Travel + Leisure Q2 2025 Earnings Report

Travel + Leisure EPS Results

• Actual EPS: $1.65
• Consensus EPS: $1.66
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: $1.52

Travel + Leisure Revenue Results

• Actual Revenue: $1.02 billion
• Expected Revenue: $1.01 billion
• Beat/Miss: Beat by +$9.07 million
• YoY Revenue Growth: +3.40%

Travel + Leisure Announcement Details

• Quarter: Q2 2025
• Date: 7/23/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 23, 2025
• Conference Call Time: 8:00AM ET

Travel + Leisure (NYSE:TNL) Co., together with its subsidiaries, provides hospitality services and travel products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership. The Vacation Ownership segment develops, markets, and sells vacation ownership interests (VOIs) to individual consumers, as well as provides consumer financing in connection with the sale of VOIs; and property management services at resorts. The Travel and Membership segment operates various travel businesses, including three vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment also offers private-label travel booking technology solutions. The company was formerly known as Wyndham Destinations, Inc. and changed its name to Travel + Leisure Co. in February 2021. Travel + Leisure Co. was founded in 1990 and is headquartered in Orlando, Florida.

Travel + Leisure Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Travel and Leisure reported Q2 revenue of $1.02 billion, adjusted EBITDA of $250 million, and $1.65 in adjusted EPS—all up year-over-year—and returned $107 million to shareholders.
• Positive Sentiment: Vacation ownership was the driver with 6% revenue growth, record VPG of $3,251 (above guidance), and a steady 25% adjusted EBITDA margin.
• Negative Sentiment: The Travel and Membership segment saw a 6% revenue decline and 11% drop in adjusted EBITDA due to exchange consolidation headwinds and M&A-related disruptions.
• Positive Sentiment: Credit quality remains strong with average origination FICO of 746, moderating delinquencies, and a loan loss provision on track at 21%, with potential to trend below 20% over time.
• Positive Sentiment: The company is investing in digital initiatives and launching new brands—Margaritaville, Accor Vacation Club in Asia, and Sports Illustrated Resorts—to expand its addressable market and enhance customer engagement.

Presentation

[Operator]

Greetings, and welcome to the Travel and Leisure Second Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Eric Hoch, Chief Financial Officer. Please go ahead, sir.

[Erik Hoag, CFO at Travel + Leisure]

Thank you, Kevin. Good morning to everyone. Before we begin, we would like to remind you that our discussion today will include forward looking statements. Actual results could differ materially from those indicated in the forward looking statements and the forward looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these statements.

[Erik Hoag, CFO at Travel + Leisure]

The factors that could cause actual results to differ are discussed in our SEC filings and in our press release accompanying the earnings call. You can find a reconciliation of the non GAAP financial measures discussed in today's call in the earnings press release available on the Investor Relations website. This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of the second quarter results and our longer term growth strategy. And then I'll provide greater detail on the quarter, our balance sheet and outlook for the rest of the year. Following our prepared remarks, we'll open up the call for questions.

[Erik Hoag, CFO at Travel + Leisure]

Finally, all comparisons today are to the same period of the prior year unless specifically stated. With that, I'm pleased to turn the call over to Michael Brown.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Good morning and thanks for joining us. Travel and Leisure delivered another solid quarter of revenue and adjusted EBITDA growth. Our strong adjusted EBITDA or free cash flow allowed us to return $107,000,000 of capital to shareholders in the quarter. This performance underscores the strength of our brands, the resilience of leisure travel and our owner base and the disciplined execution of our strategy. Against the dynamic macroeconomic backdrop, our teams remain focused on driving growth, managing costs and delivering exceptional experiences to our owners, members and guests.

[Michael Brown, CEO, President & Director at Travel + Leisure]

In the quarter, we generated over $1,000,000,000 in revenue, dollars $250,000,000 in adjusted EBITDA and $1.65 in adjusted earnings per share all up year over year. Our results were driven by continued strength in our vacation ownership business, which more than offset softer performance in travel and membership. We saw a healthy year over year growth in VOI sales with gains in both tour flow and volume per guest. Notably volume per guest of $3,251 was above the high end of our guidance range and adjusted EBITDA margin remained consistent with the prior year at 25%. These results support the core foundation of our business, a resilient customer base built around leisure travel, a compelling value proposition and consistent returns to our shareholders.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Demand remains strong across our core timeshare business. We see encouraging engagement from consumers as tour growth improved sequentially from the first quarter and 3% compared to 2024. The resilience of our platform is directly related to the quality of our customers. There's been plenty of noise around the economy, but from where we sit our consumers are healthy and prioritizing travel. Spending on leisure travel is expected to grow mid single digits per year over the next five years.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Our business is built on recurring behavior and less so on short term trends, making us less sensitive to the macro economy as we benefit from a highly visible recurring revenue base. More than 75% of our revenue is tied to predictable sources like owner upgrades, financing and management fees, which leads to a nearly $20,000,000,000 pipeline of future potential revenue over ten years. We see our strategy play out through our bookings, sales tours and owner engagement metrics. Our owners are traveling supporting what we've long believed that vacations are not discretionary they're essential. We have seen no significant change in buyer behavior related to booking pace, VPG and portfolio performance.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Booking pace is relatively consistent to the prior year and with a one hundred and nine day average booking window, we have clear visibility into the remainder of the year. VPG performance continues to be strong and our portfolio remains stable. Our owners know what they are getting. They've already planned for it and 80% of them have fully paid for their ownership. Today, we serve more than 800,000 owner families with an average tenure of seventeen years.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Here are some key characteristics of our owner base. The average household income for our owners is approximately $118,000 The average FICO score of our $3,000,000,000 portfolio is above seven twenty. Since 2020, we have seen sub-six 40 FICO loans declined four points as a percentage of the overall portfolio. The average FICO score of new originations is 746. This is an over 20 increase since we updated our credit quality standards.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Our owners take an average of four to five vacations annually with more than 50% of their vacation time being utilized through their ownership. We are seeing consistent interest from younger generations with over 65% of new buyers coming from Gen X, millennial and Gen Z households. Our product delivers exactly what these new owners want flexibility, convenience and personalized experiences. During the quarter, we continued to invest in technology, marketing and product innovation to enhance the customer journey and extend our reach. Our Club Wyndham app which offers frictionless engagement now has 162,000 downloads and accounts for 19% of bookings.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Additionally, we are preparing for the launch of our WorldMark app in Q4. We are progressing with investments in AI on our web and app channels driving recommendations for personalized experiences and seamless booking process. During the quarter, we announced an exclusive marketing partnership with Hornblower focused on creating memorable experiences for our owners as well as new owner tour generation. Hornblower Group is an experienced based tourism leader across 22 destinations in The United States, Canada and The U. K.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Looking ahead, we are focused on growing the core vacation ownership business leveraging data and technology to enhance the customer experience across all platforms. We are taking targeted revenue and cost actions to mitigate the headwinds in our Traveler Membership segment leaving us well positioned to deliver sustainable growth and consistent returns. Now turning to execution on our multi brand strategy. This strategy is not just about scale, it's about customer segment. It's about both customer segment and geographic expansion.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Our Club Wyndham and WorldMark brands will continue to be the cornerstone of our vacation ownership business along with our Blue Thread partnership with Wyndham Hotels. In June, we expanded our Margaritaville footprint with a new sales location in Nashville on Broadway and a new marketing channel on the Margaritaville cruise ship. We launched and expanded the Accor Vacation Club with the formation of a new Asia based club. The first resort is the Novotel Nusadua in Indonesia. And last week, we announced our newest Sports Illustrated Resorts location in Nashville, Tennessee, Located on Music Row in the heart of Midtown just one mile from downtown, the planned resort will feature 185 units and is expected to open in the spring of twenty twenty six.

[Michael Brown, CEO, President & Director at Travel + Leisure]

These new brands will help us expand into key markets, reach new audiences and offer experiences suited to their lifestyles. Our strong free cash flow allows us to invest in the right places brand, digital and targeted inventory. We are confident these investments will continue to drive value. Alongside these investments, we continue to consistently return capital to our shareholders through our dividend and share repurchase program. Since then, we have returned $2,700,000,000 to shareholders.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Before I hand it over, I'd like to take a moment to welcome Eric Ho, our new Chief Financial Officer. Eric brings a strong background in strategy, operational finance and capital allocation. Eric has hit the ground running since he joined the company. In his first two months, he has attended five conferences and met with 49 investors over 27 meetings. I'm confident his leadership will help us continue delivering disciplined execution and long term value for our shareholders.

[Michael Brown, CEO, President & Director at Travel + Leisure]

With that, I'll hand it over to Eric to walk through our financial performance and capital allocation in more detail. Eric?

[Erik Hoag, CFO at Travel + Leisure]

Thanks, Michael, and good morning. Let me start by saying how excited I am to be part of Travel and Leisure. This is a company with a strong leadership team, a highly recognizable brand portfolio and a resilient business model that delivers dependable cash flow and long term value creation. In my first few months, I've been especially impressed by the financial discipline and operational focus embedded across the organization. This came through clearly in our second quarter results with strong revenue and adjusted EBITDA growth alongside robust adjusted free cash flow.

[Erik Hoag, CFO at Travel + Leisure]

I'll walk through the quarter's key drivers and highlight how we're deploying capital to drive shareholder value. Revenue for the quarter was $1,020,000,000 up 3% year over year driven by strong VOI volume and VPGs that exceeded our expectation. Adjusted EBITDA was $250,000,000 up 2% over the prior year and at the midpoint of our guidance range. This translates to a 4% adjusted EBITDA growth for the first half of the year. Adjusted earnings per share grew 9% in the quarter driven by strong performance in Vacation Ownership and the benefit from ongoing share repurchases.

[Erik Hoag, CFO at Travel + Leisure]

Turning to the Vacation Ownership segment, our core growth engine. The business delivered accelerating revenue, rising tour flow, historically high VPGs and double digit growth in average transaction size. Revenue grew 6% to $853,000,000 for the quarter, driven by a 3% increase in tours and VPG of $3,251 up seven percent from last year. The increase in average transaction size reflects strong consumer demand, effective upsell strategies and continued sales force productivity across our resorts. Adjusted EBITDA grew 6% with margin performance remaining steady underscoring the health and the consistency of the platform.

[Erik Hoag, CFO at Travel + Leisure]

We are also making disciplined progress with our inventory pipeline with several key resort projects underway to support future growth while maintaining our capital light mix. Our loan loss provision and delinquencies were in line with expectations and we remain on track to deliver a full year provision of 21%. Credit quality remained strong in the quarter with new origination FICO scores above seven forty, which reflects our consistent and disciplined underwriting approach. Our second quarter delinquency trends moderated after the uptick we noted last quarter. With no signs of material deterioration, we're confident in the portfolio's strength.

[Erik Hoag, CFO at Travel + Leisure]

Our provision has historically ranged from the high teens to the low 20s as a percentage of VOI sales and we see potential for this to trend below 20% over time enhancing capital efficiency and supporting durable free cash flow. In our Travel and Membership segment, revenue was $166,000,000 for the quarter, down 6% year over year and adjusted EBITDA declined 11% to $55,000,000 The exchange business continues to face industry consolidation headwinds. Additionally, recent M and A activity disrupted transaction volumes from certain affiliates and was not anticipated in our original guidance. While not the sole driver of the underperformance, the impact was meaningful and we remain focused on maximizing cash flow and operational flexibility with an emphasis on long term shareholder value. Turning to cash generation and capital deployment.

[Erik Hoag, CFO at Travel + Leisure]

We generated $123,000,000 in adjusted free cash flow and $353,000,000 in operating cash flow in the first six months of the year supported by strong sales efficiency, capital efficient sales execution and the ongoing contribution of our consumer finance portfolio. These factors alongside both our highly recurring revenue mix and capital light development strategy drive consistent and dependable cash generation even in a complex macroeconomic and political environment. During the quarter, we returned $107,000,000 of our adjusted free cash flow to shareholders, dollars 37,000,000 through dividends and $70,000,000 in share repurchases retiring more than 2% of our shares outstanding in the quarter. Our capital allocation strategy remains unchanged, reinvest in high return growth, maintain a resilient balance sheet and return excess cash to shareholders all while preserving financial flexibility. We continue to evaluate reinvestment returns vigorously prioritizing initiatives where we see strong IRRs, capital efficiency and clear pathways to shareholder value.

[Erik Hoag, CFO at Travel + Leisure]

Our liquidity position remains strong. We ended the quarter with over $800,000,000 including $212,000,000 of cash and cash equivalents and $596,000,000 available on our revolver. We ended the quarter at 3.4 times levered and with normal seasonality we expect our leverage rate to slightly increase in the third quarter and then end the year below 3.4 times. During the quarter, we amended our $1,000,000,000 revolving credit facility with improved terms. And yesterday, we completed our second ABS transaction of the year raising $300,000,000 at a 98% advance rate and a 5.1% coupon, the lowest we've seen since 2022.

[Erik Hoag, CFO at Travel + Leisure]

We continue to actively manage maturities and expect to refinance the $350,000,000 note coming due in the fourth quarter. Looking ahead, we continue to expect full year adjusted EBITDA to be in line with our prior guidance supported by the strength of our vacation ownership business. We expect travel and membership to remain challenged through year end. That said, we're committed to executing on our core business launching new brands delivering strong free cash flow and allocating capital in ways that enhance shareholder value. For the third quarter, we expect Travel and Leisure adjusted EBITDA to be in the range of $250,000,000 to $260,000,000 Vacation Ownership gross VOI sales are expected to be in the range of $650,000,000 to $680,000,000 with VPGs in the range of $3,200 to $3,250 For the full year, we continue to expect adjusted EBITDA to be in the range of $955,000,000 to $985,000,000 gross VOI sales between $2,400,000,000 to $2,500,000,000 and VPGs in the range of $3,200 to $3,250 an increase from our prior range of $3,050 to $3,150 Please refer to our earnings material for full details and underlying assumptions by segment.

[Erik Hoag, CFO at Travel + Leisure]

Thank you for your time and continued interest in travel and leisure. I look forward to connecting with many of you in the weeks ahead. Kevin, we can now open the line for questions.

[Operator]

Certainly. We'll now be conducting a question and answer session. Our first question is coming from Chris Woronka from Deutsche Bank. Your line is now live.

[Chris Woronka, Research Analyst at Deutsche Bank]

Hey, thanks. Good morning, everyone. Eric, welcome. We're looking forward to working with you. So I guess, Michael, maybe start with the kind of the more obvious question this quarter on the travel and membership side.

[Chris Woronka, Research Analyst at Deutsche Bank]

I know you mentioned that there was some M and A impact with partnerships. But do you feel like visibility in that segment is declining? It used to be very stable and predictable within $1,000,000 or so. And if so, how confident are you that you can turn this around? Or are you in some ways possibly considering something more strategic with that segment? Thanks.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Good morning, Chris. Well, recap Q1 or the first half of the year. So we recognize the two components of the travel membership decline. In the organic side of the business, yes, we saw decline as it relates to exchange transactions, a conversation we've been having on this call for several years now that side of the business remains challenged through consolidation and the fact that the way bigger clubs are doing business has changed. And we've done a pretty significant job over the last few years stemming the tide of that. In fact, if you remember last year we actually had growth in this segment. Over 50 of the decline in the first half of the year was based off this component of the business. The other piece which Eric mentioned was there was consolidation in the space and that impacted those related to affiliates of ours and that obviously was an un forecasted impact to the first half of this year.

[Michael Brown, CEO, President & Director at Travel + Leisure]

As we digest that and look at new alternatives on how to address and mitigate the impact of A, that transaction, but B, just the general trend of what's happening on exchange external exchange transactions. There's a number of measures we continue to take. We want to grow the TravelClub business which grew 7% in Q2 as far as transactions. We continue to look at innovative ways to deploy our inventory and to grow revenue on that side of the equation. And then obviously, we manage costs associated with where our top line goes.

[Michael Brown, CEO, President & Director at Travel + Leisure]

I think we've been very clear that we understand the structural challenges of the space, but we've been very proactive over the past few years. And we will continue to look at smart strategic investments or alternatives to make sure that we're doing the right thing for this business and creating our objectives to get back to a growth trajectory over time here.

[Chris Woronka, Research Analyst at Deutsche Bank]

Okay. Thanks Michael. Just as a follow-up, I think you mentioned a double digit increase in average size of transactions in the quarter. Question on that is kind of in the context of financing. And how does that play into when we think about transactions getting bigger propensity to finance in the context of a lot of wealth effect that's being generated with the stock market and maybe other forms of real estate.

[Chris Woronka, Research Analyst at Deutsche Bank]

Does that change the calculus at all for your, I guess, average customer in terms of that propensity to finance? Or what's driving that larger transaction size? Thanks.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Well, haven't really seen any change to our propensity to finance. Those statistics are very consistent. I think what you've seen in the first or the second quarter and the reference was really a combination of two components. First is, we've continued to take measured price increases over time and that results in some component of the average transaction price increasing. The other piece is and we mentioned it a number of time in our prepared remarks related to experiences and greater owner engagement.

[Michael Brown, CEO, President & Director at Travel + Leisure]

We're starting to see we believe some of the those elements come into play and the fact that people continue to buy more. Four to five vacations a year through their ownership with us about 50% of their vacation time being dedicated to us at Wyndham. That means people are buying more and that's only because they're satisfied and they're enjoying their ownership. So I think it's a combination. It is a combination of price increases and people just continuing to be loyal and committed to this type of leisure travel.

[Chris Woronka, Research Analyst at Deutsche Bank]

Very good. Thanks, Michael.

[Operator]

Thank you. Next question today is coming from Lizzie Dubb from Goldman Sachs. Your line is now live.

[Lizzie Dove, VP - Equity Research at Goldman Sachs]

Hi, there. Thanks for taking the question. First one just on you raised the VPG guidance for the year, obviously a really strong number in 2Q, but you didn't take up gross VOI sales number. Is the assumption that maybe tour growth is a little low or something? I know telesales is a little lower in 2Q than expected. Just curious kind of what factored into that?

[Michael Brown, CEO, President & Director at Travel + Leisure]

Really the factor is we wanted to recognize this very strong PPG performance in the first half of the year and that led to our raise for the full year. I think what that really says Lizzie is that we have greater confidence that our gross VOI is going to be at the mid to maybe the top end of that range. So at this point being halfway through the year knowing that we're entering July being one of the biggest months of the year and same with August with summer travel. We thought we were better off to simply be more confident in the top half of the range at this point. We'll see where we are at Q3, but at the end of Q3.

[Michael Brown, CEO, President & Director at Travel + Leisure]

But what I would say is both tours being up 3% in Q2, 2% for the first half that's showing sequential acceleration. We were quite pleased with our Q2 tour performance and we think that tour increase will continue into the second half. And obviously our VPG raise of guidance reflects what we're already seeing and that we don't see the consumer weakening in the second half of the year.

[Lizzie Dove, VP - Equity Research at Goldman Sachs]

Got it. And then on the delinquency side, I think last quarter you'd said March ticked up a little bit, but then you saw an improvement in April. Curious how that's been tracking over the last few months and into July? And you mentioned there's maybe some opportunity for the provision to kind of trend below 20% over time. Just curious this kind of steps to get there timing, would be helpful to know. Thanks.

[Erik Hoag, CFO at Travel + Leisure]

Yes. Hi, Lizzie. It's Eric Hogue. You are right. So early in the year, we saw elevated delinquencies in the first quarter.

[Erik Hoag, CFO at Travel + Leisure]

However, they did moderate near the end of the first quarter and we saw that moderation persist through the second quarter. And frankly, we've seen that moderation persist through the July as well. So we have got a full year provision of 21%. We feel like we are in a good spot with that 21% provision. In terms of the longer range comments associated with getting back into the teens from a provision perspective, there's a couple of things that I would say about that.

[Erik Hoag, CFO at Travel + Leisure]

First, we've got disciplined underwriting quality with FICO scores above seven forty and we consistently have seen improvement associated with the credit quality that's coming through the front door. And then the second piece is the adoption of our app. As we continue to focus on the usability of our products, the adoption increase that seeing from our customers making it easier for customers to actually get on to vacation. And maybe one other comment associated with the provision sixty days in. One of the meaningful 's that I've had Lizzie coming into the seat is that and Mike mentioned, I've had roughly 50 investor conferences or touch points in the last two months.

[Erik Hoag, CFO at Travel + Leisure]

We've got a really robust efficient and effective inventory recovery process. So as delinquencies occur, we have a way to get the inventory back. We're able to reprice the inventory. We reprice the inventory at favorable rates with a cost of sales rate that's under 10%, very effective way for us to get that back.

[Lizzie Dove, VP - Equity Research at Goldman Sachs]

Great. Thank you.

[Operator]

Thank you. Next question is coming from Patrick Scholes from Truist Securities. Your line is now live.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Hi. Good morning. Thank you. Welcome Eric.

[Erik Hoag, CFO at Travel + Leisure]

Hey, Patrick.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Great. Michael, I'll start out with a question for you. You touched briefly about the health of your consumer. I'm wondering if you can dig down a little bit more. You talked about average household income about $120,000 but I'm sure within the average you probably have some say $80,000 and some $150,000 and above.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Talk about sort of at the various ends of the spectrum, what are the behaviors and propensity strengths and weaknesses? Any noticeable differences between the lower end and the upper end within your customer network and potential customer network? Thank you.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Absolutely. Good morning, Patrick. I'll hit this a few different ways. And I think most simply we get a good read on performance of our household incomes via FICOs and through our default curves. And it's one of the reasons that as we came out of COVID, we thought the most efficient way to reestablish our foundation was by raising our FICOs to six forty.

[Michael Brown, CEO, President & Director at Travel + Leisure]

That move as you heard has brought our average FICOs up to seven forty six. And there's clear stratification with higher performance at higher household incomes and clearly higher delinquencies on the lower end. I think interestingly enough there's an odd phenomenon there or maybe not so odd is that the higher the income the more likely there is for prepayment of the loans. So there's always this sort of balance of you love the higher FICO sales and you definitely want people to pay off and get using their ownership. But you do have a drop off with the higher FICOs in the first year of ownership.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Let me hit it the second way of really how I look at it is the bifurcation between owners and new owners. In an economy like this with uncertainty and if the economy accelerates or decelerates, the first place you tend to see that is on the new owner side. As we talked about in our prepared remarks, the first half of the year was super strong for our owner base, high engagement, value what they own, continue to buy more at very high rates. Our new owner business continues to be strong as well. We were very pleased with our tour flow.

[Michael Brown, CEO, President & Director at Travel + Leisure]

But I think specifically related to your question, when we look back to pre COVID 2019, our close rates, our VPGs and our transaction size all related to new owners are meaningfully up from pre COVID. And that's really a reflection to your question about the performance of all strata of household incomes and looking at a different perspective of new owners and owners. Because I think most people are looking for weakness to show up at our new owner segment as a sign that the economy is weakening and we could say after the first six months that that's not the case.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Great. Thank you. And then I do have a follow-up question for Eric. Eric, with the VPG expectation going up, what are your expectations for the buyer mix in that expectations for closing rates versus your prior guidance for VPG. And I think on last earnings call, you had expected new owner mix or Mike Hug had expected new owner mix still to be around 35%? Thank you.

[Erik Hoag, CFO at Travel + Leisure]

So we expect in our financial forecast to see acceleration of the new owner mix not so the long range target remains 35% from a new owner mix perspective. We sat at 30% here in the second quarter. Our forecast does expect some improvement in that in the back half of the year.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Okay. Thank you.

[Operator]

Thank you. Next question today is coming from Stephen Grambling from Morgan Stanley. Your line is now live.

[Stephen Grambling, MD & Senior Equity Research Analyst at Morgan Stanley]

Hey, thanks for taking the question. Just a follow-up on the new owner mix improvement. I guess are there any things that you're doing and that you're thinking about to help drive some of the incremental new owners or anything that you're thinking about in terms of trying to improve the conversion rate on new owners as we think about initiatives going into the back half of this year or even into next year?

[Michael Brown, CEO, President & Director at Travel + Leisure]

Yes. So just to add on to what Eric was saying was, we've always communicated this percentage and I just want to make sure everyone's got the context of it. We had an incredible first half of the year on our owner side of the business which is naturally going to push down our percentage of new owner percentage. We had a really good first half of the year as it relates to new owner business. It just happens when you're performing so well on the owner side.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Our target of 35% naturally it's further away from 35% than we're going to continue to get to. Our long term target, our short term target is 35%. And if quarter by quarter we have strength in one segment, it will fluctuate. Remember, I believe it was first quarter last year maybe it was second that we were at 3837% and that was just a quarter. So related to some things we're doing as it relates to driving new owners, there's a lot feathered throughout the script related to that.

[Michael Brown, CEO, President & Director at Travel + Leisure]

But I really want to focus on number one, we continue to focus on getting the right partners. We were pleased with the announcement in Q2 of one such partner in Hornblower. We also believe that the addition of these new brands Margaritaville which we're reinvigorating up double digits in sales year on year. The addition of a core up double digits in sales year on year. Sports Illustrated launching new sales later in the year.

[Michael Brown, CEO, President & Director at Travel + Leisure]

All of these are going to be bringing new owners to our overall ecosystem. And lastly, just in addition to all of that, we have six regions and each single one of them is out doing smaller partnerships in their region that are more pertinent to their region. And all that put together, I do just want to put a stamp on I think you mentioned something about performance in new owners. I think our close rates are up roughly 11 percentage points from pre COVID level. So our teams are performing well above where they were pre COVID.

[Michael Brown, CEO, President & Director at Travel + Leisure]

And I think it's a combination of having a great team, very focused on execution and raising our marketing standards.

[Stephen Grambling, MD & Senior Equity Research Analyst at Morgan Stanley]

That's great. I'll leave it there. Thank you.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Thanks, Stephen.

[Erik Hoag, CFO at Travel + Leisure]

Thank you.

[Operator]

Our next question is coming from David Katz from Jefferies. Your line is now live.

[David Katz, Managing Director at Jefferies]

Hi, good morning everybody. Thanks for all the commentary so far. I noticed that the Akor brand seems to be more of an international play. And I wonder if you could give us some updated thoughts on what you think the international opportunity or TAM really is? And at what point does it become an increasingly meaningful driver of the enterprise in total?

[Michael Brown, CEO, President & Director at Travel + Leisure]

Well, there's two sides to that story. First of all, Accor is, if my stats are right, the largest international operator of hospitality outside The United States. The brand is powerful. It's impactful. It's got a multitude of brands and its TAM is on par with the best hospitality companies and the largest hospitality companies in the world.

[Michael Brown, CEO, President & Director at Travel + Leisure]

That's all the positive. And the second if I could add a second positive is the integration with their teams in the Asia Pacific region and considerations in other regions has been superb, super supportive to help us grow and that's meaningful in the assistance of growth which has led us to announcing our first resort since having the brand about fourteen months after the acquisition. The flip side of that coin is timeshare is by far globally strongest in The United States. We've got an accepted product in after thirty years of operation, the industry has evolved to be primarily hospitality branded companies. People are highly loyal to Wyndham, to Hilton, to Marriott, to Disney, to Holiday Inn just to name a few at our Margaritaville brand and the industry is over 80% hospitality branded.

[Michael Brown, CEO, President & Director at Travel + Leisure]

The regulatory environment protects consumers and gives them avenues to for their ownership and comfort that their purchase is protected. So we remain super bullish about The U. S. Market. We remain super bullish about our Wyndham brand.

[Michael Brown, CEO, President & Director at Travel + Leisure]

We have incremental opportunity outside The U. S. With the core. And we view most of these new brands whether it's a core Sports Illustrated and you go down the line to be sort of $200 to $400,000,000 of sales brands. But you stack four or five of those together and you can start to look at a growth trajectory over five to seven years that allows for us to maintain our current growth rate over time.

[David Katz, Managing Director at Jefferies]

Understood. And just to follow that up, right, when we think about international sales maybe $1 of sales or $100 of sales, Should we think about the economic intensity in terms of what you earn being similar better worse than what you have here in The U. S?

[Michael Brown, CEO, President & Director at Travel + Leisure]

I would expect it to be similar as far as profitability margins. I would also expect it to be similar three years from now what it is today as far as a mix. We do about 90% of our revenue in The U. S. And about 10% internationally.

[Michael Brown, CEO, President & Director at Travel + Leisure]

So I wouldn't expect any significant trajectory or incremental risk for currency fluctuation as a result of our expansion. Our objective back to Stephen's question and tying in yours is, we want to look for new customers geographically database wise and the core provides us both those avenues.

[David Katz, Managing Director at Jefferies]

Thank you very much.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Thanks, David.

[Operator]

Thank you. Next question today is coming from Ben Chacon from Mizuho. Your line is now live.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Hey, good morning. Thanks for taking my questions. Good morning, Eric. Maybe just to start off as think about the remainder of the year, can you help remind us the different variables influencing the back half? If I'm not mistaken, I believe you begin selling SI in 3Q or 4Q.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Maybe help us with the timing and magnitude of that and any other considerations. I guess the premise of the question is I think prior to today there was an implied acceleration in contract sales in the back half and I just want to maybe dive into what those considerations are? Thanks. And then one follow-up.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Of course, Ben. And the implication that you're reading through is correct. The anticipation on the back half of the year is that we would be lapping tough comps in the first half of the year on tour flow. So year on year tour flow increases in the latter half of this year. You combine that acceleration to an increase of VPG guidance.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Diving back into Lizzie's question there is that you start to see a lot more confidence on the high end of the VOI range, which in turn gives us confidence that continued softness on the Traveler membership segment can be covered, ultimately leading us to confirmation of our guidance range on adjusted EBITDA. So you should expect to see continued strength on the VOI side, covering off any weakness we see on the travel and membership side. And albeit only three weeks into July, I think it's safe to say that the trends that we've seen in Q2 on consumer resilience, key KPIs that led to a good Q2, portfolio performance, VPG, booking patterns, trends we saw in travel membership, all of those have remained consistent in the first three weeks of July. A reminder, our largest month of the year, those trends are consistent that we saw in Q2.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Got it. And then anything from just to touch on SI. Doesn't that start to hit in 2025 as well helping you out in the back half?

[Michael Brown, CEO, President & Director at Travel + Leisure]

Yes and no. Yes, we will open in the spring of twenty twenty six. We expect to start sales at the end of twenty twenty five. So we can pun intended put our first points on the board. And but as far as meaningful bottom line not at all.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Continuing to grow a core this year, continuing to grow Margaritaville and continued excellent execution of Club Wyndham will be the determinant of how we end the year and where in our guidance range we'll finish.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Understood. And then for my follow-up maybe just stepping back a little bit on some of these new projects. Maybe you could help us understand the importance and why you're excited about new Margaritaville in Orlando opening in 2027, as well as the SI in Nashville whether it's strategically or geographically why it's important to the network? Thanks.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Yes. Ultimately, I'd zoom way out and just look at how hospitality is transitioning where people are attaching their individual lifestyle to the way they want to spend their leisure time. I don't know exactly the year I probably should, but Margaritaville was a song and a drink a decade ago and today it's a hospitality company with dozens of hotels. Why? Because people love to listen to music and have a drink in their hand on the beach and leisure travels become an expression of that lifestyle and you transition that across to Sports Illustrated and the affiliation excitement and passion people have for college sports.

[Michael Brown, CEO, President & Director at Travel + Leisure]

And we're simply meeting consumers where they are today. And most importantly for our business especially being direct marketing is we need to constantly be finding incremental databases, incremental addressable markets that we can't reach otherwise. And that's why we have aspirations on each of these not to become the behemoth that Wyndham is today, which will continue to grow. That's where our strength is. But adding $200 to $400,000,000 of sales with an individual brand that has a unique database that we otherwise wouldn't reach, That's why I'm excited.

[Michael Brown, CEO, President & Director at Travel + Leisure]

And a year ago, we shared with you our aspirations. It's a year later. We I mentioned it in one of my last answers, we're double digit growth in Margaritaville, we're double digit growth in a core and with Sports Illustrated coming that those are all going to have to have outsized growth to our total VOI sales projections that we have today.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Got it. Appreciate it.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Thanks, Ben.

[Operator]

Thank you. Next question is coming from Brent Montour from Barclays. Your line is now live.

[Brandt Montour, Director - Equity Research at Barclays]

Good morning, everybody. Thanks for taking my question. So just a more nuanced version of a question you heard earlier about the 2Q and the new owner sales. I think when we went back, if we go back to March, April when you were exiting the first quarter, you highlighted slightly softening, I don't want put words in your mouth, new owner sales trend. It sounds like it came out pretty well for you and those sort of held up in the 2Q.

[Brandt Montour, Director - Equity Research at Barclays]

But with the sort of lowering in the mix in the 2Q, I wonder and the question is, you guys have levers, in terms of what kind of tour flow you want, new owner versus repeat. Did you sort of tactically move toward repeat in the 2Q and that kind of helps keep a higher quality new owner tour coming in and keeping those metrics high? That makes sense?

[Michael Brown, CEO, President & Director at Travel + Leisure]

So let me go back to my commentary at the end of Q1. We've just gone through Liberation Day. I think everyone was super nervous around the uncertainty in the macro economy. We've now gone three months through the quarter and there's not really been a change. We've not changed what we're trying to do.

[Michael Brown, CEO, President & Director at Travel + Leisure]

We're not trying to force any issue. I'm not going to ask my team to force the 35%. We're going to do we're going to execute against our business. If we didn't bring up 35% to you all, we wouldn't even discuss it, because the industry sits there are companies in 30%, there's companies at 40%. And in that range you can run a highly successful timeshare business.

[Michael Brown, CEO, President & Director at Travel + Leisure]

So we're going to stay consistent to the way we generate new owners. And if there's fluctuation down to 30% up to 40%, we are North Star for this business long term and the second half of this year will be 35%. But it will be no sweat if we hit 32%, 33% and I'm not going to get overly excited at 37%, 38%. The normal cadence of adding marketing, taking it away, refining the business means we will end up over time at 35% and keeping a highly executing sales and marketing team without dropping in changes in the middle of quarters inorganically or unnaturally doesn't help the overall enterprise. So this is our percentage in Q2 was natural.

[Michael Brown, CEO, President & Director at Travel + Leisure]

We didn't do anything unique to drive or decelerate the number and the performance specifically in new owner the KPIs as I mentioned in Stephen's question are really strong and set up well for the long term.

[Brandt Montour, Director - Equity Research at Barclays]

Okay. That's super helpful and crystal clear. And this is I guess a follow-up to that and maybe more of a mathematical question that is and I know that there's no hard target on the back half for new owners. But if you are looking for a sequential improvement, what gives you confidence you can get a sequential improvement while also keeping VPGs in line sequentially while tour flow grows, right? I would think like the logic or the math would tell me that you'd have if you did improve new owner mix throughout the back half you would see sequential pressure on VPG. So maybe I'm missing something.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Yes. So again let me just come back to I'm going to worry less about the percentage and I'm going to spend more energy and our teams spend more energy of are we growing our tour mix, are we lapping our harder comps, Are we executing against our new partnerships? And are we opening on time the new channels and the new in house opportunities that we have? What we're seeing is that first three weeks of July is our marketing teams on the new owner side are executing extremely well. They're executing against new partnerships.

[Michael Brown, CEO, President & Director at Travel + Leisure]

They're activating in the regions in a high new owner period being in July. So percentage aside, the new owner channel is growing the way we wanted to. And yes, there needs to be acceleration in Q3 from the 3% and Q2 growth and two percent first half of the year year on year growth. So yes, we expect acceleration. Early indications are we're going to get that acceleration.

[Michael Brown, CEO, President & Director at Travel + Leisure]

And the key now is we raised our full year VPG guidance, but the big win in the second half of the year is if we accelerate tour flow and maintain VPGs where they were in Q2. But it is a balance. And right now our team's balancing is extremely well.

[Brandt Montour, Director - Equity Research at Barclays]

Excellent. Great. Thanks for the thoughts, Michael.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Thanks, Brent.

[Operator]

Thank you. Next question is a follow-up from Patrick Scholes from Truist Securities. Your line is now live.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Great. Just a quick follow-up question on the Sports Illustrated brand. Just give us an update on when you expect Alabama to open? It sounds like Nashville will be next year, but where do you stand with Alabama? And then specifically on Nashville, how is that being financed?

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Is that asset light or is that something that you're putting perhaps partially or fully on balance sheet? Thank you.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Okay. So let me hit each of the markets one by one. So Nashville is a conversion property. It will be just in time inventory to match revenue to sales, 185 units opening in the 2026 and expectation is to start sales at some point in Q4 this year. Tuscaloosa is a purpose built project, which we've gone through the permitting process, which put us about a quarter behind from our original expectation.

[Michael Brown, CEO, President & Director at Travel + Leisure]

So it's going to be early twenty twenty seven for delivery. I would expect the to sort of split those two goalposts is that we will do another announcement this year on a third Sports Illustrated Resort more than likely to be conversion, but more to come on that. We told you on the last call, we'd announced by this call we did. I'd expect that we do one more announcement this year for our third location, which again I'd expect to be just in time and I'd expect to be conversion as well.

[C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities]

Okay. Thank you for the color on that. I'm all set.

[Michael Brown, CEO, President & Director at Travel + Leisure]

All right. That's it.

[Erik Hoag, CFO at Travel + Leisure]

Thank you.

[Operator]

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

[Michael Brown, CEO, President & Director at Travel + Leisure]

Thanks, Kevin, and thanks again for joining us today. We're proud of what our team has accomplished so far this year and are excited about what's ahead. We remain focused on executing our strategy, driving long term value and navigating the market with discipline and agility. As we look forward, we're confident in the strength of our business, the resilience of our model and our future opportunities. We appreciate your time today and look forward to keeping you updated on our progress in the quarters to come. Thanks. Have a great day.

[Operator]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Participants

Executives

• Erik Hoag, CFO
• Michael Brown, CEO, President & Director

Analysts

• Chris Woronka, Research Analyst at Deutsche Bank
• Lizzie Dove, VP - Equity Research at Goldman Sachs
• C. Patrick Scholes, Managing Director - Lodging & Leisure Equity Research at Truist Securities
• Stephen Grambling, MD & Senior Equity Research Analyst at Morgan Stanley
• David Katz, Managing Director at Jefferies
• Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.
• Brandt Montour, Director - Equity Research at Barclays