What drives Maintenance Fees?

[Kickstart]

I've been thinking about buying into DVC recently (resale) and was wondering what I should expect on fee increases.

I assume the fees must be used for the DVC resort, so they can't just be raised to "make money", but what are the potential drivers for fee increases besides annual inflation?

If a resort has a refurb coming up, will the fees increase around (or after) the refurb, or is the refurb paid for out of the previous seven years of fees (or the portion of those fees earmarked for the refurb)?

Is it a safe assumption that resorts which have had consistently lower fees over the last 5-10years will continue to have lower fees than the resorts with more expensive fees in the future?

 

[_auroraborealis_]

The biggest single driver of fees is the wage paid to resort staff.

Refurbishment is paid via a reserve fund, and not from current maintenance fees as a lump sum. The amount for the refurbishment is accumulated over a 7-ish year period.

 

[CastAStone]

I would look here for the history, but the short answer is the expensive resorts tend to remain expensive: https://www.disboards.com/threads/t...-updated-december-2019.3655476/#post-58628435

 

[chalee94]

I've been thinking about buying into DVC recently (resale) and was wondering what I should expect on fee increases.

1) I assume the fees must be used for the DVC resort, so they can't just be raised to "make money", but what are the potential drivers for fee increases besides annual inflation?

2) If a resort has a refurb coming up, will the fees increase around (or after) the refurb, or is the refurb paid for out of the previous seven years of fees (or the portion of those fees earmarked for the refurb)?

3) Is it a safe assumption that resorts which have had consistently lower fees over the last 5-10years will continue to have lower fees than the resorts with more expensive fees in the future?

As the others have said, 2) is "no - the capital reserves are collected over a period of time" and 3) should generally be true (interesting to see if OKW the last couple of years was an aberration).

1) Operating expenses, like housekeeping, administration and front desk, maintenance and transportation account for the majority of operating expenses. Wage increases related to new collective bargaining agreements recently have accounted for a lot of the increases here.

Capital reserves can depend on how frequently renovations and refurbishments are scheduled.

Property taxes are also a factor and increases here are not capped.

I believe that Disney also gets a management fee that is roughly 15% of the above resort costs.

These links may provide a little more information:

https://dvcnews.com/index.php/dvc-p...29-sharp-increases-to-hit-owners-in-2019-dues
https://dvcnews.com/index.php/dvc-p...020-disney-vacation-club-annual-dues-revealed

 

[CastAStone]

As the others have said, 2) is "no - the capital reserves are collected over a period of time" and 3) should generally be true (interesting to see if OKW the last couple of years was an aberration).

1) Operating expenses, like housekeeping, administration and front desk, maintenance and transportation account for the majority of operating expenses. Wage increases related to new collective bargaining agreements recently have accounted for a lot of the increases here.

Capital reserves can depend on how frequently renovations and refurbishments are scheduled.

Property taxes are also a factor and increases here are not capped.

I believe that Disney also gets a management fee that is roughly 15% of the above resort costs.

These links may provide a little more information:

https://dvcnews.com/index.php/dvc-p...29-sharp-increases-to-hit-owners-in-2019-dues
https://dvcnews.com/index.php/dvc-p...020-disney-vacation-club-annual-dues-revealed

For the WDW resorts the management fees are generally closer to about 8% of dues. The 3 beach resorts management fees are higher.

https://dvcnews.com/dvc-program/fin...ent/content/4730-2020-budgets-for-all-resorts

 

[chalee94]

Yeah, I knew I was oversimplifying but I think I confused the 15% general cap with the management fee.

But your dvcnews link was the one I was looking for earlier with the detailed breakdown for annual dues, so that is very helpful.

SSR's 2019 condo notice puts it at 12% of specific pieces of the annual costs... But anyway, there is definitely a DVC management fee that works its way into the overall resort total...

"Management Fee - Fee paid to DVCMC for providing management services to the Association according to the Property Management Agreement. The fee is equal to 12 percent of the total Operating and Reserve Budget exclusive of real estate taxes, transportation fees, and the management fee, itself."

https://disneyvacationclub.disney.g...iation-notices/2019/2019_Condo_Notice_SSR.pdf

 

[Kickstart]

Wow... great information... thanks everyone!