VARIABLE INTEREST ENTITIES

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities Related to Our Vacation Ownership Notes Receivable Securitizations

We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products. These vacation ownership notes receivable securitizations provide funding for us and transfer the economic risks and substantially all the benefits of the consumer loans we originate to third parties. In a vacation ownership notes receivable securitization, various classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. With each vacation ownership notes receivable securitization, we may retain a portion of the securities, subordinated tranches, interest-only strips, subordinated interests in accrued interest and fees on the securitized vacation ownership notes receivable or, in some cases, overcollateralization and cash reserve accounts.

We created these bankruptcy remote special purpose entities to serve as a mechanism for holding assets and related liabilities, and the entities have no equity investment at risk, making them VIEs. We continue to service the vacation ownership notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities. Accordingly, we concluded that we are the entities’ primary beneficiary and, therefore, consolidate them. There is no noncontrolling interest balance related to these entities and the creditors of these entities do not have general recourse to us.

The following table shows consolidated assets, which are collateral for the obligations of these VIEs, and consolidated liabilities included on our Balance Sheet at December 31, 2021:


($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves	$	1,662	$	—	$	1,662
Interest receivable	12		—		12
Restricted cash	139		—		139
Total	$	1,813	$	—	$	1,813
Consolidated Liabilities
Interest payable	$	2	$	—	$	2
Securitized debt	1,877		—		1,877
Total	$	1,879	$	—	$	1,879

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during 2021:


($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Interest income	$	217	$	2	$	219
Interest expense to investors	$	43	$	2	$	45
Debt issuance cost amortization	$	7	$	1	$	8
Administrative expenses	$	3	$	—	$	3

The following table shows cash flows between us and the vacation ownership notes receivable securitization VIEs:


($ in millions)	2021		2020
Cash Inflows
Net proceeds from vacation ownership notes receivable securitizations	$	841	$	371
Principal receipts	585		487
Interest receipts	228		218
Reserve release	159		16
Total	1,813		1,092
Cash Outflows
Principal to investors	(590)		(509)
Voluntary repurchases of defaulted vacation ownership notes receivable	(99)		(95)
Voluntary clean-up call	(72)		(18)
Interest to investors	(43)		(49)
Funding of restricted cash	(217)		(20)
Total	(1,021)		(691)
Net Cash Flows	$	792	$	401

Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. We made voluntary repurchases of defaulted vacation ownership notes receivable, net of substitutions, of $99 million during 2021, $95 million during 2020 and $54 million during 2019. We also made voluntary repurchases of $200 million, $383 million and $356 million of other non-defaulted vacation ownership notes receivable during 2021, 2020 and 2019, respectively, to retire previous vacation ownership notes receivable securitizations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell, and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance on the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.

The following table shows cash flows between us and the Warehouse Credit Facility VIE:


($ in millions)	2021		2020
Cash Inflows
Proceeds from vacation ownership notes receivable securitizations	$	107	$	315
Principal receipts	2		34
Interest receipts	2		17
Reserve release	1		2
Total	112		368
Cash Outflows
Principal to investors	—		(33)
Voluntary repurchases of defaulted vacation ownership notes receivable	—		(3)
Repayment of Warehouse Credit Facility	(107)		(300)
Interest to investors	(2)		(4)
Funding of restricted cash	(1)		(2)
Total	(110)		(342)
Net Cash Flows	$	2	$	26

Other Variable Interest Entities

We have a commitment to purchase a property located in Waikiki, Hawaii, which we assigned to a third party during 2020. If we are unable to negotiate a capital efficient inventory arrangement, we are committed to purchase the property, in its then current form, for $104 million in 2022, unless it has been sold to another party. The property is held by a VIE for which we are not the primary beneficiary as we do not control the operations of the VIE. Accordingly, we have not consolidated the VIE. As of December 31, 2021, our Balance Sheet reflected $1 million in Accounts Receivable, including a note receivable of less than $1 million, related to this VIE. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $1 million as of December 31, 2021.