Results
Travel + Leisure Co.
02/18/2026 | Press release | Distributed by Public on 02/18/2026 09:09
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS AND OVERVIEW
We are a global provider of hospitality services and travel products with the following two reportable segments:
•Vacation Ownership - develops, markets, and sells vacation ownership interests ("VOIs") to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts. This segment is wholly comprised of our Vacation Ownership business line.
•Travel and Membership - operates a variety of travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment is comprised of our Exchange and Travel Club business lines.
Economic Conditions and Key Business Trends
During 2025, our business saw continued demand for leisure travel which resulted in higher Gross VOI sales and Adjusted EBITDA growth at our Vacation Ownership business, as compared to the prior year. Tour flow increased year-over-year in the fourth quarter, as well as for the full year. We believe this tour increase, coupled with a significant increase in volume per guest ("VPGs") as compared to the prior year, highlights consumers' recognition of the value proposition of our products. Such value proposition becomes especially apparent during periods of inflation when the costs of other accommodation types are rising. Although consumer sentiment progressively declined throughout 2025, our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, which provides opportunities for upgrade sales.
At our Travel and Membership business, 2025 continued to reflect the impacts of exchange headwinds, which resulted in lower revenues. This decline was primarily attributed to a reduction in member counts and an increasing mix of exchange members with club affiliations. Exchange members with club affiliations have historically demonstrated a lower propensity to transact, which has contributed to a decline in exchange transactions. This decline was partially offset by continued growth in Travel Club transactions. Exchange revenue per transaction remained flat compared to the prior year, while Travel Club revenue per transaction declined. However, the overall improvement in Travel Club transactions outpaced the decline in revenue per transaction leading to increased revenue for this subset of the business, supporting this segment's performance. Given recent declines in the number of exchange members, this business may be negatively impacted in the future if we are required to purchase additional inventory to supplement the inventory supplied by exchange members.
While we continue to benefit from the changes we made to our marketing criteria to strengthen sales efficiencies and improve the performance of our vacation ownership contract receivables ("VOCR") portfolio, similar to a number of other companies, we are experiencing some pressure on our loan portfolio primarily due to delinquencies remaining elevated over historical levels.
We have seen an improvement in interest rates on our variable rate corporate borrowings which positively impacted our interest expense during 2025. Interest expense was also benefitted by savings associated with refinancing our revolving credit facility at the end of the second quarter, which reduced the associated interest rate spread on borrowings by 25 basis points at all pricing levels, and the refinancing of our $350 million notes in the third quarter with a nearly 50 basis point interest rate reduction. We anticipate further interest savings following the refinancing of our Term Loan B facility, which occurred at the end of the fourth quarter and reduced the interest rate on this facility by 50 basis points (see Note 15-Debt to the Consolidated Financial Statements for additional details on these refinancings). Additionally, we completed three term securitizations during 2025. Two had terms comparable to our 2024 transactions, while the third, completed in the fourth quarter, achieved our lowest coupon rate since 2022. These transactions demonstrate the strength of our business, even during times of market volatility.
While overall we have benefited from positive demand trends through the year, the sustained effects of inflationary pressures over time, high interest rates and risk of recession inherently result in uncertainty in business trends and consumer behavior. Recent tariff actions and other trade restrictions have increased this uncertainty.
Our Vacation Ownership and Travel and Membership businesses are highly dependent on the health of the travel industry and declines in, or disruptions to, the industry such as those caused by adverse economic conditions may adversely affect us. We are also subject to the other risks and uncertainties discussed in "Risk Factors" contained in Part I, Item 1A of this Annual Report on Form 10-K.
Resort Optimization Initiative
In order to promote the long-term strength of our vacation ownership resorts, we undertook a strategic review during 2025 with the intent of optimizing the overall quality of our resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future. This review identified 17 resorts requiring significant owner reinvestment, or that are in markets that no longer align with owner demand. See Note 25-Restructuring-Resort Optimization Initiativeto the Consolidated Financial Statements for a description of the restructuring plan we are undertaking in connection with this strategic review.
This plan is expected to result in meaningful annual savings attributable to the maintenance fees we incur on unsold VOIs. Such savings would be partially offset by the loss of, or reduction in, VOI sales and property management fees earned at the impacted resorts resulting in an expected positive net impact to Adjusted EBITDA beginning in 2026. In connection with these actions, during 2025, we incurred the following charges:
•$216 million of inventory write-downs and impairments, which are included within Cost of vacation ownership interests on the Consolidated Statements of Income;
•$9 million of other charges consisting primarily of employee-related costs, of which $5 million is included within Operating expense and $4 million is included in Restructuring on the Consolidated Statements of Income; and
•$8 million of property and equipment impairments, which are included within Asset impairments, net.
We would expect to incur an additional $4 million of inventory impairment charges and an additional $11 million of inventory write-downs if the remaining actions are approved by the owners in the first quarter of 2026.
Pillar Two
The Organization for Economic Co-operation and Development ("OECD"), continues to advance initiatives, including Pillar Two which introduced a global minimum tax at a rate of 15%. A number of countries have implemented the OECD's Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive. As of December 31, 2025, based on the countries in which we do business that have enacted legislation effective January 1, 2025, the impact of these rules did increase our effective tax rate but overall the impact to our financial statements was not material. This may change as other countries enact similar legislation and further guidance is released. We continue to closely monitor regulatory developments to assess potential impacts, including the OECD's published administrative guidance, released January 5, 2026, on a side-by-side system, which would effectively exempt U.S. multinationals from certain provisions of Pillar Two.
Recent Legislation
On July 4, 2025, the bill commonly referred to as the "One Big Beautiful Bill Act" was signed into law. Among other provisions, the bill extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for research and development and capital investments. In addition, the bill contains other new tax relief measures and various revenue raising measures. The legislation has multiple effective dates. For the provisions effective in 2025, there was no material impact to our effective tax rate for the year ended December 31, 2025. For the provisions which will become effective in 2026, we are currently assessing the potential impact of these changes on our business and financial results.
SEGMENT OVERVIEW
Vacation Ownership
We develop, market, and sell VOIs to individual consumers, provide consumer financing in connection with the sale of VOIs, and provide property management services at resorts. Our sales of VOIs are either cash sales or developer-financed sales. Developer-financed sales are typically collateralized by the underlying VOI. Revenue is recognized on VOI sales upon transfer of control, which is defined as the point in time when a binding sales contract has been executed, the financing contract has been executed for the remaining transaction price, the statutory rescission period has expired, and the transaction price has been deemed to be collectible.
For developer-financed sales, we reduce the VOI sales transaction price by an estimate of uncollectible consideration at the time of the sale. Our estimates of uncollectible amounts are based largely on the results of our static pool analysis which relies on historical payment data by customer class.
We leverage a number of different tools to impact the percentage of developer-financed sales and balance our consumer default risk profile, such as offering credit cards and other third-party financing directly to consumers to facilitate cash down payments and sales, underwriting discipline, and periodic sales of VOCRs.
In connection with entering into a VOI sale, we may provide our customers with certain non-cash incentives, such as credits for future stays at our resorts. For those VOI sales, we allocate the sales price between the VOI sale and the non-cash incentive based upon the relative standalone selling price of the performance obligations within the contract. Non-cash incentives generally have expiration periods of two years or less and are recognized at a point in time upon transfer of control.
We provide day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners' associations and clubs. These services may also include reservation and resort renovation activities. The initial terms of such property management agreements are generally between three to five years; however, the vast majority of the agreements provide a mechanism for an automatic one year renewal upon expiration of the terms. Our management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests. We receive fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities). Fees for property management services typically approximate 10% of budgeted operating expenses. We are entitled to consideration for reimbursement of costs incurred on behalf of the property owners' association in providing management services ("reimbursable revenue"). These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of Operating expenses on the Consolidated Statements of Income. We reduce our management fees revenue for amounts paid to the property owners' association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer. Property management fee revenues and reimbursable revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of Income.
We earn revenue from our Wyndham Rewards co-branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders. The primary performance obligation for the program relates to brand performance services. Total contract consideration is estimated and recognized on a straight-line basis over the contract term.
Within our Vacation Ownership segment, we measure operating performance using the following key operating statistics: (i) gross VOI sales, which represents total sales of VOIs, including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business' efforts in generating sales from tours, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours. We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel.
Travel and Membership
We derive a majority of our revenues from membership dues and fees for facilitating members' trading of their timeshare intervals. Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf. As a provider of vacation exchange services, we enter into affiliation agreements with developers of vacation ownership properties to allow owners of VOIs to trade their intervals for intervals at other properties affiliated with our vacation exchange network and, for some members, for other leisure-related services and products. We recognize revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services. Estimated net contract consideration payable by affiliated clubs for memberships is recognized as revenue over the term of the contract with the affiliated club in proportion to the estimated average monthly member count. Such estimates are adjusted periodically for changes in actual and forecasted member activity. For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with our vacation exchange networks and, for certain members, for other leisure-related services and products. We also derive revenue from facilitating bookings of travel accommodations that were acquired from various sources. Revenue is recognized when these transactions have been confirmed, net of expected cancellations.
Our vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs; and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Revenues from other vacation exchange related product fees are deferred and recognized upon the occurrence of a future exchange, event, or other related transaction.
We earn revenue from our RCI Elite Rewards co-branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders. The primary performance obligation for the program relates to brand performance services. Total contract consideration is estimated and recognized on a straight-line basis over the contract term.
Within our Travel and Membership segment, we measure operating performance using the following key operating statistics: (i) average number of exchange members, which represents paid members in our vacation exchange programs who are considered to be in good standing; (ii) transactions, which represents the number of exchanges and travel bookings recognized as revenue during the period, net of cancellations; and (iii) revenue per transaction, which represents transaction revenue divided by transactions. Transactions and revenue per transaction are provided in two categories: Exchange, which is primarily RCI, and Travel Club.
Other Items
We record property management service revenues for our Vacation Ownership segment and RCI Elite Rewards revenues for our Travel and Membership segment gross as a principal.
RESULTS OF OPERATIONS
We have two reportable segments: Vacation Ownership and Travel and Membership. The reportable segments presented below are those for which discrete financial information is available and which are utilized on a regular basis by the chief operating decision maker ("CODM") to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by the operating segments. Based on this analysis we aggregate two geographical operating segments within the Vacation Ownership reportable segment and two operating segments within the Travel and Membership reportable segment. Management uses Adjusted EBITDA to assess the performance of the reportable segments. During the fourth quarter of 2025, we updated the definition of Adjusted EBITDA to exclude inventory write-downs associated with the Company's resort optimization initiative. This initiative resulted in inventory write-downs related to agreements to supply replacement inventory to vacation ownership clubs impacted by this initiative. These charges are included within Cost of vacation ownership interests on the Consolidated Statements of Income. For additional detail on the resort optimization initiative see Note 25-Restructuring. As a result, we now define Adjusted EBITDA as net income from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, asset impairments/recoveries and inventory write-downs associated with the Company's resort optimization initiative, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent. Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. ("Wyndham Hotels") and Avis Budget Group, Inc. ("ABG") formerly Cendant Corporation, and the sale of the vacation rentals businesses. Integration costs represent certain non-recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business. We believe that Adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, we believe gives a more complete understanding of our operating performance. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
OPERATING STATISTICS
The table below presents our operating statistics for the years ended December 31, 2025 and 2024. These operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses. Refer to "The Year Ended December 31, 2025 vs. The Year Ended December 31, 2024" for a discussion on how these operating statistics affected our business for the periods presented.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 |
% Change (h)
|
|||||||||||||||
|
Vacation Ownership (a)
|
|||||||||||||||||
|
Gross VOI sales (in millions) (b) (i)
|
$ | 2,486 | $ | 2,293 | 8.4 | ||||||||||||
|
Tours (in 000s) (c)
|
734 | 716 | 2.5 | ||||||||||||||
|
Volume per guest (d)
|
$ | 3,284 | $ | 3,094 | 6.1 | ||||||||||||
| Travel and Membership | |||||||||||||||||
|
Transactions (in 000s) (e)
|
|||||||||||||||||
| Exchange | 810 | 889 | (9.0) | ||||||||||||||
| Travel Club | 765 | 673 | 13.8 | ||||||||||||||
| Total transactions | 1,575 | 1,562 | 0.8 | ||||||||||||||
|
Revenue per transaction (f)
|
|||||||||||||||||
| Exchange | $ | 360 | $ | 360 | (0.2) | ||||||||||||
| Travel Club | $ | 225 | $ | 247 | (9.1) | ||||||||||||
| Total revenue per transaction | $ | 294 | $ | 312 | (5.6) | ||||||||||||
|
Average number of exchange members (in 000s) (g)
|
3,328 | 3,427 | (2.9) | ||||||||||||||
(a)Includes the impact of acquisitions from the acquisition dates forward.
(b)Represents total sales of VOIs, including sales under the Fee-for-Service program, before the effect of loan loss provisions. We believe that Gross VOI sales provides an enhanced understanding of the performance of our Vacation Ownership business because it directly measures the sales volume of this business during a given reporting period.
(c)Represents the number of tours taken by guests in our efforts to sell VOIs.
(d)VPG is calculated by dividing Gross VOI sales (excluding telesales and virtual sales) by the number of tours. We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our Vacation Ownership business because it directly measures the efficiency of this business' efforts in generating sales from tours during a given reporting period.
(e)Represents the number of exchanges and travel bookings recognized as revenue during the period, net of cancellations.
(f)Represents transaction revenue divided by transactions.
(g)Represents paid members in our vacation exchange programs who are considered to be in good standing.
(h)Percentage change may not calculate due to rounding.
(i)The following table provides a reconciliation of Vacation ownership interest sales, net to Gross VOI sales (in millions):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Vacation ownership interest sales, net | $ | 1,847 | $ | 1,721 | |||||||
| Loan loss provision | 484 | 432 | |||||||||
| Gross VOI sales, net of Fee-for-Service sales | 2,331 | 2,153 | |||||||||
|
Fee-for-Service sales(1)
|
155 | 140 | |||||||||
| Gross VOI sales | $ | 2,486 | $ | 2,293 | |||||||
(1) Represents total sales of VOIs through our Fee-for-Service programs where inventory is sold through our sales and marketing channels for a commission. Fee-for-Service commission revenues were $78 million and $71 million for the years ended December 31, 2025 and 2024. These commissions are reported within Service and membership fees on the Consolidated Statements of Income.
THE YEAR ENDED DECEMBER 31, 2025 VS. THE YEAR ENDED DECEMBER 31, 2024
Our consolidated results are as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | Favorable/ (Unfavorable) | |||||||||||||||
| Net revenues | $ | 4,021 | $ | 3,864 | $ | 157 | |||||||||||
| Expenses | 3,468 | 3,131 | (337) | ||||||||||||||
| Operating income | 553 | 733 | (180) | ||||||||||||||
| Interest expense | 232 | 249 | 17 | ||||||||||||||
| Other (income), net | (7) | (15) | (8) | ||||||||||||||
| Interest (income) | (9) | (14) | (5) | ||||||||||||||
| Income before income taxes | 337 | 513 | (176) | ||||||||||||||
| Provision for income taxes | 107 | 135 | 28 | ||||||||||||||
| Net income from continuing operations | 230 | 378 | (148) | ||||||||||||||
| Gain on disposal of discontinued business, net of income taxes | - | 33 | (33) | ||||||||||||||
| Net income attributable to Travel + Leisure Co. shareholders | $ | 230 | $ | 411 | $ | (181) | |||||||||||
Net revenues increased $157 million during 2025 compared with 2024. This increase was unfavorably impacted by foreign currency of $5 million. Excluding the impacts of foreign currency, the increase in net revenues was primarily due to:
•$195 million of increased revenues at our Vacation Ownership segment primarily due to an increase in net VOI sales as a result of an increase in VPG due to a higher owner transaction mix which generally produce higher VPGs and increased tours; higher property management revenues resulting from higher property management fees and reimbursable revenues; and an increase in other revenues due to higher co-branded credit card and VOI incentive revenues. This increase in revenues was partially offset by:
•$33 million of decreased revenues at our Travel and Membership segment primarily driven by lower transaction revenue due to lower revenue per transaction resulting from a higher mix of Travel Club transactions, which generally produce lower revenue per transaction. Exchange transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity. Additionally, subscription revenues declined due to lower average member count.
Expenses increased $337 million during 2025 compared with 2024. This increase in expenses was favorably impacted by foreign currency of $1 million. Excluding the impacts of foreign currency, the increase in expenses was primarily the result of:
•$182 million increase in cost of VOIs driven by $216 million of inventory write-downs and impairments related to the resort optimization initiative at the Vacation Ownership segment (see Note 25-Restructuringfor additional information), partially offset by a $34 million decrease in the cost of VOIs sold due to variations in inventory sourcing;
•$46 million increase in sales and commission expenses at the Vacation Ownership segment due to higher Gross VOI sales, net of Fee-for-Service sales;
•$41 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;
•$35 million increase in marketing costs primarily due to an increase at our Vacation Ownership business in support of increased tour flow and sales volume, partially offset by cost savings at the Travel and Membership segment;
•$23 million increase in General and administrative expenses driven by $17 million higher stock-based compensation expense, $9 million higher advertising costs, and $8 million higher employee-related costs; partially offset by the prior year reversal of a $12 million receivable representing Wyndham Hotels' one-third portion of an expired guarantee associated with the sale of the European vacation rentals business;
•$9 million increase in depreciation and amortization;
•$7 million increase in cost of sales at the Travel and Membership segment due to increased Travel Clubs transactions and a heavier weighting of rentals;
•$7 million increase in Asset impairments, net driven by $8 million of asset impairments at the Vacation Ownership segment resulting from the resort optimization initiative; and a
•$5 million increase in sales and commission expense for VOI Fee-for-Service sales due to increased volume.
These increases were partially offset by:
•$18 million decrease in developer obligations due to increased monetization of unsold VOIs; and
•$9 million of operating cost savings at the Travel and Membership driven by the strategic restructuring of this segment in the prior year and additional restructuring activities during the fourth quarter of 2025.
Interest expense decreased $17 million during 2025 compared with 2024 primarily due to a lower weighted average interest rate on corporate borrowings, partially offset by a higher average outstanding balance on corporate debt.
Other income, net of other expense decreased $8 million during 2025 compared with 2024, primarily due to a $7 million reduction in the fair value of contingent consideration associated with business acquisitions in 2024; partially offset by a $4 million gain on a building held-for-sale during 2025.
Interest income decreased $5 million during 2025 compared with 2024, primarily due to a lower investment balance.
Our effective tax rates were 31.8% and 26.4% for the years ended December 31, 2025 and 2024. Our effective tax rate for 2025 was impacted primarily by the inventory write-down and impairment charges recorded in the year that significantly reduced our pre-tax income.
Gain on disposal of discontinued business, net of income taxes decreased $33 million during 2025 compared with 2024 driven by the release of expired guarantees of $32 million, net of tax in 2024, related to the sale of the European vacation rentals business.
As a result of these items, Net income attributable to Travel + Leisure Co. shareholders decreased $181 million in 2025 as compared with 2024.
The tables below present our reportable segment information (see Note 23-Segment Informationto the Consolidated Financial Statements for a breakout of significant expenses related to our reportable segments), followed by a discussion of each segment's 2025 results compared to 2024 (in millions):
| Year Ended December 31, | |||||||||||
| Net revenues | 2025 | 2024 | |||||||||
| Vacation Ownership | $ | 3,361 | $ | 3,171 | |||||||
| Travel and Membership | 662 | 695 | |||||||||
| Total reportable segments | 4,023 | 3,866 | |||||||||
|
Corporate and other (a)
|
(2) | (2) | |||||||||
| Total Company | $ | 4,021 | $ | 3,864 | |||||||
| Year Ended December 31, | |||||||||||
| Reconciliation of Net income to Adjusted EBITDA | 2025 | 2024 | |||||||||
| Net income attributable to Travel + Leisure Co. shareholders | $ | 230 | $ | 411 | |||||||
| Gain on disposal of discontinued business, net of income taxes | - | (33) | |||||||||
| Interest expense | 232 | 249 | |||||||||
| Interest (income) | (9) | (14) | |||||||||
| Provision for income taxes | 107 | 135 | |||||||||
| Depreciation and amortization | 124 | 115 | |||||||||
|
Inventory write-downs and asset impairments, net (b)
|
226 | 3 | |||||||||
| Stock-based compensation | 57 | 40 | |||||||||
|
Restructuring (c)
|
19 | 16 | |||||||||
|
Other (d)
|
3 | - | |||||||||
| Acquisition and divestiture related costs | 1 | 2 | |||||||||
| Legacy items | - | 11 | |||||||||
| Integration costs | - | 1 | |||||||||
| Fair value change in contingent consideration | - | (7) | |||||||||
| Adjusted EBITDA | $ | 990 | $ | 929 | |||||||
| Year Ended December 31, | |||||||||||
| Adjusted EBITDA | 2025 | 2024 | |||||||||
| Vacation Ownership | $ | 861 | $ | 764 | |||||||
| Travel and Membership | 228 | 251 | |||||||||
| Total reportable segments | 1,089 | 1,015 | |||||||||
|
Corporate and other (a)
|
(99) | (86) | |||||||||
| Total Company | $ | 990 | $ | 929 | |||||||
(a)Includes the elimination of transactions between segments.
(b)Includes $216 million of inventory write-downs and impairments during 2025, included within Cost of vacation ownership interests on the Consolidated Statements of Income.
(c)Includes $1 million of stock-based compensation expense during 2024 associated with the 2022 restructuring plan.
(d)Includes $5 million of employee costs associated with the resort optimization initiative included within Operating expense on the Consolidated Statements of Income, and $2 million of other items that meet the conditions of unusual and/or infrequent, partially offset by a $4 million gain on sale of a corporate building owned by our Travel and Membership segment, which was previously held-for-sale.
Vacation Ownership
Net revenues increased $190 million and Adjusted EBITDA increased $97 million during 2025 compared with 2024. Net revenue was unfavorably impacted by foreign currency of $5 million. Adjusted EBITDA was unfavorably impacted by foreign currency of $2 million.
The net revenue growth excluding the impact of foreign currency was primarily driven by:
•$181 million increase in Gross VOI sales, net of Fee-for-Service sales, due to a 6.1% increase in VPG due to a higher owner upgrade transaction mix (67% in the current period compared to 64% in the same period of 2024) which generally produce higher VPGs along with higher average transaction prices, and a 2.5% increase in tours;
•$35 million increase in property management revenues primarily due to higher management fees and reimbursable revenues;
•$18 million increase in other revenues due to $9 million increase in co-branded credit card revenues and $8 million of higher VOI incentive revenues:
•$6 million increase in commission revenues due to higher volume of VOI Fee-for-Service sales; and a
•$5 million increase in consumer financing revenues primarily due to a higher average portfolio balance.
These increases were partially offset by a $52 million increase in our provision for loan losses primarily due to increased Gross VOI sales, net of Fee-for-Service sales and a higher provision rate associated with increased defaults.
In addition to the revenue change explained above, Adjusted EBITDA was further impacted by:
•$46 million increase in sales and commission expenses due to higher Gross VOI sales, net of Fee-for-Service sales;
•$41 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;
•$38 million increase in marketing costs in support of increased tour flow and sales volume;
•$13 million increase in general and administrative expenses driven by $5 million of higher professional fees and $4 million higher variable compensation; and a
•$5 million increase in sales and commission expense for VOI Fee-for-Service sales due to increased volume.
These increases were partially offset by a:
•$34 million decrease in the cost of VOIs sold primarily due to variations in inventory sourcing, partially offset by increased sales volume, and an
•$18 million decrease in developer obligations due to increased monetization of unsold VOIs.
Travel and Membership
Net revenues decreased $33 million and Adjusted EBITDA decreased $23 million during 2025 compared with 2024. Net revenue was not materially impacted by foreign currency. Adjusted EBITDA was unfavorably impacted by foreign currency of $1 million.
The decrease in net revenues, excluding the impact of foreign currency, was primarily driven by a $23 million decrease in transaction revenue due to lower revenue per transaction; a $7 million decrease in subscription revenues due to lower exchange
member count; and a $3 million decrease in ancillary revenues. Revenue per transaction was impacted by a higher mix of Travel Club transactions, which generally produce lower revenue per transaction. Exchange transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity and a decrease in average member count.
In addition to the revenue change explained above, Adjusted EBITDA excluding the impact of foreign currency was further impacted by:
•$7 million increase in cost of sales due to increased Travel Clubs transactions and a heavier weighting of rentals partially offset by:
•$12 million of employee related cost savings associated with the strategic restructuring of this segment in 2024 and additional restructuring activities during the fourth quarter of 2025; these initiatives focused on enhancing organizational efficiency and rationalizing operations, including savings of $9 million of operating costs, $2 million of marketing expenses, and $1 million of general and administrative expenses; and
•$3 million of facilities and cloud savings.
Corporate and other
Corporate and other revenue was flat and Adjusted EBITDA decreased $13 million during 2025 compared with 2024. Adjusted EBITDA was unfavorably impacted by foreign currency of $1 million. The decrease in Adjusted EBITDA was primarily due to higher general and administrative costs driven by $9 million of higher advertising expenses and $5 million of higher employee related costs.
For a comparative review of our consolidated results of operations and those of our reportable segments for the fiscal years ended December 31, 2024 and 2023, refer to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 19, 2025.
DISCONTINUED OPERATIONS
During 2024 and 2023, we recognized gains of $33 million and $5 million within Gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income.
During 2024, we had $1 million of Net cash provided by investing activities from discontinued operations on the Consolidated Statements of Cash Flows.
See Note 6-Discontinued Operations to the Consolidated Financial Statements for additional details of our discontinued operations.
RESTRUCTURING PLANS
Resort Optimization Initiative
In order to promote the long-term strength of our portfolio of vacation ownership resorts, we undertook a strategic review with the intent of optimizing the overall quality of our resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future. This review identified 17 resorts requiring significant owner reinvestment or are in markets that no longer align with owner demand. As a result, during 2025, we proposed to the boards of these respective homeowners' associations ("HOAs") of the identified resorts, court-supervised restructuring plans to remove select resorts from our portfolio and reduce the number of units at certain other resorts.
In connection with these actions, during 2025, we incurred $216 million of inventory write-downs and impairments at the Vacation Ownership segment associated with the removal of the identified resorts and the agreements to supply replacement inventory to the impacted vacation ownership clubs. These charges are included within Cost of vacation ownership interests on the Consolidated Statements of Income. We also incurred $9 million of other charges consisting primarily of employee-related costs, of which $5 million is included within Operating expense and $4 million is included in Restructuring on the Consolidated Statements of Income, and $8 million of impairments of other property and equipment, which are included within Asset impairments, net. As of December 31, 2025, there were $4 million of restructuring liabilities associated with this initiative, which are expected to be paid by the end of 2027. See Note 25-Restructuring-Resort Optimization Initiativeto the Consolidated Financial Statements for additional details.
2025 Restructuring Plan
During 2025, we incurred $15 million of restructuring charges associated with the 2025 restructuring plan. These charges included personnel-related costs resulting from a reduction of approximately 250 employees and other expenses. These charges
consisted of (i) $7 million of personnel-related costs at our corporate operations, (ii) $5 million of personnel-related costs and $2 million of fees associated with the termination of a licensing agreement at the Travel and Membership segment, and (iii) $1 million of personnel-related costs at the Vacation Ownership segment. All material initiative and related expenses have been incurred as of December 31, 2025. We reduced our 2025 restructuring liability by $3 million of cash payments during 2025. The remaining 2025 restructuring liability of $12 million is expected to be paid by the end of 2027.
2024 Restructuring Plan
During 2024, we incurred $15 million of restructuring charges associated with the 2024 restructuring plan. These charges included personnel-related costs resulting from a reduction of approximately 300 employees and other expenses. These charges consisted of (i) $10 million of personnel-related costs at the Travel and Membership segment, (ii) $3 million of personnel-related costs at our corporate operations, and (iii) $2 million of personnel-related costs at the Vacation Ownership segment. All material initiative and related expenses have been incurred as of December 31, 2025. We reduced our 2024 restructuring liability by $7 million of cash payments during both 2025 and 2024. As of December 31, 2025, the 2024 restructuring liability has been fully settled.
2023 Restructuring Plan
During 2023, we incurred $26 million of restructuring charges. These actions were primarily focused on enhancing organizational efficiency and rationalizing operations. These charges included personnel-related costs resulting from a reduction of approximately 250 employees and other expenses. As part of this restructuring plan, we also decided to decrease our facilities by closing our owned office in Indianapolis, Indiana, and exiting other leased locations. The charges consisted of (i) $11 million of personnel-related costs at the Travel and Membership segment, (ii) $9 million of personnel-related costs and $1 million of lease costs at the Vacation Ownership segment, and (iii) $5 million of personnel-related costs at our corporate operations. These restructuring charges included $2 million of accelerated stock-based compensation expense. We reduced our 2023 restructuring liability by less than $1 million, $14 million and $8 million of cash payments during the years ended December 31, 2025, 2024, and 2023. As of December 31, 2025, the 2023 restructuring liability has been fully settled.
See Note 25-Restructuringto the Consolidated Financial Statements for additional details of our restructuring plans.
FINANCIAL CONDITION
| As of December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | Change | ||||||||||||||
| Total assets | $ | 6,760 | $ | 6,735 | $ | 25 | |||||||||||
| Total liabilities | $ | 7,742 | $ | 7,615 | $ | 127 | |||||||||||
| Total deficit | $ | (982) | $ | (880) | $ | (102) | |||||||||||
Total assets increased $25 million from December 31, 2024 to December 31, 2025, due to:
•$86 million increase in Cash and cash equivalents primarily driven by $640 million of Net cash provided by operating activities, $494 million net proceeds from the issuance of $500 million 6.125% secured notes due September 2033, $34 million received from the issuance of common stock driven by option exercises and participation in our employee stock purchase plan, and $25 million proceeds on a vacation ownership inventory financing agreement, partially offset by repayment of the $350 million notes due October 2025, $301 million paid for share repurchases, $149 million of dividend payments, $133 million of net payments on the revolving credit facility, and $117 million of property and equipment additions;
•$60 million increase in Other assets driven by $38 million increase in right-of-use assets driven by our new corporate headquarters lease, $22 million increase in non-trade receivables, net, $16 million of inventory transferred to assets held-for-sale in 2025 related to the resort optimization initiative (see Note 25-Restructuringfor additional information), and a $10 million increase in deferred costs, partially offset by a $29 million decrease in tax receivables;
•$19 million increase in Vacation ownership contract receivables, net, driven by $1.6 billion of VOI originations, partially offset by $1.09 billion of principal collections and net provision for loan losses of $484 million; and an
•$11 million increase in Restricted cash associated with funds on deposit held to pay claims by our captive insurance company.
These increases were partially offset by:
•$99 million decrease in Inventory driven by $216 million of inventory write-downs and impairments at the Vacation Ownership segment, $57 million for the sale of VOI inventory, and $16 million of inventory transferred to assets held-
for-sale during 2025 related to the resort optimization initiative; partially offset by $130 million of inventory acquisitions, and $66 million of net transfers of completed VOI inventory from property and equipment; and
•$60 million decrease in Property and equipment, net primarily due to $66 million of net transfers of completed VOI inventory from Property and equipment to Inventory.
Total liabilities increased $127 million from December 31, 2024 to December 31, 2025, primarily due to:
•$132 million increase in Accrued expenses and other liabilities due to a $57 million increase in lease liabilities driven by our new corporate headquarters, $25 million for an inventory financing obligation, $17 million increase in accrued payroll costs, primarily variable compensation and deferred compensation, a $17 million increase in resort related obligations and commitments, and a $14 million increase in accrued taxes; and an
•$11 million increase in Deferred income driven by an increase of $15 million related to co-branded credit card programs and a $4 million increase in deferred VOI incentive revenue, partially offset by decreases of $4 million of deferred subscription revenue and $4 million of deferred VOI trial package revenue.
These increases were partially offset by an $18 million decrease in Deferred income taxes driven by impairments, partially offset by installment sales and tax depreciation and amortization.
Total deficit increased $102 million from December 31, 2024 to December 31, 2025, primarily due to $300 million of share repurchases and $152 million of dividends; partially offset by $230 million of Net income attributable to Travel + Leisure Co. shareholders, $57 million of stock-based compensation, $46 million of favorable currency translation adjustments driven by fluctuations in exchange rates, primarily the Australian dollar, British pound sterling, and the Euro, and $24 million of stock option exercises.
LIQUIDITY AND CAPITAL RESOURCES
We believe that we have sufficient sources of liquidity to meet our expected ongoing short-term and long-term cash needs, including capital expenditures, operational and/or strategic opportunities, and expenditures for human capital, intellectual property, contractual obligations, off-balance sheet arrangements, and other such requirements. Our net cash from operations and cash and cash equivalents are key sources of liquidity along with our revolving credit facility, bank conduit facilities, and continued access to debt markets. We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $650 million notes due in July 2026. Our discussion below highlights these sources of liquidity and how they are utilized to support our cash needs.
Cash and Cash Equivalents
As of December 31, 2025, we had $253 million of Cash and cash equivalents, which includes highly-liquid investments with an original maturity of three months or less.
$1.0 Billion Revolving Credit Facility
We generally utilize our revolving credit facility to finance our short-term to medium-term business operations, as needed. During the second quarter of 2025, we amended the credit agreement governing our revolving credit and term loan B facility ("Seventh Amendment"). The Seventh Amendment refinanced and extended the maturity date of the revolving credit facility from October 2026 to June 2030, and among other things, reduced pricing spreads on borrowings and letters of credit at all pricing levels by 25 basis points. See Note 15-Debtto the Consolidated Financial Statements for additional details regarding the Seventh Amendment. The facility had $893 million of available capacity as of December 31, 2025.
The revolving credit facility and term loan B facility are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement. The financial ratio covenants consist of a minimum interest coverage ratio, which the Seventh Amendment reduced to 2.00 to 1.0 (previously 2.50 to 1.0) as of the measurement date and a maximum first lien leverage ratio of 4.25 to 1.0 as of the measurement date. The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date. The first lien leverage ratio is calculated by dividing consolidated first lien debt (as defined in the credit agreement) as of the measurement date by consolidated EBITDA (as defined in the credit agreement) as measured on a trailing 12-month basis preceding the measurement date. Our first lien leverage ratio determines the interest rate spread on revolver borrowings and fees associated with letters of credit, which subjects them to fluctuation.
As of December 31, 2025, our interest coverage ratio was 4.92 to 1.0 and our first lien leverage ratio was 3.06 to 1.0. These ratios do not include interest expense or indebtedness related to any qualified securitization financing (as defined in the credit agreement). As of December 31, 2025, we were in compliance with the financial covenants described above.
Secured Notes and Term Loan B facility
We generally utilize borrowing via secured note and term loan B issuances to meet our long-term financing needs. During the third quarter of 2025, we issued secured notes due September 2033, with a face value of $500 million and an interest rate of 6.125%. The proceeds of this offering were used to redeem all of our $350 million 6.60% secured notes due October 2025, toward repayment of outstanding borrowings under the revolving credit facility, to pay the fees and expenses incurred in connection with the issuance, and for general corporate purposes.
During the fourth quarter of 2025, we amended the credit agreement governing our revolving credit facility and term loan B facility ("Eighth Amendment"). The Eighth Amendment refinanced the $869 million outstanding balance of the Term Loan B facility, with interest rate per annum applicable to borrowings under this facility equal to the Term SOFR rate, plus an applicable rate of 2.00%, representing a 50 basis point reduction. The maturity date of this facility remains December 14, 2029.
These transactions reinforce our expectation that we will maintain adequate liquidity for the next year and beyond. As of December 31, 2025, we had $3.39 billion of outstanding borrowings under our secured notes and term loan B facility with maturities ranging from 2026 to 2033.
Non-recourse Vacation Ownership Debt
Our Vacation Ownership business finances certain of its VOCRs through (i) asset-backed conduit facilities and (ii) term asset-backed securitizations, all of which are non-recourse to us with respect to principal and interest. For the securitizations, we pool qualifying VOCRs and sell them to bankruptcy-remote entities, all of which are consolidated into the accompanying Consolidated Balance Sheets. We plan to continue using these sources to finance certain VOCRs. On April 17, 2025, we renewed our USD bank conduit facility, extending its term through August 2027. We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, with a term through December 2026, amounting to a combined capacity of $748 million ($314 million available as of December 31, 2025), along with our ability to issue term asset-backed securities, provide sufficient liquidity to finance the sale of VOIs beyond the next year.
We closed on securitization financings of $950 million, $1.05 billion, and $1.09 billion during 2025, 2024, and 2023. These transactions positively impacted our liquidity and reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.
Our liquidity position may be negatively affected by unfavorable conditions in the capital markets in which we operate or if our VOCR portfolios do not meet specified portfolio credit parameters. Our liquidity, as it relates to our VOCR securitization program, could be adversely affected if we were to fail to renew or replace our conduit facilities on their expiration dates, or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying VOCRs deteriorate. Our ability to sell securities backed by our VOCRs depends on the continued ability and willingness of capital market participants to invest in such securities.
Each of our non-recourse securitized term notes and the bank conduit facilities contain various triggers relating to the performance of the applicable loan pools. If the VOCR pool that collateralizes one of our securitization notes fails to perform within the parameters established by the contractual triggers (such as higher default or delinquency rates), there are provisions pursuant to which the cash flows for that pool will be maintained in the securitization as extra collateral for the note holders or applied to accelerate the repayment of outstanding principal to the note holders. As of December 31, 2025, all of our securitized loan pools were in compliance with applicable contractual triggers.
We may, from time to time, depending on market conditions and other factors, repurchase our outstanding indebtedness, whether or not such indebtedness trades above or below its face amount, for cash and/or in exchange for other securities or other consideration, in each case in open market purchases and/or privately negotiated transactions.
For additional details regarding our credit facilities, term loan B facility, and non-recourse debt see Note 15-Debtto the Consolidated Financial Statements.
Material Cash Requirements
The following table summarizes material future contractual obligations of our continuing operations (in millions). We plan to fund these obligations along with our other cash requirements, with net cash from operations, cash and cash equivalents, and through the use of our revolving credit facilities, bank conduit facilities, and continued access to debt markets.
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
|
Debt (a)
|
$ | 667 | $ | 415 | $ | 12 | $ | 1,478 | $ | 414 | $ | 500 | $ | 3,486 | |||||||||||||||||||||||||||
|
Non-recourse debt (b)
|
255 | 247 | 453 | 198 | 205 | 788 | 2,146 | ||||||||||||||||||||||||||||||||||
|
Interest on debt (c)
|
294 | 238 | 212 | 187 | 86 | 104 | 1,121 | ||||||||||||||||||||||||||||||||||
|
Purchase commitments (d)
|
325 | 399 | 164 | 51 | 17 | 138 | 1,094 | ||||||||||||||||||||||||||||||||||
| Operating leases | 26 | 24 | 21 | 20 | 13 | 84 | 188 | ||||||||||||||||||||||||||||||||||
|
Inventory financing obligation (e)
|
30 | - | - | - | - | - | 30 | ||||||||||||||||||||||||||||||||||
|
Total (f)
|
$ | 1,597 | $ | 1,323 | $ | 862 | $ | 1,934 | $ | 735 | $ | 1,614 | $ | 8,065 | |||||||||||||||||||||||||||
(a)Represents required principal payments on notes, term loans, and finance leases.
(b)Represents required principal payments on debt that is securitized through bankruptcy-remote special purpose entities, the creditors of which have no recourse to us for principal and interest.
(c)Includes interest on debt and non-recourse debt; estimated using the stated interest rates.
(d)Includes $501 million for marketing related activities, $398 million related to the development of vacation ownership properties, and $126 million for information technology activities.
(e)Represents an inventory financing obligation with a third-party developer, including associated interest (see Note 10-Inventoryto the Consolidated Financial Statements for further detail) of which $27 million is included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.
(f)Excludes a $35 million liability for unrecognized tax benefits as it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.
In addition to the amounts shown in the table above and in connection with our separation from our former parent ABG, formerly Cendant Corporation, we entered into certain guarantee commitments with ABG (pursuant to our assumption of certain liabilities and our obligation to indemnify ABG, Anywhere Real Estate Inc. (formerly Realogy), and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with ABG and Anywhere Real Estate Inc. We also entered into certain guarantee commitments and indemnifications related to the sale of our vacation rentals businesses. For information on matters related to our former parent and subsidiaries see Note 26-Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements.
In addition to the key contractual obligation and separation related commitments described above, we have the following other commercial commitments and off-balance sheet arrangements.
We enter into agreements that contain standard guarantees and indemnities whereby we indemnify another party for specified breaches of, or third-party claims relating to, an underlying agreement. Such underlying agreements are typically entered into by one of our subsidiaries. The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, customer data safeguards, access to credit facilities, derivatives, and issuances of debt securities. We also provide corporate guarantees for our operating business units relating to merchant credit-card processing for prepaid customer stays and other deposits. While a majority of these guarantees and indemnifications extend only for the duration of the underlying agreement, some survive the expiration of the agreement. We are not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases, we receive offsetting indemnifications from third-parties and/or maintain insurance coverage that may mitigate any potential payments.
Our Vacation Ownership business has committed to certain owners' associations to provide funds required to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs. We may be required to fund such a shortfall as a result of unsold company-owned VOIs or failure by owners to pay such assessments. In addition, from time to time, we may agree to reimburse certain owner associations up to 70% of their uncollected assessments. These commitments extend for the duration of the underlying subsidy or similar agreement (which generally approximate one year and are renewable at our discretion on an annual basis). The maximum potential future payments that we could be required to make under these commitments was $431 million as of December 31, 2025. We would only be required to pay this maximum amount if none of the assessed owners paid their assessments. Any assessments collected from the owners of the VOIs would reduce the maximum potential amount of future payments we would be required to make. Additionally, should we be required to fund the deficit through the payment of any owners' assessments under these commitments, we would be permitted to use
that property to engage in revenue-producing activities such as rentals. During 2025, 2024, and 2023, we made payments related to these commitments of $12 million, $13 million, and $12 million. As of December 31, 2025 and 2024, we maintained a liability in connection with these commitments of $29 million and $17 million included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.
As part of the Fee-for-Service program, we may guarantee to reimburse the developer or to purchase inventory from the developer, for a percentage of the original sale price if certain future conditions exist. As of December 31, 2025, the maximum potential future payments that we may be required to make under these guarantees is $59 million. As of December 31, 2025 and 2024, we had no recognized liabilities in connection with these guarantees.
We generally utilize letters of credit to support the securitization of VOCR fundings, certain insurance policies, and development activities in our Vacation Ownership business. As of December 31, 2025, we had $81 million of irrevocable standby letters of credit outstanding, $44 million of which were under our revolving credit facility. As of December 31, 2024, we had $45 million of irrevocable standby letters of credit outstanding, $1 million of which were under our revolving credit facility.
We also utilize surety bonds in our Vacation Ownership business for sales and development transactions in order to meet regulatory requirements of certain states. In the ordinary course of our business, we have assembled commitments from 13 surety providers in the amount of $2.38 billion, of which we had $542 million outstanding as of December 31, 2025. The availability, terms and conditions, and pricing of 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. If the bonding capacity is unavailable or, alternatively, the terms and conditions and pricing of the bonding capacity are unacceptable to us, our Vacation Ownership business could be negatively impacted.
We have company sponsored severance plans in place for certain employees in the event of involuntary terminations, other than for cause. As of December 31, 2025, our maximum obligation under these severance plans was $227 million. Refer to the Proxy Statement for our 2025 Annual Meeting of Shareholders under the captions "Compensation of Directors," "Executive Compensation" and "Committees of the Board" for additional details regarding executive compensation.
Our secured debt is rated Ba3 with a "stable outlook" by Moody's Investors Service, Inc., BB- with a "stable outlook" by Standard & Poor's Rating Services, and BB+ with a "stable outlook" by Fitch Rating Agency. A security rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference in this report to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity, or any future credit rating.
CASH FLOWS
The following table summarizes the changes in cash, cash equivalents, and restricted cash between 2025 and 2024 (in millions). For a comparative review of the fiscal years ended December 31, 2024 and 2023, refer to the Cash Flows section in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 19, 2025.
| Year Ended December 31, | |||||||||||||||||
| Cash provided by/(used in): | 2025 | 2024 | Change | ||||||||||||||
| Operating activities | $ | 640 | $ | 464 | $ | 176 | |||||||||||
| Investing activities | |||||||||||||||||
| Continuing operations | (107) | (125) | 18 | ||||||||||||||
| Discontinued operations | - | 1 | (1) | ||||||||||||||
| Financing activities | (443) | (458) | 15 | ||||||||||||||
| Effect of changes in exchange rates on cash, cash equivalents and restricted cash | 7 | (11) | 18 | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | $ | 97 | $ | (129) | $ | 226 | |||||||||||
Operating Activities
Net cash provided by operating activities increased $176 million for the year ended December 31, 2025 compared to the prior year. This increase was primarily attributable to the Net income decline of $181 million being more than offset by a $279 million increase in non-cash addbacks. The increase in non-cash addbacks were driven by $216 million of inventory write-downs and impairments incurred during 2025 resulting from the resort optimization initiative, a $52 million increase in the provision for loan losses, and the $33 million Gain on disposal of discontinued business, net of income taxes in the prior year.
Investing Activities
Net cash used in investing activities from continuing operations decreased $18 million during the year ended December 31, 2025. This decrease was primarily due to $44 million paid for the acquisition of Accor Vacation Club during 2024 and $10 million of net proceeds from the sale of a building in 2025, partially offset by a $36 million increase in capital expenditures.
Net cash provided by investing activities from discontinued operations decreased $1 million due to a tax refund received in the prior year related to the sale of the European vacation rentals business.
Financing Activities
Net cash used in financing activities decreased $15 million during the year ended December 31, 2025. This decrease was primarily due to a $118 million increase in net proceeds from corporate debt, partially offset by a $70 million increase in net payments on non-recourse debt and $67 million increase in share repurchases.
Capital Deployment
We focus on deploying capital for the highest possible returns. Ultimately, our business objective is to grow our business while optimizing cash flow and Adjusted EBITDA. We intend to continue to invest in select capital and technological improvements across our business. We also regularly consider a wide array of potential acquisitions and other strategic transactions, including acquisitions of businesses and real property, joint ventures, business combinations, strategic investments, and dispositions. Any of these transactions could be material to our business. As part of this strategy, we have made, and expect to continue to make, proposals and enter into non-binding letters of intent, allowing us to conduct due diligence on a confidential basis. A potential transaction contemplated by a letter of intent may never reach the point where we enter into a definitive agreement, nor can we predict the timing of such a potential transaction. Finally, we intend to continue to return value to shareholders through the repurchase of common stock and payment of dividends. All future declarations of quarterly cash dividends and increases to the capacity of our share repurchase program are subject to review and approval by the Board of Directors ("Board").
During 2025, we spent $130 million on vacation ownership development projects (inventory). We believe that our Vacation Ownership business currently has adequate finished inventory to support vacation ownership sales for several years. We anticipate spending between $200 million and $230 million for vacation ownership development projects in 2026. After factoring in this anticipated additional annual spending, and the impacts of the resort optimization initiative discussed in Note 25-Restructuring,we expect to have adequate inventory to support vacation ownership sales through at least the next three to four years.
During 2025, we spent $117 million on capital expenditures, primarily information technology digital and new club initiatives, sales center facility and related system enhancements, resort improvements, and a new corporate office. During 2026, we anticipate spending between $90 million and $100 million on capital expenditures, primarily for continuation of information technology digital enhancements to our sales and reservation systems, sales center facility renovation and expansion, and resort improvements.
In connection with our focus on optimizing cash flow, we are continuing our asset-light efforts in vacation ownership by seeking opportunities with financial partners whereby they make strategic investments to develop assets on our behalf. We refer to this as Just-in-Time. The partner may invest in new ground-up development projects or purchase from us, for cash, existing in-process inventory which currently resides on our Consolidated Balance Sheets. The partner will complete the development of the project and we may purchase finished inventory at a future date as needed or as obligated under the agreement.
We expect that the majority of the expenditures that will be required to pursue our capital spending programs, strategic investments, and vacation ownership development projects will be financed with cash flow generated through operations and cash and cash equivalents. We expect that additional expenditures will be financed with general secured corporate borrowings, including through the use of available capacity under our revolving credit facility.
Share Repurchase Program
On August 20, 2007, our Board authorized a share repurchase program that enables us to purchase our common stock. As of December 31, 2025, the Board has increased the capacity of the program 10 times, most recently in May 2024 by $500 million, bringing the total authorization under the current program to $7.0 billion. Proceeds received from stock option exercises have increased the repurchase capacity by $111 million since the inception of this program. We had $165 million of remaining availability in our program as of December 31, 2025.
Under our current share repurchase program, we repurchased 5.4 million shares at an average price of $55.52 for a cost of $300 million during the year ended December 31, 2025. The amount and timing of specific repurchases are subject to market
conditions, applicable legal requirements and other factors, including capital allocation priorities. Repurchases may be conducted in the open market or in privately negotiated transactions.
Subsequent to the end of the year, our Board of Directors increased the authorization for the share repurchase program by $750 million.
Dividends
We paid cash dividends of $0.56 per share for all four quarters of 2025, $0.50 per share for all four quarters of 2024, and $0.45 per share for all four quarters of 2023. The aggregate dividends paid to shareholders for 2025, 2024, and 2023 were $149 million, $142 million, and $136 million.
Our long-term plan is to grow our dividend at the rate of growth of our earnings at a minimum. The declaration and payment of future dividends to holders of our common stock are at the discretion of our Board and depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant. There is no assurance that a payment of a dividend or a dividend at current levels will occur in the future.
Foreign Earnings
We assert that substantiallyall undistributed foreign earnings will be reinvested indefinitely as of December 31, 2025. In the event we determine not to continue to assert that all or part of our undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes, as well as U.S. taxes on currency transaction gains and losses, the determination of which is not practicable.
SEASONALITY
We experience seasonal fluctuations in our net revenues and net income from sales of VOIs and vacation exchange fees. Revenue from sales of VOIs is generally higher in the third quarter than in other quarters due to increased leisure travel. Revenue from vacation exchange fees is generally highest in the first quarter, which is typically when members of our vacation exchange business book their vacations for the year.
The seasonality of our business may cause fluctuations in our quarterly operating results. As we expand into new markets and geographical locations, we may experience increased or different seasonality dynamics that create fluctuations in operating results different from the fluctuations we have experienced in the past.
COMMITMENTS AND CONTINGENCIES
From time to time, we are involved in claims, legal and regulatory proceedings, and governmental inquiries related to our business, none of which, in the opinion of management, is expected to have a material effect on our results of operations or financial condition. See Note 19-Commitments and Contingenciesto the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business along with our guarantees and indemnifications and Note 26-Transactions with Former Parent and Former Subsidiariesto the Consolidated Financial Statements for a description of our obligations regarding ABG contingent litigation, matters related to Wyndham Hotels, and matters related to the vacation rentals businesses.
CRITICAL ACCOUNTING ESTIMATES
In presenting our financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the amounts reported therein. Several of these estimates and assumptions relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material impact to our consolidated results of operations, financial position, and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. In addition to our significant accounting policies referenced in Note 2-Summary of Significant Accounting Policies to the Consolidated Financial Statements, presented below are the critical accounting estimates that we believe require subjective and complex judgments that could potentially affect reported results.
Vacation Ownership Revenue Recognition and Allowance for Loan Losses.Our sales of VOIs are either cash sales or developer-financed sales. For developer-financed sales, we project our losses for uncollectible accounts over the entire lives of our notes. This estimate of uncollectible consideration reduces the amount of revenue recognized at the time of sale and establishes an allowance for loan loss which reduces the receivable.
Our estimates of uncollectible amounts are based on the results of our static pool analysis which tracks defaults for each year's sales over the entire life of those contract receivables. We consider current defaults, past due aging, historical write-offs of contracts and consumer credit scores (FICO scores) in the assessment of a borrower's credit strength, down payment amount and expected loan performance. We also consider whether the historical economic conditions are comparable to current economic conditions. If current or expected future conditions differ from the conditions in effect when the historical experience was generated, we adjust the allowance for loan losses to reflect the expected effects of the current environment on the collectability of our VOCRs. There were no changes to the assumptions used in this model in 2025.
Changes in our estimates of uncollectible amounts could result in a material impact to our allowance for loan losses. A one percent change in projected losses would increase our allowance for loan losses by approximately $7 million. See Note 9-Vacation Ownership Contract Receivables to the Consolidated Financial Statements for additional details of our allowance for loan losses.
Inventory. We use the relative sales value method of costing and relieving our VOI inventory. This method requires us to make estimates subject to significant uncertainty, including future sales prices and volumes as well as credit losses and related inventory recoveries. The impact of any changes in estimates under the relative sales value method is recorded in Cost of vacation ownership interests on the Consolidated Statements of Income in order to retrospectively adjust the margin previously recorded subject to those estimates. There were no changes in these assumptions during 2025.
Impairment of Long-Lived Assets.We perform an annual review of our goodwill and other indefinite-lived intangible assets, or more frequently if indicators of potential impairment exist. This analysis requires significant judgments, including anticipated market conditions, operating expense trends, estimation of future cash flows, which are dependent on internal forecasts, and estimation of long-term rate of growth. The estimates used to calculate the fair value of other indefinite-lived intangible assets change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets impairment. There were no changes in the methodology used in this analysis in 2025.
Business Combinations.A component of our growth strategy has been to acquire and integrate businesses that complement our existing operations. We account for business combinations in accordance with the guidance for business combinations and related literature. Accordingly, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values at the date of purchase, with the exception of contract assets and contract liabilities with a customer acquired in a business combination, for business combinations that occurred in 2022 or later. For these transactions we recognize and measure those contracts as though we had entered into the agreement with the customer as of the same date as the acquiree. This generally will result recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date. The difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill.
In determining the fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values (where available). Further, we make assumptions within certain valuation techniques including discount rates and timing of future cash flows. Valuations are performed by management or independent valuation specialists under management's supervision, where appropriate. We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates.
Guarantees. In the ordinary course of business, we enter into agreements that contain standard guarantees and indemnities whereby we indemnify another party for specified breaches of, or third-party claims relating to, an underlying agreement. Such underlying agreements are typically entered into by one of our subsidiaries. The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, access to credit facilities, derivatives and issuances of debt securities. Also, in the ordinary course of business, we provide corporate guarantees for our operating business units relating to merchant credit-card processing for prepaid customer stays and other deposits. While a majority of these guarantees and indemnifications extend only for the duration of the underlying agreement, some survive the expiration of the agreement. We are not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases, we maintain insurance coverage that may mitigate any potential payments.
Income Taxes. We regularly review our deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions may increase or decrease our
valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.
For tax positions we have taken or expect to take in our tax return, we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold.
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