4 unchanged sentences
our possible or assumed future results of operations;
+Added: financial condition and leverage;
dividend payments;
−Removed: business strategies, such as our plans to continue to increase our focus on sales of vacation ownership products to first-time buyers and our expectations regarding resulting increases in financing propensity;
+Added: business strategies, such as our plans to continue to increase our focus on sales of vacation ownership products to first-time buyers and our expectations that we will continue to offer financing incentives;
financing plans;
1 unchanged sentence
potential growth opportunities;
−Removed: 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;
+Added: potential operating performance improvements, including the expectations that contract sales, resort management, resort occupancies, and tour flow will continue to remain strong in 2023;
+Added: our expectation that interest income will increase in 2023;
our expectations regarding availability of inventory for Getaways and exchange transactions;
+Added: indemnification;
+Added: dilution related to convertible notes;
inventory spending;
the effects of competition;
−Removed: and the ongoing effect of the COVID-19 pandemic and actions we or others may take in response to the COVID-19 pandemic.
+Added: and any effects of the COVID-19 pandemic.
Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.
2 unchanged sentences
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:
−Removed: the continuing effects of the COVID-19 pandemic or future health crises, including quarantines or other government-imposed travel or health-related restrictions;
−Removed: the length and severity of the COVID-19 pandemic or future health crises, including short and longer-term impact on consumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or future health crises, or as effective treatments or vaccines against variants of the COVID-19 pandemic or future health crises become widely available;
+Added: the effects of the COVID-19 pandemic or future health crises, including their short and longer-term impact on consumer confidence and demand for travel, and the pace of recovery following a future health crisis;
variations in demand for vacation ownership and exchange products and services;
worker absenteeism;
−Removed: price inflation;
+Added: price and wage inflation;
global supply chain disruptions;
−Removed: volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic or future health crises, and the ongoing conflict between Russia and Ukraine and related sanctions and other measures;
+Added: volatility in the international and national economy and credit markets;
+Added: impact of the current or a future banking crisis;
+Added: the ongoing war between Russia and Ukraine and related sanctions and other measures;
our ability to attract and retain our global workforce;
2 unchanged sentences
the impact of rising interest rates;
−Removed: 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 or future health crises;
−Removed: 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.
+Added: political or social strife;
+Added: difficulties associated with implementing new or maintaining existing technology;
+Added: changes in privacy laws 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 updated in our future periodic filings with the U.S.
Securities and Exchange Commission (the “SEC”).
5 unchanged sentences
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.
−Removed: 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.
+Added: 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 in the Interim Condensed Notes to Consolidated Financial Statements that we include in the Financial Statements of this Quarterly Report on Form 10-Q.
Business Overview
4 unchanged sentences
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.
−Removed: 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.
+Added: We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton 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.
4 unchanged sentences
and renting vacation ownership inventory.
−Removed: 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.
−Removed: As of May 2022, we provided these services through Interval International and Aqua-Aston.
−Removed: 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.
+Added: Our Exchange & Third-Party Management segment includes an exchange network and membership programs, as well as the provision of management services to other resorts and lodging properties.
+Added: Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and owners’ association management, and other related products and services.
+Added: Since May 2022, we provide these services through our Interval International and Aqua-Aston businesses.
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.
−Removed: 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
−Removed: 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.
+Added: Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by leveraging the brands then licensed by Marriott International and its subsidiaries to us and to 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.
−Removed: 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.
−Removed: The program also harmonizes fee structures and owner benefit levels and allows us to transition most of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product.
−Removed: Later in 2022, we plan to add certain Sheraton- and Westin- branded vacation ownership interests to the Marriott Vacation Club Destinations product.
−Removed: Acquisition of Welk
−Removed: On April 1, 2021, we completed the Welk Acquisition, after which Welk became our indirect wholly-owned subsidiary.
−Removed: We refer to the Welk business that we acquired as “Legacy-Welk.” In April 2022, we introduced the Hyatt Vacation Club and rebranded Welk’s vacation ownership program as the Hyatt Vacation Club Platinum Program, enabling Legacy-Welk sales centers to sell a Hyatt-branded vacation ownership product.
−Removed: Most Legacy-Welk resorts are now available for rental stays through Hyatt.com.
−Removed: COVID-19 Pandemic
−Removed: The COVID-19 pandemic has caused significant disruptions in international and U.S.
−Removed: economies and markets, and has had an unprecedented impact on the travel and hospitality industries, as well as our Company.
−Removed: We discuss the impacts of the COVID-19 pandemic and its potential future implications throughout this report;
−Removed: however, the COVID-19 pandemic, and any recovery therefrom, continues to evolve and further potential impacts on our business in the future remain uncertain.
−Removed: Significant Accounting Policies Used in Describing Results of Operations
−Removed: Sale of Vacation Ownership Products
−Removed: 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.
−Removed: Based upon the different terms of the contracts with the customer and business practices, control of the vacation ownership product has historically transferred to the customer at different points in time for each brand of VOIs.
−Removed: In the third quarter of 2022, we aligned our business practices and contract terms, resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded vacation ownership interests.
−Removed: Prior to these changes, control transfer occurred at closing for Marriott-branded and Legacy-Welk vacation ownership products.
+Added: Under this program, owners of Marriott-, Sheraton- and Westin-branded VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club brands using a common currency.
+Added: The program also harmonizes fee structures and owner benefit levels and has allowed us to transition most of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product.
+Added: Further, in late 2022, we added certain Sheraton- and Westin- branded VOIs to the Marriott Vacation Club Destinations product.
+Added: We recognize revenues from the sale of vacation ownership products (also referred to as VOIs) when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible.
+Added: Based upon the different terms of our contracts with the customer and business practices, control of the vacation ownership product has historically transferred to the customer at different points in time for each brand of VOIs.
+Added: In the third quarter of 2022, we aligned our business practices and contract terms, resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded VOIs.
+Added: Prior to these changes, control transfer occurred at closing for Marriott-branded vacation ownership products.
Subsequent to this alignment, transfer of control of Marriott-branded vacation ownership products occurs at expiration of the statutory rescission period, consistent with the historical timing of Sheraton-, Westin- and Hyatt- branded transactions.
−Removed: Marriott-branded VOI sales contracts executed prior to these modifications will continue to be accounted for with transfer of control of the VOI occurring at closing.
−Removed: Control transfer for Legacy-Welk VOIs remains at closing.
−Removed: Sales of vacation ownership products may be made for cash or we may provide financing.
−Removed: In addition, we recognize settlement fees associated with the transfer of vacation ownership products and commission revenues from sales of vacation ownership products on behalf of third parties, which we refer to as “resales revenue.”
−Removed: We also provide sales incentives to certain purchasers.
−Removed: These sales incentives typically include Marriott Bonvoy points, World of Hyatt points or an alternative sales incentive that we refer to as “plus points.” Plus points are redeemable for stays at our resorts or for use in other third-party offerings, generally up to two years from the date of issuance.
−Removed: Typically, sales incentives are only awarded if the sale is closed.
−Removed: Finally, as more fully described in “ Financing ” below, we record the difference between the vacation ownership note receivable and the consideration to which we expect to be entitled (also known as a vacation ownership notes receivable reserve or a sales reserve) as a reduction of revenues from the sale of vacation ownership products at the time we recognize revenues from a sale.
−Removed: We report, on a supplemental basis, contract sales for our Vacation Ownership segment.
−Removed: 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.
−Removed: 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.
−Removed: We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.
−Removed: Cost of vacation ownership products includes costs to develop and construct our projects (also known as real estate inventory costs), other non-capitalizable costs associated with the overall project development process and settlement expenses associated with the closing process.
−Removed: For each project, we expense real estate inventory costs in the same proportion as the revenue recognized.
−Removed: Consistent with the applicable accounting guidance, to the extent there is a change in the estimated sales revenues or inventory costs for the project in a period, a non-cash adjustment is recorded on our income statements to true-up costs in that period to those that would have been recorded historically if the revised estimates had been used.
−Removed: These true-ups, which we refer to as product cost true-up activity, can have a positive or negative impact on our income statements.
−Removed: We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit.
−Removed: Development profit margin is calculated by dividing Development profit by revenues from the Sale of vacation ownership products.
−Removed: Management and Exchange
−Removed: 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.
−Removed: 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.
−Removed: We also receive annual membership fees, club dues and certain transaction-based fees from members, owners and other third parties.
−Removed: Management and exchange expenses include costs to operate the food and beverage outlets and other ancillary operations and to provide overall customer support services, including reservations, and certain transaction-based expenses relating to external exchange service providers.
−Removed: In our Vacation Ownership segment and Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”
−Removed: We offer financing to qualified customers for the purchase of most types of our vacation ownership products.
−Removed: The average FICO score of customers who were U.S.
−Removed: citizens or residents who financed a vacation ownership purchase was as follows:
−Removed: Nine Months Ended
−Removed: September 30, 2022 September 30, 2021
−Removed: Average FICO score 733 731
−Removed: 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.
−Removed: 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.
−Removed: We may use incentives to encourage our customers to choose our financing.
−Removed: 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.
−Removed: The interest income earned from our vacation ownership financing arrangements is earned on an accrual basis on the principal balance outstanding over the contractual life of the arrangement and is recorded as Financing revenues on our Income Statements.
−Removed: Financing revenues also include fees earned from servicing the existing vacation ownership notes receivable portfolio.
−Removed: The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which is impacted positively by the origination of new vacation ownership notes receivable and negatively by principal collections.
−Removed: We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.
−Removed: We do not include resales contract sales in the financing propensity calculation.
−Removed: Financing propensity was 59% in the third quarter of 2022 and 60% in the third quarter of 2021.
−Removed: We expect to continue offering financing incentive programs throughout the fourth quarter of 2022 and into 2023.
−Removed: 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
−Removed: Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model.
−Removed: The estimates of the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses and estimated value of collateral securing the acquired vacation ownership notes receivable.
−Removed: In the event of a default, we generally have the right to foreclose on or revoke the underlying VOI.
−Removed: We return VOIs that we reacquire through foreclosure or revocation back to inventory.
−Removed: As discussed above, for originated vacation ownership notes receivable, we record a reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our Income Statements.
−Removed: 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.
−Removed: 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.
−Removed: Historical default rates, which represent defaults as a percentage of each year’s beginning gross vacation ownership notes receivable balance, were as follows:
−Removed: Nine Months Ended
−Removed: September 30, 2022 September 30, 2021
−Removed: Historical default rates 3.3% 3.3%
−Removed: Historical default rates reflect the stabilization 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.
−Removed: As a result of the unification of the Company’s Marriott-, Sheraton- and Westin- branded vacation ownership products under the Abound by Marriott Vacations program and stabilization of defaults, in the third quarter of 2022, we combined and aligned our reserve methodology on vacation ownership notes receivable for our Marriott-, Sheraton- and Westin- brands.
−Removed: See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information.
−Removed: 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.
−Removed: We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.
−Removed: In our Vacation Ownership segment, we operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory.
−Removed: We generate revenue from rentals of inventory that we hold for sale as interests in our vacation ownership programs, inventory that we control because our owners have elected alternative usage options permitted under our vacation ownership programs and rentals of unregistered inventory and owned-hotel properties.
−Removed: We also recognize rental revenue from the utilization of plus points under our points-based products when the points are redeemed for rental stays at one of our resorts or in other third-party offerings, or upon expiration of the points.
−Removed: We obtain rental inventory from unsold inventory and inventory we control because owners have elected alternative usage options offered through our vacation ownership programs.
−Removed: For rental revenues associated with vacation ownership products which we own and which are registered and held for sale, to the extent that the revenues from rental are less than costs, revenues are reported net in accordance with ASC Topic 978, “ Real Estate - Time-Sharing Activities ” (“ASC 978”).
−Removed: The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense.
−Removed: In our Exchange & Third-Party Management segment, we offer vacation rental opportunities at managed properties.
−Removed: We also offer vacation rental opportunities known as Getaways to members of the Interval International network and certain other membership programs.
−Removed: Getaways allow us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members.
−Removed: Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program.
−Removed: We also source resort accommodations specifically for the Getaways program.
−Removed: Rental revenues associated with Getaways are reported net of related expenses.
−Removed: Rental expenses include:
−Removed: • Maintenance and other fees on unsold inventory;
−Removed: • Costs to provide alternative usage options, including Marriott Bonvoy points, World of Hyatt points and offerings available as part of third-party offerings, for owners who elect to exchange their inventory;
−Removed: • Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, labor costs, credit card expenses and reservation services);
−Removed: • Costs to secure resort accommodations for use in Getaways.
−Removed: 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.
−Removed: 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).
−Removed: 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.
−Removed: Our Vacation Ownership segment units are either “full villas” or “lock-off” villas.
−Removed: Lock-off villas are units that can be separated into a primary unit and a guest room.
−Removed: Full villas are “non-lock-off” villas because they cannot be separated.
−Removed: A “key” is the lowest increment for reporting occupancy statistics based upon the mix of non-lock-off and lock-off villas.
−Removed: Lock-off villas represent two keys and non-lock-off villas represent one key.
−Removed: The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.
−Removed: Cost Reimbursements
−Removed: Cost reimbursements include direct and indirect costs that are reimbursed to us by customers under management contracts.
−Removed: All costs reimbursed to us by customers, with the exception of taxes assessed by a governmental authority, are reported on a gross basis.
−Removed: We recognize cost reimbursements when we incur the related reimbursable costs.
−Removed: Cost reimbursements consist of actual expenses with no added margin.
−Removed: Interest Expense
−Removed: Interest expense consists of all interest expense other than consumer financing interest expense, which is included within Financing expense.
−Removed: Transaction and Integration Costs
−Removed: 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.
−Removed: 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.
+Added: Marriott-branded VOI sales contracts executed prior to these modifications have been accounted for with transfer of control of the VOI occurring at closing.
+Added: Control transfer for Legacy-Welk VOIs continues to occur at closing.
+Added: As a result of the unification of our Marriott-, Sheraton- and Westin- branded vacation ownership products under the Abound by Marriott Vacations program and stabilization of default rates following the initial impact of the COVID-19 pandemic, in the third quarter of 2022, we combined and aligned our reserve methodology for vacation ownership notes receivable for our Marriott, Sheraton and Westin brands.
+Added: Performance Measures
We measure operating performance using the key metrics described below:
−Removed: • Contract sales from the sale of vacation ownership products :
−Removed: • Total contract sales include contract sales from the sale of vacation ownership products including joint ventures.
−Removed: • Consolidated contract sales exclude contract sales from the sale of vacation ownership products for non-consolidated joint ventures.
+Added: • Contract sales from the sale of vacation ownership products, which consists of the total amount of vacation ownership product sales under contracts signed during the period where we have generally received a down payment of at least ten percent 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.
+Added: 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.
+Added: • Total contract sales include contract sales from the sale of vacation ownership products including non-consolidated joint ventures.
+Added: • Consolidated contract sales exclude contracts sales from the sale of vacation ownership products for non-consolidated joint ventures.
• 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.
+Added: • Development profit margin is calculated by dividing Development profit by revenues from the sale of vacation ownership products.
+Added: We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit.
+Added: We believe that Development profit margin is an important measure of the profitability of our development and marketing and sales of VOIs.
• Total active members is the number of Interval International network active members at the end of the applicable period.
−Removed: 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.
+Added: We consider active members to be an important metric because it represents 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.
−Removed: We believe this metric is valuable in measuring the overall engagement of our members.
+Added: We believe this metric is valuable in measuring the overall engagement of our Interval International network active 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).
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Consolidated Results
−Removed: Three Months Ended Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Sale of vacation ownership products $ 375 $ 310
16 unchanged sentences
TOTAL EXPENSES 1,015 911
−Removed: (Losses) gains and other (expense) income, net (2) (31) 39 (27)
−Removed: Interest expense (34) (41) (91) (128)
+Added: Gains and other income, net 21 4
+Added: Interest expense, net (34) (27)
Transaction and integration costs (13) (28)
−Removed: Other (1) 1 — 2
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 128 90
Provision for income taxes (41) (32)
−Removed: NET INCOME (LOSS) 110 11 303 (6)
+Added: NET INCOME 87 58
Net income attributable to noncontrolling interests — —
−Removed: NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 109 $ 10 $ 303 $ (12)
+Added: NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 87 $ 58
Operating Statistics
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: (Contract sales $ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Vacation Ownership
−Removed: Total contract sales $ 492 $ 392 $ 100 26%
−Removed: Consolidated contract sales $ 483 $ 380 $ 103 27%
−Removed: Joint venture contract sales $ 9 $ 12 $ (3) (22%)
−Removed: VPG $ 4,353 $ 4,300 $ 53 1%
−Removed: Exchange & Third-Party Management
−Removed: Total active members at end of period (000's) 1,591 1,313 278 21%
−Removed: Average revenue per member $ 38.91 $ 42.95 $ (4.04) (9%)
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: (Contract sales $ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: (Contract sales $ in millions) March 31, 2023 March 31, 2022 Change % Change
Vacation Ownership
6 unchanged sentences
Average revenue per member $ 42.07 $ 44.33 $ (2.26) (5%)
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Vacation Ownership $ 1,182 $ 974 $ 208 21%
−Removed: Exchange & Third-Party Management 71 77 (6) (7%)
−Removed: Total Segment Revenues 1,253 1,051 202 19%
−Removed: Consolidated Property Owners’ Associations (1) 1 (2) NM
−Removed: Total Revenues $ 1,252 $ 1,052 $ 200 19%
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Vacation Ownership $ 1,097 $ 956 $ 141 15%
4 unchanged sentences
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
−Removed: EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization.
−Removed: Adjusted EBITDA reflects additional adjustments for certain items described below, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted.
+Added: EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization.
+Added: Adjusted EBITDA reflects additional adjustments for certain items, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted.
For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business.
5 unchanged sentences
As a result, effective tax rates and provisions for income taxes can vary considerably among companies.
−Removed: EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and
−Removed: depreciating productive assets.
+Added: EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets.
These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
3 unchanged sentences
In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures.
−Removed: 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.
−Removed: 2022 Third Quarter
+Added: The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income attributable to common shareholders, which is the most directly comparable GAAP financial measure.
+Added: 2023 First Quarter
Three Months Ended Change
−Removed: ($ in millions) September 30, 2022 September 30, 2021 % Change
−Removed: Net income attributable to common shareholders $ 109 $ 10 $ 99 NM
−Removed: Interest expense 34 41 (7) (17%)
+Added: ($ in millions) March 31, 2023 March 31, 2022 % Change
+Added: Net income attributable to common shareholders $ 87 $ 58 $ 29 50%
+Added: Interest expense, net 34 27 7 27%
Provision for income taxes 41 32 9 30%
4 unchanged sentences
Adjusted EBITDA $ 203 $ 188 $ 15 8%
−Removed: In the third quarter of 2022, in connection with the unification of the our Marriott-, Westin-, and Sheraton- branded vacation ownership products under the Abound by Marriott Vacations program, we aligned our business practices and contract terms for the sale of vacation ownership products (the “Contract alignment”), resulting in the prospective acceleration of revenue for the sale of Marriott-branded vacation ownership interests.
−Removed: The Contract alignment increased Net income attributable to common shareholders and Adjusted EBITDA by $29 million and $39 million, respectively.
−Removed: In addition, we combined and aligned our reserve methodology for vacation ownership notes receivable for these brands (the “Reserve alignment”), resulting in a $4 million increase in Net income attributable to common shareholders and a $5 million increase in Adjusted EBITDA.
−Removed: Together, these changes are hereinafter referred to as the “Alignment.” See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information.
−Removed: Certain items for the third quarter of 2022 consisted of $34 million of transaction and integration costs (including $19 million of ILG Acquisition and integration related costs, $7 million of other transaction costs, $5 million of Welk Acquisition and integration related costs, and $3 million of other integration costs), $5 million of purchase accounting adjustments, $2 million of losses and other expense (including $3 million related to foreign currency translation losses, $1 million of miscellaneous losses and other expense, partially offset by $1 million of working capital adjustments related to the disposition of our VRI Americas business and $1 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International), $2 million of litigation charges, $1 million of impairment charges, and $1 million of miscellaneous other adjustments, partially offset by $6 million of revenue associated with expired or forfeited deposits on pre-acquisition preview packages.
−Removed: Certain items for the third quarter of 2021 consisted of $31 million of losses and other expense (including $36 million related to the early redemption of senior unsecured notes, $2 million of foreign currency translation losses, and $1 million of miscellaneous losses and other expenses, partially offset by $8 million related to a true-up to a Marriott International indemnification receivable upon settlement (the true-up to the offsetting accrual is included in the Provision for income taxes line), $27 million of transaction and integration costs (including $22 million of ILG Acquisition and integration related costs, $3 million of Welk Acquisition related costs, and $2 million of other transaction costs), $5 million of purchase accounting adjustments, and $2 million of litigation charges, partially offset by $3 million to eliminate the impact of consolidating certain property owners’ associations and $1 million of miscellaneous other adjustments.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended Change
−Removed: ($ in millions) September 30, 2022 September 30, 2021 % Change
−Removed: Net income (loss) attributable to common shareholders $ 303 $ (12) $ 315 NM
−Removed: Interest expense 91 128 (37) (29%)
−Removed: Provision for income taxes 134 63 71 113%
−Removed: Depreciation and amortization 98 112 (14) (12%)
−Removed: EBITDA 626 291 335 NM
−Removed: Share-based compensation expense 30 33 (3) (10%)
−Removed: Certain items 71 114 (43) (39%)
−Removed: Adjusted EBITDA $ 727 $ 438 $ 289 66%
−Removed: We recognized an additional $33 million of Net income attributable to common shareholders and an additional $44 million of Adjusted EBITDA during the nine months ended September 30, 2022, as a result of the Alignment.
−Removed: Certain items for the first three quarters of 2022 consisted of $99 million of transaction and integration costs (including $67 million of ILG integration related costs, $13 million of other integration costs, $10 million of Welk Acquisition and integration related costs, and $9 million of other transaction costs), $13 million of purchase accounting adjustments, $7 million of litigation charges, and $1 million of impairment charges, partially offset by $39 million of gains and other income, $6 million of revenue associated with expired or forfeited deposits on pre-acquisition preview packages, $2 million of revenue associated with an early termination of a VRI management contract, and $2 million of miscellaneous other adjustments.
−Removed: The $39 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, $17 million of gains and other income related to the strategic disposition 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 $10 million of foreign currency translation, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $2 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International.
−Removed: See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets, and $1 million of miscellaneous losses and other expense.
−Removed: Certain items for the first three quarters of 2021 consisted of $75 million of transaction and integration costs (including $64 million of ILG Acquisition and integration related costs, $8 million of Welk Acquisition related costs, and $3 million of other transaction costs), $27 million of losses and other expense (including $36 million related to the early redemption of senior unsecured notes and $1 million of miscellaneous losses and other expense, partially offset by $6 million related to a true-up to a Marriott International indemnification receivable upon settlement (the true-up to the offsetting accrual is included in the Provision for income taxes line and $4 million of foreign currency translation gains), $8 million of litigation charges, $7 million of purchase accounting adjustments, and $5 million of impairment charges, partially offset by $5 million to eliminate the impact of consolidating certain property owners’ associations, $2 million of activity related to the accrual for health and welfare costs for furloughed associates, and $1 million of miscellaneous other adjustments.
−Removed: Segment Adjusted EBITDA
−Removed: 2022 Third Quarter
+Added: Adjusted EBITDA Margin 25% 25% — pts
+Added: The table below details the components of Certain items.
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Vacation Ownership $ 299 $ 215 $ 84 39%
−Removed: Exchange & Third-Party Management 39 35 4 7%
+Added: ($ in millions) March 31, 2023 March 31, 2022
+Added: ILG integration $ 9 $ 25
+Added: Welk acquisition and integration 4 3
+Added: Transaction and integration costs 13 28
+Added: Purchase accounting adjustments 2 3
+Added: Litigation charges 3 3
+Added: Impairment 4 —
+Added: Early redemption of senior secured notes 10 —
+Added: Foreign currency translation (2) (1)
+Added: Insurance proceeds (2) (3)
+Added: Change in indemnification asset (23) —
+Added: Gains and other income, net (21) (4)
+Added: Total Certain items $ 2 $ 30
Segment Adjusted EBITDA
−Removed: General and administrative (54) (45) (9) (17%)
−Removed: Adjusted EBITDA $ 284 $ 205 $ 79 38%
−Removed: We recognized an additional $44 million of Adjusted EBITDA in the Vacation Ownership segment during the three months ended September 30, 2022, as a result of the Alignment.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: 2023 First Quarter
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Vacation Ownership $ 229 $ 199 $ 30 15%
3 unchanged sentences
Adjusted EBITDA $ 203 $ 188 $ 15 8%
−Removed: We recognized an additional $44 million of Adjusted EBITDA in the Vacation Ownership segment during the nine months ended September 30, 2022, as a result of the Alignment.
−Removed: The following tables present Adjusted EBITDA for our reportable segments reconciled to segment financial results attributable to common shareholders.
+Added: The following tables present segment financial results attributable to common shareholders reconciled to segment Adjusted EBITDA.
Vacation Ownership
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Segment adjusted EBITDA $ 299 $ 215 $ 84 39%
−Removed: Depreciation and amortization (23) (24) 1 4%
−Removed: Share-based compensation expense (2) (1) (1) (23%)
−Removed: Certain items (4) (5) 1 41%
−Removed: Segment financial results attributable to common shareholders $ 270 $ 185 $ 85 46%
−Removed: We recognized an additional $44 million of Adjusted EBITDA in the Vacation Ownership segment during the three months ended September 30, 2022, as a result of the Alignment.
−Removed: Certain items in the Vacation Ownership segment for the third quarter of 2022 consisted of $6 million of revenue associated with expired or forfeited deposits on pre-acquisition preview packages, $2 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International, and $1 million of foreign currency translation, partially offset by $5 million of purchase accounting adjustments, $3 million of miscellaneous other adjustments, $2 million of litigation charges, $2 million of miscellaneous other transaction costs, and $1 million of impairment charge.
−Removed: Certain items in the Vacation Ownership segment for the third quarter of 2021 consisted primarily of $5 million of purchase accounting adjustments.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Segment adjusted EBITDA $ 772 $ 465 $ 307 66%
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
+Added: Segment financial results $ 205 $ 173 $ 32 19%
Depreciation and amortization 23 22 1 2%
1 unchanged sentence
Certain items — 3 (3) NM
−Removed: Segment financial results attributable to common shareholders $ 720 $ 380 $ 340 90%
−Removed: We recognized an additional $44 million of Adjusted EBITDA in the Vacation Ownership segment during the nine months ended September 30, 2022, as a result of the Alignment.
−Removed: Certain items in the Vacation Ownership segment for the first three quarters of 2022 consisted primarily of $36 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), $6 million of revenue associated with expired or forfeited deposits on pre-acquisition preview packages, and $5 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International, partially offset by $13 million of purchase accounting adjustments, $7 million of litigation charges, and $3 million of miscellaneous other transaction costs, $3 million of miscellaneous other adjustments, and $1 million of impairment charge.
−Removed: Certain items in the Vacation Ownership segment for the first three quarters of 2021 consisted primarily of $7 million of litigation charges, $7 million of purchase accounting adjustments, and $2 million of miscellaneous other transaction costs, partially offset by $1 million of miscellaneous other adjustments.
+Added: Segment adjusted EBITDA $ 229 $ 199 $ 30 15%
+Added: The table below details the components of Certain items.
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
+Added: Purchase accounting adjustments $ 2 $ 3
+Added: Litigation charges 3 3
+Added: Impairment 4 —
+Added: Insurance proceeds (2) (3)
+Added: Change in indemnification asset (3) —
+Added: Gains and other income, net (9) (3)
+Added: Total Certain items $ — $ 3
Exchange & Third-Party Management
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Segment adjusted EBITDA $ 39 $ 35 $ 4 7%
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
+Added: Segment financial results $ 28 $ 33 $ (5) (16%)
Depreciation and amortization 8 9 (1) (2%)
Share-based compensation expense 1 1 — (25%)
−Removed: Certain items (1) (1) — NM
−Removed: Segment financial results attributable to common shareholders $ 29 $ 23 $ 6 23%
−Removed: Certain items for the Exchange & Third-Party Management segment for the third quarter of 2022 consisted of $2 million of foreign currency translation losses, partially offset by $1 million of gains and other income related to the strategic disposition of our VRI Americas business.
−Removed: Certain items for the Exchange & Third-Party Management segment for the third quarter of 2021 consisted of $1 million of COVID-19 related restructuring.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
Segment adjusted EBITDA $ 37 $ 43 $ (6) (13%)
−Removed: Depreciation and amortization (24) (40) 16 40%
−Removed: Share-based compensation expense (2) (1) (1) (18%)
−Removed: Certain items 17 (1) 18 NM
−Removed: Segment financial results attributable to common shareholders $ 108 $ 71 $ 37 50%
−Removed: Certain items for the Exchange & Third-Party Management segment for the first three quarters of 2022 consisted of $17 million of gains and other income related to the strategic disposition of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract, partially offset by $2 million of foreign currency translation losses.
−Removed: Certain items for the Exchange & Third-Party Management segment for the first three quarters of 2021 consisted of $1 million of COVID-19 related restructuring.
Business Segments
3 unchanged sentences
Vacation Ownership
−Removed: Three Months Ended Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Sale of vacation ownership products $ 375 $ 310
11 unchanged sentences
Litigation charges 3 3
−Removed: Restructuring — (1) — —
Royalty fee 29 27
3 unchanged sentences
Gains and other income, net 9 3
−Removed: Transaction and integration costs (2) (1) (3) (2)
−Removed: Other (1) 1 — 2
+Added: SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS 205 173
+Added: Net income attributable to noncontrolling interests — —
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 205 $ 173
−Removed: Contract Sales
−Removed: 2022 Third Quarter
−Removed: Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Total consolidated contract sales $ 483 $ 380 $ 103 27%
−Removed: Joint venture contract sales 9 12 (3) (22%)
−Removed: Total contract sales $ 492 $ 392 $ 100 26%
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Total consolidated contract sales $ 1,383 $ 968 $ 415 43%
−Removed: Joint venture contract sales 28 28 — 3%
−Removed: Total contract sales $ 1,411 $ 996 $ 415 42%
Sale of Vacation Ownership Products
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Total contract sales $ 492 $ 392 $ 100 26%
−Removed: resales contract sales (10) (7) (3)
+Added: ($ in millions) March 31, 2023 % of Consolidated Contract Sales, Net of Resales March 31, 2022 % of Consolidated Contract Sales, Net of Resales Change % Change
+Added: Total consolidated contract sales $ 434 $ 394 $ 40 10%
Joint venture contract sales 10 9 1 7%
−Removed: Consolidated contract sales, net of resales 473 373 100 27%
−Removed: Settlement revenue 10 8 2
−Removed: Resales revenue 5 5 —
−Removed: Revenue recognition adjustments:
−Removed: Reportability 54 2 52
−Removed: Sales reserve (64) (31) (33)
−Removed: (34) (27) (7)
−Removed: Sale of vacation ownership products $ 444 $ 330 $ 114 34%
−Removed: _______________
−Removed: (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.
−Removed: The higher contract sales performance reflects the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic.
−Removed: Higher settlement revenues and sales incentives issued were driven by the higher contract sales volumes.
−Removed: The favorable reportability was primarily due to the Contract alignment that resulted in the prospective acceleration of revenue for Marriott-branded vacation ownership interests in connection with the unification of the Company’s Marriott-, Westin-, and Sheraton-branded vacation ownership products through the Abound by Marriott Vacations program of $46 million.
−Removed: The increase in the sales reserve included $19 million from the Reserve alignment, which was offset by a decrease in the acquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses, and $14 million from the higher contract sales volumes and normal course adjustments to the sales reserve estimate.
−Removed: Excluding the impact of the Alignment, Sale of vacation ownership products increased $87 million and 26%.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
Total contract sales 444 403 41 10%
9 unchanged sentences
Sale of vacation ownership products $ 375 88% $ 310 80% $ 65 21%
−Removed: _______________
(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.
−Removed: The higher contract sales performance reflects $380 million from the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic and $24 million of Welk contract sales in the first quarter of 2022, which we acquired in the second quarter of 2021.
−Removed: Higher settlement and resales revenues and sales incentives issued were driven by the higher contract sales volumes as well as the Welk Acquisition.
−Removed: The favorable reportability was due to $46 million from the Contract alignment that resulted in the prospective acceleration of revenue for Marriott-branded vacation ownership interests in connection with the unification of the Company’s Marriott-, Westin-, and Sheraton-branded vacation ownership products through the Abound by Marriott Vacations program and $12 million from a favorable change in reportability compared to the prior year.
−Removed: The increase in the sales reserve included $38 million from the higher contract sales volumes and normal course adjustments to the sales reserve estimate and $19 million from the Reserve alignment, which was offset by a decrease in the acquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses.
−Removed: Excluding the impact of the Alignment, Sale of vacation ownership products increased $363 million and 46%.
+Added: The higher contract sales performance reflects tour growth of 18% compared to the 2022 first quarter, resulting from strong package and in-house sales channel results as well as the rebound of leisure travel in Asia Pacific, partially offset by a decline in VPG of 7% attributed to the strong first quarter 2022 performance.
+Added: We expect contract sales for the remainder of 2023 to exceed 2022 results.
+Added: Financing propensity was 54% in the first quarter of 2023 and 50% in the first quarter of 2022.
+Added: We expect to continue offering financing incentive programs in 2023.
+Added: The average FICO score of customers who were U.S.
+Added: citizens or residents who financed a vacation ownership purchase was 738 and 736 for the three months ended March 31, 2023 and March 31, 2022, respectively.
+Added: The increase in the sales reserve as a percentage of Consolidated contract sales, net of resales is attributed to the increase in reportability (65 basis points) and financing propensity (65 basis points), and a higher reserve rate (25 basis points).
+Added: Historical default rates as a percentage of each year’s beginning gross vacation ownership notes receivable balance increased to 1.5% in the 2023 first quarter from 1.1% in the 2022 first quarter.
+Added: Excluding the impact of defaults on loans financing the purchase of Legacy-Welk vacation ownership products, historical default rates as a percentage of each year’s beginning gross vacation ownership notes receivable increased 20bps.
Development Profit
−Removed: 2022 Third Quarter
−Removed: Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: 2023 First Quarter
+Added: Three Months Ended Change % Change
+Added: ($ in millions) March 31, 2023 % of Revenue March 31, 2022 % of Revenue
Sale of vacation ownership products $ 375 $ 310 $ 65 21%
3 unchanged sentences
Development profit margin 28.5% 21.8% 6.7 pts
−Removed: The increase in Development profit reflects $41 million of favorable revenue reportability (including $39 million of profit acceleration from the Contract alignment), $20 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), $15 million from a favorable mix of lower cost inventory being sold, and $6 million of lower marketing and sales associated with expired or forfeited deposits on pre-acquisition preview packages, partially offset by a $14 million negative impact to development profit from the Reserve alignment.
−Removed: Excluding the impact of the Alignment, Development profit increased $43 million and Development profit margin increased to 32.6%.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Sale of vacation ownership products $ 1,179 $ 789 $ 390 49%
−Removed: Cost of vacation ownership products (216) (178) (38) (22%)
−Removed: Marketing and sales (603) (439) (164) (37%)
−Removed: Development profit $ 360 $ 172 $ 188 NM
−Removed: Development profit margin 30.5% 21.8% 8.7 pts
−Removed: The increase in Development profit reflects $113 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, $45 million of favorable revenue reportability (including $39 million of profit acceleration from the Revenue alignment), $29 million from a favorable mix of lower cost inventory being sold, $9 million of favorable product cost true-up activity, and $6 million of lower marketing and sales associated with expired or forfeited deposits on pre-acquisition preview packages, partially offset by a $14 million negative impact to Development profit from the Reserve alignment.
−Removed: Excluding the impact of the Alignment, Development profit increased $163 million and Development profit margin increased to 29.1%.
+Added: The increase in Development profit reflects $24 million from favorable revenue reportability, $5 million benefit of higher contract sales volumes and $11 million of favorable product cost, due mainly to the sale of lower cost inventory and, to a lesser extent, a $4 million favorable product cost true-up, partially offset by $5 million related to higher sales reserves.
+Added: We expect development profit margins for the remainder of 2023 to be above the 2023 first quarter results.
Resort Management and Other Services Revenues, Expenses and Profit
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Management fee revenues $ 41 $ 40 $ 1 2%
−Removed: Ancillary revenues 63 55 8 16%
−Removed: Other management and exchange revenues 32 31 1 —%
−Removed: Resort management and other services revenues 136 126 10 8%
−Removed: Resort management and other services expenses (64) (55) (9) (14%)
−Removed: Resort management and other services profit $ 72 $ 71 $ 1 2%
−Removed: Resort management and other services profit margin 53.2% 55.9% (2.7 pts) (5%)
−Removed: 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 pricing, 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.
−Removed: Resort occupancies continued to increase subsequent to the initial impact of the pandemic as travel and tourism continues to recover.
−Removed: We expect travel, tourism, and resort occupancies to remain strong for the remainder of 2022.
−Removed: The increase in resort management and other services profit reflects $2 million of higher ancillary profit and higher management fee revenues, partially offset by higher customer services expenses due to wage increases and improvements in service levels.
−Removed: Ancillary profit margin remained in line with the prior year as we raised pricing and optimized our food and beverage offerings to offset wage pressures.
−Removed: We expect future ancillary profit margins to remain in line with recent results.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Management fee revenues $ 45 $ 42 $ 3 7%
5 unchanged sentences
Resort management and other services profit margin 52.7% 57.5% (4.8 pts) (8%)
−Removed: 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 and higher pricing, $6 million of revenues relating to the Welk Acquisition, which we acquired in the second quarter of 2021, and higher management fees.
−Removed: The increase in resort management and other services profit reflects $11 million of higher ancillary profit and higher management fee revenues, partially offset by higher customer services expenses due to wage increases and improvements in service levels.
−Removed: Ancillary profit margin remained in line with the prior year as we raised pricing and optimized our food and beverage offerings to offset wage pressures.
−Removed: We expect future ancillary profit margins to remain in line with recent results.
+Added: Resort occupancy (1)
+Added: 88.9% 87.6% 1.3 pts
+Added: (1) Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.
+Added: Resort management and other services revenues reflect higher ancillary revenues, including revenues from food and beverage and golf offerings, as a result of a 13% increase in revenue per occupied key, and a 1% increase in occupied keys at resorts with ancillary businesses, as well as higher management fees, partially offset by $1 million of lower refurbishment project revenues.
+Added: The $1 million decrease in resort management and other services profit reflects a $1 million decrease in ancillary profit, timing of club dues, higher customer services and exchange company expenses due to wage increases and improvements in service levels, partially offset by higher management fee revenues.
Rental Revenues, Expenses and Profit
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Rental revenues $ 141 $ 122 $ 19 16%
3 unchanged sentences
Three Months Ended
−Removed: September 30, 2022 September 30, 2021 Change % Change
+Added: March 31, 2023 March 31, 2022 Change % Change
Transient keys rented (1)
1 unchanged sentence
Average transient rate $ 286.82 $ 275.49 $ 11.33 4%
−Removed: Resort occupancy 88.9% 85.0% 3.9 pts
−Removed: _________________________
−Removed: (1) Transient keys rented exclude those occupied through the use of plus points and preview stays.
−Removed: Rental revenues increased $7 million due to additional transient keys rented at a higher average transient rate.
−Removed: The remaining $26 million increase is attributed to the lower net down of rental revenues by rental expenses for unsold VOIs that are registered and held for sale (which is recorded net within rental revenues when proceeds are less than costs).
−Removed: Rental expenses increased by $33 million attributed to a $26 million decrease in costs recorded net within rental revenues for unsold VOIs that are registered and held for sale, $5 million of additional costs attributed to higher owner utilization in 2022 of third-party vacation and other offerings, $3 million of higher carry costs of excess inventory on hand resulting from our fulfillment of purchase commitments in 2021, $3 million of higher subsidy expenses, and $1 million of higher administrative expenses, partially offset by $4 million of higher allocations of rental costs to marketing and sales expense for marketing purposes and a $1 million decrease in operating hotel expenses.
−Removed: As the majority of the governmental restrictions in response to the COVID-19 pandemic that caused rental activity to decline (such as travel restrictions and quarantine requirements) have been lifted, we expect high resort occupancies throughout the remainder of 2022.
−Removed: However, we do not expect this part of our business to fully recover to pre-pandemic levels in 2022 as a result of reduced rental inventory availability due to higher owner and preview usage as well as higher inventory carrying costs, as described above.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Rental revenues $ 405 $ 308 $ 97 31%
−Removed: Rental expenses (311) (288) (23) (8%)
−Removed: Rental profit (loss) $ 94 $ 20 $ 74 NM
−Removed: Rental profit margin 23.2% 6.6% 16.6 pts
−Removed: Nine Months Ended
−Removed: September 30, 2022 September 30, 2021 Change % Change
−Removed: Transient keys rented (1)
−Removed: 1,626,294 1,433,738 192,556 13%
−Removed: Average transient key rate $ 268.29 $ 240.48 $ 27.81 12%
−Removed: Resort occupancy 89.0% 79.1% 9.9 pts
−Removed: _________________________
+Added: Rental occupancy 70.4% 67.0% 3.4 pts
(1) Transient keys rented exclude those occupied through the use of plus points and preview stays.
−Removed: Rental revenues increased by $122 million due to the increase in transient keys rented and a higher average transient rate, partially offset by a $25 million lesser net down of rental revenues associated with unsold VOIs that are registered and held for sale.
−Removed: Rental expenses increased by $23 million attributed to $15 million of additional costs attributed to higher owner utilization in 2022 of third-party vacation and other offerings, $14 million in operating hotel expenses attributable to higher revenues, $13 million of additional tidy and variable costs associated with increased transient keys rented, $11 million of higher carry costs of excess inventory on hand resulting from our fulfillment of purchase commitments in 2021, $8 million of higher subsidy expenses, and $1 million of higher administrative expenses, partially offset by a $25 million increase in costs recorded as a reduction to rental revenues and $14 million of higher allocations of rental costs to marketing and sales expense for marketing purposes.
+Added: (2) Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.
+Added: Rental profit for transient keys, including plus points and excluding keys from owned hotels, declined by $5 million due to a $13 million increase in unsold maintenance fees associated with developer owned inventory and $6 million of increased costs associated with higher owner utilization of third-party vacation and other offerings.
+Added: These decreases were partially offset by $6 million of higher profit from the increase in keys rented and 4% higher average transient rate, net of tidy and variable costs, $3 million of higher plus points revenue, a $3 million reduction of rental costs recorded as marketing and sales expense for marketing purposes costs and $2 million of lower hotel loyalty and other costs.
+Added: Rental profit for our owned hotels decreased by $2 million (43%) due to the disposition of our Puerto Vallarta hotel in 2022.
Financing Revenues, Expenses and Profit
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Financing revenues 74 69 5 6%
−Removed: Financing expenses 9 (10) 19 NM
−Removed: Consumer financing interest expense (14) (12) (2) (20%)
−Removed: Financing profit $ 69 $ 47 $ 22 47%
−Removed: Financing propensity 58.7% 59.6%
−Removed: Financing revenues reflect $4 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.
−Removed: 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.
−Removed: 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.
−Removed: Financing expenses decreased $19 million due to the Reserve alignment which reduced the reserve related to our acquired vacation ownership notes receivable (recorded as a reduction of Financing expenses), offset by an increase to our reserve for originated vacation ownership notes receivable (which is recorded as a reduction of Sales of vacation ownership products).
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Financing revenues $ 78 $ 71 $ 7 10%
2 unchanged sentences
Financing profit $ 52 $ 50 $ 2 2%
+Added: Financing profit margin 65.7% 70.3% (4.6 pts)
Financing propensity 54.2% 50.3%
−Removed: Financing revenues reflect $18 million of higher interest income (including $10 million due to the Welk Acquisition and $8 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.
−Removed: Financing expenses decreased $19 million due to the Reserve alignment which reduced the reserve related to our acquired vacation ownership notes receivable (recorded as a reduction of Financing expenses), offset by an increase to our reserve for originated vacation ownership notes receivable (which is recorded as a reduction of Sales of vacation ownership products), partially offset by lower lien fee income and higher other expenses.
−Removed: 2022 Third Quarter
+Added: Financing revenues reflect $8 million of higher interest income as a result of a higher average notes receivable balance partially offset by $1 million of lower plus point financing incentive costs.
+Added: 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.
+Added: We expect the average notes receivable balance, and resulting interest income, to continue to increase during the remainder of 2023 as a result of the expected growth in contract sales and loan originations.
+Added: Financing expenses increased $1 million due to timing of certain expenses.
+Added: The increase in consumer financing interest expense is attributable to the higher average securitized debt at a higher average interest rate for the more recent term securitization transactions.
+Added: We expect consumer financing interest expense to continue to remain elevated over our average outstanding interest rates on existing securitization transactions as a result of rising interest rates.
+Added: We do not adjust interest rates on consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates;
+Added: thus we expect our financing profit margin to continue to decrease in 2023, as we repay existing securitization transactions with historically low interest rates and enter into new securitization transactions with higher interest rates.
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Royalty fee $ 28 $ 26 $ 2 8%
−Removed: The increase in royalty fee expense in the third quarter of 2022 included $1 million from an increase in the dollar volume of closings and $1 million from a contractual increase in the fixed portion of the royalty fee owed to Marriott International.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Royalty fee $ 29 $ 27 $ 2 7%
−Removed: The increase in royalty fee expense in the first three quarters of 2022 included $5 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 $1 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
−Removed: Litigation Charges
−Removed: 2022 Third Quarter
−Removed: Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Litigation charges $ 2 $ 1 $ 1 32%
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Litigation charges $ 7 $ 7 $ — (14%)
−Removed: During the third quarter and first three quarters of 2022, as well as the third quarter and first three quarters of 2021, the litigation charges relate primarily to business in Europe.
+Added: The increase in royalty fee expense in the first quarter of 2023 included $1 million from an increase in the dollar volume of closings and $1 million relating to variable royalty fees paid to Hyatt, which commenced in the fourth quarter of 2022.
Gains and Other Income
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Gains and other income, net $ 1 $ — $ 1 NM
−Removed: During the third quarter of 2022, we recorded a $1 million gain from foreign currency translation.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Gains and other income, net $ 9 $ 3 $ 6 NM
−Removed: During the first three quarters of 2022, we recorded gains and other income of $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.
+Added: During the first quarter of 2023, we recorded a $4 million gain associated with the earn out of additional proceeds from the 2019 disposition of a land parcel in Cancun, Mexico, $3 million of non-income tax adjustments, and $2 million related to receipt of business interruption insurance proceeds.
Exchange & Third-Party Management
−Removed: Three Months Ended Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Management and exchange $ 56 $ 64
−Removed: Rental 11 9 33 32
Cost reimbursements 5 9
2 unchanged sentences
Depreciation and amortization 8 9
−Removed: Restructuring — 1 — 1
Cost reimbursements 5 9
TOTAL EXPENSES 43 51
−Removed: (Losses) gains and other (expense) income, net (1) — 15 —
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 28 $ 33
Management and Exchange Profit
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Management and exchange revenue $ 55 $ 59 $ (4) (7%)
−Removed: Management and exchange expense (28) (33) 5 13%
−Removed: Management and exchange profit $ 27 $ 26 $ 1 1%
−Removed: Management and exchange profit margin 48.1% 44.7% 3.4 pts
−Removed: The decrease in management and exchange revenue reflects $8 million of lower revenue due to the disposition of our VRI Americas business during the second quarter of 2022, partially offset by $3 million of higher Interval International transaction fee revenue due to increased average exchange fees offset by lower exchanges as fewer members exchanged their home inventory for usage at another resort through Interval International and $1 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.
−Removed: For Interval International, average revenue per member decreased 9% over the prior year comparable period.
−Removed: This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time, partially offset by the increase in exchange revenue.
−Removed: Management and exchange profit and profit margin excluding the impact of the disposition of VRI Americas would have increased by $4 million and 15%, respectively, in the third quarter of 2022.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Management and exchange revenue $ 56 $ 64 $ (8) (12%)
2 unchanged sentences
Management and exchange profit margin 47.1% 48.6% (1.5 pts)
−Removed: The decrease in management and exchange revenue reflects $11 million of lower revenue due to the disposition of our VRI Americas business during the second quarter of 2022, partially offset by higher management fees at Aqua-Aston managed properties due to the continued ramp-up of business in Hawaii subsequent to the initial impact of the COVID-19 pandemic.
−Removed: For Interval International, revenue was in line with the prior year period while average revenue per member decreased 10% over the prior year comparable period.
−Removed: This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time.
−Removed: Management and exchange profit primarily reflected the higher management fees at Aqua-Aston, partially offset by $4 million of lower profit due to the disposition of our VRI Americas business during the second quarter of 2022.
−Removed: Management and exchange profit and profit margin excluding the impact of the disposition of VRI Americas would have increased by $8 million and 11%, respectively, in the nine months ended September 30, 2022.
+Added: The decrease in management and exchange revenue reflects $8 million of lower revenue due to the disposition of our VRI Americas business during the second quarter of 2022.
+Added: Management and exchange profit and profit margin, excluding the impact of the disposition of VRI Americas, would have decreased by $3 million or 9% in the first quarter of 2023, due to higher wage and benefits costs.
Rental Revenues
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Rental revenues $ 11 $ 9 $ 2 25%
−Removed: Results reflect a $2 million increase in gross Getaway revenues, which resulted from a 12% increase in transactions and an 8% increase in the average Getaway fee.
−Removed: Rental inventory procurement costs, which are recorded net within Rental revenues, were in line with the prior year.
−Removed: The increase in Getaway transactions reflects an increase in inventory available for Getaways.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Rental revenues $ 10 $ 11 $ (1) (10%)
−Removed: Results reflect a $1 million increase in gross Getaway revenues, driven by a 10% increase in the average Getaway fee, partially offset by an 8% decline in transactions.
+Added: Results reflect a $1 million decrease in gross Getaway revenues, which resulted from a 10% decrease in transactions driven by lower inventory availability, partially offset by a 2% increase in the average Getaway fee.
Rental inventory procurement costs, which are recorded net within Rental revenues, were in line with the prior year.
−Removed: The decline in Getaway transactions reflects fewer owner deposits in the first three quarters of 2022 as more members chose to occupy their home resorts rather than exchange for usage through Interval International, which put pressure on the inventory available for Getaways.
−Removed: Depreciation and Amortization
−Removed: 2022 Third Quarter
−Removed: Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Depreciation and amortization $ 8 $ 11 $ (3) (32%)
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Depreciation and amortization $ 24 $ 40 $ (16) (40%)
−Removed: The decrease in depreciation and amortization expense in the first three quarters of 2022 relates to a true-up made in the prior year to accelerate depreciation on a technology asset.
−Removed: Gains (Losses) and Other Income (Expense)
−Removed: 2022 Third Quarter
−Removed: Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Losses and other expense, net $ (1) $ — $ (1) NM
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Gains and other income, net $ 15 $ — $ 15 NM
−Removed: During the first three quarters of 2022, we recorded a $17 million gain related to the sale of our VRI Americas business, partially offset by $2 million of foreign currency translation.
−Removed: See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.
Corporate and Other
Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes.
−Removed: In addition, Corporate and Other includes the revenues and expenses from the Consolidated Property Owners’ Associations.
−Removed: Three Months Ended Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
+Added: In addition, Corporate and Other includes the revenues and expenses from Consolidated Property Owners’ Associations.
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Resort management and other services $ 9 $ 32
5 unchanged sentences
Depreciation and amortization 1 2
−Removed: Litigation charges — 1 — 1
−Removed: Restructuring — — — (1)
−Removed: Impairment — — — 5
Cost reimbursements (8) (20)
TOTAL EXPENSES 71 74
−Removed: Losses and other expense, net (2) (31) (12) (27)
−Removed: Interest expense (34) (41) (91) (128)
+Added: Gains and other income, net 12 1
+Added: Interest expense, net (34) (27)
Transaction and integration costs (13) (28)
4 unchanged sentences
Consolidated Property Owners’ Associations
−Removed: The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance and the changes attributed to the deconsolidation of individual Consolidated Property Owners’ Associations subsequent to the third quarter of 2021.
−Removed: Three Months Ended Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
+Added: The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance and the changes attributed to the deconsolidation of individual Consolidated Property Owners’ Associations.
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Resort management and other services $ 9 $ 32
11 unchanged sentences
General and Administrative
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: General and administrative $ 62 $ 54 $ 8 13%
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
General and administrative $ 68 $ 61 $ 7 12%
−Removed: For the third quarter of 2022 and the first three quarters of 2022, General and administrative expenses increased $8 million and $21 million, respectively, attributed to higher compensation and transformation initiative spending, including procurement and artificial intelligence capabilities.
−Removed: Gains / Losses and Other Income / Expense
−Removed: 2022 Third Quarter
−Removed: Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Losses and other expense, net $ (2) $ (31) $ 29 92%
−Removed: In the third quarter of 2022, we recorded $2 million of foreign currency translation losses, and $1 million of miscellaneous losses and other expense, offset by $1 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International.
−Removed: In the third quarter of 2021, we recorded losses and other expenses of $31 million, including $36 million of expense related to the early redemption of senior unsecured notes, $2 million of foreign currency translation losses, and $1 million of miscellaneous losses and other expense, partially offset by $8 million related to a true-up of a Marriott International indemnification receivable upon settlement (the true-up to the offsetting accrual is included in the Provision for income taxes line).
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Losses and other expense, net $ (12) $ (27) $ 15 55%
−Removed: In the first three quarters of 2022, we recorded $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, $2 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International, and $1 million of miscellaneous losses and other expense, partially offset by $2 million of proceeds from corporate owned life insurance.
−Removed: In the first three quarters of 2021, we recorded losses and other expenses of $27 million, including $36 million of expense related to the early redemption of senior unsecured notes, and $1 million of miscellaneous losses and other expense, partially offset by $6 million related to a true-up of a Marriott International indemnification receivable upon settlement (the true-up to the offsetting accrual is included in the Provision for income taxes line), and $4 million of foreign currency translation gains.
−Removed: Interest Expense
−Removed: 2022 Third Quarter
+Added: General and administrative expenses increased $5 million for costs related to the implementation of technology associated with the integration of Legacy-ILG, $5 million of incremental costs primarily related to compliance activities and new product development initiatives, and a $1 million increase in insurance expense, partially offset by a $4 million decrease in compensation related costs due to lower bonus expense partially offset by an increase in wages.
+Added: We expect General and administrative expenses for the remainder of 2023 to increase due the continued impact of increased wages and additional investment in upgrading and implementing technology.
+Added: Gains and Other Income
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Interest expense $ (34) $ (41) $ 7 17%
−Removed: Interest expense decreased $7 million, including $4 million of lower interest expense associated with the early redemption of a portion of senior secured notes in the third quarter of 2021, $3 million of lower interest expense associated with the early redemption of senior unsecured notes in the third quarter of 2021, $2 million of lower interest expense 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 $1 million of lower non-income tax related interest expense.
−Removed: These decreases were partially offset by $3 million of higher interest expense due to amounts drawn on the Warehouse Credit Facility and Revolving Corporate Credit Facility, and a higher variable interest rate on the Revolving Corporate Credit Facility.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
+Added: Gains and other income, net $ 12 $ 1 $ 11 NM
+Added: In the first quarter of 2023, we recorded a $20 million increase in our receivable from Marriott International for indemnified tax matters (the true-up to the offsetting accrual is included in the Provision for income taxes line) and $2 million of foreign currency translation gains, partially offset by $10 million attributed to the redemption premium and write-off of unamortized debt issuance costs attributed to the early redemption of our senior secured notes.
+Added: In the first quarter of 2022, we recorded $1 million of foreign currency translation gains.
Interest Expense
−Removed: Interest expense decreased $37 million, including $28 million of lower interest expense associated with the early redemption of senior unsecured notes in the third quarter of 2021, $15 million of lower interest expense 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 $12 million of lower interest expense associated with the early redemption of a portion of senior secured notes in the third quarter of 2021.
−Removed: These decreases were partially offset by $11 million of higher interest expense associated with senior unsecured notes issued in the second quarter of 2021, $3 million of higher interest expense related to finance leases, $2 million of higher non-income tax related interest expense, and $2 million of higher interest expense due to amounts drawn on the Warehouse Credit Facility and Revolving Corporate Credit Facility, and a higher variable interest rate on the Revolving Corporate Credit Facility.
−Removed: Transaction and Integration Costs
−Removed: 2022 Third Quarter
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Transaction and integration costs $ (32) $ (26) $ (6) (25%)
−Removed: In the third quarter of 2022, Transaction and integration costs included $19 million of ILG integration related costs, $3 million of other integration costs, $5 million of Welk Acquisition and integration related costs, and $5 million of other transaction and integration related costs.
−Removed: In the third quarter of 2021, Transaction and integration costs included $22 million of ILG integration related costs, $3 million of Welk Acquisition and integration related costs and $1 million of other transaction and integration related costs.
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Transaction and integration costs $ (96) $ (73) $ (23) (32%)
−Removed: In the first three quarters of 2022, Transaction and integration costs included $67 million of ILG integration related costs, $13 million of other integration costs, $10 million of Welk Acquisition and integration related costs, and $6 million of other transaction and integration related costs.
−Removed: In the first three quarters of 2021, Transaction and integration costs included $64 million of ILG integration related costs, $8 million of Welk Acquisition and integration related costs, and $1 million of other transaction and integration related costs.
−Removed: 2022 Third Quarter
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
+Added: Interest expense, net $ (34) $ (27) $ (7) (27%)
+Added: The increase in Interest expense, net is attributed to $5 million associated with higher borrowings on the Warehouse Credit Facility and Revolving Corporate Credit Facility, including the impact of the increase in the variable interest rate on the Revolving Corporate Credit Facility, $3 million of higher variable interest expense on the Term Loan, $4 million of higher interest expense associated with our convertible notes, and $1 million of interest expense related to leased assets.
+Added: This was partially offset by $4 million of lower interest expense associated with the early redemption of our senior secured notes, $1 million of lower interest on non-income tax related items and $1 million of interest income.
+Added: 2023 First Quarter
Three Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
+Added: ($ in millions) March 31, 2023 March 31, 2022 Change % Change
Provision for income taxes $ (41) $ (32) $ (9) (30%)
−Removed: 2022 First Three Quarters
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021 Change % Change
−Removed: Provision for income taxes $ (134) $ (63) $ (71) NM
−Removed: The change in the Provision for income taxes is predominately attributable to an increase in pre-tax income for the three and nine months ended September 30, 2022.
+Added: Our interim effective tax rate was 32.3% and 35.6% for the three months ended March 31, 2023 and March 31, 2022, respectively.
+Added: The decrease in the effective tax rate is predominately attributable to an increase in Income Before Income Taxes and Noncontrolling Interests and a net increase in discrete items, including a net increase in the reserve for uncertain tax benefits of $16 million, partially offset by an increase in our share-based compensation benefit of $5 million and a $4 million increase in favorable foreign income tax adjustments.
+Added: See Footnote 5 “Income Taxes” to our Financial Statements for further information on our uncertain tax benefits and corresponding indemnification.
Liquidity and Capital Resources
−Removed: Typically, our capital needs are supported by cash on hand, 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.
+Added: Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to raise capital through securitizations in the ABS market, our ability to issue new debt 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.
We continuously monitor the capital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs.
−Removed: At September 30, 2022, we had $4.6 billion of total gross debt outstanding, which included $2.8 billion of corporate debt (consisting of $1.1 billion of senior notes, $1.0 billion of debt under our Corporate Credit Facility, and $575 million of convertible notes), $1.8 billion of non-recourse debt associated with vacation ownership notes receivable securitizations, $83 million related to finance lease obligations, and $10 million related to a non-interest bearing note payable.
−Removed: the impact of the Alignment, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio at September 30, 2022 was 2.8x, which is within our targeted 2.5x to 3.0x leverage range.
+Added: Our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 3.1 at March 31, 2023, roughly in-line with our targeted leverage range of 2.5x to 3.0x, and we expect to be within the range by the end of 2023.
We have no material maturities of corporate debt until 2025.
−Removed: At the end of the third quarter of 2022, our corporate debt, including the impact of interest rate hedges, had a weighted average interest rate of 3.9% and 83% accrued interest at a fixed rate.
+Added: At the end of the first quarter of 2023, the interest rate applicable to approximately 85% of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was effectively fixed.
+Added: The weighted average interest rate of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was 3.7% as of March 31, 2023.
Sources of Liquidity
2 unchanged sentences
Vacation Ownership Notes Receivable Securitizations
−Removed: We periodically securitize, without recourse, through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the asset-backed securities (“ABS”) term securitization market.
+Added: We periodically securitize, without recourse, through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the ABS term securitization market.
These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes.
−Removed: In a vacation ownership notes receivable term securitization, several classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable.
−Removed: With each vacation ownership notes receivable securitization, we may retain a portion of the securities, subordinated tranches, interest-only strips, subordinated interests in accrued interest and fees on the securitized vacation ownership notes receivable or, in some cases, over-collateralization and cash reserve accounts.
+Added: In a vacation ownership notes receivable term securitization, several classes of debt securities issued
+Added: by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable.
+Added: In connection with each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued.
Typically, we receive cash at inception of the term securitization transaction for the amount of notes issued less fees and monies held in reserve and we receive cash during the life of the transaction in amounts reflecting the excess spread of interest received on the related vacation ownership notes receivable less the interest payable on the ABS securities, less administrative fees and amounts from related vacation ownership notes receivable that default.
−Removed: As of November 3, 2022, we have completed two term securitization transactions in 2022 resulting in net proceeds of $621 million.
Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable.
If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread of interest accruing on the related vacation ownership notes receivable less the interest accruing on the ABS securities and fees we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured.
−Removed: During the third quarter of 2022, and as of September 30, 2022, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters.
+Added: During the first quarter of 2023, and as of March 31, 2023, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters.
Since 2000, we have issued approximately $8.1 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.
+Added: See Footnote 11 “Securitized Debt” to our Financial Statements for further information related to our recent securitization transaction, completed subsequent to the end of the first quarter of 2023.
On an ongoing basis, we have the ability to use our Warehouse Credit Facility to securitize, on a revolving non-recourse basis, eligible consumer loans derived from certain vacation ownership sales.
Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur at least once per year.
−Removed: Our Warehouse Credit Facility, as amended during the third quarter of 2022, provides for up to $425 million of aggregate borrowings through July 28, 2024.
−Removed: As of September 30, 2022, $142 million of gross vacation ownership notes receivable were eligible for securitization.
+Added: Our Warehouse Credit Facility provides for up to $425 million of aggregate borrowings through July 28, 2024, and at March 31, 2023, we had $296 million of borrowings outstanding.
+Added: As of March 31, 2023, $120 million of gross vacation ownership notes receivable were eligible for securitization.
Revolving Corporate Credit Facility
−Removed: Our Revolving Corporate Credit Facility provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit and acquisitions and expires on March 31, 2027.
−Removed: At September 30, 2022, $230 million of debt principal was outstanding on our Revolving Corporate Credit Facility, the proceeds of which were used to repay the 2022 Convertible Notes which matured on September 15, 2022, and $1 million of le tters of credit were outstanding.
−Removed: See Footnote 13 “Debt” to our Financial Statements for more information on interest rates pertaining to this facility.
−Removed: Issuance of Senior Notes and Convertible Debt
−Removed: Our ability to access the public debt markets through the issuance of senior notes and convertible debt remained strong during the COVID-19 pandemic.
−Removed: We accessed the public debt markets every year between 2017 and 2021, including a $500 million senior note issuance during the height of the COVID-19 pandemic in May 2020.
+Added: Our Revolving Corporate Credit Facility, which expires on March 31, 2027, provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions.
+Added: At March 31, 2023, $200 million of borrowings were outstanding on our Revolving Corporate Credit Facility, and $1 million of le tters of credit were outstanding.
+Added: Redemption of Senior Secured Notes
+Added: During the first quarter of 2023, we redeemed, prior to maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in the fourth quarter of 2022 and the terms of the indenture governing the 2025 Notes.
+Added: In connection with this redemption, we incurred charges of $10 million, including a redemption premium and the write-off of unamortized debt issuance costs, which were recorded in Gains and other income, net on our Income Statement for the three months ended March 31, 2023.
We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts.
1 unchanged sentence
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 acquisitions and development.
−Removed: Cash and cash equivalents on hand at September 30, 2022 totaled $294 million, a decrease of $48 million from December 31, 2021, primarily reflecting the repurchase of common stock of $528 million, payment of dividends of $75 million and repayments of securitized debt in excess of new borrowings of $46 million, capital expenditures for property and equipment (excluding inventory) of $36 million, $13 million related to debt issuance costs and payments on finance leases, and $23 million for payment of withholding taxes on vesting of restricted stock units offset by $380 million associated with net cash and cash equivalents provided by operating activities, and investing cash inflow related to the disposition of subsidiaries of $94 million.
+Added: Cash and cash equivalents on hand at March 31, 2023 totaled $306 million, a decrease of $218 million from December 31, 2022, primarily reflecting the redemption of senior notes of $250 million, the repurchase of common stock of $80 million, payment of dividends of $54 million, capital expenditures for property and equipment (excluding inventory) of $37 million, $9 million for payment of withholding taxes on vesting of restricted stock units, and repayments of securitized debt in excess of new borrowings of $3 million, partially offset by other debt borrowings in excess of repayments of $194 million, $12 million associated with net cash and cash equivalents provided by operating activities, $8 million of finance lease incentives in excess of payments, and $1 million due to the effect of changes in exchange rates.
+Added: Our cash flow from operations fluctuates during the year due to the timing of certain receipts and contractual and compensation-related payments.
+Added: Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occur in either the fourth quarter or the first quarter of each year.
+Added: Generally, cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points products, and in the first quarter for our weeks-based products.
+Added: In addition, significant compensation-related cash outflows occur in the first quarter of each year associated with payment of annual bonuses and the payment of two quarterly dividends (December and February dividend declarations).
In addition to net income or loss and adjustments for non-cash items, the following are key drivers of our cash flow from operating activities:
−Removed: Inventory Spending Less Than (In Excess of) Cost of Sales
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021
+Added: Inventory Spending Less Than Cost of Sales
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Inventory spending $ (30) $ (22)
Purchase of vacation ownership units for future transfer to inventory — (12)
−Removed: Cost of sales 183 159
−Removed: Inventory spending less than (in excess of) cost of sales $ 63 $ (41)
−Removed: While we have significant excess inventory on hand, we will continue to selectively pursue growth opportunities 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.
−Removed: 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.
+Added: Inventory costs 46 50
+Added: Inventory spending less than cost of sales $ 16 $ 16
+Added: Although we have significant excess inventory on hand, we intend to continue selectively pursuing growth opportunities by targeting high-quality inventory that allows us to add desirable new destinations to our systems with new on-site sales locations.
+Added: Where possible, we will structure transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale.
+Added: These capital efficient vacation ownership transaction structures may consist of the development of new inventory, or the conversion of previously built units, by third parties.
In addition, we may develop inventory in key markets where opportunities generate acceptable risk adjusted returns.
−Removed: Through our existing vacation ownership interest repurchase program, we proactively acquire previously sold vacation ownership interests from owners’ associations and individual owners at lower costs than would be required to develop new inventory.
−Removed: Among other reasons, by repurchasing inventory, we expect to be able to help stabilize the future cost of vacation ownership products.
−Removed: Our spending for real estate inventory in the first three quarters of 2022 was lower than cost of sales and was primarily related to our vacation ownership interest repurchase program.
−Removed: We acquired a higher amount of previously sold vacation ownership interests in the first three quarters of 2022 due to the reinstatement of our vacation ownership interest repurchase programs that were suspended as part of the cash preservation measures implemented in response to the COVID-19 pandemic.
−Removed: We expect inventory spending to be less than cost of sales for the last quarter of 2022.
−Removed: During the third quarter of 2022, we also amended the terms of a capital efficient inventory arrangement, under which a third party will develop the Waikiki property that we are committed to purchase and agree to resell it to us over time commencing in 2024.
−Removed: See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.
+Added: Through our existing VOI repurchase program, we proactively acquire previously sold VOIs from owners’ associations and individual owners at lower costs than would be required to develop new inventory.
+Added: Among other reasons, by repurchasing inventory, we expect to be able to help stabilize the future cost of our vacation ownership products.
+Added: Our spending for real estate inventory in the first quarter of 2023 was lower than cost of sales and was primarily related to our VOI repurchase programs.
+Added: We expect inventory spending to be less than cost of sales for 2023.
Vacation Ownership Notes Receivable Collections Less Than Originations
−Removed: Nine Months Ended
−Removed: ($ in millions) September 30, 2022 September 30, 2021
+Added: Three Months Ended
+Added: ($ in millions) March 31, 2023 March 31, 2022
Vacation ownership notes receivable collections — non-securitized $ 48 $ 67
2 unchanged sentences
Vacation ownership notes receivable collections less than originations $ (64) $ (17)
−Removed: The increase in sales of vacation ownership products subsequent to the COVID-19 pandemic combined with an increase in financing propensity (54% in the first three quarters of 2022 compared to 53% in the three quarters of 2021) outpaced collections of vacation ownership notes receivable.
+Added: Vacation ownership notes receivable collections were less than originations due to the growth of sales of VOIs in the 2023 first quarter and 2022.
Repurchase of Common Stock
The following table summarizes share repurchase activity under our current share repurchase program:
−Removed: ($ in millions, except per share amounts) Number of Shares Repurchased Cost of Shares Repurchased Average Price
+Added: ($ in millions, except per share amounts) Number of Shares Repurchased Cost Basis of Shares Repurchased Average Price
Paid per Share
As of December 31, 2022 22,773,218 $ 2,119 $ 93.06
−Removed: For the first three quarters of 2022 3,852,726 528 137.16
−Removed: As of September 30, 2022 21,534,121 $ 1,946 $ 90.37
−Removed: See Footnote 14 “Shareholders' Equity” to our Financial Statements for further information related to our current share repurchase program, including the additional share repurchase authorization and extension approved by our Board of Directors during the first three quarters of 2022.
−Removed: We distributed cash dividends to holders of our common stock during the first three quarters of 2022 as follows:
+Added: For the first quarter of 2023 522,422 80 153.71
+Added: As of March 31, 2023 23,295,640 $ 2,199 $ 94.42
+Added: See Footnote 13 “Shareholders' Equity” to our Financial Statements for further information related to our current share repurchase program.
+Added: Payment of Dividends to Common Shareholders
+Added: We distributed cash dividends to holders of common stock during the first quarter of 2023 as follows:
Declaration Date Shareholder Record Date Distribution Date Dividend per Share
1 unchanged sentence
February 16, 2023 March 2, 2023 March 16, 2023 $0.72
−Removed: May 12, 2022 May 26, 2022 June 9, 2022 $0.62
−Removed: We declared cash dividends to holders of our common stock during the third quarter of 2022, and distributed such cash dividends subsequent to the end of the third quarter of 2022 as follows:
−Removed: Declaration Date Shareholder Record Date Distribution Date Dividend per Share
−Removed: September 8, 2022 September 22, 2022 October 6, 2022 $0.62
−Removed: 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.
+Added: We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to Board of Directors 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.
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.
2 unchanged sentences
Material Cash Requirements
−Removed: The following table summarizes our future material cash requirements from known contractual or other obligations as of September 30, 2022:
+Added: The following table summarizes our future material cash requirements from known contractual or other obligations as of March 31, 2023:
Payments Due by Period
2 unchanged sentences
Contractual Obligations
−Removed: Debt obligations (1)
$ 3,431 $ 83 $ 116 $ 880 $ 635 $ 833 $ 884
10 unchanged sentences
$ 6,710 $ 351 $ 527 $ 1,497 $ 929 $ 1,065 $ 2,341
−Removed: _________________________
(1) Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
4 unchanged sentences
(4) Includes interest.
+Added: (5) The lease term of the finance lease arrangement for our new global headquarters office building located in Orlando, Florida commenced for accounting purposes during the first quarter of 2023, upon substantial completion of construction.
+Added: See Footnote 12 “Debt” to our Financial Statements for additional information on this lease.
(6) Primarily relates to future guaranteed purchases of rental inventory of $6 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 $7 million.
2 unchanged sentences
These purchase commitments are excluded from the table above.
−Removed: Leases That Have Not Yet Commenced
−Removed: During 2020, we entered into a finance lease arrangement, that was amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida.
−Removed: The new Orlando corporate office building is currently expected to be completed in 2023, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet.
−Removed: The initial lease term is approximately 16 years with total lease payments of $137 million for the aforementioned period.
Supplemental Guarantor Information
3 unchanged sentences
The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
−Removed: The following tables present consolidating financial information as of September 30, 2022 and December 31, 2021, and for the nine months ended September 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.
+Added: The following tables present consolidating financial information as of March 31, 2023 and December 31, 2022, and for the three months ended March 31, 2023 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVWC, and MVW on a consolidated basis.
Condensed Consolidating Balance Sheet
−Removed: As of September 30, 2022
+Added: As of March 31, 2023
Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated
2 unchanged sentences
Restricted cash — 29 83 156 — 268
−Removed: Accounts receivable, net 4 113 92 63 (24) 248
+Added: Accounts and contracts receivable, net 9 121 92 74 (7) 289
Vacation ownership notes receivable, net — 148 186 1,886 — 2,220
Inventory — 178 376 118 — 672
−Removed: Property and equipment — 195 667 274 — 1,136
+Added: Property and equipment, net — 224 741 250 — 1,215
Goodwill — — 3,117 — — 3,117
21 unchanged sentences
Restricted cash — 25 145 160 — 330
−Removed: Accounts receivable, net 14 49 172 119 (75) 279
+Added: Accounts and contracts receivable, net 10 120 116 73 (27) 292
Vacation ownership notes receivable, net — 132 195 1,871 — 2,198
Inventory — 204 375 81 — 660
−Removed: Property and equipment — 200 644 292 — 1,136
+Added: Property and equipment, net — 202 659 278 — 1,139
Goodwill — — 3,117 — — 3,117
16 unchanged sentences
Total liabilities and equity $ 3,683 $ 5,007 $ 5,804 $ 2,738 $ (7,593) $ 9,639
−Removed: Condensed Consolidating Statements of Income
−Removed: Nine Months Ended September 30, 2022
+Added: Condensed Consolidating Statement of Income
+Added: Three Months Ended March 31, 2023
Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated
2 unchanged sentences
Expenses (9) (283) (576) (183) 10 (1,041)
−Removed: Benefit (provision) for income taxes 4 54 (144) (48) — (134)
+Added: Provision for income taxes 7 2 (41) (9) — (41)
Equity in net income (loss) of subsidiaries 89 139 — — (228) —
Net income (loss) 87 95 67 66 (228) 87
−Removed: Net loss attributable to noncontrolling interests — — — — — —
+Added: Net income attributable to noncontrolling interests — — — — — —
Net income (loss) attributable to common shareholders $ 87 $ 95 $ 67 $ 66 $ (228) $ 87
5 unchanged sentences
Since the date of our most recent Annual Report on Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.
−Removed: Quantitative and Qualitative Disclosures About Market Risk
−Removed: 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.