Marriott Vacations Worldwide (VAC) The 2nd Annual Morgan Stanley Travel & Leisure Conference 2024 summary

Industry demand and outlook

• Leisure travel demand remains strong and stable, with no signs of deceleration in the near term.

• Occupancy rates are consistently above 90%, supported by a prepaid owner base.

• Summer occupancy and ADRs are holding steady, with positive trends expected to continue.

• Maui recovery is ongoing, with occupancy slightly below normal but gradually improving.

• Election cycles typically have minimal impact on business performance.

Margins, financing, and credit

• Margins face headwinds from inflation and higher short-term interest rates, with some moderation expected as inflation eases.

• Financing margins are expected to compress over the next year or two.

• Lending rates to customers have increased by about 50 basis points in response to market rates.

• Delinquencies are higher among lower FICO score customers, with efforts focused on encouraging usage to reduce defaults.

• Excess spread on receivables remains attractive, though expected to normalize as rates stabilize.

Strategic priorities and IT transformation

• Focus on delivering exceptional onsite experiences, which drive repeat sales and high owner satisfaction.

• Data analytics and IT integration are key priorities, aiming for better decision-making and operational efficiency.

• Major IT transformation underway, integrating legacy systems and leveraging data for marketing and yield management.

• Online bookings now dominate, with new tools expected to impact the bottom line over the next few years.