Annual dues: Could it get that high?

[cseca]

Hi,
I was just working on a spreadsheet for annual dues and cost/point and all that fun stuff.

Just working in the number for approx 5% increase in annual dues/year will get us over $330/month in dues by year 2042 (for 150pt owner).

That makes a total of close to $4000 a year.

Please tell me I'm making a calculation blunder somewhere...
That sounds sooo darn expensive to me right now.

Thanks,
Cyn

 

[Beca]

Yes, it could get that high...but, in 2042...$4000 per year might be "chump change". It's all a matter of perspective.

Of course, WDW could be totally wiped out by a hurricane long before then...when you want to worry, there is always something you can find. I just wouldn't stress about dues. If you can afford them now, you can probably afford $4000 in "2042 money".



Beca

 

[jctwizzer]

Apply the same assumption to your current income...
You'll feel better

 

[paslea_pooh]

What was to happen in the event of a hurricane or is this a completely stupid question! I haven't even gotten my members id and package yet..

Oh well , something else to worry about

 

[Richnj]

I'LL be dead!

 

[disney junky]

By then it will be my kids' problem.

 

[PamOKW]

What was to happen in the event of a hurricane or is this a completely stupid question! I haven't even gotten my members id and package yet..

Oh well , something else to worry about

There is insurance coverage....

Don't stress when you get your "legal" papers Disney knows how to account for just about every "worst case" and has language protecting them. What they "say" and what their reputation would cause them to actually do, don't always match. We need to put some level of faith into the purchase and to date they've come through.

Yes, the dues could go up 5% every year. Or maybe they won't. We went through out about a 5 year stretch when there was almost no increase in dues and some years had a slight decrease. Not being able to get a good return on invested money and higher insurance costs have caused dues to go up since 2002.

 

[sjdisneywedding]

sure dues could go up that much, but so will everything else such as your income as well as the cost per night of hotel rooms.

besides 5% might be a bit high anyway, in okw history the ave increase per year is only at 3.2% and BWV is only at 2%

 

[Granny]

I think it's important to know that, by law, dues cannot generate a profit for Disney. So they can only go up as a direct reflection in the increase in operating cost.

In fact, a few years ago, some of the DVC resorts experienced a decrease in dues.

So if dues costs go up, it's pretty safe to say that other things should be increasing (including cash room rates and income) and it should not be much more of a hardship than it is now.

The wild card seems to be the insurance rates, which can rise rapidly if they see a lot of hurricane action or other costs that would increase beyond a normal inflation rate.

 

[Horace Horsecollar]

I think it's important to know that, by law, dues cannot generate a profit for Disney. So they can only go up as a direct reflection in the increase in operating cost.

There is a management fee (not to be confused with the administration fee) that produces a small, fixed percentage of profit for Disney. That's normal in the timeshare industry and the general property management industry. (Otherwise, why would anyone want to be in the property management business?)

Granny is correct that Disney can't suddenly increase the annual dues to produce additional profits.

Aside from the small management fee, the annual dues fund a budget that represents actual costs for such things as utilities, housekeeping, security, insurance, and so on. So, as the price of those things go up, the dues will go up. Essentially, the dues will more or less go up with inflation.

If your income also keeps up with inflation, your DVC dues as a percentage of your income should stay about the same -- even if your dues go to $4000 a year.

 

[tjkraz]

Apply that 5% increase to the rates of a room at the Grand Floridian and see how much they'll be in a few decades.

Incidentally, WDW room rates did increase 3-5% in 2005, and I agree that 3% is probably a more reasonable expectation for DVC dues in the long-term.

 

[Caskbill]

Looking at 'future' prices can be mind-boggling, or just fun.

In the just for fun category, here's what happens if we apply your 5% annual inflation factor to a few other items.

Item........Today's Price......Price in 2042
Gal. Gas........$2.25............$13.68
DVC dues.....$4/point........$24/point
Cable TV......$45/month.....$273/month
Hotel Room...$100/night.....$608/night
New Car.......$20,000.........$122,000
Salary..........$50,000.........$304,000

BTW, not everything goes up. For example, my pension check is exactly the same amount today that it was when they first started. And it will never increase, so effectively it's value decreases every year....

That's why it's called a 'fixed' income. We make up the difference with our 401k distributions.

 

[rocketriter]

Don't worry about how high that number looks. Inflation affects income as well as cost. When I went to college in Manhattan in the 60s, my non-rental living expenses (all meals, clothing and entertainment) fit into my weekly allowance of $35. Today I couldn't buy my family one Manhattan breakfast for $35. But it doesn't matter. My first job in 1968 paid $6,800/year. Today the same job would pay over $50,000/year. So apply your 5% factor (or any other predictive factor that you trust) to both your income and your annual dues and you'll feel a lot better.

 

[DebbieB]

Apply the same assumption to your current income...
You'll feel better

Wish my income increased 5% per year.....

 

[Granny]

Looking at 'future' prices can be mind-boggling, or just fun.

In the just for fun category, here's what happens if we apply your 5% annual inflation factor to a few other items.

Item........Today's Price......Price in 2042
Gal. Gas........$2.25............$13.68
DVC dues.....$4/point........$24/point
Cable TV......$45/month.....$273/month
Hotel Room...$100/night.....$608/night
New Car.......$20,000.........$122,000
Salary..........$50,000.........$304,000

BTW, not everything goes up. For example, my pension check is exactly the same amount today that it was when they first started. And it will never increase, so effectively it's value decreases every year....

That's why it's called a 'fixed' income. We make up the difference with our 401k distributions.

Bill....by your calculations, points for VFR (Villas at Future Resort) will be about $600 a point!

There is a management fee (not to be confused with the administration fee) that produces a small, fixed percentage of profit for Disney. That's normal in the timeshare industry and the general property management industry. (Otherwise, why would anyone want to be in the property management business?)

Thanks for correcting my overly generalized statement. You did undertand the gist of what I was saying, but I genuinely do appreciate any corrections especially when dealing with finances.

 

[RobDoc]

Just to add to the discussion- while maintenance fees have increased about 4% per year since 1991, the maximum allowed in any year is 15%. No resort has had anywhere near that level of increase in a single year. (OKW did have an 8% increase a couple of years ago, but also had several years when there was a decrease.) Increases above 15% must be approved by a vote of the owners- so there would have to be a compelling reason for such an increase.

DVC has, IMO, done an excellent job of controlling costs and in limiting increases in the annual budget while maintaining a respectable level of service for it's owners.