TNL - NYSE

Greetings, and welcome to the Travel + Leisure Co. Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Andrew Burns, Vice President, Investor Relations. Thank you. You may begin. Thank you, Shimali.

Good morning, everyone. Before we begin, I would like to remind you that our discussion 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 our press release accompanying this earnings call. You can find a reconciliation of the non-GAAP financial measures discussed in today’s call in the earnings press release available on our Investor Relations website. Please note that all references to EBITDA, diluted earnings per share, free cash flow, and return on invested capital made during this call are on an adjusted basis as disclosed in our earnings press release. This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of our results and longer-term growth strategy. And then Erik Hoag, our Chief Financial Officer, will provide greater detail on our results, capital allocation strategy, and outlook for 2026. Following our prepared remarks, we will open the call up for questions. Finally, all comparisons today are to the same period of the prior year unless specifically stated. With that, I will turn the call over to Michael Brown. Good morning, and thank you for joining us. 2025 was an outstanding year for Travel + Leisure Co.

Our results reflect sustained momentum in our core vacation ownership business and repeatable execution across the enterprise. Our fourth quarter adjusted EBITDA exceeded the full year outlook which we raised in Q3. 2025 was an excellent year, and we are off to a strong start in 2026. So I want to thank our associates across Travel + Leisure Co. for their hard work and dedication, which drives our success. In addition to strong financial performance during the year, we advanced our brand expansion strategy, activated new partnerships, and continued to invest in our digital roadmap. These initiatives strengthen the foundation of the business and position us for long-term profitable growth. At the center of our strategy is a clear focus on delivering exceptional vacation experiences for our owners and members. What differentiates Travel + Leisure Co. is that we convert owner engagement into recurring demand, predictable cash flow, and consistent capital return. We manage the model end to end to deliver shareholder value that compounds over time. Since the 2018 spin, we have returned over $2.9 billion to shareholders, reduced our share count by roughly one-third, and grown the dividend by more than 35%. As we enter 2026, leisure demand remains strong. We have momentum in our vacation ownership business and clear line of sight to another year of growth and shareholder value creation. At the same time, we are advancing our brand expansion strategy and strategically optimizing our resort portfolio, building the foundation for sustainable, profitable growth that extends far beyond this year. In 2025, we generated 4% revenue growth and 7% EBITDA growth. Revenue growth combined with EBITDA margin improvement and our shareholder-friendly capital allocation approach fueled compounding growth across the P&L. We returned $449 million to shareholders through dividends and share repurchases, reflecting our ongoing commitment to disciplined capital allocation. These results underscore the strength and resilience of our operating model. 2025 financial performance was led by our vacation ownership business, which is built around a large, loyal owner base with highly recurring demand. Performance is driven less by short-term travel trends and more by these long-term owner relationships and our intentional approach to operating the business. For the year, strong sales and marketing execution drove 8% gross vacation ownership sales growth. VPG was up 6%, above the high end of our guidance range, and tour flow growth steadily improved throughout the year, including 5% growth in the fourth quarter. Q4 represented our fastest year-over-year tour growth in 2025. In our Travel and Membership segment, we delivered $228 million of EBITDA for the year, demonstrating the profitability and cash-generating strengths of the business. We remain focused on very tight cost management as we actively mitigate the impact of exchange headwinds. Travel and Membership continues to be an important part of the portfolio, and we are evaluating every opportunity to enhance its performance and create value for shareholders. In 2025, we made meaningful progress advancing our multi-brand strategy, announcing four new resorts across our emerging brands. Margaritaville and Accor continued to deliver solid growth, and we began sales at both Eddie Bauer Adventure Club and Sports Illustrated Resorts. Early consumer response has been very encouraging; we are focused on scaling these brands in 2026. For consumers, leisure travel has increasingly become an expression of their lifestyle. Our diversified brand portfolio allows us to reach new, distinct travel segments. This multi-brand strategy broadens our addressable market and enhances our long-term growth potential. When combined with Club Wyndham and WorldMark, we have a powerful engine to sustain vacation ownership growth, balancing existing owner upgrades and new owner sales. Another area of focus for us is enhancing the owner experience. We know that delivering outstanding vacations directly drives owner retention and greater lifetime customer value. The more frequently our owners vacation with us, the more likely they are to upgrade. On average, owners purchase 2.6 times their initial purchase over the first ten years. That dynamic is central to our model, driving predictable revenue and cash flow. To support this, we are investing in technology that makes the experience more seamless end to end, from discovering a vacation to booking travel and on-site activities. In 2025, we made progress on our digital roadmap with the launches of the Club Wyndham and WorldMark apps and launch of our new AI Concierge service. Beyond digital investments, we are focused on deepening owner engagement through special events and experiential offerings. Our partnerships with Live Nation and Authentic Brands expand our ability to deliver highly differentiated, memorable experiences for our owners. Looking ahead to 2026, we are focused on continuing to advance these initiatives, further enhancing our digital capabilities and scaling new partnerships. In our vacation ownership business, we have consistently been an innovator of the product and in running our timeshare business for the good of our owners and the enterprise. This includes everything from being among the first to adopt a points-based product in the 1990s to recently launching new and innovative brand resorts and experiences. We are constantly modernizing our owner offerings while seeking better and more efficient ways to grow the business. Last year, we embarked on our latest initiative which we refer to as the Resort Optimization Initiative. A handful of our resorts have aged and are consistently at the lower end of our demand scale. As such, we will be removing those resorts from our system, similar to what hotel brands do year after year, and replace them with higher demand, less seasonal, and newer resorts and resort locations. In fact, once we net these reductions against our additions, we will have grown our resort portfolio by over 30 resorts in the last three years. We believe this will be a win for our owners as they have demonstrated their resounding support through the individual HOA votes. As noted in our release, this has resulted in a 2025 balance sheet impact and related one-time charges. Going forward, it will drive a full year 2026 positive EBITDA benefit. Erik will walk through the mechanics and how it impacts our financial performance and outlook. Ultimately, this is an innovative way to strengthen our resort system for our owner base while improving the financial health of Travel + Leisure Co. and our club HOAs. Turning to the outlook, while the first quarter is still in progress, early trends are consistent with our expectations, and we are seeing momentum carry forward across demand, tour flow, and execution. We have started 2026 with strong visibility into the key drivers of our results, and we are well positioned to deliver another year of revenue growth, EBITDA margin expansion, and robust free cash flow. All in, we expect EBITDA in the range of $1.03 billion to $1.055 billion, reflecting 4% to 7% year-over-year growth. I will now turn the call over to Erik to further elaborate on our results, capital allocation framework, and outlook. Erik?

I will frame my comments in three parts.

How the business performed, how we ran it, and how that performance translates into capital allocation as we look ahead.

Starting with performance, the fourth quarter marked a strong close to 2025 with revenue of $1,026,000,000, EBITDA of $272,000,000, and EPS of $1.83. EBITDA grew 8% year over year with margin expansion reflecting operating leverage that built over the course of the year and became more evident in the fourth quarter. These results reflect deliberate and proactive choices we made across pricing, mix, underwriting, and capital. Turning to the Vacation Ownership segment.

The core engine of the business continued to perform at a high level. For the quarter, gross VOI sales rose 8% year over year driven by accelerating tour flow growth of 5%, the strongest level of the year, reflecting sustained consumer demand and strong marketing performance. Volume per guest finished above the high end of our expectations at $3,359, reflecting consistent sales execution and disciplined yield management across channels. Segment EBITDA was $252,000,000 with margins expanding year over year as operating leverage and inventory efficiency improved. Credit performance remained stable with delinquencies and defaults holding within a tight range consistent with our expectations. Our provision rate was 19.3% in the quarter, with a full year provision rate of 20.7%, slightly better than our 21% guidance. New originations remained high quality, with weighted average FICO scores above 740 and average down payments trending above 20%. Those originations, combined with actions we are taking around early owner engagement and collections efficiency, give us confidence the loan loss provision will be lower in 2026 than in 2025. Turning to the Travel and Membership segment. Fourth quarter revenue was $148,000,000, down 6% year over year, while EBITDA was $47,000,000, down 10%, reflecting ongoing exchange headwinds. We continue to take targeted cost actions to align the expense base with the current revenue profile and maximize profitability. Stepping back and looking at the full year, we delivered revenue of $4,020,000,000, EBITDA of $990,000,000, EPS of $6.34, and free cash flow of $516,000,000. These results are compounded: revenue up 4%, EBITDA up 7%, EPS up 10%, and free cash flow up 16%. That progression reflects operating leverage in the model and return-based capital allocation with buybacks amplifying per-share growth. Relative to the initial full-year guidance we provided at the start of 2025, we finished at the high end of our gross VOI sales range, above the high end of our VPG range, and above the high end of our EBITDA range. For the full year, we converted 52% of EBITDA into free cash flow, right in line with how this business is designed to perform over time. On a GAAP basis, cash flow from operating activities grew year over year, reinforcing that the earnings growth we delivered in 2025 translated into real cash generation. Our return on invested capital remains above 20%, reflecting both the quality of the business and the discipline with which we deploy capital. That is the model at work. Operational execution drives cash, cash funds capital return, and capital return compounds value. We exited the year with leverage under 3.1 times, reinforcing the balance sheet strength that supports consistent capital return while preserving flexibility. During the year, we returned $449,000,000 to shareholders through a combination of dividends and share repurchases. We repurchased $300,000,000 of stock, reducing our share count by approximately 6%, and we paid $149,000,000 in dividends. Together, these actions increased per-share value while maintaining balance sheet flexibility. Reflecting that confidence, our Board approved a new $750,000,000 share repurchase authorization, which we view as one of the highest return uses of capital at current valuations. We also intend to recommend to our Board a first quarter 2026 dividend of $0.60 per share. Looking ahead to 2026, our capital allocation priorities remain unchanged. Our top priority is investing in the core business to drive organic growth while returning meaningful capital to shareholders through dividends and share repurchases. We also pursue opportunistic M&A when returns are compelling and clearly expected to be superior to buying back our own shares. Given the strength of our balance sheet and consistency of free cash flow, we expect share repurchases to remain the primary use of excess capital alongside a growing dividend. This approach preserves flexibility across cycles. As Michael referenced earlier, we have identified a select group of resorts to close. This resulted in a non-cash inventory write down and impairment of $216,000,000 in 2025. From a P&L perspective, there are three main components to keep in mind as you model the impact of these actions in 2026. I will run through some of the high-level estimates to help you better understand the mechanics. First, the impact of sales office closures will reduce VOI sales by approximately $100,000,000, and, assuming a 35% flow-through, this creates a $35,000,000 EBITDA headwind. Second, fewer resorts in the system will reduce management fees by approximately $20,000,000. Assuming a 75% flow-through, this creates a $15,000,000 headwind to EBITDA. Taken together, this creates a $120,000,000 revenue headwind and a $50,000,000 drag to EBITDA. The third component is lower inventory carry costs, which results in roughly $70,000,000 of expense savings. All in, lower expenses more than offset the impact of lower revenue, resulting in a $20,000,000 net EBITDA benefit. I used specific numbers for this example to illustrate the mechanics, but there are several variables and a range of outcomes to consider. Based on our best estimates as of today, we expect this initiative to provide a net EBITDA benefit in the range of $15,000,000 to $25,000,000, which is included in our outlook. Importantly, this is not a demand story. It is a deliberate portfolio action that improves the cost and capital intensity of the system while leaving the core engine intact. This is how we actively manage the portfolio, exiting lower-return assets, redeploying capital to higher-return opportunities, and improving returns and cash flow over time. Turning to the outlook for 2026. We expect gross VOI sales to increase 1% to 5% year over year to a range of $2,500,000,000 to $2,600,000,000. Absent the impact of sales office closures, underlying VOI growth would have been 5% to 9%, reflecting continued strength in tour flow, pricing, and close rates. For the full year, we expect volume per guest to be in the range of $3,175 to $3,275, modestly lower year over year, reflecting a deliberate mix shift towards new owners over the course of the year. EBITDA is expected to be in the range of $1,030,000,000 to $1,055,000,000, representing mid-single-digit growth year over year. The midpoint of this range reflects our base execution plan for the year and the positive net impact of the resort optimization initiative. We expect year-over-year EPS growth to be in the teens, supported by EBITDA growth, lower interest expense, and share repurchases. As you update your models, a few guardrails may be helpful. We expect depreciation and amortization to be modestly higher in 2026, reflecting our ongoing investments in technology and digital platforms. We expect our adjusted tax rate to be broadly consistent with 2025, and we expect to convert roughly half of our EBITDA into free cash flow.

Stepping back, the guide reflects a profile where we believe downside is well contained while upside is asymmetric and driven by execution. It also reflects our conviction that we can deliver mid-single-digit EBITDA growth and teens EPS growth while investing in our brand expansion strategy and navigating Travel and Membership headwinds. For the first quarter, we expect gross VOI sales to be in the range of $520,000,000 to $540,000,000 and EBITDA in the range of $210,000,000 to $220,000,000. We expect volume per guest in the first quarter to be in the range of $3,200 to $3,250.

To close, the business is performing the way it is designed to perform. The results we are delivering are the outcomes of clear priorities, intentional trade-offs, and a capital allocation approach designed to compound value over time. Emily, we can now open the line for questions. Thank you. We will now open for questions.

You may press star 2 to remove yourself from the queue. It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Stephen Grambling with Morgan Stanley. Please proceed with your question.

Hey, thank you. Just wanted to start off on the

optimization initiative and just maybe help us think longer term about maybe the moving parts around the EBITDA or free cash flow contribution from effectively the club management business as we think about maybe clubs coming out, new clubs coming in, and price within that?

So, good morning, Stephen. I would first of all consider 2025 as the effort we put into the resort as a catch-up year. If you think about our strategy, coming out of COVID, it was all about creating efficiency in our models, starting with marketing and now moving over to the resort portfolio system that we have. We use the three-year comparative because that is when we really started to come out of COVID and prepare our P&L and our overall operation to be highly efficient. So as we go forward, I would expect the following years to return to your normal cadence of VOI growth, resort management growth. Overall, resort system on a net basis is going to continue to grow as we add new brands to our overall portfolio system, and maybe going forward we are talking one to two resorts, just normal maintenance, as opposed to a catch-up year, which we had in 2025.

That is helpful. And then one other follow-up. There are a bunch of balls in the air between the initiative and then some of the new brand launches. As we think about the trajectory of owners, do you think that we will get to a point where net owner growth could actually kind of flatline and maybe even grow as we look into 2026 or 2027?

Yes. That is our full intention. Part of creating a more efficient resort system, a more efficient sales and marketing organization, and supporting the type of growth and launching these initiatives allows us to start to bend that curve back north. I do not think it is going to be too long before we start seeing a northern trajectory on our owner count for two reasons. Number one is all the initiatives we have in our core brands, Club Wyndham and WorldMark, related to our partnerships. But additional to that is as we launch these new brands, you are going to see a higher mix, especially in the Sports Illustrated Resorts, on the new owner component versus a Club Wyndham where we have been in the business for four decades, where you have got long-tenured owners, a huge owner base, and therefore the relative new owner to owner growth is a lot tougher. It is one of the benefits that we are going to see as we get these new brands going. But it is our full intention. I do not think it is going to be over the long term, but over the midterm, where that owner count begins growing again in the northern trajectory on a consistent basis.

Great. Thank you.

Thank you. Our next question comes from the line of Patrick Scholes with Scholes Security. Proceed with your question.

Hi. Good morning.

Everyone. Morning, Patrick. Good morning. Just from a high level,

talk about

just how you see your consumer doing right now? Certainly, a very bifurcated world out there between the highs and the lower-end financial demographics, but give us your latest thoughts on specifically your consumer. Thank you.

The short answer, Patrick, is really no change to what we saw in 2025: continued strong demand both for their vacations and for their purchases. The why, I think, is a little more important. The continued performance is partly due to the changes we made that I referenced in Stephen’s, really focusing on the continued quality of our consumer from a demographic standpoint. Our household income has moved up well above $100,000. Our average FICOs has moved from the 720s to over the 740s over the last few years. But I also think it is reinforced by the quality and value and consistency that people see in the vacations. You know, the macro conversation is all about affordability in a K-shaped economy. But when 80% of your owner base made their purchase and are vacationing for pre-inflationary prices, it is very easy to see the value combined with the fact that you are inside of a condominium that is, you know, 800 square feet, 1,200 square feet. And that value really plays out. You know, someone said to me recently that there is something very special about a vacation when you are not in a hotel room and you do not have to go to bed at the same time as your kid. You know, it just really elevates the vacation experience. And when you do that, when you have paid 2020 dollars or 2018 or 2015 dollars, which is 80% of our owners, people see the value in the quality and the experience at a much more elevated level. And that has played through our performance. And I would add maybe one final forward-looking statistic that reinforces that our Q1 arrivals are above what they were in 2025, and we are getting early indications that Q2 is on a really good path as well.

Okay. Thank you. And then just a follow-up question for

Erik, I believe, and this is related to consumer performance. I think in the prepared remarks, you said you expected loan loss provision for this year to be down, if I got that correctly. When you are thinking down, is that like 100 basis points from the 21% that you did in 2025? And then related to that, you did drop 100 basis points year over year in the fourth quarter. Talk a little bit about what the dynamics for that 4Q were. Thank you.

Yeah. Thanks, Connor.

Yep. Thanks, Patrick. Couple of things. So we ended the fourth quarter with a loan loss provision of 19.3%, yes, down roughly 110 basis points year over year. It was the only quarter that we were down year over year during 2025 and we finished the full year at 20.7%, which is better than what Michael and I have been talking about for the last several quarters at roughly 21%. So as I think about 2026, Patrick, I would guide you towards 20%, down year over year roughly. You know, we saw larger down payments in the fourth quarter, which is the predominant driver for the more favorable loan loss provision, and I think that we have got real comfort and conviction that we will be down year over year.

Okay, thank you.

Will hop back in the queue. Thank you.

Thank you.

Our next question comes from the line of Ben Chaiken with Mizuho. Proceed with your question.

Hey, good morning. Thanks for taking my question. Would love to touch on the strategic review. Of the 17 assets, what were the occupancies of these? Clearly, they were below average, but maybe how sold or unsold were they in broad strokes, to the extent you can share? And then maybe what is the swing factor between the $15 million and the $25 million? Simply how well you can reallocate those sales to other sales centers? And then one follow-up. Thanks.

So, Ben, let me hit the—it is 17 in 12 locations. Significant amount of unsold inventory at those resorts, and occupancies well below 50%. And if you think about the resorts that we focused on, average age 40 years, primarily in the Northeast, and if you could think about those assets, highly seasonal, lots of wear and tear, lots of pressure that starts to get put on HOAs that the entire club has to bear. So when we talk about this as a positive for the overall club HOAs, it reduces a lot of burden on what could occur as assets age to 45 and 50 years. Additionally, let me use this as an anecdote. In Branson, we have over 600 units. So is the demand for unit 600, 650 as valuable to our owner base as the first 50 units, or 60 units we will put in a place like Chicago where we have no assets today? And as we evaluated, we looked at the age, we looked at that lower demand, the lower sales level, many with fixed weeks, and then started to think where would our owners prefer to go, and the decision became obvious that let us get them to newer builds, higher-demand destinations, and less seasonal. And, you know, the HOAs were very much a part of it and had obviously a clear vote because they run the individual HOAs, our owners. So that was our thinking about it. And just your second question, Ben, I apologize. I think you just explained your question on the

between the

what did you mean, the delta between fifteen and twenty-five?

I believe you said that the EBITDA contribution, if I caught you correctly originally, I think you said EBITDA contribution for the year was going to be some tailwind of $15,000,000 to $25,000,000. And so I am asking about the swing factor, which is sales that you kind of—

Let me let Erik run through the mechanics there.

Yes. So, Ben, good to hear you. So I think we have been able to isolate the revenue components pretty clearly. We have got a point of view associated with the EBITDA contribution associated with the revenue bit. We do still have some open switches associated with gaining all of the Homeowners’ Association approvals. We do have a couple that will bleed here into the first quarter. I think that the $20,000,000 at the midpoint is a good place for you to model what the benefit of this program will drive.

Got it. Appreciate it. And then just one quick one on Sports Illustrated. I believe you opened up sales of Nashville in December. Maybe you could share any relevant data points to the extent you are willing? And then, obviously, recognizing it is very early in the system, have you considered any type of upgrade program for legacy TNL customers where you buy SI and your legacy TNL is fungible at an exchange rate? So I believe it is a separate platform at the moment. Thanks.

Let me take the opportunity to give you two updates. First on Sports Illustrated, we started our event-based marketing there as we renovate both Nashville and Chicago. We do not have our physical sales gallery open, so we are doing more events. We have done several. We have a good amount of sales with our first Sports Illustrated owners. Those will begin in earnest in our more traditional approach late in Q1 and early in Q2. So I would expect more meaningful results to come at that point, but early reception was very positive, very excited about the concept. We were very pleased with the feedback we got from our first event programs. Equally to that, we transitioned in Q1 from virtual sales to physical sales centers for Eddie Bauer Collection, and we saw tremendous reception in that approach. Our WorldMark owner base, which is nearly 250,000, was looking for more destinations with a slightly different feel. We are giving them that through the Eddie Bauer to different club, but the reception to that product has been really, really impressive. We are very pleased with what we saw in the first 45 days of 2026. So, pleased with both of those starts, both for Sports Illustrated and Eddie Bauer.

Thank you. Our next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed with your question.

Thanks for taking our questions.

I was hoping we could maybe spend a minute talking about the kind of the marketing approach this year, and there has been a lot of talk obviously about tax refunds, larger refunds, other stimulus. And I am curious as to whether you guys have adjusted any of your marketing campaigns either in terms of timing or messaging to kind of coincide with what are expected to be those larger refunds and whether it is about, from a P&L aspect, maybe in terms of marketing expense being more weighted towards one quarter or one half. Thanks.

Good morning, Chris. I would not say that we have a different approach as it relates to the singular event around taxes. I think as you look through 2026, we are being more intentional in a few areas. Number one is continued focus on owner arrivals, which indirectly is going to be a benefit if there is an economic win for consumers in the April timeframe. That means it is likely that encourages summer travel, and given that the vast majority of our tours are booked when people are at location, that is going to be a big win for us. But owner arrivals is always our number one priority for a number of reasons. Number one, outside of sales, is because that is why we are in business. The other components are, I mentioned it in the prepared remarks, Live Nation, Authentic Brands, really working in closer partnership. We have been working with both those companies for over a year, and we are finding new ways to link up to their organizations and provide some really cool both new owner and owner events there. And then, lastly, as we continue to mine our data, we have got an incredible population of data that we think we have underutilized over the past five years and that we think, with the launch of our apps, more engagement through AI, that we can start moving more of our data through the marketing funnel to the point that we can get them into market and ultimately have a sales opportunity. I think that is more of a mid- to long-term opportunity, but we have made tremendous strides in the last 12 months of prepping that platform to really start leveraging it at the end of this year and into the next three to five years.

Oh, okay. That is great color. Thanks, Michael. And then a follow-up for you. You just mentioned kind of Live Nation and Authentic Brands. I am curious as to how you view the cruise industry. It is not exactly a secret they have been doing pretty well lately, and I think you guys have historically done some level of sales opportunities on ships, and I know that people can also use their points on cruises, although it is not necessarily the most economic use of those points. So is there any thought, any evolution, you are thinking of how you interact with that industry to maybe capture some of the same tailwinds that they are seeing?

A little bit tongue in cheek, I think we have had some pretty good tailwinds in 2025. I thought we had a great year, and I think we would sort of ride alongside of cruise as enjoying the high leisure demand, but I think the nature of your question is absolutely on point. Our consumer loves not only to visit our resorts, but to cruise. We began to leverage one of our existing partnerships with Margaritaville in 2025 on the Margaritaville cruises, which, you know, that lifestyle between vacation club, hotel, cruising, and retirement communities is an entire ecosystem unto itself, and our partnership with Margaritaville continues to grow. And cruise is just one of those components. And I think it will grow from simply cross-marketing opportunities to something bigger as time goes by. You know, success in that brand will yield more dots on the map, and if they happen to float, then even better. That does not mean that it is only Margaritaville. I think we have really stepped up through partnerships, tying into other cruise lines in 2025. We have made some changes there, and we have recently seen an uptick in the cruise side. And, yeah, we like to take things methodically. If we see a partnership, we will start working with the company, and if it grows, then we will invest more heavily. Margaritaville, the first example, but we have others in the works as well.

Okay. Very good. Thanks, guys.

Thanks, Chris.

Thank you. Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Hi, good morning, everybody. Congrats on the quarter and thanks for taking my question.

And I think I may have asked this maybe last quarter or some prior quarter. When we look at SI, we look at Eddie Bauer, you know, Accor, do you have a notional sales amount with each of those that you have sort of laid out for some untimed future, you know, opportunity for you to, you know, chew into that we can sort of paint the long-term vision of?

Let me come at it the other way, David, which is on a high level. We want to see the four brands—Margaritaville, Accor, Sports Illustrated, and Eddie Bauer—as a growing percentage of our overall mix as we progress year over year, simply to take pressure off in the law of big numbers. You know, Club Wyndham and WorldMark are $2.3 billion. You know, 6% to 8% growth gets harder and harder as you progress through that. So the addition of these new brands allow us to either augment to maintain that 6% to 8% or give us potentially upside. So I am looking at it more top down. Three years ago, that number represented about $50,000,000 of sales. Two years ago. In 2026, we think that number gets to $200,000,000 or north. And if you think about our overall guidance, you are starting to approach a 10% number. So as we move to 2027, 2028, that number should be moving to double digits and then to the teens and up to 20. So we just want it to be a growing percentage of the overall mix. I still would say, and that is an absolute direction that we have. What I would say on the individual brands is they should be obviously outsized growth compared to our core 6% to 8%. And then how we divide that growth into 2027, we just want to see how both of these brands are received and how we change the offering as we get consumer feedback. But the macro answer to your question is it is going to be high single digits this year as a percentage of total sales, moving into double digits and then to teens after that.

Excellent. And as my

follow-up,

wanted to spend a second on the blue thread, which, you know, we have not talked about much in a while. What is the aspiration or the vision for, you know, Blue Thread? I am not sure if you gave us a sales number breakout. You have in the past. And how does that sort of fit into, you know, launching your app? Right? Does your app connect with their app? And, you know, should we sort of see this as heading down opposite paths?

So Wyndham Hotels and the blue thread remain a critical and important and a very strong partnership for us. We have continued to see success with the affinities between Wyndham Hotels and our Club Wyndham brand, and it will remain a core part of all of our growth as we move forward. So no new news there. I think the reality of the sales contribution from the Wyndham Rewards member has reached a point where there are mechanics way beyond the timeshare realm that has changed the way people book hotel reservations. We work very collaboratively with the hotel group to find new ways to reach those customers. We found a few avenues, but we have really seen that sales level stabilize at about 3% of our total sales, and it will remain an extremely important part of who we are here at Travel + Leisure Co.

Okey doke. Thanks.

Oh, and sorry, the app. We are focused on our app of the Club Wyndham and WorldMark. We will get apps for all of our brands, and then we will absolutely look for connectivity across to anyone we are working with. So, you know, the technicalities of that, I could not say, but we are trying to establish our platform first, but in all respects where we can link across to work collaboratively with Wyndham Hotels, we will absolutely do it.

Thank you.

Thank you. Our next question comes from the line of Lizzie Dove with Goldman Sachs. Please proceed with your question.

Hi, good morning. I just wanted to ask about VPG. You had a really good year. And then for this year, there are some moving pieces. You called out the deliberate mix shift, but your guidance does factor in quite a deceleration in trends throughout the year. Could you maybe just give us some more color on how to think about that and the impact of the mix shift?

Hey, good morning, Lizzie. We finished the year with our fourth quarter VPG right under $3,400. VPG was up percent year over year and VPG was at a three-year high. So we feel great about the momentum that we have associated with demand. You are right, the midpoint of our guide has got VPG down, I think it is between 1%–2% year over year. Full-year new owner transactions in 2025 was 30%–31%. We are trying to move from low thirties to mid thirties. And the flattish VPG is 100% attributable to our desire to nudge new owner transactions from low thirties to mid thirties.

Got it. That makes sense. And just to follow up on that, I apologize if I missed this in the opening, but anything you can share in terms of specifically around new owner close rates or just kind of new owner demand and how that has been versus existing in the fourth quarter? Thanks.

Well, 2025, and in the fourth quarter, our new owner performance was very consistent throughout the year. So no meaningful change. What you saw in 2025 was just extremely strong owner performance. So if we hold what we did in Q4 and 2026 on our new owner performance, we will be very pleased. We will have an acceleration on tour growth year over year. And our teams have been able to very much handle that acceleration, and they did in the quarter, and we were very pleased with that.

Got it. Thank you.

Thanks,

Thank you.

Our next question comes from the line of Trey Bowers with Wells Fargo. Please proceed with your question.

Hey guys, just a follow-up to I think it was Patrick’s question on the provisions.

As we look forward a little longer term, where do you see that number heading? Is there something about kind of optimized level of recycling that a provision level of 20 and an associated write-off level is kind of the right place to be? Or on the flip side, as you have improved your FICO scores and you have a higher income bracket for most of the owners now, should that number kind of continue to migrate down? Thanks so much.

Hey, Trey. Good morning. You know, as I mentioned, we finished the fourth quarter with a provision of 19.3% and a full year 20.7%. And we expect it to go down in 2026, so super pleased with the direction of travel and the trajectory with the loan loss provision. I have said over the last couple of quarters that we expect, over time, that the provision settles back into the high teens. Do I think we can do that? I do. Do I think that the business needs for us to settle back into the high teens? I do not. You look at 2025, full-year provision was 20.7%. We wound up beating our budget. We were above the top end of our guide in EBITDA. We feel good about the programs and the initiatives that we have in place to drive the provision down. And we do think it settles into the high teens over time. And I think 2026 is a step in that direction, moving from 20.7% to something lower and then, aspirationally, into the teens after that.

And unrelated, but just a follow-up. Could you guys just talk about the Travel and Membership business going forward, just expectations for when that kind of bases out? Or do you expect that one to continue to just have some top-line pressure for the foreseeable future? Thanks.

Yeah. So the Travel and Membership business, you know, we are modeling 2026 very consistent with the 2025 trend line. No heroic assumptions, just disciplined cost management. We are trying to be very pragmatic and opportunistic associated with leveraging partners. We had announced a partnership during the fourth quarter. So we are trying to be very pragmatic associated with the roughly 3.5 million members that we have there. The business continues to be a very important contributor to our EBITDA growth as well as a very important contributor to cash flow generation. But right now we are modeling our base case in 2026 off of the 2025 trend line.

Thanks guys. Thanks for the questions. Thanks, Troy. Thank you.

Our next question comes from the line of Brandt Montour with Barclays. Please proceed with your question. Hey, good morning, everybody. Thanks for taking

question. On the sales optimization announcement, was there any benefit from that to the bottom line in the fourth quarter?

There was no Q4 benefit. We will start to see some benefit in Q1. The impact was balance sheet related.

Okay. Thanks for that.

And then just a follow-up because I do not think we have really ever talked about this—sort of what happens to the older resorts when you guys eventually move on, which makes total sense. I guess that is really not your problem. What happens to it is up to the HOA, the residual HOA, and what they decide to do with the property because it is their property. But, you know, and maybe it is negligible, but 17 resorts, it might sort of add up. Is there sort of a contingent of folks that have owned for a long time there that are not part of your points program that then you kind of do outreach to try and, you know, get them to sort of, you know, maybe convert so that they are not quote, unquote, like, left behind? And maybe it is just such a small amount of people at that point it does not matter. But just curious on how that sort of plays out.

Well, for us, it does matter. We will go through a sale process of the resorts. And it was not a one option for the owners. And keep in mind, we are a big owner here. We have worked with the owner base. We have worked with the HOAs to really provide two options for them. Number one is to receive proceeds from the eventual sale of the properties, which has been well received. Or to move their ownership back right back with us, and we are in the middle of a pretty intensive outreach to the owner base of all these resorts to make sure that they understand fully the two options. And what we have learned as we have moved along, even though I do not know we are a third or halfway through, is that once people understand their options, we are seeing a good number want to stay in their ownership and move across to a Club Wyndham or another type of product. So it is an intensive outreach program, and we have learned that there is a lot of surprise at the options that have been given and that there is some excitement about—some people, you know, it is just at their point in time said, I never thought that I would see proceeds from this, or, you know, I see great value in it and I want to keep my ownership. And that is what we are in the process of doing, and that is how we have moved along. So did I answer fully your question, or was there anything trailing there? No. That was great. It does not sound like there is a cost

component with trying to make, you know, trying to sort of help those folks out—

So artist.

No. In some cases, it is going to be the opposite where there are proceeds. But I think ultimately, just to come back to the bigger point here, is we took that three-year example of netting 30 resorts positive, but if you go back even further, it is net growth of more than that. And hindsight 20/20, would have liked to have started this earlier, sort of onesies and twosies along the way. But at some point, you just have to catch up, and we have spoken at all our conferences about having four to five years of inventory. We want to get it down to two and a half, three. And this helps along that path. And additionally, you know, one of the value equations for owners is I do not want special assessments. I do not want maintenance fees going up beyond a reasonable level. And when you are looking at older resorts that have a lot of wear and tear, this really helps to reduce the likelihood that those elements occur and really help to preserve value and trade it out for higher-demand destinations.

Just so clear. Thanks, Michael. Thanks, everyone.

Thanks, Brian.

Thank you. Our next question comes from the line of Ian

Hey, good morning. This is Isaac Selhausen on for Ian. Thanks very much for taking the questions. I just had a follow-up on Travel and Membership from the previous questions that were asked. Maybe if you can touch on the profitability of the segment, with the exchange revenue headwinds, and if the mid-30s EBITDA margin is sustainable with the cost actions that were previously taken. Just any puts and takes on the margin would be great.

Yeah. So I would start with

some of my prior comments around the 2025 trend line, sort of extrapolating into 2026 as sort of the baseline starting point for modeling. We do see a dynamic, right? So we have got exchange headwinds, we have got our Travel Clubs business that is continuing to grow very nicely. It was up mid-teens in the fourth quarter. There is a structural contribution margin difference between the two things, between those two businesses, that over the longer term, if the trend continues, we will see some broad-based erosion in segment margins for Travel and Membership.

Okay. That is clear. Thanks very much.

Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to CEO Michael Brown for closing remarks.

Well, thanks once again for joining us today. I am proud of what our global team of more than 19,000 was able to achieve in 2025. They drove our results which exceeded the expectations on nearly every metric, but we are not content with just having a strong 2025. We are focused on delivering outstanding results again in 2026. We are entering the year with confidence, momentum, and a clear path for growth and value creation. Erik and I look forward to seeing you at upcoming conferences and eventually on the Q1 call. Have a great day, everyone.