TRAVEL & LEISURE CO. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

BUSINESS AND OVERVIEW

We are a global provider of hospitality services and travel products and operate
our business in the following two segments:

•Vacation Ownership - develops, markets and sells vacation ownership interests
("VOIs") to individual consumers, provides consumer financing in connection with
the sale of VOIs, and provides property management services at resorts.

•Travel and Membership – operates a variety of travel businesses, including
three vacation exchange brands, a home exchange network, travel technology
platforms, travel memberships, and direct-to-consumer rentals.

Travel + Leisure Brand Acquisition

On January 5, 2021, Wyndham Destinations, Inc. acquired the Travel + Leisure
brand and related assets from Meredith Corporation ("Meredith") for $100
million, of which $55 million was paid during 2021. The remaining payments are
to be completed by June 2024. This acquisition included Travel + Leisure branded
travel clubs and members. We acquired the Travel + Leisure brand to accelerate
our strategic plan to broaden our reach with the launch of new travel services,
expand our membership travel business, and amplify the global visibility of our
leisure travel products. Meredith will continue to operate and monetize Travel +
Leisure branded multi-platform media assets across multiple channels under a
30-year royalty-free, renewable licensing relationship. In connection with this
acquisition, on February 17, 2021, Wyndham Destinations, Inc. was renamed Travel
+ Leisure Co. and continues to trade on the New York Stock Exchange under the
new ticker symbol TNL.

In connection with the Travel + Leisure brand acquisition we updated the names
and composition of our reportable segments to better align with how they are
managed. We created the Travel + Leisure Group which falls under the Travel and
Membership segment along with the Panorama business line. With the formation of
the Travel + Leisure Group, we decided that the operations of our Extra Holidays
business, which focuses on direct-to-consumer bookings, better aligns with the
operations of this new business line and therefore transitioned the management
of our Extra Holidays business to the Travel and Membership segment. As such, we
reclassified the results of our Extra Holidays business, which were previously
reported within the Vacation Ownership segment, into the Travel and Membership
segment.

Impact of COVID-19 on Our Business

The results of operations for the years ended December 31, 2021 and 2020 include
impacts related to the novel coronavirus global pandemic ("COVID-19"), which
have been significantly negative for the travel industry, our company, our
customers, and our employees.

Our response to COVID-19 initially focused on the health and safety of our
owners, members, guests, and employees when we closed the majority of our
resorts and sales centers in early 2020. As a result, we significantly reduced
our workforce and furloughed thousands of employees at that time. As of
December 31, 2021, we had reopened all of the resorts and sales offices in North
America that we expect to reopen. The remaining closed resorts and sales offices
that we intend to reopen are located in the South Pacific and are expected to
reopen in 2022, contingent upon the lifting of government imposed travel
restrictions. As a result of reopening substantially all of our resorts, the
majority of furloughed employees have returned to work.

Given the significant impacts of COVID-19 on our business, our revenues have
been negatively impacted. While revenues are continuing to recover, not all
product and service lines have yet reached pre-pandemic levels, and we believe
that COVID-19 will continue to have an adverse effect on our financial condition
and results of operations in the near term. Despite some volatility with recent
spikes in COVID-19 case-counts as a result of variants, in general, we are
seeing a broad increase in consumer confidence as well as a reduction in travel
restrictions. These factors combined with progress in the roll-out of
vaccinations have continued to help travel sentiment improve. Assuming travel
sentiment continues to improve, we expect increases in both VOI sales and new
owner mix in 2022. We also expect an increase in the percentage of financed VOI
sales, which would impact our allowance for loan losses.

During the year ended December 31, 2021, we reversed $61 million of COVID-19
charges, compared to $385 million of charges incurred in 2020. The $61 million
of net reversals during 2021 included the release of $91 million of the COVID-19
related allowance for loan losses. See Note 26-COVID-19 Related Items to the
Consolidated Financial Statements for additional details on the impact COVID-19
had on our business.

Included in the $385 million of COVID-19 related charges for the year ended
December 31, 2020, was a $225 million COVID-19 related loan loss provision
recorded during the first quarter as a result of our evaluation of the impact of
COVID-19

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on our owners' ability to repay their vacation ownership contract receivables
("VOCRs"). As we began to see an improvement in net new defaults and lower than
expected unemployment rates, we reduced this provision by $20 million in the
fourth quarter of 2020.

Since the time the COVID-19 related allowance was established in March 2020, we
have reversed $111 million of the initial $225 million provision. After
considering write-offs and the allowance for remaining likely defaults
associated with loans that were granted payment deferrals, we have no COVID-19
related allowances as of December 31, 2021.

As a precautionary measure to enhance liquidity during the pandemic, in the
first quarter of 2020, we drew down our $1.0 billion revolving credit facility
and suspended share repurchase activity. In the third quarter of 2020, we
amended the credit agreement governing our revolving credit facility and term
loan B ("First Amendment"), which provided financial covenant flexibility during
the relief period that commenced on July 15, 2020 and was scheduled to end on
April 1, 2022 (the "Relief Period"). During the Relief Period we were prohibited
from using cash for share repurchases but maintained our ability to pay
dividends and make investments in our business. During 2021 we repaid the $1.0
billion revolving credit facility, the $250 million 5.625% secured notes due
March 2021, and the $650 million 4.25% secured notes due March 2022. On
October 22, 2021, we renewed the credit agreement governing our revolving credit
facility and term loan B ("Second Amendment"), which terminated the Relief
Period, established new thresholds for our financial covenant ratios and
eliminated the restrictions regarding share repurchases, dividends, and
acquisitions established by the First Amendment. In connection with entering the
Second Amendment, we resumed share repurchases during the fourth quarter of
2021.

As part of our reopening strategy, we focused on higher margin owner business by
leveraging our owner upgrade pipeline. Prior to the pandemic, just under 40% of
our sales transactions were to lower margin new owners as compared to 28% during
2021.

We also raised our credit standards and directed our marketing efforts towards
higher Fair Isaac Corporation ("FICO") scores, which we expect will continue to
strengthen our receivables portfolio going forward. Additionally, we closed
certain unprofitable marketing and sales locations and shifted marketing
channels and resources to our most productive channels. All of these changes
were designed to result in higher volume per guest ("VPG"), which is a measure
of sales efficiency and is strongly correlated to profitability.

For certain of the events, uncertainties, trends, and risks associated with the
impact of the COVID-19 pandemic on our future results and financial condition,
see "Risks Related to the COVID-19 Pandemic" included in Part I, Item 1A of this
Annual Report filed on Form 10-K.

Alliance Reservations Network Acquisition

On August 7, 2019, we acquired Alliance Reservations Network ("ARN") for $102
million ($97 million net of cash acquired). ARN provides private-label travel
booking technology solutions. This acquisition was undertaken for the purpose of
accelerating growth at Travel and Membership by increasing the offerings
available to its members and affiliates. See Note 5-Acquisitions to the
Consolidated Financial Statements for additional details. ARN is reported within
the Travel and Membership segment.

North American Vacation Rentals Business Sale

During 2019 we closed on the sale of our North American vacation rentals
business for $162 million. This business did not meet the criteria to be
classified as a discontinued operation; therefore, the results of operations are
reflected within continuing operations on the Consolidated Statements of
Income/(Loss) through the date of sale.

SEGMENT OVERVIEW

Vacation Ownership

We develop, market, and sell VOIs to individual consumers, provide consumer
financing in connection with the sale of VOIs, and provide property management
services at resorts. Our sales of VOIs are either cash sales or
developer-financed sales. Developer-financed sales are typically collateralized
by the underlying VOI. Revenue is recognized on VOI sales upon transfer of
control, which is defined as the point in time when a binding sales contract has
been executed, the financing contract has been executed for the remaining
transaction price, the statutory rescission period has expired, and the
transaction price has been deemed to be collectible.

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For developer-financed sales, we reduce the VOI sales transaction price by an
estimate of uncollectible consideration at the time of the sale. Our estimates
of uncollectible amounts are based largely on the results of our static pool
analysis which relies on historical payment data by customer class.

In connection with entering into a VOI sale, we may provide our customers with
certain non-cash incentives, such as credits for future stays at our resorts.
For those VOI sales, we bifurcate the sale and allocate the sales price between
the VOI sale and the non-cash incentive. Non-cash incentives generally have
expiration periods of 18 months or less and are recognized at a point in time
upon transfer of control.

We provide day-to-day property management services including oversight of
housekeeping services, maintenance, and certain accounting and administrative
services for property owners' associations and clubs. These services may also
include reservation and resort renovation activities. Such agreements are
generally for terms of one year or less, and are renewed automatically on an
annual basis. Our management agreements contain cancellation clauses, which
allow for either party to cancel the agreement, by either a majority board vote
or a majority vote of non-developer interests. We receive fees for such property
management services which are collected monthly in advance and are based upon
total costs to operate such resorts (or as services are provided in the case of
resort renovation activities). Fees for property management services typically
approximate 10% of budgeted operating expenses. We are entitled to consideration
for reimbursement of costs incurred on behalf of the property owners'
association in providing the management services ("reimbursable revenue"). These
reimbursable costs principally relate to the payroll costs for management of the
associations, club and resort properties where we are the employer and are
reflected as a component of Operating expenses on the Consolidated Statements of
Income/(Loss). We reduce our management fees for amounts paid to the property
owners' association that reflect maintenance fees for VOIs for which we retain
ownership, as we have concluded that such payments are consideration payable to
a customer.

Property management fee revenues are recognized when the services are performed
and are recorded as a component of Service and membership fees on the
Consolidated Statements of Income/(Loss). Property management revenues, which
are comprised of management fee revenue and reimbursable revenue, for the years
ended December 31, were (in millions) (a):
                                2021       2020       2019
Management fee revenue         $ 358      $ 331      $ 365
Reimbursable revenues            313        252        307
Property management revenues   $ 671      $ 583      $ 672

(a)Reflects the impact of reclassifying the Extra Holidays business line from
the Vacation Ownership segment to Travel and Membership.

One of the associations that we manage paid our Travel and Membership segment
$30 million for exchange services during 2021, $27 million during 2020, and $29
million during 2019.

Within our Vacation Ownership segment, we measure operating performance using
the following key operating statistics: (i) gross VOI sales including
Fee-for-Service sales before the effect of loan loss provisions, (ii) tours,
which represents the number of tours taken by guests in our efforts to sell
VOIs, and (iii) VPG, which represents revenue per guest and is calculated by
dividing the gross VOI sales (excluding tele-sales upgrades, which are non-tour
upgrade sales) by the number of tours.

Travel and Membership

Travel and Membership derives a majority of revenues from membership dues and
fees for facilitating members' trading of their intervals. Revenues from
membership dues represent the fees paid by members or affiliated clubs on their
behalf. We recognize revenues from membership dues paid by the member on a
straight-line basis over the membership period as the performance obligations
are fulfilled through delivery of publications, if applicable, and by providing
access to travel-related products and services. Estimated net contract
consideration payable by affiliated clubs for memberships is recognized as
revenue over the term of the contract with the affiliated club in proportion to
the estimated average monthly member count. Such estimates are adjusted
periodically for changes in the actual and forecasted member activity. For
additional fees, members have the right to exchange their intervals for
intervals at other properties affiliated with our vacation exchange networks
and, for certain members, for other leisure-related services and products. We
also derive revenue from facilitating bookings of travel accommodations for both
members and non-members. Revenue is recognized when these transactions have been
confirmed, net of expected cancellations; except in certain transactions where
we have a performance obligation that is not satisfied until the time of stay.

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As a provider of vacation exchange services, we enter into affiliation
agreements with developers of vacation ownership properties to allow owners of
VOIs to trade their intervals for intervals at other properties affiliated with
our vacation exchange network and, for some members, for other leisure-related
services and products.

Our vacation exchange business also derives revenues from programs with
affiliated resorts, club servicing, and loyalty programs; and additional
exchange-related products that provide members with the ability to protect
trading power or points, extend the life of deposits, and combine two or more
deposits for the opportunity to exchange into intervals with higher trading
power. Other vacation exchange-related product fees are deferred and recognized
as revenue upon the occurrence of a future exchange, event, or other related
transaction.

We earn revenue from our RCI Elite Rewards co-branded credit card program, which
is primarily generated by cardholder spending and the enrollment of new
cardholders. The advance payments received under the program are recognized as a
contract liability until our performance obligations have been satisfied. The
primary performance obligation for the program relates to brand performance
services. Total contract consideration is estimated and recognized on a
straight-line basis over the contract term.

Prior to the sale of our vacation rental businesses, our vacation rental brands
derived revenue from fees associated with the rental of vacation properties we
managed and marketed on behalf of independent owners. We remitted the rental fee
received from the renter to the independent owner, net of our agreed-upon fee.
The related revenue from such fees, net of expected refunds, was recognized over
the renter's stay. Our vacation rental brands also derived revenues from
additional services delivered to independent owners, vacation rental guests, and
property owners' associations which were generally recognized when the service
was delivered.

Within our Travel and Membership segment, we measure operating performance using
the following key operating statistics: (i) average number of exchange members,
which represents paid members in our vacation exchange programs who are
considered to be in good standings, (ii) transactions, which represents the
number of vacation bookings recognized as revenue during the period, net of
cancellations, provided in two categories; Exchange, which is primarily RCI, and
non-Exchange, and (iii) revenue per transaction, which represents transactional
revenue divided by transactions, provided in two categories; Exchange, which is
primarily RCI, and non-Exchange.

Other Items

We record property management services revenues and RCI Elite Rewards revenues
for our Vacation Ownership and Travel and Membership segments in accordance with
the guidance for reporting revenues gross as a principal versus net as an agent,
which requires that these revenues be recorded on a gross basis.

Discussed below are our consolidated results of operations and the results of
operations for each of our reportable segments. These reportable segments
represent our operating segments for which discrete financial information is
available and which are utilized on a regular basis by our chief operating
decision maker to assess performance and to allocate resources. In identifying
the reportable segments, we also consider the nature of services provided by our
operating segments. Management uses net revenues and Adjusted EBITDA to assess
the performance of the reportable segments. We define Adjusted EBITDA as Net
income/(loss) from continuing operations before Depreciation and amortization,
Interest expense (excluding Consumer financing interest), early extinguishment
of debt, Interest income (excluding Consumer financing revenues) and income
taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation
and restructuring costs, legacy items, transaction costs for acquisitions and
divestitures, impairments, gains and losses on sale/disposition of business, and
items that meet the conditions of unusual and/or infrequent. Legacy items
include the resolution of and adjustments to certain contingent assets and
liabilities related to acquisitions of continuing businesses and dispositions,
including the separation of Wyndham Hotels, Inc. ("Wyndham Hotels") and Cendant,
and the sale of the vacation rentals businesses. We believe that Adjusted EBITDA
is a useful measure of performance for our segments which, when considered with
generally accepted accounting principles in the U.S. ("GAAP") measures, gives a
more complete understanding of our operating performance. Our presentation of
Adjusted EBITDA may not be comparable to similarly-titled measures used by other
companies.

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OPERATING STATISTICS

The table below presents our operating statistics for the years ended
December 31, 2021 and 2020. These operating statistics are the drivers of our
revenues and therefore provide an enhanced understanding of our businesses.
Refer to the Results of Operations section for a discussion on how these
operating statistics affected our business for the periods presented.

Year Ended December 31,

                                                            2021                 2020              % Change (h)
Vacation Ownership
Gross VOI sales (in millions) (a) (i)                  $      1,491          $     967                 54.1
Tours (in 000s) (b)                                             451                333                 35.7
Volume Per Guest ("VPG") (c)                           $      3,143          $   2,486                 26.4
Travel and Membership (d)
Transactions (in 000s) (e)
Exchange                                                      1,182                762                 55.0
Non-exchange                                                    778                458                 69.8
Total transactions                                            1,960              1,220                 60.6
Revenue per transaction(f)
Exchange                                               $        322          $     324                (0.6)
Non-exchange                                           $        205          $     148                 38.0
Total revenue per transaction                          $        275          $     258                 6.8
Average number of exchange members (in 000s) (g)              3,721              3,749                (0.7)




(a)Represents total sales of VOIs, including sales under the Fee-for-Service
program before the effect of loan loss provisions. We believe that Gross VOI
sales provide an enhanced understanding of the performance of our vacation
ownership business because it directly measures the sales volume of this
business during a given reporting period.
(b)Represents the number of tours taken by guests in our efforts to sell VOIs.
(c)VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades,
which are non-tour upgrade sales) by the number of tours. We believe that VPG
provides an enhanced understanding of the performance of our vacation ownership
business because it directly measures the efficiency of this business' tour
selling efforts during a given reporting period.
(d)Includes the impact from acquisitions from the acquisition dates forward
(e)Represents the number of vacation bookings recognized as revenue during the
period, net of cancellations.
(f)Represents transactional revenue divided by transactions.
(g)Represents paid members in our vacation exchange programs who are considered
to be in good standing.
(h)Percentage of change may not calculate due to rounding.
(i)The following table provides a reconciliation of Vacation ownership interest
sales, net to Gross VOI sales for the years ended December 31, (in millions):
                                                  2021        2020

Vacation ownership interest sales, net $ 1,176 $ 505
Loan loss provision

                                 129        415
Gross VOI sales, net of Fee-for-Service sales     1,305        920
Fee-for-Service sales (1)                           186         47
Gross VOI sales                                 $ 1,491      $ 967




(1)   Represents total sales of VOIs through our Fee-for-Service programs where
inventory is sold through our sales and marketing channels for a commission.
Fee-for-Service commission revenues were $101 million and $22 million for the
years ended December 31, 2021 and 2020. These commissions are reported within
Service and membership fees on the Consolidated Statements of Income/(Loss).

The closures of our resorts and suspension of our sales and marketing operations
in response to COVID-19 in 2020 resulted in lower tours which negatively
impacted gross VOI sales at our Vacation Ownership segment. In our Travel and
Membership segment, affiliate resort closures and regional travel restrictions
contributed to decreased bookings and increased cancellations, which resulted in
lower transactions and revenue per transaction during 2020. In 2021, we
experienced significant improvements in VOI sales, tours, VPG, the number of
Travel and Membership transactions, and revenue per transaction; however, not
all product and service lines have yet returned to pre-pandemic levels. We
expect the impact of COVID-19 on our operating statistics to continue into 2022;
however we do not expect to incur the same level of COVID-19 impact on our
revenues or the level of COVID-19 expenses that we did in 2020.

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RESULTS OF OPERATIONS

Our consolidated results for the years ended December 31, 2021, versus
December 31, 2020, are as follows (in millions):

Year Ended December 31,

                                                                                                       Favorable/
                                                               2021                 2020              (Unfavorable)
Net revenues                                             $    3,134             $   2,160          $            974
Expenses                                                      2,516                 2,265                      (251)
Operating income/(loss)                                         618                  (105)                      723
Interest expense                                                198                   192                        (6)
Interest (income)                                                (3)                   (7)                       (4)
Other (income), net                                              (6)                  (14)                       (8)
Income/(loss) before income taxes                               429                  (276)                      705
Provision/(benefit) for income taxes                            116                   (23)                     (139)
Net income/(loss) from continuing operations                    313                  (253)                      566

Loss on disposal of discontinued business, net of income
taxes

                                                            (5)                   (2)                       (3)

Net income/(loss) attributable to Travel + Leisure Co.
shareholders                                             $      308             $    (255)         $            563



During 2020 we evaluated the potential impact of COVID-19 on our owners' ability
to repay their contract receivable and as a result of current and anticipated
unemployment rates at that time, we recorded a $205 million COVID-19 related
provision, which negatively impacted revenues, and a corresponding $48 million
benefit to Cost of vacation ownership interests, representing estimated
recoveries related to this provision. These adjustments negatively impacted
prior year Adjusted EBITDA by $157 million. During 2021 we analyzed the adequacy
of the COVID-19 related allowance consistent with past methodology, resulting in
a $91 million release, which positively impacted revenues, and a corresponding
$33 million increase in Cost of vacation ownership interests, representing the
associated reduction in estimated recoveries. The net positive impact of the
COVID-19 related allowance release on Adjusted EBITDA was $58 million for the
year ended December 31, 2021.

Net revenues increased $974 million during 2021 compared with 2020. This
increase was favorably impacted by foreign currency of $11 million (0.5%).
Excluding the impacts of foreign currency and the COVID-19 related provision
adjustments discussed above, the increase in net revenues was primarily the
result of:

•$475 million of increased revenues at our Vacation Ownership segment primarily
due to an increase in gross VOI sales, higher property management and commission
revenues as a result of the ongoing recovery of our operations from the impact
of COVID-19; partially offset by a decrease in consumer financing revenues due
to a lower average portfolio balance; and
•$196 million increased revenues at our Travel and Membership segment driven by
higher transaction revenues as we continue to recover from the impacts of
COVID-19, partially offset by a decrease in subscription revenues driven by
lower new owner sales in the timeshare industry.

Expenses increased $251 million during 2021 compared with 2020. This increase
was unfavorably impacted by foreign currency of $8 million (0.4%). Excluding the
impacts of foreign currency, and the Cost of vacation ownership interest related
to the COVID-19 provision adjustments discussed above the increase in expenses
was the result of:

•$97 million increase in cost of sales and other operating costs in support of
higher Travel and Membership revenues;
•$73 million increase in the cost of VOIs sold primarily due to higher gross VOI
sales;
•$66 million increase in property management expenses due to higher management
fees and reimbursable expenses;
•$52 million increase in commission expense as a result of higher
Fee-for-Service VOI sales;
•$51 million increase in sales and commission expenses at the Vacation Ownership
segment primarily due to higher gross VOI sales;
•$36 million increase in general and administrative expenses primarily due to
higher employee-related costs;
•$34 million increase in marketing costs in support of increased revenue; and
•$16 million increase in maintenance fees on unsold inventory.

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These increases were partially offset by:

•$230 million decrease in COVID-19 related costs including employee compensation
related costs ($84 million); impairments ($62 million); the write-down of
exchange inventory ($48 million) and restructuring charges ($37 million); and
•$20 million decrease in consumer financing interest expense primarily due to a
lower average non-recourse debt balance.

Other income, net of other expense decreased $8 million during 2021 compared
with 2020, primarily due to lower business interruption recoveries in 2021 and
value added tax provision releases; partially offset by an unrealized gain from
our equity stake in Vacasa, LLC ("Vacasa") in 2021 and an unfavorable tax
settlement in 2020.

Interest expense increased $6 million during 2021 compared with 2020 primarily
due to a higher average outstanding balance in 2021.

Our effective tax rates were 27.0% and 8.3% for the years ended December 31,
2021 and 2020. Our effective tax rate in 2020 was significantly impacted by
COVID-19, leading to a mix of earnings in higher tax rate jurisdictions and
losses in lower tax rate jurisdictions that reduced our overall effective tax
rate.

Loss on disposal of discontinued business, net of income taxes was $5 million
during 2021 resulting from entering into a settlement agreement for post-closing
adjustment claims related to the sale of the European vacation rentals business,
contingent upon regulatory approval; and $2 million during 2020 resulting from a
tax audit related to the European vacation rentals business. These losses were
net of Wyndham Hotels' one-third share.

As a result of these items, Net income attributable to Travel + Leisure Co.
shareholders was $308 million in 2021 as compared with a Net loss attributable
to Travel + Leisure Co. shareholders of $255 million in 2020.

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Following is a discussion of the 2021 results of each of our segments compared
to 2020 (in millions):
                                                                                Year Ended December 31,
Net revenues                                                                    2021                 2020
Vacation Ownership                                                         $      2,403          $   1,625
Travel and Membership                                                               752                552
Total reportable segments                                                         3,155              2,177
Corporate and other (a)                                                             (21)               (17)
Total Company                                                              $      3,134          $   2,160

                                                                                Year Ended December 31,
Reconciliation of Net income to Adjusted EBITDA                                 2021                 2020

Net income/(loss) attributable to Travel + Leisure Co. shareholders $ 308 $ (255)

Loss on disposal of discontinued business, net of income taxes                        5                  2
Provision/(benefit) for income taxes                                                116                (23)
Depreciation and amortization                                                       124                126
Interest expense                                                                    198                192
Interest (income)                                                                    (3)                (7)

Stock-based compensation                                                             32                 20
Legacy items                                                                          4                  4
COVID-19 related costs (b)                                                            3                 56
Exchange inventory write-off                                                          -                 48
Restructuring                                                                        (1)                39
Unrealized gain on equity investment (c)                                             (3)                 -

Asset impairments/(recovery) (d)                                                     (5)                57
Adjusted EBITDA                                                            $        778          $     259


                                       Year Ended December 31,
Adjusted EBITDA                            2021                 2020
Vacation Ownership             $         558                   $ 121
Travel and Membership                    282                     191
Total reportable segments                840                     312
Corporate and other (a)                  (62)                    (53)
Total Company                  $         778                   $ 259




(a)Includes the elimination of transactions between segments.
(b)Reflects severance and other employee costs associated with layoffs due to
the COVID-19 workforce reduction offset in part by employee retention credits
received in connection with the U.S. Coronavirus Aid, Relief, and Economic
Security ("CARES") Act, American Rescue Plan Act of 2021, and similar
international programs for wages paid to certain employees despite having
operations suspended. This amount does not include costs associated with idle
pay.
(c)Represents the unrealized gain associated with Vacasa equity acquired as part
of the consideration for the sale of North America vacation rentals. The total
amount of unrealized gain on this investment was $9 million for the year ended
December 31, 2021, of which $6 million is included in Asset
impairments/(recovery) on the Consolidated Statements of Income/(Loss) to offset
the 2020 impairment recognized on this investment.
(d)Includes $5 million of bad debt expense related to a note receivable for the
year ended December 31, 2020, included in Operating expenses on the Consolidated
Statements of Income/(Loss).

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Vacation Ownership

Net revenues increased $778 million and Adjusted EBITDA increased $437 million
during 2021 compared with 2020. The net revenue increase was favorably impacted
by foreign currency of $7 million (0.4%) and the Adjusted EBITDA increase was
favorably impacted by foreign currency of $2 million (1.7%).

The net revenue increase excluding the impact of foreign currency was primarily
driven by:

•$382 million increase in gross VOI sales, net of Fee-for-Service sales, due to
the ongoing recovery of our operations from the impact of COVID-19;
•$286 million decrease in our provision for loan losses primarily due to the
COVID-19 related allowance adjustments ($205 million provision recorded during
2020 and $91 million release during 2021);
•$85 million increase in property management revenues primarily due to higher
management fees and reimbursable revenues; and
•$78 million increase in commission revenues as a result of higher
Fee-for-Service VOI sales.

These increases were partially offset by a $63 million decrease in consumer
financing revenues primarily due to a lower average portfolio balance.

In addition to the drivers above, Adjusted EBITDA excluding the impact of
foreign currency was further impacted by:

•$154 million increase in the cost of VOIs sold primarily due to higher gross
VOI sales, the absence of a $48 million benefit recorded in 2020 representing
estimated recoveries related to the COVID-19 related provision, and a $33
million reduction in estimated recoveries related to the release of our COVID-19
related allowance during 2021;
•$66 million increase in property management expenses primarily due to higher
management fees and reimbursable expenses;
•$52 million increase in commission expense as a result of higher
Fee-for-Service VOI sales;
•$51 million increase in sales and commission expenses due to higher gross VOI
sales;
•$22 million increase in marketing costs in support of increased revenue;
•$17 million increase in general and administrative expenses primarily due to
higher employee-related costs; and
•$16 million increase in maintenance fees on unsold inventory.

These increased expenses were partially offset by:

•$30 million decrease in COVID-19 related costs associated with workforce
reductions; and
•$20 million decrease in consumer financing interest expense primarily due to a
lower average non-recourse debt balance.

Travel and Membership

Net revenues increased $200 million and Adjusted EBITDA increased $91 million
during 2021 compared with 2020. The net revenue increase was favorably impacted
by foreign currency of $4 million (0.7%) and the Adjusted EBITDA increase was
favorably impacted by foreign currency of $1 million (0.5%).

Increases in net revenues excluding the impact of foreign currency were
primarily driven by:

•$202 million increase in transaction revenue driven by a 61% increase in
transactions and a 7% increase in revenue per transaction; partially offset by
•$6 million decrease in subscription revenue due to a 1% decrease in average
number of exchange members driven by lower new owner sales in the timeshare
industry.

In addition to the revenue changes explained above, Adjusted EBITDA excluding
the impact of foreign currency was further impacted by the following operational
costs in support of increased revenues:

•$86 million increase in cost of sales;
•$12 million increase in marketing expense; and
•$11 million increase in operational expenses.

These increased expenses were partially offset by a $3 million decrease in
general and administrative expenses resulting from staff reductions and cost
savings initiatives implemented after the first quarter of 2020.

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Corporate and other

Corporate and other Adjusted EBITDA decreased $9 million (17.0%) during 2021
compared with 2020 and was not materially impacted by foreign currency. The
decrease in Adjusted EBITDA was primarily due to higher employee-related costs.

For a comparative review of our consolidated results of operations and the
results of operations of our reportable segments for the fiscal years ended
December 31, 2020 and 2019, refer to Part II, Item 7 of our Annual Report on
Form 10-K filed with the SEC on February 24, 2021.

DISCONTINUED OPERATIONS

We recognized a loss on disposal of discontinued business, net of income taxes
of $5 million during 2021 resulting from entering into a settlement agreement
regarding post-closing adjustment claims related to the sale of the European
vacation rentals business, contingent upon regulatory approval. See Note
29-Transactions with Former Parent and Former Subsidiaries to the Consolidated
Financial Statements for additional information. During 2020, we recognized a $2
million loss on disposal of discontinued business, net of income taxes resulting
from a tax audit related to the European vacation rentals business. During 2019,
we recognized an additional $18 million gain on the sale of our European
vacation rentals business, related to $12 million of tax benefits associated
with additional foreign tax credit utilization and lower than anticipated state
income taxes, as well as $6 million in returned escrow deposits associated with
expired guarantees.

SEPARATION AND TRANSACTION COSTS

During 2019, we incurred $45 million of expenses in connection with the spin-off
of our hotel business completed on May 31, 2018, which are reflected within
continuing operations. These separation costs were related to stock
compensation, severance and other employee costs, as well as impairment charges
as a result of abandoning portions of our administrative offices in New Jersey.
This decision was part of our continued focus on rationalizing existing
facilities in order to reduce our corporate footprint. These expenses also
include additional impairment charges related to the early termination of an
operating lease in Chicago, Illinois, partially offset by an indemnification
receivable from Wyndham Hotels. Refer to Note 13-Leases to the Consolidated
Financial Statements for additional detail regarding these impairments.

RESTRUCTURING PLANS

During 2020, we recorded $37 million of charges related to restructuring
initiatives, $36 million of which were COVID-19 related. Due to the impact of
COVID-19, we decided in the second quarter of 2020 to abandon the remaining
portion of our administrative offices in New Jersey. We were also notified in
the second quarter of 2020 that Wyndham Hotels exercised its early termination
rights under the sublease agreement. As a result, we recorded $22 million of
restructuring charges associated with non-lease components of the office space
and $24 million of impairment charges associated with the write-off of
right-of-use assets and furniture, fixtures and equipment at our Travel and
Membership segment. We also recognized $12 million of lease-related charges due
to the renegotiation of an agreement and $2 million of facility-related
restructuring charges associated with closed sales centers at our Vacation
Ownership segment. We additionally recognized $1 million in employee-related
expenses associated with the consolidation of a shared service center within our
Travel and Membership segment. We reduced the 2020 restructuring liability by $5
million and $12 million of cash payments during 2021 and 2020. During 2021 we
also reversed $1 million of expense related to the reimbursement of prepaid
licensing fees that were previously written-off, and increased the liability by
$3 million of cash reimbursements at our Vacation Ownership segment. The
remaining 2020 restructuring liability of $22 million is expected to be paid by
the end of 2029.

During 2019, we recorded $5 million of charges related to restructuring
initiatives, most of which are personnel-related resulting from a reduction of
approximately 100 employees. This action was primarily focused on enhancing
organizational efficiency and rationalizing operations. The charges consisted of
(i) $2 million at our Vacation Ownership segment, (ii) $2 million at our Travel
and Membership segment, and (iii) $1 million at our corporate operations. During
2020, we incurred an additional $1 million of restructuring expenses at both our
Travel and Membership segment and our corporate operations. We reduced the
restructuring liability by less than $1 million, $5 million, and $1 million of
cash payments during 2021, 2020, and 2019. As of December 31, 2021 the 2019
restructuring liability has been paid off.

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FINANCIAL CONDITION

                     December 31,       December 31,
(In millions)            2021               2020            Change
Total assets        $       6,588      $       7,613      $ (1,025)
Total liabilities           7,382              8,581        (1,199)
Total deficit                (794)              (968)          174

Total assets decreased $1.03 billion from December 31, 2020 to December 31,
2021, due to:

•$827 million decrease in Cash and cash equivalents primarily due to net debt
repayments, including the revolving credit facility, notes, and non-recourse
debt; dividend payments; property and equipment additions; payments associated
with the acquisition of the Travel + Leisure brand; and treasury share
repurchases; partially offset by net cash provided by operating activities.
•$173 million decrease in Vacation ownership contract receivables, net, driven
by principal collections and allowance for loan losses, partially offset by net
VOI originations;
•$131 million decrease in Inventory driven by VOI sales and lower estimated VOI
recoveries, partially offset by purchases; and
•$48 million decrease in Other assets primarily due to the receipt of employee
retention credits earned in connection with the CARES Act in 2020, as well as
decreases in tax receivables, right-of-use assets, and deferred costs, partially
offset by an increase in marketable securities.

These decreases were partially offset by an $88 million increase in Other
intangibles, net primarily related to the acquisition of the Travel + Leisure
brand from Meredith; a $23 million increase in Prepaid expenses; and a $23
million increase in Property and equipment, net.

Total liabilities decreased $1.2 billion from December 31, 2020 to December 31,
2021, due to:

•$65 million decrease in Deferred income due to increased usage of deferred VOI
trial packages, VOI incentives, and subscription revenue as a result of owners
and members returning to vacation as COVID-19 travel restrictions lifted;
•$300 million decrease in Non-recourse vacation ownership debt primarily due to
net repayments;
•$805 million decrease in Debt due to net repayments of the revolving credit
facility, early payoff of the $650 million notes due March 2022, and the
repayment of the $250 million notes due March 2021; partially offset by the
issuance of $650 million notes due December 2029; and
•$39 million decrease in Deferred income taxes due to installment sales
partially offset by the allowance for bad debt.

Total deficit decreased $174 million from December 31, 2020 to December 31,
2021, due to $308 million of Net income attributable to Travel + Leisure Co.
shareholders; and $32 million due to changes in stock based compensation;
partially offset by $111 million of dividends; $32 million of unfavorable
currency translation adjustments driven by fluctuations in the exchange rates,
primarily of the Australian dollar, the Danish krone, and the Euro; and $26
million of share repurchases.

LIQUIDITY AND CAPITAL RESOURCES

We believe that we have sufficient liquidity to meet our ongoing cash needs for
the next year and beyond, including capital expenditures, operational and/or
strategic opportunities, and expenditures for human capital, intellectual
property, contractual obligations, off-balance sheet arrangements, and other
such requirements. Our net cash from operations and cash and cash equivalents
are key sources of liquidity to meet our ongoing cash needs. In addition to
these sources, we also rely on access to our revolving credit facilities, bank
conduit facilities, and continued access to debt markets. Our discussion below
highlights these sources of liquidity and how they have been utilized to support
our cash needs.

$1.0 Billion Revolving Credit Facility

We generally utilize our revolving credit facility to finance our short-term to
medium-term business operations, as needed. As a precautionary measure at the
onset of the global pandemic, in March 2020 we fully drew down our $1.0 billion
revolving credit facility. Based on the ongoing recovery of our business to
date, our strong liquidity position and ability to access secured debt capital
markets, we fully repaid the remaining outstanding revolver balance as of
December 31, 2021, and had $998 million of available capacity on our revolving
credit facility, net of letters of credit.

On July 15, 2020, we entered into the First Amendment governing our revolving
credit facility and term loan B. The First Amendment established a Relief Period
with respect to our secured revolving credit facility, which commenced on
July 15,

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2020, and was scheduled to end on April 1, 2022. Among other changes, the First
Amendment added a new minimum liquidity covenant, tested quarterly until the end
of the Relief Period, of (i) $250 million plus (ii) 50% of the aggregate amount
of dividends paid after the effective date of the First Amendment and on or
prior to the last day of the relevant fiscal quarter. On October 22, 2021, we
entered into the Second Amendment governing our revolving credit facility and
term loan B which resulted in the termination of this Relief Period and extended
the commitment period for the revolving credit facility from May 2023 to October
2026.

The revolving credit facility and term loan B are subject to covenants including
the maintenance of specific financial ratios as defined in the credit agreement.
The financial ratio covenants consist of a minimum interest coverage ratio and a
maximum first lien leverage ratio. The interest coverage ratio is calculated by
dividing consolidated EBITDA (as defined in the credit agreement) by
consolidated interest expense (as defined in the credit agreement), both as
measured on a trailing 12-month basis preceding the measurement date. The first
lien leverage ratio is calculated by dividing consolidated first lien debt (as
defined in the credit agreement) as of the measurement date by consolidated
EBITDA (as defined in the credit agreement) as measured on a trailing 12-month
basis preceding the measurement date. The Second Amendment stipulates a first
lien leverage ratio financial covenant not to exceed 4.75 to 1.0 commencing with
the December 31, 2021 period through June 30, 2022, after which time it will
return to 4.25 to 1.0, the level in existence prior to the effective date of the
First Amendment. It also reestablished the interest coverage ratio (as defined
in the credit agreement) of no less than 2.5 to 1.0, the level existing prior to
the effective date of the First Amendment. Additionally, the Second Amendment
reestablished the annual interest rate in existence prior to the effective date
of the First Amendment which is equal to, at our option, either a base rate plus
a margin ranging from 0.75% to 1.25% or the London Interbank Offered Rate
("LIBOR") plus a margin ranging from 1.75% to 2.25%, in either case based upon
our first lien leverage ratio. The Second Amendment also includes customary
LIBOR replacement language providing for alternative interest rate option upon
the cessation of LIBOR publication.

As of December 31, 2021, our first lien leverage ratio was 3.99 to 1.0 and our
interest coverage ratio was 4.00 to 1.0. These ratios do not include interest
expense or indebtedness related to any qualified securitization financing (as
defined in the credit agreement). As of December 31, 2021, we were in compliance
with the financial covenants described above.

Secured Notes and Term Loan B

We generally utilize borrowing under our secured notes to meet our long-term
financing needs. During 2020 we issued $650 million senior secured notes due
2026 with an interest rate of 6.625% and during 2021, we issued $650 million of
senior secured notes due 2029 with an interest rate of 4.50%. These transactions
positively impacted our liquidity and reinforce our expectation that we will
maintain adequate liquidity for the next year and beyond.

During 2021, we repaid our $250 million 5.625% secured notes due March 2021 and
our $650 million 4.25% secured notes due March 2022. As of December 31, 2021, we
had $3.37 billion outstanding of secured notes and Term Loan B, with maturities
ranging from 2023 to 2030.

Non-recourse Vacation Ownership Debt

Our vacation ownership business finances certain of its VOCRs through (i)
asset-backed conduit facilities and (ii) term asset-backed securitizations, all
of which are non-recourse to us with respect to principal and interest. For the
securitizations, we pool qualifying VOCRs and sell them to bankruptcy-remote
entities, all of which are consolidated into the accompanying Consolidated
Balance Sheets as of December 31, 2021. We plan to continue using these sources
to finance certain VOCRs. We believe that our USD bank conduit facility with a
term through October 2022, which we expect to extend prior to its expiration,
and our AUD/NZD bank conduit facility, with a term through April 2023, amounting
to a combined capacity of $1.02 billion ($698 million available as of
December 31, 2021), along with our ability to issue term asset-backed
securities, provide sufficient liquidity to finance the sale of VOIs beyond the
next year.

We closed on securitization financings of $850 million in 2021 and $900 million
in 2020. These transactions positively impacted our liquidity and reinforce our
expectation that we will maintain adequate liquidity for the next year and
beyond.

Our liquidity position may be negatively affected by unfavorable conditions in
the capital markets in which we operate or if our VOCR portfolios do not meet
specified portfolio credit parameters. Our liquidity, as it relates to our VOCR
securitization program, could be adversely affected if we were to fail to renew
or replace our conduit facilities on their expiration dates, or if a particular
receivables pool were to fail to meet certain ratios, which could occur in
certain instances if the default rates or other credit metrics of the underlying
VOCRs deteriorate. Our ability to sell securities backed by our VOCRs depends on
the continued ability and willingness of capital market participants to invest
in such securities.

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Each of our non-recourse, securitized term notes, and the bank conduit
facilities contain various triggers relating to the performance of the
applicable loan pools. If the VOCR pool that collateralizes one of our
securitization notes fails to perform within the parameters established by the
contractual triggers (such as higher default or delinquency rates), there are
provisions pursuant to which the cash flows for that pool will be maintained in
the securitization as extra collateral for the note holders or applied to
accelerate the repayment of outstanding principal to the note holders. As of
December 31, 2021, all of our securitized loan pools were in compliance with
applicable contractual triggers.

We may, from time to time, depending on market conditions and other factors,
repurchase our outstanding indebtedness, whether or not such indebtedness trades
above or below its face amount, for cash and/or in exchange for other securities
or other consideration, in each case in open market purchases and/or privately
negotiated transactions.

For additional details regarding our credit facilities, term loan B, and
non-recourse debt see Note 16-Debt to the Consolidated Financial Statements.

Material Cash Requirements

The following table summarizes material future contractual obligations of our
continuing operations (in millions). We plan to fund these obligations along
with our other cash requirements with net cash from operations, cash and cash
equivalents as well as access to our revolving credit facilities, bank conduit
facilities, and continued access to debt markets.

                           2022             2023            2024             2025             2026            Thereafter           Total
Debt                     $    7          $   407          $  303          $   625          $   643          $     1,394          $ 3,379
Non-recourse debt (a)       424              234             201              201              214                  660            1,934
Interest on debt (b)        230              205             182              163              114                  151            1,045
Purchase commitments (c)    208              117             105              132               93                  171              826
Operating leases             32               30              28               24               14                   35              163
Inventory sold subject
to conditional
repurchase (d)               35               30               -                -                -                    -               65
Total (e)                $  936          $ 1,023          $  819          $ 1,145          $ 1,078          $     2,411          $ 7,412




(a)Represents debt that is securitized through bankruptcy-remote special purpose
entities the creditors of which have no recourse to us for principal and
interest.
(b)Includes interest on both debt and non-recourse debt; estimated using the
stated interest rates.
(c)Includes (i) $656 million for marketing related activities, (ii) $61 million
relating to the development of vacation ownership properties, and (iii) $45
million for information technology activities.
(d)Represents obligations to repurchase completed vacation ownership properties
from third-party developers (see Note 11-Inventory to the Consolidated Financial
Statements for further detail) of which $13 million is included within Accrued
expenses and other liabilities on the Consolidated Balance Sheets.
(e)Excludes a $38 million liability for unrecognized tax benefits since it is
not reasonably estimable to determine the periods in which such liability would
be settled with the respective tax authorities.

In addition to the amounts shown in the table above and in connection with our
separation from Cendant, we entered into certain guarantee commitments with
Cendant (pursuant to our assumption of certain liabilities and our obligation to
indemnify Cendant, Realogy, and Travelport for such liabilities) and guarantee
commitments related to deferred compensation arrangements with Cendant and
Realogy. We also entered into certain guarantee commitments related to the sale
of our European vacation rentals business. For information on matters related to
our former parent and subsidiaries see Note 29-Transactions with Former Parent
and Former Subsidiaries to the Consolidated Financial Statements.

In addition to the key contractual obligation and separation related commitments
mentioned above, we have the following other commercial commitments and
off-balance sheet arrangements:

We enter into agreements that contain standard guarantees and indemnities
whereby we indemnify another party for specified breaches of, or third-party
claims relating to, an underlying agreement. Such underlying agreements are
typically entered into by one of our subsidiaries. The various underlying
agreements generally govern purchases, sales or outsourcing of products or
services, leases of real estate, licensing of software and/or development of
vacation ownership properties, access to credit facilities, derivatives,
and issuances of debt securities. We also provide corporate guarantees for our
operating business units relating to merchant credit-card processing for prepaid
customer stays and other deposits. While a majority of these guarantees

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and indemnifications extend only for the duration of the underlying agreement,
some survive the expiration of the agreement. We are not able to estimate the
maximum potential amount of future payments to be made under these guarantees
and indemnifications as the triggering events are not predictable. In certain
cases we maintain insurance coverage that may mitigate any potential payments.

Our vacation ownership business provides guarantees to certain owners'
associations for funds required to operate and maintain vacation ownership
properties in excess of assessments collected from owners of the VOIs. We may be
required to fund such a shortfall as a result of unsold company-owned VOIs or
failure by owners to pay such assessments. In addition, from time to time, we
may agree to reimburse certain owner associations up to 80% of their uncollected
assessments. These guarantees extend for the duration of the underlying subsidy
or similar agreement (which generally approximate one year and are renewable at
our discretion on an annual basis). The maximum potential future payments that
we could be required to make under these guarantees was $518 million as of
December 31, 2021. We would only be required to pay this maximum amount if none
of the assessed owners paid their assessments. Any assessments collected from
the owners of the VOIs would reduce the maximum potential amount of future
payments to be made by us. Additionally, should we be required to fund the
deficit through the payment of any owners' assessments under these guarantees,
we would be permitted to use that property to engage in revenue-producing
activities such as rentals. During 2021, 2020, and 2019, we made payments
related to these guarantees of $13 million, $13 million, and $11 million. As of
December 31, 2021 and 2020, we maintained a liability in connection with these
guarantees of $32 million and $26 million included within Accrued expenses and
other liabilities on the Consolidated Balance Sheets.

As part of the Fee-for-Service program, we may guarantee to reimburse the
developer or to purchase inventory from the developer, for a percentage of the
original sale price if certain future conditions exist. As of December 31, 2021,
the maximum potential future payments that we may be required to make under
these guarantees is $41 million. As of December 31, 2021 and 2020, we had no
recognized liabilities in connection with these guarantees.

We generally utilize letters of credit to support the securitization of VOCR
fundings, certain insurance policies, and development activities in our vacation
ownership business. As of December 31, 2021, we had $36 million of irrevocable
standby letters of credit outstanding, of which $2 million were under our
revolving credit facilities. As of December 31, 2020, we had $127 million of
irrevocable standby letters of credit outstanding, of which $96 million were
under our revolving credit facilities. Such letters of credit issued during 2020
included a $48 million letter of credit for guarantees related to the sale of
the European vacation rentals business in which Wyndham Hotels and Travel +
Leisure Co. were required to maintain certain credit ratings. This letter of
credit was released during 2021, see Note 29-Transactions with Former Parent and
Former Subsidiaries to the Consolidated Financial Statements for additional
details.

We primarily utilize surety bonds in our vacation ownership business for sales
and development transactions in order to meet regulatory requirements of certain
states. In the ordinary course of our business, we have assembled commitments
from 12 surety providers in the amount of $2.3 billion, of which we had $292
million outstanding as of December 31, 2021. The availability, terms and
conditions, and pricing of bonding capacity are dependent on, among other
things, continued financial strength and stability of the insurance company
affiliates providing the bonding capacity, general availability of such
capacity, and our corporate credit rating. If the bonding capacity is
unavailable or, alternatively, the terms and conditions and pricing of the
bonding capacity are unacceptable to us, our vacation ownership business could
be negatively impacted.

We have Company sponsored severance plans in place for certain employees in the
event of involuntary terminations, other than for cause. As of December 31,
2021, our maximum obligation under these severance plans was $152 million. Refer
to the Proxy Statement for our 2022 Annual Meeting of Shareholders under the
captions "Compensation of Directors," "Executive Compensation" and "Committees
of the Board" for additional details regarding executive compensation.

Our secured debt is rated Ba3 with a "negative outlook" by Moody's Investors
Service, BB- with a "stable outlook" by
Standard & Poor's Rating Services, and BB+ with a "negative outlook" by Fitch
Rating Agency. A security rating is not a recommendation to buy, sell or hold
securities and is subject to revision or withdrawal by the assigning rating
organization.
Reference in this report to any such credit rating is intended for the limited
purpose of discussing or referring to aspects of our liquidity and of our costs
of funds. Any reference to a credit rating is not intended to be any guarantee
or assurance of, nor should there be any undue reliance upon, any credit rating
or change in credit rating, nor is any such reference intended as any inference
concerning future performance, future liquidity or any future credit rating. For
information regarding the impact of changes to our credit rating and the credit
rating of Wyndham Hotels, see Note 29-Transactions with Former Parent and Former
Subsidiaries-Matters Related to the European Vacation Rentals Business to the
Consolidated Financial Statements.

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We are currently evaluating the impact of the transition from LIBOR as an
interest rate benchmark to other potential alternative reference rates,
including but not limited to the Secured Overnight Financing Rate ("SOFR").
Currently, we have debt and derivative instruments in place that reference
LIBOR-based rates. Although certain of these LIBOR based obligations provide for
alternative methods of calculating the related interest rate payable (including
transition to an alternative benchmark rate) if LIBOR is not reported,
uncertainty as to the extent and manner of future changes may result in interest
rates and/or payments that are higher than, lower than, or that do not otherwise
correlate over time with the interest rates and/or payments that would have been
made on our obligations if LIBOR was available in its current form. The
transition from LIBOR based benchmark rates is expected to begin January 1, 2022
and be completed when USD LIBOR rates are phased out by June 30, 2023.
Management will continue to actively assess the related opportunities and risks
involved in this transition.

We adopted appropriate LIBOR replacement rate transition language into the
agreements for the renewal of our USD bank conduit facility in 2020 and the
renewal of the credit agreement governing the revolving credit facility and term
loan B which closed on October 22, 2021. These agreements represented our
largest exposure to LIBOR.

CASH FLOWS

The following table summarizes the changes in cash, cash equivalents and
restricted cash between 2021 and 2020 (in millions). For a comparative review of
the fiscal years ended December 31, 2020 and 2019, refer to the Cash Flows
section in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC
on February 24, 2021.
                                                                    Year Ended December 31,
Cash provided by/(used in)                                 2021                 2020              Change
Operating activities:                                $      568             $     374          $     194

Investing activities:
Continuing operations                                       (93)                  (60)               (33)
Discontinued operations                                       -                    (5)                 5
Financing activities:                                    (1,288)                  502             (1,790)

Effects of changes in exchange rates on cash and
cash equivalents                                             (7)                    4                (11)
Net change in cash, cash equivalents and restricted
cash                                                 $     (820)            $     815          $  (1,635)

Operating Activities

Net cash provided by operating activities was $568 million for the year ended
December 31, 2021, compared to $374 million in the prior year. This $194 million
increase in 2021 was primarily driven by a $563 million increase in net income
from continuing operations; partially offset by a $281 million decrease in
non-cash add-back items, mainly lower provision for loan losses, and a $91
million increase in cash utilized for working capital.

Investing Activities

Net cash used in investing activities from continuing operations was $93 million
for the year ended December 31, 2021, compared to $60 million in the prior year.
This increase in cash used was primarily driven by $37 million of cash payments
for the acquisition of the Travel + Leisure brand in 2021; partially offset by
$12 million lower property and equipment additions in 2021.
Net cash used in investing activities from discontinued operations was $5
million for the year ended December 31, 2020, which was related to the sale of
the European vacation rentals business.

Financing Activities

Net cash used in financing activities was $1.29 billion for the year ended
December 31, 2021, compared to net cash provided of $502 million in the prior
year. The variance was primarily due to higher net repayments in 2021 due to the
early payoff of our $650 million notes due March 2022, the net payoff of our
secured revolving credit facility of $547 million, and payoff of our $250
million notes due March 2021, partially offset by the issuance of $650 million
notes due December 2029; compared to prior year proceeds from the issuance of
$650 million notes and $547 million of net proceeds from borrowings under our
secured revolving credit facility. The variance was also due to $103 million of
decreased share repurchase activity in 2021 compared to 2020.

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Capital Deployment

We focus on deploying capital for the highest possible returns. Ultimately, our
business objective is to grow our business while optimizing cash flow and
Adjusted EBITDA. We intend to continue to invest in select capital and
technological improvements across our business. We may also seek to
strategically grow the business through merger and acquisition activities. As
part of our merger and acquisition strategy, we have made, and expect to
continue to make, acquisition proposals and enter into non-binding letters of
intent, allowing us to conduct due diligence on a confidential basis. A
potential transaction contemplated by a letter of intent may never reach the
point where we enter into a definitive agreement, nor can we predict the timing
of such a potential transaction. Finally, we intend to continue to return value
to shareholders through the repurchase of common stock and payment of dividends.
All future declarations of quarterly cash dividends are subject to final
approval by the Board.

On October 22, 2021, we renewed the credit agreement governing our revolving
credit facility and term loan B. The renewal eliminated the Relief Period
restrictions on share repurchases, among other changes, and we resumed share
repurchases during the fourth quarter of 2021.

During 2021, we spent $165 million on vacation ownership development projects
(inventory). We believe that our vacation ownership business currently has
adequate finished inventory to support vacation ownership sales for several
years. The average inventory spend on vacation ownership development projects
for the five-year period from 2022 through 2026 is expected to be between $140
million and $170 million annually. After factoring in the anticipated additional
average annual spending, we expect to have adequate inventory to support
vacation ownership sales through at least the next four to five years.

During 2021, we invested $57 million on capital expenditures, primarily on
information technology and sales center improvement projects. During 2022, we
anticipate investing $60 million to $65 million on capital expenditures.

In connection with our focus on optimizing cash flow, we are continuing our
asset-light efforts in vacation ownership by seeking opportunities with
financial partners whereby they make strategic investments to develop assets on
our behalf. We refer to this as Just-in-Time. The partner may invest in new
ground-up development projects or purchase from us, for cash, existing
in-process inventory which currently resides on our balance sheet. The partner
will complete the development of the project and we may purchase finished
inventory at a future date as needed or as obligated under the agreement.

We expect that the majority of the expenditures that will be required to pursue
our capital spending programs, strategic investments and vacation ownership
development projects will be financed with cash flow generated through
operations and cash and cash equivalents. We expect that additional expenditures
will be financed with general secured corporate borrowings, including through
the use of available capacity under our revolving credit facility.

Share Repurchase Program

On August 20, 2007, our Board authorized a share repurchase program that enables
us to purchase our common stock. The Board has since increased the capacity of
the program eight times, most recently in October 2017 by $1.0 billion, bringing
the total authorization under the current program to $6.0 billion. Proceeds
received from stock option exercises increased our repurchase capacity by $81
million since the inception of this program. We had $328 million of remaining
availability in our program as of December 31, 2021.

Under our current share repurchase program, we repurchased 0.5 million shares at
an average price of $52.94 for a cost of $26 million during the year ended
December 31, 2021. The amount and timing of specific repurchases are subject to
market conditions, applicable legal requirements and other factors, including
capital allocation priorities. Repurchases may be conducted in the open market
or in privately negotiated transactions. We suspended share repurchase activity
in March 2020 due to uncertainty associated with COVID-19. On July 15, 2020, we
entered into the First Amendment to the credit agreement governing our revolving
credit facility and term loan B. Among other changes, the First Amendment placed
us into a Relief Period from July 15, 2020 through April 1, 2022 that prohibited
the use of cash for share repurchases during this period. On October 22, 2021,
we entered into the Second Amendment which renewed the credit agreement
governing our revolving credit facility and term loan B. This Second Amendment
eliminated the Relief Period restrictions on share repurchases, among other
changes. In connection with this Second Amendment we resumed share repurchases
during the fourth quarter of 2021.

Dividends

During 2021, we paid cash dividends of $0.30 per share for the first, second,
and third quarters, and $0.35 per share for the fourth quarter. During 2020, we
paid cash dividends of $0.50 per share for the first and second quarters, and
$0.30 per share for the third and fourth quarters. We paid cash dividends of
$0.45 per share for all four quarters of 2019. The aggregate of dividends paid
to shareholders for 2021, 2020, and 2019, were $109 million, $138 million, and
$166 million.

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The First Amendment, which we entered into on July 15, 2020, among other
changes, established a Relief Period which added a new minimum liquidity
covenant, tested quarterly until the end of the Relief Period, of (i) $250
million plus (ii) 50% of the aggregate amount of dividends paid after the
effective date of the First Amendment and on or prior to the last day of the
relevant fiscal quarter. Additionally, the First Amendment limited the payout of
dividends during the Relief Period to not exceed $0.50 per share, the rate in
effect prior to the First Amendment. The Second Amendment, which was entered
into on October 22, 2021, renewed the credit agreement governing our revolving
credit facility and term loan B and terminated the Relief Period which, among
other changes, eliminated the restrictions on dividends and the Relief Period
minimum liquidity covenant established by the First Amendment.

Although our quarterly dividend was previously reduced due to the impacts of
COVID-19, we were able to increase our dividend in the fourth quarter of 2021
and our long-term expectation is to grow our dividend at the rate of growth of
our earnings at a minimum. The declaration and payment of future dividends to
holders of our common stock are at the discretion of our Board and depend upon
many factors, including our financial condition, earnings, capital requirements
of our business, covenants associated with certain debt obligations, legal
requirements, regulatory constraints, industry practice and other factors that
our Board deems relevant. There is no assurance that a payment of a dividend or
a dividend at current levels will occur in the future.

Foreign Earnings

We assert that substantially all undistributed foreign earnings will be
reinvested indefinitely as of December 31, 2021. In the event we determine not
to continue to assert that all or part of our undistributed foreign earnings are
permanently reinvested, such a determination in the future could result in the
accrual and payment of additional foreign withholding taxes, as well as U.S.
taxes on currency transaction gains and losses, the determination of which is
not practicable.

SEASONALITY

We experience seasonal fluctuations in our net revenues and net income from
sales of VOIs and vacation exchange fees. Revenues from sales of VOIs are
generally higher in the third quarter than in other quarters due to increased
leisure travel. Revenues from vacation exchange fees are generally highest in
the first quarter, which is generally when members of our vacation exchange
business book their vacations for the year. Our seasonality has been and could
continue to be impacted by COVID-19.

The seasonality of our business may cause fluctuations in our quarterly
operating results. As we expand into new markets and geographical locations, we
may experience increased or different seasonality dynamics that create
fluctuations in operating results different from the fluctuations we have
experienced in the past.

COMMITMENTS AND CONTINGENCIES

From time to time, we are involved in claims, legal and regulatory proceedings,
and governmental inquiries related to our business, none of which, in the
opinion of management, is expected to have a material effect on our results of
operations or financial condition. See Note 20-Commitments and Contingencies to
the Consolidated Financial Statements for a description of claims and legal
actions arising in the ordinary course of our business along with our guarantees
and indemnifications and Note 29-Transactions with Former Parent and Former
Subsidiaries to the Consolidated Financial Statements for a description of our
obligations regarding Cendant contingent litigation, matters related to Wyndham
Hotels, matters related to the European vacation rentals business, and matters
related to the North American vacation rentals business.

CRITICAL ACCOUNTING ESTIMATES

In presenting our financial statements in conformity with GAAP, we are required
to make estimates and assumptions that affect the amounts reported therein.
Several of the estimates and assumptions we are required to make relate to
matters that are inherently uncertain as they pertain to future events. However,
events that are outside of our control cannot be predicted and, as such, they
cannot be contemplated in evaluating such estimates and assumptions. If there is
a significant unfavorable change to current conditions, it could result in a
material impact to our consolidated results of operations, financial position,
and liquidity. We believe that the estimates and assumptions we used when
preparing our financial statements were the most appropriate at that time. In
addition to our significant accounting policies referenced in Note 2-Summary of
Significant Accounting Policies to the Consolidated Financial Statements,
presented below are the critical accounting estimates that we believe require
subjective and complex judgments that could potentially affect reported results.

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Vacation Ownership Revenue Recognition and Allowance for Loan Losses. Our sales
of VOIs are either cash sales or developer-financed sales. For
developer-financed sales, we project our losses for uncollectible accounts over
the entire lives of our notes. This estimate of uncollectible consideration
reduces the amount of revenue recognized at the time of sale and establishes an
allowance for loan loss which reduces the receivable.

Our estimates of uncollectible amounts are based on the results of our static
pool analysis which tracks defaults for each year's sales over the entire life
of those contract receivables. We consider current defaults, past due aging,
historical write-offs of contracts and consumer credit scores (FICO scores) in
the assessment of a borrower's credit strength, down payment amount and expected
loan performance. We also consider whether the historical economic conditions
are comparable to current economic conditions. If current or expected future
conditions differ from the conditions in effect when the historical experience
was generated, we adjust the allowance for loan losses to reflect the expected
effects of the current environment on the collectability of our VOCRs. There
were no changes to the assumptions used in this model in 2021.

In March 2020, as a result of the COVID-19 pandemic's impact on our owners'
ability to repay their contract receivables, we added an additional model that
increased the allowance for loan losses by $225 million, representing 6% of
gross VOCRs as of March 31, 2020. This additional model was based upon
historical data on the relationship between unemployment rates and net new
defaults. The model provided for the full estimated impact of a recession
(approximately 15-20 months from the peak of unemployment) based on our
historical data from the recession in 2008. Based upon improved performance in
our portfolio (lower net new defaults) and improved unemployment rates, we
reversed $111 million of the initial $225 million provision recorded in March
2020. After considering write-offs and the allowance for remaining likely
defaults associated with loans that were granted payment deferrals, we have no
COVID-19 related allowances as of December 31, 2021. The allowance for loan
losses is our most significant and complex estimate. Over the past five years,
the year-end allowance as a percentage of gross VOCRs has ranged from 18.1% to
19.5% with the exception of 2020 which was 21.8% as a result of the impact of
COVID-19. See Note 10-Vacation Ownership Contract Receivables to the
Consolidated Financial Statements for additional details of changes in the
COVID-19 estimates and impacts to the financial statements.

Inventory. We use the relative sales value method of costing and relieving our
VOI inventory. This method requires us to make estimates subject to significant
uncertainty, including future sales prices and volumes as well as credit losses
and related inventory recoveries. The impact of any changes in estimates under
the relative sales value method is recorded in Cost of vacation ownership
interests on the Consolidated Statements of Income/(Loss) in order to
retrospectively adjust the margin previously recorded subject to those
estimates. There were no changes in these assumptions during 2021.

Impairment of Long-Lived Assets. We perform an annual review of our goodwill and
other indefinite-lived intangible assets, or more frequently if indicators of
potential impairment exist. This analysis requires significant judgments,
including anticipated market conditions, operating expense trends, estimation of
future cash flows, which are dependent on internal forecasts, and estimation of
long-term rate of growth. The estimates used to calculate the fair value of
other indefinite-lived intangible assets change from year to year based on
operating results and market conditions. There were no changes in the
assumptions used in this analysis in 2021. Changes in these estimates and
assumptions could materially affect the determination of fair value and the
other indefinite-lived intangible assets impairment.

Business Combinations. A component of our growth strategy has been to acquire
and integrate businesses that complement our existing operations. We account for
business combinations in accordance with the guidance for business combinations
and related literature. Accordingly, we allocate the purchase price of acquired
companies to the tangible and intangible assets acquired and liabilities assumed
based upon their estimated fair values at the date of purchase. The difference
between the purchase price and the fair value of the net assets acquired is
recorded as goodwill.

In determining the fair values of assets acquired and liabilities assumed in a
business combination, we use various recognized valuation methods including
present value modeling and referenced market values (where available). Further,
we make assumptions within certain valuation techniques including discount rates
and timing of future cash flows. Valuations are performed by management or
independent valuation specialists under management's supervision, where
appropriate. We believe that the estimated fair values assigned to the assets
acquired and liabilities assumed are based on reasonable assumptions that
marketplace participants would use. However, such assumptions are inherently
uncertain and actual results could differ from those estimates.

Guarantees. In the ordinary course of business, we enter into agreements that
contain standard guarantees and indemnities whereby we indemnify another party
for specified breaches of, or third-party claims relating to, an underlying
agreement. Such underlying agreements are typically entered into by one of our
subsidiaries. The various underlying agreements generally govern purchases,
sales or outsourcing of products or services, leases of real estate, licensing
of software and/or development of

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vacation ownership properties, access to credit facilities, derivatives and
issuances of debt securities. Also in the ordinary course of business, we
provide corporate guarantees for our operating business units relating to
merchant credit-card processing for prepaid customer stays and other deposits.
While a majority of these guarantees and indemnifications extend only for the
duration of the underlying agreement, some survive the expiration of the
agreement. We are not able to estimate the maximum potential amount of future
payments to be made under these guarantees and indemnifications as the
triggering events are not predictable. In certain cases, we maintain insurance
coverage that may mitigate any potential payments.

Income Taxes. We regularly review our deferred tax assets to assess their
potential realization and establish a valuation allowance for portions of such
assets that we believe will not be ultimately realized. In performing this
review, we make estimates and assumptions regarding projected future taxable
income, the expected timing of the reversals of existing temporary differences
and the implementation of tax planning strategies. A change in these assumptions
may increase or decrease our valuation allowance resulting in an increase or
decrease in our effective tax rate, which could materially impact our results of
operations.

For tax positions we have taken or expect to take in our tax return, we apply a
more likely than not threshold, under which we must conclude a tax position is
more likely than not to be sustained, assuming that the position will be
examined by the appropriate taxing authority that has full knowledge of all
relevant information, in order to recognize or continue to recognize the
benefit. In determining our provision for income taxes, we use judgment,
reflecting our estimates and assumptions, in applying the more likely than not
threshold.

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