Travel + Leisure 2026 Q3 Earnings Call

Good morning, everyone. Before we begin, I would like to remind you that our discussion today will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements, and the forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these estimates. The factors that could cause actual results to differ are discussed in our SEC filings and in our press release accompanying this earnings call. You can also find a reconciliation of non-GAAP financial measures discussed in today's call in the earnings press release available on our investor relations website. Please note that all references to EBITDA, net income, earnings per share, and free cash flow made during this call are on an adjusted basis, as disclosed in our earnings press release. Additionally, all references to earnings per share are on a diluted basis.

This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of our results and our longer-term growth strategy. Then Erik Hoag, our Chief Financial Officer, will provide greater detail on our results, capital allocation strategy, and outlook for 2026. Following our prepared remarks, we will open the call up for questions. Finally, all comparisons today are to the same period of the prior year, unless specifically stated. With that, I will turn the call over to Mike.

Good morning, and thank you for joining us. Travel + Leisure delivered another strong quarter, extending the momentum we built throughout the year. Our owners continue to prioritize travel, demand remains healthy, and we are translating that strength into growth in earnings and cash flow. More broadly, this quarter shows how the actions we have taken over the last several years are improving the quality of the enterprise. The core business is growing, our multi-brand platform is scaling, and our acquisitions and portfolio actions are expanding both our earnings power and long-term revenue potential. Quarter after quarter, our results validate that strategy and that compounding impact on our financial results is evident. From 2024 to the midpoint of our 2026 guidance, we expect to grow EBITDA by 16% and earnings per share by 33%.

From a profitability standpoint, we are generating industry-leading EBITDA margins of approximately 25% while making meaningful investments in our long-term growth strategies. On the capital allocation front, since 2024, we have increased our annual dividend by 20%, reduced our common shares outstanding by 10%, and made two strategic acquisitions for approximately $350 million. We have done all this while maintaining our leverage ratio at around 3.3 times, which is the lowest leverage ratio of our peers. The durability of our model and the free cash flow it generates gives us a distinct advantage. We can invest in growth, pursue strategic acquisitions, and return meaningful capital to shareholders at the same time. Each dollar has a clear purpose, strengthening the company and increasing per-share value. Our results over the last 24 months demonstrate the power of that approach.

For the quarter, we generated revenue of $1.1 billion, EBITDA of $283 million, and earnings per share of $2.21. Gross VOI sales were up 6% year-over-year, driven by strong execution and the initial contribution from recent acquisitions. Tours increased 7%, led by new owner tours, reflecting healthy top-of-funnel demand. Volume per guest on an organic basis was up low single digit and within our guidance range, reflecting consistent execution across our sales and marketing teams. Reported volume per guest of $3,286 was down 1% year-over-year, reflecting the mix impact from recent acquisitions. On the consumer front, the indicators we track remain healthy. While we continue to monitor the broader consumer environment, our owners continue to make travel a priority. Guest surveys and industry data show our owners plan to take one more trip over the next 12 months than the average U.S. traveler.

That commitment is also reflected in our bookings, which point to continued momentum through the holiday season. Owner travel behavior, including booking windows, length of stay, and distance traveled to our resorts, all are stable. We are also seeing positive underlying portfolio trends in our consumer financing business, which Erik will address in more detail later in the call. I would now like to provide an update on our recent acquisitions, which are already providing immediate accretion to our overall financial performance. We closed the Spinnaker Resorts acquisition ahead of schedule on August 1st, and integration across both acquired businesses is progressing well. Our integration approach is straightforward: preserve the local strengths that made these businesses attractive while embracing best practices. We are quickly deploying our technology and commercial capabilities and expect to be able to realize the full cost benefits of this integration within the first 12 months.

We are also investing in the acquired resorts to enhance the guest experience and add more options for our owners. I have spent significant time with the leaders and associates across both businesses in recent weeks and have visited nearly every resort. Those interactions have only strengthened my confidence in the strategic fit of these acquisitions. Moving past the near-term integration and cost synergy realization, these two acquisitions grow our owner base by over 100,000 owners. In November, we will begin selling Club Wyndham points at select properties alongside their existing product suite. In these early months, we will test and methodically optimize our offerings to appeal to the existing owner base. I see a meaningful long-term opportunity to expand sales across the acquired businesses by bringing our points-based products and expanded resort network to their owner bases.

Another growth initiative for us is our multi-brand strategy, which is moving from proof of concept to a scaled platform. This strategy allows us to reach new consumer segments, geographies, and vacation experiences while leveraging our established technology and operating infrastructure. Each brand is progressing along its maturity curve. From Margaritaville Vacation Club and Accor Vacation Club, which are generating outsized growth, to Eddie Bauer Adventure Club and Sports Illustrated Resorts, which are earlier in their commercialization. Each brand broadens our growth opportunities without meaningfully increasing complexity or capital intensity. During the quarter, we continued to see strong momentum across the portfolio. Margaritaville Vacation Club is on pace to deliver more than $175 million of gross VOI sales this year. Accor Vacation Club is approaching $50 million in annual gross VOI sales in only its third year of operation.

Eddie Bauer Adventure Club continues to expand with the announcement of its second resort in the Hill Country outside of Austin, Texas. With cabins, geodomes, hiking trails, and outdoor activities, it brings the brand to life through an immersive outdoor experience. The resort is scheduled to open by next summer. Sports Illustrated Resorts reached an important milestone with the opening of the Nashville resort, and the early response has been encouraging. To date, we've announced four Sports Illustrated Resorts, and we are closing in on our first million dollar sales month. Earlier this month, we announced the expansion of our partnership with Wyndham Hotels and Resorts to bring the Sports Illustrated concept to traditional hotels and mixed-use destinations. Together, we see an opportunity to create immersive year-round destinations in college towns and major urban markets featuring distinctive programming, premier sporting events, and unique guest experiences.

With this expanded partnership, I believe that we will be able to enter more markets and scale Sports Illustrated Resorts even faster. Our multi-brand strategy is doing exactly what we intended it to do, expanding our addressable market, creating new growth avenues, and demonstrating the power of the Travel + Leisure platform. What began as a collection of individual opportunities is increasingly becoming a meaningful contributor to our long-term growth algorithm. As a reminder, we expect these new brands to be approximately 10% of our total sales mix this year and continue to grow as a percent of the mix in the years ahead. In closing, we've spent the last several years proving the resilience of our model. In 2026, we are showing how much more the platform can become.

Since raising our full year outlook last quarter, we've achieved the high end of our third quarter EBITDA guidance, completed two acquisitions, and continued to scale our multi-brand growth platform. This quarter, we are raising the midpoint of our gross VOI sales and EBITDA guidance once again. Overall, we are delivering results, widening our growth runway, and improving the quality of the enterprise, and we are doing it with the financial discipline our shareholders expect. With that, I'll turn the call over to Erik.

Erik? Thanks, Mike, and good morning, everyone.

I will start with our third quarter results, then cover vacation ownership, our acquired businesses, Travel and Membership, capital allocation in the balance sheet, and finally, our outlook. Third quarter revenue grew 5% to $1.1 billion, and EBITDA increased 6%, with 20 basis points of EBITDA margin expansion. Net income grew 16%, and earnings per share of $2.21 increased 23% over last year. This third quarter progression mirrors the consistent performance we have delivered all year. Through the first three quarters, revenue is up 4%, EBITDA is up 8%, net income is up 15%, and EPS is up 21%. Compounding growth across the P&L, consistent with how the business is designed to perform over time. High-quality earnings growth that converts into cash and per share value. Third quarter vacation ownership segment revenue was $953 million, and segment EBITDA was $250 million.