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Good morning and welcome to the Hilton Grand Vacations Fourth Quarter 2023 Earnings Conference Call. A telephone replay will be available for seven days following the call. The dial-in number is 844-512-2921 and enter PIN number 13743184. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions] I would now like to turn the call over to Mark Melnyk, Senior Vice-President of IR. Please go ahead, sir.

Thank you, operator and welcome to the Hilton Grand Vacations fourth quarter 2023 earnings call. As a reminder, our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements. These statements are effective only as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the Risk Factors section of our SEC filings. We'll also be referring to certain non-GAAP financial measures. You can find definitions and components of such non-GAAP numbers, as well as reconciliations of non-GAAP and GAAP financial measures discussed today in our earnings press release and on our website at investors.hgv.com. Our reported results for all periods reflect accounting rules under ASC 606 which we adopted in 2018. Under ASC 606, we're required to defer certain revenues and expenses related to sales made in the period when a project is under construction and then hold-off on recognizing those revenues and expenses until the period when construction is completed. For ease of comparability and to simplify our discussion today, our comments on adjusted EBITDA and our real estate results will refer to results excluding the net impact of construction related deferrals and recognitions for all reporting periods. To help you make more meaningful comparisons you can find details of our current and historical deferral and recognitions in Table T1 in our earnings release and complete accounting of our historical deferral and recognition activity can also be found in Excel format on the financial reporting section of our investor relations website. In a moment, Mark Wang, our President and Chief Executive Officer, will provide highlights from the quarter in addition to an update of our current operations and company strategy. After Mark's comments, our Chief Financial Officer, Dan Mathewes, will go through the financial details for the quarter. Mark and Dan will then make themselves available for your questions. With that, let me turn the call over to our President and CEO, Mark Wang. Mark?

Morning everyone and welcome to our fourth quarter earnings call. Contract sales in the quarter were $572 million and EBITDA grew 12% to $282 million with margins of 27% improving 200 basis points from the prior year. For the year EBITDA of $1.26 billion was slightly ahead of our revised guidance of $1 billion to $1.20 billion with margins of 26%. Tour flow grew 7% for the quarter with growth in arrivals and improved occupancy levels. Our owner channels again proved to be resilient with tours remaining above 2019 levels. But while tour flow was solid overall, it nevertheless came in modestly below our expectations, reflecting some lingering hesitancy and consumer behavior, particularly on the new buyer side, which we also saw in the early part of this quarter. That said, we're entering '24 with a strong pipeline of booked vacation packages, given us confidence that the willingness to travel remains steady. VPG's declined 14% in the quarter, roughly on the same trend of mid-team declines that we've seen all year as we lapped tough comparisons from '22. But it also reflects the effects of continued disruption in our Maui market, along with a temporary system outage that impacted our legacy deeded sales system early in the quarter. The issue was fully remedied and we subsequently enhanced our backup systems to mitigate any future risk. But it did create a modest drag on our sales and VPG results in the quarter, which Dan will get into in a minute. In that context, I'm happy with our underlying EBITDA performance despite these issues, which highlighted the adaptability of our business, along with the benefit of our recurring EBITDA. On the cost front, we have a natural hedge due to our largely variable expense base, and we also implemented additional short-term cost saving measures to protect our margins. Looking at sales, we adjusted the use of some of our more expensive marketing channels to improve our efficiency, and we made changes to some sales processes and new sales incentives to focus on our highest quality tours and help improve our tour outcomes and VPGs. So we have a lot of levers to pull in this business to support our margins, and ultimately our free cash flow generation. Our confidence in our business model is reflected in our '24 guidance we issued today, which shows growth in our EBITDA supporting even faster growth in our cash flow per share. While our current expectations is that the consumer softness will persist through the first half of the year, our costs and our tour efficiency initiatives will still enable us to grow our EBITDA. In addition, we're also expecting EBITDA growth at Bluegreen this coming year, along with the recognition of some initial cost synergies. Regarding the acquisition of Bluegreen after a smooth review process and great execution on our financing, I'm happy to announce we officially closed the transaction on January 17th, much earlier than our initial expectations. We're really excited about this transaction, and we think Bluegreen will be a great compliment to HGV and enabling us to reinforce our position as the premier vacation ownership and experience company. We're adding scale and diversity to our existing offerings through Bluegreen's member base and additional geographies. We're also expanding and diversifying our lead flow with the addition of new world-class strategic partners and lead flow channels, and we'll also explore new avenues for growth for our joint venture relationship with one of those partners, Bass Pro Shops. In addition, we'll de-risk the integration process by leveraging the infrastructure and experience we developed with the Diamond acquisition. We'll realize material synergies, and importantly, we'll further strengthen the resiliency of our business with additional recurring EBITDA and free cash flow. Along with today's release, we've provided some additional financial details for Bluegreen on our Investor Relations website, but I'm happy to say they finished out '23 with solid momentum, throwing contract sales 4% in the quarter to $193 million, and generating EBITDA $46 million with margins of 17%, improving nearly 500 basis points year-over-year. Our teams have already begun the integration process, and we formed working groups throughout the organization to collaborate with our new Bluegreen team members as well as our new strategic partners. We intend to support Bluegreen's momentum during the integration by operating their sales organization in parallel with HGV over the course of the coming months. At the same time, we'll also be working closely with Bass Pro and our other strategic partners to develop a roadmap for successful integration and expansion of our marketing efforts. So we're hitting the ground running with our integration efforts. On the heels of the Diamond integration, our teams are well-versed in the processes and procedures that we need to ensure a smooth transition, and we're excited to share our progress with you over the coming quarters. Now let's take a look at our operational performance. Remember that these fourth quarter results refer to a standalone HGV. We just closed the Bluegreen acquisition here in the first quarter, and we'll report operations as a combined entity beginning in Q1 '24 results. As has been the case throughout the year, contract sales in the quarter were driven by growth in tours, offset by a decline in VPG. The 152,000 tours generated in Q4 were up 7% and maintained the trend of tour growth with new buyer tours growing slightly faster than our owner channel. VPG for the quarter was $3,730, continuing the pace of normalization we've seen through the year. Those rates also remained ahead of 2019's levels led by the strength of owner channel, which are still above 2019 by several hundred basis points. And as we've now left the tough VPG comparisons from last year, our expectations is to return to a more normal pace of VPG growth in '24. Turning to our demand indicators, our package pipeline remains robust at well over 500,000 packages, and we've entered '24 with a record number of those packages dated for travel, which should support additional tour flow growth this year. Fourth quarter occupancy of 82% was 300 basis points ahead of last year with strong improvements in November and December. And we continue to see arrivals this year trending ahead of last year's pointing to additional gains in '24. We also capped off a strong year for our experiential platform, HGV Ultimate Access. We hosted over 3,600 events during the year for more than 120,000 members and guests, and we're already off to a strong start in '24. Our Marquee, Ultimate Access event, the Hilton Grand Vacation Tournament of Champions, built upon last year's strength with attendance and media exposure setting new records. And our teams have put together a rich list of programming for the year ahead that will surpass last year's performance. We believe that differentiated offers like Ultimate Access drive increased on our engagement and loyalty, strengthening the value proposition of HGV's ownership. Moving to our non-real estate segments, transient travel demand remains strong in the quarter, leading to gains in both occupancy and rate in driving growth in our rental business, despite having more room nights allocated toward owner stays and fewer available nights in Maui. In our recurring club and finance business, NOG grew 2% and capped off another year of member growth. We ended the year with nearly 529,000 members, including more than 144,000 Max members. That means we added 70,000 Max members this year, both through new member additions and upgrades from existing owners, which nearly equal the number of Max members we added during last year's strong launch period. Our financing business also continued to perform well, even after controlling for a one-time expense adjustment made in the fourth quarter of last year. During the quarter, we repurchased 2.6 million shares of stock, bringing the total to 8.7 million shares for the year. And since we spun out as an independent public company in 2017, we've repurchased over a billion dollars of stock for 30 million shares. We remain committed to returning capital to enhance our total shareholder returns. And with the addition of Bluegreen, we're on a path to enhance that commitment as we further improve our cash flow generation. Looking back to 2023, I'm proud of the progress we made and I'm excited about the year ahead. As we continue our integration of Diamond assets and turn our attention toward Bluegreen this year, our goal is to solidify our position as the premier vacation ownership and experience company. We have the widest offering of products and price points in the industry, the most accessible and featured packed member club with HGV Max and the largest experience platform with HGV Ultimate Access. With the addition of Bluegreen and our new partners, we'll also be able to reach a wider audience than we've ever had before. Our goal this year will be to ensure a smooth integration of Bluegreen and engagement with our new club members, team members and partners. And we'll maintain our focus on driving long-term value creation of free cash flow generation along with capital returns. With that, I'll turn it over to Dan to talk you through the numbers. Dan?

Thank you, Mark and good morning, everyone. Before we start, note that our reported results for this quarter included $21 million of sales deferrals, which reduced reported GAAP revenues and were related to pre-sales of the latest phases of our Ocean Tower and Sesoko projects. We also recorded $9 million of associated direct expense deferrals. Adjusting for these two items would increase the ease that are reported in our press release by $12 million to $282 million. In my prepared remarks I'll only refer to metrics excluding net deferrals, which more accurately reflects the cash flow dynamics of our financial performance during the period. To begin, our team did a great job this year adapting to a number of headwinds, including the normalization of VPGs from the all-time highs of 2022, elevated interest rates, a more tenuous macroeconomic environment, and the devastating wildfires in Maui. Despite that, we produced results that were near the record levels of last year with contract sales of $2.3 billion and adjusted EBITDA of a $1.26 billion. Importantly, we converted 52% of the EBITDA into over $530 million of cash flow. We use that cash flow effectively to support shareholder returns by repurchasing over $365 million of shares this year. In addition, when combined with our balance sheet discipline and low leverage, that cash flow helped put us in a position to capitalize on the opportunity to acquire Bluegreen Resorts and provide us with another avenue to add long-term value to the business. As Mark mentioned, our integration process with Bluegreen is underway, and we have a robust plan in place that we will be executing against it over the coming months. Moving to our results for the quarter, total revenue excluding cost reimbursements for the quarter grew 3% to $943 million. Growth was led by our financing resort and club and rental and ancillary businesses, more than offsetting a decline into the real estate revenue. Q4 reported adjusted EBITDA was $282 million with a margin of 30% excluding cost reimbursements. Our margins in the quarter improved over 200 basis points versus the prior year. And compared to the first half of 2023, margins in the back half improved by 300 basis points to 30% as we improved efficiency and lapsed some of investment spending from the second half of last year. For the full year of 2023, we generated EBITDA of $1.26 billion versus our guidance of $1 billion to $1.20 billion with margins of 28% excluding reimbursements. As Mark mentioned, our sales this quarter were impacted by the ongoing effects of the Maui wildfires combined with a temporary outage at one of our third party data center providers that impacted our sales systems over a number of days early in the quarter. We believe that the combination of these two items was an impact of roughly $40 million of contract sales, $21 million of adjusted EBITDA during the quarter. Turning to our segments, within real estate, total contract sales of $572 million were down 10% versus the prior year with new buyers comprising 26% of contract sales in the quarter. Tours grew by 7% in the quarter to 152,000 tours with both our owner and new buyer channels showing similar levels of growth. VPG of $3,730 in the quarter was 5% ahead of 2019 levels. Excluding those two one-time items, we believe we would have achieved the low end of our expectations to be 10% to 15% ahead of 2019. For the full year, our reported VPG was 11% ahead of 2019. And looking out to 2024, we believe that the VPG growth will return the more normal level of a low single-digit annual growth. Cost of product was 15% of net VOI sales for the quarter. Real estate, S&M expense was $248 million for the quarter or 43% of contract sales, improving nearly 200 basis points sequentially as we improved efficiency and lapped some of the marketing investments made beginning in the back half of last year. Real estate profit for the quarter was $158 million with margins of 34% improving 70 basis points from the fourth quarter of last year. In our financing business, fourth quarter revenue was $82 million and segment profit was $56 million with margins of 68% versus margins of 48% in the prior year or 61% if you exclude the one-time expense true-up that we made during Q4 of last year. Combined gross receivables for the quarter were $2.9 billion or $2.1 billion net of allowance and our interest income was $74 million. Our originated portfolio weighted average interest rate was 14.85% while our acquired portfolio had a weighted average interest rate of 14.66% and includes a $3.4 million contract revenue for the amortization of a non-cash premium associated with the portfolio of receivables that we acquired from Diamond during the acquisition. Our allowance for bad debt was $779 million on that $2.9 billion receivables balance. Of these amounts, the acquired portfolio which used Diamond's underwriting standards was $249 million on a portfolio balance of $499 million. Our annualized default rate for our consolidated portfolios including the Diamond acquired and underwritten portfolios was 8.56%. Our provision for bad debt was $54 million or 12% of owned contract sales. Previously discussed, we continue to see normalizing credit trends with the termination of certain government stimulus plans. So we believe our current loan loss provision is adequate. Going forward, we expect our provision to migrate towards the low to mid teams percentage of contract sales on a normalized basis, not accounting for the Bluegreen acquisition. We continue to evaluate blue-green's provision and allowance through our opening balance sheet and purchase accounting work streams who will share more on the portfolio during our first quarter results. In our resort and club business, our consolidated member account was 529,000 and our consolidated NOG was 2% at the end of the fourth quarter. Revenue of $167 million was up 8% for the quarter and segment profit was $119 million driven by the typical seasonal uptick in revenues and expenses in our club business with margins of 71%. Rental and ancillary revenues grew 2% to $164 million in the quarter with segment profit of $12 million and margins of 7% versus 4% last year. Revenue growth was driven by ADR gains in most markets, partially offset by lower available rental room nights. Inventory owned to increase member stays along with fewer available room nights from the affected properties in Maui. During the fourth quarter, the timing shifts from adjusted Diamond member benefit recognition resulted in a $3 million year-over-year benefit to the fourth quarter expenses, which was in line with our expectations. With those timing adjustments made this year, they won't create issues with comparability in 2024 or beyond. Bridging the gap between segment adjusted EBITDA and total adjusted EBITDA, corporate G&A was $36 million, license fees were $37 million and JV adjusted EBITDA was $6 million. Our adjusted free cash flow in the quarter was $255 million, which included inventory spending of $88 million. The adjusted free cash flow conversion rate for the quarter was 88%. And for the year, we had a conversion ratio of 52%, which was nicely inside our 50% to 60% target range. During the quarter, the company repurchased 2.7 million shares of common stock for $99 million. And through February 23rd, we repurchased an additional 1.7 million shares for $71 million, leaving us with $289 million of remaining availability under the 2023 repurchase plan. In 2023, we repurchased an average of $92 million per quarter, which is in line with our goal of roughly $100 million per quarter. Turning to our outlook, we expect adjusted EBITDA in the coming year of $1.2 billion to $1.26 billion. I'd note that our guidance includes the assumption that bad debt and COP will approach their long-term run rate levels of mid and high teams, respectively, which collectively would represent a headland to EBITDA of roughly $100 million. It also includes an estimated $150 to $160 million of pre-synergized EBITDA contributed from our acquisition of Bluegreen, which was completed in mid January. In addition, we're also expecting to achieve actual cost energies for the year of $50 million, which puts us nicely down the path of achieving $100 million of run rate cost energies within 24 months of acquisition close. As of December 31st, our liquidity position consisted of $589 million of unrestricted cash and $553 million of availability under our revolving credit facility. Our debt balance at the quarter end was comprised of corporate debt of $3 billion and a non-recourse debt balance of approximately $1.5 billion. At quarter end, we had $351 million of remaining capacity in our warehouse facility, of which we had 155 million of notes available to securitize, and another $317 million of mortgage notes we anticipate being eligible following certain customary milestones, such as first payment, deeding, and recording. According to our credit metrics, at the end of Q4, the company's total net leverage on a TTM basis was 2.44 times. Again, these liquidity and leverage calculations reflect HGV legacy operations that do not contemplate the Bluegreen acquisition. We did have a very successful permanent debt financing for the Bluegreen transaction in early January, successfully placing $900 million of secured debt at six and five eighths, and an incremental term loan fee of $900 million at SOFR plus 275. We were also recommitting to our long-term leverage target of two to three times total net leverage. On a pro forma basis, not taking into consideration account any purchase account adjustments, we were just about three times levered at $12.31 on a pro forma basis. Coupled with our collateral available to securitize and expectations to realize approximately $100 million of synergies. We were very confident in returning to our target laboratory share without negatively impacting our expectations for approximately 100 million of share repurchases per quarter in 2024. Before we turn to Q&A, I'd like to note one additional item that will appear in our 10-K. First, I'm happy to say that we fully remediated the material weakness at Diamond that was detailed in our annual filing last year and referenced in our quarterly filings during 2023. Separately and unrelated to the system outage that we previously talked about, during the course of our audit this year, we identified an issue with an IT application having to do with user access that was classified as a material weakness. Just like the Diamond related material weakness from last year, this item did not impact our current or historical financial results or create the need for a statement of historical results nor did it impact our business operations in any way. We've already begun our remediation plan and we'll provide updates on the process, but we expect that we'll be able to remediate this new item during 2024. We will now turn the call over to the operator and look forward to your questions. Operator?

Thank you. We will now be conducting a question and answer session. [Operator Instructions] Our first question is from Patrick Scholes with Truist Securities. Please proceed with your question.

Great, thank you. A couple of questions here for you. With the full year guidance, how should we think about, and I apologize, I hope I didn't mention this in the remarks, how should we think about the contribution from the legacy company and then the contribution from newly acquired Bluegreen? Thank you.

Hey, Patrick, it's Dan here. So we gave a little bit of color in the prepared remarks, but just to repeat that, when we think about Bluegreen, we're looking at EBITDA guidance of roughly 150 to 160. Cost energies, we're not moving as quickly as we did with Diamond. We're operating as separate operations for a little while, but we're still making some sizable traction on that front. We've already gone through track one, if you will, from a cost energy base, which is mostly on the G&A side. And we expect to realize $50 million in the current year. So that would put, if you do the math, that would put the range for legacy HGV guidance of between a billion and a billion 25, just given those dynamics. So relatively flat from a HGV perspective, up low single digits on the Bluegreen business and then the benefit of cost energies. That all gives you a midpoint of the guidance of just under 5%, a range being between 2% and 7% growth on EBITDA.

Okay. Thank you. I have a follow-up question here. About a year or so ago, you talked about, this is pre-Bluegreen, a CapEx of around $300 million run rate for 2024 going forward. How should we think about the CapEx at this moment? Thank you.

Yes, no, that's a great question. So when it comes to capital allocation with regards to inventory in particular, we talked about a long-term run rate of between 250 and 350, that being the order of magnitude that you needed to support, $2.5 billion in contract sales. Now, what I'd remind everyone, and I think we talked about this on our last earnings call with the announcement of Bluegreen, unlike Diamond, Bluegreen was not an inventory play. From the standpoint that Diamond came with four years of excess inventory. Bluegreen had a very efficient use of their balance sheet and maintained inventory levels, very commiserate where you would expect between one and two years. So when we think about 2024, we'd actually spent a little less in inventory spend in 2023 than we originally anticipated. That's really just a function of the timing of our own construction. Unfortunately, as you can expect, these projects ebb and flow, they're not just straight line, but from an inventory spend in 2024, we would expect a little bit north of 350 about 370 from a legacy HGV side, and then there would be an incremental $100 million associated with the Bluegreen side. So you're talking about 470-ish give or take million in inventory spend for 2024. Now, just to break that down, just to break that down a little bit, on the legacy HGV side that's driven by Maui Bay Villas, which as you recall, its a series of low rise buildings in Maui, conversion of ocean tower, and also we've started construction on Kahaku, which is in a while, and that's a vertical build. And then we have one final payment for a just-in-time project in Okinawa, that's Sesoko, and that's going to happen in Q1. And I'll take care of all of our contractual payments. That and one other smaller item, takes care of all our contractual payments from a just-in-time perspective.

Okay, and just one last, if I could take it in. Going into the year, or no, I guess as of January 17th, prior to this CapEx for this year, how many years of unsold inventory do you have all in, roughly?

With Bluegreen, let me pull that number. It's multiple years, I mean, to put things in perspective, when I mentioned Diamond as being an inventory play to a certain degree, since acquisition, we've actually invested with a minor exception of some conversion costs, virtually zero dollars in any Diamond inventory. So Bluegreen brings along with it an incremental year of inventory. So I think when you think about contract sales, we would point you to our results in 2023, add roughly $800 million in contract sales for Bluegreen, and that $12 billion-ish in inventory will help you do the math there

Okay, I do have more questions, but I'm going to hop back in the queue. Thank you.

Okay, great.

Our next question is from Brandt Montour with Barclays. Please proceed with your question.

Hey, good morning, everybody. Thanks for taking my questions. So maybe on the first one for VPG, if you're looking for low-single digit growth for the year that puts you sort of squarely back in the, I'm assuming you're talking about legacy, HGV, you're just squarely back in that 110% to 115% of '19 range, which is sort of on top of what you did in the third quarter. And so I guess the question is, Mark, you gave some qualitative commentary about the soft consumer. It sounds like things haven't gotten worse from three months ago when you first started talking about this in late November. Could you just sort of bridge your comments with that guidance and tell me if I'm missing anything there?

Yes, so, Brandt, I'd say we feel really good about the business right now. I think VPG finished the year still up 11% over '19, and we talked about the system and Maui issues, so that obviously had an impact there. But just taking a step back, our goal and when we put out that soft guidance probably a couple of years ago was really to highlight that we've generated a sustainable upside to the prior peak based on the investments we've made. So, I did make a comment in my prepared remarks around the consumer. And on the margin, we do see some more hesitancy, particularly with the new buyers. And it's something that we actually started seeing in the third quarter, the second half of the third quarter, and it's persisted through the fourth quarter and into early this year. So, look, at the end of the day, I think from an execution standpoint, there's some areas for us to improve in, but clearly we are seeing a little bit more hesitancy from a buyer standpoint. Again, more on the new buyer side than on the owner side.

Okay, great, thanks for that. And then on the loan loss provisions, Dan, it looks like that $100 million is kind of right in that mid-teens range, which you've been talking about, I feel like for a year now, and we never have seen you get that high, but now you're baking it into guidance and being a little bit more forthright there. So, what are you seeing that suggests that you're going to see that step up of sort of several points here from the fourth quarter?

Well, I mean, I think it's similar to some of Mark's commentary on the macro environment. I mean, obviously interest rates, where they are associated with other avenues for spending are clearly squeezing the consumer to a certain extent. From a delinquency rate, what I would say is we did see a little bit of sequential deterioration in our portfolio, nothing overly material, but 20 basis points between both the legacy Diamond and the legacy HGV side is something that we pay attention to. Now, from an annualized default rate, we still are performing from a legacy HGV side consistent with 2019 levels. The higher end of 2019 levels in the Diamond portfolio continues to outperform significantly where they were in 2019. So, we're optimistic, but at the same time with normalization of credit trends, we're not being overly optimistic. And that's why we expect the bad debt provisioning to creep up on us in 2024.

Thanks, everyone.

Our next question is from David Kass with Jefferies. Please proceed with your question.

Hi, everyone. Thanks for taking my question. And in the release, and then, Dan, I think in your comments you mentioned, $40 million revenues in '21 of EBITDA from Maui and the third party sale center. I wonder if you could maybe break that out for us and the nature of the question is, at least for us, our fee-for-service sales were lower than what we're looking for, my sense is others too?

Yeah, so just a couple of clarifications point there, David, when we talk about the 40 million, that's a combination of the impact from Maui as well as the sales outage from a system issue. Now, the system issue with sale outage, it's one of those things that happens, one of a million event, I doubt we could even, it could repeat itself, not only with us or virtually in the other organization. It was a human error with a third party vendor that was doing a hardware update at the same time we were doing a software update. And what happened was it effectively knocked our deeded sales system offline and to bring those sales back up, it was offline for almost a week. So as Mark mentioned, we've done a lot of work to make sure that the backup system replicates on a real-time basis and that recovery would no longer take that much time, even if this very unusual event were to happen. Now, to break that down just to quantify it for you, out of the $40 million, I'd say roughly two thirds was associated with the system outage and the balance with Maui and from an EBITDA perspective, the sales system outage had a high flow through because tours were still coming to our sales centers, right? We still wanted to get in front of customers, have that interaction. So when you look at an EBITDA impact, Maui was roughly caught in the $6 to $8 million range and the balance was associated with the system outage, so right around $14 million.

Yes, David, just go up on that real quick on Maui. So our expected recovery really won't happen until we're able to build back our sales teams and Maui's kind of a tale of two different stories. The Southside and Maui Bay and Villa's continues to operate as normal. Connolly Beach, where we have the bulk of our units, we have over 400 units up there on the West side, that was near the epicenter of the worst damage and so we committed to our team members, we had most 100 team members who lost their homes up there. And so, we committed to keep a roof over their head and happy to say that 60 have found permanent housing, we still have 40 that we're housing today, but what happened is we lost a lot of our sales teams who left to other islands or to other locations, a lot of them transferring within our company and it's going to take a while to get them built back up. So this Maui impact is something that's going to continue throughout the rest of this year. It will continue -- it'll get better as we move through the year but there will be an impact that does much more lasting than the system outage which Dan alluded to was really just around a week.

Understood, that's precisely the nature of the question is one's a moment and one lingers. Thank you very much.

Sure.

Thank you. Our next question is from Chris Woronka with Deutsche Bank. Please continue with your question.

Hey guys, good morning, thanks for taking the question. Mark or Dan, I guess you guys mentioned a little bit of, you were seeing a little bit of hesitancy on the consumer front. I think you talked about that being a little bit more exogenous to the new owners. Is that comment for any specific region? Is that more about Maui or is that more of a general comment geographically?

Yes, look, when you look at it, it's really pretty much related to the U.S. mainland is where we're seeing more of the impact and it's more again with the new buyers. Our owners are -- we're in really good shape with our owner base, we've got a great base of owners and when you combine now the Bluegreen owners, we've got a strong base of recurring revenue that's coming through that part of the business. We've seen a little bit of pullback that's still above our historical levels. We're seeing most of it is around our new buyers. And I have to say, I talked about it, I just mentioned that there was, I think some execution, better execution opportunities on our side, but Dan mentioned the macro, we've got the inflationary pressures out there and rates that have moved and essentially, that's put some pressure on people's ability to deal with their essential payments. But the other side of it is we grew our tour flow last year, our new buyer tour flow by 22%. And that put a lot of pressure on our new agents, right? That's a lot to digest in a short period of time. And so, what we did is we actually, we started dialing back on a few of our lower producing channels, starting in the middle of the year, and hence we reduced the amount of new buyers coming through the system as the year went on. Our expectations is how we dial some of those back up. We're still seeing a bit of softness there, but long-term, we still believe, and as Dan alluded to earlier, we're going to grow our contract sales approximately 6% to 7%. We've probably weighted heavier toward VPG than it will be to tour flow this year. And a lot of that is due that we're lapping softer comps or so.

Okay, that is helpful. And then as you look out with the package pipeline, you mentioned, I think over 500,000 tours on the books, can you give us a sense, the cadence of that, or are we more back-enloaded? Is it more, or just trying to get sense for level of conviction and kind of what you're expecting this year on tour flow and how that relates to what you've got in the books right now?

Yes, no, we've got great visibility, and that's one of the benefits of our model of having this big pipeline. Of course, on the owner's side, arrivals on the books creates a lot of certainty in our expectations. What we see right now is what our owners are above the levels we saw last year. The new buyer pipeline is circled over half a million, then you add Bluegreen into it, and they bring another 160,000 packages. But as I mentioned, we dialed the back activations, the back half of last year, and that'll have a knock-on effect at the early part of this year, because as you wrap some of that down, it takes a while to wrap that up, so the cadence of tours will wrap up through the back half of the year, so it's definitely more back half-weighted than front half-weighted.

Okay, very helpful. Thanks, guys.

Thanks

Thank you. Our next question is from Patrick Scholes with Truist Securities. Please continue with your question.

Thank you. A follow-up question here. Mark, I'm kind of surprised you haven't talked about Japanese customer coming back. I was on the Park Hotel's conference call, and they seemed very enthusiastic about the return. I'm wondering your thoughts or what you're seeing or not seeing in that regard? Thank you.

Yes, so, look, I think when you look at our business today, the U.S. mainland is basically fully recovered from '19 from new buyers and we're well over our number and for owners on the Mainland. Now, in Hawaii, we have had a pretty good recovery of our owners coming back. In fact, I've used, and I've said this data point a number of times, our owners who are very loyal to the brand, who've made that commitment to buying in the brand and buying in the Hawaii have come back really strong, and so we're basically back to the historical levels we had in '19. Where we're trailing off is we're really still trailed off on the new buyers coming back to Hawaii, and we're still about 25% to 27% down there. Now, that's better than the market. When you look at the market, the recovery for the Japanese coming back to Hawaii is around 50% of the '19 level, and when you look at our new buyer traffic in Japan, it's still down about 25% and that's because we source a lot of tours from the international airports in Japan and while the Japanese are traveling, they're traveling mainly domestic right now. So, look, we're optimistic that the Japan business will be a strong business for us over the long term. Our expectations, though, is that we won't get back to full recovery until you get the Japanese back into Hawaii, and this is less a pandemic issue. I think that is way past this now. It's more about the weakness of the Yen, and I think right now there's just better options for them to travel elsewhere, but they'll be back and our expectations is probably, we're probably looking more into the latter part of '25, '26, than we are any time this year or early next year.

Okay. Thank you. And then just a related last question here. When we think about sort of pre-Diamond acquisition, pre-Bluegreen acquisition, Hawaii was 20 or so percent of your business. What would be sort of that comparable number if you went back to 2018 and had both acquisitions? It certainly sounds like Hawaii is less relevant as far as your overall exposure. How should we sort of think about how that percentage has decreased because of these acquisitions? I hope that makes sense. Thank you.

Yes, no, that makes sense. And actually it was a bigger percentage pre-the two M&A deals we did. So today, when you look at Hawaii, you look at Hawaii and Japan in total, it's still, it's right around 20% or just under 20%, but the Japanese part of that is about 10% of that. So the Japan part of it itself is about a 10% part of our business now. So it has come down maturely.

Okay. That should do it. Thank you.

Thanks

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mark Wang for any closing comments.

All right, well, thank you everyone for joining us today. Before I wrap up, I'd like to thank all of our team members for the hard work this year and their continued service and dedication to our owners and guests. When you think about what we've accomplished in the last 30 months, acquiring two new companies and setting the business at a whole new level with the most offerings, experiences, and partners in the industry, I'm really proud of what we've achieved together. I'd also like to offer a special welcome to our new Bluegreen team members. Welcome to the HGV family. I'm really optimistic about the future of HGV and look forward to speaking with you again next time. Thank you.