Hilton Grand Vacations Inc. 10-K

ITEM 8. Financial Statements and Supplementary Data HILTON GRAND VACATIONS INC. INDEX TO FINANCIAL STATEMENTS Audited Consolidated Financial Statements of Hilton Grand Vacations Inc. Management’s Report on Internal Control Over Financial Reporting 75 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 76 Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 78 Internal Control Over Financial Reporting Consolidated Balance Sheets as of December 31, 2023 , and 2022 80 Consolidated Statements of Operations for the years ended December 31, 202 3 , 202 2 and 20 21 81 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 20 21 82 Consolidated Statements of Cash Flows for the years ended December 31, 202 3 , 20 2 2 and 20 21 83 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 3 , 202 2 and 20 21 84 Notes to Consolidated Financial Statements 85 74 Table of Contents Management's Report on Internal Control Over Financial Reporting Management of Hilton Grand Vacations Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. 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). 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. 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. The report is included herein. 75 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Hilton Grand Vacations Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Hilton Grand Vacations Inc. (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, 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 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Cost of Vacation Ownership Intervals Sales 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 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. 76 Table of Contents Cost of Vacation Ownership Intervals Sales (Continued) 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 performed analytical procedures to evaluate individual timeshare project or individual collection cost of VOI sales rates. Given the uniqueness of the cost of VOI sales analysis to the real estate timeshare industry, we involved real estate subject matter resources on our team. Allowance for Financing Receivables 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 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 allowance for financing receivables for certain pools of loans. /s/ Ernst & Young LLP We have served as the Company's auditor since 2016. Orlando, Florida February 29, 2024 77 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Hilton Grand Vacations Inc. Opinion on Internal Control Over Financial Reporting We have audited Hilton Grand Vacation Inc.’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) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Hilton Grand Vacations Inc. (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 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 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 78 Table of Contents Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Orlando, Florida February 29, 2024 79 Table of Contents HILTON GRAND VACATIONS INC. CONSOLIDATED BALANCE SHEETS (in millions, except share data) December 31, 2023 2022 ASSETS Cash and cash equivalents $ 589 $ 223 Restricted cash 296 332 Accounts receivable, net 507 511 Timeshare financing receivables, net 2,113 1,767 Inventory 1,400 1,159 Property and equipment, net 758 798 Operating lease right-of-use assets, net 61 76 Investments in unconsolidated affiliates 71 72 Goodwill 1,418 1,416 Intangible assets, net 1,158 1,277 Other assets 314 373 TOTAL ASSETS (variable interest entities - $ 1,459 in 2023 and $ 948 in 2022) $ 8,685 $ 8,004 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other $ 952 $ 1,007 Advanced deposits 179 150 Debt, net 3,049 2,651 Non-recourse debt, net 1,466 1,102 Operating lease liabilities 78 94 Deferred revenues 215 190 Deferred income tax liabilities 631 659 Total liabilities (variable interest entities - $ 1,472 in 2023 and $ 1,005 in 2022) 6,570 5,853 Commitments and contingencies - see Note 23 Stockholders' Equity: Preferred stock, $ 0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of December 31, 2023 and 2022 — — Common stock, $ 0.01 par value; 3,000,000,000 authorized shares, 105,961,160 shares issued and outstanding as of December 31, 2023, and 113,628,706 shares issued and outstanding as of December 31, 2022 1 1 Additional paid-in capital 1,504 1,582 Accumulated retained earnings 593 529 Accumulated other comprehensive income 17 39 Total stockholders' equity 2,115 2,151 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,685 $ 8,004 See notes to consolidated financial statements. 80 Table of Contents HILTON GRAND VACATIONS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) Year Ended December 31, 2023 2022 2021 Revenues Sales of VOIs, net $ 1,416 $ 1,491 $ 883 Sales, marketing, brand and other fees 634 620 385 Financing 307 267 183 Resort and club management 569 534 340 Rental and ancillary services 666 626 342 Cost reimbursements 386 297 202 Total revenues 3,978 3,835 2,335 Expenses Cost of VOI sales 194 274 213 Sales and marketing 1,281 1,146 653 Financing 99 103 65 Resort and club management 177 161 80 Rental and ancillary services 612 579 267 General and administrative 194 212 151 Acquisition and integration-related expense 68 67 106 Depreciation and amortization 213 244 126 License fee expense 138 124 80 Impairment expense 3 17 2 Cost reimbursements 386 297 202 Total operating expenses 3,365 3,224 1,945 Interest expense ( 178 ) ( 142 ) ( 105 ) Equity in earnings from unconsolidated affiliates 12 13 10 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 Diluted $ 2.80 $ 2.93 $ 1.75 See notes to consolidated financial statements. 81 Table of Contents HILTON GRAND VACATIONS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) Year Ended December 31, 2023 2022 2021 Net income $ 313 $ 352 $ 176 Derivative instrument adjustments, net of tax ( 16 ) 46 2 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. 82 Table of Contents HILTON GRAND VACATIONS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2023 2022 2021 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 Amortization of deferred financing costs, acquisition premiums and other 33 52 39 Provision for financing receivables losses 171 142 121 Impairment expense 3 17 2 Other (gain) loss, net ( 2 ) 3 14 Share-based compensation 40 46 48 Deferred income tax (benefit) expense ( 23 ) ( 38 ) 58 Equity in earnings from unconsolidated affiliates ( 12 ) ( 13 ) ( 10 ) Return on investment in unconsolidated affiliates 16 — 2 Net changes in assets and liabilities, net of effects of acquisitions: Accounts receivable, net 10 ( 177 ) ( 124 ) Timeshare financing receivables, net ( 315 ) ( 224 ) ( 92 ) Inventory ( 64 ) 100 15 Purchases and development of real estate for future conversion to inventory ( 39 ) ( 8 ) ( 33 ) Other assets ( 8 ) ( 34 ) 48 Accounts payable, accrued expenses and other ( 86 ) 294 ( 48 ) Advanced deposits 29 37 ( 8 ) Deferred revenues 33 ( 46 ) ( 166 ) Net cash provided by operating activities 312 747 168 Investing Activities 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 ) Software capitalization costs ( 44 ) ( 39 ) ( 21 ) Investments in unconsolidated affiliates ( 1 ) — — Other ( 8 ) — — Net cash used in investing activities ( 158 ) ( 97 ) ( 1,631 ) Financing Activities Proceeds from debt 758 40 2,950 Proceeds from non-recourse debt 868 769 264 Repayment of debt ( 373 ) ( 313 ) ( 1,154 ) Repayment of non-recourse debt ( 694 ) ( 990 ) ( 359 ) Payment of debt issuance costs ( 7 ) ( 13 ) ( 70 ) Repurchase and retirement of common stock ( 368 ) ( 272 ) — Payment of withholding taxes on vesting of restricted stock units ( 14 ) ( 8 ) ( 6 ) Proceeds from employee stock plan purchases 8 5 1 Proceeds from stock option exercises 9 2 13 Other ( 4 ) ( 2 ) ( 3 ) 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 Cash, cash equivalents and restricted cash, end of period 885 555 695 Less: Restricted cash 296 332 263 Cash and cash equivalents $ 589 $ 223 $ 432 See notes to consolidated financial statements. 83 Table of Contents HILTON GRAND VACATIONS INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY (in millions) Common Stock Additional Paid-in Capital Accumulated Retained Earnings Accumulated Other Comprehensive Income Total Stockholders' Equity Shares Amount Balance as of December 31, 2020 84 $ 1 $ 192 $ 181 $ — $ 374 Net income — — — 176 — 176 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, net of tax — — — — 46 46 Repurchase and retirement of common stock ( 7 ) — ( 92 ) ( 180 ) — ( 272 ) Balance as of December 31, 2022 113 $ 1 $ 1,582 $ 529 $ 39 $ 2,151 Net income — — — 313 — 313 Activity related to share-based compensation 1 — 35 — — 35 Employee stock plan issuance — — 8 — — 8 Foreign currency translation adjustments — — — — ( 6 ) ( 6 ) Derivative instrument adjustments, net of tax — — — — ( 16 ) ( 16 ) Repurchase and retirement of common stock ( 8 ) — ( 121 ) ( 249 ) — ( 370 ) Balance as of December 31, 2023 106 $ 1 $ 1,504 $ 593 $ 17 $ 2,115 See notes to consolidated financial statements. 84 Table of Contents . HILTON GRAND VACATIONS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Our Business 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 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 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. Diamond Acquisition On August 2, 2021, we completed the Diamond Acquisition by exchanging 100 % of the outstanding equity interests of Diamond for shares of HGV common stock. Pre-existing HGV shareholders owned approximately 72 % of the combined company immediately after giving effect to the Diamond Acquisition, with certain funds controlled by Apollo Global Management Inc. (“Apollo”) and other minority shareholders, which previously owned 100 % of Diamond, holding the remaining approximately 28 % at the time the Diamond Acquisition was completed. This Annual Report on Form 10-K includes Diamond’s results of operations beginning on August 2, 2021 (“Diamond Acquisition Date”). See Note 3: 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. 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. If the entity is considered to be a variable interest entity (“VIE”), we determine whether we are the primary beneficiary, and then consolidate those VIEs for which we have determined we are the primary beneficiary. If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interests in the entity. 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. GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition 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 85 Table of Contents 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: (i) identify the contract with the customer; (ii) determine whether the promised goods or services are separate performance obligations in the contract; (iii) determine the transaction price, including considering the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract based on the standalone selling price or estimated standalone selling price of the good or service; and (v) recognize revenue when (or as) we satisfy each performance obligation. Contracts with Multiple Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. For arrangements that contain multiple goods or services, we determine whether such goods or services are distinct performance obligations that should be accounted for separately in the arrangement. When allocating the transaction price in the arrangement, we may not have observable standalone sales for all of the performance obligations in these contracts. In order to estimate the standalone selling prices for products, we primarily rely on the expected cost-plus margin and adjusted market assessment approaches. We then recognize the revenue allocated to each performance obligation as the related performance obligation is satisfied as discussed below. • Sales of VOIs, net — Customers who purchase all vacation ownership products, whether paid in cash or financed, enter into multiple contracts, which we combine and account for as a single contract. Revenue from VOI sales is recognized at the point in time when control of the VOI is transferred to the customer which is when the customer has executed a binding sales contract, collectability is reasonably assured, the purchaser’s period to cancel for a refund has expired and the customer has the right to use the VOI. Revenue from sales of VOIs under construction is deferred until the point in time when construction activities are deemed to be completed, occupancy of the development is permissible, and the above criteria has been met. For financed sales, we estimate the variable consideration to be received under such contracts and recognize revenue net of amounts deemed uncollectible as the VOI is returned to inventory upon customer default. The variable consideration is estimated based on the expected value method, based on historical default rates, to the extent that it is probable that a significant reversal is not expected to occur. Variable consideration which has not been included within the transaction price is presented as a reserve on the financing receivable. See Note 7: 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, 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. 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 86 Table of Contents services. Any changes in these estimates would affect revenue and earnings in the period such variances are realized. Additionally, we enter into contracts to sell prepaid vacation packages. Our obligation in such contracts is satisfied when customers stay at our property; therefore, we recognize revenue for these packages when they are redeemed. On a portfolio basis, we exercise judgement to estimate the amount of expected breakage related to unused prepaid vacation packages and recognize such breakage in proportion to the pattern of packages utilized by our portfolio of customers. • Resort and club management — As part of our VOI sales, a majority of our customers enter into a Club arrangement which allows the member to exchange points for a number of vacation options. We manage the Clubs, receiving annual dues, transaction fees from member exchanges, and, when applicable, activation fees. The member's first year of annual dues and, when applicable, the activation fee, are payable at the time of the VOI sale. The Club activation fee relates to activities we are required to undertake at or near contract inception to fulfill the contract and does not result in the transfer of a promised good or service. Since our customers are granted the opportunity to renew their membership on an annual basis for no additional activation fee, we defer and amortize the activation fee on a straight-line basis over the seven-year average inventory holding period. Annual dues for membership renewals are billed each year, and we recognize revenue from these annual dues over the period services are rendered. A member may elect to enter into an optional exchange transaction at which point the member pays their required transaction fee. This option does not represent a material right as the transactions are priced at their standalone selling price. Revenue related to the transaction is recognized when the services are rendered. As part of our resort operations, we contract with HOAs to provide day-to-day-management services, including housekeeping services, operation of a reservation system, maintenance, and certain accounting and administrative services. We receive compensation for such management services, which is generally based on a percentage of costs to operate the resorts, on a monthly basis. These fees represent a form of variable consideration and are estimated and recognized over time as the HOAs receive and consume the benefits of the management services. Management fees earned related to the portion of unsold VOIs at each resort which we own are recognized on a net basis given we retain these VOIs in our inventory. • Rental and ancillary services — Our rental and ancillary services consist primarily of rental revenues on unoccupied vacation ownership units, inventory made available due to ownership exchanges through our club program and ancillary revenues. Rental revenue is recognized when occupancy has occurred. Advance deposits on the rental unit and the corresponding revenue is deferred and recognized upon the customer’s vacation stay. Ancillary revenues consist of food and beverage, retail, spa offerings and other items. We recognize ancillary revenue when goods have been provided and/or services have been rendered. We account for rental operations of unsold VOIs, including accommodations provided through the use of our vacation sampler programs, as incidental operations. In all periods presented, incremental carrying costs exceeded incremental revenues, and all revenues and expenses are recognized in the period earned or incurred. • Cost reimbursements — As part of our management agreements with HOAs and fee-for-service developers, we receive cost reimbursements for performing the day-to-day management services, including direct and indirect costs that HOAs and developers reimburse to us. These costs primarily consist of insurance, payroll and payroll related costs for management of the HOAs and other services we provide where we are the employer and provide insurance. 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 capitalize all incremental costs incurred to obtain a contract when such costs would not have been incurred if the contract had not been obtained. We elect to expense costs incurred to obtain a contract when the deferral period would be one year or less. These contract costs are recognized at the point in time that the revenue related to the incentive is recognized. Commissions for VOI sales for resorts under construction are expensed when the associated VOI revenue is recognized which is upon completion of the resort. These commissions are classified as Sales and marketing expense in our consolidated statements of operations. 87 Table of Contents 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. For the years ended December 31, 2023, 2022 and 2021, we did not earn more than 10% of our total revenue from one customer. We are required to collect certain taxes and fees from customers on behalf of government agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent with respect to these taxes and fees. We do not retain these taxes and fees and, therefore, they are not included in revenues. 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. See Note 4: Revenue from Contracts with Customers for additional information. Business Combinations We account for our business combinations in accordance with the acquisition method of accounting. We allocate the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. For each acquisition, we recognize goodwill as the amount in which consideration transferred for the acquired entity exceeds the fair values of net assets. 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 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. We record the net assets and results of operations of an acquired entity in our consolidated financial statements from the acquisition date through period-end. We expense acquisition-related expenses as incurred and include such expenses within Acquisition and integration-related expense on our consolidated statements of operations. See Note 3: Acquisitions for additional information. Acquired Financial Assets with Credit Deterioration When financial assets are acquired, whether in connection with a business combination or an asset acquisition, we evaluate whether those acquired financial assets have experienced a more-than-insignificant deterioration in credit quality since origination. Financial assets that were acquired with evidence of such credit deterioration are referred to as purchased credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at the acquisition date. The evaluation of PCD assets is a qualitative assessment requiring 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, 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. Acquired PCD assets are recorded at the purchase price, represented by the acquisition date fair value, and subsequently “grossed-up” by the acquirer’s acquisition date assessment of the allowance for credit losses. The purchase price and the initial allowance for credit losses collectively represent the PCD asset’s initial amortized cost basis. While the initial allowance for credit losses of PCD assets does not impact period earnings, the Company remeasures the allowance for credit losses for PCD assets during each subsequent reporting period; changes in the allowance are recognized as provision expense within period earnings. The difference over which par value of the acquired PCD assets exceeds the purchase price plus the initial allowance for credit losses is reflected as a non-credit discount (or premium) and is accreted into interest income (or as a reduction to interest income) under the effective interest method. Acquired financial assets which are not PCD assets are also recorded at the purchase price but are not similarly “grossed-up”. The acquirer recognizes an allowance for credit losses as of the acquisition date, which is recognized with a corresponding provision expense impact within earnings. The allowance is remeasured within each subsequent reporting period in the same manner as for PCD assets, with any change in the allowance recognized as provision expense in period earnings. 88 Table of Contents 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. -See Note 3: Acquisitions and Note 7: Timeshare Financing Receivables for additional information. Investments in Unconsolidated Affiliates We account for investments in unconsolidated affiliates under the equity method of accounting when we exercise significant influence, but do not maintain a controlling financial interest over the affiliates. We evaluate our investments in affiliates for impairment when there are indicators that the fair value of our investment may be less than our carrying value. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with original maturities of three months or less. Restricted Cash Restricted cash includes deposits received on VOI sales that are held in escrow until legal requirements of the local jurisdictions are met with regards to project construction or contract status and cash reserves required by our non-recourse debt agreements. Restricted cash also includes certain amounts collected on behalf of HOAs. Accounts Receivable and Allowance for Credit Losses Accounts receivable primarily consists of trade receivables and is reported as the customers’ outstanding balances, less any allowance for credit losses. The expected credit losses are measured using an expected-loss model that reflects the risk of loss and considers the losses expected over the outstanding period of the receivable. Cloud Computing Arrangements We capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in Other assets in our consolidated balance sheets and are expensed in the same line as the hosting arrangement in our consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years . We review the CCAs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the fair value in our consolidated statements of operations. Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and record changes in fair value in Accumulated other comprehensive income for the effective portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our consolidated statement of operations. We release the derivative’s gain or loss from accumulated other comprehensive income to match the timing of the underlying hedged items’ effect on earnings. Timeshare Financing Receivables and Allowance for Financing Receivables Losses 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, 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. There are no significant concentrations of collection risk with any individual counterparty or groups of counterparties. 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 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 89 Table of Contents 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: servicing fees; interest; principal; and late charges. 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. See Note 7: Timeshare Financing Receivables for additional information. Inventory and Cost of Sales Inventory includes unsold, completed VOIs; VOIs under construction; and land and infrastructure held for future VOI product development at our current resorts. We carry our completed VOI inventory at the lower of cost or estimated fair value, less costs to sell, which can result in impairment losses and/or recoveries of previous impairments. Projects under development, along with land and infrastructure for future development are under a held and use impairment model and are reviewed for indicators of impairment quarterly. We capitalize costs directly associated with the acquisition, development and construction of a real estate project when it is probable that the project will move forward. We capitalize salary and related costs only to the extent they directly relate to the project. We capitalize interest expense, taxes and insurance costs when activities that are necessary to get the property ready for its intended use are underway. We cease capitalization of costs during prolonged gaps in development when substantially all activities are suspended or when projects are considered substantially complete. We account for our VOI inventory and cost of VOI sales using the relative sales value method. Also, we do not reduce inventory for the cost of VOI sales related to anticipated defaults, and accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable. This results in changes in estimates within the relative sales value calculations to be accounted for as real estate inventory true-ups, which we refer to as cost of sales true-ups, and are included in Cost of VOI sales in our consolidated statements of operations to retrospectively adjust the margin previously recognized subject to those estimates. Property and Equipment 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. Construction in progress primarily relates to development activities. Costs that are capitalized related to development activities are classified as property and equipment until they are registered for sale. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. Other than the United States, there were no countries that individually represented over 10% of total property and equipment, net as of December 31, 2023 and 2022. Depreciation is recorded using the straight-line method over the assets’ estimated useful lives, which are generally as follows: buildings and improvements ( eight to forty years ); furniture and equipment ( three to fifteen years , including our corporate jet); and computer equipment and acquired software ( three years ). Leasehold improvements are depreciated over the shorter of the estimated useful life, based on the estimates above, or the lease term. We evaluate the carrying value of our property and equipment if there are indicators of potential impairment. We perform an analysis to determine the recoverability of the asset’s carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset. If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset, we calculate the asset’s fair value. The impairment loss recognized is equal to the amount that the net book value is in excess of fair value. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset using discount and capitalization rates deemed reasonable for the type of asset, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers. Refer to Note 9: Property and Equipment for additional information. 90 Table of Contents 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. Assets Held for Sale We classify long-lived assets to be sold as held for sale in the period (i) we have approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We initially measure a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, we stop recording depreciation expense on the asset. We assess the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale. The methodology utilized to determine fair value at the time of classification as held for sale is dependent on the type of long-lived asset. All methodologies utilized to determine fair value involve judgment. 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. 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. 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, 2023 and 2022, we did not have assets held for sale. Refer to Note 9: Property and Equipment for additional information. Leases We lease sales centers, office space and equipment under lease agreements. We determine if an arrangement is a lease at inception. Amounts related to operating leases are included in Operating lease right-of-use (“ROU”) assets, net and Operating lease liabilities in our consolidated balance sheets. ROU assets are adjusted for lease incentives received. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Because most of our leases do not provide an explicit or implicit rate of return, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar terms. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. Our operating leases may require minimum rent payments, contingent rent payments based on a percentage of revenue or income, or rental payments adjusted periodically for inflation or rent payments equal to the greater of a minimum rent or contingent rent. Our leases do not contain any residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and lease expense is recognized on a straight-line basis over the lease term. 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 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 additional information. Goodwill 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. 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 91 Table of Contents 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, 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: 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. 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. These capitalized costs are included in Intangible assets, net in our consolidated balance sheets. Intangible assets with finite useful lives are amortized using the straight-line method over their respective useful lives, which varies for each type of intangible, unless another amortization method is deemed to be more appropriate. In our consolidated statements of operations, the amortization of these intangible assets is included in Depreciation and amortization expense. In estimating the useful life of acquired assets, we reviewed the expected use of the assets acquired, factors that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. We review all finite life intangible assets for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of the carrying value over the fair value in our consolidated statements of operations. As of December 31, 2023 and 2022, we do not have any indefinite lived intangible assets. Refer to Note 12: 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 and Non-recourse debt, net in our consolidated balance sheets. The amortization of deferred financing costs is included in Interest expense in our consolidated statements of operations. Refer to Note 15: Debt & Non-recourse debt for additional information. Costs Incurred to Sell VOIs and Vacation Packages 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 as of both December 31, 2023 and 2022, and were included in Other assets on our consolidated balance sheets. Fair Value Measurements—Valuation Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (an exit price). We use the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. 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. The three-level hierarchy of inputs is summarized below: • Level 1—Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets; • Level 2—Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and • Level 3—Valuation is based upon unobservable inputs that are significant to the fair value measurement. 92 Table of Contents The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Refer to Note 15: Debt and non-recourse debt and Note 16: Fair Value Measurements for additional information. Currency Translation and Remeasurement The United States dollar (“USD”) is our reporting currency and is the functional currency of the majority of our operations. For operations whose functional currency is not the USD, assets and liabilities measured in foreign currencies are translated into USD at the prevailing exchange rates in effect as of the financial statement date, and the related gains and losses are reflected within Accumulated other comprehensive income in our consolidated balance sheets. Related income and expense accounts are translated at the average exchange rate for the period. 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 gain (loss), net in our consolidated statements of operations. Share-Based Compensation 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 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. We recognize forfeitures of awards as they occur. Income Taxes We account for income taxes using the asset and liability method. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year, to recognize the deferred tax assets and liabilities that relate to tax consequences in future years, which result from differences between the respective tax basis of assets and liabilities and their financial reporting amounts, and tax loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the respective temporary differences or operating loss or tax credit carryforwards are expected to be recovered or settled. The realization of deferred tax assets and tax loss and tax credit carryforwards is contingent upon the generation of future taxable income and other restrictions that may exist under the tax laws of the jurisdiction in which a deferred tax asset exists. Valuation allowances are provided to reduce such deferred tax assets to amounts more likely than not to be ultimately realized. We use a prescribed recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. For all income tax positions, we first determine whether it is “more-likely-than-not” that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. If it is determined that a position meets the more-likely-than-not recognition threshold, the benefit recognized in the financial statements is measured as the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. Earnings Per Share 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 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; hence, diluted EPS would equal basic EPS in a period of loss. 93 Table of Contents Defined Contribution Plan 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 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. Recently Issued Accounting Pronouncements Adopted Accounting Standards 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 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 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. See Note 7: 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 . ASU 2021-08 provides that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. 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 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. NOTE 3: ACQUISITIONS Diamond Acquisition 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. Additionally, in connection with the Diamond Acquisition, HGV repaid certain existing indebtedness of Diamond. 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. 94 Table of Contents 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 Diamond Acquisition Date (1) 40.71 Stock purchase price $ 1,381 Repayment of Legacy-Diamond debt $ 2,029 Total consideration transferred $ 3,410 (1) Represents the average of the opening and closing price of HGV stock on August 2, 2021. 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 Diamond Acquisition Date. The following table presents the fair values of the assets that we acquired and the liabilities that we assumed, as finalized: ($ in millions) August 2, 2021 (as finalized) Assets acquired Cash and cash equivalents $ 310 Restricted cash 127 Accounts receivable, net of allowance for doubtful accounts 90 Timeshare financing receivables, net 825 Inventory 488 Property and equipment, net 273 Operating lease right-of-use assets, net 33 Intangible assets, net 1,429 Other assets 261 Total assets acquired $ 3,836 Liabilities assumed Accounts payable, accrued expenses and other $ 520 Non-recourse debt, net 660 Operating lease liabilities 33 Advanced deposits 4 Deferred revenues 140 Deferred income tax liabilities 485 Total liabilities assumed $ 1,842 Net assets acquired $ 1,994 Total consideration transferred $ 3,410 Goodwill (1) $ 1,416 (1) Goodwill is calculated as total consideration transferred less net assets acquired and it primarily represents the value that we expect to obtain from synergies and growth opportunities from our combined Company post-acquisition. 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 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. 95 Table of Contents The net income effects associated with the measurement period adjustments recorded during the years ended December 31, 2022 and 2021 are considered immaterial. Timeshare Financing Receivables We acquired timeshare financing receivables which consist of loans to customers who purchased vacation ownership products and chose to finance their purchases. These timeshare financing receivables are collateralized by the underlying VOIs and generally have 10-year amortizing repayment terms. We estimated the fair value of the timeshare financing receivables 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 receivables. For purposes of our fair value allocation, we have considered all acquired receivables to be purchase credit deteriorated assets. See Note 7: 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 August 2, 2021 Purchase price $ 825 Allowance for credit losses 512 Premium attributable to other factors ( 97 ) Par value $ 1,240 Inventory We acquired inventory which primarily consists of completed unsold VOIs. We valued acquired inventory using a discounted cash flows method, which included an estimate of cash flows expected to be generated from the sale of VOIs. Significant estimates and assumptions impacting the fair value of the acquired inventory 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 inventory involving less subjective and/or less complex judgments include: short-term and long-term revenue growth rates, capital expenditures, tax rates and other factors impacting the discounted cash flows. Property and Equipment We acquired property and equipment, which includes land, building and leasehold improvements, furniture and equipment and construction in progress. We valued the majority of acquired property and equipment using a mix of cost, market and discounted cash flow approaches, which included estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the resorts. Intangible Assets The following table presents our fair values of the acquired identified intangible assets and their related remaining useful lives . Estimated Fair Value ($ in millions) Estimated Useful Life (in years) Trade name $ 18 1.5 Management contracts 1,251 35.4 Club member relationships 139 14.4 Computer software 21 1.5 Total intangible assets $ 1,429 We valued the acquired trade name intangible using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value. We valued the acquired management contracts intangible and club member relationships intangible using the multi-period excess earnings method, which is a variation of the income approach. This method estimates an intangible asset’s value based on the present value of the incremental after-tax cash flows attributable to the intangible asset. 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 96 Table of Contents 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 Deferred revenue primarily relates to deferred sales incentives revenues, mainly related to Bonus Points, which are deferred and recognized upon redemption; and Club membership fees, which are deferred and recognized over the terms of the applicable contract term or membership on a straight-line basis. Additionally, deferred revenue includes maintenance fees collected from owners, in certain cases, which are earned by the relevant property owners’ association over the applicable period. Deferred Income Taxes Deferred income taxes primarily relate to the fair value of assets and liabilities acquired from Diamond, including timeshare financing receivables, inventory, property and equipment, intangible assets, and debt. We calculated deferred income taxes based on statutory rates in the jurisdictions of the legal entities where the acquired assets and liabilities are recorded. Debt As part of the acquisition and consideration transferred, we paid off $ 2,029 million of Diamond’s existing corporate debt, accrued interest and early termination penalties. Non-Recourse Debt We valued the securitized debt from VIEs and warehouse loan facilities, using a discounted cash flow model under the income approach. The significant assumptions in our analysis include default rates, prepayment rates, bond interest rates and other structural factors. Operating Lease Right-of-Use-Assets and Lease Liabilities 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 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. Goodwill We have allocated the acquired goodwill to our segments, Real Estate Sales and Financing and Resort Operations and Club Management, as indicated in the table below. Real Estate Sales and Financing Segment Resort Operations and Club Management Segment Total Consolidated Goodwill $ 1,048 $ 368 $ 1,416 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 Diamond Acquisition Date. These unaudited pro forma results do not reflect any synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Diamond Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations. Year Ended December 31, ($ in millions) 2021 Revenue $ 3,068 Net income (loss) 337 97 Table of Contents Diamond Results of Operations 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 Revenue $ 633 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. 98 Table of Contents NOTE 4: REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue The following tables show our disaggregated revenues by product and segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management . See Note 22: Business Segments for more information related to our segments. ($ in millions) Year Ended December 31, Real Estate Sales and Financing Segment 2023 2022 2021 Sales of VOIs, net $ 1,416 $ 1,491 $ 883 Sales, marketing, brand and other fees 634 620 385 Interest income 273 235 157 Other financing revenue 34 32 26 Real estate sales and financing segment revenues $ 2,357 $ 2,378 $ 1,451 ($ in millions) Year Ended December 31, Resort Operations and Club Management Segment 2023 2022 2021 Club management $ 240 $ 227 $ 168 Resort management 329 307 172 Rental (1) 623 586 315 Ancillary services 43 40 27 Resort operations and club management segment revenues $ 1,235 $ 1,160 $ 682 (1) Excludes intersegment eliminations. See Note 22: Business Segments for additional information. 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. See Note 7: 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: 2023 2022 Accounts receivable, net $ 343 $ 322 Timeshare financing receivables, net 2,113 1,767 Total $ 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. 99 Table of Contents The following table presents the composition of our contract liabilities: ($ in millions) December 31, Contract liabilities: 2023 2022 Advanced deposits $ 179 $ 150 Deferred sales of VOIs of projects under construction 39 3 Club activation fees and annual dues 97 76 Bonus Point incentive liability (1) 83 106 Deferred maintenance fees 12 14 Other deferred revenue 38 42 (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. 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, 2023 and 2022, contract assets were $ 13 million and $ 9 million, respectively. Transaction Price Allocated to Remaining Performance Obligations Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. 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; 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, deferred cost of VOI sales and deferred direct selling costs from sales of VOIs related to projects under construction: December 31, ($ in millions) 2023 2022 Sales of VOIs, net $ 39 $ 3 Cost of VOI sales 10 1 Sales and marketing expense 6 1 During the year ended December 31, 2023, we recognized $ 4 million of sales of VOIs, net, offset by deferrals of $ 39 million, related to sales of projects under construction, some of which were completed during the year. We expect to recognize the revenue, costs of VOI sales and direct selling costs related to the projects under construction as of December 31, 2023, upon their completion in 2024. The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Bonus Points as of December 31, 2023: ($ in millions) Remaining Transaction Price Recognition Period Recognition Method Advanced deposits $ 179 18 months Upon customer stays Club activation fees 66 7 years Straight-line basis over average inventory holding period Bonus Points incentive liability 83 18 - 30 months Upon redemption 100 Table of Contents NOTE 5: RESTRICTED CASH Restricted cash was as follows: December 31, ($ in millions) 2023 2022 Escrow deposits on VOI sales $ 199 $ 241 Reserves related to non-recourse debt (1) 48 50 Other (2) 49 41 Total $ 296 $ 332 (1) See Note 15: 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. NOTE 6: ACCOUNTS RECEIVABLE Accounts receivable within the scope of ASC 326 are measured at amortized cost. The following table represents our accounts receivable, net of allowance for credit losses: December 31, ($ in millions) 2023 2022 Fee-for-service commissions $ 57 $ 91 Real estate and financing 87 71 Resort and club operations 199 167 Tax receivables 97 84 Insurance claims receivable 54 81 Other receivables 13 17 Total $ 507 $ 511 Our accounts receivable are generally due within one year of origination. 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 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 Total Balance as of December 31, 2022 $ 16 $ 24 $ 12 $ 52 Current period provision for expected credit losses 14 13 16 43 Write-offs charged against the allowance ( 7 ) ( 3 ) ( 25 ) ( 35 ) Balance at December 31, 2023 $ 23 $ 34 $ 3 $ 60 NOTE 7: TIMESHARE FINANCING RECEIVABLES We define our timeshare financing receivables portfolio segments as (i) originated and (ii) acquired. 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. 101 Table of Contents The following table presents the components of each portfolio segment by class of timeshare financing receivables: Originated Acquired ($ in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Securitized $ 770 $ 788 $ 214 $ 262 Unsecuritized (1) 1,326 971 551 447 Timeshare financing receivables, gross $ 2,096 $ 1,759 $ 765 $ 709 Unamortized non-credit acquisition premium (2) — — 32 41 Less: allowance for financing receivables losses ( 500 ) ( 404 ) ( 279 ) ( 338 ) Timeshare financing receivables, net $ 1,596 $ 1,355 $ 518 $ 412 (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 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. See Note 10: 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. 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. 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, 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. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. 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 14.7 %, a weighted-average remaining term of 6.9 and maturities through 2038 . Acquired Timeshare Financing Receivables with Credit Deterioration 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 financing receivable losses is reflected as a non-credit premium and is amortized as a reduction to interest income under the effective interest method. See Note 2: 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. 102 Table of Contents Our acquired timeshare financing receivables as of December 31, 2023, mature as follows: Acquired Timeshare Financing Receivables ($ in millions) Securitized Unsecuritized Total Year 2024 $ 36 $ 55 $ 91 2025 38 58 96 2026 37 64 101 2027 35 68 103 2028 28 71 99 Thereafter 40 235 275 Total $ 214 $ 551 $ 765 Originated Timeshare Financing Receivables Our originated timeshare financing receivables as of December 31, 2023, mature as follows: Originated Timeshare Financing Receivables ($ in millions) Securitized Unsecuritized Total Year 2024 $ 88 $ 99 $ 187 2025 92 99 191 2026 98 106 204 2027 98 117 215 2028 94 131 225 Thereafter 300 774 1,074 Total $ 770 $ 1,326 $ 2,096 103 Table of Contents Allowance for Financing Receivables Losses The changes in our allowance for financing receivables losses were as follows: ($ in millions) Originated Acquired Balance as of December 31, 2020 $ 211 $ — Initial allowance for PCD financing receivables acquired during the period (1) — 512 Provision for financing receivables losses (2) 121 — Write-offs ( 79 ) ( 11 ) Inventory recoveries — 8 Upgrades (3) 27 ( 27 ) Balance as of December 31, 2021 $ 280 $ 482 Provision for financing receivables losses (2) 140 — Write-offs ( 70 ) ( 119 ) Inventory recoveries — 29 Upgrades (3) 54 ( 54 ) Balance as of December 31, 2022 $ 404 $ 338 Initial allowance for PCD financing receivables acquired during the period (4) — 30 Provision for financing receivables losses (2) 171 — Provision for credit loss expense (5) — ( 1 ) Write-offs ( 73 ) ( 116 ) Inventory recoveries — 26 Upgrades (3) ( 2 ) 2 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 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, 2023 December 31, 2022 FICO score 700+ $ 882 $ 763 600-699 311 270 <600 39 37 No score (1) 196 174 Total $ 1,428 $ 1,244 (1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers. 104 Table of Contents The following table details our gross Legacy-HGV timeshare financing receivables by the origination year and average FICO score as of December 31, 2023: ($ in millions) 2023 2022 2021 2020 2019 Prior Total FICO score 700+ $ 389 $ 210 $ 93 $ 34 $ 61 $ 95 $ 882 600-699 125 78 35 12 22 39 311 <600 13 11 5 2 3 5 39 No score (1) 77 40 20 13 19 27 196 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. As of December 31, 2023 and 2022, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $ 101 million and $ 76 million, respectively. The following tables detail an aged analysis of our gross timeshare financing receivables balance: Legacy-HGV Timeshare Financing Receivables December 31, 2023 ($ in millions) Securitized Unsecuritized Total Current $ 577 $ 723 $ 1,300 31 - 90 days past due 11 16 27 91 - 120 days past due 4 4 8 121 days and greater past due 2 91 93 Total $ 594 $ 834 $ 1,428 Legacy-HGV Timeshare Financing Receivables December 31, 2022 ($ in millions) Securitized Unsecuritized Total Current $ 631 $ 520 $ 1,151 31 - 90 days past due 9 8 17 91 - 120 days past due 3 2 5 121 days and greater past due 4 67 71 Total $ 647 $ 597 $ 1,244 Legacy-Diamond Timeshare Financing Receivables Our gross balances by average FICO score of our Legacy-Diamond acquired and originated timeshare financing receivables were as follows: Legacy-Diamond Acquired Timeshare Financing Receivables ($ in millions) December 31, 2023 December 31, 2022 FICO score 700+ $ 256 $ 373 600-699 189 265 <600 42 55 No score (1) 12 16 Total $ 499 $ 709 (1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers. 105 Table of Contents Legacy-Diamond Originated Timeshare Financing Receivables ($ in millions) December 31, 2023 December 31, 2022 FICO score 700+ $ 403 $ 321 600-699 220 163 <600 31 26 No score (1) 8 5 Total $ 662 $ 515 (1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers. The following tables details our gross Legacy-Diamond acquired and originated timeshare financing receivables by the origination year and average FICO score as of December 31, 2023: Legacy-Diamond Acquired Timeshare Financing Receivables ($ in millions) 2023 2022 2021 2020 2019 Prior Total FICO score 700+ $ — $ — $ 46 $ 56 $ 66 $ 88 $ 256 600-699 — — 33 37 47 72 189 <600 — — 8 9 8 17 42 No score (1) — — 1 3 1 7 12 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. Legacy-Diamond Originated Timeshare Financing Receivables ($ in millions) 2023 2022 2021 2020 2019 Prior Total FICO score 700+ $ 196 $ 156 $ 51 $ — $ — $ — $ 403 600-699 98 92 30 — — — 220 <600 13 13 5 — — — 31 No score (1) 5 2 1 — — — 8 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. As of December 31, 2023 and 2022, we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $ 373 million and $ 377 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance: Legacy-Diamond Timeshare Financing Receivables December 31, 2023 ($ in millions) Securitized Unsecuritized Total Current $ 294 $ 457 $ 751 31 - 90 days past due 14 23 37 91 - 120 days past due 5 9 14 121 days and greater past due 6 353 359 Total $ 319 $ 842 $ 1,161 106 Table of Contents Legacy-Diamond Timeshare Financing Receivables December 31, 2022 ($ in millions) Securitized Unsecuritized Total Current $ 373 $ 442 $ 815 31 - 90 days past due 13 19 32 91 - 120 days past due 4 8 12 121 days and greater past due 13 352 365 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 FICO score 700+ $ 66 600-699 20 <600 — No score (1) 180 Total $ 266 (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 FICO score 700+ $ 3 600-699 — <600 — No score (1) 3 Total $ 6 (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 FICO score 700+ $ 28 $ 16 $ 5 $ 2 $ 7 $ 8 $ 66 600-699 9 4 1 1 2 3 20 <600 — — — — — — — No score (1) 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. 107 Table of Contents Legacy-Grand Islander Originated Timeshare Financing Receivables ($ in millions) 2023 2022 2021 2020 2019 Prior Total FICO score 700+ $ 3 $ — $ — $ — $ — $ — $ 3 600-699 — — — — — — — <600 — — — — — — — No score (1) 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 NOTE 8: INVENTORY Inventory was comprised of the following: December 31, ($ in millions) 2023 2022 Completed unsold VOIs $ 1,259 $ 1,096 Construction in process 140 62 Land, infrastructure and other 1 1 Total $ 1,400 $ 1,159 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. See Note 24: 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 Cost of sales true-up (1) $ 61 $ 23 $ ( 2 ) (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. 108 Table of Contents NOTE 9: PROPERTY AND EQUIPMENT Property and equipment were comprised of the following: December 31, ($ in millions) 2023 2022 Land $ 232 $ 235 Building and leasehold improvements 415 403 Furniture and equipment 113 78 Construction in progress 221 251 981 967 Accumulated depreciation ( 223 ) ( 169 ) Total $ 758 $ 798 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. 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. See Note 24: Supplemental Disclosures of Cash Flow Information for information regarding non-cash transfers. NOTE 10: CONSOLIDATED VARIABLE INTEREST ENTITIES 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. The timeshare financing receivables held by these entities are not available to our creditors and are not our legal assets, nor is the debt that is securitized through these entities a legal liability to us. We have determined that we are the primary beneficiaries of the VIEs as we have the power to direct the activities that most significantly affect their economic performance. 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 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 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 also assumed a timeshare facility that has an outstanding balance of $ 124 million as of December 31, 2023 and is considered a VIE. See Note 15: 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: December 31, ($ in millions) 2023 2022 Restricted cash $ 48 $ 48 Timeshare financing receivables, net 1,395 883 Non-recourse debt, net 1,466 1,003 NOTE 11: INVESTMENTS IN UNCONSOLIDATED AFFILIATES 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. 109 Table of Contents 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 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. See Note 21: Related Party Transactions for additional information. NOTE 12: INTANGIBLE ASSETS Intangible assets and related amortization expense were as follows: December 31, 2023 ($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name $ 18 $ ( 18 ) $ — Management contracts 1,340 ( 347 ) 993 Club member relationships 139 ( 57 ) 82 Capitalized software 207 ( 124 ) 83 Total $ 1,704 $ ( 546 ) $ 1,158 December 31, 2022 ($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name $ 18 $ ( 17 ) $ 1 Management contracts 1,340 ( 230 ) 1,110 Club member relationships 139 ( 37 ) 102 Capitalized software 163 ( 99 ) 64 Total $ 1,660 $ ( 383 ) $ 1,277 Amortization expense on intangible assets was $ 163 million, $ 192 million, and $ 90 million for the years ended December 31, 2023, 2022 and 2021, respectively. 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. As of December 31, 2023, our future amortization expense for our amortizing intangible assets is estimated to be as follows: ($ in millions) Future Amortization Expense 2024 $ 162 2025 138 2026 114 2027 88 2028 78 Thereafter 578 Total $ 1,158 110 Table of Contents NOTE 13: OTHER ASSETS Other assets were as follows: December 31, ($ in millions) 2023 2022 Inventory deposits $ 1 $ 9 Deferred selling, marketing, general and administrative expenses 20 18 Prepaid expenses (1) 89 117 Cloud computing arrangements 19 15 Interest receivable 21 17 Deferred income tax assets 9 8 Interest rate swap 42 63 Other 113 126 Total $ 314 $ 373 (1) Net of $ 11 million impairment recognized during the year ended December 31, 2022 due to certain expenses deemed unrecoverable. NOTE 14: ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER Accounts payable, accrued expenses and other were as follows: December 31, ($ in millions) 2023 2022 Accrued employee compensation and benefits $ 122 $ 139 Accounts payable 144 83 Bonus point incentive liability 54 51 Due to Hilton 48 54 Income taxes payable 11 34 Sales and other taxes payable 150 145 Accrued legal settlements 123 124 Other accrued expenses (1) 300 377 Total $ 952 $ 1,007 (1) Other accrued expenses includes interest payable, amounts due to HOAs and various accrued liabilities . 111 Table of Contents NOTE 15: DEBT AND NON-RECOURSE DEBT Debt The following table details our outstanding debt balance and its associated interest rates: December 31, ($ in millions) 2023 2022 Debt (1) Senior secured credit facility Term loan with a rate of 8.213 %, due 2028 $ 1,271 $ 1,284 Revolver with a rate of 7.360 %, due 2026 438 40 Senior notes with a rate of 5.000 %, due 2029 850 850 Senior notes with a rate of 4.875 %, due 2031 500 500 Other debt 33 29 Total debt, gross 3,092 2,703 Less: unamortized deferred financing costs and discounts (2)(3) ( 43 ) ( 52 ) Total debt, net $ 3,049 $ 2,651 (1) As of December 31, 2023 and 2022, weighted-average interest rates were 6.649 % and 6.143 %, respectively. (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 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 During the year ended December 31, 2023, we repaid $ 323 million under the senior secured credit facilities. As of December 31, 2023, we had $ 9 million of letters of credit outstanding under the revolving credit facility and $ 1 million outstanding backed by cash collateral. We were in compliance with all applicable maintenance and financial covenants and ratios as of December 31, 2023. 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 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. As of December 31, 2023 and 2022, the estimated fair value of our cash flow hedges was $ 42 million and $ 63 million, respectively. 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. We classify cash inflows and outflows from derivatives that hedge interest rate risk within operating activities in the Consolidated Statements of Cash Flows. 112 Table of Contents 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 Balance as of December 31, 2022 $ 48 Other comprehensive income before reclassifications, net 3 Reclassifications to net income ( 19 ) Balance as of December 31, 2023 $ 32 Senior Notes due 2029 and 2031 The Senior Unsecured Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries. We are in compliance with all applicable financial covenants as of December 31, 2023. Non-recourse Debt The following table details our outstanding non-recourse debt balance and associated interest rates: December 31, ($ in millions) 2023 2022 Non-recourse debt (1) Timeshare Facility with an average rate of 6.420 %, due 2025 (3) $ 400 $ 98 Grand Islander Timeshare Facility with an average rate of 6.716 %, due 2029 124 — HGV Securitized Debt with a weighted average rate of 2.711 %, due 2028 — 42 HGV Securitized Debt with a weighted average rate of 3.602 %, due 2032 66 98 HGV Securitized Debt with a weighted average rate of 2.431 %, due 2033 70 101 HGV Securitized Debt with a weighted average rate of 4.304 %, due 2034 118 168 HGV Securitized Debt with a weighted average rate of 4.826 %, due 2037 188 251 HGV Securitized Debt with a weighted average rate of 5.937 %, due 2038 264 — HGV Securitized Debt with a weighted average rate of 3.658 %, due 2039 95 134 Grand Islander Securitized Debt with a weighted average rate of 2.965 %, due 2029 15 — Grand Islander Securitized Debt with a weighted average rate of 3.316 %, due 2033 55 — Diamond Resorts Owner Trust 2019 with a weighted average rate of 3.255 %, due 2032 — 87 Diamond Resorts Owner Trust 2021 with a weighted average rate of 2.160 %, due 2033 87 134 Total non-recourse debt, gross 1,482 1,113 Less: 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 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. 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 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 113 Table of Contents 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. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $ 48 million and $ 50 million as of December 31, 2023 and 2022, respectively, and were included in Restricted Cash in our consolidated balance sheets. Debt Maturities The contractual maturities of our debt and non-recourse debt as of December 31, 2023, were as follows: ($ in millions) Debt Non-recourse Debt Total Year 2024 $ 17 $ 255 $ 272 2025 17 602 619 2026 453 161 614 2027 13 119 132 2028 1,228 85 1,313 Thereafter 1,364 260 1,624 Total $ 3,092 $ 1,482 $ 4,574 NOTE 16: FAIR VALUE MEASUREMENTS The carrying amounts and estimated fair values of our financial assets and liabilities, which are required for disclosure, were as follows: December 31, 2023 Fair Value ($ in millions) Carrying Amount Level 1 Level 3 Assets: Timeshare financing receivables, net (1) $ 2,113 $ — $ 2,289 Liabilities: Debt, net (2) 3,049 2,496 483 Non-recourse debt, net (2) 1,466 867 592 December 31, 2022 Fair Value ($ in millions) Carrying Amount Level 1 Level 3 Assets: Timeshare financing receivables, net (1) $ 1,767 $ — $ 1,910 Liabilities: Debt, net (2) 2,651 2,413 76 Non-recourse debt, net (2) 1,102 957 97 (1) Carrying amount net of allowance for financing receivables losses. (2) Carrying amount net of unamortized deferred financing costs and discounts Our estimates of the fair values were determined using available market information and appropriate valuation methods. 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 and advance deposits, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. 114 Table of Contents The estimated fair values of our originated and acquired timeshare financing receivables were determined using a discounted cash flow model. Our model incorporates default rates, coupon rates, credit quality and loan terms respective to the portfolio based on current market assumptions for similar types of arrangements. The estimated fair value of our Level 2 derivative financial instruments was determined utilizing projected future cash flows discounted based on an expectation of future interest rates derived from observable market interest rate curves and market volatility. Refer to Note 15: Debt and Non-recourse Debt above. The estimated fair values of our Level 1 debt and non-recourse debt were based on prices in active debt markets. The estimated fair value of our Level 3 debt and non-recourse debt were based on the following: • Debt – based on indicative quotes obtained for similar issuances and projected future cash flows discounted at risk-adjusted rates. • Non-recourse debt – based on projected future cash flows discounted at risk-adjusted rates. NOTE 17: LEASES 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. 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. Contingent rental expense includes short term and variable rent. Rent expense for all operating leases was as follows: Year Ended December 31, ($ in millions) 2023 2022 2021 Minimum rentals $ 28 $ 34 $ 20 Contingent rentals 11 4 2 Total $ 39 $ 38 $ 22 Supplemental cash flow information related to operating leases was as follows: Year Ended December 31, ($ in millions) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 27 $ 27 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 9 25 Supplemental balance sheet information related to operating leases was as follows: December 31, 2023 2022 Weighted-average remaining lease term of operating leases (in years) 6 6 Weighted-average discount rate of operating leases 4.85 % 4.57 % 115 Table of Contents The future minimum rent payments under non-cancelable operating leases as of December 31, 2023, are as follows: ($ in millions) Operating Leases Year 2024 $ 20 2025 18 2026 14 2027 8 2028 6 Thereafter 26 Total future minimum lease payments 92 Less: imputed interest ( 14 ) Present value of lease liabilities $ 78 NOTE 18: INCOME TAXES Our tax provision includes federal, state and foreign income taxes payable. The domestic and foreign components of our income (loss) before taxes were as follows: Year Ended December 31, ($ in millions) 2023 2022 2021 U.S. income before tax $ 335 $ 384 $ 195 Foreign income before tax 114 97 74 Total income before taxes $ 449 $ 481 $ 269 The components of our provision for income taxes were as follows: Year Ended December 31, ($ in millions) 2023 2022 2021 Current: Federal $ 105 $ 102 $ ( 5 ) State 18 19 9 Foreign 36 46 31 Total current 159 167 35 Deferred: Federal ( 22 ) ( 21 ) 61 State ( 1 ) ( 16 ) ( 1 ) Foreign — ( 1 ) ( 2 ) Total deferred ( 23 ) ( 38 ) 58 Total provision for income taxes $ 136 $ 129 $ 93 116 Table of Contents Reconciliations of our tax provision at the U.S. statutory rate to the provision for income taxes were as follows: Year Ended December 31, ($ in millions) 2023 2022 2021 Statutory U.S. federal income tax provision $ 94 $ 101 $ 57 State and local income taxes, net of U.S. federal tax benefit 17 4 8 Impact of foreign operations 10 17 11 Interest on installment sales, net of U.S. federal tax benefit 3 1 3 Uncertain Tax Positions 5 4 3 Transaction costs — — 5 Share-based compensation, net of IRC § 162(m) limitation 2 3 5 Other 5 ( 1 ) 1 Provision for income taxes $ 136 $ 129 $ 93 Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items. The compositions of net deferred tax balances were as follows: December 31, ($ in millions) 2023 2022 Deferred tax assets $ 9 $ 8 Deferred tax liabilities ( 631 ) ( 659 ) Net deferred tax liability $ ( 622 ) $ ( 651 ) The tax effects of the temporary differences and carryforwards that give rise to our net deferred tax liability were as follows: December 31, ($ in millions) 2023 2022 Deferred tax assets: Compensation $ 20 $ 18 Domestic tax loss and credit carryforwards 35 37 Foreign tax loss carryforwards 41 38 Other reserves 177 152 273 245 Valuation allowance ( 81 ) ( 78 ) Deferred tax assets 192 167 Deferred tax liabilities: Property and equipment ( 128 ) ( 138 ) Amortizable intangible assets ( 251 ) ( 284 ) Deferred income ( 435 ) ( 396 ) Deferred tax liabilities ( 814 ) ( 818 ) Net deferred tax liability $ ( 622 ) $ ( 651 ) As of December 31, 2023, we have $ 43 million federal, $ 163 million foreign, and $ 112 million state tax loss carryforwards with varying expiration dates. The federal losses will expire between 2024 and 2034, while the majority of the foreign tax losses can be carried forward indefinitely. The majority of state tax losses have expiration periods between fifteen years and twenty years . We have foreign tax credit carryforwards of $ 12 million and state tax credit carryforwards of $ 5 million. 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 $ 78 million as of 117 Table of Contents 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: December 31, ($ in millions) 2023 2022 2021 Unrecognized tax benefits at beginning of year $ 23 $ 12 $ — Current period tax position increases 2 2 1 Prior period tax position increases 3 11 18 Decreases due to lapse in applicable statute of limitations ( 3 ) ( 2 ) ( 7 ) Unrecognized tax benefits at end of year $ 25 $ 23 $ 12 We recorded $ 25 million and $ 23 million as of December 31, 2023 and 2022, respectively, excluding interest and penalties, as a liability for unrecognized tax benefits in Accounts payable, accrued expenses and other in the consolidated balance sheet. Had we recognized these tax benefits, $ 25 million and $ 23 million, along with related interest and penalties, it would have favorably impacted the annual effective tax rate. The total liability accrued for interest and penalties was $ 34 million and $ 31 million as of December 31, 2023, and 2022, respectively. We do not anticipate any significant increases or decreases in our unrecognized tax benefits within the next twelve months. We file federal, state and foreign income tax returns in jurisdictions with varying statute of limitations. We are currently under audit in several tax jurisdictions. The open tax years for major tax jurisdictions are 2006 through 2023. While there is no assurance as to the results, we believe we are adequately reserved for these audits. Although the Tax Cuts and Jobs Act of 2017 generally eliminates U.S. federal income tax on dividends from foreign subsidiaries, foreign withholding taxes may be incurred if these profits are distributed. 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 we operate. NOTE 19: SHARE-BASED COMPENSATION Stock Plan 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. 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. The total tax benefit recognized related to this compensation was $ 6 million, $ 6 million and $ 4 million for the years ended December 31, 2023, 2022 and 2021, respectively. In addition, we withheld common stock shares associated with net share settlements to cover tax withholding obligations upon the vesting of awards under our employee equity incentive program. For the years ended December 31, 2023, 2022 and 2021, we withheld approximately 264,000 , 147,000 and 131,000 shares at a total cost of $ 14 million, $ 8 million and $ 6 million, respectively, through net share settlements. Shares withheld to cover tax withholding obligations are retired. 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. Service RSUs 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 118 Table of Contents stock. The grant date fair value is equal to closing stock price on the date of grant. The following table provides information about our Service RSU grants for the last three fiscal years: Year Ended December 31, 2023 2022 2021 Number of shares granted 537,964 800,378 588,930 Weighted average grant date fair value per share $ 48.60 $ 44.12 $ 38.50 Fair value of shares vested (in millions) $ 23 $ 25 $ 19 The following table summarizes the activity of our RSUs during the year ended December 31, 2023: Number of Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period 1,300,584 40.09 Granted 537,964 48.60 Vested ( 624,972 ) 37.40 Forfeited ( 68,723 ) 45.87 Outstanding, end of period 1,144,853 45.21 Options Options vest over three years in annual installments from the date of grant, subject to the individual’s continued employment through the applicable vesting date and will terminate 10 years from the date of grant or earlier on the unvested portion of an individual whose service was terminated. The exercise price is equal to the closing price of the common stock on the date of grant. The following table provides information about our option grants for the last three fiscal years: Year Ended December 31, 2023 2022 2021 Number of options granted 301,215 389,536 542,793 Weighted average exercise price per share $ 49.14 $ 44.09 $ 38.22 Weighted average grant date fair value per share $ 24.78 $ 20.08 $ 18.41 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, 2023 2022 2021 Expected volatility 46.8 % 45.8 % 50.5 % Dividend yield (1) — % — % — % Risk-free rate 4.2 % 1.7 % 1.1 % Expected term (in years) 6.0 6.0 6.0 (1) At the date of grant we had no plans to pay dividends during the expected term of these options. The following table summarizes the activity of our options during the year ended December 31, 2023: Number of Shares Weighted Average Exercise Price Per Share Outstanding, beginning of period 2,412,232 $ 34.35 Granted 301,215 49.14 Exercised ( 263,570 ) 28.86 Forfeited, canceled or expired ( 32,159 ) 45.29 Outstanding, end of period 2,417,718 36.65 Exercisable, end of period 1,705,249 33.26 119 Table of Contents As of December 31, 2023, we had 1,705,249 options outstanding that were exercisable with an aggregate intrinsic value of $ 13 million and weighted average remaining contractual term of approximately 6 years. The intrinsic value of all options exercised during the year was $ 4.9 million. Performance RSUs 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 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. 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. The following table provides information about our Performance RSU grants, which is based on our Adjusted EBITDA metric described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K, further adjusted by net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction for the last three fiscal years: Year Ended December 31, 2023 2022 2021 Number of shares granted 59,944 46,532 178,224 Weighted average grant date fair value per share $ 49.14 $ 44.09 $ 39.55 Fair value of shares vested (in millions) 4 — — The following table provides information about our Performance RSU grants, which is based on contract sales for the last three fiscal years: Year Ended December 31, 2023 2022 2021 Number of shares granted 59,944 46,532 62,356 Weighted average grant date fair value per share $ 49.14 $ 44.09 $ 38.22 Fair value of shares vested (in millions) 4 — — 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 2023 and 2022 fiscal years. The following table summarizes the activity of our Performance RSUs during the year ended December 31, 2023: Number of Shares Weighted Average Exercise Price Per Share Outstanding, beginning of period 726,710 $ 37.26 Granted 119,887 49.14 Performance achievement shares adjustment (1) 90,162 38.22 Vested ( 214,873 ) 38.22 Forfeited, canceled or expired ( 161,719 ) 26.27 Outstanding, end of period 560,167 42.77 (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 In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the Plan, we reserved 2.5 million shares of common stock which may be purchased under the ESPP. 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, 120 Table of Contents 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. NOTE 20: 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. Year Ended December 31, ($ and shares outstanding in millions, except per share amounts) 2023 2022 2021 Basic EPS: Numerator: Net income $ 313 $ 352 $ 176 Denominator: Weighted average shares outstanding 110.1 118.0 99.7 Basic EPS (1) $ 2.84 $ 2.98 $ 1.77 Diluted EPS: Numerator: Net income $ 313 $ 352 $ 176 Denominator: Weighted average shares outstanding 111.6 119.6 101.1 Diluted EPS (1) $ 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 1.5 1.6 1.4 Diluted weighted average shares outstanding 111.6 119.6 101.1 (1) Earnings per share amounts are calculated using whole numbers. (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 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 programs may be 121 Table of Contents 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: (in millions) Shares Cost As of December 31, 2022 7 $ 272 Repurchases 9 368 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. NOTE 21: RELATED PARTY TRANSACTIONS BRE Ace LLC and 1776 Holding, LLC 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. See Note 11: 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. These amounts are summarized in the following table and are included in Sales, marketing, brand, and other fees on our consolidated statements of operations as of the date they became related parties. December 31, ($ in millions) 2023 2022 2021 Equity in earnings from unconsolidated affiliates $ 12 $ 13 $ 10 Commissions and other fees 204 200 105 We also had $ 19 million and $ 23 million of outstanding receivables related to the fee-for-service agreements included in Accounts receivable, net on our consolidated balance sheets as of December 31, 2023 and 2022, respectively. Apollo Global Management Inc. As part of the Diamond Acquisition as described above in Note 3: 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 Diamond Acquisition Date. 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. 122 Table of Contents NOTE 22: BUSINESS SEGMENTS We operate our business through the following two reportable segments: • Real estate sales and financing – We market and sell VOIs that we own. We also source VOIs through fee-for-service agreements with third-party developers. Related to the sales of the VOIs that we own, we provide consumer financing, which includes interest income generated from the origination of consumer loans to customers to finance their purchase of VOIs and revenue from servicing the loans. We also generate fee revenue from servicing the loans provided by third-party developers to purchasers of their VOIs. • Resort operations and club management – We manage the Clubs and earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. 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 Club programs. We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties. 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: (i) other gains, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges. 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 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: Year Ended December 31, ($ in millions) 2023 2022 2021 Revenues: Real estate sales and financing $ 2,357 $ 2,378 $ 1,451 Resort operations and club management (1) 1,291 1,197 700 Total segment revenues 3,648 3,575 2,151 Cost reimbursements 386 297 202 Intersegment eliminations (1) ( 56 ) ( 37 ) ( 18 ) 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. These charges totaled $ 56 million, $ 37 million and $ 18 million for the years ended December 31, 2023, 2022, and 2021, respectively. 123 Table of Contents The following table presents Adjusted EBITDA for our reportable segments reconciled to net income: Year Ended December 31, ($ in millions) 2023 2022 2021 Adjusted EBITDA: Real estate sales and financing (1) $ 754 $ 865 $ 537 Resort operations and club management (1) 504 463 353 Segment Adjusted EBITDA 1,258 1,328 890 Acquisition and integration-related expense ( 68 ) ( 67 ) ( 106 ) General and administrative ( 194 ) ( 212 ) ( 151 ) Depreciation and amortization ( 213 ) ( 244 ) ( 126 ) License fee expense ( 138 ) ( 124 ) ( 80 ) Other gain (loss), net 2 ( 1 ) ( 26 ) Interest expense ( 178 ) ( 142 ) ( 105 ) Income tax expense ( 136 ) ( 129 ) ( 93 ) Equity in earnings from unconsolidated affiliates 12 13 10 Impairment expense ( 3 ) ( 17 ) ( 2 ) Other adjustment items (2) ( 29 ) ( 53 ) ( 35 ) 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 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: December 31, ($ in millions) 2023 2022 Real estate sales and financing $ 6,559 $ 5,755 Resort operations and club management 1,735 1,986 Total segment assets 8,294 7,741 Corporate 391 263 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 Real estate sales and financing $ 61 $ 26 $ 60 Resort operations and club management 2 2 — Total segment capital expenditures 63 28 60 Corporate 34 65 12 Total capital expenditures $ 97 $ 93 $ 72 NOTE 23: COMMITMENTS AND CONTINGENCIES Commitments 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, 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. 124 Table of Contents 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: ($ in millions) 2024 2025 2026 2027 2028 Thereafter Total Inventory purchase obligations (1) $ 37 $ — $ — $ — $ — $ — $ 37 Other commitments (2) 10 3 — — — — 13 Total $ 47 $ 3 $ — $ — $ — $ — $ 50 (1) Includes commitments for properties in Japan. (2) Primarily relates to commitments related to information technology and sponsorships. Litigation Contingencies We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. We evaluate these legal proceedings and claims at each balance sheet date to determine the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to reasonably estimate the amount of loss. 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, 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. Surety Bonds We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. 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 $ 454 million as of December 31, 2023, which primarily consist of escrow, construction and subsidy related bonds. NOTE 24: SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 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 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. 125 Table of Contents • 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. See Note 3: 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 . NOTE 25: SUBSEQUENT EVENTS 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. 126 Table of Contents ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with our accountants on accounting and financial disclosure matters.