Hilton Grand Vacations Q1 Earnings Call Highlights

Key Points

• Hilton Grand Vacations' adjusted EBITDA beat expectations, rising 8% year‑over‑year, and management raised full‑year adjusted EBITDA guidance to $1.225 billion–$1.265 billion (a $40M midpoint increase); the company repurchased $150M of stock in Q1 and targets roughly $150M per quarter with $237M remaining on its repurchase plan.
• HGV agreed to acquire the remaining 75% interest in its flagship Las Vegas resort Elara for about $130M (net cash use ≈ $45M), with consolidation beginning in Q2 expected to contribute roughly $20M this year and slightly reduce corporate net leverage.
• Sales mix shifted toward new buyers (new‑buyer share >26%) and HGV Max membership grew 29% to 277,000 while volume per guest (VPG) fell ~8% to ~$3,800 even as real estate margins improved to 28%; the financing business showed stronger performance with ~65% margins, $4.4B of receivables, a $1.3B allowance, improving early delinquencies, and an oversubscribed $500M securitization.

Hilton Grand Vacations NYSE: HGV reported first-quarter 2026 results that management said reflected “disciplined execution” across the business, with contract sales meeting prior expectations and adjusted EBITDA outperforming internal targets. CEO Mark Wang said the company is raising full-year adjusted EBITDA guidance, citing the quarter’s performance and the agreement to acquire the remaining interest in its Elara joint venture in Las Vegas.

Accounting deferrals and Q1 overview

Senior Vice President of Investor Relations Mark Melnyk noted the company’s prepared remarks focused on metrics that remove the impact of ASC 606 “net deferrals,” which management said better reflect underlying cash flow dynamics. Melnyk said reported results for the quarter did not reflect $25 million of net contract sales deferrals tied to pre-sales of the Kahaku project, partially offset by recognition associated with the Kyoto project, which opened in March. A net $7 million of direct expenses were also deferred. Melnyk said adjusting for those items would increase “adjusted EBITDA to shareholders” by a net $18 million to $267 million.

Wang said adjusted EBITDA exceeded expectations and grew 8% year over year, supported by 130 basis points of margin expansion and cost efficiencies. He also highlighted share repurchases of $150 million in the quarter and said total capital returned since becoming a standalone public company is “nearly $2.3 billion.”

Demand trends, sales performance, and new buyer mix

Management said leisure travel demand among members remained healthy, with strong arrivals in the first quarter. Wang said March was the strongest sales month of the quarter and that momentum carried into April, while adding the company is monitoring potential impacts from the conflict in the Middle East.

President and CFO Dan Mathewes reported total revenue before cost reimbursements grew 2% to $1.2 billion. In the real estate segment, contract sales were $719 million, down slightly but “in line with the expectations” set on the prior call. Mathewes attributed the decline to “tough comparisons” at Bluegreen as results normalized after last year’s HGV Max launch period.

New buyer contract sales accounted for more than 26% of total contract sales, up about 160 basis points from the prior year. Mathewes said tours grew 8.5% to more than 189,000, with growth from both new buyer and owner channels. He said conversion of the marketing package pipeline built over the past year fueled new buyer growth, while the value proposition of HGV Max continued to drive owner tour demand.

Volume per guest (VPG) was nearly $3,800, down 8%, which management said was consistent with its previously discussed expectation for a high single-digit decline. Mathewes said the VPG decline was driven by normalization of Bluegreen owner close rates as the company lapped last year’s HGV Max comparisons, along with a higher mix of new buyer sales, which carry lower VPG.

Despite the VPG headwind, Mathewes said real estate profitability improved due to lower costs and efficiency initiatives. Cost of product was 10% and benefited from a higher mix of lower-cost inventory. Real estate sales and marketing expense was $352 million, or 49% of contract sales, 260 basis points lower than the prior year. Real estate profit was $152 million, with margins of 28%, up 350 basis points year over year.

Wang said new buyers supported 29% growth in the HGV Max member base to 277,000 members. In response to questions, he emphasized the company’s focus on tour quality and its value proposition, and said recapture activity affects net owner growth mechanically, but management is focused on EBITDA and lifetime value.

Financing and credit trends

In the financing business, Mathewes reported revenue of $138 million and profit of $87 million. Excluding amortization items tied to acquired receivables, he said financing margins were 65%, up 510 basis points from the prior year. The weighted average interest rate for originated loans was 14.5%, and combined gross receivables were $4.4 billion.

Mathewes said the total allowance for bad debt was $1.3 billion, or 29% of the receivables portfolio. The annualized default rate was 10.1% for the quarter, which he said reflected a slight improvement from the prior year, while 31-60 day delinquencies were 1.48% versus 1.49% a year earlier. Provision declined sequentially to 14.9%, and Mathewes reiterated expectations for provision to remain in the mid-teens for the full year.

On portfolio performance, Mathewes told analysts early-stage delinquencies were “stable to improving,” adding that subsequent to quarter end, HGV’s early-stage delinquency rates were down 7%, Diamond down 10%, and Bluegreen stable, with Bluegreen’s 0-30-day delinquencies at a four-year low. He also said a change in Bluegreen underwriting mid-last year increased the initial equity down payment, with “equity at the table” up 50% compared to 2024 levels.

Mathewes also discussed the company’s first securitization of the year, an oversubscribed $500 million deal that was upsized from $400 million. He said it priced with a 98% advance rate and an average coupon of 5.13% and included a D tranche, adding that securitization markets “remain open and healthy.”

Elara acquisition and inventory optimization

Wang announced an agreement to purchase the development rights and remaining interest in Elara, the company’s “flagship resort in Las Vegas,” moving it from a fee-for-service joint venture structure to an owned property. He said Elara’s popularity with new buyers is significant, and the transaction allows the company to sell the project more broadly across its distribution network and enables Elara owners to upgrade outside the project while allowing other members to upgrade into Elara.

Mathewes said HGV historically owned 25% of the JV and did not consolidate Elara’s financials. With full consolidation beginning in the second quarter, he said investors should expect a reduction in certain line items, offset by additional VOI sales and a new stream of portfolio income in the financing business. He said the total initial outflow for the remaining 75% is about $130 million, including approximately $85 million of unpledged eligible ABS collateral and short-term working capital expected to be monetized, resulting in a net cash use of about $45 million. Mathewes said the transaction should be deleveraging and slightly reduce corporate net leverage, and he expects Elara to contribute about $20 million for the remainder of the year, which was not included in prior 2026 guidance.

Separately, management said it is progressing on an Inventory Optimization Initiative and has identified eight properties for disposition. Wang said the decision was driven by “financial considerations,” rebranding investment requirements that “didn’t make sense,” and market overlap, noting that four of the eight properties are in Orlando, where the company has 19 properties. Mathewes said the company expects the dispositions to generate a positive net contribution to adjusted EBITDA by reducing developer maintenance fee expense on unsold inventory. The initial estimate is a $10 million to $12 million annual run-rate benefit, although the agreement is subject to customary closing conditions. Mathewes said 2026 guidance does not include any contribution from these dispositions.

Guidance raised and capital return plans reiterated

Mathewes said the company increased full-year 2026 adjusted EBITDA before deferrals guidance to $1.225 billion to $1.265 billion, up from $1.185 billion to $1.225 billion, an increase of $40 million at the midpoint. He said the change reflects first-quarter performance and Elara’s contribution, while assumptions for the remaining quarters outside Elara are unchanged from the initial guidance.

Management reiterated prior full-year top-line targets, including low single-digit contract sales growth, low- to mid-single-digit tour growth, and VPG down slightly for the year. Mathewes said the company expects VPG declines in the low- to mid-single digits in the second and third quarters, returning to growth in the fourth quarter as Bluegreen fully laps the HGV Max launch comparisons. For the second quarter, he said the company expects adjusted EBITDA growth in the low- to mid-single-digit range versus the prior year, including about $3 million of contribution from Elara.

On capital returns, Mathewes said HGV repurchased 3.3 million shares for $150 million in the quarter and another 904,000 shares for $41 million from April 1 through April 23. As of April 23, the company had $237 million remaining under its repurchase plan. He said HGV remains committed to share repurchases as a primary use of free cash flow and is targeting approximately $150 million per quarter, subject to repurchases not increasing net leverage for the full year.

Addressing weather impacts, Wang said Hawaii experienced unusual “Kona low” storms and that there were also ice storms in the Northeast and colder temperatures in Florida. He estimated the aggregate impact at about $5 million in revenue, mostly in contract sales and rental-related areas, and said it was not material and not expected to be ongoing.

About Hilton Grand Vacations NYSE: HGV

Hilton Grand Vacations Inc is a leading developer and marketer of premium vacation ownership resorts. The company specializes in selling timeshare interests in vacation properties under the Hilton Grand Vacations brand, enabling members to purchase deeded real estate interests and utilize a points-based system for booking stays. Alongside new sales, the company provides ongoing management services for its portfolio of resorts, ensuring high standards of guest services, resort maintenance, and member engagement through its proprietary technology platform.

In addition to vacation ownership sales, Hilton Grand Vacations offers a comprehensive suite of membership benefits.

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