Q2 2022 Hilton Grand Vacations Inc Earnings Call
[music].
Good morning, and welcome to the Hilton Grand Vacations second quarter 2022 earnings Conference call.
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I would now like to turn the call over to Mr. Mark Melnyk Senior Vice President of Investor Relations G&A and productivity. Please go ahead Sir.
Thank you operator, and welcome to the Hilton Grand Vacations second quarter 2022 earnings call.
As a reminder, our discussions this morning will include forward looking statements.
Results could differ materially from those indicated by these forward looking statements and these 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 see the risk factors section of our 10-Q or any other applicable SEC filings. We will 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-GAAP and GAAP financial measure.
<unk> discussed today in our earnings press release and on our website at investors HGV Dot com.
Our reported results for all periods reflect accounting rules under ASC 606, which we adopted in 2018 under ASC 606, we're required to defer certain revenues and expenses related to sales made in the period. When a project is under construction and then hold off on recognizing those revenues and expenses until the period when construction is completed.
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 for ease of comparability and to simplify our discussion today our comments on adjusted EBITDA in our real estate results will refer to results. Excluding the net impact of construction related deferrals and recognitions for all reporting periods.
Fleet accounting of our historical deferral and recognition activity can be found in excel format on the financial reporting section of our Investor Relations website.
In a moment Mark Wang 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 Mark's comments, our Chief Financial Officer, Dan Matthews, who will go through the financial details for the quarter, Mark and Dan will then make themselves available for your questions with that let me turn the call over to our president and CEO Mark.
Mark.
Good morning, everyone and welcome to our second quarter earnings call I'm Happy to report that we produced another set of strong results for the quarter with contract sales and margins well ahead of our pro forma combined 2019 numbers.
And EBITDA over 50% ahead of 2019.
Our performance was consistent in each month of the quarter, which highlights both the compelling nature of our new offerings and the hard work that the integration teams have done.
Our members and consumers remain very much in a travel mindset. Despite the risks posed by higher fuel prices and recent travel disruptions.
All these macroeconomic forces may create risk to consumer spending we continue to see high demand for vacation packages, particularly at our new resorts and recently rebranded Hilton vacation club properties.
Our close rates remain near the record levels, we saw in last quarter.
Underscoring the value proposition of vacation ownership.
We're deepening our relationship with Hilton with the addition of Hilton vacation club collection, allowing us to engage with a wider customer base of high quality Hilton honors members.
And we've strengthened our business with the integration of diamond, adding marketing scale product flexibility and portfolio diversification that will help us to serve the travel preferences of our guests in every environment importantly.
Importantly, these factors continue to support solid trends and forward indicators today, giving us confidence in our outlook throughout the rest of the year.
Before I provide highlights for the quarter, let me start with an update on our strategy and integration progress.
On our last call, we talked about our new <unk> membership program. We're excited about the increased level of access and new benefits, providing a streamlined way to engage our members.
This is an important step in our journey to evolve what it means to be an HCV member and provide an even greater value proposition through membership.
We're meeting the expectations of todays travelers through enhanced benefits simplicity omni channel engagement and focus on experiences.
And our strong <unk> sales performance confirm these offerings are resonating with our members and guests.
So today I won't expand on two important capabilities that support these strong results, our ultimate axis events platform and our virtual sales channel.
H C V. Ultimate access is a collection of premier experiences exclusively for Hilton Grand vacation members and guests.
Including a private concert series access to sporting events culinary experiences and more.
We believe these events deepen the relationship between our members and HEV Brad.
Because we've seen that engaging experiences inspire our members to create more memories build relationships and enhance the overall travel and hospitality experience we offer.
I'm really proud of how our teams have expanded on this events platform and this year, we're on track to deliver our 15% participation rate for members. We've offered just experience too.
The goal of achieving over 25% in the coming years and growing from there.
All properties are expected to participate in the program.
And we're conducting successful events in major cities to maintain our owners connection HCV, even when they're not traveling or staying in one of our properties.
We're also seeing a high correlation between member V P G and ultimate access participation.
As we expand we're collecting a significant amount of data that will allow us to further sharpen our ability to engage with more members.
Additionally.
We're already running successful test with prospects, who are Hilton honors members expanding on our universe of potential customers.
The other new capability, where we've made significant progress is in virtual sales.
Diversifying how we reach our customers are critical function.
Especially this week span on our suite of products and experiences.
It's become an integral part of how we engage with our members and prospects as a way to drive incremental sales outside of our traditional sales channels.
Great reengineering their approach across the marketing and sales process for example.
We now use AI to provide real time support to our agents drive consistency and adhere to our compliance standards.
We're thinking about this channel as both additive and supported by the strength of our sales centers and we expect to drive over 50 million of contract sales through our virtual channels. This year.
Turning to our rebranding we continue to make excellent progress the vast majority of our sales network has now been rebranded and it's selling HEV Max offering and we expect this work to be materially completed by the end of the third quarter, which is ahead of schedule.
Since our last call we completed the rebranding of nine more sale centers seven of which are in markets that are new to H T V.
On the property rebrand side, we added several additional properties did help the club collection and Scottsdale Lake Tahoe, and Virginia for each bringing our total property rebrand to eight this year.
And we're on track to deliver on our target of having one third of our legacy Diamond room keys rebranded by year end.
Along with rebranding our physical assets. We're also continuing to improve on the service standards at our resorts.
Ensuring we provide a high quality and consistent guest experience across our portfolio that are HGV members and guests expect from us.
We're also executing on our cost synergy capture.
Dan will get into more details, but we remain confident in our ability to realize the upsize of 150 million of cost synergies that we laid out on our last call.
So overall I'm very pleased with the progress of our integration.
Yeah.
Now, let me turn to our performance for the quarter contrary.
Contract sales were $617 million or 105% of 2019 pro forma combined sales.
First it's great to set a new milestone to move us past referencing 2019 as the prior peak.
But we're also pleased with the quality of the growth we saw this quarter we.
We had broad based improvements in tour flow, we covered pace across all segments and geographies led by the mainland region and new buyer demand.
And we maintain close rates within 60 basis points at a record close rates, we produced last quarter.
As I mentioned earlier, we saw consistency in our sales with a steady cadence of growth in each month of the quarter.
And I'm encouraged that our product continues to resonate with our tour guests despite negative macro economic news flow.
Turning to our demand indicators occupancy for the quarter was 83% versus 75% in the first quarter and at the highest levels since the end of 2019.
And another positive sign are returning to a more normal business cadence, we witnessed a very typical seasonal trend through Q2 with April stronger than May and June having the highest occupancy of the quarter.
Looking out to the rest of the year, our owner arrivals continue to show solid trends through the fall.
Our rental rivals are showing a similar trend with particular strength in the fourth quarter.
And in total room nights on the books for the rest of the year are on par with where we were in 2019.
We also continue to see exceptionally strong packaged sales demand, giving us visibility into our future new buyer tour flow.
In fact, despite converting some of our pipeline in Q2 to drive improvements in new buyer tours, we still grew our package pipeline for the quarter, which now up to a half a million packages.
So it is a great indicator that travel demand continues to be robust in the face of economic headwinds.
And it should support our investment efforts to drive additional new buyer growth in the second half of the year.
V P. G of nearly $4500 remained strong even as we saw some normalization of our owner new buyer mix.
New buyers drove growth in our member base, which is now nearly 508000, our HCV NOG was three 2% and Diamond added 1400 net new members in the quarter.
Those members fueled steady performance in our club and resort business, which alongside our financing business contributed nearly half of our EBITDA.
Our rental business had strong growth in the quarter fueled by higher travel volumes and continued strength in 80 ours.
The combination of those consistent segment results, along with our synergies and efficiency initiatives.
EBITDA of $277 million with margins ahead of last quarter and well ahead of 2019.
Yeah.
So overall, we had a solid quarter, we saw consistent improvement across the organization and a return to a more normal cadence of business.
The strength of our offering helped us to deliver great results and gives me confidence that we're well positioned to withstand macroeconomic noise.
We just added a new high quality inventory to HCV, we have a very strong new buyer pipeline, we've diversified our portfolio with the addition of 92 Diamond resorts and we have a loyal base of dedicated members of prepaid for their future vacations.
Last week marked the one year anniversary of closing of the acquisition.
I'm thrilled with the progress we've made to date and I'm also proud of how hard our teams are at work to get us here.
Looking forward, we're focused on making further progress wrapping Hilton vacation club collection, HED, Max and our ultimate access program all of which are strong catalysts for continued growth.
With that I'll turn it over to Dan to walk you through the numbers.
Thank you Mark and good morning, everyone before we start note that our reported results for this quarter included $10 million of sales deferrals impacting reported revenue related to pre opening sales of our Maui project.
We also recorded an associated 6 million of deferred direct expenses from those sales.
Resulting in a net deferral impact of $4 million.
In my prepared remarks, I will only refer to metrics, excluding the impact of deferrals, which more accurately reflects the cash flow dynamics of our financial performance during the period.
Yeah.
Let's review the results for the quarter.
Total revenue in the second quarter was $958 million, excluding the deferral as I mentioned, we saw strong sequential growth in our real estate and rental business as trends continued to improve from Q1 levels, while our recurring financing club businesses were in line with the first quarter's performance.
Q2 reported adjusted EBITDA of $277 million was 51% of our ahead of our 2019 pro forma combined level.
EBITDA margins of 29% or nearly 800 basis points better than pro forma 2019, and a record for the second quarter performance.
We continue to realize margin improvements from our synergy capture and efficiency initiatives elevated V P Gs and favorable buyer mix along with provision below our normalized rate.
For the quarter, our cost synergy run rate is $140 million versus 120 million reported last quarter and our target of an annualized $150 million of cost synergies.
We're really encouraged by the consistency of the results through the quarter, which underscores both the inherent synergies of the acquisition as well as the attractiveness of our new product offerings.
Now, let's talk through the segment detail.
Within real estate total contract sales were $617 million and have fully recovered 2019 pro forma combined levels as Mark noted.
Owners made up 70% of contract sales for the quarter compared to 73% for Q1, we.
We saw strong improvement in our new buyer tour flow and contract sales in the quarter with sequential growth from Q1 outpacing the growth that we saw in our own metrics.
We're encouraged by the early results from the investment in new buyer channels that I mentioned last quarter, and we expect continued improvement into the second half driving buyer mix toward our 60% owner sales target and embedding additional value into the enterprise through new buyer growth.
D. P. G was nearly 4500 for the quarter.
This is elevated from the post acquisition levels, we had in the second half of 2021. It was down from the historic record from Q1, owing largely to the mix shift towards new buyers.
We anticipate this trend will continue in the coming quarters as we see more results from our new buyer initiatives as Mark noted close rates held the record levels. We saw in Q1.
Cost of product was 19% of net VOI sales, which was just under our low to mid 20 target range.
Real estate sales and marketing expense of $213 million for the quarter was 35% of gross contract sales 300 basis points lower than the first quarter ratio.
Real estate profit was 187 million for the quarter with margins of 40% at the highest level we've ever produced in our real estate segment.
We continue to expect that margins in the second half of the year will normalize from these levels due to our investment in new buyer channel and anticipated higher mix of new buyer sales, which carry lower margins and owner sales.
In our financing business second quarter segment profit was $42 million with margins of 66%.
Combined gross receivables for the quarter were $2 4 billion or $1 7 billion net of it net.
Net of allowance and our interest income was $54 million.
Our originated portfolio weighted average interest rate was 13, 9%.
While all of our acquired portfolio had a weighted average interest rate of 15, 6% and includes an $11 million Contra revenue for the amortization of a noncash premium associated with the portfolio of receivables that we acquired from diamond during the acquisition.
Our allowance for bad debt was $753 million on that $2 4 billion receivable receivables balance.
Of these amounts the acquired diamond portfolio, which use their underwriting standards was $405 million on a portfolio of balance of $855 million.
Delinquencies remain at very low levels, reflecting continued strength of the consumer which has benefited from stimulus and other government programs rising home equity and ample access to credit, but consistent with our previous comments, we expect a normalization of credit trends into 2023.
Annualized default rate for our originated portfolios was $4 two 6%.
Our provision for bad debt was $40 million or 9% of owned contract sales.
This was up almost a full point from Q1's provision due to another quarter of seasoning being reflected in the diamond receivables portfolio and our related credit modeling.
But it remains lower than our target provision rate of the mid to high teens, owing to better than expected consumer performance portfolio amortization, lower bankruptcies and lower impairments than anticipated.
We're also still seeing a higher mix of full cash transactions, which lowers our provision for bad debt we continue.
Do you expect these trends to normalize and provision to begin working its way towards our mid to high teens target.
Yeah.
And our resort and club business, our consolidated member Count was 508000 looking at H C. These legacy business NOG was three 2% at the end of the quarter dime.
Diamond also added 1400 net new members during the quarter.
Revenue was 124 million for the quarter and segment profit was $87 million in the quarter with margins of 70%.
Turning to rental and ancillary revenues were $171 million in the quarter.
Rental revenues were up 25% from Q1's level.
And built upon the strong uptick we saw in the latter half of Q1 secondly.
Segment profit was $21 million with margins of 12% the.
The strong improvement in margins from the first quarter was due to lower seasonal expense loads combined with sell through of our new project inventory, which carries a headwind from developer maintenance fees.
Bridging the gap between segment adjusted EBITDA and total adjusted EBITDA Corporate G&A was 36 million license fees were $32 million in JV income was $4 million.
Our adjusted free cash flow in the quarter was 103 million, which included inventory spending of 71 million and excludes acquisition related costs of $37 million.
Our conversion rate of EBITDA to free cash flow was 37% for the quarter. This was below our target range due solely to the timing of the payment for the next phase of our <unk> project, along with the timing of repayments of our warehouse facility associated with the spring securitization.
Year to date, our EBITDA to cash flow conversion rate at 52% and we still feel confident with being well within our guidance of 50% to 60% for the year.
During the quarter, we repurchased nearly 2 million shares of our common stock at an average price of $43.14.
At June 30th our remaining purchase authorization was $417 million of the approved 500 million repurchase plan.
Turning to our outlook, we're maintaining our guidance for the year of $960 million to $990 million, which we raised last quarter.
Owing to the strong results we produced this quarter, we feel comfortable with the upper half of this range.
And as I mentioned, we expect conversion of adjusted EBITDA to free cash flow to fall well within the target range of 50% to 60%.
At June 30th our liquidity position consisted of 374 million of unrestricted cash and $824 million of availability under our revolving credit facility our debt balance at quarter end was comprised of corporate debt of $2 8 billion.
And a nonrecourse debt balance of $1 billion.
At quarter end, we had $874 million of remaining capacity on our warehouse facilities of which we had $242 million of notes available to securitize and another $225 million of mortgage notes, we anticipate being eligible following certain customary malls milestones such as first payment dealing and recording.
Turning to our credit metrics at the end of Q2, the company's total net leverage on a pro forma TTM basis was two one times not giving effect to anticipated synergies.
Including our anticipated synergies our leverage at two times on a pro forma TTM basis.
We will now turn the call over to the operator, and we look forward to your questions operator.
Thank you well now be conducting a question and answer session. If you'd like to ask a question today. Please press star one on your Touchtone phone to enter the queue.
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Thank you and our first question comes from the line of Patrick Shelf with Jewish Securities. Please proceed with your question.
Hi, good morning, everyone.
Good morning, Patrick.
Good morning.
I see now you actually did some share repurchases in the quarter did those continue into <unk>.
Yeah.
To touch base on capital allocation.
As you recall.
Focused historically on the organic growth and then secondarily on returning capital to shareholders and then obviously you're looking at M&A transactions that are materially accretive to our shareholders as a third leg of the stool so to speak so.
Through the end of the quarter, we did commit to $83 million in share repurchases cash going out the door actually turned translated into 78, just because of where the cash left.
Our bank accounts, but through July we did continue.
And we're right at about 120 million through July 31.
Okay.
And when you think about capital allocation going forward, we do see returning capital to shareholders via that share repurchase plan as the primary use of capital as of today. So I think last quarter, we talked about that $500 million being spread rather evenly across the two year period, which was 62 and a half quarters. So we clearly exceeded that in the <unk>.
First quarter of it being available to us and I would anticipate exceeding that Marc going forward as well.
Okay.
Thank you.
<unk> given some encouraging thoughts about the back half of the year anything you can speak to about how the first half of 2023 is trending at this point. Thank you.
Yeah.
First half of 'twenty three.
Yes.
That's right.
What I would say Patrick is look where we're watching the patient positioning and all of our key metrics really well.
You know I'd say.
Knights in positions on the books continue to look very strong.
Especially among our owners and one of the advantages we have in this sector is that we have a further sightline around compared to lodging around our owners booking outdated. They book on average 200 days out so that's a compare to 75 days out.
For typical rental so so we've got a really good sideline have been owners continue to book up very well.
I'd say on the recurring revenue side things are holding up very well now as far as $23. Our expectations as you know our club and management fees will be collected at the beginning of year like they were this year. So you.
You know our expectation set.
That will hold up very well you know I think in Dan's remarks, he mentioned delinquencies and defaults remained low on our portfolio. So that's good and we're seeing owners upgrade at record levels.
Especially with very strong interest in HCV Max work our expectations. It was we're going to have about 75000, new HCV Max members. This year in total.
That rollout has gone really well.
Bob.
New buyer continue to pick up we had a 45% increase in tour flow from Q1 to Q2 and the back half of the year looks better.
Regarding a than they are in the first half from a growth standpoint, so that's kind of that mix shift that we're looking at that's going to put some pressure on PPG.
And our margins but.
Look I think overall leisure travel looks really good and our mainland contract sales were 120% of where they were in 19.
The mainland business continues to look really strong we're just still waiting for the Japanese to come back in and you know where we were about 80% in APAC right now that are our expectations as you know hopefully by the middle of next year, we'll start seeing a more normal cadence with the Japanese so all in all feel good about.
You know where we're at.
Things are going.
Okay.
I'm all set.
Thank you. Our next question is from the line of France on tour with Barclays. Please proceed with your questions.
Hey, good morning, everybody and thanks for taking my question. So maybe just on the on the back of that we can dig in a little bit more on the V. P. G.
In the quarter and the outlook and.
Your comments were well were well understood. Your <unk> were down a tiny bit sequentially, a little bit year over year and I get the mix shift maybe what would be helpful is just.
To break out sort of close rate trends near term between new and repeat as well as between legacy H T V and diamond.
Yeah Brad.
So it actually <unk> for Q2, while sequentially were down they were still up 39% against 19 versus in.
In Q1, which was up 35% against 19, so seasonality created some of that that that pressure downward on.
<unk> so look.
We don't have a breakdown.
<unk> to go through to the legacy HCP and Diamond, but I would say.
Across the board.
Owners are upgrading at record paces at a record pace I mentioned HEV match I think has a.
A substantial.
Amount of.
<unk> to our members and so we're seeing a lot of trading up and at significant levels and so we're really really excited about what's going on there I think today's environment. This inflationary environment.
It is creating.
It's enhancing our accentuating our value proposition as people are hedging are the cost of their future vacations.
So I think today's environment is really.
Helping us in that regard.
As far as new buyers go we're really pleased with what we're seeing in on a new buyer side importantly, we've opened up a number of the markets to the Hilton.
Customer base, and we booked over 32000 packages to date from.
From Hilton customers going to the legacy.
Diamond locations, which are now being rebranded.
So all in all great PPG performance and a continued.
Continued improvement in sequential tour flow.
Okay.
Okay, great. Thanks, and if I was if I was to interpret that as well as your your reiteration of guidance for the back half of the year for the full year, yes. It does seem like you're baking in some mix shift I guess the question would be I guess do you think it's going to show up more in V. P geez, I'm going a little bit softer sequentially or.
Or is it going to show up more in the sales and marketing line as a percentage of gross contract sales.
Hey, Brandon.
Dan it's actually going to be a combination of both I mean, I see compression on the <unk> side due primarily to that mix and then with the mix.
New buyer tours are more costly so what we would expect as a compression in the margin in the back half of the year not material, but a couple of basis couple of hundred basis points potentially.
When you think about our guidance.
Came out at the beginning of the year with a midpoint of $925 million, we upped that to 90 $975 million at the midpoint and that's where we sit today. So it's really us taking into consideration the beat in Q1 and the beat in Q2 that kind of gets you to the midpoint of 960 to 90, 90, 975, and we feel as you heard.
In my prepared comments.
We feel there is some modest upside to that that gets us comfortable saying 975 to 90 90 in that ballpark, but just to walk you through our thought process there.
Super helpful. Thanks, So much guys.
Our next question is from the line of David Katz with Jefferies. Please proceed with your questions.
Hi morning, Thanks for taking my question and I apologize.
Apologize upfront for doubling back on some of the stuff you just talked about but we've sort of.
It had it come up.
A bunch this morning about looking into the back half of the year.
And it is entirely a function of mix shift and margin.
As you know.
That is sort of a driver of a beat and then keeping in the back half of the year.
Flattish Theres nothing.
And sort of loan loss.
Any other sort of one off items in there.
Just to make sure the.
She was really beaten.
No Hey, look 11 dead horse no problem outside of the V. P. G on the real estate side. The other thing that you that you do see than what we've anticipated and we've we've tried to reiterate this multiple times, but from a loan loss provision we are well below historical averages for legacy HCV, let alone the combined entity, we're sub 10.
Present on that provision level, and we expect to be at some point in the mid teens to high teens, and we expect that to ramp probably ramp over the next.
Now between 12, and 18 months in that timeframe.
Part of that is driven by pure accounting reasons right for instance, we acquired Diamond's portfolio at the time of that opening balance sheet, we put a large reserve against those existing loans. So we're not that provision does not hit our P&L today as we continue to sell Hilton vacation club and legacy Diamond product, obviously that will start to impact.
The provision and then in addition to that what we have seen over the last I want to say, it's been three quarters now has a lower propensity to borrow from in particular, our new buyers and to a certain extent owners, we feel that that's driven by a lot of the government stimulus that has been ramping down from COVID-19. So as that continues.
As to ramp down we believe that propensity to borrow will increase but at the lower levels. You, obviously have lower loans, which also lower your provision as a percent of owned contract sales. So those two dynamics will come into the back half of the year to from a financing perspective.
But that combined with real estate is really what it is so effectively David the same story, we've been saying for the last I want to say three quarters.
Got it.
<unk>.
Okay I think that's it for me I may jump back in the queue. Thanks.
Thanks.
Our next question is from the line of Ben Chaiken with Credit Suisse. Please proceed with your question.
Okay.
Hey, Thanks for taking my question I guess for the you you kind of get some some color on the 30 to 32000 packages for us.
So the Hilton honors members.
But I guess, just stepping back a little bit.
The sales centers you have rebranded can you talk about some of the early results of selling E. T V. Max like are you are you seeing that the product.
Also the sales centers resonate with the diamond customers and I'm kind of talking about a diamond customer upgrading into the HCV Max portfolio, then I have one or two others.
Yeah. So.
I'd say that we're seeing very positive results across the board from sales, both mostly in HCV legacy and diamond and legacy or those that have been converted over.
And so one of the things, although Ben so we have not.
<unk> moved on doing a lot of cross selling yet and that's something we'll be doing down the road.
You know obviously, we've had a significant amount of change for the organization and propping all of this up and getting Max started up and and all the technology and so we've kept our teams focused.
On what they've been doing best historically and.
Both data and trust are selling very well and we're seeing a little bit of cross selling and where we are allowing some of that cross selling that happen, we're seeing very strong.
Desire to upgrade into deeded product.
On the other side, we're seeing some really strong day.
A man on the trust product from our in our HCV legacy sales centers, but we're only testing that in a few areas.
Ultimately.
Think about it we went we moved everything into a single currency earlier in the year before we launched Mac and so our points work great across both deed and and the trust product right now so all in all I think the product is resonating with each of our guest very well.
And I think as we get farther out into 'twenty three 'twenty four when we allow more cross selling that to occur we think that'll be another potential tailwind for us.
Got you and then on the just maybe a little bit hard to pinpoint I think you mentioned 32000 packages being sold to Hilton honors members.
Primarily to legacy Diamond product is there any way to think about just help us maybe like bracket the timeframe that's likely to be used over and then how to think about I guess like package conversion.
I don't know if that.
It's possible but.
Sure sure, yes, so anyway. So we saw it just on the on.
On the package side, the 32000 were into eight markets right.
So those are markets that have been rebranded and typically the travel time after we sell a packages around six months and.
So it's still very early on so we haven't seen that many of those customers coming through the door yet.
But we're very confident that the sales centers had been upgraded the technology has been upgraded and is pretty much identical to what youre seeing at HCV.
Legacy sales centers.
And the product.
It's been rebranded as <unk>.
Bit of a step down in some cases, but still really meets that Hilton vacation club quality that we are that.
That we put out there so our expectations are that our sales are going to go well to those customers.
And.
As it relates to the pipeline in our package pipeline now sits at a record amount of 500000.
Activations continue to pick up.
I mentioned, we saw new buyer tour flow was up 45% in Q2 versus Q1 and all indications from what we can see is that momentum continues to pick up.
Throughout the back half of the year, which is as part of that mix shift that we have.
We've talked about earlier today.
Got you and then one very quick one I think you mentioned new owners were.
70% of the mix versus seven three and <unk> just to be clear is that sales dollars or is that transactions.
Yes.
Sales dollars. So if you think about.
Where we are HED legacy is.
Historically used to run around 50, 50, and it was running more around 60 40 before the pandemic.
That has come back pretty well, we're still running about 50.
$55 35, its legacy Diamond when we acquired Diamond Theyre running about 80 20.
And the opportunity there is again, there's 32000 packages and as we sell additional packages every month and as we start propping up new marketing opportunities to drive new new customers, New Hilton type customers through those sales centers that mix.
We'll shift and our goal is to get back to 60 40 across the company, but pleased with the NOG, we had an HCV legacy we're back up to three 2%.
And net we gained about 1400.
Diamond.
<unk> thousand 500, new members through the Diamond legacy sales centers.
And then have you been just for clarification I think you said, 70% new buyers, it's actually 70% owners just to make sure.
Got it thank you very much.
Thank you.
And now I'll turn the call back over to Mr. Mark Wang for any closing remarks, Mr. Wang.
Alright, well thanks, everyone for joining us today I want to give a special thanks to our team members for going above and beyond to meet our owners' needs by delivering outstanding vacation experiences and I also want to thank our owners, who make vacation a priority and they entrust us and.
Allowing us to create memorable experiences for themselves and their families. So have a great day.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.