• Adjusted EBITDA (2024): $929 million.
• Vacation Ownership Tour Growth (2024): 8%.
• Enterprise-wide Gross Vacation Ownership Sales Growth (2024): 7%.
• New Owner Transactions Increase (2024): 35%, a 185 basis points increase from 2023.
• Adjusted EBITDA Margin (2024): 24%.
• Fourth Quarter Adjusted EBITDA: $252 million, an increase of 5%.
• Fourth Quarter Adjusted EPS: $1.02.
• Full Year Adjusted EPS (2024): $5.75.
• Vacation Ownership Segment Revenue (Q4 2024): $813 million.
• Vacation Ownership Adjusted EBITDA Increase (Q4 2024): 7% to $222 million.
• Fourth Quarter Tours: 175,000, growth of 2%.
• VPG (Q4 2024): $3,284.
• Travel Membership Segment Revenue (Q4 2024): $157 million.
• Travel Membership Adjusted EBITDA (Q4 2024): $52 million, flat compared to Q4 2023.
• Exchange Transactions Decrease (Q4 2024): 5%.
• Travel Club Transactions Increase (Q4 2024): 9%.
• Revenue per Travel Club Transaction Increase (Q4 2024): 6%.
• Capital Return to Shareholders (2024): $377 million.
• Adjusted Free Cash Flow (2024): $446 million.
• Net Corporate Leverage Ratio (End of 2024): 3.3 times.
• Adjusted EBITDA Guidance (2025): $955 million to $985 million.
• Gross VOI Sales Guidance (2025): $2.4 million to $2.5 million.
• VPG Guidance (2025): $3,050 to $3,150.
• Travel Membership Adjusted EBITDA Growth Expectation (2025): Flat to up 2%.
• Effective Income Tax Rate Expectation (2025): 28% to 30%.
• Adjusted Free Cash Flow Conversion Expectation (2025): In excess of 50%.
• First Quarter Adjusted EBITDA Guidance (2025): $195 million to $205 million.
• First Quarter VOI Sales Guidance (2025): $495 million to $515 million.
• First Quarter VPG Guidance (2025): $3,150 to $3,250.
• First Quarter Tax Rate Expectation (2025): 29% to 31%.
• Proposed First Quarter Dividend (2025): $0.56 per share, a 12% increase over Q4 2024.

• Warning! GuruFocus has detected 6 Warning Sign with TNL.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Travel+Leisure Co (NYSE:TNL) reported strong momentum in 2024, with $929 million in adjusted EBITDA, driven by an 8% growth in their vacation ownership business.
• The company successfully integrated a core vacation club, exceeding expectations in people, process, and performance standards.
• New owner transactions increased to 35% in 2024, with expectations to reach 35% to 37% in 2025, indicating strong sales growth potential.
• Partnerships with Allegiant Airlines and Live Nation are expected to provide incremental cross-marketing and lead generation opportunities.
• The launch of the new Club Window app has seen positive user engagement, with a 30% higher booking conversion rate compared to the owner website.

Negative Points

• The exchange business faced structural headwinds, with continued pressure from the migration from external to internal exchanges.
• Delinquencies were higher in the first half of 2024 compared to historical levels, although they slightly tightened in the second half.
• Interest rates remain a concern, with potential headwinds expected in 2025 due to recent increases in benchmark rates.
• The loan loss provision is expected to remain around 20% in 2025, with aspirations to reduce it to 18% to 19% in the long term.
• Forward bookings for 2025 are slightly behind the same time last year, indicating potential challenges in maintaining occupancy levels.

Q & A Highlights

Q: VPG in the quarter came in ahead of your outlook, but tours were a bit below. Can you explain the difference? A: Michael Brown, CEO: We saw 8% growth for 2024, and we have confidence in mid-single-digit growth for 2025. The first half of 2024 benefited from investments in new owner tour generation. However, we experienced some softness in the Las Vegas market and culled lower-performing marketing channels, impacting Q4 and early 2025. We expect tour growth to ramp up as the year progresses.

Q: How much of the VPG strength was due to mix adjustments versus underlying factors? A: Michael Brown, CEO: The VPG of $3,284 in Q4 was strong, aided by a mix adjustment towards owner VPG. Even without the mix adjustment, VPG would still be above $3,000, which is a strong level for our business model. Most of the VPG strength was price-related rather than due to changes in close rates.

Q: Are there any changes in the propensity to finance, especially with a higher mix of new first-time owners? A: Michael Hug, CFO: We haven't seen changes in the propensity to finance. Our average FICO score for 2024 was 744, the highest in company history. Consumers remain strong, and we continue to generate good quality loans.

Q: Is there potential for transformative changes in the travel clubs and memberships segment? A: Michael Brown, CEO: We are focused on growing the travel club business organically, despite structural headwinds in the exchange business. We have launched a new travel club business outside of timeshare, which has been a consistent grower. We aim to continue this growth while remaining open to strategic opportunities.

Q: What is your perspective on consumer receptivity and strength given the economic landscape? A: Michael Brown, CEO: Consumer sentiment remains consistent, and our volume per guest has been strong, indicating value in our product. Forward bookings are slightly behind last year, but it's early in the year. Delinquencies have improved slightly, and we continue to see strong consumer quality at the sales table.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.