NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except share and per share amounts)
(Unaudited)
1. Background and Basis of Presentation
Background
Travel + Leisure Co. and its subsidiaries (collectively, “Travel + Leisure Co.,” or the “Company”) is a global provider of hospitality services and travel products. The Company has two reportable segments: Vacation Ownership and Travel and Membership.
The Vacation Ownership segment develops, markets, and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts. This segment is wholly comprised of the Vacation Ownership business line.
The Travel and Membership segment operates a variety of travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment is comprised of the Exchange and Travel Club business lines.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q include the accounts and transactions of Travel + Leisure Co., as well as the entities in which Travel + Leisure Co. directly or indirectly has a controlling financial interest. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements.
The Company presents an unclassified balance sheet which conforms to that of the Company’s peers and industry practice.
In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates and assumptions. In management’s opinion, the Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s 2025 Consolidated Financial Statements included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 18, 2026.
2. New Accounting Pronouncements
Recently Issued Accounting Pronouncements
Disclosure Improvements. In October 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to modify the disclosure and presentation requirements of a variety of topics in the Codification. Among other updates, amendments specific to the Company include updates to disclosure requirements related to derivative instruments, diluted earnings per share, commitments, and amounts and terms of unused lines of credit. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor updates to the regulations as they become effective and adjust its disclosures as needed in future filings.
Disaggregation of Disclosures About Income Statement Expenses. In November 2024, the FASB issued guidance which will require public companies to provide disclosure in the footnotes of certain expense captions into specified categories. The objective of the standard is to provide more detailed information about the types of expenses presented within expense captions commonly used in the statements of income. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.
Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. In May 2025, the FASB issued guidance to revise current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a
business. The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. Previously, the accounting acquirer in such transactions was always the primary beneficiary. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.
Software costs. In September 2025, the FASB issued new guidance amending the accounting for and disclosure of software costs. The amendments update the framework for recognizing and disclosing costs related to software developed for internal use, including costs associated with website development. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of this guidance on its financial statements and related disclosures.
Hedge accounting. In November 2025, the FASB issued new guidance that updates several aspects of hedge accounting under ASC 815. The amendments address how companies assess risk for cash flow hedges, account for hedges of forecasted interest payments on choose-your-rate debt, apply hedge accounting to nonfinancial forecasted transactions, use net written options as hedging instruments, and manage dual hedges involving foreign-currency-denominated debt. These changes are designed to better align hedge accounting practices with the actual risk management strategies used by companies. The guidance is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods therein. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statements and related disclosures.
Interim accounting. In December 2025, the FASB issued new guidance which updates ASC 270 to make interim reporting requirements clearer and easier to follow. The guidance clarifies the required format and content of interim reports, provides comprehensive lists of interim disclosures required by other Codification topics, and establishes that entities must disclose any material events occurring after the last annual reporting period. These changes are intended to improve clarity and consistency, without fundamentally altering the nature or scope of interim reporting requirements. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statements and related disclosures.
Codification Improvements. In December 2025, the FASB issued new guidance related to its continuing agenda to make improvements to the Codification. The purpose of the new guidance is to cover “a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements.” The guidance is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statements and related disclosures.
Recently Adopted Accounting Pronouncements
Financial Instruments—Credit Losses. In July 2025, the FASB issued new guidance amending the manner in which credit losses for accounts receivable and contract assets are determined. For public companies, the guidance introduces a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets. Under this expedient, entities may assume that conditions existing at the balance sheet date will persist for the remaining life of the asset, which simplifies the estimation process by eliminating the need to forecast future economic conditions for these short-term assets. This guidance became effective for fiscal years beginning after December 15, 2025. This guidance did not have a material impact to the Company's financial statements.
3. Revenue Recognition
Vacation Ownership
The Company develops, markets, and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts. The Company’s sales of VOIs are either cash sales or developer-financed sales. Developer-financed sales are typically collateralized by the underlying VOI. Revenue is recognized on VOI sales upon transfer of control, which is defined as the point in time when a binding sales contract has been executed, the financing contract has been executed for the remaining transaction price, the statutory rescission period has expired, and the transaction price has been deemed to be collectible.
For developer-financed sales, the Company reduces the VOI sales transaction price by an estimate of uncollectible consideration at the time of the sale. The Company’s estimates of uncollectible amounts are based largely on the results of the Company’s static pool analysis which relies on historical payment data by customer class.
In connection with entering into a VOI sale, the Company may provide its customers with certain non-cash incentives, such as credits for future stays at its resorts. For those VOI sales, the Company allocates the sales price between the VOI sale and the non-cash incentive based upon the relative standalone selling price of the performance obligations within the contract. Non-cash incentives generally have expiration periods of two years or less and are recognized at a point in time upon transfer of control.
The Company provides day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs. These services may also include reservation and resort renovation activities. The initial terms of such property management agreements are generally between three to five years; however, the vast majority of the agreements provide a mechanism for an automatic one year renewal upon expiration of the terms. The Company’s management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests. The Company receives fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities). Fees for property management services typically approximate 10% of budgeted operating expenses. The Company is entitled to consideration for reimbursement of costs incurred on behalf of the property owners’ association in providing management services (“reimbursable revenue”). These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where the Company is the employer and are reflected as a component of Operating expenses on the Condensed Consolidated Statements of Income. The Company reduces its management fee revenue for amounts it has paid to the property owners’ association that reflect maintenance fees for VOIs for which it retains ownership, as the Company has concluded that such payments are consideration payable to a customer.
Property management fee revenues and reimbursable revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Condensed Consolidated Statements of Income. Property management fee and reimbursable revenues were (in millions):
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
| 2026 | | 2025 | | | | |
| Management fee revenues | $ | 116 | | | $ | 114 | | | | | |
| Reimbursable revenues | 107 | | | 109 | | | | | |
| Property management fees and reimbursable revenues | $ | 223 | | | $ | 223 | | | | | |
One of the associations that the Company manages paid the Travel and Membership segment $9 million for exchange services during both the three months ended March 31, 2026 and 2025.
The Company earns revenue from its Wyndham Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders. The primary performance obligation for the program relates to brand performance services. Total contract consideration is estimated and recognized on a straight-line basis over the contract term.
Travel and Membership
Travel and Membership derives a majority of its revenues from membership dues and fees for facilitating members’ trading of their timeshare intervals. Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf. As a provider of vacation exchange services, the Company enters into affiliation agreements with developers of vacation ownership properties to allow owners of VOIs to trade their intervals for intervals at other properties affiliated with the Company’s vacation exchange network and, for some members, for other leisure-related services and products. The Company recognizes revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services. Estimated net contract consideration payable by affiliated clubs for memberships is recognized as revenue over the term of the contract with the affiliated club in proportion to the estimated average monthly member count. Such estimates are adjusted periodically for changes in actual and forecasted member activity. For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with the Company’s vacation exchange networks and, for certain members, for other leisure-related services and products. The Company also derives revenue from facilitating bookings of travel accommodations that were acquired from various sources. Revenue is recognized when these transactions have been confirmed, net of expected cancellations.
The Company’s vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs, and additional exchange-related products that provide members with the ability to protect trading
power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Revenues from other vacation exchange related product fees are deferred and recognized upon the occurrence of a future exchange, event, or other related transaction.
The Company earns revenue from its RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders. The primary performance obligation for the program relates to brand performance services. Total contract consideration is estimated and recognized on a straight-line basis over the contract term.
Other Items
The Company records property management service revenues for its Vacation Ownership segment and RCI Elite Rewards revenues for its Travel and Membership segment gross as a principal.
Contract Liabilities
Contract liabilities generally represent payments or consideration received in advance for goods or services that the Company has not yet transferred to the customer. Contract liabilities consisted of (in millions): | | | | | | | | | | | |
| March 31,
2026 | | December 31, 2025 |
| Deferred subscription revenue | $ | 151 | | | $ | 147 | |
| Deferred VOI trial package revenue | 137 | | | 138 | |
| Deferred VOI incentive revenue | 88 | | | 90 | |
Deferred exchange-related revenue (a) | 58 | | | 57 | |
| Deferred co-branded credit card programs revenue | 34 | | | 36 | |
| Deferred other revenue | 11 | | | 1 | |
| Total | $ | 479 | | | $ | 469 | |
(a)Includes contractual liabilities to accommodate members for cancellations initiated by the Company due to unexpected events. As of both March 31, 2026 and December 31, 2025, there were $1 million of these contractual liabilities included within Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.
In the Company’s Vacation Ownership segment, deferred VOI trial package revenue represents consideration received in advance for a trial VOI, which allows customers to utilize a vacation package typically within three years of purchase, but may extend longer for certain programs. Deferred VOI incentive revenue represents payments received in advance for additional travel-related services and products at the time of a VOI sale. Revenue is recognized when a customer utilizes the additional services and products, which is typically within two years of the VOI sale, but may extend longer for certain programs. Deferred revenue also includes VOI sales for which the Company has not met all required performance obligations.
Within the Company’s Travel and Membership segment, deferred subscription revenue represents billings and payments received in advance from members and affiliated clubs for memberships in the Company’s travel programs which are recognized in future periods. Deferred exchange-related revenue primarily represents payments received in advance from members to book vacation exchanges which are recognized upon the future confirmed transaction. Deferred revenue also includes other leisure-related service and product revenues which are recognized as customers utilize the associated benefits.
Deferred co-branded credit card programs revenue represents the advance payments received under these programs for the Vacation Ownership and Travel and Membership segments, which are recognized as the brand performance service obligations are satisfied.
Changes in contract liabilities for the periods presented were as follows (in millions): | | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2026 | | 2025 |
| Beginning balance | $ | 469 | | | $ | 459 | |
| Additions | 93 | | | 110 | |
| Revenue recognized | (83) | | | (82) | |
| | | |
| Ending balance | $ | 479 | | | $ | 487 | |
Capitalized Contract Costs
The Vacation Ownership segment incurs certain direct and incremental selling costs in connection with VOI trial package and incentive revenues. Such costs are capitalized and subsequently recognized over the utilization period when usage or expiration occurs, which is typically within three years from the date of sale. As of March 31, 2026 and December 31, 2025, these capitalized costs were $50 million and are included within Other assets on the Condensed Consolidated Balance Sheets.
The Travel and Membership segment incurs certain direct and incremental selling costs to obtain contracts with customers in connection with subscription revenues and exchange–related revenues. Such costs, which are primarily comprised of commissions paid to internal and external parties and credit card processing fees, are deferred at the inception of the contract and recognized when the benefit is transferred to the customer. As of March 31, 2026, the capitalized costs were $21 million, of which $8 million was included in Prepaid expenses and $13 million was included in Other assets on the Condensed Consolidated Balance Sheets. As of December 31, 2025, these capitalized costs were $16 million, of which $9 million was included in Prepaid expenses and $7 million was included in Other assets on the Condensed Consolidated Balance Sheets.
Practical Expedients
The Company has not adjusted the consideration for the effects of a significant financing component if it expected, at contract inception, that the period between when the Company will satisfy the performance obligation and when the customer will pay for that good or service will be one year or less.
Performance Obligations
A performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. The consideration received from a customer is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied.
The following table summarizes the Company’s remaining performance obligations for the 12-month periods set forth below (in millions):
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| 4/1/2026 - 3/31/2027 | | 4/1/2027 - 3/31/2028 | | 4/1/2028 - 3/31/2029 | | Thereafter | | Total |
| Subscription revenue | $ | 86 | | | $ | 32 | | | $ | 15 | | | $ | 18 | | | $ | 151 | |
| VOI trial package revenue | 125 | | | 4 | | | 4 | | | 4 | | | 137 | |
| VOI incentive revenue | 88 | | | — | | | — | | | — | | | 88 | |
| Exchange-related revenue | 55 | | | 2 | | | 1 | | | — | | | 58 | |
| Co-branded credit card programs revenue | 4 | | | 4 | | | 4 | | | 22 | | | 34 | |
| Other revenue | 11 | | | — | | | — | | | — | | | 11 | |
| Total | $ | 369 | | | $ | 42 | | | $ | 24 | | | $ | 44 | | | $ | 479 | |
Disaggregation of Net Revenues
The table below presents a disaggregation of the Company’s net revenues from contracts with customers by major services and products for each of the Company’s segments (in millions):
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
| 2026 | | 2025 | | | | |
| Vacation Ownership | | | | | | | |
| Vacation ownership interest sales | $ | 427 | | | $ | 384 | | | | | |
| Property management fees and reimbursable revenues | 223 | | | 223 | | | | | |
| Consumer financing | 113 | | | 112 | | | | | |
| Fee-for-Service commissions | 11 | | | 16 | | | | | |
| Ancillary revenues | 24 | | | 20 | | | | | |
| Total Vacation Ownership | 798 | | | 755 | | | | | |
| | | | | | | |
| Travel and Membership | | | | | | | |
| Transaction revenues | 117 | | | 130 | | | | | |
| Subscription revenues | 42 | | | 43 | | | | | |
| Ancillary revenues | 6 | | | 7 | | | | | |
| Total Travel and Membership | 165 | | | 180 | | | | | |
| | | | | | | |
| Corporate and other | | | | | | | |
| Ancillary revenues | — | | | 1 | | | | | |
| Eliminations | (2) | | | (2) | | | | | |
| Total Corporate and other | (2) | | | (1) | | | | | |
| | | | | | | |
| Net revenues | $ | 961 | | | $ | 934 | | | | | |
4. Earnings Per Share
The computations of basic and diluted earnings per share (“EPS”) are based on Net income attributable to Travel + Leisure Co. shareholders divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding. The following table sets forth the computations of basic and diluted EPS (in millions, except per share data):
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
| 2026 | | 2025 | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income attributable to Travel + Leisure Co. shareholders | $ | 79 | | | $ | 73 | | | | | |
| | | | | | | |
Earnings per share (a) | | | | | | | |
| Basic | $ | 1.25 | | | $ | 1.09 | | | | | |
| Diluted | $ | 1.22 | | | $ | 1.07 | | | | | |
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| Basic weighted average shares outstanding | 62.9 | | | 67.1 | | | | | |
RSUs,(b) PSUs (c) and NQs (d) | 1.5 | | | 1.1 | | | | | |
Diluted weighted average shares outstanding (e) | 64.4 | | | 68.2 | | | | | |
| | | | | | | |
| Dividends: | | | | | | | |
Aggregate dividends paid to shareholders (f) | $ | 41 | | | $ | 41 | | | | | |
(a)Earnings per share amounts are calculated using whole numbers.
(b)Excludes 0.2 million of restricted stock units (“RSUs”) that would have been anti-dilutive to EPS for the three months ended March 31, 2025.
(c)Excludes performance-vested restricted stock units (“PSUs”) of 0.5 million and 0.9 million for the three months ended March 31, 2026 and 2025, as the Company has not met the required performance metrics. These PSUs could potentially dilute EPS in the future.
(d)Excludes 0.1 million of outstanding non-qualified stock options (“NQs”) that would have been anti-dilutive to EPS for the three months ended March 31, 2025.
(e)The dilutive impact of the Company’s potential common stock is computed utilizing the treasury stock method using average market prices during the period.
(f)The Company paid cash dividends of $0.60 and $0.56 per share during the three months ended March 31, 2026 and 2025.
Share Repurchase Program
The following table summarizes stock repurchase activity under the current share repurchase program (in millions):
| | | | | | | | | | | |
| Shares | | Cost |
| As of December 31, 2025 | 138.4 | | | $ | 6,946 | |
| Repurchases | 1.2 | | | 87 | |
| As of March 31, 2026 | 139.6 | | | $ | 7,033 | |
On August 20, 2007, the Company’s Board of Directors (“Board”) authorized a share repurchase program that enabled it to purchase its common stock. As of March 31, 2026, the Board has increased the capacity of the program 11 times, most recently in February 2026 by $750 million, bringing the total authorization under the current program to $7.75 billion. Proceeds received from stock option exercises have increased the repurchase capacity by $115 million since the inception of this program. As of March 31, 2026, the Company had $832 million of remaining availability in its program.
The Company incurred $1 million of excise tax related to share repurchases during both the three months ended March 31, 2026 and 2025, included within Treasury stock on the Condensed Consolidated Balance Sheets.
5. Acquisitions
Other. On February 10, 2025, the Company completed a business acquisition for consideration of $3 million. The fair value of purchase consideration was comprised of $1 million of cash paid at closing and $2 million to be paid in 2027. The acquisition resulted in the recognition of (i) $2 million of definite-lived intangible assets consisting of management agreements, and (ii) $1 million of Property and equipment, net. This business is included within the Vacation Ownership segment.
6. Vacation Ownership Contract Receivables
The Company generates vacation ownership contract receivables (“VOCRs”) by extending financing to the purchasers of its VOIs. Vacation ownership contract receivables, net consisted of the following (in millions):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Vacation ownership contract receivables: | | | |
Securitized (a) | $ | 2,218 | | | $ | 2,281 | |
Non-securitized (b) | 1,037 | | | 1,020 | |
| Vacation ownership contract receivables, gross | 3,255 | | | 3,301 | |
| Less: allowance for loan losses | 646 | | | 663 | |
| Vacation ownership contract receivables, net | $ | 2,609 | | | $ | 2,638 | |
(a)Excludes $19 million of accrued interest on VOCRs as of both March 31, 2026 and December 31, 2025, which are included in Trade receivables, net on the Condensed Consolidated Balance Sheets.
(b)Excludes $9 million and $8 million of accrued interest on VOCRs as of March 31, 2026 and December 31, 2025, which are included in Trade receivables, net on the Condensed Consolidated Balance Sheets.
During the three months ended March 31, 2026 and 2025, the Company’s securitized VOCRs generated interest income of $80 million and $84 million. Such interest income is included within Consumer financing revenue on the Condensed Consolidated Statements of Income.
During the three months ended March 31, 2026 and 2025, the Company had net VOCR originations of $356 million and $344 million, and received principal collections of $288 million and $292 million. The weighted average interest rate on outstanding VOCRs was 14.6% as of both March 31, 2026 and December 31, 2025.
The Company records the difference between VOCRs and the variable consideration included in the transaction price for the sale of the related VOIs as a provision for loan losses on VOCRs. The activity in the allowance for loan losses on VOCRs was as follows (in millions):
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2026 | | 2025 |
| Allowance for loan losses, beginning balance | $ | 663 | | | $ | 614 | |
Provision for loan losses, net (a) | 100 | | | 91 | |
| Contract receivables write-offs, net | (117) | | | (110) | |
| Allowance for loan losses, ending balance | $ | 646 | | | $ | 595 | |
(a)Recorded as a reduction to Net revenue.
Credit Quality for Financed Receivables and the Allowance for Credit Losses
The basis of the differentiation within the identified class of financed VOI contract receivables is the consumer’s Fair Isaac Corporation (“FICO”) score. A FICO score is a branded version of a consumer credit score widely used within the U.S. by the largest banks and lending institutions. FICO scores range from 300 to 850 and are calculated based on information obtained from one or more of the three major U.S. credit reporting agencies that compile and report on a consumer’s credit history. The Company updates its records for all active VOI contract receivables with a balance due on a rolling monthly basis to ensure that all VOI contract receivables are scored at least every six months. The Company groups all VOI contract receivables into five different categories: FICO scores ranging from 700 to 850, from 600 to 699, below 600, no score (primarily comprised of consumers for whom a score is not readily available, including consumers declining access to FICO scores and non-U.S. residents), and Asia Pacific (comprised of receivables in the Company’s Travel + Leisure Vacation Clubs Asia Pacific business for which scores are not available).
The following table details an aging analysis of financing receivables using the most recently updated FICO scores, based on the policy described above (in millions):
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| As of March 31, 2026 |
| 700+ | | 600-699 | | <600 | | No Score | | Asia Pacific | | Total |
| Current | $ | 1,951 | | | $ | 679 | | | $ | 133 | | | $ | 81 | | | $ | 223 | | | $ | 3,067 | |
| 31 - 60 days | 35 | | | 28 | | | 13 | | | 2 | | | 6 | | | 84 | |
| 61 - 90 days | 23 | | | 20 | | | 10 | | | 2 | | | 3 | | | 58 | |
| 91 - 120 days | 16 | | | 16 | | | 10 | | | 2 | | | 2 | | | 46 | |
| Total | $ | 2,025 | | | $ | 743 | | | $ | 166 | | | $ | 87 | | | $ | 234 | | | $ | 3,255 | |
| | | | | | | | | | | |
| As of December 31, 2025 |
| 700+ | | 600-699 | | <600 | | No Score | | Asia Pacific | | Total |
| Current | $ | 2,014 | | | $ | 680 | | | $ | 133 | | | $ | 77 | | | $ | 213 | | | $ | 3,117 | |
| 31 - 60 days | 31 | | | 29 | | | 13 | | | 2 | | | 4 | | | 79 | |
| 61 - 90 days | 22 | | | 18 | | | 11 | | | 2 | | | 3 | | | 56 | |
| 91 - 120 days | 15 | | | 17 | | | 12 | | | 2 | | | 3 | | | 49 | |
| Total | $ | 2,082 | | | $ | 744 | | | $ | 169 | | | $ | 83 | | | $ | 223 | | | $ | 3,301 | |
The Company ceases to accrue interest on VOI contract receivables once the contract has remained delinquent for greater than 90 days and reverses all of the associated accrued interest recognized to date against interest income included within Consumer financing revenue on the Condensed Consolidated Statements of Income. At greater than 120 days, the VOI contract receivable is written off to the allowance for loan losses. In accordance with its policy, the Company assesses the allowance for loan losses using a static pool methodology and thus does not assess individual loans for impairment.
The following table details the year of origination of financing receivables using the most recently updated FICO scores, based on the policy described above (in millions):
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| As of March 31, 2026 |
| 700+ | | 600-699 | | <600 | | No Score | | Asia Pacific | | Total |
| 2026 | $ | 273 | | | $ | 55 | | | $ | — | | | $ | 15 | | | $ | 47 | | | $ | 390 | |
| 2025 | 789 | | | 263 | | | 36 | | | 26 | | | 103 | | | 1,217 | |
| 2024 | 381 | | | 148 | | | 41 | | | 16 | | | 40 | | | 626 | |
| 2023 | 226 | | | 104 | | | 33 | | | 10 | | | 17 | | | 390 | |
| 2022 | 148 | | | 74 | | | 22 | | | 5 | | | 7 | | | 256 | |
| Prior | 208 | | | 99 | | | 34 | | | 15 | | | 20 | | | 376 | |
| Total | $ | 2,025 | | | $ | 743 | | | $ | 166 | | | $ | 87 | | | $ | 234 | | | $ | 3,255 | |
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| As of December 31, 2025 |
| 700+ | | 600-699 | | <600 | | No Score | | Asia Pacific | | Total |
| 2025 | $ | 1,001 | | | $ | 266 | | | $ | 24 | | | $ | 30 | | | $ | 131 | | | $ | 1,452 | |
| 2024 | 431 | | | 169 | | | 45 | | | 18 | | | 45 | | | 708 | |
| 2023 | 251 | | | 116 | | | 36 | | | 12 | | | 18 | | | 433 | |
| 2022 | 163 | | | 81 | | | 26 | | | 6 | | | 7 | | | 283 | |
| 2021 | 73 | | | 36 | | | 13 | | | 2 | | | 5 | | | 129 | |
| Prior | 163 | | | 76 | | | 25 | | | 15 | | | 17 | | | 296 | |
| Total | $ | 2,082 | | | $ | 744 | | | $ | 169 | | | $ | 83 | | | $ | 223 | | | $ | 3,301 | |
The table below represents the gross write-offs of financing receivables by year of origination (in millions):
| | | | | |
| Three Months Ended |
| March 31, 2026 |
| 2026 | $ | — | |
| 2025 | 55 | |
| 2024 | 32 | |
| 2023 | 16 | |
| 2022 | 9 | |
| Prior | 8 | |
| Total | $ | 120 | |
7. Inventory
Inventory consisted of the following (in millions):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Completed VOI inventory | $ | 918 | | | $ | 857 | |
| Estimated VOI recoveries | 218 | | | 222 | |
| Inventory subject to financing arrangement | 27 | | | 26 | |
| Land held for VOI development | 10 | | | 10 | |
| VOI construction in process | 7 | | | 9 | |
| Vacation exchange credits and other | 3 | | | 4 | |
| Total inventory | $ | 1,183 | | | $ | 1,128 | |
As VOI inventory is completed, it may be transferred into property and equipment until such units are registered and made available for sale. Once registered and available for sale, the units are then transferred back into completed inventory. There was no net impact of transfers between VOI inventory and property and equipment during the three months ended March 31, 2026 and there were $1 million of net transfers of VOI inventory to property and equipment during the three months ended March 31, 2025.
In connection with the resort optimization initiative discussed in Note 20—Restructuring, during the first quarter of 2026 the Vacation Ownership segment transferred $5 million of inventory to assets held-for-sale bringing the total assets held-for-sale related to this initiative to $21 million as of March 31, 2026. This balance is included within Other assets on the Condensed Consolidated Balance Sheets.
During 2025, the Company entered into an agreement to sell real property located in Tuscaloosa, Alabama, associated with Sports Illustrated Resorts, to a third-party developer consisting of inventory, in exchange for cash consideration. Under the agreement, the Company could be obligated to repurchase the property should certain future events not occur. As a result, $27 million of vacation ownership inventory remained on the balance sheet and the $29 million in proceeds and accrued interest were recorded as an inventory financing obligation, included within Accrued and other liabilities on the Condensed Consolidated Balance Sheets. The Company recognized no gain or loss on this transaction.
Inventory Obligations
The Company has entered into inventory sale transactions with third-party developers for which the Company has conditional rights and obligations to repurchase the completed properties from the developers subject to the properties conforming to the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party. Under the sale of real estate accounting guidance, the conditional rights and obligations of the Company constitute continuing involvement and thus the Company was unable to account for these transactions as a sale.
The following table summarizes the activity related to the Company's inventory obligations (in millions):
| | | | | | | | | |
| | | | | Total (a) |
| December 31, 2025 | | | | | $ | 2 | |
| Purchases | | | | | 93 | |
| Payments | | | | | (94) | |
| March 31, 2026 | | | | | $ | 1 | |
| | | | | |
| December 31, 2024 | | | | | $ | 7 | |
| Purchases | | | | | 22 | |
| Payments | | | | | (22) | |
| March 31, 2025 | | | | | $ | 7 | |
(a)Included in Accounts payable on the Condensed Consolidated Balance Sheets.
The Company has committed to purchase completed properties from third-party developers subject to the properties meeting the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party. The third-party developers are VIEs for which the Company is not the primary beneficiary. Accordingly, the Company does not consolidate the VIEs. The maximum potential future payments that the Company could be required to make under these commitments was $180 million as of March 31, 2026.
8. Property and Equipment
Property and equipment, net consisted of the following (in millions):
| | | | | | | | | | | |
| March 31,
2026 | | December 31, 2025 |
| Capitalized software | $ | 863 | | | $ | 854 | |
Building and leasehold improvements (a) | 565 | | | 564 | |
| Furniture, fixtures and equipment | 120 | | | 120 | |
Finance lease assets | 60 | | | 59 | |
| Land | 20 | | | 20 | |
| Construction in progress | 19 | | | 9 | |
| Total property and equipment | 1,647 | | | 1,626 | |
| Less: accumulated depreciation and amortization | 1,124 | | | 1,095 | |
| Property and equipment, net | $ | 523 | | | $ | 531 | |
(a)Includes $118 million and $119 million of unregistered VOI inventory as of March 31, 2026 and December 31, 2025.
9. Debt
The Company’s indebtedness consisted of the following (in millions):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
Non-recourse vacation ownership debt: (a) | | | |
Term notes (b) | $ | 1,736 | | | $ | 1,690 | |
USD bank conduit facility (due August 2027) (c) | 250 | | | 318 | |
AUD/NZD bank conduit facility (due December 2026) (d) | 120 | | | 116 | |
| Total | $ | 2,106 | | | $ | 2,124 | |
| | | |
Debt: (e) | | | |
$1.0 billion secured revolving credit facility (due June 2030) (f) | $ | 240 | | | $ | 63 | |
Secured term loan B (due December 2029) (g) | 852 | | | 854 | |
$650 million 6.625% secured notes (due July 2026) | 649 | | | 649 | |
$400 million 6.00% secured notes (due April 2027) (h) | 401 | | | 402 | |
$650 million 4.50% secured notes (due December 2029) | 646 | | | 646 | |
$350 million 4.625% secured notes (due March 2030) | 348 | | | 348 | |
$500 million 6.125% secured notes (due September 2033) | 494 | | | 494 | |
| Finance leases | 18 | | | 18 | |
| Total | $ | 3,648 | | | $ | 3,474 | |
(a)Represents non-recourse debt that is securitized through bankruptcy-remote special purpose entities, the creditors of which have no recourse to the Company for principal and interest. These outstanding borrowings (which legally are not liabilities of the Company) are collateralized by $2.37 billion and $2.40 billion of underlying gross VOCRs and related assets (which legally are not assets of the Company) as of March 31, 2026 and December 31, 2025.
(b)The carrying amounts of the term notes are net of deferred financing costs of $24 million and $23 million as of March 31, 2026 and December 31, 2025.
(c)The Company has a borrowing capacity of $600 million under the USD bank conduit facility through August 2027. Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than September 2028.
(d)The Company has a borrowing capacity of 200 million Australian dollars (“AUD”) and 25 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through December 2026. Borrowings under this facility are required to be repaid no later than January 2029.
(e)The carrying amounts of the secured notes and term loan are net of unamortized discounts of $10 million and $11 million as of March 31, 2026 and December 31, 2025, and net of unamortized debt financing costs of $15 million and $16 million as of March 31, 2026 and December 31, 2025.
(f)The weighted average effective interest rate on facility borrowings was 5.60% and 6.52% for the three months ended March 31, 2026 and year-ended December 31, 2025.
(g)The weighted average effective interest rate on facility borrowings was 5.71% and 6.86% for the three months ended March 31, 2026 and year-ended December 31, 2025.
(h)Includes $2 million of unamortized gains from the settlement of a derivative as of both March 31, 2026 and December 31, 2025.
Sierra Timeshare 2026-1 Receivables Funding LLC
On March 26, 2026, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2026-1 Receivables Funding LLC, with an initial principal amount of $325 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 5.11%. The advance rate for this transaction was 98%.
Maturities and Capacity
The Company’s outstanding indebtedness as of March 31, 2026, matures as follows (in millions):
| | | | | | | | | | | | | | | | | |
| Non-recourse Vacation Ownership Debt | | Debt | | Total |
| Within 1 year | $ | 239 | | | $ | 667 | | | $ | 906 | |
| Between 1 and 2 years | 241 | | | 415 | | | 656 | |
| Between 2 and 3 years | 374 | | | 11 | | | 385 | |
| Between 3 and 4 years | 192 | | | 1,820 | | | 2,012 | |
| Between 4 and 5 years | 208 | | | 240 | | | 448 | |
| Thereafter | 852 | | | 495 | | | 1,347 | |
| $ | 2,106 | | | $ | 3,648 | | | $ | 5,754 | |
Required principal payments on the non-recourse vacation ownership debt are based on the contractual repayment terms of the underlying VOCRs. Actual maturities may differ as a result of prepayments by the VOCR obligors.
As of March 31, 2026, the available capacities under the Company’s borrowing arrangements were as follows (in millions):
| | | | | | | | | | | |
| Non-recourse Conduit Facilities (a) | | Revolving Credit Facilities (b) |
| Total capacity | $ | 752 | | | $ | 1,000 | |
| Less: outstanding borrowings | 370 | | | 240 | |
| Less: letters of credit | — | | | 1 | |
| Available capacity | $ | 382 | | | $ | 759 | |
(a)Consists of the Company’s USD bank conduit facility and AUD/NZD bank conduit facility. The capacities of these facilities are subject to the Company’s ability to provide additional assets to collateralize additional non-recourse borrowings.
(b)Consists of the Company’s $1.0 billion secured revolving credit facility.
Debt Covenants
The revolving credit facility and term loan B facility are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement. The financial ratio covenants consist of a minimum interest coverage ratio of 2.00 to 1.0 as of the measurement date and a maximum first lien leverage ratio of 4.25 to 1.0 as of the measurement date. The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date. The first lien leverage ratio is calculated by dividing consolidated first lien debt (as defined in the credit agreement) as of the measurement date by consolidated EBITDA (as defined in the credit agreement) as measured on a trailing 12-month basis preceding the measurement date.
As of March 31, 2026, the Company’s interest coverage ratio was 5.06 to 1.0 and the first lien leverage ratio was 3.16 to 1.0. These ratios do not include interest expense or indebtedness related to any qualified securitization financing (as defined in the credit agreement). As of March 31, 2026, the Company was in compliance with the financial covenants described above.
Each of the Company’s non-recourse securitized term notes and bank conduit facilities contain various triggers relating to the performance of the applicable loan pools. If the VOCR pool that collateralizes one of the Company’s securitization notes fails to perform within the parameters established by the contractual triggers (such as higher default or delinquency rates), there are provisions pursuant to which the cash flows for that pool will be maintained in the securitization as extra collateral for the note holders or applied to accelerate the repayment of outstanding principal to the note holders. As of March 31, 2026, all of the Company’s securitized loan pools were in compliance with applicable contractual triggers.
Interest Expense
The Company incurred interest expense of $56 million and $57 million during the three months ended March 31, 2026 and 2025, excluding interest expense associated with non-recourse vacation ownership debt. These amounts include offsets of less than $1 million of capitalized interest during each period. Cash paid related to such interest was $66 million and $54 million for the three months ended March 31, 2026 and 2025.
Interest expense incurred in connection with the Company’s non-recourse vacation ownership debt was $33 million and $34 million during the three months ended March 31, 2026 and 2025. These amounts are included within Consumer financing interest on the Condensed Consolidated Statements of Income. Cash paid related to such interest was $26 million and $28 million for the three months ended March 31, 2026 and 2025.
10. Variable Interest Entities
The Company analyzes its variable interests, including loans, guarantees, interests in special purpose entities (“SPEs”), and equity investments, to determine if an entity in which the Company has a variable interest is a VIE. If the entity is deemed to be a VIE, the Company consolidates those VIEs for which the Company is the primary beneficiary.
Vacation Ownership Contract Receivables Securitizations
The Company pools qualifying VOCRs and sells them to bankruptcy-remote entities. VOCRs qualify for securitization based primarily on the credit strength of the VOI purchaser to whom financing has been extended. VOCRs are securitized through bankruptcy-remote SPEs that are consolidated within the Company’s Condensed Consolidated Financial Statements. As a result, the Company does not recognize gains or losses resulting from these securitizations at the time of sale to the SPEs. Interest income is recognized when earned over the contractual life of the VOCRs. The Company services the securitized VOCRs pursuant to servicing agreements negotiated on an arm’s-length basis based on market conditions. The activities of these SPEs are limited to (i) purchasing VOCRs from the Company’s vacation ownership subsidiaries, (ii) issuing debt securities and/or borrowing under a conduit facility to fund such purchases, and (iii) entering into derivatives to hedge interest rate exposure. The bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to creditors of the Company and legally are not assets of the Company. Additionally, the non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.
The assets and liabilities of these vacation ownership SPEs are as follows (in millions):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
Securitized contract receivables, gross (a) | $ | 2,218 | | | $ | 2,281 | |
Securitized restricted cash (b) | 115 | | | 87 | |
Interest receivables on securitized contract receivables (c) | 19 | | | 19 | |
Other assets (d) | 13 | | | 8 | |
| Total SPE assets | 2,365 | | | 2,395 | |
Non-recourse term notes (e) (f) | 1,736 | | | 1,690 | |
Non-recourse conduit facilities (e) | 370 | | | 434 | |
Other liabilities (g) | 2 | | | 1 | |
| Total SPE liabilities | 2,108 | | | 2,125 | |
| SPE assets in excess of SPE liabilities | $ | 257 | | | $ | 270 | |
(a)Included in Vacation ownership contract receivables, net on the Condensed Consolidated Balance Sheets.
(b)Included in Restricted cash on the Condensed Consolidated Balance Sheets.
(c)Included in Trade receivables, net on the Condensed Consolidated Balance Sheets.
(d)Primarily includes deferred financing costs for the bank conduit facilities and a security investment asset, which are included in Other assets on the Condensed Consolidated Balance Sheets.
(e)Included in Non-recourse vacation ownership debt on the Condensed Consolidated Balance Sheets.
(f)Includes deferred financing costs of $24 million and $23 million as of March 31, 2026 and December 31, 2025, related to non-recourse debt.
(g)Primarily includes accrued interest on non-recourse debt, which is included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.
In addition, the Company has VOCRs that have not been securitized through bankruptcy-remote SPEs. Such gross receivables were $1.04 billion and $1.02 billion as of March 31, 2026 and December 31, 2025.
A summary of total vacation ownership receivables and other securitized assets, net of securitized liabilities and the allowance for loan losses, is as follows (in millions):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| SPE assets in excess of SPE liabilities | $ | 257 | | | $ | 270 | |
| Non-securitized contract receivables | 1,037 | | | 1,020 | |
| Less: allowance for loan losses | 646 | | | 663 | |
| Total, net | $ | 648 | | | $ | 627 | |
11. Fair Value
The Company measures its financial assets and liabilities at fair value on a recurring basis and utilizes the fair value hierarchy to determine such fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable.
Level 3: Unobservable inputs used when little or no market data is available.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input (closest to Level 3) that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The Company’s derivative instruments currently consist of foreign exchange forward contracts and interest rate caps.
As of March 31, 2026, the Company had foreign exchange contracts resulting in less than $1 million of assets which are included within Other assets and $1 million of liabilities which are included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets. On a recurring basis, such assets and liabilities are remeasured at estimated fair value (all of which are Level 2) and thus are equal to the carrying value.
The impact of interest rate caps was immaterial as of both March 31, 2026 and 2025.
For assets and liabilities that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using other significant observable inputs are valued by reference to similar assets and liabilities. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets and liabilities in active markets. For assets and liabilities that are measured using significant unobservable inputs, fair value is primarily derived using a fair value model, such as a discounted cash flow model.
The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, accounts payable, and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities.
The carrying amounts and estimated fair values of all other financial instruments were as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2026 | | December 31, 2025 |
| Carrying
Amount | | Estimated Fair Value | | Carrying
Amount | | Estimated Fair Value |
| Assets | | | | | | | |
| Vacation ownership contract receivables, net (Level 3) | $ | 2,609 | | | $ | 2,828 | | | $ | 2,638 | | | $ | 2,866 | |
| Liabilities | | | | | | | |
| Debt (Level 2) | $ | 5,754 | | | $ | 5,714 | | | $ | 5,598 | | | $ | 5,612 | |
The Company estimates the fair value of its VOCRs using a discounted cash flow model which it believes is comparable to the model that an independent third-party would use in the current market. The model uses Level 3 inputs consisting of default rates, prepayment rates, coupon rates, and loan terms for the contract receivables portfolio as key drivers of risk and relative value that, when applied in combination with pricing parameters, determines the fair value of the underlying contract receivables.
The Company estimates the fair value of its non-recourse vacation ownership debt by obtaining Level 2 inputs comprised of indicative bids from investment banks that actively issue and facilitate the secondary market for timeshare securities. The Company estimates the fair value of its debt, excluding finance leases, using Level 2 inputs based on indicative bids from investment banks and determines the fair value of its secured notes using quoted market prices (such secured notes are not actively traded).
12. Derivative Instruments and Hedging Activities
Foreign Currency Risk
The Company has foreign currency rate exposure to exchange rate fluctuations worldwide with particular exposure to the Euro, British pound sterling, Australian and Canadian dollars, and Mexican peso. The Company uses freestanding foreign currency forward contracts to manage a portion of its exposure to changes in foreign currency exchange rates associated with its foreign currency denominated receivables, payables, and forecasted earnings of foreign subsidiaries. Additionally, the Company has used foreign currency forward contracts designated as cash flow hedges to manage a portion of its exposure to changes in forecasted foreign currency denominated vendor payments. As of March 31, 2026, the Company had no gains or losses relating to foreign currency contracts designated as cash flow hedges included in Accumulated other comprehensive loss (“AOCL”).
Interest Rate Risk
A portion of the debt used to finance the Company’s operations is exposed to interest rate fluctuations. The Company periodically uses financial derivatives to strategically adjust its mix of fixed to floating rate debt. The derivative instruments utilized include interest rate swaps which convert fixed rate debt into variable rate debt (i.e. fair value hedges), and interest rate caps (undesignated hedges) to manage the overall interest cost. For relationships designated as fair value hedges, changes in fair value of the derivatives are recorded in income, with offsetting adjustments to the carrying amount of the hedged debt. As of March 31, 2026 and 2025, the Company had no interest rate derivatives designated as fair value or cash flow hedges.
There were no losses on derivatives recognized in AOCL for the three months ended March 31, 2026 or 2025.
13. Income Taxes
The Company files U.S. federal and state, and foreign income tax returns in jurisdictions with varying statutes of limitations. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2022 and state and local income tax examinations prior to 2016. In significant foreign jurisdictions, years prior to 2017 are generally no longer subject to income tax examinations by their respective tax authorities.
The Company’s effective tax rate was 26.8% and 28.0% for the three months ended March 31, 2026 and 2025. The effective tax rate for the three months ended March 31, 2026 was primarily impacted by the excess tax benefit from stock-based compensation, which resulted from increases in the Company’s stock price. The effective tax rate for the three months ended March 31, 2025 was primarily impacted by Pillar Two taxes offset by a decrease in state taxes.
The Company made income tax payments, net of tax refunds, of $12 million and $8 million during the three months ended March 31, 2026 and 2025.
14. Leases
The Company leases property and equipment under finance and operating leases for its corporate headquarters, administrative functions, marketing and sales offices, and various other facilities and equipment. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Many of its leases include rental escalation clauses, lease incentives, renewal options and/or termination options that are factored into the Company’s determination of lease payments. The Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company also made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments on a straight-line basis over the lease term in the Condensed Consolidated Statements of Income.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement. The majority of the Company’s leases have remaining lease terms of one to 20 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within one year.
The table below presents information related to the lease costs for finance and operating leases (in millions):
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
| 2026 | | 2025 | | | | |
| Operating lease cost | $ | 5 | | | $ | 5 | | | | | |
| | | | | | | |
| Short-term lease cost | $ | 4 | | | $ | 4 | | | | | |
| | | | | | | |
| Finance lease cost: | | | | | | | |
| Amortization of right-of-use assets | $ | 3 | | | $ | 3 | | | | | |
| | | | | | | |
| Total finance lease cost | $ | 3 | | | $ | 3 | | | | | |
The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheets:
| | | | | | | | | | | | | | | | | |
| Balance Sheet Classification | | March 31,
2026 | | December 31, 2025 |
| Operating leases (in millions): | | | | | |
| Operating lease right-of-use assets | Other assets | | $ | 85 | | | $ | 85 | |
| Operating lease liabilities | Accrued expenses and other liabilities | | $ | 135 | | | $ | 136 | |
| | | | | |
| Finance leases (in millions): | | | | | |
Finance lease assets (a) | Property and equipment, net | | $ | 17 | | | $ | 19 | |
| Finance lease liabilities | Debt | | $ | 18 | | | $ | 18 | |
| | | | | |
| Weighted average remaining lease term: | | | | | |
| Operating leases | | | 9.4 years | | 9.6 years |
| Finance leases | | | 2.4 years | | 2.4 years |
| Weighted average discount rate: | | | | | |
Operating leases (b) | | | 6.3 | % | | 6.3 | % |
| Finance leases | | | 6.0 | % | | 6.1 | % |
(a)Presented net of accumulated depreciation.
(b)Upon adoption of the lease standard, discount rates used for existing leases were established at January 1, 2019.
The table below presents supplemental cash flow information related to leases (in millions):
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2026 | | 2025 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash outflows from operating leases | $ | 7 | | | $ | 8 | |
| | | |
| Financing cash outflows from finance leases | $ | 3 | | | $ | 2 | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | $ | 2 | | | $ | 9 | |
| Finance leases | $ | 1 | | | $ | 1 | |
The table below presents maturities of lease liabilities as of March 31, 2026 (in millions):
| | | | | | | | | | | |
| Operating Leases | | Finance
Leases |
| Nine months ending December 31, 2026 | $ | 20 | | | $ | 7 | |
| 2027 | 25 | | | 7 | |
| 2028 | 22 | | | 4 | |
| 2029 | 20 | | | 1 | |
| 2030 | 13 | | | — | |
| Thereafter | 84 | | | — | |
| Total minimum lease payments | 184 | | | 19 | |
| Amount of lease payments representing interest | (49) | | | (1) | |
| Present value of future minimum lease payments | $ | 135 | | | $ | 18 | |
15. Commitments and Contingencies
The Company is involved in claims, legal and regulatory proceedings, and governmental inquiries related to its business, none of which, in the opinion of management, is expected to have a material effect on the Company’s results of operations or financial condition.
Travel + Leisure Co. Litigation
The Company may be from time to time involved in claims, legal and regulatory proceedings, and governmental inquiries arising in the ordinary course of its business including but not limited to: for its Vacation Ownership business — breach of contract, bad faith, conflict of interest, fraud, consumer protection and other statutory claims by property owners’ associations, owners and prospective owners in connection with the sale or use of VOIs or land, or the management of vacation ownership resorts; construction defect claims relating to vacation ownership units or resorts or in relation to guest reservations and bookings; and negligence, breach of contract, fraud, consumer protection and other statutory claims by guests and other consumers for alleged injuries sustained at or acts or occurrences related to vacation ownership units or resorts or in relation to guest reservations and bookings; for its Travel and Membership business — breach of contract, fraud and bad faith claims by affiliates and customers in connection with their respective agreements, negligence, breach of contract, fraud, consumer protection and other statutory claims asserted by members, guests and other consumers for alleged injuries sustained at or acts or occurrences related to affiliated resorts, or in relation to guest reservations and bookings; and for each of its businesses, bankruptcy proceedings involving efforts to collect receivables from a debtor in bankruptcy, employment matters including but not limited to, claims of wrongful termination, retaliation, discrimination, harassment and wage and hour claims, whistleblower claims, claims of infringement upon third parties’ intellectual property rights, claims relating to information security, privacy and consumer protection, fiduciary duty/trust claims, tax claims, environmental claims, and landlord/tenant disputes.
The Company records an accrual for legal contingencies when it determines, after consultation with outside counsel where appropriate, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the Company’s ability to make a reasonable estimate of loss. The Company reviews these accruals each fiscal quarter and makes revisions based on changes in facts and circumstances including changes to its strategy in dealing with these matters. The Company believes that it has adequately accrued for such matters with reserves of $3 million and $2 million as of March 31, 2026 and December 31, 2025. Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings and/or cash flows in any given reporting period. As of March 31, 2026, it is estimated that the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to $18 million in excess of recorded accruals. Such accruals are exclusive of matters relating to the Company’s separation from the Company’s former parent Avis Budget Group, Inc. (“ABG”), formerly Cendant Corporation, matters relating to the spin-off of Wyndham Hotels & Resorts, Inc. (“Spin-off”), and matters relating to the sale of the vacation rentals businesses, which are discussed in Note 21—Transactions with Former Parent and Former Subsidiaries. However, the Company does not believe that the impact of such litigation should result in a material liability to the Company in relation to its consolidated financial position and/or liquidity.
For matters deemed reasonably possible, therefore not requiring accrual, the Company believes that such matters will not have a material effect on its results of operations, financial position, or cash flows based on information currently available.
In addition to the items listed above, the Company has reached an agreement in principle with the SEC Staff to settle an inquiry relating to its disclosures regarding certain delinquent and defaulted loans that the Company agreed to rescind in 2019 and 2020. The proposed settlement is subject to approval by the SEC. Until it is approved, there can be no assurance that the matter will ultimately be resolved on terms acceptable to the Company and the SEC. The proposed settlement, which would be entered into on a neither admit nor deny basis, involves non-scienter-based violations of the federal securities laws by the Company and a civil monetary penalty of $975,000. Such amount has been accrued within Accrued expenses and other liabilities on the Condensed Consolidated Balance sheets as of both March 31, 2026 and December 31, 2025.
GUARANTEES/INDEMNIFICATIONS
Standard Guarantees/Indemnifications
In the ordinary course of business, the Company enters into agreements that contain standard guarantees and indemnities whereby the Company indemnifies another party for specified breaches of, or third-party claims relating to, an underlying agreement. Such underlying agreements are typically entered into by one of the Company’s subsidiaries. The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, customer data safeguards, access to credit facilities, derivatives, and issuances of debt securities. Also in the ordinary course of business, the Company provides corporate guarantees for its operating business units relating to merchant credit-card processing for prepaid customer stays and other deposits. While a majority of these guarantees and indemnifications extend only for the duration of the underlying agreement, some survive the expiration of the agreement. The Company is not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases, the Company receives offsetting indemnifications from third-parties and/or maintains insurance coverage that may mitigate any potential payments.
Other Guarantees and Indemnifications
For information on guarantees and indemnifications related to the Company’s former parent and subsidiaries see Note 21—Transactions with Former Parent and Former Subsidiaries.
16. Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows (in millions):
| | | | | | | | | | | | | | | | | | | |
| Pretax | Foreign Currency Translation Adjustments | | | | Defined Benefit Pension Plans | | Accumulated Other Comprehensive Loss |
| Balance, December 31, 2025 | $ | (164) | | | | | $ | 1 | | | $ | (163) | |
Other comprehensive income/(loss) | 4 | | | | | (1) | | | 3 | |
| Balance, March 31, 2026 | $ | (160) | | | | | $ | — | | | $ | (160) | |
| | | | | | | |
| Tax | | | | | | | |
| Balance, December 31, 2025 | $ | 97 | | | | | $ | — | | | $ | 97 | |
Other comprehensive income/(loss) | — | | | | | — | | | — | |
| Balance, March 31, 2026 | $ | 97 | | | | | $ | — | | | $ | 97 | |
| | | | | | | |
| Net of Tax | | | | | | | |
| Balance, December 31, 2025 | $ | (67) | | | | | $ | 1 | | | $ | (66) | |
Other comprehensive income/(loss) | 4 | | | | | (1) | | | 3 | |
| Balance, March 31, 2026 | $ | (63) | | | | | $ | — | | | $ | (63) | |
| | | | | | | | | | | | | | | | | | | |
| Pretax | Foreign Currency Translation Adjustments | | | | Defined Benefit Pension Plans | | Accumulated Other Comprehensive Loss |
| Balance, December 31, 2024 | $ | (210) | | | | | $ | 1 | | | $ | (209) | |
| Other comprehensive income | 12 | | | | | — | | | 12 | |
| Balance, March 31, 2025 | $ | (198) | | | | | $ | 1 | | | $ | (197) | |
| | | | | | | |
| Tax | | | | | | | |
| Balance, December 31, 2024 | $ | 97 | | | | | $ | — | | | $ | 97 | |
| Other comprehensive income | — | | | | | — | | | — | |
| Balance, March 31, 2025 | $ | 97 | | | | | $ | — | | | $ | 97 | |
| | | | | | | |
| Net of Tax | | | | | | | |
| Balance, December 31, 2024 | $ | (113) | | | | | $ | 1 | | | $ | (112) | |
| Other comprehensive income | 12 | | | | | — | | | 12 | |
| Balance, March 31, 2025 | $ | (101) | | | | | $ | 1 | | | $ | (100) | |
Foreign currency translation adjustments exclude income taxes related to investments in foreign subsidiaries where the Company intends to reinvest the undistributed earnings indefinitely in those foreign operations.
The Company's policy for releasing disproportionate income tax effects from AOCL utilizes the aggregate approach.
There were no reclassifications out of AOCL for the three months ended March 31, 2026 or 2025.
17. Stock-Based Compensation
The Company has a stock-based compensation plan available to grant RSUs, PSUs, stock-settled appreciation rights, NQs, and other stock-based awards to key employees, non-employee directors, advisors, and consultants.
Under the Amended and Restated 2006 Equity Incentive Plan, a maximum of 15.7 million shares of common stock may be awarded. As of March 31, 2026, based on the number of awards granted at target performance levels, 9.0 million shares remained available.
Incentive Equity Awards Granted by the Company
During the three months ended March 31, 2026, the Company granted incentive equity awards to key employees and senior officers of $47 million in the form of RSUs and $20 million in the form of PSUs, based on target performance. Of these awards, the majority of RSUs will vest ratably over a period of four years and the majority of the PSUs will cliff vest on the third anniversary of the grant date, contingent upon the Company achieving certain performance metrics, with a maximum vesting of 200%.
During the three months ended March 31, 2025, the Company granted incentive equity awards to key employees and senior officers of $34 million in the form of RSUs and $10 million in the form of PSUs, contingent upon the Company achieving certain performance metrics, with a maximum vesting of 200%.
The activity related to incentive equity awards granted by the Company to key employees and senior officers for the three months ended March 31, 2026, consisted of the following (in millions, except grant prices):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balance, December 31, 2025 | | Granted | | Performance Adjustment (a) | | Vested /Exercised (b) | | Cancelled / Forfeited (c) | | Balance, March 31, 2026 | |
| RSUs | | | | | | | | | | | | | |
| Number of RSUs | | 1.7 | | | 0.7 | | | — | | | (0.6) | | | — | | | 1.8 | | (d) |
| Weighted average grant price | | $ | 49.64 | | | $ | 71.50 | | | $ | — | | | $ | 48.17 | | | $ | — | | | $ | 58.17 | | |
| | | | | | | | | | | | | |
| PSUs | | | | | | | | | | | | | |
| Number of PSUs | | 0.9 | | | 0.3 | | | (0.3) | | | (0.2) | | | — | | | 0.7 | | (e) |
| Weighted average grant price | | $ | 46.08 | | | $ | 71.50 | | | $ | 43.33 | | | $ | 42.18 | | | $ | — | | | $ | 58.64 | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| NQs | | | | | | | | | | | | | |
| Number of NQs | | 0.9 | | | — | | | — | | | (0.1) | | | — | | | 0.8 | | (f) |
| Weighted average grant price | | $ | 43.97 | | | $ | — | | | $ | — | | | $ | 44.38 | | | $ | — | | | $ | 43.93 | | |
(a)Represents a reduction to shares awarded as the Company did not achieve the target performance metrics at the end of the associated performance period.
(b)Upon exercise of NQs and vesting of RSUs and PSUs, the Company issues new shares to participants.
(c)The Company recognizes cancellations and forfeitures as they occur.
(d)Aggregate unrecognized compensation expense related to RSUs was $93 million as of March 31, 2026, which is expected to be recognized over a weighted average period of 3.0 years.
(e)The aggregate unrecognized compensation expense related to PSUs was $42 million as of March 31, 2026, which is expected to be recognized over a weighted average period of 2.4 years.
(f)There were 0.8 million NQs which were exercisable as of March 31, 2026. These exercisable NQs will expire over a weighted average period of 4.0 years and carry a weighted average grant date fair value of $9.10. There was no unrecognized compensation expense for NQs as of March 31, 2026.
The Company did not grant any stock options during the three months ended March 31, 2026 or 2025. The fair value of stock options granted by the Company prior to 2025 was estimated on the date of grant using the Black-Scholes option-pricing model with the relevant weighted average assumptions. Expected volatility was based on both historical and implied volatilities of the Company’s stock and the stock of comparable companies over the estimated expected life for options. The expected life represented the period of time these awards were expected to be outstanding. The risk-free interest rate was based on yields on U.S. Treasury strips with a maturity similar to the estimated expected life of the options. The projected dividend yield was based on the Company’s anticipated annual dividend divided by the price of the Company’s stock on the date of the grant.
The Company received $4 million and $2 million from option exercises during the three months ended March 31, 2026 and 2025. The total intrinsic value of options exercised was $3 million and $1 million during the three months ended March 31, 2026 and 2025. The vest date fair value of shares that vested during the three months ended March 31, 2026 and 2025 was $41 million and $50 million.
Stock-Based Compensation Expense
The Company recorded stock-based compensation expense of $13 million and $14 million during the three months ended March 31, 2026 and 2025 related to incentive equity awards granted to key employees, senior officers, and non-employee directors. During both the three months ended March 31, 2026 and 2025, the Company recognized $4 million of tax benefits associated with stock-based compensation.
The Company paid $16 million and $13 million of taxes for the net share settlement of incentive equity awards that vested during the three months ended March 31, 2026 and 2025. Such amounts are included within Financing activities on the Condensed Consolidated Statements of Cash Flows.
18. Segment Information
The Company has two reportable segments: Vacation Ownership and Travel and Membership. In identifying its reportable segments the Company analyzed the components of each segment, the nature of the segments’ products and services, and
prescribed quantitative thresholds. Based on this analysis the Company aggregates two geographical operating segments within the Vacation Ownership reportable segment and two operating segments within the Travel and Membership reportable segment.
The Vacation Ownership segment develops, markets, and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts. This segment is wholly comprised of the Vacation Ownership business line. The Travel and Membership segment operates a variety of travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment is comprised of the Exchange and Travel Club business lines.
The financial results of these reportable segments are regularly reviewed by the Company’s Chief Executive Officer (“CEO”) to evaluate performance and allocate resources. Since the Company’s CEO makes key operating and resource allocation decisions, the CEO is considered the Company’s chief operating decision maker (“CODM”).
Adjusted EBITDA is the profitability measure utilized by the CODM to assess the performance of the reportable segments through comparisons to budgets, forecasts, prior periods, and trends. This analysis is used to make certain decisions regarding the allocation of capital and personnel to the segments.
Adjusted EBITDA is defined by the Company as net income from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, asset impairments/recoveries and inventory write-downs associated with the Company’s resort optimization initiative, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent. Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) and ABG, and the sale of the vacation rentals businesses. Integration costs represent certain non-recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business. The Company excludes these costs as they do not reflect recurring operating expenses. The Company believes that Adjusted EBITDA is a useful measure of performance for its segments which, when considered with GAAP measures, gives a more complete understanding of its operating performance. The Company’s presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
The following tables present the Company’s segment information (in millions):
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2026 |
| Net revenues | Vacation Ownership | | Travel and Membership | | Total |
| Revenues from external customers | $ | 798 | | (a) | $ | 163 | | | $ | 961 | |
| Intersegment revenues | — | | | 2 | | | 2 | |
| 798 | | | 165 | | | 963 | |
| Reconciliation of revenues | | | | | |
| | | | | |
| Elimination of intersegment revenues | | | | | (2) | |
| Total consolidated revenues | | | | | $ | 961 | |
| | | | | |
| Less: | | | | | |
| Property management expense | 173 | | | — | | (b) | |
Marketing | 108 | | (c) | 9 | | | |
| Commissions | 100 | | | — | | (b) | |
General and administrative (d) | 62 | | | 23 | | | |
| Sales administration | 58 | | | — | | (b) | |
| Consumer financing interest | 33 | | | — | | (b) | |
| Licensing fees | 24 | | | — | | (b) | |
Developer obligations (e) | 18 | | | — | | (b) | |
| Cost of sales | 16 | | (f) | 47 | | | |
Fee-for-Service expenses | 7 | | | — | | (b) | |
| Contact center | — | | (b) | 17 | | | |
| Resort services | — | | (b) | 8 | | | |
Other segment items (g) | 8 | | | 2 | | | |
Reportable segment Adjusted EBITDA | $ | 191 | | | $ | 59 | | | $ | 250 | |
| | | | | |
Other Adjusted EBITDA | | | | | (25) | |
| Adjusted EBITDA | | | | | $ | 225 | |
| | | | | |
| Three Months Ended March 31, 2026 |
| Reconciliation of Adjusted EBITDA | Total |
| Adjusted EBITDA | $ | 225 | |
Inventory write-downs and asset impairments, net (h) | (19) | |
| Stock-based compensation | (13) | |
Other (i) | (5) | |
| |
| |
| |
Restructuring | 2 | |
| Legacy items | 4 | |
| Depreciation and amortization | (32) | |
Interest income | 2 | |
| Interest expense | (56) | |
| Income before income taxes | 108 | |
| Provision for income taxes | (29) | |
| |
| |
| |
| |
| Net income attributable to Travel + Leisure Co. shareholders | $ | 79 | |
(a)Includes $100 million provision for loan losses, net.
(b)Expense category not regularly provided to the CODM for this segment.
(c)Excludes licensing fees which are reported within Marketing on the Condensed Consolidated Statements of Income, as it is separately disclosed.
(d)Excludes stock-based compensation and legacy items which are not included in the determination of Adjusted EBITDA.
(e)Represents maintenance fees incurred by the Company for unsold VOIs, net of monetization.
(f)Represents Cost of vacation ownership interests on the Condensed Consolidated Statements of Income. Excludes $19 million of inventory write-downs and impairments which are not included in the determination of Adjusted EBITDA.
(g)Includes expenses for VOI travel packages, VOI incentives, and professional fees reported within Operating expenses, and other non-operating income/expense items included in the determination of Adjusted EBITDA such as dividend income and asset sales.
(h)Includes $19 million of inventory write-downs and impairments related to the Company’s resort optimization initiative included in Cost of vacation ownership interests on the Condensed Consolidated Statements of Income.
(i)Includes $5 million of resort closure and employee related costs associated with the resort optimization initiative included within Operating expense on the Condensed Consolidated Statements of Income.
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2025 |
| Net revenues | Vacation Ownership | | Travel and Membership | | Total |
| Revenues from external customers | $ | 755 | | (a) | $ | 178 | | | $ | 933 | |
| Intersegment revenues | — | | | 2 | | | 2 | |
| 755 | | | 180 | | | 935 | |
| Reconciliation of revenues | | | | | |
Other revenues (b) | | | | | 1 | |
| Elimination of intersegment revenues | | | | | (2) | |
| Total consolidated revenues | | | | | $ | 934 | |
| | | | | |
| Less: | | | | | |
| Property management expense | 173 | | | — | | (c) | |
Marketing | 93 | | (d) | 11 | | | |
| Commissions | 89 | | | — | | (c) | |
General and administrative (e) | 58 | | | 22 | | | |
| Sales administration | 52 | | | — | | (c) | |
Developer obligations (f) | 37 | | | — | | (c) | |
| Consumer financing interest | 34 | | | — | | (c) | |
| Cost of sales | 23 | | (g) | 51 | | | |
| Licensing fees | 21 | | | — | | (c) | |
Fee-for-Service expenses | 10 | | | — | | (c) | |
| Contact center | — | | (c) | 18 | | | |
| Resort services | — | | (c) | 8 | | | |
Other segment items (h) | 6 | | | 2 | | | |
Reportable segment Adjusted EBITDA | $ | 159 | | | $ | 68 | | | $ | 227 | |
| | | | | |
Other Adjusted EBITDA | | | | | (25) | |
| Adjusted EBITDA | | | | | $ | 202 | |
| | | | | |
| Three Months Ended March 31, 2025 |
| Reconciliation of Adjusted EBITDA | Total |
| Adjusted EBITDA | $ | 202 | |
| |
| Stock-based compensation | (14) | |
| |
| |
| |
| |
| |
| Legacy items | (1) | |
| Depreciation and amortization | (30) | |
Interest income | 1 | |
| Interest expense | (57) | |
| Income before income taxes | 101 | |
| Provision for income taxes | (28) | |
| |
| |
| |
| Net income attributable to Travel + Leisure Co. shareholders | $ | 73 | |
(a)Includes $91 million provision for loan losses, net.
(b)Represents revenue recognized at the Company's Corporate and other segment for managing an insurance program on behalf of homeowners associations.
(c)Expense category not regularly provided to the CODM for this segment.
(d)Excludes licensing fees which are reported within Marketing on the Condensed Consolidated Statements of Income, as it is separately disclosed.
(e)Excludes stock-based compensation and legacy items which are not included in the determination of Adjusted EBITDA.
(f)Represents maintenance fees incurred by the Company for unsold VOIs, net of monetization.
(g)Represents Cost of vacation ownership interests on the Condensed Consolidated Statements of Income, excluding less than $1 million of inventory impairments which are not included in the determination of Adjusted EBITDA.
(h)Includes expenses for VOI travel packages, VOI incentives, and professional fees reported within Operating expenses, and other non-operating income/expense items included in the determination of Adjusted EBITDA such as dividend income, business insurance proceeds, and asset sales.
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| Capital Expenditures | 2026 | | 2025 |
| Vacation Ownership | $ | 11 | | | $ | 12 | |
| Travel and Membership | 3 | | | 4 | |
| Total reportable segments | 14 | | | 16 | |
| Corporate and other | 5 | | | 5 | |
| Total Company | $ | 19 | | | $ | 21 | |
| | | | | | | | | | | |
Segment Assets (a) | March 31,
2026 | | December 31, 2025 |
| Vacation Ownership | $ | 5,107 | | | $ | 5,022 | |
| Travel and Membership | 1,317 | | | 1,334 | |
| Total reportable segments | 6,424 | | | 6,356 | |
| Corporate and other | 416 | | | 404 | |
| Total Company | $ | 6,840 | | | $ | 6,760 | |
(a)Excludes investment in consolidated subsidiaries.
19. Impairments and other charges
In connection with the resort optimization initiative discussed in Note 20—Restructuring, the Company incurred $19 million of inventory write-downs and impairments at its Vacation Ownership segment during the first quarter of 2026 associated with the removal of certain identified resorts from the Company’s portfolio and agreements to supply replacement inventory to vacation ownership clubs impacted by this initiative. These charges are included within Cost of vacation ownership interests on the Condensed Consolidated Statements of Income.
20. Restructuring
Resort Optimization Initiative
In order to promote the long-term strength of its portfolio of vacation ownership resorts, the Company undertook a strategic review with the intent of optimizing the overall quality of its resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future. This review identified 17 resorts requiring significant owner reinvestment, or are in markets that no longer align with owner demand. As a result, during 2025, the Company proposed to the boards of the respective homeowners’ associations (“HOAs”) of these identified resorts, court-supervised restructuring plans to remove select resorts from the Company’s portfolio and reduce the number of units at certain other resorts.
As of March 31, 2026, the Company had received confirmation of both HOA board and required member approvals of the proposed actions for all HOAs of the identified resorts. When the restructuring plans have completed, the identified resorts and related assets of the respective HOAs will be sold, and all owners, including the Company and its vacation ownership clubs, will receive pro-rata distributions of the net sales proceeds. The Company anticipates that the respective HOAs will receive the necessary court approvals for the sale of the property governed by the HOAs by the end of 2026. Related to this initiative, during the fourth quarter of 2025, the Company executed agreements to supply replacement inventory to the vacation ownership clubs impacted by removal of the identified resorts in exchange for the clubs’ pro-rata distributions of net sales proceeds.
During 2025, the Company incurred $233 million of costs in connection with these actions, including $216 million of inventory write-downs and impairments at its Vacation Ownership segment associated with the removal of the identified resorts and the agreements to supply replacement inventory to the impacted vacation ownership clubs which were included within Cost of vacation ownership interests on the Consolidated Statements of Income. During 2025, the Company also incurred $8 million of impairments of other property and equipment, which were included within Asset impairments, net and $9 million of other charges consisting primarily of employee-related costs, of which $5 million was included within Operating expense and $4 million was included in Restructuring on the Consolidated Statements of Income.
During the three months ended March 31, 2026, the Company incurred an additional $22 million of costs associated with this initiative at its Vacation Ownership segment, including $19 million of inventory write-downs and impairments driven by actions that were approved by owners during the first quarter of 2026.
The valuation method used in the determination of the fair value of inventory impacted by this initiative was based on a discounted cash flow model which used Level 3 inputs consisting of available property information and comparable sales to estimate income and operating expenses to determine an estimated price range.
The Company’s financial statements included the following impacts related to the resort optimization initiative (in millions): | | | | | | | | | | | | | |
| Three Months Ended March 31, 2026 | | | | Income Statement Classification |
| Inventory write-downs | $ | 11 | | | | | Cost of vacation ownership interests |
| Inventory impairments | 8 | | | | | Cost of vacation ownership interests |
| | | | | |
| Resort closure costs | 3 | | | | | Operating |
| Severance and related benefits | (2) | | | | | Restructuring |
| Other employee related costs | 2 | | | | | Operating |
| Total resort optimization initiative costs | $ | 22 | | | | | |
As of December 31, 2025, there was $4 million of restructuring liabilities associated with this initiative. During the three months ended March 31, 2026, the Company reversed $2 million of restructuring expense for costs incurred during 2025 on behalf of the HOAs which are subject to reimbursement. As these costs will be paid by the Company on behalf of the HOAs these $2 million of charges are maintained within the restructuring liability with an offsetting receivable included in Trade receivables, net on the Condensed Consolidated Balance Sheet. This liability was reduced by $1 million of cash payments during the three months ended March 31, 2026. The remaining resort optimization initiative liability of $3 million is expected to be paid by the end of 2027.
2025 Restructuring Plan
During 2025, the Company incurred $15 million of restructuring charges associated with the 2025 restructuring plan. These actions were primarily focused on enhancing organizational efficiency and rationalizing operations. These charges included personnel-related costs resulting from a reduction of approximately 250 employees and other expenses. The 2025 restructuring plan charges consisted of (i) $7 million of personnel-related costs at the Company’s corporate operations, (ii) $5 million of personnel-related costs and $2 million of fees associated with the termination of a licensing agreement at the Travel and Membership segment, and (iii) $1 million of personnel-related costs at the Vacation Ownership segment. All material initiative and related expenses have been incurred as of December 31, 2025. The 2025 restructuring liability was reduced by $3 million of cash payments during the year ended December 31, 2025. As of December 31, 2025, this restructuring liability was $12 million. The 2025 restructuring liability was reduced by $9 million of cash payments during the three months ended March 31, 2026. The remaining 2025 restructuring liability of $3 million is expected to be paid by the end of 2027.
Prior Restructuring Plans
The Company has additional restructuring plans which were implemented prior to 2025. As of both March 31, 2026 and December 31, 2025, the restructuring liability related to these plans was $12 million, all of which is related to leased facilities. The remaining liability associated with these prior restructuring plans is expected to be paid by the end of 2029.
The Company’s restructuring liabilities are included within Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets. The table below summarizes the activity associated with the Company’s aforementioned restructuring plans (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liability as of | | | | | | | | Liability as of |
| December 31, 2025 | | Costs Recognized | | Cash Payments | | Other | | March 31,
2026 |
| Personnel-related | $ | 14 | | | $ | (2) | | | $ | (8) | | | $ | 2 | | (a) | $ | 6 | |
| Facility-related | 12 | | | — | | | — | | | — | | | 12 | |
| Other | 2 | | | — | | | (2) | | | — | | | — | |
| $ | 28 | | | $ | (2) | | | $ | (10) | | | $ | 2 | | | $ | 18 | |
(a)Represents reimbursable costs the Company will pay on behalf of the respective HOAs related to the resort optimization initiative.
21. Transactions with Former Parent and Former Subsidiaries
Matters Related to Former Parent
Pursuant to the Separation and Distribution Agreement with the Company’s former parent ABG (formerly Cendant Corporation), the Company entered into certain guarantee commitments with ABG and ABG’s former subsidiary, Compass, Inc. (formerly Anywhere Real Estate Inc. and Realogy). These guarantee arrangements primarily related to certain contingent litigation liabilities, contingent tax liabilities, and ABG contingent and other corporate liabilities, of which Wyndham Worldwide Corporation assumed 37.5% of the responsibility while ABG’s former subsidiary Compass, Inc. is responsible for the remaining 62.5%. In connection with the Spin-off, Wyndham Hotels agreed to retain one-third of ABG’s contingent and other corporate liabilities and associated costs; therefore, Travel + Leisure Co. was effectively responsible for 25% of such matters subsequent to the separation. Since ABG’s separation, ABG has settled the majority of the lawsuits that were pending on the date of the separation.
On March 21, 2023, the California Office of Tax Appeals (“OTA”) issued an opinion in favor of the California Franchise Tax Board on a legacy tax matter involving ABG related to a 1999 transaction. The matter concerned (i) whether the statute of limitations barred proposed assessment notices issued by the California Franchise Tax Board; and (ii) whether a transaction undertaken by the taxpayers for the 1999 tax year constituted a tax-free reorganization under the Internal Revenue Code. ABG filed a petition for rehearing in 2023. On April 10, 2024, the OTA denied ABG’s petition. On May 27, 2025, the Company paid $24 million for its share of the taxes and interest, and was reimbursed $8 million by Wyndham Hotels for its one-third portion. ABG intends to appeal.
As of both March 31, 2026 and December 31, 2025, the Company had $1 million ABG separation and related liabilities, comprised of contingent and corporate liabilities. These liabilities are included within Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.
Matters Related to Wyndham Hotels
In connection with the Spin-off on May 31, 2018, Travel + Leisure Co. entered into several agreements with Wyndham Hotels that govern the relationship of the parties following the separation. The current ongoing agreements include the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, and the License, Development and Noncompetition Agreement.
The Company and Wyndham Hotels entered into a letter agreement during 2021 pursuant to which, among other things, Wyndham Hotels waived its right to enforce certain noncompetition covenants in the License, Development and Noncompetition Agreement.
In accordance with the agreements governing the relationship between Travel + Leisure Co. and Wyndham Hotels, Travel + Leisure Co. assumed two-thirds and Wyndham Hotels assumed one-third of certain contingent corporate liabilities of the Company incurred prior to the Spin-off, including liabilities of the Company related to certain terminated or divested businesses, certain general corporate matters, and any actions with respect to the separation plan. Likewise, Travel + Leisure Co. is entitled to receive two-thirds and Wyndham Hotels is entitled to receive one-third of the proceeds from certain contingent corporate assets of the Company arising prior to the Spin-off.
Matters Related to the European Vacation Rentals Business
In connection with the sale of the Company’s European vacation rentals business to Awaze Limited (“Awaze”), formerly Compass IV Limited, an affiliate of Platinum Equity, LLC, the Company and Wyndham Hotels agreed to certain post-closing credit support for the benefit of certain credit card service providers, a British travel association, and certain regulatory authorities to allow them to continue providing services or regulatory approval to the business. Post-closing credit support may be called if the business fails to meet its primary obligation to pay amounts when due. Awaze has provided an indemnification to Travel + Leisure Co. in the event that the post-closing credit support is enforced or called upon.
At closing, the Company agreed to provide additional post-closing credit support to a British travel association and regulatory authority. An escrow was established at closing, of which $46 million was subsequently released in exchange for a secured bonding facility and a perpetual guarantee denominated in British pound sterling with a USD equivalent of $46 million. The estimated fair value of the guarantee was $22 million as of March 31, 2026. The Company maintains a $7 million receivable from Wyndham Hotels for its portion of the guarantee.
Wyndham Hotels provided certain post-closing credit support primarily for the benefit of a British travel association in the form of guarantees which are mainly denominated in pound sterling of up to £61 million ($81 million USD) on a perpetual
basis. These guarantees totaled £30 million ($39 million USD) at March 31, 2026. Travel + Leisure Co. is responsible for two-thirds of these guarantees.
The estimated fair value of the guarantees and indemnifications for which Travel + Leisure Co. is responsible related to the sale of the European vacation rentals business at March 31, 2026, including the two-thirds portion related to guarantees provided by Wyndham Hotels, totaled $48 million and was included in Accrued expenses and other liabilities and total receivables of $7 million were included in Other assets on the Condensed Consolidated Balance Sheets, representing the portion of these guarantees and indemnifications for which Wyndham Hotels is responsible.
Matters Related to the North American Vacation Rentals Business
In connection with the sale of the North American vacation rentals business, the Company agreed to indemnify Vacasa LLC against certain claims and assessments, including income tax and other tax matters related to the operations of the North American vacation rentals business for the periods prior to the transaction. As of March 31, 2026, the estimated fair value of the indemnifications was $2 million, which was included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.
22. Related Party Transactions
The Company occasionally sublets an aircraft from its former CEO and current Chairman of the Board for business travel through a timesharing arrangement. The Company incurred less than $1 million of expenses related to this timesharing arrangement during each of the three months ended March 31, 2026 and 2025.