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What changed in MARRIOTT VACATIONS WORLDWIDE Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MARRIOTT VACATIONS WORLDWIDE Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+476 added−465 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-27)

Top changes in MARRIOTT VACATIONS WORLDWIDE Corp's 2023 10-K

476 paragraphs added · 465 removed · 380 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

164 edited+32 added−24 removed146 unchanged
Biggest changeLicense Agreements and Intellectual Property Our long-term license agreements include a License, Services, and Development Agreement (the “Marriott License Agreement”) with Marriott International and a License, Services, and Development Agreement (the “Ritz-Carlton License Agreement”) with The Ritz-Carlton Hotel Company, a subsidiary of Marriott International.
Biggest changeWe also have a long-term license agreement with The Ritz-Carlton Hotel Company, a subsidiary of Marriott International, under which we are granted the exclusive right, for the term of the license agreement, to use certain Ritz-Carlton marks and intellectual property in our vacation ownership business and the nonexclusive right to use certain Ritz-Carlton marks and intellectual property in our residential real estate business.
This fee typically covers expenses such as housekeeping, landscaping, taxes, insurance, and resort labor, a property management fee payable to the management company for providing management 3 services, and an assessment to fund a capital asset reserve account used to renovate, refurbish and replace furnishings, common areas and other assets (such as parking lots or roofs) as needed over time.
This fee typically covers expenses such as housekeeping, 3 landscaping, taxes, insurance, and resort labor, a property management fee payable to the management company for providing management services, and an assessment to fund a capital asset reserve account used to renovate, refurbish and replace furnishings, common areas and other assets (such as parking lots or roofs) as needed over time.
Licensor Customer Loyalty Programs Under our affiliation agreements with Marriott International and its affiliates, our owners who are Marriott Bonvoy members generally have the ability to redeem their vacation ownership usage rights to access participating Marriott-, Sheraton-, and Westin-branded properties or other products and services offered through the program.
Licensor Customer Loyalty Programs Under our affiliation agreements with Marriott International and its affiliates, our owners who are Marriott Bonvoy members generally have the ability to redeem their vacation ownership usage rights to access participating Marriott-, Sheraton-, and Westin-branded properties or other products and services offered through the Marriott Bonvoy program.
Through our relationship with Hyatt, our owners who are members of the World of Hyatt customer loyalty program generally have the ability to redeem their vacation ownership usage rights to access participating Hyatt-branded properties or other products and services offered through the program. 4 Business Strategy Our strategic goal is to strengthen our leadership position in the vacation industry by further enhancing the vacation experience to help our members and owners live their lives to the fullest.
Through our relationship with Hyatt, our owners who are members of the World of Hyatt customer loyalty program generally have the ability to redeem their vacation ownership usage rights to access participating Hyatt-branded properties or other products and services offered through the World of Hyatt program. 4 Business Strategy Our strategic goal is to strengthen our leadership position in the vacation industry by further enhancing the vacation experience to help our members and owners live their lives to the fullest.
Competitive Strengths A leading global vacation ownership and exchange company We are one of the world’s largest vacation ownership companies, based on number of owners, members, number of resorts and revenues.
Competitive Strengths A leading global vacation ownership and exchange company We are one of the world’s largest vacation ownership companies, based on number of owners, members, and resorts and revenues.
Through our points systems and exchange networks, owners can also use points toward vacation experiences such as a bicycle tour, a culinary journey, an adventure cruise or a once-in-a-lifetime trip to a major sporting event. Our points-based products offer usage in perpetuity or for a term of years and may consist of real estate interests or a contractual right-to-use.
Through our exchange networks and points systems, owners can also use points toward vacation experiences such as a bicycle tour, a culinary journey, an adventure cruise or a once-in-a-lifetime trip to a major sporting event. Our points-based products offer usage in perpetuity or for a term of years and may consist of real estate interests or a contractual right-to-use.
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.
Under this program, owners of Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club branded VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club brands using a common currency.
We also market to existing Marriott and Hyatt customer loyalty program members and travelers who are staying in locations where we have resorts that are affiliated with those brands. We market extensively to guests in Marriott International or Hyatt hotels that are located near one of our sales locations.
We also market to existing Marriott and Hyatt customer loyalty program members and travelers who are staying in locations where we have resorts affiliated with those brands. We market extensively to guests in Marriott International or Hyatt hotels that are located near one of our sales locations.
Our in-market sales and marketing team utilizes a variety of sales, marketing, revenue management and digital marketing initiatives to attract consumers and additional properties to Aqua‑Aston. We utilize many channels of distribution, including traditional wholesale through tour operators and travel partners, online travel agencies and global distribution systems.
Our in-market sales and marketing team utilizes a variety of sales, marketing, revenue management and digital marketing initiatives to attract consumers and additional properties to Aqua‑Aston. We utilize many channels of distribution, including traditional wholesale distribution through tour operators and travel partners, online travel agencies and global distribution systems.
Our total revenue excluding cost reimbursements derived from sources other than the sale of VOIs has increased and is expected to continue to increase. Our Exchange & Third-Party Management businesses also create ample opportunities to realize recurring higher-margin, fee-based revenue streams with modest required capital expenditures, which we believe will enhance our margins and free cash flow generation over time.
Our total revenue excluding cost reimbursements derived from sources other than the sale of VOIs has increased and is expected to continue to increase. Our Exchange & Third-Party Management businesses also create ample opportunities to realize recurring higher-margin, fee-based revenue streams with modest required capital expenditures, which we believe will enhance our margins and cash flow generation over time.
Regis Residence Club, The Luxury Collection Residence Club, and The Ritz-Carlton Destination Club resorts. Our weeks-based vacation ownership products in the United States and select Caribbean locations are typically sold as fee simple deeded real estate interests at a specific resort representing an ownership interest in perpetuity, except where restricted by leasehold or other structural limitations.
Regis Residence Club, The Luxury Collection Residence Club, and The Ritz-Carlton Club resorts. Our weeks-based vacation ownership products in the United States and select Caribbean locations are typically sold as fee simple deeded real estate interests at a specific resort representing an ownership interest in perpetuity, except where restricted by leasehold or other structural limitations.
Our management team’s experience in the highly regulated vacation ownership industry also provides us with a competitive advantage in expanding existing product forms and developing new ones. Engaged associates delivering high levels of customer service driving repeat customers We believe that our associates provide superior customer service and this dedication to serving the customer enhances our competitive position.
Our management team’s experience in the highly regulated vacation ownership industry also provides us with a competitive advantage in expanding existing product forms and developing new ones. 7 Engaged associates delivering high levels of customer service driving repeat customers We believe that our associates provide superior customer service and this dedication to serving the customer enhances our competitive position.
We also market through call transfer arrangements with Marriott International pursuant to which callers to certain of its reservation centers are asked if they would like to be transferred to one of our representatives who can tell them about our products. In addition, we operate other local marketing venues in various high-traffic areas.
We also market through call transfer arrangements with Marriott International pursuant to which callers to certain reservation centers are asked if they would like to be transferred to one of our representatives who can tell them about our products. In addition, we operate other local marketing venues in various high-traffic areas.
Generally, individuals are enrolled by resort developers in connection with their purchase of VOIs from such resort developers, with initial membership fees being paid on behalf of members by the resort developers. Members may also enroll directly, for instance, when they purchase a VOI through resale or an owners’ association at a resort that participates in the Interval International network.
Generally, individuals are enrolled by resort developers in connection with their purchase of VOIs from such resort developers, with initial membership fees being paid on behalf of members by the resort developers. Members may also enroll directly, for instance, when they purchase a VOI through resale or an owners’ association at a resort that participates in the Interval Network.
We were also among the first of the major hospitality brands to move from a fixed-week, fixed-unit operating model to a points-based system. This critical transition responded directly to consumer demand for greater flexibility and allowed us to tap into the broader membership opportunity afforded by the industry’s exchange businesses.
We were among the first of the major hospitality brands to move from a fixed-week, fixed-unit operating model to a points-based system. This critical transition responded directly to consumer demand for greater flexibility and allowed us to tap into the broader membership opportunity afforded by the industry’s exchange businesses.
We also receive revenues that represent reimbursement for certain costs we incur under our management agreements, which are principally payroll-related costs at the locations where we employ the associates providing on-site services, and costs associated with property refurbishments. Cost reimbursements consist of actual expenses with no added margin.
We also receive revenues that represent reimbursement for certain costs we incur under our management agreements, which are principally payroll-related costs at the locations where we employ the associates providing on-site services, costs associated with property refurbishments, and insurance. Cost reimbursements consist of actual expenses with no added margin.
We provide owners’ association governance and vacation ownership program management services for The Ritz-Carlton Destination Club and co-located The Ritz-Carlton Residences properties, including preparing association budgets, facilitating association meetings, billing and collecting maintenance fees, and supporting reservations, vacation experience planning and other off-site member services. We and The Ritz-Carlton Hotel Company typically split the management fees equally for these resorts.
We provide owners’ association governance and vacation ownership program management services for The Ritz-Carlton Club and co-located The Ritz-Carlton Residences properties, including preparing association budgets, facilitating association meetings, billing and collecting maintenance fees, and supporting reservations, vacation experience planning and other off-site member services. We and The Ritz-Carlton Hotel Company typically split the management fees equally for these resorts.
Our disciplined inventory approach and use of capital efficient vacation ownership transaction structures, including working with third parties that develop new inventory or convert previously built units that are sold to us close to when such inventory is needed to support sales, is expected to support strong and stable free cash flow generation.
Our disciplined inventory approach and use of capital efficient vacation ownership transaction structures, including working with third parties that develop new inventory or convert previously built units that are sold to us close to when such inventory is needed to support sales, is expected to support strong and stable cash flow generation.
Collective Bargaining Agreements We are party to collective bargaining agreements in the United States, Spain, and Mexico, primarily with regard to employees working in food service, laundry, and hospitality and tourism. 22 Human Rights We maintain a Human Rights Policy that aligns with government, business, and public concerns about issues such as human trafficking and the exploitation of children.
Collective Bargaining Agreements We are party to collective bargaining agreements in the United States, Spain, and Mexico, primarily with regard to employees working in food service, laundry, and hospitality and tourism. Human Rights We maintain a Human Rights Policy that aligns with government, business, and public concerns about issues such as human trafficking and the exploitation of children.
Premier global brands with access to expansive customer bases We believe that each of our owned or licensed brands - from Marriott Vacation Club to Hyatt Residence Club, from Interval International to Aqua-Aston, from Sheraton Vacation Club to Westin Vacation Club - is a highly respected and widely trusted leader in the travel and hospitality industry.
Premier global brands with access to expansive customer bases We believe that each of our owned or licensed brands — from Marriott Vacation Club to Hyatt Vacation Club, from Interval International to Aqua-Aston, from Sheraton Vacation Club to Westin Vacation Club — is a highly respected and widely trusted leader in the travel and hospitality industry.
For financing on the majority of our VOIs, we require a minimum down payment of 10% of the purchase price, although down payments and interest rates are typically higher for applicants with credit scores below certain levels and for purchasers who do not have credit scores, such as non-U.S. purchasers.
For financing on the majority of our VOIs, we require a minimum down payment of 10% of the purchase price, although down payments and interest rates are typically higher for applicants with credit scores below certain levels and for purchasers who do not have credit scores, such as non-U.S. resident purchasers.
Sobeck Butera held a number of leadership positions with the Company, serving as Vice President, Asset Management for The Ritz-Carlton Destination Club from August 2014 to October 2018, before moving into the position of Senior Vice President, Vacation Ownership for the Americas, Florida, Mexico, and Caribbean from October 2018 to April 2021. Ms.
Butera held a number of leadership positions with the Company, serving as Vice President, Asset Management for The Ritz-Carlton Destination Club from August 2014 to October 2018, before moving into the position of Senior Vice President, Vacation Ownership for the Americas, Florida, Mexico, and Caribbean from October 2018 to April 2021. Ms.
We expect to continue to leverage our exclusive call transfer 6 arrangements, on-site marketing at Marriott and Hyatt branded hotels, and use of certain exclusive marketing rights to increase sales across all of our Marriott-affiliated and Hyatt-affiliated vacation ownership properties, respectively. Loyal, highly satisfied customers We have a large, highly satisfied customer base.
We expect to continue to leverage our exclusive call transfer arrangements, on-site marketing at Marriott and Hyatt branded hotels, and use of certain exclusive marketing rights to increase sales across all of our Marriott-affiliated and Hyatt-affiliated vacation ownership properties, respectively. Loyal, highly satisfied customers We have a large, highly satisfied customer base.
We also receive annual fees, club dues, and certain transaction-based fees from owners and other third parties, including external exchange service providers with which we are associated. Financing We earn interest income on loans that we provide to purchasers of our VOIs, as well as loan servicing and other fees.
We also receive annual fees, club dues, and certain transaction-based fees from owners and other third parties, including exchange service providers with which we are associated. Financing We earn interest income on loans that we provide to purchasers of our VOIs, as well as loan servicing and other fees.
We operate in a highly competitive industry and our brand names, trademarks, service marks, trade names and logos are very important to the marketing and sales of our products and services. We believe that our licensed brand names and other intellectual property represent high standards of quality, caring, service and value to our customers and the traveling public.
We operate in a highly competitive industry and our brand names, trademarks, trade names, and service marks are very important to the marketing and sales of our products and services. We believe that our licensed brand names and other intellectual property represent high standards of quality, caring, service and value to our customers and the traveling public.
Vacation ownership is a vacation option that is positioned and sold as an attractive alternative to vacation rentals (such as hotels, resorts and condominium rentals) and second home ownership. The various segments within the vacation ownership industry can be differentiated by the quality level of the accommodations, range of services and ancillary offerings, and price.
Vacation ownership is a vacation option that is positioned and sold as an attractive alternative to vacation rentals (such as hotels, resorts and 18 condominium rentals) and second home ownership. The various segments within the vacation ownership industry can be differentiated by the quality level of the accommodations, range of services and ancillary offerings, and price.
Other laws, regulations and policies primarily affect one of five areas of our business: real estate development activities; marketing and sales activities; lending activities; resort management activities; and exchange and travel activities. Real Estate Development Regulation Our real estate development activities are regulated under a number of different timeshare, condominium and land sales disclosure statutes in many jurisdictions.
Other laws, regulations and policies primarily affect one of five areas of our business: real estate development activities; marketing and sales activities; lending activities; resort management activities; and exchange and travel activities. 19 Real Estate Development Regulation Our real estate development activities are regulated under a number of different timeshare, condominium and land sales disclosure statutes in many jurisdictions.
We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, and have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. We have a license to use the St. Regis brand for specified fractional ownership products.
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.
The Ritz-Carlton Destination Club is a collection of vacation ownership resorts that provide luxurious vacation experiences for members and their families commensurate with the legacy of The Ritz-Carlton brand. The Ritz-Carlton Destination Club resorts include luxury villas and resort amenities that offer inspirational vacation lifestyles tailored to every member’s needs and expectations.
The Ritz-Carlton Club is a collection of vacation ownership resorts that provide luxurious vacation experiences for members and their families commensurate with the legacy of The Ritz-Carlton brand. The Ritz-Carlton Club resorts include luxury villas and resort amenities that offer inspirational vacation lifestyles tailored to every member’s needs and expectations.
The Ritz-Carlton Destination Club resorts typically feature two, three and four bedroom units that usually include marble foyers, walk-in closets, custom kitchen cabinetry and luxury resort amenities such as large feature swimming pools and access to full service restaurants and bars.
The Ritz-Carlton Club resorts typically feature two-, three-, and four-bedroom units that usually include marble foyers, walk-in closets, custom kitchen cabinetry, and luxury resort amenities such as large feature swimming pools and access to full-service restaurants and bars.
We leverage high levels of associate engagement and a strong corporate culture to deliver positive customer experiences in sales, marketing, exchange, management, and resort operations. 7 We use an external third-party service provider to regularly survey our associates for feedback.
We leverage high levels of associate engagement and a strong corporate culture to deliver positive customer experiences in sales, marketing, exchange, management, and resort operations. We use an external third-party service provider to regularly survey our associates for feedback.
Our Interval International network includes members and resorts from our Marriott, Westin, Sheraton and Hyatt products, as well as other high quality branded and independent resorts, that can attract developers and owners’ associations to affiliate with the network and provide exchange opportunities for their owners.
Our Interval Network includes members and resorts from our Marriott, Westin, Sheraton and Hyatt products, as well as other high quality branded and independent resorts, that can attract developers and owners’ associations to affiliate with the network and provide exchange opportunities for their owners.
The owners at such resorts also lose their ability to access other usage benefits, such as the ability to exchange occupancy for customer loyalty program points, access to accommodations at other The Ritz-Carlton Destination Club resorts, preferential access to Ritz-Carlton hotels worldwide and access to our internal exchange and vacation travel options.
The owners at such resorts also lose their ability to access other usage benefits, such as the ability to exchange occupancy for customer loyalty program points, access to accommodations at other The Ritz-Carlton Club resorts, preferential access to Ritz-Carlton hotels worldwide and access to our internal exchange and vacation travel options.
Foreign Corrupt Practices Act (the “FCPA”). The FCPA and similar anti-corruption and bribery laws in other jurisdictions generally prohibit companies and 19 their intermediaries from making improper payments to government officials for the purpose of obtaining or generating business.
Foreign Corrupt Practices Act (the “FCPA”). The FCPA and similar anti-corruption and bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or generating business.
These laws and regulations include requirements that address health and safety; the use, management and disposal of hazardous substances and wastes; and emission or discharge of wastes or other materials. We believe that our management and development of properties comply, in all material respects, with environmental laws and regulations.
These laws and regulations include requirements that address health and safety; the use, management and disposal of hazardous substances and wastes; and emission or discharge of wastes or other materials. We believe that our management and development of properties comply, in all material respects, with applicable environmental laws and regulations.
We monitor sales that occur in the secondary market and exercise our right of first refusal when it is advantageous for us to do so, whether due to pricing, desire for the particular inventory, or other factors.
We monitor sales that occur in the secondary market and exercise our right of first refusal when it is advantageous for us to do so, 12 whether due to pricing, desire for the particular inventory, or other factors.
In addition, the vacation ownership industry competes generally with other vacation rental options (such as hotels, resorts and condominium rentals) offered by the lodging industry as well as alternative lodging marketplaces such as Airbnb, VRBO, and HomeAway, which offer rentals of homes and condominiums.
In addition, the vacation ownership industry competes generally with other vacation rental options (such as hotels, resorts and condominium rentals) offered by the lodging industry as well as alternative lodging marketplaces such as Airbnb and VRBO, which offer rentals of homes and condominiums.
The collection, use and protection of personal data of our customers, as well as the sharing of our customer data with affiliates and third parties, are governed by privacy laws and regulations enacted in the United States and other jurisdictions around the world.
The collection, use and protection of personal data of our customers, as well as the sharing of our customer data with affiliates and third parties, are governed by privacy laws and regulations enacted in the United States, individual states, and other jurisdictions around the world.
This strategy includes further reducing energy and water consumption, expanding our portfolio of green resorts, including LEED (Leadership in Energy & Environmental Design) certification, educating and inspiring associates and guests to support the environment, and embracing innovation.
This strategy includes further reducing energy and water consumption, expanding our portfolio of green resorts, including resorts with LEED (Leadership in Energy & Environmental Design) certification, educating and inspiring associates and guests to support the environment, and embracing innovation.
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 Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension of the Marriott Vacation Club brand.
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 believe our access to guests with an affinity for our brands aids our marketing efforts and significantly enhances our ability to drive future sales, as we predominantly generate VOI sales through brand loyalty-affiliated sales channels.
We 6 believe our access to guests with an affinity for our brands aids with our marketing efforts and significantly enhances our ability to drive future sales, as we predominantly generate VOI sales through brand loyalty-affiliated sales channels.
Products and Services Points-Based Vacation Ownership Products We sell the majority of our products through points-based ownership programs, including Marriott Vacation Club Destinations, Sheraton Flex, Westin Flex, Westin Aventuras, the Hyatt Residence Club Portfolio Program, and the Hyatt Vacation Club Platinum Program.
Products and Services Points-Based Vacation Ownership Products We sell the majority of our products through points-based ownership programs, including Marriott Vacation Club Destinations, Sheraton Flex, Westin Flex, Westin Aventuras, the Hyatt Vacation Club Portfolio Program, and the Hyatt Vacation Club Platinum Program.
The Ritz-Carlton Hotel Company manages the on-site operations for The Ritz-Carlton Destination Club and The Ritz-Carlton Residences properties in our portfolio under separate management agreements with us.
The Ritz-Carlton Hotel Company manages the on-site operations for The Ritz-Carlton Club and The Ritz-Carlton Residences properties in our portfolio under separate management agreements with us.
In 2022, approximately 70% of our vacation ownership contract sales were to our existing owners. In addition, we are concentrating on growing our tour flow cost effectively as we seek to generate more first-time buyer tours through our strategy that emphasizes adding new sales locations and new marketing channels, including digital and social media marketing.
In 2023, approximately 70% of our vacation ownership contract sales were to our existing owners. In addition, we are concentrating on growing our tour flow cost effectively as we seek to generate more first-time buyer tours through our strategy that emphasizes adding new sales locations and new marketing channels, including digital and social media marketing.
It can be a bicycle tour, a culinary journey, an adventure cruise, or a once-in-a-lifetime trip to a major sporting event. That’s why our sales force is highly trained in a consultative sales approach designed to enable us to meet customers’ needs on an individual basis. We hire our sales executives based on stringent selection criteria.
It can be a bicycle tour, a culinary journey, an adventure cruise, or a once-in-a-lifetime trip to a major sporting event. That is why our sales force is highly trained in a consultative sales approach designed to enable us to meet customers’ needs on an individual basis. We hire our sales executives based on stringent selection criteria.
Many jurisdictions, including in the United States, Asia Pacific and Europe, require that we file detailed registration or offering statements with regulatory authorities disclosing certain information regarding the VOIs and other real estate interests we market and sell, such as information concerning the interests being offered, any projects, resorts or programs to which the interests relate, applicable condominium or vacation ownership plans, evidence of title, details regarding our business, the purchaser’s rights and obligations with respect to such interests, and a description of the manner in which we intend to offer and advertise such interests.
Many jurisdictions, including in the United States, Asia Pacific, Mexico, Europe, and Central America, require that we file detailed registration or offering statements with regulatory authorities disclosing certain information regarding the VOIs and other real estate interests we market and sell, such as information concerning the interests being offered, any projects, resorts or programs to which the interests relate, applicable condominium or vacation ownership plans, evidence of title, details regarding our business, the purchaser’s rights and obligations with respect to such interests, and a description of the manner in which we intend to offer and advertise such interests.
We have 21 more than 20 years of energy conservation experience that we have put to use in implementing our environmental strategy across each of our segments.
We have more than 20 years of energy conservation experience that we have put to use in implementing our environmental strategy across each of our segments.
We believe our access to capital markets and credit facilities will enable us to maintain an attractive leverage profile and level of liquidity that provides financial flexibility, giving us the ability to pursue strategic growth opportunities, withstand potential future economic downturns, optimize our cost of capital, and pursue strategies for returning excess capital to shareholders.
We believe our access to capital markets and credit facilities will enable us to maintain an attractive leverage profile and level of liquidity that provides financial flexibility, giving us the ability to pursue strategic growth opportunities, withstand potential future economic downturns, optimize our cost of capital, and pursue strategies for returning excess capital to stockholders.
These capital efficient vacation ownership transaction structures may include working with third parties to develop new inventory or to convert previously built units to be sold to us close to when we need such inventory. Approximately 20% of our Vacation Ownership segment resorts are co-located with same-branded or affiliated hotel properties.
These capital efficient vacation ownership transaction structures may include working with third parties to develop new inventory or to convert previously built units to be sold to us close to when we need such inventory. Approximately 25% of our Vacation Ownership segment resorts are co-located with same-branded or affiliated hotel properties.
Financing revenues are relatively stable as the majority of these revenues generated in any given year come from prior year note originations.
Financing revenues are generally relatively stable as the majority of these revenues generated in any given year come from prior year note originations.
Maximize cash flow by selectively pursuing capital efficient vacation ownership deal structures and business models Through the use of our points-based products, we are able to more closely match inventory investment with sales pace, thereby generating strong cash flows over time.
Maximize cash flow by selectively pursuing capital efficient vacation ownership deal structures and business models Through the use of our points-based products, we are able to more closely align inventory investment with sales pace, thereby generating strong cash flows over time.
It is this very diversity that make us “Better Together” and that has allowed us to grow and prosper over the years.
It is this very inclusivity and diversity that make us “Better Together” and that has allowed us to grow and prosper over the years.
These revenues generally grow as we add new resorts and are more predictable due to the relatively fixed nature of resort operating expenses and, in the case of management and exchange revenues, contractual agreements that typically span many years and are often automatically renewable.
These revenues generally grow as we add new resorts and are more predictable due to the relatively fixed nature of resort operating expenses and, in the case of management and exchange revenues, contractual agreements that typically span many years and often renew automatically.
We maintain a range of different off-site sales centers, including our central telesales organization based in Orlando and our network of third-party brokers in Latin America and Europe. We have more than 90 global sales locations focused on the sale of VOIs.
We maintain a range of different off-site sales centers, including our central telesales organization based in Orlando and our network of third-party brokers in Latin America and Europe. We have 90 global sales locations focused on the sale of VOIs.
We seek to continuously evolve and expand our core product offerings, as demonstrated by the launch of the Marriott Vacation Club Destinations (“MVCD”) points product in 2010 and Abound by Marriott Vacations program in 2022, and through the integration of the Legacy-Welk and Hyatt businesses.
We seek to continuously evolve and expand our core product offerings, as demonstrated by the launch of the Marriott Vacation Club Destinations points product in 2010 and Abound by Marriott Vacations program in 2022, and through the integration of the Legacy-Welk and Hyatt businesses in 2023.
James H Hunter, IV Executive Vice President and General Counsel 60 James H Hunter, IV has served as our Executive Vice President and General Counsel since November 2011. Prior to that time, he had served as Senior Vice President and General Counsel since 2006. Mr. Hunter joined Marriott International in 1994. Jeanette E.
James H Hunter, IV Executive Vice President and General Counsel 61 James H Hunter, IV has served as our Executive Vice President and General Counsel since November 2011. Prior to that time, he had served as Senior Vice President and General Counsel since 2006. Mr. Hunter joined Marriott International in 1994. Jeanette E.
John and Hawaii, that allow owners to access that particular single site using points in a similar use fashion to the other points-based products. 9 Our points programs allow owners to bank and borrow their annual point allotments, access other locations through the applicable internal exchange programs that we operate, and access Interval International’s network of more than 3,200 affiliated resorts.
John and Hawaii, that allow owners to access only that particular site using points in a similar fashion to the other points-based products. 9 Our points programs allow owners to bank and borrow their annual point allotments, access other locations through the applicable internal exchange programs that we operate, and access Interval International’s network of more than 3,200 affiliated resorts.
Our VOIs are currently marketed for sale throughout the United States and in over 30 countries and territories around the world, targeting customers who vacation regularly with a focus on family, relaxation and recreational activities. In 2022, over 90% of our vacation ownership contract sales originated at sales centers that are co-located with one of our resorts.
Our VOIs are currently marketed for sale throughout the United States and in nearly 30 countries and territories around the world, targeting customers who vacation regularly with a focus on family, relaxation and recreational activities. In 2023, over 90% of our vacation ownership contract sales originated at sales centers that are co-located with one of our resorts.
In Asia Pacific, our owner base is derived primarily from the Asia Pacific region and secondarily from the Europe and North America regions. In Europe, our owner base is derived primarily from the North America, Europe and Middle East regions. Recent and potential future consolidation in the highly fragmented vacation ownership industry may increase competition.
In Asia Pacific, our owner base is derived primarily from the Asia Pacific region and secondarily from the Europe and North America regions. In Europe, our owner base is derived primarily from the North America, Europe and Middle East regions. Recent and potential future consolidation in the vacation ownership industry may increase competition.
Dream Vacation Week is a certificate program which provides the recipient with access to book discounted resort accommodations and is used as a marketing premium, sales incentive, or enhancement to an existing program.
Dream Vacation Week is a certificate program that provides the recipient with access to book discounted resort accommodations and is used as a marketing premium, sales incentive, or enhancement to an existing program.
Since 2000, we have issued approximately $8.1 billion of debt securities in securitization transactions in the ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.
Since 2000, we have issued approximately $8.9 billion of debt securities in securitization transactions in the ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.
Our compliance with such provisions has not had a material impact on our capital expenditures, earnings or competitive position, nor do we anticipate that such compliance will have a material impact in the future.
Our compliance with such requirements has not had a material impact on our capital expenditures, earnings or competitive position, nor do we anticipate that such compliance will have a material impact in the future.
We retain the servicing and collection responsibilities for the loans we securitize, for which we receive a servicing fee. 14 Our Resorts As of December 31, 2022, our vacation ownership portfolio consisted of over 120 properties with over 22,000 vacation ownership villas, also referred to as units, and over 31,000 keys in the following locations.
We retain the servicing and collection responsibilities for the loans we securitize, for which we receive a servicing fee. 14 Our Resorts As of December 31, 2023, our vacation ownership portfolio consisted of approximately 120 properties with over 22,000 vacation ownership villas, also referred to as units, and over 31,000 keys in the following locations.
Virgin Islands 3 512 Costa Rica 1 48 West Indies 1 88 Europe and Asia Pacific # of Resorts # of Keys # of Resorts # of Keys France 1 202 Indonesia 2 161 Spain 3 715 Thailand 3 332 United Kingdom 1 49 Australia 1 88 Brands # of Resorts # of Keys Marriott Vacation Club 63 18,913 Sheraton Vacation Club 9 4,375 Westin Vacation Club 12 4,308 Grand Residences by Marriott 2 381 The Ritz-Carlton Club 5 259 St.
Virgin Islands 3 512 Costa Rica 1 48 West Indies 1 88 Europe and Asia Pacific # of Resorts # of Keys # of Resorts # of Keys France 1 202 Indonesia 2 161 Spain 3 715 Thailand 3 332 United Kingdom 1 49 Australia 1 88 Brands # of Resorts # of Keys Marriott Vacation Club 63 18,913 Sheraton Vacation Club 9 4,364 Westin Vacation Club 12 4,310 Grand Residences by Marriott 2 381 The Ritz-Carlton Club 5 259 St.
Marbert President, Exchange and Third-Party Management 66 Jeanette Marbert has served as our President, Exchange and Third-Party Management since October 2018. She served as President and Chief Executive Officer for the Exchange and Rental segment of ILG, Inc. from November 2017 until September 2018, and as Executive Vice President from June 2009 until November 2017.
Marbert President, Exchange and Third-Party Management 67 Jeanette E. Marbert has served as our President, Exchange and Third-Party Management since October 2018. She served as President and Chief Executive Officer for the Exchange and Rental segment of ILG, Inc. from November 2017 until September 2018, and as Executive Vice President from June 2009 until November 2017.
Grand Residences by Marriott is dedicated to providing carefree property ownership. The accommodations for this brand are similar to those we offer under the Marriott Vacation Club brand, but the duration of the VOI is longer, ranging between three and thirteen weeks.
Grand Residences by Marriott is dedicated to providing carefree property ownership. The accommodations for this brand are similar to those offered under the Marriott Vacation Club brand, but the duration of the VOI is longer, ranging between three and thirteen weeks.
For example, the tapestry of vacation experiences we offer includes not only traditional resort experiences but also urban experiences at our Marriott Vacation Club Pulse locations, which are unique properties that embrace the spirit and culture of their urban locations.
For example, the wide range of vacation experiences we offer includes not only traditional resort experiences but also urban experiences at our Marriott Vacation Club Pulse locations, which are unique properties that embrace the spirit and culture of their urban locations.
We intend to maintain and improve their satisfaction with our products and services, which drives incremental sales as customers choose to spend more time at our resorts. Because our owners, members, and guests are our most cost-effective vacation ownership sales channels, we intend to continue to leverage our strong customer satisfaction to drive higher margin sales volumes.
We intend to maintain and improve owner, member, and guest satisfaction with our products and services, which drives incremental sales as customers choose to spend more time at our resorts. Because our owners, members, and guests are our most cost-effective vacation ownership sales channels, we intend to continue to leverage our strong customer satisfaction to drive higher margin sales volumes.
Prior to that time, he served as our Chief Human Resources Officer since 2010. Mr. Yonker joined Marriott International in 1983. 24
Prior to that time, he served as our Chief Human Resources Officer since 2010. Mr. Yonker joined Marriott International in 1983. 25
From a single week at a fixed location to today’s abundance of getaway options, the range of vacation experiences we offer has undergone a remarkable metamorphosis. The vacation experience we provide today isn’t just about a visit to a resort.
From a single week at a fixed location to today’s abundance of getaway options, the range of vacation experiences we offer has undergone a remarkable metamorphosis. The vacation experience we provide today is not just about a visit to a resort.
We intend to continue to selectively pursue growth opportunities primarily in North America by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations in ways that optimize the timing of our capital investments.
We intend to continue to selectively pursue growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations in ways that optimize the timing of our capital investments.
Members are enrolled in these programs either by resort developers in connection with the initial purchase of their VOIs or by upgrading their membership directly. Club Interval This product gives owners of fixed or floating week VOIs the opportunity to use their resort week as points within the Interval International network.
Members are enrolled in these programs either by resort developers in connection with the initial purchase of their VOIs or by upgrading their membership directly. 16 Club Interval Club Interval gives owners of fixed or floating week VOIs the opportunity to use their resort week as points within the Interval Network.
Within our Exchange & Third-Party Management segment, we recognize exchange and Getaways revenue based on confirmation of the vacation; revenue is generally higher in the first quarter and lower in the fourth quarter. Remaining rental revenue is recognized based on occupancy. Refer to Liquidity within Part I, Item 7.
Within our Exchange & Third-Party Management segment, we recognize exchange and Getaways revenue based on confirmation of the vacation; revenue is generally higher in the first quarter and lower in the fourth quarter. Remaining rental revenue is recognized based on occupancy. Refer to “Liquidity and Capital Resources” within Part I, Item 7.
We offer our existing Marriott Vacation Club owners who hold weeks-based products the opportunity to participate, on a voluntary basis, in MVCD, an exchange program through which many of MVCD’s vacation experiences are offered. All existing owners, whether or not they elect to participate in the MVCD exchange program, retain their existing rights and privileges of vacation ownership.
We offer our existing Marriott Vacation Club owners who hold weeks-based products the opportunity to participate, on a voluntary basis, in an exchange program through which many vacation experiences are offered. All existing owners, whether or not they elect to participate in the Abound by Marriott Vacations exchange program, retain their existing rights and privileges of vacation ownership.
Our approach is thoughtfully designed to attract, develop, retain, and engage our associates by: • offering competitive, fair, and transparent compensation and benefits; • supporting the overall well-being of our associates physically, mentally, and socially; • creating opportunities for associate growth, development, recognition, training, and education; and • promoting an inclusive and diverse workplace, where all individuals are respected regardless of their age, race, national origin, gender, religion, disability, sexual orientation, or other lived experiences.
Our approach is thoughtfully designed to attract, engage, and retain our associates and promote their career development by: • offering competitive, fair, and transparent compensation and benefits; • supporting the overall well-being of our associates physically, mentally, and socially; • creating opportunities for associate growth, career development, recognition, training, and education; and • fostering an inclusive and diverse workplace, where all individuals are respected regardless of their age, race, ethnic background, national origin, gender, religion, disability, sexual orientation, or other lived experiences.
Marriott Vacation Club Pulse, a brand extension of Marriott Vacation Club, offers properties in the heart of vibrant cities, including San Francisco and New York City, among others. Because of their urban locations, Marriott Vacation Club Pulse properties typically offer limited on-site amenities and may include smaller guest rooms without separate living areas and kitchens.
Marriott Vacation Club Pulse, a brand extension of Marriott Vacation Club, offers properties in the heart of vibrant cities, such as San Francisco and New York City. Because of their urban locations, Marriott Vacation Club Pulse properties typically offer limited on-site amenities and may include smaller guest rooms without separate living areas and kitchens.
Our services may include day-to-day operations of the resorts, maintenance of the resorts, preparation of reports, budgets, owners’ association administration, quality assurance and employee training. As of December 31, 2022, we provided third-party management services to over 25 resorts and lodging properties. Our Aqua-Aston business provides management and rental services for condominium owners, hotel owners, and owners’ associations.
Our services may include day-to-day operations of the properties, maintenance of the properties, preparation of reports and budgets, owners’ association administration, quality assurance and employee training. As of December 31, 2023, we provided third-party management services to 25 properties. Our Aqua-Aston business provides management and rental services for condominium owners, hotel owners, and owners’ associations.
According to the American Resort Development Association (“ARDA”), a trade association representing the vacation ownership and resort development industries, as of December 31, 2021, the U.S. vacation ownership community was comprised of over 1,500 resorts, representing more than 200,000 units. According to ARDA, sales in the U.S. market were approximately $8.1 billion in 2021.
According to the American Resort Development Association (“ARDA”), a trade association representing the vacation ownership and resort development industries, as of December 31, 2022, the U.S. vacation ownership community was comprised of over 1,500 resorts, representing more than 200,000 units. According to ARDA, sales in the U.S. market were approximately $10.5 billion in 2022.
Similarly, through our relationship with Hyatt, we benefit from access to members of Hyatt’s award-winning guest loyalty program, the World of Hyatt, which includes approximately 36 million members as of December 31, 2022.
Similarly, through our relationship with Hyatt, we benefit from access to members of Hyatt’s award-winning guest loyalty program, the World of Hyatt, which includes approximately 44 million members as of December 31, 2023.
The condominium rental properties are generally investment properties, and, to a lesser extent, second homes, owned by individuals who contract with Aqua‑Aston directly to manage, market and rent their properties, generally pursuant to short‑term agreements. We also offer such owners a comprehensive package of marketing, management and rental services designed to enhance rental income and profitability.
The condominium rental properties are generally investment properties, and, to a lesser extent, second homes, owned by individuals who contract with Aqua‑Aston directly to manage, market and rent their properties to transient guests. We also offer such owners a comprehensive package of marketing, management and rental services designed to enhance rental income and profitability.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, properties in these markets have had to close in the past, including for extended periods, in order to repair damage caused by disasters. Depending on the severity of future disasters, the resulting damage could require closure of all or substantially all of our properties in one or more of these markets while we complete renovations.
Biggest changeDepending on the severity of future disasters, the resulting damage could require closure of all or substantially all of our properties in one or more of these markets while we complete renovations. Our insurance may not cover all damages caused by any such event, including the loss of sales of VOIs at sales centers that are not fully operational.
Delaware law also restricts some business combinations between any holder of 15% or more of our outstanding common stock and us. The fact that these provisions and statutory restrictions may discourage acquisition proposals or delay or prevent a change in control could harm our stock price.
The fact that these provisions and statutory restrictions may discourage acquisition proposals or delay or prevent a change in control could harm our stock price. Delaware law also restricts some business combinations between any holder of 15% or more of our outstanding common stock and us.
Complying with the GDPR, other international laws and regulation, and state and federal laws and regulation could subject us to increased costs; and our failure to comply with these laws and regulations could result in significant fines, litigation, losses, third-party damages and other liabilities, any of which may have a material adverse effect on our brands, marketing, reputation, business, financial condition and results of operations.
Complying with the GDPR, other international laws and regulations, and state and federal laws and regulations could subject us to increased costs; and our failure to comply with these laws and regulations could result in significant fines, litigation, losses, third-party damages and other liabilities, any of which may have a material adverse effect on our brands, marketing, reputation, business, financial condition and results of operations.
If we are unable to recover any of the principal amount of the loan from a defaulting borrower, or if the allowances for losses from such defaults are inadequate, the revenues and profits that we derive from the vacation ownership business could be reduced materially. Our points-based product forms expose us to an increased risk of temporary inventory depletion.
If we are unable to recover any of the principal amount of the loan from a defaulting borrower, or if the allowances for losses from such defaults are inadequate, the revenues and profits that we derive from the vacation ownership business could be reduced materially. 34 Our points-based product forms expose us to an increased risk of temporary inventory depletion.
We could also lose our on-site access to hotel customers, including brand customer loyalty program members, at such resorts, which is a cost-effective marketing channel for our vacation ownership products, and our sales may decline. 32 We may not have inventory available for sale when needed or we may have excess inventory.
We could also lose our on-site access to hotel customers, including brand customer loyalty program members, at such resorts, which is a cost-effective marketing channel for our vacation ownership products, and our sales may decline. We may not have inventory available for sale when needed or we may have excess inventory.
To the extent that we and our subsidiaries incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above will increase. If the default rates or other credit metrics underlying our vacation ownership notes receivable deteriorate, our vacation ownership notes receivable securitization program and VOI financing program could be adversely affected.
To the extent that we and our subsidiaries incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above will increase. 37 If the default rates or other credit metrics underlying our vacation ownership notes receivable deteriorate, our vacation ownership notes receivable securitization program and VOI financing program could be adversely affected.
If we are unable to hire and retain employees capable of performing at a high level, our business, including our cash flows, results of operations, owner, guest and associate satisfaction and reputation, could be adversely affected. 26 Significant inflation, higher interest rates or deflation could adversely affect our business and financial results.
If we are unable to hire and retain employees capable of performing at a high level, our business, including our cash flows, results of operations, owner, guest and associate satisfaction and reputation, could be adversely affected. Significant inflation, higher interest rates or deflation could adversely affect our business and financial results.
The cost of compliance with privacy laws in the jurisdictions in which we operate has increased and may continue to increase as laws change and we expand into new jurisdictions and become subject to the privacy laws of such jurisdictions. If we are not able to develop adequate alternative marketing strategies, our sales may be adversely 27 affected.
The cost of compliance with privacy laws in the jurisdictions in which we operate has increased and may continue to increase as laws change and we expand into new jurisdictions and become subject to the privacy laws of such jurisdictions. If we are not able to develop adequate alternative marketing strategies, our sales may be adversely affected.
The existence of a share repurchase program could cause our stock price to be higher than it would be absent the program and could reduce market liquidity for our stock. Use of our funds to repurchase shares could diminish our cash reserves, which may impact our ability to finance growth, pursue strategic opportunities, and discharge liabilities.
The existence of a share repurchase program could cause our stock price to be higher than it would be absent the program and could reduce market liquidity for our stock. Use of our funds to repurchase shares could diminish our cash reserves, which may 38 impact our ability to finance growth, pursue strategic opportunities, and discharge liabilities.
Default rates may deteriorate due to many different reasons, including those beyond our control, such as financial hardship of purchasers. In addition, if we offer loans to our customers with terms longer than those generally offered in the industry, our ability to securitize those loans may be adversely impacted.
Default rates may deteriorate due to many different reasons, including those beyond our control, such as financial hardship of purchasers. In addition, if we offer loans to our customers with terms longer or different than those generally offered in the industry, our ability to securitize those loans may be adversely impacted.
In addition, the transactions in which we have securitized vacation ownership notes receivable contain certain portfolio 25 performance requirements related to default and delinquency rates, which, if not met, would result in loss or disruption of cash flow until portfolio performance sufficiently improves to satisfy the requirements.
In addition, the transactions in which we have securitized vacation ownership notes receivable contain certain portfolio performance requirements related to default and delinquency rates, which, if not met, would result in loss or disruption of cash flow until portfolio performance sufficiently improves to satisfy the requirements.
Under the license agreements with Marriott International, if other international hotel operators offer new products and services as part of their respective hotel businesses that may directly compete with our vacation ownership products and services, then Marriott International may also offer such new products and services, and use its trademarks in connection with such offers.
Under our license agreements with Marriott International, if other international hotel operators offer new products and services as part of their respective hotel businesses that may directly compete with our vacation ownership products and services, then Marriott International may also offer such new products and services, and use its trademarks in connection with such offers.
The factors that affect demand for specific destinations could significantly reduce the number of accommodations available in such areas for exchanges. The level of inventory in our system also depends on the number of developers whose resorts are in our exchange network, and the numbers of members of such resorts.
The factors that affect demand for specific destinations could significantly reduce the number of 36 accommodations available in such areas for exchanges. The level of inventory in our system also depends on the number of developers whose resorts are in our exchange network, and the numbers of members of such resorts.
Our Board of Directors makes all decisions regarding our payment of dividends, subject to an evaluation of our financial condition, results of operations and capital requirements, as well as applicable law, regulatory and contractual constraints, industry practice and other business considerations that our Board of Directors considers relevant.
Our Board makes all decisions regarding our payment of dividends, subject to an evaluation of our financial condition, results of operations and capital requirements, as well as applicable law, regulatory and contractual constraints, industry practice and other business considerations that our Board considers relevant.
Our inability or failure to meet, or the perceived failure to meet, such stakeholders’ expectations, as well as adverse incidents, could negatively impact our stock price, results of operations, or reputation and increase our cost of capital. Risks related to our vacation ownership business.
Our inability or failure to meet, or the perceived failure to meet, such stakeholders’ expectations, as well as adverse incidents, could negatively impact our stock price, results of operations, or reputation and increase our cost of capital. 32 Risks related to our vacation ownership business.
Projects to upgrade or replace our technologies may be extremely complex and require significant resources and time and may adversely affect our ability to provide services, operate websites, process and fulfill 28 transactions, and respond to customer inquiries during the upgrade or replacement process.
Projects to upgrade or replace our technologies may be extremely complex and require significant resources and time, and may adversely affect our ability to provide services, operate websites, process and fulfill transactions, and respond to customer inquiries during the upgrade or replacement process.
Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, or terrorist acts, may be uninsurable or the price of coverage for such losses may be too expensive to justify obtaining insurance.
Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes, wildfires, and floods, or terrorist acts, may be uninsurable or the price of coverage for such losses may be too expensive to justify obtaining insurance.
See Footnote 16 “Debt” and Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for additional information regarding the accounting for our convertible notes. 36 We are subject to risks relating to our convertible note hedges and warrants.
See Footnote 16 “Debt” and Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for additional information regarding the accounting for our convertible notes. We are subject to risks relating to our convertible note hedges and warrants.
For two years after the Vistana Spin-Off, the Tax Matters Agreement prohibited Vistana and ILG from taking certain actions involving their stock or Vistana’s assets because the Vistana Spin-Off would be taxable to Starwood (but not to Starwood shareholders) pursuant to Section 355(e) of the Internal Revenue Code if there was a direct or indirect 50% or greater change in Vistana’s ownership as part of a plan or series of related transactions including the Vistana Spin-Off.
For two years after the Vistana Spin-Off, the Tax Matters Agreement prohibited Vistana and ILG from taking certain actions involving their stock or Vistana’s assets because the Vistana Spin-Off would be taxable to Starwood (but not to Starwood stockholders) pursuant to Section 355(e) of the Internal Revenue Code if there was a direct or indirect 50% or greater change in Vistana’s ownership as part of a plan or series of related transactions including the Vistana Spin-Off.
The credit agreement that governs the Corporate Credit Facility and the indentures that govern our various senior notes impose significant operating and financial restrictions on us, which among other things limit our ability and the ability of certain of our subsidiaries to incur debt, pay dividends and make other restricted payments, make loans and investments, incur liens, sell assets, enter into affiliate transactions, enter into agreements restricting certain subsidiaries’ ability to pay dividends and consolidate, merge or sell all or substantially all of their assets.
The credit agreement that governs our corporate credit facility (“Corporate Credit Facility”) and the indentures that govern our various senior notes impose significant operating and financial restrictions on us, which among other things limit our ability and the ability of certain of our subsidiaries to incur debt, pay dividends and make other restricted payments, make loans and investments, incur liens, sell assets, enter into affiliate transactions, enter into agreements restricting certain subsidiaries’ ability to pay dividends and consolidate, merge or sell all or substantially all of their assets.
Failure to maintain the integrity of internal or customer data or to protect our systems from cyber-attacks could disrupt our business, damage our reputation, and subject us to costs, fines or lawsuits.
Failure to maintain the integrity of internal or customer data or to protect our information systems from cyber-attacks could disrupt our business, damage our reputation, and subject us to costs, fines or lawsuits.
Competitive pressures may cause us to reduce our fee structure or potentially modify our business models, which could adversely affect our business, financial condition and results of operations. Our principal exchange network administered by Interval International included more than 3,200 resorts located in over 90 countries and territories as of December 31, 2022.
Competitive pressures may cause us to reduce our fee structure or potentially modify our business models, which could adversely affect our business, financial condition and results of operations. Our principal exchange network administered by Interval International included more than 3,200 resorts located in over 90 countries and territories as of December 31, 2023.
The effects of such competition on our exchange business are more pronounced as the proportion of vacation club corporate members in the Interval International network increases.
The effects of such competition on our exchange business are more pronounced as the proportion of vacation club corporate members in the Interval Network increases.
As a result, we had to temporarily close outlets (e.g., food and beverage) or reduce services (e.g., housekeeping performed fewer cleans throughout the week), and we may have to take these or similar steps in the future. Any such changes may harm our revenues, cash flows, profitability or customer satisfaction.
As a result, we had to temporarily close outlets (e.g., food and beverage) or reduce services (e.g., housekeeping performed fewer cleanings throughout the week), and we may have to take these or similar steps in the future. Any such changes may harm our revenues, cash flows, profitability or customer satisfaction.
If default rates for our borrowers increase, we have been required, and may in the future be required, to increase our reserve on vacation ownership notes receivable, which may reduce our earnings. If default rates increase beyond current projections and result in higher than expected foreclosure activity, our results of operations could be adversely affected.
If default rates for our borrowers increase, we have been required, and may in the future be required, to increase our reserve on vacation ownership notes receivable, which would reduce our earnings. If default rates increase beyond current projections and result in higher than expected foreclosure activity, our results of operations would be adversely affected.
If any holders elect to convert their convertible notes, we may elect to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity. The way we account for our convertible notes may impact our reported or future financial results and the market price of our common stock.
If any holders elect to convert their convertible notes, we may elect to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity. The way we account for our convertible notes may impact our financial results and the market price of our common stock.
In addition, Interval International competes with developers that create, operate and expand internal exchange and vacation club systems, which decreases their reliance on external vacation ownership exchange programs, including those we offer, and adversely impacts the supply of resort accommodations available through our external exchange networks.
In addition, Interval International competes with developers that create, operate and expand internal exchange and vacation club systems, which decreases their reliance on external vacation ownership exchange programs, including those we offer, and adversely impacts the supply of resort accommodations available through our external exchange network.
The increased ability for owners of Spanish timeshares to void their contracts has negatively impacted other developers with resorts in Spain and led to a significant decrease in the number of resorts located in Spain in the Interval International network with active sales and the loss of members who own VOIs at those resorts.
The increased ability for owners of Spanish timeshares to void their contracts has negatively impacted other developers with resorts in Spain and led to a decrease in the number of resorts located in Spain in the Interval Network with active sales and the loss of members who own VOIs at those resorts.
If we are unable to negotiate new affiliation agreements with resort developers or secure renewals with existing members or developers in our Interval International network, as has occurred in the past, the number of new and existing members, the supply of resort accommodations available through our exchange networks and related revenue could decrease.
If we are unable to negotiate new affiliation agreements with resort developers or secure renewals with existing members or developers in our Interval Network, as has occurred in the past, the number of new and existing members, the supply of resort accommodations available through our exchange network and related revenue could decrease.
Our share repurchases may not enhance shareholder value because the market price of our common stock may decline below the prices at which we repurchased shares and short-term stock price fluctuations could reduce the program’s effectiveness. Our ability to pay dividends on our stock is limited.
Our share repurchases may not enhance stockholder value because the market price of our common stock may decline below the prices at which we repurchased shares and short-term stock price fluctuations could reduce the program’s effectiveness. Our ability to pay dividends on our stock is limited.
These actions may lead to operational delays or restrictions, as well as increased operating costs, regulatory burdens and risk of litigation. 29 Changes in tax regulations or their interpretation could negatively impact our cash flows and results of operations.
These actions may lead to operational delays or restrictions, as well as increased operating costs, regulatory burdens and risk of litigation. 30 Changes in tax regulations or their interpretation could negatively impact our cash flows and results of operations.
The Vistana acquisition was not expected to violate this rule because Starwood shareholders held over 50% by vote and value of ILG stock (and, thus, indirectly, of Vistana) immediately after the Vistana acquisition. However, the ILG Acquisition diluted the indirect ownership of Vistana by its former shareholders below 50%.
The Vistana acquisition was not expected to violate this rule because Starwood stockholders held over 50% by vote and value of ILG stock (and, thus, indirectly, of Vistana) immediately after the Vistana acquisition. However, the ILG Acquisition diluted the indirect ownership of Vistana by its former stockholders below 50%.
Increases in maintenance fees to keep pace with maintenance and other costs may make our products less desirable, which could negatively impact sales and cause an increase in defaults on our vacation ownership notes receivable portfolio.
Increases in maintenance fees to keep pace with operating expenses, maintenance and other costs may make our products less desirable, which could negatively impact sales and cause an increase in defaults on our vacation ownership notes receivable portfolio.
Risks related to ownership of our common stock. Our share repurchase program may not enhance long-term shareholder value and could increase the volatility of the market price of our common stock and diminish our cash. Our share repurchase program does not obligate us to repurchase any shares of our common stock.
Risks related to ownership of our common stock. Our share repurchase program may not enhance long-term stockholder value and could increase the volatility of the market price of our common stock and diminish our cash. Our share repurchase program does not obligate us to repurchase any shares of our common stock.
Failure to adhere to these restrictions, including in certain circumstances that may be outside of our control, could result in tax being imposed on Starwood or its shareholders for which we may be obligated to indemnify Starwood.
Failure to adhere to these restrictions, including in certain circumstances that may be outside of our control, could result in tax being imposed on Starwood or its stockholders for which we may be obligated to indemnify Starwood.
As a result, our ability to achieve some or all of our ESG initiatives or goals may be limited without additional support or action by the owners’ associations of the vacation ownership resorts and properties we manage. Complying with increased regulations could increase our costs and adversely impact our results of operations.
As a result, our ability to achieve some or all of our corporate responsibility initiatives or goals may be limited without additional support or action by the owners’ associations of the vacation ownership resorts and properties we manage. Complying with increased regulations could increase our costs and adversely impact our results of operations.
Our inability to market to guests in hotels affiliated with our licensors that are located near one of our sales locations or maintain our marketing partnerships with Marriott International or Hyatt reservation centers would cause our sales to decline, which could adversely affect our financial condition and results of operations.
Our inability to market to guests in hotels affiliated with our licensors that are located near one of our sales locations or maintain our marketing relationships with Marriott International or Hyatt reservation centers would likely cause our sales to decline, which could adversely affect our financial condition and results of operations.
Fear of exposure to contagious illnesses, such as COVID-19 or other diseases, or natural or man-made disasters, and the physical effects of climate change, such as more frequent or severe storms, droughts, hurricanes, erosion and flooding, have caused and may continue to cause travelers to delay or cancel travel plans, including sales tours at our resorts, with greater frequency.
Fear of exposure to contagious illnesses, such as COVID-19 or other Health Crises, or natural or man-made disasters, and the physical effects of climate change, such as more frequent or severe storms, droughts, hurricanes, wildfires, erosion and flooding, have caused and may continue to cause travelers to delay or cancel travel plans, including sales tours at our resorts, with greater frequency.
Provisions of our Charter and Bylaws, as well as provisions in the agreements with our licensors, may delay or prevent a merger or acquisition that a shareholder may consider favorable.
Provisions of our Charter and Bylaws, as well as provisions in the agreements with our licensors, may delay or prevent a merger or acquisition that a stockholder may consider favorable.
Our information technology systems and our databases are potentially susceptible to manmade and natural disasters, as well as power losses, computer and telecommunications failures, technological breakdowns, cyber-attacks, acts of war or terrorism and other events.
Our information technology systems and our databases are potentially susceptible to man-made and natural disasters, as well as power losses, computer and telecommunications failures, technological breakdowns, cyber-attacks, acts of war or terrorism and other events.
These rulings have led to an increase in lawsuits by owners seeking to void timeshare contracts in Spain, including certain contracts at certain of our resorts in Spain. However, the Supreme Court of Spain has not yet substantively opined on the issue as it pertains to the Company’s timeshare contracts.
These rulings have led to an increase in lawsuits by owners seeking to void timeshare contracts in Spain, including lawsuits by owners at certain of our resorts in Spain which are currently pending. However, the Supreme Court of Spain has not yet substantively opined on the issue as it pertains to the Company’s timeshare contracts.
Acquisitions may also significantly increase our debt or result in dilutive issuances of our equity securities, write-offs of goodwill or substantial amortization expenses associated with other intangible assets. 30 Our use of different estimates and assumptions in the application of our accounting policies could result in material changes to our reported financial condition and results of operations, and changes in accounting standards or their interpretation could significantly impact our reported results of operations.
Acquisitions may also significantly increase our debt or result in dilutive issuances of our equity securities, impairments of goodwill or substantial amortization expenses associated with other intangible assets. 31 Our use of different estimates and assumptions in the application of our accounting policies could result in material changes to our reported financial condition and results of operations, and changes in accounting standards or their interpretation could significantly impact our reported results of operations.
For example, failure to comply with applicable law could result in the loss of licenses or registrations we must have in order to operate our business, render sales contracts for our products void or voidable, subject us to fines or other sanctions, and increase our exposure to litigation.
Failure to comply could have a material adverse effect on our business. For example, failure to comply with applicable law could result in the loss of licenses or registrations we must have in order to operate our business, render sales contracts for our products void or voidable, subject us to fines or other sanctions, and increase our exposure to litigation.
If the inventory available for sale for a particular trust were to be depleted before new inventory is added and available for sale, we would be required to temporarily suspend sales until inventory is replenished or shift to selling an alternative product which may increase marketing and sales costs and lower VPG.
If the inventory available for sale for a particular trust were to be depleted before new inventory is added and available for sale, we would be required to temporarily suspend sales until inventory is replenished or shift to selling an alternative product, which may increase marketing and sales costs and lower volume per guest (“VPG”).
Further, the COVID-19 pandemic or a future health crisis may also adversely affect our cash flows and operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations. Risks related to our business and industry.
Further, a future Health Crisis may also adversely affect our cash flows and operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations. 26 Risks related to our business and industry.
The duration and extent of the impact of the COVID-19 pandemic or a future health crisis on our business and financial results will largely depend on future developments, including the duration and spread of the pandemic or other health crisis, the extent and severity of any resurgences of the pandemic or other health crisis in the future, the response by all levels of government in their efforts to contain the pandemic or other health crisis to mitigate the economic disruptions, the related impact on consumer confidence and spending, and how quickly economies and demand for our products and services recover after the pandemic or other health crisis subsides, all of which are highly uncertain, can rapidly change and cannot be predicted.
The duration and extent of the impact of a future Health Crisis on our business and financial results will largely depend on future developments, including the duration and spread of the Health Crisis, the response by all levels of government in their efforts to contain the Health Crisis to mitigate the economic disruptions, the related impact on consumer confidence and spending, and how quickly economies and demand for our products and services recover after the Health Crisis subsides, all of which are highly uncertain, can rapidly change and cannot be predicted.
We must also obtain the applicable licensor’s consent to use its trademarks in connection with properties we acquire or develop in the future. If our licensors do not consent to such use, our ability to expand our business and remain competitive may be materially adversely affected.
We must obtain the applicable licensor’s consent to use its trademarks in connection with properties we acquire or develop in the future. If our licensors do not consent to such use as required by the applicable license agreement, our ability to expand our business and remain competitive may be materially adversely affected.
A sustained labor shortage or increased turnover rates within our employee base, whether due to the impact of COVID-19 global health concerns or as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our business.
A sustained labor shortage or increased turnover rates within our employee base, whether due to a Health Crisis or as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our business.
Under the Hyatt license agreement, Hyatt may compete with us under certain circumstances, e.g., if we fail to meet certain performance standards or if Hyatt acquires a new hotel brand that Hyatt determines to license for timeshare and we are unsuccessful negotiating license rights pursuant to our right of first offer.
Under the Hyatt license agreement, Hyatt may compete with us under certain circumstances, such as if we fail to meet certain performance standards or if Hyatt acquires a new hotel brand that Hyatt desires to license for timeshare and we are unsuccessful in negotiating such license rights pursuant to our right of first offer.
Spanish court rulings voiding certain timeshare contracts have increased our exposure to litigation that may materially adversely affect our business and financial condition. A series of Spanish court rulings that, since 2015, have voided certain timeshare contracts has increased our exposure to litigation that may materially adversely affect our business and financial condition.
Spanish court rulings voiding certain timeshare contracts have increased our exposure to litigation that may materially adversely affect our business and financial condition. A series of Spanish court rulings starting in 2015 increased our exposure to litigation that may materially adversely affect our business and financial condition.
A number of factors may adversely affect the labor force available or increase labor costs from time to time, such as high employment levels, federal unemployment subsidies, including unemployment benefits offered in response to the COVID-19 pandemic or other health crises, and other government actions. In 2021, we observed an overall tightening and increasingly competitive labor market.
A number of factors may adversely affect the labor force available or increase labor costs from time to time, such as high employment levels, increasing minimum wage rates, federal unemployment subsidies, including unemployment benefits offered in response to a Health Crisis, and other government actions. In 2021, we observed an overall tightening and increasingly competitive labor market.
Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses and operations. Risks related to COVID-19 global or regional health concerns, outbreaks, and pandemics.
Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses and operations. Risks related to global or regional health concerns, outbreaks, and pandemics (each a “Health Crisis”).
For example, in response to the COVID-19 pandemic, we increased our reserve for vacation ownership notes receivable due to higher default expectations and revised our estimates of the fair value of our reporting units, resulting in the impairment of goodwill.
For example, in response to the COVID-19 pandemic, we increased our reserve for vacation ownership notes receivable due to higher default expectations and revised our estimates of the fair value of our reporting units, resulting in the impairment of goodwill. See the “Critical Accounting Estimates” section of Item 7.
Effective succession planning is also important to our long-term success. The departure of a key executive or associate or the failure to ensure an effective transfer of knowledge and a smooth transition upon such departure may be disruptive to the business and could hinder our strategic planning and execution.
The departure of a key executive or associate or the failure to ensure an effective transfer of knowledge and a smooth transition upon such departure may be disruptive to the business and could hinder our strategic planning and execution.
Fear of exposure to the COVID-19 virus or other illnesses, government restrictions on travel, including quarantine requirements, low vaccination rates in some parts of the world and variants of COVID-19 that may be resistant to available vaccines have caused travelers to cancel or delay plans to travel to our resorts.
Fear of exposure to viruses or other illnesses, government restrictions on travel, including quarantine requirements, low vaccination rates in some parts of the world and viruses or other illnesses that may be resistant to available vaccines could cause travelers to cancel or delay plans to travel to our resorts.
As we report on our ESG initiatives or goals, we may be subject to heightened reputational and operational risk and compliance costs related to these matters. Also, we do not exercise complete control over all resorts and properties that we manage; rather, our control over these properties is generally limited by the terms of the applicable management agreements.
As we report on our corporate responsibility initiatives or goals, we may be subject to heightened reputational and operational risk and compliance costs related to these matters. Our control over resorts and properties that we manage is generally limited by the terms of the applicable management agreements.
If Marriott International or Hyatt offers new vacation ownership products and services under their trademarks, they may compete directly with our vacation ownership products and services, and we may not be able to distinguish our vacation ownership products and services from those offered by Marriott International or Hyatt.
If Marriott International or Hyatt offers new vacation ownership products and services as contemplated under certain circumstances under their respective license agreements, they may compete directly with our vacation ownership products and services, and we may not be able to distinguish our vacation ownership products and services from those offered by Marriott International or Hyatt.
Our backup systems only relate to certain aspects of our operations; these systems are not fully redundant and disaster recovery planning is not sufficient for all eventualities.
Our backup systems only relate to certain aspects of our operations; these systems are not fully redundant and disaster recovery planning cannot anticipate and address all eventualities.
We must dedicate a portion of our cash flow from operations to debt servicing and repayment of debt, which reduces funds available for strategic initiatives and opportunities, dividends, share repurchases, working capital, and other general corporate needs.
We must dedicate a portion of our cash flow from operations to debt servicing and repayment of debt, which reduces funds available for strategic initiatives and opportunities, dividends, share repurchases, working capital, and other general corporate needs. It also increases our vulnerability to the impact of adverse economic and industry conditions.
As new variants of the coronavirus or other health crises make headlines from time to time, consumer fear about contracting COVID-19 or other illnesses and recommendations or mandates from governmental authorities to avoid large gatherings of people or self-quarantine, may increase. These recommendations and mandates have affected, and may affect in the future, resort occupancies.
When Health Crises make headlines from time to time, consumer fear about contracting an illness and recommendations or mandates from governmental authorities to avoid large gatherings of people or self-quarantine, may increase. These recommendations and mandates have affected, and may affect in the future, resort occupancies.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing and frequently evolving scrutiny globally from customers, regulators, investors, employees and other stakeholders related to their ESG practices and disclosure.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
Our license agreements also allow us to offer points to members of the customer loyalty programs associated with the Marriott, Sheraton, Westin and Hyatt brands, which provides us with the opportunity to market directly to these members. The termination of the license agreements with Marriott International or Hyatt would eliminate this valuable marketing channel.
Our license agreements also allow us to market directly to members of the customer loyalty programs associated with the Marriott, Sheraton, Westin and Hyatt brands, and offer points in such loyalty programs as premiums for related promotional offers. The termination of the license agreements with Marriott International or Hyatt would eliminate this valuable marketing channel.
The COVID-19 pandemic has had, and may continue to have, serious adverse effects on our business, financial condition, cash flows, and results of operations for an unknown period of time and we may face similar health crises in the future.
The COVID-19 pandemic had, and a future Health Crisis may have, serious adverse effects on our business, financial condition, cash flows, and results of operations for an unknown period of time.
Adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels, inflation, recession and loss of personal wealth resulting from the impact of the COVID-19 pandemic may negatively affect travel demand for a prolonged period. Any future health crises may also adversely affect our business in a similar or more severe manner.
Adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels, inflation, recession and loss of personal wealth resulting from the impact of a future Health Crisis may negatively affect travel demand for a prolonged period.
Risks related to our indebtedness. Our indebtedness may restrict our operations. As of December 31, 2022, we had approximately $3.1 billion of total corporate indebtedness outstanding and could borrow an additional $749 million under the Revolving Corporate Credit Facility.
Risks related to our indebtedness. Our indebtedness may restrict our operations. As of December 31, 2023, we had approximately $3 billion of total corporate indebtedness outstanding and could borrow an additional $621 million under a revolving corporate credit facility with a borrowing capacity of $750 million (the “Revolving Corporate Credit Facility”).
It also increases our vulnerability to the impact of adverse economic and industry conditions. 35 If we are unable to comply with our debt agreements, or to raise additional capital when needed, our business, cash flow, liquidity, and results of operations could be harmed.
If we are unable to comply with our debt agreements, or to raise additional capital when needed, our business, cash flow, liquidity, and results of operations could be harmed.
In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption. If our information technology systems fail to adequately support our strategic, operational or compliance needs, our business, financial position, results of operations or cash flows, as well as our disclosure controls and procedures and internal control over financial reporting, may be adversely affected.
If our information technology systems fail to adequately support our strategic, operational or compliance needs, our business, financial position, results of operations or cash flows, as well as our disclosure controls and procedures and internal control over financial reporting, may be adversely affected.
Any of these events could have a material adverse effect on our business, financial condition and results of operations. 34 Risks related to our exchange and third-party management business.
Any of these events could have a material adverse effect on our business, financial condition and results of operations. Risks related to our exchange and third-party management business. Our Exchange & Third-Party Management business depends on relationships with developers, members and others, and any adverse changes in these relationships could adversely affect our business, financial condition, and results of operations.
Damage to, or other potential losses involving, properties that we own or manage may not be covered by insurance. We procure insurance for general liability, property, business interruption, directors and officers liability, and other insurable risks with respect to our business operations and as customarily carried by companies in the hospitality industry.
We procure insurance for general liability, property, business interruption, directors and officers liability, and other insurable risks with respect to our business operations and as customarily carried by companies in the hospitality industry.
The number of delinquencies may increase again as the pandemic continues or its effect on economic conditions and the ability and desire to travel continues and could lead to defaults on financing that we provide to purchasers of our products in excess of our estimates. Future health crises may also have such adverse effects.
The number of delinquencies may increase as the result of a future Health Crisis’s effect on economic conditions and the ability and desire to travel, and could lead to defaults on financing that we provide to purchasers of our products in excess of our estimates.
If any such litigation results in a significant adverse judgment or settlement, we could suffer significant losses, our margins and results of operations could be reduced, our reputation could be harmed and our future ability to operate our business could be constrained.
If any such litigation results in a significant adverse judgment or settlement, we could suffer significant losses, our margins and results of operations could be reduced, our reputation could be harmed and our future ability to operate our business could be constrained. 35 Damage to, or other potential losses involving, properties that we own or manage may not be covered by insurance.
We finance more than half of our VOI sales. 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. As a result, our financing profit margin has declined.
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. As a result, our financing profit margin declined in 2023 due to general market interest rate increases, and may decline again in the future.
Laws, regulations, policies, and case law precedent may change or be subject to different interpretation in the future, including in ways that could decrease demand for our products and services, increase costs, and subject us to additional liabilities. Failure to comply could have a material adverse effect on our business.
We may not be able to successfully comply with all laws, regulations and policies to which we are subject. Laws, regulations, policies, and case law precedent may change or be subject to different interpretation in the future, including in ways that could decrease demand for our products and services, increase costs, and subject us to additional liabilities.
Alternatively, deflation could cause an overall decrease in spending and borrowing capacity, which could lead to a deterioration of economic conditions and employment levels. Deflation could also cause the value of our products and services to decline. These, or other factors that increase the risk of significant deflation, could have a negative impact on our business or financial results.
Alternatively, deflation could cause an overall decrease in spending and borrowing capacity, which could lead to a deterioration of economic conditions and employment levels. Deflation could also cause the value of our products and services to decline.
Developers and members also supply resort accommodations for use in exchanges and Getaways. Our third-party management business depends on relationships with vacation property and hotel owners.
Our Interval International business depends on vacation ownership developers for new members and on members and participants to renew their existing memberships and otherwise engage in transactions. Developers and members also supply resort accommodations for use in exchanges and Getaways. Our third-party management business depends on relationships with vacation property and hotel owners.
Increasing our financing rates could negatively impact VOI sales and financing propensity. However, if we are unable to increase our financing rates at the same rate as our costs of funds, our financing profits will be negatively impacted. Our business is extensively regulated, and any failure to comply with applicable laws could materially adversely affect our business.
Increasing our financing rates could negatively impact VOI sales and financing propensity. However, if we are unable to increase our financing rates at the same rate as our costs of funds, our financing profits will be negatively impacted, as happened in 2023.
In addition, if any of our properties does not meet applicable brand standards, the applicable licensor can terminate our right to use its trademarks at the subject properties. 31 The termination of our license agreements with Marriott International, Hyatt or their affiliates would materially harm our business and results of operations and materially impair our ability to market and sell our products and maintain our competitive position, and could have a material adverse effect on our financial position, results of operations or cash flows.
The termination of our license agreements with Marriott International, Hyatt or their affiliates would materially harm our business and results of operations and materially impair our ability to market and sell our products and maintain our competitive position, and could have a material adverse effect on our financial position, results of operations or cash flows.
Any of the foregoing could materially adversely affect our business, financial condition and results of operations. Our international operations expose us to risks that could negatively impact our financial results or disrupt our business.
Our international operations expose us to risks that could negatively impact our financial results or disrupt our business.
Neither we nor our service providers may be able to prevent, detect and contain unauthorized activity and misuse or human errors compromising the efficacy of security measures.
The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time. Neither we nor our service providers may be able to prevent, detect and contain unauthorized activity and misuse or human errors compromising the efficacy of security measures.
We may be required to expend significant capital and other resources to enhance the security of our data. Our information systems and records, including those we maintain with our service providers or licensors, may be subject to security breaches, cyber-attack or cyber-intrusion, system failures, viruses, operator error or inadvertent releases of data.
Our information systems and records, including those we maintain with our service providers or licensors, may be subject to security breaches, cyber-attack or cyber-intrusion, system failures, viruses, malicious software, operator error or inadvertent releases of data, or other cybersecurity incidents. Data breaches have increased in recent years as the number, intensity and sophistication of attacks have increased.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe leases for our current corporate headquarters in Orlando, Florida are set to expire in 2027. In 2020, we entered into a lease agreement, that was amended during 2021, for our new global headquarters office building in Orlando, Florida, which is expected to be substantially complete in the first half of 2023. See Footnote 14 “Leases” for additional information.
Biggest changeIn 2020, we entered into a finance lease agreement for our new corporate headquarters office building in Orlando, Florida. The lease for the new building commenced for accounting purposes during the first quarter of 2023, upon the substantial completion of construction.
Item 2. Properties As of December 31, 2022, our vacation ownership portfolio consisted of over 120 properties in the United States and thirteen other countries and territories. These properties are described in Part I, Item 1, “Business” of this Annual Report. Except as indicated in Part I, Item 1, “Business,” we own unsold inventory at these properties.
Item 2. Properties As of December 31, 2023, our vacation ownership portfolio consisted of approximately 120 properties in the United States and thirteen other countries and territories. These properties are described in Part I, Item 1, “Business” of this Annual Report. Except as indicated in Part I, Item 1, “Business,” we own unsold inventory at these properties.
Added
In the fourth quarter of 2023, we relocated from our former corporate headquarters to our new corporate headquarters office building. See Footnote 14 “Leases” for additional information. 41

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. Mine Safety Disclosures Not applicable. 38 PART II
Biggest changeItem 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn August 1, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $500 million of our common stock and extended the term of our existing share repurchase program to June 30, 2023. 39 Performance Graph The above graph compares the relative performance of our common stock, the S&P MidCap 400 Index (which has included our common stock since the acquisition of ILG), and the S&P Composite 1500 Hotels, Resorts & Cruise Lines Index.
Biggest changeOn August 1, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $500 million of our common stock and extended the term of our share repurchase program to June 30, 2023.
On February 22, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $300 million of our common stock, and extended the term of our existing share repurchase program to March 31, 2023.
On February 22, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $300 million of our common stock and extended the term of our share repurchase program to March 31, 2023.
The foregoing performance graph is being furnished as part of this Annual Report solely in accordance with the requirement under Rule 14a-3(b)(9) to furnish our shareholders with such information, and therefore, shall not be deemed to be filed or incorporated by reference into any filings by the Company under the Securities Act of 1933, as amended, or the Exchange Act.
The foregoing performance graph is being furnished as part of this Annual Report solely in accordance with the requirement under Rule 14a-3(b)(9) to furnish our stockholders with such information, and therefore, shall not be deemed to be filed or incorporated by reference into any filings by the Company under the Securities Act of 1933, as amended, or the Exchange Act.
The graph assumes that $100 was invested in our common stock and each index on December 31, 2017. The stock price performance reflected above is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested in our common stock and each index on December 31, 2018. The stock price performance reflected above is not necessarily indicative of future stock price performance.
Holders of Record On February 21, 2023, there were 23,506 holders of record of our common stock.
Holders of Record On February 21, 2024, there were 22,402 holders of record of our common stock.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2022 – October 31, 2022 387,544 $ 135.84 387,544 $ 391,193,305 November 1, 2022 – November 30, 2022 312,283 $ 142.93 312,283 $ 346,558,043 December 1, 2022 – December 31, 2022 539,270 $ 141.06 539,270 $ 270,489,176 Total 1,239,097 $ 139.90 1,239,097 $ 270,489,176 _________________________ (1) On September 13, 2021, our Board of Directors authorized a share repurchase program under which we were authorized to purchase shares of our common stock for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ( 1) Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs (1)(2) October 1, 2023 – October 31, 2023 176,000 $ 93.40 176,000 $ 459,314,827 November 1, 2023 – November 30, 2023 134,000 $ 79.55 134,000 $ 448,655,123 December 1, 2023 – December 31, 2023 121,000 $ 83.15 121,000 $ 438,594,526 Total 431,000 $ 86.22 431,000 $ 438,594,526 (1) On September 13, 2021, our Board of Directors authorized a share repurchase program under which we were authorized to purchase shares of our common stock for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022.
Added
On May 11, 2023, we announced that our Board of Directors increased the then-remaining authorization to authorize purchases of up to $600 million of our common stock and extended the term of our share repurchase program to December 31, 2024.
Added
(2) The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. See Footnote 17 “Stockholders' Equity” to our Financial Statements for further information.
Added
All dollar amounts presented exclude such excise tax, as applicable. 42 Performance Graph The above graph compares the relative performance of our common stock, the S&P MidCap 400 Index (which has included our common stock since our acquisition of ILG), and the S&P Composite 1500 Hotels, Resorts & Cruise Lines Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeVACATION OWNERSHIP Fiscal Years ($ in millions) 2022 2021 2020 REVENUES Sale of vacation ownership products $ 1,618 $ 1,153 $ 546 Resort management and other services 534 470 356 Rental 509 446 239 Financing 293 268 265 Cost reimbursements 1,388 1,202 1,124 TOTAL REVENUES 4,342 3,539 2,530 EXPENSES Cost of vacation ownership products 289 250 150 Marketing and sales 807 617 386 Resort management and other services 240 200 136 Rental 400 394 363 Financing 75 88 106 Depreciation and amortization 92 89 79 Litigation charges 9 9 6 Restructuring — — 15 Royalty fee 114 106 95 Impairment 2 — 8 Cost reimbursements 1,388 1,202 1,124 TOTAL EXPENSES 3,416 2,955 2,468 Gains and other income, net 37 1 12 Transaction and integration costs (3) (2) (3) Other 1 2 — SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 961 $ 585 $ 71 Contract Sales Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Total consolidated contract sales 1,837 1,374 654 463 34% Joint venture contract sales 37 37 15 — (1%) Total contract sales $ 1,874 $ 1,411 $ 669 $ 463 33% 50 Sale of Vacation Ownership Products Fiscal Years 2022 vs. 2021 ($ in millions) 2022 % of Consolidated Contract Sales, Net of Resales 2021 % of Consolidated Contract Sales, Net of Resales 2020 % of Consolidated Contract Sales, Net of Resales Change Total contract sales $ 1,874 $ 1,411 $ 669 $ 463 33% Less resales contract sales (40) (26) (12) (14) Less joint venture contract sales (37) (37) (15) — Consolidated contract sales, net of resales 1,797 1,348 642 449 Plus: Settlement revenue 36 2% 28 2% 14 2% 8 Resales revenue 20 1% 12 1% 7 1% 8 Revenue recognition adjustments: Reportability 43 2% (44) (3%) 58 9% 87 Sales reserve (170) (9%) (101) (7%) (129) (20%) (69) Other (1) (108) (6%) (90) (7%) (46) (7%) (18) Sale of vacation ownership products $ 1,618 90% $ 1,153 86% $ 546 85% $ 465 40% _______________ (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. 2022 Compared to 2021 The higher contract sales performance reflects the continued ramp-up of the business following the initial impact of the COVID-19 pandemic and $24 million of Legacy-Welk contract sales in the first quarter of 2022 (Legacy-Welk was acquired in the second quarter of 2021).
Biggest changeVACATION OWNERSHIP Fiscal Years ($ 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 — 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 — (3) (2) Other (3) 1 2 SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS 777 961 585 Net income attributable to noncontrolling interests — — — SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 777 $ 961 $ 585 54 Sale of Vacation Ownership Products 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 —% 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 (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.
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 resorts, these obligations have minimal impact on our net income and cash flow.
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.
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 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.
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.
We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to Board of Directors 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 of Directors considers relevant.
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.
See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information regarding the accounting for acquired vacation ownership notes receivable. 43 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.
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.
These true-ups, which we refer to as product cost true-up activity, can have a positive or negative impact on our income statements. 42 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.
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.
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 choose our financing.
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 45 choose our financing.
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 62 also limit or prohibit the payment of dividends.
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.
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 external exchange service providers.
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.
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 41 a common currency.
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.
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 shareholders. 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.
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.
We consider active members to be an important metric because it represents the population of owners eligible to book transactions using the Interval International network. 45 • Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue for the Interval International network by the monthly weighted average number of Interval International network active members during 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.
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 occur in either the fourth quarter or the first quarter of each year.
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.
We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St. Regis brand for specified fractional ownership resorts.
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.
See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas. 56 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.
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.
During 2022, 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.
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.
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 2022 and 2021.
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.
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 2022 to fiscal year 2021 is included herein.
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.
During the fourth quarter of 2022, 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 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.
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 shareholders and a $5 million increase in Adjusted EBITDA.
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.
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 Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand.
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.
Subsequent to this 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-, Westin- and Hyatt- 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.
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.
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 shareholders.
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.
Our discussion and analysis of fiscal year 2021 to fiscal year 2020 has been omitted from this Form 10-K and can be found in Part II, “Item 7.
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.
The program also harmonizes fee structures and owner benefit levels and allows 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.
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.
In the third quarter of 2022, we aligned our business practices and contract terms, 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.
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.
During 2022, and as of December 31, 2022, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters. Since 2000, we have issued approximately $8.1 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.
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.
In August 2022, we launched Abound by Marriott Vacations, a new 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.
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.
Factors considered in estimating net realizable value include historical results by tax jurisdiction, carryforward periods, income tax strategies and forecasted taxable income. 65
Factors considered in estimating net realizable value include historical results by tax jurisdiction, carryforward periods, income tax strategies and forecasted taxable income. 69
The Contract alignment increased Net income attributable to common shareholders and Adjusted EBITDA by $34 million and $46 million in 2022, respectively.
The Contract Alignment increased Net income attributable to common stockholders and Adjusted EBITDA by $34 million and $46 million in 2022, respectively.
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 at least once per year.
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.
The table below details the components of Certain items for the Vacation Ownership segment financial results for 2022 and 2021.
The table below details the components of Certain items for the Vacation Ownership segment financial results for 2023 and 2022.
Rental revenues associated with Getaways are reported net of related expenses. 44 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 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).
We completed two term securitization transactions in 2022 resulting in net proceeds of $621 million. Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable.
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.
At December 31, 2022, no borrowings were outstanding on our Revolving Corporate Credit Facility and $1 million of le tters of credit were outstanding. See Footnote 16 “Debt” to our Financial Statements for more information on interest rates pertaining to this facility.
At December 31, 2023, $105 million of borrowings were outstanding on our Revolving Corporate Credit Facility and $24 million of le tters of credit were outstanding. See Footnote 16 “Debt” to our Financial Statements for more information on interest rates pertaining to this facility.
(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.
(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.
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.
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.
We believe this metric is valuable in measuring the overall engagement of our Interval International network active members. • Segment financial results attributable to common shareholders represents revenues less expenses directly attributable to each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management).
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.
Integration of Marriott-, Sheraton- and Westin- Branded Vacation Ownership Products 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.
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.
We consider contract sales to be an important operating measure because it reflects the pace of sales in our business. • Development profit margin; • 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 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.
On April 1, 2021, we acquired Welk (see Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for further information). • 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.
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.
Cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points products, and in the first quarter for our weeks-based products. In addition, significant compensation-related cash outflows occur in the first quarter of each year associated with payment of annual bonuses.
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.
Most Legacy-Welk resorts are now available for rental stays through Hyatt.com. 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.
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.
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.
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.
Development profit margin is calculated by dividing Development profit by revenues from the Sale of vacation ownership products. We previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the Cost of vacation ownership products and marketing and sales costs.
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.
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.
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.
Subsequent to the end of 2022, on February 16, 2023, our Board of Directors declared a quarterly dividend of $0.72 per share to be paid on March 16, 2023 to shareholders of record as of March 2, 2023.
Subsequent to the end of 2023, on February 15, 2024, our Board of Directors declared a quarterly dividend of $0.76 per share to be paid on March 14, 2024 to stockholders of record as of February 29, 2024.
CONSOLIDATED RESULTS Fiscal Years ($ in millions) 2022 2021 2020 REVENUES Sale of vacation ownership products $ 1,618 $ 1,153 $ 546 Management and exchange 827 855 755 Rental 551 486 276 Financing 293 268 267 Cost reimbursements 1,367 1,128 1,042 TOTAL REVENUES 4,656 3,890 2,886 EXPENSES Cost of vacation ownership products 289 250 150 Marketing and sales 807 617 386 Management and exchange 444 521 475 Rental 382 344 321 Financing 75 88 107 General and administrative 249 227 154 Depreciation and amortization 132 146 123 Litigation charges 11 10 6 Restructuring — — 25 Royalty fee 114 106 95 Impairment 2 3 100 Cost reimbursements 1,367 1,128 1,042 TOTAL EXPENSES 3,872 3,440 2,984 Gains (losses) and other income (expense), net 40 (51) (26) Interest expense (118) (164) (150) Transaction and integration costs (125) (110) (66) Other 1 2 — INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 582 127 (340) (Provision for) benefit from income taxes (191) (74) 84 NET INCOME (LOSS) 391 53 (256) Net income attributable to noncontrolling interests — (4) (19) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 391 $ 49 $ (275) 46 Operating Statistics Fiscal Years 2022 vs. 2021 (Contract sales $ in millions) 2022 2021 2020 Change Vacation Ownership Total contract sales $ 1,874 $ 1,411 $ 669 $ 463 33% Consolidated contract sales $ 1,837 $ 1,374 $ 654 $ 463 34% Joint venture contract sales $ 37 $ 37 $ 15 $ — (1%) VPG $ 4,421 $ 4,356 $ 3,767 $ 65 1% Exchange & Third-Party Management Total active members at end of period (000's) 1,566 1,296 1,518 270 21% Average revenue per member $ 157.97 $ 179.48 $ 144.97 $ (21.51) (12%) Revenues Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Vacation Ownership $ 4,342 $ 3,539 $ 2,530 $ 803 23% Exchange & Third-Party Management 291 320 309 (29) (9%) Total Segment Revenues 4,633 3,859 2,839 774 20% Consolidated Property Owners' Associations 23 31 47 (8) (24%) Total Revenues $ 4,656 $ 3,890 $ 2,886 $ 766 20% 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 shareholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization.
NM = Not meaningful. 48 CONSOLIDATED RESULTS 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 — — 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 — (4) NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 254 $ 391 $ 49 Operating Statistics 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) —% Average revenue per member $ 156.65 $ 157.97 $ 179.48 $ (1.32) (1%) 49 Revenues 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’ Associations (3) 23 31 (26) (112%) Total Revenues $ 4,727 $ 4,656 $ 3,890 $ 71 2% 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.
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 tranche of transferred assets, which consist of vacation ownership notes receivable.
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.
As of December 31, 2022, $72 million of gross vacation ownership notes receivable were eligible for securitization. 60 Revolving Corporate Credit Facility Our Revolving Corporate Credit Facility provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions, and expires on March 31, 2027.
Revolving Corporate Credit Facility Our Revolving Corporate Credit Facility, which expires on March 31, 2027, provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions.
Fiscal Years ($ in millions) 2022 2021 2020 REVENUES Resort management and other services $ 67 $ 152 $ 188 Cost reimbursements (44) (121) (141) TOTAL REVENUES 23 31 47 EXPENSES Resort management and other services 84 190 217 Rental (18) (50) (53) General and administrative 249 227 154 Depreciation and amortization 9 9 12 Litigation charges 2 1 — Restructuring — (1) 6 Impairment — 3 — Cost reimbursements (44) (121) (141) TOTAL EXPENSES 282 258 195 Losses and other expense, net (12) (52) (36) Interest expense (118) (164) (150) Transaction and integration costs (122) (108) (63) FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (511) (551) (397) (Provision for) benefit from income taxes (191) (74) 84 Net income attributable to noncontrolling interests — (4) (19) FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (702) $ (629) $ (332) 57 Consolidated Property Owners’ Associations The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance, which represents the portion related to third-party VOI owners.
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 — 2 1 Restructuring 6 — (1) Impairment 16 — 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 — (4) FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (616) $ (702) $ (629) 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.
Control transfer for Legacy-Welk VOIs continues to occur at closing. Sales of vacation ownership products may be made for cash or we may provide financing.
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. 44 Sales of vacation ownership products may be made for cash or we may provide financing.
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. Financing propensity was 54% in 2022 and 53% in 2021. We expect to continue offering financing incentive programs in 2023.
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.
Vacation Ownership Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Segment financial results $ 961 $ 585 $ 71 $ 376 64% Depreciation and amortization 92 89 79 3 4% Share-based compensation 7 6 6 1 21% Certain items (27) 19 73 (46) NM Segment Adjusted EBITDA $ 1,033 $ 699 $ 229 $ 334 48% We recognized an additional $51 million of Adjusted EBITDA in the Vacation Ownership segment during 2022 as a result of the Alignment.
Vacation Ownership Fiscal Years 2023 vs. 2022 ($ 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%) We recognized an additional $51 million of Adjusted EBITDA in the Vacation Ownership segment during 2022 as a result of the Alignment.
Fiscal Years ($ in millions) 2022 2021 Transaction and integration costs $ 3 $ 2 Purchase accounting adjustments 11 10 Litigation charges 9 9 Impairment 2 — Gain on disposition of hotel (33) — Insurance proceeds (4) — Other — (1) (Gains) losses and other (income) expense, net (37) (1) Expiration/forfeiture of deposits on pre-acquisition preview packages (6) — Change in estimate relating to pre-acquisition contingencies (12) — Other 3 (1) Total Certain items $ (27) $ 19 Exchange & Third-Party Management Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Segment financial results $ 132 $ 93 $ (14) $ 39 42% Depreciation and amortization 31 48 32 (17) (36%) Share-based compensation 2 2 2 — 12% Certain items (17) 1 99 (18) NM Segment Adjusted EBITDA $ 148 $ 144 $ 119 $ 4 3% Certain items for the Exchange & Third-Party Management segment for 2022 consisted of $17 million of gains and other income related to the strategic disposition of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract, offset by $2 million of foreign currency translation losses. 49 Certain items for the Exchange & Third-Party Management segment for 2021 consisted of $1 million of COVID-19 related restructuring costs.
Fiscal Years ($ in millions) 2023 2022 Transaction and integration costs $ — $ 3 Gain on disposition of hotel, land, and other (7) (33) Insurance proceeds (9) (4) Change in indemnification asset (9) — Other (4) — 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 — (6) Change in estimate relating to pre-acquisition contingencies — (12) Other 2 3 Total Certain items $ 5 $ (27) 52 Exchange & Third-Party Management 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 — (2%) Share-based compensation expense 2 2 2 — (23%) Certain items 4 (17) 1 21 122% Segment Adjusted EBITDA $ 130 $ 148 $ 144 $ (18) (13%) The table below details the components of Certain items for the Exchange & Third-Party Management segment financial results for 2023 and 2022.
Losses and Other Expense Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Gains (losses) and other income (expense), net $ 15 $ — $ (2) $ 15 NM 2022 Compared to 2021 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.
During 2022, we recorded a $17 million gain related to the sale of our VRI Americas business, partially offset by $2 million of foreign currency translation losses.
The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense.
The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense. 46 In our Exchange & Third-Party Management segment, we offer vacation rental opportunities at managed properties through our Aqua-Aston business, and for the period prior to its disposition in the second quarter of 2022, VRI Americas.
BUSINESS SEGMENTS Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 20 “Business Segments” to our Financial Statements for further information on our segments.
See Footnote 20 “Business Segments” to our Financial Statements for further information on our reportable business segments.
Income Tax Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change (Provision for) benefit from income taxes $ (191) $ (74) $ 84 $ (117) (159%) 2022 Compared to 2021 The change in the (Provision for) benefit from income taxes is predominately attributable to an increase in pre-tax income for fiscal year 2022. 59 Liquidity and Capital Resources Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to raise capital through securitizations in the ABS market, our ability to issue new, and refinance existing, debt, and, to the extent necessary, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility.
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.
Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and 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.
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.
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. • Total active members is the number of Interval International network active members at the end of the applicable 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.
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).
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.
The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income (loss) attributable to common shareholders, which is the most directly comparable GAAP financial measure. 47 Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Net income (loss) attributable to common shareholders $ 391 $ 49 $ (275) $ 342 NM Interest expense 118 164 150 (46) (28%) Tax provision (benefit) 191 74 (84) 117 159% Depreciation and amortization 132 146 123 (14) (10%) EBITDA 832 433 (86) 399 93% Share-based compensation 39 51 37 (12) (23%) Certain items 95 173 284 (78) (46%) Adjusted EBITDA $ 966 $ 657 $ 235 $ 309 47% Adjusted EBITDA margin 29% 24% 13% 5 pts In the third quarter of 2022, in connection with the unification of the 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.
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) 50 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.
Operations In addition to net income or loss 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 Fiscal Years ($ in millions) 2022 2021 2020 Inventory spending $ (138) $ (153) $ (98) Purchase of vacation ownership units for future transfer to inventory (12) (98) (61) Inventory costs 242 212 117 Inventory spending less than (in excess of) cost of sales $ 92 $ (39) $ (42) While we have significant excess inventory on hand, we will continue to selectively pursue growth opportunities by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale.
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 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) 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.
The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was as follows: Fiscal Years 2022 2021 2020 Average FICO score 734 732 730 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.
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.
We expect future development profit margins to remain above pre-pandemic levels and in line with recent results. 51 Resort Management and Other Services Revenues, Expenses and Profit Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Management fee revenues $ 166 $ 158 $ 149 $ 8 5% Ancillary revenues 241 188 89 53 28% Other management and exchange revenue 127 124 118 3 4% Resort management and other services revenues 534 470 356 64 14% Resort management and other services expenses (240) (200) (136) (40) (20%) Resort management and other services profit $ 294 $ 270 $ 220 $ 24 9% Resort management and other services profit margin 55.1% 57.5% 61.8% (2.4 pts) Resort occupancy (1) 89.3% 81.6% 57.2% 7.7 pts _________________________ (1) Resort occupancy represents all transient, preview, and owner keys divided by total keys available, net of keys out of service. 2022 Compared to 2021 Resort management and other services revenues reflect $50 million of higher ancillary revenues, including revenues from food and beverage and golf offerings, as a result of an increase in occupied keys (0.9 million keys or 13%) at resorts with ancillary business and a 14% increase in revenue per occupied key, $6 million of revenues relating to the Welk Acquisition, which we acquired in the second quarter of 2021, $5 million of increased commissions on third-party offerings and higher management fees, and $3 million attributed to higher annual club dues.
Resort Management and Other Services Revenues, Expenses and Profit Fiscal Years 2023 vs. 2022 ($ 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) (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.
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.
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.
Excluding the impact of the Alignment, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 2.8 at December 31, 2022, which is within our targeted leverage range of 2.5x to 3.0x. Excluding the redemption of the 2025 Notes subsequent to the end of 2022, we have no material maturities of corporate debt until 2025.
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.
We do not adjust interest rates, on 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 2023, as we repay existing securitization transactions with historically low interest rates and enter into new securitization transactions with higher interest rates.
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.
Gains and Other Income Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Gains and other income, net $ 37 $ 1 $ 12 $ 36 NM 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 receipt of business interruption insurance proceeds, and $1 million related to property insurance proceeds.
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 $1 million related to property insurance proceeds. 58 EXCHANGE & THIRD-PARTY MANAGEMENT Our Exchange & Third-Party Management segment is comprised of the Interval International and Aqua-Aston businesses.
The increase in consumer financing interest expense is attributable to the higher average securitized debt at a higher average interest rate for the more recent term securitization transactions.
The increase in consumer financing interest expense is attributable to the higher average securitized debt and a higher average interest rate on our more recent term securitization transactions. We expect consumer financing interest expense to continue to increase as the rates on new securitizations exceed the current weighted average of our portfolio.
As of December 31, 2022, our corporate debt, excluding finance leases and including the impact of interest rate hedges, had a weighted average interest rate of 3.7%, and 92% of such corporate debt accrued interest at a fixed rate.
As of December 31, 2023, the interest rate applicable to approximately 80% of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was effectively fixed. The weighted average interest rate of our total corporate debt, excluding finance leases and including the impact of interest rate hedges, was 3.9% as of December 31, 2023.
Financing Revenues, Expenses and Margin Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Financing revenues $ 293 $ 268 $ 265 $ 25 9% Financing expenses (20) (38) (48) 18 48% Consumer financing interest expense (55) (50) (58) (5) (10%) Financing profit $ 218 $ 180 $ 159 $ 38 22% Financing profit margin 74.5% 67.1% 59.8% 7.4 pts Financing propensity 54% 53% 51% 2022 Compared to 2021 Financing revenues reflect $23 million of higher interest income (including $10 million attributed to the lack of comparability due to the Welk Acquisition in the second quarter of 2021 and $13 million as a result of a higher average vacation ownership notes receivable balance and a slightly higher average interest rate driven by mix of customers and brands) and $2 million of lower plus point financing incentive costs year-over-year.
Financing Revenues, Expenses and Margin Fiscal Years 2023 vs. 2022 ($ 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 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).
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.
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.
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, 2021 , which was filed with the Securities and Exchange Commission on March 1, 2022.
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. 43 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.
The Contract alignment resulted in an increase in reportability of $58 million in 2022.
Revenue reportability declined due to the non-recurring impact of the Alignment recorded in 2022, which resulted in an increase in reportability of $58 million in 2022.
Getaways allows us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members. Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program. We also source resort accommodations specifically for the Getaways program.
Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program. We also source resort accommodations specifically for the Getaways program. Rental revenues associated with Getaways are reported net of related expenses.
Losses and Other Expense Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Losses and other expense, net $ (12) $ (52) $ (36) $ 40 76% 2022 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, $3 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International, partially offset by $2 million of proceeds from corporate owned life insurance. 58 2021 In 2021, we recorded $55 million of expense related to the early redemption of senior unsecured notes, and $4 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $7 million related to a true-up of a Marriott International indemnification receivable upon settlement (the true-up to the offsetting accrual is included in the Provision for income taxes line).
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 $2 million of proceeds from corporate owned life insurance.
Litigation Charges Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Litigation charges $ 9 $ 9 $ 6 $ — (3%) 2022 Compared to 2021 During 2022 and 2021, the litigation charges relate primarily to our business in Europe. 53 Royalty Fee Fiscal Years 2022 vs. 2021 ($ in millions) 2022 2021 2020 Change Royalty fee $ 114 $ 106 $ 95 $ 8 7% 2022 Compared to 2021 The increase in royalty fee expense included $6 million from an increase in the dollar volume of closings, $3 million from a contractual increase in the fixed portion of the royalty fee owed to Marriott International, and $1 million relating to the commencement of variable royalty fees for Hyatt in the fourth quarter of 2022, partially offset by $2 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
Royalty Fee Fiscal Years 2023 vs. 2022 ($ in millions) 2023 2022 2021 Change Royalty fee $ 117 $ 114 $ 106 $ 3 3% 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).
Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above. (4) Includes interest.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+4 added−2 removed4 unchanged
Biggest changeThe following table sets forth the scheduled maturities and the total fair value as of year-end 2022 for our financial instruments that are impacted by market risks: ($ in millions) Average Interest Rate Maturities by Period 2023 2024 2025 2026 2027 Thereafter Total Carrying Value Total Fair Value Assets – Maturities represent expected principal receipts; fair values represent assets Vacation ownership notes receivable — non-securitized 12.6% $ 52 $ 38 $ 35 $ 33 $ 32 $ 216 $ 406 $ 408 Vacation ownership notes receivable — securitized 13.2% $ 171 $ 175 $ 177 $ 181 $ 180 $ 908 $ 1,792 $ 1,837 Liabilities – Maturities represent expected principal payments; fair values represent liabilities Securitized debt 3.5% $ (185) $ (189) $ (328) $ (186) $ (184) $ (889) $ (1,961) $ (1,828) Senior notes 2025 Notes 6.1% $ (250) $ — $ — $ — $ — $ — $ (250) $ (258) 2028 Notes 4.8% $ — $ — $ — $ — $ — $ (350) $ (350) $ (307) 2029 Notes 4.5% $ — $ — $ — $ — $ — $ (500) $ (500) $ (417) Term Loan 6.1% $ — $ — $ (784) $ — $ — $ — $ (784) $ (775) 2026 Convertible Notes —% $ — $ — $ — $ (575) $ — $ — $ (575) $ (560) 2027 Convertible Notes 3.3% $ — $ — $ — $ — $ (575) $ — $ (575) $ (568) Non-interest bearing note payable —% $ (6) $ (4) $ — $ — $ — $ — $ (10) $ (10) We are exposed to currency exchange rate risk through investments in foreign subsidiaries that transact business in a currency other than the U.S. dollar and through the revaluation of assets and liabilities denominated in a currency other than the functional currency.
Biggest changeThe following table presents the scheduled maturities and the total fair value as of year-end 2023 for our financial instruments that are impacted by market risks: ($ in millions) Average Interest Rate Maturities by Period 2024 2025 2026 2027 2028 There-after Total Carrying Value Total Fair Value Assets – Maturities represent expected principal receipts; fair values represent assets Vacation ownership notes receivable — non-securitized 12.0% $ 63 $ 42 $ 40 $ 40 $ 38 $ 208 $ 431 $ 433 Vacation ownership notes receivable — securitized 13.3% $ 171 $ 176 $ 181 $ 183 $ 181 $ 1,020 $ 1,912 $ 1,994 Contracts receivable for financed VOI sales, net 12.6% $ 3 $ 3 $ 3 $ 3 $ 3 $ 22 $ 37 $ 37 Liabilities – Maturities represent expected principal payments; fair values represent liabilities Securitized debt 4.6% $ (193) $ (196) $ (319) $ (192) $ (189) $ (1,032) $ (2,121) $ (2,068) Term Loan 7.2% $ — $ (784) $ — $ — $ — $ — $ (784) $ (784) Revolving Corporate Credit Facility 7.5% $ — $ — $ — $ (105) $ — $ — $ (105) $ (105) Senior Notes 2028 Notes 4.8% $ — $ — $ — $ — $ (350) $ — $ (350) $ (322) 2029 Notes 4.5% $ — $ — $ — $ — $ — $ (500) $ (500) $ (445) 2026 Convertible Notes —% $ — $ — $ (575) $ — $ — $ — $ (575) $ (508) 2027 Convertible Notes 3.3% $ — $ — $ — $ (575) $ — $ — $ (575) $ (513) Non-interest bearing note payable —% $ (4) $ — $ — $ — $ — $ — $ (4) $ (4) We are exposed to currency exchange rate risk through investments in foreign subsidiaries that transact business in a currency other than the U.S. dollar and through the revaluation of assets and liabilities denominated in a currency other than the functional currency.
However, we cannot assure you that these transactions will be as effective as we anticipate. 66
However, we cannot assure you that these transactions will be as effective as we anticipate. 70
Changes in interest rates also impact the fair value of our fixed-rate vacation ownership notes receivable and our fixed-rate debt. As of December 31, 2022, approximately $784 million of our gross aggregate consolidated indebtedness (our Term Loan) was indexed to the USD London Interbank Offered Rate (“LIBOR”) and we were party to $550 million of derivative instruments indexed to LIBOR.
Changes in interest rates also impact the fair value of our fixed-rate vacation ownership notes receivable and our fixed-rate debt.
Removed
The U.K. authority that regulates LIBOR announced that it will no longer permit new LIBOR contracts after December 31, 2021, and will not compel banks to submit rates for the calculation of LIBOR after June 2023. We intend to amend our Term Loan and derivative instruments to reference an alternative benchmark rate prior to the cessation of LIBOR.
Added
We manage the interest rate risk on our corporate debt through the use of a combination of fixed-rate debt and interest rate swaps (certain of which expired in September 2023 and the remaining outstanding interest rate swaps will expire in April 2024) that fix a portion of our variable-rate debt.
Removed
The use of an alternative benchmark rate could cause our interest expense to increase, which could adversely affect our financial condition, operating results and cash flows.
Added
At December 31, 2023, after considering the impact of interest rate swap agreements and excluding finance leases, the interest rate applicable to approximately 80% of our corporate debt was effectively fixed and the interest rate applicable to the remaining 20% (approximately $589 million) was variable.
Added
Assuming no outstanding balance on our Revolving Corporate Credit Facility, a 100 basis point increase in the underlying benchmark rate on our variable-rate debt at December 31, 2023 would result in an increase of approximately $5 million in annual cash interest due to the impact of our hedging arrangements discussed in Footnote 16 “Debt” to our Financial Statements.
Added
Assuming we had no outstanding hedging arrangements and no outstanding balance on our Revolving Corporate Credit Facility, a 100 basis point increase in the underlying benchmark rate on our variable-rate debt at December 31, 2023 would result in an annual increase in cash interest of approximately $8 million.

Other VAC 10-K year-over-year comparisons