v3.26.1
Debt
 3 Months Ended
Mar. 31, 2026
Debt Disclosure [Abstract]  
Debt Debt
The Company’s indebtedness consisted of the following (in millions):
March 31,
2026		December 31,
2025
Non-recourse vacation ownership debt: (a)
Term notes (b)
$1,736 $1,690 
USD bank conduit facility (due August 2027) (c)
250 318 
AUD/NZD bank conduit facility (due December 2026) (d)
120 116 
Total$2,106 $2,124 
Debt: (e)
$1.0 billion secured revolving credit facility (due June 2030) (f)
$240 $63 
Secured term loan B (due December 2029) (g)
852 854 
$650 million 6.625% secured notes (due July 2026)
649 649 
$400 million 6.00% secured notes (due April 2027) (h)
401 402 
$650 million 4.50% secured notes (due December 2029)
646 646 
$350 million 4.625% secured notes (due March 2030)
348 348 
$500 million 6.125% secured notes (due September 2033)
494 494 
Finance leases18 18 
Total$3,648 $3,474 
(a)Represents non-recourse debt that is securitized through bankruptcy-remote special purpose entities, the creditors of which have no recourse to the Company for principal and interest. These outstanding borrowings (which legally are not liabilities of the Company) are collateralized by $2.37 billion and $2.40 billion of underlying gross VOCRs and related assets (which legally are not assets of the Company) as of March 31, 2026 and December 31, 2025.
(b)The carrying amounts of the term notes are net of deferred financing costs of $24 million and $23 million as of March 31, 2026 and December 31, 2025.
(c)The Company has a borrowing capacity of $600 million under the USD bank conduit facility through August 2027. Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than September 2028.
(d)The Company has a borrowing capacity of 200 million Australian dollars (“AUD”) and 25 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through December 2026. Borrowings under this facility are required to be repaid no later than January 2029.
(e)The carrying amounts of the secured notes and term loan are net of unamortized discounts of $10 million and $11 million as of March 31, 2026 and December 31, 2025, and net of unamortized debt financing costs of $15 million and $16 million as of March 31, 2026 and December 31, 2025.
(f)The weighted average effective interest rate on facility borrowings was 5.60% and 6.52% for the three months ended March 31, 2026 and year-ended December 31, 2025.
(g)The weighted average effective interest rate on facility borrowings was 5.71% and 6.86% for the three months ended March 31, 2026 and year-ended December 31, 2025.
(h)Includes $2 million of unamortized gains from the settlement of a derivative as of both March 31, 2026 and December 31, 2025.
Sierra Timeshare 2026-1 Receivables Funding LLC
On March 26, 2026, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2026-1 Receivables Funding LLC, with an initial principal amount of $325 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 5.11%. The advance rate for this transaction was 98%.
Maturities and Capacity
The Company’s outstanding indebtedness as of March 31, 2026, matures as follows (in millions):
Non-recourse Vacation Ownership DebtDebtTotal
Within 1 year$239 $667 $906 
Between 1 and 2 years241 415 656 
Between 2 and 3 years374 11 385 
Between 3 and 4 years192 1,820 2,012 
Between 4 and 5 years208 240 448 
Thereafter852 495 1,347 
$2,106 $3,648 $5,754 
Required principal payments on the non-recourse vacation ownership debt are based on the contractual repayment terms of the underlying VOCRs. Actual maturities may differ as a result of prepayments by the VOCR obligors.
As of March 31, 2026, the available capacities under the Company’s borrowing arrangements were as follows (in millions):
Non-recourse Conduit Facilities (a)
Revolving
Credit Facilities (b)
Total capacity$752 $1,000 
Less: outstanding borrowings370 240 
Less: letters of credit— 1 
Available capacity$382 $759 
(a)Consists of the Company’s USD bank conduit facility and AUD/NZD bank conduit facility. The capacities of these facilities are subject to the Company’s ability to provide additional assets to collateralize additional non-recourse borrowings.
(b)Consists of the Company’s $1.0 billion secured revolving credit facility.
Debt Covenants
The revolving credit facility and term loan B facility are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement. The financial ratio covenants consist of a minimum interest coverage ratio of 2.00 to 1.0 as of the measurement date and a maximum first lien leverage ratio of 4.25 to 1.0 as of the measurement date. The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date. The first lien leverage ratio is calculated by dividing consolidated first lien debt (as defined in the credit agreement) as of the measurement date by consolidated EBITDA (as defined in the credit agreement) as measured on a trailing 12-month basis preceding the measurement date.
As of March 31, 2026, the Company’s interest coverage ratio was 5.06 to 1.0 and the first lien leverage ratio was 3.16 to 1.0. These ratios do not include interest expense or indebtedness related to any qualified securitization financing (as defined in the credit agreement). As of March 31, 2026, the Company was in compliance with the financial covenants described above.
Each of the Company’s non-recourse securitized term notes and bank conduit facilities contain various triggers relating to the performance of the applicable loan pools. If the VOCR pool that collateralizes one of the Company’s securitization notes fails to perform within the parameters established by the contractual triggers (such as higher default or delinquency rates), there are provisions pursuant to which the cash flows for that pool will be maintained in the securitization as extra collateral for the note holders or applied to accelerate the repayment of outstanding principal to the note holders. As of March 31, 2026, all of the Company’s securitized loan pools were in compliance with applicable contractual triggers.
Interest Expense
The Company incurred interest expense of $56 million and $57 million during the three months ended March 31, 2026 and 2025, excluding interest expense associated with non-recourse vacation ownership debt. These amounts include offsets of less than $1 million of capitalized interest during each period. Cash paid related to such interest was $66 million and $54 million for the three months ended March 31, 2026 and 2025.
Interest expense incurred in connection with the Company’s non-recourse vacation ownership debt was $33 million and $34 million during the three months ended March 31, 2026 and 2025. These amounts are included within Consumer financing interest on the Condensed Consolidated Statements of Income. Cash paid related to such interest was $26 million and $28 million for the three months ended March 31, 2026 and 2025.