How high can MF go?

[Momtomouselover]

I have been playing with spreadsheets and find much different outcomes on where the breakeven point is ( or even a reversal and you pay more!) and the biggest variable is MF vs. room inflation. How high can the MFs go? What stops DVC from going to the maximum? Lets say you purchase Riviera and there is an issue with the gonodolas that needs repairs, or the roof, etc....and perhaps they never sold out the resort...could the fees go to 12% every year? 15%? Another peculiar point is if you draw out room inflation for 10, 20, 30 years the cost per night for a deluxe room gets outrageous. I guess that's how things work and supposably salaries keep pace more or less but its just so hard to imagine $1000 for one night. geesh.

 

[JDOrlando]

There's really no way to know. The inflation in Disney room/ticket/food/merchandise in the last 5-10 years is unsustainable in my opinion, but where it stops exactly no one really knows. My concern based on some of the recent DVC happenings is that DVC will continue to heavily increase maintenance fees even when room prices become stagnant. Yes, I realize that that's technically "illegal" but so are some of the point chart changes that they attempted to get through last year.

 

[CanadaDisney05]

There's really no way to know. The inflation in Disney room/ticket/food/merchandise in the last 5-10 years is unsustainable in my opinion, but where it stops exactly no one really knows. My concern based on some of the recent DVC happenings is that DVC will continue to heavily increase maintenance fees even when room prices become stagnant. Yes, I realize that that's technically "illegal" but so are some of the point chart changes that they attempted to get through last year.

Is there a chart anywhere on the internet that shows the appreciation of rack rates over the years?

 

[BillPA]

The limit is 15% a year, plus taxes could make it higher. So far is been in the 3 1/2 - 4% range, with higher increases in the last few years.

 

[DVC Doctor]

DVC Dues OKW

1991 = $2.50
2004 = $3.68 (13 years to increase 50%)
2001 = $5.20 (20 years to increase 100%)
2019 = $7.23 (28 years to increase 150%)

I am estimating that the annual dues will double every 15-20 years

Thus, if dues are $7 in 2020, then it will be $14 in 2040, and $28 in 2060

 

[Momtomouselover]

Unless you are BLT and then wow they had bigger average increases. More like 5.5-6% for BLT. Ugh. What worries me is if 2019 is indicative of similar high increases to come then the numbers don't really work. Especially with a high MF and buy in cost to begin with in a resort like Riviera. At 5.5% it is already 17ish years to breakeven and that is assuming that resort costs increase 5%.

 

[Deb & Bill]

And now that they are giving out clean towels any time you want some, it will triple every five years.

 

[ELMC]

The limit is 15% a year, plus taxes could make it higher. So far is been in the 3 1/2 - 4% range, with higher increases in the last few years.

It's also important to note that these increases are compounding, so it is going to get much worse much quicker. Recent changes to salary structures among other variables have led to higher increases in recent years. I do not think it is safe to look at past patterns and assume they will continue in the same way. Riviera starting at over $8 per point should be a wake up call for everyone. Just seven years ago dues at BLT were less than half that.

 

[Disney Dad ADL]

Unless your BLT and then wow they had bigger average increases. More like 5.5-6% for BLT. Ugh. What worries me is if 2019 is indicative of similar high increases to come then the numbers don't really work. Especially with a high MF and buy in cost to begin with in a resort like Riviera. At 5.5% it is already 18ish years to breakeven and that is assuming that resort costs increase 5%.

BLT has been hit pretty hard by Ad Valorem taxes though, so it's not all Disney there. BLT is $1.70 pp in taxes, vs $1.31 pp at SSR for example. In 2012, BLT actually had lower Ad Valorem Taxes compared to SSR (0.9805 pp vs 1.0518 pp). If BLT's Ad Valorem taxes mirrored SSR, then it would be at around $6 pp.

In 2009, BLT was $3.6709 pp total for MFs, in 2019 $6.3994 total, for a total change of $2.7285 pp. During that same period, Ad Valorem Taxes increased from $0.8280 pp to $1.7028 pp, for a difference of $0.8748 pp, so roughly 1/3 of the increase in MFs is from Ad Valorem Taxes.

Housekeeping is the other big one, going from 0.5005 pp to 1.2780, for a difference of $0.7775 pp.

There is some speculation though that they will increase much more in the coming years due to the increase in wages.

 

[ELMC]

BLT has been hit pretty hard by Ad Valorem taxes though, so it's not all Disney there. BLT is $1.70 pp in taxes, vs $1.31 pp at SSR for example. In 2012, BLT actually had lower Ad Valorem Taxes compared to SSR (0.9805 pp vs 1.0518 pp). If BLT's Ad Valorem taxes mirrored SSR, then it would be at around $6 pp.

In 2009, BLT was $3.6709 pp total for MFs, in 2019 $6.3994 total, for a total change of $2.7285 pp. During that same period, Ad Valorem Taxes increased from $0.8280 pp to $1.7028 pp, for a difference of $0.8748 pp, so roughly 1/3 of the increase in MFs is from Ad Valorem Taxes.

Housekeeping is the other big one, going from 0.5005 pp to 1.2780, for a difference of $0.7775 pp.

There is some speculation though that they will increase much more in the coming years due to the increase in wages.

Great info, thanks. There was also a lot of talk around the time BLT was built that it was done so on the cheap and that maintenance fees were kept as low as possible initially. Fixtures broke, soft goods got worn out quickly, etc. The increase in MFs at BLT was not a surprise to anyone paying attention, and the information above regarding the taxes only exasperated the issue.

 

[skippytx]

Is there a chart anywhere on the internet that shows the appreciation of rack rates over the years?

The data is out there for some recent years but I haven’t found anyone that has put it together. Also too many variables to get a true price, not sure many pay rack rate. Lots of discounts out there, free dining, etc.

My first trip in 2015 was at an AoA family suite which was maybe 300, 350 a night tops. Same room is 500 now give or take depending on when you go.

I’m going to try to find my records for that trip.

 

[_auroraborealis_]

This has been touched on, btu to be absolutely explicit: There is NO CEILING on real estate tax increase. It will always be actual increase.

 

[CanadaDisney05]

DVC Dues OKW

1991 = $2.50
2004 = $3.68 (13 years to increase 50%)
2001 = $5.20 (20 years to increase 100%)
2019 = $7.23 (28 years to increase 150%)

I am estimating that the annual dues will double every 15-20 years

Thus, if dues are $7 in 2020, then it will be $14 in 2040, and $28 in 2060

While this is true, you must also factor in US inflation. Not only will DVC maintenance fees be going up, everything else will too. This includes your salary. In general, DVC dues have outpaced inflation, which means every year it eats up a larger percentage of your budget. However if you don't factor in inflation, then you are grossly over estimating the percentage of your budget is being used up by MF.

Unless you are BLT and then wow they had bigger average increases. More like 5.5-6% for BLT. Ugh. What worries me is if 2019 is indicative of similar high increases to come then the numbers don't really work. Especially with a high MF and buy in cost to begin with in a resort like Riviera. At 5.5% it is already 17ish years to breakeven and that is assuming that resort costs increase 5%.

Make sure you are factoring increasing costs to hotel rooms into your equation.... Of course, there is a risk that this doesn't happen, but it is very unlikely that hotel prices don't atleast keep pace with inflation. If the past is 30 to 50 years is indicative, it will likely outpace inflation as well.

It's also important to note that these increases are compounding, so it is going to get much worse much quicker. Recent changes to salary structures among other variables have led to higher increases in recent years. I do not think it is safe to look at past patterns and assume they will continue in the same way. Riviera starting at over $8 per point should be a wake up call for everyone. Just seven years ago dues at BLT were less than half that.

As mentioned above, don't forget inflation. Also keep in mind that these things are not linear functions. There will undoubtedly be several years in a row where MF inflation outpaces its long term average, followed by years where it under paces the average. Don't allow recency bias to affect your decision making.

 

[skippytx]

I think we're in for a couple years of large (relatively) increases, primarily driven by 2 factors. 1- the increase in pay for the cast members that work at the resorts, and 2- property tax values going up.

It's been talked about before a while ago, and lawsuits are still ongoing, but the Tax Assessor in Orange County Florida isn't as friendly to the mouse as the previous assessor was and has increased the taxable value of many WDW properties by a significant amount. Those costs for DVC properties will get passed on to the owners

The newer properties dues seem to have these new costs already baked into them. Below is an older article showing how the property tax valuations have gone up, even though it's 2 years old you can see the jump after 2014.

https://dvcnews.com/index.php/dvc-p...ns-property-tax-victory-against-orange-county

 

[heathere3]

... Not only will DVC maintenance fees be going up, everything else will too. This includes your salary. ...

HAHAHAHAHAHAHAHA
I'm finding very few people's salaries have kept up with inflation...

 

[DVC Doctor]

While this is true, you must also factor in US inflation. Not only will DVC maintenance fees be going up, everything else will too. This includes your salary. In general, DVC dues have outpaced inflation, which means every year it eats up a larger percentage of your budget. However if you don't factor in inflation, then you are grossly over estimating the percentage of your budget is being used up by MF.

I disagree with you.....I simply answered the OP question "How high can the MFs go?" and I posted my estimation and this has nothing to do with percentage of budget.

Of course there will be inflation, increased hotel costs, increased cost of refillable soda mugs, increased cost of tickets, etc. but that was not the question.

Also, I 100% doubt my salary (physician) or others here in the USA (perhaps this is not true for canada) will get increases that match Disney increase of fees....seriously, Disney way outpaces inflation and salaries. So, yes, it eats up a higher percentage of our money.

 

[CanadaDisney05]

HAHAHAHAHAHAHAHA
I'm finding very few people's salaries have kept up with inflation...

If your looking at short time frame (1-3 years) then perhaps not. But if your looking at it over a long time frame (25 -50 years, which is really what we are talking about here), salaries have to keep up with inflation. If salaries don't keep pace, then people can afford less and less, and if people can't afford as much, prices go down, which brings us back to a point where salaries have kept pace.

Also keep in mind, that people who are buying DVC most likely skew to higher wage professions. I'm sure these jobs have well outpaced inflation.

 

[CanadaDisney05]

I disagree with you.....I simply answered the OP question "How high can the MFs go?" and I posted my estimation and this has nothing to do with percentage of budget.

Of course there will be inflation, increased hotel costs, increased cost of refillable soda mugs, increased cost of tickets, etc. but that was not the question.

I'm not trying to argue with you. Just stating (because many people who are reading your post may not have factored in inflation when they see these numbers) that the numbers you posted have not factored in inflation.

Also, I 100% doubt my salary (physician) or others here in the USA (perhaps this is not true for canada) will get increases that match Disney increase of fees....seriously, Disney way outpaces inflation and salaries. So, yes, it eats up a higher percentage of our money.

......

While this is true, you must also factor in US inflation. Not only will DVC maintenance fees be going up, everything else will too. This includes your salary. In general, DVC dues have outpaced inflation, which means every year it eats up a larger percentage of your budget. However if you don't factor in inflation, then you are grossly over estimating the percentage of your budget is being used up by MF.

 

[Deb & Bill]

If your looking at short time frame (1-3 years) then perhaps not. But if your looking at it over a long time frame (25 -50 years, which is really what we are talking about here), salaries have to keep up with inflation. If salaries don't keep pace, then people can afford less and less, and if people can't afford as much, prices go down, which brings us back to a point where salaries have kept pace.

Also keep in mind, that people who are buying DVC most likely skew to higher wage professions. I'm sure these jobs have well outpaced inflation.

Pensions and Social Security don't increase very much from year to year.

 

[crvetter]

Pensions and Social Security don't increase very much from year to year.

Well Social Security benefits are pegged to increase YOY based on realized inflation that is being seen, since 1975. So in this case your spending/buying power each year stays similar. The other important detail is Social Security was also meant to be supplemental retirement benefits. As for pensions, almost all I've seen or worked on have pegged to an inflation increase too.

https://www.ssa.gov/cola/