Q1 2025 Travel + Leisure Co Earnings Call
Speaker Change: Greetings, and welcome to the Travel Leader Q1 2025 earnings call. At this time, all participants are listening only mode. If anyone would require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation.
Speaker Change: He may be placed in the question queued any time by pressing star one under telephone keypad. In the meantime we ask you please ask one question, one follow up, then return to the queue. As a reminder this conference is being recorded.
Speaker Change: It's time for my pleasure to travel over to Mike Hug, Chief Financial Officer. Please go ahead, Mike.
Thank you, Kevin. Good morning, everyone.
Speaker Change: Before we begin, we would like to remind you that our discussions today will include four looking statements.
Speaker Change: Actual results to different material from those indicated in a board looking statements and a board looking statements made today are effective only as of today.
Speaker Change: We undertake no obligation to publicly update or revise these statements.
Speaker Change: The factors that could cause actual results to differ are discussed in RICT guidelines and are arranged for at least accompanying this earnings call.
Speaker Change: And you can find a reconciliation of a non-GAAP financial measures discussed in today's call in the Orange Press release available on our website at travelneisureco.com slash investors.
Speaker Change: This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of our first quarter results and outlook and then I will provide greater detail in the quarter, our balance sheet and outlook for the rest of the year.
Speaker Change: Following our prepared remarks, we will open up the call for questions. With that, please to turn the call over to Michael Brown.
Speaker Change: Good morning, and thank you for joining our first quarter earnings call. I look forward to expanding on the first strong first quarter results you saw in our press release earlier today, as well as handing the call over to Mike Hug for a review of our financial performance.
Speaker Change: This will be Mike's last earnings call, and I would like to thank Mike for his 26 years with our company, and his last seven as the first and only Travel & Leisure CFO .
Speaker Change: During his leadership, Mike Asena's grow revenues from $500 million to $4 billion.
Speaker Change: has brought the company public, navigated us through the great financial crisis in COVID, and has been integral and ensuring we execute against our operational plans and our capital returns strategy with incredible consistency. Thank you very much.
Thank you, Mike.
Speaker Change: In quarter one, we delivered $200 and $2 million of adjusted EBITDA at the high end of our guidance range. Our vacation ownership business, once again, fueled our success, driven by VPG's well above $3,000.
Speaker Change: Consolidated Adjusted EBITDA, margins grew from 21% in the prior year to 22%.
Speaker Change: We also continue to return capital to shareholders through dividends and share repurchases.
Speaker Change: Our dividend increased 12% to 56 cents per share, and share repurchases were $70 million, or 1.3 million shares in Q1.
Speaker Change: Before I address the question, we're asked most often, which is how is the consumer? Let me first take a moment to revisit who are 800,000 plus owners actually are.
Speaker Change: On average, they're 59 years old with a household income in excess of $110,000 and a tenure of about 17 years.
Speaker Change: 80% have fully paid off their ownership and are newest buyers, 65% of whom are Gen X, Millennials and Gen Z, reflect the appeal of our product across generations.
In short, our consumer KPIs perform very well in Q1.
Speaker Change: Consistent with the broad commentary in the marketplace, we recognize there is incrementally more uncertainty in the macro outlook and the consumer sentiment has fallen progressively in 2025.
Speaker Change: Our perspective is that we will continue to monitor the available data. However, we have not seen meaningful changes in our company's specific KPIs.
Speaker Change: Our owners showed continued demand for vacation ownership in the first quarter.
Speaker Change: This was most clearly reflected in our best daily measure, volume per guest, or VBG. Our VBG was $3,212, up from 2024 and notably above $3,000.
Speaker Change: We also measure consumer demand through our owner's desire to visit our properties as shown in resort bookings.
Speaker Change: We saw an acceleration of resort bookings as the quarter progressed.
Speaker Change: Michael speak to a third important KPI performance of the portfolio during his overview.
Speaker Change: Our performance in Q1 is a great reminder of the characteristics of the timeshare business that are often overlooked starting with the reality that our owners continue to prioritize their travel and generally do not view vacations as discretionary.
Speaker Change: Travel patterns do tend to shift with economic conditions and in that regard we monitor drive to versus fly to arrival percentages as well as booking windows.
Speaker Change: There's been no change in the percent of owners driving to our resorts and we have only seen a modest reduction in our booking window.
Speaker Change: Compared to the same time last year, the booking window is decreased from 130 to 116 days.
Speaker Change: We see strong build for the upcoming months and our second quarter reservations on the books are in line with expectations.
Speaker Change: When you combine VPGs, forward bookings, and travel trends, we currently see our consumer as quite resilient.
Speaker Change: We also observe that our investments in technology are beginning to yield higher owner status
Speaker Change: The Club Wyndham app has now been downloaded by nearly 100,000 owners or approximately 20% of our Club Wyndham owner base.
This is up from 40,000 downloads when we last report it.
Speaker Change: As I mentioned in our last call, we will deploy a similar app to our 200,000 plus world mark owners later this year.
Speaker Change: Additionally, our Resort Operations team have deployed texting capabilities, increasing on-site satisfaction scores to new highs in Q1.
Speaker Change: All of this is to say, demand with solid and Q1 in our satisfaction rates are increasing.
Speaker Change: Exchange transactions were down in the quarter. However, the business had its strongest exchange year-over-year transaction performance toward the end of the quarter.
Speaker Change: Our Travel Club business showed transaction growth of 3% in the quarter, with an expectation of acceleration in Q2, highlighting an opportunity to support the Travel Membership segment.
Speaker Change: Q1 is typically the strongest transaction quarter, therefore transaction trends in margin will remain in our focus in Q2.
Speaker Change: Our views shrink more than offset weakness in this segment and we expect a similar dynamic throughout 2025. I'll be with different orders of magnitudes.
Speaker Change: Lastly, let me touch on our brand strategy. Starting with our partnership with Wynnum Hotels, Blue Thread Performance and Q1 contributed 7% of new owner tours, with a VPG more than 20% higher than other new owner channels.
Speaker Change: Our relationship with the core in Asia Pacific has been performing for a year with good success.
Speaker Change: Sports Illustrated remains on pace to start sales in 2025, and we have dedicated significant resources to reinvigorate our sales and expansion efforts from Margaritaville.
Speaker Change: We announced a new Margaritaville Resort in Orlando that was open in 2027, placing a vacation ownership resort next to the successful 265-room Margaritaville Hotel and 900 Margaritaville cottages on the doorsteps of Disney.
Speaker Change: We have nearly completed an organizational re-alignment to marry strategy, economic objectives and people around our brands. Although it is a subtle change, it is one that ensures we are laser focused on the successful execution of these brands.
Speaker Change: As we look to Q2, on the back of the strength from Q1, we are projecting $250 million of adjusted EBITDA with a range of 5 million on either side, and are reiterating our full year adjusted
Speaker Change: Michael provide more details on this outlook and with that let me hand the call over to Mike.
Speaker Change: Thanks Michael, and also thanks to everyone for joining us this morning.
Michael Brown: All of my comments will refer to comparisons to the same period of the prior year, unless specifically stated.
Michael Brown: For the March quarter, we reported adjusted EBITDA of $202 million and adjusted diluted earnings per share of $1.11.
Increases of 6%, and 14% respectively.
Michael Brown: Breaking this down into more detail for our two business units.
Michael Brown: Vacation R-Ship reports segment revenue of $755 million, an increase of 4%, while adjusted the EBITDA increased 18% to $159.00.
Michael Brown: VPGs continue to remain strong, coming in at the higher end of a range.
Michael Brown: Tour of Flow was down 1% for the quarter, but we did see a year of a year of tour growth in March, which we expect will continue in the second quarter and the remainder of the year.
Michael Brown: As it relates to the law portfolio, during the quarter, the improvement in portfolio delinquencies we usually see from December to March did not occur.
Michael Brown: With this in mind, our current failure even to guidance, which remains unchanged, reflects a provision rate of 21%, which assumes the lengthy stay at current LVAD levels compared to historical trends.
Michael Brown: Revenue in our travel and membership segment was $189, down 7%, and just the EBITDA of $68 million for this segment was down 9%, driven by a 13% decline in exchange transactions.
Michael Brown: While travel club transactions were up year over year, the growth in these transactions are not yet sufficient to cover the drop and exchange propensity.
Michael Brown: Now let me provide some more detail about expectations for the second quarter in full year.
Michael Brown: For the second quarter, overall, we expected just at the EBITDA in the range of $245 to $255 million.
Michael Brown: In vacation our ship, we expect 2nd Corridor Grossvale I sales at 620 to 640 million dollars and BPGs of $3,050 to $3,150.
Michael Brown: As Michael mentioned, for the full year we are reiterating our guidance range of $955 to $985 for just a diva with a range for the travel membership segment moving to flat to down 2%.
Michael Brown: Moving to cash flow in our bounce sheet, we generated $121 million of operating cash flow and $152 million of adjusted free cash flow for the quarter.
Michael Brown: As we previously said, we expect our adjusted EBITDA to free cashflow conversion to be in excess of 50% this year.
Michael Brown: On the balance sheet, we continue to have consistent access to the capital markets and close our first ABS transaction of the year.
Michael Brown: The $350 million transaction had terms that were identical to our last transaction in 2024.
Michael Brown: But an advantage rate of 98% and an interest rate of 5.2%
Michael Brown: We also renewed our 600-million-dollar ABS Conduct Facility in April , pushing the maturity date to August of 2027.
Michael Brown: Our leverage ratio in the first quarter was 3.3 times. Consistent with prior years, we expect our leverage rate to increase the next two quarters and then decline in the fourth quarter in in the year below 3.4 times.
Michael Brown: With the balance sheet in good shape, our capital allocation is focused on growing the business and returning capital as shareholders.
Michael Brown: As Michael mentioned, in March, we increased our dividend to 56 cents per share for a total of $41 million in the first quarter.
Michael Brown: This David in, combined with our sharey purchases throughout the quarter, resulted in $111 million, we turned to shareholders through the first three months of the year.
Michael Brown: Before opening up the launch for questions, I would like to thank the entire team at Travel & Leisure for doing another great quarter, which once again is this great momentum heading into the busy summer months ahead.
Speaker Change: With that, Kevin, can you please over the call to take questions?
Speaker Change: Certainly, without becoming a question and answer session, if you'd like to be placed into question Q, please press star one on your telephone keypad, and as a reminder, please ask one question, one follow up, then return to the Q. If you'd like to remove your question from the Q, please press star two.
Speaker Change: Our first question today is coming from David Katz from Jeffries, you're right, is that live.
David Katz: Can you talk about what you've seen in April ? And then talk about T&M. We'd love to try and figure out where the solid core is, you know, for a pressure of business. Those two things, please thanks.
David Katz: Good morning, David. Let me let me touch on T&M and um...
David Katz: Vacation ownership, and then I'll hand it over to Mike just to see what he's seeing enabled as it relates to the portfolio. The Vacation ownership business continues to perform...
David Katz: Very well in the month of April . There's been no signs of that uncertainty that we're all failing at the moment affecting our KPIs as it relates to the business.
We...
David Katz: Just finished as you're well aware the Easter weekend which is the peak of the month and it was a very good weekend for us that reinforce that our consumer remains committed to travel and
David Katz: Performing very well as it relates to the DPGs and overall tour flow in the Travel and Membership
David Katz: We've mentioned on multiple calls that consolidation is continued to drive from external to internal exchange. We anticipate that migration does continue.
David Katz: But there does come a flaw that we are trying to estimate what I would say is...
Mike Hug: To release the portfolio, let me hand that over to Mike in April .
Speaker Change: Thanks, Michael, and good morning, David. As a way to portfolio, as I mentioned in my comments, we did see increased the linkages at the end of March compared to what we had expected when we had our last call back in February . However, the good news is in April , we are seeing improvement in collections. Keep in mind that...
Speaker Change: In order to book a reservation, our owners have to be current on both their loan and their maintenance fees, so it serves as a great collection tool, so happy with what we're starting to see in April , but felt it was prudent to go ahead and take the provision in our full year guidance up to 21% based on the LVL levels we saw at the end of March, and then we'll see obviously as bookings continue in the rest of the quarter kind of how it shakes out as far as where we stand at the end of June , but April's off to good start from a collection standpoint on the portfolio.
Thank you.
Sure, thank you.
Speaker Change: Thank you. Next question is coming from Patrick Scholes from Truma Securities, Your Line of Now Live.
Patrick Scholls: Great, good morning. Thank you. Mike, congratulations. I wish you well on your retirement and future travels and endeavors.
Thank you, Patrick.
Speaker Change: Great. Let's move on to some questions here. You know, it sounds like your core legacy owners are especially resilient, something, you know, we've seen
Speaker Change: in past economic downturns. Curious, if you have any visibility or anything you can share with us, how your summer rental business for non-owners.
Speaker Change: If you have anything you can share how that is looking, thank you.
Mike Hug: Let me try to wrap two things in one here, Patrick. First of all, some are demand through our rental program.
Mike Hug: Remains consistent with what we would expect at this time of the year. There's no...
Noticeable movie, they're up or down summer rentals.
are very solid and everyone's aware. [inaudible]
Mike Hug: Q2 and Q3 are the peak seasons for us, not only for overall volumes, but also...
Mike Hug: New Water Mix as it relates to owner demand that we didn't want to point out.
Mike Hug: referencing also back to David's question is, are forward bookings in April look to be extremely solid for the summertime? So again, it's a good projection. It's why we added the booking window of 116 days. That gives you really a...
Mike Hug: A four-month view out of how booking demand is, and it's right where we expected it to be. So overall the summer seems to be shaping up in the way we had hoped for, which gives us confidence in our Q2 outlook.
Okay, thank you, and then… [inaudible]
Shifting gears a bit here, you know, as far as-
You're, it implies and you're one key result you had.
Better Closing Rates than, I guess, the Street Expected.
Speaker Change: What was the mechs or trends in the mechs of closing?
to existing owners.
Speaker Change: vs. new buyers. You might imply that you're selling more upgrades and is that your expectation going forward to sell more upgrades, which typically have higher?
Margin Stenson, New Honours. Thank you.
Speaker Change: There's a few details in your question, Patrick, that I want to encompass first of all in the more upgrades comment.
Speaker Change: If you look at our new owner, Mixing Q1, what happened this year? It returned to our historical levels. What we saw in 23 and 22 for Q1 percentage of sales being new owners.
Speaker Change: So that was very comforting for us that our mix was right back where we've traditionally seen it.
Speaker Change: In historical years, last year, if you remember, was it anomaly where we were over 35% because...
Speaker Change: The investments we put in in 22 and 23 to really reopen our marketing channels saw a lot of tour flow come through and to one of last year we generated new owners.
Speaker Change: Which led to what always happened after the summer as we evaluated all of those channels. We pulled back on some eliminated some and reinvested in others. So as we start this year at the New Order Mix.
Speaker Change: We're very comfortable where that is, and we'd expect that to grow as we move into the summer time. As it relates to individual closing percentages, you've...
Speaker Change: You've read the room very well as it relates to close rates. Our owner business had...
Speaker Change: A Stronger Close Rates Year-on-Year. And I think that makes a lot of sense as uncertainty or questions arise around travel, owners see the value of their ownership.
People are vacationing for... [inaudible]
Speaker Change: Extremely high value, and there's no reason for them to defer, and they see the value even more when there's uncertainty ahead. So our owner of close rates were...
Speaker Change: A tad up and Q1 and I think equally on the new one or side.
Speaker Change: People that haven't enjoyed a decade's worth of tremendous value are a little more hesitant to make the decisions and our new aren't close rate was slightly down sort of the similar to how we were slightly up in the owner.
Speaker Change: But our long-term outlook is, as it always is, we want to be at a 35 to 40% in New Orleans mix over time, and it doesn't need to hit it every single quarter, but as we look through a year and three year cadence, we want to be in that 35 to 40% range for new owners.
Okay, thank you. I'm all set.
Speaker Change: Thank you. Next question is coming from Dany Asad, from Bank of America. Your line is now live.
Danny Assad: Hi. Good morning, everybody. Maybe one more question on guidance. So if we maintain...
Full Your Adjusted.
Speaker Change: David Dove, but we're lowering travel and membership. Does that mean we're raising the O.I. segment for the year? And maybe can you just help us walk us through some of the offsets to the lower TNM and the higher provision? What are we raising on the other side? We're raising the O.I. segment for the year. We're raising the O.I. segment for the year.
Yeah, good morning, Dan. It's my great question.
Mike Hug: Really, the lowering of the TNM guidance was really just the shortfall we had in the first quarter, which obviously was covered by over performance on the vacation ownership side. So the overall take down of TNM doesn't really change our expectation for the last three quarters of the year. It's more just the...
Mike Hug: First quarter flow through, if you will, which once again was covered as we came in about the high end of our midpoint.
Mike Hug: As it relates to the provision, the 21% provision rate that I talked about in my script.
The Quates of about 15 or $16 million in EBITDA.
Mike Hug: If that were to come only from the BPG's, the strong BPG's, we're on this.
Best School Repair, $50.00 B.T.G. Lift.
Mike Hug: But also keep in mind that we'll look across the entire organization to make sure that we do the things that we need to do to control our cost to be able to cover that. The good thing about identifying that at this point in the years, we've got seven months less. So a lot of time to obviously drive the strong BPGs, but just important to make sure the organization's focused on covering that. So, uh...
Mike Hug: I think it's just once again rolling through the first core on TNM and then identifying that higher provision early and making sure we, as I mentioned, drive EPGs and control our cost to get to the range that we have out there that as you mentioned, we help for the year.
Awesome. Thank you, thank you very much. And then…
Speaker Change: The back half of the year has, you know, a tour flow acceleration that's implied here. He maybe just help us walk us through the drivers of that. Like how do we get from, you know, the run rate of, let's say, the, you know, 4% tour flow growth in the second quarter to, you know, maybe well, looks like probably a high signal to just tour flow growth. Like what are we going to, how do we get there? [inaudible]
Patrick Scholls: Well, I'll circle back around to what I shared with Patrick in the last question as it relates to the cadence over the last three to four years on tour flow. We were downing Q1 simply
Patrick Scholls: We were coming off a really tough comp and Q1 of last year where we had benefited from a two years of marketing buildup that
Patrick Scholls: Combinated in the first half of 2024. And if you remember, our tour flow percentage growth came down as the year progresses and we communicated that.
Patrick Scholls: That was really a continued fine tuning of which marketing programs we thought were sustainable for the long haul.
Patrick Scholls: So, there's a combination of easier concepts we move through the year and also some new partnerships and new marketing channels that we started in 24 that will start to play through and we get our 4-year run rate in 2025. So, it's a combination of those two items that allow us to have confidence that our tour flow will move up to that sort of mid-single digit range.
Thank you very much.
Sure, thank you.
Speaker Change: Thank you. This question today is coming from Chris Woronka from Deutsche Bank, Dubai. It was not live.
Chris Warrenco: A good morning guys and Mike really appreciate all the interactions and perspectives over the years so all the best to you in retirement.
Chris Warrenco: Yeah, we did have a couple questions. I guess first on the, you know, I'm taking up the provision, you guys have already covered on the graph in there, but any more color to add, I'm just aware that, you know, it's light up thick, you mentioned, you mentioned better collections, but, but, you know, the uptake you did see in March is already way to...
Chris Warrenco: You know, break that down a little further, give us some color on where that came from, what type of customer was, is it the customer you would expect to see the faulting or something else?
Speaker Change: Yes, so really it was a, it didn't just turn marches kind of throughout the quarter, we saw kind of higher level of the lengthensies and obviously ended up the quarter at a higher level than we expected. It's really coming from all channels, I wouldn't say it's, you know, there's one particular...
Speaker Change: Channel, we can point her one particular question. We can point to, obviously, that the lower back those are impacted a little bit more than the higher back those when it comes to...
Speaker Change: The ability to pay, but overall it's kind of across the board.
Speaker Change: Keep in mind, we're talking about, as I mentioned, a number that's $15 or $16 million, as far as the Inquimal Provision soap.
Speaker Change: Overall, I think we're pretty happy with where the portfolios coming in, compared to...
Speaker Change: Maybe where some people thought it might. And I would also point out that we were able to execute the ABS transaction in March, like we always do. Great terms there.
Speaker Change: You know, think about the note holders that are buying into that transaction, basically they're buying into, you know, a portfolio of loans. So, to me, that's always a good re-information that others believe in the quality of our portfolio as well. So, look, it's 10-year lost curves that we use.
Speaker Change: We've seen some movement across all the bands but overall pretty happy with our chat and hopefully the improvements we're seeing in April will continue through the quarter and throughout the year as people book their vacations.
Mike Hug: Okay, fair enough, thanks Mike, and in the follow-up, appreciate the incremental data point on the booking window.
Mike Hug: It still sounds pretty healthy, but the question would be, yeah, that kind of takes us, I guess, on average into...
Mike Hug: to make guidance and when we typically start seeing bookings for Q4 command, is there any seasonality to the booking of the tour package in that quarter? Or how should we maybe think about what's left and doing Q4? Thanks.
Mike Hug: So the average is 116, which means we do have the tail that's well beyond that and into the fourth quarter.
Mike Hug: And although we say that the summer bookings is at our expectation, we do have a look and if there's anything showing up with our bookings into Q4 granted, they're fewer and they're further out, but...
Mike Hug: You can already get early trend lines into Q4 now to see if there's anything any anomalies coming up. And again, there's nothing really and it's the point of a lot of our commentaries.
Mike Hug: As you'd expect with the uncertainty that's out there you would expect our business to have tweaks up and down across the enterprise and that's exactly what we tried to communicate today knowing that as we've had some some metrics come in a bit behind where we expected.
Q1
Mike Hug: Q1 had areas that again covered those shortfalls and even exceeded them but right now there's nothing in Q4 that gives us any concern.
The other thing I'd point about.
Mike Hug: The heaviest newer travels as a percentage so I think when we think about
Mike Hug: Competence in Q4, as we saw in Q1, we believe our owners are going to travel. They see the value, they've paid for the product in 80% of cases. So I think that's the other part about Q4. It's a less streamlined on new owners and more streamlined on those resilient owners that we have. Thank you very much.
Okay, super helpful. Thanks, guys.
Sure. Thank you.
Mike Hug: Thank you. Next question today is coming from Lizzie Dove from Goldman Sachs Asset Management. Your line is now live.
Lizzie Dove: Hi there, thanks for taking the question. I guess first one, there's been a lot of headlines about, you know, slowdown in international tourism into the US, some, you know, boycotts of the US, long those lines. I'm curious just
Good morning, or good afternoon to the... The...
The makeup of our owner base is…
Lizzie Dove: Or our revenues about 90% North America and pretty much all in the United States. We do have...
Nearing 10% that's in the Asia-Pacific region. So
Lizzie Dove: When you look at both sales and bookings, we're not seeing any impact as it relates to the international travel impact.
Lizzie Dove: We do have a good number of resorts in Canada and we are seeing a bit more loyalty to the Canadian resorts from our Canadian members.
Lizzie Dove: which is very consistent with, I think, what everyone's seeing broadly. We have no exposure really to Europe and Minimal Resorts in Mexico.
Lizzie Dove: So all that's to say that, no, it's the international commentary that's out there today is not affecting our business as the Asia Pacific more specifically tends to stay in travel within their region, primarily Australia, Thailand and New Zealand.
Speaker Change: Got it, that's helpful. And then I guess when we're in this kind of choppy or more uncertain macro environment, is there any change to how you think about capital allocation, you know, obviously you've been pretty consistent with share repurchases, but I'm curious like whether that changes in this kind of environment.
Thank you for the question.
Mike Hug: You know, I think we reiterated both our RE and our pre cash flow conversion being over 50% of me, but as we sit here today, I think we're
Speaker Change: Confident our business, we're confident on cash flow, obviously we executed the ABS transaction.
Speaker Change: We extended the maturity on the ABS conduit to August of 27, so I think everything we did in the quarter of April , really.
Speaker Change: Set us up to continue to be consistent with our capital allocation. Obviously, we increase the dividend and mention that we'll recommend that same level 56 exists for share. And then the sharey purchases of 70 million in the first quarter were very consistent with what we've done on it. And then the sharey purchases of 70 million in the first quarter were very consistent with what we've done on it.
Unknown Executive, Michael Brown
Speaker Change: As needing to Roy make any significant changes, that relates to capital allocation.
Got it. Thank you. Sure. Thank you.
Speaker Change: Thank you. As a reminder, that's all one to be placed in the question queue. Our next question is coming from Ben Chaiken, from the Zero Security, if you're lying, it's our life.
Ben Chaykin: Hey, good morning. My congratulations and good luck. Two quick two quick ones. I'd love to take into exchange a little more.
Ben Chaykin: And I guess, optically, it looks like the decline somewhat accelerated. So, is there a a common issue that we can't really see or is there a change in the way people are exchanging in a current macro for some reason? Does the question make sense? Meaning, I totally understand the industry consolidation angle. This optically looks like a step down a little more.
Ben Chaykin: Little faster than we would have expected in one cue.
Ben Chaykin: Well, let's know that in this case the numbers are, what the numbers are, there's not a...
Ben Chaykin: You're on your comp issue. I think what we're seeing both in our business because we're a client of the exchange business as well as many other affiliates out there is.
Ben Chaykin: As uncertainty rises, there is a tendency to want to keep your members within your club because
Ben Chaykin: The great thing about time share is there's a lot of value satisfaction rates are high and
Ben Chaykin: and they see the value of purchasing more. So I think it's a natural phenomenon that we saw within the quarter there was variation. January and February started slower and we saw a noticeable pickup of exchange transactions as the quarter ended.
As Evolved, and...
Ben Chaykin: We have not tried to sit quietly and just let it happen as we shared, we launched a travel club business.
Ben Chaykin: And although it can't offset the exchange reductions, we are seeing growth in that space. We mentioned there will be an acceleration and all that.
Ben Chaykin: All that's just to sort of flatten the curve and allow the VO business to really shine like it did in Q1.
Speaker Change: Understood, that's very helpful. And then a quick question on SI. I guess, what's the, is there any updated timing on Tuscaloosa? And can you start selling the product? I believe maybe last quarter you put some inventory into the trust if I'm not mistaken. I think you did a conversion if I'm not mistaken.
Unknown Executive, Michael Brown
Speaker Change: which is why in our prepared remarks we said we look forward to being in sales this year on Sports Illustrated.
Got it, understood. Thank you very much.
Thanks, Beth.
Speaker Change: Thank you. Next question today is coming from Stephen Grambling from Morgan Stanley , your line is now live.
Stephen Grambling: Hey, thank you. I guess it's in the past when you've seen a deterioration in the man, you're typically kind of pivoted to selling to existing owners.
Stephen Grambling: I guess how do you think about the opportunity to upgrade existing owners and how the pulling that lever in today's environment like compared to the past as we look at how your existing owner base looks now versus other instances.
Stephen Grambling: Well, I think the optionality we have that you mentioned, Stephen, is absolutely there. We don't view where any we're at that point, which is why I think it's important you have to look at our Q1 performance.
Stephen Grambling: Compared to sort of 23 and 22 as being at a normal run rate, we're investing the same with new owners.
Stephen Grambling: Our owners to your question aren't very good shape. Our household incomes have moved up.
The age category has moved down for new owners.
Stephen Grambling: And ultimately, our changes that we made coming out of COVID to step up our market and criteria, I think all in all puts our owner base in a very good space.
Stephen Grambling: We are spending a lot of our run rate capital, operating capital, putting it back into the consumer and
Stephen Grambling: The Club Window Map is reactivating owners, it's getting them to use more and we're long overdue to update the world mark capabilities as well and we think that's going to be extremely well.
Stephen Grambling: Receive. So, economically it's one answer, but ultimately we always know in this business if your consumers are using their product or done a buy more and our efforts are to really get owners using their
Stephen Grambling: Ownership more in that with less fraction and the less fraction is.
and Mike Hugg.
Stephen Grambling: tells his own anecdote about booking his vacations on our app as well and doing it in a record amount of time. So we're super excited about where we're going and we're super excited about our owner base being in a really good place.
Stephen Grambling: to do exactly what you indicate, but we're not at that point yet.
Speaker Change: That's helpful, maybe one quick follow-up. Maybe I missed this, but did you disclose kind of the composition of owner growth in the quarter and maybe how that's compared over the past couple of quarters, do you think about gross ads, attrition, and getting to kind of a net owner growth?
Yeah, I think when you look at-
Speaker Change: The transaction makes it with 31% new owner sales in the quarter. Rolled right in line with what we expected as true flow came in in line with where we expected we would expect as
New Owners, Grow Throughout Q3 & Q4 & Q2 2.
Speaker Change: That will get a increase in the neuromix and kind of in the year in that 35% range. If you looked at our account it would be down a little bit which it always is in the first gorgeous because it's the lowest new owner overall for the full year we're still expecting to be in that 35% transaction, new our transaction range. We'll see you in the next one.
Thank you.
Sure. Thank you.
Brent Montour: Thank you. Next question is coming from Brandt Montour from Barclays, your line is alive. Good morning, everybody. Thanks for taking my question and congrats again to my hug. I will miss you.
Speaker Change: Question is, summer is a big new owner, sale season. [inaudible]
Speaker Change: New Owner, Closerator, what you've called out was a little bit soft toward the end of the quarter, and so you have optionality, you just mentioned that, how quickly could you deploy that optionality, and is there other levers that you'd pull even before that, incentives, promotions? 10s.
Speaker Change: Hotel Points, what is sort of the playbook look like if new owner close rates slow further from here?
Speaker Change: Well, let me first say that even during COVID, we didn't-
Speaker Change: Pull some of those levers you've mentioned of discounting and incremental noticeable incentives. We, our performance...
It really tends to be our performance. And...
Speaker Change: We were strong believer in maintaining steady, steady pricing over time and in the inflationary period that really helped us because people even more saw the value and it's about creating the owners specific to your question.
Speaker Change: We can react very quickly, but we think our business has a lot of variables that we as a management team will move very quickly to resolve, and that's not just...
Speaker Change: The older side of sales, but we have a full cost structure. We also believe that as we move into this second and the third quarter, we have exciting new things coming our way that should propel our business.
And ultimately, Q1 was a quarter that saw… [inaudible]
Speaker Change: Sentiment Decline, one study from something like 75, 78, down to 50. And that's a dramatic
Speaker Change: There were minor adjustments to closing percentages and they were minor. And I just ... I ...
and ultimately to VPG.
Speaker Change: But I think it's all within our grasp as far as management's ability to toggle.
throughout the summer and into the fall.
Speaker Change: Should there be changes to the economy that would warn it? Mike and I often comment that.
Speaker Change: We haven't seen a normal pullback since 2001. We all sort of imagine the great financial crisis which we access the market within months, COVID which we access the market within I think two months.
Speaker Change: If this is your normal pullback, I think not only Mike and I, but the entire management team as well within their capabilities.
Speaker Change: To toggle the oner side of the equation, the call side of the equation, and just new initiatives to make sure we get to the other side. And if we do, we really are hopeful that we'll be able to turn around and say to you all and to the by side.
Speaker Change: We've been saying it for a long time that this is a highly resilient business where vacations aren't discretionary and we can continue to return a high degree of capital to our shareholders.
Speaker Change: in Good Times and in trough periods in the economy. But let's hope we don't have to see that this summer.
Speaker Change: Okay, that's a great answer. A second follow-up would be is the separate to the SI portfolio and the sales that you were mentioning just a minute ago. So, you know, in Tescalus, one of the things that we hear about.
Speaker Change: You know, deals related to college sports programs and sort of the, it's really the seasonality that makes it difficult for that model because people all want to stay during football season, right? I mean that or a graduation weekend or et cetera. And there's sort of, you know, good swath of the calendar that.
Speaker Change: That you don't have people wanting to utilize that capacity from an owner's perspective. And I apologize if you've addressed this issue or maybe it's not an issue. In past calls I don't remember and so I just wanted to make sure I understand, you know, is that something that...
Speaker Change: Is a detractor of this model and do you think you've sort of gotten past that or figured out a way to smooth that out and making it work from an economic perspective?
Speaker Change: Well, let me tackle that on two different fronts, maybe professionally and personally, professionally, you know, you think about the ski destinations and places like Park City, Breck and Ridge, Vale, Aspen.
Speaker Change: of the Northeast, and the same commentary was always around ski destinations. Park City today.
Speaker Change: You get great rates during ski season, especially presidents and Christmas New Year.
Speaker Change: But guess what? You know, if they say in Park City is you come for the ski season and you stay for the summer. And that's what I think is very much the case in college town. There's a reason why...
Hilton believed in the graduate because...
Speaker Change: and I'll maybe transition to the personal side is, if you've had a kid that's gone through college, you're not there for only football games, you're there for graduation, you're there for the other sporting events, you're there for parents' weekend and
Speaker Change: Although it feels like there's only one sport eventually that's going to be in college sports, it's really a year-round calendar that parents are equally as passionate about women's volleyball or men's track as they are about college football just may not be orders of magnitude. So, I think that's a very natural reaction similar to what it was in ski, the ski destinations, but ski destinations have proven that. That's it.
They do very well year round Smith.
Yes, and I would add, I mean, these...
Speaker Change: College communities are also trying to use the assets they have to drive incremental revenues into their tantamount to the EPL, European Soccer League is now coming over the summer time and playing in some of these college stadiums.
Speaker Change: A lot of contrast nowadays are occurring in the summer and the college football stadiums in the basketball ring as so.
You know, bringing additional attractions, if you will, or entertainment [inaudible]
Speaker Change: into their destinations during the Aussies, and I think that gives us confidence as well that us working with them will be great in terms of just driving additional demand into those communities.
Thank you.
Speaker Change: Thank you. We reached, thank you. We reached end of our question after session. I'd like to take a look forward to Michael Brown for any further closing comments.
Michael Brown: I do, and there's one component I admit which I do want to just share with everyone that
Speaker Change: As Mike exits, we are at the final stage of our search process and anticipate announcing Mike's replacement very soon and are pleased that it will allow us for an overlap in a very smooth and orderly transition.
Speaker Change: Nothing short of what you would expect with Mike, but before we do wrap up...
Speaker Change: I definitely want to take a moment and acknowledge once again that this is Mike Hug's final earnings call as the CFO of Travel & Leisure .
Speaker Change: His leadership and commitment to this company have made a lasting impact and Mike on behalf of the entire team thank you for everything and it's only appropriate that you provide today's closing remarks.
Speaker Change: Thanks again, Michael. As we close out today's call, I just want to take a moment to reflect and express my gratitude.
Speaker Change: Over the years, I've had the privilege of working alongside an exceptional team.
Speaker Change: Navigame of Opportunities and Challenges in helping shape companies that are truly believing.
Speaker Change: I'm proud of the progress we've made that this can be maintained in the resilience we've shown across market cycles.
Speaker Change: I want to thank all the Travel and Leisure Associates, whose hardware and dedication continue to drive this business forward.
Speaker Change: I also want to thank our investors and analysts for your support, your questions, and your partnership over the years.
Speaker Change: I'm confident this company is in a strong position both financially and operationally and I have faith that the team that we have will carry the torch forward.
Speaker Change: Thank you, Ian, for your trust you place in May. It's been an honor.
Speaker Change: Thank you. That does conclude today's telecompetitive webcast. You may disconnect your line out this time and have a wonderful day. We thank you for your participation today.