Private Island Deposit Opportunity Cost

Luxury island buyouts often demand six-figure deposits months in advance. Enter the deposit size and the non-refundable window to see the expected forfeiture risk, the capital carrying cost, and the blended opportunity cost of locking up that cash.

Non-refundable deposit required to secure the island buyout.
Days before arrival when the deposit becomes fully non-refundable.
Optional. Defaults to 6%. Captures the yield you could earn on the deposit elsewhere.
Optional. Defaults to 12%. Likelihood you cancel inside the penalty window.
Optional. Defaults to 30. Adds extra days cash stays tied up while the resort releases funds.

Travel budgeting aid—confirm contractual penalties, refund policies, and insurance coverage with your advisor before wiring funds.

Examples

  • $180,000 deposit, 120-day window, 6% cost of capital, 15% cancel probability, 30-day refund lag ⇒ Expected forfeiture risk: $27,000.00 USD • Carrying cost of tied-up cash: $3,547.95 USD • Total opportunity cost: $30,547.95 USD • Cash locked for approximately 150 days • Daily economic drag: $203.65 USD.
  • $95,000 deposit, 90-day window, optional fields blank ⇒ Expected forfeiture risk: $11,400.00 USD • Carrying cost of tied-up cash: $1,401.37 USD • Total opportunity cost: $12,801.37 USD • Cash locked for approximately 120 days • Daily economic drag: $106.68 USD.

FAQ

How should I estimate the cancellation probability?

Use historical rebooking rates for similar groups, or align it with the likelihood of hurricanes, border closures, or guest conflicts during your travel season.

Can I factor in travel insurance reimbursements?

Yes. Subtract insured amounts from the deposit input so only the portion you truly self-insure flows through the calculator.

What if the resort lets me apply the deposit to a future stay?

Lower the cancellation probability to reflect the chance of reusing the credit, or shorten the window if the credit must be consumed quickly.

Does this include foreign exchange swings?

No. Add expected FX hedging costs to the opportunity cost output for a full picture if the deposit is denominated in another currency.

Additional Information

  • Result unit: U.S. dollars showing expected forfeiture plus capital carrying cost.
  • Cost of capital converts the non-refundable window into an interest-equivalent drag on cash flow.
  • Adding refund lag days extends the lockup so concierge teams can plan liquidity.

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