Travel + Leisure at Morgan Stanley Conference: Strategic Growth Insights

On Tuesday, 03 June 2025, Travel + Leisure Co (NYSE:TNL) participated in the Morgan Stanley 3rd Annual Travel & Leisure Conference 2025. The company presented a robust outlook, emphasizing strong consumer demand and business durability. However, it acknowledged challenges in its exchange business due to industry consolidation. The discussion also highlighted the company’s capital allocation strategy and the role of AI in enhancing customer engagement.

Key Takeaways

• Travel + Leisure reported sustained strong consumer demand and business durability.
• 80% of owners have paid off loans, reducing discretionary vacation decisions.
• Focus on AI and digital marketing to boost existing owner bookings.
• Exchange business faces headwinds, but growth in travel club business offers potential.
• Company aims for a 4-5% dividend yield and 7-10% share repurchase annually.

Financial Performance & Capital Allocation

Travel + Leisure highlighted a robust financial profile with three main profit streams: vacation ownership sales, management fees, and loans. The company maintains high margins of 22-25%, driven by consistent revenue per guest. Its capital-light business model requires capital expenditure of just 3% of revenue. Since 2018, the company has returned $2.6 billion to shareholders through dividends and share repurchases. The dividend has grown at a compound annual growth rate of approximately 16% since 2021.

Operational Updates

The company emphasized the durability of its business model, noting that 80% of its owners have paid off their loans, making vacation decisions less discretionary. Travel + Leisure is seeing strong demand, with arrivals in May surpassing the previous year, and positive projections for June and July. The company is focused on attracting new owners, with 65% of new acquisitions coming from Gen X and Millennials.

Future Outlook

Travel + Leisure plans to leverage AI and digital marketing to encourage existing owners to book more trips. The company is also addressing headwinds in its exchange business, caused by industry consolidation, by focusing on expanding its travel club business. The receivables portfolio stands at $3.1 billion, with a lending spread of borrowing at 4% and lending at 14%. The provision for 2025 is expected to be 21%, with potential to decrease as economic uncertainty diminishes.

Marketing & Brand Strategy

The company employs three primary marketing sources: existing owners, general marketing, and partnerships. Partnerships with brands like Live Nation and Sports Illustrated are expected to generate significant sales. Travel + Leisure’s inventory management strategy involves carrying four to four and a half years’ worth of inventory, with plans to reduce this to conserve cash over the next 2-3 years.

Conclusion

For a detailed understanding of Travel + Leisure’s strategic plans and financial outlook, readers are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley 3rd Annual Travel & Leisure Conference 2025:

Unidentified speaker: Let’s kick things off.

Michael Brown, President and CEO, Travel + Leisure: You can incorporate it in this

Unidentified speaker: Yeah. Discussion. Yeah. Sure. We so we have Michael Brown, president and CEO of Travel, and these are the world’s largest vacation ownership company with over 270 resorts and 800 plus owners.

He’s joined by their recently announced new CFO, Eric Hoegh, who takes the reins from Michael Hug, who I see in the audience over here. He’s gonna be asking very difficult questions. So excited to hear from him as well. Thank you both for for kicking things off this morning.

Michael Brown, President and CEO, Travel + Leisure: It’s a great lineup, so thanks for letting us get started with you.

Unidentified speaker: Yeah. Absolutely. So we were talking about was it, on the demand side? Was it, an April showers brings May flowers was maybe a debate around a title note for our note yesterday, but we felt like flowers is maybe too strong of a word for the the tone. But curious to hear how you would characterize the demand environment as you see it and maybe what you’re thinking about longer term as well.

Eric Hoegh, CFO, Travel + Leisure: Well, let let me be let

Michael Brown, President and CEO, Travel + Leisure: me answer the question then we can figure out the headline here. But, but April April, we reported on the April 23 our q one results. And what we shared at that time was we had a really strong consumer first quarter, and that demand had not abated in, the month of April. So let’s say we would not use the word showers. In fact, it was fairly sunny out in the month of April.

And so we’re we’re five weeks on from that, and, we’ve continued to see consistent strong growth from our consumer demand. We’ve been listening very closely to what others have had to say, and obviously, there’s been some cross ones out there. But I would say from our standpoint, really consistent performance on the top line as it relates to VPGs and tours. So April flowers maybe brings May flowers as well. Yep.

That that seems better. It’s it’s better than showers. That’s that’s great.

Unidentified speaker: And and I know that, you know, we’ve got our typical questions that we ask for everybody, but because we’ve got, you know, a new colleague of yours on stage, we’d love to just hear, Eric, you know, maybe what what attracted you to the company, and maybe what from your background would you say, you know, could be particularly impactful for the business?

Eric Hoegh, CFO, Travel + Leisure: So, first, thanks for having me today. You know, I think that there was three predominant, points that really attracted me to p and l. First, the durability of the business. I think that there’s an under appreciation for the durability of the business. Tino’s got a high concentration of recurring revenue, a

Michael Brown, President and CEO, Travel + Leisure: lot of visibility to future growth,

Eric Hoegh, CFO, Travel + Leisure: stable margins, and a capital a very investor friendly capital allocation approach. So I think that the financial profile of the company is very, interesting. And then maybe items number two and number three, the the more I got to meet the leadership team and the management team that Mike had put together and the culture that that team had put together. It just became a very attractive opportunity.

Unidentified speaker: Great. Well, maybe on your first point about the the durability of the model, it’s obviously been a window even though we’ve had flowers and flowers, Little bit more anxiety from other folks in the broader industry. So maybe you can help set the stage for how you think about travel and leisure’s business model in different economic environments. Yeah. Why is it so resilient?

Michael Brown, President and CEO, Travel + Leisure: Well, I I think if there’s any misperception out there, it’s exactly that it’s sort of a high beta business. As soon as the economy goes down, a high discretionary item is gonna really suffer. And the reality is of our business is that we see the durability and the and the, the movement in our top line is to be very minimal. Why is the question? So we have 800.

Unidentified speaker: So maybe set the stage in terms of what’s the average price point

Michael Brown, President and CEO, Travel + Leisure: Right.

Eric Hoegh, CFO, Travel + Leisure: For a new

Unidentified speaker: For for a

Michael Brown, President and CEO, Travel + Leisure: for a new time share. So let’s let’s start with, that the idea that you’re gonna make a high discretionary purchase, which is somewhere around 20 to $25,000 is the average transaction. You don’t pay that on a day on a day. You’re gonna put 10 to 20% down and then take a note on for ten years. So if you think about the decision that a consumer is making on the day, can I does $400 a month fit into my 2025 vacation budget?

And I think if you look at hotel rates and all the rest, that’s well within people’s budget. And then you get into the whole value equation and how you like the vacation. That’s on the day for a new purchaser. It’s a it’s not a lump sum upfront. It’s a it’s a stream of payments that you’re gonna be making anyways.

If you’re going to rent a hotel room or an Airbnb, you’re gonna be swiping a credit card for multiple thousands of dollars at a single point in time as opposed to $400 a month, continually for your loan duration. Now the other reason that our durability and really, consumer continues to remain strong is of our 800,000 plus owners, 80% of them have paid off that loan. Right. So when they’re making a decision in April, do I want a vacation this summer? They’re not thinking, do I wanna add to my credit card bill?

Because it’s already paid for. So the the cost of not going on vacation is the cost of going on vacation is is basically it’s an it’s a no brainer. There’s no opportunity cost. So that’s the big driver of why we’re gonna see high arrivals. We saw them in May above last year, arrivals, and then June and July is really shaping up to be a good summer.

So, when you say to someone, you’ve already paid for your vacation, and by the way, you probably paid for it in 02/2018, ’2 thousand ’19 prices, the value is super strong for our consumers.

Unidentified speaker: But but then there’s also the, yeah, operating leverage of the business. Maybe if you can touch on, talk about some recurring revenue streams, but also how do we think about the operating expenses of the business and how that might ebb and flow?

Michael Brown, President and CEO, Travel + Leisure: Well, we we’ve got a pretty variable model. So the the three revenue streams, the three profit streams are the sale of, vacation ownership, the management of it, and the loans. We have $3,100,000,000 of consumer notes. It’s it’s been securitized to the ABS market, so there’s no variability there. You come across the management, which is a cost plus basis, and we take 10% above the cost, 10 to 15%.

So that is that is not that’s not, gonna hurt us. And then really when you get to the sale and the ultimate development of our resorts, the volume per guest, which is the hotel equivalent is RevPAR, Every single dollar of revenue we get per guest we see has remained consistently high post COVID, and we’ve seen that able to allow us to drive 22 to 25% margins consistently coming out of COVID and even before COVID. So it’s it’s been a very consistent model. And and as we got through q one, our margins were, again, in that that similar range that we expected to remain there for the remainder of the year.

Unidentified speaker: Right. And and I

Unidentified speaker: think the other area of pushback that we often hear from investors is that time share is really, you know, for a different generation than the next generation coming up, which maybe is a perennial, you know, question mark about a lot of things. But how do you think about addressing and assessing the next generation of owners and what KPIs can you share that would bolster, you know, your ability to capture, whether it’s Gen z or whoever else is there.

Eric Hoegh, CFO, Travel + Leisure: Sure. So,

Michael Brown, President and CEO, Travel + Leisure: in the past ten years, you’ve seen us have very few Gen X and mostly baby boomers to where we are today, which is about sixty five percent of our new owners are Gen xers or millennials. And we’re seeing, the Gen zers show up for the first time in the last two years, small percentages. And the reason is is the average new purchaser for us is in their forties, which is where we want to sit, for our type of product, which is when people are more dedicated to brand consistency, amenitized resorts, and a and a network of of resorts that you can access. One rhetorical, comment I’ll make in the in the room is a lot of people still think of our industry as when you think of time share, I’m gonna go to Clearwater Beach the March. I’m gonna stay in my same two bedroom, and I’m gonna have the same Northeast view or Northwest view to The Gulf.

That industry went away in 02/2008. Today, it’s 80% of sales in the industry are done by a branded hospitality company. Hilton, Disney, Merit, Holiday Inn, Wyndham, Margaritaville. And therefore, beyond it being a branded industry, flexibility has skyrocketed because you could not only use the 280 resorts we have, but you’ll have the, CEO of Wyndham Hotels here later on today. You can exchange your ownership to go to any one of the hotels there.

And the same is true for Hilton and same is true for Marriott. And therefore, the balance sheet, the reputation, the flexibility is all there because in the end, whereas you might have in 2,007 on the Clearwater every year and enjoyed your vacation in that same unit because that was time share then. Now you can go for March Madness in Vegas and go stay in the studio for two nights, and then take your family down to Orlando and stay in a two bedroom for five nights or for eight nights depending on what you own. So that’s that’s probably the other big misperception is how dramatically this industry’s evolved.

Unidentified speaker: Now with that flexibility, you know, I think the consumer also then wanted a much more diverse set of options to where they can vacation, but then also led to consolidation in the industry.

Unidentified speaker: It did.

Unidentified speaker: So are we what are we done with consolidation? Two, how do you think about the scale benefits from consolidation when you have this variable model embedded in you?

Michael Brown, President and CEO, Travel + Leisure: So a few things. We’ve gone from an industry that’s over 50 developers, individual developers that have one site, two sites, three sites, and not really a club system to a consolidated industry today that, is probably 10 developers of size, if that, and most of them are the branded hospitality companies I mentioned. Right. So there might be more consolidation, but it’s not at the pace or the scale that we’ve seen in the past. I think there will be more, but there’s just simply by the the law of fewer numbers that there can only be so much.

How has it helped? I sort of referenced it in my last question or last answer is the consumer has been the big beneficiary because as long as, you know if I vacation with my ownership for the next thirty years, I won’t get to 280 resorts, and I surely won’t get to all the hotels that I can exchange into or cruises or events that that you can also use your ownership with. So it’s really broad broad based flexibility backed by the quality and consistency that brands offer, that has been the major beneficiary. From our standpoint, operating wise, the scale really comes in sales and marketing is you can do large scale partnerships, which we’ve been able to exercise over the last five years to to sort of ramp up our marketing as opposed to being a small single site player. And so I guess maybe if

Unidentified speaker: you can dig into that a little bit. How has been sourcing changed for customers or how does that marketing evolve?

Michael Brown, President and CEO, Travel + Leisure: So, the the three primary sources of marketing in this industry are owners who buy more, which is the most consistent, predictable to the durability of the business. We know when someone buys today, they’re gonna buy 2.6 times more in the future over ten years. It’s it’s locked in high margin business because they’re satisfied. The second is general marketing, is people who are not familiar with their brand. What you’re referring to these partnerships is finding complimentary companies that that you can tie our hospitality experience with their lifestyle experience.

And let me give you a a real life example. We’re partnered with Live Nation. And so if you go visit our resort in Vina Bella in Napa Valley, we might be able to to tie that to the Bala Rock festival that’s there Right. And have a experience that’s outside of the resort and then come back to your resort where you, you know, lay your head and enjoy your vacation. We’re partnering with different companies as well with Sports Illustrated.

We just announced Sports Illustrated Resorts recently, and we’ve just hosted the Sports Illustrated Club at the Kentucky Derby where our owners can get access to the paddock. Nice buffet, all the stars coming through with their nice outfits, and then sneak out to the track and and watch the race force firsthand. To me, that’s where hospitality is going is not just the bricks and mortar, but also the experiences that come with it.

Unidentified speaker: So I guess on Sports Illustrated, how quickly can sales ramp as that deal finalizes Yeah. And how it might be be approaching Sports Illustrated similar or different to the other brands?

Michael Brown, President and CEO, Travel + Leisure: So so the brands we have today are Wyndham, Margaritaville, Sports Illustrated, and Accor. And the way we’re thinking about our business is each of those businesses, we can leverage our core competencies of sales and marketing management and accessing the financial markets to grow each of those at their own pace without being in conflict with one another. Our core Wyndham brand, is 2,400,000,000.0 of sales, is owners, partnerships, and open marketing. We view these new brands as primarily owners and affinity marketing. A core vacation club using the A core database, marketing in A core hotels, growing their brand through owners.

So we think that the Sports Illustrated, Margaritaville, A core, maybe A core has more in it, is probably 200,000,000 to 500,000,000 versus Wyndham, which we’ve been developing for forty years, which is now 2,400,000,000.0. Right. But given that each of these brands is more or less starting at zero, it is a very clear runway to exercise in a new brand what we already do very successfully. So we’re not trying to reinvent the wheel. We’re trying to take our core skill set and apply it to brands that have great loyalty basis, a lifestyle affinity, and hospitality.

Unidentified speaker: Is there a natural cadence to how close rates evolve? I imagine there’s some kind of change in how people are selling the product.

Michael Brown, President and CEO, Travel + Leisure: So so today so today in our Wyndham product, two thirds of our sales roughly, are to existing owners, and they close at nearly double the same rates as a new owner, someone buying for the first time. So as we launch Sports Illustrated, because we have new owners, everyone we sell will be a new owner. So close rates will start lower. We’ll invest capital in those businesses, And then from there, it’ll start to move to the cadence that’s eventually where we are with Wyndham. Right.

So your your margins, your close rates, and your, owner mix will change as you grow each of those brands. So another area that that we get kind of pushback or feedback on is really around the receivables portfolio and provisions in particular.

Unidentified speaker: And it always seems that delinquencies tend to lead the provision and sometimes maybe goes the other direction. But how should investors reconcile that you had an improvement in FICO scores seemingly improved the the the borrowing base, but at the same time, the provision still feels a little bit elevated versus history.

Michael Brown, President and CEO, Travel + Leisure: Why don’t we let Eric talk about the provision, and then I can sort of tie it in to I can sort of tie it into the consumer demand.

Unidentified speaker: Tag him in?

Michael Brown, President and CEO, Travel + Leisure: Yeah. Yeah. So we

Eric Hoegh, CFO, Travel + Leisure: did see delinquencies. As we talked about in the first quarter call, we did see deli elevated delinquencies in the first quarter. We also mentioned during the call that, during the month of April in the in the run up to our first quarter call, we did see some moderation associated with delinquencies. And in the thirty or forty days since that time, we’ve seen that moderation persist. So the the provision for 2025, as we talked about, is 21%.

And, while I think that there’s some seasonality that that that we may experience here in the second quarter and the third quarter that might take it over 21%, We feel good about the full year 21% number.

Michael Brown, President and CEO, Travel + Leisure: Yeah. And if you think about if you think about the buying pattern versus the provision, the provision is, as I mentioned, $3,100,000,000 portfolio where we borrow at roughly 4% and we lend at roughly 14%. So that’s great business for us, but it does represent 3,100,000,000 of consumers who are already in it. And things when the when the market is uncertain, when, there’s maybe, the April showers in the more broader macro economy, not necessarily with our performance, that does affect the provision. And every quarter, we update our provision, and it’s based on 40 court 40 quarters.

Right? So we’re just, you know, one fortieth updating, and it reflects recent reality of what’s happening in the market. It’s not we’re not concerned about waking up one day and seeing, oh my goodness. Our provision’s way off. We need a big adjustment.

And given recent history, I think it’s very important people understand is we’re seeing what you would normally see in business is slight modulation to the provision, a little bit up, a little bit down. Buying performance, people are people are still going on vacation. I know that we’ve seen some news out of the airlines. But what we’re seeing is if 80% of our owners have already paid for their ownership and they’re gonna go, Like, you know, I don’t know if I wanna swipe the credit card for $2,000 for flights for my family. They might just fill up the tank of gas, drive down to Myrtle Beach or drive down to Tennessee or go to Nashville and enjoy a vacation and be a little more cautious that way, but they’re not gonna give up their vacation.

And if they’re not giving up their vacation, they’re talking to us at a point in this environment where they’ve chosen to go on vacation. And that that, you know, has our our our sales team and our marketing team, continues to deliver really strong VPGs, and we’re very pleased with not only April performance, but how that’s continued in May.

Unidentified speaker: Great. I’ve got a couple follow ups on the the financial receivables book. I guess, first on the provision, if I take a a step back and think, you know, ten years ago, which maybe stating myself, but, and the provision stepped up when there were some third party default activity since before the pandemic. And and as I said, your FICO scores have improved. Seems like that third party default, you know, activity has subsided.

We just don’t hear about it as much. Maybe some people hear about some of the

Eric Hoegh, CFO, Travel + Leisure: Mhmm.

Unidentified speaker: Couple of commercials here or there, but it seems like it’s kinda gone away. Is there an opportunity to further reduce the provision as a percentage of the receivables going forward as you effectively upgraded the owner base?

Michael Brown, President and CEO, Travel + Leisure: Yes. We saw last year the provision moving down. Yep. It was it it started to move down from sort of the peak of the third party activity. As you mentioned, our minimum FICO is six forty.

Our average FICO is between seven thirty and seven forty, the highest in the industry. And we would expect that as, sort of uncertainty abates and, increasing confidence comes back to the market. While our top line performance stays, we see two things as a potential tailwind in our provision. Number one is that it does float back down, below 20 eventually. And then secondly, is that depending on if rate cuts come, our lending doesn’t really change, but our borrowing will.

And that we’ve we’ve endured, I think the number was something like 30,000,000 of headwind last year because of interest rates that we had used in the ABS market. As those begin to come down, it’s a very natural tailwind that drops a % to the bottom line in the next few years if they cut rates.

Unidentified speaker: Right. Well, so maybe on the the securitization market and liquidity side, that’s another area that I think sometimes people get concerned about that in a tighter macro that might dry up. So what are some of the steps you’ve taken to bolster the balance sheet and have sources of liquidity in those different environments? So

Michael Brown, President and CEO, Travel + Leisure: liquidity is not something that keeps us up at night. And I’ll I’ll point back to COVID where in the second quarter of twenty twenty when basically every hospitality company got rid of their dividend and pulled down their revolver and loaded up the balance sheet, we cut our dividend from 50¢ to 30 and never really sweated it. We we turn our EBITDA into over 50% cash flow, and we’ll do so again this year. We that’s our guidance, and that’s we’re not changing that. And ultimately, as you look going forward, as it relates to our ability to generate cash flow and our our bolstering of our balance sheet, our free cash flow generation, the fact that we really time our capital spend to revenue, which is a huge change from where this industry used to be, we feel very confident that not only is our balance sheet strong, it allows us to do and and I’ll let Eric speak about this, a capital allocation strategy that’s, in a nutshell, four to 5% dividend.

Every year, we’ve been buying back seven to 10% of our shares, and we’re growing at mid single digits all while having a leverage that’s right around 3% three times levered. We’re right now at 3.3, but our capital allocations well, let me let you

Eric Hoegh, CFO, Travel + Leisure: talk about it. I appreciate it.

Michael Brown, President and CEO, Travel + Leisure: I get excited when I talk about our our capital allocation strategy.

Eric Hoegh, CFO, Travel + Leisure: What is what is exciting? And it and it comes back a little bit to the durability of the business model that we’re that I mentioned at the at the top of the meeting. From a capital allocation perspective, you know, first, we wanna invest to grow. And to Mike’s point, very capital light. CapEx is a as a function of revenue.

It’s roughly 3%. We’ll be opportunistic associated with inorganic growth, if there’s something that can, expand our reach or enhance our products. From a dividend perspective, very committed. So since 2021, our dividend has grown, roughly 16% on a CAGR basis. We increased to 12% earlier this year.

And to Mike’s point, you know, the dividend yield right now is roughly, 4.6%, four hundred sixty basis points. And then beyond that, we use our available cash for share repurchase. So over that same time period, 2021, you know, we have retired roughly 7% of our Wassa on a on a on a carrier basis. So a large concentration of our available free cash flow is going back to our investors. Again, coming back to that really, attractive financial profile.

Michael Brown, President and CEO, Travel + Leisure: I wanna make sure I get this a % right, but I I think our market cap right now is 3.2, and, we’ve returned 2.6 Since ’18. ’18. Yeah. Well,

Unidentified speaker: as of the end of last quarter.

Michael Brown, President and CEO, Travel + Leisure: As of the end of last quarter.

Unidentified speaker: You’re not updating that right now.

Michael Brown, President and CEO, Travel + Leisure: No. We’re updating. I I I think what Eric said is exactly right. It’s we’ve been a very consistent returner of to shareholders. And absent a clear opportunity, which we’ve seen them.

We used it to change our name to travel and leisure. Yep. We bought a core vacation club last year. So we’re always looking, but we know our investors love that dividend and and share repurchase along with the growth.

Unidentified speaker: And you talked about that steady capital spend and matching it to revenue. Help frame where inventory levels are. Why is that the right amount of inventory? Why we wouldn’t maybe see it, you know, go up or go down in the future?

Michael Brown, President and CEO, Travel + Leisure: So we we don’t think we have the right amount of inventory today. And the reason is is coming out of COVID, a few things happened. We were committed to finishing resorts that were already under construction or we had have contractual commitments too. We fulfill those, and that delivered resorts up until about ’22. At the same times at the same time, 2020, our sales declined, obviously.

So we built up inventory on our balance sheet that we’re carrying today roughly four years, maybe four and a half years worth of inventory. The ideal scenario is one and a half years. So that’s where I talked about, interest income being a tailwind for us going forward if rates drop. This is another area where we have very natural positivity coming in the future because we’re not we don’t need to go out and build new resorts today. We have 280 Yeah.

Plenty for family to vacation with. And therefore, our ability to conserve cash and not deploy it for resorts that we don’t necessarily need today. We will opportunistically, but we have tons of optionality of not deploying cash and returning it to shareholders over the next two to three years until that inventory balance gets back to around a year and a

Unidentified speaker: half to two years. Right. Now a a related question on that then is if you bought inventory back or built it before a lot of that inflation, it seems like that could be a good thing for margins. So when you talk about the puts and takes to margins

Michael Brown, President and CEO, Travel + Leisure: What will that’s a great place that we are at the moment because we we know what’s on the balance sheet from a cost of goods sold sold standpoint. And we take back a lot of inventory on an annual basis either through defaults, you know, life situations cause people you lose a job, divorce, death, you know, it’s it’s there are reasons that we take back inventory. And when we do, we’re taking it back at a relatively low cost that we we built years and years ago. We take it back at a very reasonable cost, and then we’re selling it at today’s prices. So we have a really good situation where when we look at our cost of product going forward, it’s one of the areas that we feel we have our hands firmly on the wheel and we’re not concerned about, you know, supply chain, tariffs, new build, new construction cost, which is very expensive at the moment because we have our inventory situation absolutely locked in for the next few years, on our core Wyndham brand, our core Margaritaville brand.

And then as we do Sports Illustrated and build more core, that will be incremental. But it is not a risk factor that’s gonna materially change as it relates to cost of product.

Unidentified speaker: So when you think about your margins from here, you know, not just this year, but maybe looking further out, Do we do we generally think that they’re going to have opportunity to expand, hold steady? Are there any pressures to think about or investment in the near term behind some of these new brands that are being folded in?

Michael Brown, President and CEO, Travel + Leisure: I I would describe it as holding steady because I think we continue to see opportunities as I mentioned on potentially our portfolio and inventory, which will drive positivity on our core Wyndham, margins. However, anytime you invest in incremental business, do a conversion or a new build for a new brand, you’re gonna have only new owners which come with a lower margin, and you’re gonna have new build construction. So the immateriality of the new brands laid against the materiality of our core predictable brand, I think in the end when you weigh the dollar, you should see you should be able to retain those, over 20% margins going up to 25%. Right.

Unidentified speaker: One of the other questions we’ve been asking all the companies at the conference has been really around AI Yep. And how to think about is that an opportunity from a top line standpoint, margin, other, or and where are you maybe looking to deploy it currently?

Michael Brown, President and CEO, Travel + Leisure: Yeah. So so whether it’s AI or digital, our our core mission is to get people to utilize in the in in the maximum way their their ownership. And we’re deploying both digital opportunities and AI to get people booking more. The more people go to our resorts, the more they buy. It’s just absolutely proven.

So we our first biggest focus is to utilize AI and digital marketing to get our existing owners back to resorts. We have room in our utilization to get that up even higher, and that has huge visibility going forward for us. And then I think a lot of companies would say we’re gonna use it to help code in our IT department and and and and build your IT systems both faster and more efficiently. But I think the the more interesting part for us is consumer facing.

Unidentified speaker: Great. We’ve got a couple minutes. If folks have questions in the audience, we can take one there. Otherwise, I can keep going. Charlie.

Well, I appreciate everyone showing up. People haven’t had their coffee yet.

Michael Brown, President and CEO, Travel + Leisure: For their breakfast or coffee. Well,

Unidentified speaker: so one of the areas we didn’t touch on was travel and membership Yeah. That segment. So perhaps talk about the expectation for acceleration in the travel club in particular, I think, you know, following the first quarter. And any other, you know, kind of puts and takes that folks should think about in that segment.

Michael Brown, President and CEO, Travel + Leisure: Yeah. So so as we we’ve really spent the forty minutes or thirty minutes talking about vacation ownership, which as I said let me just recap that as we really strong VPGs, really good tour growth, and a consistent consumer demand on the vacation ownership side. As we move to travel and membership, we mentioned on the first quarter call, that same consolidation that’s helping the entire industry, which we think is great for the industry, puts puts headwinds around our exchange business because the exchange business was all about connecting single site developer to single site developer and giving them a worldwide network. As the industry’s consolidated, the exchange business, represents 200 you know, most of our $250,000,000 of EBITDA in the travel and membership segment has has definitely a headwind against it, and we continue to see pressure on exchange on the exchange business. Yep.

With all that said, our team’s doing a great job, and and we’re sort of holding serve in that front. On the travel club business, that is our first foray outside of time share, closed user group behind a paywall, discounted travel. We do see continued growth in that space. We are excited about not only travel clubs, but experimenting with more non timeshare based products. The reality, again, sort of although in material, it’s not enough to sort of offset the exchange headwinds.

So we’re really leaning into vacation ownership that’s performing very well. It’s it’s more than making up for our travel membership pressure, and then we’re trying to really spark some innovation on the travel club side to see growth.

Unidentified speaker: On the exchange side, I mean, do we hit a plateau at some point? Or, you know, what are the different things that you’re trying to think about to stem that deterioration value proposition there?

Michael Brown, President and CEO, Travel + Leisure: It will hit a plateau at some point. I can’t sit here today and say, I I thought we would have this time last year and and we haven’t. That’s okay because although we know that that is an issue that we’re having to address, and we sort of talked about this check-in to check out concept, which is the exchange business. Our opportunities to expand that beyond and get a broader travel share of wallet, we aren’t there yet, but we’re we’re not sort of just waiting for this plateau to occur and hope the travel club take off. As management, we’re there to be proactive, and we’re being very proactive to find other opportunities.

Keep in mind, 1% growth on that level of EBITDA is 2 and a half million dollars. I mean, there’s there are plenty of opportunities out there. We just need to find the right ones, maybe partner with some other companies to really start grabbing a a bigger share of wallet.

Unidentified speaker: Well, we’re a little over time. Next up, we will have, Marriott joining us. But please join me in thanking Michael and Eric for all their insights today. Thank you. Thank you.

Unidentified speaker: Appreciate it. It was a very nice meeting with you. Thank you.

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