Travel + Leisure (NYSE:TNL) reported a strong finish to 2025 on its latest earnings call, with executives pointing to continued momentum in its core Vacation Ownership business, expanding margins, and another year of significant capital returns to shareholders. Management also outlined a portfolio “Resort Optimization Initiative” that led to one-time 2025 charges but is expected to benefit 2026 results.
2025 results exceeded updated outlook
CEO Michael Brown said 2025 was “an outstanding year,” highlighting 4% revenue growth and 7% adjusted EBITDA growth. He noted fourth-quarter adjusted EBITDA exceeded the company’s full-year outlook, which had been raised in the third quarter, and said the company entered 2026 with “strong visibility into the key drivers” of performance.
Hoag also emphasized cash conversion and returns, stating the company converted 52% of EBITDA into free cash flow for the year and maintained return on invested capital above 20%. The company ended 2025 with leverage under 3.1x, which management said supports ongoing flexibility and capital returns.
Vacation Ownership led performance; credit metrics stable
Management described Vacation Ownership as the “core engine” of the business. Brown said 2025 performance was driven by “strong sales and marketing execution,” including 8% gross Vacation Ownership sales growth, volume per guest (VPG) up 6% and above the high end of guidance, and tour flow growth that improved throughout the year, reaching 5% growth in the fourth quarter.
Hoag said fourth-quarter gross VOI sales rose 8% year over year, driven by the 5% tour flow increase and sustained consumer demand. VPG was $3,359 in the quarter, finishing above the high end of expectations, which he attributed to consistent sales execution and disciplined yield management. Segment adjusted EBITDA was $252 million, with margin expansion supported by operating leverage and improved inventory efficiency.
On credit, Hoag said performance “remained stable,” with delinquencies and defaults holding within a tight range. The provision rate was 19.3% in the fourth quarter and 20.7% for the full year, slightly better than the company’s 21% guidance. He said new originations remained high quality, with weighted average FICO scores above 740 and average down payments trending above 20%.
In Q&A, Hoag said the lower provision rate in the fourth quarter was predominantly driven by larger down payments. Looking to 2026, he guided toward a roughly 20% provision rate, down year over year, and said management expects provision levels to trend into the high teens over time.
Travel and Membership faced exchange headwinds
The Travel and Membership segment continued to face pressure from “exchange headwinds,” according to management. Hoag said fourth-quarter segment revenue was $148 million, down 6% year over year, and segment EBITDA was $47 million, down 10%. Brown said the company is focused on “very tight cost management” to mitigate the impact.
For 2026, management said it is modeling Travel and Membership results “very consistent with the 2025 trend line,” emphasizing disciplined cost management and a pragmatic approach to leveraging partners. In response to a question on segment margins, Hoag noted that while the travel clubs business is growing (he said it was up mid-teens in the fourth quarter), there is a structural margin difference versus exchange-related revenue. If those trends persist, he said the company could see “some broad-based erosion” in Travel and Membership segment margins over the longer term.
Resort Optimization Initiative: 2025 charges, 2026 EBITDA benefit
A major theme of the call was the company’s Resort Optimization Initiative, which Brown described as a deliberate effort to remove lower-demand, aging resorts from the system and replace them over time with higher-demand, less seasonal, newer locations. He said the initiative resulted in one-time 2025 balance sheet impacts and related charges, but is expected to generate a positive EBITDA benefit in 2026.
Hoag said the company recorded a non-cash inventory write-down and impairment of $216 million in 2025 related to identified resort closures. He provided a framework for modeling the 2026 impact, citing three components:
- Sales office closures expected to reduce VOI sales by about $100 million, representing an estimated $35 million EBITDA headwind (assuming 35% flow-through).
- Fewer resorts reducing management fees by about $20 million, representing an estimated $15 million EBITDA headwind (assuming 75% flow-through).
- Lower inventory carry costs expected to generate roughly $70 million of expense savings.
Hoag said the net impact should be a 2026 EBITDA benefit of roughly $15 million to $25 million, which is included in guidance. He stressed the program is “not a demand story,” but a portfolio action intended to improve cost and capital intensity while keeping the core business intact.
In Q&A, Brown said the initiative covers 17 resorts in 12 locations, with “significant” unsold inventory and occupancies “well below 50%,” describing the properties as averaging 40 years old and primarily located in the Northeast. He also discussed owner outreach around property dispositions, stating owners have options including receiving proceeds from eventual sales or moving their ownership back into a Club Wyndham or another product.
2026 outlook: mid-single-digit EBITDA growth, continued capital returns
Management guided to 2026 adjusted EBITDA of $1.03 billion to $1.055 billion, representing 4% to 7% growth year over year, with expectations for revenue growth, margin expansion, and robust free cash flow. Hoag said the company expects to convert roughly half of EBITDA into free cash flow in 2026.
For Vacation Ownership, the company expects 2026 gross VOI sales of $2.5 billion to $2.6 billion, up 1% to 5% year over year. Hoag said that absent the impact of sales office closures tied to resort optimization, underlying VOI growth would have been 5% to 9%. The company guided to 2026 VPG of $3,175 to $3,275, modestly lower year over year, reflecting a deliberate mix shift toward new owners.
In Q&A, Hoag said the expected flattish-to-down VPG is “100% attributable” to the plan to increase new-owner transactions from the low 30% range to the mid-30% range. Brown added that early 2026 trends were consistent with expectations and cited Q1 arrivals tracking above the prior year, with early indications that Q2 was “on a really good path.”
For the first quarter of 2026, the company guided to gross VOI sales of $520 million to $540 million and adjusted EBITDA of $210 million to $220 million, with VPG expected between $3,200 and $3,250.
On capital allocation, Hoag said the company returned $449 million to shareholders in 2025, including $300 million of share repurchases (reducing share count by about 6%) and $149 million in dividends. The board approved a new $750 million share repurchase authorization, and management said it intends to recommend a first-quarter 2026 dividend of $0.60 per share.
Brown also reiterated longer-term capital return progress since the 2018 spin, stating the company has returned more than $2.9 billion to shareholders, reduced share count by roughly one-third, and grown the dividend by more than 35%.
About Travel + Leisure (NYSE:TNL)
Travel + Leisure Co (NYSE: TNL) is a leisure travel company headquartered in Orlando, Florida, that specializes in vacation ownership, membership programs and branded travel experiences. The company operates an extensive portfolio of vacation clubs and destination services, offering members access to resorts, hotels, cruises and guided tours in markets around the world. Through its flagship membership brands, Travel + Leisure Co provides curated vacation packages, exchange services and unique travel itineraries that cater to both individual and family travelers.
In addition to its membership offerings, Travel + Leisure Co manages a network of resort properties and hospitality assets across North America, the Caribbean, Europe and Asia-Pacific.
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