What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-09 · 480 added, 222 removed, 501 unchanged (58% of the section changed)

8 unchanged sentences

potential growth opportunities;

potential operating performance improvements, including the expectations that contract sales, resort management, and rental occupancies will continue to remain strong and/or improve throughout 2022 and that interest income will increase in 2022;

our expectations regarding availability of inventory for Getaways;

potential operating performance improvements, including the expectations that contract sales, resort management, and resort occupancies will continue to remain strong for the remainder of 2022 and that interest income will increase in 2022;

our expectations regarding availability of inventory for Getaways and exchange transactions;

the effects of competition;

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We caution you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as:

the continuing effects of the COVID-19 pandemic, including variations in demand for vacation ownership and exchange products and services, volatility in the international and national economy and credit markets, worker absenteeism, quarantines or other government-imposed travel or health-related restrictions;

the length and severity of the COVID-19 pandemic, including its short and longer-term impact on the demand for travel and on consumer confidence;

the impact of the availability and distribution of effective vaccines on the demand for travel and consumer confidence;

the effectiveness of available vaccines against variants of the virus;

the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines become widely available;

the continuing effects of the COVID-19 pandemic, including quarantines or other government-imposed travel or health-related restrictions;

the length and severity of the COVID-19 pandemic, including its short and longer-term impact on consumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines against variants of the COVID-19 virus become widely available;

variations in demand for vacation ownership and exchange products and services;

worker absenteeism;

price inflation;

global supply chain disruptions;

volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine and related sanctions and other measures;

our ability to attract and retain our global workforce;

competitive conditions;

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the effects of steps we have taken and may continue to take to reduce operating costs and/or enhance health and cleanliness protocols at our resorts due to the COVID-19 pandemic;

political or social strife, and other matters referred to under the heading “Risk Factors” contained herein and also in our most recent Annual Report on Form 10-K, and which may be discussed in our future filings with the U.S.

political or social strife, and other matters referred to under the heading “Risk Factors” contained herein and also in our most recent Annual Report on Form 10-K, and as may be updated in our future periodic filings with the U.S.

Securities and Exchange Commission (the “SEC”).

You should not put undue reliance on any forward-looking statements in this Report.

We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

We do not have any intention or obligation to update forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law.

All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein.

We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows.

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Our Financial Statements (as defined below), which we discuss below, reflect our historical financial condition, results of operations and cash flows.

However, the financial information discussed below and included in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations or cash flows may be in the future.

In order to make this report easier to read, we refer to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes to our Financial Statements that we include in the Financial Statements of this Quarterly Report on Form 10-Q.

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We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand.

We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right

to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St.

We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St.

Regis brand for specified fractional ownership resorts.

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Our Exchange & Third-Party Management segment includes exchange networks and membership programs, as well as provision of management services to other resorts and lodging properties.

As of the end of the first quarter of 2022, we provided these services through a variety of brands including Interval International, VRI, TPI, and Aqua-Aston.

As of the end of the second quarter of 2022, we provided these services through Interval International and Aqua-Aston.

Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and association management, and other related products and services.

Subsequent to the end of the first quarter of 2022, we disposed of the VRI and TPI businesses.

See Footnote 18 “Subsequent Event” to our Financial Statements for further information regarding this disposition.

In April 2022, we disposed of VRI Americas after determining that the business was not a core component of our future growth strategy and operating model.

This business was a component of our Exchange and Third-Party Management segment through the date of the sale.

See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for further information regarding this disposition.

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated property owners’ associations (“Consolidated Property Owners’ Associations”).

Integration of Marriott, Sheraton and Westin Branded Vacation Ownership Products

Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by leveraging the brands licensed by Marriott International and its subsidiaries to us and to ILG.

In 2016, Marriott International purchased Starwood Hotels and Resorts Worldwide, Inc., which at the time exclusively licensed the Sheraton and Westin vacation ownership brands to Legacy-ILG.

In August 2022, we launched Abound by Marriott Vacations, a new owner benefit and exchange program which affiliates the Marriott, Sheraton and Westin vacation ownership brands to offer similar benefits to owners of our products under these brands.

Under this program, owners of Marriott-, Sheraton- and Westin-branded vacation ownership interests can access over 90 Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club resorts using a common currency.

The program also harmonizes fee structures and owner benefit levels and allows us to transition certain of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product.

Later in 2022, we plan to add certain Sheraton- and Westin-branded vacation ownership interests to the Marriott Vacation Club Destinations product.

Acquisition of Welk

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Sale of Vacation Ownership Products

We recognize revenues from the sale of vacation ownership products (“VOIs”) when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible.

We recognize revenues from the sale of vacation ownership products (also referred to as vacation ownership interests or “VOIs”) when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible.

Based upon the different terms of the contracts with the customer and business practices, control of the vacation ownership product is transferred to the customer at closing for Marriott-branded and Legacy-Welk transactions and upon expiration of the statutory rescission period for Sheraton-,Westin-, and Hyatt-branded transactions.

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Contract sales consist of the total amount of vacation ownership product sales under contract signed during the period where we have generally received a down payment of at least 10% of the contract price, reduced by actual rescissions during the period, inclusive of contracts associated with sales of vacation ownership products on behalf of third-parties, which we refer to as “resales contract sales.” In circumstances where a customer applies any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales.

Contract sales differ from revenues from the sale of vacation ownership products that we report on our income statements due to the requirements for revenue

recognition described above.

Contract sales differ from revenues from the sale of vacation ownership products that we report on our income statements due to the requirements for revenue recognition described above.

We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.

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Development profit margin is calculated by dividing Development profit by revenues from the Sale of vacation ownership products.

Revenue Recognition Change Commencing in August 2022

In connection with the affiliation of the Marriott-, Sheraton-, and Westin-branded vacation ownership products discussed above, in mid-August, we intend to modify our business practices and the terms of our Marriott-branded VOI sales contracts to be consistent with the existing terms of our Sheraton- and Westin-branded VOI sales contracts.

As a result of these modifications, control of Marriott-branded vacation ownership products will be transferred to the customer upon expiration of the statutory rescission period, consistent with the current method for Sheraton- and Westin-branded vacation ownership products.

This will result in the acceleration of revenue and a one-time benefit to development profit, net income attributable to common shareholders and Adjusted EBITDA (defined below), however at this time we are

unable to quantify the magnitude of this impact.

Marriott-branded VOI sales contracts executed prior to these modifications will continue to be accounted for as outlined above, with transfer of control of the VOI occurring at closing.

Management and Exchange

Our management and exchange revenues include revenues generated from fees we earn for managing each of our vacation ownership resorts, providing property management, owners’ association management and related services to third-party vacation ownership resorts and fees we earn for providing rental services and related hotel, condominium resort, and owners’ association management services to vacation property owners.

Our management and exchange revenues include revenues generated from fees we earn for managing each of our vacation ownership resorts, providing property management, owners’ association management and related services and fees we earn for providing rental services and related hotel, condominium resort, and owners’ association management services to vacation property owners.

In addition, we earn revenue from ancillary offerings, including food and beverage outlets, golf courses and other retail and service outlets located at our Vacation Ownership resorts.

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citizens or residents who financed a vacation ownership purchase was as follows:

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

Average FICO score 735 733

The typical financing agreement provides for monthly payments of principal and interest with the principal balance of the loan fully amortizing over the term of the related vacation ownership note receivable, which is generally ten to fifteen years.

While we adjust interest rates from time to time, such changes are typically not made in step with the timing and magnitude of changes in broader market rates.

We do use incentives to encourage our customers to take our financing.

Included within our vacation ownership notes receivable are originated vacation ownership notes receivable and vacation ownership notes receivable acquired in connection with the ILG Acquisition and the Welk Acquisition.

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We do not include resales contract sales in the financing propensity calculation.

Financing propensity was 50% in the first quarter of 2022 and 46% in the first quarter of 2021;

the higher financing propensity in the first quarter of 2022 is due to a higher percentage of sales during this period to first-time buyers, who tend to have a higher financing propensity.

We expect to continue offering financing incentive programs in 2022.

We also plan to shift back to the increased focus we placed pre-pandemic on sales to first-time buyers, who are more likely to finance their purchases, which should further increase propensity and increase interest income as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

Financing propensity was 53% in the second quarter of 2022 and 52% in the second quarter of 2021.

We expect to continue offering financing incentive programs throughout the remainder of 2022.

Growing sales to first-time buyers, who are more likely to finance their purchases, remains an integral part of our overall marketing and sales strategy.

We expect the current financing incentives and other initiatives to increase sales to first-time buyers to further increase propensity and interest income as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model.

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Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenues.

In contrast, for acquired vacation ownership notes receivable, we record changes to the reserve, net of collateral value, as an adjustment to Financing expenses on our Income Statements.

In contrast, for acquired vacation ownership notes receivable, we record changes to the reserves, net of collateral value, as adjustments to Financing expenses on our Income Statements.

Historical default rates, which represent defaults as a percentage of each year’s beginning gross vacation ownership notes receivable balance, were as follows:

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

Historical default rates 2.1% 2.4%

The decrease in default rates in 2022 reflects the return of the performance of our notes receivable portfolio to pre-pandemic levels.

The decrease in default rates in 2022 reflects the continued improvement in the performance of our vacation ownership notes receivable portfolio subsequent to the increased default rates experienced in 2020 as a result of the COVID-19 pandemic.

Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable, costs to support the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable.

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We also source resort accommodations specifically for the Getaways program.

Rental revenues associated with Getaways are reported net of related expenses.

Rental expenses include:

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Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), owner use and exchange behavior.

In addition, rental metrics may not correlate with rental revenues due to the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above).

In addition, rental metrics may not correlate with rental revenues due to

the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above).

Further, as our ability to rent certain luxury and other inventory is often limited on a site-by-site basis, rental operations may not generate adequate rental revenues to cover associated costs.

Our Vacation Ownership segment units are either “full villas” or “lock-off” villas.

Lock-off villas are units that can be separated into a master unit and a guest room.

Lock-off villas are units that can be separated into a primary unit and a guest room.

Full villas are “non-lock-off” villas because they cannot be separated.

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Transaction and Integration Costs

Transaction and integration costs represent costs related to the ILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax related accruals.

Transaction and integration costs also include charges for employee retention, severance and other termination related benefits, fees paid to change-management consultants and technology-related costs related to the integration of ILG and Welk.

We measure operating performance using the following key metrics:

Transaction and integration costs include fees paid to change-management consultants and technology-related costs associated with the integration of ILG and Welk and charges for employee retention, severance and other termination related benefits.

Transaction and integration costs also include costs related to the ILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax related accruals.

We measure operating performance using the key metrics described below.

• Contract sales from the sale of vacation ownership products :

• Total contract sales include contract sales from the sale of vacation ownership products including joint ventures, and

• Total contract sales include contract sales from the sale of vacation ownership products including joint ventures.

• Consolidated contract sales exclude contract sales from the sale of vacation ownership products for non-consolidated joint ventures.

• Development profit margin;

• Volume per guest (“VPG”), which we calculate by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, joint venture sales and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period.

We consider contract sales to be an important operating measure because it reflects the pace of our business.

• Volume per guest (“VPG”) is calculated by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period.

We believe that this operating metric is valuable in evaluating the effectiveness of the sales process as it combines the impact of average contract price with the number of touring guests who make a purchase.

• Total active members, which is the number of Interval International network active members at the end of the applicable period;

• Average revenue per member, which we calculate by dividing membership fee revenue, transaction revenue and other member revenue for the Interval International network by the monthly weighted average number of Interval International network active members during the applicable period.

• Total active members is the number of Interval International network active members at the end of the applicable period.

We consider active members to be an important metric as it provides the population of owners eligible to book transactions using the Interval International network.

• Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue for the Interval International network by the monthly weighted average number of Interval International network active members during the applicable period.

We believe this metric is valuable in measuring the overall engagement of our members.

• Segment financial results attributable to common shareholders represents revenues less expenses directly attributable to each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management).

We consider this measure to be important in evaluating the performance of our reportable business segments.

See Footnote 17 “Business Segments” to our Financial Statements for further information on our reportable business segments.

NM = Not meaningful.

Consolidated Results

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Sale of vacation ownership products $ 425 $ 296 $ 735 $ 459

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Management and exchange 102 126 229 243

Rental 87 81 168 163

Financing 23 21 44 42

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Royalty fee 29 27 56 52

Impairment — 5 — 5

Cost reimbursements 324 274 640 529

TOTAL EXPENSES 957 870 1,868 1,609

Gains and other income, net 4 6

Gains (losses) and other income (expense), net 37 (2) 41 4

Interest expense (30) (44) (57) (87)

Transaction and integration costs (37) (29) (65) (48)

Other 1 1 1 1

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 178 35 268 (1)

(Provision for) benefit from income taxes (32) 11

Provision for income taxes (43) (27) (75) (16)

NET INCOME (LOSS) 135 8 193 (17)

Net income attributable to noncontrolling interests — (3)

Net loss (income) attributable to noncontrolling interests 1 (2) 1 (5)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 136 $ 6 $ 194 $ (22)

Operating Statistics

2022 First Quarter

2022 Second Quarter

Three Months Ended

(Contract sales $ in millions) March 31, 2022 March 31, 2021 Change % Change

(Contract sales $ in millions) June 30, 2022 June 30, 2021 Change % Change

Vacation Ownership

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Total active members at end of period (000's) 1,596 1,321 275 21%

1,606 1,479 127 9%

Average revenue per member $ 38.79 $ 46.36 $ (7.57) (16%)

$ 44.33 $ 47.13 $ (2.80) (6%)

_______________

(1) Only includes members of the Interval International exchange network.

2022 First Quarter

2022 First Half

Six Months Ended

(Contract sales $ in millions) June 30, 2022 June 30, 2021 Change % Change

Vacation Ownership

Total contract sales $ 919 $ 604 $ 315 52%

Consolidated contract sales $ 900 $ 588 $ 312 53%

Joint venture contract sales $ 19 $ 16 $ 3 22%

VPG $ 4,653 $ 4,428 $ 225 5%

Exchange & Third-Party Management

Total active members at end of period (000's) 1,596 1,321 275 21%

Average revenue per member $ 83.32 $ 93.77 $ (10.45) (11%)

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Vacation Ownership $ 1,091 $ 883 $ 208 24%

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Total Revenues $ 1,164 $ 979 $ 185 19%

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Vacation Ownership $ 2,047 $ 1,544 $ 503 33%

Exchange & Third-Party Management 158 172 (14) (8%)

Total Segment Revenues 2,205 1,716 489 28%

Consolidated Property Owners’ Associations 11 22 (11) (48%)

Total Revenues $ 2,216 $ 1,738 $ 478 28%

Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA

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For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term loan securitization transactions because we consider it to be an operating expense of our business.

We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures and expand our business.

We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to shareholders.

We also use Adjusted EBITDA, as do analysts, lenders, investors and others, because this measure excludes certain items that can vary widely across different industries or among companies within the same industry.

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The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income (loss) attributable to common shareholders, which is the most directly comparable GAAP financial measure.

2022 First Quarter

2022 Second Quarter

Three Months Ended Change

($ in millions) March 31, 2022 March 31, 2021 % Change

($ in millions) June 30, 2022 June 30, 2021 % Change

Net income attributable to common shareholders $ 136 $ 6 $ 130 NM

Interest expense 30 44 (14) (32%)

Provision for income taxes 43 27 16 65%

Depreciation and amortization 32 36 (4) (11%)

EBITDA 241 113 128 NM

Share-based compensation expense 12 14 (2) (12%)

Certain items 2 37 (35) (96%)

Adjusted EBITDA $ 255 $ 164 $ 91 55%

Certain items for the second quarter of 2022 consisted of $37 million of gains and other income, $2 million of revenue associated with an early termination of a VRI management contract, and $3 million of miscellaneous other adjustments, partially offset by $37 million of transaction and integration costs (including $23 million of ILG integration related costs, $10 million of other integration costs, $2 million of Welk Acquisition and integration related costs, and $2 million of other transaction costs), $5 million of purchase accounting adjustments, and $2 million of litigation charges.

The $37 million of gains and other income included $33 million of gains and other income related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business, and $2 million of proceeds from corporate owned life insurance, partially offset by $8 million of foreign currency translation losses, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $3 million of non-income tax related adjustments to the receivable for the indemnification payment we expect to receive from Marriott International.

See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets.

Certain items for the second quarter of 2021 consisted of $29 million of transaction costs (including $25 million of ILG integration related costs and $3 million of Welk Acquisition and integration related costs), $5 million of impairment charges, $3 million of litigation charges, $2 million of purchase accounting adjustments, and $2 million of losses and other expense, partially offset by $2 million to eliminate the impact of consolidating certain property owners’ associations, and $2 million of activity related to the accrual for health and welfare costs for furloughed associates.

2022 First Half

Six Months Ended Change

($ in millions) June 30, 2022 June 30, 2021 % Change

Net income (loss) attributable to common shareholders $ 194 $ (22) $ 216 NM

Interest expense 57 87 (30) (34%)

Provision for (benefit from) income taxes 32 (11) 43 NM

Provision for income taxes 75 16 59 NM

Depreciation and amortization 65 77 (12) (16%)

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Certain items 32 53 (21) (42%)

Adjusted EBITDA $ 188 $ 69 $ 119 NM

Certain items for the first quarter of 2022 consisted of $28 million of transaction and integration costs (including $25 million of ILG Acquisition and integration related costs and $3 million of Welk Acquisition and integration related costs), $3 million of purchase accounting adjustments, and $3 million of litigation charges, partially offset by $4 million of gains and other income, net (including $3 million of business interruption insurance proceeds received during the quarter and $1 million of foreign currency translation gains).

Certain items for the first quarter of 2021 consisted of $19 million of transaction costs (including $17 million of ILG Acquisition and integration related costs and $2 million of Welk Acquisition and integration related costs) and $3 million of litigation charges, partially offset by $4 million of foreign currency translation gains, and $2 million of miscellaneous gains and other income.

Adjusted EBITDA $ 443 $ 233 $ 210 90%

Certain items for the first half of 2022 consisted of $65 million of transaction and integration costs (including $48 million of ILG integration related costs, $10 million of other integration costs, $5 million of Welk Acquisition and integration related costs, and $2 million of other transaction costs), $8 million of purchase accounting adjustments, and $5 million of litigation charges, partially offset by $41 million of gains and other income, $2 million of revenue associated with an early termination of a VRI management contract, and $3 million of miscellaneous other adjustments.

The $41 million of gains and other income included $33 million of gains and other income related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business, $3 million of business interruption insurance proceeds received and $2 million of proceeds from corporate owned life insurance, partially offset by $7 million of foreign currency translation charges, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $3 million of non-income tax related adjustments to the receivable for the indemnification payment we expect to receive from Marriott International.

See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets.

Certain items for the first half of 2021 consisted of $48 million of transaction costs (including $42 million of ILG integration related costs and $5 million of Welk Acquisition and integration related costs), $6 million of litigation charges, $5 million of impairment charges and $2 million of purchase accounting adjustments, partially offset by $4 million of gains and other income net (including $6 million of foreign currency translation gains, partially offset by $2 million of non-income tax related charges), $2 million to eliminate the impact of consolidating certain property owners’ associations, and $2 million of activity related to the accrual for health and welfare costs for furloughed associates.

Segment Adjusted EBITDA

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

Vacation Ownership $ 199 $ 68 $ 131 NM

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Vacation Ownership $ 274 $ 182 $ 92 51%

Exchange & Third-Party Management 35 37 (2) (5%)

Segment adjusted EBITDA 242 109 133 NM

Segment adjusted EBITDA 309 219 90 41%

General and administrative (54) (55) 1 1%

Consolidated property owners’ associations — — — NM

Adjusted EBITDA $ 188 $ 69 $ 119 NM

Adjusted EBITDA $ 255 $ 164 $ 91 55%

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Vacation Ownership $ 473 $ 250 $ 223 89%

2022 First Quarter

Exchange & Third-Party Management 78 78 — —%

Segment adjusted EBITDA 551 328 223 68%

General and administrative (108) (95) (13) (14%)

Adjusted EBITDA $ 443 $ 233 $ 210 90%

The following tables present Adjusted EBITDA for our reportable segments reconciled to segment financial results attributable to common shareholders.

Vacation Ownership

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

Segment adjusted EBITDA $ 199 $ 68 $ 131 NM

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Segment adjusted EBITDA $ 274 $ 182 $ 92 51%

Depreciation and amortization (22) (23) 1 5%

Share-based compensation expense (2) (2) — (20%)

Certain items (3) (4) 1 17%

Segment financial results $ 173 $ 44 $ 129 NM

Certain items in the Vacation Ownership segment for the first quarter of 2022 consisted of $3 million of litigation charges and $3 million of purchase accounting adjustments, offset by $3 million of gains and other income, net related to business interruption insurance proceeds received during the quarter.

Certain items in the Vacation Ownership segment for the first quarter of 2021 consisted of $3 million of litigation charges and $1 million of restructuring costs.

Certain items 27 (6) 33 NM

Segment financial results attributable to common shareholders $ 277 $ 151 $ 126 85%

Certain items in the Vacation Ownership segment for the second quarter of 2022 consisted of $32 million of gains and other income, net (including $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, partially offset by $1 million of foreign currency translation charges) and $3 million of miscellaneous other adjustments, partially offset by $5 million of purchase accounting adjustments, $2 million of litigation charges and $1 million of miscellaneous other transaction costs.

Certain items in the Vacation Ownership segment for the second quarter of 2021 consisted of $3 million of litigation charges, $2 million of purchase accounting adjustments and $1 million of transaction and integration costs.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Segment adjusted EBITDA $ 473 $ 250 $ 223 89%

Depreciation and amortization (44) (42) (2) (4%)

Share-based compensation expense (3) (3) — (21%)

Certain items 24 (10) 34 NM

Segment financial results attributable to common shareholders $ 450 $ 195 $ 255 NM

Certain items in the Vacation Ownership segment for the first half of 2022 consisted primarily of $35 million of gains and other income, net (including $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, and $3 million related to business interruption insurance proceeds, partially offset by $1 million of foreign currency translation charges) and $3 million of miscellaneous other adjustments, partially offset by $8 million of purchase accounting adjustments, $5 million of litigation charges, and $1 million of miscellaneous other transaction costs.

Certain items in the Vacation Ownership segment for the first half of 2021 consisted of $6 million of litigation charges, $2 million of purchase accounting adjustments, $1 million of transaction and integration costs, and $1 million of restructuring costs.

Exchange & Third-Party Management

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Segment adjusted EBITDA $ 35 $ 37 $ (2) (5%)

2 unchanged sentences

Certain items 18 — 18 NM

Segment financial results $ 33 $ 21 $ 12 59%

Segment financial results attributable to common shareholders $ 46 $ 27 $ 19 66%

Certain items for the Exchange & Third-Party Management segment for the second quarter of 2022 consisted of $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Segment adjusted EBITDA $ 78 $ 78 $ — —%

Depreciation and amortization (16) (29) 13 43%

Share-based compensation expense (1) (1) — (23%)

Certain items 18 — 18 NM

Segment financial results attributable to common shareholders $ 79 $ 48 $ 31 63%

Certain items for the Exchange & Third-Party Management segment for the first half of 2022 consisted of $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract.

Business Segments

3 unchanged sentences

Vacation Ownership

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Sale of vacation ownership products $ 425 $ 296 $ 735 $ 459

7 unchanged sentences

Resort management and other services 60 46 114 81

Rental 91 95 181 191

Financing 23 21 44 42

6 unchanged sentences

Gains and other income, net 32 — 35 —

Transaction and integration costs (1) (1) (1) (1)

Other 1 1 1 1

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 277 $ 151 $ 450 $ 195

Contract Sales

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Total consolidated contract sales $ 506 $ 362 $ 144 40%

1 unchanged sentence

Total contract sales $ 516 $ 372 $ 144 39%

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Total consolidated contract sales $ 900 $ 588 $ 312 53%

Joint venture contract sales 19 16 3 22%

Total contract sales $ 919 $ 604 $ 315 52%

Sale of Vacation Ownership Products

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Total contract sales $ 516 $ 372 $ 144 39%

11 unchanged sentences

(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

The higher contract sales performance reflects the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic.

Higher settlement and resales revenues, sales incentives issued, and sales reserve activity were driven by the higher contract sales volumes.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Total contract sales $ 919 $ 604 $ 315 52%

resales contract sales (20) (12) (8)

joint venture contract sales (19) (16) (3)

Consolidated contract sales, net of resales 880 576 304 53%

Settlement revenue 16 13 3

Resales revenue 8 3 5

Revenue recognition adjustments:

Reportability (47) (53) 6

Sales reserve (66) (42) (24)

(56) (38) (18)

Sale of vacation ownership products $ 735 $ 459 $ 276 60%

_______________

(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

The higher contract sales performance reflects the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic, as well as $29 million in contract sales relating to the Welk Acquisition, which we acquired in the second quarter of 2021.

Higher settlement revenue, sales incentives issued, and sales reserve activity were driven primarily by the higher contract sales volumes as well as the Welk Acquisition.

Higher settlement and resales revenues, sales incentives issued and sales reserve activity were driven by the higher contract sales volumes as well as the Welk Acquisition.

Development Profit

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Sale of vacation ownership products $ 425 $ 296 $ 129 44%

1 unchanged sentence

Marketing and sales (214) (164) (50) (32%)

Development profit $ 131 $ 65 $ 66 (100%)

Development profit margin 31.0% 22.3% 8.7 pts

The increase in Development profit reflects $50 million as a result of higher contract sales volumes net of the sales reserve and direct variable expenses (i.e.

cost of vacation ownership products and marketing and sales), in part from continued strong VPG and lower marketing and sales spending as a percentage of revenue, $11 million from a favorable mix of lower cost inventory being sold, $3 million of favorable product cost true-up activity, and $2 million of favorable revenue reportability.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Sale of vacation ownership products $ 735 $ 459 $ 276 60%

Cost of vacation ownership products (140) (107) (33) (31%)

Marketing and sales (396) (273) (123) (45%)

Development profit $ 199 $ 79 $ 120 NM

The increase in Development profit reflects $51 million as a result of higher contract sales volumes, in part from continued strong VPGs, and lower marketing and sales spending as a percentage of revenue and $9 million of favorable product cost, due to the sale of lower cost inventory as well as favorable product cost true-up activity, partially offset by $5 million of higher sales reserve activity due to higher contract sales volumes and $1 million of unfavorable revenue reportability.

Development profit margin 27.1% 17.3% 9.8 pts

The increase in Development profit reflects $93 million as a result of higher contract sales volumes net of the sales reserve and direct variable expenses (i.e.

cost of vacation ownership products and marketing and sales), in part from continued strong VPGs and lower marketing and sales spending as a percentage of revenue, $14 million from a favorable mix of lower cost inventory being sold, $9 million of favorable product cost true-up activity, and $4 million of favorable revenue reportability.

Resort Management and Other Services Revenues, Expenses and Profit

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Management fee revenues $ 41 $ 39 $ 2 3%

5 unchanged sentences

Resort management and other services profit margin 56.7% 62.4% (5.7 pts)

Resort management and other services revenues reflects higher ancillary revenues, including revenues from food and beverage and golf offerings, as a result of the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic, higher management fees, and $6 million of revenues from the Welk Acquisition.

Resort occupancies continued to increase since the initial impact of the pandemic as travel and tourism trends continue to recover.

We expect this trend in business improvement to continue throughout 2022.

The increase in resort management and other services profit reflects the higher ancillary expenses as a result of the higher ancillary revenues mentioned above.

Resort management and other services revenues reflected higher ancillary revenues, including revenues from food and beverage and golf offerings, as a result of the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic, and higher management fees.

attributed to budgeted expense increases at owners’ associations, as our management fees are largely calculated as a percentage of budgeted costs to operate resorts.

Resort occupancies continued to increase subsequent to the initial impact of the pandemic as travel and tourism trends continue to recover.

We expect resort occupancies to remain strong for the remainder of 2022 and this trend in business improvement to continue for the remainder of 2022.

The increase in resort management and other services profit reflected the higher ancillary expenses as a result of the higher ancillary revenues mentioned above.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Management fee revenues $ 83 $ 77 $ 6 7%

Ancillary revenues 120 80 40 50%

Other management and exchange revenues 63 60 3 6%

Resort management and other services revenues 266 217 49 23%

Resort management and other services expenses (114) (81) (33) (41%)

Resort management and other services profit $ 152 $ 136 $ 16 12%

Resort management and other services profit margin 57.1% 62.7% (5.6 pts)

The increase in resort management and other services profit reflected the higher ancillary expenses as a result of the higher ancillary revenues mentioned above.

Rental Revenues, Expenses and Profit

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Rental revenues $ 129 $ 110 $ 19 18%

Rental expenses (91) (95) 4 4%

Rental profit $ 38 $ 15 $ 23 NM

Rental profit margin 29.5% 13.2% 16.3 pts

Three Months Ended

June 30, 2022 June 30, 2021 Change % Change

Transient keys rented (1)

577,114 547,041 30,073 5%

Average transient key rate $ 262.38 $ 230.67 $ 31.71 14%

Resort occupancy 90.5% 85.0% 5.5 pts

_________________________

(1) Transient keys rented exclude those occupied through the use of plus points and preview stays.

Rental revenues increased by $37 million due to additional transient keys rented at a higher average transient rate, partially offset by $18 million of increased rental expenses recorded as a reduction to rental revenues.

Rental expenses decreased by $4 million attributed to $18 million of costs recorded as a reduction to rental revenues and $1 million of lower administrative expenses, partially offset by a $6 million increase in operating hotel expenses attributable to higher revenues, $5 million of higher carry costs of excess inventory on hand resulting from our fulfillment of purchase commitments in 2021 and $4 million of additional costs attributed to higher utilization in 2022 of third-party vacation offerings by owners.

As the majority of the governmental restrictions in response to the COVID-19 pandemic that caused rental activity to decline (such as travel restrictions and quarantine requirements) have been lifted, we expect high resort occupancies throughout the remainder of 2022.

However, we do not expect this part of our business to fully recover to pre-pandemic levels in 2022 as a result of reduced rental inventory availability due to higher owner usage as well as higher inventory carrying costs, as described above.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Rental revenues $ 251 $ 187 $ 64 34%

Rental expenses (181) (191) 10 5%

Rental profit (loss) $ 70 $ (4) $ 74 NM

Rental profit margin 27.7% NM

Three Months Ended

March 31, 2022 March 31, 2021 Change % Change

Six Months Ended

June 30, 2022 June 30, 2021 Change % Change

Transient keys rented (1)

4 unchanged sentences

(1) Transient keys rented exclude those occupied through the use of plus points and preview stays.

The improvement in rental profit resulted from an increase in transient keys rented and a higher average transient rate due to the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic as COVID-19-related restrictions continued to ease, as well as from higher plus point revenue.

These increases were partially offset by higher inventory carrying costs (due to low sales volumes in 2021 as a result of the COVID-19 pandemic, the acquisition of new inventory in 2021, and higher utilization in 2022 of third-party vacation offerings for owners who elect to exchange the usage of their inventory).

As the majority of the governmental restrictions in response to the pandemic that caused rental activity to decline, such as travel restrictions and quarantine requirements, have been lifted, we expect rental occupancies to continue to remain strong throughout the remainder of 2022.

Rental revenues increased by $115 million due to the increase in transient keys rented and a higher average transient rate, partially offset by $51 million of increased rental expenses recorded as a reduction to rental revenues.

Rental expenses decreased by $10 million attributed to $51 million of costs recorded as a reduction to rental revenues and $11 million of higher allocations of rental costs to marketing and sales expense for marketing purposes partially offset by $15 million in operating hotel expenses attributable to higher revenues, $13 million of additional tidy and variable costs associated with increased transient keys rented, $8 million of higher carry costs of excess inventory on hand resulting from our fulfillment of purchase commitments in 2021, $8 million of additional costs attributed to higher utilization in 2022 of third-party vacation offerings by owners, $5 million of higher subsidy expenses, and $3 million of higher owner list for rent costs.

Financing Revenues, Expenses and Profit

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Financing revenues 72 68 4 5%

3 unchanged sentences

Financing propensity 53.1% 52.0%

Financing revenues increased due primarily to the Welk Acquisition, which contributed $10 million in the first quarter of 2022.

Excluding the impact of the Welk Acquisition, financing revenues increased $2 million due mainly to lower plus point financing incentive costs year-over-year.

New loan originations are beginning to offset the continued pay-down of the existing vacation ownership notes receivable portfolio, such that interest income is relatively flat compared to the prior year quarter.

As contract sales volumes continue to grow, we expect that the growth from new loan originations will more than offset the normal decline in the existing vacation ownership notes receivable portfolio due to loan payment activity, and cause interest income to increase.

Financing expenses increased due to the Welk Acquisition and increased foreclosure costs, offset partially by the timing of when lien fee income is recognized.

The higher financing propensity reflects a higher mix of sales to first-time buyers, who tend to have a higher financing propensity.

Financing revenues reflected $3 million of higher interest income as a result of a higher average notes receivable balance, a slightly higher average interest rate driven by mix of customers and brands, and $1 million of lower plus point financing incentive costs year-over-year.

The higher average notes receivable balance was the result of new loan originations in excess of the amount of the continued pay-down of the existing vacation ownership notes receivable portfolio.

We expect the average notes receivable balance, and resulting interest income, to continue to increase with the expected growth in contract sales and loan originations.

Financing expenses increased primarily due to the timing of when lien fee income is recognized.

As we move through 2022, we expect to continue to increase our focus on sales to first-time buyers, which should further increase financing propensity.

2022 First Quarter

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Financing revenues 143 127 16 12%

Financing expenses (19) (16) (3) (17%)

Consumer financing interest expense (25) (26) 1 4%

Financing profit $ 99 $ 85 $ 14 17%

Financing propensity 51.9% 49.2%

Financing revenues reflected $13 million of higher interest income (including $10 million due to the Welk Acquisition and $3 million as a result of a higher average vacation ownership notes receivable balance and a slightly higher average interest rate driven by mix of customers and brands) and $3 million of lower plus point financing incentive costs year-over-year.

Financing expenses increased primarily due to the timing of when lien fee income is recognized.

The higher financing propensity is primarily a result of the Welk Acquisition in the second quarter of 2021.

Legacy-Welk customers have a higher financing propensity than Legacy-MVW customers.

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Royalty fee $ 29 $ 27 $ 2 7%

The increase in royalty fee expense in the second quarter of 2022 included $2 million from an increase in the dollar volume of closings and $1 million from a contractual increase in the fixed portion of the royalty fee owed to Marriott International, partially offset by $1 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Royalty fee $ 56 $ 52 $ 4 8%

The increase in royalty fee expense in the first half of 2022 included $4 million from an increase in the dollar volume of closings and $2 million from a contractual increase in the fixed portion of the royalty fee owed to Marriott International, partially offset by $2 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).

Litigation Charges

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Litigation charges $ 2 $ 3 $ (1) (42%)

During the first quarter of 2022 and the first quarter of 2021, the litigation charges related primarily to projects in Europe.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Litigation charges $ 5 $ 6 $ (1) (26%)

During the second quarter and first half of 2022, as well as the second quarter and first half of 2021, the litigation charges related primarily to projects in Europe.

Gains and Other Income

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Gains and other income, net $ 32 $ — $ 32 NM

During the first quarter of 2022, we recorded $3 million of gains and other income, net related to business interruption insurance proceeds received during the quarter.

During the second quarter of 2022, we recorded $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, partially offset by $1 million of foreign currency translation charges.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Gains and other income, net $ 35 $ — $ 35 NM

During the first half of 2022, we recorded $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, and $3 million related to receipt of business interruption insurance proceeds, partially offset by $1 million of foreign currency translation charges.

Exchange & Third-Party Management

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Management and exchange $ 58 $ 60 $ 122 $ 120

Rental 11 11 22 23

Cost reimbursements 5 15 14 29

4 unchanged sentences

TOTAL EXPENSES 44 59 95 124

Gains and other income, net 16 — 16 —

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 46 $ 27 $ 79 $ 48

Rental Revenues, Expenses and Profit

2022 First Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

Rental revenues $ 11 $ 12 $ (1) (8%)

Rental expenses — — — NM

Rental profit $ 11 $ 12 $ (1) (8%)

Rental profit margin 100.0% 100.0% — pts

Results reflect a 12% decline in Getaways transactions, offset partially by a 15% increase in average fees.

The decline in transactions reflects increased owner usage which is putting pressure on the volume of member deposits available as inventory for Getaways as members choose to occupy their accommodations rather than exchange usage through Interval International, offset partially by pricing increases.

Management and Exchange Profit

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Management and exchange revenue $ 58 $ 60 $ (2) (4%)

2 unchanged sentences

Management and exchange profit margin 45.2% 42.2% 3.0 pts

The increase in management and exchange revenue and profit reflects higher management fees at Aqua-Aston managed properties due to the continued ramp-up of the business in Hawaii subsequent to the initial impact of the COVID-19 pandemic.

The decrease in management and exchange revenue reflected $4 million of lower revenue due to the disposition of our VRI Americas business during the second quarter of 2022 and $1 million of lower Interval International transaction fee revenue due to fewer exchanges as more members chose to occupy their home resorts rather than exchange for usage through Interval International, partially offset by $2 million of higher management fees at Aqua-Aston managed properties due to the continued ramp-up of the business in Hawaii subsequent to the initial impact of the COVID-19 pandemic.

For Interval International, average revenue per member decreased 16% over the prior year comparable period.

This decline was due in part to new, recently added affiliations for which we expect any exchange activity to take time to ramp-up as many of the new members have already booked near term travel plans.

This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time, as well as the decline in exchange revenue.

The increase in management and exchange profit primarily reflected the higher management fees at Aqua Aston.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Management and exchange revenue $ 122 $ 120 $ 2 1%

Management and exchange expense (65) (66) 1 2%

Management and exchange profit $ 57 $ 54 $ 3 6%

Management and exchange profit margin 47.0% 45.1% 1.9 pts

The increase in management and exchange revenue and profit reflects higher management fees at Aqua-Aston managed properties due to continued ramp-up of business in Hawaii subsequent to the initial impact of the COVID-19 pandemic, partially offset by lower Interval International transaction fee revenue and profit due to fewer exchanges as more members chose to occupy their home resorts rather than exchange for usage through Interval International.

The management and exchange revenue was also negatively impacted by the disposition of our VRI Americas business during the second quarter of 2022 as discussed above.

For Interval International, average revenue per member decreased 11% over the prior year comparable period.

This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time, as well as the decline in exchange revenue.

Rental Revenues

2022 Second Quarter

Three Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Rental revenues $ 11 $ 11 $ — (3%)

Results reflect a $2 million decrease in gross Getaway revenues, which resulted from an 18% decline in transactions, partially offset by a 7% increase in the average Getaway fee.

Rental revenues remain flat to the prior year, as rental inventory procurement costs, which are recorded net within Rental revenues, declined by $2 million.

The decline in Getaway transactions reflected fewer owner deposits as more members chose to occupy their home resorts rather than exchange for usage through Interval International, which put pressure on the inventory available for Getaways.

We expect the reduced exchange volume and Getaway specific inventory sourcing to continue through the remainder of the year.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Rental revenues $ 22 $ 23 $ (1) (6%)

Results reflect a $2 million decrease in gross Getaway revenues, which resulted from a 15% decline in transactions, partially offset by an 11% increase in the average Getaway fee.

This was partially offset by lower rental inventory procurement costs, which are recorded net within Rental revenues, of $1 million.

Depreciation and Amortization

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Depreciation and amortization $ 7 $ 9 $ (2) (16%)

The decrease in depreciation expense relates to a true-up made in the prior year to accelerate depreciation on a technology asset.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Depreciation and amortization $ 16 $ 29 $ (13) (43%)

The decrease in depreciation expense in the first half of 2022 relates to a true-up made in the prior year to accelerate depreciation on a technology asset.

Gains and Other Income

2022 Second Quarter

Three Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Gains and other income, net $ 16 $ — $ 16 NM

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Gains and other income, net $ 16 $ — $ 16 NM

During the second quarter and first half of 2022, we recorded a $16 million gain related to the strategic decision to dispose of our VRI Americas business .

See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.

Corporate and Other

1 unchanged sentence

In addition, Corporate and Other includes the revenues and expenses from the Consolidated Property Owners’ Associations.

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Resort management and other services $ 5 $ 37 $ 37 $ 76

6 unchanged sentences

Restructuring — — — (1)

Impairment — 5 — 5

Cost reimbursements (6) (27) (26) (54)

TOTAL EXPENSES 67 79 141 136

Gains and other income, net 1 6

(Losses) gains and other (expense) income, net (11) (2) (10) 4

Interest expense (30) (44) (57) (87)

1 unchanged sentence

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (145) (143) (261) (244)

(Provision for) benefit from income taxes (32) 11

Net income attributable to noncontrolling interests — (3)

Provision for income taxes (43) (27) (75) (16)

Net loss (income) attributable to noncontrolling interests 1 (2) 1 (5)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (187) $ (172) $ (335) $ (265)

Consolidated Property Owners’ Associations

The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance, which represents the portion related to third-party VOI owners.

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance.

Three Months Ended Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Resort management and other services $ 4 $ 37 $ 36 $ 76

5 unchanged sentences

TOTAL EXPENSES — 4 11 14

Gains and other income, net — 2

Losses and other expense, net (3) (2) (3) —

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (5) 4 (4) 8

Net income attributable to noncontrolling interests — (3)

Provision for income taxes — (1) — (1)

Net loss (income) attributable to noncontrolling interests 1 (2) 1 (5)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (4) $ 1 $ (3) $ 2

General and Administrative

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

General and administrative $ 64 $ 66 $ (2) (2%)

For the first quarter of 2022, General and administrative expenses increased due primarily to $11 million of higher salary costs due to reduced work week programs in the prior year, $3 million related to higher bonus expense, and a $2 million decrease in credits related to incentives under the CARES Act, partially offset by $1 million in lower overall spending.

Restructuring

2022 First Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

Restructuring $ — $ (1) $ 1 (100%)

No restructuring costs were recorded for the first quarter of 2022.

During the first quarter of 2021, we reversed an accrual for $1 million associated with a restructuring plan that we adopted as a result of the COVID-19 pandemic.

For the second quarter of 2022, General and administrative expenses decreased due primarily to lower bonus expenses.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

General and administrative $ 125 $ 112 $ 13 12%

For the first half of 2022, General and administrative expenses increased primarily due to $12 million of higher salary costs due to reduced work week programs in the prior year and a $2 million decrease in credits related to incentives under the CARES Act, partially offset by $1 million in lower overall spending.

Gains / Losses and Other Income / Expense

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

Gains and other income, net $ 1 $ 6 $ (5) (74%)

We recorded $1 million and $6 million of foreign currency translation gains in the first quarter of 2022 and the first quarter of 2021, respectively.

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Losses and other expense, net $ (11) $ (2) $ (9) NM

In the second quarter of 2022, we recorded $7 million of foreign currency translation losses, a tax related charge of $3 million, and $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $2 million of proceeds from corporate owned life insurance.

In the second quarter of 2021, we recorded a tax related charge of $2 million.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

(Losses) gains and other (expense) income, net $ (10) $ 4 $ (14) NM

In the first half of 2022, we recorded $6 million of foreign currency translation losses, a tax related charge of $3 million, and $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $2 million of proceeds from corporate owned life insurance.

In the first half of 2021, we recorded $6 million of foreign currency translation gains, partially offset by a tax related charge of $2 million.

Interest Expense

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Interest expense $ (30) $ (44) $ 14 32%

Interest expense decreased $16 million, including $13 million due to the early redemption of the 2026 Notes in 2021, $6 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards”), and $4 million due to the early redemption of a portion of the 2025 Notes, partially offset by $6 million due to the issuance of the 2029 Notes in 2021 and $1 million of higher interest related to a leased asset.

Interest expense decreased $14 million, including $12 million due to the early redemption of the 2026 Notes in 2021, $7 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements), and $4 million due to the early redemption of a portion of the 2025 Notes in 2021, partially offset by $5 million due to the issuance of the 2029 Notes in June 2021, $3 million of non-income tax related interest expense and $1 million of higher interest related to finance leases.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Interest expense $ (57) $ (87) $ 30 34%

Interest expense decreased $30 million, including $25 million due to the early redemption of the 2026 Notes in 2021, $13 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements), and $8 million due to the early redemption of a portion of the 2025 Notes in 2021, partially offset by $11 million due to the issuance of the 2029 Notes in June 2021, $3 million of non-income tax related interest expense and $2 million of higher interest related to finance leases.

Transaction and Integration Costs

2022 First Quarter

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Transaction and integration costs $ (36) $ (28) $ (8) (27%)

In the first quarter of 2022, Transaction and integration costs included $25 million of ILG Acquisition and integration related costs, and $3 million of Welk Acquisition and integration related costs.

In the first quarter of 2021, Transaction and integration costs included $17 million of ILG Acquisition and integration related costs, and $2 million of Welk Acquisition and integration related costs.

2022 First Quarter

In the second quarter of 2022, Transaction and integration costs included $23 million of ILG integration related costs, $10 million of other integration costs, $2 million of Welk Acquisition and integration related costs, and $1 million of other transactions costs.

In the second quarter of 2021, Transaction and integration costs included $25 million of ILG integration related costs, and $3 million of Welk Acquisition and integration related costs.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Transaction and integration costs $ (64) $ (47) $ (17) (36%)

In the first half of 2022, Transaction and integration costs included $48 million of ILG integration related costs, $10 million of other integration costs, $5 million of Welk Acquisition and integration related costs and $1 million of other transaction costs.

In the first half of 2021, Transaction and integration costs included $42 million of ILG integration related costs and $5 million of Welk Acquisition and integration related costs.

2022 Second Quarter

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021 Change % Change

(Provision for) benefit from income taxes $ (32) $ 11 $ (43) NM

The change in the (Provision for) benefit from income taxes is predominately attributable to an increase in pre-tax income and an increase in the reserve for unrecognized tax benefits for the three months ended March 31, 2022.

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Provision for income taxes $ (43) $ (27) $ (16) (65%)

The change in the Provision for income taxes is predominately attributable to an increase in pre-tax income for the three months ended June 30, 2022.

2022 First Half

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021 Change % Change

Provision for income taxes $ (75) $ (16) $ (59) NM

The change in the Provision for income taxes is predominately attributable to an increase in pre-tax income for the six months ended June 30, 2022.

Liquidity and Capital Resources

Typically, our capital needs are supported by cash on hand ($0.4 billion at the end of the first quarter of 2022), cash generated from operations, our ability to raise capital through securitizations in the asset-backed securities market, our ability to issue new, and refinance existing, debt and, to the extent necessary, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility.

Typically, our capital needs are supported by cash on hand ($0.3 billion at the end of the second quarter of 2022), cash generated from operations, our ability to raise capital through securitizations in the asset-backed securities market, our ability to issue new, and refinance existing, debt and, to the extent necessary, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility.

We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to shareholders.

During the first quarter of 2022, we entered into an amendment to the Revolving Corporate Credit Facility (the “Amendment”), which increased the borrowing capacity of the existing revolving credit facility from $600 million to $750 million and extended the maturity date from August 31, 2023 to March 31, 2027.

At March 31, 2022, we had $4.6 billion of total gross debt outstanding, which included $1.8 billion of non-recourse debt associated with vacation ownership notes receivable securitizations, $1.1 billion of senior notes, $0.8 billion of convertible notes, $0.8 billion of debt under our Corporate Credit Facility, $84 million related to finance lease obligations, and $11 million related to a non-interest bearing note payable.

At March 31, 2022, we had $684 million of completed real estate inventory on hand.

In addition, we had $496 million of completed vacation ownership units that have been classified as a component of Property and equipment until the time at which they are legally registered and available for sale as vacation ownership products.

Our material cash requirements from known contractual or other obligations were $6 billion as of March 31, 2022, of which we expect $748 million to be payable during 2022.

During the first quarter of 2022, we entered into an amendment to the Revolving Corporate Credit Facility, which increased the borrowing capacity of the existing revolving credit facility from $600 million to $750 million and extended the maturity date from August 31, 2023 to March 31, 2027.

Subsequent to the end of the second quarter of 2022, we amended certain agreements associated with our Warehouse Credit Facility, which increased the borrowing capacity of the existing facility from $350 million to $425 million and extended the revolving period from April 21, 2023 to July 28, 2024.

At June 30, 2022, we had $4.7 billion of total gross debt outstanding, which included $1.9 billion of non-recourse debt associated with vacation ownership notes receivable securitizations, $1.1 billion of senior notes, $0.8 billion of convertible notes, $0.8 billion of debt under our Corporate Credit Facility, $84 million related to finance lease obligations, and $10 million related to a non-interest bearing note payable.

During the second quarter of 2022, we issued irrevocable notice of our intent to settle the 2022 Convertible Notes in cash.

Excluding repayment of non-recourse debt, which is funded by the performance of vacation ownership notes receivable, principal repayments for the remainder of 2022 and 2023 consist of $230 million related to the 2022 Convertible Notes and $6 million related to a non-interest bearing note payable, respectively.

At June 30, 2022, we had $686 million of completed real estate inventory on hand and $506 million of completed vacation ownership units that have been classified as a component of Property and equipment until the time at which they are legally registered and available for sale as vacation ownership products.

Our material cash requirements from known contractual or other obligations were $6 billion as of June 30, 2022, of which we expect $569 million to be payable during the second half of 2022.

These obligations primarily relate to our debt, securitized debt, and purchase obligations.

Please see “Material Cash Requirements” below for additional information.

See “Material Cash Requirements” below for additional information.

The following table summarizes the changes in cash, cash equivalents, and restricted cash:

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021

Cash, cash equivalents, and restricted cash provided by (used in):

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In addition, our cash from operations varies due to the timing of repayment by owners of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for inventory acquisition and development.

Excluding the impact of changes in net income or loss and adjustments for non-cash items, the change in cash flows from operations increased as a result of lower inventory spending, higher operational expense accruals, higher sales and rental deposits due to the continued ramp-up of the business, and higher collections of vacation ownership notes receivable, partially offset by timing of certain employee benefit payments.

Excluding the impact of changes in net income or loss and adjustments for non-cash items, the change in cash flows from operations increased as a result of lower inventory spending, higher collections of vacation ownership notes receivable, higher sales and rental deposits due to the continued ramp-up of the business, and higher operational expense accruals, partially offset by timing of certain employee benefit payments and recognition of previously deferred revenues.

In addition to net income or loss and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:

Inventory Spending Less Than (In Excess of) Cost of Sales

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021

Inventory spending $ (92) $ (77)

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Inventory spending less than (in excess of) cost of sales $ 14 $ (86)

While we have significant inventory on hand, we will continue to selectively pursue growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale.

While we have significant excess inventory on hand, we will continue to selectively pursue growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale.

These capital efficient vacation ownership deal structures may consist of the development of new inventory, or the conversion of previously built units by third parties, just prior to sale.

Our spending for real estate inventory in the first quarter of 2022 was lower than real estate inventory costs due to our strategy to minimize spending because we have a significant amount of inventory on hand.

Through our existing vacation ownership interest repurchase program, we proactively buy back previously sold vacation ownership interests at lower costs than would be required to develop new inventory.

Through our existing vacation ownership interest repurchase program, we proactively acquire previously sold vacation ownership interests at lower costs than would be required to develop new inventory.

By repurchasing inventory, we expect to be able to help stabilize the future cost of vacation ownership products.

Our spending for real estate inventory in the first half of 2022 was lower than real estate inventory costs and was primarily related to our vacation ownership interest repurchase program.

We acquired a higher amount of previously sold

vacation ownership interests in the first half of 2022 due to the reinstatement of our vacation ownership interest repurchase program that was suspended as part of the cash preservation measures implemented in response to the COVID-19 pandemic.

We expect inventory spending to be less than cost of sales for the remainder of 2022 as we intend to repurchase less inventory and provided we are able to negotiate a capital efficient inventory arrangement under which a third party will develop the Waikiki property we are committed to purchase and agree to resell it to us at a later date.

See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.

Vacation Ownership Notes Receivable Collections (Less Than) In Excess of Originations

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Six Months Ended

($ in millions) June 30, 2022 June 30, 2021

Vacation ownership notes receivable collections — non-securitized $ 133 $ 110

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Vacation ownership notes receivable collections (less than) in excess of originations $ (118) $ 42

Vacation ownership notes receivable collections increased during the first quarter of 2022, as compared to the first quarter of 2021, due to an increase in the portfolio of outstanding vacation ownership notes receivable.

Vacation ownership notes receivable originations in the first quarter of 2022 increased, as compared to the first quarter of 2021, due to higher sales combined with a higher financing propensity.

Financing propensity increased to 50% for the first quarter of 2022, compared to 46% for the first quarter of 2021, reflecting a higher mix of sales to first-time buyers, who tend to have a higher financing propensity.

Vacation ownership notes receivable collections increased during the first half of 2022, as compared to the first half of 2021, due to an increase in the portfolio of outstanding vacation ownership notes receivable, reflecting the continued ramp up of sales and higher financing propensity (52% for the first half of 2022, compared to 49% for the first half of 2021).

Cash from Investing Activities

Acquisition of a Business, Net of Cash and Restricted Cash Acquired

Net cash outflows of $157 million in the first half of 2021 were due to the Welk Acquisition.

See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.

Proceeds from Disposition of Subsidiaries, Net of Cash and Restricted Cash Transferred

Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred of $93 million in the first half of 2022 were due to the disposition of various subsidiaries, including $55 million for the VRI Americas business entities and $38 million for the entities that owned and operated the hotel in Puerto Vallarta, Mexico.

See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.

Capital Expenditures for Property and Equipment

In the first quarter of 2022, capital expenditures for property and equipment included $9 million to support business operations (including $6 million for ancillary and other operations assets and $3 million for sales locations).

In the first quarter of 2021, capital expenditures for property and equipment of $7 million included $5 million to support business operations (including $3 million for ancillary and other operations assets and $2 million for sales locations) and $2 million for technology.

In the first half of 2022, capital expenditures for property and equipment included $23 million to support business operations (including $15 million for ancillary and other operations assets and $7 million for sales locations) and $1 million for technology.

In the first half of 2021, capital expenditures for property and equipment of $11 million included $8 million to support business operations (including $5 million for ancillary and other operations assets and $3 million for sales locations) and $3 million for technology.

Issuance of Note Receivable to VIE

During the second quarter of 2022, in connection with the amendment of an inventory purchase commitment, we extended a loan to a VIE, which we do not consolidate, for $47 million.

The loan is due in full upon the earlier of either a sale of the property, including a sale to us, or an amendment and restatement of our purchase commitment, one of which is expected to occur in 2022.

See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.

Cash from Financing Activities

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Net proceeds were $101 million due to the funding of reserve accounts of $1 million.

As of March 31, 2022, $120 million of gross vacation ownership notes receivable were eligible for securitization.

During the second quarter of 2022, we completed the securitization of a pool of $383 million of vacation ownership notes receivable.

Approximately $342 million of the vacation ownership notes receivable were purchased by the 2022-1 LLC during the second quarter of 2022.

Of the $375 million in proceeds from the transaction, $40 million was held by the 2022-1 LLC as of June 30, 2022 and released subsequently as it purchased all of the remaining loans.

In addition, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility, approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes.

In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes, issued in a prior securitization, for approximately $38 million;

the majority of the loans acquired through the redemption were purchased by the 2022-1 LLC.

As of June 30, 2022, $106 million of gross vacation ownership notes receivable were eligible for securitization.

Proceeds from / Repayments of Debt

Borrowings from / Repayment of Corporate Credit Facility

All proceeds from and repayments of debt during the first half of 2022 were related to borrowings from and repayments of our Corporate Credit Facility.

Our Corporate Credit Facility includes the Term Loan and our Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements.

No principal payments were made on our Term Loan during the first quarter of 2022.

During the first quarter of 2022, we borrowed $30 million under our Revolving Corporate Credit Facility, all of which was repaid prior to the end of the quarter.

There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of March 31, 2022.

As of March 31, 2022, we had $2 million of letters of credit outstanding under our Revolving Corporate Credit Facility.

During the first quarter of 2021, we repaid $100 million of the amount outstanding under the Term Loan.

We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first quarter of 2021.

No principal payments were made on our Term Loan during the first half of 2022.

During the first half of 2022, we borrowed and repaid $125 million under our Revolving Corporate Credit Facility.

There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of June 30, 2022.

As of June 30, 2022, w e had $1 million of le tters of credit outstanding under our Revolving Corporate Credit Facility.

During the first half of 2021, we repaid $100 million of the amount outstanding under the Term Loan.

We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first half of 2021.

Finance Lease Payment

During the first quarter of 2022, we paid $2 million related to our finance lease obligations for technology and business operations equipment.

During the first half of 2022, we paid $2 million related to our finance lease obligations for technology and business operations equipment.

Debt Issuance Costs

During the first quarter of 2022, we paid $4 million of debt issuance costs associated with an amendment to the Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements.

During the first quarter of 2021, we paid $2 million of debt issuance costs, which included $1 million associated with the 2026 Convertible Notes and $1 million associated with the extension of the Waiver which suspended certain requirements under the Revolving Corporate Credit Facility.

During the first half of 2022, we paid $9 million of debt issuance costs, which included $5 million associated with the vacation ownership notes receivable securitization completed in 2022 and $4 million associated with an amendment to the Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements.

During the first half of 2021, we paid $15 million of debt issuance costs, which included $6 million associated with the vacation ownership notes receivable securitization we completed in 2021, $7 million associated with the issuance of the 2029 Notes, $1 million associated with the issuance of the 2026 Convertible Notes, and $1 million associated with the amendment of a waiver to the agreement that governs our Corporate Credit Facility.

Repurchase of Common Stock

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As of December 31, 2021 17,681,395 $ 1,418 $ 80.17

For the first quarter of 2022 764,824 119 156.50

As of March 31, 2022 18,446,219 $ 1,537 $ 83.34

See Footnote 14 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program, including the additional share repurchase authorization approved by our Board of Directors during the first quarter of 2022.

We distributed cash dividends to holders of our common stock during the first quarter of 2022 as follows:

For the first half of 2022 2,187,336 312 143.02

As of June 30, 2022 19,868,731 $ 1,730 $ 87.09

See Footnote 14 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program, including the additional share repurchase authorization and extension approved by our Board of Directors during the first half of 2022.

We distributed cash dividends to holders of our common stock during the first half of 2022 as follows:

Declaration Date Shareholder Record Date Distribution Date Dividend per Share

1 unchanged sentence

February 18, 2022 March 3, 2022 March 17, 2022 $0.62

We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors

considers relevant.

May 12, 2022 May 26, 2022 June 9, 2022 $0.62

In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends.

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Material Cash Requirements

The following table summarizes our future material cash requirements from known contractual or other obligations as of March 31, 2022:

The following table summarizes our future material cash requirements from known contractual or other obligations as of June 30, 2022:

Payments Due by Period

($ in millions) Total Remainder

of 2022 Years

2023 - 2024 Years

2025 - 2026 Thereafter

of 2022 2023 2024 2025 2026 Thereafter

Contractual Obligations

6 unchanged sentences

Operating lease obligations (4)

128 12 25 21 20 18 32

Finance lease obligations (4)

3 unchanged sentences

$ 5,985 $ 569 $ 413 $ 378 $ 1,379 $ 877 $ 2,369

_________________________

(1) Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.

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(4) Includes interest.

(5) Primarily relates to our commitment to an owners’ association that we manage, to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees, of $10 million.

(5) Primarily relates to future guaranteed purchases of rental inventory of $8 million and our commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees, of $5 million.

In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts.

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The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

The following tables present consolidating financial information as of March 31, 2022 and December 31, 2021, and for the three months ended March 31, 2022 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVW, and MVW on a consolidated basis.

The following tables present consolidating financial information as of June 30, 2022 and December 31, 2021, and for the six months ended June 30, 2022 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVW, and MVW on a consolidated basis.

Condensed Consolidating Balance Sheet

As of March 31, 2022

As of June 30, 2022

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

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Condensed Consolidating Statements of Income

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

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Equity in net income (loss) of subsidiaries 197 294 — — (491) —

Net (loss) income 58 66 87 24 (177) 58

Net income attributable to noncontrolling interests — — — — — —

Net (loss) income attributable to common shareholders $ 58 $ 66 $ 87 $ 24 $ (177) $ 58

Net income (loss) 194 214 221 55 (491) 193

Net loss attributable to noncontrolling interests — — — 1 — 1

Net income (loss) attributable to common shareholders $ 194 $ 214 $ 221 $ 56 $ (491) $ 194

Recent Accounting Pronouncements

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Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk has not changed materially from that disclosed in Part I, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021.

Our exposure to market risk has not changed materially from that disclosed in Part I, Item 7A of the 2021 Annual Report.

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-Q

Item 2. Management’s Discussion and Analysis