Q1 2025 Hilton Grand Vacations Inc Earnings Call
[music].
Good morning, and welcome to the Hilton Grand Vacations first quarter 2025 earnings conference call a telephone replay will be available for seven days following the call. The dial in numbers 84451 to two nine to one and enter pin 137.
51066.
At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following the presentation.
Speaker Change: I would like to ask a question. Please press star one on your telephone for on your Touchtone phone to enter the queue. If any point. Your question has been answered you may remove your question from the queue by pressing star two.
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Speaker Change: Please limit yourself to one question and one follow up to allow the opportunity for everyone to ask questions. You May then reenter the queue to ask additional questions.
Speaker Change: I would now like to turn the call over to Mark Melnyk Senior Vice President of Investor Relations.
Speaker Change: Please go ahead Sir.
Speaker Change: Thank you operator, and welcome to the Hilton Grand Vacations first quarter 2025 earnings call.
Speaker Change: Under our discussions. This morning will include forward looking statements actual results could differ materially from those indicated by these forward looking statements. 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 SEC filings also be referring to certain non-GAAP.
Speaker Change: Financial measures you can find definitions and components of such non-GAAP numbers as well as reconciliations of non-GAAP and GAAP financial measures discussed today in our earnings press release and on our website at investors HGV Dot com.
Speaker Change: Reported results for all periods reflect accounting rules under ASC 606, which we adopted in 2018 under ASC 606 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 for ease of comparability and to simplify our discussion.
Speaker Change: Today, our comments on adjusted EBITDA in our real estate results for Florida results, excluding the net impact of construction related deferrals and recognitions for all reporting periods to help you make more meaningful period to period comparisons you can find details of our current and historical deferrals and recognitions in table team one of our earnings release, and a complete accounting of our historical deferral of <unk>.
Mark Melnyk: Commercial activity can also be found in excel format on the financial reporting section of our Investor Relations website with that let me turn the call over to our CEO Mark <unk> Mark.
Mark Melnyk: Good morning, everyone and welcome to our first quarter earnings call.
Mark Melnyk: Happy to report another solid quarter of results today, driven by the team's hard work. In addition to the structural process improvements we carried out over the past several quarters.
Mark Melnyk: Efforts have yielded positive results producing an acceleration in transactions PPG growth and sales growth in the quarter.
Mark Melnyk: Also pleased that we carried that momentum through April on the <unk>.
Mark Melnyk: Book, a rival trends and cancellation rates are generally consistent with the past several quarters and vacation package sales have remained strong.
Mark Melnyk: So while we've generated positive performance. Thanks in large part to our initiatives. We also recognize that the macro economic environment has recently become more volatile and unpredictable.
Mark Melnyk: Although we have limited exposure to many of the recent policy announcements such as tariffs.
Mark Melnyk: They have potential to create additional consumer uncertainty to which we're not EMEA.
Mark Melnyk: So while it's still too early to know the impact of these policies and when that impact may be felt we're taking deliberate actions in areas that we can control in order to insulate our business from this macroeconomic volatility.
Mark Melnyk: To that end, along with maintaining our disciplined approach to process and execution.
Mark Melnyk: Redoubled our efforts on implementing additional programs that are visible impactful and readily achievable this year.
Mark Melnyk: While these actions are designed to produce results in the near term. They will also serve as ongoing drivers that will benefit our business over the long term.
Mark Melnyk: In addition, our business model has several fundamental advantages that provide a buffer against macro volatility our direct marketing approach means that we create our own demand.
Mark Melnyk: We have the most diversified business in the industry with a variety of brands price points product types and vacation destinations in both fly to and drive to markets.
Mark Melnyk: We have a dedicated member base prepaid their vacations haven't paid their annual dues for the year, making them more likely to travel.
Mark Melnyk: In addition, we have a natural hedge from our highly variable cost structure and we've demonstrated the ability to make further adjustments to our cost structure, if the environment demands it.
Mark Melnyk: More than half of our EBITDA is contractually reoccurring in nature.
Mark Melnyk: And we convert 55% to 65% of our EBITDA into free cash flow, providing additional financial flexibility.
These trades reinforce the strongest value proposition, we've ever had with the benefit of HCV, Max and the quality and scale of our portfolio backed by the power of the Hilton brand.
Mark Melnyk: So I am pleased with our results for the quarter and with the momentum that we've carried into Q2.
Speaker Change: We're maintaining our EBITDA guidance for the year, which Dan will take you through shortly.
Speaker Change: Well, it's certainly harder today to predict the future than it has been in the past our focus is on being proactive with the initiatives, we've identified and continuing to control what we can control to navigate through any potential uncertainty.
Speaker Change: Looking at our results for the quarter reported contract sales were up 10% to $721 million and adjusted EBITDA was $248 million with margins, excluding reimbursements of 22%.
Speaker Change: As we've seen in prior quarters tour growth was impacted due to our efficiency programs as we continue to utilize our scoring models to maximize the quality of the tourists we bring in.
Notably.
Speaker Change: Our efficiency efforts are helping to drive improved close rates transactions and PG.
Speaker Change: <unk> grew 15% to more than $4100 with growth in both our owners and new buyers channels.
Speaker Change: <unk> were particularly strong in the quarter.
Speaker Change: They also benefited from the continued success of Kaheaku sales and the launch of HCV Max two Blue Green members.
Speaker Change: Looking at our demand indicators occupancy in the quarter, which includes blue Green in both periods was flat at 77% consolidated rivals in the second quarter remain ahead of prior year and Theyre in line with the prior year when looking at the next six months.
Speaker Change: In our rental channels continue to indicate solid bookings growth over the next several quarters, reflecting continued demand from independent leisure travelers.
Speaker Change: Our industry, leading marketing package pipeline remains robust at over 725000 packages.
Speaker Change: And our package sales trends have remained healthy.
Speaker Change: In addition, the portion of our pipeline with confirmed travel date. It was up nicely from the fourth quarter to its highest level in a year.
Speaker Change: So as I mentioned earlier.
Speaker Change: We're cognizant of the broader environment and news flow, we haven't yet seen any material shifts in our four demand indicators.
Speaker Change: Turning to our other business units our member Count was 725000 at the end of the quarter with NOG of just under 1%.
Speaker Change: <unk> growth continues to outperform as members appreciate the benefits that Max membership brings and our research shows that our Max members have our highest satisfaction scores across every ownership tenure.
Speaker Change: We're now over 215000, Max members with Blue Green contributing nearly 13000 members to that total and only a handful of months since the launch.
Speaker Change: Our rental business has continued to show consistent topline growth.
Speaker Change: And while trends have remained consistent we're monitoring them closely for any signs of deterioration.
Speaker Change: In our financing business optimization continues to benefit our cash flow, enabling us to repurchase $115 million worth of stock during the quarter.
Speaker Change: Turning next to our update on our initiatives and integration progress.
Over the last few quarters, we spoken about several key efforts.
Speaker Change: Mainly optimizing our staff staffing levels, and our sales centers and evolving our scoring models to help identify.
Tours with a higher likelihood of closing.
Speaker Change: When combined with our introduction of HCV Max into the Blue Green system and the launch of Kaheaku. These programs have helped produce positive results since implementation supporting strong transaction BTG growth in contract sales.
Speaker Change: Building upon that success, we're implementing additional initiatives that we bucket it into three main categories.
Speaker Change: The first is enhanced lead generation. This includes directing more resources towards package sales and Activations.
Speaker Change: Along with introducing new marketing campaigns, particularly for owners and guests that I previously see toward with us before.
Speaker Change: And we're also accelerating our digital marketing integration efforts with our partners.
Speaker Change: The second bucket is execution related. This includes further refinement of our scoring models along with new pre tour qualifying to ensure that we're touring our highest propensity guests.
Speaker Change: In addition, we will be offering more flexible financing options to allow members to enter and stay within the HEV system.
Speaker Change: And the last bucket is product enhancements.
Speaker Change: Which includes the previously mentioned enhancements to our mass products slated for later this year.
And we're adding additional features aimed at driving incremental engagement and encouraging additional member stays at our property.
Speaker Change: Collectively we believe these initiatives can support our EBITDA and cash flow goals.
Speaker Change: Our list of the macro environment.
Speaker Change: And over the long.
Speaker Change: To generate a positive impact by improving the efficiency of the business strengthening our value proposition and improving member engagement.
Speaker Change: Turning to the Blue Green integration, we've reached $89 million of cost synergies and are confident in achieving our target of $100 million. This year.
Speaker Change: And we're just ahead of launching blue-green property rebrand program with the expectation that we will complete 10 to 12 rebrand in each of the next three years on the partnership front, we added nine new great Wolf locations and rebranded 79 bass pro locations and we opened a number.
Speaker Change: There are sales centers dedicated to servicing our choice customers.
Speaker Change: So to sum up we've had another strong quarter and that momentum has continued into Q2.
Speaker Change: The combination of our new offerings and our efficiency initiatives enabled us to drive an acceleration in transactions BTG growth in contract sales.
Speaker Change: While market volatility and uncertainty have increased in recent weeks, we continue to take a proactive approach with additional initiatives to ensure we sustain our momentum.
Speaker Change: Focused on controlling the things that we can control.
Speaker Change: But we'll continue to adapt as needed to protect and grow the long term value of the business.
Speaker Change: So with that I'd like to extend a warm welcome back to Dan who will take you through the numbers Dan.
Dan: Thank you Mark and good morning, everyone before we start note that our reported results for this quarter included $126 million of sales deferrals, which reduced reported GAAP revenue and were related to <unk> sales of our newest project Kaheaku.
Dan: Also recorded $58 million of associated direct expense deferrals adjusting for these two items would increase the adjusted EBITDA reported in our press release by a net $68 million to $248 million.
Dan: My prepared remarks, I will only refer to metrics, excluding net deferrals, which more accurately reflects the cash flow dynamics of our financial performance during the period.
Dan: As Mark discussed Q1 was characterized by strong operating performance driven by our focus on core efficiency combined with the continuation of HCV Max being offered to the Blue Green member base and the continued success of these.
Dan: These items helped drive a 15% increase in pro forma ppg's, resulting in contract sales growing 10% year over year on a pro forma basis.
Dan: In addition to strong operating performance made significant strides in advancing the optimization of our financing business was approximately 70% of our current receivables securitized at the end of the quarter.
Dan: This is within our targeted securitizing, 70% to 80% of current receivables on a steady state basis, the higher securitized positioned helped drive our adjusted free cash flow conversion rate of 75% of our adjusted EBITDA for Q1 2025.
Dan: We anticipate being in the ABS markets. This coming summer as we seek to term out our receivables securitized through the warehouse at quarter end.
Dan: Early in the quarter, we also successfully recast our $1 billion revolver and reprice all of our outstanding term loans, resulting in reduced pricing spreads and expanded covenants.
Dan: Charities for these facilities and our senior notes of novel.
Extended.
Dan: 128 through 2032.
Dan: Turning to our results for the quarter total revenue excluding cost reimbursements in the quarter grew 11% to $1 1 billion and adjusted EBITDA was $248 million with margins, excluding reimbursements of 22%.
Dan: EBITDA included approximately $23 million of Blue Green cost synergies recognized during the quarter or a run rate of $91 million annualized, leaving us well on track to achieve our target of $100 million in cost synergies by the end of 2025.
Dan: Within our real estate business contract sales were $721 million up 10% on a pro forma year over year basis, assuming a full quarter of blue green ownership in both periods.
Dan: Consistent with the fourth quarter, our new buyer mix in the quarter remained at 25% owing to the continued strength of our owner channel. After the launch of AC Max So our blueberry members along with the launch of Kaheaku.
Dan: Last fall.
Dan: Tours were down 4% to 175000, primarily reflecting the tour efficiency initiatives that Mark mentioned earlier, along with ongoing sales center closures related to the Hurricanes This past fall.
Dan: These initiatives improved close rates and were reflected in CPG, which grew 15% to more than $4100.
Dan: We saw growth in both our owner in new buyer channels with particular strength in our owner channel, which grew 21% year over year.
Dan: That growth was driven by a combination of our recent initiatives along with the continued contribution from HCV Max anchor Hocking.
Dan: Cost of product was 12% of net VOI sales for the quarter up 100 basis points from the prior year and our provision for bad debt was roughly in line with the prior year at 12% of owned contract sales.
Dan: Real estate sales and marketing expense was $372 million for the quarter or 52% of contract sales.
Dan: Real estate profit for the quarter was 138 million with margins of 24% down 200 basis points with half of that coming from the uptick in cost of product and the other half coming from sales and marketing cost.
Dan: In our financing business first quarter revenue was $125 million and segment profit was $70 million with margins of 56%.
Dan: It's important to highlight that the provision statistics do not include $7 million of additional reserves related to our acquired portfolios.
Dan: Due to the fact that the reserve was related to our acquired portfolios rather than our underwritten portfolios. It is booked in our financing expense rather than the real estate provision and accounted for the majority of the year over year decrease in our financing business margin in the quarter.
Dan: Looking at our portfolio metrics are originated weighted average interest rate was 15% combined gross receivables for the quarter were $4 billion or 3 billion net of allowance.
Dan: Our total allowance for bad debt was $1 1 billion on that $4 billion receivables balance or 27% of the portfolio.
Dan: Our annualized default rate for our consolidated portfolio stood at 10, 2% for the quarter a slight decrease from the fourth quarter's levels of 10, 8%.
Dan: Our originated portfolio delinquencies continued to outperform a much more seasonal acquired portfolio, which is a testament to the strength of the ACD brand increased value proposition from <unk> HEV, Max and continued rollout of the best in class sales and underwriting practices.
Dan: We continue to believe that we are adequately reserved when considering the recent volatility in credit and equity markets, notably.
Dan: Notably delinquency rates for HIV and legacy Cri portfolios are running below last year and while we expect the provision rate to build throughout the year given the current operating environment and seasonal trends, we still expect all in provision to be in the mid teens for the full year.
Dan: We also monitor our 31% to 60 day delinquency trends very closely as a as an early indicator and we haven't seen any signs of increased stress within our portfolio in recent weeks, but continue to monitor the situation closely.
Dan: In our resort and club business, our consolidated member Count was approximately 725000 and our NOG was just under 1% at the end of the quarter.
Dan: Revenues grew 10% to $183 million for the quarter, owing to our increased member count and solid member activity. During the quarter segment profit was $129 million with margins of 71% as we maintained good expense controls.
Dan: Rental and ancillary revenues were $187 million in the quarter with segment loss of $19 million.
Dan: Revenue growth was driven by increased occupancy, resulting in slight improvement in our revpar.
Dan: Consistent with the fourth quarter, our expenses remained elevated due to higher developer maintenance fees, along with higher expenses from point conversions or stages of growth as we continue to see great traction with our new partnership program.
Dan: Bridging the gap between segment adjusted EBITDA and total adjusted EBITDA JV EBITDA was $5 million corporate G&A was 37 million license fees were $49 million in EBITDA attributable to Noncontrolling interest was $5 million.
Dan: Our adjusted free cash flow in the quarter was 185 million, which included inventory spending of $110 million or cash flow conversion of 75% was elevated owing to the timing of non recourse activity under our financing business optimization, but for the full year, we still anticipate that the conversion rate of adjusted EBITDA into adjusted free cash flow will be in the range of 60.
Dan: 5% to 70%.
Dan: During the quarter the company repurchased three 9 million shares of common stock for $150 million from April one through April 24th we repurchased an additional one 8 million shares for $60 million year.
Dan: Year to date 2025, we have repurchased $5 7 million or 6% of our shares outstanding for $210 million on an app or an average of approximately $37.
Dan: We remain committed to capital returns as the primary use of our free cash flow and believe our shares continue to represent a compelling value at current prices.
Dan: Pleased that our strong balance sheet provides us with the financial flexibility necessary to allow us to navigate the current macroeconomic volatility accordingly, we remain committed to our target of repurchasing an average of $150 million per quarter, assuming the current macro environment.
Dan: We currently have $218 million of remaining availability under our purchase plan.
Dan: Turning to our outlook, we are maintaining our 2025 adjusted EBITDA guidance to be in the range of $1 5 billion to $1 65 billion, which assumes the environment remains consistent with what we see today.
Dan: As Mark mentioned, we had a solid quarter that was in line with our expectations and that momentum carried into April.
Dan: That said, while our direct exposure to tariffs is minimal at the volatility of the past few weeks has nevertheless made it made the consumer environment more uncertain and it's something that we continue to monitor very closely.
Dan: Moving on to our liquidity as of March 31, our liquidity position consisted of $259 million of unrestricted cash and $870 million of availability under our revolving credit facility.
Dan: Our debt balance at quarter end was comprised of corporate debt of $4 5 billion.
Dan: Nonrecourse nonrecourse debt balance of approximately $2 4 billion at.
Dan: At quarter end, we had $100 million of the remaining capacity in our warehouse facility.
Dan: We also had $951 million of notes that were current on payments, but unsecured types of that figure approximately $519 million can be monetized through either warehouse borrowings or securitization, while another $210 million of mortgage notes, we anticipate being eligible following certain customary milestones such as first payment data and recording.
Dan: Despite market volatility ABS markets remain open and functioning.
Dan: This fact, coupled with our $850 million warehouse gave us confidence we can execute on our previously discussed financial optimization strategy.
Dan: Turning to our credit metrics at the end of Q1 inclusive of all anticipated cost synergies. The company's total net leverage on a TTM basis was three nine times.
Dan: We will turn the call over now to the operator and look forward to your questions operator.
Dan: Thank you we will now be conducting a question and answer session.
Dan: If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove your question from the queue for participants using speaker equipment and may be necessary to pick up the handset before pressing the star keys.
Dan: Please while we poll for questions.
Speaker Change: Thank you. Our first question is from Brent <unk> with Barclays.
Good morning, everybody and thanks for taking my question.
Speaker Change: So maybe mark if we could just start talking about the consumer.
Speaker Change: The.
Speaker Change: The commentary I want to put words in your mouth. The commentary seems like youre not seeing any changes across preview package sales as well as forward bookings for rentals things that we would think would you would start to see a little bit of Choppiness. We've heard from most other most other leisure facing businesses that there is that there is some leisure choppiness in forward bookings.
Speaker Change: <unk> can you just maybe talk about why you think you're sort of.
Speaker Change: Define that trend is it the.
Speaker Change: Geographical exposure or is it the consumer what do you think it is.
Speaker Change: Yes, no good question and I think.
Speaker Change: From a leading indicator standpoint.
Speaker Change: We do have a distinct advantage.
Speaker Change: It gets underappreciated.
Speaker Change: Around line of sight, when you think about it Brad.
Speaker Change: 50% of our occupancy is from our owners right.
Speaker Change: Another 15% to 20% is a marketing packages.
Speaker Change: So thats a population we have data and we understand how we can activate on it right.
Speaker Change: From a rental perspective.
Speaker Change: Youre booking window is around 40 days.
Speaker Change: For an owner to 177 days at least this year to 177 days last year was 178 days. So its come down one day, so no material change at all for marketing its 95 days.
Speaker Change: So we have a distinct advantage of understanding who is going to be arriving at our properties well before your traditional leisure travel is booked on.
Speaker Change: Hilton Dot com or through an OTA, which typically averages 40 days. So the other thing is our owners have paid right a prepaid for this and our package.
Speaker Change: Pipeline those customers are prepaid too so I think those give us line of sight and a distinct advantage over traditional demand that would come in through neurologic.
Speaker Change: Yes.
Speaker Change: That's really helpful. Thanks for that the second question I have is around.
Speaker Change: New owner versus new owner mix versus owned mix you guys did I think 85%.
Speaker Change: And mix in the first quarter.
Speaker Change: The full year I believe runs a little bit below that and the summer time, I think is seasonally a little bit higher for.
Speaker Change: For new owner sales and so as we look at the first quarter's <unk>, which was.
Speaker Change: Our Monster result.
Speaker Change: For you guys does that.
Speaker Change: Do you.
Speaker Change: Is it harder to maintain the strong <unk> as you move into a more new owner sales intensive season that being the summer or or is that sort of a lever. That's in your control and Thats something you plan to Paul.
Speaker Change: Yes look it is a lever that we can control, but first of all I would say that the number is closer to.
Speaker Change: For new buyers is closer to 25% to 30%. So it's not just about 15%. So the other thing thats in a way skewing that number is the outperformance on the owner side is really material.
Speaker Change: Now, we had PPG growth both from owners and new buyers.
Speaker Change: <unk>.
Speaker Change: From a new buyer standpoint, <unk> growth was really driven by average transaction price going up 5%.
Speaker Change: From a order perspective, if you look at.
Speaker Change: The owner side, we saw great.
Speaker Change: Improvements almost 500 bps.
Speaker Change: <unk>.
Speaker Change: Improvement in close rates so.
Part of the.
Speaker Change: The mix there is driven by outsized owners and dense still ramping up on new buyers. So we were really pleased to see the results of the teams did a great job of executing I think were up 15% or just under 15% of PPG.
Speaker Change: So as we go through the balance of the year the mix is going to be somewhat similar so.
Speaker Change: Our expectations are that.
Speaker Change: We will continue to see.
<unk> strong performance and strong execution.
Speaker Change: That being said I think we've made plenty of disclosures out there.
Speaker Change: <unk> debt.
Speaker Change: The narrative out there hasnt been positive around the consumer and its confidence, but again, we haven't yet seen that.
Speaker Change: And our members.
Speaker Change: Great. Thanks for all the color nice quarter.
Speaker Change: Thank you.
Speaker Change: Our next question is from Ben <unk> with Mizuho Securities.
Ben: Hey, Thanks for thanks for taking my questions Dan Nice to have you back.
Ben: Regarding the balance sheet optimization, you gave some color on the prepared remarks and also in the press release regarding the 951 of notes that were.
Ben: Current on payments and there is the 519 could be monetized and then there is the 210 of.
Ben: Additional notes.
Ben: That still leaves a balance of something around 200, I guess for a three part question number one where does that remaining 220 or so set.
Ben: Two do you view all of the 951 as receivables.
Ben: You could securitize in the near term or is there is there a portion you would leave in the balance sheet for some reason or another and then part three I think the warehouses full is the plan to securitize those work into warehouse down and then use that 850 million capacity to to take down the 950, hopefully that all makes sense.
Ben: I can circle back at those too convoluted. Thanks.
Ben: Hey, Ben Thanks, and it's good to be back.
Ben: With regards to your questions.
Speaker Change: Don't know where to begin I think the last one.
Speaker Change: Effectively answered, but let's let's jump back to the $290 million to $200 million as a part of the current unsecured highs receivables it really pertains to loans that either have no FICO scores for one reason or another or their loan balance heavy for another reason.
Speaker Change: Just.
Speaker Change: For lack of a better term theyre not immediately securitize it sit.
Speaker Change: Securitizing securitize.
Speaker Change: That doesn't mean, there's not a path there is a path is as more of your scrap scratch and dent of nature. So there is a path to do that.
Speaker Change: We wanted to focus on that we haven't focused that on the.
Speaker Change: In the past just given the advance rate, that's typically associated with the scratch and dent.
Speaker Change: Issuance, so thats out there the other thing that.
Take into consideration as all of these metrics are a point in time right. So to your point that warehouse is drawn effectively not completely drawn at this point in time, but majority drawn what we will look to do is to term that out by going to the ABS markets most likely as we approach the summer months.
Speaker Change: As you've seen while the markets have been very choppy.
Speaker Change: Markets are definitely open we are competitor went to the market recently and was successful.
Speaker Change: Successful, we anticipate go into the market in the short term we would.
Speaker Change: Just given today again.
Speaker Change: Pause because there's a lot of noise out there, but if we were to go out today I would anticipate pricing in the range of five to five five obviously that will move with the macro but that's where we would see it today.
Speaker Change: Let's see I think I answered two of your three which one did I not answer completely.
Speaker Change: So just overall do you think about that just as you think about the total balance of the 951 is there is there any.
Speaker Change: Can we think about that as being all secure tithable.
Speaker Change: In the near to medium term or is there a portion that you would want to leave on the balance sheet for some reason or another.
Speaker Change: The vast majority would be.
Speaker Change: The vast majority we would look to securitize, but again this is getting back to that point in time concept because there is a certain amount that we would retain to make sure that we have.
Speaker Change: Notes available for replacements in the existing deals et cetera.
Speaker Change: So there is some level that we wanted to actively go out and securitize.
Speaker Change: Okay. That's very helpful and then on BTG.
Speaker Change: Definitely stronger than expected it sounds like partially.
Speaker Change: Wholegrain HEB Max success, which makes sense are there any statistics, you can share or anecdotal comments regarding the success of upgrading below dream.
Speaker Change: Tumors I know you gave the overall close rate customer and just the overall close rate on existing owners, a moment ago, which was very helpful.
Speaker Change: I don't know if maybe you have that for for Bulgarian customers. If you feel comfortable sharing that and then is there any Bulgarian sales centers.
Speaker Change: Yep.
Speaker Change: You are still maybe upgrading or rebranding.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yeah. Good question, so what I would say is.
Speaker Change: First of all Btg's were strong across the legacy business.
Speaker Change: And in particular blue-green owners and so if you look at BTG growth in the legacy <unk> World.
Speaker Change: Owners.
Speaker Change: New buyers were up 8% right. So you can see that blue Green.
Speaker Change: <unk> really outperformed and the growth there was.
Speaker Change: Pretty material it was.
Speaker Change: Over 40% growth in PPG, So two times of what we saw in overall.
Speaker Change: <unk> so good performance across the entire company.
Speaker Change: Company, Inc, and tire brands.
Speaker Change: But really strong outperformance on the Blue Green side.
Speaker Change: Thanks, a lot appreciate it.
Speaker Change: Our next question is from Patrick <unk> with <unk> Securities.
Patrick: Great. Thank you and good morning.
Speaker Change: Mark.
Speaker Change: In previous earnings calls you had.
Speaker Change: Given some outlines on several kpis.
Speaker Change: Specifically from my notes last time, you had talked about low to mid single digits.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Approximately 30 basis points.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yes, Patrick broke up a little bit there, but I think.
Speaker Change: Cut the best.
Speaker Change: Yes.
Speaker Change: The question and so.
Speaker Change: When you think about that.
The cadence for the rest of the year. We came out we are down on tour flow.
Speaker Change: Four.
Speaker Change: Q1, but we still expect to have tour flow growth.
Speaker Change: For the remainder of the year.
Speaker Change: Part of the.
Speaker Change: Pardon me.
Speaker Change: Contraction on the tour flow side was really related to a number of initiatives we're doing a route.
Speaker Change: Improving the quality of the tours and so we're using and continue to tighten up our qualifications.
Speaker Change: <unk> higher quality customers and we've refined our modeling.
Speaker Change: Turning to identify higher propensity buyers and those that have the ability to pay.
Speaker Change: No.
Speaker Change: So thats part of it the other part of it is.
Speaker Change: Unfortunately.
Speaker Change: The Blue Green sales centers that were impacted by the hurricane.
Speaker Change: Half.
Speaker Change: <unk> are going to take longer to reopen than we initially expected and so and there's a lot of work that's going on with the teams.
Speaker Change: Around that to get those those properties reopened, but youre dealing with insurance companies and.
Speaker Change: So some of that timing is not necessarily in our control.
Speaker Change: What I would say around the PPG Friday is.
Speaker Change: We performed much better than we expected.
Speaker Change: In the first quarter now.
Speaker Change: We've talked a lot about.
Speaker Change: Lodging.
Speaker Change: <unk>.
Speaker Change: There's a lot of noise around the consumer out there.
Speaker Change: <unk>.
Speaker Change: Assuming.
Speaker Change: The market conditions continue.
Speaker Change: To be what they are today, our expectations. There. Yes. We will continue we will have that mid to higher single digit BTG growth for the rest of the year.
Stephen Grambling: Our next question is from Stephen Grambling with Morgan Stanley.
Stephen Grambling: Hey, Thanks, welcome back Dan.
Speaker Change: If you dig.
Speaker Change: Dig into a couple of things in the opening remarks, Mark I think you gave a couple of these strategic initiatives and two of them. One was more flexible financing. One I think you said new features to drive engagement I was hoping you could you just maybe expand on on each of those on the flexible financing is that effectively.
Speaker Change: Improving the rate is improving the amount down and then on the features to drive engagement. Maybe if you can just elaborate on maybe the cadence of what you're doing and then the cadence of when we will start to see that.
Speaker Change: Yes no.
Speaker Change: Great questions. So on the on the financing side and Dan you can jump in here we have.
Dan: Essentially what we're doing is we're standardizing our financing.
Speaker Change: Program across the company.
Dan: Blue Green has their financing program.
Speaker Change: Legacy business had their financing program.
Speaker Change: One of the things that I have to say over the years, it's gotten very very complex.
Speaker Change: Around our financing grids and so one of the things we've tried to do is just simplify it.
Speaker Change: And create a financing grid that I think was attractive too.
Two new customers coming in and and really focus on generating additional cash.
Speaker Change: At point of sale and so that's a big driver of it and then in satisfying our customers.
Speaker Change: Around what product type.
Speaker Change: They are acquiring and we've got a lot of inventory, we're really good inventory position and obviously looking to move as much and balance out our inventory and utilizing our finance granted two to focus.
Speaker Change: Yes.
Speaker Change: Buyers into certain types of inventory as.
Speaker Change: As far as initiatives go.
Speaker Change: It is it has been really focused around the tour quality.
Speaker Change: And also the value proposition and so this work while I think I talked about just a few minutes ago on.
Speaker Change: The value proposition.
Speaker Change: It's around what we can do to deliver.
Speaker Change: Even a better value proposition than we have today and so there's really no silver bullet here, it's really a staffing of a number of initiatives that we're focused on it and.
Speaker Change: And part of it is also driving investing in marketing upfront.
Speaker Change: To drive additional revenue going forward.
Speaker Change: I don't see a demand shock out there I think.
Speaker Change: Our urgency.
Speaker Change: And our sense of urgency right now given this environment to continue driving new buyers as well as driving the value proposition for our owners.
Speaker Change: Those are super important and.
Speaker Change: As we think about the benefits of those we're seeing the scoring benefits today.
Speaker Change: The other initiatives, we see that benefit us in the back half of the year and taken together. We believe all of these things will help us.
Speaker Change: Insulate our business from any potential macro disruption out there.
Speaker Change: Yes, Mark and I think I'd, just add to that I mean, Steven to Mark's point on the financing front. It is really about making the messaging and the conversation at the sales table a lot cleaner a lot less friction. We're also unifying the underwriting to Mark's point Blue Green I think we mentioned this a couple of times last year at <unk>.
Speaker Change: <unk>, which and this is not unusual for the industry, but blue-green was offering.
Speaker Change: The ability to upgrade with no additional cash down things like that.
Speaker Change: Which we are unifying with the.
Speaker Change: The underwriting process with HIV and the legacy Diamond portfolio, where we require additional skin in the game to make people make sure people are motivated to us once they engage with their mortgage but two and more importantly is to engage with the product itself.
Speaker Change: So the combination of those two we're very optimistic will help drive portfolio performance as we go throughout this year and into future years.
Speaker Change: Great. Thank you.
Speaker Change: Our next question is from Lizzie Dove with Goldman Sachs.
Lizzie Dove: Hi, guys. Thanks for taking the question.
Just to kind of zoom in a bit on the consumer I'm curious if you've seen any kind of divergence between.
Lizzie Dove: Different geographies within the U S with particular strength in areas versus others or any signs that the kind of trade down between different products just any other color that would be would be helpful.
Lizzie Dove: Yeah.
Lizzie Dove: Yes.
Lizzie Dove: It's interesting because.
Speaker Change: Preparing for today's call I was really looking at market results right.
Speaker Change: We had outstanding performance in a number of markets and it's not really geographically.
Speaker Change: Focused and when I look at for instance, Hawaii.
Speaker Change: Yes.
Speaker Change: Wi teens again delivered very strong Maui grew 40% we are now back to pre fire.
Speaker Change: Numbers in Bali, we saw our allahu domestic and Japan teams outperform as well as our Big Island teams and <unk>. So very strong there in New York was extremely strong.
Speaker Change: D C. In fact, our east teams did a fantastic job in Orlando was a really good story for US improved execution and then when you look at the kind of the mid to smaller markets, our JV with bass pro up in big Cedar did well.
Speaker Change: Carolinas were strong.
Speaker Change: Arizona was strong in Texas was strong.
Speaker Change: So I would say around the consumer.
Speaker Change: And we were we actually started signaling there is the middle of last year.
Speaker Change: Mainly around the bottom third of our new buyer wealth cohorts.
Speaker Change: That has stabilized, but it still hasn't improved right.
Speaker Change: No.
Speaker Change: Our focus.
Speaker Change: <unk> has been to maneuver around it right why continue to focus on those customers. When they are having a tough time Dalian with this cumulative inflation, that's gone out and gone on over the last couple of years and the uncertainty out there. So our focus has really been what.
Speaker Change: Can we control we can tighten up our qualifications right and so that's what we've been doing and at the end of the day.
It was really great to see how well our owners and members.
Speaker Change: <unk> continued to perform.
Speaker Change: And it was nice to see <unk> growth from our new buyers.
Speaker Change: No it wasn't.
Double digit growth for new buyers, but we did see a little growth. So I think all the work we're doing around our initiatives.
Speaker Change: Starting to pay off.
Speaker Change: Got it thank you.
Speaker Change: Our next question is from Chris <unk> with Deutsche Bank.
Chris: Hey, good morning, guys. Thanks for taking the question.
Speaker Change: Yes, Mark can you just just for a moment returning to kind of the <unk>.
Speaker Change: Outside scenario in the economy that we're we're still thinking about I know <unk>.
Speaker Change: In prior cycles, not none of which are exactly alike.
Speaker Change: There was some discounting by the resort sector and.
Speaker Change: I think there is a perception that if that happens.
Speaker Change: And your value proposition a little bit in terms of.
Speaker Change: Getting folks on tour, so any any thoughts there any contingency plans anything you're seeing in any markets yet.
Speaker Change: It gives you pause for concern on that.
Speaker Change: No.
Speaker Change: I'd have to say, we haven't seen any our package pipeline, which I think is a great indicator.
Speaker Change: And I actually think our package.
Speaker Change: Value proposition because you remember the way our model works we are subsidizing.
Speaker Change: These guests that come visit our properties and go through a sales presentation and in this environment. This value proposition even stands out even greater right, especially at <unk> and a high rate environment.
Speaker Change: And so I would say we continue to.
Speaker Change: We continue to see really strong execution. There in fact, our data packages and data means to those that have agreed to a date and are planning the travel actually went up 22% from Q4 to Q1 now as far as a downturn scenario.
Speaker Change: I think we've got we're in a really good position right.
Speaker Change: Our business is in better position than it was before because of some of the built in advantages.
50% of our EBIT is recurring.
Speaker Change: We have a strong balance sheet and a great brand strong value proposition our partners.
Speaker Change: Having a partner like Hilton a partner like bass Pro choice.
Speaker Change: <unk>.
Speaker Change: It has helped us build the largest pipeline of potential new buyers in the industry right and then you think about how loyal our members are we have tens of thousands of our owners who have been staying with us for multiple decades in 70% of them have paid off their mortgage 90% live within a four hour.
Speaker Change: Drive to one of our resorts.
Speaker Change: So I think we were prepared for a wide range of outcomes, but.
Speaker Change: At the end of the day.
Speaker Change: The one benefit we have in our business and we talked about it before as we go out and create demand we're.
Speaker Change: We're not waiting for people to show up we are out there reaching out connecting creating relationships with customers to drive that demand going forward. So look.
Speaker Change: It's hard to tell right now and I'd say, it's just too early to understand the full impact of what could occur with.
Speaker Change: The policy changes out there.
Speaker Change: Im a big believer that then.
Speaker Change: And then shift to moving to experiences.
Speaker Change: Way from goods is going to continue and it could even accelerate in an environment like this so.
Speaker Change: As you can tell im very optimistic that being said.
Speaker Change: Anything that happened there is a lot of zigzagging going on right now in the policy to talks right now.
Speaker Change: Quite frankly every day I wake up.
Speaker Change: Wonder what what's in there is going to be like today.
Speaker Change: But.
Speaker Change: All we can do is focus on what we can control and that's that's what we're doing and Chris I think the only thing I'd add to that I mean, mark obviously covered a lot of value additions that we've had two well we offer our product offering over the past few years, but even if you go back to 2019 before hotels had these substantial increases in ADR.
Speaker Change: We had a great value proposition back then and when you think about the average transaction price.
Speaker Change: Okay.
Speaker Change: The last few years.
Speaker Change: With the rate of inflation.
Speaker Change: The outsized growth in Asia.
Speaker Change: The elements of the product materially better, but just from a financial perspective.
Speaker Change: Okay.
Speaker Change: Hi.
Speaker Change: So there would be they would have to be.
Speaker Change: Substantial substantial substantial decrease in what you see the hotels.
Speaker Change: Yeah.
Speaker Change: Dan.
Speaker Change: We believe it's a great value.
Speaker Change: Yes.
Speaker Change: Okay, Yes fair enough. Thanks, guys I appreciate it.
Speaker Change: Thank you there are no further questions at this time.
Speaker Change: Before we end I would like to turn the call back over to Mark Wang for any closing comments.
Mark Wang: Thanks, everyone for joining us today and I wanted to thank you all.
Speaker Change: All of our team members.
Speaker Change: Beyond.
Speaker Change: To meet our owners' needs and deliver outstanding vacation experiences and I also want to thank our owners who make vacation.
Speaker Change: Priority and entrust us with creating those memorable experiences for themselves and their families have a great day. Thank you.
Speaker Change: Okay.
Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Sure.