Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Note 4: Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables show our disaggregated revenues by product and segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 22: Business Segments below for more details related to our segments.

($ in millions)	Year Ended December 31,
Real Estate Sales and Financing Segment	2021		2020		2019
Sales of VOIs, net	$	883	$	108	$	509
Sales, marketing, brand and other fees		385		221		573
Interest income		157		141		147
Other financing revenue		26		24		23
Real estate sales and financing segment revenues	$	1,451	$	494	$	1,252

($ in millions)	Year Ended December 31,
Resort Operations and Club Management Segment	2021		2020		2019
Club management	$	168	$	96	$	125
Resort management		172		70		66
Rental(1)		315		91		201
Ancillary services		27		7		26
Resort operations and club management segment revenues	$	682	$	264	$	418

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(1)Excludes intersegment eliminations. See Note 22: Business Segments for additional information.

Contract Balances

The following table provides information on our accounts receivable with customers which are included in Accounts Receivable, net on our consolidated balance sheets:

	Year Ended December 31,
($ in millions)	2021		2020
Receivables	$	202	$	64

The following table presents the composition of our contract liabilities.

	Year Ended December 31,
($ in millions)	2021		2020
Contract liabilities:
Advanced deposits	$	112	$	117
Deferred sales of VOIs of projects under construction		34		169
Club dues and Legacy-HGV Club activation fees		91		77
Bonus Point incentive liability(1)		44		48

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(1) Amounts related to the Bonus Point incentive liability are included in Accounts payable, Accrued Expenses and other on our consolidated balance sheets. This liability is comprised of unrecognized revenue for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.

Revenue earned for the year ended December 31, 2021 that was included in the contract liabilities balance at December 31, 2020 was approximately $355 million. Revenue earned for the year ended December 31, 2020 that was included in the contract liabilities balance at December 31, 2019 was approximately $81 million.

Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations management agreements and are settled when the related cash is received. Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time. Refer to Note 7: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our timeshare financing receivables.

Contract assets relate to incentive fees that can be earned for meeting certain targets on sales of VOIs at properties under our fee-for-service arrangements; however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period. There were no contract assets as of December 31, 2021.

Contract liabilities include payments received or due in advance of satisfying our performance obligations, offset by revenues recognized. Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues and the liability for Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future.

In addition to the contract liabilities included herein, we also have deferred revenue of $112 million and $16 million as of December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, this additional deferred revenue balance includes $51 million for bonus points and marketing package deferred revenue, $10 million in deferred property insurance, $14 million in deferred maintenance fees and $37 million in other deferred revenue.

Transaction Price Allocated to Remaining Performance Obligations

Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Legacy-HGV Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Bonus Points that may be redeemed in the future.

Deferred VOI sales include the deferred revenues associated with: the sales associated with incomplete phases or buildings; the sales of unacquired inventory; and deferred sales associated with our long-term lease product with a reversionary interest. The following table represents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of December 31, 2021 and December 31, 2020.

	Year Ended December 31,
($ in millions)	2021		2020
Sales of VOIs, net	$	34	$	169
Cost of VOI sales(1)		12		50
Sales and marketing expense		5		25

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(1) Includes anticipated Cost of VOI sales related to inventory associated with Sales of VOIs under construction that will be acquired under a just-in-time arrangement once construction is complete.

During the year ended December 31, 2021, we recognized $245 million of sales of VOIs, net, offset by deferrals of $112 million, related to sales of projects under construction, some of which were completed during the year. We expect to recognize the revenue, costs of VOI sales and direct selling costs related to the projects under construction as of December 31, 2021 upon their completion in 2022.

The following table includes the remaining transaction price related to Advanced deposits, Legacy-HGV Club activation fees and Bonus Points as of December 31, 2021:

($ in millions)	Remaining Transaction Price		Recognition Period	Recognition Method
Advanced deposits	$	112	18 months	Upon customer stays
Legacy-HGV Club activation fees		63	7 years	Straight-line basis over average inventory holding period
Bonus Points		44	18 - 30 months	Upon redemption