Timeshare Giants Report Strong Quarter

Vacation ownership is having a boom time this year as the travel sector broadly recovers from the pandemic.

Hilton Grand Vacations said Tuesday that its contract sales in the second quarter were $617 million, or 5 percent above 2019 contract sales. It produced a net income (a measure of profit) of $73 million on $948 million in revenue.

Hilton Grand Vacation has also been adding back employees after the pandemic crisis, having added 3,890 employees over two years to reach about 14,000.

Meanwhile, Marriott Vacations Worldwide Corp. said Monday that it had produced a quarterly net income of $136 million on revenue of $1.16 billion.

Some analysts have been making a case that timeshare companies would be able to handle a potential recession in the U.S. without much trouble.

Deutsche Bank’s Chris Woronka and research analyst colleagues recently wrote a report making this case:

“To be clear, Marriott Vacations’ business is well within the wheelhouse of being discretionary in nature and the core sales function can also rightfully be described as being a “big ticket” purchase, especially for first time buyers. But VAC also noted that roughly 40 percent of earnings before interest, taxes, depreciation, and amoritization is largely recurring in nature and isn’t directly correlated with contract sales. …. Management also noted that its customers have an average (self-reported) net worth of $1.5 million; 54 percent of Interval owners have annual income in excess of $100,000 compared to an industry average of 29 percent.”

—Deutsche Bank Securities