# MARRIOTT VACATIONS WORLDWIDE Corp (VAC) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from MARRIOTT VACATIONS WORLDWIDE Corp's 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1524358/000152435824000006/vac-20231231.htm
Accession: 0001524358-24-000006
Filing date: 2024-02-27
Report date: 2023-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/VAC/
All MD&A years: /company/VAC/mda/
Previous year: /company/VAC/mda/fy2022/ (FY 2022)
Next year: /company/VAC/mda/fy2024/ (FY 2024)

Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

You should read the following discussion of our results of operations and financial condition together with our audited historical consolidated financial statements and accompanying notes in Part II, “Item 8. Financial Statements and Supplementary Data,” and Part I, “Item 1. Business,” of this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on our current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those we discuss in the sections of this Annual Report entitled “Risk Factors” and “Special Note About Forward-Looking Statements.”

Our consolidated financial statements, which we discuss below, reflect our historical financial condition, results of operations and cash flows. The financial information discussed below and included in this Annual Report may not, however, necessarily reflect what our financial condition, results of operations and cash flows may be in the future.

Our discussion and analysis of fiscal year 2023 to fiscal year 2022 is included herein. Our discussion and analysis of fiscal year 2022 to fiscal year 2021 has been omitted from this Form 10-K and can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the Securities and Exchange Commission on February 27, 2023.

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Business Overview

We are a leading global vacation company that offers vacation ownership, exchange, rental, and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management.

Our Vacation Ownership segment includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive long-term relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Vacation Club brands, as well as under Marriott Vacation Club Pulse, an extension of the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. We also have a license to use the St. Regis brand for specified fractional ownership products.

Our Vacation Ownership segment generates most of its revenues from four primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.

Our Exchange & Third-Party Management segment includes an exchange network and membership programs, as well as the provision of management services to other resorts and lodging properties. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and owners’ association management, and other related products and services. In April 2022, we disposed of VRI Americas after determining that the business was not a core component of our future growth strategy and operating model. This business was a component of our Exchange & Third-Party Management segment through the date of the sale.

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to Consolidated Property Owners’ Associations.

Integration of Marriott-, Sheraton- and Westin- Branded Vacation Ownership Products

In 2016, Marriott International purchased Starwood Hotels and Resorts Worldwide, Inc., which at the time exclusively licensed the Sheraton and Westin vacation ownership brands to Legacy-ILG. Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by leveraging the brands licensed by Marriott International and its subsidiaries to us and to ILG. In August 2022, we launched Abound by Marriott Vacations, an owner benefit and exchange program which affiliates the Marriott, Sheraton and Westin vacation ownership brands to offer similar benefits to owners of our products under these brands. Under this program, owners of Marriott-, Sheraton- and Westin-branded VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club brands using a common currency. The program also harmonizes fee structures and owner benefit levels and has allowed us to transition most of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product. Further, in late 2022, we added certain Sheraton- and Westin- branded VOIs to the Marriott Vacation Club Destinations product.

Significant Accounting Policies Used in Describing Results of Operations

Sale of Vacation Ownership Products

We recognize revenues from the sale of vacation ownership products (also referred to as “VOIs”) when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible. Based upon the different terms of our contracts with the customer and business practices, control of the vacation ownership product has historically transferred to the customer at different points in time for each brand of VOIs. In the third quarter of 2022, we aligned our business practices and contract terms for the sale of vacation ownership products (the “Contract Alignment”), resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded VOIs. Prior to these changes, control transfer occurred at closing for Marriott-branded vacation ownership products. Subsequent to the Contract Alignment, transfer of control of Marriott-branded vacation ownership products occurs at expiration of the statutory rescission period, consistent with the historical timing of Sheraton- and Westin- branded transactions. Marriott-branded VOI sales contracts executed prior to these modifications have been accounted for with transfer of control of the VOI occurring at closing. Control transfer for Hyatt Vacation Club VOIs occurs at expiration of the statutory rescission period, except that control transfer for VOIs derived from Legacy-Welk continues to occur at closing.

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Sales of vacation ownership products may be made for cash or we may provide financing. In addition, we recognize settlement fees associated with the transfer of vacation ownership products and commission revenues from sales of vacation ownership products on behalf of third parties, which we refer to as “resales revenue.”

We also provide sales incentives to certain purchasers. These sales incentives typically include Marriott Bonvoy points, World of Hyatt points or an alternative sales incentive that we refer to as “plus points.” Plus points are redeemable for stays at our resorts or for use in other third-party offerings, generally up to two years from the date of issuance.

Finally, as more fully described in “Financing” below, we record the difference between the contract receivable or vacation ownership note receivable and the consideration to which we expect to be entitled (also known as a vacation ownership notes receivable reserve or a sales reserve) as a reduction of revenues from the sale of vacation ownership products at the time we recognize revenues from a sale.

We report, on a supplemental basis, contract sales for our Vacation Ownership segment. Contract sales consist of the total amount of vacation ownership product sales under contract signed during the period where we have generally received a down payment of at least ten percent of the contract price, reduced by actual rescissions during the period, inclusive of contracts associated with sales of vacation ownership products on behalf of third-parties, which we refer to as “resales contract sales.” In circumstances where a customer applies any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of vacation ownership products that we report on our income statements due to the requirements for revenue recognition described above. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.

Cost of vacation ownership products includes costs to acquire, develop and construct our projects (also known as real estate inventory costs), other non-capitalizable costs associated with the overall project development process and settlement expenses associated with the closing process. For each project, we expense real estate inventory costs in the same proportion as the revenue recognized. Consistent with the applicable accounting guidance, to the extent there is a change in the estimated sales revenues or inventory costs for the project in a period, a non-cash adjustment is recorded on our income statements to true-up costs in that period to those that would have been recorded historically if the revised estimates had been used. These true-ups, which we refer to as product cost true-up activity, can have a positive or negative impact on our income statements.

We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit. Development profit margin is calculated by dividing Development profit by revenues from the Sale of vacation ownership products.

Management and Exchange

Our management and exchange revenues include revenues generated from fees we earn for managing each of our vacation ownership resorts, providing property management, owners’ association management and related services and fees we earn for providing rental services and related hotel, condominium resort, and owners’ association management services to vacation property owners.

In addition, we earn revenue from ancillary offerings, including food and beverage outlets, golf courses and other retail and service outlets located at our Vacation Ownership resorts. We also receive annual membership fees, club dues and certain transaction-based fees from members, owners and other third parties.

Management and exchange expenses include costs to operate the food and beverage outlets and other ancillary operations and to provide overall customer support services, including reservations, and certain transaction-based expenses relating to exchange service providers.

In our Vacation Ownership segment and Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”

Financing

We offer financing to qualified customers for the purchase of most types of our vacation ownership products. The typical financing agreement provides for monthly payments of principal and interest with the principal balance of the loan fully amortizing over the term of the related vacation ownership note receivable, which is generally ten to fifteen years. While we adjust interest rates on our financing programs from time to time, such changes are typically not made in lockstep with the timing and magnitude of changes in broader market rates. We may use incentives to encourage our customers to

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choose our financing. Included within our vacation ownership notes receivable are originated vacation ownership notes receivable and vacation ownership notes receivable acquired in connection with the ILG Acquisition and the Welk Acquisition.

The interest income earned from our vacation ownership financing arrangements is earned on an accrual basis on the principal balance outstanding over the contractual life of the arrangement and is recorded as Financing revenues on our Income Statements. Financing revenues also include fees earned from servicing the existing vacation ownership notes receivable portfolio. The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which is impacted positively by the origination of new vacation ownership notes receivable and negatively by principal collections. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period. We do not include resales contract sales in the financing propensity calculation. Growing sales to first-time buyers, who are more likely to finance their purchases, remains an integral part of our overall marketing and sales strategy.

Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model. The estimates of the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses and the estimated value of collateral securing the acquired vacation ownership notes receivable. See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information regarding the accounting for acquired vacation ownership notes receivable.

In the event of a default, we generally have the right to foreclose on or revoke the underlying VOI. We return VOIs that we reacquire through foreclosure or revocation back to inventory. As discussed above, for originated vacation ownership notes receivable, we record a reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our Income Statements. Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenues. In contrast, for acquired vacation ownership notes receivable, we record changes to the reserve as an adjustment to Financing expenses on our Income Statements.

As a result of the unification of our Marriott-, Sheraton- and Westin- branded vacation ownership products under the Abound by Marriott Vacations program and stabilization of the default rates, in the third quarter of 2022, we combined and aligned our reserve methodology for vacation ownership notes receivable for our Marriott, Sheraton and Westin brands. See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information.

Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable, costs to support the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.

Rental

In our Vacation Ownership segment, we operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory. We generate revenue from rentals of inventory that we hold for sale as interests in our vacation ownership programs, inventory that we control because our owners have elected alternative usage options permitted under our vacation ownership programs and rentals of unregistered inventory and owned-hotel properties. We also recognize rental revenue from the utilization of plus points under our points-based products when the points are redeemed for rental stays at one of our resorts or other third-party offerings, or upon expiration of the points. We obtain rental inventory from unsold inventory and inventory we control because owners have elected alternative usage options offered through our vacation ownership programs. For rental revenues associated with vacation ownership products which we own and which are registered and held for sale, to the extent that the revenues from rental are less than costs, revenues are reported net in accordance with Accounting Standards Codification (“ASC”) Topic 978, “Real Estate - Time-Sharing Activities” (“ASC 978”). The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense.

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In our Exchange & Third-Party Management segment, we offer vacation rental opportunities at managed properties through our Aqua-Aston business, and for the period prior to its disposition in the second quarter of 2022, VRI Americas. We also offer vacation rental offers known as Getaways to members of the Interval Network and certain other membership programs. Getaways allows us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members. Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program. We also source resort accommodations specifically for the Getaways program. Rental revenues associated with Getaways are reported net of related expenses.

Rental expenses include:

•Maintenance and other fees on unsold inventory;

•Costs to provide alternative usage options, including Marriott Bonvoy points, World of Hyatt points, and offerings available as part of third-party offerings, for owners who elect to exchange their inventory; and

•Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, labor costs, credit card expenses, and reservation services).

Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), owner use and exchange behavior, unsold inventory on hand and keys allocated for preview stays. In addition, rental metrics may not correlate with rental revenues due to the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above). Further, as our ability to rent certain inventory may be limited on a site-by-site basis, rental operations may not generate adequate rental revenues to cover associated costs. Our Vacation Ownership segment units are either “full villas” or “lock-off” villas. Lock-off villas are units that can be separated into a primary unit and a guest room. Full villas are “non-lock-off” villas because they cannot be separated. A “key” is the lowest increment for reporting occupancy statistics based upon the mix of non-lock-off and lock-off villas. Lock-off villas represent two keys and non-lock-off villas represent one key. The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.

Cost Reimbursements

Cost reimbursements include direct and indirect costs that are reimbursed to us by owners’ associations and customers under management contracts. All costs reimbursed to us by owners’ associations and customers, with the exception of taxes assessed by a governmental authority, are reported on a gross basis. We recognize cost reimbursements when we incur the related reimbursable costs. Cost reimbursements consist of actual expenses with no added margin.

Interest Expense

Interest expense consists of all interest expense other than consumer financing interest expense, which is included within Financing expense.

Transaction and Integration Costs

Transaction and integration costs primarily include fees paid to change-management consultants, technology-related costs associated with the integration of ILG and Welk and charges for employee retention, severance and other termination-related benefits. Transaction and integration costs also include costs related to the ILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax-related accruals. Commencing in the third quarter of 2023, we discontinued classifying costs associated with the continued integration of ILG in Transaction and integration costs. Further costs incurred are reflected in the operating results of each of our segments and/or General and administrative expenses.

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Performance Measures

We measure operating performance using the key metrics described below:

•Contract sales from the sale of vacation ownership products, which consists of the total amount of vacation ownership product sales under contracts signed during the period where we have generally received a down payment of at least ten percent of the contract price, reduced by actual rescissions during the period, inclusive of contracts associated with sales of vacation ownership products on behalf of third parties, which we refer to as “resales contract sales.” In circumstances where customers apply any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of vacation ownership products that we report on our income statements due to the requirements for revenue recognition described above and adjustments for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.

•Total contract sales include contract sales from the sale of vacation ownership products including non-consolidated joint ventures.

•Consolidated contract sales exclude contract sales from the sale of vacation ownership products for non-consolidated joint ventures.

•Volume per guest (“VPG”) is calculated by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period. We believe that this operating metric is valuable in evaluating the effectiveness of the sales process as it combines the impact of average contract price with the number of touring guests who make a purchase.

•Development profit margin is calculated by dividing Development profit by revenues from the sale of vacation ownership products. We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit. We believe that Development profit margin is an important measure of the profitability of our development and subsequent marketing and sales of VOIs.

•Total active members is the number of Interval Network active members at the end of the applicable period. We consider active members to be an important metric because it represents the population of owners eligible to book transactions using the Interval Network.

•Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue for the Interval Network by the monthly weighted average number of Interval Network active members during the applicable period. We believe this metric is valuable in measuring the overall engagement of our Interval Network active members.

•Segment financial results attributable to common stockholders represents revenues less expenses directly attributable to each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We consider this measure to be important in evaluating the performance of our reportable business segments. See Footnote 20 “Business Segments” to our Financial Statements for further information on our reportable business segments.

NM = Not meaningful.

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CONSOLIDATED RESULTS

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["REVENUES"],["Sale of vacation ownership products","$","1,460","","","$","1,618","","","$","1,153"],["Management and exchange","813","","","827","","","855"],["Rental","571","","","551","","","486"],["Financing","322","","","293","","","268"],["Cost reimbursements","1,561","","","1,367","","","1,128"],["TOTAL REVENUES","4,727","","","4,656","","","3,890"],["EXPENSES"],["Cost of vacation ownership products","224","","","289","","","250"],["Marketing and sales","823","","","807","","","617"],["Management and exchange","442","","","444","","","521"],["Rental","452","","","382","","","344"],["Financing","113","","","75","","","88"],["General and administrative","273","","","249","","","227"],["Depreciation and amortization","135","","","132","","","146"],["Litigation charges","13","","","11","","","10"],["Restructuring","6","","","\u2014","","","\u2014"],["Royalty fee","117","","","114","","","106"],["Impairment","32","","","2","","","3"],["Cost reimbursements","1,561","","","1,367","","","1,128"],["TOTAL EXPENSES","4,191","","","3,872","","","3,440"],["Gains (losses) and other income (expense), net","47","","","40","","","(51)"],["Interest expense, net","(145)","","","(118)","","","(164)"],["Transaction and integration costs","(37)","","","(125)","","","(110)"],["Other","(3)","","","1","","","2"],["INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS","398","","","582","","","127"],["Provision for income taxes","(146)","","","(191)","","","(74)"],["NET INCOME","252","","","391","","","53"],["Net loss (income) attributable to noncontrolling interests","2","","","\u2014","","","(4)"],["NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS","$","254","","","$","391","","","$","49"]]
[[/GREPCENT_TABLE]]

Operating Statistics

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["(Contract sales $ in millions)","2023","","2022","","2021","","Change"],["Vacation Ownership"],["Total contract sales","$","1,800","","","$","1,874","","","$","1,411","","","$","(74)","","","(4%)"],["Consolidated contract sales","$","1,772","","","$","1,837","","","$","1,374","","","$","(65)","","","(4%)"],["Joint venture contract sales","$","28","","","$","37","","","$","37","","","$","(9)","","","(24%)"],["VPG","$","4,088","","","$","4,421","","","$","4,356","","","$","(333)","","","(8%)"],["Exchange & Third-Party Management"],["Total active members at end of year (000's)","1,564","","","1,566","","","1,296","","","(2)","","","\u2014%"],["Average revenue per member","$","156.65","","","$","157.97","","","$","179.48","","","$","(1.32)","","","(1%)"]]
[[/GREPCENT_TABLE]]

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Revenues

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Vacation Ownership","$","4,468","","","$","4,342","","","$","3,539","","","$","126","","","3%"],["Exchange & Third-Party Management","262","","","291","","","320","","","(29)","","","(10%)"],["Total Segment Revenues","4,730","","","4,633","","","3,859","","","97","","","2%"],["Consolidated Property Owners\u2019 Associations","(3)","","","23","","","31","","","(26)","","","(112%)"],["Total Revenues","$","4,727","","","$","4,656","","","$","3,890","","","$","71","","","2%"]]
[[/GREPCENT_TABLE]]

Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA

EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common stockholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to stockholders. We also use Adjusted EBITDA, as do analysts, lenders, investors, and others, because this measure excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others of results from our on-going core operations before the impact of these items with results from other companies.

EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with net income or loss attributable to common stockholders, which is the most directly comparable GAAP financial measure.

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Net income attributable to common stockholders","$","254","","","$","391","","","$","49","","","$","(137)","","","(35%)"],["Interest expense, net","145","","","118","","","164","","","27","","","23%"],["Provision for income taxes","146","","","191","","","74","","","(45)","","","(24%)"],["Depreciation and amortization","135","","","132","","","146","","","3","","","2%"],["EBITDA","680","","","832","","","433","","","(152)","","","(18%)"],["Share-based compensation expense","31","","","39","","","51","","","(8)","","","(21%)"],["Certain items","50","","","95","","","173","","","(45)","","","(47%)"],["Adjusted EBITDA","$","761","","","$","966","","","$","657","","","$","(205)","","","(21%)"],["Adjusted EBITDA Margin","24%","","29%","","24%","","(5 pts)"]]
[[/GREPCENT_TABLE]]

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In the third quarter of 2022, in connection with the unification of our Marriott-, Westin-, and Sheraton- branded vacation ownership products under the Abound by Marriott Vacations program, we aligned our business practices and contract terms for the sale of vacation ownership products (the “Contract Alignment”), resulting in the prospective acceleration of revenue for the sale of Marriott-branded VOIs. The Contract Alignment increased Net income attributable to common stockholders and Adjusted EBITDA by $34 million and $46 million in 2022, respectively. In addition, we combined and aligned our reserve methodology for vacation ownership notes receivable for these brands (the “Reserve Alignment”), resulting in a $4 million increase in Net income attributable to common stockholders and a $5 million increase in Adjusted EBITDA. Together, these changes are hereinafter referred to as the “Alignment.” See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information on the Reserve Alignment.

The table below details the components of Certain items for 2023 and 2022.

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022"],["ILG integration","$","15","","","","","$","98"],["Welk acquisition and integration","22","","","","","14"],["Other transformation initiatives","\u2014","","","","","10"],["Other transaction costs","\u2014","","","","","3"],["Transaction and integration costs","","","37","","","","","125"],["Early redemption of senior secured notes","10","","","","","\u2014"],["Gain on disposition of hotel, land, and other","(8)","","","","","(33)"],["Gain on disposition of VRI Americas","\u2014","","","","","(17)"],["Foreign currency translation","(6)","","","","","10"],["Insurance proceeds","(9)","","","","","(6)"],["Change in indemnification asset","(31)","","","","","3"],["Other","(3)","","","","","3"],["Gains and other income, net","","","(47)","","","","","(40)"],["Purchase accounting adjustments","","","8","","","","","11"],["Litigation charges","","","13","","","","","11"],["Restructuring charges","","","6","","","","","\u2014"],["Impairment charges","","","32","","","","","2"],["Expiration/forfeiture of deposits on pre-acquisition preview packages","","","\u2014","","","","","(6)"],["Early termination of VRI management contract","","","\u2014","","","","","(2)"],["Change in estimate relating to pre-acquisition contingencies","","","\u2014","","","","","(12)"],["Other","","","1","","","","","6"],["Total Certain items","","","$","50","","","","","$","95"]]
[[/GREPCENT_TABLE]]

Commencing in the third quarter of 2023, we discontinued classifying costs associated with the continued integration of ILG in Transaction and integration costs. Further costs incurred are reflected in the operating results of each of our segments and/or General and administrative expenses.

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Segment Adjusted EBITDA

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Vacation Ownership","$","883","","","$","1,033","","","$","699","","","$","(150)","","","(15%)"],["Exchange & Third-Party Management","130","","","148","","","144","","","(18)","","","(13%)"],["Segment Adjusted EBITDA","1,013","","","1,181","","","843","","","(168)","","","(14%)"],["General and administrative","(273)","","","(249)","","","(227)","","","(24)","","","(10%)"],["Other","21","","","34","","","41","","","(13)","","","(37%)"],["Adjusted EBITDA","$","761","","","$","966","","","$","657","","","$","(205)","","","(21%)"]]
[[/GREPCENT_TABLE]]

The following tables present segment financial results attributable to common stockholders reconciled to segment Adjusted EBITDA.

Vacation Ownership

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Segment financial results","$","777","","","$","961","","","$","585","","","$","(184)","","","(19%)"],["Depreciation and amortization","93","","","92","","","89","","","1","","","2%"],["Share-based compensation expense","8","","","7","","","6","","","1","","","20%"],["Certain items","5","","","(27)","","","19","","","32","","","117%"],["Segment Adjusted EBITDA","$","883","","","$","1,033","","","$","699","","","$","(150)","","","(15%)"]]
[[/GREPCENT_TABLE]]

We recognized an additional $51 million of Adjusted EBITDA in the Vacation Ownership segment during 2022 as a result of the Alignment. The table below details the components of Certain items for the Vacation Ownership segment financial results for 2023 and 2022.

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022"],["Transaction and integration costs","","","$","\u2014","","","","","$","3"],["Gain on disposition of hotel, land, and other","(7)","","","","","(33)"],["Insurance proceeds","(9)","","","","","(4)"],["Change in indemnification asset","(9)","","","","","\u2014"],["Other","(4)","","","","","\u2014"],["Gains and other income, net","","","(29)","","","","","(37)"],["Purchase accounting adjustments","","","8","","","","","11"],["Litigation charges","","","12","","","","","9"],["Impairment charges","","","12","","","","","2"],["Expiration/forfeiture of deposits on pre-acquisition preview packages","","","\u2014","","","","","(6)"],["Change in estimate relating to pre-acquisition contingencies","","","\u2014","","","","","(12)"],["Other","","","2","","","","","3"],["Total Certain items","","","$","5","","","","","$","(27)"]]
[[/GREPCENT_TABLE]]

52

Exchange & Third-Party Management

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Segment financial results","$","93","","","$","132","","","$","93","","","$","(39)","","","(30%)"],["Depreciation and amortization","31","","","31","","","48","","","\u2014","","","(2%)"],["Share-based compensation expense","2","","","2","","","2","","","\u2014","","","(23%)"],["Certain items","4","","","(17)","","","1","","","21","","","122%"],["Segment Adjusted EBITDA","$","130","","","$","148","","","$","144","","","$","(18)","","","(13%)"]]
[[/GREPCENT_TABLE]]

The table below details the components of Certain items for the Exchange & Third-Party Management segment financial results for 2023 and 2022.

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022"],["Gain on disposition of hotel, land, and other","$","(1)","","","","","$","\u2014"],["Gain on disposition of VRI Americas","\u2014","","","","","(17)"],["Foreign currency translation","\u2014","","","","","2"],["Gains and other income, net","","","(1)","","","","","(15)"],["Litigation charges","","","1","","","","","\u2014"],["Impairment charges","","","4","","","","","\u2014"],["Early termination of VRI management contract","","","\u2014","","","","","(2)"],["Total Certain items","","","$","4","","","","","$","(17)"]]
[[/GREPCENT_TABLE]]

53

BUSINESS SEGMENTS

Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 20 “Business Segments” to our Financial Statements for further information on our segments.

VACATION OWNERSHIP

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["REVENUES"],["Sale of vacation ownership products","$","1,460","","","$","1,618","","","$","1,153"],["Resort management and other services","568","","","534","","","470"],["Rental","531","","","509","","","446"],["Financing","322","","","293","","","268"],["Cost reimbursements","1,587","","","1,388","","","1,202"],["TOTAL REVENUES","4,468","","","4,342","","","3,539"],["EXPENSES"],["Cost of vacation ownership products","224","","","289","","","250"],["Marketing and sales","823","","","807","","","617"],["Resort management and other services","270","","","240","","","200"],["Rental","466","","","400","","","394"],["Financing","113","","","75","","","88"],["Depreciation and amortization","93","","","92","","","89"],["Litigation charges","12","","","9","","","9"],["Royalty fee","117","","","114","","","106"],["Impairment","12","","","2","","","\u2014"],["Cost reimbursements","1,587","","","1,388","","","1,202"],["TOTAL EXPENSES","3,717","","","3,416","","","2,955"],["Gains and other income, net","29","","","37","","","1"],["Transaction and integration costs","\u2014","","","(3)","","","(2)"],["Other","(3)","","","1","","","2"],["SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS","777","","","961","","","585"],["Net income attributable to noncontrolling interests","\u2014","","","\u2014","","","\u2014"],["SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS","$","777","","","$","961","","","$","585"]]
[[/GREPCENT_TABLE]]

54

Sale of Vacation Ownership Products

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","% of Consolidated Contract Sales, Net of Resales","","2022","","% of Consolidated Contract Sales, Net of Resales","","2021","","% of Consolidated Contract Sales, Net of Resales","","Change"],["Consolidated contract sales","$","1,772","","","","","$","1,837","","","","","$","1,374","","","","","$","(65)","","","(4%)"],["Joint venture contract sales","28","","","","","37","","","","","37","","","","","(9)","","","(24%)"],["Total contract sales","1,800","","","","","1,874","","","","","1,411","","","","","(74)","","","(4%)"],["Less resales contract sales","(42)","","","","","(40)","","","","","(26)","","","","","(2)"],["Less joint venture contract sales","(28)","","","","","(37)","","","","","(37)","","","","","9"],["Consolidated contract sales, net of resales","1,730","","","","","1,797","","","","","1,348","","","","","(67)","","","(4%)"],["Plus:"],["Settlement revenue","39","","","2%","","36","","","2%","","28","","","2%","","3"],["Resales revenue","22","","","1%","","20","","","1%","","12","","","1%","","2"],["Revenue recognition adjustments:"],["Reportability","3","","","\u2014%","","43","","","2%","","(44)","","","(3%)","","(40)"],["Sales reserve","(232)","","","(13%)","","(170)","","","(9%)","","(101)","","","(8%)","","(62)"],["Other(1)","(102)","","","(6%)","","(108)","","","(6%)","","(90)","","","(7%)","","6"],["Sale of vacation ownership products","$","1,460","","","84%","","$","1,618","","","90%","","$","1,153","","","86%","","$","(158)","","","(10%)"],["Financing propensity","58.1%","","","","53.9%","","","","52.7%","","","","4.2 pts"],["Average FICO Score(2)","735","","","","734","","","","732"]]
[[/GREPCENT_TABLE]]

(1)Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

(2)For customers who financed a vacation ownership purchase and for whom a credit score was available, generally U.S. and Canadian residents.

2023 Compared to 2022

Contract sales declined due to an 8% decline in VPG, partially offset by tour growth of 4%. The decline in VPG is attributed to the normalization of sales following the COVID-19 pandemic, the transition of certain Legacy-ILG sales galleries to selling our Marriott Vacation Club Destinations product and the impact of the reduced activity at our sales centers in Maui due to the wildfires. These results reflect a 46% and 14% increase in tours and VPG, respectively, in Asia Pacific resulting from the rebound of our sales operations in response to the increase in travel in this region following the COVID-19 pandemic.

Revenue reportability declined due to the non-recurring impact of the Alignment recorded in 2022, which resulted in an increase in reportability of $58 million in 2022.

The increase in the sales reserve is due to an adjustment to our sales reserve recorded in the third quarter of 2023 (referred to as the “2023 Reserve Adjustment” and discussed further below), an increase in the sales reserve rate in the fourth quarter of 2023 to provide for increased defaults consistent with the 2023 Reserve Adjustment, and an increase in financing propensity, partially offset by the non-recurring $19 million Reserve Alignment recorded in 2022.

In the third quarter of 2023, we evaluated our vacation ownership notes receivable reserve in light of trends in delinquencies and default rates. As a result, we increased our originated vacation ownership notes receivable reserve by $59 million. We primarily used a similar historical period of increased defaults as a basis for estimating the increase in our reserve. The additional reserve adjusted our future default rate estimates to reflect then-current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity.

55

The $19 million Reserve Alignment in 2022 was offset by a $19 million decrease in the acquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses in 2022.

Development Profit

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","% of Revenue","","2022","","% of Revenue","","2021","","% of Revenue","","Change"],["Sale of vacation ownership products","$","1,460","","","","","$","1,618","","","","","$","1,153","","","","","$","(158)","","","(10%)"],["Cost of vacation ownership products","(224)","","","(15%)","","(289)","","","(18%)","","(250)","","","(22%)","","65","","","23%"],["Marketing and sales","(823)","","","(56%)","","(807)","","","(50%)","","(617)","","","(54%)","","(16)","","","(2%)"],["Development profit","$","413","","","","","$","522","","","","","$","286","","","","","$","(109)","","","(21%)"],["Development profit margin","28.3%","","","","32.2%","","","","24.8%","","","","(3.9 pts)"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022 

The decrease in Development profit reflects lower contract sales volumes and higher sales reserves, higher marketing and sales costs attributed to the 4% increase in tours, lower VPGs and higher than normal inflation, partially offset by $13 million of favorable product cost true-up activity and a lower average cost of inventory in 2023.

Excluding the impact of the $49 million 2023 Reserve Adjustment ($59 million gross, offset by a $10 million reduction in Cost of vacation ownership products) and the $32 million Alignment in 2022, Development profit decreased $28 million and Development profit margin decreased by approximately 60 basis points. We expect future development profit margins to decline slightly resulting from increasing our sales reserve to reflect more recent default activity and an increase in Cost of vacation ownership products.

Resort Management and Other Services Revenues, Expenses and Profit

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Management fee revenues","$","180","","","$","166","","","$","158","","","$","14","","","8%"],["Ancillary revenues","252","","","241","","","188","","","11","","","5%"],["Other management and exchange revenues","136","","","127","","","124","","","9","","","7%"],["Resort management and other services revenues","568","","534","","470","","34","","","6%"],["Resort management and other services expenses","(270)","","","(240)","","","(200)","","","(30)","","","(12%)"],["Resort management and other services profit","$","298","","","$","294","","","$","270","","","$","4","","","1%"],["Resort management and other services profit margin","52.4%","","55.1%","","57.5%","","(2.7 pts)"],["Resort occupancy(1)","88.1%","","89.3%","","81.6%","","(1.2 pts)"]]
[[/GREPCENT_TABLE]]

(1)Resort occupancy represents all transient, preview, and owner keys divided by total keys available, net of keys out of service.

2023 Compared to 2022 

The increase in Resort management and other services revenues reflects higher ancillary revenues, including revenues from food and beverage and golf offerings (resulting in a 6% increase in revenue per occupied key, partially offset by a 2% decrease in occupied keys at resorts with ancillary businesses), and higher management fees and commissions from third-party vacation and other offerings. The decline in occupied keys at resorts with ancillary businesses was primarily in Maui due to the wildfires.

The increase in Resort management and other services expenses reflects an increase in ancillary expenses of $19 million due to increased volumes sold, inflation and foreign currency exchange rate changes in Mexico, and an increase in customer services and exchange company expenses of $11 million due to incremental headcount, wages, benefits, and other operating cost increases.

56

Rental Revenues, Expenses and Margin

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Rental revenues","$","531","","","$","509","","","$","446","","","$","22","","","4%"],["Rental expenses","(466)","","","(400)","","","(394)","","","(66)","","","(16%)"],["Rental profit","$","65","","","$","109","","","$","52","","","$","(44)","","","(40%)"],["Rental profit margin","12.4%","","21.4%","","11.7%","","(9.0 pts)"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["(transient keys in millions)","2023","","2022","","2021","","Change"],["Transient keys rented(1)","2,072,590","","","2,073,945","","","1,933,746","","","(1,355)","","","\u2014%"],["Average transient key rate","$","268.79","","","$","268.39","","","$","245.79","","","$","0.40","","","\u2014%"],["Rental occupancy(2)","68.2%","","70.3%","","55.1%","","(2.1 pts)"]]
[[/GREPCENT_TABLE]]

(1)Transient keys rented exclude plus points and preview stays.

(2)Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.

2023 Compared to 2022

Rental profit excluding profit from our owned hotels declined $38 million due to a $49 million increase in unsold maintenance fees associated with developer owned inventory, $11 million of decreased profit (due to lower demand, the impact of the Maui wildfires, and an unfavorable change in the mix of keys available to rent), and $5 million of increased costs associated with higher owner utilization of third-party vacation and other offerings. These decreases were partially offset by $21 million of higher plus points revenue and a $6 million reduction in costs associated with occupancy used for marketing and sales activities.

Rental profit for our owned hotels declined by $6 million, or 34%, primarily attributed to the disposition of our Puerto Vallarta and Branson hotels in 2022 and 2023, respectively.

Financing Revenues, Expenses and Margin

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Financing revenues","$","322","","","$","293","","","$","268","","","$","29","","","10%"],["Financing expenses","(36)","","","(20)","","","(38)","","","(16)","","","(82%)"],["Consumer financing interest expense","(77)","","","(55)","","","(50)","","","(22)","","","(40%)"],["Financing profit","$","209","","","$","218","","","$","180","","","$","(9)","","","(4%)"],["Financing profit margin","64.9%","","74.5%","","67.1%","","(9.6 pts)"],["Financing propensity","58.1%","","53.9%","","52.7%","","4.2 pts"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

The increase in Financing revenues reflects $31 million of higher interest income as a result of a higher average vacation ownership notes receivable balance and a slightly higher average interest rate and $1 million of higher late and service fees, offset by $3 million of higher plus point financing incentive costs (recorded as a reduction of interest income). We plan to continue offering financing incentives to certain customers in the future.

Excluding the $19 million Reserve Alignment recorded in 2022, which reduced the reserve related to our acquired vacation ownership notes receivable (recorded as a reduction of Financing expenses), the decline in Financing expenses is attributed to a reduction in the acquired vacation ownership notes receivable reserve of $3 million during 2023.

The increase in consumer financing interest expense is attributable to the higher average securitized debt and a higher average interest rate on our more recent term securitization transactions. We expect consumer financing interest expense to continue to increase as the rates on new securitizations exceed the current weighted average of our portfolio. We expect originations of vacation ownership notes receivable to outpace payoffs. We do not adjust interest rates on

57

consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates; thus, we expect our financing profit margin to decrease in the near term.

Litigation Charges

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Litigation charges","$","12","","","$","9","","","$","9","","","$","3","","","36%"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

During 2023 and 2022, the litigation charges relate primarily to our business in Europe.

Royalty Fee

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Royalty fee","$","117","","","$","114","","","$","106","","","$","3","","","3%"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

Royalty fee expense increased $2 million due to increased variable royalty fees paid to Hyatt, which became effective in the fourth quarter of 2022, and a $1 million increase in initial sales of our inventory, which carry a higher royalty fee as compared to sales of pre-owned inventory (two percent versus one percent).

Impairment

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Impairment","$","12","","","$","2","","","$","\u2014","","","$","10","","","NM"]]
[[/GREPCENT_TABLE]]

During 2023, we recorded non-cash impairment charges of $8 million related to our investment in a joint venture, $2 million related to an ancillary operation in Europe, and $2 million related to an owned hotel.

During 2022, we recorded a non-cash impairment charge of $2 million related to an ancillary operation in Europe.

Gains and Other Income

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Gains and other income, net","$","29","","","$","37","","","$","1","","","$","(8)","","","(23%)"]]
[[/GREPCENT_TABLE]]

During 2023, we recorded a $9 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, $9 million related to the receipt of business interruption and property damage insurance proceeds, $7 million of gains on the disposition of excess real estate, and $4 million of gains associated with the earn out of additional proceeds from the 2019 disposition of a land parcel in Cancun, Mexico.

During 2022, we recorded gains and other income of $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $3 million related to the receipt of business interruption insurance proceeds, and $1 million related to property insurance proceeds.

58

EXCHANGE & THIRD-PARTY MANAGEMENT

Our Exchange & Third-Party Management segment is comprised of the Interval International and Aqua-Aston businesses. The Interval International business offers a variety of membership programs and travel related products to approximately 1.6 million members and the Aqua-Aston business provides property management and rental services to property owners at 25 resorts and lodging properties. Our results include those of VRI Americas for the period prior to its disposition in the second quarter of 2022.

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["REVENUES"],["Management and exchange","$","206","","","$","226","","","$","233"],["Rental","40","","","42","","","40"],["Cost reimbursements","16","","","23","","","47"],["TOTAL REVENUES","262","","","291","","","320"],["EXPENSES"],["Management and exchange","118","","","120","","","131"],["Depreciation and amortization","31","","","31","","","48"],["Litigation charges","1","","","\u2014","","","\u2014"],["Restructuring","\u2014","","","\u2014","","","1"],["Impairment","4","","","\u2014","","","\u2014"],["Cost reimbursements","16","","","23","","","47"],["TOTAL EXPENSES","170","","","174","","","227"],["Gains and other income, net","1","","","15","","","\u2014"],["SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS","$","93","","","$","132","","","$","93"]]
[[/GREPCENT_TABLE]]

Management and Exchange Profit

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Management and exchange revenue","$","206","","","$","226","","","$","233","","","$","(20)","","","(9%)"],["Management and exchange expense","(118)","","","(120)","","","(131)","","","2","","","1%"],["Management and exchange profit","$","88","","","$","106","","","$","102","","","$","(18)","","","(18%)"],["Management and exchange profit margin","42.5%","","47.0%","","43.8%","","(4.5 pts)"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

Excluding the $12 million decrease attributed to the disposition of our VRI Americas business during the second quarter of 2022, management and exchange revenue decreased $8 million or 4%. Interval International management and exchange revenues declined $5 million or 3%, primarily attributed to lower transaction volume and lower membership revenues due to the continued shift in mix to corporate members, which have a lower propensity to transact than our traditional members. Exchange transaction volume declined 5% and average revenue per member decreased 1% compared to the prior year. Aqua-Aston management revenue declined $3 million due to higher property level expenses, which adversely impacted management fees, and a reduction in the number of units managed at a property in Maui.

Excluding the impact of the disposition of VRI Americas, management and exchange profit decreased by $14 million or 14% from the prior year, primarily attributed to higher information technology costs, marketing and sales costs and higher wages and benefits and lower revenues.

59

Rental Revenues

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Rental revenues","$","40","","","$","42","","","$","40","","","$","(2)","","","(4%)"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022 

Lower rental revenues reflect higher rental inventory procurement costs, which are recorded net within Rental revenues.

Impairment

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Impairment","$","4","","","$","\u2014","","","$","\u2014","","","$","4","","","NM"]]
[[/GREPCENT_TABLE]]

During 2023, we impaired an investment in a management contract.

Gains and Other Income

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Gains and other income, net","$","1","","","$","15","","","$","\u2014","","","$","(14)","","","(95%)"]]
[[/GREPCENT_TABLE]]

During 2023, we recorded a gain on the disposition of excess real estate of $1 million.

During 2022, we recorded a $17 million gain related to the sale of our VRI Americas business, partially offset by $2 million of foreign currency translation losses. See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.

60

CORPORATE AND OTHER

Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from the Consolidated Property Owners’ Associations.

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["REVENUES"],["Resort management and other services","$","39","","","$","67","","","$","152"],["Cost reimbursements","(42)","","","(44)","","","(121)"],["TOTAL REVENUES","(3)","","","23","","","31"],["EXPENSES"],["Resort management and other services","54","","","84","","","190"],["Rental","(14)","","","(18)","","","(50)"],["General and administrative","273","","","249","","","227"],["Depreciation and amortization","11","","","9","","","9"],["Litigation charges","\u2014","","","2","","","1"],["Restructuring","6","","","\u2014","","","(1)"],["Impairment","16","","","\u2014","","","3"],["Cost reimbursements","(42)","","","(44)","","","(121)"],["TOTAL EXPENSES","304","","","282","","","258"],["Gains (losses) and other income (expense), net","17","","","(12)","","","(52)"],["Interest expense, net","(145)","","","(118)","","","(164)"],["Transaction and integration costs","(37)","","","(122)","","","(108)"],["FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS","(472)","","","(511)","","","(551)"],["Provision for income taxes","(146)","","","(191)","","","(74)"],["Net loss (income) attributable to noncontrolling interests","2","","","\u2014","","","(4)"],["FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS","$","(616)","","","$","(702)","","","$","(629)"]]
[[/GREPCENT_TABLE]]

61

Consolidated Property Owners’ Associations

The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance, and the changes attributed to the deconsolidation of individual Consolidated Property Owners’ Associations.

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["REVENUES"],["Resort management and other services","$","39","","","$","64","","","$","152"],["Cost reimbursements","(42)","","","(44)","","","(121)"],["TOTAL REVENUES","(3)","","","20","","","31"],["EXPENSES"],["Resort management and other services","54","","","84","","","190"],["Rental","(14)","","","(18)","","","(50)"],["Cost reimbursements","(42)","","","(44)","","","(121)"],["TOTAL EXPENSES","(2)","","","22","","","19"],["Losses and other expense, net","\u2014","","","(3)","","","(4)"],["Interest expense, net","1","","","\u2014","","","\u2014"],["FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS","\u2014","","","(5)","","","8"],["Provision for income taxes","(1)","","","(1)","","","(1)"],["Net loss (income) attributable to noncontrolling interests","2","","","\u2014","","","(4)"],["FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS","$","1","","","$","(6)","","","$","3"]]
[[/GREPCENT_TABLE]]

General and Administrative

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["General and administrative","$","273","","","$","249","","","$","227","","","$","24","","","10%"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

General and administrative expenses increased due to $31 million of costs related to the implementation of technology, $14 million of increased wages and benefits, $8 million related to new product development initiatives, $6 million of increased insurance expense, $6 million of incremental costs related to compliance activities and $7 million of other miscellaneous expenses, partially offset by a $39 million decrease in variable compensation expense and $9 million of higher allocations of general and administrative expenses to operations.

We expect General and administrative expenses to increase in the near term due to the continued impact of increased wages and variable compensation expense and additional investment in upgrading, maintaining, and implementing new technology, including costs associated with our continued transition to software as a service, which are recorded as a component of General and administrative expense as opposed to Depreciation expense.

Restructuring

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Restructuring","$","6","","","$","\u2014","","","$","(1)","","","$","6","","","NM"]]
[[/GREPCENT_TABLE]]

During 2023, we realigned our management structure, resulting in severance costs associated with the elimination of certain positions.

62

Impairment

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Impairment","$","16","","","$","\u2014","","","$","3","","","$","16","","","NM"]]
[[/GREPCENT_TABLE]]

During 2023, upon our relocation to our new corporate headquarters, we recorded a non-cash impairment of a right-of-use asset related to operating leases for our legacy corporate headquarters located in Orlando, Florida, as we do not expect proceeds from subleasing the spaces to exceed our future obligations under the operating leases.

Gains (Losses) and Other Income (Expense)

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Gains (losses) and other income (expense), net","$","17","","","$","(12)","","","$","(52)","","","$","29","","","NM"]]
[[/GREPCENT_TABLE]]

In 2023, we recorded a $22 million increase to our receivable from Marriott International for indemnified income tax matters (the offsetting accrual is included in the Provision for income taxes line) and $6 million of foreign currency translation gains, partially offset by a $10 million expense attributed to the redemption premium and write-off of unamortized debt issuance costs in connection with the early redemption of our 6.125% Senior Secured Notes due 2025 (“2025 Notes”).

In 2022, we recorded $8 million of foreign currency translation losses, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations as a result of which we ceased consolidating these owners’ associations, $3 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International for indemnified tax matters, partially offset by $2 million of proceeds from corporate owned life insurance.

Interest Expense

[[GREPCENT_TABLE]]
[["","Fiscal Years","","2023 vs. 2022"],["($ in millions)","2023","","2022","","2021","","Change"],["Interest expense, net","$","(145)","","","$","(118)","","","$","(164)","","","$","(27)","","","(23%)"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

The increase in Interest expense, net is attributed to $20 million of higher interest expense associated with our 2027 Convertible Notes issued in December 2022, $17 million associated with higher borrowings and higher variable interest rates on both the Warehouse Credit Facility and the Revolving Corporate Credit Facility, $10 million of higher interest expense associated with higher variable interest rates and the expiration of a portion of our interest rate hedges on the $900 million term loan facility included in our corporate credit facility Term Loan, $7 million of interest expense related to leased assets and $2 million of higher interest on non-income tax related items. This was partially offset by $16 million of lower interest expense associated with the early redemption of our 2025 Notes, $9 million of lower interest expense associated with our 2022 Convertible Notes which were repaid at maturity and $4 million of higher interest income.

Income Tax

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["Provision for income taxes","$","(146)","","","$","(191)","","","$","(74)"],["Effective tax rate","36.5%","","32.9%","","58.4%"]]
[[/GREPCENT_TABLE]]

2023 Compared to 2022

The change in our income tax expense is attributable to lower income before income taxes and noncontrolling interests ($49 million) and benefits from state tax rate changes and certain other foreign and permanent differences which were favorable to prior periods ($62 million). These decreases were partially offset by increases in uncertain tax benefits and changes in our valuation allowance ($66 million) of which $22 million is to be indemnified pursuant to a Tax Matters

63

Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc. and we have recorded a corresponding indemnification asset as a component of Gains (losses) and other income (expense), net on our Income Statements.

Refer to Footnote 5 “Income Taxes” for additional information.

The Organization for Economic Co-operation and Development has proposed a global minimum tax of 15% of reported profits (Pillar 2) that has been agreed upon in principle by over 140 non-U.S. countries. During 2023, many countries took steps to incorporate Pillar 2 model rule concepts into their domestic laws. Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and/or on different timelines. While we continue to monitor legislative developments, we do not anticipate Pillar 2 will have a material impact on our long-term financial position.

Liquidity and Capital Resources

Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility, our ability to raise capital through securitizations in the ABS market, and, to the extent necessary, our ability to issue new debt and refinance existing debt. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to stockholders. We continuously monitor the capital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs.

At December 31, 2023, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 3.7, above our targeted range of 2.5 to 3.0. We have no material maturities of corporate debt until the third quarter of 2025.

As of December 31, 2023, the interest rate applicable to approximately 80% of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was effectively fixed. The weighted average interest rate of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was 3.9% as of December 31, 2023. Approximately 70% of our corporate debt will be fixed once our interest rate hedges mature in April 2024.

Sources of Liquidity

Cash from Operations

Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions, and (4) net cash generated from our rental and resort management and other services operations.

Vacation Ownership Notes Receivable Securitizations

We periodically securitize, without recourse, through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the ABS term securitization market. These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes. In a vacation ownership notes receivable term securitization, several classes of debt securities issued by a special purpose entity are generally collateralized by a single pool of transferred assets, which consist of vacation ownership notes receivable. In connection with each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued. Typically, we receive cash at inception of the term securitization transaction for the amount of notes issued less fees and monies held in reserve and we receive cash during the life of the transaction in amounts reflecting the excess spread of interest received on the related vacation ownership notes receivable less the interest payable on the ABS securities, less administrative fees and amounts from related vacation ownership notes receivable that default. We completed two term securitization transactions in 2023 resulting in net proceeds of $806 million.

Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread of interest accruing on the related vacation ownership notes receivable less the interest accruing on the ABS securities and fees we would otherwise receive from

64

that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During 2023, and as of December 31, 2023, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters. Since 2000, we have issued approximately $8.9 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.

On an ongoing basis, we have the ability to use our Warehouse Credit Facility to securitize, on a revolving non-recourse basis, eligible consumer loans derived from certain vacation ownership sales. Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur twice a year. During 2023, we amended certain agreements associated with our Warehouse Credit Facility, which increased the borrowing capacity from $425 million to $500 million and extended the revolving period from July 28, 2024 to May 31, 2025. At December 31, 2023, we had $150 million of borrowings outstanding on our Warehouse Credit Facility.

As of December 31, 2023, $60 million of gross vacation ownership notes receivable were eligible for securitization. See Footnote 15 “Securitized Debt’ and Footnote 19 “Variable Interest Entities” for further information on these facilities.

Revolving Corporate Credit Facility

Our Revolving Corporate Credit Facility, which expires on March 31, 2027, provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions. At December 31, 2023, $105 million of borrowings were outstanding on our Revolving Corporate Credit Facility and $24 million of letters of credit were outstanding. See Footnote 16 “Debt” to our Financial Statements for more information on interest rates pertaining to this facility.

Redemption of Senior Secured Notes

During 2023, we redeemed, prior to maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in 2022. In connection with this redemption, we incurred charges of $10 million, including a redemption premium and the write-off of unamortized debt issuance costs, which were recorded in Gains (losses) and other income (expense), net on our Income Statement for the year ended December 31, 2023.

Uses of Cash

We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of repayment by owners of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for inventory acquisitions and development.

Seasonality

Our cash flow from operations fluctuates during the year due to the timing of certain receipts and contractual and compensation-related payments. Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occurs in either the fourth quarter or the first quarter of each year. Generally, cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points-based products, and in the first quarter for our weeks-based products. In addition, during the first quarter of each year, we generally have significant variable compensation-related cash outflows associated with payment of annual bonuses.

65

Operations

In addition to net income and adjustments for non-cash items, the following are key drivers of our cash flow from operating activities:

Inventory Spending Less Than (In Excess of) Cost of Sales

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["Inventory spending","$","(89)","","","$","(138)","","","$","(153)"],["Purchase of property for future transfer to inventory","(27)","","","(12)","","","(98)"],["Inventory costs","176","","","242","","","212"],["Inventory spending less than (in excess of) cost of sales","$","60","","","$","92","","","$","(39)"]]
[[/GREPCENT_TABLE]]

Although we have significant inventory on hand, we intend to continue selectively pursuing growth opportunities by targeting high-quality inventory that allows us to add desirable new destinations to our systems with new on-site sales locations. Where possible, we will structure transactions to limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. These capital efficient vacation ownership transaction structures may consist of the development of new inventory, or the conversion of previously built units, by third parties. In addition, we may develop inventory on balance sheet in key markets where we believe the opportunities will generate acceptable risk adjusted returns.

Through our existing VOI repurchase program, we proactively acquire previously sold VOIs from owners’ associations and individual owners at lower costs than would be required to develop new inventory. Among other reasons for repurchasing inventory, we expect these repurchases will stabilize the future cost of our vacation ownership products.

Our spending for real estate inventory in 2023 was lower than our cost of sales and was primarily related to our purchases under our VOI repurchase programs. Purchase of property for future transfer to inventory included the acquisition of property in Savannah, Georgia and Charleston, South Carolina in 2023. We expect inventory spending to again be less than cost of sales for 2024.

Vacation Ownership Notes Receivable Collections Less Than of Originations

[[GREPCENT_TABLE]]
[["","Fiscal Years"],["($ in millions)","2023","","2022","","2021"],["Vacation ownership notes receivable collections \u2014 non-securitized","$","152","","","$","196","","","$","129"],["Vacation ownership notes receivable collections \u2014 securitized","444","","","446","","","557"],["Vacation ownership notes receivable originations","(987)","","","(980)","","","(750)"],["Vacation ownership notes receivable collections less than originations","$","(391)","","","$","(338)","","","$","(64)"]]
[[/GREPCENT_TABLE]]

Vacation ownership notes receivable collections were less than originations in 2023, 2022 and 2021 due to the growth of the average vacation ownership notes receivable portfolio.

Repurchase of Common Stock

The following table summarizes share repurchase activity under our current share repurchase program:

[[GREPCENT_TABLE]]
[["($ in millions, except per share amounts)","Number of Shares Repurchased","","Cost Basis of Shares Repurchased","","Average Price Paid per Share"],["As of December 31, 2022","22,773,218","","","$","2,119","","","$","93.06"],["For the year ended December 31, 2023","2,367,855","","","286","","","120.55"],["As of December 31, 2023","25,141,073","","","$","2,405","","","$","95.65"]]
[[/GREPCENT_TABLE]]

See Footnote 17 “Stockholders' Equity” to our Financial Statements for further information related to our current share repurchase program.

66

Payment of Dividends to Common Stockholders

We distributed cash dividends to holders of common stock during the year ended December 31, 2023 as follows:

[[GREPCENT_TABLE]]
[["Declaration Date","","Stockholder Record Date","","Distribution Date","","Dividend per Share"],["December 1, 2022","","December 22, 2022","","January 5, 2023","","$0.72"],["February 16, 2023","","March 2, 2023","","March 16, 2023","","$0.72"],["May 11, 2023","","May 25, 2023","","June 8, 2023","","$0.72"],["September 7, 2023","","September 21, 2023","","October 5, 2023","","$0.72"]]
[[/GREPCENT_TABLE]]

On December 7, 2023, our Board of Directors declared a quarterly dividend of $0.76 per share that was paid subsequent to the end of 2023, on January 4, 2024, to stockholders of record as of December 21, 2023.

Subsequent to the end of 2023, on February 15, 2024, our Board of Directors declared a quarterly dividend of $0.76 per share to be paid on March 14, 2024 to stockholders of record as of February 29, 2024.

We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all.

Material Cash Requirements

The following table summarizes our future material cash requirements from known contractual or other obligations as of December 31, 2023:

[[GREPCENT_TABLE]]
[["","","","Payments Due by Period"],["($ in millions)","Total","","Less Than 1 Year","","1 - 3 Years","","3 - 5 Years","","More Than 5 Years"],["Debt(1)","$","3,256","","","$","118","","","$","1,517","","","$","1,111","","","$","510"],["Securitized debt(1) (2)","2,680","","","287","","","675","","","496","","","1,222"],["Purchase obligations(3)","468","","","204","","","219","","","40","","","5"],["Operating lease obligations","125","","","24","","","41","","","23","","","37"],["Finance lease obligations(4)(5)","525","","","17","","","29","","","24","","","455"],["Other long-term obligations","18","","","14","","","3","","","1","","","\u2014"],["","$","7,072","","","$","664","","","$","2,484","","","$","1,695","","","$","2,229"]]
[[/GREPCENT_TABLE]]

(1)Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.

(2)Payments based on estimated timing of cash flow associated with securitized notes receivable.

(3)Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts and primarily relate to future purchases of vacation ownership units and information technology assets (hardware and software). Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.

(4)Includes interest.

(5)The lease term of the finance lease arrangement for our new corporate headquarters office building located in Orlando, Florida commenced for accounting purposes during the first quarter of 2023, upon substantial completion of construction. See Footnote 14 “Leases” to our Financial Statements for additional information on this lease.

In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the owners’ associations, these obligations have minimal impact on our net income and cash flow. These purchase commitments are excluded from the table above.

67

Supplemental Guarantor Information

The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

The following tables present consolidating financial information as of December 31, 2023, and for the fiscal year ended December 31, 2023, for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVWC, and MVW on a consolidated basis.

Condensed Consolidating Balance Sheet

[[GREPCENT_TABLE]]
[["","As of December 31, 2023"],["","Issuers","","Senior Notes Guarantors","","Non-Guarantor Subsidiaries","","Total Eliminations","","MVW Consolidated"],["($ in millions)","MVWC","","MORI"],["Cash and cash equivalents","$","\u2014","","","$","20","","","$","96","","","$","132","","","$","\u2014","","","$","248"],["Restricted cash","\u2014","","","25","","","153","","","148","","","\u2014","","","326"],["Accounts and contracts receivable, net","30","","","106","","","142","","","120","","","(13)","","","385"],["Vacation ownership notes receivable, net","\u2014","","","121","","","176","","","2,046","","","\u2014","","","2,343"],["Inventory","\u2014","","","186","","","336","","","112","","","\u2014","","","634"],["Property and equipment, net","\u2014","","","265","","","736","","","259","","","\u2014","","","1,260"],["Goodwill","\u2014","","","\u2014","","","3,117","","","\u2014","","","\u2014","","","3,117"],["Intangibles, net","\u2014","","","\u2014","","","822","","","32","","","\u2014","","","854"],["Investments in subsidiaries","3,421","","","3,943","","","\u2014","","","\u2014","","","(7,364)","","","\u2014"],["Other","122","","","126","","","279","","","118","","","(132)","","","513"],["Total assets","$","3,573","","","$","4,792","","","$","5,857","","","$","2,967","","","$","(7,509)","","","$","9,680"],["Accounts payable","$","55","","","$","30","","","$","196","","","$","81","","","$","\u2014","","","$","362"],["Advance deposits","\u2014","","","65","","","83","","","16","","","\u2014","","","164"],["Accrued liabilities","5","","","95","","","137","","","113","","","(7)","","","343"],["Deferred revenue","\u2014","","","7","","","169","","","213","","","(7)","","","382"],["Payroll and benefits liability","\u2014","","","91","","","86","","","28","","","\u2014","","","205"],["Deferred compensation liability","\u2014","","","126","","","39","","","3","","","\u2014","","","168"],["Securitized debt, net","\u2014","","","\u2014","","","\u2014","","","2,121","","","(25)","","","2,096"],["Debt, net","1,131","","","1,736","","","177","","","5","","","\u2014","","","3,049"],["Other","\u2014","","","2","","","229","","","18","","","\u2014","","","249"],["Deferred taxes","\u2014","","","124","","","242","","","19","","","(105)","","","280"],["MVW stockholders' equity","2,382","","","2,516","","","4,499","","","350","","","(7,365)","","","2,382"],["Total liabilities and equity","$","3,573","","","$","4,792","","","$","5,857","","","$","2,967","","","$","(7,509)","","","$","9,680"]]
[[/GREPCENT_TABLE]]

Condensed Consolidating Statement of Income

[[GREPCENT_TABLE]]
[["","2023"],["","Issuers","","Senior Notes Guarantors","","Non-Guarantor Subsidiaries","","Total Eliminations","","MVW Consolidated"],["($ in millions)","MVWC","","MORI"],["Revenues","$","\u2014","","","$","962","","","$","2,731","","","$","1,075","","","$","(41)","","","$","4,727"],["Expenses","(25)","","","(1,127)","","","(2,458)","","","(760)","","","41","","","(4,329)"],["Benefit from (provision for) income taxes","12","","","25","","","(90)","","","(93)","","","\u2014","","","(146)"],["Equity in net income (loss) of subsidiaries","267","","","439","","","\u2014","","","\u2014","","","(706)","","","\u2014"],["Net income (loss)","254","","","299","","","183","","","222","","","(706)","","","252"],["Net loss attributable to noncontrolling interests","\u2014","","","\u2014","","","\u2014","","","2","","","\u2014","","","2"],["Net income (loss) attributable to common stockholders","$","254","","","$","299","","","$","183","","","$","224","","","$","(706)","","","$","254"]]
[[/GREPCENT_TABLE]]

68

Recent Accounting Pronouncements

See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information about new accounting standards and the future adoption of such standards.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if: (1) it requires assumptions to be made that are uncertain at the time the estimate is made; and (2) changes in the estimate, or different estimates that could have been selected, could have a material effect on our results of operations or financial condition.

While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly. Additionally, changes in our assumptions, estimates or assessments as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations.

See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for further information related to our critical accounting policies and estimates, which are as follows:

•Revenue recognition, including how we recognize revenue under ASC Topic 606 “Revenue from Contracts with Customers” for the sale of vacation ownership products, including our estimates of variable consideration. Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenue. See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information on our assessments of our originated vacation ownership notes receivable reserve.

•Inventories and cost of vacation ownership products, which requires estimation of future revenues and product costs to apply a relative sales value method specific to the vacation ownership industry and how we evaluate the fair value of our vacation ownership inventory.

•Valuation of goodwill and other intangible assets, including how we determine the fair value of goodwill and our other intangible assets and reporting units, and how we determine when an impairment loss should be recorded. During the fourth quarter of 2023, we conducted our annual goodwill impairment test and did not record any impairment charges. The estimated fair values of our reporting units exceeded their carrying amounts at the date of their most recent estimated fair value determination. During 2023, we evaluated our other intangible assets for impairment and did not record any impairment charges.

•Accounting for acquired vacation ownership notes receivable, where estimates of future cash flows are based largely on the customer class and the results of our static pool analysis. In addition, the valuation of acquired vacation ownership notes receivable includes a material estimate of the fair value of the underlying collateral which would be retained in the event of customer default. See further discussion included in Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements.

•Loss contingencies, including information on how we account for loss contingencies. Accruals for contingent liabilities are recorded when it is probable that a liability has been incurred, or an asset impaired, and the amount of the loss can be reasonably estimated. Liabilities accrued for legal matters require judgments regarding projected outcomes and range of loss based on historical litigation and settlement experience, recommendations of legal counsel and, if applicable, other experts.

•Income taxes, including the accounting related to uncertain tax positions and the determination of valuation allowances on our deferred tax assets. The recognition and measurement of uncertain tax positions involves consideration of the amounts and probabilities of various outcomes that could be realized upon ultimate resolution. Tax valuation allowances are established to reduce deferred tax assets, such as tax loss carryforwards, to net realizable value. Factors considered in estimating net realizable value include historical results by tax jurisdiction, carryforward periods, income tax strategies and forecasted taxable income.

69