Steamboat Bill

I decided to objectively look at the "cost per night" of an Exclusive Resorts 10 night membership plan using the “new” membership numbers.

10 nights
$139,900 membership fee ($34,975 non-refundable)
$59,000 priority holiday access for Christmas, New Year, Presidents (100% non-refundable)
$13,900 annual dues

If I assume a 10 year membership life cycle
Assume 4% lost opportunity of membership deposit = $5,596 per year x 10 years = $55,960
Account for the $34,975 in non-refundable membership deposit
$13,900 annual dues x 10 years = $139,000
Add in the $59,000 priority holiday access for Spring Break that is 100% non-refundable
Cost per night = $55,960 + $34,975 + $139,000 + $59,000 = $288,935

Divided by 100 nights of total use = $2,889 per night

If I assume a 15 year membership life cycle
Assume 4% lost opportunity of membership deposit = $5,596 per year x 15 years = $83,940
Account for the $34,975 in non-refundable membership deposit
$13,900 annual dues x 15 years = $208,500
Add in the $39,000 priority holiday access for Spring Break that is 100% non-refundable
Cost per night = $83,940 + $34,975 + $208,500 + $39,000 = $367,315

Divided by 150 nights of total use = $2,443 per night

There are a few factors that I did not calculate for:
1. The lost opportunity costs % calculation could be higher or lower for different people
2. Should the lost opportunity percent be simple or compound interest?
3. I did not account for any increase in the annual dues over 10 years
4. Not everyone wants the Holiday upgrade or may only want the other holidays

You can account for many different things and it is probably very different for everyone, but I wanted to create some type of standardized approach to joining this destination club. I just wanted a simple calculation in today’s dollars that made sense to me.

ER Traveler

Nice analysis Bill. I think you could include at least the annual CPI + 3% or so and compound it annually - because that's about how the clubs calculate it. I also think the lost opportunity cost is a bit low. You could also just separate out the holiday options, calculate their respective lost opportunity costs, then their cost per night and they could be added back in depending on the package chosen.

LTTravel

There is an additional small flaw in the calculations. You include the lost opportunity cost of the 25% non refundable portion of the membership deposit but do not include the lost opportunity cost of the non-refundable holiday deposit. $59,000 x 4% = $2360 X 10 years or $23,600.
Also, ER yearly dues price increase is CPI + 4.5%.
Therefore cost of the membership deposit is calculated in 2008 dollars, whereas the yearly dues are not, unless you add 4.5% each year. The CPI does not need to be added because that would take into account 2008 dollars versus future dollars.