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Timeshare Financing Receivables
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
Timeshare Financing Receivables Timeshare Financing Receivables We define our timeshare financing receivables portfolio segments as (i) originated and (ii) acquired. Our originated portfolio includes all Legacy-HGV and Legacy-Diamond timeshare financing receivables originated after the Acquisition Date. Our acquired portfolio includes all timeshare financing receivables acquired from Legacy-Diamond as of the Acquisition Date.
The following table presents the components of each portfolio segment by class of timeshare financing receivables:
OriginatedAcquired
($ in millions)December 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Securitized$788 $587 $262 $523 
Unsecuritized(1)
971 810 447 515 
Timeshare financing receivables, gross$1,759 $1,397 $709 $1,038 
Unamortized non-credit acquisition premium(2)
— — 41 74 
Less: allowance for financing receivables losses(404)(280)(338)(482)
Timeshare financing receivables, net$1,355 $1,117 $412 $630 
(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.
(2)Non-credit premium of $97 million was recognized at the Acquisition Date, of which $41 million remains unamortized as of December 31, 2022.
In August 2022, we completed a securitization of $269 million of gross timeshare financing receivables and issued various notes due January 2037. In April 2022, we completed a securitization of $246 million of gross timeshare financing receivables and issued various notes due June 2034. Neither of the securitization transactions qualified as a sale and, accordingly, no gain or loss was recognized. See Note 15: Debt and Non-recourse Debt for additional information.
As of December 31, 2022 and 2021, we had timeshare financing receivables with a carrying value of $105 million and $131 million, respectively, securing 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. We recorded an adjustment to our estimate of variable consideration of $140 million and $121 million during the years ended December 31, 2022 and 2021, respectively.
We recognize interest income on our timeshare financing receivables as earned. As of December 31, 2022 and 2021, we had interest receivable of $13 million and $9 million, respectively, on our originated timeshare financing receivables. As of December 31, 2022 and 2021, we had interest receivable of $4 million and $7 million, respectively, on our acquired timeshare financing receivables. Interest receivable is included in Other Assets within our 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 December 31, 2022, our originated timeshare financing receivables had interest rates ranging from 1.5% to 25.8%, a weighted-average interest rate of 14.3%, a weighted-average remaining term of 8.2 years and maturities through 2037. Our acquired timeshare financing receivables had interest rates ranging from 2.0% to 25.0%, a weighted-average interest rate of 15.6%, a weighted-average remaining term of 7.4 years and maturities through 2032.
Acquired Timeshare Financing Receivables with Credit Deterioration
As part of the Diamond Acquisition, we acquired existing portfolios of timeshare financing receivables. Acquired timeshare financing receivables include all timeshare financing receivables of Legacy-Diamond as of the Acquisition Date and were deemed to be purchase credit deteriorated financial assets. These notes receivable were initially recognized at their purchase price, represented by the acquisition date fair value, and subsequently “grossed-up” by our acquisition date assessment of the allowance for credit losses. The difference over which par value of the acquired purchased credit deteriorated assets exceeds the purchase price plus the initial allowance for credit losses is reflected as a non-credit premium and is amortized as a reduction to interest income under the effective interest method.
See Note 2: Summary of Significant Accounting Policies for additional information on the fair value methodology for our acquired timeshare financing receivables and related allowances for credit losses.
Our acquired timeshare financing receivables as of December 31, 2022 mature as follows:
Acquired Timeshare Financing Receivables
($ in millions)SecuritizedUnsecuritizedTotal
Year
2023$30 $39 $69 
202432 43 75 
202534 47 81 
202636 52 88 
202736 56 92 
Thereafter94 210 304 
Total$262 $447 $709 
Originated Timeshare Financing Receivables
Originated timeshare financing receivables represent all Legacy-HGV timeshare financing receivables and timeshare financing receivables originated by Legacy-Diamond subsequent to the Acquisition Date. Our originated timeshare financing receivables as of December 31, 2022 mature as follows:
Originated Timeshare Financing Receivables
($ in millions)SecuritizedUnsecuritizedTotal
Year
2023$94 $72 $166 
202498 69 167 
202598 78 176 
202698 86 184 
202795 94 189 
Thereafter305 572 877 
Total$788 $971 $1,759 
Allowance for Financing Receivables Losses
The changes in our allowance for financing receivables losses were as follows:
($ in millions)
Originated
Acquired
Balance as of December 31, 2020
$211 $— 
Initial allowance for PCD financing receivables acquired during the period(2)
— 512 
Provision for financing receivables losses(1)
121 — 
Write-offs(79)(11)
Upgrades(3)
27 (19)
Balance as of December 31, 2021
$280 $482 
Provision for financing receivables losses(1)
140 — 
Write-offs(70)(119)
Upgrades(3)
54 (25)
Balance as of December 31, 2022
$404 $338 
(1)Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.
(2)The initial gross allowance determined for receivables with credit deterioration was $512 million as of the Acquisition Date. Of this amount, approximately $249 million relates to net uncollectible balances such as loans that were fully written-off prior to the Acquisition. Therefore, the net impact to the allowance related to acquired loans not previously written off was an increase of $263 million.
(3)Represents the initial change in allowance resulting from upgrades of Acquired loans. Upgraded Acquired loans and their related allowance are included in the Originated portfolio segment.
Credit Quality of Timeshare Financing Receivables
Legacy-HGV Timeshare Financing Receivables
We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the collectability of
our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. For the static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.
Our gross balances by average FICO score of our Legacy-HGV timeshare financing receivables were as follows:
Legacy-HGV Timeshare Financing Receivables
($ in millions)December 31,
2022		December 31,
2021
FICO score
700+$763 $703 
600-699270 248 
<60037 35 
No score(1)
174 166 
Total$1,244 $1,152 
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
The following table details our gross Legacy-HGV timeshare financing receivables by the origination year and average FICO score as of December 31, 2022:
($ in millions)20222021202020192018PriorTotal
FICO score
700+$340 $140 $49 $87 $61 $86 $763 
600-699112 52 17 32 23 34 270 
<60014 7 3 5 3 5 37 
No score(1)
59 28 18 26 17 26 174 
Total$525 $227 $87 $150 $104 $151 $1,244 
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
As of December 31, 2022 and 2021, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $76 million and $83 million, respectively. The following tables detail an aged analysis of our gross timeshare financing receivables balance:
Legacy-HGV Timeshare Financing Receivables
December 31, 2022
($ in millions)SecuritizedUnsecuritizedTotal
Current$631 $520 $1,151 
31 - 90 days past due9 8 17 
91 - 120 days past due3 2 5 
121 days and greater past due4 67 71 
Total$647 $597 $1,244 
Legacy-HGV Timeshare Financing Receivables
December 31, 2021
($ in millions)SecuritizedUnsecuritizedTotal
Current$569 $488 $1,057 
31 - 90 days past due6 6 12 
91 - 120 days past due2 2 4 
121 days and greater past due2 77 79 
Total$579 $573 $1,152 
Legacy-Diamond Timeshare Financing Receivables
We evaluate these portfolios collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the collectability of our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.
Our gross balances by average FICO score of our Legacy-Diamond acquired and originated timeshare financing receivables were as follows:
Legacy-Diamond Acquired Timeshare Financing Receivables
($ in millions)December 31, 2022December 31, 2021
FICO score 
700+$373 $601 
600-699265 356 
<60055 70 
No score(1)
16 11 
Total$709 $1,038 
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
Legacy-Diamond Originated Timeshare Financing Receivables
($ in millions)December 31, 2022December 31, 2021
FICO score
700+$321 $172 
600-699163 60 
<60026 11 
No score(1)
5 2 
Total$515 $245 
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
The following tables details our gross Legacy-Diamond acquired and originated timeshare financing receivables by the origination year and average FICO score as of December 31, 2022:
Legacy-Diamond Acquired Timeshare Financing Receivables
($ in millions)20222021202020192018PriorTotal
FICO score
700+$— $66 $80 $96 $64 $67 $373 
600-699— 44 49 68 41 63 265 
<600— 10 13 11 5 16 55 
No score(1)
— 1 5 2 1 7 16 
Total$— $121 $147 $177 $111 $153 $709 
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
Legacy-Diamond Originated Timeshare Financing Receivables
($ in millions)20222021202020192018PriorTotal
FICO score  
700+$248 $73 $— $— $— $— $321 
600-699123 40 — — — — 163 
<60017 9 — — — — 26 
No score(1)
4 1 — — — — 5 
Total$392 $123 $— $— $— $— $515 
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
As of December 31, 2022 and 2021, we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $377 million and $369 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:
Legacy-Diamond Timeshare Financing Receivables
December 31, 2022
($ in millions)SecuritizedUnsecuritizedTotal
Current$373 $442 $815 
31 - 90 days past due13 19 32 
91 - 120 days past due4 8 12 
121 days and greater past due13 352 365 
Total$403 $821 $1,224 
Legacy-Diamond Timeshare Financing Receivables
December 31, 2021
($ in millions)SecuritizedUnsecuritizedTotal
Current$496 $385 $881 
31 - 90 days past due15 18 33 
91 - 120 days past due6 5 11 
121 days and greater past due14 344 358 
Total$531 $752 $1,283