DVC FAQ: What Exactly IS Disney Vacation Club (DVC)?

April 26, 2015, 9:03 PM · If you've been to a Disney park anytime in the past several years, you've doubtless seen the Disney Vacation Club kiosks, advertisements, and signage. "The Best Kept Disney Secret!" they proclaim, suggesting that it isn't much of a secret. Many visitors shy away from the kiosks in particular, fearing one of the high-pressure sales tactics that the timeshare industry is famous for. But DVC isn't technically a timeshare.

What IS a Timeshare?

Timeshares began as condominiums that each had multiple owners. Today, this model is often referred to as "fractional ownership," where you might own a 1/16th stake - or around three weeks per year - of the condo. You "shared your time" with the other owners of your unit. Originally, timeshare owners actually owned specific weeks of the year, and could only own the unit during those weeks. Eventually, timeshare developers started selling 1/52nd shares - meaning one week each year - and invented the concept of "floating weeks," where you could schedule your use and not be fixed to a specific week each year.

The point of all this is that with a timeshare, you actually own a piece of deeded real estate, representing a fraction of the total number of units and weeks available at the facility. Trade systems like Interval International and Resort Condominiums International (II and RCI, respectively) evolved that let your swap your ownership and stay at a different location, but you always owned that fractional piece of real estate wherever you bought it. Newer timeshare brands often express your ownership in terms of points, "charging" a certain number of points to stay in specific types of rooms, during specific seasons. Those "point systems" also allow you to own less than a full week of time, if you like. You could, for example, buy enough points to visit for 11 days every year, instead of having to buy either 7 or 14 days as weeks. But in almost all cases, you actually own a fractional piece of real estate forever.

Sounds very similar to Disney Vacation Club, but there's a key difference.

Polynesian Bungalows
The new DVC bungalows at Disney's Polynesian Village Resort, which opened this month at Walt Disney World. Photo courtesy Disney

The DVC Difference

Disney originally was reluctant to let the word "timeshare" anywhere near their vacation ownership product, because the industry has a terrible reputation for high-pressure, deceptive sales practices. Certainly not something Disney wanted to be a part of! Disney also had a unique problem: ownership implies control. Disney certainly didn't want to give up control over its Walt Disney World real estate, because the company's exclusive ownership helps it maintain de facto control of the property's legal government.

So DVC isn't really a timeshare. Instead, it's what I like to call a "prepaid vacation program." Essentially, you are buying a certain amount of "usage" in the system, and that usage expires after a given period of time. You're renting, more or less, not buying. Disney remains the landlord and property owner, under a complex set of legal relationships they created with the DVC development division.

So under DVC, you buy a set of points. You pay for that up front, either in cash or through a financing arrangement - that is, a loan. You get your point allocation annually on a specific day, and you can "spend" your points to stay at Disney hotels. Each different type of hotel room, at each resort, during one of five seasons, has a point "cost." You can also use your points to "buy" other types of vacations, including Disney Cruise Line reservations, reservations at non-DVC hotels owned by Disney, and even at a selection of properties not owned by Disney.

Disney's Aulani, a DVC property on Oahu in Hawaii. Photo courtesy Disney

DVC: How it Works

When Disney builds a new DVC resort, or converts an existing hotel to the DVC program, it invests the property with a fixed number of points. That number represents all possible rooms during all possible seasons. If you were to plop down enough cash to buy ALL of those points, you'd basically own the hotel. But we're talking tens of millions of points per hotel, so it would be a LOT of cash!

Disney then divvies up the points, assigning them to different room types and seasons. The trick is that Disney can't ever add more points to that hotel unless they add more rooms to it - the points, once declared, are fixed. Disney CAN rearrange the points, up to a certain percentage every so often. They can make one kind of room more "expensive," for example, but to do so another type of room has to get "cheaper." The points can be shuffled, but they'll always add up to the same total number.

So there's a fixed number of points in the system, which means a specific property is "sold out" when all of its points have been purchased. In reality, Disney withholds a certain number of points for itself, which it then uses to sell cash reservations at the property.

When you buy your points, you're therefore buying them from a specific resort, and that's said to be your "home resort." Disney lets you make reservations, using your points, at that resort up to nine months in advance. You can use your points at other DVC locations up to six months in advance, meaning people who "own" at a particular resort get a three-month advantage. That's an important fact, because if you prefer to stay at once resort, you want to own your points from that resort, so that you'll get the extra three-month window.

If you choose not to use some or all of your points for a given year, you can "bank" them into the following year. You can also "borrow" from the subsequent year, dragging points into the current year. Thus, you can have up to three years' worth of points at your disposal. For example, let's say you own 200 points. You could bank your 2015 points into 2016, and borrow your 2017 points into 2016, giving you 600 points total to use in 2016. These bank/borrow transactions are permanent, and can't be un-done. Any given point can only be banked/borrowed one time, meaning once it's banked into the next year, it has to get used in that year or be lost forever.

Bay Lake Tower
The DVC Bay Lake Tower, located next to the original A-frame building of Disney's Contemporary Resort

What About the Expiration?

When Disney creates points by building or converting a resort, they assign an expiration date to those points. The original DVC resort points expire in 2042; newer properties were set to expire in 2056. That date is adjusted constantly for new resorts as they're built, and Disney always has the option of selling extensions - something it did for Old Key West owners, who could spend a bit more money to extend their points from 2042 to 2056.

On the expiration date, the points vanish from your control, and revert to Disney, who can then re-sell them. So you don't "own" your points as you would in a timeshare; you're merely renting them for a period of time.

So That's the Overview

Those are the basics of how DVC works. There's a lot more to consider, like the finances, buying direct from Disney or from a previous DVC owner, and so on. We'll explore those topics in future "DVC FAQ" articles.

Theme Park Insider's Disney Vacation Club FAQ:

Replies (11)

April 27, 2015 at 1:06 AM

Good article. Just 1 small correction, you can book at your own resort 11 months in advance and 7 months at a resort which is not your home resort.

April 27, 2015 at 7:35 AM

I think there's a bit more. All timeshares have maintenance fees for the year when the points can be redeemed. This is usually yearly, but it can also be alternate years depending on what points your purchased. The maintenance fees can be quite costly and they are expected to increase every year. There is no free ride even if it feels free.

One advantage of a floating points plan is using them at any resort that you want. Unfortunately, Disney's resorts are mostly at Orlando. Few rooms are available at any other location. The Grand Californian in Anaheim has a tiny allotment. Aulani has a bit more and still in development. Hilton Head is another possible location if you really want to go there (???). Fortunately, they can exchange for other resorts at RCI, but sticking with DVC gives them the best value because Disney is clearly the leader in terms of demand and satisfaction.

I do notice that despite expiring points, Disney's value is keeping up unlike other timeshare resorts. Owners can get some money out if they want out.

April 27, 2015 at 3:52 PM

The annual maintenance fees can cost as much as a 7-night stay at a WDW moderate resort. That is the part that always stops me from being tempted to buying in.

April 27, 2015 at 4:37 PM

After having done some trial offers with Vacation Clubs I've learned two things.

1) Do not look at them as an investment or money making enterprise. Although the sales team will tell you about how you can sell and rent your points and it is probably technically possible to make money, that is only going to happen if your willing to turn it into a part (possibly full) time job of managing it. If you are going to do one of these clubs (Disney or otherwise) do it because you are committed to the idea of taking regular vacations and they are way of making it easier and cheaper over the long term.

2) Do not buy from the club owner. These plans do not appreciate in value, and in fact depreciate faster than a new car driven off the lot. Do your research and learn how to buy in the secondary market (basically Ebay). You will literally pay pennies on the dollar and save tens of thousands of dollars. Talk to anyone participates in vacation clubs/timeshares and they will all tell you to buy resell. The only ones who won't are the club owners.

April 27, 2015 at 6:17 PM

And it's those maintenance costs that has driven me away. You pay up front then must pay extremely high fees each year. The fees were so expensive, it made it clear that there was not much of an advantage, if at all, in investing in DVC.

April 28, 2015 at 7:54 AM

The biggest problem with timeahares and vacation programs like DVC, is that buyers are putting huge sums of money down today for vacations they "may" take a decade from now. For those who are loyal and dedicated enough to recoup the initial cost of the program, it can be a huge benefit. However, for those that travel more spontaneously and sporadically, it can be a financial drain.

I have a number of friends who are DVC members, and they are extremely satisfied, but they are the type of people that go to WDW multiple times every year. I'm not sure if they would go as frequently if they weren't DVC members, but they and their kids eat and sleep everything Disney. I do, however, also know a few others and have read dozens of horror stories from guests that have gone into serious debt because they did not conduct a proper cost benefit analysis prior to investing in DVC (and other timeshares). A DVC purchase should be looked at very carefully and decisions should be based on sound financial information from a professional.

DVC is not for everyone, but can be a great service for certain guests that visit at least once a year.

April 28, 2015 at 8:00 AM

Anonymous878 I've an upcoming article that gets into the financials in more depth; I just wanted to use this article to describe how the system works.

And Russtinator, I think that'll also open the part of the discussion you're talking about, which is the money.

This wasn't intended to be a "you should do this" or "you should not do this;" it was intended to be a high-level description of how the system works. I think the financials, combined with the kind of person(s) you and your family are, play more into the "should we do this or not" decision.

Any kind of large financial purchase - and a DVC membership can indeed get quite large, depending on what you go for - involves a lot more reading and research than I wanted to squeeze into a single article, so there'll be more to come.

April 28, 2015 at 9:17 AM

Absolutely Don, and I look forward to reading future articles. I've seen both sides of the coin with DVC, and this intro piece only grazes the surface and highlights the importance of perspective buyers to always complete their due diligence and ensure that they are on sound financial footing before buying a luxury such as DVC. Sure, you can save a lot of money on vacations buying into DVC, but you can also throw a lot away if your purchase is made in haste or without a proper analysis.

April 28, 2015 at 10:19 AM

The time windows are 11 months for your home resort, and seven months for the others. You might also wish to discuss that the very significant financial benefits of buying resale are offset by a more limited manner in which you can redeem your points (not on the Disney Cruise Line, not at the overseas Disney parks, nor with Adventures by Disney).

It is best to think of this as a means to me able to afford a deluxe resort stay at the price of a moderate resort, but only then if you are committed to going to Disney at least once every three years. For those of us who are dedicated Disney fans, and have the financial reserves to buy in and pay yearly maintenance fees, it's a good proposition.

April 28, 2015 at 11:09 AM

I own the HGVC timeshare. I bought cheaply ten years ago, but the maintenance fees (includes club dues and taxes too) increased 60% since my purchase. It went from low $600 to just shy of $1000. From my own calculations, it took 10 years to breakeven. My plan is a 2 bedroom on a moderate season and alternative years (5000 points on alternative years). A 2 bedroom suite is worth approximately $300 to $500 a day or $2100 to $3500 for a 7 day (1 week) stay. After staying in 1 or 2 bedroom suites, you don't want to stay in cheap studio sized hotel rooms anymore for well planned vacations.

I exchanged my floating points for a 1 week trip at Disney's Old Key West in a 1 bedroom suite. I was quite a nice stay. I only used up 3400 points, which means I can reserve my remaining points (1600 points) for another vacation by combining points. This is how you play the system. Use less points and combining points. Exchanging points via RCI for DVC is challenging. They are often snapped up within days when a listing appears. It is highly unlikely you'll get the popular and newer DVC sites like Bay Tower or Boardwalk. You'll likely get Old Key West and Saratoga Springs; however since Downtown Disney is getting remodeled, I suspect these resorts will be more popular as they are the closest DVC locations to Downtown Disney.

Best to compare prices. OKW rooms start out at $355 a night for 1 bedroom suite. $2485 for 7 days plus taxes. Even with a 20 or 30% discount, it is still an expensive place to stay. Via RCI, I paid $199 RCI transaction fee plus $99 resort fee and I got free airport transportation and MagicBand.

Even with DVC, how do people go multiple times a year since they likely just purchased 1 week? Certainly they could do points stretching by getting a smaller room or they could borrow points from the next year or previous year. Or just get a second week of points. These are all tricks of the trade, but in general, you use what you're allocated.

April 28, 2015 at 6:02 PM

Have you seen Sharket.com ?? It ranks Disney (DVC) as some of the top 25 resorts. The National Timeshare Owners Association recommends this program as a top resource for resort research. There are also a select few licensed real estate companies that have Disney resale inventory. Check RedWeek if you want to buy direct from other owners.

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