Travel + Leisure Co. Q4 2025 Earnings Call Summary

Performance was anchored by the vacation ownership business, where management converted high owner engagement into recurring demand and predictable cash flow.

The company achieved 8% gross vacation ownership sales growth, driven by a 6% increase in Volume Per Guest (VPG) and accelerating tour flow that peaked in the fourth quarter.

Management attributed sustained consumer demand to a deliberate shift toward higher-quality demographics, with average FICO scores rising above 740 and household incomes exceeding $100,000.

The multi-brand strategy, including Sports Illustrated and Eddie Bauer, is designed to broaden the addressable market and reach new travel segments beyond the legacy Wyndham and WorldMark brands.

The Resort Optimization Initiative was launched to remove 17 aged, low-demand resorts, replacing them with newer, high-demand locations to improve system-wide financial health.

Travel and Membership segment performance was impacted by ongoing exchange headwinds, prompting management to implement tight cost controls to align expenses with the current revenue profile.

Full-year 2026 EBITDA guidance of $1.03 billion to $1.055 billion assumes a net benefit of $15 million to $25 million from the resort optimization program.

Management expects a deliberate mix shift toward new owners to cause a modest year-over-year decline in VPG to a range of $3,175 to $3,275.

The company anticipates bending the owner count curve back to a positive trajectory as new brands like Sports Illustrated Resorts scale and reach higher new-owner mixes.

Capital allocation will prioritize organic growth and shareholder returns, with a new $750 million share repurchase authorization viewed as a high-return use of capital.

Loan loss provisions are expected to trend lower toward 20% in 2026, driven by higher down payments and improved collections efficiency.

A non-cash inventory write-down and impairment of $216 million was recorded in 2025 related to the strategic closure of select resorts.

The resort optimization initiative creates a $120 million revenue headwind but is offset by $70 million in expense savings, yielding a net EBITDA benefit.

Exchange rate volatility remains a persistent headwind for the Travel and Membership segment, with management modeling 2026 based on 2025 trend lines.

Management flagged that while the core business is resilient, the ‘law of large numbers’ makes 6% to 8% growth in legacy brands increasingly difficult, necessitating the multi-brand expansion.