Another Financial Analysis
of DVC Membership
a lawyer and MousePlanet contributor, wrote up the following financial
analysis on the Disney Vacation Club. It, along with the associated
spreadsheets, give another angle on the financial benefits versus
costs of membership. This page, and the associated spreadsheets,
were updated in July 2002.
For some time I had been interested in the possibility of joining
the Disney Vacation Club, but like most people I had assumed that
it was too expensive for me to afford. Even so, I decided to go
on a DVC tour during an October 2000 trip to WDW. I was impressed
with the tour, so when I got home I decided to see just what the
cost was. Much to my surprise I found that not only was DVC not
too expensive, but that for a regular visitor like me it was actually
a good deal.
For various reasons I had to delay the planned purchase a couple
of years but I'm now back into serious planning. Since it's been
a couple years since I last ran all of the numbers I decided to
do a summer/fall 2002 update on the charts to take into account
the newer resorts. With changes in the resale pricing and slightly
better interest rates I found that overall things actually improved
during my self imposed delay. I now look to be purchasing in the
next 6 months if things fall into place.
Because I figured others might be in the same boat as me, wondering
about DVC, I decided to share my spreadsheets with Mouseplanet.
I should state from the start that the basis for these spreadsheets
was a spreadsheet already on Brian Bennett's site. While I have
extensively revised the work, I must give credit to the original
author, especially in terms of some of the formulas.
I've included 4 Microsoft Excel spreadsheets, (when the MousePlanet
server asks for your user name and password, just hit enter) one
for Old Key West,
one for Boardwalk
Villas, one for Wilderness
Lodge Villas, and one for Beach
Club Villas, in each case assuming the purchase of 200 DVC points.
Please note that for most of the analysis I'll just use the initials
for each resort (IE Old Key West is OKW).
The layout of each sheet is identical, except for the numbers themselves.
I'll explain what I was doing section by section, so if you want
to download a sheet first and print it out you might be able to
Section A: Basic Cost
In section A, I calculated the base cost of buying into DVC, assuming
the purchase of 200 points (the whole point system and how it works
is explained in the rest of the DVC guide here on Mouseplanet.com).
The first thing I had to do was determine a cost per point. Although
you can buy into the newer resorts through Disney I've come to the
clear conclusion that a resale is a much better way to go. With
a resale you purchase from a current DVC owner and save accordingly.
To determine a ballpark per point resale cost, I reviewed the various
resale web sites, checked posts on some message boards and talked
with some resale agencies.
I settled on an approximate resale cost of $ 62 per point for Old
Key West, $ 67 per point for Boardwalk Villas and $ 72 per point
for Wilderness Lodge Villas. Since Beach Club Villas are selling
from Disney at $ 80 per point I used that figure. In both cases
the numbers could be high as I've seen OKW sales as low as $ 58
per point and Beach Club as low as $ 70. But as the song says you
better shop around.
I then factored in a bank loan, since I don't have $ 10,000 to
$ 15,000 just laying around. I assumed that I'd make a basic down
payment and then take out a 5 year loan. Based on current loan rates
I figured I could get a rate of around 8%. Again, your rates could
vary. A home refinance could result in an even lower rate while
some other loans could be higher.
This is just an average, and you may have to adjust accordingly.
Based on an 8 %loan for 5 years I would pay a total of 21.657% in
interest payments (IE for a $ 10,000 loan I'd pay back $ 12,165.70).
I've programmed this rate into the spreadsheet, so if you adjust
your interest rate you'll need to change that number. Any program
like Money or Quicken can calculate a loan for you.
The final results I came up with were roughly $ 15,250 for OKW,
$ 16,500 for BWV, $ 17,750 for WLV and $ 20,000 for BCV.
Section B: Cost of Lost Income
In Section B, I tried to factor in the lost income I could have
earned on the money in Section A (since theoretically I could have
invested it in something else). I assumed a 10% annual return, less
33% in taxes to result in a net income of 6.7% per year, over the
next 40 years. I was able to use a formula provided by the original
spreadsheet to convert the 40 years worth of costs into equivalent
To calculate what is called the Net Present Value I needed a figure
for the inflation/cost of funds rate over the next 40 years. As
a good guideline I used the Federal Reserve Discount Fund Rate which
was about 3.5% as of July 2002.
A side note, I get the 40 year figure from the fact that the DVC
membership expires in 2042. Admittedly the theoretical investment
would continue beyond that point, but by 2042 I'll be old enough
to not care <G>.
The net costs I came up with were roughly $ 47,750 for OKW, $ 51,500
for BWV, $ 55,500 for WLV and $ 62,000 for BCV.
Section C: Cost of Annual Fees
When you join DVC you have to pay annual membership fees, equal
to a few dollars per point. For each of the three resorts I took
the current annual fees (for 2002) and assumed they would increase
by 2.5% per year. This is based on the fact that between 1994 and
2002 they have increased at roughly this rate. Interestingly since
the fees are increasing at a rate slower than inflation the overall
average cost per year is actually lower than the current cost.
The net costs I came up with were roughly $ 21,500 for OKW, $ 26,500
for BWV $ 25,500 for WLV and BCV.
Section D: Total Costs
In this section I simply added the numbers from Sections A, B and
C together, this gave me the total 42 year costs for joining DVC.
The total costs I came up with were $ 84,558 for OKW, $ 94,335
for BWV, $ 98,553 for WLV and $ 107,182 for BCV.
These seem like pretty imposing costs, in the area of one hundred
thousand dollars, but wait until we start spreading these costs
Section E: Cost per Point
The cost in section D is enough for 200 DVC points over a 40 year
period. In other words you get a total of 8000 points (200 times
42) for that amount. I took the net cost and divided it by the total
number of points received.
For example with OKW I took $ 84,558 and divided it by 8000 and
got the per point cost of $ 10.57 per point
The net per point costs I came up with were $ 10.57 for OKW, $
11.79 for BWV, $ 12.32 for WLV and $ 13.40 for BCV.
I also did a couple of alternate calculations to determine point
costs. Arguably the money you are spending on DVC is money you would
have spent on Disney trips anyway, thus there wouldn't be any earnings
on that money. So I calculated the cost per point based strictly
on money out of pocket, without any assumption of lost income. These
numbers are much lower but they assume you would not have earned
anything off the money you spent on DVC.
The net per point costs I came up with were $ 4.60 for OKW, $ 5.35
for BWV, $ 5.40 for WLV and $ 5.64 for BCV.
Since I'd looked at the good I thought it was only fair to look
at the bad as well. During the 5 year period you are paying off
the loan your monthly expenses are much higher. So I also ran a
formula to determine the per point cost during the duration of the
The net per point costs I came up with were $ 16.48 for OKW, $
18.41 for BWV, $ 19.50 for WLV and $ 21.62 for BCV.
Section F: Net nightly cost for Room
When you buy into DVC you get a point chart that tells you how
many points each type of room would cost for a given night during
a given time of year. I took those charts and added them up to determine
the total annual cost for a studio room at each of the three resorts.
A studio room is a comfortable room that is equal to any basic room
at most of the deluxe resorts and is better than any moderate room.
I then divided things out to come up with a average nightly cost
for a studio room. If you are really interested you can e-mail me
and I will send you the point chart spreadsheet.
The numbers I arrived at were roughly 14 points for OKW, 15 points
for BWV and 18 points for WLV and BCV.
In this section I took the cost per point and the point cost per
room and multiplied them out to determine the average nightly cost.
This cost will remain constant for the whole 40 years (in other
words the cost today and the cost in 2030 will be the same).
Using the main cost per point (including lost income), I arrived
at $ 145.55 for OKW, $ 174.39 for BWV, $ 218.90 for WLV and $ 232.14
for BCV. This is the total price, no taxes or room fees to add.
Just for comparison, the 2002 costs for the same rooms during the
slow season are: $ 276.39 for OKW, $ 298.59 for WLV and $ 320.79
for BCV or BWV. Thus the 'cost' through DVC is more than 33% less
than the cash price.
Section G: Comparison to Moderate Resorts
In this section I tried to compare the cost of DVC versus paying
cash for the moderate resorts. In each resort I determined how many
nights I could stay in a studio room with 200 DVC points based on
the cost during Magic Season, which is the highest price except
for Christmas and Easter. For OKW and BWV you could stay 13 nights,
for BCV and WLV you could stay for 11 nights.
To determine the cost of the moderate hotel I looked at the cost
during the Value season (currently $ 133 plus tax). I then calculated
the net cost over the next 40 years. I used a 6% inflation factor
because over the last 10 years that is the average rate at which
costs have increased (1991-2001).
The net cost I came up with by comparison was $ 132,000 for 13
night stays and $ 112,000 for 11 night stays at the moderate resort
over 40 years. Arguably you could reduce this somewhat if you assumed
a discount of some type, but since I'm already comparing high season
cost for DVC to low season cost for cash price I didn't think I
needed to go quite that far.
By comparison the net costs for DVC were roughly $ 84,500 for OKW,
$ 94,500 for BWV, $ 98,500 for WLV and $ 107,000 for Beach Club
In other words the costs were lower in every single case. Considering
that this is comparing a moderate room during the cheapest time
of year to a studio room during any time of the year (larger and
with more amenities) this is really pretty amazing. If you were
to actually compare same times of year the benefits would be even
One other way to make a DVC membership more economical is to 'rent'
your points out. Some years you might not be in a position to use
all of your points, and you might not want to keep banking them
for future use. With DVC you can 'rent' your points to other people
for cash, and then make a reservation for them at a chosen DVC resort.
There are a number of agencies that can do this for you but most
people do it on their own. There are many bulletin boards out there
dedicated to renting points or swapping timeshare accommodations,
some even sell their points on places like E-Bay. I made a review
of the various boards and found the average price to be around $
10 per point. Based on the cost per point, this would almost completely
cover the cost of points at Old Key West and would cover much of
the cost of the points at other resorts.
Also you should remember that a large portion of this 'cost' is
a theoretical cost of lost income on the money spent on DVC membership
and fees. If you consider just the out of pocket costs, $ 10 per
point more than covers the cost of the points. Even if you look
at the total cost, it covers a huge portion (nearly all with Old
Key West, around 75% with Beach Club Villas).
Just as an example, let's assume you have 200 points at Old Key
West. You rent a years worth for $ 10 a point or $ 2,000. You then
spend $ 645 to pay your fees which leaves you with a profit of $
1,355. If you're still paying on a loan it covers a little over
6 months worth of payments. If you're done with the loan, then $
1,355 is enough for 2 round trip plane tickets and 2 Premium Adult
AP's. Either way it's a pretty good deal.
There are also other considerations related to DVC purchase. One
of the biggest is the issue of being 'trapped' into traveling to
WDW every year in order to justify the expense. In fact nothing
could be further from the truth.
For one thing you have the option of 'banking' your points for
a year. What this means is that if you don't want to use your 200
points during 2002 you can save them until 2003. You can also bring
points forward one year, so in theory this allows you to use 3 years
worth of points in one year. This is a nice deal if you want to
take a big trip or bring family or friends along.
Another option is sharing a membership. In my own case my sister
and I are buying in together. Our plan is that when we have families
of our own we will trade off each year, or perhaps take a big trip
together. In addition, you have all the other timeshare benefits
of DVC such as swapping out for a condo in Hawaii, or stays at the
DL Paris hotels, etc.
A final option would be to sell the membership if you found you
didn't use it very often.
Another concern to look into if you are doing a resale is that
you might not be able to move as quickly as you might like. It takes
time to find a deal that has the right resort, number of points
and cost per point. You also need to make sure that the company
you are buying through is reputable. I've heard some good things
about The Timeshare Store (www.dvc-resales.com) and A Timeshare
Broker (www.atimeshare.com), but be sure to check things out carefully
before you buy. A Yahoo search will bring up a number of DVC resale
resources on the net.
Also, be sure and do some haggling over the price, as the asking
price and the selling price are seldom the same.
So what conclusions did I reach ?
I concluded that if you travel to WDW more than once every couple
years then you should seriously consider buying into DVC. The costs
are roughly equal to that of a moderate resort, and the DVC resorts
are much nicer that the moderates.
In essence what you are doing with DVC is frontloading the expense
now in exchange for lower costs in the future.
I welcome any questions or comments at email@example.com.