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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-03-01 · 249 added, 258 removed, 416 unchanged (55% of the section changed)

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During 2021, we acquired Diamond Resorts and are in the process of rebranding Diamond properties and sales centers to the Hilton Grand Vacations brand and Hilton standards.

Our operations primarily consist of selling vacation ownership intervals and vacation ownership interests (collectively, “VOIs”, “VOI”) for us and third parties;

On January 17, 2024 (the "Bluegreen Acquisition Date"), we completed the Bluegreen Acquisition.

Our operations primarily consist of selling vacation ownership intervals and vacation ownership interests (collectively, “VOIs” or “VOI”) for us and third parties;

financing and servicing loans provided to consumers for their timeshare purchases;

operating resorts and timeshare plans;

and managing both our points-based Hilton Grand Vacations Club and Hilton Club exchange program (collectively the “Legacy-HGV Club”) and the Diamond points-based multi-resort timeshare plans and exchange programs (the “Legacy-Diamond Clubs”).

The acquired portfolio of resort properties are included in Diamond's single- and multi-use trusts (collectively, the "Diamond Collections" or "Collections"), or are stand-alone Diamond branded resorts in which we own inventory.

In addition, there are affiliated resorts and hotels, which we do not manage, and which do not carry the Diamond brand but are a part of Diamond's network and, through THE Club® and other Club offerings (collectively the “Diamond Clubs”), are available for its members to use as vacation destinations.

As of December 31, 2022, we had over 150 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada and Japan.

and managing our clubs and exchange programs.

As of December 31, 2023, we had over 150 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada and Asia.

A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, California, Arizona, Nevada and Virginia and feature spacious, condominium-style accommodations with superior amenities and quality service.

As of December 31, 2023, we had approximately 529,000 members across our club offerings.

Legacy-HGV Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations Club resort or any property in the Hilton system of 19 industry-leading brands across approximately 7,000 properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program.

Legacy-Diamond Club members are able to utilize their points across the Diamond resorts, affiliated properties and alternative experiential options.

During 2022, we began offering a new club membership called HGV Max across our certain of our sales centers.

For any customer who purchases a VOI, this membership provides the ability to use points across all properties within our network.

The membership provides new destinations for both Legacy-HGV and Legacy-Diamond club owners and broader vacation opportunities for new buyers.

The Legacy-HGV Club, Legacy-Diamond Clubs and HGV Max are collectively referred to as “Clubs”.

Based on the type of Club membership, members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort, any property in the Hilton system of 22 industry-leading brands across approximately 7,500 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program.

We operate our business across two segments:

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Real Estate Sales and Financing

Our primary Legacy-HGV product is the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties.

Our primary deeded product includes the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties.

This ownership interest is an interest in real estate generally equivalent to one week on an annual or biennial basis, at the timeshare resort in which the VOI is located.

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The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers.

Sales of owned, including just-in-time, inventory generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales

Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

Our primary Legacy Diamond VOI product, which we acquired in the Diamond Acquisition, is the marketing and selling of beneficial interests in one of our Collections, which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in that Collection.

In general, purchasers of VOI in a collection do not acquire a direct ownership interest in the resort properties in the Collection.

Rather, for each Collection, one or more trustees hold legal title either to the deeded fee simple real estate interests, the functional equivalent, or, in some cases, leasehold real estate interests for the benefit of the respective Collection’s association members in accordance with the applicable agreements.

We source some of our VOIs through just-in-time agreements with third-party developers and develop our own properties.

Our primary trust VOI product, which we acquired in the Diamond Acquisition, includes the marketing and selling of beneficial interests in one of our Collections, which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in that Collection.

In general, purchasers of a VOI in a collection do not acquire a direct ownership interest in the resort properties in the Collection.

Rather, for each Collection, one or more trustees hold legal title to the deeded fee simple real estate interests, or the functional equivalent, or, in some cases, leasehold real estate interests for the benefit of the respective Collection’s association members in accordance with the applicable agreements.

For the year ended December 31, 2023, sales from fee-for-service and just-in-time inventory were 28% and 19% of contract sales, respectively.

See “Key Business and Financial Metrics and Terms Used by Management—Real Estate Sales Operating Metrics” for additional discussion of contract sales.

See “ Key Business and Financial Metrics—Real Estate Sales Operating Metrics ” for

additional discussion of contract sales.

The estimated contract sales value related to our inventory that is currently available for sale at open or soon-to-be open projects and inventory at new or existing projects that will become available for sale in the future upon registration, delivery or construction is approximately $11.3 billion at current pricing.

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We sell our vacation ownership products primarily through our distribution network of both-in-market and off-site sales centers.

Our products are currently marketed for sale throughout the United States, Mexico, Canada, Europe, and Japan.

Our products are currently marketed for sale throughout the United States, Mexico, Canada, Europe and Asia.

We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership.

We have approximately 50 sales distribution centers in various domestic and international locations.

We have over 60 sales distribution centers in various domestic and international locations.

A phased rebranding of sales centers that were acquired as part of the Diamond Acquisition began in late 2021.

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We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products, are frequent leisure travelers, and have an affinity with our brands.

Tour flow quality impacts key metrics such as close rate and VPG, defined in “ Key Business and Financial Metrics and Terms Used by Management—Real Estate Sales Metrics .” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables.

For the year ended December 31, 2022, 71% of our contract sales were to our existing owners.

We provide financing for members purchasing our developed and acquired inventory and generate interest income.

Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing loans that bear a fixed interest rate ranging from 2.5% to 25% per annum.

Financing propensity was 62% and 74% for the year ended December 31, 2022 and 2021, respectively.

Tour flow quality impacts key metrics such as close rate and VPG, defined in “ Key Business and Financial Metrics—Real Estate Sales Operating Metrics .” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables.

For the years ended December 31, 2023, 2022 and 2021, 70%, 71% and 70% of our contract sales were to our existing owners, respectively.

We provide financing for members purchasing our developed and acquired inventory and generate interest income on the loans.

Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully amortizing loans that bear a fixed interest rate typically ranging from 2.5% to 25% per annum.

Financing propensity was 63% and 62% for the years ended December 31, 2023, and 2022, respectively.

We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.

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Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities.

In these securitization transactions,

special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits.

In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits.

For additional information see Note 7:

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Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable.

Our services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records including, reports, budgets and projections, arranging for annual audits and maintenance fee billing and collections and personal employment training and oversight.

Our services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records including reports, budgets and projections, arranging for annual audits and maintenance fee billing and collections and employment training and personnel oversight.

Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10% to 15% of the costs to operate the applicable resort.

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We are also reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services.

The original term of our management agreements typically ranges from three to five years and the agreements are subject to periodic renewal for one- to three-year periods.

The original terms of our management agreements typically range from three to five years and the agreements are subject to periodic renewal for one- to three-year periods.

Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.

Since our inception, none of the management agreements relating to our owned or fee-for-service properties have been terminated or lapsed, including management agreements obtained as part of the Diamond Acquisition.

We also manage and operate the Clubs, including the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Legacy-HGV Club members, as well as the Legacy-Diamond Clubs.

When owners purchase VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options.

We also manage and operate the Clubs and exchange programs.

When owners purchase a VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options.

In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.

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All sales commissions and brand fees are based on the total sales price of the VOIs.

Also included in Sales, marketing, brand and other fees are revenues from marketing and incentive programs, including redemption of prepaid vacation packages and Club bonus points for stays at HGV properties, which are included in Rental and ancillary services .

Also included in Sales, marketing, brand and other fees are revenues from marketing and incentive programs, except for redemption of prepaid vacation packages and Club bonus points for stays at HGV properties, which are included in Rental and ancillary services .

• Financing represents revenue from the financing of sales of our owned intervals, which includes interest income and fees from servicing loans.

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• Relationships with developers .

In recent years, we have entered into fee-for-service and just-in-time agreements to sell VOIs on behalf of or acquired from third-party developers.

We have entered into fee-for-service and just-in-time agreements to sell VOIs on behalf of or acquire VOIs from third-party developers.

The success and sustainability of our capital-efficient business model depends on our ability to maintain good relationships with third-party developers.

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• Construction activities .

In recent years, we have entered into agreements with third parties to acquire both completed VOIs and property.

We have entered into agreements with third parties to acquire both completed VOIs and property.

At the same time, we have increased our own development activities to construct new properties that we will own and from which we are selling, and will continue to sell, units and VOIs.

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• Relationship with Hilton.

Following the spin-off, Hilton retained ownership of the Hilton-branded trademarks, tradenames and certain related intellectual property used in the operation of our business.

We entered into a license agreement with Hilton, which was subsequently amended and restated in connection with the Diamond Acquisition, granting us the right to use the Hilton-branded trademarks, trade names and related intellectual property in our business for the term of the agreement.

We are party to a license agreement with Hilton granting us the right to use the Hilton-branded trademarks, trade names and related intellectual property in our business for the term of the agreement.

The termination of the license agreement or exercise of other remedies would materially harm our business and results of operations and impair our ability to market and sell our products and maintain our competitive position.

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• Competition.

We compete with other hotel and resort timeshare operators for sales of VOIs based principally on location, quality of accommodations, price, service levels and amenities, financing terms,

quality of service, terms of property use, reservation systems and flexibility for VOI owners to exchange into time at other timeshare properties or other travel rewards.

We compete with other hotel and resort timeshare operators for sales of VOIs based principally on location, quality of accommodations, price, service levels and amenities, financing terms, quality of service, terms of property use, reservation systems and flexibility for VOI owners to exchange into time at other timeshare properties or other travel rewards.

In addition, we compete based on brand name recognition and reputation.

Our primary branded competitors in the timeshare space include Marriott Vacations Worldwide, Travel + Leisure Co., Disney Vacation Club, Holiday Inn Club Vacations, Westgate Resorts, and Bluegreen Vacations.

Principal Components of Expenses

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• License fee expense represents the royalty fee paid to Hilton under a license agreement for the exclusive right to use the Hilton Grand Vacations mark, which is generally based on a percentage of gross sales volume of certain revenue streams.

• Acquisition and integration-related expense represents direct expenses for the Diamond Acquisition including integration costs, legal and other professional fees.

• Acquisition and integration-related expense represents direct expenses for the Diamond Acquisition and the Bluegreen Acquisition, including integration costs, legal and other professional fees.

Integration costs include technology-related costs, fees paid to management consultants and employee-related costs such as severance and transition.

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In periods where more upgrades are occurring and we are not generating increased sales volume on unsold supply, we could see an adverse effect on our cash flows, margins and profits.

Furthermore, construction delays, zoning and other local, state or federal governmental approvals, particularly in new geographic areas with which we are unfamiliar, cost overruns, lender financial

defaults, or natural or man-made disasters, as well as failure by third-party contractors to perform for any reason, could lead to an adverse effect on our cash flows, margins and profits.

Furthermore, construction delays, zoning and other local, state or federal governmental approvals, particularly in new geographic areas with which we are unfamiliar, cost overruns, lender financial defaults, or natural or man-made disasters, as well as failure by third-party contractors to perform for any reason, could lead to an adverse effect on our cash flows, margins and profits.

• Sales and marketing expense .

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Increases in interest rates would increase the consumer financing interest expense we pay on the Timeshare Facility and could adversely affect our financing operations in future securitization or other debt transactions, affecting net cash flow, margins and profits.

Key Business and Financial Metrics and Terms Used by Management

Key Business and Financial Metrics

Real Estate Sales Operating Metrics

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Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 in this Annual Report on form 10-K, for additional information on Sales of VOIs, net.

• Sales revenue represents Sale of VOIs, net and commissions and brand fees earned from the sale of fee-for-service intervals.

• Real estate profit represents sales revenue less the cost of VOI sales and sales and marketing costs, net of marketing revenue.

Real estate margin percentage is calculated by dividing real estate margin by sales revenue.

We consider this to be an important operating measure because it measures the efficiency of our sales and marketing spending and management of inventory costs.

• Tour flow represents the number of sales presentations given at our sales centers during the period.

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EBITDA, presented herein, is a financial measure that is not recognized under U.S.

GAAP that reflects net income (loss), before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.

GAAP that reflects net income, before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with:

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EBITDA and Adjusted EBITDA are not recognized terms under U.S.

GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S.

GAAP and should not be considered as alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S.

In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

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and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under U.S.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income, cash flow or other methods of analyzing our results as reported under U.S.

Some of these limitations are:

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Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

See below under “Segment Results” for reconciliation of our EBITDA and Adjusted EBITDA to net income, our most comparable U.S.

GAAP financial measure.

Non-GAAP Measures within Our Segments

Within each of our two reportable segments, we present additional profit and profit margin information for certain key activities—real estate, financing, resort and club management, and rental and ancillary services.

These non-GAAP measures are used by our management team to evaluate the operating performance of each of our key activities, and to make day-to-day operating decisions.

We believe these additional measures are also important in helping investors understand the performance and efficiency with which we are able to convert revenues for each of these primary activities into operating profit, both in dollars and as margins, and are frequently used by securities analysts, investors and other interested parties as one of common performance measures to compare results or estimate valuations across companies in our industry.

Specifically—

• Sales revenue represents sales of VOIs, net, and Fee-for-service commissions and brand fees earned from the sale of fee-for-service VOIs.

Fee-for-service commissions and brand fees represents sales, marketing, brand and other fees, which corresponds to the applicable line item from our consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners.

Real estate expense represents Costs of VOI sales and Sales and marketing expense, net .

Sales and marketing expense, net represents sales and marketing expense, which corresponds to the applicable line item from our consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners.

Both fee-for-service commissions and brand fees and sales and marketing expense, net, represent non-GAAP measures.

We present these items net because it provides a meaningful measure of our underlying real estate profit related to our primary real estate activities which focus on the sales and costs associated with our VOIs.

• Real estate profit represents sales revenue less real estate expense.

Real estate margin is calculated as a percentage by dividing real estate profit by sales revenue.

We consider real estate profit margin to be an important non-GAAP operating measure because it measures the efficiency of our sales and marketing spending, management of inventory costs, and initiatives intended to improve profitability.

• Financing profit represents financing revenue, net of financing expense, both of which correspond to the applicable line items from our consolidated statements of operations.

Financing profit margin is calculated as a percentage by dividing financing profit by financing revenue.

We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our financing business in connection with our VOI sales.

• Resort and club management profit represents resort and club management revenue, net of resort and club management expense, both of which correspond to the applicable line items from our consolidated statements of operations.

Resort and club management profit margin is calculated as a percentage by dividing resort and club management profit by resort and club management revenue.

We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our resort and club management business that support our VOI sales business.

• Rental and ancillary services profit represents rental and ancillary services revenues, net of rental and ancillary services expenses, both of which correspond to the applicable line items from our consolidated statements of operations.

Rental and ancillary services profit margin is calculated as a percentage by

dividing rental and ancillary services profit by rental and ancillary services revenue.

We consider this to be an important non-GAAP operating measure because it measures our ability to convert available inventory and unoccupied rooms into revenue and profit by transient rentals, as well as profitability of other services, such as food and beverage, retail, spa offerings and other guest services.

Each of the foregoing four profit measures is not a recognized term under U.S.

GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S.

In addition, our calculation of such measures may not be comparable to similarly titled measures of other companies.

Furthermore, these measures have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income or other methods of analyzing our results as reported under U.S.

Such limitations include the fact that these measures only include those revenues and expenses related to one of the four specified operating activities as opposed to on a consolidated basis, and other limitations that are similar to those discussed above under “ EBITDA and Adjusted EBITDA .” See below under “ Reconciliation of Non-GAAP Profit Measures to GAAP Measure ” for reconciliation of these four profit measures to net income, our most comparable U.S.

GAAP financial measure.

Results of Operations

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Year Ended December 31, 2023 vs 2022

2021 vs 2020 (1)

($ in millions) 2023 2022 2021 $ %

Real estate sales and financing $ 2,378 $ 1,451 $ 494 $ 927 63.9 $ 957 NM

Resort operations and club management 1,197 700 276 497 71.0 424 NM

Total segment revenues 3,575 2,151 770 1,424 66.2 1,381 NM

Real estate sales and financing $ 2,357 $ 2,378 $ 1,451 $ (21) (0.9)

Resort operations and club management 1,291 1,197 700 94 7.9

Total segment revenues 3,648 3,575 2,151 73 2.0

Cost reimbursements 386 297 202 89 30.0

Intersegment eliminations (1)

(37) (18) (13) (19) NM (5) 38.5

Total revenues $ 3,835 $ 2,335 $ 894 $ 1,500 64.2 $ 1,441 NM

(1) NM - fluctuation in terms of percentage change is not meaningful.

(56) (37) (18) (19) 51.4

Total revenues $ 3,978 $ 3,835 $ 2,335 $ 143 3.7

(1) Refer to Note 22:

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Business Segments in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following table reconciles net income, our most comparable U.S.

For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics—EBITDA and Adjusted EBITDA.” The following table reconciles net income, our most comparable U.S.

GAAP financial measure, to EBITDA and Adjusted EBITDA:

Year Ended December 31, 2023 vs 2022 (1)

2021 vs 2020 (1)

($ in millions) 2023 2022 2021 $ %

Net income (loss) $ 352 $ 176 $ (201) $ 176 100.0 $ 377 NM

Interest expense 142 105 43 37 35.2 62 NM

Income tax expense (benefit) 129 93 (79) 36 38.7 172 NM

Depreciation and amortization 244 126 45 118 93.7 81 NM

$ 313 $ 352 $ 176 $ (39) (11.1)

Interest expense 178 142 105 36 25.4

Income tax expense

136 129 93 7 5.4

Depreciation and amortization 213 244 126 (31) (12.7)

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 2 2 1 — —

EBITDA 869 501 (190) 368 73.5 691 NM

Other loss (gain), net 1 26 (3) (25) (96.2) 29 NM

Share-based compensation expense 46 48 15 (2) (4.2) 33 NM

Impairment expense 17 2 209 15 NM (207) (99.0)

EBITDA 842 869 501 (27) (3.1)

Other (gain) loss, net

(2) 1 26 (3) NM

Share-based compensation expense 40 46 48 (6) (13.0)

Impairment expense 3 17 2 (14) (82.4)

Acquisition and integration-related expense 68 67 106 1 1.5

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54 65 33 (11) (16.9)

Adjusted EBITDA $ 1,065 $ 716 $ 57 $ 349 48.7 $ 659 NM

Adjusted EBITDA $ 1,005 $ 1,065 $ 716 $ (60) (5.6)

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) For the years ended December 31, 2022, 2021 and 2020, this amount includes costs associated with restructuring, one-time charges and other non-cash items.

Subsequent to the acquisition of Diamond in 2021, this also includes amortization of fair value premiums and discounts resulting from purchase accounting.

(2) For the years ended December 31, 2023, 2022 and 2021, this amount includes costs associated with restructuring, one-time charges, other non-cash items, and amortization of fair value premiums and discounts resulting from purchase accounting.

The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA.

Year Ended December 31, 2022 vs 2021 2021 vs 2020 (1)

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $ %

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Real estate sales and financing (1)

$ 865 $ 537 $ 33 $ 328 61.1 $ 504 NM

$ 754 $ 865 $ 537 $ (111) (12.8)

Resort operations and club management (1)

463 353 136 110 31.2 217 NM

504 463 353 41 8.9

Adjusted EBITDA from unconsolidated affiliates 14 15 11 (1) (6.7)

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(129) (154) (105) 25 (16.2)

Adjusted EBITDA $ 1,065 $ 716 $ 57 $ 349 48.7 $ 659 NM

(1) NM - fluctuation in terms of percentage change is not meaningful.

Adjusted EBITDA $ 1,005 $ 1,065 $ 716 $ (60) (5.6)

(1) Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.

(2) Adjusts for segment related share-based compensation, depreciation and other adjustment items.

Reconciliation of Non-GAAP Profit Measures to GAAP Measure

The following table reconciles net income, our most comparable U.S.

GAAP financial measure, to EBITDA and the total of our real estate, financing, resort and club management, and rental and ancillary services profit measures.

Year Ended December 31, 2023 vs 2022 (1)

($ in millions) 2023 2022 2021 $ %

$ 313 $ 352 $ 176 $ (39) (11.1)

Interest expense 178 142 105 36 25.4

Income tax expense

136 129 93 7 5.4

Depreciation and amortization 213 244 126 (31) (12.7)

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 2 2 1 — —

EBITDA 842 869 501 (27) (3.1)

Other (gain) loss, net

(2) 1 26 (3) NM

Equity in earnings from unconsolidated affiliates (2)

(14) (15) (11) 1 (6.7)

Impairment expense 3 17 2 (14) (82.4)

License fee expense 138 124 80 14 11.3

Acquisition and integration-related expense 68 67 106 1 1.5

General and administrative 194 212 151 (18) (8.5)

$ 1,229 $ 1,275 $ 855 $ (46) (3.6)

Real estate profit 575 691 402 (116) (16.8)

Financing profit 208 164 118 44 26.8

Resort and club management profit 392 373 260 19 5.1

Rental and ancillary services profit 54 47 75 7 14.9

Profit $ 1,229 $ 1,275 $ 855 $ (46) (3.6)

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $2 million, $2 million and $1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Reconciliation of Non-GAAP Real Estate Measures to GAAP Measures

The following table reconciles our Sales, marketing, brand and other fees revenue, our most comparable U.S.

GAAP financial measure, to Fee-for-service commissions and brand fees, and Sales and marketing expense, our most comparable U.S.

GAAP financial measure, to Sales and marketing expense, net.

Fee-for-service commissions and brand fees and Sales and marketing, net, are used in calculating our real estate profit and real estate profit margin.

See “Real Estate Sales and Financing Segment—Real Estate” below.

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $ %

Sales, marketing, brand and other fees $ 634 $ 620 $ 385 $ 14 2.3

Marketing revenue and other fees (1)

(241) (208) (149) (33) 15.9

Fee-for-service commissions and brand fees $ 393 $ 412 $ 236 $ (19) (4.6)

Sales and marketing expense $ 1,281 $ 1,146 $ 653 $ 135 11.8

Marketing revenue and other fees (1)

(241) (208) (149) (33) 15.9

Sales and marketing expense, net $ 1,040 $ 938 $ 504 $ 102 10.9

(1) Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

Real Estate Sales and Financing

Real estate sales and financing segment revenues increased by $927 million for the year ended December 31, 2022, compared to the same period in 2021, primarily due to a $784 million increase in sales revenue, a $59 million increase in marketing revenue associated with higher vacation package sales and a $84 million increase in financing revenue primarily related to an increase in interest income.

Diamond contributed $533 million to the total increase in real estate sales and financing segment revenues primarily driven by $441 million of sales of VOIs, net.

Excluding the impact of Diamond, sales revenue primarily increased in these periods due to an increase in travel demand and a corresponding increase in tour flow and sales transactions;

partially offset by a net decrease in the recognition of deferred sales of VOIs related to projects previously under construction.

Real estate sales and financing Adjusted EBITDA increased by $328 million compared to the same period in 2021, primarily due to the revenue increases discussed above.

Real estate sales and financing segment revenues decreased by $21 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to a $75 million decrease in Sales of VOIs, net, driven by a $66 million increase in net deferrals of sales of VOIs under construction, a 15% decrease in VPG, and a $29 million increase in provision for financing receivable losses, offset by a $49 million decrease in fee for service sales.

Sales, marketing, brand and other fees increased $14 million driven by higher commissions earned on sales of fee-for-service properties.

In addition, there was a $40 million increase in financing revenue primarily related to an increase in our loan portfolio combined with an increase in the weighted-average interest rate.

Real estate sales and financing Adjusted EBITDA decreased by $111 million compared to the same period in 2022, primarily due to an increase in marketing costs due to our emphasis in adding new owners, which typically carry a higher cost per tour, in addition to the overall decrease in segment revenues described above.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the real estate sales and financing segment.

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The following table represents deferrals and recognitions of Sales of VOIs revenue and direct costs for properties under construction:

Year Ended December 31, 2022 vs 2021 2021 vs 2020

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $

1 unchanged sentence

Sales of VOIs recognitions 4 98 245 (94)

Net Sales of VOIs recognitions (deferrals) 31 133 (85) (102) 218

Net Sales of VOIs (deferrals) recognitions

(35) 31 133 (66)

Cost of VOI sales (deferrals) (10) (22) (36) 12

Cost of VOI sales recognitions 1 33 74 (32)

Net Cost of VOI sales recognitions (deferrals) 11 38 (23) (27) 61

Net Cost of VOI sales (deferrals) recognitions

(9) 11 38 (20)

Sales and marketing expense (deferrals) (6) (10) (17) 4

Sales and marketing expense recognitions 1 14 36 (13)

Net Sales and marketing expense

recognitions (deferrals)

Net Sales and marketing expense (deferrals) recognitions

Net construction (deferrals) recognitions

$ (21) $ 16 $ 76 $ (37)

Net construction recognitions (deferrals) $ 16 $ 76 $ (49) $ (60) $ 125

Resort Operations and Club Management

Resort operations and club management segment revenues increased $497 million for the year ended December 31, 2022, compared to the same period in 2021.

Diamond contributed $356 million to the total increase in resort operations and club management segment revenues driven by $189 million of rental and ancillary revenue and $167 million of resort operations and club management revenues.

Excluding the impact of Diamond, the increase in resort operations and club management revenues was driven by greater resort management revenue from the launch of new properties as well as an increase in Club members.

Resort operations and club management segment Adjusted EBITDA increased $110 million for the year ended December 31, 2022 compared to the same period in 2021, primarily due to the increase in resort and club management and rental revenues described above, partially offset by an increase in resort and club management expenses due to personnel-related costs incurred to service increased arrivals and transaction activity along with the launch of new club features and programs.

Resort operations and club management segment revenues increased $94 million for the year ended December 31, 2023, compared to the same period in 2022, primarily driven by greater Rental and ancillary revenue as a result of increased average daily rates.

The segment revenue increase is also attributable to higher Resort management revenues, primarily driven by higher fees as well as an increase in Club members.

Resort operations and club management segment Adjusted EBITDA increased $41 million for the year ended December 31, 2023 compared to the same period in 2022, primarily due to the increase in resort and club management and rental revenues described above, partially offset by an increase in resort and club management expenses due to personnel-related costs incurred to service increased arrivals and transaction activity.

Refer to “—Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the resort operations and club management segment.

Real Estate Sales and Financing Segment

Year Ended December 31, 2022 vs 2021 2021 vs 2020 (1)

See “Reconciliation of Profit Measures to GAAP Measure” above.

Year Ended December 31, 2023 vs 2022

($ in millions, except Tour flow and VPG) 2023 2022 2021 $ %

Contract sales $ 2,381 $ 1,352 $ 528 $ 1,029 76.1 $ 824 NM

Contract sales $ 2,310 $ 2,381 $ 1,352 $ (71) (3.0)

Fee-for-service sales (2)

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Reportability and other:

Net recognition (deferral) of sales of VOIs under construction (3)

Net (deferral) recognition of sales of VOIs under construction (3)

(35) 31 133 (66) NM

Fee-for-service sale upgrades, net 19 18 14 1 5.6

(104) (71) (1) (33) 46.5 (70) NM

Sales of VOIs, net $ 1,491 $ 883 $ 108 $ 608 68.9 $ 775 NM

(63) (104) (71) 41 (39.4)

Sales of VOIs, net $ 1,416 $ 1,491 $ 883 $ (75) (5.0)

Tour flow 608,367 517,117 298,044 91,250

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(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) Represents contract sales from fee-for-service properties on which we earn commissions and brand fees.

(3) Represents the net impact of deferred revenues related to the Sales of VOIs under construction that are recognized when construction is complete.

(2) Represents contract sales from fee-for-service properties on which we earn Fee-for-service commissions and brand fees.

(3) Represents the net recognition of revenues related to the Sales of VOIs under construction that are recognized when construction is complete.

(4) Includes adjustments for revenue recognition, including amounts in rescission and sales incentives.

Contract sales increased $1,029 million for the year ended December 31, 2022, compared to the same period in 2021.

Excluding the impact of the Diamond Acquisition, the increase was primarily due to the continued recovery from the impact of COVID travel restrictions in 2021.

Tour flow increased with the corresponding increases in travel demand related to relaxed COVID travel restrictions and new inventory available for sale at resorts that were opened during 2021.

Diamond contributed $511 million to the total increase in contract sales and $441 million to the total increase in sales of VOIs, net.

Year Ended December 31, 2022 vs 2021 2021 vs 2020 (1)

Contract sales decreased $71 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to a 15.2% decrease in VPG, and partially offset by a 17.6% increase in tour flow.

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $ %

Sales, marketing, brand and other fees $ 620 $ 385 $ 221 $ 235 61.0 $ 164 74.2

Marketing revenue and other fees 208 149 57 59 39.6 92 NM

Commissions and brand fees 412 236 164 176 74.6 72 43.9

Sales of VOIs, net 1,491 883 108 608 68.9 775 NM

Sales revenue 1,903 1,119 272 784 70.1 847 NM

Cost of VOI sales 274 213 28 61 28.6 185 NM

Sales of VOIs, net $ 1,416 $ 1,491 $ 883 $ (75) (5.0)

Fee-for-service commissions and brand fees 393 412 236 (19) (4.6)

Sales revenue 1,809 1,903 1,119 (94) (4.9)

Cost of VOI sales 194 274 213 (80) (29.2)

Sales and marketing expense, net 1,040 938 504 102 10.9

886 479 313 407 85.0 166 53.0

Real Estate expense 1,160 692 341 468 67.6 351 NM

Real Estate profit $ 743 $ 427 $ (69) $ 316 74.0 $ 496 NM

Real Estate expense 1,234 1,212 717 22 1.8

Real Estate profit $ 575 $ 691 $ 402 $ (116) (16.8)

Real Estate profit margin (1)

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

Real estate profit increased by $316 million for the year ended December 31, 2022, compared to the same period in 2021, driven by an increase of $784 million in Sales revenue and offset by an increase in Real estate expense of $468 million.

Diamond contributed $205 million to the increase in Real estate profit, driven by an increase of $457 million in Sales revenue and offset by an increase in Real estate expense of $252 million for the year ended December 31, 2022 compared to the same prior period in 2021.

These increases were driven by greater travel demand;

partially offset by a net decrease in the recognition of deferred sales of VOIs related to projects previously under construction.

The increase in sales revenue was also attributed to higher sales of owned VOIs at new properties and greater commissions earned on sales of fee-for-service properties for the year ended December 31, 2022 compared to the same period in 2021.

Real estate expense increased in line with the increase in sales revenue.

Marketing revenue and other fees increased as a result of increased sales of vacation packages.

Year Ended December 31, 2022 vs 2021 2021 vs 2020

31.8 % 36.3 % 35.9 %

(1) Excluding the marketing revenue and other fees adjustment, Real estate profit margin was 28.0%, 32.7% and 31.7% for the years ended December 31, 2023, 2022 and 2021, respectively.

Real estate profit decreased by $116 million for the year ended December 31, 2023, compared to the same period in 2022, driven by a decrease of $94 million in Sales revenue due to lower Sales of VOIs, net of $75 million driven primarily by net deferrals of sales of VOIs under construction and lower Fee-for-service commissions and brand fees of $19 million.

Additionally, Real estate expense increased by $22 million due to an increase in payroll expense from additional employee headcount and increases in wage rates as a result of competitive labor conditions experienced in most geographical markets.

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $ %

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Financing profit margin 67.8 % 61.4 % 64.5 %

Financing profit increased by $46 million for the year ended December 31, 2022, compared to the same period in 2021, driven by an increase of $84 million in financing revenue, partially offset by an increase in financing expense of $38 million.

Diamond contributed $29 million to the increase in financing profit for the year ended December 31, 2022 compared to the same prior period in 2021 driven by an increase of $49 million in Financing revenue, partially offset by an increase of $20 million in financing expenses.

Financing revenue increased primarily due to an increase in the weighted average interest rate and an increase in the timeshare financing receivables portfolio.

The increase in Financing expense is primarily due to the increased costs

associated with loan servicing in addition to an increase in consumer financing interest expense resulting from an increase in the weighted-average interest rate.

Financing profit increased by $44 million for the year ended December 31, 2023, compared to the same period in 2022, driven by an increase of $40 million in financing revenue, accompanied by a decrease in financing expense of $4 million.

Financing revenue increased by $40 million primarily due to interest income driven by an increase in our loan portfolio and an increase in the weighted-average interest rate.

Financing expense decreased by $4 million due to a decrease in bank fees partially offset by higher compensation costs due to increased headcount.

Resort Operations and Club Management Segment

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Year Ended December 31, 2023 vs 2022

2021 vs 2020 (1)

($ in millions) 2023 2022 2021 $ %

Club management revenue $ 240 $ 227 $ 168 $ 13 5.7

Resort management revenue 307 172 70 135 78.5 102 NM

Resort and club management revenues 534 340 166 194 57.1 174 NM

Resort management revenue 329 307 172 22 7.2

Resort and club management revenues 569 534 340 35 6.6

Club management expense 60 42 28 18 42.9

Resort management expense 119 52 12 67 NM 40 NM

Resort and club management expenses 161 80 36 81 NM 44 NM

Resort management expense 117 119 52 (2) (1.7)

Resort and club management expenses 177 161 80 16 9.9

Resort and club management profit $ 392 $ 373 $ 260 $ 19 5.1

Resort and club management profit margin 68.9 % 69.9 % 76.5 %

(1) Fluctuation in terms of percentage change is not meaningful.

Resort and club management profit increased by $19 million for the year ended December 31, 2023, compared to the same period in 2022, driven by an increase of $35 million in resort and club management revenue and partially offset by an increase of $16 million in resort and club management expenses.

Diamond contributed $98 million to the increase in Resort and club management profit for the year ended December 31, 2022 compared to the same prior period in 2021, driven by an increase of $167 million in resort and club management revenue and partially offset by an increase of $69 million in resort and club management expenses.

The increases in resort operations and club management revenues were driven by greater resort management revenue from the launch of new properties as well as an increase in Club members and number of transactions.

The increase in resort and club management expenses is primarily due to personnel related costs incurred to service the increased transactions and the launch of new club features and programs.

The increases in resort operations and club management revenues were driven by an increase in license fee revenue and maintenance fees for the period.

The increase in resort and club management expenses is primarily due to personnel related costs incurred to service the increased transactions.

Rental and Ancillary Services

Year Ended December 31, 2023 vs 2022

2021 vs 2020 (1)

($ in millions) 2023 2022 2021 $ %

Rental revenues $ 586 $ 315 $ 90 $ 271 86.0 $ 225 NM

Ancillary services revenues 40 27 7 13 48.1 20 NM

Rental and ancillary services revenues 626 342 97 284 83.0 245 NM

Rental expenses 544 242 98 302 NM 144 NM

Ancillary services expense 35 25 9 10 40.0 16 NM

Rental and ancillary services expenses 579 267 107 312 NM 160 NM

Rental and ancillary services profit (loss) $ 47 $ 75 $ (10) $ (28) (37.3) $ 85 NM

Rental revenues $ 623 $ 586 $ 315 $ 37 6.3

Ancillary services revenues 43 40 27 3 7.5

Rental and ancillary services revenues 666 626 342 40 6.4

Rental expenses 573 544 242 29 5.3

Ancillary services expense 39 35 25 4 11.4

Rental and ancillary services expenses 612 579 267 33 5.7

Rental and ancillary services profit

$ 54 $ 47 $ 75 $ 7 14.9

Rental and ancillary services profit margin 8.1 % 7.5 % 21.9 %

(1) Fluctuation in terms of percentage change is not meaningful.

Rental and ancillary services profit decreased by $28 million for the year ended December 31, 2022, compared to the same period in 2021, driven by an increase of $312 million in rental and ancillary expenses partially offset by an increase of $284 million in rental and ancillary services revenue.

Diamond contributed $51 million to the rental and ancillary services profit decrease for the year ended December 31, 2022 compared to the same prior period in 2021, driven by an increase of $240 million in expenses partially offset by an increase of $189 million in rental and ancillary services revenue.

Rental and ancillary services revenue increased due to an increase in average nightly rates charged in addition to an increase in rooms available for rent corresponding with the launch of new properties.

Rental and ancillary services expense increased consistent with the aforementioned launch of new properties.

Rental and ancillary services profit increased by $7 million for the year ended December 31, 2023, compared to the same period in 2022, driven by an increase of $40 million in rental and ancillary services revenue primarily due to an increase in occupied room nights compared to the same period in 2022.

This was partially offset by an increase of $33 million in rental and ancillary expenses, consistent with the aforementioned increase in rental revenue.

Other Operating Expenses

Year Ended December 31, 2023 vs 2022

2021 vs 2020 (1)

($ in millions) 2023 2022 2021 $ %

General and administrative $ 194 $ 212 $ 151 $ (18) (8.5)

Depreciation and amortization 244 126 45 118 93.7 81 NM

Depreciation and amortization 213 244 126 (31) (12.7)

License fee expense 138 124 80 14 11.3

Impairment expense 17 2 209 15 NM (207) (99.0)

(1) Fluctuation in terms of percentage change is not meaningful.

The change in other operating expenses for the year ended December 31, 2022 compared to the same period in 2021, was driven by increased costs subsequent to the Diamond Acquisition.

General and administrative expenses increased by $61 million, primarily related to increased salaries, legal and professional fees.

Depreciation and amortization increased by $118 million, primarily as a result of a full year of amortization of acquired intangible assets as part of the Diamond Acquisition.

License fee expense increased by $44 million, primarily due to improved results related to increased travel demand.

Impairment expense increased by $15 million, primarily due to certain assets that were not deemed recoverable.

Impairment expense 3 17 2 (14) (82.4)

The change in other operating expenses for the year ended December 31, 2023, compared to the same period in 2022, was driven by decreased general and administrative costs and decreased depreciation and amortization expense.

General and administrative expenses decreased by $18 million, primarily related to decreased legal and professional fees.

Depreciation and amortization decreased by $31 million due to decreased amortization of trade names, management

contracts, and club member relationships acquired as a part of the Diamond Acquisition.

License fee expense increased by $14 million due to improved results related to increased travel demand.

Impairment expense decreased by $14 million due to fewer assets deemed unrecoverable in 2023 compared to the same period in 2022.

Acquisition and Integration-Related Expense

Year Ended December 31, 2022 vs 2021 2021 vs 2020 (1)

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $ %

Acquisition and integration-related expense $ 67 $ 106 $ — $ (39) (36.8) $ 106 NM

(1) Fluctuation in terms of percentage change is not meaningful.

For the year ended December 31, 2022, compared to the same period in 2021, acquisition and integration-related costs decreased by $39 million due to decreased legal and professional fees incurred.

Acquisition and integration-related expense $ 68 $ 67 $ 106 $ 1 1.5

For the year ended December 31, 2023, acquisition and integration-related costs remained consistent compared to the same period in 2022.

Acquisition and integration-related costs incurred consisted of professional fees related to the Diamond Acquisition and the Bluegreen Acquisition in 2023 and solely related to the Diamond Acquisition in 2022.

Non-Operating Expenses

Year Ended December 31, 2022 vs 2021 2021 vs 2020 (1)

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $ %

Interest expense $ 142 $ 105 $ 43 $ 37 35.2 $ 62 NM

Interest expense $ 178 $ 142 $ 105 $ 36 25.4

Equity in earnings from unconsolidated affiliates (12) (13) (10) 1 (7.7)

Other loss (gain), net 1 26 (3) (25) (96.2) 29 NM

Income tax expense (benefit) 129 93 (79) 36 38.7 172 NM

(1) Fluctuation in terms of percentage change is not meaningful.

The change in non-operating expenses for the year ended December 31, 2022 compared to the same period in 2021, was primarily due to a $37 million increase in interest expense and partially offset by a decrease in other loss, net of $25 million driven by debt extinguished in connection to the Diamond Acquisition and other borrowings to support 2021 operations.

Income tax expense also increased for the year ended December 31, 2022 compared to the same period in 2021 consistent with increased pre-tax income.

Other (gain) loss, net

(2) 1 26 (3) NM

Income tax expense 136 129 93 7 5.4

(1) NM - Fluctuation in terms of percentage change is not meaningful.

The change in non-operating expenses for the year ended December 31, 2023 compared to the same period in 2022, was primarily due to a $36 million increase in interest expense driven by an increase in interest rates and draws on our revolver credit facility to support operations and a $7 million increase in income tax expense primarily due to non-recurring state tax benefits recognized in the prior year.

Liquidity and Capital Resources

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Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with potential acquisitions and development projects.

Our primary source of funding to satisfy these requirements is derived from sales and financing of vacation ownership intervals, management of our resorts and Clubs, and rentals of available inventory.

1 unchanged sentence

We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our revolver credit facility, our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.

• In April 2022, we completed a securitization of $246 million of gross timeshare financing receivables.

The proceeds were primarily used to pay down the remaining borrowings on one of our conduit facilities and for general corporate operating expenses.

Timeshare Financing Receivables and Note 15:

Debt and Non-Recourse Debt for further information.

• In May 2022, we amended and restated our Timeshare Facility agreement under new terms, which includes increasing the borrowing capacity from $450 million to $750 million allowing us to borrow up to the maximum amount until May 2024 and requiring all amounts borrowed to be repaid in 2025.

The Timeshare Facility is secured by certain timeshare financing receivables in our loan portfolio.

Debt and Non-Recourse Debt for further information.

The following highlights certain matters that impacted our liquidity for the year ended December 31, 2023:

• In January 2023, we acquired inventory associated with a property in New York for $136 million from a third-party developer.

• In August 2023, we completed a securitization of $293 million of gross timeshare financing receivables.

The proceeds were primarily used to pay down the Timeshare Facility and general corporate operating expenses.

The proceeds were primarily used to pay down in part some of the existing debt and for other general

corporate purposes.

Timeshare Financing Receivables and Note 15:

Debt and Non-recourse Debt for further information.

• As of December 31, 2022, we had total cash and cash equivalents of $555 million, including $332 million of restricted cash.

Debt and Non-recourse Debt for additional information.

• In December 2023, we completed the Grand Islander Acquisition for $117 million.

• During the year ended December 31, 2023, we repurchased $368 million of shares under our share repurchase programs.

• As of December 31, 2023, we had total cash and cash equivalents of $589 million and restricted cash of $296 million.

Restricted cash primarily consists of escrow deposits received on VOI sales and reserves related to non-recourse debt.

• As of December 31, 2023, we have $553 million remaining borrowing capacity under the revolver credit facility.

• As of December 31, 2022, we have $652 million remaining borrowing capacity under our Timeshare Facility.

• As of December 31, 2023, we have $350 million remaining borrowing capacity under our Timeshare Facility, and an additional $1 million remaining borrowing capacity under the Grand Islander Timeshare Facility.

Of this amount, we have $155 million of mortgage notes that are available to be securitized, and another $317 million of mortgage notes that we expect will become eligible as soon as they meet typical milestones including receipt of first payment, deeding, or recording.

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The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating.

We have commitments from surety providers in the amount of $327 million as of December 31, 2022, which primarily consist of escrow and subsidy related bonds.

We have commitments from surety providers in the amount of $454 million as of December 31, 2023, which primarily consist of escrow, construction and subsidy related bonds.

We believe that these actions, together with drawing on available borrowings under our revolver and preserving our capacity under our Timeshare Facility as described above, will provide adequate capital to meet our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, additional costs related to complying with various regulatory requirements and to finance our long-term growth plan and capital expenditures for the foreseeable future.

1 unchanged sentence

We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand.

As of December 31, 2022, our inventory-related purchase commitments totaled $195 million over 2 years.

As of December 31, 2023, our inventory-related purchase commitments totaled $37 million over 1 year.

Sources and Uses of Our Cash

The following table summarizes our net cash flows and key metrics related to our liquidity:

Year Ended December 31, 2022 vs 2021 2021 vs 2020

Year Ended December 31, 2023 vs 2022

($ in millions) 2023 2022 2021 $

5 unchanged sentences

Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related rental and ancillary services.

used in operating activities primarily include spending for the purchase and development of real estate for future conversion to inventory and funding our working capital needs.

Cash flows used in operating activities primarily include spending for the purchase and development of real estate for future conversion to inventory and funding our working capital needs.

Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs;

4 unchanged sentences

over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.

The change in net cash flows provided by operating activities for the year ended December 31, 2022 compared to the same period in 2021 was primarily due to an increase in net income and non-cash operating expense depreciation and amortization expense, partially offset by decreases in net working capital from operations.

The change in net cash flows provided by operating activities for the year ended December 31, 2023, compared to the same period in 2022 was primarily due to increases in cash utilized for working capital and purchase of inventory from a third party developer.

The following table exhibits our VOI inventory spending for the years ended December 31, 2023, 2022 and 2021.

9 unchanged sentences

Investing Activities

The following table summarizes our net cash used in investing activities:

Year Ended December 31, 2022 vs 2021 2021 vs 2020

($ in millions) 2022 2021 2020 $ $

Acquisition of Diamond, net of cash and restricted cash acquired $ — $ (1,592) $ — $ 1,592 $ (1,592)

Capital expenditures for property and equipment (excluding inventory) (58) (18) (8) (40) (10)

Software capitalization costs (39) (21) (23) (18) 2

Investments in unconsolidated affiliates — — (2) — 2

Net cash used in investing activities $ (97) $ (1,631) $ (33) $ 1,534 $ (1,598)

Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities.

We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.

The change in net cash used in investing activities for the year ended December 31, 2022 compared to the same period in 2021 was primarily due cash paid for the Diamond Acquisition during 2021.

The change in net cash used in investing activities for the year ended December 31, 2023, compared to the same period in 2022 was primarily due to the Grand Islander Acquisition partially offset by decreased capital expenditures.

Financing Activities

The following table summarizes our net cash (used in) provided by financing activities:

Year Ended December 31, 2022 vs 2021 2021 vs 2020

($ in millions) 2022 2021 2020 $ $

Issuance of debt $ 40 $ 2,950 $ 495 $ (2,910) $ 2,455

Issuance of non-recourse debt 769 264 495 505 (231)

Repayment of debt (313) (1,154) (165) 841 (989)

Repayment of non-recourse debt (990) (359) (475) (631) 116

Debt issuance costs (13) (70) (9) 57 (61)

Repurchase and retirement of common stock (272) — (10) (272) 10

Payment of withholding taxes on vesting of restricted stock units (8) (6) (4) (2) (2)

Proceeds from employee stock plan purchases 5 1 2 4 (1)

Proceeds from stock option exercises 2 13 1 (11) 12

Other (2) (3) (2) 1 (1)

Net cash (used in) provided by financing activities $ (782) $ 1,636 $ 328 $ (2,418) $ 1,308

The change in net cash flows used in financing activities for the year ended December 31, 2022 compared to the same period in 2021 was primarily driven by repayments of debt and non-recourse debt in 2022 and our share repurchase program launched in 2022, partially offset by issuances of corporate debt in connection with the Diamond Acquisition during 2021.

The change in net cash flows used in financing activities for the year ended December 31, 2023, compared to the same period in 2022 was primarily due to net proceeds from debt of $658 million and lower net payments of non-recourse debt of $395 million compared to 2022, partially offset by $96 million increase in share repurchases when compared to 2022.

Contractual Obligations

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We have commitments from surety providers in the amount of $327 million as of December 31, 2022, which primarily consist of escrow and subsidy related bonds.

We have commitments from surety providers in the amount of $454 million as of December 31, 2023, which primarily consist of escrow, construction and subsidy related bonds.

Guarantor Financial Information

5 unchanged sentences

(the “Parent”), Hilton Grand Vacations Parent LLC, the Issuers, and each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries (all entities that guarantee the Notes, collectively, the “Obligor group”).

provide for their subordination to the notes and the related guarantees, and are structurally subordinated to all existing and future indebtedness claims of holders of preferred stock and other liabilities of the Issuer’s subsidiaries that do not guarantee the Notes.

The Notes rank equally in right of payment with all of the Issuers’ and each guarantor’s existing and future senior indebtedness, are subordinated to all of the Issuers’ and guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including the Senior Secured Credit Facilities, rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated indebtedness and other obligations that expressly provide for their subordination to the notes and the related guarantees, and are structurally subordinated to all existing and future indebtedness claims of holders of preferred stock and other liabilities of the Issuer’s subsidiaries that do not guarantee the Notes.

The guarantee of each guarantor subsidiary is limited to a maximum amount, subject to applicable U.S.

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Subsequent Events

Management has evaluated all subsequent events through March 1, 2023, the date the audited 2022 10-K was available to be issued.

The results of management’s analysis indicated no significant subsequent events have occurred that required consideration or adjustments to our disclosures in the audited financial statements.

On January 17, 2024, we completed the Bluegreen Acquisition in an all-cash transaction for 100% of the outstanding voting equity interests of Bluegreen, with total consideration of approximately $1.6 billion, inclusive of net debt assumed.

The Bluegreen Acquisition will be considered a business combination and accounted for using the acquisition method.

Due to the close proximity of the Bluegreen Acquisition Date and the Company's filing of its Annual Report on Form 10-K for the year ended December 31, 2023, the initial accounting for the business combination is incomplete, and therefore we are unable to disclose the information required by ASC 805, Business Combinations.

We will include relevant disclosures as required in the first quarter of 2024.

In connection with the Bluegreen Acquisition, we executed the following transactions:

• Completed an offering of $900 million aggregate principal amount of the escrow issuers’ 6.625% senior secured notes due 2032 issued by our wholly-owned subsidiaries, Hilton Grand Vacations Borrower Escrow, LLC and Hilton Grand Vacations Borrower Escrow, Inc.

The proceeds were used to finance the Bluegreen Acquisition, repay certain outstanding indebtedness and pay related fees, costs, premiums and expenses in connection with these transactions.

• Entered into Amendment No 4, dated January 17, 2024, to the Credit Agreement, dated as of August 2, 2021 (the “Amendment”) and incurred $900 million of new term loans that will mature on January 17, 2031.

Under the Amendment, the related interest rate is SOFR plus 2.75%, Proceeds were used to pay the Bluegreen Acquisition consideration, fees and expenses incurred in connection with the Amendment and to refinance the repayment of certain indebtedness of Bluegreen and its subsidiaries.

Critical Accounting Policies and Estimates

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When allocating the transaction price in the arrangement, we may not have observable standalone sales for all the performance obligations in these contracts.

therefore, we exercise significant judgement when determining the standalone selling price of certain performance obligations.

In order to estimate the standalone selling prices for products other than Collections contracts, we primarily rely on the expected cost-plus margin and adjusted market assessment approaches.

We estimate stand-alone selling price for Collections contracts based on historical information, including expected breakage in contracts with multiple performance obligations, and allocate the remainder of the transaction price to the sale of points-based VOIs due to the variability in observable historical prices for traditional VOI sales.

In order to estimate the standalone selling prices for products other than trust products, we primarily rely on the expected cost-plus margin and adjusted market assessment approaches.

We estimate stand-alone selling price for trust products based on historical information, including expected breakage in contracts with multiple performance obligations, and allocate the remainder of the transaction price to the sale of points-based VOIs due to the variability in observable historical prices for traditional VOI sales.

We then recognize the revenue allocated to each performance obligation as the related performance obligation is satisfied.

Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion.

Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.

Inventory and Cost of Sales

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In addition, we continually assess our VOIs inventory and, if necessary, impose pricing adjustments to modify sales pace.

Long-lived Assets and Related Impairment

We evaluate the carrying value of our property and equipment if there are indicators of potential impairment.

We perform an analysis to determine the recoverability of the asset’s carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset.

If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset, we calculate the asset’s fair value.

The impairment loss recognized is equal to the amount that the net book value is in excess of fair value.

Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset using discount and capitalization rates deemed reasonable for the type of

asset, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers.

We review all finite life intangible assets for impairment when circumstances indicate that their carrying amounts may not be recoverable.

If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of the carrying value over the fair value in our consolidated statements of operations.

We classify long-lived assets to be sold as held for sale in the period if (i) we have approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

We initially measure a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell.

We assess the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

The methodology utilized to determine fair value at the time of classification as held for sale is dependent on the type of long-lived asset reclassified.

All methodologies utilized to determine fair value involve judgment.

Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.

Business Combinations

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The fair value of net assets is the fair value assigned to the assets acquired reduced by the fair value assigned to liabilities assumed.

In determining the fair values of assets acquired and liabilities assumed, we use various recognized valuation methods including the income, cost and sales and market approaches, which also include certain valuation techniques such as discount rates, and the amount and timing of future cash flows.

In determining the fair values of assets acquired and liabilities assumed, we use various recognized valuation methods including the income, cost and sales and market approaches, which also include certain valuation assumptions such as discount rates, and the amount and timing of future cash flows.

We utilize independent valuation specialists under our supervision for certain of our assignments of fair value.

When financial assets are acquired, we evaluate whether those acquired financial assets have experienced a more-than-insignificant deterioration in credit quality since origination.

Financial assets that were acquired with evidence of such credit deterioration are referred to as purchased credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at the acquisition date.

The evaluation of PCD assets is a qualitative assessment requiring management judgment.

We record the net assets and results of operations of an acquired entity in our consolidated financial statements from the acquisition date through period-end.

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Summary of Significant Accounting Policies and Note 3:

Diamond Acquisition for further information.

We do not amortize goodwill.

We evaluate goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that it is more-likely-than-not that we may not be able to recover the carrying amount (book value) of the net assets of the related reporting unit.

When evaluating goodwill for impairment, we may perform the optional qualitative assessment by considering factors including macroeconomic conditions, industry and market conditions, overall financial performance and other relevant entity-specific events.

If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

We only recognize an impairment on goodwill if the estimated fair value of a reporting unit is less than its carrying value, in an amount not to exceed the carrying value of the reporting unit's goodwill.

Acquisitions in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.

Allowance for Financing Receivables Losses

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A 0.5% increase to our projected default rates used in the allowance calculation would increase our allowance for financing receivables losses by approximately $18 million.

Acquired Financial Assets with Credit Deterioration

When financial assets are acquired, whether in connection with a business combination or an asset acquisition, we evaluate whether those acquired financial assets have experienced a more-than-insignificant deterioration in credit quality since origination.

Financial assets that were acquired with evidence of such credit deterioration are referred to as purchased

credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at the acquisition date.

The evaluation of PCD assets is a qualitative assessment requiring significant management judgment.

We consider indicators such as delinquency, FICO score deterioration, purchased credit impaired status from prior acquisition, certain account status codes which we believe are indicative of credit deterioration, as well as certain loan activity such as modifications and downgrades.

In addition, we consider the impact of current and forward-looking economic conditions relative to the conditions which would have existed at origination.

Acquired PCD assets are recorded at the purchase price, represented by the acquisition date fair value, and subsequently “grossed-up” by the acquirer’s acquisition date assessment of the allowance for credit losses.

The purchase price and the initial allowance for credit losses collectively represent the PCD asset’s initial amortized cost basis.

While the initial allowance for credit losses of PCD assets does not impact period earnings, the Company remeasures the allowance for credit losses for PCD assets during each subsequent reporting period;

changes in the allowance are recognized as provision expense within period earnings.

The difference over which par value of the acquired PCD assets exceeds the purchase price plus the initial allowance for credit losses is reflected as a non-credit discount (or premium) and is accreted into interest income (or as a reduction to interest income) under the effective interest method.

Acquired financial assets which are not PCD assets are also recorded at the purchase price but are not similarly “grossed-up”.

The acquirer recognizes an allowance for credit losses as of the acquisition date, which is recognized with a corresponding provision expense impact within earnings.

The allowance is remeasured within each subsequent reporting period in the same manner as for PCD assets, with any change in the allowance recognized as provision expense in period earnings.

Diamond Acquisition and Note 7:

Timeshare Financing Receivables for further information.

Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using currently enacted tax rates.

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Assumptions and estimates are used to determine the more-likely-than-not designation.

Changes to these assumptions and estimates can lead to an additional income tax (expense) benefit, which can materially change our consolidated financial statements.

Changes to these assumptions and estimates can lead to an additional income tax expense or benefit, which can materially change our consolidated financial statements.

Legal Contingencies

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Changes in these factors could materially affect our consolidated financial statements.

Commitments and Contingencies to our consolidated financial statements included in this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis