Projected DVC Maintenance Fees

[tjkraz]

We're exploring buying after-market and an older property, so I'm assuming 6% maintenance cost increases. When I run that scenario the numbers look pretty rough.

Any thoughts?

In my opinion, there are no blanket assumptions which can be made. No matter the increase, there are underlying reasons and those reasons vary from year-to-year and property-to-property.

Old Key West is the...oldest...resort at 20+ years. The last four years' worth of increases were: 2.9%, 2.9%, 4.4% and 2.7%.

Each respective county (and its taxpayers) controls property tax rates which can be a big influencer on the final dues numbers. Some expense categories like property insurance and transportation (fuel costs) have proven rather volatile over the years. 2/3 of each resort's operating costs are linked to employee salaries and benefits. Those numbers will change an undetermined amount as union contracts come up for renewal and as lawmakers have an impact on health insurance costs.

And last but not least, we are all subject to Disney's whims with regard to services added or removed from the budgets. When they decide to add a new layer of management at the resorts, change the bedsheets to a more expensive configuration or build a new pool, members pay the cost.

Most DVC resorts are split between timeshare and cash hotel. Even the balance of cash guests vs. DVC can dramatically alter the budgets as more (or less) total operating dollars are attributed to DVC.

You could certainly trend historical increases and come up with a broad expectation for the future. But I seriously doubt the future increases can be predicted with any high degree of accuracy.

At some point it seems the dues will cost more than a vacation on cash.

That will not happen.

Remember the dues represent the actual operating expense for the resort...plus Disney's 12% management fee. DVC member dues are paying for property taxes, Cast Member salaries, bus & boat transportation and so on. But when it comes to the hotel rooms, Disney must fund all of these expenses themselves.

If dues were to cost more than a cash vacation, Disney would be taking a loss on operating the hotels. That simply will not happen. Expect profit margins to remain about the same.

Generally speaking, member dues increase because it costs more to run the hotels. Employees get raises and their benefits are more expensive...gas prices go up...supplies cost more to procure. That is why Disney raises its room rates every year, and they will continue to increase rates to at least match (if not exceed) the rise in expenses.

 

[lodge]

I thought I heard/read the points don't increase for the resorts. This may be why. Although more points aren't needed to secure the reservations, the MF's PER point owned increase, which cover the expenses. Am I right that the points stay the same (just, perhaps, allocated in different areas) year to year?

 

[chalee94]

I thought I heard/read the points don't increase for the resorts. This may be why. Although more points aren't needed to secure the reservations, the MF's PER point owned increase, which cover the expenses. Am I right that the points stay the same (just, perhaps, allocated in different areas) year to year?

the points for each resort (for all the rooms in that resort for the whole year) are fixed and stay the same. those pts can be reallocated - so studios might get more expensive, early december might get more expensive or weekends might get more expensive...but for pts to go up in one area, they have to go down elsewhere.

 

["Got Disney"]

that last chart is SCARY!!!! 22.50 per point for SSR...

 

[Garthilk]

If the due is 22 per point, I wonder how the rental is going to be 10 per point. Something is going to have to happen with rental prices I think.

 

[chalee94]

If the due is 22 per point, I wonder how the rental is going to be 10 per point. Something is going to have to happen with rental prices I think.

it's already started. rental prices have definitely been creeping up the last year or so.

that last chart is SCARY!!!! 22.50 per point for SSR...

like i said over a year ago, unadjusted inflation numbers can be misleading if you are not on a fixed income. obviously if wdw were charging $90+ per day in early-80s dollars instead of $15 per day, park attendance would be sparse...but it is as busy as it has ever been.

in a similar way, $20 in 2050 dollars is hardly the same as $20 today.

 

[Brandis]

The only upside to the "future" chart is that the MF for BLT (my home resort) are still the lowest in 2060.

But then, with the rate of wear and tear of the furnishing at BLT, we might see some unplanned raises because of necessary renovations happening earlier than planned.

 

[ThunderSnow]

What happens if it's 2045, you're on a fixed income, and you just can't afford the MF so you don't pay them (assuming renting them doesn't cover the MF)? I know economically rentals are correlated to the rack rates, so they should increase accordingly, but just asking. Thanks.

 

[Maverick]

What happens if it's 2045, you're on a fixed income, and you just can't afford the MF so you don't pay them (assuming renting them doesn't cover the MF)? I know economically rentals are correlated to the rack rates, so they should increase accordingly, but just asking. Thanks.

I'm pretty sure this scenario happens already especially with the economy opportunities over the last few years. There are at least a couple things that can happen if someone can no longer pay their maintenance fees.

1. Sell your contract via resale

2. Disney can consider you in 'default' of your contract and reclaim ownership of your points. (This could also come with legal and/or court costs - not sure)

Disney is the real winner in both of those scenarios as they have ROFR options with #1 and #2 would allow them to sell your points again at full direct value.

As the 2042 end dates come for the early DVC resorts, it will be interesting to see what happens as it will likely be difficult to sell, even at a very low cost. What value will brokers get to work deals for sellers and buyers at $5 per point?

I also wonder if Disney will spend the money to default contracts that have only one or two years remaining when MF's are not paid. I'll bet there are executives that have this figured out though. As an example, I can see them sectioning certain parts or buildings of the DVC resorts back into regular hotel room inventory if needed. (I don't know if that is legal or not.)

Mav

 

[tjkraz]

As the 2042 end dates come for the early DVC resorts, it will be interesting to see what happens as it will likely be difficult to sell, even at a very low cost. What value will brokers get to work deals for sellers and buyers at $5 per point?

I would expect values to really crater in the last couple of years, but not sure how much sooner it will happen. Today, people spend $13 per point to rent (of which $5-6 actually goes toward paying the member's dues.) So there would seem to be value in a contract, even if it only has 3 or 4 years remaining.

Who here wouldn't pay $10-15--plus dues--for 4 years' worth of points? In 2014, that transaction makes complete sense. 2045 may be different but time will tell. Dues rise as costs rise. And as cost rises, hotel rates also rise. Short of some major economic upheaval, I expect DVC ownership and point rentals will be just as beneficial in another 30 years as they are today.

 

[Maverick]

Who here wouldn't pay $10-15--plus dues--for 4 years' worth of points? In 2014, that transaction makes complete sense. 2045 may be different but time will tell.

I completely agree!

I just wonder if the brokers would be able to make enough (or charge enough) to make it worth their time and effort while they are selling other DVC resort contracts that expire 12+ years later at a much higher point value (= higher commission percentage).

I see other 'never ending' timeshares for sale at $0.99 and even free, so the brokers must be making money somewhere. Guess the seller is ponying up.

 

[Lorilais_mommie]

Thank you to whoever pop this up from the grave!

This is what I wanted to look at..

Does anyone know if there is one that includes 2013/2014 yet?

 

[Dean]

What happens if it's 2045, you're on a fixed income, and you just can't afford the MF so you don't pay them (assuming renting them doesn't cover the MF)? I know economically rentals are correlated to the rack rates, so they should increase accordingly, but just asking. Thanks.

As noted, either we or our estates will be responsible. An estate will not be able to be settled with a timeshare sitting in it. That means someone has to take it as an inheritance or the executor has to dispose of it in some way. I'm told that after a year of trying that sometimes probate judges will take it out of the estate and essentially put it but on the timeshare itself but I'm sure that's hit or miss at best and who knows multiple decades from now. For the owner, it'd be counted against their credit subject to the laws and rules at the time. It could mess you up if credit is important to you, some jobs even require a certain credit rating to maintain and apparently a CC can unilaterally jack up your interest if they get the sense you're credit is bad or worsening.

I would expect values to really crater in the last couple of years, but not sure how much sooner it will happen. Today, people spend $13 per point to rent (of which $5-6 actually goes toward paying the member's dues.) So there would seem to be value in a contract, even if it only has 3 or 4 years remaining.

Who here wouldn't pay $10-15--plus dues--for 4 years' worth of points? In 2014, that transaction makes complete sense. 2045 may be different but time will tell. Dues rise as costs rise. And as cost rises, hotel rates also rise. Short of some major economic upheaval, I expect DVC ownership and point rentals will be just as beneficial in another 30 years as they are today.

I agree, my guess is it'll become a real problem around 4-5 years out from the end date and by 2 years, it'll likely be difficult to give a contract away. Remember there is no way every member will be able to use every point at DVC the last UY, it's simply not mathematical possible. I'm guessing banking will be suspended about this time and borrowing maybe the last year or 2 depending on how the final points are rationed. This seems to be an area where many members are overly optimistic, I've seen statements like Disney will just keep the resorts open an extra year to allow us to use the points, etc. I've posted some possibilities previously but won't go into here unless asked.

Thank you to whoever pop this up from the grave!

This is what I wanted to look at..

Does anyone know if there is one that includes 2013/2014 yet?

I haven't seen it like that lately and apparently that poster is no longer active on DIS. One thing I'd caution given you are looking to buy, is that VGF fees are most likely artificially low just like BLT's were and really still are catching up. Scary isn't it. The other caution is those are historical and not projections and really don't predict future fees very well. I think it's reasonable to think of them long term at say 4% but one needs to realize it's really possible that they will be 5-6% or could even be 8% per year over time. My suggestion is to look at it at say 4% and then at 5 & 6% and see where you are in 10, 20 and 30 years. I'd figure that the dues will track inflation but likely be just a little higher per year over time, that gets to be quite a lot compounded over time.

 

[CarolMN]

Thank you to whoever pop this up from the grave!

This is what I wanted to look at..

Does anyone know if there is one that includes 2013/2014 yet?

All of the 2014 annual fees are listed in the

DVC Resource Center

which is a Sticky Thread located at the top of each of the 4 main DIS DVC Forums.

 

[Lorilais_mommie]

All of the 2014 annual fees are listed in the

DVC Resource Center

which is a Sticky Thread located at the top of each of the 4 main DIS DVC Forums.

Thanks...

DH and i were discussing how much we felt annual dues would go up..
I had read that Disney keeps them low why selling them before..

So how much does everyone think they are going to go up after they sell out?
If look similar to BLT DH and I are ok with that.. Does anyone think it will be higher??

 

[Missyrose]

Thanks...

DH and i were discussing how much we felt annual dues would go up..
I had read that Disney keeps them low why selling them before..

So how much does everyone think they are going to go up after they sell out?
If look similar to BLT DH and I are ok with that.. Does anyone think it will be higher??

I think it's telling that VGF's starting point for MFs is higher than BLT. Disney has upped the quality of some of VGF's amenities to make it worthy of the flagship resort. The linens are nicer, the toiletries are nicer, there appears to be more staff at the resort. Plus the cost to fix all those TVs in the bathroom mirrors is something new to DVC. This all seems like it will add up to higher MFs. I'm expecting VGF to average a 4 percent increase each year while previously DVC resorts averaged 3 percent.

 

[Dean]

Thanks...

DH and i were discussing how much we felt annual dues would go up..
I had read that Disney keeps them low why selling them before..

So how much does everyone think they are going to go up after they sell out?
If look similar to BLT DH and I are ok with that.. Does anyone think it will be higher??

Extrapolating from BLT and VGC, VGF would be just over $7 a point in 5 years as both are roughly 30% higher than they were initially. Of course no one knows what will happens but realistically one can look at a similar increase comparatively speaking. The other resorts went up barely half that other than AKV which was in between and was still in active sales and being held down at the start of that period.

 

[Pluto777]

An old thread that has been inactive for a while, but an important one. Looking to add points (again), but not sure how to proceed.

Anyone have thoughts on a lower buy in at say a VB or HHI for 7 month points vs paying more upfront for a WDW even at SSR or OKW? (Yes I KNOW the Mf's are the key, but without knowing exactly what they will be over the next 5-10-15 years, how can we be sure?

 

[Sandisw]

An old thread that has been inactive for a while, but an important one. Looking to add points (again), but not sure how to proceed.

Anyone have thoughts on a lower buy in at say a VB or HHI for 7 month points vs paying more upfront for a WDW even at SSR or OKW? (Yes I KNOW the Mf's are the key, but without knowing exactly what they will be over the next 5-10-15 years, how can we be sure?

I dont think that the WDW resorts will ever catch up to those properties in fees.

In addition, it may be harder to book WDW in the next few years given all the extra points from canceled trips. IMO, if WDW is it, I’d buy there.

 

[Dean]

An old thread that has been inactive for a while, but an important one. Looking to add points (again), but not sure how to proceed.

Anyone have thoughts on a lower buy in at say a VB or HHI for 7 month points vs paying more upfront for a WDW even at SSR or OKW? (Yes I KNOW the Mf's are the key, but without knowing exactly what they will be over the next 5-10-15 years, how can we be sure?

Just as a points cow I do not think it's a good choice. Certainly the buy in is lower but there's a reason for that. They are still higher long term looked at in total and you give up a potential 11 month window at WDW. Now if one wants to stay at one of those resorts a fair amount of time AND use at WDW, it can be reasonable but even then for most situation owning 2 resorts would be better with any volume of points.