Q4 2019 Earnings Call
Good morning, and welcome to the Hilton Grand Vacations fourth quarter 2019 earnings Conference call.
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I'd now like to turn the call over to Mark Melnick, Vice President Investor Relations. Please go ahead Sir.
Thank you operator, and welcome to the Hilton Grand Vacations fourth quarter 2019 earnings call.
Before we get started please be reminded that our discussion this morning.
Forward looking statements actual results could differ materially from those indicated by these forward looking statements any statements are effective only as of today.
We undertake no obligation to publicly update or revise these statements.
For a discussion of some of the factors that could cause actual results to differ please refer to the risk factor section of our 10-K.
We'll also be referring to certain non-GAAP financial measures.
You can find definitions and components of such non-GAAP numbers as well as reconciliations of non gap and GAAP financial measures discussed today in our earnings press release, and our website at <unk> Dot age TV Dot com.
As a reminder, our reported results for both periods in 2019, and 2018 reflect accounting rules under AMC six so six which we adopted in 2018.
Under 86, so since we are required to the first certain revenues and expenses related to sales made in the period when a project is under construction.
And then cooled off on recognizing those revenues and expenses until the period when construction is completed.
To help you make more meaningful period to period comparisons you can find details of our current and historical deferrals and recognitions in table T. One of our earnings release.
Also for either comparability and simplify our discussion today or comments on adjusted EBITDA and our real estate results well refer to results. Excluding the net impact of construction related deferrals and recognitions for all reporting periods.
Unless otherwise noted results discuss today referred to fourth quarter 2019, and all comparisons our quarterly against fourth quarter 2018.
In a moment Mark Twain, our president and Chief Executive Officer will provide highlights from the quarter. In addition to an update of our current operations and company strategy.
After marks comments, our Chief Financial Officer, Dan Matthews, well go through the financial details for the quarter and our forward expectations after that mark in damn well make themselves available for your questions with that let me turn the call over to our president and CEO Mark.
Mark.
Good morning, everyone earlier today, we released our fourth quarter results total revenues were up 3% contract sales grew 1.4%.
The year contract sales were flat finished in line with the guidance, we provided last quarter.
NOG was 5.5% and marked our 27th consecutive year of net on a gross.
Adjusted EBITDA grew 18% to 124 million with margins of 25% up 320 basis points versus last year.
For the year, our adjusted EBITDA was up 7% to 453 million versus our revised guidance of 415 to 435 million or.
Our margins were 24% up 85 basis points versus 2018.
I think it says a lot about our team in our model that were ultimately able to deliver solid EBITDA growth and margins during the transitionary period for our portfolio.
There was no easy task and I applaud our teams for their efforts.
Now, let's jump into what we saw in the quarter and a year.
In our real estate segment.
Our Q4 contract sales growth was driven by 5% increase in tours offset by lower Vpgs.
Our fourth quarter close rates increased year over year is operational improvements in a continued focus on execution drove an acceleration in our transaction growth each quarter of 29 team.
Regionally, we saw growth and tours in both the mainland and a path and we saw a close rates up in both regions as well contributing equally to the gain we saw in the quarter.
Our other engagement remained strong with rivals up 7% for the year.
And our capital efficient mix increased 500 basis points to 83% of contract sales underscoring our commitment to efficient inventory sourcing.
Our non real estate business continue to demonstrate strength fueled by NOG.
At our club and resort business, the compounding benefits of growing our member base resulted in another solid quarter was record revenues of 61 million and EBITDA 49 million for margins of 80%.
This capped off a strong year for the business with EBITDA of 145 million on revenues of 191 million.
And our member base now stands at over 325000 members.
Our financing business also generated another solid quarter with EBITDA of 29 billion on revenues of 43 million from margin of 67%.
For the year revenues of 170 million in EBIT of 117 million continue to provide us with a stream of consistent high margin cash flow. In addition to the well received.
Yes offerings that we talked about in the third quarter.
Now I'd like to talk you through some of our near term initiatives that we're focused on for 2020.
As it relates to inventory.
Just beginning to realize the initial benefits of the inventory investments we've made over the past two years we.
We recently received approval from New York to begin sales or the Quinn and from Hawaii to begin sales of phase two of Ocean tower.
And as we move through the year and obtain additional state regulatory approvals will expand their distribution into our sales network.
We expect sales to gain momentum each quarter as these projects ramp resulting in strong contract sales run rate as we exit the year.
In addition, we expect to receive approval to commence initial offsite sales of our now in cover projects in the first half of this year and we're excited to enter these two new markets.
We will also start sales over sequel property in Waikiki and second half.
Sales at these properties well built through the back half of this year and ended 2021 as we layer on additional distribution.
Along with this new inventory, we're laser focused on execution. In addition to the process adjustments at key sales centers that we touched on last year, we've taken additional steps to bolster our sales teams training and aligned or incentive programs to focus more sharply on execution metrics.
At our collateral resort business, we're piloting a cash and points initiatives that allows the owners to supplement their point packages with cash providing them with flexibility to maximize our points and expand their usage of the HCV network.
And we'll build upon the success of our owner exclusive programs that we piloted last year, which drives increase our occupancy during low seasonal periods.
These programs are part of our commitment to continually improve the guest experience, which supports our customer loyalty and creates value for HCV well beyond their initial purchase.
And companywide, we'll maintain our cost discipline as we capitalize on these initiatives corporate DNA was down 17% in the quarter to 24 million.
And we believe this is a sustainable levels spending that will still support our anticipated growth.
You should also allow us to maintain industry, leading EBITDA margins despite headwinds in our rental and ancillary division.
As we transition that Quinn from rental to timeshare.
Shifting to the longer term, we continue to make strides in or strategic growth initiatives, including continued investment in technology to enable increasingly sophisticated multichannel data enabled marketing efforts.
We see this is key to our ability to attract to write customer to the right distribution center and offer them the right product at the right time.
In 2019, we create a new campaign analysis tools to help us improve our to our efficiency.
And we invested in our campaign management capability support current and future high volume multichannel campaigns.
We invested in a new web foundation and launched a new unified side.
Ramifications dot com that will help us better convert qualified prospects into leads and ultimately in dollars.
We advanced our consumer data quality in action ability.
And as a result, our digitally source leads became a larger part of our marketing mix with over 30000 packages sold for the year.
In 2020.
Changyou.
To invest in this important digital strategy to refine and optimize these processes and make consumer data and even stronger part of our marketing plans going forward.
And we will work closely with Hilton to apply this data in new ways throughout our marketing channels.
Overall I'm excited about what the future holds for HCV.
Over the past decade, we more than doubled our owner base tour flow.
Contract sales and EBITDA, all well never losing focus on providing our guests with exceptional customer experiences.
Well it wasn't satisfied with our 29 team resolves I'm encouraged by how we closed out a challenging year.
And looking ahead I.
I think that we have the right brand the right team and the right inventory in place to deliver another strong decade or performance for HCV.
Before we move to Dan I'd like to provide an update on the crowd of Iris.
On February 14th.
We weren't formed a guess who stayed at our Grand Waikiki and property was later diagnosed with a virus after returning home to Japan.
The health and safety of our owners guest and team members as always our highest priority and we acted swiftly to implement emergency procedures and protocols.
And where it continuous communication with both local and national health agencies.
February 21st we pass through the 14 days suggested moderating period from when the guess departed our property and it received no reports of further infections.
I'm proud of how our team reacted to successfully address the incident with our owners guest team members and the community.
Like many travel related companies, we have experienced some disruption since the onset as a media coverage surrounding the virus.
Mainly in Japan.
Given the importance of our business in Japan in Hawaii, we felt it would be prudent to frame of potential impact from the virus.
The situation, obviously remains very fluid.
Having experienced similar disruptive events in the past.
The prepaid nature of our product in the desire of our guests the travel lease me confident in the resilience of our business.
I'll turn things over to Dan to give you additional details and walk you through our financial results.
Thank you Mark and good morning, everyone before getting into the results I'd like to cover a quick refresher on deferrals.
As you will recall our model allows us to pre sell new projects up to two years in advance of opening.
GAAP FC six of six requires that we defer the revenue cost of product indirect SNA associated with those presales until we opened the property for occupancy.
Put simply this requirement creates deferral items on our balance sheet grow during the pre sell phase and consequently, there is an artificial reduction to adjusted EBITDA. During this period.
Once we obtain a temporary certificate of occupancy for a project we reverse those items in their entirety, creating a large positive income statement recognition that inflates EBITDA in that period.
As these adjustments create misleading volatility in our revenues and EBITDA and the sales book during the presale period generate cash flow, we manage our business internally by focusing on earnings excluding deferrals and recognitions.
Since all references to net income adjusted EBITDA and real estate results on this call for current and prior and future periods exclude the impact of deferrals and recognitions.
This quarter deferrals or a drag of 19 million on a reported AMC six six EBITDA.
Further details can be found and tables T. One and T 15 in our press release, and the complete accounting or historical deferred recognition activity can be found an excel format.
Financial reporting section of our Investor Relations site.
We would encourage you to reach out to more money for additional help in understanding deferrals in your modeling and valuation work.
Now, let's turn to the results for the fourth quarter and full year 2019.
Total fourth quarter revenues increased 2.9% to $503 million, reflecting growth in a real estate resort in club and financing businesses with flat rental ancillary revenues.
[music] for adjusted EBITDA came in at a 124 million versus $105 million last year, a year over year increase of 18%.
Q4, adjusted EBITDA also came in well ahead of our implied guidance for Q4.
These results were driven by the growth in revenues combined with a continued focus on cost efficiency.
Adjusted EBITDA margins improved by 318 basis points.
It is important to note on the cost efficiency front, a couple items are specific to 2019.
Specifically, we benefited from a gain of approximately 4 million associated with the change in certain employee benefits as well as an additional 4 million gain in a real estate segment, which I'll discuss in a minute.
For the full year, our adjusted EBITDA of $453 million versus $424 million last year with margins up 85 basis points to 23.6%.
This concludes the $8 million of unique items that I just mentioned.
Net income was 91 million diluted earnings per share was one dollar in five cents compared to net income of 39 million diluted earnings per share of 40 cents in the fourth quarter 2018.
Full year net income was $261 million and diluted earnings per share was $2 a 92 cents.
Versus prior year full year net income of 219 million and diluted earnings per share of $2 in 24 cents.
Within real estate Q4 contract sales gained 1.4% solid toward growth of 5.2%, partially offset by 2.5% decline in VPG.
As Mark discussed earlier, our increased focus on execution was reflected in again or close rate for the quarter offset by the trend of lower transaction prices, we discussed on prior calls.
Provision our provision for bad debt was 8% of own sales, reflecting refinements in our static pool forecast models and underwriting strategies.
The refinements to our stacked cool forecast model benefited our Q4 provision by approximately $4 million.
Going forward, we anticipate the rate should trend between 11 and 13%.
For the full year contract sales were flat versus our revised guidance a flat to down 3%.
Fee for service mix for the quarter was 52% versus 56% last year within our 40% to 54% guidance for the full year.
With the introduction of our new projects. This year, we anticipate selling a higher proportion of owned inventory.
Back to see fee for service mix between 47, and 53% of our contract sales in 2020.
Turning to real estate expenses product costs were 26.4% in Q4 and finished the year at 23.7%.
As we discussed on our last call 2019 product costs benefited from a larger than normal cumulative product cost adjustment in Q3.
This fact, coupled with the introduction of additional inventory in higher product costs regions, like New York, and Hawaii will drive our overall cost of product to a range of 27% to 30% going forward.
SMB DNA was 38.1% of sales in favorable by 81 basis points.
The improvement in close rate for the quarter that drove some operating leverage for the year SM DNA was 39.8% of contract sales up 28 basis points versus 2018.
Our Q4 real estate margin was 86 million up 10% versus last year margins of 31.7% were up 274 basis points for the year real estate margin was $315 million with margins of 30.6%.
While we do anticipate seeing leverage on EPS in DNA in 2020, owing to higher sales volumes are higher cost of product. Nevertheless drive over a real estate segment margin compression in 2020.
At our financing business Q4 margin was $29 million with the margin percentage of 67.4% versus a margin of $27 million and emerging percentage of 65.9% last year, our credit trends remained stable and our allowance for bad debt is expected to remain near current levels due to underwriting changes.
And it over the year, coupled with anticipated increases in purchases of our new projects in Hawaii by Japanese buyers generally carry stronger credit profiles.
Looking at the portfolio balance gross receivables stood at just over $1.3 billion.
Average down payment year to date is 12.4% or average interest income rate increased to 12.5% from 12.3% last year.
Turning to our resort and club business NOG was 5.5% for the quarter and year, which drove an 8.9% increase in revenue to $61 million.
Both club and resort revenues contributed to the game and we once again reached a new high for revenue per member $587.
Arjun for Q4 was up 17% to 49 million within margin percentage of 80.3%.
This quarter capped off a year strong results for club in resort with revenues up 11.1% to $191 million margins of 145 million margin percentage increase of 324 basis points to 75.9%.
Rental and ancillary revenues in the fourth quarter were flat at $54 million with an increase in rental revenue offsetting the decline in ancillary revenues lower supply of rental rooms at the Quinn during the transition to a timeshare property will continue to be a driving growth until we lap the conversion towards the end of 2020.
Rental and ancillary expenses were $1 million higher at 39 million owing to larger subsidy requirements for newly opened properties.
Margin was 15 million with margin percentage coming at 27.8%.
As we detailed on our last call the transition of the Quinto timeshare property from a rental property drag on the segment margins in the coming here and we anticipate a slightly higher level margin compression.
Rental and ancillary segment in 2020 versus what we saw in 2019.
Bridging the gap between segment adjusted EBITDA in total adjusted EBITDA fourth quarter, DNA decreased $5 million driven by the aforementioned changes to certain employee benefits as well as the result of cost efficiency initiatives implemented. This year license fees were up $1 million, an EBITDA from Jvs was flat.
Our tax rate in Q4 was 2.2% as a result of an accounting method to review recently approved by the IRS, which resulted in a benefit of $18 million the being recorded in the fourth quarter.
This was a onetime benefit going forward to attach rate will revert to a more normalized range in 2007% to 29%.
At the end of Q4 net leverage stood at 1.7 times versus our target range of one and half to two times.
Looking at our liquidity position you ended the year with $67 million of unrestricted cash $479 million capacity on the revolver and $450 million capacity in the warehouse.
On the debt front, we had corporate debt net of deferred financing cost of $820 million nonrecourse debt balance of $747 million.
Oh into inventory spending for new properties. Our Q4 adjusted free cash flow was a decline of $71 million compared to a decline of $25 million last year.
Adjusted free cash flow for the full year was $71 million.
In Q4, 2019, we did not complete any share repurchases.
Since the program's origination in November of 2018, we have repurchased $355 million worth of shares at an average price of $29 in 90 cents.
283 million of this amount was repurchased 2019.
For 2020, we're guiding to adjusted EBITDA of 455 to 475 million.
With contract sales of plus 3% to 7%.
As Mark mentioned earlier, given the uncertainties associated with the current of ours at this time our guidance does not include the impact from the virus.
As a framework each 5% impact to sales to a Japanese conns customers would be a one point impact contract sales growth rate and roughly five to 6 million to EBITDA.
Walking through the additional items in our guidance adjusted free cash flow is expected to be in the range of $50 million to $110 million.
Net income is expected to be $253 million to $268 million.
For 2091 cents to $3, an eight cents on per share basis.
Both of these are excluding all deferral and recognition activity.
And our guidance assumes no further share repurchases and is based on 87 million shares outstanding.
Similar to our last call before we turn the Q and a I'd like to remind you that we do not comment on much speculation and will not be addressing rumors.
We will now turn the call over to the operator and look forward to your questions operator.
Thank you at this time, we will be conducting a question and answer session.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star Keith.
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We ask that you. Please limit yourself to one question and one follow up to allow the opportunity for everyone to ask questions. You May then reenter the queue.
One moment, please what we call for questions.
Our first questions come from the line of Brandt Montour of JP Morgan. Please proceed with your question.
Good morning, Brett.
Frank could you check if your phone on mute please.
I am here can you hear me.
We talked about that.
Sorry about that everyone. Good morning.
So mark just qualitatively I was hoping you could maybe just give us a little bit of color.
So to the behavior of the Japanese consumer at this point in time.
As much as you can I guess tell us in terms of future packages activity with with regards to new bookings and cancellations and any other color you can give.
Yeah sure.
Yes, so I can tell you.
You know since see the news broke.
Early this year, we've had very minimal impact in is up.
Checking his latest.
This morning.
We've seen very few cancellations and.
As far as a rival SCO owners are rivals.
A bit impacted our tour flow in Japan.
That was probably a little earlier on after the news hit but it's now picked up so.
Right now the behavior is up.
Is good and.
So we're it's again, it's early on and things can.
Things can move around and change swiftly but.
Right now we're feeling.
Like everything is fine, but vicki.
We keep hearing new news out every day so.
Yeah.
Thank you for that and then just kind of curious on on tumor growth in the quarter, obviously, a solid number but still maybe the rose year over year growth in tours.
The last couple of years. So just curious if anything's going out there I know a lot of that kind of baked in several months and Dan.
Yeah, No I think.
Tour flow was solid.
For the year in and you know for the quarter.
Came back down a little bit off of our pace for the year, but a lot of that was really driven by so.
Internal initiatives that we had around a tightening up some of the qualifications and.
But all in all I thought it was good quarter.
We're still at.
That particular point, we're still waiting for some inventory to get into the system, but no.
I think right now if you look at where our packages are starting the year were up 14%.
Our packaged port.
Lines, so and we've got well over 400000 packages sitting in our pipeline. So we're not good position.
As we start off the year.
Great. Thanks, everyone I'll jump back in the Q.
Our next question, it's come from the line of Patrick Shoals Suntrust Robinson Humphrey. Please proceed with your question.
Hi, good morning, everyone.
A question for you on the share repurchase authorization it looks like a deep prior one expired I believe back in November is there any sense of urgency to.
Get a new authorization.
Hi, Patrick it's Dan so folks going well today with regards to share repurchases.
We actually it hasn't actually expired, we still have about $45 billion that oh, okay. Okay. We simply did not repurchase any shares in the fourth quarter of 2019 and booked as we've discussed before when we look at capital allocation.
Number one comment was commitment was investing inventory and we clearly did that started in 2018 and they're still in the process of.
Realizing all of those commitments.
Number two was weaker returning capital to shareholders as you can imagine there's a number of factors that come into play when.
We make those decisions we did not repurchasing shares in Q4, but it remains the number do you said.
Capital and our mindset and given where inventories today. It's a it's a number one is and will go back into the market when it's appropriate.
Okay.
Just as a related follow up have you repurchased any shares.
This quarter it doesn't sound like you have but curious if you have and if not are you a blacked out from doing so.
This quarter.
We have nots and we are not to be discussing anything with regards to our blackout.
Understood associated with stock repurchases, okay. Thank you.
Our next questions come from the line of Jared show Jain of Wolfe Research. Please proceed with your question.
Hi, Good morning, everyone. Thanks for taking my question.
So I appreciate the commentary on on the Japanese phase I get purchase a little bit differently I think about 20% of your owners are from Japan can you give us a sense as to what percentage of your EBITDA that represents and I guess, realizing that some of the earnings contribution is from maintenance fees and financing and things.
Probably wouldn't really be affected by current of ours anyway.
And then maybe you could just help us understand what percent of your EBITDA is non U.S. non Japan. Thank you.
Yeah, So, yes, you're correct, 20% of our sales or our drive down to Japan. So.
Which is.
As we talked about half of that actually comes from sales in Japan and half of it occurs.
In Hawaii for those those visitors coming in so.
So at the end of the day for instance, if for some reason in the Japanese.
Reduced travel to Hawaii, and they decided they didn't want to do some off long haul trips, we still have the ability to sell them in Japan, because we have approximately.
We have 12 sales centers over there as far as a percentage of EBITDA goes I don't know Dan. It's a if we had the exact percentage on that but yeah. I know I mean look just to take a step back in our prepared remarks, we did comment on what the potential impact would be and I just want to make sure that really clarify that statement too.
Great.
So if there was a 5% impact to our Japanese consumer base.
It would translate into a 1% impact to overall contract sales and then translate further down the line to EBITDA of roughly five ish million dollars now that is clearly not an ongoing scenario. If there was a scenario where things were to be persistent we would obviously make more dramatic measures.
With regards to cost and all items related to the Japanese basis, that's meant to be just an indicator as you kind of short term impact.
From an overall perspective.
To Mark's earlier point, Japan does represent roughly 20% of our.
Sales and from an Eva perspective, it would be slightly less than that just because they're focused on higher cost of product.
Business as well as sales and marketing.
In a for Japan is also slightly higher than average.
I, just just add to that to you know again, it's early days.
Still uncertain now this is all going to play out, but we faced a these kind of challenges before I can tell you from my past experience in.
In some of that past experience here with some gravity creations.
Really due to the prepaid nature of our product into vested interests that are owners have to their properties that historically these kind of events, we bounce back.
Very fast and.
Slide 11, we met our objections and.
In that year and the following year. If you look back at Sars, We had a similar disruption with our Japanese customer that ultimately we didn't see any meaningful impact to our contract sales.
The only affected us for a couple of months.
Another another example that I watched.
First had was hurricane Aneek client and this is really kind of an example for what I think the whole sector will experience is back in 92. They closed the entire island dollar visitors and when the island reopened.
First and visitors to return were timeshare owners and it was well documented that that may touch or the popular with the local communities officials.
As it help kick start their economy back, but so again I think.
So early on I think as far as our business goes we're very well position. We've spent now a decade.
Selling to 50% new owners. So we have a very healthy very healthy base.
Of owners that are upgrading at record levels right now we've got a lot of embedded significant.
Recurring fees and predictable revenue I mentioned earlier, our pipeline is really strong.
So let's get for some reason, there's some delays in that pipeline, which is push those customers out and.
So there they're committed to traveling at some point so we feel really good debt should this disruption.
You know last for a longer period of time, regardless, we'll be able to bounce back quickly.
The only thing I would add is just an additional data points through the end of February the impact that we've seen.
We can see to date and keep in mind, while the U.S. has been hypersensitive to this over the last 14 days clearly this has been top of mind issue for Asia for an excess of two or three months and I'm sure. It will continue but through the end of February the impact from a contract sales perspective is a couple of million the cut.
A million dollars at this point.
Great. Thank you for.
All that color and then I guess you know as we look at the guidance for 2020.
It looks like economic EBITDA, you're expecting to grow kind of at a low single digit pace I guess below the contract sales growth below some of the growth you had in 2019. Despite all the challenges in the years. It can you talk about.
What maybe driving that to be a little bit lower than than those those factors and then you had mentioned you'll be at a.
Strong rate of growth on contract sales by the ended the year strong run rate I think as terminology used on can you help us understand what that means I mean are you thinking.
By the end of this year, you could be back to called that double digit pace you were at a couple of years ago and obviously this is entirely before krona virus, but maybe you can just help me understand how you're thinking about both of those pieces.
I'll talk briefly about the EBITDA addressing I'll turn it back over that Mark with some of some additional color.
The one thing I I do want to point out and I think we highlighted in our per paired my remarks, but just to be clear.
Q4, we did have some items that are unique to to 29 team that will not be carried forward. So in that $453 million of EBITDA in 2019, as we have roughly slightly north of $8 million of items that we really got to bump from in Q4, one was the change in certain employee benefits that was about $4 million.
Impacted DNA and also the segment levels and then there was also 4 million dollar benefit from refinement of our static pool model. So when you take that step back you're looking at.
A base EBITDA, that's close enough for 45, so that for 45 growing to the midpoint of arranges just shy of 5%, which I think is just shy of 5% of the midpoint of the range of it's consistent with midpoint range excuse me with the contract sales growth from.
From a overall continuation of a I'll turn it back I was marked at and Yeah I know Jared.
You're right look we're excited.
We're turning back to growth in 2020.
Got it never a new projects, we talked about Cabo on Maui, no, we're not going to be opening an onsite on those properties this year, but well be able to start selling the inventory.
And so we expect sales are going to ramp throughout the years inventory as it comes online to just give you a kind of a sense on timing and maybe this is to be helpful. As we if we think about the such sales evolution of the typical project.
It can take a full year for property become available across our entire sales network. So.
For instance, if we get a project a proof or sales typically it's available at about 20% of our network you get about six months out it runs out to about 50%.
As we get registrations and into various jurisdictions and and ER and then you know you're out were 100% it at all available out there so.
We look back when we started 19 and let's see if you if you looked at kind of.
The inventory as inventory on the shelf.
We have we're at a all time low of inventory on the shelf now as you can we look forward into 2028 were restocking our inventory on those shell so as we get out through the year the inventory to become more plentiful.
You know it will help us meet a number of.
A number of upgrade.
Opportunities with our owners there no help us also meet somebody a new buyer opportunity so excited about.
Where we're at you know we've spent a good part of two years or getting this inventory prepared and we're excited that it's finally coming about and and a as far as getting back to double digit growth I think.
You can expect it will be nearing that amount as we move in the 21.
Okay. Thank you very much.
Our next question has come from the line of David Katz with Jefferies. Please proceed with your question.
Hi, good good morning, everyone in this call morning.
Hi, I wanted to.
Sort of.
Take a different tactics and and avoid asking more about.
Near term virus impact because there is as you point out.
Hey, a refocus on growth.
I thought of HGTV in terms of the locations, where it could be overtime, such as Caribbean or more ski et cetera.
How should we think about the longer term opportunities and how long we might have to wait before we'd see you're getting into.
A little more geographic distribution.
Yeah, well, we we have been expanding.
Yeah actually from a geographic standpoint, when you think about Cabo on Maui those in new markets, we moved into Charleston.
We just started selling that we opened up in Chicago.
So we have been we've been expanding and we continue to look for new opportunities.
We're looking at.
Some product new product forms as well as that and.
If there was new product forms, we think theres, an opportunity to really up prop up and mid tour in mid tier.
Opportunity, which we think will will broaden our base of customers that we can.
Addressed today, so Ah so theres been a lot of expansion and we continue to look at new opportunities. We also I forgot to in my list. We did open a new property and the Caribbean last year in Barbados. So that's the first time, we've been in the Caribbean.
And then if you look international we've got a new project under construction.
In our that's a just in time deals that I'm worried trust is building on our behalf so.
I did about or or expansion and the opportunities in front us.
All right and in terms of how those growth opportunities should roll should we think of those more as capital I models or should we expect them to consume capital or really depends.
You're going to see.
As we think about some of these new opportunities, we're going to be extremely capital efficient.
And so you know we've got a grade mix of fee for service. We're the only once it has.
Really I feel perfected eight a. fee for service model that we can do with multiple developers out there at scale. A you know this year, we're still looking at 47% to 53% of our mix to be fee for service.
We expect it to drop a little you know around 40% or just a little below that and 21, but you can expect as we look at some of these mid tier product that we would probably be looking at a trust format and we'd be looking at.
One of our partners to help us up.
You know stand that up.
Got it thank you very much.
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One moment, please while we Paul for more questions.
There are no further questions at this time before we add I would like to turn the call back over to Mr., Mark Wang for any closing remarks Mr. Wang.
Alright, well thanks, everyone for joining us. This morning, we look forward to speaking with you over the next couple of weeks sense and updating you on our next call. Thank you.
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