Travel & Leisure Co.

Previous wording

Our results for the three and six months ended June 30, 2026 highlight the strength and efficiency of our vacation ownership sales process driven by high quality tours, and the recognition of benefits resulting from strategic decisions made in 2025, mainly the resort optimization initiative. These benefits are apparent in both the quarter to date and year to date results of our Vacation Ownership segment with revenue and Adjusted EBITDA increases as compared to the prior year. Revenue growth at this segment was driven by higher tours and volume per guest (“VPGs”), with Adjusted EBITDA further benefitted by cost savings attributable to lower maintenance fees incurred on unsold VOIs as a result of resorts closed as part of the resort optimization initiative. We believe the tour increase, coupled with a significant increase in VPGs as compared to the prior year, highlights consumers’ recognition of the value proposition of our products. Such value proposition becomes especially apparent during periods of inflation when the costs of other accommodation types are rising. Our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, which provides opportunities for upgrade sales. Subsequent to the end of the quarter, we closed on the acquisition of Yes& Vacations and entered into a definitive agreement to acquire Spinnaker Resorts. These transactions will expand our network of resorts and number of owners. Upon closing, these transactions are expected to be immediately accretive and create opportunities for owner monetization, receivables optimization, and recurring management fee growth. These acquisitions will be included within our Vacation Ownership segment. See Note 23—Subsequent Eventsfor additional information.

Current wording

Our results for the three and nine months ended September 30, 2026 highlight the strength and efficiency of our vacation ownership sales process driven by high quality tours, and the recognition of benefits resulting from strategic decisions made in 2025, mainly the resort optimization initiative. These benefits are apparent in both the quarter to date and year to date results of our Vacation Ownership segment with revenue and Adjusted EBITDA increases as compared to the prior year. Revenue growth at this segment was driven by higher tours and strong volume per guest (“VPGs”), with Adjusted EBITDA further benefitted by cost savings attributable to lower maintenance fees incurred on unsold VOIs as a result of resorts closed as part of the resort optimization initiative. We believe the tour increase, coupled with strong VPGs, highlights consumers’ recognition of the value proposition of our products. Such value proposition becomes especially apparent during periods of inflation when the costs of other accommodation types are rising. Our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, which provides opportunities for upgrade sales. During the third quarter of 2026, we acquired Yes& Vacations and Spinnaker Resorts (the “Acquisitions”), which expanded our network of resorts and owner count and created opportunities for owner upgrade sales, receivables optimization, and recurring management fee growth. These acquisitions are included within our Vacation Ownership segment from their acquisition dates forward. See Note 5—Acquisitionsfor additional information.

Previous wording

At our Travel and Membership business, the results for the three and six months ended June 30, 2026 reflect the impacts of continued exchange headwinds associated with reduced member counts and the increased mix of members with club affiliations. While Travel Club transactions have increased on both a quarter to date and year to date basis as compared to the prior year, this shift in transaction mix is putting downward pressure on revenue per transaction as there was a significant decline in Travel Club revenue per transaction due to an increased mix of transactions sourced from lower commission partners. Given recent declines in the number of exchange members, this business may be negatively impacted in the future if we are required to purchase additional inventory to supplement the inventory supplied by exchange members. Despite the headwinds faced by this business it remains a capital-light, high-margin business that generates significant cash flows. We continue to focus on stabilizing the long-term earnings and cash flow generation of this business through operational improvements, new strategic partnerships, and digital initiatives.

Current wording

At our Travel and Membership business, the results for the three and nine months ended September 30, 2026 reflect the impacts of continued exchange headwinds associated with reduced member counts for the nine months ended September 30, 2026 and the increased mix of members with club affiliations. While Travel Club transactions have increased on both a quarter to date and year to date basis as compared to the prior year, this shift in transaction mix is putting downward pressure on revenue per transaction as there was a significant decline in Travel Club revenue per transaction due to an increased mix of transactions sourced from lower commission partners. Given recent declines in the number of exchange members, this business may be negatively impacted in the future if we are required to purchase additional inventory to supplement the inventory supplied by exchange members. Despite the headwinds faced by this business it remains a capital-light, high-margin business that generates significant cash flows. We continue to focus on stabilizing the long-term earnings and cash flow generation of this business through operational improvements, new strategic partnerships, and digital initiatives.

Previous wording

While we continue to benefit from the changes we made to our marketing criteria to strengthen sales efficiencies and improve the performance of our vacation ownership contract receivables (“VOCR”) portfolio, similar to a number of other companies, we are experiencing some pressure on our loan portfolio primarily due to delinquencies remaining elevated over historical levels, however delinquency levels are beginning to normalize with sequential improvement as compared to the first quarter of the year.

Current wording

While we continue to benefit from the changes we made to our marketing criteria to strengthen sales efficiencies and improve the performance of our vacation ownership contract receivables (“VOCR”) portfolio, similar to a number of other companies, we are experiencing some pressure on our loan portfolio primarily due to delinquencies remaining elevated over historical levels. However, delinquency levels have begun to normalize with sequential improvement each quarter as compared to the first quarter of the year.

Previous wording

Our interest expense during the first half of 2026 was benefitted by savings associated with our 2025 and 2026 corporate debt refinancing activities. The 2025 refinancing activities reduced the associated interest rate spread on borrowings under our revolving credit facility by 25 basis points at all pricing levels, reduced the interest rate on our term loan B facility by 50 basis points, and provided for a nearly 50 basis point interest rate reduction on our refinanced $350 million notes. During the second quarter of 2026, we reduced the associated interest rate on our refinanced $650 million notes by nearly 40 basis points. As a result, interest expense for the first half of the year remained flat despite higher outstanding borrowings. Additionally, we closed on a $325 million term securitization at the end of the first quarter of 2026 with a 98% advance rate and weighted average coupon rate of 5.11%, which is well below the average interest rate on our portfolio creating significant interest income opportunities and serving to strengthen our liquidity position. Subsequent to the end of the second quarter, we closed on additional term securitization financings of $300 million with a 98% advance rate and weighted average coupon rate of 5.52%. These transactions reflect our ability to access the capital markets even during times of market volatility.

Current wording

Our interest expense during the first nine months of 2026 was benefitted by savings associated with our 2025 and 2026 corporate debt refinancing activities. The 2025 refinancing activities reduced the associated interest rate spread on borrowings under our revolving credit facility by 25 basis points at all pricing levels, reduced the interest rate on our term loan B facility by 50 basis points, and provided for a nearly 50 basis point interest rate reduction on our refinanced $350 million notes. During the second quarter of 2026, we reduced the associated interest rate on our refinanced $650 million notes by nearly 40 basis points. As a result, we saw savings of $4 million in interest expense for the nine months ended September 30, 2026.

Previous wording

While overall we had a strong first half of the year, the sustained effects of hostilities in the Middle East, inflationary pressures, high interest rates, high fuel costs, and risk of recession inherently result in uncertainty in business trends and consumer behavior. Since our Vacation Ownership and Travel and Membership businesses are highly dependent on the health of the travel industry, declines in, or disruptions to, the industry such as those caused by adverse economic conditions may adversely affect us. We are also subject to the other risks and uncertainties discussed in “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 18, 2026.

Current wording

While overall we had a strong nine months, the sustained effects of hostilities in the Middle East, inflationary pressures, rising interest rates and rate volatility, high fuel costs, and risk of recession inherently result in uncertainty in business trends and consumer behavior. Since our Vacation Ownership and Travel and Membership businesses are highly dependent on the health of the travel industry, declines in, or disruptions to, the industry such as those caused by adverse economic conditions may adversely affect us. We are also subject to the other risks and uncertainties discussed in “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 18, 2026.

Previous wording

In order to promote the long-term strength of our vacation ownership resorts, during 2025 we undertook a strategic review with the intent of optimizing the overall quality of our resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future. This review identified 17 resorts requiring significant owner reinvestment, or those located in markets that no longer align with owner demand. This initiative has generated, and is expected to generate further, meaningful savings attributable to developer obligations, which represent the maintenance fees we incur on unsold VOIs. Such savings are partially offset by the loss of, or reduction in, VOI sales and property management fees earned at the impacted resorts, but are expected to result in a positive net impact to Adjusted EBITDA. These benefits are reflected in the $40 million reduction in developer obligations associated with this initiative through the first half of the year, as compared to the prior year.

Current wording

In order to promote the long-term strength of our vacation ownership resorts, during 2025 we undertook a strategic review with the intent of optimizing the overall quality of our resort portfolio, aligning with evolving owner preferences, preserving the affordability of maintenance fees, and mitigating the need for costly special assessments in the future. This review identified 17 resorts requiring significant owner reinvestment, or those located in markets that no longer align with owner demand. This initiative has generated, and is expected to generate further, meaningful savings attributable to developer obligations, which represent the maintenance fees we incur on unsold VOIs. Such savings are partially offset by the loss of, or reduction in, VOI sales and property management fees earned at the impacted resorts, but are expected to result in a positive net impact to Adjusted EBITDA. These benefits are reflected in the $57 million reduction in developer obligations associated with this initiative through the first nine months of the year, as compared to the prior year.

Previous wording

During the six months ended June 30, 2026, we incurred an additional $31 million of charges associated with the resort optimization initiative, consisting of $11 million of inventory impairment charges and $14 million of inventory write-downs driven by actions that were approved by owners during the first half of 2026, and $6 million of resort closure, severance, and other associated employee costs.

Current wording

During the nine months ended September 30, 2026, we incurred an additional $35 million of charges associated with the resort optimization initiative, consisting of $14 million of inventory impairment charges and $13 million of inventory write-downs driven by actions that were approved by owners during the first half of 2026, and $8 million of resort closure, severance, and other associated employee costs.

Previous wording

On July 4, 2025, the bill commonly referred to as the “One Big Beautiful Bill Act” was signed into law. Among other provisions, the bill extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for research and development and capital investments. In addition, the bill contains other new tax relief measures and various revenue raising measures. The legislation has multiple effective dates. For the provisions effective in 2026 and 2025, there was no material impact to our effective tax rate for the three and six months ended June 30, 2026, or the year ended December 31, 2025. We do not expect the impact to be material to our full year 2026 effective tax rate.

Current wording

On July 4, 2025, the bill commonly referred to as the “One Big Beautiful Bill Act” was signed into law. Among other provisions, the bill extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for research and development and capital investments. In addition, the bill contains other new tax relief measures and various revenue raising measures. The legislation has multiple effective dates. For the provisions effective in 2026 and 2025, there was no material impact to our effective tax rate for the three and nine months ended September 30, 2026, or the year ended December 31, 2025. We do not expect the impact to be material to our full year 2026 effective tax rate.