Steamboat Bill

I decided to objectively look at the "cost per night" of an Exclusive Resorts 20 night membership plan using the “new” membership numbers.

20 nights
$199,900 membership fee ($49,997 non-refundable)
$39,000 priority holiday access for Spring Break (100% non-refundable)
$19,900 annual dues

If I assume a 10 year membership life cycle
Assume 4% lost opportunity of membership deposit = $7,996 per year x 10 years = $79,960
Account for the $49,977 in non-refundable membership deposit
$19,900 annual dues x 10 years = $199,000
Add in the $39,000 priority holiday access for Spring Break that is 100% non-refundable
Cost per night = $79,960 + $49,977 + $199,000 + $39,000 = $367,937

Divided by 200 nights of total use = $1,840 per night

If I assume a 15 year membership life cycle
Assume 4% lost opportunity of membership deposit = $7,996 per year x 15 years = $119,940
Account for the $49,977 in non-refundable membership deposit
$19,900 annual dues x 15 years = $298,500
Add in the $39,000 priority holiday access for Spring Break that is 100% non-refundable
Cost per night = $119,940 + $49,977 + $298,500 + $39,000 = $507,417

Divided by 300 nights of total use = $1,691 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 Spring break upgrade
5. Someone may want the Christmas/New Year upgrade for $59,000 (non-refundable)

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.

Does anyone agree with me or am I missing something?

ER Traveler

I think 4% is rather low an annual opp. cost - even with the current economy if you're looking at a long term. Perhaps the raw number should be without any holiday added in and then the holiday numbers could be calculated with lost opportunity and folded into the base number. I also think the interest should be compounded and at least the CPI annual increase plus several percentage points should be added onto the annual dues for a more realistic view. I would do the math myself but Bill you're so good at it ...

LTTravel

But that is after taxes indicating about 7% pre tax.(or 8.5% if the democrats win)

ER Traveler

I still think it's a little low long term and after taxes. Maybe high for this year, though!