Trying to wrap my head around dues increases

[Herding_Cats]

I'm in the midst of massive information gathering in here, and dues are clearly the most expensive part of DVC long term.
Even looking at a small contract (50pts) if we kept it for the life of the contract, we could be paying 1/3 of the purchase price in dues for the last few years. And, as an example, going from just under $10/pt dues at OKW to over $15/pt in 10 years (with a 4ish% annual increase) is pretty sobering. And possibly $60+/pt at the same rate of increase in the final year of the contract (for extended)? That's.....nuts? Am I missing something here?

 

[TraderStitch]

I've seen this topic discussed before. I believe you'd need to consider rate of inflation as well as value of future dollars vs present. No one really knows how it will work out. I don't recall the exact thread or person who did it, but looking at historical rates of increase and applying those to VGF or Riv, they would have dues something like $46 ppt by the end.

This by no means is going to happen as that would be insane to the average owner; however, no one knows how things will look down the road.
Another data point would be amount of owners and cost of maintenance, cash reserve... yadda yadda yadda.

 

[wnielsen1]

You have to take it into context of how much room rates at Disney increase over those years too.

 

[Herding_Cats]

You have to take it into context of how much room rates at Disney increase over those years too.

OK, so if dues at OKW would to from $10 up to $60 at the end of the contract (just over 25 years) that x6. So a $200/nt room right now would be $1200 in 25 years? All-Stars or Pop for $1200/nt? There's no way. I know people compare cash stays at the same resort to find "savings", but I'm looking at DVC as being priced just a bit more than rack rate Value Resorts for per night costs.

 

[havoc315]

I'm in the midst of massive information gathering in here, and dues are clearly the most expensive part of DVC long term.
Even looking at a small contract (50pts) if we kept it for the life of the contract, we could be paying 1/3 of the purchase price in dues for the last few years. And, as an example, going from just under $10/pt dues at OKW to over $15/pt in 10 years (with a 4ish% annual increase) is pretty sobering. And possibly $60+/pt at the same rate of increase in the final year of the contract (for extended)? That's.....nuts? Am I missing something here?

It's called inflation. My parents bought their house in 1975 for $35,000 and today that house is worth over $500,000.
So yes... dues may go from $10 to $60 over 40+ years.
But when dues are $60, rooms at Pop Century will be going for $1500 per night... Rooms at Grand Floridian will be $7,000 per night and Walmart cashiers will be earning $95 per hour. (Back in 1975, minimum wage was $2.10.... now in most states it is between $10 and $15).

That's the effect of inflation.

 

[Sandisw]

OK, so if dues at OKW would to from $10 up to $60 at the end of the contract (just over 25 years) that x6. So a $200/nt room right now would be $1200 in 25 years? All-Stars or Pop for $1200/nt? There's no way. I know people compare cash stays at the same resort to find "savings", but I'm looking at DVC as being priced just a bit more than rack rate Value Resorts for per night costs.

It may not always make sense when comparing to values if you only look at the price and forget about what you are getting for a similar price…which is deluxe stays.

There is definitely a bit of assumption that goes into things in terms of dues increases and cash rates rising at the same pace, So, all you can do is decide if the having DVC makes sense against what you might pay, and if you will want to own and go long enough to make it worth the investment.

 

[havoc315]

OK, so if dues at OKW would to from $10 up to $60 at the end of the contract (just over 25 years) that x6. So a $200/nt room right now would be $1200 in 25 years? All-Stars or Pop for $1200/nt? There's no way. I know people compare cash stays at the same resort to find "savings", but I'm looking at DVC as being priced just a bit more than rack rate Value Resorts for per night costs.

Yes way. Do you know what those hotel rooms were going for in 1990?

https://www.latimes.com/archives/la-xpm-1991-03-03-tr-93-story.html

The Contemporary was $190 per night... CBR was $84 per night.
So in 32 years, WDW resort rates have increased by 4x-5x approximately.

If a room can go from $190 per night to $900 per night from 1991 to 2022, why wouldn't it go from $900 to $5,000 in another 25-30 years?

 

[Herding_Cats]

This is why I hate math.

 

[wnielsen1]

OK, so if dues at OKW would to from $10 up to $60 at the end of the contract (just over 25 years) that x6. So a $200/nt room right now would be $1200 in 25 years? All-Stars or Pop for $1200/nt? There's no way. I know people compare cash stays at the same resort to find "savings", but I'm looking at DVC as being priced just a bit more than rack rate Value Resorts for per night costs.

Getting from $10 to $60 in 25 years requires compounding at nearly 7.5% per year. If that happens, then I think it is safe to assume that the all-stars or pop will also increase by around that rate

 

[skippytx]

Don't forget about the increased cost just to use your DVC points. Park tickets, food prices at the parks, Airfare (if applicable). What's a park ticket going to cost in 15 years?

I don't mind owning DVC because it's easy to sell if I don't want it anymore. I'm not stuck with it, so I don't worry about it. Worse case scenario I just sell the contracts.

This is why I'm always telling people not to worry about the initial point cost with DVC. After a few years the dues and cost to use the DVC points quickly overshadows any initial point savings.

 

[pianomanzano]

OK, so if dues at OKW would to from $10 up to $60 at the end of the contract (just over 25 years) that x6. So a $200/nt room right now would be $1200 in 25 years? All-Stars or Pop for $1200/nt? There's no way. I know people compare cash stays at the same resort to find "savings", but I'm looking at DVC as being priced just a bit more than rack rate Value Resorts for per night costs.

If you take into account historical dues increases over the life of the contract, dues should be about ~$20/pt at 2042 and ~$36/pt in 2057 for OKW, so more like 2 to 3.5x the rates in those timeframes. Which given the increases we've seen so far in rack rates don't think it's very farfetched to see. And again as others have noted it's all relative to the overall inflation you'll see everything, including our salaries.

 

[BillPA]

DVC ANNUAL DUES BY RESORT

Year	OKW	BWV	VB	VB(s)	HHI	BRV	BCV	SSR	AKV	BLT	VGC	AUL	AUL(s)	VGF	PVB	CCV	RIV
2022	8.81	8.08	11.94	9.41	10.07	8.15	7.54	7.33	8.24	7.08	7.48	8.67	6.52	7.01	7.39	7.60	8.38
2021	8.36	7.81	11.23	8.86	9.97	8.11	7.44	7.11	8.07	6.90	6.99	8.35	6.30	6.81	7.05	7.59	8.38
2020	7.84	7.37	10.13	8.00	9.10	7.78	7.06	6.77	7.67	6.58	6.60	8.33	6.26	6.56	6.79	7.45	8.31
2019	7.23	7.17	9.48	7.48	8.56	7.32	6.94	6.40	7.44	6.40	6.27	7.86	5.91	6.39	6.76	7.42	8.31
2018	6.72	6.55	8.53	6.71	7.72	6.93	6.44	5.86	6.76	5.92	5.88	7.53	5.66	6.13	6.20	7.26
2017	6.41	6.47	8.11	6.49	7.27	6.54	6.27	5.60	6.59	5.62	5.61	7.03	5.28	5.90	6.14	7.33
2016	6.01	6.18	8.08	6.35	6.82	6.22	6.13	5.44	6.42	5.28	5.37	6.79	5.10	5.71	6.09
2015	5.84	6.07	8.06	6.28	6.52	6.03	5.97	5.17	6.30	5.05	5.15	6.51	4.89	5.52	6.02
2014	5.54	6.01	7.75	6.06	6.28	5.93	5.79	4.91	5.97	4.78	4.94	6.44	4.84	5.41
2013	5.34	5.84	7.41	5.80	6.02	5.79	5.65	4.81	5.67	4.50	4.58	6.25	4.70	5.41
2012	5.20	5.62	7.12	5.57	5.93	5.61	5.50	4.73	5.44	4.22	4.33	5.96	4.48
2011	4.98	5.46	6.78	5.31	5.68	5.34	5.28	4.51	5.01	3.89	4.07	5.73	4.31
2010	4.87	5.36	6.61	5.18	5.57	5.20	5.15	4.46	4.95	3.78	3.94
2009	4.73	5.21	6.41	4.97	5.36	5.04	5.00	4.34	4.86	3.67	3.82
2008	4.56	5.04	6.04	4.71	5.16	4.87	4.80	4.21	4.71
2007	4.40	4.85	5.63	4.39	4.98	4.73	4.63	4.12	4.62
2006	4.24	4.69	5.27	4.12	4.34	4.61	4.48	3.98
2005	3.86	4.41	4.87	3.84	4.04	4.35	4.27	3.83
2004	3.68	4.25	4.67	3.67	3.86	4.22	4.18	3.80
2003	3.49	4.11	4.36	3.45	3.70	4.05	3.97
2002	3.22	3.92	4.17	3.33	3.48	3.80	3.77
2001	3.13	3.82	3.97	2.70	3.32	3.63
2000	3.16	3.94	4.08	2.87	3.25	3.62
1999	3.16	4.02	3.99	2.82	3.18
1998	3.17	3.94	—	2.76	3.20
1997	3.14	3.84	—	2.90	3.16
1996	2.99	3.70	—	2.82	3.16
1995	2.84
1994	2.70
1993	2.63
1992	2.56
1991	2.51

 

[Brian Noble]

That's.....nuts? Am I missing something here?

Presumably, you also have more to spend, even though things cost more. Inflation applies to both income and expenses, though not always at the same rate. After all, the expenses go up because the people being paid for those services are being paid more.

This is why I hate math.

You aren't alone, but one of the best things I ever did for my ability to understand money was to wrap my head around the idea that $100 today is worth more than $100 ten years from now.

One of my colleagues teaches an excellent (and free!) course on Coursera for beginners about this very idea. If you have a few hours to spend in the next month or so, I recommend it.

https://www.coursera.org/learn/time-value-of-money

 

[havoc315]

Presumably, you also have more to spend, even though things cost more. Inflation applies to both income and expenses, though not always at the same rate. After all, the expenses go up because the people being paid for those services are being paid more.


You aren't alone, but one of the best things I ever did for my ability to understand money was to wrap my head around the idea that $100 today is worth more than $100 ten years from now.

One of my colleagues teaches an excellent (and free!) course on Coursera for beginners about this very idea. If you have a few hours to spend in the next month or so, I recommend it.

https://www.coursera.org/learn/time-value-of-money

That course should be mandatory before making a big pre-payment in buying DVC points!

 

[Herding_Cats]

Presumably, you also have more to spend, even though things cost more. Inflation applies to both income and expenses, though not always at the same rate. After all, the expenses go up because the people being paid for those services are being paid more.


You aren't alone, but one of the best things I ever did for my ability to understand money was to wrap my head around the idea that $100 today is worth more than $100 ten years from now.

One of my colleagues teaches an excellent (and free!) course on Coursera for beginners about this very idea. If you have a few hours to spend in the next month or so, I recommend it.

https://www.coursera.org/learn/time-value-of-money

right. I understand what inflation is. But the scale of the jump I was seeing using some spreadsheets others have posted in here just seemed like it was going to be so far ahead of inflation that it seemed.....off? Not the word I want, but it'll work.

 

[Brian Noble]

For some reason, entertainment of all sorts seems to grow faster than base inflation: theme parks, vacation lodging, major sporting events…about the only one that hasn’t is movie theaters. I don’t really understand what’s driving that, though I have some guesses.

I do suspect 7.5% is on the high side but I wouldn’t bet the farm on it.

 

[DonMacGregor]

It's called inflation. My parents bought their house in 1975 for $35,000 and today that house is worth over $500,000.
So yes... dues may go from $10 to $60 over 40+ years.
But when dues are $60, rooms at Pop Century will be going for $1500 per night... Rooms at Grand Floridian will be $7,000 per night and Walmart cashiers will be earning $95 per hour. (Back in 1975, minimum wage was $2.10.... now in most states it is between $10 and $15).

That's the effect of inflation.

This. I bought my first house for exactly 20 times what my parents paid for theirs (same size and square footage too).

 

[DVC Doctor]

Yep, death, taxes, and yearly increases in DVC annual dues are facts of life

 

[AstroBlasters]

I assume a 5% annual cost of dues increase.

If you actually look at inflation projected out over decades it will make your head spin.

In the early 2010’s we used to stay at the Disneyland Hotel for ~$250 night and get a note in our bill that we could extend for ~$100/night. Those same rooms are $600+ now.

Was 2010 depressed and 2023 overinflated? Perhaps. But inflation is real.

 

[DebbieB]

Getting from $10 to $60 in 25 years requires compounding at nearly 7.5% per year. If that happens, then I think it is safe to assume that the all-stars or pop will also increase by around that rate

I bought BWV in 1999, dues were $4.02, 2023 is $8.53, 24 years. So $10 to $60 in 25 years doesn’t seem right.