Good morning, and welcome to the Hilton Grand Vacations Fourth Quarter 2024 Earnings Conference Call. A telephone replay will be available for 7 days following the call. The dial-in number is 844-512-2921 and Enter Pin #13751065. I would now like to turn the call over to Mark Melnyk, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and welcome to the Hilton Grand Vacations Fourth Quarter 2024 Earnings Call. Before we begin, I'd note that we've uploaded slides through our IR website detailing our financing business optimization program, which are available for download at investors.hgv.com. As a reminder, our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements. These statements are effective only as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the risk factor section of our SEC filings. We'll also be referring to certain non-GAAP financial measures. You can find definitions and components of such non-GAAP numbers as well as reconciliations of non-GAAP and GAAP financial measures discussed today in our earnings press release and on our website at investors.hgv.com. Our reported results for all periods reflect accounting rules under ASC 606, which we adopted in 2018. Under ASC 606, we're required to defer certain revenues and expenses related to sales made in the period when a project is under construction and then hold off on recognizing revenues and expenses until the period when construction is completed. For ease of comparability and to simplify our discussion today, our comments on adjusted EBITDA and our real estate results will refer to results excluding the net impact of construction-related deferrals and recognitions for all reporting periods. To help you make more meaningful period-to-period comparisons, you can find details of our current and historical deferrals and recognitions in Table T1 of our earnings release and a complete accounting of our historical deferral and recognition activity can also be found in Excel format on the Financial Reporting section of our Investor Relations website. In a moment, our Chief Executive Officer, Mark Wang, will provide highlights from the quarter in addition to an update on our current operations and company strategy. After Mark's comments, our EVP of Finance and acting CFO, Erin Day, will go through the financial details for the quarter. Mark and Erin will then make themselves available for your questions. With that, let me turn the call over to our CEO, Mark Wang. Mark?

Good morning, everyone, and welcome to our fourth quarter earnings call. I want to give a special thank you to our team members across the globe for making 2024 another productive year for HGV. We closed our Bluegreen acquisition and completed a significant amount of integration work, adding nearly 200,000 members and expanding our portfolio to more than 200 properties. We made substantial progress against our goal of realizing $100 million in cost synergies. We made meaningful organization changes, leveraging the strength of our combined teams to improve sales and marketing execution. We launched HGV Max to our Bluegreen members, providing them with access to more properties and more destinations, and we generated record free cash flow while returning a record amount to shareholders. This was on top of the work we've been doing to continuously enhance the value of HGV ownership for our members. The teams have a lot to be proud of, and while our path in 2024 was not without its challenges, I believe that we finished on a strong note in the fourth quarter. Our new organizational structure and strategic initiatives have been producing further results, and we got off to a great start with the introduction of HGV Max to our Bluegreen members. As a result, we saw growth in transactions, VPGs, and contract sales, even after adjusting for some of the nonrecurring impacts we saw during the fourth quarter of both '23 and '24. From a macro perspective, the consumer environment remains consistent with the past few quarters as inflation and elevated interest rates continue to impact spending and sentiment, but we're pleased to see that travel intentions have remained strong, and we're optimistic that our operational adjustments and initiatives will help to insulate us from those two broad macro factors. As we look ahead, our '25 guidance reflects the view that these initiatives will further enable growth in contract sales and EBITDA, along with strong free cash flow generation as we continue to build on those improvements. And that growth comes despite the addition of $25 million of additional consumer finance interest expense associated with our financing business optimization, which we expect to materially improve our future capital returns. So while there's more work remaining, I'm pleased with the significant progress we made to regain our momentum which positions HGV for success in '25 and beyond. Turning to an overview of the fourth quarter results. Reported contract sales were $837 million, and adjusted EBITDA was $289 million, with margins excluding reimbursements of 23%, which came in ahead of our expectations. Contract sales in the quarter were driven by strong VPG performance, which more than offset a decline in tours. Core growth was primarily impacted by back-to-back hurricanes that hit the southern U.S. at the start of the quarter, along with our initiatives to improve our efficiency and the removal of a new buyer channel on the Bluegreen side that we made earlier this year. Controlling for those effects, our channel trends remained consistent with past quarters. We continue to see strength in our owner tours, aided by our launch of HGV Match for Bluegreen owners. Our tour growth has been more muted as we continue to improve the efficiency of those channels, along with the removal of a third-party channel on the Bluegreen side. We expect these trends to continue throughout the year, which should drive further improvements in VPG Max. These dynamics played out during the fourth quarter with VPG of 4,026, over 20% ahead of the pro forma '19 and at the best levels since the highs we saw in '22. Geographically, it's worth noting the strong performance out of our APAC region in the fourth quarter. As we lapped the Maui wildfires, we saw high demand for both the remaining inventory at our Okinawa project as well as the initial sales launch of our new Kohaku property in Waikiki. Ka Haku will be our first Hilton Club offering in Hawaii. And like our other Hilton Club offerings, this luxury property will include exclusive amenities and meticulous attention to every detail, which we think will be very popular with our high-end network members. We've already seen strong upgrade activity in Ka Haku, which has added the benefit of freeing up additional inventory at some of our other highly desired properties in the islands. Looking at our demand indicators, occupancy of 82% was slightly up in the quarter. Our rental arrivals look very strong for the first half, in particular in the first quarter, and our package pipeline also remains robust at over 710,000 packages. We have great partners like Hilton, Bass Pro, and Choice that have access to a huge pool of quality customers to enable us to continue building that pipeline. And as a result, we continue to be optimistic about the leisure travel environment. Turning to our non-real estate business. Our member count stood at 724,000 at the end of the quarter, and NOG is 1.1%. HGV Max members' growth remains well ahead of overall NOG as we continue to see strong owner upgrade demand, with our Max member base growing 34% this year to more than 193,000. Our rental business is showing good top-line trends, although its profitability is being met by seasonality and the addition of the Bluegreen rental business, which Erin will speak to shortly. On the cash flow front, we had a record year in adjusted free cash flow generation at $837 million. And we also set a record in the amount of capital returned to our holders this year, over $432 million. Building on the momentum, I'm also excited about our financing optimization, which will unlock additional cash flow this year and will allow us to return a record $600 million to shareholders. Erin will provide more details here in a few minutes. Now let me provide an update on our integration and strategic initiatives. Starting with Bluegreen, we achieved some significant milestones with our integration over the last year. We officially rolled out HGV Max in our rebranded Bluegreen sales centers in early November and received a strong initial reception from both members and sales teams. We added nearly 5,000 new HGV Max members in less than 2 months post-launch, which was a quicker uptake than we saw with the initial launch of Max in early '22. There was a lot of anticipation building ahead of the launch, and we're pleased to see that excitement convert into new memberships. Looking at cost synergies related to the integration, we're well on track to achieve our $100 million goal this year, and with a significant amount of headcount and organizational work completed in '24. Our integration efforts this year will turn more towards rebranding. In the fourth quarter, we rebranded Bluegreen sales centers ahead of our Max launch. On the whole, their sales centers were already in great shape, which enabled us to move very quickly to get them rebranded. On the property side, we have a detailed rebranding plan for approximately 30 Bluegreen properties. We expect a roughly even split of those rebrands to be completed over the next 3 years, with work commencing this spring. On the operational side, we have several initiatives to further improve our tour efficiency and enhance our value proposition of our offering. We continue to optimize our staffing coverage to better service our tour flow, particularly in some of our regional markets, and we're continuing to evolve our tour scoring models with additional filters and data points to ensure that we're prioritizing our best tours at any given time. We also have several additional value enhancements planned for this year, in addition to expanding our ultimate access offerings, which have been incredibly popular with our members. Taken together, the goal of these efforts will be focused on improving core quality and tour outcomes to drive growth in transactions rather than absolute tour volume growth. Ultimately, those transactions are what will drive improved EBITDA generation margins and cash flow. Moving to our partner programs. In the fourth quarter, we started introducing our brand into locations within the Bass Pro network. We completed a handful of locations during the quarter. And over the course of '25, we plan to introduce our brands into nearly 125 additional stores. So far, we're very pleased with the results in these first locations, and we're seeing an increase in comparative traffic levels. We're also working with Bass Pro to evolve the in-store presence and deliver an experiential interaction that reflects the value of our brands coming together. The Great Wolf partnership is also producing solid results, exceeding projected expectations in room nights, call transfers, and member feedback. The rollout remains on schedule with 14 retail locations currently active. Finally, we're pleased to solidify our long-term partnership with Choice Hotels in the fourth quarter. Historically, Choice was a material source of new buyer tours for Bluegreen, and we see further potential to grow lead flow as we expand our existing marketing channels and launch new channels. Overall, we're very pleased with the success of our partnership model, and we continue to scout for new partners that can expand our reach and enhance our owner experience. So in summary, it was a strong end to a busy year for HGV, and I'm optimistic about our momentum coming into '25. We're in the middle innings of our integration work with solid line of sight on the remaining milestones. Our sales teams are excited about selling HGV Max across all our brands, and we have a great set of initiatives to drive another strong year-over-year cash flow generation this coming year. Before I turn it over, I'd like to note that per our 8-K earlier this month, our President and CFO, Dan Matthews, has taken a temporary leave of absence for personal reasons. Our EVP of Finance and Acting CFO, Erin Day, is stepping in for him on today's call. So with that, I'll turn it over to Erin to talk you through the numbers.

Thank you, Mark, and good morning, everyone. Before we start, note that our reported results for this quarter include $90 million of sales deferrals, which reduced reported GAAP revenue and were related to presales of our newest project, Ka Haku. We also recorded $41 million of associated direct expense deferrals. Adjusting for these two items would increase the EBITDA reported in our press release by a net $49 million to $289 million. In my prepared remarks, I'll only refer to metrics, excluding net deferrals, which more accurately reflects the cash flow dynamics of our financial performance during the period. As Mark mentioned, this was a very impactful year for HGV. We ended the year strong, exceeding our prior expectations and finishing in the upper half of our revised guidance range. We generated contract sales of $3 billion and adjusted EBITDA of $1.1 billion. We converted 76% of that EBITDA into a record $837 million of adjusted free cash flow, enabling us to repurchase a record $432 million of stock, reducing our diluted share count by 10%. Now let's turn to our results for the quarter. Total revenue, excluding cost reimbursements for the quarter was $1.2 billion, and adjusted EBITDA was $289 million, with margins excluding reimbursement of 23%. EBITDA included just over $17 million of Bluegreen cost synergies recognized during the quarter for a run rate of $75 million annualized, on target with our plan for $100 million of cost synergies within 24 months. Turning to our segments. Within real estate, contract sales grew to $837 million for the quarter, up 9% year-over-year on a pro forma basis. With Bluegreen contributing $208 million of sales and new buyers comprising 25% of total contract sales. If you recall, we faced several headwinds in the fourth quarter of '23, including the continued impact of the Maui fires, along with a system outage impacting our ability to convert tours into contracts. In the quarter, we also experienced a significant impact from the dual hurricanes that affected the southern states and cost us nearly $23 million in lost contract sales and $11 million in EBITDA. Adjusting for these one-time impacts in both periods, I'm pleased to note that we returned to solid contract sales growth for the quarter, including double-digit year-over-year growth from Bluegreen, which benefited from the launch of HGV Max in early November. Of course, we’re nearly 207,000 with Bluegreen contributing just over 54,000 tours for the quarter. If we adjust for the one-time impacts of Q4, both this year and last, tours declined roughly 1%, which reflects efforts made during the quarter to focus on tour efficiency. As Mark mentioned earlier, this will continue to be a key focal area for us in 2025 as we push to drive improvements in our VPG. On a pro forma basis, VPG for the quarter rose 13% to 4,026, which was over 20% ahead of pro forma 2019 level. Both our owner and new buyer channel showed strong growth during the quarter, and we still experienced high single-digit EPG growth even after adjusting for the one-time headwinds experienced this and last year. The introduction of HGV Max to our Bluegreen members and the launch of sales at Ka Haku were significant drivers of VPG during the quarter, producing our highest close rate since the record levels of 2022 and enabling us to drive solid transaction growth despite tours being slightly down year-over-year. Cost product was 15% of net VOI sales for the quarter, and our provision for bad debt as a percent of owned contract was approximately 13% in the quarter. Real estate sales and marketing expense was $387 million for the quarter, or 46% of contract sales. Real estate profit for the quarter was $167 million, with margins of 26%. In our financing business, fourth quarter revenues were $153 million, and segment profit was $93 million with margins of 61%. I'd like to take a moment here to highlight the slides that we have on the IR website detailing our financing business optimization that launched in the fourth quarter. That initiative aims to increase both the level and consistency of our nonrecourse borrowing activity, generating additional adjusted free cash flow during the program ramp, and enabling incremental shareholder value creation from both capital return and business reinvestment. The goal is to increase the amount of current receivables that we are regularly securitizing to between 70% and 80% from the historical run rate, which was closer to mid-50s. We began the first stage of the program late in the fourth quarter and will continue to ramp it over the next 18 months. Our business is well positioned today to execute on this initiative. We have significant excess liquidity of over $2 billion. We've become programmatic ABS issuers with a record of strong execution, which will support our access to the securitization market, and we recently completed extensive work to enhance our credit and consolidate our warehouse facilities, providing us with additional flexibility and a solid platform for this optimization effort. As shown on Slide 5, our goal in 2025 is to increase our nonrecourse rate to between 65% and 70%, with the ultimate goal of holding our rate in a range of 70% to 80%. When comparing to our baseline at full run rate, this will unlock an additional $700 million of cash versus our prior securitization strategy, which we can use for additional capital returns and business reinvestment. At full run rate, we anticipate the program will result in a step-up in our consumer financing interest expense of $39 million versus our preoptimization level, which reduces our adjusted EBITDA due to being reported as an operating expense. Importantly, however, the tax shield and incremental securitization activity to maintain our new higher rates means the optimization will have minimal impact on our underlying cash flow while still being highly accretive to our equity value. We'll use that incremental cash to support additional capital returns, increasing our share repurchase goal by 50% to $600 million or an average of $150 million per quarter. As I mentioned, we expect it to take roughly 18 months for us to fully achieve the run rate, where we're holding our 70% to 80% target range throughout the year. And in 2025, our current expectation is that we'll achieve an average securitization rate between 65% and 70%, which will increase our consumer financing interest expense by $25 million and consequently reduce our adjusted EBITDA by that same amount. That $25 million impact is currently included in the guidance range we issued this morning. Turning back to our portfolio metrics. Our originated weighted average interest rate was 14.95%. Combined gross receivables for the quarter were $4 billion or $2.9 billion net of allowance. Our total allowance for bad debt was $1.1 billion on that $4 billion receivable balance or 27% of the portfolio. Our annualized default rate for our consolidated portfolio, inclusive of Bluegreen, stood at 10.8% for the quarter. Our provision was 13.3% of owned contract sales in the quarter. Finally, I note that our other financing expense increased this quarter, owing in part to an additional reserve of $13 million, primarily on the acquired Bluegreen portfolio. This is similar to the approach we use with Dime, where we acquired a portfolio of mortgage receivables that will continue to pay off over time, and we've taken a reserve against it as we work over time to migrate the underwriting and sales processes to the legacy HGV. Also similar to Diamond, early indications are the originated portfolio is performing better than the acquired portfolio, reflecting the higher value proposition of HGV's network, HGV Max, and improved underwriting standards. In our resort and club business, our consolidated member count was approximately 724,000, and our NOG was 1.1% at the end of the quarter. Revenue was $206 million for the quarter, and segment profit was $147 million with margins of 71%. Rental and ancillary revenues were $174 million in the quarter with segment loss of $11 million. Revenue growth was driven by the addition of Bluegreen along with an increase in available room nights at our legacy business, offset by a mix-driven decline in RevPAR. The mix impact on RevPAR was driven by an increased number of room nights in our Hawaii market being dedicated to member days rather than rentals this quarter as we lapped the wildfire related to the disruption in the region. Given that Hawaii carries the highest ADR in our portfolio, this created a negative mix impact when looking at system-wide RevPAR. But when looking at a same market basis, our RevPAR has increased versus the prior year in each of our major markets during the quarter. Expenses in the period were elevated primarily due to the addition of Bluegreen's rental business, which operated at a loss, along with continued elevated developer maintenance fees associated with our unsold inventory. During the fourth quarter, we also saw strong usage of points for stays at Great Wolf through our new partnership program, with associated point conversion expense showing up in our Rental segment. Over time, we expect annual segment profitability to improve, mainly as a result of selling through our unsold inventory, which reduces the burden of developer maintenance fees. But the addition of the Bluegreen business will continue to weigh on segment profits and rentals, mainly in the seasonally slower first and fourth quarters. Bridging the gap between segment adjusted EBITDA and total adjusted EBITDA, corporate EBITDA was $6 million. Corporate G&A was $46 million, license fees were $47 million, and EBITDA attributable to noncontrolling interest was $5 million. Our adjusted free cash flow in the quarter was $883 million, which included inventory spend of $159 million. I note that this is materially higher than our initial expectations. We elected to take advantage of tax deferrals in the U.S. and Japan at the end of the year, coupled with the timing shift on some of our anticipated inventory spending in the quarter. We expect that both of these items will instead be paid in 2025. In addition, we had a significant level of securitization activity in Q4, which contributed to the strong cash flow in the quarter. For the year, we produced adjusted free cash flow of $837 million or 76% of our adjusted EBITDA, which was materially higher than our long-term target range of 55% to 65%. Excluding the deferral items I mentioned above, our conversion rate in the quarter would have been in the high 50s. Looking forward, our cash conversion rate will also be elevated as we ramp our financing optimization program before reverting back to our long-term target range of 55% to 65%. As we look at 2025 specifically, despite the inclusion of the tax deferrals and deferred inventory payments, our optimization benefits will still enable our cash conversion rate for the full year to be in a range of 65% to 75%. During the quarter, the company repurchased 3.15 million shares of common stock for $125 million. And through February 20, we repurchased an additional 1.6 million shares for $66 million, leaving us with $361 million of remaining availability under our share repurchase plan. Turning to our outlook, we are establishing our 2025 adjusted EBITDA guidance to be in a range of $11.25 to $11.65. When contemplating this range, there are several important expense items embedded into the guidance that should be noted. The first is the $25 million increase in our consumer financing interest expense due to our financing optimization program. Excluding this expense, our guidance would have been in the range of $11.50 to $11.90. But as I detailed earlier, we believe this program will be accretive to our cash flow and our equity value. The second item is regarding our license fees. The overlap of our final license fee rate step-up on our diamond sales versus our first rate step-up on our Bluegreen sales takes 2025 uniquely high with respect to year-over-year change in our license fee rate. If we assume no change in sales from 2024 levels, this change in rate would be a $3 million EBITDA headwind in 2025. As it relates to our liquidity, as of December 31, our position consisted of $328 million of unrestricted cash and $715 million of availability under our revolving credit facility. Our debt balance at quarter end was comprised of corporate debt of $4.6 billion and a nonrecourse debt balance of approximately $2.3 billion. At quarter end, we had $423 million of remaining capacity on our warehouse facility. We also had $1.2 billion of notes that were current on payments, but unsecuritized. Of that figure, approximately $749 million could be monetized through either warehouse borrowings or securitization while another $291 million of mortgage notes we anticipate being eligible following certain customary milestones, such as first payments. Turning to our credit metrics. At the end of Q4 and inclusive of all anticipated cost synergies, the company's total net leverage on a TTM basis was 3.77x. Finally, I'm happy to announce that we've remediated the material weakness that we previously disclosed in our 2023 Form 10-K. We will now turn the call over to the operator and look forward to your questions.

The first question comes from Patrick Scholes from Truist Securities.

A number of questions here for you. How should we think about some of the puts and takes as far as growth rates between balancing off workflow and VPG as it relates to your 2025 outlook? Certainly, in the most recent quarter, saw this massive year-over-year acceleration in VPG. Does that flow through if you give a little more color on that? And then I'll have a follow-up question or two.

Thank you, Patrick. I'll provide a high-level overview, and then Erin will share more details. We finished the year strong with great momentum. Our teams improved execution on all initiatives from last year. We anticipate strong revenue growth driven by an increase in contract deals this year. We're rolling out Max and Ultimate, our experiential platform for Bluegreen. We will also benefit from the launch of Ka Haku, particularly in the APAC region. Our focus on customer conversion will continue, emphasizing not just tour quality but also staffing ratios. Our recruiting team and sales leadership have done an excellent job improving our position there. We expect tours to increase in the low to mid-single digits, with VPG in a similar range. There are some unique expense headwinds affecting EBITDA this year, as Erin mentioned in our prepared remarks. Revenue will exceed EBITDA this year, but we anticipate solid growth in our underlying business, including strong free cash flow generation. Erin will now provide additional details.

Yes. Thanks, Mark. So as Mark mentioned on the top line, if you take that tour flow at that low to mid and the VPG at mid-single digits, we really expect to be mid- to high single digits overall. As Mark mentioned, we are going to see a slight margin contraction primarily related to items I mentioned in my prepared remarks. So that's around the additional interest expense from our financing optimization business as well as a license fee headwind and some rental pressures around recovered inventory. So from a cadence standpoint, just thinking about the year, Q1 will be the lowest from a growth and margin perspective. And that's mainly due to some of those cost headwinds lapping throughout the year. But on the sales side, we also had easier comps. We'll have easier comps in the second quarter and third quarter. So we really should see some better flow-through in those quarters. And then once Mark mentioned as well on the cash flow side, we are expecting a 65% to 75% conversion rate, and that's really the benefit of the financing optimization program we announced today.

Okay. And then my follow-up question really just relates to this optimization program. It seems pretty straightforward. I guess, is a very simplified way of describing it essentially just picking up the pace of securitizations and because you're doing that, you'll receive less immediate income from that, but the trade-off is you get more cash infusion from doing the actual securitizations, which you could use for share repurchases. Is that a very simplified way high level of describing it?

Yes, Patrick. I think that's a good way to describe it. One thing to note is that the program will ramp over the next 18 months to reach the full $700 million we announced. So when you look at 2025, we anticipate generating $800 million at the midpoint of our cash flow guidance for that year. This also accounts for the timing impacts of the Q4 cash benefit. Of that $800 million, we're planning to allocate $600 million to the share repurchase program, which we have increased from $100 to $150 per quarter. Overall, we aim for our nonrecourse borrowing in 2025 to be in the range of 65% to 70%. We ended Q3 at around 55%. We initiated this program slightly in Q4, so you will see some benefit in both nonrecourse borrowing and share repurchases, but this will ultimately ramp up to 70% to 80% over the next 18 months.

Yes. And just to maybe finish up on that. Look, our priority is to return cash to our shareholders. And when ramped, the program is really going to have minimal impact on our underlying go-forward cash flow. As we've talked about in the prepared remarks, we see this as highly accretive to our free cash flow in the near term as well as to our equity value.

Okay. That makes sense. And I certainly found over time shareholders like the cash infusion used for share repurchases as the preference. I have more questions, happy to be back in queue.

The next question comes from the line of Brandt Montour from Barclays.

So maybe for Erin, the loan loss provision, you provided a lot of detail, and I apologize if I missed this, but as a percentage of owned, it did fluctuate quite a bit last year. I know there was some market-wide volatility regarding delinquencies. But could you help us understand how to think about 2025 qualitatively compared to the numbers we observed in 2024?

Yes. So you're right, it did bounce around a bit. If you remember, Q1, we were around 12%, and that started picking up in 2Q and 3Q. So we did mention on last November's call that we always expect seasonally, it's a bit lower in Q4. And so that pretty much came in as expected. Overall, the book is holding up really well. Delinquencies are stable. So we look into next year, I think you're going to see some headwind in Q1 as we talked about that mid-teens, and we still think that's a good number. So we're going to see that stabilize in that area. And it's really going to be like on an annualized basis. So if you think about it from a cadence perspective, the provision typically picks up throughout the year with a decline in Q4. So Q1, you're going to see a little bit of a headwind. We still expect to be on an annualized basis in that mid-teens when we're looking at '25 and what we've assumed in our guidance.

Okay. That's super helpful. Okay. And then maybe for Mark, the Bluegreen HGV Max sort of pent-up demand where they were waiting for that to roll out, and it sounds like you saw what you wanted to see in November when you launched that to all those folks in the Bluegreen who were waiting for. Can you help us understand a little bit about the sales cycle length, meaning that we're sitting here in February, have you gotten through to all those folks that were waiting? Or does that take a lot longer? And is that a tailwind for the next few quarters?

Yes, that's a great question. I'm really pleased you brought it up. We're very excited about the launch, and the increase in interest is much stronger than what we experienced when we initially launched in 2022. We noticed this during the Bluegreen performance prior to the launch, where people were eager to understand the benefits of Bluegreen's acquisition from Hilton Grand Vacations. We observed a significant uptick. As for the timeframe, it will take us about 18 to 24 months to effectively reach all the members. When we talk about the launch, it's done within our sales centers. We're not utilizing mail, email, or numerous digital transactions; we introduce it directly in our sales centers. We wait for the Bluegreen members to visit the property, and those who express interest in HGV Max are then invited to participate in sales presentations. It will indeed take us around 18 to 24 months to engage a substantial number of these members.

The next question comes from the line of Stephen Grambling from Morgan Stanley.

You may have addressed a little bit of this in the opening remarks. But I guess, what have you seen in terms of changes in customer behavior across the different segments that you now have across the portfolio kind of post-election? And maybe another way of asking this, if we were to have the guidance conversation a quarter ago, what would have changed?

Yes. So Steve, I'd say, number one, I think trends remain broadly the same, particularly around the pressure of just cost of living, right, inflation. And we talked about that throughout '24. We saw that pressure, especially in our new buyer close rates. The KPIs for the bottom third network customer was the one that we were really struggling with. But I can tell you today, that bottom third tier is really stabilized. And if you think about that bottom third to top half of that bottom third has definitely stabilized. So I can tell you that leisure travel remained strong. We saw it in the fourth quarter improvements across the board. And when you look at the performance across all of our brands and new buyers, owners, VPGs, and closing rates were up solid across all of them. VPG for new buyers was up 8% for owners, 13%. I think for us, what we've been able to control have been the improved execution and getting really this new organization aligned around our brand, our company strategy. And then we talked about the MAX launch already; it's a big one. If you look at who led performance for the company, it was APAC. Hawaii had an outstanding quarter. We saw great growth there. We saw it in Oahu. We saw it in Maui. We saw it in the Big Island. And we also saw growth in Japan as our new buyer tour flow is ramping up there. So I guess to answer your question, people are engaged and travel. I think things have stabilized. And I think our execution and our focus around what's important and what we can control has improved. So all in all, I feel good about the momentum that we came out of Q4 with.

That's great color on what's going on in Hawaii. An unrelated follow-up, and I know you talked a little bit about the free cash flow conversion. But maybe if we can just drill down into the inventory investment that you're anticipating in 2025? I may have missed that.

In 2025, on the inventory side, we expect to see spending in the range of $350 to $450 million, with a target around $450 million. When HGV was a stand-alone company, we discussed a range of $250 million to $350 million based on approximately $2.5 billion in sales. Bluegreen, when acquired, was running at about $100 million, and we've been investing a bit each year since their inventory was lower than what we had from the Diamond acquisition. For 2025 and 2026, we anticipate positioning ourselves closer to the higher end of that combined range. Some inventory spending was delayed from Q4 into 2025, mainly finishing up pre-COVID projects, particularly in Hawaii, which Mark mentioned is currently progressing. We expect some fluctuations in spending throughout the year but foresee a more sustained focus near the lower end of that $350 to $450 million range in the long term. I believe we're in a strong inventory position with good availability and quality across all segments. The Diamond acquisition brought in ample inventory, and we haven't needed to spend any capital since then, as Bluegreen also had sufficient inventory. The current elevated spending is focused on wrapping up projects initiated back in 2018 that were delayed due to COVID. Overall, we maintain a robust inventory, with a bit more on hand than our usual long-term target, but we're dedicated to completing these worthwhile projects, which we believe will yield significant returns for us.

Thank you. The next question comes from the line of Ben Chaiken from Missouri Securities.

Hey. Thanks for taking my questions on the legacy Bluegreen ownership. Does that convert at one-to-one? Or is it on a case-by-case basis when people are upgrading to HGV Max? Are consumers proactively seeing that value proposition, or do you need to flag it to them to your point? Around this taking 18 to 24 months, ramping up and then, and then I have one or two quick follow-ups? Thanks.

Yeah, I'm not sure. Ben, I understand the first part of the question. Look, we have a conversion as far as our points go in Bluegreen. So they own points at Bluegreen, in the Bluegreen Club, they will continue to have those benefits and be able to use that within that system, but there's a conversion rate as a Max member. So the benefit for them is now they have the ability when they join HGV Max, you have to upgrade into an additional purchase, but you get cross-booking activities. So now you can go from the 40 or so Bluegreen properties across 200 properties within Max. You also get Hilton Honors status. You get discounted stays at Hilton Hotels. And you also add on that the travel services that we have; you can exchange your points for cruises, flights, rental cars, etc. So yeah, so to be able to take advantage of the Max benefits, you have to upgrade into the Max system, and you don't lose any of the benefits you had at Bluegreen. As far as timing goes, the timing is really like I think I talked about just a few minutes ago, the introduction of Max was introduced in our sales centers, right? And so the ability for people to learn about HGV Max. Now, of course, it comes in there; you know, on the website, we talk about it there, but to really purchase it and upgrade, it's done at the sales table. So again, it's going to take us a good 18 to 24 months to really get to a good meaningful amount of these members.

Got it, got it. That makes sense. And have you done any work on similar transactions regarding the potential upgrade propensity or proportion of the owner base over time, maybe looking at past transactions in the industry?

Yeah. Look, we track that daily and monthly. We have a static pool on upgrade propensity. And so one of the things that we really liked about Bluegreen is their upgrade propensity wasn't, or hasn't been historically, at the same level as HGV, nor at the levels that Diamond had. And we think part of it is because there really wasn't a compelling, you know, new story and compelling new value proposition that was put in front of those customers. And so, you know, our expectations are, well, we underwrote it to be lower than the propensity at HGV legacy, we still see the VPGs at right around $2,000 to $2,500 stronger than they've historically been, but still below historic HVPG.

Got it. And just to fit in one more quick question, the update on securitization financing is clear and appreciated. The question is, why not conduct the securitization all at once? Is it simply a matter of market demand that takes about 18 months to increase the ratio?

We are considering the ramp-up for a few reasons. This ramp will allow us to maintain a more controlled approach instead of executing everything at once. The timing of the ramp is somewhat influenced by the securitization market, but we anticipate reaching our target run rate in the first half of 2026. We prefer to implement this gradually. For this year, we will aim for 65%, achieving a significant portion of it this year and completing the process by the first half of 2026 when we expect to stabilize at the full nonrecourse percentage.

The next question comes from the line of David Katz from Jefferies.

I appreciate all the copious detail in the prepared remarks in the deck, and I appreciate you taking my questions. So look, I do want to get a sense for your updated geographic distribution and how you look at it on a combined basis. Just remembering some of the concentration that was Hawaii early on. Looking at sort of where the company is able to touch today and where might be future places for you to grow into?

Thanks, David. We have transformed significantly since 2019, particularly in terms of our platform and geographical reach. Back in 2019, our focus was primarily on four major core markets along with a few regional ones. Currently, while those core markets have grown even larger, we have expanded to include 44 new regional markets. We've added locations such as Savannah, Virginia Beach, Sedona, Scottsdale, Palm Desert, and Lake Tahoe, which has dramatically enhanced our value proposition by allowing more travel options. Furthermore, we have restructured our business into more regions, increasing from two to a more expansive setup. Geographically, we had a particularly strong quarter in the APAC region, with Japan performing well. Our joint venture with Bass Pro and our East teams delivered impressive results. Overall, our performance is on the rise. For example, in Nashville, we have a modest presence, but there's significant potential for expansion, especially with our joint venture featuring 12 Hilton-branded hotels in that area. Texas is another compelling market for us, reinforced by our acquisition of Bluegreen in San Antonio, as it holds the third-largest member base for HGV. Last quarter, we initiated expansions, marking the first international development of a purpose-built timeshare resort in Japan, which has been nearly sold out beyond expectations. This success has led us to acquire property in Kyoto, indicating strong domestic demand and numerous growth opportunities in Japan. Our new platform allows for expansion in these regional markets, which differ from major ones like Las Vegas or Orlando. We anticipate growth in these incremental markets at high single-digit to low double-digit rates, whereas our core markets may experience more modest mid-single-digit growth. While unlocking this potential will take time, we are actively working on a plan for expansion. Importantly, our investment strategy in these markets will be incremental, focusing on capital-efficient deals rather than large-scale developments.

The next question comes from the line of Chris Woronka from Deutsche Bank.

Mark, you talked earlier about improving the efficiency, right, the close rates. And I'm curious as to whether that's going to have any potential impact on the financing business in terms of either propensity to finance or maybe lower LLPs. Is this a higher quality customer that you think you can get the higher close rates on?

That's an interesting question. We haven't noticed any significant change in the likelihood to finance. We are currently seeing higher quality customers. So I would say that we have not observed any substantial change in that.

Okay. Fair enough. And then I know you mentioned, I think you kind of re-upped with Choice. Can you maybe without going into any specifics you don't want to go into, can you let us know if there's any difference in economics there? Or how much uplift do you expect from the renegotiated relationship?

Look, we solidified our partnership with Choice. They're a great partner with Bluegreen. They did a really good job driving new buyer transactions. Look, this is part of our new business. We've really diversified our new buyer lead sources. With the Bluegreen acquisition, Bass Pro, Choice, but Choice had a really nice call transfer program that's performed well. And where we see the opportunity with this partner is in the digital side and other consumer-facing marketing opportunities. So excited about this. It took a while for us to get things figured out when you're dealing with two hospitality brands, but the Choice customers will be focused on the Bluegreen product and will not be focused on the Hilton product. So we will keep those separate going forward. We need to be mindful around the brand integrity. And so we'll have dedicated sales centers for Choice leads going forward.

The next question comes from the line of Patrick Scholes from Truist Securities.

Just a quick follow-up question. On an earnings call this morning, one of your peers had some quick comments about softness in sales beginning in February, which subsequently stabilized. Curious if you saw anything similar along those lines.

Yes. We haven't seen anything similar to that. We had very similar momentum that we saw in the fourth quarter roll through January. And so right now, that momentum continues. So we haven't seen that softness.

Thank you. Ladies and gentlemen, this concludes the question-and-answer session. And before we end, I will turn the call back over to Mark Wang for any closing remarks. Mr. Wang?

All right. Well, thanks everyone for joining us today. I also want to thank all of our team members again for going above and beyond to provide outstanding vacation experiences for our members, and we look forward to speaking with you on our next call. So thank you.

Thank you. Ladies and gentlemen, the conference of Hilton Grand Vacations has now concluded. Thank you for your participation. You may now disconnect your lines.