Maintenance fee predictions

[Littlelulu01]

Duplicate post

 

[Bing Showei]

Yeah If this happens it would surely have to mean Disney is selling the rooms on cash at a steep loss, DVC has failed at making them money, and the theme parks are performing so badly no one wants to go.

Or dot-com bust, 9/11, Great Recession, Chinese fake economy implosion (...coming soon to a portfolio near you).

 

[zavandor]

I would hope ADs never exceed hotel room equivalents, as they should, and are audited to, reflect costs that, in part, parallels the costs to maintain the Disney hotels.

But how are DVC costs calculated?
The DVC condominium associations use Disney services for most of their operations. For example, the WDC charges a fee to DVC members for DME. How is this fee calculated? Is it audited to reflect the actual cost of the service or being the WDC a contractor they can charge whatever they want? Just as another example, are the DVC resorts using the central WDW laundry facility for towels and sheets? I guess so. Would a resort be able to get a cheaper contract using a third party contractor?
Everyone said that running a gondola transportation system is way cheaper than running buses. Then why DRR budget for transportation is double that of other resorts? How will the costs for running the Skyliner split between resorts?

If MF have increased more than average costs, then some other force is in play. Have we received more services over time? The increased refurbishment schedule might play a part, for example. Or is the WDC increasing over time the fees for services they charge to DVC to make a higher profit?

 

[Bing Showei]

But how are DVC costs calculated?
The DVC condominium associations use Disney services for most of their operations. For example, the WDC charges a fee to DVC members for DME. How is this fee calculated? Is it audited to reflect the actual cost of the service or being the WDC a contractor they can charge whatever they want? Just as another example, are the DVC resorts using the central WDW laundry facility for towels and sheets? I guess so. Would a resort be able to get a cheaper contract using a third party contractor?
Everyone said that running a gondola transportation system is way cheaper than running buses. Then why DRR budget for transportation is double that of other resorts? How will the costs for running the Skyliner split between resorts?

If MF have increased more than average costs, then some other force is in play. Have we received more services over time? The increased refurbishment schedule might play a part, for example. Or is the WDC increasing over time the fees for services they charge to DVC to make a higher profit?

I know those were mostly rhetorical questions, but the one thing I hang onto is that Disney still needs to sell current resorts against their hotel offerings.

There is only so much creativity with accounting and marketing they can exercise before a buyer is going to look hard at the value proposition of buying a Disney timeshare.

It wasn’t too high with CCV. It‘s too early to say definitively whether or not it’s too high with Riviera, but early indications are it’s not. So they’ve probably got room to stretch out a little still.

 

[KAT4DISNEY]

But how are DVC costs calculated?
The DVC condominium associations use Disney services for most of their operations. For example, the WDC charges a fee to DVC members for DME. How is this fee calculated? Is it audited to reflect the actual cost of the service or being the WDC a contractor they can charge whatever they want? Just as another example, are the DVC resorts using the central WDW laundry facility for towels and sheets? I guess so. Would a resort be able to get a cheaper contract using a third party contractor?
Everyone said that running a gondola transportation system is way cheaper than running buses. Then why DRR budget for transportation is double that of other resorts? How will the costs for running the Skyliner split between resorts?

If MF have increased more than average costs, then some other force is in play. Have we received more services over time? The increased refurbishment schedule might play a part, for example. Or is the WDC increasing over time the fees for services they charge to DVC to make a higher profit?

That's the catch isn't it. As Disney discovered they could change the way they calculated how shared costs were computed to a method that allows even more to be passed to DVC members. It's unlikely that other divisions haven't noticed they can up their margins a bit too. And we are at the mercy of the DVC board (all Disney employees) and management to fight to control the costs.

 

[Deb & Bill]

Don't forget about management fees from the Association Mgmt that owners have no say in. They run the Board, they make the decisions. And charge us a big fee to do it.

 

[CanadaDisney05]

That's the catch isn't it. As Disney discovered they could change the way they calculated how shared costs were computed to a method that allows even more to be passed to DVC members. It's unlikely that other divisions haven't noticed they can up their margins a bit too. And we are at the mercy of the DVC board (all Disney employees) and management to fight to control the costs.

Transfer pricing is a highly scrutinized area of accounting. I'm not familiar with Florida laws concerning timeshares, but I'd have to believe that the auditors have detailed the methods used to determine transfer pricing and that they are proportionately as accurate as can be expected.

 

[KAT4DISNEY]

Transfer pricing is a highly scrutinized area of accounting. I'm not familiar with Florida laws concerning timeshares, but I'd have to believe that the auditors have detailed the methods used to determine transfer pricing and that they are proportionately as accurate as can be expected.

At best they would see if it fell in a reasonable range. They will not make certain it is the best price.

 

[CanadaDisney05]

At best they would see if it fell in a reasonable range. They will not make certain it is the best price.

They will also make sure its not changing unreasonaby year over year without a reasonable explanation as well.

 

[KAT4DISNEY]

They will also make sure its not changing unreasonaby year over year without a reasonable explanation as well.

Reasonable explanations are not difficult but can still mean a higher cost than might otherwise be necessary or achievable.

 

[crvetter]

Or dot-com bust, 9/11, Great Recession, Chinese fake economy implosion (...coming soon to a portfolio near you).

Most of those times they weren’t selling rooms at a loss. They mostly shuttered some hotels during the times to create artificial demand to avoid selling rooms at a loss. Plus none of those times were extended periods of time. The recovery post recession has exceeded any losses experienced.

 

[crvetter]

Don't forget about management fees from the Association Mgmt that owners have no say in. They run the Board, they make the decisions. And charge us a big fee to do it.

The fee is set as a percentage that never changes

 

[KAT4DISNEY]

The fee is set as a percentage that never changes

It changes as the budgets increase though. If they agree to pay more for something they also get more because it is a percentage.

 

[crvetter]

It changes as the budgets increase though. If they agree to pay more for something they also get more because it is a percentage.

Very true. Though only at the “at cost” elements are included. It doesn’t count transportation which is the only “subcontracted” component of the dues, which is exactly why transportation is excluded from the management fee.

 

[zavandor]

Very true. Though only at the “at cost” elements are included. It doesn’t count transportation which is the only “subcontracted” component of the dues, which is exactly why transportation is excluded from the management fee.

Does this mean labour is not subcontracted? How does it work, for example with CM working in Bell Services (you know where I'm going )? Do "we" hire the CM directly?

 

[Pluto777]

AKV has higher transportation costs since they have to bus to all parks. RIV skyliner should be cheaper transportation at costs at some point for Epcot and HS.

I wasnt aware that DVC owners were responsible for paying upkeep on transport to specific resorts.. So does that mean that BLT/PVB/GFV owners would be responsible if they upgraded monorails etc? Would it mean that if some new technology for transport for a particular resort was developed they would add that to the MF's and that it is NOT spread out to other places? How do they determine which resort is which % responsible for a particular mode of transport when there are connections?

 

[Deb & Bill]

I wasnt aware that DVC owners were responsible for paying upkeep on transport to specific resorts.. So does that mean that BLT/PVB/GFV owners would be responsible if they upgraded monorails etc? Would it mean that if some new technology for transport for a particular resort was developed they would add that to the MF's and that it is NOT spread out to other places? How do they determine which resort is which % responsible for a particular mode of transport when there are connections?

Yes, and the boats as well.

 

[crvetter]

I wasnt aware that DVC owners were responsible for paying upkeep on transport to specific resorts.. So does that mean that BLT/PVB/GFV owners would be responsible if they upgraded monorails etc? Would it mean that if some new technology for transport for a particular resort was developed they would add that to the MF's and that it is NOT spread out to other places? How do they determine which resort is which % responsible for a particular mode of transport when there are connections?

This is where transportation is different. Most charges on the dues are specific "at cost" charges. However, transportation the resorts don't actually own any of those means but they contract out WDW for transportation. This was why transportation is excluded from the management fee costs.

It is possible that if the new monorail demands WDW to pass on higher costs to the resorts then BLT/PVB/GFV can be charged higher costs. Really it's just the resorts subcontracting out transportation. However, they can not be charged for the replacement of the monorail (because the DVC resorts don't have ownership in the monorail). Basically think of it as leasing in that eventually a landlord will have to replace a kitchen but won't charge it back to the tenant at whole but will raise the rent to start recouping the costs for the next upgrade needed on the kitchen and because the unit might be more desirable.

As for what they decide to charge its whatever WDW charges their hotels. So I assume a similar equation is used at all resorts that considers the number of passengers and the expected number of buses/boats/etc that resort requires. Think of transportation as a subcontractor so they get some leeway in charging what they want (just they can't be prejudice in charging so cash and DVC likely need to be considered under a similar formula).

As for new transportation methods they can't charge construction or purchasing costs because the DVC resort (or any resort) does not own transportation. Transportation is owned at a much higher level and subcontracted out. Thus transportation charges can change because of new methods but likely that new method would be added as a cost saving measure long term simply because that really is the drive for Disney to lower costs. But long term is the key could be more expensive in immediate years but subsequent years be cheaper than the replaced methods.