What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-01 · 487 added, 410 removed, 1274 unchanged (41% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm

Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Internal Control Over Financial Reporting

Consolidated Balance Sheets as of December 31, 2023 , and 2022

Consolidated Statements of Operations for the years ended December 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 20 21

Consolidated Statements of Cash Flows for the years ended December 31, 202 3 , 20 2 2 and 20 21

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In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on our assessment, management concluded that a material weakness exists in our internal control over financial reporting as of December 31, 2022 due to a material weakness in internal control over financial reporting at Dakota Holdings, Inc.

(“Diamond”), which the Company acquired on August 2, 2021.

The scope of our efforts to comply with Section 404 of the Sarbanes-Oxley Act with respect to 2023 included all of our operations other than those of BRE Grand Islander Parent LLC which we acquired in 2023 as described in Note 3 to the consolidated financial statements.

In accordance with the SEC’s published guidance, because we acquired these operations during the year, we excluded these operations from our efforts to comply with Section 404 with respect to 2023.

The acquired operations of BRE Grand Islander Parent LLC constituted approximately 3.7% of total assets as of December 31, 2023 and 0.1% and 0.7% of revenues and income before income taxes, respectively, for the year then ended.

The SEC’s published guidance specifies that the period in which management may omit an assessment of an acquired business’s internal control over financial reporting from its assessment of the Company’s internal control may not extend beyond one year from the date of acquisition.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements could occur but will not be prevented or detected on a timely basis.

Prior to 2022, Diamond, which was acquired on August 2, 2021, was not included in our assessment of the effectiveness of our internal control over financial reporting as the Securities and Exchange Commission (“SEC”) rules provide companies one year to assess controls at an acquired entity.

Accordingly, within this period, we performed our first comprehensive assessment of the design and effectiveness of internal controls at Diamond, which was not a reporting company pursuant to the Exchange Act, at the time of the acquisition and therefore not subject to the same requirements with respect to internal controls as the Company.

As a result of this assessment, we determined that Diamond’s internal control over financial reporting was ineffective as of December 31, 2022.

Specifically, Diamond did not adequately identify, design and implement the process-level controls for its significant processes that are necessary for compliance with the requirements for reporting companies, and Diamond did not have appropriate information technology controls for its information technology systems or such controls did not operate for a sufficient period of time prior to the assessment date.

These deficiencies neither pertained to, nor impacted, any of the processes, controls or procedures related to the historical business of the Company outside of Diamond.

Additionally, there were no identified material misstatements to our current year financial statements, no restatements of prior period financial statements and no changes in previously released financial results required as the result of these control deficiencies.

Based on our assessment, management concluded that a material weakness existed in our internal control over financial reporting as of December 31, 2023 due to deficiencies arising out of ineffectively designed general information technology controls over user access for an IT application used to initiate revenue and inventory transactions.

As a result, process-level automated controls and manual controls that are dependent on the completeness and accuracy of information derived from the affected IT application were also ineffective.

There were no identified material misstatements to our current year financial statements, no restatements of prior period financial statements and no changes in previously released financial results required as the result of these control deficiencies.

Ernst & Young LLP, the independent registered public accounting firm that has audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report expressing an adverse opinion on the Company’s internal control over financial reporting as of December 31, 2023.

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We have audited the accompanying consolidated balance sheets of Hilton Grand Vacations Inc.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2023 expressed an adverse opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024 expressed an adverse opinion thereon.

Basis for Opinion

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Cost of Vacation Ownership Intervals Sales

Description of the Matter For the year ended December 31, 2022, the Company’s cost of vacation ownership intervals (“VOI”) sales was $274 million, which includes amounts recognized by the Legacy-HGV and Legacy-Diamond operations.

Description of the Matter For the year ended December 31, 2023, the Company’s cost of vacation ownership intervals (“VOI”) sales was $194 million.

As discussed in Note 2 to the consolidated financial statements, the Company accounts for cost of VOI sales using the relative sales value method.

Changes in estimates within the relative sales value calculations are accounted for as cost of sales true-ups and are included in cost of VOI sales in the consolidated statements of operations to retrospectively adjust the margin previously recognized subject to those estimates.

Auditing management’s application of the relative sales value method for Legacy-HGV and Legacy-Diamond sales was complex and highly judgmental due to the significant estimation uncertainty in determining the significant assumptions required to apply the method, including future VOI sales prices, timing and volume of VOI sales, and provisions for financing receivables losses on financed sales of VOIs.

Changes in estimates within the relative sales value calculations are recognized on a retrospective basis through corresponding adjustments to inventory and cost of sales in the period in which the estimates are revised.

Auditing management’s application of the relative sales value method for sales was complex and highly judgmental due to the significant estimation uncertainty in determining the significant assumptions required to apply the method, including future VOI sales prices, timing and volume of VOI sales, and provisions for financing receivables losses on financed sales of VOIs.

Cost of Vacation Ownership Intervals Sales (Continued)

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Legacy-HGV cost of VOI sales process.

For example, we tested controls over management’s review of the Legacy-HGV cost of VOI sales calculations used as part of the relative sales value method, including the significant assumptions described above.

To test the Legacy-HGV and Legacy-Diamond cost of VOI sales, we performed audit procedures that included, among others, assessing the methodologies used by management, evaluating the significant assumptions discussed above and testing the underlying data used by the Company within its analyses.

How We Addressed the Matter in Our Audit To test cost of VOI sales, we performed audit procedures that included, among others, assessing the methodologies used by management, evaluating the significant assumptions discussed above and testing the underlying data used by the Company within its analyses.

We compared the significant assumptions used by management to historical trends and/or the Company’s future plans, as appropriate.

We assessed the historical accuracy of management’s estimates based on previous assumptions and performed analytical procedures to evaluate the significant assumptions.

We performed analytical procedures to evaluate individual timeshare project or individual collection cost of VOI sales rates.

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Allowance for Financing Receivables

Description of the Matter At December 31, 2022, the Company’s allowance for financing receivables generated by the financing of VOI sales was $742 million, which included amounts related to the Legacy-HGV and Legacy-Diamond operations.

As discussed in Note 2 to the consolidated financial statements, the Company records an estimate of variable consideration due to uncollectibles as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale.

The Company uses a technique referred to as static pool analysis as the basis for determining the default rates that are used to estimate variable consideration and allowance for financing receivables.

The estimates of the variable consideration are based on default rates that are an output of the Legacy-HGV and Legacy-Diamond static pools and consider current and future economic and market conditions.

Auditing the Legacy-HGV and Legacy-Diamond allowance for financing receivables was challenging and required additional audit effort due to the complex nature of the static pool analysis and the high volume of data which is utilized in applying the static pool analysis.

The estimate also required judgment in evaluating management’s conclusions regarding which historical default rates most appropriately reflect the current and future market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Legacy-HGV allowance for financing receivables process, including controls over management’s review of the static pool analysis and data utilized in the static pool analysis.

To test the estimated Legacy-HGV and Legacy-Diamond allowance for financing receivables, we performed audit procedures that included, among others, assessing the methodology discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analyses.

Description of the Matter At December 31, 2023, the Company’s allowance for financing receivables losses was $779 million.

As discussed in Note 2 to the consolidated financial statements, the Company estimates the variable consideration to be received from financed VOI sales and recognizes revenue net of amounts deemed uncollectible as the VOI is returned to inventory upon customer default.

Variable consideration which has not been included within the transaction price is presented as a reserve on the financing receivable.

The Company uses a technique referred to as the static pool analysis as the basis for determining the default rates that are used to estimate variable consideration and the allowance for financing receivables losses.

The static pool analysis uses default rate information accumulated from several years of historical loan data to estimate future expected defaults on the outstanding financing receivables.

The reasonableness of the static pool analysis is evaluated by management in light of current and future economic and market conditions.

Auditing the allowance for financing receivables losses was challenging and required additional audit effort due to the high volume of data that is utilized in applying the static pool analysis.

Additionally, the allowance for financing receivables losses is sensitive to changes in the estimated default rates given the size of the outstanding timeshare financing receivable balance as of year-end.

How We Addressed the Matter in Our Audit To test the allowance for financing receivables, we performed audit procedures that included, among others, assessing the methodology discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analyses.

We evaluated management’s assessment that historical data reflects current and future market conditions in estimating the allowance.

We also compared data used in the Legacy-HGV and Legacy-Diamond static pool analyses to historical data from prior periods.

We also compared data used in the static pool analyses to historical data from prior periods.

We analytically compared current year default rates to prior year default rates.

In addition, we recalculated the Legacy-HGV and Legacy-Diamond allowance for financing receivables for certain pools of loans.

Given the uniqueness of the static pool analysis to the real estate timeshare industry, we involved real estate subject matter resources on our team.

In addition, we recalculated the allowance for financing receivables for certain pools of loans.

/s/ Ernst & Young LLP

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Orlando, Florida

March 1, 2023

February 29, 2024

Report of Independent Registered Public Accounting Firm

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(the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

The Company, which acquired Diamond on August 2, 2021, did not adequately identify, design and implement appropriate process-level controls for Legacy-Diamond’s significant processes and appropriate information technology controls for Legacy-Diamond’s information technology systems or such controls did not operate for a sufficient period of time prior to the assessment date.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report dated March 1, 2023, which expressed an unqualified opinion thereon.

The Company had ineffectively designed general information technology controls over user access for an IT application used to initiate revenue and inventory transactions.

As a result, process-level automated controls and manual controls that are dependent on the completeness and accuracy of information derived from the affected IT application were also ineffective.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of BRE Grand Islander Parent LLC, which is included in the 2023 consolidated financial statements of the Company and constituted approximately 3.7% of total assets as of December 31, 2023 and 0.1% and 0.7% of revenues and income before taxes, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of BRE Grand Islander Parent LLC.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 29, 2024, which expressed an unqualified opinion thereon.

Basis for Opinion

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Orlando, Florida

March 1, 2023

February 29, 2024

HILTON GRAND VACATIONS INC.

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Restricted cash 296 332

Accounts receivable, net of allowance for doubtful accounts of $ 52 and $ 39

Accounts receivable, net

Timeshare financing receivables, net 2,113 1,767

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Intangible assets, net 1,158 1,277

Land and infrastructure held for sale — 41

Other assets 314 373

TOTAL ASSETS (variable interest entities - $ 948 and $ 1,100 )

TOTAL ASSETS (variable interest entities - $ 1,459 in 2023 and $ 948 in 2022)

$ 8,685 $ 8,004

LIABILITIES AND EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable, accrued expenses and other $ 952 $ 1,007

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Deferred income tax liabilities 631 659

Total liabilities (variable interest entities - $ 1,005 and $ 1,199 )

Total liabilities (variable interest entities - $ 1,472 in 2023 and $ 1,005 in 2022)

Commitments and contingencies - see Note 23

Stockholders' Equity:

Preferred stock, $ 0.01 par value;

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Accumulated other comprehensive income 17 39

Total equity 2,151 1,988

TOTAL LIABILITIES AND EQUITY $ 8,004 $ 8,008

Total stockholders' equity 2,115 2,151

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,685 $ 8,004

See notes to consolidated financial statements.

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Equity in earnings from unconsolidated affiliates 12 13 10

Other (loss) gain, net ( 1 ) ( 26 ) 3

Income (loss) before income taxes 481 269 ( 280 )

Income tax (expense) benefit ( 129 ) ( 93 ) 79

Net income (loss) $ 352 $ 176 $ ( 201 )

Earnings (loss) per share:

Other gain (loss), net 2 ( 1 ) ( 26 )

Income before income taxes 449 481 269

Income tax expense ( 136 ) ( 129 ) ( 93 )

Net income $ 313 $ 352 $ 176

Earnings per share:

Basic $ 2.84 $ 2.98 $ 1.77

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HILTON GRAND VACATIONS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

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2023 2022 2021

Net income (loss) $ 352 $ 176 $ ( 201 )

Foreign currency translation adjustments ( 7 ) ( 2 ) —

Net income $ 313 $ 352 $ 176

Derivative instrument adjustments, net of tax ( 16 ) 46 2

Other comprehensive income, net of tax 39 — —

Comprehensive income (loss) $ 391 $ 176 $ ( 201 )

Foreign currency translation adjustments ( 6 ) ( 7 ) ( 2 )

Other comprehensive (loss) income, net of tax ( 22 ) 39 —

Comprehensive income $ 291 $ 391 $ 176

See notes to consolidated financial statements.

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Operating Activities

Net income (loss) $ 352 $ 176 $ ( 201 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 313 $ 352 $ 176

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 213 244 126

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Impairment expense 3 17 2

Other loss (gain), net 3 14 ( 1 )

Other (gain) loss, net ( 2 ) 3 14

Share-based compensation 40 46 48

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Return on investment in unconsolidated affiliates 16 — 2

Net changes in assets and liabilities, net of effects of acquisition:

Net changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable, net 10 ( 177 ) ( 124 )

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Investing Activities

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

Acquisition of a business, net of cash and restricted cash acquired

( 74 ) — ( 1,592 )

Capital expenditures for property and equipment (excluding inventory) ( 31 ) ( 58 ) ( 18 )

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Financing Activities

Issuance of debt 40 2,950 495

Issuance of non-recourse debt 769 264 495

Proceeds from debt 758 40 2,950

Proceeds from non-recourse debt

Repayment of debt ( 373 ) ( 313 ) ( 1,154 )

Repayment of non-recourse debt ( 694 ) ( 990 ) ( 359 )

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

Payment of debt issuance costs ( 7 ) ( 13 ) ( 70 )

Repurchase and retirement of common stock ( 368 ) ( 272 ) —

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Other ( 4 ) ( 2 ) ( 3 )

Net cash (used in) provided by financing activities ( 782 ) 1,636 328

Effect of changes in exchange rates on cash, cash equivalents & restricted cash ( 8 ) ( 4 ) —

Net (decrease) increase in cash, cash equivalents and restricted cash ( 140 ) 169 374

Net cash provided by (used in) financing activities

183 ( 782 ) 1,636

Effect of changes in exchange rates on cash, cash equivalents and restricted cash ( 7 ) ( 8 ) ( 4 )

Net increase (decrease) in cash, cash equivalents and restricted cash

330 ( 140 ) 169

Cash, cash equivalents and restricted cash, beginning of period 555 695 526

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Comprehensive

Income Total Stockholders'

Shares Amount

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Activity related to share-based compensation 2 — 56 — — 56

Employee stock plan issuance — — 1 — — 1

Foreign currency translation adjustments — — — — ( 2 ) ( 2 )

Derivative instrument adjustments, net of tax — — — — 2 2

Shares issued for Diamond Acquisition 34 — 1,381 — — 1,381

Balance as of December 31, 2021

120 $ 1 $ 1,630 $ 357 $ — $ 1,988

Net income — — — 352 — 352

Activity related to share-based compensation — — 40 — — 40

Employee stock plan issuance — — 4 — — 4

Foreign currency translation adjustments — — — — ( 7 ) ( 7 )

Derivative instrument adjustments — — — — 2 2

Derivative instrument adjustments, net of tax — — — — 46 46

Repurchase and retirement of common stock ( 7 ) — ( 92 ) ( 180 ) — ( 272 )

Balance as of December 31, 2022

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Foreign currency translation adjustments — — — — ( 6 ) ( 6 )

Derivative instrument adjustments — — — — 46 46

Derivative instrument adjustments, net of tax — — — — ( 16 ) ( 16 )

Repurchase and retirement of common stock ( 8 ) — ( 121 ) ( 249 ) — ( 370 )

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We are a global timeshare company engaged in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services, primarily under the Hilton Grand Vacations brand.

During 2021, we acquired Dakota Holdings, Inc., (the “Diamond Acquisition”) the parent of Diamond Resorts International (“Diamond”) 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” or “VOI”) for ourselves and third parties;

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

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.

On January 17, 2024 (the "Bluegreen Acquisition Date"), we completed the acquisition of Bluegreen Vacations Holding Corporation (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 our Diamond points-based multi-resort timeshare plans and exchange programs (the “Legacy-Diamond Clubs”).

During 2022, we began offering a new club membership called HGV Max across 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”.

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.

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(“Apollo”) and other minority shareholders, which previously owned 100 % of Diamond, holding the remaining approximately 28 % at the time the Diamond Acquisition was completed.

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.

This Annual Report on Form 10-K includes Diamond’s results of operations beginning on August 2, 2021.

We refer to Diamond's business and operations that we acquired as “Legacy-Diamond”, and our business and operations that existed both prior to and following the Diamond Acquisition as “Legacy-HGV”.

Diamond Acquisition for further information.

This Annual Report on Form 10-K includes Diamond’s results of operations beginning on August 2, 2021 (“Diamond Acquisition Date”).

Acquisitions for additional information.

Bluegreen Acquisition

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

The Bluegreen Acquisition is expected to broaden HGV’s offerings, customer reach and sales locations, creating a premier vacation ownership and experiences company.

For the year ended December 31, 2023, we incurred $ 17 million of acquisition-related expenses attributable to the Bluegreen Acquisition which are included in our consolidated statement of operations under Acquisition and integration-related expense .

Basis of Presentation

The consolidated financial statements presented herein include 100% of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest.

Our accompanying consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation.

All material intercompany transactions and balances have been eliminated in consolidation.

The consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S.

generally accepted accounting principles (“U.S.

The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of rights held by other interests.

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We consolidate entities when we own more than 50% of the voting shares of a company or otherwise have a controlling financial interest.

All material intercompany transactions and balances have been eliminated in consolidation.

Our accompanying consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation.

The consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S.

generally accepted accounting principles (“U.S.

Use of Estimates

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We account for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”).

Revenue is recognized upon the transfer of control of promised goods or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

Revenue is recognized upon the transfer of control of promised goods or services to customers in an amount that reflects the

consideration we expect to receive in exchange for those products or services.

To achieve the core principle of the guidance, we take the following steps:

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When allocating the transaction price in the arrangement, we may not have observable standalone sales for all of 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, we primarily rely on the expected cost-plus margin and adjusted market assessment approaches.

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Variable consideration which has not been included within the transaction price is presented as a reserve on the financing receivable.

Timeshare Financing Receivables for further information regarding our estimate of variable consideration.

Vacation ownership product sales include revenue from the sale of VOIs, which in the case of the Diamond Collections, are represented by an annual or biennial allotment of points that can be utilized for vacations at Diamond resorts in our network for varying lengths of stay.

Typical contracts include the sale of VOIs, certain sales incentives primarily in the form of additional points for use over a specified period of time (“Bonus Points”), and generally membership in the Clubs, each of which represent a separate and distinct performance obligation for which consideration is allocated based on the estimated stand-alone selling price of the sales incentives and membership dues.

Timeshare Financing Receivables for additional information regarding our estimate of variable consideration.

Vacation ownership product sales include revenue from the sale of VOIs, which in the case of the trust products, are represented by an annual or biennial allotment of points that can be utilized for vacations at resorts in our network for varying lengths of stay.

Typical contracts include the sale of VOIs, certain sales incentives primarily in the form of additional points for use over a specified period of time (“Bonus Points”), and generally membership of Hilton Grand Vacations Club and Hilton Club exchange programs, Diamond points-based multi-resort timeshare clubs or HGV Max (collectively the "Clubs"), each of which represent a separate and distinct performance obligation for which consideration is allocated based on the estimated stand-alone selling price of the sales incentives and membership dues.

We recognize revenue related to our VOIs when control of the points passes to the customer, which generally occurs after the expiration of the applicable statutory rescission period and after collectability is reasonably assured and the customer has the right to use the VOI.

Bonus Points are valid for a specified period of time (generally for a period between 18 and 30 months) and may be used for stays at properties within our resort network, and in the case of HGV, hotel reservations within Hilton’s system and VOI interval exchanges with other third-party vacation ownership exchanges.

Bonus Points are valid for a specified period of time (generally for a period between 18 and 30 months) and may be used for stays at properties within our resort network, or converted to use for hotel reservations within Hilton’s system and VOI interval exchanges with other third-party vacation ownership exchanges.

At the time of the VOI sale, we estimate the fair value of sales incentives to be redeemed, including an adjustment for estimated breakage, to determine the standalone selling price of these incentives (“FDI”).

We defer a portion of the total transaction price for the combined VOI contract as a liability for the FDI and recognize the corresponding revenue at the point in time when the customer receives the benefits of the FDI, which is upon the customer’s redemption of the Bonus Points.

time, we also determine whether we are principal or agent for the redeemed good or service and recognize revenue on a gross or net basis accordingly.

At that time, we also determine whether we are principal or agent for the redeemed good or service and recognize revenue on a gross or net basis accordingly.

• Sales, marketing, brand and other fees — We enter into contracts with third-party developers to sell VOIs on their behalf through fee-for-service agreements for which we earn sales commissions and other fees.

These commissions are variable as they are based on the sales and marketing results, which are subject to the constraint on variable consideration and resolved on a monthly basis over the contract term.

We estimate such commissions to the extent that it is probable that a significant reversal of such revenue will not occur and recognize the commissions as the developer receives and consumes the benefits of the services.

Any changes in these estimates would affect revenue and earnings in the period such variances are realized.

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Cost reimbursements are based upon actual expenses with no added margin, and are billed to the HOA on a monthly basis.

We recognize cost

reimbursements when we incur the related reimbursable costs as the HOA receives and consumes the benefits of the management services.

We recognize cost reimbursements when we incur the related reimbursable costs as the HOA receives and consumes the benefits of the management services.

We capitalize all incremental costs incurred to obtain a contract when such costs would not have been incurred if the contract had not been obtained.

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These commissions are classified as Sales and marketing expense in our consolidated statements of operations.

As of December 31, 2022, the ending asset balance for costs to obtain a contract was $ 8 million relating to deferred commission costs for certain vacation package sales and VOI sales of resorts under construction.

As of December 31, 2023 and 2022, the ending asset balance for costs to obtain a contract was $ 11 million and $ 8 million, respectively, relating to deferred commission costs for certain vacation package sales and VOI sales of resorts under construction.

For the year ended December 31, 2023, we recognized $ 7 million of expense related to costs deferred as of December 31, 2022.

For the year ended December 31, 2022, we recognized $ 9 million of expense related to costs deferred as of December 31, 2021.

Other than the United States, there were no countries that individually represented more than 10% of total revenues for the years ended December 31, 2023, 2022 and 2021.

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We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency.

Revenue from Contracts with Customers for further information.

Revenue from Contracts with Customers 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.

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We expense acquisition-related expenses as incurred and include such expenses within Acquisition and integration-related expense on our consolidated statements of operations.

Diamond Acquisition for further information.

Acquisitions for additional information.

Acquired Financial Assets with Credit Deterioration

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The evaluation of PCD assets is a qualitative assessment requiring 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.

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, foreign currency exchange risks, 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.

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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.

We acquired PCD assets as part of the Diamond Acquisition and the Grand Islander Acquisition which are referred to as “Legacy-Diamond” and “Legacy-Grand Islander”, respectively.

Acquisitions and Note 7:

Timeshare Financing Receivables for additional information.

Investments in Unconsolidated Affiliates

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Timeshare Financing Receivables and Allowance for Financing Receivables Losses

Our timeshare financing receivables consist of loans related to our financing of VOI sales that are secured by the underlying timeshare properties.

We determine our timeshare financing receivables to be past due based on the contractual terms of the individual mortgage loans.

We recognize interest income on our timeshare financing receivables as earned.

The interest rate charged on the notes correlates to the risk profile of the borrower at the time of purchase and the percentage of the purchase that is financed, among other factors.

We record an estimate of variable consideration as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale.

Our timeshare financing receivables consist of loans that are secured by the underlying timeshare properties.

We have two timeshare financing receivables portfolio segments:

(i) originated and (ii) acquired.

Our originated portfolio segment includes Legacy-HGV and Legacy-Diamond timeshare financing receivables originated after the August 2, 2021 acquisition date, while our acquired portfolio segments includes all Legacy-Diamond timeshare financing receivables as of that date.

We evaluate the portfolio segments collectively, since we hold a large group of homogeneous timeshare financing receivables, which are individually immaterial.

Our originated portfolio segment includes Legacy-HGV, Legacy-Diamond and Legacy-Grand Islander timeshare financing receivables originated after their respective acquisition dates, while our acquired portfolio segments includes all Legacy-Diamond and Legacy-Grand Islander timeshare financing receivables as of their respective acquisition dates.

We evaluate each portfolio segment collectively, since we hold a large group of homogeneous timeshare financing receivables, which are individually immaterial.

We monitor the credit quality of our receivables on an ongoing basis.

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We use a technique referred to as static pool analysis as the basis for determining our financing receivables losses reserve requirements on our timeshare financing receivables.

The static pool analysis includes several years of default data through which we stratify our portfolio using certain key dimensions including, for Legacy-HGV timeshare financing receivables, FICO scores and equity percentage at the time of sale.

The adequacy of the related allowance is

determined by management through analysis of several factors, such as current and forward-looking economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables.

The static pool analysis includes several years of default data through which we stratify our portfolio using certain key dimensions such as FICO scores and equity percentage at the time of sale.

For our originated portfolio, we record an estimate of variable consideration as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale;

for our acquired portfolio, any changes to the estimates of our allowance are recorded within Financing expense on our consolidated statements of operations in the period in which the change occurs.

The adequacy of the related allowance is determined by management through analysis of several factors, such as current and forward-looking economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables.

In addition, for our acquired portfolio segment we also develop an inventory recovery assumption to reflect the recovery value of VOIs from future potential defaults.

Our estimate of inventory recovery is principally based upon the fair value of underlying VOIs and assumed default rates and is reflected as a reduction to the estimated gross allowance.

Our estimate of

inventory recovery is principally based upon the fair value of underlying VOIs and assumed default rates and is reflected as a reduction to the estimated gross allowance.

Once a timeshare financing receivable within the acquired portfolio segment is charged-off, the loan's corresponding inventory recovery amount is reclassified from the allowance into inventory.

The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

We determine our timeshare financing receivables to be past due based on the contractual terms of the individual mortgage loans.

We recognize interest income on our timeshare financing receivables as earned.

The interest rate charged on the notes correlates to the risk profile of the borrower at the time of purchase and the percentage of the purchase that is financed, among other factors.

We apply payments we receive for loans, including those in non-accrual status, to amounts due in the following order:

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Once a loan is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point.

For the years ended December 31, 2023, 2022 and 2021, we reversed $ 73 million, $ 70 million and $ 28 million, respectively, of accrued interest income.

We resume interest accrual for loans for which we had previously ceased accruing interest once the loan is less than 91 days past due.

We fully reserve for a timeshare financing receivable in the month following the date that the loan is 121 days past due and, subsequently, we write off the uncollectible note against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.

Timeshare Financing Receivables for further information.

Timeshare Financing Receivables for additional information.

Inventory and Cost of Sales

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Property and Equipment

Property and equipment includes land, buildings and leasehold improvement and furniture and equipment at our corporate offices, sales centers and management offices.

Property and equipment are recorded at cost and include land, buildings and leasehold improvement and furniture and equipment at our corporate offices, sales centers and management offices.

Additionally, certain property and equipment is held for future conversion into inventory.

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Refer to Note 9:

Property and Equipment for further information.

Property and Equipment for additional information.

If sufficient information exists to reasonably estimate the fair value of a conditional asset retirement obligation, including environmental remediation liabilities, we recognize the fair value of the obligation when the obligation is incurred.

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All methodologies utilized to determine fair value involve judgment.

For the year ended December 31, 2020, we recorded a non-cash impairment charge of $ 209 million related to the identified assets held for sale.

The non-cash impairment charge was comprised of a $ 201 million charge related to Land and infrastructure held for sale and an $ 8 million charge related to Property and equipment , respectively.

The estimated fair value of land and infrastructure held for sale was $ 45 million as of December 31, 2021, excluding costs to sell.

We did not have any non-cash impairment charges related to assets held for sale for the year ended December 31, 2021.

During the year ended December 31, 2022, we concluded that the parcels of land and infrastructure which were previously classified as held for sale, no longer met the held for sale criteria.

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For the year ended December 31, 2022, we recorded a reversal of impairment expense of $ 7 million corresponding with this reclassification.

As of December 31, 2022, we did not have assets held for sale.

As of December 31, 2023 and 2022, we did not have assets held for sale.

Refer to Note 9:

Property and Equipment and Note 16:

Fair value measurements for further information.

Property and Equipment for additional information.

We lease sales centers, office space and equipment under lease agreements.

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We monitor events or changes in circumstances that change the timing or amount of future lease payments which results in the remeasurement of a lease liability, with a corresponding adjustment to the ROU asset.

ROU assets for operating and financing leases are periodically reviewed for impairment losses under ASC 360-10, Property, Plant, and Equipment , to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

ROU assets for operating and finance leases are periodically reviewed for impairment losses under ASC 360-10, Property, Plant, and Equipment , to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

Refer to Note 17:

Leases for further information.

Leases for additional information.

Goodwill acquired in business combinations is assigned to the reporting units expected to benefit from the combination as of the acquisition date.

We do not amortize goodwill.

We evaluate goodwill for potential impairment at least annually, on October 1, 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.

We evaluate goodwill for potential impairment at least annually, on October 1, 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.

The review is based on either a qualitative assessment or a two-step impairment test.

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 of our reporting units, 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.

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.

No goodwill impairment charges were recognized during the years ended December 31, 2022 and 2021.

No goodwill impairment charges were recognized during the years ended December 31, 2023, 2022 and 2021 and there is no accumulated impairment of goodwill for any period presented in the consolidated financial statements.

The changes in goodwill for the periods presented in the consolidated financial statements were limited to increases or decreases in goodwill resulted from the Diamond and Grand Islander acquisitions and any related measurement period adjustments.

Refer to Note 3:

Diamond Acquisition for further information.

Acquisitions for additional information.

Intangible Assets

Our intangible assets consist of management agreements, trade name, club member relationships and certain proprietary software technologies with finite lives.

We have management agreements, trade name, club member relationships, and software intangibles that were recorded at their fair value as part of the Diamond Acquisition.

We also have management agreements that were recorded at their fair value at the time of the completion of a merger on October 24, 2007, where Hilton became a wholly-owned subsidiary of an affiliate of The Blackstone Group L.P.

(“Blackstone”).

Additionally, we capitalize costs incurred to develop internal-use computer software, including costs incurred in connection with development of upgrades or enhancements that result in additional functionality.

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Refer to Note 12:

Intangible Assets for further information.

Intangible Assets for additional information.

Deferred Financing Costs

Deferred financing costs, including legal fees and upfront lenders fees, related to the Company’s debt and non-recourse debt are deferred and amortized over the life of the respective debt using the effective interest method.

The capitalized costs related to the Timeshare Facility and the Revolver are included in Other assets while the remaining capitalized costs related to all other debt instruments are included in Debt, net in our consolidated balance sheets.

The amortization of deferred financing costs is included in Interest expense in our consolidated statements of operations.

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We expense indirect sales and marketing costs we incur to sell VOIs and vacation packages when incurred.

Deferred selling expenses, which are direct selling costs related to a contract for which revenue has not yet been recognized, were $ 18 million and $ 25 million as of December 31, 2022 and 2021, respectively, and were included in Other assets on our consolidated balance sheets.

Deferred selling expenses, which are direct selling costs related to a contract for which revenue has not yet been recognized, were $ 18 million as of both December 31, 2023 and 2022, and were included in Other assets on our consolidated balance sheets.

Fair Value Measurements—Valuation Hierarchy

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Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources.

Unobservable inputs are inputs that reflect our own assumptions about the data

market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Unobservable inputs are inputs that reflect our own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three-level hierarchy of inputs is summarized below:

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Debt and non-recourse debt and Note 16:

Fair Value Measurements for further information.

Fair Value Measurements for additional information.

Currency Translation and Remeasurement

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Gains and losses from foreign exchange rate changes related to transactions denominated in a currency other than an entity’s functional currency or transactions related to intercompany receivables and payables denominated in a currency other than an entity’s functional currency that are not of a long-term investment nature are recognized as g ains or losses on foreign currency transactions.

These gains or losses are included in Other (loss) gain, net in our consolidated statements of operations.

These gains or losses are included in Other gain (loss), net in our consolidated statements of operations.

Share-Based Compensation

Certain of our employees participate in our 2017 Omnibus Incentive Plan (the “Stock Plan”) which compensates eligible employees and directors with restricted stock units (“RSUs”), time and performance-vesting restricted stock units (“Performance RSUs” or “PSUs”) and nonqualified stock options (“Options”).

On May 3, 2023, the 2023 Omnibus Incentive Plan (“2023 Plan”) was approved by our shareholders to replace the 2017 Omnibus Incentive Plan and the 2017 Plan for Non-Employee Directors (the “2017 Plans”).

The 2023 Plan authorizes the issuance of restricted stock units (“Service RSUs” or “RSUs”), nonqualified stock options (“Options”), time and performance-vesting restricted stock units (“Performance RSUs” or “PSUs”), and stock appreciation rights (“SARs”) to certain employees and directors.

We record compensation expense based on the share-based awards granted to our employees.

The measurement objective for these equity awards is the estimated fair value at the grant date of the equity instruments that we are obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments.

Compensation expense is recognized ratably over the requisite period and the corresponding change is recognized in Additional paid-in capital in our consolidated balance sheets.

Compensation expense is recognized ratably over the requisite service period and the corresponding change is recognized in Additional paid-in capital in our consolidated balance sheets.

The requisite service period is the period during which an employee is required to provide service in exchange for an award.

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Basic earnings per share (“EPS”) is calculated by dividing the earnings available to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted earnings per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period.

Diluted EPS is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period.

When there is a year-to-date loss, potential common shares should not be included in the computation of diluted EPS;

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We administer and maintain a defined contribution plan for the benefit of all employees meeting certain eligibility requirements who elect to participate in the plan.

Contributions are determined based on a specified percentage of salary deferrals by participating employees.

Contributions are determined based on a specified percentage of salary and bonus deferrals by participating employees.

We recognized compensation expense for our participating employees totaling $ 23 million, $ 19 million and $ 5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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Adopted Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

ASU 2020-04 provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued.

Further, in December 2022, the FASB issued ASU No.

2022-06 (“ASU 2022-06”), Reference Rate Reform (“Topic 848”).

The update deferred the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

The guidance was effective as of March 12, 2020 and will apply through December 31, 2024.

During the year ended December 31, 2022, we adopted this standard and it did not have a material impact on our consolidated financial statements or results.

Accounting Standards Not Yet Adopted

In March 2022, the FASB issued Accounting Standards Update 2022-02 (“ASU 2022-02”), Financial Instruments—Credit Losses (Topic 326):

On January 1, 2023, we adopted Accounting Standards Update 2022-02 (“ASU 2022-02”), Financial Instruments— Credit Losses (ASC 326):

Troubled Debt Restructurings and Vintage Disclosures.

ASU 2022-02 provides, under Issue 2 - Vintage Disclosures, that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

ASU 2022-02 provides, under Issue 2 - Vintage Disclosures, that an entity discloses current-period gross write-offs by year of origination for financing receivables and net investments in leases.

For financing receivables, the vintage disclosure is to present the amortized cost basis by credit quality indicator and class of financing receivable for the year of origination.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and is to be applied prospectively.

We are currently evaluating the effects of this ASU to our disclosures.

In October 2021, the FASB issued Accounting Standards Update 2021-08 (“ASU 2021-08”), Business Combinations (Topic 805):

The vintage disclosures are to be applied prospectively.

The impact of adoption of ASU 2022-02 was in disclosure only and did not have an impact on our consolidated financial statements.

Timeshare Financing Receivables for additional information.

On January 1, 2023, we adopted Accounting Standards Update 2021-08 (“ASU 2021-08”), Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

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At the acquisition date, the entity should account for the related revenue contracts in accordance with Topic 606 as if the entity had originated the contracts.

The guidance is effective for fiscal years beginning after December 15, 2022.

We currently plan to implement and evaluate the impacts of this new standard with future acquisitions, if any.

The adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements.

Accounting Standards Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 provides amendments to improve reportable segment disclosure requirements both on an interim and annual basis, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The impact of adoption of ASU 2023-07 is expected to impact disclosures only and not have a material impact on our consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 states that an entity must provide greater disaggregation of its effective tax rate reconciliation disclosure.

The ASU also states that an entity must separately disclose net cash taxes paid between federal, state, and foreign jurisdictions.

The guidance is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.

The guidance is to be applied prospectively, although retrospective application is permitted.

The impact of adoption of ASU 2023-09 is expected to impact disclosures only and not have a material impact on our consolidated financial statements or results.

Diamond Acquisition

On August 2, 2021, (the “Acquisition Date”), we completed the Diamond Acquisition by exchanging 100 % of the outstanding equity interests of Diamond to HGV common shares.

On August 2, 2021, we completed the Diamond Acquisition by exchanging 100 % of the outstanding equity interests of Diamond to HGV common shares.

Shareholders of Diamond received 0.32 shares of our common stock for each share of Diamond common stock.

Following the closing of the Diamond Acquisition, pre-existing HGV shareholders owned approximately 72 % of the combined company after giving effect to the Diamond Acquisition, with Apollo and other minority shareholders holding the remaining approximately 28 % at the time the Diamond Acquisition was completed.

On the Acquisition Date, shareholders of Diamond received 0.32 shares of our common stock for each share of Diamond common stock, totaling approximately 28 % of our total common shares outstanding.

Additionally, in connection with the Diamond Acquisition, HGV repaid certain existing indebtedness of Diamond.

Costs related to the acquisition for the year ended December 31, 2022 and 2021 were $ 67 million and $ 106 million, respectively, which were expensed as incurred, and reflected as Acquisition and integration-related expense in our consolidated statements of operations.

The following table presents the fair value of each class of consideration transferred in relation to the Diamond Acquisition at the Acquisition Date.

Costs related to the acquisition for the years ended December 31, 2023, 2022 and 2021 were $ 51 million, $ 67 million, and $ 106 million, respectively, which were expensed as incurred, and reflected as Acquisition and integration-related expense in our consolidated statements of operations.

The following table presents the fair value of each class of consideration transferred in relation to the Diamond Acquisition at the Diamond Acquisition Date:

($ in millions, except stock price amounts)

HGV common stock shares issued for outstanding Diamond shares 33.93

HGV common stock price as of Acquisition Date (1)

HGV common stock price as of Diamond Acquisition Date (1)

Stock purchase price $ 1,381

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Fair Values of Assets Acquired and Liabilities Assumed

We accounted for the Diamond Acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value as of the Acquisition Date.

We accounted for the Diamond Acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value as of the Diamond Acquisition Date.

The following table presents the fair values of the assets that we acquired and the liabilities that we assumed, as finalized:

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The majority of goodwill is not expected to be deductible for tax purposes.

Our estimates and assumptions were subject to adjustments during the measurement period, not to exceed one year from the Acquisition Date.

During the year ended December 31, 2022, we recognized a net adjustment to goodwill of which $ 39 million, net of impacts of tax adjustments.

Our estimates and assumptions were subject to adjustments during the measurement period, not to exceed one year from the Diamond Acquisition Date.

During the year ended December 31, 2022, we recognized a net adjustment to goodwill of $ 39 million, net of impacts of tax adjustments.

The adjustments resulted from changes to our estimates of the fair value of the acquired assets and assumed liabilities based on finalizing the valuations of acquired property and equipment, accounts receivable, operating lease right-of-use asset and related lease liabilities, capitalized software and insurance receivables given the ultimate determination of proceeds related to preacquisition business interruption insurance claims as well as deferred income tax liabilities.

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For purposes of our fair value allocation, we have considered all acquired receivables to be purchase credit deteriorated assets.

Timeshare Financing Receivables for further information.

Acquired timeshare financing receivables with credit deterioration as of the Acquisition Date were as follows:

Timeshare Financing Receivables for additional information.

Acquired timeshare financing receivables with credit deterioration as of the Diamond Acquisition Date were as follows:

($ in millions) As of

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Significant estimates and assumptions impacting the fair value of the acquired management contracts intangible that are subjective and/or require complex judgments include our estimates of operating costs and margins, and the discount rate.

Certain other estimates and assumptions impacting the fair value of the acquired management contracts intangible involving less subjective and/or less complex judgments include:

short-term and

long-term revenue growth rates, attrition rates, capital expenditures, tax rates and other factors impacting the discounted cash flows.

Certain other estimates and assumptions impacting the fair value of the

acquired management contracts intangible involving less subjective and/or less complex judgments include:

short-term and long-term revenue growth rates, attrition rates, capital expenditures, tax rates and other factors impacting the discounted cash flows.

Deferred Revenue

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We have recorded liabilities for those operating leases assumed in connection with the Diamond Acquisition with a remaining term in excess of a year.

We valued lease liabilities at the present value of the remaining contractual lease payments based on the guidance in ASC 842 and used a discount rate determined as of the Acquisition Date.

We valued lease liabilities at the present value of the remaining contractual lease payments based on the guidance in ASC 842 and used a discount rate determined as of the Diamond Acquisition Date.

The right-of-use assets for such leases were measured at an amount equal to the lease liabilities, adjusted for favorable or unfavorable terms of the lease when compared with market terms.

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Pro Forma Results of Operations

The following unaudited pro forma information presents the combined results of operations of HGV and Diamond as if we had completed the Diamond Acquisition on January 1, 2020, the first day of our 2020 fiscal year, but using our fair values of assets acquired and liabilities assumed as of the Acquisition Date.

These unaudited pro forma results do not reflect any synergies from operating efficiencies.

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Diamond Results of Operations

The following table presents the results of Diamond operations included in our statement of operations for the period from the Acquisition Date through the end of 2021.

The following table presents the results of Diamond operations included in our statement of operations for the period from the Diamond Acquisition Date through the end of 2021:

($ in millions) August 2, 2021 to December 31, 2021

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Net income 92

Grand Islander Acquisition

On December 1, 2023 (“Grand Islander Acquisition Date”), the Company completed the acquisition of BRE Grand Islander Parent LLC (“Grand Islander”), by exchanging 100 % of the outstanding equity interests of Grand Islander for approximately $ 117 million (the “Grand Islander Acquisition”).

Prior to the acquisition, we managed the resort property in Hawaii owned by Grand Islander.

The acquisition expands our product offerings and provides existing members upgrade opportunities to locations outside of the prior Fee-for-service arrangement.

The purchase price of $ 117 million included 110 million in cash consideration, $ 4 million of non-cash consideration attributable to the effective settlement of a pre-existing relationship based on the contract value, and the remaining $ 3 million was accrued for within Accounts payable, accrued expenses and other as of December 31, 2023.

The preliminary fair values of the assets acquired includes $ 8 million of cash and cash equivalents, $ 28 million of restricted cash, $ 5 million of accounts receivable, $ 52 million of securitized timeshare financing receivables, net, $ 199 million of unsecuritized timeshare financing receivables, net, $ 18 million of inventory, and $ 2 million of other assets.

Of the unsecuritized timeshare financing receivables acquired, $ 127 million is used as collateral to secure a non-recourse revolving timeshare receivable credit facility (“Grand Islander Timeshare Facility”).

The preliminary fair values of the liabilities assumed consist of $ 193 million of non-recourse debt and $ 4 million of other liabilities.

The estimated fair values of the assets acquired, and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management.

We preliminarily estimated the fair value of the timeshare financing receivables and inventory using a discounted cash flow model, which calculated a present value of expected future risk-adjusted cash flows over the remaining term of the respective timeshare financing receivable and the sell-out period of the inventory, respectively.

For non-recourse debt we estimated the fair value using recent recent trades of the debt, using adjustments to recent trades of similar debt or the settlement amounts for debt that was repaid in close proximity to the Grand Islander Acquisition Date.

Timeshare Financing Receivables

The timeshare financing receivables acquired are considered purchased credit deteriorated assets.

The following table presents the acquired assets with credit deterioration as of the Grand Islander Acquisition Date:

($ in millions) As of

December 1, 2023

Purchase price $ 251

Allowance for credit losses 30

Premium attributable to other factors ( 6 )

Par value $ 275

Goodwill of $ 2 million is calculated as total consideration transferred less net assets acquired.

Such amount of goodwill is de minimis to our reporting units or to our reportable segments as of December 31, 2023.

The majority of goodwill is expected to be deductible for tax purposes.

All amounts recorded, including those based on estimates and assumptions, are subject to change during the measurement period, not to exceed one year from the Grand Islander Acquisition Date, as defined by Topic 805.

Acquisition and integration-related expense related to this transaction were de minimis for the year ended December 31, 2023.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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(i) Real estate sales and financing and (ii) Resort operations and club management .

Please refer to Note 22:

Business Segments below for more details related to our segments.

Business Segments for more information related to our segments.

($ in millions) Year Ended December 31,

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Business Segments for additional information.

Contract Balances

The following table provides information on our accounts receivable with customers which are included in Accounts Receivable, net on our consolidated balance sheets:

Year Ended December 31,

($ in millions) 2022 2021

Receivables $ 322 $ 202

Receivables from Contracts with Customers, Contract Liabilities, and Contract Assets

Our accounts receivable that relates to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations and are settled when the related cash is received.

Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time.

Our timeshare financing receivables consist of loans related to our financing of VOI sales that are secured by the underlying timeshare properties.

Timeshare financing receivables for additional information.

The following table provides information on our contracts with customers which are included in Accounts Receivable, net and Timeshare financing receivables, net , respectively, on our consolidated balance sheets:

($ in millions) December 31,

Receivables from contracts with customers:

Accounts receivable, net $ 343 $ 322

Timeshare financing receivables, net

$ 2,456 $ 2,089

Contract liabilities include payments received or due in advance of satisfying our performance obligations.

Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues, the liability for bonus points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future, deferred maintenance fees and other deferred revenue.

The following table presents the composition of our contract liabilities:

Year Ended December 31,

($ in millions) 2022 2021

($ in millions) December 31,

Contract liabilities:

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Deferred sales of VOIs of projects under construction 39 3

Club dues and Club activation fees 76 91

Bonus Point incentive liability and marketing package (1)

Club activation fees and annual dues

Bonus Point incentive liability (1)

Deferred maintenance fees 12 14

Other deferred revenue 38 42

(1) As of December 31, 2022, the balance includes $ 51 million of bonus point incentive liabilities and $ 55 million for related bonus points and marketing package deferred revenue.

The Bonus Point incentive liabilities are included in Accounts payable, accrued expenses and other on our consolidated balance sheets.

This liability is comprised of unrecognized revenue for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.

(1) This balance includes $ 54 million and $ 51 million of bonus point incentive liabilities included in Accounts payable, accrued expenses and other on our consolidated balance sheets as of December 31, 2023, and 2022, respectively.

This liability is for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.

Revenue earned for the year ended December 31, 2023, that was included in the contract liabilities balance at December 31, 2022 was approximately $ 173 million.

Revenue earned for the year ended December 31, 2022, that was included in the contract liabilities balance at December 31, 2021 was approximately $ 173 million.

Our accounts receivable that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations management agreements and are settled when the related cash is received.

Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time.

Contract assets relate to incentive fees that can be earned for meeting certain targets on sales of VOIs at properties under our fee-for-service arrangements;

however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period.

As of December 31, 2022, contract assets were $ 9 million.

There were no contract assets as of December 31, 2021.

Contract liabilities include payments received or due in advance of satisfying our performance obligations, offset by revenues recognized.

Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues and the liability for Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future.

As of December 31, 2023 and 2022, contract assets were $ 13 million and $ 9 million, respectively.

Transaction Price Allocated to Remaining Performance Obligations

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Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Bonus Points that may be redeemed in the future.

Deferred VOI sales include the deferred revenues associated with:

the sales associated with incomplete phases or buildings;

Deferred VOI sales include the deferred revenues associated with the sales associated with incomplete phases or buildings;

the sales of unacquired inventory;

and deferred sales associated with our long-term lease product with a reversionary interest.

The following table presents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction:

Year Ended December 31,

The following table presents the deferred revenue, deferred cost of VOI sales and deferred direct selling costs from sales of VOIs related to projects under construction:

($ in millions) 2023 2022

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Club activation fees 66 7 years Straight-line basis over average inventory holding period

Bonus Points 106 18 - 30 months

Bonus Points incentive liability

83 18 - 30 months

Upon redemption

Club activation fees are paid at closing of a VOI purchase, which grants access to our points-based Club.

The revenue from these fees are deferred and amortized on a straight-line basis over the average inventory holding period.

Deferred revenues do not include prepaid vacation packages or other prepayments for future stays at our resorts, which are included in Advanced deposits in our consolidated balance sheets.

RESTRICTED CASH

Restricted cash was as follows:

Year Ended December 31,

($ in millions) 2023 2022

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(1) See Note 15:

Debt & Non-recourse Debt for further information.

Debt & Non-recourse Debt for additional information.

(2) Other restricted cash primarily includes cash collected on behalf of HOAs, deposits related to servicer arrangements and other deposits.

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The following table represents our accounts receivable, net of allowance for credit losses:

($ in millions) December 31, 2022 December 31, 2021

($ in millions) 2023 2022

Fee-for-service commissions $ 57 $ 91

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We use delinquency status and economic factors such as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.

We sell VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing and brand fees.

We use historical losses and economic factors as a basis to develop our allowance for credit losses.

Under these fee-for-service arrangements, we earn commission fees based on a percentage of total interval sales.

Additionally, the terms of these arrangements include provisions requiring the reduction of fees earned for defaults and cancellations.

The changes in our allowance for fee-for-service commissions were as follows during the year ended December 31, 2022:

($ in millions)

We have various allowances for our accounts receivable related to fee-for-service commissions, trade accounts receivable, marketing packages, club dues and activation fees.

The changes in our allowance were as follows during the year ended December 31, 2023:

($ in millions) Fee-for-service commissions

Real estate and financing

Resort and club operations

Balance as of December 31, 2022

$ 16 $ 24 $ 12 $ 52

Current period provision for expected credit losses 14 13 16 43

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Balance at December 31, 2023

$ 23 $ 34 $ 3 $ 60

TIMESHARE FINANCING RECEIVABLES

We define our timeshare financing receivables portfolio segments as (i) originated and (ii) acquired.

Our originated portfolio includes all Legacy-HGV and Legacy-Diamond timeshare financing receivables originated after the Acquisition Date.

Our acquired portfolio includes all timeshare financing receivables acquired from Legacy-Diamond as of the Acquisition Date.

Our originated portfolio represents timeshare financing receivables that existed both prior to and following the Diamond Acquisition and the Grand Islander Acquisition date, excluding Legacy-Diamond and Legacy-Grand Islander (“Legacy-HGV”) and timeshare financing receivables originated by Legacy-Diamond and Legacy-Grand Islander subsequent to the respective acquisition dates.

Our acquired portfolio includes all timeshare financing receivables acquired from Legacy-Diamond and Legacy-Grand Islander as of the respective acquisition dates.

The following table presents the components of each portfolio segment by class of timeshare financing receivables:

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(1) Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility (“Timeshare Facility”) as well as amounts held as future collateral for securitization activities.

(2) Non-credit premium of $ 97 million was recognized at the Acquisition Date, of which $ 41 million remains unamortized as of December 31, 2022.

In August 2022, we completed a securitization of $ 269 million of gross timeshare financing receivables and issued various notes due January 2037.

In April 2022, we completed a securitization of $ 246 million of gross timeshare financing receivables and issued various notes due June 2034.

Neither of the securitization transactions qualified as a sale and, accordingly, no gain or loss was recognized.

(2) Non-credit premium of $ 97 million was recognized at the Diamond Acquisition Date, of which $ 26 million and $ 41 million remains unamortized as of December 31, 2023 and 2022, respectively.

Non-credit premium of $ 6 million was recognized at the Grand Islander Acquisition Date which remains unamortized as of December 31, 2023.

In August 2023, we completed a securitization of approximately $ 293 million of gross timeshare financing receivables and issued approximately $ 187 million of 5.72 % notes, $ 79 million of 6.11 % notes, and $ 27 million of 6.94 % notes due January 2038.

The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized.

The transaction is considered a secured borrowing, and the notes from the transaction are presented as non-recourse debt.

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

Consolidated Variable Interest Entities and Note 15:

Debt and Non-recourse Debt for additional information.

As of December 31, 2023 and 2022, we had timeshare financing receivables with a carrying value of $ 415 million and $ 105 million, respectively, securing the Timeshare Facility.

We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale.

In connection with the acquisition of Grand Islander, we also gained access to an additional timeshare facility.

The Grand Islander Timeshare Facility is secured by Legacy-Grand Islander acquired timeshare financing receivables with a carrying value of $ 127 million as of December 31, 2023.

For our originated portfolio, we record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale.

We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance.

We recorded an adjustment to our estimate of variable consideration of $ 140 million and $ 121 million during the years ended December 31, 2022 and 2021, respectively.

During the years ended December 31, 2023, and 2022, we recorded an adjustment to our estimate of variable consideration of $ 171 million and $ 140 million, respectively.

For our acquired portfolio, any changes to the estimates of our allowance are recorded within Financing expense on our consolidated statements of operations in the period in which the change occurs.

We recognize interest income on our timeshare financing receivables as earned.

As of December 31, 2022 and 2021, we had interest receivable of $ 13 million and $ 9 million, respectively, on our originated timeshare financing receivables.

As of December 31, 2022 and 2021, we had interest receivable of $ 4 million and $ 7 million, respectively, on our acquired timeshare financing receivables.

As of December 31, 2023 and 2022, we had interest receivable outstanding of $ 17 million and $ 13 million, respectively, on our originated timeshare financing receivables.

As of both December 31, 2023 and 2022, we had interest receivable outstanding of $ 4 million on our acquired timeshare financing receivables.

Interest receivable is included in Other Assets within our consolidated balance sheets.

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As of December 31, 2023, our originated timeshare financing receivables had interest rates ranging from 1.5 % to 25.8 %, a weighted-average interest rate of 14.9 %, a weighted-average remaining term of 8.3 years and maturities through 2038 .

Our acquired timeshare financing receivables had interest rates ranging from 2.0 % to 25.0 %, a weighted-average interest rate of 15.6 %, a weighted-average remaining term of 7.4 years and maturities through 2032 .

Our acquired timeshare financing receivables had interest rates ranging from 2.0 % to 25.0 %, a weighted-average interest rate of 14.7 %, a weighted-average remaining term of 6.9 and maturities through 2038 .

Acquired Timeshare Financing Receivables with Credit Deterioration

As part of the Diamond Acquisition, we acquired existing portfolios of timeshare financing receivables.

Acquired timeshare financing receivables include all timeshare financing receivables of Legacy-Diamond as of the Acquisition Date and were deemed to be purchase credit deteriorated financial assets.

Our acquired timeshare financing receivables were deemed to be purchased credit deteriorated financial assets.

These notes receivable were initially recognized at their purchase price, represented by the acquisition date fair value, and subsequently “grossed-up” by our acquisition date assessment of the allowance for credit losses.

The difference over which par value of the acquired purchased credit deteriorated assets exceeds the purchase price plus the initial allowance for credit losses is reflected as a non-credit premium and is amortized as a reduction to interest income under the effective interest method.

The difference over which par value of the acquired purchased credit deteriorated assets exceeds the purchase price plus the initial allowance for financing receivable losses is reflected as a non-credit premium and is amortized as a reduction to interest income under the effective interest method.

Summary of Significant Accounting Policies for additional information on the fair value methodology for our acquired timeshare financing receivables and related allowances for credit losses.

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Originated Timeshare Financing Receivables

Originated timeshare financing receivables represent all Legacy-HGV timeshare financing receivables and timeshare financing receivables originated by Legacy-Diamond subsequent to the Acquisition Date.

Our originated timeshare financing receivables as of December 31, 2023, mature as follows:

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Write-offs ( 79 ) ( 11 )

Inventory recoveries — 8

Balance as of December 31, 2021 $ 280 $ 482

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Write-offs ( 70 ) ( 119 )

Inventory recoveries — 29

Balance as of December 31, 2022 $ 404 $ 338

(1) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

(2) The initial gross allowance determined for receivables with credit deterioration was $ 512 million as of the Acquisition Date.

Of this amount, approximately $ 249 million relates to net uncollectible balances such as loans that were fully written-off prior to the Acquisition.

Initial allowance for PCD financing receivables acquired during the period (4)

Provision for financing receivables losses (2)

Provision for credit loss expense (5)

Write-offs ( 73 ) ( 116 )

Inventory recoveries — 26

Balance as of December 31, 2023 $ 500 $ 279

(1) The initial gross allowance determined for receivables with credit deterioration was $ 512 million as of the Diamond Acquisition Date.

Of this amount, approximately $ 249 million relates to net uncollectible balances such as loans that were fully written-off prior to the Diamond Acquisition.

Therefore, the net impact to the allowance related to acquired loans not previously written off was an increase of $ 263 million.

(2) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

(3) Represents the initial change in allowance resulting from upgrades of Acquired loans.

Upgraded Acquired loans and their related allowance are included in the Originated portfolio segment.

(4) The initial gross allowance determined for receivables with credit deterioration was $ 30 million as of the Grand Islander Acquisition Date.

(5) Includes incremental provision for credit loss expense from Acquired loans.

Credit Quality of Timeshare Financing Receivables

Legacy-HGV Timeshare Financing Receivables

We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial.

We monitor the collectability of

our receivables on an ongoing basis.

There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties.

We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables.

For the static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors.

The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables.

The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

Our gross balances by average FICO score of our Legacy-HGV timeshare financing receivables were as follows:

Legacy-HGV Timeshare Financing Receivables

($ in millions) December 31,

2022 December 31,

($ in millions) December 31, 2023 December 31, 2022

700+ $ 882 $ 763

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Total $ 604 $ 339 $ 153 $ 61 $ 105 $ 166 $ 1,428

Current period gross write-offs

$ — $ 8 $ 12 $ 6 $ 9 $ 18 $ 53

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

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Legacy-Diamond Timeshare Financing Receivables

We evaluate these portfolios collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial.

We monitor the collectability of our receivables on an ongoing basis.

There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties.

The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

Our gross balances by average FICO score of our Legacy-Diamond acquired and originated timeshare financing receivables were as follows:

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Total $ — $ — $ 88 $ 105 $ 122 $ 184 $ 499

Current period gross write-offs

$ — $ — $ 14 $ 23 $ 35 $ 44 $ 116

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

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Total $ 312 $ 263 $ 87 $ — $ — $ — $ 662

Current period gross write-offs

$ — $ 10 $ 10 $ — $ — $ — $ 20

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

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Total $ 403 $ 821 $ 1,224

Legacy-Grand Islander Timeshare Financing Receivables

Our gross balances by average FICO score of our Legacy-Grand Islander acquired and originated timeshare financing receivables were as follows:

Legacy-Grand Islander Acquired Timeshare Financing Receivables

($ in millions) December 31, 2023

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

Legacy-Grand Islander Originated Timeshare Financing Receivables

($ in millions) December 31, 2023

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

The following tables details our gross Legacy-Grand Islander acquired and originated timeshare financing receivables by the origination year and average FICO score as of December 31, 2023:

Legacy-Grand Islander Acquired Timeshare Financing Receivables

($ in millions) 2023 2022 2021 2020 2019 Prior Total

700+ $ 28 $ 16 $ 5 $ 2 $ 7 $ 8 $ 66

600-699 9 4 1 1 2 3 20

<600 — — — — — — —

39 29 18 20 34 40 180

Total $ 76 $ 49 $ 24 $ 23 $ 43 $ 51 $ 266

Current period gross write-offs

$ — $ — $ — $ — $ — $ — $ —

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

Legacy-Grand Islander Originated Timeshare Financing Receivables

($ in millions) 2023 2022 2021 2020 2019 Prior Total

700+ $ 3 $ — $ — $ — $ — $ — $ 3

600-699 — — — — — — —

<600 — — — — — — —

3 — — — — — 3

Total $ 6 $ — $ — $ — $ — $ — $ 6

Current period gross write-offs

$ — $ — $ — $ — $ — $ — $ —

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

As of December 31, 2023, we had ceased accruing interest on Legacy-Grand Islander timeshare financing receivables with an aggregate principal balance of $ 14 million.

The following tables detail an aged analysis of our gross timeshare receivables balance:

Legacy-Grand Islander Timeshare Financing Receivables

December 31, 2023

($ in millions) Securitized Unsecuritized Total

Current $ 71 $ 183 $ 254

31 - 90 days past due 1 3 4

91 - 120 days past due — 1 1

121 days and greater past due — 13 13

Total $ 72 $ 200 $ 272

Inventory was comprised of the following:

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Total $ 1,400 $ 1,159

The table below presents costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory:

During the year ended December 31, 2023, we acquired inventory associated with a property in New York for $ 136 million from a third-party developer.

Under the purchase agreement, there are no further inventory commitments related to this property.

For the year ended December 31, 2023, we recorded non-cash operating activity transfers of $ 92 million related to the registrations for timeshare units under construction from Property and equipment, net to Inventory, pertaining to two of our properties in Hawaii.

As VOI inventory is constructed it is recorded into Property and equipment, net until such units are registered and made available for sale.

Once registered and available for sale, the units are then transferred into completed unsold VOIs inventory.

Supplemental Disclosures of Cash Flow Information for information regarding non-cash transfers.

The table below presents costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory and cost of VOI sales:

Year Ended December 31,

($ in millions) 2023 2022 2021

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$ 61 $ 23 $ ( 2 )

(1) For the year ended December 31, 2022, the costs of sales true-up decreased costs of VOI sales and increased inventory.

(1) For the years ended December 31, 2023, and December 31, 2022, the costs of sales true-up decreased costs of VOI sales and increased inventory.

For the year ended December 31, 2021, the costs of sales true-up increased costs of VOI sales and decreased inventory.

For the year ended December 31, 2020, the costs of sales true-up decreased costs of VOI sales and increased inventory.

The table below presents expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects:

($ in millions) 2022 2021 2020

Cost of VOI sales related to fee-for-service upgrades $ 9 $ 7 $ 9

PROPERTY AND EQUIPMENT

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Depreciation expense on property and equipment was $ 51 million, $ 52 million, and $ 36 million for the years ended December 31, 2023, 2022 and 2021 respectively.

Land increased by $ 42 million as of December 31, 2022 from December 31, 2021, primarily due to the transfer of assets held for sale to property and equipment.

During 2022, we concluded that the parcels of land and infrastructure which were previously classified as held for sale, no longer met the held for sale criteria.

Thus, these assets were reclassified to property and equipment as a non-cash transfer.

The assets were measured at fair value as of the transfer date as assets held for sale prior to reclassification, principally utilizing market approaches for the land parcels and the cost approach for infrastructure.

During the year ended December 31, 2023, we recorded a non-cash operating activity transfer of $ 20 million to Property and equipment, net, related to the purchase of units in South Carolina.

For the year ended December 31, 2022, we recorded a reversal of impairment expense of $ 7 million, corresponding with the asset reclassification and an impairment charge of $ 4 million, for retirement of certain assets.

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CONSOLIDATED VARIABLE INTEREST ENTITIES

As of December 31, 2022 and 2021, we consolidated 8 and 11 VIEs, respectively.

As of December 31, 2023, we consolidated 11 VIEs.

The activities of these entities are limited to purchasing qualifying non-recourse timeshare financing receivables from us and issuing debt securities and/or borrowing under a debt facility to facilitate such purchases.

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We are also the servicer of these timeshare financing receivables and often replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts.

Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them.

Additionally, we have the right to receive benefits that could be significant to them.

Only the assets of our VIEs are available to settle the obligations of the respective entities.

As part of the Diamond Acquisition, we acquired the variable interests in the entities associated with Diamond’s outstanding timeshare financing receivables securitization transactions.

As part of the Grand Islander Acquisition, we acquired the variable interests in the entities associated with Grand Islander’s outstanding timeshare financing receivables securitization transactions.

They have been aggregated for disclosure purposes as they are similar in nature to our previously established VIEs.

We acquired two conduit facilities that had an outstanding balance of $ 133 million as of December 31, 2021.

As of December 31, 2022, all conduit facilities were paid off and terminated.

We also assumed a timeshare facility that has an outstanding balance of $ 124 million as of December 31, 2023 and is considered a VIE.

Debt and Non-recourse debt for additional information.

Our consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:

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Timeshare financing receivables, net 1,395 883

Non-recourse debt (1)

(1) Net of deferred financing costs.

Non-recourse debt, net 1,466 1,003

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

As of December 31, 2022, we have a 25 % and 50 % ownership interests in BRE Ace LLC and 1776 Holdings LLC, respectively, which are VIEs.

As of December 31, 2023, we had ownership interests in BRE Ace LLC and 1776 Holdings LLC, which are VIEs.

We do not consolidate BRE Ace LLC and 1776 Holdings LLC because we are not the primary beneficiary.

For both VIEs, our investment interests are included in the consolidated balance sheets as Investments in unconsolidated affiliates, and equity earned is included in the consolidated statements of operations as Equity in earnings from unconsolidated affiliates .

During the year ended December 31, 2023, we received a cash distribution of approximately $ 16 million from our investment in BRE Ace LLC.

Our two unconsolidated affiliates have aggregated debt balances of $ 427 million and $ 393 million as of December 31, 2023 and 2022, respectively.

The debt is secured by their assets and is without recourse to us.

Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals $ 72 million and $ 59 million as of December 31, 2022 and December 31, 2021, respectively and (ii) receivables for commission and other fees earned under fee-for-service arrangements.

Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totaled $ 71 million and $ 72 million as of December 31, 2023 and 2022, respectively and (ii) receivables for commission and other fees earned under fee-for-service arrangements.

Related Party Transactions for additional information.

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Total $ 1,660 $ ( 383 ) $ 1,277

We acquired definite-lived intangible assets as part of the Diamond Acquisition in the amount of $ 1,429 million as of the Acquisition Date.

Refer to Note 3:

Diamond Acquisition for further information.

Prior to the Diamond Acquisition, intangible assets included computer software and management contracts.

Amortization expense on intangible assets was $ 163 million, $ 192 million, and $ 90 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2022, the weighted average life on trade name was 1.5 years, management agreements was 35.2 years, club member relationships was 14.4 years, and capitalized software was 35.2 years.

During the year ended December 31, 2022, $ 3 million intangible impairment charges were recognized.

Trade name has been fully amortized as of December 31, 2023.

As of December 31, 2023, the weighted average life on management agreements was 34.6 years, club member relationships was 14.4 years, and capitalized software was 3.0 years.

During the year ended December 31, 2022, we recognized $ 3 million of intangible impairment charges.

No intangible impairment charges were recognized during the years ended December 31, 2023, and 2021.

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Interest rate swap 42 63

Other 113 126

Total $ 314 $ 373

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(1) Other accrued expenses includes interest payable, amounts due to HOAs and various accrued liabilities .

Debt & Non-recourse Debt

DEBT AND NON-RECOURSE DEBT

The following table details our outstanding debt balance and its associated interest rates:

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(2) Amount includes unamortized deferred financing costs related to our term loan and senior notes of $ 21 million and $ 17 million, respectively, as of December 31, 2023 and $ 26 million and $ 19 million, respectively, as of December 31, 2022.

This amount also includes original issuance discounts of $ 7 million and $ 6 million as of December 31, 2022 and 2021, respectively.

(3) Amount does not include unamortized deferred financing costs of $ 4 million and $ 5 million as of December 31, 2022 and 2021, respectively, related to our revolving facility included in Other Assets in our consolidated balance sheets.

This amount also includes unamortized original issuance discounts of $ 5 million and $ 7 million as of December 31, 2023, and 2022, respectively.

(3) Amount does not include unamortized deferred financing costs of $ 3 million and $ 4 million as of December 31, 2023, and 2022, respectively, related to our revolving facility which are included in Other assets in our consolidated balance sheets.

Senior Secured Credit Facilities

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

On May 31, 2023, we amended our Credit Facility Agreement to transition from London Interbank Offered Rate (“LIBOR”) reference rates to Secured Overnight Financing Rate (“SOFR”) reference rates.

We applied the optional expedients in ASC 848, Reference Rate Reform (“ASC 848”), accounting for the modification as a continuation of the existing contract.

Therefore, the transition did not require remeasurement at the modification date or a reassessment of previous accounting determinations, and the change in reference rates will be applied prospectively from the amendment date.

On October 6, 2023, we amended our Term loan under the Senior secured credit facility.

Under the amendment, the new interest rate is SOFR plus a spread adjustment of 0.11 % plus 2.75 %, down from SOFR plus a spread adjustment of 0.11 % plus 3.00 %.

Additionally, the interest rate floor for the Term loan was lowered from 0.50 % to 0.00 %.

During the year ended December 31, 2023, we expensed approximately $ 2 million in debt issuance costs in connection with the amendment.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt.

These interest rate swaps are associated with the remaining available LIBOR based senior secured credit facility.

Therefore as of December 31, 2022, these interest rate swaps convert the LIBOR based variable rate on our Term Loan to average fixed rates of 1.32 % per annum with maturities between 2023 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps.

As of December 31, 2022, the notional values of the interest rate swaps under our Term Loan was $ 708 million.

These interest rate swaps are associated with the remaining available SOFR based senior secured credit facility.

During the second quarter of 2023, we amended our interest rate swap contracts to transition from one-month LIBOR to one-month SOFR as the floating interest rate.

The notional amount of the amended contracts was $ 550 million.

As of December 31, 2023, these interest rate swaps convert the SOFR-based variable rate on our Term Loan to average fixed rates of 1.55 % per annum with maturities between 2026 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps.

As of December 31, 2023, the aggregate notional values of the interest rate swaps under our Term Loan was $ 550 million.

Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded at their estimated fair value as an asset in Other assets in our consolidated balance sheets.

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We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes.

The following table reflects the activity in accumulated other comprehensive income related to our derivative instruments during the year ended December 31, 2022:

We classify cash inflows and outflows from derivatives that hedge interest rate risk within operating activities in the Consolidated Statements of Cash Flows.

The following table reflects the activity, net of tax, in Accumulated other comprehensive income related to our derivative instruments during the year ended December 31, 2023:

Net unrealized gain on derivative instruments

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Other comprehensive income before reclassifications, net 3

Reclassification to net income ( 4 )

Reclassifications to net income ( 19 )

Balance as of December 31, 2023 $ 32

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Non-recourse Debt

The following table details our outstanding non-recourse debt balance and its associated interest rates:

The following table details our outstanding non-recourse debt balance and associated interest rates:

($ in millions) 2023 2022

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Timeshare Facility with an average rate of 6.420 %, due 2025 (3)

Grand Islander Timeshare Facility with an average rate of 6.716 %, due 2029

HGV Securitized Debt with a weighted average rate of 2.711 %, due 2028

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HGV Securitized Debt with a weighted average rate of 5.937 %, due 2038

Diamond Resorts Premium Yield Facility with an average rate of 4.766 %, due 2031

Diamond Resorts Conduit Facility with an average rate of 2.250 %, due 2023

Diamond Resorts Conduit Facility with an average rate of 3.00 %, due 2024

Diamond Resorts Owner Trust 2017 with a weighted average rate of 3.504 %, due 2029

Diamond Resorts Owner Trust 2018 with a weighted average rate of 4.061 %, due 2031

HGV Securitized Debt with a weighted average rate of 3.658 %, due 2039

Grand Islander Securitized Debt with a weighted average rate of 2.965 %, due 2029

Grand Islander Securitized Debt with a weighted average rate of 3.316 %, due 2033

Diamond Resorts Owner Trust 2019 with a weighted average rate of 3.255 %, due 2032

Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160 %, due 2033

Total face value 1,113 1,334

unamortized deferred financing costs (2)

Total non-recourse debt, gross 1,482 1,113

unamortized deferred financing costs and discounts (2)

( 16 ) ( 11 )

Total non-recourse debt, net $ 1,466 $ 1,102

(1) As of December 31, 2023, and 2022, weighted-average interest rates were 5.095 % and 3.539 %, respectively.

(2) Amount relates to securitized debt only and does not include unamortized deferred financing costs of $ 4 million and $ 2 million as of December 31, 2022 and 2021, respectively, relating to our Timeshare Facility included in Other Assets in our consolidated balance sheets.

(3) In connection with the amended and restated Timeshare Facility executed in May 2022, the revolving commitment period of the Timeshare Facility terminates in May 2024, however the repayment maturity date extends 12 months beyond the commitment termination date to May 2025.

During the year ended December 31, 2022, we repaid and terminated our conduit facilities due in 2023 and 2024.

The Timeshare Facility is a non-recourse obligation payable solely from the pool of timeshare financing receivables pledged as collateral and related assets.

In May 2022, we amended and restated our Timeshare Facility agreement under new terms, which include 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.

Under the amendment, the Timeshare Facility is subject to an interest rate of 0.910 % plus one-month Secured Overnight Financing Rate ("SOFR") plus a SOFR adjustment of 0.110 %.

In connection with the amendment, we incurred $ 4 million in debt issuance costs.

In August 2022, we completed a securitization of $ 269 million of gross timeshare financing receivables and issued approximately $ 153 million of 4.30 % notes, $ 73 million of 4.74 % notes, $ 26 million of 5.57 % notes, and $ 17 million of 8.73 % notes due January 2037.

The securitized debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interest.

The securitized debt is a non-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt.

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

In connection with the securitization, we incurred $ 5 million in debt issuance costs.

In April 2022, we completed a securitization of $ 246 million of gross timeshare financing receivables and issued approximately $ 107 million of 3.61 % notes, $ 84 million of 4.10 % notes, $ 22 million of 4.69 % notes, and $ 33 million of 6.79 % notes due June 2034.

The securitized debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interest and initially by a $ 34 million cash deposit.

As of December 31, 2022, the cash deposit has been withdrawn due to subsequent collateralization of additional timeshare financing receivables.

(2) Amount includes unamortized deferred financing costs of $ 12 million related to securitized debt only and does not include unamortized deferred financing costs of $ 2 million and $ 4 million as of December 31, 2023, and 2022, respectively, relating to the Timeshare Facility included in Other Assets in our consolidated balance sheets.

Amount also includes unamortized discount of $ 4 million related to the Grand Islander securitized debt recognized at the Grand Islander Acquisition Date.

(3) The revolving commitment period of the Timeshare Facility terminates in May 2024;

however the repayment maturity date extends 12 months beyond the commitment termination date to May 2025.

The Timeshare Facilities are non-recourse obligations payable solely from the pool of timeshare financing receivables pledged as collateral and related assets.

As of December 31, 2023, the Timeshare Facility and the Grand Islander Timeshare Facility have a remaining borrowing capacity of $ 350 million and $ 1 million, respectively.

The securitized debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages, deeds of trust, membership interests or timeshare interests (other than a fee simple interest in real estate) and initially by a $ 49 million cash deposit.

The securitized debt is a non-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt.

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

In connection with the securitization, we incurred $ 4 million in debt issuance costs.

During the year ended December 31, 2022, we repaid $ 162 million on the Timeshare facility, $ 8 million on the Premium Yield Facility, $ 258 million on the conduit facilities, and $ 562 million on Securitized Debt.

proceeds were used to pay down in part some of the existing debt and for other general corporate purposes.

Additionally, in connection with the securitization, we incurred $ 5 million in debt issuance costs.

During the year ended December 31, 2023, we repaid $ 273 million on the Timeshare Facility, and $ 421 million on Securitized Debt.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties.

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December 31, 2023

Hierarchy Level

($ in millions) Carrying

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Non-recourse debt, net (2)

1,466 867 592

December 31, 2022

Hierarchy Level

($ in millions) Carrying

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Non-recourse debt, net (2)

1,328 1,080 270

(1) Carrying amount net of allowance for financing receivables losses.

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Considerable judgment is necessary to interpret market data and develop the estimated fair values.

The table above excludes cash and cash equivalents, restricted cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The table above excludes cash and cash equivalents, restricted cash, accounts receivable and advance deposits, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The estimated fair values of our originated and acquired timeshare financing receivables were determined using a discounted cash flow model.

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• Non-recourse debt – based on projected future cash flows discounted at risk-adjusted rates.

Non-recurring fair value measurements

We measure certain assets at fair value on a non-recurring basis, including land and infrastructure, as a result of their classification as held for sale.

Refer to Note 2:

Significant Accounting Policie s for further information on the held for sale classification.

We utilized the market approach for the land and cost approach for infrastructure to determine their respective fair values.

The fair value calculations involve judgement and are sensitive to key assumptions utilized, including comparative sales for land (level 2) and replacement costs for infrastructure (level 3).

The estimated fair value of land and infrastructure held for sale was $ 45 million as of December 31, 2021, excluding costs to sell.

As of December 31, 2022, we did not have assets held for sale.

We lease sales centers, office space and equipment under operating leases, some of which we acquired as part of the Diamond Acquisition.

We lease sales centers, office space and equipment under operating leases.

Our leases expire at various dates from 2024 through 2034, with varying renewal and termination options.

Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

As part of our integration of business operations from the Diamond Acquisition, we ceased utilizing certain offices 2022, which the Company considered to be triggering events for impairment analysis.

We recognized impairments on the related right-of-use assets of $ 6 million during the year ended December 31, 2022.

During the years ended December 31, 2023 and 2022, we ceased utilizing certain offices as part of our integration of business operations and recognized impairments of related operating lease right-of-use assets of $ 3 million and $ 6 million, respectively.

We did no t recognize any impairments on right-of-use assets for the year ended December 31, 2021.

We recognize rent expense on leases with both contingent and non-contingent lease payment terms.

Rent associated with non-contingent lease payments are recognized on a straight-line basis over the lease term.

Rent expense for all operating leases for the year ended December 31, 2022, 2021 and 2020 was as follows:

Contingent rental expense includes short term and variable rent.

Rent expense for all operating leases was as follows:

Year Ended December 31,

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Total $ 39 $ 38 $ 22

(1) These amounts include short term and variable rent of $ 4 million, $ 2 million, and $ 5 million for the years December 31, 2022, 2021 and 2020, respectively.

Supplemental cash flow information related to operating leases was as follows:

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($ in millions) 2023 2022 2021

income (loss) before tax $ 384 $ 195 $ ( 287 )

income before tax $ 335 $ 384 $ 195

Foreign income before tax 114 97 74

Total income (loss) before taxes $ 481 $ 269 $ ( 280 )

Total income before taxes $ 449 $ 481 $ 269

The components of our provision for income taxes were as follows:

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Federal $ 105 $ 102 $ ( 5 )

State 18 19 9

Foreign 36 46 31

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federal tax benefit 3 1 3

Uncertain Tax Positions 5 4 3

Transaction costs — — 5

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We have foreign tax credit carryforwards of $ 12 million and state tax credit carryforwards of $ 5 million.

The credit carryforwards will generally expire between five and fifteen years .

The credit carryforwards will generally expire between 2027 and 2037.

We establish valuation allowances for financial reporting purposes to offset certain deferred tax assets due to uncertainty regarding our ability to realize them in the future.

The valuation allowance increased from $ 74 million as of December 31, 2021, to $ 78 million as of December 31, 2022, primarily as a result of tax credits generated in the current year that we expect to expire unused.

The valuation allowance increased from $ 78 million as of

December 31, 2022, to $ 81 million as of December 31, 2023, primarily as a result of foreign currency impacts on net operating losses.

Reconciliations of the amounts of unrecognized tax benefits were as follows:

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No income or deferred taxes have been accrued on foreign earnings or other outside basis differences, as we intend to indefinitely reinvest these amounts in our foreign operations.

An estimate of these amounts is not practicable due to the inherent complexity of the multi-jurisdictional tax environment in which the Company operates.

An estimate of these amounts is not practicable due to the inherent complexity of the multi-jurisdictional tax environment in which we operate.

SHARE-BASED COMPENSATION

We issue RSUs, Options, and Performance RSUs to certain employees and directors.

Pursuant to the 2023 Plan, 5,240,000 shares of our common stock are reserved for issuance.

The 2017 Plans remain in place until all of the awards previously granted thereunder have been paid, forfeited or expired.

Shares underlying awards that are canceled or forfeited under the 2017 Plans without the issuance of any shares are added to the 2023 Plan share pool.

However, the shares which remained available for issuance under the 2017 Plans are no longer available for issuance, and all future awards will be granted pursuant to the 2023 Plan.

As of December 31, 2023, there were 5,279,236 shares of common stock available for future issuance under the 2023 plan.

We recognized share-based compensation expense of $ 39 million, $ 46 million and $ 48 million during the years ended December 31, 2023, 2022 and 2021, respectively.

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As of December 31, 2023, unrecognized compensation cost for unvested awards was approximately $ 29 million, which is expected to be recognized over a weighted average period of 1.8 years.

As of December 31, 2022, there were 2,659,206 shares of common stock available for future issuance under this plan.

RSUs vest in annual installments over three years from the date of grant, subject to the individual’s continued employment through the applicable vesting date.

Vested RSUs generally will be settled for common stock.

Service RSUs vest in annual installments over three years from the date of grant, subject to the individual’s continued employment through the applicable vesting date.

Vested Service RSUs generally will be settled for common

The grant date fair value is equal to closing stock price on the date of grant.

The following table provides information about our RSU grants for the last three fiscal years:

The following table provides information about our Service RSU grants for the last three fiscal years:

Year Ended December 31,

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The weighted-average grant date fair value of each of these options were determined using the Black-Scholes-Merton option-pricing model with the following assumptions.

Expected volatility is calculated using the historical volatility of our share price.

Risk-free rate is based on the Treasury Constant Maturity Rate closest to the expected life as of the grant date.

Expected term is estimated using the vesting period and contractual term of the Options:

Year Ended December 31,

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Expected term (in years)

(1) During the year ended December 31, 2020, due to limited trading history for our common stock, we did not have sufficient information available on which to base a reasonable and supportable estimate of the expected volatility of its share price.

As a result, we used an average historical volatility of our peer group over a time period consistent with its expected term assumption.

Our peer group was determined based upon companies in our industry with similar business models and is consistent with those used to benchmark our executive compensation.

(1) At the date of grant we had no plans to pay dividends during the expected term of these options.

(3) Based on the yields of U.S.

Department of Treasury instruments with similar expected lives.

(4) Estimated using the average of the vesting periods and the contractual term of the options.

The following table summarizes the activity of our options during the year ended December 31, 2023:

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In March 2023, we issued 119,887 Performance RSUs with a grant date fair value of $ 49.14 .

The Performance RSUs are settled at the end of a two-year performance period, with 50 % of the Performance RSUs subject to achievement

based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

The remaining 50 % of the Performance RSUs are subject to the achievement of certain contract sales targets.

In March 2021, we issued 124,711 Performance RSUs with a grant date fair value of $ 38.22 .

The Performance RSUs are settled at the end of a two-year performance period, with 50 % of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

The remaining 50 % of the Performance RSUs issued are subject to the achievement of certain contract sales targets.

In August 2021, and in conjunction with the Diamond Acquisition, we issued 351,118 Performance RSUs with a grant date fair value of $ 40.27 .

The Performance RSUs are settled at the end of the performance period which is from the Acquisition Date through December 31, 2023, with 67 % of the Performance RSUs subject to achievement based on certain run rate cost savings.

The remaining 33 % of the Performance RSUs issued are subject to the achievement of the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

During the year ended December 31, 2020, we issued 168,529 Performance RSUs with a grant date fair value of $ 25.69 .

The Performance RSUs are settled at the end of a three-year performance period, with 70 % of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

The Performance RSUs are settled at the end of a 3-year performance period, with 50 % of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization, further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

The remaining 50 % of the Performance RSUs are subject to the achievement of certain contract sales targets.

During the fourth quarter of 2021, the Compensation Committee approved the modification of the performance conditions for the Performance RSUs issued in 2020 and March 2021, to reflect the results of HGV's and Diamond's operations subsequent to the Acquisition Date.

We estimated that the performance conditions for the 2020 Performance RSU awards remain improbable of achievement under the modified performance conditions.

As such, the Company did not accrue expenses related to the Performance RSUs granted in 2020.

In regards to the Performance RSUs granted in March 2021, we determined that under the modified performance conditions, the awards issued were probable of achievement.

During 2021, we did not incur incremental compensation expense resulting from the modification which was applied to the Performance RSUs of 28 grantees.

For all other performance-based awards, compensation expense will be recorded through the end of the performance period if it is deemed probable that the performance goals will be met.

Compensation expense will be recorded through the end of the performance period if it is deemed probable that the performance goals will be met.

If the performance goals are not met, no compensation cost will be recognized and any previously recognized compensation cost will be reversed.

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During fiscal 2021, 235,249 Performance RSU grants, which are based on achieving certain run rate cost savings initiatives, were granted with a weighted average grant date fair value per share of $ 40.27 .

There were no Performance RSU grants based on achieving certain run rate cost savings initiatives for the 2022 and 2020 fiscal years, respectively.

There were no Performance RSU grants based on achieving certain run rate cost savings initiatives for the 2023 and 2022 fiscal years.

The following table summarizes the activity of our Performance RSUs during the year ended December 31, 2023:

Adjusted EBITDA (1)

Contract Sales Run Rate Cost Savings

Shares Weighted

Share Number of

Shares Weighted

Share Number of

Shares Weighted

Shares Weighted Average Exercise Price Per Share

Outstanding, beginning of period 726,710 $ 37.26

Granted 119,887 49.14

Vested — — — — — —

Performance achievement shares adjustment (1)

( 214,873 ) 38.22

Forfeited, canceled or expired ( 161,719 ) 26.27

Outstanding, end of period 560,167 42.77

(1) Represents our Adjusted EBITDA metric described in Part 1 of this Form 10-K, further adjusted by net recognition and deferral activity from sales of VOIs under construction.

(1) Reflects the number of shares achieved above target, based on actual performance as determined at the completion of the performance period for the March 2021 Performance RSU grant

Employee Stock Purchase Plan

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In connection with the Plan, we reserved 2.5 million shares of common stock which may be purchased under the ESPP.

Under the ESPP, eligible employees can purchase common stock twice per year at the end of a six-month payment period (a "Purchase Period").

The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 % of the fair market value per share of common stock on the last day of the Purchase Period, up to a maximum threshold established by the plan administrator for the offering period.

For the year ended December 31, 2022 and 2021, we issued 121,095 and 39,985 shares, respectively, and recognized less than $ 1 million of compensation expense in both periods related to this plan.

In November 2022, the Board of Directors amended the ESPP plan to allow eligible employees to purchase shares of our common stock at a price per share not less than 85 % of the fair market value per share of common stock on the first day of the Purchase Period or the last day of the Purchase Period, whichever is lower, up to a maximum threshold established by the plan administrator for the offering period.

The amendment will become effective in 2023.

Earnings (Loss) Per Share

The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 % of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period.

For the year ended December 31, 2022,

and 2021, we issued 121,095 and 39,985 shares, respectively, and recognized less than $ 1 million of compensation expense in both periods related to this plan.

During the fourth quarter of 2022, the Board of Directors amended the ESPP plan to allow eligible employees to purchase shares of our common stock at a price per share not less than 85 % of the fair market value per share of common stock on the first day of the Purchase Period or the last day of the Purchase Period, whichever is lower, up to a maximum threshold established by the plan administrator for the offering period.

The amendment became effective in 2023.

During the year ended December 31, 2023, we issued 221,562 shares and recognized $ 1 million of compensation expense related to this plan.

EARNINGS PER SHARE

The following tables present the calculation of our basic and diluted EPS and the corresponding weighted average shares outstanding referenced in these calculations for the years ended December 31, 2023, 2022, and 2021.

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($ and shares outstanding in millions, except per share amounts) 2023 2022 2021

Net income (loss) $ 352 $ 176 $ ( 201 )

Net income $ 313 $ 352 $ 176

Weighted average shares outstanding 110.1 118.0 99.7

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$ 2.84 $ 2.98 $ 1.77

Net income (loss) $ 352 $ 176 $ ( 201 )

Net income $ 313 $ 352 $ 176

Weighted average shares outstanding 111.6 119.6 101.1

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$ 2.80 $ 2.93 $ 1.75

Basic weighted average shares outstanding 110.1 118.0 99.7

RSUs (2) , PSUs (3) , Options (4) and ESPP

Diluted weighted average shares outstanding 111.6 119.6 101.1

(1) Earnings per share amounts are calculated using whole numbers.

The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period.

For the years ended December 31, 2022, 2021 and 2020, we excluded 759,627 , 651,748 and 2,192,591 of share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.

(2) There were no anti-dilutive RSUs for the years ended December 31, 2023, 2022, and 2021, respectively.

(3) There were no anti-dilutive PSUs for the years ended December 31, 2023, 2022, and 2021, respectively.

(4) Excludes $ 0.8 million (or approximately 818,000 shares), $ 0.8 million (or approximately 760,000 shares), and $ 0.7 million (or approximately 652,000 shares) of Options that would have been anti-dilutive to EPS for the years ended December 31, 2023, 2022, and 2021, respectively, under the treasury stock method.

These Options could potentially dilute EPS in the future.

Share Repurchases

On May 4, 2022, our Board of Directors approved a share repurchase program authorizing us to repurchase up to an aggregate of $ 500 million of our outstanding shares of common stock over a two-year period through any combination of open market repurchases, accelerated share repurchases or privately negotiated transactions.

On May 4, 2022, our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to an aggregate of $ 500 million of its outstanding shares of common stock over a two-year period (the "2022 Repurchase Plan").

On May 3, 2023, our Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to an aggregate of $ 500 million of its outstanding shares of common stock over a two-year period (the "2023 Repurchase Plan") which is in addition to the 2022 Repurchase Plan.

The timing and actual number of shares repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements and other market and economic conditions.

The shares are retired upon repurchase.

The stock repurchase program may be suspended or discontinued at any time and will automatically expire at the end of the two-year term.

As of December 31, 2022, $ 228 million remains available to be repurchased under the share repurchase program.

The stock repurchase programs may be

suspended or discontinued at any time and will automatically expire at the end of each plan's respective term.

As of December 31, 2023, $ 360 million remains available to be repurchased under the 2023 Repurchase Plan.

The following table summarizes stock repurchase activity under the share repurchase program as of December 31, 2023:

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As of December 31, 2023 16 $ 640

From January 1, 2024, through February 23, 2024, we repurchased approximately 1.7 million shares for $ 71 million.

As of February 23, 2024, we had $ 289 million of remaining availability under the 2023 Repurchase Plan.

RELATED PARTY TRANSACTIONS

BRE Ace LLC and 1776 Holding, LLC

We hold a 25 % ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold a 50 % ownership interest in 1776 Holdings, LLC, a VIE, which owns a timeshare resort property and related operations, known as “Liberty Place Charleston, by Hilton Club.”

We hold an ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold an ownership interest in 1776 Holdings, LLC, a VIE, which owns a timeshare resort property and related operations, known as “Liberty Place Charleston, by Hilton Club.”

We record Equity in earnings from our unconsolidated affiliates in our consolidated statements of operations.

Investments in Unconsolidated Affiliates for further information.

Investments in Unconsolidated Affiliates for additional information.

Additionally, we earn commissions and other fees related to fee-for-service agreements with the investees to sell VOIs at Elara, by Hilton Grand Vacations and Liberty Place Charleston, by Hilton Club.

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As part of the Diamond Acquisition as described above in Note 3:

Diamond Acquisition , Apollo obtained more than 20 % of our common stock during 2021.

Acquisitions , Apollo obtained more than 20 % of our common stock during 2021.

Outside of agreements related to the Diamond Acquisition, we did not have any transactions with Apollo during the year ended December 31, 2021, and do not have any outstanding balances or agreements with Apollo as of December 31, 2021.

During 2021, we made one payment to Apollo subsequent to the Diamond Acquisition, of approximately $ 2 million, for amounts that were accrued for periods prior to the completion of the Diamond Acquisition and were included in Accounts payable, accrued expenses and other as of the Acquisition Date.

We did not have outstanding balances or any transactions due to/from Apollo as of and for the year ended December 31, 2022, respectively.

We did not have outstanding balances or any transactions due to/from Apollo as of and for the years ended December 31, 2023, and 2022, respectively.

BUSINESS SEGMENTS

We operate our business through the following two segments:

We operate our business through the following two reportable segments:

• Real estate sales and financing – We market and sell VOIs that we own.

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We also earn fees for managing the timeshare properties.

We generate rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges under our Clubs programs.

We generate rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges under our Club programs.

We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties.

The performance of our operating segments is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”).

The performance of our operating segments, which are also our reportable segments, is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”).

We define Adjusted EBITDA as EBITDA, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with:

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We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

Below is the presentation of our reportable segment results which include the acquired Diamond operations within both segments since the Acquisition Date.

Below is the presentation of our reportable segment results which include the acquired Diamond and Grand Islander operations within both segments as of their respective acquisition dates.

The following table presents revenues for our reportable segments reconciled to consolidated amounts:

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

(1) Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts and for the rental of model units to show prospective buyers.

(1) Includes charges to the Real estate sales and financing segment from the Resort operations and club management segment for fulfillment of discounted marketing package stays at resorts.

These charges totaled $ 56 million, $ 37 million and $ 18 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The following table presents Adjusted EBITDA for our reportable segments reconciled to net income (loss):

The following table presents Adjusted EBITDA for our reportable segments reconciled to net income:

Year Ended December 31,

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License fee expense ( 138 ) ( 124 ) ( 80 )

Other (loss) gain, net ( 1 ) ( 26 ) 3

Other gain (loss), net 2 ( 1 ) ( 26 )

Interest expense ( 178 ) ( 142 ) ( 105 )

Income tax (expense) benefit ( 129 ) ( 93 ) 79

Income tax expense ( 136 ) ( 129 ) ( 93 )

Equity in earnings from unconsolidated affiliates 12 13 10

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( 29 ) ( 53 ) ( 35 )

Net income (loss) $ 352 $ 176 $ ( 201 )

Net income $ 313 $ 352 $ 176

(1) Includes intersegment transactions.

Refer to our table presenting revenues by reportable segment above for additional discussion.

(2) This amount includes costs associated with restructuring, one-time charges and other non-cash items included within our reportable segments.

(2) This amount includes costs associated with stock-based compensation, restructuring, one-time charges and other non-cash items included within our reportable segments.

The following table presents total assets for our reportable segments, reconciled to consolidated amounts:

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Corporate 391 263

Land and infrastructure held for sale — 41

Total assets $ 8,685 $ 8,004

The following table presents capital expenditures for property and equipment (including inventory and leases) for our reportable segments, reconciled to consolidated amounts:

Year Ended December 31,

($ in millions) 2023 2022 2021

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We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand.

As of December 31, 2022, we were committed to purchase approximately $ 195 million of inventory and land over a period of 2 years and $ 15 million of other commitments in the normal course of business.

As of December 31, 2023, we were committed to purchase approximately $ 37 million of inventory and land over a period of 1 year and $ 13 million of other commitments in the normal course of business.

We are also committed to an agreement to exchange parcels of land in Hawaii, subject to the successful completion of zoning, land use requirements and other applicable regulatory requirements.

The actual amount and timing of the acquisitions are subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances.

During the years ended December 31, 2022 and 2021, we fulfilled $ 92 million and $ 132 million, respectively, of purchases required under our inventory-related purchase commitments.

During the years ended December 31, 2023, 2022 and 2021, we fulfilled $ 156 million, $ 92 million and $ 132 million, respectively, of purchases required under our inventory commitments.

Of the $ 156 million fulfilled in 2023, we have accrued $ 17 million within Accounts payable, accrued expenses and other and $ 3 million of inventory deposit included in Other Assets to complete a purchase commitment in South Carolina of $ 20 million.

The purchase was completed on January 31, 2024.

As of December 31, 2023, our remaining obligations pursuant to these arrangements were expected to be incurred as follows:

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Total $ 47 $ 3 $ — $ — $ — $ — $ 50

(1) Includes commitments for properties in New York, South Carolina, and Japan.

(1) Includes commitments for properties in Japan.

(2) Primarily relates to commitments related to information technology and sponsorships.

3 unchanged sentences

We record a contingent litigation liability when it is determined that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of December 31, 2022, we accrued liabilities of approximately $ 124 million for legal matters.

Approximately $ 96 million of these accrued liabilities relate to a judgment entered against Diamond in March 2022 in connection with a case filed in 2015 that was not deemed probable and estimable as of the Acquisition Date.

This matter is subject to insurance coverage and, as a result, as of December 31, 2022, we recorded an insurance claim receivable of $ 81 million within Accounts receivable, net in our consolidated balance sheet.

During the year ended December 31, 2022, we recognized a charge of $ 15 million to General and administrative in our consolidated statement of operations that represents the amount of the settlement liability not deemed probable of recovery from the insurance carriers.

As of December 31, 2023, we accrued liabilities of approximately $ 123 million for all legal matters.

Approximately $ 102 million of these accrued liabilities relate to a judgment entered against Diamond in March 2022 in connection with a case filed in 2015 ( O'Malley v.

Diamond Resorts Management, Inc.

) that was not deemed probable and estimable as of the Acquisition Date.

An appeal for judgment was rendered in favor of the plaintiffs in November 2023 (with the California Supreme Court rejecting further appeals in February 2024).

This matter is subject to insurance coverage, and as a result, we recorded an insurance claim receivable of approximately $ 53 million within Accounts receivable, net in our consolidated balance sheet as of December 31, 2023.

During the year ended December 31, 2023, and 2022, we recognized charges of approximately $ 33 million and $ 15 million, respectively, to General and administrative in our consolidated statement of operations that represents the amount of the settlement liability not deemed probable of recovery from the insurance carriers.

However, we have initiated litigation against the various insurers disputing all or parts of coverage for this matter seeking to obtain full coverage.

While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material effect on the Company’s financial condition, cash flows, or materially adversely affect overall trends in our results of operations, legal proceedings are inherently uncertain and unfavorable rulings could, individually or in aggregate, have a material adverse effect on the Company’s business, financial condition or results of operations.

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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.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest was $ 177 million, $ 118 million and $ 64 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Cash paid for interest, net was $ 187 million, $ 175 million and $ 113 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Cash paid for income taxes, net of refunds, was $ 187 million, $ 141 million and $ 54 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The following non-cash activities were excluded from the consolidated statements of cash flows:

• In 2022, we recorded non-cash operating activity transfer of $ 48 million related certain undeveloped land and infrastructure that was previously recorded within the classification of Land and infrastructure held for sale to Property and equipment, net .

• In 2023, we recorded non-cash operating activity transfer of $ 20 million to Property and equipment, net, related to the purchase of units in South Carolina, of which $ 17 million was accrued within Accounts payable, accrued expenses and other and the remaining $ 3 million was an inventory deposit in Other Assets .

• In 2023, we recorded non-cash operating activity transfers of $ 92 million related to the registrations for timeshare units under construction from Property and equipment, net to Inventory, pertaining to properties in Hawaii.

• In 2022, we recorded non-cash operating activity transfer of $ 48 million related to certain undeveloped land and infrastructure that was previously recorded within the classification of Land and infrastructure held for sale to Property and equipment, net .

• In 2021, we recorded non-cash issuance of stock of $ 1,381 million related to our acquisition of Diamond.

Diamond Acquisition for additional information.

• In 2021, we recorded non-cash operating activity transfers of $ 55 million related to related to the registrations for timeshare units under construction from Property and equipment to Inventory .

• In 2020, we recorded non-cash operating activity transfers of $ 41 million related to the classification of certain undeveloped land and infrastructure as available for sale from Inventory to Land and infrastructure held for sale and $ 16 million related to the classification of certain undeveloped land and infrastructure from Inventory to Property and equipment

Acquisitions for additional information.

• In 2021, we recorded non-cash operating activity transfers of $ 55 million related to the registrations for timeshare units under construction from Property and equipment to Inventory .

SUBSEQUENT EVENTS

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

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.

Excluding the above, management has evaluated all subsequent events through February 29, 2024, the date this Annual Report on Form 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.

2 unchanged sentences

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 8. Financial Statements and Supplementary Data