As of ~~June~~September 30, 2017 and December 31, 2016, we consolidated three and two variable interest entities (“VIEs”), respectively, that issued Securitized Debt, backed by pledged assets consisting primarily of a pool of timeshare financing receivables, which is without recourse to us. We are the primary beneficiaries of these 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 are required to 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 assets of our VIEs are available to settle the obligations of the respective entities.

Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:

During the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, we did not 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.

On July 18, 2017, we entered into an agreement with BRE Ace Holdings LLC, a Delaware limited liability company (“BRE Ace Holdings”), an affiliate of The Blackstone Group L.P. (“Blackstone”) and formed BRE Ace LLC. Pursuant to the agreement, we contributed $40 million in cash for a 25 percent interest in BRE Ace LLC, which owns a 1,201-key timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations,” located in Las Vegas, Nevada. Our investment interest in and equity earned from BRE Ace LLC are included in the condensed consolidated balance sheets as Investment in unconsolidated affiliate and in the condensed consolidated statements of operations as Equity in earnings from unconsolidated affiliate, respectively.

BRE Ace LLC had debt of $207 million and non-recourse debt of $235 million as of September 30, 2017. The debt and non-recourse debt are secured by its assets and are without recourse to us. Our maximum exposure to loss as a result of our investment interest in BRE Ace LLC is primarily limited to the carrying amount of the investment which totals $41 million as of September 30, 2017, as well as receivables for commission and other fees earned under a fee-for-service arrangement. See Note 13: Related Party Transactions for additional information.

The following table details our outstanding debt balance and its associated interest rates:

We were in compliance with all applicable financial covenants as of ~~June~~September 30, 2017.

The following table details our outstandingnon-recourse debt balance and its associated interest rates:

The Timeshare Facility is anon-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets.

In March 2017, we completed a securitization of approximately $357 million of gross timeshare financing receivables and issued approximately $291 million of 2.66 percent notes and $59 million of 2.96 percent notes due December 2028. The Securitized Debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interests. The Securitized Debt is anon-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $22 million as of ~~June~~September 30, 2017 and December 31, 2016, ~~were $24 million and $22 million, respectively,~~ and were included inRestricted cash in our condensed consolidated balance sheets.

The contractual maturities of our debt andnon-recourse debt as of ~~June~~September 30, 2017 were as follows:

The carrying amounts and estimated fair values of our financial assets and liabilities were as follows:

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 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 market assumptions for similar types of arrangements.

The estimated fair values of our Level 1 debt was based on prices in active debt markets. The estimated fair value of our Level 3 debt andnon-recourse debt were as follows:

Debt - based on indicative quotes obtained for similar issuances and projected future cash flows discounted at risk-adjusted rates.

Non-recourse debt - based on projected future cash flows discounted at risk-adjusted rates.

Note 9:10: Income Taxes

At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective income tax rate is determined by the level and composition ofpre-tax income or loss, which is subject to federal, foreign, state and local income taxes. The effective income tax rate for the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016 was approximately 3738 percent and 4043 percent, respectively, which decreased primarily due to a decrease in cumulative installment sale interest ~~liability, partially offset by an increase in the cumulative effect of a change in the state effective tax rate.~~liability.

The Company was a party to several intercompany asset transfers with Hilton prior to thespin-off. As required under U.S. tax regulations, the gain resulting from the intercompany transfer of these assets should be deferred and no deferred tax asset or liability should be recognized until a recognition event occurs. On January 3, 2017, Hilton executed a~~tax-freespin-off~~ tax-free spin-off of the Company, which met the requirement of a recognition event. On thespin-off date, for the assets transferred, we recognized a stepped up tax basis,re-measured the asset by applying applicable tax rate changes and evaluated the realizability of the asset. This resulted in a reduction to our net deferred tax liability and an increase in ourAdditionalpaid-in capital ~~capital~~ of $9 million on our condensed consolidated balance sheet as of ~~June~~September 30, 2017.

Note ~~10:~~11: Share-Based Compensation

Stock Plan

We issue time-vesting restricted stock units (“RSUs”) and nonqualified stock options (“options”) to certain employees. All performance shares that were issued under the ~~Stock Plan~~stock plan of ~~our former Parent,~~ Hilton, were converted to RSUs as of December 31, 2016. We recognized share-based compensation expense of $5 million and $3$2 million during the three months ended ~~June~~September 30, 2017 and 2016, respectively and $8$13 million and $5$7 million during the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, respectively. As of ~~June~~September 30, 2017, unrecognized compensation costs for unvested awards were approximately ~~$17~~$13 million, which is expected to be recognized over a weighted average period of ~~2.2~~2.0 years. As of ~~June~~September 30, 2017, there were ~~7,806,023~~7,961,151 shares of common stock available for future issuance.

RSUs

During the ~~six~~nine months ended ~~June~~September 30, 2017, we issued ~~487,718~~530,674 RSUs with a weighted average grant date fair value of ~~$28.64,~~$29.15, which generally vest 25 percent in the first year, 25 percent in the second year and 50 percent in the third year from the date of grant.

Options

During the ~~six~~nine months ended ~~June~~September 30, 2017,we issued 669,658 options with a grant date fair value of $8.66 and an exercise price of $28.30, which generally vest 25 percent in the first year, 25 percent in the second year and 50 percent in the third year from the date of grant.

The grant date fair value of each of these option grants was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:


Expected volatility⁽¹⁾	26.3	%
Dividend yield⁽²⁾	—	%
Risk-free rate⁽³⁾	2.3	%
Expected term (in years)⁽⁴⁾	6.0

⁽¹⁾

Due to limited trading history for Hilton Grand Vacations’ common stock, we did not have sufficient information available on which to base a reasonable and supportable estimate of the expected volatility of our share price. As a result, we used a weighted-average of the implied volatility and the average historical volatility of our peer group over a time period consistent with its expected term assumption. Our peer group was determined based upon companies in our industry with similar business models and is consistent with those used to benchmark its executive compensation.

⁽²⁾	At the date of grant we had no plans to pay dividends during the expected term of these options.

⁽³⁾	Based on the yields of U.S. Department of Treasury instruments with similar expected lives.

⁽⁴⁾	Estimated using the average of the vesting periods and the contractual term of the options.

As of ~~June~~September 30, 2017, we had 169,926 options outstanding that were exercisable.

Note ~~11:~~12: Earnings Per Share

The following table presents the calculation of our basic and diluted earnings per share (“EPS”). The weighted average shares outstanding for the three and ~~six~~nine months ended ~~June~~September 30, 2016 reflect 98,802,597 shares distributed on January 3, 2017, ourspin-off date, to our stockholders. See Note 1: Organization and Basis of Presentation for further discussion. The weighted average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~June~~September 30, 2017 is ~~98,959,438~~98,981,557 and ~~99,529,301,~~99,730,483, respectively and for the ~~six~~nine months ended ~~June~~September 30, 2017 is ~~98,881,494~~98,916,894 and ~~99,442,829,~~99,530,534, respectively.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
*($ and shares outstanding in millions, except per share amounts)*	2017		2016		2017		2016		2017		2016		2017		2016
Basic EPS:
Numerator:
Net Income⁽¹⁾	$	51	$	47	$	101	$	95	$	43	$	35	$	144	$	130
Denominator:
Weighted average shares outstanding		99		99		99		99		99		99		99		99

Basic EPS	$	0.51	$	0.48	$	1.02	$	0.96	$	0.43	$	0.35	$	1.45	$	1.31

Diluted EPS:
Numerator:
Net Income⁽¹⁾	$	51	$	47	$	101	$	95	$	43	$	35	$	144	$	130
Denominator:
Weighted average shares outstanding		100		99		99		99		100		99		100		99

Diluted EPS	$	0.51	$	0.48	$	1.02	$	0.96	$	0.43	$	0.35	$	1.44	$	1.31

⁽¹⁾

Net income for the three months ended ~~June~~September 30, 2017 and 2016 was ~~$50,828,907~~$42,700,978 and ~~$47,400,289,~~$34,597,597, respectively, and for the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016 was ~~$101,041,522~~$143,742,500 and ~~$95,069,102,~~$129,727,071, respectively.

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 ~~three and six~~nine months ended ~~June~~September 30, 2017, we excluded ~~295,316 and 399,194~~224,783 share-based compensation awards because their effect would have been anti-dilutive under the treasury stock method. For the three months ended September 30, 2017, we did not exclude any share-based compensation awards.

Note ~~12:~~13: Related Party Transactions

Relationship Between HGV and Hilton after theSpin-Off

On January 3, 2017, when thespin-off was completed, Hilton and Park Hotels & Resorts Inc. ceased to be related parties of HGV. In connection with thespin-off, we entered into certain agreements with Hilton (who at the time was a related party) and other third parties. SeeKey Agreements Related to theSpin-Offsection inPart I - Item 1. Businessof our Annual Report on Form10-K for the year ended December 31, 2016 for further information.

HNA Tourism Group Co., Ltd.

On March 15, 2017, Blackstone completed the previously announced sale of 24,750,000 shares of our common stock to HNA Tourism Group Co., Ltd. (“HNA”), representing approximately 25 percent of the outstanding shares of our common stock.

In connection with the consummation of the sale, we adopted our amended and restatedby-laws, effective March 15, 2017, to remove references to Blackstone’s ownership of at least 40 percent of the total voting power of our common stock and revised certain provisions referencing the Blackstone Stockholders Agreement, as appropriate, to include references to the HNA Stockholder Agreement.

The Blackstone Group

As of March 31, 2017, Blackstone held 15,008,689 shares, or approximately 15 percent of our outstanding common stock. On May 25, 2017, ~~The~~ Blackstone ~~Group L.P. (“Blackstone”)~~ filed a Registration Statement on FormS-1 and registered all of our common stock held by ~~them.On~~them. On June 14, 2017, Blackstone entered into an underwriting agreement with J.P. Morgan Securities LLC pursuant to which J.P. Morgan

Securities LLC agreed to purchase from Blackstone 9,650,000 shares of our common stock at a price of $35.40 per share. The sale was completed on June 20, 2017. Subsequently, on September 25, 2017, Blackstone completed the sale of substantially all of the remaining shares of our common stock held by them to several institutional investors and ceased to be a related party of HGV. We did not receive any proceeds from ~~the sale.~~either of these sales. As of ~~June~~September 30, 2017, Blackstone ~~held approximately five percent~~holds only a nominal number of ~~the outstanding~~ shares of our common stock.

The following table summarizes amounts included in our condensed consolidated statements of operations related to afee-for-service arrangement with a Blackstone ~~affiliate~~affiliates to sell VOIs on their ~~behalf:~~behalf through September 30, 2017:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
*($ in millions)*	2017		2016		2017		2016		2017		2016		2017		2016
Commission and other fees	$	42	$	44	$	93	$	88	$	42	$	54	$	135	$	142

Also related to thefee-for-service agreement, as of ~~June~~September 30, 2017 and December 31, 2016, we ~~recognized~~have outstanding receivables of $8 million and $20 million, respectively.

BRE Ace LLC

On July 18, 2017, we entered into an agreement with BRE Ace Holdings, an affiliate of Blackstone, to form BRE Ace LLC. In conjunction with this agreement we acquired a 25 percent ownership interest in BRE Ace LLC. During the nine months ended September 30, 2017, we recorded $1 million in equity in earnings from unconsolidated affiliates, included in our condensed consolidated statements of operations. See Note 7: Investment in Unconsolidated Affiliate for additional information. In addition, we earn commissions and other fees related to a fee-for-service agreement to sell VOIs at Elara, by Hilton Grand Vacations. These amounts are summarized in the following table and included in our condensed consolidated statements of operations as of the date they became a related party.

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in millions)

2017

2016

2017

2016

Commission and other fees

—

Also related to the fee-for-service agreement, as of September 30, 2017 we have outstanding receivables of $29 million.

Note ~~13:~~14: 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 fee-for-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.

•

~~Real estate sales and financing –~~~~We market and sell VOIs that we own. We also source VOIs throughfee-for-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, earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. We 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 program. We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties.

•

~~Resort operations and club management –~~We manage the Club, earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. We 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 program. 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, taxes, depreciation and amortization (“EBITDA”). We define Adjusted EBITDA as EBITDA which has been further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements;(iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and other compensation expenses; (vii) costs related to thespin-off; and (viii) other items. During the first quarter of 2017, we revised our definition of EBITDA to exclude the adjustment of interest expense relating to ournon-recourse debt as a reconciling item to arrive at net income (loss) in order to conform to the presentation of the timeshare industry following the consummation of thespin-off from Hilton. This adjustment was retrospectively applied to prior period(s) to conform with the current presentation.

We do not include equity in earnings from unconsolidated affiliate in our measures of segment revenues.The following table presents revenues for our reportable segments reconciled to consolidated amounts:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
*($ in millions)*	2017			2016			2017			2016			2017			2016			2017			2016
Revenues:
Real estate sales and financing⁽¹⁾	$	323		$	276		$	606		$	542		$	310		$	301		$	916		$	843
Resort operations and club management⁽²⁾		92			89			180			170			90			81			270			251

Total segment revenues		415			365			786			712			400			382			1,186			1,094
Cost reimbursements		34			32			68			61			34			33			102			94
Intersegment eliminations^(1)(2)(3)		(10	)		(6	)		(16	)		(12	)		(8	)		(8	)		(24	)		(20	)

Total revenues	$	439		$	391		$	838		$	761		$	426		$	407		$	1,264		$	1,168

⁽¹⁾

Includes charges of $1 million and $2 million to the resort operations and club management segment for billing and collection services provided by the real estate sales and financing segment for the ~~six~~three and nine months ended ~~June~~September 30, 2016. There were no charges for the three and nine months ended ~~June~~September 30, ~~2016 or for the three and six months ended June 30,~~ 2017.

⁽²⁾

Includes charges to the real estate sales and financing segment from the resort operations and club management segment for discounted stays at properties resulting from marketing packages. These charges totaled ~~$10~~$7 million ~~and $6 million~~ for each of the three months ended ~~June~~September 30, 2017 and 2016, ~~respectively,~~ and ~~$16~~$23 million and ~~$11~~$18 million for the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, respectively.

⁽³⁾

Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled $1 million for each of the three and nine months ended September 30, 2017. There were charges of less than $1 million for each of the three and ~~six~~nine months ended ~~June~~September 30, ~~2017 and 2016.~~2016

The following table presents Adjusted EBITDA for our reportable segments reconciled to net income:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
*($ in millions)*	2017			2016			2017			2016			2017			2016			2017			2016
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	99		$	84		$	182		$	165		$	81		$	85		$	263		$	250
Resort operations and club management⁽¹⁾		52			51			103			97			50			42			153			139

Segment Adjusted EBITDA		151			135			285			262			131			127			416			389
General and administrative		(29	)		(21	)		(52	)		(37	)		(23	)		(24	)		(75	)		(61	)
Depreciation and amortization		(7	)		(6	)		(14	)		(11	)		(7	)		(6	)		(21	)		(17	)
License fee expense		(23	)		(20	)		(43	)		(39	)		(22	)		(22	)		(65	)		(61	)
Other loss, net		—			1			—			1			—			—			—			(1	)
Gain on foreign currency transactions		—			(1	)		—			(1	)		1			1			1			2
Allocated Parent interest expense⁽²⁾		—			(7	)		—			(13	)		—			(7	)		—			(20	)
Interest expense		(7	)		—			(14	)		—			(7	)		—			(21	)		—
Income tax expense		(33	)		(33	)		(59	)		(65	)		(28	)		(33	)		(87	)		(98	)
Equity in earnings from unconsolidated affiliate⁽³⁾														1			—			1			—
Other adjustment items		(1	)		(1	)		(2	)		(2	)		(3	)		(1	)		(5	)		(3	)

Net income	$	51		$	47		$	101		$	95		$	43		$	35		$	144		$	130

⁽¹⁾	Includes intersegment eliminations. Refer to our table presenting revenues by reportable segment above for additional discussion.

⁽²⁾	This amount represents interest expense on an unconditional obligation to guarantee certain Hilton allocated debt balances which were released in November 2016.

⁽³⁾	This amount represents our 25 percent interest in BRE Ace LLC. See Note 7: Investment in Unconsolidated Affiliate for additional information.

Note ~~14:~~15: Commitments and Contingencies

We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of ~~June~~September 30, 2017, we were committed to purchase approximately ~~$212~~$208 million of inventory and land over a period of five years. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, we purchased $4$9 million and $11 million, respectively, of VOI inventory as required under our commitments. As of ~~June~~September 30, 2017, our remaining obligation pursuant to these arrangements was expected to be incurred as follows: ~~$4 million in 2017,~~ $3 million in 2018, $187 million in 2019, $9 million in 2020, and $9 million in 2021.

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of ~~June~~September 30, 2017, will not have a material effect on our condensed consolidated results of operations, financial position or cash flows.

Note ~~15:~~16: Subsequent Events

On ~~July 18,~~October 13, 2017, we ~~entered into~~acquired an ~~agreement with BRE Ace Holdings LLC,~~83-unit, ski-in mountain lodge in Park City, Utah, known as “The Sunrise Lodge, a ~~Delaware limited liability company (“BRE Ace Holdings”), an affiliate of Blackstone Real Estate Partners VIII, which is an affiliate of Blackstone and formed BRE Ace LLC. Pursuant~~Hilton Grand Vacations Club.” Prior to the ~~agreement, we contributed $40 million in cash for~~acquisition, HGV was providing marketing, sales and resort management services to the seller Sunrise Park City, LLC under a ~~25 percent interest in BRE Ace LLC, which owns, a1,201-key~~fee-for-service agreement. timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations,” located in Las Vegas Nevada. The Company’s investment in BRE Ace LLC will be accounted for under equity method of accounting.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form10-Q and with our Annual Report on Form10-K for the year ended December 31, 2016.

Forward-Looking Statements

This Quarterly Report onForm 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the benefits resulting from our ~~separation from Hilton Worldwide Holdings Inc.,~~spin-off, the effects of competition and the effects of future legislation or regulations andother non-historical statements. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements in this Quarterly Report onForm 10-Q. We do not intend to update any of these forward-looking statement or publicly announce the results of any revisions to these forward-looking statements, other than as is required under the federal securities laws.

The risk factors discussed in “PartI-Item 1A. Risk Factors” of our Annual Report on Form10-K for the year ended December 31, 2016 and in “PartII-Item 1A. Risk Factors” of this Quarterly Report on Form10-Q for the quarter ended ~~June~~September 30, 2017 could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Any such risks could cause our results to differ materially from those expressed in forward-looking statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Terms Used in this Quarterly Report onForm 10-Q

Except where the context requires otherwise, references in this Quarterly Report onForm 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” and “rooms” refer to the timeshare properties managed,

franchised, owned or leased by us. Of these properties and rooms, a portion are directly owned or leased by us or joint ventures in which we have an interest and the remaining properties and rooms are owned by third-party owners.

Investment funds associated with or designated by The Blackstone Group L.P. and their affiliates, former majority owners of Hilton Worldwide Holdings, Inc. ~~(“Hilton”~~(together with its then consolidated subsidiaries, “Hilton”), are referred to herein as “Blackstone.”

Investment funds associated with or designated by HNA Tourism Group Co., Ltd. and their affiliates are referred to herein as “HNA.”

“Developed” refers VOI inventory that is sourced from projects developed by HGV.

“Fee for service” refers to VOI inventory that we sell and manage on behalf of third-party developers.

“Just-in-time” refers to VOI inventory that is primarily sourced in transactions that are designed to closely correlate the timing of the acquisition by us with our sale of that inventory to purchasers.

“VOI” refers to vacation ownership intervals.

Non-GAAP Financial Measures

This Quarterly Report on Form10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including contract sales, sales revenue, real estate margin, tour flow, volume per guest, capital efficiency ratio, transient rate, earnings before interest expense (excluding interest expense relating to ournon-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA and segment Adjusted EBITDA. See “Management’s Discussion and Analysis of Financial Condition and Results ofOperations-Key Business and Financial Metrics and Terms Used by Management” and “-Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providingnon-GAAP financial measures, and reconciliations ofnon-GAAP financial measures to measures calculated in accordance with U.S. GAAP.

Overview

Spin-Off Transactions

On January 3, 2017, the previously announcedspin-off was completed by way of a pro rata distribution of the Company’s common stock to Hilton ~~Worldwide Holdings Inc. (“Former Hilton Parent” and together with its them consolidated subsidiaries, “Hilton”)~~ stockholders. Each Hilton stockholder received one share of our common stock for every ten shares of Hilton common stock. As a result of thespin-off, we became a separate publicly-traded company on the New York Stock Exchange under the ticker symbol “HGV” and Hilton did not retain any ownership interest in us.

In connection with the completion of thespin-off, we entered into agreements with Hilton (who at the time was a related party) and other third parties, including licenses to use the Hilton brand. SeeKey Agreements Related to theSpin-Offsection inPart I -– Item 1. Businessof our Annual Report on Form10-K for the year ended December 31, 2016 for further information.

On March 15, 2017, Blackstone completed the previously announced sale of 24,750,000 shares of our common stock to HNA, representing approximately 25 percent of the outstanding shares of our common stock. Blackstone retained 15,008,689 shares, or approximately 15 percent of our common stock upon the completion of the sale.

On May 25, 2017, Blackstone filed a Registration Statement on FormS-1 and registered all of our common stock held by ~~them.On~~them. On June 14, 2017, Blackstone entered into an underwriting agreement with J.P. Morgan Securities LLC pursuant to which J.P. Morgan Securities LLC agreed to purchase from Blackstone 9,650,000 shares of our common stock at a price of $35.40 per share. The sale was completed on June 20, 2017. ~~We did not receive any proceeds from the sale. As of June 30,~~Subsequently, on September 25, 2017, Blackstone ~~held approximately five percent~~completed the sale of substantially all of the ~~outstanding~~remaining shares of our common stock held by them to several institutional investors. We did not received any proceeds from either of these sales. As of September 30, 2017, Blackstone holds only a nominal number of shares of our common stock.

Tax Matters Agreement

Subsequent to thespin-off, we have no unrecognized taxes that, if recognized, would have impacted our effective tax rate. As a large taxpayer, Hilton is continuously under audit by the IRS and other taxing authorities. HGV has joined in the Hilton U.S. Federal tax consolidated filing for prior tax years up to the date of thespin-off. Although we do not anticipate that a significant impact to our unrecognized tax balance will occur during the next fiscal year as a result of these audits, it remains possible that the amount of our liability for unrecognized taxes could change over that time period. Pursuant to the Tax Matters Agreement, Hilton is liable and shall pay the relevant tax authority for all taxes related to the taxable income prior to thespin-off. HGV will be responsible for its portion of any amounts Hilton is deemed liable by a taxing authority according to the Tax Matters Agreement. HGV is responsible for tax years subsequent to thespin-off.

Our Business

We are a rapidly growing timeshare company that markets and sells ~~vacation ownership intervals (“VOIs”),~~VOIs, manages resorts in top leisure and urban destinations, and operates a points-based vacation club. As of ~~June~~September 30, 2017, we have 48 resorts, representing 8,101 units, which are located in iconic vacation destinations such as the Hawaiian Islands, New York City, Orlando and Las Vegas, and feature spacious, condominium-style accommodations with superior amenities and quality service. As of ~~June~~September 30, 2017, we have approximately ~~278,000~~284,000 Hilton Grand Vacations Club (the “Club”) members. Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 14 industry-leading brands across more than 5,000 properties, as well as numerous experiential vacation options, such as cruises and guided tours.

We operate our business across two segments: (1) real estate sales and financing; and (2) resort operations and club management.

Real Estate Sales and Financing

Our primary product is the marketing and selling offee-simple VOIs deeded in perpetuity, developed either by us or by third parties. This ownership interest is an interest in real estate generally equivalent to one week annually at the timeshare resort where the VOI was purchased. Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties. In 2010, we began sourcing VOIs throughfee-for-service andjust-in-time agreements with third-party developers and have successfully transformed from a capital-intensive business to one that is highly capital-efficient. Thefee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs. Thejust-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory by us with the sale to purchasers. Sales of owned inventory, including purchasedjust-in-time inventory, generally result in greater Adjusted EBITDA contributions, whilefee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory andfee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

For the ~~six~~nine months ended ~~June~~September 30, 2017, sales fromfee-for-service,just-in-time and developed inventory sources were 5654 percent, 1920 percent and 2526 percent, respectively, of contract sales. See “-Real Estate Sales Metrics” for additional discussion of contract sales. Based on our trailing twelve months sales pace, we have access to ~~more than~~approximately five years of future inventory, with capital efficient arrangements representing approximately 88 percent of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.

We originate loans for members purchasing our developed and acquired inventory which generate interest income. Our loans are collateralized by the underlying VOIs and are generally structured as10-year, fully-amortizing loans that bear a fixed interest rate typically ranging from 9 percent to 18 percent per annum.

The interest rate on our loans is determined by, among other factors, the amount of the down payment, the borrower’s credit profile and the loan term. The weighted average FICO score for new loans to U.S. and Canadian borrowers at the time of origination were as follows:

	Nine Months Ended September 30,
	2017		2016
Weighted average FICO score		738		736

   Six Months Ended June 30,
   2017    2016
Weighted average FICO score
   745    742

Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Club.

Some of our loans have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and cash deposits. For additional information see Note 4:Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

In addition, we earn fees from servicing our securitized loan portfolio and the loans provided by third-party developers of ourfee-for-service projects to purchasers of their VOIs.

Resort Operations and Club Management

We enter into a management agreement with the homeowners’ association (“HOA”) of the VOI owners for timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprising owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our management services includeday-to-day operations of the resorts, maintenance of the resorts, preparation of reports, budgets and projections and employee training and oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10 percent to 15 percent of the costs to operate the applicable resort. The fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are reimbursed for the costs incurred to perform our services, principally related to personnel providingon-site services. The initial term of our management agreements typically ranges from three to five years and the agreements are subject to periodic renewal for one to three year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.

We also manage and operate the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Club members. When an owner purchases a VOI, he or she is generally automatically enrolled in the Club and given an annual allotment of points that allow the member to exchange his or her annual usage rights in the VOI that they own for a number of vacation and travel options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.

We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our ~~club~~Club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties.

Key Business and Financial Metrics and Terms Used by Management

Real Estate Sales Metrics

The following are not recognized terms under U.S. GAAP:

Contract sales represents the total amount of VOI products under purchase agreements signed during the period where we have received a down payment of at least 10 percent of the contract price. Contract sales is not a recognized term under U.S. GAAP and should not be considered in isolation or as an alternative to Sales of VOIs, net or any other comparable operating measure derived in accordance with U.S. GAAP. Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives and other administrative fee revenues. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.

Sales revenue represents sale of VOIs, net and commissions and brand fees earned from the sale of fee-for-service intervals.

Real estate margin represents sales revenue less the cost of VOI sales and sales and marketing costs, net of marketing revenue. Real estate margin percentage is calculated by dividing real estate margin by sales revenue. We consider this to be an important operating measure because it measures the efficiency of our sales and marketing spending and management of inventory costs.

Tour flow represents the number of sales presentations given at our sales centers during the period.

Volume per guest (“VPG”) represents the sales attributable to tours at our sales locations and is calculated by dividing Contract sales, excluding telesales, by tour flow. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with closing rate.

•

~~Contract sales~~represents the total amount of VOI products under purchase agreements signed during the period where we have received a down payment of at least 10 percent of the contract price. Contract sales is not a recognized term under U.S. GAAP and should not be considered in isolation or as an alternative to~~Sales of VOIs, net~~ ~~or any other comparable operating measure derived in accordance with U.S. GAAP. Contract sales differ from revenues from the~~~~Sales of VOIs, net~~ that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives and other administrative fee revenues. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.

•

~~Sales revenue~~ ~~represents sale of VOIs, net and commissions and brand fees earned from the sale of~~

~~fee-for-service~~ ~~intervals.~~

•

~~Real estate margin~~represents sales revenue less the cost of VOI sales and sales and marketing costs, net of marketing revenue. Real estate margin percentage is calculated by dividing real estate margin by sales revenue. We consider this to be an important operating measure because it measures the efficiency of our sales and marketing spending and management of inventory costs.

•

~~Tour flow~~~~represents the number of sales presentations given at our sales centers during the period.~~

•

~~Volume per guest (“VPG”)~~represents the sales attributable to tours at our sales locations and is calculated by dividing Contract sales, excluding telesales, by tour flow. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with closing rate.

•

Capital efficiency ratiorepresents the ratio of cost of VOI sales to VOI inventory spend, includingfee-for-service upgrades. We consider this to be an important operating measure because capital efficiency allows us to reduce inventory investment requirements while continuing to generate growth in revenues and cash flows.

Resort and Club Management and Rental Metrics

Transient rate represents the total rental room revenue for transient guests divided by total number of transient room nights sold in a given period and excludes room rentals associated with marketing programs, owner usage and the redemption of Club Bonus Points.

•

~~Transient rate~~represents the total rental room revenue for transient guests divided by total number of transient room nights sold in a given period and excludes room rentals associated with marketing programs, owner usage and the redemption of Club Bonus Points.

For further information see Item 8. Financial Statements and Supplementary Data - Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form10-K for the year ended December 31, 2016.

EBITDA and Adjusted EBITDA

EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income (loss), before interest expense, a provision for income taxes and depreciation and amortization. During the first quarter of 2017, we revised our definition of EBITDA to exclude the adjustment of interest expense relating to ournon-recourse debt as a reconciling item to arrive at net income (loss) in order to conform to the presentation of the timeshare industry following the consummation of thespin-off from Hilton. The revised definition was applied to prior period(s) to conform with current presentation. Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements;(iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and certain other compensation expenses; (vii) costs related to thespin-off; and (viii) other items.

EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and makeday-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

EBITDA and Adjusted EBITDA do not reflect our interest expense (excluding interest expense onnon-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness;

EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

EBITDA and Adjusted EBITDA do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and

EBITDA and Adjusted EBITDA may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

Recent Events

On July 18, 2017, we entered into an agreement with BRE Ace Holdings LLC, a Delaware limited liability company (“BRE Ace Holdings”), an affiliate of Blackstone and formed BRE Ace LLC. Pursuant to the agreement, we contributed $40 million in cash for a 25 percent interest in BRE Ace LLC, which owns a 1,201-key timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations,” located in Las Vegas, Nevada.

On September 10, 2017, Hurricane Irma hit the Florida Keys as a Category 4 hurricane, weakening somewhat as it made landfall along Florida’s southwest shoreline. Although certain of our managed Florida properties were temporarily closed during the aftermath of Hurricane Irma, neither HGV’s operations nor financial performance were significantly impacted by this storm. In the aftermath of Hurricane Irma, the IRS has granted an automatic extension to individuals and businesses affected by the hurricanes, which extends tax filing and payment deadlines beginning September 4, 2017. As a result, we have delayed our third quarter Federal income tax payment.

Results of Operations

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2017 Compared with the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2016

Segment Results

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note ~~13:~~14: Business Segments in our unaudited condensed consolidated financial statements. We do not include equity in earnings from unconsolidated affiliate in our measures of segment revenues. For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses it to manage our business and material limitations on its usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following table sets forth revenues and Adjusted EBITDA by segment, reconciled to consolidated amount, including net income, our most comparable U.S. GAAP financial measure:


	Three Months Ended June 30,							Variance						Six Months Ended June 30,						Variance						Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016				$			%			2017			2016			$			%			2017			2016			$		%			2017			2016			$			%
Revenues:
Real estate sales and financing	$	323		$	276		��	$	47			17.0	%	$	606		$	542		$	64			11.8	%	$	310		$	301		$	9		3.0	%	$	916		$	843		$	73			8.7	%
Resort operations and club management		92			89				3			3.4			180			170			10			5.9			90			81			9		11.1			270			251			19			7.6

Segment revenues		415			365				50			13.7			786			712			74			10.4			400			382			18		4.7			1,186			1,094			92			8.4
Cost reimbursements		34			32				2			6.3			68			61			7			11.5			34			33			1		3.0			102			94			8			8.5
Intersegment eliminations⁽¹⁾		(10	)		(6	)			(4	)		(66.7	)		(16	)		(12	)		(4	)		(33.3	)		(8	)		(8	)		—		—			(24	)		(20	)		(4	)		(20.0	)

Total revenues	$	439		$	391			$	48			12.3		$	838		$	761		$	77			10.1		$	426		$	407		$	19		4.7		$	1,264		$	1,168		$	96			8.2

⁽¹⁾	Refer to Note ~~13:~~14: Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations.

The following table reconciles net income, our most comparable U.S. GAAP financial measure, to EBITDA and Adjusted EBITDA:


	Three Months Ended June 30,					Variance						Six Months Ended June 30,					Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions)*	2017		2016			$			%			2017		2016			$			%			2017			2016			$			%			2017			2016			$			%
Net Income	$	51	$	47		$	4			8.5	%	$	101	$	95		$	6			6.3	%	$	43		$	35		$	8			22.9	%	$	144		$	130		$	14			10.8	%
Interest expense		7		—			7			NM	⁽¹⁾		14		—			14			NM	⁽¹⁾		7			—			7		NM⁽¹⁾				21			—			21		NM⁽¹⁾
Allocated Parent interest expense		—		7			(7	)		(100.0	)		—		13			(13	)		(100.0	)		—			7			(7	)		(100.0	)		—			20			(20	)		(100.0	)
Income tax expense		33		33			—			—			59		65			(6	)		(9.2	)		28			33			(5	)		(15.2	)		87			98			(11	)		(11.2	)
Depreciation and amortization		7		6			1			16.7			14		11			3			27.3			7			6			1			16.7			21			17			4			23.5

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliate																								2			—			2		NM⁽¹⁾				2			—			2		NM⁽¹⁾
EBITDA		98		93			5			5.4			188		184			4			2.2			87			81			6			7.4			275			265			10			3.8
Other loss, net		—		1			(1	)		(100.0	)		—		1			(1	)		(100.0	)		—			—			—			—			—			1			(1	)		(100.0	)
Gain on foreign currency transactions		—		(1	)		1			(100.0	)		—		(1	)		1			(100.0	)		(1	)		(1	)		—			—			(1	)		(2	)		1			(50.0	)
Share-based compensation expense		5		3			2			66.7			8		5			3			60.0			5			2			3		NM⁽¹⁾				13			7			6			85.7
Other adjustment items⁽²⁾		3		7			(4	)		(57.1	)		4		10			(6	)		(60.0	)		3			11			(8	)		(72.7	)		7			21			(14	)		(66.7	)

Adjusted EBITDA	$	106	$	103		$	3			2.9		$	200	$	199		$	1			0.5		$	94		$	93		$	1			1.1		$	294		$	292		$	2			0.7

⁽¹⁾	Fluctuation in terms of percentage change is not meaningful.

⁽²⁾	For the three and ~~six~~nine months ended ~~June~~September 30, 2017, ~~amount represents~~amounts represent $2 million and ~~$3million,~~$5 million, respectively, of costs associated with thespin-off transaction.

   Three Months Ended
June 30,    Variance Six Months Ended
June 30,    Variance
($ in millions)    2017    2016    $    % 2017    2016    $    %
Adjusted EBITDA:

Real estate sales and financing⁽¹⁾
   $ 99    $ 84    $ 15    17.9 % $ 182    $ 165    $ 17    10.3 %
Resort operations and club management⁽¹⁾
   52    51    1    2.0 103    97    6    6.2













Segment Adjusted EBITDA
   151    135    16    11.9 285    262    23    8.8
Less:

License fee expense
   23    20    3    15.0 43    39    4    10.3
General and administrative⁽²⁾
   22    12    10    83.3 42    24    18    75.0













Adjusted EBITDA
   $ 106    $ 103    $ 3    2.9 $ 200    $ 199    $ 1    0.5

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2017			2016			$			%			2017			2016			$			%
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	81		$	85		$	(4	)		(4.7	)%	$	263		$	250		$	13			5.2	%
Resort operations and club management⁽¹⁾		50			42			8			19.0			153			139			14			10.1
Segment Adjusted EBITDA		131			127			4			3.1			416			389			27			6.9
Adjustments:
Adjusted EBITDA from unconsolidated affiliate		3			—			3		NM⁽¹⁾				3			—			3		NM⁽¹⁾
License fee expense		(22	)		(22	)		—			—			(65	)		(61	)		(4	)		6.6
General and administrative⁽²⁾		(18	)		(12	)		(6	)		50.0			(60	)		(36	)		(24	)		66.7
Adjusted EBITDA	$	94		$	93		$	1			1.1		$	294		$	292		$	2			0.7

⁽¹⁾	Includes intersegment eliminations and other adjustments.

⁽²⁾	Excludes share-based compensation and other adjustment items.

Real Estate Sales and Financing

Real estate sales and financing segment revenues ~~increased~~increase for the three months ended ~~June~~September 30, 2017, compared to the same period in 2016, primarily due to a ~~$30~~$4 million increase in sales revenue, a ~~$15~~$2 million increase in marketing revenue and a $2$4 million increased in financing revenues. The increase in sales revenue was primarily due to higher sales of VOIs, net, due to sales at our newly developed project beginning in the fourth quarter of 2016. The increase in marketing revenues was primarily due to an increase in title related services. The increase in financing revenues was primarily due an increase in interest income from higher outstanding timeshare financing receivables balance. Real estate sales and financing segment Adjusted EBITDA decreased by $4 million for the three months ended September 30, 2017, compared to the same period in 2016, primarily due to a $14 million increase in sales and marketing expense as well as a decrease in commission and brand fees.

Real estate sales and financing segment revenues increased for the nine months ended September 30, 2017, compared to the same period in 2016, primarily due to a $44 million increase in sales revenue, a $22 million increase in marketing revenue and a $9 million increased in financing revenues. The increase in sales revenue was primarily due to a ~~$29~~$47 million increase in sales of VOIs, net, due to sales at our newly developed ~~projects~~project beginning in the ~~second half of 2016 and a $1 million increase in commissions and brand fees, due to the launch of a newfee-for-service~~ property in Orlando, Florida in the second quarter of 2016. The increase in marketing revenue was due to a $10 million reduction of our expected redemptions of expired discounted vacation packages and a $4 million increase in the actual redemption of discounted vacation packages. Real estate sales and financing segment Adjusted EBITDA increased by $15 million for the three months ended June 30, 2017, compared to the same period in 2016, primarily due to an increase in revenues associated with the segment, partially offset by a $6 million increase in cost of VOI sales and a $18 million increase in sales and marketing expense.

Real estate sales and financing segment revenues increased for the six months ended June 30, 2017, compared to the same period in 2016, primarily due to a $40 million increase in sales revenue, a $20 million increase in marketing revenue and a $5 million increase in financing revenues. The increase in sales revenue was primarily due to a $32 million increase in sales of VOIs, net, due to sales at our newly developed projects beginning in the second half of 2016 and a $8 million increase in commissions and brand fees, due to the launch of a new~~fee-for-service~~ ~~property in Orlando, Florida in the second~~fourth quarter of 2016. The increase in marketing revenue was primarily due to (i) a $10 million reduction of our expected redemptions of expired discounted vacation packages, (ii) a $5$8 million

increase in the actual redemption of discounted vacation packages and (iii) a $3 million increase in title related service revenue. The increase in financing revenues was primarily due an increase in interest income from higher outstanding timeshare financing receivables balance. Real estate sales and financing segment Adjusted EBITDA increased by ~~$17~~$13 million for the ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same period in 2016, primarily due to an increase in revenues associated with the segment, partially offset by a ~~$35~~$49 million increase in sales and marketing expense as well as a decrease in commission and ~~$1 million increase in costs of VOI sales.~~brand fees.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the real estate sales and financing segment.

Resort Operations and Club Management

Resort operations and club management segment revenues increased for the three and nine months ended ~~June~~September 30, 2017, compared to the same ~~period~~periods in 2016, primarily due to ~~a $2~~(i) an increase of $4 million ~~increase~~and $10 million, respectively, in resort and club management ~~revenue~~revenues from the launch of new properties ~~during and~~ subsequent to the ~~second~~third quarter of ~~2016.~~2016 and (ii) an increase of $4 million and $3 million, respectively, in rental and ancillary services revenues as a result of higher transient room and club inventory rentals at our developed and fee-for-service properties. Resort operations and club management segment Adjusted EBITDA increased for the three and nine months ended ~~June~~September 30, 2017, compared to the same ~~period~~periods in 2016, primarily due to increases in revenues associated with the segment, partially offset by ~~a $2~~increases of $3 million ~~increase~~and $9 million, respectively, in ~~resort operations and club management~~segment expenses.

Resort operations and club management segment revenues increased for the six months ended June 30, 2017, compared to the same period in 2016, primarily due to a $4 million increase in resort management revenue from the launch of new properties during and subsequent to the second quarter of 2016. Resort operations and club management segment Adjusted EBITDA increased for the six months ended June 30, 2017, compared to the same period in 2016, primarily due to increases in revenues associated with the segment, partially offset by a $4 million increase in resort operations and club management expenses.

Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the resort operations and club management segment.

Real Estate Sales and Financing Segment

Real Estate


	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance					Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions, except Tour flow and VPG)*	2017			2016			$			%			2017			2016			$		%			2017			2016			$			%			2017			2016			$			%
Sales of VOIs, net	$	143		$	114		$	29			25.4	%	$	261		$	229		$	32		14.0	%	$	145		$	130		$	15			11.5	%	$	406		$	359		$	47			13.1	%
Adjustments:
Fee-for-service sales⁽¹⁾		166			171			(5	)		(2.9	)		339			331			8		2.4			169			181			(12	)		(6.6	)		508			512			(4	)		(0.8	)
Loan loss provision		15			13			2			15.4			26			23			3		13.0			19			14			5			35.7			45			37			8			21.6
Reportability and other⁽²⁾		(1	)		(7	)		6			(85.7	)		(16	)		(30	)		14		(46.7	)		(7	)		(19	)		12			(63.2	)		(23	)		(49	)		26			(53.1	)

Contract sales	$	323		$	291		$	32			11.0		$	610		$	553		$	57		10.3		$	326		$	306		$	20			6.5		$	936		$	859		$	77			9.0

Tour flow		87,114			79,557			7,557			9.5			159,519			150,545			8,974		6.0			87,346			79,817			7,529			9.4			246,865			230,362			16,503			7.2
VPG	$	3,503		$	3,447		$	56			1.6		$	3,609		$	3,452		$	157		4.5		$	3,555		$	3,602		$	(47	)		(1.3	)	$	3,590		$	3,504		$	86			2.5

⁽¹⁾	Represents contract sales fromfee-for-service properties on which we earn commissions and brand fees.

⁽²⁾	Includes adjustments for revenue recognition, includingpercentage-of-completion deferrals and amount in rescission, and sales incentives, as well as adjustments related to granting credit to customers for their existing ownership when upgrading intofee-for-service projects.

Contract sales increased for the three ~~and six~~ months ended ~~June~~September 30, 2017, compared to the same ~~periods~~period in 2016, primarily due to an increase in tour flow which correlates to the increase in marketing expense. VPG decreased for the three months ended September 30, 2017, compared to the same period in 2016 due to a 1.4 percent decrease in close rate, partially offset by a 0.8 percent increase in average transaction price.

Contract sales increased for the nine months ended September 30, 2017, compared to the same period in 2016, primarily due to an increase in tour flow which correlates to the increases in marketing expense ~~telesales~~ and VPG. VPG increased for the nine months ended September 30, 2017, compared to the same period in 2016 due to a ~~1.1~~0.5 percent and ~~2.8~~2.1 percent increase in close rate and average transaction price, ~~for the three and six months ended June 30, 2017,~~ respectively.


	Three Months Ended June 30,						Variance					Six Months Ended June 30,						Variance					Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016			$		%			2017			2016			$		%			2017			2016			$			%			2017			2016			$			%
Sales of VOIs, net	$	143		$	114		$	29		25.4	%	$	261		$	229		$	32		14.0	%	$	145		$	130		$	15			11.5	%	$	406		$	359		$	47			13.1	%
Sales, marketing, brand and other fees		144			128			16		12.5			274			246			28		11.4			127			136			(9	)		(6.6	)		401			382			19			5.0
Less:
Marketing revenue and other fees		43			28			15		53.6			75			55			20		36.4			34			32			2			6.3			109			87			22			25.3

Sales revenue		244			214			30		14.0			460			420			40		9.5			238			234			4			1.7			698			654			44			6.7

Less:
Cost of VOI sales		34			28			6		21.4			67			66			1		1.5			40			44			(4	)		(9.1	)		107			110			(3	)		(2.7	)
Sales and marketing expense, net⁽¹⁾		130			124			6		4.8			252			231			21		9.1			142			125			17			13.6			394			356			38			10.7

Real estate margin	$	80		$	62		$	18		29.0		$	141		$	123		$	18		14.6		$	56		$	65		$	(9	)		(13.8	)	$	197		$	188		$	9			4.8

Real estate margin percentage		32.8	%		29.0	%							30.7	%		29.3	%							23.5	%		27.8	%								28.2	%		28.7	%

⁽¹⁾	Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers.

Sales revenue increased for the three ~~and six~~ months ended ~~June~~September 30, 2017, compared to the same ~~periods~~period in 2016, primarily as a result of a ~~$29~~$15 million ~~and $32 million, respectively,~~ increase in ~~sales~~Sales of VOIs, net due to sales at our newly developed projects beginning in the ~~second half~~fourth quarter of 2016, in Washington, DC and New York, NY. The increase in sales revenues was partially offset by (i) a decrease in commission and brand fees primarily due to a shift in sales mix from fee-for-service to developed projects, (ii) a decrease in commission rate received on fee-for-service due to project mix and (iii) higher sales and marketing expense due to an increase in contract sales volume and research and development costs to evaluate new markets.

Sales revenue increased for the nine months ended September 30, 2017, compared to the same period in 2016, primarily as a result of (i) a $47 million increase in Sales of VOIs, net due to sales at our newly developed projects beginning in the fourth quarter of 2016, in Washington, DC and New York, NY, ~~and a $1 million and $8 million, respectively, increase in commissions and brand fees due to the launch of one newfee-for-service~~ ~~property in the second quarter of 2016. In addition, marketing revenue increased for the three and six months ended June 30, 2017, compared to the same periods in 2016, primarily due to~~(ii) a $10 million reduction of our expected redemptions of expired discounted vacation packages, (iii) an $8 million increase in the actual redemption of ~~the~~ discounted vacation packages and an(iii) a $3 million increase in title related service revenue. The increase in sales revenues was partially offset by (i) a decrease in commission and brand fees primarily due to a shift in sales mix from fee-for-service to developed projects, (ii) a decrease in commission rate received on fee-for-service due to project mix and (iii) higher sales and marketing expense due to an increase in contract sales volume and research and development costs to evaluate new markets.

Real estate margin and real estate margin percentage ~~increased~~decreased for the three ~~and six~~ months ended ~~June~~September 30, 2017, compared to the same ~~periods~~period in 2016, ~~due~~primarily as a result of an increase in our marketing costs as a percentage of revenue and additional research and development costs to evaluate new markets. Real estate margin increased for the nine months ended September 30, 2017, compared to the ~~aforementioned~~same period in 2016, primarily as a result of the increases in ~~sales and marketing~~segment revenues, partially offset by ~~an increase in costs of VOI sales and~~the aforementioned sales and marketing ~~expense driven by higher contract sales volume.~~expenses. Real estate margin percentage was flat for the nine months ended September 30, 2017, compared to the same period in 2016.

Financing


	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance					Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016			$			%			2017			2016			$		%			2017			2016			$		%			2017			2016			$		%
Interest income	$	32		$	30		$	2			6.7	%	$	64		$	60		$	4		6.7	%	$	33		$	31		$	2		6.5	%	$	97		$	91		$	6		6.6	%
Other financing revenue		4			4			—			—			7			6			1		16.7			5			3			2		66.7			12			9			3		33.3

Financing revenue		36			34			2			5.9			71			66			5		7.6			38			34			4		11.8			109			100			9		9.0

Consumer financing interest expense		6			3			3			100.0			10			6			4		66.7			6			3			3		100.0			16			9			7		77.8
Other financing expense		5			5			—			—			11			10			1		10.0			5			5			—		—			16			15			1		6.7

Financing expense		11			8			3			37.5			21			16			5		31.3			11			8			3		37.5			32			24			8		33.3

Financing margin	$	25		$	26		$	(1	)		(3.8	)	$	50		$	50		$	—		—		$	27		$	26		$	1		3.8		$	77		$	76		$	1		1.3

Financing margin percentage		69.4	%		76.5	%								70.4	%		75.8	%							71.1	%		76.5	%							70.6	%		76.0	%

Financing revenue increased for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016, primarily due to an increase of $2 million and $4$6 million, respectively, in interest income resulting from a higher outstanding timeshare financing receivables balance during the three and ~~six~~nine months ended ~~June~~September 30, 2017. Financing margin percentage decreased for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016, primarily due to highernon-recourse debt balance associated with the additional drawdown on our timeshare facility in December 2016. See Note 7:8: Debt &Non-recourse debt ~~debt~~in our unaudited condensed consolidated financial statements for additional information.

Resort Operations and Club Management Segment

Resort and Club Management


	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance					Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016			$			%			2017			2016			$		%			2017			2016			$		%			2017			2016			$		%
Club management revenue	$	20		$	21		$	(1	)		(4.8	)%	$	41		$	39		$	2		5.1	%	$	22		$	21		$	1		4.8	%	$	63		$	60		$	3		5.0	%
Resort management revenue		15			13			2			15.4			30			26			4		15.4			15			12			3		25.0			45			38			7		18.4

Resort and club management revenues		35			34			1			2.9			71			65			6		9.2			37			33			4		12.1			108			98			10		10.2

Club management expense		6			5			1			20.0			11			10			1		10.0			7			5			2		40.0			18			15			3		20.0
Resort management expense		4			3			1			33.3			9			6			3		50.0			5			4			1		25.0			14			10			4		40.0

Resort and club management expenses		10			8			2			25.0			20			16			4		25.0			12			9			3		33.3			32			25			7		28.0

Resort and club management margin	$	25		$	26		$	(1	)		(3.8	)	$	51		$	49		$	2		4.1		$	25		$	24		$	1		4.2		$	76		$	73		$	3		4.1

Resort and club management margin percentage		71.4	%		76.5	%								71.8	%		75.4	%							67.6	%		72.7	%							70.4	%		74.5	%

Resort and club management revenues increased for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016, primarily due to (i) an increase in resort management revenue from the launch of new properties ~~during and~~ subsequent to the ~~second~~third quarter of 2016 and (ii) an increase of approximately 19,000 in Club members resulting in higher annual dues and transaction fees. These increases were partially offset by a~~one-time~~ ~~fees earned in 2016 on a prepaid contract and~~ higher resort and club management expenses due to an increase in costs for servicing additional Club members and ~~operating expenses.~~

~~Resort and club management margin decreased~~properties. In addition, for the ~~three~~nine months ended ~~June~~September 30, 2017, ~~compared to~~ the ~~same period in 2016, primarily due to~~increases were partially offset by aone-time ~~fees~~ fee earned in 2016 on a prepaid ~~contract, partially offset by the aforementioned increases in segment revenues as well as a $2 million increase in resort and club management expenses.~~contract.

Resort and club management margin increased for the ~~six~~three and nine months ended ~~June~~September 30, 2017, compared to the same ~~period~~periods in 2016, primarily due to the aforementioned increases in segment revenues, partially offset by a~~one-time~~ ~~fees earned~~an increase in ~~2016 on a prepaid contract as well~~segment expenses as a ~~$4 million increase in resort~~result of customer and company related initiatives. Resort and club management ~~expenses.~~

~~Rental and Ancillary Services~~

   Three Months Ended
June 30, Variance Six Months Ended
June 30, Variance
($ in millions)    2017 2016 $ % 2017 2016 $ %
Rental revenues
   $ 40 $ 42 $ (2 ) (4.8 )% $ 81 $ 81 $ —   — %
Ancillary services revenues
   7 7 —   —   12 13 (1 ) (7.7 )


Rental and ancillary services revenues
   47 49 (2 ) (4.1 ) 93 94 (1 ) (1.1 )


Rental expenses
   25 23 2 8.7 48 44 4 9.1
Ancillary services expense
   6 7 (1 ) (14.3 ) 10 12 (2 ) (16.7 )


Rental and ancillary services expenses
   31 30 1 3.3 58 56 2 3.6


Rental and ancillary services margin
   $ 16 $ 19 $ (3 ) (15.8 ) $ 35 $ 38 $ (3 ) (7.9 )


Rental and ancillary services margin percentage
   34.0 % 38.8 % 37.6 % 40.4 %

~~Rental and ancillary services revenues~~margin percentage decreased for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016, primarily due to an increase in segment expenses as a result of customer and company related initiatives, partially offset by the aforementioned increases in segment revenues.

Rental and Ancillary Services

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2017			2016			$			%			2017			2016			$			%
Rental revenues	$	39		$	35		$	4			11.4	%	$	120		$	116		$	4			3.4	%
Ancillary services revenues		6			6			—			—			18			19			(1	)		(5.3	)
Rental and ancillary services revenues		45			41			4			9.8			138			135			3			2.2
Rental expenses		25			23			2			8.7			73			67			6			9.0
Ancillary services expense		5			7			(2	)		(28.6	)		15			19			(4	)		(21.1	)
Rental and ancillary services expenses		30			30			—			—			88			86			2			2.3
Rental and ancillary services margin	$	15		$	11		$	4			36.4		$	50		$	49		$	1			2.0
Rental and ancillary services margin percentage		33.3	%		26.8	%								36.2	%		36.3	%

Rental and ancillary services revenues increased for the three months ended September 30, 2017, compared to the same period in 2016, primarily due to an increase of $4 million in rental revenues as a result of higher transient room and club inventory rentals at our developed and fee-for-service properties. Rental expenses increased by $2 million, offset by a decrease in ancillary expense.

Rental and ancillary services revenues increased for the nine months ended September 30, 2017, compared to the same period in 2016, primarily due to an increase of $4 million in rental revenues as a result of higher transient room and club inventory rentals at our developed and fee-for-service properties. The increases were partially offset by (i) a net increase of $2 million in rental expenses due to additional owners and new properties, (ii) a one-time insurance claim payment of $2 million received in 2016, ~~as well as~~and (iii) a reduction in access fees received due to higher quantity of access fees sold in 2016.

Rental and ancillary services margin ~~decreased~~increased for the three ~~and six~~ months ended ~~June~~September 30, 2017, compared to the same ~~periods~~period in 2016, due to aforementioned ~~decreases~~increases in segment revenues and ~~increases in~~lower property subsidy expenses from ~~new properties with unsold inventory as well as an increase~~operational savings. Rental and ancillary services margin was flat for the nine months ended September 30, 2017, compared to the same period in ~~Hilton Honors expense due to higher Club members.~~2016.

Other Operating Expenses


	Three Months Ended June 30,				Variance						Six Months Ended June 30,				Variance						Three Months Ended September 30,				Variance						Nine Months Ended September 30,				Variance
*($ in millions)*	2017		2016		$			%			2017		2016		$			%			2017		2016		$			%			2017		2016		$			%
Unallocated general and administrative	$	29	$	15	$	14			93.3	%	$	52	$	27	$	25			92.6	%	$	23	$	17	$	6			35.3	%	$	75	$	44	$	31			70.5	%
Allocated general and administrative		—		6		(6	)		(100.0	)		—		10		(10	)		(100.0	)		—		7		(7	)		(100.0	)		—		17		(17	)		(100.0	)

General and administrative	$	29	$	21	$	8			38.1		$	52	$	37	$	15			40.5		$	23	$	24		(1	)		(4	)	$	75	$	61	$	14			23.0

Unallocated general and administrative expenses increased for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016, primarily due to an increase in expenses relating to regulatory filings, professional fees and other costs as a result of becoming an independent publicly traded company. Allocated general and administrative were expenses allocated to us from Hilton relating to thespin-off which was completed on January 3, 2017.


	Three Months Ended June 30,				Variance					Six Months Ended June 30,				Variance					Three Months Ended September 30,				Variance					Nine Months Ended September 30,				Variance
*($ in millions)*	2017		2016		$		%			2017		2016		$		%			2017		2016		$		%			2017		2016		$		%
Depreciation and amortization	$	7	$	6	$	1		16.7	%	$	14	$	11	$	3		27.3	%	$	7	$	6	$	1		16.7	%	$	21	$	17	$	4		23.5	%
License fee expense		23		20		3		15.0			43		39		4		10.3			22		22		—		—			65		61		4		6.6

Depreciation and amortization expense increased for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016, primarily due to asset transfers from Hilton during the fourth quarter of 2016, some of which we hold as property and equipment for future conversion into inventory. The increase in license fee expense for the nine months ended September 30, 2017 was as a result of the increase in revenues.

Non-Operating Expenses ~~Expenses~~


	Three Months Ended June 30,					Variance						Six Months Ended June 30,					Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions)*	2017		2016			$			%			2017		2016			$			%			2017			2016			$			%			2017			2016			$			%
Gain on foreign currency transactions	$	—	$	(1	)	$	1			(100.0	)%	$	—	$	(1	)	$	1			(100.0	)%	$	(1	)	$	(1	)	$	—			—		$	(1	)	$	(2	)	$	1			(50.0	)%
Allocated Parent interest expense		—		7			(7	)		(100.0	)		—		13			(13	)		(100.0	)		—			7			(7	)		(100.0	)		—			20			(20	)		(100.0	)
Interest expense		7		—			7			NM	⁽¹⁾		14		—			14			NM	⁽¹⁾		7			—			7		NM⁽¹⁾				21			—			21		NM⁽¹⁾
Other loss, net		—		1			(1	)		(100.0	)		—		1			(1	)		(100.0	)		—			—			—			—			—			1			(1	)		(100.0	)
Income tax expense		33		33			—			—			59		65			(6	)		(9.2	)		28			33			(5	)		(15.2	)		87			98			(11	)		(11.2	)
Equity in earnings from unconsolidated affiliate																								(1	)		—			(1	)	NM⁽¹⁾				(1	)		—			(1	)	NM⁽¹⁾

⁽¹⁾	Fluctuation in terms of percentage change is not meaningful.

The Allocated Parent interest expense ~~included in our condensed consolidated statements of operations for the three and six months ended June 30, 2016~~ relates to an unconditional obligation to guarantee certain Hilton allocated debt balances which was released in November 2016.

The increase in interest expense for the three and ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same periods in 2016 is directly related to the financing transactions closed during and subsequent to the fourth quarter of 2016.

Income tax expense decreased for the ~~six~~three and nine months ended ~~June~~September 30, 2017, compared to the same ~~period~~periods in 2016, primarily due to a decrease in the cumulative installment sale interest ~~liability, offset by an increase~~liability.

Equity in ~~tax due~~earnings from unconsolidated affiliate relates to ~~the cumulative effect of a change~~our 25 percent interest in ~~the state effective tax rate.~~BRE Ace LLC. See Note 7: Investment in unconsolidated affiliate in our unaudited condensed consolidated financial statements for additional information.

Liquidity and Capital Resources

Overview

Prior to the fourth quarter of 2016, any net cash generated by our business has been transferred to Hilton, where it has been centrally managed. Transfers of cash to and from Hilton have been reflected as a component ofNet transfers (to) from Parent in our condensed consolidated statements of cash flows.

As of ~~June~~September 30, 2017, we had total cash and cash equivalents of ~~$253~~$284 million, including ~~$62~~$58 million of restricted cash. The restricted cash balance relates to escrowed cash from our sales of our VOIs and consumer financing receivables pledged to ournon-recourse revolving timeshare receivable credit facility or securitizations.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness and capital expenditures for renovations and maintenance at our offices and sales centers. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, purchase commitments and costs associated with potential acquisitions and development projects.

We finance our business activities primarily with existing cash and cash equivalents, cash generated from our operations and through securitizations of our timeshare financing receivables. We believe that this cash will be adequate to meet anticipated requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs and capital expenditures for the foreseeable future. The objectives of our cash management policy are to maintain the availability of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects. Further, we have an investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments.

Sources and Uses of Our Cash

The following table summarizes our net cash flows and key metrics related to our liquidity:


	Six Months Ended June 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016			$			%			2017			2016			$			%
Net cash provided by (used in):
Operating activities⁽²⁾	$	177		$	86		$	91			NM	⁽¹⁾	$	299		$	133		$	166		NM⁽¹⁾
Investing activities		(21	)		(17	)		(4	)		23.5	%		(77	)		(21	)		(56	)	NM⁽¹⁾
Financing activities⁽²⁾		(54	)		(73	)		19			(26.0	)		(89	)		(94	)		5			(5.3	)

⁽¹⁾	Fluctuation in terms of percentage change is not meaningful.

⁽²⁾

Reflects the adoption of Accounting Standards Update (“ASU”)No. 2016-18, (“ASU2016-18”)Statement of Cash Flows (Topic 230): Restricted Cash.See Note 2: ~~Recently Issued~~ Significant Accounting ~~Pronouncements~~Policies in our unaudited condensed consolidated financial statements for further discussion.

Operating Activities

Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related ancillary services. Cash flows used in operating activities primarily include spending for the acquisition of inventory, development of new phases of existing resorts and funding our working capital needs. Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs: the degree to which our owners finance their purchase and our owners’ repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from afee-for-service sale.

Net cash flows provided by operating activities increased by ~~$91~~$166 million during the ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same period in 2016, primarily as a result of improved operating results in the real estate sales and financing segment and increased sources of cash for working capital requirements. In addition, as permitted by the federal government pursuant to a tax relief program for regions impacted by Hurricane Irma, we deferred our estimated federal tax payment until the first quarter of 2018.

Capital efficiency allows us to reduce inventory investment requirements and to generate growth in revenues and cash flows. Over a short-term period, depending on the timing of inventory spend, our capital efficiency may vary; however, over the long-term, we generally target a 50/50 mix of owned andfee-for-service inventory, which we expect will allow us to expand partner relationships and to provide a strong inventory supply without the upfront capital investment. In addition, we continue to move towards morejust-in-time owned inventory sourcing arrangements that we expect to also drive capital efficiency. ~~Over~~The change for the nine months ended September 30, 2017, compared to the same period in 2016, is primarily due to reduced inventory spending while maintaining a consistent sales pace and fewer fee-for-service upgrades. However, over the long-term, we consider a ratio of VOI inventory spend to cost of VOI sales of 1:1 to be indicative of capital efficiency. ~~The change for the six months ended June 30, 2017, compared to the same period in 2016, is primarily due to reduced inventory spending while maintaining a consistent sales pace and fewerfee-for-service~~ ~~upgrades.~~

The following is a summary of our Capital Efficiency Ratio:


	Six Months Ended June 30,				Nine Months Ended September 30,
*($ in millions)*	2017		2016		2017		2016
VOI spending - owned properties	$	18	$	32	$	31	$	62
VOI spending -fee-for-service upgrades		28		40		41		65

Total VOI inventory spending⁽¹⁾	$	46	$	72	$	72	$	127

Cost of VOI sales⁽¹⁾	$	67	$	66	$	107	$	110
Capital Efficiency Ratio		1.5		0.9		1.5		0.9

⁽¹⁾	Includes costs of VOI sales related to the cost of reacquiring inventory that we have developed from existing owners upgrading intofee-for-service projects. Excludesnon-cash asset transfers from Hilton andnon-cash inventory accruals.

Investing Activities

The following table summarizes our net cash used in investing activities:


	Six Months Ended June 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016			$			%			2017			2016			$			%
Capital expenditures for property and equipment	$	(15	)	$	(14	)	$	(1	)		7.1	%	$	(25	)	$	(16	)	$	(9	)		56.3	%
Software capitalization costs		(6	)		(3	)		(3	)		100.0			(12	)		(5	)		(7	)	NM⁽¹⁾

Investment in unconsolidated affiliate														(40	)		—			(40	)	NM⁽¹⁾
Net cash used in investing activities	$	(21	)	$	(17	)	$	(4	)		23.5		$	(77	)	$	(21	)	$	(56	)	NM⁽¹⁾

⁽¹⁾	Fluctuation in terms of percentage change is not meaningful.

Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. We believe the ~~maintenance and~~ renovations of our existing assets are necessary to stay competitive in the markets in which we operate.

Financing Activities

The following table summarizes our net cash used in financing activities:


	Six Months Ended June 30,						Variance						Nine Months Ended September 30,						Variance
*($ in millions)*	2017			2016			$			%			2017			2016			$			%
Issuance ofnon-recourse debt	$	350		$	—		$	350			NM	⁽¹⁾	$	350		$	—		$	350		NM⁽¹⁾
Repayment ofnon-recourse debt		(395	)		(58	)		(337	)		NM	⁽¹⁾		(428	)		(85	)		(343	)	NM⁽¹⁾
Repayment of debt		(5	)		—			(5	)		NM	⁽¹⁾		(7	)		—			(7	)	NM⁽¹⁾
Debt issuance costs		(5	)		—			(5	)		NM	⁽¹⁾		(5	)		(6	)		1			(16.7	)%
Allocated Parent debt activity														—			111			(111	)		(100.0	)
Net transfers to Parent⁽²⁾		—			(15	)		15			(100.0	)%		—			(114	)		114			(100.0	)
Proceeds from stock option exercises		1			—			1			NM	⁽¹⁾		1			—			1		NM⁽¹⁾

Net cash used in financing activities	$	(54	)	$	(73	)	$	19			(26.0	)	$	(89	)	$	(94	)	$	5			(5.3	)

⁽¹⁾	Fluctuation in terms of percentage change is not meaningful.

⁽²⁾	All transactions between HGV and Hilton have been settled in connection with thespin-off.

The change in net cash used in financing activities for the ~~six~~nine months ended ~~June~~September 30, 2017, compared to the same period in 2016, was primarily due to our financing transactions that occurred in the first quarter of 2017. During the ~~six~~nine months ended ~~June~~September 30, 2017, we issued $350 million innon-recourse securitized debt and paid $5 million in debt issuance costs. The proceeds received from thenon-recourse securitized debt were used to pay down a portion of our timeshare facility. We also paid $5$7 million of the principal amount of the senior secured term loan. See Note 7:8: Debt & Non -recourse debtin our unaudited condensed consolidated financial statements for further discussion. Additionally, following thespin-off date we no longer receive transfers from Hilton.

Contractual Obligations

The following table summarizes our significant contractual obligations as of ~~June~~September 30, 2017:


	Payments Due by Period										Payments Due by Period
*($ in millions)*	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Debt⁽¹⁾	$	658	$	35	$	69	$	210	$	344	$	650	$	35	$	69	$	206	$	340
Non-recourse debt⁽¹⁾		691		142		370		113		66		652		147		348		100		57
Purchase commitments		212		7		196		9		—		208		3		196		9		—

Total contractual obligations	$	1,561	$	184	$	635	$	332	$	410	$	1,510	$	185	$	613	$	315	$	397

⁽¹⁾	Includes principal, as well as estimated interest payments. For our variable-rate debt, we have assumed a constant30-day LIBOR rate of ~~1.22~~1.23 percent as of ~~June~~September 30, 2017.

As of ~~June~~September 30, 2017, our contractual obligations relating to our operating leases have not materially changed from what was reported in our Annual Report on Form10-K for the year ended December 31, 2016.

Off-Balance Sheet Arrangements

Ouroff-balance sheet arrangements as of ~~June~~September 30, 2017 consisted of ~~$212~~$208 million of certain commitments with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under the Hilton Grand Vacations brand. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note ~~14:~~ 15: Commitments and Contingencies in our unaudited condensed consolidated financial statements for a discussion of ouroff-balance sheet arrangements.

Subsequent Events

On ~~July 18,~~October 13, 2017, we ~~entered into~~acquired an ~~agreement with BRE Ace Holdings, an affiliate of Blackstone and formed BRE Ace LLC. Pursuant to the agreement, we contributed $40 million~~83-unit, ski-in mountain lodge in ~~cash for a 25 percent interest in BRE Ace LLC, which owns, a1,201-key~~ ~~timeshare resort property and related operations, commonly~~Park City, Utah, known as ~~“Elara, by~~“The Sunrise Lodge, a Hilton Grand Vacations Club.” ~~located in Las Vegas Nevada. See Note 15:~~~~Subsequent Events~~ ~~in our unaudited condensed consolidated financial statements for additional information.~~Prior to the acquisition, HGV was providing marketing, sales and resort management services to the seller Sunrise Park City, LLC under a fee-for-service agreement.

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form10-K for the year ended December 31, 2016. Since the date of our Annual Report on Form10-K, there have been no material changes to our critical accounting policies or the methods or assumptions we apply under them.

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates, currency exchange rates and debt prices. We manage our exposure to these risks by monitoring available financing alternatives and through pricing policies that may take into account currency exchange rates. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form10-K for the year ended December 31, 2016.

Interest Rate Risk

We are exposed to interest rate risk on our variable-rate debt, comprised of the term loans and our timeshare facility, of which the timeshare facility is without recourse to us. The interest rate is based onone-month LIBOR and we are most vulnerable to changes in this rate.

We intend to securitize timeshare financing receivables in the asset-backed financing market ~~on a regular basis.~~periodically. We expect to secure fixed rate funding to match our fixed rate timeshare financing receivables. However, if we have floating rate debt in the future, we will monitor the interest rate risk and evaluate opportunities to mitigate such risk through the use of derivative instruments.

To the extent we utilize variable rate indebtedness in the future, any increase in interest rates beyond amounts covered under any corresponding derivative financial instruments, particularly if sustained, could have an adverse effect on our net income, cash flows and financial position. Hedging transactions we enter into may not adequately mitigate the adverse effects of interest rate increases or that counterparties in those transactions will honor their obligations.

The following table sets forth the contractual maturities, weighted average interest rates and the total fair values as of ~~June~~September 30, 2017, for our financial instruments that are materially affected by interest rate risk:


				Maturities by Period																			Maturities by Period
*($ in millions)*	Weighted Average Interest Rate⁽¹⁾			2017		2018		2019		2020		2021		There- after		Total⁽²⁾		Fair Value		Weighted Average Interest Rate⁽¹⁾			2017		2018		2019		2020		2021		There- after		Total⁽²⁾		Fair Value
Assets:
Fixed-rate securitized timeshare financing receivables		11.880	%	$	39	$	79	$	78	$	75	$	69	$	201	$	541	$	620		11.901	%	$	19	$	76	$	75	$	72	$	67	$	197	$	506	$	595
Fixed-rate unsecuritized timeshare financing receivables		12.210	%		39		52		56		61		64		351		623		679		12.272	%		28		56		60		65		70		408		687		799
Liabilities:⁽³⁾
Fixed-rate debt		3.772	%		127		116		108		79		29		364		823		842		3.836	%		30		134		99		120		32		374		789		817
Variable-rate debt⁽⁴⁾		3.031	%		10		10		138		10		155		—		323		330		3.103	%		3		10		139		10		160		—		322		326

⁽¹⁾	Weighted average interest rate as of ~~June~~September 30, 2017.

⁽²⁾	Amount excludes unamortized deferred financing costs.

⁽³⁾	Includes debt andnon-recourse debt.

⁽⁴⁾	Variable-rate debt includes principal outstanding debt of ~~$195~~$193 million andnon-recourse debt of ~~$128~~$129 million as of ~~June~~September 30, 2017. See Note 7: 8: Debt &Non-recourse debt ~~debt~~ in our unaudited condensed consolidated financial statements for additional information.

Foreign Currency Exchange Rate Risk

Though the majority of our operations are conducted in United States dollar (“U.S. dollar”), we are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates. Our principal exposure results from our timeshare financing receivables denominated in Japanese yen, the value of which could change materially in reference to our reporting currency, the U.S. dollar. A 10 percent increase in the foreign exchange rate of Japanese yen to U.S. dollar would increase our gross timeshare financing receivables by less than $1 million.

ITEM 4.

Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form10-Q, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules13a-15(e) and15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance about management’s control objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving the desired control objectives. However, you should note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and operating to provide reasonable assurance that we record, process, summarize and report the information we are required to disclose in the reports that we file or submit under the Exchange Act within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that we accumulate and communicate such information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions about required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of ~~June~~September 30, 2017 will not have a material effect on our condensed consolidated results of operations, financial position or cash flows.

Item 1A.

Risk Factors

Set forth below are the material changes to the risk factors discussed in Item 1A of Part 1 of the Annual Report on Form10-K for the year ended December 31, 2016. In addition to the other information set forth in this Quarterly Report on Form10-Q, you should carefully consider the risk factors discussed below and in Item 1A of Part 1 of the Annual Report on Form10-K for the year ended December 31, 2016, which could materially and adversely affect our business, financial condition, results of operations and stock price. The risks described below and in the Annual Report on Form10-K are not the only risks facing HGV. Additional risks and uncertainties not presently known to management or that management presently believes not to be material may also result in material and adverse effects on our business, financial condition, results of operations and stock price.

Partnership or joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on partners’ orco-venturers’ financial condition, disputes between us and our partners orco-venturers and our obligation to guaranty certain obligations beyond the amount of our investments.

We mayco-invest in the future with other third parties through partnerships, joint ventures or other entities, acquiringnon-controlling interests in, or sharing responsibility for managing the affairs, of a timeshare property, partnership, joint venture or other entity. For example, we recently entered into the Joint Venture Agreement with BRE Ace Holdings, an affiliate of Blackstone, pursuant to which we acquired anon-managing 25 percent interest in ~~the Elara~~BRE Ace LLC, which owns a 1,201-key timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations,” located in Las Vegas, Nevada (the “Elara Joint Venture.”) Consequently, with respect to any such third-party arrangements, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity, and may, under certain circumstances, be exposed to risks not present if a third party were not involved, including the possibility that partners orco-venturers might become bankrupt or fail to fund their share of required capital contributions, and we may be forced to make contributions to maintain the value of the property. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner orco-venturer may have full control over the partnership or joint venture. We and our respective partners orco-venturers may each have the right to trigger abuy-sell right or forced sale arrangement, which could cause us to sell our interest, or acquire our partners’ orco-venturers’ interest, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. In addition, a sale or transfer by us to a third party of our interests in the partnership or joint venture may be subject to consent rights or rights of first refusal in favor of our partners orco-venturers, which would in each case restrict our ability to dispose of our interest in the partnership or joint venture. For example, our joint venture partner in the Elara Joint Venture generally has exclusive authority to manage the business and affairs of the Elara Joint Venture, and has the discretion to call for additional capital contributions at any time. In addition, it has certain rights to transfer or sell some or all of its interests in the Elara Joint Venture and/or the Property without our consent or, in certain situations, require us to sell our interests at the same time, while we are not permitted to sell or transfer our interest without their consent. Any or all of these factors could adversely affect the value of our investment, our ability to exit, sell or dispose of our investment at times that are beneficial to us, or our financial commitment to maintaining our interest in the joint ventures.

Our joint ventures may be subject to debt and the refinancing of such debt, and we may be required to provide certain guarantees or be responsible for the full amount of the debt in certain circumstances in the event of a default beyond the amount of our equity investment. Our joint venture partners may take actions that are inconsistent with the interests of the partnership or joint venture, or in violation of the financing arrangements and trigger our guaranty, which may expose us to substantial financial obligation and commitment that are beyond our ability to fund. In addition, partners orco-venturers may have economic or other business interests or goals that are inconsistent with our business interests or goals and may be in a position to take action or withhold consent contrary to our policies or objectives. In some instances, partners orco-venturers may have competing interests in our markets that could create conflict of interest issues. Disputes between us and partners orco-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers from focusing their time and effort on our business. Consequently, actions by or disputes with partners orco-venturers might result in subjecting assets owned by the partnership or joint venture to additional risk. In addition, we may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers.

~~co-venturers.~~A significant percentage of our revenue is derived from our fee-for-service agreements with respect to two properties that are owned by a third party, and any termination of such arrangements could have a materially adverse impact on our revenues and financial results.

We derived approximately 20 percent and 14 percent of our revenues for the quarter and nine months ended September 30, 2017, respectively, from fee-for-service fees with respect two of our properties that are owned single third party and for which we have entered into fee-for-service agreements. If these fee-for-service agreements are terminated by the property owner, if one or both properties are sold to another party without the continuation of such arrangement, or if there is any occurrence or existence of any adverse economic development, adverse acts of natural or manmade disasters, or any other conditions (as more fully described in our Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2017, as updated from time to time) that negatively or disproportionately adversely affects either or both of these two properties, our revenues, our operating results and our financial performance could be materially adversely impacted.

Item 2.

Unregistered Sales of ~~Equity~~Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

~~Exhibits~~

Exhibits


Exhibit No.		Description

~~3.1~~
3.1		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form8-K (FileNo. 001-37794) filed on March 17, 2017).

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form8-K (FileNo. 001-37794) filed on March 17, 2017).

10.1		~~2017 Declaration~~ Amended and Restate Limited Liability Company Agreement of ~~Amendment to Hilton Grand Vacations Inc.~~BRE Ace LLC, a Delaware limited liability company, dated as of July 18, 2017 ~~Omnibus Incentive Plan (incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A (FileNo. 001-37794)~~ filed on March 24, 2017).*

~~10.2~~		~~Employment Letter Agreement, dated April 17, 2017, between Mark D. Wang and Hilton Grand Vacations Inc.~~ (incorporated by reference to Exhibit 10.1 to ~~the Company’s~~Hilton Grand Vacation Inc.’s Current Report on Form8-K (FileNo. 001-37794) filed on ~~April 17,~~July 21, 2017).*

~~10.3~~ 11.1		~~Severance Agreement, dated April 17, 2017, between Mark D. Wang and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form8-K~~ ~~(FileNo. 001-37794)~~ filed on April 17, 2017).*

~~10.4~~		~~Severance Agreement, dated April 17, 2017, between James E. Mikolaichik and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form8-K~~ ~~(FileNo. 001-37794)~~ filed on April 17, 2017).*

~~10.5~~		~~Severance Agreement, dated April 17, 2017, between Stan R. Soroka and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form8-K~~ ~~(FileNo. 001-37794)~~ filed on April 17, 2017).*

~~10.6~~		~~Severance Agreement, dated April 17, 2017, between Barbara L. Hollkamp and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form8-K~~ ~~(FileNo. 001-37794)~~ filed on April 17, 2017).*

~~10.7~~		Severance Agreement, dated April 17, 2017, between Charles R. Corbin and Hilton Grand Vacations, Inc.*

~~10.8~~		~~Hilton Grand Vacations Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on FormS-8~~ ~~(FileNo. 333-218056)~~ filed on May 17, 2017).*

~~11.1~~		Statement regarding computation of earnings per share. See condensed consolidated statements of operations on page 3 of this Form10-Q.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Label Linkbase Document.

101.PRE		XBRL Taxonomy Presentation Linkbase Document.

*	Denotes management contract or compensatory plan or arrangement.

~~SIGNATURES~~SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 32^rdnd day of ~~August,~~November, 2017.


HILTON GRAND VACATIONS INC.

By:		/s/ Mark D. Wang
Name:		Mark D. Wang
Title:		President and Chief Executive Officer

~~By:~~
By:	/s/ James E. Mikolaichik
Name:		James E. Mikolaichik
Title:		Executive Vice President and Chief Financial Officer

Delaware
~~Delaware~~		81-2545345
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)		~~(I.R.S. Employer~~ Identification No.)

6355 MetroWest Boulevard, Suite 180,
Orlando, Florida		32835
(Address of Principal Executive Offices)		(Zip Code)


~~Large Accelerated Filer~~		☐		~~Accelerated Filer~~		☐

~~Non-Accelerated~~ Large Accelerated Filer	☐	Accelerated Filer	☐

Non-Accelerated Filer	☒ (Do not check if a smaller reporting company)		Smaller Reporting Company		☐

Emerging Growth Company	☐	☐


	June 30,		December 31,		September 30,		December 31,
	2017		2016		2017		2016
	(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents	$	191	$	48	$	226	$	48
Restricted cash		62		103		58		103
Accounts receivable, net of allowance for doubtful accounts of $10 and $6		123		123		104		123
Timeshare financing receivables, net		1,034		1,025		1,055		1,025
Inventory		492		513		475		513
Property and equipment, net		255		256		266		256
Investment in unconsolidated affiliate						41		—
Intangible assets, net		71		70		72		70
Other assets		59		42		51		42

TOTAL ASSETS (variable interest entities - $534 and $258)	$	2,287	$	2,180

TOTAL ASSETS (variable interest entities - $500 and $258)					$	2,348	$	2,180
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	265	$	231	$	324	$	231
Advanced deposits		100		103		102		103
Debt		486		490		484		490
Non-recourse debt		645		694		612		694
Deferred revenues		128		106		119		106
Deferred income tax liabilities		380		389		374		389

Total liabilities (variable interest entities - $518 and $245)		2,004		2,013
Commitments and contingencies - see Note 14
Total liabilities (variable interest entities - $484 and $245)						2,015		2,013
Commitments and contingencies - see Note 15
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2017 and December 31, 2016		—		—

Common stock, $0.01 par value; 3,000,000,000 authorized shares, 99,082,128 issued and outstanding as of June 30, 2017 and 98,802,597 issued and outstanding as of December 31, 2016		1		1

Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of September 30, 2017 and December 31, 2016						—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 99,088,973 issued and outstanding as of September 30, 2017 and 98,802,597 issued and outstanding as of December 31, 2016						1		1
Additionalpaid-in capital		153		138		160		138
Accumulated retained earnings		129		28		172		28

Total equity		283		167		333		167

TOTAL LIABILITIES AND EQUITY	$	2,287	$	2,180	$	2,348	$	2,180


	June 30, 2017									September 30, 2017
*($ in millions)*	Securitized and Pledged			Unsecuritized			Total			Securitized and Pledged			Unsecuritized			Total
Timeshare financing receivables	$	541		$	623		$	1,164		$	506		$	687		$	1,193
Less: allowance for loan loss		(33	)		(97	)		(130	)		(29	)		(109	)		(138	)
										$	477		$	578		$	1,055
	$	508		$	526		$	1,034


	December 31, 2016
*($ in millions)*	Securitized and Pledged			Unsecuritized			Total
Timeshare financing receivables	$	253		$	892		$	1,145
Less: allowance for loan loss		(9	)		(111	)		(120	)

	$	244		$	781		$	1,025


PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements	2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	32	33
Item 4.		Controls and Procedures	33
		34

PART II - OTHER INFORMATION

Item 1.		Legal Proceedings	33	35
Item 1A.		Risk Factors	33	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34	37
Item 3.	Defaults Upon Senior Securities		34	37
Item 4.	Mine Safety Disclosures		34	37
Item 5.		Other Information	34	37
Item 6.		Exhibits	35	38
	Signatures


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2017			2016			2017			2016
Revenues
Sales of VOIs, net	$	143		$	114		$	261		$	229		$	145		$	130		$	406		$	359
Sales, marketing, brand and other fees		144			128			274			246			127			136			401			382
Financing		36			34			71			66			38			34			109			100
Resort and club management		35			34			71			65			37			33			108			98
Rental and ancillary services		47			49			93			94			45			41			138			135
Cost reimbursements		34			32			68			61			34			33			102			94

Total revenues		439			391			838			761			426			407			1,264			1,168

Expenses
Cost of VOI sales		34			28			67			66			40			44			107			110
Sales and marketing		169			151			321			286			171			157			492			443
Financing		11			8			21			16			11			8			32			24
Resort and club management		10			8			20			16			12			9			32			25
Rental and ancillary services		31			30			58			56			30			30			88			86
General and administrative		29			21			52			37			23			24			75			61
Depreciation and amortization		7			6			14			11			7			6			21			17
License fee expense		23			20			43			39			22			22			65			61
Cost reimbursements		34			32			68			61			34			33			102			94

Total operating expenses		348			304			664			588			350			333			1,014			921
Gain on foreign currency transactions		—			1			—			1			1			1			1			2
Allocated Parent interest expense		—			(7	)		—			(13	)		—			(7	)		—			(20	)
Interest expense		(7	)		—			(14	)		—			(7	)		—			(21	)		—
Equity in earnings from unconsolidated affiliate														1			—			1			—
Other loss, net		—			(1	)		—			(1	)		—			—			—			(1	)

Income before income taxes		84			80			160			160			71			68			231			228
Income tax expense		(33	)		(33	)		(59	)		(65	)		(28	)		(33	)		(87	)		(98	)

Net income	$	51		$	47		$	101		$	95		$	43		$	35		$	144		$	130

Earnings per share:⁽¹⁾
Basic and diluted	$	0.51		$	0.48		$	1.02		$	0.96
Basic													$	0.43		$	0.35		$	1.45		$	1.31
Diluted													$	0.43		$	0.35		$	1.44		$	1.31


					Additional		Accumulated								Additional		Accumulated
	Common Stock				Paid-in		Retained		Total		Common Stock				Paid-in		Retained		Total
	Shares		Amount		Capital		Earnings		Equity		Shares		Amount		Capital		Earnings		Equity
Balance as of December 31, 2016		99	$	1	$	138	$	28	$	167		99	$	1	$	138	$	28	$	167
Net income		—		—		—		101		101		—		—		—		144		144
Deferred intercompany transaction⁽¹⁾		—		—		9		—		9		—		—		9		—		9
Activity related to share-based compensation		—		—		6		—		6		—		—		11		—		11

Balance as of June 30, 2017		99	$	1	$	153	$	129	$	283

Other												—		—		2		—		2
Balance as of September 30, 2017												99	$	1	$	160	$	172	$	333


	June 30, 2016									September 30, 2016
*($ in millions)*	Securitized and Pledged			Unsecuritized			Total			Securitized and Pledged			Unsecuritized			Total
Balance as of December 31, 2015	$	17		$	89		$	106		$	17		$	89		$	106
Write-offs		—			(17	)		(17	)		—			(27	)		(27	)
Provision for loan loss⁽¹⁾		(4	)		27			23			(6	)		43			37

Balance as of June 30, 2016	$	13		$	99		$	112

Balance as of September 30, 2016										$	11		$	105		$	116


*($ in millions)*	Debt		Non-recourse Debt		Total		Debt		Non-recourse Debt		Total
Year
2017 (remaining)	$	5	$	61	$	66	$	3	$	30	$	33
2018		10		126		136		10		134		144
2019		10		230		240		10		228		238
2020		10		122		132		10		120		130
2021		160		34		194		160		32		192
Thereafter		300		78		378		300		74		374
							$	493	$	618	$	1,111
	$	495	$	651	$	1,146


	June 30, 2017						September 30, 2017
			Hierarchy Level						Hierarchy Level
*($ in millions)*	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables⁽¹⁾	$	1,034	$	—	$	1,299	$	1,055	$	—	$	1,394
Liabilities:
Debt⁽²⁾		486		325		201		484		329		197
Non-recourse debt⁽²⁾		645		—		646		612		—		617

	December 31, 2016
			Hierarchy Level
*($ in millions)*	Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables⁽¹⁾	$	1,025	$	—	$	1,147
Liabilities:
Debt⁽²⁾		490		314		200
Non-recourse debt⁽²⁾		694		—		696