11. Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment.

We report our results of operations through two reportable segments: (i) sales of VOIs and financing; and (ii) resort operations and club management.

Our sales of VOIs and financing segment includes our marketing and sales activities related to the VOIs that we own, including VOIs we acquire under just-in-time and secondary market inventory arrangements, our sale of VOIs through fee-for-service arrangements with third-party developers, our consumer financing activities in connection with sales of VOIs that we own, and our title services operations through a wholly-owned subsidiary.

Our resort operations and club management segment includes our provision of management services activities for our Vacation Club and for a majority of the HOAs of the resorts within our Vacation Club. In connection with those services, we also provide club reservation services, services to owners and billing and collections services to our Vacation Club and certain HOAs. Additionally, we generate revenue within our resort operations and club management segment from our Traveler Plus program, food and beverage and other retail operations, our rental services activities, and our management of construction activities for certain of our fee-based developer clients.

The information provided for segment reporting is obtained from internal reports utilized by management. The presentation and allocation of results of operations may not reflect the actual economic costs of the segments as standalone businesses. Due to the nature of our business, assets are not allocated to a particular segment, and therefore management does not evaluate the balance sheet by segment. If a different basis of allocation were utilized, the relative contributions of the segments might differ but the relative trends in the segments’ operating results would, in management’s view, likely not be impacted.

The table below sets forth our segment information for the three months ended June 30, 2018 (in thousands):



Revenues:	Sales of VOIs and financing		Resort operations and club management		Corporate and other		Elimination		Total

Sales of VOIs	$	68,573	$	—	$	—	$	—	$	68,573
Fee-based sales commission revenue		60,086		—		—		—		60,086
Other fee-based services revenue		3,175		27,216		—		—		30,391
Cost reimbursements		—		14,059		—		—		14,059
Mortgage servicing revenue		1,471		—		—		(1,471)		—
Interest income		19,658		—		1,460		—		21,118
Other income, net		—		—		710		—		710
Total revenues		152,963		41,275		2,170		(1,471)		194,937

Costs and expenses:

Cost of VOIs sold		6,789		—		—		—		6,789
Net carrying cost of VOI inventory		1,650		—		—		(1,650)		—
Cost of other fee-based services		1,115		13,869		—		1,650		16,634
Cost reimbursements		—		14,059		—		—		14,059
Selling, general and administrative expenses		90,834		—		18,870		(124)		109,580
Mortgage servicing expense		1,347		—		—		(1,347)		—
Interest expense		4,622		—		3,873		—		8,495
Total costs and expenses		106,357		27,928		22,743		(1,471)		155,557
Income (loss) before non-controlling interest and provision for income taxes	$	46,606	$	13,347	$	(20,573)	$	—	$	39,380

Add: Depreciation and amortization		1,649		403
Segment Adjusted EBITDA (1)	$	48,255	$	13,750

(1)

See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including how we define Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

The table below sets forth our segment information for the three months ended June 30, 2017 (in thousands):



Revenues:	Sales of VOIs and financing		Resort operations and club management		Corporate and other		Elimination		Total * As Adjusted

Sales of VOIs	$	59,405	$	—	$	—	$	—	$	59,405
Fee-based sales commission revenue		63,915		—		—		—		63,915
Other fee-based services revenue		5,737		24,198		—		—		29,935
Cost reimbursements		—		11,893		—		—		11,893
Mortgage servicing revenue		1,256		—		—		(1,256)		—
Interest income		19,824		—		2,167		—		21,991
Other income, net		—		—		244		—		244
Total revenues		150,137		36,091		2,411		(1,256)		187,383

Costs and expenses:

Cost of VOIs sold		1,749		—		—		—		1,749
Net carrying cost of VOI inventory		707		—		—		(707)		—
Cost of other fee-based services		1,140		13,527		—		707		15,374
Cost reimbursements		—		11,893		—		—		11,893
Selling, general and administrative expenses		93,017		—		14,461		10		107,488
Mortgage servicing expense		1,266		—		—		(1,266)		—
Interest expense		4,544		—		3,533		—		8,077
Other expense, net		—		—		—		—		—
Total costs and expenses		102,423		25,420		17,994		(1,256)		144,581
Income (loss) before non-controlling interest and provision for income taxes	$	47,714	$	10,671	$	(15,583)	$	—	$	42,802

Add: Depreciation and amortization		1,497		397
Segment Adjusted EBITDA (1)	$	49,211	$	11,068

* See Note 2 for summary of adjustments.

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The table below sets forth our segment information for the six months ended June 30, 2018 (in thousands):


Revenues:	Sales of VOIs and financing		Resort operations and club management		Corporate and other		Elimination		Total

Sales of VOIs	$	124,714	$	—	$	—	$	—	$	124,714
Fee-based sales commission revenue		105,940		—		—		—		105,940
Other fee-based services revenue		5,863		52,552		—		—		58,415
Cost reimbursements		—		30,260		—		—		30,260
Mortgage servicing revenue		2,916		—		—		(2,916)		—
Interest income		39,272		—		2,968		—		42,240
Other income, net		—		—		891		—		891
Total revenues		278,705		82,812		3,859		(2,916)		362,460

Costs and expenses:

Cost of VOIs sold		8,601		—		—		—		8,601
Net carrying cost of VOI inventory		4,167		—		—		(4,167)		—
Cost of other fee-based services		2,357		27,521		—		4,167		34,045
Cost reimbursements		—		30,260		—		—		30,260
Selling, general and administrative expenses		162,650		—		40,462		17		203,129
Mortgage servicing expense		2,933		—		—		(2,933)		—
Interest expense		9,332		—		6,930		—		16,262
Total costs and expenses		190,040		57,781		47,392		(2,916)		292,297
Income (loss) before non-controlling interest and provision for income taxes	$	88,665	$	25,031	$	(43,533)	$	—	$	70,163

Add: Depreciation and amortization		3,316		798
Segment Adjusted EBITDA (1)	$	91,981	$	25,829

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The table below sets forth our segment information for the six months ended June 30, 2017 (in thousands):


Revenues:	Sales of VOIs and financing		Resort operations and club management		Corporate and other		Elimination		Total * As Adjusted

Sales of VOIs	$	113,641	$	—	$	—	$	—	$	113,641
Fee-based sales commission revenue		109,069		—		—		—		109,069
Other fee-based services revenue		8,554		47,502		—		—		56,056
Cost reimbursements		—		26,563		—		—		26,563
Mortgage servicing revenue		2,417		—		—		(2,417)		—
Interest income		40,021		—		4,356		—		44,377
Other income (expense), net		—		—		(1)		—		(1)
Total revenues		273,702		74,065		4,355		(2,417)		349,705

Costs and expenses:

Cost of VOIs sold		4,908		—		—		—		4,908
Net carrying cost of VOI inventory		2,381		—		—		(2,381)		—
Cost of other fee-based services		2,426		26,674		—		2,381		31,481
Cost reimbursements		—		26,563		—		—		26,563
Selling, general and administrative expenses		167,023		—		29,960		340		197,323
Mortgage servicing expense		2,757		—		—		(2,757)		—
Interest expense		8,850		—		6,871		—		15,721
Total costs and expenses		188,345		53,237		36,831		(2,417)		275,996
Income (loss) before non-controlling interest and provision for income taxes	$	85,357	$	20,828	$	(32,476)	$	—	$	73,709

Add: Depreciation and amortization		3,015		804
Segment Adjusted EBITDA (1)	$	88,372	$	21,632

* See Note 2 for summary of adjustments.

(1)