Marriott Vacations Worldwide (VAC) Morgan Stanley 3rd Annual Travel & Leisure Conference summary

Business model resilience and demand trends

• Timeshare purchases are seen as long-term vacation investments, with recurring revenue from management, membership, and financing streams providing stability even during macro volatility.

• VPGs (volume per guest) for both first-time buyers and owners were down about 2% in Q1, but demand remains resilient, with high occupancy rates (90%+) expected throughout the year.

• Promotions and incentives for first-time buyers and owners have helped increase closing efficiencies and sales mix, outperforming competitors in first-time buyer growth.

• Margins are managed through modernization projects and cost controls, with a focus on growing VPG and improving closing rates.

• Recent volatility in sales and VPGs has stabilized, with ongoing initiatives aimed at reversing declines and supporting margin recovery.

Customer demographics and product evolution

• Target customers have an average household income of $125,000-$150,000 and a net worth of $1.5 million, consistent over 15-20 years.

• Millennials and Gen X make up about 60% of first-time buyers, with the product evolving to offer more flexible vacation options and city experiences.

• Owner upgrades are common, with 40% of first-time buyers purchasing additional points within 10 years.

• The average owner holds about 1.5 weeks of timeshare, and demographic trends have remained stable, with average first-time buyer age in the early 50s.

Marketing, technology, and modernization

• Marketing leverages data from Marriott and Hyatt loyalty programs, with ongoing efforts to expand the funnel using analytics and new channels.

• 70% of villa bookings are now made online, up from 30% three years ago, with further digital enhancements planned for all vacation types.

• AI and Gen AI are being integrated into customer service and booking processes, aiming to improve efficiency and customer experience.

• Modernization initiatives target $150-$200 million in incremental EBITDA by end of next year, with $35 million expected this year due to accelerated savings and revenue opportunities.