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Item 7. Management’s Discussion and Analysis

2024-02-27 compared with 2023-02-27 · 244 added, 257 removed, 529 unchanged (49% of the section changed)

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Our discussion and analysis of fiscal year 2022 to fiscal year 2021 has been omitted from this Form 10-K and can be found in Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 , which was filed with the Securities and Exchange Commission on March 1, 2022.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 , which was filed with the Securities and Exchange Commission on February 27, 2023.

Business Overview

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Our Vacation Ownership segment includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive long-term relationships.

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

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

Regis brand for specified fractional ownership resorts.

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 Vacation Club brands, as well as under Marriott Vacation Club Pulse, an extension of the Marriott Vacation Club brand.

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

We also have a license to use the St.

Regis brand for specified fractional ownership products.

Our Vacation Ownership segment generates most of its revenues from four primary sources:

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and renting vacation ownership inventory.

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

As of May 2022, we provided these services through our Interval International and Aqua-Aston businesses.

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.

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.

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.

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

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

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

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

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to Consolidated Property Owners’ Associations.

Integration of Marriott-, Sheraton- and Westin- Branded Vacation Ownership Products

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

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

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

Under this program, owners of Marriott-, Sheraton- and Westin-branded VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club brands using

a common currency.

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.

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

Under this program, owners of Marriott-, Sheraton- and Westin-branded VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club brands using a common currency.

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.

Further, in late 2022, we added certain Sheraton- and Westin- branded VOIs to the Marriott Vacation Club Destinations product.

Acquisition of Welk

On April 1, 2021, we completed the Welk Acquisition, after which Welk became our indirect wholly-owned subsidiary.

In April 2022, we introduced the Hyatt Vacation Club and rebranded Legacy-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.

Most Legacy-Welk resorts are now available for rental stays through Hyatt.com.

Significant Accounting Policies Used in Describing Results of Operations

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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.

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.

In the third quarter of 2022, we aligned our business practices and contract terms for the sale of vacation ownership products (the “Contract Alignment”), resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded VOIs.

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.

Subsequent to the Contract 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- and Westin- branded transactions.

Marriott-branded VOI sales contracts executed prior to these modifications have been accounted for with transfer of control of the VOI occurring at closing.

Control transfer for Legacy-Welk VOIs continues to occur at closing.

Control transfer for Hyatt Vacation Club VOIs occurs at expiration of the statutory rescission period, except that control transfer for VOIs derived from Legacy-Welk continues to occur at closing.

Sales of vacation ownership products may be made for cash or we may provide financing.

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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.

Typically, sales incentives are only awarded if the sale is closed.

Finally, as more fully described in “ Financing ” below, we record the difference between the contract receivable or 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.

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

We previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the Cost of vacation ownership products and marketing and sales costs.

Management and Exchange

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We also receive annual membership fees, club dues and certain transaction-based fees from members, owners and other third parties.

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.

In our Vacation Ownership segment and Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”

We offer financing to qualified customers for the purchase of most types of our vacation ownership products.

The average FICO score of customers who were U.S.

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

2022 2021 2020

Average FICO score 734 732 730

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

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

We may use incentives to encourage our customers to choose our financing.

We may use incentives to encourage our customers to

choose our financing.

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

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

Financing propensity was 54% in 2022 and 53% in 2021.

We expect to continue offering financing incentive programs in 2023.

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.

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

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

2022 2021 2020

Historical default rates 4.5% 4.3% 6.3%

The increased default rates in 2020 were predominantly due to the impact of the COVID-19 pandemic on the performance of our vacation ownership notes receivable portfolio.

In 2021 and 2022, default rates decreased compared to 2020 and the performance of our notes receivable portfolio returned to pre-pandemic levels.

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 the default rates, 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.

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In our Exchange & Third-Party Management segment, we offer vacation rental opportunities at managed properties through our Aqua-Aston business, and for the period prior to its disposition in the second quarter of 2022, VRI Americas.

We also offer vacation rental offers known as Getaways to members of the Interval International network and certain other membership programs.

We also offer vacation rental offers known as Getaways to members of the Interval Network and certain other membership programs.

Getaways allows us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members.

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

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

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

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

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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.

Commencing in the third quarter of 2023, we discontinued classifying costs associated with the continued integration of ILG in Transaction and integration costs.

Further costs incurred are reflected in the operating results of each of our segments and/or General and administrative expenses.

Performance Measures

We measure operating performance using the key metrics described below:

• Contract sales from the sale of vacation ownership products :

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

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

• 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 customers apply any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales.

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

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

• Development profit margin;

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

• Consolidated contract sales exclude contract 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.

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

We consider active members to be an important metric 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.

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).

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

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.

We believe that Development profit margin is an important measure of the profitability of our development and subsequent marketing and sales of VOIs.

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

We consider active members to be an important metric because it represents the population of owners eligible to book transactions using the Interval Network.

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

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

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

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

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Gains (losses) and other income (expense), net 47 40 (51)

Interest expense (118) (164) (150)

Interest expense, net (145) (118) (164)

Transaction and integration costs (37) (125) (110)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 582 127 (340)

(Provision for) benefit from income taxes (191) (74) 84

NET INCOME (LOSS) 391 53 (256)

Net income attributable to noncontrolling interests — (4) (19)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 391 $ 49 $ (275)

Other (3) 1 2

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 398 582 127

Provision for income taxes (146) (191) (74)

NET INCOME 252 391 53

Net loss (income) attributable to noncontrolling interests 2 — (4)

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 254 $ 391 $ 49

Operating Statistics

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Exchange & Third-Party Management

Total active members at end of period (000's) 1,566 1,296 1,518 270 21%

Total active members at end of year (000's) 1,564 1,566 1,296 (2) —%

Average revenue per member $ 156.65 $ 157.97 $ 179.48 $ (1.32) (1%)

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

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.

EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common stockholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization.

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.

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

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

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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.

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.

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

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Net income (loss) attributable to common shareholders $ 391 $ 49 $ (275) $ 342 NM

Interest expense 118 164 150 (46) (28%)

Tax provision (benefit) 191 74 (84) 117 159%

Net income attributable to common stockholders $ 254 $ 391 $ 49 $ (137) (35%)

Interest expense, net 145 118 164 27 23%

Provision for income taxes 146 191 74 (45) (24%)

Depreciation and amortization 135 132 146 3 2%

EBITDA 680 832 433 (152) (18%)

Share-based compensation 39 51 37 (12) (23%)

Share-based compensation expense 31 39 51 (8) (21%)

Certain items 50 95 173 (45) (47%)

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Adjusted EBITDA Margin 24% 29% 24% (5 pts)

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 VOIs.

The Contract alignment increased Net income attributable to common shareholders and Adjusted EBITDA by $34 million and $46 million in 2022, respectively.

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.

In the third quarter of 2022, in connection with the unification of 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 VOIs.

The Contract Alignment increased Net income attributable to common stockholders and Adjusted EBITDA by $34 million and $46 million in 2022, respectively.

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 stockholders and a $5 million increase in Adjusted EBITDA.

Together, these changes are hereinafter referred to as the “Alignment.” See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information on the Reserve Alignment.

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Welk acquisition and integration 22 14

I/T transformation 16 —

Other transformation initiatives — 10

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Transaction and integration costs 37 125

Purchase accounting adjustments 11 10

Litigation charges 11 10

Impairment 2 3

Early redemption of senior unsecured notes — 55

Gain on disposition of hotel (33) —

Early redemption of senior secured notes 10 —

Gain on disposition of hotel, land, and other (8) (33)

Gain on disposition of VRI Americas — (17)

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Change in indemnification asset (31) 3

(Gains) losses and other (income) expense, net (40) 51

Gains and other income, net (47) (40)

Purchase accounting adjustments 8 11

Litigation charges 13 11

Restructuring charges 6 —

Impairment charges 32 2

Expiration/forfeiture of deposits on pre-acquisition preview packages — (6)

Early termination of VRI management contract — (2)

Eliminate impact of Consolidated Property Owners' Associations — (8)

Change in estimate relating to pre-acquisition contingencies — (12)

Total Certain items $ 50 $ 95

Commencing in the third quarter of 2023, we discontinued classifying costs associated with the continued integration of ILG in Transaction and integration costs.

Further costs incurred are reflected in the operating results of each of our segments and/or General and administrative expenses.

Segment Adjusted EBITDA

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General and administrative (273) (249) (227) (24) (10%)

Consolidated Property Owners' Associations — — 5 — NM

Other 21 34 41 (13) (37%)

Adjusted EBITDA $ 761 $ 966 $ 657 $ (205) (21%)

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

The following tables present segment financial results attributable to common stockholders reconciled to segment Adjusted EBITDA.

Vacation Ownership

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Depreciation and amortization 93 92 89 1 2%

Share-based compensation 7 6 6 1 21%

Certain items (27) 19 73 (46) NM

Share-based compensation expense 8 7 6 1 20%

Certain items 5 (27) 19 32 117%

Segment Adjusted EBITDA $ 883 $ 1,033 $ 699 $ (150) (15%)

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Transaction and integration costs $ — $ 3

Gain on disposition of hotel, land, and other (7) (33)

Insurance proceeds (9) (4)

Change in indemnification asset (9) —

Gains and other income, net (29) (37)

Purchase accounting adjustments 8 11

Litigation charges 12 9

Impairment 2 —

Gain on disposition of hotel (33) —

Insurance proceeds (4) —

(Gains) losses and other (income) expense, net (37) (1)

Impairment charges 12 2

Expiration/forfeiture of deposits on pre-acquisition preview packages — (6)

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Depreciation and amortization 31 31 48 — (2%)

Share-based compensation 2 2 2 — 12%

Certain items (17) 1 99 (18) NM

Share-based compensation expense 2 2 2 — (23%)

Certain items 4 (17) 1 21 122%

Segment Adjusted EBITDA $ 130 $ 148 $ 144 $ (18) (13%)

Certain items for the Exchange & Third-Party Management segment for 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, offset by $2 million of foreign currency translation losses.

Certain items for the Exchange & Third-Party Management segment for 2021 consisted of $1 million of COVID-19 related restructuring costs.

The table below details the components of Certain items for the Exchange & Third-Party Management segment financial results for 2023 and 2022.

($ in millions) 2023 2022

Gain on disposition of hotel, land, and other $ (1) $ —

Gain on disposition of VRI Americas — (17)

Foreign currency translation — 2

Gains and other income, net (1) (15)

Litigation charges 1 —

Impairment charges 4 —

Early termination of VRI management contract — (2)

Total Certain items $ 4 $ (17)

BUSINESS SEGMENTS

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Litigation charges 12 9 9

Restructuring — — 15

Royalty fee 117 114 106

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Transaction and integration costs — (3) (2)

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 961 $ 585 $ 71

Contract Sales

Fiscal Years 2022 vs.

($ in millions) 2022 2021 2020 Change

Total consolidated contract sales 1,837 1,374 654 463 34%

Joint venture contract sales 37 37 15 — (1%)

Total contract sales $ 1,874 $ 1,411 $ 669 $ 463 33%

Other (3) 1 2

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS 777 961 585

Net income attributable to noncontrolling interests — — —

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 777 $ 961 $ 585

Sale of Vacation Ownership Products

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($ in millions) 2023 % of Consolidated Contract Sales, Net of Resales 2022 % of Consolidated Contract Sales, Net of Resales 2021 % of Consolidated Contract Sales, Net of Resales Change

Consolidated contract sales

$ 1,772 $ 1,837 $ 1,374 $ (65) (4%)

Joint venture contract sales 28 37 37 (9) (24%)

Total contract sales 1,800 1,874 1,411 (74) (4%)

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Sale of vacation ownership products $ 1,460 84% $ 1,618 90% $ 1,153 86% $ (158) (10%)

_______________

Financing propensity

58.1% 53.9% 52.7% 4.2 pts

Average FICO Score (2)

(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.

(2) For customers who financed a vacation ownership purchase and for whom a credit score was available, generally U.S.

and Canadian residents.

2023 Compared to 2022

The higher contract sales performance reflects the continued ramp-up of the business following the initial impact of the COVID-19 pandemic and $24 million of Legacy-Welk contract sales in the first quarter of 2022 (Legacy-Welk was acquired in the second quarter of 2021).

The Contract alignment resulted in an increase in reportability of $58 million in 2022.

The increase in the sales reserve as a percentage of Consolidated contract sales, net of resales is attributed to the Reserve alignment ($19 million or 110bps) recorded in the third quarter of 2022, the increase in reportability (40bps), an increase attributed to higher Legacy-Welk contract sales which carry a higher reserve rate (30bps), and an increase in financing propensity (20bps).

The Reserve alignment was offset by a corresponding decrease in the acquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses.

Excluding the impact of the Alignment, Sale of vacation ownership products increased $426 million or 37%.

Contract sales declined due to an 8% decline in VPG, partially offset by tour growth of 4%.

The decline in VPG is attributed to the normalization of sales following the COVID-19 pandemic, the transition of certain Legacy-ILG sales galleries to selling our Marriott Vacation Club Destinations product and the impact of the reduced activity at our sales centers in Maui due to the wildfires.

These results reflect a 46% and 14% increase in tours and VPG, respectively, in Asia Pacific resulting from the rebound of our sales operations in response to the increase in travel in this region following the COVID-19 pandemic.

Revenue reportability declined due to the non-recurring impact of the Alignment recorded in 2022, which resulted in an increase in reportability of $58 million in 2022.

The increase in the sales reserve is due to an adjustment to our sales reserve recorded in the third quarter of 2023 (referred to as the “2023 Reserve Adjustment” and discussed further below), an increase in the sales reserve rate in the fourth quarter of 2023 to provide for increased defaults consistent with the 2023 Reserve Adjustment, and an increase in financing propensity, partially offset by the non-recurring $19 million Reserve Alignment recorded in 2022.

In the third quarter of 2023, we evaluated our vacation ownership notes receivable reserve in light of trends in delinquencies and default rates.

As a result, we increased our originated vacation ownership notes receivable reserve by $59 million.

We primarily used a similar historical period of increased defaults as a basis for estimating the increase in our reserve.

The additional reserve adjusted our future default rate estimates to reflect then-current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity.

The $19 million Reserve Alignment in 2022 was offset by a $19 million decrease in the acquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses in 2022.

Development Profit

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2023 Compared to 2022

Cost of vacation ownership products included favorable product cost true ups of $24 million and $10 million during 2022 and 2021, respectively.

Marketing and sales in 2022 was reduced by $6 million of lower marketing and sales associated with expired or forfeited deposits on pre-acquisition preview packages.

Excluding the impact of the Alignment, Development profit increased $204 million and Development profit margin increased to 31.0%.

We expect future development profit margins to remain above pre-pandemic levels and in line with recent results.

The decrease in Development profit reflects lower contract sales volumes and higher sales reserves, higher marketing and sales costs attributed to the 4% increase in tours, lower VPGs and higher than normal inflation, partially offset by $13 million of favorable product cost true-up activity and a lower average cost of inventory in 2023.

Excluding the impact of the $49 million 2023 Reserve Adjustment ($59 million gross, offset by a $10 million reduction in Cost of vacation ownership products) and the $32 million Alignment in 2022, Development profit decreased $28 million and Development profit margin decreased by approximately 60 basis points.

We expect future development profit margins to decline slightly resulting from increasing our sales reserve to reflect more recent default activity and an increase in Cost of vacation ownership products.

Resort Management and Other Services Revenues, Expenses and Profit

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Ancillary revenues 252 241 188 11 5%

Other management and exchange revenue 127 124 118 3 4%

Other management and exchange revenues 136 127 124 9 7%

Resort management and other services revenues 568 534 470 34 6%

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88.1% 89.3% 81.6% (1.2 pts)

_________________________

(1) Resort occupancy represents all transient, preview, and owner keys divided by total keys available, net of keys out of service.

2023 Compared to 2022

Resort management and other services revenues reflect $50 million of higher ancillary revenues, including revenues from food and beverage and golf offerings, as a result of an increase in occupied keys (0.9 million keys or 13%) at resorts with ancillary business and a 14% increase in revenue per occupied key, $6 million of revenues relating to the Welk Acquisition, which we acquired in the second quarter of 2021, $5 million of increased commissions on third-party offerings and higher management fees, and $3 million attributed to higher annual club dues.

The increase in resort management and other services profit reflects $10 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.

Ancillary profit margin remained in line with the prior year because we raised pricing and optimized our food and beverage offerings to offset wage pressures.

We expect future ancillary profit margins to remain in line with recent results.

The increase in Resort management and other services revenues reflects higher ancillary revenues, including revenues from food and beverage and golf offerings (resulting in a 6% increase in revenue per occupied key, partially offset by a 2% decrease in occupied keys at resorts with ancillary businesses), and higher management fees and commissions from third-party vacation and other offerings.

The decline in occupied keys at resorts with ancillary businesses was primarily in Maui due to the wildfires.

The increase in Resort management and other services expenses reflects an increase in ancillary expenses of $19 million due to increased volumes sold, inflation and foreign currency exchange rate changes in Mexico, and an increase in customer services and exchange company expenses of $11 million due to incremental headcount, wages, benefits, and other operating cost increases.

Rental Revenues, Expenses and Margin

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Rental profit $ 65 $ 109 $ 52 $ (44) (40%)

Rental profit margin 21.4% 11.7% NM 9.7 pts

Rental profit margin 12.4% 21.4% 11.7% (9.0 pts)

Fiscal Years 2023 vs.

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68.2% 70.3% 55.1% (2.1 pts)

_________________________

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

(1) Transient keys rented exclude plus points and preview stays.

(2) Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.

2023 Compared to 2022

Rental profit for transient keys associated with our vacation ownership operations improved by $45 million (97%) in 2022 while rental profit for our owned hotels improved by $12 million (231%).

The improvement in rental profit resulted from an increase in transient keys rented and a higher average transient rate due to the continued ramp-up of the business following the waning impact of the COVID-19 pandemic starting late in the prior year first quarter net of higher associated tidy and variable costs, a $17 million increase in allocations of rental costs to marketing and sales expense for marketing purposes and

$5 million from higher plus point revenue.

These increases were partially offset by $36 million of higher costs associated with higher owner utilization of third-party vacation and other offerings, and excess inventory on hand compared to 2021.

In addition to these variances, there was a $52 million higher net down of rental revenues and expense in 2022 associated with unsold VOIs that are registered and held for sale.

Rental profit excluding profit from our owned hotels declined $38 million due to a $49 million increase in unsold maintenance fees associated with developer owned inventory, $11 million of decreased profit (due to lower demand, the impact of the Maui wildfires, and an unfavorable change in the mix of keys available to rent), and $5 million of increased costs associated with higher owner utilization of third-party vacation and other offerings.

These decreases were partially offset by $21 million of higher plus points revenue and a $6 million reduction in costs associated with occupancy used for marketing and sales activities.

Rental profit for our owned hotels declined by $6 million, or 34%, primarily attributed to the disposition of our Puerto Vallarta and Branson hotels in 2022 and 2023, respectively.

Financing Revenues, Expenses and Margin

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Financing profit margin 64.9% 74.5% 67.1% (9.6 pts)

Financing propensity 54% 53% 51%

Financing propensity 58.1% 53.9% 52.7% 4.2 pts

2023 Compared to 2022

Financing revenues reflect $23 million of higher interest income (including $10 million attributed to the lack of comparability due to the Welk Acquisition in the second quarter of 2021 and $13 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 $2 million of lower plus point financing incentive costs year-over-year.

The increase in Financing revenues reflects $31 million of higher interest income as a result of a higher average vacation ownership notes receivable balance and a slightly higher average interest rate and $1 million of higher late and service fees, offset by $3 million of higher plus point financing incentive costs (recorded as a reduction of interest income).

We plan to continue offering financing incentives to certain customers in the future.

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), partially offset by higher other expenses and 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 $1 million lower lien fee income.

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.

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 and we expect originations of vacation ownership notes receivable to outpace payoffs.

We do not adjust interest rates, on consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates;

thus we expect our financing profit margin 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.

Depreciation and Amortization

Fiscal Years 2022 vs.

($ in millions) 2022 2021 2020 Change

Depreciation and amortization $ 92 $ 89 $ 79 $ 3 4%

2022 Compared to 2021

The increase in depreciation and amortization expense is attributed to an additional $2 million of depreciation expense associated with completed VOIs that are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products and $1 million attributed to the inclusion of expense associated with assets acquired in the Welk Acquisition for an additional quarter in 2022 compared to 2021.

Excluding the $19 million Reserve Alignment recorded in 2022, which reduced the reserve related to our acquired vacation ownership notes receivable (recorded as a reduction of Financing expenses), the decline in Financing expenses is attributed to a reduction in the acquired vacation ownership notes receivable reserve of $3 million during 2023.

The increase in consumer financing interest expense is attributable to the higher average securitized debt and a higher average interest rate on our more recent term securitization transactions.

We expect consumer financing interest expense to continue to increase as the rates on new securitizations exceed the current weighted average of our portfolio.

We expect originations of vacation ownership notes receivable to outpace payoffs.

We do not adjust interest rates on

consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates;

thus, we expect our financing profit margin to decrease in the near term.

Litigation Charges

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2023 Compared to 2022

The increase in royalty fee expense included $6 million from an increase in the dollar volume of closings, $3 million from a contractual increase in the fixed portion of the royalty fee owed to Marriott International, and $1 million relating to the commencement of variable royalty fees for Hyatt in the fourth quarter of 2022, partially offset by $2 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).

Gains and Other Income

Royalty fee expense increased $2 million due to increased variable royalty fees paid to Hyatt, which became effective in the fourth quarter of 2022, and a $1 million increase in initial sales of our inventory, which carry a higher royalty fee as compared to sales of pre-owned inventory (two percent versus one percent).

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Gains and other income, net $ 37 $ 1 $ 12 $ 36 NM

During 2022, we recorded gains and other income of $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $3 million related to receipt of business interruption insurance proceeds, and $1 million related to property insurance proceeds.

Transaction and Integration Costs

Impairment $ 12 $ 2 $ — $ 10 NM

During 2023, we recorded non-cash impairment charges of $8 million related to our investment in a joint venture, $2 million related to an ancillary operation in Europe, and $2 million related to an owned hotel.

During 2022, we recorded a non-cash impairment charge of $2 million related to an ancillary operation in Europe.

Gains and Other Income

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Transaction and integration costs $ (3) $ (2) $ (3) $ (1) (62%)

In 2022, we incurred $2 million of transaction costs associated with our capital efficient inventory arrangement in Waikiki and $1 million for costs incurred to identify required upgrades of acquired properties to meet brand standards.

Gains and other income, net $ 29 $ 37 $ 1 $ (8) (23%)

During 2023, we recorded a $9 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, $9 million related to the receipt of business interruption and property damage insurance proceeds, $7 million of gains on the disposition of excess real estate, and $4 million of gains associated with the earn out of additional proceeds from the 2019 disposition of a land parcel in Cancun, Mexico.

During 2022, we recorded gains and other income of $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $3 million related to the receipt of business interruption insurance proceeds, and $1 million related to property insurance proceeds.

EXCHANGE & THIRD-PARTY MANAGEMENT

Our Exchange & Third-Party Management segment offers access to vacation accommodations and other travel-related transactions and services to leisure travelers by providing vacation exchange and management services, including vacation rentals and other services.

We provide these services through our Interval International and Aqua-Aston businesses.

Our Exchange & Third-Party Management segment is comprised of the Interval International and Aqua-Aston businesses.

The Interval International business offers a variety of membership programs and travel related products to approximately 1.6 million members and the Aqua-Aston business provides property management and rental services to property owners at 25 resorts and lodging properties.

Our results include those of VRI Americas for the period prior to its disposition in the second quarter of 2022.

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Rental 40 42 40

Financing — — 2

Cost reimbursements 16 23 47

1 unchanged sentence

Management and exchange 118 120 131

Rental — — 11

Financing — — 1

Depreciation and amortization 31 31 48

Litigation charges 1 — —

Restructuring — — 1

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TOTAL EXPENSES 170 174 227

Gains (losses) and other income (expense), net 15 — (2)

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 132 $ 93 $ (14)

Gains and other income, net 1 15 —

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 93 $ 132 $ 93

Management and Exchange Profit

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Management and exchange profit margin 42.5% 47.0% 43.8% (4.5 pts)

Fiscal Years 2022 vs.

2022 2021 2020 Change

Total active members at end of period (000's) 1,566 1,296 1,518 270 21%

Average revenue per member $ 157.97 $ 179.48 $ 144.97 $ (21.51) (12%)

2023 Compared to 2022

The decrease in management and exchange revenue reflects $18 million of lower revenue due to the disposition of our VRI Americas business during the second quarter of 2022, partially offset by $10 million and $1 million of higher management fees and ancillary revenues, respectively, 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.

For Interval International, revenue was in line with the prior year period while average revenue per member decreased 12% over the prior year comparable period.

This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp up over time and lower inventory levels in the first half of 2022.

The increase in management and exchange profit primarily reflected $10 million of higher profit at Aqua-Aston, partially offset by $6 million of lower profit

due to the disposition of our VRI Americas business during the second quarter of 2022.

Management and exchange profit and profit margin excluding the impact of the disposition of VRI Americas would have increased by $10 million and 11%, respectively, during 2022.

Rental Revenues, Expenses and Margin

Excluding the $12 million decrease attributed to the disposition of our VRI Americas business during the second quarter of 2022, management and exchange revenue decreased $8 million or 4%.

Interval International management and exchange revenues declined $5 million or 3% , primarily attributed to lower transaction volume and lower membership revenues due to the continued shift in mix to corporate members, which have a lower propensity to transact than our traditional members.

Exchange transaction volume declined 5% and average revenue per member decreased 1% compared to the prior year.

Aqua-Aston management revenue declined $3 million due to higher property level expenses, which adversely impacted management fees, and a reduction in the number of units managed at a property in Maui.

Excluding the impact of the disposition of VRI Americas, management and exchange profit decreased by $14 million or 14% from the prior year, primarily attributed to higher information technology costs, marketing and sales costs and higher wages and benefits and lower revenues.

Rental Revenues

Fiscal Years 2023 vs.

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2023 Compared to 2022

Results reflect a $1 million increase in gross Getaways revenues, driven by an 8% increase in the average Getaways fee, partially offset by a 6% decline in transactions and a $1 million increase in revenue from other rental operations.

Rental inventory procurement costs, which are recorded net within Rental revenues, were in line with the prior year.

The decline in Getaways transactions reflects fewer owner deposits in 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.

Depreciation and Amortization

Lower rental revenues reflect higher rental inventory procurement costs, which are recorded net within Rental revenues.

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Depreciation and amortization $ 31 $ 48 $ 32 $ (17) (36%)

2022 Compared to 2021

The decrease in depreciation and amortization expense in 2022 relates to a true-up made to accelerate depreciation on a technology asset in 2021 of $12 million.

Losses and Other Expense

Impairment $ 4 $ — $ — $ 4 NM

During 2023, we impaired an investment in a management contract.

Gains and Other Income

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Gains (losses) and other income (expense), net $ 15 $ — $ (2) $ 15 NM

2022 Compared to 2021

During 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.

Gains and other income, net $ 1 $ 15 $ — $ (14) (95%)

During 2023, we recorded a gain on the disposition of excess real estate of $1 million.

During 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 losses.

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

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TOTAL EXPENSES 304 282 258

Losses and other expense, net (12) (52) (36)

Interest expense (118) (164) (150)

Gains (losses) and other income (expense), net 17 (12) (52)

Interest expense, net (145) (118) (164)

Transaction and integration costs (37) (122) (108)

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (472) (511) (551)

(Provision for) benefit from income taxes (191) (74) 84

Net income attributable to noncontrolling interests — (4) (19)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (702) $ (629) $ (332)

Provision for income taxes (146) (191) (74)

Net loss (income) attributable to noncontrolling interests 2 — (4)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (616) $ (702) $ (629)

Consolidated Property Owners’ Associations

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

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.

($ in millions) 2023 2022 2021

7 unchanged sentences

Losses and other expense, net — (3) (4)

Interest expense, net 1 — —

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

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

Net income attributable to noncontrolling interests — (4) (19)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (6) $ 3 $ 5

Pursuant to a change in control of certain Consolidated Property Owners’ Associations, we no longer consolidate these owners’ associations and we recorded a non-cash loss of $3 million in Gains (losses) and other income (expense), net on our Income Statement for the year ended December 31, 2022.

We continue to act as manager for these owners’ associations pursuant to existing management contracts and we retain membership interests in these owners’ associations via our ownership of VOIs.

Net loss (income) attributable to noncontrolling interests 2 — (4)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 1 $ (6) $ 3

General and Administrative

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2023 Compared to 2022

During 2022, General and administrative expenses increased $22 million, attributed to transformation initiative spending, including procurement and artificial intelligence capabilities, business travel related expenses and other miscellaneous costs.

Compensation related costs remained relatively flat due to an increase in wages and benefits of $14 million, offset by $12 million and $4 million of lower stock compensation expense and bonus expense, respectively.

Losses and Other Expense

General and administrative expenses increased due to $31 million of costs related to the implementation of technology, $14 million of increased wages and benefits, $8 million related to new product development initiatives, $6 million of increased insurance expense, $6 million of incremental costs related to compliance activities and $7 million of other miscellaneous expenses, partially offset by a $39 million decrease in variable compensation expense and $9 million of higher allocations of general and administrative expenses to operations.

We expect General and administrative expenses to increase in the near term due to the continued impact of increased wages and variable compensation expense and additional investment in upgrading, maintaining, and implementing new technology, including costs associated with our continued transition to software as a service, which are recorded as a component of General and administrative expense as opposed to Depreciation expense.

Restructuring

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Losses and other expense, net $ (12) $ (52) $ (36) $ 40 76%

In 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, $3 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International, partially offset by $2 million of proceeds from corporate owned life insurance.

In 2021, we recorded $55 million of expense related to the early redemption of senior unsecured notes, and $4 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $7 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).

Interest Expense

Restructuring $ 6 $ — $ (1) $ 6 NM

During 2023, we realigned our management structure, resulting in severance costs associated with the elimination of certain positions.

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Interest expense $ (118) $ (164) $ (150) $ 46 28%

2022 Compared to 2021

The decrease in interest expense is attributable to redemption of higher coupon debt in 2021, which was refinanced at lower rates, and the adoption in 2022 of new accounting guidance related to convertible debt (see Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements).

The decrease in interest expense was partially offset by increases in borrowings under our revolving credit facilities.

Transaction and Integration Costs

Impairment $ 16 $ — $ 3 $ 16 NM

During 2023, upon our relocation to our new corporate headquarters, we recorded a non-cash impairment of a right-of-use asset related to operating leases for our legacy corporate headquarters located in Orlando, Florida, as we do not expect proceeds from subleasing the spaces to exceed our future obligations under the operating leases.

Gains (Losses) and Other Income (Expense)

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

Transaction and integration costs $ (122) $ (108) $ (63) $ (14) (13%)

2022 Compared to 2021

During 2022, Transaction and integration costs included $82 million of ILG integration-related costs, $16 million of other integration costs, $14 million of Welk Acquisition and integration-related costs, and $10 million of other transaction and integration-related costs.

During 2021, Transaction and integration costs included $93 million of ILG integration-related costs, and $16 million of Welk Acquisition and integration-related costs, partially offset by $1 million of other transaction and integration-related costs.

ILG Acquisition and integration costs primarily relate to the integration of the Sheraton, Westin and Marriott vacation ownership platforms and brands, including upgrading and combining information technology systems in order to create integrated servicing capabilities across brands.

These costs, which primarily relate to the implementation of multiple software applications and other enabling technologies, were expensed as incurred and do not include costs to maintain the applications and systems once they are in productive use.

As part of the integration of the ILG business, we have been working towards improving the customer experience via enhancing self-service tools and streamlining our business processes through technology.

While this effort is in process and we have experienced some servicing delays and website outages, as phases of the effort are completed, we expect these changes will provide enhanced owner and member experiences.

In addition, in April 2021, similar integration opportunities were introduced, albeit it on a smaller scale, when we completed the Welk Acquisition.

The ILG and Welk acquisitions presented the opportunity for us to transform our business by integrating the acquired platforms with our existing platforms.

Gains (losses) and other income (expense), net $ 17 $ (12) $ (52) $ 29 NM

In 2023, we recorded a $22 million increase to our receivable from Marriott International for indemnified income tax matters (the offsetting accrual is included in the Provision for income taxes line) and $6 million of foreign currency translation gains, partially offset by a $10 million expense attributed to the redemption premium and write-off of unamortized debt issuance costs in connection with the early redemption of our 6.125% Senior Secured Notes due 2025 (“2025 Notes”).

In 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 as a result of which we ceased consolidating these owners’ associations, $3 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International for indemnified tax matters, partially offset by $2 million of proceeds from corporate owned life insurance.

Interest Expense

Fiscal Years 2023 vs.

($ in millions) 2023 2022 2021 Change

(Provision for) benefit from income taxes $ (191) $ (74) $ 84 $ (117) (159%)

Interest expense, net $ (145) $ (118) $ (164) $ (27) (23%)

2023 Compared to 2022

The change in the (Provision for) benefit from income taxes is predominately attributable to an increase in pre-tax income for fiscal year 2022.

The increase in Interest expense, net is attributed to $20 million of higher interest expense associated with our 2027 Convertible Notes issued in December 2022, $17 million associated with higher borrowings and higher variable interest rates on both the Warehouse Credit Facility and the Revolving Corporate Credit Facility, $10 million of higher interest expense associated with higher variable interest rates and the expiration of a portion of our interest rate hedges on the $900 million term loan facility included in our corporate credit facility Term Loan, $7 million of interest expense related to leased assets and $2 million of higher interest on non-income tax related items.

This was partially offset by $16 million of lower interest expense associated with the early redemption of our 2025 Notes, $9 million of lower interest expense associated with our 2022 Convertible Notes which were repaid at maturity and $4 million of higher interest income.

($ in millions) 2023 2022 2021

Provision for income taxes $ (146) $ (191) $ (74)

Effective tax rate

36.5% 32.9% 58.4%

2023 Compared to 2022

The change in our income tax expense is attributable to lower income before income taxes and noncontrolling interests ($49 million) and benefits from state tax rate changes and certain other foreign and permanent differences which were favorable to prior periods ($62 million).

These decreases were partially offset by increases in uncertain tax benefits and changes in our valuation allowance ($66 million) of which $22 million is to be indemnified pursuant to a Tax Matters

Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc.

and we have recorded a corresponding indemnification asset as a component of Gains (losses) and other income (expense), net on our Income Statements.

Refer to Footnote 5 “Income Taxes” for additional information.

The Organization for Economic Co-operation and Development has proposed a global minimum tax of 15% of reported profits (Pillar 2) that has been agreed upon in principle by over 140 non-U.S.

During 2023, many countries took steps to incorporate Pillar 2 model rule concepts into their domestic laws.

Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and/or on different timelines.

While we continue to monitor legislative developments, we do not anticipate Pillar 2 will have a material impact on our long-term financial position.

Liquidity and Capital Resources

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, 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.

Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility, our ability to raise capital through securitizations in the ABS market, and, to the extent necessary, our ability to issue new debt and refinance existing debt.

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.

Excluding the impact of the Alignment, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 2.8 at December 31, 2022, which is within our targeted leverage range of 2.5x to 3.0x.

Excluding the redemption of the 2025 Notes subsequent to the end of 2022, we have no material maturities of corporate debt until 2025.

As of December 31, 2022, our corporate debt, excluding finance leases and including the impact of interest rate hedges, had a weighted average interest rate of 3.7%, and 92% of such corporate debt accrued interest at a fixed rate.

At December 31, 2023, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 3.7, above our targeted range of 2.5 to 3.0.

We have no material maturities of corporate debt until the third quarter of 2025.

As of December 31, 2023, the interest rate applicable to approximately 80% of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was effectively fixed.

The weighted average interest rate of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was 3.9% as of December 31, 2023.

Approximately 70% of our corporate debt will be fixed once our interest rate hedges mature in April 2024.

Sources of Liquidity

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These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes.

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.

In connection 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.

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 pool of transferred assets, which consist of vacation ownership notes receivable.

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.

1 unchanged sentence

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.

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.

During 2023, and as of December 31, 2023, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters.

1 unchanged sentence

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.

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.

Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur twice a year.

During 2023, we amended certain agreements associated with our Warehouse Credit Facility, which increased the borrowing capacity from $425 million to $500 million and extended the revolving period from July 28, 2024 to May 31, 2025.

At December 31, 2023, we had $150 million of borrowings outstanding on our Warehouse Credit Facility.

As of December 31, 2023, $60 million of gross vacation ownership notes receivable were eligible for securitization.

See Footnote 15 “Securitized Debt’ and Footnote 19 “Variable Interest Entities” for further information on these facilities.

Revolving Corporate Credit Facility

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.

At December 31, 2022, no borrowings were outstanding on our Revolving Corporate Credit Facility and $1 million of le tters of credit were outstanding.

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.

At December 31, 2023, $105 million of borrowings were outstanding on our Revolving Corporate Credit Facility and $24 million of le tters of credit were outstanding.

See Footnote 16 “Debt” to our Financial Statements for more information on interest rates pertaining to this facility.

Issuance of Senior Notes and Convertible Debt

Our ability to access the public debt markets through the issuance of senior notes and convertible debt remained strong during the COVID-19 pandemic.

We accessed the public debt markets every year between 2017 and 2022, including a $500 million senior note issuance during the height of the COVID-19 pandemic in May 2020.

Redemption of Senior Secured Notes

During 2023, we redeemed, prior to maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in 2022.

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 (losses) and other income (expense), net on our Income Statement for the year ended December 31, 2023.

We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts.

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

Cash and cash equivalents on hand at December 31, 2022 totaled $524 million, an increase of $182 million from December 31, 2021, primarily reflecting $653 million associated with net cash and cash equivalents provided by operating activities, $331 million of proceeds from the issuance of convertible notes in excess of repayments (net of the temporary refinancing of the 2022 Convertible Notes on our Revolving Corporate Credit Facility), $86 million of new securitized debt borrowings in excess of repayments, investing cash inflow related to the disposition of subsidiaries of $94 million, $43 million of proceeds from the issuance of warrants, and $7 million other net proceeds, partially offset by the repurchase of common stock of $701 million, $107 million for the purchase of convertible note hedges, payment of dividends of $99 million, capital expenditures for property and equipment (excluding inventory) of $65 million, $19 million of debt issuance costs and payments on finance leases, $23 million for payment of withholding taxes on vesting of restricted stock units and $18 million in purchases of company owned life insurance.

Our cash flow from operations fluctuates during the year due to the timing of certain receipts and contractual and compensation-related payments.

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.

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.

In addition, significant compensation-related cash outflows occur in the first quarter of each year associated with payment of annual bonuses.

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:

Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occurs in either the fourth quarter or the first quarter of each year.

Generally, cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points-based products, and in the first quarter for our weeks-based products.

In addition, during the first quarter of each year, we generally have significant variable compensation-related cash outflows associated with payment of annual bonuses.

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

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

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Inventory spending $ (89) $ (138) $ (153)

Purchase of vacation ownership units for future transfer to inventory (12) (98) (61)

Purchase of property for future transfer to inventory (27) (12) (98)

Inventory costs 176 242 212

Inventory spending less than (in excess of) cost of sales $ 60 $ 92 $ (39)

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.

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, that we may purchase just prior to the time we need the

inventory to support future sales.

In addition, we may develop inventory in key markets where opportunities generate acceptable risk adjusted returns.

Although we have significant 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.

Where possible, we will structure transactions to limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale.

These capital efficient vacation ownership 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 on balance sheet in key markets where we believe the opportunities will generate acceptable risk adjusted returns.

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.

Among other reasons, by repurchasing inventory, we expect to be able to help stabilize the future cost of our vacation ownership products.

Our spending for real estate inventory in 2022 was lower than cost of sales and was primarily related to our VOI repurchase program.

We acquired a higher amount of previously sold VOIs in 2022 due to the reinstatement of our VOI repurchase programs that were suspended as part of the cash preservation measures implemented in response to the COVID-19 pandemic.

We expect inventory spending to be less than cost of sales for 2023.

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

Among other reasons for repurchasing inventory, we expect these repurchases will stabilize the future cost of our vacation ownership products.

Our spending for real estate inventory in 2023 was lower than our cost of sales and was primarily related to our purchases under our VOI repurchase programs.

Purchase of property for future transfer to inventory included the acquisition of property in Savannah, Georgia and Charleston, South Carolina in 2023.

We expect inventory spending to again be less than cost of sales for 2024.

Vacation Ownership Notes Receivable Collections Less Than of Originations

($ in millions) 2023 2022 2021

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Vacation ownership notes receivable originations (987) (980) (750)

Vacation ownership notes receivable collections (less than) in excess of originations $ (338) $ (64) $ 243

The increase in sales of vacation ownership products subsequent to the COVID-19 pandemic combined with an increase in financing propensity (54% in 2022 compared to 53% in 2021) outpaced collections of vacation ownership notes receivable.

Vacation ownership notes receivable collections less than originations $ (391) $ (338) $ (64)

Vacation ownership notes receivable collections were less than originations in 2023, 2022 and 2021 due to the growth of the average vacation ownership notes receivable portfolio.

Repurchase of Common Stock

The following table summarizes share repurchase activity under our current share repurchase program:

($ in millions, except per share amounts) Number of Shares Repurchased Cost of Shares Repurchased Average Price Paid per Share

($ 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

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As of December 31, 2023 25,141,073 $ 2,405 $ 95.65

See Footnote 17 “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 2022.

Payment of Dividends to Common Shareholders

See Footnote 17 “Stockholders' Equity” to our Financial Statements for further information related to our current share repurchase program.

Payment of Dividends to Common Stockholders

We distributed cash dividends to holders of common stock during the year ended December 31, 2023 as follows:

Declaration Date Shareholder Record Date Distribution Date Dividend per Share

Declaration Date Stockholder Record Date

Distribution Date Dividend per Share

December 1, 2022 December 22, 2022 January 5, 2023 $0.72

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September 7, 2023 September 21, 2023 October 5, 2023 $0.72

On December 1, 2022, our Board of Directors declared a quarterly dividend of $0.72 per share that was paid subsequent to the end of 2022, on January 5, 2023, to shareholders of record as of December 22, 2022.

Subsequent to the end of 2022, on February 16, 2023, our Board of Directors declared a quarterly dividend of $0.72 per share to be paid on March 16, 2023 to shareholders of record as of March 2, 2023.

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.

On December 7, 2023, our Board of Directors declared a quarterly dividend of $0.76 per share that was paid subsequent to the end of 2023, on January 4, 2024, to stockholders of record as of December 21, 2023.

Subsequent to the end of 2023, on February 15, 2024, our Board of Directors declared a quarterly dividend of $0.76 per share to be paid on March 14, 2024 to stockholders of record as of February 29, 2024.

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 considers relevant.

The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us.

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$ 7,072 $ 664 $ 2,484 $ 1,695 $ 2,229

_________________________

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

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(3) Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction.

Amounts reflected herein represent expected funding under such contracts.

Amounts reflected herein represent expected funding under such contracts and primarily relate to future purchases of vacation ownership units and information technology assets (hardware and software).

Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.

(4) Includes interest.

(5) Primarily relates to future guaranteed purchases of rental inventory of $7 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 $10 million.

(5) The lease term of the finance lease arrangement for our new corporate headquarters office building located in Orlando, Florida commenced for accounting purposes during the first quarter of 2023, upon substantial completion of construction.

See Footnote 14 “Leases” to our Financial Statements for additional information on this lease.

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

Since we are reimbursed for these commitments from the cash flows of the resorts, these obligations have minimal impact on our net income and cash flow.

Since we are reimbursed for these commitments from the cash flows of the owners’ associations, these obligations have minimal impact on our net income and cash flow.

These purchase commitments are excluded from the table above.

Leases That Have Not Yet Commenced

During 2020, we entered into a finance lease arrangement, that was amended in 2021, for our new global headquarters office building in Orlando, Florida.

The new global headquarters office building is expected to be substantially complete in the first half of 2023, at which time the lease term will commence and a right-of-use asset and corresponding lease liability will be recorded on our balance sheet.

Total payments for the initial lease term (approximately 16 years) plus, at our option, two five-year renewal terms, is $249 million.

Also see Footnote 14 “Leases” to our Financial Statements.

Supplemental Guarantor Information

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Deferred taxes — 124 242 19 (105) 280

MVW shareholders' equity 2,496 2,600 4,569 324 (7,493) 2,496

Noncontrolling interests — — — 2 — 2

MVW stockholders' equity 2,382 2,516 4,499 350 (7,365) 2,382

Total liabilities and equity $ 3,573 $ 4,792 $ 5,857 $ 2,967 $ (7,509) $ 9,680

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Net income (loss) 254 299 183 222 (706) 252

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

Net income (loss) attributable to common shareholders $ 391 $ 400 $ 418 $ 134 $ (952) $ 391

Net loss attributable to noncontrolling interests — — — 2 — 2

Net income (loss) attributable to common stockholders $ 254 $ 299 $ 183 $ 224 $ (706) $ 254

Recent Accounting Pronouncements

See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for information regarding accounting standards adopted in 2022 and other new accounting standards that were issued but not effective as of December 31, 2022.

See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information about new accounting standards and the future adoption of such standards.

Critical Accounting Estimates

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See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information on our assessments of our originated vacation ownership notes receivable reserve.

• Purchase price allocations of business combinations , which is also discussed in Footnote 3 “Acquisitions and Dispositions” to our Financial Statements.

Determining the fair value of the assets acquired and liabilities assumed as part of a business acquisition requires management to make significant judgements and estimates.

On April 1, 2021, we acquired Welk (see Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for further information).

• Inventories and cost of vacation ownership products, which requires estimation of future revenues and product costs to apply a relative sales value method specific to the vacation ownership industry and how we evaluate the fair value of our vacation ownership inventory.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis