Hilton Grand Vacations (HGV) 4th Annual Morgan Stanley Travel & Leisure Conference summary

Strategic outlook and growth algorithm

• 2026 is not expected to be a normal year; normalization anticipated in 2027 as integration and inventory spend decline.

• Inventory spend is dropping from $400M to $300M, and integration spend from $200M to $75M before disappearing, boosting free cash flow.

• Organization has tripled in size over five to six years through acquisitions and integration.

• Focus on capital efficiency, with new builds and conversions structured for flexibility and lower costs.

• Inventory optimization includes divesting underperforming, non-rebranded resorts to improve cash flow.

Competitive positioning and product flexibility

• Product offers flexibility for both high-end and economical vacations, appealing to a broad demographic.

• Experiential programs like Ultimate Access enhance owner engagement and drive higher sales per guest.

• Partnerships with Hilton, Bass Pro, Japan Airlines, and others expand tour flow and new buyer opportunities.

• Targeting a new buyer mix of 35% (up from 30%) while monetizing existing owners through upgrades and acquisitions.

• Fee-for-service business has declined post-COVID, now in low double digits after Elara acquisition.

Risk management and demand environment

• Main concern is sustaining tour flow, not sales force performance; partnerships are key to lead generation.

• Demand remains resilient despite macro pressures; 70% of owners live within a four-hour drive of a property, mitigating fuel price impact.

• Owner churn and default rates have increased post-acquisitions, now slightly over 10% annualized.

• Recaptured inventory is a growing focus due to paused recapture during COVID.

• Underwriting tightened, requiring more equity down, especially for Bluegreen, to reduce defaults.