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 September 30, 2019 (in thousands):



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

Sales of VOIs	$	66,318	$	—	$	—	$	—	$	66,318
Fee-based sales commission revenue		60,478		—		—		—		60,478
Other fee-based services revenue		4,289		29,455		—		—		33,744
Cost reimbursements		—		21,111		—		—		21,111
Mortgage servicing revenue		1,588		—		—		(1,588)		—
Interest income		20,043		—		2,038		—		22,081
Other income, net		537		—		1,609		—		2,146
Total revenue		153,253		50,566		3,647		(1,588)		205,878

Costs and expenses:

Cost of VOIs sold		3,121		—		—		—		3,121
Net carrying cost of VOI inventory		5,878		—		—		(5,878)		—
Cost of other fee-based services		2,442		15,426		—		5,878		23,746
Cost reimbursements		—		21,111		—		—		21,111
Selling, general and administrative expenses		94,798		—		22,388		(27)		117,159
Mortgage servicing expense		1,561		—		—		(1,561)		—
Interest expense		5,062		—		5,326		—		10,388
Total costs and expenses		112,862		36,537		27,714		(1,588)		175,525
Income (loss) before non-controlling interest and provision for income taxes	$	40,391	$	14,029	$	(24,067)	$	—	$	30,353

Add: Depreciation and amortization		1,507		321
Add: Severance		594		238
Segment Adjusted EBITDA (1)	$	42,492	$	14,588

(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 September 30, 2018 (in thousands):



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

Sales of VOIs	$	70,698	$	—	$	—	$	—	$	70,698
Fee-based sales commission revenue		61,641		—		—		—		61,641
Other fee-based services revenue		3,491		27,566		—		—		31,057
Cost reimbursements		—		16,900		—		—		16,900
Mortgage servicing revenue		1,454		—		—		(1,454)		—
Interest income		20,009		—		1,522		—		21,531
Other income, net		—		—		378		—		378
Total revenue		157,293		44,466		1,900		(1,454)		202,205

Costs and expenses:

Cost of VOIs sold		11,237		—		—		—		11,237
Net carrying cost of VOI inventory		2,908		—		—		(2,908)		—
Cost of other fee-based services		1,227		15,802		—		2,908		19,937
Cost reimbursements		—		16,900		—		—		16,900
Selling, general and administrative expenses		92,180		—		20,262		(35)		112,407
Mortgage servicing expense		1,419		—		—		(1,419)		—
Interest expense		5,001		—		4,207		—		9,208
Total costs and expenses		113,972		32,702		24,469		(1,454)		169,689
Income (loss) before non-controlling interest and provision for income taxes	$	43,321	$	11,764	$	(22,569)	$	—	$	32,516

Add: Depreciation and amortization		1,606		450
Segment Adjusted EBITDA (1)	$	44,927	$	12,214

(1)

The table below sets forth our segment information for the nine months ended September 30, 2019 (in thousands):


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

Sales of VOIs	$	186,351	$	—	$	—	$	—	$	186,351
Fee-based sales commission revenue		161,033		—		—		—		161,033
Other fee-based services revenue		10,092		83,923		—		—		94,015
Cost reimbursements		—		58,705		—		—		58,705
Mortgage servicing revenue		4,621		—		—		(4,621)		—
Interest income		59,985		—		5,979		—		65,964
Other income, net		537		—		3,691		—		4,228
Total revenue		422,619		142,628		9,670		(4,621)		570,296

Costs and expenses:

Cost of VOIs sold		17,541		—		—		—		17,541
Net carrying cost of VOI inventory		18,853		—		—		(18,853)		—
Cost of other fee-based services		4,832		42,853		—		18,853		66,538
Cost reimbursements		—		58,705		—		—		58,705
Selling, general and administrative expenses		296,403		—		59,145		(507)		355,041
Mortgage servicing expense		4,114		—		—		(4,114)		—
Interest expense		15,391		—		14,564		—		29,955
Total costs and expenses		357,134		101,558		73,709		(4,621)		527,780
Income (loss) before non-controlling interest and provision for income taxes	$	65,485	$	41,070	$	(64,039)	$	—	$	42,516

Add: Depreciation and amortization		4,577		1,050
Add: Severance		594		238
Add: Bass Pro Settlement (1)		39,121		—
Segment Adjusted EBITDA (2)	$	109,777	$	42,358

(1)

See Note 10: Commitments and Contingencies for additional information regarding this matter.

(2)

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


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

Sales of VOIs	$	195,412	$	—	$	—	$	—	$	195,412
Fee-based sales commission revenue		167,581		—		—		—		167,581
Other fee-based services revenue		9,355		80,117		—		—		89,472
Cost reimbursements		—		47,157		—		—		47,157
Mortgage servicing revenue		4,369		—		—		(4,369)		—
Interest income		59,281		—		4,490		—		63,771
Other income, net		—		—		1,269		—		1,269
Total revenue		435,998		127,274		5,759		(4,369)		564,662

Costs and expenses:

Cost of VOIs sold		19,838		—		—		—		19,838
Net carrying cost of VOI inventory		7,075		—		—		(7,075)		—
Cost of other fee-based services		3,584		43,324		—		7,075		53,983
Cost reimbursements		—		47,157		—		—		47,157
Selling, general and administrative expenses		254,830		—		60,723		(18)		315,535
Mortgage servicing expense		4,351		—		—		(4,351)		—
Interest expense		14,334		—		11,136		—		25,470
Total costs and expenses		304,012		90,481		71,859		(4,369)		461,983
Income (loss) before non-controlling interest and provision for income taxes	$	131,986	$	36,793	$	(66,100)	$	—	$	102,679

Add: Depreciation and amortization		4,922		1,248
Segment Adjusted EBITDA (1)	$	136,908	$	38,041

(1)