Hilton Grand Vacations Inc. · NYSE:HGV

Hilton Grand Vacations — Investor Presentation (March 2018)

29 slides from Hilton Grand Vacations's investor presentation, Mar 8, 2018

  1. Slide 1: Hilton Grand Vacations Investor Presentation Q4 2017

    HILTON GRAND VACATIONS Investor Presentation Q4 2017 © 2018 Hilton Grand Vacations Inc. Proprietary

  2. Slide 2: Disclaimer

    D I S C L A I M E R This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s beliefs, expectations and assumptions and information currently available to management, an

  3. Slide 3: Company Overview

    COMPANY OVERVIEW © 2018 Hilton Grand Vacations Inc. Proprietary

  4. Slide 4: Strategic Priorities

    S T R A T E G I C P R I O R I T I E S Inspiring People to Go Further and Share More VISION NOG OUR PRIORITIES GROW Sales and Member Base MAXIMIZE Customer Engagement and Experience STRENGTHEN AND EXPAND FOCUS ON Operating Effectiveness NOG = Net Owner Growth © 2018 Hilton Grand Vacations Inc. Propri

  5. Slide 5: The New Paradigm in Vacation Ownership

    T H E N E W P A R A D I G M I N V A C A T I O N O W N E R S H I P Exceptional Vacation Offerings 48 UPSCALE ASSETS IN HIGH-DEMAND LOCATIONS 20K EXCHANGE 26 OPTIONS HGV MANAGED PROPERTIES OUT OF WITH OUSTANDING QUALITY 26 ASSURANCE SCORES Strong Net Owner Growth 2008–2017 CONTRACT 12/31/2017 8% SALES

  6. Slide 6: Customer Lifecycle

    C U S T O M E R L I F E C Y C L E Real Estate Financing Club & Resort Rental & Ancillary Real Estate First Time Buyer • Deeded timeshare • Real Estate margin 32.4% YE 2017 Credit • Loans to high-quality customers • Interest income • Origination and servicing fees Dues & Fees • Manage resort HOAs – H

  7. Slide 7: Revenue Lifecycle

    R E V E N U E L I F E C Y C L E We expect to generate 60% of a customer’s lifetime value after the initial purchase. Initial VOI Purchase Purchase of ~$25K home resort stay and points Financing1 Financing of some or all of the VOI purchase Follow-on VOI Spend Point reloads for nicer rooms and locati

  8. Slide 8: Vacation Ownership is Flexible

    V A C A T I O N O W N E R S H I P I S F L E X I B L E 20,000+ Home Resort HGV Hilton Other Uses Vacation Club Points Hotels Options ~90% in Hilton Lagoon 48 5,000+ Cruise Exchange, Ecosystem Tower HGV Resorts Hilton Hotels RCI & Airline Disclaimer: Past performance does not necessarily predict futur

  9. Slide 9: Consistent Growth

    C O N S I S T E N T G R O W T H $12.0b $2.0b $10.0b MARKET $9.2 $1.6b $ b) VOLUME ( LOSS HGV $1.3 Sales $8.0b y Net $1.2b VOI Industr $6.0b $6.3 Sales $0.8b ( b) $ $4.0b Timeshare 1 $2.0b $0.4b $0.0b $0.0b 1974 1975 1976 1977 1978 1979 *1980 1981 1982 1983 1984 1985 *1986 1987 1988 1989 1990 *1991 *

  10. Slide 10: Strong Market Positioning

    S T R O N G M A R K E T P O S I T I O N I N G Trailing 12-Month Sales Relative to Calendar Year 2007 HGV Market Share: 5% 13% (‘07-‘16) 250% 225% HGV 200% 175% 150% 125% WYN 100% INDUSTRY 75% VAC 50% 25% 0% Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 Q4-16 Q4-17 2017 HGV VAC ILG1, 2 WYN Co

  11. Slide 11: High-Quality, Loyal Customers

    H I G H—Q U A L I T Y , L O Y A L C U S T O M E R S We consider our ~288,000 members to be among the highest quality in the industry with: 25 743 $113,000 92% Weighted Average Average Household Homeowners Leisure Travel 1 Fico Score Income (U.S. Owners as of 12/31/17) Days Per Year (Year ended 12/31

  12. Slide 12: Highly Effective Customer Engagement Model

    H I G H L Y E F F E C T I V E C U S T O M E R E N G A G E M E N T M O D E L Tours (000s) 350 250 150 50 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 -50 Non-Owner Owner Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations

  13. Slide 13: Marketing Channels

    M A R K E T I N G C H A N N E L S 2017 Marketing Mix In House 30% Non-Hilton Affiliate 11% Hilton Hotel Marketing 7% Club Direct 5% Direct Marketing 47% Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations Inc. Proprietary

  14. Slide 14: Net Owner Growth

    N E T O W N E R G R O W T H Member Growth (1999 – 2017) 288K 300,000 200,000 100,000 0 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 US Japan Other Int’l Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations Inc. Proprie

  15. Slide 15: Industry-Leading Net Owner Growth

    I N D U S T R Y—L E A D I N G N E T O W N E R G R O W T H Net Owner Growth CAGR 2012–2017 8% 2%1 (1)% (1)% (1) Reflects 2014-2017 growth in members for Vistana Signature Experiences and Hyatt Vacation Ownership. Source: Public Financials Disclaimer: Past performance does not necessarily predict futu

  16. Slide 16: Capital-Efficient Business Model

    C A P I T A L—E F F I C I E N T B U S I N E S S M O D E L 26% 54% 20% 26% 54% 20% 26% 54% 20% Fee-for-Service Capital: • Third Party Capital Revenue Streams: • Commissions & Brand Fees • Club & Resort Management • Rental & Ancillary Margin: • vs. Developed—lower • vs. JIT—lower Return: • vs. Develop

  17. Slide 17: The Capital-Efficient Model Allows Us to Develop Inventory Rapidly

    T H E C A P I T A L—E F F I C I E N T M O D E L A L L O W S U S T O D E V E L O P I N V E N T O R Y R A P I D L Y A N D S U P P O R T H I G H E R S A L E S HGV Contract Sales (2012-2017) (Millions of Dollars) 1,400 1,275 1,172 1,200 1,068 1,000 905 829 694 796 657 52 800 611 134 351 258 600 235 324

  18. Slide 18: Key Development Partners

    K E Y D E V E L O P M E N T P A R T N E R S Estimated HGV # of Gross 3rd Party Developers Property Names (dates) units1 Investment Volume Since 2010 ($ millions) ($ millions) • Elara – 2012 (Conversion)2 1,200 $21 $1,540 – 1,880 2,601 units added • Sunrise Lodge – 2012 (Conversion)3 83 2 140 – 170 $

  19. Slide 19: Japan Overview

    J A P A N O V E R V I E W Committed to Japan ~58,000 8% ~500 Member Families Net Owner Growth Team Members in Japan (2012-2017 CAGR) in Japan High-Quality, Loyal Japanese Customers 69% 16 College Graduates Leisure Travel Days Per Year Beach Okinawa Top Destination Type Top Asia Destination Disclaime

  20. Slide 20: Japan Projects

    J A P A N P R O J E C T S Sesoko Pristine and Unparalleled Beauty 132 Timeshare Units Dedicated Check-in Facilities Private Pool A Dine-In / Take-Out Deli Concept Odawara Stunning Mountain and Sea Views Hillside Collection of 10 Villas Ability to develop up to 100 more units in phases over time Acce

  21. Slide 21: Financial Strengths

    FINANCIAL STRENGTHS © 2018 Hilton Grand Vacations Inc. Proprietary

  22. Slide 22: Key Business Drivers

    K E Y B U S I N E S S D R I V E R S Real estate revenues driven by tours and closings Real estate margin driven by inventory, sales and marketing efficiency Financing margin driven by 2/3 financing propensity of our owned sales, scale and low cost of funds Focus on net owner growth expands member ba

  23. Slide 23: Key Business Drivers

    K E Y B U S I N E S S D R I V E R S Tours (thousands) 331 306 288 262 2014 2015 2016 2017 Contract Sales ($ millions) $1,275 $1,172 $1,068 $905 2014 2015 2016 2017 Financing Propensity1 63.6% 65.3% 65.4% 55.1% 2014 2015 2016 2017 Default Rate 4.12% 3.67% 3.22% 2.84% 2014 2015 2016 2017 # of Members

  24. Slide 24: Resilient Business Model

    R E S I L I E N T B U S I N E S S M O D E L Contribution to Segment Adjusted EBITDA 2017 Financing 19% Real Club & Estate Resort 45% 21% Rental & Ancillary 15% Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations Inc. Proprietary

  25. Slide 25: Capital-Efficient Business Model

    C A P I T A L—E F F I C I E N T B U S I N E S S M O D E L 2017 Sales Mix as a Percentage of 2017 Contract Sales 26% Developed Just-in-Time 54% Fee-for-Service 20% Owned Capital-Efficient Inventory Supply as of 12/31/17 years of sales remaining (contract sales) 0.5 years 2.2 years 89% Capital -2 year

  26. Slide 26: Outlook and Adjusted EBITDA Reconciliation

    O U T L O O K A N D A D J U S T E D E B I T D A R E C O N C I L I A T I O N 2018E (In millions) Low Case High Case Segment Adjusted EBITDA1 654 673 General and administrative 89 87 License fee expense 93 95 Adjusted EBITDA from unconsolidated affiliate (8) (9) Adjusted EBITDA1 480 500 Share based co

  27. Slide 27: Historical Adjusted EBITDA Reconciliation

    H I S T O R I C A L A D J U S T E D E B I T D A R E C O N C I L I A T I O N YEAR ENDED DECEMBER 31, 2014 2015 2016 2017 Total Revenues $1,317 $1,475 $1,583 $1,711 Net income 167 174 168 327 Interest expense 36 29 29 27 Income tax expense (benefit) 113 118 125 (16) Depreciation and amortization 18 22

  28. Slide 28: LTM Sales and Segment Adjusted EBITDA Reconciliation

    L T M S A L E S A N D S E G M E N T A D J U S T E D E B I T D A R E C O N C I L I A T I O N YEAR ENDED DECEMBER 31, 2016 2017 Contract Sales 1,172 1,275 Fee-for-Service Sales 657 694 Owned Sales 515 581 Business Lines Real Estate Revenues Sales of VOIs, net 508 548 Sales, marketing, brand and other

  29. Slide 29: Hilton Grand Vacations

    HILTON GRAND VACATIONS © 2018 Hilton Grand Vacations Inc. Proprietary

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