MARRIOTT VACATIONS WORLDWIDE Corp
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
VAC$110.42+3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001524358-26-000037
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001524358-26-000042
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 182 previous paragraphs and 193 current paragraphs.
116 unchanged; 51 reworded; 24 added; 15 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 32 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
•We continued to improve profitability and Adjusted EBITDA, both sequentially and compared to the prior-year quarter and year to date periods. We also remained focused on improving operating cash flow, generating significantly higher cash from operating activities during the first three quarters of 2026 compared the first three quarters of 2025, while maintaining disciplined capital spending on inventory and property and equipment.
Current report
•In September, we generated $66 million of net proceeds from the private placement of $91 million of vacation ownership notes receivable with collateral located in Asia Pacific that were not eligible for sale in the traditional ABS market at a blended interest rate of 6.70% .
Current report
•At September 30, 2026, our gross corporate debt, net of cash and cash equivalents, to Adjusted EBITDA ratio was 3.6, which has improved from 4.2 at December 31, 2025, providing flexibility for capital allocation decisions.
Current report
•Subsequent to the end of the third quarter of 2026, we securitized a pool of $469 million of vacation ownership notes receivable at a blended interest rate of 5.91% and a gross advance rate of 98%.
Current report
Certain amounts from the prior year have been reclassified to conform to the current year presentation. Beginning in the third quarter of 2025, we began separately presenting Modernization expense in our Income Statements and in the fourth quarter of 2025, all Modernization expenses were moved from our individual business segments to Corporate and other. As a result, prior year amounts for the three and nine months ended September 30, 2025 were reclassified from Modernization expense to conform with our current year presentation. Additionally, for the nine months ended September 30, 2025, we reclassified $2 million related to the impairment of an operating lease and related assets from Restructuring expense to Impairment expense to conform with our current year presentation.
Current report
Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and nine months ended September 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $4 million and $9 million for the three and nine months ended September 30, 2026, respectively, and $3 million and $10 million for the three and nine months ended September 30, 2025, respectively.
Current report
We expect the higher contract sales and VPG to continue in the last quarter of 2026, as well as into 2027 but at a lower rate of growth. We also expect the sales reserve, measured as a percentage of contract sales, to reflect higher utilization of our Company-provided financing.
Current report
•a lower marketing and sales rate primarily attributed to higher VPG and continued progress on our marketing and sales initiatives.
Current report
•Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and nine months ended September 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $4 million and $9 million for the three and nine months ended September 30, 2026, respectively, and $3 million and $10 million for the three and nine months ended September 30, 2025, respectively.
Current report
Restructuring
Current report
During the third quarter of 2026, we recorded $6 million of restructuring costs in connection with the termination of a future inventory purchase commitment in Mexico and $3 million of severance.
Current report
During the first three quarters of 2026, we recorded $6 million of restructuring costs in connection with the termination of a future inventory purchase commitment in Mexico, $2 million relating to the change in strategy for Asia Pacific and $1 million of severance.
Current report
Gains and Other Income
Current report
General and Administrative
Current report
The increase in general and administrative expenses for the third quarter of 2026 was primarily attributable to a $16 million increase in incentive compensation expense related to Company performance and a $3 million increase in stock-based compensation expense partially offset by a $2 million decrease in insurance expense.
Current report
The increase in general and administrative expenses for the third quarter of 2026 was primarily attributable to a $23 million increase in incentive compensation expense related to Company performance and a $6 million increase in stock-based compensation expense partially offset by a $4 million decrease in insurance expense.
Current report
Gains (Losses) and Other Income (Expense)
Current report
In the third quarter of 2026, we recorded $3 million of foreign currency gains partially offset by $1 million of other losses.
Current report
Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and nine months ended September 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $4 million and $9 million for the three and nine months ended September 30, 2026, respectively, and $3 million and $10 million for the three and nine months ended September 30, 2025, respectively.
Current report
The effective tax rate for the three months ended September 30, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments, including an $8 million increase in income tax expense related to changes in uncertain tax positions, partially offset by $2 million of tax benefits from U.S. and non-U.S. return-to-provision adjustments. The effective tax rate for the three months ended September 30, 2026 also reflects the cumulative impact of a lower estimated annual effective tax rate, primarily due to a change in our position regarding the utilization of foreign tax credits.
Current report
The effective tax rate for the three months ended September 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments in non-U.S. jurisdictions, including a $25 million increase in income tax expense related to changes in valuation allowances, partially offset by $13 million of tax benefits associated with permanent differences arising from restructuring activities and $6 million of tax benefit related to other deferred tax adjustments.
Current report
The effective tax rate for the nine months ended September 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments in non-U.S. jurisdictions, including a $25 million increase in income tax expense related to changes in valuation allowances, partially offset by $13 million of tax benefits related to permanent differences arising from restructuring activities and $6 million of tax benefits from non-U.S. return-to-provision adjustments.
Current report
At September 30, 2026, our gross corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 3.6, which has improved from 4.2 at December 31, 2025, providing flexibility for capital allocation decisions.
Current report
In September, we generated $66 million of net proceeds from the private placement of $91 million of vacation ownership notes receivable with collateral located in Asia Pacific that was not eligible for sale in the traditional ABS market at a blended interest rate of 6.70%. Subsequent to the end of the third quarter of 2026, we securitized a pool of $469 million of vacation ownership notes receivable at a blended interest rate of 5.91% and a gross advance rate of 98%.
Removed paragraphs (15)
Previous report
•We improved net income and Adjusted EBITDA in the second quarter of 2026 as compared to the second quarter of 2025 and improved operating cash flow for the first half of 2026, shifting to cash provided by operating activities in 2026 from cash used in operating activities during the comparable period in 2025.
Previous report
•During the second quarter of 2026, we decided to close our sales gallery in Dubai, United Arab Emirates. This decision reflected the anticipated impact of heightened geopolitical uncertainty in the region on anticipated operating performance and our commitment to deploying capital in a manner that supports long-term value creation.
Previous report
Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.
Previous report
We expect the higher contract sales and VPG to continue throughout the remainder of the year, partially offset by an increase in our Sales reserve attributed to higher average transaction size and propensity.
Previous report
•higher Marketing and sales costs due to higher salaries, commissions and incentive compensation, marketing costs and severance associated with restructuring our marketing and sales leadership changes.
Previous report
•Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.
Previous report
(Losses) Gains and Other (Expense) Income
Previous report
Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from Consolidated Property Owners’ Associations.
Previous report
(Losses) Gains and Other (Expense) Income
Previous report
In the first half of 2025, we recorded $21 million of foreign currency gains, $3 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters, $2 million of other gains, and $1 million of insurance proceeds.
Previous report
Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.
Previous report
The effective tax rate for the three months ended June 30, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to projected losses in certain foreign jurisdictions for which no tax benefit was recognized as a result of valuation allowances with respect to such foreign jurisdictions, as well as discrete tax benefits related to uncertain tax positions and the effective settlement of a domestic tax audit, partially offset by penalties accrued for foreign tax matters.
Previous report
The effective tax rate for the three months ended June 30, 2025 was generally consistent with the blended U.S. federal and state statutory tax rate, with no significant variances.
Previous report
The effective tax rate for the six months ended June 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to the effect of losses incurred in certain non-U.S. jurisdictions for which no tax benefit was recognized. Additionally, permanent differences between the book and tax treatment contributed to the variance from the statutory rate.
Previous report
At June 30, 2026, our gross corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 4.0, which we believe is a manageable leverage level, and we remain focused on reducing this ratio over time.
Reworded paragraphs (51)
Previous wording
We make forward-looking statements throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”), based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, the information concerning: our possible or assumed future results of operations, cash flows, financial condition, leverage, liquidity; future dividend payments; business strategies and management priorities for 2026, including efforts to improve profitability, accelerate growth, lower costs, monetize non-core assets and enhance Tour quality and VPG, expected trends in rental profit, marketing and sales expenses and cost of vacation ownership products as a percentage of revenue; the adequacy of capital to meet short-term and long-term liquidity requirements; our expectations regarding the costs and benefits of our modernization efforts; our plan to reduce our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio; our expectations regarding inventory spending; and the impact of inventory repurchases and timing of payments for inventory. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.
Current wording
We make forward-looking statements throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”), based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, the information concerning: our possible or assumed future results of operations, cash flows, financial condition, leverage and liquidity; future dividend payments; our business strategies and management priorities for 2026, including efforts to improve profitability and cash flow, strengthen leadership and talent, accelerate sustainable revenue growth, lower our cost base, protect and grow our recurring revenue streams, maintain disciplined capital allocation, monetize non-core assets and optimize our geographic mix, including through our Asia-Pacific strategy; expected trends in contract sales, VPG and Tours, including the anticipated benefits of our owner engagement initiatives, such as our enhanced Owner Benefit Levels and Inner Circle platform, and our efforts to enhance Tour quality; expected trends in Development profit margin, sales reserve, rental profit (including the impact of the closure of the Sheraton Kauai hotel), marketing and sales expenses and cost of vacation ownership products as a percentage of revenue; the amount and timing of expected proceeds from the disposition of non-core assets and our decision to retain certain assets for operational use; the adequacy of capital to meet short-term and long-term liquidity requirements; our leverage, including our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio; our expectations regarding the costs and benefits of our modernization efforts, including expected modernization expenses in the fourth quarter of 2026; and our expectations regarding inventory spending, including the impact of inventory repurchases and the timing of payments for inventory and other purchase commitments. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.
Previous wording
•Development profit marginis calculated as Development profit divided by revenues from the sale of vacation ownership products. Development profit represents revenues from the sale of vacation ownership products, net of the cost of vacation ownership products and related marketing and sales costs. We believe that Development profit margin is a key indicator of the profitability of our development activities and the effectiveness of our associated marketing and sales efforts.
Current wording
•Development profit margin is calculated as Development profit divided by revenues from the sale of vacation ownership products. Development profit represents revenues from the sale of vacation ownership products, net of the cost of vacation ownership products and related marketing and sales costs. We believe that Development profit margin is a key indicator of the profitability of our development activities and the effectiveness of our associated marketing and sales efforts.
Previous wording
During the second quarter of 2026, we continued to execute our previously described management priorities and made meaningful progress across our strategic, operational, and financial objectives. The following discussion provides an update on our progress.
Current wording
During the third quarter of 2026, we continued to execute our previously described management priorities and made meaningful progress across our strategic, operational, and financial objectives. The following discussion provides an update on our progress.
Previous wording
•During the first half of 2026, we enhanced key leadership talent and capabilities and made targeted investments in our workforce. We believe these actions have strengthened our leadership bench, enhanced critical commercial capabilities across the organization, and supported the execution of our strategic and operational objectives. We will regularly evaluate our talent needs and organizational structure to help maintain the capabilities we believe are necessary to support long-term growth and value creation.
Current wording
•During the first three quarters of 2026, we enhanced key leadership talent and capabilities and made targeted investments in our workforce. We believe these actions have strengthened our leadership bench, enhanced critical commercial capabilities across the organization, and supported the execution of our strategic and operational objectives. We will regularly evaluate our talent needs and organizational structure to help maintain the capabilities we believe are necessary to support long-term growth and value creation.
Previous wording
•As a result of these actions, Contract sales increased 22% and VPG increased 23% during the second quarter of 2026 over the comparable period in 2025 despite a 1% decline in Tours.
Current wording
•As a result of these actions, Contract sales increased 29% and VPG increased 30% during the third quarter of 2026 over the comparable period in 2025 despite a 2% decline in Tours. Third quarter 2026 development margin benefited from a substantially higher mix of sales to existing owners as we were able to leverage marketing and sales costs on higher VPGs.
Previous wording
•We expect the enhanced owner experience, new owner benefits and Inner Circle platforms to increase owner engagement and retention which we anticipate will generate increased referrals of potential new customers to support contract sales growth and higher VPG. We expect the financial benefits of these actions to grow in the second half of 2026 and continue into 2027 as we build a Tour pipeline that reflects these changes. We expect that marketing and sales expenses to decline as a percentage of Development revenue during the second half of 2026.
Current wording
•We expect the enhanced owner experience, new owner benefits and Inner Circle platforms to continue to increase owner engagement and retention which we anticipate will generate increased referrals of potential new customers to support contract sales growth and higher VPG. We expect the financial benefits of these actions to grow in the fourth quarter of 2026 and continue into 2027 as we continue to build an owner Tour pipeline that reflects these changes. We expect marketing and sales expenses to continue to decline as a percentage of Development revenue during the fourth quarter of 2026.
Previous wording
•We intend to continue to advance this priority through focused expense control, operational efficiencies, and disciplined management of working capital and capital expenditures. We believe these efforts contributed to a significant improvement in operating cash flow, which transitioned from cash used in operating activities during the comparable 2025 period to cash provided by operating activities in 2026.
Current wording
•We intend to continue to advance this priority through focused expense control, operational efficiencies, and disciplined management of working capital and capital expenditures. We believe these efforts contributed to a significant improvement in operating cash flow.
Previous wording
•Our financing, management and exchange businesses continue to be high-margin, recurring revenue streams which contribute to earnings and cash flow generation, reinforcing the resilience of our business model and supporting our objective of delivering consistent financial performance across varying market conditions.
Current wording
•Our financing, management and exchange businesses continue to be high-margin, contractually based, recurring revenue streams which contribute to earnings and cash flow generation, reinforcing the resilience of our business model and supporting our objective of delivering consistent financial performance across varying market conditions.
Previous wording
•Monetize non-core assetsto generate proceeds and support our deleveraging and reinvestment priorities.
Current wording
•Monetize non-core assetsto generate proceeds and support our capital allocation priorities.
Previous wording
•While we continue to evaluate opportunities to monetize non-core assets as part of our capital allocation framework, recent increases in contract sales volume and improved sales trends have increased our inventory requirements to support anticipated future sales. As a result, we now expect to retain certain assets for operational use that we previously identified for potential disposition, reducing our near term estimated proceeds from non-core asset monetization but supporting future revenue generation and long-term value creation.
Current wording
•While we continue to evaluate opportunities to monetize non-core assets as part of our capital allocation framework, recent increases in contract sales volume and improved sales trends have increased our inventory requirements to support anticipated future sales. As a result, we expect to retain certain assets for operational use that we previously identified for potential disposition, reducing our near term estimated proceeds from non-core asset monetization but supporting future revenue generation and long-term value creation.
Previous wording
We expect that we will generate approximately $200 million of gross cash proceeds from the disposition of non-core assets in 2026 and 2027. We realized proceeds of $50 million in the first quarter of 2026 from the disposition of an entity that owned and operated a hotel in Cancun, Mexico and we expect to realize an additional $50 million of gross proceeds from dispositions during the remainder of 2026.
Current wording
•We realized proceeds of $50 million in the first quarter of 2026 from the disposition of an entity that owned and operated a hotel in Cancun, Mexico and we expect to realize an additional $11 million of gross proceeds from dispositions during the fourth quarter of 2026.
Previous wording
•As part of our previously announced Asia Pacific strategy, we reduced Tours to certain customers in select markets, aligned regional staffing levels with anticipated demand, and deferred the purchase of a future phase of our Khao Lak, Thailand resort development.
Current wording
•As part of our previously announced Asia-Pacific strategy, we reduced Tours to certain customers aligned regional staffing levels with anticipated demand, and deferred the purchase of a future phase of our Khao Lak, Thailand resort development.
Previous wording
The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with net income attributable to common stockholders, which is the most directly comparable GAAP financial measure.
Current wording
The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with net income or loss attributable to common stockholders, which is the most directly comparable GAAP financial measure.
Previous wording
(1)Includes $5 million of severance expense relating to changes in executive leadership that was recorded as General and administrative expense in the six months ended June 30, 2026.
Current wording
(1)Includes $5 million of severance expense relating to changes in executive leadership that was recorded as General and administrative expense in the nine months ended September 30, 2026.
Previous wording
The increase in Sale of vacation ownership products for the second quarter of 2026 was driven by higher contract sales, partially offset by lower revenue reportability.
Current wording
The increase in Sale of vacation ownership products for the third quarter of 2026 was driven by higher contract sales and a slightly lower rate for sales incentives, partially offset by a higher sales reserve attributable to a significant increase in dollars financed.
Previous wording
•Owner contract sales increased 41% reflecting a 33% increase in VPG and a 7% increase in owner Tours. These results reflect changes in our second quarter sales strategy to focus on existing owners upon the launch of our recent owner engagement initiatives and greater incremental purchase activity by existing owners.
Current wording
•Owner contract sales increased 54% reflecting a 43% increase in VPG and an 8% increase in owner Tours. These results reflect changes in our sales strategy to focus on existing owners in connection with the launch of our recent owner engagement initiatives and improved owner arrival connection rates which drove higher incremental purchase activity.
Previous wording
•First time buyer contract sales decreased 16% driven by lower VPG and Tours. We continue to believe there is a significant long-term opportunity to expand our first time buyer base through targeted marketing, enhanced lead generation efforts, and continued refinement of our sales and customer acquisition strategies.
Current wording
•First time buyer contract sales decreased 20% driven by lower VPG and Tours. We continue to believe there is a significant long-term opportunity to expand our first time buyer base through targeted marketing, enhanced lead generation efforts, and continued refinement of our sales and customer acquisition strategies.
Previous wording
The overall decline in Tours was largely attributable to change in strategy for our Asia-Pacific business as well as our strategy to improve Tour quality for first time buyers. Excluding Asia‑Pacific, Tours increased 3% year-over-year. VPG increased 23% year-over-year on a consolidated basis and, excluding Asia-Pacific, VPG increased nearly 22% year over year.
Current wording
The overall decline in Tours was largely attributable to the change in strategy for our Asia-Pacific business as well as our strategy to improve tour quality for first time buyers. Excluding Asia‑Pacific, Tours increased 3% year-over-year. VPG increased 30% year-over-year on a consolidated basis and, excluding Asia-Pacific, VPG increased nearly 30% year over year.
Previous wording
The increase in Sale of vacation ownership products for the first half of 2026 was driven by higher contract sales, partially offset by lower revenue reportability.
Current wording
The increase in Sale of vacation ownership products for the first three quarters of 2026 was driven by higher contract sales, partially offset by lower revenue reportability, a higher sales reserve attributable to a significant increase in dollars financed and a slightly lower rate for sales incentives.
Previous wording
•Owner contract sales increased 22% reflecting a 19% increase in VPG and higher Tours.
Current wording
•Owner contract sales increased 33% reflecting a 27% increase in VPG and 5% higher Tours.
Previous wording
•First time buyer contract sales decreased 14% reflecting lower Tours and a lower VPG.
Current wording
•First time buyer contract sales decreased 16% reflecting lower Tours and a lower VPG.
Previous wording
The decline in Tours was largely attributable to the change in strategy for our Asia-Pacific business as well as our strategy to improve Tour quality for first time buyers. Excluding Asia‑Pacific, Tours increased 1% year-over-year. VPG increased 13% year-over-year on a consolidated basis and, excluding Asia-Pacific, increased nearly 12% year over year.
Current wording
The overall decline in Tours was largely attributable to the change in strategy for our Asia-Pacific business as well as our strategy to improve tour quality for first time buyers. Excluding Asia‑Pacific, Tours increased 2% year-over-year. VPG increased 19% year-over-year on a consolidated basis and, excluding Asia-Pacific, VPG increased nearly 18% year over year.
Previous wording
•a decline in Cost of vacation ownership products as a percentage of revenue due to the sale of lower average cost inventory (including resulting from the impairments in inventory from the fourth quarter of 2025), partially offset by lower favorable product cost true up activity; and
Current wording
•a decline in Cost of vacation ownership products as a percentage of revenue due to the sale of lower average cost inventory (including resulting from the impairments in inventory in the fourth quarter of 2025); and
Previous wording
Cost of vacation ownership products as a percentage of revenue is expected to increase during the remainder of 2026, although will ultimately be determined through pricing increases, upgrade volume, repurchase activity and change in mix of inventory being sold. In addition, we expect to further leverage our fixed Marketing and sales expenses as we continue to invest in initiatives that support sales growth, reflecting our expectation that the growth in contract sales achieved during the second quarter of 2026 will continue through year-end resulting in an increase in Development profit margin.
Current wording
Cost of vacation ownership products as a percentage of revenue is expected to increase in the last quarter of 2026, although changes in this percentage will ultimately be the result of pricing increases, upgrade volume, repurchase activity and changes in the mix of inventory being sold. In addition, we expect to further leverage our fixed Marketing and sales expenses as we continue to invest in initiatives that support sales growth, reflecting our expectation that the growth in contract sales achieved during the second and third quarters of 2026 will continue through year-end resulting in an increase in Development profit margin.
Previous wording
Rental profit declined due to $13 million of higher unsold maintenance fees associated with developer-owned inventory and $8 million of higher marketing, variable and other costs, partially offset by a $12 million increase in transient rental revenues, including plus points.
Current wording
Rental profit declined due to $6 million of higher unsold maintenance fees associated with developer-owned inventory, $3 million of higher marketing, variable, and other costs, and $2 million due to the closure of the Sheraton Kauai hotel following damage sustained from Hurricane Lowell.
Previous wording
Rental revenues and Rental expenses are both $5 million higher due to a reduction in costs in excess of rental revenues for developer-owned inventory which is registered and held for sale. which is reclassified to Rental revenues (net presentation).
Current wording
Rental revenues and Rental expenses are both $5 million higher due to a reduction of costs in excess of rental revenues for developer-owned inventory which is registered and held for sale, which is reclassified to Rental revenues (net presentation).
Previous wording
We continue to expect a decline in rental profit in 2026 due to higher inventory and related unsold maintenance fees.
Current wording
We expect the ongoing closure of the Sheraton Kauai hotel will negatively impact our fourth quarter Rental profit by approximately $6 million. We continue to expect a decline in rental profit for the fourth quarter of 2026 due to higher inventory and related unsold maintenance fees.
Previous wording
Rental profit increased due to a $9 million increase in transient rental revenues, including plus points, partially offset by $6 million of higher unsold maintenance fees associated with developer-owned inventory and $3 million of higher marketing, variable and other costs.
Current wording
Rental profit declined due to $18 million of higher unsold maintenance fees associated with developer-owned inventory, $9 million of higher marketing, variable, and other costs, and $2 million due to the closure of the Sheraton Kauai hotel following damage sustained from Hurricane Lowell, partially offset by an $11 million increase in transient rental revenues, including plus points.
Previous wording
Rental revenues and Rental expenses are both $11 million higher due to a reduction in costs in excess of rental revenues for developer-owned inventory which is registered and held for sale, which is reclassified to Rental revenues (net presentation).
Current wording
Rental revenues and Rental expenses are both $16 million higher due to a reduction of costs in excess of rental revenues for developer-owned inventory which is registered and held for sale, which is reclassified to Rental revenues (net presentation).
Previous wording
•In addition, consumer financing interest expense increased by $2 million and $4 million in the second quarter and first half of 2026, respectively, due to a higher average securitized debt balance.
Current wording
•In addition, consumer financing interest expense increased by $3 million and $7 million in the third quarter and first three quarters of 2026, respectively, due to a higher average securitized debt balance and a higher blended interest rate.
Previous wording
During the first half of 2026, we benefited from a $2 million gain on the disposition of an entity that owned and operated a hotel in Cancun, Mexico, and a $4 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition.
Current wording
During the first three quarters of 2026, we benefited from a $4 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, a $2 million gain on the disposition of an entity that owned and operated a hotel in Cancun, Mexico, and $1 million of other gains.
Previous wording
During the first half of 2025, we benefited from $7 million of proceeds from service interruption insurance relating to the Maui wildfires, a $2 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $1 million of other gains.
Current wording
During the first three quarters of 2025, we benefited from $15 million of proceeds from service interruption insurance relating to the Maui wildfires, a $2 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $1 million of other gains.
Previous wording
The following table shows the composition of our modernization expenses during the second quarter and first half of 2026 and 2025, respectively:
Current wording
The following table shows the composition of our modernization expenses during the third quarter and first three quarters of 2026 and 2025:
Previous wording
We expect to incur less than $60 million of non-recurring expenses in the remainder of 2026 primarily related to technology, as we wind down consulting spend and expect no further advisory services costs.
Current wording
We expect to incur less than $20 million of non-recurring modernization expenses in the fourth quarter of 2026 primarily related to technology, as we wind down consulting (implementation) spending and do not expect to incur further advisory services costs.
Previous wording
In the second quarter of 2026, we recorded $2 million of foreign currency losses and a $2 million reduction in the receivable from Marriott International for indemnified tax matters, partially offset by $1 million of other gains.
Current wording
In the third quarter of 2025, we recorded $2 million of foreign currency gains, $1 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters, partially offset by $1 million of other losses.
Previous wording
In the first half of 2026, we recorded $5 million of foreign currency losses and a $5 million reduction in the receivable from Marriott International for indemnified tax matters, partially offset by $1 million of other gains.
Current wording
In the first three quarters of 2026, we recorded $2 million of foreign currency losses and a $5 million reduction in the receivable from Marriott International for indemnified tax matters.
Previous wording
In the second quarter of 2025, we recorded $18 million of foreign currency gains, $3 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters, $1 million of insurance proceeds and $1 million of other gains.
Current wording
In the first three quarters of 2025, we recorded $23 million of foreign currency gains, $4 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters, $1 million of insurance proceeds, and $1 million of other gains.
Previous wording
The increase in Interest expense, net is primarily attributed to interest on our 6.500% Senior Unsecured Notes due 2033 issued in the third quarter of 2025 (the proceeds of which were used to repay our $575 million 0.000% 2026 Convertible Notes) for the second quarter and first half of 2026. This increase was partially offset by the change in presentation of interest on our Warehouse Credit Facility and by lower interest on our Corporate Credit Facility and 2026 Convertible Notes, which were repaid during the first half of 2026.
Current wording
The change in Interest expense, net is primarily attributed to interest on our 6.500% Senior Unsecured Notes due 2033 issued in the third quarter of 2025 (the proceeds of which were used to repay our $575 million 0.000% 2026 Convertible Notes). This increase was partially offset by the change in presentation of interest on our Warehouse Credit Facility and by lower interest on our Corporate Credit Facility and on our 2026 Convertible Notes, which were repaid during the first three quarters of 2026.
Previous wording
Our effective tax rate was 32.4% and 26.8% for the three months ended June 30, 2026 and June 30, 2025, respectively.
Current wording
Our effective tax rate was 27.8% and 537.8% for the three months ended September 30, 2026 and September 30, 2025, respectively.
Previous wording
Our effective tax rate was 37.5% and 35.5% for the six months ended June 30, 2026 and June 30, 2025, respectively.
Current wording
Our effective tax rate was 33.4% and 37.0% for the nine months ended September 30, 2026 and September 30, 2025, respectively.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•Following the decision to retain certain assets for operational use, we expect that we will generate approximately $200 million of gross cash proceeds from the disposition of non-core assets by the end of 2027.
Current report — wording carried from elsewhere
During the third quarter of 2025, we benefited from $8 million of proceeds from service interruption insurance relating to the Maui wildfires.