Hilton Grand Vacations Inc.

02/26/2026 | Press release | Distributed by Public on 02/26/2026 13:11

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K.
The following discussion and analysis of our financial condition and results of operations is for the year ended December 31, 2025 compared with the year ended December 31, 2024. Discussions of our financial condition and results of operations for the year ended December 31, 2024 compared to December 31, 2023 that have been omitted under this item can be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on March 3, 2025.
Forward-Looking Statements
This disclosure includes forward-looking statements; and actual results and events may differ substantially from those discussed or highlighted in these forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements."
Overview
Our Business
We are a global timeshare company engaged in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services, primarily under the Hilton Grand Vacations brand. During 2021, we completed the Diamond Acquisition, and on January 17, 2024, we completed the Bluegreen Acquisition.
Our operations primarily consist of: selling VOIs for us and third parties; financing and servicing loans provided to consumers for their VOI purchases; operating resorts and timeshare plans; and managing our exchange programs through which our members may receive HGV Max benefits. Together our timeshare plans and exchange programs are collectively referred to as "Clubs".
As of December 31, 2025, we have over 200 properties located in the United States ("U.S."), Europe, Canada, the Caribbean, Mexico and Asia. A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, South Carolina, California, Arizona, Nevada and Virginia. Our properties feature spacious, condominium-style accommodations with superior amenities and quality service. We have rebranded many of the Diamond properties, and we expect to continue this process for a majority of the remaining Diamond properties. During 2025, we began rebranding certain Bluegreen properties to Hilton Grand Vacation brands. We anticipate rebranding the majority of the Bluegreen properties to meet Hilton brand standards.
As of December 31, 2025, we had more than 720,000 members across our club offerings. Based on the type of Club membership, members have the flexibility to exchange their VOIs for stays at Hilton Grand Vacations resorts, properties in the Hilton system of 25 industry-leading brands with over 9,000 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program, including travel services options.
Our Segments
We operate our business across two segments: (1) real estate sales and financing; and (2) resort operations and club management.
Real Estate Sales and Financing
Traditionally, timeshare operators have funded 100% of the investment necessary to acquire land and construct timeshare properties. We source VOIs through developed properties and fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers. Sales of owned, including just-in-time, inventory generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.
For the year ended December 31, 2025, sales from fee-for-service and just-in-time inventory were 17% and 9% of contract sales, respectively. See "Key Business and Financial Metrics-Real Estate Sales Operating Metrics" for additional discussion of contract sales. The estimated contract sales value related to our inventory that is currently available for sale or will be made available for sale in the future at planned projects is $14.7 billion at current pricing. Capital-efficient arrangements, comprised of our fee-for-service and just-in-time inventory, represented 35% of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.
We sell our vacation ownership products primarily through our distribution network of both-in-market and off-site sales centers. Our products are currently marketed for sale throughout the United States, Europe, Canada, Mexico and Asia. We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership. We have over 100 sales distribution centers in various domestic and international locations. Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach. We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products, are frequent leisure travelers, and have an affinity with our brands.
Tour flow quality impacts key metrics such as close rate and VPG, defined in "Key Business and Financial Metrics-Real Estate Sales Operating Metrics." Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables. For the years ended December 31, 2025, 2024 and 2023, 74%, 72% and 70% of our contract sales were to our existing owners.
We provide financing for members purchasing our developed and acquired inventory and generate interest income on the loans. Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully amortizing loans that bear a fixed interest rate typically ranging from 2.5% to 25% per annum. Financing propensity was 67% for both of the years ended December 31, 2025, and 2024. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume originated in the period.
The interest rate on our loans is determined by, among other factors, the amount of the down payment, the borrower's credit profile and the loan term. The weighted-average FICO scores for loans to U.S. and Canadian borrowers at the time of origination were as follows:
Year Ended December 31,
2025 2024 2023
Weighted-average FICO score 734 741 737
Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Clubs. Historical default rates, which represent annual defaults as a percentage of each year's beginning gross timeshare financing receivables balance, were as follows:
Year Ended December 31,
2025 2024 2023
Historical default rates(1)
9.86 % 10.77 % 8.56 %
(1)A loan is considered to be in default if it is equal to or greater than 121 days past due as of the prior month end.
Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 7: Timeshare Financing Receivablesin our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
In addition, we earn fees from servicing our securitized timeshare financing receivables and the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs.
Resort Operations and Club Management
We enter into management agreements with the HOAs of the timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records including reports, budgets and projections,
arranging for annual audits and maintenance fee billing and collections and employment training and personnel oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10% to 15% of the costs to operate the applicable resort. As a result, the fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are also reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services. The original terms of our management agreements typically range from three to five years and the agreements are subject to periodic renewal for one- to three-year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.
We also manage and operate the Clubs and exchange programs. When owners purchase a VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.
We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our Club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties.
Principal Components and Factors Affecting Our Results of Operations
Principal Components of Revenues
•Sales of VOIs, net represents revenue recognized from the sale of owned VOIs, net of amounts considered uncollectible and sales incentives.
•Fee-for-service commissions, package sales and other fees represents sales commissions, brand fees and other fees earned on the sales of VOIs through fee-for-service agreements with third-party developers. All sales commissions and brand fees are based on the total sales price of the VOIs. Also included in Fee-for-service commissions, package sales and other fees are revenues from marketing and incentive programs, except for redemption of vacation packages and bonus points for stays at HGV properties, which are included in Rental and ancillary services.
During the first quarter of 2025, we renamed the line item "Sales, marketing, brand and other fees"as previously shown on the consolidated statements of income, and used elsewhere within our filing, to "Fee-for-service commissions, package sales and other fees"to better align with the underlying activity. This change did not result in any reclassification of revenues and had no impact on our consolidated results for any of the periods presented.
•Financing represents revenue from the financing of sales of our owned intervals, which includes interest income and fees from servicing loans. We also earn fees from servicing the loans provided by third-party developers to purchasers of their VOIs.
•Resort and club management represents revenues from Club activation fees, annual dues and transaction fees from member exchanges. Resort and club managementalso includes recurring management fees under our agreements with HOAs for day-to-day-management services, including housekeeping services, maintenance, and certain accounting and administrative services for HOAs, generally based on a percentage of costs to operate the resorts.
•Rental and ancillary services represents revenues from transient rentals of unoccupied vacation ownership units and revenues recognized from the utilization of bonus points and vacation packages when points and packages are redeemed for rental stays at one of our resorts. We also earn fees from the rental of inventory owned by third parties. Ancillary revenues include food and beverage, retail, spa offerings and other guest services provided to resort guests.
•Cost reimbursements include costs that HOAs and developers reimburse to us. These costs primarily consist of payroll and payroll-related costs for management of the HOAs and other services we provide where we are the employer and insurer. The corresponding expenses are presented as Cost reimbursementsexpense in our consolidated statements of income resulting in no effect on net income.
Factors Affecting Revenues
•Relationships with developers. We have entered into fee-for-service and just-in-time agreements to sell VOIs on behalf of or acquire VOIs from third-party developers. The success and sustainability of our capital-efficient business model depends on our ability to maintain good relationships with third-party developers. Our relationships with these third parties also generate new relationships with developers and
opportunities for property development that can support our growth. We believe that we have strong relationships with our third-party developers, and we are committed to the continued growth and development of these relationships. These relationships exist with a diverse group of developers and are not significantly concentrated with any particular third party.
•Construction activities. We have entered into agreements with third parties to acquire both completed VOIs and property. At the same time, we have increased our own development activities to construct new properties that we will own and from which we are selling, and will continue to sell, units and VOIs. These activities, and in particular the development of real property into inventory, are subject to construction risks including, construction delays, zoning and other local, state or governmental approvals and failure by third-party contractors to perform. The realization of these factors could result in the inability to source inventory and ultimately lead to sales declines.
•Registration activities. The registration of VOIs for sale requires time and cost, and in many jurisdictions the exact date of registration approval cannot be predicted accurately. The inability to register our products in a timely, cost-effective fashion could result in the inability to sell our products and ultimately lead to sales declines.
•Relationship with Hilton. We are party to a license agreement with Hilton granting us the right to use the Hilton-branded trademarks, trade names and related intellectual property in our business for the term of the agreement. The termination of the license agreement or exercise of other remedies would materially harm our business and results of operations and impair our ability to market and sell our products and maintain our competitive position. For example, if we are not able to rely on the strength of the Hilton brands to attract prospective members and guest tours in the marketplace, our revenue would decline, and our marketing and sales expenses would increase.
•Consumer demand and global economic conditions. Consumer demand for our products and services may be affected by the performance of the general economy, including the ability to generate high quality tours, and is sensitive to business and personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence and adverse political conditions can subject and have subjected our revenues to significant volatility.
•Marketing. We rely on call transfers from Hilton, execution of a successful digital marketing strategy, vacation traffic at key locations, and other critical marketing elements to increase tour flow, VPG, and VOI sales, thereby increasing our revenue. Any significant changes to one or more factors that adversely affect our marketing activities, such as changes in consumer behavior and preference for vacations, decreases in call transfers from Hilton due to increasing consumer reliance on digital tools, and declining quality and/or volume of tour flow may adversely and materially impact our revenue.
•Interest rates. We generate interest income from consumer loans we originate and declines in interest rates may cause us to lower our interest rates on our originated loans, which would adversely affect our income generated on future loans. Conversely, if interest rates increase significantly, it would increase the cost of purchasing VOIs for any purchaser who is financing their acquisition and may deter potential purchasers from buying a VOI, which could result in sales declines.
•Competition. We compete with other hotel and resort timeshare operators for sales of VOIs based principally on location, quality of accommodations, price, service levels and amenities, financing terms, quality of service, terms of property use, reservation systems and flexibility for VOI owners to exchange into time at other timeshare properties or other travel rewards. In addition, we compete based on brand name recognition and reputation. Our primary competitors in the timeshare space include Marriott Vacations Worldwide, Travel + Leisure Co., Disney Vacation Club, Holiday Inn Club Vacations, Westgate Resorts and the Berkley Group.
Principal Components of Expenses
•Cost of VOI salesrepresents the costs attributable to the sales of owned VOIs recognized.
•Sales and marketing represents costs incurred to sell and market VOIs, including costs incurred relating to marketing and incentive programs, costs for tours, rental expense and wages and sales commissions.
•Financing represents consumer financing interest expense related to our debt securitized by gross timeshare financing receivables ("Securitized Debt") and Timeshare Facility, amortization of the related deferred loan costs and other expenses incurred in providing consumer financing and servicing loans.
•Resort and club management represents costs incurred to manage resorts and the Clubs, including payroll and related costs and other administrative costs.
•Rental and ancillary services include payroll and related costs, costs incurred from participating in the Hilton Honors loyalty program, retail, food and beverage costs and maintenance fees on unsold inventory.
•General and administrative consists primarily of compensation expense for our corporate staff and personnel supporting our business segments, professional fees (including consulting, audit and legal fees), administrative and related expenses.
•Depreciation and amortizationare non-cash expenses that primarily consist of depreciation of fixed assets such as buildings and leasehold improvements and furniture and equipment at our sales centers, corporate offices, and assets purchased for future conversion to inventory, as well as amortization of our trade names, management agreement contracts, club member relationship and marketing agreement intangibles and capitalized software.
•License fee expenserepresents primarily the royalty fee paid to Hilton under a license agreement for the exclusive right to use the Hilton Grand Vacations mark, which is generally based on a percentage of gross sales volume of certain revenue streams.
•Acquisition and integration-related expenserepresents direct expenses for the Diamond Acquisition and the Bluegreen Acquisition, including integration costs, legal and other professional fees. Integration costs include technology-related costs, fees paid to management consultants and employee-related costs such as severance and transition.
•Cost reimbursements include costs that HOAs and developers reimburse to us. These costs primarily consist of payroll and payroll-related costs for management of the HOAs and other services we provide where we are the employer and insurer. The corresponding revenues are presented as Cost reimbursementsrevenue in our consolidated statements of income resulting in no effect on net income.
Factors Affecting Expenses
•Costs of VOI sales. In periods where there is increased demand for VOIs, we may incur increased costs to acquire inventory in the short-term, which can have an adverse effect on our cash flows, margins and profits. In addition, the registration of inventory for sale requires time and cost, and in many jurisdictions the exact date of registration approval cannot be predicted accurately. In periods where more upgrades are occurring and we are not generating increased sales volume on unsold supply, we could see an adverse effect on our cash flows, margins and profits.
Furthermore, construction delays, zoning and other local, state or federal governmental approvals, particularly in new geographic areas with which we are unfamiliar, cost overruns, lender financial defaults, or natural or man-made disasters, as well as failure by third-party contractors to perform for any reason, could lead to an adverse effect on our cash flows, margins and profits.
•Sales and marketing expense. A significant portion of our costs relates to selling and marketing of our VOIs. In periods of decreased demand for VOIs, we may be unable to reduce our sales and marketing expenses quickly enough to prevent a deterioration of our profits and margins on our real estate operations.
•Rental and ancillary services expense. These expenses include personnel costs, rent, property taxes, insurance and utilities. We pay a portion of these costs through maintenance fees of unsold intervals and by subsidizing the costs of HOAs not covered by maintenance fees collected. If we are unable to decrease these costs significantly or rapidly when demand for our unit rentals decreases, the resulting decline in our revenues could have an adverse effect on our net cash flow, margins and profits.
•General and administrative.Increases in general and administrative expenses associated with operating as a publicly traded company in a competitive and dynamic timeshare industry, regulatory filings and professional fees may affect our net cash flows, margins and profits.
•Interest rates. Increases in interest rates would increase the consumer financing interest expense we pay on the Timeshare Facility and securitized debt and could adversely affect our financing operations in future securitization or other debt transactions, affecting net cash flow, margins and profits.
Key Business and Financial Metrics
Real Estate Sales Operating Metrics
We measure our performance using the following key operating metrics:
•Contract sales represent the total amount of VOI products (fee-for-service, just-in-time, developed, and points-based) under purchase agreements signed during the period where we have received a down payment of at least 10% of the contract price. Contract sales differ from revenues from the Sales of VOIs, netthat we report in our consolidated statements of income due to the requirements for revenue recognition, as well as adjustments for incentives. While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S. GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of our results to the results of our competitors which may source their VOI products differently.
We believe that the presentation of contract sales on a combined basis (fee-for-service, just-in-time, developed and points-based) is most appropriate for the purpose of the operating metric, additional information regarding the split of contract sales, is included in "-Real Estate Sales Operating Metrics" below. See Note 2: Summary of Significant Accounting Policiesin our consolidated financial statements included in Item 8 in this Annual Report on form 10-K, for additional information on Sales of VOIs, net.
•Tour flow represents the number of sales presentations given at our sales centers during the period.
•Volume per guest ("VPG") represents the sales attributable to tours at our sales locations and is calculated by dividing contract sales, excluding telesales, by tour flow. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders
EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income, before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) other gains and losses, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges.
Adjusted EBITDA Attributable to Stockholders is Adjusted EBITDA excluding amounts attributable to the noncontrolling interest in Bluegreen/Big Cedar Vacations LLC ("Big Cedar"), a joint venture in which HGV is deemed to hold a controlling financial interest based on its 51% equity interest, its active role as the day-to-day manager of its activities, and majority voting control of its management committee.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may not be comparable to similarly titled measures of other companies.
We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income, cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect changes in, or cash requirements for, our working capital needs;
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness;
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our tax expense or the cash requirements to pay our taxes;
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and
•EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.
Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
See below under "Reconciliation of Non-GAAP Measures to GAAP Measures" for reconciliation of our EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders to net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures.
Non-GAAP Measures within Our Segments
Within each of our two reportable segments, we present additional profit and profit margin information for certain key activities-real estate, financing, resort and club management, and rental and ancillary services. These non-GAAP measures are used by our management team to evaluate the operating performance of each of our key activities, and to make day-to-day operating decisions. We believe these additional measures are also important in helping investors understand the performance and efficiency with which we are able to convert revenues for each of these primary activities into operating profit, both in dollars and as margins, and are frequently used by securities analysts, investors and other interested parties as one of common performance measures to compare results or estimate valuations across companies in our industry. Specifically-
•Sales revenue represents sales of VOIs, net, and Fee-for-service commissions and brand feesearned from the sale of fee-for-service VOIs. Fee-for-service commissions and brand fees represents Fee-for-service commissions, package sales and other fees, which corresponds to the applicable line item from our consolidated statements of income, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Real estate expense represents Costs of VOI salesand Sales and marketing expense, net. Sales and marketing expense, net represents sales and marketing expense, which corresponds to the applicable line item from our consolidated statements of income, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Both fee-for-service commissions and brand fees and sales and marketing expense, net, represent non-GAAP measures. We present these items net because it provides a meaningful measure of our underlying real estate profit related to our primary real estate activities which focus on the sales and costs associated with our VOIs.
•Real estate profit represents sales revenue less real estate expense. Real estate margin is calculated as a percentage by dividing real estate profit by sales revenue. We consider real estate profit margin to be an important non-GAAP operating measure because it measures the efficiency of our sales and marketing spending, management of inventory costs, and initiatives intended to improve profitability.
•Financing profit represents financing revenue, net of financing expense, both of which correspond to the applicable line items from our consolidated statements of income. Financing profit margin is calculated as a percentage by dividing financing profit by financing revenue. We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our financing business in connection with our VOI sales.
•Resort and club management profit represents resort and club management revenue, net of resort and club management expense, both of which correspond to the applicable line items from our consolidated statements of income. Resort and club management profit margin is calculated as a percentage by dividing resort and club management profit by resort and club management revenue. We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our resort and club management business that support our VOI sales business.
•Rental and ancillary services profit represents rental and ancillary services revenues, net of rental and ancillary services expenses, both of which correspond to the applicable line items from our consolidated statements of income. Rental and ancillary services profit margin is calculated as a percentage by dividing rental and ancillary services profit by rental and ancillary services revenue. We consider this to be an important non-GAAP operating measure because it measures our ability to convert available inventory and unoccupied rooms into revenue and profit by transient rentals, as well as profitability of other services, such as food and beverage, retail, spa offerings and other guest services.
Each of the foregoing four profit measures is not a recognized term under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our calculation of such measures may not be comparable to similarly titled measures of other companies. Furthermore, these measures have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income or other methods of analyzing our results as reported under U.S. GAAP. Such limitations include the fact that these measures only include those revenues and expenses related to one of the four specified operating activities as opposed to on a consolidated basis, and other limitations that are similar to those discussed above under "EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders." See below under "Reconciliation of Non-GAAP Measures to GAAP Measures" for reconciliation of these four profit measures to net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures.
Real Estate Sales Operating Metrics
Year Ended December 31,
2025 vs 2024 (1)
($ in millions, except Tour flow and VPG) 2025 2024 2023 $ %
Contract sales $ 3,314 $ 3,002 $ 2,310 $ 312 10.4
Adjustments:
Fee-for-service sales(2)
(547) (540) (644) (7) 1.3
Provision for financing receivables losses (422) (363) (171) (59) 16.3
Reportability and other:
Net (deferrals) of sales of VOIs under construction(3)
(368) (52) (35) (316) NM
Fee-for-service sale upgrades, net - - 19 - -
Other(4)
(165) (138) (63) (27) 19.6
Sales of VOIs, net $ 1,812 $ 1,909 $ 1,416 $ (97) (5.1)
Tour flow 856,676 835,181 608,367 21,495
VPG $ 3,851 $ 3,572 $ 3,760 $ 279
(1)NM - fluctuation in terms of percentage change is not meaningful.
(2)Represents contract sales from fee-for-service properties on which we earn Fee-for-service commissions and brand fees.
(3)Represents the net recognition of revenues related to the Sales of VOIs under construction that are recognized when construction is complete.
(4)Includes adjustments for revenue recognition, including sales incentives and amounts in rescission.
Contract sales increased $312 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to increases in both VPG of 7.8% and tour flow of 2.6%.
Net Construction Deferral Activity
In accordance with Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606"), revenue and the related costs to fulfill and acquire the contract ("direct costs") from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed. The real estate sales and financing segment is impacted by construction related deferral and recognition activity. In periods where Sales of VOIs and related direct costs of projects under construction are deferred, margin percentages will generally contract as the indirect marketing and selling costs associated with these sales are recognized as incurred in the current period. In periods where previously deferred Sales of VOIs and related direct costs are recognized upon construction completion, margin percentages will generally expand as the indirect marketing and selling costs associated with these sales were recognized in prior periods.
The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction:
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $
Sales of VOIs (deferrals) $ (368) $ (158) $ (39) $ (210)
Sales of VOIs recognitions - 106 4 (106)
Net Sales of VOIs (deferrals) recognitions
(368) (52) (35) (316)
Cost of VOI sales (deferrals) (105) (48) (10) (57)
Cost of VOI sales recognitions - 30 1 (30)
Net Cost of VOI sales (deferrals) recognitions
(105) (18) (9) (87)
Sales and marketing expense (deferrals) (61) (22) (6) (39)
Sales and marketing expense recognitions - 15 1 (15)
Net Sales and marketing expense (deferrals) recognitions
(61) (7) (5) (54)
Net construction (deferrals) recognitions
$ (202) $ (27) $ (21) $ (175)
Results of Operations
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Segment Results
The following tables present our revenues by segment for the year ended December 31, 2025, compared to the years ended December 31, 2024, and 2023. We do not include equity in earnings from unconsolidated affiliates in our measures of segment revenues.
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Revenues:
Real estate sales and financing $ 2,989 $ 3,010 $ 2,357 $ (21) (0.7)
Resort operations and club management 1,625 1,528 1,291 97 6.3
Total segment revenues 4,614 4,538 3,648 76 1.7
Cost reimbursements 534 516 386 18 3.5
Intersegment eliminations(1)
(101) (73) (56) (28) 38.4
Total revenues $ 5,047 $ 4,981 $ 3,978 $ 66 1.3
(1)See Note 22: Business Segmentsin our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for details on the intersegment eliminations.
Real Estate Sales and Financing Segment
Real Estate
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Sales of VOIs, net $ 1,812 $ 1,909 $ 1,416 $ (97) (5.1)
Fee-for-service commissions and brand fees 328 328 393 - -
Sales revenue 2,140 2,237 1,809 (97) (4.3)
Less:
Cost of VOI sales 152 239 194 (87) (36.4)
Sales and marketing expense, net 1,535 1,459 1,040 76 5.2
Real Estate expense 1,687 1,698 1,234 (11) (0.6)
Real Estate profit $ 453 $ 539 $ 575 $ (86) (16.0)
Real Estate profit margin(1)
21.2 % 24.1 % 31.8 %
(1)Excluding the marketing revenue and other fees adjustment, Real estate profit margin was 18.3%, 21.2% and 28.0% for the years ended December 31, 2025, 2024 and 2023.
Sales revenue decreased $97 million for the year ended December 31, 2025, compared to the same period in 2024, primarily due to net construction deferral activity of $368 million in 2025 compared to a net construction deferral activity of $52 million in 2024, and increases in the provision for receivable losses of $59 million and sales incentives of $51 million, partially offset by an increase in contract sales excluding fee-for-service of $305 million and a decrease in the sales rescission of $24 million.
Real estate expense decreased $11 million for the year ended December 31, 2025, compared to the same period in 2024, primarily due to net construction deferral activity of $166 million in 2025 compared to net construction deferral activity of $25 million in 2024, partially offset increases in selling expenses of $85 million and costs of contract sales excluding fee-for-service of $27 million.
Financing
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Interest income $ 500 $ 468 $ 287 $ 32 6.8
Other financing revenue 40 39 34 1 2.6
Premium amortization of acquired timeshare financing receivables
(27) (43) (14) 16 (37.2)
Financing revenue 513 464 307 49 10.6
Consumer financing interest expense 117 99 50 18 18.2
Other financing expense 92 82 51 10 12.2
Amortization of acquired non-recourse debt discounts and premiums, net
6 7 (2) (1) (14.3)
Financing expense 215 188 99 27 14.4
Financing profit $ 298 $ 276 $ 208 $ 22 8.0
Financing profit margin 58.1 % 59.5 % 67.8 %
Financing revenue increased by $49 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to an increase in the average outstanding balance of the timeshare financing receivables portfolio and a decrease in the premium amortization of acquired timeshare financing receivables of $16 million.
Financing expense increased by $27 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to increases in consumer financing interest expense of $18 million and provision for financing receivable losses of the acquired portfolios of $6 million. The increase in consumer financing interest expense was due to an increase in the average non-recourse debt balance.
Resort Operations and Club Management Segment
Resort and Club Management
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Club management revenue $ 321 $ 303 $ 240 $ 18 5.9
Resort management revenue 457 419 329 38 9.1
Resort and club management revenues 778 722 569 56 7.8
Club management expense 87 83 60 4 4.8
Resort management expense 140 128 117 12 9.4
Resort and club management expenses 227 211 177 16 7.6
Resort and club management profit $ 551 $ 511 $ 392 $ 40 7.8
Resort and club management profit margin 70.8 % 70.8 % 68.9 %
Resort and club management revenues increased $56 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to increases in management fee revenue of $19 million, club annual dues revenue of $10 million and license fee revenue of $10 million.
Resort and club management expenses increased $16 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to property management expenses.
Rental and Ancillary Services
Year Ended December 31,
2025 vs 2024 (1)
($ in millions) 2025 2024 2023 $ %
Rental revenues $ 692 $ 682 $ 623 $ 10 1.5
Ancillary services revenues 54 51 43 3 5.9
Rental and ancillary services revenues 746 733 666 13 1.8
Rental expenses 738 681 573 57 8.4
Ancillary services expense 47 43 39 4 9.3
Rental and ancillary services expenses 785 724 612 61 8.4
Rental and ancillary services profit
$ (39) $ 9 $ 54 $ (48) NM
Rental and ancillary services profit margin (5.2) % 1.2 % 8.1 %
(1) NM - fluctuation in terms of percentage change is not meaningful.
Rental and ancillary services revenue increased $13 million for the year ended December 31, 2025, compared to the same period in 2024 primarily driven by higher transient revenue as a result of increased occupied room nights.
Rental and ancillary services expenses increased $61 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to increases in maintenance fees on unsold inventory and other rental expenses.
Other Operating Expenses
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
General and administrative $ 215 $ 199 $ 194 $ 16 8.0
Depreciation and amortization 273 268 213 5 1.9
License fee expense 214 171 138 43 25.1
Impairment expense 3 2 3 1 50.0
General and administrative expenses increased by $16 million for the year ended December 31, 2025, compared to the same period in 2024 primarily due to employee-related costs.
License fee expense increased by $43 million for the year ended December 31, 2025, compared to the same period in 2024, primarily due to licensing fees paid to Hilton.
Acquisition and Integration-Related Expense
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Acquisition and integration-related expense $ 98 $ 237 $ 68 $ (139) (58.6)
Acquisition and integration-related costs include direct expenses related to our recent acquisitions including integration costs, legal and other professional fees. Integration costs include technology-related costs, fees paid to management consultants, rebranding fees and employee-related costs such as severance and retention. For the year ended December 31, 2025, acquisition and integration-related costs decreased by $139 million compared to the same period in 2024. The decrease was primarily due to acquiring Bluegreen in 2024.
Non-Operating Expenses
Year Ended December 31,
2025 vs 2024 (1)
($ in millions) 2025 2024 2023 $ %
Interest expense $ 311 $ 329 $ 178 $ (18) (5.5)
Equity in earnings from unconsolidated affiliates (19) (18) (12) (1) 5.6
Other (gain) loss, net
(7) 11 (2) (18) NM
Income tax expense 76 76 136 - -
(1)NM - Fluctuation in terms of percentage change is not meaningful.
The changes in non-operating expenses for the year ended December 31, 2025 compared to the same period in 2024, were primarily due to interest expense and other (gain) loss, net. The decrease in interest expense was primarily due to a decrease in the overall debt balance and a decrease in the weighted average interest rate. The change in other (gain) loss, net is primarily due to revaluation of our foreign currency transactions.
Net income attributable to noncontrolling interest
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Net income attributable to noncontrolling interest
$ 18 $ 13 $ - $ 5 38.5
We include in our consolidated financial statements the results of operations and financial condition of Big Cedar, the joint venture with Bluegreen/Big Cedar Vacations, LLC in which HGV holds 51% equity interest. Net income attributable to noncontrolling interest is the portion of Big Cedar that is attributable to Big Cedar Vacations, LLC, which holds the remaining 49% equity interest.
Reconciliation of Non-GAAP Measures to GAAP Measures
The following table reconciles net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures, to EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders:
Year Ended December 31,
2025 vs 2024(1)
($ in millions) 2025 2024 2023 $ %
Net income attributable to stockholders $ 81 $ 47 $ 313 $ 34 72.3
Net income attributable to noncontrolling interest
18 13 - 5 38.5
Net income
99 60 313 39 65.0
Interest expense 311 329 178 (18) (5.5)
Income tax expense
76 76 136 - -
Depreciation and amortization 273 268 213 5 1.9
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 1 2 2 (1) (50.0)
EBITDA 760 735 842 25 3.4
Other (gain) loss, net
(7) 11 (2) (18) NM
Share-based compensation expense 64 47 40 17 36.2
Impairment expense 3 2 3 1 50.0
Acquisition and integration-related expense 98 237 68 (139) (58.6)
Other adjustment items(2)
51 62 54 (11) (17.7)
Adjusted EBITDA 969 1,094 1,005 (125) (11.4)
Adjusted EBITDA attributable to noncontrolling interest 19 16 - 3 18.8
Adjusted EBITDA attributable to stockholders $ 950 $ 1,078 $ 1,005 $ (128) -
(1)NM - fluctuation in terms of percentage change is not meaningful.
(2)These amounts include costs associated with restructuring, one-time charges, other non-cash items, and amortization of fair value premiums and discounts resulting from purchase accounting.
The following table reconciles net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures, to EBITDA and the total of our real estate, financing, resort and club management, and rental and ancillary services profit measures.
Year Ended December 31,
2025 vs 2024(1)
($ in millions) 2025 2024 2023 $ %
Net income attributable to stockholders $ 81 $ 47 $ 313 $ 34 72.3
Net income attributable to noncontrolling interest
18 13 - 5 38.5
Net income
99 60 313 39 65.0
Interest expense 311 329 178 (18) (5.5)
Income tax expense
76 76 136 - -
Depreciation and amortization 273 268 213 5 1.9
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 1 2 2 (1) (50.0)
EBITDA 760 735 842 25 3.4
Other (gain) loss, net
(7) 11 (2) (18) NM
Equity in earnings from unconsolidated affiliates(2)
(20) (20) (14) - -
Impairment expense 3 2 3 1 50.0
License fee expense 214 171 138 43 25.1
Acquisition and integration-related expense 98 237 68 (139) (58.6)
General and administrative 215 199 194 16 8.0
Profit
$ 1,263 $ 1,335 $ 1,229 $ (72) (5.4)
Real estate profit 453 539 575 (86) (16.0)
Financing profit 298 276 208 22 8.0
Resort and club management profit 551 511 392 40 7.8
Rental and ancillary services profit (39) 9 54 (48) (533.3)
Profit $ 1,263 $ 1,335 $ 1,229 $ (72) (5.4)
(1)NM - fluctuation in terms of percentage change is not meaningful.
(2) Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $1 million for the year ended December 31, 2025, and $2 million for each of the years ended December 31, 2024 and 2023.
We evaluate our business segment operating performance using segment Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders, as described in Note 22: Business Segmentsin our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. For a discussion of our definition of EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders, how management uses them to manage our business and material limitations on their usefulness, refer to "-Key Business and Financial Metrics-EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders." The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA to Adjusted EBITDA Attributable to Stockholders:
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Adjusted EBITDA:
Real estate sales and financing(1)
$ 707 $ 802 $ 754 $ (95) (11.8)
Resort operations and club management(1)
620 604 504 16 2.6
Adjustments:
Adjusted EBITDA from unconsolidated affiliates 20 20 14 - -
License fee expense (214) (171) (138) (43) 25.1
General and administrative(2)
(164) (161) (129) (3) 1.9
Adjusted EBITDA 969 1,094 1,005 (125) (11.4)
Adjusted EBITDA attributable to noncontrolling interest
19 16 - 3 18.8
Adjusted EBITDA attributable to stockholders $ 950 $ 1,078 $ 1,005 $ (128) -
(1)Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.
(2)Adjusts for segment related share-based compensation, depreciation and other adjustment items.
The following table reconciles our Fee-for-service commissions, package sales and other fees, our most comparable U.S. GAAP financial measure, to Fee-for-service commissions and brand fees, and Sales and marketing expense, our most comparable U.S. GAAP financial measure, to Sales and marketing expense, net. Fee-for-service commissions and brand fees and Sales and marketing, net, are used in calculating our real estate profit and real estate profit margin. See "Real Estate Sales and Financing Segment-Real Estate" above.
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $ %
Fee-for-service commissions, package sales and other fees
$ 664 $ 637 $ 634 $ 27 4.2
Less: Package sales and other fees(1)
(336) (309) (241) (27) 8.7
Fee-for-service commissions and brand fees $ 328 $ 328 $ 393 $ - -
Sales and marketing expense $ 1,871 $ 1,768 $ 1,281 $ 103 5.8
Less: Package sales and other fees(1)
(336) (309) (241) (27) 8.7
Sales and marketing expense, net $ 1,535 $ 1,459 $ 1,040 $ 76 5.2
(1)Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.
Liquidity and Capital Resources
Overview
Our cash management objectives are to maintain the availability of liquidity, minimize operational costs, remit debt payments and fund future acquisitions and development projects. Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, capital expenditures for renovations and maintenance at our offices and sales centers, and share repurchases. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with potential acquisitions and development projects, including rebranding, and share repurchases. Our primary source of funding to satisfy these requirements is derived from sales and financing of vacation ownership intervals,
management of our resorts and Clubs, and rentals of available inventory. See Item 1. Business for more information on our reportable segments and sources of revenue.
We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our revolver credit facility, our non-recourse revolving timeshare credit facility ("Timeshare Facility"), and through periodic securitizations of our timeshare financing receivables.
The following highlights certain matters that impacted our liquidity for the year ended December 31, 2025:
•As of December 31, 2025, we had total cash and cash equivalents of $239 million and restricted cash of $332 million. Restricted cash primarily consists of escrow deposits received on VOI sales and reserves related to non-recourse debt.
•During the year ended December 31, 2025, we repurchased 15 million shares for $600 million, excluding the excise tax, under our share repurchase programs. See Note 20: Earnings Per Sharefor additional information.
•In June 2025, we completed a securitization of $300 million of gross timeshare financing receivables. The proceeds were used to pay down in part some of our existing debt and for other general corporate purposes. See Note 15: Debt and Non-Recourse Debtfor additional information.
•In July 2025, we completed a securitization of ¥9.5 billion, or $65 million, of gross timeshare financing receivables domiciled in Japan. The proceeds were primarily used for general corporate purposes. See Note 15: Debt and Non-Recourse Debtfor additional information.
•In August 2025, we completed a securitization of $400 million of gross timeshare financing receivables. The proceeds were used to pay down in part some of our existing debt and for other general corporate purposes. See Note 15: Debt and Non-Recourse Debtfor additional information.
•In December 2025, we completed a securitization of $400 million of gross timeshare financing receivables. The proceeds were used to pay down debt and for other general corporate purposes. See Note 15: Debt and Non-Recourse Debtfor additional information.
•As of December 31, 2025, we have $809 million remaining borrowing capacity under the revolver credit facility.
•As of December 31, 2025, we have an aggregate of $235 million remaining borrowing capacity under our Timeshare Facility. As of December 31, 2025, we had $943 million of notes that were current on payments but not securitized. Of that figure, $374 million could be monetized through either warehouse borrowing or securitization while another $388 million of mortgage notes we anticipate being eligible following certain customary milestones such as first payment, deeding and recording.
We believe that these actions, together with drawing on available borrowings under our revolver credit facility and preserving our capacity under our Timeshare Facility as described above, will provide adequate capital to meet our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, additional costs related to complying with various regulatory requirements and to finance our long-term growth plan and capital expenditures for the foreseeable future.
We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the optimal level of receivables, and provides the ability to be strategically opportunistic in the marketplace. We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of December 31, 2025, our inventory-related purchase commitments totaled $226 million over a period of 10 years.
Sources and Uses of Our Cash
The following table summarizes our net cash flows and key metrics related to our liquidity:
Year Ended December 31,
2025 vs 2024
($ in millions) 2025 2024 2023 $
Net cash provided by (used in):
Operating activities $ 300 $ 309 $ 312 $ (9)
Investing activities (146) (1,571) (158) 1,425
Financing activities (338) 1,156 183 (1,494)
Operating Activities
Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related rental and ancillary services. Cash flows used in operating activities primarily include spending for the purchase and development of real estate for future conversion to inventory and funding our working capital needs. Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs; the degree to which our owners finance their purchase and our owners' repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.
The change in net cash flows provided by operating activities for the year ended December 31, 2025, compared to the same period in 2024 was primarily due to a $92 million increase in cash used for working capital, a $27 million increase in deferred tax benefit and a $18 million change in other gains and losses, partially offset by a $65 million increase in provision for financing receivable losses, a $39 million increase in net income and a $17 million increase in share-based compensation expense.
The following table exhibits our VOI inventory spending for the years ended December 31, 2025, 2024 and 2023.
Year Ended December 31,
($ in millions) 2025 2024 2023
VOI spending - owned properties(1)
$ 273 $ 318 $ 243
VOI spending - fee-for-service upgrades(2)
- - 16
Purchases and development of real estate for future conversion to inventory 96 127 39
Total VOI inventory spending $ 369 $ 445 $ 298
(1)Relates to costs on properties that are classified as Inventoryon our consolidated balance sheets.
(2)Includes costs related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects.
Investing Activities
Investing activities include cash paid for acquisitions, capital expenditures and software capitalization costs. Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.
Net cash used in investing activities was $146 million for the year ended December 31, 2025, compared to $1,571 million for the same period in 2024. The decrease was primarily due to the Bluegreen Acquisition in 2024.
Financing Activities
Net cash used in financing activities for the year ended December 31, 2025 was $338 million, compared to net cash provided of $1,156 million for the same period in 2024. The change was primarily due to net proceeds from debt and non-recourse debt of $1,664 million in 2024 compared to net proceeds of $286 million in 2025, a $168 million increase in share repurchases, partially offset by a $35 million decrease in debt issuance costs and a $12 million decrease in payments of withholding taxes on vesting of restricted stock units.
Share Repurchase Plans
On July 29, 2025, our Board of Directors approved a new share repurchase program authorizing us to repurchase up to an aggregate of $600 million of our outstanding shares of common stock over a two-year period (the "2025 Repurchase Plan"), which is in addition to the amount that remained at the time under the current 2024 repurchase plan that our Board of Directors had approved in August 2024. As of December 31, 2025, we had $428 million of remaining availability under the 2025 Repurchase Plan.
Contractual Obligations
Our commitments primarily relate to agreements with developers to purchase or construct vacation ownership units, operating leases, marketing and license fee agreements and obligations associated with our debt, non-recourse debt and the related interest. As of December 31, 2025, we were committed to $9.4 billion in contractual obligations over 14 years, $1.0 billion of which will be fulfilled in 2026. This amount includes $1.5 billion of interest on our debt and non-recourse debt, of which $362 million will be incurred in 2026. The ultimate amount and timing of certain commitments is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain
circumstances. See Note 15:Debt and Non-recourse Debt,Note 17:Leases and Note 23: Commitments and Contingencies,in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.
We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating. We have commitments from surety providers in the amount of $439 million as of December 31, 2025, which primarily consist of escrow and subsidy related bonds.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures in the consolidated financial statements and accompanying footnotes. We believe that of our significant accounting policies, which are described in Note 2:Summary of Significant Accounting Policiesin our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K, the following accounting policies are critical because they involve a higher degree of judgment, and the estimates required to be made are based on assumptions that are inherently uncertain. As a result, these accounting policies could materially affect our financial position, results of operations and related disclosures. On an ongoing basis, we evaluate these estimates and judgments based on historical experiences and various other factors that are believed to reflect the current circumstances. While we believe our estimates, assumptions and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material effect on our financial position or results of operations.
Revenue Recognition
In accordance with ASC 606, revenue is recognized upon the transfer of control of promised goods or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. To achieve the core principle of the guidance, we take the following steps: (i) identify the contract with the customer; (ii) determine whether the promised goods or services are separate performance obligations in the contract; (iii) determine the transaction price, including considering the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract based on the standalone selling price or estimated standalone selling price of the good or service; and (v) recognize revenue when (or as) we satisfy each performance obligation.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. For arrangements that contain multiple goods or services, we determine whether such goods or services are distinct performance obligations that should be accounted for separately in the arrangement. We then recognize the revenue allocated to each performance obligation as the related performance obligation is satisfied. See Note 2:Summary of Significant Accounting Policiesin our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.
Inventory and Cost of Sales
We use the relative sales value method of costing our VOI sales and relieving inventory, which requires us to make estimates subject to significant uncertainty. Significant assumptions include future VOI sales prices, timing and volume of VOI sales, and provisions for financing receivables losses on financed sales of VOIs. Other assumptions include sales incentives, projected future cost and volume of recoveries. We aggregate these factors to calculate total net cost of sales of VOIs as a percentage of net sales of VOIs and apply this ratio to allocate the cost of sales to recognized sales of VOIs. The effect of changes in these estimates over the life of a project are recognized on a retrospective basis through corresponding adjustments to inventory and cost of sales in the period in which the estimates are revised. See Note 2:Summary of Significant Accounting Policiesin our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.
Allowance for Financing Receivables Losses
The allowance for financing receivables losses is related to the receivables generated by our financing of VOI sales, which are secured by the underlying timeshare properties. We determine our financing receivables to be past due based on the contractual terms of the individual mortgage loans. We use a technique referred to as static pool analysis as the basis for determining our general reserve requirements on our financing receivables. The adequacy of the related allowance is determined by management through analysis of the specific risk characteristics of the portfolio, including historic and assumed default rates. Although the allowance requires judgment, the static pool model is not highly uncertain as it relies upon historical metrics.
Changes in the estimates used in developing our default rates could result in a material change to our allowance. A 0.5% increase to our projected default rates used in the allowance calculation would increase our allowance for financing receivables losses by $26 million. See Note 2: Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.
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