Hilton Grand Vacations Inc. · NYSE:HGV
Hilton Grand Vacations — Investor Presentation (May 2018)
29 slides from Hilton Grand Vacations's investor presentation, May 10, 2018
Slide 1: Investor Presentation Q1 2018
Investor Presentation Q1 2018 © 2018 Hilton Grand Vacations Inc. Proprietary
Slide 2: Disclaimer
DISCLAIMER 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, and are sub
Slide 3: Company Overview
COMPANY OVERVIEW © 2018 Hilton Grand Vacations Inc. Proprietary
Slide 4: Strategic Priorities
STRATEGIC PRIORITIES STRATEGIC PRIORITIES Inspiring people to go further and share more Vision our priorities Grow sales and member base maximize customer engagement and experience strengthen and expand our brand presence focus on talent and operating effectiveness Nog = net owner growth © 2017 Hilt
Slide 5: The New Paradigm in Vacation Ownership
THE NEW PARADIGM IN VACATION OWNERSHIP Exceptional Vacation Offerings 48 HIGH-DEMAND UPSCALE ASSETS LOCATIONS IN 26 HGV MANAGED PROPERTIES OUT OFWITH OUSTANDING QUALITY 26ASSURANCE SCORES 20K EXCHANGE OPTIONS Strong Net Owner Growth 52% Adj. EBITDA v Growth (‘12-‘17) 2008–2017 CONTRACT 8% SALES CAGR
Slide 6: Customer Life Cycle
CUSTOMER LIFE CYCLE 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 – HOA management
Slide 7: Revenue Life Cycle
REVENUE LIFE CYCLE We expect to generate 60% of a customer’s lifetime value after the initial purchase. Initial VOI Purchase Purchase of ~$25K home resort stay and points Follow-on VOI Spend Point reloads for nicer rooms and locations Financing1 Financing of some or all of the VOI purchase Rental an
Slide 8: Vacation Ownership Is Flexible
VACATION OWNERSHIP IS FLEXIBLE 20,000+ Home Resort HGV Hilton Other Uses Vacation Club Points Hotels Options ~90% in Hilton Lagoon 48 5,000+ Cruise Exchange, Ecosystem Tower HGV Resorts Hilton Hotels RCI & Airline Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilto
Slide 9: Consistent Growth
CONSISTENT GROWTH Timeshare Industry Sales ($b) $12.0b $10.0b $8.0b $6.0b $4.0b $2.0b $0.0b $2.0b $1.6b $1.2b $0.8b $0.4b $0.0b HGV Net VOI Sales ($b)1 MARKET $9.2 VOLUME LOSS $1.3 $6.3 1974 1975 1976 1977 1978 1979 *1980 1981 1982 1983 1984 1985 *1986 1987 1988 1989 1990 *1991 *1992 1993 *1994 1995
Slide 10: Strong Market Positioning
STRONG MARKET POSITIONING Trailing 12-Month Sales Relative to Calendar Year 2007 HGV Market Share: 5% 13% (‘07-‘16) 250% 225% 200% 175% 150% 125% 100% 75% 50% 25% 0% Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 Q4-16 Q4-17 HGV WYN INDUSTRY VAC 2017 Contract Sales ($ millions) Fee-for-servic
Slide 11: High-Quality, Loyal Customers
HIGH—QUALITY , LOYAL CUSTOMERS We consider our ~288,000 members to be among the highest quality in the industry with: $113,000 92% 25 743 Leisure Travel Weighted Average Average Household Homeowners Fico Score1 Income (U.S. Owners as of 12/31/17) Days Per Year (Year ended 12/31/17) (U.S. Owners as o
Slide 12: Highly Effective Customer Engagement Model
HIGHLY EFFECTIVE CUSTOMER ENGAGEMENT MODEL Tours (000s) 350 250 150 50 -50 9.2% cagr since downturn ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 Non-Owner Owner Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations Inc. Pro
Slide 13: Marketing Channels
MARKETING CHANNELS 2017 Sales Mix ~74% new owners from Hilton affiliated channels Hilton Marketing Hotel 7% HGV Owners 34% Direct Marketing 44% Non-Hilton Affiliate 15% & Other 51% Hilton affiliated channel Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand
Slide 14: Net Owner Growth
NET OWNER GROWTH Member Growth (1999 – 2017) 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 16% cagr 288k Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations Inc. Proprieta
Slide 15: Industry-Leading Net Owner Growth
INDUSTRY—LEADI NG NET OWNER GROWTH 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 future results. © 2018 Hilt
Slide 16: Capital-Efficient Business Model
CAPITAL—EFFICIENT BUSINESS MODEL 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. Developed—higher • vs. JIT—higher 26% 54% 20% Just-in-Ti
Slide 17: Capital-Efficient Model Allows Rapid Inventory Development
THE CAPITAL—EFFICIENT MODEL ALLOWS US TO DEVELOP INVENTORY RAPIDLY AND SUPPORT HIGHER SALES HGV Contract Sales (2012-2017) (Millions of Dollars) 1,400 1,200 1,000 800 600 400 200 0 796 52 134 546 116 2012 829 258 319 252 2013 905 351 235 319 2014 1,068 611 246 211 2015 1,172 657 304 211 2016 1,275 6
Slide 18: Key Development Partners
KEY DEVELOPMENT PARTNERS 3rd Party Developers Property Names (dates) • Elara – 2012 (Conversion)2 • Sunrise Lodge – 2012 (Conversion)3 • Grand Islander – 2014 (New Build) • Las Palmeras – 2016 (Conversion) • Anderson Ocean Club – 2011 (Conversion) • Ocean 22 – 2014 (New Build) • Ocean Oak Resort – 2
Slide 19: Japan Overview
JAPAN OVERVIEW Committed to Japan ~58,000 Member Families in Japan 8% Net Owner Growth (2012-2017 CAGR) ~500 Team Members in Japan High-Quality, Loyal Japanese Customers 69% College Graduates Beach Top Destination Type 16 Leisure Travel Days Per Year Okinawa Top Asia Destination Disclaimer: Past per
Slide 20: Japan Projects
JAPAN PROJECTS 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 Access to Hilto
Slide 21: Financial Strengths
FINANCIAL STRENGTHS © 2018 Hilton Grand Vacations Inc. Proprietary
Slide 22: Key Business Drivers
KEY BUSINESS DRIVERS 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 base Growing memb
Slide 23: Key Business Drivers
KEY BUSINESS DRIVERS Tours (thousands) 331 306 262 288 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 (thousands) 288
Slide 24: Resilient Business Model
RESILIENT BUSINESS MODEL Contribution to Segment Adjusted EBITDA 2017 Estate Real 45% Financing 19% Club Resort & 21% Rental Ancillary & 15% 39% one-year visibility 40% contractual and recurring Disclaimer: Past performance does not necessarily predict future results. © 2018 Hilton Grand Vacations I
Slide 25: Capital-Efficient Business Model
CAPITAL—EFFICIENT BUSINESS MODEL 2017 Sales Mix as a Percentage of 2017 Contract Sales Inventory Supply as of 12/31/17 years of sales remaining (contract sales) 26% Developed Just-in-Time 54% Fee-for-Service 20% Owned Capital-Efficient 0.5 years 2.2 years 2 years 89% Capital-Efficient Disclaimer: Pa
Slide 26: Outlook and Adjusted EBITDA Reconciliation
OUT LOOK AND ADJUSTED EBITD ARE CONCILIATION 2018E (In millions) Segment Adjusted EBITDA1 General and administrative License fee expense Adjusted EBITDA from unconsolidated affiliate Adjusted EBITDA1 Share based comp Other items2 EBITDA1 Interest expense Depreciation and amortization Interest expens
Slide 27: Historical Adjusted EBITDA Reconciliation
HISTORICAL ADJUSTED EBITD ARE CONCILIATION Total Revenues Net income Interest expense Income tax expense (benefit) Depreciation and amortization Interest expense, depreciation, and amortization included in equity in earnings from unconsolidated affiliate EBITDA1 (Gain)/loss on foreign currency trans
Slide 28: LTM Sales and Segment Adjusted EBITDA Reconciliation
LTM SALES AND SEGMENT ADJUSTED EBITD ARE CONCILIATION Contract Sales Fee-for-Service Sales Owned Sales Business Lines Real Estate Revenues Sales of VOIs, net Sales, marketing, brand and other fees Expenses Cost of VOI sales Sales and marketing Restructuring and one-time spin related costs Intersegme
Slide 29: Proprietary
© 2018 Hilton Grand Vacations Inc. Proprietary
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