Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Travel+Leisure Co (TNL, Financial) delivered $202 million of adjusted EBITDA, reaching the high end of their guidance range.
- The Vacation Ownership business showed strong performance with VPGs well above $3,000, contributing to a 22% increase in consolidated adjusted EBITDA margins.
- The company increased its dividend by 12% to $0.56 per share and repurchased $70 million worth of shares, returning significant capital to shareholders.
- The Club Wyndham app has seen increased adoption, with nearly 100,000 downloads, leading to a 71% search-to-book conversion rate, a 22% increase compared to the owner website.
- Travel+Leisure Co (TNL) maintained strong forward bookings and travel trends, indicating consumer resilience despite macroeconomic uncertainties.
Negative Points
- The Travel and Membership segment experienced a 7% decline in revenue and a 9% decrease in adjusted EBITDA, driven by a 13% decline in exchange transactions.
- Tour flow in the Vacation Ownership segment was down 1% for the quarter, although there was year-over-year growth in March.
- The improvement in portfolio delinquencies typically seen from December to March did not occur, leading to an increased provision rate assumption of 21%.
- The booking window decreased from 130 to 116 days compared to the previous year, indicating a potential shift in consumer booking behavior.
- There is increased uncertainty in the macroeconomic outlook and consumer sentiment has progressively fallen in 2025, which could impact future performance.
Q & A Highlights
Q: Can you talk about what you've seen in April and the state of the Travel and Membership (T&M) segment?
A: Michael Brown, CEO, noted that the Vacation Ownership business continues to perform well in April, with no signs of uncertainty affecting key performance indicators (KPIs). The Easter weekend was particularly strong. For T&M, industry consolidation is driving a shift from external to internal exchanges, but the company is managing this transition and expects a slight year-over-year decline in exchanges. Michael Hug, CFO, added that while delinquencies were higher than expected at the end of March, April collections have improved, which is promising for the portfolio.
Q: How is the summer rental business for non-owners looking, and what are the trends in closing rates for existing owners versus new buyers?
A: Michael Brown, CEO, stated that summer demand through the rental program is consistent with expectations, with no noticeable changes. Forward bookings for summer are solid, supporting a positive Q2 outlook. Regarding closing rates, the mix of new owner sales returned to historical levels, and owner close rates were slightly up, while new owner close rates were slightly down. The company aims for a 35% to 40% new owner mix over time.
Q: If full-year adjusted EBITDA guidance is maintained but T&M is lowered, does that mean the Vacation Ownership segment is being raised?
A: Michael Hug, CFO, explained that the lowering of T&M guidance is due to the Q1 shortfall, which was covered by overperformance in Vacation Ownership. The provision rate was increased to 21% due to elevated delinquencies, but the company plans to manage costs and drive strong VPGs to cover this.
Q: How do you view the opportunity to upgrade existing owners in today's environment compared to the past?
A: Michael Brown, CEO, emphasized that the company is not at a point where it needs to pivot heavily towards existing owners. The owner base is in good shape, with higher household incomes and younger demographics. Investments in technology, such as the Club Wyndham app, are enhancing owner engagement and satisfaction, which is expected to drive more usage and potential upgrades.
Q: Has there been any impact from the slowdown in international tourism into the US?
A: Michael Brown, CEO, stated that the company's revenue is predominantly from North America, with minimal exposure to Europe and Mexico. The Asia Pacific region tends to travel within its own area. Therefore, the slowdown in international tourism has not significantly impacted the business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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