Marriott Vacations Worldwide Corporation

Greetings and welcome to the Marriott Vacations Worldwide 4th Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Neil Goldner, Vice President and Best Relations for Marriott Vacations Worldwide. Thank you. You may begin.

Thank you and welcome to the Marrification's Worldwide Fourth Quarter 2023 Earnings Call. I'm joined today by John Geller, President and Chief Executive Officer, and Jason Marino, our Executive Vice President and Chief Financial Officer. I need to remind everyone that many of our comments today are not historical facts and are considered forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our SEC filings, which could cause Future results are different materially from those expressed in or implied by our comments. Forward-looking statements in the press release that we issued last night, as well as our comments on this call, are effective only when made and will not be updated as actual events unfold. Throughout the call, we will make references to non-GAAP financial information. You can find a reconciliation of non-GAAP financial measures and the schedules attached to our press release as well as the investor relations page of our website. Before I turn over to John, as you saw in our earnings release last night, with four vacation ownership resorts in West Maui, the wildfires had a negative impact on our results in the third and fourth quarters, despite having no physical damage to our properties. We added a table to our earnings release last night to illustrate the impact of the wildfires on our business. In addition, during last year's third quarter with the launch of Abound by Marriifications, we aligned the contract terms for vacation ownership sales across our Marriott, Westin, and Sheridan brands. We also aligned and combined their accounting methodologies for the reserve on vacation ownership notes receivable for these brands. These changes, which we refer to as the alignment, resulted in a non-recurring benefit of $7 million to last year's fourth quarter adjusted EBITDA. The schedules we provided last night illustrate what our results would have been for the prior year without this benefit. With that, it's now my pleasure to turn the call over to our CEO, John Geller.

Thanks, Neil, and good morning, everyone. And thank you for joining our fourth quarter earnings call. As you saw in our press release last night, we ended the year on a positive note, with contract sales increasing 4% year over year, adjusting for the estimated impact of Maui. We're also very encouraged with how fast travelers have returned to Maui, with occupancy during the month of December approaching the prior year. Housing in Maui continues to be a challenge for residents, including many of our associates. Fortunately, our operations team was close to fully staffed as we entered the new year, though only approximately 75% of our sales organization was back to pre-fire levels. Throughout last year, we worked with owners to educate them about the benefits of the Abound by Marriott Vacations program, while at the same time, our sales executives gained experience selling under Abound. Today, more legacy Sheraton and Westin owners are using the Abound program, enabling them to experience its many benefits. VPG, excluding the estimated impact of the Maui fires, was in line with the prior year, a meaningful improvement compared to where we were just a few quarters ago. And at this point, the impact of the abound transition is behind us. 2023 was also an exciting year for our Hyatt business. We brought our 22 Hyatt resorts together under the Hyatt Vacation Club brand, unified our customer touchpoints, and introduced the Beyond program, which provides owners more vacation options. We also expanded our highly successful preview booking engine and will continue to replace inefficient off-premise marketing channels with more efficient branded channels. This will enable us to grow tours and increase VPG in our high vacation ownership business this year, allowing us to better leverage our marketing and sales spending. First-time buyers represented roughly half of our tours last year and nearly a third of our contract sales. As we continue to focus on driving new owner growth, we also ended the year with more than 250,000 packages in our pipeline, which is an all-important driver of future sales. We saw strong growth in our international business last year, with contract sales growing more than 50%. and we expect strong growth in Asia Pacific again this year as the market continues to recover. On the development front, we announced two new domestic Westin Vacation Club projects, Charleston and Savannah, each of which will bring a new sales center when they open in a few years. We'll also be opening our first Marriott Vacation Club resort in Waikiki during the second half of this year, which comes with a new sales center as well. On the international front, I'm happy to announce that we recently signed an agreement for a 58-unit expansion at one of our existing Marriott vacation clubs in Bali, bringing our presence in that destination to nearly 200 units. And our team is actively working on other new development opportunities to grow our resort portfolio. In our exchange and third-party management segment, Interval ended the year with approximately 1.6 million active members in line with the prior year, while average revenue per member increased year over year for the third quarter in a row. On the inventory front, we've been working closely with our developer partners to stimulate supply earlier in the year, which we hope will drive higher inventory utilization and exchange transactions. Despite the growth in leisure travel over the past few years, 92% of Americans recently surveyed said they plan to travel as much or more this year as they did last year. And demand for international travel continues to be strong. While demand for domestic travel has normalized, it does appear that travel will benefit from a more lasting shift in spending with consumers prioritizing experiences. As a company whose sole focus is providing memorable vacations for our owners and guests, that puts us in a great position to grow. At the same time, GDP is growing, consumer confidence remains positive, wealth indicators such as the stock market and home values remain robust, and inflation is normalizing, all of which is good for us. Looking forward, we've got a great business with the exclusive rights to use the Marriott, Sheraton, Westin, and Hyatt brands in our vacation ownership business with products that resonate with customers and opportunities to continue to evolve our core offerings to meet the needs of today's consumer. We also made significant changes in our business last year that are the right strategic decisions to help position us for growth. We took actions to realign our organization to best deliver long-term results, including hiring a new CIO to drive our IT transformation efforts while revamping our organizational structure to create efficiencies. We also welcomed our first global head of data analytics to help us find new ways to unlock the power of data while also providing more self-service options for our owners. Our Marriott Education Club brand will celebrate its 40th anniversary this year and continues the bold vision to change the way people vacation. I've also had the opportunity to meet many of our associates around the world in my first year as CEO, and the energy and passion our teams bring to delivering consistently exceptional vacation experiences is apparent in each of them. As we enter 2024, we're also watching our summer bookings closely, given the change in travel patterns we saw last year. Right now, our keys on the books for the summer months in North America and international are up a few points, which is encouraging, but it's still early days. With that, I'll turn the call over to Jason to discuss our results.