Aulani Dues 33% Higher

[explorer7700]

Aulani dues have been raised from 4.31 per point to 5.73 per point a 33% increase.

I can't post the link since I am new. See the orlando sentinel.

orlandosentineldotcom/business/os-disney-aulani-maintenance-fee-20110922,0,6790563.story

[Ron_Robin]

Posted the link, it looks like the ones who bought early are still getting the old rate.....for now

http://www.orlandosentinel.com/the-d...,7012355.story

[dan1065cf]

After reading this.. I'm confused. Is it the new buyers that will face the price increase, or do we all feel the pain of this? We bought into Hawaii last year.

[denlo]

The new buyers will have the higher annual dues and everyone will have the new Transient Tax amount. The original buyers will have the lower annual dues for 2011. And all future increases on the annual dues for the original buyers will be applied to their current lower MF's amount. Whereas all new buyers from this date forward will use the higher MF rate and all increase will be applied to the MF amount. So there will always be a difference in MFs for those buyers that have a subsidy from the DVC versus all other buyers. Something like Vero Beach has in their MFs.

[wdrl]

Posted the link, it looks like the ones who bought early are still getting the old rate.....for now

The DVC Members who bought before will have a lower, subsidized maintenance fee amount for the life of their contracts. Vero Beach Members who are eligible for a subsidized MF have continued to receive a subsidy which has actually increased a bit over the years.

After reading this.. I'm confused. Is it the new buyers that will face the price increase, or do we all feel the pain of this? We bought into Hawaii last year.

If you bought into Aulani last year, or any time before July 9, 2011, your MF amount will be lower than Members who buy after July 9th. For 2011, you'll pay $1.42 less because you are eligible for the subsidy.

[dvctreatusfair]

DVC members pay a premium for the excellence associated with the Disney brand. The departure of three top DVC executives so close to the launch date for the Aulani calls into question Disney’s management of the timeshare division. As former VP of Disney Cruise Lines Jim Heany said of his departure “I am very proud of my accomplishments and how I conducted business during my sixteen-plus years at Disney. Given this track record, I am bewildered by the company’s decision.”

According to a report in the Orlando Sentinel, “Disney concluded that Vacation Club executives had calculated dues amounts so low that they would not generate enough money to cover the cost of maintaining Aulani.” Disney has announced they will honor the lower maintenance fee and credit buyers who have already purchased points for the Aulani. However, Aulani purchasers may pay more in taxes for their stays at the Aulani. According to Tim Krasniewski of DVCNews.com, at the new maintenance fee of $5.73 a point, a guest using 250 points to stay at the Aulani would pay $51.92 in taxes, up from the original figure of $39.05. DVC members should not pay for Disney’s mistakes. Disney should pay the increased taxes.

How will Disney make up for losses on maintaining the Aulani? You should be aware that Disney is legally allowed to increase its maintenance fees up to 15% a year - or could decrease the level of service in future years so that you pay for Disney’s mistake. Since 2004, maintenance fees at DVC resorts have increased 3-6% annually. Disney should not increase fees faster in future years at the Aulani or other resorts to make up for their mistake. Conversely, Disney should not reduce the level of services at its timeshare properties to make up for Aulani’s losses.

We should demand Disney limit increases in maintenance fees to no more than its past increases and not reduce services to recoup the cost of its mistakes. Disney should also pay the increased tax for previous Aulani buyers and commit to ensuring that those who bought at the lower level always pay 33% less than the maintenance fee, so that the value of the credit is not winnowed away over time. Please click on the attached petition to demand fairness. Disney Vacation Club members should not pay for Disney’s mistake.

[TimK]

How will Disney make up for losses on maintaining the Aulani? You should be aware that Disney is legally allowed to increase its maintenance fees up to 15% a year - or could decrease the level of service in future years so that you pay for Disney’s mistake.

Disney Vacation Club is legally obligated to establish a budget for each resort. That budget is subject to regular reviews by independent auditors and state lawmakers.

Unless you are suggesting that there is a conspiracy involving Disney, it's auditing firm (I believe Ernst & Young) and the timeshare review boards of Florida, South Carolina, California & Hawaii, members are well protected on this issue.

The main reason that dues continue to increase even in recessionary times is because a large portion of our dues go toward salaries & benefits and fuel costs (theme park buses.) Health care costs and other employee benefits continue to rise, and union contracts have wage increases built in.

As for Aulani, the subsidy will be paid by Disney Vacation Development. It won't result in other owners paying higher dues. They will set the operating budget and spread the cost evenly among all owners (points.) Then, the owners who purchased before July 9 will receive a credit with Disney Vacation Development paying that difference into the resort's operating fund.

Disney has not commented on exactly how the subsidy will be calculated. I've personally contacted them in recent days and am waiting on a reply. But it's worth noting that a similar subsidy exists for early buyers at the Vero Beach resort and the subsidy has been growing as dues cost increases.

[dvctreatusfair]

AFAIK, they have not committed to paying the additional tax liability caused by the increased maintenance fee for the early Aulani buyers. Hopefully they do clarify what kind of credit this is and it is similar to the practice at Vero Beach.

Additionally, if costs do increase because the maintenance fee is set too low this year (even if there is a subsidy for current buyers- if $5.73 is what it actually costs to maintain the property, they still may not be making ends meet on the already sold units), couldn't a higher maintenance increase than what has happened at other resorts (generally between 3-6%) be justified at the Aulani? It's worth clarifying that with DVC, no?

[TimK]

No, DVC hasn't commented on how they will handle everything and members are certainly welcome to contact them to share thoughts. My suspicion is that part of the reason for no contact is that licensing has not been updated in most areas yet. As of a week ago, only Hawaii had cleared DVC to even discuss Aulani. They are still working on getting those licenses updated in other areas. Until that step is complete, I suspect it limits all communications they can have with potential buyers--even if they are current owners.

Additionally, if costs do increase because the maintenance fee is set too low this year (even if there is a subsidy for current buyers- if $5.73 is what it actually costs to maintain the property, they still may not be making ends meet on the already sold units), couldn't a higher maintenance increase than what has happened at other resorts (generally between 3-6%) be justified at the Aulani? It's worth clarifying that with DVC, no?

I have not seen the Aulani budget personally but all of the budgets that I have reviewed include a "Developer Guarantee" which affirms that the budget represents the maximum owners are expected to pay in the given year. If costs exceed projections Disney pledges to cover the overruns.

(Incidentally in situations where the budget is set too high and there is a surplus at the end of the year, the funds are typically placed in the reserve fund...an action which ultimately benefits members.)

Regardless of what happens in 2011, the budget resets on 1/1/12. There COULD be increases if the calculations were off somewhat for '11. Or if employees are due raises, staffing needs to be increased, fuel prices skyrocket (theme park resorts), property taxes go up, long term projects like exterior painting or roofing need to be accelerated, etc.

I guess, in the end you either trust Disney or you don't. Errors were discovered and fixed. The revised '11 budget represents Disney's honest calculation of what it will cost to operate the resort. If the '11 budget is low--even after the subsidy--Disney will still cover it. And if the dues go up in '12, it just means that they have determined even more needs to be spent on the resort in that year.

There wouldn't be any element of charging more in '12 to cover shortfalls in '11. (Unless the property tax collections are short, and that's controlled by Hawaii officials.)

I understand the angst over this situation. But Disney has acted in pretty good faith so far. They fired 3 long time executives including Jim Lewis, their one-time golden child. And they readily agreed to subsidize the dues, even though exact details are still pending.

Again, feel free to make inquiries of DVC and share your thoughts with them. But my suspicion is that owners will get a fair deal once all of the dust settles. And this situation shouldn't have any impact on owners at other resorts, or a negative financial impact on Aulani owners going forward.