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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.04pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.18pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.26pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+2
fail+2
negatively+2
restructuring+2
impairments+2
Positive rising
effective+3
successfully+2
innovations+2
success+1
greater+1
Risk Factors (Item 1A)
11,436 words
ITEM 1A. RISK FACTORS
You should carefully consider each of the following risk factors and all of the other information set forth in this report. Based on the information currently known to us, we believe that the following information identifies the material risk factors affecting our company. However, the risks and uncertainties we face are not limited to those set forth in the risk factors described below.
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Additional risks and uncertainties not presently known to us or that we currently believe not to be material risks may also adversely affect our business.
Risks Related to Our Business and Our Industry
The timeshare industry is highly competitive and we are subject to risks related to competition that may adversely affect our performance.
We will be adversely impacted if we cannot compete effectively in the highly competitive timeshare industry. The continued success and future growth of our timeshare and exchange businesses depend upon our ability to compete effectively in an industry that contains numerous competitors, some of which have significantly greater financial, marketing, and other resources and flexibility than we have. We principally compete with short-term leisure travel options such as lodging (hotels and resorts), cruises, and home and apartment rental or sharing services. We also compete with other timeshare companies for customers, projects and talent, and consolidation in the timeshare industry can lead to larger competitors that may have resources than us. We compete based on brand name recognition and reputation, lifetime value, location and the availability of development sites for new properties, convenience, quality of accommodations, alignment with customer lifestyles and evolving customer travel preferences, service levels, technological , cost, amenities, customer loyalty and flexibility. In order to compete with the multitude of short-term leisure travel options for customers, we incent potential new owners and existing owners to tour with us to understand our products and services. New developments are being constructed and additional properties are being added to rental and sharing platforms, and these additions to supply may create new competitors, in some cases without corresponding increases in demand. Competition may reduce fee structures, potentially causing us to lower our fees or prices, which may impact our profits. New competition or existing competition that uses a business model that is different from our business model may require us to change our model so that we can remain competitive. We also face competition from national and regional timeshare resale companies as well as from private resales of VOIs, which has in the past and likely will in the future impact VOI sales. New owners have also historically engaged in upgrade purchases over time which impact our business. However, we cannot guarantee that the historic upgrade trends will continue in the future at the same rates we have generated in the past or that we will continue to in creating new owners at levels sufficient to continue historic upgrade trends.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairments+12
restructuring+10
decline+5
unfavorably+3
unsold+3
Positive rising
effective+3
gain+3
strength+3
rewards+1
gains+1
MD&A (Item 7)
12,105 words
ITEM 7. 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 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 for upgrade sales.
Our RCI exchange business primarily depends on vacation ownership developers for new members and on existing members and participants renewing their memberships with us and engaging in exchange and travel club transactions. Our new member enrollment and exchange member volumes dropped significantly during the COVID-19 pandemic, due in large part to the industry wide drop in VOI sales to new owners, and the total number of our exchange members continues to be below pre-pandemic levels. Although new owner sales levels have recovered from their lows in 2020, there is no assurance that they will continue to result in increased new owner memberships sufficient to reach pre-pandemic levels. Developers and members also supply resort accommodations for use in exchanges. If we are unable to negotiate new affiliation agreements with resort developers or secure renewals with existing members or developers in our RCI network, the number of new and/or existing members, the supply of resort accommodations available through our exchange networks and related revenue will decrease. These effects on our exchange business are more pronounced as the proportion of corporate member relationships has increased, where the developer renews RCI membership fees for all of its active owners. The loss or renegotiation on less favorable terms of several of our largest affiliation agreements could materially impact our financial condition and results of operations. Our ability to maintain affiliate agreements with resort developers is also impacted by consolidation in the vacation ownership industry. For example, in connection with the acquisition of Welk Hospitality Group, Inc. (“Welk”) by Marriott Vacations Worldwide Corporation, the RCI contract with Welk was terminated. In addition, developers are increasingly competing with our Exchange business by creating, operating and expanding internal exchange and points-based vacation club networks to offer their respective owners travel flexibility. By design, these networks decrease the propensity of owners to continue their membership in and use of external vacation ownership exchange programs, such as RCI, which in turn adversely impacts the supply of resort accommodations available for exchange through our exchange networks and reduces exchange and travel club transactions and our related revenue. The success of our Exchange business is also dependent upon our ongoing ability to successfully adjust and restructure our business models, including seeking to lower our costs, which we have been undertaking to meet changing conditions.
We cannot guarantee that our innovations to enhance technologies and digital marketing and services will satisfy customers or that competitors will not develop more effective or appealing innovations, which could limit the benefits we derive from our own efforts or adversely impact our competitive position.
Our travel club businesses operate in a highly competitive global environment and may take longer than expected to achieve the levels of revenues, customer acceptance and profitability we expect.
Our travel club businesses have not grown as quickly as originally anticipated and as we continue to operate and seek to expand our business in the broader leisure travel industry, we will be adversely impacted if we cannot compete effectively. There are a
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great number of existing competitive travel services, some of which have significantly greater financial, marketing, and other resources than we have, and while the market is currently fragmented, existing travel service companies as well as new entrants may adversely impact our ability to achieve the level of revenues, transactions, and profitability we expect.
Our B2B white label travel clubs business is largely dependent on the success of marketing efforts to closed user groups through partner brands and the subsequent propensity of the members of those groups to use the platform for their travel bookings and upgrade to receive premium services. Our travel clubs businesses are also reliant on our ability to leverage new and existing relationships with travel suppliers, including hotels, airlines, rental car companies, and wholesale suppliers, and their willingness to distribute products and services through our platforms. This business is also impacted by third-party internet travel intermediaries and peer-to-peer online networks that may be used by consumers to search for, book and rent their resort and other travel accommodations. Our success in these leisure travel clubs is also dependent upon our ability to efficiently customize our travel offerings to particular areas of interest and focus on the groups to which we market and promote our services and offerings. Our success here is also dependent upon our ongoing ability to successfully adjust and restructure our business models, including seeking to lower our costs, which we have been undertaking to meet changing conditions and customer requirements compared to those we had originally anticipated and planned for. There is no assurance that these efforts will be successful within the timeframe or at the levels we expect, or at all.
Our travel clubs businesses have required us to utilize and augment human capital and other resources in a manner different from those required by our historical business offerings and, as a result, subject us to greater risks and uncertainties than historically considered for our core timeshare and exchange businesses.
Our revenues are highly dependent on the health of the travel industry and declines in or disruptions to the travel industry such as those caused by economic conditions, terrorism or acts of violence, political strife, severe weather events and other natural disasters, war, and pandemics may adversely affect us.
Declines in or disruptions to the travel industry including in regions and locations where we have a significant number of resorts have, in the past, adversely impacted us and any future declines or disruptions are also likely to adversely impact us. Risks affecting the travel industry can be localized events or global in nature and may adversely impact decisions by consumers to use and consume travel services and products and may include economic factors such as economic slowdown and recession; increased cost of living and reduced discretionary income (including due to recent and potential future inflationary pressures, tariffs, higher borrowing costs and foreign exchange rates) and potential for increased unemployment rates; terrorist incidents and threats and associated heightened travel security measures; acts of violence or threats thereof; war, other hostilities and political and regional strife (including the risk that the current conflict between Ukraine and Russia or the conflicts in the Middle East expand in a manner that significantly impacts our business and operations); extreme weather conditions and natural disasters; the associated economic disruption due to concerns with high rates of infection, pandemics, contagious diseases or health epidemics, such as occurred during the COVID-19 pandemic, and the related increased governmental regulations or restrictions on and recommendations and warningsagainst travel in certain regions; changes in travel preferences arising from adverse changes in the diplomatic relations of foreign countries with the U.S. and heightened U.S. immigration enforcement; lengthy power outages; increased pricing, financial instability and capacity constraints of air carriers; airline job actions and strikes, or governmental activities in connection with air travel such as flight impacts resulting from reduced levels of air traffic controllers; and potential for increases in gasoline and other fuel prices such as experienced in 2022.
Extreme weather conditions and natural disasters, whether resulting from climate change or other factors, such as increased frequency and severity of hurricanes, storms and floods, coastal erosion and flooding due to higher sea levels, increased temperatures, increased wildfires, tornadoes, earthquakes, typhoons, tsunamis, drought, volcanic eruptions and other factors, have in the past adversely impacted, and in the future will likely continue to adversely impact, the accessibility or desirability of travel to certain locations, including those areas where we or our affiliated resort owners have existing resort properties or may develop resort properties in the future. Additionally, increased regulations related to climate change could have an adverse impact on the leisure travel industry generally.
Further, Travel + Leisure Co. develops and manages resort properties and provides our exchange and travel club members access to resort properties throughout the world, a portion of which are in areas with greater exposure to the adverse effects of severe weather events and other natural disasters due to their location in coastal areas or states where wildfires are common or have increased in frequency, which could cause such resorts to suffergreateradverse effects from those events than the leisure travel industry faces in general. Based upon insurable property values as of December 31, 2025, 35% of our managed properties are located in Tier I windstorm exposure areas, 22% are located in high-risk wildfire-prone states, and 19% are located in areas with a high level of flood risk. In addition, based on the water risk assessment we conducted in 2025, we identified 63 managed resorts in high or extremely high water-stressed locations. Properties in these areas have in the past closed, and may in the future close, due to such extreme weather events and such closures have been, and in the future may be, extended for prolonged
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periods following such weather events while major damage is remedied and/or major renovations are undertaken and completed, whether to the resort properties themselves or to the surrounding infrastructure which supports such areas. Concern with climate change or increased extreme weather events, may also impact customer preferences for future timeshare purchases, including potential decreased customer preference for geographic areas that may be viewed as subject to increased risk of extreme weather events.
Natural disasters, such as the severe wildfires in California in early 2025 and the hurricanes in Florida in 2024, have increasingly caused substantial and, in certain instances, unprecedented property damage which have impacted and in the future will likely materially impact property insurance markets. Coverage and insurance rates may materially impact resort ownership unit maintenance fees to timeshare owners which could potentially make vacation ownership less attractive to some consumers.
The particular geographic areas exposed to these extreme weather events and other natural disasters have increased in recent years to areas which had not historically been subject to such extreme conditions, including areas which we and our affiliated resort owners own or manage resort properties and, in the future, expect to develop additional or expanded resort properties. Additionally, if we, in the areas in which such events occur, fail timely to prepare in advance for, or fail timely to repair and address the damage and impact of such events, our business and financial results will be further negatively impacted.
Any of the foregoing disruptions would also likely adversely affect our affiliated resorts, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations in the impacted location(s), and our travel clubs, thereby impacting our operations and financial results.
Acquisitions, dispositions and other strategic transactions may not prove successful and could result in operating difficulties.
We regularly consider a wide array of potential acquisitions and other strategic transactions, including acquisitions of businesses and real property, brand licensing transactions, joint ventures, business combinations, strategic investments and dispositions. Any of these transactions could be material to our business. We often compete for these opportunities with third parties, which may cause us to lose potential opportunities or to pay more than we may otherwise have paid absent such competition. We cannot assure you that we will be able to identify and consummate strategic transactions and opportunities on favorable terms or at all, or that any such strategic transactions or opportunities, if consummated, will be successful. Assimilating any strategic transactions may also create unforeseen operating difficulties and costs.
Acquisitions may also be structured in such a way that we will be assuming unknown, undisclosed or contingent liabilities or obligations or we may incur unanticipated costs or expenses following the acquisition, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, reductions in personnel, unexpectedpenalties or enforcement actions, and other liabilities. Moreover, we may be unable to efficiently integrate acquisitions, management attention and other resources may be diverted away from other potentially more profitable areas of our business and in some cases these acquisitions may turn out to be less compatible with our growth and operational strategy than originally anticipated. The success of our acquisitions is also subject to other risks, including, among others:
• failure to realize expected technological and product synergies, economies of scale and cost reductions;
• unforeseen expenses, delays or conditions related to the transactions, including those due to regulations;
• adverse effects on existing business relationships with customers, partners, employees or suppliers;
• potential dilutive issuances of equity securities in payment of the acquisition price in a strategic transaction;
• risks associated with entering into markets in which we have limited or no prior experience, including new domestic and international geographic locations and new consumer markets such as the sports fan community (for example, the risk that we may have less visibility into demand in such markets);
• inaccurate assumptions regarding the acquired business or integration process;
• financial and operational results that may differ materially from our assumptions and forecasts, including higher than expected development costs;
• unforeseendifficulties that may arise in integrating operations, processes and systems;
• higher than expected investments that may be required to implement necessary compliance processes and related systems, including information technology systems, accounting systems and internal control over financial reporting;
• failure to retain, motivate and integrate any key management and other employees of the acquired business;
• higher than expected costs or other impacts resulting from unforeseen tax, trade, environmental or other regulations in jurisdictions in which the acquired business conducts its operations; and
• issues with retaining customers and integrating customer bases.
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Many of these factors are outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues, and diversion of management’s time and attention. Furthermore, we may not realize the degree or timing of benefits we anticipate when we first enter into these transactions. Failure to successfully execute these transactions and integrate acquired businesses could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
In 2021, we acquired the Travel + Leisure brand and all related assets from People Inc. (formerly Dotdash Meredith and Meredith Corporation) and we also changed our name to Travel + Leisure Co. The expected results of the transaction and the future prospects for and plans of our company more broadly, including our strategies to accelerate growth of our global businesses through the addition of new vacation ownership brands and growing our travel clubs, are subject to a number of risks and uncertainties, many of which are beyond our control, and may not be achieved in the time or at the level we expect, or at all.
Our efforts to establish and grow our travel clubs businesses and add brands to our existing portfolio of vacation ownership brands, such as through the launch of a network of sports-themed resorts and lifestyle resorts under the Sports Illustrated Resorts brand and the acquisition of Accor Vacation Club, subject us to greater risks and uncertainties than those historically considered for our core timeshare and exchange businesses. These risks and uncertainties include requiring us to utilize and augment human capital and other resources beyond those required by our historical business offerings to source and establish relationships with new partners and to develop and market vacation ownership resorts, products, and services that meet the demands of new consumers.
Promotional activities associated with our businesses may not yield increased revenue in the time or levels expected, and even if revenue does increase, it may not be sufficient to offset the expenses we incur in building our brands and businesses. If we fail to successfully promote and maintain our brands and businesses or incur substantial expenses in an unsuccessful attempt to promote and maintain our brands and businesses, we may fail to attract or retain customers to the extent necessary to realize a sufficient return with respect to the acquisition, our branding efforts and our businesses, which would adversely impact our results of operations and financial condition.
In addition, a portion of the value associated with the Travel + Leisure brand is derived from the long-standing commitment to high-quality, independent travel journalism by Travel + Leisure magazine and associated media properties, which continue to be operated by People Inc. (formerly Dotdash Meredith and Meredith Corporation) outside of our control. If the quality or reach of such media properties deteriorates in the future, it could negatively impact the perception of the Travel + Leisure brand and adversely impact our business.
Further, there can be no assurance that the anticipated benefits from the 2024 Accor Vacation Club acquisition will be achieved, or that we will be successful in operating and developing this business outside of the U.S. market and in geographical areas where we have had limited or no operating experience.
Dispositions of businesses, such as our European and North American vacation rentals transactions, also pose risks and challenges that could negatively impact our business, including costs or disputes with buyers. Dispositions may also involve continued financial involvement, as we may be required to retain responsibility for, or agree to indemnify buyers against, credit support obligations, and contingent liabilities related to a divested business, such as lawsuits, tax liabilities, or other matters. Under these types of arrangements, performance by the divested business or other conditions outside of our control could affect our financial condition or results of operations.
We are subject to numerous business, financial, operating and other risks common to the timeshare industry and the leisure travel industry more broadly, any of which could reduce our revenues and our ability to make distributions and limit opportunities for growth.
We are subject to numerous business, financial, operating and other risks common to the timeshare industry and the leisure travel industry more broadly, such as adverse changes with respect to any of the following:
• consumer travel and vacation patterns and consumer preferences;
• increased or unanticipated operating costs, including as a result of recent inflationary pressures, and which may not be offset on a timely basis, or at all, by our ability or actions to increase our product pricing or maintenance fees;
• increased energy costs, labor shortages and increased labor costs as well as increases in minimum wage and health-care related costs, which may not be fully offset by price or fee increases in our business or otherwise;
• product and supply chain disruptions;
• desirability or continued desirability of geographic regions where resorts in or affiliated with our businesses are located;
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• the supply and demand for exchange services and products, and travel subscription services and products;
• our ability to accurately plan for, predict, and satisfy future timeshare inventory needs, including through development of new properties, and optimally manage the amount of developer owned inventory we hold for sale, which has been and may in the future be adversely impacted by events and occurrences that affect vacation ownership tours and VOI sales, such as COVID-19 or other pandemics or health-related concerns;
• our ability to continue to attract customers for VOI purchases and upgrades at the levels we expect;
• our ability to operate our managed resorts and to conduct tours of our properties at the levels we have in the past;
• seasonality in our businesses, which may cause fluctuations in our operating results;
• the availability of acceptable financing and the cost of capital as they apply to us, our customers, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations;
• the quality of the services provided by affiliated resorts and properties in our exchange business or resorts in which we sell VOIs or by participants in the Wyndham Rewards loyalty program, which may adversely affect our image, reputation and brand value;
• success of any actions we may take to increase our exchange membership levels;
• our ability to develop and maintain relationships with marketing partners, including our Blue Thread marketing relationship with Wyndham Hotels;
• market perception of the timeshare industry and our ability to effectively respond to any reputational or brand issues that may arise from negative publicity from social media postings or media reports, which could damage our brands;
• our ability to develop and maintain positive relations and contractual arrangements with VOI owners, current and potential vacation exchange members, resorts with units that are exchanged through our exchange business and timeshare property owner associations;
• organized labor activities and associated litigation;
• adverse economic factors impacting the financial health of customers, which has impaired and could continue to impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights;
• our effectiveness in keeping pace with technological developments as well as any failure to timely upgrade our technology infrastructure and efficiently manage upgrade projects to achieve our strategic planning expectations and to meet changing customer preferences and customer interfacing needs;
• our effectiveness with positive messaging, through social media platforms, our brand and our timeshare resorts and those resorts with which our exchange members may exchange vacation interests, and our ability to effectively respond to any negative messaging or comments on social media;
• our ability to effectively use data to achieve market intelligence and develop, manage and grow our core operations and strategic initiatives using such data and market intelligence;
• our ability to offer acceptable customer pricing for products and services, including in a time of economic uncertainty and higher borrowing costs;
• our ability to identify, obtain, train and retain industry specific talent (including digital, sales, marketing, and operational leadership skills) to execute our growth strategy and to address customer satisfaction;
• disruptions, including non-renewal or termination of agreements, in relationships with third parties (including marketing alliances, loyalty programs and other affiliations with third parties, including Wyndham Hotels);
• owners or other developers that have advance notes with us, or who have received loans or other financial arrangements incentives from us, who have experienced and may continue to experience financial difficulties;
• a decrease in the supply of available exchange accommodations due to, among other reasons, a decrease in inventory included in the system (including as a result of extreme weather events such as have occurred in our geographic markets in recent years, ongoing property renovations or a decrease in member deposits) which could adversely affect our exchange business;
• the viability of property owners’ associations and the maintenance and refurbishment of vacation ownership properties that we manage, which depend on property owners’ associations levying sufficient maintenance fees and the ability of members to pay such maintenance fees, particularly in times of economic downturn;
• decrease in or delays or cancellations of planned or future development or refurbishment projects, whether due to budgetary constraints of property owners’ associations or otherwise, and the complexity with regard to removing properties from timeshare regimes when they can no longer be sustainably maintained;
• increases in maintenance fees, which could cause our product to become less attractive or less competitive;
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• the level of unlawful or deceptive third-party VOI resale schemes, which could damage our reputation and brand value;
• the cost to develop vacation ownership properties and difficulties associated with obtaining required approvals in connection with development, liability under state and local laws with respect to any construction defects in the vacation ownership properties we develop, and risks related to real estate project development costs and completion;
• private resale of VOIs and the sale of VOIs on the secondary market, which could adversely affect our vacation ownership resorts, the prices at which we sell VOIs, and our exchange business;
• disputes with owners of VOIs, property owners’ associations, and vacation exchange affiliation partners, which may result in litigation and the loss of management contracts;
• laws, regulations and legislation internationally and domestically, and on a federal, state or local level, concerning the leisure travel industry, which may make the operation of our business more onerous, more expensive or less profitable;
• our failure or inability to adequately protect and maintain our trademarks and other intellectual property rights; and
• consumers increased use of third-party internet travel intermediaries and peer-to-peer online networks to search for and book their lodging accommodations, which could adversely affect our vacation ownership and vacation exchange brands, travel clubs and travel subscription businesses, reservation systems, bookings and rates.
Any of these factors could increase our costs, reduce our revenues and profitability and otherwise adversely impact our opportunities for growth.
Our international operations are subject to additional risks not generally applicable to our domestic operations.
Our international operations are subject to numerous risks, including exposure to local economic conditions; potential adverse changes in the diplomatic relations of foreign countries with the U.S.; hostility from local populations; potential changes in the regulation of timeshare products by foreign countries, such as occurred in Australia; political instability; threats or acts of war, hostilities, or terrorism; the presence and acceptance of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws; restrictions and taxes on the withdrawal of foreign investment and earnings; government policies against businesses or properties owned by non-U.S. citizens; investment restrictions or requirements; diminished ability to legally enforce our contractual rights in foreign countries; forced nationalization of assets by local, state or national governments; foreign exchange restrictions; fluctuations in foreign currency exchange rates, including negative impacts of the weakening of foreign currencies in geographic regions in which we operate relative to the U.S. dollar; our ability to, or our decision whether or not in particular instances to, hedge against foreign currency effects, and whether we are successful in any such hedging transactions; conflicts between local laws and U.S. laws including laws that impact our rights to protect our intellectual property; withholding and other taxes on remittances and other payments by subsidiaries; and changes in and application of foreign taxation structures including value added taxes. Any of these risks or any adverse outcome resulting from the financial instability or performance of foreign economies, the instability or weakening of other currencies and the related volatility on foreign exchange and interest rates, could impact our results of operations, financial position or cash flows.
Increases in our international operations, including through our Accor Vacation Club acquisition, may increase our operating risk, including many of the risks discussed above, and result in less benefits for our company than for a company with greater international operating experience in those particular international regions.
We are subject to risks related to our vacation ownership receivables portfolio.
We are subject to risks that purchasers of VOIs who finance a portion of the purchase price default or otherwise delay payments on their loans due to adverse macro or personal economic conditions, third-party organizations that encourage defaults, or otherwise, which necessitates increases in loan loss reserves and adversely affects loan portfolio performance. In addition, fluctuations in consumer down‑payment behavior and overall financing levels may still increase our loan loss provision and negatively impact the performance of our loan portfolio. We manage our consumer credit exposure in part through portfolio management and tools that impact the mix of developer-financed sales, such as offering credit cards and other third-party financing directly to consumers to facilitate cash down payments and periodic sales of VOCRs. Reduced effectiveness of our portfolio management activities, lower down payments or a reduction in periodic VOCR sales, could increase the loan loss allowance associated with VOCRs.
Financial difficulties of owners and customers, such as those that occurred during the COVID-19 pandemic and that generally occur during recessionary periods, could result in increased payment defaults and delinquencies. When defaults or delinquencies occur during the early part of the loan amortization period, we may not have recovered the marketing, selling, administrative and other costs associated with such VOIs. Additional costs are incurred in connection with the resale of repossessed VOIs, and the value we recover in a resale is not in all instances sufficient to cover the outstanding debt on the defaulted loan. During 2020, in response to COVID-19, we substantially increased our loan loss allowance on our vacation
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ownership receivables portfolio. At times we have had to, and in the future we may have to, increase our loan loss allowance above average historical levels again, whether due to a public health emergency, adverse economic conditions generally, increased customer default trends generally, or other causes.
The growth of our business and the execution of our business strategies depend on the services of our senior management and our associates.
We believe that our business success and future growth depends, in part, on the continued services of our senior management team, including our President and CEO, Michael D. Brown, and on our ability to successfully implement succession plans for members of our senior management team. The loss of any members of our senior management team, or the failure to identify qualified successors for such positions, could adversely affect our strategic growth and customer relationships, and impede our ability to execute our business strategies. Additionally, lack of sufficient effectiveleadership may lead to low morale, higher turnover, and decreased ability to execute our strategy. Also, insufficient numbers of talented associates could constrain our ability to maintain and expand our business. We compete with other companies both within and outside of our industry for talented personnel. If we cannot recruit, train, develop and retain sufficient numbers of talented associates, we could experience increased associate turnover, decreased guest satisfaction, low morale, inefficiency, or internal control failures.
Risks Related to Technology, Data Privacy and Cybersecurity
Failure to maintain the integrity of internal or customer data or to protect our systems from cyber-attacks could disrupt our business, damage our reputation, and subject us to significant costs, fines or lawsuits.
In connection with our business, we and our service providers collect and retain large volumes of certain types of personal and proprietary information pertaining to our customers, shareholders, and employees. Such information includes, but is not limited to, large volumes of customer credit and payment card information, customer travel documents, other identification documents, account numbers, and other personally identifiable information. We are subject to attack by cyber-criminals (including nation state-sponsored or nation state-supported organizations, terrorist organizations, criminal enterprises and other actors) operating on a global basis attempting to gain access to such information as well as our source code information, and the integrity and protection of that customer, shareholder, and employee data and proprietary information is critical to us.
While we maintain what we believe are reasonable security controls over personal and proprietary information (including the personal information of customers, shareholders, and employees), and our information technology staff regularly assesses and seeks to identify vulnerabilities in our information technology and cybersecurity systems and controls, breaches of or breakdowns in our systems that result in the theft, loss, access to, fraudulent use or other unauthorized release of personal, confidential or other proprietary information, source code information, or other data have occurred in the past and may occur in the future. While we have sought and will continue to seek to appropriately address and remedy these vulnerabilities as they are identified, we cannot assure you that all such vulnerabilities will be adequately or timely remediated to prevent unauthorized access to our information technology systems in the future.
In addition, any such cyber-attacks could persist for an extended period of time without detection, which could likely have a material adverse effect on our brands, reputation, customer confidence, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, losses, third-party damages and other liabilities. Such a breach or a breakdown could also materially increase our costs to protect such information and to protect and insure against such risks. Our and our third-party service providers’ vulnerability to attack exists in relation to known and unknown threats. As a consequence, the security measures we deploy are not perfect or impenetrable, and we may likely be unable to anticipate or prevent all unauthorized access attempts made on our systems or those of our third-party service providers.
Data breaches and other serious cyber incidents have increased globally, along with the sophistication of the methods and techniques of the intrusions and complexity of the attacks, including use of viruses, ransomware and other malicious software, phishing, deepfake technology, artificial intelligence (“AI”) technology, and other ever-evolving efforts to discover and exploit any design flaws, bugs or other security vulnerabilities. Continued geopolitical turmoil (including the ongoing conflict between Russia and Ukraine and the ongoing conflicts in the Middle East) has heightened the risk of cyber-attacks. We have experienced and likely will continue to experience such cyber-attacks. Further, because methods used by third-party actors to obtain unauthorized access to or interference with information systems are ever-evolving, they may not be identified until long after they are used against a target and, as a result, our cybersecurity measures then in place may be inadequate in preventing any such intrusion or in identifying or assessing the breadth or significance of any such intrusion. Also, the same cybersecurity threats exist for the third parties with whom we interact (such as parties providing us software or services) or share information, and cyber-attacks on third parties with which we interact or which possess, use or have access to our customer, and other information have in the past adversely impacted us in the same way as a direct cyber-attack on us. Additionally, we currently have a hybrid work environment in which many corporate associates work both in the office and remotely on an ongoing basis.
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The increase in the number of our associates working remotely has increased certain risks to our business, including increased demand on our information technology resources and systems, and greater potential for phishing and other cybersecurity attacks.
While to date no such cyber-attacks have had, individually or in the aggregate, any known material adverse impact on our operations or financial results, we cannot guarantee that cyber-attacks have not gone generally undetected or without general recognition of magnitude or will not continue to occur in the future, any of which could materially adversely affect our brands, reputation, consumer confidence in us, costs, and profitability.
Our information technology infrastructure (including our, and our third-party service providers’, information systems and legacy proprietary online reservation and management systems) has been and will likely continue to be vulnerable to system failures such as server malfunction or software or hardware failures, computer hacking, phishing attacks, user error, cyber-terrorism, loss of data, computer viruses, ransomware and malware installation, deepfake technology, and other intentional or unintentionalinterference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems, including through the use of AI technology, and our personal and proprietary information. In addition, as we continue to transition from our legacy systems to new, cloud-based technologies and other technology systems, we will likely continue to face issues that may negatively impact customers, other individuals and third parties. In addition, as we pursue new initiatives that are designed to improve our operations and cost structure, the expansion and implementation of new technologies and systems (including our increasing use, and the likely increasing use by our third-party service providers, of AI technologies carries significant potential risks, including failure to operate as designed, potential loss of or corruption of information, changes in security processes, implementation delays, and disruption of operations. The increased scope and complexity of our information technology infrastructure and systems could contribute to the risk of future material security breaches or breakdowns, any of which could have a material adverse impact on our business, brands, reputation, and results of operations. Further, if we fail to fully assess, identify and address all cybersecurity risks associated with acquisitions (such as our acquisition of Accor Vacation Club) or failsuccessfully to integrate all information technology systems of such acquired businesses into and with our existing technology framework and cybersecurity controls, we would become increasingly vulnerable to all of the above risks.
Consumer privacy laws could adversely affect our ability to market our products effectively and may require us to change our business practices or expend significant amounts on compliance with such laws.
We are subject to federal, state, and international laws and regulations relating to the collection, use, retention, security and transfer of personally identifiable information and individual payment data. The information, security and privacy requirements imposed by such laws and regulations are constantly evolving and are becoming increasingly demanding in the U.S., both at the federal and state levels, and in other jurisdictions where we operate. Aspects of these laws and regulations, as well as their enforcement, remain unclear, and foreign laws and regulations are often more restrictive or burdensome than those in the U.S. Moreover, we have incurred and will likely continue to incur significant costs relating to compliance with these laws and regulations, including costs related to updating certain business practices and systems. Further, any changes to laws or regulations, including new restrictions or requirements applicable to our business, or an increase in enforcement of existing laws and regulations, such as restricting use or sharing of consumer data, including for marketing or advertising or limiting the use of, limiting our ability to provide certain consumer data to our customers, or otherwise regulating AI and machine learning (including the use of algorithms and automated processing), could expose us to additional costs and liability. In addition, should we violate or not comply with any applicable laws, regulations, contractual requirements relating to data security and privacy, such as the recently adopted regulations for the California Consumer Privacy Act, or with our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries, it could have a material adverse effect on our brands, marketing, reputation, business, financial condition, and results of operations, as well as subject us to significant fines, litigation, losses, third-party damages and other liabilities.
We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities.
We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities, including those used for our travel clubs businesses, reservation systems, payments systems, vacation exchange systems, property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems. We also maintain physical facilities to support these systems and related services. Our backup systems and disaster recovery systems, or those of our third-party service providers, may be insufficient to address or prevent breakdown of systems, loss of critical information or prolongedinterruption. A natural disaster, cyberattack, disruption or other impairment in our technology capabilities and service facilities (including information technology systems, data centers and backup systems, or those of our third-party service providers) could result in denial or interruption of service, significant investment in resources to restore and remedy such systems,
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prolongedoutages and interruption, financial losses, customer claims, litigation or damage to our reputation, or otherwise harm our business and financial results. In addition, any failure of our ability to provide our reservation systems, as a result of failures related to us or our third-party providers, may deter prospective resort owners from entering into agreements with us, and may expose us to liability from other parties with whom we have contracted to provide reservation services. Similarly, any failure to keep pace with developments in technology and technology infrastructures (including continuing upgrades to our technology systems which interface with customers), which is a significant part of our business, could impair our operations, financial results and competitive position.
Further, any failure to keep pace with new or innovative use of technologies (including digital technologies within the leisure travel and timeshare industry, as well as evolutionary changes in social media (including third-party social media sites) which consumers increasingly rely upon for assessments and decisions concerning travel and vacation information) could adversely impact our competitive position and future prospects. Our industry is marked by rapid technological developments and innovations (such as the use of AI and machine learning) and evolving industry standards. We are increasingly incorporating AI technologies into our processes, marketing and services, and these technologies are becoming increasingly important to our operations and important in maintaining our competitive position, both in our vacation ownership business and in our exchange and travel club businesses. The development, capabilities, adoption and use of AI and machine learning technologies have been advancing at a rapid pace, and the further development of AI technologies is complex, involving technical challenges associated with achieving the desired level of accuracy, efficiency, and reliability. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs and any failure of our business continuity planning as to any of these matters could have a material adverse impact on our business, brand, and financial results.
Risks Related to Indebtedness and Tax Treatment
We are subject to certain risks related to our indebtedness, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us.
We are a borrower of funds under credit facilities, credit lines, senior notes, and term loans and securitization financings. We use financial instruments to reduce or hedge our financial exposure to the effects of currency and interest rate fluctuations from time to time. We are required to post surety bonds in connection with our development and sales activities. In connection with our debt obligations, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us, we are subject to numerous risks, including:
• the interest rates, inclusive of benchmark rates and spread premium, being charged on floating rate corporate debt and securitized debt had increased significantly beginning in 2022 and higher interest costs on our debt may recur or continue in the future, and although rates have fallen from their peak in 2023, we have not been able to and in the future likely will not be able to pass along the full amount of such costs to purchasers of VOIs to whom we provide financing;
• our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt and other debt instruments that contain cross-default provisions;
• we may be unable to comply with the terms of the financial covenants under our revolving credit facility or other debt agreements, including a breach of the financial ratio tests, which could result in a default and acceleration of the underlying debt (and under other debt and financial instruments that contain cross-default provisions) as well as increase the cost of that debt;
• our leverage may adversely affect our ability to obtain additional financing on favorable terms or at all;
• our leverage requires the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures, dividends, share repurchases or other operating needs and capital uses;
• negative ratings and/or downgrades of our debt by rating agencies have in the past increased interest rates on some of our debt instruments and if they recur in the future would likely increase our borrowing costs and could prevent us from obtaining additional financing on favorable terms or at all;
• failure or non-performance of counterparties to foreign exchange and interest rate hedging transactions could result in losses;
• an inability to securitize our vacation ownership loan receivables on terms acceptable to us or at all because of, among other factors, the performance of the vacation ownership loan receivables, adverse conditions in the market for vacation ownership loan-backed notes and asset-backed notes in general, and the risk that the actual amount of uncollectible accounts on our securitized vacation ownership loan receivables and other credit we extend is greater than expected;
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• our liquidity, as it relates to our vacation ownership contract receivables (“VOCRs”) 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, which may be negatively affected by economic conditions, the credit quality of our VOCRs pools, and other market dynamics;
• breach of portfolio performance triggers under securitization transactions which if violated may result in a disruption or loss of cash flow from such transactions;
• a reduction in commitments from surety bond providers, which may impair our Vacation Ownership business by requiring us to escrow cash in order to meet regulatory requirements of certain states;
• prohibitive or increased cost, or inadequate availability, of capital could restrict the development or acquisition of vacation ownership resorts by us or by our third-party developers and as well as the financing of purchases of VOIs;
• increases in interest rates on consumer financing to VOI purchasers could diminish our VOI sales; and
• disruptions in the U.S. or global financial markets, and the failure of financial institutions that support our credit facilities, general economic conditions and market liquidity factors outside of our control, which may limit our access to short- and long-term financing, credit and capital.
Changes in U.S. federal, state and local or foreign tax law, interpretations of existing tax law, or adverse determinations by tax authorities, could increase our tax burden or otherwise adversely affect our financial condition or results of operations.
We are subject to taxation at the federal, state and local levels in the U.S., and various other countries and jurisdictions. Our future effective tax rate and future cash flows could be affected by changes in the composition of earnings in jurisdictions with differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, changes in determinations regarding the jurisdictions in which we are subject to tax, and our ability to repatriate earnings from foreign jurisdictions. From time to time, U.S. federal, state and local, and foreign governments make substantive changes to tax rules and their application. For example, effective beginning for the 2023 tax year, the Inflation Reduction Act of 2022 made changes to the U.S. corporate income tax system, including a 15% minimum tax on adjusted financial statement income for certain large corporations and a 1% excise tax on share repurchases. We currently are not subject to the 15% minimum tax, but we will continue to monitor as this could change. In addition, the One Big Beautiful Bill Act, enacted in 2025, 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, in addition to providing for new tax relief measures and various revenue raising measures. For the provisions effective in 2025, there was no material impact to our effective tax rate for the year ended December 31, 2025, but we continue to assess the potential impact of these law changes, including provisions becoming effective in 2026, on our business and financial results. Further changes to the tax laws may be contemplated both in the U.S. and certain other countries, which could result in materially higher corporate taxes than would be incurred under existing tax law and could otherwise adversely affect our financial condition or results of operations.
The international tax environment remains highly uncertain and increasingly complex as evidenced by initiatives put forth by the Organization for Economic Co-operation and Development (“OECD”), which includes the introduction of a global minimum tax at a rate of 15% under the OECD’s Pillar Two rules. A number of countries around the world have enacted or are in the process of enacting legislation implementing OECD’s Pillar Two rules. As of December 31, 2025, based on the countries in which we do business that have enacted legislation effective on or before January 1, 2025, the 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. The OECD may continue to release guidance, and enacting legislation may continue to be implemented, that could impact our assessment as to the impact of Pillar Two on our Consolidated Financial Statements and operations.
We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local, and foreign jurisdictions. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations.
We are responsible for certain of Avis Budget Group, Inc.'s contingent and other corporate liabilities.
Under the separation agreement and the tax sharing agreement that we executed with Cendant Corporation (now Avis Budget Group, Inc., “ABG”) and former ABG units, Realogy (now Anywhere Real Estate Inc.) and Travelport. Wyndham Worldwide and Anywhere Real Estate Inc. generally were responsible for 37.5% and 62.5% of certain of ABG’s contingent and other corporate liabilities and associated costs, including certain contingent and other corporate liabilities of ABG or its subsidiaries
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to the extent incurred on or prior to August 23, 2006. As a result of the completion of the Spin-off, Wyndham Hotels agreed to retain one-third of ABG’s contingent and other corporate liabilities and associated costs; therefore, we are responsible for 25% of these liabilities and costs subsequent to the Spin-off. These liabilities include those relating to certain of ABG’s terminated or divested businesses, including the sale of the North American and European vacation rentals businesses, the Travelport sale, certain ABG-related litigation, actions with respect to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the separation.
If any party responsible for the liabilities described above were to default on its obligations, the non-defaulting parties would be required to pay the amounts in default. Accordingly, we could under certain circumstances be obligated to pay amounts in excess of our share of the assumed obligations related to such liabilities, including associated costs.
We may incur impairment charges related to the fair value of our assets.
Changes to estimates or projections used to assess the fair value of our assets or operating results that are lower than our current estimates may cause us to incur impairmentlosses and require us to write-off all or a portion of the remaining value of our goodwill or other intangibles of companies we have acquired.
Our total assets include goodwill and other intangible assets. We evaluate our goodwill for impairment on an annual basis or at other times during the year if events or circumstances indicate that it is more likely than not that the fair value is below the carrying value. We may be required to record a significant non-cash impairment charge in our financial statements during the period in which any impairment of our goodwill, other intangible assets or other assets is determined, negatively impacting our results of operations and shareholders’ equity. For example, during 2025, we identified certain resorts requiring significant reinvestment or located in markets that no longer align with owner demand, and we have undertaken actions to remove or reduce our interests in those properties. These restructuring activities have resulted in inventory write-downs and impairments and may lead to additional impairments or other charges as the initiative progresses. See Note 25— Restructuring for further information.
Risks Related to Legal, Regulatory and Reputational Matters
Negative public perception regarding our industry could have an adverse effect on our operations.
Negative public perception regarding our industry resulting from, among other things, consumer complaints regarding sales and marketing practices, consumer financing arrangements, and restrictions on exit related to our products, as well as negative comments or messaging on social media, could result in increased regulatory scrutiny and negative customer and public perceptions of us and one or more of our brands, which could result in significant reputational damage, more onerous laws, regulations, guidelines and enforcement interpretations in jurisdictions in which we operate. These actions may lead to operational delays or restrictions, as well as increased operating costs, regulatory burdens and risk of litigation, and decrease customers’ willingness to buy from us or to use our travel clubs or vacation exchange platforms.
Reputational image is based on many factors, including perception of consumers, which increasingly is influenced by social media, whether accurate or not, which is difficult to control or counteract, and negative social media may substantially impair our reputation or that of our brands, hurting our business and financial results.
Our business is subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect us.
Our business is regulated by federal, state and local governments in the countries in which we operate. In addition, U.S. and international, federal, state and local regulators may enact new laws and regulations that may reduce our revenues, cause our expenses to increase or require us to modify our business practices substantially. We are, and may be in the future, subject to regulatory inquiries and investigations from time to time arising under laws and regulations applicable to our business, including, among others, those governing timeshare (including required government registrations), consumer financings and other lending, information security, data protection and privacy, credit card and payment card security standards, marketing, sales, consumer protection and advertising, unfair and deceptive trade practices, fraud, bribery and corruption, telemarketing (including do-not-call and call-recording regulations), licensing, labor, employment, anti-discrimination, health care, health and safety, accessibility, immigration, gaming, environmental (including climate change) and remediation, intellectual property, securities, stock exchange listing, accounting, tax and regulations applicable under the Dodd-Frank Act, Office of Foreign Asset Control, Americans with Disabilities Act, the Sherman Act, and the Foreign Corrupt Practices Act and local equivalents in international jurisdictions (including the United Kingdom Bribery Act). As a result, we may be subject to actions, fines, civil and/or criminalpenalties, injunctions and potential criminalprosecution. In the past, when we have been subjected to regulatory inquiries or investigations, the amount of the fines involved were not material to our business, financial condition or results of operations. However, future fines, penalties or other remedies that regulators might seek to impose could materially adversely affect our business, financial condition or results of operations.
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The insurance we carry may not always pay, or be sufficient to pay or reimburse us, for our liabilities, losses or replacement costs.
We carry insurance for general liability, property, business interruption, cybersecurity, directors and officers (“D&O”), and other insurable risks with respect to our business operations. We also self-insure for certain risks up to certain monetary limits. The terms and conditions or the amounts of coverage of our insurance may not at all times be sufficient to pay or reimburse us for the amount of our liabilities, losses or replacement costs. There are risks for which we do not carry insurance for the full range of possible outcomes or at all concerning a potential loss or liability, due to the cost, availability or terms and conditions of such insurance. As a result, we may incur liabilities or losses in the operation of our business that are substantial and not sufficiently covered by the insurance we maintain, or at all, which could have a material adverse effect on our business, financial condition and results of operations. Following the significant property and casualty losses incurred by the insurance industry due to hurricanes, wildfires, cybersecurity breaches and other events, as well as market dynamics, insurance costs have increased and may be higher (and availability may be lower) in future periods. In addition, increased storm intensity, increased wildfires and rising sea levels as well as other natural disasters, whether resulting from climate change or other factors, have increased and will likely in the future increase the cost and decrease the available coverage levels of property insurance, particularly in certain geographies which have been or may be viewed as more likely in the future to be subject to such events and natural disasters.
We are subject to risks related to environmental, social and governance activities.
Many factors influence our reputation and the value of our brands, including the perceptions held by our customers, other key stakeholders and the communities in which we do business related to our environmental, social and governance activities. The public holds diverse and often conflicting views on these matters, and customer, government and other stakeholder perceptions of our environmental, social and governance initiatives may differ widely. If we do not successfully manage expectations across these varied stakeholder interests, it could erode stakeholder trust, harm our reputation and the value of our brands, constrain our investment opportunities, and damage our ability to compete effectively and grow and operate our business. At the same time, our reputation and the value of our brands may be damaged if we fail to act responsibly or comply with regulatory requirements in a number of areas, such as business ethics and compliance, safety and security, responsible tourism, public health, environmental stewardship and sustainability, supply chain management, climate change, human rights and modern slavery, philanthropy, employee relations, and support for local communities.
We have publicly stated our goals related to environmental sustainability, which include reducing our water intensity and GHG emissions (Scope 1 + Scope 2) and increasing our renewable energy consumption at our owned, managed, and leased assets. In part, we must work through applicable property owners’ associations that we do not control to achieve these goals. We may also take additional actions related to climate change and environmental sustainability voluntarily or in response to increased regulations in the future that would materially increase the costs to develop and operate our resorts, which could have an adverse impact on our profitability even though such actions may be necessary to increase the long-term sustainability of our business. We also must continue to develop appropriate internal and disclosure controls designed such that our disclosedachievementsagainst our environmental goals are accurately reported.
Current and future international operations expose us to additional challenges and risks that may not be inherent in operating solely in the U.S. due to different social or cultural norms and practices that are not customary in the U.S., geographical distance and language barriers, including our ability to sell products and services, enforce intellectual property rights and staff and manage operations.
Risks Related to the Spin-Off
Our success depends in part on our ongoing relationship with Wyndham Hotels.
In connection with the Spin-off, we entered into a number of agreements with Wyndham Hotels that govern the ongoing relationships between Wyndham Hotels and Travel + Leisure Co. following the Spin-off. Our success depends, in part, on the maintenance of these ongoing relationships with Wyndham Hotels as well as Wyndham Hotels’ performance of its obligations under these agreements. As we work to continue to expand our portfolio of vacation ownership brands beyond the brands we license from Wyndham Hotels, the operation of our Vacation Ownership business is evolving and becoming more complex. If we are unable to maintain a good relationship with Wyndham Hotels, or if Wyndham Hotels does not perform its obligations under these agreements, fails to protect the trademarks, trade names and intellectual property that we license from it or if these brands deteriorate or materially change in an adverse manner, or the reputation of these brands declines, our brand may be negatively affected, our profitability and revenues could decrease and our growth potential may be adversely affected. We also have successfully utilized and leveraged our relationship with Wyndham Hotels’ loyalty program, which we refer to as Blue Thread, and any cessation of or adverse change in that loyalty program could be expected to materially adversely impact our
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business, growth strategy and financial results. There is also no assurance that this Blue Thread marketing source will continue to generate new owner tours at the level or with the volume per guest we have experienced to date.
We are responsible for certain contingent and other corporate liabilities incurred prior to the Spin-off.
In accordance with the agreements we entered into with Wyndham Hotels in connection with the Spin-off, Wyndham Hotels assumed one-third and Travel + Leisure Co. assumed two-thirds of certain contingent and other corporate liabilities of Wyndham Worldwide incurred prior to the Distribution, including liabilities of Wyndham Worldwide related to certain terminated or divested businesses, certain general corporate matters, and any actions with respect to the separation plan. See Note 26— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations related to Wyndham Hotels. If Wyndham Hotels were to default on its obligations, we would be required to pay the amounts in default. Accordingly, we could under certain circumstances be obligated to pay amounts in excess of our share of the assumed obligations related to such liabilities, including associated costs.
Certain directors who serve on our Board also serve on the board of directors of and own common stock of Wyndham Hotels.
Certain directors who serve on our Board currently serve as directors of and/or own shares of common stock of Wyndham Hotels, which may create, or appear to create, conflicts of interest, in particular when our or Wyndham Hotels’ management and directors face decisions that could have different implications for us and Wyndham Hotels, including the resolution of any issue regarding the terms of the agreements governing the Spin-off or governing the relationship between us and Wyndham Hotels or any other commercial agreements entered into in the future between Travel + Leisure Co. and Wyndham Hotels.
Risks Related to the Ownership of Our Common Stock
The trading price of our shares of common stock may continue to fluctuate.
The trading price of our common stock may continue to fluctuate depending upon many factors, some of which may be beyond our control, including our quarterly or annual earnings or earnings outlook or those of other companies in our industry; customer acceptance and success of our strategic growth initiatives; actual or anticipated fluctuations in our operating results due to seasonality, economic conditions, including increased inflation, tariffs and interest rate fluctuations, and other factors related to our business; our credit ratings; announcements by us or our competitors of significant acquisitions or dispositions; lower than expected earnings or revenues or outlook for such financial measures, changes in earnings or revenues estimates by us or by securities analysts or our ability to meet those estimates; the operating and stock price performance of comparable companies; and overall market fluctuations. Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.
Provisions in our certificate of incorporation and by-laws and under Delaware law may prevent or delay an acquisition of Travel + Leisure Co. which could impact the trading price of our common stock.
Our certificate of incorporation and by-laws and Delaware law contain provisions that are intended to detercoercive takeover practices and inadequate takeover bids. These provisions include that shareholders do not have the right to act by written consent, rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings, the right of our Board to issue preferred stock without shareholder approval and limitations on the right of shareholders to remove directors. Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our Board determines is not in the best interests of our company and our shareholders.
We cannot provide assurance that we will continue to pay dividends or purchase shares of our common stock under our share repurchase program.
There can be no assurance that we will have sufficient cash or surplus under Delaware law to be able to continue to pay dividends or purchase shares of our common stock under our share repurchase program. This may result from higher than anticipated cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures, need to fund acquisitions or expected acquisitions, increases in reserves or lack of available capital. Our Board may also reduce or suspend the payment of dividends or suspend our share repurchase program if it deems such action to be in the best interests of our shareholders, such as our Board did when it reduced our dividend and suspended our share repurchase program in response to the COVID-19 pandemic. Although we have since increased our dividend and resumed our share repurchase program, we
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cannot provide assurance that our Board will not need to consider limitations, reductions or other restrictions on share repurchases and dividends in the future.
benefited
opportunities
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.
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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 Initiative to 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.
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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.
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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.
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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,
% Change (h)
Vacation Ownership (a)
Gross VOI sales (in millions) (b) (i)
Tours (in 000s) (c)
Volume per guest (d)
Travel and Membership
Transactions (in 000s) (e)
Exchange
Travel Club
Total transactions
Revenue per transaction (f)
Exchange
Travel Club
Total revenue per transaction
Average number of exchange members (in 000s) (g)
(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,
Vacation ownership interest sales, net
Loan loss provision
Gross VOI sales, net of Fee-for-Service sales
Fee-for-Service sales (1)
Gross VOI sales
(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.
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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,
Favorable/ (Unfavorable)
Net revenues
Expenses
Operating income
Interest expense
Other (income), net
Interest (income)
Income before income taxes
Provision for income taxes
Net income from continuing operations
Gain on disposal of discontinued business, net of income taxes
Net income attributable to Travel + Leisure Co. shareholders
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— Restructuring for 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
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• $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 Information to 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
Vacation Ownership
Travel and Membership
Total reportable segments
Corporate and other (a)
Total Company
Year Ended December 31,
Reconciliation of Net income to Adjusted EBITDA
Net income attributable to Travel + Leisure Co. shareholders
Gain on disposal of discontinued business, net of income taxes
Interest expense
Interest (income)
Provision for income taxes
Depreciation and amortization
Inventory write-downs and asset impairments, net (b)
Stock-based compensation
Restructuring (c)
Other (d)
Acquisition and divestiture related costs
Legacy items
Integration costs
Fair value change in contingent consideration
Adjusted EBITDA
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Year Ended December 31,
Adjusted EBITDA
Vacation Ownership
Travel and Membership
Total reportable segments
Corporate and other (a)
Total Company
(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
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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 Initiative to 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
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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— Restructuring to the Consolidated Financial Statements for additional details of our restructuring plans.
FINANCIAL CONDITION
As of December 31,
(In millions)
Change
Total assets
Total liabilities
Total deficit
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— Restructuring for 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-
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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— Debt to 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.
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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— Debt to the Consolidated Financial Statements.
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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.
Thereafter
Total
Debt (a)
Non-recourse debt (b)
Interest on debt (c)
Purchase commitments (d)
Operating leases
Inventory financing obligation (e)
Total (f)
(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— Inventory to 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
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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 involuntaryterminations, 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):
Change
Operating activities
Investing activities
Continuing operations
Discontinued operations
Financing activities
Effect of changes in exchange rates on cash, cash equivalents and restricted cash
Net change in cash, cash equivalents and restricted cash
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.
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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
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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 substantially all 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 Contingencies to 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 Subsidiaries to 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.
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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
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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.
