BUSINESS SEGMENTS

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

BUSINESS SEGMENTS

16. BUSINESS SEGMENTS

We define our reportable segments based on the way in which the chief operating decision maker (“CODM”), currently our chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance. We operate in two operating and reportable business segments:

•Vacation Ownership includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive, long-term relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Vacation Club brands. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. We also have a license to use the St. Regis brand for specified fractional ownership products.

Our Vacation Ownership segment generates most of its revenues from four primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs, and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.

•Exchange & Third-Party Management includes an exchange network and membership programs, as well as provision of management services to other resorts and lodging properties. We provide these services through our Interval International and Aqua-Aston businesses. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange, and rental transactions, property and owners’ association management, and other related products and services.

Our CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation and amortization, other gains and losses, equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated owners’ associations, as our CODM does not use this information to make operating segment resource allocations.

Our CODM uses Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to evaluate the profitability of our operating segments, and the components of net income attributable to common stockholders excluded from Adjusted EBITDA are not separately evaluated. Adjusted EBITDA is defined as net income attributable to common stockholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance. Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income attributable to common stockholders is presented below.

Revenues

	Three Months Ended
($ in millions)	March 31, 2024		March 31, 2023
Vacation Ownership	$	1,130	$	1,097
Exchange & Third-Party Management	65		71
Total segment revenues	1,195		1,168
Consolidated Property Owners’ Associations	—		1
	$	1,195	$	1,169

Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Stockholders

	Three Months Ended
($ in millions)	March 31, 2024		March 31, 2023
Adjusted EBITDA Vacation Ownership	$	213	$	229
Adjusted EBITDA Exchange & Third-Party Management	32		37
Reconciling items:
Corporate and other	(58)		(63)
Interest expense, net	(40)		(34)
Tax provision	(35)		(41)
Depreciation and amortization	(38)		(32)
Share-based compensation expense	(7)		(7)
Certain items	(20)		(2)
Net income attributable to common stockholders	$	47	$	87

Assets

($ in millions)	At March 31, 2024		At December 31, 2023
Vacation Ownership	$	8,327	$	8,167
Exchange & Third-Party Management	802		813
Total segment assets	9,129		8,980
Corporate and other	738		700
	$	9,867	$	9,680

Revenues Excluding Cost Reimbursements

	Three Months Ended
($ in millions)	March 31, 2024		March 31, 2023
United States	$	699	$	700
All other countries	105		104
	$	804	$	804