13. 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, our VOIs we acquire under just-in-time and secondary market inventory arrangements, our sales 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 materially impacted.

The table below sets forth our segment information for the three months ended March 31, 2019 (in thousands):


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

Sales of VOIs	$	51,731	$	—	$	—	$	—	$	51,731
Fee-based sales commission revenue		45,212		—		—		—		45,212
Other fee-based services revenue		2,728		26,840		—		—		29,568
Cost reimbursements		—		20,236		—		—		20,236
Mortgage servicing revenue		1,490		—		—		(1,490)		—
Interest income		20,017		—		1,991		—		22,008
Other income, net		—		—		89		—		89
Total revenue		121,178		47,076		2,080		(1,490)		168,844

Costs and expenses:

Cost of VOIs sold		3,848		—		—		—		3,848
Net carrying cost of VOI inventory		7,687		—		—		(7,687)		—
Cost of other fee-based services		1,210		13,971		—		7,687		22,868
Cost reimbursements		—		20,236		—		—		20,236
Selling, general and administrative expenses		72,196		—		18,128		(110)		90,214
Mortgage servicing expense		1,380		—		—		(1,380)		—
Interest expense		5,262		—		4,244		—		9,506
Total costs and expenses		91,583		34,207		22,372		(1,490)		146,672
Income (loss) before non-controlling interest and provision for income taxes	$	29,595	$	12,869	$	(20,292)	$	—	$	22,172

Add: Depreciation and amortization		1,536		365
Segment Adjusted EBITDA (1)	$	31,131	$	13,234

(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 March 31, 2018 (in thousands):


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

Sales of VOIs	$	56,141	$	—	$	—	$	—	$	56,141
Fee-based sales commission revenue		45,854		—		—		—		45,854
Other fee-based services revenue		2,689		25,335		—		—		28,024
Cost reimbursements		—		16,200		—		—		16,200
Mortgage servicing revenue		1,445		—		—		(1,445)		—
Interest income		19,590		—		1,532		—		21,122
Other income, net		—		—		181		—		181
Total revenue		125,719		41,535		1,713		(1,445)		167,522

Costs and expenses:

Cost of VOIs sold		1,812		—		—		—		1,812
Net carrying cost of VOI inventory		2,517		—		—		(2,517)		—
Cost of other fee-based services		1,242		13,652		—		2,517		17,411
Cost reimbursements		—		16,200		—		—		16,200
Selling, general and administrative expenses		71,816		—		21,592		141		93,549
Mortgage servicing expense		1,586		—		—		(1,586)		—
Interest expense		4,711		—		3,056		—		7,767
Total costs and expenses		83,684		29,852		24,648		(1,445)		136,739
Income (loss) before non-controlling interest and provision for income taxes	$	42,035	$	11,683	$	(22,935)	$	—	$	30,783

Add: Depreciation and amortization		1,667		395
Segment Adjusted EBITDA (1)	$	43,702	$	12,078

(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.