Travel + Leisure (TNL) Q2 2025 Earnings Call July 23, 2025 08:00 AM ET Company ParticipantsErik Hoag - CFOMichael Brown - CEO, President & DirectorLizzie Dove - VP - Equity ResearchC. Patrick Scholes - Managing Director - Lodging & Leisure Equity ResearchDavid Katz - Managing DirectorBrandt Montour - Director - Equity ResearchConference Call ParticipantsChris Woronka - Research AnalystStephen Grambling - MD & Senior Equity Research AnalystBenjamin Chaiken - Equity AnalystOperatorGreetings, and welcome to th ...

Travel + Leisure (TNL) Q2 2025 Earnings Call July 23, 2025 08:00 AM ET Speaker0Greetings, and welcome to the Travel and Leisure Second Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Eric Hoch, Chief Financial Officer.Please go ahead, sir.Speaker1Thank you, Kevin. Good morni ...

Summary of Marriott Vacations Worldwide (VAC) FY Conference Call Company Overview - **Company**: Marriott Vacations Worldwide (VAC) - **Date of Conference**: June 03, 2025 Key Industry Insights - **Cyclicality of Timeshare Business**: Timeshare purchases are discretionary but viewed as long-term investments in future vacations. Despite macroeconomic volatility, the company reported only a 2% decline in vacation purchase growth (VPG) for first-time buyers and owners, indicating continued consumer interest in long-term vacation investments [2][12] - **Post-COVID Consumer Behavior**: There is a notable shift towards prioritizing experiences over material goods, leading to high occupancy rates of over 90% across vacation ownership resorts [4] Financial Performance and Business Model - **Recurring Revenue**: Approximately 40% of EBITDA is recurring, with growth expected in financing profits and management fees despite higher securitization rates [6] - **Sales and Promotions**: The company has implemented promotional incentives to drive demand, particularly for first-time buyers, resulting in an increase in their mix of first-time buyers compared to competitors [7][8] - **Occupancy Rates**: The company maintains high occupancy rates, with resorts expected to remain over 90% occupied throughout the year [4] Consumer Demographics and Trends - **Target Demographics**: The average household income of customers is around $275,000, with a self-reported net worth of approximately $1 million. About 60% of first-time buyers are from the millennial and Gen X demographics [16][15] - **Product Evolution**: The timeshare product has evolved to include more flexible options, appealing to younger consumers and families, which helps maintain relevance across generations [13][14] Operational Efficiency and Cost Management - **Modernization Initiatives**: The company is targeting an incremental EBITDA of $150 million to $200 million through modernization efforts, with a focus on improving operational efficiency and agility [29] - **Cost of Vacation Ownership Interest (VOI)**: The cost of VOI has been managed through a mix of repurchased inventory and new inventory, with expectations of higher product costs in the future [31][34] Credit and Delinquency Management - **Delinquency Rates**: Delinquency rates have improved due to proactive outreach and technology enhancements, with maintenance fee increases kept to a low 3% for 2025 [38][39] - **FICO Scores**: The average FICO score for originations is approximately 735, reflecting a focus on higher-quality credit risk since the acquisition of ILG in 2018 [42] Capital Allocation and Free Cash Flow - **Free Cash Flow Conversion**: Historically, free cash flow conversion has been above 50%, but is expected to be in the low 40% range this year due to higher inventory spending [49] - **Asset Sales**: The company is actively selling non-core assets, such as the Sheraton Kauai Hotel, to focus on its core business and improve cash flow [55] Conclusion Marriott Vacations Worldwide is navigating a complex market environment with a focus on enhancing customer experience, maintaining high occupancy rates, and improving operational efficiencies. The company is well-positioned to leverage its strong brand and evolving product offerings to attract a diverse customer base while managing costs and improving financial performance.