Business Segments

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Business Segments

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 loans to customers to finance their purchase of VOIs and revenue from servicing the loans. We also generate fee revenue from servicing the loans provided by third-party developers to purchasers of their VOIs.

•Resort operations and club management – We manage the Clubs and earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. We also 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 programs. 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, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) other gains, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges.

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

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

	Three Months Ended March 31,
($ in millions)	2023		2022
Revenues:
Real estate sales and financing	$	550	$	452
Resort operations and club management(1)	302		268
Total segment revenues	852		720
Cost reimbursements	95		66
Intersegment eliminations(1)	(13)		(7)
Total revenues	$	934	$	779

(1)Includes charges to the Real estate sales and financing segment from the Resort operations and club management segment for fulfillment of discounted marking package stays at resorts. These charges totaled $13 million and $7 million for the three months ended March 31, 2023 and 2022, respectively.

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

	Three Months Ended March 31,
($ in millions)	2023		2022
Adjusted EBITDA:
Real estate sales and financing(1)	$	169	$	153
Resort operations and club management(1)	109		101
Segment Adjusted EBITDA	278		254
Acquisition and integration-related expense	(17)		(13)
General and administrative	(42)		(42)
Depreciation and amortization	(51)		(60)
License fee expense	(30)		(25)
Other gain, net	1		1
Interest expense	(44)		(33)
Income tax expense	(17)		(20)
Equity in earnings from unconsolidated affiliates	3		3
Impairment expense	—		(3)
Other adjustment items(2)	(8)		(11)
Net income	$	73	$	51

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

(2)For the three months ended March 31, 2023 and 2022, this amount includes costs associated with stock-based compensation, restructuring, one-time charges and other non-cash items included within our reportable segments.