The Disney Vacation Club (DVC) is a way for Disney to increase profits by saying to each potential guest: “We’ll give you a discounted stay at our resorts if you promise to keep coming back.” It doesn’t promise a profit for any money invested, just a bargain-priced Disney vacation as long as you keep coming back – and “points” you can use elsewhere. On an accounting/tax level, you own a “real estate interest” in a specific Disney resort, but that legal fact works almost in the background; on an operational level, you have “points” in the bank and you spend them by reserving a Disney resort or tour or cruise within the program.
Important note: This is complicated; in some cases, very complicated. Anything said here that sounds absolutely true could be followed by a “but” or an “unless.” It could also change on a dime. For that reason, keep the following in mind:
There is one and only one key to this process: The details that are in black-and-white and signed. Read it. Understand it.
As a general rule, Disney’s DVC reps are a decent lot because Disney’s reputation is on the line. A screw-up in the division would make top news on CNN, and that could impact Disney’s movies, parks, and more. Disney can’t afford a bad reputation. Still, a verbal “Sure you can do that” from a DVC salesperson doesn’t count unless it also appears in black-and-white within the contract.
Think of DVC “points” like foreign currency. If you visit Japan, you pay in yen. Say you converted dollars to yen, and then handed over 2,520 yen for a souvenir. You use a calculator to figure that’s about $30, but that’s background, good-to-know information. You were charged in yen and you paid in yen. At DVC, you exchanged your cash for points. From then on, you’re charged in points and you pay in points.
Part 2: The number of points you need for a vacation package purchase depends on the resort, the time of year, and the size of the room. If you travel to Disney every Christmas and love Disney’s original DVC resort, Old Key West, you might need 325 yearly points to make that happen. In the slow season, however, that one-bedroom might cost 175 points. The points you get, then, are based on the room/dates/location you select and the money you paid.
Part 3: Even if you love Old Key West at Christmas, you may use your points at any property in the program. Points carry over year-to-year (with limitations), so you might opt for an Old Key West studio this year and save some points for the Contemporary’s Bay Lake Tower. Points also apply to Disney resorts elsewhere in the world – Hawaii is the latest option – and other things, such as cruises, tours, and some non-Disney resorts. Points can also, with limitations, be sold or bought a la carte to upgrade an accommodation.
Part 4: Joining DVC comes with additional perks, such as discounts on tickets, merchandise, meals, etc. Again: Read the contract and don’t assume anything lasts the length of the contract unless it’s in the contract.
Part 5: The actual offer from DVC has a lot more variables, the process is a more confusing, and I’ve oversimplified some details.
Here’s the big one: DVC is expensive and requires both a downpayment and a yearly maintenance fee. Expect to put out at least $20,000 upfront and $800 each year in maintenance fees for a fairly basic package – and Disney (per the contract) can raise the yearly fee. If you ignore the $20,000 upfront fee, that $800 for a vacation is a fantastic deal; if you consider the $20,000, not so much.
As a pure financial calculation, there is a breakeven point where a DVC membership saves money compared to the cost of booking each year’s vacation independently. Compare all costs over time for a DVC vacation, and then all costs if booking accommodations as a regular guest. Then pinpoint the magic moment – the number of years later – when the cost of a DVC vacation becomes less than the cost of a series of independent vacations.
This doesn’t sound easy, and it’s even harder than it sounds. You must guess A) how much room rates will rise over time and B) how much yearly DVC maintenance fees will rise over time. However, it’s logical to assume that the percentage rise will be roughly the same.
But like all investment decisions, a breakeven point is only half the equation. You’re the other half. If you just celebrated your seventieth birthday, should you commit to 20 years of DVC membership? Your kids are 10 and 12 – can you recreate this fun, magical vacation when they’re, say, 24 and 26? (Or, arguably, when they’re 16 and 18?) Can you afford the membership? What if you lose a job?
Predicting the future is an extremely tricky endeavor.
A key reason people opt for DVC: convenience. Booking a tour package allows someone else to take care of the details for this vacation. Buying a DVC unit allows someone else to take care of the details for all future vacations. That’s nice – like having Mom and Dad figure things out.
Even if DVC turns out to be expensive, you also become part of the Disney family, and that’s a kinda cool thing for many people. The Club treats you like a Disney insider.
Because a decision has like 100-plus variables, however, consider the following before making a decision:
- Do you like repeating a vacation year after year or exploring new areas? If the latter, DVC probably isn’t for you
- Points have the most value when used to book a Disney-owned resort, and less value if used for cruises, etc.
- Disney keeps expanding DVC properties and some, such as the Contemporary, offer prime spots on property. It currently has seven locations at Walt Disney World. Not all are available for purchase, but all may be available for a one-week stay.
- Taxes differ between DVC ownership and hotel rooms – hotel guests pay a lot more tax. Add those numbers to a breakeven calculation.
- Interest expenses on a loan, assuming you need a loan, might be tax deductible. Check with your accountant.
- Note where DVC points don’t work. If saving for a trip to Budapest in two years, the points won’t help. Or if they do help, where is the Budapest resort that works with the program – close to where you prefer to stay? In addition, if you skip Disney one year to go to Budapest, will you use your accumulated points at another time? You do eventually lose them.
- If opting for a villa with kitchen to cut down on food expenses, will you cook? I mean really? (Some people rationalize a DVC decision because “We’ll save money on food with a full kitchen” – and then no one wants to cook or do dishes on vacation because, well, that’s not a vacation.)
- DVC membership can be resold. This is a “get out of the contract” clause, but it invariably cuts down or erases any savings if you decide to bail. On the flip side, you can pick up a DVC membership on the used-condo market.
- Consider a resale DVC “real estate investment” before confirming a new one. Because memberships expire, a resale generally lasts less time and requires less downpayment. The vacation itself, however, is the same under both types of purchases.
- If financing the downpayment, include the interest paid in your breakeven calculation.
Important point: You can pretty much trust Disney. Signing a contract based on 100 variables is scary. However (no guarantees from me on this one, but…), they probably won’t go bankrupt; their salesman probably won’t lie to you; and if you complain, someone will listen.
For more information, visit the Disney Vacation Club website at: http://disneyvacationclub.disney.go.com