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Item 1A. Risk Factors

2022-02-23 compared with 2021-02-24 · 201 added, 203 removed, 229 unchanged (64% of the section changed)

You should carefully consider each of the following risk factors and all of the other information set forth in this report.

Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company.

Based on the information currently known to us, we believe that the following information identifies the material risk factors affecting our company.

However, the risks and uncertainties we face are not limited to those set forth in the risk factors described below.

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Risks Related to Our Business and Our Industry

We may not be able to achieve the objectives of our acquisition of the Travel + Leisure brand or the future prospects and plans for the Company.

We may not be able to achieve the objectives of our acquisition of the Travel + Leisure brand or the future prospects and plans for Travel + Leisure Co.

On January 5, 2021, we acquired the Travel + Leisure brand and all related assets from Meredith Corporation.

On February 17, 2021, Wyndham Destinations, Inc.

changed its name to Travel + Leisure Co., and the new Travel + Leisure Co.

stock began trading under the ticker symbol NYSE:

See Note 32— Subsequent Events to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information concerning this acquisition.

The expected results of the transaction and the future prospects for, and plans of, our company are subject to a number of risks and uncertainties, many of which are beyond our control, including (without limitation) unanticipated costs and/or delays;

unfavorable reaction by customers, partners, employees, or suppliers;

future revenues being lower than expected;

failure or inability to implement growth or expansion strategies in a timely manner or at all;

local and global political and economic conditions.

Promotion activities associated with our new business may not yield increased revenue in the time expected or at all, and, even if revenue does increase, it may not be sufficient to offset the expenses we incur in building our brands.

If we fail to successfully promote and maintain our new business and brands, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may fail to attract or retain customers to the extent necessary to realize a sufficient return with respect to the acquisition and our rebranding efforts, which would adversely impact our business, results of operations, and financial condition.

In addition, a portion of the value associated with the Travel + Leisure brand is derived from the long-standing commitment to high-quality, independent travel journalism by Travel + Leisure magazine and associated media properties, which will continue to be operated by Meredith outside our control.

changed its name to Travel + Leisure Co., and began trading under the ticker symbol NYSE:

See Note 5— Acquisitions to the Consolidated Financial Statements for information concerning this acquisition.

The expected results of the transaction and the future prospects for, and plans of, our company, including our strategies to accelerate growth of our global businesses by broadening the strength of our cornerstone timeshare and exchange businesses and creating depth of leisure travel products and services through our business extensions, are subject to a number of risks and uncertainties, many of which are beyond our control.

Promotion activities associated with our businesses may not yield increased revenue in the time expected or at all, and, even if revenue does increase, it may not be sufficient to offset the expenses we incur in building our brands.

If we fail to successfully promote and maintain our businesses and brands, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may fail to attract or retain customers to the extent necessary to realize a sufficient return with respect to the acquisition and our rebranding efforts, which would adversely impact our business, results of operations, and financial condition.

In addition, a portion of the value associated with the Travel + Leisure brand is derived from the long-standing commitment to high-quality, independent travel journalism by Travel + Leisure magazine and associated media properties, which continue to be operated by Meredith outside of our control.

If the quality or reach of such media properties deteriorates in the future, it could negatively impact the perception of the Travel + Leisure brand and adversely impact our business.

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We will be adversely impacted if we cannot compete effectively in the highly competitive timeshare industry.

Our continued success depends upon our ability to compete effectively in markets that contain numerous competitors, some of which may have significantly greater financial, marketing and other resources than we have.

Competition in the timeshare industry is based on brand name recognition and reputation as well as location, quality of accommodations, price, service levels and amenities, financing terms, quality of service, terms of property use, reservation systems, flexibility of members to exchange into other timeshare properties or other travel awards, property size and availability, customer satisfaction, consumer confidence, consumer discretionary spending, and the ability to earn and redeem loyalty program points.

The continued success and future growth of our timeshare and exchange businesses, depends upon our ability to compete effectively in markets that contain numerous competitors, some of which may have significantly greater financial, marketing, and other resources than we have.

We principally compete with short-term vacation options such as lodging, cruise, and home and apartment sharing services, as well as other timeshare developers.

We compete based on brand name recognition and reputation, lifetime value, location, convenience, quality accommodations, service levels, amenities, and flexibility.

In order to compete, we incent potential new owners and existing owners to tour with us to better understand our products and services.

New resorts may be constructed and these additions to supply may create new competitors, in some cases without corresponding increases in demand.

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New competition or existing competition that uses a business model that is different from our business model may require us to change our model so that we can remain competitive.

Our RCI exchange business depends on vacation ownership developers for new members and existing members and participants to renew their memberships and engage in exchange and non-exchange transactions.

Our new owner enrollment volumes dropped significantly during the COVID-19 pandemic due to the industry wide drop in VOI sales to new owners.

Although new owner sales levels have recovered from their lows in 2020, they have not yet returned to pre-pandemic levels and there is no assurance that they will recover in the timeframe or at the levels that we expect.

Developers and members also supply resort accommodations for use in exchanges.

If we are unable to negotiate new affiliation agreements with resort developers or secure renewals with existing members or developers in our RCI network, the number of new and/or existing members, the supply of resort accommodations available through our exchange networks and related revenue will decrease.

The failure to secure the renewal of affiliation agreements with developers that have corporate member relationships, where the developer renews RCI membership fees for all of its active owners, has a greater adverse effect.

The loss or renegotiation on less favorable terms of several of our largest affiliation agreements could materially impact our financial condition and results of operations.

Our ability to maintain affiliate agreements with resort developers is also impacted by consolidation in the vacation ownership industry.

For example, in connection with the acquisition of Welk Hospitality Group, Inc.

(“Welk”) by Marriott Vacations Worldwide Corporation, the RCI contract with Welk was terminated.

Consolidation can also lead to larger competitors with greater resources that compete with our vacation ownership business for customers, projects, and talent.

Our new business extensions operate in a highly competitive global environment and may take longer than expected to achieve the levels of revenues, customer acceptance and profitability we expect.

As we continue to expand our business into the broader leisure travel industry, we will be adversely impacted if we cannot compete effectively.

There are a great number of existing competitive travel services, some of which have significantly greater financial, marketing, and other resources than we have, and while the market is currently fragmented, existing travel service companies as well as new entrants may adversely impact our ability to achieve the level of revenues, transactions, and profitability we expect.

Our Travel + Leisure Group’s subscription business is largely dependent on the success of our direct-to-consumer marketing efforts and the willingness of consumers to subscribe to the Travel + Leisure Club for access to preferred travel pricing,

exclusive experiences and customized concierge services.

Our Panorama Travel Solutions business is largely dependent on the success of marketing efforts to closed user groups through partner brands and the subsequent propensity of the members of those groups to use the platform for their travel bookings and upgrade to receive premium services.

Both businesses are also reliant on our ability to leverage new and existing relationships with travel suppliers, including hotels, airlines, rental car companies, and wholesale suppliers, and their willingness to distribute products and services through our platforms.

There is no assurance that these efforts will be successful within the timeframe or at the levels we expect.

We will also need to regularly update our technology infrastructure to continually changing conditions, needs, and advancements, which may not at all times occur in the time or in the manner needed to achieve our desired results.

While many of our activities in establishing and implementing each of these business extensions are using our existing expertise, resources and technologies, these subscription business extensions can be expected to require us to utilize and augment resources, including management and other personnel, beyond those required by our historic business offerings and, as a result, subject us to greater risks and uncertainties than historically considered for our core timeshare and exchange businesses.

Failure to maintain the integrity of internal or customer data or to protect our systems from cyber-attacks could disrupt our business, damage our reputation, and subject us to costs, fines or lawsuits.

In connection with our business, we and our service providers collect and retain large volumes of certain types of personal and proprietary information pertaining to our guests, shareholders and employees.

Such information includes, but is not limited to, large volumes of guest credit and payment card information, guest travel documents, other identification documents, account numbers, and other personally identifiable information.

We are subject to attack by cyber-criminals operating on a global basis attempting to gain access to such information, and the integrity and protection of that guest, shareholder, and employee data is critical to us.

While we maintain what we believe are reasonable security controls over personal and proprietary information, including the personal information of guests, shareholders, and employees, any breach of or breakdown in our systems that results in the theft, loss, fraudulent use or other unauthorized release of personal, confidential or other proprietary information or other data could nevertheless occur and persist for an extended period of time without detection, which could have a material adverse effect on our brands, reputation, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, losses, third-party damages and other liabilities.

Such a breach or a breakdown could also materially increase our costs to protect such information and to protect against such risks.

Our and our third-party service providers’ vulnerability to attack exists in relation to known and unknown threats.

As a consequence, the security measures we deploy are not perfect or impenetrable, and we may be unable to anticipate or prevent all unauthorized access attempts made on our systems or those of our third-party service providers.

Data breaches, viruses, ransomware and other serious cyber incidents have increased globally, along with the methods, techniques and complexity of attacks.

We have been, and likely will continue to be, subject to such cyber-attacks.

Also, the same cyber security issues exist for the third parties with whom we interact and share information, and cyber-attacks on third parties which possess or use our customer, personnel and other information could adversely impact us in the same way as would a direct cyber-attack on us.

While we have not incurred any material adverse impact on our operations or financial results as a result of a cyber-attack, there is no guarantee that cyber-attacks have not gone generally undetected or without general recognition of magnitude or will not occur in the future, any of which could materially adversely affect our brands, reputation, costs and profitability.

Additionally, the legal and regulatory environment surrounding information security and privacy in the U.S.

and international jurisdictions is constantly evolving.

For example, in the U.S., California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which became effective on January 1, 2020.

The CCPA provides to California consumers certain new access, deletion and opt-out rights related to their personal information, imposes civil penalties for violations and affords, in certain cases, a private right of action for data breaches.

The CCPA was amended in November 2020 with passage of the California Privacy Rights Act (“CPRA”) ballot initiative, adding further consumer rights and compliance obligations.

Complying with the CCPA has increased our compliance cost and compliance with additional provisions of CCPA and CPRA that will take effect in 2023 could increase these costs further.

Similar legislation has been proposed or adopted in other states (for example, the Virginia Consumer Data Protection Act that is also going into effect in 2023).

Aspects of the CCPA and these other state laws and regulations, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.

Moreover, foreign data protection, privacy, consumer protection, content regulation and other laws and regulations are often more restrictive or burdensome than those in the United States.

For example, the European Union (“E.U.”)

General Data Protection Regulation (“GDPR”) imposes significant obligations to businesses that sell products or services to E.U.

customers or otherwise control or process personal data of E.U.

Complying with GDPR caused us to update certain business practices and systems and incur costs related to continued compliance with GDPR and other international laws and regulations.

In addition, should we violate or not comply with the CCPA, GDPR or any other applicable laws or regulations, contractual requirements relating to data security and privacy, or with our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries, it could have a material adverse effect on our brands, marketing, reputation, business, financial condition and results of operations, as well as subject us to significant fines, litigation, losses, third-party damages and other liabilities.

Our information technology infrastructure, including but not limited to our, and our third-party service providers’, information systems and legacy proprietary online reservation and management systems, has been and will likely continue to be vulnerable to system failures such as server malfunction or software or hardware failures, computer hacking, phishing attacks, user error, cyber-terrorism, loss of data, computer viruses, ransomware and malware installation, and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information.

In addition, as we continue to transition from our legacy systems to new, cloud-based technologies, we may continue to face start-up issues that may negatively impact guests.

The increased scope and complexity of our information technology infrastructure and systems could contribute to the risk of future material security breaches or breakdowns, any of which could have a material adverse impact on our business, brands, reputation and results of operations.

Acquisitions, dispositions and other strategic transactions may not prove successful and could result in operating difficulties.

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We often compete for these opportunities with third parties, which may cause us to lose potential opportunities or to pay more than we may otherwise have paid absent such competition.

We cannot assure you that we will be able to identify and consummate strategic transactions and opportunities on favorable terms or that any such

strategic transactions or opportunities, if consummated, will be successful.

We cannot assure you that we will be able to identify and consummate strategic transactions and opportunities on favorable terms or that any such strategic transactions or opportunities, if consummated, will be successful.

Assimilating any strategic transactions may also create unforeseen operating difficulties and costs.

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Under these types of arrangements, performance by the divested business or other conditions outside of our control could affect our financial condition or results of operations.

See Note 29— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations related to the European vacation rentals business and the North American vacation rentals business and Note 7— Held-for-Sale Business to the Consolidated Financial Statements for more details on the North American vacation rentals transaction, both of which are included in Part II, Item 8 of this Annual Report on Form 10-K.

On August 7, 2019, we completed the acquisition of Alliance Reservations Network, a company that provides private-label travel booking technology solutions, and on January 5, 2021, we completed the acquisition of the Travel + Leisure brand of Meredith, as described above in this Item 1A under “We may not be able to achieve the objectives of our acquisition of the Travel + Leisure brand or the future prospects and plans for the Company”.

Acquisitions of businesses, such as the ARN transaction, could result in potentially dilutive issuances of equity securities and/or the assumption of contingent liabilities.

See Note 32— Subsequent Events and Note 5— Acquisitions to the Consolidated Financial Statements, both of which are included in Part II, Item 8 of this Annual Report on Form 10-K for a description of the consideration paid in connection with the acquisition of the Travel + Leisure brand from Meredith, and the consideration paid, including the amount of shares of our common stock issued, in connection with the ARN transaction.

Acquisitions may also be structured in such a way that we will be assuming unknown or undisclosed liabilities or obligations or we may incur unanticipated costs or expenses following the acquisition, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, unexpected penalties or enforcement actions, and other liabilities.

See Note 5— Acquisitions to the Consolidated Financial Statements for a description of the consideration paid in connection with these acquisitions.

Acquisitions may also be structured in such a way that we will be assuming unknown or undisclosed liabilities or obligations or we may incur unanticipated costs or expenses following the acquisition, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, reductions in personnel, unexpected penalties or enforcement actions, and other liabilities.

Moreover, we may be unable to efficiently integrate acquisitions, management attention and other resources may be diverted away from other potentially more profitable areas of our business and in some cases these acquisitions may turn out to be less compatible with our growth and operational strategy than originally anticipated.

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Our revenues are highly dependent on the health of the travel industry and declines in or disruptions to the travel industry such as those caused by economic conditions, terrorism or acts of gun violence, political strife, severe weather events and other natural disasters, war, and pandemics may adversely affect us.

Declines in or disruptions to the travel industry may adversely impact us.

Risks affecting the travel and timeshare industries include:

Declines in or disruptions to the travel industry have in the past adversely impacted us and any future declines or disruptions are also likely to adversely impact us.

Risks affecting the travel industry can be localized events or global in nature and include:

economic slowdown and recession;

economic factors such as increased costs of living and reduced discretionary income adversely impacting decisions by consumers and businesses to use and consume travel services and products;

economic factors such as increased costs of living and reduced discretionary income adversely impacting decisions by consumers to use and consume travel services and products;

terrorist incidents and threats and associated heightened travel security measures;

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natural disasters such as earthquakes, hurricanes, fires, floods and volcano eruptions;

concerns with pandemics, contagious diseases or health epidemics;

concerns with, and increased governmental regulations in response to, pandemics, contagious diseases or health epidemics such as the continuing COVID-19 pandemic;

environmental disasters;

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and increases in gasoline and other fuel prices.

Further, there has been public discussion that climate change may be associated with extreme weather conditions, such as increased frequency and severity of storms and floods, coastal erosion and flooding due to higher sea levels, increased temperatures at winter destinations and other factors that may adversely impact the accessibility or desirability of travel to certain locations, and any regulation related to climate change could have an adverse impact on the travel industry generally.

Any such disruptions to the travel or timeshare industries may adversely affect our affiliated resorts, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations, thereby impacting our operations and the trading price of our common stock.

We are subject to numerous business, financial, operating and other risks common to the travel and timeshare industries, any of which could reduce our revenues and our ability to make distributions and limit opportunities for growth.

Our business is subject to numerous business, financial, operating and other risks common to the travel and timeshare industries, including adverse changes with respect to any of the following:

There has also been public discussion that climate change is associated with extreme weather conditions and other natural disasters, such as increased frequency and severity of storms and floods, coastal erosion and flooding due to higher sea levels, increased temperatures, increased forest fires, and other factors that may adversely impact the accessibility or desirability of travel to certain locations.

Additionally, increased regulations related to climate change could have an adverse impact on the leisure travel industry generally.

Any of the foregoing disruptions would likely adversely affect our affiliated resorts, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations, and our new business extensions, thereby impacting our operations and the trading price of our common stock.

Further, Travel + Leisure Co.

develops and manages resort properties throughout the world, a portion of which are in areas with greater exposure to the adverse effects of severe weather events and other natural disasters associated with climate change due to their location in coastal areas or states where wildfires are common, which could cause such resorts to suffer greater adverse effects from those events than the leisure travel industry faces in general.

For risks related to the COVID-19 pandemic, see “ Risks Related to the COVID-19 Pandemic.

We are subject to numerous business, financial, operating and other risks common to the travel industry, including timeshare, any of which could reduce our revenues and our ability to make distributions and limit opportunities for growth.

Our business is subject to numerous business, financial, operating and other risks common to the travel industry, including adverse changes with respect to any of the following:

• consumer travel and vacation patterns and consumer preferences;

• increased or unanticipated operating costs, including as a result of inflation, energy costs and labor costs such as minimum wage increases and unionization, workers' compensation and health-care related costs and insurance which may not be fully offset by price or fee increases in our business or otherwise;

• desirability of geographic regions where resorts in our business are located;

• the supply and demand for vacation ownership services and products and exchange services and products;

• increased or unanticipated operating costs, including as a result of inflation;

• energy costs, labor shortages, including such shortages as have occurred during the COVID-19 pandemic, and labor costs such as minimum wage increases and unionization, workers' compensation and health-care related costs and insurance which may not be fully offset by price or fee increases in our business or otherwise;

• product and supply chain disruptions, such as have occurred during the COVID-19 pandemic;

• desirability of geographic regions where resorts in or affiliated with our businesses are located;

• the supply and demand for vacation ownership products and services, exchange services and products, and travel subscription services and products;

• seasonality in our businesses, which may cause fluctuations in our operating results;

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• the availability of acceptable financing and the cost of capital as they apply to us, our customers, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations;

• the quality of the services provided by affiliated resorts and properties in our exchange business or resorts in which we sell VOIs or participants in the Wyndham Rewards loyalty program, which may adversely affect our image, reputation and brand value;

• the quality of the services provided by affiliated resorts and properties in our exchange business or resorts in which we sell VOIs or by participants in the Wyndham Rewards loyalty program, which may adversely affect our image, reputation and brand value;

• overbuilding or excess capacity in one or more segments of the timeshare industry or in one or more geographic regions;

• our ability to conduct tours of our properties and generate new owners, which has been reduced during the continuance of the COVID-19 pandemic;

• our ability to conduct tours of our properties and generate new owners, both of which were significantly reduced during the continuance of the COVID-19 pandemic;

• our ability to accurately plan for or estimate future timeshare inventory needs, which was adversely impacted by the effect of COVID-19 on vacation ownership tours and VOI sales, and balance our supply of new and existing timeshare properties with consumer demand for those properties;

• success of any actions we may take in seeking to increase our vacation ownership contract receivables portfolio, which was adversely impacted by the effect of COVID-19 on vacation ownership tours and VOI sales;

• success of any actions we may take to increase our exchange membership levels, which were adversely impacted by the effect of COVID-19 on VOI sales;

• our ability to develop and maintain positive relations and contractual arrangements with VOI owners, current and potential vacation exchange members, resorts with units that are exchanged through our exchange business and timeshare property owner associations;

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• the bankruptcy or insolvency of customers or other adverse economic factors impacting the financial health of customers, which has impaired and could continue to impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights;

• our effectiveness in keeping pace with technological developments, including with respect to social media platforms, which could impair our competitive position;

• our effectiveness in keeping pace with technological developments, including with respect to social media platforms, as well as any failure to upgrade our technology infrastructure to meet changing customer interfacing needs, which could impair our competitive position;

• our ability to grow the membership base of our businesses;

• our ability to offer acceptable customer pricing for products and services;

• our ability to identify and obtain industry specific talent (including digital, sales, marketing, and operational leadership skills) to execute our growth strategy;

• disruptions, including non-renewal or termination of agreements, in relationships with third parties including marketing alliances and affiliations with e-commerce channels;

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• the viability of property owners' associations that we manage and the maintenance and refurbishment of vacation ownership properties, which depend on property owners associations levying sufficient maintenance fees and the ability of members to pay such maintenance fees, particularly in times of economic downturn such as caused by the COVID-19 pandemic;

• impact of existing or future inflation;

• increases in maintenance fees, which could cause our product to become less attractive or less competitive;

• our ability to securitize the receivables that we originate in connection with sales of VOIs;

• defaults or delinquencies on loans to purchasers of VOIs who finance the purchase price of such vacation ownerships, which increase in times of economic downturn such as during the COVID-19 pandemic;

• defaults or delinquencies on loans to purchasers of VOIs who finance the purchase price of such vacation ownerships, which generally increase in times of economic downturn such as during the COVID-19 pandemic;

• the level of unlawful or deceptive third-party VOI resale schemes, which could damage our reputation and brand value;

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• disputes with owners of VOIs, property owners associations, and vacation exchange affiliation partners, which may result in litigation and the loss of management contracts;

• laws, regulations and legislation internationally and domestically, and on a federal, state or local level, concerning the timeshare industry, which may make the operation of our business more onerous, more expensive or less profitable;

• laws, regulations and legislation internationally and domestically, and on a federal, state or local level, concerning the leisure travel industry, which may make the operation of our business more onerous, more expensive or less profitable;

• our failure or inability to adequately protect and maintain our trademarks and other intellectual property rights;

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Additionally, such travel intermediaries may divert reservations away from our direct online channels or increase the overall cost of internet reservations for our affiliated resorts through their fees.

As the use of these third-party reservation channels and peer-to-peer online networks increases, consumers may rely on these channels, adversely affecting our vacation ownership and vacation exchange brands, reservation systems, bookings and rates.

We are subject to risks related to our vacation ownership receivables portfolio.

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When such defaults or delinquencies occur during the early part of the loan amortization period, we may not have recovered the marketing, selling, administrative and other costs associated with such VOIs.

Additional costs are incurred in connection with the resale of

repossessed VOIs, and the value we recover in a resale is not in all instances sufficient to cover the outstanding debt on the defaulted loan.

Additional costs are incurred in connection with the resale of repossessed VOIs, and the value we recover in a resale is not in all instances sufficient to cover the outstanding debt on the defaulted loan.

During 2020, in response to the COVID-19 pandemic, we initiated a program permitting our owners to defer payment on their receivables to us in order to provide financial assistance to these owners during a period of unprecedented economic insecurity.

While a majority of owners who participated in this deferral program resumed normal payments to us, not all owners have resumed normal payment schedules, and financial difficulties of owners and customers arising from the continuation of the COVID-19 pandemic could result in increased payment defaults and delinquencies both during the continuation of, and following, the COVID-19 pandemic.

While a majority of owners who participated in this deferral program resumed normal payments to us, financial difficulties of owners and customers arising from the continuation of the COVID-19 pandemic could result in increased payment defaults and delinquencies both during the continuation of, and following, the COVID-19 pandemic.

Also during 2020, in response to COVID-19, we substantially increased our loan loss allowance on our vacation ownership receivables portfolio.

In the future, we could have to increase our loan loss allowance above average historic levels again, whether due to COVID-19 or other unexpected causes.

Our international operations are subject to additional risks not generally applicable to our domestic operations.

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political instability;

threats or acts of terrorism;

threats or acts of war, hostilities, or terrorism;

the effect of disruptions caused by severe weather, natural disasters, outbreak of disease or other events that make travel to a particular region less attractive or more difficult;

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and changes in and application of foreign taxation structures including value added taxes.

Any of these risks or any adverse outcome resulting from the financial instability or performance of foreign economies, the instability of other currencies and the related volatility on foreign exchange and interest rates, could impact our results of operations, financial position or cash flows.

For risks related to the global COVID-19 pandemic, see “Risks Related to the COVID-19 Pandemic.”

Any of these risks or any adverse outcome resulting from the financial instability or performance of foreign economies, the instability of other currencies

and the related volatility on foreign exchange and interest rates, could impact our results of operations, financial position or cash flows.

Changes in U.S.

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From time to time, U.S.

federal, state and local and foreign governments make substantive changes to tax rules and their application, which could result in materially higher corporate taxes than would be incurred under existing tax law and could otherwise adversely affect our financial condition or results of operations.

This includes potential changes in tax laws or the interpretation of tax laws arising out of the Base Erosion Profit Shifting project initiated by the Organization for Economic Co-operation and Development.

federal, state and local and foreign governments make substantive changes to tax rules and their application, and which are being contemplated in the U.S.

and certain other countries, and which could result in materially higher corporate taxes than would be incurred under existing tax law and could otherwise adversely affect our financial condition or results of operations.

We are subject to ongoing and periodic tax audits and disputes in U.S.

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We are subject to certain risks related to our indebtedness, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us.

We are a borrower of funds under credit facilities, credit lines, senior notes, a term loan and securitization financings.

We use financial instruments to reduce or hedge our financial exposure to the effects of currency and interest rate fluctuations.

We are a borrower of funds under credit facilities, credit lines, senior notes, and term loan and securitization financings.

We use financial instruments to reduce or hedge our financial exposure to the effects of currency and interest rate fluctuations from time to time.

We are required to post surety bonds in connection with our development and sales activities.

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• our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt and other debt instruments that contain cross-default provisions;

• we may be unable to comply with the terms of the financial covenants under our revolving credit facility or other debt, including a breach of the financial ratio tests, which could result in a default and acceleration of the underlying revolver debt and under other debt instruments that contain cross-default provisions;

• we may be unable to comply with the terms of the financial covenants under our revolving credit facility or other debt agreements, including a breach of the financial ratio tests, which could result in a default and acceleration of the underlying revolver debt and under other debt instruments that contain cross-default provisions;

• our leverage may adversely affect our ability to obtain additional financing on favorable terms or at all;

• our leverage may require the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures, dividends, share repurchases or other operating needs;

• a minimum liquidity covenant under our amended credit agreement is impacted by 50% of the amount of aggregate dividends paid after the July 2020 effective date of the amended credit agreement, which covenant will affect the amount of dividends, if any, we declare and pay to our shareholders;

• increases in interest rates may adversely affect our financing costs and the costs of our VOI financing and associated increases in hedging costs;

• during the second quarter of 2020, Moody’s Investors Service, Inc.

(“Moody’s”) downgraded our secured debt rating from Ba2 to Ba3 with a “negative outlook”, and our secured debt is rated BB- with a “negative outlook” by Standard & Poor’s Rating Services (“S&P”) and BB+ with a “negative outlook” by Fitch Rating Agency;

negative ratings and/or downgrades of our debt by rating agencies could increase our borrowing costs and prevent us from obtaining additional financing on favorable terms or at all;

• negative ratings and/or downgrades of our debt by rating agencies could increase our borrowing costs and prevent us from obtaining additional financing on favorable terms or at all, such as when during the second quarter of 2020, Moody’s Investors Service, Inc.

downgraded our secured debt rating from Ba2 to Ba3 with a “negative outlook;”

• failure or non-performance of counterparties to foreign exchange and interest rate hedging transactions could result in losses;

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• a reduction in commitments from surety bond providers, which may impair our vacation ownership business by requiring us to escrow cash in order to meet regulatory requirements of certain states;

• prohibitive cost, or inadequate availability, of capital could restrict the development or acquisition of vacation ownership resorts by us and the financing of purchases of VOIs;

• the inability of developers of vacation ownership properties that have received mezzanine and other loans from us to pay back such loans;

• increases in interest rates, which may prevent us from passing along the full amount of such increases to purchasers of VOIs to whom we provide financing;

• prohibitive or increased cost, or inadequate availability, of capital could restrict the development or acquisition of vacation ownership resorts by us and the financing of purchases of VOIs;

• increases in interest rates, which would increase the cost of our existing variable rate debt and cost of our subsequent fixed rate debt, and which also may prevent us from passing along the full amount of such increases to purchasers of VOIs to whom we provide financing;

• increases in interest rates on consumer financing to VOI purchasers could diminish our VOI sales;

• disruptions in the financial markets, including potential financial uncertainties surrounding the United Kingdom’s withdrawal from the European Union, commonly referred to as “Brexit,” and the failure of financial institutions that support our credit facilities, general economic conditions and market liquidity factors outside of our control, which may limit our access to short- and long-term financing, credit and capital.

Changes in the method pursuant to which the LIBOR rates are determined and phasing out of LIBOR after 2021 may affect our financial results.

The chief executive of the United Kingdom Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), announced that the FCA intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

The chief executive of the United Kingdom Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), previously announced that the FCA intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

In response, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to USD-LIBOR in derivatives and other financial contracts.

It is not possible to predict the effect of these changes, including when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR and the other alternative LIBOR rate markets.

It is not possible to predict the effect of these changes, including the pace at which sufficient liquidity in the LIBOR replacement rate markets will develop.

During 2021, the LIBOR rate administrator announced its intention to extend publication of LIBOR rates for most USD LIBOR tenors through June 30, 2023.

Our intention is to address LIBOR fallback language in all of our debt agreements by the end of 2021.

Currently, we have debt and derivative instruments in place that reference LIBOR-based rates.

In the transition from the use of LIBOR to SOFR or other alternatives, the level of interest payments we incur may change.

In the transition from the use of LIBOR to SOFR or other alternatives, the level of interest payments we incur under our debt agreements may change.

In addition, although certain of our LIBOR based obligations provide for alternative methods of calculating the related interest rate payable (including transition to an alternative benchmark rate) if LIBOR is not reported, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments that are higher than, lower than, or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR was available in its current form.

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We are subject to a number of claims and legal proceedings and the risk of future litigation as described in these Risk Factors and throughout this report and as may be updated in subsequent SEC filings from time to time, including, but not limited to, with respect to Cendant and the Spin-off.

See further discussion in Note 20— Commitments and Contingencies to the Consolidated Financial Statements and Note 29— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements, both included in Part II, Item 8 of this Annual Report on Form 10-K.

See further discussion in Note 20— Commitments and Contingencies and Note 29— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements.

We cannot predict with certainty the ultimate outcome or related damages and costs of litigation and other proceedings filed or asserted by or against us.

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In the past, when we have been subjected to regulatory investigations, the amount of the fines involved were not material to our business, financial condition or results of operations.

However, we cannot predict whether any future fines that regulators might seek to impose would materially adversely affect our business, financial condition or results of operations.

Failure to maintain the security of personally identifiable and proprietary information, non-compliance with our contractual obligations or other legal obligations regarding such information or a violation of our privacy and security policies with respect to such information could adversely affect us.

While we maintain what we believe are reasonable security controls over personal and proprietary information, including the personal information of guests, shareholders and employees, any breach of or breakdown in our systems that results in the theft, loss, fraudulent use or other unauthorized release of personal or proprietary information or other data could nevertheless occur and persist for an extended period of time without detection, which could have a material adverse effect on our brands, reputation, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, losses, third-party damages and other liabilities.

Such a breach or a breakdown could also materially increase our costs to protect such information and to protect against such risks.

Our and our third-party service providers’ vulnerability to attack exists in relation to known and unknown threats.

As a consequence, the security measures we deploy are not perfect or impenetrable, and despite our investment in and maintenance of such controls, we may be unable to anticipate or prevent all unauthorized access attempts made on our systems or those of our third-party service providers.

Additionally, the legal and regulatory environment surrounding information security and privacy in the U.S.

and international jurisdictions is constantly evolving.

For example, in the U.S., California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which became effective on January 1, 2020.

Regulations implementing the CCPA continue to be under development.

Complying with the CCPA could increase our compliance cost.

Similar legislation has been proposed or adopted in other states.

Aspects of the CCPA and these other state laws and regulations, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.

Moreover, foreign data protection, privacy, consumer protection, content regulation and other laws and regulations are often more restrictive or burdensome than those in the United States.

For example, the European Union (“E.U.”) GDPR imposes significant obligations to businesses that sell products or services to E.U.

customers or otherwise control or process personal data of E.U.

Complying with GDPR caused us to update certain business practices and systems and incur costs related to continued compliance with GDPR and other international laws and regulations.

Our information technology infrastructure, including but not limited to our, and our third-party service providers’, information systems and legacy proprietary online reservation and management systems, has been and will likely continue to be vulnerable to system failures such as server malfunction or software or hardware failures, computer hacking, phishing attacks, user error, cyber-terrorism, loss of data, computer viruses and malware installation, and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information.

In addition, as we continue to transition from our legacy systems to new, cloud-based technologies, we may continue to face start-up issues that may negatively impact guests.

The increased scope and complexity of our information technology infrastructure and systems could contribute to the potential risk of security breaches or breakdown.

However, we cannot predict whether any future fines, penalties or other sanctions that regulators might seek to impose would materially adversely affect our business, financial condition or results of operations.

The insurance we carry may not always pay, or be sufficient to pay or reimburse us, for our liabilities, losses or replacement costs.

We carry insurance for general liability, property, business interruption, cyber security, and other insurable risks with respect to our business operations.

We carry insurance for general liability, property, business interruption, cyber security, directors and officers (“D&O”), and other insurable risks with respect to our business operations.

We also self-insure for certain risks up to certain monetary limits.

The terms and conditions or the amounts of coverage of our insurance may not at all times be sufficient to pay or reimburse us for the amount of our liabilities, losses or replacement costs, and there may also be risks for which we do not obtain insurance in the full amount or at all concerning a potential loss or liability, due to the cost or availability of such insurance.

in the full amount or at all concerning a potential loss or liability, due to the cost or availability of such insurance.

As a result, we may incur liabilities or losses in the operation of our business that are substantial which are not sufficiently covered by the insurance we maintain, or at all, which could have a material adverse effect on our business, financial condition and results of operations.

Following the significant casualty losses incurred by the insurance industry due to hurricanes, fires and other events, property insurance costs have been and in the future may be higher, and availability may be lower, in future periods, particularly in certain geographies.

Following the significant casualty losses incurred by the insurance industry due to hurricanes, fires, cyber security breaches and other events, property, cyber security and D&O insurance costs have increased and in the future may be higher, and availability may be lower, in future periods, particularly in certain geographies.

In addition, the effects of climate change, such as increased storm intensity and rising sea levels, may also increase the cost and decrease the available coverage levels of property insurance.

We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities.

We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities, including those used for reservation systems, payments systems, vacation exchange systems, property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems.

We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities, including those used for our travel subscription businesses, reservation systems, payments systems, vacation exchange systems, property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems.

We also maintain physical facilities to support these systems and related services.

Any natural disaster, cyberattack, disruption or other impairment in our technology capabilities and service facilities or those of our third-party service providers could result in denial or interruption of service, financial losses, customer claims, litigation or damage to our reputation, or otherwise harm our business.

In addition, any failure of our ability to provide our reservation systems, as a result of failures related to us or our third-party providers, may deter prospective resort owners from entering into agreements with us, and may expose us to liability from other parties with whom we have contracted to provide reservation services.

Similarly, failure to keep pace with developments in technology could impair our operations or competitive position.

Similarly, failure to keep pace with developments in technology, including continuing upgrades to our technology system which interface with customers, which is a significant part of our business, could impair our operations, financial results and competitive position.

Any failure of our business continuity planning as to any of these matters could have a material adverse impact on our business, brand and financial results.

The growth of our business and the execution of our business strategies depend on the services of our senior management and our associates.

We believe that our future growth depends, in part, on the continued services of our senior management team, including our President and Chief Executive Officer, Michael D.

Brown, and on our ability to successfully implement succession plans for

members of our senior management team.

The loss of any members of our senior management team, or the failure to identify successors for such positions, could adversely affect our strategic and customer relationships and impede our ability to execute our business strategies.

We believe that our business success and future growth depends, in part, on the continued services of our senior management team, including our President and Chief Executive Officer, Michael D.

Brown, and on our ability to successfully implement succession plans for members of our senior management team.

The loss of any members of our senior management team, or the failure to identify successors for such positions, could adversely affect our strategic growth, new business extensions and customer relationships and impede our ability to execute our business strategies.

In addition, insufficient numbers of talented associates could constrain our ability to maintain and expand our business.

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Many factors influence our reputation and the value of our brands including the perception held by our customers and other key stakeholders and the communities in which we do business.

Our business faces increasing scrutiny related to environmental, social and governance activities and risk of damage to our reputation and the value of our brands if we fail to act responsibly or comply with regulatory requirements in a number of areas, such as safety and security, responsible tourism, environmental stewardship and sustainability, supply chain management, climate change, diversity, human rights and modern slavery, philanthropy and support for local communities.

Our business faces increasing scrutiny related to environmental, social and governance activities and risk of damage to our reputation and the value of our brands if we fail to act responsibly or comply with regulatory requirements in a number of areas, such as business ethics and compliance, safety and security, responsible tourism, public health, environmental stewardship and sustainability, supply chain management, climate change, diversity, human rights and modern slavery, philanthropy and support for local communities.

We have publicly stated our goals related to environmental sustainability, which include reducing our water intensity and carbon emissions and increasing our renewable energy consumption.

We may also take additional actions related to climate change and environmental sustainability voluntarily or in response to increased regulations in the future that would materially increase the costs to develop and operate our resorts, which could have an adverse impact on our profitability even though such actions may be necessary to increase the long term sustainability of our business.

Current and future international operations expose us to additional challenges and risks that may not be inherent in operating solely in the U.S.

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We are responsible for certain of Cendant's contingent and other corporate liabilities.

Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy and Travelport, Travel + Leisure and Realogy generally are responsible for 37.5% and 62.5% of certain of Cendant's contingent and other corporate liabilities and associated costs including certain contingent and other corporate liabilities of Cendant or its subsidiaries to the extent incurred on or prior to August 23, 2006.

Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy and Travelport, Wyndham Worldwide Corporation and Realogy generally were responsible for 37.5% and 62.5% of certain of Cendant’s contingent and other corporate liabilities and associated costs including certain contingent and other corporate liabilities of Cendant or its subsidiaries to the extent incurred on or prior to August 23, 2006.

As a result of the completion of the Spin-off, Wyndham Hotels agreed to retain one-third of Cendant’s contingent and other corporate liabilities and associated costs;

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We may be required to record a significant non-cash impairment charge in our financial statements during the period in which any impairment of our goodwill, other intangible assets or other assets is determined, negatively impacting our results of operations and shareholders' equity.

In 2020, we recorded $56 million of asset impairment charges, primarily associated with the impact of COVID-19 on our business.

In 2020, we recorded $56 million of asset impairment charges, primarily associated with the impact of COVID-19 on our business, $6 million of which was subsequently reversed in 2021.

With the COVID-19 pandemic continuing to impact the U.S.

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Risks Related to the COVID-19 Pandemic

The global outbreak of COVID-19 has significantly negatively affected our operations and may significantly negatively affect our future business, financial condition and results of operations.

The global outbreak of COVID-19 pandemic has led, and will likely continue to lead, to disruptions in the global and U.S.

economy, in the timeshare and leisure travel industries and in our business.

Tourism and travel-related industries continue to

face significant disruption as a result of the COVID-19 pandemic, as the U.S.

government and individual states and local jurisdictions as well as foreign countries have taken, and in light of the continuing COVID-19 pandemic, will likely continue to take, actions to curb the spread of COVID-19, including encouraging or mandating social distancing and quarantines, mandating certain business closures, limiting the number of individuals that may gather in one location and implementing travel restrictions.

COVID-19 has also caused, and will likely continue to cause, volatility in the equity markets and the capital markets, generally.

Our business has been significantly negatively affected by COVID-19.

In response to COVID-19, we temporarily closed our resorts in mid-March 2020 across the globe and suspended our vacation ownership sales and marketing operations.

Our temporary resort and sales center closures led to significant declines in our VOI sales during this closure period.

We also experienced an increase in cancellations and a decrease in bookings for our travel and membership business.

As a result of these closures, we reduced our workforce and furloughed or laid off approximately 9,000 employees in March 2020, and an additional 1,400 employees during the remainder of the year.

Given the magnitude of these events, our revenues were negatively impacted and we incurred $385 million of charges directly related to COVID-19 during the year ended December 31, 2020.

As of December 31, 2020, we had reopened 81% of our resorts and the majority of these resorts have re-opened to full capacity following local health guidelines.

Approximately 5,300 employees remained laid off or furloughed at December 31, 2020.

We have reopened 86% of our sales offices;

however, revenue has not returned to pre-COVID-19 levels.

While the levels of restrictions on operations imposed by governmental authorities have reduced in most locations, there is continued uncertainty regarding restrictions going forward, which could cause additional resort and sales center closures or other restrictions or interruptions, increases in cancellations or reduction in bookings and reluctance of customers to travel.

The duration of the COVID-19 pandemic and its impact on our resort and sales centers and our ability to implement our growth strategy is uncertain, as the impact and duration of the COVID-19 outbreak continues to evolve.

Continued closure and/or reclosure of resorts and sales centers could result in additional COVID-19 charges, including idle pay for certain sales and marketing employees, and could result in potential further impairment of assets.

If the impact of COVID-19 continues or worsens, our revenues will continue to be negatively impacted.

The actions we have taken to reduce operating costs and improve efficiency, including the layoff and furloughing of a substantial number of our employees and further changes we may make in the future to reduce costs, have caused and may continue to cause us to experience operational challenges, including as a result of furloughed employees not returning to employment because they have obtained alternative employment or otherwise, and may negatively impact our ability to attract and retain associates, our reputation and market share.

The COVID-19 pandemic has significantly negatively affected our operations and may significantly negatively affect our future business, financial condition and results of operations.

COVID-19 has led to significant disruptions in the global and U.S.

economy, in the leisure travel industry and in our business.

The extent and duration of the ongoing negative effects of COVID-19 continues to be impacted by uncertainty as the pandemic continues to evolve.

As a result, the economic recovery, the recovery of our business, the market for our common stock and the capital markets generally remain volatile.

See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19 on our Business ” for more information.

In addition, the increase in the number of our employees working remotely has increased certain risks to our business, including increased demand on our information technology resources and systems, greater potential for phishing and other cybersecurity attacks, and an increase in the number of points of potential attack, and any failure to effectively manage these risks and to timely identify and respond to any cyberattacks may adversely affect our business.

The pandemic may also have long-term effects on the nature of the office environment and remote working, which may present operational challenges that could adversely affect our business.

Working remotely has caused strain for, and may adversely impact the productivity of, certain employees, which conditions, if prolonged, could harm our business.

Additionally, efforts to re-open our offices safely may not be successful, could expose our personnel to health risks and will involve additional financial burdens.

In addition, increases in unemployment due to COVID-19 as well as decreases in consumer confidence and the continuation of the measures implemented to contain the spread of the virus may continue to negatively impact our VOI owners’ ability to repay their contract receivables.

If unemployment rates increase and/or our collection experience for our vacation ownership contract receivables (“VOCRs”) declines more than we estimated, we may need to further increase our allowance for loan losses for VOCRs.

The additional $205 million allowance recorded during the year ended December 31, 2020, provided our estimated impact of a prolonged recession, but we cannot assure that additional charges may not be required in the future.

There remains significant uncertainty concerning the current and future impact of the pandemic on the U.S.

and global economy, consumer confidence, leisure travel, the timeshare industry and our business.

Some of these uncertainties and risks may include the following:

• resurgences, continued high rates of infection, and increased death rates related to COVID-19, including in regions and locations where we have a significant number of resorts;

• uncertainty regarding the ongoing length and severity of the economic downturn caused by COVID-19;

• changes in federal, state and local policies, rules and regulations which could change or otherwise impact our safety protocols and measures intended to protect our owners, guests, and team members;

• continued significant governmental restrictions, recommendations and warnings against travel, including in or to areas or locations where we have a significant number of resorts, as well as between the U.S.

The pandemic may also have long-term effects on the nature of the office environment and remote working, which may present operational challenges that could adversely affect our culture and our business.

Our corporate associates have been predominately working remotely since March 2020.

We plan to reopen our corporate offices in 2022 and adopt a hybrid work environment in which many corporate associates will work both in the office and remotely on an ongoing basis.

The re-opening of our offices may not be successful and could expose our personnel to health risks and will involve additional financial burdens.

There remains significant uncertainty concerning the current and future impact of COVID-19 on the U.S.

and global economy, consumer confidence, the leisure travel industry and our business.

Some of these uncertainties and risks include the following:

• resurgences, continued high rates of infection and hospitalization, and continued high death rates related to COVID-19, including in regions and locations where we have a significant number of resorts;

• uncertainty regarding the U.S.

and global economic impact caused by the continuation of COVID-19;

• changes in governmental policies, rules and regulations which could change or otherwise impact our safety protocols and measures intended to protect our owners, guests, and team members;

• continued governmental restrictions on and recommendations and warnings against travel in certain regions, including in or to areas or locations where we have resorts, as well as between the U.S.

and other countries, including restrictions placed by foreign governments on U.S.

citizens traveling to their countries;

• continued closures and/or curtailment of operations at many popular tourist and entertainment center destinations, reducing the demand for leisure travel;

• changing behavior of individuals and decrease in willingness to travel and stay at resorts, timeshares and other lodging facilities due to the pandemic, which may continue beyond when global health and safety conditions improve and vaccines become generally available;

• whether the steps we have taken, and in the future may continue to take, to reduce our operating costs and improve operating efficiencies, including furloughs and headcount reductions, may negatively impact the image of our brands, sales of VOIs, and our near-term and long-term financial results;

• our inability to predict the length of time it will take for our properties to return to normal operations;

• whether certain of the operating practices and efficiencies we have adopted in response to the pandemic, such as virtual tours, will be successful during the continuance of the pandemic or thereafter;

• our in-person tours materially decreased during 2020 and we expect will continue to be at depressed levels into 2021, and our VOI sales can be expected to be negatively impacted until in-person tours return to normal levels;

• we reduced project inventory and capital expenditures in 2020 in response to the pandemic, which may adversely impact future revenues;

• average number of members in our Travel and Membership segment was down significantly in 2020, and we expect this trend to continue into 2021;

• we raised FICO requirements for new owners, which is expected to strengthen our portfolio but which may adversely impact VOI sales;

• continued increased unemployment levels resulting from the pandemic may continue to impact consumer confidence and leisure travel;

• leisure travel may take longer to recover than expected following a return to normalcy, and we may see increases in cancellations or reductions in bookings, even after all government restrictions and recommendations are no longer in effect, the risks associated with the pandemic decrease and vaccines become generally available, due to reluctance to engage in discretionary spending or otherwise;

• our telesales activities during the continuance of the pandemic may not be as successful as we expect;

• continued closures and/or limitations on the number of individuals that may gather in one location at many popular tourist and entertainment center destinations, reducing the demand for leisure travel;

• our inability to predict the length of time it will take for all of our properties to return to normal operations;

• leisure travel may take longer to recover than expected, and we may see lower VOI sales or reductions in bookings, even after the risks associated with the pandemic decrease to acceptable levels, due to changing behavior of individuals and decrease in willingness to travel and stay at resorts, timeshares and other lodging facilities or reluctance to engage in discretionary spending or otherwise;

• whether the steps we have taken, and in the future may continue to take, to reduce our operating costs and improve operating efficiencies, including our ongoing operating cost reductions implemented in 2020, may negatively impact our ability to attract and retain associates, the image of our brands and market share, sales of VOIs, and our near-term and long-term financial results;

• our virtual tours and tele sales activities increased since the start of the pandemic and may not be as successful as we expect during the continuance of the pandemic or thereafter, and our VOI sales can be expected to be negatively impacted until in-person tours return to normal levels;

• average number of exchange members in our Travel and Membership segment is down as a result of the pandemic, and we expect this to continue into 2022;

• we have elected not to reopen certain sales offices which were closed as a result of the pandemic, which may adversely impact VOI sales and exchange memberships;

has experienced significant labor shortages, which has impacted most industries including the leisure travel industry and our business;

• unemployment rates increased sharply in 2020 to record high levels as a result of the COVID-19 pandemic and, although as of December 31, 2021, unemployment rates had recovered to near pre-pandemic levels, volatility in unemployment may continue to impact consumer confidence and leisure travel generally, and negatively impact our financial condition and results of operations;

• owner defaults, delinquencies and payment delays may increase if the U.S.

and global economies and consumer confidence do not rebound to pre-pandemic levels;

and global economies and consumer confidence do not rebound to pre-pandemic levels or remain volatile;

• there is no assurance that, post-pandemic, owner upgrades will return to levels which existed pre-pandemic;

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• other actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic that may result in investigations, legal claims (regardless of merit) or litigation against us.

Each of these uncertainties, risks and events associated with the COVID-19 pandemic may cause a significantly negative impact on our future business and financial results, and we are unable to predict the full extent or nature of these impacts at this time.

Each of these uncertainties, risks and events associated with COVID-19 may cause a significantly negative impact on our future business and financial results, and we are unable to predict the full extent or nature of these impacts at this time.

While we have made and continue to make efforts to mitigate the impacts of COVID-19, there can be no assurance that these efforts will be successful, and as a result, our future business, financial condition and results of operations may be significantly negatively impacted.

The volatile conditions stemming from COVID-19, as well as reactions to future pandemics or resurgences of COVID-19, could also precipitate or aggravate the other risk factors that we identify in this Item 1A, which in turn could significantly negatively affect our business, financial condition, liquidity, results of operations (including revenues and profitability) and/or stock price.

Further, COVID-19 may affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations.

The COVID-19 pandemic has impacted and may continue to impact our credit facilities and securitization facilities.

Given a range of different scenarios related to the COVID-19 impact on our business, we expect to maintain adequate liquidity.

However, the effects of COVID-19 may negatively affect our ability to comply with existing covenants under our debt agreements, increase our cost of capital or make additional capital more difficult to obtain or available only on terms less favorable to us, if at all.

Subject to the provisions of the amendment to our credit agreement (“Credit Agreement Amendment”), our secured revolving credit facility requires us to maintain a minimum interest coverage ratio of at least 2.5 to 1.0 as of the measurement date and a maximum first lien leverage ratio not to exceed 4.25 to 1.0 as of the measurement date.

However, the Credit Agreement Amendment establishes a relief period with respect to our secured revolving credit facility, which began on July 15, 2020, and will last until the earlier of April 1, 2022, and the termination by us of the relief period, subject to certain conditions (“Relief Period”).

The Credit Agreement Amendment increases the leverage-based financial covenant by varying levels for each applicable quarter during the Relief Period, in each case which represents an increase to the existing leverage-based financial covenant of 4.25 to 1.0.

As of December 31, 2020, the Credit Agreement Amendment increased the maximum first lien leverage ratio to 7.50 to 1.0.

Following the Relief Period, the Credit Agreement Amendment re-establishes the existing leverage-based financial covenant of 4.25 to 1.0, tested on the basis of trailing 12-month consolidated EBITDA (as defined in the credit agreement).

In addition, the Credit Agreement Amendment, among other things, increases the interest rate applicable to borrowings under our secured revolving credit facility based on our first lien leverage ratio in any quarter if it exceeds 4.25 to 1.0, until the end of the Relief Period;

adds a new minimum liquidity covenant, tested quarterly until the end of the Relief Period, of (i) $250 million plus (ii) 50% of the aggregate amount of dividends paid after the Amendment Effective Date and on or prior to the last day of the relevant fiscal quarter and requires us to maintain an interest coverage ratio (as defined in the credit agreement) of not less than 2.00 to 1.0, which shall increase to 2.50 to 1.0 after the Relief Period, the level existing prior to the Amendment Effective Date.

Finally, the Credit Agreement Amendment amends the definition of “Material Adverse Effect” in the credit agreement to take into consideration the COVID-19 pandemic during the Relief Period, to the extent disclosed prior to July 15, 2020, in our public filings and certain other specified materials.

The continued impact of COVID-19 on our industry and business may impact our ability to maintain compliance with these debt covenants in the future.

If we fail to comply with our debt covenants, including as amended by the Credit Agreement Amendment during the Relief Period, the lenders under our secured revolving credit facility and term loan B, subject to our right to cure, would have the right to terminate and declare the outstanding loans to be immediately due and payable, and any such default could trigger a cross-default, acceleration or other consequences under other indebtedness or financial instruments to which we are a party.

Any continued impact of COVID-19 on our industry and business will also lead to a higher first lien leverage ratio in the future.

The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date.

As of December 31, 2020, our interest coverage ratio was 3.0 to 1.0.

The first lien leverage ratio is calculated by dividing consolidated first lien debt (as defined in the credit agreement) as of the measurement date by consolidated EBITDA (as defined in the credit agreement) as measured on a trailing 12-month basis preceding the measurement date.

As of December 31, 2020, our first lien leverage ratio was 5.4 to 1.0.

These ratios do not include interest expense or indebtedness related to any qualified securitization financing (as defined in the credit agreement).

As of December 31, 2020, we were in compliance with all of the financial covenants described above.

Under the credit agreement, if our first lien leverage ratio exceeds 4.25 to 1.0, the interest rate on revolver borrowings would increase, and we would be subject to higher fees associated with our letters of credit.

Given the first lien leverage ratio at December 31, 2020 the interest rate on the revolver borrowings will increase 25 basis points effective March 1, 2021.

COVID-19 has also impacted the public asset-backed securities market, and thus impacts our ability to issue asset-backed securities.

In April 2020, we successfully closed on a $325 million private securitization financing at a higher cost compared to transactions we have completed in the past, though it was favorable to similar transactions completed in the public market at that time.

In August 2020, we successfully closed on a $575 million securitization financing at a similar cost compared to transactions we have completed in the past.

The impact of COVID-19 on the financial markets may have an impact on the availability of this type of funding and other types of financing in the near term or longer term and terms for hospitality/travel-related companies may command a higher interest rate.

The ongoing effects of COVID-19 on our operations could have a significant negative impact on our financial results, capital and liquidity, as well as our credit rating, and such negative impact could continue well beyond the containment of such outbreak.

Further, COVID-19 may affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present material risks to our operations.

COVID-19 has impacted and may continue to impact our credit facilities and securitization facilities.

The effects of COVID-19 may negatively affect our ability to comply with existing covenants under our debt agreements, increase our cost of capital or make additional capital more difficult to obtain or available only on terms less favorable to us, if at all.

In response to the impact of COVID-19 on our business, on July 15, 2020, we entered into an amendment to the credit agreement governing our revolving credit facility and term loan B (the “First Amendment”), which among other changes, provided financial covenant flexibility and imposed certain restrictions during a relief period that commenced on July 15, 2020 and was scheduled to end on April 1, 2022 (the “Relief Period”).

As a result of improved business conditions, on October 22, 2021, we entered into a second amendment to our credit agreement (the “Second Amendment”), which among other changes terminated the Relief Period early.

See 16— Debt to the Consolidated Financial Statements for additional information.

However, the continued impact of COVID-19 on our industry and business may impact our ability to maintain compliance with

our debt covenants in the future.

If we fail to comply with our debt covenants, the lenders under our secured revolving credit facility and term loan B, subject to our right to cure, would have the right to terminate and declare the outstanding loans to be immediately due and payable, and any such default could trigger a cross-default, acceleration or other consequences under other indebtedness or financial instruments to which we are a party.

COVID-19 also temporarily impacted the asset-backed securities market in 2020, and thus impacted the cost of issuing asset-backed securities.

As of December 31, 2021, we had $698 million of availability under our asset-backed conduit facilities.

Any further disruption to the asset-backed securities market could negatively impact our ability to obtain asset-backed financings or the terms of such financings.

Our liquidity, as it relates to our VOCRs securitization program, could be adversely affected if we were to fail to renew or replace our conduit facilities on their expiration dates, or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying VOCRs deteriorate as a result of the COVID-19 crisis or otherwise.

Our ability to sell securities backed by our VOCRs depends on the continued

ability and willingness of capital market participants to invest in such securities, which may be negatively affected by COVID-19 and its impact on economic conditions and the credit of our VOCRs pools.

In connection with the sale of our European vacation rentals business, Wyndham Hotels provided certain post-closing credit support in the form of guarantees.

As part of this agreement Wyndham Hotels is required to maintain minimum credit ratings which increased to Ba1 for Moody’s and BB+ for S&P.

In April 2020, S&P downgraded Wyndham Hotels’ credit rating from BB+ to BB.

Although any ultimate exposure relative to indemnities retained from the European vacation rentals sale will be shared two-thirds by Travel + Leisure and one-third by Wyndham Hotels, as the selling entity, we are responsible for administering additional security to enhance corporate guarantees in the event either company falls below a certain credit rating threshold.

As a result of the Wyndham Hotels credit ratings downgrade, we posted £58 million surety bond and a £36 million letter of credit ($79 million and $48 million as of December 31, 2020) and we will maintain them until such time that either companies’ S&P and Moody’s credit rating improves to BB+/Ba1.

In addition, as a result of Moody’s downgrading our credit rating from Ba2 to Ba3 in May 2020, the coupon rate on the 5.65% notes due 2024, the 6.60% notes due 2025, and the 6.00% notes due 2027 each increased by 25 basis points per annum, effective October 1, 2020.

Since issuance, the interest rates on these notes have increased 150 basis points as of December 31, 2020, with the maximum potential additional increase at 50 basis points.

Any disruption to the asset-backed securities market could negatively impact our ability to obtain asset-backed financings or the terms of such financings.

Our liquidity, as it relates to our vacation ownership contract receivables (“VOCRs”) securitization program, could be adversely affected if we were to fail to renew or replace our conduit facilities on their expiration dates, or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying VOCRs deteriorate as a result of the COVID-19 crisis or otherwise.

Our ability to sell securities backed by our VOCRs depends on the continued ability and willingness of capital market participants to invest in such securities, which may be negatively affected by COVID-19 and its impact on economic conditions and the credit of our VOCRs pools.

We utilize surety bonds in our vacation ownership business for sales and development transactions in order to meet regulatory requirements of certain states.

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An unpaid creditor could claim that we did not receive fair consideration or reasonably equivalent value in the Spin-off, and that the Spin-off left us insolvent or with unreasonably small capital or that we intended or believed we would incur debts beyond our ability to pay such debts as they mature.

If a court were to agree with such a plaintiff, then such court could void the Spin-off as a fraudulent transfer and could impose a number of different remedies, including without limitation, returning the assets or the shares of common stock in Wyndham Hotels being distributed as part of the Spin-off or providing us with a claim for money damages against the spun-off business in an amount equal to the difference between the consideration received by us and the fair market value of Wyndham Hotels at the time of the Spin-off.

and the fair market value of Wyndham Hotels at the time of the Spin-off.

Following completion of the Spin-off, our success depends in part on our ongoing relationship with Wyndham Hotels.

In connection with the Spin-off, we entered into a number of agreements with Wyndham Hotels that govern the ongoing relationships between Wyndham Hotels and Travel + Leisure following the Spin-off.

Our success will depend, in part, on the maintenance of these ongoing relationships with Wyndham Hotels as well as Wyndham Hotels’ performance of its obligations under these agreements.

In connection with the Spin-off, we entered into a number of agreements with Wyndham Hotels that govern the ongoing relationships between Wyndham Hotels and Travel + Leisure Co.

following the Spin-off.

Our success depends, in part, on the maintenance of these ongoing relationships with Wyndham Hotels as well as Wyndham Hotels’ performance of its obligations under these agreements.

If we are unable to maintain a good relationship with Wyndham Hotels, or if Wyndham Hotels does not perform its obligations under these agreements, fails to protect the trademarks, trade names and intellectual property that we license from it or if these brands deteriorate or materially change in an adverse manner, or the reputation of these brands declines, our brand may be negatively affected, our profitability and revenues could decrease and our growth potential may be adversely affected.

We also have successfully utilized and leveraged our relationship with Wyndham Hotels’ loyalty program and any cessation of or adverse change in that loyalty program could be expected to materially adversely impact our business, growth strategy and financial results.

We are responsible for certain contingent and other corporate liabilities incurred prior to the Spin-off.

In accordance with the agreements we entered into with Wyndham Hotels in connection with the Spin-off, Wyndham Hotels assumed one-third and Travel + Leisure assumed two-thirds of certain contingent and other corporate liabilities of Wyndham Worldwide incurred prior to the distribution, including liabilities of Wyndham Worldwide related to certain terminated or divested businesses, certain general corporate matters, and any actions with respect to the separation plan.

Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of our obligations related to Wyndham Hotels.

In accordance with the agreements we entered into with Wyndham Hotels in connection with the Spin-off, Wyndham Hotels assumed one-third and Travel + Leisure Co.

assumed two-thirds of certain contingent and other corporate liabilities of Wyndham Worldwide incurred prior to the Distribution, including liabilities of Wyndham Worldwide related to certain terminated or divested businesses, certain general corporate matters, and any actions with respect to the separation plan.

See Note 29— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations related to Wyndham Hotels.

If Wyndham Hotels was to default on its obligations, we would be required to pay the amounts in default.

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Certain directors who serve on our Board also serve on the board of directors of and own common stock of Wyndham Hotels.

Certain directors who serve on our Board currently serve as directors of and own shares of common stock of Wyndham Hotels following the Spin-off, which may create, or appear to create, conflicts of interest, in particular when our or Wyndham Hotels’ management and directors face decisions that could have different implications for us and Wyndham Hotels, including the resolution of any dispute regarding the terms of the agreements governing the Spin-off and the relationship between us and Wyndham Hotels after the Spin-off or any other commercial agreements entered into in the future between us and Wyndham Hotels.

Certain directors who serve on our Board currently serve as directors of and own shares of common stock of Wyndham Hotels, which may create, or appear to create, conflicts of interest, in particular when our or Wyndham Hotels’ management and directors face decisions that could have different implications for us and Wyndham Hotels, including the resolution of any dispute regarding the terms of the agreements governing the Spin-off and the relationship between us and Wyndham Hotels or any other commercial agreements entered into in the future between Travel + Leisure Co.

and Wyndham Hotels.

If the Distribution, together with certain related transactions, were to fail to qualify as a reorganization for U.S.

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federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code in which no gain or loss is recognized by us or our shareholders, except, in the case of our shareholders, for cash received in lieu of fractional shares.

The opinions of our Spin-off tax advisors were based on and relied on, among other things, certain assumptions as well as on the continuing accuracy of certain factual representations and statements that we and Wyndham Hotels made to the Spin-off tax advisors and certain covenants that Travel + Leisure and Wyndham Hotels entered into, including covenants contained in the Tax Matters Agreement described below.

If any of these representations or statements are or become inaccurate or incomplete, or if Travel + Leisure or Wyndham Hotels breach any of such covenants, the Distribution and such related transactions might not qualify for such tax treatment.

and Wyndham Hotels entered into, including covenants contained in the Tax Matters Agreement.

If any of these representations or statements are or become inaccurate or incomplete, or if Travel + Leisure Co.

or Wyndham Hotels breach any of such covenants, the Distribution and such related transactions might not qualify for such tax treatment.

The opinions of the Spin-off tax advisors are not binding on the IRS or a court, and there can be no assurance that the IRS will not challenge the validity of the distribution and such related transactions as a reorganization for U.S.

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The trading price of our common stock may continue to fluctuate depending upon many factors, some of which may be beyond our control, including our quarterly or annual earnings or those of other companies in our industry;

customer acceptance and success of our new business extensions;

actual or anticipated fluctuations in our operating results due to seasonality and other factors related to our business;

our ability or perceived ability

to realize the benefits of the Spin-off;

our ability or perceived ability to realize the benefits of the Spin-off;

our credit ratings, including the impact of the Spin-off and the global COVID-19 pandemic on such ratings;

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announcements by us or our competitors of significant acquisitions or dispositions;

the lack of securities analysts covering our common stock;

changes in earnings estimates by securities analysts or our ability to meet those estimates;

the lack of securities analysts covering our

common stock;

lower than expected earnings or revenues or outlook for such financial measures, changes in earnings or revenues estimates by us or by securities analysts or our ability to meet those estimates;

the operating and stock price performance of comparable companies;

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These broad market fluctuations may adversely affect the trading price of our common stock.

Provisions in our certificate of incorporation and by-laws and under Delaware law may prevent or delay an acquisition of Travel + Leisure which could impact the trading price of our common stock.

Provisions in our certificate of incorporation and by-laws and under Delaware law may prevent or delay an acquisition of Travel + Leisure Co.

which could impact the trading price of our common stock.

Our certificate of incorporation and by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids.

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During 2020, in response to the unprecedented COVID-19 pandemic, our Board, acting prudently, reduced our dividend and suspended our share repurchase program.

While we expect to continue to pay dividends to shareholders during the continuance of the COVID-19 pandemic, and a continuance of dividends is permitted under our modified credit facilities subject to certain conditions, we cannot assure that our Board may not need to consider further dividend reductions in the future in response to continuing effects of the COVID-19 pandemic or otherwise.

While the Relief Period restrictions under our First Amendment on share repurchases and dividend payments was terminated by amendment on October 22, 2021, we cannot assure that our Board may not need to consider limitations, reductions or other restrictions on share repurchases and dividends in the future in response to continuing effects of the COVID-19 pandemic or otherwise.

UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors