Elaborate on the inventory optimization initiatives and potential future opportunities. Also, provide more detail on the Elara acquisition's $20 million contribution to the 2026 guide and its longer-term inventory benefits.

Inventory optimization is driven by financial considerations, rebranding challenges, and market overlap for 8 older, smaller properties, primarily in Orlando. This is expected to yield $10 million to $12 million in annual run-rate adjusted EBITDA benefit. The Elara acquisition is a strategic 'tail acquisition' for a flagship property, unlocking owner upgrade potential and adding over $400 million in consumer notes. It will reduce the fee-for-service percentage below 10%. While this is an initial set of dispositions, more may occur in the next 12-24 months, but not on a consistent annual basis. “this is not about shrinking. It's about upgrading the portfolio. We're monetizing lower quality inventory well, improving the margin and cash flow.”

What was the impact of the weather events in late Q1 and early Q2 in Hawaii, and is this reflected in guidance?

Unusual weather, including a 'Kona Low' in Hawaii, ice storms in the Northeast, and cold temperatures in Florida, had a minimal impact. The total revenue impact was approximately $5 million, primarily affecting contract sales. Maui sales remained strong despite the weather. This minimal impact is already reflected in the current guidance, and no further ongoing effects are anticipated. “the impact was about $5 million of revenue with the majority of that being contract sales and the balance in rentals.”

What factors are driving the strong new owner performance? Is HGV approaching a period of sustained positive Net Unit Growth with its inventory optimization and rebranding efforts?

Strong new buyer trends are attributed to a focus on tour quality and the value proposition, resulting in an 8% increase in transactions and a 3 percentage point mix shift. While new buyer growth is positive, Net Unit Growth (NOG) in the near term is a mechanical outcome of recapture activity, which improves cash flow and returns. The company prioritizes EBITDA and lifetime value creation, and expects to return to positive NOG at some point, but current recapture is considered healthy. “NOG in the near term is more a mechanical outcome of recapture. And ultimately, that's going to improve our cash flow and returns.”

HGV

Hilton Grand Vacations (HGV) Q1 FY26 earnings call: guidance and Q&A

Q: Can you provide additional color on loan loss provision trends and new issuances? Also, compare and contrast tour growth versus VPG expectations for Q2 and the rest of the year.

The loan portfolio is performing strongly with decreased default rates and stable/improving early-stage delinquencies across all brands, including Bluegreen's 0-30 day delinquencies at a 4-year low. The provision is in the mid-teens as expected. VPG headwinds were anticipated due to Bluegreen Max launch comparisons, but strong tour growth and new buyer transactions offset this, leading to margin expansion. The focus is on balancing healthy tour growth with sustainable VPG growth, with VPG expected to improve towards year-end. “our portfolio is performing extremely well. No deterioration. It's solid performance. And I think that is also well received in the ABS markets.”

Earnings call· Mar 2026 (Q1 FY26)· Real Estate· Apr 30, 2026

Source: earnings call transcript

Executive summary

Hilton Grand Vacations Q1 FY26 — Strong Start, Raised EBITDA Guidance, and Strategic Portfolio Optimization

Hilton Grand Vacations delivered a strong first quarter, exceeding adjusted EBITDA expectations and raising full-year guidance, driven by disciplined execution and strategic initiatives. The company successfully integrated new buyers and optimized its portfolio through the Elara JV acquisition and inventory dispositions, while navigating expected VPG declines and external market uncertainties. Management remains focused on operational excellence and capital returns.

Highlights

Adjusted EBITDA grew 8% year-over-year to $267 million, exceeding expectations.
Adjusted EBITDA margin expanded by 130 basis points over the prior year.
New buyer transactions increased 8% year-over-year, driving new buyer contract sales to over 26% of total.
Acquisition of the Elara JV tail is expected to contribute $20 million to FY26 EBITDA.
Repurchased $150 million of stock in Q1, with $237 million remaining authorization.

Concerns

Contract sales were down slightly due to tough comparisons for the Bluegreen business.
VPG declined 8% to nearly $3,800, in line with expectations, due to Bluegreen normalization and higher new buyer mix.
Adjusted free cash flow was a use of $37 million in Q1, including $71 million in inventory spending.

Guidance & targets

Category	Target	Timeline	Confidence
Adjusted EBITDA (before deferrals)	$1.225 billion to $1.265 billion high materiality	Full-year FY26	High
Contract Sales Growth	Low single-digit growth medium materiality	Full-year FY26	High
Tour Growth	Low to mid-single-digit growth medium materiality	Full-year FY26	High
VPG (per guest)	Down slightly medium materiality	Full-year FY26	High
VPG Growth	Low to mid-single-digit declines medium materiality	Q2 and Q3 FY26	High
VPG Growth	Returning to solid growth medium materiality	Q4 · FY26	High
Provision	Mid-teens medium materiality	Full-year FY26	High
Adjusted Free Cash Flow Conversion Rate	Lower half of 55% to 65% range medium materiality	Full-year FY26	High
Share Repurchases	Approximately $150 million per quarter high materiality	Quarterly for FY26	High
Adjusted EBITDA Growth	Low to mid-single-digit range versus prior year medium materiality	Q2 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Real Estate Business Contract sales were slightly down due to tough comparisons for the Bluegreen business. Strong margin performance was driven by efficiency initiatives, offsetting lower VPG and higher new buyer mix. Contract sales: $719 millionNew buyer contract sales: >26% of totalNew buyer contract sales growth: +160 bps YoYTours: >189,000Tours growth: +8.5%VPG: ~$3,800VPG decline: -8%Cost of products: 10%Sales and marketing expense: $352 millionSales and marketing expense as % of contract sales: 49%Sales and marketing expense reduction: -260 bps YoY	—	—	—	$152 million profit, 28% margin
Financing Business Strong performance with margins up significantly. The portfolio remains in great shape with stable delinquencies and a declining provision rate. Financing margin growth: +510 bps YoYWeighted average interest rate for originated loans: 14.5%Combined gross receivables: $4.4 billionTotal allowance for bad debt: $1.3 billionAllowance for bad debt as % of portfolio: 29%Annualized default rate: 10.1%31-60 day delinquencies: 1.48%Provision: 14.9%	$138 million	—	—	$87 million profit, 65% margin
Resort and Club Business Revenue grew modestly, reflecting strong new buyer additions offset by recaptured activity. Expenses were slightly elevated due to program-related headcount additions, impacting Q1 margins. Consolidated member count: >720,000	$185 million	1%	—	$126 million profit, 68% margin
Rental and Ancillary Business Revenue growth was driven by higher available room nights and a slight increase in overall portfolio RevPAR. Developer maintenance fees were the largest driver of the $19 million loss in the period. Developer maintenance fee loss: $19 million	$197 million	5%	—	$19 million loss

HGV operating KPIs by quarter

HGV operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Members HGV Max	266K Our strong 2025 results not only demonstrate the progress we made in integrating our business but they also underscore the advantages of our business model, backed by the strength of the Hilton brand with nearly 60% recurring segment EBITDA, a highly engaged base of over 720,000 members, including 266,000 Max members with substantial embedded value and an established differentiated experience platform in our HGV Ultimate Access. Source: earnings call transcript	277K Those new buyers helped to support 29% growth in our HGV Max member base over the prior year to 277,000 members. Source: earnings call transcript	<300K Nearly 300,000 or 40% of our base are Max members today, growing 24% versus the prior year. Source: earnings call transcript	—
Tours	225K Tours were up 9% year-over-year to 225,000, driven by growth in our new buyer as well as our owner channels. Source: earnings call transcript	189K+ Tours grew 8.5% during the quarter to more than 189,000 with growth coming from both our new buyer and owner channels. Source: earnings call transcript	239K We generated 239,000 tours in the quarter, an increase of 6% versus the prior year, marking our fourth consecutive quarter of consolidated tour growth and demonstrating the continued demand across the platform. Source: earnings call transcript	—
Volume per guest (VPG)	—	<$3,800 VPG was nearly $3,800 for the quarter, declining 8% and in line with the expectations of a high single-digit decline we discussed last quarter. Source: earnings call transcript	~$3,400 VPG was down 9% to approximately $3,400 in the quarter, reflecting the factors that I mentioned earlier. Source: earnings call transcript	—
Gross receivables	$4.3B Combined gross receivables for the quarter were $4.3 billion. Source: earnings call transcript	$4.4B Combined gross receivables for the quarter were $4.4 billion. Source: earnings call transcript	$5B Combined gross receivables for the quarter were $5 billion. Source: earnings call transcript	+13.6%
Annualized default rate	9.86% Our annualized default rate for our consolidated portfolios was 9.86% for the quarter, reflecting another 24 basis points of improvement from the third quarter and marking our third straight quarter of sequential improvement in our default rate. Source: earnings call transcript	10.1% Our annualized default rate for our consolidated portfolios was 10.1% for the quarter, reflecting a slight improvement against the first quarter of the prior year. Source: earnings call transcript	—	+0.2 pt
Members Resort and club	720K+ In our resort and club business, our consolidated member count was over 720,000. Source: earnings call transcript	720K+ In our resort and club business, our consolidated member count was just over 720,000, reflecting strong new buyer additions offset by continued recaptured activity in the period. Source: earnings call transcript	722K In our resort and club business, our consolidated member count was 722,000 as we continue to add new HGV Max members balanced by additional inventory recapture. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Elara JV partner Agreement to purchase the remaining 75% development rights of Elara, a flagship resort in Las Vegas, transitioning it from a fee-for-service JV to an owned property. $130 million initial outflow

The acquisition is effective as of today (call date). It provides full economics, inventory flexibility, and unlocks upgrade potential for Elara owners and other members.

a third party Agreement for the disposition of interest in 8 properties that no longer fit with the portfolio, to proactively manage aging and noncore inventory.

The properties are on average 38 years old, with 4 of the 8 located in Orlando. The agreement is subject to customary closing conditions. This initiative aims to upgrade the portfolio and recycle capital into higher-performing opportunities.

Risks & headwinds

Middle East conflict

Potential broader effects on the leisure travel landscape

Mitigation:Business model advantages: members have prepaid vacations, new buyers attracted by value propositions, ongoing efficiency initiatives, and variable cost structure.

VPG decline Q1 FY26, expected to continue Q2 and Q3 FY26

8% decline in Q1 to ~$3,800

Mitigation:Offset by strong tour growth and new buyer transactions; cost efficiencies driving margin expansion. Expected to return to solid growth in Q4 FY26.

Elevated expenses in Resort and Club business Q1 FY26

Reduced margins in Q1

Mitigation:Expected to diminish as the company moves into seasonally stronger quarters of the year.

Higher interest rates Ongoing

ABS deals priced a little bit higher than originally anticipated

Mitigation:Securitization markets remain open and healthy, demonstrated by oversubscribed $500 million deal.

What to watch in Q2 FY26

Inventory Disposition Closing

Q3 FY26

Current Agreement signed for 8 properties

Target Closing of the disposition

Why it matters

The closing of the disposition will generate an expected $10M-$12M annual run-rate adjusted EBITDA benefit and optimize the portfolio by reducing developer maintenance fees.

We're confident that we'll get that achieved in Q3.

Find out whether HGV delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you provide additional color on loan loss provision trends and new issuances? Also, compare and contrast tour growth versus VPG expectations for Q2 and the rest of the year.

The loan portfolio is performing strongly with decreased default rates and stable/improving early-stage delinquencies across all brands, including Bluegreen's 0-30 day delinquencies at a 4-year low. The provision is in the mid-teens as expected. VPG headwinds were anticipated due to Bluegreen Max launch comparisons, but strong tour growth and new buyer transactions offset this, leading to margin expansion. The focus is on balancing healthy tour growth with sustainable VPG growth, with VPG expected to improve towards year-end.

“our portfolio is performing extremely well. No deterioration. It's solid performance. And I think that is also well received in the ABS markets.”

asked by Patrick Scholes · answered by Daniel Mathewes

2 min read 6 chapters

Detailed narrative

Strategic Initiatives & Operational Excellence

Hilton Grand Vacations reported a strong Q1 FY26, with adjusted EBITDA exceeding expectations and margin expansion, reinforcing confidence in achieving long-term growth algorithms. The company's strategic priorities include operational excellence, attracting new customers, product evolution and innovation, and enhancing member lifetime value. Disciplined execution and cost efficiencies were key drivers of performance, allowing the company to manage expected VPG headwinds effectively and improve EBITDA contribution.

New Buyer Growth & Member Engagement

The company achieved high single-digit new buyer tour growth in Q1, leading to an 8% increase in new buyer transactions, the highest level since 2023. New buyer contract sales represented over 26% of the total, an increase of 160 basis points year-over-year.

The HGV Max member base grew 29% year-over-year to 277,000 members, supported by enhancements to Hilton Honors points conversions and expanded HGV Ultimate Access offerings, including exclusive concerts and sports events.

Inventory Optimization & Portfolio Upgrade

HGV announced an agreement to dispose of its interest in 8 non-core properties, primarily older, smaller assets with an average age of 38 years, including four in Orlando. This initiative is expected to generate an annual run-rate adjusted EBITDA benefit of $10 million to $12 million by reducing developer maintenance fees.

This strategy aims to proactively manage aging inventory, reduce long-term carry risk, and upgrade the overall portfolio mix and quality without shrinking the business.

Elara JV Acquisition

The company reached an agreement to purchase the remaining development rights of Elara, its flagship resort in Las Vegas, for an initial outflow of $130 million, resulting in a net cash use of $45 million. This acquisition allows HGV to take full control of the project, unlocking full economics, providing inventory flexibility, and integrating a consumer note portfolio exceeding $400 million.

Elara is expected to contribute $20 million to FY26 adjusted EBITDA for the remainder of the year and will reduce the company's fee-for-service percentage below 10%.

Financial Business Performance & Loan Portfolio Health

The financing business reported $138 million in revenue and $87 million in profit, with margins of 65%, up 510 basis points year-over-year. The weighted average interest rate for originated loans was 14.5%. The combined gross receivables stood at $4.4 billion, with an allowance for bad debt of $1.3 billion (29% of the portfolio).

The annualized default rate was 10.1%, a slight improvement, and 31-60 day delinquencies remained stable at 1.48%. The provision declined sequentially to 14.9%, in line with expectations.

Liquidity, Capital Structure & Securitization

As of March 31, HGV's liquidity position was $852 million, comprising $261 million in unrestricted cash and $591 million in revolving credit facility availability. Total net leverage on a TTM basis was 3.9x. The company successfully completed a $500 million securitization, upsized from $400 million due to strong investor demand, with an advance rate of 98% and an average coupon rate of 5.13%, demonstrating healthy securitization markets despite geopolitical noise.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.