Does Buying Disney Vacation Club Directly Make Sense?

Beach Club Villas Night Photo

If you’re in the market to purchase Disney Vacation Club, you might have heard about a new restriction that recently took effect. Going forward, Members who do not purchase their ownership interest directly from Disney will not have access to “Membership Extras,” such as exclusive Member experiences and discounts.

Disney’s explanation for the change? A “very positive step to ensure that, going forward, our Members who purchase directly from Disney Vacation Club receive a premium advantage – in addition to all the magic that Disney has to offer.”

From Disney’s perspective, this move makes sense, but let’s call it what it is: a protectionist attempt to reverse the trend of declining direct sales. It is motivated by the desire to offer a “premium advantage” to those who purchase directly from Disney to the same extent that a bear’s love for salmon is motivated by the US crude oil market, which is to say, in no way whatsoever. This hurts current owners by virtue of decreasing the value of their contracts–the only benefit here is to Disney. It’s another way to push potential customers who are aware of the resale market towards a direct purchase.

In this era of information, it’s much easier to quickly gain perspective with a quick Google search (just look at the comments from readers on our Disney Vacation Club Buying Guide who found it after hearing the sales pitch). This is something with which timeshare salespeople did not have to contend in the 1990s. Not only was there no highly visible resale market allowing for easy price comparisons, but there was no in-depth financial analysis of timeshares online.

It was much easier for potential customers to get caught up in the sales pitch without the counter-balance of the actual monetary implications of the purchase, and blindly buy. (Fortunately, in the 1990s, DVC was an unequivocally good deal!) Free access to this information has undoubtedly made selling timeshares more difficult, even for Disney Vacation Club which offers a premium that avoids many of the pitfalls of traditional timeshares.

As an existing DVC Member, I can’t really complain. While this will likely cause a slight dip in the value of our contract, Disney’s practices including right of first refusal (ROFR) and price increases safeguard the value of our contract, preventing it from becoming a money pit like other timeshares. Moreover, the market value of our contract at Saratoga has actually increased in the years since we made the purchase, despite the restrictions. That’s remarkable given that it’s duration-limited with the end date now ~8 years closer.

The question here is whether Disney’s latest restriction on Membership Extras should make those considering Disney Vacation Club look at a direct purchase instead of one via resale. For the purposes of brevity, we will assume you’re going to make a purchase one way or the other, and will thus overlook the threshold question of whether it’s a smart purchase to begin with. (An analysis that absolutely should be performed and not assumed. Our DVC Buying Guide can assist you in that.)

Unlike the last restriction that prevents resale buyers from using their points on certain non-DVC products (which was totally meaningless because Members should rent out their points and pay for those experiences out of pocket since they are such poor uses of DVC points), this restriction does have an impact.

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Let’s start by looking at the key Membership Extra, which is the Annual Pass discount at Walt Disney World. On the Platinum Passes, Disney Vacation Club members save $100 per person (if you’re able to make use of the Gold Pass, it’s effectively a $200/person discount), per year for everyone in the same household. For a family of 4, that’s $400 per year. That’s a pretty significant discount, and could be enough to close the gap on its own, so let’s have a little fun with math.

Since Saratoga Springs Resort is our home resort and the one I recommend to many prospective purchasers, we’ll use it for our example. (If you’re dead-set on a different resort–particularly the newer ones like the Poly Villas or Grand Floridian–you will want to do the math yourself with current prices, because the smaller gap between resale and direct prices dramatically change the comparison.)

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Currently, purchasing Saratoga directly from Disney costs $140 per point, making it one of the more attractive Walt Disney World DVC resorts. By contrast, average prices on the resale market are around $82 for contracts of 150 points. We’ll use that 150 level because that’s about the “average” baseline Disney Vacation Club contract.

With those numbers, you’re saving $8,700 on the initial purchase price by buying resale. That doesn’t include closing costs (if you negotiate well, you can often get the seller to pay those), so we’ll drop the number to an even $8,000 for the sake of simplicity.

In order to recoup that $8,000 savings, you need to purchase 4 Annual Passes at the current discount levels for 20 years. For your sake, I hope your kids aren’t still living in your basement in 20 years. Instead, let’s say 4 Annual Passes for 10 years and 2 Annual Passes for 20 years after that. At least, that’s the simple math.

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This still is not an apples to apples comparison. In the case of buying resale, you’re saving that money on the initial purchase price, rather than over the course of time. If you are financing your purchase (something we do not recommend with Disney Vacation Club), you should always take the upfront savings, and buy via resale. The interest on the difference in the purchase prices will negate any long-term savings.

If you’re paying cash, the decision is a bit more difficult. One thing we’ve repeatedly stressed on this blog–and by far the most overlooked element of calculating the true value of Disney Vacation Club–is the time value of money, or the principle that money at the present time is worth more than the same amount in the future.

The earning capacity of today’s money makes it worth more than the same amount in the future. Think about it this way: if you had $8,000 in your hand today, you could place that money into a low-risk investment and have significantly more than $8,000 in 20-30 years, which is the timeline of your AP savings.

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To illustrate this principle, let’s get full-0n McDuck and crunch some numbers. Imagine investing $1 today with a 6% yearly rate of return, and letting it sit for 20 years. At the end of that 20 year period, that investment is worth $3.21. That’s the “time value” of that money.

Since you’re paying for all of your future Disney Vacation Club vacations up front as opposed to when the expenses are actually incurred, large portions of the initial investment in Disney Vacation Club could be invested in other ways if you were instead paying for your room each year as you vacationed. We could do complex math here to determine the return on that $8,000 over time versus the annual pass savings, but suffice to say, in the first year you’d earn $400 on that $8,000 assuming a 5% return, which itself equals the AP discount. That return only increases with each subsequent year the money is invested.

This is a big reason why the purported savings claimed with Disney Vacation Club are dubious to begin with. However, it’s a big assumption that people will invest money instead of purchasing Disney Vacation Club. I think it’s fair to say that for most people, it’s either buying DVC or spending the money they could use towards the initial purchase price some other way. However, in the case of these AP savings, it seems more reasonable. You’re buying DVC this way, regardless. It’s thus a matter of how to buy and where to allocate savings (over time on the APs, or up-front on the purchase price).

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While this is far and away the largest Membership Extra that has an ascribable value, there are plenty of other perks. This means no DVC dining discounts (DVC Members who are Annual Passholders can still purchase the Tables in Wonderland card), no shopping discounts, no access to Top of the World and Journey into Imagination Lounges, and no access to Member events (like cruises, the 25th Anniversary parties). Here’s a list of all perks for Walt Disney World. (No access to the Top of World Lounge means no access to the glorious 7 Layer Cake, and I think we can all agree that access to the cake alone negates any math.)

I think it unwise to factor dining and shopping discounts into any math for two reasons. First, many DVC Members have access to these same or better discounts via other means (Tables in Wonderland, Disney Visa, etc.) Second, I don’t know how they’ll possibly be enforced. In the past, I’ve received a DVC discount at restaurants by simply saying I’m a Disney Vacation Club Member.

On other occasions, the Cast Member merely looked at my card. Unless new Membership cards will have a scarlet “R” or something denoting that its owner is a lower-class, Resale Member, I don’t see how this will be enforced with any consistency–or at all. Most Cast Members simply won’t know or care, and will continue to give the discount.

With the Member events and access to the lounges, enforcement is much more likely. For the events, you go through Member Services, and they can certainly flag you in the system. Likewise, when you visit Top of the World Lounge, they scan your MagicBand (which can likewise be flagged) before sending you down towards the Tower of Terror 2.0 maintenance elevator. Access to these events and lounges is nice, and only you can determine how much they matter to you.

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Above all else, you need to keep in mind that all of these are incidental perks that are subject to change. Disney itself states as much: “You should not purchase…real estate interest in a Disney Vacation Club Resort in reliance upon the continued availability…[of] Membership Extras…These incidental benefits are subject to change or termination without notice…” (This is Disney’s way of trying to rebut any reliance upon the perks as inducement for entering into the contract; if DVC guides make explicit representations as to the perks, such that the perks are selling points, they aren’t quite so easily “disclaimed away.”)

In fact, the history of the Annual Pass discount for DVC Members demonstrates that the Annual Pass discount has fluctuated over time, ranging from free passes in the 90s to nothing at all from 2000-05. With that said, I would be surprised to see the discount disappear completely. It’s a selling point for Membership, and the blowback from owners would be substantial. DVC relies on goodwill from its Members to make add-on purchases, and that would significantly damage such goodwill. The amount of the discount can and will change over time, but I think it’s unlikely to ever disappear–at least as long as Disney is building new Disney Vacation Club properties.

So, where does that leave a decision to purchase DVC directly or via resale? If we were in the market for Disney Vacation Club today, this would be a tough decision. I really hate the idea of forfeiting the AP discount, especially as we prepare to have enough children to form an all-Bricker boy band. I’m also concerned that going forward DVC will actually increase Membership Perks to help bolster sales and draw a greater distinction between direct and resale purchases. On the other hand, direct prices are nothing short of excessive.

We’d probably ultimately do a mix: purchasing 50 points at Saratoga directly from Disney (the minimum number that can be purchased there), and buy the rest of the points we wanted via the resale market. The 50 point purchase guarantees access to all current and future Membership Perks, and the remainder bought on the resale market saves money on total up-front cost. As mentioned, I could not care less about the inability to use our points on the non-DVC collections, and that’s the only restriction that would impact those resale points. This hybrid approach saves the most money while also ensuring access to Membership Extras.

Planning a Walt Disney World trip? For comprehensive advice, the best place to start is our Walt Disney World Trip Planning Guide for everything you need to know. If you’re considering joining DVC, first be sure to read our Ultimate Guide to Disney Vacation Club. If you still can’t decide whether membership is right for you, “try before you buy” and rent points from DVC Rental Store. If you are convinced a membership is for you, check out the discounted options at DVC Resale Market.

Your Thoughts

If you’re in the market to purchase Disney Vacation Club, what do you plan on doing in light of these new restrictions? Do you agree or disagree with our assessment? If you’re an existing Member, what do you think? Share any questions, tips, or additional thoughts you have in the comments!


58 Responses to “Does Buying Disney Vacation Club Directly Make Sense?”
  1. Mike Thompson November 24, 2018
  2. Kelly July 28, 2018
  3. Julie Myers June 11, 2018
  4. Julie A Myers June 11, 2018
  5. Kelsey April 8, 2018
    • Tom Bricker April 8, 2018

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