COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Commitments

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 December 31, 2023, we were committed to purchase approximately $37 million of inventory and land over a period of 1 year and $13 million of other commitments in the normal course of business. We are also committed to 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 are subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances.

During the years ended December 31, 2023, 2022 and 2021, we fulfilled $156 million, $92 million and $132 million, respectively, of purchases required under our inventory commitments. Of the $156 million fulfilled in 2023, we have accrued $17 million within Accounts payable, accrued expenses and other and $3 million of inventory deposit included in Other Assets to complete a purchase commitment in South Carolina of $20 million. The purchase was completed on January 31, 2024. As of December 31, 2023, our remaining obligations pursuant to these arrangements were expected to be incurred as follows:

($ in millions)	2024		2025		2026		2027		2028		Thereafter		Total
Inventory purchase obligations(1)	$	37	$	—	$	—	$	—	$	—	$	—	$	37
Other commitments(2)	10		3		—		—		—		—		13
Total	$	47	$	3	$	—	$	—	$	—	$	—	$	50

(1)Includes commitments for properties in Japan.

(2)Primarily relates to commitments related to information technology and sponsorships.

Litigation Contingencies

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. We evaluate these legal proceedings and claims at each balance sheet date to determine the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to reasonably estimate the amount of loss. We record a contingent litigation liability when it is determined that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of December 31, 2023, we accrued liabilities of approximately $123 million for all legal matters. Approximately $102 million of these accrued liabilities relate to a judgment entered against Diamond in March 2022 in connection with a case filed in 2015 (O'Malley v. Diamond Resorts Management, Inc.) that was not deemed probable and estimable as of the Acquisition Date. An appeal for judgment was rendered in favor of the plaintiffs in November 2023 (with the California Supreme Court rejecting further appeals in February 2024). This matter is subject to insurance coverage, and as a result, we recorded an insurance claim receivable of approximately $53 million within Accounts receivable, net in our consolidated balance sheet as of December 31, 2023. During the year ended December 31, 2023, and 2022, we recognized charges of approximately $33 million and $15 million, respectively, to General and administrative in our consolidated statement of operations that represents the amount of the settlement liability not deemed probable of recovery from the insurance carriers. However, we have initiated litigation against the various insurers disputing all or parts of coverage for this matter seeking to obtain full coverage.

While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material effect on the Company’s financial condition, cash flows, or materially adversely affect overall trends in our results of operations, legal proceedings are inherently uncertain and unfavorable rulings could, individually or in aggregate, have a material adverse effect on the Company’s business, financial condition or results of operations.

Surety Bonds

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 $454 million as of December 31, 2023, which primarily consist of escrow, construction and subsidy related bonds.