Company Overview
Travel + Leisure Co. (TNL) is the world's leading vacation ownership and membership travel company, providing more than six million vacations to travelers every year. With a diverse portfolio of vacation ownership, travel club, and lifestyle travel brands, the company has established itself as a dominant player in the dynamic leisure travel industry.
Historical Background
Founded in 1990 as Hospitality Franchise Systems (HFS), the company has undergone a transformative journey, marked by strategic acquisitions, business expansions, and a spin-off that reshaped its identity. In December 1997, HFS merged with CUC International to form Cendant Corporation, which subsequently expanded into vacation rentals and vacation ownership businesses. On July 31, 2006, Cendant distributed all of the shares of its subsidiary, Wyndham Worldwide Corporation, to the holders of Cendant common stock. Wyndham Worldwide commenced regular way trading on the New York Stock Exchange on August 1, 2006 under the symbol WYN.
On May 31, 2018, Wyndham Destinations, Inc. (the predecessor to Travel + Leisure Co.) established and completed the spin-off of its hotel business, Wyndham Hotels & Resorts, Inc., into a separate publicly traded company. This transaction was effected through a pro rata distribution of the new hotel entity's stock to shareholders of Wyndham Worldwide. In connection with the spin-off, Travel + Leisure Co. entered into certain agreements with Wyndham Hotels & Resorts to govern the ongoing relationships between the two companies. These agreements included a license, development and noncompetition agreement, as well as an employee matters agreement and a tax matters agreement.
On January 5, 2021, Travel + Leisure Co. acquired the Travel + Leisure brand and all related assets from Dotdash Meredith (formerly Meredith Corporation). This acquisition created a strategic alliance between Travel + Leisure Co. and Dotdash Meredith, with Dotdash Meredith continuing to operate and monetize Travel + Leisure branded multi-platform media assets across multiple channels under a 30-year royalty-free, renewable licensing relationship. In connection with this acquisition, on February 17, 2021, Wyndham Destinations, Inc. was renamed Travel + Leisure Co. and began trading on the NYSE under the ticker symbol TNL.
Business Segments
Today, Travel + Leisure Co. operates in two core business segments: Vacation Ownership and Travel and Membership. The Vacation Ownership segment develops, markets, and sells vacation ownership interests (VOIs) to individual consumers, provides consumer financing for VOI purchases, and manages vacation ownership resorts. The Travel and Membership segment operates a variety of travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals.
Financials
The company's financial performance has been consistently strong, with the Vacation Ownership segment driving the bulk of its revenue and earnings. In the fiscal year 2024, Travel + Leisure Co. reported net revenue of $3.86 billion and net income of $411 million, reflecting the resilience of its business model even in the face of macroeconomic challenges. The company also generated operating cash flow of $464 million and free cash flow of $446 million for the year.
For the most recent quarter (Q4 2024), Travel + Leisure Co. reported revenue of $971 million, representing a 3.9% increase year-over-year, and net income of $119 million. The company's liquidity position remains strong, with $167 million in cash and cash equivalents as of December 31, 2024, and $803 million available under its $1 billion revolving credit facility. The company's current ratio stands at 4.09, and its quick ratio is 3.04, indicating a healthy short-term financial position.
It's worth noting that 88% of the company's revenues were derived from the United States in 2024, highlighting its strong domestic market presence.
Strategic Focus
One of the key factors contributing to the company's success is its strategic focus on expanding its portfolio of vacation ownership brands. In 2024, Travel + Leisure Co. acquired the Accor Vacation Club, which added 24 resorts and nearly 30,000 members to its global footprint. The company also made progress in developing its Sports Illustrated Resorts brand, a network of sports-themed resort and lifestyle complexes that it plans to launch in 2025.
Capital Allocation
In addition to organic growth, the company has demonstrated a disciplined approach to capital allocation, returning significant value to shareholders through share repurchases and dividend payments. In 2024, the company repurchased $235 million of its common stock and paid dividends totaling $142 million, reflecting its commitment to enhancing shareholder returns.
Resilience and Adaptability
Despite the challenges posed by the COVID-19 pandemic, Travel + Leisure Co. has shown remarkable resilience. The company's focus on providing seamless vacation experiences, leveraging its strong brand portfolio, and diversifying its revenue streams has enabled it to navigate the evolving leisure travel landscape.
Segment Performance
The Vacation Ownership segment, which is wholly comprised of the Vacation Ownership business line, generated $3.17 billion in net revenues in 2024, representing the majority of the company's overall revenues. Key performance indicators for this segment include:
- Gross VOI sales: $2.29 billion in 2024, an increase of 6.7% from the previous year - Tours: 716,000 in 2024, an 8% increase year-over-year - Volume per guest (VPG): $3,090 in 2024, a slight decrease of 1.1% year-over-year
The Travel and Membership segment, which includes the Exchange and Travel Club business lines, generated $695 million in net revenues in 2024. Key performance indicators for this segment include:
- Average number of exchange members: 3.43 million as of December 31, 2024, a 2.5% decrease year-over-year - Transactions: 1.56 million in 2024, a 4.6% decrease year-over-year - Revenue per transaction: $312 in 2024, a 2.3% increase year-over-year
Future Outlook
Looking ahead, the company remains optimistic about its growth prospects. For the fiscal year 2025, Travel + Leisure Co. has provided guidance for an adjusted EBITDA range of $955 million to $985 million, driven by continued strength in its Vacation Ownership segment and a focus on optimizing its Travel and Membership business.
Specifically, the company expects:
- Gross vacation ownership sales in the range of $2.4 billion to $2.5 billion - VPGs in the range of $3,050 to $3,150 - Flat to 2% growth in adjusted EBITDA for the Travel and Membership segment - An effective income tax rate of 28% to 30% - Adjusted free cash flow conversion in excess of 50%
For the first quarter of 2025, the company anticipates:
- Adjusted EBITDA in the range of $195 million to $205 million - Vacation ownership sales of $495 million to $515 million - VPGs of $3,150 to $3,250 - An effective tax rate ranging from 29% to 31%
Additionally, the company intends to recommend to its Board a first-quarter 2025 dividend of $0.56 per share, representing a 12% increase over the fourth-quarter dividend.
Conclusion
In conclusion, Travel + Leisure Co. has solidified its position as a dominant player in the vacation ownership and membership travel industry, leveraging its diverse portfolio of brands, strategic acquisitions, and disciplined capital allocation to drive sustainable growth and shareholder value. As the leisure travel landscape continues to evolve, the company's ability to adapt and innovate will be crucial in maintaining its competitive edge. With strong financial performance, a clear strategic focus, and positive guidance for the future, Travel + Leisure Co. appears well-positioned to capitalize on the growing demand for leisure travel experiences.