Inflation of Maintainance Costs

[megustadisney]

If the curruent rate of inflation (3.5% per year) occurs in the Cost of maintainance (4.12 per point for AKV) then in fifty years this will equal over 23 dollars per point per year! Do you think that inflation rate will slow eventually? This is quite a high amount to be paying per point! I hope Disney wouldn't do that to us. I know that the value of a dollar will be less in 50 years, but that seems like quite a high amount to pay.

 

[Granny]

Do you think the cost of Disney resorts will rise at a slower rate than DVC dues?

Using your numbers, a regular resort room that costs $125 now will cost over $700 a night in 50 years. And a $2 loaf of bread will cost about $12.

So far, Disney resort room prices have risen at a faster rate than DVC dues.

Sounds crazy? I can remember a nice new car costing less than $3,000 only 35 years ago. That would be for a full sized sedan.

It's all relative. It not about Disney "doing anything to us", as you suggest.

 

[megustadisney]

I probably should have worded that better...

The current rate of the rising of maintainance prices is 3.5% per year.
I believe that the rate of national inflation is around 2.2% per year.

In 50 years, 4.12 will equal 12.23, and the maintainance of a point will be 23.

That can be compared to the price of maintainance being about 8 dollars today.

My brain hurts.

 

[Doctor P]

The national rate of inflation has been as low as 2.2% in only 3 of the last twenty years. It has only been below 3% in 9 of the last twenty years, and it has been above 3% the last two years (3.4 and 3.2). So, the DVD dues increase have generally not been all that out of whack with inflation. Even with a 4% annual increase in inflation, 36 years from now dues would be only 4 times what they are today. There aren't many things today that don't cost at least 4 times what they cost in 1970.

 

[OKW Lover]

Your question is only looking at one side of the equation. Could you afford DVC today on the earnings you might have had 50 years ago?

 

[drusba]

Look at it this way: In the early 1970's the average starting salary of an engineer out of college was about $8500; the average starting salary today is about $48,000. Sounds like a huge difference but based on inflation over the years those two salaries are essentially the same and have the same buying power.

 

[tomlapointe]

Im sure they will also adjust based on membership participation. I'm sure they are HOPING for some dropouts due to lack of interest or financial difficulty, but if too many fall by the wayside, they won't be able to suppor the program - supply & demand.

Tom LaPointe
Dunedin, Florida

 

[Maistre Gracey]

In addition to all the good info posted here, I think we need to look at the specific costs associated with our fees.

One example is insurance. We all know what happened to insurance premiums after the hurricanes of a couple years ago.
Also look at the current trends in energy costs. The cost of heat, air conditioning, and electricity are rising fast.

These examples have risen unproportionally faster than overall inflation as of late (at least my home heating has ).
Once you factor in things such as these, it's easy to see why fees may creep up a bit faster than inflation at times.

I've always lived by the words "you get what you pay for".
I would be concerned if DVC fees were not rising, as I would be worried maintenance was slipping.

I want DVC to remain at the top of the food chain, and that's why I cringe when I hear Members complain about fees.

MG

 

[abner1776]

Also keep in mind that regardless of the inflation rate applicable to the maint fee, the only part that is increasing is the maint fee itself. The cost of purchasing DVC is fixed and never changes.

If you are paying $4.62/point for maint and say that an average night at AKV for a studio is 20 points, then you are talking about $92 per night. Even if the maint fee % increase is higher than the cash ressie increase % you are applying it to $92 per night rather than a cash ressie cost per night of something closer to $250 or higher. Throw on an 11% tax on top of the cash ressie cost (not applicable to maint fees) and you can see that the incremental cost for the increase in the maint fees is far smaller than the increase in the cost of cash ressies.