Raising Maintenance Fees

[rg35]

Hilton Head MF increased from $3.32 to 8.56 between 2001 and 2019 - the years we owned it. For our 180 points, dues increased from $597 to $1540 in 18 years. That's a 258% increase. Inflation has increased 44% during that time.

That's actually a 158% increase. (8.56-3.32)/3.32 -- which is still significant.

In any case, HHI isn't necessarily the best point of comparison. That resort has had the highest CAGR (compound annual growth rate) over time compared to all the other resorts because of significant storm damage. The majority of resorts are in the 3-6% CAGR range.

By comparison, AKV, which we purchased in 2012, has gone from 5.43 to 7.44, a more reasonable 37% increase.

DVC does disclose on their website that since inception, on average across all resorts, MF increases between 3-6% per year. This is not a misleading statement even though there have been outliers, including the large increases at all resorts this year to maintain disney profits cover increases in minimum wage for Disney workers.

 

[crvetter]

The MF are out of control and that's one of the reasons we sold. They are outpacing the inflation rate. Keep in mind - a 3% increase on $3 is 9 cents. On $8, it is 24 cents. So, as it compounds, the $$ increase - but even worse is that percentage increase continues to go up as well.

Hilton Head MF increased from $3.32 to 8.56 between 2001 and 2019 - the years we owned it. For our 180 points, dues increased from $597 to $1540 in 18 years. That's a 258% increase. Inflation has increased 44% during that time.

The CPI index (a measure of inflation for the US economy, which is what MF should be compared against since it's US based expenses) raised from $175.6 (Jan 2001) to $252.763 (Jan 2019) which equates to 144% larger or a 44% growth.

Your numbers above seem correct though for the MF you seem to have given the multiple but the inflation number you seem to have given growth rate (subtracted 1). So while yes MF growth outpaced inflation it isn't nearly as large as stated (but still large about 2% a year extra).

Some info on how inflation moved recently

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

Some info on historical average YOY increase in the annual dues since inception and since 2017

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

 

[skier_pete]

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.

 

[CanadaDisney05]

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.

This....

DVC maintenance fees is a single expense (i know if it's broken down its multiple expenses), within a single industry, almost entirely located in a single geographic area. To expect the costs to increase at a similar rate as a diversified portfolio of expenses (US Inflation) will lead to disappointment. The change in manufacturing costs of paper towels in Montana is irrelevant to the costs of maintaining a hotel property in Orlando. It's like expecting a single stock to increase at the same rate as a diversified world wide mutual fund/index fund. The law of averages means that their are points all over the chart. It would be more fair to compare average increases to other timeshares in the Orlando area.

 

[stewart715]

The MF are out of control and that's one of the reasons we sold. They are outpacing the inflation rate. Keep in mind - a 3% increase on $3 is 9 cents. On $8, it is 24 cents. So, as it compounds, the $$ increase - but even worse is that percentage increase continues to go up as well.

Hilton Head MF increased from $3.32 to 8.56 between 2001 and 2019 - the years we owned it. For our 180 points, dues increased from $597 to $1540 in 18 years. That's a 258% increase. Inflation has increased 44% during that time.

HHI has only increased 4.5% YOY. And for the time period you mentioned (18 years), thats 5.4% YOY, which is above inflation. Reason: hurricanes and rising property insurance and maintenance costs.

Should note that this is really exclusive of HHI and VB (hurricane prone and hit areas). The WDW property MF increases have been quite reasonable at < 3-4% year over year. Some even less than that.

Just like property taxes and maintenance costs for our own residences, they are going to go up every year. We knew that going into this.

 

[skier_pete]

Should note that outside of of HHI and VB (hurricane prone and hit areas), the WDW property MF increases have been quite reasonable at < 3-4% year over year.

And even HHI has only increased 4.5% YOY.

Yeah - one bad year that is completely explainable by the internal wage hikes does not seem to me to be "Out of control". However, you all need to realize that a 4% hike when MF were $5 is 20 cents, while at $8 the same 4% is 32 cents, so yes it will make rate hikes appear to accelerate.

 

[stewart715]

Yeah - one bad year that is completely explainable by the internal wage hikes does not seem to me to be "Out of control". However, you all need to realize that a 4% hike when MF were $5 is 20 cents, while at $8 the same 4% is 32 cents, so yes it will make rate hikes appear to accelerate.

For sure. But I think it is rising insurance costs along the coast that will keep those MF's high for the foreseeable future as the new normal. And I wonder if DVC keeps them in their portfolio after the deed expiration date in 2042.

It's also not worth looking at "hey, it went up 150% or 250% from X year to Y year." It's going to be high as is the increase for gasoline, personal property taxes, etc. etc. They are going to go up and they are supposed to go up. How much is certainly up for debate, but they definitely aren't going up for no reason.

 

[SL6827]

The MF are out of control and that's one of the reasons we sold. They are outpacing the inflation rate. Keep in mind - a 3% increase on $3 is 9 cents. On $8, it is 24 cents. So, as it compounds, the $$ increase - but even worse is that percentage increase continues to go up as well.

Hilton Head MF increased from $3.32 to 8.56 between 2001 and 2019 - the years we owned it. For our 180 points, dues increased from $597 to $1540 in 18 years. That's a 258% increase. Inflation has increased 44% during that time.

Wow, that is really eye opening right there.

 

[gscott8075]

I certainly apologize for the math error and will correct it.

According to BLS, a $100,000 house in 2001 would cost 149,000 today. A 49% increase or 1/3 what DVC HH has increased.

Everyone is free to draw their own conclusions. We enjoyed DVC immensely but I still maintain the dues increase are out of control.

 

[SL6827]

I certainly apologize for the math error and will correct it.

According to BLS, a $100,000 house in 2001 would cost 149,000 today. A 49% increase or 1/3 what DVC HH has increased.

Everyone is free to draw their own conclusions. We enjoyed DVC immensely but I still maintain the dues increase are out of control.

It happens. No biggie. We are human, but still, that is a major increase. And I love HH.

 

[KAT4DISNEY]

I certainly apologize for the math error and will correct it.

According to BLS, a $100,000 house in 2001 would cost 149,000 today. A 49% increase or 1/3 what DVC HH has increased.

Everyone is free to draw their own conclusions. We enjoyed DVC immensely but I still maintain the dues increase are out of control.

I know of places that house prices have only increased that, or less. But for the most part in any popular area with growth that number is immensely low.

 

[gscott8075]

I know of places that house prices have only increased that, or less. But for the most part in any popular area with growth that number is immensely low.

Merely quoting from the Bureau of Labor Statistics!

 

[disney11fan]

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

Is the maintenance fee based on how many points you have? Is the real estate tax the same way?
What is the average maintenance fee and taxes one might pay if the stay at a deluxe resort once a year for one week during the fall?

 

[disney11fan]

That's actually a 158% increase. (8.56-3.32)/3.32 -- which is still significant.

In any case, HHI isn't necessarily the best point of comparison. That resort has had the highest CAGR (compound annual growth rate) over time compared to all the other resorts because of significant storm damage. The majority of resorts are in the 3-6% CAGR range.

By comparison, AKV, which we purchased in 2012, has gone from 5.43 to 7.44, a more reasonable 37% increase.

DVC does disclose on their website that since inception, on average across all resorts, MF increases between 3-6% per year. This is not a misleading statement even though there have been outliers, including the large increases at all resorts this year to maintain disney profits cover increases in minimum wage for Disney workers.

This is a little confusing to a non dvc member.

 

[disney11fan]

Wow, that is really eye opening right there.

how does this make sense. When maintenance fee rising so fast is it possible that you could start paying more than a guest just visit and not paying a guy in fee and commit for a long time.

 

[crvetter]

how does this make sense. When maintenance fee rising so fast is it possible that you could start paying more than a guest just visit and not paying a guy in fee and commit for a long time.

Theoretically MF will need to be lower than the cost of the hotel. The MF cover at cost items (aside from transportation, which same formula for costs need to be applied to cash and DVC) whereas the hotel side needs to cover at cost items (utilities, capital costs) and turn a profit for Disney. So since a DVC member had the buy in that covers the profit Disney makes the subsequent yearly MF will be lower than cash rates. Sure some years Disney could have to discount rooms to run a loss (though even in 2008 they didn’t do this but simply shuttered resorts) overall the MF will be lower. This is of course comparing to similar resort amenities. So value and moderate hotels have lower costs because they provide less amenities.

 

[skier_pete]

Is the maintenance fee based on how many points you have? Is the real estate tax the same way?
What is the average maintenance fee and taxes one might pay if the stay at a deluxe resort once a year for one week during the fall?

Www
Maintenance fees are based on per point annually. They include taxes, services such as front desk and housekeeping, an emergency fund and maintaining the property. Most resorts fall between $6.50 and $7.50 a point. Like any condo-style property they go up every year. Most year they go up between 2-5%, last year most of them went up more because of the raise in minimum wage. You will get an annual statement every year that shows the dues offset expenses. This is all information that is readily available on the internet. Search DVC maintenance fees and you can get a list of them all.

 

[McCrae]

how does this make sense. When maintenance fee rising so fast is it possible that you could start paying more than a guest just visit and not paying a guy in fee and commit for a long time.

This is the case for the majority of time shares and why most should be avoided. It could of course happen to DVC at some point in time. Currently that is not and has never been the case. My costs to stay at DVC are roughly 50% of the cost it would be to pay cash for the same room.

As long as demand remains strong to stay at Disney I don’t see the current situation changing.

 

[CanadaDisney05]

I certainly apologize for the math error and will correct it.

According to BLS, a $100,000 house in 2001 would cost 149,000 today. A 49% increase or 1/3 what DVC HH has increased.

Everyone is free to draw their own conclusions. We enjoyed DVC immensely but I still maintain the dues increase are out of control.

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.

 

[SL6827]

how does this make sense. When maintenance fee rising so fast is it possible that you could start paying more than a guest just visit and not paying a guy in fee and commit for a long time.

Ya, that is what I am getting at. That is what I meant by eye opening. But that is not to say I might not jump back into DVC later on. May or may not. But if I do, I know it will be with just another very small contract.