Hey everyone, it's Jacqueline for Pixie Dust PhD. When you buy Disney Vacation Club you have to pay
annual dues. This is a timeshare so a yearly fee really isn't all that surprising. But what exactly
goes into annual dues? What are the components that make up this annual fee? In this video
we will be going over the details of the line items that make up your annual dues--stay tuned!
Thanks so much for joining me for this video today where we are taking a deep dive into annual dues.
If you enjoy detailed content like this please hit that thumbs up button to like the video and
consider subscribing to the channel--you can ring that bell icon to receive notifications whenever
I post new videos. And if you're interested in Disney Vacation Club in general I have loads
of videos on this channel going over details of membership and jargon to know. Check out
a playlist of all these videos by clicking the card in the corner now and I’ll leave a link to
the playlist in the description below. Naturally, on the channel we have talked about annual dues
before. I’ve modeled the possible future of annual dues twice on this channel using three different
techniques. Back in April of 2020 we took a look at possible future annual dues by using a percent
change method as well as a treadline method. Then, more recently on the channel we looked at
the long-term cost analysis of owning Vero Beach or Hilton Head as your home resort by using the
compound annual growth rate. I’ll also leave links to both of these videos in the description below
for you to explore. Without further ado let's go ahead and get into today's topic: what goes into
annual dues. Largely there are three categories that make up your annual dues. These are capital
reserves, ad valorem taxes--and apologies I’m surely pronouncing that word incorrectly,
and then the last part is your total member operating assessment. Let's go ahead and talk
about each of these categories in a bit more detail. Please note for the sake of brevity I
will only be covering the DVC home resorts located at Walt Disney World. Resorts outside of Florida
can have variable and different line items than those inside of Florida, but regardless
after this video you certainly will have a better understanding of what goes into your annual dues.
Let's begin with capital reserves. These are funds that are set aside for the repair or replacement
of major items for the units or common elements with a useful life of greater than one year.
Capital reserves for Disney Vacation Club are covered in chapter 721 of the Florida statutes;
this chapter broadly covers timeshares. Here you can see the Bay Lake Tower 2020 annual dues.
There's a capital reserves amount per vacation point, as well as an interest income credit.
The total capital reserve's cost per point at Bay Lake Tower in 2020 was just under one dollar per
point. And in terms of what kind of elements qualify for capital reserves projects we can
see here that it's things like the roof, paving, and other common elements. The next main category
is ad valorem taxes. Ad valorem I believe is a Latin word that roughly translates to
according to value. Essentially your ad valorem taxes are just property taxes. For Disney Vacation
Club the rate is determined by the Orange County Property Appraisals Office as well
as the Reedy Creek Improvement District. The last main category that goes into dues is that member
operating assessment. This is a big one, so brace yourselves. Let's begin with operating costs.
Administration and front desk fees are the cost of resort management and operations. The annual audit
fee pays for the independent annual audit of the financial statements, which is required by law.
Next is the DVC reservation component. A small amount of your annual dues goes towards covering
the reservation system. Then there's fees paid to the division per Florida regulations.
Of course, the housekeeping fee covers costs associated with housekeeping. This is cleaning
vacation homes as well as public areas, and then replacement and cleaning of linens and towels.
Moving right along, next is the income tax. This pays for federal income taxes. The insurance fee
goes to premiums for property coverage, as well as general liability, workers compensation,
etc. The legal line item naturally covers legal counsel. Maintenance is a big one, and this covers
interior and exterior maintenance repairs. This also covers landscaping, pest control, and fire
alarm monitoring. The management fee gets paid to Disney Vacation Club management for the management
services they provide. Next is the member activity fee. This pays for things like recreation
operations, the newsletter, the annual meeting, as well as legal mailings. Next is sales tax on
support facilities. The definition of this one is pretty vague, saying it covers the maintenance
associated with support facilities. This is a little bit of a strange line item as it only
appears for the BoardWalk Villas and none of the other Disney Vacation Club home resorts located at
Walt Disney World. Thanks so much to the wonderful folks over at DVCnews.com for illuminating me to
what this line item is. They believe this is common things like upkeep with HVAC and plumbing;
and furthermore, they believe that these costs are just rolled up into other line items for the other
resorts, as obviously these are things that are happening at all the other resorts--it's likely
just a strange notation with the way that the dues for this exact resort were written out originally.
Next we have the security fee, which goes towards covering the cost of guards at the resort. The
transportation fee covers the cost of Walt Disney World transportation provided to the resort.
And finally utilities pays for utilities of course; this is things like electricity,
water, gas, waste, sewage, etc. Those are all of your operating costs, now let's move on to
operating revenue. First on the revenue side is the member late fees and interest. Essentially if
folks are late on paying their annual dues then interest and late fees are collected.
Next is breakage income, which is also explained a bit vaguely. I asked a cast member about
this and essentially my understanding from that conversation is that there is a breakage period--I
believe this breakage period is 60 days. At the point of the breakage period if there is any
inventory that isn't booked these can be sold at the cash rate, and that counts as profits. If any
of you know more about the breakage income and the breakage period definitely please enlighten
me and leave a comment down below! Then finally for revenue are parking fees, which are of course
fees paid to park. The total member operating assessment is then your cost minus the revenue.
Let's take a look at the 2020 annual dues for Bay Lake Tower, starting first with those operating
costs. You can see that most of the operating cost line items are fractions of a dollar per point
with the exception of housekeeping sticks out right away as quite high. If we add all these
line items up then we get the total cost per point for operating costs. Next we've got the operating
revenue from those late fees and interest, the breakage income, and parking fees. For 2020 at
Bay Lake Tower this totals just under 20 cents per point. To get your total member operating
assessment you then take your operating costs and subtract out that operating revenue. For Bay Lake
Tower we are left with a little bit over $3.87 per point for those 2020 annual dues from that
operating member assessment. Next for annual dues we have capital reserves. As I previously showed
you this is the reserves amount minus any interest income. In 2020 at Bay Lake Tower the total was
just under one dollar per point. And finally you have your property taxes. These just are what
they are. There's no cost or revenue math to do with this line item. In 2020 the Bay Lake Tower
property taxes were assessed at $1.71 per point. Finally to get your total annual dues you add up
the cost from your member operating assessment, the capital reserves, and the property taxes. In
2020 for Bay Lake Tower this resulted in annual dues around $6.58 per point. Now I’ve already
showed you the direct cost for each line item, but those tiny numbers are kind of hard to understand
and digest. Instead let's take a look at each item as a percentage of the total amount of
annual dues. You can see by percentage that two of the operating costs really jump out here--that's
housekeeping at around 21% of your overall annual dues, and that admin/front desk fee at around
10% of your annual dues. These percents are not accounting for your little rebate, for lack of a
better term, from your operating revenue. So it is a little bit of an overestimate, but I do think it
helps you visualize the overall picture. Even if we prorated that operating revenue across all the
operating costs, you can still see that these two line items would definitely be the highest. Next,
let's look at the percent of the total annual dues that the capital reserves and property taxes
consumes. And here you can now easily visualize that yes these two line items are actually quite
expensive. Along with housekeeping and that admin fee, the capital reserves and property taxes cost
actually makes up the other half of the top four line items in your annual dues. I used Bay Lake
Tower as an example because I own a Bay Lake Tower contract, so I have access to those documents.
However, if you're peeking around at other home resorts and want to take a look at the line items
for those annual dues costs there are a bevy of websites that collect this type of information.
My personal favorite is DVCnews.com. They have an entire article breaking down the dues cost
for each of the resorts, which I will leave a link to in the description below. Now let's go ahead
and take a look at all of the DVC resorts located at Walt Disney World and not just Bay Lake Tower;
complete credit for this data again goes to DVCnews.com. This is obviously a very overwhelming
screen full of a lot of data in kind of a small font that I don't expect anyone to digest,
but feel free to pause the video and take a screenshot. Of note I did want to point out that
the Animal Kingdom Villas do incur a line item that none of the other resorts do for the animals
program. This of course makes sense as the Animal Kingdom Villas have that savanna, which is a super
unique aspect of the resort that none of the other resorts share. And then the other line item that
may jump out to you is again that sales tax on support facilities, which we talked about earlier,
only for the BoardWalk Villas. Now let's take a look at these as percentages, which I find a
lot easier to understand. Again, I didn't subtract out the operating revenue from the operating costs
when turning these into percentages. So they are a little bit of an overestimate, but the general
idea remains. And certainly if we prorated that revenue across all the costs your top operating
costs would still be the top. Just like with the Bay Lake Tower example you can see across all of
the resorts that housekeeping is a very expensive part of your annual dues and quite a large line
item. If we look beyond housekeeping, let's see what's next most expensive in the operating costs
at all the resorts at Walt Disney World now. You can see it's a spread between the resorts of
that front desk fee, the maintenance fee, and the transportation fee. Between these three categories
and housekeeping that actually sums to be a pretty decent chunk of your annual dues. Next let's take
a look at total annual dues. Here in the lighter colors I am showing you the operating costs and
the operating revenue just for transparency, and then the darker colors are your main components
that make up the cost of that member operating assessment, capital reserves, and property taxes.
Moving on to a more useful format again, let's take a look at these as percentages. In general
the cost of your member operating assessment is going to be the vast majority of your dues,
but still those capital reserves and property taxes aren't small amounts.
Next, let's pull out the most expensive operating cost, housekeeping, to compare to these other
line items. Now you can see that in most cases the single most expensive line item for your
annual dues is going to be those property taxes. Occasionally the cost of the single line item of
housekeeping does outpace that of property taxes. This is over at Old Key West and Saratoga Springs.
I could be making assumptions here, but this makes sense to me given the huge inventory
over at Old Key West and Saratoga Springs. It's easy to imagine housekeeping being a very costly,
as well as a labor-intensive aspect of upkeep of those two resorts.
Overall, annual dues are made up of three main categories: capital reserves, property taxes,
which end up being about 20% to 25% of your total dues, and then the member operating assessment,
which of course is those operating costs minus the operating revenue. From the operating costs your
most expensive single line items are going to be housekeeping, the front desk fee, transportation,
and maintenance. In fact between those four line items alone this will often cover around 40%
of your annual dues cost. If you have any questions about the Disney Vacation Club
annual dues or DVC in general definitely leave me a comment down below. I’ll always do my best to
get you a helpful answer. Or if you want to chat outside of YouTube you can find me on Twitter and
Instagram @PixieDustPhD. Big shout out again to DVCnews.com for collecting that data and making it
so transparent to potential buyers. And past just the annual dues data, in general thanks to that
website for helping demystify the DVC process. Unfortunately annual dues are just part of Disney
Vacation Club existence. If you want to own Disney Vacation Club you will be paying annual dues. You,
as an owner, don't have any meaningful say over what the dues will end up costing. But
that being said I am a knowledge's power kind of person, so I always feel more comfortable
knowing exactly what's going into these fees that I’m paying. I hope you found this video helpful.
May the rest of your day be totally magical, and we'll see you real soon at Pixie Dust PhD!