Disney Vacation Club Membership

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Introduction

Disney Vacation Club (DVC) is a timeshare program operated by Disney. The program currently operates six DVC resorts at Walt Disney World (with a seventh under construction) as well as resorts in Vero Beach, Florida and Hilton Head, South Carolina. In 2009, a DVC resort called Grand Californian Villas will open at Disneyland in California, and in 2011, one will open in Oahu, Hawaii. This page is currently focused on Disney Vacation Club at Walt Disney World.

Unlike many other timeshares, DVC operates on a "points" system that allows members to use their points in a flexible fashion at any of the DVC resorts as well as Disney resort hotels in California, Florida, France, Hong Kong, Japan, the Disney Cruise Line, and other (non-Disney) vacations.

While Disney likes to emphasize the flexibility of the points system and your ability to use them outside of Disney, the reality is that the most cost-effective use of DVC points is almost always at the DVC resorts. Using points for cruises or regular hotel rooms just doesn't give you as much "bang for your buck." For that reason, DVC membership generally is not worth considering unless you plan to stay at a DVC resort at least every other year.

There are six DVC resorts at Walt Disney World: Animal Kingdom Villas, Saratoga Springs, Beach Club Villas, Villas at Wilderness Lodge, Boardwalk Villas and Old Key West. A seventh DVC resort at Walt Disney World (Bay Lake Tower at Disney’s Contemporary Resort) will open in fall 2009. With the exception of Saratoga Springs and Old Key West, the DVC resorts are located right next to Disney's resort hotels. The units are extremely nice -- in many respects actually nicer than most of the hotel rooms at Disney resorts.

There are studios, which are similar to a standard hotel room, but they are slightly larger and include a wet bar, mini-fridge and microwave. There are also 1- and 2-bedroom villas at all of the DVC properties. The villas are very luxurious and include a full kitchen (with all the basic cooking utensils, pots, pans and dishes supplied), and living room in addition to the bedroom(s), plus a whirlpool tub in the master bedroom and a washer/dryer in a closet. 1-bedroom villas sleep 4; 2-bedroom villas sleep up to 8. Some of the DVC properties also have 3-bedroom Grand Villas, for the ultimate in luxury and space -- these can sleep up to 12.

DVC members receive a few extra benefits, including free valet parking at Animal Kingdom Villas, Beach Club, Boardwalk and Wilderness Lodge; discounts on certain Disney World restaurants (these change frequently); and discounts on Annual Passes.

Deciding Whether or Not to Join

Before purchasing a DVC membership, I think it's a good idea to consider all of the costs and benefits, pros and cons. It's really a very complex decision if you want to make sure you're doing the wisest thing financially. In the sections below, I offer some thoughts on these issues.

That said, some people just want to lock in an annual vacation at Disney with family and friends, regardless of whether it's a "good deal" or not. Ultimately many DVC members have joined because they found the membership emotionally satisfying -- and that's a hard thing to evaluate.

The initial cost of joining DVC is significant (without incentives, the current minimum of 160 points costs $16,640 plus closing costs, if you purchase direct from Disney) and you will pay substantial annual dues/maintenance fees (current minimum is around $674 per year).

It's very important to realize that you while you are purchasing a deeded and transferable interest, it is not a real estate investment, but rather a prepaid vacation plan. Among other things, your points are not good forever: they expire on January 31st of 2042, 2054 or 2057, depending on which resort you buy into.

When considering a DVC membership, it's a good idea to run some calculations. I did this, and also looked at spreadsheets done by others. It's incredibly complex, because there are a zillion variables. Among the factors to consider are your vacation habits, whether you can afford the initial buy-in cost and its associated opportunity cost and whether you can handle the annual dues (be sure to account for annual dues increases).

This may not make me popular in this day and age of "instant gratification," but realistically, it is hard to argue that DVC membership is a financially responsible decision if you don't have the upfront cost in the bank. If I had to borrow the money, I definitely would not join. Naturally Disney will suggest otherwise, because it makes a lot of money on the financing. (Of course, I also think it's unwise to finance a vacation on credit cards. Call me old-fashioned, call me a tightwad -- but I bet most financial advisors will agree with me.)

Dues Increases vs. Resort Rate Increases

The effect of annual dues increases on the total cost of DVC membership must be considered. One issue to keep in mind is that Disney can increase dues significantly from year to year, subject to a limit of 15% each year and a requirement to charge only for the actual operating expenses (including management of the operation) and reasonably expected necessary reserves.

A portion of your dues is allocated to a capital reserve fund for major refurbishments. Adjustments are always possible if the projected reserve needs vary from actual experience, although Disney has been in lodging business for many decades and has considerable experience in what long-term costs to expect. Special assessments are possible if something unforeseen occurs (i.e. hurricane damage).

Here are some examples of historical increases:

• Old Key West Resort, the oldest of the DVC resorts (thus having the longest track record) had dues of $2.51 in 1991 and in 2008 has dues of $4.56. That means it has averaged a 3.57% increase, compounded annually.

• Boardwalk Villas has gone from $3.70 in 1996 to $5.04 in 2008, an average annual compounded increase of 2.61%.

• Villas at Wilderness Lodge has gone from $3.62 in 2000 to $4.87 in 2008, an average annual compounded increase of 3.77%.

In short, it's hard to gauge exactly what the annual increases will be. As the buildings age, it's likely the increases will escalate. The smaller resorts are likely to have bigger increases because there are fewer members sharing the costs. In the scenarios expressed on this page, I assumed a 3.2% dues increase, compounded annually. If you think it will be higher, you should adjust your calculations accordingly.

To be fair, the cash cost of staying in one of Disney's resort rooms has also gone up significantly over time, and the cash cost of a resort room starts out much higher than the dues for an equivalent stay. Like the DVC resort dues increases, the rate increases at the Disney resort hotels are not consistent. For example:

• In 1992 a standard room at Caribbean Beach Resort in Regular Season cost $77, while in 2008 it is $165 (weeknights) -- a 4.88% increase, compounded annually.

• In 1997 a studio at Old Key West in regular season cost $229, while in 2008 it is $315 -- a 2.94% increase, compounded annually.

• In 1998 a standard room at Yacht Club in regular season cost $280, while in 2008 it is $370 -- a 2.82% increase, compounded annually.

By the way, "compounded annually" means that each year's increase is added to the total cost the previous year, not the original rate you were paying at the beginning. So if your 2008 dues at Saratoga Springs Resort are $4.21 and go up 3.2%, your new dues in 2009 would be $4.34. If those new dues of $4.34 per point go up 3.2%, your new dues in 2010 would be $4.48, and so on. Thus, the total grows exponentially.

Assuming 3.2% compounded annually, the 2008 $4.21 per point dues at Saratoga Springs resort would slowly rise to $17.37 per point by 2053. Of course, the value of your dollar will almost certainly be much lower by then, due to inflation. If inflation stays at or above the rate of dues increases and resort rate increases, they are not really significant in terms of your spending power.

I think it's fair to guess that dues increases and resort rate increases may be roughly equivalent over time. I based my calculations below on that assumption. If you think resort rates will go up faster (and they might) than DVC dues increases, that will tend to make DVC membership look more attractive.

DVC Cost vs. Paying Cash for Your Resort Stay

Let's say you buy 160 points at Saratoga Springs Resort. For purposes of this example, 160 points would cover 11 nights of vacation in a Saratoga Springs Studio unit: a 6-night stay (including one weekend night) in Magic Season and a 5-night stay (including one weekend night) in Choice season.

• Your dues for 160 Saratoga Springs Resort points cost $674 in 2008. (This ignores the buy-in cost of $16,640 and the associated opportunity cost.)

• If you rented points from an owner to stay in a Saratoga Springs studio for the same dates at $11 a point, it would cost you $1760.

• Maybe you'd be just as happy staying in the least expensive Disney Deluxe hotel room, and you're able to get a modest discount on the hotel room. If you stayed at Wilderness Lodge in Regular Season with a 25% discount, 11 nights would cost you $2552.34 with tax in 2008.

• If you paid the full "rack rate" charged by Disney to stay in a Saratoga Springs studio for 11 nights in Regular season, it would cost you $3898.13 with tax in 2008.

Note that Disney Deluxe resort stays are currently subject to 12.5% tax. DVC dues aren't subject to sales or resort taxes.

Deep resort rate discounts (25% off or more), such as Annual Passholder rates and "code" rates, are sometimes available. A more conservative number to use is something like the AAA member discount of 10% off the standard rate, since that discount has been consistently available for many years. There are no similar "discounts" on the number of points required for a DVC stay.

Opportunity Cost

Another factor to consider before buying into DVC is the "opportunity cost" -- what you are losing by tying up your money with Disney, instead of using it for another purpose.

Let's say you put the same amount you would have used to buy a DVC membership into investments paying 7% annual interest. Each each year you add the same amount of money you would have paid in DVC fees. Then you pay cash for your vacation each year out of this investment account.

When you compare such an investment against a DVC purchase, the results will depend on a number of factors, including your vacation habits (how much time will you be spending at Disney World in the next 35-50 years? what kind of lodgings do you prefer?), the initial buy-in cost, the annual dues (be sure to account for annual dues increases), and any interest you would be paying if you finance the purchase.

Every family can generate a different scenario. I've done some calculations based on certain assumptions, and the results are listed below. The assumptions include NOT financing the purchase. I also assumed there would be equivalent annual increases in dues, resort rates and cost to rent points. Most importantly, I assumed you didn't get any incentives at buy-in. If you were able to buy your points at a reduced "incentive" price, a DVC purchase would be even more attractive than described below.

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.

Maybe you don't vacation at Walt Disney World every year, but when you do go, you stay in luxurious accommodations (Deluxe resorts or DVC units). DVC may still be a decent bet. You can bank your annual points, allowing you to skip a year. In fact, by carefully banking and borrowing points, it's even possible to skip two years and only use the points every third year. Or you can rent out excess points.

Interestingly enough, the results are pretty similar whether you pay full price to Disney for Animal Kingdom Villas (expires 2057) or buy an Old Key West resale from a private party that expires in 2042. (If you can get a significant purchase incentive on Animal Kingdom Villas, resales that expire in 2042 are slightly less attractive on a financial basis, but in most scenarios it still isn't that significant.)

If you want to see how the above scenarios were calculated, right-click on this link and download the Excel file. Note that calculations were based on 2008 numbers and assume 3.2% annual compounded increases in all figures used.

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.

Other Expenses and Benefits

Remember that the cost of accommodations is actually a small fraction of the overall cost of a vacation. Annual passes for a family of four (2 adults, 2 kids ages 3-9), with the DVC discount, cost over $1337 in 2007. (A bit less for renewals.) Meals for a 10-day vacation can easily run $1000 or more for a family. Then you have to account for airfare (or gas to drive there), souvenirs, bottled water, extra ticketed events such as Mickey's Very Merry Christmas Party, and so on.

DVC members do qualify for some discounts that may help with these additional vacation expenses. They save on Annual Passes and get some restaurant discounts (but this varies and is always subject to change). Also, the villas have full kitchens, which could help a bit with the costs, since some meals can be made in the unit.

DVC members and their guests may choose to purchase the Dining Plan when staying on "points" at a DVC resort. The Dining Plan is available to the general public only as part of a vacation package, so this is a nice benefit for those DVC members who enjoy the convenience and value of the Dining Plan.

Another DVC benefit: you don't pay extra when more than 2 adults are staying in one DVC unit. This is true whether you use your own points, rent points or pay cash. By contrast, the Disney resort hotels charge extra if you have more than 2 adults (defined as 18 and older) in a room. Depending on the ages of the people in your group, this may save you a bit.

DVC members who are staying on points at a Walt Disney World DVC resort get FREE high-speed Internet access in their units. This normally costs $10 a day for the general public. (Note that Internet access is not yet available at Hilton Head and Vero Beach.) They also get FREE self-service laundry: laundry rooms near Studio accommodations have the machines rigged so no coins are required; a washer/dryer and a starter packet of laundry soap are included in 1-Bedroom and larger units.

You may be able to deduct the property tax portion of your annual dues on your federal and/or state tax return. For instance, in 2004 Old Key West owners paid $0.7959 per point in property taxes, out of their total $3.6766 per point annual dues. For an owner with 150 points, that translated into $119.39 in property taxes that might be deductible. Consult your tax advisor for details.

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.

Resale or Direct From Disney?

Only Animal Kingdom Villas and Bay Lake Tower are available for immediate purchase directly through Disney. You can ask Disney to put you on a waiting list to purchase the other resorts, though they are supposedly "sold out." If Disney exercises its "right of first refusal" on a resale, it will often turn around and sell the contract at current full market rates to the next person on the waiting list.

You can also purchase any of the resorts from current owners who want to get rid of their memberships, through the resale market. If your offer is too low, Disney will exercise its "right of first refusal" and buy it out from under you -- which is nice for the seller, but a waste of the buyer's time. Be sure to research before making your offer, so that you have a reasonable expectation of actually getting the contract.

According to my calculations, the long-term value of a DVC membership is very similar whether you buy a resale or the newest resort direct from Disney (unless Disney is currently offering a significant incentive on new sales, which may affect those results slightly). For that reason I think the decision to go with a resale vs. buying from Disney should be based primarily on which resort you want, how much you are willing to pay up front (which will usually be a bit less with a resale) and how long a contract you want (through 2042, 2054 or 2057).

If purchasing directly from Disney, normally you must buy at least 160 points. It is possible to purchase less than 160 points through a resale. For years the minimum purchase requirement was 150 points, so there are quite a few 150-point contracts that may come up for resale. Also, some owners have purchased "add-ons" of as few as 25 points, which they may choose to sell off at some point.

Once your purchase is completed, there is zero difference between buying directly from Disney and buying on the resale market. You will be treated exactly the same either way, and receive the same benefits and discounts.

Several Florida real estate companies specialize in DVC resales -- try a Google search to find them.

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. See below for information on how to rent points.

Thanks to Jim C for suggesting many helpful points, providing additional data, correcting errors here and there, and looking over my calculations. Thanks to Don M for suggesting different ways of running the numbers and for vetting my results. Thanks to Sue Pisaturo of Small World Vacations for some excellent suggestions and historical hotel rate information. Thanks to the members of the DIS DVC Forum for useful insights and suggestions.

		More Information DVCNews.com is an excellent source of information on Disney Vacation Club. The main focus is reporting news that is of interest to DVC members, but the site also offers room descriptions and floorplans, DVC points charts (including charts for destinations like Tokyo Disneyland, Disneyland Paris, etc.), details on current DVC purchase prices and promotional offers, and so on. MouseOwners.com offers a friendly discussion forum and you can get a lot of useful information from the DVC owners there.

		Owner's Locker If you're a regular visitor to Walt Disney World, you should look into a service called Owner’s Locker: Owner’s Locker allows you to store your vacation gear between visits, which means less packing, less hassles, less hauling and less stress! Owner's Locker provides you with a container to store personal items that you regularly use at Walt Disney World, such as toiletries, an air bed, a water filter, your favorite liquor -- just about anything that makes your stay more pleasant. Owner's Locker picks the container up from your resort when you check out and stores it in a climate-controlled warehouse until you return. Here's the great part: Owner's Locker will have your container waiting for you at your resort’s bell stand when you come back! Click here to read my personal review of Owner's Locker and find out how to save $50 on a membership!

Renting Disney Vacation Club Points

Renting Disney Vacation Club (DVC) points is a little-known way to stay in a deluxe-level Disney resort for much less. DVC members own timeshare "points" that they can use for stays at the six DVC resorts at Walt Disney World: Animal Kingdom Villas, Saratoga Springs, Beach Club Villas, Villas at Wilderness Lodge, Boardwalk Villas and Old Key West. Sometimes DVC members are unable to use the points before they expire, so they will "rent" them to others.

Disney allows the general public to book DVC units at very high rates through its regular resort reservations system, when available. Renting points is a much better deal. For instance, a five-night stay (Sunday through Thursday) in a Villas at Wilderness Lodge studio in May 2007 will "cost" the DVC member 65 points. At the typical rate of $10-$12 a point, you could rent his points for $650-$780 and enjoy a stay that would cost over $1945 (including tax) if booked directly through Disney at 2007 rack rates. (For comparison, a standard room at Wilderness Lodge -- which would not include the mini-fridge and microwave you get with a studio -- would cost $1477 with tax if booked with Disney directly for May 2007.)

Important Things to Know About Renting DVC Points

Renting points means you pay the DVC member directly (often by giving him a one-night deposit up front and paying the balance 30 days before the trip, though arrangements vary widely) and he makes a reservation in your name. The transaction requires trust on both sides.

I have rented points on four occasions and in each case had no problems at all. In fact, for years I had never heard of anyone being ripped off in a DVC rental situation, but in 2006 I heard of some instances in which renters were the victims of fraud.

If you are renting, be very careful!

• Ask for references and check the references.

• Get the owner's full name, address and phone number before sending any payment. To the extent possible, confirm that the information is valid. (For instance, call and talk with the owner. Also, consider going to Google and typing in the person's name and contact info to see if you find any mentions that will help you confirm the owner's identity.)

• Confirm that the person is a DVC owner by running a search at the Florida Comptroller's Office web site.

• NEVER pay a total stranger by using a "cash equivalent" such as Western Union or money order. I also don't recommend paying by check (especially cashier's check). The safest way to pay is to use a credit card. (That isn't difficult. Members of the public can pay and receive payments by credit card through PayPal.) Personally, credit card payment is the only method I would ever agree to use, because it is the only method that provides you with some protection against fraud.

• There should be a written contract or letter of agreement, signed by both of you, spelling out exactly what the rental will cost, when payment is due, dates of the stay, etc.

• Make sure the owner sends you the confirmation from Disney. Be aware that Disney Vacation Club will not speak with renters or give them any information. Only DVC owners can speak with DVC about reservations.

• If something sounds "off," don't proceed. It's not worth taking the risk.

DVC reservations are not as "forgiving" as hotel reservations. Cancellation must take place 30 days or more in advance, so you have to be very sure about your dates. Also, once the owner makes a reservation with points, they are subject to complex rules and may not be easily redeposited in the owner's account. That's the risk the owner is taking with you.

If you're considering a rental, you'll need to do some research to learn how the point system works. The points needed for a stay vary tremendously depending on the season. Weekend nights "cost" about twice as many points as weekdays, so sometimes it's better to book Friday and Saturday nights directly with Disney and rent points for Sunday through Thursday only. (Do the calculations both ways -- this varies.) To figure out how many points your stay would require, you can consult the DVC Points Charts on DVCNews.com.

When you rent points, you are usually treated like a DVC owner during your stay. Technically renters are not supposed to be entitled to certain DVC owner benefits, while guests of the owner who paid no compensation are entitled to the benefits. Based on my experience and the experiences reported by dozens of other renters, Disney just assumes you are a guest of the owner, so chances are close to 100% that your room key will say "DVC Member" on it. This is nice because it gives you access to the perks DVC members enjoy, which include free valet parking at the resort, certain discounts on restaurants, etc.

DVC rentals offer less-frequent maid service than paying cash directly to Disney for the same unit. When renting from a DVC member, you get the usual DVC maid service, which includes a "trash and towels" service (no cleaning) on the fourth day of your stay and a "full service" cleaning on the eighth day. You can opt to pay extra for more frequent service.

How to Rent Points or Buy DVC Vacations From Owners

Bear in mind that there is no guarantee that the dates and/or resorts you want will be available. You'll have to find a DVC member who is interested in renting points and willing to check your dates. A member can reserve a unit in his "home" resort up to 11 months in advance and at any other DVC resort up to 7 months in advance.

		MouseOwners.com has a Rent/Trade/Transfer board where you may find a DVC member willing to rent out points. This is part of a very friendly discussion forum associated with an excellent site for DVC information.

Other options:

DIS Boards DVC rent/trade board. Be sure to read the FAQ (Frequently Asked Questions) post on that board before trying a rental. I recommend renting only from people who have participated on the DIS Boards for over a year and who have made a significant number of posts about general subjects (not just offers to rent).

Redweek.com is a major site listing all sorts of timeshare rentals. You can look at general lists of available rentals without charge, but to see any specifics or learn how to contact the owners, you'll have to pay $10 for a 6-month site membership. Thanks to Kent and Joyce A for the suggestion.

I personally would not rent DVC points from eBay listings. I'm sure there are some legitimate owners offering rentals there, but unfortunately in my experience, eBay is rife with fraud these days.

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