Help with DVC decision for UK - Checking the numbers.....

Discussion in 'UK DVC Discussion' started by Mav2002, May 30, 2017.

  1. Mav2002

    Mav2002 Earning My Ears

    Joined:
    May 30, 2017
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    Hi All,

    Long time browser, first time poster so go easy on me :)

    My wife and I have been going back and forth on whether to join the DVC or not and having done my research i 'think' i've finally got my head around all the intricacies of it.

    We're now looking for some advice from experienced members and generally helpful Disney fans to help with the decision.

    So for a bit of background, i've been looking at the resale market as the prices buying direct seem especially high for what we'd need (even more so considering the exchange rate) so i put together a bit of a spreadsheet to help weigh it up. I imagine I've massively over simplified it or missed some important figures so feel free to correct me...,.please :P

    Before getting to the numbers, our intention is to head to Disney at least once a year, for 2 weeks, usually at the end of September/early October. We usually opt for the french quarter to save some money however, old key west is preferred. We also add on the dining plan (upgraded free quick service) so would be looking to do that when we travel.

    Numbers are:

    [​IMG]

    As i said, my math is probably off somewhere so let me know.
    Based on the above, it looks like it would be a good investment....

    Cheers for reading :earsboy:
     
  2. Lee Matthews

    Lee Matthews DIS Veteran

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    I'm going to keep a close eye on this thread because looking at those numbers, maybe buying resale is the way to go. I'm guessing with resale you'll have to pay the £10k upfront
     
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  4. Mav2002

    Mav2002 Earning My Ears

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    Hi Lee,

    Hopefully the logic of my calculations follows though and i've not missed any figures. (Hoping a DVC members can confirm)

    The 10k would be paid upfront the the numbers are based on a resale figure of $85 ish per point - this was a Saratoga sale.
     
  5. pinklotusflower

    pinklotusflower Mouseketeer

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    We've been DVC members since 2015 & home resort is BWV & we bought re-sale, my only regret is that we did not buy in sooner :)

    With your figures are you planning on SSR as your home resort as this may not be the same as Old Key West cost wise to compare. As we now stay in a one bedroom we no longer get the dining plan as it is cheaper and easy to make some meals back at base. Beginning of October is food & wine & you may not be able to swap resorts at the 7 month mark if your wanted to stay somewhere other than SSR.

    You will get a lot more responses to your post if you post on the DVC purchasing forum.
     
  6. Tony

    Tony Mouseketeer

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    As a UK-based DVC member for 5 years or so at Bay Lake Tower, I would suggest you consider the following....

    1) The DVC annual subs will increase annually, and at a surprising rate that will likely exceed the inflationary pressures you will find on hotel rooms where you have the flexibility to shop around.
    2) The £10k upfront needs to be considered on the basis of that money could easily - over the long term - yield the best part of 10% a year, which significantly pushes out the 6.6yr repayment estimate
    3) The frequent free dining offers - which may well become even more aggressive in terms of trying to attract UK business given we've probably got at least 5 years of a beaten up £ - aren't available to DVC members.
    4) DVC can change the points requirements, so if you think you've found a sweet spot and demand picks up, expect the goal posts to move. This has a bigger impact on those of us travelling a long distance for one trip, versus those travelling a shorter distance for lots of trips.

    I've just run your numbers with the following assumptions.

    1) You invest your £10k and get 8% a year. Over the long term, that's about what the FTSE-100 does if you reinvest the dividends.
    2) Your DVC subs will rise by 5% a year.
    3) I can currently book a king room at the Caribbean Beach Resort for those dates next year including free quick service dining for £2400. Strip out the free dining to get a like for like comparison and that's £1400 for the hotel. (Appreciate that the it might not be the exact hotel you want, but bear with me).

    So invest the money now and in 1 year you take out enough to pay for the hotel ($1900) minus the estimated DVC dues ($756). Your $14000 pot has barely moved - it's down to $13976.

    It takes until year 17 for your initial $14k pot to be used up.

    However, if inflation is lower, so the dues and the cost of the hotel rise at a lower rate, and let's say you manage to get an average 10% return on the investment, then your pot only runs out in the 30th year.

    Our plan is visiting every 2-3 years. I've looked at cashing in the membership and it's close run - our points have held their value well, but the ability to get space that will accommodate the whole family so close to the park, plus in room laundry, is the winner. But if it was just two of us, I reckon we could pick up better deals at on property resorts for less. Last year we needed an extra night & paid about $250 incl all taxes at the Boardwalk Inn for a room. Could have been even cheaper at the Swan/Dolphin.

    In summary, I'd say DVC is an "OK" deal, but it does lock you in. Get fed up with the parks or the constant price hikes - I see a muffin now costs the best part of a fiver - well, tough, you still have to pay those annual dues...
     
    Last edited: Jun 3, 2017
  7. hsc3boys

    hsc3boys Mouseketeer

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    Hi, we bought 150 SS points resale in 2015 and have another contract waiting for ROFR right now, that one is 100 points at AK.

    So I also do similar calculations, mine are as follows,

    150 points at SS bought at $60 a point plus closing etc with the exchange rate at the time came to £6476.89
    £6476.89 devided by 150 points = £43.179 a point, pretty good in my opinion
    Ok so total cost £6476.89 devided by the 38 years left on the contract when we got it =£170.44 a year
    Add the annual dues around £665 a year gives a total cost of around £835.96 a year depending on exchange rate when paying annual dues.

    Things I consider,
    The value of the points I bought has gone up, I think that's pretty good considering the years left on the contract have come down.

    Because we bought resale in 2015 I get the DVC discount off merchandise, food etc which goes a good way to cancelling out the cost of annual dues. Now if you buy resale you don't get that perk.

    We have never used the Disney dinning plan as there are 4 of us and we have always been able to eat for less that the dinning plan. We just got back at the weekend from a two week trip, some of which we stayed in a one bed value at Animal Kingdom, therefore we were able to have meals in the room due to the kitchen. Even in a studio we always have breakfast in the room, I always get a garden grocer order which covers water, drinks, snacks etc. If there were just two of us and not two teenage boys then the cost would be much lower for food.
    Once using DVC you can only buy the dinning plan via the DVC in US dollars which on my calculations is more expensive than buying it this end in pounds.

    Once you have bought the points, that cost each year will not go up and it's unlikely the annual dues going up each year will make it unreasonable compared with the cost of a package holiday.

    You can always sell your points a few years down the line if you want, at the moment the contracts are selling fast and the prices seem to be going up.

    These are the negatives for me
    The fact you have to plan so far in advance. This last trip was a bit last minute and we ended up in 4 different rooms over the two weeks. I could have had less room changes but my boys wanted to go to AK, which is why we have decided to buy another contract which will give us the option of staying in a one bed for some of the time.

    The studios that all have pull out sofas (also the case for the one beds) is not as comfortable for the boys as having two beds in a hotel room. The only DVC studio with two beds is OKW which we have stayed at twice now, but had a bad experience this last time as the room was so filthy, mould on the windows and wall falling apart, we had to move rooms. The cast members were so helpful in AK but in OKW it was a different story. If your in a hotel room they will bend over backwards for you and the rooms are in far better condition than OKW, although they are doing work on the resort right now.

    I would look at the point charts because if you can go anytime then this will influence how many points you will need and you can get some reasonably priced flights, for example 4 of us flew direct with virgin on the 6th December for just over two weeks for £1170.

    In my experience it's also cheaper to buy your 14 day tickets via the Disney website here in the U.K.

    I have also done the same calculations on the animal kingdom contract I'm waiting on at $80 a point. That one with the closing costs etc works out at £190.72 a year for 100 points, not as good as our other contract.

    Remember that most contracts unless they have been extended are shorter for OKW so factor in how many years left on the contract when you decide which resort to buy into, likewise consider the annual dues which are different at each resort, SS are the cheapest. I found recently a comparison for 2017 annual dues showing the percentage that each resort had gone up since 2016 and some have gone up over 6%.

    Hope this helps.
    Good Luck!
     
  8. Wakey

    Wakey Mouseketeer

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    Some good analysis above. re changing the points requirement though don't worry about that. The overall point requirement for the resort stays the same, they can jiggle the points around and do rarely, but overall point requirement per resort stays the same. Saratoga is a prime example- everyone was requesting the same blocks so they made them preferred, upped the points slightly for those but lowered the points by the same amount for the non preferred which is fantastic as I can get a room cheaper. This rarely happens but can do to balance demand for views or times of year, but the overall pot remains the same. Some suggest the period Oct to first week Jan (Most popular DVC time) is due an adjustment upwards which I hope they do as they'll make the time I go cheaper as part of the balance.

    Next think about 7 month availability. Go in a low DVC season like me in a lower demand room like a 1 bed and I can book anywhere at 7 months, so I bought Saratoga which is the best bang for the buck- dues, contract length and buy in. See attached pdf of 2015 7 month availability data. I can get my 1 bed in any resort at 7 months. So why buy more expensive? However if I wanted Beach Club at Thanksgiving and no where else would do I'd have had to spend more and buy there.

    The UK free dining offers mentioned above have increased in price a lot for 2018. The same one I had in 2016 is $2000 more expensive in 2018.

    I paid £10000 all in for 160 SSR points earlier this year incl all dues. It was loaded with 2016 points I couldn't use, so I rented them out immediately for £1500. So my purchase price was £8500 for a contract to 2054 with all 2017/18 points.
    Going next year for 3 nights at Vero, 7 nights Kidani in a 1 bed. Will have to pay £500 in dues for 2018 points so by the time I go, my outlay will be 9k.
    You can't compare to a studio at Caribbean Beach as I'll be stopping in a 1 bed, deluxe which Disney would charge you 3x the price for. Without dining plan those 10 nights would cost me circa £4k ( or more think booking through UK Disney it was around 500 a night for a 1 bed so 4k could be low). So immediately I am only £5k in the red.

    Max of 2 more trips and I'll have broken even, easy. Then I'll have 31 years (only go every 2 years though at the mo in a 1 bed) more vacations with that 1 bed costing me a dues only price of £100 a night or a studio at £50 if I drop down to one of those when the kids are grown and go every year.

    Yes dues go up, but have historically gone up slower than room rate increases. SSR has trended in the 3%s. SSR also has $98m in capital reserves to pay for refurbs etc.

    Essentially research it for at least 3 months. Definitely buy resale and only buy if you can pay cash. Only buy if you want to stay in Deluxe resorts- if you're happy with Pop Century or even Caribbean Beach, is DVC really for you- probably not. Only buy if you would go every 2 years.
    If I get bored of going I can rent the points at around $1500 profit after dues or just sell the contract. The US government withholds 15% tax on UK buyers on sale, you can get it back if you pay a tax expert $500 to file the forms. The good news is that if you buy resale, the direct purchaser has already taken the hit and the contracts have historically climbed in value over the last 25 years. In other words when you come to sell your resale you won't lose much, and possibly make a bit.

    Of course this doesn't account for growth you could possibly have made on the capital- I'd have struggled to make 10% on my 8.5k though.
     

    Attached Files:

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  9. Tony

    Tony Mouseketeer

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    What a fantastic bit of analysis about availability! Was just about to post a question along those lines myself. Only thing I would add is that banking & borrowing, if you plan carefully, lets you travel every third year with little or no waste of points.
     

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