10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to ________

Commission file number 001-37794

Hilton Grand Vacations Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	81-2545345
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

6355 MetroWest Boulevard, Suite 180,
Orlando, Florida	32835
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code (407) 613-3100

(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	HGV	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of July 24, 2020 was 85,077,503.

HILTON GRAND VACATIONS INC.

FORM 10-Q TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.		Financial Statements	2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.		Controls and Procedures	43
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		44
Item 1A.	Risk Factors		44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 3.	Defaults Upon Senior Securities		47
Item 4.	Mine Safety Disclosures		47
Item 5.	Other Information		47
Item 6.	Exhibits		48
	Signatures		50

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	June 30,		December 31,
	2020		2019
	(unaudited)
ASSETS
Cash and cash equivalents	$	733	$	67
Restricted cash		90		85
Accounts receivable, net of allowance for credit losses of $17 and $21		74		174
Timeshare financing receivables, net		1,053		1,156
Inventory		907		558
Property and equipment, net		484		778
Operating lease right-of-use assets, net		58		60
Investments in unconsolidated affiliates		48		44
Intangible assets, net		79		77
Other assets		109		80
TOTAL ASSETS (variable interest entities - $942 and $748)	$	3,635	$	3,079
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	237	$	298
Advanced deposits		116		115
Debt, net		1,263		828
Non-recourse debt, net		926		747
Operating lease liabilities		74		76
Deferred revenues		268		186
Deferred income tax liabilities		228		259
Total liabilities (variable interest entities - $931 and $750)		3,112		2,509
Commitments and contingencies - see Note 19
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none    issued or outstanding as of June 30, 2020 and December 31, 2019		—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares,   85,077,503 shares issued and outstanding as of June 30, 2020 and   85,535,501 shares issued and outstanding as of December 31, 2019		1		1
Additional paid-in capital		180		179
Accumulated retained earnings		342		390
Total equity		523		570
TOTAL LIABILITIES AND EQUITY	$	3,635	$	3,079

See notes to unaudited condensed consolidated financial statements.

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HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues
Sales of VOIs, net	$	—		$	120		$	56		$	245
Sales, marketing, brand and other fees		13			145			119			286
Financing		43			43			87			84
Resort and club management		39			43			83			85
Rental and ancillary services		5			60			57			119
Cost reimbursements		23			43			72			85
Total revenues		123			454			474			904
Expenses
Cost of VOI sales		(1	)		32			13			68
Sales and marketing		61			186			218			356
Financing		13			12			26			25
Resort and club management		6			12			18			23
Rental and ancillary services		24			37			61			72
General and administrative		22			30			43			57
Depreciation and amortization		11			12			23			20
License fee expense		6			26			28			49
Cost reimbursements		23			43			72			85
Total operating expenses		165			390			502			755
Interest expense		(12	)		(11	)		(22	)		(21	)
Equity in earnings from unconsolidated affiliates		1			2			4			3
Other loss, net		(3	)		(1	)		(1	)		(2	)
Income (Loss) before income taxes		(56	)		54			(47	)		129
Income tax benefit (expense)		8			(15	)		7			(35	)
Net income (loss)	$	(48	)	$	39		$	(40	)	$	94
Earnings (Loss) per share:
Basic	$	(0.56	)	$	0.43		$	(0.47	)	$	1.02
Diluted	$	(0.56	)	$	0.43		$	(0.47	)	$	1.01

See notes to unaudited condensed consolidated financial statements.

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HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)

	Six Months Ended June 30,
	2020			2019
Operating Activities
Net income (loss)	$	(40	)	$	94
Adjustments to reconcile net income (loss) to net cash provided by (used in)    operating activities:
Depreciation and amortization		23			20
Amortization of deferred financing costs, contract costs, and other		9			8
Provision for financing receivables losses		45			38
Other loss, net		1			2
Share-based compensation		4			12
Deferred income tax benefit		(31	)		(9	)
Equity in earnings from unconsolidated affiliates		(4	)		(3	)
Net changes in assets and liabilities:
Accounts receivable, net		100			(3	)
Timeshare financing receivables, net		58			(42	)
Inventory		(36	)		(11	)
Purchases and development of real estate for future conversion to inventory		(19	)		(80	)
Other assets		(33	)		(27	)
Accounts payable, accrued expenses and other		(72	)		(3	)
Advanced deposits		1			7
Deferred revenues		82			68
Net cash provided by operating activities		88			71
Investing Activities
Capital expenditures for property and equipment		(4	)		(17	)
Software capitalization costs		(11	)		(10	)
Investments in unconsolidated affiliates		—			(2	)
Net cash used in investing activities		(15	)		(29	)
Financing Activities
Issuance of debt		495			410
Issuance of non-recourse debt		495			15
Repayment of debt		(60	)		(105	)
Repayment of non-recourse debt		(313	)		(79	)
Debt issuance costs		(6	)		(2	)
Repurchase and retirement of common stock		(10	)		(271	)
Payment of withholding taxes on vesting of restricted stock units		(2	)		(3	)
Proceeds from employee stock plan purchases		—			2
Other financing activity		(1	)		(2	)
Net cash provided by (used in) financing activities		598			(35	)
Net increase in cash, cash equivalents and restricted cash		671			7
Cash, cash equivalents and restricted cash, beginning of period		152			180
Cash, cash equivalents and restricted cash, end of period	$	823		$	187
Supplemental disclosure of non-cash operating activities:
Non-cash transfers from Inventory to Property and Equipment(1)	$	301		$	—
Supplemental disclosure of non-cash financing activities:
Issuance of other debt	$	—		$	23

⁽¹⁾ See Note 8: Property and Equipment for more information.

See notes to unaudited condensed consolidated financial statements.

4

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in millions)

						Additional			Accumulated
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2019		85		$	1	$	179		$	390		$	570
Net income		—			—		—			8			8
Activity related to share-based compensation		—			—		(5	)		—			(5	)
Repurchase and retirement of common stock		(1	)		—		(2	)		(8	)		(10	)
Balance as of March 31, 2020		84			1		172			390			563
Net loss		—			—		—			(48	)		(48	)
Activity related to share-based compensation		—			—		8			—			8
Balance as of June 30, 2020		84			1	$	180		$	342		$	523
						Additional			Accumulated
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2018		94		$	1	$	174		$	441		$	616
Net income		—			—		—			55			55
Activity related to share-based compensation		—			—		1			—			1
Repurchase and retirement of common stock		(3	)		—		(5	)		(92	)		(97	)
Balance as of March 31, 2019		91			1		170			404			575
Net income		—			—		—			39			39
Activity related to share-based compensation		—			—		10			—			10
Repurchase and retirement of common stock		(5	)		—		(11	)		(163	)		(174	)
Balance as of June 30, 2019		86			1	$	169		$	280		$	450

See notes to unaudited condensed consolidated financial statements.

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HILTON GRAND VACATIONS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Organization

Our Business

Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand. Our operations primarily consist of: selling vacation ownership intervals (“VOIs”) for us and third parties; financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing our points-based Hilton Grand Vacations Club exchange program (collectively the “Club”). As of June 30, 2020, we had 60 properties, comprised of 9,595 units, located in the United States (“U.S.”), Japan, the United Kingdom, Italy and Barbados. A significant number of our properties and units are concentrated in Florida, Hawaii, Nevada, New York, and South Carolina, with particular concentration of our units in Florida, Hawaii and New York.

Note 2: Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest.  In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.  All material intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the SEC on March 2, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.

COVID-19

The novel coronavirus (“COVID-19”) pandemic has significantly negatively impacted the hospitality, travel and leisure industries due to various mandates and orders to close non-essential businesses, impose travel restrictions, require “stay-at-home” and/or self-quarantine, and require similar actions. Such restrictions and directives have resulted in cancellations and significant reductions in travel around the world, as well as the negative global economic conditions resulting from the impact of COVID-19. As a result of the reduction in travel, during the first quarter of 2020 we closed substantially all of our resorts and sales centers.  

In addition, in response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.  Further, during the first quarter of 2020, we drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period and on May 8, 2020, we amended our Credit Agreement which amended certain terms of the credit facilities (“Senior Secured Credit Facilities”) to provide us with both near-term and long-term flexibility with respect to satisfying certain negative and financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. See Note 11: Debt and Non-recourse debt for additional actions taken with respect to our financial flexibility.

Prior to re-opening our resorts and sales centers, we introduced the HGV Enhanced Care Guidelines, designed to provide owners, guests and team members with the highest level of cleaning protocols and safety standards recommended by the Center for Disease Control and Prevention and cleaning solutions approved by the Environmental Protection Agency in response to the COVID-19 pandemic. Along with providing personal protective equipment to team members, these Enhanced Care Guidelines include low-touch arrivals and departures, frequent and thorough cleaning, reduction of paper

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items, reduced capacity for our pool decks and fitness centers, and new technologies. While operations were suspended, essential resort personnel worked diligently maintaining the resorts for a safe re-opening. Annual deep cleanings, typically scheduled during slower seasons, were moved up and completed, allowing the resorts to be in top shape when owners and guests arrive.

Beginning in May 2020, various states and counties started to allow gradual relaxation of restrictions on activities and a resumption of businesses. In response, we began a phased reopening of resorts and resumption of our business activities during the second quarter of 2020, but under new operating guidelines and with safety measures. As of June 30, 2020, we have approximately two thirds of our resorts and sales centers open and currently operating however, many of our resorts and sales centers are operating with significant capacity constraints and subject to various safety measures.

While we plan to continue to reopen our resorts and resume our business as conditions permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Further, various state and local government officials may issue new or revised orders that are different than current ones under which we are operating. Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income and other operating results, as well as our business and operations generally. Any significantly extended duration or worsening of the conditions associated with the pandemic may adversely impact our liquidity in the longer term, including our ability to finance our day-to-day business and operations, and may adversely affect our ability to comply with our financial covenants under our debt obligations notwithstanding the recent amendments discussed above.

Summary of Significant Accounting Policies

Accounts Receivable and Allowance for Credit Losses

Accounts receivable primarily consists of trade receivables and is reported at the customers’ outstanding balances, less any allowance for credit losses. The expected credit losses are measured using an expected-loss model that reflects the risk of loss and considers the losses expected over the outstanding period of the receivable.

Cloud Computing Arrangements

We capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in Other assets in our condensed consolidated balance sheets and are expensed in the same line as the hosting arrangement in our condensed consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years. We review the CCAs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the fair value in our condensed consolidated statements of operations.

Derivative Instruments

We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and record changes in fair value in accumulated other comprehensive income (“AOCI”) for the effective portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our condensed consolidated statements of operations. We release the derivative’s gain or loss from AOCI to match the timing of the underlying hedged items’ effect on earnings.

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Recently Issued Accounting Pronouncements

Adopted Accounting Standards

On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, (“ASU 2016-13”), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), using the modified retrospective approach. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our timeshare financing receivables are recorded net of an allowance that is calculated in accordance with ASC 606, Revenue from Contracts with Customers.

On January 1, 2020, we adopted ASU 2018-15 (“ASU 2018-15”), Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. This ASU has been adopted using the retrospective approach. Accordingly, previously reported financial information has been restated to reflect the application of the new standard to the comparative periods presented. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements.

In March 2020, the SEC issued a final rule, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, which simplifies the disclosure requirements related to registered securities under Rule 3-10 of Regulation S-X. The rule replaces the requirement for a parent entity to provide detailed disclosures with regard to guarantors of registered debt offerings within the footnotes to the consolidated financial statements. Under the final rule, a parent entity is required to present summarized financial information of the issuers’ and guarantors’ balance sheets and statements of operations on a consolidated basis. It also requires qualitative disclosures with respect to information about guarantors and the terms and conditions of guarantees. These disclosures may be provided outside the footnotes to the Company’s consolidated financial statements. We early adopted the reporting requirements of the rule in the second quarter of 2020 and elected to provide these disclosures in Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and which also clarifies and amends existing guidance to improve consistent application. The provisions of this ASU are effective for reporting periods after December 15, 2020. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

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Note 3: Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables show our disaggregated revenues by 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 18: Business Segments below for more details related to our segments.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Real Estate and Financing Segment
Sales of VOIs, net	$	—	$	120	$	56	$	245
Sales, marketing, brand and other fees		13		145		119		286
Interest income		36		36		74		72
Other financing revenue		7		7		13		12
Real estate and financing segment revenues	$	56	$	308	$	262	$	615

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Resort Operations and Club Management Segment
Club management	$	22	$	26	$	47	$	52
Resort management		17		17		36		33
Rental		5		53		52		105
Ancillary services		—		7		5		14
Resort operations and club management segment revenues	$	44	$	103	$	140	$	204

Contract Balances

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

	June 30,		December 31,
($ in millions)	2020		2019
Receivables	$	41	$	129

The following table presents the composition of our contract liabilities.

	June 30,		December 31,
($ in millions)	2020		2019
Contract liabilities:
Advanced deposits	$	116	$	115
Deferred Sales of VOIs of projects under construction		135		84
Club activation fees, annual dues and other		118		86
Club Bonus Point incentive liability(1)		59		59

⁽¹⁾ Amounts related to the Club Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our condensed 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 three and six months ended June 30, 2020 that was included in the contract liabilities balance at December 31, 2019 was approximately $17 million and $53 million, respectively. 

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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 (“HOA”) 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 6: 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 target 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.  

Contract liabilities include payments received or due in advance of satisfying our performance obligations. 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 Club 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.

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) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Club Bonus Points that may be redeemed in the future. 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 June 30, 2020:

	June 30,		December 31,
($ in millions)	2020		2019
Sales of VOIs, net	$	135	$	84
Cost of VOI sales(1)		40		27
Sales and marketing expense		20		12

⁽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.

We expect to recognize the revenue, costs of VOI sales and direct selling costs upon completion of the projects in 2021.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of June 30, 2020:

($ in millions)	Remaining Transaction Price		Recognition Period	Recognition Method
Advanced deposits	$	116	18 months	Upon customer stays
Club activation fees		69	7 years	Straight-line basis over average inventory holding    period
Club Bonus Points		59	24 months	Upon redemption

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Note 4: Restricted Cash

Restricted cash was as follows:

	June 30,		December 31,
($ in millions)	2020		2019
Escrow deposits on VOI sales	$	39	$	59
Reserves related to non-recourse debt(1)		51		26
	$	90	$	85

⁽¹⁾ Includes a $15 million cash deposit that will be released upon future pledging of qualified collateral. See Note 11: Debt & Non-recourse Debt for further discussion.

Note 5: Accounts Receivable

The following table represents our accounts receivable, net of allowance for credit losses.  Following the adoption of ASC 326 on January 1, 2020, accounts receivable within the scope of ASC 326 are measured at amortized cost.

($ in millions)	June 30, 2020
Fee-for-service commissions(1)	$	7
Real estate and financing	8
Resort and club operations	21
Tax receivables	32
Other receivables(2)	6
Total	$	74

⁽¹⁾ Net of allowance.

⁽²⁾ Primarily includes individually insignificant accounts receivable recognized in the ordinary course of business, the allowances for which are individually insignificant.

Our accounts receivable are all due within one year of origination. We use delinquency status and economic factors as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.

We sell VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing and brand fees.  We use historical losses and economic factors as a basis to develop our allowance for credit losses. Under these fee-for-service arrangements, we earn commission fees based on a percentage of total interval sales.  Additionally, the terms include provisions requiring the reduction of fees earned for defaults and cancellations.

The changes in our allowance for fee-for-service commissions were as follows:

($ in millions)	June 30, 2020
Balance as of December 31, 2019	$	19
Current period provision for expected credit losses	4
Write-offs charged against the allowance		(8	)
Balance at June 30, 2020	$	15

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Note 6: Timeshare Financing Receivables

Timeshare financing receivables were as follows:

	June 30, 2020
($ in millions)	Securitized			Unsecuritized(1)			Total
Timeshare financing receivables	$	956		$	307		$	1,263
Less: allowance for financing receivables losses		(78	)		(132	)		(210	)
	$	878		$	175		$	1,053

	December 31, 2019
($ in millions)	Securitized			Unsecuritized(1)			Total
Timeshare financing receivables	$	758		$	582		$	1,340
Less: allowance for financing receivables losses		(54	)		(130	)		(184	)
	$	704		$	452		$	1,156

⁽¹⁾ Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.

As of June 30, 2020, we had timeshare financing receivables with a carrying value of $20 million securing the Timeshare Facility in anticipation of future financing activities. As of December 31, 2019, we had no timeshare receivables pledged to the Timeshare Facility. We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale. We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance. During the six months ended June 30, 2020, we recorded an adjustment to our estimate of variable consideration of $45 million, which includes a $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.

In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables, which included a $15 million cash deposit that will be released upon future pledging of qualified collateral, and issued approximately $186 million of 2.74 percent notes, $66 million of 4.22 percent notes and $48 million of 6.42 percent notes, which have a stated maturity date of February 25, 2039. The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized. The transaction is considered a secured borrowing; therefore, the proceeds from the transaction are presented as non-recourse debt (collectively, the “Securitized Debt”). The proceeds were primarily used to pay down the remaining borrowings on our Timeshare Facility and general corporate operating expenses. See Note 11: Debt and Non-recourse Debt for additional information.

Our timeshare financing receivables as of June 30, 2020 mature as follows:

($ in millions)	Securitized			Unsecuritized			Total
Year
2020 (remaining)	$	55		$	13		$	68
2021		112			26			138
2022		115			28			143
2023		118			30			148
2024		119			33			152
Thereafter		437			177			614
		956			307			1,263
Less: allowance for financing receivables losses		(78	)		(132	)		(210	)
	$	878		$	175		$	1,053

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We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the credit quality of our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

We recognize interest income on our timeshare financing receivables as earned. As of June 30, 2020, and December 31, 2019 we had $9 million of interest receivable outstanding included in our condensed consolidated balance sheets. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. As of June 30, 2020, our timeshare financing receivables had interest rates ranging from 3.90 percent to 20.50 percent, a weighted-average interest rate of 12.56 percent, a weighted-average remaining term of 7.7 years and maturities through 2035.

Our gross timeshare financing receivables balances by average FICO score were as follows:

	June 30,		December 31,
($ in millions)	2020		2019
FICO score
700+	$	764	$	818
600-699		279		292
<600		37		39
No score(1)		183		191
	$	1,263	$	1,340

⁽¹⁾ Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

The following table details the origination year of our gross timeshare financing receivables by average FICO score as of June 30, 2020:

($ in millions)	2020		2019		2018		2017		2016		Prior		Total
FICO score
700+	$	74	$	252	$	169	$	109	$	70	$	90	$	764
600-699		24		89		61		39		25		41		279
<600		4		12		7		5		3		6		37
No score(1)		20		59		37		20		14		33		183
	$	122	$	412	$	274	$	173	$	112	$	170	$	1,263

⁽¹⁾ Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

We apply payments we receive for timeshare financing receivables, including those in non-accrual status, to amounts due in the following order: servicing fees; interest; principal; and late charges. Once a receivable is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point. We resume interest accrual for receivables for which we had previously ceased accruing interest once the receivable is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the receivable is 121 days past due and, subsequently, we write off the uncollectible balance against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.

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As of June 30, 2020 and December 31, 2019, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $101 million and $74 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:

	June 30, 2020
($ in millions)	Securitized		Unsecuritized		Total
Current	$	935	$	202	$	1,137
31 - 90 days past due		12		13		25
91 - 120 days past due		4		5		9
121 days and greater past due		5		87		92
	$	956	$	307	$	1,263

	December 31, 2019
($ in millions)	Securitized		Unsecuritized		Total
Current	$	743	$	502	$	1,245
31 - 90 days past due		9		12		21
91 - 120 days past due		3		4		7
121 days and greater past due		3		64		67
	$	758	$	582	$	1,340

The changes in our allowance for financing receivables losses were as follows:

	June 30, 2020
($ in millions)	Securitized			Unsecuritized			Total
Balance as of December 31, 2019	$	54		$	130		$	184
Write-offs		—			(19	)		(19	)
Provision for financing receivables losses(1)		(12	)		57			45
Securitization		36			(36	)		—
Balance as of June 30, 2020	$	78		$	132		$	210

	June 30, 2019
($ in millions)	Securitized			Unsecuritized			Total
Balance as of December 31, 2018	$	43		$	129		$	172
Write-offs		—			(36	)		(36	)
Provision for financing receivables losses(1)		(8	)		46			38
Balance as of June 30, 2019	$	35		$	139		$	174

(1) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

Note 7: Inventory

Inventory was as follows:

	June 30,		December 31,
($ in millions)	2020		2019
Completed unsold VOIs	$	253	$	241
Construction in process		396		59
Land, infrastructure and other		258		258
	$	907	$	558

During the six months ended June 30, 2020, we recorded non-cash operating activity transfers from Property and equipment to Inventory. See Note 8: Property and Equipment. 

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Shown below are costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory.

	Six Months Ended June 30,
($ in millions)	2020		2019
Cost of sales true-up(1)	$	5	$	5

⁽¹⁾ Costs of sales true ups reduced costs of VOI sales and increased inventory in the periods presented.

Shown below are expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Cost of VOI sales related to fee-for-service upgrades	$	—	$	7	$	5	$	16

Note 8: Property and Equipment

Property and equipment was as follows:

	June 30,			December 31,
($ in millions)	2020			2019
Land	$	104		$	154
Building and leasehold improvements		245			286
Furniture and equipment		67			65
Construction in progress		190			383
		606			888
Accumulated depreciation		(122	)		(110	)
	$	484		$	778

During the six months ended June 30, 2020, we recorded non-cash operating activity transfers of $301 million related to the registrations for timeshare units under construction from Property and equipment to Inventory. Non-cash transfers are reflected in our unaudited condensed consolidated statements of cash flows.

Note 9: Consolidated Variable Interest Entities

As of June 30, 2020 and December 31, 2019, we consolidated 5 and 4 variable interest entities (“VIEs”), respectively, that issued non-recourse debt backed by pledged assets consisting primarily of a pool of timeshare financing receivables which is without recourse to us. We are the primary beneficiaries of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. We are also the servicer of these timeshare financing receivables and we are required to replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. Only the assets of our VIEs are available to settle the obligations of the respective entities.

Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:

	June 30,		December 31,
($ in millions)	2020		2019
Restricted cash	$	50	$	26
Timeshare financing receivables, net		878		704
Non-recourse debt(1)		926		747

⁽¹⁾ Net of deferred financing costs.

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During the six months ended June 30, 2020 and 2019, we did not provide any financial or other support to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.

Note 10: Investments in Unconsolidated Affiliates

As of June 30, 2020, we have 25 percent and 50 percent ownership interests in BRE Ace LLC and 1776 Holding LLC, respectively, that are deemed as VIEs. We do not consolidate BRE Ace LLC and 1776 Holding LLC because we are not the primary beneficiary. Our investment interests in and equity earned from both VIEs are included in the consolidated balance sheets as Investments in unconsolidated affiliates and in the consolidated statements of operations as Equity in earnings from unconsolidated affiliates, respectively.

We held investments in our two unconsolidated affiliates with aggregated debt balances of $471 million and $479 million as of June 30, 2020 and December 31, 2019, respectively. The debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals $48 million and $44 million as of June 30, 2020 and December 31, 2019, respectively and (ii) receivables for commission and other fees earned under fee-for-service arrangements.  See Note 17:  Related Party Transactions for additional information.  

Note 11: Debt & Non-recourse Debt

Debt

The following table details our outstanding debt balance and its associated interest rates:

	June 30,			December 31,
($ in millions)	2020			2019
Debt(1)
Senior secured credit facilities:
Term loan with a rate of 2.000%, due 2023	$	182		$	187
Revolver with a weighted average rate of 2.000%, due 2023		760			320
Senior notes with a rate of 6.125%, due 2024		300			300
Other debt		27			27
		1,269			834
Less: unamortized deferred financing costs and discount(2)(3)		(6	)		(6	)
	$	1,263		$	828

⁽¹⁾ As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.080 percent and 4.571 percent, respectively.

⁽²⁾ Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of June 30, 2020 and December 31, 2019.

⁽³⁾ Amount does not include deferred financing costs of $4 million as of June 30, 2020 and $5 million as of December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

In May 2020, we amended our Credit Agreement with respect to certain terms of our credit facilities (the “Amendment”) to provide flexibility with respect to satisfying certain financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. The borrowing capacity under the Credit Agreement remained the same. In connection with the Amendment we incurred $1 million in debt issuance costs.

During the six months ended June 30, 2020, we borrowed $495 million and repaid $60 million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus 1.75 percent, subject to a 0.25 percent floor.

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We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. As of June 30, 2020, we had approximately $182 million of our Term Loan subject to interest rate swap. Such interest rate swaps converted the LIBOR-based variable rates on our Term Loan to an average fixed annual rate of 0.53 percent per annum through November 2023.  Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded as a liability in Accounts payable, accrued expenses and other in our condensed consolidated balance sheets as of June 30, 2020. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. For the six months ended June 30, 2020, we recorded less than $1 million in accumulated other comprehensive loss related to the hedge.

As of June 30, 2020 and December 31, 2019, we had $1 million of outstanding letters of credit under the revolving credit facility.  We were in compliance with all applicable financial covenants as of June 30, 2020.

Non-recourse Debt

The following table details our outstanding non-recourse debt balance and its associated interest rates:

	June 30,			December 31,
($ in millions)	2020			2019
Non-recourse debt(1)
Securitized Debt with an average rate of 1.810%, due 2026	$	34		$	46
Securitized Debt with an average rate of 2.711%, due 2028		126			149
Securitized Debt with an average rate of 3.602%, due 2032		233			275
Securitized Debt with an average rate of 2.431%, due 2033		252			285
Securitized Debt with an average rate of 3.658%, due 2039		292			—
		937			755
Less: unamortized deferred financing costs(2)		(11	)		(8	)
	$	926		$	747

⁽¹⁾ As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.119 percent and 2.876 percent, respectively.

⁽²⁾ Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of June 30, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets.

In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables and issued approximately $186 million of 2.74 percent notes, $66 million of 4.22 percent notes and $48 million of 6.42 percent notes due February 2039. The Securitized Debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interest and temporarily by a $15 million cash deposit, which is reflected as Restricted Cash in our condensed consolidated balance sheets. The Securitized Debt is a non-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt. The proceeds were primarily used to pay down the remaining borrowings on our Timeshare Facility and general corporate operating expenses. In connection with the securitization we incurred $5 million in debt issuance costs.

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. During the second quarter of 2020, we amended the Timeshare Facility, temporarily changing certain covenant requirements pricing and advance rates to be consistent with the amended corporate credit facility. 

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $36 million and $26 million as of June 30, 2020 and December 31, 2019, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

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Debt Maturities

The contractual maturities of our debt and non-recourse debt as of June 30, 2020 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2020 (remaining)	$	6	$	160	$	166
2021		11		258		269
2022		11		165		176
2023		918		116		1,034
2024		300		100		400
Thereafter		23		138		161
	$	1,269	$	937	$	2,206

Note 12: Fair Value Measurements

The carrying amounts and estimated fair values of our financial assets and liabilities were as follows:

	June 30, 2020
			Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net(1)	$	1,053	$	—	$	1,276
Liabilities:
Debt, net(2)		1,263		303		959
Non-recourse debt, net(2)		926		—		916

⁽¹⁾ Carrying amount net of allowance for financing receivables losses.

⁽²⁾ Carrying amount net of unamortized deferred financing costs and discount.

	December 31, 2019
			Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net(1)	$	1,156	$	—	$	1,446
Liabilities:
Debt, net(2)		828		326		544
Non-recourse debt, net(2)		747		—		749

⁽¹⁾ Carrying amount net of allowance for financing receivables losses.

⁽²⁾ Carrying amount net of unamortized deferred financing costs and discount.

Our estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values. The table above excludes cash and cash equivalents, restricted cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The estimated fair values of our timeshare financing receivables were determined using a discounted cash flow model. Our model incorporates default rates, coupon rates, credit quality and borrowing terms respective to the portfolio based on current market assumptions for similar types of arrangements.

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The estimated fair values of our Level 1 debt was based on prices in active debt markets. The estimated fair value of our Level 3 debt and non-recourse debt were as follows:

• Debt - based on indicative quotes obtained for similar issuances and projected future cash flows discounted at risk-adjusted rates.

• Non-recourse debt - based on projected future cash flows discounted at risk-adjusted rates.

We do not have any assets or liabilities measured at fair value on a recurring or non-recurring basis as of June 30, 2020.

Note 13: Leases

We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from 2020 through 2030, with varying renewal and termination options. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We recognize rent expense on leases with both contingent and non-contingent lease payment terms. Rent associated with non-contingent lease payments are recognized on a straight-line basis over the lease term. Rent expense for all operating leases for the three months ended June 30, 2020 and 2019 was $5 million and $4 million, respectively, and $10 million for the six months ended June 30, 2020 and 2019. This amount includes immaterial short-term leases and variable lease costs.

Supplemental cash flow information related to operating leases was as follows:

	Six Months Ended June 30,
($ in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9	$	8
Right-of-use assets obtained in exchange for new lease liabilities:
Operating Leases		5		1

Supplemental balance sheet information related to operating leases was as follows:

	June 30,			December 31,
	2020			2019
Weighted-average remaining lease term of operating leases (in years)	5.7			6.1
Weighted-average discount rate of operating leases		4.87	%		5.34	%

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of June 30, 2020, are as follows:

($ in millions)	Operating Leases
Year
2020 (remaining)	$	9
2021		18
2022		14
2023		12
2024		11
Thereafter		22
Total future minimum lease payments	$	86
Less: imputed interest		(12	)
Present value of lease liabilities	$	74

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Note 14: Income Taxes

At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective tax rate is determined by the level and composition of pre-tax ordinary income or loss, which is subject to federal, foreign and state and local income taxes. The effective tax rate for the six months ended June 30, 2020 and 2019 was approximately 15 percent and 27 percent, respectively. The decrease in the effective tax rate is primarily due to the tax benefit on our worldwide estimated ordinary loss being reduced by the incremental tax expense from the estimated ordinary income in our foreign jurisdictions, the interest due on income deferred related to installment sales, and the impact of estimated permanent differences between financial reporting and taxable income.

We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of June 30, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no effect on either the June 30, 2020 tax rate or the computation of the estimated effective tax rate for the year. We will continue to evaluate the income tax provisions of the CARES Act and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have income tax accounting and disclosure implications.

We have requested a change in accounting method effective for the taxable year beginning on January 1, 2020 and ending on December 31, 2020 which is pending IRS review.  The impact of the requested method change will be included in the financial statements upon IRS consent.

Note 15: Share-Based Compensation

Stock Plan

We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units (“Performance RSUs”) and nonqualified stock options (“Options”) to certain employees and directors. We recognized share-based compensation expense of $6 million and $7 million for the three months ended June 30, 2020 and 2019, respectively, and $4 million and $12 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, unrecognized compensation costs for unvested awards were approximately $25 million, which is expected to be recognized over a weighted average period of 1.8 years. As of June 30, 2020, there were 5,146,485 shares of common stock available for future issuance under this plan.

Service RSUs

During the six months ended June 30, 2020, we issued 652,583 Service RSUs with a grant date fair value of $25.24, which generally vest in equal annual installments over three years from the date of grant.

Options

During the six months ended June 30, 2020, we issued 566,401 Options with an exercise price of $25.80, which vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was $9.14, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

Expected volatility	35.4	%
Dividend yield	—	%
Risk-free rate	1.0	%
Expected term (in years)	6.0

As of June 30, 2020, we had 1,103,850 Options outstanding that were exercisable.

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Performance Shares

During the six months ended June 30, 2020, we issued 172,620 Performance RSUs with a grant date fair value of $25.80. The Performance RSUs are settled at the end of a three-year performance period, with 70 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 30 percent of the Performance RSUs are subject to the achievement of certain contract sales targets. In March 2020, we determined that the performance conditions for the 2018, 2019, and 2020 Performance RSU awards were improbable of achievement due to the significantly negative impact of the COVID-19 pandemic on the global economy, demand for travel and leisure, and our business. As a result, we reversed $8 million of previously recognized share-based compensation expense related to our 2018 and 2019 Performance RSUs and ceased accruing expense related to Performance RSUs granted in 2018, 2019, and 2020, during the three months ended March 31, 2020. As of June 30, 2020, we determined the performance conditions continue to be improbable of achievement and therefore no expense was recognized in the current period.

Employee Stock Purchase Plan

In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the Plan, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 percent of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. During the three and six months ended June 30, 2020 and 2019, we recognized less than $1 million of compensation expense related to this plan.  

Note 16: Earnings (Loss) Per Share

The following table presents the calculation of our basic and diluted earnings (loss) per share (“EPS”).  The weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended June 30, 2020 was 85,002,791 and for the six months ended June 30, 2020 was 85,258,963. The weighted-average shares outstanding used to compute basic EPS and diluted EPS for the three months ended June 30, 2019 was 89,849,803 and 90,271,976, respectively, and for the six months ended June 30, 2019 was 91,959,041 and 92,421,752, respectively.  

	Three Months Ended June 30,					Six Months Ended June 30,
($ and shares outstanding in millions, except per share amounts)	2020			2019		2020			2019
Basic EPS:
Numerator:
Net income (loss)(1)	$	(48	)	$	39	$	(40	)	$	94
Denominator:
Weighted average shares outstanding		85			90		85			92
Basic EPS	$	(0.56	)	$	0.43	$	(0.47	)	$	1.02
Diluted EPS:
Numerator:
Net income (loss)(1)	$	(48	)	$	39	$	(40	)	$	94
Denominator:
Weighted average shares outstanding		85			90		85			92
Diluted EPS	$	(0.56	)	$	0.43	$	(0.47	)	$	1.01

⁽¹⁾ Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.   

The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period. Potentially dilutive shares of 175,635 and 357,912 for the three and six months ended June 30, 2020, respectively, were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share as a result of our net loss position.

For the three and six months ended June 30, 2020, we excluded 3,027,069 and 2,429,811, respectively, and for the three and six months ended June 30, 2019, we excluded 1,433,833 and 1,168,159 share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.

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Note 17: Related Party Transactions

BRE Ace LLC and 1776 Holding, LLC

We hold a 25 percent ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold a 50 percent ownership interest in 1776 Holding, LLC, a VIE, which will construct a timeshare resort property, known as “Liberty Place Charleston, by Hilton Club.”

We record Equity in earnings (losses) from our unconsolidated affiliates in our condensed consolidated statements of operations. See Note 10: Investments in Unconsolidated Affiliates for additional information. Additionally, we earn commissions and other fees related to fee-for-service agreements with the investees to sell VOIs at Elara, by Hilton Grand Vacations and Liberty Place Charleston, by Hilton Club.  These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became related parties.  

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Equity in earnings from unconsolidated affiliates	$	1	$	2	$	4	$	3
Commissions and other fees		4		32		27		68

We also have $2 million and $25 million of outstanding receivables related to the fee-for-service agreements as of June 30, 2020 and December 31, 2019, respectively.

Note 18: Business Segments

We operate our business through the following two segments:

• Real estate sales and financing – We market and sell VOIs that we own. We also source VOIs through fee-for-service agreements with third-party developers. Related to the sales of the VOIs that we own, we provide consumer financing, which includes interest income generated from the origination of consumer receivables to customers to finance their purchase of VOIs and revenue from servicing the timeshare financing receivables. We also generate fee revenue from servicing the timeshare financing receivables provided by third-party developers to purchasers of their VOIs.

• Resort operations and club management – We manage the Club, earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. We earn fees for managing the timeshare properties. We generate rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges under our Club program. We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties.

The performance of our operating segments is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”). We define Adjusted EBITDA as EBITDA which has been further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

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The following table present revenues for our reportable segments reconciled to consolidated amounts:

	Three Months Ended June 30,					Six Months Ended June 30,
($ in millions)	2020		2019			2020			2019
Revenues:
Real estate sales and financing	$	56	$	308		$	262		$	615
Resort operations and club management(1)(2)		44		114			148			224
Total segment revenues		100		422			410			839
Cost reimbursements		23		43			72			85
Intersegment eliminations(1)(2)		—		(11	)		(8	)		(20	)
Total revenues	$	123	$	454		$	474		$	904

⁽¹⁾ Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts. There were no such charges related to this for the three months ended June 30, 2020. These charges totaled $11 million for the three months ended June 30, 2019, and $8 million and $20 million for the six months ended June 30, 2020 and 2019, respectively.  

⁽²⁾ Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled less than $1 million for the three and six months ended June 30, 2020 and 2019.  

The following table presents Segment Adjusted EBITDA for our reportable segments reconciled to net income:

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2020			2019			2020			2019
Adjusted EBITDA:
Real estate sales and financing(1)	$	(14	)	$	69		$	1		$	149
Resort operations and club management(1)		15			66			70			131
Segment Adjusted EBITDA		1			135			71			280
General and administrative		(22	)		(30	)		(43	)		(57	)
Depreciation and amortization		(11	)		(12	)		(23	)		(20	)
License fee expense		(6	)		(26	)		(28	)		(49	)
Other loss, net		(3	)		(1	)		(1	)		(2	)
Interest expense		(12	)		(11	)		(22	)		(21	)
Income tax benefit (expense)		8			(15	)		7			(35	)
Equity in earnings from unconsolidated affiliates		1			2			4			3
Other adjustment items(2)		(4	)		(3	)		(5	)		(5	)
Net income (loss)	$	(48	)	$	39		$	(40	)	$	94

⁽¹⁾ Includes intersegment transactions. Refer to our table presenting revenues by reportable segment above for additional discussion.

⁽²⁾ For the three and six months ended June 30, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items.

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Note 19: Commitments and Contingencies

We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of June 30, 2020, we were committed to purchase approximately $464 million of inventory and land over a period of 11 years and $26 million of other commitments under the normal course of business. Additionally, we have committed to develop additional vacation ownership units at an existing resort in Japan. During the second quarter of 2020, we entered into an agreement to exchange parcels of land in Hawaii, subject to the successful completion of zoning, land use requirements and other applicable regulatory requirements. The actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the six months ended June 30, 2020 and 2019, we purchased $9 million and $28 million, respectively, as required under our inventory-related purchase commitments. As of June 30, 2020, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:

($ in millions)	2020 (remaining)		2021		2022		2023		2024		Thereafter		Total
Inventory purchase obligations	$	17	$	225	$	110	$	58	$	40	$	14	$	464
Other commitments(1)		7		14		3		2		—		—		26
Total	$	24	$	239	$	113	$	60	$	40	$	14	$	490

⁽¹⁾ Primarily relates to commitments related to information technology and brand licensing under the normal course of business.

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe that possible losses derived from an unfavorable outcome that is reasonably possible or remote is not reasonably estimable. While the actual results of claims and litigation cannot be predicted with certainty, we expect that the resolution of all pending or threatened claims and litigation as of June 30, 2020, will not materially affect our unaudited condensed consolidated financial statements.

Note 20: Subsequent Events

Management has evaluated all subsequent events through July 30, 2020, the date the unaudited consolidated financial statements were available to be issued.  The results of management’s analysis indicated no significant subsequent events have occurred that required consideration as adjustments to our disclosures in the unaudited financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements convey management’s expectations as to our future, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time we make such statements. Forward-looking statements include all statements that are not historical facts, including those related to our revenues, earnings, cash flow and operations, and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” predicts,” “intends,” “plans,” “estimates,” “anticipates” “future,” “guidance,” “target,” or the negative version of these words or other comparable words.

We caution you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond our control, that may cause our actual results, performance or achievements to be materially different from the future results. Factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements include: the material impact of the COVID-19 pandemic on our business, operating results, and financial condition; the extent and duration of the impact of the COVID-19 pandemic on global economic conditions; our ability to meet our liquidity needs; risks related to our indebtedness; inherent business risks, market trends and competition within the timeshare and hospitality industries; our ability to successfully source inventory and market, sell and finance VOIs; default rates on our financing receivables; the reputation of and our ability to access Hilton brands and programs, including the risk of a breach or termination of our license agreement with Hilton; compliance with and changes to United States and global laws and regulations, including those related to anti-corruption and privacy; risks related to our acquisitions, joint ventures, and other partnerships; our dependence on third-party development activities to secure just-in-time inventory; the performance of our information technology systems and our ability to maintain data security; regulatory proceedings or litigation; our ability to attract and retain  key executives and employees with skills and capacity to meet our needs; and natural disasters or adverse geo-political conditions. Any one or more of the foregoing factors could adversely impact our operations, revenue, operating margins, financial condition and/or credit rating.

For additional information regarding factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements in this Report, please see the risk factors discussed in “Part I—Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented and updated by the risk factors discussed in “Part II-Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and this Report, as well as those described from time to time other periodic reports that we file with the SEC. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, changes in management’s expectations, or otherwise.

Terms Used in this Quarterly Report on Form 10-Q

Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” or “resorts” and “units” refer to the timeshare properties that we manage or own. Of these resorts and units, a portion is directly owned by us or our joint ventures in which we have an interest and the remaining resorts and units are owned by our third-party owners.

“Developed” refers to VOI inventory that is sourced from projects developed by HGV.

“Fee for service” refers to VOI inventory that we sell and manage on behalf of third-party developers.

“Just-in-time” refers to VOI inventory that is primarily sourced in transactions that are designed to closely correlate the timing of the acquisition by us with our sale of that inventory to purchasers.

“VOI” refers to vacation ownership intervals.

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Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including earnings before interest expense (excluding interest expense relating to our non-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, free cash flow and adjusted free cash flow.

Operational Metrics

This Quarterly Report on Form 10-Q includes discussion of key business operational metrics including contract sales, sales revenue, real estate margin, tour flow, volume per guest and transient rate.  

See “Key Business and Financial Metrics and Terms Used by Management” and “-Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providing non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S. GAAP.

Overview

Our Business

We are a timeshare company that markets and sells VOIs, manages resorts in top leisure and urban destinations, and operates a points-based vacation club. As of June 30, 2020, we have 60 properties, representing 9,595 units, that are primarily located in vacation destinations such as Orlando, Las Vegas, the Hawaiian Islands, New York City, Washington D.C., and South Carolina and feature spacious, condominium-style accommodations with superior amenities and quality service. As of June 30, 2020, we have approximately 327,000 Hilton Grand Vacations Club and Hilton Club (collectively the “Club”) members. Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 18 industry-leading brands across approximately 6,100 properties, as well as numerous experiential vacation options, such as cruises and guided tours. Our business has been and continues to be adversely impacted by the COVID-19 pandemic and its effects on the global economy, including the various government orders and mandates for closures of non-essential businesses.  Please see “Recent Events” and other discussions throughout this Report for additional information regarding such impacts.

We operate our business across two segments: (1) real estate sales and financing; and (2) resort operations and club management.

Real Estate Sales and Financing

Our primary product is the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties. This ownership interest is an interest in real estate generally equivalent to one week on an annual basis, at the timeshare resort where the VOI was purchased. Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties. We source VOIs through fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix focused on developed properties as well as fee-for-service and just-in-time agreements. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers. Sales of owned, including just-in-time inventory, generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

For the six months ended June 30, 2020, sales from fee-for-service, just-in-time and developed inventory sources were 53 percent, 24 percent and 23 percent, respectively, of contract sales. See “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics” for additional discussion of contract sales. Based on our trailing twelve months sales pace, we have access to approximately nine years of future inventory, with capital efficient arrangements representing approximately 52 percent of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.

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We sell our vacation ownership products under the Hilton Grand Vacations brand primarily through our distribution network of both in-market and off-site sales centers.  Our products are currently marketed for sale throughout the United States and the Asia-Pacific region.  We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership.  We have sales distribution centers in Las Vegas, Orlando, Oahu, Japan, New York, Myrtle Beach, Waikoloa, Washington D.C., Hilton Head, Park City, Chicago, Korea and Carlsbad. Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach.  We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products and have an affinity with Hilton and are frequent leisure travelers.  Tour flow quality impacts key metrics such as close rate and VPG, defined in “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics.” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables. For the six months ended June 30, 2020, 57 percent of our contract sales were to our existing owners.

We provide financing for members purchasing our developed and acquired inventory and generate interest income. Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing loans that bear a fixed interest rate typically ranging from 9 percent to 18 percent per annum. Financing propensity was 63 percent and 66 percent for the six months ended June 30, 2020 and 2019, respectively. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.

The interest rate on our loans is determined by, among other factors, the amount of the down payment, the borrower’s credit profile and the loan term. The weighted-average FICO score for new loans to U.S. and Canadian borrowers at the time of origination were as follows:  

	Six Months Ended June 30,
	2020		2019
Weighted-average FICO score		735		737

Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Club.

Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 6: Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

In addition, we earn fees from servicing the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs and from our securitized timeshare financing receivables.

Resort Operations and Club Management

We enter into management agreements with the HOAs of the VOI owners for timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our management services include day-to-day operations of the resorts, maintenance of the resorts, preparation of reports, budgets and projections and employee training and oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10 percent to 15 percent of the costs to operate the applicable resort. The fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services. The initial term of our management agreements typically ranges from three to five years and the agreements are subject to periodic renewal for one to three-year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.

We also manage and operate the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Club members. When owners purchase a VOI, they are generally enrolled in the Club and given an annual allotment of points that allow the member to exchange their annual usage rights in the VOI that they own for a number of vacation and travel options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.

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We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties.

Key Business and Financial Metrics and Terms Used by Management

Real Estate Sales Operating Metrics

We measure our performance using the following key operating metrics:

• Contract sales represents the total amount of VOI products (fee-for-service and developed) under purchase agreements signed during the period where we have received a down payment of at least 10 percent of the contract price. Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business and is used to manage the performance of the sales organization. While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S. GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of our results to the results of our competitors which may source their VOI products differently.

We believe that the presentation of contract sales on a combined basis (fee-for-service and developed) is most appropriate for the purpose of the operating metric, additional information regarding the split of contract sales, is included in “—Real Estate” below. See Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our audited consolidated financial statements included in Item 8 in our Annual Report on form 10-K for the year ended December 31, 2019, for additional information on Sales of VOI, net.  

• Sales revenue represents Sales of VOIs, net, commissions and brand fees earned from the sale of fee-for-service intervals.

• Real estate margin represents sales revenue less the cost of VOI sales, sales and marketing costs, net of marketing revenue. Real estate margin percentage is calculated by dividing real estate margin by sales revenue. We consider this to be an important operating measure because it measures the efficiency of our sales and marketing spending and management of inventory costs.

• Tour flow represents the number of sales presentations given at our sales centers during the period.

• Volume per guest (“VPG”) represents the sales attributable to tours at our sales locations and is calculated by dividing Contract sales, excluding telesales, by tour flow. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate.

Resort and Club Management and Rental Metrics

• Transient rate represents the total rental room revenue for transient guests divided by total number of transient room nights sold in a given period and excludes room rentals associated with marketing programs, owner usage and the redemption of Club Bonus Points.

For further information see Item 8. Financial Statements and Supplementary Data - Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2019.

EBITDA and Adjusted EBITDA

EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income (loss), before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and certain other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

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EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:

• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA and Adjusted EBITDA do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness;

• EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

• EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

• EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

• EBITDA and Adjusted EBITDA do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and

• EBITDA and Adjusted EBITDA may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

Recent Events Related to the COVID-19 Pandemic and Impact on Our Results of Operations, Financial Condition, and Business During the Three and Six Months Ended June 30, 2020.

In March 2020, a National Public Health Emergency was declared in response to the coronavirus, known as COVID-19. As a result, many local, county and state government officials have issued, and continue to issue, various mandates and orders to close non-essential businesses, impose travel restrictions, and require “stay-at-home” and/or self-quarantine in certain cases, all in an effort to protect the health and safety of individuals and aimed at slowing and ultimately stopping the spread and transmission of the virus.

Accordingly, commencing in March 2020, we started to temporarily close substantially all of our properties and suspended our U.S sales operations and closed such sales offices.  In addition, we took a number of other actions to reduce our expenses and preserve liquidity, including furloughing more than 6,100 of our approximately 9,100 employees, implementing salary reductions for the remaining active employees, implementing hiring freezes, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.

Furthermore, we believe the following actions will provide adequate capital to meet our short-and long-term liquidity requirements for anticipated operating expenses and other expenditures, including payroll and related benefits, legal costs, and additional costs related to complying with various regulatory requirements and best practices for opening under the current environment resulting from the pandemic, and to finance our long-term growth plan and capital expenditures for the foreseeable future.

• In March 2020, we drew down the substantial remainder of our borrowing capacity under our revolver facility through net borrowings of $445 million as a precautionary measure to ensure liquidity for a sustained period in the economic environment resulting from the COVID-19 pandemic. We expect the proceeds would be used for general corporate and working capital purposes in the ordinary course of business.

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• In April 2020, we amended certain key definitions related to delinquency level calculations of underlying timeshare loans that are used as collateral for borrowings under our Timeshare Facility, and generated added flexibility to manage any potential increase in the rate of delinquency as a result of the impact of the COVID-19 pandemic.

• In May 2020, we amended our Credit Agreement which amended certain terms of the credit facilities (“Senior Secured Credit Facilities”) to provide us with both near-term and long-term flexibility with respect to satisfying certain negative and financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations.

• In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables and used the proceeds to pay down the $195 million outstanding balance on our Timeshare Facility and for general corporate operating expenses. As of June 30, 2020, we have $450 million remaining borrowing capacity under our Timeshare Facility. See Note 11: Debt and Non-Recourse Debt for additional information.

The closure of our resorts and sales centers, and the related suspensions of our operations, expectedly have had a materially adverse impact on our revenues, net income and other operating results during the second quarter, as well as our business and operations generally, as more fully discussed below. As discussed in further detail below, substantially all of the unfavorable changes in our operating results during the three and six months ended June 30, 2020 as compared to prior periods were as a result of the closure of substantially all of our resorts, operations and sales activities.

Outlook

The COVID-19 pandemic has created an unprecedented and challenging time. Our current focus is on taking critical actions that are aimed at positioning the Company in a sound position from an operational, liquidity, credit access, and compliance perspective for a strong recovery when the impact of COVID-19 subsides. As discussed above, we have taken several steps to enhance our liquidity, preserve cash, reduce our expenditures and provide financial flexibility. We will continue to assess the evolving COVID-19 pandemic, including the various government mandates and orders that impact the re-opening of our properties and any new recommended or required business practices, and will take additional actions as appropriate.

Prior to re-opening our resorts and sales centers, we introduced the HGV Enhanced Care Guidelines, designed to provide owners, guests and team members with the highest level of cleaning protocols and safety standards recommended by the Center for Disease Control and Prevention and cleaning solutions approved by the Environmental Protection Agency in response to the COVID-19 pandemic. Along with providing personal protective equipment to team members, these Enhanced Care Guidelines include low-touch arrivals and departures, frequent and thorough cleaning, reduction of paper items, reduced capacity for our pool decks and fitness centers, and new technologies. While operations were suspended, essential resort personnel worked diligently maintaining the resorts for a safe re-opening. Annual deep cleanings, typically scheduled during slower seasons, were moved up and completed, allowing the resorts to be in top shape when owners and guests arrive.

Beginning in May 2020, various states and counties started to allow gradual relaxation of restrictions on activities and a resumption of businesses. In response, we began a phased reopening of resorts and resumption of our business activities during the second quarter of 2020, but under new operating guidelines and with safety measures. As of July 2020, we have nearly three quarters of our resorts and sales centers open and currently operating however, many of our resorts and sales centers are operating with significant capacity constraints and subject to various safety measures.

Although we have started re-opening our sales centers, they have initially been operating at lower levels of utilization than they were prior to the temporary shutdown.  This includes lower levels of sales staff, modified operating schedules to stagger tours in compliance with social distancing rules, and running a reduced weekly operating calendar.  As we respond to changes in tour flow, we intend to adjust our sales operations accordingly while complying with all applicable social distancing rules and our own safety measures.

While we plan to continue to reopen our resorts and resume our business as conditions and applicable rules and regulations permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Further, various state and local government officials, including Florida, Hawaii and New York, where we have a significant concentration of our properties and units, may issue new or revised orders that are different than current ones under which we are operating.

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Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income and other operating results, as well as our business and operations generally. Any significantly extended duration or worsening of the conditions associated with the pandemic may adversely impact our liquidity in the longer term, including our ability to finance our day-to-day business and operations, and may adversely affect our ability to comply with our financial covenants under our debt obligations notwithstanding the recent amendments discussed above. Please review carefully the risk factors contained in our 2019 10-K and, in particular, those that are included in our first quarter 2020 10-Q and this Report for discussions of various factors and uncertainties related to the pandemic that may materially impact us.

Results of Operations

Three and Six Months Ended June 30, 2020 Compared with the Three and Six Months Ended June 30, 2019  

Segment Results

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 18: Business Segments in our unaudited condensed consolidated financial statements. We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance. For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following tables set forth revenues and Adjusted EBITDA by segment:

	Three Months Ended June 30,					Variance						Six Months Ended June 30,						Variance
($ in millions)	2020		2019			$			%			2020			2019			$			%
Revenues:
Real estate sales and financing	$	56	$	308		$	(252	)		(81.8	)%	$	262		$	615		$	(353	)		(57.4	)%
Resort operations and club    management		44		114			(70	)		(61.4	)		148			224			(76	)		(33.9	)
Segment revenues		100		422			(322	)		(76.3	)		410			839			(429	)		(51.1	)
Cost reimbursements		23		43			(20	)		(46.5	)		72			85			(13	)		(15.3	)
Intersegment eliminations(1)		—		(11	)		11			(100.0	)		(8	)		(20	)		12			(60.0	)
Total revenues	$	123	$	454		$	(331	)		(72.9	)	$	474		$	904		$	(430	)		(47.6	)

⁽¹⁾ Refer to Note 18: Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations.

The following table reconciles net income (loss), our most comparable U.S. GAAP financial measure, to EBITDA and Adjusted EBITDA:

	Three Months Ended June 30,					Variance						Six Months Ended June 30,					Variance
($ in millions)	2020			2019		$			%			2020			2019		$			%
Net income (loss)	$	(48	)	$	39	$	(87	)	NM(1)			$	(40	)	$	94	$	(134	)	NM(1)
Interest expense		12			11		1			9.1	%		22			21		1			4.8	%
Income tax (benefit) expense		(8	)		15		(23	)	NM(1)				(7	)		35		(42	)	NM(1)
Depreciation and amortization		11			12		(1	)		(8.3	)		23			20		3			15.0
Interest expense, depreciation    and amortization included in    equity in earnings from    unconsolidated affiliates		—			1		(1	)		(100.0	)		1			2		(1	)		(50.0	)
EBITDA		(33	)		78		(111	)	NM(1)				(1	)		172		(173	)	NM(1)
Other loss, net		3			1		2		NM(1)				1			2		(1	)		(50.0	)
Share-based compensation    expense(2)		6			7		(1	)		(14.3	)		4			12		(8	)		(66.7	)
Other adjustment items(3)		5			4		1			25.0			10			6		4			66.7
Adjusted EBITDA	$	(19	)	$	90	$	(109	)	NM(1)			$	14		$	192	$	(178	)		(92.7	)

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⁽¹⁾ Fluctuation in terms of percentage change is not meaningful.

⁽²⁾ As of March 31, 2020, we determined that the performance conditions for our 2018, 2019, and 2020 Performance RSUs were improbable of achievement therefore we reversed $8 million of share-based compensation expense recognized in prior years and ceased accruing expenses related to Performance RSUs granted in 2018, 2019, and 2020, during the three months ended March 31, 2020.  As of June 30, 2020, we determined the performance conditions continue to be improbable of achievement and therefore no expense was recognized for our Performance RSUs in the current period.

⁽³⁾ For the three and six months ended June 30, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items.

The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA:

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Adjusted EBITDA:
Real estate sales and financing(2)	$	(14	)	$	69		$	(83	)	NM(1)			$	1		$	149		$	(148	)		(99.3	)%
Resort operations and club    management(2)		15			66			(51	)		(77.3	)%		70			131			(61	)		(46.6	)
Segment Adjusted EBITDA		1			135			(134	)		(99.3	)		71			280			(209	)		(74.6	)
Adjustments:
Adjusted EBITDA from    unconsolidated affiliates		1			3			(2	)		(66.7	)		5			5			—			—
License fee expense		(6	)		(26	)		20			(76.9	)		(28	)		(49	)		21			(42.9	)
General and administrative(3)		(15	)		(22	)		7			(31.8	)		(34	)		(44	)		10			(22.7	)
Adjusted EBITDA	$	(19	)	$	90		$	(109	)	NM(1)			$	14		$	192		$	(178	)		(92.7	)

⁽¹⁾ Fluctuation in terms of percentage change is not meaningful.

⁽²⁾ Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.

⁽³⁾ Excludes segment related share-based compensation, depreciation and other adjustment items.  

Real Estate Sales and Financing

In accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed. The Real estate sales and financing segment is impacted by construction related deferral and recognition activity. In periods where Sales of VOIs and related direct costs of projects under construction are deferred, margin percentages will generally contract as the indirect marketing and selling costs associated with these sales are recognized as incurred in the current period.  In periods where previously deferred Sales of VOIs and related direct costs are recognized upon construction completion, margin percentages will generally expand as the indirect marketing and selling costs associated with these sales were recognized in prior periods.  

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The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction:

	Three Months Ended June 30,						Variance		Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$		2020			2019			$
Sales of VOIs (deferrals)	$	(4	)	$	(34	)	$	30	$	(51	)	$	(34	)	$	(17	)
Sales of VOIs recognitions		—			—			—		—			—			—
Net Sales of VOIs (deferrals) recognitions		(4	)		(34	)		30		(51	)		(34	)		(17	)
Cost of VOI sales (deferrals)(1)		—			(11	)		11		(13	)		(11	)		(2	)
Cost of VOI sales recognitions		—			—			—		—			—			—
Net Cost of VOI sales (deferrals) recognitions(1)		—			(11	)		11		(13	)		(11	)		(2	)
Sales and marketing expense (deferrals)		(1	)		(5	)		4		(8	)		(5	)		(3	)
Sales and marketing expense recognitions		—			—			—		—			—			—
Net Sales and marketing expense      (deferrals) recognitions		(1	)		(5	)		4		(8	)		(5	)		(3	)
Net construction (deferrals) recognitions	$	(3	)	$	(18	)	$	15	$	(30	)	$	(18	)	$	(12	)

⁽¹⁾ Includes anticipated Costs of VOI sales of VOIs under construction that will be acquired under a just-in-time arrangement once construction is complete for the six months ended June 30, 2020.

Real estate sales and financing segment revenues decreased by $252 million for the three months ended June 30, 2020 and $353 million for the six months ended June 30, 2020, compared to the same periods in 2019, primarily due to decreases in sales revenue and marketing revenue as a result of the temporary closure of substantially all of our properties and suspension of our sales and related operations as a result of the COVID-19 pandemic.

Real estate sales and financing segment Adjusted EBITDA decreased by $83 million and $148 million for the three and six months ended June 30, 2020, compared to the same periods in 2019, primarily due to the decreases in segment revenues associated with segment performance discussed herein partially offset by decreases in related expenses.  In addition, real estate sales and financing segment Adjusted EBITDA was impacted by $15 million in one-time payroll related expenses, net of an employee retention credit granted under the CARES Act, primarily related to payments made to employees as a result of operational closures caused by the COVID-19 pandemic for the six months ended June 30, 2020, respectively.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the real estate sales and financing segment.

Resort Operations and Club Management

Resort operations and club management segment revenues decreased $70 million and $76 million for the three and six months ended June 30, 2020, compared to the same periods in 2019, primarily due to decreases in rental and ancillary revenues. Resort operations and club management segment Adjusted EBITDA decreased $51 million and $61 million for the three and six months ended June 30, 2020, compared to the same periods in 2019, primarily due to the decreases in segment margin associated with segment performance discussed herein.

Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the resort operations and club management segment.

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Real Estate Sales and Financing Segment

Real Estate

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions, except Tour flow and VPG)	2020			2019			$			%			2020			2019			$			%
Sales of VOIs, net	$	—		$	120		$	(120	)		(100.0	)%	$	56		$	245		$	(189	)		(77.1	)%
Adjustments:
Fee-for-service sales(2)		19			185			(166	)		(89.7	)		149			375			(226	)		(60.3	)
Provision for financing receivables losses		8			24			(16	)		(66.7	)		45			38			7			18.4
Reportability and other:
Net deferral (recognition) of sales of VOIs under construction(3)		4			34			(30	)		(88.2	)		51			34			17			50.0
Fee-for-service sale upgrades, net		(1	)		(10	)		9			(90.0	)		(9	)		(24	)		15			(62.5	)
Other(4)		5			10			(5	)		(50.0	)		(13	)		17			(30	)	NM(1)
Contract sales	$	35		$	363		$	(328	)		(90.4	)	$	279		$	685		$	(406	)		(59.3	)
Tour flow		5,810			101,712			(95,902	)		(94.3	)		72,775			184,356			(111,581	)		(60.5	)
VPG	$	4,786		$	3,393		$	1,393			41.1		$	3,608		$	3,520		$	88			2.5

⁽¹⁾ Fluctuation in terms of percentage change is not meaningful.

⁽²⁾ Represents contract sales from fee-for-service properties on which we earn commissions and brand fees.

⁽³⁾ Represents the net impact of deferred revenues related to the Sales of VOIs under construction that are recognized when construction is complete.

⁽⁴⁾ Includes adjustments for revenue recognition, including amounts in rescission and sales incentives.

Contract sales decreased $328 million and $406 million for the three and six months ended June 30, 2020, respectively, primarily due to a decrease in tour flow related to the temporary closure of substantially all of our properties and suspension of sales and related operations due to the COVID-19 pandemic. Beginning in May 2020, we began a phased reopening of resorts and resumption of our business activities however, many of our resorts and sales centers are operating with significant capacity constraints and are subject to various safety measures. As of June 30, 2020, we have approximately two thirds of our resorts and sales centers open and currently operating.

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Sales, marketing, brand and other fees	$	13		$	145		$	(132	)		(91.0	)%	$	119		$	286		$	(167	)		(58.4	)%
Less:
Marketing revenue and other fees		4			38			(34	)		(89.5	)		29			68			(39	)		(57.4	)
Commissions and brand fees		9			107			(98	)		(91.6	)		90			218			(128	)		(58.7	)
Sales of VOIs, net		—			120			(120	)		(100.0	)		56			245			(189	)		(77.1	)
Sales revenue		9			227			(218	)		(96.0	)		146			463			(317	)		(68.5	)
Less:
Cost of VOI sales		(1	)		32			(33	)	NM(1)				13			68			(55	)		(80.9	)
Sales and marketing expense, net(2)		56			139			(83	)		(59.7	)		181			270			(89	)		(33.0	)
Real estate margin	$	(46	)	$	56		$	(102	)	NM(1)			$	(48	)	$	125		$	(173	)	NM(1)
Real estate margin percentage	NM(1)				24.7	%								(32.9	)%		27.0	%

⁽¹⁾ Fluctuation in terms of percentage change is not meaningful.

⁽²⁾ Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

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Sales revenue decreased for the three and six months ended June 30, 2020, compared to the same period in 2019, due to decreases in sales revenue, commission and brand fees and related expenses as a result of the temporary closure of substantially all of our properties and suspension of our sales and related operations as a result of the COVID-19 pandemic.

Financing

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$		%
Interest income	$	36		$	36		$	—			—		$	74		$	72		$	2		2.8	%
Other financing revenue		7			7			—			—			13			12			1		8.3
Financing revenue		43			43			—			—			87			84			3		3.6
Consumer financing interest expense		7			7			—			—			14			14			—		—
Other financing expense		6			5			1			20.0			12			11			1		9.1
Financing expense		13			12			1			8.3			26			25			1		4.0
Financing margin	$	30		$	31		$	(1	)		(3.2	)	$	61		$	59		$	2		3.4
Financing margin percentage		69.8	%		72.1	%								70.1	%		70.2	%

Financing revenue remained flat for the three months ended June 30, 2020 and increased $3 million for the six months ended June 30, 2020, compared to the same periods in 2019 due to higher interest income resulting from an increase in the weighted average interest rate we receive on our timeshare financing receivables balance and an increase in other financing revenue related to higher loan servicing fees.

Financing margin and margin percentage decreased for the three months ended June 30, 2020, compared to the same period in 2019 related to the increase in other financing expenses. Financing margin increased for the six months ended June 30, 2020 while margin percentage remained relatively flat, compared to the same period in 2019 driven by an increase in interest income and other financing revenue partially offset by an increase in other financing expenses.

Resort Operations and Club Management Segment

Resort and Club Management

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Club management revenue	$	22		$	26		$	(4	)		(15.4	)%	$	47		$	52		$	(5	)		(9.6	)%
Resort management revenue		17			17			—			—			36			33			3			9.1
Resort and club management revenues		39			43			(4	)		(9.3	)		83			85			(2	)		(2.4	)
Club management expense		5			7			(2	)		(28.6	)		12			14			(2	)		(14.3	)
Resort management expense		1			5			(4	)		(80.0	)		6			9			(3	)		(33.3	)
Resort and club management expenses		6			12			(6	)		(50.0	)		18			23			(5	)		(21.7	)
Resort and club management margin	$	33		$	31		$	2			6.5		$	65		$	62		$	3			4.8
Resort and club management margin percentage		84.6	%		72.1	%								78.3	%		72.9	%

Resort and club management revenues decreased for the three and six months ended 2020, compared to the same periods in 2019, primarily due to a decrease in club management revenue related to the refunding and waiving of club transaction fees to accommodate our guests impacted by the COVID-19 pandemic partially offset by (i) an increase of approximately 10,000 Club members and (ii) an increase in resort management revenue from the launch of new properties. Resort and club management margin percentage increased for the three and six months ended 2020, compared to the same periods in 2019, primarily due to a reduction in resort and club management expenses driven by the temporary closure and suspension of substantially all of our resort operations as a result of the COVID-19 pandemic.

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Rental and Ancillary Services

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Rental revenues	$	5		$	53		$	(48	)		(90.6	)%	$	52		$	105		$	(53	)		(50.5	)%
Ancillary services revenues		—			7			(7	)		(100.0	)		5			14			(9	)		(64.3	)
Rental and ancillary services revenues		5			60			(55	)		(91.7	)		57			119			(62	)		(52.1	)
Rental expenses		22			30			(8	)		(26.7	)		54			59			(5	)		(8.5	)
Ancillary services expense		2			7			(5	)		(71.4	)		7			13			(6	)		(46.2	)
Rental and ancillary services    expenses		24			37			(13	)		(35.1	)		61			72			(11	)		(15.3	)
Rental and ancillary services margin	$	(19	)	$	23		$	(42	)	NM(1)			$	(4	)	$	47		$	(51	)	NM(1)
Rental and ancillary services margin    percentage	NM(1)				38.3	%								(7.0	)%		39.5	%

⁽¹⁾ Fluctuation in terms of percentage change is not meaningful.

Rental and ancillary services revenue and expense decreased for the three and six months ended June 30, 2020, compared to the same periods in 2019, due to the temporary closure and suspension of substantially all of our resort operations as a result of the COVID-19 pandemic. Rental and ancillary services margin and margin percentage decreased for the three and six months ended June 30, 20120, compared to the same period in 2019, primarily due to the decreases in revenues and expenses discussed above. Beginning in May 2020, we began a phased reopening of resorts and resumption of our business activities however, many of our resorts are operating with significant capacity constraints and are subject to various safety measures. As of June 30, 2020, we have approximately two thirds of our resorts open and currently operating.

Other Operating Expenses

	Three Months Ended June 30,				Variance						Six Months Ended June 30,				Variance
($ in millions)	2020		2019		$			%			2020		2019		$			%
General and administrative	$	22	$	30	$	(8	)		(26.7	)%	$	43	$	57	$	(14	)		(24.6	)%
Depreciation and amortization		11		12		(1	)		(8.3	)		23		20		3			15.0
License fee expense		6		26		(20	)		(76.9	)		28		49		(21	)		(42.9	)

The change in other operating expenses for the three and six months ended June 30, 2020, compared to the same periods in 2019, is driven by a decrease in General and administrative expenses related to (i) decreases in salaries and wages resulting from the furloughs and pay decreases announced during the first quarter of 2020, (ii) the reversal of previously recognized expense related to our 2018 and 2019 Performance RSUs which are not expected to achieve certain performance targets during the first quarter of 2020 and (iii) lower license fee expense related to the corresponding decrease in real estate sales and resort operations revenue.

Non-Operating Expenses

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Interest expense	$	12		$	11		$	1			9.1	%	$	22		$	21		$	1			4.8	%
Equity in earnings from unconsolidated affiliates		(1	)		(2	)		1			(50.0	)		(4	)		(3	)		(1	)		33.3
Other loss, net		3			1			2		NM(1)				1			2			(1	)		(50.0	)
Income tax (benefit) expense		(8	)		15			(23	)	NM(1)				(7	)		35			(42	)	NM(1)

⁽¹⁾ Fluctuation in terms of percentage change is not meaningful.

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The change in non-operating expenses for the three and six months ended June 30, 2020, compared to the same periods in 2019, is primarily due to a decrease in income tax expense due to a decrease in income before taxes combined with a decrease in the effective tax rate. See Note 14: Income Taxes for additional information.

Liquidity and Capital Resources

Overview

Our cash management objectives are to maintain the availability of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects. Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with potential acquisitions and development projects.

We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our senior secured credit facility and our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.  

• In March 2020, we drew down the substantial remainder of our borrowing capacity under the revolver facility through net borrowings of $445 million as a precautionary measure to ensure liquidity for a sustained period in the economic environment resulting from the COVID-19 pandemic. We do not have a plan for the use of the proceeds other than for general corporate and working capital purposes in the ordinary course of business. As of June 30, 2020, we have $39 million remaining borrowing capacity under the revolver facility (“Revolver”) which includes $29 million of undrawn borrowing capacity available for letters of credit and $10 million available under short-term borrowings. See Note 11: Debt and Non-Recourse Debt for additional information.

• In April 2020, we amended certain key definitions related to delinquency level calculations of underlying timeshare loans that are used as collateral for borrowings under our Timeshare Facility, and generated added flexibility to manage any potential increase in the rate of delinquency as a result of the impact of the COVID-19 pandemic.

• In May 2020, we amended our Credit Agreement which amended certain terms of the credit facilities (“Senior Secured Credit Facilities”) to provide us with both near-term and long-term flexibility with respect to satisfying certain negative and financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations.

• In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables and used the proceeds to pay down the $195 million outstanding balance on our Timeshare Facility and for general corporate operating expenses. As of June 30, 2020, we have $450 million remaining borrowing capacity under our Timeshare Facility. See Note 11: Debt and Non-Recourse Debt for additional information.

• As of June 30, 2020, we had total cash and cash equivalents of $823 million, including $90 million of restricted cash. The restricted cash balance relates to escrowed cash from sales of our VOIs and reserves related to our non-recourse debt.  

To optimize our liquidity and access to capital in light of the significant adverse impact of the COVID-19 pandemic, particularly as substantially all of our properties were temporarily closed and substantially all of our sales, operations and other activities were suspended during the first and second quarter of 2020, in addition to the steps discussed above, we have undertaken efforts to increase our capital and decrease our expenses. These include the furlough of approximately 67 percent of our employees, temporary salary reductions for the remaining employees, eliminating discretionary spending, and reducing our planned investment in new inventory by approximately $200 million. We have also suspended the share repurchase program that was initially authorized by our Board in March 2020.

We believe that these actions, together with drawing on available borrowings under our Revolver and preserving our capacity under our Timeshare Facility as described above, will provide adequate capital to meet our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, and additional costs related to complying with various regulatory requirements and best practices for opening under the current environment resulting from the pandemic, and to finance our long-term growth plan and capital expenditures for the foreseeable future.

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In addition, as noted previously, beginning in May 2020, in response to various states and counties starting to allow gradual relaxation of restrictions on activities and a resumption of businesses, we began a phased reopening of resorts and resumption of our business activities, including our sales activities. However, we are operating under new guidelines and with safety measures that did not exist prior to the onset of the pandemic. As of July 2020, we have nearly three quarters of our resorts and sales centers open and currently operating however, many of our resorts and sales centers are operating with significant capacity constraints and subject to various safety measures. While we plan to continue to reopen our resorts and resume our business as conditions permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income and other operating results, as well as our business and operations generally and, accordingly, our future cash flows and our liquidity in the longer term. Any sustained material adverse impact on our revenues, net income (loss) and other operating results due to COVID-19 could adversely affect our ability to comply with our financial covenants under our debt obligations.

Sources and Uses of Our Cash

The following table summarizes our net cash flows and key metrics related to our liquidity:

	Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$
Net cash provided by (used in):
Operating activities	$	88		$	71		$	17
Investing activities		(15	)		(29	)		14
Financing activities		598			(35	)		633

Operating Activities

Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related ancillary services. Cash flows used in operating activities primarily include spending for the purchase and development of real estate for future conversion to inventory and funding our working capital needs. Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs; the degree to which our owners finance their purchase and our owners’ repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.

The change in net cash flows provided by operating activities for the six months ended June 30, 2020, compared to the same period in 2019 was primarily due to a reduction in the purchase and development of real estate for future conversion to inventory, partially offset by decreased sources of cash from working capital.

The following table exhibits our VOI inventory spending:

	Six Months Ended June 30,
($ in millions)	2020		2019
VOI spending - owned properties	$	41	$	54
VOI spending - fee-for-service upgrades(1)		9		24
Purchases and development of real estate for future conversion to inventory		19		80
Total VOI inventory spending	$	69	$	158

⁽¹⁾ Includes expense related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects from developed projects of $5 million and $16 million recorded in Costs of VOI sales for the six months ended June 30, 2020 and 2019, respectively.

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Investing Activities

The following table summarizes our net cash used in investing activities:

	Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$
Capital expenditures for property and equipment	$	(4	)	$	(17	)	$	13
Software capitalization costs		(11	)		(10	)		(1	)
Investments in unconsolidated affiliates		—			(2	)		2
Net cash used in investing activities	$	(15	)	$	(29	)	$	14

The change in net cash used in investing activities for the six months ended June 30, 2020, compared to the same period in 2019, was primarily due to a reduction of property and equipment spending.

Our capital expenditures include spending related to technology, buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.

Financing Activities

The following table summarizes our net cash provided by financing activities:

	Six Months Ended June 30,						Variance
($ in millions)	2020			2019			$
Issuance of debt	$	495		$	410		$	85
Issuance of non-recourse debt		495			15			480
Repayment of debt		(60	)		(105	)		45
Repayment of non-recourse debt		(313	)		(79	)		(234	)
Debt issuance costs		(6	)		(2	)		(4	)
Repurchase and retirement of common stock		(10	)		(271	)		261
Payment of withholding taxes on vesting of restricted stock units		(2	)		(3	)		1
Proceeds from employee stock plan purchases		—			2			(2	)
Other financing activity		(1	)		(2	)		1
Net cash provided by (used in) financing activities	$	598		$	(35	)	$	633

The change in net cash provided by (used in) financing activities for the six months ended June 30, 2020, compared to the same period in 2019, was primarily due to (i) the debt borrowings and repayments under our Revolver of $85 million and $45 million, respectively, (ii) the issuance of $300 million of securitized debt offset by additional repayments of $39 million of our other securitized debt, (iii) the additional borrowing of $180 million on our Timeshare Facility offset by a repayment of our outstanding balance of $195 million, and (iv) a reduction in repurchases and retirement of common stock.

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Contractual Obligations

The following table summarizes our significant contractual obligations as of June 30, 2020:

	Payments Due by Period
($ in millions)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Debt	$	1,269	$	12	$	22	$	1,212	$	23
Non-recourse debt		937		261		367		188		121
Interest on debt(1)		232		63		104		50		15
Operating leases		86		18		28		23		17
Inventory purchase commitments		464		108		244		98		14
Other commitments(2)		26		13		12		1		—
Total contractual obligations	$	3,014	$	475	$	777	$	1,572	$	190

₍₁₎ Includes interest on our debt and non-recourse debt. For our variable-rate debt, we have assumed a constant 30-day LIBOR rate of 0.16 percent, subject to a 0.25 percent floor, as of June 30, 2020.

₍₂₎ Primarily relates to commitments related to information technology and brand licensing under the normal course of business.

We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand.  As of June 30, 2020, our inventory-related purchase commitments totaled $464 million over 11 years of which we expect to purchase $17 million for the remaining of 2020.  

We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating. We have commitments from surety providers in the amount of $576 million as of June 30, 2020 which primarily consist of escrow and construction related bonds.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements as of June 30, 2020 consisted of $464 million of certain commitments with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand and $26 million of other commitments under the normal course of business. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note 19: Commitments and Contingencies in our unaudited condensed consolidated financial statements for a discussion of our off-balance sheet arrangements.

Guarantor Financial Information

Certain subsidiaries, which are listed on Exhibit 22 of this Quarterly Report on Form 10-Q, have guaranteed our obligations related to our senior unsecured notes (the “Notes”). The notes were issued in November 2016 with an aggregate principal balance of $300 million, an interest rate of 6.125 percent, and maturity in December 2024.

Our senior unsecured notes were co-issued by Hilton Grand Vacations Borrower LLC and Hilton Grand Vacations Borrower Inc. (the “Issuers”) and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Hilton Grand Vacations Inc. (the “Parent”), Hilton Grand Vacations Parent LLC (the “Intermediate Parent”), the Issuers, and each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries (all entities that guarantee the Notes, collectively, the “Obligor group”).

The Notes rank equally in right of payment with all of our existing and future senior unsecured obligations, are senior in right of payment to any of our Guarantor’s subordinated indebtedness, and are subordinate to all existing and future liabilities of our entities that do not guarantee the Notes and our secured indebtedness, including our senior secured credit facilities and securitized non-recourse debt.

The guarantee of each guarantor subsidiary is limited to a maximum amount, subject to applicable U.S. and non-U.S. laws. The guarantees can also be released upon the sale or transfer of a guarantor subsidiary’s capital stock or substantially all of its assets, becoming designated as an unrestricted subsidiary, or upon its consolidation into a co-Issuer or another subsidiary Guarantor.

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The following tables provide summarized financial information of the Obligor group on a combined basis after elimination of (i) intercompany transactions and balances between the Parent Company and the subsidiary Guarantors and (ii) investments in and equity in the earnings of non-Guarantor subsidiaries and unconsolidated affiliates:

Summarized Financial Information

	June 30,		December 31,
($ in millions)	2020		2019
Assets
Cash and cash equivalents	$	690	$	35
Restricted cash		39		59
Accounts receivable, net - due from non-guarantor subsidiaries		14		41
Accounts receivable, net - due from related parties		2		25
Accounts receivable, net - other		67		126
Timeshare financing receivables, net		149		449
Inventory		824		524
Property and equipment, net		474		718
Operating lease right-of-use assets, net		57		58
Intangible assets, net		79		77
Other assets		98		69
Total assets	$	2,493	$	2,181
Liabilities
Accounts payable, accrued expenses and other - due from non-guarantor subsidiaries	$	14	$	41
Accounts payable, accrued expenses and other - other		229		288
Advanced deposits		116		115
Debt, net		1,263		828
Operating lease liabilities		73		74
Deferred revenues		268		186
Deferred income tax liabilities		228		259
Total liabilities	$	2,191	$	1,791

	Six Months Ended June 30,
($ in millions)	2020
Total revenues - transactions with non-guarantor subsidiaries	$	3
Total revenues - other		408
Operating loss		(65	)
Net loss		(80	)

Subsequent Events

Management has evaluated all subsequent events through July 30, 2020, the date the unaudited consolidated financial statements were available to be issued.  The results of management’s analysis indicated no significant subsequent events have occurred that required consideration as adjustments to our disclosures in the unaudited financial statements.

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the year ended December 31, 2019.  

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives and through pricing policies that may take into account currency exchange rates. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Interest Rate Risk

We are exposed to interest rate risk on our variable-rate debt, comprised of the term loans, Revolver and our Timeshare Facility, of which the Timeshare Facility is without recourse to us. The interest rates are based on one-month LIBOR and we are most vulnerable to changes in this rate. We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt.

We intend to securitize timeshare financing receivables in the asset-backed financing market periodically. We expect to secure fixed-rate funding to match our fixed-rate timeshare financing receivables. However, if we have variable-rate debt in the future, we will monitor the interest rate risk and evaluate opportunities to mitigate such risk through the use of derivative instruments.

To the extent we continue to have variable-rate borrowings and continue to utilize variable-rate indebtedness in the future, any increase in interest rates beyond amounts covered under any corresponding derivative financial instruments, particularly if sustained, could have an adverse effect on our net income, cash flows and financial position. While we have entered into certain hedging transactions to address such potential risk, such transactions and any future hedging transactions we may enter into may not adequately mitigate the adverse effects of interest rate increases or that counterparties in those transactions will honor their obligations.

The following table sets forth the contractual maturities, weighted-average interest rates and the total fair values as of June 30, 2020, for our financial instruments that are materially affected by interest rate risk:

				Maturities by Period
($ in millions)	Weighted Average Interest Rate(1)			2020		2021		2022		2023		2024		There- after		Total(2)		Fair Value
Assets:
Fixed-rate securitized timeshare    financing receivables		12.248	%	$	55	$	112	$	115	$	118	$	119	$	437	$	956	$	961
Fixed-rate unsecuritized    timeshare financing    receivables		13.528	%		13		26		28		30		33		177		307		315
Liabilities:(3)
Fixed-rate debt		3.914	%		161		259		166		117		400		161		1,264		1,251
Variable-rate debt(4)		2.000	%		5		10		10		917		—		—		942		927

⁽¹⁾ Weighted-average interest rate as of June 30, 2020.

⁽²⁾ Amount excludes unamortized deferred financing costs.

⁽³⁾ Includes debt and non-recourse debt.

⁽⁴⁾ Variable-rate debt includes principal outstanding debt of $942 million as of June 30, 2020. See Note 11: Debt & Non-recourse Debt in our unaudited condensed consolidated financial statements for additional information.

Foreign Currency Exchange Rate Risk

Though the majority of our operations are conducted in United States dollar (“U.S. dollar”), we are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates. Our principal exposure results from our timeshare financing receivables denominated in Japanese yen, the value of which could change materially in reference to our reporting currency, the U.S. dollar. A 10 percent increase in the foreign exchange rate of Japanese yen to U.S. dollar would change our gross timeshare financing receivables by less than $1 million. A 10 percent change in the foreign exchange rate of Mexican Peso to U.S. dollar would change our gross VAT receivable by less than $1 million.

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ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) or our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of the controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of effectiveness of controls and procedures to future periods are subject to the risk that the controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the controls and procedures may have deteriorated. 

In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  We will continue to assess the adequacy of our disclosure controls and procedures and make any appropriate changes given the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to assess the effectiveness of our internal controls over financial reporting consistent with past practice, particularly in light of the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe an unfavorable outcome is either reasonably possible or remote and/or for which are not reasonably estimable. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of June 30, 2020 will not have a material effect on our unaudited condensed consolidated financial statements.  

Item 1A. Risk Factors

The following represents important changes and updates to the risk factors previously disclosed in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2019 (our “2019 10-K”) and Item 1A. of Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (our “Prior 10-Q”). The risk factors discussed below and the risk factors included in our 2019 10-K and our Prior 10-Q are important to understanding our business, operation, results of operations, financial condition, and prospects, especially during the current environment, and our statements generally in this Form 10-Q. Therefore, they should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

In addition, the following risks and those risks described in our 2019 Form 10-K and our Prior 10-Q contain forward-looking statements, and they may not be the only risks facing the Company. The future business, results of operations and financial condition of the Company can be affected by the risk factors described in such reports and by other factors currently unknown, that management presently believes not to be material, that management has made certain forward looking projections, estimates or assumptions, or that may rapidly evolve, develop or change, including those that are caused, directly or indirectly, by the COVID-19 pandemic.  Any one or more of such factors could, directly or indirectly, cause our actual financial condition and results of operations to vary materially from past, or from anticipated future, financial condition and results of operations. Any of these factors, in whole or in part, could materially and adversely affect our business, results of operations and financial condition and the trading price of our common stock.  Because of these factors affecting our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

The COVID-19 pandemic and related events, including the various measures implemented or adopted to respond to the pandemic, have had, and will continue to have, a material adverse effect on our business, financial condition and results of operations for the foreseeable future.

The global COVID-19 pandemic and the various measures taken or implemented by governments and other authorities in the United States and around the world, businesses, organizations and individuals have had, and will continue to have, a significant adverse impact on domestic and international travel, consumer demand for travel, commercial activities across the travel, lodging and hospitality industries, businesses generally, and consequently, on our business and operations. The COVID-19 pandemic also has had, and will continue to have, significant adverse impacts on global economic, capital market, financial, healthcare, societal, and government regulatory conditions. In response to the growing pandemic and various governmental orders, we took certain significant actions to ensure the continuity of our business and operations between the end of the first quarter 2020 and during the second quarter 2020, including temporarily closing operations at substantially all of our resorts, closing substantially all of our sales centers, implementing salary reductions, furloughing over 6,100 of our approximately 9,100 employees, implementing hiring freezes, drawing down substantial amounts under our credit facility as a precautionary measure to ensure liquidity and amending both our credit facility and our warehouse facility to provide near-term flexibility on certain financial and operating covenant ratios. All of these actions have had, and will likely continue to have, a material adverse effect on our results of operations, financial condition, and business.

During May 2020, various cities, counties and states in the US started to allow gradual relaxation of restrictions on activities and a resumption of businesses. We began a phased reopening of our resorts and resumption of our sales activities in accordance with applicable orders, and we plan to continue to reopen our resorts as conditions permit. However, we have implemented a variety of measures that are required, or we believe are advisable for our business with the goal of keeping our customers, owners, team members, and the communities we serve as safe as reasonably feasible from the COVID-19 virus. These measures include additional cleaning and sanitation of our resorts and common areas, providing our team

44

members with personal protective equipment, requiring our guests and owners use face masks based on CDC or other federal, state, or local health guidelines, and implementing physical distancing practices.

Despite these reopening trends, the situations caused by the pandemic continues to be unprecedented and rapidly changing and fluid. Accordingly, there remains significant uncertainties and risks around the duration and severity of the pandemic in the US and around the world, the breadth and duration of business disruptions resulting from COVID-19, the pandemic’s impact on the global economy, consumer confidence, various businesses, and, consequently, our business and operations.

Some of these uncertainties and risks may include the following:

• resurgences, new outbreaks, increases in the rate of infection, and/or increasing death rates related to the COVID-19 virus, including as recently seen in certain regions and locations where we have a significant number of resorts and concentration of units, including the states of Florida, Hawaii, and New York and the various cities and counties located within such states, which may lead to another series of temporary closures, either out of abundance of caution or as may be required by new regulations;

• potentiality of "second waves" of outbreak and spreading of the disease later in 2020 as certain healthcare officials have warned, which may result in further disruptions and additional governmental COVID-19 restrictions, closure orders and/or or “shelter in place” health orders, or similar restrictions;

• ongoing issuances of new orders, amendments to existing orders, and conflicting directives by different governmental bodies, including, without limitation, certain key states identified above, which could disrupt, change, or otherwise adversely impact our safety protocols and measures that are intended to protect our guests, owners, and team members;

• travel bans, quarantine requirements upon entry, and significant restrictions on travel among the states within the U.S., including the states of Florida, Hawaii and New York, as well as between the U.S. and specific countries, including restrictions placed by foreign governments on citizens of the U.S. flying into their countries;

• continued closures and/or curtailment of operations at many popular tourist destinations, reducing the demand for leisure travel;

• changing behavior of individuals and unwillingness to travel and stay at hotels, resorts, timeshares, and other lodging facilities due to the pandemic;

• various safety measures that—

o may continue to be challenging to implement due to uncertainties in how to correctly implement such measures, lack of availability of needed supplies or other issues,

o we have already adopted but may need to change rapidly based on the status of the pandemic, any applicable governmental actions, industry practices, and guidance or recommendations from leading healthcare experts,

o may result in significant costs to us, or

o may cause guests to not visit our resorts because they do not want to abide by such measures, do not fully understand or agree with such requested measures, and/or are wary of the risk of infection despite such measures,

• potential cases of infection and transmission at our resorts despite the implementation of our safety measures efforts, which would be disruptive and may lead to exposure to assertions of liability,

• other actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic that may result in investigations, legal claims (with or without merit) or litigation against us, and

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• inability to repay on time or at all the significant increases in our indebtedness and inadequacies of our liquidity and recent amendments to our credit facility and warehouse facility despite our recent efforts if the pandemic worsens and continues for significant duration.

In addition to the foregoing, the COVID-19 pandemic and the resulting adverse conditions are likely to continue to implicate or exacerbate the risk factors that we identified in our 2019 10-K and our prior 10-Q. We encourage you to review such risk factors and related disclosure in such filings, together with the foregoing supplemental risk factors.

Any of the foregoing or other risks, factors, and events that are not foreseeable can result in significant negative impact on our results of operations, financial condition, business and operations, and reputation.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 17, 2017).
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 17, 2017).
3.3	Certificate of Designation of Series A Junior Participating Preferred Stock of Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on April 16, 2020).
4.1	Rights Agreement, dated as of April 16, 2020, between Hilton Grand Vacations Inc. and Equiniti Trust Company, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on April 16, 2020).
10.1	Omnibus Amendment No. 14 to Receivables Loan Agreement and Amendment No. 6 to Sale and Contribution Agreement, effective as of April 22, 2020, by and among Hilton Grand Vacations Trust I LLC, as borrower, the financial institutions signatory thereto as managing agents, the financial institutions signatory thereto as conduit lenders, the financial institutions signatory thereto as committed lenders, and Bank of America, N.A., as administrative agent and Wells Fargo Bank, National Association, as paying agent and securities intermediary (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on April 28, 2020).
10.2	Amendment No. 2 to the Credit Agreement, dated as of May 8, 2020, to the Credit Agreement, as amended by Amendment No. 1 to the Credit Agreement dated as of November 28, 2018, by and among Hilton Grand Vacations Borrower LLC, Hilton Grand Vacations Parent LLC, Hilton Grand Vacations Inc., the other lender parties thereto, the other guarantors thereto, and Bank of America, N.A., as successor administrative agent, collateral agent, L/C issuer and swing line lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on May 12, 2020).
10.3	Omnibus Amendment No. 15 to Receivables Loan Agreement and Amendment No. 7 to Sale and Contribution Agreement, effective as of May 8, 2020, by and among Hilton Grand Vacations Trust I LLC, as borrower, the financial institutions signatory thereto as managing agents, the financial institutions signatory thereto as conduit lenders, the financial institutions signatory thereto as committed lenders, and Bank of America, N.A., as administrative agent and Wells Fargo Bank, National Association, as paying agent and securities intermediary (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on May 12, 2020).
10.4	Separation, Waiver and Release Agreement, dated as of June 6, 2020, between Hilton Grand Vacations Inc. and Barbara L. Hollkamp. *+
22	List of Issuer Subsidiaries of Guaranteed Securities and Guarantor Subsidiaries. *
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

48

Exhibit No.	Description
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

+ Compensatory arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 30^th day of July 2020.

HILTON GRAND VACATIONS INC.
By:	/s/ Mark D. Wang
Name:	Mark D. Wang
Title:	President and Chief Executive Officer
By:	/s/ Daniel J. Mathewes
Name:	Daniel J. Mathewes
Title:	Executive Vice President and Chief Financial Officer

50

EX-10.4

Exhibit 10.4

Execution Version

SEPARATION, WAIVER AND RELEASE AGREEMENT

This Separation, Waiver and Release Agreement (this “Agreement”) is entered into by between Barbara L. Hollkamp (“You” or “Your”) and Hilton Grand Vacations Inc. (“HGV” or the “Company”).

WHEREAS, You currently serve as the Company’s Executive Vice President and Chief Human Resources Officer;

WHEREAS, You and the Company are parties to that certain severance agreement, dated as of April l7, 2017 (the “Severance Agreement”), that provides for certain severance payments and benefits in certain termination of employment events;

WHEREAS, You and the Company are parties to several award agreements related to certain stock options, service-based restricted stock units and performance-based restricted stock units (such equity awards, collectively, the “Equity Awards”) granted under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) that have been previously issued to You;

WHEREAS, under the award agreements evidencing the Equity Awards, among other things, You currently meet the minimum age and years of service requirements within the definition of a “Qualifying Retirement” (as defined therein) that would inure certain additional vesting rights in the event of certain separation events; and

WHEREAS, the Company and You have discussed a mutually agreeable separation from the Company, such separation to be effective as of July 31, 2020, and which separation shall be treated as a “Qualifying Termination” as defined in the Severance Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

1. You acknowledge and agree that Your employment with the Company will terminate effective July 31, 2020 (the “Separation Date”). All other positions that You hold with the Company, its subsidiaries and affiliates shall terminate effective as of the Separation Date. You acknowledge and agree that You have been paid all wages and accrued benefits to which You are entitled through the date of execution of this Agreement or that the Company has promised to pay such wages and accrued benefits within thirty (30) days following the Separation Date. Other than the payments set forth in this Agreement, You agree that the Company owes no additional amounts to You for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason.  This Agreement is intended to, and does, settle and resolve all claims of any nature that You might have against the Company arising out of Your employment relationship with Company or the termination of such employment or relating to any other matter.

Execution Version

2. In exchange for You signing this Agreement within sixty (60) days of the Separation Date, and You not revoking this Agreement, You acknowledge and agree that You will receive the following separation pay and benefits(collectively referred to herein as the “Separation Benefits”):

(i)A total gross amount of One Million Five Hundred Twenty Nine Thousand Eight Hundred and Nineteen DOLLARS ($1,529,819), which represents an amount equal to two (2) times the sum of (X) Your current annual base salary and (Y) Your target annual bonus for 2020, less withholding for taxes and other similar items (collectively, the “Cash Severance”).  The Cash Severance shall be paid to You as follows: (1) Nine Hundred Fifty Nine Thousand Eight Hundred and Nineteen DOLLARS ($959,819) shall be payable in a single lump sum on the first payroll date to occur after the sixtieth (60^th) day following the Separation Date and Five Hundred Seventy Thousand DOLLARS ($570,000) shall be payable in periodic installments (each installment to be treated as a separate payment for purposes of Section 409A of the Code) over the 12-month period commencing on the Separation Date in accordance with the normal payroll practices of the Company, it being understood that such installments will be paid to You over a 12-month period rather than a 24-month period as set forth in the Severance Agreement solely upon Your request and You understand and acknowledge that any taxes owed on such amounts are solely Your responsibility, as more fully set forth in Section 19 of this Agreement;

(ii)A prorated annual bonus for fiscal year 2020, equal to (X) the bonus, if any, that would have been earned by You for fiscal year 2020 if You had remained employed on the normal payment date for such bonus under the Company’s annual incentive plan, based on actual performance under applicable financial metrics, multiplied by (Y) a fraction, the numerator of which is the number of days worked by You during fiscal year 2020 and the denominator of which is 365, which bonus, if any, shall be payable to you in March 2021 at the same time payment is made to other participants in the Company’s annual incentive plan, provided that in no event shall such prorated annual bonus for fiscal year 2020 be less than 56% of Your current annual base salary;

(iii)If You elect to continue participation in any group medical, dental, vision or prescription drug plan benefits to which You or Your eligible dependents would be entitled under Section 4980B (“COBRA”) of the Internal Revenue Code of 1986, as amended (the “Code”), then for twelve (12) months following the Separation Date (the “COBRA Reimbursement Period”), the Company shall pay to You monthly payments of an amount equal to the excess of (X) the COBRA cost of such coverage over (Y) the amount that You would have had to pay for such coverage if You had remained employed during the COBRA Reimbursement Period and paid the active employee rate for such coverage, less withholding for taxes and other similar items; provided, however, that (A) if You become eligible to receive group health benefits under a program of a subsequent employer or otherwise (including coverage available to Your spouse), the Company’s obligation to pay any portion of the cost of health coverage as described herein shall cease, except as otherwise provided by law; (B) the COBRA Reimbursement Period shall only run for the period during which You are eligible to elect health coverage under COBRA and timely elect such coverage; (C) nothing herein shall prevent

2

Execution Version

the Company from amending, changing, or canceling any group medical, dental, vision and/or prescription drug plans during the COBRA Reimbursement Period; (D) during the COBRA Reimbursement Period, the benefits provided in any one calendar year shall not affect the amount of benefits provided in any other calendar year (other than the effect of any overall coverage benefits under the applicable plans); (E) the reimbursement of an eligible taxable expense shall be made as soon as practicable but not later than December 31 of the year following the year in which the expense was incurred; (F) Your rights pursuant to this Section shall not be subject to liquidation or exchange for another benefit;

(iv)a cash payment equal to the amount required to continue Your Company-provided life insurance coverage as an individual policy for a period of twelve (12) months following the Separation Date, payable in a single lump sum on the first payroll date to occur after the sixtieth (60^th) day following the Separation Date; and

(v)Your Equity Awards that are outstanding as of the Separation Date and that were granted within six (6) months prior to the Separation Date shall be eligible for the benefits of a “Qualifying Retirement” (as defined in the applicable award agreement(s)), notwithstanding anything to the contrary in the applicable award agreement(s) and subject to the applicable conditions, requirements, terms and conditions of the applicable award agreement(s).

You acknowledge that the Separation Benefits are subject to the terms and conditions of this Agreement, compliance with the Surviving Provisions (as defined in Section 15 hereof), exceed any earned wages or anything else of value otherwise owed to You by the Company, and You would not receive the Separation Benefits absent Your execution of this Agreement and compliance with the Surviving Provisions. For the avoidance of doubt, if You fail to comply with the obligations set forth in this Agreement and the Surviving Provisions, the Company shall have no obligation to provide the Separation Benefits, and You shall not be entitled to any of the Separation Benefits and, further, the Company may, in its sole discretion, suspend, terminate and/or recover from You any Separation Benefits.

3. In exchange for the Separation Benefits, You, voluntarily and of Your own free will, to the fullest extent permitted by law, hereby forever waive, release, discharge and hold harmless, the Company, and each of its former, current and future subsidiaries, affiliates, divisions, parents, equity holders, predecessors, successors and assigns, and all of their current, former and future officers, shareholders, members, partners, principals, investors, owners, directors, trustees, joint venturers, insurers, attorneys, employees, agents (in their official and individual capacities), employee benefit plans and their administrators and fiduciaries (in their official and individual capacities) and all of their affiliates, predecessors, successors and assigns (the “Released Parties”), from any and all claims, rights, causes of action and demands of whatever nature, whether known or unknown, foreseen or unforeseen, that You had, now have or may have against any of them arising from any act, event or omission which has occurred up through the date You sign this Agreement. For the avoidance of any doubt, You hereby waive and relinquish any monies, amounts, sums or benefits, severance or otherwise, that would otherwise be payable or owed to you under Section 2 of the Severance Agreement in exchange for the Separation Benefits.    

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Execution Version

4. This waiver and release of claims includes, but is not limited to, (i) claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Older Worker Benefit Protection Act of 1990, the Americans With Disabilities Act, the Equal Pay Act, the Genetic Information Non-Discrimination Act, the National Labor Relations Act, the Pregnancy Discrimination Act, the Immigration Reform and Control Act, the Employee Retirement Income Security Act of 1974 (ERISA), Sections 503 and 504 of the Rehabilitation Act of 1973, the Family and Medical Leave Act, and the Worker Adjustment Retraining and Notification Act, all as amended; (ii) all other federal, state and local anti-discrimination, labor or employment laws or regulations or orders to the extent any such claims may legally be waived by private agreement; (iii) claims and potential claims relating to or arising out of any work You have done for the Company in any capacity, Your employment, the terms and conditions of Your employment and/or Your separation from employment, including but not limited to statutory claims and claims in common law or in equity, including, without limitation, claims for discrimination, harassment, retaliation for asserting any claims, whistle-blowing, breach of contract (oral or written, express or implied), detrimental reliance, breach of policy or practice, constructive discharge, wrongful discharge, negligence, emotional distress, pain and suffering and all torts, including any intentional torts, such as defamation; (iv) claims and potential claims subject to federal, state and local occupational safety and health laws and regulations; (v) claims or potential claims under any other federal, state or local constitution, statute, regulation, agreement, order or duty; (vi) claims or potential claims concerning or based on the adequacy of Your compensation or remuneration, including incentive payments, commissions, bonuses, expense reimbursements, or claims for benefits, to the extent any and all such claims are legally capable of being waived; and (vii) any claims or potential claims for relief of any kind, including but not limited to claims for back pay, front pay, compensatory or punitive damages, reinstatement or other equitable relief, injunctive or declaratory relief, attorneys’ fees, costs, disbursements and/or the like.

5. Notwithstanding the above, the foregoing waiver and release of legal claims shall not release any claims or rights arising from or related to the following: (i) COBRA, workers’ compensation benefits, or unemployment insurance benefits; (ii) reimbursement for business expenses incurred prior to the date of termination, in accordance with any HGV business expense policies (as applicable); (iii) any employee benefit or compensation plan or program in which You participate (or participated), subject to the terms and conditions of such plans or programs; (iv) Your right to receive the Separation Benefits; (v) Your rights to be indemnified pursuant to the terms of that certain indemnification agreement entered into by between You and the Company, dated on or about April 17, 2017 (the “Indemnification Agreement”) for claims or proceedings, or threatened claims or proceedings, that arise out of or relate to Your service as an officer or employee of HGV and/or any affiliate, including attorneys’ fees of attorneys of Your choosing, subject to and as provided in the Indemnification Agreement; (vi) Your vested equity or other similar interest in HGV or any affiliate, subject to the terms and conditions of any applicable plan and award agreement; and (vii) any rights or claims that arise after the signing of this Agreement or which otherwise cannot be waived as a matter of law.

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Execution Version

6. The foregoing waiver and release of legal claims shall not waive Your rights to file a charge with an administrative agency and to participate in an agency investigation or report possible violations of federal law or regulation to any governmental agency or entity. However, except as provided below, You knowingly and intentionally waive and release any right to monetary relief or other individual specific remedy that might be sought on Your behalf by any other person, entity, local, state or federal government or agency thereof, including specifically the Equal Employment Opportunity Commission, U.S. Department of Labor, or any state agency.  You understand and agree that (a) neither this provision nor anything else in this Agreement prohibits You from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission (“SEC”), Congress, and any agency Inspector General, or communicating with such government agencies, or otherwise participating in any investigation or proceeding that may be conducted by such government agencies, including providing documents or other information; (b) You do not need the prior authorization of the Company to take any action described in clause (a) of this Section, and You are not required to notify the Company that You have taken any action described in clause (a); and (c) this Agreement does not limit Your right to receive an award for providing information relating to a possible securities law violation to the SEC.  

7. Except as provided above, the foregoing waiver and release of legal claims includes all claims existing as of the date You sign this Agreement, even though You did not know or suspect those claims to exist at the time You signed the Agreement, regardless of whether knowledge of such claims or the underlying facts would have materially affected Your decision to sign this Agreement.  Your subsequent discovery of different or additional facts shall not affect the enforceability of this Agreement.  You further represent and warrant that You have not assigned or transferred, or purported to assign or transfer to any third party, any claim released by this Agreement, and that You will indemnify the Company and the other Released Parties and hold them harmless against any claims, costs or expenses (including attorneys’ fees) paid or incurred, arising out of or related to any such transfer or assignment.

8. You agree that Your rights and obligations, if any, under other compensation or employee benefit plans, policies, agreements or arrangements of the Company shall be as determined under such plans, policies, agreements or arrangements. Without limiting the foregoing:

(i) Your rights pursuant to the Hilton Resorts Corporation 2017 Executive Deferred Compensation Plan shall be determined in accordance with the terms of such plan and Your payment elections thereunder; and

(ii) Your separation shall qualify as a “Qualifying Retirement” for purposes of determining Your rights with respect to Your outstanding Equity Awards as provided under the 2017 Plan and applicable award agreement(s) and shall continue to be subject to any conditions, requirements, terms and conditions set forth therein.

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Execution Version

9. By signing below, You represent and agree that You have returned all Company property and Confidential Information (asdefined in the Severance Agreement) and otherwise complied with all of Your obligations under Section 4.2(c) of the Severance Agreement. The Company is not required to provide any Separation Benefits until You fully comply with this provision.A copy of such agreement has been provided to you contemporaneously with the provision of this Agreement.  

10. You agree to cooperate fully and provide assistance to the Company in any legal or other proceedings which may be required, including any litigation or potential litigation or administrative, regulatory or investigatory matter in which You are, or may be, a witness, or as to which You possess, or may possess, relevant information.  The Company shall pay all reasonable expenses incurred in connection with a request made by a Released Party pursuant to this Section unless such payment is prohibited by applicable law or rule regarding legal ethics or professional conduct.  

11. You agree that all controversies, claims, disputes, and matters arising out of or relating to this Agreement or the breach thereof, shall be subject to binding arbitration in accordance with the terms of that certain Mutual Agreement to Arbitrate, dated April 17, 2017, entered into by and between You and the Company (the “Arbitration Agreement”). You acknowledge and agree that the Arbitration Agreement shall remain in full force and effect and is incorporated by reference herein, and You shall remain subject to the obligations contained therein regardless of whether You sign or revoke this Agreement.  A copy of such agreement has been provided to you contemporaneously with the provision of this Agreement.  

12. By signing this Agreement, the Company does not admit to any wrongdoing or legal violation by the Company or the Released Parties.

13. This Agreement is intended as a legally binding and enforceable document.  You have been advised to seek legal counsel and have been provided time and opportunity to consult with an attorney prior to executing this Agreement.

14. If any part of this Agreement is held invalid, that part shall be severed and the remaining parts shall be given full force and effect.  Notwithstanding the foregoing, in the event the release and waiver of claims in this Agreement is declared invalid, this Agreement shall be null and void, and the Company shall be entitled to the return of the Separation Benefits paid to You through the date any portion of the Agreement is held invalid.

15. This Agreement constitutes the complete understanding and entire agreement of the parties with respect to the subject matter hereof, except that the parties further agree that the covenants in Section 4 of the Severance Agreement, the provisions of Section 7 and, to the extent applicable (and to the extent any provision does not conflict with the provisions herein, in which case this Separation Agreement shall control), the provisions of Section 10 of the Severance Agreement survive and remain in full force and effect in accordance with their terms, as well as any other provisions of the Severance Agreement that are necessary to enforce or interpret such section,and such sections and provisions are incorporated herein by reference in full and made a part hereof as if set out in full herein (all such sections and such other provisions, collectively, the “Surviving Provisions”).

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Execution Version

Notwithstanding the foregoing, the Surviving Provisions shall not restrict You from solely serving on a board of directors of a company in the leisure industry during the Restricted Periodor from solely providing C-suite coaching services for executives in the leisure industry during the Restricted Period that, in each case, would otherwise be restricted pursuant to Section 4.2(a)(ii)(A) and (B) of the Severance Agreement that forms a part of the Surviving Provisions as long as You are not in violation of any other part of the Surviving Provisions. For the avoidance of doubt, other than the preceding exception, all provisions of the Surviving Provisions shall continue to be in full force and in effect during the Restricted Period.For purposes of interpreting the Surviving Provisions for purposes of this Agreement, (a) the “Termination Date” referred to in the Surviving Provisions shall be the Separation Date and (b) the “Qualifying Termination Severance Payment” referred to in the Surviving Provisions shall be the Separation Benefits. With the exception of the Surviving Provisions, the Severance Agreement is hereby terminated, without further action by the parties, as of the Separation Date and will be of no further force and effect, and that neither party has any further obligations under the Severance Agreement as of the Separation Date. The Agreement cannot be amended, terminated, discharged or waived, except by a mutually agreed upon writing signed by You and an authorized representative of the Company.

16. This Agreement shall be construed and interpreted in accordance with the laws of the State of Florida, without regard to the conflict of laws provisions of any state, to the extent not preempted by federal law, which shall otherwise control.  The parties knowingly and voluntarily agree that, except as otherwise governed by the Arbitration Agreement, any controversy or dispute arising out of or otherwise related to this Agreement shall be tried exclusively, without jury, and consent to personal jurisdiction, in the state courts of Orange County, Florida, or the United States District Court for the Middle District of Florida, Orlando Division.

17. You have twenty-one (21) days from Your receipt of this Agreement to consider it before signing, although You may choose to sign it earlier.  For a period of seven (7) days following Your signing of this Agreement, You may revoke this Agreement.  This Agreement shall not become effective or enforceable until seven (7) days after You sign and do not revoke this Agreement.  You may revoke this Agreement only by giving written notice of revocation to Charles Corbin, Executive Vice President and General Counsel (delivered to the Company’s headquarters at 6355 MetroWest Boulevard, Suite 180, Orlando, FL 32835) within this seven (7) day period. Any revocation must state “I hereby revoke my acceptance of the Agreement.”

18. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.  

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Execution Version

19. This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder.  Nevertheless, the tax treatment of the benefits provided under thisAgreement is not warranted or guaranteed to You, and You are responsible for all taxes assessed on any payments made pursuant to this Agreement, whether under Section 409A of the Code or any other sections of the Code.  Neither the Company nor its directors, officers, employees or advisers shall be held liable to You or any other party for any taxes, interest, penalties or other monetary amounts owed by You as a result of the application of Section 409A or any other provisions of the Code, or for any taxes, interest, penalties or monetary amounts owed by You as a result of any applicable localor state tax rules and regulations. Any installment payments under this Agreement shall be deemed to be a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

20. You represent and agree that:

• You have suffered no specific injuries while employed by the Company that You did not report to the Company.

• Except for the Separation Benefits, You have been provided all wages, compensation and benefits due and owing to You.

• You have fully read and understand all terms of this Agreement, and are signing this Agreement voluntarily and with full knowledge of their significance.  

• You understand that You have up to twenty-one (21) calendar days to consider this Agreement.  You agree that you have been advised to consult with an attorney prior to Your signing of this Agreement.

• You understand that You are waiving any claims under the Age Discrimination in Employment Act and The Older Workers’ Benefit Protection Act.

• You agree that any modifications, material or otherwise, made to this Agreement, do not restart or affect in any manner the original up to twenty-one (21) day consideration period.

[Signatures on following page]

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Execution Version

IN WITNESS WHEREOF, the parties voluntarily and freely enter into and execute this Waiver and Release Agreement on the dates set forth below.

Hilton Grand Vacations Inc.		Employee or You
By:	/s/ Charles R. Corbin	By:	/s/ Barbara L. Hollkamp
Name:	Charles R. Corbin	Name:	Barbara L. Hollkamp
Title:	EVP and Chief Legal Officer
Date:	June 16, 2020	Date:	June 16, 2020

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EX-22

Exhibit 22

List of Issuer Subsidiaries of Guaranteed Securities and Guarantor Subsidiaries

The $300 million 6.125% senior unsecured notes due in 2024 issued by Hilton Grand Vacations Borrower LLC and co-issued by Hilton Grand Vacations Borrower Inc., both of which are 100% owned subsidiaries of Hilton Grand Vacations Inc., a Delaware corporation (HGVI), are jointly and severally guaranteed on a full and unconditional basis by HGVI and the following 100% owned subsidiaries of HGVI as of June 30, 2020:

Entity Name	Jurisdiction of Incorporation or Organization	Issuer/Guarantor
Hilton Grand Vacations Parent LLC	Delaware	Guarantor
Hilton Grand Vacations Borrower LLC	Delaware	Issuer
Hilton Grand Vacations Borrower Inc.	Delaware	Co-issuer
Hilton Resorts Corporation	Delaware	Guarantor
48th Street Holding LLC	Delaware	Guarantor
Grand Vacations Realty, LLC	Delaware	Guarantor
Grand Vacations Services LLC	Delaware	Guarantor
Grand Vacations Title, LLC	Delaware	Guarantor
Hilton Grand Vacations Club, LLC	Delaware	Guarantor
Hilton Grand Vacations Company, LLC	Delaware	Guarantor
Hilton Grand Vacations Management, LLC	Nevada	Guarantor
Hilton Grand Vacations Financing, LLC	Delaware	Guarantor
Hilton Kingsland I, LLC	Delaware	Guarantor
Hilton Resorts Marketing Corp.	Delaware	Guarantor
Hilton Travel, LLC	Delaware	Guarantor
HRC Islander, LLC	Delaware	Guarantor
2400 Prince Edward, LLC	Delaware	Guarantor
Customer Journey, LLC	Delaware	Guarantor
Kupono Partners LLC	Hawaii	Guarantor

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Mark D. Wang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 of Hilton Grand Vacations Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Mark D. Wang
	Mark D. Wang
	President and Chief Executive Officer (Principal Executive Officer)
	July 30, 2020

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Daniel J. Mathewes, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 of Hilton Grand Vacations Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Daniel J. Mathewes
	Daniel J. Mathewes
	Executive Vice President and Chief Financial Officer
	(principal financial officer)
	July 30, 2020

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY

ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Hilton Grand Vacations Inc. (the “Company”) for the quarter ended June 30, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark D. Wang, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Mark D. Wang
	Mark D. Wang
	President and Chief Executive Officer (Principal Executive Officer)
July 30, 2020

A signed original of this certification required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY

ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Hilton Grand Vacations Inc. (the “Company”) for the quarterly period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel J. Mathewes, Executive Vice President and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, certify that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Daniel J. Mathewes
	Daniel J. Mathewes
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
July 30, 2020

A signed original of this certification required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jul. 24, 2020
Cover [Abstract]
Entity Registrant Name	Hilton Grand Vacations Inc.
Entity Central Index Key	0001674168
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		85,077,503
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	HGV
Security Exchange Name	NYSE
Entity Shell Company	false
Entity File Number	001-37794
Entity Tax Identification Number	81-2545345
Entity Address, Address Line One	6355 MetroWest Boulevard
Entity Address, Address Line Two	Suite 180
Entity Address, City or Town	Orlando
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32835
City Area Code	407
Local Phone Number	613-3100
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	DE

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 733	$ 67
Restricted cash	90	85
Accounts receivable, net of allowance for credit losses of $17 and $21	74	174
Timeshare financing receivables, net	1,053	1,156
Inventory	907	558
Property and equipment, net	484	778
Operating lease right-of-use assets, net	58	60
Investments in unconsolidated affiliates	48	44
Intangible assets, net	79	77
Other assets	109	80
TOTAL ASSETS (variable interest entities - $942 and $748)	3,635	3,079
Liabilities:
Accounts payable, accrued expenses and other	237	298
Advanced deposits	116	115
Debt, net	1,263	828
Non-recourse debt, net	926	747
Operating lease liabilities	74	76
Deferred revenues	268	186
Deferred income tax liabilities	228	259
Total liabilities (variable interest entities - $931 and $750)	3,112	2,509
Commitments and contingencies - see Note 19
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2020 and December 31, 2019
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 85,077,503 shares issued and outstanding as of June 30, 2020 and 85,535,501 shares issued and outstanding as of December 31, 2019	1	1
Additional paid-in capital	180	179
Accumulated retained earnings	342	390
Total equity	523	570
TOTAL LIABILITIES AND EQUITY	$ 3,635	$ 3,079

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Allowance for credit losses receivable	$ 17	$ 21
Assets, variable interest entity	3,635	3,079
Liabilities, variable interest entity	$ 3,112	$ 2,509
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized	300,000,000	300,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized (in shares)	3,000,000,000	3,000,000,000
Common Stock, shares issued (in shares)	85,077,503	85,535,501
Common Stock, shares outstanding (in shares)	85,077,503	85,535,501
Variable Interest Entities
Assets, variable interest entity	$ 942	$ 748
Liabilities, variable interest entity	$ 931	$ 750

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Condensed Consolidated Statements of Operations (UNAUDITED) - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues
Total revenues		$ 123,000,000	$ 454,000,000	$ 474,000,000	$ 904,000,000
Expenses
General and administrative		22,000,000	30,000,000	43,000,000	57,000,000
Depreciation and amortization		11,000,000	12,000,000	23,000,000	20,000,000
Total operating expenses		165,000,000	390,000,000	502,000,000	755,000,000
Interest expense		(12,000,000)	(11,000,000)	(22,000,000)	(21,000,000)
Equity in earnings from unconsolidated affiliates		1,000,000	2,000,000	4,000,000	3,000,000
Other loss, net		(3,000,000)	(1,000,000)	(1,000,000)	(2,000,000)
Income (Loss) before income taxes		(56,000,000)	54,000,000	(47,000,000)	129,000,000
Income tax benefit (expense)		8,000,000	(15,000,000)	7,000,000	(35,000,000)
Net income (loss)	[1]	$ (47,751,330)	$ 38,624,856	$ (39,924,584)	$ 93,692,657
Earnings (Loss) per share:
Basic		$ (0.56)	$ 0.43	$ (0.47)	$ 1.02
Diluted		$ (0.56)	$ 0.43	$ (0.47)	$ 1.01
Sales of VOIs, Net
Revenues
Total revenues			$ 120,000,000	$ 56,000,000	$ 245,000,000
Sales, Marketing, Brand and Other Fees
Revenues
Total revenues		$ 13,000,000	145,000,000	119,000,000	286,000,000
Financing
Revenues
Total revenues		43,000,000	43,000,000	87,000,000	84,000,000
Expenses
Expenses		13,000,000	12,000,000	26,000,000	25,000,000
Resort and Club Management
Revenues
Total revenues		39,000,000	43,000,000	83,000,000	85,000,000
Expenses
Expenses		6,000,000	12,000,000	18,000,000	23,000,000
Rental and Ancillary Services
Revenues
Total revenues		5,000,000	60,000,000	57,000,000	119,000,000
Expenses
Expenses		24,000,000	37,000,000	61,000,000	72,000,000
Cost Reimbursements
Revenues
Total revenues		23,000,000	43,000,000	72,000,000	85,000,000
Expenses
Expenses		23,000,000	43,000,000	72,000,000	85,000,000
Cost of VOI Sales
Expenses
Expenses			32,000,000	13,000,000	68,000,000
Expenses		(1,000,000)
Sales and Marketing
Expenses
Expenses		61,000,000	186,000,000	218,000,000	356,000,000
License Fee Expense
Expenses
Expenses		$ 6,000,000	$ 26,000,000	$ 28,000,000	$ 49,000,000

[1] Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.

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Condensed Consolidated Statements of Cash Flows (UNAUDITED) - USD ($)		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019
Operating Activities
Net income (loss)	[1]	$ (39,924,584)	$ 93,692,657
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		23,000,000	20,000,000
Amortization of deferred financing costs, contract costs, and other		9,000,000	8,000,000
Provision for financing receivables losses	[2]	45,000,000	38,000,000
Other loss, net		1,000,000	2,000,000
Share-based compensation		4,000,000	12,000,000
Deferred income tax benefit		(31,000,000)	(9,000,000)
Equity in earnings from unconsolidated affiliates		(4,000,000)	(3,000,000)
Net changes in assets and liabilities:
Accounts receivable, net		100,000,000	(3,000,000)
Timeshare financing receivables, net		58,000,000	(42,000,000)
Inventory		(36,000,000)	(11,000,000)
Purchases and development of real estate for future conversion to inventory		(19,000,000)	(80,000,000)
Other assets		(33,000,000)	(27,000,000)
Accounts payable, accrued expenses and other		(72,000,000)	(3,000,000)
Advanced deposits		1,000,000	7,000,000
Deferred revenues		82,000,000	68,000,000
Net cash provided by operating activities		88,000,000	71,000,000
Investing Activities
Capital expenditures for property and equipment		(4,000,000)	(17,000,000)
Software capitalization costs		(11,000,000)	(10,000,000)
Investments in unconsolidated affiliates			(2,000,000)
Net cash used in investing activities		(15,000,000)	(29,000,000)
Financing Activities
Issuance of debt		495,000,000	410,000,000
Issuance of non-recourse debt		495,000,000	15,000,000
Repayment of debt		(60,000,000)	(105,000,000)
Repayment of non-recourse debt		(313,000,000)	(79,000,000)
Debt issuance costs		(6,000,000)	(2,000,000)
Repurchase and retirement of common stock		(10,000,000)	(271,000,000)
Payment of withholding taxes on vesting of restricted stock units		(2,000,000)	(3,000,000)
Proceeds from employee stock plan purchases			2,000,000
Other financing activity		(1,000,000)	(2,000,000)
Net cash provided by (used in) financing activities		598,000,000	(35,000,000)
Net increase in cash, cash equivalents and restricted cash		671,000,000	7,000,000
Cash, cash equivalents and restricted cash, beginning of period		152,000,000	180,000,000
Cash, cash equivalents and restricted cash, end of period		823,000,000	187,000,000
Supplemental disclosure of non-cash operating activities:
Non-cash transfer from Inventory to Property and Equipment	[3]	$ 301,000,000
Supplemental disclosure of non-cash financing activities:
Issuance of other debt			$ 23,000,000

[1] Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.

[2] Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

[3] See Note 8: Property and Equipment for more information.

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Condensed Consolidated Statements of Stockholders' Equity (UNAUDITED) - USD ($)		Total		Common Stock	Additional Paid-in Capital	Accumulated Retained Earnings
Beginning balance, value at Dec. 31, 2018		$ 616,000,000		$ 1,000,000	$ 174,000,000	$ 441,000,000
Beginning balance, shares at Dec. 31, 2018				94,000,000
Net income (loss)		55,000,000		$ 0	0	55,000,000
Activity related to share-based compensation		1,000,000		0	1,000,000	0
Repurchase and retirement of common stock		(97,000,000)		$ 0	(5,000,000)	(92,000,000)
Repurchase and retirement of common stock, shares				(3,000,000)
Ending balance, value at Mar. 31, 2019		575,000,000		$ 1,000,000	170,000,000	404,000,000
Ending balance, shares at Mar. 31, 2019				91,000,000
Beginning balance, value at Dec. 31, 2018		616,000,000		$ 1,000,000	174,000,000	441,000,000
Beginning balance, shares at Dec. 31, 2018				94,000,000
Net income (loss)	[1]	93,692,657
Ending balance, value at Jun. 30, 2019		450,000,000		$ 1,000,000	169,000,000	280,000,000
Ending balance, shares at Jun. 30, 2019				86,000,000
Beginning balance, value at Mar. 31, 2019		575,000,000		$ 1,000,000	170,000,000	404,000,000
Beginning balance, shares at Mar. 31, 2019				91,000,000
Net income (loss)		38,624,856	[1]	$ 0	0	39,000,000
Activity related to share-based compensation		10,000,000		0	10,000,000	0
Repurchase and retirement of common stock		(174,000,000)		$ 0	(11,000,000)	(163,000,000)
Repurchase and retirement of common stock, shares				(5,000,000)
Ending balance, value at Jun. 30, 2019		450,000,000		$ 1,000,000	169,000,000	280,000,000
Ending balance, shares at Jun. 30, 2019				86,000,000
Beginning balance, value at Dec. 31, 2019		$ 570,000,000		$ 1,000,000	179,000,000	390,000,000
Beginning balance, shares at Dec. 31, 2019		85,535,501		85,000,000
Net income (loss)		$ 8,000,000		$ 0	0	8,000,000
Activity related to share-based compensation		(5,000,000)		0	(5,000,000)	0
Repurchase and retirement of common stock		(10,000,000)		$ 0	(2,000,000)	(8,000,000)
Repurchase and retirement of common stock, shares				(1,000,000)
Ending balance, value at Mar. 31, 2020		563,000,000		$ 1,000,000	172,000,000	390,000,000
Ending balance, shares at Mar. 31, 2020				84,000,000
Beginning balance, value at Dec. 31, 2019		$ 570,000,000		$ 1,000,000	179,000,000	390,000,000
Beginning balance, shares at Dec. 31, 2019		85,535,501		85,000,000
Net income (loss)	[1]	$ (39,924,584)
Ending balance, value at Jun. 30, 2020		$ 523,000,000		$ 1,000,000	180,000,000	342,000,000
Ending balance, shares at Jun. 30, 2020		85,077,503		84,000,000
Beginning balance, value at Mar. 31, 2020		$ 563,000,000		$ 1,000,000	172,000,000	390,000,000
Beginning balance, shares at Mar. 31, 2020				84,000,000
Net income (loss)		(47,751,330)	[1]	$ 0	0	(48,000,000)
Activity related to share-based compensation		8,000,000		0	8,000,000	0
Ending balance, value at Jun. 30, 2020		$ 523,000,000		$ 1,000,000	$ 180,000,000	$ 342,000,000
Ending balance, shares at Jun. 30, 2020		85,077,503		84,000,000

[1] Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.

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Organization

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

Note 1: Organization

Our Business

Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand. Our operations primarily consist of: selling vacation ownership intervals (“VOIs”) for us and third parties; financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing our points-based Hilton Grand Vacations Club exchange program (collectively the “Club”). As of June 30, 2020, we had 60 properties, comprised of 9,595 units, located in the United States (“U.S.”), Japan, the United Kingdom, Italy and Barbados. A significant number of our properties and units are concentrated in Florida, Hawaii, Nevada, New York, and South Carolina, with particular concentration of our units in Florida, Hawaii and New York.

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Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

Note 2: Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest.  In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.  All material intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the SEC on March 2, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.

COVID-19

The novel coronavirus (“COVID-19”) pandemic has significantly negatively impacted the hospitality, travel and leisure industries due to various mandates and orders to close non-essential businesses, impose travel restrictions, require “stay-at-home” and/or self-quarantine, and require similar actions. Such restrictions and directives have resulted in cancellations and significant reductions in travel around the world, as well as the negative global economic conditions resulting from the impact of COVID-19. As a result of the reduction in travel, during the first quarter of 2020 we closed substantially all of our resorts and sales centers.  

In addition, in response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.  Further, during the first quarter of 2020, we drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period and on May 8, 2020, we amended our Credit Agreement which amended certain terms of the credit facilities (“Senior Secured Credit Facilities”) to provide us with both near-term and long-term flexibility with respect to satisfying certain negative and financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. See Note 11: Debt and Non-recourse debt for additional actions taken with respect to our financial flexibility.

Prior to re-opening our resorts and sales centers, we introduced the HGV Enhanced Care Guidelines, designed to provide owners, guests and team members with the highest level of cleaning protocols and safety standards recommended by the Center for Disease Control and Prevention and cleaning solutions approved by the Environmental Protection Agency in response to the COVID-19 pandemic. Along with providing personal protective equipment to team members, these Enhanced Care Guidelines include low-touch arrivals and departures, frequent and thorough cleaning, reduction of paper

items, reduced capacity for our pool decks and fitness centers, and new technologies. While operations were suspended, essential resort personnel worked diligently maintaining the resorts for a safe re-opening. Annual deep cleanings, typically scheduled during slower seasons, were moved up and completed, allowing the resorts to be in top shape when owners and guests arrive.

Beginning in May 2020, various states and counties started to allow gradual relaxation of restrictions on activities and a resumption of businesses. In response, we began a phased reopening of resorts and resumption of our business activities during the second quarter of 2020, but under new operating guidelines and with safety measures. As of June 30, 2020, we have approximately two thirds of our resorts and sales centers open and currently operating however, many of our resorts and sales centers are operating with significant capacity constraints and subject to various safety measures.

While we plan to continue to reopen our resorts and resume our business as conditions permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Further, various state and local government officials may issue new or revised orders that are different than current ones under which we are operating. Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income and other operating results, as well as our business and operations generally. Any significantly extended duration or worsening of the conditions associated with the pandemic may adversely impact our liquidity in the longer term, including our ability to finance our day-to-day business and operations, and may adversely affect our ability to comply with our financial covenants under our debt obligations notwithstanding the recent amendments discussed above.

Summary of Significant Accounting Policies

Accounts Receivable and Allowance for Credit Losses

Accounts receivable primarily consists of trade receivables and is reported at the customers’ outstanding balances, less any allowance for credit losses. The expected credit losses are measured using an expected-loss model that reflects the risk of loss and considers the losses expected over the outstanding period of the receivable.

Cloud Computing Arrangements

We capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in Other assets in our condensed consolidated balance sheets and are expensed in the same line as the hosting arrangement in our condensed consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years. We review the CCAs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the fair value in our condensed consolidated statements of operations.

Derivative Instruments

We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and record changes in fair value in accumulated other comprehensive income (“AOCI”) for the effective portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our condensed consolidated statements of operations. We release the derivative’s gain or loss from AOCI to match the timing of the underlying hedged items’ effect on earnings.

Recently Issued Accounting Pronouncements

Adopted Accounting Standards

On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, (“ASU 2016-13”), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), using the modified retrospective approach. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our timeshare financing receivables are recorded net of an allowance that is calculated in accordance with ASC 606, Revenue from Contracts with Customers.

On January 1, 2020, we adopted ASU 2018-15 (“ASU 2018-15”), Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. This ASU has been adopted using the retrospective approach. Accordingly, previously reported financial information has been restated to reflect the application of the new standard to the comparative periods presented. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements.

In March 2020, the SEC issued a final rule, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, which simplifies the disclosure requirements related to registered securities under Rule 3-10 of Regulation S-X. The rule replaces the requirement for a parent entity to provide detailed disclosures with regard to guarantors of registered debt offerings within the footnotes to the consolidated financial statements. Under the final rule, a parent entity is required to present summarized financial information of the issuers’ and guarantors’ balance sheets and statements of operations on a consolidated basis. It also requires qualitative disclosures with respect to information about guarantors and the terms and conditions of guarantees. These disclosures may be provided outside the footnotes to the Company’s consolidated financial statements. We early adopted the reporting requirements of the rule in the second quarter of 2020 and elected to provide these disclosures in Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and which also clarifies and amends existing guidance to improve consistent application. The provisions of this ASU are effective for reporting periods after December 15, 2020. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue from Contracts with Customers

Note 3: Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables show our disaggregated revenues by 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 18: Business Segments below for more details related to our segments.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Real Estate and Financing Segment
Sales of VOIs, net	$	—	$	120	$	56	$	245
Sales, marketing, brand and other fees		13		145		119		286
Interest income		36		36		74		72
Other financing revenue		7		7		13		12
Real estate and financing segment revenues	$	56	$	308	$	262	$	615

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Resort Operations and Club Management Segment
Club management	$	22	$	26	$	47	$	52
Resort management		17		17		36		33
Rental		5		53		52		105
Ancillary services		—		7		5		14
Resort operations and club management segment revenues	$	44	$	103	$	140	$	204

Contract Balances

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

	June 30,		December 31,
($ in millions)	2020		2019
Receivables	$	41	$	129

The following table presents the composition of our contract liabilities.

	June 30,		December 31,
($ in millions)	2020		2019
Contract liabilities:
Advanced deposits	$	116	$	115
Deferred Sales of VOIs of projects under construction		135		84
Club activation fees, annual dues and other		118		86
Club Bonus Point incentive liability(1)		59		59

⁽¹⁾ Amounts related to the Club Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our condensed 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 three and six months ended June 30, 2020 that was included in the contract liabilities balance at December 31, 2019 was approximately $17 million and $53 million, respectively. 

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 (“HOA”) 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 6: 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 target 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.  

Contract liabilities include payments received or due in advance of satisfying our performance obligations. 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 Club 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.

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) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Club Bonus Points that may be redeemed in the future. 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 June 30, 2020:

	June 30,		December 31,
($ in millions)	2020		2019
Sales of VOIs, net	$	135	$	84
Cost of VOI sales(1)		40		27
Sales and marketing expense		20		12

⁽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.

We expect to recognize the revenue, costs of VOI sales and direct selling costs upon completion of the projects in 2021.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of June 30, 2020:

($ in millions)	Remaining Transaction Price		Recognition Period	Recognition Method
Advanced deposits	$	116	18 months	Upon customer stays
Club activation fees		69	7 years	Straight-line basis over average inventory holding    period
Club Bonus Points		59	24 months	Upon redemption

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Restricted Cash

6 Months Ended

Jun. 30, 2020

Cash And Cash Equivalents [Abstract]

Restricted Cash

Note 4: Restricted Cash

Restricted cash was as follows:

	June 30,		December 31,
($ in millions)	2020		2019
Escrow deposits on VOI sales	$	39	$	59
Reserves related to non-recourse debt(1)		51		26
	$	90	$	85

⁽¹⁾ Includes a $15 million cash deposit that will be released upon future pledging of qualified collateral. See Note 11: Debt & Non-recourse Debt for further discussion.

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Accounts Receivable

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Accounts Receivables

Note 5: Accounts Receivable

The following table represents our accounts receivable, net of allowance for credit losses.  Following the adoption of ASC 326 on January 1, 2020, accounts receivable within the scope of ASC 326 are measured at amortized cost.

($ in millions)	June 30, 2020
Fee-for-service commissions(1)	$	7
Real estate and financing	8
Resort and club operations	21
Tax receivables	32
Other receivables(2)	6
Total	$	74

^{(1) Net of allowance.}

^{(2) Primarily includes individually insignificant accounts receivable recognized in the ordinary course of business, the allowances for which are individually insignificant.}

Our accounts receivable are all due within one year of origination. We use delinquency status and economic factors as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.

We sell VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing and brand fees.  We use historical losses and economic factors as a basis to develop our allowance for credit losses. Under these fee-for-service arrangements, we earn commission fees based on a percentage of total interval sales.  Additionally, the terms include provisions requiring the reduction of fees earned for defaults and cancellations.

The changes in our allowance for fee-for-service commissions were as follows:

($ in millions)	June 30, 2020
Balance as of December 31, 2019	$	19
Current period provision for expected credit losses	4
Write-offs charged against the allowance		(8	)
Balance at June 30, 2020	$	15

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Timeshare Financing Receivables

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Timeshare Financing Receivables

Note 6: Timeshare Financing Receivables

Timeshare financing receivables were as follows:

	June 30, 2020
($ in millions)	Securitized			Unsecuritized(1)			Total
Timeshare financing receivables	$	956		$	307		$	1,263
Less: allowance for financing receivables losses		(78	)		(132	)		(210	)
	$	878		$	175		$	1,053

	December 31, 2019
($ in millions)	Securitized			Unsecuritized(1)			Total
Timeshare financing receivables	$	758		$	582		$	1,340
Less: allowance for financing receivables losses		(54	)		(130	)		(184	)
	$	704		$	452		$	1,156

⁽¹⁾ Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.

As of June 30, 2020, we had timeshare financing receivables with a carrying value of $20 million securing the Timeshare Facility in anticipation of future financing activities. As of December 31, 2019, we had no timeshare receivables pledged to the Timeshare Facility. We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale. We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance. During the six months ended June 30, 2020, we recorded an adjustment to our estimate of variable consideration of $45 million, which includes a $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.

In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables, which included a $15 million cash deposit that will be released upon future pledging of qualified collateral, and issued approximately $186 million of 2.74 percent notes, $66 million of 4.22 percent notes and $48 million of 6.42 percent notes, which have a stated maturity date of February 25, 2039. The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized. The transaction is considered a secured borrowing; therefore, the proceeds from the transaction are presented as non-recourse debt (collectively, the “Securitized Debt”). The proceeds were primarily used to pay down the remaining borrowings on our Timeshare Facility and general corporate operating expenses. See Note 11: Debt and Non-recourse Debt for additional information.

Our timeshare financing receivables as of June 30, 2020 mature as follows:

($ in millions)	Securitized			Unsecuritized			Total
Year
2020 (remaining)	$	55		$	13		$	68
2021		112			26			138
2022		115			28			143
2023		118			30			148
2024		119			33			152
Thereafter		437			177			614
		956			307			1,263
Less: allowance for financing receivables losses		(78	)		(132	)		(210	)
	$	878		$	175		$	1,053

We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the credit quality of our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

We recognize interest income on our timeshare financing receivables as earned. As of June 30, 2020, and December 31, 2019 we had $9 million of interest receivable outstanding included in our condensed consolidated balance sheets. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. As of June 30, 2020, our timeshare financing receivables had interest rates ranging from 3.90 percent to 20.50 percent, a weighted-average interest rate of 12.56 percent, a weighted-average remaining term of 7.7 years and maturities through 2035.

Our gross timeshare financing receivables balances by average FICO score were as follows:

	June 30,		December 31,
($ in millions)	2020		2019
FICO score
700+	$	764	$	818
600-699		279		292
<600		37		39
No score(1)		183		191
	$	1,263	$	1,340

⁽¹⁾ Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

The following table details the origination year of our gross timeshare financing receivables by average FICO score as of June 30, 2020:

($ in millions)	2020		2019		2018		2017		2016		Prior		Total
FICO score
700+	$	74	$	252	$	169	$	109	$	70	$	90	$	764
600-699		24		89		61		39		25		41		279
<600		4		12		7		5		3		6		37
No score(1)		20		59		37		20		14		33		183
	$	122	$	412	$	274	$	173	$	112	$	170	$	1,263

⁽¹⁾ Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

We apply payments we receive for timeshare financing receivables, including those in non-accrual status, to amounts due in the following order: servicing fees; interest; principal; and late charges. Once a receivable is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point. We resume interest accrual for receivables for which we had previously ceased accruing interest once the receivable is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the receivable is 121 days past due and, subsequently, we write off the uncollectible balance against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.

As of June 30, 2020 and December 31, 2019, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $101 million and $74 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:

	June 30, 2020
($ in millions)	Securitized		Unsecuritized		Total
Current	$	935	$	202	$	1,137
31 - 90 days past due		12		13		25
91 - 120 days past due		4		5		9
121 days and greater past due		5		87		92
	$	956	$	307	$	1,263

	December 31, 2019
($ in millions)	Securitized		Unsecuritized		Total
Current	$	743	$	502	$	1,245
31 - 90 days past due		9		12		21
91 - 120 days past due		3		4		7
121 days and greater past due		3		64		67
	$	758	$	582	$	1,340

The changes in our allowance for financing receivables losses were as follows:

	June 30, 2020
($ in millions)	Securitized			Unsecuritized			Total
Balance as of December 31, 2019	$	54		$	130		$	184
Write-offs		—			(19	)		(19	)
Provision for financing receivables losses(1)		(12	)		57			45
Securitization		36			(36	)		—
Balance as of June 30, 2020	$	78		$	132		$	210

	June 30, 2019
($ in millions)	Securitized			Unsecuritized			Total
Balance as of December 31, 2018	$	43		$	129		$	172
Write-offs		—			(36	)		(36	)
Provision for financing receivables losses(1)		(8	)		46			38
Balance as of June 30, 2019	$	35		$	139		$	174

(1) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

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Inventory

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventory

Note 7: Inventory

Inventory was as follows:

	June 30,		December 31,
($ in millions)	2020		2019
Completed unsold VOIs	$	253	$	241
Construction in process		396		59
Land, infrastructure and other		258		258
	$	907	$	558

During the six months ended June 30, 2020, we recorded non-cash operating activity transfers from Property and equipment to Inventory. See Note 8: Property and Equipment. 

Shown below are costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory.

	Six Months Ended June 30,
($ in millions)	2020		2019
Cost of sales true-up(1)	$	5	$	5

⁽¹⁾ Costs of sales true ups reduced costs of VOI sales and increased inventory in the periods presented.

Shown below are expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Cost of VOI sales related to fee-for-service upgrades	$	—	$	7	$	5	$	16

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Property and Equipment

6 Months Ended

Jun. 30, 2020

Property Plant And Equipment [Abstract]

Property and Equipment

Note 8: Property and Equipment

Property and equipment was as follows:

	June 30,			December 31,
($ in millions)	2020			2019
Land	$	104		$	154
Building and leasehold improvements		245			286
Furniture and equipment		67			65
Construction in progress		190			383
		606			888
Accumulated depreciation		(122	)		(110	)
	$	484		$	778

During the six months ended June 30, 2020, we recorded non-cash operating activity transfers of $301 million related to the registrations for timeshare units under construction from Property and equipment to Inventory. Non-cash transfers are reflected in our unaudited condensed consolidated statements of cash flows.

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Consolidated Variable Interest Entities

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Consolidated Variable Interest Entities

Note 9: Consolidated Variable Interest Entities

As of June 30, 2020 and December 31, 2019, we consolidated 5 and 4 variable interest entities (“VIEs”), respectively, that issued non-recourse debt backed by pledged assets consisting primarily of a pool of timeshare financing receivables which is without recourse to us. We are the primary beneficiaries of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. We are also the servicer of these timeshare financing receivables and we are required to replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. Only the assets of our VIEs are available to settle the obligations of the respective entities.

Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:

	June 30,		December 31,
($ in millions)	2020		2019
Restricted cash	$	50	$	26
Timeshare financing receivables, net		878		704
Non-recourse debt(1)		926		747

⁽¹⁾ Net of deferred financing costs.

During the six months ended June 30, 2020 and 2019, we did not provide any financial or other support to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.

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Investments in Unconsolidated Affiliates

6 Months Ended

Jun. 30, 2020

Equity Method Investments And Joint Ventures [Abstract]

Investments in Unconsolidated Affiliates

Note 10: Investments in Unconsolidated Affiliates

As of June 30, 2020, we have 25 percent and 50 percent ownership interests in BRE Ace LLC and 1776 Holding LLC, respectively, that are deemed as VIEs. We do not consolidate BRE Ace LLC and 1776 Holding LLC because we are not the primary beneficiary. Our investment interests in and equity earned from both VIEs are included in the consolidated balance sheets as Investments in unconsolidated affiliates and in the consolidated statements of operations as Equity in earnings from unconsolidated affiliates, respectively.

We held investments in our two unconsolidated affiliates with aggregated debt balances of $471 million and $479 million as of June 30, 2020 and December 31, 2019, respectively. The debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals $48 million and $44 million as of June 30, 2020 and December 31, 2019, respectively and (ii) receivables for commission and other fees earned under fee-for-service arrangements.  See Note 17:  Related Party Transactions for additional information.  

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Debt & Non-recourse Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt & Non-recourse Debt

Note 11: Debt & Non-recourse Debt

Debt

The following table details our outstanding debt balance and its associated interest rates:

	June 30,			December 31,
($ in millions)	2020			2019
Debt(1)
Senior secured credit facilities:
Term loan with a rate of 2.000%, due 2023	$	182		$	187
Revolver with a weighted average rate of 2.000%, due 2023		760			320
Senior notes with a rate of 6.125%, due 2024		300			300
Other debt		27			27
		1,269			834
Less: unamortized deferred financing costs and discount(2)(3)		(6	)		(6	)
	$	1,263		$	828

⁽¹⁾ As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.080 percent and 4.571 percent, respectively.

⁽²⁾ Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of June 30, 2020 and December 31, 2019.

⁽³⁾ Amount does not include deferred financing costs of $4 million as of June 30, 2020 and $5 million as of December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

In May 2020, we amended our Credit Agreement with respect to certain terms of our credit facilities (the “Amendment”) to provide flexibility with respect to satisfying certain financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. The borrowing capacity under the Credit Agreement remained the same. In connection with the Amendment we incurred $1 million in debt issuance costs.

During the six months ended June 30, 2020, we borrowed $495 million and repaid $60 million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus 1.75 percent, subject to a 0.25 percent floor.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. As of June 30, 2020, we had approximately $182 million of our Term Loan subject to interest rate swap. Such interest rate swaps converted the LIBOR-based variable rates on our Term Loan to an average fixed annual rate of 0.53 percent per annum through November 2023.  Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded as a liability in Accounts payable, accrued expenses and other in our condensed consolidated balance sheets as of June 30, 2020. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. For the six months ended June 30, 2020, we recorded less than $1 million in accumulated other comprehensive loss related to the hedge.

As of June 30, 2020 and December 31, 2019, we had $1 million of outstanding letters of credit under the revolving credit facility.  We were in compliance with all applicable financial covenants as of June 30, 2020.

Non-recourse Debt

The following table details our outstanding non-recourse debt balance and its associated interest rates:

	June 30,			December 31,
($ in millions)	2020			2019
Non-recourse debt(1)
Securitized Debt with an average rate of 1.810%, due 2026	$	34		$	46
Securitized Debt with an average rate of 2.711%, due 2028		126			149
Securitized Debt with an average rate of 3.602%, due 2032		233			275
Securitized Debt with an average rate of 2.431%, due 2033		252			285
Securitized Debt with an average rate of 3.658%, due 2039		292			—
		937			755
Less: unamortized deferred financing costs(2)		(11	)		(8	)
	$	926		$	747

⁽¹⁾ As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.119 percent and 2.876 percent, respectively.

⁽²⁾ Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of June 30, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets.

In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables and issued approximately $186 million of 2.74 percent notes, $66 million of 4.22 percent notes and $48 million of 6.42 percent notes due February 2039. The Securitized Debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interest and temporarily by a $15 million cash deposit, which is reflected as Restricted Cash in our condensed consolidated balance sheets. The Securitized Debt is a non-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt. The proceeds were primarily used to pay down the remaining borrowings on our Timeshare Facility and general corporate operating expenses. In connection with the securitization we incurred $5 million in debt issuance costs.

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. During the second quarter of 2020, we amended the Timeshare Facility, temporarily changing certain covenant requirements pricing and advance rates to be consistent with the amended corporate credit facility. 

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $36 million and $26 million as of June 30, 2020 and December 31, 2019, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of June 30, 2020 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2020 (remaining)	$	6	$	160	$	166
2021		11		258		269
2022		11		165		176
2023		918		116		1,034
2024		300		100		400
Thereafter		23		138		161
	$	1,269	$	937	$	2,206

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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 12: Fair Value Measurements

The carrying amounts and estimated fair values of our financial assets and liabilities were as follows:

	June 30, 2020
			Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net(1)	$	1,053	$	—	$	1,276
Liabilities:
Debt, net(2)		1,263		303		959
Non-recourse debt, net(2)		926		—		916

⁽¹⁾ Carrying amount net of allowance for financing receivables losses.

⁽²⁾ Carrying amount net of unamortized deferred financing costs and discount.

	December 31, 2019
			Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net(1)	$	1,156	$	—	$	1,446
Liabilities:
Debt, net(2)		828		326		544
Non-recourse debt, net(2)		747		—		749

⁽¹⁾ Carrying amount net of allowance for financing receivables losses.

⁽²⁾ Carrying amount net of unamortized deferred financing costs and discount.

Our estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values. The table above excludes cash and cash equivalents, restricted cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The estimated fair values of our timeshare financing receivables were determined using a discounted cash flow model. Our model incorporates default rates, coupon rates, credit quality and borrowing terms respective to the portfolio based on current market assumptions for similar types of arrangements.

The estimated fair values of our Level 1 debt was based on prices in active debt markets. The estimated fair value of our Level 3 debt and non-recourse debt were as follows:

• Debt - based on indicative quotes obtained for similar issuances and projected future cash flows discounted at risk-adjusted rates.

• Non-recourse debt - based on projected future cash flows discounted at risk-adjusted rates.

We do not have any assets or liabilities measured at fair value on a recurring or non-recurring basis as of June 30, 2020.

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Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Note 13: Leases

We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from 2020 through 2030, with varying renewal and termination options. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We recognize rent expense on leases with both contingent and non-contingent lease payment terms. Rent associated with non-contingent lease payments are recognized on a straight-line basis over the lease term. Rent expense for all operating leases for the three months ended June 30, 2020 and 2019 was $5 million and $4 million, respectively, and $10 million for the six months ended June 30, 2020 and 2019. This amount includes immaterial short-term leases and variable lease costs.

Supplemental cash flow information related to operating leases was as follows:

	Six Months Ended June 30,
($ in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9	$	8
Right-of-use assets obtained in exchange for new lease liabilities:
Operating Leases		5		1

Supplemental balance sheet information related to operating leases was as follows:

	June 30,			December 31,
	2020			2019
Weighted-average remaining lease term of operating leases (in years)	5.7			6.1
Weighted-average discount rate of operating leases		4.87	%		5.34	%

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of June 30, 2020, are as follows:

($ in millions)	Operating Leases
Year
2020 (remaining)	$	9
2021		18
2022		14
2023		12
2024		11
Thereafter		22
Total future minimum lease payments	$	86
Less: imputed interest		(12	)
Present value of lease liabilities	$	74

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 14: Income Taxes

At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective tax rate is determined by the level and composition of pre-tax ordinary income or loss, which is subject to federal, foreign and state and local income taxes. The effective tax rate for the six months ended June 30, 2020 and 2019 was approximately 15 percent and 27 percent, respectively. The decrease in the effective tax rate is primarily due to the tax benefit on our worldwide estimated ordinary loss being reduced by the incremental tax expense from the estimated ordinary income in our foreign jurisdictions, the interest due on income deferred related to installment sales, and the impact of estimated permanent differences between financial reporting and taxable income.

We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of June 30, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no effect on either the June 30, 2020 tax rate or the computation of the estimated effective tax rate for the year. We will continue to evaluate the income tax provisions of the CARES Act and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have income tax accounting and disclosure implications.

We have requested a change in accounting method effective for the taxable year beginning on January 1, 2020 and ending on December 31, 2020 which is pending IRS review.  The impact of the requested method change will be included in the financial statements upon IRS consent.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

Note 15: Share-Based Compensation

Stock Plan

We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units (“Performance RSUs”) and nonqualified stock options (“Options”) to certain employees and directors. We recognized share-based compensation expense of $6 million and $7 million for the three months ended June 30, 2020 and 2019, respectively, and $4 million and $12 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, unrecognized compensation costs for unvested awards were approximately $25 million, which is expected to be recognized over a weighted average period of 1.8 years. As of June 30, 2020, there were 5,146,485 shares of common stock available for future issuance under this plan.

Service RSUs

During the six months ended June 30, 2020, we issued 652,583 Service RSUs with a grant date fair value of $25.24, which generally vest in equal annual installments over three years from the date of grant.

Options

During the six months ended June 30, 2020, we issued 566,401 Options with an exercise price of $25.80, which vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was $9.14, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

Expected volatility	35.4	%
Dividend yield	—	%
Risk-free rate	1.0	%
Expected term (in years)	6.0

As of June 30, 2020, we had 1,103,850 Options outstanding that were exercisable.

Performance Shares

During the six months ended June 30, 2020, we issued 172,620 Performance RSUs with a grant date fair value of $25.80. The Performance RSUs are settled at the end of a three-year performance period, with 70 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 30 percent of the Performance RSUs are subject to the achievement of certain contract sales targets. In March 2020, we determined that the performance conditions for the 2018, 2019, and 2020 Performance RSU awards were improbable of achievement due to the significantly negative impact of the COVID-19 pandemic on the global economy, demand for travel and leisure, and our business. As a result, we reversed $8 million of previously recognized share-based compensation expense related to our 2018 and 2019 Performance RSUs and ceased accruing expense related to Performance RSUs granted in 2018, 2019, and 2020, during the three months ended March 31, 2020. As of June 30, 2020, we determined the performance conditions continue to be improbable of achievement and therefore no expense was recognized in the current period.

Employee Stock Purchase Plan

In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the Plan, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 percent of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. During the three and six months ended June 30, 2020 and 2019, we recognized less than $1 million of compensation expense related to this plan.  

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Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Note 16: Earnings (Loss) Per Share

The following table presents the calculation of our basic and diluted earnings (loss) per share (“EPS”).  The weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended June 30, 2020 was 85,002,791 and for the six months ended June 30, 2020 was 85,258,963. The weighted-average shares outstanding used to compute basic EPS and diluted EPS for the three months ended June 30, 2019 was 89,849,803 and 90,271,976, respectively, and for the six months ended June 30, 2019 was 91,959,041 and 92,421,752, respectively.  

	Three Months Ended June 30,					Six Months Ended June 30,
($ and shares outstanding in millions, except per share amounts)	2020			2019		2020			2019
Basic EPS:
Numerator:
Net income (loss)(1)	$	(48	)	$	39	$	(40	)	$	94
Denominator:
Weighted average shares outstanding		85			90		85			92
Basic EPS	$	(0.56	)	$	0.43	$	(0.47	)	$	1.02
Diluted EPS:
Numerator:
Net income (loss)(1)	$	(48	)	$	39	$	(40	)	$	94
Denominator:
Weighted average shares outstanding		85			90		85			92
Diluted EPS	$	(0.56	)	$	0.43	$	(0.47	)	$	1.01

⁽¹⁾ Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.   

The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period. Potentially dilutive shares of 175,635 and 357,912 for the three and six months ended June 30, 2020, respectively, were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share as a result of our net loss position.

For the three and six months ended June 30, 2020, we excluded 3,027,069 and 2,429,811, respectively, and for the three and six months ended June 30, 2019, we excluded 1,433,833 and 1,168,159 share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.

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Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Note 17: Related Party Transactions

BRE Ace LLC and 1776 Holding, LLC

We hold a 25 percent ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold a 50 percent ownership interest in 1776 Holding, LLC, a VIE, which will construct a timeshare resort property, known as “Liberty Place Charleston, by Hilton Club.”

We record Equity in earnings (losses) from our unconsolidated affiliates in our condensed consolidated statements of operations. See Note 10: Investments in Unconsolidated Affiliates for additional information. Additionally, we earn commissions and other fees related to fee-for-service agreements with the investees to sell VOIs at Elara, by Hilton Grand Vacations and Liberty Place Charleston, by Hilton Club.  These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became related parties.  

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Equity in earnings from unconsolidated affiliates	$	1	$	2	$	4	$	3
Commissions and other fees		4		32		27		68

We also have $2 million and $25 million of outstanding receivables related to the fee-for-service agreements as of June 30, 2020 and December 31, 2019, respectively.

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Business Segments

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Business Segments

Note 18: Business Segments

We operate our business through the following two segments:

• Real estate sales and financing – We market and sell VOIs that we own. We also source VOIs through fee-for-service agreements with third-party developers. Related to the sales of the VOIs that we own, we provide consumer financing, which includes interest income generated from the origination of consumer receivables to customers to finance their purchase of VOIs and revenue from servicing the timeshare financing receivables. We also generate fee revenue from servicing the timeshare financing receivables provided by third-party developers to purchasers of their VOIs.

• Resort operations and club management – We manage the Club, earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. We earn fees for managing the timeshare properties. We generate rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges under our Club program. We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties.

The performance of our operating segments is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”). We define Adjusted EBITDA as EBITDA which has been further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

The following table present revenues for our reportable segments reconciled to consolidated amounts:

	Three Months Ended June 30,					Six Months Ended June 30,
($ in millions)	2020		2019			2020			2019
Revenues:
Real estate sales and financing	$	56	$	308		$	262		$	615
Resort operations and club management(1)(2)		44		114			148			224
Total segment revenues		100		422			410			839
Cost reimbursements		23		43			72			85
Intersegment eliminations(1)(2)		—		(11	)		(8	)		(20	)
Total revenues	$	123	$	454		$	474		$	904

⁽¹⁾ Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts. There were no such charges related to this for the three months ended June 30, 2020. These charges totaled $11 million for the three months ended June 30, 2019, and $8 million and $20 million for the six months ended June 30, 2020 and 2019, respectively.  

⁽²⁾ Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled less than $1 million for the three and six months ended June 30, 2020 and 2019.  

The following table presents Segment Adjusted EBITDA for our reportable segments reconciled to net income:

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2020			2019			2020			2019
Adjusted EBITDA:
Real estate sales and financing(1)	$	(14	)	$	69		$	1		$	149
Resort operations and club management(1)		15			66			70			131
Segment Adjusted EBITDA		1			135			71			280
General and administrative		(22	)		(30	)		(43	)		(57	)
Depreciation and amortization		(11	)		(12	)		(23	)		(20	)
License fee expense		(6	)		(26	)		(28	)		(49	)
Other loss, net		(3	)		(1	)		(1	)		(2	)
Interest expense		(12	)		(11	)		(22	)		(21	)
Income tax benefit (expense)		8			(15	)		7			(35	)
Equity in earnings from unconsolidated affiliates		1			2			4			3
Other adjustment items(2)		(4	)		(3	)		(5	)		(5	)
Net income (loss)	$	(48	)	$	39		$	(40	)	$	94

^{(1) Includes intersegment transactions. Refer to our table presenting revenues by reportable segment above for additional discussion.}

⁽²⁾ For the three and six months ended June 30, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 19: Commitments and Contingencies

We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of June 30, 2020, we were committed to purchase approximately $464 million of inventory and land over a period of 11 years and $26 million of other commitments under the normal course of business. Additionally, we have committed to develop additional vacation ownership units at an existing resort in Japan. During the second quarter of 2020, we entered into an agreement to exchange parcels of land in Hawaii, subject to the successful completion of zoning, land use requirements and other applicable regulatory requirements. The actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the six months ended June 30, 2020 and 2019, we purchased $9 million and $28 million, respectively, as required under our inventory-related purchase commitments. As of June 30, 2020, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:

($ in millions)	2020 (remaining)		2021		2022		2023		2024		Thereafter		Total
Inventory purchase obligations	$	17	$	225	$	110	$	58	$	40	$	14	$	464
Other commitments(1)		7		14		3		2		—		—		26
Total	$	24	$	239	$	113	$	60	$	40	$	14	$	490

^{(1) Primarily relates to commitments related to information technology and brand licensing under the normal course of business.}

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe that possible losses derived from an unfavorable outcome that is reasonably possible or remote is not reasonably estimable. While the actual results of claims and litigation cannot be predicted with certainty, we expect that the resolution of all pending or threatened claims and litigation as of June 30, 2020, will not materially affect our unaudited condensed consolidated financial statements.

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Subsequent Events

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 20: Subsequent Events

Management has evaluated all subsequent events through July 30, 2020, the date the unaudited consolidated financial statements were available to be issued.  The results of management’s analysis indicated no significant subsequent events have occurred that required consideration as adjustments to our disclosures in the unaudited financial statements.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest.  In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.  All material intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the SEC on March 2, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.

COVID-19

The novel coronavirus (“COVID-19”) pandemic has significantly negatively impacted the hospitality, travel and leisure industries due to various mandates and orders to close non-essential businesses, impose travel restrictions, require “stay-at-home” and/or self-quarantine, and require similar actions. Such restrictions and directives have resulted in cancellations and significant reductions in travel around the world, as well as the negative global economic conditions resulting from the impact of COVID-19. As a result of the reduction in travel, during the first quarter of 2020 we closed substantially all of our resorts and sales centers.  

In addition, in response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.  Further, during the first quarter of 2020, we drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period and on May 8, 2020, we amended our Credit Agreement which amended certain terms of the credit facilities (“Senior Secured Credit Facilities”) to provide us with both near-term and long-term flexibility with respect to satisfying certain negative and financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. See Note 11: Debt and Non-recourse debt for additional actions taken with respect to our financial flexibility.

Prior to re-opening our resorts and sales centers, we introduced the HGV Enhanced Care Guidelines, designed to provide owners, guests and team members with the highest level of cleaning protocols and safety standards recommended by the Center for Disease Control and Prevention and cleaning solutions approved by the Environmental Protection Agency in response to the COVID-19 pandemic. Along with providing personal protective equipment to team members, these Enhanced Care Guidelines include low-touch arrivals and departures, frequent and thorough cleaning, reduction of paper

items, reduced capacity for our pool decks and fitness centers, and new technologies. While operations were suspended, essential resort personnel worked diligently maintaining the resorts for a safe re-opening. Annual deep cleanings, typically scheduled during slower seasons, were moved up and completed, allowing the resorts to be in top shape when owners and guests arrive.

Beginning in May 2020, various states and counties started to allow gradual relaxation of restrictions on activities and a resumption of businesses. In response, we began a phased reopening of resorts and resumption of our business activities during the second quarter of 2020, but under new operating guidelines and with safety measures. As of June 30, 2020, we have approximately two thirds of our resorts and sales centers open and currently operating however, many of our resorts and sales centers are operating with significant capacity constraints and subject to various safety measures.

While we plan to continue to reopen our resorts and resume our business as conditions permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Further, various state and local government officials may issue new or revised orders that are different than current ones under which we are operating. Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income and other operating results, as well as our business and operations generally. Any significantly extended duration or worsening of the conditions associated with the pandemic may adversely impact our liquidity in the longer term, including our ability to finance our day-to-day business and operations, and may adversely affect our ability to comply with our financial covenants under our debt obligations notwithstanding the recent amendments discussed above.

Accounts Receivable and Allowance for Credit Losses

Accounts Receivable and Allowance for Credit Losses

Accounts receivable primarily consists of trade receivables and is reported at the customers’ outstanding balances, less any allowance for credit losses. The expected credit losses are measured using an expected-loss model that reflects the risk of loss and considers the losses expected over the outstanding period of the receivable.

Cloud Computing Arrangements

Cloud Computing Arrangements

We capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in Other assets in our condensed consolidated balance sheets and are expensed in the same line as the hosting arrangement in our condensed consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years. We review the CCAs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the fair value in our condensed consolidated statements of operations.

Derivative Instruments

Derivative Instruments

We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and record changes in fair value in accumulated other comprehensive income (“AOCI”) for the effective portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our condensed consolidated statements of operations. We release the derivative’s gain or loss from AOCI to match the timing of the underlying hedged items’ effect on earnings.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Adopted Accounting Standards

On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, (“ASU 2016-13”), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), using the modified retrospective approach. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our timeshare financing receivables are recorded net of an allowance that is calculated in accordance with ASC 606, Revenue from Contracts with Customers.

On January 1, 2020, we adopted ASU 2018-15 (“ASU 2018-15”), Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. This ASU has been adopted using the retrospective approach. Accordingly, previously reported financial information has been restated to reflect the application of the new standard to the comparative periods presented. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements.

In March 2020, the SEC issued a final rule, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, which simplifies the disclosure requirements related to registered securities under Rule 3-10 of Regulation S-X. The rule replaces the requirement for a parent entity to provide detailed disclosures with regard to guarantors of registered debt offerings within the footnotes to the consolidated financial statements. Under the final rule, a parent entity is required to present summarized financial information of the issuers’ and guarantors’ balance sheets and statements of operations on a consolidated basis. It also requires qualitative disclosures with respect to information about guarantors and the terms and conditions of guarantees. These disclosures may be provided outside the footnotes to the Company’s consolidated financial statements. We early adopted the reporting requirements of the rule in the second quarter of 2020 and elected to provide these disclosures in Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and which also clarifies and amends existing guidance to improve consistent application. The provisions of this ASU are effective for reporting periods after December 15, 2020. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Schedule of Disaggregated Revenues by Segment from Contracts with Customers

The following tables show our disaggregated revenues by 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 18: Business Segments below for more details related to our segments.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Real Estate and Financing Segment
Sales of VOIs, net	$	—	$	120	$	56	$	245
Sales, marketing, brand and other fees		13		145		119		286
Interest income		36		36		74		72
Other financing revenue		7		7		13		12
Real estate and financing segment revenues	$	56	$	308	$	262	$	615

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Resort Operations and Club Management Segment
Club management	$	22	$	26	$	47	$	52
Resort management		17		17		36		33
Rental		5		53		52		105
Ancillary services		—		7		5		14
Resort operations and club management segment revenues	$	44	$	103	$	140	$	204

Schedule of Accounts Receivable from Contracts with Customers and Composition of Contract Liabilities

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

	June 30,		December 31,
($ in millions)	2020		2019
Receivables	$	41	$	129

The following table presents the composition of our contract liabilities.

	June 30,		December 31,
($ in millions)	2020		2019
Contract liabilities:
Advanced deposits	$	116	$	115
Deferred Sales of VOIs of projects under construction		135		84
Club activation fees, annual dues and other		118		86
Club Bonus Point incentive liability(1)		59		59

⁽¹⁾ Amounts related to the Club Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our condensed 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.

Schedule of Deferred Revenue Cost of Sales and Direct Selling Costs from Sales of Project Under Construction

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 June 30, 2020:

	June 30,		December 31,
($ in millions)	2020		2019
Sales of VOIs, net	$	135	$	84
Cost of VOI sales(1)		40		27
Sales and marketing expense		20		12

⁽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.

Schedule of Remaining Transaction Price Related to Advanced Deposits Club Activation Fees and Club Bonus Points

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of June 30, 2020:

($ in millions)	Remaining Transaction Price		Recognition Period	Recognition Method
Advanced deposits	$	116	18 months	Upon customer stays
Club activation fees		69	7 years	Straight-line basis over average inventory holding    period
Club Bonus Points		59	24 months	Upon redemption

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Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2020

Cash And Cash Equivalents [Abstract]

Schedule of Restricted Cash

Restricted cash was as follows:

	June 30,		December 31,
($ in millions)	2020		2019
Escrow deposits on VOI sales	$	39	$	59
Reserves related to non-recourse debt(1)		51		26
	$	90	$	85

⁽¹⁾ Includes a $15 million cash deposit that will be released upon future pledging of qualified collateral. See Note 11: Debt & Non-recourse Debt for further discussion.

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Summary of Accounts Receivable, Net of Allowance for Credit Losses

The following table represents our accounts receivable, net of allowance for credit losses.  Following the adoption of ASC 326 on January 1, 2020, accounts receivable within the scope of ASC 326 are measured at amortized cost.

($ in millions)	June 30, 2020
Fee-for-service commissions(1)	$	7
Real estate and financing	8
Resort and club operations	21
Tax receivables	32
Other receivables(2)	6
Total	$	74

^{(1) Net of allowance.}

^{(2) Primarily includes individually insignificant accounts receivable recognized in the ordinary course of business, the allowances for which are individually insignificant.}

Changes in Allowance for Fee-for-Service Commissions

The changes in our allowance for fee-for-service commissions were as follows:

($ in millions)	June 30, 2020
Balance as of December 31, 2019	$	19
Current period provision for expected credit losses	4
Write-offs charged against the allowance		(8	)
Balance at June 30, 2020	$	15

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Timeshare Financing Receivables (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Schedule of financing receivables

Timeshare financing receivables were as follows:

	June 30, 2020
($ in millions)	Securitized			Unsecuritized(1)			Total
Timeshare financing receivables	$	956		$	307		$	1,263
Less: allowance for financing receivables losses		(78	)		(132	)		(210	)
	$	878		$	175		$	1,053

	December 31, 2019
($ in millions)	Securitized			Unsecuritized(1)			Total
Timeshare financing receivables	$	758		$	582		$	1,340
Less: allowance for financing receivables losses		(54	)		(130	)		(184	)
	$	704		$	452		$	1,156

⁽¹⁾ Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.

Schedule of future payments due from financing receivables

Our timeshare financing receivables as of June 30, 2020 mature as follows:

($ in millions)	Securitized			Unsecuritized			Total
Year
2020 (remaining)	$	55		$	13		$	68
2021		112			26			138
2022		115			28			143
2023		118			30			148
2024		119			33			152
Thereafter		437			177			614
		956			307			1,263
Less: allowance for financing receivables losses		(78	)		(132	)		(210	)
	$	878		$	175		$	1,053

Schedule of financing receivables by average FICO score

Our gross timeshare financing receivables balances by average FICO score were as follows:

	June 30,		December 31,
($ in millions)	2020		2019
FICO score
700+	$	764	$	818
600-699		279		292
<600		37		39
No score(1)		183		191
	$	1,263	$	1,340

⁽¹⁾ Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

Details the origination year of gross timeshare financing receivables by average FICO score

The following table details the origination year of our gross timeshare financing receivables by average FICO score as of June 30, 2020:

($ in millions)	2020		2019		2018		2017		2016		Prior		Total
FICO score
700+	$	74	$	252	$	169	$	109	$	70	$	90	$	764
600-699		24		89		61		39		25		41		279
<600		4		12		7		5		3		6		37
No score(1)		20		59		37		20		14		33		183
	$	122	$	412	$	274	$	173	$	112	$	170	$	1,263

⁽¹⁾ Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

Schedule of past due financing receivables

The following tables detail an aged analysis of our gross timeshare receivables balance:

	June 30, 2020
($ in millions)	Securitized		Unsecuritized		Total
Current	$	935	$	202	$	1,137
31 - 90 days past due		12		13		25
91 - 120 days past due		4		5		9
121 days and greater past due		5		87		92
	$	956	$	307	$	1,263

	December 31, 2019
($ in millions)	Securitized		Unsecuritized		Total
Current	$	743	$	502	$	1,245
31 - 90 days past due		9		12		21
91 - 120 days past due		3		4		7
121 days and greater past due		3		64		67
	$	758	$	582	$	1,340

Schedule of Change in Allowance For Financing Receivables Losses

The changes in our allowance for financing receivables losses were as follows:

	June 30, 2020
($ in millions)	Securitized			Unsecuritized			Total
Balance as of December 31, 2019	$	54		$	130		$	184
Write-offs		—			(19	)		(19	)
Provision for financing receivables losses(1)		(12	)		57			45
Securitization		36			(36	)		—
Balance as of June 30, 2020	$	78		$	132		$	210

	June 30, 2019
($ in millions)	Securitized			Unsecuritized			Total
Balance as of December 31, 2018	$	43		$	129		$	172
Write-offs		—			(36	)		(36	)
Provision for financing receivables losses(1)		(8	)		46			38
Balance as of June 30, 2019	$	35		$	139		$	174

(1) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

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Inventory (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Schedule Of Inventory

Inventory was as follows:

	June 30,		December 31,
($ in millions)	2020		2019
Completed unsold VOIs	$	253	$	241
Construction in process		396		59
Land, infrastructure and other		258		258
	$	907	$	558

Schedule of Costs of Sales True-ups Relating to VOI Products and Impacts on the Carrying Value of Inventory

Shown below are costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory.

	Six Months Ended June 30,
($ in millions)	2020		2019
Cost of sales true-up(1)	$	5	$	5

⁽¹⁾ Costs of sales true ups reduced costs of VOI sales and increased inventory in the periods presented.

Schedule of expense incurred when customers upgrade existing ownership to fee-for-service project

Shown below are expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Cost of VOI sales related to fee-for-service upgrades	$	—	$	7	$	5	$	16

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2020

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment and Related Depreciation Expenses

Property and equipment was as follows:

	June 30,			December 31,
($ in millions)	2020			2019
Land	$	104		$	154
Building and leasehold improvements		245			286
Furniture and equipment		67			65
Construction in progress		190			383
		606			888
Accumulated depreciation		(122	)		(110	)
	$	484		$	778

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Consolidated Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Consolidated Variable Interest Entities

Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:

	June 30,		December 31,
($ in millions)	2020		2019
Restricted cash	$	50	$	26
Timeshare financing receivables, net		878		704
Non-recourse debt(1)		926		747

⁽¹⁾ Net of deferred financing costs.

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Debt & Non-recourse Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of Outstanding Borrowings

The following table details our outstanding debt balance and its associated interest rates:

	June 30,			December 31,
($ in millions)	2020			2019
Debt(1)
Senior secured credit facilities:
Term loan with a rate of 2.000%, due 2023	$	182		$	187
Revolver with a weighted average rate of 2.000%, due 2023		760			320
Senior notes with a rate of 6.125%, due 2024		300			300
Other debt		27			27
		1,269			834
Less: unamortized deferred financing costs and discount(2)(3)		(6	)		(6	)
	$	1,263		$	828

⁽¹⁾ As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.080 percent and 4.571 percent, respectively.

⁽²⁾ Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of June 30, 2020 and December 31, 2019.

⁽³⁾ Amount does not include deferred financing costs of $4 million as of June 30, 2020 and $5 million as of December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

The following table details our outstanding non-recourse debt balance and its associated interest rates:

	June 30,			December 31,
($ in millions)	2020			2019
Non-recourse debt(1)
Securitized Debt with an average rate of 1.810%, due 2026	$	34		$	46
Securitized Debt with an average rate of 2.711%, due 2028		126			149
Securitized Debt with an average rate of 3.602%, due 2032		233			275
Securitized Debt with an average rate of 2.431%, due 2033		252			285
Securitized Debt with an average rate of 3.658%, due 2039		292			—
		937			755
Less: unamortized deferred financing costs(2)		(11	)		(8	)
	$	926		$	747

⁽¹⁾ As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.119 percent and 2.876 percent, respectively.

⁽²⁾ Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of June 30, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets.

Schedule of Contractual Maturities of Debt

The contractual maturities of our debt and non-recourse debt as of June 30, 2020 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2020 (remaining)	$	6	$	160	$	166
2021		11		258		269
2022		11		165		176
2023		918		116		1,034
2024		300		100		400
Thereafter		23		138		161
	$	1,269	$	937	$	2,206

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Carrying and Estimated Fair Value Amounts

The carrying amounts and estimated fair values of our financial assets and liabilities were as follows:

	June 30, 2020
			Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net(1)	$	1,053	$	—	$	1,276
Liabilities:
Debt, net(2)		1,263		303		959
Non-recourse debt, net(2)		926		—		916

⁽¹⁾ Carrying amount net of allowance for financing receivables losses.

⁽²⁾ Carrying amount net of unamortized deferred financing costs and discount.

	December 31, 2019
			Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net(1)	$	1,156	$	—	$	1,446
Liabilities:
Debt, net(2)		828		326		544
Non-recourse debt, net(2)		747		—		749

⁽¹⁾ Carrying amount net of allowance for financing receivables losses.

⁽²⁾ Carrying amount net of unamortized deferred financing costs and discount.

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Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Schedule Of Supplemental Cash Flow Information Related To Operating Leases

Supplemental cash flow information related to operating leases was as follows:

	Six Months Ended June 30,
($ in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9	$	8
Right-of-use assets obtained in exchange for new lease liabilities:
Operating Leases		5		1

Schedule Of Supplemental Balance Sheet Information Related To Operating Leases

Supplemental balance sheet information related to operating leases was as follows:

	June 30,			December 31,
	2020			2019
Weighted-average remaining lease term of operating leases (in years)	5.7			6.1
Weighted-average discount rate of operating leases		4.87	%		5.34	%

Future Minimum Lease Payments Under Non-Cancelable Operating Leases

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of June 30, 2020, are as follows:

($ in millions)	Operating Leases
Year
2020 (remaining)	$	9
2021		18
2022		14
2023		12
2024		11
Thereafter		22
Total future minimum lease payments	$	86
Less: imputed interest		(12	)
Present value of lease liabilities	$	74

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Schedule of Stock Option Valuation Assumptions

The weighted-average grant date fair value of these options was $9.14, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

Expected volatility	35.4	%
Dividend yield	—	%
Risk-free rate	1.0	%
Expected term (in years)	6.0

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Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Share, Basic and Diluted

The following table presents the calculation of our basic and diluted earnings (loss) per share (“EPS”).  The weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended June 30, 2020 was 85,002,791 and for the six months ended June 30, 2020 was 85,258,963. The weighted-average shares outstanding used to compute basic EPS and diluted EPS for the three months ended June 30, 2019 was 89,849,803 and 90,271,976, respectively, and for the six months ended June 30, 2019 was 91,959,041 and 92,421,752, respectively.  

	Three Months Ended June 30,					Six Months Ended June 30,
($ and shares outstanding in millions, except per share amounts)	2020			2019		2020			2019
Basic EPS:
Numerator:
Net income (loss)(1)	$	(48	)	$	39	$	(40	)	$	94
Denominator:
Weighted average shares outstanding		85			90		85			92
Basic EPS	$	(0.56	)	$	0.43	$	(0.47	)	$	1.02
Diluted EPS:
Numerator:
Net income (loss)(1)	$	(48	)	$	39	$	(40	)	$	94
Denominator:
Weighted average shares outstanding		85			90		85			92
Diluted EPS	$	(0.56	)	$	0.43	$	(0.47	)	$	1.01

⁽¹⁾ Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.   

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Summary of Amounts Included in Condensed Consolidated Statements of Operations Related to Fee for Service Arrangement

These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became related parties.

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Equity in earnings from unconsolidated affiliates	$	1	$	2	$	4	$	3
Commissions and other fees		4		32		27		68

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Business Segments (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Schedule of Segment Operating Performance Reconciled to Consolidated Amounts

We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

The following table present revenues for our reportable segments reconciled to consolidated amounts:

	Three Months Ended June 30,					Six Months Ended June 30,
($ in millions)	2020		2019			2020			2019
Revenues:
Real estate sales and financing	$	56	$	308		$	262		$	615
Resort operations and club management(1)(2)		44		114			148			224
Total segment revenues		100		422			410			839
Cost reimbursements		23		43			72			85
Intersegment eliminations(1)(2)		—		(11	)		(8	)		(20	)
Total revenues	$	123	$	454		$	474		$	904

⁽¹⁾ Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts. There were no such charges related to this for the three months ended June 30, 2020. These charges totaled $11 million for the three months ended June 30, 2019, and $8 million and $20 million for the six months ended June 30, 2020 and 2019, respectively.  

⁽²⁾ Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled less than $1 million for the three and six months ended June 30, 2020 and 2019.  

Schedule of Adjusted EBITDA Reconciled to Net Income

The following table presents Segment Adjusted EBITDA for our reportable segments reconciled to net income:

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2020			2019			2020			2019
Adjusted EBITDA:
Real estate sales and financing(1)	$	(14	)	$	69		$	1		$	149
Resort operations and club management(1)		15			66			70			131
Segment Adjusted EBITDA		1			135			71			280
General and administrative		(22	)		(30	)		(43	)		(57	)
Depreciation and amortization		(11	)		(12	)		(23	)		(20	)
License fee expense		(6	)		(26	)		(28	)		(49	)
Other loss, net		(3	)		(1	)		(1	)		(2	)
Interest expense		(12	)		(11	)		(22	)		(21	)
Income tax benefit (expense)		8			(15	)		7			(35	)
Equity in earnings from unconsolidated affiliates		1			2			4			3
Other adjustment items(2)		(4	)		(3	)		(5	)		(5	)
Net income (loss)	$	(48	)	$	39		$	(40	)	$	94

^{(1) Includes intersegment transactions. Refer to our table presenting revenues by reportable segment above for additional discussion.}

⁽²⁾ For the three and six months ended June 30, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items.

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Schedule of Remaining Purchase Obligations

As of June 30, 2020, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:

($ in millions)	2020 (remaining)		2021		2022		2023		2024		Thereafter		Total
Inventory purchase obligations	$	17	$	225	$	110	$	58	$	40	$	14	$	464
Other commitments(1)		7		14		3		2		—		—		26
Total	$	24	$	239	$	113	$	60	$	40	$	14	$	490

^{(1) Primarily relates to commitments related to information technology and brand licensing under the normal course of business.}

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Organization - Additional Information (Details)	Jun. 30, 2020 property unit
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of timeshare properties | property	60
Number of units in timeshare properties | unit	9,595

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Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Reduction in planned investment in inventory	$ 200
Cloud Computing Arrangements | Minimum
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	3 years
Cloud Computing Arrangements | Maximum
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	5 years

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Revenue from Contracts with Customers - Additional Information (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($) segment
Revenue From Contract With Customer [Abstract]
Number of operating segments | segment		2
Revenue earned that was included in the contract liabilities balance | $	$ 17,000,000	$ 53,000,000

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Revenue from Contracts with Customers - Schedule of Disaggregated Revenues by Segment from Contracts with Customers (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation Of Revenue [Line Items]
Total revenues	$ 123	$ 454	$ 474	$ 904
Sales of VOIs, Net
Disaggregation Of Revenue [Line Items]
Total revenues		120	56	245
Sales, Marketing, Brand and Other Fees
Disaggregation Of Revenue [Line Items]
Total revenues	13	145	119	286
Real Estate and Financing Segment
Disaggregation Of Revenue [Line Items]
Total revenues	56	308	262	615
Real Estate and Financing Segment | Sales of VOIs, Net
Disaggregation Of Revenue [Line Items]
Total revenues		120	56	245
Real Estate and Financing Segment | Sales, Marketing, Brand and Other Fees
Disaggregation Of Revenue [Line Items]
Total revenues	13	145	119	286
Real Estate and Financing Segment | Interest Income
Disaggregation Of Revenue [Line Items]
Total revenues	36	36	74	72
Real Estate and Financing Segment | Other Financing Revenue
Disaggregation Of Revenue [Line Items]
Total revenues	7	7	13	12
Resort Operations and Club Management Segment
Disaggregation Of Revenue [Line Items]
Total revenues	44	103	140	204
Resort Operations and Club Management Segment | Club Management
Disaggregation Of Revenue [Line Items]
Total revenues	22	26	47	52
Resort Operations and Club Management Segment | Resort Management
Disaggregation Of Revenue [Line Items]
Total revenues	17	17	36	33
Resort Operations and Club Management Segment | Rental
Disaggregation Of Revenue [Line Items]
Total revenues	$ 5	53	52	105
Resort Operations and Club Management Segment | Ancillary Services
Disaggregation Of Revenue [Line Items]
Total revenues		$ 7	$ 5	$ 14

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Revenue from Contracts with Customers - Schedule of Accounts Receivable from Contracts with Customers (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Accounts Receivable
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Receivables	$ 41	$ 129

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Revenue from Contracts with Customers - Composition of Contract Liabilities (Details) - Topic 606 - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Advanced deposits
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Contract liabilities		$ 116	$ 115
Deferred Sales of VOIs of projects under construction
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Contract liabilities		135	84
Club activation fees, annual dues and other
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Contract liabilities		118	86
Club Bonus Point incentive liability
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Contract liabilities	[1]	$ 59	$ 59

[1] Amounts related to the Club Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our condensed 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

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Revenue from Contracts with Customers - Schedule of Deferred Revenue, Cost of VOI Sales and Direct Selling Costs from Sales of VOIs Related to Project Under Construction (Details) - USD ($) $ in Millions		6 Months Ended	12 Months Ended
		Jun. 30, 2020	Dec. 31, 2019
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Sales of VOIs, net		$ 268	$ 186
Sales of VOIs
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Sales of VOIs, net		135	84
Cost of VOI sales	[1]	40	27
Sales and marketing expense		$ 20	$ 12

[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.

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Revenue from Contracts with Customers - Remaining Transaction Price (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Advanced deposits
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Remaining Transaction Price	$ 116
Recognition Period	18 months
Recognition Method	Upon customer stays
Club Activation Fees
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Remaining Transaction Price	$ 69
Recognition Period	7 years
Recognition Method	Straight-line basis over average inventory holding    period
Club Bonus Points
Revenue Initial Application Period Cumulative Effect Transition [Line Items]
Remaining Transaction Price	$ 59
Recognition Period	24 months
Recognition Method	Upon redemption

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Restricted Cash - Schedule of Restricted Cash (Details) - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash		$ 90	$ 85
Escrow deposits on VOI sales
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash		39	59
Reserves related to non-recourse debt
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	[1]	$ 51	$ 26

[1] Includes a $15 million cash deposit that will be released upon future pledging of qualified collateral. See Note 11: Debt & Non-recourse Debt for further discussion.

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Restricted Cash - Schedule of Restricted Cash Parenthetical (Details) $ in Millions	Jun. 30, 2020 USD ($)
Cash And Cash Equivalents [Abstract]
Restricted cash used as collateral for securitization	$ 15

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Accounts Receivable - Summary of Accounts Receivable, Net of Allowance for Credit Losses (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, net of allowances	$ 74	$ 174
Fee-for-Service Commission
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, net of allowances	7
Real Estate and Financing
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, net of allowances	8
Resort and Club Operations
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, net of allowances	21
Tax Receivables
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, net of allowances	32
Other Receivables
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, net of allowances	$ 6

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Accounts Receivable - Changes in Allowance for Fee-for-Service Commissions (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Balance as of December 31, 2019	$ 21
Balance at June 30, 2020	17
Fee-for-Service Commission
Accounts Notes And Loans Receivable [Line Items]
Balance as of December 31, 2019	19
Current period provision for expected credit losses	4
Write-offs charged against the allowance	(8)
Balance at June 30, 2020	$ 15

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Timeshare Financing Receivables - Schedule of Timeshare Financing Receivables (Details) - USD ($) $ in Millions		Jun. 30, 2020		Dec. 31, 2019		Jun. 30, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Timeshare financing receivables		$ 1,263		$ 1,340
Less: allowance for financing receivables losses		(210)		(184)		$ (174)	$ (172)
Timeshare financing receivables, net		1,053		1,156
Securitized
Accounts Notes And Loans Receivable [Line Items]
Timeshare financing receivables		956		758
Less: allowance for financing receivables losses		(78)		(54)		(35)	(43)
Timeshare financing receivables, net		878		704
Unsecuritized
Accounts Notes And Loans Receivable [Line Items]
Timeshare financing receivables	[1]	307		582
Less: allowance for financing receivables losses		(132)	[1]	(130)	[1]	$ (139)	$ (129)
Timeshare financing receivables, net	[1]	$ 175		$ 452

[1] Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.

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Timeshare Financing Receivables - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Decrease in Variable Consideration		$ 45
Reduction in Revenue due to COVID-19 Pandemic		$ 23
Cash deposit for future pledging of qualified collateral	$ 15
Financing receivable, weighted average interest rate (as a percent)	12.56%	12.56%
Financing receivable, weighted average remaining term (in years)		7 years 8 months 12 days
Financing receivable weighted average maturities year		2035
Interest receivable outstanding	$ 9	$ 9	$ 9
Timeshare financing receivable not accruing interest	$ 101	$ 101	74
Minimum
Accounts Notes And Loans Receivable [Line Items]
Financing receivable, stated interest rate (as a percent)	3.90%	3.90%
Maximum
Accounts Notes And Loans Receivable [Line Items]
Financing receivable, stated interest rate (as a percent)	20.50%	20.50%
2.74 Percent Notes
Accounts Notes And Loans Receivable [Line Items]
Debt instrument, face amount	$ 186	$ 186
Debt instrument, stated interest rate	2.74%	2.74%
4.22 Percent Notes
Accounts Notes And Loans Receivable [Line Items]
Debt instrument, face amount	$ 66	$ 66
Debt instrument, stated interest rate	4.22%	4.22%
6.42 Percent Notes
Accounts Notes And Loans Receivable [Line Items]
Debt instrument, face amount	$ 48	$ 48
Debt instrument, stated interest rate	6.42%	6.42%
Non-recourse Debt
Accounts Notes And Loans Receivable [Line Items]
Gross timeshare receivables securing the Timeshare Facility	$ 20	$ 20	$ 0
Timeshare financing receivables securitized	$ 300	300
Debt instrument stated maturity date	Feb. 25, 2039
Non-recourse Debt | 2.74 Percent Notes
Accounts Notes And Loans Receivable [Line Items]
Debt instrument, face amount	$ 186	$ 186
Debt instrument, stated interest rate	2.74%	2.74%
Non-recourse Debt | 4.22 Percent Notes
Accounts Notes And Loans Receivable [Line Items]
Debt instrument, face amount	$ 66	$ 66
Debt instrument, stated interest rate	4.22%	4.22%
Non-recourse Debt | 6.42 Percent Notes
Accounts Notes And Loans Receivable [Line Items]
Debt instrument, face amount	$ 48	$ 48
Debt instrument, stated interest rate	6.42%	6.42%

XML

Timeshare Financing Receivables - Maturities of Financing Receivables (Details) - USD ($) $ in Millions	Jun. 30, 2020		Dec. 31, 2019		Jun. 30, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
2020 (remaining)	$ 68
2021	138
2022	143
2023	148
2024	152
Thereafter	614
Timeshare financing receivable maturities, gross	1,263
Less: allowance for financing receivables losses	(210)		$ (184)		$ (174)	$ (172)
Timeshare financing receivable maturities, net	1,053
Securitized
Accounts Notes And Loans Receivable [Line Items]
2020 (remaining)	55
2021	112
2022	115
2023	118
2024	119
Thereafter	437
Timeshare financing receivable maturities, gross	956
Less: allowance for financing receivables losses	(78)		(54)		(35)	(43)
Timeshare financing receivable maturities, net	878
Unsecuritized
Accounts Notes And Loans Receivable [Line Items]
2020 (remaining)	13
2021	26
2022	28
2023	30
2024	33
Thereafter	177
Timeshare financing receivable maturities, gross	307
Less: allowance for financing receivables losses	(132)	[1]	$ (130)	[1]	$ (139)	$ (129)
Timeshare financing receivable maturities, net	$ 175

[1] Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.

XML

Timeshare Financing Receivables - Financing Receivable by average FICO Score (Details) - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment [Line Items]
Timeshare financing receivables		$ 1,263	$ 1,340
More than 700
Financing Receivable, Recorded Investment [Line Items]
Timeshare financing receivables		764	818
600-699
Financing Receivable, Recorded Investment [Line Items]
Timeshare financing receivables		279	292
Less than 600
Financing Receivable, Recorded Investment [Line Items]
Timeshare financing receivables		37	39
No score
Financing Receivable, Recorded Investment [Line Items]
Timeshare financing receivables	[1]	$ 183	$ 191

[1] Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

XML

Timeshare Financing Receivables - Details the Origination Year of Gross Timeshare Financing Receivables by average FICO Score (Details) - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		$ 1,263	$ 1,340
More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		764	818
600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		279	292
Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		37	39
No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	183	$ 191
Year Of Origination 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		122
Year Of Origination 2020 | More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		74
Year Of Origination 2020 | 600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		24
Year Of Origination 2020 | Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		4
Year Of Origination 2020 | No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	20
Year Of Origination 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		112
Year Of Origination 2016 | More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		70
Year Of Origination 2016 | 600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		25
Year Of Origination 2016 | Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		3
Year Of Origination 2016 | No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	14
Year Of Origination 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		412
Year Of Origination 2019 | More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		252
Year Of Origination 2019 | 600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		89
Year Of Origination 2019 | Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		12
Year Of Origination 2019 | No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	59
Year Of Origination Prior
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		170
Year Of Origination Prior | More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		90
Year Of Origination Prior | 600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		41
Year Of Origination Prior | Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		6
Year Of Origination Prior | No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	33
Year Of Origination 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		274
Year Of Origination 2018 | More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		169
Year Of Origination 2018 | 600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		61
Year Of Origination 2018 | Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		7
Year Of Origination 2018 | No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	37
Year Of Origination 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		173
Year Of Origination 2017 | More than 700
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		109
Year Of Origination 2017 | 600-699
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		39
Year Of Origination 2017 | Less than 600
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables		5
Year Of Origination 2017 | No score
Financing Receivable, Recorded Investment, Past Due [Line Items]
Timeshare financing receivables	[1]	$ 20

[1] Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

XML

Timeshare Financing Receivables - Past Due Financing Receivables (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 1,137	$ 1,245
Financing receivable, past due and current	1,263	1,340
31 - 90 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	25	21
91 - 120 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	9	7
121 days and greater past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	92	67
Securitized
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	935	743
Financing receivable, past due and current	956	758
Securitized | 31 - 90 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	12	9
Securitized | 91 - 120 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	4	3
Securitized | 121 days and greater past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	5	3
Unsecuritized
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	202	502
Financing receivable, past due and current	307	582
Unsecuritized | 31 - 90 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	13	12
Unsecuritized | 91 - 120 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	5	4
Unsecuritized | 121 days and greater past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivable, past due	$ 87	$ 64

XML

Timeshare Financing Receivables - Schedule of Change in Allowance For Financing Receivables Losses (Details) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2020		Jun. 30, 2019
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, beginning balance		$ 184		$ 172
Write-offs		(19)		(36)
Provision for financing receivables losses	[1]	45		38
Allowance for loan loss, ending balance		210		174
Securitized
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, beginning balance		54		43
Provision for financing receivables losses	[1]	(12)		(8)
Securitization		36
Allowance for loan loss, ending balance		78		35
Unsecuritized
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, beginning balance		130	[2]	129
Write-offs		(19)		(36)
Provision for financing receivables losses	[1]	57		46
Securitization		(36)
Allowance for loan loss, ending balance		$ 132	[2]	$ 139

[1] Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

[2] Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.

XML

Inventory - Schedule of Inventory, Noncurrent (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Completed unsold VOIs	$ 253	$ 241
Construction in process	396	59
Land, infrastructure and other	258	258
Inventory	$ 907	$ 558

XML

Inventory - Schedule of Costs of Sales True-ups Relating to VOI Products and Impacts on the Carrying Value of Inventory (Details) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019
Sales true-up
Inventory [Line Items]
Expenses	[1]	$ 5	$ 5

[1] Costs of sales true ups reduced costs of VOI sales and increased inventory in the periods presented.

XML

Inventory - Schedule of Expenses Incurred, Recorded in Cost of VOI Sales (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Fee For Service Upgrades
Inventory [Line Items]
Expenses	$ 7	$ 5	$ 16

XML

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 606	$ 888
Accumulated depreciation	(122)	(110)
Property and equipment, net	484	778
Land
Property Plant And Equipment [Line Items]
Property and equipment, gross	104	154
Building and Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	245	286
Furniture and Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	67	65
Construction in Progress
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 190	$ 383

XML

Property and Equipment - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Property Plant And Equipment Gross [Abstract]
Timeshare units transfer from property and equipment to inventory	$ 301

XML

Consolidated Variable Interest Entities - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020 USD ($) entity	Jun. 30, 2019 USD ($)	Dec. 31, 2019 entity
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of VIEs consolidated | entity	5		4
Financial or other support to any VIEs | $	$ 0	$ 0

XML

Consolidated Variable Interest Entities - Schedule of Consolidated Variable Interest Entities (Details) - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Variable Interest Entity [Line Items]
Assets, variable interest entity		$ 3,635	$ 3,079
Liabilities, variable interest entity		3,112	2,509
Variable Interest Entities
Variable Interest Entity [Line Items]
Assets, variable interest entity		942	748
Liabilities, variable interest entity		931	750
Variable Interest Entities | Restricted cash
Variable Interest Entity [Line Items]
Assets, variable interest entity		50	26
Variable Interest Entities | Timeshare financing receivables, net
Variable Interest Entity [Line Items]
Assets, variable interest entity		878	704
Variable Interest Entities | Non-recourse debt
Variable Interest Entity [Line Items]
Liabilities, variable interest entity	[1]	$ 926	$ 747

[1] Net of deferred financing costs

XML

Investments in Unconsolidated Affiliates - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) Affiliate	Dec. 31, 2019 USD ($)
Schedule Of Investments [Line Items]
Number of unconsolidated affiliates | Affiliate	2
Debt	$ 1,263	$ 828
Investments in unconsolidated affiliates	$ 48	44
BRE Ace LLC
Schedule Of Investments [Line Items]
Equity method investment, ownership percentage	25.00%
1776 Holdings LLC
Schedule Of Investments [Line Items]
Equity method investment, ownership percentage	50.00%
BRE Ace LLC and 1776 Holding, LLC
Schedule Of Investments [Line Items]
Debt	$ 471	$ 479

XML

Debt & Non-recourse Debt - Schedule of Outstanding Borrowings (Details) - USD ($) $ in Millions		Jun. 30, 2020	May 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term debt, gross	[1]	$ 1,269		$ 834
Less: unamortized deferred financing costs and discount	[2],[3]	(6)		(6)
Long-term debt		1,263		828
Revolving Credit Facility
Debt Instrument [Line Items]
Less: unamortized deferred financing costs and discount		(4)	$ (1)	(5)
Revolver with an average rate of 2.000%, due 2023 | Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt, gross	[1]	760		320
Line of Credit | Term loans with an average rate of 2.000%, due 2023
Debt Instrument [Line Items]
Long-term debt, gross	[1]	182		187
Less: unamortized deferred financing costs and discount		(1)		(1)
Senior Notes | Senior notes with a rate of 6.125%, due 2024
Debt Instrument [Line Items]
Long-term debt, gross	[1]	300		300
Less: unamortized deferred financing costs and discount		(5)		(5)
Other Debt
Debt Instrument [Line Items]
Long-term debt, gross	[1]	27		27
Non-recourse Debt
Debt Instrument [Line Items]
Long-term debt, gross	[4]	937		755
Less: unamortized deferred financing costs and discount	[5]	(11)		(8)
Long-term debt		926		747
Non-recourse Debt | Securitized Debt with an average rate of 1.810%, due 2026
Debt Instrument [Line Items]
Long-term debt, gross		34		46
Non-recourse Debt | Securitized Debt with an average rate of 2.711%, due 2028
Debt Instrument [Line Items]
Long-term debt, gross		126		149
Non-recourse Debt | Securitized Debt with an average rate of 3.602%, due 2032
Debt Instrument [Line Items]
Long-term debt, gross		233		275
Non-recourse Debt | Securitized Debt with an average rate of 2.431%, due 2033
Debt Instrument [Line Items]
Long-term debt, gross		252		$ 285
Non-recourse Debt | Securitized Debt with an average rate of 3.658%, due 2039
Debt Instrument [Line Items]
Long-term debt, gross		$ 292

[1] As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.080 percent and 4.571 percent, respectively.

[2] Amount does not include deferred financing costs of $4 million as of June 30, 2020 and $5 million as of December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

[3] Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of June 30, 2020 and December 31, 2019.

[4] As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.119 percent and 2.876 percent, respectively.

[5] Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of June 30, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets.

XML

Debt & Non-recourse Debt - Schedule of Outstanding Borrowings (Parenthetical) (Details) - USD ($) $ in Millions		6 Months Ended	12 Months Ended
		Jun. 30, 2020	Dec. 31, 2019	May 31, 2020
Debt Instrument [Line Items]
Debt instrument, average interest rate		3.08%	4.571%
Less: unamortized deferred financing costs and discount	[1],[2]	$ (6)	$ (6)
Revolving Credit Facility
Debt Instrument [Line Items]
Less: unamortized deferred financing costs and discount		$ (4)	$ (5)	$ (1)
Revolving Credit Facility | Revolver with an average rate of 2.000%, due 2023
Debt Instrument [Line Items]
Debt instrument, average interest rate		2.00%	2.00%
Debt instrument, maturity year		2023	2023
Line of Credit | Term loans with an average rate of 2.000%, due 2023
Debt Instrument [Line Items]
Debt instrument, average interest rate		2.00%	2.00%
Debt instrument, maturity year		2023	2023
Less: unamortized deferred financing costs and discount		$ (1)	$ (1)
Senior Notes | Senior notes with a rate of 6.125%, due 2024
Debt Instrument [Line Items]
Debt instrument, maturity year		2024	2024
Debt instrument, stated interest rate		6.125%	6.125%
Less: unamortized deferred financing costs and discount		$ (5)	$ (5)
Non-recourse Debt
Debt Instrument [Line Items]
Debt instrument, average interest rate		3.119%	2.876%
Less: unamortized deferred financing costs and discount	[3]	$ (11)	$ (8)
Non-recourse Debt | Securitized Debt with an average rate of 1.810%, due 2026
Debt Instrument [Line Items]
Debt instrument, average interest rate		1.81%	1.81%
Debt instrument, maturity year		2026	2026
Non-recourse Debt | Securitized Debt with an average rate of 2.711%, due 2028
Debt Instrument [Line Items]
Debt instrument, average interest rate		2.711%	2.711%
Debt instrument, maturity year		2028	2028
Non-recourse Debt | Securitized Debt with an average rate of 3.602%, due 2032
Debt Instrument [Line Items]
Debt instrument, average interest rate		3.602%	3.602%
Debt instrument, maturity year		2032	2032
Non-recourse Debt | Securitized Debt with an average rate of 2.431%, due 2033
Debt Instrument [Line Items]
Debt instrument, average interest rate		2.431%	2.431%
Debt instrument, maturity year		2033	2033
Non-recourse Debt | Securitized Debt with an average rate of 3.685%, due 2039
Debt Instrument [Line Items]
Debt instrument, average interest rate		3.658%	3.658%
Debt instrument, maturity year		2039	2039
Non-recourse Debt | Timeshare Facility with an average rate of X.XXX%, due 2022
Debt Instrument [Line Items]
Less: unamortized deferred financing costs and discount		$ (2)	$ (3)

[1] Amount does not include deferred financing costs of $4 million as of June 30, 2020 and $5 million as of December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

[2] Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of June 30, 2020 and December 31, 2019.

[3] Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of June 30, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets.

XML

Debt & Non-recourse Debt - Additional Information (Details) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2020	May 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Debt issuance costs	[1],[2]	$ 6		$ 6
Accumulated other comprehensive loss, Qualifying as hedge		1
Accounts Receivable from Securitization		300
Restricted cash		90		85
Reserves related to non-recourse debt
Debt Instrument [Line Items]
Restricted cash	[3]	51		26
Restricted cash and cash equivalents depository accounts		36
2.74 Percent Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 186
Debt instrument, stated interest rate		2.74%
4.22 Percent Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 66
Debt instrument, stated interest rate		4.22%
6.42 Percent Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 48
Debt instrument, stated interest rate		6.42%
Timeshare Facility
Debt Instrument [Line Items]
Term loan outstanding		$ 450
LIBOR
Debt Instrument [Line Items]
Derivative fixed interest rate		0.53%
Senior Secured Credit Facilities
Debt Instrument [Line Items]
Debt issuance costs		$ 5
Non-recourse Debt
Debt Instrument [Line Items]
Debt issuance costs	[4]	11		8
Restricted cash		15
Non-recourse Debt | 2.74 Percent Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 186
Debt instrument, stated interest rate		2.74%
Non-recourse Debt | 4.22 Percent Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 66
Debt instrument, stated interest rate		4.22%
Non-recourse Debt | 6.42 Percent Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 48
Debt instrument, stated interest rate		6.42%
Revolving Credit Facility
Debt Instrument [Line Items]
Debt issuance costs		$ 4	$ 1	5
Interest rate on revolving credit facility description		one month LIBOR
Revolving Credit Facility | LIBOR
Debt Instrument [Line Items]
Interest rate on revolving credit facility		1.75%
Revolving Credit Facility | LIBOR | Minimum
Debt Instrument [Line Items]
Interest rate on revolving credit facility		0.25%
Revolving Credit Facility | Senior Secured Credit Facilities
Debt Instrument [Line Items]
Debt instrument borrowed amount		$ 495
Debt instrument repaid amount		60
Letters of credit outstanding, amount		1		$ 1
Term Loan
Debt Instrument [Line Items]
Debt instrument, face amount		$ 182

[1] Amount does not include deferred financing costs of $4 million as of June 30, 2020 and $5 million as of December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

[2] Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of June 30, 2020 and December 31, 2019.

[3] Includes a $15 million cash deposit that will be released upon future pledging of qualified collateral. See Note 11: Debt & Non-recourse Debt for further discussion.

[4] Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of June 30, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets.

XML

Debt & Non-recourse Debt - Schedule of Contractual Maturities of Debt (Details) - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
2020 (remaining)		$ 6
2021		11
2022		11
2023		918
2024		300
Thereafter		23
Long-term debt	[1]	1,269	$ 834
Non-recourse Debt
Debt Instrument [Line Items]
2020 (remaining)		160
2021		258
2022		165
2023		116
2024		100
Thereafter		138
Long-term debt	[2]	937	$ 755
Debt and Non-recourse Debt
Debt Instrument [Line Items]
2020 (remaining)		166
2021		269
2022		176
2023		1,034
2024		400
Thereafter		161
Long-term debt		$ 2,206

[1] As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.080 percent and 4.571 percent, respectively.

[2] As of June 30, 2020 and December 31, 2019, weighted-average interest rates were 3.119 percent and 2.876 percent, respectively.

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Fair Value Measurements - Schedule of Carrying and Estimated Fair Value Amounts (Details) - USD ($) $ in Millions		Jun. 30, 2020	Dec. 31, 2019
Carrying Amount
Assets:
Timeshare financing receivables, net	[1]	$ 1,053	$ 1,156
Liabilities:
Debt, net	[2]	1,263	828
Non-recourse debt, net	[2]	926	747
Level 1
Liabilities:
Debt, net	[2]	303	326
Level 3
Assets:
Timeshare financing receivables, net	[1]	1,276	1,446
Liabilities:
Debt, net	[2]	959	544
Non-recourse debt, net	[2]	$ 916	$ 749

[1] Carrying amount net of allowance for financing receivables losses.

[2] Carrying amount net of unamortized deferred financing costs and discount.

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Fair Value Measurements - Additional Information (Details) - Fair Value, Recurring	Jun. 30, 2020 USD ($)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value on recurring basis	$ 0
Liabilities measured at fair value on recurring basis	$ 0

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Leases - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Leases starting expiration date			2020
Leases ending expiration date			2030
Rent expense	$ 5	$ 4	$ 10	$ 10

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Leases - Schedule of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 9	$ 8
Right-of-use assets obtained in exchange for new lease liabilities:
Operating Leases	$ 5	$ 1

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Leases - Schedule of Supplemental Balance Sheet Information Related to Operating Leases (Details)	Jun. 30, 2020	Dec. 31, 2019
Leases [Abstract]
Weighted-average remaining lease term of operating leases (in years)	5 years 8 months 12 days	6 years 1 month 6 days
Weighted-average discount rate of operating leases	4.87%	5.34%

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Leases - Future Minimum Lease Payments Under Non-Cancelable Operating Leases (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020	$ 9
2021	18
2022	14
2023	12
2024	11
Thereafter	22
Total future minimum lease payments	86
Less: imputed interest	(12)
Operating lease liabilities	$ 74	$ 76

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Income Taxes - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate (as a percent)	15.00%	27.00%

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Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated share-based compensation expense	$ 6		$ 7	$ 4	$ 12
Unrecognized compensation costs for unvested awards	$ 25			$ 25
Unrecognized compensation costs, weighted average period for recognition				1 year 9 months 18 days
Shares of common stock available for future issuance	5,146,485			5,146,485
2017 Employees Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum shares of common stock issued under ESPP	2.5
Minimum | 2017 Employees Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of fair market value per share of common stock	95.00%
Maximum | 2017 Employees Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation expense related to ESPP	$ 1		$ 1	$ 1	$ 1
Service Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued (in shares)				652,583
Grant date fair value (in dollars per share)				$ 25.24
Service Restricted Stock Units (RSUs) | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period				3 years
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued (in shares)				566,401
Exercise price (in dollars per share)				$ 25.80
Grant date fair value (in dollars per share)				$ 9.14
Stock options exercisable (in shares)	1,103,850			1,103,850
Stock Options | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period				3 years
Performance RSUs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued (in shares)				172,620
Grant date fair value (in dollars per share)				$ 25.80
Award vesting period				3 years
Reversal of share based compensation expense		$ 8
Performance RSUs | Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting percentage				70.00%
Performance RSUs | VOI sale | Tranche Two
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting percentage				30.00%

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Share-Based Compensation - Options Assumptions (Details) - Stock Options	6 Months Ended
	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility	35.40%
Dividend yield	0.00%
Risk-free rate	1.00%
Expected term (in years)	6 years

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Earnings (Loss) Per Share - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding, Basic	85,002,791	89,849,803	85,258,963	91,959,041
Weighted average shares outstanding, diluted	85,000,000	90,271,976	85,000,000	92,421,752
Potentially dilutive shares excluded from calculation of diluted weighted average shares outstanding and diluted earnings per shares	357,912		175,635
Stock Compensation Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from calculation of diluted weighted average shares outstanding and diluted earnings per shares	3,027,069	1,433,833	2,429,811	1,168,159

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Earnings (Loss) Per Share - Schedule of Earnings (Loss) Per Share, Basic and Diluted (Details) - USD ($)	3 Months Ended						6 Months Ended
	Jun. 30, 2020		Mar. 31, 2020	Jun. 30, 2019		Mar. 31, 2019	Jun. 30, 2020		Jun. 30, 2019
Numerator:
Net income (loss)	$ (47,751,330)	[1]	$ 8,000,000	$ 38,624,856	[1]	$ 55,000,000	$ (39,924,584)	[1]	$ 93,692,657	[1]
Denominator:
Weighted average shares outstanding, Basic	85,002,791			89,849,803			85,258,963		91,959,041
Basic EPS	$ (0.56)			$ 0.43			$ (0.47)		$ 1.02
Denominator:
Weighted average shares outstanding, diluted	85,000,000			90,271,976			85,000,000		92,421,752
Diluted EPS	$ (0.56)			$ 0.43			$ (0.47)		$ 1.01

[1] Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.

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Earnings (Loss) Per Share - Schedule of Earnings (Loss) Per Share, Basic and Diluted (Parenthetical) (Details) - USD ($)	3 Months Ended						6 Months Ended
	Jun. 30, 2020		Mar. 31, 2020	Jun. 30, 2019		Mar. 31, 2019	Jun. 30, 2020		Jun. 30, 2019
Earnings Per Share [Abstract]
Net income (loss)	$ (47,751,330)	[1]	$ 8,000,000	$ 38,624,856	[1]	$ 55,000,000	$ (39,924,584)	[1]	$ 93,692,657	[1]

[1] Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Due from related parties	$ 2	$ 25
BRE Ace LLC
Related Party Transaction [Line Items]
Equity method investment, ownership percentage	25.00%
1776 Holdings LLC
Related Party Transaction [Line Items]
Equity method investment, ownership percentage	50.00%

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Related Party Transactions - Summary of Amounts Included in Condensed Consolidated Statements of Operations Related to Fee for Service Arrangement (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Related Party Transaction [Line Items]
Equity in earnings from unconsolidated affiliates	$ 1	$ 2	$ 4	$ 3
BRE Ace LLC
Related Party Transaction [Line Items]
Equity in earnings from unconsolidated affiliates	1	2	4	3
Commissions and other fees	$ 4	$ 32	$ 27	$ 68

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Business Segments - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020 segment
Segment Reporting [Abstract]
Number of operating segments	2

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Business Segments - Schedule of Segment Operating Performance Reconciled to Consolidated Amounts (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		$ 123	$ 454	$ 474	$ 904
Real Estate and Financing Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		56	308	262	615
Resort Operations and Club Management Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		44	103	140	204
Operating segments
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		100	422	410	839
Operating segments | Real Estate and Financing Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		56	308	262	615
Operating segments | Resort Operations and Club Management Segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues	[1],[2]	44	114	148	224
Segment Reconciling Items
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		$ 23	43	72	85
Intersegment eliminations
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues	[1],[2]		$ (11)	$ (8)	$ (20)

[1] Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts. There were no such charges related to this for the three months ended June 30, 2020. These charges totaled $11 million for the three months ended June 30, 2019, and $8 million and $20 million for the six months ended June 30, 2020 and 2019, respectively.  

[2] Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled less than $1 million for the three and six months ended June 30, 2020 and 2019.

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Business Segments - Schedule of Segment Operating Performance Reconciled to Consolidated Amounts (Parenthetical) (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		$ 123	$ 454	$ 474	$ 904
Intersegment eliminations
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues	[1],[2]		(11)	(8)	(20)
Intersegment eliminations | Maximum
Segment Reporting, Revenue Reconciling Item [Line Items]
Rental expense for model units		1	1	1	1
Intersegment eliminations | Billing and Collection Services
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenues		$ 0	$ (11)	$ (8)	$ (20)

[1] Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts. There were no such charges related to this for the three months ended June 30, 2020. These charges totaled $11 million for the three months ended June 30, 2019, and $8 million and $20 million for the six months ended June 30, 2020 and 2019, respectively.  

[2] Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled less than $1 million for the three and six months ended June 30, 2020 and 2019.

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Business Segments - Schedule of Adjusted EBITDA Reconciled to Net Income (Details) - USD ($)		3 Months Ended						6 Months Ended
		Jun. 30, 2020		Mar. 31, 2020	Jun. 30, 2019		Mar. 31, 2019	Jun. 30, 2020		Jun. 30, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
General and administrative		$ (22,000,000)			$ (30,000,000)			$ (43,000,000)		$ (57,000,000)
Depreciation and amortization		(11,000,000)			(12,000,000)			(23,000,000)		(20,000,000)
Other loss, net		(3,000,000)			(1,000,000)			(1,000,000)		(2,000,000)
Interest expense		(12,000,000)			(11,000,000)			(22,000,000)		(21,000,000)
Income tax benefit (expense)		8,000,000			(15,000,000)			7,000,000		(35,000,000)
Equity in earnings from unconsolidated affiliates		1,000,000			2,000,000			4,000,000		3,000,000
Net income (loss)		(47,751,330)	[1]	$ 8,000,000	38,624,856	[1]	$ 55,000,000	(39,924,584)	[1]	93,692,657	[1]
Operating segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA		1,000,000			135,000,000			71,000,000		280,000,000
Operating segments | Real Estate and Financing Segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	[2]	(14,000,000)			69,000,000			1,000,000		149,000,000
Operating segments | Resort Operations and Club Management Segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	[2]	15,000,000			66,000,000			70,000,000		131,000,000
Segment Reconciling Items
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
General and administrative		(22,000,000)			(30,000,000)			(43,000,000)		(57,000,000)
Depreciation and amortization		(11,000,000)			(12,000,000)			(23,000,000)		(20,000,000)
License fee expense		(6,000,000)			(26,000,000)			(28,000,000)		(49,000,000)
Other loss, net		(3,000,000)			(1,000,000)			(1,000,000)		(2,000,000)
Interest expense		(12,000,000)			(11,000,000)			(22,000,000)		(21,000,000)
Income tax benefit (expense)		8,000,000			(15,000,000)			7,000,000		(35,000,000)
Equity in earnings from unconsolidated affiliates		1,000,000			2,000,000			4,000,000		3,000,000
Other adjustment items	[3]	$ (4,000,000)			$ (3,000,000)			$ (5,000,000)		$ (5,000,000)

[1] Net income (loss) for the three months ended June 30, 2020 and 2019 was $(47,751,330) and $38,624,856, respectively, and for the six months ended June 30, 2020 and 2019 was $(39,924,584) and $93,692,657, respectively.

[2] Includes intersegment transactions. Refer to our table presenting revenues by reportable segment above for additional discussion.

[3] For the three and six months ended June 30, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items.

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Commitments and Contingencies - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Long-term Purchase Commitment [Line Items]
Reasonably estimable of possible losses	$ 0
Inventories
Long-term Purchase Commitment [Line Items]
Purchase commitment	$ 464,000,000
Purchase commitment, period (in years)	11 years
Vacation ownership intervals commitment	$ 9,000,000	$ 28,000,000
Other Commitments
Long-term Purchase Commitment [Line Items]
Purchase commitment	$ 26,000,000

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Commitments and Contingencies - Schedule of Remaining Purchase Obligations (Details) $ in Millions	Jun. 30, 2020 USD ($)
Long-term Purchase Commitment [Line Items]
2020 (remaining)	$ 24
2021	239
2022	113
2023	60
2024	40
Thereafter	14
Total	490
Inventory Purchase Obligations
Long-term Purchase Commitment [Line Items]
2020 (remaining)	17
2021	225
2022	110
2023	58
2024	40
Thereafter	14
Total	464
Other Commitments
Long-term Purchase Commitment [Line Items]
2020 (remaining)	7	[1]
2021	14	[1]
2022	3	[1]
2023	2	[1]
Total	$ 26	[1]

[1] Primarily relates to commitments related to information technology and brand licensing under the normal course of business.