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TIMESHARE FINANCING RECEIVABLES

12 Months Ended

Dec. 31, 2023

We define our timeshare financing receivables portfolio segments as (i) originated and (ii) acquired. Our originated portfolio represents timeshare financing receivables that existed both prior to and following the Diamond Acquisition and the Grand Islander Acquisition date, excluding Legacy-Diamond and Legacy-Grand Islander (“Legacy-HGV”) and timeshare financing receivables originated by Legacy-Diamond and Legacy-Grand Islander subsequent to the respective acquisition dates. Our acquired portfolio includes all timeshare financing receivables acquired from Legacy-Diamond and Legacy-Grand Islander as of the respective acquisition dates.

The following table presents the components of each portfolio segment by class of timeshare financing receivables:


	Originated				Acquired
($ in millions)	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Securitized	$	770	$	788	$	214	$	262
Unsecuritized(1)	1,326		971		551		447
Timeshare financing receivables, gross	$	2,096	$	1,759	$	765	$	709
Unamortized non-credit acquisition premium(2)	—		—		32		41
Less: allowance for financing receivables losses	(500)		(404)		(279)		(338)
Timeshare financing receivables, net	$	1,596	$	1,355	$	518	$	412

(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 Diamond Acquisition Date, of which $26 million and $41 million remains unamortized as of December 31, 2023 and 2022, respectively. Non-credit premium of $6 million was recognized at the Grand Islander Acquisition Date which remains unamortized as of December 31, 2023.

In August 2023, we completed a securitization of approximately $293 million of gross timeshare financing receivables and issued approximately $187 million of 5.72% notes, $79 million of 6.11% notes, and $27 million of 6.94% notes due January 2038. The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized. The transaction is considered a secured borrowing, and the notes from the transaction are presented as non-recourse debt. The proceeds were used to pay down in part some of the existing debt and for other general corporate purposes. See Note 10: Consolidated Variable Interest Entities and Note 15: Debt and Non-recourse Debt for additional information.

As of December 31, 2023 and 2022, we had timeshare financing receivables with a carrying value of $415 million and $105 million, respectively, securing the Timeshare Facility. In connection with the acquisition of Grand Islander, we also gained access to an additional timeshare facility. The Grand Islander Timeshare Facility is secured by Legacy-Grand Islander acquired timeshare financing receivables with a carrying value of $127 million as of December 31, 2023.

For our originated portfolio, 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 years ended December 31, 2023, and 2022, we recorded an adjustment to our estimate of variable consideration of $171 million and $140 million, respectively. For our acquired portfolio, any changes to the estimates of our allowance are recorded within Financing expense on our consolidated statements of operations in the period in which the change occurs.

We recognize interest income on our timeshare financing receivables as earned. As of December 31, 2023 and 2022, we had interest receivable outstanding of $17 million and $13 million, respectively, on our originated timeshare financing receivables. As of both December 31, 2023 and 2022, we had interest receivable outstanding of $4 million 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, 2023, our originated timeshare financing receivables had interest rates ranging from 1.5% to 25.8%, a weighted-average interest rate of 14.9%, a weighted-average remaining term of 8.3 years and maturities through 2038. Our acquired timeshare financing receivables had interest rates ranging from 2.0% to 25.0%, a weighted-average interest rate of 14.7%, a weighted-average remaining term of 6.9 and maturities through 2038.

Acquired Timeshare Financing Receivables with Credit Deterioration

Our acquired timeshare financing receivables were deemed to be purchased 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 financing receivable 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, 2023, mature as follows:


	Acquired Timeshare Financing Receivables
($ in millions)	Securitized		Unsecuritized		Total
Year
2024	$	36	$	55	$	91
2025	38		58		96
2026	37		64		101
2027	35		68		103
2028	28		71		99
Thereafter	40		235		275
Total	$	214	$	551	$	765

Originated Timeshare Financing Receivables

Our originated timeshare financing receivables as of December 31, 2023, mature as follows:


	Originated Timeshare Financing Receivables
($ in millions)	Securitized		Unsecuritized		Total
Year
2024	$	88	$	99	$	187
2025	92		99		191
2026	98		106		204
2027	98		117		215
2028	94		131		225
Thereafter	300		774		1,074
Total	$	770	$	1,326	$	2,096

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(1)	—		512
Provision for financing receivables losses(2)	121		—
Write-offs	(79)		(11)
Inventory recoveries	—		8
Upgrades(3)	27		(27)
Balance as of December 31, 2021	$	280	$	482
Provision for financing receivables losses(2)	140		—
Write-offs	(70)		(119)
Inventory recoveries	—		29
Upgrades(3)	54		(54)
Balance as of December 31, 2022	$	404	$	338
Initial allowance for PCD financing receivables acquired during the period(4)	—		30
Provision for financing receivables losses(2)	171		—
Provision for credit loss expense(5)	—		(1)
Write-offs	(73)		(116)
Inventory recoveries	—		26
Upgrades(3)	(2)		2
Balance as of December 31, 2023	$	500	$	279

(1) The initial gross allowance determined for receivables with credit deterioration was $512 million as of the Diamond Acquisition Date. Of this amount, approximately $249 million relates to net uncollectible balances such as loans that were fully written-off prior to the Diamond Acquisition. Therefore, the net impact to the allowance related to acquired loans not previously written off was an increase of $263 million.

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

(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.

(4) The initial gross allowance determined for receivables with credit deterioration was $30 million as of the Grand Islander Acquisition Date.

(5) Includes incremental provision for credit loss expense from Acquired loans.

Credit Quality of Timeshare Financing Receivables

Legacy-HGV Timeshare Financing Receivables

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, 2023		December 31, 2022
FICO score
700+	$	882	$	763
600-699	311		270
<600	39		37
No score(1)	196		174
Total	$	1,428	$	1,244

(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, 2023:


($ in millions)	2023		2022		2021		2020		2019		Prior		Total
FICO score
700+	$	389	$	210	$	93	$	34	$	61	$	95	$	882
600-699	125		78		35		12		22		39		311
<600	13		11		5		2		3		5		39
No score(1)	77		40		20		13		19		27		196
Total	$	604	$	339	$	153	$	61	$	105	$	166	$	1,428

Current period gross write-offs	$	—	$	8	$	12	$	6	$	9	$	18	$	53

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

As of December 31, 2023 and 2022, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $101 million and $76 million, respectively. The following tables detail an aged analysis of our gross timeshare financing receivables balance:


	Legacy-HGV Timeshare Financing Receivables
	December 31, 2023
($ in millions)	Securitized		Unsecuritized		Total
Current	$	577	$	723	$	1,300
31 - 90 days past due	11		16		27
91 - 120 days past due	4		4		8
121 days and greater past due	2		91		93
Total	$	594	$	834	$	1,428


	Legacy-HGV Timeshare Financing Receivables
	December 31, 2022
($ in millions)	Securitized		Unsecuritized		Total
Current	$	631	$	520	$	1,151
31 - 90 days past due	9		8		17
91 - 120 days past due	3		2		5
121 days and greater past due	4		67		71
Total	$	647	$	597	$	1,244

Legacy-Diamond Timeshare Financing Receivables

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, 2023		December 31, 2022
FICO score
700+	$	256	$	373
600-699	189		265
<600	42		55
No score(1)	12		16
Total	$	499	$	709

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


	Legacy-Diamond Originated Timeshare Financing Receivables
($ in millions)	December 31, 2023		December 31, 2022
FICO score
700+	$	403	$	321
600-699	220		163
<600	31		26
No score(1)	8		5
Total	$	662	$	515

(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, 2023:


	Legacy-Diamond Acquired Timeshare Financing Receivables
($ in millions)	2023		2022		2021		2020		2019		Prior		Total
FICO score
700+	$	—	$	—	$	46	$	56	$	66	$	88	$	256
600-699	—		—		33		37		47		72		189
<600	—		—		8		9		8		17		42
No score(1)	—		—		1		3		1		7		12
Total	$	—	$	—	$	88	$	105	$	122	$	184	$	499

Current period gross write-offs	$	—	$	—	$	14	$	23	$	35	$	44	$	116

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


	Legacy-Diamond Originated Timeshare Financing Receivables
($ in millions)	2023		2022		2021		2020		2019		Prior		Total
FICO score
700+	$	196	$	156	$	51	$	—	$	—	$	—	$	403
600-699	98		92		30		—		—		—		220
<600	13		13		5		—		—		—		31
No score(1)	5		2		1		—		—		—		8
Total	$	312	$	263	$	87	$	—	$	—	$	—	$	662

Current period gross write-offs	$	—	$	10	$	10	$	—	$	—	$	—	$	20

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

As of December 31, 2023 and 2022, we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $373 million and $377 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:


	Legacy-Diamond Timeshare Financing Receivables
	December 31, 2023
($ in millions)	Securitized		Unsecuritized		Total
Current	$	294	$	457	$	751
31 - 90 days past due	14		23		37
91 - 120 days past due	5		9		14
121 days and greater past due	6		353		359
Total	$	319	$	842	$	1,161


	Legacy-Diamond Timeshare Financing Receivables
	December 31, 2022
($ in millions)	Securitized		Unsecuritized		Total
Current	$	373	$	442	$	815
31 - 90 days past due	13		19		32
91 - 120 days past due	4		8		12
121 days and greater past due	13		352		365
Total	$	403	$	821	$	1,224

Legacy-Grand Islander Timeshare Financing Receivables

Our gross balances by average FICO score of our Legacy-Grand Islander acquired and originated timeshare financing receivables were as follows:


	Legacy-Grand Islander Acquired Timeshare Financing Receivables
($ in millions)	December 31, 2023
FICO score
700+	$	66
600-699	20
<600	—
No score(1)	180
Total	$	266

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


	Legacy-Grand Islander Originated Timeshare Financing Receivables
($ in millions)	December 31, 2023
FICO score
700+	$	3
600-699	—
<600	—
No score(1)	3
Total	$	6

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

The following tables details our gross Legacy-Grand Islander acquired and originated timeshare financing receivables by the origination year and average FICO score as of December 31, 2023:


	Legacy-Grand Islander Acquired Timeshare Financing Receivables
($ in millions)	2023		2022		2021		2020		2019		Prior		Total
FICO score
700+	$	28	$	16	$	5	$	2	$	7	$	8	$	66
600-699	9		4		1		1		2		3		20
<600	—		—		—		—		—		—		—
No score(1)	39		29		18		20		34		40		180
Total	$	76	$	49	$	24	$	23	$	43	$	51	$	266

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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


	Legacy-Grand Islander Originated Timeshare Financing Receivables
($ in millions)	2023		2022		2021		2020		2019		Prior		Total
FICO score
700+	$	3	$	—	$	—	$	—	$	—	$	—	$	3
600-699	—		—		—		—		—		—		—
<600	—		—		—		—		—		—		—
No score(1)	3		—		—		—		—		—		3
Total	$	6	$	—	$	—	$	—	$	—	$	—	$	6

Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

As of December 31, 2023, we had ceased accruing interest on Legacy-Grand Islander timeshare financing receivables with an aggregate principal balance of $14 million. The following tables detail an aged analysis of our gross timeshare receivables balance:


	Legacy-Grand Islander Timeshare Financing Receivables
	December 31, 2023
($ in millions)	Securitized		Unsecuritized		Total
Current	$	71	$	183	$	254
31 - 90 days past due	1		3		4
91 - 120 days past due	—		1		1
121 days and greater past due	—		13		13
Total	$	72	$	200	$	272