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Item 7. Management’s Discussion and Analysis

2026-02-18 compared with 2025-02-19 · 218 added, 178 removed, 378 unchanged (51% of the section changed)

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BUSINESS AND OVERVIEW

We are a global provider of hospitality services and travel products and operate our business in the following two segments:

We are a global provider of hospitality services and travel products with the following two reportable segments:

• Vacation Ownership — 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.

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Economic Conditions and Key Business Trends

During 2024, our business saw strong demand for leisure travel which resulted in higher tours and Gross VOI sales at our Vacation Ownership business, as compared to the prior year.

Our volume per guest (“VPG”) also continued to perform above pre-pandemic levels, despite VPG levels moderating in response to our strategic shift to increase our mix of new owners, which generally produce lower VPGs and lower close rates.

This strategic shift was made to grow our pipeline of potential future owner upgrade sales.

The 2024 full-year results also reflect the impact of cost savings realized as a result of the strategic realignment of our Travel and Membership segment at the end of 2023 and the implementation of additional cost saving initiatives at this segment in the third quarter of 2024.

As a result of these cost saving initiatives we saw an increase in net income and Adjusted EBITDA at this segment despite a decrease in revenue as compared to the prior year.

The Travel and Membership segment was also benefited by pricing increases which led to higher revenue per transaction and served to partially offset the impact of lower transactions, as compared to the prior year.

Lower transactions compared to the prior year were primarily the result of an increasing mix of exchange members with a club affiliation, who have a lower transaction propensity.

While we continue to benefit from the changes we made to our marketing criteria to strengthen sales efficiencies and improve the performance of our vacation ownership contract receivables (“VOCR”) portfolio, similar to a number of other companies, we are experiencing some pressure on our loan portfolio primarily due to an increase in delinquencies.

We have also taken steps to increase the percentage of developer-financed sales since 2022 with the goal of accelerating growth in our consumer financing revenues, while also balancing our portfolio performance.

While we are experiencing the benefits of positive demand trends, the sustained effects of inflationary pressures over time, high interest rates, and risk of recession inherently result in uncertainty in business trends and consumer behavior.

Although higher interest rates negatively impacted our interest expense during 2024, we have begun to experience improvements in the capital markets.

We closed on three term securitizations during 2024 with lower blended interest rates and higher advance rates than our securitizations in 2023, with our last securitization of the year closing with the lowest coupon rate and advance rate we have achieved in over two years.

Additionally, during the fourth quarter of 2024, we repriced and replaced the $593 million outstanding balance on the 2023 Incremental Term Loan B facility and refinanced the $282 million outstanding balance on the 2018 Term Loan B facility, which will provide future interest savings.

We also expect benefits in the interest on our floating rate debt as a result of the Federal Reserve benchmark interest rate reductions, which totaled 100 basis points in the second half of 2024.

Our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, which provides opportunities for upgrade sales.

This business, and, to a greater extent, our Travel and Membership businesses are highly dependent on the health of the travel industry and we are subject to the other risks and uncertainties discussed in “ Risk Factors ” contained in Part I, Item 1A of this Annual Report on Form 10-K.

Accor Vacation Club Acquisition

On March 1, 2024, we acquired Accor Vacation Club for $50 million ($44 million net of cash acquired).

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

This acquisition was undertaken to 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 receives a percentage of vacation ownership sales revenue as a licensing fee under the exclusive licensing agreement and we receive the exclusive right to develop new vacation ownership clubs and products in the aforementioned regions, utilizing the Accor Vacation Club brand.

This acquisition

is included within the Vacation Ownership segment.

See Note 5— Acquisitions to the Consolidated Financial Statements for additional details.

Sports Illustrated Resorts

On September 11, 2023, we entered into an agreement to acquire the rights to the vacation ownership business of Sports Hospitality Ventures, LLC (“SHV”), and introduced a new concept for a network of sports-themed resort and lifestyle complexes in popular college towns and leisure destinations under the Sports Illustrated Resorts brand.

The new resorts are anticipated to be developed using an asset-light development financing model.

We are still early in the development of the Sports Illustrated Resorts portfolio but expect to begin sales within the next 9 to 18 months.

This new product line is included within the Vacation Ownership segment.

There is no immediate earnings impact for us, but we expect this business to drive incremental growth starting in 2026.

The Organization for Economic Co-operation and Development (“OECD”), continues to put forth various initiatives, including Pillar Two rules which include the introduction of a global minimum tax at a rate of 15%.

European Union member states agreed to implement the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive and most have already enacted legislation.

A number of other countries have also implemented similar legislation.

As of December 31, 2024, based on the countries in which we do business that have enacted legislation effective January 1, 2024, the impact of these rules to our financial statements was not material.

For the rules effective January 1, 2025, we do expect the impact to increase our effective tax rate but overall the rules are not expected to have a material impact on our financial statements.

During 2025, our business saw continued demand for leisure travel which resulted in higher Gross VOI sales and Adjusted EBITDA growth at our Vacation Ownership business, as compared to the prior year.

Tour flow increased year‑over‑year in the fourth quarter, as well as for the full year.

We believe this tour increase, coupled with a significant increase in volume per guest (“VPGs”) as compared to the prior year, highlights consumers’ recognition of the value proposition of our products.

Such value proposition becomes especially apparent during periods of inflation when the costs of other accommodation types are rising.

Although consumer sentiment progressively declined throughout 2025, our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, which provides opportunities for upgrade sales.

At our Travel and Membership business, 2025 continued to reflect the impacts of exchange headwinds, which resulted in lower revenues.

This decline was primarily attributed to a reduction in member counts and an increasing mix of exchange members with club affiliations.

Exchange members with club affiliations have historically demonstrated a lower propensity to transact, which has contributed to a decline in exchange transactions.

This decline was partially offset by continued growth in Travel Club transactions.

Exchange revenue per transaction remained flat compared to the prior year, while Travel Club revenue per transaction declined.

However, the overall improvement in Travel Club transactions outpaced the decline in revenue per transaction leading to increased revenue for this subset of the business, supporting this segment’s performance.

Given recent declines in the number of exchange members, this business may be negatively impacted in the future if we are required to purchase additional inventory to supplement the inventory supplied by exchange members.

We have seen an improvement in interest rates on our variable rate corporate borrowings which positively impacted our interest expense during 2025.

Interest expense was also benefitted by savings associated with refinancing our revolving credit facility at the end of the second quarter, which reduced the associated interest rate spread on borrowings by 25 basis points at all pricing levels, and the refinancing of our $350 million notes in the third quarter with a nearly 50 basis point interest rate reduction.

We anticipate further interest savings following the refinancing of our Term Loan B facility, which occurred at the end of the fourth quarter and reduced the interest rate on this facility by 50 basis points (see Note 15— Debt to the Consolidated Financial Statements for additional details on these refinancings).

Additionally, we completed three term securitizations during 2025.

Two had terms comparable to our 2024 transactions, while the third, completed in the fourth quarter, achieved our lowest coupon rate since 2022.

These transactions demonstrate the strength of our business, even during times of market volatility.

While overall we have benefited from positive demand trends through the year, the sustained effects of inflationary pressures over time, high interest rates and risk of recession inherently result in uncertainty in business trends and consumer behavior.

Recent tariff actions and other trade restrictions have increased this uncertainty.

Our Vacation Ownership and Travel and Membership businesses are highly dependent on the health of the travel industry and declines in, or disruptions to, the industry such as those caused by adverse economic conditions may adversely affect us.

We are also subject to the other risks and uncertainties discussed in “ Risk Factors ” contained in Part I, Item 1A of this Annual Report on Form 10-K.

Resort Optimization Initiative

In order to promote the long-term strength of our vacation ownership resorts, we undertook a strategic review during 2025 with the intent of optimizing the overall quality of our resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future.

This review identified 17 resorts requiring significant owner reinvestment, or that are in markets that no longer align with owner demand.

See Note 25— Restructuring—Resort Optimization Initiative to the Consolidated Financial Statements for a description of the restructuring plan we are undertaking in connection with this strategic review.

This plan is expected to result in meaningful annual savings attributable to the maintenance fees we incur on unsold VOIs.

Such savings would be partially offset by the loss of, or reduction in, VOI sales and property management fees earned at the impacted resorts resulting in an expected positive net impact to Adjusted EBITDA beginning in 2026.

In connection with these actions, during 2025, we incurred the following charges:

• $216 million of inventory write-downs and impairments, which are included within Cost of vacation ownership interests on the Consolidated Statements of Income;

• $9 million of other charges consisting primarily of employee‑related costs, of which $5 million is included within Operating expense and $4 million is included in Restructuring on the Consolidated Statements of Income;

• $8 million of property and equipment impairments, which are included within Asset impairments, net.

We would expect to incur an additional $4 million of inventory impairment charges and an additional $11 million of inventory write-downs if the remaining actions are approved by the owners in the first quarter of 2026.

The Organization for Economic Co-operation and Development (“OECD”), continues to advance initiatives, including Pillar Two which introduced a global minimum tax at a rate of 15%.

A number of countries have implemented the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive.

As of December 31, 2025, based on the countries in which we do business that have enacted legislation effective January 1, 2025, the impact of these rules did increase our effective tax rate but overall the impact to our financial statements was not material.

This may change as other countries enact similar legislation and further guidance is released.

We continue to closely monitor regulatory developments to assess potential impacts.

We continue to closely monitor regulatory developments to assess potential impacts, including the OECD’s published administrative guidance, released January 5, 2026, on a side-by-side system, which would effectively exempt U.S.

multinationals from certain provisions of Pillar Two.

Recent Legislation

On July 4, 2025, the bill commonly referred to as the “One Big Beautiful Bill Act” was signed into law.

Among other provisions, the bill extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for research and development and capital investments.

In addition, the bill contains other new tax relief measures and various revenue raising measures.

The legislation has multiple effective dates.

For the provisions effective in 2025, there was no material impact to our effective tax rate for the year ended December 31, 2025.

For the provisions which will become effective in 2026, we are currently assessing the potential impact of these changes on our business and financial results.

SEGMENT OVERVIEW

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Our estimates of uncollectible amounts are based largely on the results of our static pool analysis which relies on historical payment data by customer class.

We leverage a number of different tools to impact the percentage of developer-financed sales, such as offering credit cards and other third-party financing directly to consumers to facilitate cash down payments and sales while balancing our consumer default risk profile.

We leverage a number of different tools to impact the percentage of developer-financed sales and balance our consumer default risk profile, such as offering credit cards and other third-party financing directly to consumers to facilitate cash down payments and sales, underwriting discipline, and periodic sales of VOCRs.

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

For those VOI sales, we allocate the sales price between the VOI sale and the non-cash incentive.

For those VOI sales, we allocate 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.

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These services may also include reservation and resort renovation activities.

The initial terms of the property management agreements are generally between three to five years;

The initial terms of such property management agreements are generally between three to five years;

however, the vast majority of the agreements provide a mechanism for an automatic one year renewal upon expiration of the terms.

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

We reduce our management fees revenue for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we

have concluded that such payments are consideration payable to a customer.

We reduce our management fees revenue for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have 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.

We earn revenue from our Wyndham Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.

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

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

Within our Vacation Ownership segment, we measure operating performance using the following key operating statistics:

(i) gross VOI sales including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business’ efforts in generating sales from tours, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours.

(i) gross VOI sales, which represents total sales of VOIs, including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business’ efforts in generating sales from tours, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours.

We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel.

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Estimated net contract consideration payable by affiliated clubs for memberships is recognized as revenue over the term of the contract with the affiliated club in proportion to the estimated average monthly member count.

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

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

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

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We earn revenue from our RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.

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

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

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Vacation Ownership and Travel and Membership.

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 our reportable segments, we also consider the nature of services provided by the operating segments.

Based on this analysis we aggregate two geographical operating segments within the Vacation Ownership reportable segment and two operating segments within the Travel and Membership reportable segment.

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

During the third quarter of 2024, we updated our definition of Adjusted EBITDA to exclude certain non-recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business as these costs do not reflect recurring operating expenses.

This change was made as a result of our acquisition of Accor Vacation Club.

As this business is being further integrated into our operations, it has begun incurring certain discrete non-recurring costs directly attributable to

integration activities and we believe excluding these types of costs would assist investors in understanding our ongoing performance when considered with generally accepted accounting principles in the U.S.

(“GAAP”) measures.

We define Adjusted EBITDA 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 and integration costs associated with mergers, 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.

During the fourth quarter of 2025, we updated the definition of Adjusted EBITDA to exclude inventory write-downs associated with the Company’s resort optimization initiative.

This initiative resulted in inventory write-downs related to agreements to supply replacement inventory to vacation ownership clubs impacted by this initiative.

These charges are included within Cost of vacation ownership interests on the Consolidated Statements of Income.

For additional detail on the resort optimization initiative see Note 25— Restructuring .

As a result, we now define Adjusted EBITDA 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 and integration costs associated with mergers, acquisitions, and divestitures, asset impairments/recoveries and inventory write-downs associated with the Company’s resort optimization initiative, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc.

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(“ABG”) formerly Cendant Corporation, and the sale of the vacation rentals businesses.

Integration costs represent certain non-recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business.

We believe that Adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, we believe gives a more complete understanding of our operating performance.

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Refer to “The Year Ended December 31, 2025 vs.

The Year Ended December 31, 2023” section for a discussion of how these operating statistics affected our business for the periods presented.

The Year Ended December 31, 2024” for a discussion on how these operating statistics affected our business for the periods presented.

Year Ended December 31,

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$ 3,284 $ 3,094 6.1

Travel and Membership (a)

Travel and Membership

Transactions (in 000s) (e)

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Expenses 3,468 3,131 (337)

Loss on sale of business — 2 2

Operating income 553 733 (180)

Interest expense 232 249 17

Interest (income) (14) (13) 1

Other (income), net (7) (15) (8)

Interest (income) (9) (14) (5)

Income before income taxes 337 513 (176)

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Excluding the impacts of foreign currency, the increase in net revenues was primarily due to:

• $131 million of increased revenues at our Vacation Ownership segment primarily due to an increase in net VOI sales as a result of increased tours, partially offset by a decrease in VPG due to a higher new owner transaction mix which generally produce lower VPGs;

• $195 million of increased revenues at our Vacation Ownership segment primarily due to an increase in net VOI sales as a result of an increase in VPG due to a higher owner transaction mix which generally produce higher VPGs and increased tours;

higher property management revenues resulting from higher property management fees and reimbursable revenues;

and an increase in consumer financing revenues primarily due to a higher average portfolio balance;

partially offset by a decrease in commission revenues due to lower volume of VOI Fee-for-Service sales as a result of fewer commitments.

and an increase in other revenues due to higher co-branded credit card and VOI incentive revenues.

This increase in revenues was partially offset by:

• $14 million of decreased revenues at our Travel and Membership segment primarily due to a decrease in transaction revenue driven by lower transactions and an increasing mix of exchange members with a club affiliation who have a lower transaction propensity, partially offset by higher revenue per transaction resulting from price increases.

• $33 million of decreased revenues at our Travel and Membership segment primarily driven by lower transaction revenue due to lower revenue per transaction resulting from a higher mix of Travel Club transactions, which generally produce lower revenue per transaction.

Exchange transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity.

Additionally, subscription revenues declined due to lower average member count.

Expenses increased $337 million during 2025 compared with 2024.

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Excluding the impacts of foreign currency, the increase in expenses was primarily the result of:

• $182 million increase in cost of VOIs driven by $216 million of inventory write-downs and impairments related to the resort optimization initiative at the Vacation Ownership segment (see Note 25— Restructuring for additional information), partially offset by a $34 million decrease in the cost of VOIs sold due to variations in inventory sourcing;

• $46 million increase in sales and commission expenses at the Vacation Ownership segment due to higher Gross VOI sales, net of Fee-for-Service sales;

• $43 million increase in marketing costs primarily due to an increase at our Vacation Ownership business in support of increased tour flow and new owner mix, partially offset by cost savings at the Travel and Membership segment;

• $41 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;

• $24 million increase in consumer financing interest expense primarily due to a higher average non-recourse debt balance and increased weighted average coupon rate;

• $21 million increase in general and administrative expenses driven by variable compensation and other employee related costs.

• $35 million increase in marketing costs primarily due to an increase at our Vacation Ownership business in support of increased tour flow and sales volume, partially offset by cost savings at the Travel and Membership segment;

• $23 million increase in General and administrative expenses driven by $17 million higher stock-based compensation expense, $9 million higher advertising costs, and $8 million higher employee-related costs;

partially offset by the prior year reversal of a $12 million receivable representing Wyndham Hotels’ one-third portion of an expired guarantee associated with the sale of the European vacation rentals business;

• $9 million increase in depreciation and amortization;

• $7 million increase in cost of sales at the Travel and Membership segment due to increased Travel Clubs transactions and a heavier weighting of rentals;

• $7 million increase in Asset impairments, net driven by $8 million of asset impairments at the Vacation Ownership segment resulting from the resort optimization initiative;

• $5 million increase in sales and commission expense for VOI Fee-for-Service sales due to increased volume.

These increases were partially offset by:

• $39 million decrease in the cost of VOIs sold primarily due to product mix, partially offset by increased sales volume;

• $39 million decrease in sales and commission expense for VOI Fee-for-Service sales due to lower volume;

• $10 million decrease in restructuring costs.

We recognized a loss on sale of business of $2 million during 2023 resulting from the sale of the Love Home Swap business.

Interest expense decreased $2 million during 2024 compared with 2023 primarily due to a lower average outstanding balance on corporate debt, partially offset by a higher weighted average interest rate on corporate borrowings.

Other income, net of other expense increased $12 million during 2024 compared with 2023, primarily due to a $7 million reduction in the fair value of contingent consideration associated with business acquisitions.

• $18 million decrease in developer obligations due to increased monetization of unsold VOIs;

• $9 million of operating cost savings at the Travel and Membership driven by the strategic restructuring of this segment in the prior year and additional restructuring activities during the fourth quarter of 2025.

Interest expense decreased $17 million during 2025 compared with 2024 primarily due to a lower weighted average interest rate on corporate borrowings, partially offset by a higher average outstanding balance on corporate debt.

Other income, net of other expense decreased $8 million during 2025 compared with 2024, primarily due to a $7 million reduction in the fair value of contingent consideration associated with business acquisitions in 2024;

partially offset by a $4 million gain on a building held-for-sale during 2025.

Interest income decreased $5 million during 2025 compared with 2024, primarily due to a lower investment balance.

Our effective tax rates were 31.8% and 26.4% for the years ended December 31, 2025 and 2024.

Our effective tax rate for 2023 is lower primarily due to the partial reversal of the valuation allowance related to our foreign tax credits based on our determination that it is more likely than not that the benefit will be realized.

Gain on disposal of discontinued business, net of income taxes increased $28 million during 2024 compared with 2023 driven by the release of expired guarantees of $32 million, net of tax in 2024, related to the sale of the European vacation rentals business.

Our effective tax rate for 2025 was impacted primarily by the inventory write-down and impairment charges recorded in the year that significantly reduced our pre-tax income.

Gain on disposal of discontinued business, net of income taxes decreased $33 million during 2025 compared with 2024 driven by the release of expired guarantees of $32 million, net of tax in 2024, related to the sale of the European vacation rentals business.

As a result of these items, Net income attributable to Travel + Leisure Co.

shareholders increased $15 million in 2024 as compared with 2023.

The tables below present our segment information (see Note 23— Segment Information to the Consolidated Financial Statements for a breakout of significant expenses related to our reportable segments), followed by a discussion of each segment’s 2024 results compared to 2023 (in millions):

shareholders decreased $181 million in 2025 as compared with 2024.

The tables below present our reportable segment information (see Note 23— Segment Information to the Consolidated Financial Statements for a breakout of significant expenses related to our reportable segments), followed by a discussion of each segment’s 2025 results compared to 2024 (in millions):

Year Ended December 31,

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Depreciation and amortization 124 115

Inventory write-downs and asset impairments, net (b)

Stock-based compensation 57 40

Restructuring (b)

Legacy items 11 8

Asset impairments, net (c)

Restructuring (c)

Acquisition and divestiture related costs 1 2

Legacy items — 11

Integration costs — 1

Loss on sale of business — 2

Fair value change in contingent consideration — (7)

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(a) Includes the elimination of transactions between segments.

(b) Includes $1 million of stock-based compensation expense during 2024 associated with the 2022 restructuring plan and $2 million of stock-based compensation expense during 2023 associated with the 2023 restructuring plan.

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

(b) Includes $216 million of inventory write-downs and impairments during 2025, included within Cost of vacation ownership interests on the Consolidated Statements of Income.

(d) Includes $5 million of employee costs associated with the resort optimization initiative included within Operating expense on the Consolidated Statements of Income, and $2 million of other items that meet the conditions of unusual and/or infrequent, partially offset by a $4 million gain on sale of a corporate building owned by our Travel and Membership segment, which was previously held-for-sale.

Vacation Ownership

Net revenues increased $190 million and Adjusted EBITDA increased $97 million during 2025 compared with 2024.

The net revenue and Adjusted EBITDA growth were not materially impacted by foreign currency.

Net revenue was unfavorably impacted by foreign currency of $5 million.

Adjusted EBITDA was unfavorably impacted by foreign currency of $2 million.

The net revenue growth excluding the impact of foreign currency was primarily driven by:

• $224 million increase in Gross VOI sales, net of Fee-for-Service sales, due to an 8.0% increase in tours, partially offset by a 1.1% decrease in VPG due to a higher new owner transaction mix (35% in the current year compared to 33% in the same period of 2023) which generally produce lower VPGs;

• $181 million increase in Gross VOI sales, net of Fee-for-Service sales, due to a 6.1% increase in VPG due to a higher owner upgrade transaction mix (67% in the current period compared to 64% in the same period of 2024) which generally produce higher VPGs along with higher average transaction prices, and a 2.5% increase in tours;

• $35 million increase in property management revenues primarily due to higher management fees and reimbursable revenues;

• $18 million increase in other revenues due to $9 million increase in co-branded credit card revenues and $8 million of higher VOI incentive revenues:

• $6 million increase in commission revenues due to higher volume of VOI Fee-for-Service sales;

• $5 million increase in consumer financing revenues primarily due to a higher average portfolio balance.

These increases were partially offset by a $84 million increase in our provision for loan losses primarily due to higher Gross VOI sales, net of Fee-for-Service sales and a higher provision rate resulting from a slight elevation in delinquencies and defaults, and a $63 million decrease in commission revenues due to lower volume of VOI Fee-for-Service sales as a result of fewer commitments.

These increases were partially offset by a $52 million increase in our provision for loan losses primarily due to increased Gross VOI sales, net of Fee-for-Service sales and a higher provision rate associated with increased defaults.

In addition to the revenue change explained above, Adjusted EBITDA was further impacted by:

• $46 million increase in sales and commission expenses due to higher Gross VOI sales, net of Fee-for-Service sales;

• $56 million increase in marketing costs in support of increased tour flow and new owner mix;

• $41 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;

• $24 million increase in consumer financing interest expense primarily due to a higher average non-recourse debt balance and increased weighted average coupon rate.

These increases were partially offset by a $39 million decrease in the cost of VOIs sold primarily due to product mix, partially offset by increased sales volume, and a $39 million decrease in sales and commission expense for VOI Fee-for-Service sales due to lower volume.

• $38 million increase in marketing costs in support of increased tour flow and sales volume;

• $13 million increase in general and administrative expenses driven by $5 million of higher professional fees and $4 million higher variable compensation;

• $5 million increase in sales and commission expense for VOI Fee-for-Service sales due to increased volume.

These increases were partially offset by a:

• $34 million decrease in the cost of VOIs sold primarily due to variations in inventory sourcing, partially offset by increased sales volume, and an

• $18 million decrease in developer obligations due to increased monetization of unsold VOIs.

Travel and Membership

Net revenues decreased $16 million and Adjusted EBITDA increased $4 million during 2024 compared with 2023.

The net revenue decrease was unfavorably impacted by foreign currency of $2 million (0.3%) and the Adjusted EBITDA growth was not materially impacted by foreign currency.

The decrease in net revenues, excluding the impact of foreign currency, was primarily driven by a $11 million decrease in transaction revenue due to lower transactions, partially offset by higher revenue per transaction resulting from price increases;

and a $4 million decrease in subscription revenues.

Transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity.

Net revenues decreased $33 million and Adjusted EBITDA decreased $23 million during 2025 compared with 2024.

Net revenue was not materially impacted by foreign currency.

Adjusted EBITDA was unfavorably impacted by foreign currency of $1 million.

The decrease in net revenues, excluding the impact of foreign currency, was primarily driven by a $23 million decrease in transaction revenue due to lower revenue per transaction;

a $7 million decrease in subscription revenues due to lower exchange

member count;

and a $3 million decrease in ancillary revenues.

Revenue per transaction was impacted by a higher mix of Travel Club transactions, which generally produce lower revenue per transaction.

Exchange transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity and a decrease in average member count.

In addition to the revenue change explained above, Adjusted EBITDA excluding the impact of foreign currency was further impacted by:

• $11 million of employee related cost savings related to the strategic restructuring of this segment;

which focused on enhancing organizational efficiency and rationalizing operations including $5 million of other operating expenses, $4 million of marketing, and $2 million of general and administrative;

• $9 million of additional marketing cost savings.

These savings were partially offset by a $6 million increase in cost of sales due to a heavier weighting of rentals in addition to the revenue growth in Travel Clubs.

• $7 million increase in cost of sales due to increased Travel Clubs transactions and a heavier weighting of rentals partially offset by:

• $12 million of employee related cost savings associated with the strategic restructuring of this segment in 2024 and additional restructuring activities during the fourth quarter of 2025;

these initiatives focused on enhancing organizational efficiency and rationalizing operations, including savings of $9 million of operating costs, $2 million of marketing expenses, and $1 million of general and administrative expenses;

• $3 million of facilities and cloud savings.

Corporate and other

Corporate and other revenue was flat during 2024 compared with 2023 primarily due to a $3 million decrease in revenue from the insurance program we manage on behalf of homeowners associations;

wholly offset by a $3 million decrease in eliminated transactions between segments.

Adjusted EBITDA decreased $18 million (26.5%) during 2024 compared with 2023 and was not materially impacted by foreign currency.

The decrease in Adjusted EBITDA was primarily due to $15 million of higher general and administrative costs driven by $12 million of higher variable compensation and other employee related costs.

Corporate and other revenue was flat and Adjusted EBITDA decreased $13 million during 2025 compared with 2024.

Adjusted EBITDA was unfavorably impacted by foreign currency of $1 million.

The decrease in Adjusted EBITDA was primarily due to higher general and administrative costs driven by $9 million of higher advertising expenses and $5 million of higher employee related costs.

For a comparative review of our consolidated results of operations and those of our reportable segments for the fiscal years ended December 31, 2024 and 2023, refer to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 19, 2025.

DISCONTINUED OPERATIONS

During 2024, 2023, and 2022, we recognized $33 million, $5 million, and $1 million within Gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income.

During 2024, we had $1 million of Net cash provided by investing activities from discontinued operations and in 2022 we had $5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows.

During 2024 and 2023, we recognized gains of $33 million and $5 million within Gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income.

During 2024, we had $1 million of Net cash provided by investing activities from discontinued operations on the Consolidated Statements of Cash Flows.

See Note 6— Discontinued Operations to the Consolidated Financial Statements for additional details of our discontinued operations.

RESTRUCTURING PLANS

Resort Optimization Initiative

In order to promote the long-term strength of our portfolio of vacation ownership resorts, we undertook a strategic review with the intent of optimizing the overall quality of our resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future.

This review identified 17 resorts requiring significant owner reinvestment or are in markets that no longer align with owner demand.

As a result, during 2025, we proposed to the boards of these respective homeowners’ associations (“HOAs”) of the identified resorts, court-supervised restructuring plans to remove select resorts from our portfolio and reduce the number of units at certain other resorts.

In connection with these actions, during 2025, we incurred $216 million of inventory write-downs and impairments at the Vacation Ownership segment associated with the removal of the identified resorts and the agreements to supply replacement inventory to the impacted vacation ownership clubs.

These charges are included within Cost of vacation ownership interests on the Consolidated Statements of Income.

We also incurred $9 million of other charges consisting primarily of employee-related costs, of which $5 million is included within Operating expense and $4 million is included in Restructuring on the Consolidated Statements of Income, and $8 million of impairments of other property and equipment, which are included within Asset impairments, net.

As of December 31, 2025, there were $4 million of restructuring liabilities associated with this initiative, which are expected to be paid by the end of 2027.

See Note 25— Restructuring—Resort Optimization Initiative to the Consolidated Financial Statements for additional details.

2025 Restructuring Plan

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

These charges consisted of (i) $10 million of personnel-related costs at the Travel and Membership segment, (ii) $3 million of personnel-related costs at our corporate operations, and (iii) $2 million of personnel-related costs at the Vacation Ownership segment.

These charges

consisted of (i) $7 million of personnel-related costs at our corporate operations, (ii) $5 million of personnel-related costs and $2 million of fees associated with the termination of a licensing agreement at the Travel and Membership segment, and (iii) $1 million of personnel-related costs at the Vacation Ownership segment.

All material initiative and related expenses have been incurred as of December 31, 2025.

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2024 Restructuring Plan

We incurred $26 million of restructuring charges during the year ended December 31, 2023.

During 2024, we incurred $15 million of restructuring charges associated with the 2024 restructuring plan.

These charges included personnel-related costs resulting from a reduction of approximately 300 employees and other expenses.

All material initiative and related expenses have been incurred as of December 31, 2025.

We reduced our 2024 restructuring liability by $7 million of cash payments during both 2025 and 2024.

As of December 31, 2025, the 2024 restructuring liability has been fully settled.

2023 Restructuring Plan

During 2023, we incurred $26 million of restructuring charges.

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

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These restructuring charges included $2 million of accelerated stock-based compensation expense.

We reduced our 2023 restructuring liability by $14 million and $8 million of cash payments during the years ended December 31, 2024 and 2023.

The remaining 2023 restructuring liability of less than $1 million is expected to be paid by the end of 2025.

2022 Restructuring Plan

We incurred $14 million of restructuring charges during the year ended December 31, 2022.

These charges were associated with certain positions that were made redundant based upon changes to our organizational structure, 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 our corporate operations.

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

During 2024, we recognized an additional $1 million of stock-based compensation expense associated with the 2022 restructuring plan.

The 2022 restructuring liability was reduced by $1 million, $7 million, and $5 million of cash payments during the years ended December 31, 2024, 2023, and 2022.

We reduced our 2023 restructuring liability by less than $1 million, $14 million and $8 million of cash payments during the years ended December 31, 2025, 2024, and 2023.

As of December 31, 2025, the 2023 restructuring liability has been fully settled.

See Note 26— Restructuring to the Consolidated Financial Statements for additional details of our restructuring activities.

See Note 25— Restructuring to the Consolidated Financial Statements for additional details of our restructuring plans.

FINANCIAL CONDITION

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Total deficit $ (982) $ (880) $ (102)

Total assets decreased $3 million from December 31, 2023 to December 31, 2024, due to:

• $115 million decrease in Cash and cash equivalents primarily driven by repayment of the $300 million 5.65% notes which were due in April of 2024, $234 million of share repurchases, $142 million of dividend payments, $81 million of property and equipment additions, and $44 million of net payments related to the acquisition of Accor Vacation Club, partially offset by $464 million of net cash provided by operating activities, $196 million of net borrowings on the revolving credit facility, and $62 million of net proceeds on non-recourse debt;

• $64 million decrease in Property and equipment, net driven by $56 million of net transfers of completed VOI inventory from Property and equipment to Inventory;

• $24 million decrease in Trade receivables, net due to net collections of $15 million of developer receivables and $11 million of property management fees;

• $15 million decrease in Prepaid expenses driven by a $9 million decrease in prepaid maintenance fees.

These decreases were partially offset by:

• $92 million increase in Inventory driven by $126 million of inventory acquisitions, including the $9 million from the Accor Vacation Club purchase;

and $56 million of net transfers of completed VOI inventory from property and equipment;

partially offset by $92 million for the sale of VOI inventory;

• $92 million increase in Vacation ownership contract receivables, net, driven by $1.53 billion of VOI originations, partially offset by $983 million of principal collections and net provision for loan losses of $432 million;

• $31 million increase in Other assets driven by an increase of $35 million related to timing of payroll payments.

Total liabilities decreased $40 million from December 31, 2023 to December 31, 2024, primarily due to:

• $107 million decrease in Debt driven by repayment of the $300 million 5.65% notes which were due in April of 2024, partially offset by $196 million of net borrowings on the revolving credit facility;

• $29 million decrease in Accrued expenses and other liabilities primarily due to the release of a $36 million accrual related to the expiration of certain guarantees associated with the European vacation rentals business, a $17 million decrease in deferred contingent consideration due to a $10 million payment related to the Travel + Leisure brand acquisition and a $7 million fair value adjustment to contingent consideration related to the Playbook365 acquisition, and a $10 million decrease in accrued restructuring, partially offset by a $34 million increase in accrued payroll and related costs, primarily employee bonus and commissions.

These decreases were partially offset by a:

• $52 million increase in Non-recourse vacation ownership debt primarily due to $62 million net borrowings, partially offset by $9 million of foreign exchange impacts;

• $35 million increase in Deferred income taxes primarily due to installment sales;

• $15 million increase in Deferred income due to increases of $15 million in deferred co-branded credit card programs, $6 million of VOI trial package revenue, and $5 million of VOI incentive revenue, partially offset by a $10 million decrease in deferred subscription revenue.

Total deficit decreased $37 million from December 31, 2023 to December 31, 2024, primarily due to $411 million of Net income attributable to Travel + Leisure Co.

shareholders and a $49 million increase in additional paid-in capital, primarily due to stock-based compensation;

partially offset by $235 million of share repurchases and $144 million of dividends, and $42 million of unfavorable currency translation adjustments driven by fluctuations in exchange rates, primarily the Australian Dollar, Euro, and the British Pound Sterling.

Total assets increased $25 million from December 31, 2024 to December 31, 2025, due to:

• $86 million increase in Cash and cash equivalents primarily driven by $640 million of Net cash provided by operating activities, $494 million net proceeds from the issuance of $500 million 6.125% secured notes due September 2033, $34 million received from the issuance of common stock driven by option exercises and participation in our employee stock purchase plan, and $25 million proceeds on a vacation ownership inventory financing agreement, partially offset by repayment of the $350 million notes due October 2025, $301 million paid for share repurchases, $149 million of dividend payments, $133 million of net payments on the revolving credit facility, and $117 million of property and equipment additions;

• $60 million increase in Other assets driven by $38 million increase in right-of-use assets driven by our new corporate headquarters lease, $22 million increase in non-trade receivables, net, $16 million of inventory transferred to assets held-for-sale in 2025 related to the resort optimization initiative (see Note 25— Restructuring for additional information), and a $10 million increase in deferred costs, partially offset by a $29 million decrease in tax receivables;

• $19 million increase in Vacation ownership contract receivables, net, driven by $1.6 billion of VOI originations, partially offset by $1.09 billion of principal collections and net provision for loan losses of $484 million;

• $11 million increase in Restricted cash associated with funds on deposit held to pay claims by our captive insurance company.

These increases were partially offset by:

• $99 million decrease in Inventory driven by $216 million of inventory write-downs and impairments at the Vacation Ownership segment, $57 million for the sale of VOI inventory, and $16 million of inventory transferred to assets held-

for-sale during 2025 related to the resort optimization initiative;

partially offset by $130 million of inventory acquisitions, and $66 million of net transfers of completed VOI inventory from property and equipment;

• $60 million decrease in Property and equipment, net primarily due to $66 million of net transfers of completed VOI inventory from Property and equipment to Inventory.

Total liabilities increased $127 million from December 31, 2024 to December 31, 2025, primarily due to:

• $132 million increase in Accrued expenses and other liabilities due to a $57 million increase in lease liabilities driven by our new corporate headquarters, $25 million for an inventory financing obligation, $17 million increase in accrued payroll costs, primarily variable compensation and deferred compensation, a $17 million increase in resort related obligations and commitments, and a $14 million increase in accrued taxes;

• $11 million increase in Deferred income driven by an increase of $15 million related to co-branded credit card programs and a $4 million increase in deferred VOI incentive revenue, partially offset by decreases of $4 million of deferred subscription revenue and $4 million of deferred VOI trial package revenue.

These increases were partially offset by an $18 million decrease in Deferred income taxes driven by impairments, partially offset by installment sales and tax depreciation and amortization.

Total deficit increased $102 million from December 31, 2024 to December 31, 2025, primarily due to $300 million of share repurchases and $152 million of dividends;

partially offset by $230 million of Net income attributable to Travel + Leisure Co.

shareholders, $57 million of stock-based compensation, $46 million of favorable currency translation adjustments driven by fluctuations in exchange rates, primarily the Australian dollar, British pound sterling, and the Euro, and $24 million of stock option exercises.

LIQUIDITY AND CAPITAL RESOURCES

We believe that we have sufficient sources of liquidity to meet our expected ongoing short-term and long-term cash needs, including capital expenditures, operational and/or strategic opportunities, and expenditures for human capital, intellectual property, contractual obligations, off-balance sheet arrangements, and other such requirements.

Our net cash from operations

and cash and cash equivalents are key sources of liquidity along with our revolving credit facility, bank conduit facilities, and continued access to debt markets.

We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $350 million notes due in October 2025.

Our discussion below highlights these sources of liquidity and how they have been utilized to support our cash needs.

Our net cash from operations and cash and cash equivalents are key sources of liquidity along with our revolving credit facility, bank conduit facilities, and continued access to debt markets.

We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $650 million notes due in July 2026.

Our discussion below highlights these sources of liquidity and how they are utilized to support our cash needs.

Cash and Cash Equivalents

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We generally utilize our revolving credit facility to finance our short-term to medium-term business operations, as needed.

The facility expires in October 2026 and had $803 million of available capacity as of December 31, 2024.

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.

During the second quarter of 2025, we amended the credit agreement governing our revolving credit and term loan B facility (“Seventh Amendment”).

The Seventh Amendment refinanced and extended the maturity date of the revolving credit facility from October 2026 to June 2030, and among other things, reduced pricing spreads on borrowings and letters of credit at all pricing levels by 25 basis points.

See Note 15— Debt to the Consolidated Financial Statements for additional details regarding the Seventh Amendment.

The facility had $893 million of available capacity as of December 31, 2025.

The revolving credit facility and term loan B facility 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, which the Seventh Amendment reduced to 2.00 to 1.0 (previously 2.50 to 1.0) as of the measurement date and a maximum first lien leverage ratio of 4.25 to 1.0 as of the measurement date.

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

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As of December 31, 2025, we were in compliance with the financial covenants described above.

Secured Notes and Term Loan B facilities

We generally utilize borrowing via secured note issuances to meet our long-term financing needs.

During 2024, we amended the credit agreement governing our revolving credit facility and term loan B facilities (“Sixth Amendment”).

The Sixth Amendment repriced and replaced the $593 million outstanding balance on the 2023 Incremental Term Loan B facility and refinanced the $282 million outstanding balance on the 2018 Term Loan B facility which was due May 2025.

This amendment accomplished the dual benefit of extending the maturity of our 2018 Term Loan B facility and providing future interest savings.

The resulting new $875 million 2024 Term Loan B facility matures on December 14, 2029.

This transaction reinforces our expectation that we will maintain adequate liquidity for the next year and beyond.

Secured Notes and Term Loan B facility

We generally utilize borrowing via secured note and term loan B issuances to meet our long-term financing needs.

During the third quarter of 2025, we issued secured notes due September 2033, with a face value of $500 million and an interest rate of 6.125%.

The proceeds of this offering were used to redeem all of our $350 million 6.60% secured notes due October 2025, toward repayment of outstanding borrowings under the revolving credit facility, to pay the fees and expenses incurred in connection with the issuance, and for general corporate purposes.

During the fourth quarter of 2025, we amended the credit agreement governing our revolving credit facility and term loan B facility (“Eighth Amendment”).

The Eighth Amendment refinanced the $869 million outstanding balance of the Term Loan B facility, with interest rate per annum applicable to borrowings under this facility equal to the Term SOFR rate, plus an applicable rate of 2.00%, representing a 50 basis point reduction.

The maturity date of this facility remains December 14, 2029.

These transactions reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.

As of December 31, 2025, we had $3.39 billion of outstanding borrowings under our secured notes and term loan B facility with maturities ranging from 2026 to 2033.

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We plan to continue using these sources to finance certain VOCRs.

On December 20, 2024, we renewed our AUD/NZD bank conduit facility, extending its term through December 2026.

We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, amounting to a combined capacity of $738 million ($361 million available as of December 31, 2024), along with our ability to issue term asset-backed securities, provide sufficient liquidity to finance the sale of VOIs beyond the next year.

We closed on securitization financings of $1.05 billion, $1.09 billion, and $800 million during 2024, 2023, and 2022.

On April 17, 2025, we renewed our USD bank conduit facility, extending its term through August 2027.

We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, with a term through December 2026, amounting to a combined capacity of $748 million ($314 million available as of December 31, 2025), along with our ability to issue term asset-backed securities, provide sufficient liquidity to finance the sale of VOIs beyond the next year.

We closed on securitization financings of $950 million, $1.05 billion, and $1.09 billion during 2025, 2024, and 2023.

These transactions positively impacted our liquidity and reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.

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We may, from time to time, depending on market conditions and other factors, repurchase our outstanding indebtedness, whether or not such indebtedness trades above or below its face amount, for cash and/or in exchange for other securities or other consideration, in each case in open market purchases and/or privately negotiated transactions.

For additional details regarding our credit facilities, term loan B facilities, and non-recourse debt see Note 15— Debt to the Consolidated Financial Statements.

For additional details regarding our credit facilities, term loan B facility, and non-recourse debt see Note 15— Debt to the Consolidated Financial Statements.

Material Cash Requirements

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Operating leases 26 24 21 20 13 84 188

Inventory financing obligation (e)

30 — — — — — 30

$ 1,597 $ 1,323 $ 862 $ 1,934 $ 735 $ 1,614 $ 8,065

(a) Represents required principal payments on notes, term loans, and finance leases.

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estimated using the stated interest rates.

(d) Includes $502 million for marketing related activities, $116 million relating to the development of vacation ownership properties, and $106 million for information technology activities.

(e) Excludes a $30 million liability for unrecognized tax benefits as it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.

In addition to the amounts shown in the table above and in connection with our separation from ABG, we entered into certain guarantee commitments with ABG (pursuant to our assumption of certain liabilities and our obligation to indemnify ABG, Anywhere Real Estate Inc., and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with ABG and Anywhere Real Estate Inc.

(d) Includes $501 million for marketing related activities, $398 million related to the development of vacation ownership properties, and $126 million for information technology activities.

(e) Represents an inventory financing obligation with a third-party developer, including associated interest (see Note 10— Inventory to the Consolidated Financial Statements for further detail) of which $27 million is included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

(f) Excludes a $35 million liability for unrecognized tax benefits as it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.

In addition to the amounts shown in the table above and in connection with our separation from our former parent ABG, formerly Cendant Corporation, we entered into certain guarantee commitments with ABG (pursuant to our assumption of certain liabilities and our obligation to indemnify ABG, Anywhere Real Estate Inc.

(formerly Realogy), and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with ABG and Anywhere Real Estate Inc.

We also entered into certain guarantee commitments and indemnifications related to the sale of our vacation rentals businesses.

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In certain cases, we receive offsetting indemnifications from third-parties and/or maintain insurance coverage that may mitigate any potential payments.

Our Vacation Ownership business provides guarantees to certain owners’ associations for funds required to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs.

Our Vacation Ownership business has committed to certain owners’ associations to provide funds required to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs.

We may be required to fund such a shortfall as a result of unsold company-owned VOIs or failure by owners to pay such assessments.

In addition, from time to time, we may agree to reimburse certain owner associations up to 70% of their uncollected assessments.

These guarantees extend for the duration of the underlying subsidy or similar agreement (which generally approximate one year and are renewable at our discretion on an annual basis).

The maximum potential future payments that we could be required to make under these guarantees was $452 million as of December 31, 2024.

These commitments extend for the duration of the underlying subsidy or similar agreement (which generally approximate one year and are renewable at our discretion on an annual basis).

The maximum potential future payments that we could be required to make under these commitments was $431 million as of December 31, 2025.

We would only be required to pay this maximum amount if none of the assessed owners paid their assessments.

Any assessments collected from the owners of the VOIs would reduce the maximum potential amount of future payments we would be required to make.

Additionally, should we be required to fund the deficit through the payment of any owners’ assessments under these guarantees, we would be permitted to use that property to engage in revenue-producing activities such as rentals.

During 2024, 2023, and 2022, we made payments related to these guarantees of $13 million, $12 million, and $12 million.

As of December 31, 2024 and 2023, we maintained a liability in connection with these guarantees of $17 million and $21 million included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

Additionally, should we be required to fund the deficit through the payment of any owners’ assessments under these commitments, we would be permitted to use

that property to engage in revenue-producing activities such as rentals.

During 2025, 2024, and 2023, we made payments related to these commitments of $12 million, $13 million, and $12 million.

As of December 31, 2025 and 2024, we maintained a liability in connection with these commitments of $29 million and $17 million included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

As part of the Fee-for-Service program, we may guarantee to reimburse the developer or to purchase inventory from the developer, for a percentage of the original sale price if certain future conditions exist.

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Net cash provided by operating activities increased $176 million for the year ended December 31, 2025 compared to the prior year.

This increase was primarily attributable to an increase in Net income attributable to Travel + Leisure Co.

shareholders of $15 million, $82 million of non-cash add-back items, and $44 million of lower cash tax payments.

This increase was primarily attributable to the Net income decline of $181 million being more than offset by a $279 million increase in non-cash addbacks.

The increase in non-cash addbacks were driven by $216 million of inventory write-downs and impairments incurred during 2025 resulting from the resort optimization initiative, a $52 million increase in the provision for loan losses, and the $33 million Gain on disposal of discontinued business, net of income taxes in the prior year.

Investing Activities

Net cash used in investing activities from continuing operations increased $45 million during the year ended December 31, 2024.

This increase was primarily due to $44 million paid for the acquisition of Accor Vacation Club.

Net cash provided by investing activities from discontinued operations increased $1 million due to a tax refund received for pre-sale tax items related to the sale of the European vacation rentals business.

Net cash used in investing activities from continuing operations decreased $18 million during the year ended December 31, 2025.

This decrease was primarily due to $44 million paid for the acquisition of Accor Vacation Club during 2024 and $10 million of net proceeds from the sale of a building in 2025, partially offset by a $36 million increase in capital expenditures.

Net cash provided by investing activities from discontinued operations decreased $1 million due to a tax refund received in the prior year related to the sale of the European vacation rentals business.

Financing Activities

Net cash used in financing activities decreased $15 million during the year ended December 31, 2025.

This decrease was primarily due to a $75 million decrease in share repurchases partially offset by a $41 million decrease in net proceeds on non-recourse debt.

This decrease was primarily due to a $118 million increase in net proceeds from corporate debt, partially offset by a $70 million increase in net payments on non-recourse debt and $67 million increase in share repurchases.

Capital Deployment

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Finally, we intend to continue to return value to shareholders through the repurchase of common stock and payment of dividends.

All future declarations of quarterly cash dividends and increases to the capacity of our share repurchase program are subject to final approval by the Board of Directors (“Board”).

All future declarations of quarterly cash dividends and increases to the capacity of our share repurchase program are subject to review and approval by the Board of Directors (“Board”).

During 2025, we spent $130 million on vacation ownership development projects (inventory).

We believe that our Vacation Ownership business currently has adequate finished inventory to support vacation ownership sales for several years.

As such, we expect to remain below historical levels of spending for vacation ownership development projects in 2025 with anticipated spending between $150 million and $180 million.

After factoring in the anticipated additional annual spending, we expect to have adequate inventory to support vacation ownership sales through at least the next four to five years.

During 2024, we spent $81 million on capital expenditures, primarily for information technology and sales center improvement projects.

During 2025, we anticipate spending between $120 million and $130 million on capital expenditures, primarily for continuation of information technology digital and new club initiatives, sales center facility and related system enhancements, resort improvements, and a new corporate office.

We anticipate spending between $200 million and $230 million for vacation ownership development projects in 2026.

After factoring in this anticipated additional annual spending, and the impacts of the resort optimization initiative discussed in Note 25— Restructuring, we expect to have adequate inventory to support vacation ownership sales through at least the next three to four years.

During 2025, we spent $117 million on capital expenditures, primarily information technology digital and new club initiatives, sales center facility and related system enhancements, resort improvements, and a new corporate office.

During 2026, we anticipate spending between $90 million and $100 million on capital expenditures, primarily for continuation of information technology digital enhancements to our sales and reservation systems, sales center facility renovation and expansion, and resort improvements.

In connection with our focus on optimizing cash flow, we are continuing our asset-light efforts in vacation ownership by seeking opportunities with financial partners whereby they make strategic investments to develop assets on our behalf.

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Under our current share repurchase program, we repurchased 5.4 million shares at an average price of $55.52 for a cost of $300 million during the year ended December 31, 2025.

The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors, including capital allocation priorities.

The amount and timing of specific repurchases are subject to market

conditions, applicable legal requirements and other factors, including capital allocation priorities.

Repurchases may be conducted in the open market or in privately negotiated transactions.

Subsequent to the end of the year, our Board of Directors increased the authorization for the share repurchase program by $750 million.

We paid cash dividends of $0.56 per share for all four quarters of 2025, $0.50 per share for all four quarters of 2024, and $0.45 per share for all four quarters of 2023.

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Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets impairment.

There were no changes in the assumptions used in this analysis in 2024.

There were no changes in the methodology used in this analysis in 2025.

Business Combinations.

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Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate.

We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable

assumptions that marketplace participants would use.

We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use.

However, such assumptions are inherently uncertain and actual results could differ from those estimates.

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In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies.

A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.

A change in these assumptions may increase or decrease our

valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.

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

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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 7. Management’s Discussion and Analysis