Could the Aulani Dues Subsidy Affect Dues at Other Properties?

[ammo]

Apparently Disney is going to subsidize the 33% dues shortfall at Aulani for early buyers through the length of their ownership. That's great if it is truly going to be subsidized by Disney shareholders, but not so great if it just gets passed on to other Disney guests (which is what corporations always do when they make a mistake).

So does any DVC/DVD overhead factor into the annual dues at the separate DVC properties? If so, isn't it possible that a subsidy absorbed by DVC will be split up among the various properties and recaptured through slightly higher dues at AKL, BCV, BWV, etc...?

I'm no expert on the contractual minutiae of DVC, so hopefully somebody with greater understanding can provide an answer that keeps my non-Aulani dues down!

 

[mjc2003]

Apparently Disney is going to subsidize the 33% dues shortfall at Aulani for early buyers through the length of their ownership. That's great if it is truly going to be subsidized by Disney shareholders, but not so great if it just gets passed on to other Disney guests (which is what corporations always do when they make a mistake).

So does any DVC/DVD overhead factor into the annual dues at the separate DVC properties? If so, isn't it possible that a subsidy absorbed by DVC will be split up among the various properties and recaptured through slightly higher dues at AKL, BCV, BWV, etc...?

I'm no expert on the contractual minutiae of DVC, so hopefully somebody with greater understanding can provide an answer that keeps my non-Aulani dues down!

I seem to remember a question along these same lines a few months back, but not sure....either way, it is my understanding that they could not subsidize their dues shortfall at Aulani by charging more at other resorts, simply b/c contractually we are obligated to pay MF's for only one resort and these expenses are line items that are audited, so they can't just move money around.

 

[drusba]

Can DVD legally do that? No. Also, the operating budget of one resort is truly distinct from any other and thus it would not necessarily be easy to do. Easier to do and hide would be to actually charge the other Aulani owners a higher rate than needed and thus cover the loss since DVD would be monkeying with the same budget if it tried to do so.

 

[ammo]

I seem to remember a question along these same lines a few months back, but not sure....either way, it is my understanding that they could not subsidize their dues shortfall at Aulani by charging more at other resorts, simply b/c contractually we are obligated to pay MF's for only one resort and these expenses are line items that are audited, so they can't just move money around.

That starts to get at the core contractual issue -- do MFs only cover direct costs of each resort? Or do they also absorb indirect/overhead costs from DVC, which would include things like the costs of member services, etc. If any indirect costs can slip into MFs, then there is a potential risk of a DVC shortfall showing up in our fees.

 

[ammo]

Can DVD legally do that? No. Also, the operating budget of one resort is truly distinct from any other and thus it would not necessarily be easy to do. Easier to do and hide would be to actually charge the other Aulani owners a higher rate than needed and thus cover the loss since DVD would be monkeying with the same budget if it tried to do so.

So you are saying that MFs cannot include any indirect costs (member services, etc.)? If so, that is good.

 

[RobDoc]

So you are saying that MFs cannot include any indirect costs (member services, etc.)? If so, that is good.

DVC, as managing entity, gets a flat % (I believe it is 12%) of the operating budget (without ad valorem taxes) for each resort they manage. From that amount they cover their costs of managing the resort (Member Services).

 

[ammo]

DVC, as managing entity, gets a flat % (I believe it is 12%) of the operating budget (without ad valorem taxes) for each resort they manage. From that amount they cover their costs of managing the resort (Member Services).

Perfect. Thanks everybody for the information.

 

[drusba]

So you are saying that MFs cannot include any indirect costs (member services, etc.)? If so, that is good.

Not exactly. Most of the line entries covered by dues relate to the particular resort only. There is then $1 per member fee charged for the general reservation component (part of MS) and then, as mentioned above, a set percentage of the total operating dues for the resort that goes to the "Management Fee." That $1 charge and portions of the management fee do go to a pool that covers MS costs that apply centrally such as reservations, accounting, etc. Though the management fee can increase in total dollars whenever the particular resort's other operating costs increase the percentage cannot change so you cannot build in Aulani costs into it even indirectly.

 

[Chuck S]

This is not the first dues subsidy by DVC. Original early purchasers of Vero Beach also receive a dues subsidy because the resort was downsized from the original plans. And no, dues did not increase at other resorts to cover the Vero subsidy.

 

[disneynutz]

You can be sure that Disney is working on legal ways to come up with the money by adding a fee somewhere. There is no way for us to prove it and we can be sure that it won't be announced.

The last thing that they want is for the subsidy to affect their bottom line and how they are perceived by investors. That's one of the reasons that they fired 3, (rumored to be 4) executives.

Bill

 

[Dean]

The subsidy will not affect other owners including other HI owners. In addition to the 12% flat rate they get, they also get the income from breakage inventory over a certain %.

 

[DVCconvert]

Could the Aulani Dues Subsidy Affect Dues at Other Properties?

no