Okay. Hello, everybody. I am here with Travel + Leisure Co CFO, Mike Hug. Mike, thanks for joining us. I know Orlando, not Miami. Last company was from Miami.
Orlando, yes, sir.
You're from company after company that is coming up here in this beautiful weather in New York, to join us. So we appreciate it. So, you know, with T&L and Timeshare I think it just makes sense to have you start out and give sort of a very brief overview of the company and the different business lines.
Sure.
Because what'll happen is if we don't do that, we start diving into questions and then, you know, it because it's a very unique business and I think it deserves a quick overview.
Sure. Happy to do that and appreciate you hosting us today. The day started off great with some great meetings, so looking forward to the afternoon as well. Basically our business is made up of two segments. The first is a vacation ownership business. Represents about 70% of our EBITDA. That's the sales and marketing of vacation ownership. So we generate tours, if you can imagine, being out in the casinos in Las Vegas or being in a theme park in Orlando. We'll offer you an incentive to come to our sales office, take a presentation, and present the vacation ownership product to you. In that presentation, obviously, we, we hope you will purchase the product and, if you purchase, 75% of our owners choose financing. So the big three, three big revenue streams for the vacation ownership business are the sales and marketing revenues associated with the VOI sale.
The financing income, we landed at about 15% interest rate. And borrowing the ABS markets at about 5.5-5.2% interest rate in our last transaction. So great spreads on a $3 billion finance portfolio. And then the third piece of that segment is gonna be the property management business where for the properties we develop and sell, we are in the property management contracts that are cost + 10%. So those are the four primary revenue streams that drive the EBITDA, which once again is about 70% of the EBITDA of Travel + Leisure Company. The other segment is our travel membership. The largest component of that is an RCI exchange company, which represents about 90% of EBITDA. And what that is, is there's 3.5 million timeshare owners from different companies that choose to participate in RCI. They pay a fee for being an RCI member.
And then if you wanna go to a destination that's not available to you, let's say through Club Wyndham, you decide you wanna go to London, you'll take your ownership for the year, you'll contribute that to the RCI exchange, and you'll go to London. That individual in London will contribute theirs and go to Orlando. And basically those 3.5 million members have an opportunity to go to 4,000 different destinations rather than just the destinations that are within their club. Once again, the two revenue streams there are gonna be the annual membership fee. And then when you choose to transact, you pay a transaction fee. Great low capital business, transaction base, about 33% margins. So a nice fee for service business represents about 30% of what we do.
Okay. That's a great overview. So next I'd like to talk about the consumer. This is again, before we get into Timeshare metrics necessarily specifically, but just thinking about, you know, big picture, the health of the consumer and sort of how you think about the consumer's health heading into 2025, lower end versus higher end geographical. We can talk about those.
Sure.
Those mix, differentiation as well.
Well, I'd say, you know, throughout the year we, we've seen a healthy consumer, and I know we're not talking timeshare metrics yet, but one of the ways we measure that is volume per guest. And our VPGs are running incredibly high. They've been at the high end of our guidance every year. And so throughout 2024 we've seen a strong consumer, a confident consumer. We were a little uncertain heading into the election about, you know, the level of consumer confidence. You know, depending on who won, you know, we might still be sitting here today, you know, trying to figure out who won or who they claimed won.
I think where we sit today heading into 2025 is we have a consumer that I believe is even more confident than they were 60 days ago because they now know the answer as to who won the election. So that uncertainty is gone. And then when you look at what's happened, the reaction to the stock market, I think people are feeling pretty good, as it relates to, you know, the market. So I think we're heading into, you know, 2025 with the consumer in a good spot and some uncertainty that was there 30 or 60 days ago isn't there anymore.
Okay. Speaking of the political backdrop, you know, Trump obviously has some pretty big policy changes that he wants to get through. Maybe we can go through some of the big. I know it's early because we don't know exactly what he's gonna do, but the big buckets and how they might affect your business specifically. So, you know, we know that tax, you know, extending tax cuts is a positive. We know that business, you know, the letting the animal spirits out and the market going up, that, and that's good for consumer confidence. That's a positive. What about immigration as it affects labor markets? And then I guess tariffs, if that could affect you on a second derivative basis from.
Yep.
Your maintenance agreements and things like that.
Yeah. So, you know, right now we aren't expecting any issues as far as our labor force as a result of the potential changes in immigration. So, obviously something we're watching and talking to our property managers about 'cause that's where we'd feel most, you know, the housekeeping, the maintenance, things like that at our resorts. But don't expect any significant issues there as it relates to the immigration. I think as it relates to tariffs, I mean, the good thing about the position we're in is we've got enough inventory on our balance sheet to last us another three and a half to four years. So I don't have to worry about what happens with the cost of supplies from tariffs and things like that.
I think the thing that we will be watching is what do his policies do as it relates to interest rates, right? I think everybody's pretty confident that there'll be another rate cut in 2024 in December this year. But I think what's in question now is will those rate cuts that people were pretty expecting to occur pretty consistently in 2025 still occur? And so, I think that's what we'll be watching now. In our case, we don't pass higher interest rates onto the consumer because we wanna make sure that the, the, what we present to the consumer is great vacation accommodations at great prices and great value, right? A two-bedroom condo that's gonna cost you, your maintenance fee is gonna be a third of what two hotel rooms would cost you in the markets that you're going to. And we wanna keep that value proposition strong.
And once again, 75% of the people that buy from us choose to finance with us. And we're already collecting a 15% interest rate. And we wanna keep that monthly payment on that loan in the $325-$350 range. So when interest rates do go up as they have the last two years, we don't pass that on the consumer because we want them to buy because what history shows is for that first purchase they make, let's say of $23,000, they're gonna upgrade 2.6x more, right? So they're gonna buy another $50,000-$60,000 worth. So for us, it's a customer acquisition model where we feel the pain on the interest rate increases will be on those ABS transactions, right? Where the last one we did was at 5.2%.
So that's what we'll have to watch. Now, we've been in that rising interest rate environment really for the last two and a half years, and we've been able to still drive EBITDA growth. We've been able to drive margins 22%-23%, still have 50% EBITDA to free cash flow conversion. So we managed it very well. But I think that's where I'm watching more close, most closely as far as how his policies might impact the business and it would really come through what happens with interest rates throughout 2025.
Okay. No, that was what I was looking for. Thank you for that. Let's take a step back and look at 2024 again and this time let's go into more in the weeds on the timeshare metrics. You know, what, when you look at your performance today, what sort of differed the most versus your expectations at the beginning of the year versus, you know, what were the good guys, what were the bad guys in here today?
So, I would say, and I'll talk about three key things, volume per guest, tour flow, and the portfolio, the $3 billion consumer portfolio we have. Tour flow has just been, you know, incredibly positive for us, right? We start out the year with double-digit tour flow growth. We knew it slowed down the second half of the year, which it has. But I would say tour flow has kind of been where we expected. Volume per guest, that's the efficiency. That's basically taking the gross VOI sales we have divided by the number of tours we see. That's how we measure efficiency. That's how our salespeople get rated and things like that. That's been a pleasant surprise. It settled in at over $3,000 when we entered the year. $3,000 was the high end of the range that we put out there for VPG.
And the beautiful thing about a high VPG is every incremental dollar in VPG comes with about a 40% margin because by the time that individual shows up at our sales galleries, your marketing costs are already at sunk costs. So if you can sell them a $25,000 package versus a $23,000 package, on that $2,000, all you have is some commission and some cost of sales, right? So very, very high margins on that incremental VPG. And so VPGs every quarter have been, you know, at the high end of the range. And we would expect that again to, in the fourth quarter based on what we're seeing, really through the end of November. So VPGs have been a pleasant surprise. And then the portfolio, we were all worried about the consumer coming into 2024.
We did see a slight deterioration in the portfolio in Q1 and Q2. We took our provision guidance up a little bit for that, basically providing for future losses. We still held our guidance. We still run 23% margin. So it wasn't so significant that it caused us to change our overall guidance. And then in Q3, we saw the portfolio improve a little bit compared to historical trends. So, you know, I think that when we look at the key drivers of the business, VPGs are strong. Tour flow is good. We gotta make sure we get the tour flow growth in 2025. And then the concern about the consumer, I'd say, is probably alleviated a little bit based on what we're seeing now and the uncertainty of the election being gone.
Okay. And when you think about tours in 2025, what are the major building blocks for tour growth?
Yep. So, several things. We announced early this year a marketing arrangement with Allegiant Air. And if you think about Allegiant, 90% leisure travel going into all the leisure markets. And the way something like that works for us is we'll get the right to market to their guests. So for example, if we see an individual going in on the Allegiant website and booking a trip from Little Rock, Arkansas down to Orlando, we can contact that individual and say, "Hey, while you're in Orlando, for two tickets to SeaWorld, would you come over to Bonnet Creek and take a sales presentation," right?
So it's all about being able to touch base with people coming to our markets, whether it's Las Vegas or Orlando, providing them with an incentive, theme park tickets, you know, restaurant gift certificates or casino chips out in Las Vegas, show tickets here in New York, wherever's attractive to them in the markets to go into to drive tour flow. Allegiant's gonna be a great opportunity for us. We also signed an agreement with Live Nation. A lot of data there. Once again, same type of concept. If you have somebody that's, you know, lives in Orlando, Florida and is going up to Atlanta for a concert, right? You reach out to them and say, "Hey, while you're in Atlanta, we'll offer you a discount to stay at our property and take a sales presentation.
We'll offer you, you know, two tickets to the Braves game. You can go to the Braves game, you know, in order to come take a sales presentation. So creating those marketing relationships are really what will allow us to drive that tour flow year over year. And then we also have a couple of sales offices that we haven't reopened coming out of COVID that will reopen. But the goal would be, you know, 5%-6% tour growth year over year. You get a little bit of pricing on top of that, and you're talking about 6%-7% top line VOI growth, on an annual basis kind of as far as a long-term model.
Okay. And then, going to that pricing or that VPG, you know, there's a lot of nuance under the surface in terms of mix shifts that can affect your VPG growth. So when we think about 2025 in terms of, do you have a mixed change agenda that you need to hit in terms of new versus existing or how should we think about the VPG? Same question, but for VPG.
No, it's a great question. So I mentioned the upgrade model, right, where when they buy today, they're gonna buy two point times more. So if you look at our owner base today, and there's a great slide in our investor deck that's on the website, we have about $20 billion over the next 10 years in revenue embedded in our owner base. About $12 billion of that's going to be incremental vacation ownership that they buy. $4 billion is gonna be the interest on those vacation ownerships that they finance. And the remaining $3 billion is gonna be the property management fees. And so to your point, we wanna keep that $20 billion future revenue stream there and growing in the future. And the way for us to do that is to get a new owner mix coming in at about 35% of our total transactions.
Pre-COVID, 2019, we were 36-37%. During COVID, that dropped because our owners were traveling more than our non-owners. This year, we moved from 33% last year up to 36% this year, so, you know, we're kind of in that good spot, 36-37%, and your new owners run a lower VPG volume per guest than your owners do because if you're an owner, you've owned the product for three years, you come down to a sales presentation, you know exactly what you need, right, I'm gonna move from a two-bedroom to a three-bedroom, so I go down and I buy more points to get me, you know, larger accommodations, go to Hawaii, whatever it might be, so we have seen some pressure on VPG because our new owner mix has moved up to 35% or 36%.
But to your point, now that we're at that level, we shouldn't have that headwind, going into 2025. Now, we might choose to go ahead and try to bump that up to 37%-38%.
But if we do, we'll manage it overall just like we did this year to still maintain, you know, 22%-23% margins.
Okay. So if close rate, if the mix is unchanged, let's say you, which you didn't say per se, but let's pretend it is.
Yep.
Close rates, which you can't necessarily forecast, but they're pretty consistent or is the same, then VPG growth is equal to pricing growth. Is that correct?
That's correct. Yes.
Okay. And so then we can look at pricing growth as maybe, well, we can model what we think, but you're in charge of pricing growth. You decide what you.
Yeah. Yeah. We decide. Yeah. Yeah.
So, do you usually target inflation-like pricing growth or does it really more depend on the environment? How do you think about pricing growth?
Yeah. I think so. So the key is, once again, we wanna keep the product affordable, right? And if you look at what hotel rates have done coming out of COVID, right? I mean, we were talking to somebody today and he was, you know, talking about going down to the Caribbean. He's like, "I can't find a, you know, hotel room down there for less than $600," right? And we can sit there to the consumer and, you know, we can say, "Well, hey, you can go down to, you know, our property down in Puerto Rico and for a week for a two-bedroom condo, you can pay a $1,500 maintenance fee," right? So that's what we wanna keep is that value proposition incredibly strong, which is why our pricing increases have been very moderate, right? Two or three%.
Keep that monthly payment on that loan about $325-$350. And sometimes even when we do price increases, you might not see a VPG lift because they might just buy less points, right? They, you know, they might say, "Hey, I'm still gonna spend $25,000.
Got it.
Which means that gets me four nights versus five nights.
Average points purchase is another factor.
Average points purchase, the transaction size is another factor. But for us, let's keep that product affordable. Let's show the value proposition, start making money on the interest income, start making money on the RCI membership fee, make money on the property management, and then we know you're gonna upgrade, right? So, that's why we've been very moderate as far as price increases. Don't get aggressive there and have a great value proposition to create those recurring revenue streams.
Okay. We're gonna shift gears to the consumer finance business. But before I do that, does anybody have any questions about demand, pricing, tours, VPG, anything? Okay. Great. So on consumer finance, you touched on it a little bit, but I'm, and there's a little deterioration in the first quarter, second quarter. In the second half of the year, how has consumer behavior evolved around payments and delinquencies? And maybe just talk about that in terms of above 700, versus below 700 FICOs.
First quarter, we primarily the deterioration was in the below 700 FICOs. The reason we took the provision up in the second quarter was we did see that deterioration across the broader portfolio. Still more impactful at the lower FICOs than the higher FICOs, but we did see that our delinquencies didn't improve as much as they usually do from December of last year to June of this year. We took our provision guidance up a little bit, about 1%, still maintained our overall guidance for the year. What we saw in Q3 was, from Q2 to Q3, delinquencies always go up. We saw them go up, but they didn't go up as much as they usually do.
So they're still a little elevated compared to historical levels, but the trend reversed as far as the, you know, the gap in between the two, if you will. And then we talked about the strong confidence in the consumer that we're seeing today. So, you know, we're confident in the portfolio that 20% provision roughly for the year. And I would say less concerned about the portfolio today than I was 60 days ago. I think that kind of ties in with the VPG that I talked about where we expect the VPG to be at the high end of the range, which gives us confidence in the VOI numbers that we have out there for the revenue numbers kind of being, in the range.
Mm-hmm. Okay. Great. And same topic, loan loss provisions at 19%, 20%, like you said for this year. That's kind of the same area as it was in 2018, 2019, but you guys took your lending standards way up, which we can see in the data. So why would the LLP be the same even though credit standards are higher?
So to your point, as we came out of COVID, we moved our minimum FICO from 600 up to 640. We wanted to focus on quality. If you look at our new originations year to date through September of this year, we have a 742 FICO. So a good, strong FICO compared to probably what was 726 back in 2019. The reason our provision is still at that rate is the other thing we did is we require less down payment from the consumer to purchase a product because we wanted to grow that portfolio quicker, right? We had a $4 billion portfolio at the end of 2019. Naturally, through you know, just normal principal reductions and defaults, it decreases about a billion dollars a year, which means we've got to originate a billion one every year to get growth.
So the portfolio declined in 2020, 2021, and the first half of 2022. And if you think about losing down to $3 billion, if you think about losing $1 billion in a portfolio where you're getting an 8.8% spread, let's say that's $80 million in EBITDA, right? That's the only reason we aren't at 2019 EBITDA levels is our portfolio is at a little bit over $3 billion now. But we wanted to grow that portfolio quicker to get that EBITDA back, right, associated with the net interest income. So we said to our sales team, "Hey, rather than asking for a 20% down payment, why don't you just ask for a 15% down payment?" And when you finance more, naturally your provisions are gonna be higher even if it's good paper, right? So that's really the dynamic there.
And that probably costs us 100-150 basis points as far as the rate. So that's really the big difference as far as why the provision is still kind of at the level it was before we made the underwriting changes.
So better consumers, but slightly worse, not worse, slightly less, you know, stringent terms on the loans they're taking.
On the down payment.
Just on the down payment.
Yeah. Yeah.
Okay. 'Cause I guess the question.
It's a strategic decision, right?
Right.
We said, "Hey, if you're making, you know, an 8% spread, right, why, why wouldn't you?" Look, your provision goes up a little bit.
Yeah.
But the beautiful thing is the thing about this model, and people don't appreciate this, that they always say, "Man, you've got a 20% default rate. How can the business operate with a 20% default rate?" Well, we manage the properties, as I mentioned earlier, right? Cost plus 10% for managing the properties that we develop. I'm an owner, right? About 15% of the maintenance fee that I pay as an owner of Club Wyndham goes into a reserve account that's held by the HOAs and the clubs. And our goal is for every five to six years for every unit in the system to be refurbished using the owner's money, the HOA's money, not Travel + Leisure's money.
So when I have an asset, so if you go down to Bonnet Creek, for example, in Orlando where we have six timeshare towers, every year one tower is out of commission because we're refurbishing the units. So as the lender, Travel + Leisure as the lender, when I do have a situation where I have to go foreclose, I've got a great asset. I manage it every day. It never looks older than five or six years. I'm gonna sell for more today than I did three years ago 'cause I've had price increases over the last three years. If you think about most lenders, right, the lender on the automobile, they don't sell automobiles, right? Plus they aren't managing that all, but the consumer's gonna lose the automobile. They're not gonna change the tires. They're not gonna change the oil.
The bank's gonna foreclose on it and go sell it at auction. They're gonna take a loss, right? We're providing for the loss at the point of sale. When I foreclose three years later, there's no P&L hit to me 'cause I provide the point of sale and I get a great piece of inventory back that's already developed, already registered. I've managed it and I sell for more today than I did three years ago, and that's why this model can run with a 19%-20% provision rate is because I'm there managing the asset and I have, I'm better than anybody, or our sales team is better than anybody at reselling it when it comes, you know, back to us, so that's the reason I don't get excited. I've been in the business, I've been with the company for 25 years.
You know, at 17%, 18%, 19% provision, we still run 23% margins. We still have EBITDA to free cash flow conversion of over 50%. It's a great model that's been proven over time, very resilient. That's what we've been doing this year every quarter, just proving the resiliency of the business.
Okay. What has to happen to get back down to 19% LLP? Is that.
Yep.
Just gonna happen when delinquencies ease off?
Yeah. Once we see those delinquencies for several quarters kind of come back down to historical levels, then you take it back down. Yeah.
That's macro. Okay. Maybe shifting over to Travel & Membership. There were headwinds, you know, at the conference last year where you talked about the headwinds that you had in that business. Modest, I mean, it's sort of been the story for multiple years now that that business is a structural, a bit of a challenge structurally growing because of just the nature of how timeshares evolved as an industry. But talk about 2024. We haven't seen as much underperformance this year. I think maybe just because expectations were lower. But has that business started to stabilize? And how do you think about it over the next sort of multi-year basis?
So when you think about the Travel & Membership segment, you know, I mentioned earlier, to your point, RCI is about 90% of EBITDA there, which is the exchange company. And Fran, as you mentioned, what's happening is the growth in the industry is coming from companies that have big clubs. So for example, as an owner of Club Wyndham, I've got 200 properties that I can go to within my club, which means, if I'm in a club over here that only has 10 properties, I'm probably gonna have a higher need to exchange because I might wanna go somewhere outside those 10, right? To one of the 4,000 properties that RCI has.
So as the growth in the industry, whether it's us or Hilton or Holiday Inn occurs in companies with clubs, even though the member count should stabilize at RCI, the need to exchange goes down because you have more vacation options with your club, right? And so that's the dynamic that you were talking about, which means exchange propensity has been going down. What we've done though for the other side of the business that currently only represents 10%, we've created more of a travel club where we go out and we offer to companies products to offer their employees the opportunity to take vacations for, you know, at great rates to hotels.
And so what you'll see in that business is growth will be flat on the bottom line, but high margins, great free cash flow allows us to, you know, grow the dividend every year, buy back shares. But the dynamic you'll see is we'll work to maintain EBITDA, maybe grow it, you know, 1% or 2%. Exchange transactions will come down. Transactions on the travel side will come up. So net, net they probably stay flat, maybe grow a little bit on the travel clubs. And so we'll work to keep the EBITDA flat over there. Once again, take advantage of the great margins, the great free cash flow, and use that to create a very strong capital allocation policy.
Okay. The other interesting dynamic in your business is the inventory dynamic with timeshare. And you, not just you, your peers built up a lot of inventory during the pandemic. What's the status of the sort of overbuildup of inventory, I guess? And sort of how long can you get how much extra free cash flow out of that build that you have?
Yeah. So, you know, we are sitting here today with probably three and a half to four years of inventory on our books, and ideally, you're talking about 18 months, so we've got, you know, inventory to last us a while. Keep in mind, even though I would love to have no defaults because I wouldn't have to make provision point sale, when I do have a default, I'm getting about $100 million a year in inventory back that I don't have to pay cash for because it's already paid for and it's built and it's developed, so when we look at our inventory for our core business, Club Wyndham, I mean, that's gonna last us three, four, five years.
Plus we also spend about $50 million a year buying back inventory from HOAs that, for owners that have gone to lien on their maintenance fees, buy on the resale market. We have some very attractive exit programs for owners who will take the inventory back. So on the Club Wyndham side of business, you know, that's gonna last us a really long time. I mean, three, four, five years. We will have some incremental spend. We've got a development of a new vacation ownership club, Sports Illustrated Vacation Ownership Club, and that will take some development spend as we get into 2026 and 2027. But that should be on a just-in-time basis. So the spending should occur when we create incremental revenues. But you'll see our inventory spend go up then.
But our long-term goal, just like we did back in 2018 and 2019 when we were spending more on inventory, is to get EBITDA to Free Cash Flow conversion to 55%-60%. We're gonna be around 50% this year. And as we grow that EBITDA, we're gonna continue to be able to leverage all the walk-across items from EBITDA to Free Cash Flow to move it back up to 55%-60%. So eventually inventory spend will go up, but as that's happening, the other line items that get us from our EBITDA to our Free Cash Flow should go down as a percentage of EBITDA.
Okay. Great. You know, thinking about diversification and sort of the business model in terms of growing your, your footprint in your business, one of the unique things about T&L is that you kind of have a flag in most markets in the U.S., right? Whereas your peers are much, much smaller than you, and so thinking about, you know, how to grow from here and where you can plant new flags and grow a network effect, that's not necessarily maybe as much of an opportunity, but you do have these other opportunities, whether it's Accor, whether it's Sports Illustrated. It seems like over the last 12 months, the big change in the story has been you building as a company, you building a pipeline.
Right.
Of either branded or sort of, you know, synergistic deals that could then boost tour growth. Can you give us a sense of, you know, what the next three years look like in terms of rolling things out? And then, you know, is there stuff you're working on that you can't announce yet? Maybe you wanna announce right here. I'm just kidding. No pressure. But how do you think about, you know, those kind of opportunities that we can't sort of model or even try to come up with them ourselves?
Yeah. So the way we look at it is, and for example, right now our Blue Thread, the relationship we have with Wyndham Hotels is about $125 million in revenue. And what we think is as we go out and do these new clubs, Sports Illustrated Vacation Club, the Accor acquisition, they start at about $25-$50 million the first year and then grow to $25-$50 million a year till they become $250-$300 million.
The contract sales you're talking about.
Contract sales. Yep. VOI. We acquired the Accor brand internationally, the vacation ownership business they had over in Australia in March of this year for about $50 million. It's gonna be a great acquisition for us. It's gonna do 5 million in EBITDA this year, probably double that next year. But really the reason that's such a great opportunity is coming out of COVID, the Accor hotels really didn't focus on their vacation ownership business very much. It was a very small business. Australia coming out of COVID was very up and down, right? They were closed for a long time. They would open up, they would get five cases of COVID, and they would shut down for another three months, right? So really wasn't a great market for them to be able to reopen in.
And so we go to Accor, just like all the other hotel companies have done, Marriott, Hilton, Hyatt, Wyndham, Holiday Inn. We said, "Hey, why don't you let us run your vacation ownership business? We're selling to us for $50 million. We'll pay you a royalty just like all the other hotel companies get a royalty." So we execute on that. Like I said, about $50 million when you include inventory in March of this year. That's gonna grow, kind of, you know, become a $25 million business and then a $50. And then so the goal would be to have two or three new brands like that, an Accor, Sports Illustrated, one more TBD.
Okay.
And make them into $300 million businesses. And if you do that and you do it with three or four of them, you've got an additional $900 billion in VOI revenue four or five years down the road. So you grow the core business, Club Wyndham, to make sure you're achieving your long-term growth objectives of 7%-8% on the VOI business. You add on these other ones and you grow them up, let's say, $50 million a year each to stack on top of each other.
Okay.
That's kind of that multi-brand strategy you'll hear us talk about under the Travel + Leisure umbrella.
Questions in the audience? Last chance. Okay. Oh.
I'd be curious, if you're willing to share, you're in some ski destinations, right? How do you see people returning to the ski destination? Last year was horrific for some areas.
So, so weather's good. Is that the onus of the question?
Yes.
Weather's good. I actually went out to Park City, Utah, Christmas of 2023, yeah, just last year. In terms of the value proposition, I'll answer your question in a minute, but I was at the foot of the canyon, ski in, ski out, December 23rd through 28th, so over Christmas, right?
At your.
At our property. Yep.
Your property.
Yep. I'm a Club Wyndham owner, right? My maintenance fee for five nights total, for five nights ski in, ski out, was $1,800 total. You try to find a condo there, a two-bedroom condo, you're gonna pay $1,500 a night, right? But that's the value proposition we present to our consumers. And actually, I had three condos. I enrolled my points from 2022 to 2023 'cause I got a bunch of kids that have spouses. So there were 10 of us out there, right? So I got three condos, $1,800 a piece. And then think about going out to dinner in Park City, Utah, over Christmas week every night with 10 adults. That's gonna get real expensive, right? We went out two nights. The other three nights we ate in the room, which we wanted to do anyway. You're worn out from skiing.
Just think about the value proposition in terms of being able to eat meals there in the room with 10 people, a few bottles of wine, and everything else that goes along with a great time with your family. That's the other part of the value proposition. People think about the accommodations, but if you look at what restaurant rates run today, right? If you're in two hotel rooms and you go downstairs with a family of five to eat at that buffet, you're paying $30 a pop. And that six-year-old kid has a strawberry and some orange juice and a bake when you pay $30, right? We get to Park City, we call Walmart, they ship everything to us, and we go downstairs, pick it up, and we're set for the week, right? A long answer. That, that was about the value proposition.
As far as, look, in any market, Orlando's our biggest market where we probably have 1,500 units. Park City, 200 units. When you've got 800,000 owners, you're gonna fill up Park City every year during ski season, right? So that's the beautiful thing about our footprint. You had that diverse footprint. So there's not really any one market where, you know, you're saturated. In fact, right, some markets, Myrtle Beach in the summer, you can never have enough Myrtle Beach in the summer. So, 25 years I've been with the company, our annual occupancy always runs 75%-77%. And that, that's just being thoughtful as far as when you go into a market, make sure you don't overbuild it.
What's the highest default rate you can recall?
Oh, 2009 and 2010, we were probably at 26%-27%.
And for anybody who's a debt guy in the crowd, I know there's a lot of us. What's the argument for maybe including or not including recourse debt when you're talking about leverage? I wonder if you'd have any thoughts on that.
Well, it's non-recourse to us, which our ABS debt is non-recourse to us. My view is when I think about leverage, right? It's like, what's the risk to the bondholders or the shareholders, right? If that debt, if the corporate entity isn't able to pay that debt. On the ABS debt, which is non-recourse to Travel + Leisure, if that goes into default, there's no obligation of Travel + Leisure to pay that debt. So your corporate bondholders don't have to take, aren't taking on any risks by the issuance of the ABS debt. So that's our viewpoint. Look, it's non-recourse to the company, so it shouldn't be included in our leverage rate, which is consistent across the industry, by the way.
But you mentioned taking upfront reserves, and I think that's interesting. I wonder if people fully appreciate the fact that reserves have already been taken, and we'll take it offline.
Well, so from an accounting standpoint, for book purposes, the debt is consolidated, right? The debt's on our books, even though it's non-recourse, the accounting says you consolidate, which means you keep the receivables on the books, which means you've got to put a reserve on those receivables for projected losses.
Fair enough. Thank you.
Sure.
Anybody else? Mike? Mike, thanks for coming.
Sure. Thank you all.