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What changed in Travel & Leisure Co.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Travel & Leisure Co.'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.

+351 added−343 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in Travel & Leisure Co.'s 2023 10-K

351 paragraphs added · 343 removed · 280 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

81 edited+6 added−11 removed90 unchanged
Biggest changeThis fee typically covers expenses such as housekeeping, landscaping, taxes, insurance, resort labor, a management fee payable to the management company, and an assessment to fund a reserve account used to renovate, refurbish and replace furnishings, appliances, and common areas and other assets, such as structural elements and equipment, as needed over time. 4 Table of Contents Based on published industry data, owners express the following primary reasons for buying and continuing to own their timeshare: • saving money on future vacation costs; • location of resorts; • overall flexibility to use different locations, unit types, and times of year; • certainty of vacations; and • certainty of quality accommodations.
Biggest changeBased on published industry data, owners express the following primary reasons for buying and continuing to own their timeshare: • saving money on future vacation costs; • location of resorts; 4 Table of Contents • overall flexibility to use different locations, unit types, and times of year; • certainty of vacations; and • certainty of quality accommodations.
Most property owners’ associations are governed by a board of directors that includes owners and which may include representatives of the developer. The board of the property owners’ association typically delegates much of the responsibility for managing the resort to a management company, which is often affiliated with the developer.
Most property owners’ associations are governed by a board of directors that includes owners and may include representatives of the developer. The board of the property owners’ association typically delegates much of the responsibility for managing the resort to a management company, which is often affiliated with the developer.
President & CEO Michael Brown signed the CEO Diversity Action Pledge in partnership with CEO Action for Diversity & Inclusion, joining more than 2,400 global organizations who have pledged to act on supporting a more inclusive workplace for employees, communities, and society at large. Mr.
President and CEO Michael Brown signed the CEO Diversity Action Pledge in partnership with CEO Action for Diversity & Inclusion, joining more than 2,400 global organizations who have pledged to act on supporting a more inclusive workplace for employees, communities, and society at large. Mr.
In particular, the Separation and Distribution Agreement provided that, subject to certain terms and conditions: • The assets that have been retained by or transferred to Wyndham Hotels (“SpinCo assets”) include, but are not limited to: • all of the equity interests of Wyndham Hotels; • any and all assets reflected on the audited combined balance sheet of the Wyndham Hotels businesses; 14 Table of Contents • any and all contracts primarily relating to the Wyndham Hotels businesses; and • all rights in the “Wyndham” trademark and “The Registry Collection” trademark, and certain intellectual property related thereto. • The liabilities that have been retained by or transferred to Wyndham Hotels (“SpinCo liabilities”) include, but are not limited to: • any and all liabilities (whether accrued, contingent or otherwise, and subject to certain exceptions) to the extent primarily related to, arising out of or resulting from (i) the operation or conduct of the Wyndham Hotels businesses or (ii) the SpinCo assets; • any and all liabilities (whether accrued, contingent or otherwise) relating to, arising out of or resulting from any form, registration statement, schedule or similar disclosure document filed or furnished with the SEC, to the extent such filing is either made by Wyndham Hotels or made by us in connection with the Spin-off, subject to each party’s indemnification obligations under the Separation and Distribution Agreement with respect to any misstatement of or omission to state a material fact contained in any such filing to the extent the misstatement or omission is based upon information that was furnished by such party; • any and all liabilities relating to, arising out of, or resulting from any indebtedness of Wyndham Hotels or any indebtedness secured exclusively by any of the Wyndham Hotels assets; and • any and all liabilities (whether accrued, contingent or otherwise) reflected on the audited combined balance sheet of the Wyndham Hotels businesses. • Wyndham Hotels assumed one-third and Travel + Leisure Co. assumed two-thirds of certain contingent and other corporate liabilities of Travel + Leisure Co. and Wyndham Hotels (“shared contingent liabilities”) in each case incurred prior to the Distribution, including our liabilities related to, arising out of or resulting from (i) certain terminated or divested businesses, (ii) certain general corporate matters of Travel + Leisure Co., and (iii) any actions with respect to the separation plan or the Distribution made or brought by any third party. • Wyndham Hotels is entitled to receive one-third and Travel + Leisure Co. is entitled to receive two-thirds of the proceeds (or, in certain cases, a portion thereof) from certain contingent and other corporate assets of Travel + Leisure Co. and Wyndham Hotels (“shared contingent assets”) arising or accrued prior to the Distribution, including our assets related to, arising from or involving (i) certain terminated or divested businesses, and (ii) certain general corporate matters of Travel + Leisure Co. • In connection with the sale of our European vacation rentals business, Wyndham Hotels assumed one-third and Travel + Leisure Co. assumed two-thirds of certain shared contingent liabilities and certain shared contingent assets. • Except as otherwise provided in the Separation and Distribution Agreement or any ancillary agreement, the corporate costs and expenses relating to the Spin-off will be paid by the party with whom such costs were incurred, from a separate account maintained by each of Wyndham Hotels and Travel + Leisure Co. and established prior to completion of the Spin-off on terms agreed upon by Wyndham Hotels and Travel + Leisure Co. and, to the extent the funds in such separate account are not sufficient to satisfy such costs and expenses, be treated as shared contingent liabilities (as described above). • All of our assets and liabilities (whether accrued, contingent or otherwise) other than the SpinCo assets and SpinCo liabilities, subject to certain exceptions (including the shared contingent assets and shared contingent liabilities), have been retained by or transferred to Travel + Leisure Co., except as set forth in the Separation and Distribution Agreement or one of the other agreements described below.
In particular, the Separation and Distribution Agreement provided that, subject to certain terms and conditions: • The assets that have been retained by or transferred to Wyndham Hotels (“SpinCo assets”) include, but are not limited to: • all of the equity interests of Wyndham Hotels; • any and all assets reflected on the audited combined balance sheet of the Wyndham Hotels businesses; • any and all contracts primarily relating to the Wyndham Hotels businesses; and • all rights in the “Wyndham” trademark and “The Registry Collection” trademark, and certain intellectual property related thereto. • The liabilities that have been retained by or transferred to Wyndham Hotels (“SpinCo liabilities”) include, but are not limited to: • any and all liabilities (whether accrued, contingent or otherwise, and subject to certain exceptions) to the extent primarily related to, arising out of or resulting from (i) the operation or conduct of the Wyndham Hotels businesses or (ii) the SpinCo assets; • any and all liabilities (whether accrued, contingent or otherwise) relating to, arising out of or resulting from any form, registration statement, schedule or similar disclosure document filed or furnished with the SEC, to the extent such filing is either made by Wyndham Hotels or made by us in connection with the Spin-off, subject to each party’s indemnification obligations under the Separation and Distribution Agreement with respect to any misstatement of or omission to state a material fact contained in any such filing to the extent the misstatement or omission is based upon information that was furnished by such party; • any and all liabilities relating to, arising out of, or resulting from any indebtedness of Wyndham Hotels or any indebtedness secured exclusively by any of the Wyndham Hotels assets; and 14 Table of Contents • any and all liabilities (whether accrued, contingent or otherwise) reflected on the audited combined balance sheet of the Wyndham Hotels businesses. • Wyndham Hotels assumed one-third and Travel + Leisure Co. assumed two-thirds of certain contingent and other corporate liabilities of Travel + Leisure Co. and Wyndham Hotels (“shared contingent liabilities”) in each case incurred prior to the Distribution, including our liabilities related to, arising out of or resulting from (i) certain terminated or divested businesses, (ii) certain general corporate matters of Travel + Leisure Co., and (iii) any actions with respect to the separation plan or the Distribution made or brought by any third party. • Wyndham Hotels is entitled to receive one-third and Travel + Leisure Co. is entitled to receive two-thirds of the proceeds (or, in certain cases, a portion thereof) from certain contingent and other corporate assets of Travel + Leisure Co. and Wyndham Hotels (“shared contingent assets”) arising or accrued prior to the Distribution, including our assets related to, arising from or involving (i) certain terminated or divested businesses, and (ii) certain general corporate matters of Travel + Leisure Co. • In connection with the sale of our European vacation rentals business, Wyndham Hotels assumed one-third and Travel + Leisure Co. assumed two-thirds of certain shared contingent liabilities and certain shared contingent assets. • Except as otherwise provided in the Separation and Distribution Agreement or any ancillary agreement, the corporate costs and expenses relating to the Spin-off will be paid by the party with whom such costs were incurred, from a separate account maintained by each of Wyndham Hotels and Travel + Leisure Co. and established prior to completion of the Spin-off on terms agreed upon by Wyndham Hotels and Travel + Leisure Co. and, to the extent the funds in such separate account are not sufficient to satisfy such costs and expenses, be treated as shared contingent liabilities (as described above). • All of our assets and liabilities (whether accrued, contingent or otherwise) other than the SpinCo assets and SpinCo liabilities, subject to certain exceptions (including the shared contingent assets and shared contingent liabilities), have been retained by or transferred to Travel + Leisure Co., except as set forth in the Separation and Distribution Agreement or one of the other agreements described below.
We earn interest revenue on our portfolio as well as club and resort management fees. We also seek to enhance our future upgrade pipeline through sales to new owners. On average, new owners double their initial VOI purchase within six years, resulting in predictable, high-margin future revenue streams. Maximize our relationship with Wyndham Hotels.
We earn interest revenue on our portfolio as well as club and resort management fees. We also seek to enhance our future upgrade pipeline through sales to new owners. On average, new owners nearly double their initial VOI purchase within six years, resulting in predictable, high-margin future revenue streams. Maximize our relationship with Wyndham Hotels.
Performance in our Travel and Membership business has been measured by the following key operating statistics: • Average number of exchange members — Represents paid members in our vacation exchange programs who are considered to be in good standing. • Transactions — Represents the number of exchanges and travel club bookings recognized as revenue during the period, net of cancellations. • Revenue per transaction — Represents transaction revenue divided by transactions.
Performance in our Travel and Membership business has been measured by the following key operating statistics: • Average number of exchange members — Represents paid members in our vacation exchange programs who are considered to be in good standing. • Transactions — Represents the number of exchanges and travel bookings recognized as revenue during the period, net of cancellations. • Revenue per transaction — Represents transaction revenue divided by transactions.
This right is generally limited to use in connection with our vacation ownership and vacation exchange businesses, with certain limited exceptions. This agreement has a term of 100 years with an option for us to extend the term for an additional 30 years. We will pay Wyndham Hotels certain royalties and other fees under this agreement.
This right is generally limited to use in connection with our vacation ownership and vacation exchange businesses, with certain limited exceptions. This agreement has a term of 100 years with an option for us to extend the term for an additional 30 years. We pay Wyndham Hotels certain royalties and other fees under this agreement.
History and Development Our corporate history can be traced back to the formation of Hospitality Franchise Systems (“HFS”) in 1990. In December 1997, HFS merged with CUC International, Inc. to form Cendant Corporation, which then expanded further through the addition of vacation rentals and vacation ownership businesses.
History and Development Our corporate history can be traced back to the formation of Hospitality Franchise Systems (“HFS”) in 1990. In December 1997, HFS merged with CUC International, Inc. to form Cendant Corporation (“Cendant”), which then expanded further through the addition of vacation rentals and vacation ownership businesses.
Our capital-efficient inventory sourcing strategy has significantly increased return on invested capital since 2010. Revenues and Operating Statistics Our Vacation Ownership business derives a majority of its revenues from timeshare sales, with consumer financing and property management fees being the other main sources of revenue.
Our capital-efficient inventory sourcing strategy has significantly increased return on invested capital since 2010. Revenues and Operating Statistics Our Vacation Ownership business derives a majority of its revenues from vacation ownership sales, with consumer financing and property management fees being the other main sources of revenue.
BUSINESS DESCRIPTIONS We report results of operations for the following reportable segments, which are described in more detail below: • Vacation Ownership, comprised of Wyndham Destinations. • Travel and Membership , comprised of Exchange and Travel Club. Our business segments generate diversified revenue streams and significant cash flow.
BUSINESS DESCRIPTIONS We report results of operations for the following reportable segments, which are described in more detail below: • Vacation Ownership, substantially comprised of Wyndham Destinations. • Travel and Membership , comprised of Exchange and Travel Club. Our business segments generate diversified revenue streams and significant cash flow.
Our Board of Directors and its committees also provide oversight on certain human capital matters, including diversity and inclusion initiatives. Our Corporate Governance Committee periodically reviews potential trends and impacts of environmental, social, and governance issues that affect human capital matters.
Our Board of Directors (“Board”) and its committees also provide oversight on certain human capital matters, including diversity and inclusion initiatives. Our Corporate Governance Committee periodically reviews potential trends and impacts of environmental, social, and governance issues that affect human capital matters.
Beyond our diverse workforce, we have diverse representation on our Board of Directors, with four of our nine Board members being gender and/or ethnically diverse. We remain committed to sustaining our reputation as an engaged and responsive organization. Travel + Leisure Co.
Beyond our diverse workforce, we have diverse representation on our Board, with four of our nine Board members being gender and/or ethnically diverse. We remain committed to sustaining our reputation as an engaged and responsive organization. Travel + Leisure Co.
Specifically, each party will, and will cause its subsidiaries to, indemnify, defend and hold harmless the other party, its affiliates and subsidiaries and each of its and their respective officers, directors, employees and agents for any losses arising out of, by reason of or otherwise in connection with: • the liabilities each such party assumed or retained pursuant to the Separation and Distribution Agreement; 15 Table of Contents • any misstatement of or omission to state a material fact contained in any party’s public filings, only to the extent the misstatement or omission is based upon information that was furnished by the indemnifying party (or incorporated by reference from a filing of such indemnifying party) and then only to the extent the statement or omission was made or occurred after the Spin-off; and • any breach by such party of the Separation and Distribution Agreement or any ancillary agreement unless such ancillary agreement expressly provides for separate indemnification therein, in which case any such indemnification claims will be made thereunder.
Specifically, each party will, and will cause its subsidiaries to, indemnify, defend and hold harmless the other party, its affiliates and subsidiaries and each of its and their respective officers, directors, employees and agents for any losses arising out of, by reason of or otherwise in connection with: • the liabilities each such party assumed or retained pursuant to the Separation and Distribution Agreement; • any misstatement of or omission to state a material fact contained in any party’s public filings, only to the extent the misstatement or omission is based upon information that was furnished by the indemnifying party (or incorporated by reference from a filing of such indemnifying party) and then only to the extent the statement or omission was made or occurred after the Spin-off; and • any breach by such party of the Separation and Distribution Agreement or any ancillary agreement unless such ancillary agreement expressly provides for separate indemnification therein, in which case any such indemnification claims will be made thereunder.
Vacation Ownership Overview Our Vacation Ownership reportable segment is comprised of our Wyndham Destinations branded business line, which is the world’s largest vacation ownership business based on number of resorts and owners.
Vacation Ownership Overview Our Vacation Ownership reportable segment is substantially comprised of our Wyndham Destinations branded business line, which is the world’s largest vacation ownership business based on number of resorts and owners.
To achieve this goal, we intend to pursue the following strategies: Expand and enhance our products and services to increase wallet share, propensity, and retention within our member base.
To achieve this goal, we intend to pursue the following strategies: Expand and enhance our products and services to increase wallet share, transaction propensity, and retention within our member base.
HUMAN CAPITAL Employee Profile We recognize our employees as associates who bring our mission to put the world on vacation to life through their service to the world’s leading membership and leisure travel company. Oversight and Management Our human resources organization manages employment-related matters, including recruiting and hiring, onboarding, compensation planning, performance management, and professional development.
HUMAN CAPITAL Employee Profile We recognize our employees as associates who bring our mission to put the world on vacation to life through their service to the world’s leading membership and leisure travel company. Oversight and Management Our human resources organization manages employment-related matters, including recruiting and hiring, onboarding, compensation and benefits, performance management, and professional development.
Sales and Marketing, Distribution and Customer Development In the exchange business, we affiliate with vacation ownership developers directly through our in-house sales teams. Affiliated vacation ownership developers sign agreements that have an average duration of four years. Our vacation exchange members are acquired primarily through our affiliated developers as part of the vacation ownership purchase process.
Sales and Marketing, Distribution and Customer Development In the exchange business, we affiliate with vacation ownership developers directly through our in-house sales teams. Affiliated vacation ownership developers sign agreements that have an average duration of five years. Our vacation exchange members are acquired primarily through our affiliated developers as part of the vacation ownership purchase process.
By fostering growth potential for all associates at Travel + Leisure Co., we enable each individual to clearly understand their role in the context of the larger organization and to access courses designed specifically to further their development. • Programs focused on career progression include: formal talent reviews, succession planning, associate development programs for all levels, executive coaching, leader onboarding plans, new leader orientation, and tuition and certification reimbursement.
By fostering growth potential for all 10 Table of Contents associates at Travel + Leisure Co., we enable each individual to clearly understand their role in the context of the larger organization and to access courses designed specifically to further their development. • Programs focused on career progression include formal talent reviews, succession planning, associate development programs for all levels, executive coaching, leader onboarding plans, new leader orientation, and tuition and certification reimbursement.
Additionally, these forums enable executives to showcase thought leadership at sponsored programs and events. • Our roadmap to drive progress in inclusion and diversity is guided by our goals of continuing to enhance a diverse talent pipeline to increase diverse representation at the director and above level; ongoing focus on diverse hires at all levels; and maintaining and growing our business relationships with companies that have diverse ownership.
Additionally, these forums enable executives to showcase thought leadership at sponsored programs and events. 12 Table of Contents • Our roadmap to drive progress in inclusion and diversity is guided by our goals of continuing to enhance a diverse talent pipeline to increase diverse representation at the director and above level; ongoing focus on diverse hires at all levels; and maintaining and growing our business relationships with companies that have diverse ownership.
Approximately 97% of our associates are eligible to participate in a company sponsored retirement plan or a mandatory pension plan in their country of residence, subject to plan terms. We also have an Employee Stock Purchase Plan, which is available to 89% of our associates.
Approximately 97% of our associates are eligible to participate in a company sponsored retirement plan or a mandatory pension plan in their country of residence, subject to plan terms. We also have an Employee Stock Purchase Plan which is available to 87% of our associates.
Brown was also among 75 Central Florida leaders to sign the first-ever Orlando 13 Table of Contents Economic Partnership Regional Corporate Pledge in 2020, committing to improve regional diversity, equity, and inclusion outcomes. Philanthropy With a focus on improving the lives of children and families through vacations, we support charitable organizations with a similar focus and mission.
Brown was also among 75 Central Florida leaders to sign the first-ever Orlando Economic Partnership Regional Corporate Pledge in 2020, committing to improve regional diversity, equity, and inclusion outcomes. Philanthropy With a focus on improving the lives of children and families through vacations, we support charitable organizations with a similar focus and mission.
Through our collection of vacation exchange brands, we have 3.5 million paid member families. Annual member retention is high and over the last three years we have retained on average 84% of the exchange memberships through our Exchange networks.
Through our collection of vacation exchange brands, we have 3.5 million paid member families. Annual member retention is high and over the last three years we have retained on average 85% of the exchange memberships through our Exchange networks.
Additionally, through contributions to Step Up for Students, we support providing low-income families in Florida the opportunity to choose the best education for their children. Most recently, we established the Travel + Leisure Charitable Foundation. This foundation will embrace a diverse and inclusive community through a variety of programs, including leadership training, mentoring opportunities, and educational support.
Additionally, through contributions to Step Up for Students, we support providing low-income families in Florida the opportunity to choose the best education for their children. Most recently, we established the Travel + Leisure Charitable Foundation. This foundation embraces a diverse and inclusive community through a variety of programs, including leadership training, mentoring opportunities, and educational support.
Our vacation exchange business has relationships with more than 4,100 affiliated vacation ownership resorts in 104 countries and territories located in North America, Latin America, the Caribbean, Europe, the Middle East, Africa, and Asia Pacific.
Our vacation exchange business has relationships with 4,100 affiliated vacation ownership resorts in 104 countries and territories located in North America, Latin America, the Caribbean, Europe, the Middle East, Africa, and Asia Pacific.
Through the addition of more inventory options for exchange and more travel products and services, RCI Travel Club seeks to enhance its core exchange business lines’ growth through greater share of consumers’ travel spend, increased member engagement, and reduced churn. Expand B2B travel club solutions.
Through the addition of more inventory options for exchange and more travel products and services, RCI Travel Club seeks to enhance its core exchange business lines’ growth through greater share of consumers’ travel spend, increased member engagement, and reduced churn. 7 Table of Contents Expand B2B travel solutions.
As of December 31, 2022, 53% of our global associates were women, 45% were men, and 2% were not declared. On December 31, 2022, of our global leaders with direct reports 52% were men and 48% were women.
As of December 31, 2023, 53% of our global associates were women, 45% were men, and 2% were not declared. On December 31, 2023, of our global leaders with direct reports 52% were men and 48% were women.
Travel + Leisure Co. and Wyndham Hotels have agreed to broad releases pursuant to which each releases the other and certain related persons specified in the Separation and Distribution Agreement from any claims against any of them that arise out of or relate to events, circumstances or actions occurring or failing to occur or alleged to occur or to have failed to occur or any conditions existing or alleged to exist at or prior to the time of the Distribution.
Travel + Leisure Co. and Wyndham Hotels agreed to broad releases pursuant to which each releases the other and certain related persons from any claims against any of them that arise out of or relate to events, circumstances or actions occurring or failing to occur or alleged to occur or to have failed to occur or any conditions existing or alleged to exist at or prior to the time of the Distribution.
The Wyndham loyalty program, Wyndham Rewards, has approximately 99 million enrolled members, many of whom fit our target new-customer demographic, providing us with a substantial customer sourcing opportunity to drive future VOI sales. We plan to increase this sales channel with initiatives such as enhanced call transfers, online marketing, in-hotel marketing, and online rentals of vacation ownership resorts.
The Wyndham Hotels loyalty program, Wyndham Rewards, has over 106 million enrolled members, many of whom fit our target new-customer demographic, providing us with a substantial customer sourcing opportunity to drive future VOI sales. We plan to increase this sales channel with initiatives such as enhanced call transfers, online marketing, in-hotel marketing, and online rentals of vacation ownership resorts.
Fees for property management services typically approximate 10% of budgeted operating expenses. As the owner of unsold VOIs, we pay maintenance fees in accordance with 6 Table of Contents the legal requirements of the jurisdictions in which the resorts are located.
Fees for property management services typically approximate 10% of budgeted operating expenses. As the owner of unsold VOIs, we pay maintenance fees in accordance with the legal requirements of the jurisdictions in which the resorts are located.
In total VOI upgrade sales represented 70% and 72% of our net VOI sales in 2022 and 2021. Our marketing and sales activities are often facilitated through marketing alliances with other travel, hospitality, entertainment, gaming, and retail companies that provide access to such companies’ customers through a variety of co-branded marketing offers.
In total VOI upgrade sales represented 68% and 70% of our net VOI sales in 2023 and 2022. Our marketing and sales activities are often facilitated through marketing alliances with other travel, hospitality, entertainment, gaming, and retail companies that provide access to such companies’ customers through a variety of co-branded marketing offers.
In connection with the Spin-off, we entered into a license, development and noncompetition agreement with Wyndham Hotels, which, among other things, granted to Travel + Leisure Co. the right to use the “Wyndham” trademark, “The Registry Collection” trademark, and certain other trademarks and intellectual property in our business.
In connection with the Spin-off, we entered into a license, development and noncompetition 8 Table of Contents agreement with Wyndham Hotels, which, among other things, granted to Travel + Leisure Co. the right to use the “Wyndham” trademark, “The Registry Collection” trademark, and certain other trademarks and intellectual property in our business.
As of December 31, 2021, we have reduced our Scope 1 + Scope 2 GHG emissions intensity by 39% and continue to increase our renewable energy consumption. This progress has been accomplished through a combination of increased operational efficiency, onsite solar projects, and one offsite solar project.
As of December 31, 2022, we have reduced our Scope 1 + Scope 2 GHG emissions intensity by 36% and continue to increase our renewable energy consumption. This progress has been accomplished through a combination of increased operational efficiency, onsite solar projects, and one offsite solar project.
All of our managers participate in an annual incentive plan that most closely aligns with their role. Sales and marketing associates at all levels across our business lines participate in variable compensation plans aligned to their role. As of December 31, 2022, 43% of our associates participate in a variable pay incentive pay program.
All of our managers participate in an annual incentive plan that most closely aligns with their role. Sales and marketing associates at all levels across our business lines participate in variable compensation plans aligned to their role. As of December 31, 2023, 41% of our associates participate in a variable pay incentive pay program.
The Separation and Distribution Agreement provided for those transfers of assets and assumptions of liabilities that were necessary in connection with the Spin-off so that Travel + Leisure Co. and Wyndham Hotels allocated the assets necessary to operate their respective businesses and retain or assume the liabilities allocated to them in accordance with the separation plan.
The Separation and Distribution Agreement provided for those transfers of assets and assumptions of liabilities so that Travel + Leisure Co. and Wyndham Hotels allocated the assets necessary to operate their respective businesses and retain or assume the liabilities allocated to them in accordance with the separation plan.
We use a consumer credit score, Fair Isaac Corporation (“FICO”), which is a branded version of a consumer credit score widely used within the U.S. Our weighted average FICO score on new originations was 736 for both 2022 and 2021.
We use a consumer credit score, Fair Isaac Corporation (“FICO”), which is a branded version of a consumer credit score widely used within the U.S. Our weighted average FICO score on new originations was 739 and 736 for 2023 and 2022.
Travel + Leisure Co. has the following business segments: • Wyndham Destinations is the world’s largest vacation ownership company with 816,000 owners and more than 245 vacation club resort locations. • Travel and Membership includes our Exchange and Travel Club business lines.
Travel + Leisure Co. has the following segments: • Vacation Ownership includes our Wyndham Destinations business line, which is the world’s largest vacation ownership company with 804,000 owners and more than 245 vacation club resort locations. • Travel and Membership includes our Exchange and Travel Club business lines.
In January 2021, Travel + Leisure Co. and Wyndham Hotels entered into a letter agreement pursuant to which, among other things, Wyndham Hotels waived its right to enforce certain noncompetition covenants in the License, Development and Noncompetition Agreement. 16 Table of Contents
In January 2021, Travel + Leisure Co. and Wyndham Hotels entered into a letter agreement pursuant to which, among other things, Wyndham Hotels waived its right to enforce certain noncompetition covenants in the License, Development and Noncompetition Agreement.
The following summaries do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, which is incorporated by reference into this Annual Report on Form 10-K included in Part IV, Item 15 as Exhibits 2.4, 10.59, 10.60, 10.61, and 10.62.
The following summaries do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, which is incorporated by reference into this Annual Report on Form 10-K included in Part IV, Item 15 as Exhibits 2.4, 10.62, 10.63, 10.64, and 10.65.
As of December 31, 2022, we had more than 245 vacation ownership resorts in the U.S., Canada, Mexico, Caribbean, and Asia Pacific that represent over 26,800 individual vacation ownership units and 816,000 owners of VOIs.
As of December 31, 2023, we had more than 245 vacation ownership resorts in the U.S., Canada, Mexico, the Caribbean, and Asia Pacific that represent 26,800 individual vacation ownership units and 804,000 owners of VOIs.
We have a long-term, exclusive license agreement and marketing arrangements with Wyndham Hotels, the world’s largest hotel franchiser by number of hotels with approximately 9,100 affiliated hotels located in over 95 countries.
We have a long-term, exclusive license agreement and marketing arrangements with Wyndham Hotels, the world’s largest hotel franchiser by number of hotels with approximately 9,200 affiliated hotels located in more than 95 countries.
In 2022, we generated 42% of our revenues from the sale of vacation ownership interests, and 45% of our revenues from our fee-for-service businesses. Our businesses have both domestic and international operations. During 2022, we derived 89% of our revenues in the United States (“U.S.”) and 11% internationally.
In 2023, we generated 42% of our revenues from the sale of vacation ownership interests, and 44% from our fee-for-service revenue streams. Our businesses have both domestic and international operations. During 2023, we derived 89% of our revenues in the United States (“U.S.”) and 11% internationally.
Federal Trade Commission and states’ “Little FTC Acts” and other regulations governing unfair, deceptive or abusive acts or practices including unfair or deceptive trade practices and unfair competition, state attorney general regulations, anti-fraud laws, prize, gift and sweepstakes laws, laws governing discount sales and buying clubs, real estate, title agency or insurance and other licensing or registration laws and regulations, anti-money laundering, consumer information privacy and security, breach notification, information sharing, telemarketing and email marketing laws, home solicitation sales laws, tour operator laws, lodging certificate and seller of travel laws, securities laws, subscription laws, and other consumer protection laws. 9 Table of Contents We must obtain the approval of numerous governmental authorities for our sales and marketing activities.
Federal Trade Commission and states’ “Little FTC Acts” and other regulations governing unfair, deceptive or abusive acts or practices including unfair or deceptive trade practices and unfair competition, state attorney general regulations, anti-fraud laws, prize, gift and sweepstakes laws, laws governing discount sales and buying clubs, real estate, title agency or insurance and other licensing or registration laws and regulations, anti-money laundering, consumer information privacy and security, breach notification, information sharing, telemarketing and email marketing laws, home solicitation sales laws, tour operator laws, lodging certificate and seller of travel laws, securities laws, subscription laws, and other consumer protection laws.
In addition, based on the water risk assessment we conducted in 2021, we identified 71 managed resorts in high or extremely high-water stressed locations.
In addition, based on the water risk assessment we conducted in 2023, we identified 53 managed resorts in high or extremely high-water stressed locations.
Our ethnic representation in the U.S. as of December 31, 2022 was: • 48% White • 23% Hispanic/Latinx • 14% Black/African American • 7% Asian • 3% Two or more races • 2% Native Hawaiian/Other Pacific Islander • 1% Native American/American Indian • 2% Undeclared The following table provides the U.S. ethnic diversity distribution by level: Below Director Director and above (a) White 46% 76% Diverse 52% 23% Undeclared 2% 1% (a) Includes our executive officers which are 89% white and 11% ethnically diverse.
Our ethnic representation in the U.S. as of December 31, 2023 was: • 47% White • 23% Hispanic/Latinx • 14% Black/African American • 7% Asian • 4% Two or more races • 2% Native Hawaiian/Other Pacific Islander • 1% Native American/American Indian • 2% Undeclared The following table provides the U.S. ethnic diversity distribution by level: Below Director Director and above (a) White 46% 75% Diverse 52% 24% Undeclared 2% 1% (a) Includes our executive officers which are 90% white and 10% ethnically diverse.
Travel Club offers global discount travel membership clubs to consumers as well as custom travel technology solutions to business-to-business affinity partners including large employers, banks and retailers, trade associations and others via their operations in the U.S., Mexico, Asia, and Europe.
Travel Club offers discount travel to consumers as well as custom travel technology solutions to B2B affinity partners including large employers, banks and retailers, trade associations and others via their operations in the U.S. and Mexico.
Employee Matters Agreement We are party to an Employee Matters Agreement with Wyndham Hotels that governs the respective rights, responsibilities and obligations of Wyndham Hotels and Travel + Leisure Co. following the Spin-off. The Employee Matters Agreement addresses the allocation of employees between Wyndham Hotels and Travel + Leisure Co. as well as other employment, compensation and benefits-related matters.
Employee Matters Agreement We are party to an Employee Matters Agreement with Wyndham Hotels that governs the respective rights, responsibilities and obligations of Wyndham Hotels and Travel + Leisure Co. following the Spin-off with respect to employment, compensation and benefits-related matters.
We seek to grow our membership beyond the timeshare industry, expanding B2B partnerships across multiple sectors driving incremental transaction revenue and subscriptions. We offer white-label solutions to associations, organizations, and other closed-user groups in order for these groups to offer travel benefits to their communities which increases engagement and loyalty.
We seek to expand B2B partnerships across multiple sectors driving incremental transaction revenue. We offer white-label solutions to associations, organizations, and other closed-user groups in order for these groups to offer travel benefits to their communities which increases engagement and loyalty.
Our Compensation Committee is responsible for periodically reviewing certain of our human capital programs, policies and procedures, including management succession planning and development.
Our Compensation Committee is responsible for periodically reviewing certain of our human capital programs, policies and procedures, including management succession planning and development. The Compensation Committee is also responsible for periodically reviewing incentives and risks related to our compensation programs.
We are continuously monitoring climate change risks and taking actions to mitigate impacts wherever possible. 12 Table of Contents Inclusion & Diversity We understand that a culture of rich inclusion and diversity enhances our performance and fortifies our ability to serve our customers.
We are continuously monitoring climate change risks and taking actions to mitigate impacts, as deemed appropriate. Inclusion & Diversity We understand that a culture of rich inclusion and diversity enhances our performance and fortifies our ability to serve our customers.
Based upon insurable property values as of December 31, 2022, approximately 35% of our managed properties are located in Tier I windstorm exposure areas, approximately 20% are located in areas with a high level of flood risk; and approximately 20% are located in high-risk wildfire-prone states.
As of December 31, 2023, based on insurable property values, approximately: • 37% of our managed properties are located in Tier I windstorm exposure areas, • 23% are in states prone to high-risk wildfire, and • 20% are situated in areas with a high level of flood risk.
The acquisition created a strategic alliance between Travel + Leisure Co. and Dotdash Meredith, with Dotdash Meredith continuing to operate and monetize Travel + Leisure branded multi-platform media assets across multiple channels under a 30-year royalty-free, renewable licensing relationship.
On January 5, 2021, we acquired the Travel + Leisure brand and all related assets from Dotdash Meredith (formerly Meredith Corporation). The acquisition created a strategic alliance between Travel + Leisure Co. and Dotdash Meredith, with Dotdash Meredith continuing to operate and monetize Travel + Leisure branded multi-platform media assets across multiple channels under a 30-year royalty-free, renewable licensing relationship.
Changes in circumstances or applicable law may necessitate the application for or modification of existing approvals. Our telemarketing activities are subject to regulation and enforcement activities including the federal Telephone Consumer Protection Act and “do not call” legislation, which may increase the cost of telemarketing activities and expose us to enforcement actions if we do not comply.
Our telemarketing activities are subject to regulation and enforcement activities including the federal Telephone Consumer Protection Act and “do not call” legislation, which may increase the cost of telemarketing activities and expose us to enforcement actions if we do not comply.
Since its formation, the Travel + Leisure Charitable Foundation has partnered with the School Board of Orange County, Florida, to create the Travel + Leisure Eatonville scholarship program, which strives to promote educational excellence within the Eatonville community, the oldest African-American-incorporated municipality in the U.S., by providing scholarships to eligible students.
Since its formation, the Travel + Leisure Charitable Foundation has partnered with the School Board of Orange County, Florida, to create the Travel + Leisure Eatonville scholarship program, which strives to promote educational excellence within the Eatonville community, the oldest African-American-incorporated municipality in the U.S., by providing scholarships to eligible students. 13 Table of Contents Governance For detailed information about our governance practices, see “Governance” in the Proxy Statement for our 2024 Annual Meeting of Shareholders.
Tax Matters Agreement We have a Tax Matters Agreement with Wyndham Hotels that governs the respective rights, responsibilities and obligations of Wyndham Hotels and Travel + Leisure Co. following the Spin-off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns.
Wyndham Hotels’ employees no longer participate in Travel + Leisure Co.’s plans or programs, and Wyndham Hotels has established plans or programs for their employees as described in the Employee Matters Agreement. 15 Table of Contents Tax Matters Agreement We have a Tax Matters Agreement with Wyndham Hotels that governs the respective rights, responsibilities and obligations of Wyndham Hotels and Travel + Leisure Co. following the Spin-off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns.
Visit our website at travelandleisureco.com/esg-commitment for additional information about our health and safety activities and initiatives. Information on our website is not part of, or incorporated by reference into, this Annual Report on Form 10-K.
Visit our website at travelandleisureco.com/esg-commitment for additional information on our social responsibility activities and initiatives, along with our 2022 ESG report. Information on our website, including our 2022 ESG report, is not part of, or incorporated in, this Annual Report on Form 10-K.
We prioritize protecting the environment and strengthening the communities where we live and operate. We strive to cultivate an inclusive environment, in which our associates, customers, suppliers, and communities feel appreciated, respected, and valued.
This strategy remains an integral part of our company culture and is reflected in our global business operations. We prioritize protecting the environment and strengthening the communities where we live and operate. We strive to cultivate an inclusive environment, in which our associates, customers, suppliers, and communities feel appreciated, respected, and valued.
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. Other laws, regulations, and policies primarily affect one of our areas of business: inventory sourcing activities; sales and marketing activities; purchaser financing activities; and property management activities.
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.
The following table provides the global gender distribution by level: Gender Below Director Director and above (a) Female 54% 39% Male 44% 60% Undeclared 2% 1% (a) Includes our executive officers which are 89% male and 11% female.
The following table provides the global gender distribution by level: Gender Below Director Director and above (a) Female 53% 41% Male 45% 59% Undeclared 2% —% (a) Includes our executive officers which are 80% male and 20% female.
In addition, many jurisdictions, including many in the U.S., require that we file detailed registration or offering statements with regulatory authorities disclosing information regarding our VOIs, such as information concerning the intervals being offered, the project, resort or program to which the intervals relate, applicable timeshare plans, evidence of title, details regarding our business, the purchaser’s rights and obligations with respect to such intervals, and a description of the manner in which we intend to offer and advertise such intervals.
In addition, many jurisdictions, including many in the U.S., require that we file detailed registration or offering statements with regulatory authorities disclosing information regarding our VOIs, such as information concerning the intervals being offered, the project, resort or program to which the intervals relate, applicable timeshare plans, evidence of title, details regarding our business, the purchaser’s rights and obligations with respect to such intervals, and a description of the manner in which we intend to offer and advertise such intervals. 9 Table of Contents When we sell VOIs, local law grants the purchaser of a VOI the right to cancel a purchase contract during a specified rescission period following the later of the date the contract was signed or the date the purchaser received the last of the documents required to be provided by us.
GOVERNMENT REGULATION Our business is subject to various international, national, federal, state and local laws, regulations, and policies in jurisdictions in which we operate.
See Note 7— Intangible Assets to the Consolidated Financial Statements for more information regarding our intangible assets. GOVERNMENT REGULATION Our business is subject to various international, national, federal, state and local laws, regulations, and policies in jurisdictions in which we operate.
As of December 31, 2022, our global team was comprised of over 18,200 associates, more than 3,700 of whom work outside the U.S. Of our global associates 14,000 support Vacation Ownership, 2,300 support Travel and Membership, and 1,900 comprise our corporate group. Less than 1% of our associates are subject to collective bargaining agreements governing their employment with our company.
Of our global associates 14,900 support Vacation Ownership, 1,900 support Travel and Membership, and 2,200 comprise our corporate group. Less than 1% of our associates are subject to collective bargaining agreements governing their employment with our company.
Through our Travel Club business, we also offer additional travel products such as flights and car rentals. 8 Table of Contents Seasonality Our revenues from vacation exchange fees have traditionally been higher in the first quarter, which is generally when our vacation exchange members plan and book their vacations for the year.
Seasonality Our revenues from vacation exchange fees have traditionally been higher in the first quarter, which is generally when our vacation exchange members plan and book their vacations for the year.
Environmental Progress We are committed to sustainable business practices with a focus on emissions, energy, water, and biodiversity. We closely partner with applicable property owners’ associations that we do not control to drive progress toward our environmental goals.
We closely partner with applicable property owners’ associations that we do not control to drive progress toward our environmental goals.
Business Continuity owns a detailed Emergency Preparedness Guide that equips each location with incident response protocols and reporting processes, an emergency response hotline, and outlines the physical requirements for handling situations ranging from natural disasters to criminal activity. In addition to the health and well-being benefits offered to our associates, we have a variety of safety programs, including Project Opioid.
Business Continuity owns a detailed Emergency Preparedness Guide that equips each location with incident response protocols and reporting processes, an emergency response hotline, and outlines the physical requirements for handling situations ranging from natural disasters to criminal activity. Visit our website at travelandleisureco.com/esg-commitment for additional information about our health and safety activities and initiatives.
Timeshare Inventory Purchasing and Development Our inventory sourcing 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 only one of the following areas of our business: inventory sourcing activities; sales and marketing activities; purchaser financing activities; and property management activities. Timeshare Inventory Purchasing and Development Our inventory sourcing activities are regulated under a number of different timeshare, condominium, and land sales disclosure statutes in many jurisdictions.
Our Travel Club business line includes: our RCI travel club, which seeks to capture greater share of our members non-exchange travel budgets; our B2B travel clubs, which offer white-label solutions to associations, organizations, and other closed user groups; and Travel + Leisure GO, which provides a travel club offering direct to consumers.
RCI is the world’s largest exchange company with 3.5 million members and 4,100 affiliated resorts in its network. Our Travel Club business line includes: our RCI travel club, which seeks to capture a greater share of our members non-exchange travel budgets; and our business-to-business (“B2B”) travel clubs, which offer white-label solutions to associations, organizations, and other closed user groups.
Members are acquired through affinity partnerships where the affinity partner would offer a travel club membership to affiliated groups, usually its customers, members and/or employees. 7 Table of Contents Strategies Our goal is to grow our cornerstone vacation exchange business, optimize cash flow, and broaden our reach into the leisure travel markets to accelerate overall growth for the segment through our travel clubs.
Strategies Our goal is to grow our cornerstone vacation exchange business, optimize cash flow, and broaden our reach into the leisure travel markets to accelerate overall growth for the segment through our travel clubs.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE We are committed to making a positive impact on our world while delivering stakeholder value through our Environmental, Social, and Governance (“ESG”) strategy, Full Circle. This strategy remains an integral part of our company culture and is reflected in our global business operations.
Information on our website is not part of, or incorporated by reference into, this Annual Report on Form 10-K. ENVIRONMENTAL, SOCIAL, AND GOVERNANCE We are committed to making a positive impact on our world while delivering stakeholder value through our Environmental, Social, and Governance (“ESG”) strategy, Full Circle.
After the application of these early repayments, we financed 56% of VOI sales during 2022. Similar to many other companies that provide consumer financing, we have historically securitized a majority of the receivables originated in connection with the sale of VOIs.
Similar to many other companies that provide consumer financing, we have historically securitized a majority of the receivables originated in connection with the sale of VOIs. We initially place the financed contracts into a revolving warehouse securitization facility, generally within 30 to 90 days after origination.
In addition, at certain newly-developed resorts, we may enter into subsidy agreements with the property owners’ associations to cover costs that otherwise would be covered by annual maintenance fees payable with respect to VOIs that have not yet been sold.
In addition, at certain newly-developed resorts, we may enter into subsidy agreements with the property owners’ associations to cover costs that otherwise would be covered by annual maintenance fees payable with respect to VOIs that have not yet been sold. 6 Table of Contents Seasonality We rely, in part, upon tour flow to generate sales of VOIs; consequently, sales volume tends to increase in the spring and summer months as a result of greater tour flow from travelers, generally resulting in higher revenue from sales of VOIs in the third quarter than in other quarters.
During 2022, we generated $1.14 billion of receivables on $1.79 billion of gross VOI sales, net of Fee-for-Service sales, resulting in 64% of our VOI sales being financed. This level of financing is prior to the application of cash received for the full payment of a loan within 60 days of origination.
This level of financing is prior to the application of cash received for the full payment of a loan within 60 days of origination. After the application of these early repayments, we financed 56% of VOI sales during both 2023 and 2022.
We offer travelers flexibility to select preferred travel dates in a variety of lodging options. We leverage inventory comprised of VOIs and independently owned properties across our network of brands to maximize value for affiliates and members.
We leverage inventory comprised of VOIs and independently owned properties across our network of brands to maximize value for affiliates and members. Through our Travel Club business, we also offer additional travel products such as flights and car rentals.
Our programs allow us to market and sell our vacation ownership products in variable quantities and to offer existing owners “upgrade” sales to supplement their existing VOIs. Strategies Our goal is to strengthen our leadership position in the vacation ownership industry and generate consistent and long-term value for our shareholders.
This business line is included in the Vacation Ownership segment. Strategies Our goal is to strengthen our leadership position in the vacation ownership industry and generate consistent and long-term value for our shareholders.
Inventory The properties our business makes available to travelers include vacation ownership and fractional resorts, homes, private residence clubs, and traditional hotel rooms. Only in rare cases do we acquire and take title of inventory, as our network supply is predominantly owned and provided by third-party affiliates and suppliers.
Only in rare cases do we acquire and take title of inventory, as our network supply is predominantly owned and provided by third-party affiliates and suppliers. We offer travelers flexibility to select preferred travel dates in a variety of lodging options.
Additionally, as of December 31, 2021 we have reduced our water withdrawal per square foot by 21%, compared to our 2010 baseline. As of December 31, 2022, we have also planted more than 1.8 million trees through our partnership with the Arbor Day Foundation, as part of our innovative approach to increase biodiversity and sequester carbon.
Additionally, as of December 31, 2022, we have reduced our water withdrawal per square foot by 21%, compared to our 2010 baseline. In partnership with the Arbor Day Foundation, during 2023 we achieved our 2025 goal of planting two million trees. This accomplishment, two years ahead of schedule, underscores our commitment to enhancing biodiversity.
Information on our website, including our 2021-2022 ESG report, is not part of, or incorporated in, this Annual Report on Form 10-K. KEY AGREEMENTS RELATED TO THE SPIN-OFF This section summarizes the material agreements between Travel + Leisure Co. and Wyndham Hotels that govern the ongoing relationships between the two companies after the Spin-off.
KEY AGREEMENTS RELATED TO THE SPIN-OFF This section summarizes the material agreements between Travel + Leisure Co. and Wyndham Hotels that govern the ongoing relationships between the two companies after the Spin-off. These summaries are qualified in their entirety by reference to the full text of the applicable agreements, which are incorporated by reference herein.
We initially place the financed contracts into a revolving warehouse securitization facility, generally within 30 to 90 days after origination. Many of the receivables are subsequently transferred from the warehouse securitization facility into term securitization facilities. Wyndham Consumer Finance manages the selection, processing and servicing of loans pledged in our warehouse and term securitization facilities.
Many of the receivables are subsequently transferred from the warehouse securitization facility into term securitization facilities. Wyndham Consumer Finance manages the selection, processing and servicing of loans pledged in our warehouse and term securitization facilities. We assess the performance of our loan portfolio by monitoring numerous metrics including collection rates, defaults by state of residency, and bankruptcies.
The Compensation Committee is also responsible for periodically reviewing incentives and risks related to our compensation programs. 10 Table of Contents Furthermore, our Audit Committee discusses compliance risks related to human capital matters and periodically reviews and updates our Code of Conduct to promote ethical behavior by all of our associates.
Furthermore, our Audit Committee discusses compliance risks related to human capital matters and periodically reviews and updates our Code of Conduct to promote ethical behavior by all of our associates. As of December 31, 2023, our global team was comprised of over 19,000 associates, 4,200 of whom work outside the U.S.
We assess the performance of our loan portfolio by monitoring numerous metrics including collection rates, defaults by state of residency, and bankruptcies. As of December 31, 2022, 94% of our loan portfolio was current (not more than 30 days past due).
Our loan portfolio was 95% and 94% current (not more than 30 days past due) as of December 31, 2023 and 2022. See Note 9— Vacation Ownership Contract Receivables to the Consolidated Financial Statements for further information on the performance of our loan portfolio.
Our Full Circle strategy is recognized through the prestigious honors we have earned, including Fortune magazine’s World’s Most Admired Companies, Newsweek’s list of America’s Most Responsible Companies, the National Veteran-Owned Business Association’s Best Corporations for Veteran’s Business Enterprises, and the Human Rights Campaign’s Best Places to Work for LGBTQ+ Equality award, among others.
Our Full Circle strategy is recognized through the prestigious honors we have earned, including: • Fortune magazine’s World’s Most Admired Companies, • U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile to date we have not incurred any known material adverse impact on our operations or financial results as a result of a cyber-attack, we cannot guarantee that cyber-attacks have not gone generally undetected or without general recognition of magnitude or will not occur in the future, any of which could materially adversely affect our brands, reputation, consumer confidence in us, costs and profitability. 21 Table of Contents Our information technology infrastructure (including our, and our third-party service providers’, information systems and legacy proprietary online reservation and management systems) has been and will likely continue to be vulnerable to system failures such as server malfunction or software or hardware failures, computer hacking, phishing attacks, user error, cyber-terrorism, loss of data, computer viruses, ransomware and malware installation, and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information.
Biggest changeOur information technology infrastructure (including our, and our third-party service providers’, information systems and legacy proprietary online reservation and management systems) has been and will likely continue to be vulnerable to system failures such as server malfunction or software or hardware failures, computer hacking, phishing attacks, user error, cyber-terrorism, loss of data, computer viruses, ransomware and malware installation, and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information.
These provisions include that shareholders do not have the right to act by written consent, rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings, the right of our Board of Directors to issue preferred stock without shareholder approval and limitations on the right of shareholders to remove directors.
These provisions include that shareholders do not have the right to act by written consent, rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings, the right of our Board to issue preferred stock without shareholder approval and limitations on the right of shareholders to remove directors.
In connection with our debt obligations, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us, we are subject to numerous risks, including: • the interest rates being charged on recently issued and floating rate corporate debt and securitized debt have increased significantly beginning in 2022 and increased interest costs on our debt may continue in the future, and we may not be able to pass along the full amount of such increases to purchasers of VOIs to whom we provide financing; • our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt and other debt instruments that contain cross-default provisions; • we may be unable to comply with the terms of the financial covenants under our revolving credit facility or other debt agreements, including a breach of the financial ratio tests, which could result in a default and acceleration of the underlying debt and under other debt and financial instruments that contain cross-default provisions; • our leverage may adversely affect our ability to obtain additional financing on favorable terms or at all; • our leverage requires the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures, dividends, share repurchases or other operating needs; • negative ratings and/or downgrades of our debt by rating agencies could increase our borrowing costs and prevent us from obtaining additional financing on favorable terms or at all; • failure or non-performance of counterparties to foreign exchange and interest rate hedging transactions could result in losses; • an inability to securitize our vacation ownership loan receivables on terms acceptable to us or at all because of, among other factors, the performance of the vacation ownership loan receivables, adverse conditions in the market for vacation ownership loan-backed notes and asset-backed notes in general, and the risk that the actual amount of uncollectible accounts on our securitized vacation ownership loan receivables and other credit we extend is greater than expected; • our liquidity, as it relates to our vacation ownership contract receivables (“VOCRs”) securitization program, could be adversely affected if we were to fail to renew or replace our conduit facilities on their expiration dates, or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying VOCRs deteriorate.
In connection with 23 Table of Contents our debt obligations, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us, we are subject to numerous risks, including: • the interest rates being charged on recently issued and floating rate corporate debt and securitized debt have increased significantly beginning in 2022 and higher interest costs on our debt may continue in the future, and we may not be able to pass along the full amount of such costs to purchasers of VOIs to whom we provide financing; • our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt and other debt instruments that contain cross-default provisions; • we may be unable to comply with the terms of the financial covenants under our revolving credit facility or other debt agreements, including a breach of the financial ratio tests, which could result in a default and acceleration of the underlying debt and under other debt and financial instruments that contain cross-default provisions; • our leverage may adversely affect our ability to obtain additional financing on favorable terms or at all; • our leverage requires the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures, dividends, share repurchases or other operating needs; • negative ratings and/or downgrades of our debt by rating agencies could increase our borrowing costs and prevent us from obtaining additional financing on favorable terms or at all; • failure or non-performance of counterparties to foreign exchange and interest rate hedging transactions could result in losses; • an inability to securitize our vacation ownership loan receivables on terms acceptable to us or at all because of, among other factors, the performance of the vacation ownership loan receivables, adverse conditions in the market for vacation ownership loan-backed notes and asset-backed notes in general, and the risk that the actual amount of uncollectible accounts on our securitized vacation ownership loan receivables and other credit we extend is greater than expected; • our liquidity, as it relates to our vacation ownership contract receivables (“VOCRs”) securitization program, could be adversely affected if we were to fail to renew or replace our conduit facilities on their expiration dates, or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying VOCRs deteriorate.
Our Board of Directors may also reduce or suspend the payment of dividends or suspend our share repurchase program if it deems such action to be in the best interests of our shareholders, such as our Board did when it reduced our dividend and suspended our share repurchase program in response to the COVID-19 pandemic.
Our Board may also reduce or suspend the payment of dividends or suspend our share repurchase program if it deems such action to be in the best interests of our shareholders, such as our Board did when it reduced our dividend and suspended our share repurchase program in response to the COVID-19 pandemic.
In addition, in order to accelerate the growth of consumer financing income, we have recently taken actions to increase the percentage of the sale amount of VOIs that is financed by owners, which we also expect to increase the loan loss provision associated with such increased financed amount.
In addition, in order to accelerate the growth of consumer financing income, we have taken actions to increase the percentage of the sale amount of VOIs that is financed by owners, which we also expect to increase the loan loss provision associated with such increased financed amount.
Our new owner enrollment and exchange member volumes dropped significantly during the COVID-19 pandemic due in large part to the industry wide drop in VOI sales to new owners and the total number of our exchange members continues to be below pre-pandemic levels.
Our new member enrollment and exchange member volumes dropped significantly during the COVID-19 pandemic, due in large part to the industry wide drop in VOI sales to new owners, and the total number of our exchange members continues to be below pre-pandemic levels.
We are, and may be in the future, subject to regulatory inquiries and investigations from time to time arising under laws and regulations applicable to our business, including, among others, those governing timeshare (including required government registrations), consumer financings and other lending, information security, data protection and privacy, credit card and payment card security standards, marketing, sales, consumer protection and advertising, unfair and deceptive trade practices, fraud, bribery and corruption, telemarketing (including do-not-call and call-recording regulations), licensing, labor, employment, anti-discrimination, health care, health and safety, accessibility, immigration, gaming, environmental (including climate change) and remediation, intellectual property, securities, stock exchange listing, accounting, tax and regulations applicable under the Dodd-Frank Act, Office of Foreign Asset Control, Americans with Disabilities Act, the Sherman Act, the Foreign Corrupt Practices Act and local equivalents in international jurisdictions (including the United Kingdom Bribery Act).
We are, and may be in the future, subject to regulatory inquiries and investigations from time to time arising under laws and regulations applicable to our business, including, among others, those governing timeshare (including required government registrations), consumer financings and 25 Table of Contents other lending, information security, data protection and privacy, credit card and payment card security standards, marketing, sales, consumer protection and advertising, unfair and deceptive trade practices, fraud, bribery and corruption, telemarketing (including do-not-call and call-recording regulations), licensing, labor, employment, anti-discrimination, health care, health and safety, accessibility, immigration, gaming, environmental (including climate change) and remediation, intellectual property, securities, stock exchange listing, accounting, tax and regulations applicable under the Dodd-Frank Act, Office of Foreign Asset Control, Americans with Disabilities Act, the Sherman Act, the Foreign Corrupt Practices Act and local equivalents in international jurisdictions (including the United Kingdom Bribery Act).
However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our Board of Directors determines is not in the best interests of our company and our shareholders.
However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our Board determines is not in the best interests of our company and our shareholders.
We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities, including those used for our travel subscription businesses, reservation systems, payments systems, vacation exchange systems, property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems.
We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities, including those used for our travel clubs businesses, reservation systems, payments systems, vacation exchange systems, property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems.
Our business is subject to numerous business, financial, operating and other risks common to the timeshare industry and the leisure travel industry more broadly, such as adverse changes with respect to any of the following: • consumer travel and vacation patterns and consumer preferences; • increased or unanticipated operating costs, including as a result of recent inflationary pressures, and which may not be offset on a timely basis, or at all, by our ability or actions to increase our product pricing or maintenance fees; • increased energy costs, labor shortages and increased labor costs as a result of inflation as well as increases in minimum wage and health-care related costs, which may not be fully offset by price or fee increases in our business or otherwise; • product and supply chain disruptions; • desirability of geographic regions where resorts in or affiliated with our businesses are located; • the supply and demand for exchange services and products, and travel subscription services and products; • our ability to accurately plan for and satisfy future timeshare inventory needs, which was adversely impacted by the effect of COVID-19 on vacation ownership tours and VOI sales, as well as timely acquire and balance our supply of new and existing timeshare properties with consumer demand for those properties; • our ability to continue to attract customers for VOI purchases and upgrades at the levels we expect; • our ability to operate our affiliated resorts and conduct tours of our properties; • seasonality in our businesses, which may cause fluctuations in our operating results; • the availability of acceptable financing and the cost of capital as they apply to us, our customers, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations; • the quality of the services provided by affiliated resorts and properties in our exchange business or resorts in which we sell VOIs or by participants in the Wyndham Rewards loyalty program, which may adversely affect our image, reputation and brand value; • success of any actions we may take to increase our exchange membership levels; • market perception of the timeshare industry and our ability to effectively respond to any reputational issues that may arise from negative publicity from social media postings or media reports, which could damage our brands; • our ability to develop and maintain positive relations and contractual arrangements with VOI owners, current and potential vacation exchange members, resorts with units that are exchanged through our exchange business and timeshare property owner associations; • organized labor activities and associated litigation; • adverse economic factors impacting the financial health of customers, which has impaired and could continue to impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights; • our effectiveness in keeping pace with technological developments (including with respect to social media platforms) as well as any failure to timely upgrade our technology infrastructure and efficiently manage upgrade projects to achieve our strategic planning expectations and to meet changing customer preferences and customer interfacing needs; • our ability to effectively use data to achieve market intelligence and develop, manage and grow our core operations and strategic initiatives using such data and market intelligence; • our ability to offer acceptable customer pricing for products and services, including in a time of current recession concerns and higher interest rates; • our ability to identify, obtain, train and retain industry specific talent (including digital, sales, marketing, and operational leadership skills) to execute our growth strategy and to address customer satisfaction; • disruptions, including non-renewal or termination of agreements, in relationships with third parties (including marketing alliances and affiliations with e-commerce channels); • owners or other developers that have development advance notes with us, or who have received loans or other financial arrangements incentives from us, who have experienced and may continue to experience financial difficulties ; • decrease in the supply of available exchange accommodations due to, among other reasons, a decrease in inventory included in the system (including as a result of severe weather events, ongoing property renovations or a decrease in member deposits) could adversely affect our exchange business; • the viability of property owners' associations that we manage and the maintenance and refurbishment of vacation ownership properties, which depend on property owners associations levying sufficient maintenance fees and the ability of members to pay such maintenance fees, particularly in times of economic downturn; 20 Table of Contents • decrease in or delays or cancellations of planned or future development or refurbishment projects, whether due to budgetary constraints of property owners’ associations or otherwise, and the complexity with regard to removing properties from timeshare regimes when they can no longer be sustainably maintained; • increases in maintenance fees, which could cause our product to become less attractive or less competitive; • the level of unlawful or deceptive third-party VOI resale schemes, which could damage our reputation and brand value; • difficulties associated with obtaining required approvals to develop vacation ownership properties, liability under state and local laws with respect to any construction defects in the vacation ownership properties we develop, and risks related to real estate project development costs and completion; • private resale of VOIs and the sale of VOIs on the secondary market, which could adversely affect our vacation ownership resorts and exchange business; • disputes with owners of VOIs, property owners associations, and vacation exchange affiliation partners, which may result in litigation and the loss of management contracts; • laws, regulations and legislation internationally and domestically, and on a federal, state or local level, concerning the leisure travel industry, which may make the operation of our business more onerous, more expensive or less profitable; • our failure or inability to adequately protect and maintain our trademarks and other intellectual property rights; and • consumers increased use of third-party internet travel intermediaries and peer-to-peer online networks to search for and book their lodging accommodations, which could adversely affect our vacation ownership and vacation exchange brands, travel subscription businesses, reservation systems, bookings and rates.
Our business is subject to numerous business, financial, operating and other risks common to the timeshare industry and the leisure travel industry more broadly, such as adverse changes with respect to any of the following: • consumer travel and vacation patterns and consumer preferences; • increased or unanticipated operating costs, including as a result of recent inflationary pressures, and which may not be offset on a timely basis, or at all, by our ability or actions to increase our product pricing or maintenance fees; • increased energy costs, labor shortages and increased labor costs as well as increases in minimum wage and health-care related costs, which may not be fully offset by price or fee increases in our business or otherwise; 19 Table of Contents • product and supply chain disruptions; • desirability of geographic regions where resorts in or affiliated with our businesses are located; • the supply and demand for exchange services and products, and travel subscription services and products; • our ability to accurately plan for, predict, and satisfy future timeshare inventory needs, which can be adversely impacted by events and occurrences that affect vacation ownership tours and VOI sales, such as the COVID-19 pandemic, as well as timely acquire and balance our supply of new and existing timeshare properties with consumer demand for those properties; • our ability to continue to attract customers for VOI purchases and upgrades at the levels we expect; • our ability to operate our affiliated resorts and conduct tours of our properties; • seasonality in our businesses, which may cause fluctuations in our operating results; • the availability of acceptable financing and the cost of capital as they apply to us, our customers, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations; • the quality of the services provided by affiliated resorts and properties in our exchange business or resorts in which we sell VOIs or by participants in the Wyndham Rewards loyalty program, which may adversely affect our image, reputation and brand value; • success of any actions we may take to increase our exchange membership levels; • our ability to develop and maintain relationships with marketing partners; • market perception of the timeshare industry and our ability to effectively respond to any reputational issues that may arise from negative publicity from social media postings or media reports, which could damage our brands; • our ability to develop and maintain positive relations and contractual arrangements with VOI owners, current and potential vacation exchange members, resorts with units that are exchanged through our exchange business and timeshare property owner associations; • organized labor activities and associated litigation; • adverse economic factors impacting the financial health of customers, which has impaired and could continue to impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights; • our effectiveness in keeping pace with technological developments (including with respect to social media platforms) as well as any failure to timely upgrade our technology infrastructure and efficiently manage upgrade projects to achieve our strategic planning expectations and to meet changing customer preferences and customer interfacing needs; • our ability to effectively use data to achieve market intelligence and develop, manage and grow our core operations and strategic initiatives using such data and market intelligence; • our ability to offer acceptable customer pricing for products and services, including in a time of economic uncertainty and higher borrowing costs; • our ability to identify, obtain, train and retain industry specific talent (including digital, sales, marketing, and operational leadership skills) to execute our growth strategy and to address customer satisfaction; • disruptions, including non-renewal or termination of agreements, in relationships with third parties (including marketing alliances, loyalty programs and other affiliations with third parties, including Wyndham Hotels); • owners or other developers that have development advance notes with us, or who have received loans or other financial arrangements incentives from us, who have experienced and may continue to experience financial difficulties ; • decrease in the supply of available exchange accommodations due to, among other reasons, a decrease in inventory included in the system (including as a result of severe weather events, including in 2022 and 2023, ongoing property renovations or a decrease in member deposits) could adversely affect our exchange business; • the viability of property owners' associations that we manage and the maintenance and refurbishment of vacation ownership properties, which depend on property owners associations levying sufficient maintenance fees and the ability of members to pay such maintenance fees, particularly in times of economic downturn; • decrease in or delays or cancellations of planned or future development or refurbishment projects, whether due to budgetary constraints of property owners’ associations or otherwise, and the complexity with regard to removing properties from timeshare regimes when they can no longer be sustainably maintained; • increases in maintenance fees, which could cause our product to become less attractive or less competitive; • the level of unlawful or deceptive third-party VOI resale schemes, which could damage our reputation and brand value; 20 Table of Contents • difficulties associated with obtaining required approvals to develop vacation ownership properties, liability under state and local laws with respect to any construction defects in the vacation ownership properties we develop, and risks related to real estate project development costs and completion; • private resale of VOIs and the sale of VOIs on the secondary market, which could adversely affect our vacation ownership resorts and exchange business; • disputes with owners of VOIs, property owners associations, and vacation exchange affiliation partners, which may result in litigation and the loss of management contracts; • laws, regulations and legislation internationally and domestically, and on a federal, state or local level, concerning the leisure travel industry, which may make the operation of our business more onerous, more expensive or less profitable; • our failure or inability to adequately protect and maintain our trademarks and other intellectual property rights; and • consumers increased use of third-party internet travel intermediaries and peer-to-peer online networks to search for and book their lodging accommodations, which could adversely affect our vacation ownership and vacation exchange brands, travel subscription businesses, reservation systems, bookings and rates.
If we are unable to maintain a good relationship with Wyndham Hotels, or if Wyndham Hotels does not perform its obligations under these agreements, fails to protect the trademarks, trade names and intellectual property that we license from it or if these brands deteriorate or materially change in an adverse manner, or the reputation of these brands declines, our brand may be negatively affected, our profitability and revenues could decrease and our growth potential may be adversely affected.
If we are unable to maintain a good relationship with Wyndham Hotels, or if Wyndham Hotels does not perform its obligations under these agreements, fails to protect the trademarks, trade names and intellectual property that we 26 Table of Contents license from it or if these brands deteriorate or materially change in an adverse manner, or the reputation of these brands declines, our brand may be negatively affected, our profitability and revenues could decrease and our growth potential may be adversely affected.
We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board of Directors and by providing our Board of Directors with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers.
We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers.
Failure to successfully execute these transactions and integrate acquired businesses could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Dispositions of businesses, such as our European and North American vacation rentals transactions, also pose risks and challenges that could negatively impact our business, including costs or disputes with buyers.
Failure to successfully execute these transactions and integrate acquired businesses could have a material adverse effect on our business, financial condition, results of operations, and cash flows. 18 Table of Contents Dispositions of businesses, such as our European and North American vacation rentals transactions, also pose risks and challenges that could negatively impact our business, including costs or disputes with buyers.
We may also take additional actions related to climate change and environmental sustainability voluntarily or in response to increased regulations in the future that would materially increase the costs to develop and operate our resorts, which could have an 25 Table of Contents adverse impact on our profitability even though such actions may be necessary to increase the long-term sustainability of our business.
We may also take additional actions related to climate change and environmental sustainability voluntarily or in response to increased regulations in the future that would materially increase the costs to develop and operate our resorts, which could have an adverse impact on our profitability even though such actions may be necessary to increase the long-term sustainability of our business.
The trading price of our common stock may continue to fluctuate depending upon many factors, some of which may be beyond our control, including our quarterly or annual earnings or those of other companies in our industry; customer acceptance and success of our new business extensions; actual or anticipated fluctuations in our operating results due to seasonality, economic conditions, including increased inflation and higher interest rates, and other factors related to our business; our credit ratings; announcements by us or our competitors of significant acquisitions or dispositions; lower than expected earnings or revenues or outlook for such financial measures, changes in earnings or revenues estimates by us or by securities analysts or our ability to meet those estimates; the operating and stock price performance of comparable companies; and overall market fluctuations.
The trading price of our common stock may continue to fluctuate depending upon many factors, some of which may be beyond our control, including our quarterly or annual earnings or those of other companies in our industry; customer acceptance and success of our strategic growth initiatives; actual or anticipated fluctuations in our operating results due to seasonality, economic conditions, including increased inflation and higher interest rates, and other factors related to our business; our credit ratings; announcements by us or our competitors of significant acquisitions or dispositions; lower than expected earnings or revenues or outlook for such financial measures, changes in earnings or revenues estimates by us or by securities analysts or our ability to meet those estimates; the operating and stock price performance of comparable companies; and overall market fluctuations.
There are a great number of existing competitive travel services, some of which have significantly greater financial, marketing, and other resources than we have, and while the market is currently fragmented, existing travel service companies as well as new entrants may adversely impact our ability to achieve the level of revenues, transactions, and profitability we expect.
There are a great number of existing competitive travel services, some of which have significantly greater financial, marketing, and other 17 Table of Contents resources than we have, and while the market is currently fragmented, existing travel service companies as well as new entrants may adversely impact our ability to achieve the level of revenues, transactions, and profitability we expect.
Both businesses are also reliant on our ability to leverage new and existing relationships with travel suppliers, including hotels, airlines, rental car companies, and wholesale suppliers, and their willingness to distribute products and services through our platforms.
Our travel clubs businesses are also reliant on our ability to leverage new and existing relationships with travel suppliers, including hotels, airlines, rental car companies, and wholesale suppliers, and their willingness to distribute products and services through our platforms.
Our future effective tax rate and future cash flows could be affected by changes in the composition of earnings in jurisdictions with 23 Table of Contents differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, changes in determinations regarding the jurisdictions in which we are subject to tax, and our ability to repatriate earnings from foreign jurisdictions.
Our future effective tax rate and future cash flows could be affected by changes in the composition of earnings in jurisdictions with differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, changes in determinations regarding the jurisdictions in which we are subject to tax, and our ability to repatriate earnings from foreign jurisdictions.
Further changes to the tax laws may be contemplated both in the U.S. and certain other countries, which could result in materially higher corporate taxes than would be incurred under existing tax law and could otherwise adversely affect our financial condition or results of operations.
Further changes to the tax laws may be contemplated both 24 Table of Contents in the U.S. and certain other countries, which could result in materially higher corporate taxes than would be incurred under existing tax law and could otherwise adversely affect our financial condition or results of operations.
Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy and Travelport, Wyndham Worldwide and Realogy generally were responsible for 37.5% and 62.5% of certain of Cendant’s contingent and other corporate liabilities and associated costs, including certain contingent and other corporate liabilities of Cendant or its subsidiaries to the extent incurred on or prior to August 23, 2006.
Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy (now Anywhere Real Estate Inc.) and Travelport, Wyndham Worldwide and Realogy generally were responsible for 37.5% and 62.5% of certain of Cendant’s contingent and other corporate liabilities and associated costs, including certain contingent and other corporate liabilities of Cendant or its subsidiaries to the extent incurred on or prior to August 23, 2006.
The success of our acquisitions is also subject to other risks, including, among others: • failure to realize expected technological and product synergies, economies of scale and cost reductions; • unforeseen expenses, delays or conditions related to the acquisitions, including those due to regulations; • adverse effects on existing business relationships with customers, partners, employees or suppliers; • potential dilutive issuances of equity securities in payment of the acquisition price; • risks associated with entering into markets in which we have limited or no prior experience, including less visibility into demand; • inaccurate assumptions regarding the acquired business or integration process; • financial and operational results that may differ materially from our assumptions and forecasts; • unforeseen difficulties that may arise in integrating operations, processes and systems; 18 Table of Contents • higher than expected investments that may be required to implement necessary compliance processes and related systems, including information technology systems, accounting systems and internal control over financial reporting; • failure to retain, motivate and integrate any key management and other employees of the acquired business; • higher than expected costs or other impacts resulting from unforeseen changes in tax, trade, environmental or other regulations in jurisdictions in which the acquired business conducts its operations; and • issues with retaining customers and integrating customer bases.
The success of our acquisitions is also subject to other risks, including, among others: • failure to realize expected technological and product synergies, economies of scale and cost reductions; • unforeseen expenses, delays or conditions related to the transactions, including those due to regulations; • adverse effects on existing business relationships with customers, partners, employees or suppliers; • potential dilutive issuances of equity securities in payment of the acquisition price; • risks associated with entering into markets in which we have limited or no prior experience such as the college sports community and environment, including less visibility into demand; • inaccurate assumptions regarding the acquired business or integration process; • financial and operational results that may differ materially from our assumptions and forecasts; • unforeseen difficulties that may arise in integrating operations, processes and systems; • higher than expected investments that may be required to implement necessary compliance processes and related systems, including information technology systems, accounting systems and internal control over financial reporting; • failure to retain, motivate and integrate any key management and other employees of the acquired business; • higher than expected costs or other impacts resulting from unforeseen changes in tax, trade, environmental or other regulations in jurisdictions in which the acquired business conducts its operations; and • issues with retaining customers and integrating customer bases.
The increased scope and complexity of our information technology infrastructure and systems could contribute to the risk of future material security breaches or breakdowns, any of which could have a material adverse impact on our business, brands, reputation and results of operations.
The increased scope and complexity of our information 22 Table of Contents technology infrastructure and systems could contribute to the risk of future material security breaches or breakdowns, any of which could have a material adverse impact on our business, brands, reputation, and results of operations.
There are risks for which we do not carry insurance for the full range of possible outcomes or at all concerning a potential loss or liability, due to the cost, availability or terms and conditions 24 Table of Contents of such insurance.
There are risks for which we do not carry insurance for the full range of possible outcomes or at all concerning a potential loss or liability, due to the cost, availability or terms and conditions of such insurance.
In 2021, we acquired the Travel + Leisure brand and all related assets from Dotdash Meredith and we also changed our name to Travel + Leisure Co.
In 2021, we acquired the Travel + Leisure brand and all related assets from Dotdash Meredith (formerly Meredith Corporation) and we also changed our name to Travel + Leisure Co.
We are subject to certain risks related to our indebtedness, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us. We are a borrower of funds under credit facilities, credit lines, senior notes, and term loan and securitization financings.
Risks Related to Indebtedness and Tax Treatment We are subject to certain risks related to our indebtedness, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us. We are a borrower of funds under credit facilities, credit lines, senior notes, and term loans and securitization financings.
Although the IRS Ruling generally is binding on the IRS, the continued validity of the IRS Ruling will be based upon and subject to the continuing accuracy of factual statements and representations made to the 27 Table of Contents IRS by us.
Although the IRS Ruling generally is binding on the IRS, the continued validity of the IRS Ruling will be based upon and subject to the continuing accuracy of factual statements and representations made to the IRS by us.
Concern with climate change may also impact customer preferences for future timeshare purchases, including potential decreased customer preference for geographic areas that may be viewed as an increased climate change risk.
Concern with climate change may also impact customer preferences for future timeshare purchases, including potential decreased customer preference for geographic areas that may be viewed as subject to increased climate change risk.
Our international operations are subject to numerous risks, including exposure to local economic conditions; potential adverse changes in the diplomatic relations of foreign countries with the U.S.; hostility from local populations; political instability; threats or acts of war, hostilities, or terrorism; the effect of disruptions caused by severe weather, natural disasters, outbreak of disease or other events that make travel to a particular region less attractive or more difficult; the presence and acceptance of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws; restrictions and taxes on the withdrawal of foreign investment and earnings; government policies against businesses or properties owned by non-U.S. citizens; investment restrictions or requirements; diminished ability to legally enforce our contractual rights in foreign countries; forced nationalization of assets by local, state or national governments; foreign exchange restrictions; fluctuations in foreign currency exchange rates, including negative impacts of the weakening of foreign currencies in geographic regions in which we operate relative to the U.S. dollar; our ability to, or our decision whether or not in particular instances to, hedge against foreign currency effects, and whether we are successful in any such hedging transactions; conflicts between local laws and U.S. laws including laws that impact our rights to protect our intellectual property; withholding and other taxes on remittances and other payments by subsidiaries; and changes in and application of foreign taxation structures including value added taxes.
Our international operations are subject to numerous risks, including exposure to local economic conditions; potential adverse changes in the diplomatic relations of foreign countries with the U.S.; hostility from local populations; political instability; threats or acts of war, hostilities, or terrorism; the presence and acceptance of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws; restrictions and taxes on the withdrawal of foreign investment and earnings; government policies against businesses or properties owned by non-U.S. citizens; investment restrictions or requirements; diminished ability to legally enforce our contractual rights in foreign countries; forced nationalization of assets by local, state or national governments; foreign exchange restrictions; fluctuations in foreign currency exchange rates, including negative impacts of the weakening of foreign currencies in geographic regions in which we operate relative to the U.S. dollar; our ability to, or our decision whether or not in particular instances to, hedge against foreign currency effects, and whether we are successful in any such hedging transactions; conflicts between local laws and U.S. laws including laws that impact our rights to protect our intellectual property; withholding and other taxes on remittances and other payments by subsidiaries; and changes in and application of foreign taxation structures including value added taxes.
Our success in these leisure travel business extensions is also dependent upon our ability to efficiently customize our travel offerings to particular areas of interest and focus of the groups to which we market and promote our services and offerings.
Our success in these leisure travel clubs is also dependent upon our ability to efficiently customize our travel offerings to particular areas of interest and focus on the groups to which we market and promote our services and offerings.
Based upon insurable property values as of December 31, 2022, approximately 35% of our managed properties are located in Tier I windstorm exposure areas, approximately 20% are located in areas with a high level of flood risk, and approximately 20% are located in high-risk wildfire-prone states.
Based upon insurable property values as of December 31, 2023, approximately 37% of our managed properties are located in Tier I windstorm exposure areas, 23% are located in high-risk wildfire-prone states, and 20% are located in areas with a high level of flood risk.
The expected results of the transaction and the future prospects for and plans of our company more broadly, including our strategies to accelerate growth of our global businesses by broadening the strength of our cornerstone timeshare and exchange businesses and creating depth of leisure travel products and services through our business extensions, are subject to a number of risks and uncertainties, many of which are beyond our control, and may not be achieved in the time or at the level we expect, or at all.
The expected results of the transaction and the future prospects for and plans of our company more broadly, including our strategies to accelerate growth of our global businesses by broadening the strength of our cornerstone timeshare and exchange businesses and through our travel clubs, are subject to a number of risks and uncertainties, many of which are beyond our control, and may not be achieved in the time or at the level we expect, or at all.
For example, the recently enacted Inflation Reduction Act of 2022 includes changes to the U.S. corporate income tax system including a 15% minimum tax on adjusted financial statement income for certain large corporations and a 1% excise tax on share repurchases. These changes are effective beginning for the 2023 tax year.
For example, effective beginning for the 2023 tax year, the Inflation Reduction Act of 2022 made changes to the U.S. corporate income tax system, including a 15% minimum tax on adjusted financial statement income for certain large corporations and a 1% excise tax on share repurchases.
Also, the same cyber security threats exist for the third parties with whom we interact and share information, and cyber-attacks on third parties which possess or use our customer, personnel and other information could adversely impact us in the same way as would a direct cyber-attack on us.
Also, the same cyber security threats exist for the third parties with whom we interact and share information, and cyber-attacks on third parties which possess or use our customer, personnel and other information have in the past adversely impacted us in the same way as a direct cyber-attack on us.
Risks affecting the travel industry can be localized events or global in nature and adversely impact decisions by consumers to use and consume travel services and products, including: economic factors such as economic slowdown and recession, increased cost of living and reduced discretionary income (including due to current inflationary pressures and rising interest rates), and high unemployment rates; terrorist incidents and threats and associated heightened travel security measures; acts of gun violence or threats thereof; war, other hostilities, and political and regional strife (including the risk that the current conflict between Ukraine and Russia expands in a manner that significantly impacts our business and operations); natural disasters such as hurricanes, fires, floods, earthquakes, and volcano eruptions; concerns with, and increased governmental regulations in response to, pandemics, contagious diseases or health epidemics such as the continuing COVID-19 pandemic; environmental disasters; lengthy power outages; increased pricing, financial instability and capacity constraints of air carriers; airline job actions and strikes; and increases in gasoline and other fuel prices such as experienced in 2022.
Risks affecting the travel industry can be localized events or global in nature and may adversely impact decisions by consumers to use and consume travel services and products, including: economic factors such as economic slowdown and recession; increased cost of living and reduced discretionary income (including due to inflationary pressures and current higher borrowing costs), and potential for increased unemployment rates; terrorist incidents and threats and associated heightened travel security measures; acts of gun violence or threats thereof; war, other hostilities, and political and regional strife (including the risk that the current conflict between Ukraine and Russia or the conflict in the Middle East expands in a manner that significantly impacts our business and operations); natural disasters such as hurricanes, fires, floods, earthquakes, and volcanic eruptions; concerns with high rates of infection, increased governmental regulations or restrictions on and recommendations and warnings against travel in certain regions, and the associated economic disruption due to pandemics, contagious diseases or health epidemics such as occurred during the COVID-19 pandemic; environmental disasters; lengthy power outages; increased pricing, financial instability and capacity constraints of air carriers; airline job actions and strikes; and potential for increases in gasoline and other fuel prices such as experienced in 2022.
In addition, based on the water risk assessment we conducted in 2021, we identified 71 managed resorts in high or extremely high-water stressed locations.
In addition, based on the water risk assessment we conducted in 2023, we identified 53 managed resorts in high or extremely high water-stressed locations.
Additionally, if the distribution of the common stock of Wyndham Hotels does not qualify as tax-free under Section 355 of the Code, our shareholders will be treated as having received a taxable distribution. General Risk Factors Related to Our Common Stock The trading price of our shares of common stock may continue to fluctuate.
Additionally, if the distribution of the common stock of Wyndham Hotels does not qualify as tax-free under Section 355 of the Code, our shareholders will be treated as having received a taxable distribution. 27 Table of Contents Risks Related to the Ownership of Our Common Stock The trading price of our shares of common stock may continue to fluctuate.
Although we have since increased our dividend and resumed our share repurchase program, we cannot provide assurance that our Board of Directors will not need to consider limitations, reductions or other restrictions on share repurchases and dividends in the future.
Although we have since increased our dividend and resumed our share repurchase program, we cannot provide assurance that our Board will not need to consider limitations, reductions or other restrictions on share repurchases and dividends in the future. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, U.S. and international, federal, state and local regulators may enact new laws and regulations that may reduce our revenues, cause our expenses to increase or require us to modify our business practices substantially.
Our business is regulated by federal, state and local governments in the countries in which we operate. In addition, U.S. and international, federal, state and local regulators may enact new laws and regulations that may reduce our revenues, cause our expenses to increase or require us to modify our business practices substantially.
Continued geopolitical turmoil (including the ongoing conflict between Russia and Ukraine) has heightened the risk of cyber-attacks. We have been, and likely will continue to be, subject to such cyber-attacks.
Continued geopolitical turmoil (including the ongoing conflict between Russia and Ukraine and the ongoing conflict in the Middle East) has heightened the risk of cyber-attacks. We have experienced and likely will continue to experience, such cyber-attacks.
In addition, the effects of climate change, such as increased storm intensity, increased wildfires and rising sea levels, have increased and may in the future increase the cost and decrease the available coverage levels of property insurance, particularly in certain geographies.
In addition, the effects of climate change, such as increased storm intensity, increased wildfires and rising sea levels, have increased and may in the future increase the cost and decrease the available coverage levels of property insurance, particularly in certain geographies. We are subject to risks related to environmental, social and governance activities.
In connection with the Spin-off, we entered into a number of agreements with Wyndham Hotels that govern the ongoing relationships between Wyndham Hotels and Travel + Leisure Co. following the Spin-off. Our success depends, in part, on the maintenance of these ongoing relationships with Wyndham Hotels as well as Wyndham Hotels’ performance of its obligations under these agreements.
Risks Related to the Spin-Off Our success depends in part on our ongoing relationship with Wyndham Hotels. In connection with the Spin-off, we entered into a number of agreements with Wyndham Hotels that govern the ongoing relationships between Wyndham Hotels and Travel + Leisure Co. following the Spin-off.
Our business extensions can also be expected to require us to utilize and augment resources, including management and other personnel, beyond those required by our historic business offerings and, as a result, subject us to greater risks and uncertainties than historically considered for our core timeshare and exchange businesses.
Our travel clubs businesses have required us to utilize and augment human capital and other resources beyond those required by our historic business offerings and, as a result, subject us to greater risks and uncertainties than historically considered for our core timeshare and exchange businesses.
Declines in or disruptions to the travel industry have in the past adversely impacted us and any future declines or disruptions are also likely to adversely impact us.
Declines in or disruptions to the travel industry including in regions and locations where we have a significant number of resorts have in the past adversely impacted us and any future declines or disruptions are also likely to adversely impact us.
In addition, implementation of new technologies and systems carries significant potential risks, including failure to operate as designed, potential loss of or corruption of information, changes in security processes, implementation delays, and disruption of operations.
In addition, as we pursue new initiatives that are designed to improve our operations and cost structure, the expansion and implementation of new technologies and systems (including artificial intelligence (“AI”) technologies) carries significant potential risks, including failure to operate as designed, potential loss of or corruption of information, changes in security processes, implementation delays, and disruption of operations.
Any of these factors could increase our costs, reduce our revenues and profitability and otherwise adversely impact our opportunities for growth. 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 significant costs, fines or lawsuits.
Risks Related to Technology, Data Privacy and Cybersecurity 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 significant costs, fines or lawsuits.
Additionally, we are subject to federal, state, and international laws and regulations relating to the collection, use, retention, security and transfer of personally identifiable information and individual payment data. The information, security and privacy requirements imposed by such laws and regulations are constantly evolving and are becoming increasingly demanding in the U.S. and other jurisdictions where we operate.
The information, security and privacy requirements imposed by such laws and regulations are constantly evolving and are becoming increasingly demanding in the U.S., both at the federal and state levels, and in other jurisdictions where we operate.
In the future, we could have to increase our loan loss allowance above average historic levels again, whether due to COVID-19, adverse economic conditions generally, or other causes.
In the future, we could have to increase our loan loss allowance above average historic levels again, whether due to a public health emergency, adverse economic conditions generally, or other causes. The growth of our business and the execution of our business strategies depend on the services of our senior management and our associates.
Brown, and on our ability to successfully implement succession plans for members of our senior management team. The loss of any members of our senior management team, or the failure to identify successors for such positions, could adversely affect our strategic growth, new business extensions and customer relationships and impede our ability to execute our business strategies.
The loss of any members of our senior management team, or the failure to identify qualified successors for such positions, could adversely affect our strategic growth and customer relationships, and impede our ability to execute our business strategies. Additionally, lack of sufficient effective leadership may lead to low morale, higher turnover, and decreased ability to execute our strategy.
Financial difficulties of owners and customers, such as those that occurred during the COVID-19 pandemic and that generally occur during recessionary periods, could result in increased payment defaults and delinquencies.
Financial difficulties of owners and customers, such as those that occurred during the COVID-19 pandemic and that generally occur during recessionary periods, could result in increased payment defaults and delinquencies. When defaults or delinquencies occur during the early part of the loan amortization period, we may not have recovered the marketing, selling, administrative and other costs associated with such VOIs.
Any of the foregoing disruptions would likely adversely affect our affiliated resorts, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations, and our new business extensions, thereby impacting our operations and financial results. 19 Table of Contents We are subject to numerous business, financial, operating and other risks common to the timeshare industry and the leisure travel industry more broadly, any of which could reduce our revenues and our ability to make distributions and limit opportunities for growth.
We are subject to numerous business, financial, operating and other risks common to the timeshare industry and the leisure travel industry more broadly, any of which could reduce our revenues and our ability to make distributions and limit opportunities for growth.
Our new business extensions operate in a highly competitive global environment and may take longer than expected to achieve the levels of revenues, customer acceptance, and profitability we expect. As we continue to expand our business into the broader leisure travel industry, we will be adversely impacted if we cannot compete effectively.
Our travel club businesses operate in a highly competitive global environment and may take longer than expected to achieve the levels of revenues, customer acceptance and profitability we expect.
Additionally, lack of sufficient effective leadership may lead to low morale, higher turnover, and decreased ability to execute our strategy. Also, insufficient numbers of talented associates could constrain our ability to maintain and expand our business. We compete with other companies both within and outside of our industry for talented personnel.
Also, insufficient numbers of talented associates could constrain our ability to maintain and expand our business. We compete with other companies both within and outside of our industry for talented personnel. If we cannot recruit, train, develop and retain sufficient numbers of talented associates, we could experience increased associate turnover, decreased guest satisfaction, low morale, inefficiency, or internal control failures.
The growth of our business and the execution of our business strategies depend on the services of our senior management and our associates. We believe that our business success and future growth depends, in part, on the continued services of our senior management team, including our President and Chief Executive Officer, Michael D.
We believe that our business success and future growth depends, in part, on the continued services of our senior management team, including our President and CEO, Michael D. Brown, and on our ability to successfully implement succession plans for 21 Table of Contents members of our senior management team.
Further, any failure to keep pace with new or innovative use of technologies (including digital technologies within the leisure travel and timeshare industry) could adversely impact our competitive position and future prospects. Any failure of our business continuity planning as to any of these matters could have a material adverse impact on our business, brand and financial results.
Further, any failure to keep pace with new or innovative use of technologies (including digital technologies within the leisure travel and timeshare industry) could adversely impact our competitive position and future prospects. Our industry is marked by rapid technological developments and innovations (such as the use of AI and machine learning) and evolving industry standards.
While we maintain what we believe are reasonable security controls over personal and proprietary information (including the personal information of guests, shareholders, and employees), any breach of or breakdown in our systems that results in the theft, loss, fraudulent use or other unauthorized release of personal, confidential or other proprietary information or other data could nevertheless occur and persist for an extended period of time without detection, which could have a material adverse effect on our brands, reputation, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, losses, third-party damages and other liabilities.
In addition, any such cyber-attacks could persist for an extended period of time without detection, which could have a material adverse effect on our brands, reputation, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, losses, third-party damages and other liabilities.
Further, any changes to laws or regulations, including new restrictions or requirements applicable to our business, or an increase in enforcement of existing laws and regulations, could expose us to additional costs and liability.
Further, any changes to laws or regulations, including new restrictions or requirements applicable to our business, or an increase in enforcement of existing laws and regulations, such as restricting use or sharing of consumer data, including for marketing or advertising or limiting the use of, limiting our ability to provide certain consumer data to our customers, or otherwise regulating AI and machine learning (including the use of algorithms and automated processing), could expose us to additional costs and liability.
We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local and foreign jurisdictions. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations. We are subject to risks related to litigation.
An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations. We are responsible for certain of Cendant's contingent and other corporate liabilities.
We continue to monitor these proposals closely and, if enacted by various countries in which we do business, they may increase our taxes in the applicable jurisdictions or cause us to change the way we operate our business and result in increased taxation of our international earnings.
These changes may increase our taxes in the applicable jurisdictions or cause us to change the way we operate our business and result in increased taxation of our international earnings. We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local, and foreign jurisdictions.
The loss or renegotiation on less favorable terms of 17 Table of Contents several of our largest affiliation agreements could materially impact our financial condition and results of operations. Our ability to maintain affiliate agreements with resort developers is also impacted by consolidation in the vacation ownership industry. For example, in connection with the acquisition of Welk Hospitality Group, Inc.
Our ability to maintain affiliate agreements with resort developers is also impacted by consolidation in the vacation ownership industry. For example, in connection with the acquisition of Welk Hospitality Group, Inc. (“Welk”) by Marriott Vacations Worldwide Corporation, the RCI contract with Welk was terminated.
We do not currently expect to be subject to the minimum tax, but we will continue to monitor as this could change. We are subject to the 1% excise tax to the extent of future share repurchases. We are still evaluating the impact of the other provisions on our business.
We currently are not subject to the 15% minimum tax, but we will continue to monitor as this could change.
Unfavorable rulings or outcomes in litigation and other proceedings may harm our business. Our business is subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect us. Our business is regulated by federal, state and local governments in the countries in which we operate.
These actions may lead to operational delays or restrictions, as well as increased operating costs, regulatory burdens and risk of litigation. Our business is subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect us.
Our international operations are subject to additional risks not generally applicable to our domestic operations.
Any of these factors could increase our costs, reduce our revenues and profitability and otherwise adversely impact our opportunities for growth. Our international operations are subject to additional risks not generally applicable to our domestic operations.
(“Welk”) by Marriott Vacations Worldwide Corporation, the RCI contract with Welk was terminated. Consolidation can also lead to larger competitors with greater resources that compete with our vacation ownership business for customers, projects, and talent.
Consolidation can also lead to larger competitors with greater resources that compete with our Vacation Ownership business for customers, projects, and talent. In addition, d evelopers have been creating, operating and expanding internal exchange and points-based vacation club networks to offer their respective owners travel flexibility.
Removed
The failure to secure the renewal of affiliation agreements with developers that have corporate member relationships, where the developer renews RCI membership fees for all of its active owners, has a greater adverse effect.
Added
Our efforts to establish and grow our travel clubs businesses and add brands to our existing portfolio of vacation ownership brands, such as through the planned launch of a network of sports-themed resorts and lifestyle complexes under the Sports Illustrated Resorts brand and the expected acquisition of Accor Vacation Club, subject us to greater risks and uncertainties than 16 Table of Contents those historically considered for our core timeshare and exchange businesses.
Removed
Our direct-to-consumer subscription business is largely dependent on the success of our consumer marketing efforts and the willingness of consumers to subscribe to and use the Travel + Leisure GO travel club for access to preferred travel pricing, exclusive experiences and customized concierge services.
Added
These risks and uncertainties include requiring us to utilize and augment human capital and other resources beyond those required by our historic business offerings to source and establish relationships with new partners and to develop and market vacation ownership resorts, products, and services that meet the demands of new consumers.
Removed
When defaults or delinquencies occur during the early part of the loan amortization period, we may not have recovered the marketing, selling, 22 Table of Contents administrative and other costs associated with such VOIs.
Added
These effects on our exchange business are more pronounced as the proportion of corporate member relationships, where the developer renews RCI membership fees for all of its active owners, increases . The loss or renegotiation on less favorable terms of several of our largest affiliation agreements could materially impact our financial condition and results of operations.
Removed
The OECD continues to release additional guidance on these rules and suggests enactment to take effect in 2023 and 2024.
Added
By design, these networks decrease the propensity of owners to use external vacation ownership exchange programs, such as RCI, which in turn adversely impacts the supply of resort accommodations available for exchange through our exchange networks and reduces our related exchange revenue .
Removed
We are subject to a number of claims and legal proceedings and the risk of future litigation as described in these Risk Factors and throughout this report and as may be updated in subsequent SEC filings from time to time, including with respect to Cendant and the Spin-off.
Added
Our travel club businesses have not grown as quickly as originally anticipated and as we continue to operate and seek to expand our business in the broader leisure travel industry, we will be adversely impacted if we cannot compete effectively.
Removed
See further discussion in Note 19— Commitments and Contingencies and Note 27— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements. We cannot predict with certainty the ultimate outcome or related damages and costs of litigation and other proceedings filed or asserted by or against us.
Added
Any of the foregoing disruptions would also likely adversely affect our affiliated resorts, our RCI affiliates and other developers of vacation ownership resorts and timeshare property owner associations in the impacted location(s), and our travel clubs, thereby impacting our operations and financial results.
Removed
If we cannot recruit, train, develop and retain sufficient numbers of talented associates, we could experience increased associate turnover, decreased guest satisfaction, low morale, inefficiency, or internal control failures. We are subject to risks related to environmental, social and governance activities.
Added
We have likewise taken action to increase the percentage of new owner sales of our timeshare aggregate sales, which typically results in greater consumer defaults and a corresponding increase in the loan loss provision relative to timeshare sales to existing owners.
Removed
We are responsible for certain of Cendant's contingent and other corporate liabilities.
Added
While we maintain what we believe are reasonable security controls over personal and proprietary information (including the personal information of guests, shareholders, and employees), breaches of or breakdowns in our systems that result in the theft, loss, fraudulent use or other unauthorized release of personal, confidential or other proprietary information, or other data have occurred in the past and may occur again in the future.
Removed
The COVID-19 pandemic significantly negatively affected our operations and COVID-19 or other public health crises may significantly negatively affect our future business, financial condition and results of operations. COVID-19 led to significant disruptions in the global and U.S. economy, in the leisure travel industry and in our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur Vacation Ownership business also has leased space in; Las Vegas, Nevada; the Philippines; Australia; and Singapore, with various expiration dates between 2023 and 2056. Our Vacation Ownership business leases space for administrative functions in Las Vegas, Nevada, which expires in 2028.
Biggest changeVacation Ownership Our Vacation Ownership business has its main corporate operations in Orlando, Florida, pursuant to several leases which begin to expire in 2025. Our Vacation Ownership business also has leased space in Las Vegas, Nevada; the Philippines; Australia; and Singapore, with various expiration dates between 2024 and 2056.
All leases that are due to expire in 2023 are presently under review related to our ongoing requirements. Travel and Membership Our Travel and Membership business is headquartered in Orlando, Florida, pursuant to several leases which begin to expire in 2025. The business also owns one property in Indianapolis, Indiana, and one property in Mexico.
All leases that are due to expire in 2024 are presently under review related to our ongoing requirements. Travel and Membership Our Travel and Membership business is headquartered in Orlando, Florida, pursuant to several leases which begin to expire in 2025. The business also owns one property in Indianapolis, Indiana, and one property in Mexico.
There are 17 leased offices located in Europe, Latin America, Asia Pacific, North America, and Africa with expiration dates between 2023 and 2029. All leases that are due to expire in 2023 are presently under review related to our ongoing requirements.
There are 19 leased offices located in Europe, Latin America, Asia Pacific, North America, and Africa with expiration dates between 2024 and 2029. All leases that are due to expire in 2024 are presently under review related to our ongoing requirements.
In addition, our Vacation Ownership business utilizes 160 marketing and sales offices with 116 locations in the U.S. and the remaining locations in Australia, the Caribbean, Thailand, Mexico, Fiji, New Zealand, Indonesia, China, Japan and the Philippines. Of these 160 marketing and sales offices, 70 are pursuant to leases with various expiration dates between 2023 and 2056.
In addition, our Vacation Ownership business utilizes 164 marketing and sales offices with 123 locations in the U.S. and the remaining locations in Australia, China, the Caribbean, Thailand, Mexico, Indonesia, Japan, Fiji, the Philippines, and New Zealand. Of these 164 marketing and sales offices, 71 are pursuant to leases with various expiration dates between 2024 and 2056.
ITEM 2. PROPERTIES Travel + Leisure Co. Corporate Our corporate headquarters is located in a leased office at 6277 Sea Harbor Drive in Orlando, Florida, for which the lease expires in 2025 . Vacation Ownership Our Vacation Ownership business has its main corporate operations in Orlando, Florida, pursuant to several leases which begin to expire in 2025.
ITEM 2. PROPERTIES Travel + Leisure Co. Corporate Our corporate headquarters is located in a leased office at 6277 Sea Harbor Drive in Orlando, Florida, for which the lease expires in 2025 . The lease is currently under review related to our ongoing requirements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe equity plan compensation information called for by Item 201(d) of Regulation S-K is set forth in Part III, Item 12 of this Annual Report on Form 10-K under the heading “ Equity Compensation Plan Information as of December 31, 2022. ” Issuer Purchases of Equity Securities Below is a summary of our Travel + Leisure Co. common stock repurchases by month for the quarter ended December 31, 2022: 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 Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plan (b) October 2022 (October 1-31) 1,159,600 $ 37.71 1,159,600 $ 541,374,215 November 2022 (November 1-30) 1,053,096 37.49 1,053,096 501,895,726 December 2022 (a) (December 1-31) 684,602 36.79 684,602 476,709,831 Total (a) 2,897,298 $ 37.41 2,897,298 $ 476,709,831 (a) Includes 66,604 shares purchased for which the trade date occurred in December 2022 and settled in January 2023.
Biggest changeThe equity plan compensation information called for by Item 201(d) of Regulation S-K is set forth in Part III, Item 12 of this Annual Report on Form 10-K under the heading “ Equity Compensation Plan Information as of December 31, 2023. ” Issuer Purchases of Equity Securities Below is a summary of our Travel + Leisure Co. common stock repurchases by month for the quarter ended December 31, 2023: 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 Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plan (a) October 2023 (October 1-31) 180,438 $ 33.25 180,438 $ 204,130,249 November 2023 (November 1-30) 874,092 $ 36.04 874,092 $ 172,630,660 December 2023 (December 1-31) 60,753 $ 37.50 60,753 $ 170,352,250 Total 1,115,283 $ 35.67 1,115,283 $ 170,352,250 (a) On August 20, 2007, our Board of Directors (“Board”) authorized the repurchase of our common stock (the “Share Repurchase Program”).
For a description of limitations on the payment of our dividends, see the “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Dividends .” 30 Table of Contents Stock Performance Graph The Stock Performance Graph is not deemed filed with the Securities and Exchange Commission (“SEC”) and shall not be deemed incorporated by reference into any of our prior or future filings made with the SEC.
For a description of limitations on the payment of our dividends, see the “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Dividends. ” 31 Table of Contents Stock Performance Graph The Stock Performance Graph is not deemed filed with the Securities and Exchange Commission (“SEC”) and shall not be deemed incorporated by reference into any of our prior or future filings made with the SEC.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (a) Among Travel + Leisure Co., the S&P Midcap 400 Index and the S&P Hotels, Resorts, & Cruise Lines Index (a) $100 invested on December 31, 2017, in stock or index, including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN (a) Among Travel + Leisure Co., the S&P Midcap 400 Index and the S&P Hotels, Resorts, & Cruise Lines Index (a) $100 invested on December 31, 2018, in stock or index, including reinvestment of dividends.
The following Stock Performance Graph compares the cumulative total stockholder return of our common stock against the cumulative total returns of the Standard & Poor’s Rating Services (“S&P”) Midcap 400 index and the S&P Hotels, Resorts & Cruise Lines index for the period from December 31, 2017, to December 31, 2022.
The following Stock Performance Graph compares the cumulative total stockholder return of our common stock against the cumulative total returns of the Standard & Poor’s Rating Services (“S&P”) Midcap 400 index and the S&P Hotels, Resorts & Cruise Lines index for the period from December 31, 2018, to December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Price of Common Stock Our common stock is listed on the New York Stock Exchange under the symbol TNL. As of January 31, 2023, the number of stockholders of record was 4,216.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Price of Common Stock Our common stock is listed on the New York Stock Exchange under the symbol TNL. As of January 31, 2024, the number of stockholders of record was 4,076.
The graph assumes that $100 was invested on December 31, 2017, and all dividends and other distributions were reinvested.
The graph assumes that $100 was invested on December 31, 2018, and all dividends and other distributions were reinvested.
The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time. The Board of Directors has since increased the capacity of the Share Repurchase Program nine times, most recently in April 2022, by $500 million, bringing the total authorization under the current program to $6.5 billion.
The Board has since increased the capacity of the Share Repurchase Program nine times, most recently in April 2022, by $500 million, bringing the total authorization under the current program to $6.5 billion.
(b) On August 20, 2007, our Board of Directors authorized the repurchase of our common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act.
Under the Share Repurchase Program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time.
Cumulative Total Return Fiscal year ending December 31: 2017 2018 2019 2020 2021 2022 Travel + Leisure Co. $ 100.00 $ 70.97 $ 106.50 $ 96.87 $ 122.01 $ 83.37 S&P Midcap 400 $ 100.00 $ 88.92 $ 112.21 $ 127.54 $ 159.12 $ 138.34 S&P Hotels, Resorts & Cruise Lines $ 100.00 $ 81.94 $ 112.30 $ 83.24 $ 99.76 $ 75.57 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Cumulative Total Return Fiscal year ending December 31: 2018 2019 2020 2021 2022 2023 Travel + Leisure Co. $ 100.00 $ 150.06 $ 136.48 $ 171.91 $ 117.47 $ 131.98 S&P Midcap 400 $ 100.00 $ 126.20 $ 143.44 $ 178.95 $ 155.58 $ 181.15 S&P Hotels, Resorts & Cruise Lines $ 100.00 $ 137.05 $ 101.59 $ 121.75 $ 92.23 $ 153.39 The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

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

111 edited+45 added−36 removed52 unchanged
Biggest changeExcluding the impacts of foreign currency and the Cost of vacation ownership interest related to the COVID-19 allowance adjustments discussed above the increase in expenses was the result of: • $128 million increase in sales and commission expenses at the Vacation Ownership segment due to higher gross VOI sales, net of Fee-for-Service sales; • $90 million increase in marketing costs in support of increased tour flow, new owner mix and Travel Club transactions; • $59 million increase in property management expenses due to higher reimbursable resort operating costs and expenses; • $45 million increase in general and administrative expenses primarily due to higher employee-related costs and legal fees; • $34 million increase in the cost of VOIs sold primarily due to higher gross VOI sales; • $28 million increase in maintenance fees on unsold inventory; • $18 million increase in cost of sales at the Travel and Membership segment in support of higher Travel Club transaction revenue; • $15 million increase in impairments primarily due to the loss on sale of property in the current year and asset recoveries recognized in the prior year; • $15 million increase in restructuring charges driven by the elimination of certain positions which were made redundant based upon changes to the organizational structure; • $11 million increase in sales and commission expenses as a result of the mix of VOI Fee-for-Service sales; and • $9 million increase in other operating costs at the Travel and Membership segment in support of the new travel club launches.
Biggest changeThis increase in expenses, excluding immaterial foreign currency impacts, was primarily the result of: • $56 million increase in marketing costs mainly in support of increased tour flow and new owner mix at our Vacation Ownership business; • $45 million increase in property management expenses due to higher reimbursable resort operating costs and expenses; • $32 million increase in consumer financing interest expense primarily due to an increased weighted average coupon rate; • $31 million increase in sales and commission expenses at the Vacation Ownership segment due to higher gross VOI sales, net of Fee-for-Service sales; and a • $12 million increase in restructuring costs as we focused on enhancing organizational efficiency and rationalizing operations.
Within our Travel and Membership segment, we measure operating performance using the following key operating statistics: (i) average number of exchange members, which represents paid members in our vacation exchange programs who are considered to be in good standing; (ii) transactions, which represents the number of exchanges and travel club bookings recognized as revenue during the period, net of cancellations; and (iii) revenue per transaction, which represents transaction revenue divided by transactions.
Within our Travel and Membership segment, we measure operating performance using the following key operating statistics: (i) average number of exchange members, which represents paid members in our vacation exchange programs who are considered to be in good standing; (ii) transactions, which represents the number of exchanges and travel bookings recognized as revenue during the period, net of cancellations; and (iii) revenue per transaction, which represents transaction revenue divided by transactions.
Revenues for other vacation exchange-related product fees are deferred and recognized upon the occurrence of a future exchange, event, or other related transaction. We earn revenue from our RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.
Revenues from other vacation exchange related product fees are deferred and recognized upon the occurrence of a future exchange, event, or other related transaction. We earn revenue from our RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.
The declaration and payment of future dividends to holders of our common stock are at the discretion of our Board of Directors and depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board of Directors deems relevant.
The declaration and payment of future dividends to holders of our common stock are at the discretion of our Board and depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.
We expect that additional expenditures will be financed with general secured corporate borrowings, including through the use of available capacity under our revolving credit facility. Share Repurchase Program On August 20, 2007, our Board of Directors authorized a share repurchase program that enables us to purchase our common stock.
We expect that additional expenditures will be financed with general secured corporate borrowings, including through the use of available capacity under our revolving credit facility. Share Repurchase Program On August 20, 2007, our Board authorized a share repurchase program that enables us to purchase our common stock.
In connection with entering into a VOI sale, we may provide our customers with certain non-cash incentives, such as credits for future stays at our resorts. For those VOI sales, we bifurcate the sale and allocate the sales price between the VOI sale and the non-cash incentive.
In connection with entering into a VOI sale, we may provide our customers with certain non-cash incentives, such as credits for future stays at our resorts. For those VOI sales, we allocate the sales price between the VOI sale and the non-cash incentive.
These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of Operating expenses on the Consolidated Statements of Income/(Loss).
These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of Operating expenses on the Consolidated Statements of Income.
We reduce our management fees for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer.
We reduce our management fees revenue for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer.
Our net cash from operations and cash and cash equivalents are key sources of liquidity along with our revolving credit facilities, bank conduit facilities, and continued access to debt markets.
Our net cash from operations and cash and cash equivalents are key sources of liquidity along with our revolving credit facility, bank conduit facilities, and continued access to debt markets.
Our secured debt is rated Ba3 with a “stable outlook” by Moody’s Investors Service, Inc., BB- with a “stable outlook” by Standard & Poor’s Rating Services, and BB+ with a “negative outlook” by Fitch Rating Agency.
Our secured debt is rated Ba3 with a “stable outlook” by Moody’s Investors Service, Inc., BB- with a “stable outlook” by Standard & Poor’s Rating Services, and BB+ with a “stable outlook” by Fitch Rating Agency.
If current or expected future conditions differ from the conditions in effect when the historical experience was generated, we adjust the allowance for loan losses to reflect the expected effects of the current environment on the collectability of our VOCRs. There were no changes to the assumptions used in this model in 2022.
If current or expected future conditions differ from the conditions in effect when the historical experience was generated, we adjust the allowance for loan losses to reflect the expected effects of the current environment on the collectability of our VOCRs. There were no changes to the assumptions used in this model in 2023.
The estimates used to calculate the fair value of other indefinite-lived intangible assets change from year to year based on operating results and market conditions. There were no changes in the assumptions used in this analysis in 2022. Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets impairment.
The estimates used to calculate the fair value of other indefinite-lived intangible assets change from year to year based on operating results and market conditions. There were no changes in the assumptions used in this analysis in 2023. Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets impairment.
For additional details regarding our credit facilities, term loan B facilities, and non-recourse debt see Note 15— Debt to the Consolidated Financial Statements. Material Cash Requirements The following table summarizes material future contractual obligations of our continuing operations (in millions).
For additional details regarding our credit facilities, term loan B facilities, and non-recourse debt see Note 15— Debt to the Consolidated Financial Statements. 42 Table of Contents Material Cash Requirements The following table summarizes material future contractual obligations of our continuing operations (in millions).
There is no assurance that a payment of a dividend or a dividend at current levels will occur in the future. Foreign Earnings We assert that substantially all undistributed foreign earnings will be reinvested indefinitely as of December 31, 2022.
There is no assurance that a payment of a dividend or a dividend at current levels will occur in the future. Foreign Earnings We assert that substantially all undistributed foreign earnings will be reinvested indefinitely as of December 31, 2023.
Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) and Cendant, and the sale of the vacation rentals businesses.
Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) and Cendant Corporation (“Cendant”), and the sale of the vacation rentals businesses.
The impact of any changes in estimates under the relative sales value method is recorded in Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss) in order to retrospectively adjust the margin previously recorded subject to those estimates. There were no changes in these assumptions during 2022. Impairment of Long-Lived Assets.
The impact of any changes in estimates under the relative sales value method is recorded in Cost of vacation ownership interests on the Consolidated Statements of Income in order to retrospectively adjust the margin previously recorded subject to those estimates. There were no changes in these assumptions during 2023. Impairment of Long-Lived Assets.
We are not able to estimate the maximum 46 Table of Contents potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases, we maintain insurance coverage that may mitigate any potential payments. Income Taxes.
We are not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases, we maintain insurance coverage that may mitigate any potential payments. Income Taxes.
Non-cash incentives generally have expiration periods of 18 months or less and are recognized at a point in time upon transfer of control. We provide day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs. These services may also include reservation and resort renovation activities.
Non-cash incentives generally have expiration periods of two years or less and are recognized at a point in time upon transfer of control. We provide day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs. These services may also include reservation and resort renovation activities.
See Note 19— Commitments and Contingencies to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business along with our guarantees and indemnifications and Note 27— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations regarding Cendant contingent litigation, matters related to Wyndham Hotels, matters related to the European vacation rentals business, and matters related to the North American vacation rentals business.
See Note 19— Commitments and Contingencies to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business along with our guarantees and indemnifications and Note 27— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations regarding Cendant contingent litigation, matters related to Wyndham Hotels, and matters related to the vacation rentals businesses.
SEASONALITY We experience seasonal fluctuations in our net revenues and net income from sales of VOIs and vacation exchange fees. Revenues from sales of VOIs are generally higher in the third quarter than in other quarters due to increased leisure travel.
SEASONALITY We experience seasonal fluctuations in our net revenues and net income from sales of VOIs and vacation exchange fees. Revenue from sales of VOIs is generally higher in the third quarter than in other quarters due to increased leisure travel.
This segment is wholly comprised of our Wyndham Destinations business line. • Travel and Membership — operates a variety of travel businesses, including three vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment is comprised of our Exchange and Travel Club business lines.
This segment includes our Wyndham Destinations business line. • Travel and Membership — operates a variety of travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment is comprised of our Exchange and Travel Club business lines.
Cash and Cash Equivalents As of December 31, 2022, we had $550 million of Cash and cash equivalents, which includes highly-liquid investments with an original maturity of three months or less. $1.0 Billion Revolving Credit Facility We generally utilize our revolving credit facility to finance our short-term to medium-term business operations, as needed.
Cash and Cash Equivalents As of December 31, 2023, we had $282 million of Cash and cash equivalents, which includes highly-liquid investments with an original maturity of three months or less. $1.0 Billion Revolving Credit Facility We generally utilize our revolving credit facility to finance our short-term to medium-term business operations, as needed.
The 42 Table of Contents availability, terms and conditions, and pricing of bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity, and our corporate credit rating.
The availability, terms and conditions, and pricing of bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity, and our corporate credit rating.
As of December 31, 2022, our maximum obligation under these severance plans was $173 million. Refer to the Proxy Statement for our 2023 Annual Meeting of Shareholders under the captions “Compensation of Directors,” “Executive Compensation” and “Committees of the Board” for additional details regarding executive compensation.
As of December 31, 2023, our maximum obligation under these severance plans was $199 million. Refer to the Proxy Statement for our 2024 Annual Meeting of Shareholders under the captions “Compensation of Directors,” “Executive Compensation” and “Committees of the Board” for additional details regarding executive compensation.
Inflation Reduction Act On August 16, 2022, the United States enacted the Inflation Reduction Act. Among other provisions, this new law imposes a 15% minimum tax rate for large corporations with more than $1.0 billion of adjusted financial statement income over a three-year period, and a 1% excise tax on stock buybacks.
Inflation Reduction Act On August 16, 2022, the United States (“U.S.”) enacted the Inflation Reduction Act. Among other provisions, this new law imposes a 15% minimum tax rate for large corporations with an average of more than $1.0 billion of adjusted financial statement income over a three-year period, and a 1% excise tax on stock buybacks.
For a comparative review of the fiscal years ended December 31, 2021 and 2020, refer to the Cash Flows section in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 23, 2022.
For a comparative review of the fiscal years ended December 31, 2022 and 2021, refer to the Cash Flows section in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 22, 2023.
The maximum potential future payments that we could be required to make under these guarantees was $483 million as of December 31, 2022. We would only be required to pay this maximum amount if none of the assessed owners paid their assessments.
The maximum potential future payments that we could be required to make under these guarantees was $473 million as of December 31, 2023. We would only be required to pay this maximum amount if none of the assessed owners paid their assessments.
As of December 31, 2022, all of our securitized loan pools were in compliance with applicable contractual triggers.
As of December 31, 2023, all of our securitized loan pools were in compliance with applicable contractual triggers.
Revenues from vacation exchange fees are generally highest in the first quarter, which is generally when members of our vacation exchange business book their vacations for the year. The seasonality of our business may cause fluctuations in our quarterly operating results.
Revenue from vacation exchange fees is generally highest in the first quarter, which is typically when members of our vacation exchange business book their vacations for the year. The seasonality of our business may cause fluctuations in our quarterly operating results.
In addition to the amounts shown in the table above and in connection with our separation from Cendant, we entered into certain guarantee commitments with Cendant (pursuant to our assumption of certain liabilities and our obligation to indemnify Cendant, Realogy, and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with Cendant and Realogy.
In addition to the amounts shown in the table above and in connection with our separation from Cendant, we entered into certain guarantee commitments with Cendant (pursuant to our assumption of certain liabilities and our obligation to indemnify Cendant, Realogy (now Anywhere Real Estate Inc.), and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with Cendant and Realogy.
CASH FLOWS The following table summarizes the changes in cash, cash equivalents, and restricted cash between 2022 and 2021 (in millions).
CASH FLOWS The following table summarizes the changes in cash, cash equivalents, and restricted cash between 2023 and 2022 (in millions).
(f) Excludes a $33 million liability for unrecognized tax benefits as it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.
(e) Excludes a $31 million liability for unrecognized tax benefits as it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.
We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $400 million notes due in March 2023. Our discussion below highlights these sources of liquidity and how they have been utilized to support our cash needs.
We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $300 million notes due in April 2024. Our discussion below highlights these sources of liquidity and how they have been utilized to support our cash needs.
In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold.
In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold. 47 Table of Contents
We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, amounting to a combined capacity of $752 million ($324 million available as of December 31, 2022), along with our ability to issue term asset-backed securities, provides sufficient liquidity to finance the sale of VOIs beyond the next year.
We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, with a term through December 2024, amounting to a combined capacity of $752 million ($388 million available as of December 31, 2023), along with our ability to issue term asset-backed securities, provide sufficient liquidity to finance the sale of VOIs beyond the next year.
We closed on securitization financings of $800 million, $850 million, and $900 million during 2022, 2021, and 2020. These transactions positively impacted our liquidity and reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.
We closed on securitization financings of $1.09 billion, $800 million, and $850 million during 2023, 2022, and 2021. These transactions positively impacted our liquidity and reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.
Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf. We recognize revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services.
We recognize revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services.
Fee-for-Service commission revenues were $116 million and $101 million for the years ended December 31, 2022 and 2021. These commissions are reported within Service and membership fees on the Consolidated Statements of Income/(Loss). 35 Table of Contents THE YEAR ENDED DECEMBER 31, 2022 VS.
Fee-for-Service commission revenues were $131 million and $116 million for the years ended December 31, 2023 and 2022. These commissions are reported within Service and membership fees on the Consolidated Statements of Income. 36 Table of Contents THE YEAR ENDED DECEMBER 31, 2023 VS.
The facility expires in October 2026 and had $1.0 billion of available capacity as of December 31, 2022. The revolving credit facility and term loan B are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement.
The facility expires in October 2026 and had $998 million of available capacity as of December 31, 2023. The revolving credit facility and term loan B facilities are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement.
(b) Includes $3 million of stock-based compensation expense for the year ended December 31, 2022 associated with the 2022 restructuring plans. 37 Table of Contents (c) Includes $1 million of inventory impairments for the year ended December 31, 2022, included in Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).
(b) Includes $2 million and $3 million of stock-based compensation expense for the years ended December 31, 2023 and 2022 associated with the 2023 and 2022 restructuring plans. (c) Includes $1 million of inventory impairments for the years ended December 31, 2023 and 2022, included in Cost of vacation ownership interests on the Consolidated Statements of Income.
As part of this strategy, we have made, and expect to continue to make, proposals and enter into non-binding letters of intent, allowing us to conduct due diligence on a confidential basis.
Any of these transactions could be material to our business. As part of this strategy, we have made, and expect to continue to make, proposals and enter into non-binding letters of intent, allowing us to conduct due diligence on a confidential basis.
All future declarations of quarterly cash dividends are subject to final approval by the Board of Directors. During 2022, we spent $144 million on vacation ownership development projects (inventory). We believe that our Vacation Ownership business currently has adequate finished inventory to support vacation ownership sales for several years.
All future declarations of quarterly cash dividends and increases to the capacity of our share repurchase program are subject to final approval by the Board of Directors (“Board”). During 2023, we spent $100 million on vacation ownership development projects (inventory). We believe that our Vacation Ownership business currently has adequate finished inventory to support vacation ownership sales for several years.
In the ordinary course of business, we enter into agreements that contain standard guarantees and indemnities whereby we indemnify another party for specified breaches of, or third-party claims relating to, an underlying agreement. Such underlying agreements are typically entered into by one of our subsidiaries.
However, such assumptions are inherently uncertain and actual results could differ from those estimates. Guarantees. In the ordinary course of business, we enter into agreements that contain standard guarantees and indemnities whereby we indemnify another party for specified breaches of, or third-party claims relating to, an underlying agreement. Such underlying agreements are typically entered into by one of our subsidiaries.
Net cash used in investing activities from discontinued operations was $5 million for the year ended December 31, 2022, primarily related to the settlement of post-closing adjustment claims associated with the sale of the European vacation rentals business. Financing Activities Net cash used in financing activities decreased $1.09 billion during the year ended December 31, 2022.
Net cash used in investing activities from discontinued operations was $5 million during 2022, primarily related to the settlement of post-closing adjustment claims associated with the sale of the European vacation rentals business. 44 Table of Contents Financing Activities Net cash used in financing activities increased $304 million during the year ended December 31, 2023.
(j) The following table provides a reconciliation of Vacation ownership interest sales, net to Gross VOI sales (in millions): Year Ended December 31, 2022 2021 Vacation ownership interest sales, net $ 1,484 $ 1,176 Loan loss provision 302 129 Gross VOI sales, net of Fee-for-Service sales 1,786 1,305 Fee-for-Service sales (1) 196 186 Gross VOI sales $ 1,982 $ 1,491 (1) Represents total sales of VOIs through our Fee-for-Service programs where inventory is sold through our sales and marketing channels for a commission.
(i) The following table provides a reconciliation of Vacation ownership interest sales, net to Gross VOI sales (in millions): Year Ended December 31, 2023 2022 Vacation ownership interest sales, net $ 1,582 $ 1,484 Loan loss provision 348 302 Gross VOI sales, net of Fee-for-Service sales 1,930 1,786 Fee-for-Service sales (1) 219 196 Gross VOI sales $ 2,149 $ 1,982 (1) Represents total sales of VOIs through our Fee-for-Service programs where inventory is sold through our sales and marketing channels for a commission.
The tables below present our segment information, followed by a discussion of each segment’s 2022 results compared to 2021 (in millions): Year Ended December 31, Net revenues 2022 2021 Vacation Ownership $ 2,835 $ 2,423 Travel and Membership 735 714 Total reportable segments 3,570 3,137 Corporate and other (a) (3) (3) Total Company $ 3,567 $ 3,134 Year Ended December 31, Reconciliation of Net income to Adjusted EBITDA 2022 2021 Net income attributable to Travel + Leisure Co. shareholders $ 357 $ 308 (Gain)/loss on disposal of discontinued business, net of income taxes (1) 5 Provision for income taxes 130 116 Depreciation and amortization 119 124 Interest expense 195 198 Interest (income) (6) (3) Stock-based compensation 42 32 Restructuring (b) 14 (1) Asset impairments/(recoveries), net (c) 11 (5) Loss/(gain) on equity investment 5 (3) COVID-19 related costs (d) 2 3 Legacy items 1 4 Fair value change in contingent consideration (10) — Adjusted EBITDA $ 859 $ 778 Year Ended December 31, Adjusted EBITDA 2022 2021 Vacation Ownership $ 665 $ 569 Travel and Membership 268 271 Total reportable segments 933 840 Corporate and other (a) (74) (62) Total Company $ 859 $ 778 (a) Includes the elimination of transactions between segments.
The tables below present our segment information, followed by a discussion of each segment’s 2023 results compared to 2022 (in millions): Year Ended December 31, Net revenues 2023 2022 Vacation Ownership $ 3,041 $ 2,835 Travel and Membership 711 735 Total reportable segments 3,752 3,570 Corporate and other (a) (2) (3) Total Company $ 3,750 $ 3,567 Year Ended December 31, Reconciliation of Net income to Adjusted EBITDA 2023 2022 Net income attributable to Travel + Leisure Co. shareholders $ 396 $ 357 Gain on disposal of discontinued business, net of income taxes (5) (1) Interest expense 251 195 Interest (income) (13) (6) Provision for income taxes 94 130 Depreciation and amortization 112 119 Stock-based compensation 36 42 Restructuring (b) 26 14 Legacy items 8 1 Loss on sale of business 2 — Asset impairments, net (c) 1 11 Loss on equity investment — 5 COVID-19 related costs (d) — 2 Fair value change in contingent consideration — (10) Adjusted EBITDA $ 908 $ 859 Year Ended December 31, Adjusted EBITDA 2023 2022 Vacation Ownership $ 729 $ 665 Travel and Membership 247 268 Total reportable segments 976 933 Corporate and other (a) (68) (74) Total Company $ 908 $ 859 (a) Includes the elimination of transactions between segments.
We define Adjusted EBITDA as Net income/(loss) from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes.
Management uses Adjusted EBITDA to assess the performance of the reportable segments. We define Adjusted EBITDA as net income from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes.
Within our Vacation Ownership segment, we measure operating performance using the following key operating statistics: (i) gross VOI sales including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business’ tour selling efforts, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours.
Property management fee revenues and reimbursable revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of Income. 34 Table of Contents Within our Vacation Ownership segment, we measure operating performance using the following key operating statistics: (i) gross VOI sales including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business’ tour selling efforts, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours.
The financial ratio covenants consist of a minimum interest coverage ratio and a maximum first lien leverage ratio. The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date.
The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date.
We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel. Travel and Membership We are primarily a fee-for-service business deriving a majority of our revenues from membership dues and fees for facilitating members’ trading of their timeshare intervals.
We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel. Travel and Membership We derive a majority of our revenues from membership dues and fees for facilitating members’ trading of their timeshare intervals. Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf.
Travel and Membership Net revenues increased $21 million and Adjusted EBITDA decreased $3 million during 2022 compared with 2021. The net revenue increase was unfavorably impacted by foreign currency of $6 million (0.8%) and the Adjusted EBITDA decrease was unfavorably impacted by foreign currency of $1 million (0.4%).
Travel and Membership Net revenues decreased $24 million and Adjusted EBITDA decreased $21 million during 2023 compared with 2022. The net revenue decrease was unfavorably impacted by foreign currency of $1 million (0.1%) and the Adjusted EBITDA decrease was unfavorably impacted by foreign currency of $5 million (1.9%).
See Note 9— Vacation Ownership Contract Receivables to the Consolidated Financial Statements for additional details of changes in the COVID-19 estimates and impacts to the financial statements. Inventory . We use the relative sales value method of costing and relieving our VOI inventory.
See Note 9— 46 Table of Contents Vacation Ownership Contract Receivables to the Consolidated Financial Statements for additional details of our allowance for loan losses. Inventory . We use the relative sales value method of costing and relieving our VOI inventory.
Year Ended December 31, 2022 2021 % Change (i) Vacation Ownership Gross VOI sales (in millions) (a) (j) $ 1,982 $ 1,491 33.0 Tours (in 000s) (b) 561 451 24.4 Volume Per Guest (“VPG”) (c) $ 3,426 $ 3,143 9.0 Travel and Membership (d) Transactions (in 000s) (e) (f) Exchange 1,022 1,064 (3.9) Travel Club 709 624 13.6 Total transactions 1,731 1,688 2.5 Revenue per transaction (f) (g) Exchange $ 341 $ 325 4.9 Travel Club $ 241 $ 252 (4.6) Total revenue per transaction $ 300 $ 298 0.6 Average number of exchange members (in 000s) (h) 3,524 3,721 (5.3) (a) Represents total sales of VOIs, including sales under the Fee-for-Service program before the effect of loan loss provisions.
Year Ended December 31, 2023 2022 % Change (h) Vacation Ownership Gross VOI sales (in millions) (a) (i) $ 2,149 $ 1,982 8.4 Tours (in 000s) (b) 663 561 18.2 Volume per guest (c) $ 3,128 $ 3,426 (8.7) Travel and Membership (d) Transactions (in 000s) (e) Exchange 959 1,022 (6.2) Travel Club 679 709 (4.2) Total transactions 1,638 1,731 (5.4) Revenue per transaction (f) Exchange $ 357 $ 341 4.8 Travel Club $ 230 $ 241 (4.4) Total revenue per transaction $ 305 $ 300 1.6 Average number of exchange members (in 000s) (g) 3,515 3,524 (0.2) (a) Represents total sales of VOIs, including sales under the Fee-for-Service program before the effect of loan loss provisions.
Refer to The Year Ended December 31, 2022 vs. the Year Ended December 31, 2021 section for a discussion on how these operating statistics affected our business for the periods presented.
The Year Ended December 31, 2022” section for a discussion of how these operating statistics affected our business for the periods presented.
During both 2022 and 2020 we had $5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows. We had no cash flow activity related to discontinued operations during 2021. See Note 6— Discontinued Operations to the Consolidated Financial Statements for additional information.
During 2021, we recognized a Loss on disposal of discontinued business, net of income taxes of $5 million. During 2022, we had $5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows. See Note 6— Discontinued Operations to the Consolidated Financial Statements for additional information.
Higher interest rates negatively impacted our interest expense in 2022 and, if interest rates remain elevated, we expect this trend to continue. Although we are not currently seeing meaningful signs of a slowdown in leisure travel demand, we are monitoring economic conditions.
Higher interest rates negatively impacted our interest expense during 2023 as well as the reporting periods since COVID-19 and, if interest rates remain elevated, we would expect this trend to continue. Although we are not currently seeing meaningful signs of a slowdown in leisure travel demand at our Vacation Ownership business, we are monitoring economic conditions.
For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with our vacation exchange networks and, for certain members, for other leisure-related services and products. We also derive revenue from facilitating bookings of travel accommodations for both members and non-members. Revenue is recognized when these transactions have been confirmed, net of expected cancellations.
For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with our vacation exchange networks and, for certain members, for other leisure-related services and products. We also derive revenue from facilitating bookings of travel accommodations that were acquired from various sources.
Year Ended December 31, Cash provided by/(used in): 2022 2021 Change Operating activities $ 442 $ 568 $ (126) Investing activities Continuing operations (45) (93) 48 Discontinued operations (5) — (5) Financing activities (196) (1,288) 1,092 Effects of changes in exchange rates on cash and cash equivalents (5) (7) 2 Net change in cash, cash equivalents and restricted cash $ 191 $ (820) $ 1,011 Operating Activities Net cash provided by operating activities was $442 million for the year ended December 31, 2022, compared to $568 million in the prior year.
Year Ended December 31, Cash provided by/(used in): 2023 2022 Change Operating activities $ 350 $ 442 $ (92) Investing activities Continuing operations (80) (45) (35) Discontinued operations — (5) 5 Financing activities (500) (196) (304) Effects of changes in exchange rates on cash and cash equivalents — (5) 5 Net change in cash, cash equivalents and restricted cash $ (230) $ 191 $ (421) Operating Activities Net cash provided by operating activities was $350 million for the year ended December 31, 2023, compared to $442 million in the prior year.
For a comparative review of our consolidated results of operations and those of our reportable segments for the fiscal years ended December 31, 2021 and 2020, refer to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 23, 2022.
For a comparative review of our consolidated results of operations and those of our reportable segments for the fiscal years ended December 31, 2022 and 2021, refer to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 22, 2023. 39 Table of Contents DISCONTINUED OPERATIONS During 2023 and 2022, we recognized $5 million and $1 million Gains on disposal of discontinued business, net of income taxes.
As a provider of vacation exchange services, we enter into affiliation agreements with developers of vacation ownership properties to allow owners of VOIs to trade their intervals for intervals at other properties affiliated with our vacation exchange network and, for some members, for other leisure-related services and products. 33 Table of Contents Our vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs; and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power.
Our vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs; and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power.
During 2022, we spent $52 million on capital expenditures, primarily for information technology and sales center improvement projects. During 2023, we anticipate spending between $60 million and $65 million on capital expenditures, primarily for continuation of information technology digital initiatives, travel club enablement, and sales center/resort improvements.
During 2023, we spent $74 million on capital expenditures, primarily for information technology and sales center improvement projects. During 2024, we anticipate spending between $80 million and $90 million on capital expenditures, primarily for continuation of information technology digital initiatives, sales center facility and related system enhancements and resort improvements.
These ratios do not include interest expense or indebtedness related to any qualified securitization financing (as defined in the credit agreement). As of December 31, 2022, we were in compliance with the financial covenants described above. Secured Notes, and Term Loan B facilities We generally utilize borrowing via secured note issuances to meet our long-term financing needs.
These ratios do not include interest expense or indebtedness related to any qualified securitization financing (as defined in the credit agreement). As of December 31, 2023, we were in compliance with the financial covenants described above. On March 30, 2023, we entered into the fourth amendment to the credit agreement governing our revolving credit facility and term loan B facilities.
We believe that Adjusted EBITDA is a useful measure of performance for our segments which, when considered with generally accepted accounting principles in the United States (“GAAP”) measures, gives a more complete understanding of our operating performance.
We believe that Adjusted EBITDA is a useful measure of 35 Table of Contents performance for our segments which, when considered with generally accepted accounting principles in the U.S. (“GAAP”) measures, we believe gives a more complete understanding of our operating performance. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
As we seek to increase the mix of new owner sales and expand our pipeline of potential future owner upgrade sales, we would expect VPG levels to moderate. Our current VOI inventory levels are expected to be sufficient to support sales during the near term, which limits our exposure to increased inventory costs due to the potential effects of inflation.
Our current VOI inventory levels are expected to be sufficient to support sales during the near term, which limits our exposure to increased inventory costs due to the potential effects of inflation.
Prior period segment information has been updated to reflect this change. The reportable segments presented below are those for which discrete financial information is available and which are utilized on a regular basis by the chief operating decision maker to assess performance and to allocate resources.
The reportable segments presented below are those for which discrete financial information is available and which are utilized on a regular basis by the chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by the operating segments.
During 2020, we paid cash dividends of $0.50 per share for the first and second quarters, and $0.30 per share for the third and fourth quarters. The aggregate dividends paid to shareholders for 2022, 2021, and 2020, were $135 million, $109 million, and $138 million.
During 2021, we paid cash dividends of $0.30 per share for the first, second, and third quarters, and $0.35 per share for the fourth quarter.
We expect to use the net proceeds from the incremental term loan B borrowing toward the repayment of our $400 million notes due in March 2023. These transactions reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.
These transactions reinforce our expectation that we will maintain adequate liquidity for the next year and beyond. During 2023, we used net proceeds from the 2022 Incremental Term Loan B Facility, along with cash on hand, and borrowings under our revolving credit facility, to repay our $400 million notes which came due in March 2023.
As of December 31, 2022, the Board of Directors has increased the capacity of the program nine times, most recently in April 2022 by $500 million, bringing the total authorization under the current program to $6.5 billion. We had $477 million of remaining availability in our program as of December 31, 2022.
As of December 31, 2023, the Board has increased the capacity of the program nine times, most recently in April 2022 by $500 million, bringing the total authorization under the current program to $6.5 billion. Proceeds received from stock option exercises have increased the repurchase capacity by $81 million since the inception of this program.
Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate. We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates. Guarantees.
Further, we make assumptions within certain valuation techniques including discount rates and timing of future cash flows. Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate. We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use.
These changes will become effective for the 2023 tax year. We do not currently expect to be subject to the minimum tax, but we will continue to monitor as this could change. We are subject to the 1% excise tax to the extent of future share repurchases. We are still evaluating the impact of the other provisions on our business.
These changes became effective for the 2023 tax year. We do not currently expect to be subject to the minimum tax, but we will continue to monitor as this could change.
In determining the fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values (where available). Further, we make assumptions within certain valuation techniques including discount rates and timing of future cash flows.
The difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill. In determining the fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values (where available).
This estimate of uncollectible consideration reduces the amount of revenue recognized at the time of sale and establishes an allowance for loan loss which reduces the receivable. 45 Table of Contents Our estimates of uncollectible amounts are based on the results of our static pool analysis which tracks defaults for each year’s sales over the entire life of those contract receivables.
Our estimates of uncollectible amounts are based on the results of our static pool analysis which tracks defaults for each year’s sales over the entire life of those contract receivables.
We also utilize surety bonds in our Vacation Ownership business for sales and development transactions in order to meet regulatory requirements of certain states. In the ordinary course of our business, we have assembled commitments from 12 surety providers in the amount of $2.3 billion, of which we had $455 million outstanding as of December 31, 2022.
As of December 31, 2022, we had $34 million of irrevocable standby letters of credit outstanding, none of which were under our revolving credit facilities. We also utilize surety bonds in our Vacation Ownership business for sales and development transactions in order to meet regulatory requirements of certain states.
As of December 31, 2022 and 2021, we had no recognized liabilities in connection with these guarantees. We generally utilize letters of credit to support the securitization of VOCR fundings, certain insurance policies, and development activities in our Vacation Ownership business.
We generally utilize letters of credit to support the securitization of VOCR fundings, certain insurance policies, and development activities in our Vacation Ownership business. As of December 31, 2023, we had $47 million of irrevocable standby letters of credit outstanding, $2 million of which were under our revolving credit facilities.
The average inventory spend on vacation ownership development projects for the five-year period from 2023 through 2027 is expected to be between $130 million and $150 million annually. After factoring in the anticipated additional average annual spending, we expect to have adequate inventory to support vacation ownership sales through at least the next four to five years.
As such, we expect to remain below historical levels of spending for vacation ownership development projects in 2024 with anticipated spending between $105 million and $125 million. After factoring in the anticipated additional annual spending, we expect to have adequate inventory to support vacation ownership sales through at least the next four to five years.
Total deficit increased $110 million from December 31, 2021 to December 31, 2022, primarily due to $352 million of share repurchases; $136 million of dividends; and $31 million of unfavorable currency translation adjustments driven by fluctuations in exchange rates, primarily the British pound sterling, Australian dollar, Danish krone, and the Euro; partially offset by $357 million of Net income attributable to Travel + Leisure Co. shareholders and a $50 million increase in additional paid-in capital, primarily due to stock-based compensation.
Total deficit increased $13 million from December 31, 2022 to December 31, 2023, primarily due to $307 million of share repurchases and $137 million of dividends; partially offset by $396 million of Net income attributable to Travel + Leisure Co. shareholders and a $37 million increase in additional paid-in capital, primarily due to stock-based compensation.
Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. 34 Table of Contents OPERATING STATISTICS The table below presents our operating statistics for the years ended December 31, 2022 and 2021. These operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses.
OPERATING STATISTICS The table below presents our operating statistics for the years ended December 31, 2023 and 2022. These operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses. Refer to “The Year Ended December 31, 2023 vs.
Our sales of VOIs are either cash sales or developer-financed sales. For developer-financed sales, we project our losses for uncollectible accounts over the entire lives of our notes.
Our sales of VOIs are either cash sales or developer-financed sales. For developer-financed sales, we project our losses for uncollectible accounts over the entire lives of our notes. This estimate of uncollectible consideration reduces the amount of revenue recognized at the time of sale and establishes an allowance for loan loss which reduces the receivable.
Other income, net of other expense increased $16 million during 2022 compared with 2021, primarily due to a $10 million reduction of contingent consideration associated with a business acquisition. Our effective tax rates were 26.7% and 27.0% for the years ended December 31, 2022 and 2021.
Interest income increased $7 million during 2023 compared with 2022 primarily due to higher interest rates. 37 Table of Contents Our effective tax rates were 19.4% and 26.7% for the years ended December 31, 2023 and 2022.
As part of the Fee-for-Service program, we may guarantee to reimburse the developer or to purchase inventory from the developer, for a percentage of the original sale price if certain future conditions exist. As of December 31, 2022, the maximum potential future payments that we may be required to make under these guarantees is $51 million.
As of December 31, 2023 and 2022, we maintained a liability in connection with these guarantees of $21 million and $20 million included within Accrued expenses and other liabilities on the Consolidated Balance Sheets. 43 Table of Contents As part of the Fee-for-Service program, we may guarantee to reimburse the developer or to purchase inventory from the developer, for a percentage of the original sale price if certain future conditions exist.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+3 added−3 removed9 unchanged
Biggest changeIn the first quarter of 2023, we expect to exercise our option under our credit agreement to replace LIBOR with Term SOFR, subject to lender approval, as the benchmark rate governing our revolving credit facility and Term Loan B, which would eliminate our largest exposure to LIBOR based interest rates. • Currently, we have debt agreements in place that reference LIBOR-based rates which contain standard LIBOR replacement benchmark language to SOFR for USD denominated debt.
Biggest changeIn the first quarter of 2023, we amended the credit agreement governing our revolving credit facility and term loan B facilities to replace LIBOR with Term SOFR as the benchmark rate.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We use various financial instruments, particularly interest rate caps, to manage and reduce the interest rate risk related to our debt.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We use various financial instruments, particularly interest rate caps and interest rate swaps, to manage and reduce the interest rate risk related to our debt.
We used December 31, 2022 market rates to perform a sensitivity analysis separately for each of our market risk exposures. The estimates assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.
We used December 31, 2023 market rates to perform a sensitivity analysis separately for each of our market risk exposures. The estimates assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.
We have determined that a hypothetical 10% change in the foreign currency exchange rates would have resulted in an approximate increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts of $5 million, which 47 Table of Contents would generally be offset by an opposite effect on the underlying exposure being economically hedged.
We have determined that a hypothetical 10% change in the foreign currency exchange rates would have resulted in an approximate increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts of $5 million, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
We have determined, through such analyses, that a hypothetical 10% change in the interest rates would have resulted in a $2 million increase or decrease in annual consumer financing interest expense and $3 million increase or decrease in annual debt interest expense.
We have determined, through such analyses, that a hypothetical 10% change in the interest rates would have resulted in a $2 million increase or decrease in annual consumer financing interest expense and $5 million increase or decrease in annual debt interest expense.
A 100-basis point change in the underlying interest rates would result in a $4 million increase or decrease in annual consumer financing interest expense and a $6 million increase or decrease in our annual debt interest expense.
A 100-basis point change in the underlying interest rates would result in a $4 million increase or decrease in annual consumer financing interest expense and a $9 million increase or decrease in our annual debt interest expense.
Our principal market exposures are interest rate and foreign currency rate risks. • Our primary interest rate exposures as of December 31, 2022, are to interest rate fluctuations in LIBOR interest rates, asset-backed commercial paper interest rates, and SOFR interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities.
Our principal market exposures are interest rate and foreign currency rate risks. • Our primary interest rate exposures as of December 31, 2023, are to interest rate fluctuations in asset-backed commercial paper interest rates and SOFR interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities.
The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of December 31, 2022. As of December 31, 2022, the absolute notional amount of our outstanding foreign exchange hedging instruments was $65 million.
The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of December 31, 2023. As of December 31, 2023, the absolute notional amount of our outstanding foreign exchange hedging instruments was $61 million.
Our variable rate borrowings, which include our term loan B facilities, non-recourse conduit facilities, and revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable rate borrowings at December 31, 2022 was $428 million in non-recourse debt and $574 million in corporate debt.
Our variable rate borrowings, which include our term loan B facilities, non-recourse conduit facilities, and revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable rate borrowings at December 31, 2023 was $364 million in non-recourse debt and $867 million in corporate debt.
There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.
While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled. 48 Table of Contents We used December 31, 2023 market rates on outstanding financial instruments to perform the sensitivity analysis separately for each of our market risk exposures: interest and foreign currency rate instruments.
We used December 31, 2022 market rates on outstanding financial instruments to perform the sensitivity analysis separately for each of our market risk exposures: interest and foreign currency rate instruments. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.
The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves and exchange rates. There were no changes to the assumptions used in this model in 2023. 49 Table of Contents
Removed
In addition, interest rate movements in one country, as well as relative interest rate movements between countries, can impact us. We anticipate that SOFR and asset-backed commercial paper rates will remain our primary market risk exposures.
Added
This change became effective on March 31, 2023, for both new borrowings and rollovers of then existing USD LIBOR based borrowings (except Base Rate borrowings) and eliminated our exposure to LIBOR. In addition, interest rate movements in one country, as well as relative interest rate movements between countries, can impact us.
Removed
Although these LIBOR based obligations provide for alternative methods of calculating the related interest rate payable (including transition to an alternative benchmark rate) if LIBOR is not reported, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments that are higher than, lower than, or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR was available in its current form. • We have foreign currency rate exposure to exchange rate fluctuations worldwide particularly with respect to the Euro, British pound sterling, Australian and Canadian dollars, Danish krone, and Mexican peso.
Added
We anticipate that SOFR and asset-backed commercial paper rates will remain our primary market risk exposures. • We have foreign currency rate exposure to exchange rate fluctuations worldwide particularly with respect to the Euro, British pound sterling, Australian and Canadian dollars, and Mexican peso.
Removed
There were no changes to the assumptions used in this model in 2022. 48 Table of Contents
Added
There are certain limitations inherent in the sensitivity analyses presented.

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