A serious discussion on future 'guestimates' of MF's..

[disneynutz]

BLT was built during a time of different management. I may be wrong but it seems to me that they held dues low initially on new resorts to help with sales.

Bill

 

[Ben E N]

BLT was built during a time of different management. I may be wrong but it seems to me that they held dues low initially on new resorts to help with sales.

Bill

I agree with that. The dues are slowly but surely rising faster than other resorts and will eventually catch up with them.

 

[Pluto777]

I doubt BLTs compact wise will keep it's MFs in check too much compared to others. There is still an equal ratio of rooms/owner to maintain, and a large portion of MFs are based on maintenance and upkeep costs. Property taxes are based on the value of the land, not just it's size, and a huge building right next to the Magic Kingdom is going to be assessed at a high value. As a BLT owner, I hope I'm wrong though...

Thanks for the input Ben. Yes the number of units/owners is I believe very important to determine future MF's, perhaps this will protect a place like SSR from future MF raises? in any case as to property taxes, if they did increase on BLT despite it's relative smaller acreage vs other DVC's in WDW, wouldn't that mean that the land itself is gaining value? If that IS the case (that the land gains in value) then wouldn't (I hope I hope!) the cash prices at resorts would also increase and thus offset any future increases in MF's with higher values per night?

 

[disneynutz]

Dues and costs are a strange animal. For transportation only BLT budget is $1.8 million with $5.92 for dues per point. SSR's budget for transportation is $8.9 million with $5.85 dues per point. I don't understand why the bus costs so much more at SSR but having more owners helps keep the dues lower.

Bill

 

[Pluto777]

BLT was built during a time of different management. I may be wrong but it seems to me that they held dues low initially on new resorts to help with sales.

Bill

I heard a rumor that CCV (I have NO idea if this is true btw) initially had very high MF's due to a miscalculation of property taxes that were SUPPOSED to be put on all DVC's; but this fell through and so now they actually had a DECREASE in MF's from 2017-2018 as they adjust it. This would seem to go against the theory that they initially plan MF's to be low to 'attract' new owners. In fact, I'm not sure they are even allowed to do this; dues are determined by the association meetings, are they not? So I am not sure Disney actually has control over MF's...

 

[DVCDisneyRunner]

Here are some empirical numbers and opinions:

Rate of MF increase from opening of resort through 2017 for the following DVC Resorts:

OKW 3.82%
SSR 3.03%
AKV 3.61%
BLT 5.47%

Past performance, while not an exact indicator, is one of the best sources to predict future results. So, you can see BLT has not faired so well, but as discussed this may have been from the MF's being prematurely low during the initial sale of the property. However, I think it is fair to say you can look for the average MF's to increase around 3.5%+/year over the course of ownership.

Another thing to consider is shared cost. SSR and OKW do not have significant shared cost with a cash resort. BLT (or also know as BLT at Contemporary Resort) shares a lot of amenities with the Contemporary. One very expensive amenity it shares is the ever increase cost to keep the Monorail up and running. The more rooms and occupancy at the DVC resort the higher the shared cost. There are also things like the pools. DVC BLT members can use the Contemporary's pool but Contemporary guest are not to use the DVC pool. Why is this... well it is so that DVC owners have to share the cost to upkeep the resort pool while the resort does not have to help cover the cost to maintain the DVC pool. As you can see in these shared resort situations Disney markets it as if the DVC owners get the best of both worlds. While DVC members do get the option to use these amenities it does come with a cost.

 

[Pluto777]

Here are some empirical numbers and opinions:

Rate of MF increase from opening of resort through 2017 for the following DVC Resorts:

OKW 3.82%
SSR 3.03%
AKV 3.61%
BLT 5.47%

Past performance, while not an exact indicator, is one of the best sources to predict future results. So, you can see BLT has not faired so well, but as discussed this may have been from the MF's being prematurely low during the initial sale of the property. However, I think it is fair to say you can look for the average MF's to increase around 3.5%+/year over the course of ownership.

Another thing to consider is shared cost. SSR and OKW do not have significant shared cost with a cash resort. BLT (or also know as BLT at Contemporary Resort) shares a lot of amenities with the Contemporary. One very expensive amenity it shares is the ever increase cost to keep the Monorail up and running. The more rooms and occupancy at the DVC resort the higher the shared cost. There are also things like the pools. DVC BLT members can use the Contemporary's pool but Contemporary guest are not to use the DVC pool. Why is this... well it is so that DVC owners have to share the cost to upkeep the resort pool while the resort does not have to help cover the cost to maintain the DVC pool. As you can see in these shared resort situations Disney markets it as if the DVC owners get the best of both worlds. While DVC members do get the option to use these amenities it does come with a cost.

Wow, I never thought about the 'pool' thing; if you are correct it is seen as a perk, but maybe it was a 'disguised' cost... then again, how much money is it really just to maintain a pool? We are talking about a pretty big resort with many units; which brings me to another point: you say about sharing with a cash resort means increased occupancy - but isn't that a good thing? When people stay at a DVC place on cash does that help lower MF's? Also I'm not sure if it's fair to comapre BLT to SSR and OKW's history of MF's, because the MF's on OKW & SSR started long before BLT's I'm not sure it's an 'apples to apples' comparison. Great post though Bill, several factors you mention which I hadn't considered. Anyone have thoughts on future projected MF costs at AKV?

 

[DLgal]

Have you done the math on what a on-site deluxe will cost in 40-50 years? I can tell you the average rate of a Disney Deluxe in 4-5 decades would make you sick if your worried about a 3% compounding rate on MF’s.

Eh...I don't pay rack rate. Never have, never will. I've been to WDW about 25 times (give or take) and what I paid 20 years ago isn't super far off from today's discount prices. If I average my nightly room cost over all my trips (some value, a few moderate, but mostly deluxe) it's around $250-$300/night. Our upcoming trip will be 11 nights in Club Level accommodations and our nightly room cost is less than the cost to rent points for a studio at $14/point, and we'd much rather be in a club level room.

When Disney eliminates all discount programs, DVC might be more attractive, but when we are getting 35-40% off rack rate every time, DVC ends up being substantially more expensive over the long run. I can just stop going if the price hits a tipping point. As it stands, I average a trip every other year. I don't need to go more than that, as I live in Disneyland's backyard.

Edit:
I just pulled out my folio from our honeymoon at WL in June 2001. Our room rate (taxes all in) was $261. Club Level room. I entered the same dates for this year and my discount price would be $412 taxes in, same room type. The cost (using a discount) has increased about 2% per year for this room since 2001. Not a big increase. Looking at the rack rates only, the increase has been 2.7%. So, still less than 3% per year. In contrast, the cost per point just to buy in to DVC between 2001 and 2018 has increased 5%...

 

[CarolMN]

.......... When people stay at a DVC place on cash does that help lower MF's? ......

Only if the cash rooms became available within 60 days of arrival and the revenue (less a % that goes to DRC as a commission for handling the booking) is part of "Breakage Income". Breakage Income is capped to a percentage of the operating budget and anything over that just goes to Disney's bottom line.

Since the vast majority of those cash rooms are due to Members who choose to use points for the Disney Collection (mostly cruising on DCL), there is no impact on dues. Dues were paid on the points that were traded out to make those rooms available for cash. Doesn't matter to the operating budget if the rooms are occupied by DVC Members or cash guests (who are there because Members traded out to cruise).

 

[DVCDisneyRunner]

Wow, I never thought about the 'pool' thing; if you are correct it is seen as a perk, but maybe it was a 'disguised' cost... then again, how much money is it really just to maintain a pool? We are talking about a pretty big resort with many units; which brings me to another point: you say about sharing with a cash resort means increased occupancy - but isn't that a good thing? When people stay at a DVC place on cash does that help lower MF's? Also I'm not sure if it's fair to comapre BLT to SSR and OKW's history of MF's, because the MF's on OKW & SSR started long before BLT's I'm not sure it's an 'apples to apples' comparison. Great post though Bill, several factors you mention which I hadn't considered. Anyone have thoughts on future projected MF costs at AKV?

I was not comparing resorts just providing data. You can do what you want with it.

As for how much can it cost to share the pool... well it isn't just the pool. The DVC members enjoy all the amenities of the Contemporary so they would share in the up keep of the grounds, the staff needed to keep the resort (not rooms) clean and maintained, all common area maintainance.... Like Bill says (I am not Bill) "Disney will do what makes Disney the most money" (or something like that) and if sharing expenses of a cash resort like Contemporary with DVC (while not taking on any expenses related to BLT) is what makes them the most money then that is what Disney will do.

As for occupancy, I am saying the bigger the DVC resort like BLT and with it's higher occupancy, DVC runs nearly 100% occupancy, the high the percentage of the shared cost it will have to cover.

 

[aoconnor]

Agreed with Bill that 3-5% over the long run is probably a good bet. The property taxes are a sizable part of the dues and while those can be hard to predict, at least they're tax deductible. The big ticket capital needs (renovations, roof replacements, etc) are easy to map out and are already accounted for in yearly reserves so that there's no lumpy spikes.

As you said what it comes down to is whether you think cash prices at the resorts will increase more than 3-5% on average. Who knows, but I would wager that in the last 10-15 years they have risen way more than 3%.

 

[tjkraz]

Good point - I think this is THE question to focus on: Will MF's rise faster or slower than cash prices for all WDW resorts over the future decades?

Maintenance fees are tied to actual operating costs + taxes. All things being equal, hotel rates should rise at a higher rate because Disney not only has to cover that same increase in expenses at its hotels, but it also wants higher profit margins to satisfy Wall Street.

That said, Disney has the flexibility of adjusting hotel rates in response to the economy. A downturn means they're forced to discount, which benefits consumers. Meanwhile DVC dues remain consistent because salaries, utilities, taxes and other fees must be paid.

Fortunately downturns seem to be few and far between so generally speaking, hotel guests are subject to far greater inflation than DVC.

 

[DVCDisneyRunner]

Eh...I don't pay rack rate. Never have, never will. I've been to WDW about 25 times (give or take) and what I paid 20 years ago isn't super far off from today's discount prices. If I average my nightly room cost over all my trips (some value, a few moderate, but mostly deluxe) it's around $250-$300/night. Our upcoming trip will be 11 nights in Club Level accommodations and our nightly room cost is less than the cost to rent points for a studio at $14/point, and we'd much rather be in a club level room.

When Disney eliminates all discount programs, DVC might be more attractive, but when we are getting 35-40% off rack rate every time, DVC ends up being substantially more expensive over the long run. I can just stop going if the price hits a tipping point. As it stands, I average a trip every other year. I don't need to go more than that, as I live in Disneyland's backyard.

Edit:
I just pulled out my folio from our honeymoon at WL in June 2001. Our room rate (taxes all in) was $261. Club Level room. I entered the same dates for this year and my discount price would be $412 taxes in, same room type. The cost (using a discount) has increased about 2% per year for this room since 2001. Not a big increase. Looking at the rack rates only, the increase has been 2.7%. So, still less than 3% per year. In contrast, the cost per point just to buy in to DVC between 2001 and 2018 has increased 5%...

Quick math:

$412 per night * 7 nights = $2884

$2884 weekly cost / $14 per point = 206 points

cost for week on points
Adventure 107
Choice 107
Dream 120
Magic 127
Premier 176 (only 3 of the 52 weeks)

it would appear renting at $14 is significantly less than discounted club level and owners do not pay $14 per point that is the rental rate with margin built in and today the rate is much closer to $16 per point average than $14.

 

[Pluto777]

Maintenance fees are tied to actual operating costs + taxes. All things being equal, hotel rates should rise at a higher rate because Disney not only has to cover that same increase in expenses at its hotels, but it also wants higher profit margins to satisfy Wall Street.

That said, Disney has the flexibility of adjusting hotel rates in response to the economy. A downturn means they're forced to discount, which benefits consumers. Meanwhile DVC dues remain consistent because salaries, utilities, taxes and other fees must be paid.

Fortunately downturns seem to be few and far between so generally speaking, hotel guests are subject to far greater inflation than DVC.

Still anxious to learn about the future MF's on AKV, my question (anyone feel free please to 'chime in'), will future MF fees be any steeper than other DVC resorts due to the large 'safari' type area? Does that place cost a lot to maintain? Also anyone know if there are plans to connect AKV to some type of faster transportation? Thanks in advance for any thoughts!

 

[disneynutz]

I heard a rumor that CCV (I have NO idea if this is true btw) initially had very high MF's due to a miscalculation of property taxes that were SUPPOSED to be put on all DVC's; but this fell through and so now they actually had a DECREASE in MF's from 2017-2018 as they adjust it. This would seem to go against the theory that they initially plan MF's to be low to 'attract' new owners. In fact, I'm not sure they are even allowed to do this; dues are determined by the association meetings, are they not? So I am not sure Disney actually has control over MF's...

As I posted, the prior management seemed to set the dues low for new resorts, three executives were fired over that mistake. The association is run by Disney with Disney employees as officers, they set the budgets and collect the dues. Isn't a budget an estimate of future costs? Do we always meet the budgeted amounts, end up paying more or get a refund?

Bill

 

[tjkraz]

I just pulled out my folio from our honeymoon at WL in June 2001. Our room rate (taxes all in) was $261. Club Level room.

VWL points purchased in 2001 retailed for $75 each for about 42 years of ownership. That's $1.78 per point, per year for initial acquisition. Add in the 2001 dues rate of $3.63 per point and the 2001 ownership cost was $5.41 per point. A single Studio night in June goes for 17 points, making the DVC owner's OOP cost $91.97 with no additional taxes or fees. $169 seems like a lot to pay for club privileges in 2001.

I entered the same dates for this year and my discount price would be $412 taxes in, same room type.

Same math today. $1.78 per year for the points bought back in 2001 plus 2018 dues of $6.93 = $8.71 per point. At 17 points per night, 2018 cost for the DVC owner is $148.07.

Different strokes, I guess.

 

[Ben E N]

Quick math:

$412 per night * 7 nights = $2884

$2884 weekly cost / $14 per point = 206 points

cost for week on points
Adventure 107
Choice 107
Dream 120
Magic 127
Premier 176 (only 3 of the 52 weeks)

it would appear renting at $14 is significantly less than discounted club level and owners do not pay $14 per point that is the rental rate with margin built in and today the rate is much closer to $16 per point average than $14.

Yeah I looked into those figures as well. I specifically went to compare a club level garden view room at the Polynesian during the dates that I will be staying there. There are no discounts listed, and I doubt many will be offered due to it being July 30-August 4th, but assigned a 40% discount anyway, just to make the math comparison fair.

I came up with $435 per night after the massive discount, and before taxes are added in, bringing the total to $1740

92 points rented at $14 per point, without any taxes, would cost $1288. I am paying much less as I bought resale and am only actually paying about $9 per point in today's rates.

I am sure you could pick one or two specific dates out of the year to claim that buying rooms cash is a better deal, but the overall trend shows that it is not, and will probably never be.

 

[aoconnor]

Still anxious to learn about the future MF's on AKV, my question (anyone feel free please to 'chime in'), will future MF fees be any steeper than other DVC resorts due to the large 'safari' type area? Does that place cost a lot to maintain? Also anyone know if there are plans to connect AKV to some type of faster transportation? Thanks in advance for any thoughts!

It's not as expensive as you might think. Around 35 cents of the dues go towards the Animal Programs (~5% of the total dues). The resort has been open since 2001, I don't see why the cost of the animal programs would change dramatically after all this time.

 

[tjkraz]

It's not as expensive as you might think. Around 35 cents of the dues go towards the Animal Programs (~5% of the total dues). The resort has been open since 2001, I don't see why the cost of the animal programs would change dramatically after all this time.

Up from 29 cents in 2012, so no huge level of inflation.

Complete budgets from 9 of the last 10 years are posted here:

http://dvcnews.com/index.php/dvc-program/financial/2016-resort-budgets

 

[wnielsen1]

I just pulled out my folio from our honeymoon at WL in June 2001. Our room rate (taxes all in) was $261. Club Level room. I entered the same dates for this year and my discount price would be $412 taxes in, same room type...

I'm curious as to how you are getting such a significant discount. Military, most likely? A club level room at the WL in June is $673 all-in at rack. I think the public at large is getting 10%-20% off.