Hilton Grand Vacations Inc. · NYSE:HGV

Hilton Grand Vacations — Investor Presentation (November 2017)

28 slides from Hilton Grand Vacations's investor presentation, Nov 16, 2017

  1. Slide 1: Hilton Grand Vacations Investor Presentation Q3 2017

    HILTON GRAND VACATIONS © 2017 Hilton Grand Vacations Inc. Proprietary Investor Presentation Q3 2017

  2. Slide 2: Disclaimer

    DISCLAIMER © 2017 Hilton Grand Vacations Inc. Proprietary This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management’s beliefs

  3. Slide 3: Company Overview

    © 2017 Hilton Grand Vacations Inc. Proprietary OVERVIEW COMPANY

  4. Slide 4: The New Paradigm in Vacation Ownership

    THE NEW PARADIGM IN VACATION OWNERSHIP © 2017 Hilton Grand Vacations Inc. Proprietary v 89% Adj. EBITDA Growth (‘11-‘16) (1) Approximate Third Party based on a range of product cost times sales value of inventory. (2) 39/9 assets in Resort/Urban destinations, respectively 212 230 250 269 2013 2014 2

  5. Slide 5: Customer Lifecycle

    CUSTOMER L I FECYCLE © 2017 Hilton Grand Vacations Inc. Proprietary First Time Buyer • Deeded timeshare • Real Estate margin 27.6% YE 2016 Credit • Loans to high-quality customers • Interest income • Origination and servicing fees Dues & Fees • Manage resort HOAs – HOA management fees • Operate HGV

  6. Slide 6: Revenue Lifecycle

    REVENUELIFECYCLE 37% 10% 13% 1% 39% ~60% © 2017 Hilton Grand Vacations Inc. Proprietary We expect to generate 60% of a customer’s lifetime value after the initial purchase. Note: (1) Average, including spend related to follow-on VOI purchases, adjusted for defaults and share of customers financing;

  7. Slide 7: Vacation Ownership Is Flexible

    VACAT ION OWNERSHI P I S F LEX I BLE © 2017 Hilton Grand Vacations Inc. Proprietary Source: Company reports ~90% 14,000+ Vacation Options in Hilton Ecosystem Cruise Exchange, RCI & Airline Other Uses Hilton Hotels 5,000+ Hilton Hotels HGV Club Points 48 HGV Resorts Home Resort Lagoon Tower7

  8. Slide 8: Timeshare Industry Sales Growth and HGV Consistent Growth

    $0.0b $0.4b $0.8b $1.2b $1.6b $2.0b $0.0b $2.0b $4.0b $6.0b $8.0b $10.0b $12.0b 1974 1975 1976 1977 1978 1979 *1980 1981 1982 1983 1984 1985 *1986 1987 1988 1989 1990 *1991 *1992 1993 *1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

  9. Slide 9: Strong Market Positioning

    STRONG MARKET POSITIONING © 2017 Hilton Grand Vacations Inc. Proprietary (1) Starwood Vacation Ownership acquired by Interval Leisure Group in May 2016. (2) ILG Contract Sales includes $64M in sales from unconsolidated joint venture in Maui. Source: Company Financials Trailing 12-MonthSales Relative

  10. Slide 10: Strategic Priorities

    STRATEGIC PRIORITIES © 2017 Hilton Grand Vacations Inc. Proprietary Source: Company reports Grow contract sales with balanced mix of new and existing owners Grow Sales and Member Base Remain focused on Net Owner Growth (NOG) Maximize Customer Engagement & Experience Expand product, service, and tech

  11. Slide 11: High-Quality, Loyal Customers

    HIGH-QUAL I T Y, LOYAL CUSTOMERS © 2017 Hilton Grand Vacations Inc. Proprietary We consider our ~283,000 members to be among the highest quality in the industry with: 92% Homeowners (Owners as of 12/31/16) $113,000 Average Household Income (Owners as of 12/31/16) 25 Leisure Travel Days Per Year Baby

  12. Slide 12: Highly Effective Customer Engagement Model

    HIGHLY EFFECTIVE CUSTOMER ENGAGEMENT MODEL © 2017 Hilton Grand Vacations Inc. Proprietary Tours (000s) 0 100 200 300 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 Non-Owner Owner12

  13. Slide 13: Marketing Channels

    MARKETINGCHANNELS © 2017 Hilton Grand Vacations Inc. Proprietary 2016 Marketing Mix Direct Marketing49% In House27% Non-Hilton Affiliate9% Hilton Hotel Marketing9% Club Direct6%13

  14. Slide 14: Net Owner Growth

    NET OWNER GROWTH © 2017 Hilton Grand Vacations Inc. Proprietary Member Growth(1999 –2016) 0 100,000 200,000 300,000 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 US Japan Other Int’l 269K14

  15. Slide 15: Industry-Leading Net Owner Growth

    INDUSTRY- LE ADING NET OWNER GROWTH © 2017 Hilton Grand Vacations Inc. Proprietary (1) Reflects 2014-2016 growth in members for Vistana Signature Experiences and Hyatt Vacation Ownership Source: Company analysis 2%1 2% (1)% 9% CAGR 2011–2016 Net Owner Growth 15 HILTON GRAND VACATIONS WYNDHAM VACATIO

  16. Slide 16: Capital-Efficient Business Model

    CAPITAL-EFFICIENT BUSINESS MODEL © 2017 Hilton Grand Vacations Inc. Proprietary Developed Capital: •HGV Capital Revenue Streams: •Sales of VOI •Financing •Club & Resort Management •Rental & Ancillary Margin: •vs. JIT -higher •vs. FFS -higher Return: •vs. JIT -lower •vs. FFS -lower Just-in-Time Capit

  17. Slide 17: Capital-Efficient Model Allows Rapid Inventory Development

    THE CAPITAL-EFFICIENT MODEL ALLOWS US TO DEVELOP INVENTORY RAPIDLY AND SUPPORT HIGHER SALES © 2017 Hilton Grand Vacations Inc. Proprietary HGV Contract Sales (2011-2016) (Millions of Dollars) CAGR (2011–2016) 66% (11)% 20% Developed FFS JIT Total 11% 252 319 211 211 550 546 319 235 246 304 134 258 3

  18. Slide 18: Third-Party Developer Fee-for-Service Properties

    3rdParty Developers Property Names (dates) # ofunits1HGV Investment($ millions)Estimated Gross Volume ($ millions)Since 2010 •Elara –2012 (Conversion)2 •Sunrise Lodge –2012 (Conversion)3 1,20083$212$1,540 –1,880140 –1702,601 units added $61M HGV investment $5B estimated gross volume •Grand Islander

  19. Slide 19: Financial Strengths

    FINANCIAL STRENGTHS © 2017 Hilton Grand Vacations Inc. Proprietary

  20. Slide 20: Key Business Drivers

    KEY BUSINESS DRIVERS © 2017 Hilton Grand Vacations Inc. Proprietary Real estate revenues driven by tours and closings Real estate margin driven by inventory, sales and marketing efficiency We finance 2/3 of our owned inventory sales and scale and low cost of funds drives financing margin Net owner g

  21. Slide 21: Key Business Drivers

    KEY BUSINESS DRIVERS © 2017 Hilton Grand Vacations Inc. Proprietary (1) % of developed contract sales financed (excluding 90-day “same as cash” loans). 2.99% 3.22% 2.84% 3.67% 2013 2014 2015 2016 Tours (thousands) Financing Propensity1 # of Members (thousands) Contract Sales ($ millions) Default Rat

  22. Slide 22: Resilient Business Model

    Real Estate45% Financing19% Club & Resort20% Rental & Ancillary16% RESILIENTBUSINESS MODEL © 2017 Hilton Grand Vacations Inc. Proprietary Contribution to Segment Adjusted EBITDA 201622

  23. Slide 23: Conservative Financial Profile

    CONSERVATIVE FINANCIAL PROFILE HGV’s conservative financial policy emphasizes a commitment to a strong credit profile Leverage Goals Liquidity Debt •Liquidity will be maintained in a manner intended to ensure adequate cash/revolver availability in all phases of the cycle •De-leveraging through EBITD

  24. Slide 24: Outlook and Adjusted EBITDA Reconciliation

    Net Income $180M to $198M Adjusted EBITDA1 $380M to $410M Net Cash Provided by Operating Activities $345M to $360M Free Cash Flow $280M to $300M Contract Sales Growth 6.5% to 8.5% FFS as % of Contract Sales 52% to 57% 2017 EPS $1.80 to $1.98 OUTLOOK AND ADJUSTED EBITDARECONCILIATION © 2017 Hilton Gr

  25. Slide 25: Historical Adjusted EBITDA Reconciliation

    HISTORICAL ADJUSTED EBITDARECONCILIATION © 2017 Hilton Grand Vacations Inc. Proprietary YEAR ENDED DECEMBER 31, 2013 2014 20152016 Total Revenues$1,224 $1,317 $1,475 $1,583 Net income128 167 174 168 Recourse debt interest expense48 36 29 29 Income tax expense90 113 118 125 Depreciation and amortizat

  26. Slide 26: LTM Sales and Segment Adjusted EBITDA Reconciliation

    LTM SALES AND SEGMENT ADJUSTED EBITDARECONCILIATION © 2017 Hilton Grand Vacations Inc. Proprietary YEAR ENDED DECEMBER 31, 2015 2016 Contract Sales 1,068 1,172 Fee-for-Service Sales611 657 Owned Sales457 515 Business Lines Real Estate Revenues Sales of VOIs, net492 508 Sales, marketing, brand and ot

  27. Slide 27: Capitalization

    CAPITALIZATION (1) Consolidated First Lien Net Debt and Consolidated Total Net Debt includes unamortized deferred financing costs of $9 millionas of September 30, 2017 and excludes non-recourse financing, specifically $129 million conduit facility and $489 million in prior securitizations. (2) Subje

  28. Slide 28: Hilton Grand Vacations

    © 2017 Hilton Grand Vacations Inc. Proprietary HILTON GRAND VACATIONS

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