present value analysis

[Former Goalie]

Hello from a new board member who needs some help, or a reference to a way I can do a present value analysis (I think that may be the best description). I'm essentially trying to find out the true yearly cost of a DVC timeshare using the following parameters:

I would be paying $23,550 up front
"Maintenance" costs would be $900/yr. for '06, and would go up 3% per year every year of the contract
The term of the contract is, of course, through 2042

Any help figuring this out would be most appreciated!

 

[napnet]

I think this is what your asking for...

2006 - $900.00
2007 - $927.00
2008 - $954.81
2009 - $983.45
2010 - $1,012.96
2011 - $1,043.35
2012 - $1,074.65
2013 - $1,106.89
2014 - $1,140.09
2015 - $1,174.30
2016 - $1,209.52
2017 - $1,245.81
2018 - $1,283.18
2019 - $1,321.68
2020 - $1,361.33
2021 - $1,402.17
2022 - $1,444.24
2023 - $1,487.56
2024 - $1,532.19
2025 - $1,578.16
2026 - $1,625.50
2027 - $1,674.27
2028 - $1,724.49
2029 - $1,776.23
2030 - $1,829.51
2031 - $1,884.40
2032 - $1,940.93
2033 - $1,999.16
2034 - $2,059.13
2035 - $2,120.91
2036 - $2,184.54
2037 - $2,250.07
2038 - $2,317.57
2039 - $2,387.10
2040 - $2,458.71
2041 - $2,532.48
2042 - $2,608.45

 

[Former Goalie]

Thank you so much. I guess for the principal portion of $23,550, I'd peg the value of that at 3% compounded annually to get the future value in '42.

Although I was a stock broker, this is an intellectually challenging thing (the true annual cost needing to factor in both future and present values of $$$)!

 

[Magic Maker]

The other factor to figure is how much room rate will go up each year.

2042 is what 36 years from now. The Contemporary has been open for 35 years. A Magic Kingdom view room in the tower of Contemporary cost $29 in 1971, is anywhere from $400 - $545 for one night.

The room rates go up each year without fail about 10-15% per room per night. Big different between 3-4% of annual dues vs. the increase in room rates each year. That is one of the reasons I love DVC.

WELCOME HOME!!!

 

[HauntedPirate]

The other factor to figure is how much room rate will go up each year.

2042 is what 36 years from now. The Contemporary has been open for 35 years. A Magic Kingdom view room in the tower of Contemporary cost $29 in 1971, is anywhere from $400 - $545 for one night.

The room rates go up each year without fail about 10-15% per room per night. Big different between 3-4% of annual dues vs. the increase in room rates each year. That is one of the reasons I love DVC.

WELCOME HOME!!!

The room rate increase is so true. I'll be paying, relatively speaking, the same amount for my room in 2050 as I do today. And honestly, I LOVE staying at DVC properties over where we were staying - Value and sometimes Moderate resorts. It's such a nice change... but I can't say why exactly, or else I'd be ostracized. :lookaroun :zipit: But, staying at SSR last year was so much different... laid back, quiet. We are very much looking forward to the VWL in less than a month!

 

[sbain0770]

10-15% per year really accurate or reasonable assumption going forward

I found a "vacation cost" index somewhere on the internet that dated back to about 81 to present and its "other accomodations" index implied about 4.45% on an annual compounded basis. I am trying to do the same type of present value analysis but am having trouble justifing a higher rate. Has it really averaged 10-15% over the last 5-10-15 years across all resorts. Another complexity in the analysis is doing an "apples to apples" when you throw in discounted park tix with hotel reservations (magic your way) vs. dvc annual pass discounts. The other leg of the analysis is the membership dues. I understand the historical rate of increase is about 3.5% but I cannot see anything in the sample contract that would prevent sustained higher increases especially as these resorts age (yearly max of 15% was the only clause I could find). What I am trying to square is if I am a family of 2 adults and 2 kids and want to visit a dvc property every 3rd year for a week in early december and then spend the rest of my time using the international group of resorts would it be worth it? My sense is the payback period if I am only staying at a DVC resort every 3rd year would be 20 years or so. Thoughts?

 

[Hakunamatata]

I dont think that an automatic increase in yearly dues can be counted on, at any given percent. I want to say that I saw a chart of historic dues and that a couple of the older DVC resorts actually saw a year or two where the yearly due went down. I dont know if this has to do with depreciating the property of time, having a property fully built out, or what, but I was supprised when I saw it.

Also, look at it from an investment standpoint. If you are not planning to utilize your points each and every year, as time goes by and the cost of lodging increases, the price you are able to rent your points out for increases as well. You could easily cover the yearly cost, or most of it, by renting your points out.

 

[jburns]

Regarding the international trips and getaways I think it will be worth it. My wife and I love to travel and the biggest price tag is always accomodations (depending on your flight I guess). I've heard that you get your best bang for the buck staying at a DVC property compared to the other resorts that are involved. However, to stay peak season in a DVC property (one bedroom) you're looking at 243 points or so. To do the same in peak season but room in one of the getaway international hotels you're only looking 160 points.

I had the same questions for my DVC sales guy and this is what he does since he lives in Orlando.. a few days at the park but the rest of his time he stays in the other locations. Seems like a good deal since all these other resorts have to be up to standards (kitchenette, etc) in order to be considered by Disney.

I know a few Canadian ski resorts that are REALLY pricy but on the points chart they are very affordable.

J

 

[ConstanceIrene]

Hello from a new board member who needs some help, or a reference to a way I can do a present value analysis (I think that may be the best description). I'm essentially trying to find out the true yearly cost of a DVC timeshare using the following parameters:

I would be paying $23,550 up front
"Maintenance" costs would be $900/yr. for '06, and would go up 3% per year every year of the contract
The term of the contract is, of course, through 2042

Any help figuring this out would be most appreciated!

Question: Why is the initial amount $23,550? I thought you could buy in for a little over $15K.

 

[Hakunamatata]

Question: Why is the initial amount $23,550? I thought you could buy in for a little over $15K.

The OP may be buying in with more than the minimum number of points.

 

[ConstanceIrene]

The OP may be buying in with more than the minimum number of points.

Yes, I thought of that. I'm just curious about the large buy in amount with the relatively small cost of maintenance fees. Does $900 per year for about 230 points sound right?

 

[Hakunamatata]

Yes, I thought of that. I'm just curious about the large buy in amount with the relatively small cost of maintenance fees. Does $900 per year for about 230 points sound right?

Roughly yes. We bought in with 250 points and the yearly fees were a little over $900, so that sounds about right.

 

[ConstanceIrene]

Roughly yes. We bought in with 250 points and the yearly fees were a little over $900, so that sounds about right.

Good deal. I have 250 points from three different places and my fees are much higher.

 

[GrowingUpDisney]

We have been DVC members for 8 years now. Our annual dues at Boardwalk have gone down twice (or maybe three times) since our initial purchase. Therefore I think it is safe to say that the annual dues will not neccessarily (sp?) increase each year.