2025 Dues

[atthebeachclub]

I read it sarcastically, and that is 100% my fault. Mea culpa! I apologize to you.

I will accept your apology, though I remain mystified as to how anyone could have interpreted my post sarcastically.

 

[Cfabar1]

Does Disney still own the national harbor land?

I think the thing I find most surprising about national harbor was that it was announced in the first place.

It seems to me like a very Michael Eisner Disney project.

Personally I think DVC should have more non resort locations, but the economics of all the non theme park adjacent properties seem to indicate that while members want these choices, no one wishes to own these choices.

A DVC DC, Colorado, NYC, Newport, and France would have nicely rounded out the portfolio. Guess that’s what MVC is for instead….

 

[WB1971]

how do you mean?

The dues cost plus acquisition cost plus cost of capital on in many cases 40-60 points per night is a ton of money.

 

[disneylandtour]

I apologize if this has been noted somewhere. When will our statements be available to pay our dues? I need to meet the minimum spending to get a new credit card bonus by 12/11 so as really hoping it’s before that.

You can pre-pay now as a credit against future dues.

 

[Cfabar1]

The dues cost plus acquisition cost plus cost of capital on in many cases 40-60 points per night is a ton of money.

Yes that’s also true for two bedrooms though and three bedrooms for that matter. Though I personally think at most resorts the three bedrooms are not meant to be used routinely for trips. OKW and VB being the strongest exceptions.

 

[sethschroeder]

When I was talking "non-sustainable" it was in the context of increases of 7% in dues per year, compounded. Most years, that would outpace inflation by a lot. For example, the CPI increase over the past 12 months was 2.6%. Companies providing "cost of living adjustments" (not all companies do it) tie those adjustments to the CPI, not DVC dues... In that world, not everything is increasing at higher rates, and neither are salaries.

To put it in perspective, a 7% annualized increase doubles your dues every 10 years which is an 8x increase in 30 years. Anyone here is up for paying $70/point in dues on their RIV contract or leaving that "gift" to your kids in the 2050s?

Maybe I'm thinking about this wrong but....some questions to think about...

• Who recommends the annual budget, including the annual dues?
• How much say do "owners" get?
• Does that arrangement pose any form of conflict of interest when the estimated operating budget lists the following:

View attachment 914859

If higher operating expenses and reserves = higher management fees, what's the incentive to reign in costs?

Reminds me a little of what that lady is saying repeatedly about "winners and losers" when we wait in line for the Tron ride.

When dues outpace CPI, owners are not on the winning side...

Except its not going to outpace inflation "by a lot" which is why until very recently at like 3%ish for most resorts. These prices are not made up, they are not pocketing all the money.

The totality of the management fee is 11.7% at BWV and 10.6% at RIV. Just looked it was 11.7% at BWV in 2017 as well. I am fairly sure its fixed but its been a number of years since I looked.

You didn't get to 7% because of a management fee its because everywhere and everything went up in cost the past 4 years.

 

[sethschroeder]

The scary picture is dues vs rental rates.

DVC shouldn't be in places where a wide variety of room options are essentially the same. Disney is not good at being better than a normal hotel. They are good at being Disney with exclusive rights.

What makes the WDW DVC worth buying is because otherwise your choice is to be outside the bubble.

Flip side I personally see almost zero reason to buy a beach resort. I can't imagine there is much more value than randomly picking any other hotel or resort up and down the coast. Additionally if I wanted to pay a premium for a beach its in the Caribbean likely at a top end all inclusive resort like Sandals, Beaches, ect.

The overall point is valid. Most timeshare developers control the game--lock, stock, and barrel. Most of them have the fig leaf of owners electing the Board of Directors. Disney doesn't even do that. DVC owners cede their voting interest for Board membership.

So, you pretty much have three choices.

1. Assume Disney is trying to sell an honest product at a fair price.
2. Assume Disney is acting only in its self interest, but is still incentivized to provide enough value to justify ownership.
3. Don't buy, and if it is too late for that, sell.

I think people need to look at the Florida news where a law is going in to effect where plenty of condos and such voted to not upkeep the property causing issues.

I dont fully trust Disney but at the same time their interest is making money and having a 2nd rate falling apart hotel is not leading them down that path long term. So we might pay a little more but nothing crazy IMO.

Dues outpacing CPI is 100% irrelevant.

CPI in general is irrelevant honestly to me. The fact the metric changes what is "normal" goods someone purchases makes it that way. I am not a economist but I also could never find a clear outline of all the changes over time to the metric. The concept you could have buying 1LB of Beef as the baseline then be replaced by 1LB of Turkey and say total cost stayed the same is crazy.

If CPI is going up at any clip its extra bad is my view on it as you can't trust long term comparisons of a metric that changes its variables.

If only dues go up (but cash rates don't) then I think rental rates will likely go down because more owners will try to rent out points.

People are making a profit right now on points. Its why you have a ton of rental inventory out there currently at all times.

The good thing is as more people rent out points every year there seems to be more demand for renting. As Disney turns over more rooms to DVC more and more people are becoming familiar with it.

Go back 10 years and DVC was something talked about quietly in the corner.

 

[sethschroeder]

The dues cost plus acquisition cost plus cost of capital on in many cases 40-60 points per night is a ton of money.

Anytime you start talking cost of capital you lose a large number of people.

Lots of people are not taking the money they put in DVC and investing it instead. They are putting it in to something for personal benefit.

So its either DVC or a cruise or another trip or a home improvement.

Some people are borrowing money as well (which I dont suggest) which means they are even less likely to be investing any of that money.

 

[Brian Noble]

Also, I can't imagine a world in which cash rates do not go up---at least not in the medium term. There may be (and have been) blips in travel demand that cause effective cash rates to drop a little bit for a few years, but those are transient.

For better or worse, those moments also coincide with lots of resale inventory hitting the market---and not just because commercial renters are shedding risk. It's also the moment when ROFR ends. Perfect storm.

Lots of people are not taking the money they put in DVC and investing it instead. They are putting it in to something for personal benefit.

It doesn't matter, because money is fungible (it's part of the definition of "money"), and a dollar today is worth more than a dollar next year. How you use the dollar makes no difference.

 

[sethschroeder]

It doesn't matter, because money is fungible, and a dollar today is worth more than a dollar next year. How you use the dollar makes no difference.

In other words it doesn't matter than the money was put in to DVC. It wasn't a "huge cost" as it was being outline. It just meant the person didn't take a trip to Alaska, DL, and possibly redid their floors in their house.

So it now becomes 100% personal view of what is and is not worth it for personal enjoyment.

I am doubtful that was the intention though. Most of the time its talked about on here its about how much money that would turn in to investing and such.

 

[Brian Noble]

If you are trying to account for what things cost in a way that is comparable to other ways you could spend it, you have to account for the time value of money. Period, full stop. If you do not, you fail ENGIN 120.

No one does, though, even people who are otherwise on top of things, so I recognize I am spitting into the wind on this.

I will note though, that people who do not account for time value of money are a timeshare sales agent's best friend. I will also note that ENGIN 120 is possibly the most useful class I ever took, as it helped me understand e.g. when my mortgage broker was trying to take advantage of my to line his own pocket.

 

[VGCgroupie]

Anytime you start talking cost of capital you lose a large number of people.

Lots of people are not taking the money they put in DVC and investing it instead. They are putting it in to something for personal benefit.

So its either DVC or a cruise or another trip or a home improvement.

Some people are borrowing money as well (which I dont suggest) which means they are even less likely to be investing any of that money.

This is me, I would not be investing this money. I would never borrow to buy DVC, if someone is borrowing to buy its 100% not worth it.

 

[Mouseforward]

This is me, I would not be investing this money. I would never borrow to buy DVC, if someone is borrowing to buy it’s 100% not worth it.

If I had waited until now to buy RIV vs when I bought ( during the best deals ever ) I would be paying $32 more a point.

My total interest cost was less than 1/3 of the the price increase.

Granted with today’s rates on personal loans it would make me pause.

 

[VGCgroupie]

If I had waited until now to buy RIV vs when I bought ( during the best deals ever ) I would be paying $32 more a point.

My total interest cost was less than 1/3 of the the price increase.

Granted with today’s rates on personal loans it would make me pause.

Even for an unsavvy investors savings rates are paying high and borrowing rates are high, so current climate I still don’t believe borrowing and paying interest to buy DVC would be a wise choice even when you factor in the price pp going up. The interest paid eats up most/all of the savings you get with DVC, then paired with not earning basic HYSA rates makes it an even worse combination. When rates were much lower maybe it would be worth it but still debatable imo, also depends on the length of time the loan is being held of course.

 

[Mouseforward]

Even for an unsavvy investors savings rates are paying high and borrowing rates are high, so current climate I still don’t believe borrowing and paying interest to buy DVC would be a wise choice even when you factor in the price pp going up. The interest paid eats up most/all of the savings you get with DVC, then paired with not earning basic HYSA rates makes it an even worse combination. When rates were much lower maybe it would be worth it but still debatable imo, also depends on the length of time the loan is being held of course.

Dvc prices are not good now - I would not buy cash.

But if they had a RIV fire sale at 175 point direct - I would consider short term financing vs selling stock.

 

[sethschroeder]

If I had waited until now to buy RIV vs when I bought ( during the best deals ever ) I would be paying $32 more a point.

My total interest cost was less than 1/3 of the the price increase.

Granted with today’s rates on personal loans it would make me pause.

I think the exception could possibly be during that first year of promo rates at a specific resort.

If I did have to borrow I would likely push to get a double dip on points by doing a later in the year like December UY with buying it in November. This way I get 3 years of points to use almost instantly and I could rent them all out for $16-$20/point and really bring down the price.

 

[VGCgroupie]

Dvc prices are not good now - I would not buy cash.

But if they had a RIV fire sale at 175 point direct - I would consider short term financing vs selling stock.

It was my understanding that recent last quarter and prior to that for RIV were one of the best they have had despite a rise in base cost per point when you factor in incentives and MB. I’d have to go back and verify but that’s what I remember most here saying.

 

[Mouseforward]

It was my understanding that recent last quarter and prior to that for RIV were one of the best they have had despite a rise in base cost per point when you factor in incentives and MB. I’d have to go back and verify but that’s what I remember most here saying.

I never factor in MB - red herring

 

[Brian Noble]

At best, it is a few dollars per point---the difference between net rental proceeds and what MB returns.

 

[VGCgroupie]

At best, it is a few dollars per point---the difference between net rental proceeds and what MB returns.

Having Disney rebate me vs claiming on my taxes is worth a lot imo. Also I earned credit card cash back / miles on that money that Disney rebated to me. But I guess just how some think financing isn’t the best option for DVC some think MB isn’t the best option either. For me paying cash via credit cards that get paid off immediately saved me a ton of money on my direct purchase.

Edit to add: our tax cost is about 35%