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    HGV
    Earnings call· Jun 2026(Q2 FY26)

    Hilton Grand Vacations Q2 FY26 earnings call HGV

    Jul 30, 2026 Source

    Executive summary

    Hilton Grand Vacations Q2 FY26 — Strong EBITDA and Tour Growth Amidst Sales Execution Challenges

    Hilton Grand Vacations delivered solid Q2 FY26 adjusted EBITDA and robust tour growth, demonstrating underlying business strength and operational efficiency. However, contract sales faced headwinds from VPG moderation at Bluegreen and sales execution issues, prompting management to implement corrective actions. The company remains committed to its full-year EBITDA and free cash flow outlook, focusing on strategic investments, cost discipline, and capital returns to shareholders.

    Highlights

    5

    • Generated 239,000 tours in the quarter, an increase of 6% versus the prior year, marking the fourth consecutive quarter of consolidated tour growth.

    • Adjusted EBITDA grew 5% to $293 million, with margins expanding to 23%.

    • New buyer tours increased at a high single-digit rate, supporting long-term embedded value.

    • Repurchased $150 million of shares in the quarter, with year-to-date repurchases totaling over $300 million (over 10% of float).

    • Closed disposition of noncore assets, expected to reduce maintenance fee burden by $10 million to $12 million annually on a run-rate basis.

    Concerns

    4

    • Contract sales declined versus the prior year, primarily due to VPG moderation at Bluegreen and sales execution shortcomings.

    • VPG was down 9% to approximately $3,400 in the quarter.

    • Provision for bad debt was 17% of owned contract sales, at the high end of the mid-teens range.

    • Club business expenses remained slightly elevated due to timing of headcount additions.

    Guidance & targets

    11
    CategoryTargetConfidence
    Adjusted EBITDA before deferrals
    $1.225 billion to $1.265 billion
    high materiality
    High
    Tour growth
    positive low to mid-single digits
    medium materiality
    High
    Tour growth
    low single-digit growth
    medium materiality
    Medium
    VPG (Volume Per Guest)
    decline in the low to mid-single digits
    high materiality
    Medium
    VPG (Volume Per Guest)
    decline in the high single digits
    high materiality
    Medium
    Contract sales
    flat to down slightly
    high materiality
    Medium
    Contract sales
    down in the mid-single digits
    high materiality
    Medium
    Share repurchase pace
    approximately $150 million per quarter
    high materiality
    High
    Adjusted free cash flow conversion rate
    lower half of our long-term target range of 55% to 65%
    medium materiality
    High
    Elara EBITDA benefit
    $25 million to $30 million
    medium materiality
    High
    Maintenance fee burden reduction
    $10 million to $12 million
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Real Estate Business
    Contract sales declined due to VPG moderation at Bluegreen, execution challenges, and mix shifts. New buyer contract sales and tours showed strong growth. Cost of product and sales and marketing expense as a percentage of contract sales improved, leading to profit margin expansion.
    Contract sales: $810 millionNew buyer contract sales: 28% of total volumeNew buyer contract sales growth: 70 bps (vs prior period)Tours: 239,000Tours growth: 6% (YoY)VPG: $3,400VPG decline: 9% (YoY)Cost of product: 10%Cost of product decline: 130 bps (YoY)Sales and marketing expense: $397 millionSales and marketing expense as % of contract sales: 49%Sales and marketing expense decline: 40 bps (YoY)Profit growth: 7% (YoY)Profit margin: 28%Profit margin expansion: 220 bps (YoY)
    		—-3%—$173 million
    Financing Business
    Revenue and profit were strong, with financing margins expanding. The portfolio remains in good shape, with stable delinquency trends.
    Financing margins (excluding amortization): 62%Financing margins expansion: 100 bps (YoY)
    		$144 million——$86 million
    Resort and Club Business
    Revenue grew, driven by continued member additions, particularly HGV Max. Expenses were slightly elevated due to headcount additions, but margins are expected to normalize by year-end.
    Consolidated member count: 722,000HGV Max members: 300,000HGV Max members as % of base: 40%HGV Max members growth: 24% (YoY)Profit margin: 68%
    		$189 million3%—$128 million
    Rental and Ancillary Revenues
    Revenue growth was driven by RevPAR and increased room nights. The segment reported a loss primarily due to developer maintenance fees, which the company is actively working to reduce through inventory optimization.
    RevPAR growth: (vs prior year)Increased room nights: (vs prior year)
    		$210 million8%—-$10 million

    Operational metrics

    37
    Adjusted EBITDA
    $293 millionup 5% YoY
    Q2 FY26

    Adjusted EBITDA to shareholders.

    Adjusted EBITDA margin
    23%up 40 bps YoY
    Q2 FY26

    Excluding reimbursements.

    Net contract sales deferrals (ASC 606)
    $54 million
    Q2 FY26

    Reduced reported GAAP revenue, related to presales of Kahaku project.

    Net direct expenses deferrals (ASC 606)
    $26 million
    Q2 FY26

    Associated with deferred revenues.

    Adjusted EBITDA impact from deferrals
    $28 million
    Q2 FY26

    Net impact of deferrals, increasing reported adjusted EBITDA.

    New buyer tour growth
    high single-digit ratevs prior year
    Q2 FY26

    Maintaining strong pace since last fall.

    New buyer transaction growth
    high single-digit
    Q2 FY26

    Critical to growing embedded value and long-term health of the business.

    Weighted average interest rate for originated loans
    14.4%
    Q2 FY26

    For originated loans in the financing business.

    Combined gross receivables
    $5 billion
    Q2 FY26

    Total receivables for the quarter.

    Total allowance for bad debt
    28%
    Q2 FY26

    As a percentage of the $5 billion receivable balance.

    Provision as % of owned contract sales
    17%increased vs prior year
    Q2 FY26

    Remained within targeted mid-teen range, increased due to higher financing propensity and mix of trust/new buyer sales.

    31-90 day delinquencies as % of current
    down 9 bpsfrom year-end
    Q2 FY26

    Combined basis for all portfolios.

    Bluegreen down payments
    800 bps higherthan a year ago
    Q2 FY26

    Driven by underwriting changes implemented last year.

    Developer maintenance fees loss
    $10 million
    Q2 FY26

    Largest driver of rental and ancillary business profitability trends.

    JV EBITDA
    $2 million
    Q2 FY26

    Reflecting the Elara transaction.

    License fees
    $58 million
    Q2 FY26

    Revenue from license agreements.

    EBITDA attributable to noncontrolling interest
    $4 million
    Q2 FY26

    EBITDA attributable to noncontrolling interests.

    Corporate G&A
    $40 million
    Q2 FY26

    Corporate general and administrative expenses.

    Corporate G&A % of pre-reimbursement revenue
    3%consistent
    Q2 FY26

    Consistent with prior periods.

    Inventory spend
    $58 million
    Q2 FY26

    Capital expenditure on inventory.

    Shares repurchased
    3.1 million shares
    Q2 FY26

    Common stock repurchased during the quarter.

    Shares repurchased
    488,000 shares
    July 1-23

    Additional shares repurchased from July 1 through July 23.

    Remaining share repurchase authorization
    $103 million
    as of July 23

    Remaining availability under current share repurchase plan.

    Liquidity position
    $735 million
    as of June 30

    Total liquidity position.

    Unrestricted cash
    $272 million
    as of June 30

    Part of total liquidity.

    Availability under revolving credit facility
    $463 million
    as of June 30

    Part of total liquidity.

    Corporate debt
    $4.9 billion
    Q2 FY26

    Corporate debt balance at quarter end.

    Nonrecourse debt
    $2.9 billion
    Q2 FY26

    Nonrecourse debt balance at quarter end.

    Remaining capacity in warehouse facility
    $755 million
    Q2 FY26

    Remaining capacity in the $1 billion warehouse facility.

    Unsecuritized notes (current on payments)
    $1.3 billion
    Q2 FY26

    Notes that were current on payments but unsecuritized.

    Monetizable unsecuritized notes
    $719 million
    Q2 FY26

    Portion of unsecuritized notes that could be monetized through warehouse borrowing and securitization.

    Total net leverage (pro forma TTM)
    3.8xconsistent with year-end levels, down 0.1 turns compared to Q1
    Q2 FY26

    Company's total net leverage on a pro forma TTM basis.

    Noncash loss from disposition
    $48 million
    Q2 FY26

    Recorded as a result of the noncore asset disposition transaction.

    Elara EBITDA benefit
    $3 million
    Q3 FY26

    Anticipated EBITDA benefit from Elara acquisition for Q3.

    Elara EBITDA benefit
    $20 million
    FY26

    Anticipated EBITDA benefit from Elara acquisition for the full year.

    RevPAR growth
    vs prior year
    Q2 FY26

    Revenue growth for the quarter was driven by growth in RevPAR versus the prior year, along with increased room nights.

    Elara shift from fee-for-service to own contract sales
    close to 3%
    FY26

    Expected shift in sales mix due to Elara acquisition.

    Product announcements

    1
    ProductTypeDetails
    HGV Ultimate Access new toolslaunch

    Deals & partnerships

    2
    Third partyDisposition of a group of noncore assets

    Closed on the agreement to dispose of noncore assets, removing them from the system. The third party stepped into future obligations as manager and developer and is actively marketing these properties for sale, with HGV participating in proceeds.

    ElaraAcquisition of Elara

    The acquisition of Elara closed on April 30. Performance has been in line or slightly better than expectations, contributing to EBITDA and supporting the thesis of advantageous maintenance fees and solid upgrades.

    Risks & headwinds

    7
    VPG moderation at BluegreenQ2 FY26, Q3 FY26, FY26

    VPG down 9% to $3,400 in Q2 FY26; full-year VPG expected to decline in low to mid-single digits; Q3 VPG expected to decline in high single digits.

    Mitigation: Leadership changes, recruiting investments, and training investments implemented to improve execution.

    Sales execution shortcomingsQ2 FY26

    Contributed to contract sales decline in Q2 FY26, most pronounced in the back half of the quarter at Orlando and Myrtle Beach locations.

    Mitigation: Decisive actions taken, new leadership in place, issues identified and being rectified; expected improvement in Q3 and Q4.

    Higher mix of trust transactions and new buyer salesQ2 FY26

    Contributed to 9% VPG decline in Q2 FY26 due to lower average VPGs.

    Mitigation: Recognized as short-term pressure but beneficial for long-term embedded value, expanding the MAX ecosystem and upgrade opportunities.

    Club business expenses elevatedQ2 FY26

    Expense remains slightly elevated due to the timing of program-related headcount additions.

    Mitigation: Expect margins to approach last year's levels as we exit the year.

    Developer maintenance fees burdenQ2 FY26

    Responsible for a $10 million loss in the rental and ancillary business in Q2 FY26.

    Mitigation: Disposition of noncore assets expected to reduce the fee burden on EBITDA by $10 million to $12 million annually on a run-rate basis.

    VPG compression in Q3Q3 FY26

    Expected to continue into Q3, with VPG projected to decline in the high single digits.

    Mitigation: Cost discipline, expected improvement in bad debt provision, and higher trust mix will help maintain guidance.

    SG&A pressure in Q3Q3 FY26

    Expected to be a little pressured in Q3.

    Mitigation: Expected to normalize in Q4.

    What to watch in Q3 FY26

    5

    Sales execution improvement in Orlando and Myrtle Beach

    Q3 and Q4
    CurrentUnderperformance due to leadership issues
    TargetPerformance improvement to expected levels

    Why it matters

    Critical for overall contract sales and VPG recovery, especially in high-volume markets.

    we expect that the performance will improve as we move through the third quarter and get back up to the level of expectation that we expect from that -- from those sales distribution centers by Q4.

    Q&A highlights

    6

    Can you clarify the 400 basis point year-over-year increase in the loan loss provision and confirm the mid-teens full-year expectation?

    The 17% provision in Q2 was due to higher borrowing propensity and a mix shift to higher-provisioned trust/new buyer sales, not portfolio deterioration. Delinquencies improved for Diamond and Bluegreen due to underwriting changes. Management expects the provision to improve in the second half, keeping it within the mid-teens range for the full year.

    “our provision for the quarter was roughly 17%, which is definitely at the high end of our mid-teens range. But nearly actually a little bit just at a point is associated with a higher propensity to borrow that we saw with the buyers coming through the door as well as a mix to a higher percent of product being sold under the trust product.”

    asked by Patrick Scholes · answered by Daniel Mathewes

    2 min read5 chapters

    Detailed Narrative

    01

    Sales Execution and VPG Headwinds

    Hilton Grand Vacations experienced a decline in contract sales during Q2 FY26, primarily attributed to a moderation in VPG (Volume Per Guest) at Bluegreen, which was lapping a strong HGV Max launch period. Sales execution challenges, particularly in high-volume markets like Orlando and Myrtle Beach, also weighed on overall sales productivity. Additionally, a higher mix of trust transactions and new buyer sales, which typically carry lower average VPGs, contributed to the pressure. Management emphasized that these issues were operational, not demand-related, and have implemented leadership changes and recruiting investments to drive improvement.

    02

    HGV Max and Member Engagement

    The HGV Max program continues to be a significant growth driver and a central pillar of the company's strategy. The member count for HGV Max reached nearly 300,000, representing 40% of the total member base and a 24% increase year-over-year. This growth, alongside the HGV Ultimate Access experience platform, is deepening member engagement and reinforcing the value proposition of ownership. These initiatives are crucial for expanding upgrade opportunities and recurring revenue streams, contributing to long-term embedded value.

    03

    Inventory Optimization and Capital Recycling

    The company successfully executed its inventory optimization strategy by closing an agreement to dispose of a group of noncore assets on June 30. This transaction is expected to reduce the maintenance fee burden on EBITDA by $10 million to $12 million annually on a run-rate basis. While a noncash loss of $48 million was recorded in Q2, the strategy aims to recycle capital, improve portfolio quality, reduce inventory carrying costs, and enhance long-term returns. Management indicated potential for future dispositions, though none are anticipated in 2026.

    04

    Financing Portfolio Health and Provisioning

    The financing business demonstrated resilience, with combined gross receivables at $5 billion and a total allowance for bad debt at 28% of the portfolio. While the Q2 provision was 17% of owned contract sales, at the high end of the mid-teens range, this was driven by a higher financing propensity and a mix shift towards higher-provisioned trust and new buyer sales, not a deterioration in portfolio quality. Early-stage delinquencies remained stable, and management expects the provision to normalize in the mid-teens range for the full year due to improved underwriting.

    05

    Elara Acquisition Impact

    The Elara acquisition, which closed on April 30, is performing in line with or slightly better than expectations. It is projected to contribute approximately $3 million to EBITDA in Q3 and $20 million for the full year 2026. For the next fiscal year (FY27), the annualized EBITDA benefit is expected to accelerate to between $25 million and $30 million. The acquisition supports the thesis of advantageous maintenance fees and solid upgrades, contributing to a shift from fee-for-service to owned contract sales.

    AI-generated summary of the company’s earnings call. Not investment advice.