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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.18pp 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
-0.15pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.20pp
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
negatively+5
adversely+2
adverse+2
expose+2
critical+2
Positive rising
successfully+1
improve+1
achieved+1
Risk Factors (Item 1A)
11,930 words
Item 1A. Risk Factors
This section describes circumstances or events that could have a negative effect on our financial results or operations or that could change, for the worse, existing trends in our businesses. The occurrence of one or more of the circumstances or events described below could have a material adverse effect on our financial condition, results of operations and cash flows and/or on the trading prices of our common stock. The risks and uncertainties described in this Annual Report are not the only ones facing us. Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses and operations.
Risks related to our business and industry.
Our business may be adversely affected by factors that disrupt or deter travel.
Our success and results of operations depend, in substantial part, upon the health of the worldwide vacation ownership and leisure travel industries, and may be affected by a number of factors that can or travel. A substantial amount of our sales activity occurs at our resorts, and sales volume is affected by the number of visitors at our resorts. of exposure to contagious illnesses, natural or man-made , the physical effects of climate change, such as more frequent or storms, , hurricanes, wildfires, and flooding, consumer confidence, limited availability or increased costs of consumer credit, to infrastructure caused by natural or man-made , changes in government policies affecting travel such as modifications to visa processing, entry requirements, border controls, or other travel-related regulations or policies or other changes that impact travelers’ interest in traveling to locations in which our resorts are located, and other causes that travel have caused, and may in the future cause, travelers to or plans to tour or visit our resorts. For example, hurricanes and wildfires have caused a number of Interval International exchange network resorts and our managed vacation ownership resorts to close for periods. The 2023 wildfires in Maui also resulted in the temporary of our resorts and sales centers in Maui, which had an effect on our business and results of operations for 2023 and 2024. At times, beach access at certain of our resorts and our managed resorts has been by weather conditions or due to the effects of . Actual or war, civil and terrorist activity, as well as heightened travel security measures, could also or travel plans. In addition, demand for our products and services may decrease if the cost of travel, including the cost of transportation and fuel, increases, airlift to vacation destinations decreases, airline or airport , flight or unreliability of various modes of transportation increases, or if general economic conditions .
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+8
loss+5
restructuring+5
litigation+4
declined+3
Positive rising
profitability+3
gains+2
favorable+2
benefited+2
efficiency+1
MD&A (Item 7)
11,893 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
You should read the following discussion of our results of operations and financial condition together with our audited historical consolidated financial statements and accompanying notes in Part II, “Item 8. Financial Statements and Supplementary Data,” and Part I, “Item 1. Business,” of this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on our current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those we discuss in the sections of this Annual Report entitled “Risk Factors” and “Special Note About Forward-Looking Statements.”
Our consolidated financial statements, which we discuss below, reflect our historical financial condition, results of operations and cash flows. The financial information discussed below and included in this Annual Report may not, however, necessarily reflect what our financial condition, results of operations and cash flows may be in the future.
Our discussion and analysis of fiscal year 2025 to fiscal year 2024 is included herein. Our discussion and analysis of fiscal year 2024 to fiscal year 2023 has been omitted from this Form 10-K and can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 , which was filed with the Securities and Exchange Commission on February 28, 2025.
Our ability to process exchanges for members and to find purchasers and renters for accommodations we market or manage, as well as the need for the vacation rental and property management services we provide, largely depends on the continued desirability of the key vacation destinations in which our branded, managed or exchange properties are concentrated. Changes in the desirability of the destinations where these resorts are located and changes in vacation and travel patterns may adversely affect our cash flows and results of operations.
Uncertainty in the current global macroeconomic environment created by rapid governmental policy and regulatory changes could negatively impact our business.
Our business operations and financial performance are significantly influenced by governmental policies, the regulatory environment and consumers' willingness to travel to our resorts. Rapid changes to governmental policies worldwide and, evolving governmental regulations regarding international trade and other matters have introduced substantial uncertainty and volatility into the financial markets which can negatively impact consumer sentiment. These changes could negatively impact our supply chain, cost structure, market access and consumers' willingness to travel to our resorts and purchase our products and services. Additionally, recent and future policy and regulatory changes could disrupt our strategic planning and investments, require us to increase maintenance fees and negatively impact owners’ ability to pay such fees, decrease consumers' disposable income and impact our ability to originate, and the borrowers’ repayment of, vacation ownership notes receivable, among other consequences. These factors may also adverselyimpair our ability to execute strategies to mitigate negative impacts of the current environment.
The unpredictable nature of the current global macroeconomic environment makes it challenging to anticipate and address possible material risks. This uncertainty and its effects could have a material adverse effect on our financial condition, results of operations and cash flows.
Significant inflation, higher interest rates or deflation could adversely affect our business and financial results.
Inflation can and has adversely affected us by increasing the costs of carrying unsold inventory, development and other corporate capital expenditures, materials and labor, service contracts, insurance, technology and related hardware or equipment, and interest rates. All of these factors can and at times have decreased the affordability of our products and services. In a high inflationary environment, we may be unable to raise the price of our products and services in a proportional manner, which at times has reduced and in the future could reduce, our operating margins and negatively impact our results or operations. In addition, increases in the cost of capital, labor and materials have had, and in the future could have an adverse impact on our business or financial results. Inflation has had and in the future could have an indirect adverse impact on our business by making travel more expensive, increasing maintenance costs and fees for consumers, and reducing consumer discretionary income and negatively impacting the performance of our vacation ownership notes receivable portfolio.
Alternatively, deflation could cause an overall decrease in spending and borrowing capacity, which could lead to a deterioration of economic conditions and employment levels. Deflation could also cause the value of our products and services to decline. These, or other factors that increase the risk of significant deflation, could have a negative impact on our business or financial results.
We finance more than half of our VOI sales. While we adjust interest rates on our financing programs from time to time, such changes are typically not made in lockstep with the timing and magnitude of changes in broader market rates. Increasing our financing rates could negatively impact VOI sales and financing propensity. However, if we are unable to increase our financing rates at the same rate as our costs of funds, our financing profits and margin will be negatively impacted, as happened in 2023 and 2024.
Our results of operations can be adversely affected by labor shortages, turnover and labor cost increases.
A number of factors may adversely affect the labor force available or increase labor costs from time to time, such as high employment levels, increasing minimum wage rates, federal unemployment subsidies, including unemployment benefits offered in response to a Health Crisis, and other government actions. In 2021, we observed an overall tightening and increasingly competitive labor market. As a result, we had to temporarily close outlets (e.g., food and beverage) or reduce services (e.g., housekeeping performed fewer cleanings throughout the week), and we may have to take these or similar steps in the future. Any such changes may harm our revenues, cash flows, profitability or customer satisfaction. We have also incurred, and may incur in the future, additional costs for overtime wages, increased wages, enhanced referral bonuses, increased use of sign on bonuses, and increased marketing for open positions. A sustained labor shortage or increased turnover rates within our employee base, whether due to a Health Crisis or as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our business. If we are
unable to hire and retain employees capable of performing at a high level, our business, including our cash flows, results of operations, owner, guest and associate satisfaction and reputation, could be adversely affected.
Future global or regional health concerns, outbreaks, and pandemics (each a “Health Crisis”) may have seriousadverse effects on our business, financial condition, cash flows, and results of operations for an unknown period of time.
The success of our business and our financial results depend, in substantial part, upon the health of the travel industry. The COVID-19 pandemic significantly disrupted international and U.S. economies and markets and had a material adverse impact on participants in the travel and hospitality industries, including our Company. For example, in 2020 we saw marked declines in resort occupancy, rentals, and contract sales due to temporary closures of nearly all of our sales centers and many of our resorts and the limited operations at all of our resorts. Consumer fears, government restrictions and changes in travel behavior related to future Health Crises could similarly impact our business and financial results.
Our sales volume and rental revenue are materially impacted by the desire and ability of vacationers to travel, because a substantial amount of our sales activity occurs at our resorts. Concerns about travel restrictions, low vaccination rates and exposure to illness, including vaccine-resistant illnesses could cause travelers to cancel or delay plans to visit our resorts, which could adversely affect our cash flows, revenues, and results of operations. Moreover, even after travel advisories and restrictions are lifted, travel demand could be unpredictable and could remain so for a significant period. Adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels, inflation, recession and loss of personal wealth whether or not resulting from the impact of a future Health Crisis may negatively affect travel demand for a prolonged period.
The onset of the COVID-19 pandemic led to an increase in payment delinquencies and defaults for our vacation ownership notes receivable. The number of delinquencies may increase as the result of a future Health Crisis’s effect on economic conditions and the ability and desire to travel, and could lead to defaults on financing that we provide to purchasers of our products in excess of our estimates. Purchaser defaults may cause us to foreclose on vacation ownership notes receivable and reclaim ownership of the financed interests and could impact our ability to secure ABS or warehouse credit facility financing on terms that are acceptable to us, or at all. In addition, the transactions in which we have securitized vacation ownership notes receivable contain certain portfolio performance requirements related to default and delinquency rates, which, if not met, would result in loss or disruption of cash flow until portfolio performance sufficiently improves to satisfy the requirements.
The duration and extent of the impact of a future Health Crisis on our business and financial results will largely depend on future developments, including the duration and spread of the Health Crisis, governmental efforts to contain the Health Crisis, the related impact on consumer confidence and spending, and how quickly economies and demand for our products and services recover after the Health Crisis subsides, all of which are highly uncertain, can rapidly change and cannot be predicted. Such impacts could adversely affect our results of operations, cash flows, and capital resources for a significant period.
Our business is extensively regulated, and any failure to comply with applicable laws could materially adversely affect our business.
We are subject to a wide variety of highly complex international, national, federal, state, and local laws, regulations and policies. The vacation ownership industry is subject to extensive regulation around the world. Each jurisdiction where we operate generally requires resort developers to follow a set of specific procedures to develop, market and sell VOIs. Our real estate development activities, marketing and sales activities, lending activities and resort management activities are also heavily regulated. In addition, a myriad of laws, regulations and policies impact multiple areas of our business, such as those regulating the sale and offer of securities, anti-discrimination, anti-fraud, environmental and social matters, data protection, anti-corruption and bribery or implementing government economic sanctions.
Complying with the intricate and multifaceted regulatory structures applicable to our businesses across the globe is complicated, constantly evolving, time-consuming and costly. We may not be able to successfully comply with all laws, regulations and policies. Laws, regulations, policies, and case law precedent may change or be subject to different interpretation in the future, including in ways that could decrease demand for our products and services, increase costs, and subject us to additional liabilities. Failure to comply could have a material adverse effect on our business. For example, we could lose licenses or registrations required to operate our business, sales contracts for our products could be void or voidable, we may incur fines or other sanctions, and our exposure to litigation may increase. Allegations of our failure to comply with applicable laws could adversely affect our business, financial condition, and reputation.
Changes in privacy laws could adversely affect our ability to market our products effectively.
We rely on a variety of marketing techniques, including digital marketing (e-mail), telemarketing, postal mailings, websites and social media. Adoption of new laws, or changes in existing laws, in any of the jurisdictions in which we operate regulating marketing and solicitation or data protection could adversely affect the effectiveness of our marketing strategies. For example, in the U.S., California enacted the California Consumer Privacy Act of 2018 (“CCPA”). The CCPA provides California consumers with certain access, deletion and opt-out rights related to their personal information, imposes civil penalties for violations and affords, in certain cases, a private right of action for data breaches. Similar legislation has been proposed or adopted in other states. In addition, foreign data protection, privacy, consumer protection, content regulation and other laws and regulations may be more restrictive or burdensome than those in the United States. For example, the European Union (“E.U.”) General Data Protection Regulation (“GDPR”) imposes significant obligations on businesses that sell products or services to E.U. customers or otherwise control or process personal data of E.U. residents. Complying with the GDPR or other laws and regulations could subject us to increased costs; and our failure to comply with these laws and regulations could result in significant fines, litigation, losses, third-party damages and other liabilities, any of which may have a material adverse effect on our brands, marketing, reputation, business, financial condition and results of operations. The cost of our compliance with privacy laws has increased and may continue to increase as laws change and we expand into new jurisdictions. If we are not able to develop adequate alternative marketing strategies, our sales may be adversely affected. We also obtain access to potential customers from travel service providers and other companies, including our licensors. If our access to these third-party customer lists is prohibited or restricted, our ability to attract new customers could be impaired.
Failure to maintain the integrity of internal or customer data or to protect our information systems from cyber-attacks could disrupt our business, damage our reputation, and subject us to costs, fines or lawsuits.
We collect large volumes of data, including social security numbers and other personally identifiable information of our customers and employees, and retain it in our information systems and those of our service providers. It is critical that we maintain the integrity of and protect this data, which we rely on to make business decisions and which our customers and employees expect that we will protect.
We may have to expend significant capital and other resources to enhance the security of our data. Our information systems and records, including those we maintain with our service providers or licensors, may be subject to security breaches, cyber-attack or cyber-intrusion, system failures, viruses, malicious software, operator error or inadvertent releases of data, or other cybersecurity incidents. Data breaches have increased in recent years as the number, intensity and sophistication of attacks increased. Techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, may be difficult to detect and could be enhanced by artificial intelligence (“AI”). Neither we nor our service providers may be able to prevent, detect and contain unauthorized activity and misuse or human errors compromising the efficacy of security measures. A breach in the security of our information systems or those of our service providers or licensors could lead to interruptions in the operation of our systems, resulting in operational inefficiencies and a negative impact to our results of operations. A significant cybersecurity incident or theft, loss, disclosure, or fraudulent use of our customer, employee or company data could adversely impact our reputation and result in remedial and other expenses, fines, penalties or litigation, any of which may be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident.
The regulatory environment in the jurisdictions where we operate, and the requirements imposed on us by the payment card industry regarding information, security and privacy, are increasingly demanding. Many of the laws applicable to us in different jurisdictions vary from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Our efforts to comply with these requirements may require significant additional resources and time and may not be successful.
We and the companies we work with have experienced cybersecurity threats to our data and systems, including ransomware and other forms of malware and computer virus attacks, unauthorized access, systems failures and temporary disruptions. We have experienced cybersecurity incidents in the past, and have previously disclosed those with material operational or financial implications to the Company or our stakeholders. Routinely, we partner with and use third-party service providers and products that host, manage, or control sensitive data. The failure of any such service providers or products to comply with our privacy policies or privacy laws and regulations, or any unauthorized release of personally identifiable information or other user data, could damage our reputation, discourage potential users from trying our products and services, breach certain agreements under which we have obligations with respect to network security, and result in fines and proceedings against us. Our insurance might not be sufficient in type or amount to cover us against such claims or losses. Any of the foregoing could materially adversely affect our business, financial condition and results of operations.
Our use of AI technologies may not be successful and may present business, compliance, and reputational risks.
We use, and are expanding our use of, machine learning and AI technologies in our products and processes. If we fail to keep pace with rapidly evolving AI technological developments, our competitive position and business results may be negatively impacted. Our use of AI technologies requires resources to develop, test and maintain such products, which is costly and may be subject to delays. We may not achieve our objectives from these efforts. In addition, third parties may be more successful in the use of AI or create technologies that could require us to change how we currently operate certain of our businesses.
The introduction of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities due to enhanced governmental scrutiny, litigation, compliance issues, ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business, reputation, and financial results. If the content, analyses, or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate, unreliable, misleading, biased, discriminatory or otherwise flawed, any of which may not be easily detectable, our business and reputation may be adversely affected. Use of AI technologies, and the evolving legal, regulatory and compliance framework for AI, could impact our ability to protect our data and intellectual property, as well as vendor and client information, and could expose us to intellectual property or other claims by third parties. Use of AI technologies may also increase risks related to cyberattacks or other security incidents or result in a failure to protect confidential information. Because AI technology is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to AI.
Our international operations expose us to risks that could negatively impact our financial results or disrupt our business.
Our international operations expose us to a number of additional risks, any of which could negatively impact our results of operations or disrupt our business, such as: compliance with laws of non-U.S. jurisdictions, including foreign ownership restrictions, import and export controls, data privacy and usage, and trade restrictions, and U.S. laws affecting our activities outside of the U.S.; anti-American sentiment; war, political or civil unrest and terrorism; difficulties of managing operations in many different countries; local economic risks; foreign currency exchange risks; and uncertainty as to the enforceability of contract and intellectual property rights under local laws, which can change or be interpreted in ways that could negatively impact our business.
Inadequate or failed technologies could lead to interruptions in our operations and materially adversely affect our business, financial position, results of operations or cash flows.
Our operations and competitive position depend on our ability to maintain existing systems and implement new technologies. Our information technology systems and our databases are potentially susceptible to man-made and natural disasters, as well as power losses, computer and telecommunications failures, technological breakdowns, cyber-attacks, acts of war or terrorism and other events. System interruption, delays, obsolescence, loss of critical data and lack of integration and redundancy in our information technology systems and infrastructure may adversely affect our ability to provide services, operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations. Our backup systems only relate to certain aspects of our operations; these systems are not fully redundant and disaster recovery planning cannot anticipate and address all eventualities. Projects to upgrade or replace our technologies may be extremely complex and require significant resources and time, and may adversely affect our ability to provide services, operate websites, process and fulfill transactions, and respond to customer inquiries during the upgrade or replacement process. Our insurance coverage may not compensate us for all our losses from a major interruption. If our information technology systems fail to adequately support our strategic, operational or compliance needs, our business, financial position, results of operations or cash flows, as well as our disclosure controls and procedures and internal control over financial reporting, may be adversely affected.
If third-parties do not comply with their contractual obligations to us our financial condition, results of operations, internal controls over financial reporting and stock price could be materially and adversely affected.
We rely on various third parties, including suppliers, service providers, and business partners, to fulfill contractual obligations that are critical to our operations. For example, we have outsourced certain corporate functions, including a significant portion of our global technology, finance and accounting, and human resources functions to third-party service providers and shared service centers. While these actions are intended to streamline operations and improve scalability, at times they have resulted in disruptions, increased transition costs, delays in service delivery and disputes with vendors and we may experience similar or more severe issues in the future. Additionally, such initiatives may lead to the loss of institutional knowledge, reduced employee morale, or increased attrition, including among key personnel. We may increase our reliance on third-party providers to deliver critical services and any failure by these providers to
perform their contractual obligations, or any disruption in our ability to manage or transition these services effectively, could adversely affect our internal controls, compliance functions, or overall business operations. Furthermore, these initiatives may expose us to additional risks, including data security vulnerabilities, regulatory compliance challenges across jurisdictions and reputational harm. If we are unable to successfully execute and manage these third-party relationships, our financial condition, results of operations, internal controls over financial reporting and stock price could be materially and adversely affected.
The industries in which our businesses operate are competitive, which may impact our ability to compete successfully.
Our businesses will be adversely impacted if they cannot compete effectively in their respective industries, each of which is highly competitive. A number of highly competitive companies participate in the vacation ownership industry. Our brands compete with the vacation ownership brands of major hotel chains in national and international venues, as well as with the vacation rental options (such as hotels, resorts and condominium or apartment rentals) offered by the lodging industry. Our competitors may have greater access to capital resources and broader marketing, sales and distribution capabilities than we do. Competitive pressures may cause us to reduce our fee structure or potentially modify our business models, which could adversely affect our business, financial condition and results of operations.
Our principal exchange network administered by Interval International included more than 3,200 resorts located in over 90 countries and territories as of December 31, 2025. Interval International’s primary competitor, RCI, has a greater number of affiliated resorts than we have. Through the resources of its corporate affiliates, particularly Travel + Leisure Co., which is engaged in vacation ownership sales, RCI may have greater access to a significant segment of new vacation ownership purchasers and a broader platform for participating in industry consolidation. In addition, Interval International competes with developers that create, operate and expand internal exchange and vacation club systems, which decreases their reliance on external vacation ownership exchange programs, including those we offer, and adversely impacts the supply of resort accommodations available through our external exchange network. The effects of such competition on our exchange business are more pronounced as the proportion of vacation club corporate members in the Interval Network increases.
Our businesses also compete for leisure travelers with other leisure lodging operators, including both independent and branded properties, as well as with alternative lodging marketplaces, which operate websites that market furnished, privately-owned residential properties throughout the world which can be rented on a nightly, weekly or monthly basis.
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 on social media, could result in increased regulatory scrutiny, which could result in 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.
Spanish court rulings voiding certain timeshare contracts have increased our exposure to litigation that may materially adversely affect our business and financial condition.
A series of Spanish court rulings starting in 2015 (“2015 Rulings”) increased our exposure to litigation that may materially adversely affect our business and financial condition. These rulings voided certain timeshare contracts entered into after January 1999 related to certain resorts in Spain if a resort’s timeshare structure did not meet requirements prescribed by Spanish timeshare laws enacted in 1998, even if the structure was lawful prior to 1998 and adapted pursuant to mechanisms specified in the 1998 laws. These rulings led to an increase in lawsuits by owners seeking to void timeshare contracts in Spain, including lawsuits by owners at certain of our resorts in Spain which are currently pending. In November 2025, the Supreme Court of Spain overturned the 2015 Rulings and thereby eliminated the principal legal grounds on which the contract cancellation cases had been brought. Lesser remedies, including monetary damages, remain available for certain claims based on allegederrors or omissions in, or tardy delivery of, contract documents. The Supreme Court’s decision was based in part on legislation effective April 4, 2025 that placed a five-year limitation on the filing of new cancellation cases and reduced the scope of available remedies. A subsequent decision of the Supreme Court, issued in January 2026, overturned another legal theory previously relied upon by owners seeking to void their contracts. Cases filed prior to the Supreme Court’s November 2025 and January 2026 decisions remain pending, including cases filed against us, and insufficient time has passed since the issuance of those decisions for us to predict the likely outcomes, in light of that ruling, of pending or future cases against us. Currently pending cases and any cases filed in the future have caused and could continue to cause us to incur material litigation and other costs, including judgment or settlement payments; and materially adversely affect the results of operations of our Vacation Ownership
segment, as well as our business and financial condition. The ability for owners of Spanish timeshares to void their contracts has negatively impacted other developers with resorts in Spain and led to a decrease in the number of resorts located in Spain in the Interval Network with active sales and the loss of members who own VOIs at those resorts.
Changes in tax regulations or their interpretation could negatively impact our cash flows and results of operations.
Changes in tax and other revenue raising laws, regulations and policies in the jurisdictions where we do business could impose new restrictions, costs or prohibitions on our practices and negatively impact our results of operations. In addition, interpretation of tax regulations requires us to exercise our judgment and taxing authorities or our independent registered public accounting firm may reach conclusions about the application of such regulations that differ from our conclusions. Our effective tax rate reflects the fact that income earned and reinvested outside the U.S. is generally taxed at local rates that can be higher or lower than U.S. tax rates or based on a different tax base than U.S. jurisdictions, as well as our ability to carry forward losses in certain jurisdictions from prior years to offset future profits. Changes to U.S. or international tax laws, regulations or interpretations could impact the tax treatment of our earnings and adversely affect our cash flows and financial results. For example, if such changes significantly increase the tax rates on non-U.S. income, our effective tax rate could increase, our financial results and cash flows could be negatively impacted, and if such increases were a result of our status as a U.S. corporation, we could be placed at a disadvantage to our non-U.S. competitors that are subject to lower local tax rates.
We are subject to audit in various jurisdictions, and these jurisdictions may assess additional taxes against us. Developments in an audit, litigation, or laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows. An unfavorable outcome from any tax audit could result in higher tax expense, penalties and interest, and could materially and adversely affect our financial condition or results of operations.
Concentration of some of our resorts, sales centers and exchange destinations in particular geographic areas exposes our business to the effects of natural or man-made disasters or adverse economic conditions in these areas.
Our business is susceptible to the effects of natural or man-made disasters, including earthquakes, windstorms, tornadoes, hurricanes, typhoons, tsunamis, volcanic eruptions, floods, drought, fires, oil spills, erosion and nuclear incidents, in the areas where some of our resorts, sales centers and exchange destinations are concentrated, such as Florida, California, South Carolina and Hawaii. Properties in these markets have had to close in the past, including for extended periods, in order to repair or assess damage caused by disasters. For example, we temporarily closed our resorts and sales centers in 2023 as a result of wildfires in Maui. Depending on the severity of future disasters, the resulting damage could require closure of all or substantially all of our properties in one or more of these markets while we complete repairs, restoration or renovations. Our insurance may not cover all damages caused by any such event, including the loss of sales of VOIs at sales centers that are not fully operational. In 2023, our cost to insure our properties in these areas increased significantly. Our insurance costs may rise again and coverage levels may decrease for properties in these areas as a result of the number and magnitude of recent natural disasters in these areas.
Our business is also susceptible to the effects of adverse economic developments in these areas, such as regional economic downturns, significant increases in the number of our competitors’ products in these markets and potentially higher labor, real estate, tax or other costs in these geographic markets. This geographic concentration of properties increases the risk of a negative effect on our results of operations if these areas are affected by severe weather, man-made disasters or adverse economic and competitive conditions.
If we are not able to successfully identify, finance, integrate and manage costs related to acquisitions, our business operations and financial position could be adversely affected.
We have expanded in part through acquisitions of other businesses and may continue to do so in the future. Our acquisition strategy depends on our ability to identify, and the availability of, suitable acquisition candidates. We may incur costs in connection with proposed acquisitions, but may ultimately be unable or unwilling to consummate any particular proposed transaction for various reasons. In addition, acquisitions involve numerous risks, including risks that we will not be able to: successfully integrate acquired businesses in an efficient and cost-effective manner; properly measure or identify all risks associated with the acquisition; achieve anticipated benefits of an acquisition, including expected synergies; control potential increases in operating costs; manage geographically remote operations; successfully expand our system of internal controls or our technological infrastructure to include an acquired business; avoid potential disruptions in ongoing operations during an acquisition process or integration efforts; successfully enter markets in which we have limited or no direct experience, including foreign markets whose practices or laws may pose increased risk; and retain key employees, clients, vendors and business partners of the acquired businesses. Failure to achieve the anticipated benefits of any acquisition may adversely affect our financial condition, operating results and prospects.
Acquisitions may also significantly increase our debt or result in dilutive issuances of our equity securities, impairments of assets or substantial amortization expenses associated with other intangible assets. For example, we have not achieved all of the anticipated benefits from the ILG Acquisition or the Welk Acquisition, and have incurred unanticipated expenses and impairment charges in 2024 and 2025 related to inventory.
Our use of different estimates and assumptions in the application of our accounting policies could result in material changes to our reported financial condition and results of operations, and changes in accounting standards or their interpretation could significantly impact our reported results of operations.
Our accounting policies are critical to the manner in which we present our results of operations and financial condition. Many of these policies, including policies relating to the recognition of revenue, determination of cost of sales and evaluation of our assets for impairment, are highly complex and involve numerous assumptions, estimates and judgments which we regularly review and revise as needed. Our actual results of operations vary from period to period based on revisions to these estimates. For example, higher loan delinquencies or defaults have caused us to increase and in the future could lead to new increases in our estimated reserve for vacation ownership notes receivable. In addition, changes to our assumptions and estimates used to determine the fair value of our assets or actual operating results that are lower than our current estimates could result in impairmentlosses and require us to write off all or a portion of our assets. For example, in 2025, we incurred $577 million in impairmentlosses in the aggregate. See the “Critical Accounting Estimates” section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information. In addition, the regulatory bodies that establish accounting and reporting standards, including the SEC and the Financial Accounting Standards Board, periodically revise or issue new financial accounting and reporting standards that govern the preparation of our consolidated financial statements. Changes to these standards or their interpretation could significantly impact our reported results in future periods. See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for more information regarding changes in accounting standards that we recently adopted or expect to adopt in the future.
The growth of our business and execution of our business strategies depend on the services of our senior management and our associates.
Our business is based on successfully attracting and retaining talented associates. The market for highly skilled associates and leaders in our industry is extremely competitive. If we are unable to attract and retain management and other key associates, our ability to develop and deliver successful products and services may be adversely affected. Effective succession planning is also important to our long-term success. The departure of a key executive or associate or the failure to ensure an effective transfer of knowledge and a smooth transition upon such departure may be disruptive to the business and could hinder our strategic planning and execution.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may increase our costs or expose us to new or additional risks.
Companies are facing increasing and frequently evolving scrutiny globally from customers, regulators, investors, employees and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure as expectations for, and support or criticism of, such matters continues to evolve. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices. Third parties have developed proprietary ratings or analyses of companies based on certain ESG metrics. ESG disclosure rules have been adopted by California, the European Union and other jurisdictions; various ESG regulations are under consideration, and the Company cannot determine what final regulations will be enacted, modified, or reversed or the ultimate impact on its business. Increased ESG-related compliance costs could increase our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or other stakeholder expectations and standards could increase the risk of antidiscrimination lawsuits and customer backlash, negatively impact our reputation, ability to do business with certain partners, sales and stock price, and result in penalties. Our corporate responsibility initiatives and goals are based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future. As we report on our corporate responsibility initiatives or goals, we may be subject to heightened reputational and operational risk and compliance costs related to these matters. Our control over resorts and properties that we manage is generally limited by the terms of the applicable management agreements. As a result, our ability to achieve some or all of our corporate responsibility initiatives or goals may be limited without additional support or action by the owners’ associations of the vacation ownership resorts and properties we manage. Complying with increased regulations could increase our costs and adversely impact our results of operations. Our inability or failure to meet, or the perceived failure to meet, such stakeholders’ expectations, as well as adverseincidents, could negatively impact our stock price, results of operations, or reputation and increase our cost of capital.
Risks related to our vacation ownership business.
The termination of our license agreements with Marriott International or Hyatt, or our rights to use their trademarks at our existing or future properties, could materially harm our business.
Our success depends, in part, on our relationships with Marriott International and Hyatt. These relationships are governed by various agreements, including long-term license agreements that expire between 2090 and 2095, subject to renewal. However, if we breach our obligations under a license agreement and fail to cure such breach, or if our properties do not meet brand standards, the applicable licensor may be entitled to terminate the license agreement and our rights to use its brands and trademarks at the subject properties.
The termination of our license agreements with Marriott International, Hyatt or their affiliates could materially harm our business and results of operations and materially impair our ability to market and sell our products and maintain our competitive position, and could have a material adverse effect on our financial position, results of operations or cash flows. Our inability to rely on the strength of the Marriott, Sheraton, Westin, or Hyatt brands to attract qualified prospects in the marketplace would likely cause our results of operations to decline and our marketing and sales expenses to increase. Our inability to market to guests in hotels affiliated with our licensors that are located near one of our sales locations or maintain our marketing relationships with Marriott International or Hyatt reservation centers would likely cause our sales to decline, which could adversely affect our financial condition and results of operations. In addition, we would not be able to use the brand websites as channels through which to rent available inventory, which could cause our rental revenue to decline materially.
Our license agreements also allow us to market directly to members of the customer loyalty programs associated with the Marriott, Sheraton, Westin and Hyatt brands, and offer points in such loyalty programs as premiums for related promotional offers. The termination of the license agreements with Marriott International or Hyatt would eliminate this valuable marketing channel.
We must obtain the applicable licensor’s consent to use its trademarks in connection with properties we acquire or develop in the future. If our licensors do not consent to such use, our ability to expand our business and remain competitive may be materially adversely affected.
Deterioration in the quality or reputation of the brands associated with our portfolio could adversely affect our market share, reputation, business, financial condition and results of operations.
We offer vacation ownership products and services under the Marriott, Sheraton, Westin, The Ritz-Carlton, and Hyatt brands. Our success depends in part on the continued success of Marriott International and Hyatt and their respective brands. If market recognition or the positive perception of Marriott International or Hyatt is reduced or compromised, the goodwill associated with these brands may be adversely affected, which may adversely affect our market share, reputation, business, financial condition or results of operations. The positioning and offerings of any of these brands or their related customer loyalty programs could change in a manner that adversely affects our business.
Marriott International or Hyatt could compete with our vacation ownership business in the future.
Under our license agreements with Marriott International, if other international hotel operators offer new products and services as part of their respective hotel businesses that may directly compete with our vacation ownership products and services, then Marriott International may also offer such new products and services, and use its trademarks in connection with such offers. Under the Hyatt license agreement, Hyatt may compete with us under certain circumstances, such as if we fail to meet certain performance standards or if Hyatt acquires a new hotel brand that Hyatt desires to license for timeshare and we are unsuccessful in negotiating such license rights pursuant to our right of first offer. If Marriott International or Hyatt offers new vacation ownership products and services as contemplated under certain circumstances under their respective license agreements, they may compete directly with our vacation ownership products and services, and we may not be able to distinguish our vacation ownership products and services from those offered by Marriott International or Hyatt. Our ability to remain competitive and to attract and retain owners depends on our success in distinguishing the quality and value of our products and services from those offered by others. If we cannot compete successfully in these areas, this could limit our operating margins, diminish our market share and reduce our earnings.
If a branded hotel property co-located with one of our resorts ceases to be affiliated with the same brand as our resort or a related brand, our business could be harmed.
Approximately 25% of our Vacation Ownership segment resorts are co-located with same-branded or affiliated hotel properties. If a branded hotel property with which one of our resorts is co-located ceases to be operated by or affiliated with the same brand as our resort, which has happened in the past, we could lose benefits such as shared amenities,
infrastructure and staff, integration of services, and other cost efficiencies. Our owners could lose access to the more varied and elaborate amenities that are generally available at the larger campus of an integrated vacation ownership and hotel resort. We could also lose our on-site access to hotel customers, including brand customer loyalty program members, at such resorts, which is a cost-effective marketing channel for our vacation ownership products, and our sales may decline.
The sale of VOIs in the secondary market by existing owners could cause our sales revenues, margins, and results of operations to decline.
Sales of VOIs by existing owners, which are typically at lower prices than the prices at which we would sell interests, can create pricing pressure on our sale of vacation ownership products and cause our sales revenues, margins and results of operations to decline. In addition, unlawful or deceptive third-party VOI resale schemes involving interests in our resorts could damage our reputation and brand value and adversely impact our sales revenues and results of operations. Development of a more robust secondary market may also cause the volume of lower-cost VOI inventory that we are able to repurchase to supplement our inventory needs to decline, which could adversely impact our development margin.
Borrower defaults on the vacation ownership notes receivable our business generates could reduce our results of operations and cash flows.
In connection with our vacation ownership business, we provide loans to purchasers to finance their purchase of VOIs. Accordingly, we are subject to the risk that those borrowers may default on the financing that we provide. The risk of borrower defaults may increase due to man-made or natural disasters, inflation, recessions or other economic downturns that cause financial hardship for borrowers. In the past, we have experienced increased defaults as a result of economic downturns. Certain of our borrowers have been impacted by man-made and natural disasters. The risk of borrower defaults may also increase if we do not evaluate accurately the creditworthiness of the customers to whom we extend financing or due to the influence of timeshare relief firms. Borrower defaults have caused, and may continue to cause, us to foreclose on vacation ownership notes receivable and reclaim ownership of the financed interests, both for loans that we have not securitized and in our role as servicer for the vacation ownership notes receivable we have securitized through the ABS market or the Warehouse Credit Facility. If default rates for our borrowers increase, we have been required, and may in the future be required, to increase our reserve on vacation ownership notes receivable, which would adversely affect our results of operations and cash flows.
If default rates increase beyond current projections and result in higher than expected foreclosure activity, our results of operations would be adversely affected. Borrower defaults could impact our ability to secure ABS or warehouse credit facility financing on terms that are acceptable to us, or at all. In addition, the transactions in which we have securitized vacation ownership notes receivable contain certain portfolio performance requirements related to default and delinquency rates, which, if not met, would result in loss or disruption of cash flow until portfolio performance sufficiently improves to satisfy the requirements. Also, if a purchaser of a VOI defaults on the related loan during the early part of the amortization period, we may not have fully recovered the marketing, selling and general and administrative costs associated with the sale of that VOI. If we are unable to recover any of the principal amount of the loan from a defaulting borrower, or if the allowances for losses from such defaults are inadequate, the revenues and profits that we derive from the vacation ownership business could be reduced materially.
We may not have inventory available for sale when needed or we may have excess inventory.
We may continue to enter into capital-efficient transactions to source inventory in which third parties agree to deliver completed units in the future to us at pre-agreed prices. These transactions expose us to additional risk as we will not control development activities or timing of development completion. If our counterparties default on their obligations, or exercise their right to sell inventory to a different buyer, we may not acquire the inventory we expect on time or at all, or it may not be within agreed upon specifications. If we cannot obtain inventory from alternative sources on a timely basis, we may not be able to achieve sales forecasts. Conversely, if we procure or commit to procure inventory based on an expected sales plan and fail to achieve that plan, we could have excess inventory, potentially negatively impacting our margins and results of operations.
Our points-based product forms expose us to an increased risk of temporary inventory depletion.
Selling VOIs in a system of resorts under a points-based business model increases the risk of temporary inventory depletion. Currently, our VOI sales are made primarily through a limited number of trust entities that issue VOIs. These structures can lead to a temporary depletion of inventory available for sale caused by: (1) delayed delivery of inventory under construction by us or third parties; (2) delayed receipt of required governmental registrations of inventory for sale; or (3) significant unanticipated increases in sales pace. If the inventory available for sale for a particular trust were to be
depleted before new inventory is added and available for sale, we may be required to temporarily suspend sales until inventory is replenished, shift to selling an alternative product or buy additional inventory at a higher cost, which happened in Thailand in 2025. Our efforts to avoid the risk of temporary inventory depletion by maintaining a surplus supply of completed inventory based on our forecasted sales pace, and by employing other mitigation strategies such as accelerating completion of resorts under construction, acquiring VOIs on the secondary market, or reducing sales pace by adjusting prices or sales incentives, may not be successful. A depletion of VOI inventory could decrease our financing revenues generated from purchasers of VOIs and fee revenues generated by providing club, management, exchange, sales, and marketing services. In addition, any temporary suspension of sales due to lack of inventory could reduce our cash flow and have a negative impact on our results of operations.
Our development activities expose us to project cost and completion risks.
Our project development activities entail risks that may cause project delays or increased project costs and therefore may adversely impact our results of operations, cash flows and financial condition. These risks include construction delays or cost overruns; shortages of skilled labor; claims for construction defects, including claims by purchasers and owners’ associations; the discovery of hazardous or toxic substances, or other environmental, culturally-sensitive, or related issues; an inability to timely obtain required governmental permits and authorizations; compliance with zoning, building codes and other local regulations; performance by third parties involved in the financing and development of our projects; the cost or availability of raw materials; and interference of weather-related, geological or other events, such as hurricanes, earthquakes, floods, tsunamis, fires, and volcanic eruptions.
Our resort management business may be adversely affected by the loss of management contracts, failure of resorts to comply with brand standards, increased maintenance fees and disagreements with owners.
Owners of our VOIs are required to pay maintenance fees to maintain and refurbish the vacation ownership properties and keep them in compliance with brand standards. If a resort fails to comply with applicable brand standards, the applicable licensor could terminate our rights to use its trademarks at the resort, which could result in the loss of management fees, decreased customer satisfaction, and impair our ability to market and sell our products at the non-compliant locations. Increases in maintenance fees to keep pace with operating expenses, maintenance and other costs may make our products less desirable, which could negatively impact sales and cause an increase in defaults on our vacation ownership notes receivable portfolio. If the owners’ associations that we manage are unable to collect sufficient maintenance fees to cover operating and maintenance costs, the related resorts may have to close or file for bankruptcy, which may result in termination of our management agreements. We may also lose resort management contracts if they are not renewed when they expire, or the contract terms may be renegotiated in a manner adverse to us. The loss or renegotiation of a significant number of our management contracts may adversely affect our cash flows and results of operations.
From time to time, disagreements arise between us and the owners of VOIs and owners’ associations. For example, owners of our VOIs have disagreed, and may in the future disagree, with changes we make to our products or programs. Sometimes, disagreements with VOI owners and owners’ associations result in litigation and the loss of management contracts. If any such litigation results in a significant adverse judgment or settlement, we could suffer significant losses, our margins and results of operations could be reduced, our reputation could be harmed and our future ability to operate our business could be constrained.
Damage to, or other potential losses involving, properties that we own or manage may not be covered by insurance.
We procure insurance for general liability, property, business interruption, directors and officers liability, and other insurable risks with respect to our business operations and as customarily carried by companies in the hospitality industry. Market forces beyond our control may limit the scope, terms, and conditions of the insurance coverage we are able to obtain or our ability to obtain coverage at reasonable rates, which may affect our ability to maintain customary insurance coverages and deductibles at acceptable costs. Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes, wildfires, and floods, or terrorist acts, may be uninsurable or the price of coverage for such losses may be too expensive to justify obtaining insurance. The effects of climate change, such as increased storm intensity and rising temperatures or sea levels over time, may also increase the cost of property insurance and decrease our coverage levels. In addition, in the event of a substantial loss, the insurance coverage we carry may not be sufficient to pay the full market value or replacement cost of our lost property or property of owners of VOIs or third party liability. In some cases, insurance may not provide a recovery for any part of a loss due to deductibles, retentions, policy limits, coverage limitations, uninsured parts of a loss or other factors. As a result, we could lose some or all of the capital we have invested in a property, as well as the anticipated future revenue from the property, and we could remain obligated under guarantees or other financial obligations related to the property. In addition, we could lose the
management contract for the property and, to the extent such property operates under a licensed brand, the property may lose operating rights under the associated brand. We may also incur liabilities or losses in the operation of our business that are only partially covered by insurance, or not covered at all. Any of these events could have a material adverse effect on our business, financial condition and results of operations.
Risks related to our exchange and third-party management business.
Any adverse changes in our relationships with developers, members and others could adversely affect our Exchange & Third-Party Management business, financial condition, and results of operations.
Our Interval International business depends on vacation ownership developers for new members and on members and participants to renew their existing memberships and engage in transactions. Developers and members also supply resort accommodations for use in exchanges and Getaways. Our third-party management business depends on relationships with vacation property and hotel owners.
If we are unable to negotiate new affiliation agreements with resort developers or secure renewals with existing members or developers in our Interval Network, as has occurred in the past, the number of new and existing members, the supply of resort accommodations available through our exchange network and related revenue could decrease. The failure to secure the renewal of affiliation agreements with developers with corporate member relationships, where the developer renews Interval International membership fees for all of its active owners, has a greateradverse effect. The loss or renegotiation on less favorable terms of several of our largest affiliation agreements could materially adversely impact our financial condition and results of operations. Our ability to maintain affiliation agreements with resort developers is also impacted by consolidation in the vacation ownership industry.
In addition, we depend on third parties to make certain benefits available to members of the Interval International exchange network. The loss of such benefits could result in a decrease in the number of Interval International members, which could have a material adverse effect on our business, financial condition and results of operations.
Similarly, the failure of our third-party management business to maintain existing or negotiate new management agreements with vacation property and hotel owners, as a result of the sale of property to third parties, contract disputes or otherwise, or the failure of vacationers to book vacation rentals through our businesses would result in a decrease in related revenue, which would have an adverse effect on our business, financial condition and results of operations.
Insufficient availability of exchange inventory may adversely affect our results of operations.
Our exchange network’s transaction levels depend on the supply of inventory in the system and demand for the available inventory. Exchange inventory is deposited in the system by members, or by developers on behalf of members, to support current or anticipated exchanges. Inventory supply and demand for specific regions and on a broader scope are influenced by a variety of factors, such as: economic conditions; health and safety concerns, including concerns and travel restrictions relating to Health Crises such as the COVID-19 pandemic; the occurrence or threat of natural disasters and severe weather; and owner decisions to travel to their home resort/vacation club system or otherwise not deposit exchange inventory. The factors that affect demand for specific destinations could significantly reduce the number of accommodations available in such areas for exchanges. The level of inventory in our system also depends on the number of developers whose resorts are in our exchange network, and the numbers of members of such resorts. The number of developers affiliated with our exchange network may decrease for a variety of reasons, such as consolidation and contraction in the industry and competition. If inventory supply and demand do not keep pace, transactions may decrease or we may purchase additional inventory to fulfill the demand, both of which could negatively affect our results of operations.
Risks related to our indebtedness.
Our indebtedness may restrict our operations.
As of December 31, 2025, we had approximately $3.6 billion of total corporate indebtedness outstanding and could borrow an additional $787 million under a revolving corporate credit facility with a borrowing capacity of $800 million (the “Revolving Corporate Credit Facility”). The credit agreement that governs our corporate credit facility (“Corporate Credit Facility”) and the indentures that govern our various senior notes impose significant operating and financial restrictions on us, which among other things limit our ability and the ability of certain of our subsidiaries to incur debt, pay dividends and make other restricted payments, make loans and investments, incur liens, sell assets, enter into affiliate transactions, enter into agreements restricting certain subsidiaries’ ability to pay dividends and consolidate, merge or sell all or substantially all of their assets. The Corporate Credit Facility also requires us to not exceed a maximum first lien
leverage ratio and maintain a minimum interest coverage ratio. These restrictions could restrict our flexibility to react to changes in our businesses, industries and economic conditions and increase borrowing costs.
We must dedicate a portion of our cash flow from operations to debt servicing and repayment of debt, which reduces funds available for strategic initiatives and opportunities, dividends, share repurchases, working capital, and other general corporate needs. It also increases our vulnerability to the impact of adverse economic and industry conditions.
If we are unable to comply with our debt agreements, or to raise additional capital when needed, our business, cash flow, liquidity, and results of operations could be harmed.
Our ability to make scheduled cash payments on and to refinance our indebtedness depends on our ability to generate significant operating cash flow in the future, which, to a significant extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not be able to maintain a sufficient level of cash flow from operating activities to permit us to pay the principal, premium, if any, and interest on our indebtedness.
In addition, our credit ratings will impact the cost and availability of future borrowings and, accordingly, our cost of capital. The Company has experienced ratings downgrades in the past, including being downgraded to ‘B+’ by S&P in 2025. Additional downgrades in our ratings could adversely affect our businesses, cash flows, financial condition, operating results and share and debt prices, as well as our ability to meet our obligations under our capital efficient inventory acquisitions.
Failure to make scheduled cash payments on our existing debt, or to comply with the restrictive covenants and other requirements in our debt agreements, could result in an event of default, which, if not cured or waived, could result in acceleration of our debt repayment obligations. We may not have sufficient cash to repay any accelerated debt obligations, which would immediately and materially harm our business, results of operations and financial condition.
We may be required to raise additional capital to refinance our existing debt, or to expand or support our operations. For example, during 2025, we issued $575 million aggregate principal amount of 6.500% Senior Notes due 2033 to raise the funds necessary to repay our convertible notes maturing in 2026. Our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings, and the outlook for our industry as a whole. The terms of future debt agreements could include more restrictive covenants or require incremental collateral, which may further restrict our business operations or adversely affect our ability to obtain additional financing. There is no guarantee that debt or equity financings will be available in the future on terms favorable to us or at all. If we are unable to access additional funds on acceptable terms, we may have to adjust our business operations, and our ability to acquire additional vacation ownership inventory, repurchase VOIs, or make other investments in our business could be impaired, any of which may adversely affect our cash flows and results of operations.
We may incur substantially more debt, which could exacerbate further the risks associated with our leverage.
We may incur substantial additional indebtedness in the future, including secured indebtedness, as well as obligations that do not constitute indebtedness as defined in our debt agreements. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above will increase.
If the default rates or other credit metrics underlying our vacation ownership notes receivable deteriorate, our vacation ownership notes receivable securitization program and VOI financing program could be adversely affected.
Our vacation ownership notes receivable portfolio performance and securitization program could be adversely affected if any vacation ownership notes receivable pool fails to meet certain ratios, which could occur if the default rates or other credit metrics of the underlying vacation ownership notes receivable deteriorate. Default rates may deteriorate due to many different reasons, including those beyond our control, such as financial hardship of purchasers. In addition, if we offer loans to our customers with terms longer or different than those generally offered in the industry, our ability to securitize those loans may be adversely impacted. Instability in the credit markets may impact the timing and volume of the vacation ownership notes receivable that we are able to securitize, as well as the financial terms of such securitizations. If ABS issued in our securitization programs are downgraded by credit agencies in the future, our ability to complete securitization transactions on acceptable terms or at all could be jeopardized, and we could be forced to rely on other potentially more expensive and less attractive funding sources, to the extent available.
We are subject to risks relating to our convertible notes.
Holders of our convertible notes may convert the convertible notes after the occurrence of certain dates or events. See Footnote 15 “Debt” to our Financial Statements for additional information. If any holders elect to convert their convertible notes, we may elect to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
We are subject to risks relating to our convertible note hedges and warrants.
In connection with the convertible notes, we entered into privately negotiated convertible note hedges to reduce potential dilution to our common stock and offset cash payments we must make in excess of the principal amount, in each case, upon any conversion of convertible notes. We also issued warrants to the hedge counterparties. The warrants could have a dilutive effect on our shares of common stock to the extent that the market price per share exceeds the applicable strike price of the warrants on one or more of the applicable expiration dates. Alternatively, if settled in cash, the warrants could have a negative impact on cash flow and liquidity.
In connection with establishing their initial hedges of the convertible note hedges and the warrants, the hedge counterparties and their respective affiliates advised us that they expected to purchase shares of our common stock in secondary market transactions and enter into various derivative transactions with respect to our common stock. These parties may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and buying or selling our common stock in the secondary market. Any of these activities could cause or prevent an increase or a decline in the market price of our common stock.
We are subject to the risk that one or more of the hedge counterparties may default under the convertible note hedges. If any of the hedge counterparties become subject to insolvency proceedings, we will become an unsecured creditor with a claim equal to our exposure at that time under our transactions with such counterparties. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by a hedge counterparty, we may sufferadverse tax consequences and more dilution than we currently anticipate with respect to our common stock.
Risks related to ownership of our common stock.
Our stock price may be volatile and your investment in our common stock could lose value.
Our stock price and trading volume are subject to changes, which may be significant, due to our financial results and operating performance and recommendations or earnings estimates by securities analyst and investors, as well as changes in economic, political and market conditions, including changes that affect demand for travel and consumer discretionary spending, such as inflationary pressures, health crises, acts of war and terrorism, and other factors unrelated to our financial results and operating performance. Speculation in the press or investment community about our business and results of operation can also cause changes in our stock price and trading volume. Many of these factors are out of our control. A significant drop in our stock price could expose us to the risk of securities class action lawsuits, which may result in substantial expense and divert management’s attention and resources, which may adversely affect our business.
Our ability to pay dividends on our stock is limited.
We may not declare or pay dividends in the future at any particular rate or at all. Our Board makes all decisions regarding our payment of dividends, subject to an evaluation of our financial condition, results of operations and capital requirements, as well as applicable law, regulatory and contractual constraints, industry practice and other business considerations that our Board considers relevant. Certain of the agreements governing our indebtedness restrict our ability and the ability of our subsidiaries to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit dividend payments. The payment of certain cash dividends has and may in the future result in an adjustment to the conversion rate of the Convertible Notes and related warrants in a manner adverse to us. We may not have sufficient surplus under Delaware law to be able to pay dividends, which may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures or increases in reserves.
Our share repurchase program may not enhance long-term stockholder value and could increase the volatility of the market price of our common stock and diminish our cash.
Our share repurchase program does not obligate us to repurchase any shares of our common stock. The timing and amount of any repurchases depend upon several factors, including market conditions, business conditions, statutory and contractual restrictions, the trading price of our common stock and the nature of other investment opportunities available to us. In addition, repurchases of our common stock could affect our stock price and increase its volatility. The existence
of a share repurchase program could cause our stock price to be higher than it would be absent the program and could reduce market liquidity for our stock. Use of our funds to repurchase shares could diminish our cash reserves, which may impact our ability to finance growth, pursue strategic opportunities, and discharge liabilities. Our share repurchases may not enhance stockholder value because the market price of our common stock may decline below the prices at which we repurchased shares and short-term stock price fluctuations could reduce the program’s effectiveness.
Anti-takeover provisions in our organizational documents, Delaware law and in certain of our agreements could delay or prevent a change in control.
Provisions of our Charter and Bylaws, as well as provisions in the agreements with our licensors, may delay or prevent a merger or acquisition that a stockholder may consider favorable. For example, our Charter and Bylaws require advance notice of stockholder proposals and nominations, place limits on convening stockholder meetings and authorize our Board of Directors to issue one or more series of preferred stock. Delaware law also restricts some business combinations between any holder of 15% or more of our outstanding common stock and us. The fact that these provisions and statutory restrictions may discourage acquisition proposals or delay or prevent a change in control could harm our stock price.
Further, a change in control could result in an acceleration of our obligations under the Corporate Credit Facility or the indentures that govern our senior notes. Such debt acceleration could make it more difficult for us to attract potential buyers or to consummate a change in control transaction that would otherwise be beneficial to our stockholders.
Business Overview
We are a leading global vacation company that offers vacation ownership, exchange, rental, and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management.
Our Vacation Ownership segment includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive long-term relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Vacation Club brands. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. We also have a license to use the St. Regis brand for specified fractional ownership products.
Our Vacation Ownership segment generates revenues from four primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
Our Exchange & Third-Party Management segment includes an exchange network and membership programs, as well as the provision of management services to other resorts and lodging properties. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and owners’ association management, and other related products and services. We provide these services through our Interval International and Aqua-Aston businesses.
Corporate and other represents the portion of our results that are not allocable to our segments, including those relating to Consolidated Property Owners’ Associations.
Accounting Policies Used in Describing Results of Operations
Sale of Vacation Ownership Products
We recognize revenues from the sale of vacation ownership products (also referred to as “VOIs”) when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible, which typically correlates to expiration of the statutory rescission period.
Sales of vacation ownership products may be made for cash or we may provide financing. In addition, we recognize settlement fees associated with the transfer of VOIs and commission revenues from sales of VOIs on behalf of third parties, which we refer to as “resales revenue.”
We also provide sales incentives to certain purchasers. These sales incentives typically include Marriott Bonvoy points, World of Hyatt points or an alternative sales incentive that we refer to as “plus points.” Plus points are redeemable for stays at our resorts or for use in other third-party offerings, generally up to two years from the date of issuance.
Finally, as more fully described in “ Financing ” below, we record the difference between the contract receivable or vacation ownership note receivable and the amount we expect to collect from debtors (also known as a vacation ownership notes receivable reserve or a sales reserve) as a reduction of revenues from the sale of VOIs at the time we recognize revenues from a sale.
We report, on a supplemental basis, contract sales for our Vacation Ownership segment. Contract sales consist of the total amount of VOI sales under contract signed during the period where we have generally received a down payment of at least ten percent of the contract price, reduced by actual rescissions during the period, inclusive of contracts associated with sales of VOIs on behalf of third parties, which we refer to as “resales contract sales.” In circumstances where a customer applies any or all of their existing ownership interests as part of the purchase price for additional interests (also referred to as an equity upgrade), we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of VOIs that we report on our income statements due to the requirements for revenue recognition described above. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.
Cost of vacation ownership products includes costs to acquire, develop and construct our projects (also known as real estate inventory costs), other non-capitalizable costs associated with the overall project development process and settlement expenses associated with the closing process. For each project, we expense inventory costs in the same proportion as the revenue recognized. Consistent with the applicable accounting guidance, to the extent there is a change in the estimated sales revenues or inventory costs for the project in a period, a non-cash adjustment is recorded on our income statements to true up costs in that period to those that would have been recorded historically if the revised estimates had been used. These true-ups, which we refer to as product cost true-up activity, can have a positive or negative impact on our income statements.
Management and Exchange
Our management and exchange revenues include revenues generated from fees we earn for managing each of our vacation ownership resorts, providing property management, owners’ association management and related services and fees we earn for providing rental services and related hotel, condominium resort, and owners’ association management services to vacation property owners.
In addition, we earn revenue from ancillary offerings, including food and beverage outlets, golf courses and other retail and service outlets located at our Vacation Ownership resorts. We also receive annual membership fees, club dues and certain transaction-based fees from members, owners and other third parties.
Management and exchange expenses include costs to operate the food and beverage outlets, other ancillary operations and to provide overall customer support services, including reservations, and certain transaction-based expenses relating to third-party exchange service providers.
In our Vacation Ownership segment and Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”
Financing
We offer financing to qualified customers for the purchase of most types of our VOIs. The typical financing agreement provides for monthly payments of principal and interest with the principal balance of the loan fully amortizing over the term of the related vacation ownership note receivable, which is generally ten to fifteen years. While we adjust interest rates on our financing programs from time to time, such changes are typically not made in lockstep with the timing and magnitude of changes in broader market rates. We may use incentives to encourage our customers to choose our financing. Included within our vacation ownership notes receivable are originated vacation ownership notes receivable and vacation ownership notes receivable acquired in connection with the ILG Acquisition and the Welk Acquisition.
The interest income earned from our vacation ownership financing arrangements is earned on an accrual basis on the principal balance outstanding over the contractual life of the arrangement and is recorded as Financing revenues on our Income Statements. Financing revenues also include fees earned from servicing the existing vacation ownership notes receivable portfolio. The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which is impacted positively by the origination of new vacation ownership notes receivable and negatively by principal collections and defaults. We calculate financing propensity as contract sales volume of
financed contracts originated in the period divided by contract sales volume of all contracts originated in the period. We do not include resales contract sales in the financing propensity calculation. First-time buyers are more likely to finance their purchases and remain an integral part of our overall marketing and sales strategy.
Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model. The estimates of the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses and the estimated value of collateral securing the acquired vacation ownership notes receivable.
In the event of a default, we generally have the right to foreclose on or revoke the underlying VOI. We return VOIs that we reacquire through foreclosure or revocation back to inventory. As discussed above, for originated vacation ownership notes receivable, we record a reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our Income Statements. Revisions to estimates that result in decreases or increases to the reserve for originated vacation ownership notes receivable can increase or decrease revenues, respectively. In contrast, for acquired vacation ownership notes receivable, we record changes to the reserve as an adjustment to Financing expenses on our Income Statements. See Footnote 5 “Vacation Ownership Notes Receivable” to our Financial Statements for further information.
Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable, costs to support the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is considered to be an operating expense of our business.
Rental
In our Vacation Ownership segment, we operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory. We obtain rental inventory and generate revenue from rentals of inventory that we hold for sale as interests in our vacation ownership programs, inventory that we control because our owners have elected alternative usage options permitted under our vacation ownership programs and rentals of unregistered inventory and owned-hotel properties. We also recognize rental revenue from the utilization of plus points at redemption for rental stays at one of our resorts or other third-party offerings. For rental revenues associated with VOIs which we own and which are registered and held for sale, to the extent that the revenues from rental are less than costs, revenues are reported net of rental expenses in accordance with Accounting Standards Codification (“ASC”) Topic 978, “ Real Estate - Time-Sharing Activities ” (“ASC 978”). The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense.
In our Exchange & Third-Party Management segment, we offer vacation rental offers known as Getaways to members of the Interval Network and certain other membership programs. Getaways allows us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members. Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program. We also source resort accommodations specifically for the Getaways program. Rental revenues associated with Getaways are reported net of related expenses.
Rental expenses include:
• Maintenance and other fees on unsold inventory;
• Costs to provide alternative usage options, including Marriott Bonvoy points, World of Hyatt points, and offerings available as part of third-party offerings, for owners who elect to exchange their inventory; and
• Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, labor costs, credit card expenses, and reservation services).
Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), owner use and exchange behavior, rental inventory on hand and keys allocated for preview stays. In addition, rental metrics may not correlate with rental revenues due to the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above). The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.
Cost Reimbursements
Cost reimbursements include direct and indirect costs that are reimbursed to us by owners’ associations and customers under management contracts, which costs are principally payroll-related costs at the locations where we employ the associates providing on-site services, costs associated with property refurbishments (including those where we act as the project manager), and insurance costs. All costs reimbursed to us by owners’ associations and customers, with the exception of taxes assessed by a governmental authority, are reported on a gross basis. We recognize cost reimbursements when we incur the related reimbursable costs. Cost reimbursements consist of actual expenses with no added margin.
Interest Expense
Interest expense consists of all interest expense other than consumer financing interest expense, which is included within Financing expense, net of interest income.
Transaction and Integration Costs
Transaction and integration costs primarily include fees paid to change-management consultants, technology-related costs associated with the integrations of ILG and Welk and charges for employee retention, severance and other termination-related benefits. Transaction and integration costs also include costs related to the ILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax-related accruals. During the third quarter of 2023 and the second quarter of 2024, we discontinued classifying costs associated with the continued integration of ILG and Welk, respectively, in Transaction and integration costs. Further integration costs incurred after these periods are reflected in the operating results of each of our segments and/or General and administrative expenses.
Performance Measures
Management uses the following key performance metrics to assess the Company’s operational efficiency and market competitiveness, identify trends, develop financial projections, and support strategic decision-making. Management continuously monitors and analyzes these metrics to help ensure that the Company remains responsive to changing market conditions and aligned with our long-term growth objectives. The definitions and methodologies of certain of these metrics may differ from those used by other companies, and as a result, these metrics may not be directly comparable to similarly titled measures reported by other companies.
• Contract sales from the sale of VOIs reflects the pace of sales in our business.
• Total contract sales include contract sales from the sale of vacation ownership products, including non-consolidated joint ventures.
• Consolidated contract sales exclude contract sales from the sale of vacation ownership products for non-consolidated joint ventures.
• Volume per guest (“VPG”) is calculated as consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a sales tour (collectively, “Tours”) divided by the number of Tours conducted during the applicable period. We believe that VPG is a key driver of profitability as it reflects both the average contract price and the effectiveness of converting touring guests into purchasers.
• Tours is defined as the number of sales tours conducted during the applicable period, including virtual and offsite sales tours and excludes telesales. We view Tours as an important indicator of touring guest volume.
• Development profit margin is calculated as Development profit divided by revenues from the sale of vacation ownership products. Development profit represents revenues from the sale of vacation ownership products, net of the cost of vacation ownership products and related marketing and sales costs. We believe that Development profit margin is a key indicator of the profitability of our development activities and the effectiveness of its associated marketing and sales efforts.
• Total active members represents the number of active members of the Interval Network active members as of the end of the applicable period. We consider this metric to be an important indicator of the size of the member base eligible to transact within the Interval Network.
• Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue generated by the Interval Network by the monthly weighted average number of active
members of the Interval Network during the applicable period. We believe this metric is a meaningful indicator of member engagement.
• Segment financial results attributable to common stockholders reflects revenues less expenses that are directly attributable to each respective reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We believe this measure provides meaningful insight into the operating performance of our reportable business segments. See Footnote 19 “Business Segments” to our Financial Statements for further information about our reportable business segments.
• Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by the Company’s total revenues less cost reimbursements revenues.
• Segment Adjusted EBITDA margin is calculated as Segment Adjusted EBITDA divided by the respective segment’s total revenues less cost reimbursements revenues.
NM = Not meaningful.
Management Priorities
Our management priorities for 2026 are centered on driving strongerprofitability and improving cash flow. We are focused on reshaping the quality and composition of our tours, tightening our cost structure, and refining our global development strategy. We expect that delivering higher‑quality tours via various initiatives will increase VPGs while reducing default rates on newly originated vacation ownership notes receivable. For example, we are using FICO scores to pre-qualify prospective purchasers and focusing on increasing in-house capture rates, which has historically been one of our highest VPG channels. Additional priorities include reducing overhead, focusing on marketing and sales talent, delaying modernization projects to manage cash flow, monetizing certain non-core assets on our balance sheet, and managing maintenance fee increases for each of our vacation ownership products.
Asia Pacific Strategy Change
A key element of our revised strategy relates to our Asia Pacific business, where we have experienced lower returns than expected, partially due to higher defaults that are primarily driven by customers from newer source markets. To address these dynamics, we are scaling back growth expectations and right‑sizing our business in the region. This includes reducing tours for first‑time buyers in select countries, reducing headcount in the region, deferring the purchase of the next phase of our resort in Khao Lak, Thailand, and canceling a purchase commitment for inventory in Bali. Collectively, these actions are designed to concentrate our efforts on markets with the greatest potential to drive profitability and cash flow and resulted in Restructuring expense in our Vacation Ownership segment. We also recorded a non-cash impairment for vacation ownership units in Khao Lak, Thailand primarily attributed to the elongation of the pace of sales and changes in our marketing approach.
Development Strategy Change
As part of our broader financial strategic review, we conducted a comprehensive review to assess the strategic alignment of inventory and property and equipment within our North America vacation ownership business. This review focused on assessing inventory needs in light of our current inventory position and identifying opportunities to monetize non-core assets. The outcome of this review represented an indicator of impairment for certain assets. As a result of our impairment analysis, we recorded a non‑cash impairment related to assets associated with future phases of our existing resorts that we no longer plan to further develop. The carrying values of the assets associated with these resorts exceeded their estimated fair values because the carrying values included historical allocations of common infrastructure costs incurred when we built the resorts. In addition, we recorded a non-cash impairment related to certain property and equipment identified for disposition in our Vacation Ownership segment.
We expect to generate between $250 million and $300 million of net cash proceeds over a two year period from the disposition of certain non-core property and equipment and other assets, including $50 million from the disposition of the Cancun hotel in January 2026.
CONSOLIDATED RESULTS
Fiscal Years
($ in millions)
REVENUES
Sale of vacation ownership products
Management and exchange
Rental
Financing
Cost reimbursements
TOTAL REVENUES
EXPENSES
Cost of vacation ownership products
Marketing and sales
Management and exchange
Rental
Financing
Royalty fee
General and administrative (1)
Depreciation and amortization
Litigation charges (1)
Modernization (1)
Restructuring (1)
Impairment
Cost reimbursements
TOTAL EXPENSES
Gains (losses) and other income (expense), net
Interest expense, net
Transaction and integration costs
Other
(LOSS) INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Provision for income taxes
NET (LOSS) INCOME
Net (income) loss attributable to noncontrolling interests
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
(1) Prior year amounts have been reclassified to conform with our current year presentation.
Operating Statistics
Fiscal Years
(Contract sales $ in millions)
Change
Vacation Ownership
Consolidated contract sales
VPG
Tours
Exchange & Third-Party Management
Total active members at end of period (000's)
Average revenue per member
Revenues
Fiscal Years
($ in millions)
Change
Vacation Ownership
Exchange & Third-Party Management
Total Segment Revenues
Consolidated Property Owners’ Associations
Total Revenues
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common stockholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items, and excludes share-based compensation expense and amortization of cloud computing software implementation costs. Share-based compensation expense is excluded to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. During the first quarter of 2025, we began excluding amortization of cloud computing software implementation costs, which are not included in depreciation and amortization, from Adjusted EBITDA for comparability purposes to address the considerable variability among companies in the utilization of productive assets, and have reclassified prior year amounts to conform with our current year presentation.
For purposes of our EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to stockholders. We consider Adjusted EBITDA margin to be an indicator of our operating profitability.
We also use Adjusted EBITDA and Adjusted EBITDA margin, as do analysts, lenders, investors, and others, because these measures exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin also exclude depreciation and amortization as well as amortization of cloud computing software implementation costs because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating or amortizing productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
We believe Adjusted EBITDA and Adjusted EBITDA margin are useful as indicators of operating performance and profitability, respectively, because they allow for period-over-period comparisons of our ongoing core operations before the impact of the excluded items. Adjusted EBITDA and Adjusted EBITDA margin also facilitate comparisons by us, analysts, investors, and others of results from our ongoing core operations before the impact of these items with results from other companies.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin differently than we do or may not calculate them at all, limiting their usefulness as comparative measures.
Additionally, during 2025, we reclassified $6 million of certain amounts related to ongoing litigation from General and administrative expense to Litigation charges in order to conform our 2024 results with our current year presentation.
Commencing in 2026, interest expense associated with our Warehouse Credit Facility will be included as a component of Consumer financing interest expense within Financing expense. Interest expense on our Warehouse Credit Facility was $13 million and $10 million for the years ended December 31, 2025 and December 31, 2024, respectively.
The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with net income or loss attributable to common stockholders, which is the most directly comparable GAAP financial measure.
Fiscal Years
($ in millions)
Change
Net (loss) income attributable to common stockholders
Interest expense, net
Provision for income taxes
Depreciation and amortization
EBITDA
Share-based compensation expense
Amortization of cloud computing software implementation costs (1)(2)
Certain items (1)
Adjusted EBITDA (1)
Adjusted EBITDA Margin (1)
0.0 pts
(1) Prior year amounts have been reclassified to conform with our current year presentation.
(2) During the first quarter of 2025, we began excluding Amortization of cloud computing software implementation costs, which are not included in Depreciation and amortization, from Adjusted EBITDA, and have reclassified prior year amounts to conform with our current year presentation.
The table below details the components of Certain items for fiscal years 2025 and 2024.
Fiscal Years
($ in millions)
Gain on disposition of hotel, land, and other
Foreign currency translation (gain) loss
Insurance proceeds
Change in indemnification asset
Change in estimates relating to pre-acquisition contingencies
Other
(Gains) losses and other (income) expense, net
Transaction and integration costs
Purchase accounting adjustments
Litigation charges (1)
Modernization (1)
Restructuring (1)
Impairment
Other
Total Certain items (1)
(1) Prior year amounts have been reclassified to conform with our current year presentation.
Segment Adjusted EBITDA
Fiscal Years
($ in millions)
Change
Vacation Ownership (1)
Exchange & Third-Party Management
Segment Adjusted EBITDA (1)
General and administrative (1)
Other
Adjusted EBITDA (1)
(1) Prior year amounts have been reclassified to conform with our current year presentation.
The following tables present segment financial results attributable to common stockholders reconciled to segment Adjusted EBITDA.
Vacation Ownership
Fiscal Years
($ in millions)
Change
Segment financial results
Depreciation and amortization
Share-based compensation expense
Amortization of cloud computing amortization implementation costs (1)
Certain items
Segment Adjusted EBITDA (1)
Segment Adjusted EBITDA Margin (1)
0.1 pts
(1) Prior year amounts have been reclassified to conform with our current year presentation.
The table below details the components of Certain items for the Vacation Ownership segment financial results for fiscal years 2025 and 2024.
Fiscal Years
($ in millions)
Gain on disposition of hotel, land, and other
Insurance proceeds
Change in estimates relating to pre-acquisition contingencies
Other
Gains and other income, net
Purchase accounting adjustments
Litigation charges
Restructuring
Impairment
Other
Total Certain items
Exchange & Third-Party Management
Fiscal Years
($ in millions)
Change
Segment financial results
Depreciation and amortization
Share-based compensation expense
Certain items
Segment Adjusted EBITDA
Segment Adjusted EBITDA Margin
(1.5 pts)
The table below details the components of Certain items for the Exchange & Third-Party Management segment financial results for fiscal years 2025 and 2024.
Fiscal Years
($ in millions)
Gains and other income, net
Restructuring
Impairment
Total Certain items
BUSINESS SEGMENTS
Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 19 “Business Segments” to our Financial Statements for further information about our segments.
VACATION OWNERSHIP
Fiscal Years
($ in millions)
REVENUES
Sale of vacation ownership products
Resort management and other services
Rental
Financing
Cost reimbursements
TOTAL REVENUES
EXPENSES
Cost of vacation ownership products
Marketing and sales
Resort management and other services
Rental
Financing
Royalty fee
Depreciation and amortization
Litigation charges
Restructuring
Impairment
Cost reimbursements
TOTAL EXPENSES
Gains and other income, net
Other
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS
Sale of Vacation Ownership Products
Fiscal Years
($ in millions)
% of Consolidated Contract Sales, Net of Resales
% of Consolidated Contract Sales, Net of Resales
% of Consolidated Contract Sales, Net of Resales
Change
Consolidated contract sales
Joint venture contract sales
Total contract sales
Less:
Resales contract sales
Joint venture contract sales
Consolidated contract sales, net of resales
Plus:
Settlement revenue
Resales revenue
Revenue recognition adjustments:
Reportability
Sales reserve
Other (1)
Sale of vacation ownership products
VPG
Tours
Financing propensity
0.8 pts
Average FICO Score (2)
(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.
(2) For customers who financed a vacation ownership purchase and for whom a credit score was available, generally U.S. and Canadian residents.
2025 Compared to 2024
The increase in Sale of vacation ownership products was primarily due to a decrease in our sales reserve reflecting the $70 million sales reserve adjustment (the “additional sales reserve”) recorded in the second quarter of 2024, which did not recur in 2025. Lower contract sales were partially offset by higher revenue reportability and financing propensity in 2025. First time buyer contract sales were flat on 1% higher tours. Owner contract sales declined 4% on lower VPG and tours.
Excluding the impact of the additional sales reserve recorded in the second quarter of 2024, our sales reserve as a percent of contract sales in 2025 is approximately 110 basis points higher than the prior year, reflecting our expectation that future defaults will be higher than those experienced prior to 2023. While our delinquency rates at December 31, 2025 have declined approximately 100 basis points compared to December 31, 2024, we do not expect to lower the sales reserve for new originations until we have sufficient, sustained evidence of continued improvement in delinquency and default rates.
Development Profit
Fiscal Years
($ in millions)
% of Revenue
% of Revenue
% of Revenue
Change
Sale of vacation ownership products
Cost of vacation ownership products
Marketing and sales
Development profit
Development profit margin
0.3 pts
2025 Compared to 2024
The increase in Development profit was due to the following:
• higher Sale of vacation ownership products (discussed above); and
• lower Cost of vacation ownership products due to the $13 million favorable impact of the additional sales reserve in 2024 partially offset by the sale of higher average cost inventory.
These were partially offset by:
• higher marketing and sales costs due to:
• $10 million of higher costs for occupancy used for previews;
• $8 million of higher marketing and other costs; and
• $6 million of higher salaries, wages and benefits for sales executives, including variable compensation.
Excluding the favorable impact of the additional sales reserve in 2024, both Cost of vacation ownership products and Cost of vacation ownership products as a percentage of sales were flat.
Excluding the impact of the additional sales reserve in 2024, Development profit decreased $49 million and Development profit margin decreased approximately 240 basis points in 2025.
Resort Management and Other Services Revenues, Expenses and Profit
Fiscal Years
($ in millions)
Change
Management fee revenues
Ancillary revenues
Other management and exchange revenues
Resort management and other services revenues
Resort management and other services expenses
Resort management and other services profit
Resort management and other services profit margin
2.0 pts
Resort occupancy (1)
(0.6 pts)
(1) Resort occupancy represents all transient, preview, and owner keys divided by total keys available, net of keys out of service.
2025 Compared to 2024
The increase in Resort management and other services profit reflects $16 million of higher management and exchange profit reflecting continued growth in revenues and operating efficiencies, and $7 million of higher ancillary profit.
Rental Revenues, Expenses and Margin
Fiscal Years
($ in millions)
Change
Rental revenues
Rental expenses
Rental profit
Rental profit margin
(4.9 pts)
Transient keys rented (1)
Average transient key rate
Rental occupancy (2)
(0.3 pts)
(1) Transient keys rented exclude plus points and preview stays.
(2) Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.
2025 Compared to 2024
Rental profit declined due to:
• $23 million of lower plus point revenue resulting from the non-recurring impact of sales incentive programs put in place during the COVID pandemic, which increased the amount of plus points issued and lengthened the use period through the end of 2024, resulting in higher non-recurring revenues in 2024;
• $13 million of higher unsold maintenance fees associated with developer-owned inventory;
• $17 million of higher marketing, variable and other costs; and
• $2 million of increased costs due to higher owner utilization of third-party vacation offerings.
These amounts are partially offset by:
• $16 million increase in transient rental revenues; and
• $10 million increase in costs allocated to marketing and sales expense for occupancy used for previews.
Rental revenues and Rental expenses are both $17 million higher due to the year over year change in the amount reclassified for costs in excess of rental revenues for developer-owned inventory which is registered and held for sale.
Financing Revenues, Expenses and Margin
Fiscal Years
($ in millions)
Change
Financing revenues
Financing expenses
Consumer financing interest expense
Financing profit
Financing profit margin
0.9 pts
Financing propensity
0.8 pts
2025 Compared to 2024
• Financing revenues reflect higher interest income as a result of a higher average notes receivable balance.
• The increase in financing expense is primarily attributed to higher credit card fees, partially offset by lower operating costs, including those resulting from our cost savings initiatives implemented in the third quarter of 2025.
Litigation Charges
Fiscal Years
($ in millions)
Change
Litigation charges
2025 Compared to 2024
During 2025 and 2024, litigation charges relate primarily to certain resorts in Europe, as well as a land disposition in the U.S. during 2024.
Restructuring Charges
Fiscal Years
($ in millions)
Change
Restructuring
2025 Compared to 2024
During 2025, we recorded $15 million of restructuring costs, all of which related to the strategy change in our Asia Pacific business, consisting of $10 million for the cancellation of a purchase commitment for 26 vacation ownership units in Bali ($8 million related to the write-off of progress payments and $2 million for the contract termination fee) and $5 million of severance.
Impairment
Fiscal Years
($ in millions)
Change
Impairment
During 2025, we recorded non-cash impairment charges of $395 million related to our development strategy change including:
• $160 million to write down the basis of certain non-core Property and equipment and Other assets identified for disposition to their estimated fair values;
• $131 million related to decisions to forego build out of future phases of existing resorts primarily attributed to the fact that the book values of these assets include the historical allocations of common costs incurred when we built the infrastructure of these resorts;
• $75 million to write down the value of vacation ownership interests related to Legacy-Welk reflecting a further elongated pace of sales at a higher marketing and selling cost as the Hyatt-branded vacation ownership business continues to underperform expectations;
• $27 million for the impairment of vacation ownership units in Khao Lak, Thailand classified in Inventory due to the change in strategy for the in Asia Pacific region which elongated the pace of sales and changes in our marketing approach; and
• $2 million for the impairment of inventory in an equity method investment.
During 2024, we recorded non-cash impairment charges of $28 million related to Legacy-Welk inventory. The impairment charge reflects an elongated pace of sales at a higher marketing and selling cost than the estimates used in purchase accounting when we acquired the inventory.
Gains and Other Income
Fiscal Years
($ in millions)
Change
Gains and other income, net
During 2025 we benefited from $15 million of proceeds from service interruption insurance relating to the Maui wildfires, a $2 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $1 million of other miscellaneous gains.
During 2024 we benefited from $6 million of gains on the disposition of excess real estate, $5 million related to the receipt of business interruption insurance proceeds, a $4 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $1 million of other miscellaneous gains.
EXCHANGE & THIRD-PARTY MANAGEMENT
Our Exchange & Third-Party Management segment is comprised of the Interval International and Aqua-Aston businesses.
Fiscal Years
($ in millions)
REVENUES
Management and exchange
Rental
Cost reimbursements
TOTAL REVENUES
EXPENSES
Management and exchange
Depreciation and amortization
Litigation charges
Restructuring
Impairment
Cost reimbursements
TOTAL EXPENSES
Gains and other income, net
Other
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS
Management and Exchange Profit
Fiscal Years
($ in millions)
Change
Management and exchange revenue
Management and exchange expense
Management and exchange profit
Management and exchange profit margin
(1.9 pts)
2025 Compared to 2024
• Interval International management and exchange revenues declined $6 million primarily due to 9% lower exchange transaction volume, partially offset by a 6% increase in average exchange fees.
• Management and exchange revenue reflects a $4 million decline in Aqua-Aston management revenues resulting from fewer available nights for rent and a lower average daily rate in the Hawaii market.
• Management and exchange revenue declined $2 million as a result of the sale of an immaterial subsidiary in the second quarter of 2024.
• The decrease in management and exchange expenses was primarily attributable to lower wages and benefits and other costs.
Rental Revenues
Fiscal Years
($ in millions)
Change
Rental revenues
2025 Compared to 2024
The decrease in rental revenues reflects a 15% decrease in transaction volume, partially offset by a 9% increase in average fees per transaction.
Impairment
Fiscal Years
($ in millions)
Change
Impairment
2025 Compared to 2024
In 2025, we recorded a non-cash impairment of $182 million primarily to write down the value of our goodwill ($159 million) as a result of (i) the change in expected future operating results based on a sustained decline in operating performance in comparison to prior expectations; and (ii) the impact of market factors, including a decline in our stock price and market capitalization. In addition, we recorded a $21 million non-cash impairment to write down the value of trade names which was primarily attributed to the decline in estimated future revenues of each of the related businesses and a $2 million impairment related to an operating lease and related assets. See Footnote 10 “Goodwill” and Footnote 11 “Intangible Assets” to our Financial Statements for additional information.
CORPORATE AND OTHER
Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from the Consolidated Property Owners’ Associations.
Fiscal Years
($ in millions)
REVENUES
Resort management and other services
Cost reimbursements
TOTAL REVENUES
EXPENSES
Resort management and other services
Rental
General and administrative
Depreciation and amortization
Litigation charges (1)
Modernization (1)
Restructuring (1)
Impairment
Cost reimbursements
TOTAL EXPENSES
Gains (losses) and other income (expense), net
Interest expense, net
Transaction and integration costs
Other
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Provision for income taxes
Net (income) loss attributable to noncontrolling interests
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS
(1) Prior year amounts have been reclassified to conform with our current year presentation.
General and Administrative
Fiscal Years
($ in millions)
Change
General and administrative
2025 Compared to 2024
The increase in General and administrative expenses is attributed to $27 million of higher wages, benefits and variable compensation and $6 million of severance for our former chief executive officer, partially offset by $8 million of net savings from outsourcing certain finance and accounting and human resources functions, $7 million of lower insurance, $4 million of lower consulting costs and $9 million of other individually insignificant cost reductions.
Litigation Charges
Fiscal Years
($ in millions)
Change
Litigation charges (1)
(1) Prior year amounts have been reclassified to conform with our current year presentation.
2025 Compared to 2024
Litigation charges during 2025 and 2024 relate to a dispute with a service provider.
Modernization Charges
Fiscal Years
($ in millions)
Change
Modernization (1)
(1) Prior year amounts have been reclassified to conform with our current year presentation.
2025 Compared to 2024
In November 2024, we announced the creation of a Strategic Business Operations office focused on accelerating our growth and driving operating efficiencies in all areas of our business while increasing organizational agility. The Strategic Business Operations office was created to modernize and optimize our processes and systems, including through advanced technology and automation; increase sales efficiency and inventory optimization; and capture significant savings from initiatives related to procurement and corporate overhead.
2025 Modernization charges related to:
• $87 million of advisory services;
• $18 million for the partial outsourcing of corporate overhead functions;
• $12 million for technology; and
• $5 million related to other initiatives.
In the third quarter of 2025, we outsourced a portion of our human resources and finance and accounting functions to third-party service providers, which we expect will result in annual cost savings of approximately $20 million that will be reflected in multiple expense lines on our income statements.
We expect to incur non-recurring expenses of approximately $100 million in 2026 related to these modernization initiatives.
Gains (Losses) and Other Income (Expense)
Fiscal Years
($ in millions)
Change
Gains (losses) and other income (expense), net
In 2025, we recorded $22 million of foreign currency translation gains, a $4 million increase in the receivable from Marriott International for indemnified tax matters, $1 million of insurance proceeds, and $1 million of other gains.
In 2024, we recorded $12 million of foreign currency translation losses and a $5 million reduction in the receivable from Marriott International for indemnified tax matters.
Income Tax
Fiscal Years
($ in millions)
Provision for income taxes
Effective tax rate
2025 Compared to 2024
The decrease in income tax expense for 2025 primarily reflects losses before income taxes and noncontrolling interests, as well as the establishment of valuation allowances on certain deferred tax assets. The decrease was further driven by
the absence of the tax expense recognized in 2024 related to the removal of our permanent reinvestment assertion for earnings in certain non-U.S. entities, partially offset by tax benefits associated with 2025 restructuring activity. These decreases were partially offset by the impact of certain state and federal permanent differences and the absence of a benefit recognized in 2024 related to changes in uncertain tax positions.
Timing of Estimated Tax Payments
As part of the federal tax relief provided by the Internal Revenue Service for businesses in areas of Florida affected by hurricanes during 2024, we were permitted to defer certain federal income tax payments without incurring interest or penalties. As a result, we deferred $38 million of estimated tax payments from 2024 to 2025. Similarly, in 2024, under comparable relief measures related to hurricanes in 2023, we deferred $32 million of estimated tax payments from 2023 to 2024. In addition, in 2023, under similar circumstances, we deferred $45 million of estimated tax payments from 2022 to 2023. None of our 2025 estimated tax payments were deferred into 2026.
Refer to Footnote 4 “Income Taxes” for additional information.
Consolidated Property Owners’ Associations
The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance.
Fiscal Years
($ in millions)
REVENUES
Resort management and other services
Cost reimbursements
TOTAL REVENUES
EXPENSES
Resort management and other services
Rental
Cost reimbursements
TOTAL EXPENSES
Interest expense, net
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Provision for income taxes
Net (income) loss attributable to noncontrolling interests
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS
Liquidity and Capital Resources
Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility, our ability to raise capital through securitizations in the ABS market, and, to the extent necessary, our ability to issue new debt and refinance existing debt. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to stockholders. We continuously monitor the capital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs.
At December 31, 2025, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 4.2, a manageable leverage level, and we remain focused on reducing this ratio over time.
Subsequent to the end of 2025, we used the proceeds from the 2033 Notes to repay our 2026 Convertible Notes upon maturity. See Footnote 15 “Debt” to our Financial Statements for further information related to maturities of our debt.
Sources of Liquidity
Cash from Operations
Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions, and (4) cash generated from our rental and resort management and other services operations.
We periodically securitize, without recourse, through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the ABS term securitization market. These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes. In a vacation ownership notes receivable term securitization, several classes of debt securities issued by a special purpose entity are collateralized by a single pool of transferred vacation ownership notes receivable. In connection with each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued.
Typically, we receive cash at inception of the term securitization transaction for the amount of notes issued less fees and monies held in reserve and we receive cash during the life of the transaction in amounts reflecting the excess spread of interest received on the related vacation ownership notes receivable less the interest payable on the ABS securities, less administrative fees and amounts from related vacation ownership notes receivable that default. Loan defaults under securitizations offset a portion of the excess spread we receive, on a monthly basis. We completed two term securitization transactions in 2025 resulting in net proceeds of $908 million.
Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread of interest accruing on the related vacation ownership notes receivable less the interest accruing on the ABS securities and fees we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. At the recent level of defaults, there is no impact to cash whether we repurchase defaulted vacation ownership notes receivable from a securitization VIE and pursue foreclosure or foreclose on behalf of a securitization VIE. During 2025, and as of December 31, 2025, no securitized vacation ownership notes receivable pools were out of compliance with their respective required parameters. As of December 31, 2025, we had 12 term securitization transactions outstanding. Since 2000, we have issued approximately $10.7 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.
On an ongoing basis, we have the ability to use our Warehouse Credit Facility to securitize, on a revolving non-recourse basis, eligible consumer loans derived from certain vacation ownership sales. Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur twice a year. During 2025, we amended certain agreements associated with our Warehouse Credit Facility, which among other things extended the revolving period from June 11, 2026 to June 11, 2027. At December 31, 2025, no borrowings were outstanding on our Warehouse Credit Facility.
As of December 31, 2025, $176 million of gross vacation ownership notes receivable were eligible for securitization. See Footnote 14 “Securitized Debt” and Footnote 18 “Variable Interest Entities” for further information on these facilities.
Issuance of Senior Unsecured Notes
During the third quarter of 2025, we issued the 2033 Notes with an aggregate principal amount of $575 million and we received net proceeds of $567 million from the offering, after deducting the underwriting fees and transaction expenses. We used the net proceeds to repay our 2026 Convertible Notes due in January 2026.
Corporate Credit Facility
During 2025, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which, among other things, increased the borrowing capacity on our Revolving Corporate Credit Facility from $750 million to $800 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions. The Amendment also extended the termination date from March 31, 2027 to March 24, 2030, reduced
certain fees and interest costs, and increased the letter of credit sub-facility of the Revolving Corporate Credit Facility from $75 million to $150 million. At December 31, 2025, no borrowings and $13 million of letters of credit were outstanding under our Revolving Corporate Credit Facility. See Footnote 15 “Debt” to our Financial Statements for more information pertaining to this facility.
Uses of Cash
We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of repayment by owners of vacation ownership notes receivable, timing and amount of voluntary repurchases of defaulted vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for inventory acquisitions and development.
Seasonality
Our cash flow from operations fluctuates during the year due to the timing of certain receipts and contractual and compensation-related payments. Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occurs in either the fourth quarter or the first quarter of each year. Generally, cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points-based products, and in the first quarter for our weeks-based products. In addition, during the first quarter of each year, we generally have variable compensation-related cash outflows associated with payment of annual bonuses.
Operations
In addition to net income or loss and adjustments for non-cash items, the following are key drivers of our cash flow from operating activities:
Inventory Spending (In Excess of) Less Than Cost of Sales
Fiscal Years
($ in millions)
Inventory spending
Purchase and development of property for future transfer to inventory
Inventory costs
Inventory spending (in excess of) less than cost of sales
We plan to restrict our new inventory spending to capital efficient arrangements where our cash outlay coincides with start of sales, as well as low-cost reacquired inventory. Through our existing VOI repurchase program, we proactively acquire previously sold VOIs from owners’ associations and individual owners at lower costs than would be required to develop new inventory. Among other reasons for repurchasing inventory, we expect these repurchases will help stabilize the future cost of our vacation ownership products. In 2025, we fulfilled existing commitments to purchase property in Waikiki and Thailand.
Vacation Ownership Notes Receivable Collections Less Than Originations
Vacation ownership notes receivable collections less than originations
Vacation ownership notes receivable collections were less than originations in 2025, 2024 and 2023 due to the growth of our vacation ownership notes receivable portfolio.
Repurchase of Common Stock
The following table summarizes share repurchase activity under our Share Repurchase Program:
($ in millions, except per share amounts)
Number of Shares Repurchased
Cost Basis of Shares Repurchased
Average Price
Paid per Share
As of December 31, 2024
For the year ended December 31, 2025
As of December 31, 2025
See Footnote 16 “Stockholders' Equity” to our Financial Statements for further information related to our current share repurchase program.
Payment of Dividends to Common Stockholders
We distributed cash dividends to holders of our common stock during the year ended December 31, 2025 as follows:
Declaration Date
Stockholder Record Date
Distribution Date
Dividend per Share
December 6, 2024
December 19, 2024
January 3, 2025
February 20, 2025
March 5, 2025
March 19, 2025
May 12, 2025
May 23, 2025
June 6, 2025
September 3, 2025
September 17, 2025
October 1, 2025
On December 12, 2025, our Board of Directors declared a quarterly dividend of $0.80 per share that was paid subsequent to the end of 2025, on January 7, 2026, to stockholders of record as of December 24, 2025.
Subsequent to the end of 2025, on February 19, 2026, our Board of Directors declared a quarterly dividend of $0.80 per share to be paid on March 18, 2026 to stockholders of record as of March 4, 2026.
We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to the approval of our Board of Directors, which will depend on our financial condition, results of operations and capital requirements at the time, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all.
Material Cash Requirements
The following table summarizes our future material cash requirements from known contractual or other obligations as of December 31, 2025:
Payments Due by Period
($ in millions)
Total
Less Than 1 Year
1 - 3 Years
3 - 5 Years
More Than 5 Years
Debt (1)
Securitized debt (1)(2)
Purchase obligations (3)
Operating lease obligations (4)
Finance lease obligations (4)
Other long-term obligations
(1) Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
(2) Payments based on estimated timing of cash flow associated with securitized notes receivable.
(3) Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts
reflected herein represent expected funding requirements under such contracts and primarily relate to future purchases of property and vacation ownership units, outsourced services, and arrangements related to information technology, including cloud computing. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.
(4) Includes interest.
In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the owners’ associations, these obligations have minimal impact on our net income or loss and cash flow. These purchase commitments are excluded from the table above.
Supplemental Guarantor Information
The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
The following tables present consolidating financial information as of December 31, 2025, and for the fiscal year ended December 31, 2025, for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVWC, and MVW on a consolidated basis.
Condensed Consolidating Balance Sheet
As of December 31, 2025
Issuers
Senior Notes Guarantors
Non-Guarantor Subsidiaries
Total Eliminations
MVW Consolidated
($ in millions)
MVWC
MORI
Cash and cash equivalents
Restricted cash
Accounts and contracts receivable, net
Vacation ownership notes receivable, net
Inventory
Property and equipment, net
Goodwill
Intangibles, net
Investments in subsidiaries
Other
Total assets
Accounts payable
Advance deposits
Accrued liabilities
Deferred revenue and other
Payroll and benefits liability
Deferred compensation liability
Securitized debt, net
Debt, net
Other
Deferred taxes
MVW stockholders' equity
Noncontrolling interests
Total liabilities and equity
Condensed Consolidating Statement of Income
Issuers
Senior Notes Guarantors
Non-Guarantor Subsidiaries
Total Eliminations
MVW Consolidated
($ in millions)
MVWC
MORI
Revenues
Expenses
Benefit from (provision for) income taxes
Equity in net income (loss) of subsidiaries
Net loss
Net income attributable to noncontrolling interests
Net loss attributable to common stockholders
Recent Accounting Pronouncements
See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information about new accounting standards and the future adoption of such standards.
Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if: (1) it requires assumptions to be made that are uncertain at the time the estimate is made; and (2) changes in the estimate, or different estimates that could have been selected, could have a material effect on our results of operations or financial condition.
While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly. Additionally, changes in our assumptions, estimates or assessments as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations.
See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for further information related to our critical accounting policies and estimates, which are as follows:
• Revenue recognition , including how we recognize revenue under ASC Topic 606 “ Revenue from Contracts with Customers ” for the sale of vacation ownership products, including our estimates of the sales reserve (variable consideration). Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenue. See Footnote 5 “Vacation Ownership Notes Receivable” to our Financial Statements for further information on our assessments of our originated vacation ownership notes receivable reserve.
• Inventories and cost of vacation ownership products, which require estimation of future revenues (including pricing assumptions) and product costs to apply a relative sales value method specific to the vacation ownership industry and how we evaluate the fair value of our vacation ownership inventory. See Footnote 20 “Restructuring and Impairment” to our Financial Statements for further information.
• Valuation of property and equipmen t, including when we record impairmentlosses. See Footnote 20 “Restructuring and Impairment” to our Financial Statements for further information.
• Valuation of goodwill and other intangible assets, including how we determine the fair value of goodwill and our other intangible assets and reporting units, and how we determine when an impairmentloss should be recorded. See Footnote 10 “Goodwill” and Footnote 11 “Intangible Assets” to our Financial Statements for further information.
• Loss contingencies , including information on how we account for loss contingencies. Accruals for contingent liabilities are recorded when it is probable that a liability has been incurred, or an asset impaired, and the amount of the loss can be reasonably estimated. Liabilities accrued for legal matters require judgments regarding projected outcomes and range of loss based on historical litigation and settlement experience, recommendations of legal counsel and, if applicable, other experts.
• Income taxes , including the accounting related to uncertain tax positions and the determination of valuation allowances on our deferred tax assets. The recognition and measurement of uncertain tax positions involves consideration of the amounts and probabilities of various outcomes that could be realized upon ultimate resolution. Tax valuation allowances are established to reduce deferred tax assets, such as tax loss carryforwards, to net realizable value. Factors considered in estimating net realizable value include historical results by tax jurisdiction, carryforward periods, income tax strategies and forecasted taxable income.
