Marriott Vacations Worldwide Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 3, 2023

There are 8 speakers on the call.

Operator

Greetings, and welcome to the Marriott Vacations Worldwide Second Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Neil Goldner, Vice President, Investor Relations for Marriott Please go ahead.

Speaker 1

Thank you, Melissa, and welcome to the Marriott Vacations Worldwide Q2 2023 earnings conference call. I am joined today by John Geller, President and Chief Executive Officer will be Tony Terry, our Executive Vice President and Chief Financial Officer Jason Marino, who will be assuming the role of CFO effective September 30 when Tony retires. Session. I need to remind everyone that many of our comments today are not historical facts and are considered forward looking statements under the federal securities laws. These statements are subject to numerous risks and uncertainties as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by forward looking statements in the press release that we issued last night as well as our comments on this call are effective only when made and will not be updated as actual events unfold.

Speaker 1

Throughout the call, we will make references to non GAAP financial information. You can find a reconciliation of non GAAP financial measures referred to in our remarks in the schedules attached to our press release as well as the Investor Relations page of our website at ir.mbwc.com. Session. With that, it's now my pleasure to turn the call over to John Geller.

Speaker 2

Thanks, Neil and good morning everyone and thank you for joining our Q2 earnings call. While we were pleased to run nearly a 90% occupancy in the quarter with the high VPGs we had last year in a mixed macroeconomic environment this year, we knew coming into the quarter that comparisons were going to be tough. As a result, we expected VPGs to be lower on a year over year basis, So we expected this to be offset by higher tours. However, VPGs declined more than we expected in the Q2 and while tours did grow 4%, that was a few points below our expectations. We believe most of the VPG difference this quarter compared to what we expected was a result of the changes we've discussed in the past, specifically the transition to selling of Baum by Marriott Vacations at most of our Despite the difficult comparison, contract sales at locations that didn't transition from selling a legacy Vistana product were only down 5% in the quarter, while sales at legacy Vistana locations that made the change were down double digits.

Speaker 2

And on the legacy Welk side, we are aligning the business models and the sales processes, which we expect will improve our business for the long term, but resulted in double digit sales decline in the quarter. Despite the near term transition impact, I remain confident that the changes we've made are the right strategic decisions that will benefit us in the future. We are also seeing changes in travel patterns with more Americans vacationing overseas this year, which has not been fully replaced by inbound international travelers. This shift negatively impacted sales and rentals In our higher end U. S.

Speaker 2

Travel destinations like Hawaii. However, we benefited from the increase in international travel as our European and Asian contract Sales grew 56%. We also continue to focus on driving new owner growth with first time buyers representing 1 third of our contract sales this quarter, up 200 basis points from the prior year, which is good for the long term health of the system. Session. In our Hyatt vacation ownership business, we expect to rebrand the legacy wealth resorts later this month to align them under 1 unified brand, Hyatt Vacation Club.

Speaker 2

In addition, we will be adding more vacation options for our Hyatt owners, including cruises and tours as we launch the Beyond program in a few weeks. Moving to our Exchange and Third Party Management segment, active members at International were unchanged compared to the Q1. Inventory utilization was very strong in the quarter and average revenue per member increased 1% compared to the prior year. However, member deposits remain below pre pandemic levels. In our Aqua Asking business, revenue was lower compared from prior year due to lower ADRs in Hawaii.

Speaker 2

As a result, excluding cost reimbursements and VRI Americas, which we sold last April, Revenue on our Exchange and 3rd party management segment declined 4% compared to the prior year. Despite the difficult quarter, It was heartening to see our vacation ownership resorts at nearly 90% occupancy, reflecting the continued demand for leisure travel. And I want to thank our associates who have been working tirelessly to deliver exceptional vacation experiences for our owners, members and guests. Looking forward, while I'm not satisfied with our results this quarter, we have some of the best brands in the hospitality industry and sought after markets and an experienced management team that has successfully integrated new businesses and launched new products in the past. And I'm confident that the strategic changes we've made will provide long term benefits.

Speaker 2

In fact, VPG improved sequentially in June July even with an increase in first time buyer mix and while we are seeing some variability in the macroeconomic environment, We still expect to grow contract sales for the full year. We also expect to grow adjusted earnings per share this year, excluding the impact of last year's alignment, reflects the benefit of our share repurchases and to generate between $540,000,000 $600,000,000 of adjusted free cash flow illustrating the strength of our leisure focused business model. With that, I'll turn it over to

Speaker 3

Tony. Thanks, John. Today, I'm going to review our Q2 results, the strength of our balance sheet and liquidity and our 2023 outlook. Starting with our vacation ownership segment. We grew tourists 4% in the Q2 to 96% of pre pandemic levels.

Speaker 3

We also grew our package pipeline by 10% from a year ago, ending the Q2 with more than 230,000 packages. However, while we expected VPG to decline due to last year's difficult comp, it did come in lower than expected. Session. As a result, contract sales declined 10% compared to the prior year, though they remained 17% above 2019. Adjusted development profit decreased 20% year over year to $118,000,000 Despite lower sales, adjusted development profit margin remained strong at over 30%.

Speaker 3

While we expected rental profit to be down in the quarter, it declined more than anticipated due to lower fees rented and lower than expected ABR. And with the moderation of revenue per available key, we now expect rental profit could decline by $15,000,000 to $25,000,000 this year. In the stickier parts of our vacation ownership business, financing profit increased 3,000,000 and answer session. Our next question comes from the line of David. Hi, good morning, everyone.

Speaker 3

This is primarily driven by higher average notes receivable balance and a 30 basis point increase in the weighted average coupon rate, partially offset by an increased Resort Management revenue increased 5% in the quarter, while profit declined $2,000,000 due to higher labor and other costs, leadership segment decreased 11% in the 2nd quarter to $245,000,000 while margin was strong at 32%. Moving to our Exchange and 3rd party management business, adjusted EBITDA declined $3,000,000 compared to the prior year, is primarily due to lower ADRs at Aqua Aston, while operating margin was 52% for the quarter. Finally, corporate G and A expense was largely unchanged compared to the prior year. As a result, total company adjusted EBITDA declined 13% to $222,000,000 in the quarter and adjusted EBITDA margin was 27%. Moving to the balance sheet.

Speaker 3

We ended the quarter with approximately $1,000,000,000 in liquidity, including $242,000,000 of cash, $59,000,000 of gross notes receivable eligible for securitization and $684,000,000 of revolver capacity. With $3,000,000,000 of corporate debt outstanding at the end of the quarter, our net debt to adjusted EBITDA ratio stood at 3.1 times, is roughly in line with our targeted 2.5 to 3 times leverage range. We ended the quarter at an average interest rate of 3.6% With no corporate debt maturities until 2025. We have a combined $550,000,000 of interest rate hedges that mature by next April. However, after those hedges mature, our corporate debt will still be 70% fixed with a pro form a interest rate of only 4.1%.

Speaker 3

We ended the quarter with $2,000,000,000 of non recourse related to our securitized notes receivable. In June, we renewed our warehouse facility extending its maturity and increasing its capacity is $500,000,000 to support future growth. Finally, the sales reserve increased will be $8,000,000 year over year on our $2,500,000,000 gross originated notes portfolio. Defaults were up is 50 basis points compared to the prior year and delinquencies were up approximately 70 basis points. While delinquencies were higher than the previous year, We have seen them trend downward in the first half of twenty twenty three.

Speaker 3

Our new guidance also assumes 100 basis points to 150 basis points higher sales reserves compared to last year. We continue to return excess cash to shareholders during the quarter, repurchasing $82,000,000 of common stock and paying $26,000,000 in dividends. Our Board of Directors increased our share repurchase authorization to $600,000,000 during the quarter with $561,000,000 remaining at the end of the quarter. Moving to our 2023 guidance. As you saw in last night's earnings release, we now expect contract Sales to be between $1,840,000,000 $1,900,000,000 this year.

Speaker 3

This is roughly 5% lower than our previous guidance with the difference being driven by mix of lower tours and lower VPG. We expect VPG to improve sequentially in the 3rd quarter, but to be down year over year, while tours are expected to be up a few points compared to last year's Q3. However, we still expect 2023 contract sales to increase year over year, reflecting the continued demand for our leisure based products. Despite the lower contract sales guidance, we still expect 2023 full year development margin to be around 30% even after a slightly higher sales reserve. As I mentioned earlier, we now expect rental profit to decline this year versus being up 10% in our previous guidance and for resort management profit to be up.

Speaker 3

We also expect financing profit to increase slightly excluding last year's alignment benefit. We expect exchange and third party management profit declined $15,000,000 to $20,000,000 for the full year versus our previous guidance of roughly flat due primarily to lower transactions at interval international as well as lower ADRs in Aqua Aston. As a result, we now expect our 2023 adjusted EBITDA to be between $880,000,000 $910,000,000 8% lower than our prior guidance. As a reminder, we also reported a $44,000,000 alignment benefit in last year's Q3 that we do not expect to recur this year. Moving to cash flow.

Speaker 3

We have a strong balance sheet and ended the quarter with roughly $470,000,000 of excess inventory Enough to support approximately $2,400,000,000 in future sales. We sold 3 non core session during the quarter generating $14,000,000 in total proceeds, which we exclude in the calculation of adjusted free cash flow. We also paid down $135,000,000 of our outstanding revolver during the quarter. With the lower expected adjusted EBITDA this year, we now expect our adjusted free cash flow to be between $540,000,000 $600,000,000 Our capital allocation strategy remains consistent in that we continue to use our free cash flow to grow the business As always, we appreciate your interest in Marriott Vacations Worldwide. With that, we'll be happy to answer your questions.

Speaker 3

Melissa?

Operator

Answer Our first question comes from the line of Chris Woronka with Deutsche Bank.

Speaker 4

I guess maybe we could drill down a little bit as you guys go back and unpack the quarter on the abound. I mean, was this Where you implemented it, was this just an issue of salespeople not having a lot of experience kind of selling yet or is it more Pushback from consumers, just trying to get a sense for what you think was kind of a little bit off?

Speaker 3

Yes. Well, The sales folks

Speaker 2

have been well trained on the product. That said, yes, when you change from one product To another, right, and can take a little bit of time to get your sales pitch down and grooving on that. So a little bit of that. I think the other is the consumer and really an education of the consumer. And this is a little bit like when this was prior to us Being a public standalone company when we went from our weeks to points product in 2010, right.

Speaker 2

The people that bought weeks were sold weeks, they were sold a And how they can use it in flexibility, but it takes some time. The best thing that can happen is those Existing owners that bought into either the Westin Flex or the Sheraton Flex product, They play in the abound program, right. They start to use their ownership. They go stay at different resorts. They use different exchanges.

Speaker 2

Remember the abound program offers More cruise and trips and things that were already in the Marriott program. So, there is Educationgetting the consumer to use the product and because we launched it, call it earlier this year, a lot of those folks Had already made their vacation plans, right, under their old product. So there's just that, it's going to take a little bit of time, education And the best is getting the Wesson and the Sheraton Flex owners using the product, which just takes a little bit of time on the transition side.

Speaker 3

And Chris, one add on to that is that educating the owners means that there's something out there to talk to them about and they are interested in new products. So that is a good source

Speaker 4

Sure, understood. And then the follow-up question is just on the comment towards the end of the prepared remarks on the some of the Reserves going up. Is there is it possible to get a little bit more color? Is that coming from any specific or particular segment or Customer type, is there any way to kind of parse through that and say that this gives us gives you confidence that There's not going to be a larger problem later. Can you maybe give us a little more detail on it?

Speaker 4

Thanks.

Speaker 5

Yes. Let me start and

Speaker 3

then if John has anything to say, he can In total, when you start looking at our reserves, we have a $2,500,000,000 originated notes receivable balance out there. So pretty big portfolio. When we took a look at the quarter, we had about $11,000,000 of true ups and defaults. And those defaults came from a lot of different places. But we tend to take a look at those and treat them as permanent.

Speaker 3

And that's one way that we do our calculation. So we don't assume that it's an acceleration of anything on our default curve. We do assume that they are permanent and they're going to continue into the future. So we feel that we have an adequate reserve for those right now. We feel that we have increased the default rate or the sales reserve rate that we put against contract sales for the remainder of the year and that will get us to the right place based on what we know today.

Speaker 3

So a couple of other things, Chris,

Speaker 5

I think when Tony mentioned it

Speaker 2

in his remarks, Yes. While delinquencies, right, which is a potential indicator of future defaults are up over last year. As we said, coming out of COVID, A lot of our delinquencies, if you looked at Adam over historical, we're below, right? And so you've seen them come up, If you go back in time, those delinquencies, yes, higher than last year, but arguably more in line with some of the delinquency we've seen over time. The other key point is that the trend of those delinquencies this year have been coming down, right.

Speaker 2

So That's a positive sign as a potential future indicator. And to Tony's point, we in our outlook, Including this charge we took in the Q2, we've got a variability range of some higher defaults. But Yes, we feel good about kind of where we're at today.

Speaker 4

Okay. Very helpful. Thanks guys.

Operator

Thank you. Our next question comes from the line of Brandt Montour

Speaker 6

I do want to Talk a little bit more about a bound. Maybe we could just start with reminding us how much of the system was selling under a bound in the second quarter? How much of the and how what's the cadence of the rollout from here?

Speaker 2

Sure. Well, when you talk about Abound, the vast majority of the system or the majority I should is selling abound, right, because your Marriott legacy sales centers are selling the abound. But The core of the abound program is the Marriott Vacation Club, right? The abound allows the Westin and Sheraton Flex owners to come in and play in that broader Marriott Exchange Program. So the change that we're talking about, Probably, I'd call it about 20%, 25% of the sales centers in the quarter were the ones that transitioned from selling a legacy Vistana brand like the Westin Flex, right, over to selling the Marriott Vacation Club.

Speaker 2

So those are the ones where you have owners, that's where I was trying to focus in that bought a different product. They want to understand the new product, the best way for them to understand it and see the benefits or actually use the product, but we're educating them. To Tony's point, it's helping drive owner capture. Owners want to come in, and as well as obviously first time buyers and educate them on the product. So all that work is going on.

Speaker 2

Now there are some on the Sheraton Flex side, we still have inventory in the Sheraton Flex. So There are certain legacy Vistana centers that haven't transitioned over yet. And those are doing kind of what we were expecting versus the broader. So It is really the ones and more broadly, we talked about the Hyatt, right, even more so with the Welk legacy sales centers Transitioning over, we've seen big impact there as well.

Speaker 6

Okay. And John, you likened it to the transition from weeks to points, which if I recall It was a multi year and a really disruptive campaign for you guys. And Remember that transition had tons of financial positive financial implications in the back end For balance sheet management and inventory management, all those different things. Is there can you just remind us What the there's meaningful benefits that are going to come to you from a bound. When do you think when you look out at this sort of playbook, when do you think that the benefits will start to override the disruption that you're seeing from these specific Legacy Brands.

Speaker 2

Yes. I think it will build over time. If you go back to the weeks to points, I would say it was a much bigger change than what's happening here, right? And I know you're looking for this will all be behind us 6 months or 9 months. But I do think what we're going to see is continued improvement As we move forward here through this year, we obviously based on the outlook, we're not expecting it to bounce back.

Speaker 2

But like I talked about big picture, We did see VPGs improve sequentially in June July. And I can tell you right now, not saying 1 month is where the quarter is is going to be, but we're running VPGs that are about 5% higher than we saw in the Q2, right. So You're starting to see, it won't be a straight line, but you're starting to see some improvements more broadly in the VPG. So Yes, we're hoping we continue to get through a lot of this and get better as we get through this year into next. But we're already starting to see Some green shoots, if you will, as we start this transition.

Speaker 2

So once again, hard to put a deadline or saying, yes, it all be back to normal, but the other transition I would point to a little bit different was when we bought Vistana. Vistana VPGs were down 25% relative Marriot, we didn't have a good sense as to how long that would take, but I think we moved pretty quickly there and probably even faster than we expected to get those VPGs up and get the benefit out of there. So we've got the right leadership. My point is we've got leaders that have been through this They're hyper focused on getting this right as quickly as possible, and I'm confident we're going to get there.

Speaker 3

And Brent, I'd add on to that that we've probably already seen a little bit of benefit here from a balance sheet perspective of the Bound. Remember, we were selling 3 different trusts And we're running low on inventory in the Weston Trust specifically. And had we not done the abounding program, we would have probably had to have built inventory in that trust over the last couple of years. So that's one of the reasons why we have lower inventory spend It's because we have a bound, we knew it was coming and now we're selling 1 major trust to our customers instead of through separate.

Operator

Thank you. Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Speaker 5

Hi, morning everyone. Question comes from the line of David. Hey, David. Hey. So a couple of things.

Speaker 5

1, I have your analyst meeting deck open, which obviously has a little bit of datedness to it, but it has some 2025 targets. And I suppose the assumption should be That those get pushed out by some amount and we'd love to get some sense about how far that could be. And coupled with that and just listening to your comments on the last couple of questioners, have we Seeing the worst of the pressure that is from abound, do we feel like we Have the rollout of World of Hyatt under good control right at this point? And I suppose what I'm asking is, What's your degree of confidence that the guidance we have today is relatively firm versus where we might be 90 days from now the next time We address it.

Speaker 2

Sure. So taking the second part, yes, as I said a little bit earlier, Yes, we are seeing sequential improvement. So that said, as we look at our guidance For the full year, we haven't assumed that we get a hockey stick up On sales at the legacy transition Vistana sites and the Welk sites that are transitioning. We're assuming some gradual improvement, But the outlook we give you, that's where we are in terms of confident that We should achieve that for the full year based on the current outlook. Going back to the Investor Day, Look, we got a couple of years.

Speaker 2

I think a lot of what happens in 2025 is how quickly, as you guys have asked, We recover and get the abound going, because it is the right longer term strategic decision. And Some of these things we knew was going to have some bumps to it, right, as you transition. We talked about that anytime you make a transition or change to a product. The harder part is trying to predict when and how quickly it will come back and get you going again. And that's where, like I said, we got a couple of years here.

Speaker 2

So we are not giving up in terms at this point of where we're at in 25, we'll get better And as we've also talked about, this isn't the only thing we have in the hopper. I mean, we're making significant investments on the technology side. We're going to be rolling out from a marketing and sales perspective, sales force out at our sites, our digital marketing, how we target. So you got a lot of initiatives going at the same time as you're transitioning this product. So we'll come back At some point here and look longer term in terms of 25, but the team is focused and we're not giving up on 25 at this point.

Speaker 5

Understood. And if I can just follow-up with one more perspective in this direction, which is You certainly have sort of been out and about throughout the quarter. And I'm curious whether there were some acceleration in some of these pressures as we got toward the end of the quarter and into and through June? Or did I guess what I'm asking did some of this sneak up in some way or was this A vision and I'll sort of throw myself out there. Did I not hear it clearly enough?

Speaker 2

Well, when we came in into the quarter, yes, things got a little bit I think worse in May directionally and then we And then we started to see improvement in June. So if you look at kind of our mix, let's take a step back. We don't guide the 2nd quarter. Consensus was call it is $250,000,000 of EBITDA. We were coming into the quarter probably around $241,000,000 $242,000,000 on our own expectations of what we were going to do, right?

Speaker 2

So We missed our own internal by about $20,000,000 of which development profit was about half of that, right. And Quite frankly, a lot of that was the higher sales reserve, which we didn't anticipate. So notwithstanding the lower contract sales, we Still held the development margin above 30% and the sales reserve was a bit of our miss for the quarter. The other bit of the miss was rentals. And as I talked about in my script, we had a Q1 that was pretty good in rentals in terms of occupancy and rate.

Speaker 2

As we moved into the And we're seeing that impact. We have a lot of our key's higher end Hawaii, those higher end markets, Florida Beach, another area where we've been able to get higher ADRs, especially back in 2022. And You're seeing 3 points, four points of lower occupancy rates are down in some of those markets. So those are the other trends that kind of shifted as we went through the Q2 and we probably about $10,000,000 of our miss versus our expectations in the Q2 were on the rental side of the business. So And as you look at the outlook, we've kind of we've flowed through in terms of our outlook That miss in rentals, so call it another the 10 plus another 20 give or take for the balance of the year, because As we look out at these markets right now and what's on the books and all that, while it's strong on a relative basis, The trends are similar to what we're seeing in the Q2.

Speaker 2

So that's where you have it. As Tony talked about, we do expect contract sales to be up, Notwithstanding some of this noise here that we're having with the Bound in HBO and we're managing the development margin to be at 30 plus percent. So, unfortunately, these travel pattern shifts and that's a little bit on the exchange side as well, where we haven't seen the The deposits come back here through the first half of the year. We weren't forecasting for them to be back to pre pandemic levels. We were expecting that they would improve year over year and we just haven't seen that.

Speaker 2

And that gets at a broader That's travel patterns, right? People still using their weeks a little bit different coming out of COVID. We're in a little bit of that environment coming out of COVID where The patterns have shifted a little bit and we still expect those will continue to normalize back. Next year, I would expect given the U. S.

Speaker 2

Travelers go into Europe, there might be some pullback here to the U. S. As well. So, yes, we're keeping an eye on all that, but that was a little bit of The surprise on the rental side versus what we were seeing.

Speaker 3

And David, I would add one other thing in there on the rental side. When you're getting into the year and especially when you get to that second quarter, A lot of your rental costs are already fixed for the year. So if you think about the inventory costs, we pay unsold maintenance fees at the beginning of the year. You look at the programs that our owners have that they use to do other excursions. We get that inventory back, We have to rent.

Speaker 3

So we're not going to stop owners from participating in the Explorer program or the Bonvoy program. So a lot of that cost rentals is kind of fixed. So when you miss a little bit on the ADR side or on the revenue side, a lot of that flows through to the bottom line and that's part of what we're seeing here and why rentals, saw a little bit of weakness on the bottom line.

Speaker 5

Got it. Thank you very much. Appreciate the answers. Thanks, David.

Operator

Thank you. Our next question comes from the line of Patrick

Speaker 7

Can you break down a little bit $20,000,000 from rentals. It looks like there's 3 other items. It's a tougher comp, Abound and the Hyatt's alignment, for those tougher comp Abound and Hyatt alignment, how much EBITDA taken down would you ascribe to each one of those roughly?

Speaker 2

Sure. Sure, Patrick. Yes. Rentals with the $10,000,000 miss in the second quarter and another $20,000,000 right? That's about $30,000,000 of the 80,000,000 The exchange as like I said, we're not seeing the inventory deposits and the trends there, Call it another $20,000,000 from there.

Speaker 2

So that's about $50,000,000 of the $80,000,000 And the balance the development is the balance call it roughly 30,000,000 And that's a combination of the lower sales, but some of the higher sales reserve I just talked about. So depending on where we come out for the year, We've already got, as Tony mentioned, dollars 9,000,000 or $10,000,000 of additional in that $30,000,000 but we've given you a range on the sales reserves. So some of The sales reserve and then the rest would be the more impact on the contract sales.

Speaker 7

Okay. And I believe you talked about 25% of the legacy Vistana sales centers have Transition to abound. What's the timing on the other 75%?

Speaker 2

So, yes, it's about 20%, 25%. The remaining ones are going to be The Stana, excuse me, the Sheraton Flex, which is Probably later next year, which is really mostly sales centers in Orlando, Myrtle Beach. And then there's some where they just have a different product. They're not selling the Sheraton or Weston Flex, right? So for example, in Mexico, We sell a different trust, Adventura, so that won't transition, right?

Speaker 2

That will continue to sell the Mexican trust. Our Westin St. John, for example, is standalone product. So, not all of them will transition because they don't sell necessarily the Western or Sheraton Flex. It's the Sheraton and Westin ones that will continue to transition and I don't know if I have that number in front of me, but probably another 30%, 40%, and then the remainder will continue to sell their existing product.

Speaker 3

Yes. If you think about it, it's Some of our locations still selling that old product, so that we can get through that and deplete that trust. There's always going to be some inventory trickling back. So we'll always have to keep selling some of our sales centers, but through the end of this year and probably early into next year, You should probably see more of the Sheridan sales centers shifting over.

Speaker 2

So the nice thing about that delay notwithstanding The sales process and all that is those owners are enrolled in the abound program on the Sheraton Flex side for example, Patrick. So They can start using it now and getting educated and all that. So that's the good thing, right? That's the piece that I mentioned before, which is not only educating, but getting your owners to use it and see the benefit of it. So I would expect, time will tell here a little bit, when we go to transition, you're going to have a much more educated owner base about the new product.

Speaker 7

Okay. So is it safe to, I guess, assume that all the challenges you had Out of the box with the first slug of 25%, likely at least to the degree that you saw with that first 25% Won't continue for that remaining 35%?

Speaker 2

Yes. I mean that I think it should go smoother, Right. That's all I'm saying. And because that owner education piece and the ability for those Sheraton Flex owners to start Using the Abound program now, seeing the benefits of it, staying at different resorts, exchanging out for cruises or tours, things like that, That will help because that's what we saw with the Weekspace product, right? People started To enroll their weeks in the points program, use it, right?

Speaker 2

And then they wanted to buy more points, right? So a little bit of It takes a little bit of transition. My only point is delaying the launch on the Sheraton Flex side to sell through that Should be helpful, right, from a it should make that transition easier than starting cold.

Speaker 7

Okay. And can you remind us, Before you started to transition into a bound, the legacy Vistana owners, What percentage of VOI sales did that represent? Roughly, I get it, taking on COVID and the acquisition, but roughly.

Speaker 2

30% to 40%, I would say. I'm looking at Tony 30%

Speaker 3

to 40%. I'd have to go confirm that number for you, Patrick. It should be in that ballpark.

Speaker 2

I mean, we can go back and look at it, but I think that's ballpark ish.

Speaker 7

Okay. I am all set. Thank you.

Speaker 2

Great. Thank you, Melissa, and thanks for everyone joining our call today. Despite the uncertain macro environment, our resorts again experienced high occupancy this quarter illustrating the power of vacations. And while I'm not satisfied with our results this quarter, that doesn't diminish my enthusiasm for the long for our long term trajectory. We have some of the best brands in the hospitality business with a portfolio of resorts that would be impossible to replicate and the improvements that we've made to our core Marriott brand vacation ownership product in addition to the alignments we're making on the Hyatt side are the right strategic decisions that will propel our growth over the long term.

Speaker 2

On behalf of all of our associates, owners, members and customers around the world, I want to thank you for your continued interest in our company and hope to see you on vacation soon. Thank you.

Operator

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

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Marriott Vacations Worldwide Q2 2023
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