TRAVEL & LEISURE CO. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

Lyla

FORWARD-LOOKING STATEMENTS This report includes “forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be […]

FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements" as that term is defined by the
Securities and Exchange Commission ("SEC"). Forward-looking statements are any
statements other than statements of historical fact, including statements
regarding our expectations, beliefs, hopes, intentions or strategies regarding
the future. In some cases, forward-looking statements can be identified by the
use of words such as "may," "will," "expects," "should," "believes," "plans,"
"anticipates," "estimates," "predicts," "potential," "continue," "future" or
other words of similar meaning. Forward-looking statements are subject to risks
and uncertainties that could cause actual results of Travel + Leisure Co. and
its subsidiaries ("Travel + Leisure Co." or "we") to differ materially from
those discussed in, or implied by, the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, uncertainty with
respect to our ability to realize the benefits of the Travel + Leisure brand
acquisition; the scope and duration of the novel coronavirus global pandemic
("COVID-19"), any resurgences and the pace of recovery; the timing of the
widespread distribution and use of an effective vaccine or treatment for
COVID-19; the potential impact of governmental, business and individuals'
actions in response to the COVID-19 pandemic and our related contingency plans,
including reductions in investment in our business, vacation ownership interest
sales and tour flow, and consumer demand and liquidity; our ability to comply
with financial and restrictive covenants under our indebtedness and our ability
to access capital on reasonable terms, at a reasonable cost or at all; our
ability and the ability of Wyndham Hotels & Resorts, Inc. ("Wyndham Hotels") to
maintain credit ratings; general economic conditions and unemployment rates, the
performance of the financial and credit markets, the competition in and the
economic environment for the leisure travel industry; risks associated with
employees working remotely or operating with a reduced workforce; the impact of
war, terrorist activity, political strife, severe weather events and other
natural disasters, and pandemics (including COVID-19) or threats of pandemics;
operating risks associated with the Vacation Ownership and Travel and Membership
segments; uncertainties related to strategic transactions, including the
spin-off of our hotels business, Wyndham Hotels, and any potential impact on our
relationships with our customers, suppliers, employees and others with whom we
have relationships, and possible disruption to our operations; our ability to
execute on our strategy; the timing and amount of future dividends and share
repurchases, if any, and those other factors disclosed as risks under "Risk
Factors" in documents we have filed with the SEC, including in Part I, Item 1A
of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020,
filed with the SEC on February 24, 2021. We caution readers that any such
statements are based on currently available operational, financial and
competitive information, and they should not place undue reliance on these
forward-looking statements, which reflect management's opinion only as of the
date on which they were made. Except as required by law, we undertake no
obligation to review or update these forward-looking statements to reflect
events or circumstances as they occur.

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 (formerly Wyndham Vacation Clubs)-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. This segment is wholly comprised of our Wyndham
Destinations business line. The following brands operate under the Wyndham
Destinations business line: Club Wyndham, WorldMark by Wyndham, Shell Vacations
Club, Margaritaville Vacation Club by Wyndham, and Presidential Reserve by
Wyndham.
•Travel and Membership (formerly Panorama or Vacation Exchange)-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. This segment is comprised of our Panorama and Travel
+ Leisure Group business lines. The following brands operate under the Panorama
business line: RCI, Panorama Travel Solutions, Alliance Reservations Network
("ARN"), 7Across, The Registry Collection, and Love Home Swap. The Travel +
Leisure Group operates the go.travelandleisure.com, Travel + Leisure Travel
Clubs, and Extra Holidays brands.

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 we paid $35 million at closing and an additional
$20 million during the second quarter of 2021. The remaining payments are to be
completed by June 2024. This acquisition included Travel + Leisure's branded
travel clubs and their nearly 60,000 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's 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.
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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
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 three and nine months ended September 30, 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. As of September 30, 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 2021,
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. We expect that
further improvements in travel sentiment will help with a broader recovery of
our business.

Similar to the impact on revenue, COVID-19 also had a significant impact on our
expenses. During the three and nine months ended September 30, 2020, we incurred
$31 million and $377 million of COVID-19 related charges. During the three and
nine months ended September 30, 2021 we reversed $12 million and $28 million of
COVID-19 charges, primarily due to the COVID-19 related allowance for loan
losses on vacation ownership contract receivables ("VOCRs"). We believe our
COVID-19 related expenses will continue to be at a significantly lower level
than we experienced in 2020. See Note 20-COVID-19 Related Items to the Condensed
Consolidated Financial Statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q for additional details on the impact COVID-19 had on our
business.

Included in the $377 million of COVID-19 related charges during the nine months
ended September 30, 2020 was a $225 million COVID-19 related loan loss provision
recorded as a result of our evaluation of the impact of COVID-19 on our owners'
ability to repay their 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. During 2021, as a result of
continued improvement in net new defaults, we further reduced this provision by
$47 million during the nine months ended September 30, 2021.

As of September 30, 2021, given the significant amount of government assistance
provided to consumers during the pandemic, we expect default risk to remain
elevated for approximately six months as those programs expire. If unemployment
rates or our collection experience for our VOCRs differ significantly from
current expectations, we may need to further increase or decrease our allowance
for loan losses for VOCRs.

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, which provided financial covenant flexibility during the relief period
spanning from July 15, 2020 through 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 our $1.0 billion revolving credit facility and our $250
million 5.625% secured notes which came due in March 2021. On October 22, 2021,
we renewed the credit agreement governing our revolving credit facility and term
loan B, which terminated the Relief Period, establishing new thresholds for our
financial covenant ratios and eliminating
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the restrictions regarding share repurchases, dividends, and acquisitions
established by the 2020 amendment. See Other Information included in Part II,
Item 5 of this Quarterly Report on Form 10-Q for additional details on the
renewal.

During 2020 we successfully executed $900 million of securitization financings
and issued $650 million of senior secured notes due 2026 with an interest rate
of 6.625%. In the first quarter of 2021 we closed on a $500 million
securitization financing at a more favorable cost than any securitization
transaction we have completed in the past. On October 26, 2021 we closed on a
$350 million securitization financing, see Note 25-Subsequent Events to the
Condensed Consolidated Financial Statements included in Part I, Item 1 of this
Quarterly Report on Form 10-Q for additional details. These transactions
together with improving operational results reinforce our expectation that we
will be able to maintain adequate liquidity.

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 30% in the
third quarter of 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 in the
Annual Report filed on Form 10-K with the SEC on February 24, 2021.

RESULTS OF OPERATIONS
We have two reportable segments: Vacation Ownership (formerly Wyndham Vacation
Clubs) and Travel and Membership (formerly Panorama or Vacation Exchange). In
connection with the Travel + Leisure brand acquisition and creation of the
Travel + Leisure Group business line, we decided that the operations of our
Extra Holidays business, which focuses on direct to consumer bookings, better
aligns with the operations of the new Travel + Leisure Group business line and
therefore transitioned the management of this business to the Travel and
Membership segment. As such, we reclassified the results of our Extra Holidays
business, which was previously reported within the Vacation Ownership segment,
into the Travel and Membership segment. This change is reflected in all periods
reported. The reportable segments presented below are those 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 liabilities related to acquisitions of
continuing businesses and dispositions, including the separation of 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 GAAP measures, we believe 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 three months ended
September 30, 2021 and 2020. These operating statistics are the drivers of our
revenues and therefore provide an enhanced understanding of our businesses.
Refer to the Three Months Ended September 30, 2021 vs. Three Months Ended
September 30, 2020 section for a discussion on how these operating statistics
affected our business for the periods presented.
                                                                    Three 

Months Ended September 30,

                                                            2021                2020              % Change (h)
Vacation Ownership
Gross VOI sales (in millions) (a) (i)                  $       440          $     256                 72.3
Tours (in 000s) (b)                                            129                 80                 61.5
Volume Per Guest ("VPG") (c)                           $     3,233          $   3,039                 6.4
Travel and Membership (d)
Transactions (in 000s) (e)
Exchange                                                       256                214                 19.9
Non-exchange                                                   214                142                 51.1
Total transactions                                             470                356                 32.3
Revenue per transaction(f)
Exchange                                               $       339          $     300                 13.2
Non-exchange                                           $       214          $     157                 36.1
Total revenue per transaction                          $       282          $     243                 16.2
Average number of exchange members (in 000s) (g)             3,895              3,680                 5.8




(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 current on
their annual membership dues or within the allowed grace period.
(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 three months ended September 30, 2021 and
2020 (in millions):
                                                 2021       2020

Vacation ownership interest sales, net $ 344 $ 196
Loan loss provision

                                49         45

Gross VOI sales, net of Fee-for-Service sales     393        241
Fee-for-Service sales (1)                          47         15
Gross VOI sales                                 $ 440      $ 256




(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.
There were $28 million and $6 million Fee-for-Service commission revenues for
the three months ended September 30, 2021 and 2020. These commissions are
reported within Service and membership fees on the Condensed Consolidated
Statements of Income/(Loss) included in Part I, Item 1 of this Quarterly Report
on Form 10-Q.

Our 2020 operating statistics include the impacts of COVID-19 which were
significantly negative for the travel industry, our company, our customers, and
our employees. In response to COVID-19, our Vacation Ownership segment
temporarily closed its resorts in mid-March 2020 across the globe and suspended
its sales and marketing operations. These closures resulted in lower tours which
negatively impacted gross VOI sales. 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. Given the pace of COVID-19
vaccinations in the U.S., reduced travel restrictions, increased consumer
confidence and pent-up leisure travel demand, we experienced significant
improvements in VOI sales, tours, VPG, the number of Travel and Membership
transactions, revenue per transaction, and average number of exchange
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members, finishing the first nine months of 2021 with increased momentum in
these areas; 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 through the remainder of 2021; however we do not expect
to incur the level of COVID-19 expenses that we did in 2020.

THREE MONTHS ENDED SEPTEMBER 30, 2021 VS. THREE MONTHS ENDED SEPTEMBER 30, 2020
Our consolidated results are as follows (in millions):

Three Months Ended September 30,

                                                               2021                 2020              Favorable/(Unfavorable)
Net revenues                                              $        839          $      614          $                    225
Expenses                                                           653                 550                              (103)
Operating income                                                   186                  64                               122
Other (income), net                                                  -                  (5)                               (5)
Interest expense                                                    47                  52                                 5
Interest (income)                                                   (1)                 (2)                               (1)
Income before income taxes                                         140                  19                               121
Provision/(benefit) for income taxes                                39                 (21)                              (60)

Net income attributable to Travel + Leisure Co.
shareholders                                              $        101          $       40          $                     61



Net revenues increased $225 million for the three months ended September 30,
2021, compared with the same period last year. In the third quarter of 2021, we
analyzed the adequacy of the COVID-19 related allowance consistent with past
methodology, and as a result of the improvements in net new defaults, we
released $21 million of the COVID-19 related allowance which positively impacted
revenues and recorded a corresponding $8 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 $13 million.

Revenue growth of $224 million (36.5%) was favorably impacted by foreign
currency of $1 million (0.2%). Excluding the impacts of foreign currency and the
COVID-19 related provision release discussed above, the remaining revenue
increase was primarily the result of:
•$164 million of increased revenues at our Vacation Ownership segment primarily
due to an increase in gross VOI sales, property management revenues, 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 driven by a lower average portfolio balance; and
•$39 million of increased revenues at our Travel and Membership segment driven
by higher vacation transaction revenues as we continue to recover from the
impacts of COVID-19.

Expenses increased $103 million for the three months ended September 30, 2021,
compared with the same period last year. The increase in expenses of $102
million (18.5%) was unfavorably impacted by foreign currency of $1 million
(0.2%). Excluding the foreign currency impact, the increase in expenses was
primarily the result of:
•$30 million increase in sales and commission expenses at the Vacation Ownership
segment due to higher gross VOI sales;
•$28 million increase in operating costs in support of higher Travel and
Membership revenues;
•$21 million increase in the cost of VOIs sold primarily due to higher gross VOI
sales and an $8 million reduction in estimated recoveries related to the partial
release of our COVID-19 related provision;
•$20 million increase in property management expenses due to higher management
fees and reimbursable expenses;
•$16 million increase in marketing costs in support of increased revenue;
•$13 million increase in commission expense as a result of higher
Fee-for-Service VOI sales;
•$9 million increase in maintenance fees on unsold inventory; and
•$6 million increase in general and administrative expenses primarily due to
higher employee-related costs.
These increases were partially offset by:
•$30 million decrease in COVID-19 related costs including employee compensation
related costs ($13 million); the write-down of exchange inventory ($10 million);
impairments ($6 million); and
•$7 million decrease in consumer financing interest expense primarily due to a
lower average non-recourse debt balance.

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Interest expense decreased $5 million for the three months ended September 30,
2021 compared with the same period last year primarily due to repayment of the
revolving credit facility and $250 million 5.625% notes in the first quarter of
2021.

Our effective tax rates were 27.9% and (110.5)% during the three months ended
September 30, 2021 and 2020. The effective tax rate in the current year returned
to a more normalized range after being significantly impacted in 2020 by
COVID-19. Our effective tax rate in 2020 was significantly reduced due to a
shift in the mix of earnings in higher tax rate jurisdictions and losses in
lower tax rate jurisdictions. During the third quarter of 2020, we reported a
tax benefit on pre-tax income resulting from the true-up of applying the revised
forecasted effective tax rate to the prior quarter's losses.

As a result of these items, Net income attributable to Travel + Leisure Co.
shareholders increased $61 million for the three months ended September 30, 2021
as compared to the same period last year.

Our segment results are as follows (in millions):

                                                                                Three Months Ended
                                                                                  September 30,
Net revenues                                                                 2021                2020
Vacation Ownership                                                       $      660          $     475
Travel and Membership                                                           185                145
Total reportable segments                                                       845                620
Corporate and other (a)                                                          (6)                (6)
Total Company                                                            $      839          $     614

                                                                                Three Months Ended
                                                                                  September 30,
Reconciliation of Net income to Adjusted EBITDA                              2021                2020
Net income attributable to Travel + Leisure Co. shareholders             $  

101 $ 40

Provision/(benefit) for income taxes                                             39                (21)
Depreciation and amortization                                                    31                 32
Interest expense                                                                 47                 52
Interest (income)                                                                (1)                (2)
Stock-based compensation                                                          8                  6
Legacy items                                                                      2                  1
COVID-19 related costs (b)                                                        1                 13
Asset impairments                                                                 -                  6
Exchange inventory write-off                                                      -                 10
Restructuring                                                                     -                  2

Adjusted EBITDA                                                          $      228          $     139

                                                                                Three Months Ended
                                                                                  September 30,
Adjusted EBITDA                                                              2021                2020
Vacation Ownership                                                       $      177          $      93
Travel and Membership                                                            68                 62
Total reportable segments                                                       245                155
Corporate and other (a)                                                         (17)               (16)
Total Company                                                            $      228          $     139



(a)Includes the elimination of transactions between segments.
(b)Reflects severance and other 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, the American Rescue Plan Act of 2021 (“ARPA”), and
similar international programs for wages paid to certain employees despite
having operations suspended. This amount does not include costs associated with
idle pay.

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Vacation Ownership
Net revenues increased $185 million (38.9%) and Adjusted EBITDA increased $84
million (90.3%) during the three months ended September 30, 2021, compared with
the same period of 2020. Net revenue and Adjusted EBITDA growth were not
materially impacted by foreign currency.

The net revenue increase was primarily driven by:
•$152 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;
•$25 million increase in property management revenues primarily due to higher
management fees and reimbursable revenues; and
•$22 million increase in commission revenues as a result of higher
Fee-for-Service VOI sales.
These increases were partially offset by:
•$12 million decrease in consumer financing revenues primarily due to a lower
average portfolio balance; and
•$4 million increase in our provision for loan losses inclusive of a $21 million
release of our COVID-19 related allowance.

In addition to the drivers above, Adjusted EBITDA was further impacted by:
•$30 million increase in sales and commission expenses due to higher gross VOI
sales;
•$21 million increase in the cost of VOIs sold primarily due to higher gross VOI
sales and an $8 million reduction in estimated recoveries related to the partial
release of our COVID-19 related provision;
•$20 million increase in property management expenses primarily due to higher
management fees and reimbursable expenses;
•$13 million increase in marketing costs in support of increased revenue;
•$13 million increase in commission expense as a result of higher
Fee-for-Service VOI sales; and
•$9 million increase in maintenance fees on unsold inventory.
These increases were partially offset by a $7 million decrease in consumer
financing interest expense primarily due to a lower average non-recourse debt
balance.

Travel and Membership
Net revenues increased $40 million and Adjusted EBITDA increased $6 million
during the three months ended September 30, 2021, compared with the same period
of 2020. Revenue growth of $39 million (26.9%) was favorably impacted by foreign
currency of $1 million (0.7%). The Adjusted EBITDA growth of $6 million (9.7%)
was not materially impacted by foreign currency.

Increases in net revenues excluding the impact of foreign currency were due to
higher transaction revenue. Transactions increased 32% compared to the prior
year as we continue to see recovery from the impact of COVID-19.

In addition to the revenue change explained above, Adjusted EBITDA, excluding
the impact of foreign currency, was further impacted by the following
operational costs in support of higher revenue:
•$24 million increase in cost of sales;
•$4 million increase in other operational expenses; and
•$3 million increase in marketing expense.

Corporate and other
Corporate Adjusted EBITDA decreased $1 million for the three months ended
September 30, 2021 compared to 2020.

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NINE MONTHS ENDED SEPTEMBER 30, 2021 VS. NINE MONTHS ENDED SEPTEMBER 30, 2020
Our consolidated results are as follows (in millions):

Nine Months Ended September 30,

                                                           2021                 2020              Favorable/(Unfavorable)
Net revenues                                          $      2,264          $    1,515          $                    749
Expenses                                                     1,841               1,705                              (136)
Operating income/(loss)                                        423                (190)                              613
Other (income), net                                             (2)                (11)                               (9)
Interest expense                                               147                 138                                (9)
Interest (income)                                               (1)                 (5)                               (4)
Income/(loss) before income taxes                              279                (312)                              591
Provision/(benefit) for income taxes                            76                 (54)                             (130)
Net income/(loss) from continuing operations                   203                (258)                              461

Loss on disposal of discontinued business, net of
income taxes                                                    (2)                  -                                (2)

Net income/(loss) attributable to Travel + Leisure
Co. shareholders                                      $        201          $     (258)         $                    459



Net revenues increased $749 million for the nine months ended September 30, 2021
compared with the same period last year. In the first quarter of 2020, we
evaluated the potential impact of COVID-19 on our owner's ability to repay their
contract receivable and as a result of current and anticipated unemployment
rates at that time, we recorded a $225 million COVID-19 related provision, which
negatively impacted revenues, and a corresponding $55 million benefit to cost of
vacation ownership interests, representing estimated recoveries related to this
provision. These adjustments negatively impacted prior year Adjusted EBITDA by
$170 million. During the nine months ended September 30, 2021, we analyzed the
adequacy of the COVID-19 related allowance consistent with past methodology,
resulting in a $47 million release, which positively impacted revenues, and a
corresponding $17 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
$30 million.

Total revenue growth of $738 million (48.7%) was favorably impacted by foreign
currency of $11 million (0.7%). 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:
•$313 million of increased revenues at our Vacation Ownership segment primarily
due to an increase in gross VOI sales, higher commission and property management
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
driven by a lower average portfolio balance; and
•$158 million of increased revenues at our Travel and Membership segment driven
by higher vacation 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 $136 million for the nine months ended September 30, 2021
compared with the same period last year. The increase in expenses of $127
million (7.4%) was unfavorably impacted by foreign currency of $9 million
(0.5%). Excluding the foreign currency impact, the increase in expenses was
primarily the result of:
•$130 million increase in the cost of VOIs sold primarily due to higher gross
VOI sales, the absence of a $55 million benefit recorded in the prior year
representing estimated recoveries related to the COVID-19 related provision, and
a $17 million increase associated with the COVID-19 related provision release in
the current year;
•$80 million increase in operating costs in support of higher Travel and
Membership revenues;
•$41 million increase in commission expense as a result of higher
Fee-for-Service VOI sales;
•$35 million increase in property management expenses due to higher management
fees and reimbursable expenses;
•$29 million increase in general and administrative expenses primarily due to
higher employee-related costs;
•$27 million increase in sales and commission expenses the Vacation Ownership
segment primarily due to higher gross VOI sales; and
•$13 million increase in marketing costs in support of increased revenue.
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These increases were partially offset by:
•$205 million decrease in COVID-19 related costs including employee compensation
related costs ($78 million); impairments ($54 million); the write-down of
exchange inventory ($48 million) and restructuring charges ($25 million); and
•$13 million decrease in consumer financing interest expense primarily due to a
lower average non-recourse debt balance.

Other income, net of other expenses decreased $9 million for the nine months
ended September 30, 2021 compared with the same period last year, primarily due
to lower business interruption recoveries in 2021.

Interest expense increased $9 million for the nine months ended September 30,
2021 compared with the same period last year primarily due to interest on the
$650 million 6.625% secured notes issued during the third quarter of 2020,
partially offset by repayment of the revolving credit facility and $250 million
5.625% notes in the first quarter of 2021.

Our effective tax rates were 27.2% and 17.3% for the nine months ended
September 30, 2021 and 2020. The effective tax rate in the current year returned
to a more normalized range after being significantly impacted in 2020 by
COVID-19. Our effective tax rate in 2020 was significantly reduced due to a
shift in the mix of earnings in higher tax rate jurisdictions and losses in
lower tax rate jurisdictions.

As a result of these items, Net income attributable to Travel + Leisure Co.
shareholders was $201 million for the nine months ended September 30, 2021, as
compared to a Net loss attributable to Travel + Leisure Co. shareholders of $258
million during the same period last year.

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Our segment results are as follows (in millions):

                                                                                Nine Months Ended
                                                                                  September 30,
Net Revenues                                                                 2021                2020
Vacation Ownership                                                       $    1,708          $   1,116
Travel and Membership                                                           573                411
Total reportable segments                                                     2,281              1,527
Corporate and other (a)                                                         (17)               (12)
Total Company                                                            $    2,264          $   1,515

                                                                                Nine Months Ended
                                                                                  September 30,
Reconciliation of Net income to Adjusted EBITDA                              2021                2020

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

                                                             $  

201 $ (258)

Loss on disposal of discontinued business, net of income taxes                    2                  -
Provision/(benefit) for income taxes                                             76                (54)
Depreciation and amortization                                                    93                 94
Interest expense                                                                147                138
Interest (income)                                                                (1)                (5)
Stock-based compensation                                                         24                 14
Legacy items                                                                      6                  2
COVID-19 related costs (b)                                                        3                 51
Asset impairments (c)                                                             -                 54
Exchange inventory write-off                                                      -                 48
Restructuring                                                                    (1)                27

Adjusted EBITDA                                                          $      550          $     111

                                                                                Nine Months Ended
                                                                                  September 30,
Adjusted EBITDA                                                              2021                2020
Vacation Ownership                                                       $      377          $       6
Travel and Membership                                                           218                142
Total reportable segments                                                       595                148
Corporate and other (a)                                                         (45)               (37)
Total Company                                                            $      550          $     111




(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. CARES Act, ARPA, 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)Includes $5 million of bad debt expense related to a note receivable for the
nine months ended September 30, 2021, included in Operating expenses on the
Condensed Consolidated Statements of Income/(Loss) included in Part I, Item 1 of
this Quarterly Report on Form 10-Q.

Vacation Ownership
Net revenues increased $592 million and Adjusted EBITDA increased $371 million
during the nine months ended September 30, 2021 compared with the same period of
2020. The net revenue growth of $585 million (52.4%) was favorably impacted by
foreign currency of $7 million (0.6%) and the total Adjusted EBITDA growth of
$369 million (6,150.0%) was favorably impacted by foreign currency of $2 million
(33.3%).

The net revenue increase excluding the impact of foreign currency was primarily
driven by:
•$272 million decrease in our provision for loan losses primarily due to the
COVID-19 related allowance adjustments ($225 million provision recorded in the
first quarter of 2020 and $47 million release during 2021);
•$262 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;
•$60 million increase in commission revenues as a result of higher
Fee-for-Service VOI sales; and
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•$47 million increase in property management revenues primarily due to higher
management fees and reimbursable revenues.
These increases were partially offset by a $56 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:
•$130 million increase in the cost of VOIs sold primarily due to higher gross
VOI sales, the absence of a $55 million benefit recorded in the first quarter of
2020 representing estimated recoveries related to the COVID-19 related
provision, and a $17 million reduction in estimated recoveries related to the
partial release of our COVID-19 related provision;
•$41 million increase in commission expense as a result of higher
Fee-for-Service VOI sales;
•$35 million increase in property management expenses primarily due to higher
management fees and reimbursable expenses;
•$27 million increase in sales and commission expenses due to higher gross VOI
sales;
•$11 million increase in general and administrative expenses primarily due to
higher employee-related costs;
•$8 million increase in marketing costs in support of increased revenue; and
•$7 million of lower proceeds from business interruption claims.
These increased expenses were partially offset by:
•$29 million decrease in COVID-19 related costs associated with workforce
reduction; and
•$13 million decrease in consumer financing interest expense primarily due to a
lower average non-recourse debt balance.

Travel and Membership
Net revenues increased $162 million and Adjusted EBITDA increased $76 million
during the nine months ended September 30, 2021 compared with the same period of
2020. Revenue growth of $158 million (38.4%) was favorably impacted by foreign
currency of $4 million (1.0%). Adjusted EBITDA growth of $77 million (54.2%) was
unfavorably impacted by foreign currency of $1 million (0.7%).

Increases in net revenues excluding the impact of foreign currency were
primarily driven by:
•$165 million increase in transaction revenue driven by an increase in vacation
transactions booked as we continue to recover from the impacts of COVID-19;
partially offset by
•$7 million decrease in subscription revenue due to a 2.6% decrease in the
average member count in our exchange business 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:
•$80 million increase in cost of sales; and
•$5 million increase in marketing expense.
These increased expenses were partially offset by a $5 million decrease in
general and administrative expenses resulting from staff reductions and cost
savings initiatives implemented after the first quarter of 2020.

Corporate and other
Corporate Adjusted EBITDA decreased $8 million for the nine months ended
September 30, 2021 compared to 2020 and was favorably impacted by foreign
currency of $1 million. The decrease in Adjusted EBITDA of $9 million was
primarily due to higher employee-related costs.

RESTRUCTURING PLANS
During 2020, we recorded $37 million of restructuring charges, $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 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 the 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
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sales centers at the Vacation Ownership segment. The Travel and Membership
segment additionally recognized $1 million in employee-related expenses
associated with the consolidation of a shared service center. We reduced our
restructuring liability by $12 million of cash payments in 2020 and another $1
million of cash payments during the nine months ended September 30, 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 during the current period at our Vacation
Ownership segment. The remaining 2020 restructuring liability of $27 million is
expected to be paid by the end of 2027.

We have other restructuring plans implemented prior to 2020. The remaining
liability of less than $1 million as of September 30, 2021, is mostly
personnel-related and is expected to be paid by the end of 2021.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Financial Condition

                     September 30,       December 31,
(In millions)             2021               2020            Change
Total assets        $        6,601      $       7,613      $ (1,012)
Total liabilities            7,450              8,581        (1,131)
Total (deficit)               (849)              (968)          119



Total assets decreased by $1.01 billion from December 31, 2020 to September 30,
2021, primarily due to:
•$850 million decrease in Cash and cash equivalents primarily due to net
repayments on the revolving credit facility, notes, and non-recourse debt,
interest payments, payments associated with the acquisition of the Travel +
Leisure brand, and dividend payments, partially offset by VOCR principal
collections;
•$190 million decrease in Vacation ownership contract receivables, net,
primarily due to principal collections and allowance for loan losses, partially
offset by higher net VOI originations; and
•$77 million decrease in Inventory driven by VOI sales and lower estimated VOI
recoveries, partially offset by purchases.

These decreases were partially offset by a $91 million increase in Other
intangibles, net primarily related to the acquisition of the Travel + Leisure
brand from Meredith.

Total liabilities decreased by $1.13 billion from December 31, 2020 to
September 30, 2021, primarily due to:
•$53 million decrease in Deferred income due to increased usage of deferred VOI
trial packages and VOI incentives as a result of owners and members returning to
vacation as COVID-19 travel restrictions lifted;
•$277 million decrease in Non-recourse vacation ownership debt due to net
repayments;
•$798 million decrease in Debt due to net repayments on the revolving credit
facility and the $250 million notes repaid in March 2021; and
•$25 million decrease in Deferred income taxes, primarily due to installment
sales partially offset by the allowance for bad debt.

These decreases were partially offset by a $24 million increase in Accrued
expenses and other liabilities, primarily due to increases in employee related
expenses and the purchase liability related to the acquisition of the Travel +
Leisure brand, partially offset by decreases in accrued marketing, inventory
obligations, accrued interest, and lease liabilities.

Total deficit decreased $119 million from December 31, 2020 to September 30,
2021
, primarily due to $201 million of Net income attributable to Travel +
Leisure Co.
shareholders; partially offset by $81 million of dividends.

Liquidity and Capital Resources
Currently, our financing needs are supported by cash generated from operations
and borrowings under our revolving credit facility as well as the issuance of
secured debt. In addition, we use our bank conduit facilities and non-recourse
debt borrowings to finance our VOCRs. We believe that our net cash from
operations, cash and cash equivalents, access to our revolving credit facilities
and bank conduit facilities, and continued access to the debt markets provide us
with sufficient liquidity to meet our ongoing cash needs for the foreseeable
future, inclusive of the $650 million 4.25% secured notes which come due in
March 2022.

As a precautionary measure at the onset of the global pandemic, in March 2020 we
fully drew down our revolving credit facility. Based on the recovery of our
business to date, our strong liquidity position and ability to access secured
debt capital
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markets, during 2021 we fully repaid the remaining outstanding revolver balance.
The revolving credit facility has a total capacity of $1.0 billion. As of
September 30, 2021, we had $949 million of available capacity, net of letters of
credit.

We repaid our $250 million 5.625% secured notes which came due in March 2021.

On July 15, 2020, we amended our credit agreement governing our revolving credit
facility and term loan B ("Credit Agreement Amendment"). The Credit Agreement
Amendment established a Relief Period with respect to our secured revolving
credit facility, which commenced on July 15, 2020, and was scheduled to end on
April 1, 2022. Among other changes, this 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 Credit Agreement Amendment and on or prior to the last day
of the relevant fiscal quarter. On October 22, 2021, we renewed the credit
agreement governing our revolving credit facility and term loan B which resulted
in the termination of this Relief Period and extends the commitment period for
the revolving credit facility from May 2023 to October 2026. See Other
Information included in Part II, Item 5 of this Quarterly Report on Form 10-Q
for additional details on the renewal.

During 2020 we successfully executed $900 million of securitization financings
and issued $650 million senior secured notes due 2026 with an interest rate of
6.625%. We plan to continue to use our conduit facilities and non-recourse debt
borrowings to finance VOCRs. During the first quarter of 2021, we closed on our
first securitization financing transaction of the year. High demand allowed us
to upsize the transaction and we closed on a $500 million securitization
financing at a 98% advance rate and a company record low weighted average yield
of 1.57%. We also called the notes issued in the securitization financing
transaction that we closed in April of 2020 and included that collateral in the
2021 transaction, reducing the interest rate going forward on our non-recourse
debt. On October 26, 2021, we closed on an additional $350 million
securitization financing at a 98% advance rate and a weighted average yield of
1.82% (see Note 25-Subsequent Events to the Condensed Consolidated Financial
Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for
additional details). These transactions positively impact our liquidity and
reinforce our expectation that we will maintain adequate liquidity.

Our non-recourse timeshare receivables U.S. dollars ("USD") bank conduit
facility has a borrowing capacity of $800 million through October 2022, and had
$486 million of available capacity as of September 30, 2021. Borrowings under
this facility are required to be repaid as the collateralized receivables
amortize, but no later than November 2023.

Our non-recourse timeshare receivables Australian and New Zealand dollars ("AUD"
and "NZD") bank conduit facility has a borrowing capacity of A$250 million and
NZ$48 million through April 2023 and had available capacity of $79 million as of
September 30, 2021. Borrowings under this facility are required to be repaid no
later than May 2025.

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.

We are currently evaluating the impact of the transition from the London
Interbank Offered Rate ("LIBOR") as an interest rate benchmark to other
potential alternative reference rates, including but not limited to the Secured
Overnight Financing Rate. 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. We intend to include such language in our other
relevant agreements prior to the end of 2021.

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CASH FLOW
The following table summarizes the changes in cash, cash equivalents and
restricted cash during the nine months ended September 30, 2021 and 2020 (in
millions):
                                                          2021                2020              Change
Cash provided by/(used in):
Operating activities                                  $      435          $     224          $     211

Investing activities                                         (77)               (98)                21

Financing activities                                      (1,195)               775             (1,970)

Effects of changes in exchange rates on cash and cash
equivalents

                                                   (6)                (5)                (1)
Net change in cash, cash equivalents and restricted
cash                                                  $     (843)         $     896          $  (1,739)



Operating Activities
Net cash provided by operating activities was $435 million for the nine months
ended September 30, 2021, compared to $224 million in the prior year. This $211
million increase was driven by a $459 million increase in net income; partially
offset by a $203 million decrease in non-cash add-back items primarily due to a
lower provision for loan losses and asset impairments, partially offset by
deferred income taxes, and a $47 million increase in cash utilized for working
capital.

Investing Activities
Net cash used in investing activities was $77 million for the nine months ended
September 30, 2021, compared to $98 million in the prior year. This decrease was
primarily related to $50 million of net investment purchases in 2020; partially
offset by $37 million of cash payments for the acquisition of the Travel +
Leisure brand in 2021.

Financing Activities
Net cash used in financing activities was $1.2 billion for the nine months ended
September 30, 2021, compared to net cash provided by financing activities of
$775 million in the prior year. The variance was primarily due to the drawdown
of the $1.0 billion secured revolving credit facility and $650 million note
issuance in the prior year. During 2021 we had $250 million increased repayments
on the revolving credit facility and notes, $178 million of higher net
repayments of non-recourse debt, and a $19 million increase in deferred
consideration payments mainly associated with the acquisition of the Travel +
Leisure brand; partially offset by a $128 million decrease in share repurchases,
and $33 million of decreased dividend payments.

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. We also seek to maintain a first lien leverage
ratio below 4.25 to 1.0. Finally, over the long term 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 of Directors ("Board").

During the nine months ended September 30, 2021, we spent $122 million on
vacation ownership development projects (inventory). We expect that our Vacation
Ownership business currently has adequate finished inventory to support vacation
ownership sales for several years. During 2021, we anticipate spending between
$160 million and $180 million on vacation ownership development projects. The
average inventory spend on vacation ownership development projects for the
four-year period 2022 through 2025 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 the nine months ended September 30, 2021, we spent $40 million on capital
expenditures primarily for information technology and sales center improvement
projects. During 2021, we anticipate spending between $60 million and $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

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in-process inventory which currently resides on our Condensed Consolidated
Balance Sheets. 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 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. Additional expenditures are expected to be financed with
general corporate borrowings.

Stock Repurchase Program
On August 20, 2007, our Board authorized a stock 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 increase our repurchase capacity under the
program. We had $354 million of remaining availability in our program as of
September 30, 2021.

The amount and timing of specific repurchases are subject to applicable legal
requirements and other factors, including capital allocation priorities and
market conditions. 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
amended the credit agreement for our revolving credit facility and term loan B.
Among other changes, the Credit Agreement 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 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 expect to resume our share repurchase program in the 2021
fourth quarter. See Other Information included in Part II, Item 5 of this
Quarterly Report on Form 10-Q for additional details on the renewal.

Dividends

During the quarterly periods ended March 31, June 30, and September 30, 2021, we
paid cash dividends of $0.30 per share ($79 million in aggregate). During the
quarterly periods ended March 31, and June 30, 2020, we paid cash dividends of
$0.50 per share, and in the quarterly period ended September 30, 2020, we paid
cash dividends of $0.30 per share ($112 million in aggregate). On July 15, 2020,
we amended the credit agreement governing our revolving credit facility and term
loan B. Among other changes, the amendment placed us into 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 amendment effective date and on or prior to the last
day of the relevant fiscal quarter. Additionally, the amendment limited the
payout of dividends during the Relief Period to not exceed $0.50 per share, the
rate in effect prior to the amendment. On October 22, 2021, we renewed the
credit agreement governing our revolving credit facility and term loan B. This
terminated the Relief Period which, among other changes, eliminated the
restrictions on dividends and the Relief Period minimum liquidity covenant
established by the 2020 amendment. See Other Information included in Part II,
Item 5 of this Quarterly Report on Form 10-Q for additional details on the
renewal.

Although our quarterly dividend was reduced during the third quarter of 2020 due
to the impact of COVID-19, our long-term plan 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 will occur in the future.

LONG-TERM DEBT COVENANTS
The revolving credit facilities 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, or on an annualized basis as allowed for
certain test periods during the Relief Period.

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The global spread of COVID-19 significantly impacted 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. We were also
keenly focused on preserving cash, cutting costs and managing liquidity. While
we have reopened all of the resorts and sales offices in North America that we
expect to reopen, and expect to reopen our remaining locations in the South
Pacific later this year, the continued impact of COVID-19 on our industry and
business has led to a higher first lien leverage ratio which has begun to
decrease and we expect will continue to decrease over time as the recovery in
leisure travel continues. On July 15, 2020, we amended the credit agreement
governing the revolving credit facility and term loan B. This amendment
increased the maximum first lien leverage ratio and decreased the minimum
interest coverage ratio allowed during the specified Relief Period, which was
scheduled to continue through the first quarter of 2022. The Credit Agreement
Amendment included certain restrictions on the use of cash during the Relief
Period, including the prohibition of share repurchases and added a minimum
liquidity covenant, which was to be tested quarterly and required us to maintain
an interest coverage ratio (as defined in the credit agreement) of not less than
2.0 to 1.0. The maximum first lien leverage ratio for the test period ending
September 30, 2021 was 6.75 to 1.0.

As of September 30, 2021, our first lien leverage ratio was 4.2 to 1.0 and our
interest coverage ratio was 3.6 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 September 30, 2021, we were in
compliance with the financial covenants described above. Under the Credit
Agreement Amendment, when the first lien leverage ratio exceeds 4.25 to 1.0, the
interest rate on revolver borrowings increases, and we are subject to higher
fees associated with our letters of credit based on a tiered pricing grid. Given
the first lien leverage ratio of 5.4 to 1.0 at December 31, 2020, we became
subject to higher fees associated with letters of credit and the interest rate
on the revolver borrowings increased 25 basis points effective March 2, 2021.

On October 22, 2021, we renewed the credit agreement governing our revolving
credit facility and term loan B. This renewal terminated the Relief Period and
reestablished the tiered pricing grid that was in place prior to the Credit
Agreement Amendment. The interest rate on revolver borrowings and fees
associated with letters of credit are subject to future changes based on our
first lien leverage ratio which could serve to further reduce this rate if this
ratio were to decrease to 3.75 to 1.0 or below. Additionally, the renewal
eliminated restrictions regarding share repurchases, dividends, acquisitions,
and the Relief Period minimum liquidity covenant established by the 2020
amendment. See Other Information included in Part II, Item 5 of this Quarterly
Report on Form 10-Q for additional details on the renewal.

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 VOCRs 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
September 30, 2021, all of our securitized loan pools were in compliance with
applicable contractual triggers.

For additional details regarding our credit facilities, term loan B, and
non-recourse debt see Note 10-Debt to the Condensed Consolidated Financial
Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

LIQUIDITY

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.

We believe that our USD bank conduit facility with a term through October 2022,
and our AUD/NZD bank conduit facility, with a term through April 2023, amounting
to a combined capacity of $1.02 billion, along with our ability to issue term
asset-backed securities, should provide sufficient liquidity for our expected
sales pace, and we expect to have available liquidity to finance the sale of
VOIs for the foreseeable future. As of September 30, 2021, we had $565 million
of availability under these asset-backed conduit facilities.

Our liquidity position may be negatively affected by unfavorable conditions in
the capital markets in which we operate or if our VOCRs portfolios do not meet
specified portfolio credit parameters. Our liquidity, as it relates to our VOCRs
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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During 2020 we completed $900 million of securitization financings and during
the first quarter of 2021 we closed on a $500 million securitization financing
at a 98% advance rate and a company record low weighted average yield of 1.57%.
We also called the notes issued in the securitization financing transaction that
we closed in April of 2020 and included that collateral in the 2021 transaction,
reducing the interest rate going forward on our non-recourse debt. On
October 26, 2021, we closed on an additional $350 million securitization
financing at a 98% advance rate and a weighted average yield of 1.82%. See Note
25-Subsequent Events to the Condensed Consolidated Financial Statements included
in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.
These transactions positively impact our liquidity and reinforce our expectation
that we will maintain adequate liquidity.

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 $297
million outstanding as of September 30, 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.

Our secured debt is rated Ba3 with a "negative outlook" by Moody's Investors
Service, BB- with a "negative 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 our credit rating downgrade and credit rating downgrade
of Wyndham Hotels, see Note 23-Transactions with Former Parent and Former
Subsidiaries - Matters Related to the European Vacation Rentals Business to the
Condensed Consolidated Financial Statements included in Part I, Item 1 of this
Quarterly Report on Form 10-Q.

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.

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CONTRACTUAL OBLIGATIONS
The following table summarizes our future contractual obligations for the
12-month periods set forth below (in millions):

                              10/1/21 -          10/1/22 -           10/1/23 -           10/1/24 -          10/1/25 -
                               9/30/22            9/30/23             9/30/24             9/30/25            9/30/26            Thereafter           Total
Debt                         $     652          $     405          $     

302 $ 280 $ 987 $ 753 $ 3,379
Non-recourse debt (a)

              292                484                 191                 192                208                  590            

1,957

Purchase commitments (b)           268                129                 101                  98                123                  192             

911

Interest on debt (c)               218                183                 153                 137                 92                   75              858
Operating leases                    32                 30                  28                  26                 16                   38              170
Inventory sold subject to
conditional repurchase (d)          35                 30                   -                   -                  -                    -               

65

Separation liabilities (e)           1                 12                   -                   -                  -                    2               15
Finance leases                       4                  2                   1                   -                  -                    -                7
Other (f)                           20                 25                  10                   -                  -                    -               55
Total (g)                    $   1,522          $   1,300          $      786          $      733          $   1,426          $     1,650          $ 7,417




(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 (i) $720 million for marketing-related activities; (ii) $79 million
relating to the development of vacation ownership properties, of which $18
million is included within Accrued expenses and other liabilities on the
Condensed Consolidated Balance Sheets included in Part I, Item 1 of this
Quarterly Report on Form 10-Q; and (iii) $35 million for information technology
activities.
(c)Includes interest on debt, non-recourse debt, and finance leases; estimated
using the stated interest rates on our debt and non-recourse debt.
(d)Represents obligations to repurchase completed vacation ownership properties
from third-party developers (See Note 8-Inventory to the Condensed Consolidated
Financial Statements included in Part I, Item 1 of this Quarterly Report on Form
10-Q for further detail) of which $13 million was included within Accrued
expenses and other liabilities on the Condensed Consolidated Balance Sheets
included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
(e)Represents liabilities which we assumed and are responsible for pursuant to
the Cendant Separation and spin-off of Wyndham Hotels (See Note 23-Transactions
with Former Parent and Former Subsidiaries to the Condensed Consolidated
Financial Statements included in Part I, Item 1 of this Quarterly Report on Form
10-Q for further details).
(f)Represents future consideration to be paid for the acquisitions of ARN and
the Travel + Leisure brand (See Note 5-Acquisitions to the Condensed
Consolidated Financial Statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q for further detail).
(g)Excludes a $42 million liability for unrecognized tax benefits associated
with the accounting guidance for uncertainty in income taxes since it is not
reasonably estimable to determine the periods in which such liability would be
settled with the respective tax authorities.

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 16-Commitments and Contingencies to
the Condensed 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 23-Transactions with Former Parent and
Former Subsidiaries to the Condensed 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.
Both notes are included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

CRITICAL ACCOUNTING POLICIES
In presenting our Condensed Consolidated Financial Statements in conformity with
generally accepted accounting principles, 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 Condensed
Consolidated Financial Statements were the most appropriate at that time. These
Condensed Consolidated Financial Statements should be read in conjunction with
the audited Consolidated Financial Statements included in the Annual Report
filed on Form 10-K with the SEC on February 24, 2021, which includes a
description of our critical accounting policies that involve subjective and
complex judgments that could potentially affect reported results.

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