Hilton Grand Vacations Inc., a global timeshare company, engages in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services.
The company primarily engages under the Hilton Grand Vacations brands. The company’s operations primarily consist of: selling vacation ownership intervals and vacation ownership interests (collectively, ‘VOIs’ or ‘VOI’) for itself and third parties; financing and servicing loans provided to consumers for...
Hilton Grand Vacations Inc., a global timeshare company, engages in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services.
The company primarily engages under the Hilton Grand Vacations brands. The company’s operations primarily consist of: selling vacation ownership intervals and vacation ownership interests (collectively, ‘VOIs’ or ‘VOI’) for itself and third parties; financing and servicing loans provided to consumers for their VOI purchases; operating resorts and timeshare plans; and managing the company’s clubs and exchange programs that include HGV Max, Hilton Grand Vacations Club, Hilton Club, Diamond clubs, and Bluegreen Vacation Club (collectively referred to as ‘Clubs’).
As of December 31, 2024, the company had over 200 properties located in the United States (‘U.S.’), Europe, Canada, the Caribbean, Mexico, and Asia. A significant number of the company’s properties and VOIs are concentrated in Florida, Europe, Hawaii, South Carolina, California, Arizona, Virginia, and Nevada, inclusive of the new locations acquired in connection with the Bluegreen Acquisition. The company has commenced rebranding many of the Bluegreen sales centers and expects to continue during 2025, along with starting to rebrand the majority of Bluegreen properties to Hilton Grand Vacations brands and Hilton standards. In addition, the company continued to rebrand the remaining Diamond properties that were in its plan and expects to continue to do so in 2025.
As of December 31, 2024, the company had approximately 724,000 members across its Club offerings. Based on the type of Club membership, certain members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort, any property in the Hilton system of 24 industry-leading brands across approximately 8,300 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program, including travel services options.
The company’s compelling VOI product allows customers to advance purchase a lifetime of vacations. The company’s customers also benefit from the amenities and service at its resorts. Furthermore, the company’s points-based platform offers members tremendous flexibility, enabling it to more effectively adapt to their changing vacation needs over time.
Bluegreen Acquisition
On January 17, 2024, the company completed the Bluegreen Acquisition. Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. Bluegreen’s resort network operates close to 50 Club Resorts (resorts in which owners in the Bluegreen Vacation Club (the ‘BG Vacation Club’) have the right to control and use most of the units in connection with their VOI ownership) and over 24 Club Associate Resorts (resorts in which owners in the BG Vacation Club have the right to use only a limited number of units in connection with their VOI ownership).
Bluegreen’s Club Resorts and Club Associate Resorts are primarily located in high-volume, ‘drive-to’ vacation locations, including Orlando, Panama City Beach, Las Vegas, the Smoky Mountains, Myrtle Beach, Charleston, the Branson, Missouri area, Nashville, and New Orleans, among others. Through Bluegreen’s points-based system, the approximately 200,000 BG Vacation Club members have the flexibility to stay at units available at any of Bluegreen’s resorts and have access to approximately 11,600 other hotels and resorts through partnerships and exchange networks.
Bluegreen’s sales and marketing platform is supported by marketing relationships with nationally recognized consumer brands and companies, such as Bass Pro, LLC and its affiliates (‘Bass Pro’), which operate Bass Pro Shops and Cabela’s, and Choice Hotels International, Inc. (‘Choice Hotels’ or ‘Choice’). Since 2000, Bluegreen has been the official vacation ownership provider for Bass Pro Shops and Cabela’s, among the nation’s leading outdoor retailers, with strong brand equity and a loyal customer base. There is a Bluegreen marketing presence in the majority of Bass Pro stores that are located in nearly 200 locations across North America. Additionally, the joint venture between Bluegreen and Bass Pro includes four high-end wilderness resorts under the Big Cedar Lodge brand.
Segments
The company operates its business across two segments: Real estate sales and financing, and Resort operations and club management.
The company’s real estate sales and financing segment primarily generates revenue from:
VOI Sales—The company sells its owned inventory and interests directly and, through its fee-for-service agreements, it sells VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing, and brand fees. Under these fee-for-service agreements, the company earns commission fees based on a percentage of total interval sales.
Financing—The company provides consumer financing, which includes interest income generated from the origination of consumer loans to members to finance their purchase of VOIs owned by the company. The company also generates fee revenue from servicing the loans provided by third-party developers to purchasers of their VOIs.
The company’s resort operations and club management segment primarily generates revenue from:
Resort Management—The company’s resort management services primarily consist of operating properties under management agreements for the benefit of homeowners’ associations (‘HOAs’) of VOI owners at both its resorts and those developed by third parties. The company’s management agreements with HOAs provide for a cost-plus management fee, which means it generally earns a fee equal to 10% to 15% of the costs to operate the applicable resort.
Club Management—The company operates and manages the Clubs and receives annual membership fees, as well as incremental fees depending on exchanges and transactions members choose for other vacation products and services within the Club system.
Rental of Available Inventory—The company generates rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges through the company’s Club programs. This allows the company to utilize otherwise unoccupied inventory to generate additional revenues. The company also earns fee revenue from the rental of inventory owned by third parties, as well as revenue from retail, spa, and other outlets at its timeshare properties.
VOI and Club Products
Each property provides a distinctive setting, while signature elements remain consistent, such as high-quality guest service, spacious units, and extensive on-property amenities. Most resorts feature studio to three-bedroom condominium-style accommodations and amenities, such as full kitchens, in-unit washers and dryers, spas, and kids’ clubs. The company’s timeshare properties are relatively concentrated in significant tourist markets, including Florida, Europe, Hawaii, South Carolina, California, Arizona, Virginia, and Nevada.
The company’s deeded VOI product that it markets and sells is fee-simple, deeded in perpetuity, and right to use real estate interests, developed either by the company or by third parties. This ownership interest is generally equivalent to one week on an annual or biennial basis, at the timeshare resort in which the VOI is located. Purchasers of a deeded VOI also generally become members of a Club which allows the member to exchange their points for a number of vacation options. In addition to an annual membership fee, members pay incremental fees depending on the exchange or services they choose.
The company’s trust VOI product that it markets and sells is a beneficial interest in one of its Collections, which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in that Collection. In general, purchasers of a VOI in a collection do not acquire a direct ownership interest in the resort properties in the Collection. Rather, for each Collection, one or more trustees hold legal title to the deeded fee simple real estate interests, or the functional equivalent, or, in some cases, leasehold real estate interests for the benefit of the respective Collection’s association members in accordance with the applicable agreements. Purchasers of a trust VOI are offered the opportunity to become members of a Club through which they can exchange their points for a number of vacation options. In addition to an annual membership fee, members pay transaction fees depending upon the exchange or service options they choose.
Through the Bluegreen Acquisition, the company also offers a points-based use right in perpetuity coupled with a freehold estate whereby upon purchase of a VOI, the purchaser directs conveyance of the VOI to the trustee of the Bluegreen Vacation Club who holds the timeshare interest pursuant to the Bluegreen Vacation Club Trust Agreement.
The company’s club membership offering is HGV Max. For any customer who purchases a VOI, this membership provides the ability to use points across all properties within its network. The membership provides new destinations for existing club owners, broader vacation opportunities for new buyers, and discounts across the Hilton portfolio of hotels and resorts. Prior to the offering of HGV Max, purchasers of deeded and trust VOI products generally became members of Hilton Grand Vacations Club and Hilton Club exchange programs and Diamond points-based multi-resort timeshare clubs. Bluegreen’s club offering was the BG Vacation Club, which was assumed as part of the acquisition. The company’s club memberships, including HGV Max, are collectively referred to as ‘Clubs’.
As of December 31, 2024, the company had approximately 724,000 members across its various club offerings.
Inventory and Development Activities
The company secures VOI inventory by developing or acquiring resorts in strategic markets, building additional phases at its existing resorts, re-acquiring inventory from owners in default and in the open market, and sourcing inventory from third-party developers through fee-for-service and just-in-time transactions.
The company’s development activities involving the acquisition of real estate are followed by construction or renovation to create individual vacation ownership units. These development activities, and the related management of construction activities, are performed either by the company or third-party developers. The development and construction of the units require a large upfront investment of capital and can take several years to complete in the case of a ground-up project. Additionally, the VOIs must be legally registered prior to sale to its end customers. This investment cannot be recovered until the individual VOIs are sold to purchasers, which can take several years. Traditionally, timeshare operators have funded 100% of the investment necessary to acquire land and construct timeshare properties.
The company also sources developed VOI inventory through fee-for-service and just-in-time agreements with third-party developers and has focused its inventory strategy on developing an optimal inventory mix. The fee-for-service agreements enable the company to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring it to fund up-front acquisition and construction costs or incur unsold inventory maintenance costs. The capital investment made in connection with these projects is typically limited to the cost of constructing an on-site sales center. The just-in-time agreements enable the company to source VOI inventory in a manner that allows it to correlate the timing of acquisition of the inventory with the sale to purchasers. The company refers to fee-for-service transactions and just-in-time sales as ‘capital-efficient transactions.’
The company monitors sales that occur in the secondary market and exercises its right of first refusal in certain cases.
Marketing and Sales Activities
The company’s marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach. The company uses targeted direct marketing to reach potential members who are identified as having the financial ability to pay for its products, are frequent leisure travelers, and have an affinity with its brands.
The company sells its vacation ownership products primarily through its distribution network of both in-market and off-site sales centers. The company’s products are currently marketed for sale throughout the United States, Europe, Canada, the Caribbean, Mexico, and Asia. The company operates sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership. The company has approximately 100 sales distribution centers in various domestic and international locations.
Financing Activities
The company originates loans for members purchasing its developed and acquired VOIs who qualify according to its underwriting criteria. The company generates interest income from the spread between the revenue generated on loans originated less its costs to fund and service those loans. The company also earns fee revenue from servicing its own portfolio and the loans provided by third-party developers of its fee-for-service projects to purchasers of their VOIs.
Timeshare Financing Receivables Origination
In underwriting each loan, the company obtains a credit application and a minimum down payment of 10% of the purchase price on the majority of sales of VOIs.
As of December 31, 2024, the company’s entire portfolio consisted of originated loans and loans that were acquired as part of the Diamond Acquisition, the Grand Islander Acquisition, and the Bluegreen Acquisition, which are referred to as acquired loans.
The company also finances its working capital needs in part by borrowing against timeshare financing receivables. In general, the company seeks to use the majority of its financed VOI sales as collateral to borrow against the Timeshare Facility and subsequently transfer those loans into a term securitization after the loans have seasoned and an appropriately sized portfolio has been assembled.
Loan Portfolio Servicing
The company has a skilled, integrated consumer finance team. This team is responsible for payment processing, loan servicing, collections, default recovery, and portfolio reporting and analytics. Accounts more than 30 days past due are deemed delinquent. The company reserves for all loans based on its static pool method.
The company monitors numerous metrics, including collection rates, defaults, and bankruptcies. The company’s consumer finance team is also responsible for selecting and processing loans pledged or to be pledged in its securitizations and preparing monthly servicing reports.
Resort and Club Management Activities
Resort Management
Prior to the initiation of VOI sales at a timeshare resort owned by the company or by a third party with whom the company has entered into a fee-for-service agreement, the company enters into a management agreement with the relevant HOA. Each of the HOAs is governed by a board of directors consisting of owner or developer representatives that are charged with ensuring that the resorts are well-maintained and financially stable. The company’s services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records, including reports, budgets, and projections, arranging for annual audits, and maintenance fee billing and collections, as well as personnel employment training and oversight.
The company is then able to resell those VOIs through its normal distribution channels.
Club Management
The company also manages and operates its Clubs, providing exclusive exchange, leisure travel, and reservation services to its Club members. When owners purchase a VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.
Rental of Available Inventory
The company rents unsold VOI inventory, third-party inventory, and inventory made available due to ownership exchanges through the company’s Club programs. By using the company’s websites, Hilton’s websites, and other direct booking channels to rent available inventory, the company is able to reach potential new members that may already have an affinity for and loyalty to its brands and introduce them to its products. Inventory rentals allow the company to utilize otherwise unoccupied inventory to generate additional revenues and provision of ancillary services. The company earns a fee from rentals of third-party inventory. Additionally, the company provides ancillary offerings, including food and beverage, retail, and spa offerings at these timeshare properties.
Competition
The company’s primary competitors in the timeshare space include Marriott Vacations Worldwide, Travel + Leisure Co., Disney Vacation Club, Holiday Inn Club Vacations, and Westgate Resorts.
Seasonality
The company experiences modest seasonality in timeshare sales at certain resorts, with stronger revenue generation during traditional vacation periods for those locations. The company’s business is moderately cyclical as the demand for VOIs is affected by the availability and cost of financing for purchases of VOIs, as well as general economic conditions and the relative health of the travel industry.
Government Regulation
The company’s business is subject to various international, national, federal, state, and local laws, regulations, and policies in jurisdictions in which it operates. Some laws, regulations, and policies impact multiple areas of its business, such as securities, anti-discrimination, anti-fraud, data protection, and security and anti-corruption and bribery laws and regulations, or government economic sanctions, including applicable regulations under the U.S. Treasury’s Office of Foreign Asset Control and the U.S. Foreign Corrupt Practices Act (‘FCPA’).
The company is generally subject to laws and regulations typically applicable to real estate development, subdivision, and construction activities, such as laws relating to zoning, land use restrictions, environmental regulation, accessibility, title transfers, title insurance, and taxation. In the United States, these include the Fair Housing Act and the Americans with Disabilities Act of 1990, and the Accessibility Guidelines promulgated thereunder, which the company refers to collectively as (the ‘ADA’). In addition, the company is subject to laws in some jurisdictions that impose liability on property developers for construction defects discovered or repairs made by future owners of property developed by the developer.
The company’s marketing and sales activities are highly regulated in the U.S. and in non-U.S. jurisdictions. In addition to regulations implementing laws enacted specifically for the timeshare industry, a wide variety of laws and regulations govern its marketing and sales activities, including regulations implementing the USA PATRIOT Act, Foreign Investment In Real Property Tax Act, the Federal Interstate Land Sales Full Disclosure Act and fair housing statutes, the U.S. Federal Trade Commission (‘FTC’) and state ‘Little FTC Acts’ and other regulations governing unfair, deceptive, or abusive acts or practices, including unfair or deceptive trade practices and unfair competition, state attorney general regulations, anti-fraud laws, prize, gift, and sweepstakes laws, real estate, title agency or insurance and other licensing or registration laws and regulations, anti-money laundering, consumer information privacy and security, breach notification, information sharing, and telemarketing laws, home solicitation sales laws, tour operator laws, lodging certificate and seller of travel laws, and other consumer protection laws.
The company’s lending and related activities are subject to a number of laws and regulations, including those of applicable supervisory agencies such as, in the United States, the Consumer Financial Protection Bureau, the FTC, and the Financial Crimes Enforcement Network, and, in the case of the company’s international operations, the Financial Conduct Authority (in the United Kingdom) and other similar or equivalent agencies in other countries and regions in which it operates.
Key Agreements with Hilton Worldwide Holdings
On January 3, 2017, in connection with the completion of the spin-off, the company entered into various agreements with Hilton. Certain of such agreements have been fully performed. However, several agreements continue to govern certain key transactions and arrangements between the parties, in particular between the company and Hilton, including its license agreement. The following is a summary of the terms of such agreements.
License Agreement
In connection with the spin-off, the company entered into a long-term license agreement with Hilton granting it the right to use certain trademarks, including, without limitation, ‘Hilton Grand Vacations,’ ‘HGV,’ ‘HGV Max,’ ‘Hilton Vacation Club,’ and ‘Hilton Club’ (collectively, the ‘Hilton Marks’), in connection with the current and future operation of a Hilton branded vacation ownership business (the ‘Licensed Business’), a license or right to use certain other Hilton-owned intellectual property, including promotional content and access to Hilton’s reservation system and property management software (collectively with the Hilton Marks, the ‘Hilton IP’), the right to use Hilton’s loyalty program data and other customer information (‘Hilton Data’) to promote the Licensed Business and for other internal business purposes, and certain other rights. In exchange for these rights, the company has agreed to pay Hilton license and other fees, and has agreed to certain restrictions on the operation of its business. In most cases, such rights are exclusive to the company, but there are certain exceptions. While the license agreement permits the company to operate certain businesses that do not conflict with Hilton’s business, including non-Hilton branded vacation ownership business, the company is not permitted to use any Hilton IP or Hilton Data for such non-Hilton branded portions of its businesses without Hilton’s prior consent.
In connection with the Diamond Acquisition and the Bluegreen Acquisition, the company and Hilton entered into a series of amendments to the license agreement, including most recently the Second Amended and Restated License Agreement, dated as of November 1, 2024, which incorporates all prior amendments (as amended and restated, the ‘License Agreement’).
The initial term of the License Agreement will expire on December 31, 2116. The company generally has the exclusive right to use the Hilton IP and Hilton Data for its vacation ownership business (subject to certain limited exceptions) until December 31, 2051.
The company is required to comply with the Hilton brand standards applicable to the Licensed Business (which includes any part of the Diamond business or Bluegreen business that becomes part of the Licensed Business).
History
Hilton Grand Vacations Inc., a Delaware corporation, was founded in 1992. The company was incorporated in 2016.
