GoldenVIKE
TUG Member
 Joined
 Feb 12, 2017
 Messages
 92
 Reaction score
 40
 Location
 Chicago
 Resorts Owned

GRC Tahoe 5 Wk Ski
St Kitts Week 52
Ocean Pointe Silver
DC/AP points
My wife and I (33, 36 yo) with 2 kids (1, 2 yo) just joined MVCI (4,000 points level) mostly to realize financial benefits over time (including in retirement in the distant future), but also for some of the intangible benefits the club offers like access to bigger villas, broader experiences, etc.
Part of our decision to buy was based on financial analysis. I'd like to lay this out to you experienced TS users and see if we're missing anything, or if any of the assumptions I'm making may not be accurate. We're within our 10day review period so we could still back out...
Booking Value of a Point
First, practically all calculations hinge on how much annual "value" we're going to get out of the points on an annual basis in terms of booking vacations. I understand that this can vary greatly, but based on 50 internet comparisons of how much it'd cost to book various MVC villas through the internet, vs. how much they cost to book with DC points, it looks like assuming about $1.50 per point per year is a reasonable target. (For example, using 4,000 points should be the rough equivalent of spending $6,000 on the open market, and 6000/4000=$1.50) The average was actually $1.21 across the 50 searches but valuedminded owners can skew that upward. Still, I ran numbers at $1.50 and $1.20 just to get a range.
Owner UpFront Acquisition Costs
Second, the way ownership is acquired is a big factor too. In doing a little research on the internet we decided to buy through Marriott rather than go resale because (a) it seems a hell of a lot easier and our time is valuable, and (b) the ultimate cost per point that you pay (after Marriott's incentives w/ direct and after junk fees with resale) is about the same. To buy resale looks like you'll be a little over $7 per point after you pass ROFR w/ a $5+ bid, and after you pay the transfer, education, closing, and other junk fees. Our allin cost per point was $7.56 after incentives. Those included (a) 20% discount off of the $13.32 starting price (b) $999 reimbursement of our presentation trip (c) $1750 bonus due to adding an extra day onto our presentation trip (subtract $400)  you have to ask special for this (d) 4,000 bonus points for signing up at presentation  valued at $6,000 (e) 4,000 more bonus points for financing 70% of the purchase, which are net valued at $3,566 considering interest fees and tax deduction in the 18 months required to carry the loan for the bonus (f) $1,660 value of putting all upfront costs on Marriott Rewards card for 5x points, and (g) $1,180 closing costs. In summary depending on exactly how much you get resale points for, (using $4.50 to $5.00 range before junk fees) and assuming an annual booking value of $1.20 to $1.50 per point, the potential savings for going resale is around 215% (see below). Not worth the headache to us. Note that the math would be different at different levels of ownership.
Point: @$4.50 @$5.00
$1.20: 15.18% 9.02%
$1.30: 13.15% 6.85%
$1.40: 11.02% 4.56%
$1.50: 8.78% 2.16%
Calculating the Value of MVC Ownership
There are several ways to calculate return on a potential investment and I looked at just about all of them...
Perpetual Bond: 7.7% to 12.2% return on investment
Taking the future marginal value of the booking value of a point, over the maintenance and ownership fees yeilds $0.62 (@ $1.20) to $0.92 (@ $1.50) in net value per point per year. In the $1.50 per point example, that's $1.50  $0.53 annual maintenance fee  $0.05 annual dues ($185 / 4,000 points) per point. Simply dividing the annual "return" on a point into the initial "investment" in that point is a simple calculation of interest as if it were a perpetual bond.
Internal 30year Rate of Return: 6.1% to 11.5% return on investment
This method looks at all future cash flows and then finds the interest rate that would make the net present value $0. The range of results for our particular situation is 6.1% (at $1.20/point) to 10.4% (at $1.50/point). Add about a point to that if you successfully acquired a resale allotment of points at a discount vs. buying from Marriott direct. Note that this method doesn't contemplate some big things, including (a) the inflation hedge benefit of MVC ownership, (b) any residual value at 30 years, meaning that if the ownership still has value or can be resold for any amount at the end of the 30 year period, that's just a bonus.
Breakeven exit period: 37 years
The amount of time it'd take to be able to realize a breakeven proposition when netting out (a) upfront costs (b) future savings and (c) cashout in this case assuming the ability to sell at $4 per point in the resale market. Buying direct from Marriott range is 47 years, with 3 years possible if you get a good resale deal and realize $1.50 annual booking value per point.
Payback period: 812 years
Similar to the above, but assuming you're not going to sell and exit, it'd take a little longer to reach the point at which the total amount you've paid is equal to the total market value of the travel that you've booked through MVCI. Shave a year off both ends if you score a great deal on a resale. It's interesting to note that this goes to 20 years if the booking value per point drops to $1.00.
Cumulative Net Value: possibly over $100,000
In taking the cumulative net values of all incoming and outgoing cash, and not discounting or adjusting for inflation due to an assumption that while the cost of maintenance will go up over time, so will the cost of travel in general (they net each other out), here's the estimated net value at various milestones (looking at buying direct from Marriott only, as the additional value gained from scoring a good resale stake is minimal)
Time @$1.20 @1.50
1 year $9,044 $3,124
5 years $4,034 $4,246
10 years $8,441 $22,721
20 years $33,391 $59,671
30 years $58,341 $96,621
.... and it'd keep going up from here
Cumulative Relative Discount: 2040% cheaper travel for longterm MCVI owners
Using the same math as the payback period, this compares the total you've spent vs. the market value of all of your travel at various points in time, to calculate the cumulative effective discount (or premium) you've had on your travel due to being a MVCI owner. Here are some examples at various milestones...
Time @$1.20 @1.50
5 years +49.7% +26.1% (the + means you're paying more in the early years)
10 years +10.3%  9.0%
20 years  16.9%  32.4%
30 years  27.6%  41.4%
.... and the discount would keep going in the same direction
Financial Summary
The stuff above made this a pretty easy decision for us, or at least easily justifiable from a financial perspective. Of course it all falls apart of the average booking value of a point goes down though. For example, if it falls to $1.00 then the payback period becomes 20 years and the IRR falls to 2.7%3.9%; so it's really important that we continue to be able to book trips for fewer DC points than it'd cost $USD to book outside of the MVCI structure. This is why I'm very interested to hear your actual experience and perceived booking value of a DC point.
Intangible Benefits
And of course there are many cherries on top. I've been a frequent Marriott traveler w/ lifetime gold status, and enjoy and trust the brand. The ability to get early access to booking very desirable 2 and 3br villas is going to be great for our family. As is the fact that being part of MVCI makes it easier and less awkward to invite friends and family to just come along, since everything is paid for already anyway (close enough). Not to mention other perks and experiences through Interval International, Homes, Cruises, MVP discounted bookings, etc. Plus just having something that psychologically feels like we're building wealth, having fun, and being part of a club; and ultimately can pass this down to our kids  all of that stuff is truly icing on the cake to use a second dessert analogy in the same paragraph.
Anyway, if you've made it this far through this rambling postuhhthank you?! Sorry?! I'd love to hear feedback though to help us confirm whether we've made a good choice or not. How do you all feel about being MVCI members? Any regrets? Feeling the value? Thanks!
PS: Kudos to our TS Sales Rep w/ MVCI Allen Larkin. He was very transparent, forthcoming, and helpful. I'd recommend him to anyone that wants to learn more about MVCI.
Part of our decision to buy was based on financial analysis. I'd like to lay this out to you experienced TS users and see if we're missing anything, or if any of the assumptions I'm making may not be accurate. We're within our 10day review period so we could still back out...
Booking Value of a Point
First, practically all calculations hinge on how much annual "value" we're going to get out of the points on an annual basis in terms of booking vacations. I understand that this can vary greatly, but based on 50 internet comparisons of how much it'd cost to book various MVC villas through the internet, vs. how much they cost to book with DC points, it looks like assuming about $1.50 per point per year is a reasonable target. (For example, using 4,000 points should be the rough equivalent of spending $6,000 on the open market, and 6000/4000=$1.50) The average was actually $1.21 across the 50 searches but valuedminded owners can skew that upward. Still, I ran numbers at $1.50 and $1.20 just to get a range.
Owner UpFront Acquisition Costs
Second, the way ownership is acquired is a big factor too. In doing a little research on the internet we decided to buy through Marriott rather than go resale because (a) it seems a hell of a lot easier and our time is valuable, and (b) the ultimate cost per point that you pay (after Marriott's incentives w/ direct and after junk fees with resale) is about the same. To buy resale looks like you'll be a little over $7 per point after you pass ROFR w/ a $5+ bid, and after you pay the transfer, education, closing, and other junk fees. Our allin cost per point was $7.56 after incentives. Those included (a) 20% discount off of the $13.32 starting price (b) $999 reimbursement of our presentation trip (c) $1750 bonus due to adding an extra day onto our presentation trip (subtract $400)  you have to ask special for this (d) 4,000 bonus points for signing up at presentation  valued at $6,000 (e) 4,000 more bonus points for financing 70% of the purchase, which are net valued at $3,566 considering interest fees and tax deduction in the 18 months required to carry the loan for the bonus (f) $1,660 value of putting all upfront costs on Marriott Rewards card for 5x points, and (g) $1,180 closing costs. In summary depending on exactly how much you get resale points for, (using $4.50 to $5.00 range before junk fees) and assuming an annual booking value of $1.20 to $1.50 per point, the potential savings for going resale is around 215% (see below). Not worth the headache to us. Note that the math would be different at different levels of ownership.
Point: @$4.50 @$5.00
$1.20: 15.18% 9.02%
$1.30: 13.15% 6.85%
$1.40: 11.02% 4.56%
$1.50: 8.78% 2.16%
Calculating the Value of MVC Ownership
There are several ways to calculate return on a potential investment and I looked at just about all of them...
Perpetual Bond: 7.7% to 12.2% return on investment
Taking the future marginal value of the booking value of a point, over the maintenance and ownership fees yeilds $0.62 (@ $1.20) to $0.92 (@ $1.50) in net value per point per year. In the $1.50 per point example, that's $1.50  $0.53 annual maintenance fee  $0.05 annual dues ($185 / 4,000 points) per point. Simply dividing the annual "return" on a point into the initial "investment" in that point is a simple calculation of interest as if it were a perpetual bond.
Internal 30year Rate of Return: 6.1% to 11.5% return on investment
This method looks at all future cash flows and then finds the interest rate that would make the net present value $0. The range of results for our particular situation is 6.1% (at $1.20/point) to 10.4% (at $1.50/point). Add about a point to that if you successfully acquired a resale allotment of points at a discount vs. buying from Marriott direct. Note that this method doesn't contemplate some big things, including (a) the inflation hedge benefit of MVC ownership, (b) any residual value at 30 years, meaning that if the ownership still has value or can be resold for any amount at the end of the 30 year period, that's just a bonus.
Breakeven exit period: 37 years
The amount of time it'd take to be able to realize a breakeven proposition when netting out (a) upfront costs (b) future savings and (c) cashout in this case assuming the ability to sell at $4 per point in the resale market. Buying direct from Marriott range is 47 years, with 3 years possible if you get a good resale deal and realize $1.50 annual booking value per point.
Payback period: 812 years
Similar to the above, but assuming you're not going to sell and exit, it'd take a little longer to reach the point at which the total amount you've paid is equal to the total market value of the travel that you've booked through MVCI. Shave a year off both ends if you score a great deal on a resale. It's interesting to note that this goes to 20 years if the booking value per point drops to $1.00.
Cumulative Net Value: possibly over $100,000
In taking the cumulative net values of all incoming and outgoing cash, and not discounting or adjusting for inflation due to an assumption that while the cost of maintenance will go up over time, so will the cost of travel in general (they net each other out), here's the estimated net value at various milestones (looking at buying direct from Marriott only, as the additional value gained from scoring a good resale stake is minimal)
Time @$1.20 @1.50
1 year $9,044 $3,124
5 years $4,034 $4,246
10 years $8,441 $22,721
20 years $33,391 $59,671
30 years $58,341 $96,621
.... and it'd keep going up from here
Cumulative Relative Discount: 2040% cheaper travel for longterm MCVI owners
Using the same math as the payback period, this compares the total you've spent vs. the market value of all of your travel at various points in time, to calculate the cumulative effective discount (or premium) you've had on your travel due to being a MVCI owner. Here are some examples at various milestones...
Time @$1.20 @1.50
5 years +49.7% +26.1% (the + means you're paying more in the early years)
10 years +10.3%  9.0%
20 years  16.9%  32.4%
30 years  27.6%  41.4%
.... and the discount would keep going in the same direction
Financial Summary
The stuff above made this a pretty easy decision for us, or at least easily justifiable from a financial perspective. Of course it all falls apart of the average booking value of a point goes down though. For example, if it falls to $1.00 then the payback period becomes 20 years and the IRR falls to 2.7%3.9%; so it's really important that we continue to be able to book trips for fewer DC points than it'd cost $USD to book outside of the MVCI structure. This is why I'm very interested to hear your actual experience and perceived booking value of a DC point.
Intangible Benefits
And of course there are many cherries on top. I've been a frequent Marriott traveler w/ lifetime gold status, and enjoy and trust the brand. The ability to get early access to booking very desirable 2 and 3br villas is going to be great for our family. As is the fact that being part of MVCI makes it easier and less awkward to invite friends and family to just come along, since everything is paid for already anyway (close enough). Not to mention other perks and experiences through Interval International, Homes, Cruises, MVP discounted bookings, etc. Plus just having something that psychologically feels like we're building wealth, having fun, and being part of a club; and ultimately can pass this down to our kids  all of that stuff is truly icing on the cake to use a second dessert analogy in the same paragraph.
Anyway, if you've made it this far through this rambling postuhhthank you?! Sorry?! I'd love to hear feedback though to help us confirm whether we've made a good choice or not. How do you all feel about being MVCI members? Any regrets? Feeling the value? Thanks!
PS: Kudos to our TS Sales Rep w/ MVCI Allen Larkin. He was very transparent, forthcoming, and helpful. I'd recommend him to anyone that wants to learn more about MVCI.
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