Hilton Grand Vacations Inc. · NYSE:HGV

Hilton Grand Vacations — Investor Presentation (September 2018)

29 slides from Hilton Grand Vacations's investor presentation, Sep 19, 2018

  1. Slide 1: Investor Presentation Q2 2018

    Exhibit 99.1 Investor Presentation Q2 2018 © 2018 Hilton Grand Vacations Inc. ProprietaryExhibit 99.1 Investor Presentation Q2 2018 © 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, a

  3. Slide 3: Company Overview

    COMPANY OVERVIEW © 2018 Hilton Grand Vacations Inc. ProprietaryCOMPANY 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 4 © 2018 Hilton Grand Vacations Inc. ProprietaryS T R A T E G I C P R I O R I T I E S 4 © 2018 Hilton Grand Vacations Inc. Proprietary

  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 1 Exceptional Vacation Offerings Strong Net Owner Growth 2008–2017 CONTRACT 12/31/2017 SALES CAGR CLUB MEMBERS 8% 288K UPSCALE ASSETS IN 48 HIGH-DEMAND LOCATIONS 8% CAGR 20K 288 269 250 230 EXCHANGE OPTIONS 26 HGV MANAGED PROPERTIES W

  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 Credit Dues & Fees On Property Additional Purchase • Deeded timeshare • Loans to high-quality • Manage resort HOAs • Market transient rental • Second sale Real customers – HOA manage

  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. 1 Initial VOI Purchase Financing Purchase of Financing of some or home resort all of the VOI purchase ~$25K stay and points 37% 10% ~60% 1 Follow-on VOI Spend Club and Resort 13% Poin

  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 Vacation Hilton Other Uses Options Club Points Hotels ~90% Lagoon 51 5,400+ Cruise Exchange, in Hilton Ecosystem Tower HGV Resorts Hilton Hotels RCI & Airline Disclaimer: Past performance does not necessarily predict futur

  9. Slide 9: Consistent Growth

    1 HGV Net VOI Sales ($b) C O N S I S T E N T G R O W T H $12.0b $2.0b $9.6 $10.0b MARKET $1.6b VOLUME LOSS $1.3 $8.0b $1.2b $6.0b $6.3 $0.8b $4.0b $0.4b $2.0b $0.0b $0.0b 1974–2007 CAGR: 15% Timeshare Industry Sales Growth ($B) HGV ($B) (1) Unless otherwise noted, HGV Net VOI Sales data from histori

  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 HGV Market Share: 5% 13% Relative to Calendar Year 2007 (‘07-‘17) 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 1, 2 2017 HGV VAC ILG WYN C

  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: 743 25 $113,000 92% Weighted Average Leisure Travel Average Household Homeowners 1 Fico Score (U.S. Owners as of 12/31/17) Days Per Year Income (Year ended 12/

  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. 12 © 2018 Hilton Grand Vacatio

  13. Slide 13: Marketing Channels

    M A R K E T I N G C H A N N E L S 2017 Sales Mix ~74% new owners from Hilton affiliated channels Hilton Hotel Marketing 7% HGV Owners 34% Direct Marketing 44% Non-Hilton Affiliate & Other 15% Disclaimer: Past performance does not necessarily predict future results. 13 © 2018 Hilton Grand Vacations I

  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. 14 © 2018 Hilton Grand Vacations Inc. Prop

  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 CAGR 2012–2017 Net Owner Growth 8% 1 2% (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 f

  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% 26% 26% 54% 54% 54% 20% 20% 20% Fee-for-Service Developed Just-in-Time Capital: Capital: Capital: • Third Party Capital • HGV Capital • HGV Capital Revenue Streams: Revenue Streams: Revenue Streams: • Commissions & Brand Fees • Sales of

  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) CAGR (2012–2017) 1,400 1,275 Total 10% 1,172 1,200 1,068 1,000 905 829 694 796 657 52 800

  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 rd 3 Party Developers Property Names (dates) Investment Since 2010 1 units Volume ($ millions) ($ millions) 2 • Elara – 2012 (Conversion) 1,201 $21 $1,540 – 1,880 1 2,602 units added 3 • Sunrise Lodge – 2012 (Conversion) 83 2 140 –

  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 Net Owner Growth Team Members Member Families (2012-2017 CAGR) in Japan in Japan High-Quality, Loyal Japanese Customers 69% 16 Leisure Travel College Graduates 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 Odawara Stunning Mountain and Sea Views Pristine and Unparalleled Beauty Hillside Collection of 10 Villas 132 Timeshare Units Ability to develop up to 100 more units in Dedicated Check-in Facilities phases over time Private Pool Access to Hilton Odawara Resort & Spa

  21. Slide 21: Financial Strengths

    FINANCIAL STRENGTHS © 2018 Hilton Grand Vacations Inc. ProprietaryFINANCIAL 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 1 Tours Financing Propensity # of Members (thousands) (thousands) 65.3% 65.4% 288 331 63.6% 306 55.1% 269 288 250 262 230 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Contract Sales Default Rate Club & Resort Management ($ millions) Revenue per Memb

  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. 24 © 2018 Hilton Grand Vacations Inc. ProprietaryR E S I L I E N T

  25. Slide 25: Capital-Efficient Business Model

    77% Capital-Efficient 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 YTD 6/30/18 Sales Mix Years of Inventory Supply as of 6/30/18 as a Percentage of YTD 6/30/18 Contract Sales as a Percentage of TTM 6/30/18 Contract Sales 1.4 years 21% Developed Just-in-Time Fee-for-Service 2.4 years 2

  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 2018 (In millions) Low Case High Case 1 Net Income $285M to $300M Segment Adjusted EBITDA 669 682 General and administrative 88 86 License fee expense 96 98 Adjusted EBITDA from unconsolidated affiliate (4) (6) EPS $2.

  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: ©

    © 2018 Hilton Grand Vacations Inc. Proprietary© 2018 Hilton Grand Vacations Inc. Proprietary

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