Hello all, first post, so be gentle!
Here is my situation: my wife and I recently bought into The District in DC directly from HGVC. Here are the details:
Club points: 7,200 Platinum odd year (exchangeable to HHonors at 1:50)
One-time bonus club points: 20,000 (exchangeable to HHonors at 1:25)
Price: $27,620
Closing costs: $1,193
HOA: $1,549 EOY
Lifetime Gold VIP HHonors status
Intangibles: we are very likely to use the points often at The District, as we go to DC for vacations frequently, and would likely want to book during peak times (e.g., around 4th of July). There are also some owner's lounge food/drink benefits, and free parking ($40+/night) at the property, which I am not sure would be available to a resale owner, but for purposes of this analysis, I am ignoring those factors.
We have two days left to rescind and go the resale route instead, and I was leaning in that direction after looking exhaustively through TUG. However, I have also been thinking a lot about the bonus points and improved HHonors ratios, and I was hoping to get a sanity check on my math.
While I realize that converting club points (and especially bonus points) into HHonors points isn’t really the most efficient use, it seems like the best way to analyze, on an apples-to-apples basis, the two primary benefits of buying direct from Hilton versus what I would get in a resale: namely, the 1:50 conversion for club points and the one-time bonus points. So here is what I have calculated over a 10-year ownership period for my developer purchase:
Developer Benefits
10 years of club points at 1:50 HHonors points = 3600 (average per year) x 10 x 50 = 1,800,000
One-time bonus points at 1:25 HHonors points = 20,000 x 25 = 500,000
Total 10 year HHonors points: 2,300,000
Average HHonors points per year: 230,000
Developer Costs
Purchase price over 10 years = $27,620 / 10 years = $2,762 per year
Closing costs over 10 years = $1,193 / 10 = $119.30 per year
HOA over 10 years (assuming a 50% average increase in HOA over 10 years) = $1,162 per year
Total 10-year cost per year = $4,043.05
Average 10-year developer cost per HHonors point: $0.0175
I did a similar analysis for a theoretical resale purchase. (I say theoretical, because there aren’t any resales at The District yet.) For purposes of the analysis, I used a $2/point purchase price, again since The District is new and will likely sell at a premium when resales come on the market, and slightly lower closing costs (though I’m not sure why this would necessarily be the case).
Resale Benefits
10 years of club points at 1:25 HHonors points = 3600 (average per year) x 10 x 25 = 900,000
Average HHonors points per year: 90,000
Resale Costs
Purchase price over 10 years = $7,200 / 10 years = $720 per year
Closing costs over 10 years = $1,000 / 10 = $100 per year
Same HOA = $1,162 per year
Total 10-year cost per year = $1,982
Average 10-year resale cost per HHonors point: $0.022
Even assuming a $1/point resale purchase price, it still comes out to $0.018 per HHonors point.
So, based strictly on the basis of HHonors conversion, the developer purchase (with the bonus points and higher conversion factor) seems to be the better deal over a 10-year period. (The numbers weigh even more in favor of the developer purchase over longer time periods...) Am I missing something?
Now, I realize that I’m not likely to convert all of my points every time, and that the bonus points have to be used within two years. But those are the only assumptions I could think of that would allow me to do a reasonable side-by-side comparison. Is there any other approach that would let me do a true comparison of the “developer” benefit represented by the increased conversion factor and the bonus points? If so, I’m all ears.
I guess the bottom line is that I’m now leaning in favor of going through with the developer purchase and not rescinding. Thoughts?
Thanks in advance for your thoughts and for making this forum a great sounding board for such questions!
Here is my situation: my wife and I recently bought into The District in DC directly from HGVC. Here are the details:
Club points: 7,200 Platinum odd year (exchangeable to HHonors at 1:50)
One-time bonus club points: 20,000 (exchangeable to HHonors at 1:25)
Price: $27,620
Closing costs: $1,193
HOA: $1,549 EOY
Lifetime Gold VIP HHonors status
Intangibles: we are very likely to use the points often at The District, as we go to DC for vacations frequently, and would likely want to book during peak times (e.g., around 4th of July). There are also some owner's lounge food/drink benefits, and free parking ($40+/night) at the property, which I am not sure would be available to a resale owner, but for purposes of this analysis, I am ignoring those factors.
We have two days left to rescind and go the resale route instead, and I was leaning in that direction after looking exhaustively through TUG. However, I have also been thinking a lot about the bonus points and improved HHonors ratios, and I was hoping to get a sanity check on my math.
While I realize that converting club points (and especially bonus points) into HHonors points isn’t really the most efficient use, it seems like the best way to analyze, on an apples-to-apples basis, the two primary benefits of buying direct from Hilton versus what I would get in a resale: namely, the 1:50 conversion for club points and the one-time bonus points. So here is what I have calculated over a 10-year ownership period for my developer purchase:
Developer Benefits
10 years of club points at 1:50 HHonors points = 3600 (average per year) x 10 x 50 = 1,800,000
One-time bonus points at 1:25 HHonors points = 20,000 x 25 = 500,000
Total 10 year HHonors points: 2,300,000
Average HHonors points per year: 230,000
Developer Costs
Purchase price over 10 years = $27,620 / 10 years = $2,762 per year
Closing costs over 10 years = $1,193 / 10 = $119.30 per year
HOA over 10 years (assuming a 50% average increase in HOA over 10 years) = $1,162 per year
Total 10-year cost per year = $4,043.05
Average 10-year developer cost per HHonors point: $0.0175
I did a similar analysis for a theoretical resale purchase. (I say theoretical, because there aren’t any resales at The District yet.) For purposes of the analysis, I used a $2/point purchase price, again since The District is new and will likely sell at a premium when resales come on the market, and slightly lower closing costs (though I’m not sure why this would necessarily be the case).
Resale Benefits
10 years of club points at 1:25 HHonors points = 3600 (average per year) x 10 x 25 = 900,000
Average HHonors points per year: 90,000
Resale Costs
Purchase price over 10 years = $7,200 / 10 years = $720 per year
Closing costs over 10 years = $1,000 / 10 = $100 per year
Same HOA = $1,162 per year
Total 10-year cost per year = $1,982
Average 10-year resale cost per HHonors point: $0.022
Even assuming a $1/point resale purchase price, it still comes out to $0.018 per HHonors point.
So, based strictly on the basis of HHonors conversion, the developer purchase (with the bonus points and higher conversion factor) seems to be the better deal over a 10-year period. (The numbers weigh even more in favor of the developer purchase over longer time periods...) Am I missing something?
Now, I realize that I’m not likely to convert all of my points every time, and that the bonus points have to be used within two years. But those are the only assumptions I could think of that would allow me to do a reasonable side-by-side comparison. Is there any other approach that would let me do a true comparison of the “developer” benefit represented by the increased conversion factor and the bonus points? If so, I’m all ears.
I guess the bottom line is that I’m now leaning in favor of going through with the developer purchase and not rescinding. Thoughts?
Thanks in advance for your thoughts and for making this forum a great sounding board for such questions!