Raising Maintenance Fees

[anomamatt]

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.

I've seen this mentioned a few times. But if this actually did happen, the deed has not been recorded yet. At least that I can find. Has anyone else looked for this?

 

[DaveNan]

I've seen this mentioned a few times. But if this actually did happen, the deed has not been recorded yet. At least that I can find. Has anyone else looked for this?

On July 8th all the chatter about the first resale hit. If it did happen around that time, you have 30 days of ROFR, then 10-15 to close, then another few to record. And those are if not delays hit. I would not bother looking for this transaction to hit the recorder till late August at the earliest.

 

[skier_pete]

On July 8th all the chatter about the first resale hit. If it did happen around that time, you have 30 days of ROFR, then 10-15 to close, then another few to record. And those are if not delays hit. I would not bother looking for this transaction to hit the recorder till late August at the earliest.

If Disney ROFRs the contract, will it still show up as a recorded deed? If so then the full facts will be known. Otherwise it will only come out if Disney doesn't ROFR it.

 

[Matty B13]

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.?

The original cost of the points/contract pays for the construction of the resort, not the lifetime maintenance of the resort, if that were the case the points would be 10x their cost......... and no one would buy. The unique thing about DVC is that those original points/contracts have held their value and have increase over time. The DVC resorts site on prime real-estate and have gone up in value, just like beach front properties have.

 

[crvetter]

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!

Depends on a commodity for instance you look at and the time you cherry pick. Gasoline for instance from mid 90s to mid 00s went from about 1 a gallon to about 4 a gallon. Natural gas had a similar cycle. Corn also had a similar cycle and still is fairly high from where it was around 2000. Wages have increased above inflation, historically, which drives demand for consumer discretionary spending (along with the Federal Reserve Interest Rate).

Compounding effects are the same on everything. I’m not sure what you mean compounding has been significant on DVC dues. The average that @skier_pete presented of about 3-4% (see my previous post below that plots some stuff), which is the average rate and measures compounding so I was confused on the significant comment. Also if you cherry pick the late 70s as a subset for CPI you will see a huge difference from that subset and where CPI increase was well above the long term average.

The issue is annual dues only pick from a small basket of the CPI commodities and it includes direct wage payments for employees too. So it doesn’t have the basket of commodities that decreased to lower dues.

So here are the dues history:

https://dvcnews.com/index.php/dvc-p...content/2494-historical-annual-dues-by-resort

And here is an idea for the average annual YOY due increase for each resort for 2017 to 2019 (only the copper creek timeline):

View attachment 401225

For fun here is the average yearly increase in dues since inception for each resort

View attachment 401236

Well actually earnings increases pretty much are correlated with inflation, sort of required for a well functioning economy. Inflation is a measure of a basket of common household goods a US citizen would purchase, thus if inflation outpaces wage growth people stop being able to live and quality of life plummets and eventually would disappear. Also inflation here being discussed is US inflation thus should correlate that to US wage growth. Historically since 1951 Wage growth has outpaced inflation

View attachment 407371

Looking at the annual growths you see very few times inflation outpaced wage growth. Any time inflation outpaces wage growth for extended periods of time there will be large macroeconomic issues and if it continues consistently you have situations like Venezuela.

View attachment 407372

Here is looking at a comparison from 2007 (peak market before crash) until 2017. You see them pretty much in lock step. So overall the past 10 years has shown we can expect wage growth (median is used here which is a better measure for middle class) and inflation to be similar.

View attachment 407373

Looking at 1990 forward (last 30 years or so) we see wage growth still outpacing.

View attachment 407375

Median Wage (From Social Security Admin)
https://www.ssa.gov/oact/cola/AWI.html
CPI (Measure of Inflation for US)
https://fred.stlouisfed.org/series/CPIAUCSL

 

[CarolMN]

I don't believe anyone likes increases large or small. But Disney vacations and DVC ownership are luxuries, not necessities, so I see little value in comparing them to the CPI.

 

[katandmouse]

If Disney ROFRs the contract, will it still show up as a recorded deed? If so then the full facts will be known. Otherwise it will only come out if Disney doesn't ROFR it.

Yes it should still show up as a recorded deed (since ROFR basically means Disney will buy the contract at the same terms). In that case it’ll be recorded with DVD as the Grantee.

 

[sethschroeder]

Does anyone think maintenance fees will actually decrease after the resort goes through its last refurb of its lifetime? Since they don't need to build up a cash reserve to pay for a refurb that money shouldn't be taken then right?

 

[KAT4DISNEY]

Does anyone think maintenance fees will actually decrease after the resort goes through its last refurb of its lifetime? Since they don't need to build up a cash reserve to pay for a refurb that money shouldn't be taken then right?

Correct. They should not charge the members to refurb a resort for them to use or resell.

 

[CanadaDisney05]

Correct. They should not charge the members to refurb a resort for them to use or resell.

Are we sure about this? I've never seen a DVC contract, but I would assume that there would be some sort of stipulation that the members cover the cost to bring the resort back to a minimum standard, similar to a car lease. At the end of a car lease, it is the lessee's responsibility to make sure the vehicle is returned to certain standards less "regular wear and tear".

 

[stewart715]

Are we sure about this? I've never seen a DVC contract, but I would assume that there would be some sort of stipulation that the members cover the cost to bring the resort back to a minimum standard, similar to a car lease. At the end of a car lease, it is the lessee's responsibility to make sure the vehicle is returned to certain standards less "regular wear and tear".

Even if it's not in the contract, it wouldn't make much sense to refurbish a resort shortly before re-sale. Simply because, they would be doing the refurbishment twice in a short period of time (they aren't going to sell a resort as brand new after being used for 2-3 years by the previous group of owners).

Let's take resort that has the closest expiration date, say BWV:

2016 - Hard goods
2023 - Soft goods (+7 years)
2030 - Hard goods (+7 years)
2037 - Soft goods (+7 years)
2042 - Expiration (+5 years)

So according the schedule, there won't be time for a refurb before expiration.

 

[CanadaDisney05]

Even if it's not in the contract, it wouldn't make much sense to refurbish a resort shortly before re-sale. Simply because, they would be doing the refurbishment twice in a short period of time (they aren't going to sell a resort as brand new after being used for 2-3 years by the previous group of owners).

Let's take resort that has the closest expiration date, say BWV:

2016 - Hard goods
2023 - Soft goods (+7 years)
2030 - Hard goods (+7 years)
2037 - Soft goods (+7 years)
2042 - Expiration (+5 years)

So according the schedule, there won't be time for a refurb before expiration.

I'm not sure of the exact wording, but I have to imagine that they thought this through.

At the end of a car lease, you don't necessarily have to bring back the car in perfect shape, but if you don't, the dealership will charge you for the work that needs to be done at a "reasonable" rate.

There is probably something that makes the members responsible to cover the cost of a full (or pro rated) refurb at the end of the contract. If Disney decides to actually go ahead with the work at the end of the contract is up to them. Using your example, my assumption would be that the members have to cover 5/14ths of the cost of a Soft Goods refurb, and 12/14ths of the Hard Goods refurb.

This is just speculation. I have no clue what is actually explicitly stated in the contract. There also may be something that refunds owners at the end for any unused funds from the reserve fund.

 

[disney11fan]

The only winner in DVC is Disney. How do they determine your buy in? If you wanted enough points to have 2 weeks every year for a 2 bedroom villa at kindani village in the fall what would it cost you?

Now how long would it take you to break even and how much would maintenance fees be?

 

[stewart715]

I'm not sure of the exact wording, but I have to imagine that they thought this through.

At the end of a car lease, you don't necessarily have to bring back the car in perfect shape, but if you don't, the dealership will charge you for the work that needs to be done at a "reasonable" rate.

There is probably something that makes the members responsible to cover the cost of a full (or pro rated) refurb at the end of the contract. If Disney decides to actually go ahead with the work at the end of the contract is up to them. Using your example, my assumption would be that the members have to cover 5/14ths of the cost of a Soft Goods refurb, and 12/14ths of the Hard Goods refurb.

This is just speculation. I have no clue what is actually explicitly stated in the contract. There also may be something that refunds owners at the end for any unused funds from the reserve fund.

Sorry, I think we’re talking about 2 different things.

Do I think they will do another refurb after their last scheduled one? No.

Do I think dues will go down after the “last” refurb? Also no. So I guess if I had to predict, we will technically be paying for the refurb (at least partially) after contract expires. Legal, not sure. But would be shocked if that weren’t the case.

 

[CanadaDisney05]

Sorry, I think we’re talking about 2 different things.

Do I think they will do another refurb after their last scheduled one? No.

Do I think dues will go down after the “last” refurb? Also no. So I guess if I had to predict, we will technically be paying for the refurb (at least partially) after contract expires. Legal, not sure. But would be shocked if that weren’t the case.

I must have misunderstood your post. This is exactly what I believe as well.

 

[zavandor]

Do I think dues will go down after the “last” refurb? Also no. So I guess if I had to predict, we will technically be paying for the refurb (at least partially) after contract expires. Legal, not sure. But would be shocked if that weren’t the case.

I'm just quoting what I've read on another thread here: members will not be responsible for a last refurb before the lease expiry and it would be illegal to do such a thing. Also, any capital reserve remaining in the budget when the resort expires will be divided among members, a quote per point.
Someone more expert than me will correct me if this is wrong.

 

[stewart715]

I'm just quoting what I've read on another thread here: members will not be responsible for a last refurb before the lease expiry and it would be illegal to do such a thing. Also, any capital reserve remaining in the budget when the resort expires will be divided among members, a quote per point.
Someone more expert than me will correct me if this is wrong.

Interesting. I'm gonna dig in and see if I can confirm.

 

[crvetter]

I'm just quoting what I've read on another thread here: members will not be responsible for a last refurb before the lease expiry and it would be illegal to do such a thing. Also, any capital reserve remaining in the budget when the resort expires will be divided among members, a quote per point.
Someone more expert than me will correct me if this is wrong.

This is correct. It's specifically stated in the POS that all capital reserves will be returned. I asked Y about this and she said the capital reserve portion of the budget would eventually be adjusted towards the end of the life to make to get the remaining capital reserves to be as close to 0 as possible.

I did ask about the refurbishment and her comment was it is expected that DVC will have the last refurb (soft or hard) about 7 years before expiration on the current schedule. The bigger question is roof and siding, etc. as they are the bigger costs. I'm guessing those will be replaced at the end of their life (generally about 20-30 years) thus there will be maybe 10 years left of useful life at the end of the lease.

 

[stewart715]

This is correct. It's specifically stated in the POS that all capital reserves will be returned. I asked Y about this and she said the capital reserve portion of the budget would eventually be adjusted towards the end of the life to make to get the remaining capital reserves to be as close to 0 as possible.

I did ask about the refurbishment and her comment was it is expected that DVC will have the last refurb (soft or hard) about 7 years before expiration on the current schedule. The bigger question is roof and siding, etc. as they are the bigger costs. I'm guessing those will be replaced at the end of their life (generally about 20-30 years) thus there will be maybe 10 years left of useful life at the end of the lease.

That's good to know and makes sense.

 

[KAT4DISNEY]

This is correct. It's specifically stated in the POS that all capital reserves will be returned. I asked Y about this and she said the capital reserve portion of the budget would eventually be adjusted towards the end of the life to make to get the remaining capital reserves to be as close to 0 as possible.

I did ask about the refurbishment and her comment was it is expected that DVC will have the last refurb (soft or hard) about 7 years before expiration on the current schedule. The bigger question is roof and siding, etc. as they are the bigger costs. I'm guessing those will be replaced at the end of their life (generally about 20-30 years) thus there will be maybe 10 years left of useful life at the end of the lease.

The very interesting thing is that afaik they didn't redo the siding or roofing for PVB. To not even start new and charge for it? AKV - Jambo was similar I believe. A lot of exterior work was done at WL though.