bank, who plan to stay in the higher-end accommodations at Walt Disney World on a regular basis.
A DVC purchase is a way of committing to an annual Disney vacation with family and friends. For some people, that may outweigh any financial considerations. Only you can determine if DVC membership makes sense for your situation.
If you only visit Disney World occasionally, you may find that renting DVC points from an owner is actually a better deal than buying a DVC membership.
