Contractually, what CAN'T Disney change?

[Mama Twinkles]

Can anyone comment on what Disney CANNOT change in the years ahead for current DVC owners (other than total points per year per resort)? In trying to piece together responses to numerous threads in recent weeks, I've come to the perhaps incorrect conclusion that they can at any time impose almost any change: whether one has the freedom to stay at resorts other than one's home resort, required length of stay, maintenance fees (is there a cap on the yearly increase?), whether a special assessment is imposed in case of hurricane or other damage (is there a cap, and shouldn't insurance cover disasters?), whether HHI and Vero Beach remain DVC options, etc. It would seem to me that a short contract would at least hedge against loss (both financial and emotional), as would a small contract. If ownership becomes so undesirable that no one can sell, Disney still gets to reap maintenance fees for the length of the contract.

An additional disincentive to purchase is that as resorts sell out, it will only get harder to secure reservations at 7 months or less. Even now it sounds as if one has to jockey to get certain room types at certain times of year at 11 months.

Not wishing to be a downer. Just wondering what protections/assurances a buyer has.

Thanks much.

 

[Chuck S]

Basically Disney can not change our ability to book at our home resorts based upon availability, and they can not change the minimum number of nights that X number of points will get you based upon a full, maximum point chart reallocation. For instance, if all nights/seasons were equal, a 230 point contract at OKW would still be able to book 15 consecutive nights in a studio at OKW, based upon availability. The maximum reallocations for each resort should be in their respective POS.

 

[Mama Twinkles]

Appreciate your quick reply, Chuck. Thanks. That's what I thought. Do wonder about limits on MF's and special assessments, if anyone knows.

 

[chalee94]

maintenance fees (is there a cap on the yearly increase?),

15% cap, except for actual increases in property taxes, IIRC.

whether a special assessment is imposed in case of hurricane or other damage (is there a cap, and shouldn't insurance cover disasters?),

no cap that i know of. IIRC, VB did actually suffer some storm damage at one point but insurance covered the losses such that a special assessment was considered but deemed unnecessary.

If ownership becomes so undesirable that no one can sell, Disney still gets to reap maintenance fees for the length of the contract.

that's how timeshares work, yes...and why they can be very risky.

IMO, that's also an advantage of a "right-to-use" timeshare like DVC as opposed to most other timeshares that never expire.

 

[Mama Twinkles]

Thank you, Chalee. Very helpful. It does sound risky to sign on for a possible increase in MF's of 15% per year and unlimited special assessments. Ouch.

 

[jlewisinsyr]

Thank you, Chalee. Very helpful. It does sound risky to sign on for a possible increase in MF's of 15% per year and unlimited special assessments. Ouch.

Dues have to be relevant and based on actual anticipated costs, they cannot arbitrarily raise dues, as they cannot make a profit off the dues (outside of the management fee % - but that goes back to the abritrary bit to some degree).

Outside the POS, there are laws and regulations that govern timeshares that Disney must adhere to.

 

[disneynutz]

We have owned other vacation proprieties and they all have several things in common.

As long as the developer is selling units, the sales prices are controlled, the dues are kept low, the proprieties are well maintained, and the parities and perks provided by the marketing department are really nice.

The governing body of the association, has the ability to change just about anything they want and the members are powerless.

Once sold out, they don't have any reason to stay involved and they disappear. The prices tank, the dues go through the roof, the property falls into dis-repair, and the extras and perks go away.

Since most of the resorts are located inside WDW, I would think that Disney won't be like other developers and they have the Disney brand to maintain.

Unfortunately, business is business and the DVC was created to make money so who knows what can happen.

As long as we are saving money on our resort stays and we continue to love WDW, we will keep our memberships.

Bill

 

[Mama Twinkles]

Dues have to be relevant and based on actual anticipated costs, they cannot arbitrarily raise dues, as they cannot make a profit off the dues (outside of the management fee % - but that goes back to the abritrary bit to some degree).

Outside the POS, there are laws and regulations that govern timeshares that Disney must adhere to.

Ah, good (and reassuring) to know. The power seemed so one-sided otherwise, though it is still obviously lopsided.

 

[Mama Twinkles]

We have owned other vacation proprieties and they all have several things in common.

As long as the developer is selling units, the sales prices are controlled, the dues are kept low, the proprieties are well maintained, and the parities and perks provided by the marketing department are really nice.

The governing body of the association, has the ability to change just about anything they want and the members are powerless.

Once sold out, they don't have any reason to stay involved and they disappear. The prices tank, the dues go through the roof, the property falls into dis-repair, and the extras and perks go away.

Since most of the resorts are located inside WDW, I would think that Disney won't be like other developers and they have the Disney brand to maintain.

Unfortunately, business is business and the DVC was created to make money so who knows what can happen.

As long as we are saving money on our resort stays and we continue to love WDW, we will keep our memberships.

Bill

Love your plainspoken take on things, Bill. Thanks for the insights.

 

[sweetdana]

With Disney owning it after our DVC contracts run out. (Latest I think 2054.) There is no reason to think they would "let them go". Even assuming tom. no one wanted to buy them any more, and DVC sales stopped. They are more likely to over kill on updates/upkeep while it is DVCs to have in prime condition after our contract runs out. (More likely would be extentions, but even assuming they stoped selling them.)

They have to stay "sellable", as Disney is selling way more now then ever before. Although they can make changes they will not make ones that will hurt future sales.

 

[disneynutz]

If Disney could make more money selling the resorts to another company, I get the feeling that they would do it.

They don't seem to have trouble outsourcing restaurants, valets, transportation, and food kiosks to other companies, who knows what's next?

Bill

 

[YourEveryDayAdam]

Dues have to be relevant and based on actual anticipated costs, they cannot arbitrarily raise dues, as they cannot make a profit off the dues (outside of the management fee % - but that goes back to the abritrary bit to some degree).

Outside the POS, there are laws and regulations that govern timeshares that Disney must adhere to.

This is correct. Disney can NOT make a profit off of our annual dues. They can not arbitrarily decide to increase them. The dues have to be estimated based on projected reasonable operating costs. If the actual operating costs are less than the projection, then the over payment in dues by members is carried over until next year and dues for that year are decreased by an appropriate amount.

The only fee that we pay that is a part of our annual dues that goes directly to Disney is the management fee. This fee is a percentage based on the other operating costs of the resort. However, this fee pays for members services, the cost of the mailing the reservation confirmations, magic express, etc. Disney might make a bit of profit from it, but it's likely a drop in the bucket.

 

[Brian Noble]

the dues go through the roof

More often than not, this is due to mis-management on the part of the board and/or the management company that the board hires. For example, a resort with a board that is very casual about collections can enter a spiraling dues situation where each year, a few owners just quit paying, and the ones left pay increased costs to cover the bad debt. That causes a few *more* owners to quit paying, and so on.

Somewhat less often, it's because the original developer did not set the budget to adequately fund reserves. When the resort begins to wear, you either let it decay, or you refurbish. Refurbishment costs money, and with an under-funded reserve budget, it's money the resort doesn't have. This can hit owners with very large special assessments, or very large fee increases. Sheraton Vistana owners have seen the former. A lot of former Sunterra (now Diamond) owners have seen the latter.

If your resort has a competent, careful board of directors looking out for owners' best interests, then there is no need for fees to get out of control.

One of my seasonal resorts is having a problem with collections, but a few new board members sound as though they'll be very proactive in getting that under control. Another of my resorts has an excellent board that has kept fees reasonable while still funding improvements. There was a special assessment to some sections of this resort from hurricane damange---the insurance covered replacement, but the new construction was subject to new building codes that were not anticipated when the insurance was obtained. This is probably the fault of the board, but it was only clear in hindsight.