What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-22 · 399 added, 425 removed, 1293 unchanged (39% of the section changed)

3 unchanged sentences

— PCAOB ID No.

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

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

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

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

Consolidated Balance Sheets as of December 31, 202 3 and 202 2

5 unchanged sentences

Revenue Recognition 62

Earnings/(Loss) Per Share 65

Earnings Per Share 66

Acquisitions 67

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Vacation Ownership Contract Receivables 71

Property and Equipment, net 74

Property and Equipment 74

Other Assets 76

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Commitments and Contingencies 85

Accumulated Other Comprehensive Income/(Loss) 87

Accumulated Other Comprehensive Loss 87

Stock-Based Compensation 87

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

and subsidiaries (the "Company") as of December 31, 2022 and 2021, 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, 2022, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash flows, and deficit for each of the three years in the period ended December 31, 2023, 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, 2023, 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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TRAVEL + LEISURE CO.

CONSOLIDATED STATEMENTS OF INCOME/(LOSS)

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

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Consumer financing interest 112 79 81

General and administrative 479 434 398

Marketing 507 451 363

General and administrative 454 479 434

Depreciation and amortization 112 119 124

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Total expenses 3,028 2,914 2,516

Operating income/(loss) 653 618 ( 105 )

Loss on sale of business 2 — —

Operating income 720 653 618

Interest expense 251 195 198

Interest (income) ( 6 ) ( 3 ) ( 7 )

Other (income), net ( 3 ) ( 22 ) ( 6 )

Income/(loss) before income taxes 486 429 ( 276 )

Provision/(benefit) for income taxes 130 116 ( 23 )

Net income/(loss) from continuing operations 356 313 ( 253 )

Interest (income) ( 13 ) ( 6 ) ( 3 )

Income before income taxes 485 486 429

Provision for income taxes 94 130 116

Net income from continuing operations 391 356 313

Gain/(loss) on disposal of discontinued business, net of income taxes 5 1 ( 5 )

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

Net income attributable to Travel + Leisure Co.

shareholders $ 396 $ 357 $ 308

Basic earnings/(loss) per share

Basic earnings per share

Continuing operations $ 5.24 $ 4.27 $ 3.62

1 unchanged sentence

$ 5.31 $ 4.28 $ 3.56

Diluted earnings/(loss) per share

Diluted earnings per share

Continuing operations $ 5.21 $ 4.23 $ 3.58

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TRAVEL + LEISURE CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

( In millions )

1 unchanged sentence

2023 2022 2021

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

Net income attributable to Travel + Leisure Co.

shareholders $ 396 $ 357 $ 308

1 unchanged sentence

Defined benefit pension plans, net of tax 1 — —

Other comprehensive (loss)/income, net of tax ( 31 ) ( 32 ) 36

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

Other comprehensive gain/(loss), net of tax 9 ( 31 ) ( 32 )

Comprehensive income attributable to Travel + Leisure Co.

shareholders $ 405 $ 326 $ 276

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Operating activities

Net income/(loss) $ 357 $ 308 $ ( 255 )

Net income $ 396 $ 357 $ 308

(Gain)/loss on disposal of discontinued business, net of income taxes

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

( 5 ) ( 1 ) 5

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

Provision for loan losses 348 302 129

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Non-cash lease expense 16 16 17

Asset impairments/(recoveries), net 10 ( 5 ) 52

Deferred income taxes 8 ( 4 ) ( 39 )

Loss on sale of business 2 — —

Asset impairments/(recoveries), net — 10 ( 5 )

Other, net ( 3 ) 8 1

25 unchanged sentences

Dividends to shareholders ( 136 ) ( 135 ) ( 109 )

Payment of deferred acquisition consideration ( 19 ) ( 30 ) ( 11 )

Debt issuance/modification costs ( 22 ) ( 19 ) ( 20 )

Payment of deferred acquisition consideration ( 14 ) ( 19 ) ( 30 )

Net share settlement of incentive equity awards ( 10 ) ( 7 ) ( 9 )

1 unchanged sentence

Proceeds from issuance of common stock 9 10 11

Net cash (used in)/provided by financing activities ( 196 ) ( 1,288 ) 502

Net cash used in by financing activities ( 500 ) ( 196 ) ( 1,288 )

Effect of changes in exchange rates on cash, cash equivalents and restricted cash — ( 5 ) ( 7 )

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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 0.5 — — 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 )

1 unchanged sentence

Other comprehensive loss — — — — — ( 31 ) — ( 31 )

Stock option exercises 0.1 — — 4 — — — 4

Issuance of shares for RSU vesting 0.4 — — — — — — —

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Dividends ($1.60 per share) — — — — ( 136 ) — — ( 136 )

Non-controlling interest ownership change — — — — — — 2 2

Other — — — 3 — — — 3

Balance as of December 31, 2022 78.4 2 ( 6,886 ) 4,242 1,808 ( 79 ) 9 ( 904 )

Net income — — — — 396 — — 396

Other comprehensive loss — — — — — ( 31 ) — ( 31 )

Other comprehensive income — — — — — 9 — 9

Issuance of shares for RSU vesting 0.6 — — — — — — —

17 unchanged sentences

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.

Due to changes in organizational structure in the second quarter of 2022, the management of the Extra Holidays business was transitioned to the Vacation Ownership segment.

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

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

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

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

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

This segment is comprised of the Exchange and Travel Club business lines.

Impact of COVID-19

The results of operations for the years ended December 31, 2022, 2021, and 2020 include impacts related to the novel coronavirus global pandemic (“COVID-19”).

These COVID-19 impacts were significantly negative for the travel industry, the Company, its customers, and employees during the earlier stages of the pandemic, but had a substantially lower impact during 2022.

See Note 24— COVID-19 Related Items for additional details on the impact COVID-19 had on the Company.

Basis of Presentation

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

In addition, prior period segment results have been updated to reflect the aforementioned reclassification of the Extra Holidays business into the Vacation Ownership segment.

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

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Escrow Deposits.

Laws in most United States (“U.S.”) states require the escrow of down payments on VOI sales, with the typical requirement mandating that the funds be held in escrow until the rescission period expires.

Laws in most U.S.

states require the escrow of down payments on VOI sales, with the typical requirement mandating that the funds be held in escrow until the rescission period expires.

As sales transactions are consummated, down payments are collected and are subsequently placed in escrow until the rescission period has expired.

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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 Income/(Loss).

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.

This analysis is based upon the historical performance of similar VOCRs and

incorporates more recent history of default information.

This analysis is based upon the historical performance of similar VOCRs and incorporates more recent history of default information.

Management prepares a model to track defaults for each year’s sales over the entire life of the contract receivable as a means to project future expected losses.

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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 VOCRs.

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

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 9— Vacation Ownership Contract Receivables.

For additional details on the Company’s vacation ownership contract receivables, including information on the related allowances, see Note 9— 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.

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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 during 2022 and 2021.

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

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 during 2023, 2022, or 2021.

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 Income/(Loss), 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, 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.

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

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 up to 10 years.

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

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 $ 147 million and $ 145 million as of December 31, 2023 and 2022.

Capitalized interest was $ 1 million, less than $ 1 million, and $ 1 million during 2022, 2021, and 2020.

Capitalized interest was less than $ 1 million, $ 1 million, and less than $ 1 million during 2023, 2022, and 2021.

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

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

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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 Provision/(benefit) for income taxes on the Consolidated Statements of Income/(Loss).

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

ADVERTISING EXPENSE

2 unchanged sentences

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 Income/(Loss).

The Company measures all stock-based compensation awards using a fair value method and records the related expense within General and administrative expenses on its Consolidated Statements of Income.

LONG-LIVED ASSETS

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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/(recoveries), net 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.

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The amount that the Company accrued as of December 31, 2023, represents its best estimate of the obligations incurred in connection with these actions, but could change due to various factors including market conditions or the outcome of negotiations with third parties.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Business Combinations—Joint Venture Formations .

In August 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to address the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements.

The guidance was issued in an effort to reduce diversity in practice and requires a joint venture to initially measure its assets and liabilities at fair value on the formation date.

This guidance is effective prospectively for all joint ventures within the scope of the standard that are formed on or after January 1, 2025.

Existing joint ventures have the option to apply the guidance retrospectively.

Early adoption is permitted.

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

Disclosure improvements .

In October 2023, the FASB issued guidance to modify the disclosure and presentation requirements of a variety of topics in the codification.

Among other updates, amendments specific to the Company include updates to disclosure requirements related to derivative instruments, diluted earnings per share, commitments, and amounts and terms of unused lines of credit.

The effective date for each amendment will be the date on which the Securities and Exchange Commission’s (“SEC’s”) removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

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

Segment Reporting.

In November 2023, the FASB issued guidance to enhance segment disclosures by requiring incremental segment information on an annual and interim basis for all public entities.

Among other provisions, this guidance will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

This guidance is effective for all public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

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

Improvements to Income Tax Disclosures.

In December 2023, the FASB issued guidance to enhance the transparency and decision usefulness of income tax disclosures through improvements in rate reconciliation and income taxes paid information.

Among other provisions, this guidance requires public entities to disclose specific categories in the rate reconciliation, using both percentages and reporting currency amounts;

and present cash taxes paid on a disaggregated basis.

This guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

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

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Presentation of Financial Statements .

In July 2023, the FASB issued guidance which amends various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No.

The bulletin added interpretive guidance for public companies to consider when entering into share-based payment transactions while in possession of material non-public information (i.e., “spring-loaded” awards).

This guidance became effective upon issuance and the adoption of this guidance did not have an impact on the Company's Consolidated Financial Statements and related disclosures.

The Company will monitor future stock-based awards and will include additional disclosures in future filings, if applicable.

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 Codification (“ASC”) 606 - Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

In October 2021, the FASB issued guidance which requires companies to apply Accounting Standards Codification (“ASC”) 606 - Revenue from Contracts with Customers 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 - Business Combinations .

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.

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

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

Early adoption is permitted.

The Company early adopted this guidance during 2022, and it did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Government Assistance.

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

The guidance became effective for financial statements issued for annual periods beginning after December 15, 2021.

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

The Company early adopted this guidance in 2022.

The adoption of this guidance has not had a material impact on the Company's Consolidated Financial Statements and related disclosures.

Troubled Debt Restructurings and Vintage Disclosures.

In March 2022, the FASB issued guidance which eliminates the accounting guidance in ASC 310-40 Troubled Debt Restructurings for Creditors and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination.

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

As a result of adopting this guidance the Company added the required disclosure of current-period gross write-offs in Note 9— Vacation Ownership Contract Receivables.

Aside from this additional disclosure 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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Developer-financed sales are typically collateralized by the underlying VOI.

Revenue is recognized on VOI sales upon transfer of control, which is defined as the point in time when a binding sales contract has been executed, the financing contract has been executed for the remaining transaction price, the statutory rescission period has expired, and the transaction price has been deemed to be collectible.

Revenue is recognized on VOI sales upon transfer of control, which is defined as the point in time when a binding sales contract has

been executed, the financing contract has been executed for the remaining transaction price, the statutory rescission period has expired, and the transaction price has been deemed to be collectible.

For developer-financed sales, the Company reduces the VOI sales transaction price by an estimate of uncollectible consideration at the time of the sale.

1 unchanged sentence

In connection with entering into a VOI sale, the Company may provide its customers with certain non-cash incentives, such as credits for future stays at its resorts.

For those VOI sales, the Company bifurcates the sale and allocates the sales price between the VOI sale and the non-cash incentive.

Non-cash incentives generally have expiration periods of 18 months or less and are recognized at a point in time upon transfer of control.

For those VOI sales, the Company allocates the sales price between the VOI sale and the non-cash incentive based upon the relative standalone selling price of the performance obligations within the contract.

Non-cash incentives generally have expiration periods of two years or less and are recognized at a point in time upon transfer of control.

The Company provides day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs.

1 unchanged sentence

Such agreements are generally for terms of one year or less and are renewed automatically on an annual basis.

The Company’s management agreements contain cancellation

clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests.

The Company’s management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests.

The Company receives fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities).

1 unchanged sentence

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 Income/(Loss).

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 Income/(Loss).

Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were (in millions) (a) :

The Company reduces its management fee revenue 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 and reimbursable 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.

Property management fee and reimbursable revenues, were (in millions):

Year Ended December 31,

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Reimbursable revenues 382 350 313

Property management revenues $ 763 $ 691 $ 595

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

One of the associations that the Company manages paid its Travel and Membership segment $ 31 million for exchange services during 2022, $ 30 million during 2021, and $ 27 million during 2020.

Property management fees and reimbursable revenues $ 814 $ 763 $ 691

One of the associations that the Company manages paid its Travel and Membership segment $ 36 million, $ 31 million, and $ 30 million for exchange services during 2023, 2022, and 2021.

Travel and Membership

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

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.

The Company recognizes revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services.

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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 travel club members.

The Company also derives revenue from facilitating bookings of travel accommodations that were acquired from various sources.

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

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

and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power.

intervals with higher trading power.

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

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These amounts are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

In the Company’s Vacation Ownership business, deferred VOI trial package revenue represents consideration received in advance for a trial VOI, which allows customers to utilize a vacation package typically within one year of purchase, but may extend longer for certain programs.

In the Company’s Vacation Ownership business, deferred VOI trial package revenue represents consideration received in advance for a trial VOI, which allows customers to utilize a vacation package typically within three years of purchase, but may extend longer for certain programs.

Deferred VOI incentive revenue represents payments received in advance for additional travel-related services and products at the time of a VOI sale.

Revenue is recognized when a customer utilizes the additional services and products, which is typically within one year of the VOI sale, but may extend longer for certain programs.

Revenue is recognized when a customer utilizes the additional services and products, which is typically within two years of the VOI sale, but may extend longer for certain programs.

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 exchange-related revenue primarily represents payments received in advance from members to book vacation exchanges which are recognized upon the future confirmed transaction.

Deferred revenue also includes other leisure-related service and product revenues which are recognized as customers utilize the associated benefits.

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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.

Such costs are capitalized and subsequently recognized over the utilization period when usage or expiration occurs, which is typically within three years from the date of sale.

As of December 31, 2023 and 2022, these capitalized costs were $ 46 million and $ 35 million and are included within Other assets on the Consolidated Balance Sheets.

1 unchanged sentence

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.

As of December 31, 2022, these capitalized costs were $ 18 million, of which $ 11 million was included in Prepaid expenses and $ 7 million was included in Other assets on the Consolidated Balance Sheets.

As of December 31, 2021, these capitalized costs were $ 19 million, of which $ 11 million was included in Prepaid expenses and $ 8 million was included in Other assets on the Consolidated Balance Sheets.

As of December 31, 2023, the capitalized costs were $ 16 million, of which $ 11 million are included in Prepaid expenses and $ 5 million was included in Other assets on the Consolidated Balance Sheets.

As of December 31, 2022, these capitalized costs were $ 18 million, of which $ 11 million are included in Prepaid expenses and $ 7 million are included in Other assets on the Consolidated Balance Sheets.

Practical Expedients

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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) (a) :

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):

Year Ended December 31,

1 unchanged sentence

Vacation Ownership

Vacation ownership interest sales (b)

Vacation ownership interest sales (a)

$ 1,582 $ 1,484 $ 1,176

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Corporate and other

Ancillary revenues 5 — —

Eliminations ( 7 ) ( 3 ) ( 3 )

1 unchanged sentence

Net revenues $ 3,750 $ 3,567 $ 3,134

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

The Extra Holidays business revenue is included within Property management fees and reimbursable 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 the release 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 income/(loss) attributable to Travel + Leisure Co.

(a) The Company increased its loan loss allowance during 2020 due to an expected increase in net new defaults driven by higher unemployment associated with COVID-19 at that time.

During 2021, the Company released a portion of its COVID-19 related allowance which is reflected as a $ 91 million increase to Vacation ownership interest sales on the Consolidated Statements of Income.

Earnings Per Share

The computations of basic and diluted earnings per share (“EPS”) are based on Net income 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.

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2023 2022 2021

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

Net income from continuing operations attributable to Travel + Leisure Co.

shareholders $ 391 $ 356 $ 313

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shareholders, net of income taxes 5 1 ( 5 )

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

Net income attributable to Travel + Leisure Co.

shareholders $ 396 $ 357 $ 308

Basic earnings/(loss) per share (a)

Basic earnings per share (a)

Continuing operations $ 5.24 $ 4.27 $ 3.62

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$ 5.31 $ 4.28 $ 3.56

Diluted earnings/(loss) per share (a)

Diluted earnings per share (a)

Continuing operations $ 5.21 $ 4.23 $ 3.58

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Aggregate dividends paid to shareholders $ 136 $ 135 $ 109

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

(b) Excludes 0.7 million, 0.4 million, and 1.1 million of restricted stock units (“RSUs”) that would have been anti-dilutive to EPS for the years 2022, 2021, and 2020, of which 0.2 million would have been dilutive during 2020 had the Company not been in a net loss position.

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

(b) Excludes 1.1 million, 0.7 million, and 0.4 million of restricted stock units (“RSUs”) that would have been anti-dilutive to EPS for the years 2023, 2022, and 2021.

These shares could potentially dilute EPS in the future.

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(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 2022, the Company paid cash dividends of $ 0.40 per share for all four quarters.

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.

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 of 2020.

(f) The Company paid cash dividends of $ 0.45 per share for all four quarters of 2023 and $ 0.40 per share for all four quarters of 2022.

The Company paid cash dividends of $ 0.30 per share during the first, second, and third quarters, and $ 0.35 per share for the fourth quarter of 2021.

Share Repurchase Program

During 2022, the Company’s Board of Directors increased the authorization for the Company’s share repurchase program by $ 500 million.

Proceeds received from stock option exercises have increased the repurchase capacity by $ 81 million since the inception of this program.

As of December 31, 2022, the Company had $ 477 million of remaining availability under this program.

Since the inception of the Company’s share repurchase program in August 2007 proceeds received from stock option exercises have increased the repurchase capacity by $ 81 million.

As of December 31, 2023, the Company had $ 170 million of remaining availability under the program.

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

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As of December 31, 2023 127.8 $ 6,411

During 2022, the United States enacted the Inflation Reduction Act which became effective for the 2023 tax year.

Among other provisions, this law imposes a 1% excise tax on stock buybacks.

During the year ended December 31, 2023, the

Company recorded $ 3 million of excise tax related to share repurchases;

which is included within Treasury stock on the Consolidated Balance Sheets.

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 Income/(Loss) 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 since their respective dates of acquisition.

For contract assets and contract liabilities with customers acquired in business combinations which occurred in 2022 or later, the Company recognized and measured those contracts as though it had entered into the agreement with the customer as of the same date as the acquiree.

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

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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 Income/(Loss) as expenses.

2022 ACQUISITIONS

During the third quarter of 2022, the Company completed a business acquisition at its Travel and Membership segment for $ 2 million.

The preliminary purchase price allocations resulted in the recognition of (i) $ 1 million of definite lived intangibles with a weighted average life of seven years (ii) $ 1 million of goodwill;

and (iii) $ 1 million of deferred other revenue.

2021 ACQUISITIONS

These costs will be recorded on the Consolidated Statements of Income as expenses.

On January 3, 2023, the Company acquired the Playbook365 business, which is a youth and amateur sports management platform.

This platform was integrated with Alliance Reservations Network’s (“ARN”) event lodging management platform to create an all-in-one solution in the youth sports market in order to broaden the products and services offered by ARN.

Playbook365 was acquired for $ 13 million, comprised of $ 6 million of cash paid at closing and contingent consideration with a fair market value of $ 7 million, which can range to $ 24 million, based on the achievement of certain financial metrics.

If these financial metrics are achieved, the Company would be required to make payments in the first quarter of 2025 and/or 2026.

This transaction was accounted for as a business acquisition.

As of December 31, 2023, the Company has recognized the assets and liabilities of Playbook365 based on estimates of their acquisition date fair values.

The determination of the fair values of the acquired assets and assumed liabilities, including goodwill and other intangible assets, requires significant judgment.

The purchase price allocation includes:

(i) $ 5 million of developed software with a weighted average life of four years included within Property and equipment, net on the Consolidated Balance Sheets;

(ii) $ 5 million of Goodwill;

(iii) $ 3 million of definite-lived intangible assets with a weighted average life of four years primarily consisting of customer relationships included within Other intangibles, net on the Consolidated Balance Sheets;

and (iv) $ 7 million of Accrued expenses and other liabilities.

All of the goodwill and other intangible assets are expected to be deductible for income tax purposes.

This business is included within the Travel and Membership segment.

The Company completed purchase accounting for this transaction during the third quarter of 2023.

Travel + Leisure.

On January 5, 2021, the Company acquired the Travel + Leisure brand from Dotdash Meredith (formerly Meredith Corporation) for $ 100 million, $ 35 million of which was paid at closing and is reflected as cash used in Investing activities on the Consolidated Statements of Cash Flows.

The Company made additional payments of $ 20 million in each of 2021 and 2022, the majority of which is reflected as cash used in Financing activities on the Consolidated Statements of Cash Flows.

The remaining payments are to be completed by June 2024.

The Company made additional payments of $ 20 million, $ 20 million, and $ 15 million in 2021, 2022, and 2023.

The majority of these payments were reflected as cash used in Financing activities on the Consolidated Statements of Cash Flows.

The remaining $ 10 million payment is due in 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 .

On August 7, 2019, the Company acquired all of the equity of Alliance Reservations Network (“ARN”).

ARN, which is reported within the Travel and Membership segment, provides private-label travel booking technology solutions.

On August 7, 2019, the Company acquired all of the equity of Alliance Reservations Network.

ARN is reported within the Travel and Membership segment and 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.

ARN was acquired for $ 102 million ($ 97 million net of cash acquired).

The fair value of purchase consideration was comprised of:

(i) $ 48 million paid in cash at closing and $ 11 million paid in each of 2020 and 2021;

(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.

During 2022, the Company reduced its accrual for contingent consideration by $ 10 million to reflect the fair value based on expected performance.

This amount was included within Other income, net on the Consolidated Statements of Income/(Loss).

A portion of the fair value purchase consideration for this transaction was related to contingent consideration, which was reduced by $ 10 million during 2022 to reflect the fair value based on expected performance.

This amount was included within Other income, net on the Consolidated Statements of Income.

During 2022, the Company completed a business acquisition at its Travel and Membership segment for $ 2 million.

The purchase price allocations resulted in the recognition of (i) $ 1 million of definite lived intangibles with a weighted average life of seven years (ii) $ 1 million of goodwill;

and (iii) $ 1 million of deferred other revenue.

Discontinued Operations

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(“Wyndham Hotels”) and the sale of its European vacation rentals business.

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.

During 2022, the Company had $ 5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows which included $ 6 million related to the settlement of post-closing adjustment claims associated with the sale of the European vacation rentals business (see Note 27— Transactions with Former Parent and Former Subsidiaries for additional details) partially offset by $ 1 million of tax refunds related to various pre-sale tax items included in Gain/(loss) on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income/(Loss).

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.

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.

During 2023, the Company recognized a $ 5 million Gain on disposal of discontinued business, net of income taxes associated with the expiration of a guarantee associated with the sale of the European vacation rentals business.

See Note 27— Transactions with Former Parent and Former Subsidiaries for additional information.

The Company had no cash flow activity related to discontinued operations during 2021.

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 and had $ 5 million of Net cash used in investing activities from discontinued operations for the year ended December 31, 2020 associated with the sale of the European vacation rentals business.

partially offset by $ 1 million of tax refunds related to various pre-sale tax items included in Gain/(loss) on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income.

During 2021, the Company recognized a $ 5 million Loss on disposal of discontinued business, net of income taxes 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 27— Transactions with Former Parent and Former Subsidiaries for additional information.

The Company does not expect to incur significant ongoing gains and/or losses for the aforementioned discontinued operations.

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(d) Amortized between 5 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 of 58 years.

(e) Includes business contracts and noncompetition covenants, which are amortized between 3 to 69 years with a weighted average life of 57 years.

During the fourth quarters of 2023, 2022, and 2021, 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.

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Amortizable Intangible Assets

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):

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

Year Ended December 31,

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Based on the Company’s amortizable intangible assets as of December 31, 2023, the Company expects related amortization expense for the next five years as follows (in millions):

The income tax provision/(benefit) attributable to continuing operations consisted of the following (in millions):

The income tax provision attributable to continuing operations consisted of the following (in millions):

Year Ended December 31,

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8 ( 4 ) ( 39 )

Provision/(benefit) for income taxes $ 130 $ 116 $ ( 23 )

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

Provision for income taxes $ 94 $ 130 $ 116

Pre-tax income for domestic and foreign operations attributable to continuing operations consisted of the following (in millions):

Year Ended December 31,

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Foreign 170 160 115

Income/(loss) before income taxes $ 486 $ 429 $ ( 276 )

Income before income taxes $ 485 $ 486 $ 429

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

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Provision for doubtful accounts and loan loss allowance for vacation ownership contract receivables $ 182 $ 179

Foreign tax credit carryforward 69 77

Accrued liabilities and deferred income 76 76

Other comprehensive income 82 78

Accrued liabilities and deferred income 74 76

Foreign tax credit carryforward 52 69

Net operating loss carryforward 25 33

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The gross amount of the unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate were $ 18 million, $ 20 million, and $ 22 million as of December 31, 2023, 2022, and 2021.

The Company records 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.

The Company records potential penalties and interest as a component of Provision for income taxes on the Consolidated Statements of Income related to these unrecognized tax benefits.

During 2023 penalties and interest decreased by less than $ 1 million.

During 2022 penalties and interest decreased by $ 1 million.

During 2021 and 2020 penalties and interest increased by $ 1 million in each respective year.

The Company had a liability for potential penalties of $ 4 million as of December 31, 2022, 2021, and 2020, and potential interest of $ 10 million, $ 11 million, and $ 10 million as of December 31, 2022, 2021, and 2020.

During 2021 penalties and interest increased by $ 1 million.

The Company had a liability for potential penalties of $ 3 million as of December 31, 2023, and $ 4 million as of December 31, 2022 and 2021, and potential interest of $ 10 million, $ 10 million, and $ 11 million as of December 31, 2023, 2022, and 2021.

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

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The Company made cash income tax payments, net of refunds, of $ 144 million, $ 153 million, and $ 110 million during 2023, 2022, and 2021.

In addition, the Company made cash income tax payments, net of refunds, of $ 8 million during 2020 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.

Such payments exclude income tax related payments made to or refunded by the Company’s former parent Cendant Corporation (“Cendant”) and Wyndham Hotels.

Vacation Ownership Contract Receivables

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Vacation ownership contract receivables, net $ 2,527 $ 2,370

(a) Excludes $ 17 million of accrued interest on VOCRs as of both December 31, 2022 and 2021, which are included in Trade receivables, net on the Consolidated Balance Sheets.

(a) Excludes $ 18 million and $ 17 million of accrued interest on VOCRs as of December 31, 2023 and 2022, which are included in Trade receivables, net on the Consolidated Balance Sheets.

(b) Excludes $ 8 million and $ 7 million of accrued interest on VOCRs as of December 31, 2023 and 2022, which are included in Trade receivables, net on the Consolidated Balance Sheets.

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During 2023, 2022, and 2021, the Company’s securitized VOCRs generated interest income of $ 311 million, $ 292 million, and $ 304 million.

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

During 2022, 2021, and 2020, the Company had net VOCR originations of $ 1.14 billion, $ 780 million, and $ 481 million and received principal collections of $ 771 million, $ 815 million, and $ 718 million.

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

During 2023, 2022, and 2021, the Company had net VOCR originations of $ 1.43 billion, $ 1.14 billion, and $ 780 million and received principal collections of $ 924 million, $ 771 million, and $ 815 million.

The weighted average interest rate on outstanding VOCRs was 14.7 %, 14.6 %, and 14.5 % during 2023, 2022, and 2021.

The Company records the difference between VOCRs and the variable consideration included in the transaction price for the sale of the related VOIs as a provision for loan losses on VOCRs.

The activity in the allowance for loan losses on VOCRs was as follows (in millions):

Allowance for loan losses as of December 31, 2019 $ 747

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, net 129

Contract receivables write-offs, net ( 312 )

Allowance for loan losses as of December 31, 2021 510

Provision for loan losses, net 302

Year Ended December 31,

2023 2022 2021

Allowance for loan losses beginning balance

$ 541 $ 510 $ 693

Provision for loan losses, net (a)

Contract receivables write-offs, net ( 315 ) ( 271 ) ( 312 )

Allowance for loan losses as of December 31, 2022 $ 541

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.

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.

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).

Since the first quarter of 2020, the Company has performed quarterly evaluations of the impact of COVID-19 on its owners’ ability to repay contract receivables and, as a result of improvements in net new defaults and lower than expected unemployment rates, reduced this allowance.

The total impact of COVID-19 on owners’ ability to repay contract 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 Income/(Loss).

During 2021 the Company released a portion of its COVID-19 related allowance which is reflected as a $ 91 million increase to Vacation ownership interest sales and a $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

After considering write-offs and the allowance for remaining likely defaults associated with loans that were granted payment deferrals, the Company has not had a COVID-19 related allowance since December 31, 2021.

The Company recorded net provisions for loan losses of $ 302 million and $ 129 million as a reduction of net revenues during the years ended December 31, 2022 and 2021, inclusive of the aforementioned COVID-19 related adjustments.

Allowance for loan losses ending balance

$ 574 $ 541 $ 510

(a) Recorded as a reduction to Net revenue.

The Company increased its allowance losses during 2020 due to an expected increase in net new defaults driven by current and projected unemployment rates associated with COVID-19 at that time.

During 2021, the Company released a portion of its COVID-19 related allowance which is reflected as a $ 91 million increase to Vacation ownership interest sales and a $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income.

Credit Quality for Financed Receivables and the Allowance for Credit Losses

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$ 1,726 $ 769 $ 121 $ 151 $ 144 $ 2,911

(a) Includes contracts under temporary deferment (up to 180 days) of $ 7 million as of December 31, 2021.

There were no contracts under temporary deferment as of December 31, 2022.

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 Income/(Loss).

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.

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):

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

As of December 31, 2023

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Total $ 1,726 $ 769 $ 121 $ 151 $ 144 $ 2,911

The table below represents the gross write-offs of financing receivables by year of origination (in millions):

December 31, 2023

Inventory consisted of the following (in millions):

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Estimated VOI recoveries 207 192

Land held for VOI development 20 1

VOI construction in process 5 14

Vacation exchange credits and other 4 4

Land held for VOI development 1 1

Inventory sold subject to repurchase

Total inventory $ 1,135 $ 1,193

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The Company had net transfers of VOI inventory to property and equipment of $ 16 million and $ 19 million during 2023 and 2022.

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 Income/(Loss).

The Company utilized the remaining inventory to maximize exchange supply for its members.

Inventory Obligations

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

Atlanta (a) (b)

Las Vegas (a)

Las Vegas (b)

December 31, 2021 $ — $ 13 $ 1 $ 14

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December 31, 2023 $ — $ — $ 8 $ 8

(a) Included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

(b) Represents vacation ownership inventory and property and equipment in Atlanta, Georgia, acquired from a third-party developer.

(a) Represents vacation ownership inventory and property and equipment in Atlanta, Georgia, acquired from a third-party developer.

(b) Included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

In connection with an inventory sale transaction, the Company has committed to repurchase completed property located in Las Vegas, Nevada, from a third-party developer.

The maximum potential future payments that the Company may be required to make under this commitment was $ 30 million as of December 31, 2022.

Property and Equipment, net

Property and Equipment

Property and equipment, net consisted of the following (in millions):

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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 Consolidated Statements of Income/(Loss).

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

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Present value of future minimum lease payments $ 87 $ 20

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 at its Travel and Membership segment.

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.

Other assets consisted of the following (in millions):

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Non-trade receivables, net $ 84 $ 65

Right-of-use assets 62 79

Deferred costs 58 49

Tax receivables 52 3

Capitalized contract costs (a)

Right-of-use assets 46 62

Deferred tax asset 23 23

Deposits 22 20

Investments 19 18

Held-for-sale 18 11

Marketable securities 14 12

Derivatives 12 2

Tax receivables 3 5

Derivatives contract assets 11 12

Deposits 10 22

(a) Includes certain direct and incremental selling costs in connection with VOI trial package, incentive, subscription, and exchange–related revenues.

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Accrued interest 55 52

Resort related obligations 45 54

Payables associated with separation and sale of business activities 49 41

Resort related obligations 48 45

Accrued advertising and marketing 35 38

Inventory sale obligation (b)

Restructuring liabilities (c)

Deferred consideration 24 52

Restructuring liabilities (b)

Accrued VOI maintenance fees 20 21

Accrued legal and professional fees 20 21

Derivative contract liabilities 13 1

Deferred consideration (c)

Funds on deposit 17 7

Customer advances 12 12

Derivative contract liabilities 10 13

Accrued legal settlements 7 3

Inventory sale obligation (d)

Accrued other 73 70

(a) See Note 12— Leases for details.

(b) See Note 10— Inventory for details.

(b) See Note 26— Restructuring for details.

(d) See Note 10— Inventory for details.

The Company’s indebtedness consisted of the following (in millions):

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$ 1,707 $ 1,545

USD bank conduit facility (due July 2024) (c)

USD bank conduit facility (due September 2025) (c)

AUD/NZD bank conduit facility (due December 2024) (d)

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Total $ 3,575 $ 3,669

(a) Represents non-recourse debt that is securitized through bankruptcy-remote special purpose entities (“SPEs”), the creditors of which have no recourse to the Company for principal and interest.

These outstanding borrowings (which legally are not liabilities of the Company) are collateralized by $ 2.29 billion and $ 2.17 billion of underlying gross VOCRs and related assets (which legally are not assets of the Company) as of December 31, 2022 and 2021.

(b) The carrying amounts of the term notes are net of deferred financing costs of $ 18 million as of both December 31, 2022 and 2021.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than August 2025.

(a) Represents non-recourse debt that is securitized through bankruptcy-remote special purpose entities, the creditors of which have no recourse to the Company for principal and interest.

These outstanding borrowings (which legally are not liabilities of the Company) are collateralized by $ 2.42

billion and $ 2.29 billion of underlying gross VOCRs and related assets (which legally are not assets of the Company) as of December 31, 2023 and 2022.

(b) The carrying amounts of the term notes are net of deferred financing costs of $ 22 million and $ 18 million as of December 31, 2023 and 2022.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than October 2026.

(d) The Company has a borrowing capacity of 200 million Australian dollars (“AUD”) and 25 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through December 2024.

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(g) The weighted average effective interest rate on borrowings from this facility was 7.49 % and 4.01 % as of December 31, 2023 and 2022.

(h) The weighted average effective interest rate on borrowings from this facility was 8.24 % as of December 31, 2022.

(i) Includes less than $ 1 million and $ 2 million of unamortized gains from the settlement of a derivative as of December 31, 2022 and 2021.

(h) The weighted average effective interest rate on borrowings from this facility was 9.25 % and 8.24 % as of December 31, 2023 and 2022.

(i) Includes less than $ 1 million of unamortized gains from the settlement of a derivative as of December 31, 2022.

(j) Includes $ 2 million and $ 3 million of unamortized losses from the settlement of a derivative as of December 31, 2023 and 2022.

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The Company’s outstanding indebtedness as of December 31, 2023, matures as follows (in millions):

Non-recourse Vacation Ownership Debt Debt Total

Non-recourse Vacation Ownership Debt (a)

Within 1 year $ 220 $ 317

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$ 2,071 $ 3,575 $ 5,646

Required principal payments on the non-recourse vacation ownership debt are based on the contractual repayment terms of the underlying VOCRs.

(a) Required principal payments on the non-recourse vacation ownership debt are based on the contractual repayment terms of the underlying VOCRs.

Actual maturities may differ as a result of prepayments by the VOCR obligors.

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outstanding borrowings 364 —

letters of credit — 2

Available capacity $ 388 $ 998

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Sierra Timeshare 2023-1 Receivables Funding, LLC.

On March 23, 2022, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2022-1 Receivables Funding LLC, with an initial principal amount of $ 275 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 3.84 %.

On April 5, 2023, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2023-1 Receivables Funding LLC, with an initial principal amount of $ 250 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 6.33 %.

The advance rate for this transaction was 91.25 %.

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On July 20, 2023, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2023-2 Receivables Funding LLC, with an initial principal amount of $ 300 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 6.72 %.

The advance rate for this transaction was 90.5 %.

The advance rate for this

transaction was 91.70 %.

As of December 31, 2023, the Company had $ 233 million of outstanding borrowings under these term notes, net of debt issuance costs.

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As of December 31, 2023, the Company had $ 269 million of outstanding borrowings under these term notes, net of debt issuance costs.

Premium Yield Facility 2023-A LLC.

On December 20, 2023, the Company closed on a private term securitization transaction with an initial principal amount of $ 238 million.

The transaction is secured by VOCRs and includes $ 34 million in receivables rolled from the Company’s 2018-A Premium Yield Facility, which the Company called on December 15, 2023.

The advance rate for this transaction was 80.0 % and the borrowings bear interest at a coupon rate of 6.51 %.

As of December 31, 2023, the Company had $ 236 million of outstanding borrowings under this facility, net of debt issuance costs.

In addition to the 2023 term notes described above, as of December 31, 2023, the Company had $ 806 million of outstanding non-recourse borrowings, net of debt issuance costs, under term notes entered into prior to December 31, 2022.

The Company’s non-recourse term notes include fixed and floating rate term notes for which the weighted average interest rate was 4.2 %, 3.9 %, and 4.5 % during 2022, 2021, and 2020.

The Company’s non-recourse term notes include fixed rate term notes for which the weighted average interest rate was 5.6 %, 4.2 %, and 3.9 % during 2023, 2022, and 2021.

USD bank conduit facility .

On March 4, 2022, the Company renewed its USD timeshare receivables conduit facility, extending the end of the commitment period from October 2022 to July 2024.

The renewal included a reduction of the USD borrowing capacity from $ 800 million to $ 600 million.

This capacity reduction was made in an effort to reduce fees associated with unused capacity.

The facility bears interest based on a mixture of variable commercial paper rates plus a spread for certain participating banks and the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus a spread for other participating banks.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize, no later than August 2025.

On September 26, 2023, the Company renewed its $ 600 million USD timeshare receivables conduit facility, extending the end of the commitment period from July 2024 to September 2025 and making certain other amendments, including to the advance rate.

The facility bears interest based on a mixture of variable commercial paper rates plus a spread or the Daily Simple Secured Overnight Financing Rate (“SOFR”), plus a spread.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize, but no later than October 2026.

As of December 31, 2023, the Company had $ 261 million of outstanding borrowings under this facility.

AUD/NZD bank conduit facility.

On December 21, 2022, the Company renewed its AUD/NZD timeshare receivables conduit facility, extending the end of the commitment period from April 2023 to December 2024.

The renewal included a reduction of the AUD borrowing capacity from A$ 250 million to A$ 200 million and a reduction of the NZD borrowing capacity from NZ$ 48 million to NZ$ 25 million.

These capacity reductions were made in an effort to reduce fees associated with unused capacity.

The Company has a non-recourse AUD/NZD timeshare receivables conduit facility, with a total capacity of A$ 200 million and NZ$ 25 million.

The facility is secured by VOCRs and bears interest at variable rates based on the Bank Bill Swap Bid Rate plus 2.0 %.

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The combined weighted average interest rate on the Company’s total non-recourse vacation ownership debt was 5.9 %, 4.2 %, and 4.0 % during 2023, 2022, and 2021.

$1.0 billion Revolving Credit Facility and $300 million Term Loan B.

$1.0 billion Revolving Credit Facility and $300 million 2018 Term Loan B due May 2025.

The Company has a credit agreement with Bank of America, N.A.

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The agreement provides for senior secured credit facilities in the amount of $ 1.3 billion, consisting of the secured 2018 Term Loan B of $ 300 million maturing in 2025 and a secured revolving facility of $ 1.0 billion maturing in 2026.

As of December 31, 2022, the Company’s 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 the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.25 %.

The interest rate per annum applicable to borrowings under the revolving credit facility 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 first-lien leverage ratio of Travel + Leisure Co.

On March 30, 2023, the Company entered into the fourth amendment to the credit agreement governing its revolving credit facility and term loan B facilities.

Through this amendment the Company exercised its early opt-in election to change the benchmark rate on the revolving credit facility and 2018 Term Loan B facility due May 2025 from the USD London Interbank Offered Rate (“LIBOR”) to SOFR.

This change became effective on March 31, 2023, for both new borrowings and rollovers of then existing USD LIBOR based borrowings (except Base Rate borrowings) and eliminated the Company’s exposure to LIBOR.

As of December 31, 2023, the Company’s interest rate per annum applicable to the 2018 Term Loan B Facility is equal to, at the Company’s option, either a base rate plus a margin of 1.25 % or the SOFR plus a margin of 2.25 %.

The interest rate per annum applicable to borrowings under the revolving credit facility is equal to, at the Company’s option, either a base rate plus a margin ranging from 0.75 % to 1.25 % or SOFR plus a margin ranging from 1.75 % to 2.25 %, in either case based upon the first-lien leverage ratio of Travel + Leisure Co.

and its restricted subsidiaries.

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 SOFR rate with respect to either the term loan B facilities or the revolving credit facility borrowings are subject to a floor of 0.50 %.

The Company is also subject to a commitment fee for the unused portion of its revolving credit facility.

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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 outstanding secured notes, 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 increased for certain of the outstanding secured 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 Service, Inc.

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 outstanding secured notes, as “secured parties.” These note holders 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.

$598 million 2023 Incremental Term Loan B due December 2029.

On December 20, 2023, the Company amended the credit agreement governing its revolving credit facility and term loan B facilities (“Fifth Amendment”).

The Fifth Amendment refinanced $ 298 million of outstanding borrowings under the 2022 Incremental Term Loan B facility and included additional borrowings of $ 300 million.

The Company expects to use net proceeds from the 2023 Incremental Term Loan B facility, together with available cash on hand and revolving credit facility borrowings to repay its outstanding $ 300 million 5.65 % secured notes due April 2024 and pay related fees and expenses.

The 2023 Incremental Term Loan B facility matures on December 14, 2029, and is priced at SOFR plus 3.25 % plus a 0.10 % SOFR Adjustment, which is 75 basis points lower than the 2022 Incremental Term Loan B facility.

$ 298 million of the borrowings under the 2022 Incremental Term Loan B facility is priced at par, while the additional $ 300 million was subject to an original issue discount of 99.75 %.

The floor rate remains at 0.50 % for Term SOFR borrowings.

The 2023 Incremental Term Loan B facility amortizes in equal quarterly installments of 0.25 % of the initial principal amount, starting with the first quarter of 2024.

Proceeds from the Fifth Amendment for the facility were $ 290 million, which were net of the debt discount, arrangement fees, and unpaid interest through the date of the amendment.

Debt discount and deferred financing costs were collectively $ 5 million, which will be amortized over the life of the notes.

Secured Notes.

The interest rates increased for certain of the outstanding secured notes that were impacted by 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 Service, Inc.

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

Since issuance, the interest rates on the impacted notes have increased 150 basis points as of December 31, 2023, with a maximum potential for additional increase of 50 basis points.

Incremental Term Loan B.

On December 14, 2022, the Company amended the credit agreement governing its revolving credit facility and term loan B (“Third Amendment”).

The Third Amendment provides for an incremental term loan B of $ 300 million, which will mature on December 14, 2029.

The incremental term loan B bears interest, at the Company’s option, at a rate of (a) Base Rate (which is the highest of Bank of America’s prime rate, the federal funds rate plus 0.50 %, and the Term SOFR (as defined in the Company’s existing Credit Agreement) one month rate, inclusive of the SOFR Adjustment (defined as 0.10 % per annum in the Company’s Credit Agreement), plus 1.00 % (subject in each case to a floor of 0.50 %)), plus an applicable rate of 3.00 %, or (b) the Term SOFR rate, inclusive of the SOFR Adjustment, plus an applicable rate of 4.00 % (subject to a floor of 0.50 %).

The incremental term loan B amortizes in equal quarterly installments of 0.25 % of the initial principal amount, starting with the first full fiscal quarter after the closing date.

The incremental term loan B was issued with an original issue discount of 97.5 %.

Proceeds for the facility were $ 289 million, which were net of the discount, arrangement fees, and structuring fees.

Debt discount and deferred financing costs were collectively $ 12 million, which will be amortized over the life of the notes.

As of December 31, 2023, the Company had $ 2.69 billion of outstanding secured notes issued prior to December 31, 2022.

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Debt Covenants

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 revolving credit facility and term loan B facilities 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 no less than 2.50 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.

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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.

During 2021, the Company renewed the credit agreement governing the revolving credit facilities and term loan B (“Second Amendment”).

The Second Amendment terminated the relief period restrictions adopted in the July 15, 2020 first amendment as a result of the COVID-19 pandemic.

Beginning in the third quarter of 2022, the Second Amendment returned the first lien leverage ratio financial covenant to not exceed 4.25 to 1.0 and reestablished the interest coverage ratio (as defined in the credit agreement) of no less than 2.50 to 1.0, the levels in place prior to COVID-19.

As of December 31, 2023, the Company’s interest coverage ratio was 4.23 to 1.0 and the first lien leverage ratio was 3.40 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, 2022, the Company was in compliance with all of the financial covenants described above.

As of December 31, 2023, the Company was in compliance with 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.

If the VOCR pool that collateralizes one of the Company’s securitization notes fails to perform within the parameters established by the contractual triggers (such as higher default or delinquency rates), there are provisions pursuant to which the cash flows for that pool will be maintained in the securitization as extra collateral for the note holders or applied to accelerate the repayment of outstanding principal to the note holders.

If the VOCR pool that collateralizes one of the Company’s securitization notes fails to perform within the parameters established by the contractual triggers (such as higher default or delinquency

rates), there are provisions pursuant to which the cash flows for that pool will be maintained in the securitization as extra collateral for the note holders or applied to accelerate the repayment of outstanding principal to the note holders.

As of December 31, 2023, all of the Company’s securitized loan pools were in compliance with applicable contractual triggers.

Interest Expense

The Company incurred interest expense of $ 195 million during 2022, 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 $ 189 million.

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 $ 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.

Interest expense incurred in connection with the Company’s non-recourse vacation ownership debt was $ 79 million, $ 81 million, and $ 101 million during 2022, 2021, and 2020, and is reported within Consumer financing interest on the Consolidated Statements of Income/(Loss).

The Company incurred interest expense of $ 251 million, $ 195 million, and $ 198 million during 2023, 2022, and 2021 excluding interest expense associated with non-recourse vacation ownership debt.

These amounts include offsets of less than $ 1 million, $ 1 million, and less than $ 1 million of capitalized interest during 2023, 2022, and 2021.

Cash paid related to such interest was $ 239 million, $ 189 million, and $ 207 million during 2023, 2022, and 2021.

Interest expense incurred in connection with the Company’s non-recourse vacation ownership debt was $ 112 million, $ 79 million, and $ 81 million during 2023, 2022, and 2021, and is reported within Consumer financing interest on the Consolidated Statements of Income.

Cash paid related to such interest was $ 82 million, $ 51 million, and $ 56 million during 2023, 2022, and 2021.

Variable Interest Entities

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.

The Company analyzes its variable interests, including loans, guarantees, interests in special purpose entities (“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.

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VOCRs qualify for securitization based primarily on the credit strength of the VOI purchaser to whom financing has been extended.

VOCRs are securitized through bankruptcy-remote SPEs that are consolidated within the Consolidated Financial Statements.

VOCRs are securitized through bankruptcy-remote SPEs that are consolidated within the Company’s Consolidated Financial Statements.

As a result, the Company does not recognize gains or losses resulting from these securitizations at the time of sale to the SPEs.

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(d) Primarily includes deferred financing costs for the bank conduit facility and a security investment asset, which is included in Other assets on the Consolidated Balance Sheets.

(d) Primarily includes deferred financing costs for the bank conduit facilities and a security investment asset, which is included in Other assets on the Consolidated Balance Sheets.

(e) Included in Non-recourse vacation ownership debt on the Consolidated Balance Sheets.

(f) Includes deferred financing costs of $ 18 million as of both December 31, 2022 and 2021, related to non-recourse debt.

(f) Includes deferred financing costs of $ 22 million and $ 18 million as of December 31, 2023 and 2022, related to non-recourse debt.

(g) Primarily includes accrued interest on non-recourse debt, which is included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

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See Note 18— Financial Instruments for additional details.

As of December 31, 2022, the Company had foreign exchange contracts resulting in less than $ 1 million of assets which are included within Other assets and $ 1 million of liabilities which are included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

As of December 31, 2023, the Company had foreign exchange forward contracts resulting in $ 1 million of assets which are included within Other assets and less than $ 1 million of liabilities which are included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

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.

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In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate.

The carrying amounts of cash

and cash equivalents, restricted cash, trade receivables, accounts payable, and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities.

The carrying amounts and estimated fair values of all other financial instruments were as follows (in millions):

The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, accounts payable, and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities.

The carrying amounts and estimated fair values of the Company’s other financial instruments were as follows (in millions):

December 31, 2023 December 31, 2022

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The Company estimates the fair value of its debt, excluding finance leases, using Level 2 inputs based on indicative bids from investment banks and determines the fair value of its secured notes using quoted market prices (such secured notes are not actively traded).

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

After customary closing adjustments, the Company received $ 156 million in cash and $ 10 million in Vacasa LLC (“Vacasa”) equity.

During the fourth quarter of 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 2021 which was reflected as a $ 6 million recovery within Asset impairments/(recoveries), net, and $ 3 million of Other income, net on the Consolidated Statements of Income/(Loss).

During 2022, the Company sold all of its equity in Vacasa for $ 8 million resulting in a $ 5 million loss, which was included within Other income, net on the Consolidated Statements of Income/(Loss).

Financial Instruments

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Changes in fair value for qualifying cash flow hedges, are recorded in Accumulated other comprehensive loss (“AOCL”).

The derivative’s gain or loss is released from AOCL to match the timing of the underlying hedged cash flows effect on earnings.

The derivative’s gain or loss is released from AOCL to match the timing of the underlying hedged cash flows.

A hedge is designated as a fair value hedge when the derivative is used to manage an exposure to changes in the fair value of a recognized asset or liability.

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These two changes in fair value offset one another in whole or in part and are reported in the same statement of income line item as the hedged risk.

The Company reviews the effectiveness of its hedging instruments on an ongoing basis, recognizes current period hedge ineffectiveness immediately in earnings and discontinues hedge accounting for any hedge that it no longer considers to be highly effective.

The Company reviews the effectiveness of its hedging instruments on an ongoing basis and discontinues hedge accounting for any hedge that it no longer considers to be highly effective.

The Company recognizes changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings.

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Foreign Currency Risk

The Company has foreign currency rate exposure to exchange rate fluctuations worldwide with particular exposure to the Euro, British pound sterling, Australian and Canadian dollars, Danish krone, and Mexican peso.

The Company has foreign currency rate exposure to exchange rate fluctuations worldwide with particular exposure to the Euro, British pound sterling, Australian and Canadian dollars, and Mexican peso.

The Company uses freestanding foreign currency forward contracts to manage a portion of its exposure to changes in foreign currency exchange rates associated with its foreign currency denominated receivables, payables, and forecasted earnings of foreign subsidiaries.

Additionally, the Company has used foreign currency forward contracts designated as cash flow hedges to manage a portion of its exposure to changes in forecasted foreign currency denominated vendor payments.

The amount of gains or losses relating to contracts designated as cash flow hedges that the Company expects to reclassify from AOCL to earnings over the next 12 months is not material.

Additionally, the Company has used foreign currency forward contracts designated as cash flow hedges to manage a portion of its

exposure to changes in forecasted foreign currency denominated vendor payments.

As of December 31, 2023, the Company had no gains or losses relating to contracts designated as cash flow hedges included in AOCL.

Interest Rate Risk

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Foreign exchange contracts (a)

(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.

(a) Included within Operating expenses on the Consolidated Statements of Income, which is primarily offset by changes in the value of the underlying assets and liabilities.

Credit Risk and Exposure

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As of December 31, 2023, there were no significant concentrations of credit risk with any individual counterparty or groups of counterparties.

However, 17 % of the Company’s outstanding VOCRs portfolio relates to customers who reside in California.

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.

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.

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.

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For the year ended December 31, 2023, the Company generated 14 %, 14 %, and 11 % of its VOI sales revenues in sales offices located in Nevada, Florida, and California.

Included within the Consolidated Statements of Income/(Loss) are net revenues generated in the state of Florida of 15 %, 15 %, and 18 % during 2022, 2021, and 2020;

net revenues generated in Nevada of 11 %, 10 %, and 6 %;

and net revenues generated in California of 9 %, 10 %, and 12 % during these periods.

Additionally, residents who live in California represent 17 % of the Company’s outstanding VOCRs portfolio.

Included within the Consolidated Statements of Income are net revenues generated in the state of Florida of 15 % during 2023, 2022, and 2021;

net revenues generated in California of 10 %, 9 %, and 10 %;

and net revenues generated in Nevada of 10 %, 11 %, and 10 % during these periods.

Commitments and Contingencies

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Purchase commitments made by the Company as of December 31, 2023, aggregated to $ 748 million, of which $ 533 million were for marketing-related activities and $ 133 million were for information technology activities.

Inventory Sold Subject to Conditional Repurchase

In the normal course of business, the Company makes various commitments to repurchase completed vacation ownership properties from third-party developers.

Inventory sold subject to conditional repurchase made by the Company as of December 31, 2022 aggregated to $ 30 million.

See Note 10— Inventory for additional detail.

Letters of Credit

As of December 31, 2022, the Company had $ 34 million of irrevocable standby letters of credit outstanding, none of which were under its revolving credit facilities.

As of December 31, 2023, the Company had $ 47 million of irrevocable standby letters of credit outstanding, of which $ 2 million were under its revolving credit facilities.

As of December 31, 2022, the Company had $ 34 million of irrevocable standby letters of credit outstanding, none of which were under its revolving credit facilities.

The letters of credit issued during 2023 and 2022 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 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.

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.

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As of December 31, 2023, it is estimated that the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to $ 13 million in excess of recorded accruals.

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 27— Transactions with Former Parent and Former Subsidiaries .

Such reserves are exclusive of matters relating to the Company’s separation from Cendant, matters relating to Wyndham Hotels, 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 27— Transactions with Former Parent and Former Subsidiaries .

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.

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Vacation Ownership

The Company has committed to repurchase completed property located in Las Vegas, Nevada, from a third-party developer subject to such property meeting the Company’s vacation ownership resort standards and provided that the third-party developer has not sold such property to another party.

See Note 10— Inventory for additional details.

In connection with the Company’s vacation ownership inventory sale transactions, for which it has conditional rights and conditional obligations to repurchase the completed properties, the Company was required to maintain an investment-grade credit rating from at least one rating agency.

See Note 27— 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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For information on guarantees and indemnifications related to the Company’s former parent and subsidiaries see Note 27— Transactions with Former Parent and Former Subsidiaries .

Accumulated Other Comprehensive Income/(Loss)

The components of accumulated other comprehensive income/(loss) are as follows (in millions):

Pretax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive (Loss)/Income

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (in millions):

Pretax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Loss

Balance as of December 31, 2020 $ ( 113 ) $ ( 1 ) $ — $ ( 114 )

Other comprehensive income/(loss) 35 — ( 1 ) 34

Other comprehensive loss

( 32 ) — — ( 32 )

Balance as of December 31, 2021 ( 145 ) ( 1 ) — ( 146 )

Other comprehensive income/(loss) ( 32 ) — — ( 32 )

Other comprehensive (loss)/income

( 33 ) 1 — ( 32 )

Balance as of December 31, 2022 ( 178 ) — — ( 178 )

Other comprehensive income/(loss) ( 33 ) 1 — ( 32 )

Other comprehensive income

Balance as of December 31, 2023 $ ( 170 ) $ — $ 1 $ ( 169 )

Tax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive (Loss)/Income

Tax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Loss

Balance as of December 31, 2020 $ 97 $ 1 $ — $ 98

Other comprehensive income/(loss) 2 — — 2

Other comprehensive income

Balance as of December 31, 2021 97 1 — 98

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Balance as of December 31, 2022 99 — — 99

Other comprehensive income/(loss) 2 ( 1 ) — 1

Other comprehensive income

Balance as of December 31, 2023 $ 99 $ — $ — $ 99

Net of Tax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive (Loss)/Income

Net of Tax Foreign Currency Translation Adjustments Unrealized (Losses)/Gains on Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Loss

Balance as of December 31, 2020 $ ( 16 ) $ — $ — $ ( 16 )

Other comprehensive income/(loss) 37 — ( 1 ) 36

Other comprehensive loss

( 32 ) — — ( 32 )

Balance as of December 31, 2021 ( 48 ) — — ( 48 )

Other comprehensive income/(loss) ( 32 ) — — ( 32 )

Other comprehensive loss

( 31 ) — — ( 31 )

Balance as of December 31, 2022 ( 79 ) — — ( 79 )

Other comprehensive income/(loss) ( 31 ) — — ( 31 )

Other comprehensive income

Balance as of December 31, 2023 $ ( 71 ) $ — $ 1 $ ( 70 )

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.

Foreign 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.

The Company's policy for releasing disproportionate income tax effects from AOCL utilizes the aggregate approach.

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Under the Amended and Restated Equity Incentive Plan, a maximum of 15.7 million shares of common stock may be awarded.

As of December 31, 2022, 10.8 million shares remain available.

As of December 31, 2023, 10.1 million shares remain available, based on target performance.

Incentive Equity Awards Granted by the Company

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The majority of 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, 2021, the Company granted incentive equity awards of $ 35 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 2 million in the form of stock options.

During the year ended December 31, 2022, the Company granted incentive equity awards of $ 34 million in the form of RSUs and $ 13 million in the form of PSUs.

During 2021, the Company granted incentive equity awards of $ 35 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 2 million in the form of stock options.

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These NQs will expire over a weighted average period of 5.3 years and carry a weighted average grant date fair value of $ 8.61 .

Unrecognized compensation expense for the NQs was $ 4 million as of December 31, 2022, which is expected to be recognized over a weighted average period of 1.7 years.

The Company did not grant any stock options during 2022.

The fair value of stock options granted by the Company during 2021 and 2020 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.

Unrecognized compensation expense for the NQs was $ 1 million as of December 31, 2023, which is expected to be recognized over a weighted average period of 1.0 year.

The Company did not grant any stock options during the years ended 2023 and 2022.

The fair value of stock options granted by the Company during 2021 were estimated on the date of the grant using the Black-Scholes option-pricing model with the relevant weighted average assumptions outlined in the table below.

Expected volatility was based on both historical and implied volatilities of the Company’s stock and the stock of comparable companies over the estimated expected life for options.

The expected life represents the period of time these awards are expected to be outstanding.

The risk-free interest rate is based on yields on U.S.

The expected life represents the period of time these awards were expected to be outstanding on the date of grant.

The risk-free interest rate was based on yields on U.S.

Treasury strips with a maturity similar to the estimated expected life of the options.

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Expected life (a)

6.25 years 6.25 - 7.50 years

Risk-free interest rate

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(a) The maximum contractual term for these options is 10 years.

The total intrinsic value of exercised options were less than $ 1 million and $ 1 million during 2022 and 2021.

There were no options exercised during 2020.

The total intrinsic value of exercised options was less than $ 1 million during 2023, and 2022, and $ 1 million during 2021.

The fair value of shares that vested during 2023, 2022, and 2021 were $ 37 million, $ 34 million, and $ 33 million.

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The Company recorded stock-based compensation expense of $ 38 million, $ 45 million, and $ 32 million during 2023, 2022, and 2021, related to the incentive equity awards granted to key employees, senior officers, and non-employee directors.

During 2022, such stock-based compensation expense includes $ 3 million which has been classified within Restructuring on the Consolidated Statements of Income/(Loss).

The Company recognized $ 12 million, $ 9 million, and $ 2 million of associated tax benefits during 2022, 2021, and 2020.

During 2023 and 2022, such stock-based compensation expense includes $ 2 million and $ 3 million which has been

classified within Restructuring on the Consolidated Statements of Income.

The Company recognized $ 9 million, $ 12 million, and $ 9 million of tax benefits associated with stock-based compensation during 2023, 2022, and 2021.

The Company paid $ 10 million, $ 7 million, and $ 9 million of taxes for the net share settlement of incentive equity awards that vested during 2023, 2022, and 2021.

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The Company had $ 6 million and $ 5 million of net pension liability as of December 31, 2023 and 2022, included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The Company had no unrecognized gains as of December 31, 2022 and less than $ 1 million of unrecognized gains as of December 31, 2021 included within Accumulated other comprehensive loss on the Consolidated Balance Sheets.

The Company had $ 1 million of unrecognized gains as of December 31, 2023;

which were included within Accumulated other comprehensive loss on the Consolidated Balance Sheets.

There were no unrecognized gains as of December 31, 2022.

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 recognized no pension expense related to these plans during 2022, 2021, or 2020.

The Company recognized no pension expense during 2023, 2022 or 2021 .

Segment Information

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Vacation Ownership and Travel and Membership.

Due to changes in organizational structure in the second quarter of 2022, the management of the Extra Holidays business was transitioned to the Vacation Ownership segment.

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

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

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 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.

Management uses Adjusted EBITDA to assess the performance of the reportable segments.

Adjusted EBITDA is defined by the Company as Net 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.

Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, asset impairments/recoveries, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

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Reconciliation of Net income to Adjusted EBITDA 2023 2022 2021

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

Net income attributable to Travel + Leisure Co.

shareholders $ 396 $ 357 $ 308

(Gain)/loss on disposal of discontinued business, net of income taxes ( 5 ) ( 1 ) 5

Provision/(benefit) for income taxes 130 116 ( 23 )

Depreciation and amortization 119 124 126

Interest expense 251 195 198

Interest (income) ( 13 ) ( 6 ) ( 3 )

Provision for income taxes 94 130 116

Depreciation and amortization 112 119 124

Stock-based compensation 36 42 32

Restructuring (b)

Legacy items 8 1 4

Loss on sale of business

Asset impairments/(recoveries), net (c)

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COVID-19 related costs (d)

Legacy items 1 4 4

Exchange inventory write-off — — 48

Fair value change in contingent consideration — ( 10 ) —

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(a) Includes the elimination of transactions between segments.

(b) Includes $ 3 million of stock-based compensation expense for the year ended December 31, 2022 associated with the 2022 restructuring plans.

(c) Includes $ 1 million of inventory impairments for the year ended December 31, 2022, included in Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

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).

(b) Includes $ 2 million and $ 3 million of stock-based compensation expense for the years ended December 31, 2023 and 2022 associated with the 2023 and 2022 restructuring plans.

(c) Includes $ 1 million of inventory impairments for the years ended December 31, 2023 and 2022, included in Cost of vacation ownership interests on the Consolidated Statements of Income.

(d) Includes expenses related to COVID-19 testing and other expenses associated with the Company’s return-to-work program in 2022.

In 2021 and 2020, this includes severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by U.S.

In 2021, this includes incremental severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by U.S.

and international government employee retention credits.

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COVID-19 Related Items

During the year ended December 31, 2022, the Company had $ 2 million of employee compensation related and other expenses at its corporate operations directly related to COVID-19.

These costs are included within COVID-19 related costs on the Consolidated Statements of Income/(Loss).

During the year ended December 31, 2022, the Company had $ 2 million of employee compensation related and other expenses at its corporate operations related to COVID-19 testing and other expenses associated with the Company’s return-to-work program.

These costs are included within COVID-19 related costs on the Consolidated Statements of Income.

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):

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Recoveries 33 — — 33 Cost of vacation ownership interests

Employee compensation related and other 3 — 1 4 COVID-19 related costs

Asset recoveries — ( 6 ) — ( 6 ) Asset impairments/(recoveries), net

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 3 — 1 4 COVID-19 related costs

Asset impairments 21 34 1 56 Asset impairments/(recoveries), net and Operating expenses

Exchange inventory write-off — 48 — 48 Operating expenses

Lease-related 14 22 — 36 Restructuring

Total COVID-19 $ ( 56 ) $ ( 6 ) $ 1 $ ( 61 )

Allowance for loan losses — Due to 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.

During 2020, the total impact of this COVID-19 related allowance and subsequent adjustments resulted in 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 these adjustments on Adjusted EBITDA was $ 157 million for the year ended December 31, 2020.

During the year ended December 31, 2021, the Company analyzed the adequacy of this COVID-19 related allowance consistent with past methodology, and due to the improvement in net new defaults the Company reduced this allowance resulting in an increase of $ 91 million to Vacation ownership interest sales and a corresponding increase of $ 33 million to Cost of vacation ownership interests.

During 2021, the Company analyzed the adequacy of this 2020 COVID-19 related allowance consistent with past methodology, and due to the improvement in net new defaults the Company reduced this allowance resulting in an increase of $ 91 million to Vacation ownership interest sales and a corresponding increase of $ 33 million to Cost of vacation ownership interests.

The net positive impact of these adjustments on Adjusted EBITDA was $ 58 million for the year ended December 31, 2021.

Refer to Note 9— Vacation Ownership Contract Receivables for additional details.

Asset impairments/(recoveries) — During 2020, the Company incurred $ 56 million of COVID-19 related impairments, including $ 51 million recorded within Asset impairments/(recoveries), net and $ 5 million included in Operating expenses on the Consolidated Statements of Income/(Loss).

Refer to Note 25— 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 17— Fair Value for additional details.

Exchange inventory write-off — During 2020, the Company wrote-off $ 48 million of exchange inventory as discussed in Note 10— Inventory.

Lease-related — During 2020, the Company recognized $ 36 million of restructuring charges including $ 22 million related to the New Jersey lease discussed in Note 26— Restructuring and $ 12 million related to the renegotiation of an agreement.

Employee compensation related and other — During 2022 these costs were related to COVID-19 testing and other expenses associated with the Company’s return-to-work program.

During 2021 these costs included $ 3 million of professional and other costs and $ 1 million of severance and other employee costs resulting from layoffs, salary, and benefits continuation at the Vacation Ownership segment.

Asset recoveries — During 2021, the Company reversed $ 6 million of asset impairments related to its equity investment in Vacasa LLC (“Vacasa”) previously impaired in 2020.

Employee compensation related and other — During 2021, these costs included $ 3 million of professional and other costs and $ 1 million of severance and other employee costs resulting from layoffs, salary, and benefits continuation at the Vacation Ownership segment.

These costs were inclusive of $ 2 million of employee retention credits earned in connection with government programs for the year ended December 31, 2021.

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 Coronavirus Aid, Relief, and Economic Security (“CARES”) Act for which there are no additional requirements or restrictions.

Employee compensation related and other costs also included $ 17 million related to renegotiating or exiting certain agreements and other professional fees in 2020.

In connection with COVID-19 related actions taken by the Company, it recorded employee-related liabilities which are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

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Liability as of 2021 Activity Liability as of

December 31, 2019 Costs Recognized Cash Payments Other (a)

December 31, 2020

COVID-19 employee-related $ — $ 71 $ ( 64 ) $ ( 1 ) $ 6

Ending balance $ — $ 71 $ ( 64 ) $ ( 1 ) $ 6

Liability as of 2021 Activity Liability as of

December 31, 2020 Costs Recognized Cash Payments Other December 31, 2021

December 31, 2020 Costs Recognized Cash Payments December 31, 2021

COVID-19 employee-related $ 6 $ 1 $ ( 6 ) $ 1

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Liability as of 2022 Activity Liability as of

December 31, 2021 Costs Recognized Cash Payments Other December 31, 2022

December 31, 2021 Costs Recognized Cash Payments December 31, 2022

COVID-19 employee-related $ 1 $ 2 $ ( 3 ) $ —

Ending balance $ 1 $ 2 $ ( 3 ) $ —

(a) Includes employee-related write-offs.

Impairments and Other Charges

During 2022, the Company recorded $ 10 million of impairments within Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

During 2022, the Company recorded $ 10 million of impairments within Asset impairments/(recoveries), net on the Consolidated Statements of Income.

These impairments include a $ 9 million loss on the sale at the Vacation Ownership segment related to certain property sold for $ 22 million, made up of $ 17 million in cash and a $ 5 million promissory note.

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This reversal was partially offset by less than $ 1 million of impairments at the Vacation Ownership segment.

This activity was recorded within Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

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 26— 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 trade name impairment at the Travel and Membership segment;

and $ 1 million of impairments at the corporate segment.

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.

This activity was recorded within Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

This activity was recorded within Asset impairments/(recoveries), net on the Consolidated Statements of Income.

Other Charges

During 2022, the Company recorded a $ 1 million inventory impairment at the Vacation Ownership segment included within Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

During 2023 and 2022, the Company recorded a $ 1 million inventory impairment at the Vacation Ownership segment included within Cost of vacation ownership interests on the Consolidated Statements of Income.

Restructuring

2022 Restructuring Plans

2023 Restructuring Plan

During 2023, the Company incurred $ 26 million of restructuring charges.

These charges are associated with certain positions that were made redundant based upon changes to the organizational structure of the Company, primarily within the Travel and Membership segment.

The charges consisted of (i) $ 9 million of personnel costs at the Travel and Membership segment (ii) $ 3 million of lease and personnel-related costs at the Vacation Ownership segment, and (iii) $ 2 million of personnel-related costs at the Company’s corporate operations.

These restructuring charges included $ 3 million of accelerated stock-based compensation expense.

These actions were primarily focused on enhancing organizational efficiency and rationalizing operations.

These charges included personnel-related costs resulting from a reduction of approximately 250 employees and other expenses.

As part of this restructuring plan, the Company decided to decrease its facilities by closing its owned office in Indianapolis, Indiana, and exiting other leased locations.

The 2023 restructuring plan charges consisted of (i) $ 11 million of personnel-related costs at the Travel and Membership segment, (ii) $ 9 million of personnel-related costs and $ 1 million of lease costs at the Vacation Ownership segment, and (iii) $ 5 million of personnel-related costs at the Company’s corporate operations.

These restructuring charges included $ 2 million of accelerated stock-based compensation expense, which is included within Additional paid-in capital on the Consolidated Balance Sheets.

All material initiative and related expenses have been incurred as of December 31, 2023.

The 2022 restructuring liability was reduced by $ 5 million of cash payments during the year ended December 31, 2022.

The majority of the remaining 2022 restructuring liability of $ 7 million is expected to be paid in 2023 with lease-related payments continuing through 2025.

2020 Restructuring Plans

During 2020, the Company recorded $ 37 million of restructuring charges, most of which were COVID-19 related.

These charges included $ 22 million at the Travel and Membership segment associated with the Company’s decision to abandon the remaining portion of its administrative offices in New Jersey, and $ 14 million of lease-related charges due to the renegotiation of an agreement and facility-related restructuring charges associated with closed sales centers at the Vacation Ownership segment.

The Company reduced the 2023 restructuring liability by $ 8 million of cash payments during the year ended December 31, 2023.

The remaining 2023 restructuring liability of $ 15 million is expected to be paid by the end of 2025.

2022 Restructuring Plan

During 2022, the Company incurred $ 14 million of restructuring charges.

These charges were associated with certain positions that were made redundant based upon changes to the organizational structure of the Company, primarily within the Travel and Membership segment.

The charges consisted of (i) $ 9 million of personnel-related costs at the Travel and Membership segment (ii) $ 3 million of lease and personnel-related costs at the Vacation Ownership segment, and (iii) $ 2 million of personnel-related costs at the Company’s corporate operations.

These restructuring charges included $ 3 million of accelerated stock-based compensation expense, which is included within Additional paid-in capital on the Consolidated Balance Sheets.

The 2022 restructuring liability was reduced by $ 7 million and $ 5 million of cash payments during the

years ended December 31, 2023 and 2022.

The remaining 2022 restructuring liability of less than $ 1 million is personnel-related and is expected to be paid by the end of 2024.

The Company has additional restructuring plans which were implemented prior to 2021, most of which were COVID-19 related.

This restructuring liability was reduced by $ 2 million, $ 3 million, and $ 5 million of cash payments during the years ended December 31, 2023, 2022 and 2021.

The remaining 2020 restructuring liability of $ 19 million is lease-related and is expected to be paid by the end of 2029.

The activity associated with all of the Company’s restructuring plans is summarized by category as follows (in millions):

As of December 31, 2023, the remaining liability of $ 17 million, all of which is related to leased facilities, is expected to be paid by the end of 2029.

The activity associated with the Company’s restructuring plans is summarized as follows (in millions):

Liability as of 2021 Activity Liability as of

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Facility-related $ 23 $ — $ ( 1 ) $ — $ 22

Personnel-related 7 3 (a)

Marketing-related — 12 ( 10 ) — 2

Marketing-related 2 ( 1 ) (a)

Personnel-related 1 — ( 1 ) — —

$ 26 $ ( 1 ) $ ( 6 ) $ 3 $ 22

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Facility-related $ 22 $ 1 $ ( 4 ) $ 1 $ 20

Personnel-related 1 — ( 1 ) — —

Marketing-related 2 ( 1 ) (b)

Personnel-related — 13 ( 4 ) ( 3 ) (c)

$ 22 $ 14 $ ( 8 ) $ ( 2 ) $ 26

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Facility-related $ 20 $ 1 $ ( 4 ) $ — $ 17

Personnel-related — 13 ( 4 ) ( 3 ) (d)

Personnel-related 6 25 ( 13 ) ( 2 ) (c)

$ 26 $ 26 $ ( 17 ) $ ( 2 ) $ 33

(a) Includes $ 2 million of restructuring charges related to 2019 Restructuring Plans which have been fully repaid.

(b) Includes $ 1 million reversal of expense related to the reimbursement of prepaid licensing fees that were previously written-off at the Vacation Ownership segment.

(c) Includes $ 2 million reimbursement of termination payments and $ 1 million reimbursement of license fees at the Vacation Ownership segment.

(d) Represents $ 3 million of accelerated stock-based compensation expense included in Additional paid-in capital on the Consolidated Balance Sheets.

(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.

(c) Represents accelerated stock-based compensation expense included in Additional paid-in capital on the Consolidated Balance Sheets.

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, 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 %.

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Since Cendant’s separation, Cendant has settled the majority of the lawsuits that were pending on the date of the separation.

On March 21, 2023, the California Office of Tax Appeals (“OTA”) issued an opinion on a Cendant legacy tax matter involving Avis Budget Group related to a 1999 transaction.

The matter concerned (i) whether the statute of limitations barred proposed assessment notices issued by the California Franchise Tax Board;

and (ii) whether a transaction undertaken by the taxpayers for the 1999 tax year constituted a tax-free reorganization under the Internal Revenue Code.

The OTA ruled in favor of the California Franchise Tax Board.

During 2023 the Company increased the reserve by $ 8 million for this legacy tax matter, one-third of which is the responsibility of Wyndham Hotels.

The OTA’s opinion is not final, and during the second quarter of 2023 Cendant filed a petition for rehearing.

As of December 31, 2023, Cendant’s petition was still pending.

As of December 31, 2023 and 2022 the Cendant separation and related liabilities were $ 23 million and $ 15 million, all of which were tax related liabilities.

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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 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, the Company recognized transition service agreement expenses of less than $ 1 million, included in General and administrative expense on the Consolidated Statements of Income/(Loss).

These transition services ended in 2020.

Matters Related to the European Vacation Rentals Business

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In addition, the Company agreed to indemnify Awaze against certain claims and assessments, including income tax, value-added tax and other tax matters, related to the operations of the European vacation rentals business for the periods prior to the transaction.

During 2023, one of the guarantees under this agreement expired resulting in the Company recognizing $ 5 million within Gain on disposal of discontinued business, net of income taxes, with an offsetting $ 2 million expense, representing Wyndham Hotels one-third share, included within General and administrative expense on the Consolidated Statements of Income.

The estimated fair value of the indemnifications was $ 36 million at December 31, 2023.

The Company has a $ 12 million receivable from Wyndham Hotels for its portion of the guarantee.

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 Gain/(loss) on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income/(Loss).

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 £ 61 million ($ 81 million USD) on a perpetual basis.

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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 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 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.

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.

If Wyndham Hotels drops below these minimum credit ratings, Travel + Leisure Co.

would be required to post a letter of credit (or equivalent support) for the amount of the Wyndham Hotels guarantee.

The estimated fair value of the guarantees and indemnifications for which Travel + Leisure Co.

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This matter is now resolved and no further payments are required.

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.

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

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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.

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).

During 2021, transition service agreement expenses were less than $ 1 million and transition service agreement income was less than $ 1 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 Income.

These transition services ended in February 2021.

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The Company incurred less than $ 1 million of expenses related to this timesharing arrangement during the years ended December 31, 2023, 2022, and 2021.

During 2021, the Company sold a parcel of land in Crossville, Tennessee, that was 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 were no longer core to the Company’s operations to a former executive of the Company for less than $ 1 million.

During 2021, the Company sold a parcel of land in Crossville, Tennessee, which was 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.

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Subsequent Events

On January 3, 2023, the Company acquired the Playbook365 business for $ 6 million of cash paid at closing and contingent consideration of up to $ 24 million based on the achievement of certain financial and operational metrics.

Playbook365 is a youth and amateur sports management platform.

This platform will integrate with ARN’s event lodging management platform to create an all-in-one solution in the youth sports market.

This acquisition was made to broaden the products and services offered by ARN.

The Company is currently in the process of determining the initial purchase accounting for this transaction and expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of 2023.

This business will be included within the Travel and Membership segment.

On January 30, 2024, the Company announced an agreement to acquire the vacation ownership business of Accor, for $ 48 million.

Accor Vacation Club represents 24 resorts and nearly 30,000 members.

This acquisition will help the two companies establish a relationship to develop new timeshare products in the Asia Pacific, Middle East, Africa, and Türkiye regions under the Accor Vacation Club brand leveraging the Travel + Leisure Co.

global platform.

Accor will receive a percentage of vacation ownership sales revenue as a licensing fee under the exclusive licensing agreement.

Travel + Leisure Co.

also receives the exclusive rights to develop new vacation ownership clubs and products utilizing the Accor Vacation Club brand.

The acquisition will be included within the Vacation Ownership segment.

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