2017 DVC Dues Announced Prior to Annual Meeting

[skier_pete]

Just from looking at this. No one gets these increases. They are not paying people more. We you go in the resort I would say the overall condition is worst then it was 10 years ago yet dues go up by 4 times the inflation rate. Does anyone really audit what is a DVC expense and what should be Disney Corp expense. They basically have freedom to raise it as high as they want.

No one gets these increses? First off - they provide you with DETAILED numbers on the increases at the resort you own at showing exactly where the increases are coming from. You can also get ones to don't own if you are interested.

Second, if you chose to actually read those documents - you might notice some of the bigger increases this year are due to Florida tax assessments spiking high at some of the resorts...which Disney is fighting. However, NOT Disney raising the prices. Out of there control.

Third - do you not think that maintenance costs go up over time on buildings? Do you own a home? Does your home gets cheaper to maintain as it gets older? Not to mention the cost of inflation, and that things always cost MORE over time - not less.

 

[luckyman_apd]

Every year these conversations begin and converse with.... Your resort went up such and such a % when this one only increased x%. Stop comparing percentages. Percentage will always be higher if the resort had a lower amount of dues to begin with.

Let's talk real $ amounts here. For as long as I've owned BLT, each year people on here complained about how high the percentage increase was.... But in reality my dues increases have been pretty consistent @$0.25 per point each year.... Give or take a few cents. It was very manageable and easy to budget for. This year is a $0.34 cent increase.... Far more than any other year so I'm scratching my head.

Give me the real $ increases for each resort and then there are conversations to be had.... But comparing percentages is not an apples to apples conversation.

 

[CarolMN]

Every year these conversations begin and converse with. You resort went up such and such a % when this one only increased x%. Stop comparing percentages. Percentage will always be higher if the resort had a lower amount of dues to begin with.

Let's talk real $ amounts here. For as long as I've owned BLT, each year people on here complained about how high the percentage increase was.... But in reality my dues increases have been pretty consistent @$0.25 per point each year.... Give or take a few cents. It was very manageable and easy to budget for. This year is a $0.34 cent increase.... Far more than any other year so I'm scratching my head.

Give me the real $ increases for each resort and then there are conversations to be had.... But comparing percentages is not an apples to apples conversation.

I think I agree with you re comparing actual $$ vs percentages.

I'm wondering if the jump in fees for 2017 is mostly due to the large increase in assessed values and thus property taxes. According to DVCNews (Wil Lovato), BLT's assessed value increased 10.24% from 2015 to 2016. And that's on top of a 10.49% increase from 2014 to 2015. If the rates also went up, that's a pretty big whammy! Sure hope it doesn't continue - if they keep compounding at 10%, we're all in trouble!!

BWV, OKW & VWL also had 10% increases in assessed values over the past two years. On top of that, all four of them underestimated the 2016 taxes which means we will have to pay that amount back as part of our 2017 dues.

Reconciling 2016 Property Taxes (from DVCNews.com)

 

[tjkraz]

They are not paying people more.

Of course they are. Spend a few minutes searching the net and you'll find information regarding Disney's agreements with labor unions. Most WDW employees are unionized and their contracts include pay increases. If memory serves, some of the more recent contract renewals have included raises much better than in years past.

Also, the cost of employee benefits needs to be included. Health care costs have been rising much faster than the rate of inflation for 20+ years now. DVC dues cover all of the compensation and benefits for cast members, so we're paying that price.

Does anyone really audit what is a DVC expense and what should be Disney Corp expense.

Yes. Internal auditors, external auditors and government regulators who oversee all timeshares which fall under their jurisdiction.

They basically have freedom to raise it as high as they want.

No, they don't.

If there's any gray area, it lies in the fact that DVC does not bid out services like housekeeping and maintenance to the lowest bidder. Instead they purchase those services from TWDC at agreed upon rate (Disney's union pay structure). If DVC did bid out services, rates may go down. But then people working in DVC resorts would not be "Cast Members." And the old adage would apply: you get what you pay for.

It's a moot point because the POS we all agreed to at time of purchase gives DVC the right to choose these service vendors.

 

[zavandor]

I'm wondering if the jump in fees for 2017 is mostly due to the large increase in assessed values and thus property taxes. According to DVCNews (Wil Lovato), BLT's assessed value increased 10.24% from 2015 to 2016. And that's on top of a 10.49% increase from 2014 to 2015. If the rates also went up, that's a pretty big whammy! Sure hope it doesn't continue - if they keep compounding at 10%, we're all in trouble!!

I guess it's downside of a healthy resale market: contracts have increased a lot in the latest years. Mine are up about 50% since I bought them in 2011, it just make sense for the taxmen to say that the value of the property has increased. We pay a bit more in our MF but if we resell our contracts we get more.

 

[disneynutz]

What we don't know is how they keep track of DVC versus resort expenses. Do they use the number of DVC rooms as percentage of total costs? Do they use the number of DVC guests staying in DVC rooms? How do they track when Disney books a room for a cash guest? How much electricity do the different DVC rooms use? What about the electricity in the hallways in the DVC room areas? Same questions for all shared expenses, front desk, security, when they paint the outside of a resort, is there a separate bill for the DVC parts of the building?

Bill

 

[skier_pete]

What we don't know is how they keep track of DVC versus resort expenses. Do they use the number of DVC rooms as percentage of total costs? Do they use the number of DVC guests staying in DVC rooms? How do they track when Disney books a room for a cash guest? How much electricity do the different DVC rooms use? What about the electricity in the hallways in the DVC room areas? Same questions for all shared expenses, front desk, security, when they paint the outside of a resort, is there a separate bill for the DVC parts of the building?

Bill

I don't know for sure - but I would bet that shared expenses are divided by rooms/designed occupancy (max # in rooms). If the resort has a designed occupancy of 1500 people in the resort side,and 500 people in the DVC side - then they likely split it 75% /25%. It is also possible that they charge a set fee to DVC - but I think that less likely. As a simplistic example of this - AKV dues include a certain amount of money for animal programs. Not sure what it is this year, but in 2015 it was $0.32 / point. Since there are 7.4 million points at AKV - that's $2.37 million for the Animal Programs. The DVC side cannot be paying for ALL the animal programs at AKL however, so therefore there must be some calculated total, which is then split some way. It is unlikely to just be a 50/50 split, so it must be a negotiated split. Room occupancy would be the most logical split for this. (In this case - between Jambo and Kindani, there may be MORE DVC rooms than standard rooms, so DVC may be paying for more than 50% of occupancy.) It is true that there is probably no real way to determine how these are split - but it might be worth inquiring.

How they deal with a cash guest booked in a DVC room is probably irrelevant. Some portion of that money is coming back to DVC (DVD?) as income designed to offset the expenses of the room. The "hotel" side does not get to keep all that money - they have to pay DVC for the room.

 

[disneynutz]

I don't know for sure - but I would bet that shared expenses are divided by rooms/designed occupancy (max # in rooms). If the resort has a designed occupancy of 1500 people in the resort side,and 500 people in the DVC side - then they likely split it 75% /25%. It is also possible that they charge a set fee to DVC - but I think that less likely. As a simplistic example of this - AKV dues include a certain amount of money for animal programs. Not sure what it is this year, but in 2015 it was $0.32 / point. Since there are 7.4 million points at AKV - that's $2.37 million for the Animal Programs. The DVC side cannot be paying for ALL the animal programs at AKL however, so therefore there must be some calculated total, which is then split some way. It is unlikely to just be a 50/50 split, so it must be a negotiated split. Room occupancy would be the most logical split for this. (In this case - between Jambo and Kindani, there may be MORE DVC rooms than standard rooms, so DVC may be paying for more than 50% of occupancy.) It is true that there is probably no real way to determine how these are split - but it might be worth inquiring.

How they deal with a cash guest booked in a DVC room is probably irrelevant. Some portion of that money is coming back to DVC (DVD?) as income designed to offset the expenses of the room. The "hotel" side does not get to keep all that money - they have to pay DVC for the room.

Seems like it would be hard to keep track of or audit. I wonder if DVC management actively fights to keep our costs low or is it on auto pilot? Many of the management who work for DVC, also work for DVD and I would guess that DVD is their primary focus.

Bill

 

[mab2012]

Seems like it would be hard to keep track of or audit. I wonder if DVC management actively fights to keep our costs low or is it on auto pilot? Many of the management who work for DVC, also work for DVD and I would guess that DVD is their primary focus.

Bill

But arguably DVD has more incentive than DVC to keep dues low. I know that many first-time retail purchasers don't give much consideration to dues cost over time, but plenty of people must at least ask about historical increases, and that's just one more thing the sales people then have to explain away.

OTOH, I don't really see any incentive for DVC to keep dues low, besides that they are supposedly acting in the best interests of owners. Hypothetically they could probably be turfed if owners got mad enough, but realistically there would have to be some pretty egregious misconduct for that to happen - and maybe not even then.

 

[disneynutz]

But arguably DVD has more incentive than DVC to keep dues low. I know that many first-time retail purchasers don't give much consideration to dues cost over time, but plenty of people must at least ask about historical increases, and that's just one more thing the sales people then have to explain away.

OTOH, I don't really see any incentive for DVC to keep dues low, besides that they are supposedly acting in the best interests of owners. Hypothetically they could probably be turfed if owners got mad enough, but realistically there would have to be some pretty egregious misconduct for that to happen - and maybe not even then.

DVD's new actively selling resorts seem to start off with lower dues so new buyers aren't really affected until the resort sells out. Aulani started off too low and people lot their jobs. My guess is that most new buyers are so caught up in the buying experience that if they didn't do their homework prior to buying, they have no idea on what's low or high. When you really want something, you justify in your mind without clear thought.

Bill

 

[zavandor]

I wouldn't be surprised at all if they calculate fees for the shared resorts depending on possible maximum occupancy. That would explain why they're adding the 5th bed in all resorts now.

 

[DebbieB]

I always believed that the DVC Resort property/liability insurance policies carried a $1M deductible. But perhaps the deductible for HHI is $750,000, which is the amount of the loan.

I work in commercial insurance. Most coastal areas have a wind or named storm deductible which is much higher than the regular property deductible. Typically it's a percentage of the property limit with a minimum dollar figure. 5% or 10% is typical, so $750,000 makes sense.

 

[tjkraz]

Historically Disney has used actual guest numbers to determine the cost split of shared amenities. If 55% of registered guests are DVC and 45% cash hotel, 55% of the operating costs of common area amenities are charged to DVC dues.

In the past there have been years where DVC cited adjustments to this guest balance as a major influence on dues. Certain resorts have both benefitted and suffered from changes. One year, a resort's dues (BoardWalk?) had a very modest increase because the cash guest balance rose and shifted a higher portion of the shared expenses to the hotel side. Meanwhile one or two other resorts (seems like it was BLT and AKV, but I can't be certain) went the other direction with a large increase prompted by higher DVC guest numbers.

 

[DougEMG]

Hey Doug - One year does not always give a fair interpretation as you know. Over the last 10 years (including 2017), BCV is up 30.65%, BWV is up 28.42%. Both are below my 3.6% annual increase estimate over the long haul, so I'm good with that.

I suspect the main difference between them this year will be in Ad Valorem tax and reserves. Just a guess though as I don't own at BCV. Let me know what you find out!

Mav

For BWV

Property Tax
2015 was 1.1438
2016 was 1.2431 or 0.0993 increase for 8.68%
2017 was 1.4042 or 0.1611 increase for 12.96%

Operating
2016 was 4.0214
2017 was 4.0997 or 0.0783 increase for 1.9%

Reserve
2016 was 0.9108
2017 was 0.9686 or 0.0578 increase for 6.35%


So most of the increase was coming from Property increases followed by reserve increase.


I also own at OKW which had a 9.74% increase in property taxes, while SSR only had 3.35% increase in property taxes. Current property tax at OKW is 1.2736 per point while SSR is 1.2781 per point.

 

[skier_pete]

For BWV

Property Tax
2015 was 1.1438
2016 was 1.2431 or 0.0993 increase for 8.68%
2017 was 1.4042 or 0.1611 increase for 12.96%

Operating
2016 was 4.0214
2017 was 4.0997 or 0.0783 increase for 1.9%

This is why screaming about "What is Disney doing?" doesn't make any sense. Disney has limited control over what they can do to prevent the county from making value assessment increases like this. (They can fight against it to a degree, but only after the fact.) Operating costs are under Disney's control - but only up 1.9%. That is a completely reasonable increase

 

[drusba]

Historically Disney has used actual guest numbers to determine the cost split of shared amenities. If 55% of registered guests are DVC and 45% cash hotel, 55% of the operating costs of common area amenities are charged to DVC dues.

Interesting because that method suggests that one of the reasons Disney changed the VWL, BWV, and BCV studios to hold five was to shift a larger share of the total annual costs of those combined hotel and DVC resorts to the DVC side.

 

[disneynutz]

This is why screaming about "What is Disney doing?" doesn't make any sense. Disney has limited control over what they can do to prevent the county from making value assessment increases like this. (They can fight against it to a degree, but only after the fact.) Operating costs are under Disney's control - but only up 1.9%. That is a completely reasonable increase

I find it interesting that Reedy Creek collects property tax so Disney is basically paying itself. In 2010 when the tax valuations were lowered, Reedy Creek increased it's tax rate to offset the reduction.

Bill

 

[tjkraz]

I find it interesting that Reedy Creek collects property tax so Disney is basically paying itself.

Reedy Creek is not a profit center. Monies paid to the municipality are used to fund necessary public services including fire, roads, utilities, etc.

In 2010 when the tax valuations were lowered, Reedy Creek increased it's tax rate to offset the reduction.

Bill

When funding for public services is linked to property values, this is the most straightforward way to maintain budgets. It's no different than any other municipality. A loss in revenues for any city, village, township, etc. would require a reduction in services in order to balance the operating budget.

 

[wishicouldgomoreofte]

Historically Disney has used actual guest numbers to determine the cost split of shared amenities. If 55% of registered guests are DVC and 45% cash hotel, 55% of the operating costs of common area amenities are charged to DVC dues.

Is that based on actual guest numbers--I stay in a studio solo, does it count as one or 4 or 5 in studios that take 5?
I would think the latter, capacity, as that would be simple to track.
On one hand, it is little difference, on the other hand, 5 people would make more use of the common area amenities, more wear and tear in hallways, lobby area, pool areas, exercise areas, etc, probably more time in housekeeping to turn over room, more towels, etc. Again, I would guess they don't track actual guest numbers, but rather unit capacity.

 

[skier_pete]

Is that based on actual guest numbers--/QUOTE]

@tjkraz is saying it's based on ACTUAL numbers. Now, by making the DVC studios hold 5 - they are not just increasing the capacity , but increasing the actual as well. (When rooms held 4 - the percent of rooms with 5 people in it were zero - now it might be 10 or 20 %, not 100%, but it still increases the actual.