Has anyone projected future dues for each resort thru the end of each contract?

[walt34]

Which would then imply that DVC dues will eventually overtake the cost of cash vacations, right? I.e. booking with cash will be cheaper than DVC.

But nearly all of the drivers of DVC dues will also be cost drivers for Disney direct, won’t they? So if cash reservations rise less than dues, won’t this be eating Disney’s profits?

 

[CastAStone]

Which would then imply that DVC dues will eventually overtake the cost of cash vacations, right? I.e. booking with cash will be cheaper than DVC.

That’s the missing piece of data here. What has the cost of a WDW cash room done in the same time period?

I know they went absolutely crazy in the early 2010s with double digit price increases every year. I don’t think it’s been anything like that since about 2018 as they clearly hit a price ceiling.

What will they do moving forward?

I already think there’s resorts and rooms where you lose money buying direct vs paying cash (Beach Club 1 bedroom is the obvious example but there’s a lot of others, including BCV studios most nights of the year by my math, when purchased direct)

 

[NY Pirate Princess]

DVC is wages, construction, and INSURANCE make up the most of dues I would think. That's why HHI and VB are where they are. Resale selling at insanely low per point prices to try to make the math work. My own contract at OKW purchased last summer would currently net me .04 profit per point rented through a broker. I am certain the base cost plus dues will exceed the rate brokers will offer me, likely as soon as 2025. Since I bought to use and ride to the end that doesn't bother me.

I am betting on smaller increases at my OKW 2042 as it nears the end. I believe it is not lawful for Disney to ask for reserves beyond the useful life calculations. At some point the 2042 has to be off the hook for big ticket items. Disney can't ask me to pay for a planned refurbishment starting after 1.31.2042. I can pay into reserves for replacements, but you can't charge me for a roof replacement for a resort that will no longer belong to me. However, who really knows, and that's why I bought a small contract at an expiring resort that I could sustain dues throughout the life and enjoy my retirement trips!

 

[NY Pirate Princess]

I know they went absolutely crazy in the early 2010s with double digit price increases every year. I don’t think it’s been anything like that since about 2018 as they clearly hit a price ceiling.

I paid a ridiculous amount for a preferred room at CBR in 2022. It was a huge part of the reason I finally bought a contract. COVID disrupted prices considerably and makes a real analysis of cash room prices difficult right now. Of course I could have done much better this summer with a cash trip, but I am betting that won't always be true.

 

[tx911]

That’s the missing piece of data here. What has the cost of a WDW cash room done in the same time period?

I know they went absolutely crazy in the early 2010s with double digit price increases every year. I don’t think it’s been anything like that since about 2018 as they clearly hit a price ceiling.

What will they do moving forward?

I already think there’s resorts and rooms where you lose money buying direct vs paying cash (Beach Club 1 bedroom is the obvious example but there’s a lot of others, including BCV studios most nights of the year by my math, when purchased direct)

That's true. The increase in cash room cost has probably out-stripped inflation as well.

I'm thinking about a Riviera contract, and this thread is giving me a lot of pause!

 

[Sandisw]

We simply have not done or worried about it. If we get to a point where the cost of dues is not tenable then we will sell and make different choices.

The hope is that whatever the increase matched the retirement income increases we might see.

 

[tx911]

But nearly all of the drivers of DVC dues will also be cost drivers for Disney direct, won’t they? So if cash reservations rise less than dues, won’t this be eating Disney’s profits?

I'm not smart enough to understand all the variables.

With cash room cost, it seems like what consumers are willing to pay is a barrier to unlimited increases. I.e., if people stop booking cash rooms, Disney will have to lower the cost.

OTOH, we are on the hook for dues whatever they inflate to in the future.

 

[tx911]

We simply have not done or worried about it. If we get to a point where the cost of dues is not tenable then we will sell and make different choices.

The hope is that whatever the increase matched the retirement income increases we might see.

I'm thinking the same. I just wonder what "selling" will look like if the dues get that high!

Hopefully not something like, hey I'll pay you $10k to take this contract off my hands

 

[kilik64]

So life time to date for OKW dues have gone up ~5% annually, so using that should end around 22.62 in 2042.

That's really not bad over 50 years, started at 2.51.

Its the new resorts, starting in the 8s and going up anywhere from 3-5% annually after the first couple of years (like RIV was flat growth basically first few years) that are going to be crazy numbers in the 40s.

If I did the maths right, BW and BCV using the life to date annual increase amount, they'll end $14.57 and 16.29 respectively in 2042. They didnt have a full 50 years of growth since they were pegged to the OKW expiration date so that helps them out.

My resort, SSR, will look to end around $25.39, also not too crazy high.

*all numbers based on https://www.dvcresalemarket.com/buying/annual-dues/ as far as dues annual growth percent estimate over time, could end up a lot less or a lot more depending on other factors.

 

[CastAStone]

I paid a ridiculous amount for a preferred room at CBR in 2022. It was a huge part of the reason I finally bought a contract. COVID disrupted prices considerably and makes a real analysis of cash room prices difficult right now. Of course I could have done much better this summer with a cash trip, but I am betting that won't always be true.

Skyliner resorts are different than the general trajectory. I almost mentioned that in my post. Disney absolutely took a bunch extra there the year before and after that opened.

 

[tom1944]

So life time to date for OKW dues have gone up ~5% annually, so using that should end around 22.62 in 2042.

That's really not bad over 50 years, started at 2.51.

Its the new resorts, starting in the 8s and going up anywhere from 3-5% annually after the first couple of years (like RIV was flat growth basically first few years) that are going to be crazy numbers in the 40s.

If I did the maths right, BW and BCV using the life to date annual increase amount, they'll end $14.57 and 16.29 respectively in 2042. They didnt have a full 50 years of growth since they were pegged to the OKW expiration date so that helps them out.

My resort, SSR, will look to end around $25.39, also not too crazy high.

*all numbers based on https://www.dvcresalemarket.com/buying/annual-dues/ as far as dues annual growth percent estimate over time, could end up a lot less or a lot more depending on other factors.

The fact that my dues for SSR could be $20,000 a year does give me some hesitation about that second contract.

 

[TheDailyMoo]

2042 and 2057 contracts are a good hedge for me personally. If things go haywire at least it won't hurt for what feels like perpetuity. If all is still great and we're still in good Disney shape in 2057 then we'll reassess at that point and end up paying more for something new or just go to cash or who the heck even knows. Maybe they'll finally have those flying cars by then.

Side note it's funny to see science fiction novels written years ago that reference years like 2010 as the "far future". At this point life is too crazy to overthink. Just wanna enjoy my trips while I can enjoy my trips.

 

[JackosinDIS]

The fact that my dues for SSR could be $20,000 a year does give me some hesitation about that second contract.

I don’t think $20k will seem that bad in 30 years time. I’ve worked out that mine will peak at $26k (at which point a couple of the contracts will expire) but assuming wage growth keeps up with inflation for the next 20 or so years it will just feel like the same amount it is today. Although I must admit the number looks big written down at today’s values..

Maybe we will look back at this thread in 20 years and laugh that we were worrying about a mere $20k in dues!

 

[CastAStone]

INSURANCE

Insurance has gone up a lot, but it is less than 3% of dues at most resorts. At many it’s less than 2%.

It is however much higher than that at VB and to a lesser extent at HHI.

 

[tjkraz]

33 years ago, dues started at $2.51 per point. Now nearly 4x as much. It shouldn't be surprising that dues will again increase 4x in another 30-35 years.

Most of what is funded by the annual dues are tangible benefits for resort guests. Wages and benefits for every single cast member, cost of theme park transportation, insurance, security, utilities, refurbishment costs, property taxes to cover fire & rescue, sanitation, etc. Dues only increase as the cost of those services go up. In the mid-90s, minimum wage was $4.75 per hour and gas was a little over $1 per gallon.

Dues will be much higher 30+ years down the road. But wages and even retirement benefits will have increased too. Hopefully at a similar rate.

If you want to maintain your sanity, I'd advise against trying to calculate the cost of a theme park ticket or annual pass....

 

[walt34]

With cash room cost, it seems like what consumers are willing to pay

What consumers are willing to pay dictates what prices Disney can charge for their rooms. But dues are similar to the costs Disney has to run its (non dvc) resorts. So if these costs rise faster than Disney can raise prices, hotels will become unprofitable and Disney has a problem (on the non-dvc side).

I can see that happening at HH or Vero and if it does, Disney will probably get rid of these resorts in the long run. But I find it hard to imagine hotels becoming unprofitable at WDW. I think it’s much more likely that hotel room prices will increase at least to recover rising costs- which would mean, that DVC points at WDW will still be valuable (as compared to booking rooms directly)

 

[tom1944]

I don’t think $20k will seem that bad in 30 years time. I’ve worked out that mine will peak at $26k (at which point a couple of the contracts will expire) but assuming wage growth keeps up with inflation for the next 20 or so years it will just feel like the same amount it is today. Although I must admit the number looks big written down at today’s values..

Maybe we will look back at this thread in 20 years and laugh that we were worrying about a mere $20k in dues!

I am retired with a pension without a COLA so in my circumstance it could be a killer. Right now, I pay for DVC with a business I do in retirement, but I figured I would stop that in about 6 years.

I am good financially, but it could have an impact.

 

[MartyParty]

I don’t think $20k will seem that bad in 30 years time. I’ve worked out that mine will peak at $26k (at which point a couple of the contracts will expire) but assuming wage growth keeps up with inflation for the next 20 or so years it will just feel like the same amount it is today. Although I must admit the number looks big written down at today’s values..

Maybe we will look back at this thread in 20 years and laugh that we were worrying about a mere $20k in dues!

Wonder what the cost per point will be to buy? I recall when folks were freaking out over VCG going over $200/pt. But on the bright side maybe by then we'll all be millionaires (not inflation adjusted of course)!

 

[Cabius]

With cash room cost, it seems like what consumers are willing to pay is a barrier to unlimited increases. I.e., if people stop booking cash rooms, Disney will have to lower the cost.

Sort of. But on the other hand, I think if you went back to 1994 or 2004 and showed them 2024 rack rates, they would think you were absolutely insane.

Disney also wants to keep recycling and reselling DVC resorts as a permanent source of income, which means that long-term they will continue to try and make it an attractive value proposition. The day that DVC costs as-much-or-more as a cash stay is the day that that entire business unit becomes ~worthless.

Anything can happen, but I expect both cash costs and DVC dues to increase at greater than the rate of inflation short of some major economic realignment (e.g. anything from seismic increases in tax rates on the upper-middle class to violent socialist revolution).

 

[Disney_escape]

Exactly. You can't just look at dues cost in isolation...

Agreed, people should do the same projection on their favorite Disney hotel room. The Delta is definitely in your favor. $8 dues for 30 years @ 4% goes to $25.95, but a $600 room goes to $1,946.