Raising Maintenance Fees

[mustinjourney]

While Disney needs to keep pace with expenses, they are hugely profitable and could certainly absorb more of the costs. Mainly, Disney's #1 goal is to continue to provide "shareholder value" (which is sadly the primary driver of most public companies these days).

for a publicly traded company -- they are LEGALLY required to provide shareholder value as their primary goal. Board members can be sued for behaving otherwise.

With that said -- they can argue that paying higher wages brings more value to the shareholders indirectly via better customer service, which drives customer experience and therefore, increased spending.

 

[mustinjourney]

It does little good to compare cost of living to the rise of a vacation property. Vacation properties have been rising well ahead of the cost of living measure for 30 years. Vacations as well are typically rising 5% or more a year - not just at Disney world.

You ain't joking.

DW and I did an impromptu trip to NYC in late February -- and I couldn't believe how expensive those three nights ended up being. If you think $130 for 16 hours of theme park is expensive -- go check out Broadway tickets. $150 for each show and drinks there are a cool $20 a piece.

 

[skier_pete]

You ain't joking.

DW and I did an impromptu trip to NYC in late February -- and I couldn't believe how expensive those three nights ended up being. If you think $130 for 16 hours of theme park is expensive -- go check out Broadway tickets. $150 for each show and drinks there are a cool $20 a piece.

Yeah, remember 20 years ago when people used to talk about how cheap Vegas was? Now it's almost as expensive to go there as WDW - we got a fantastic rate for 3 nights in late September at MGM Grand and still looking at $200+ with resort fees. We're doing a getaway to New Orleans early December (free flights, yay!) as part of this, and anything decent in NO is $200 a night for hotel even though it's severely off season. We just bought tickets for a comedy show, and not only were the ticket $49 a piece, but ticketmaster & the venue piled on $34 worth of fees making it $132 for two tickets.

Honestly between DVC, using an AP across multiple trips, and not going overboard on TS dining, Disney trips are not too bad for us compared to other places. And DVC is a virtual bargain. We have 3 nights at BWV in October and my cost with buy-in factor (buy-in price/years) plus MF it's costing me $12.09 per point, or $411 for 3 nights a boardwalk, $137 a night. We have two rooms booked at AKV in February for 8 nights, one value, one standard, the value is $920 for 8 nights, the standard $1217 for 8 nights, so $115 a night or $152 a night during peak President's week. Now admittedly I bought in at lower prices than today - but I just don't see the prices I'm getting with my DVC points being beaten at any sort of resort in the US or Europe that matches the Disney DVC/Deluxe properties.

Now if you buy BCV direct at $220 a point with 22 years left and at $6.94 a point MF - now you are looking at $17 per point cost -(assuming you keep it until the end.) and leads you to pay $300-400 a night for a studio - maybe not worth it. But even Riviera direct at $188 a point for 50 years ($3.76 / point/ year) and $8.31 a point dues, and 150 points a night average in a studio - still looking at $258 a night at a deluxe resort. And that's assuming completely sunk costs on the buy-in.

Anyways, yes maintenance fees rise every year. That doesn't mean DVC can't still be a value when used right.

 

[CanadaDisney05]

Honestly between DVC, using an AP across multiple trips, and not going overboard on TS dining, Disney trips are not too bad for us compared to other places.

I always say this. The general consensus is that Disney is really expensive, and it is if you compare it to camping, or renting a cottage on a lake for a week. When you compare a Disney trip to most other types of vacations its really not that bad. Of course, if you do all of the upgrades, it can get pricey.

Flights/Driving - No more expensive than going anywhere else for most people.
Hotels - You can stay on site in a value resort for $125-175 per night. For such a tourist destination, this is more than a fair price.
Tickets - A one day park ticket can be quite expensive, but as soon as you start getting into the 5 - 10 tickets, the price per day is more than fair for the amount of entertainment you get. If you travel elsewhere you will still have entertainment costs.
Food - Table Service is pretty expensive, but it's quite easy at WDW for a family to eat good quick service meals for an entire trip for not much more than eating fast food. On a trip to most other places, you would almost be forced into eating more table service unless you want to eat McDonalds or Subway for virtually every meal.
Local Transportation - If you stay onsite, this is included in your hotel price.

 

[rg35]

for a publicly traded company -- they are LEGALLY required to provide shareholder value as their primary goal. Board members can be sued for behaving otherwise.

With that said -- they can argue that paying higher wages brings more value to the shareholders indirectly via better customer service, which drives customer experience and therefore, increased spending.

I think you're misunderstanding. Jack Welch, former GE CEO created this concept that a company's goal was to provide "shareholder value." In the past, companies organically created value for shareholders by creating quality products and retaining customers and treating employees well. Now, they provide shareholder value by cutting things to threadbare levels, treating employees worse, etc.

In the past, shareholder value was a "result" of doing good things. Now it is a "strategy."

JetBlue is a perfect example of this. They were a highly rated airline who differentiated themselves from others by providing a very customer friendly product. In the 2000's they were one of the few profitable airlines when most were floundering. Then, about 5 years ago they got pressure from "Wall Street" to show more returns so they abandoned everything that made them great - no more free checked bags, adding 15 more seats to their A320 jets, etc. Now they're one of the lowest ranked airlines - in 2018 the WSJ ranked them as the worst airline.

You can see similar shifts in the Disney experience - getting more expensive without the same attention to providing the experience they are known for.

 

[CanadaDisney05]

for a publicly traded company -- they are LEGALLY required to provide shareholder value as their primary goal. Board members can be sued for behaving otherwise.

Now they're one of the lowest ranked airlines - in 2018 the WSJ ranked them as the worst airline.

You can see similar shifts in the Disney experience - getting more expensive without the same attention to providing the experience they are known for.

To be fair, what you are referring to here is consumer value, not shareholder value.

 

[disney11fan]

for a publicly traded company -- they are LEGALLY required to provide shareholder value as their primary goal. Board members can be sued for behaving otherwise.

With that said -- they can argue that paying higher wages brings more value to the shareholders indirectly via better customer service, which drives customer experience and therefore, increased spending.

I agree. I have to ask and wonder, what is the value of having vacation ownership? Would it be better to pay as you go? Would it be better to use buy back points from other members?

 

[skier_pete]

I agree. I have to ask and wonder, what is the value of having vacation ownership? Would it be better to pay as you go? Would it be better to use buy back points from other members?

This is totally up to you to determine. Since no one can see the future - you have to figure out what you THINK is best for you. Buying a DVC (or any timeshare) is about predicting the future - that I will want to continue to go to WDW, that Disney will maintain a product that I will enjoy, that I will not prefer going elsewhere in the future.

I've owned for 5.5 years and it's worked like gangbusters for me - far BETTER than I would've predicted when I bought in. The product was significantly different at the time. I paid $74 / point at AKV and get to enjoy nearly full member benefits on my points. But I put in for an identical contract at $109 / point, so I clearly still see value even at today's rates. But I see more value on that AKV contract than say a Poly contract at $150 / point.

Some person just bought Riviera at $188 a point and if rumor is correct sold it at less than $130 a point and never used it. That person definitely did NOT get value out of the product.

Only you can determine what DVC is worth to you. It's not worth it to everyone. It's not even worth it to everyone that buys it. (Thus the existence of resale contracts.)

 

[disney11fan]

This is totally up to you to determine. Since no one can see the future - you have to figure out what you THINK is best for you. Buying a DVC (or any timeshare) is about predicting the future - that I will want to continue to go to WDW, that Disney will maintain a product that I will enjoy, that I will not prefer going elsewhere in the future.

I've owned for 5.5 years and it's worked like gangbusters for me - far BETTER than I would've predicted when I bought in. The product was significantly different at the time. I paid $74 / point at AKV and get to enjoy nearly full member benefits on my points. But I put in for an identical contract at $109 / point, so I clearly still see value even at today's rates. But I see more value on that AKV contract than say a Poly contract at $150 / point.

Some person just bought Riviera at $188 a point and if rumor is correct sold it at less than $130 a point and never used it. That person definitely did NOT get value out of the product.

Only you can determine what DVC is worth to you. It's not worth it to everyone. It's not even worth it to everyone that buys it. (Thus the existence of resale contracts.)

Thank you. Trying to understand this DVC.

 

[GoofyDad87]

no more than 15% a year, + increases in RE Tax.

I could be wrong and that's essentially the cap but isn't there a clause that allows them to raise above 15% with approval from the board?

 

[Matty B13]

Some person just bought Riviera at $188 a point and if rumor is correct sold it at less than $130 a point and never used it. That person definitely did NOT get value out of the product.

And, they didn't even get to enjoy a stay at the resort that they purchased at!!!!

 

[gscott8075]

Average Real Estate appreciation across the country is not related to maintenance costs on a vacation resort in Orlando. I'm not sure why there should be an expectation of correlation between the two.

Since you do not seem to agree with the comparables I've used - even though the CPI is the US's main indicator of inflation, what should we use? I respectfully disagree with most and believe the dues increases have been out of control. Dues have increased more than my property taxes and my utility bills - both are components of the maintenance fee.

I cannot think of any bill or expense I have which has increased more as much as DVC.

 

[gscott8075]

The $600 I paid in 2001 would be $864 today accounting for inflation. Today, dues are close to $1600 for the same contract.

I have no other expense that has increased this much - insurance, property taxes, utilities, gas - all of which are components of the maintenance fee.

While I appreciate and respect everyone’s perspective, I maintain the dues increases have been out of control and expect Disney will continue along the same path in the future.

 

[skier_pete]

The $600 I paid in 2001 would be $864 today accounting for inflation. Today, dues are close to $1600 for the same contract.

I have no other expense that has increased this much - insurance, property taxes, utilities, gas - all of which are components of the maintenance fee.

While I appreciate and respect everyone’s perspective, I maintain the dues increases have been out of control and expect Disney will continue along the same path in the future.

I'm not disagreeing with you that the dues are going up way faster than inflation - but what I am saying is travel expenses in general are way ahead of inflation.

I maintain a table of all the dues for all the resorts historically. Last year was the worst raise in history on average dues went up 7.6 %, but here is the overall average increase for every single resort since they opened. Note most of them are averaging between 3% and 4% increase per year - and 9 of the 10 on-site are in this range. VB and HHI are higher at 4.5% but this is likely weather related to a degree. BLT and VGC are the two highest and I wish I could tell you why that is, but it's partly because they started them out very low. (I think Disney may have gotten in a bit of trouble with BLT (and I know they did with Aulani) which is why since then they start the dues high and the rate of increase stays smaller.

Year

OKW

BWV

VB

VB/Sub

HHI

WL-BRV

BCV

SSR

AKV

BLT

VGC

Aul

VGF

Poly

WL-CCV

3.9%​

2.9%​

4.5%​

4.5%​

3.8%​

3.7%​

3.8%​

4.1%​

5.7%​

5.1%​

4.0%​

3.4%​

3.0%​

2.2%​

So, while I'll agree a 4% increase is higher than inflation - to say it is "out of control" doesn't seem to really be looking at the historical trends. Some years they go up a lot, other years much less.
For example, since I bought AKV - rates have increased 5.5%,1.9%,2.6%, 2.5%, and then just 10%. Prior to the last increase - which was awful all across the board due to the 30% increase in the minimum wage - the previous 3 increases were very reasonable.

And we are talking about Disney here - in 2003 an advance ticket for MNSSHP (which at the time was only held in October) was $32.95 - in 2018 that price for an October party ranged from $99 to $125 depending on your date - an increase of between 200% and 279% - which gives an average increase of 13.3% - 18.6% per year. In 2003 a 5-day park-hopper pass was $217. Current variable pricing makes it hard to predict - but if I look at a 5-day hopper during my next trip in Feb 2020 - I get $528.78 for the week - a 143% increase and 16.2% annual increase.

To compare "apples to apples" Rack rate at POFQ when we went in 2006 was about $159 a night, currently average for that same week is just about $250 a night - not as bad as the tickets but still 57% increase - and a 3.8% annual increase, very similar to DVC dues.

Of course, you are welcome to your opinion as I am welcome to mine. But I don't think dues are "out of control".

 

[SL6827]

And, they didn't even get to enjoy a stay at the resort that they purchased at!!!!

Oh really? Seriously? They bought at 188 and turned around and sold st 130? Whatttttttttttt?

 

[CanadaDisney05]

Since you do not seem to agree with the comparables I've used - even though the CPI is the US's main indicator of inflation, what should we use? I respectfully disagree with most and believe the dues increases have been out of control. Dues have increased more than my property taxes and my utility bills - both are components of the maintenance fee.

I cannot think of any bill or expense I have which has increased more as much as DVC.

CPI is the US's main indicator of inflation, but what you have to understand is that the CPI is an average amount of many different goods and services. To get an average, it means some goods and services increased more than CPI, and others less. DVC maintenance dues happen to be above the average. Long term averages of 3 to 4% however, are not well above.

 

[gscott8075]

CPI is the US's main indicator of inflation, but what you have to understand is that the CPI is an average amount of many different goods and services. To get an average, it means some goods and services increased more than CPI, and others less. DVC maintenance dues happen to be above the average. Long term averages of 3 to 4% however, are not well above.

I have a pretty good understanding of the components of the CPI. It’s the gold standard for comparing pricing.

The compounding effect of the DVC increases have been significant. What other cost do you have that has increased as much? There aren’t any!

 

[miTnosnhoJ]

I have a pretty good understanding of the components of the CPI. It’s the gold standard for comparing pricing.

The compounding effect of the DVC increases have been significant. What other cost do you have that has increased as much? There aren’t any!

College tuition and health insurance.

 

[disney11fan]

Since you really don't own anything except the right to use a room and you paid a good chunk of change up front, why do you have to pay maintenance fees.?

 

[rg35]

To be fair, what you are referring to here is consumer value, not shareholder value.

The shareholder value was derived from providing a good customer experience, which is exactly what I explained.