TNL - Increase in vacation ownership revenues show a strong travel industry

2023-10-25 15:26:32 ET

Travel + Leisure Co. ( NYSE: TNL ) published their earnings on Wednesday and reported that its vacation ownership business saw an 8% year-over-year jump due to a prepaid model that is recession-proof.

( TNL )'s vacation ownership revenue is now $812M in the third quarter. Net vacation ownership interest sales also increased from $403M last year this quarter to $433M this year's Q3.

The company said that 80% of its owners paid off their timeshare fully and that 70% of its new buyers are Millennials and Gen-Xers.

In addition, vacation-owner nights booked for the second half of the year are still tracking ahead of 2019 levels, with volume per guest averaging in Q3 at $3,108.

The $10.5B industry has 9.9M household owners with average transaction amounts for timeshares of $23,940.

“When they’re deciding to go on vacation this year, they're only paying their annual maintenance fee, which is on average about $1,000,” said Travel + Leisure CEO Michael Brown in a CNBC interview. “So, at a time when inflation's high and hotel rooms are at all-time-high rates, for people who have already paid for it, the decision to go on vacation [is easier].”

Last year was the year of “revenge travel,” he said, “where people were going anywhere and everywhere, short-haul and mid-haul.”

This year’s summer, the industry saw a return to long-haul vacations, with a lot of cruise vacations and travel to Europe, he added.

“What we’re seeing is a normalization, and I’d expect to see a lot of U.S. travel in 2024.”

Some of the most popular destinations have been to cities like Portland, Austin, Nashville, and Atlanta. “Urban destinations for quick getaways are super popular these days,” said Brown.

( TNL ) shares are down about 2% on Wednesday, after the company reported its earnings. They also lowered their full-year guidance to $1.32–$1.46.

The company’s price earnings multiple, Brown said, “reflects a lot of uncertainty that investors have about where the economy is going [and] where interest rates are going. That doesn't change our underlying business.”

Some other timeshare stocks include Hilton Worldwide ( HLT ), Marriott International ( MAR ), Hilton Grand Vacations Inc. ( HGV ), and Marriott Vacations ( VAC ).

More on Travel+Leisure:

• Travel + Leisure Co. (TNL) Q3 2023 Earnings Call Transcript
• Travel+Leisure beats Q3 top and bottom line estimates; initiates Q4 and updates FY23 outlook
• Maui wildfire impact: Timeshare stocks are expected to take a slight profit hit in Q3
• Seeking Alpha’s Quant Rating on Travel+Leisure
• Historical earnings data for Travel+Leisure

For further details see: