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Hello and welcome to the Travel + Leisure Q3 2023 Earnings Call and Webcast. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to turn the call over to Christopher Agnew, Investor Relations. Please go ahead sir.

Thanks, Kevin and good morning. Before we begin, we'd like to remind you that our discussions today will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements and the forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these statements. The factors that could cause actual results to differ are discussed in our SEC filings and in our earnings press release accompanying the earnings call. And you can find a reconciliation of the non-GAAP financial measures discussed in today's call in the earnings press release available on our website at travelandleisureco.com/investors. This morning Michael Brown, our President and Chief Executive Officer will provide an overview of our third quarter results and Mike Hug, our Chief Financial Officer will then provide greater detail on the quarter our balance sheet and outlook for the rest of the year. Following our prepared remarks, we will open up the call for questions. With that, I'm pleased to turn the call over to Michael Brown.

Thanks, Chris and thank you for joining us on our third quarter earnings call. This morning we reported adjusted EBITDA of $248 million, a 6% increase over the prior year and adjusted diluted earnings per share of $1.54, a 20% improvement over Q3 2022. Third quarter adjusted EBITDA margin was 25% flat compared to the prior quarter and prior year. Our team delivered solid results against key performance indicators, particularly the Vacation Ownership business. Sales volume per guest and gross VOI sales were at the top end of expectations, as well, new owner, and total tour flow increased 36% and 18% respectively year-over-year. In keeping with our commitment to grow our new owner base, the transaction mix increased nearly 200 basis points to 35% of sales. The provision for loan loss came in ahead of expectations at just over 18.5% reconfirming the improvements in owner credit quality. Regarding capital allocation, we returned $98 million to shareholders in the third quarter through a combination of dividends and share repurchases which puts us on track to reduce our outstanding shares by 10% for the full year. From the start of 2022, until the end of the most recent quarter, we have reduced our share count by 16%. Since then, we have reduced our share count by 27 million shares or 27% of shares outstanding. Let me update you on the key performance indicators we monitor to gauge the health of our consumer. Forward resort booking sales volume per guest and the performance of our consumer finance portfolio. Regarding forward bookings, Q4 owner nights on the books are 7% ahead of fourth quarter 2019 reflecting a continued strong booking pace. Total owner arrivals are ahead and length of stay is 5% above the fourth quarter of 2019. Of note, in our postpaid surveys, nearly one quarter of respondents worked remote while staying at our resorts reinforcing the work from anywhere trend that we believe is one of the factors behind longer length of stay. Turning to BPG, our third quarter BPG was $3,108 above the top end of our guidance range. On an absolute basis, BPGs are healthy and reflect the strong value proposition of our products and for the full year our outlook is improving to $3,100 to $3,150. BPG did declined $42 from the second quarter, but 90% was due to the higher new owner mix. BPG remains well above our long-term guidance range of $2700 to $3,000. In 2023, we made a strategic decision to ramp up new owner marketing channels to continue growth of new owner tours. Year-to-date, we have had success with new owner tours which have increased 35% over the same period in the prior year. Over 70% of this growth have come from open market channels or package sales. This investment positions us to achieve our long-term plan for new owner transactions to be 35% to 40% of all sales. We expect this tour pipeline to yield incremental growth over the next 12 months and grow our pipeline of future upgrade sales. Blue Thread, which is our new owner marketing channel, aligned with Wyndham Hotels continues to exceed expectations with BPGs nearly 50% higher than other new owner channels. We expect Blue Thread sales to finish the year at an all-time high over $100 million. Our third key performance indicator is our consumer finance portfolio, which performed well in the quarter. Delinquencies remained below 2019 levels and our outlook for the full year loan loss provision is unchanged at 18% to 19%. At the end of the third quarter, only 10% of our portfolio had FICO below 640. And year-to-date the average FICO score for originations is 738. All in all, our Vacation Ownership segment continues to perform well. The continued strength in our Vacation Ownership business was challenged by headwinds in the Travel and Membership segment. This segment continues to lag expectations due to lower exchange propensity and slower than anticipated ramp up of travel clubs. Accordingly, we are making structural and operational changes to reduce its cost structure, while maintaining focus on driving transactions in both exchange and travel clubs. These changes will occur prior to year end allowing us to enter 2024, more streamlined. Coming into this year, our expectation was that our exchange business would maintain the 2022 transaction propensity levels and that travel clubs would ramp up through the year. Instead we experienced a decline in exchange propensity throughout the year. To put it in perspective, or exchange propensity is nearly 20% off pre-COVID levels. Mike will provide more details in a moment, but the lower expectation at Travel and Membership in combination with 3Q coming in toward the lower end of our guidance is the reason for our full year reduction - for our reduction in full year adjusted EBITDA guidance to a range of $900 million to $915 million. As we look at next year, it is worth reflecting the Travel and Membership over the last four quarters had revenues of $716 million and adjusted EBITDA of $253 million with a healthy 35% adjusted EBITDA margin. The business has low capital requirements, strong returns in cash flow. We expect that Q4 will mark the trough in revenue momentum for Travel and Membership due to a combination of stabilizing transaction propensity trends and pricing at RCI and growth in our travel clubs. On the strategic front, we acquired the rights to the Vacation Ownership business of Sports Hospitality Ventures, the hotel and resorts licensee of the Sports Illustrated brand. Our plans including network of sports themes resorts located in popular college towns and in leisure destinations. We will be launching and managing a Vacation Ownership Club under the Sports Illustrated Resorts brand. Among the strategic goals we shared at our Investor Day with the intention to add incremental Vacation Ownership revenue streams under the Travel + Leisure brand. We are proud to launch this expansion with Sports Illustrated, the most celebrated name in sports with nearly 70 years of legendary content. Tuscaloosa, Alabama, Home of the University of Alabama has been selected as the first college destination in the Sports Illustrated Resorts portfolio and is projected to open in late 2025. Our goal is to develop Sports Illustrated Vacation Ownership inventory in a capital efficient manner. We have several addition locations - additional locations in the pipeline and more consideration after significant inbound inquiries following the Tuscaloosa announcement. We're excited by the initial representation of our strategy to add new brands to our portfolio and we look forward to sharing more with you over the coming quarters. As a reminder, it's important to remember that the prepaid nature of timeshare ownership is a key differentiator for our business model within the leisure travel industry. 80% of our owners have fully paid for their timeshare and therefore the choice to vacation is less dependent on economic conditions. As we have seen historically, our healthy mix of recurring and predictable revenues is one of the reasons we expect our business will continue to be resilient as we enter a more challenging economic environment. This resilience in demand among timeshare owners has been proven time and time again, most recently coming out of COVID. With that and for more detail on our performance, I would now like to hand the call over to Mike Hug.

Thanks, Michael and good morning, to everyone, as well as discussing our third quarter results, I will provide more color on our balance sheet and cash flow, as well as update our outlook for the remainder of the year. All my comments will be first comparisons to the same period of the prior year, unless specifically stated. We reported third quarter adjusted EBITDA of $248 million and adjusted diluted earnings per share of $1.54 increases of 6% and 20% respectively. Year-to-date, adjusted growth is 5% and adjusted EPS growth is 16%. The adjusted EBITDA growth was achieved in spite of several headwinds in the third quarter, which includes the fires in Mali, two hurricanes in Florida and up the East Coast of the US and higher than anticipated healthcare expenses. Although not individually material, they amounted to $5 million and combined to push our results to the lower end of our guidance range. Vacation Ownership reported segment revenues of $812 million, an increase of 8%, while adjusted EBITDA of $203 million also increased 8%. We delivered 187,000 tours, in the third quarter representing 18% growth and BPG was $3,108, above the top end of our expectation. The Vacation Ownership segment also incurred some incremental marketing expenses in the quarter associated with the ramp up of our tour package pipeline and opening of additional new owner marking locations, both of which are designed to benefit our tour flow in 2024 and beyond. Revenue in our Travel Membership segment was $174 million [Ph] in the quarter, compared to $183 million in the prior year. Adjusted EBITDA was $62 million, compared to $65 million in the third quarter of 2022. Exchange member count has started to recover but not enough to offset the reduction in transaction propensity. We expect the headwinds to exchange transaction propensity to continue into the fourth quarter. Turning to our balance sheet, our financial position remains strong and in the third quarter, we continue to return capital to shareholders through share repurchases and our quarterly dividend of $0.45 per share. Through the first three quarters of the year, we repurchased $267 million of common stock and paid $104 million in dividends. In October, we closed our third ABS transaction of the year, a $300 million transaction with a weighted, average coupon of 6.8% and advanced rate of 92%, continuing to demonstrate our ability to access this market on a regular basis. In addition, during the quarter, we renewed our $600 million ABS condo facility and moved the maturity date to September 2025. Adjusted free cash flow was $81 million for the nine months, compared to $195 million in the same period last year. Similar to the first six months, this is due to higher year-over-year originations on our loan portfolio, certain other working capital items and an increase in interest payments on our corporate debt. For the full year, our expectations for free cash flow conversion from adjusted EBITDA is for it to be around 50% with the majority of free cash flow generated in the fourth quarter. Our net corporate leverage ratio for covenant purposes was 3.7 times at the end of the third quarter. We continue to expect our leverage ratio to decline by the end of the year to below 3.5 times. Turning to our outlook for the rest of the year, we are reducing our expectations for full year adjusted EBITDA to range between $90 million to $915 million, a 5% to 7% increase over 2022. Our expectation for the fourth quarter is for adjusted EBITDA of between $233 million to $248 million. With respect to Vacation Ownership we remain confident on our core timeshare business and its ability to continue to deliver strong sales performance. We're increasing our outlook for gross realized sales for 2023 to range at $2.15 billion to $2.2 billion on improved BPG guidance of $3,150 to $3,150. In the Travel and Membership segment we expect fourth quarter adjusted EBITDA to be in a range of $45 to $50 million. Related to EPS, we are expecting our effective tax rate to be around 27% for the full year, with stock-based compensation expected to be around $12 million in the fourth quarter and anticipate net interest at $62 million in the fourth quarter. Looking ahead to next year, we expect the rapid rise of interest rates in ‘22 and 2023 to stabilize at elevated levels in 2024. As such, our expectation is that interest expense on our asset-backed securitizations once again, be an incremental $30 million headwind to adjusted EBITDA in 2024, similar to 2023. As we continue our 2024 planning process over the next few months, we will also revisit our longer term outlook. This will allow us to take into account the impact of the interest rate environment over the full-time horizon, slower Travel and Membership growth and the updated view of a well-performing VOI business. We'll provide more color in the first quarter of 2024. In summary, we are pleased with our third quarter performance, our continued growth in adjusted EBITDA and double-digit growth and adjusted diluted earnings per share, as well as our continuing return of capital to our shareholders. With that, Kevin, can you please open up to call to take questions?

[Operator Instructions] Our first question is coming from Joe Greff from JP Morgan. Your line is now live.

Good morning, guys.

Good morning, Jeff.

Michael, you mentioned that, you think Travel and Membership is going to trough here in the fourth quarter. What gives you that confidence in both the exchange business and travel clubs? And then, when you think about next year, do you look at next year, as a growth year or is it just the rate of change is less negative next year than what it was this year?

Well, let me start with the second one. No, we expect 2024 for the Travel and Membership segment to be a growth year for a number of different reasons. So, let me jump back to the first question is, as we came into 2023, we expected exchange propensity to reflect pre-COVID levels. 2022 was a revenge travel year and I think what the trends we saw in 2022 mask a little bit of what was happening in exchange propensity. VOI was super strong and exchange propensity was similar to pre-COVID levels as travel normalized in 2023, the unmasking of post-COVID travel trends in VOI and COVID and exchange really came forward. The first two quarters, propensity was slightly down and I had expected the second half of this year for a rebound in recovery and that propensity rate to pre-COVID levels because that's what we saw throughout leisure travel. Instead what we saw is more and more of owners within the timeshare industry were returning to their home resorts, it's no different within the Wyndham Travel Club. And as the year progressed, instead of getting that rebound at I had forecasted that we had forecasted, it continued to dip as I mentioned to a level that was around 20% below pre-COVID levels. So what gives us confidence that we think Q4 is going to trough. Number one is, we have seen a stabilization in that propensity over the last few months. So we think we have a good anchor as what the true propensity is once the revenge travel. And once we've made our way through 2023 is. You've heard us refer to the fact that membership dropped about $0.5 million in RCI through COVID period and finally the membership is beginning to grow again, and that is absolutely happening. And then, lastly, as we head into 2024, when the Travel Club side, although our transactions are flat to last year that's taken into account the loss of one of our major clients. So, absent at last, we're actually seeing growth in our travel clubs and we will start the lap that in the second quarter of next year. So, I know that's a long answer to a lot what's happening. But I in the in the end, we absolutely expect through a number of the actions A, we are taking in Q4, but also with the clear visibility of what the travel trends and should return Travel and Membership will return Travel and Membership to a growth profile in 2024.

Thank you for that. And then, you also mentioned that you're reducing cost in some of these business. Can you help quantify that and how much of that is revenue dependent versus fixed cost coming out.

Well, we are, as I mentioned, going to be going through that here in Q4 to make sure that our overall cost structure aligns to the revised forecast. You would expect that and instead of being reactive to it, we've already proactively begun to look at the realities of our revenue forecast this year and make sure that our cost structure is reflected to it. We'll give you an update a bit more later in the quarter. But, as is the case with we will adjust to the realities of our revenue forecast.

Great. Thank you very much, guys.

Thanks Joe.

Thank you. Next question is coming from David Katz from Jefferies. Your line is now live.

Hi, good morning everyone. Thanks for taking my question. I wanted to just focus for a minute on the SI deal.

Yes.

And those of us that are huge sports fans, see the opportunity out there as potentially very, very large. But maybe you could help us just set our expectations as to how big an opportunity this could really be. And what your vision for it is?

Well, thanks for the question, David. And let me just - since this is the first quarter we've been on a call, let me take a little bit of time with this answer on a number of different subjects. First of all, the overall model looks very similar to the Vacation Ownership model that we currently have with Wyndham targeting similar margins and returns as this business grows three primary revenue streams, the sale of Vacation Ownership, the operations of resorts and the club, and as well the financing income streams. The difference from the outset is as today we talked about 35% to 40% new owners on an annual basis with Wyndham in the first year it's a 100% new owners into our system. And we're excited about the opportunity because the timeshare model used to be the two things you have to secure our new tours and new inventory. Over the last decade, securing inventory has not have not been anyone's issue because people appreciate the model and want to developments with timeshare companies. It's all about growing your addressable market, and the reputation of Sports Illustrated, the reach that it has in a number of different ways, not just data, social media but also passion. There's probably not a more passionate lifestyle in America than in college sports. We’re excited when we signed the deal with Sports Illustrated the day after the announcement, we became even more excited with the outreach that we received from universities around the United States wanting us to be part of their infrastructure. So for us, it's really clear is that we mentioned we'll be announcing over the next few months additional locations. We're excited about the partnership with the Sports Illustrated team. But we're probably most excited about the additional reach that this gives us to reach new timeshare owners. When you look at the US population today, there is around 10 million timeshare owners for over a hundred million households. It's safe to say that college sports will allow us to reach a lot more than that 10 million household base. And we're looking forward to get started as I've mentioned, the one in Alabama will open in later in 2025. But needless to say, we have a lot of work going on to get that up and running and eventually in the pre-sales.

All right. Now, the follow-up question I wanted to ask is, when we think about the Blue Thread which you commented is running ahead of expectations and I think your commentary was exactly the same as it was a quarter ago. One of the question is it is that accelerating? But the meat of the topic is, is really what is it that drives that? Is it just a function of getting integrated? Or is larger scale something that could drive that more? And, for obvious reasons that’s a topic that's hit our brains over the past couple of months?

So, just to clarify, when you say larger scale, Blue Thread is accelerating because with anything it comes down to relationships and maximizing them and our team tie in closely into the Wyndham Hotel team has allowed us to really accelerate the strength in the performance of the Blue Thread initiative. We've continued to invest into this space, not only through our call center operations, but also outside of Blue Thread and starting to lean heavier into forward-looking package sales. So, yes, scale matters. Data matters. And the Wyndham Hotel team has done a great job growing Wyndham rewards and that's benefited us. It's benefited them and ultimately the more Wyndham Hotels grows its Wyndham reward programs, the more opportunity we have in the Blue Thread space.

Okay. Fair enough. Thanks.

Thank you. Next question is coming from Dany Asad from Bank of America. Your line is now live.

Hi, good morning, everybody. Just to start off for that guidance cut for this year. Can we just walk through the buckets? Like the different component of like, what changed from last quarter?

Yeah, good morning, Dany. Thanks for the question. This is Mike Hug. It's really a pretty simple walk. First of all, I touched on in my comments the fact that the third quarter was the impacted by a few things that were individually immaterial, but it totaled up to $5 million, that being the fires at Hawaii, the hurricane in Florida, and the East Coast and some higher healthcare expenses. So, to get from the previous guidance to the current guidance, you have about $5 million there. And the in remainder about $15 million is really due to the reduction that we have in the Travel and Membership business forecasted for the fourth quarter. So, pretty easy walk down and really driven by the reduced revenue forecast on Travel and Membership.

Got it, okay. That's super helpful. And then, when if we look at this year as a whole and then we turn to ‘24 and ’25, can you just really walk us through like the puts and takes of kind of where free cash flow conversion from EBITDA can go kind of what drives from one year to the next compared to from this year?

Yeah, I think the big drivers are going to be, our continued securitzation activity what we're experiencing this year and the reason that cash flow is weighted to the fourth quarter is, build up in the receivable portfolio throughout the summer. As you guys know the busiest time of the year we start to get that in the ABS transactions and into our conduit in the fourth quarter. That's why the cash flow this year is like always is weighed towards the fourth quarter. On a long-term basis, the two big drivers are going to be that continued ABS market available to us and then our inventory spend. And we've talked about inventory spend remaining below a $100 million for several years into the future as we have four years of inventory on the balance sheet. And the other thing about Sports Illustrated is we do expect to reserve that inventory in a capital efficient model. So, the investment will need to make Sports Illustrated from an inventory perspective shouldn't significantly impact our free cash flow conversion. But it's really the ABS market, which remains strong to us. As you saw we've got the transactions done in October and then, us being smart keeping our inventory spending below $100 million.

Got it. Thank you very much.

Sure. Thank you.

Thank you. Next question is coming from Brandt Montour from Barclays. Your line is now live.

Hey, good morning everybody. Thanks for taking my question. Mike Hug, maybe you could just, we could dive back into that, that tree cash flow question a little bit deeper. I'm curious on the 50% free cash flow conversion commentary I think is little bit lower than what we were expecting before. So what are the dynamics that could change that? I know obviously, there's a guide down on the Travel and Membership side and that's probably a better sort of free cash flow business especially if you're growing VOI and lending more as a percentage of mix. But maybe you just talk through the dynamics of what led to that conversion guide down.

You are exactly, right as far as the free cash flow generation conversion from the Travel and Membership business is very strong. And one of the reasons we continue to like the business is the great margins and free cash flow generation. But that's one of the drivers as it relates to the 50% as opposed to the range we previously talked about. And then as I mentioned in the previous answer, as we continue to grow the portfolio, there is definitely timing in terms of - if you think about sales in the second half of the year, we're able to get that into the those receivables into the ABS conduit, most of them not all. And then obviously in the first quarter of next year and then we do the second deal get them into the term transactions that are at a 90 plus percent advanced rate. So, in my mind, it's primarily timing as far as the growth and receivable portfolio. The one headwind we continue to have is on the corporate interest expense, right? That's obviously not timing. That's permanent. So, with what's happening with the interest rates compared to the model we have from the Investor Day, we are seeing higher interest expense, but, most of it's just going to be the way we manage the portfolio and getting that into the ABS securitizations.

Okay, great. And then, my follow-up is related to something happening and away from you guys. The hostel or the sort of proposal from choice to acquire Wyndham, the - your licensor of your brand for Blue Thread, when you look at your license contract with Wyndham, what are the stipulations within that the documents? What would happen if this transaction was to go forward to your agreement?

Yeah, without going through the whole legal document, basically, any M&A would have no negative impact. Our agreements really do protect what we need to continue growing our successful and very valuable relationship with Wyndham Hotels.

Okay. So Wyndham Hotels became Wyndham brands by choice or something like that. You would sort of grandfather and you are - you would still have access to that database?

Right.

Okay. Thank you very much.

Thank you.

Thank you. Next question is from Patrick Scholes from Truist Securities. Your line is now live.

Hi, good morning, Michael and Mike.

Good morning, Patrick.

A follow up - follow up question on the hypothetical combination of choice plus Wyndham, it sounds like there wouldn't be any downside, but could there be potential upside from that certainly Choice as a massive guest reward system and I believe their primary color is yellow. So would it be the Blue Thread plus the potentially plus the yellow thread at that point? Or would you just be, or would you be just limited to the legacy Wyndham Hotels?

Well, let me comment a bit more broadly because I'm not a party to those discussions. What I would say is something very similar to what I said to David earlier is that the key to growing Vacation Ownership in general is to gain more and more access to new customers and create partnerships that allow you to open up your marketing universe, not being party to any of those discussions. If that were the case, then that's beneficial. But whether it was that question or one related to any partnership, the key to growth in this space is marketing and data and new customer opportunities. So, my answer broadly is anytime that occurs in the Vacation Ownership space, it has possibilities to be a positive to our BO business and…

Okay, okay. So fair to think that you would, fair to think you would hope that you get access to it. But again, no guarantees and certainly there's blue green in their existing contracts. So a lot of devil in the details possibly to be worked out here. And then, taking a step back, just Michael, on sort of the high level macro question, your average household income is I recall 90 for a Vacation Ownership buyer, $90,000 to $100,000. Any discernable changes in propensity of that customer to purchase or use your products that you've noticed? Thank you.

Yeah. And I really appreciate that question because in a quarter like this, I think it's really important to reground ourselves on what's happening in our business. And we raised our credit quality throughout COVID. Our FICO score of 738 matches anyone in the industry. The portfolio which I'm going to ask Mike to speak about in just a second is performing extremely well. And it's very important in my opinion to take away from this quarter on the Vacation Ownership business. BPGs are strong at or above the high end of our range. We raised our guidance. Our portfolio remains strong and our forward bookings are ahead of last year. The core, the primary driver of our business for our consumer is continuing to perform consistently well, and is not showing signs of weakness. Our household income is actually around $100,000 now, and I don't want the noise of the quarter related to our overall guidance to distract from the foundation of our overall travel leisure business, which is an extremely consistent and well-performing VO business. That did not in Q3 shows signs of change in its performance or its metrics. And as we sit here, almost through the month of October, nothing that's happened in the first three weeks of October would indicate that that commentary has changed.

And then, just touching on the portfolio a little more, first of all, a few things. We talked about the provision our guidance for the quarter was over 19% and it came under 19%, which I think once again, shows a good performance on the portfolio. You'll notice delinquencies moved out in Q2 to Q3, but that's always the case.

What was positive about that, in my opinion is, if you look at the movement from Q2 to Q3, as far as increase, there was a lot of increase we've seen since 2016 except for in 2021 when the portfolio wasn't growing. So, when you look at that increase, it's a very magical increase one that was actually better than we expected. And then finally, I always appreciate the securitization is done because we'd love the free cash flow it generates, but just as importantly for me, it's a proof that others also believe in the confidence of the portfolio, because in essence that's what they're purchasing with the – they purchase with the ABS transaction. So, overall couldn’t be happier with the portfolio performance and, the big move to move from 600 to 640. And most importantly sticking with that move when a lot of other industries had dropped down to below 640 even subprime if you will that really has allowed us to have confidence in our portfolio and see the results that we're seeing throughout this year's harsh performance.

Okay. Thank you. Very thorough answer.

Sure. Thank you.

Thank you. Next question today is coming from Chris Woronka from Deutsche Bank. Your line is now live.

Hey, good morning guys. Thanks for all the details so far. I guess, the first one for you is, Michael, I think you mentioned in the prepared comments that you that stimulate these new owner tours you're going back to some of these open market channels and package sales. And I wonder if you can kind of maybe compare and contrast, I know in the past though those we're not always the best and they weren’t always the most efficient or cost effective. Can you talk about why some of them might be better today than they've been historically?

Yeah, absolutely. And we have we have stepped back into locations that we can ensure profitability in those channels. We've been very selective when your FICO band starts at 640. You need to make sure that your open market channels are performing from really day one. But also, some commentary we didn't want to get too far into it today. But there is, there is a investment that we are making into our overall package pipeline. Wyndham has traditionally been in on the week tour generator and we will remain that. It is one of the distinguishing key characteristics of our marketing model in the space. But that doesn’t prevent us from starting to lean in more toward a little bit more to create diversification on a package pipeline that gives us visibility as well, 12 to 18 to 18 months out. So it's really being selective and what we're going into on the open marketing and starting to diversify and create incremental to workflow opportunity through the investment in our, in our package pipeline. And we've already seen early signs of success in doing exactly that.

Okay. Very helpful think. Thanks, Michael. And then, just so I'm not going to ask you for ‘24 guidance and you've already shared with us the headwind on interest. And I guess though the question is, and there's a lot of puts and takes obviously that'll impact, what happens. But it's if we kind of revisit just the free cash flow generation. I mean, whatever somebody might come up with for an EBITDA estimate, you’ve said, inventory is below, spend is going to continue to be below $100 million per year. I mean, is there any reason why the free cash flow conversion wouldn't be at least where it is this year, if not higher. I guess what I'm asking is, is there any - anything in your, you know, current thinking in terms of a placeholder for an acquisition or anything like that?

Well, I think when we think about free cash flow conversion and acquisition would be outside the free conversion. Obviously that's the decision we make as far as capital allocation right, dividends, M&A and share buybacks. But overall from a free cash flow perspective, yeah, I would expect that as we move forward, we're back north of the 50% kind of 55% range, maybe even higher. So everything except for the increase in the corporate interest expense, everything else on that walk across this timing, right, if you think about the receivables portfolio. If you think about the favorability, in the inventory spend. So - and with our cost of sales coming in lower this year very, very nice cost of sales performance due to the price increases. The inventory we have in the balance sheet is even going to last longer than we expected kind of when we came out with the model of ‘21. So, long term, I would say no change in the view to the free cash flow conversion being, 55% plus.

Okay. Very good. Thanks guys.

Sure. Thank you.

Thank you. [Operator Instructions] Our next question is coming from Ian

Hey, good morning. This is Isaac Sellhausen on for Ian. Thanks for taking the question. I just have two quick ones. On the VO business, could you just touch on tour flow, and expectations for that for the remainder of the year? I guess, should that still be in sort of the double-digit range? And then secondly, for the acquisition of the Sports Illustrated rights that you guys announced earlier without large capital commitment or is that something you guys have disclosed? Thanks.

Let me, let me touch on the tour flow and then I'll hand it to Mike on this Sports Illustrated acquisition. Yes the tour flow expectations will be both double-digit growth for Q4 and for the full year the higher teens. So that our tour plus strength continues into the Q4 and obviously reflected in our full year number.

And then on the acquisition of the Sports Illustrated brand, we haven't disclosed that number, but what I would say is, half of it is inventory or land that we purchased in Tuscaloosa to start the development now. As I also mentioned going forward, we will find a partner that will do the develop for us. So don't expect additional cash flow drag because of that. But overall, most of the acquisition cost that we paid is cash out the door that will be recovered as we sell the products.

Okay, great. Thank you very much, guys.

Thank you.

Thank you. We reached the end of our question and answer session. I’d like to turn the floor back over for any further or closing comments.

Thank you Kevin. We were pleased with the third quarter and in particular at the performance of our core Vacation Ownership metrics. We also executed on the first of what we expect will be several deals to grow our brand portfolio with the announcement of the Sports Illustrator Resorts portfolio. I would like to take a moment and thank our partners on that deal, Sports Hospitality Ventures, The Eastern Band of the Cherokees and Authentic Brands. I also want to thank all of our associates who are working hard to deliver great vacations for our owners and guests. Thanks everyone and have a great day.