HGV Q2 Earnings Report

[dayooper]

Previous Investor Calls/Reports

2025 Q1 Earnings Call
2024 Q4/Annual Earnings Call
2024 Q3 Earnings Call
2024 Q2 Earnings Call
2024 Q1 Investor Call
2023 Q4/Annual Earnings Call
2023 Q3 Earnings Call
2023 Q2 Earnings Call
2023 Q1 Earnings Call
2022 Q3 Earnings Call
2022 Q1 Earnings Call
2021 Q3 Earnings Call


Second Quarter of 2025 highlights1

• Total contract sales were $834 million, an increase of 10.2% compared to the second quarter of 2024.
• Total revenues were $1.266 billion.
  • Total revenues were affected by a net deferral of $82 million.
• Net income attributable to stockholders was $25 million and diluted EPS was $0.25.
  • Adjusted net income attributable to stockholders was $50 million and adjusted diluted EPS was $0.54.
  • Net income and Adjusted Net Income attributable to stockholders were affected by a net deferral of $45 million, or $(0.49) per share.
• Adjusted EBITDA attributable to stockholders was $233 million.
  • Adjusted EBITDA attributable to stockholders was affected by a net deferral of $45 million.
• During the second quarter, the Company repurchased 4.1 million shares of common stock for $150 million.
  • From July 1 through July 24, 2025, the Company repurchased approximately 626,000 shares for $29 million and currently has $98 million of remaining availability under the 2024 Repurchase Plan.
  • On July 29, 2025, HGV’s Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to an aggregate of $600 million of its outstanding shares of common stock over a two-year period (the “2025 Repurchase Plan”), which is in addition to the amount remaining under the 2024 Repurchase Plan.
• The Company is reiterating its prior guidance for the full year 2025 Adjusted EBITDA, excluding deferrals and recognitions, of $1.125 billion to $1.165 billion.

Positives and Negatives from Yahoo Finance:

Positive Points​

• Hilton Grand Vacations Inc (NYSE:HGV) reported a 10% increase in contract sales, reaching $834 million for the quarter.
• Adjusted EBITDA was $278 million with margins excluding reimbursements at 23%, indicating strong financial performance.
• The company successfully closed a JPY9.5 billion timeshare securitization in Japan, marking a significant milestone as the first of its kind for a US operator.
• HGV added over 20,000 packages to its pipeline, more than doubling the additions from the first quarter, indicating strong demand.
• The company returned $300 million to shareholders this year, including $150 million for the quarter, demonstrating a commitment to shareholder returns.

Negative Points​

• Tours were slightly lower in Q2 as the company focused on efficiency initiatives, which could impact future sales growth.
• There was softness in the Las Vegas market due to lower international and convention business, affecting rental performance.
• The fee for service mix was higher in Q2, which while profitable, results in lower flow-through compared to owned inventory sales.
• The company anticipates a provision rate increase for bad debt in the coming quarters, which could impact financial performance.
• Despite strong sales, the company faces a volatile policy landscape and must closely monitor consumer trends to mitigate risks.

My observations and thoughts

My overall impression of the quarter was it’s, again, a mixed bag. Reading the transcript linked below, the HGV reps, including CEO Mark Wang really try to make a meh quarter look promising (that’s part of their job). They list several factors that point to reasons why we should invest in them. From deferred revenue from the sales at the properties still under construction in Honolulu and Kyoto Japan to their pre-screening of tour candidates (tours were down, but VPG was up), they were really trying to give as many examples of why they fell short of expectations by $92 million (EPS $0.47). Contract sales were up, but there was a lot of talk on fee-for-service sales. Mark Wang specifically mentioned the South Carolina partner for having a very strong quarter and mentioned the new Myrtle Beach property. He also mentioned that 3rd party sales brings in revenue, it’s limited to just commissions. (I’m assuming this is just sales because they also get fees for managing the resorts).

Side note - With Strand Capitol performing well, this keeps my speck of hope that they will build another Hilton Head resort or 2 and expand into other parts of the SE.

Observations on the membership and BlueGreen integration front - Seems like they are moving forward with the BlueGreen rebranding starting in a month or two. They have rebranded all the Bass Pro Shops kiosks and are continuing with the Choice Hotels sales centers. The membership is at 725,000 members and ~260,000 Max members with 21,000 of them coming from BlueGreen.

Not sure what the JPY 9.5 billion loan means. Are they going to build more? It’s not a lot of cash flow in a business sense (~$6.5 million), but they said it was the first of its kind. They talked about servicing their Japanese members better so I’m not sure what to make of it. I have always believed that they want a greater presence in Asia. Before the DRI merger was even brought up, there were rumors of HGVC expanding into the Chinese market. While I don’t think that will happen, they still talk about the Japanese market almost every report. I wonder if they will expand into Asia. Whether it is new properties, purchasing existing properties or purchasing systems, I think they will expand slowly into the Asian market.

Lately, it struck me how important Las Vegas is to HGV. The lack of international conventions and tourists to Vegas is seen as one of the reasons for HGV not meeting it’s expectations. From less tours and packages to the reduced amount of rentals, Vegas seems like it’s a big part of their portfolio. Again, it could just be exaggerated to make not meeting expectations look like an anomaly. With 10 properties (including 2 in the Elara building), a downturn in Vegas would hurt tour and package sales.

If you have anything to add or correct anything I have written above, please do so. I am not a finance expert and I am learning as I do these investor calls. I originally started these to learn more about where HGVC might be expanding to so I have no background what so ever in the financial aspect of the business.

https://finance.yahoo.com/news/hilton-grand-vacations-inc-hgv-072921619.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKV7RI4ds7Je2keFCPrghN_BD6UmnuRr14W4ulMyOIaUXRIp94ZO7qpL-CUgzv-fbZrlX_8NONy1kG03iQjN2tcOk964WLVB8KQkbeG0Vmelhf3oNgtt95DsOcyxcMk-D6VnJ5wIEtFlsEpGUSB9Pd-7y9P471dCOdvLSMqesJ3x

https://seekingalpha.com/article/4807213-hilton-grand-vacations-inc-hgv-q2-2025-earnings-call-transcript

 

[jp10558]

Not a finance person either, but in terms of expansion, we all know HGVC at least is location limited. Max is supposed to address this for retail sales, but I still wonder how useful 7 month out booking is for people - certainly in HGVC there's often literally nothing available at 7 months in plenty of locations.

 

[Zenichiro]

Some may miss that most membership growth came from the Bluegreen deal, not new customers. Net Owner Growth slowed, and HGV Max still covers only about 30 percent of members. If retention drops, the gains could be masking a revolving door. The real question is whether HGV Max adds long-term value or just short-term lift.

 

[dayooper]

Some may miss that most membership growth came from the Bluegreen deal, not new customers. Net Owner Growth slowed, and HGV Max still covers only about 30 percent of members. If retention drops, the gains could be masking a revolving door. The real question is whether HGV Max adds long-term value or just short-term lift.

They had a 0.6% new member growth from sales (all Max). That amounts to ~4250 new members in Q2.

 

[escanoe]

They talked about servicing their Japanese members better so I’m not sure what to make of it. I have always believed that they want a greater presence in Asia. Before the DRI merger was even brought up, there were rumors of HGVC expanding into the Chinese market. While I don’t think that will happen, they still talk about the Japanese market almost every report. I wonder if they will expand into Asia. Whether it is new properties, purchasing existing properties or purchasing systems, I think they will expand slowly into the Asian market.

Thailand/Phuket might be interesting. Marriott has a decent presence there.

Or not build and strike a deal to trade into something like Anantara similar to how HGVC owners can access Luxxe through SFX?

Or maybe something in South Korea? I am not an expert on Asia travel.

 

[GT75]

Thanks @dayooper for the update.

Side note - With Strand Capitol performing well, this keeps my speck of hope that they will build another Hilton Head resort or 2 and expand into other parts of the SE.

I certainly would want more on HHI, too, but where they can build is the problem.

 

[GT75]

Max is supposed to address this for retail sales, but I still wonder how useful 7 month out booking is for people - certainly in HGVC there's often literally nothing available at 7 months in plenty of locations.

For sales, availability doesn't matter. Max shows dots on the page. If you go to an OU with a booking problem, no availability in Max for the other club, sales will solve that problem for you by selling you something in the other club. The problem is solved and everyone is happy until the next OU.

 

[Zenichiro]

They had a 0.6% new member growth from sales (all Max). That amounts to ~4250 new members in Q2.

I believe the 4,237 are over the last 12 months ending not just Q2 and anyone who purchases is auto Max member.

 

[dayooper]

I believe the 4,237 are over the last 12 months ending not just Q2 and anyone who purchases is auto Max member.

From the transcript
Moving on to our other business, our member count was nearly 725,000 at the end of the quarter and we ended with over 233,000 H E B Max members, including nearly 21,000 legacy Bluegreen members who have joined the program. We've continued to see very consistent monthly growth in our Max membership driven by new member growth and owner upgrades. And we expect to retain this momentum as we introduce additional benefits that further enhance the value proposition of Max. Net owner growth for the quarter was 0.6%.

It was 0.6% in Q2 total. They have had 21,000 BG members get suckered . . . Errrr . . . Join Max since the BG transaction was official in Jan 2024.

 

[dioxide45]

HGV added over 20,000 packages to its pipeline, more than doubling the additions from the first quarter, indicating strong demand.

I'm curious if increase in packages seems to indicate a distressed travel customer. Marriott Vacations had similar comments during their earnings call. Perhaps more bargain hunters out there trying to get a cheap trip, but will those packages ultimately follow through and buy into the program?

 

[dayooper]

I'm curious if increase in packages seems to indicate a distressed travel customer. Marriott Vacations had similar comments during their earnings call. Perhaps more bargain hunters out there trying to get a cheap trip, but will those packages ultimately follow through and buy into the program?

That’s a good question. They were talking about vetting those that were taking the tours. I’m not sure if that includes those that purchase the trips or if it’s just those that are already at the resorts (owners updates).

 

[dayooper]

Thanks @dayooper for the update.

I certainly would want more on HHI, too, but where they can build is the problem.

I know, but one can dream. Maybe an older resort gets sold and they can snatch it up?

 

[Zenichiro]

It was 0.6% in Q2 total. They have had 21,000 BG members get suckered . . . Errrr . . . Join Max since the BG transaction was official in Jan 2024.

Okay I saw 4237 NOG from 2024 to 2025 so assumed this was not just Q2 but for the rolling 12 months.

 

[mountainboy]

Not sure what the JPY 9.5 billion loan means. Are they going to build more? It’s not a lot of cash flow in a business sense (~$6.5 million), but they said it was the first of its kind. They talked about servicing their Japanese members better so I’m not sure what to make of it.

Grateful to you @dayooper for dissecting & sharing this call with all of us!

Likely they were able to sell the loan successfully to JPY (or other) investors (this is std practice for them stateside but likely new for them in JPY).
If they are able to sell those loans, then gives them more leverage to scale up & build/service more, without having to worry about servicing those loans/losses.

Also, JPY buyers have not been flooding into LAS or HI HGV resorts (despite the bidets & all), likely with the economy, possibly political climate or other factors; HGVC will likely be more aggressive with more sales to JPY buyers (per their stated focus on the call)...

For newbies like me, securitization in TS industry...

Timeshare securitization is a financial process where companies, particularly developers of timeshare properties, convert their timeshare loans into marketable securities.
Here's a simplified explanation:

• Timeshare Loans: When people purchase a timeshare, they often take out a loan from the developer or a specialized lender to finance the purchase. These loans function similar to mortgages or personal loans, involving monthly payments of principal and interest over a set period, which could be up to ten years.
• Pooling: In timeshare securitization, a large number of these timeshare loans (typically with a combined value exceeding $100 million) are bundled together into a pool of assets.
• Special Purpose Vehicle (SPV): These pooled loans are typically transferred to a special purpose vehicle (SPV), a separate legal entity created specifically for this purpose. The SPV's role is crucial for isolating the risk associated with these loans from the originating company's (e.g., the timeshare developer's) overall financial health.
• Issuing Securities: The SPV then issues interest-bearing securities (notes or bonds) to investors, backed by the cash flows (principal and interest payments) generated from the underlying pool of timeshare loans. These securities can be offered in different classes or tranches with varying levels of risk and return.
• Investor Payments: Investors who purchase these securities receive regular payments (typically monthly) of principal and interest, generated from the borrowers' payments on their timeshare loans.

Benefits

• Enhanced liquidity: Timeshare securitization allows developers to convert illiquid assets (the loans) into readily tradable securities, providing them with immediate access to funds.
• Diversified Financing: Securitization provides timeshare developers with an alternative financing mechanism, reducing their reliance on traditional bank loans.
• Potential for Lower Costs: By attracting a broader range of investors, securitization can potentially lower the overall cost of financing for timeshare developers.
• Risk Sharing: Securitization allows the originator (timeshare developer) to transfer the credit risk associated with the timeshare loans to the investors who purchase the securities.
• New Investment Opportunities: For investors, these securities offer a way to diversify their portfolios and gain exposure to the timeshare industry's cash flows.

Risks

• Credit Risk: The primary risk for investors is the possibility that the timeshare borrowers will default on their loan payments. This can be a significant concern, as timeshare loans are generally unsecured (not backed by collateral like a house) and borrowers may face financial hardship or become dissatisfied with their timeshare.
• Interest Rate Risk: Changes in interest rates can affect the value of the securitized assets.
• Prepayment Risk: If timeshare borrowers prepay their loans early (for example, by selling their timeshare or refinancing), investors may receive their principal back sooner than expected, potentially affecting their anticipated returns.
• Liquidity Risk: It might be challenging to buy or sell these securities in the secondary market, especially during times of financial uncertainty, according to FasterCapital.

In essence, timeshare securitization acts as a financial bridge, allowing timeshare developers to generate upfront capital by packaging their timeshare loans into securities that are then sold to a wider investment market.

A Timeshare Paradise | Insights | Holland & Knight

Discover how the timeshare and vacation ownership industry has thrived during the subprime mortgage crisis, driven by strong underwriting and flexible ownership.

www.hklaw.com

https://ratings.moodys.com/api/rmc-documents/390477

 

[dioxide45]

I find the whole securitization market of timeshare loans to be rather interesting. It isn't really like residential mortgage loans though. In essence, the timeshare company issues new debt where the collateral is the notes from timeshare loans. The timeshare notes are really just a promise to repay by the customer/borrower. Are the investors out there buying the debt from the timeshare entity aware that the real estate backing the timeshare notes that is used as collateral for the new debt is actually worthless? It has little to no value. If the timeshare entity defaults on the debt, the investor who bought the debt can take the collateral. Which is a bunch of timeshare loan notes. If the customers default on the notes the investor is holding a bunch of worthless paper. I guess they are all banking on the customers not defaulting and the timeshare entity not defaulting on the newly issued debt. At least in commercial or residential real estate securitization there is real value in the underlying asset or collateral.

 

[dayooper]

I find the whole securitization market of timeshare loans to be rather interesting. It isn't really like residential mortgage loans though. In essence, the timeshare company issues new debt where the collateral is the notes from timeshare loans. The timeshare notes are really just a promise to repay by the customer/borrower. Are the investors out there buying the debt from the timeshare entity aware that the real estate backing the timeshare notes that is used as collateral for the new debt is actually worthless? It has little to no value. If the timeshare entity defaults on the debt, the investor who bought the debt can take the collateral. Which is a bunch of timeshare loan notes. If the customers default on the notes the investor is holding a bunch of worthless paper. I guess they are all banking on the customers not defaulting and the timeshare entity not defaulting on the newly issued debt. At least in commercial or residential real estate securitization there is real value in the underlying asset or collateral.

My guess is that it would be built into the cost of the securitizations. They would pay considerably less for the debt knowing there’s a good chance for some default. The transcripts usually talk about the default rate and how it doesn’t change much from quarter to quarter and year to year (or how it’s improved). Much like a debt collector pays pennies on the dollar knowing full well that they will never see much of that debt repaid, but they will make enough that it will cover what they paid and still make a profit.

 

[PigsDad]

Or not build and strike a deal to trade into something like Anantara similar to how HGVC owners can access Luxxe through SFX?

Not sure if you know, but HGVC used to have an exchange agreement with Anantara a few years back that gave us access to their resorts.

Kurt

 

[4TimeAway]

Also, JPY buyers have not been flooding into LAS or HI HGV resorts (despite the bidets & all), likely with the economy, possibly political climate or other factors; HGVC will likely be more aggressive with more sales to JPY buyers (per their stated focus on the call)...

It seems to me that Japan is under stress. There are many high-end weeks for sale from Japanese sellers. Percentage wise it may not be material but being able to pick up HHI for less than $10,000 seems like a possible idea. Sure, the MFs are higher, but the draw to Hawaii seems more sustainable than to Las Vegas.

It’s to the point where if I were HGVC or a Board Member, I would explore authorized resales before going down the path of building. The main issue with building is the lead time and costs involved. If you think about it a major build must anticipate at least one recession and that is hard pill to swallow even with the high margins of timeshares.

The main downside of my plan to resell is that many weeks are complete rubbish and are worthless. Personally, I think there should be some kind of adjustment to maintenance fees and not just selling price as the ongoing value can be quite poor. That said many of these weeks may still be better value/location than hotels, but TUG Members strive to optimization of holdings and usage.

 

[WaikikiFirst]

Some may miss that most membership growth came from the Bluegreen deal, not new customers

HUH? BG was acquired in Jan2024, so 2Q24 had 3 months of BG, as did 2q25. Do you mean new "owners" or do you refer to "MAX" as "membership.
There are multiple posts here that seem to think of MAX as something it really isn't. They GIVE MAX TO EVERY NEW DEVELOPER PURCHASE OF A VOI, don't they?
So, understanding the growth of MAX seems simple, and reading much into the #s seems odd.

 

[WaikikiFirst]

For newbies like me, securitization in TS industry.

I feel lost. WHY do multiple people seem to think the Yen-based debt is securitization of HGV's VOI financings? It seems to me to be simply raising capital IN YEN because they need capital IN YEN to convert the Kyoto building to TSs. The interest rate in Japan is very low, so that helps.
Buffett did this same thing when he started buying Japanese stocks. He sold a bunch of debt IN YEN because he would use YEN to buy Japanese stocks.
The existing HGVC sites in Japan generate yen from their revs. Kyoto will generate no yen til it opens, other than payments by the earliest buyers. Kyoto will, OTOH, use plenty of yen.

 

[WaikikiFirst]

Japan is under stress. There are many high-end weeks for sale from Japanese sellers. Percentage wise it may not be material but being able to pick up HHI for less than $10,000 seems like a possible idea

HHI? or HHV? acronyms, my word. I doubt there are more than a few, and I do mean a FEW, VOIs in HHI owned by Japanese nationals.

 

[WaikikiFirst]

JPY buyers have not been flooding into LAS or HI HGV resorts (despite the bidets & all), likely with the economy, possibly political climate or other factors

Boy. The OTHER FACTOR that I have mentioned 30x, but everybody seems to overlook as often as they can. FX.

1a) What is cumulative inflation in Japan over the last 30 yrs? Do you think salaries in Japan have moved closely to that # or far from it?
1b) What is cumulative inflation in USA over the last 30 yrs? Do you think salaries in USA have moved closely to that # or far from it?

2a) FX! How many yen did it take to buy a US$ 30 yrs ago?
2b) How many yen does it take to buy a US$ today?

Take the difference between (1a) & (1b). Ad to that the difference between (2a) & (2b). THAT is your answer. All this nonsense about "political" is just a bunch of gaslighting by people who don't understand economics and have no end of propaganda to use to BIG LIE you.

 

[WaikikiFirst]

I have qtrly KPIs (look it up) from either HGV or TNL in excel somehwere. Not sure which. Quick look thru that 10Q tells me that w/o having that, it is a bunch of guesswork about what changed. But, I will point out 2 things
1. Licensing fee to Hilton jumpped, by A LOT, Y/Y. Did also in Q1. Must have been renegotiated. THat is not a huge # in an absolute sense, but it is a big # in the scheme of what you're trying to ponder Y/Y
2. They seem to be spending too much on S&Mkting, much of it seems to be selling the new sites in Kyoto and Waikiki. They are recognizing no revs from that (and maybe won't till the buildings are ready for occupancy). I tend to doubt they are recognizing those sales as "new owners" either.

 

[mountainboy]

All this nonsense about "political" is just a bunch of gaslighting by people who don't understand economics and have no end of propaganda to use to BIG LIE you

Lots of Canadians & many Europeans (& other Intl visitors) have changed their travel patterns due to recent changes in economy & politics etc, more than the secular trends over the last 30 yrs would indicate.
I was simply stating that & not 'gaslighting' or spreading any 'propaganda' or 'big lie'.
Let's keep the focus on HGVC earnings & appreciate your deep insight into those, without veering on these tangents..
Respectfully,
MB

 

[GT75]

Let's keep the focus on HGVC earnings & appreciate your deep insight into those, without veering on these tangents..

Agree, please don't make me lock the thread.