Marriott Vacations Worldwide (NYSE:VAC) reported second-quarter results that exceeded the high end of its guidance for contract sales and adjusted EBITDA, citing higher sales productivity, stronger owner engagement and new commercial programs.
Chief Executive Officer Matt Avril said contract sales rose 22% from a year earlier, supported by vacation ownership sales productivity, or volume per guest (VPG), of $4,477. Owner contract sales increased 41%, while owner VPG rose 33%.
Sales initiatives drive growth
President and Chief Operating Officer Michael Flaskey said the company completed implementation of a five-part commercial strategy during the quarter. May and June were the two highest sales months in the company’s history, he said.
The strategy includes a program called Connections, which focuses on engaging owners during their vacations and throughout their ownership experience. Marriott Vacations said its owner arrival-to-tour ratio, which it now calls Connections, improved 600 basis points year over year during the second quarter.
The company also introduced a data-driven “tour logistics” system in April that uses customer propensity data to match guests with sales executives. Flaskey said the initiative helped lift VPG through higher average transaction sizes. North American tours rose 3% in the quarter and were up 1% year to date through the end of the period.
Other initiatives included revamped owner loyalty tiers, called Reserve and Pinnacle; a Premier Vacations point-of-sale incentive introduced June 9; and the Inner Circle presented by Aflac events platform, which launched June 22 with country artist Lee Brice. The company held an additional five events during the second quarter.
Flaskey said VPG associated with Inner Circle events was above the company average and exceeded expectations. Marriott Vacations plans to hold about 50 events in 2026. For 2027, Flaskey said the company’s goal is a couple hundred headline events and roughly 1,000 total events, including smaller regional programs.
During the question-and-answer session, Flaskey said tour logistics and refreshed owner benefit levels were the principal drivers of second-quarter sales gains. Premier Vacations and Inner Circle, which were introduced later in the quarter, showed early results that were ahead of expectations, he said.
Margins, debt and inventory
Chief Financial Officer Jason Marino said contract sales reached $545 million in the quarter. North American contract sales increased 27%, principally due to higher average transaction size, while development profit rose $14 million year over year to $106 million.
Marino said the company’s reported development profit was reduced by $15 million because revenue from contracts sold in the final 10 days of the quarter was not recognized while those sales remained in their rescission period. Most related sales and marketing costs were recognized during the period.
Marketing and sales expense as a percentage of contract sales declined 150 basis points from a year earlier and improved 700 basis points sequentially from the first quarter. The company expects development margins to improve during the second half.
Its sales reserve was 13.4% of contract sales. Marino said the company increased the reserve rate because of the sharp growth in contract sales and expects a similar reserve rate in the second half. He said delinquencies in the sub-120-day category declined 54 basis points from the first quarter to the second quarter.
Marriott Vacations ended the quarter with $3.1 billion in net corporate debt and leverage of about four times, down from 4.2 times at the end of the first quarter. Debt outstanding has declined by about $100 million since June of the prior year, according to Marino.
The company said it has approximately $900 million of inventory at cost, representing about 1.7 years of inventory based on its updated sales outlook. It is considering adding its New York City property to its inventory trust to support sales rather than selling the asset. The property had previously been included among planned non-core dispositions.
Raised outlook and capital priorities
Marriott Vacations raised its full-year outlook for contract sales growth to 18% to 20%, implying growth of 25% to 29% in the second half. Marino said July’s sales trend was largely consistent with the strong performance recorded in May and June.
- Adjusted EBITDA guidance was raised to $805 million to $830 million, a $50 million increase from the prior range.
- Adjusted free cash flow guidance was raised to $410 million to $460 million, up $35 million at the midpoint.
- The company expects free-cash-flow conversion in the mid-50% range for the year.
- Marriott Vacations expects to sell $50 million of non-core assets in the second half and now expects total non-core asset-sale proceeds of $200 million by the end of 2027.
Marino said future capital deployment will emphasize debt repayment, dividends and opportunistic share repurchases. He said the company expects leverage to be in the upper-three-times range by year-end and may become more opportunistic on buybacks as leverage falls below four times.
Avril said the company plans to provide an update on its strategies and longer-term growth plans at an investor day scheduled for Dec. 9 in New York City.
About Marriott Vacations Worldwide (NYSE:VAC)
Marriott Vacations Worldwide Corporation, headquartered in Orlando, Florida, specializes in the development, marketing and management of vacation ownership resorts and related products. Originally launched as a division of Marriott International in 1984, the company became a separate publicly traded entity in 2011. Since then, it has expanded its offerings through both organic growth and strategic acquisitions, establishing itself as a leading provider in the global timeshare industry.
The company’s core business activities include selling vacation ownership interests, managing a growing portfolio of branded resorts and operating a loyalty program that allows members to exchange or use points at affiliated properties.
