Hilton Grand Vacations Q2 Earnings Call Highlights

Key Points

• Q2 adjusted EBITDA rose 5% to $293 million, while revenue before cost reimbursements increased 3% to $1.3 billion and margins expanded to 23%, supported by cost controls and operating efficiencies.
• Tours grew 6% to 239,000, but real estate contract sales fell 3% to $810 million and VPG declined 9% to approximately $3,400. Management attributed the weakness primarily to Bluegreen execution challenges and post-HGV Max comparisons rather than reduced demand.
• Hilton Grand Vacations reaffirmed its 2026 adjusted EBITDA guidance of $1.225 billion to $1.265 billion, while lowering expectations for full-year VPG to a low- to mid-single-digit decline and contract sales to flat to slightly down; the company also repurchased more than $300 million of shares year to date.

Hilton Grand Vacations NYSE: HGV reported second-quarter adjusted EBITDA to shareholders of $293 million, up 5% from a year earlier, as cost controls and operating-efficiency initiatives helped offset lower contract sales and sales productivity pressures at portions of its Bluegreen business.

The company said adjusted EBITDA margin, excluding cost reimbursements, expanded 40 basis points year over year to 23%. Total revenue before cost reimbursements rose 3% to $1.3 billion. Management said reported GAAP results excluded $54 million in net contract-sales deferrals tied to presales at its Ka Haku project, along with $26 million in associated direct expenses. Adjusting for those items would add a net $28 million to adjusted EBITDA, according to the company.

Tour Growth Continued, but Contract Sales Declined

Hilton Grand Vacations generated 239,000 tours during the quarter, a 6% increase from the prior-year period and its fourth consecutive quarter of consolidated tour growth. CEO Mark Wang said the results demonstrated continued demand across the platform, with occupancy and on-the-book arrivals for the second half of the year remaining ahead of the prior year.

However, real estate contract sales declined 3% to $810 million. Volume per guest, or VPG, fell 9% to about $3,400. Wang said the decline reflected a faster-than-expected moderation in Bluegreen VPG following the prior-year launch of HGV Max, sales-execution challenges at several high-volume locations, and a greater mix of trust transactions and new-buyer sales.

New-buyer contract sales accounted for 28% of total volume, up 70 basis points from the prior-year period. The company reported high-single-digit growth in both new-buyer tours and transactions, supported by prior marketing investments and stable close rates.

Wang said the company did not view the sales shortfall as a demand problem. In particular, Bluegreen tour flow increased 10% year over year and new-buyer transactions at Bluegreen rose 16%, he said. But owner VPG at Bluegreen faced a difficult comparison after the HGV Max rollout drove a 45% increase in VPG during the second quarter of 2025.

Management also identified execution issues at Bluegreen operations in Orlando and Myrtle Beach. Wang said the company installed new leadership and increased recruiting and training investments in those markets. He said Hilton Grand Vacations expects performance to improve through the third quarter and return to expected levels by the fourth quarter.

Margins Benefit From Product Mix and Cost Discipline

Real estate profit increased 7% to $173 million, while real estate margins expanded 220 basis points to 28%. Cost of product was 10%, down 130 basis points from a year earlier and consistent with the first quarter.

President and CFO Dan Mathewes said the larger mix of trust sales contributed to the cost-of-product performance. Trust transactions generally carry lower VPG than traditional deeded sales, but also have a lower cost of product, he said. Management also said inventory recapture from prior acquisitions is expected to contribute to cost-of-product benefits in the second half.

Real estate sales and marketing expense was $397 million, or 49% of contract sales, 40 basis points below the prior-year period. The financing business produced $144 million in revenue and $86 million in profit. Excluding amortization related to acquired receivables, financing margins were 62%, up 100 basis points year over year.

The company’s provision for bad debt was 17% of owned contract sales, at the high end of its targeted mid-teens range. Mathewes attributed the increase primarily to a higher customer borrowing propensity and a greater mix of trust and new-buyer sales, which carry higher provisions than deeded sales. He said the increase was not caused by portfolio deterioration, citing stable or improving early-stage delinquency trends across the company’s portfolios.

Combined gross receivables totaled $5 billion, with a $1.4 billion allowance for bad debt, or 28% of the portfolio. The weighted average interest rate on originated loans was 14.4%.

Member Growth, Asset Disposition and Capital Returns

Hilton Grand Vacations ended the quarter with 722,000 consolidated members. Nearly 300,000 members, or 40% of its base, were enrolled in HGV Max, representing 24% growth from a year earlier. Wang said the company continues to invest in HGV Max and its member experience platform to support engagement, upgrades and recurring revenue opportunities.

Its HGV Ultimate Access events platform hosted more than 137,000 guests over the past year and generated what management described as strong contract sales. The company said the platform has become a core part of its member offering.

Rental and ancillary revenue rose 8% to $210 million, supported by higher revenue per available room and increased room nights. However, developer maintenance fees remained the largest driver of profitability trends in that business and contributed to a $10 million loss during the period.

The company completed the disposition of a group of non-core assets on June 30. It recorded a $48 million non-cash loss related to the transaction, though management expects the deal to reduce the annualized maintenance-fee burden on EBITDA by $10 million to $12 million, all else equal. The benefit in 2026 is expected to be minimal because many maintenance fees are paid at the beginning of the year. Hilton Grand Vacations said it may participate in proceeds if the third party managing and marketing the properties completes future sales.

Adjusted free cash flow was $180 million, representing 61% conversion from adjusted EBITDA. During the quarter, the company repurchased 3.1 million shares for $150 million, followed by another 488,000 shares for $25 million between July 1 and July 23. Year to date, share repurchases exceeded $300 million. As of July 23, $103 million remained under the company’s repurchase authorization.

Full-Year EBITDA Outlook Maintained

Hilton Grand Vacations reaffirmed its 2026 adjusted EBITDA-before-deferrals guidance of $1.225 billion to $1.265 billion. Management said cost discipline, lower expected cost of product and improving bad-debt provisions in the second half should help support the outlook despite sales pressure.

The company now expects full-year VPG to decline in the low- to mid-single digits, compared with its prior outlook for flat to slightly lower VPG. For the third quarter, it expects high-single-digit VPG declines. Full-year contract sales are now expected to be flat to down slightly, versus its earlier expectation for a slight increase; third-quarter contract sales are expected to decline in the mid-single digits.

As of June 30, the company had $735 million of liquidity, including $272 million of unrestricted cash and $463 million available under its revolving credit facility. Total net leverage was 3.8 times on a pro forma trailing-12-month basis, down 0.1 turns from the first quarter and consistent with year-end levels.

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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