Compute at least two ratios for each of the ratio categories: profitability ratios and solvency ratios. Also the Altman’s Z-score. Please show all the calculation work and explain why you choose this ratio.
Among all the ratios that you calculated across different categories, choose the two most important ratios for profitability analysis and two most important ratios for credit analysis, and explain why these ratios are especially important for your focal firm.
Please compute the ratio from 2019 to 2022 and please show all the calculate process.
Document and Entity Information – USD ($) $ in Millions
Cover [Abstract]
Entity Registrant Name
Entity Central Index Key
Current Fiscal Year End Date
Entity Current Reporting Status
Document Type
Document Period End Date
Document Fiscal Year Focus
Document Fiscal Period Focus
Amendment Flag
Entity Well-known Seasoned Issuer
Entity Voluntary Filers
Entity Common Stock, Shares Outstanding
Entity Public Float
Entity Small Business
Entity Emerging Growth Company
Entity Shell Company
Entity Interactive Data Current
Title of 12(b) Security
Trading Symbol
Security Exchange Name
Entity File Number
Entity Incorporation, State or Country Code
Entity Tax Identification Number
Entity Address, Address Line One
Entity Address, Address Line Two
Entity Address, City or Town
Entity Address, State or Province
Entity Address, Postal Zip Code
City Area Code
Local Phone Number
Document Annual Report
Document Transition Report
Entity Filer Category
Documents Incorporated by Reference [Text Block]
ICFR Auditor Attestation Flag
Auditor Name
Auditor Location
Auditor Firm ID
12 Months Ended
Dec. 31, 2021
Hilton Grand Vacations Inc.
0001674168
–12-31
Yes
10-K
Dec. 31,
2021
2021
FY
false
Yes
No
false
false
false
Yes
Common Stock, $0.01 par value per share
HGV
NYSE
001-37794
DE
81-2545345
6355 MetroWest Boulevard
Suite 180
Orlando
FL
32835
407
613-3100
true
false
Large Accelerated Filer
The registrant has incorporated by reference into Part III of this report certain portions of its proxy
statement for its 2022 annual meeting of stockholders, which is expected to be filed pursuant to
Regulation 14A within 120 days after the end of the registrant’s fiscal year ended December 31,
2021.
true
Ernst & Young LLP
Orlando, Florida
42
Feb. 25, 2022
Jun. 30, 2021
119,925,657
$ 3,488
Consolidated Balance Sheets – USD ($) $ in Million
ASSETS
Cash and cash equivalents
Restricted cash
Accounts receivable, net of allowance for doubtful accounts of $39 and $20
Timeshare financing receivables, net
Inventory
Property and equipment, net
Operating lease right-of-use assets, net
Investments in unconsolidated affiliates
Goodwill
Intangible assets, net
Land and infrastructure held for sale
Other assets
TOTAL ASSETS (variable interest entities – $1,100 and $800)
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other
Advanced deposits
Debt, net
Non-recourse debt, net
Operating lease liabilities
Deferred revenues
Deferred income tax liabilities
Total liabilities (variable interest entities – $1,199 and $771)
Commitments and contingencies – see Note 23
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of
December 31, 2021 and 2020
Common stock, $0.01 par value; 3,000,000,000 authorized shares,119,904,001 shares issued and
outstanding as of December 31, 2021 and 85,205,012 shares issued and outstanding as of
December 31, 2020
Additional paid-in capital
Accumulated retained earnings
Accumulated other comprehensive income
Total equity
TOTAL LIABILITIES AND EQUITY
[1]
[2]
[3]
Balance Sheets – USD ($) $ in Millions
[1]
[2],[3]
Other accrued expenses includes interest payables, accrued marketing expenses, and various accrued liabilities
Amount does not include deferred financing costs of $ 5 and $ 4 million as of December 31, 2021 and 2020,
Amount includes deferred financing costs related to our term loan and senior notes of $ 33 million and $ 22 million,
Dec. 31, 2021
Dec. 31, 2020
$ 432
263
302
1,747
1,240
756
70
59
1,377
1,441
41
280
8,008
$ 428
98
119
974
702
501
52
51
0
81
41
87
3,134
673
112
2,913
1,328
87
237
670
6,020
252
117
1,159
766
67
262
137
2,760
0
0
1
1
1,630
357
0
1,988
$ 8,008
192
181
0
374
$ 3,134
arious accrued liabilities
31, 2021 and 2020,
33 million and $ 22 million,
Consolidated Balance Sheets (Parenthetical) – USD ($) $ in Millions
Allowance for doubtful accounts receivable
Assets, variable interest entity
Liabilities, variable interest entity
Preferred Stock, par value (in dollars per share)
Preferred Stock, shares authorized
Preferred Stock, shares issued
Preferred Stock, shares outstanding
Common Stock, par value (in dollars per share)
Common Stock, shares authorized (in shares)
Common Stock, shares issued (in shares)
Common Stock, shares outstanding (in shares)
Variable Interest Entities
Assets, variable interest entity
Liabilities, variable interest entity
Dec. 31, 2021
$ 39
8,008
$ 6,020
$ 0.01
300,000,000
0
0
$ 0.01
3,000,000,000
119,904,001
119,904,001
$ 1,100
$ 1,199
Dec. 31, 2020
$ 20
3,134
$ 2,760
$ 0.01
300,000,000
0
0
$ 0.01
3,000,000,000
85,205,012
85,205,012
$ 800
$ 771
Consolidated Statements of Operations – USD ($)
Revenues
Total revenues
Expenses
General and administrative
Depreciation and amortization
Impairment expense
Total operating expenses
Interest expense
Equity in earnings from unconsolidated affiliates
Other (loss) gain, net
Income (loss) before income taxes
Income tax (expense) benefit
Net income (loss)
Earnings (loss) per share:
Basic
Diluted
Sales of VOIs, Net
Revenues
Total revenues
Sales, Marketing, Brand and Other Fees
Revenues
Total revenues
Financing
Revenues
Total revenues
Expenses
Expenses
Resort and Club Management
Revenues
Total revenues
Expenses
Expenses
Rental and Ancillary Services
Revenues
Total revenues
Expenses
Expenses
Cost Reimbursements
Revenues
Total revenues
Expenses
Expenses
Cost of VOI Sales
Expenses
Expenses
Sales and Marketing
Expenses
Expenses
Acquisition and integration-related expense
Expenses
Expenses
License Fee Expense
Expenses
Expenses
[1]
Consolidated Statements of Operations – USD ($)
[1]
Net income (loss) for years ended December 31, 2021, 2020, and 2019 were $ 176,426,924 , ($ 200,709,244 ), and $ 215,695
Dec. 31, 2021
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
$ 2,335,000,000
$ 894,000,000
$ 1,838,000,000
151,000,000
92,000,000
126,000,000
45,000,000
2,000,000
209,000,000
1,945,000,000 1,139,000,000
(105,000,000)
(43,000,000)
10,000,000
5,000,000
(26,000,000)
3,000,000
269,000,000
(280,000,000)
(93,000,000)
79,000,000
$ 176,426,924 $ (200,709,244)
118,000,000
44,000,000
0
1,523,000,000
(43,000,000)
4,000,000
(3,000,000)
273,000,000
(57,000,000)
$ 215,695,961
$ 1.77
$ 1.75
$ (2.36)
$ (2.36)
$ 2.43
$ 2.42
$ 883,000,000
$ 108,000,000
$ 509,000,000
385,000,000
221,000,000
573,000,000
183,000,000
165,000,000
170,000,000
65,000,000
53,000,000
53,000,000
340,000,000
166,000,000
191,000,000
80,000,000
36,000,000
46,000,000
342,000,000
97,000,000
227,000,000
267,000,000
107,000,000
147,000,000
202,000,000
137,000,000
168,000,000
202,000,000
137,000,000
168,000,000
213,000,000
28,000,000
127,000,000
653,000,000
381,000,000
719,000,000
106,000,000
0
0
$ 80,000,000
$ 51,000,000
$ 101,000,000
924 , ($ 200,709,244 ), and $ 215,695,961 ,
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) – US
Statement of Comprehensive Income [Abstract]
Net income (loss)
Foreign currency translation adjustments
Derivative instrument adjustments
Other Comprehensive income, net of tax
Comprehensive income (loss)
[1]
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) – USD ($)
[1]
Net income (loss) for years ended December 31, 2021, 2020, and 2019 were $ 176,426,924 , ($ 200,709,244 ), and $ 215,695
12 Months Ended
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
$ 176,426,924 $ (200,709,244)
(2,000,000)
0
2,000,000
0
0
0
$ 176,000,000 $ (201,000,000)
$ 215,695,961
0
0
0
$ 216,000,000
924 , ($ 200,709,244 ), and $ 215,695,961 ,
Consolidated Statements of Cash Flows – USD ($
Operating Activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred financing costs, acquisition premiums and other
Provision for financing receivables losses
Impairment expense
Other loss (gain), net
Share-based compensation
Deferred income tax expense (benefit)
Equity in earnings (losses) from unconsolidated affiliates
Return on investment in unconsolidated affiliates
Net changes in assets and liabilities, net of effects of acquisition:
Accounts receivable, net
Timeshare financing receivables, net
Inventory
Purchases and development of real estate for future conversion to inventory
Other assets
Accounts payable, accrued expenses and other
Advanced deposits
Deferred revenues
Other
Net cash provided by operating activities
Investing Activities
Acquisition of Diamond, net of cash and restricted cash acquired
Capital expenditures for property and equipment
Software capitalization costs
Investments in unconsolidated affiliates
Net cash used in investing activities
Financing Activities
Issuance of debt
Issuance of non-recourse debt
Repayment of debt
Repayment of non-recourse debt
Debt issuance costs and discounts
Repurchase and retirement of common stock
Payment of withholding taxes on vesting of restricted stock units
Proceeds from employee stock plan purchases
Proceeds from stock option exercises
Other financing activity
Net cash provided by financing activities
Effect of changes in exchange rates on cash, cash equivalents & restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period
[1]
d Statements of Cash Flows – USD ($)
[1]
Net income (loss) for years ended December 31, 2021, 2020, and 2019 were $ 176,426,924 , ($ 200,709,244 ), and $ 215,695
12 Months Ended
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
$ 176,426,924
$ (200,709,244)
$ 215,695,961
126,000,000
39,000,000
121,000,000
2,000,000
14,000,000
48,000,000
58,000,000
(10,000,000)
2,000,000
45,000,000
18,000,000
75,000,000
209,000,000
(1,000,000)
15,000,000
(123,000,000)
(5,000,000)
0
44,000,000
17,000,000
74,000,000
0
3,000,000
22,000,000
3,000,000
(4,000,000)
0
(124,000,000)
(92,000,000)
15,000,000
(33,000,000)
48,000,000
(48,000,000)
(8,000,000)
(166,000,000)
0
168,000,000
56,000,000
107,000,000
(91,000,000)
(36,000,000)
(11,000,000)
(56,000,000)
2,000,000
76,000,000
0
79,000,000
(20,000,000)
(111,000,000)
(4,000,000)
(168,000,000)
(18,000,000)
(17,000,000)
14,000,000
91,000,000
1,000,000
143,000,000
1,592,000,000
(18,000,000)
(21,000,000)
0
(1,631,000,000)
0
(8,000,000)
(23,000,000)
(2,000,000)
(33,000,000)
0
(37,000,000)
(24,000,000)
(2,000,000)
(63,000,000)
2,950,000,000
264,000,000
(1,154,000,000)
(359,000,000)
(70,000,000)
0
(6,000,000)
1,000,000
13,000,000
(3,000,000)
1,636,000,000
495,000,000
495,000,000
(165,000,000)
(475,000,000)
(9,000,000)
(10,000,000)
(4,000,000)
2,000,000
1,000,000
(2,000,000)
328,000,000
485,000,000
365,000,000
(290,000,000)
(376,000,000)
(6,000,000)
(283,000,000)
(4,000,000)
3,000,000
0
(2,000,000)
(108,000,000)
(4,000,000)
169,000,000
526,000,000
$ 695,000,000
0
374,000,000
152,000,000
$ 526,000,000
924 , ($ 200,709,244 ), and $ 215,695,961 ,
0
(28,000,000)
180,000,000
$ 152,000,000
Consolidated Statements of Stockholders’ Equity – USD ($)
Beginning balance, value at Dec. 31, 2019
Beginning balance, shares at Dec. 31, 2019
Net income (loss)
Activity related to share-based compensation
Repurchase and retirement of common stock
Repurchase and retirement of common stock, shares
Foreign currency translation adjustments
Derivative instrument adjustments
Ending balance, value at Dec. 31, 2020
Ending balance, shares at Dec. 31, 2020
Net income (loss)
Activity related to share-based compensation
Activity related to share-based compensation, shares
Shares issued for Diamond acquisition, shares
Shares issued for Diamond acquisition
Employee stock plan issuance
Foreign currency translation adjustments
Derivative instrument adjustments
Ending balance, value at Dec. 31, 2021
Ending balance, shares at Dec. 31, 2021
[1]
Total
$ 570,000,000
(200,709,244)
15,000,000
(10,000,000)
0
0
$ 374,000,000
85,205,012
$ 176,426,924
$ 56,000,000
1,381,000,000
$ 1,000,000
(2,000,000)
2,000,000
$ 1,988,000,000
119,904,001
Net income (loss) for years ended December 31, 2021, 2020, and 2019 were $ 176,426,924 , ($ 200,709,244 ), and $ 215,695
Common Stock
Additional Paid-in Capital
$ 1,000,000
85,000,000
$ 179,000,000
[1]
Accumulated Retained Earnings
$ 390,000,000
(201,000,000)
15,000,000
(2,000,000)
(8,000,000)
192,000,000
181,000,000
(1,000,000)
$ 1,000,000
84,000,000
[1]
176,000,000
$ 56,000,000
2,000,000
$ 34,000,000
1,381,000,000
$ 1,000,000
$ 1,000,000
120,000,000
924 , ($ 200,709,244 ), and $ 215,695,961 , respectively.
$ 1,630,000,000
$ 357,000,000
Accumulated Other Comprehensive Income
$0
0
(2,000,000)
$ 2,000,000
Organization
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation
12 Months Ended
Dec. 31, 2021
Note 1: Organization and Basis of Presentation Our Business We are a global timeshare company
engaged in developing, marketing, selling and managing timeshare resorts primarily under the
Hilton Grand Vacations brand. During 2021, we also acquired Diamond Resorts and are in the
process of rebranding Diamond properties and sales centers to the Hilton Grand Vacations brand
and Hilton standards. Our operations, which primarily consist of selling vacation ownership
intervals and vacation ownership interests (collectively, “VOIs”, “VOI”) for us and third parties;
financing and servicing loans provided to consumers for their timeshare purchases; operating
resorts and multi-resort trusts; and managing our points-based Hilton Grand Vacations Club and
Hilton Club exchange program (collectively the “Legacy-HGV Club”) and Diamond points-based
clubs. As of December 31, 2021 , we had 154 properties located in the United States (“U.S.”),
Europe, Mexico, the Caribbean, Canada and Japan. A significant number of our properties and VOIs
are concentrated in Florida, Europe, Hawaii, California, Arizona, Nevada, and Virginia. Diamond
Acquisition On August 2, 2021, we completed the acquisition of Dakota Holdings, Inc., the parent of
Diamond Resorts International (the “Diamond Acquisition”). We completed the acquisition by
exchanging 100 percent of the outstanding equity interests of Diamond for shares of HGV common
stock. Pre-existing HGV shareholders owned approximately 72 percent of the combined company
immediately after giving effect of the Diamond Acquisition, with certain funds controlled by Apollo
Global Management Inc. (the “Apollo Funds” or, “Apollo”) and other minority shareholders, who
previously owned 100 percent of Diamond, holding the remaining approximately 28 percent at the
time the Diamond Acquisition was completed . Diamond also operates in the hospitality and VOI
industry, with a worldwide resort network of global vacation destinations. Diamond’s portfolio
consists of resort properties (the “Portfolio Properties”) that we manage, are included in one of
Diamond’s single- and multi-use trusts (collectively, the “Diamond Collections”), or are Diamond
branded resorts in which we own inventory, as well as affiliated resorts and hotels, which we do
not manage, and which do not carry the Diamond brand but are a part of Diamond’s network and,
through THE Club® and other Club offerings (the “Diamond Clubs”), are available for its members to
use as vacation destinations. Diamond’s operations primarily consist of: VOI sales and financing
which includes marketing and sales of VOIs and consumer financing for purchasers of the
Summary of Significant Accounting Policies
Accounting Policies [Abstract]
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2021
Note 2: Summa ry of Significant Accounting Policies Revenue Recognition We account for revenue
in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts
with Customers (commonly referred to as Accounting Standards Codification (“ASC”) Topic 606
(“ASC 606”). Revenue is recognized upon the transfer of control of promised goods or services to
customers in an amount that reflects the consideration we expect to receive in exchange for those
products or services. To achieve the core principle of the guidance, we take the following steps: (i)
identify the contract with the customer; (ii) determine whether the promised goods or services are
separate performance obligations in the contract; (iii) determine the transaction price, including
considering the constraint on variable consideration; (iv) allocate the transaction price to the
performance obligations in the contract based on the standalone selling price or estimated
standalone selling price of the good or service; and (v) recognize revenue when (or as) we satisfy
each performance obligation. Contracts with Multiple Performance Obligations A performance
obligation is a promise in a contract to transfer a distinct good or service to the customer and is the
unit of account in ASC 606. For arrangements that contain multiple goods or services, we
determine whether such goods or services are distinct performance obligations that should be
accounted for separately in the arrangement. When allocating the transaction price in the
arrangement, we may not have observable standalone sales for all of the performance obligations
in these contracts; therefore, we exercise significant judgement when determining the standalone
selling price of certain performance obligations. In order to estimate the standalone selling prices
for products, we primarily rely on the expected cost plus margin and adjusted market assessment
approaches. We then recognize the revenue allocated to each performance obligation as the
related performance obligation is satisfied as discussed below. • Sales of VOIs, net — Customers
who purchase all vacation ownership products, whether paid in cash or financed, enter into
multiple contracts, which we combine and account for as a single contract. Revenue from VOI sales
is recognized at the point in time when control of the VOI is transferred to the customer which is
when the customer has executed a binding sales contract, collectability is reasonably assured, the
purchaser’s period to cancel for a refund has expired and the customer has the right to use the VOI.
Revenue from sales of VOIs under construction is deferred until the point in time when
Diamond Acquisition
Business Combinations [Abstract]
Diamond Acquisition
12 Months Ended
Dec. 31, 2021
Note 3: Diamond Acquisition On August 2, 2021, (the “Acquisition Date”), we completed the
Diamond Acquisition by exchanging 100 percent of the outstanding equity interests of Diamond to
HGV common shares. Following the closing of the Diamond Acquisition, pre-existing HGV
shareholders owned approximately 72 percent of the combined company after giving effect to the
Diamond Acquisition, with Apollo Funds and other minority shareholders holding the remaining
approximately 28 percent at the time the Diamond Acquisition was completed. Diamond is a leader
in the vacation ownership industry focused on the infusion of hospitality and experiences through
the full life cycle of an owner or members’ life cycle relationship with Diamond. This strategic
combination creates a more expansive industry offering, leveraging HGV’s strong brand and net
owner growth along with Diamond’s diverse network of locations and strength in experiential
offerings. The acquisition also diversifies our product offerings and allows us to expand our
customer demographic. On the Acquisition Date, shareholders of Diamond received 0.32 shares of
our common stock for each share of Diamond common stock, totaling approximately 28 percent of
our total common shares outstanding. Additionally, in connection with the Diamond Acquisition,
HGV repaid certain existing indebtedness of Diamond. Costs related to the acquisition for the year
ended December 31, 2021 were $ 106 million, which were expensed as incurred, and reflected as
Acquisition and integration-related expense in our consolidated statements of operations. The
following table presents the fair value of each class of consideration transferred in relation to the
Diamond Acquisition at the Acquisition Date.
($ in millions, except stock price amounts)
HGV common stock shares issued for outstanding Diamond shares 33.93
HGV common stock price as of Acquisition Date (1) 40.71
Stock purchase price $ 1,381
Repayment of Legacy-Diamond debt $ 2,029
Total consideration transferred $ 3,410 ____________________ (1) Represents the average of the
opening and closing price of HGV stock on August 2, 2021. Preliminary Fair Values of Assets
Acquired and Liabilities Assumed We accounted for the Diamond Acquisition as a business
combination, which requires us to record the assets acquired and liabilities assumed at fair value as
Revenue from Contracts with Customers
Revenue from Contract with Customer [Abstract]
Revenue from Contracts with Customers
12 Months Ended
Dec. 31, 2021
Note 4: Revenue from Contracts with Customers Disaggregation of Revenue The following tables
show our disaggregated revenues by product and segment from contracts with customers. We
operate our business in the following two segments: (i) Real estate sales and financing and (ii)
Resort operations and club management . Please refer to Note 22: Business Segments below for
more details related to our segments.
($ in millions) Year Ended December 31,
Real Estate Sales and Financing Segment 2021 2020 2019
Sales of VOIs, net $ 883 $ 108 $ 509
Sales, marketing, brand and other fees 385 221 573
Interest income 157 141 147
Other financing revenue 26 24 23
Real estate sales and financing segment revenues $ 1,451 $ 494 $ 1,252
($ in millions) Year Ended December 31,
Resort Operations and Club Management Segment 2021 2020 2019
Club management $ 168 $ 96 $ 125
Resort management 172 70 66
Rental (1) 315 91 201
Ancillary services 27 7 26
Resort operations and club management segment revenues $ 682 $ 264 $ 418
____________________ (1) Excludes intersegment eliminations. See Note 22: Business Segments
for additional information. Contract Balances The following table provides information on our
accounts receivable with customers which are included in Accounts Receivable, net on our
consolidated balance sheets:
Year Ended December 31,
($ in millions) 2021 2020
Receivables $ 202 $ 64 The following table presents the composition of our contract liabilities.
Year Ended December 31,
($ in millions) 2021 2020
Restricted Cash
Cash and Cash Equivalents [Abstract]
Restricted Cash
12 Months Ended
Dec. 31, 2021
Note 5: Restricted Cash Restricted cash was as follows:
Year Ended December 31,
($ in millions) 2021 2020
Escrow deposits on VOI sales $ 152 $ 69
Reserves related to non-recourse debt (1) 67 29
Other (2) 44 —
$ 263 $ 98 ____________________ (1) See Note 15: Debt & Non-recourse Debt for further
discussion. (2) Other restricted cash primarily includes cash collected on behalf of HOAs, deposits
related to servicer arrangements and other deposits.
Accounts Receivable
Receivables [Abstract]
Accounts Receivables
12 Months Ended
Dec. 31, 2021
Note 6: Accounts Receivable The following table represents our accounts receivable, net of
allowance for credit losses. Accounts receivable within the scope of ASC 326 are measured at
amortized cost.
December 31, December 31,
($ in millions) 2021 2020
Fee-for-service commissions (1) $ 73 $ 22
Real estate and financing 51 11
Resort and club operations 76 23
Tax receivables 95 54
Other receivables (2) 7 9
Total $ 302 $ 119 ____________________ (1) Net of allowance. (2) Primarily includes individually
insignificant accounts receivable and related allowances recognized in the ordinary course of
business. Our accounts receivable are all due within one year of origination. We use delinquency
status and economic factors as credit quality indicators to monitor our receivables within the scope
of ASC 326 and use these as a basis for how we develop our expected loss estimates. We sell VOIs
on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales,
marketing and brand fees. We use historical losses and economic factors as a basis to develop our
allowance for credit losses. Under these fee-for-service arrangements, we earn commission fees
based on a percentage of total interval sales. Additionally, the terms of these arrangements include
provisions requiring the reduction of fees earned for defaults and cancellations. The changes in our
allowance for fee-for-service commissions were as follows during the year ended December 31,
2021:
($ in millions)
Balance as of December 31, 2020 $ 18
Current period provision for expected credit losses 5
Write-offs charged against the allowance ( 5 )
Balance at December 31, 2021 $ 18
Timeshare Financing Receivables
Receivables [Abstract]
Timeshare Financing Receivables
12 Months Ended
Dec. 31, 2021
Note 7: Timeshare Financing Receivables We define our timeshare financing receivables portfolio
segments as (i) originated and (ii) acquired. The following table presents the components of each
portfolio segment by class of timeshare financing receivables.
Originated (2) Acquired (2)
December 31, December 31, December 31, December 31,
($ in millions) 2021 2020 2021 2020
Securitized $ 587 $ 805 $ 523 $ —
Unsecuritized (1) 810 380 515 —
Timeshare financing receivables, gross $ 1,397 $ 1,185 $ 1,038 $ —
Unamortized non-credit acquisition premium (3) — — 74 —
Less: allowance for financing ( 280 ) ( 211 ) ( 482 ) —
Timeshare financing receivables, net $ 1,117 $ 974 $ 630 $ — ____________________ (1) Includes
amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility
(“Timeshare Facility”) as well as amounts held as future collateral for upcoming securitization
activities. (2) Acquired timeshare financing receivables include all timeshare financing receivables
of Legacy-Diamond as of the Acquisition Date. Originated timeshare financing receivables include
all Legacy-HGV timeshare financing receivables and Legacy-Diamond timeshare financing
receivables originated after the Acquisition Date. (3) A non-credit premium of $ 97 million was
recognized at the Acquisition Date. $ 74 million of this premium remains unamortized as of
December 31, 2021 . As of December 31, 2021 and 2020, we had timeshare financing receivables
with a carrying value of $ 131 million and $ 17 million, respectively, securing the Timeshare Facility.
In connection with the acquisition of Diamond, we also gained access to two additional conduit
facilities in anticipation of future financing activities. We record an estimate of variable
consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue
is recognized on a VOI sale. We record the difference between the timeshare financing receivable
and the variable consideration included in the transaction price for the sale of the related VOI as an
allowance for financing receivables and record the receivable net of the allowance. During the year
ended December 31, 2021 , we recorded an adjustment to our estimate of variable consideration
Inventory
Inventory Disclosure [Abstract]
Inventory
12 Months Ended
Dec. 31, 2021
Note 8: Inventory Inventory was comprised of the following:
December 31,
($ in millions) 2021 2020
Completed unsold VOIs $ 1,219 $ 515
Construction in process 20 186
Land, infrastructure and other 1 1
$ 1,240 $ 702 Shown below are (i) costs of sales true-ups relating to VOI products and the related
impacts to the carrying value of inventory and (ii) expenses incurred, recorded in Cost of VOI sales,
related to granting credit to customers for their existing ownership when upgrading into fee-forservice projects.
December 31,
($ in millions) 2021 2020 2019
Cost of sales true-up (1) $ 2 $ 6 $ 14
Cost of VOI sales related to fee-for-service upgrades 7 9 31 (1) Cost of sales true ups reduced costs
of VOI sales and increased inventory in all periods presented.
Property and Equipment
Property, Plant and Equipment [Abstract]
Property and Equipment
12 Months Ended
Dec. 31, 2021
Note 9: Property and Equipment Property and equipment were comprised of the following:
December 31,
($ in millions) 2021 2020
Land $ 193 $ 109
Building and leasehold improvements 405 250
Furniture and equipment 82 65
Construction in progress 231 208
911 632
Accumulated depreciation ( 155 ) ( 131 )
$ 756 $ 501 Depreciation expense on property and equipment was $ 36 million, $ 30 million, and $
35 million for the years ended December 31, 2021, 2020 and 2019 respectively.
Consolidated Variable Interest Entities
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Consolidated Variable Interest Entities
12 Months Ended
Dec. 31, 2021
Note 10: Consolidated Variable Interest Entities As of December 31, 2021 and 2020, we
consolidated 11 and 4 variable interest entities (“VIEs”), respectively. The activities of these entities
are limited primarily to purchasing qualifying non-recourse timeshare financing receivables from us
and issuing debt securities and/or borrowing under a debt facility to facilitate such purchases. The
timeshare financing receivables held by these entities are not available to our creditors and are not
our legal assets, nor is the debt that is securitized through these entities a legal liability to us. We
have determined that we are the primary beneficiaries of all VIEs as we have the power to direct
the activities that most significantly affect their economic performance. We are also the servicer of
these timeshare financing receivables and we often replace or repurchase timeshare financing
receivables that are in default at their outstanding principal amounts. Additionally, we have the
obligation to absorb their losses and the right to receive benefits that could be significant to them.
Only the assets of our VIEs are available to settle the obligations of the respective entities. As part
of the Diamond Acquisition, we acquired the variable interests in the entities associated with
Diamond’s outstanding timeshare financing receivables securitization transactions. They have been
aggregated for disclosure purposes as they are similar in nature to our previously established VIEs.
We also acquired two conduit facilities which are VIEs and have an outstanding balance of $ 133
million as of December 31, 2021 (see Note 15: Debt and Non-recourse debt ). Our consolidated
balance sheets included the assets and liabilities of these entities, which primarily consisted of the
following:
December 31,
($ in millions) 2021 2020
Restricted cash $ 62 $ 28
Timeshare financing receivables, net 1,021 742
Non-recourse debt (1) 1,195 766 (1) Net of deferred financing costs. During the years ended
December 31, 2021, 2020 and 2019 , we did no t provide any financial or other support to any VIEs
that we were not previously contractually required to provide, nor do we intend to provide such
support in the future.
Investments in Unconsolidated Affiliates
Equity Method Investments and Joint Ventures [Abstract]
Investments in Unconsolidated Affiliates
12 Months Ended
Dec. 31, 2021
Note 11: Investments in Unconsolidated Affiliates As of December 31, 2021 , we have 25 percent
and 50 percent ownership interests in BRE Ace LLC and 1776 Holdings LLC, respectively, which are
VIEs. We do not consolidate BRE Ace LLC and 1776 Holdings LLC because we are not the primary
beneficiary. Our investment interests in and equity earned from both VIEs are included in the
consolidated balance sheets as Investments in unconsolidated affiliates and in the consolidated
statements of operations as Equity in earnings from unconsolidated affiliates , respectively. During
the year ended December 31, 2021 , we received a cash distribution of approximately $ 2 million
from our investment in BRE Ace LLC. Our two unconsolidated affiliates have aggregated debt
balances of $ 463 million and $ 454 million as of December 31, 2021 and 2020 , respectively. The
debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a
result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the
carrying amount of the investments which totals $ 59 million and $ 51 million as of December 31,
2021 and December 31, 2020, respectively and (ii) receivables for commission and other fees
earned under fee-for-service arrangements. See Note 21: Related Party Transactions for additional
information.
Intangible Assets
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets
12 Months Ended
Dec. 31, 2021
Note 12: Intangible Assets Intangible assets and related amortization expense were as follows:
December 31, 2021
($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trade name $ 18 $ ( 5 ) $ 13
Management contracts 1,340 ( 106 ) 1,234
Club member relationships 139 ( 12 ) 127
Capitalized software 138 ( 71 ) 67
$ 1,635 $ ( 194 ) $ 1,441
December 31, 2020
($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trade name $ — $ — $ —
Management contracts 89 ( 51 ) 38
Club member relationships — — —
Capitalized software 94 ( 51 ) 43
$ 183 $ ( 102 ) $ 81 We acquired definite-lived intangible assets as part of the Diamond Acquisition,
which have been valued on a provisional basis, in the amount of $ 1,431 million as of the
Acquisition Date. Refer to Note 3: Diamond Acquisition for further details. Prior to the Diamond
Acquisition, intangible assets included computer software and management contracts.
Amortization expense on intangible assets was $ 90 million, $ 15 million, and $ 9 million for the
years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021 , the
weighted average amortization period on trade name was 1.5 years, management agreements was
34.6 years, club member relationships was 14.4 years, and capitalized software was 2.5 years. As of
December 31, 2021, our future amortization expense for our amortizing intangible assets is
estimated to be as follows:
($ in millions) Future Amortization Expense
2022 $ 196
2023 156
2024 137
Other Assets
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other Assets
12 Months Ended
Dec. 31, 2021
Note 13: Other Assets Other assets were as follows:
December 31,
($ in millions) 2021 2020
Inventory deposits $ 3 $ 7
Deferred selling, marketing, general and administrative expenses 23 25
Prepaid expenses 123 12
Cloud computing arrangements 9 10
Interest receivable 16 7
Deferred income tax assets 7 4
Other 99 22
$ 280 $ 87
Accounts Payable, Accrued Expenses and Other
Payables and Accruals [Abstract]
Accounts Payable, Accrued Expenses and Other
12 Months Ended
Dec. 31, 2021
Note 14: Accounts Payable, Accrued Expenses and Other Accounts payable, accrued expenses and
other were as follows:
December 31,
($ in millions) 2021 2020
Accrued employee compensation and benefits $ 138 $ 75
Accounts payable 63 20
Bonus point incentive liability 44 48
Due to Hilton 33 12
Income taxes payable 23 2
Sales & other taxes payable 100 7
Other accrued expenses (1) 272 88
$ 673 $ 252 (1) Other accrued expenses includes interest payables, accrued marketing expenses,
and various accrued liabilities which are primarily driven by the Diamond Acquisition.
Debt & Non-recourse Debt
Debt Disclosure [Abstract]
Debt & Non-recourse Debt
12 Months Ended
Dec. 31, 2021
Note 15: Debt & Non-recourse Debt Debt The following table details our outstanding debt balance
and its associated interest rates:
December 31,
($ in millions) 2021 2020
Debt (1)
Senior secured credit facility, due 2028 :
Term loan with a rate of 3.50 % 1,297 —
Revolver with a rate of 2.11 % 300 —
Senior secured credit facility, due 2023 :
Term loan with a rate of 2.25 % — 177
Revolver with a rate of 2.25 % — 660
Senior notes with a rate of 6.125 %, due 2024 — 300
Senior notes with a rate of 5.000 %, due 2029 850 —
Senior notes with a rate of 4.875 %, due 2031 500 —
Other debt 27 27
2,974 1,164
Less: unamortized deferred financing costs and discounts (2)(3) ( 61 ) ( 5 )
$ 2,913 $ 1,159 (1) As of December 31, 2021 and 2020, weighted-average interest rates were 4.052
% and 3.357 % , respectively. (2) Amount includes deferred financing costs related to our term loan
and senior notes of $ 33 million and $ 22 million, respectively, as of December 31, 2021 and $ 1
million and $ 4 million, respectively, as of December 31, 2020 . This amount also includes original
issuance discounts of $ 6 million as of December 31, 2021. (3) Amount does not include deferred
financing costs of $ 5 and $ 4 million as of December 31, 2021 and 2020, respectively, relating to
our revolving facility included in Other Assets in our consolidated balance sheets. Senior Secured
Credit Facilities In March 2021, we amended our Credit Agreement to amend certain terms related
to financial covenants to permit the previously announced proposed acquisition of Diamond,
pursuant to that certain Agreement and Plan of Merger dated March 10, 2021. Refer to Note 3:
Diamond Acquisition for further information regarding the merger. The borrowing capacity under
Fair Value Measurements
Fair Value Disclosures [Abstract]
Fair Value Measurements
12 Months Ended
Dec. 31, 2021
Note 16: Fair Value Measurements The carrying amounts and estimated fair values of our financial
assets and liabilities, which are required for disclosure, were as follows:
December 31, 2021
Hierarchy Level
($ in millions) Carrying Level 1 Level 3
Assets:
Timeshare financing receivables, net (1) $ 1,747 $ — $ 1,905
Liabilities:
Debt, net (2) 2,913 2,663 340
Non-recourse debt, net (2) 1,328 1,080 270 (1) Carrying amount net of allowance for financing
receivables losses. (2) Carrying amount net of unamortized deferred financing costs and discount.
December 31, 2020
Hierarchy Level
($ in millions) Carrying Level 1 Level 3
Assets:
Timeshare financing receivables, net (1) $ 974 $ — $ 1,248
Liabilities:
Debt, net (2) 1,159 315 871
Non-recourse debt, net (2) 766 — 732 (1) Carrying amount net of allowance for financing
receivables losses. (2) Carrying amount net of unamortized deferred financing costs and discounts
Our estimates of the fair values were determined using available market information and
appropriate valuation methods. Considerable judgment is necessary to interpret market data and
develop the estimated fair values. The table above excludes cash and cash equivalents, restricted
cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which
had fair values approximating their carrying amounts due to the short maturities and liquidity of
these instruments. The estimated fair values of our originated and acquired timeshare financing
receivables were determined using a discounted cash flow model. Our model incorporates default
rates, coupon rates, credit quality and loan terms respective to the portfolio based on current
Leases
Leases [Abstract]
Leases
12 Months Ended
Dec. 31, 2021
Note 17: Leases We lease sales centers, office space and equipment under operating leases, some
of which we acquired as part of the Diamond Acquisition. Our leases expire at various dates from
2022 through 2030 , with varying renewal and termination options. Our lease terms include options
to extend or terminate the lease when it is reasonably certain that we will exercise that option. We
recognize rent expense on leases with both contingent and non-contingent lease payment terms.
Rent associated with non-contingent lease payments are recognized on a straight-line basis over
the lease term. Rent expense for all operating leases for the year ended December 31, 2021, 2020
and 2019 was as follows:
Year Ended December 31,
($ in millions) 2021 (1) 2020 (1) 2019 (1)
Minimum rentals $ 20 $ 19 $ 19
Contingent rentals 2 1 2
$ 22 $ 20 $ 21 (1) These amounts include short term and variable rent of $ 2 million, $ 5 million,
and $ 3 million for the years December 31, 2021, 2020 and 2019, respectively. Supplemental cash
flow information related to operating leases was as follows:
Year Ended December 31,
($ in millions) 2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases $ 21 $ 18
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases 35 5 Supplemental balance sheet information related to operating leases was as
follows:
December 31,
2021 2020
Weighted-average remaining lease term of operating leases (in years) 4 5.4
Weighted-average discount rate of operating leases 4.35 % 4.95 % The future minimum rent
payments under noncancelable operating leases, due in each of the next five years and thereafter
as of December 31, 2021, are as follows:
Income Taxes
Income Tax Disclosure [Abstract]
Income Taxes
12 Months Ended
Dec. 31, 2021
Note 18: Income Taxes Our tax provision includes federal, state and foreign income taxes payable.
The domestic and foreign components of our income (loss) before taxes were as follows:
Year Ended December 31,
($ in millions) 2021 2020 2019
U.S. income (loss) before tax $ 195 $ ( 287 ) $ 234
Foreign income before tax 74 7 39
Total income (loss) before taxes $ 269 $ ( 280 ) $ 273 The components of our provision for income
taxes were as follows:
Year Ended December 31,
($ in millions) 2021 2020 2019
Current:
Federal $ ( 5 ) $ 36 $ 37
State 9 5 9
Foreign 31 3 8
Total current 35 44 54
Deferred:
Federal 61 ( 98 ) 3
State ( 1 ) ( 23 ) 1
Foreign ( 2 ) ( 2 ) ( 1 )
Total deferred 58 ( 123 ) 3
Total provision for income taxes $ 93 $ ( 79 ) $ 57 Reconciliations of our tax provision at the U.S.
statutory rate to the provision for income taxes were as follows:
Year Ended December 31,
($ in millions) 2021 2020 2019
Statutory U.S. federal income tax provision $ 57 $ ( 59 ) $ 57
State and local income taxes, net of U.S. federal tax benefit 8 ( 17 ) 11
Impact of foreign operations 14 ( 5 ) 1
Interest on installment sales, net of U.S. federal tax benefit 3 1 4
Share-Based Compensation
Share-based Payment Arrangement [Abstract]
Share-Based Compensation
12 Months Ended
Dec. 31, 2021
Note 19: Share-Based Compensation Stock Plan We issue service-based restricted stock units
(“Service RSUs”), service and performance-based restricted stock units and nonqualified stock
options (“Options”) to certain employees and directors. We recognized share-based compensation
expense of $48 million, $ 15 million and $ 22 million during the years ended December 31, 2021,
2020 and 2019, respectively. The total tax benefit recognized related to this compensation was $ 4
million for the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021,
unrecognized compensation cost for unvested awards was approximately $ 27 million, which is
expected to be recognized over a weighted average period of 1.7 years. As of December 31, 2021,
there were 3,771,197 shares of common stock available for future issuance under this plan. Service
RSUs The following table provides information about our RSU grants for the last three fiscal years:
Year Ended December 31,
2021 2020 2019
Number of shares granted 588,930 672,123 500,925
Weighted average grant date fair value per share 38.50 $ 25.14 $ 33.07
Fair value of shares vested (in millions) 19 $ 10 $ 10 The following table summarizes the activity of
our RSUs during the year ended December 31, 2021:
Number of Weighted
Outstanding, beginning of period 973,985 28.89
Granted 588,930 38.50
Vested ( 465,949 ) 30.39
Forfeited ( 67,328 ) 31.34
Outstanding, end of period 1,029,638 33.55 Options The following table provides information
about our option grants for the last three fiscal years:
Year Ended December 31,
2021 2020 2019
Number of options granted 542,793 566,401 544,209
Weighted average exercise price per share $ 38.22 $ 25.80 $ 33.32
Weighted average grant date fair value per share $ 18.41 $ 9.14 $ 12.29 The weighted-average
Earnings (Loss) Per Share
Earnings Per Share [Abstract]
Earnings (Loss) Per Share
12 Months Ended
Dec. 31, 2021
Note 20: Earnings (Loss) Per Share The following tables below present the calculation of our basic
and diluted earnings (loss) per share (“EPS”) and the corresponding weighted average shares
outstanding referenced in these calculations for the years ended December 31, 2021, 2020, and
2019.
Year Ended December 31,
($ and shares outstanding in millions, except per share amounts) 2021 2020 2019
Basic EPS:
Numerator:
Net income (loss) (1) $ 176 $ ( 201 ) $ 216
Denominator:
Weighted average shares outstanding 100 85 89
Basic EPS $ 1.77 $ ( 2.36 ) $ 2.43
Diluted EPS:
Numerator:
Net income (loss) (1) $ 176 $ ( 201 ) $ 216
Denominator:
Weighted average shares outstanding 101 85 89
Diluted EPS $ 1.75 $ ( 2.36 ) $ 2.42 (1) Net income (loss) for years ended December 31, 2021, 2020,
and 2019 were $ 176,426,924 , ($ 200,709,244 ), and $ 215,695,961 , respectively.
Years ended December 31,
2021 2020 2019
Weighted average shares outstanding:
Basic EPS 99,747,367 85,181,106 88,758,859
Diluted EPS 101,090,176 85,181,106 89,291,176 The dilutive effect of outstanding share-based
compensation awards is reflected in diluted earnings per common share by application of the
treasury stock method using average market prices during the period. For the years ended
December 31, 2021, 2020 and 2019, we excluded 651,748 , 2,192,591 and 836,677 share-based
compensation awards, respectively, because their effect would have been anti-dilutive under the
Related Party Transactions
Related Party Transactions [Abstract]
Related Party Transactions
12 Months Ended
Dec. 31, 2021
Note 21: Related Party Transactions BRE Ace LLC and 1776 Holding, LLC We hold a 25 percent
ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related
operations, commonly known as “Elara, by Hilton Grand Vacations.” We hold a 50 percent
ownership interest in 1776 Holdings, LLC, a VIE, which owns a timeshare resort property and
related operations, known as “Liberty Place Charleston, by Hilton Club.” We record Equity in
earnings from our unconsolidated affiliates in our consolidated statements of operations. For the
year ended December 31, 2021 , we recorded a distribution of approximately $ 2 million from BRE
Ace LLC within Equity in earnings from our unconsolidated affiliates. See Note 11: Investments in
Unconsolidated Affiliates for additional information. Additionally, we earn commissions and other
fees related to fee-for-service agreements with the investees to sell VOIs at Elara, by Hilton Grand
Vacations and Liberty Place Charleston, by Hilton Club. These amounts are summarized in the
following table and are included in General and administrative expenses on our consolidated
statements of operations as of the date they became related parties. We also have $ 20 million and
$ 7 million of outstanding receivables related to the fee-for-service agreements included in
Accounts receivable, net on our consolidated balance sheets as of December 31, 2021 and
December 31, 2020, respectively.
December 31,
($ in millions) 2021 2020 2019
Equity in earnings from unconsolidated affiliates $ 10 $ 5 $ 4
Commissions and other fees 105 55 136 Apollo Global Management Inc. As part of the Diamond
Acquisition as described above in Note 3: Diamond Acquisition , Apollo obtained more than 20
percent of our common stock and has the right to designate two nominees to the Board of
Directors of HGV pursuant to a Stockholders Agreement among HGV and Apollo. In addition to the
right to designate nominees to the Board, the Stockholders Agreement gives Apollo certain other
governance, consent and pre-emptive rights, all based on the number of certain shares of HGV
common stock owned by Apollo. Outside of agreements related to the Diamond Acquisition, we did
not have any transactions with Apollo during the year ended December 31, 2021 and do not have
any outstanding balances or agreements with Apollo as of December 31, 2021. We made one
Business Segments
Segment Reporting [Abstract]
Business Segments
12 Months Ended
Dec. 31, 2021
Note 22: Business Segments We operate our business through the following two segments: • Real
estate sales and financing – We market and sell VOIs that we own. We also source VOIs through feefor-service agreements with third-party developers. Related to the sales of the VOIs that we own,
we provide consumer financing, which includes interest income generated from the origination of
consumer loans to customers to finance their purchase of VOIs and revenue from servicing the
loans. We also generate fee revenue from servicing the loans provided by third-party developers to
purchasers of their VOIs. • Resort operations and club management – We manage the Club and
Diamond Clubs and earn activation fees, annual dues and transaction fees from member exchanges
for other vacation products. We also earn fees for managing the timeshare properties. We
generate rental revenue from unit rentals of unsold inventory and inventory made available due to
ownership exchanges under our Club and Diamond Clubs programs. We also earn revenue from
food and beverage, retail and spa outlets at our timeshare properties. The performance of our
operating segments is evaluated primarily based on adjusted earnings before interest expense
(excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”). We define
Adjusted EBITDA as EBITDA, further adjusted to exclude certain items, including, but not limited to,
gains, losses and expenses in connection with: (i) other gains, including asset dispositions and
foreign currency translations; (ii) debt restructurings/retirements; (iii) non-cash impairment losses;
(iv) share-based and other compensation expenses; and (v) other items, including but not limited to
costs associated with acquisitions, restructuring, amortization of premiums resulting from purchase
accounting, and other non-cash and one-time charges. We do not include equity in earnings
(losses) from unconsolidated affiliates in our measures of segment operating performance. Below
is the presentation of our reportable segment results which include the newly acquired Diamond
operations within both segments since the Acquisition Date. The following table presents revenues
for our reportable segments reconciled to consolidated amounts:
Year Ended December 31,
($ in millions) 2021 2020 2019
Revenues:
Real estate sales and financing $ 1,451 $ 494 $ 1,252
Commitments and Contingencies
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies
12 Months Ended
Dec. 31, 2021
Note 23: Commitments and Contingencies We have entered into certain arrangements with
developers whereby we have committed to purchase vacation ownership units or other real estate
at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of December
31, 2021 , we were committed to purchase approximately $ 330 million of inventory and land over
a period of 9 years and $ 7 million of other commitments under the normal course of business.
Additionally, we have committed to develop additional vacation ownership units at an existing
resort in Japan. We are also committed to an agreement to exchange parcels of land in Hawaii,
subject to the successful completion of zoning, land use requirements and other applicable
regulatory requirements. The actual amount and timing of the acquisitions are subject to change
pursuant to the terms of the respective arrangements, which could also allow for cancellation in
certain circumstances. During the years ended December 31, 2021 and 2020 , we completed $ 132
million and $ 23 million, respectively, of purchases required under our inventory-related purchase
commitments. As of December 31, 2021, our remaining obligations pursuant to these
arrangements were expected to be incurred as follows:
($ in millions) 2022 2023 2024 2025 2026 Thereafter Total
Inventory purchase obligations $ 80 $ 196 $ 3 $ 40 $ 3 $ 8 $ 330
Other commitments (1) 6 1 — — — — $ 7
Total $ 86 $ 197 $ 3 $ 40 $ 3 $ 8 $ 337 (1) Primarily relates to commitments related to information
technology and brand licensing under the normal course of business Rebranding Costs As part of
the Diamond Acquisition and per our licensing agreement with Hilton, we are committed to
rebranding Diamond properties to the Hilton Grand Vacations brand and Hilton standards. As of
December 31, 2021 we have begun incurring rebranding costs during the fourth quarter of 2021 in
respect to information technology and sales centers, and expect rebranding to continue over a
period of several years. Litigation Contingencies We are involved in litigation arising from the
normal course of business, some of which includes claims for substantial sums. We evaluate these
legal proceedings and claims at each balance sheet date to determine the degree of probability of
an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to
reasonably estimate the amount of loss. We record a contingent litigation liability when it is
Supplemental Disclosures of Cash Flow Information
Supplemental Cash Flow Information [Abstract]
Supplemental Disclosures of Cash Flow Information
12 Months Ended
Dec. 31, 2021
Note 24: Supplemental Disclosures of Cash Flow Information Cash paid for interest during the years
ended December 31, 2021, 2020 and 2019 , was $ 66 million, $ 64 million and $ 63 million,
respectively. Cash paid for income taxes, net of refunds during the years ended December 31,
2021, 2020 and 2019 was $ 54 million, $ 54 million and $ 74 million, respectively. The following noncash activities were excluded from the consolidated statements of cash flows: • In 2021, we
recorded non-cash issuance of stock of $ 1,381 million related to our acquisition of Diamond. See
Note 3: Diamond Acquisition for additional information. • In 2021, we recorded non-cash operating
activity transfers of $ 55 million related to the registrations for timeshare units under construction
from Property and equipment to Inventory . • In 2020, we recorded non-cash operating activity
transfers of $ 41 million related to the classification of certain undeveloped land and infrastructure
as available for sale from Inventory to Land and infrastructure held for sale and $ 16 million related
to the classification of certain undeveloped land and infrastructure from Inventory to Property and
equipment . • In 2020, we recorded non-cash operating activity transfers of $ 301 million related to
the registrations for timeshare units under construction from Property and equipment to Inventory
. • In 2019, we recorded a $ 23 million non-cash issuance of other debt related to the acquisition of
property for future conversion to inventory involving a note payable financed by the seller. • In
2019, we recorded net non-cash operating activity transfers of $ 25 million from Property and
equipment to Inventory related to the registration of timeshare units under construction. • In
2019, we recorded non-cash operating activity transfers of $ 40 million related to the
reclassification of deposits on properties for future development into timeshare inventory from
Other assets to Property and equipment.
Subsequent Events
Subsequent Events [Abstract]
Subsequent Events
12 Months Ended
Dec. 31, 2021
Note 25: Subsequent Events Management has evaluated all subsequent events through March 1,
2022, the date the audited 2021 10-K was available to be issued and determined the following
subsequent event occurred: Subsequent to December 31, 2021, HGV repaid the full $ 133 million
combined principal balance outstanding at December 31, 2021 of both conduit facilities, comprised
of $ 125 million on the conduit facility due in 2023 and $ 8 million due on the conduit facility due in
2024 .
Summary of Significant Accounting Policies (Policies)
Accounting Policies [Abstract]
Basis of Presentation
Use of Estimates
Revenue Recognition
Contracts with Multiple Performance Obligations
Business Combinations
Investments in Unconsolidated Affiliates
Cash and Cash Equivalents
Restricted Cash
Accounts Receivable and Allowance for Credit Losses
Cloud Computing Arrangements
Derivative Instruments
Acquired Financial Assets with Credit Deterioration
Inventory and Cost of Sales
Property and Equipment
Assets Held for Sale
Leases
Goodwill and Intangible Assets
Deferred Financing Costs
Costs Incurred to Sell VOIs and Vacation Packages
Fair Value Measurements-Valuation Hierarchy
Currency Translation and Remeasurement
Share-Based Compensation Costs
Income Taxes
Earnings Per Share
Defined Contribution Plan
Recently Issued Accounting Pronouncements
12 Months Ended
Dec. 31, 2021
Basis of Presentation The consolidated financial statements presented herein include 100 percent
of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a
controlling financial interest. Our accompanying consolidated financial statements reflect all
adjustments, including normal recurring items, considered necessary for a fair presentation of the
interim periods. All material intercompany transactions and balances have been eliminated in
consolidation. The consolidated financial statements reflect our financial position, results of
operations and cash flows as prepared in conformity with U.S. generally accepted accounting
principles (“U.S. GAAP”). The determination of a controlling financial interest is based upon the
terms of the governing agreements of the respective entities, including the evaluation of rights
held by other interests. If the entity is considered to be a variable interest entity (“VIE”), we
determine whether we are the primary beneficiary, and then consolidate those VIEs for which we
have determined we are the primary beneficiary. If the entity in which we hold an interest does not
meet the definition of a VIE, we evaluate whether we have a controlling financial interest through
our voting interests in the entity. We consolidate entities when we own more than 50 percent of
the voting shares of a company or otherwise have a controlling financial interest. The consolidated
financial statements reflect our financial position, results of operations and cash flows as prepared
in conformity with U.S. GAAP.
Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the amounts reported and,
accordingly, ultimate results could differ from those estimates.
Revenue Recognition We account for revenue in accordance with Accounting Standards Update
(“ASU”) No. 2014-09, Revenue from Contracts with Customers (commonly referred to as
Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). Revenue is recognized upon the
transfer of control of promised goods or services to customers in an amount that reflects the
consideration we expect to receive in exchange for those products or services. To achieve the core
principle of the guidance, we take the following steps: (i) identify the contract with the customer;
(ii) determine whether the promised goods or services are separate performance obligations in the
contract; (iii) determine the transaction price, including considering the constraint on variable
consideration; (iv) allocate the transaction price to the performance obligations in the contract
based on the standalone selling price or estimated standalone selling price of the good or service;
and (v) recognize revenue when (or as) we satisfy each performance obligation.
Contracts with Multiple Performance Obligations A performance obligation is a promise in a
contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606.
For arrangements that contain multiple goods or services, we determine whether such goods or
services are distinct performance obligations that should be accounted for separately in the
arrangement. When allocating the transaction price in the arrangement, we may not have
observable standalone sales for all of the performance obligations in these contracts; therefore, we
exercise significant judgement when determining the standalone selling price of certain
performance obligations. In order to estimate the standalone selling prices for products, we
primarily rely on the expected cost plus margin and adjusted market assessment approaches. We
then recognize the revenue allocated to each performance obligation as the related performance
obligation is satisfied as discussed below. • Sales of VOIs, net — Customers who purchase all
vacation ownership products, whether paid in cash or financed, enter into multiple contracts,
which we combine and account for as a single contract. Revenue from VOI sales is recognized at
the point in time when control of the VOI is transferred to the customer which is when the
customer has executed a binding sales contract, collectability is reasonably assured, the purchaser’s
period to cancel for a refund has expired and the customer has the right to use the VOI. Revenue
from sales of VOIs under construction is deferred until the point in time when construction
activities are deemed to be completed, occupancy of the development is permissible, and the
above criteria has been met. For financed sales, we estimate the variable consideration to be
received under such contracts and recognize revenue net of amounts deemed uncollectible as the
VOI is returned to inventory upon customer default. Variable consideration which has not been
included within the transaction price is presented as a reserve on the financing receivable. See
Note 7: Timeshare Financing Receivables for more information regarding our estimate of variable
consideration. Vacation ownership product sales include revenue from the sale of VOIs, which in
the case of the Diamond Collections are represented by an annual or biennial allotment of points
that can be utilized for vacations at Diamond resorts in our network for varying lengths of stay.
Typical contracts include the sale of VOIs, certain sales incentives primarily in the form of additional
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acquisition method of accounting. We allocate the purchase price of an acquisition to the tangible
and intangible assets acquired and liabilities assumed based on their estimated fair values at the
acquisition date. For each acquisition, we recognize goodwill as the amount in which consideration
transferred for the acquired entity exceeds the fair values of net assets. The fair value of net assets
is the fair value assigned to the assets acquired reduced by the fair value assigned to liabilities
assumed. In determining the fair values of assets acquired and liabilities assumed, we use various
recognized valuation methods including the income, cost and sales and market approaches, which
also include certain valuation techniques such as discount rates, and the amount and timing of
future cash flows. We utilize independent valuation specialists under our supervision for certain of
our assignments of fair value. We record the net assets and results of operations of an acquired
entity in our consolidated financial statements from the acquisition date through period-end. We
expense acquisition-related expenses as incurred and include such expenses within Acquisition and
integration-related expense on our consolidated statements of operations. See Note 3: Diamond
Acquisition for further information.
Investments in Unconsolidated Affiliates We account for investments in unconsolidated affiliates
under the equity method of accounting when we exercise significant influence, but do not maintain
a controlling financial interest over the affiliates. We evaluate our investments in affiliates for
impairment when there are indicators that the fair value of our investment may be less than our
carrying value.
Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with
original maturities of three months or less.
Restricted Cash Restricted cash includes deposits received on VOI sales that are held in escrow until
legal requirements of the local jurisdictions are met with regards to project construction or
contract status and cash reserves required by our non-recourse debt agreements. Restricted cash
also includes certain amounts collected on behalf of HOAs.
Accounts Receivable and Allowance for Credit Losses Accounts receivable primarily consists of
trade receivables and is reported as the customers’ outstanding balances, less any allowance for
credit losses. The expected credit losses are measured using an expected-loss model that reflects
the risk of loss and considers the losses expected over the outstanding period of the receivable.
Cloud Computing Arrangements We capitalize certain costs associated with cloud computing
arrangements (“CCAs”). These costs are included in Other assets in our consolidated balance sheets
and are expensed in the same line as the hosting arrangement in our consolidated statements of
operations using the straight-line method over the assets’ estimated useful lives, which is generally
three to five years . We review the CCAs for impairment when circumstances indicate that their
carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable,
we recognize an impairment loss for the excess of carrying value over the fair value in our
consolidated statements of operations.
Derivative Instruments We use derivative instruments as part of our overall strategy to manage our
exposure to market risks primarily associated with fluctuations in interest rates and do not use
derivatives for trading or speculative purposes. We record the derivative instrument at fair value
either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and
record changes in fair value in accumulated other comprehensive income (loss) for the effective
portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our
consolidated statement of operations. We release the derivative’s gain or loss from AOCI to match
the timing of the underlying hedged items’ effect on earnings.
Acquired Financial Assets with Credit Deterioration When financial assets are acquired, whether in
connection with a business combination or an asset acquisition, we evaluate whether those
acquired financial assets have experienced a more-than-insignificant deterioration in credit quality
since origination. Financial assets that were acquired with evidence of such credit deterioration are
referred to as purchased credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at
the acquisition date. The evaluation of PCD assets is a qualitative assessment requiring
management judgment. We consider indicators such as delinquency, FICO score deterioration,
purchased credit impaired status from prior acquisition, certain account status codes which we
believe are indicative of credit deterioration, as well as certain loan activity such as modifications
and downgrades. In addition, we consider the impact of current and forward-looking economic
conditions relative to the conditions which would have existed at origination. Acquired PCD assets
are recorded at the purchase price, represented by the acquisition date fair value, and
subsequently “grossed-up” by the acquirer’s acquisition date assessment of the allowance for
credit losses. The purchase price and the initial allowance for credit losses collectively represent
the PCD asset’s initial amortized cost basis. While the initial allowance for credit losses of PCD
assets does not impact period earnings, the Company remeasures the allowance for credit losses
for PCD assets during each subsequent reporting period; changes in the allowance are recognized
as provision expense within period earnings. The difference over which par value of the acquired
PCD assets exceeds the purchase price plus the initial allowance for credit losses is reflected as a
non-credit discount (or premium) and is accreted into interest income (or as a reduction to interest
income) under the effective interest method. Acquired financial assets which are not PCD assets
are also recorded at the purchase price but are not similarly “grossed-up”. The acquirer recognizes
an allowance for credit losses as of the acquisition date, which is recognized with a corresponding
provision expense impact within earnings. The allowance is remeasured within each subsequent
reporting period in the same manner as for PCD assets, with any change in the allowance
recognized as provision expense in period earnings. See Note 3: Diamond Acquisition and Note 7:
Timeshare Financing Receivables for further information. Timeshare Financing Receivables and
Allowance for Financing Receivables Losses Our timeshare financing receivables consist of loans
Inventory and Cost of Sales Inventory includes unsold, completed VOIs; VOIs under construction;
and land and infrastructure held for future VOI product development at our current resorts. We
carry our completed VOI inventory at the lower of cost or estimated fair value, less costs to sell,
which can result in impairment losses and/or recoveries of previous impairments. Projects under
development, along with land and infrastructure for future development are under a held and use
impairment model and are reviewed for indicators of impairment quarterly. We capitalize costs
directly associated with the acquisition, development and construction of a real estate project
when it is probable that the project will move forward. We capitalize salary and related costs only
to the extent they directly relate to the project. We capitalize interest expense, taxes and insurance
costs when activities that are necessary to get the property ready for its intended use are
underway. We cease capitalization of costs during prolonged gaps in development when
substantially all activities are suspended or when projects are considered substantially complete.
We account for our VOI inventory and cost of VOI sales using the relative sales value method. Also,
we do not reduce inventory for the cost of VOI sales related to anticipated defaults, and
accordingly, no adjustment is made when inventory is reacquired upon default of the related
receivable. This results in changes in estimates within the relative sales value calculations to be
accounted for as real estate inventory true-ups, which we refer to as cost of sales true-ups, and are
included in Cost of VOI sales in our consolidated statements of operations to retrospectively adjust
the margin previously recognized subject to those estimates.
Property and Equipment Property and equipment includes land, buildings and leasehold
improvement and furniture and equipment at our corporate offices, sales centers and management
offices. Additionally, certain property and equipment is held for future conversion into inventory.
Construction in progress primarily relates to development activities. Costs that are capitalized
related to development activities are classified as property and equipment until they are registered
for sale. Costs of improvements that extend the economic life or improve service potential are also
capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal
repairs and maintenance are expensed as incurred. Other than the United States, there were no
countries that individually represented over 10 percent of total property and equipment, net as of
December 31, 2021 and 2020. Depreciation is recorded using the straight-line method over the
assets’ estimated useful lives, which are generally as follows: buildings and improvements ( eight to
40 years ); furniture and equipment ( three to eight years ); and computer equipment and acquired
software ( three years ). Leasehold improvements are depreciated over the shorter of the
estimated useful life, based on the estimates above, or the lease term. We evaluate the carrying
value of our property and equipment if there are indicators of potential impairment. We perform
an analysis to determine the recoverability of the asset’s carrying value by comparing the expected
undiscounted future cash flows to the net book value of the asset. If it is determined that the
expected undiscounted future cash flows are less than the net book value of the asset, we calculate
the asset’s fair value. The impairment loss recognized is equal to the amount that the net book
value is in excess of fair value. Fair value is generally estimated using valuation techniques that
consider the discounted cash flows of the asset using discount and capitalization rates deemed
reasonable for the type of asset, as well as prevailing market conditions, appraisals, recent similar
transactions in the market and, if appropriate and available, current estimated net sales proceeds
from pending offers. If sufficient information exists to reasonably estimate the fair value of a
conditional asset retirement obligation, including environmental remediation liabilities, we
recognize the fair value of the obligation when the obligation is incurred.
Assets Held for Sale We classify long-lived assets to be sold as held for sale in the period (i) we have
approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in
its present condition, (iii) an active program to locate a buyer and other actions required to sell the
asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively
marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is
unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We
initially measure a long-lived asset that is classified as held for sale at the lower of its carrying value
or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the
period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale
of a long-lived asset until the date of sale. Upon designation as an asset held for sale, we stop
recording depreciation expense on the asset. We assess the fair value of a long-lived asset less any
costs to sell at each reporting period and until the asset is no longer classified as held for sale. The
methodology utilized to determine fair value at the time of classification as held for sale is
dependent on the type of long-lived asset reclassified. All methodologies utilized to determine fair
value involve judgment. In the fourth quarter of 2020, we performed a review over certain of our
long-lived assets, including undeveloped parcels of land and certain unallocated infrastructure costs
related to future phases of existing resorts. During the review, we concluded that based on our
current inventory pipeline, we will have sufficient inventory in Hawaii, Orlando and Las Vegas to
support future business operations without the need to utilize the undeveloped land and
unallocated infrastructure. As a result, we committed to a plan to monetize and dispose of these
assets via a sale, which was approved by the Board of Directors. Certain identified undeveloped
land and unallocated infrastructure assets in Orlando were part of the planned sale and are
therefore held in Property and equipment as of December 31, 2020. The remaining identified
assets are included in Land and infrastructure held for sale as of December 31, 2020. As a result of
the plan to dispose of these assets via sale, we recorded a non-cash impairment charge of $ 209
million in the fourth quarter of 2020 related to the identified assets. The non-cash impairment
charge was comprised of a $ 201 million charge related to Land and infrastructure held for sale and
an $ 8 million charge related to Property and equipment , respectively. As of December 31, 2021,
Leases We lease sales centers, office space and equipment under lease agreements. We determine
if an arrangement is a lease at inception. Amounts related to operating leases are included in
Operating lease right-of-use (“ROU”) assets, net and Operating lease liabilities in our consolidated
balance sheets. Operating lease ROU assets are adjusted for lease incentives received. ROU assets
and operating lease liabilities are recognized based on the present value of lease payments over
the lease term as of the commencement date. Because most of our leases do not provide an
explicit or implicit rate of return, we use our incremental borrowing rate based on the information
available at the commencement date in determining the present value of lease payments on an
individual lease basis. Our incremental borrowing rate for a lease is the rate of interest we would
have to pay on a collateralized basis to borrow an amount equal to the lease payments for the
asset under similar terms. We have lease agreements with lease and non-lease components. Our
operating leases may require minimum rent payments, contingent rent payments based on a
percentage of revenue or income, or rental payments adjusted periodically for inflation or rent
payments equal to the greater of a minimum rent or contingent rent. Our leases do not contain any
residual value guarantees or material restrictive covenants. Leases with a lease term of 12 months
or less are not recorded on the consolidated balance sheets and lease expense is recognized on a
straight-line basis over the lease term. We monitor events or changes in circumstances that change
the timing or amount of future lease payments which results in the remeasurement of a lease
liability, with a corresponding adjustment to the ROU asset. ROU assets for operating and financing
leases are periodically reviewed for impairment losses under ASC 360-10, Property, Plant, and
Equipment , to determine whether a ROU asset is impaired, and if so, the amount of the
impairment loss to recognize.
Goodwill Goodwill acquired in business combinations is assigned to the reporting units expected to
benefit from the combination as of the acquisition date. We review the carrying value of goodwill
of each of our reporting units annually on October 1, or more frequently upon the occurrence of
certain events or substantive changes in circumstances, based on either a qualitative assessment or
a two-step impairment test. We do not amortize goodwill. We evaluate goodwill for potential
impairment at least annually, or more frequently if an event or other circumstance indicates that it
is more-likely-than-not that we may not be able to recover the carrying amount (book value) of the
net assets of the related reporting unit. When evaluating goodwill for impairment, we may perform
the optional qualitative assessment by considering factors including macroeconomic conditions,
industry and market conditions and overall financial performance. If we bypass the qualitative
assessment, or if we conclude that it is more likely than not that the fair value of a reporting unit is
less than its carrying value, then we perform a quantitative impairment test by comparing the fair
value of a reporting unit with its carrying amount. We only recognize an impairment on goodwill if
the estimated fair value of a reporting unit is less than its carrying value, in an amount not to
exceed the carrying value of the reporting unit’s goodwill. In evaluating goodwill for impairment,
we first assess qualitative factors to determine whether it is more likely than not that the fair value
of a reporting unit is less than its carrying amount. Qualitative factors that we consider include, for
example, macroeconomic and industry conditions, overall financial performance of our reporting
units, and other relevant entity-specific events. If we bypass the qualitative assessment, or if we
conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying
value, then we perform a two-step goodwill impairment test to identify potential goodwill
impairment and measure the amount of goodwill impairment we will recognize, if any. No goodwill
impairment charges were recognized during the year ended December 31, 2021. Intangible Assets
Our intangible assets consist of management agreements, trade name, club member relationships
and certain proprietary software technologies with finite lives. We have management agreements,
trade name, club member relationships, and software intangibles that were recorded at their fair
value as part of the Diamond Acquisition. We also have management agreements that were
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Other assets, deferred financing costs related to the revolving facility only , or Debt, net in our
consolidated balance sheets (see Note 15: Debt & Non-recourse debt for additional information).
The amortization of deferred financing costs is included in interest expense in our consolidated
statements of operations.
Costs Incurred to Sell VOIs and Vacation Packages We expense indirect sales and marketing costs
we incur to sell VOIs and vacation packages when incurred. Deferred selling expenses, which are
direct selling costs related either to a contract for which revenue has not yet been recognized,
were $ 25 million and $ 29 million as of December 31, 2021 and 2020, respectively, and were
included in Other assets on our consolidated balance sheets.
Fair Value Measurements—Valuation Hierarchy Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants on the measurement date (an exit price). We use the three-level valuation hierarchy
for classification of fair value measurements. The valuation hierarchy is based upon the
transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs
refer broadly to the assumptions that market participants would use in pricing an asset or liability.
Inputs may be observable or unobservable. Observable inputs are inputs that reflect the
assumptions market participants would use in pricing the asset or liability developed based on
market data obtained from independent sources. Unobservable inputs are inputs that reflect our
own assumptions about the data market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances. The three-level hierarchy
of inputs is summarized below: • Level 1—Valuation is based upon quoted prices (unadjusted) for
identical assets or liabilities in active markets; • Level 2—Valuation is based upon quoted prices for
similar assets and liabilities in active markets, or other inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the instrument; and • Level
3—Valuation is based upon unobservable inputs that are significant to the fair value measurement.
The classification of assets and liabilities within the valuation hierarchy is based upon the lowest
level of input that is significant to the fair value measurement in its entirety.
Currency Translation and Remeasurement The United States dollar (“USD”) is our reporting
currency and is the functional currency of the majority of our operations. For operations whose
functional currency is not the USD, assets and liabilities measured in foreign currencies are
translated into USD at the prevailing exchange rates in effect as of the financial statement date and
the related gains and losses are reflected within Accumulated other Comprehensive Income in our
consolidated balance sheets. Related income and expense accounts are translated at the average
exchange rate for the period. Gains and losses from foreign exchange rate changes related to other
transactions denominated in a currency other than an entity’s functional currency or intercompany
receivables and payables denominated in a currency other than an entity’s functional currency that
are not of a long-term investment nature are recognized as gain or loss on foreign currency
transactions included in Other gain (loss), net in our consolidated statements of operations.
Share-Based Compensation Costs Certain of our employees participate in our 2017 Omnibus
Incentive Plan (the “Stock Plan”) which compensates eligible employees and directors with
restricted stock units (“RSUs”), time and performance-vesting restricted stock units (“Performance
RSUs” or “PSUs”) and nonqualified stock options (“options”). We record compensation expense
based on the share-based awards granted to our employees. Share-based compensation awards
issued prior to the spin-off have been converted to reflect the separation from Hilton. Upon the
separation on January 3, 2017, holders of Hilton share-based awards received an adjusted award
based on our shares. The adjustments were designed to generally preserve the fair value of each
award before and after the separation. • RSUs vest in annual installments over three years from
the date of grant, subject to the individual’s continued employment through the applicable vesting
date. Vested RSUs generally will be settled for Hilton Grand Vacation’s common stock. The grant
date fair value is equal to Hilton Grand Vacation’s closing stock price on the date of grant. • PSUs
issued prior to 2021 are settled at the end of a three-year performance period, with 70 percent of
the PSUs subject to achievement based on the Company’s adjusted earnings before interest
expense, taxes and depreciation and amortization. This metric is further adjusted by sales of VOIs
under construction. The remaining 30 percent of the PSUs are subject to the achievement of
certain VOI sales targets. • PSUs issued in March 2021 are settled at the end of a two-year
performance period with 50 percent of the Performance RSUs subject to achievement based on the
Company’s adjusted earnings before interest expense, taxes and depreciation and amortization
further adjusted for net deferral and recognition of revenues and related direct expenses related to
sales of VOIs of projects under construction. The remaining 50 percent of the Performance RSUs
issued are subject to the achievement of certain contract sales targets. • PSUs issued in August
2021, in conjunction with the Diamond Acquisition, are settled at the end of the performance
period, which is from the Acquisition Date through December 31, 2023, with 67 percent of the
Performance RSUs subject to achievement based on certain run rate cost savings. The remaining 33
percent of the Performance RSUs issued are subject to the achievement of the Company’s adjusted
earnings before interest expense, taxes and depreciation and amortization further adjusted for net
deferral and recognition of revenues and related direct expenses related to sales of VOIs of
Income Taxes We account for income taxes using the asset and liability method. The objectives of
accounting for income taxes are to recognize the amount of taxes payable or refundable for the
current year, to recognize the deferred tax assets and liabilities that relate to tax consequences in
future years, which result from differences between the respective tax basis of assets and liabilities
and their financial reporting amounts, and tax loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates in effect for the year in which the respective
temporary differences or operating loss or tax credit carryforwards are expected to be recovered
or settled. The realization of deferred tax assets and tax loss and tax credit carryforwards is
contingent upon the generation of future taxable income and other restrictions that may exist
under the tax laws of the jurisdiction in which a deferred tax asset exists. Valuation allowances are
provided to reduce such deferred tax assets to amounts more likely than not to be ultimately
realized. We use a prescribed recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken in a tax return. For all income tax
positions, we first determine whether it is “more-likely-than-not” that a tax position will be
sustained upon examination, including resolution of any related appeals or litigation processes,
based on the technical merits of the position. If it is determined that a position meets the morelikely-than-not recognition threshold, the benefit recognized in the financial statements is
measured as the largest amount of benefit that is greater than 50 percent likely of being realized
upon settlement. Interest and penalties related to unrecognized tax benefits are recognized as a
component of income tax expense in the accompanying consolidated statement of operations.
Accrued interest and penalties are included on the related tax liability line in the consolidated
balance sheet.
Earnings Per Share Basic earnings per share (“EPS”) is calculated by dividing the earnings available
to common shareholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per common share is calculated to give effect to all potentially dilutive
common shares that were outstanding during the reporting period. When there is a year-to-date
loss, potential common shares should not be included in the computation of diluted EPS; hence,
diluted EPS would equal basic EPS in a period of loss.
Defined Contribution Plan We administer and maintain a defined contribution plan for the benefit
of all employees meeting certain eligibility requirements who elect to participate in the plan.
Contributions are determined based on a specified percentage of salary deferrals by participating
employees. We recognized compensation expense for our participating employees totaling $ 5
million, $ 5 million and $ 13 million for the years ended December 31, 2021, 2020 and 2019,
respectively.
Recently Issued Accounting Pronouncements Adopted Accounting Standards On January 1, 2021
we adopted Accounting Standards Update 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes . ASU 2019-12 simplifies various aspects related to
accounting for income taxes by removing certain exceptions to the general principles in Topic 740
and clarifies and amends existing guidance to improve consistent application. The adoption of ASU
2019-12 did not have a material impact on our consolidated financial statements and related
disclosures. Accounting Standards Not Yet Adopted In March 2020, the FASB issued Accounting
Standards Update 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the
Effects of Reference Rate Reform on Financial Reporting . ASU 2020-04 provides optional
expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other
transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by
another reference rate expected to be discontinued. The guidance was effective as of March 12,
2020 and will apply through December 31, 2022. We are evaluating the effect of this ASU, but we
do not expect it to have a material impact on our consolidated financial statements. In October
2021, the FASB issued Accounting Standards Update 2021-08 (“ASU 2021-08”), Business
Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts
with Customers . ASU 2021-08 provides that an entity recognize and measure contract assets and
contract liabilities acquired in a business combination in accordance with Topic 606. At the
acquisition date, the entity should account for the related revenue contracts in accordance with
Topic 606 as if the entity had originated the contracts. The guidance is effective for fiscal years
beginning after December 15, 2022. We currently plan to implement and evaluate the impacts of
this new standard with future acquisitions, if any. In November 2021, the FASB issued Accounting
Standards Update 2021-10 (“ASU 2021-10”), Government Assistance (Topic 832): Disclosures by
Business Entities about Government Assistance . ASU 2021-10 provides that annual disclosures
about transactions with a government that are accounted for by applying a grant or contribution
accounting model by analogy include Information about the nature of the transactions, line items
on the balance sheet and income statement that are affected by the transactions, and significant
terms and conditions of the transactions. The guidance is effective for all entities for financial
Diamond Acquisition (Tables)
Business Combinations [Abstract]
Schedule of Fair Value of Consideration Transferred
Schedule of Preliminary Fair Values of Assets Acquired and Liabilities Assumed
Schedule of Financing Receivables
Schedule of Goodwill
Schedule of Preliminary Estimates Of The Fair Value of Intangible Assets and Estimated Remaining
Useful Lives
Schedule of Acquisition Pro Forma Information
Summary of Diamond Results of Operations
12 Months Ended
Dec. 31, 2021
The following table presents the fair value of each class of consideration transferred in relation to
the Diamond Acquisition at the Acquisition Date.
($ in millions, except stock price amounts)
HGV common stock shares issued for outstanding Diamond shares 33.93
HGV common stock price as of Acquisition Date (1) 40.71
Stock purchase price $ 1,381
Repayment of Legacy-Diamond debt $ 2,029
Total consideration transferred $ 3,410 ____________________ (1) Represents the average of the
opening and closing price of HGV stock on August 2, 2021.
Any potential adjustments made could be material in relation to the values presented in the table
below. As discussed more fully below, the primary areas of the purchase price allocation that are
not yet finalized include the following: (1) finalizing the review and valuation of acquired intangible
assets and assigning the useful lives to such assets; (2) finalizing the review and valuation of
acquired inventory, property and equipment (including key assumptions, inputs and estimates) and
assigning the remaining useful lives to the depreciable assets; (3) finalizing the review and valuation
of acquired timeshare financing receivables; (4) finalizing the review of accounts receivable,
including the evaluation of which receivables are purchased credit deteriorated; (5) finalizing the
valuation of certain in-place contracts or contractual relationships (including but not limited to
leases), including determining the appropriate amortization period; (6) finalizing the review and
valuation of other acquired assets and assumed liabilities; and (7) finalizing our estimate of the
impact of purchase accounting on deferred income tax liabilities.
($ in millions) Preliminary Amounts Recognized as of the Acquisition Date
Assets acquired
Cash and cash equivalents $ 310
Restricted cash 127
Accounts receivable, net of allowance for doubtful accounts 58
Timeshare financing receivables, net 825
Inventory 497
Property and equipment, net 298
Operating lease right-of-use assets, net 30
Intangible assets, net 1,431
Other assets 250
Total assets acquired $ 3,826
Liabilities assumed
Accounts payable, accrued expenses and other $ 470
Debt, net 14
Non-recourse debt, net 660
Acquired timeshare financing receivables with credit deterioration as of the Acquisition Date were
as follows:
($ in millions) As of August 2, 2021
Purchase price $ 825
Allowance for credit losses 512
(Premium) attributable to other factors ( 97 )
Par value $ 1,240
Diamond Acquisition. We have allocated the acquired goodwill to our segments, Real Estate Sales
and Financing and Resort Operations and Club Management, as indicated in the table below. Our
allocations may change throughout the measurement period as we continue to finalize the fair
value of assets acquired and liabilities assumed in the Diamond Acquisition.
Real Estate Sales and Financing Segment Resort Operations and Club Management Segment Total
Consolidated
Goodwill $ 1,011 366 $ 1,377
The following table presents our preliminary estimates of the fair values of the acquired Diamond’s
identified intangible assets and their related estimated remaining useful lives .
Estimated Fair Estimated
Value Useful Life
($ in millions) (in years)
Trade name $ 18 1.5
Management contracts 1,251 35.4
Club member relationships 139 14.4
Computer software 23 1.5
Total intangible assets $ 1,431
The following unaudited pro forma information presents the combined results of operations of
HGV and Diamond as if we had completed the Diamond Acquisition on January 1, 2020, the first
day of our 2020 fiscal year, but using our preliminary fair values of assets and liabilities as of the
Acquisition Date. These unaudited pro forma results do not reflect any synergies from operating
efficiencies. Accordingly, these unaudited pro forma results are presented for informational
purposes only and are not necessarily indicative of what the actual results of operations of the
combined company would have been if the Diamond Acquisition had occurred at the beginning of
the period presented, nor are they indicative of future results of operations.
Year Ended December 31,
($ in millions, except per share data) 2021 2020
Revenue $ 3,146 $ 1,896
Net income (loss) 374 ( 561 )
The following table presents the results of Diamond operations included in our statement of
operations for the period from the Acquisition Date through the end of 2021.
($ in millions) August 2, 2021 to
Revenue $ 633
Net income 92
Revenue from Contracts with Customers (Tables)
Revenue from Contract with Customer [Abstract]
Schedule of Disaggregated Revenues by Segment from Contracts with Customers
Schedule of Accounts Receivable from Contracts with Customers and Composition of Contract
Liabilities
Schedule of Deferred Revenue Cost of Sales and Direct Selling Costs from Sales of Project Under
Construction
Schedule of Remaining Transaction Price Related to Advanced Deposits Club Activation Fees and
Club Bonus Points
12 Months Ended
Dec. 31, 2021
The following tables show our disaggregated revenues by product and segment from contracts with
customers. We operate our business in the following two segments: (i) Real estate sales and
financing and (ii) Resort operations and club management . Please refer to Note 22: Business
Segments below for more details related to our segments.
($ in millions) Year Ended December 31,
Real Estate Sales and Financing Segment 2021 2020 2019
Sales of VOIs, net $ 883 $ 108 $ 509
Sales, marketing, brand and other fees 385 221 573
Interest income 157 141 147
Other financing revenue 26 24 23
Real estate sales and financing segment revenues $ 1,451 $ 494 $ 1,252
($ in millions) Year Ended December 31,
Resort Operations and Club Management Segment 2021 2020 2019
Club management $ 168 $ 96 $ 125
Resort management 172 7…
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