Q4 2020 Wyndham Destinations Inc Earnings Call

February 24, 2021

For the game.

Good morning, and welcome to the fourth quarter and full year 2020 earnings conference call for travel on leisure Cow, formerly Wyndham destinations after the.

The Speakers' remarks, there will be a question and answer period.

I would like to ask the question. During this time simply press Star then one on your attached on the phone if you would like to withdraw your question. Please press the pound key on your telephone keypad.

A reminder, ladies and gentlemen, this conference call is being recorded if you do not agree with these turns the disconnect at this time.

I would now like to turn the call over to Chris Agnew. Please go ahead.

Thank you Ashley good morning, and welcome to travel on leisure <unk> fourth quarter and full year 2020 earnings conference call before we begin we'd like to remind you that our discussions. This morning will include forward looking statements actual results could differ materially from those indicated in the forward looking statements.

On the forward looking statements made today are effective only as of today, we undertake no obligation to publicly update or revise these statements. The factors that could cause actual results to differ are discussed in our SEC filings and you can find a reconciliation of the non-GAAP financial measures.

In today's call in our earnings press release available on our website at <unk>.

The Investor don't travel on leisure co dot com.

This morning, Michael Brown, our President and Chief Executive Officer, who will provide an overview of our fourth quarter and 2020 full year results.

And Mike hug.

Our Chief Financial Officer will then provide greater detail on the quarter, our balance sheet and liquidity position.

Following these remarks will be available to respond to your questions.

With that I'm pleased to turn the call over to Michael Brown.

Thank you Chris Good morning, and welcome to our first earnings call the as travel on leisure earlier.

Earlier. This morning, we were pleased to report fourth quarter, adjusted EBITDA of $148 million and adjusted EPS up 32 cents.

Last year was full of unprecedented challenges for the travel industry the strength of leisure travel demand combined with our resilient business model enabled us to achieve positive adjusted free cash flow for the full year.

D. After reopening at the end of the second quarter, we were able to deliver a strong second half of 2020 with adjusted EBITDA margins over 20% the.

Combination of our recurring the earning streams the resilience of our owners are competitive resort footprint and the early actions, we took to reduce costs and maximize cash flows all contributed to our strong performance in 2020.

Let me transition to some of the highlights from last year.

For the full year, we generated revenue of $2 2 billion and adjusted EBITDA of $259 million.

As a reminder, adjusted EBITDA includes a $157 million negative the impact for increased defaults due to COVID-19.

The end of the first quarter and.

And the majority of the second quarter were significantly impacted by suspended resort operations due to the stay at home orders in 42 states by the end of June 85% of our U S resorts and 56% of our sales locations had reopened.

As we look ahead to the eventual rebound on leisure travel we made a number of operational changes to put us on a stronger position for the recovery.

And the vacation ownership business, we elevated the FICO qualification threshold from 600, the 640, improving toward quality, which results in better performance in the portfolio.

We also pared back underperforming marketing locations and programs, we've re imagined our check in process innovated. The on site experience with RFID Wristbands to increase engagement with our guests and went live with our New club Wyndham website in May.

We also launched virtual sales and virtual contract closings, both have been well received and we plan to expand both programs in 2021.

Cost savings helped buffer a softer top line in our travel and membership segment. The segment, which is primarily RCI achieved 40% adjusted EBITDA margins in the second half compared to 37% in the prior year.

Revenue per member also improved in both the third and fourth quarters down just 19% and 13% over the prior year, which were noteworthy improvements compared to the second quarter, which was down 37% over the prior year.

And on the consolidated basis, we reduced our annualized 2020 operating cost base by approximately $225 million $60 million of which will become permanent G&A savings and we reduced inventory in the operating capital expenditure by over 125 million.

Yeah.

And the year, when many global lodging and leisure companies, where net users of cash we maintained a strong balance sheet as we generated positive adjusted free cash flow of $35 million for the full year.

We had $1 6 billion of liquidity at year end and finished the year with $3 billion of corporate debt.

We were also able to maintain a quarterly dividend, which is currently 30 per share demonstrating our confidence in the resilience of our business.

The strength of our balance sheet, and our business allowed us to be productive and execute several strategic initiatives toward achieving our goal to expand into the broader leisure travel market.

We successfully unveiled panorama mid year, and we acquired the travel and leisure brand in the early 2021.

We're excited about both of these businesses and the momentum they will drive in the 2021 and beyond.

Let me share with you the rationale behind our acquisition of the travel on leisure brand and content and its existing businesses.

First our mission is to put the world on vacation and by renaming our corporate entity. It allows us to demonstrate an increased breadth of marketing services, we will provide going forward.

The acquisition of travel on leisure allows us to express that direction with one of the most trusted and iconic names in the leisure travel space.

Second it reinforces our strategic direction to expand beyond the timeshare space.

The overall North American leisure market is more than 10 fold larger than the timeshare market the.

The travel on leisure acquisition fueled by our technology platform allows us to expand by offering new products and services the services to a much larger market as part of the acquisition. We acquired two subscription travel clubs with a combined 60000 members we plan to grow these travel club.

<unk> as we launch new products this summer.

The third this facilitates our ability to offer timeshare services to other travel brands in addition to window.

Our strength lies in sales and marketing hospitality and our ability to access the financial markets to support consumer lending. We believe there are strong travel brands that could operate under their name.

Fit for more services the <unk>.

Renaming of our corporate entity, we will reduce the obstacle of overcoming issues of brand conflict.

To recap our company now has three business lines Wyndham destinations, our core timeshare business, which is committed to the Wyndham brand and growing our relationship with Wyndham hotels, and the Wyndham rewards program.

Panorama, including the RCI exchange business and the <unk> technology platform focused on growing the <unk> travel solutions with partners.

And the travel on leisure group, which will focus on its booking platform subscription based travel services and its licensing business.

We look forward to sharing more with you in the coming quarters and at an Investor day, we are planning whether in person of virtually for September 10 in New York City.

Let me now move to our outlook, we are already seeing the positive trends in 2021, providing us with the optimism about a strong recovery in leisure travel.

Post pandemic consumer travel sentiment is back to the highs last seen in October.

And as daily Covid infections continued to decrease we only see this trend improving.

With that said, we remain mindful of uncertainties in the first half of the year.

The state of the pandemic and the success of the vaccine rollout remain critical the consumer travel sentiment and the easing of travel restrictions.

<unk> daily infections were still elevated in January and our performance in January with California's still closed was very much like December January.

January is normally a seasonally slow month, so the impact will be less pronounced.

February has seen some improvement and we anticipate that momentum will continue into March.

Although it is our intention to return to full year guidance in the short term, we will be providing quarterly guidance for the first quarter, we expect tours to be down 56% to 58% from the prior year.

Gross VOI sales to be approximately $210 million to $220 million and <unk> to be 30% above the prior year.

Overall, we anticipate adjusted EBITDA in the range of 95 million to $110 million in the first quarter.

With that I would like to hand, the call over to our Chief Financial Officer, Mike Hug Mike.

Thanks, Michael Good morning to everyone and thank you for joining us today.

I will discuss our fourth quarter results and provide you with more color on our balance sheet liquidity position and cash flow.

My comments will be primarily focused on our adjusted results and year over year comparisons.

We reported fourth quarter, adjusted EBITDA of $148 million.

<unk> earnings per share of 32.

Compared to adjusted EBITDA of $265 million and adjusted EPS of $1 58, one year ago.

During the quarter $20 million of Covid related charges were added back to total company adjusted EBITDA with the largest item being $12 million of lease related restructuring charges.

In the fourth quarter vacation ownership reported revenue of $512 million with gross VOI sales of $281 million and adjusted EBITDA of $115 million.

Tours declined 64% in the quarter compared to the prior year with travel restrictions in California, and Hawaii, a headwind to our previous expectations.

New owner tours were down more sharply as each tour sources are expected to recover more slowly than existing owner tours, which were 48% lower than the prior year.

<unk> increased 24% to $2938 benefiting from improved new on our close rate and a higher mix of sales to existing owners.

Our underlying portfolio continues to perform well with delinquencies lower year over year driven in part by default programs are more mature portfolio from reduced originations and improved quality of new originations due to changes we've made in our underwriting standards.

Request for deferrals have continued to trend down since the second quarter and now active permits represent just 1% of loans outstanding down from 6% at the peak.

As we have noted previously as the owners come off deferral, we are seeing the majority of the <unk> returned to make the payments.

In the fourth quarter, we released $20 million of the $225 million receivable reserve, we took back in the first quarter due to COVID-19.

<unk> strong performance of the portfolio, resulting in the $13 million benefit to adjusted EBITDA.

We remain comfortable with the overall <unk> on our receivables portfolio, considering the continuing uncertainty around the pandemic and its economic impact.

Revenue in our travel membership segment, which includes panorama as well as travel on leisure groups starting in the first quarter of 2021 was $135 million from the fourth quarter compared to $181 million in the prior year.

Travel on membership fourth quarter, adjusted EBITDA was $49 million.

Down just 11% compared to $55 million in the prior year.

Strong cost control and a sequential improvement in revenue per member trends helped margin improved to 36% up from 30% in the prior year.

Average number of members in the segment decreased 6% and we expect that trend to continue in 2021, we.

We do spill on sales for the industry, particularly in new owner channels are not generating enough new owners to offset the normal churn of members.

We expect this decline to moderate in the back half of 2021.

As travel on membership continues to evolve beyond the traditional focus on the timeshare industry and in the servicing the broader travel club market. The exchange focused Kpis. We had previously been reporting will become less relevant to the overall business.

As such in 2021, we will disclose new transaction based drivers.

Net transactions for this segment declined 29% in the fourth quarter due to an increase in cancellations and lower gross bookings at <unk>, which has a shorter booking window than the exchange business.

However, we are continuing to see positive travel trends in exchange at December of gross bookings were in line with the prior year.

The different gross booking patterns and exchange <unk> are a good indicator of how our members feel about travel right now.

Although they are cautious on the short term they are looking to return to travel in the near future.

Turning to our balance sheet.

As of December 31, we had $1 $2 billion of cash and cash equivalents with corporate debt at $4 2 billion.

Which excluded $2 $2 billion of nonrecourse debt related to our securitized receivables.

Our net leverage for covenant purposes at the end of the quarter was five four times.

Two turns below our seven five times covenant.

We paid our fourth quarter dividend of <unk> <unk> per share on December 30, and we will recommend a first quarter dividend of <unk> 30 per share for approval by our board of directors in March as we remain committed to returning capital to shareholders.

As Michael mentioned, we acquired the travel on leisure brand in early January we paid $35 million in cash of closing and the trailing payments of $65 million will be completed by June 2024.

The acquisition is expected to be neutral to earnings in the first year as we invest in marketing programs to grow the business and accretive in the second year.

As noted previously we are not providing full year guidance at this time. However, we do want to share some thoughts on our outlook for full year free cash flow.

We expect 2021 free cash flow of to be below our historical free cash flow conversion range of between 50% and 60% of adjusted EBITDA.

Reduced net interest income fewer unsecured notes receivable on our balance sheet as of January 31, 2021, combined with higher corporate interest expense as a percent of adjusted EBITDA as well as the timing of some working capital items are behind the temporary reduction.

We expect 2022 free cash flow to move closer to our historical levels.

First quarter of free cash flow will be of significant use of cash due to the timing of inventory spending and working capital payments as well as fewer eligible receivables for our first ABS transaction of the year than has historically been the case due to the lower level of VOI sales in the second half of 2020.

In summary, we are pleased with our resort resort results for the fourth quarter and full year 2020, and look forward to the continued recovery of leisure travel throughout 2021.

With that Ashley can you. Please open up the call to take questions.

Yeah.

And at this time of unless you would like to ask the question that is star and one on your Touchtone phone.

With all of your question at any time by pressing the county.

Once again that as far into line.

Please limit yourself to one question and one follow up.

And we will take our first question from Joe Greff with Jpmorgan. Please go ahead.

Good morning, guys glad to hear your voice.

A question. My first question is on the the travel on leisure acquisition. When you kind of think about the investments this year and looking at.

The next year and beyond year two following the acquisition.

Mike how do you think of that sort of the incremental revenue and EBITDA growth debt P&L would contribute on a segment basis to the travel on membership segment basis.

Okay.

Good morning, Joe.

We're really really excited about this acquisition because more than anything it's strategically opens a number of doors for us and as Mike Just mentioned, we believe it'll be neutral to earnings this year and accretive next year.

Our plan as we move through this year is debt.

We've already launched.

Book GNL Dot com.

Online booking platform.

Really just start to leverage the brand, but but secondly, and more importantly is really the core of the acquisition was to begin to offer products to.

On a lower entry price point and for shorter duration.

With that we bought two travel clubs would that 60000 members and we expect to be launching new clubs that allow us to really move up and down the demographics scale, both age and economically and from that we will take those learnings and then start launching more subscription based clubs in the.

'twenty 'twenty two with that said I know the question was specifically about revenue and segment, that's our strategy and as that unfolds throughout this year. That's why we wanted to organize our investor day for the third quarter to really lay out in more detail the economics associated with that plan with six months of learning.

Under our belt.

Okay, Great and then I appreciate the of the the first quarter guidance.

Can you talk about.

Gross VOI sales targeted at $210 million to $220 million, how much of that is in the bank through the first.

55 days of the quarter and when you think about gross VOI sales and the <unk> how much of that is true.

Existing owners versus new.

And then lastly, with respect to what you have incorporated into your <unk> guidance, how much of the of another reserve release is baked into that $95 million to $110 million of EBITDA.

Okay, well, let me let me start on the VOI sales and then I'll hand over the the provision question to Mike is.

Just as you would traditionally look at the first quarter, what you tend to get Joe is debt.

About 50% of Euro of gross VOI sales come in the month of March.

And given the fact that.

January was was slower because California was closed which has knock on effects knock on effects of.

Both California, sorry, both Hawaii and Las Vegas.

January was slower than we expected when the year started we didn't take that the closure would last through the end of January and as as you look into the remainder of the score I think we I think we've already released on January.

Sorry, we released our December number but.

We would expect debt.

About 50% of our sales would be at the month of March of this year, given where we're seeing on.

Booking trends, we feel pretty good about the number.

As we're seeing definitely positive trends and overall bookings in arrivals to our resorts.

And Joe as it relates to new owner sales on the provision we would expect the new on our sales for the first quarter to be in the the low to mid twenties.

And the provision of our guidance that we put out there does not include or assume any additional benefit from the provision. We are very happy with the way the portfolio of provide performing as I mentioned delinquencies are actually down year over year so debt.

As a result of the great team of the jobs in the servicing the portfolio as well.

Mentioned higher underwriting standards as it relates to net origination so for the full year, we would expect the provision to be just south of that 19% range kind of what we saw on the third quarter, where we were at 18 eight but we are not assuming in our first quarter guidance any additional provision benefit.

Joe and let me just add back I didn't answer one of your questions about <unk>.

Three quarters of our sales will be to orders.

Thank you very much guys.

Yes, Thanks, Joe.

We will take our next question from Patrick Scholes with true the Securities. Please go ahead.

Hi, good morning, everyone.

Good morning, Patrick.

A couple of questions just concerning the name change and it sounds like a little bit of shift in direction here. When you talk about new new clubs.

Club products could you give us a little more granularly what exactly.

What that looked like what exactly is that.

Absolutely. So so let me just come back to your first comment about change of direction.

This is about expansion, it's not about a shift of core strategy that the.

We are as committed to ever to the VOI business working we're committed as ever to grow the the Wyndham name and the relationship with the Wyndham Hotel group, it's been our success for years and it will continue to be as we stay committed to that growth.

But we do see an opportunity in the leisure travel market in North America. It's it represents over 100 million households.

And.

Those people go on vacation and simply the type of products that we're offering it would be a lower entry price point.

Descriptions based price point somewhere in the 10 to $20 a month.

With the shorter duration.

You can think of many subscription models, whether they'd be peloton Netflix Costco just to name a few is.

They want to be part of something that's exclusive and unique.

And with the exclusive content that we now own related to travel on leisure youre going to be able to take the inspiration that that's created in the travel and leisure publishing side of the arm.

And activate that with fulfillment.

Through year subscription club again for a subscription based fee.

Exclusive content and.

<unk> unique value better value than you might be able to get on the open market. So.

That's the plan.

We've talked many times over the years about.

Our focus on Middle of America, we remain committed to that through our VOI brand.

This allows us to start.

Testing other demographics, both agent economics to.

To supply vacations to two of broader leisure market.

Okay.

Thank you.

Does this acquisition and those new.

The plans does that does that shift your focus at all from spending on.

Development for.

For timeshare and and.

Also are you out there still looking for perhaps some tuck.

Tuck in types of acquisitions on the on.

On the timeshare side.

This doesn't change at all of our perspective on vacation ownership. We believe that we can continue to grow that business as we always have we're committed to it as ever.

And from a development standpoint, if there is either an M&A or resort opportunity that we see that's out there we would absolutely.

Pursue it what I would what I would say related to that is as it relates to individual projects.

As.

The industry and we declined our VOI sales our balance sheet.

For just a bit more time with our existing inventory so.

We will definitely be constrained on our individual project spend because we want to we want to maintain a strong balance sheet, but to your tucking question, absolutely we would be out there looking.

I do want to take your question and just add to it on the subscription business side is that our acquisition of the technology platform of the era of nearly two years ago really laid the foundation for not only the panorama of travel solutions, but also these <unk>.

Travel and leisure subscription clubs, so as it relates to incremental capital investment there's nothing material that's required for us to go out and grow that business going forward.

Okay. Thank you very much I have a couple of other questions, but I'll hop back in queue. Thank you. Thank you Patrick.

Well take our next question from Brian Dobson with Jefferies. Please go ahead.

Hi, Good morning, I was wondering if you could provide just a little bit more color on areas of geographic strength or weakness that youre seeing within your portfolio and how you expect those to evolve over the next call it year.

As consumers start to travel more.

Absolutely Brian I appreciate the question and let me, let me start a little broader.

And then I will get into the specific geographies because the question out there today seems to be around what are you seeing with the consumer. So let me share just a few points of information that I think everyone will find interesting.

I'm going to the first talk about pacing the.

The booking pacing.

At our resorts if we were to look back at early January the first and second week of January our pacing rate was about 35% below what it was the same time in 2020.

It is now the third week of February and our pacing is flat to what it was in 2020 and I think thats a good demonstration of the momentum we're starting to see with the leisure traveler in the last 60 days.

Second point of reference is our on the books for the second half of 2021.

If you look at where we are today and the number of reservations that we have on the books for the second half of 2021 that is 99%.

Of what we of the <unk>.

Position, we were in 2019 at exactly the same point, so comparing second half 2021 to second half of 2019 on the books were at 99% of where we were in 2021.

So I think thats, a really good indication that the overall leisure demand has had a has momentum and b is starting to look like it did in 19, what we're watching for most closely is rate of cancellation that has been the elevated component and that typically will decline once.

Infections.

Stay at a reduced rate for.

A longer period of time and I'm, sorry for that long windup to your geographic question, but I think that context is important.

Where we're seeing the most geographic demand number one in a distant number one is the Carolinas beach location summertime drive to market.

We're seeing a lot of demand for the Carolinas.

Second is Arizona.

You would argue there again drive to destinations from our West coast market a lot of demand in Arizona.

About six months ago, We mentioned net Orlando was the laggard as far as reservations. Most people on the beach locations, then we talked about it being moving up to the number one destinations and now we're looking at the debt being up.

To prior year, so I would highlight the Carolinas, Arizona.

Central Florida as key demand destinations going forward.

Yeah. Thank you that's very helpful and then.

Within Panorama line, a lot of exciting stuff going on there.

Do you think you could give us some examples of the type of <unk> base business that youre hunting down for that for that unit.

It is an exciting time in that side of the business in and one that we've spoken about but.

The new brand is.

<unk> caught everyone's attention, but the team on the Panorama is really working with a wide variety of businesses.

I know when the leisure travel space, but the reality is is whether there are.

Corporations that are looking to develop programs for their employees or whether they are leisure companies that are looking to white label.

A travel benefit for their cloud, but they don't have the scale.

<unk>.

It is ranging from one one side being leisure companies all the way to corporations looking for loyalty.

I would say that when you looked at look at the development pipeline for those businesses.

It's grown.

On a very positive way since the last time, we've been on the call. So I'd expect as we roll through this year, we'll start rolling through a number of names that we've been able to contract but.

Very very encouraged by what we're seeing in the pipeline of future business for the Panorama travel solutions.

Thank you very much.

Thanks, Brian.

And we'll take our next question from.

Okay.

<unk> with Deutsche Bank. Please go ahead.

Hey, good morning, guys.

Hey, Chris.

Hey, good morning.

So.

As you think about how 2021 is going to unfold and there is a lot of variables with the consumer but in addition to getting more comfortable traveling again right we think.

A lot of them on your demographic or sitting in a better financial position with stock market gains in the savings and then we potentially have stimulus.

So the question is.

Have you guys thought about maybe how that plays out in terms of propensity to buy but also perhaps less for Pepsi to finance and kind of what some of the offsets might be there from a from a from a bigger picture perspective on how youre going to might change your marketing approach to that.

Sure. Let me let me, let me take a stab of that first and if Michael steady he he definitely can so.

<unk>.

We think it was in a very important shift that we made to our marketing standards from the pandemic.

The move to 640 FICO <unk>. We believe has has already shown signs of strength of our portfolio. We're pleased with how that has progressed and it's been the conversation that we've had with each of you over the last two years. So we think that is the right move.

We also know debt as we've discussed tour flow being down there is going to be a natural increase of tour flow not only for the owner base as we as we continue to see momentum in the owner of bookings but.

But the decisions are going to come as to the way the strength of the recovery occurs.

We will determine the speed of which we reopen some of our open marketing channels.

This is going to be a little bit of a transition year, because summer's summer will be here Memorial day, and we're going to start to need to make some of those summer time decisions in the next 60 days. So I think thats from the from a tactical of direction the decisions, we'll make over which type of.

Marketing programs will go with for the remainder of 2021, we want to grow back in a in a very margin rich environment and with the very strong portfolio of both of which I think were already proving out.

We do we are generally positive about the consumer I think if you look at savings rates.

With stimulus still coming I think people's ability to.

To make the make purchases and to get back on leisure travel is definitely going to be there, we don't see the consumers, especially.

Well we.

Our observation is that they are very liquid and.

I would I will pass this to Mike, but I think he would also say that generally our financing rates sit at.

No.

Cash.

Cash downs typically between 20%, 25% and neither of us would predict a very material change to that irrespective of where the consumer is yes I think.

When we think about the Penn State of finance to Mike's point, we would expect on finance sales to be in that.

At 25% to 25% cash down I think there is the potential of that as you noted with higher savings rates.

The actual number of contracts that do take financing could go down. So we're definitely watching that keep in mind that it also provides the opportunity for either of improvement in close rates because more people buy or larger transaction size. So it's a fair point, we definitely are excited about the the strength of the consumer we see it coming through loud and clear in terms of the current portfolio performance.

As we learn more as we continue to increase our sales levels, we'll adjust accordingly, but definitely watching the percentage of sales finance very closely.

Okay very helpful and then.

Second question is.

Mike I just heard your comments about.

You are you really more about growth not not change on your or shifting strategy and also the last question was about potential M&A or acquisitions, but.

As we think about there potentially being some distressed hotel inventory out there, especially in urban markets, where you guys are.

For a little bit more focus kind of pre COVID-19.

What's the appetite for potentially getting some some inventory and some of these urban markets. If the pricing is right.

Yes. This is Mike I'll take that one so as we've talked about we're going to be very disciplined as it relates to.

Our cash spend we do expect debt our inventory spending over the next several years, where average less than $200 million. So.

Michael noted previously in one of the interest of the questions. We do have sufficient inventory on our balance sheet the.

Curious for a while along with the what we have on the pipeline. So we'll be very selective if a great opportunity comes our way, we'll take advantage of it but I would say.

Generating free cash flow gain net leverage rate back down as is more important than one additional dot on the map, we're very happy with the resort locations. We have I think the results that we've driven in the second half of the year.

Point to the benefit of the geographic diversity, we have but I think right now inventory spending is pretty far down the list as it relates to.

We want to spend our dollars most of their just an incredibly of that comes the line and there is no rush either as we saw back in 2008 2009 days of inventory opportunities of Columbia available to us for several years now so it's not like if we don't jump on one and 2021, we won't have a chance in the future. So we'll be very disciplined in much the more focus on.

Net leverage rate in using cash and growing EBITDA to debt leverage ratio.

Okay very helpful guys. Thanks.

And we can go next to Stephen Grambling with Goldman Sachs. Please go ahead.

Hi, Thanks, I know you want to disclose more at the analyst day, but perhaps as a basic question on the travel and leisure acquisition on the travel on membership segment, how is that business similar or different kind of on online travel agent and could it become more of.

The OTI long term within some of the clubs you referenced as it related follow up is there any impact of think through from the travel and leisure brand acquisition on the VOI segment long term.

Hi.

So let me hit the the OTA.

Versus.

Non kitchen at all to get into the OTA business.

Debt the rental of nightly inventory is is a component debt.

We've been able to do as a byproduct of our VOI business and I review it as a byproduct of our travel leisure acquisition. If you look at the continuum of the way people travel.

The one side of the spectrum is is the way, we just mentioned which is heavy.

Oh and spend two to get the.

The nightly travel.

And then the other end of the spectrum is vacation ownership.

Which is which is where we specialize and we will continue the specialized we do think theres an opportunity in between.

To combine a few things that we think there is the macro trend around subscription number one and number two we think there is.

The overall trend that people want the travel with the name of that they can trust.

Debt they know that when they book their vacation, they're going to know what to expect on the other end of that vacation and when you combine.

The content and the relationships that travel leisure has through its publishing arm.

That don't necessarily have to be Wyndham combining those with.

Within the ultimate fulfillment of vacation, we think could be very attractive.

I had a discussion with the editor of travel on leisure and I was sharing with her that.

I was I was reading about reading one of her articles about great U S National parks, the visit and I kept looking for the book book the strip now and.

That's really what it is and being the owner of travel leisure its content and having that relationship with the Meredith group and ultimately travel and leisure publishing arm. It allows us to provide a product that is not simply on price, even though we think we're going to provide tremendous value, but also linking it with.

Tremendous content.

And with the trusted name debt that people are looking to travel with today.

And that sort of sits in the middle of the spectrum with with that subscription based model.

And then as it relates to your question on the impact on the life segment.

Obviously, you are still very high on the vacation ownership business do you expect to continue to drive growth. There I wouldn't say, we did the two net transaction in order to.

Improve on that segment, we think we've got plenty of upside there down the road there might be opportunities there, but I think as Michael mentioned in his comments. The primary reason for it was to start to.

Broaden our offerings to a wider group of the leisure travel.

Great. Thanks for all the color.

Thanks, David.

We can take our next question from <unk>.

Taken with credit Suisse. Please go ahead.

Hey, How's it going thanks for taking the question and not to belabor the topic, but I guess on the on the booking website <unk> dot com.

Yes I.

I guess it is the intention for it to be of B to C travel booking website for single use meaning.

I'm flipping through the P&L Instagram and then get of lead and bulk of trip that looks appealing.

And it could be anyone on that Instagram page. In this example, or is the intention to be more subscription oriented just trying to kind of close that loop number one then.

With the with the intention that the website of specifically for subscribers and then it also looks like you can get flights on here of rent cars hotels et cetera.

Bundle on saves so, but you described it not as an otas I'm just trying to close the loop on kind of like the intention who is it who is exactly it's for.

Yeah, sorry.

Right. So it's a great question.

It is an online booking platform.

For primarily single use.

The intention is that what we wanted to do was we wanted to get that website up and running and to begin.

Having transactions for the single use.

Ultimately the end objective is to.

That's just being one source of leads into what what would be in the ultimate subscription business.

Our intention is not to compete in the space. We've got an online booking platform, we're going to work with.

Number of different <unk>.

Providers and including all of the ones you mentioned, but that is a again of byproduct that will ultimately feed into.

On a more regular and recurring revenue stream, which is the subscription business, which will have.

Q4 2020 Wyndham Destinations Inc Earnings Call

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