What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-24 · 620 added, 763 removed, 1238 unchanged (53% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Consolidated Statements of (Loss)/Income for the years ended December 31, 2020, 2019, and 2018 72

Consolidated Statements of Comprehensive (Loss)/Income for the years ended December 31, 2020, 2019, and 2018 73

— PCAOB ID No.

Consolidated Statements of Income/(Loss) for the years ended December 31, 2021, 2020, and 2019

Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2021, 2020, and 2019

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019

Consolidated Statements of Equity/(Deficit) for the years ended December 31, 2020, 2019, and 2018 76

Consolidated Statements of Deficit for the years ended December 31, 2021, 2020, and 2019

Notes to Consolidated Financial Statements

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Transactions with Former Parent and Former Subsidiaries 107

Selected Quarterly Financial Data - (unaudited) 126

Related Party Transactions 109

Subsequent Events 127

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Travel + Leisure Co.

(formerly Wyndham Destinations, Inc.) and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of (loss)/income, comprehensive (loss)/income, cash flows, and equity/(deficit) for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

(formerly Wyndham Destinations, Inc.) and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income/(loss), comprehensive income/(loss), cash flows, and deficit for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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A further qualitative assessment is also performed by the Company which considers whether any external economic conditions or internal portfolio characteristics exist which indicate an adjustment is necessary to reflect expected impacts on the contract receivable portfolio.

Due to the economic disruption resulting from COVID-19, the Company estimated an additional loan loss allowance related to the impacts on the owners’ ability to repay their contract receivables.

Due to the economic disruption resulting from COVID-19 during the first quarter of 2020, the Company estimated an additional loan loss allowance related to the impacts on the owners’ ability to repay their contract receivables.

The Company based its COVID-19 loan loss estimate upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

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• We evaluated the predictability of the Company’s models through analyzing the results of a look-back analysis.

• We utilized our credit specialists to evaluate the Static Pool model and COVID-19 loan loss estimate.

/s/ Deloitte & Touche LLP

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TRAVEL + LEISURE CO.

CONSOLIDATED STATEMENTS OF (LOSS)/INCOME

CONSOLIDATED STATEMENTS OF INCOME/(LOSS)

(In millions, except per share amounts)

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COVID-19 related costs 4 88 —

Asset impairments 52 27 ( 4 )

Restructuring 39 9 16

Separation and related costs — — 45

Restructuring ( 1 ) 39 9

Asset impairments/(recovery) ( 5 ) 52 27

Total expenses 2,516 2,265 3,299

Gain on sale of business — — ( 68 )

Operating (loss)/income ( 105 ) 812 523

Other (income), net ( 14 ) ( 23 ) ( 38 )

Operating income/(loss) 618 ( 105 ) 812

Interest expense 198 192 162

Interest (income) ( 3 ) ( 7 ) ( 7 )

(Loss)/income before income taxes ( 276 ) 680 396

(Benefit from)/provision for income taxes ( 23 ) 191 130

Net (loss)/income from continuing operations ( 253 ) 489 266

Loss from operations of discontinued businesses, net of income taxes — — ( 50 )

Other (income), net ( 6 ) ( 14 ) ( 23 )

Income/(loss) before income taxes 429 ( 276 ) 680

Provision/(benefit) for income taxes 116 ( 23 ) 191

Net income/(loss) from continuing operations 313 ( 253 ) 489

(Loss)/gain on disposal of discontinued business, net of income taxes ( 5 ) ( 2 ) 18

Net (loss)/income attributable to Travel + Leisure shareholders $ ( 255 ) $ 507 $ 672

Net income/(loss) attributable to Travel + Leisure Co.

shareholders $ 308 $ ( 255 ) $ 507

Basic earnings/(loss) per share

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TRAVEL + LEISURE CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

( In millions )

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2021 2020 2019

Net (loss)/income attributable to Travel + Leisure shareholders $ ( 255 ) $ 507 $ 672

Other comprehensive income/(loss), net of tax

Net income/(loss) attributable to Travel + Leisure Co.

shareholders $ 308 $ ( 255 ) $ 507

Other comprehensive (loss)/income, net of tax

Foreign currency translation adjustments, net of tax ( 32 ) 37 —

Defined benefit pension plans, net of tax — ( 1 ) —

Other comprehensive income/(loss), net of tax 36 — ( 33 )

Comprehensive (loss)/income attributable to Travel + Leisure shareholders $ ( 219 ) $ 507 $ 639

Other comprehensive (loss)/income, net of tax ( 32 ) 36 —

Comprehensive income/(loss) attributable to Travel + Leisure Co.

shareholders $ 276 $ ( 219 ) $ 507

See Notes to Consolidated Financial Statements.

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Operating activities

Net (loss)/income $ ( 255 ) $ 507 $ 672

Loss from operations of discontinued businesses, net of income taxes — — 50

Net income/(loss) $ 308 $ ( 255 ) $ 507

Loss/(gain) on disposal of discontinued business, net of income taxes 5 2 ( 18 )

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

Depreciation and amortization 126 121 138

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

Provision for loan losses 129 415 479

Deferred income taxes ( 88 ) 79 122

Depreciation and amortization 124 126 121

Stock-based compensation 32 20 24

Asset impairments 52 36 5

Gain on sale of business — ( 68 ) —

Non-cash lease expense 23 31 —

Non-cash interest 22 23 21

Non-cash lease expense 17 23 31

Gain on sale of business — — ( 68 )

Asset impairments/(recovery) ( 5 ) 52 36

Deferred income taxes ( 39 ) ( 88 ) 79

Other, net 1 ( 9 ) 9

Net change in assets and liabilities, excluding impact of acquisitions and dispositions:

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Other assets 32 23 1

Deferred income ( 100 ) 10 7

Accounts payable, accrued expenses, and other liabilities 24 ( 21 ) ( 151 )

Other, net ( 9 ) 9 7

Deferred income ( 72 ) ( 100 ) 10

Net cash provided by operating activities - continuing operations 568 374 453

Net cash (used in)/provided by operating activities - discontinued operations — ( 1 ) 150

Net cash used in operating activities - discontinued operations — — ( 1 )

Net cash provided by operating activities 568 374 452

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Property and equipment additions ( 57 ) ( 69 ) ( 108 )

Acquisition of business, net of cash acquired — ( 51 ) ( 5 )

Acquisitions ( 37 ) — ( 51 )

Proceeds from asset sales — — 6

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Principal payments on debt ( 562 ) ( 519 ) ( 2,892 )

Repayments of commercial paper, net — — ( 147 )

Proceeds from notes issued and term loan 643 643 346

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Dividends to shareholders ( 109 ) ( 138 ) ( 166 )

Cash transferred to Wyndham Hotels related to Spin-off — ( 69 ) ( 476 )

Proceeds from issuance of common stock 7 11 —

Payment of deferred acquisition consideration ( 30 ) ( 11 ) —

Repurchase of common stock ( 25 ) ( 128 ) ( 340 )

Debt issuance/modification costs ( 20 ) ( 20 ) ( 22 )

Payment of deferred acquisition consideration ( 11 ) — —

Net share settlement of incentive equity awards ( 9 ) ( 2 ) ( 4 )

Other, net — — ( 4 )

Net cash provided by/(used in) financing activities - continuing operations 502 ( 289 ) ( 1,786 )

Net cash provided by financing activities - discontinued operations — — 2,066

Net cash provided/(used in) by financing activities 502 ( 289 ) 280

Cash transferred to Wyndham Hotels related to Spin-off — — ( 69 )

Proceeds from issuance of common stock 11 7 11

Net cash (used in)/provided by financing activities ( 1,288 ) 502 ( 289 )

Effect of changes in exchange rates on cash, cash equivalents and restricted cash ( 7 ) 4 1

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Restricted cash 128 121 147

Cash and cash equivalents and restricted cash included in assets of discontinued operations and held-for-sale business — — 31

Cash and cash equivalents $ 369 $ 1,196 $ 355

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TRAVEL + LEISURE CO.

CONSOLIDATED STATEMENTS OF EQUITY/(DEFICIT)

CONSOLIDATED STATEMENTS OF DEFICIT

(In millions, except per share amounts)

Common Shares Outstanding Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss)/Income Non-controlling Interest Total Equity/(Deficit)

Common Shares Outstanding Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interest Total Deficit

Balance as of December 31, 2018 95.0 $ 2 $ ( 6,043 ) $ 4,077 $ 1,442 $ ( 52 ) $ 5 $ ( 569 )

Beginning balance adjustment due to change in accounting principle — — — — ( 9 ) ( 8 ) — ( 17 )

Net income — — — — 507 — — 507

Other comprehensive loss — — — — — ( 33 ) — ( 33 )

Issuance of shares for RSU vesting 0.3 — — — — — — —

Net share settlement of stock-based compensation — — — ( 4 ) — — — ( 4 )

Employee stock purchase program 0.2 — — 11 — — — 11

Change in stock-based compensation — — — 24 — — — 24

Change in stock-based compensation and impact of equity restructuring for Board of Directors — — — ( 9 ) — — — ( 9 )

Repurchase of common stock ( 7.6 ) — ( 340 ) — — — — ( 340 )

Dividends ($1.89 per share) (a)

— — — — ( 191 ) — — ( 191 )

Dividends ($1.80 per share) — — — — ( 167 ) — — ( 167 )

Distribution for separation of Wyndham Hotels and adjustments related to discontinued business — — — — 3 — — 3

Acquisition of a business 0.2 — — 10 — — — 10

Non-controlling interest ownership change — — — — — — 1 1

Balance as of December 31, 2019 88.1 2 ( 6,383 ) 4,118 1,785 ( 52 ) 6 ( 524 )

Net income — — — — 507 — — 507

Net loss — — — — ( 255 ) — — ( 255 )

Other comprehensive income — — — — — 36 — 36

Issuance of shares for RSU vesting 0.2 — — — — — — —

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Dividends ($1.60 per share) — — — — ( 140 ) — — ( 140 )

Distribution for separation of Wyndham Hotels and adjustments related to discontinued business — — — — 3 — — 3

Acquisition of a business 0.5 — — 14 — — — 14

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Balance as of December 31, 2020 85.9 2 ( 6,508 ) 4,157 1,390 ( 16 ) 7 ( 968 )

Net loss — — — — ( 255 ) — — ( 255 )

Other comprehensive income — — — — — 36 — 36

Net income — — — — 308 — — 308

Other comprehensive loss — — — — — ( 32 ) — ( 32 )

Stock option exercises 0.1 — — 4 — — — 4

Issuance of shares for RSU vesting 0.3 — — — — — — —

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Dividends ($1.25 per share) — — — — ( 111 ) — — ( 111 )

Acquisition of a business — — — 14 — — — 14

Non-controlling interest ownership change — — — — — — 1 1

Balance as of December 31, 2021 85.9 $ 2 $ ( 6,534 ) $ 4,192 $ 1,587 $ ( 48 ) $ 7 $ ( 794 )

(a) Includes dividends declared by Wyndham Worldwide Corporation during the first quarter of 2018, prior to the spin-off of Wyndham Hotels & Resorts, Inc.

and subsequent dividends declared by Travel + Leisure Co.

(formerly, Wyndham Destinations, Inc.).

See Notes to Consolidated Financial Statements.

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On January 5, 2021, Wyndham Destinations, Inc.

acquired the Travel + Leisure brand and all related assets from Meredith Corporation (“Meredith”).

acquired the Travel + Leisure brand and related assets from Meredith Corporation.

The aggregate purchase price was $ 100 million, of which $ 55 million was paid during 2021.

The remaining payments are to be completed by June 2024.

In connection with this acquisition, Wyndham Destinations, Inc.

changed its name to Travel + Leisure Co.

and changed its ticker symbol to TNL on February 17, 2021.

The newly named Travel + Leisure Co.

and its subsidiaries (collectively, “Travel + Leisure,” or the “Company,” formerly Wyndham Destinations, Inc.) is a global provider of hospitality services and travel products.

The Company operates in two segments:

Vacation Ownership (formerly Wyndham Vacation Clubs) and Travel and Membership (formerly Vacation Exchange or Panorama).

In connection with the Travel + Leisure brand acquisition the Company elected to update its segment names to better align with how the segments will be referred to internally and externally.

and its ticker symbol to TNL on February 17, 2021.

Travel + Leisure Co.

and its subsidiaries (collectively, “Travel + Leisure Co.,” or the “Company,” formerly Wyndham Destinations, Inc.) is a global provider of hospitality services and travel products.

The Company has two reportable segments:

Vacation Ownership and Travel and Membership.

In connection with the Travel + Leisure brand acquisition the Company updated the names and composition of its reportable segments to better align with how the segments are managed.

The Vacation Ownership segment develops, markets, and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.

This segment is wholly comprised of the Wyndham Destinations business line.

The following brands operate under the Wyndham Destinations business line:

Club Wyndham, WorldMark by Wyndham, Shell Vacations Club, Margaritaville Vacation Club by Wyndham, and Presidential Reserve by Wyndham.

The Travel and Membership segment operates a variety of travel businesses, including three vacation exchange brands, a home exchange network, travel technology platforms, travel memberships, and direct-to-consumer rentals.

The results of operations for 2020 include impacts related to the novel coronavirus global pandemic (“COVID-19”), which have been significantly negative for the travel industry, the Company, its customers, and employees.

The Company’s response to COVID-19 initially focused on the health and safety of its owners, members, guests, and employees, when it closed the majority of its resorts and sales centers.

As a result, the Company significantly reduced its workforce and furloughed thousands of employees.

As of December 31, 2020, the Company has reopened 81 % of its resorts ( 92 % as of the date of this filing) and reopened 86 % of its sales offices ( 92 % as of the date of this filing).

Throughout 2020, many of the Company’s employees returned to work as locations reopened;

however, the Company exited the year with approximately 5,300 employees either laid off or furloughed.

The Company’s reopening plans were negatively impacted in the fourth quarter of 2020 by government shutdowns in California and Hawaii, which required temporarily closing resorts previously reopened.

The Company estimates that the remaining suspended operations will resume in early 2021.

Given these significant events, the Company’s revenues were negatively impacted and $ 385 million of charges related to COVID-19 were incurred during the year ended December 31, 2020, which are discussed in further detail in Note 26— COVID-19 Related Items .

The Company was also keenly focused on preserving cash, cutting costs, and managing liquidity.

As a precautionary measure to enhance liquidity, the Company drew down its $ 1.0 billion revolving credit facility at the end of the first quarter of 2020, and subsequently issued new $ 650 million senior secured notes, with a portion of these proceeds used to pay down borrowings under its revolving credit facility.

The Company also amended the credit agreement for its revolving credit facility and term loan B, which provided flexibility during the relief period spanning from July 15, 2020 through April 1, 2022.

This segment is comprised of the Panorama and the Travel + Leisure Group business lines.

With the formation of the Travel + Leisure Group, the Company decided that the operations of its Extra Holidays business, which focuses on direct-to-consumer bookings, better aligns with the operations of this new business line and therefore transitioned the management of the Extra Holidays business to the Travel and Membership segment.

As such, the Company reclassified the results of its Extra Holidays business, which was previously reported within the Vacation Ownership segment, into the Travel and Membership segment.

Prior period segment information has been restated to reflect this change.

The following brands operate under the Panorama business line:

RCI, Panorama Travel Solutions, Alliance Reservations Network (“ARN”), 7Across, The Registry Collection, and Love Home Swap.

The Travel + Leisure Group operates Travel + Leisure GO, Travel + Leisure Travel Clubs, and the Extra Holidays brands.

Impact of COVID-19

The results of operations for 2021 and 2020 include impacts related to the novel coronavirus global pandemic (“COVID-19”), which have been significantly negative for the travel industry, the Company, its customers, and employees.

In response to COVID-19, the Vacation Ownership segment temporarily closed its resorts in mid-March 2020 across the globe and suspended its sales and marketing operations.

In the Travel and Membership segment, affiliate resort closures and regional travel restrictions contributed to decreased bookings and increased cancellations.

As a result, the Company significantly reduced its workforce and furloughed thousands of associates in the second quarter of 2020.

As of December 31, 2021, the Company has reopened all of the resorts and sales offices in North America that it expects to reopen.

The remaining closed resorts and sales offices that the Company intends to reopen are located in the South Pacific and are expected to reopen in 2022, contingent upon the lifting of government imposed travel restrictions.

As a result of these reopenings the majority of the Company’s furloughed employees have returned to work.

As a precautionary measure to enhance liquidity, in the first quarter of 2020 the Company drew down its $ 1.0 billion revolving credit facility and suspended its share repurchase activity, and in the third quarter of 2020 amended the credit agreement governing its revolving credit facility and term loan B (“First Amendment”).

The First Amendment provided flexibility during the relief period spanning from July 15, 2020 through April 1, 2022, or upon earlier termination by the Company (“Relief Period”).

The Company has since repaid its $ 1.0 billion revolving credit facility.

During the fourth quarter of 2021, the Company renewed the credit agreement governing its $ 1.0 billion revolving credit facility and term loan B (“Second Amendment”).

The Second Amendment updated the terms and maturity date of the revolving credit facility, extending the maturity date to October 2026.

In addition, the Second Amendment terminated the Relief Period and restrictions regarding share repurchases, dividends, and acquisitions established by the First Amendment.

See Note 16— Debt for additional details.

Additionally, the Company suspended share repurchase activity since March 2020.

On April 29, 2020, the Company successfully closed on a $ 325 million private securitization financing.

While this transaction was at a higher cost compared to transactions the Company has completed in the past, it was favorable to similar transactions completed in the public market at that time.

The Company also closed on a $ 575 million securitization financing on August 13, 2020, at a similar cost compared to transactions it has completed in the past.

These transactions positively impacted the Company’s liquidity and reinforced its expectation to maintain adequate liquidity for the near future.

On August 7, 2019, the Company acquired Alliance Reservations Network (“ARN”) for $ 102 million ($ 97 million net of cash acquired).

Given the significant COVID-19 related events, the Company’s revenues were negatively impacted and while revenues are continuing to recover, not all product and service lines have yet reached pre-pandemic levels.

The Company reversed $ 61 million of COVID-19 charges for the year ended December 31, 2021, compared to $ 385 million of charges incurred in 2020.

The $ 385 million of charges incurred for the year ended December 31, 2020 included a $ 205 million COVID-19 related loan loss provision recorded as a result of the Company’s evaluation of the impact of COVID-19 on its owners’ ability to repay their vacation ownership contract receivables (“VOCRs”).

The $ 61 million of net reversals in 2021 included the release of $ 91 million of the COVID-19 related allowance for loan losses, as the Company has continued to experience improvements in net new defaults.

Refer to Note 26— COVID-19 Related Items for additional details.

Alliance Reservations Network Acquisition

On August 7, 2019, the Company acquired Alliance Reservations Network for $ 102 million ($ 97 million net of cash acquired).

ARN provides private-label travel booking technology solutions.

This acquisition was undertaken for the purpose of accelerating growth at Travel and Membership by increasing the offerings available to its members and affiliates.

The Company has recognized the assets and liabilities of ARN based on estimates of their acquisition date fair values, including the impacts of certain post-closing adjustments.

ARN is reported within the Travel and Membership segment.

See Note 5— Acquisitions for additional details.

During 2018, the Company completed the sale of its European vacation rentals business and completed the spin-off of its hotel business (“Spin-off”) into a separate publicly traded company, Wyndham Hotels & Resorts, Inc.

(“Wyndham Hotels”).

This transaction was effected through a pro rata distribution of the new hotel entity’s stock to Travel + Leisure shareholders.

In connection with the Spin-off, the Company entered into certain agreements with Wyndham Hotels to implement the legal and structural separation, govern the relationship between the Company and Wyndham Hotels up to and after the completion of the separation, and allocate various assets, liabilities, and obligations, including, among other things, employee benefits, intellectual property, and tax-related assets and liabilities between the Company and Wyndham Hotels.

The two public companies have entered into long-term exclusive license agreements to retain their affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and customer cross-sell initiatives.

For all relevant periods presented, the Company has classified the results of operations for its hotel business and its European vacation rentals business as discontinued operations.

See Note 6— Discontinued Operations for further details.

Also during 2018, the Company decided to explore strategic alternatives for its North American vacation rentals business and on October 22, 2019, completed the sale of this business for $ 162 million.

The assets and liabilities of this business were classified as held-for-sale as of December 31, 2018.

This business did not meet the criteria to be classified as a discontinued operation;

therefore, the results of operations are reflected within continuing operations on the Consolidated Statements of (Loss)/Income through the date of sale.

See Note 7— Held-for-Sale Business for further details.

Basis of Presentation

The accompanying Consolidated Financial Statements in this Annual Report on Form 10-K include the accounts and transactions of Travel + Leisure, as well as the entities in which Travel + Leisure directly or indirectly has a controlling financial interest.

The accompanying Consolidated Financial Statements in this Annual Report on Form 10-K include the accounts and transactions of Travel + Leisure Co., as well as the entities in which Travel + Leisure Co.

directly or indirectly has a controlling financial interest.

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S.

All intercompany balances and transactions have been eliminated in the Consolidated Financial Statements.

In addition, certain prior period amounts have been reclassified to comply with newly adopted accounting standards.

In addition, prior period segment results have been restated to reflect the aforementioned reclassification of the Extra Holidays business into the Travel and Membership segment.

The Company presents an unclassified balance sheet which conforms to that of the Company’s peers and industry practice.

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When evaluating an entity for consolidation, the Company first determines whether an entity is a variable interest entity (“VIE”).

If the entity is deemed to be a VIE, the Company determines whether it would be the entity’s primary beneficiary and consolidates those VIEs for which the Company would be the primary beneficiary.

If the entity is deemed to be a VIE, the Company consolidates those VIEs for which the Company is the primary beneficiary.

The Company will also consolidate an entity not deemed a VIE upon determination that the Company has a controlling financial interest.

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REVENUE RECOGNITION

In 2018, the Company adopted the Revenue from Contracts with Customers guidance utilizing the full retrospective transition method.

Refer to Note 3— Revenue Recognition for full details of the Company’s revenue recognition policies.

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Securitizations.

In accordance with the contractual requirements of the Company’s various vacation ownership contract receivable (“VOCR”) securitizations, a dedicated lockbox account, subject to a blocked control agreement, is established for each securitization.

At each month end, the total cash in the collection account from the previous month is analyzed and a monthly servicer report is prepared by the Company, which details how much cash should be remitted to the note holders for principal and interest payments, and any cash remaining is transferred by the trustee back to the Company.

In accordance with the contractual requirements of the Company’s various VOCR securitizations, a dedicated lockbox account, subject to a blocked control agreement, is established for each securitization.

At each month end, the total cash in the collection account from the previous month is analyzed and a monthly servicer report is prepared by the Company.

This report details how much cash should be remitted to the note holders for principal and interest

payments, and any cash remaining is transferred by the trustee to the Company.

Additionally, as required by various securitizations, the Company holds an agreed-upon percentage of the aggregate outstanding principal balances of the VOI contract receivables collateralizing the asset-backed notes in a segregated trust account as credit enhancement.

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Similarly, laws in certain U.S.

states require the escrow of advance deposits received from guests for vacations paid and not yet traveled through the Company’s vacation exchange business.

states require the escrow of advance deposits received from guests for vacations paid and not yet traveled through the Company’s Travel and Membership businesses.

Such amounts are required to be held in escrow until the legal restriction expires, which varies from state to state.

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When the Company determines that an account is not collectible, the account is written-off to the allowance for doubtful accounts.

The following table illustrates the Company’s allowance for doubtful accounts activity from continuing operations for the year ended December 31 (in millions):

The following table illustrates the Company’s allowance for doubtful accounts activity from continuing operations for the years ended December 31 (in millions):

2021 2020 2019

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Vacation ownership contract receivables

In the Vacation Ownership segment, the Company provides for estimated VOCR defaults at the time of VOI sales by recording a provision for loan losses as a reduction of Vacation ownership interest sales on the Consolidated Statements of (Loss)/Income.

The Company assesses the adequacy of the allowance for loan losses related to these VOIs using a technique referred to as a static pool analysis.

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A qualitative assessment is also performed to determine whether any external economic conditions or internal portfolio characteristics indicate an adjustment is necessary to reflect expected impacts on the contract receivables portfolio.

If current or expected future conditions differ from the conditions in effect when the historical experience was generated, the Company adjusts the allowance for loan losses to reflect the expected effects of the current environment on the collectability of VOCR.

Due to the economic disruption resulting from COVID-19, the Company estimated an additional loan loss allowance related to the impacts on its owners’ ability to repay their contract receivables.

The Company based its COVID-19 loan loss estimate upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

For additional details on the Company’s vacation ownership contract receivables, including information on the related allowances and the impact of COVID-19, see Note 10— Vacation Ownership Contract Receivables.

Inventory primarily consists of completed VOIs, VOIs under construction, land held for future VOI development, vacation exchange credits, and real estate interests sold subject to conditional repurchase.

The Company applies the relative sales value method for relieving VOI inventory and recording the related cost of sales.

Under the relative sales value method, cost of sales is recorded using a percentage ratio of total estimated development cost to total estimated VOI revenue, including estimated future revenue and incorporating factors such as changes in prices and the recovery of VOIs generally as a result of contract receivable defaults.

The effect of such changes in estimates under the relative sales value method is accounted for in each period using a current-period adjustment to inventory and cost of sales.

Inventory is stated at the lower of cost, including capitalized interest, property taxes, and certain other carrying costs incurred during the construction process, or estimated fair value less costs to sell.

Capitalized interest was less than $ 1 million in 2020, and $ 1 million in both 2019 and 2018.

Under the relative sales value method, cost of sales is recorded using a percentage ratio of total estimated development cost and VOI revenue, including estimated future revenue, incorporating factors such as changes in prices and the recovery of VOIs, generally as a result of contract receivable defaults.

The effect of such changes in estimates under the relative sales value method is accounted for in each period as a current-period adjustment to inventory and cost of sales.

Inventory is stated at the lower of cost, including

capitalized interest, property taxes, and certain other carrying costs incurred during the construction process, or estimated fair value less costs to sell.

There was no capitalized interest applied to inventory in 2021.

Capitalized interest related to inventory was less than $ 1 million during 2020 and $ 1 million and during 2019.

PROPERTY AND EQUIPMENT

Property and equipment (including leasehold improvements) are recorded at cost, and presented net of accumulated depreciation and amortization.

Depreciation, recorded as a component of Depreciation and amortization on the Consolidated Statements of (Loss)/Income, is computed utilizing the straight-line method over the lesser of the lease terms or estimated useful lives of the related assets.

Depreciation, recorded as a component of Depreciation and amortization on the Consolidated Statements of Income/(Loss), is computed utilizing the straight-line method over the lesser of the lease terms or estimated useful lives of the related assets.

Amortization of leasehold improvements, also recorded as a component of Depreciation and amortization, is computed utilizing the straight-line method over the lesser of the estimated benefit period of the related assets or the lease terms.

Useful lives are generally 30 years for buildings, up to 20 years for leasehold improvements, up to 30 years for vacation rental properties, and from three to seven years for furniture, fixtures, and equipment.

The Company capitalizes the costs of software developed for internal use in accordance with the guidance for accounting for costs of computer software developed or obtained fo r internal use.

Capitalization of software costs developed for internal use commences during the development phase of the pro ject.

The Company amortizes software developed or obtained for internal use on a straight-line basis over its estimated useful life, which is generally three to five years , with the exception of certain enterprise resource planning, reservation, and inventory management software, which is generally up to 10 years.

Useful lives are generally 30 years for buildings, up to 20 years for leasehold improvements, up to 30 years for vacation rental properties, and range from three to seven years for furniture, fixtures and equipment.

The Company capitalizes the costs of software developed for internal use in accordance with the guidance for accounting for costs of computer software developed or obtained for internal use.

Capitalization of software costs developed for internal use commences during the development phase of the project.

Such amortization commences when the software is substantially ready for its intended use.

The net carrying value of software developed or obtained for internal use was $ 156 million and $ 191 million as of December 31, 2021 and 2020.

Capitalized interest was $ 1 million, $ 2 million, and $ 1 million during 2020, 2019, and 2018.

Capitalized interest was less than $ 1 million, $ 1 million, and $ 2 million during 2021, 2020, and 2019.

DERIVATIVE INSTRUMENTS

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All derivatives are recorded at fair value either as assets or liabilities.

Changes in fair value of derivatives not designated as hedging instruments and of derivatives designated as fair value hedging instruments are recognized in Operating (loss)/income and net interest expense, based upon the nature of the hedged item, on the Consolidated Statements of (Loss)/Income.

Changes in fair value of derivatives not designated as hedging instruments and of derivatives designated as fair value hedging instruments are recognized in Operating income/(loss) and net interest expense, based upon the nature of the hedged item, on the Consolidated Statements of Income/(Loss).

Changes in fair value of derivatives designated as cash flow hedging instruments are recorded as components of other comprehensive income.

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Decreases to the valuation allowance are recorded as reductions to the Company’s provision for income taxes, and increases to the valuation allowance result in additional provision for income taxes.

The realization of the Company’s

deferred tax assets, net of the valuation allowance, is primarily dependent on estimated future taxable income.

A change in the Company’s estimate of future taxable income may require an addition to or reduction from the valuation allowance.

For tax positions the Company has taken or expects to take in a tax return, the Company applies a more likely than not threshold, under which the Company must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit.

The realization of the Company’s deferred tax assets, net of the valuation allowance, is primarily dependent on estimated future taxable income.

A change in the Company’s estimate of future taxable income may require a change to the valuation allowance.

For tax positions the Company has taken or expects to take in a tax return, the Company applies a more likely than not threshold, under which the Company must conclude that a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit.

In determining the Company’s provision for income taxes, the Company uses judgment, reflecting its estimates and assumptions, in applying the more likely than not threshold.

The Company classifies interest and penalties associated with unrecognized tax benefits as a component of (Benefit from)/provision for income taxes on the Consolidated Statements of (Loss)/Income.

During 2018, the Financial Accounting Standards Board (“FASB”) issued guidance on the accounting for tax on the global intangible low-taxed income provisions of the recently enacted tax law.

These provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations.

The Company has elected to treat taxes due on future inclusions in taxable income as a current-period expense when incurred.

During the fourth quarter of 2018, in accordance with the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No.

118 - Income Tax Accounting Implications of the Tax Cuts and Jobs Act , the Company completed its accounting for the tax effects of the U.S.

tax reform recorded for 2017.

LOYALTY PROGRAMS

The Company earns revenue from its RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.

The advance payments received under the program are recognized as a contract liability until the Company’s performance obligations have been satisfied.

The primary performance obligation for the program relates to brand performance services.

Total contract consideration is estimated and recognized on a straight-line basis over the contract term.

Revenues relating to the RCI Elite Rewards program, which are recorded in Other revenues on the Consolidated Statements of (Loss)/Income, were $ 13 million, $ 15 million, and $ 12 million during 2020, 2019, and 2018.

Expenses related to this program, which are recorded within Operating expenses on the Consolidated Statements of (Loss)/Income, were $ 7 million, $ 9 million, and $ 5 million during 2020, 2019, and 2018.

The liabilities associated with the program as of December 31, 2020 and 2019, were $ 15 million and $ 18 million, and are included within Deferred income on the Consolidated Balance Sheets.

As a result of the Spin-off, the Company has entered into long-term exclusive license agreements to retain its affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards.

Wyndham Rewards members accumulate points by staying in hotels franchised under one of the Wyndham Hotels brands, and by purchasing everyday services and products utilizing their co-branded credit cards.

Members may redeem their points for hotel stays, airline tickets, rental cars, resort vacations, electronics, sporting goods, movie and theme park tickets, gift certificates, vacation ownership maintenance fees, annual membership dues, and exchange fees for transactions.

The Company classifies interest and penalties associated with unrecognized tax benefits as a component of Provision/(benefit) for income taxes on the Consolidated Statements of Income/(Loss).

ADVERTISING EXPENSE

Advertising costs are expensed in the period incurred and are recorded within Marketing expense on the Consolidated Statements of (Loss)/Income.

Advertising costs are expensed in the period incurred and are recorded within Marketing expenses on the Consolidated Statements of Income/(Loss).

Advertising costs were $ 33 million, $ 26 million, and $ 37 million in 2021, 2020, and 2019.

STOCK-BASED COMPENSATION

In accordance with the guidance for stock-based compensation, the Company measures all stock-based compensation awards using a fair value method and records the related expense in its Consolidated Statements of (Loss)/Income.

The Company measures all stock-based compensation awards using a fair value method and records the related expense in its Consolidated Statements of Income/(Loss).

LONG-LIVED ASSETS

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The Company has goodwill and other indefinite-lived intangible assets recorded in connection with business combinations.

The Company annually (during the fourth quarter of each year subsequent to completing the Company’s annual forecasting process), or more frequently if circumstances indicate that the value of goodwill may be impaired, reviews the reporting units’ carrying values as required by the guidance for goodwill and other indefinite-lived intangible assets.

The Company annually in the fourth quarter, or more frequently if circumstances indicate that the value of goodwill may be impaired, reviews the reporting units’ carrying values.

This is done either by performing a qualitative assessment or a quantitative assessment, with an impairment being recognized only if a reporting unit’s fair value is less than carrying value.

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If it is not more likely than not that the fair value is in excess of the carrying value, or the Company elects to bypass the qualitative assessment, it would utilize the quantitative assessment.

The qualitative factors evaluated include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, the Company’s historical share price as well as other industry-specific considerations.

Under current accounting guidance, goodwill and other intangible assets with indefinite lives are not subject to amortization.

However, goodwill and other intangibles with indefinite lives are subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are reflected in Asset impairments.

The Company has goodwill recorded at its Vacation Ownership and Travel and Membership reporting units.

The Company performed a qualitative analysis for each of its reporting units for each quarter of 2020, including its annual fourth quarter analysis as of October 1, 2020.

Additionally, the Company performed quantitative assessments of the goodwill acquired as part of the ARN acquisition during the third and fourth quarters of 2020 which resulted in the fair value exceeding the carrying value.

For the quantitative assessment performed in the fourth quarter as part of the Company’s annual impairment analysis on October 1, 2020, it was determined that the fair value exceeded the carrying amount by approximately 20 %.

Based on the results of these qualitative and quantitative assessments the Company determined that ARN’s goodwill is not impaired and that it is more likely than not that goodwill is not impaired at the Company’s other reporting units.

The Company also evaluates the recoverability of its other long-lived assets, including property and equipment and amortizable intangible assets, if circumstances indicate impairment may have occurred, pursuant to guidance for impairment or disposal of long-lived assets.

The qualitative factors evaluated include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and the Company’s historical share price as well as other industry-specific considerations.

Goodwill and other intangible assets with indefinite lives are not subject to amortization.

However, goodwill and other intangibles with indefinite lives are subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are reflected in Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss).

The Company has goodwill recorded at reporting units comprising its Vacation Ownership and Travel and Membership reportable segments.

The Company completed its annual goodwill impairment test by performing a qualitative analysis for each of its reporting units as of October 1, 2021 and determined that no impairment exists.

This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets.

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If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value.

In addition to the goodwill assessment mentioned above, as a result of the impacts of COVID-19 the Company performed an impairment analysis on select long-lived assets during 2020.

As a result of this analysis, the Company recorded $ 56 million of COVID-19 related impairment charges during 2020 with $ 51 million included in Asset impairments and $ 5 million included in Operating expenses on the Consolidated Statements of (Loss)/Income.

See Note 26— COVID-19 Related Items for additional details.

ACCOUNTING FOR RESTRUCTURING ACTIVITIES

The Company’s restructuring activities require it to make significant estimates in several areas including (i) expenses for severance and related benefit costs, (ii) the ability to generate sublease income, as well as its ability to terminate lease obligations, and (iii) contract terminations.

The amount that the Company accrued as of December 31, 2020, represents its best estimate of the obligations incurred in connection with these actions, but could change due to various factors including market conditions, the outcome of negotiations with third parties, or the continuing effects of the COVID-19 pandemic.

The amount that the Company accrued as of December 31, 2021, represents its best estimate of the obligations incurred in connection with these actions, but could change due to various factors including market conditions, the outcome of negotiations with third parties, or the effects of the COVID-19 pandemic.

During 2021, the Company recorded $ 6 million of other income primarily due to activity at the Travel and Membership segment including (i) an unrealized gain on Vacasa equity investment;

(ii) value added tax provision release;

and (iii) equity earnings.

During 2020, the Company recorded $ 14 million of other income primarily related to (i) settlements of various business interruption claims at its Vacation Ownership segment and (ii) value added tax provision releases at its Travel and Membership segment.

During 2019, the Company recorded $ 23 million of other income primarily related to (i) settlements of various business interruption claims, (ii) value added tax provision releases at its Travel and Membership segment, and (iii) profit sharing at its Travel and Membership segment.

During 2018, the Company recorded $ 38 million of income related to (i) value added tax refunds at its Travel and Membership segment, (ii) settlements of various business interruption claims, and (iii) co-branded revenue at its Vacation Ownership segment.

During 2019, the Company recorded $ 23 million of other income related to (i)

settlements of various business interruption claims, (ii) value added tax provision releases at its Travel and Membership segment, and (iii) equity earnings at its Travel and Membership segment.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Simplifying the Accounting for Income Taxes .

In December 2019, the FASB issued guidance to simplify the accounting for income taxes.

The guidance amends the accounting for hybrid tax regimes where a tax jurisdiction imposes the greater of tax based on income versus tax based on another measurement basis, addresses the recognition of tax basis in goodwill not generated through a business combination, eliminates certain exceptions to the approach for intraperiod tax allocation when a loss from continuing operations exists, calculating interim period taxes related to enacted changes in tax law, requirements in the recognition of deferred tax liabilities for outside basis differences and exceptions to the ability not to recognize deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary.

The issued guidance also clarifies the financial statement presentation for tax benefits related to tax deductible dividends.

Contract Assets and Contract Liabilities from Contracts with Customers Acquired in a Business Combination.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which requires companies to apply Accounting Standards Committee (“ASC”) 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

This creates an exception to the general recognition and measurement principle in ASC 805.

This generally will result in companies recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date.

This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

The amendments should be applied prospectively to business combinations occurring on or after the effective date.

Early adoption is permitted.

As this guidance would only be applicable to future business combinations, the Company is currently unable to determine the impact of adopting this guidance.

Government Assistance.

In November 2021, the FASB issued guidance which requires business entities to provide certain disclosures when they (i) have received government assistance and (ii) use a grant or contribution accounting model by analogy to other accounting guidance.

The guidance is effective for fiscal years beginning after December 15, 2021.

The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements or related disclosures.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Simplifying the Accounting for Income Taxes .

In December 2019, the FASB issued guidance to simplify the accounting for income taxes and clarify the financial statement presentation for tax benefits related to tax deductible dividends.

This guidance became effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements or related disclosures.

Reference Rate Reform .

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

This guidance was effective as of March 12, 2020, and will apply through December 31, 2022.

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying generally accepted accounting principles in the U.S.

(“GAAP”) to contract modifications and hedging relationships, subject to meeting certain criteria that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

This guidance became effective as of March 12, 2020, and will apply through December 31, 2022.

The transition from LIBOR based benchmark rates is expected to begin January 1, 2022 and be completed when U.S.

Dollar (“USD”) LIBOR rates are phased out by June 30, 2023.

The Company is currently evaluating the impact of the transition from LIBOR on its financial statements and related disclosures and the related impact of this guidance on the transition.

On October 27, 2020, the Company closed on the renewal of its USD bank conduit facility (see Note 16— Debt for additional details) and adopted appropriate LIBOR disclosures for asset-backed securities (“ABS”) financing structures as part of the renewal.

The Company intends to adopt such language, as appropriate, in its other relevant agreements prior to the end of 2021.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Financial Instruments - Credit Losses .

In June 2016, the FASB issued guidance which amends the guidance on measuring credit losses on financial assets held at amortized cost.

The guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

This guidance was effective for the Company on January 1, 2020, including interim periods within the fiscal year.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements as the Company’s prior approach in estimating the allowance for loan losses generally aligned with the expected credit loss model required upon adoption of this guidance.

The Company has included additional disclosures in accordance with the adoption of this guidance, which are included in Note 10— Vacation Ownership Contract Receivables .

As part of the adoption of this accounting pronouncement, the Company made an accounting policy election to present accrued interest receivable within Trade receivables, net separate from its Vacation ownership contract receivables, net on the Consolidated Balance Sheets and elected not to estimate an allowance for credit losses on the accrued interest receivable balance.

Once a contract is 91 days past due, the Company ceases accruing interest and reverses all accrued interest recognized to date against interest income included within Consumer financing revenue on the Consolidated Statements of (Loss)/Income.

The Company resumes accruing interest for contracts which it had previously ceased accruing interest once the contract is less than 91 days past due.

Simplifying the Test for Goodwill Impairment .

In January 2017, the FASB issued guidance which simplifies the current two-step goodwill impairment test by eliminating step two of the test.

The guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any.

This guidance was effective for the Company on January 1, 2020, including interim periods within the fiscal year, and was applied on a prospective basis.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

The Company adopted appropriate LIBOR replacement rate transition language into the agreements for the renewal of its USD bank conduit facility in 2020 and the renewal of the credit agreement governing the revolving credit facility and term loan B which closed during 2021.

These agreements represented the Company’s largest exposure to LIBOR.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements or related disclosures.

Revenue Recognition

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The Company is entitled to consideration for reimbursement of costs incurred on behalf of the property owners’ association in providing management services (“reimbursable revenue”).

These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where the Company is the employer and are reflected as a component of Operating expenses on the Consolidated Statements of (Loss)/Income.

The Company reduces its management fees for amounts it has paid to the property owners’ association that reflect maintenance fees for VOIs for which it retains ownership, as the Company has concluded that such payments are consideration payable to a customer.

Property management fee revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of (Loss)/Income.

Property management revenues, which are comprised of management fee revenue and reimbursable revenue, for the years ended December 31, were (in millions):

Property management fee revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of Income/(Loss).

Property management revenues, which are comprised of management fee revenue and reimbursable revenue, for the years ended December 31, were (in millions) (a) :

2021 2020 2019

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Property management revenues $ 671 $ 583 $ 672

One of the associations that the Company manages paid its Travel and Membership segment $ 27 million for exchange services during 2020, and $ 29 million during both 2019 and 2018.

(a) Reflects the impact of reclassifying the Extra Holidays business line from the Vacation Ownership segment to Travel and Membership.

One of the associations that the Company manages paid its Travel and Membership segment $ 30 million for exchange services during 2021, $ 27 million during 2020, and $ 29 million during 2019.

Travel and Membership

As a provider of vacation exchange services, the Company enters into affiliation agreements with developers of vacation ownership properties to allow owners of VOIs to trade their intervals for intervals at other properties affiliated with the Company’s vacation exchange network and, for some members, for other leisure-related services and products.

Travel and Membership derives a majority of revenues from membership dues and fees for facilitating members’ trading of their intervals.

Travel and Membership derives a majority of its revenues from membership dues and fees for facilitating members’ trading of their intervals.

Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf.

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Such estimates are adjusted periodically for changes in the actual and forecasted member activity.

additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with the Company’s vacation exchange networks and, for certain members, for other leisure-related services and products.

For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with the Company’s vacation exchange networks and, for certain members, for other leisure-related services and products.

The Company also derives revenue from facilitating bookings of travel accommodations for both members and non-members.

Revenue is recognized when these transactions have been confirmed, net of expected cancellations.

Revenue is recognized when these transactions have been confirmed, net of expected cancellations, except in certain transactions where the Company has a performance obligation that is not satisfied until the time of stay.

The Company’s vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs;

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Other vacation exchange-related product fees are deferred and recognized as revenue upon the occurrence of a future exchange, event, or other related transaction.

The Company also derives revenue from other travel products and services, enabled as a result of the 2019 acquisition of ARN and via the Company’s resort services solution business, optimizing business to business (“B2B”) capabilities, and integration for consumer travel planning.

The Company’s relationships and buying power with major travel suppliers provide its partners with access to some of the most compelling travel inventory in the industry.

The Company’s affiliates and members enjoy inventory from accommodation wholesalers, airfare, and rental car providers.

The Company earns revenue from its RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.

The advance payments received under the program are recognized as a contract liability until the Company’s performance obligations have been satisfied.

The primary performance obligation for the program relates to brand performance services.

performance obligation for the program relates to brand performance services.

Total contract consideration is estimated and recognized on a straight-line basis over the contract term.

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The Company’s vacation rental brands also derived revenues from additional services delivered to independent owners, vacation rental guests, and property owners’ associations which were generally recognized when the service was delivered.

The Company records property management services revenues and RCI Elite Rewards revenues for its Vacation Ownership and Travel and Membership segments gross as a principal.

The Company records property management services revenues for its Vacation Ownership segment and RCI Elite Rewards revenues for its Travel and Membership segments gross as a principal.

Contract Liabilities

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Deferred VOI trial package revenue 85 115

Deferred VOI incentive revenue 74 107

Deferred exchange-related revenue (a)

Deferred VOI incentive revenue 55 74

Deferred co-branded credit card programs revenue 12 16

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Revenue is recognized when a customer utilizes the additional services and products, which is typically within one year of the VOI sale.

Within the Company’s vacation exchange business, deferred subscription revenue represents billings and payments received in advance from members and affiliated clubs for memberships in the Company’s vacation exchange programs which are recognized in future periods.

Deferred exchange-related revenue primarily represents payments received in advance from members for the right to exchange their intervals for intervals at other properties affiliated with the Company’s vacation exchange networks and for other leisure-related services and products which are generally recognized as revenue within one year .

Within the Company’s Travel and Membership business, deferred subscription revenue represents billings and payments received in advance from members and affiliated clubs for memberships in the Company’s travel programs which are recognized in future periods.

Deferred revenue primarily represents payments received in advance from members for the right to access the Company’s vacation travel network to book vacation exchanges and rent travel accommodations which are recognized on a straight-line basis over the contract period, generally within one year .

Deferred revenue also includes other leisure-related services and products revenue which is recognized as customers utilize the associated benefits.

Changes in contract liabilities for the years ended December 31, follow (in millions):

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Revenue recognized ( 313 ) ( 314 ) ( 367 )

Held-for-sale — — ( 38 )

Other — — ( 10 )

Ending balance $ 382 $ 448 $ 539

Capitalized Contract Costs

The Company’s Vacation Ownership segment incurs certain direct and incremental selling costs in connection with VOI trial package and incentive revenues.

The Vacation Ownership segment incurs certain direct and incremental selling costs in connection with VOI trial package and incentive revenues.

Such costs are capitalized and subsequently amortized over the utilization period, which is typically within one year of the sale.

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and are included within Other assets on the Consolidated Balance Sheets.

The Company’s Travel and Membership segment incurs certain direct and incremental selling costs to obtain contracts with customers in connection with subscription revenues and exchange–related revenues.

The Travel and Membership segment incurs certain direct and incremental selling costs to obtain contracts with customers in connection with subscription revenues and exchange–related revenues.

Such costs, which are primarily comprised of commissions paid to internal and external parties and credit card processing fees, are deferred at the inception of the contract and recognized when the benefit is transferred to the customer.

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VOI trial package revenue 82 — 3 — 85

VOI incentive revenue 74 — — — 74

Exchange-related revenue 56 4 1 — 61

VOI incentive revenue 55 — — — 55

Co-branded credit card programs revenue 3 3 2 4 12

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Disaggregation of Net Revenues

The table below presents a disaggregation of the Company’s net revenues from contracts with customers by major services and products for each of the Company’s segments (in millions):

The table below presents a disaggregation of the Company’s net revenues from contracts with customers by major services and products for each of the Company’s segments (in millions) (a) :

Year Ended December 31,

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Vacation Ownership

Property management fees and reimbursable revenues $ 595 $ 702 $ 665

Vacation ownership interest sales (a)

Vacation ownership interest sales (b)

$ 1,176 $ 505 $ 1,848

Property management fees and reimbursable revenues 671 583 672

Consumer financing 404 467 515

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Travel and Membership

Exchange revenues 474 647 658

Vacation rental revenues (b)

Transaction revenues 540 315 492

Subscription revenues 176 160 216

Vacation rental revenues (c)

Ancillary revenues 36 77 83

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Net revenues $ 3,134 $ 2,160 $ 4,043

(a) The Company increased its loan loss allowance by $ 205 million during 2020, due to an expected increase in defaults driven by higher unemployment associated with COVID-19, which is reflected as a reduction to Vacation ownership interest sales on the Consolidated Statements of (Loss)/Income.

(b) The Company completed the sale of the North American vacation rentals business on October 22, 2019.

(a) This table reflects the reclassification of Extra Holidays from the Vacation Ownership segment into the Travel and Membership segment for all periods presented.

Extra Holidays revenue is included within Transaction revenues.

(b) The Company increased its loan loss allowance by $ 205 million during 2020, due to an expected increase in net new defaults driven by higher unemployment associated with COVID-19, which is reflected as a reduction to Vacation ownership interest sales on the Consolidated Statements of Income/(Loss).

During 2021, the Company analyzed the adequacy of this COVID-19 related allowance consistent with past methodology, resulting in releases of $ 91 million which is reflected as an increase in Vacation ownership interest sales on the Consolidated Statements of Income/(Loss).

Earnings/(Loss) Per Share

The computations of basic and diluted earnings/(loss) per share (“EPS”) are based on Net (loss)/income attributable to Travel + Leisure shareholders divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding.

The computations of basic and diluted earnings/(loss) per share (“EPS”) are based on Net income/(loss) attributable to Travel + Leisure Co.

shareholders divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding.

The following table sets forth the computations of basic and diluted EPS (in millions, except per share data):

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2021 2020 2019

Net (loss)/income from continuing operations attributable to Travel + Leisure shareholders $ ( 253 ) $ 489 $ 266

Loss from operations of discontinued businesses attributable to Travel + Leisure shareholders, net of income taxes — — ( 50 )

(Loss)/gain on disposal of discontinued business attributable to Travel + Leisure shareholders, net of income taxes ( 2 ) 18 456

Net (loss)/income attributable to Travel + Leisure shareholders $ ( 255 ) $ 507 $ 672

Basic earnings/(loss) per share

Net income/(loss) from continuing operations attributable to Travel + Leisure Co.

shareholders $ 313 $ ( 253 ) $ 489

(Loss)/gain on disposal of discontinued business attributable to Travel + Leisure Co.

shareholders, net of income taxes ( 5 ) ( 2 ) 18

Net income/(loss) attributable to Travel + Leisure Co.

shareholders $ 308 $ ( 255 ) $ 507

Basic earnings/(loss) per share (a)

Continuing operations $ 3.62 $ ( 2.95 ) $ 5.31

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$ 3.56 $ ( 2.97 ) $ 5.50

Diluted earnings/(loss) per share

Diluted earnings/(loss) per share (a)

Continuing operations $ 3.58 $ ( 2.95 ) $ 5.29

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Basic weighted average shares outstanding 86.5 86.1 92.1

Stock-settled appreciation rights (“SSARs”), RSUs (a) and PSUs (b)

Diluted weighted average shares outstanding (c)(d)

Stock-settled appreciation rights (“SSARs”), RSUs (b) , PSUs (c) and NQs (d)

Diluted weighted average shares outstanding (e)

87.3 86.1 92.4

Cash dividends per share (e)

Cash dividends per share (f)

$ 1.25 $ 1.60 $ 1.80

Aggregate dividends paid to shareholders $ 109 $ 138 $ 166

(a) Excludes 1.1 million, 0.4 million, and 0.5 million of restricted stock units (“RSUs”) that would have been anti-dilutive to EPS for the years 2020, 2019, and 2018, of which 0.2 million would have been dilutive during 2020 had the Company not been in a net loss position.

(a) Earnings/(loss) per share amounts are calculated using whole numbers.

(b) Excludes 0.4 million, 1.1 million, and 0.4 million of restricted stock units (“RSUs”) that would have been anti-dilutive to EPS for the years 2021, 2020, and 2019, of which 0.2 million would have been dilutive during 2020 had the Company not been in a net loss position.

These shares could potentially dilute EPS in the future.

(b) Excludes performance-vested restricted stock units (“PSUs”) of 0.3 million and 0.2 million for the years 2020 and 2019, as the Company had not met the required performance metrics.

As a result of the Spin-off during the second quarter of 2018, the Company accelerated the vesting of outstanding PSUs and there were no outstanding PSUs as of December 31, 2018.

(c) Excludes 2.1 million, 1.2 million, and 0.5 million of outstanding stock option awards that would have been anti-dilutive to EPS for the years 2020, 2019, and 2018.

(c) Excludes performance-vested restricted stock units (“PSUs”) of 0.4 million, 0.3 million, and 0.2 million for the years 2021, 2020, and 2019 as the Company had not met the required performance metrics.

These PSUs could potentially dilute EPS in the future.

(d) Excludes 1.4 million, 2.1 million, and 1.2 million of outstanding non-qualified stock option (“NQs”) awards that would have been anti-dilutive to EPS for the years 2021, 2020, and 2019.

These outstanding stock option awards could potentially dilute EPS in the future.

(d) The dilutive impact of the Company’s potential common stock is computed utilizing the treasury stock method using average market prices during the period.

(e) For each of the quarterly periods ended March 31, and June 30, 2020, the Company paid cash dividends of $ 0.50 per share and in the quarterly periods ended September 30, and December 31, 2020, the Company paid cash dividends of $ 0.30 per share.

For each of the quarterly periods in 2019, the Company paid cash dividends of $ 0.45 per share.

For the quarterly period ended March 31, 2018, Wyndham Worldwide Corporation paid cash dividends of $ 0.66 prior to the Spin-off.

In each of the following periods ended June 30, September 30, and December 31, 2018, the Company paid cash dividends of $ 0.41 .

(e) The dilutive impact of the Company’s potential common stock is computed utilizing the treasury stock method using average market prices during the period.

(f) During 2021 the Company paid cash dividends of $ 0.30 per share for the first, second and third quarters, and $ 0.35 per share for the fourth quarter.

During 2020 the Company paid cash dividends of $ 0.50 per share for the first and second quarters, and $ 0.30 per share for the third and fourth quarters.

The Company paid cash dividends of $ 0.45 per share for all four quarters of 2019.

Share Repurchase Program

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In March 2020, the Company suspended its share repurchase activity due to the uncertainty resulting from COVID-19.

On July 15, 2020, the Company amended the credit agreement for its revolving credit facility and term loan B.

Among other changes, the amendment places the Company into a relief

period from July 15, 2020 through April 1, 2022 (“Relief Period”) that prohibits the use of cash for share repurchases until such time as the Company chooses to exercise its option to exit the amendment.

On July 15, 2020, the Company entered into the First Amendment to the credit agreement governing its revolving credit facility and term loan B.

This amendment placed the Company into a Relief Period from July 15, 2020 through April 1, 2022 that prohibited the use of cash for share repurchases during this period.

On October 22, 2021, the Company entered into the Second Amendment which renewed the credit agreement governing its revolving credit facility and term loan B, thereby terminating the Relief Period and

eliminating the Relief Period restrictions regarding share repurchases and dividends.

The Company resumed share repurchases during the fourth quarter of 2021.

The following table summarizes stock repurchase activity under the current share repurchase program (in millions):

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Assets acquired and liabilities assumed in business combinations were recorded on the Consolidated Balance Sheets as of the respective acquisition dates based upon their estimated fair values at such dates.

The results of operations of businesses acquired by the Company have been included in the Consolidated Statements of (Loss)/Income since their respective dates of acquisition.

The results of operations of businesses acquired by the Company have been included in the Consolidated Statements of Income/(Loss) since their respective dates of acquisition.

The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to goodwill.

In certain circumstances, the allocations of the excess purchase price are based upon preliminary estimates and assumptions.

In certain circumstances, the allocations of the excess purchase price were based upon preliminary estimates and assumptions.

Accordingly, the allocations may be subject to revision when the Company receives final information, including appraisals and other analyses.

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These costs may result from integrating operating systems, relocating employees, closing facilities, reducing duplicative efforts, and exiting and consolidating other activities.

These costs will be recorded on the Consolidated Statements of (Loss)/Income as expenses.

These costs will be recorded on the Consolidated Statements of Income/(Loss) as expenses.

2021 ACQUISITIONS

Travel + Leisure.

On January 5, 2021, the Company acquired the Travel + Leisure brand from Meredith Corporation for $ 100 million, $ 55 million of which was paid in 2021.

These payments are reflected as $ 35 million of cash used in investing activities, along with the associated professional fees, and $ 20 million of cash used in financing activities on the Consolidated Statements of Cash Flows.

The remaining payments are to be completed by June 2024.

This transaction was accounted for as an asset acquisition, with the full consideration allocated to the related trademark indefinite-lived intangible asset.

The Company acquired the Travel + Leisure brand to accelerate its strategic plan to broaden its reach with the launch of new travel services, expand its membership travel business, and amplify the global visibility of its leisure travel products.

2019 ACQUISITIONS

Alliance Reservations Network.

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The fair value of purchase consideration was comprised of:

(i) $ 48 million delivered at closing;

(ii) Travel + Leisure stock valued at $ 10 million ( 253,350 shares at $ 39.29 per share) delivered at closing;

(iii) $ 21 million to be paid over 24 months post-closing ($ 11 million of which was paid on August 7, 2020);

(iv) $ 10 million of contingent consideration based on achieving certain financial and operational metrics;

and (v) additional shares of Travel + Leisure stock valued at $ 14 million ( 468,100 shares at $ 28.84 per share) delivered on August 7, 2020.

(i) $ 48 million paid in cash at closing, which is included in cash used in investing activities on the Consolidated Statements of Cash Flows, net of cash received;

and $ 11 million paid in each of 2020 and 2021 included in cash used in financing activities on the Consolidated Statements of Cash Flows;

(ii) $ 24 million of Travel + Leisure Co.

stock ( 721,450 shares at a weighted average price per share of $ 32.51 );

and (iii) $ 10 million of contingent consideration based on achieving certain financial and operational metrics.

The Company recognized the assets and liabilities of ARN based on estimates of their acquisition date fair values.

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ARN is reported within the Travel and Membership segment.

The Company completed purchase accounting for this transaction during the third quarter of 2020.

The details above reflect the following final purchase accounting adjustments:

$ 7 million increase in developed software and $ 7 million decrease in Goodwill.

Given the impact of COVID-19 on the industry, the Company performed assessments of the goodwill acquired as part of the ARN acquisition at each interim period in 2020, including the annual assessment on October 1, 2020, and concluded at each assessment that the goodwill of ARN was not impaired.

For the assessment performed on October 1, 2020, it was determined that the fair value exceeded the carrying amount by approximately 20 %.

Although the Company has determined that the goodwill of ARN is not impaired at this time, to the extent estimated discounted cash flows are revised downward, whether as a result of continued and worsening COVID-19 impacts or if management’s current negotiations to expand ARN programs both internally and externally do not materialize as expected, the Company may be required to write-down all or a portion of this goodwill, which would negatively impact earnings.

As a result of the impacts of COVID-19, the Company also performed impairment analysis of ARN’s property and equipment and other intangible assets during each quarter of 2020, including the fourth quarter as part of its annual impairment analysis on October 1, 2020, and determined in all periods that it is more likely than not that these assets were not impaired.

During the third quarter of 2019, the Company completed a business acquisition at its Vacation Ownership segment for $ 13 million ($ 10 million net of cash acquired).

The Company completed purchase accounting for this transaction during 2020.

Given the impact of COVID-19 on the industry, the Company performed assessments of the goodwill acquired as part of the ARN acquisition at October 1, 2021 and each interim period in 2020, including the annual assessment on October 1,

2020, and concluded at each assessment that the goodwill of ARN was not impaired.

For the assessment performed on October 1, 2021, it was determined that the fair value substantially exceeded the carrying value.

Although the Company determined that the goodwill of ARN was not impaired at these times, to the extent estimated discounted cash flows are revised downward, whether as a result of continued and worsening COVID-19 impacts or if management’s current negotiations to expand ARN programs both internally and externally do not materialize as expected, the Company may be required to write-down all or a portion of this goodwill, which would negatively impact earnings.

As a result of the impacts of COVID-19, the Company also performed an impairment analysis of ARN’s property and equipment and other intangible assets during each quarter of 2020, including the fourth quarter as part of its annual impairment analysis on October 1, 2020, and determined in all periods that it was more likely than not that these assets were not impaired.

The Company did not have any triggering events requiring an impairment test to be performed for these amortizing assets in 2021.

During 2019, the Company completed a business acquisition at its Vacation Ownership segment for $ 13 million ($ 10 million net of cash acquired).

The acquisition resulted in the recognition of (i) $ 4 million of Inventory, (ii) $ 7 million of definite-lived intangible assets, and (iii) $ 1 million of Accrued expenses and other liabilities.

2018 ACQUISITIONS

La Quinta Holdings Inc.

(“La Quinta”).

In January 2018, the Company entered into an agreement with La Quinta to acquire its hotel franchising and management businesses for $ 1.95 billion.

This acquisition closed on May 30, 2018, prior to the hotel business Spin-off on May 31, 2018.

Upon completion of the Spin-off, La Quinta became a wholly-owned subsidiary of Wyndham Hotels.

During 2018, the Company completed one other acquisition at its Travel and Membership segment for $ 5 million in cash, net of cash acquired.

The purchase price allocations resulted in the recognition of (i) $ 1 million of Goodwill, none of which is expected to be deductible for tax purposes, (ii) $ 4 million of definite-lived intangible assets with a weighted average life of 21 years, (iii) less than $ 1 million in Other assets, and (iv) less than $ 1 million of liabilities.

Discontinued Operations

During 2018, the Company completed the Spin-off of its hotel business and the sale of its European vacation rentals business.

As a result, the Company has classified the results of operations for these businesses as discontinued operations in its Consolidated Financial Statements and related notes.

Discontinued operations include direct expenses clearly identifiable to the businesses being discontinued.

The sale of the European vacation rentals business resulted in final net proceeds of $ 1.06 billion and a 2018 after-tax gain of $ 456 million, net of $ 139 million in taxes.

During 2020, the Company recognized a $ 2 million loss on disposal resulting from a tax audit related to the European vacation rentals business.

During 2019, the Company recognized an additional $ 18 million gain on disposal of discontinued operations.

This gain was related to $ 12 million of tax benefits associated with additional foreign tax credit utilization and lower than anticipated state income taxes, as well as $ 6 million in returned escrow for an expired guarantee and other changes in expired guarantees related to the sale of the European vacation rentals business.

The Company does not expect to incur significant ongoing expenses classified as discontinued operations except for certain tax adjustments that may be required as final tax returns are completed.

Discontinued operations exclude the allocation of corporate overhead and interest.

During 2018, the Company completed the spin-off of its hotel business (“Spin-off”) and the sale of its European vacation rentals business.

Subsequent to these transactions closing, the Company recognized additional gain and losses on disposal associated with these discontinued businesses.

During 2021, the Company recognized a loss on disposal of discontinued business, net of income taxes of $ 5 million as a result of entering into a settlement agreement for post-closing adjustment claims related to the sale of the European vacation rentals business.

See Note 29— Transactions with Former Parent and Former Subsidiaries for additional information.

During 2020, the Company recognized a $ 2 million loss on disposal of discontinued business, net of income taxes resulting from a tax audit related to the European vacation rentals business.

During 2019, the Company recognized an $ 18 million gain on disposal of discontinued business, net of income taxes.

This gain was related to $ 12 million of tax benefits associated with additional foreign tax credit utilization and lower than anticipated state income taxes, as well as $ 6 million in returned escrow deposits associated with expired guarantees related to the sale of the European vacation rentals business.

The Company does not expect to incur significant ongoing gains and losses for these discontinued operations.

Prior to their classification as discontinued operations, the hotel business comprised the Hotel Group segment and the European vacation rentals business was part of the Travel and Membership segment.

The following table presents information regarding certain components of income from discontinued operations, net of income taxes for the years ended (in millions):

Year Ended December 31,

2020 2019 2018

Net revenues $ — $ — $ 720

Operating — — 343

Marketing — — 200

General and administrative — — 71

Separation and related costs — — 111

Depreciation and amortization — — 52

Total expenses — — 777

Benefit for income taxes — — ( 7 )

Loss from operations of discontinued businesses, net of income taxes — — ( 50 )

(Loss)/gain on disposal of discontinued business, net of income taxes ( 2 ) 18 456

Net (loss)/income from discontinued operations, net of income taxes $ ( 2 ) $ 18 $ 406

The following table presents information regarding certain components of cash flows from discontinued operations for the years ended (in millions):

Year Ended December 31,

The following table presents information regarding components of cash flows from discontinued operations for the years ended December 31, (in millions):

2021 2020 2019

Cash flows (used in)/provided by operating activities $ — $ ( 1 ) $ 150

Cash flows used in operating activities $ — $ — $ ( 1 )

Cash flows used in investing activities — ( 5 ) ( 22 )

Cash flows provided by financing activities — — 2,066

Non-cash items:

Forgiveness of intercompany debt from Wyndham Hotels — — 197

Depreciation and amortization — — 52

Stock-based compensation — — 22

Deferred income taxes — — ( 23 )

Property and equipment additions — — ( 38 )

Net assets of business acquired, net of cash acquired — — ( 1,696 )

Proceeds from sale of businesses and asset sales — — 1,099

Held-for-Sale Business

During 2018, the Company decided to explore strategic alternatives for its North American vacation rentals business and on October 22, 2019, the Company closed on the sale of this business for $ 162 million.

After customary closing adjustments, the Company received $ 156 million in cash and $ 10 million in Vacasa LLC (“Vacasa”) equity, resulting in a gain of $ 68 million which is included in Gain on sale of business on the Consolidated Statements of (Loss)/Income.

The assets and liabilities of this business were classified as held-for-sale as of December 31, 2018.

This business did not meet the criteria to be classified as a discontinued operation;

therefore, the results of operations are reflected within continuing operations on the Consolidated Statements of (Loss)/Income through the date of sale.

During 2019, the Company closed on the sale of its North American vacation rentals business for $ 162 million.

Prior to sale, this business was reported within the Travel and Membership segment.

During December 2021, Vacasa merged with a publicly traded special purpose acquisition company and began trading on the Nasdaq Global Select market.

As of December 31, 2021, the fair value of the Company’s investment in Vacasa was $ 13 million, as measured using quoted prices in the active market (Level 1);

representing an increase of $ 9 million during the year.

This increase is reflected as a $ 6 million recovery in Asset impairments/(recovery), and $ 3 million of Other income, net on the Consolidated Statements of Income/(Loss).

Intangible Assets

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(d) Amortized between 7 to 8 years with a weighted average life of 7 years.

(e) Includes business contracts, which are amortized between 10 to 69 years with a weighted average life to 57 years.

The Company performed a qualitative analysis for each of its reporting units for each quarter of 2020, including its annual fourth quarter analysis as of October 1, 2020.

For the quantitative assessment performed in the fourth quarter as part of the Company’s annual impairment analysis on October 1, 2020, it was determined that the fair value of the ARN goodwill exceeded the carrying amount by approximately 20 %.

Based on the results of these qualitative and quantitative assessments, the Company determined that ARN’s goodwill is not impaired and that it is more likely than not that goodwill is not impaired at the Company’s other reporting units.

(e) Includes business contracts, which are amortized between 10 to 69 years with a weighted average life of 57 years.

During the fourth quarters of 2021, 2020, and 2019, the Company performed its annual goodwill impairment test and determined no impairment existed as the fair value of goodwill at its reporting units was in excess of the carrying value.

Due to the impacts of COVID-19, the Company also performed a qualitative analysis for each of its reporting units during each quarter of 2020.

Additionally, the Company performed quantitative assessments of the goodwill acquired as part of the ARN acquisition during the third and fourth quarters of 2020;

which resulted in the fair value exceeding the carrying value.

Based on the results of these qualitative and quantitative assessments, the Company determined that ARN’s goodwill was not impaired and that it was more likely than not that goodwill was not impaired at the Company’s other reporting units.

For the quantitative assessment performed on October 1, 2021 as part of the Company’s annual impairment analysis, it was determined that the fair value of the ARN goodwill substantially exceeded the carrying value.

The changes in the carrying amount of goodwill are as follows (in millions):

Balance as of December 31, 2019 Adjustments to Goodwill During 2020 Foreign Exchange Balance as of December 31, 2020

Balance as of December 31, 2020 Foreign Exchange Balance as of December 31, 2021

Travel and Membership $ 937 $ ( 3 ) $ 934

Vacation Ownership 27 — 27

Travel and Membership 943 ( 7 ) (a) 1 937

Total Company $ 964 $ ( 3 ) $ 961

(a) Represents purchase price adjustments related to the acquisition of ARN.

Unamortized Trademarks

The changes in the carrying amount of unamortized trademarks are as follows (in millions):

Balance as of December 31, 2019 Adjustments to unamortized trademarks during 2020 Balance as of December 31, 2020

Travel and Membership $ 51 $ ( 4 ) (a) $ 47

Total Company $ 51 $ ( 4 ) $ 47

(a) Represents impairment of Love Home Swap trade name.

See Note 27 — Impairments and Other Charges for additional details.

Amortizable Intangible Assets

Amortization expense relating to amortizable intangible assets is included as a component of Depreciation and amortization on the Consolidated Statements of (Loss)/Income, and was as follows (in millions):

Amortization expense relating to amortizable intangible assets is included as a component of Depreciation and amortization on the Consolidated Statements of Income/(Loss) and was as follows (in millions):

2021 2020 2019

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Based on the Company’s amortizable intangible assets as of December 31, 2021, the Company expects related amortization expense for the next five years as follows (in millions):

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was established to provide emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally support the U.S.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The Company recorded $ 26 million of employee retention tax credits for the year ended December 31, 2020, including credits from similar programs outside the U.S.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA”) was signed into law, which is the latest stimulus package to provide COVID-19 relief.

ARPA included an extension of the Coronavirus Aid, Relief, and Economic Security

(“CARES”) Act Employee Retention Tax Credit until December 31, 2021.

In addition to the expansion of the employee retention credit (among other provisions), ARPA includes several revenue-raising and business tax provisions.

One such provision that will impact the Company is the expansion of the limitation of compensation deductions above $ 1 million for certain covered employees of publicly held corporations.

Effective for taxable years after December 31, 2026, ARPA expands the limitation to include the next five highest compensated employees .

On March 27, 2020, the CARES Act was established to provide emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally support the U.S.

The CARES Act, among other things, included provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The Company recorded $ 2 million and $ 26 million of employee retention tax credits for the years ended December 31, 2021 and 2020, including credits from similar programs outside the U.S.

This provision of the CARES Act has no additional requirements or restrictions.

The Company has deferred social security payments and additional depreciation deductions relating to qualified improvement property.

While the Company continues to review and consider any additional available benefits under the CARES Act or similar legislation that has been or in the future may be enacted in response to the COVID-19 pandemic for which it qualifies, the Company cannot predict the manner in which such benefits will be allocated or administered and cannot assure that it will be able to receive such benefits in a timely manner or at all.

On December 22, 2017, the U.S.

enacted the Tax Cuts and Jobs Act, which is also commonly referred to as ‘‘U.S.

tax reform,’’ and significantly changed U.S.

corporate income tax laws by reducing the U.S.

corporate income tax rate from 35.0 % to 21.0 % starting in 2018, and imposing a one-time mandatory deemed repatriation tax on undistributed historic earnings of foreign subsidiaries.

Other provisions of the law include, but are not limited to, creating a territorial tax system which generally eliminates U.S.

federal income taxes on dividends from foreign subsidiaries, eliminating or limiting the deduction of certain expenses, and imposing a minimum tax on earnings generated by foreign subsidiaries.

The Company made a reasonable estimate for the impact of U.S.

tax reform on December 31, 2017, and finalized the accounting for the tax effects of U.S.

tax reform in 2018.

The following table presents the impact of the accounting for the enactment of U.S.

tax reform on the Company’s benefit/provision for income taxes for the year ended December 31, 2018 (in millions).

T here were no such amounts for the years ended December 31, 2020 and 2019.

Remeasurement of net deferred income tax and uncertain tax liabilities $ ( 24 )

One-time mandatory repatriation tax on undistributed historic earnings of foreign subsidiaries 8

Valuation allowance established for the impact of the law on certain tax attributes ( 13 )

Net (benefit) for income taxes impact $ ( 29 )

Although the one-time mandatory deemed repatriation tax during 2017 and the territorial tax system created as a result of U.S.

tax reform generally eliminate U.S.

federal income taxes on dividends from foreign subsidiaries, the Company asserts that substantially all of the undistributed foreign earnings of $ 805 million will be reinvested indefinitely as of December 31, 2020.

The Company has deferred social security payments and taken additional depreciation deductions relating to qualified improvement property.

The Company asserts that substantially all undistributed foreign earnings will be reinvested indefinitely as of December 31, 2021.

In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes, as well as U.S.

taxes on currency transaction gains and losses, the determination of which is not practicable.

The income tax provision consisted of the following for the years ended December 31 (in millions):

The income tax provision/(benefit) attributable to continuing operations consisted of the following for the years ended December 31 (in millions):

2021 2020 2019

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( 39 ) ( 88 ) 79

(Benefit)/provision for income taxes $ ( 23 ) $ 191 $ 130

Pre-tax (loss)/income for domestic and foreign operations consisted of the following for the years ended December 31 (in millions):

Provision/(benefit) for income taxes $ 116 $ ( 23 ) $ 191

Pre-tax income/(loss) for domestic and foreign operations attributable to continuing operations consisted of the following for the years ended December 31 (in millions):

2021 2020 2019

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Foreign 115 50 228

(Loss)/income before income taxes $ ( 276 ) $ 680 $ 396

Income/(loss) before income taxes $ 429 $ ( 276 ) $ 680

Deferred income tax assets and liabilities, as of December 31, were comprised of the following (in millions):

Deferred income tax assets:

Net operating loss carryforward $ 37 $ 33

Provision for doubtful accounts and loan loss allowance for vacation ownership contract receivables $ 180 $ 227

Foreign tax credit carryforward 77 75

Tax basis differences in assets of foreign subsidiaries 12 12

Accrued liabilities and deferred income 76 80

Provision for doubtful accounts and loan loss reserves for vacation ownership contract receivables 227 229

Other comprehensive income 73 69

Net operating loss carryforward 33 37

Tax basis differences in assets of foreign subsidiaries 11 12

Valuation allowance (a)

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Deferred income tax liabilities:

Depreciation and amortization 228 189

Installment sales of vacation ownership interests 700 780

Estimated VOI recoveries 60 68

Depreciation and amortization 227 228

Other comprehensive income 53 49

Estimated VOI recoveries 46 60

Deferred income tax liabilities 1,044 1,137

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The valuation allowance will be reduced when and if the Company determines it is more likely than not that the related deferred income tax assets will be realized.

As of December 31, 2020, the Company’s net operating loss carryforwards primarily relate to state net operating losses which are due to expire at various dates, but no later than 2040.

As of December 31, 2021, the Company’s net operating loss carryforwards primarily relate to state and foreign net operating losses of $ 17 million and $ 14 million.

The state net operating losses are due to expire at various dates, but no later than 2041.

The majority of the foreign net operating losses can be carried forward indefinitely.

As of December 31, 2021, the Company had $ 77 million of foreign tax credits.

9 unchanged sentences

Valuation allowance 1.8 ( 7.1 ) ( 2.4 )

Non-deductible expenses ( 1.6 ) — —

Impact of U.S.

tax reform — — ( 5.5 )

Installment sale interest 1.3 ( 0.8 ) 0.5

Other ( 1.9 ) ( 3.2 ) 0.4

1 unchanged sentence

The effective income tax rate for 2021 differed from the statutory U.S.

Federal income tax rate of 21.0 % primarily due to net increases in valuation allowances on the Company’s deferred tax assets.

Federal income tax rate of 21.0 % primarily due to the effect of state income taxes and the net increases in valuation allowances on the Company’s deferred tax assets.

The effective income tax rate for 2020 differed from the statutory U.S.

Federal income tax rate of 21.0 % primarily due to the effect of state income taxes, which were mainly related to additional taxes resulting from 2019 state legislative changes retroactively applicable to 2018 tax filings.

Federal income tax rate of 21.0 % primarily due to net increases in valuation allowances on the Company’s deferred tax assets.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):

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Decreases related to settlements with taxing authorities — — ( 1 )

Decreases as a result of a lapse of the applicable statute of limitations ( 3 ) ( 2 ) ( 2 )

Decreases related to tax positions taken during a prior period — ( 2 ) ( 1 )

Decreases as a result of a lapse of the applicable statute of limitations ( 3 ) ( 3 ) ( 2 )

Ending balance $ 27 $ 26 $ 29

The gross amount of the unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $ 22 million, $ 22 million, and $ 24 million as of December 31, 2021, 2020, and 2019.

The Company accrued potential penalties and interest as a component of (Benefit from)/provision for income taxes on the Consolidated Statements of (Loss)/Income related to these unrecognized tax benefits of $ 1 million, $ 2 million, and $ 1 million during 2020, 2019, and 2018.

The Company accrued potential penalties and interest as a component of Provision/(benefit) for income taxes on the Consolidated Statements of Income/(Loss) related to these unrecognized tax benefits of $ 1 million, $ 1 million, and $ 2 million during 2021, 2020, and 2019.

The Company had a liability for potential penalties of $ 4 million as of December 31, 2021, 2020, and 2019, and potential interest of $ 11 million, $ 10 million, and $ 9 million as of December 31, 2021, 2020, and 2019.

Such liabilities are reported as a component of Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

The Company does not expect the unrecognized tax benefits balance to change significantly over the next 12 months.

The Company files U.S.

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In significant foreign jurisdictions, the 2014 through 2021 tax years generally remain subject to examination by their respective tax authorities.

The statutes of limitations are scheduled to expire within 12 months of the reporting date in certain taxing jurisdictions, and the Company believes that it is reasonably possible that the total amount of its unrecognized tax benefits could decrease by $ 3 million to $ 5 million.

The Company made cash income tax payments, net of refunds, of $ 110 million, $ 50 million, and $ 89 million during 2021, 2020, and 2019.

In addition, the Company made cash income tax payments, net of refunds, of $ 8 million, $ 39 million, and $ 9 million during 2020, 2019, and 2018 related to discontinued operations.

Such payments exclude income tax related payments made to or refunded by the Company’s former parent Cendant.

In addition, the Company made cash income tax payments, net of refunds, of $ 8 million and $ 39 million during 2020 and 2019 related to discontinued operations.

Such payments exclude income tax related payments made to or refunded by the Company’s former parent Cendant and Wyndham Hotels & Resorts, Inc.

(“Wyndham Hotels”).

Vacation Ownership Contract Receivables

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During 2021, 2020, and 2019, the Company’s securitized VOCRs generated interest income of $ 304 million, $ 391 million, and $ 405 million.

Such interest income is included within Consumer financing revenue on the Consolidated Statements of (Loss)/Income.

During 2020, 2019, and 2018, the Company originated VOCRs of $ 481 million, $ 1.5 billion, and $ 1.51 billion and received principal collections of $ 718 million, $ 937 million, and $ 890 million.

Such interest income is included within Consumer financing revenue on the Consolidated Statements of Income/(Loss).

During 2021, 2020, and 2019, the Company had net VOCR originations of $ 780 million, $ 481 million, and $ 1.5 billion and received principal collections of $ 815 million, $ 718 million, and $ 937 million.

The weighted average interest rate on outstanding VOCRs was 14.5 %, 14.4 %, and 14.4 % during 2021, 2020, and 2019.

1 unchanged sentence

Allowance for loan losses as of December 31, 2018 $ 734

Provision for loan losses 456

Contract receivables written off, net ( 413 )

Provision for loan losses, net 479

Contract receivables write-offs, net ( 466 )

Allowance for loan losses as of December 31, 2019 747

Provision for loan losses 479

Provision for loan losses, net 415

Contract receivables write-offs, net ( 469 )

Allowance for loan losses as of December 31, 2020 693

Provision for loan losses 415

Provision for loan losses, net 129

Contract receivables write-offs, net ( 312 )

Allowance for loan losses as of December 31, 2021 $ 510

The Company recorded a provision for loan losses of $ 415 million as a reduction of net revenues during the year ended December 31, 2020, and $ 479 million for the year ended December 31, 2019.

Due to the economic downturn resulting from COVID-19, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of current and projected unemployment rates at that time, the Company increased its loan loss allowance in the first quarter of 2020.

This was reflected as a $ 225 million reduction to Vacation ownership interest sales and a $ 55 million reduction to Cost of vacation ownership interests on the Consolidated Statements of (Loss)/Income.

During the fourth quarter of 2020, the Company updated its evaluation of the impact of COVID-19 on its owners’ ability to repay their contract receivables and, as a result of an improvement in net new defaults and lower than expected unemployment rates, reduced the reserve by $ 20 million with a corresponding $ 7 million change in Cost of vacation ownership interests.

The total impact of COVID-19 on the ability for owners’ to repay their contracts receivables for the year ended December 31, 2020, is reflected as a $ 205 million reduction to Vacation ownership interest sales and a $ 48 million reduction to Cost of vacation ownership interests on the Consolidated Statements of (Loss)/Income.

Estimating the amount of the additional loan loss allowance for COVID-19 involved the use of significant estimates and assumptions.

Management based its estimates upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

Specifically, historical data indicated that net new defaults did not return to prior levels until 15-20 months after the peak in unemployment.

As of December 31, 2020, given the significant amount of government assistance provided to consumers in the early stages of the pandemic, the Company estimated default rates would remain elevated for the next 12-15 months as a result of COVID-19.

The Company will continue to monitor this reserve as more information becomes available.

Due to the economic downturn resulting from COVID-19 during the first quarter of 2020, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of current and projected unemployment rates at that time, the Company recorded a COVID-19 related allowance for loan losses.

Company based its COVID-19 loan loss estimate upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

This allowance consisted of a $ 225 million COVID-19 related provision, which was reflected as a reduction to Vacation ownership interest sales and $ 55 million of estimated recoveries, which were reflected as a reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

During the fourth quarter of 2020, the Company updated its evaluation of the impact of COVID-19 on its owners’ ability to repay their contract receivables and, as a result of an improvement in net new defaults and lower than expected unemployment rates, reduced the provision by $ 20 million with a corresponding $ 7 million increase in Cost of vacation ownership interests.

During 2021, the Company analyzed the adequacy of the COVID-19 related allowance consistent with past methodology, and due to improvement in net new defaults the Company reduced the allowance resulting in a $ 91 million increase to Vacation ownership interest sales and a corresponding $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

Estimating the amount of the COVID-19 related allowance involves the use of significant estimates and assumptions.

Since the time this allowance was established in March 2020, the Company has reversed $ 111 million of the initial $ 225 million provision.

After considering write-offs and the allowance for remaining likely defaults associated with loans that were granted payment deferrals, the Company has no COVID-19 related allowances as of December 31, 2021.

The Company recorded net provisions for loan losses of $ 129 million and $ 415 million as a reduction of net revenues during the years ended December 31, 2021 and 2020, inclusive of the aforementioned COVID-19 related adjustments.

Credit Quality for Financed Receivables and the Allowance for Credit Losses

25 unchanged sentences

As of December 31, 2021 and 2020, contracts under deferment total $ 7 million and $ 37 million.

The Company ceases to accrue interest on VOI contract receivables once the contract has remained delinquent for greater than 90 days and reverses all of the associated accrued interest recognized to date against interest income included within Consumer financing revenue on the Consolidated Statements of (Loss)/Income.

At greater than 120 days, the VOI contract receivable is written off to the allowance for loan losses.

In accordance with its policy, the Company assesses the allowance for loan losses using a static pool methodology and thus does not assess individual loans for impairment separate from the pool.

In accordance with its policy, the Company assesses the allowance for loan losses primarily using a static pool methodology and thus does not assess individual loans for impairment.

The following table details the year of origination of financing receivables using the most recently updated FICO scores, based on the policy described above (in millions):

28 unchanged sentences

During 2020, as a result of resort closures and cancellations surrounding COVID-19, the Company recorded a $ 48 million reduction to exchange inventory consisting of costs previously incurred by RCI to provide enhanced out-of-network travel options to members.

The write-off was included within Operating expenses on the Consolidated Statements of (Loss)/Income.

The write-off was included within Operating expenses on the Consolidated Statements of Income/(Loss).

The Company anticipates that remaining inventory will be fully utilized to maximize exchange supply for its members in 2022 and beyond.

1 unchanged sentence

During 2020, the Company acquired properties in Orlando, Florida, and Moab, Utah, from third-party developers for vacation ownership inventory and property and equipment.

During 2017, the Company acquired property located in Austin, Texas, from a third-party developer for vacation ownership inventory and property and equipment.

During 2013, the Company sold real property located in Las Vegas, Nevada, and Avon, Colorado, to a third-party developer, consisting of vacation ownership inventory and property and equipment.

During 2013, the Company sold real property located in Las Vegas, Nevada, to a third-party developer, consisting of vacation ownership inventory and property and equipment.

The Company recognized no gain or loss on these sales transactions.

1 unchanged sentence

Under the sale of real estate accounting guidance, the conditional rights and obligations of the Company constitute continuing involvement and thus the Company was unable to account for these transactions as a sale.

T he following table summarizes the activity related to the Company’s inventory obligations (in millions):

The following table summarizes the activity related to the Company’s inventory obligations (in millions):

Las Vegas (a)

12 unchanged sentences

Property and equipment, net, as of December 31, consisted of (in millions):

Land $ 30 $ 28

Capitalized software $ 707 $ 694

Building and leasehold improvements 653 591

Furniture, fixtures and equipment 204 207

Capitalized software 694 652

Finance leases 20 14

3 unchanged sentences

Property and equipment, net $ 689 $ 666

During 2020, 2019, and 2018, the Company recorded depreciation and amortization expense from continuing operations of $ 117 million, $ 113 million, and $ 126 million related to property and equipment.

During 2021, 2020, and 2019, the Company recorded depreciation and amortization expense of $ 115 million, $ 117 million, and $ 113 million related to property and equipment.

As of December 31, 2021 and 2020, the Company had accrued capital expenditures of $ 1 million and $ 3 million.

The Company adopted the new Leases accounting standard as of January 1, 2019, resulting in the recognition of $ 158 million of right-of-use assets and $ 200 million of related lease liabilities.

Right-of-use assets were decreased by $ 42 million of tenant improvement allowances and deferred rent balances reclassified from other liabilities.

Both the right-of-use assets and related lease liabilities recognized upon adoption included $ 21 million associated with the Company’s held-for-sale business.

The new standard requires a lessee to recognize right-of-use assets and lease liabilities on the balance sheet for all lease obligations and disclose key information about leasing arrangements, such as the amount, timing, and uncertainty of cash flows arising from leases.

The Company adopted the standard using the modified retrospective

therefore, prior year financial statements were not recast.

The Company elected the package of transition provisions available for expired or existing contracts, which allowed the Company to carryforward its historical assessments of (i) whether contracts are leases or contain leases, (ii) lease classification, and (iii) initial direct costs.

The Company leases property and equipment under finance and operating leases for its corporate headquarters, administrative functions, marketing and sales offices, and various other facilities and equipment.

2 unchanged sentences

The Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases.

The Company also made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments on a straight-line basis over the lease term in the statements of (loss)/income.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value;

2 unchanged sentences

The majority of the Company’s leases have remaining lease terms of one to 20 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within one year .

The table below presents information related to the lease costs for finance and operating leases for the year ended December 31, (in millions):

The table below presents information related to the lease costs for finance and operating leases for the years ended December 31, (in millions):

2021 2020 2019

Operating lease cost $ 22 $ 30 $ 37

4 unchanged sentences

Total finance lease cost $ 4 $ 3 $ 2

The table below presents the lease-related assets and liabilities recorded on the balance sheet:

The table below presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets:

Balance Sheet Classification December 31, 2021 December 31, 2020

13 unchanged sentences

(a) Presented net of accumulated depreciation.

(b) Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

The table below presents supplemental cash flow information related to leases for the year ended December 31, (in millions):

(b) Upon adoption of the lease standard, discount rates used for existing leases were established at January 1, 2019.

The table below presents supplemental cash flow information related to leases for the years ended December 31, (in millions):

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

12 unchanged sentences

Present value of future minimum lease payments $ 136 $ 9

Due to the impact of COVID-19 during 2020, the Company decided to abandon the remaining portion of its administrative offices in New Jersey.

In 2020, the Company was also notified that Wyndham Hotels exercised its early termination rights under the sublease agreement for this building.

As a result, the Company recorded $ 22 million of restructuring charges associated with non-lease components of the office space and $ 24 million of impairment charges associated with the write-off of right-of-use assets and furniture, fixtures and equipment.

Additionally during 2020, the Company incurred $ 5 million of impairment charges related to right-of-use assets at closed sales centers within its Vacation Ownership segment, and $ 1 million of restructuring charges at each of the Vacation Ownership and corporate segments related to right-of-use assets at its corporate headquarters.

Subsequent to the Spin-off and in accordance with the Company’s decision to further reduce its corporate footprint, the Company focused on rationalizing existing facilities which included abandoning portions of its administrative offices in New Jersey.

2 unchanged sentences

These charges were offset by a $ 9 million indemnification receivable from Wyndham Hotels.

Such amounts are included within Separation and related costs on the Consolidated Statements of (Loss)/Income.

Due to the impact of COVID-19 during 2020, the Company decided to abandon the remaining portion of its administrative offices in New Jersey.

The Company was also notified that Wyndham Hotels exercised its early termination rights under the sublease agreement for this building.

Such amounts are included within Separation and related costs on the Consolidated Statements of Income/(Loss).

Refer to Note 27— Impairments and Other Charges for additional information on the Company’s lease related impairments.

Other assets, as of December 31, consisted of (in millions):

Right-of-use assets $ 92 $ 136

Deferred costs $ 81 $ 90

Right-of-use assets 79 92

Non-trade receivables, net 57 77

Marketable securities 27 9

Deferred tax asset 25 27

Investments 21 26

Tax receivables 20 34

Deposits 19 20

Marketable securities 9 10

Tax receivables 5 20

Accrued Expenses and Other Liabilities

4 unchanged sentences

Guarantees 67 67

Inventory sale obligation (b)

Resort related obligations 54 39

Accrued interest 53 65

Accrued advertising and marketing 61 54

Deferred consideration 52 21

Payables associated with separation and sale of business activities 39 39

Resort related obligations 39 33

Restructuring liabilities (c)

Accrued advertising and marketing 34 61

Accrued VOI maintenance fees 29 24

Deferred consideration 21 44

Restructuring liabilities (b)

Accrued legal and professional fees 21 20

Accrued legal settlements 19 13

Inventory sale obligation (c)

Customer advances 10 10

3 unchanged sentences

(a) See Note 13— Leases for details.

(b) See Note 11— Inventory for details.

(b) See Note 28— Restructuring for details.

(d) See Note 26— COVID-19 Related Items for details.

3 unchanged sentences

$ 1,614 $ 1,893

AUD/NZD bank conduit facility (due September 2021) (c)

USD bank conduit facility (due October 2022) (d)

USD bank conduit facility (due October 2022) (c)

AUD/NZD bank conduit facility (due April 2023) (d)

Total $ 1,934 $ 2,234

$1.0 billion secured revolving credit facility (due May 2023) (f)

$1.0 billion secured revolving credit facility (due October 2026) (f)

$300 million secured term loan B (due May 2025) (g)

$250 million 5.625% secured notes (due March 2021) — 250

$250 million 5.625% secured notes (due March 2021) 250 249

$650 million 4.25% secured notes (due March 2022) (h)

$400 million 3.90% secured notes (due March 2023) (i)

$300 million 5.65% secured notes (due April 2024) (j)

$350 million 6.60% secured notes (due October 2025) (k)

$300 million 5.65% secured notes (due April 2024) 299 299

$350 million 6.60% secured notes (due October 2025) (j)

$650 million 6.625% secured notes (due July 2026) 643 641

$400 million 6.00% secured notes (due April 2027) (l)

$400 million 6.00% secured notes (due April 2027) (k)

$650 million 4.50% secured notes (due December 2029) 641 —

$350 million 4.625% secured notes (due March 2030) 346 345

4 unchanged sentences

(b) The carrying amounts of the term notes are net of debt issuance costs of $ 18 million and $ 21 million as of December 31, 2021 and 2020.

(c) The Company has a borrowing capacity of 255 million Australian dollars (“AUD”) and 48 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through September 2021.

Borrowings under this facility are required to be repaid no later than September 2023.

(d) The Company has a borrowing capacity of $ 800 million under the USD bank conduit facility through October 2022.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than November 2023.

(e) The carrying amounts of the secured notes and term loan are net of unamortized discounts of $ 16 million and $ 12 million as of December 31, 2020 and 2019, and net of unamortized debt financing costs of $ 7 million as of December 31, 2020 and 2019.

(d) The Company has a borrowing capacity of 250 million Australian dollars (“AUD”) and 48 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through April 2023.

Borrowings under this facility are required to be repaid no later than May 2025.

(e) The carrying amounts of the secured notes and term loan are net of unamortized discounts of $ 20 million and $ 16 million as of December 31, 2021 and 2020, and net of unamortized debt financing costs of $ 8 million and $ 7 million as of December 31, 2021 and 2020.

(f) The weighted average effective interest rate on borrowings from this facility was 3.19 % and 3.02 % as of December 31, 2021 and 2020.

In late March 2020, the Company drew down its $ 1.0 billion secured revolving credit facility as a precautionary measure due to COVID-19.

The Company used a portion of the proceeds from the issuance of the $ 650 million secured notes to repay a portion of this debt.

At December 31, 2020, the Company had $ 1.2 billion in Cash and cash equivalents on the Consolidated Balance Sheet.

As of December 31, 2021, these borrowings have been repaid.

(g) The weighted average effective interest rate on borrowings from this facility was 2.39 % and 2.93 % as of December 31, 2021 and 2020.

(h) Includes less than $ 1 million and $ 1 million of unamortized gains from the settlement of a derivative as of December 31, 2020 and 2019.

(h) Includes less than $ 1 million of unamortized gains from the settlement of a derivative as of December 31, 2020.

(i) Includes $ 2 million and $ 3 million of unamortized gains from the settlement of a derivative as of December 31, 2021 and 2020.

(j) Effective October 1, 2020, the interest rate of these notes were increased from 5.40 % to 5.65 % as a result of the Company’s corporate notes being downgraded on May 6, 2020.

(k) Effective October 1, 2020, the interest rate of these notes were increased from 6.35 % to 6.60 % as a result of the Company’s corporate notes being downgraded on May 6, 2020.

Includes $ 5 million and $ 6 million of unamortized losses from the settlement of a derivative as of December 31, 2020 and 2019.

(l) Effective October 1, 2020, the interest rate of these notes were increased from 5.75 % to 6.00 % as a result of the Company’s corporate notes being downgraded on May 6, 2020.

Includes $ 11 million and $ 13 million of unamortized gains from the settlement of a derivative as of December 31, 2020 and 2019.

(j) Includes $ 4 million and $ 5 million of unamortized losses from the settlement of a derivative as of December 31, 2021 and 2020.

(k) Includes $ 9 million and $ 11 million of unamortized gains from the settlement of a derivative as of December 31, 2021 and 2020.

Maturities and Capacity

23 unchanged sentences

Sierra Timeshare 2021-1 Receivables Funding, LLC.

On April 29, 2020, the Company closed on a private securitization financing, issued by Sierra Timeshare 2020-1 Receivables Fundings LLC, with an initial principal amount of $ 325 million, which are secured by VOCRs and bearing a floating interest rate of 3.50 % a s of December 31, 2020 .

On March 8, 2021, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2021-1 Receivables Fundings LLC, with an initial principal amount of $ 500 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 1.57 %.

The advance rate for this transaction was 98 %.

1 unchanged sentence

Sierra Timeshare 2021-2 Receivables Funding LLC.

On August 13, 2020, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2020-2 Receivables Funding LLC, with an initial principal amount of $ 575 million, which are secured by VOCRs and bear interest at a weighted average coupon rate of 2.81 %.

On October 26, 2021, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2021-2 Receivables Funding LLC, with an initial principal amount of $ 350 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 1.82 %.

The advance rate for this transaction was 98 %.

As of December 31, 2021, the Company had $ 309 million of outstanding borrowings under these term notes, net of debt issuance costs.

In addition to the 2020 term notes described above, as of December 31, 2020, the Company had $ 1.19 billion of outstanding non-recourse borrowings, net of debt issuance costs, under term notes entered into prior to December 31, 2019.

In addition to the 2021 term notes described above, as of December 31, 2021, the Company had $ 989 million of outstanding non-recourse borrowings, net of debt issuance costs, under term notes entered into prior to December 31, 2020.

The Company’s non-recourse term notes include fixed and floating rate term notes for which the weighted average interest rate was 3.9 %, 4.5 %, and 4.5 % during 2021, 2020, and 2019.

USD bank conduit facility .

The Company has a non-recourse timeshare receivables conduit facility with a total capacity of $ 800 million and bears interest at variable rates based on the base rate or the LIBOR rate plus a spread.

On October 27, 2020, the Company renewed the facility, extending the end of the commitment period from August 30, 2021 to October 31, 2022 and making certain other amendments, including to the advance rate, the LIBOR replacement mechanism, certain default and delinquency triggers, the applicable commercial paper rate and certain concentration limits.

The facility bears

interest based on variable commercial paper rates plus a spread or LIBOR (or a successor rate), plus a spread.

The Company has a non-recourse timeshare receivables conduit facility with a total capacity of $ 800 million and bearing interest based on variable commercial paper rates plus a spread or LIBOR (or a successor rate), plus a spread.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize, no later than November 2023.

As of December 31, 2020, the Company had $ 168 million of outstanding borrowings under these term notes.

As of December 31, 2021, the Company had $ 190 million of outstanding borrowings under this facility.

AUD/NZD bank conduit facility.

The Company has a non-recourse timeshare receivables conduit facility with a total capacity of A$ 255 million and NZ$ 48 million, which is secured by VOCRs and bears interest at variable rates based on the Bank Bill Swap Bid Rate plus 1.50 %.

Borrowings under this facility are required to be repaid no later than September 2023.

As of December 31, 2020, the Company had $ 173 million of outstanding borrowings under these term notes.

On April 27, 2021, the Company renewed its AUD/NZD non-recourse timeshare receivables conduit facility, extending the commitment period from September 2021 to April 2023.

The renewal included a reduction of the AUD borrowing from A$ 255 million to A$ 250 million, while the NZD capacity remained unchanged at NZ$ 48 million.

The facility is secured by VOCRs and bears interest at variable rates based on the Bank Bill Swap Bid Rate plus 1.65 %.

Borrowings under this facility are required to be repaid no later than May 2025.

As of December 31, 2021, the Company had $ 130 million of outstanding borrowings under this facility.

As of December 31, 2021, the Company’s non-recourse vacation ownership debt of $ 1.93 billion was collateralized by $ 2.17 billion of underlying gross VOCRs and related assets.

4 unchanged sentences

as administrative agent and collateral agent.

The agreement provides for new senior secured credit facilities in the amount of $ 1.3 billion, consisting of secured term loan B of $ 300 million maturing in 2025 and a new secured revolving facility of $ 1.0 billion maturing in 2023.

The agreement provided for senior secured credit facilities in the amount of $ 1.3 billion, consisting of the secured term loan B of $ 300 million maturing in 2025 and a secured revolving facility of $ 1.0 billion maturing in 2026.

On October 22, 2021, the Company entered the Second Amendment which renewed the credit agreement governing its $ 1.0 billion revolving credit facility and term loan B, extending the end of the commitment period of the revolving credit facility from May 2023 to October 2026.

The Second Amendment reestablished the annual interest rate pricing construct in existence prior to the First Amendment which is equal to, at the Company’s option, either a base rate plus a margin ranging from 0.75 % to 1.25 % or LIBOR plus a margin ranging from 1.75 % to 2.25 %, in either case based upon the Company’s first lien leverage ratio.

The interest rate per annum applicable to term loan B is equal to, at the Company’s option, either a base rate plus a margin of 1.25 % or LIBOR plus a margin of 2.25 %.

The interest rate per annum applicable to borrowings under the revolving credit facility prior to and after the Relief Period terminates (as per the credit agreement amendment) is equal to, at the Company’s option, either a base rate plus a margin ranging from 0.75 % to 1.25 % or LIBOR plus a margin ranging from 1.75 % to 2.25 %, however, during the Relief Period, the margin ranges are 0.75 % to 1.75 % for base rates and 1.75 % to 2.75 % for LIBOR based rates.

The LIBOR rate with respect to either term loan B or the revolving credit facility borrowings are subject to a “floor” of 0.00 %.

The Second Amendment also includes customary LIBOR transition language providing for alternate interest rate options upon the cessation of LIBOR publication.

As of December 31, 2021, the Company’s interest rate per annum applicable to term loan B and borrowings under the revolving credit facility was the applicable LIBOR based rate plus a margin of 2.25 %.

In connection with this credit agreement, the Company entered into a security agreement with Bank of America, N.A., as collateral agent, as defined in the security agreement, for the secured parties.

The security agreement granted a security interest in the collateral of the Company and added the holders of Travel + Leisure’s outstanding 7.375 % notes due 2020, 5.625 % notes due 2021, 4.25 % notes due 2022, 3.90 % notes due 2023, 5.65 % notes due 2024, 6.60 % notes due 2025, and 6.00 % notes due 2027, as “secured parties,” as defined in the security agreement, that share equally and ratably in the collateral owned by the Company for so long as indebtedness under the credit agreement is secured by such collateral.

The interest rates on the aforementioned notes reflect increases resulting from rating agency downgrades of the Company’s corporate notes.

Pursuant to the terms of the indentures governing such series of notes, the interest rate on each such series of notes may be subject to future increases or decreases, as a result of future downgrades or upgrades to the credit ratings of such notes by Standard & Poor’s Rating Services (“S&P”), Moody’s Investors Services, Inc.

As of December 31, 2021, the security agreement that exists in connection with the credit agreement names Bank of America N.A.

as collateral agent on behalf of the secured parties (as defined in the security agreement), and has been in force since May 31 2018.

The security agreement grants a security interest in the collateral of the Company (as defined in the security agreement) and includes the holders of Travel + Leisure Co.'s 3.90 % notes due 2023, 5.65 % notes due 2024, 6.60 % notes due 2025, 6.625 % notes due 2026, 6.00 % notes due 2027, 4.50 % notes due 2029, and the 4.625 % notes due 2030, as “secured parties.” These noteholders share equally and ratably in the collateral (as defined in the security agreement) owned by the Company for so long as the indebtedness under the credit agreement is secured by such collateral.

The interest rates on the aforementioned notes reflect increases for those notes that were impacted by the rating agency downgrades of the Company’s corporate notes.

Pursuant to the terms of the indentures governing such rating sensitive series of notes, the interest rate on each such series of notes may be subject to future increases or decreases, as a result of future downgrades or upgrades to the credit ratings of such notes by Standard & Poor’s Rating Services (“S&P”), Moody’s Investors Services, Inc.

(“Moody’s”), or a substitute rating agency.

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

Since issuance, the interest rates on the impacted notes have increased 150 basis points as of December 31, 2021, with a maximum potential for additional increase of 50 basis points.

Secured Notes.

On July 24, 2020, the Company issued secured notes, with a face value of $ 650 million and an interest rate of 6.625 %, for net proceeds of $ 643 million.

On November 18, 2021, the Company issued secured notes, with a face value of $ 650 million and an interest rate of 4.5 %, for net proceeds of $ 643 million.

Debt discount and deferred financing costs were collectively $ 9 million, which will be amortized over the life of the notes.

Interest is payable semi-annually in arrears on the notes.

The notes will mature on July 31, 2026, and are redeemable at the Company’s option at a redemption price equal to the greater of (i) the sum of the principal being redeemed, and (ii) a “make-whole” price specified in the Indenture and the notes, plus, in each case, accrued and unpaid interest.

The proceeds will be used for general corporate purposes, which may include the repayment of outstanding indebtedness under its secured revolving credit facility, the future repayment of the Company’s 5.625 % secured notes due March 2021 and the payment of related fees and expenses.

In the third quarter, the Company used a portion of the secured notes proceeds to repay $ 350 million of its indebtedness under the secured revolving credit facility.

Interest is payable semi-annually in arrears.

The notes will mature on December 1, 2029, and are redeemable at the Company’s option at a redemption price equal to the greater of (i) the sum of the principal being redeemed, and (ii) a “make-whole” price specified in the indenture and the notes, plus, in each case, accrued and unpaid interest.

The net proceeds of this offering, together with cash on hand, was used to redeem all of the Company’s $ 650 million 4.25 % secured notes due March 2022, and to pay the related fees and expenses.

As of December 31, 2021, the Company had $ 2.44 billion of outstanding secured notes issued prior to December 31, 2020.

Interest is payable semi-annually in arrears on the notes.

Interest on these notes is payable semi-annually in arrears.

The notes are redeemable at the Company’s option at a redemption price equal to the greater of (i) the sum of the principal being redeemed, and (ii) a “make-whole” price specified in the indenture of the notes, plus, in each case, accrued and unpaid interest.

2 unchanged sentences

The Company classifies debt issuance costs related to its revolving credit facilities and the bank conduit facilities within Other assets on the Consolidated Balance Sheets.

Such costs were $ 11 million as of December 31, 2020 and 2019.

Such costs were $ 10 million and $ 11 million as of December 31, 2021 and 2020.

Fair Value Hedges

1 unchanged sentence

The fixed interest rates on these notes were effectively modified to a variable LIBOR-based index.

During 2019, the Company terminated these swap agreements resulting in a gain of $ 13 million which will be amortized over the remaining life of the secured notes as a reduction to Interest expense on the Consolidated Statements of (Loss)/Income.

The Company had $ 9 million and $ 11 million of deferred gains associated with this transaction as of December 31, 2021 and 2020, which are included within Debt on the Consolidated Balance Sheets.

1 unchanged sentence

The fixed interest rates on these notes were effectively modified to a variable LIBOR-based index.

During May 2015, the Company terminated the swap agreements resulting in a gain of $ 17 million, which is being amortized over the remaining life of the senior unsecured notes as a reduction to Interest expense on the Consolidated Statements of (Loss)/Income.

During 2015, the Company terminated the swap agreements resulting in a gain of $ 17 million, which is being amortized over the remaining life of the senior secured notes as a reduction to Interest expense on the Consolidated Statements of Income/(Loss).

The Company had $ 2 million and $ 4 million of deferred gains as of December 31, 2021 and 2020, which are included within Debt on the Consolidated Balance Sheets.

1 unchanged sentence

The revolving credit facilities and term loan B are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement.

The financial ratio covenants consist of 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.

The original financial ratio covenants consist of a minimum interest coverage ratio of no less than 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.

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.

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.

On July 15, 2020, the Company entered into an amendment to the Company’s credit agreement (“Credit Agreement Amendment”).

The Credit Agreement Amendment established a relief period with respect to the Company’s secured revolving credit facility, which commenced on July 15, 2020, and will end on April 1, 2022, or upon termination by the Company of the relief period, subject to certain conditions.

The Credit Agreement Amendment increased the existing leverage-based financial covenant of 4.25 to 1.0 by varying levels for each applicable quarter during the Relief Period.

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 reestablishes 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, increased the interest rate applicable to borrowings under the Company’s secured revolving credit facility based on the Company’s first lien leverage ratio in any quarter it exceeds 4.25 to 1.0, until the end of the Relief Period;

added 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 effective date of the Credit Agreement Amendment, and on or prior to the last day of the relevant fiscal quarter;

and requires the Company and its subsidiaries 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 effective date of the Credit Agreement Amendment.

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

The Relief Period includes certain restrictions on the use of cash including the prohibition of share repurchases until such time as the Company chooses to exercise its option to exit the amendment.

Additionally, the amendment limits the payout of dividends during the Relief Period to not exceed $ 0.50 per share, the rate in effect prior to the amendment.

The Company has the option to terminate the Relief Period at any time it can demonstrate compliance with the 4.25 to 1.0 first lien leverage ratio.

On July 15, 2020, the Company entered into the First Amendment to the Company’s credit agreement governing its revolving credit facility and term loan B.

The First Amendment established a Relief Period with respect to the Company’s secured revolving credit facility, which commenced on July 15, 2020, and was scheduled to end on April 1, 2022.

The First Amendment increased the existing leverage-based financial covenant of 4.25 to 1.0 by varying levels for each applicable quarter during the Relief Period.

Among other changes, the First Amendment increased the interest rate applicable to borrowings under the Company’s secured revolving credit facility utilizing a tiered pricing grid based on the Company’s first lien leverage ratio in any quarter it exceeded 4.25 to 1.0, until the end of the Relief Period;

added 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 effective date of the First Amendment and on or prior to the last day of the relevant fiscal quarter;

and required the Company to maintain an interest coverage ratio (as defined in the credit agreement) of no less than 2.0 to 1.0.

The First Amendment amended the definition of “Material Adverse Effect” in the credit agreement to take into consideration the impacts of the COVID-19 pandemic during the Relief Period.

The Relief Period included certain restrictions on the use of cash including the prohibition of share repurchases.

Finally, the First Amendment limited the payout of dividends during the Relief Period to not exceed $ 0.50 per share, the rate in effect prior to the amendment.

Under the First Amendment to the credit agreement, if the first lien leverage ratio exceeded 4.25 to 1.0, the interest rate on revolver borrowings would increase, and the Company would be subject to higher fees associated with its letters of credit, both of which were based on a tiered pricing grid.

Given the first lien leverage ratio at December 31, 2020, the fees associated with letters of credit and the interest rate on the revolver borrowings increased 25 basis points effective March 1, 2021, until the Relief period was terminated by the Second Amendment on October 22, 2021.

The Second Amendment stipulated a first lien leverage ratio financial covenant not to exceed 4.75 to 1.0 commencing with the December 31, 2021 period through June 30, 2022, after which time it will return to 4.25 to 1.0, the level in existence prior to the effective date of the First Amendment.

The Second Amendment also increased the interest coverage ratio (as defined in the credit agreement) to no less than 2.5 to 1.0, the level existing prior to the effective date of the First

Amendment, and eliminated restrictions regarding share repurchases, dividends, acquisitions, and the Relief Period minimum liquidity covenant.

In connection with entering the Second Amendment, the Company resumed share repurchases during the fourth quarter of 2021.

The Second Amendment reestablished the tiered pricing grid that was in place prior to the First Amendment.

The interest rate on revolver borrowings and fees associated with letters of credit are subject to future changes based on the Company’s first lien leverage ratio which could serve to further reduce the interest rate if the ratio were to decrease to 3.75 to 1.0 or below.

As of December 31, 2021, the Company’s interest coverage ratio was 4.00 to 1.0 and the first lien leverage ratio was 3.99 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, the Company was in compliance with all of the financial

covenants described above.

Under the Credit Agreement Amendment, if the first lien leverage ratio exceeds 4.25 to 1.0, the interest rate on revolver borrowings would increase, and the Company would be subject to higher fees associated with its 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.

This interest rate is subject to future changes based on the Company’s first lien ratio which could serve to further increase the rate up to an additional 25 basis points, or reduce this rate.

As of December 31, 2021, the Company was in compliance with all of the financial covenants described above.

Each of the Company’s non-recourse securitized term notes, and the bank conduit facilities contain various triggers relating to the performance of the applicable loan pools.

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Interest Expense

The Company incurred interest expense of $ 192 million during 2020.

Such amount consisted primarily of interest on debt, excluding non-recourse vacation ownership debt, and included an offset of $ 1 million of capitalized interest.

The Company incurred interest expense of $ 198 million during 2021, consisting of interest on debt, excluding non-recourse vacation ownership debt, and including an offset of less than $ 1 million of capitalized interest.

Cash paid related to such interest was $ 207 million.

The Company incurred interest expense of $ 162 million during 2019.

Such amount consisted primarily of interest on debt, excluding non-recourse vacation ownership debt, and included an offset of $ 3 million of capitalized interest.

The Company incurred interest expense of $ 192 million during 2020, consisting of interest on debt, excluding non-recourse vacation ownership debt, and including an offset of $ 1 million of capitalized interest.

Cash paid related to such interest was $ 163 million.

The Company incurred interest expense of $ 170 million during 2018.

Such amount consisted primarily of interest on debt, excluding non-recourse vacation ownership debt, and included an offset of $ 2 million of capitalized interest.

The Company incurred interest expense of $ 162 million during 2019, consisting of interest on debt, excluding non-recourse vacation ownership debt, and including an offset of $ 3 million of capitalized interest.

Cash paid related to such interest was $ 158 million.

Interest expense incurred in connection with the Company’s non-recourse vacation ownership debt was $ 101 million, $ 106 million, and $ 88 million during 2020, 2019, and 2018, and is reported within Consumer financing interest on the Consolidated Statements of (Loss)/Income.

Interest expense incurred in connection with the Company’s non-recourse vacation ownership debt was $ 81 million, $ 101 million, and $ 106 million during 2021, 2020, and 2019, and is reported within Consumer financing interest on the Consolidated Statements of Income/(Loss).

Cash paid related to such interest was $ 56 million, $ 74 million, and $ 81 million during 2021, 2020, and 2019.

Variable Interest Entities

In accordance with the applicable accounting guidance for the consolidation of a VIE, the Company analyzes its variable interests, including loans, guarantees, SPEs, and equity investments, to determine if an entity in which the Company has a variable interest is a VIE.

If the entity is considered to be a VIE, the Company determines whether it would be considered the entity’s primary beneficiary.

The Company consolidates into its financial statements those VIEs for which it has determined that it is the primary beneficiary.

The Company analyzes its variable interests, including loans, guarantees, SPEs, and equity investments, to determine if an entity in which the Company has a variable interest is a VIE.

If the entity is deemed to be a VIE, the Company consolidates those VIEs for which the Company is the primary beneficiary.

Vacation Ownership Contract Receivables Securitizations

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Total, net $ 478 $ 366

Clearwater, Florida Property

During 2015, the Company entered into an agreement with a third-party partner whereby the partner would develop and construct VOI inventory through an SPE.

The Company is considered to be the primary beneficiary for specified assets and liabilities of the SPE and, therefore, during 2017 the Company consolidated $ 51 million of both its Property and equipment, net and Debt on its Consolidated Balance Sheets.

During 2018, the Company made its final purchase of VOI inventory from the SPE, and the mortgage note was extinguished.

Saint Thomas, U.S.

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As such, during 2017, the Company was considered the primary beneficiary for specified assets and liabilities of the SPE, and therefore consolidated $ 64 million of Property and equipment, net and $ 104 million of Debt on its Consolidated Balance Sheets.

As a result of this consolidation, the Company incurred a non-cash $ 37 million loss due to the write-down

of property and equipment to fair value.

Such loss is presented within Asset impairments on the Consolidated Statements of (Loss)/Income.

As a result of this consolidation, the Company incurred a non-cash $ 37 million loss due to the write-down of property and equipment to fair value.

During 2019, the Company made its final purchase of VOI inventory from the SPE and the debt was extinguished.

During 2020, the SPEs conveyed no property and equipment to the Company.

The SPEs conveyed $ 23 million of property and equipment to the Company during 2019.

The SPEs conveyed no property and equipment to the Company during either 2021 or 2020.

The Company measures its financial assets and liabilities at fair value on a recurring basis and utilizes the fair value hierarchy to determine such fair values.

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On a recurring basis, such assets and liabilities are remeasured at estimated fair value (all of which are Level 2) and thus are equal to the carrying value.

The impact of interest rate caps was immaterial as of December 31, 2020.

The impact of interest rate caps was immaterial as of December 31, 2021 and 2020.

For assets and liabilities that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs.

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Debt (Level 2) $ 5,313 $ 5,514 $ 6,418 $ 6,705

The Company estimates the fair value of its VOCRs using a discounted cash flow model which it believes is comparable to

the model that an independent third-party would use in the current market.

The Company estimates the fair value of its VOCRs using a discounted cash flow model which it believes is comparable to the model that an independent third-party would use in the current market.

The model uses Level 3 inputs consisting of default rates, prepayment rates, coupon rates, and loan terms for the contract receivables portfolio as key drivers of risk and relative value that, when applied in combination with pricing parameters, determines the fair value of the underlying contract receivables.

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Changes in interest rates and foreign exchange rates expose the Company to market risk.

The Company has used cash flow and fair value hedges as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates.

The Company periodically uses cash flow and fair value hedges as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates.

As a matter of policy, the Company only enters into transactions that it believes will be highly effective at offsetting the underlying risk and it does not use derivatives for trading or speculative purposes.

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The Company periodically uses financial derivatives to strategically adjust its mix of fixed to floating rate debt.

The derivative

instruments utilized include interest rate swaps which convert fixed-rate debt into variable-rate debt (i.e.

fair value hedges) to manage the overall interest cost.

The derivative instruments utilized include interest rate swaps which convert fixed-rate debt into variable-rate debt (i.e.

fair value hedges) and interest rate caps (undesignated hedges) to manage the overall interest cost.

For relationships designated as fair value hedges, changes in fair value of the derivatives are recorded in income, with offsetting adjustments to the carrying amount of the hedged debt.

As of December 31, 2020, the Company did not have any interest rate derivatives designated as cash flow hedges.

The following table summarizes information regarding the losses recognized in AOCL for the years ended December 31 (in millions):

2020 2019 2018

Designated hedging instruments

Foreign exchange contracts $ — $ — $ ( 1 )

As of December 31, 2021, the Company had no interest rate derivatives designated as fair value or cash flow hedges.

There were no losses on derivatives recognized in AOCL for the years ended December 31, 2021, 2020, or 2019.

The following table summarizes information regarding the gains recognized in income on the Company’s freestanding derivatives for the years ended December 31 (in millions):

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Foreign exchange contracts (a)

(a) Included within Operating expenses on the Consolidated Statements of (Loss)/Income, which is primarily offset by changes in the value of the underlying assets and liabilities.

(a) Included within Operating expenses on the Consolidated Statements of Income/(Loss), which is primarily offset by changes in the value of the underlying assets and liabilities.

Credit Risk and Exposure

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With the exception of the financing provided to customers of its vacation ownership businesses, the Company does not normally require collateral or other security to support credit sales.

The Company is subject to risks relating to the geographic concentrations of (i) areas in which the Company is currently developing and selling vacation ownership properties, (ii) sales offices in certain vacation areas, and (iii) customers of the Company’s vacation ownership business, which in each case, may result in the Company’s results of operations being more sensitive to local and regional economic conditions and other factors, including competition, natural disasters, and economic downturns, than the Company’s results of operations would be, absent such geographic concentrations.

The Company is subject to risks relating to the geographic concentrations of (i) areas in which the Company is currently developing and selling vacation ownership properties, (ii) sales offices in certain vacation areas, and (iii) customers of the Company’s vacation ownership business, which in each case, may result in the Company’s results of operations being more sensitive to local and regional economic conditions and other factors, including competition, extreme weather conditions and other natural disasters, and economic downturns, than the Company’s results of operations would be, absent such geographic concentrations.

Local and regional economic conditions and other factors may differ materially from prevailing conditions in other parts of the world.

Florida and Nevada are examples of areas with concentrations of sales offices.

For the year ended December 31, 2020, 16 % and 15 % of the Company’s VOI sales revenues were generated in sales offices located in Florida and Nevada.

Included within the Consolidated Statements of (Loss)/Income are net revenues generated from transactions in the state of Florida of 18 %, 19 %, and 16 % during 2020, 2019, and 2018.

There were 12 % of net revenues generated from transactions in the state of California during 2020, and 11 % during 2019 and 2018.

For the year ended December 31, 2021, 15 % of the Company’s VOI sales revenues were generated in sales offices located in Florida and 15 % in Nevada.

Included within the Consolidated Statements of Income/(Loss) are net revenues generated from transactions in the state of Florida of 15 %, 18 %, and 19 % during 2021, 2020, and 2019;

net revenues generated from transactions in California of 10 %, 12 %, and 11 %;

and net revenues generated from transactions in the state of Nevada of 10 %, 6 %, and 9 %.

Commitments and Contingencies

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Purchase commitments made by the Company as of December 31, 2021, aggregated to $ 826 million, of which $ 656 million were for marketing-related activities, $ 61 million were related to the development of vacation ownership properties, and $ 45 million were for information technology activities.

Commitments for marketing related activities decreased $ 317 million from 2019 to 2020, primarily related to renegotiated and exited contracts as a result of COVID-19.

Inventory Sold Subject to Conditional Repurchase

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As of December 31, 2020, the Company had $ 127 million of irrevocable standby letters of credit outstanding, of which $ 96 million were under its revolving credit facilities.

Such letters of credit issued during 2020 includes a $ 48 million letter of credit for guarantees related to the sale of the European vacation rentals business in which Wyndham Hotels and Travel + Leisure are required to maintain certain credit ratings, see Note 29— Transactions with Former Parent and Former Subsidiaries for additional details.

Such letters of credit issued during 2020 included a $ 48 million letter of credit for guarantees related to the sale of the European vacation rentals business for which Wyndham Hotels and Travel + Leisure Co.

are required to maintain certain credit ratings.

This letter of credit was released during 2021, see Note 29— Transactions with Former Parent and Former Subsidiaries for additional details.

The letters of credit issued during 2021 and 2020 also supported the securitization of VOCR fundings, certain insurance policies, and development activity at the Company’s Vacation Ownership segment.

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The Company is involved in claims, legal and regulatory proceedings, and governmental inquiries related to its business, none of which, in the opinion of management, is expected to have a material effect on the Company’s results of operations or financial condition.

Travel + Leisure Litigation

Travel + Leisure Co.

The Company may be from time to time involved in claims, legal and regulatory proceedings, and governmental inquiries arising in the ordinary course of its business including but not limited to:

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and negligence, breach of contract, fraud, consumer protection and other statutory claims by guests and other consumers for alleged injuries sustained at or acts or occurrences related to vacation ownership units or resorts or in relation to guest reservations and bookings;

for its Travel and Membership business — breach of contract,

fraud and bad faith claims by affiliates and customers in connection with their respective agreements, negligence, breach of contract, fraud, consumer protection and other statutory claims asserted by members, guests and other consumers for alleged injuries sustained at or acts or occurrences related to affiliated resorts, or in relation to guest reservations and bookings;

for its Travel and Membership business — breach of contract, fraud and bad faith claims by affiliates and customers in connection with their respective agreements, negligence, breach of contract, fraud, consumer protection and other statutory claims asserted by members, guests and other consumers for alleged injuries sustained at or acts or occurrences related to affiliated resorts, or in relation to guest reservations and bookings;

and for each of its businesses, bankruptcy proceedings involving efforts to collect receivables from a debtor in bankruptcy, employment matters including but not limited to, claims of wrongful termination, retaliation, discrimination, harassment and wage and hour claims, whistleblower claims, claims of infringement upon third parties’ intellectual property rights, claims relating to information security, privacy and consumer protection, fiduciary duty/trust claims, tax claims, environmental claims, and landlord/tenant disputes.

The Company records an accrual for legal contingencies when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company records an accrual for legal contingencies when it determines, after consultation with outside counsel where appropriate, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the Company’s ability to make a reasonable estimate of loss.

The Company reviews these accruals each fiscal quarter and makes revisions based on changes in facts and circumstances including changes to its strategy in dealing with these matters.

The Company believes that it has adequately accrued for such matters with reserves of $ 13 million as of December 31, 2020 and 2019.

Such reserves are exclusive of matters relating to the Company’s separation from Cendant, matters relating to the Spin-off, matters relating to the sale of the European vacation rentals business, and matters relating to the sale of the North American vacation rentals business, which are discussed in Note 29— Transactions with Former Parent and Former Subsidiaries .

Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur.

The Company believes that it has adequately accrued for such matters with reserves of $ 19 million and $ 13 million as of December 31, 2021 and 2020.

Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses

in these matters, unfavorable results could occur.

As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings and/or cash flows in any given reporting period.

As of December 31, 2020, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to $ 35 million in excess of recorded accruals.

As of December 31, 2021, it is estimated that the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to $ 31 million in excess of recorded accruals.

However, the Company does not believe that the impact of such litigation should result in a material liability to the Company in relation to its consolidated financial position and/or liquidity.

For matters deemed reasonably possible, therefore not requiring accrual, the Company believes that such matters will not have a material effect on its results of operations, financial position or cash flows based on information currently available.

As of December 31, 2020, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to an amount less than $ 1 million.

As of December 31, 2021, it is estimated that the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to an amount less than $ 1 million.

G UARANTEES /I NDEMNIFICATIONS

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As a result of the Spin-off, the Company failed to maintain an investment-grade credit rating with at least one rating agency, which triggered a default.

During 2018, the Company agreed to pay $ 8

million in fees in lieu of posting collateral in favor of the development partner in an amount equal to the remaining obligations under the agreements.

See Note 29— Transactions with Former Parent and Former Subsidiaries for additional details.

As part of the Fee-for-Service program, the Company may guarantee to reimburse the developer a certain payment or to purchase inventory from the developer, for a percentage of the original sale price if certain future conditions exist.

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The components of accumulated other comprehensive income/(loss) are as follows (in millions):

Pretax Foreign Currency Translation Adjustments Unrealized Gains/(Losses) on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income/(Loss)

Balance as of December 31, 2017 $ ( 96 ) $ ( 2 ) $ ( 5 ) $ ( 103 )

Other comprehensive (loss)/income before reclassifications ( 75 ) — 1 ( 74 )

Amount reclassified to earnings 24 — 6 30

Pretax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive (Loss)/Income

Balance as of December 31, 2018 $ ( 147 ) $ ( 2 ) $ 2 $ ( 147 )

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Balance as of December 31, 2020 ( 113 ) ( 1 ) — ( 114 )

Tax Foreign Currency Translation Adjustments Unrealized Gains/(Losses) on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income/(Loss)

Other comprehensive loss before reclassifications ( 32 ) — — ( 32 )

Balance as of December 31, 2021 $ ( 145 ) $ ( 1 ) $ — $ ( 146 )

Other comprehensive income before reclassifications 13 — — 13

Amount reclassified to earnings — — ( 2 ) ( 2 )

Effect of adoption of new accounting principle (a)

( 8 ) — — ( 8 )

Tax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive (Loss)/Income

Balance as of December 31, 2018 $ 94 $ 2 $ ( 1 ) $ 95

Other comprehensive income/(loss) before reclassifications 1 ( 1 ) 1 1

Amount reclassified to earnings — — — —

Balance as of December 31, 2019 95 1 — 96

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Balance as of December 31, 2020 97 1 — 98

Net of Tax Foreign Currency Translation Adjustments Unrealized Gains/(Losses) on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income/(Loss)

Other comprehensive income before reclassifications — — — —

Balance as of December 31, 2021 $ 97 $ 1 $ — $ 98

Other comprehensive (loss)/income before reclassification ( 62 ) — 1 ( 61 )

Amount reclassified to earnings 24 — 4 28

Other comprehensive (loss)/income ( 38 ) — 5 ( 33 )

Effect of adoption of new accounting principle (a)

( 8 ) — — ( 8 )

Net of Tax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive (Loss)/Income

Balance as of December 31, 2018 $ ( 53 ) $ — $ 1 $ ( 52 )

Other comprehensive (loss) before reclassifications — ( 1 ) — ( 1 )

Other comprehensive loss before reclassification — ( 1 ) — ( 1 )

Amount reclassified to earnings — 1 — 1

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Balance as of December 31, 2020 ( 16 ) — — ( 16 )

(a) Impact of the Company’s adoption of new accounting guidance which allowed for the reclassification of the stranded tax effects resulting from the implementation of the Tax Cuts and Jobs Act of 2017.

This adoption resulted in an $ 8 million reclassification of tax benefit from AOCL to Retained Earnings.

Other comprehensive loss before reclassifications ( 32 ) — — ( 32 )

Balance as of December 31, 2021 $ ( 48 ) $ — $ — $ ( 48 )

Currency translation adjustments exclude income taxes related to investments in foreign subsidiaries where the Company intends to reinvest the undistributed earnings indefinitely in those foreign operations.

Reclassifications out of AOCL are presented in the following table.

Amounts in parentheses indicate debits to the Consolidated Statements of (Loss)/Income (in millions):

Year Ended December 31,

Unrealized losses on cash flow hedge, net

(Loss)/gain on disposal of discontinued business, net of income taxes $ — $ ( 1 )

Net income attributable to Travel + Leisure shareholders $ — $ ( 1 )

There were no reclassifications out of AOCL during 2021 and 2020.

Stock-Based Compensation

The Company has a stock-based compensation plan available to grant RSUs, PSUs, SSARs, non-qualified stock options (“NQs”), and other stock-based awards to key employees, non-employee directors, advisors, and consultants.

The Company has a stock-based compensation plan available to grant RSUs, PSUs, SSARs, NQs, and other stock-based awards to key employees, non-employee directors, advisors, and consultants.

The Wyndham Worldwide Corporation 2006 Equity and Incentive Plan was originally adopted in 2006 and was amended and restated in its entirety and approved by shareholders on May 17, 2018, (the “Amended and Restated Equity Incentive Plan”).

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During the year ended December 31, 2021, the Company granted incentive equity awards to key employees and senior officers totaling $ 35 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 2 million in the form of stock options.

Of these awards, the majority of NQs and RSUs will vest ratably over a period of four years .

Of these awards, the majority of RSUs and NQs will vest ratably over a period of four years .

The PSUs will cliff vest on the third anniversary of the grant date, contingent upon the Company achieving certain performance metrics.

During the year ended December 31, 2020, the Company granted incentive equity awards totaling $ 35 million in the form of RSUs, $ 8 million in the form of PSUs, and $ 8 million in the form of stock options.

During 2018, the Company granted incentive equity awards totaling $ 58 million in the form of RSUs and $ 7 million in the form of stock options.

During 2019, the Company granted incentive equity awards totaling $ 26 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 5 million in the form of stock options.

The activity related to incentive equity awards granted to the Company’s key employees and senior officers by the Company for the year ended December 31, 2021, consisted of the following (in millions, except grant prices):

Balance as of December 31, 2019 Granted Vested/Exercised Forfeitures (a)

Balance as of December 31, 2020 Granted Vested/Exercised (a)

Forfeitures (b)

Balance as of December 31, 2021

Number of RSUs 1.0 1.0 ( 0.3 ) ( 0.1 ) 1.6 (b)

Number of RSUs 1.6 0.6 ( 0.3 ) ( 0.1 ) 1.8 (c)

Weighted average grant price $ 38.22 $ 58.47 $ 44.72 $ 47.25 $ 47.83

Number of PSUs 0.2 0.1 — — 0.3 (c)

Number of PSUs 0.3 0.1 — — 0.4 (d)

Weighted average grant price $ 42.57 $ 59.00 $ — $ — $ 48.18

Number of SSARs 0.2 — — — 0.2 (d)

Number of SSARs 0.2 — ( 0.2 ) — — (e)

Weighted average grant price $ 34.51 $ — $ 34.51 $ — $ —

Number of NQs 1.3 1.1 — ( 0.1 ) 2.3 (e)

Number of NQs 2.3 0.1 ( 0.1 ) — 2.3 (f)

Weighted average grant price $ 44.15 $ 59.00 $ 44.50 $ — $ 45.32

(a) The Company recognizes forfeitures as they occur.

(b) Aggregate unrecognized compensation expense related to RSUs was $ 45 million as of December 31, 2020, which is expected to be recognized over a weighted average period of 2.4 years.

(d) There were 0.2 million SSARs that were exercisable as of December 31, 2020.

There was no unrecognized compensation expense related to SSARs as of December 31, 2020, as all SSARs were vested.

(e) There were 0.5 million NQs which were exercisable as of December 31, 2020.

(a) Upon exercise of NQs and SSARs and upon vesting of RSUs and PSUs, the Company issues new shares to participants.

(b) The Company recognizes forfeitures as they occur.

(c) Aggregate unrecognized compensation expense related to RSUs was $ 51 million as of December 31, 2021, which is expected to be recognized over a weighted average period of 2.4 years.

(d) There was no unrecognized compensation expense related to PSUs as these awards were not probable of vesting as of December 31, 2021.

The maximum amount of compensation expense associated with these awards would be $ 8 million which would be recognized over a weighted average period of 2.0 years.

(e) A s of December 31, 2021, all SSARs had been exercised;

therefore there was no unrecognized compensation expense.

(f) There were 0.9 million NQs which were exercisable as of December 31, 2021.

These NQs will expire over a weighted average period of 6.9 years and carry a weighted average grant date fair value of $ 8.39 .

Unrecognized compensation expense for the NQs was $ 8 million as of December 31, 2021, which is expected to be recognized over a weighted average period of 2.3 years.

(f) Upon execution of NQs, the Company issues new shares to participants.

The fair value of stock options granted by the Company during 2021, 2020, and 2019 were estimated on the dates of these grants using the Black-Scholes option-pricing model with the relevant weighted average assumptions outlined in the table below.

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Expected volatility 44.80 % 32.60 % - 32.88 % 29.97 %

Expected life 6.25 - 7.50 years 6.25 years

Expected life (a)

6.25 years 6.25 - 7.50 years 6.25 years

Risk-free interest rate 1.09 % 0.95 % - 1.03 % 2.59 %

Projected dividend yield 3.12 % 4.87 % 4.06 %

(a) The maximum contractual term for these options is 10 years.

The total intrinsic value of exercised options during 2021 were $ 1 million.

There were no options exercised during 2020 or 2019.

The fair value of vested options during 2021, 2020, and 2019 were $ 6 million, $ 3 million, and $ 1 million.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense of $ 32 million, $ 20 million, and $ 24 million during 2021, 2020, and 2019, related to the incentive equity awards granted to key employees, senior officers, and non-employee directors.

Such stock-based compensation expense included expense related to discontinued operations of $ 22 million for 2018.

Stock-based compensation expense for 2019 and 2018 included $ 4 million and $ 105 million of expense which has

been classified within Separation and related costs in continuing operations on the Consolidated Statements of (Loss)/Income.

Stock-based compensation expense for 2019 included $ 4 million of expense which has been classified within Separation and related costs in continuing operations on the Consolidated Statements of Income/(Loss).

The Company recognized $ 9 million, $ 2 million, and $ 7 million of associated tax benefits during 2021, 2020, and 2019.

The Company paid $ 9 million, $ 2 million, and $ 4 million of taxes for the net share settlement of incentive equity awards that vested during 2021, 2020, and 2019.

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Employee Stock Purchase Plan

During 2019, the Company implemented an employee stock purchase plan.

This plan allows eligible employees to purchase common shares of Company stock through payroll deductions at a 10 % discount from the fair market value at the grant date.

The Company issued 0.2 million shares in both 2020 and 2019 and recognized $ 1 million of compensation expense related to the grants under this plan in each period.

The value of shares issued under this plan was $ 7 million and $ 11 million for 2020 and 2019.

The Company has an employee stock purchase plan which allows eligible employees to purchase common shares of Company stock through payroll deductions at a 10 % discount from the fair market value at the grant date.

The Company issued 0.1 million, 0.2 million, and 0.2 million shares during 2021, 2020, and 2019 and recognized $ 1 million of compensation expense related to the grants under this plan in each period.

The value of shares issued under this plan was $ 8 million, $ 7 million, and $ 11 million during 2021, 2020, and 2019.

Employee Benefit Plans

Defined Contribution Benefit Plans

Travel + Leisure sponsors domestic defined contribution savings plans and a domestic deferred compensation plan that provide eligible employees of the Company an opportunity to accumulate funds for retirement.

Travel + Leisure Co.

sponsors domestic defined contribution savings plans and a domestic deferred compensation plan that provide eligible employees of the Company an opportunity to accumulate funds for retirement.

The Company matches the contributions of participating employees on the basis specified by each plan.

The Company’s cost for these plans was $ 19 million during 2020, and $ 33 million during both 2019 and 2018.

The Company’s cost for these plans was $ 27 million, $ 19 million, and $ 33 million during 2021, 2020, and 2019.

In addition, the Company contributes to several foreign employee benefit contributory plans which also provide eligible employees with an opportunity to accumulate funds for retirement.

The Company’s contributory cost for these plans was $ 7 million during 2020, $ 8 million during 2019, and $ 10 million during 2018.

The Company’s contributory cost for these plans was $ 6 million, $ 7 million, and $ 8 million during 2021, 2020, and 2019.

Defined Benefit Pension Plans

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Under these plans, benefits are based on an employee’s years of credited service and a percentage of final average compensation or as otherwise described by the plan.

During 2018, the Company recognized a $ 4 million loss related to the settlement of its obligation under these plans for the European vacation rentals business which was included as a component of the (Loss)/gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of (Loss)/Income.

The Company had $ 5 million and $ 4 million of net pension liability as of December 31, 2020 and 2019, included within Accrued expenses and other liabilities.

The Company had $ 4 million and $ 5 million of net pension liability as of December 31, 2021 and

2020, included within Accrued expenses and other liabilities.

As of December 31, 2021 and 2020, the Company had less than $ 1 million of unrecognized gains included within Accumulated other comprehensive loss on the Consolidated Balance Sheets.

The Company’s policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws and additional amounts that the Company determines to be appropriate.

The Company had no pension expense related to these plans during 2020, 2019, and 2018.

The Company recognized no pension expense related to these plans during 2021, 2020, and 2019.

Segment Information

The Company has two operating segments:

The Company has two reportable segments:

Vacation Ownership and Travel and Membership.

In connection with the Travel + Leisure brand acquisition the Company updated the names and composition of its segments to better align with how the segments are managed.

The Vacation Ownership segment develops, markets and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.

During 2018, the Company decided to explore strategic alternatives for its North American vacation rentals business, which was part of its Travel and Membership segment and completed the sale of this business on October 22, 2019.

The assets and liabilities of this business were classified as held-for-sale until the sale was completed.

With the formation of the Travel + Leisure Group the Company decided that the operations of its Extra Holidays business, which focuses on direct-to-consumer bookings, better aligns with the operations of this new business line and therefore transitioned the management of the Extra Holidays business to the Travel and Membership segment.

As such, the Company reclassified the results of its Extra Holidays business, which was previously reported within the Vacation Ownership segment, into the Travel and Membership segment.

This change is reflected in all periods reported.

During 2019, the Company sold its North American vacation rentals business, which was part of its Travel and Membership segment.

This business did not meet the criteria to be classified as a discontinued operation;

therefore, the results of operations through the date of sale are included in the 2018 and 2019 results presented in the tables below.

The reportable segments presented below represent the Company’s operating segments for which discrete financial information is available and which are utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources.

therefore, the results of operations through the date of sale are included in the 2019 results presented in the tables below.

The reportable segments presented below are those for which discrete financial information is available and which are utilized on a regular basis by the chief operating decision maker to assess performance and to allocate resources.

In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments.

Management uses net revenues and Adjusted EBITDA to assess the performance of the reportable segments.

Adjusted EBITDA is defined by the Company as Net (loss)/income from continuing operations before Depreciation and amortization, Interest expense (excluding Consumer financing interest), early extinguishment of debt, Interest income (excluding Consumer financing revenues) and income taxes.

EBITDA also excludes stock-based compensation costs, separation and restructuring costs, transaction costs, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

The Company believes that Adjusted EBITDA is a useful measure of performance for its segments which, when considered with generally accepted accounting principles in the U.S.

(“GAAP”) measures, the Company believes gives a more complete understanding of its operating performance.

Adjusted EBITDA is defined by the Company as Net income/(loss) from continuing operations before Depreciation and amortization, Interest expense (excluding Consumer financing interest), early extinguishment of debt, Interest income (excluding Consumer financing revenues) and income taxes.

Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels and Cendant, and the sale of the vacation rentals businesses.

The Company believes that Adjusted EBITDA is a useful measure of performance for its segments which, when considered with GAAP measures, the Company believes gives a more complete understanding of its operating performance.

The Company’s presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

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Reconciliation of Net income to Adjusted EBITDA 2021 2020 2019

Net (loss)/income attributable to Travel + Leisure shareholders $ ( 255 ) $ 507 $ 672

Loss from operations of discontinued businesses, net of income taxes — — 50

Net income/(loss) attributable to Travel + Leisure Co.

shareholders $ 308 $ ( 255 ) $ 507

Loss/(gain) on disposal of discontinued business, net of income taxes 5 2 ( 18 )

(Benefit from)/provision for income taxes ( 23 ) 191 130

Provision/(benefit) for income taxes 116 ( 23 ) 191

Depreciation and amortization 124 126 121

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Gain on sale of business — — ( 68 )

Asset impairments (b)

COVID-19 related costs (c)

Exchange inventory write-off 48 — —

Restructuring 39 9 16

Stock-based compensation 32 20 20

Legacy items (d)

Legacy items 4 4 1

COVID-19 related costs (b)

Exchange inventory write-off — 48 —

Acquisition and divestiture related costs — — 1

Value-added tax refund — — ( 16 )

Separation and related costs (e)

Separation and related costs (c)

Restructuring ( 1 ) 39 9

Unrealized gain on equity investment (d)

Asset impairments/(recovery) (e)

Adjusted EBITDA $ 778 $ 259 $ 991

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(a) Includes the elimination of transactions between segments.

(b) Includes $ 5 million of bad debt expense related to a note receivable for the year ended December 31, 2020, included in Operating Expenses on the Consolidated Statements of (Loss)/Income.

(c) Reflects severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by employee retention credits received in connection with the U.S.

CARES Act and similar international programs for wages paid to certain employees despite having operations suspended.

(b) Reflects severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by employee retention credits received in connection with the U.S.

CARES Act, ARPA, and similar international programs for wages paid to certain employees despite having operations suspended.

This amount does not include costs associated with idle pay.

(d) Represents the resolution of and adjustment to certain contingent liabilities resulting from the Spin-off, the sale of the European vacation rentals business, and the Company’s separation from Cendant.

(e) Includes $ 4 million and $ 105 million of stock-based compensation expenses for the years ended 2019 and 2018.

(d) Represents the unrealized gain associated with Vacasa equity acquired as part of the consideration for the sale of North America vacation rentals.

The total amount of unrealized gain on this investment was $ 9 million for the year ended December 31, 2021, of which $ 6 million is included in Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss) to offset the 2020 impairment recognized on this investment.

(e) Includes $ 5 million of bad debt expense related to a note receivable for the year ended December 31, 2020, included in Operating expenses on the Consolidated Statements of Income/(Loss).

Year Ended December 31,

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These separation costs were related to stock compensation, severance and other employee costs, as well as impairment charges due to the write-off of right-of-use assets and furniture, fixtures and equipment as a result of the Company abandoning portions of its administrative offices in New Jersey.

This decision was part of the Company’s continued focus on rationalizing existing facilities in order to reduce its corporate footprint.

These expenses also include additional impairment charges associated with the write-off of assets and liabilities related to the early termination of an operating lease in Chicago, Illinois, partially offset by an indemnification receivable from Wyndham Hotels.

Refer to Note 13— Leases for additional detail regarding these impairments.

During 2018, the Company incurred $ 223 million of expenses in connection with the Spin-off which are reflected within continuing operations and include related costs of the Spin-off, of which $ 217 million were related to stock compensation modification expense, severance and other employee costs offset, in part, by favorable foreign currency.

In addition, these costs include certain impairment charges related to the separation including property sold to Wyndham Hotels.

Additionally, during 2018, the Company incurred $ 111 million of separation related expenses in connection with the Spin-off and sale of the European vacation rentals business which are reflected within discontinued operations.

These expenses include legal, consulting and auditing fees, stock compensation modification expense, severance and other employee-related costs.

COVID-19 Related Items

For the year ended December 31, 2020, the Company incurred $ 88 million of expenses directly related to COVID-19 which are included within COVID-19 related costs on the Consolidated Statements of (Loss)/Income and $ 297 million of additional items directly related to COVID-19 that are reflected elsewhere on the Consolidated Statements of (Loss)/Income as displayed in the table below (in millions):

For the year ended December 31, 2021, the Company’s financial statements included impacts directly related to COVID-19 as detailed in the table below (in millions):

Vacation Ownership Travel and Membership Corporate Consolidated Income Statement Classification

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Employee compensation related and other 3 — 1 4 COVID-19 related costs

Asset impairments 21 34 1 56 Asset impairments/Operating expenses

Asset impairment recovery — ( 6 ) — ( 6 ) Asset impairments/(recovery)

Lease-related ( 1 ) — — ( 1 ) Restructuring

Total COVID-19 $ ( 56 ) $ ( 6 ) $ 1 $ ( 61 )

For the year ended December 31, 2020, the Company’s financial statements included impacts directly related to COVID-19 as detailed in the table below (in millions):

Vacation Ownership Travel and Membership Corporate Consolidated Income Statement Classification

Allowance for loan losses:

Provision $ 205 $ — $ — $ 205 Vacation ownership interest sales

Recoveries ( 48 ) — — ( 48 ) Cost of vacation ownership interests

Employee compensation related and other 65 9 14 88 COVID-19 related costs

Asset impairments 21 34 1 56 Asset impairments/(recovery) and Operating expenses

Exchange inventory write-off — 48 — 48 Operating expenses

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Total COVID-19 $ 257 $ 113 $ 15 $ 385

Allowance for loan losses - During 2020, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of higher unemployment, the Company increased its loan loss allowance.

This was reflected as a $ 205 million reduction to Vacation ownership interest sales and a $ 48 million reduction to Cost of vacation ownership interests on the Consolidated Statements of (Loss)/Income.

The net negative impact of the additional provision related to COVID-19 on Adjusted EBITDA was $ 157 million for the year ended December 31, 2020.

The Company will continue to monitor this reserve as more information becomes available.

Allowance for loan losses — Due to the closure of resorts and sales centers and the economic downturn resulting from COVID-19 during 2020, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of higher unemployment, the Company recorded a COVID-19 related allowance for loan losses.

This allowance consisted of a $ 205 million COVID-19 related provision, which was reflected as a reduction to Vacation ownership interest sales and $ 48 million of estimated recoveries, which were reflected as a reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

The net negative impact of this COVID-19 related provision on Adjusted EBITDA was $ 157 million for the year ended December 31, 2020.

During 2021, the Company analyzed the adequacy of the COVID-19 related allowance consistent with past methodology, and due to the improvement in net new defaults the Company reduced this allowance resulting in a $ 91 million increase to Vacation ownership interest sales and a corresponding $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

The net positive impact of these adjustments on Adjusted EBITDA was $ 58 million for the year ended December 31, 2021.

Based upon improved performance in the Company’s portfolio (lower net new defaults) and improved unemployment rates since the time this allowance was established, and after considering write-offs and the allowance for remaining likely defaults associated with loans that were granted payment deferrals, the

Company has no COVID-19 related allowances as of December 31, 2021.

Refer to Note 10— Vacation Ownership Contract Receivables for additional details.

Employee Compensation Related and Other - These costs included $ 97 million related to severance and other employee costs resulting from the layoffs, salary and benefits continuation for certain employees while operations were suspended, and vacation payments associated with furloughed employees, $ 17 million related to professional fees and expenses related to renegotiating or exiting certain agreements;

partially offset by $ 26 million of employee retention credits earned in connection with government programs, primarily the CARES Act.

A reduction in workforce in March resulted in the layoff or furlough of approximately 9,000 employees, with an additional 1,400 of furloughs during the remainder of the year.

As of December 31, 2020, there were approximately 5,300 employees that were laid off or remained furloughed.

As of December 31, 2020, the Company had liabilities of $ 6 million for COVID-19 employee-related costs included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

Employee compensation related and other — During 2020, these costs included $ 71 million related to severance and other employee costs resulting from the layoffs, salary and benefits continuation for certain employees while operations were suspended, and vacation payments associated with furloughed employees.

These costs are inclusive of $ 26 million of employee retention credits earned in connection with government programs, primarily the CARES Act.

Employee compensation related and other costs also included $ 17 million related to renegotiating or exiting certain agreements and other professional fees in 2020.

During 2021, employee compensation related and other costs included $ 3 million of professional and other costs;

as well as $ 1 million of severance and other employee costs resulting from layoffs, salary and benefits continuation at the Vacation Ownership segment, inclusive of $ 2 million of employee retention credits earned in connection with government programs.

In connection with these actions the Company recorded COVID-19 employee-related liabilities which are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The activity associated with the Company’s COVID-19 related liabilities is summarized as follows (in millions):

Liability as of Liability as of

December 31, 2019 Costs Recognized (a)

Cash Payments Other (b)

December 31, 2020

December 31, 2020 Costs Recognized Cash Payments December 31, 2021

COVID-19 employee-related $ 6 $ 1 $ ( 6 ) $ 1

Ending balance $ 6 $ 1 $ ( 6 ) $ 1

(a) These charges consisted of (i) $ 54 million at the Vacation Ownership segment, (ii) $ 8 million at the Travel and Membership segment, and (iii) $ 9 million at the Company’s corporate operations during 2020.

(b) Includes employee-related write-offs.

Asset Impairments - During 2020, the Company incurred $ 56 million of COVID-19 related impairments, including $ 51 million recorded within Asset Impairments and $ 5 million included in Operating expenses on the Consolidated Statements of (Loss)/Income.

Asset impairments/(recovery) — During 2020, the Company incurred $ 56 million of COVID-19 related impairments, including $ 51 million recorded within Asset impairments/(recovery) and $ 5 million included in Operating expenses on the Consolidated Statements of Income/(Loss).

Refer to Note 27— Impairments and Other Charges for additional details.

During 2021, the Company reversed $ 6 million of asset impairments related to its previously impaired equity investment in Vacasa.

Refer to Note 7— Held-for-Sale Business for additional details.

Exchange inventory write-off — During 2020, the Company wrote-off $ 48 million of exchange inventory as discussed in Note 11— Inventory.

Lease-Related - During 2020, the Company also recognized $ 36 million of COVID-19 related charges including $ 22 million related to the New Jersey lease discussed in Note 28— Restructuring and $ 12 million related to the renegotiation of an agreement.

Lease-related — During 2020, the Company recognized $ 36 million of restructuring charges including $ 22 million related to the New Jersey lease discussed in Note 28— Restructuring and $ 12 million related to the renegotiation of an agreement.

Impairments and Other Charges

During 2020, the Company recorded $ 52 million of asset impairments, $ 51 million which were COVID-19 related.

In the first quarter of 2020, there were $ 6 million of impairments at the Vacation Ownership segment related to prepaid development costs and undeveloped land and $ 4 million at the Travel and Membership segment related to the Love Home Swap trade name.

In the second quarter, the Company recorded a $ 24 million impairment at the Travel and Membership segment related to the New Jersey lease discussed in Note 28— Restructuring and the associated furniture, fixtures and equipment, a $ 6 million impairment for equity investments held at the Travel and Membership segment, and a $ 3 million impairment at the Vacation Ownership segment related to lease assets and furniture, fixtures and equipment.

During the third quarter, $ 6 million of impairments were driven by right-to-use leases and related fixed assets within the Vacation Ownership operating segment due to sales center closures.

During the fourth quarter, there was $ 1 million of impairments at the Vacation Ownership segment and $ 1 million of impairments at the corporate segment.

These impairments are recorded within Asset impairments on the Consolidated Statements of (Loss)/Income.

In addition to the COVID-19 related impairments mentioned above, the Company also recorded an additional $ 1 million of impairment charges at the Vacation Ownership segment that were unrelated to COVID-19.

During 2021, the Company had a net $ 5 million recovery of impairments driven by the $ 6 million reversal of a 2020 COVID-19 related impairment of the Vacasa equity investment at the Travel and Membership segment.

See Note 7— Held-for-Sale Business for additional details.

This reversal was partially offset by less than $ 1 million of impairments at the Vacation Ownership segment.

During 2020, the Company recorded $ 52 million of asset impairments, $ 51 million of which were COVID-19 related.

During the period, the Company recorded a $ 24 million impairment at the Travel and Membership segment related to the New Jersey lease discussed in Note 28— Restructuring and the associated furniture, fixtures and equipment;

$ 10 million of impairments were driven by right-to-use leases and related fixed assets within the Vacation Ownership segment;

$ 6 million of impairments at the Vacation Ownership segment related to prepaid development costs and undeveloped land;

a $ 6 million impairment for the Vacasa equity investment held at the Travel and Membership segment;

a $ 4 million impairment at the Travel and Membership segment related to the Love Home Swap trade name;

and $ 1 million of impairments at the corporate segment.

These impairments are recorded within Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss).

In addition to the COVID-19 related impairments mentioned above, the Company also recorded a $ 1 million impairment charge at the Vacation Ownership segment unrelated to COVID-19.

During 2019, the Company sold certain property for $ 52 million in cash and a note receivable of $ 4 million.

The Company recorded a loss of $ 27 million, which is recorded within Asset impairments on the Consolidated Statements of (Loss)/Income.

During 2018, the Company sold a property which was previously impaired by $ 27 million as part of a fair value assessment on land held for VOI development.

The Company received net proceeds of $ 11 million, resulting in a gain on sale of $ 8 million, which is included within Asset impairments on the Consolidated Statements of (Loss)/Income.

Also, as a result of changes in market conditions, the Company updated its long-term development goals during 2018 which resulted in $ 4 million of additional impairment charges on previously impaired properties.

This additional impairment expense and the aforementioned reversal, resulted in a net impairment reversal of $ 4 million during 2018.

The Company recorded a loss of $ 27 million, which is recorded within Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss).

Other Charges

Refer to Note 25— Separation and Transaction Costs, for discussion of the additional 2019 and 2018 impairments associated with the Spin-off.

Refer to Note 25— Separation and Transaction Costs, for discussion of the additional 2019 impairments associated with the Spin-off.

Restructuring

2020 Restructuring Plans

During 2020, the Company recorded $ 37 million of restructuring charges, $ 36 million which were COVID-19 related.

During 2020, the Company recorded $ 37 million of restructuring charges, $ 36 million of which were COVID-19 related.

Due to the impact of COVID-19, the Company decided in the second quarter of 2020 to abandon the remaining portion of its administrative offices in New Jersey.

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The Travel and Membership segment additionally recognized $ 1 million in employee-related expenses associated with the consolidation of a shared service center.

The Company reduced the 2020 restructuring liability by $ 12 million of cash payments during 2020.

The Company reduced the 2020 restructuring liability by $ 5 million and $ 12 million of cash payments during 2021 and 2020.

The remaining 2020 restructuring liability of $ 22 million is expected to be paid by the end of 2029.

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During 2020, the Company incurred an additional $ 1 million of restructuring expenses at both the Travel and Membership segment and its corporate operations.

The Company reduced its restructuring liability by $ 5 million and $ 1 million of cash payments during 2020 and 2019.

The remaining 2019 restructuring liability of less than $ 1 million is expected to be paid by the end of 2021.

2018 Restructuring Plans

During 2018, the Company recorded $ 16 million of charges related to restructuring initiatives, all of which are personnel-related resulting from a reduction of approximately 500 employees.

This action was primarily focused on enhancing organizational efficiency and rationalizing operations.

The charges consisted of (i) $ 11 million at the Vacation Ownership segment, (ii) $ 4 million at the Travel and Membership segment, and (iii) $ 1 million at the Company’s corporate operations.

During 2019, the Company incurred an additional $ 3 million of restructuring expenses at its Vacation Ownership segment and an additional $ 1 million at its corporate operations related to these restructuring activities.

The Company reduced its restructuring liability by $ 3 million , $ 13 million, and $ 4 million of cash payments during 2020, 2019, and 2018.

The remaining 2018 restructuring liability of less than $ 1 million is expected to be paid by the end of 2021.

The Company reduced its restructuring liability by less than $ 1 million, $ 5 million, and $ 1 million of cash payments during 2021, 2020, and 2019.

The 2019 restructuring liability was paid off as of December 31, 2021.

The activity associated with all of the Company’s restructuring plans is summarized by category as follows (in millions):

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Recognized Cash

Payments December 31, 2018

Payments Other December 31, 2019

Personnel-related $ 12 $ 9 $ ( 14 ) $ — $ 7

Facility-related 1 — ( 1 ) —

$ 12 $ 9 $ ( 14 ) $ — $ 7

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Recognized Cash

Payments December 31, 2019

Payments Other December 31, 2020

Personnel-related $ 7 $ 3 $ ( 9 ) $ — $ 1

Facility-related — 24 ( 1 ) — 23

Marketing-related — 12 ( 10 ) — 2

$ 7 $ 39 $ ( 20 ) $ — $ 26

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Recognized Cash

Payments December 31, 2020

Payments Other December 31, 2021

Personnel-related $ 1 $ — $ ( 1 ) $ — $ —

Facility-related 23 — ( 1 ) — 22

Marketing-related — 12 ( 10 ) 2

Marketing-related 2 ( 1 ) (a)

$ 26 $ ( 1 ) $ ( 6 ) $ 3 $ 22

(a) Includes $ 1 million reversal of expense related to the reimbursement of prepaid licensing fees that were previously written-off at the Vacation Ownership segment.

(b) Includes $ 2 million reimbursement of termination payments and $ 1 million reimbursement of license fees at the Vacation Ownership segment.

Transactions with Former Parent and Former Subsidiaries

Matters Related to Cendant

Pursuant to the Separation and Distribution Agreement with Cendant (the Company’s former parent company), the Company entered into certain guarantee commitments with Cendant and Cendant’s former subsidiary, Realogy.

These guarantee arrangements primarily relate to certain contingent litigation liabilities, contingent tax liabilities, and Cendant contingent and other corporate liabilities, of which Wyndham Worldwide Corporation (“Wyndham Worldwide”) assumed 37.5 % of the responsibility while Cendant’s former subsidiary Realogy is responsible for the remaining 62.5 %.

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

therefore, Travel + Leisure is effectively responsible for 25 % of such matters subsequent to the separation.

Pursuant to the Separation and Distribution Agreement with Cendant (the Company’s former parent company, now Avis Budget Group), the Company entered into certain guarantee commitments with Cendant and Cendant’s former subsidiary, Realogy.

These guarantee arrangements primarily relate to certain contingent litigation liabilities, contingent tax liabilities, and Cendant contingent and other corporate liabilities, of which Wyndham Worldwide Corporation assumed 37.5 % of the responsibility while Cendant’s former subsidiary Realogy is responsible for the remaining 62.5 %.

In connection with the Spin-off, Wyndham Hotels agreed to retain one-third of Cendant’s contingent and other corporate liabilities and associated costs;

therefore, Travel + Leisure Co.

is effectively responsible for 25 % of such matters subsequent to the separation.

Since Cendant’s separation, Cendant has settled the majority of the lawsuits that were pending on the date of the separation.

As of December 31, 2020, the Cendant separation and related liabilities of $ 13 million are comprised of $ 12 million for tax related liabilities and $ 1 million for other contingent and corporate liabilities.

As of December 31, 2019, the Company had $ 13 million of Cendant separation-related liabilities.

As of December 31, 2021 and 2020 the Cendant separation and related liabilities were $ 13 million, all of which were tax related.

These liabilities are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

Matters Related to Wyndham Hotels

In connection with the Spin-off on May 31, 2018, Travel + Leisure entered into several agreements with Wyndham Hotels that govern the relationship of the parties following the separation including the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreement and the License, Development and Noncompetition Agreement.

In connection with the Spin-off on May 31, 2018, Travel + Leisure Co.

entered into several agreements with Wyndham Hotels that govern the relationship of the parties following the separation including the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreement and the License, Development and Noncompetition Agreement.

On January 4, 2021, the Company and Wyndham Hotels entered into a letter agreement pursuant to which, among other things Wyndham Hotels waived its right to enforce certain noncompetition covenants in the License, Development and Noncompetition Agreement.

In accordance with the agreements governing the relationship between Travel + Leisure and Wyndham Hotels, Travel + Leisure assumed two-thirds and Wyndham Hotels assumed one-third of certain contingent corporate liabilities of the Company incurred prior to the distribution, including liabilities of the Company related to certain terminated or divested businesses, certain general corporate matters, and any actions with respect to the separation plan.

Likewise, Travel + Leisure is entitled to receive two-thirds and Wyndham Hotels is entitled to receive one-third of the proceeds from certain contingent corporate assets of the Company arising or accrued prior to the distribution.

During 2018, the Company conveyed the lease for its former corporate headquarters located in Parsippany, New Jersey, to Wyndham Hotels, which resulted in the removal of a $ 66 million capital lease obligation and a $ 43 million asset from the Consolidated Balance Sheets.

Travel + Leisure entered into a transition service agreement with Wyndham Hotels, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, tax, information technology, information management and related services, treasury, finance, sourcing, and employee benefits administration on an interim, transitional basis.

During 2020, transition service agreement expenses of less than $ 1 million were included in General and administrative expense.

During 2019, transition service agreement expenses of $ 3 million were included in General and administrative expense, and $ 2 million were included in Separation and related costs on the Consolidated Statements of (Loss)/Income.

Transition service agreement income of $ 1 million in 2019 was included in Other revenue on the Consolidated Statements of (Loss)/Income.

During 2018, transition service agreement expenses were $ 8 million and transition service agreement income was $ 6 million.

As of December 31, 2020, these transition services have ended.

As a result of the sale of the North American vacation rentals business to Vacasa, the Company paid Wyndham Hotels $ 5 million for a trade name royalty buy-out.

The related expense was recorded as a reduction to Gain on sale of business on the Consolidated Statements of (Loss)/Income.

In accordance with the agreements governing the relationship between Travel + Leisure Co.

and Wyndham Hotels, Travel + Leisure Co.

assumed two-thirds and Wyndham Hotels assumed one-third of certain contingent corporate liabilities of the Company incurred prior to the Spin-off, including liabilities of the Company related to certain terminated or divested businesses, certain general corporate matters, and any actions with respect to the separation plan.

Likewise, Travel + Leisure Co.

is entitled to receive two-thirds and Wyndham Hotels is entitled to receive one-third of the proceeds from certain contingent corporate assets of the Company arising or accrued prior to the Spin-off.

Travel + Leisure Co.

entered into a transition service agreement with Wyndham Hotels, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, tax, information technology, information management and related services, treasury, finance, sourcing, and employee benefits administration on an interim, transitional basis.

During 2020 and 2019, the Company recognized transition service agreement expenses of less than $ 1 million and $ 3 million, included in General and administrative expense on the Consolidated Statements of Income/(Loss).

During 2019, the Company recognized transition service agreement expenses of $ 2 million which were included in Separation and related costs on the Consolidated Statements of Income/(Loss).

Transition service agreement income of $ 1 million in 2019 was included in Other revenue on the Consolidated Statements of Income/(Loss).

These transition services ended in 2020.

During 2019, as a result of the sale of the North American vacation rentals business to Vacasa, the Company paid Wyndham Hotels $ 5 million for a trade name royalty buy-out.

The related expense was recorded as a reduction to Gain on sale of business on the Consolidated Statements of Income/(Loss).

Matters Related to the European Vacation Rentals Business

closing credit support for the benefit of certain credit card service providers, a British travel association, and certain regulatory authorities to allow them to continue providing services or regulatory approval to the business.

In connection with the sale of the Company’s European vacation rentals business to Awaze Limited (“Awaze”), formerly Compass IV Limited, an affiliate of Platinum Equity, LLC, the Company and Wyndham Hotels agreed to certain post-closing credit support for the benefit of certain credit card service providers, a British travel association, and certain regulatory authorities to allow them to continue providing services or regulatory approval to the business.

Post-closing credit support may be called if the business fails to meet its primary obligation to pay amounts when due.

Awaze has provided an indemnification to Travel + Leisure in the event that the post-closing credit support is enforced or called upon.

Awaze has provided an indemnification to Travel + Leisure Co.

in the event that the post-closing credit support is enforced or called upon.

Such post-closing credit support included a guarantee of up to $ 180 million which expired June 30, 2019.

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The estimated fair value of the guarantee was $ 22 million at December 31, 2021.

The Company established a $ 7 million receivable from Wyndham Hotels for its portion of the guarantee.

The Company maintains a $ 7 million receivable from Wyndham Hotels for its portion of the guarantee.

During 2019, the Company reached an agreement with Awaze on certain post-closing adjustments, resulting in a reduction of proceeds by $ 27 million.

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During 2020, the Company recorded a $ 2 million loss on disposal resulting from a tax audit, net of Wyndham Hotels’ one-third share related to the European vacation rentals business.

This additional expense was included within (Loss)/gain on disposal of discontinued businesses, net of income taxes on the Consolidated Statements of (Loss)/Income.

Wyndham Hotels provided certain post-closing credit support primarily for the benefit of a British travel association in the form of guarantees which are mainly denominated in pound sterling of up to an approximate $ 81 million on a perpetual basis.

These guarantees totaled $ 39 million at December 31, 2020.

Travel + Leisure is responsible for two-thirds of these 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 on May 9, 2020.

This additional expense was included within (Loss)/gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income/(Loss).

These guarantees totaled £ 29 million ($ 39 million USD) at December 31, 2021.

Travel + Leisure Co.

is responsible for two-thirds of these guarantees.

As part of this agreement Wyndham Hotels was required to maintain minimum credit ratings which increased to Ba1 for Moody’s and BB+ for S&P on May 9, 2020.

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, Travel + Leisure is 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, during the third quarter, the Company posted a £ 58 million surety bond and a £ 36 million letter of credit ($ 79 million and $ 48 million as of December 31, 2020) which will be maintained until such time that either companies’ S&P and Moody’s credit rating improves to BB+/Ba1.

The estimated fair value of the guarantees and indemnifications for which Travel + Leisure is responsible related to the sale of the European vacation rentals business at December 31, 2020, including the two-thirds portion related to guarantees provided by Wyndham Hotels, totaled $ 90 million and was recorded in Accrued expenses and other liabilities and total receivables of $ 21 million were included in Other assets on the Consolidated Balance Sheets, representing the portion of these guarantees and indemnifications for which Wyndham Hotels is responsible.

During 2019, Awaze proposed certain post-closing adjustments of $ 44 million which could serve to reduce the net consideration received from the sale of the European vacation rentals business.

The Company finds no basis for such adjustments, and at this time the Company cannot reasonably estimate the probability or amount of the potential liability that may be owed to Awaze, if any.

Any potential liability would be shared two-thirds and one-third between the Company and Wyndham Hotels and the impact would be included in discontinued operations.

After the close of the second quarter, Awaze filed its claim with the high courts of England and Wales.

The Company filed its defense on September 25, 2020, setting forth its disagreement with the claim and rebuttal of any obligation for the amounts claimed.

Travel + Leisure entered into a transition service agreement with Awaze, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, tax, information technology, information management and related services, treasury, finance, and sourcing on an interim, transitional basis.

Although any ultimate exposure relative to indemnities retained from the European vacation rentals sale would be shared two-thirds by Travel + Leisure Co.

and one-third by Wyndham Hotels, as the selling entity, Travel + Leisure Co.

was 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, during 2020, the Company posted a £ 58 million surety bond and a £ 36 million letter of credit.

During the third quarter of 2021, S&P upgraded Wyndham Hotels’ credit rating to BB+.

In connection with the upgrade of Wyndham Hotels’ credit rating and as part of the settlement of other claims, the surety bond and letter of credit were released during the fourth quarter of 2021.

The estimated fair value of the guarantees and indemnifications for which Travel + Leisure Co.

is responsible related to the sale of the European vacation rentals business at December 31, 2021, including the two-thirds portion related to guarantees provided by Wyndham Hotels, totaled $ 90 million and was recorded in Accrued expenses and other liabilities and total receivables of $ 21 million were included in Other assets on the Consolidated Balance Sheets, representing the portion of these guarantees and indemnifications for which Wyndham Hotels is responsible.

During 2019, Awaze proposed certain post-closing adjustments of £ 35 million ($ 44 million USD) related to the sale of the European vacation rentals business.

During the fourth quarter of 2021, the Company entered into a settlement agreement, contingent upon regulatory approval, to settle these post-closing adjustment claims for £ 5 million ($ 7 million USD), one-third of which is the responsibility of Wyndham Hotels.

Travel + Leisure Co.

entered into a transition service agreement with Awaze, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, tax, information technology, information management and related services, treasury, finance, and sourcing on an interim, transitional basis.

During 2020, transition service agreement expenses were less than $ 1 million and transition service agreement income was less than $ 1 million.

During 2019, transition service agreement expenses were $ 2 million and transition service agreement income was $ 2 million.

During 2018, transition service agreement expenses were $ 3 million and transition service agreement income was $ 3 million.

Transition service agreement expenses were included in General and administrative expense and transition service income was included in Net revenues on the Consolidated Statements of (Loss)/Income.

As of September 30, 2020, these transition services have ended.

Transition service agreement expenses were included in General and administrative expense and transition service income was included in Net revenues on the Consolidated Statements of Income/(Loss).

These transition services ended in 2020.

Matters Related to the North American Vacation Rentals Business

In connection with the sale of the North American vacation rentals business, the Company agreed to indemnify Vacasa against certain claims and assessments, including income tax and other tax matters related to the operations of the North American vacations rentals business for the periods prior to the transaction.

The estimated fair value of the indemnifications was $ 2 million, which was included in Accrued expenses and other liabilities on the Consolidated Balance Sheet as of December 31, 2020.

In connection with the sale of the North American vacations rentals business in the fourth quarter of 2019, the Company entered into a transition service agreement with Vacasa, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, information technology, information management and related services, treasury, and finance on an interim, transitional basis.

In connection with the sale of the North American vacation rentals business, the Company agreed to indemnify Vacasa against certain claims and assessments, including income tax and other tax matters related to the operations of the North American vacation rentals business for the periods prior to the transaction.

The estimated fair value of the indemnifications was $ 2 million, which was included in Accrued expenses and other liabilities on the Consolidated Balance Sheets as of December 31, 2021.

In connection with the sale of the North American vacation rentals business in the fourth quarter of 2019, the Company entered into a transition service agreement with Vacasa, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, information technology, information management and related services, treasury, and finance on an interim, transitional basis.

During 2021, transition service agreement expenses were less than $ 1 million and transition service agreement income was less than $ 1 million.

During 2020, transition service agreement expenses were $ 1 million and transition service agreement income was $ 2 million.

During 2019, transition service agreement expenses were $ 3 million and transition service agreement income was $ 3 million.

Transition service agreement expenses were included in General and administrative expense and transition service income was included in Other revenue on the Consolidated Statements of (Loss)/Income.

Selected Quarterly Financial Data - (unaudited)

Provided below is selected unaudited quarterly financial data for 2020.

(in millions, except per share data) First Second Third Fourth

Net revenues $ 558 $ 343 $ 614 $ 645

Total expenses 699 457 550 560

Operating (loss)/income ( 141 ) ( 114 ) 64 85

Net (loss)/income from continuing operations ( 134 ) ( 164 ) 40 4

(Loss) on disposal of discontinued business, net of income taxes — — — ( 2 )

Net (loss)/income attributable to Travel + Leisure shareholders ( 134 ) ( 164 ) 40 2

Basic earnings/(loss) per share

Continuing operations $ ( 1.54 ) $ ( 1.92 ) $ 0.47 $ 0.05

Discontinued operations — — — ( 0.02 )

$ ( 1.54 ) $ ( 1.92 ) $ 0.47 $ 0.03

Diluted earnings/(loss) per share

Continuing operations $ ( 1.54 ) $ ( 1.92 ) $ 0.47 $ 0.05

Discontinued operations — — — ( 0.02 )

$ ( 1.54 ) $ ( 1.92 ) $ 0.47 $ 0.03

Weighted average shares outstanding

Basic 86.9 85.4 85.9 86.1

Diluted 86.9 85.4 86.1 86.6

The sum of the quarters may not agree to the Consolidated Statements of (Loss)/Income for the year ended December 31, 2020 due to rounding.

(a) The results of operations for 2020 include impacts related to COVID-19.

See Note 26— COVID-19 Related Items for additional details.

Provided below is selected unaudited quarterly financial data for 2019.

(in millions, except per share data) First (a)

Net revenues $ 918 $ 1,039 $ 1,105 $ 981

Total expenses 778 841 891 790

Gain on sale of business — — — ( 68 )

Operating income 140 198 214 259

Net income from continuing operations 81 118 135 155

(Loss)/gain on disposal of discontinued business, net of income taxes ( 1 ) 6 — 12

Net income attributable to Travel + Leisure shareholders 80 124 135 167

Basic earnings per share

Continuing operations $ 0.86 $ 1.27 $ 1.48 $ 1.73

Discontinued operations ( 0.01 ) 0.06 — 0.14

$ 0.85 $ 1.33 $ 1.48 $ 1.87

Diluted earnings per share

Continuing operations $ 0.85 $ 1.26 $ 1.47 $ 1.73

Discontinued operations — 0.06 — 0.14

$ 0.85 $ 1.32 $ 1.47 $ 1.87

Weighted average shares outstanding

Basic 94.4 93.0 91.7 89.5

Diluted 94.7 93.3 92.0 89.8

The sum of the quarters may not agree to the Consolidated Statements of (Loss)/Income for the year ended December 31, 2019 due to rounding.

(a) The Company sold its North American vacation rentals business on October 22, 2019.

This business did not meet the criteria to be classified as a discontinued operation;

therefore, its results of operations are reflected within continuing operations through the date of sale.

Transition service agreement expenses were included in General and administrative expense and transition service income was included in Other revenue on the Consolidated Statements of Income/(Loss).

These transition services ended in February 2021.

Related Party Transactions

During the fourth quarter of 2020, the Company sold parcels of land in Shawnee, Pennsylvania, that are no longer core to the Company’s operations to a former executive of the Company for less than $ 1 million.

In March 2019, the Company entered into an agreement with a former executive of the Company whereby the former executive through an SPE would develop and construct VOI inventory located in Orlando, Florida.

On July 8, 2020, the Company acquired the completed vacation ownership property for $ 45 million.

During 2021, the Company sold a parcel of land in Crossville, Tennessee, that is no longer core to the Company’s Operations to a former executive of the Company for less than $ 1 million.

During 2020, the Company sold parcels of land in Shawnee, Pennsylvania, that are no longer core to the Company’s operations to a former executive of the Company for less than $ 1 million.

In 2019, the Company entered into an agreement with a former executive of the Company whereby the former executive through an SPE would develop and construct VOI inventory located in Orlando, Florida.

In 2020, the Company acquired the completed vacation ownership property for $ 45 million.

This agreement was subsequently amended during 2021, increasing the purchase to $ 47 million.

In August 2018, the Company provided notification to the owner trustee of the Company’s leased aircraft of its intent to exercise the purchase option for such aircraft at fair market value.

In connection with that purchase, the Company entered into an agreement to sell the Company aircraft to its former CEO and current Chairman of the Board of Directors at a price equivalent to the purchase price.

In January 2019, the transaction to purchase the aircraft and sell the aircraft for $ 16 million was closed.

In January 2019, the transactions to purchase and sell the aircraft for $ 16 million closed.

The Company occasionally sublets this aircraft for business travel through a timesharing arrangement, and incurred less than $ 1 million of expenses in 2021, 2020, and 2019.

Subsequent Events

On January 5, 2021, Wyndham Destinations, Inc.

acquired the Travel + Leisure brand from Meredith Corporation for $ 100 million, with $ 35 million paid at closing and trailing payments to be completed by June 2024.

In addition, Wyndham Destinations, Inc.

agreed to a five-year marketing commitment across Meredith’s portfolio of brands.

In connection with this acquisition, on February 17, 2021, Wyndham Destinations, Inc.

was renamed Travel + Leisure Co.

and will continue to trade on the New York Stock Exchange under the new ticker symbol TNL.

The new Travel + Leisure Co.

will continue to maintain its current portfolio of brands and products, with Vacation Ownership now serving as the

umbrella brand for its vacation club resorts, and with Travel and Membership operating the exchange, membership travel, and technology businesses.

CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data