Hilton, Travel and Leisure, and Marriott Timeshares: 2024 State of Play
Hilton Grand Vacations reported financial results on Thursday, following recent reports from timeshare operator rivals Marriott Vacations Worldwide and Travel and Leisure Company.
Here are a few highlights, revealing broader dynamics in the segment.
Hilton Grand Vacations (HGV)
HGV is the timeshare leader by revenue size. Last year, it generated $3.978 billion in revenue and produced a net income of $313 million.
The group has risen in stature by acquiring two companies in the past two years, including Bluegreen Vacations in a $1.5 billion deal last November and Diamond Resorts for $1.4 billion in August 2021.
It has more than 150 resorts and “more than 525,000 club members.”
Mild hesitancy among new buyers
HGV executives said Thursday it had seen “some more hesitancy, particularly with new buyers” about signing up for deals, a dynamic they had seen since the second half of the third quarter persisting into early this year.
“The inflationary pressures out there have put some pressure on people’s ability to deal with their essential payments,” said Mark Wang, president and CEO of Hilton Grand Vacations.
Current owners of timeshares remain broadly resilient, however. A tiny uptick in the delinquency rate was “nothing overly material,” and default rates remain better than in 2019, executives said.
Sales, tech, and Maui hiccups
HGV actually had a bit of the opposite trouble last year with new owners. Its success at encouraging people, especially members of Hilton’s loyalty program, to take tours and learn about timeshare opportunities led to more demand than the group could efficiently handle.
“We grew our tour flow last year, our new owners’ tour flow, by 22% year-over-year, and that’s put a lot of pressure on our new agents,” Wade said. “That’s a lot to digest in a short period. So we started dialing back on a few of our lower, producing channels, starting the middle of the year.”
A travel tech glitch hurt fourth-quarter earnings. An accidental updating of software and hardware simultaneously effectively knocked offline the company’s sales system for a week, costing HGV roughly $14 million in EBITDA.
HGV’s business in West Maui remains in recovery mode, with hundreds of units offline, after August’s devastating wildfires.
“We had close to 100 team members who lost their homes there, so we committed to putting roofs over their heads,” Wade said. “We’re still housing about 40. We’ve lost a lot of sales staff to people leaving the area.”
For reference, rival Marriott Vacations Worldwide said that housing in Maui continued to be a challenge for residents, including many of its associates, too, and that it entered the new year with only about 75% of its sales organization locally back to pre-fire levels.
Travel + Leisure Co.
Travel + Leisure Co. is the second-largest timeshare operator based on revenue. In 2023, it generated a net income of $396 million on net revenue of $3.8 billion.
The group’s brand portfolio includes Wyndham, Margaritaville, Sports Illustrated, and (most recently, in recent months) Accor Vacation Club.
Sports Illustrated Resorts Deal
On September 11, it agreed to buy the rights to the vacation ownership business of Sports Hospitality Ventures. The first resort in the new business line is expected to open in Tuscaloosa, Alabama, in late 2025, according to the Travel + Leisure Co.’s latest 10-K filing. (See: Sports Illustrated’s Game Plan for Resorts and Hotels.)
On January 3, 2023, it acquired Playbook365, a youth and amateur sports management platform to help serve the youth sports market. The company’s 10-K disclosed that it “paid $13 million, comprised of $6 million of cash paid at closing and contingent consideration with a fair market value of $7 million, which can range to $24 million, based on the achievement of certain financial metrics.”
Layoffs
Travel + Leisure incurred $26 million of restructuring last year to streamline the organization, with personnel-related costs resulting from a reduction of approximately 250 employees.
Marriott Vacations Worldwide
Marriott Vacations Worldwide last year generated $3.53 billion in revenue and a net income of $219 million.
The company taps into the loyalty programs of Marriott International and Hyatt (yes, Hyatt). It has about 700,000 owner families as customers.
Like its rivals, Marriott Vacations says it is concentrating on growing its tour flow cost-effectively, seeking to grow first-time buyer tours through a strategy that emphasizes new sales locations and new marketing channels, such as digital and social media marketing.
The group also plans to grow its recurring revenues, such as managing resorts and owners’ associations, financing revenues, and membership, club, and other revenues, which involve contracts with owners that typically span many years and often renew automatically.
“We expect our adjusted EBITDA to be between $760 million and $800 million this year,” said Jason Marino, chief financial officer, during an earnings call last week. “While Maui occupancy has recovered nicely, rebuilding our sales force is going to take more time.”
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