Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q

(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172023
OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-35219
_________________________
Marriott Vacations Worldwide Corporation
(Exact name of registrant as specified in its charter)
_________________________
Delaware45-2598330
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
6649 Westwood Blvd.
Orlando, FL
9002 San Marco Court32821OrlandoFL32819
(Address of principal executive offices)(Zip Code)
(407) 206-6000
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueVACNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
Large accelerated filerxAccelerated filer¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes¨☐ Nox☒
The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, as of October 27, 201730, 2023 was 26,494,634.
35,517,203.




MARRIOTT VACATIONS WORLDWIDE CORPORATION
FORM 10-Q TABLE OF CONTENTS
Page
Page No.
Part I.
1
Item 1.
Financial Statements
1
Interim Consolidated Statements of Income
1
Interim Consolidated Statements of Comprehensive Income
2
Interim Consolidated Balance Sheets
3
Interim Consolidated Statements of Cash Flows
4
Interim Consolidated Statements of Shareholders’ Equity
6
Interim Condensed Notes to Interim Consolidated Financial Statements
68
1. Basis of Presentation
8
2. Significant Accounting Policies and Recent Accounting Standards
9
3. Acquisitions and Dispositions
9
4. Revenue and Receivables
10
5. Income Taxes
13
6. Vacation Ownership Notes Receivable
14
7. Financial Instruments
19
8. Earnings Per Share
21
9. Inventory
23
10. Contingencies and Commitments
23
11. Securitized Debt
24
12. Debt
26
13. Shareholders’ Equity
29
14. Share-Based Compensation
30
15. Variable Interest Entities
31
16. Business Segments
34
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
3036
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
6566
Item 4.
Controls and Procedures
6566
Part II.
6667
Item 1.
Legal Proceedings
6667
Item 1A.
Risk Factors
6667
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
6867
Item 3.5.
Defaults Upon Senior SecuritiesOther Information
6867
Item 4.6.
Mine Safety DisclosuresExhibits
6968
Item 5.
6970
Item 6.
Exhibits
69
SIGNATURES
71

Throughout this report, we refer to Marriott Vacations Worldwide Corporation, together with its consolidated subsidiaries, as “Marriott Vacations Worldwide,” “MVW,” “we,” “us,” or the “Company.” We also refer to brands that we own, as well as those brands that we license, from Marriott International, Inc. (“Marriott International”) or its affiliates, as our brands. Brand names, trademarks, service marks and trade names that we own or license from Marriott International include Marriott Vacation Club®, Marriott Vacation Club DestinationsTM, Marriott Vacation Club PulseSM, Marriott Grand Residence Club��, Grand Residences by Marriott®, and The Ritz-Carlton Club®. We also refer to Marriott International’s Marriott Rewards® customer loyalty program. We may also refer toAll brand names, trademarks, trade names, and service marks and trade names of other companies and organizations, and these brand names, trademarks, service marks and trade namescited in this report are the property of their respective owners.owners, including those of other companies and organizations. Solely for convenience, trademarks, trade names, and service marks referred to in this report may appear without the ® or TM symbols, however, such references are not intended to indicate in any way that MVW or the owner, as applicable, will not assert, to the fullest extent under applicable law, all rights to such trademarks, trade names, and service marks.



Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(In thousands,millions, except per share amounts)
(Unaudited)
Quarter Ended Year to Date Ended
September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016Three Months EndedNine Months Ended
(92 days) (84 days) (274 days) (252 days)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES       REVENUES
Sale of vacation ownership products$180,522
 $131,012
 $543,687
 $415,831
Sale of vacation ownership products$319 $444 $1,085 $1,179 
Resort management and other services76,882
 70,185
 229,004
 208,049
Management and exchangeManagement and exchange205 198 611 623 
RentalRental138 165 435 438 
Financing34,685
 29,066
 99,326
 86,944
Financing81 74 239 217 
Rental81,177
 73,776
 250,621
 229,133
Cost reimbursements113,724
 97,598
 348,091
 303,973
Cost reimbursements443 371 1,163 1,011 
TOTAL REVENUES486,990
 401,637
 1,470,729
 1,243,930
TOTAL REVENUES1,186 1,252 3,533 3,468 
EXPENSES       EXPENSES
Cost of vacation ownership products42,826
 34,779
 131,589
 104,149
Cost of vacation ownership products50 76 174 216 
Marketing and sales100,527
 79,017
 305,217
 236,348
Marketing and sales202 207 618 603 
Resort management and other services44,696
 39,825
 130,349
 123,695
Management and exchangeManagement and exchange115 101 332 330 
RentalRental119 126 344 294 
Financing5,062
 4,581
 12,528
 11,782
Financing30 5 81 49 
Rental71,048
 60,970
 211,643
 191,658
General and administrative26,666
 22,151
 83,739
 72,871
General and administrative57 62 189 187 
Litigation settlement2,033
 —
 2,216
 (303)
Consumer financing interest6,498
 5,361
 18,090
 15,840
Depreciation and amortizationDepreciation and amortization33 33 99 98 
Litigation chargesLitigation charges2 2 7 7 
Royalty fee15,220
 14,624
 47,597
 42,007
Royalty fee30 28 88 84 
ImpairmentImpairment— 1 4 1 
Cost reimbursements113,724
 97,598
 348,091
 303,973
Cost reimbursements443 371 1,163 1,011 
TOTAL EXPENSES428,300
 358,906
 1,291,059
 1,102,020
TOTAL EXPENSES1,081 1,012 3,099 2,880 
Gains and other income, net6,977
 454
 6,752
 11,129
Interest expense(2,642) (2,262) (5,180) (6,331)
Gains (losses) and other income (expense), netGains (losses) and other income (expense), net3 (2)34 39 
Interest expense, netInterest expense, net(36)(34)(106)(91)
Transaction and integration costsTransaction and integration costs(5)(34)(28)(99)
Other104
 (75) (365) (4,528)Other(1)(1)— — 
INCOME BEFORE INCOME TAXES63,129
 40,848
 180,877
 142,180
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTSINCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS66 169 334 437 
Provision for income taxes(22,367) (14,041) (62,139) (54,656)Provision for income taxes(24)(59)(115)(134)
NET INCOME$40,762
 $26,807
 $118,738
 $87,524
NET INCOME42 110 219 303 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests— (1)— — 
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERSNET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$42 $109 $219 $303 
       
EARNINGS PER SHARE       
Earnings per share - Basic$1.50
 $0.99
 $4.36
 $3.10
Earnings per share - Diluted$1.47
 $0.97
 $4.26
 $3.05
EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERSEARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
BasicBasic$1.16 $2.76 $5.96 $7.39 
DilutedDiluted$1.09 $2.53 $5.33 $6.68 
       
CASH DIVIDENDS DECLARED PER SHARE$0.35
 $0.30
 $1.05
 $0.90
CASH DIVIDENDS DECLARED PER SHARE$0.72 $0.62 $2.16 $1.86 
See Interim Condensed Notes to Interim Consolidated Financial Statements

1

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)millions)
(Unaudited)
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
 (92 days) (84 days) (274 days) (252 days)
Net income$40,762
 $26,807
 $118,738
 $87,524
Other comprehensive income (loss):       
Foreign currency translation adjustments4,945
 (664) 11,626
 1,089
Derivative instrument adjustment, net of tax22
 33
 70
 (366)
Total other comprehensive income (loss), net of tax4,967
 (631) 11,696
 723
COMPREHENSIVE INCOME$45,729
 $26,176
 $130,434
 $88,247


Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
NET INCOME$42 $110 $219 $303 
Foreign currency translation adjustments(2)(1)10 1 
Reclassification of foreign currency translation adjustments realized upon disposition of entities— — — (10)
Derivative instrument adjustment, net of tax(3)8 (7)31 
OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX(5)7 3 22 
Net income attributable to noncontrolling interests— (1)— — 
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS— (1)— — 
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$37 $116 $222 $325 
See Interim Condensed Notes to the Interim Consolidated Financial Statements



2

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands,millions, except share and per share data)
Unaudited
(Unaudited)
September 30, 2017		 December 30, 2016September 30, 2023December 31, 2022
ASSETS   ASSETS
Cash and cash equivalents$440,074
 $147,102
Cash and cash equivalents$265 $524 
Restricted cash (including $34,413 and $27,525 from VIEs, respectively)61,701
 66,000
Accounts and contracts receivable, net (including $5,702 and $4,865 from VIEs, respectively)136,107
 161,733
Vacation ownership notes receivable, net (including $875,237 and $717,543 from VIEs, respectively)1,076,402
 972,311
Restricted cash (including $84 and $85 from VIEs, respectively)Restricted cash (including $84 and $85 from VIEs, respectively)238 330 
Accounts and contracts receivable, net (including $14 and $13 from VIEs, respectively)Accounts and contracts receivable, net (including $14 and $13 from VIEs, respectively)298 292 
Vacation ownership notes receivable, net (including $1,885 and $1,792 from VIEs, respectively)Vacation ownership notes receivable, net (including $1,885 and $1,792 from VIEs, respectively)2,291 2,198 
Inventory735,072
 712,536
Inventory642 660 
Property and equipment253,738
 202,802
Other (including $13,153 and $0 from VIEs, respectively)119,942
 128,935
Property and equipment, netProperty and equipment, net1,250 1,139 
GoodwillGoodwill3,117 3,117 
Intangibles, netIntangibles, net868 911 
Other (including $88 and $76 from VIEs, respectively)Other (including $88 and $76 from VIEs, respectively)484 468 
TOTAL ASSETS$2,823,036
 $2,391,419
TOTAL ASSETS$9,453 $9,639 
   
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Accounts payable$76,766
 $124,439
Accounts payable$238 $356 
Advance deposits60,247
 55,542
Advance deposits169 158 
Accrued liabilities (including $739 and $584 from VIEs, respectively)128,236
 147,469
Accrued liabilities (including $3 and $5 from VIEs, respectively)Accrued liabilities (including $3 and $5 from VIEs, respectively)359 369 
Deferred revenue103,376
 95,495
Deferred revenue371 344 
Payroll and benefits liability97,080
 95,516
Payroll and benefits liability193 251 
Deferred compensation liability72,803
 62,874
Deferred compensation liability156 139 
Debt, net (including $906,701 and $738,362 from VIEs, respectively)1,153,222
 737,224
Securitized debt, net (including $2,048 and $1,982 from VIEs, respectively)Securitized debt, net (including $2,048 and $1,982 from VIEs, respectively)2,026 1,938 
Debt, netDebt, net3,031 3,088 
Other12,789
 15,873
Other165 167 
Deferred taxes169,295
 149,168
Deferred taxes335 331 
TOTAL LIABILITIES1,873,814
 1,483,600
TOTAL LIABILITIES7,043 7,141 
Contingencies and Commitments (Note 8)
 
Contingencies and Commitments (Note 10)Contingencies and Commitments (Note 10)
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding—
 —
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding— — 
Common stock — $0.01 par value; 100,000,000 shares authorized; 36,857,186 and 36,633,868 shares issued, respectively369
 366
Treasury stock — at cost; 10,363,139 and 9,643,562 shares, respectively(689,134) (606,631)
Common stock — $0.01 par value; 100,000,000 shares authorized; 75,807,873 and 75,744,524 shares issued, respectivelyCommon stock — $0.01 par value; 100,000,000 shares authorized; 75,807,873 and 75,744,524 shares issued, respectively1 1 
Treasury stock — at cost; 40,122,822 and 38,263,442 shares, respectivelyTreasury stock — at cost; 40,122,822 and 38,263,442 shares, respectively(2,298)(2,054)
Additional paid-in capital1,184,635
 1,162,283
Additional paid-in capital3,953 3,941 
Accumulated other comprehensive income17,156
 5,460
Accumulated other comprehensive income18 15 
Retained earnings436,196
 346,341
Retained earnings734 593 
TOTAL MVW SHAREHOLDERS' EQUITYTOTAL MVW SHAREHOLDERS' EQUITY2,408 2,496 
Noncontrolling interestsNoncontrolling interests2 2 
TOTAL EQUITY949,222
 907,819
TOTAL EQUITY2,410 2,498 
TOTAL LIABILITIES AND EQUITY$2,823,036
 $2,391,419
TOTAL LIABILITIES AND EQUITY$9,453 $9,639 
The abbreviation VIEs above means Variable Interest Entities.


See Interim Condensed Notes to Interim Consolidated Financial Statements

3

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)millions)
(Unaudited)

Nine Months Ended
September 30, 2023September 30, 2022
OPERATING ACTIVITIES
Net income$219 $303 
Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities:
Depreciation and amortization of intangibles99 98 
Amortization of debt discount and issuance costs17 20 
Vacation ownership notes receivable reserve182 130 
Share-based compensation25 30 
Impairment charges2 1 
Gains and other income, net(8)(48)
Deferred income taxes2 64 
Net change in assets and liabilities:
Accounts and contracts receivable(16)6 
Vacation ownership notes receivable originations(749)(728)
Vacation ownership notes receivable collections461 469 
Inventory80 74 
Other assets(10)(21)
Accounts payable, advance deposits and accrued liabilities(103)(28)
Deferred revenue24 (5)
Payroll and benefit liabilities(58)52 
Deferred compensation liability12 8 
Other liabilities(2)7 
Deconsolidation of certain Consolidated Property Owners' Associations— (48)
Purchase of property for future transfer to inventory(27)(12)
Other, net(1)8 
Net cash, cash equivalents and restricted cash provided by operating activities149 380 
INVESTING ACTIVITIES
Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred— 94 
Capital expenditures for property and equipment (excluding inventory)(92)(36)
Issuance of note receivable to VIE— (47)
Proceeds from collection of note receivable from VIE— 47 
Purchase of company owned life insurance(8)(14)
Other dispositions, net15 5 
Net cash, cash equivalents and restricted cash (used in) provided by investing activities(85)49 

 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
OPERATING ACTIVITIES   
Net income$118,738
 $87,524
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation15,802
 14,856
Amortization of debt discount and issuance costs5,783
 3,784
Provision for loan losses38,577
 31,817
Share-based compensation12,349
 9,995
Loss (gain) on disposal of property and equipment, net1,683
 (11,129)
Deferred income taxes20,769
 21,823
Net change in assets and liabilities:   
Accounts and contracts receivable25,094
 (2,824)
Notes receivable originations(345,663) (218,190)
Notes receivable collections203,840
 177,451
Inventory27,112
 (6,118)
Purchase of vacation ownership units for future transfer to inventory(33,594) —
Other assets23,110
 38,103
Accounts payable, advance deposits and accrued liabilities(64,994) (73,935)
Deferred revenue7,121
 26,832
Payroll and benefit liabilities1,241
 (20,898)
Deferred compensation liability9,928
 8,846
Other liabilities(638) 1,190
Other, net4,529
 1,758
Net cash provided by operating activities70,787
 90,885
INVESTING ACTIVITIES   
Capital expenditures for property and equipment (excluding inventory)(21,167) (22,445)
Purchase of company owned life insurance(12,100) —
Dispositions, net17
 68,525
Net cash (used in) provided by investing activities(33,250) 46,080

Continued



See Interim Condensed Notes to Interim Consolidated Financial Statements

4


Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)millions)
(Unaudited)

Nine Months Ended
September 30, 2023September 30, 2022
FINANCING ACTIVITIES
Borrowings from securitization transactions916 609 
Repayment of debt related to securitization transactions(828)(655)
Proceeds from debt790 505 
Repayments of debt(956)(505)
Finance lease incentive10 — 
Finance lease payment(2)(3)
Payment of debt issuance costs(6)(10)
Repurchase of common stock(248)(528)
Payment of dividends(80)(75)
Payment of withholding taxes on vesting of restricted stock units(10)(23)
Net cash, cash equivalents and restricted cash used in financing activities(414)(685)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(1)(4)
Change in cash, cash equivalents and restricted cash(351)(260)
Cash, cash equivalents and restricted cash, beginning of period854 803 
Cash, cash equivalents and restricted cash, end of period$503 $543 
SUPPLEMENTAL DISCLOSURES
Non-cash issuance of debt in connection with asset acquisition$— $11 
Non-cash issuance of treasury stock for employee stock purchase plan4 4 
Non-cash transfer from inventory to property and equipment11 45 
Non-cash transfer from property and equipment to inventory60 2 
Non-cash transfer from other assets to property and equipment— 15 
Right-of-use asset obtained in exchange for finance lease obligation80 — 
Non-cash issuance of debt in connection with finance lease97 — 
Dividends payable26 24 
Interest paid, net of amounts capitalized141 104 
Income taxes paid, net of refunds138 51 

 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
FINANCING ACTIVITIES   
Borrowings from securitization transactions400,260
 376,622
Repayment of debt related to securitization transactions(231,921) (254,510)
Borrowings from Revolving Corporate Credit Facility87,500
 85,000
Repayment of Revolving Corporate Credit Facility(87,500) (85,000)
Proceeds from issuance of Convertible Notes230,000
 —
Purchase of Convertible Note Hedges(33,235) —
Proceeds from issuance of Warrants20,332
 —
Debt issuance costs(14,459) (4,065)
Repurchase of common stock(83,067) (163,359)
Accelerated stock repurchase forward contract—
 (14,470)
Payment of dividends(28,590) (26,067)
Payment of withholding taxes on vesting of restricted stock units(10,713) (3,972)
Other, net(502) 194
Net cash provided by (used in) financing activities248,105
 (89,627)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash3,031
 (3,247)
Increase in cash, cash equivalents, and restricted cash288,673
 44,091
Cash, cash equivalents and restricted cash, beginning of period213,102
 248,512
Cash, cash equivalents and restricted cash, end of period$501,775
 $292,603
    
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES   
Property acquired via capital lease$—
 $7,221
Non-cash issuance of treasury stock for employee stock purchase plan942
 673
Disposition accruals not yet paid—
 2,931
Non-cash transfer from Inventory to Property and equipment—
 9,741
Non-cash issuance of debt in connection with acquisition of vacation ownership units63,558
 —
Non-cash debt issuance costs1,000
 —
Dividends payable9,394
 8,127





See Interim Condensed Notes to Interim Consolidated Financial Statements



5


MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)
Common
Stock
Issued		Common
Stock		Treasury
Stock		Additional
Paid-In
Capital		Accumulated Other Comprehensive Income (Loss)Retained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal Equity
75.7 BALANCE AT DECEMBER 31, 2022$1 $(2,054)$3,941 $15 $593 $2,496 $2 $2,498 
— Net income— — — — 87 87 — 87 
— Foreign currency translation adjustments— — — 6 — 6 — 6 
— Derivative instrument adjustment— — — (3)— (3)— (3)
0.1 Share-based compensation plans— 2 (4)— — (2)— (2)
— Repurchase of common stock— (80)— — — (80)— (80)
— Dividends— — — — (26)(26)— (26)
75.8 BALANCE AT MARCH 31, 20231 (2,132)3,937 18 654 2,478 2 2,480 
— Net income— — — — 90 90 — 90 
— Foreign currency translation adjustments— — — 6 — 6 — 6 
— Derivative instrument adjustment— — — (1)— (1)— (1)
— Share-based compensation plans— 1 10 — — 11 — 11 
— Repurchase of common stock— (82)— — — (82)— (82)
— Dividends— — — — (26)(26)— (26)
75.8 BALANCE AT JUNE 30, 20231 (2,213)3,947 23 718 2,476 2 2,478 
— Net income— — — — 42 42 — 42 
— Foreign currency translation adjustments— — — (2)— (2)— (2)
— Derivative instrument adjustment— — — (3)— (3)— (3)
— Share-based compensation plans— 1 6 — — 7 — 7 
— Repurchase of common stock— (86)— — — (86)— (86)
— Dividends— — — — (26)(26)— (26)
75.8 BALANCE AT SEPTEMBER 30, 2023$1 $(2,298)$3,953 $18 $734 $2,408 $2 $2,410 
Continued
See Interim Condensed Notes to Consolidated Financial Statements
6


MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)
(In millions)
(Unaudited)
Common
Stock
Issued		Common
Stock		Treasury
Stock		Additional
Paid-In
Capital		Accumulated Other Comprehensive (Loss) IncomeRetained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal Equity
75.5 BALANCE AT DECEMBER 31, 2021$1 $(1,356)$4,072 $(16)$275 $2,976 $10 $2,986 
— 
Impact of adoption of ASU 2020-06
— — (111)— 31 (80)— (80)
75.5 OPENING BALANCE 20221 (1,356)3,961 (16)306 2,896 10 2,906 
— Net income— — — — 58 58 — 58 
— Foreign currency translation adjustments— — — 4 — 4 — 4 
— Derivative instrument adjustment— — — 16 — 16 — 16 
0.2 Share-based compensation plans— 1 (16)— — (15)— (15)
— Repurchase of common stock— (119)— — — (119)— (119)
— Dividends— — — — (26)(26)— (26)
75.7 BALANCE AT MARCH 31, 20221 (1,474)3,945 4 338 2,814 10 2,824 
— Net income— — — — 136 136 (1)135 
— Foreign currency translation adjustments— — — (2)— (2)— (2)
— Reclassification of foreign currency translation adjustments realized upon disposition of entities— — — (10)— (10)— (10)
— Derivative instrument adjustment— — — 7 — 7 — 7 
— Adjustment for 2022 Convertible Note Hedges— — 6 — — 6 — 6 
— Share-based compensation plans— 1 12 — — 13 — 13 
— Repurchase of common stock— (193)— — — (193)— (193)
— Deconsolidation of certain Consolidated Property Owners' Associations— — — — — — (8)(8)
— Dividends— — — — (26)(26)— (26)
75.7 BALANCE AT JUNE 30, 20221 (1,666)3,963 (1)448 2,745 1 2,746 
— Net income— — — — 109 109 1 110 
— Foreign currency translation adjustments— — — (1)— (1)— (1)
— Derivative instrument adjustment— — — 8 — 8 — 8 
— Tax effect on equity, convertible notes— — (1)— — (1)— (1)
— Share-based compensation plans— — 5 — — 5 — 5 
— Repurchase of common stock— (216)— — — (216)— (216)
— Dividends— — — — (24)(24)— (24)
— Employee stock plan issuance— — 1 — — 1 — 1 
75.7 BALANCE AT SEPTEMBER 30, 2022$1 $(1,882)$3,968 $6 $533 $2,626 $2 $2,628 
See Interim Condensed Notes to Consolidated Financial Statements
7

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.BASIS OF PRESENTATION
Our Business
The Interim Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (“we,(referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide”Worldwide,” “MVW,” or the “Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity) is the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. In 2016, we introduced Marriott Vacation Club Pulse, an extensionentity, or (ii) “MVWC,” which shall refer only to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. The Ritz-Carlton Hotel Company, L.L.C., a subsidiary of Marriott International, provides on-site management for Ritz-Carlton branded properties.
Our business is grouped into three reportable segments: North America, Asia Pacific and Europe. As of September 30, 2017, our portfolio consisted of over 65 properties in the United States and nine other countries and territories. We generate most of our revenues from four primary sources: selling vacation ownership products; managing our resorts; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
Principles of Consolidation and Basis of Presentation
The interim consolidated financial statements presented herein and discussed below include 100 percent of the assets, liabilities, revenues, expenses and cash flows of Marriott Vacations Worldwide all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and those variable interest entities for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance. Intercompany accounts and transactions betweenCorporation, without its consolidated companies have been eliminated in consolidation. The interim consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”)subsidiaries).
In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Statements of Income,“Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in thesethe Interim Condensed Notes to Interim Consolidated Financial Statements, unless otherwise noted.
Beginning with our 2017 fiscal year, we changed our financial reporting cycle to a calendar year-end Capitalized terms used and end-of-month quarterly reporting cycle. Accordingly, our 2017 fiscal year began on December 31, 2016 (the day afternot specifically defined herein have the end of the 2016 fiscal year) and will end on December 31, 2017, and our 2017 quarters include the three month periods ended March 31, June 30, September 30, and December 31, except that the period ended March 31, 2017 also includes December 31, 2016. Our future fiscal years will begin on January 1 and end on December 31. Historically, our fiscal year was a 52 or 53 week fiscal year that ended on the Friday nearest to December 31, and our quarterly reporting cycle included twelve week periods for the first, second, and third quarters and a sixteen week period (or in some cases a seventeen week period) for the fourth quarter. We have not restated, and do not plan to restate, historical results.
The table below shows the reporting periods as we refer to them in this report, their date ranges, and the number of days in each:
Reporting PeriodDate RangeNumber of Days
2017 third quarterJuly 1, 2017 — September 30, 201792
2016 third quarterJune 18, 2016 — September 9, 201684
2017 first three quartersDecember 31, 2016 — September 30, 2017274
2016 first three quartersJanuary 2, 2016 — September 9, 2016252
2017 fiscal yearDecember 31, 2016 — December 31, 2017366
2016 fiscal yearJanuary 2, 2016 — December 30, 2016364
As a result of the change in our financial reporting cycle, our 2017 third quarter had eight more days of activity than our 2016 third quarter, and our 2017 first three quarters had 22 more days of activity than our 2016 first three quarters. While our 2017 full fiscal year will have two additional days of activity as compared to our 2016 full fiscal year, our 2017 fourth quarter will have 20 fewer days of activity than the corresponding periods in our 2016 fiscal year.

In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position and the results of our operations and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, seasonal and short-term variations.
These Financial Statements have not been audited. Amounts as of December 30, 2016 included in these Financial Statements have been derived from the audited consolidated financial statements as of that date. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, you should read these Financial Statements in conjunction with the consolidated financial statements and notes tosame meanings given those consolidated financial statements includedterms in our Annual Report on Form 10-K for the fiscal year ended December 30, 2016.31, 2022 (the “2022 Annual Report”). We also use certain other terms that are defined within these Financial Statements.
The Financial Statements presented herein and discussed below include 100% of the assets, liabilities, revenues, expenses, and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary, as determined in accordance with consolidation accounting guidance. References in these Financial Statements to net income or loss attributable to common shareholders and MVW shareholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.
These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, cost of vacation ownership products, inventory valuation, propertygoodwill and equipmentintangibles valuation, loanaccounting for acquired vacation ownership notes receivable, vacation ownership notes receivable reserves, income taxes, and loss reserves, loss contingencies and income taxes. Accordingly, actual amounts maycontingencies. The uncertainties in the broader macroeconomic environment, including inflationary pressures, as well as effects of theCOVID-19 pandemic, have made it more challenging to make these estimates. Actual results could differ from these estimated amounts.our estimates, and such differences may be material.
We have reclassified certain prior year amounts to conform toIn our current period presentation. Ouropinion, our Financial Statements includereflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors, consistent with those reported in our Annual Report on Form 10-K for theperiods presented. Interim results may not be indicative of fiscal year ended December 30, 2016, within the following line items on our Statementsperformance because of, Income: Resort managementamong other reasons, general macroeconomic conditions, including inflationary pressures, rising interest rates, and other services revenues, Resort managementseasonal and other services expenses and General and administrative expenses. Correction of these immaterial errors had no impact on our consolidated Net income.
The impact of these adjustments on the Financial Statements is as follows:
  Quarter Ended Year to Date Ended
  September 9, 2016 September 9, 2016
  (84 days) (252 days)
($ in thousands) As Revised Previous Filing As Revised Previous Filing
Resort management and other services $70,185
 $75,539
 $208,049
 $226,098
TOTAL REVENUES $401,637
 $406,991
 $1,243,930
 $1,261,979
Resort management and other services $39,825
 $45,437
 $123,695
 $140,545
General and administrative $22,151
 $21,619
 $72,871
 $71,504
TOTAL EXPENSES $358,906
 $364,260
 $1,102,020
 $1,120,069
Deferred Compensation Plan
Beginning in our 2017 fiscal year, participants in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”) may select a rate of return based on various market-based investment alternatives for a portion of their contributions,short-term variations, as well as any future Company contributions,effects of the COVID-19 pandemic. These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our 2022 Annual Report.
We refer to the Deferred Compensation Plan,business and may also select such a rate for a portion of their existing account balances. To support our ability to meet a portion of our obligations under the Deferred Compensation Plan,brands that we acquired company owned insurance policies (the “COLI policies”) on the lives of certain participants in the Deferred Compensation Plan, the proceedsacquisition of which are intended to be aligned with the investment alternatives elected by plan participants and are payable to a rabbi trust with the CompanyWelk Hospitality Group, Inc. (“Welk”) in 2021 (the “Welk Acquisition”) as grantor. A portion of a participant’s contributions“Legacy-Welk.” We refer to the Deferred Compensation Plan must be subjectbusiness and brands that we acquired in the acquisition of ILG, LLC, formerly known as ILG, Inc. (“ILG”), in 2018 (the “ILG Acquisition”) as “Legacy-ILG.” We refer to a fixed rate of return, which for our 2017 fiscal year was reduced to 3.5 percent.
We consolidate the liabilities of the Deferred Compensation Planbusiness we conducted, and the related assets,associated brands, prior to the ILG Acquisition as “Legacy-MVW.”
During the third quarter of 2023 we launched Hyatt Vacation Club across our former Hyatt Residence Club and Legacy-Welk properties, which consistconnects these properties and associated vacation ownership programs under a single brand.

8

Table of the COLI policies held in the rabbi trust. The rabbi trust is considered a variable interest entity (“VIE”). We are considered the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust. At September 30, 2017, the value of the assets held in the rabbi trust was $13.2 million, which is included in the Other line within assets on our Balance Sheets.Contents

2.SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS
New Accounting Standards
Accounting Standards Update No. 2017-092022-02 – “Compensation - Stock CompensationFinancial Instruments — Credit Losses (Topic 718): Scope326) – Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”)
In the first quarter of Modification 2023, we adopted accounting standards update (“ASU”) 2022-02, which eliminated the recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhanced disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 also requires disclosure of current-period gross write-offs by year of origination to be presented in the vintage disclosures for financing receivables. The adoption of ASU 2022-02 on January 1, 2023, on a prospective basis, did not have a material impact on our financial statements or disclosures other than the incremental disclosures relating to gross write-offs for vacation ownership notes receivable. See Footnote 6 “Vacation Ownership Notes Receivable” for the incremental disclosures required by the adoption of ASU 2022-02.
Accounting Standards Update 2020-04 – “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2017-09”2020-04”) and Accounting Standards Update 2022-06 – “Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”)
In May 2017,March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-09,ASU 2020-04, as amended, which clarifies when changesprovides optional expedients and exceptions to existing guidance on contract modifications and hedge accounting in an effort to ease the financial reporting burdens related to the terms or conditions of a share-based payment award must be accounted for as modifications forexpected market transition from the purpose of applying the modification guidance in Accounting Standards Codification Topic 718.USD London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This update iswas effective for all entities for annual periods beginning afterupon issuance and issuers generally were able to elect to adopt the optional expedients and exceptions over time through a period ending on December 15, 2017, and for interim periods within those annual periods, with early adoption permitted. Our early adoption of ASU 2017-09 in the 2017 second quarter did not have an impact on our financial statements or disclosures.
Accounting Standards Update No. 2016-18 – “Restricted Cash” (“ASU 2016-18”)
31, 2022. In November 2016,December 2022, the FASB issued ASU 2016-18, which requires entities2022-06 to showextend the changestemporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. During the second quarter of 2023, we amended our Term Loan (as defined in Footnote 12 “Debt”) and our interest rate swaps and collar to reference SOFR (as defined in Footnote 12 “Debt”) rather than LIBOR. See Footnote 12 “Debt” for more information. Both our Term Loan and the totalrelated interest rate swaps and collar transitioned to SOFR at the same time, effective July 31, 2023. As of cash, cash equivalents, restrictedSeptember 30, 2023, we have no other financial instruments to transition from LIBOR.
3.ACQUISITIONS AND DISPOSITIONS
Acquisitions
Savannah, Georgia
During the third quarter of 2023, we acquired property in Savannah, Georgia for $19 million. We plan to convert the property into a 73-unit vacation ownership property. The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net.
Charleston, South Carolina
During the first quarter of 2023, we acquired a parcel of land and an adjacent retail space in Charleston, South Carolina for $17 million. We plan to develop the parcel of land into a 50-unit vacation ownership property and use a portion of the retail space to operate a sales center. The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net.
Bali
During the first quarter of 2022, we acquired 88 completed vacation ownership units, as well as a sales center, located in Bali, Indonesia for $36 million. The transaction was accounted for as an asset acquisition and the purchase price was allocated to Property and equipment, net. As consideration for the acquisition, we paid $12 million in cash and restricted cash equivalents in the statement of cash flows. Asissued a result, we no longer present changes in restricted cash as a component of investing activities. This update is effectivenon-interest bearing note payable for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We adopted ASU 2016-18 on a retrospective basis commencing in the 2017 first quarter.
Accounting Standards Update No. 2016-09 – “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-09”)
In March 2016, the FASB issued ASU 2016-09, which changes how entities account for certain aspects of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires all income tax effects of awards, including excess tax benefits, to be recorded as income tax expense (or benefit) in the income statement, which resulted in benefits to our provision for income taxes of $0.9$11 million, in the 2017 third quarter and $6.1 million in the 2017 first three quarters. The new guidance requires excess tax benefits to be presented as an operating inflow rather than as a financing inflow in the statement of cash flows. Prior to the adoption of ASU 2016-09, excess tax benefits were recorded in additional paid-in-capital on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. We adopted ASU 2016-09 in the 2017 first quarter. The adoption of ASU 2016-09 decreased our provision for income taxes, the amount of which depends on the vesting activity of our share-based compensation awards in any given period, and eliminated the presentation of excess tax benefits as a financing inflow on our statement of cash flows. Further, we made an accounting policy election to recognize forfeitures of share-based compensation awards as they occur, the cumulative effect of which resulted in an adjustment of $0.4$6 million to opening retained earnings. The adoption of ASU 2016-09 did not have any other material impacts on our financial statements or disclosures.
Future Adoption of Accounting Standards
Accounting Standards Update No. 2017-12 – “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”)
In August 2017, the FASB issued ASU 2017-12, which amends and simplifies existing guidance in order to allow companies to better portray the economic effects of risk management activities in the financial statements and enhance the transparency and understandability of the results of hedging activities. ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements. This update is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are evaluating the impact that ASU 2017-12, including the timing of implementation, will have on our financial statements and disclosures.
Accounting Standards Update No. 2016-16 – “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”)
In October 2016, the FASB issued ASU 2016-16, which changes the timing of when certain intercompany transactions are recognized within the provision for income taxes. This update is effective for public companies for annual periods beginning after December 15, 2017, and for annual periods and interim periods thereafter, with early adoption permitted. We are evaluating the impact that adoption of ASU 2016-16was repaid in the first quarter of fiscal year 2018 will have on2023. Further, during the first quarter of 2022, we reclassified $13 million of previous deposits associated with the project from Other assets to Property and equipment, net.
Dispositions
As part of the ILG Acquisition, we acquired the Vacation Resorts International (“VRI”) and Trading Places International (“TPI”) businesses (together, the “VRI Americas” business), which was part of our financial statementsExchange & Third-Party Management segment prior to our disposal of VRI Americas during the second quarter of 2022, as discussed below.
9

Table of Contents
During the second quarter of 2022, we disposed of VRI Americas for proceeds of $56 million, net of cash and disclosures.

Accounting Standards Update No. 2016-13 – “Financial Instruments – Credit Losses (Topic 326), Measurementrestricted cash transferred to the buyer of Credit Losses on Financial Instruments” (“ASU 2016-13”)
In June 2016, the FASB issued ASU 2016-13, which replaces the incurred loss impairment methodology$12 million, after determining that this business was not a core component of our future growth strategy and operating model. The results of VRI Americas are included in current GAAP with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instrumentsour Exchange and other commitments to extend credit held by a reporting entity at each reporting date. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the impact that ASU 2016-13, including the timing of implementation, will have on our financial statements and disclosures.
Accounting Standards Update No. 2016-02 – “Leases (Topic 842)” (“ASU 2016-02”)
In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability of information regarding an entity’s leasing activities by providing additional information to users of financial statements. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after,Third-Party Management segment through the date of initial application,the sale. The net carrying value of VRI Americas as of the date of the disposition was $51 million, including $25 million of goodwill and $20 million of intangible assets. As a result of the disposition, we recorded a gain of $1 million and $17 million in Gains (losses) and other income (expense), net on our Income Statements for the three and nine months ended September 30, 2022, respectively.
Additionally, during the second quarter of 2022, we disposed of entities that owned and operated a Vacation Ownership segment hotel in Puerto Vallarta, Mexico, for proceeds of $38 million, net of cash and restricted cash transferred to the buyer of $3 million, consistent with an optionour strategy to use certain transition relief. This update is effectivedispose of non-strategic assets. The net carrying value of the business disposed of as of the date of the disposition, excluding the cumulative translation adjustment, was $18 million, substantially all of which was for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Although we expect to adopt ASU 2016-02 in fiscal year 2019property and have commenced our implementation efforts, we continue to evaluate the impact that adoptionequipment. As a result of this accounting standards update will havedisposition, we recorded a gain of $33 million in Gains (losses) and other income (expense), net on our financial statements and disclosures.Income Statement for the nine months ended September 30, 2022, which included the realization of cumulative foreign currency translation gains of $10 million associated with the disposition of these entities.
Accounting Standards Update No. 2016-01 – “Financial Instruments – Overall (Subtopic 825-10)”(“ASU 2016-01”)
In January 2016, the FASB issued ASU 2016-01, which updates certain aspects
4.REVENUE AND RECEIVABLES
Sources of recognition, measurement, presentation and disclosureRevenue by Segment
Three Months Ended September 30, 2023
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$319 $— $— $319 
Ancillary revenues62 1 — 63 
Management fee revenues44 5 — 49 
Exchange and other services revenues37 44 12 93 
Management and exchange143 50 12 205 
Rental128 10 — 138 
Cost reimbursements455 4 (16)443 
Revenue from contracts with customers1,045 64 (4)1,105 
Financing81 — — 81 
Total Revenues$1,126 $64 $(4)$1,186 
10

Table of financial instruments. For public business entities, the amendments in ASU 2016-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We do not expect the adoptionContents
Three Months Ended September 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$444 $— $— $444 
Ancillary revenues63 1 — 64 
Management fee revenues41 7 (1)47 
Exchange and other services revenues32 47 8 87 
Management and exchange136 55 7 198 
Rental154 11 — 165 
Cost reimbursements374 5 (8)371 
Revenue from contracts with customers1,108 71 (1)1,178 
Financing74 — — 74 
Total Revenues$1,182 $71 $(1)$1,252 
Nine Months Ended September 30, 2023
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$1,085 $— $— $1,085 
Ancillary revenues193 3 — 196 
Management fee revenues134 18 (2)150 
Exchange and other services revenues98 136 31 265 
Management and exchange425 157 29 611 
Rental404 31 — 435 
Cost reimbursements1,182 12 (31)1,163 
Revenue from contracts with customers3,096 200 (2)3,294 
Financing239 — — 239 
Total Revenues$3,335 $200 $(2)$3,533 
11

Table of ASU 2016-01 to have a material impact on our financial statements.Contents
Accounting Standards Update No. 2014-09 – “
Nine Months Ended September 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$1,179 $— $— $1,179 
Ancillary revenues183 3 — 186 
Management fee revenues124 28 (5)147 
Exchange and other services revenues95 146 49 290 
Management and exchange402 177 44 623 
Rental405 33 — 438 
Cost reimbursements1,026 19 (34)1,011 
Revenue from contracts with customers3,012 229 10 3,251 
Financing217 — — 217 
Total Revenues$3,229 $229 $10 $3,468 
Timing of Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), as Amendedby Segment
In May 2014,The following tables detail the FASB issued ASU 2014-09, which, as amended, supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, as well as most industry-specific guidance, and significantly enhances comparabilitytiming of revenue recognition practices across entitiesfrom contracts with customers by segment for the time periods presented.
Three Months Ended September 30, 2023
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$658 $27 $(4)$681 
Goods or services transferred at a point in time387 37 — 424 
Revenue from contracts with customers$1,045 $64 $(4)$1,105 
Three Months Ended September 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$597 $31 $(1)$627 
Goods or services transferred at a point in time511 40 — 551 
Revenue from contracts with customers$1,108 $71 $(1)$1,178 
Nine Months Ended September 30, 2023
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$1,802 $83 $(2)$1,883 
Goods or services transferred at a point in time1,294 117 — 1,411 
Revenue from contracts with customers$3,096 $200 $(2)$3,294 
Nine Months Ended September 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$1,638 $103 $10 $1,751 
Goods or services transferred at a point in time1,374 126 — 1,500 
Revenue from contracts with customers$3,012 $229 $10 $3,251 
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Table of Contents
Sale of Vacation Ownership Products
Revenues were reduced during the third quarter and industriesfirst three quarters of 2023 by providing a principle-based, comprehensive framework$47 million and $66 million, respectively, due to changes in our estimates of variable consideration for addressing revenue recognition issues. In order for a providerperformance obligations that were satisfied in prior periods.
Receivables from Contracts with Customers, Contract Assets, & Contract Liabilities
The following table shows the composition of promised goodsour receivables from contracts with customers and contract liabilities. We had no contract assets at either September 30, 2023 or servicesDecember 31, 2022.
($ in millions)At September 30, 2023At December 31, 2022
Receivables from Contracts with Customers
Accounts and contracts receivable, net$176 $194 
Vacation ownership notes receivable, net2,291 2,198 
$2,467 $2,392 
Contract Liabilities
Advance deposits$169 $158 
Deferred revenue371 344 
$540 $502 
Revenue recognized during the third quarter and first three quarters of 2023 that was included in our contract liabilities balance at December 31, 2022 was $67 million and $241 million, respectively.
Remaining Performance Obligations
Our remaining performance obligations represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the considerationcontracts. At September 30, 2023, approximately 91% of this amount is expected to be recognized as revenue over the next two years.
Accounts and Contracts Receivable
Accounts and contracts receivable is comprised of amounts due from customers, primarily owners’ associations, resort developers, owners and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables. The following table shows the composition of our accounts and contracts receivable balances:
($ in millions)At September 30, 2023At December 31, 2022
Receivables from contracts with customers, net$176 $194 
Interest receivable17 16 
Tax receivable42 20 
Indemnification assets38 19 
Employee tax credit receivable13 16 
Other12 27 
$298 $292 
5.INCOME TAXES
Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), based upon expected annual income less losses in certain jurisdictions, non-deductible expenses under federal and local tax laws, statutory rates and planned tax strategies in the various jurisdictions in which we operate. Certain items that it expectsdo not relate directly to receiveordinary income are excluded from the AETR and included in exchangethe period in which they occur.
Our effective tax rate was 36.1% and 34.7% for the promised goods or services,three months ended September 30, 2023 and September 30, 2022, respectively, and 34.3% and 30.6% for the provider should apply the following five steps: (1) identify the contract with a customer; (2) identify the performance obligationsnine months ended September 30, 2023 and September 30, 2022, respectively.
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The increase in the contract; (3) determineeffective tax rate for the transaction price; (4) allocate the transaction pricethree months ended September 30, 2023 compared to the performance obligationsthree months ended September 30, 2022 is predominately attributable to a decrease in Income before income taxes and noncontrolling interests from 2022 to 2023 without a proportional decrease to non-deductible tax expenses, in addition to a net decrease in the contract; and (5) recognize revenue when (or as)tax expense for foreign uncertain tax benefits in 2023.
The increase in the entity satisfies a performance obligation. ASU 2014-09, as amended, will be effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2017. The new standard may be applied retrospectively or on a modified retrospective basis with the cumulative effect recognized on the date of adoption. We will adopt ASU 2014-09, as amended, commencing in fiscal year 2018, on a retrospective basis. Our analysis of the impact that adoption of this accounting standards update will have on our financial statements and disclosures is substantially complete, with the exception of accountingtax rate for the sale of vacation ownership productsnine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is attributable to a decrease in our Asia PacificIncome before income taxes and Europe segments.
We expect adoption of ASU 2014-09 will resultnoncontrolling interests from 2022 to 2023 without a proportional decrease to non-deductible tax expenses, partially offset by a net increase in the tax expense for foreign uncertain tax benefits in 2023.
Unrecognized Tax Benefits
The following with respect totable summarizes the recognition of revenues from the sale of vacation ownership products within our North America segment:
alignment of our assessment of collectibility of the transaction price with our credit granting policies;
deferral of revenue recognition deemed collectible from expiration of the statutory rescission period to closing, when control of the vacation ownership product is transferred to the customer;
reclassification of revenues and incidental expenses from rental revenues and expenses to marketing and sales expenses;
no impact on sales reserve accounting; and
net presentation of certain sales incentives (e.g., Marriott Rewards Points).
In addition, we expect to elect the practical expedient available in ASU 2014-09 to expense all marketing and sales costs as they are incurred.

We expect no material changes to our consolidated financial reporting for resort management and other services revenues, financing revenues or rental revenues, other than as outlined above pertaining to reclassification of activity to different lines in our statements of income. We expect a material increase in our consolidated cost reimbursements revenues and cost reimbursements expenses, as all costs reimbursed to us by property owners’ associations will be reported on a gross basis upon adoption of ASU 2014-09.
We are in the process of quantifying the impact of the adoption of ASU 2014-09 and will disclose additional detail on the impact of adoption of this accounting standards update in our 2017 Form 10-K.
2. INCOME TAXES
We file income tax returns with U.S. federal and state and non-U.S. jurisdictions and are subject to audits in these jurisdictions. Although we do not anticipate that a significant impactrelated to our unrecognized tax benefit balance will occurbenefits (excluding interest and penalties) during the next fiscal year, the amount of our liability fornine months ended September 30, 2023. These unrecognized tax benefits could changerelate to uncertain income tax positions, which would affect the effective tax rate if recognized.
($ in millions)Unrecognized Tax Benefits
Balance at December 31, 2022$25 
Increases to tax positions related to a prior period8 
Decreases to tax positions related to a prior period(8)
Balance at September 30, 2023$25 
The total amount of gross interest and penalties accrued was $46 million at September 30, 2023 and $28 million at December 31, 2022, an increase of $18 million, which is predominantly attributable to additional interest and penalties related to the pre-acquisition reserves for uncertain tax positions. We anticipate $35 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., and consequently have recorded a corresponding indemnification asset. The unrecognized tax benefits, including accrued interest and penalties, are included in Other liabilities on our Balance Sheet.
Our income tax returns are subject to examination by relevant tax authorities. Certain of our returns are being audited in various jurisdictions for tax years 2007 through 2020. The amount of the unrecognized tax benefits may increase or decrease within the next twelve months as a result of audits in these jurisdictions. Our total unrecognized tax benefit balance that, if recognized, would impact our effective tax rate, was $1.5 million at both September 30, 2017 and December 30, 2016.or audit settlements.
3.
6.VACATION OWNERSHIP NOTES RECEIVABLE
The following table shows the composition of our vacation ownership notes receivable balances, net of reserves:reserves.
September 30, 2023December 31, 2022
($ in millions)OriginatedAcquiredTotalOriginatedAcquiredTotal
Securitized$1,722 $163 $1,885 $1,571 $221 $1,792 
Non-securitized
Eligible for securitization(1)
59 1 60 63 — 63 
Not eligible for securitization(1)
327 19 346 322 21 343 
Subtotal386 20 406 385 21 406 
$2,108 $183 $2,291 $1,956 $242 $2,198 
(1)Refer to Footnote 7 “Financial Instruments” for discussion of eligibility of our vacation ownership notes receivable for securitization.
14

($ in thousands)At September 30, 2017 At December 30, 2016
Vacation ownership notes receivable — securitized$875,237
 $717,543
Vacation ownership notes receivable — non-securitized   
Eligible for securitization(1)
44,907
 98,508
Not eligible for securitization(1)
156,258
 156,260
Subtotal201,165
 254,768
Total vacation ownership notes receivable$1,076,402
 $972,311
_________________________
(1)
Refer to Footnote No. 4, “Financial Instruments,” for discussion of eligibility of our vacation ownership notes receivable for securitization.
The following tables show future principal payments, netTable of reserves, as well as interest rates for our non-securitized and securitized vacation ownership notes receivable at September 30, 2017:Contents
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
2017, remaining$11,833
 $25,594
 $37,427
201837,988
 97,634
 135,622
201926,664
 94,676
 121,340
202021,575
 96,259
 117,834
202116,952
 97,628
 114,580
Thereafter86,153
 463,446
 549,599
Balance at September 30, 2017$201,165
 $875,237
 $1,076,402
Weighted average stated interest rate at September 30, 201711.2% 12.6% 12.3%
Range of stated interest rates at September 30, 20170.0% to 18.0% 4.9% to 18.0% 0.0% to 18.0%

We reflect interest income associated with vacation ownership notes receivable in our Income Statements of Income in the Financing revenues caption. The following table summarizes interest income associated with vacation ownership notes receivable:receivable.
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Interest income associated with vacation ownership notes receivable — securitized$70 $60 $205 $179 
Interest income associated with vacation ownership notes receivable — non-securitized9 11 26 30 
Total interest income associated with vacation ownership notes receivable$79 $71 $231 $209 
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
Interest income associated with vacation ownership notes receivable — securitized$26,538
 $22,908
 $72,832
 $65,300
Interest income associated with vacation ownership notes receivable — non-securitized6,407
 4,795
 21,272
 17,430
Total interest income associated with vacation ownership notes receivable$32,945
 $27,703
 $94,104
 $82,730
Credit Quality Indicators - Vacation Ownership Notes Receivable
We record an estimate of expected uncollectibility on all notes receivable from vacation ownership purchasers as a reduction of revenues fromuse the sale of vacation ownership products at the time we recognize profit on a vacation ownership product sale. We fully reserve for all defaulted vacation ownership notes receivable in addition to recording a reserve on the estimated uncollectible portion of the remaining vacation ownership notes receivable. For those vacation ownership notes receivable that are not in default, we assess collectibility based on poolsorigination of vacation ownership notes receivable because we hold large numbersand the FICO scores of homogeneousthe customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO score and the brand associated with the vacation ownership notes receivable. We useinterest (“VOI”) they have acquired. The estimates of the same criteria to estimate uncollectibilityvariable consideration included in the transaction price for non-securitizedthe sale of the related vacation ownership product for originated vacation ownership notes receivable and securitizedthe reserve for credit losses on the acquired vacation ownership notes receivable because they perform similarly. We estimate uncollectibility for each poolare based on historical activity for similardefault rates that are an output of our static pool analyses and estimates regarding future defaults.
In the third quarter of 2023, we evaluated our vacation ownership notes receivable.receivable reserve in light of trends in delinquencies and default rates. As a result, we increased our originated vacation ownership notes receivable reserve by $59 million. We primarily used a historical period of increased defaults as a basis for estimating the increase in our reserve. This additional reserve adjusts our future default rate estimate to reflect current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity.
In the third quarter of 2022, in connection with the combination of the reserves for Marriott-, Sheraton-, and Westin-brands, we recorded a reversal of credit loss expense for the acquired vacation ownership notes receivable of $19 million in Financing expense and an increase in the reserve for our originated vacation ownership notes receivable of $21 million, which was recorded as a reduction of sales of vacation ownership products revenues.
We use the term “Combined Marriott” to refer to our Marriott-, Sheraton-, and Westin-brands.
The weighted average FICO score of the borrowers within our consolidated vacation ownership notes receivable pool was 722 and 721, at September 30, 2023 and December 31, 2022, respectively, based on the FICO score of the borrower at the time of origination.
Acquired Vacation Ownership Notes Receivable
Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition. The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable at September 30, 2023.
Acquired Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
2023, remaining$2 $8 $10 
20243 33 36 
20253 30 33 
20263 27 30 
20272 22 24 
Thereafter7 43 50 
Balance at September 30, 2023$20 $163 $183 
Weighted average stated interest rate14.0%14.2%14.2%
Range of stated interest rates0.0% to 21.9%0.0% to 21.9%0.0% to 21.9%
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The following table summarizes activity related to our acquired vacation ownership notes receivable reserve.
Acquired Vacation Ownership Notes Receivable Reserve
($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2022$11 $18 $29 
Securitizations(2)2 — 
Clean-up call2 (2)— 
Write-offs(21)— (21)
Recoveries13 — 13 
Defaulted vacation ownership notes receivable repurchase activity(1)
14 (14)— 
(Decrease) increase in vacation ownership notes receivable reserve(10)7 (3)
Balance at September 30, 2023$7 $11 $18 
(1)Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased securitized vacation ownership notes receivable.
The following tables show the acquired vacation ownership notes receivable, before reserves, by brand and borrower FICO score.
Acquired Vacation Ownership Notes Receivable as of September 30, 2023
($ in millions)700+600 - 699< 600No ScoreTotal
Combined Marriott$51 $35 $4 $11 $101 
Hyatt and Welk59 39 1 1 100 
$110 $74 $5 $12 $201 
Acquired Vacation Ownership Notes Receivable as of December 31, 2022
($ in millions)700+600 - 699< 600No ScoreTotal
Combined Marriott$67 $47 $6 $16 $136 
Hyatt and Welk80 53 1 1 135 
$147 $100 $7 $17 $271 
The following tables detail the origination year of our acquired vacation ownership notes receivable, before reserves, by brand and borrower FICO score as of September 30, 2023, and gross write-offs by brand for the first three quarters of 2023.
Acquired Vacation Ownership Notes Receivable - Combined Marriott
($ in millions)202120202019 & PriorTotal
700 +$— $— $51 $51 
600 - 699— — 35 35 
< 600— — 4 4 
No Score— — 11 11 
$— $— $101 $101 
Gross write-offs$— $— $11 $11 
Acquired Vacation Ownership Notes Receivable - Hyatt and Welk
($ in millions)202120202019 & PriorTotal
700 +$4 $13 $42 $59 
600 - 6992 7 30 39 
< 600— — 1 1 
No Score— — 1 1 
$6 $20 $74 $100 
Gross write-offs$1 $2 $7 $10 
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Originated Vacation Ownership Notes Receivable
Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to each respective acquisition date and all Legacy-MVW vacation ownership notes receivable. The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at September 30, 2023.
Originated Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
2023, remaining$8 $34 $42 
202447 141 188 
202534 147 181 
202634 155 189 
202734 163 197 
Thereafter229 1,082 1,311 
Balance at September 30, 2023$386 $1,722 $2,108 
Weighted average stated interest rate12.1%13.2%13.0%
Range of stated interest rates0.0% to 20.9%0.0% to 19.9%0.0% to 20.9%
For originated vacation ownership notes receivable, we record the difference between the vacation ownership note receivable and the variable consideration included in the transaction price for the sale of the related vacation ownership product as a reserve on our vacation ownership notes receivable. The following table summarizes the activity related to our originated vacation ownership notes receivable reserve for the 2017 first three quarters:reserve.
Originated Vacation Ownership Notes Receivable Reserve
($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2022$149 $213 $362 
Increase in vacation ownership notes receivable reserve162 21 183 
Securitizations(126)126 — 
Clean-up call43 (43)— 
Write-offs(88)— (88)
Defaulted vacation ownership notes receivable repurchase activity(1)
76 (76)— 
Balance at September 30, 2023$216 $241 $457 
(1)Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased securitized vacation ownership notes receivable.
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
Balance at December 30, 2016$56,628
 $53,735
 $110,363
Provision for loan losses31,711
 7,206
 38,917
Securitizations(29,071) 29,071
 —
Clean-up of Warehouse Credit Facility(1)
3,995
 (3,995) —
Write-offs(35,264) —
 (35,264)
Defaulted vacation ownership notes receivable repurchase activity(2)
22,356
 (22,356) —
Balance at September 30, 2017$50,355
 $63,661
 $114,016
_________________________
(1)
Refers to our voluntary repurchase of previously securitized non-defaulted vacation ownership notes receivable from our non-recourse warehouse credit facility (the “Warehouse Credit Facility”).
(2)
Decrease in securitized vacation ownership notes receivable reserve and increase in non-securitized vacation ownership notes receivable reserve was attributable to the transfer of the reserve when we voluntarily repurchased defaulted securitized vacation ownership notes receivable.
Although we consider loans to owners to be past due if we do not receive payment within 30 days of the due date, we suspend accrual of interest only on those loans that are over 90 days past due. We consider loans over 150 days past due to be in default. We apply payments we receive forThe following tables show originated vacation ownership notes receivable, on non-accrual status first to interest, then to principalbefore reserves, by brand and any remainder to fees. We resume accruing interest whenborrower FICO score.
Originated Vacation Ownership Notes Receivable as of September 30, 2023
($ in millions)700 +600 - 699< 600No ScoreTotal
Combined Marriott$1,341 $602 $57 $307 $2,307 
Hyatt and Welk180 72 2 4 258 
$1,521 $674 $59 $311 $2,565 
Originated Vacation Ownership Notes Receivable as of December 31, 2022
($ in millions)700 +600 - 699< 600No ScoreTotal
Combined Marriott$1,210 $549 $55 $278 2,092 
Hyatt and Welk157 64 3 2 226 
$1,367 $613 $58 $280 $2,318 
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The following tables detail the origination year of our originated vacation ownership notes receivable, are less than 90 days past due. We do not accept paymentsbefore reserves, by brand and FICO score as of September 30, 2023, and gross write-offs by brand for vacation ownership notes receivable during the foreclosure process unless the amount is sufficient to pay all past due principal, interest, fees and penalties owed and fully reinstate the note. We write off uncollectible vacation ownership notes receivable against the reserve once we receive title to the vacation ownership products through the foreclosure or deed-in-lieu process or, in Asia Pacific or Europe, when revocation is complete. first three quarters of 2023.
Originated Vacation Ownership Notes Receivable - Combined Marriott
($ in millions)20232022202120202019 & PriorTotal
700 +$377 $413 $228 $78 $245 $1,341 
600 - 699145 174 114 42 127 602 
< 60013 16 11 5 12 57 
No Score117 74 29 19 68 307 
$652 $677 $382 $144 $452 $2,307 
Gross write-offs$2 $14 $22 $9 $27 $74 
Originated Vacation Ownership Notes Receivable - Hyatt and Welk
($ in millions)20232022202120202019 & PriorTotal
700 +$73 $71 $31 $2 $3 $180 
600 - 69926 31 12 1 2 72 
< 600— 1 1 — — 2 
No Score3 1 — — — 4 
$102 $104 $44 $3 $5 $258 
Gross write-offs$— $6 $7 $— $1 $14 
Vacation Ownership Notes Receivable on Non-Accrual Status
For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 7.18 percent and 7.09 percent13.35% as of September 30, 20172023 and 11.62% as of December 30, 2016, respectively.31, 2022. A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in our allowance for loan lossesthe related vacation ownership notes receivable reserve of $5.6 million and $5.0$13 million as of September 30, 20172023 and $12 million as of December 30, 2016, respectively.

31, 2022.
The following table shows our recorded investment in non-accrual vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due:due.
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
Investment in vacation ownership notes receivable on non-accrual status at September 30, 2017$40,368
 $5,618
 $45,986
Investment in vacation ownership notes receivable on non-accrual status at December 30, 2016$43,792
 $6,687
 $50,479
Average investment in vacation ownership notes receivable on non-accrual status during the 2017 third quarter$39,423
 $6,304
 $45,727
Average investment in vacation ownership notes receivable on non-accrual status during the 2016 third quarter$47,038
 $8,278
 $55,316
Average investment in vacation ownership notes receivable on non-accrual status during the 2017 first three quarters$42,080
 $6,153
 $48,233
Average investment in vacation ownership notes receivable on non-accrual status during the 2016 first three quarters$45,926
 $7,296
 $53,222
Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at September 30, 2023$144 $25 $169 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2022$126 $24 $150 
The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of September 30, 2017:2023 and December 31, 2022.
As of September 30, 2023As of December 31, 2022
($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due$20 $57 $77 $25 $56 $81 
91 – 120 days past due6 16 22 7 16 23 
Greater than 120 days past due138 9 147 119 8 127 
Total past due164 82 246 151 80 231 
Current465 2,055 2,520 415 1,943 2,358 
Total vacation ownership notes receivable$629 $2,137 $2,766 $566 $2,023 $2,589 
18

($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
31 – 90 days past due$5,751
 $15,354
 $21,105
91 – 150 days past due4,297
 5,618
 9,915
Greater than 150 days past due36,071
 —
 36,071
Total past due46,119
 20,972
 67,091
Current205,401
 917,926
 1,123,327
Total vacation ownership notes receivable$251,520
 $938,898
 $1,190,418
The following table shows the aging
Table of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of December 30, 2016:
Contents
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
31 – 90 days past due$7,780
 $16,468
 $24,248
91 – 150 days past due3,981
 6,687
 10,668
Greater than 150 days past due39,811
 —
 39,811
Total past due51,572
 23,155
 74,727
Current259,824
 748,123
 1,007,947
Total vacation ownership notes receivable$311,396
 $771,278
 $1,082,674

4.
7.FINANCIAL INSTRUMENTS
The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with the authoritative guidance for disclosures regarding the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable (excluding contracts receivable for financed VOI sales, net), deposits included in Other assets, Accounts payable, Advance deposits, and Accrued liabilities, and derivative instruments, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
 At September 30, 2017 At December 30, 2016
($ in thousands)
Carrying
Amount
 
Fair
Value(1)
 
Carrying
Amount
 
Fair
Value(1)
Vacation ownership notes receivable — securitized$875,237
 $1,028,374
 $717,543
 $834,009
Vacation ownership notes receivable — non-securitized201,165
 207,592
 254,768
 269,161
Other assets13,153
 13,153
 —
 —
Total financial assets$1,089,555
 $1,249,119
 $972,311
 $1,103,170
Non-recourse debt associated with vacation ownership notes receivable securitizations, net$(895,405) $(902,213) $(729,188) $(725,963)
Convertible notes, net(190,739) (241,562) —
 —
Non-interest bearing note payable, net(59,677) (59,677) —
 —
Total financial liabilities$(1,145,821) $(1,203,452) $(729,188) $(725,963)
At September 30, 2023At December 31, 2022
($ in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Vacation ownership notes receivable, net$2,291 $2,355 $2,198 $2,245 
Contracts receivable for financed VOI sales, net35 35 22 22 
Other assets88 88 76 76 
Total financial assets$2,414 $2,478 $2,296 $2,343 
Securitized debt, net$(2,026)$(1,937)$(1,938)$(1,828)
Term Loan, net(780)(782)(778)(775)
Revolving Corporate Credit Facility, net(86)(90)— — 
2025 Notes, net— — (248)(258)
2028 Notes, net(348)(306)(347)(307)
2029 Notes, net(495)(419)(494)(417)
2026 Convertible Notes, net(568)(508)(565)(560)
2027 Convertible Notes, net(562)(496)(560)(568)
Non-interest bearing note payable, net(4)(4)(10)(10)
Total financial liabilities$(4,869)$(4,542)$(4,940)$(4,723)
_________________________
(1)
Fair value of financial instruments, with the exception of other assets and convertible notes, has been determined using Level 3 inputs. Fair value of other assets and convertible notes that are financial instruments has been determined using Level 2 inputs.
Vacation Ownership Notes Receivable
At September 30, 2023At December 31, 2022
($ in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Vacation ownership notes receivable, net
Securitized$1,885 $1,947 $1,792 $1,837 
Eligible for securitization60 62 63 65 
Not eligible for securitization346 346 343 343 
Non-securitized406 408 406 408 
$2,291 $2,355 $2,198 $2,245 
We estimate the fair value of our securitized vacation ownership notes receivable that have been securitized using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates, and loan terms for our securitized vacation ownership notes receivable portfolio as key drivers of risk and relative value that, when applied in combination with pricing parameters,to determine the fair value of the underlying vacation ownership notes receivable. We concluded that this fair value measurement should be categorized within Level 3.
Due to factors that impact the general marketability of our non-securitized vacation ownership notes receivable that have not been securitized, as well as current market conditions, we bifurcate our non-securitized vacation ownership notes receivable at each balance sheet date into those eligible and not eligible for securitization using criteria applicable to current securitization transactions in the asset-backed securities (“ABS”)ABS market. Generally, vacation ownership notes receivable are considered not eligible for securitization if any of the following attributes are present: (1) payments are greater than 30 days past due; (2) the first payment has not been received; or (3) the collateral is located in Asia or Europe. In some cases, eligibility may also
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be determined based on the credit score of the borrower, the remaining term of the loans and other similar factors that may reflect investor demand in a securitization transaction or the cost to effectively securitize the vacation ownership notes receivable.
The following table above shows the bifurcation of our non-securitized vacation ownership notes receivable that have not been securitized into those eligible and not eligible for securitization based upon the aforementioned eligibility criteria:
 At September 30, 2017 At December 30, 2016
($ in thousands)
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Vacation ownership notes receivable       
Eligible for securitization$44,907
 $51,334
 $98,508
 $112,901
Not eligible for securitization156,258
 156,258
 156,260
 156,260
Total non-securitized$201,165
 $207,592
 $254,768
 $269,161

criteria. We estimate the fair value of the portion of our non-securitized vacation ownership notes receivable that have not been securitized that we believe will ultimately be securitized in the same manner as securitized vacation ownership notes receivable.receivable that have been securitized. We value the remaining non-securitized vacation ownership notes receivable that have not been securitized at their carrying value, rather than using our pricing model. We believe that the carrying value of these particular vacation ownership notes receivable approximates fair value because the stated, or otherwise imputed, interest rates of these loans are generally consistent with current market rates and the reserve for these vacation ownership notes receivable appropriately accounts for risks in default rates, prepayment rates, discount rates, and loan terms. We concluded that this fair value measurement should be categorized within Level 3.
Contracts Receivable for Financed VOI Sales
At the time at which we recognize revenue for Marriott-branded VOI sales, we temporarily record a contract receivable for financed VOI sales, until the time at which we originate a vacation ownership note receivable, which occurs at closing. We believe that the carrying value of the contracts receivable for financed VOI sales approximates fair value because the stated, or otherwise imputed, interest rates of these receivables are generally consistent with current market rates and the reserve for these contracts receivable for financed VOI sales appropriately accounts for risks in default rates, prepayment rates, and discount rates. We concluded that this fair value measurement should be categorized within Level 3.
Other Assets
We estimateOther assets include $88 million of company owned insurance policies (the “COLI policies”), acquired on the fair valuelives of our other assetscertain participants in the Marriott Vacations Worldwide Deferred Compensation Plan, that are financial instruments using Level 2 inputs. These assets consist of COLI policies held in a rabbi trust. The carrying value of the COLI policies is equal to their cash surrender value.value (Level 2 inputs).
Non-RecourseSecuritized Debt Associated with Securitized Vacation Ownership Notes Receivable
We generate cash flow estimates by modeling all bond tranches for our active vacation ownership notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates, and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for vacation ownership securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable. We concluded that this fair value measurement should be categorized within Level 3.
ConvertibleTerm Loan
We estimate the fair value of our Term Loan (as defined in Footnote 12 “Debt”) using quotes from securities dealers as of the last trading day for the quarter; however, this loan has only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the Term Loan could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 3.
Revolving Corporate Credit Facility
We estimate that the gross carrying value of our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”) approximates fair value as the contractual interest rate is variable plus an applicable margin. We concluded that this fair value measurement should be categorized within Level 3.
Senior Notes
We estimate the fair value of our Convertible2025 Notes, (as2028 Notes, and 2029 Notes (each as defined in Footnote No. 9, “Debt,”12 “Debt”) based onusing quoted market prices as of the last trading day for the 2017 third quarter; however these notes have only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which theythese notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.
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Convertible Notes
We estimate the fair value of our convertible notes using quoted market prices as of the last trading day for the quarter; however, these notes have only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the convertible notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.
Non-Interest Bearing Note Payable
The carrying value of our non-interest bearing note payable issued in connection with the acquisition of vacation ownership units located on the Big Island of Hawaii approximates fair value, because the imputed interest rate used to discount this note payable is consistent with current market rates. See Footnote No. 5, “Acquisitions and Dispositions,” and Footnote No. 9, “Debt,” for additional information on this transaction.
5. ACQUISITIONS AND DISPOSITIONS
Acquisitions
Bali, Indonesia
During the 2017 third quarter, we acquired 51 completed vacation ownership units, as well as a sales gallery and related amenities and infrastructure, located in Bali, Indonesia for $23.8 million. The transaction was accounted for as an asset acquisition with the purchase price allocated to Inventory ($21.7 million) and Property and equipment ($2.1 million).approximates fair value. We concluded that this fair value measurement should be categorized within Level 3.
Marco Island, Florida
During the 2017 second quarter, we acquired 36 completed vacation ownership units located at our resort in Marco Island, Florida for $33.6 million. The transaction was accounted for as an asset acquisition with all of the purchase price allocated to Property and equipment. To ensure consistency with the expected related future cash flow presentation, the cash purchase price was included as an operating activity in the Purchase of vacation ownership units for future transfer to inventory line on our Cash Flows. See Footnote No. 8, “Contingencies and Commitments,” for information on our remaining commitment related to this property.
Big Island of Hawaii
During the 2017 second quarter, we acquired 112 completed vacation ownership units located on the Big Island of Hawaii. The transaction was accounted for as an asset acquisition with all of the purchase price allocated to Inventory. As consideration for the acquisition, we paid $27.3 million in cash, settled a $0.5 million note receivable from the seller on a non-cash basis, and issued a non-interest bearing note payable for $63.6 million. See Footnote No. 9, “Debt,” for information on the non-interest bearing note payable.

Miami Beach, Florida
During the 2016 first quarter, we completed the acquisition of an operating property located in the South Beach area of Miami Beach, Florida for $23.5 million. The acquisition was treated as a business combination, accounted for using the acquisition method of accounting and included within Operating activities on our Cash Flows. As consideration for the acquisition, we paid $23.5 million in cash; the value of the acquired property was allocated to Inventory. We rebranded this property as Marriott Vacation Club Pulse, South Beach and converted it, in its entirety, into vacation ownership inventory.
Dispositions
San Francisco, California
During the 2016 second quarter, we disposed of 19 residential units located at The Ritz-Carlton Club and Residences, San Francisco (the “RCC San Francisco”) for gross cash proceeds of $19.5 million. We accounted for the sale under the full accrual method in accordance with the authoritative guidance on accounting for sales of real estate and recorded a gain of $10.5 million in the Gains and other income line on our Statements of Income for the 2016 first three quarters.
Surfers Paradise, Australia
During 2015, we completed the acquisition of an operating property located in Surfers Paradise, Australia. During the 2016 second quarter, we disposed of the portion of this operating property that we did not intend to convert into vacation ownership inventory for gross cash proceeds of AUD $70.5 million ($50.9 million). We accounted for the sale under the full accrual method in accordance with the authoritative guidance on accounting for sales of real estate. As part of the disposition, we guaranteed the net operating income of this portion of the operating property through 2021 up to a specified maximum of AUD $2.9 million ($2.3 million), which was recorded as a deferred gain in the Other line within liabilities on our balance sheet. We recognized a loss, inclusive of the deferred gain, of AUD $1.4 million ($1.0 million) in connection with the sale, which was recorded in the Gains and other income line on the Statement of Income for the 2016 first three quarters.
6.
8.EARNINGS PER SHARE
Basic earnings or loss per common share attributable to common shareholders is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings or loss per common share attributable to common shareholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period.period, except in periods when there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings or loss per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.
Our calculation of diluted earnings per share reflects our intent to settle conversions of the Convertible Notes (as defined in Footnote No. 9, “Debt”) through a combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount (the “conversion premium”). Therefore, we will include only the shares that may be issued with respect to any conversion premium in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. As no conversion premium existed as of September 30, 2017, there was no dilutive impact from the Convertible Notes for the 2017 third quarter or the 2017 first three quarters.
The shares issuable onupon exercise of the Warrants (as defined in Footnote No. 9, “Debt”)warrants sold in connection with the issuance of the Convertible Notesour convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price of $176.68, as described in Footnote No. 9, “Debt.”price. If and when the price of our common stock exceeds the respective strike price of any of the Warrants,warrants, we will include the dilutive effect of the additional shares that may be issued upon exercise of the Warrantswarrants in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. The Convertible Note Hedges (as defined in Footnote No. 9, “Debt”)convertible note hedges purchased in connection with theeach issuance of the Convertible Notesour convertible notes are considered to be anti-dilutive and willdo not impact our calculation of diluted earnings per share.

share attributable to common shareholders for any periods presented herein.
The table below illustrates the reconciliation of the earnings or loss and number of shares used in our calculation of basic earnings or loss per share attributable to common shareholders.
Three Months EndedNine Months Ended
(in millions, except per share amounts)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Net income attributable to common shareholders$42 $109 $219 $303 
Shares for basic earnings per share36.4 39.5 36.9 41.1 
Basic earnings per share$1.16 $2.76 $5.96 $7.39 
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The table below illustrates the reconciliation of the earnings or loss and number of shares used in our calculation of diluted earnings or loss per share attributable to common shareholders.
Three Months EndedNine Months Ended
(in millions, except per share amounts)
September 30, 2023(1)
September 30, 2022(1)
September 30, 2023(1)
September 30, 2022(1)
Net income attributable to common shareholders$42 $109 $219 $303 
Add back of interest expense related to convertible notes, net of tax5 1 14 4 
Numerator used to calculate diluted earnings per share$47 $110 $233 $307 
Shares for basic earnings per share36.4 39.5 36.9 41.1 
Effect of dilutive shares outstanding
Employee SARs0.1 0.2 0.1 0.2 
Restricted stock units0.3 0.3 0.3 0.3 
2022 Convertible Notes ($230 million of principal)— — — 0.9 
2026 Convertible Notes ($575 million of principal)3.5 3.4 3.5 3.4 
2027 Convertible Notes ($575 million of principal)3.0 — 3.0 — 
Shares for diluted earnings per share43.3 43.4 43.8 45.9 
Diluted earnings per share$1.09 $2.53 $5.33 $6.68 
(1)The computations of diluted earnings per share.share attributable to common shareholders exclude approximately 200,000 and 293,000 shares of common stock, the maximum number of shares issuable as of September 30, 2023 and September 30, 2022, respectively, upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.
 Quarter Ended Year to Date Ended
 
September 30, 2017(1)
 
September 9, 2016(2)
 
September 30, 2017(1)
 
September 9, 2016(2)
(in thousands, except per share amounts)(92 days) (84 days) (274 days) (252 days)
Computation of Basic Earnings Per Share       
Net income$40,762
 $26,807
 $118,738
 $87,524
Shares for basic earnings per share27,090
 27,152
 27,219
 28,207
Basic earnings per share$1.50
 $0.99
 $4.36
 $3.10
Computation of Diluted Earnings Per Share       
Net income$40,762
 $26,807
 $118,738
 $87,524
Shares for basic earnings per share27,090
 27,152
 27,219
 28,207
Effect of dilutive shares outstanding       
Employee stock options and SARs403
 356
 440
 366
Restricted stock units220
 172
 199
 145
Shares for diluted earnings per share27,713
 27,680
 27,858
 28,718
Diluted earnings per share$1.47
 $0.97
 $4.26
 $3.05
_________________________
(1)
The computations of diluted earnings per share exclude approximately 289,000 shares of common stock, the maximum number of shares issuable as of September 30, 2017 upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.
(2)
The computations of diluted earnings per share exclude approximately 254,000 shares of common stock, the maximum number of shares issuable as of September 9, 2016 upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.
In accordance with the applicable accounting guidance for calculating earnings per share, for the 2017 third quarter and the 2017 first three quarters of 2023, we excluded from our calculation of diluted earnings per share included287,125 shares underlying stock appreciation rights (“SARs”) that may be settledsettle in shares of common stock because the exercise prices of such SARs, which ranged from $143.38 to $173.88, were lessgreater than or equal to the average market pricesprice of our common stock for the applicable period.
For the 2016 third quarter and the 2016 first three quarters,of 2022, we excluded from our calculation of diluted earnings per share 62,018252,314 shares underlying SARs that may be settledsettle in shares of common stock because the exercise price of $77.42prices of such SARs, waswhich ranged from $143.38 to $173.88, were greater than the average market price of our common stock for the applicable period.
For the first three quarters of 2022, we excluded from our calculation of diluted earnings per share 199,813 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $159.27 to $173.88, were greater than the average market price of our common stock for the applicable period.
7.
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9.INVENTORY
The following table shows the composition of our inventory balances:
($ in thousands)At September 30, 2017 At December 30, 2016
Finished goods(1)
$390,383
 $337,949
Work-in-progress1,964
 39,486
Land and infrastructure(2)
338,149
 330,728
Real estate inventory730,496
 708,163
Operating supplies and retail inventory4,576
 4,373
 $735,072
 $712,536
_________________________
(1)
Represents completed inventory that is either registered for sale as vacation ownership interests, or unregistered and available for sale in its current form.
(2)
Includes $66.0 million of inventory related to estimated future foreclosures at September 30, 2017.

($ in millions)At September 30, 2023At December 31, 2022
Real estate inventory(1)
$632 $651 
Other10 9 
$642 $660 
(1)Represents completed inventory that is registered for sale as VOIs and vacation ownership inventory expected to be reacquired pursuant to estimated future defaults on originated vacation ownership notes receivable.
We value vacation ownership and residential products at the lower of cost or fair market value less costs to sell, in accordance with applicable accounting guidance, and we record operating supplies at the lower of cost (using the first-in, first-out method) or net realizable value. During the 2017 and 2016 first three quarters, productProduct cost true-up activity relating to vacation ownership products increased carrying values of inventory by $1.0$24 million during the first three quarters of 2023 and $12.2$15 million respectively.during the first three quarters of 2022.
In addition to the above, at September 30, 2017,2023 and December 31, 2022, we had $49.1$369 million and $428 million, respectively, of completed vacation ownership units which have beenare classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products. Furthermore, at September 30, 2017, we also had $305.8 million of commitments to acquire completed vacation ownership units as discussed below in Footnote No. 8, “Contingencies and Commitments.”
8.
10.CONTINGENCIES AND COMMITMENTS
Commitments and Letters of Credit
As of September 30, 2017,2023, we had the following commitments outstanding:
•We have various contracts for the use of information technology hardware and software that we use in the normal course of business. Our aggregate commitmentscommitment under these contracts were $26.6was $107 million, of which we expect $4.9$17 million, $12.9$42 million, $5.3$24 million, $1.3$14 million, $0.8$6 million and $1.4$4 million will be paid in 2017, 2018, 2019, 2020, 2021the remainder of 2023, 2024, 2025, 2026, 2027, and thereafter, respectively.
•We have a commitment to purchase an operating property located in New York, New York for $158.5 million, of which $7.2 million is attributed to a related capital lease arrangement and recorded in Debt. We expect to acquire the units in the property in their current form, over time. We currently manage this property, which we have rebranded as Marriott Vacation Club Pulse, New York City. See Footnote No. 12, “Variable Interest Entities,” for additional information on this transaction. As of the end of the 2017 third quarter, we had expected to make payments for these units of $96.8 million and $61.7 million in 2018 and 2019, respectively. Subsequent to the 2017 third quarter, we amended the terms of this commitment and, as a result, we expect to make payments of $108.5 million and $61.7 million in 2019 and 2020, respectively, for these units.
We have a commitment to purchase 88 vacation ownership units located in Bali, Indonesiareal estate for use in our Asia PacificVacation Ownership segment contingent upon completion of constructionvia our involvement with a VIE. Refer to agreed-upon standards within specified timeframes. We expect to complete the acquisition in 2019 and to make payments with respect to these units when specific construction milestones are completed, as follows: $7.8 million in 2017, $5.9 million in 2018 and $25.4 million in 2019.
We have a remaining commitment to purchase vacation ownership units located at our resort in Marco Island, Florida for $108.2 million, which we expect will be paid as follows: $23.7 million in 2018 and $84.5 million in 2019. See Footnote No. 5, “Acquisitions and Dispositions,” and Footnote No. 12,15 “Variable Interest Entities,”Entities” for additional information onand our activities relating to the VIE involved in this transaction.
In addition to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 30, 2016, we have operating lease commitments that expire in 2029. Our aggregate minimum lease payments under these contracts are $17.5 million, of which we expect $0.1 million, $0.4 million, $1.7 million, $1.7 million, $1.9 million and $11.7 million will be paid in 2017, 2018, 2019, 2020, 2021 and thereafter, respectively.
Surety bonds issued as of September 30, 20172023 totaled $37.7$121 million, the majority of which were requested by federal, state, or local governments in connection with our operations.
Additionally, asAs of September 30, 2017,2023, we had $4.6$1 million of letters of credit outstanding under our $250.0 million revolving credit facility (the “RevolvingRevolving Corporate Credit Facility”Facility (as defined in Footnote 12 “Debt”). In addition, as of September 30, 2023, we had $1 million in letters of credit outstanding related to and in lieu of reserves required for several vacation ownership notes receivable securitization transactions outstanding. These letters of credit are not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.
Guarantees
Certain of our rental management agreements in our Exchange & Third-Party Management segment provide for owners of properties we manage to receive specified percentages of rental revenue or guaranteed amounts generated under our management. In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and we either retain the balance of the rental revenue (if any) as our fee or we make up the deficit if the owners have not received their guaranteed amounts. At September 30, 2023, our maximum exposure under fixed dollar guarantees was $5 million, of which $2 million, $1 million, $1 million, and $1 million relate to 2024, 2025, 2026, and 2027 and thereafter, respectively.
We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of our payment of maintenance fees for unsold inventory. The agreement will terminate on the earlier of: 1) sale of 95% of the total ownership interests in the owners’ association; or 2) written notification of termination by either party. At September 30, 2023, our expected commitment for the remainder of 2023 is $3 million.
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Loss Contingencies
In April 2013, KrishnaFebruary 2019, the owners’ association for the St. Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and Sherrie Narayanseveral of its subsidiaries and other ownerscertain third parties. The operative complaint alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of 12 residential units (ownersfiduciary duty, engaged in self-dealing as the sponsor and manager of twothe club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct. The plaintiff is seeking unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one (such claim, the “Remaining Claim”), with respect to which subsequently agreedthe plaintiff was granted leave to release their claims) at the resort formerly known asamend its complaint. The Ritz-Carlton Club & Residences, Kapalua Bay (“Kapalua Bay”)plaintiff filed an amended complaint in Circuit Court for Maui County, Hawaii against us, certain of our subsidiaries, Marriott International, certain of its subsidiaries,with respect to the Remaining Claim and appealed the joint venture in which we have an equity investment that developed and marketed vacation ownership and residential products at Kapalua Bay (the “Joint Venture”). In the original complaint, the plaintiffs alleged that defendants mismanaged fundsdismissal of the residential owners association (the “Kapalua Bay Association”), created a conflictother claims. In June 2023, the appellate court upheld the dismissal of interest by permitting their employees to serve on the Kapalua Bay Association’s board, and failed to disclose documents to which the plaintiffs were allegedly entitled. The amended complaint alleges breach of fiduciary duty, violations of the Hawaii Unfair and Deceptive Trade Practices Act and the Hawaii condominium statute, intentional misrepresentation and concealment, unjust enrichment and civil conspiracy. The relief sought in the amended complaint

includes injunctive relief, repayment of all sums paid to us and our subsidiaries and Marriott International and its subsidiaries, compensatory and punitive damages, and treble damages under the Hawaii Unfair and Deceptive Trade Practices Act. Wethose claims. Plaintiff filed a motion in the Circuit Court to compel arbitration of plaintiffs’ claims. That motion was denied, but on appeal the Hawaii Intermediate Court of Appeals reversed. The Hawaii Supreme Court reversed the decision of the Intermediate Court of Appeals and reinstated the action in Circuit Court, which set the case for trial. We filed a petition with the United States Supreme Court seeking review of the Hawaii Supreme Court’s decision. In January 2016, the U.S. Supreme Court issued an order vacating the Hawaii Supreme Court’s decision and remanding the case with instructions to reconsider its ruling in light of a recent U.S. Supreme Court decision reiterating the obligation of courts to enforce arbitration agreements. On July 14, 2017, the Hawaii Supreme Court issued a decision reaffirming its prior ruling and remanding the case to the Circuit Court for trial. Our motion for reconsideration of that decision wasappellate ruling, and in October 2023, the appellate court denied on August 9, 2017. We disputethat motion. In November 2022, the material allegations inCourt granted our motion to dismiss the amended complaint with respect to the Remaining Claim and continueagain granted plaintiff leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and again appealed the dismissal of the other claims. That appeal remains pending. In September 2023, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and denied plaintiff permission to file any additional amended complaints. We believe we have meritorious defenses to the claims in this matter and intend to vigorously defend against them.
In the action vigorously. Givenordinary course of our business, various claims and lawsuits have been filed or are pending against us. A number of these lawsuits and claims may exist at any given time. Additionally, the inherent uncertaintiesCOVID-19 pandemic may give rise to various claims and lawsuits from owners, members and other parties. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of litigation,the loss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances.
We have not accrued for the pending matter described above and we cannot estimate a range of the potential liability associated with this pending matter, if any, at this time.
In June 2013, Earl C. We have accrued for other claims and Patricia A. Charles, owners of a fractional interest at Kapalua Bay, together with owners of 38 other fractional interests (owners of two of which subsequently agreed to release their claims) at Kapalua Bay, filed an amended complaintlawsuits, but the amount accrued is not material individually or in the Circuit Courtaggregate. For matters not requiring accrual, we do not believe that the ultimate outcome of the Second Circuit for the State of Hawaii against us, certain of our subsidiaries, Marriott International, certain of its subsidiaries, the Joint Venture, and other entities that have equity investmentssuch matters, individually or in the Joint Venture. The plaintiffs allegeaggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available. However, legal proceedings are inherently uncertain, and while we believe that the defendants failedour accruals, where required, are adequate and/or we have valid defenses to disclose the financial condition of the Joint Venture and the commitment of the defendants to the Joint Venture, and that defendants’ actions constituted fraud and violated the Hawaii Unfair and Deceptive Trade Practices Act, the Hawaii Condominium Property Act and the Hawaii Time Sharing Plans statute. The relief sought includes compensatory and punitive damages, attorneys’ fees, pre-judgment interest, declaratory relief, rescission and treble damages under the Hawaii Unfair and Deceptive Trade Practices Act. The complaint was subsequently further amended to add owners of two additional fractional interests as plaintiffs. The Circuit Court granted our motion to compel arbitration of the claims asserted, by the plaintiffs. Plaintiffs appealedunfavorable rulings could occur that decision to the Hawaii Intermediate Court of Appeals and also initiated arbitration. In July 2015, the Intermediate Court of Appeals reversed the decision of the Circuit Court and directed that the action be reinstatedcould, individually or in the Circuit Court, basedaggregate, have a material adverse effect on the Hawaii Supreme Court’s decision in the Narayan case discussed above. On October 10, 2017, following the most recent action of the Hawaii Supreme Court in the Narayan case, the Circuit Court set the Charles case for trial beginning in January 2019. We dispute the material allegations in the amended complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time.our business, financial condition, or operating results.
In May 2015, we and certain of our subsidiaries were named as defendants in an action filed in the Superior Court of San Francisco County, California, by William and Sharon Petrick and certain other present and former owners of 69 fractional interests at the RCC San Francisco. The plaintiffs allege that the affiliation of the RCC San Francisco with our points-based Marriott Vacation Club Destinations (“MVCD”) program, certain alleged sales practices, and other acts we and the other defendants allegedly took caused an actionable decrease in the value of their fractional interests. The relief sought includes, among other things, compensatory and punitive damages, rescission, and pre- and post-judgment interest. Plaintiffs filed an amended complaint in April 2016. We filed a motion to dismiss, which the Court granted in part and denied in part on September 13, 2017. The Court also granted leave to plaintiffs to file a second amended complaint, which plaintiffs filed on October 17, 2017. We dispute the plaintiffs’ material allegations and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time.
In March 2017, RCHFU, L.L.C. and other owners of 232 fractional interests at The Ritz-Carlton Club, Aspen Highlands (“RCC Aspen Highlands”) served an amended complaint in an action pending in the court against us, certain of our subsidiaries, and other third party defendants. The U.S. District Court for the District of Colorado has ordered that no further amendments will be permitted. The amended complaint alleges that the plaintiffs’ fractional interests were devalued by the affiliation of RCC Aspen Highlands and other Ritz-Carlton Clubs with our points-based MVCD program. The relief sought includes, among other things, unspecified damages, pre- and post-judgment interest, and attorneys’ fees. We filed a motion to dismiss the amended complaint, which remains pending. We dispute the plaintiffs’ material allegations and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time.
11.SECURITIZED DEBT
In May 2016, we, certain of our subsidiaries, and other third parties were named as defendants in an action filed in the U.S. District Court for the Middle District of Florida by Anthony and Beth Lennen. The case is filed as a putative class action; the plaintiffs seek to represent a class consisting of themselves and all other purchasers of MVCD points, from inception of the MVCD program in June 2010 to the present, as well as all individuals who own or have owned weeks in any resorts for which weeks have been added to the MVCD program. Plaintiffs challenge the characterization of the beneficial interests in the MVCD trust that are sold to customers as real estate interests under Florida law. They also challenge the structure of the trust and associated operational aspects of the trust product. The relief sought includes, among other things, declaratory relief, an unwinding of the MVCD product, and punitive damages. On September 15, 2016, we filed a motion to dismiss the complaint

and a motion to stay the case pending referral of certain questions to Florida state regulators. On September 27, 2017, the Court granted the motion to dismiss and denied the motion to stay. The Court granted leave to plaintiffs to file an amended complaint, which plaintiffs filed on October 25, 2017. We dispute the plaintiffs’ material allegations and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time.
Other
In September 2017, over 20 of our properties were impacted by Hurricane Irma and Hurricane Maria and, as a result, we have accrued $1.7 million of expense for the estimated property damage insurance deductibles, which was recorded in the Gains and other income, net line on the Statement of Income.
During 2016, our properties in Hilton Head and Myrtle Beach, South Carolina were temporarily closed as a result of damage from Hurricane Matthew. In the 2017 third quarter, we received $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew, which were recorded in the Gains and other income line on the Statement of Income.
9. DEBT
The following table provides detail on our securitized debt, balances, net of unamortized debt discount and issuance costs:costs.
($ in millions)At September 30, 2023At December 31, 2022
Vacation ownership notes receivable securitizations, gross(1)
$1,703 $1,799 
Unamortized debt discount and issuance costs(20)(21)
1,683 1,778 
Warehouse Credit Facility, gross(2)
345 162 
Unamortized debt issuance costs(2)(2)
343 160 
$2,026 $1,938 
(1)Interest rates as of September 30, 2023 range from 1.5% to 6.6%, with a weighted average interest rate of 3.8%.
(2)Effective interest rate as of September 30, 2023 was 6.8%.
($ in thousands)At September 30, 2017 At December 30, 2016
Vacation ownership notes receivable securitizations, gross(1)
$906,701
 $738,362
Unamortized debt issuance costs(11,296) (9,174)
 895,405
 729,188
    
Convertible notes, gross(2)
230,000
 —
Unamortized debt discount and issuance costs(39,261) —
 190,739
 —
    
Non-interest bearing note payable63,558
 —
Unamortized debt discount(3)
(3,881) —
 59,677
 —
    
Other debt, gross196
 834
Unamortized debt issuance costs(16) (19)
 180
 815
    
Capital leases7,221
 7,221
 $1,153,222
 $737,224
_________________________
(1)
Interest rates as of September 30, 2017 range from 2.2% to 6.3% with a weighted average interest rate of 2.5%.
(2)
The effective interest rate as of September 30, 2017 was 4.7%.
(3)
Debt discount based on imputed interest rate of 6.0%.
All of our securitized debt is non-recourse. See Footnote No. 12,15 “Variable Interest Entities,”Entities” for a discussion of the collateral for the non-recourse debt associated with our securitized debt.
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The following table shows anticipated future principal payments for our securitized debt as of September 30, 2023.
Vacation Ownership
Notes Receivable Securitizations
Warehouse Credit
Facility(1)
Total
($ in millions)
Payments Year
2023, remaining$42 $4 $46 
2024171 17 188 
2025173 18 191 
2026176 306 482 
2027176 — 176 
Thereafter965 — 965 
$1,703 $345 $2,048 
(1)Excludes future Warehouse Credit Facility renewals.
Vacation Ownership Notes Receivable Securitizations
Each of the securitized vacation ownership notes receivable and our Warehouse Credit Facility.

The following table shows scheduled future principal payments for our debt as of September 30, 2017:
($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations(1)
 Convertible Notes Non-Interest Bearing Note Payable 
Other
Debt
 
Capital
Leases
 Total
Debt Principal Payments Year           
2017, remaining$26,213
 $—
 $—
 $4
 $—
 $26,217
201898,949
 —
 32,680
 4
 7,221
 138,854
201996,249
 —
 30,878
 4
 —
 127,131
202098,215
 —
 —
 5
 —
 98,220
202199,010
 —
 —
 5
 —
 99,015
Thereafter488,065
 230,000
 —
 174
 —
 718,239
 $906,701
 $230,000
 $63,558
 $196
 $7,221
 $1,207,676
_________________________
(1)
The debt associated with our vacation ownership notes receivable securitizations is non-recourse to us.
As the contractual terms of the underlying securitized vacation ownership notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.
We paid cash for interest, net of amounts capitalized, of $15.6 million and $14.6 million in the 2017 first three quarters and the 2016 first three quarters, respectively.
Debt Associated with Vacation Ownership Notes Receivable Securitizations
During the 2017 third quarter, we completed the securitization of a pool of $360.8 million of vacation ownership notes receivable. In connection with the securitization, investors purchased in a private placement $350.0 million in vacation ownership loan backed notes from the MVW Owner Trust 2017-1 (the “2017-1 Trust”). Three classes of vacation ownership loan backed notes were issued by the 2017-1 Trust: $276.0 million of Class A Notes, $46.9 million of Class B Notes and $27.1 million of Class C Notes. The Class A Notes have an interest rate of 2.42 percent, the Class B Notes have an interest rate of 2.75 percent and the Class C Notes have an interest rate of 2.99 percent, for an overall weighted average interest rate of 2.51 percent.
Each of the transactions in which we have securitized vacation ownership notes receivable contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the 2017 first three quarters,third quarter of 2023, and as of September 30, 2017, no2023, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.
As the contractual terms of September 30, 2017, we had 8the underlying securitized vacation ownership notes receivable pools outstanding.
Convertible Notesdetermine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.
During the 2017 thirdsecond quarter of 2023, we securitized a pool of $388 million of vacation ownership notes receivable. In connection with the securitization, $380 million in vacation ownership loan backed notes were issued $230.0by MVW 2023-1 LLC (the “2023-1 LLC”) in a private placement. Four classes of vacation ownership loan backed notes were issued by the 2023-1 LLC: $237 million of Class A Notes, $65 million of Class B Notes, $48 million of Class C Notes, and $30 million of Class D Notes. The Class A Notes have an interest rate of 4.93%, the Class B Notes have an interest rate of 5.42%, the Class C Notes have an interest rate of 6.54%, and the Class D Notes have an interest rate of 8.83%. Investors purchased $369 million of the vacation ownership loan backed notes issued by the 2023-1 LLC, composed of the Class A Notes, the Class B Notes, the Class C Notes, and a portion of the Class D Notes, of which we retained $11 million. Proceeds from the transaction, net of fees and a reserve, were used to repay the outstanding obligations on our warehouse credit facility (the “Warehouse Credit Facility”) and for other general corporate purposes. The Class D notes that we retained were subsequently sold at par during the second quarter of 2023.
Warehouse Credit Facility
During the second quarter of 2023, we amended certain agreements associated with our Warehouse Credit Facility (the “Warehouse Amendment”). The Warehouse Amendment increased the borrowing capacity of the existing facility from $425 million to $500 million and extended the revolving period from July 28, 2024 to May 31, 2025. The Warehouse Amendment made no other material changes to the Warehouse Credit Facility.
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12.DEBT
The following table provides detail on our debt balances, net of unamortized debt discount and issuance costs.
($ in millions)At September 30, 2023At December 31, 2022
Corporate Credit Facility
Term Loan$784 $784 
Unamortized debt discount and issuance costs(4)(6)
780 778 
Revolving Corporate Credit Facility(1)
90 — 
Unamortized debt issuance costs(2)
(4)— 
86 — 
Senior Secured Notes
2025 Notes— 250 
Unamortized debt discount and issuance costs— (2)
— 248 
Senior Unsecured Notes
2028 Notes350 350 
Unamortized debt discount and issuance costs(2)(3)
348 347 
2029 Notes500 500 
Unamortized debt discount and issuance costs(5)(6)
495 494 
Convertible Notes
2026 Convertible Notes575 575 
Unamortized debt issuance costs(7)(10)
568 565 
2027 Convertible Notes575 575 
Unamortized debt issuance costs(13)(15)
562 560 
Finance Leases188 86 
Non-interest bearing note payable4 10 
$3,031 $3,088 
(1)Effective interest rate as of September 30, 2023 was 7.2%.
(2)Excludes $5 million of unamortized debt issuance costs as of December 31, 2022. As no cash borrowings were outstanding under the Revolving Corporate Credit Facility at that time, the unamortized debt issuance costs were included in Other assets.
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The following table shows scheduled principal payments for our debt, based on contractual terms and maturity dates, excluding finance leases, as of September 30, 2023.
Payments Year
($ in millions)Remaining 20232024202520262027ThereafterTotal
Term Loan$— $— $784 $— $— $— $784 
Revolving Corporate Credit Facility— — — — 90 — 90 
2028 Notes— — — — — 350 350 
2029 Notes— — — — — 500 500 
2026 Convertible Notes— — — 575 — — 575 
2027 Convertible Notes— — — — 575 — 575 
Non-Interest Bearing Note Payable— 4 — — — — 4 
$— $4 $784 $575 $665 $850 $2,878 
Corporate Credit Facility
Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a $900 million term loan facility (the “Term Loan”), which matures on August 31, 2025, and a revolving credit facility with a borrowing capacity of $750 million(the “Revolving Corporate Credit Facility”), including a letter of credit sub-facility of $75 million, that terminates on March 31, 2027.
During the second quarter of 2023, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which modified the interest rate applicable to borrowings under the Term Loan. Beginning July 31, 2023, the Term Loan references the Secured Overnight Financing Rate (“SOFR”) and is based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Amendment), plus a 0.10% adjustment for a one-month interest period, a 0.15% adjustment for a three-month interest period, or a 0.25% adjustment for a six-month interest period, subject to a 0.00% floor.
Prior to 2022, we entered into interest rate swaps and an interest rate collar under which we may pay a fixed rate and receive a floating interest rate to hedge a portion of our interest rate risk on the Term Loan. During the second quarter of 2023, we amended these interest rate swaps and the collar to reference SOFR rather than LIBOR, effective July 31, 2023. As a result of this transition, the fixed rate on the $250 million of interest rate swaps that matured in September 2023 was amended to 2.88%, the fixed rate on the $200 million of interest rate swaps maturing in April 2024 was amended to 2.17%, and the cap strike price on the $100 million interest rate collar was amended to 2.43%. Both the interest rate swaps and the interest rate collar have been designated and qualify as cash flow hedges of interest rate risk and are recorded in Other assets on our Balance Sheets as of September 30, 2023 and December 31, 2022. We characterize payments we make or receive in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income or loss for presentation purposes.
The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first three quarters of 2023 and 2022. There were no reclassifications to the Income Statement for any of the periods presented below.
($ in millions)20232022
Derivative instrument adjustment balance, January 1$13 $(18)
Other comprehensive (loss) gain before reclassifications(3)16 
Derivative instrument adjustment balance, March 3110 (2)
Other comprehensive (loss) gain before reclassifications(1)7 
Derivative instrument adjustment balance, June 309 5 
Other comprehensive (loss) gain before reclassifications(3)8 
Derivative instrument adjustment balance, September 30$6 $13 
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Senior Notes
Our senior notes include:
•$500 million aggregate principal amount of our 1.50% Convertible6.125% Senior Secured Notes due 20222025 issued in the second quarter of 2020 with a maturity date of September 15, 2025 (the “Convertible“2025 Notes”), of which included the exercise in full$250 million was outstanding as of the over-allotment option we granted to the initial purchasers of the Convertible Notes to purchase up to an additional $30.0December 31, 2022.
•$350 million aggregate principal amount of Convertible4.750% Senior Unsecured Notes due 2028 issued in the fourth quarter of 2019 with a maturity date of January 15, 2028 (the “2028 Notes”).
•$500 million aggregate principal amount of 4.500% Senior Unsecured Notes due 2029 issued in the second quarter of 2021 with a maturity date of June 15, 2029 (the “2029 Notes”).
Redemption of Senior Secured Notes
During the first quarter of 2023, we redeemed, prior to maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in the fourth quarter of 2022 and the terms of the indenture governing the 2025 Notes. The Convertible Notes are governed by an indenture dated September 25, 2017 (the “Indenture”) between usIn connection with this redemption, we incurred charges of $10 million, inclusive of a redemption premium and The Bankthe write-off of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). We received net proceeds from the offering of approximately $223.7 million after adjusting forunamortized debt issuance costs, includingwhich was recorded in Gains (losses) and other income (expense), net on our Income Statement for the discount to the initial purchasers.nine months ended September 30, 2023.
The Convertible Notes
2026 Convertible Notes
During 2021, we issued $575 million aggregate principal amount of convertible senior notes (the “2026 Convertible Notes”) that bear interest at a rate of 1.50 percent, payable in cash semi-annually on March 15 and September 15 of each year beginning on March 15, 2018.0.00%. The 2026 Convertible Notes mature on SeptemberJanuary 15, 2022,2026, unless repurchased or converted in accordance with their terms prior to that date. On or after June 15, 2022, and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at their option. The Convertible Notes are convertible at an initial rate of 6.7482 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $148.19 per share of our common stock).
The conversion rate is subject to adjustment for certain events as described in the Indenture.indenture governing the notes, and was subject to adjustment as of September 30, 2023 to 6.1044 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $163.82 per share of our common stock), as a result of the dividends we declared since issuance of the 2026 Convertible Notes that were greater than the quarterly dividend we paid when the 2026 Convertible Notes were issued. Upon conversion,

we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. It is our intent to settle conversionsAs of the Convertible Notes through combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount.
Holders may convert their Convertible Notes prior to June 15, 2022 only under the following circumstances:
during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period ofSeptember 30, consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 percent of the conversion price on each applicable trading day;
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of that five consecutive trading day period was less than 98 percent of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or
upon the occurrence of specified corporate events as described in the Indenture.
We may not redeem the Convertible Notes prior to their maturity date, and no sinking fund is provided for them. If we undergo a fundamental change, as described in the Indenture, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their Convertible Notes. The repurchase price as a result of a fundamental change is equal to 100 percent of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. If certain fundamental changes referred to in the Indenture as make-whole fundamental changes occur, the conversion rate applicable to the Convertible Notes may increase.
The Convertible Notes are our general senior unsecured obligations, ranking senior in right of payment to any future debt that is expressly subordinated in right of payment to the Convertible Notes and equally in right of payment with all of our existing and future liabilities that are not so subordinated. The Convertible Notes are effectively subordinated to all of our existing and future secured debt to the extent of the value of the assets securing such debt. The Convertible Notes are structurally subordinated to all of the existing and future liabilities and obligations of our subsidiaries. The Convertible Notes are not guaranteed by any of our subsidiaries.
There are no financial or operating covenants related to the Convertible Notes. The Indenture contains customary events of default with respect to the Convertible Notes and provides that upon the occurrence and continuation of certain events of default, the Trustee or the holders of at least 25 percent in aggregate principal amount of the Convertible Notes then outstanding, may declare all principal of, and accrued and any unpaid interest on, the Convertible Notes then outstanding to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving the Company or certain of its subsidiaries, all of the principal of and accrued and unpaid interest on the Convertible Notes will automatically become immediately due and payable.
In accounting for the issuance of the Convertible Notes, we separated the Convertible Notes into liability and equity components. We allocated $196.8 million of the Convertible Notes to the liability component, and $33.2 million to the equity component. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the term of the Convertible Notes using2023, the effective interest method. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.
We incurred issuance costs of $7.3 million related to the Convertible Notes. Issuance costs were allocated to the liability and equity components based on their relative values. Issuance costs attributable to the liability component are being amortized to interest expense over the term of the Convertible Notes, and issuance costs attributable to the equity component are included along with the equity component in stockholders' equity.rate was 0.55%.
The following table shows the net carrying value of the Convertible Notes at September 30, 2017:
($ in thousands) 
Liability component 
Principal amount$230,000
Unamortized debt discount(33,076)
Unamortized debt issuance costs(6,185)
 $190,739
  
Equity component, net of issuance costs$32,573

The following table shows the total interest expense information related to the 2026 Convertible Notes for the 2017 third quarter and the 2017 first three quarters:Notes.
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Amortization of debt issuance costs$— $1 $2 $2 
($ in thousands) 
Contractual interest expense$58
Amortization of debt discount148
Amortization of debt issuance costs26
 $232
2026 Convertible Note Hedges and Warrants
In connection with the offering of the 2026 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock with two counterparties on each of September 20, 2017 and September 21, 2017 (“(the “2026 Convertible Note Hedges”), covering a total of approximately 1.553.5 million shares of our common stock, at a cost of $33.2 million. The Convertible Note Hedges are subject to anti-dilution provisions substantially similar to those of the Convertible Notes, have a strike price that initially corresponds to the initial conversion price of the Convertible Notes, are exercisable by us upon any conversion under the Convertible Notes, and expire when the Convertible Notes mature. The cost of the Convertible Note Hedges is expected to be tax deductible as an original issue discount over the life of the Convertible Notes, as the Convertible Notes and the Convertible Note Hedges represent an integrated debt instrument for tax purposes. The cost of the Convertible Note Hedges was recorded as a reduction of Additional paid-in capital on our Balance Sheet as of September 30, 2017.
Concurrently with the entry into the Convertible Note Hedges, we separately entered into privately-negotiated warrant transactions (the “Warrants”“2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire collectively,3.5 million shares of our common stock. As of September 30, 2023, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to anti-dilution adjustments,adjustment to approximately 1.55$163.82 and $204.77, respectively, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.
2027 Convertible Notes
During 2022, we issued $575 million aggregate principal amount of convertible senior notes (the “2027 Convertible Notes”) that bear interest at a rate of 3.25%. The 2027 Convertible Notes mature on December 15, 2027, unless earlier repurchased or converted in accordance with their terms prior to that date.
The 2027 Convertible Notes are convertible at a rate of 5.2729 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $189.65 per share of our common stock) as of September 30, 2023. The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.As of September 30, 2023, the effective interest rate was 3.88%.
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The following table shows interest expense information related to the 2027 Convertible Notes.
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Contractual interest expense$5 $— $14 $— 
Amortization of debt issuance costs— — 2 — 
$5 $— $16 $— 
2027 Convertible Note Hedges and Warrants
In connection with the offering of the 2027 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (the “2027 Convertible Note Hedges”), covering a total of 3.0 million shares of our common stock, at an initialand warrant transactions (the “2027 Warrants”), whereby we sold to the counterparties to the 2027 Convertible Note Hedges warrants to acquire 3.0 million shares of our common stock. As of September 30, 2023, the strike price of $176.68 per share. We received aggregate proceeds of approximately $20.3 million from the saleprices of the Warrants to the counterparties. Taken together, the2027 Convertible Note Hedges and the Warrants are generally expected to reduce the potential dilution to our common stock (or, in the event the conversion of the Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the Convertible Notes and to effectively increase the overall conversion price from $148.19 (or a conversion premium of 30 percent) to $176.68 per share (or a conversion premium of 55 percent). The Warrants will expire in ratable portions on a series of expiration dates commencing on December 15, 2022. The proceeds from the issuance of the2027 Warrants were recorded as an increase to Additional paid-in capital on our Balance Sheet as of September 30, 2017.
The Convertible Notes, the Convertible Note Hedges$189.65 and the Warrants are transactions that are separate from each other. Holders of any such instrument have$286.26, respectively, and no rights with respect to the other instruments. As of September 30, 2017, no2027 Convertible Note Hedges or 2027 Warrants have been exercised.
RevolvingSecurity and Guarantees
Amounts borrowed under the Corporate Credit Facility,
During the 2017 third quarter, we terminated our $200.0 million revolving credit facility (the “Previous Revolving Corporate Credit Facility”) and entered into a new Revolving Corporate Credit Facility with a borrowing capacity of $250.0 million, including a letter of credit sub-facility of $30.0 million, that terminates on August 16, 2022. All outstanding cash borrowings under our Previous Revolving Corporate Credit Facility were repaid in full prior to termination. The Revolving Corporate Credit Facility will provide support for our business, including ongoing liquidity and letters of credit. Borrowings under this facility generally bear interest at a floating rate plus an applicable margin that varies from 0.50 percent to 2.75 percent depending on the type of loan and our credit rating. In addition, we pay a commitment fee on the unused availability under the Revolving Corporate Credit Facility at a rate that varies from 20 basis points per annum to 40 basis points per annum, also depending on our credit rating.
No cash borrowings were outstanding as of September 30, 2017 under our Revolving Corporate Credit Facility. Any amounts borrowed under that facility, as well as obligations with respect to letters of credit issued pursuant to that facility,the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowerborrowers under, and guarantors of, that facility (which include Marriott Vacations WorldwideMVWC and eachcertain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), in each case including inventory, subject to certain exceptions. In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the 2027 Convertible Notes, the 2028 Notes, and the 2029 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries.
Finance Lease
During 2020, we entered into a finance lease arrangement, which was amended in 2021, for our new global headquarters office building in Orlando, Florida. The lease for the new building commenced for accounting purposes during the first quarter of 2023, upon the substantial completion of construction. The lease includes a 26-year lease term, consisting of a 16-year initial term plus two five-year renewal options. As of September 30, 2017, we were in compliance with2023, the applicable financial and operating covenants under the Revolving Credit Facility.

Warehouse Credit Facility
The Warehouse Credit Facility, which has a borrowing capacity of $250.0 million, allows for the securitization of vacation ownership notes receivable on a non-recourse basis. During the 2017 third quarter, we amended certain agreements associated with this facility (the “Warehouse Amendment”). The Warehouse Amendment requires us to comply with the financial covenants in the Revolving Corporate Credit Facility and eliminates the requirement to comply with the covenants contained in the Previous Revolving Corporate Credit Facility. The Warehouse Amendment did not modify the borrowing capacity or the termpresent value of the Warehouse Credit Facility. The Warehouse Credit Facility terminates on March 7, 2019future lease payments, net of lease incentives, was $78 million, with a corresponding lease liability of $99 million. We record right-of-use assets for our finance leases in Property and if not renewed, any amounts outstanding thereunder would become dueequipment, net. Our total payments under this lease are $245 million, of which we expect $1 million, $7 million, $8 million, $8 million, $9 million, and payable 13 months after termination, at which time all principal$212 million will be paid in 2023, 2024, 2025, 2026, 2027, and interest collected with respect to the vacation ownership notes receivable held in the Warehouse Credit Facility would be redirected to the lenders to pay down the outstanding debt under the facility. The advance rate for vacation ownership notes receivable securitized using the Warehouse Credit Facility varies based on the characteristics of the securitized vacation ownership notes receivable. We also pay unused facility and other fees under the Warehouse Credit Facility.thereafter, respectively.
During the 2017 second quarter, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $59.1 million. The advance rate was 85 percent, which resulted in gross proceeds of $50.3 million. Net proceeds were $50.0 million due to the funding of reserve accounts in the amount of $0.3 million.
As of September 30, 2017, there were no cash borrowings outstanding under our Warehouse Credit Facility. We generally expect to securitize our vacation ownership notes receivable, including any vacation ownership notes receivable held in the Warehouse Credit Facility, in the ABS market once per year.
Non-Interest Bearing Note Payable
During the 2017 second quarter, we issued a non-interest bearing note payable in connection with the acquisition of vacation ownership units located on the Big Island of Hawaii. See Footnote No. 5, “Acquisitions and Dispositions,” for additional information regarding this transaction.
10.
13.SHAREHOLDERS’ EQUITY
Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $0.01 per share. At September 30, 2017,2023, there were 36,857,18675,807,873 shares of Marriott Vacations Worldwide common stock issued, of which 26,494,04735,685,051 shares were outstanding and 10,363,13940,122,822 shares were held as treasury stock. At December 30, 2016,31, 2022, there were 36,633,86875,744,524 shares of Marriott Vacations Worldwide common stock issued, of which 26,990,30637,481,082 shares were outstanding and 9,643,56238,263,442 shares were held as treasury stock. Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $0.01 per share, none of which were issued or outstanding as of September 30, 20172023 or December 30, 2016.
The following table details changes in shareholders’ equity during three quarters ended September 30, 2017:
($ in thousands)Common Stock 
Treasury
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income
 
Retained
Earnings
 
Total
Equity
Balance at December 30, 2016$366
 $(606,631) $1,162,283
 $5,460
 $346,341
 $907,819
Impact of adoption of ASU 2016-09—
 —
 371
 ��
 (371) —
Opening balance 2017366
 (606,631) 1,162,654
 5,460
 345,970
 907,819
Net income—
 —
 —
 —
 118,738
 118,738
Foreign currency translation adjustments—
 —
 —
 11,626
 —
 11,626
Derivative instrument adjustment—
 —
 —
 70
 —
 70
Amounts related to share-based compensation3
 —
 1,933
 —
 —
 1,936
Repurchase of common stock—
 (83,067) —
 —
 —
 (83,067)
Dividends—
 —
 —
 —
 (28,512) (28,512)
Equity component of convertible notes, net of issuance costs—
 —
 32,573
 —
 —
 32,573
Purchase of convertible note hedges—
 —
 (33,235) —
 —
 (33,235)
Issuance of warrants—
 —
 20,332
 —
 —
 20,332
Employee stock plan issuance—
 564
 378
 —
 —
 942
Balance at September 30, 2017$369
 $(689,134) $1,184,635
 $17,156
 $436,196
 $949,222

31, 2022.
Share Repurchase Program
The following table summarizes share repurchase activityFrom time to time, with the approval of our Board of Directors, we may undertake programs to purchase shares of our common stock (each, a “Share Repurchase Program” and collectively, the “Share Repurchase Programs”). During the third quarter of 2021, our Board of Directors authorized us to purchase shares of our common stock under our current share repurchase program:
($ in thousands, except per share amounts)Number of Shares Repurchased Cost of Shares Repurchased Average Price Paid per Share
As of December 30, 20169,672,629
 $608,439
 $62.90
For the 2017 first three quarters728,385
 83,067
 114.04
As of September 30, 201710,401,014
 $691,506
 $66.48
On August 1, 2017,a Share Repurchase Program for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022. During the first quarter of 2022, our Board of Directors authorized the repurchasepurchase of up to 1.0an additional $300 million additional shares of our common stock under our existing share repurchasethis program and extended the durationterm of this program to March 31, 2023. During the program through May 31, 2018. Asthird quarter of September 30, 2017,2022, our Board of Directors had authorized the repurchase of an aggregatepurchase of up to 11.9an additional $500 million shares of our common stock under this program and extended the term of this program to June 30, 2023. During the second quarter of 2023, our Board of Directors increased the remaining authorization to authorize purchases of up to $600 million and extended the term of this program
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to December 31, 2024. As of September 30, 2023, approximately $476 million remained available for share repurchase program sincerepurchases under the initiation of the program in October 2013. Share Repurchase Program.
Share repurchases may be made through open market purchases, privately negotiated transactions, block transactions, tender offers, accelerated share repurchase agreements or otherwise. The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors. Acquired shares of our common stock are held as treasury shares carried at cost in our Financial Statements. In connection with the repurchase program,current Share Repurchase Program, we are authorized to adopt one or more trading plans pursuant to the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
As of September 30, 2017, 1.5 million shares remained available for repurchase under the authorization approved by our Board of Directors. The authorization for the share repurchase programcurrent Share Repurchase Program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice. Acquired shares of our common stock are currently held as treasury shares and carried at cost in our Financial Statements.
The Inflation Reduction Act of 2022, which was enacted in August 2022, imposes a 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. For purposes of calculating the excise tax, the fair value of certain share issuances may be netted against the fair market value of stock repurchases during the same taxable year. In the first three quarters of 2023, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accrued liabilities on our Balance Sheet.
The following table summarizes share repurchase activity under our Share Repurchase Programs:
($ in millions, except per share amounts)Number of Shares RepurchasedCost Basis of Shares RepurchasedAverage Price
Paid per Share
As of December 31, 202222,773,218 $2,119 $93.06 
For the first three quarters of 20231,936,855 248 $128.03 
As of September 30, 202324,710,073 $2,367 $95.80 
Dividends
We declared cash dividends to holders of common stock during the 2017 first three quarters of 2023 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
February 9, 2017February 23, 2017March 9, 2017$0.35
May 11, 2017May 25, 2017June 8, 2017$0.35
September 7, 2017September 21, 2017October 5, 2017$0.35
follows. Any future dividend payments will be subject to the restrictions imposed under the agreements covering our debt, and Board approval, and thereapproval. There can be no assurance that we will pay dividends in the future.
Declaration DateShareholder Record DateDistribution DateDividend per Share
February 16, 2023March 2, 2023March 16, 2023$0.72
May 11, 2023May 25, 2023June 8, 2023$0.72
September 7, 2023September 21, 2023October 5, 2023$0.72
11.
14.SHARE-BASED COMPENSATION
We maintain the Marriott Vacations Worldwide Corporation Stock and Cash2020 Equity Incentive Plan (the “Stock“MVW Equity Plan”) for the benefit of our officers, directors, and employees. Under the StockMVW Equity Plan, we are authorized to award: (1) restricted stock and restricted stock units (“RSUs”) of our common stock, (2) SARsstock appreciation rights (“SARs”) relating to our common stock, and (3) stock options to purchase our common stock. A total of 61.8 million shares are authorized for issuance pursuant to grants under the StockMVW Equity Plan. As of September 30, 2017, 1.42023, approximately 0.8 million shares were available for grants under the StockMVW Equity Plan.
The following table details our share-based compensation expense related to award grants to our officers, directors, and employees for the following periods:employees:
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Service-based RSUs$7 $7 $22 $24 
Performance-based RSUs(2)1 1 2 
5 8 23 26 
SARs1 2 2 4 
$6 $10 $25 $30 
30

  Quarter Ended Year to Date Ended
  September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands) (92 days) (84 days) (274 days) (252 days)
Service based RSUs $2,367
 $2,065
 $7,814
 $6,618
Performance based RSUs 904
 560
 2,775
 2,003
  3,271
 2,625
 10,589
 8,621
SARs 627
 514
 1,760
 1,374
Stock options —
 —
 —
 —
  $3,898
 $3,139
 $12,349
 $9,995
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The following table details our deferred compensation costs related to unvested awards:
($ in thousands) At September 30, 2017 At December 30, 2016
Service based RSUs $10,931
 $9,000
Performance based RSUs 5,754
 3,307
  16,685
 12,307
SARs 1,626
 1,146
Stock options —
 —
  $18,311
 $13,453
($ in millions)At September 30, 2023At December 31, 2022
Service-based RSUs$30 $26 
Performance-based RSUs4 7 
34 33 
SARs1 1 
$35 $34 
Restricted Stock Units
We granted 111,992 service based199,468 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $95.57,$143.54, to our employees and non-employee directors during the 2017 first three quarters. During the 2017 first three quarters of 2023. During the first three quarters of 2023, we also granted performance basedperformance-based RSUs, which are subject to performance basedperformance-based vesting conditions, to members of management. A maximum of 94,436114,602 RSUs may be earned under the performance based RSUsperformance-based RSU awards granted during the 2017 first three quarters.quarters of 2023.
Stock Appreciation Rights
We granted 81,97737,436 SARs, with a weighted average grant-date fair value of $27.63$58.50 and a weighted average exercise price of $97.53,$153.10, to members of management during the 2017 first three quarters.quarters of 2023. We use the Black-Scholes model to estimate the fair value of the SARs granted. The expected stock price volatility was calculated based on the average of the historical and implied volatility of our stock price. The average expected life was calculated using the simplified method.method, as we have insufficient historical information to provide a basis for estimating average expected life. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The dividend yield assumption listed below is based on the expectation of future payouts.
The following table outlines the assumptions used to estimate the fair value of grants during the 2017 first three quarters:
quarters of 2023:
Expected volatility30.41%40.47%
Dividend yield1.44%1.87%
Risk-free rate2.06%4.07%
Expected term (in years)6.25
12.
15.VARIABLE INTEREST ENTITIES
Variable Interest Entities Related to Our Vacation Ownership Notes Receivable Securitizations
We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products. These vacation ownership notes receivable securitizations provide funding for us and transfer the economic risks and substantially all the benefits of the consumer loans we originate to third parties.general corporate purposes. In a vacation ownership notes receivable securitization, various classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. With each vacation ownership notes receivable securitization, we may retain all or a portion of the securities subordinated tranches, interest-only strips, subordinated interests in accrued interestthat are issued, and fees on the securitized vacation ownership notes receivable or, in some cases, overcollateralization and cash reserve accounts.certain residual interests.
We created these bankruptcy remote special purpose entities to serve as a mechanism for holding assets and related liabilities, and the entities have no equity investment at risk, making them variable interest entities.VIEs. We continue to service the vacation ownership notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities. Accordingly, we concluded that we are the entities’ primary beneficiary and, therefore, consolidate them. There is no noncontrolling interest balance related to these entities and the creditors of these entities do not have general recourse to us.

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The following table shows consolidated assets, which are collateral for the obligations of these variable interest entities,VIEs, and consolidated liabilities included on our Balance Sheet at September 30, 2017:2023:
($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations
 
Warehouse
Credit Facility
 Total
Consolidated Assets:     
Vacation ownership notes receivable, net of reserves$875,237
 $—
 $875,237
Interest receivable5,702
 —
 5,702
Restricted cash34,413
 —
 34,413
Total$915,352
 $—
 $915,352
Consolidated Liabilities:     
Interest payable$697
 $42
 $739
Debt906,701
 —
 906,701
Total$907,398
 $42
 $907,440
The noncontrolling interest balance was zero. The creditors of these entities do not have general recourse to us.
($ in millions)Vacation Ownership
Notes Receivable
Securitizations		Warehouse
Credit Facility		Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves$1,526 $359 $1,885 
Interest receivable11 3 14 
Restricted cash61 23 84 
Total$1,598 $385 $1,983 
Consolidated Liabilities
Interest payable$2 $1 $3 
Securitized debt1,703 345 2,048 
Total$1,705 $346 $2,051 
The following table shows the interest income and expense recognized as a result of our involvement with these variable interest entitiesVIEs during the 2017 third quarter:quarter of 2023:
($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations
 
Warehouse
Credit Facility
 Total
Interest income$25,900
 $638
 $26,538
Interest expense to investors$4,837
 $474
 $5,311
Debt issuance cost amortization$947
 $240
 $1,187
Administrative expenses$92
 $37
 $129
($ in millions)Vacation Ownership
Notes Receivable
Securitizations		Warehouse
Credit Facility		Total
Interest income$59 $11 $70 
Interest expense$17 $4 $21 
Debt issuance cost amortization$2 $— $2 
The following table shows the interest income and expense recognized as a result of our involvement with these variable interest entitiesVIEs during the 2017 first three quarters:quarters of 2023:
($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations
 
Warehouse
Credit Facility
 Total
($ in millions)($ in millions)Vacation Ownership
Notes Receivable
Securitizations		Warehouse
Credit Facility		Total
Interest income$70,501
 $2,331
 $72,832
Interest income$180 $25 $205 
Interest expense to investors$13,389
 $1,325
 $14,714
Interest expenseInterest expense$48 $11 $59 
Debt issuance cost amortization$2,677
 $699
 $3,376
Debt issuance cost amortization$7 $1 $8 
Administrative expenses$301
 $116
 $417
Administrative expenses$1 $— $1 
The following table shows cash flows between us and the vacation ownership notes receivable securitization variable interest entities during the 2017 first three quarters and the 2016 first three quarters:VIEs:
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022
Cash Inflows
Net proceeds from vacation ownership notes receivable securitizations$396 $371 
Principal receipts375 413 
Interest receipts178 174 
Reserve release16 153 
Total965 1,111 
Cash Outflows
Principal payments(389)(446)
Voluntary repurchases of defaulted vacation ownership notes receivable(88)(69)
Voluntary clean-up call(19)(39)
Interest payments(51)(34)
Funding of restricted cash(17)(95)
Total(564)(683)
Net Cash Flows$401 $428 
32

 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Cash inflows:   
Net proceeds from vacation ownership notes receivable securitizations$346,469
 $247,453
Principal receipts170,920
 118,015
Interest receipts71,464
 60,863
Reserve release32
 405
Total588,885
 426,736
Cash outflows:   
Principal to investors(159,305) (105,863)
Voluntary repurchases of defaulted vacation ownership notes receivable(22,356) (22,025)
Interest to investors(13,121) (10,823)
Funding of restricted cash(1)
(1,804) (51,770)
Total(196,586) (190,481)
Net Cash Flows$392,299
 $236,255
_________________________
(1)
Includes $50.0 million of the proceeds from the securitization transaction completed during the 2016 third quarter, which were released when the remaining vacation ownership notes receivable were purchased by the MVW Owner Trust 2016-1 subsequent to the end of the 2016 third quarter.
The following table shows cash flows between us and the Warehouse Credit Facility variable interest entity during the 2017 first three quarters and the 2016 first three quarters:
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 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Cash inflows:   
Proceeds from vacation ownership notes receivable securitizations$50,260
 $126,622
Principal receipts1,403
 5,227
Interest receipts2,093
 5,048
Reserve release296
 909
Total54,052
 137,806
Cash outflows:   
Principal to investors(1,160) (3,771)
Voluntary repurchases of defaulted vacation ownership notes receivable—
 (661)
Repayment of Warehouse Credit Facility(49,100) (122,190)
Interest to investors(1,324) (1,338)
Funding of restricted cash(296) (447)
Total(51,880) (128,407)
Net Cash Flows$2,172
 $9,399
Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to repurchase defaulted vacation ownership notes receivable at the outstanding principal balance. The transaction documents typically limit such repurchases to 15 to 20 percent of the transaction’s initial vacation ownership notes receivable principal balance.certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance onof the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral. In addition, we could be required to fund up to an aggregate of $5.0 million upon presentation of demand notes related to certain vacation ownership notes receivable securitization transactions outstanding at September 30, 2017.

The following table shows cash flows between us and the Warehouse Credit Facility VIE:
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022
Cash Inflows
Proceeds from vacation ownership notes receivable securitizations$515 $234 
Principal receipts43 12 
Interest receipts24 5 
Reserve release9 1 
Total591 252 
Cash Outflows
Principal payments(34)(3)
Voluntary repurchases of defaulted vacation ownership notes receivable(2)— 
Repayment of Warehouse Credit Facility(296)(98)
Interest payments(9)(2)
Funding of restricted cash(18)(2)
Total(359)(105)
Net Cash Flows$232 $147 
Other Variable Interest Entities
We have a commitment to purchase an operatinga property located in New York, New York, that we currently manage as Marriott Vacation Club Pulse, New York City. Refer to Footnote No. 8, “Contingencies and Commitments” for additional information on the commitment. We are required to purchase the completed property from the third party developer unless the developer has sold the property to another party.Waikiki, Hawaii. The property is held by a variable interest entityVIE for which we are not the primary beneficiary as we cannot preventbeneficiary. We do not control the variable interestdecisions that most significantly impact the economic performance of the entity from sellingduring construction. Further, our purchase commitment is generally contingent upon the property at a higher price.being redeveloped to our brand standards. Accordingly, we have not consolidated the variable interest entity.VIE. We expect to acquire the property over time and as of September 30, 2023, we expect to make payments for the property as follows: $112 million in 2024, $81 million in 2025 and $41 million in 2026. As of September 30, 2017,2023, our Balance Sheet reflected $8.4$1 million in Accounts Receivable, including a note receivable of approximately $1 million, $3 million in Property and equipment related to a capital leaseEquipment, and leasehold improvements and $7.2$1 million in Debt related to the capital lease liability for ancillary and operations space we lease from the variable interest entity. In addition, a note receivable of $0.5 million is included in the Accounts and contracts receivable line on the Balance Sheet as of September 30, 2017.Accrued Liabilities. We believe that our maximum exposure to loss as a result of our involvement with this variable interest entityVIE is $2.2approximately $3 million as of September 30, 2017.2023.
Pursuant to a commitment to repurchase an operating property located in Marco Island, Florida that was previously sold to a third-party developer, we acquired 36 completed vacation ownership units duringDeferred Compensation Plan
We consolidate the 2017 second quarter. Refer to Footnote No. 5, “Acquisitions and Dispositions” for additional information on this transaction. We remain obligated to repurchase the remaining portionliabilities of the operating property. Refer to Footnote No. 8, “ContingenciesMarriott Vacations Worldwide Deferred Compensation Plan and Commitments” for additional information on our remaining commitment.the related assets, which consist of the COLI policies held in a rabbi trust. The developerrabbi trust is considered a variable interest entity for which weVIE. We are notconsidered the primary beneficiary as we do not control the variable interest entity’s development activities and cannot prevent the variable interest entity from selling the property at a higher price. Accordingly, we have not consolidated the variable interest entity. We are obligated to repurchase the remaining portion of the property fromrabbi trust because we direct the developer contingent uponactivities of the property meeting our brand standards upon completion, provided thattrust and are the third-party developer has not soldbeneficiary of the property to another party. As oftrust. At September 30, 2017, our Balance Sheet reflected $3.5 million2023, the value of Inventory, $2.4 million of Otherthe assets that relate to prepaid and other deposits, and $7.5 million of Other liabilities that relate to the deferral of gain recognition on the previous sale transaction and the deferral of revenue for development management services for the remaining purchase commitment, both of which will reduce our basisheld in the asset if we repurchase the property. In addition, a note receivable of $0.5rabbi trust was $88 million, which is included in the Accounts and contracts receivableOther line within assets on theour Balance Sheet asSheets.
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Table of September 30, 2017. We believe that our maximum exposure to loss as a result of our involvement with this variable interest entity is less than $1 million as of September 30, 2017.Contents
13.
16.BUSINESS SEGMENTS
We define our reportable segments based on the way in which the chief operating decision maker (“CODM”), currently our chief executive officer, manages the operations of the companyCompany for purposes of allocating resources and assessing performance. We operate in threetwo operating and reportable business segments:
In our North America segment, we develop, market, sell•Vacation Ownership includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive, long-term relationships. We are the exclusive worldwide developer, marketer, seller, and managemanager of vacation ownership and related products under the Marriott Vacation Club, and Grand Residences by Marriott, brands. In 2016, we introducedSheraton Vacation Club, Westin Vacation Club, and Hyatt Vacation Club brands, as well as under Marriott Vacation Club Pulse, an extension toof the Marriott Vacation Club brand. We are also develop, marketthe exclusive worldwide developer, marketer, and sellseller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, as well aswe have the non-exclusive right to develop, market, and sell whole ownership residential products under The Ritz-Carlton Residences brand.brand and have a license to use the St. Regis brand for specified fractional ownership resorts.
In our Asia Pacific•Our Vacation Ownership segment we develop, market, sellgenerates most of its revenues from four primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs, and manage two points-basedowners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
•Exchange & Third-Party Management includes an exchange network and membership programs, that we specifically designed to appeal to the vacation preferences of the market, Marriott Vacation Club, Asia Pacific and Marriott Vacation Club Destinations, Australia, as well as a weeks-based right-to-use product.provision of management services to other resorts and lodging properties. We provide these services through our Interval International and Aqua-Aston businesses. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and owners’ association management, and other related products and services. VRI Americas was part of the Exchange & Third-Party Management segment through the date of sale in April 2022.
In our Europe segment, we are focusing on selling our existing projects and managing existing resorts. We do not have any current plans for new development in this segment.
We evaluateOur CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense consumer financing interest expense, other financing expenses or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation and amortization, other gains and losses, and equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our revenues and other gains or lossesresults that are not allocable to our segments.segments, including those relating to consolidated owners’ associations, as our CODM does not use this information to make operating segment resource allocations.

Our CODM uses Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to evaluate the profitability of our operating segments, and the components of net income or loss attributable to common shareholders excluded from Adjusted EBITDA are not separately evaluated. Adjusted EBITDA is defined as net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance. Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income or loss attributable to common shareholders is presented below.
Revenues
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Vacation Ownership$1,126 $1,182 $3,335 $3,229 
Exchange & Third-Party Management64 71 200 229 
Total segment revenues1,190 1,253 3,535 3,458 
Corporate and other(4)(1)(2)10 
$1,186 $1,252 $3,533 $3,468 
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Table of Contents
 Quarter Ended Year to Date Ended
 September 30, 2017 
  September 9, 2016 (1)
 September 30, 2017 
  September 9, 2016 (1)
($ in thousands)(92 days) (84 days) (274 days) (252 days)
North America$437,801
 $358,799
 $1,341,430
 $1,117,419
Asia Pacific16,952
 14,760
 50,482
 53,168
Europe32,237
 28,078
 78,817
 73,343
Total segment revenues486,990
 401,637
 1,470,729
 1,243,930
Corporate and other—
 —
 —
 —
 $486,990
 $401,637
 $1,470,729
 $1,243,930
_________________________
(1)
Includes an immaterial reclassification of activity between the North America and Asia Pacific segments.
Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Shareholders
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Adjusted EBITDA Vacation Ownership$173 $299 $647 $772 
Adjusted EBITDA Exchange & Third-Party Management30 39 99 117 
Reconciling items:
Corporate and other(53)(54)(171)(162)
Interest expense, net(36)(34)(106)(91)
Tax provision(24)(59)(115)(134)
Depreciation and amortization(33)(33)(99)(98)
Share-based compensation expense(6)(10)(25)(30)
Certain items(9)(39)(11)(71)
Net income attributable to common shareholders$42 $109 $219 $303 
 Quarter Ended Year to Date Ended
 September 30, 2017 
  September 9, 2016 (1)
 September 30, 2017 
  September 9, 2016 (1)
($ in thousands)(92 days) (84 days) (274 days) (252 days)
North America$103,904
 $82,294
 $327,210
 $282,242
Asia Pacific(472) 1,191
 (552) (423)
Europe6,766
 4,536
 10,939
 7,079
Total segment financial results110,198
 88,021
 337,597
 288,898
Corporate and other(47,069) (47,173) (156,720) (146,718)
Provision for income taxes(22,367) (14,041) (62,139) (54,656)
 $40,762
 $26,807
 $118,738
 $87,524
_________________________
(1)
Includes an immaterial reclassification of activity between the North America and Asia Pacific segments.
Assets
($ in millions)At September 30, 2023At December 31, 2022
Vacation Ownership$8,057 $8,037 
Exchange & Third-Party Management830 865 
Total segment assets8,887 8,902 
Corporate and other566 737 
$9,453 $9,639 
Revenues Excluding Cost Reimbursements
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
United States$622 $771 $2,038 $2,173 
All other countries121 110 332 284 
$743 $881 $2,370 $2,457 
35

($ in thousands)At September 30, 2017 At December 30, 2016
North America$2,102,691
 $1,968,021
Asia Pacific131,486
 102,348
Europe67,433
 62,245
Total segment assets2,301,610
 2,132,614
Corporate and other521,426
 258,805
 $2,823,036
 $2,391,419

Table of Contents
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include among other things, the information concerningconcerning: our possible or assumed future results of operations,operations; financial condition and leverage, including the expected impact of the Maui wildfires; dividend payments; our expectations regarding development profit margins, defaults and expected losses, notes receivable balances, commitments to owners’ associations, payments for property acquisitions and development plans, lease payments, that interest income and notes receivable will increase in 2023, interest rates, indemnification receivables, financing profit margin, general and administrative expenses, inventory costs and inventory spending, taxes, and any effects of the COVID-19 pandemic; and business strategies, such as our expectations that we will continue to offer financing plans, competitive position, potential growth opportunities, potential operating performance improvements, and the effects of competition.incentives. 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 “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You shouldWe caution you that these statements are not put undue relianceguarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the effects of a future health crisis, including its short and longer-term impacts on any forward-looking statementsconsumer confidence and demand for travel, and the pace of recovery following a health crisis; variations in this Quarterly Report. We do notdemand for vacation ownership and exchange products and services; worker absenteeism; price and wage inflation; global supply chain disruptions; volatility in the international and national economy and credit markets; the impact of the current or a future banking crisis; wars involving Russia, Ukraine, Israel and Gaza and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the impact of rising interest rates; political or social strife; difficulties associated with implementing new or maintaining existing technology; changes in privacy laws; the effects of steps that we or our affiliates have any intentiontaken and may continue to take to reduce operating costs; impacts from natural or obligationman-made disasters and wildfires, including the Maui wildfires; and other matters referred to update forward-looking statements afterunder the date of this Quarterly Report on Form 10-Q, except as required by law.
The risk factors discussed inheading “Risk Factors” contained herein and also in our most recent Annual Report on Form 10-K, and which may be updated in our future periodic filings with the U.S. Securities and Exchange Commission (the “SEC”).
All forward-looking statements in this Quarterly Report on Form 10-Q and which may be discussed in subsequentapply only as of the date of this Quarterly ReportsReport on Form 10-Q could cause our resultsor as of the date they were made or as otherwise specified herein. We do not undertake any obligation to differ materially from those expressed inpublicly update or revise any forward-looking statements.statement, whether as a result of new information, future events, or otherwise, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.
Our Financial Statements (as defined below), which we discuss below, reflect our historical financial condition, results of operations and cash flows. TheHowever, the financial information discussed below and included in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations or cash flows may be in the future.
In order to make this report easier to read, we refer to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Statements of Income,“Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,”Sheets” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in the Interim Condensed Notes to ourConsolidated Financial Statements that we include in the Financial Statements section of this Quarterly Report on Form 10-Q.
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Business Overview
We are onea leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management.
Our Vacation Ownership segment includes a diverse portfolio of resorts that includes some of the world’s largest companies whose business is focused almost entirely on vacation ownership, based on number of owners, number of resorts and revenues.most iconic brands licensed under exclusive long-term relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, and Grand Residences by Marriott, brands.Sheraton Vacation Club, Westin Vacation Club, and Hyatt Vacation Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand.
In 2016,brand and we introduced Marriott Vacation Club Pulse, an extensionhave a license to use the Marriott Vacation ClubSt. Regis brand which features unique properties that embrace the spirit and culture of their urban locations, creating an authentic sense of place while delivering easy access to local interests, attractions and transportation.for specified fractional ownership resorts.
Our business is grouped into three reportable segments: North America, Asia Pacific and Europe. As of September 30, 2017, our portfolio consisted of over 65 properties in the United States and nine other countries and territories. We generateVacation Ownership segment generates most of ourits revenues from four primary sources: selling vacation ownership products; managing our resorts;vacation ownership resorts, clubs and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
As further detailed in Footnote No. 1, “Summary of Significant Accounting Policies,” to our Financial Statements, beginning with our 2017 fiscal year, we changed our financial reporting cycle to a calendar year-endOur Exchange & Third-Party Management segment includes an exchange network and end-of-month quarterly reporting cycle. Accordingly, our 2017 fiscal year began on December 31, 2016 (the day after the end of the 2016 fiscal year) and will end on December 31, 2017.

The table below shows the reporting periods as we refer to them in this report, their date ranges, and the number of days in each:
Reporting PeriodDate RangeNumber of Days
2017 third quarterJuly 1, 2017 — September 30, 201792
2016 third quarterJune 18, 2016 — September 9, 201684
2017 first three quartersDecember 31, 2016 — September 30, 2017274
2016 first three quartersJanuary 2, 2016 — September 9, 2016252
2017 fiscal yearDecember 31, 2016 — December 31, 2017366
2016 fiscal yearJanuary 2, 2016 — December 30, 2016364
As a result of the change in our financial reporting calendar, we had eight more days in the 2017 third quarter than we had in the 2016 third quarter, and 22 more days in the 2017 first three quarters than we had in the 2016 first three quarters. We estimate that 2016 third quarter contract sales would have been approximately $17 million higher and that 2016 first three quarters contract sales would have been approximately $43 million higher on a comparable basis. Prior year results have not been restated for the impact of the change in our financial reporting calendar.
2017 Hurricane Activity
During the third quarter of 2017, over 20 properties within our North America segment were negatively impacted by one or both of Hurricane Irma and Hurricane Maria (the “Hurricanes”). As a result of the mandatory evacuations, shutdowns and cancellations of reservations and scheduled tours resulting from the Hurricanes, the sales operations at several of our locations, primarily those located on St. Thomas (USVI) and on Marco Island and Singer Island in Florida, were adversely impacted along with rental and ancillary operations.
While many of the properties and sales centers impacted by the Hurricanes were fully or partially open by the end of September, two resorts and a sales center on St. Thomas remain closed and we are not currently in a position to predict when they will reopen. Further, while some of the properties were fully or partially open, many of the operations will continue to ramp-up throughout the fourth quarter of 2017, and potentially into 2018. We have estimated the impact these Hurricanes had on our third quarter contract sales and tours and included them in our discussion of the results below. Given the continued ramp-up throughout the fourth quarter of 2017, we expect additional impacts on our fourth quarter contract sales and tours. We expect to submit a claim for our business interruption lossesmembership programs, as well as the provision of management services to other resorts and lodging properties. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property damage experiencedand owners’ association management, and other related products and services. Since May 2022, we provide these services through our Interval International and Aqua-Aston businesses. In April 2022, we disposed of VRI Americas after determining that the business was not a core component of our future growth strategy and operating model. This business was a component of our Exchange & Third-Party Management segment through the date of the sale.
Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated property owners’ associations (“Consolidated Property Owners’ Associations”).
Integration of Marriott-, Sheraton- and Westin-Branded Vacation Ownership Products
In 2016, Marriott International purchased Starwood Hotels and Resorts Worldwide, Inc., which at the time exclusively licensed the Sheraton and Westin vacation ownership brands to Legacy-ILG. Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by bothleveraging the brands then licensed by Marriott International and its subsidiaries to us and to ILG. In August 2022, we launched Abound by Marriott Vacations, a new owner benefit and exchange program which affiliates the Marriott, Sheraton and Westin vacation ownership brands to offer similar benefits to owners of our owners’ associations fromproducts under these Hurricanes; however,brands. Under this program, owners of Marriott-, Sheraton- and Westin-branded VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club brands using a common currency. The program also harmonizes fee structures and owner benefit levels and has allowed us to transition most of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product. Further, in late 2022, we cannot quantifyadded certain Sheraton- and Westin-branded VOIs to the extent of any such mitigation at this time and we do not expect any insurance proceeds to be received in 2017.
Below is a summary of significant accounting policies used in our business that will be used in describing our results of operations.
Sale ofMarriott Vacation Ownership ProductsClub Destinations product.
We recognize revenues from the sale of vacation ownership products (also referred to as VOIs) when allcontrol of the following conditions exist: a binding salesvacation ownership product is transferred to the customer and the transaction price is deemed collectible. Based upon the different terms of our contracts with the customer and business practices, control of the vacation ownership product has historically transferred to the customer at different points in time for each brand of VOIs. In the third quarter of 2022, we aligned our business practices and contract has been executed;terms for the sale of vacation ownership products (the “Contract Alignment”), resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded VOIs. Prior to these changes, control transfer occurred at closing for Marriott-branded vacation ownership products. Subsequent to the Contract Alignment, transfer of control of Marriott-branded vacation ownership products occurs at expiration of the statutory rescission period, has expired;consistent with the receivable is deemed collectible;historical timing of Sheraton-, Westin- and the remainderHyatt- branded transactions. Marriott-branded VOI sales contracts executed prior to these modifications have been accounted for with transfer of our obligations are substantially completed.
Sales of vacation ownership products may be made for cash or we may provide financing. For sales where we provide financing, we defer revenue recognition until we receive a minimum down payment equal to ten percentcontrol of the purchase price plus the fair value of certain sales incentives providedVOI occurring at closing. Control transfer for Legacy-Welk VOIs continues to the purchaser. These sales incentives typically include Marriott Rewards Points or an alternative sales incentive that we refer to as “plus points.” These plus points are redeemable for staysoccur at our resorts or for use in the Explorer Collection, generally up to two years from the date of issuance. Typically, sales incentives are only awarded if the sale is closed.closing.
As a result of the down payment requirement described aboveunification of our Marriott-, Sheraton- and the requirement that the statutory rescission period has expired, we often defer revenues associated with the sale ofWestin-branded vacation ownership products fromunder the date of the purchase agreement to a future period. When comparing results year-over-year, this deferral frequently generates significant variances, which we refer to as the impact of revenue reportability.
Finally, as more fully describedAbound by Marriott Vacations program in the “Financing” section below,third quarter of 2022, we record an estimate of expected uncollectibility on allcombined the reserves, and aligned our reserve methodology, for vacation ownership notes receivable (also known as a vacation ownership notes receivable reserve or afor our Marriott, Sheraton and Westin brands (the “Reserve Alignment”).
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Table of Contents
Performance Measures
We measure operating performance using the key metrics described below:
•Contract sales reserve) as a reduction of revenues from the sale of vacation ownership products, at the time we recognize revenues from a sale.
We report, on a supplemental basis, contract sales for each of our three segments. Contract sales consistwhich consists of the total amount of vacation ownership product sales under purchase agreementscontracts signed during the period where we have generally received a

down payment of at least ten percent of the contract price, reduced by actual rescissions during the period.period, inclusive of contracts associated with sales of vacation ownership products on behalf of third parties, which we refer to as “resales contract sales.” In circumstances where a customer appliescustomers apply any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of vacation ownership products that we report on our Statements of Incomeincome statements due to the requirements for revenue recognition described above.above and adjustments for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.
Cost of vacation ownership products includes costs to develop and construct our projects (also known as real estate inventory costs) as well as other non-capitalizable costs associated with the overall project development process. For each project, we expense real estate inventory costs in the same proportion as the revenue recognized. Consistent with the applicable accounting guidance, to the extent there is a change in the estimated•Total contract sales revenues or real estate inventory costs for the project in a period, a non-cash adjustment is recorded on our Statements of Income to true-up costs in that period to those that would have been recorded historically if the revised estimates had been used. These true-ups, which we refer to as product cost true-up activity, will have a positive or negative impact on our Statements of Income.
We refer to revenuesinclude contract sales from the sale of vacation ownership products less the cost of vacation ownership products and marketing andincluding non-consolidated joint ventures.
•Consolidated contract sales costs as development margin. Development margin percentage is calculated by dividing development margin by revenues from the sale of vacation ownership products.
Resort Management and Other Services
Our resort management and other services revenues include revenues generated from fees we earn for managing each of our resorts. In addition, we earn revenue for providing ancillary offerings, including food and beverage, retail, and golf and spa offerings, at our resorts. We also receive annual fees, club dues, settlement feesexclude contracts sales from the sale of vacation ownership products and certain transaction-based fees from owners and other third parties, including external exchange service providers with which we are associated.for non-consolidated joint ventures.
We provide day-to-day management services, including housekeeping services, operation of reservation systems, maintenance, and certain accounting and administrative services for property owners’ associations. We receive compensation for these management services; this compensation is typically based on either a percentage of the budgeted costs to operate the resorts or a fixed fee arrangement. We earn these fees regardless of usage or occupancy.
Resort management and other services expenses include costs to operate the food and beverage and other ancillary operations and overall customer support services, including reservations, certain transaction-based expenses relating to external exchange service providers and settlement expenses from the sale of vacation ownership products.
Financing
We offer financing to qualified customers for the purchase of most types of our vacation ownership products. The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was as follows:
 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
Average FICO score743 742
The typical financing agreement provides for monthly payments of principal and interest with the principal balance of the loan fully amortizing over the term of the related vacation ownership note receivable, which is generally ten years. The interest income earned from the financing arrangements is earned on an accrual basis on the principal balance outstanding over the life of the arrangement and is recorded as Financing revenues on our Statements of Income.
Financing revenues include interest income earned on vacation ownership notes receivable as well as fees earned from servicing the existing vacation ownership notes receivable portfolio. Financing expenses include costs in support of the financing, servicing and securitization processes. The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which is impacted positively by the origination of new vacation ownership notes receivable and negatively by principal collections. We calculate financing propensity as contract sales volume of financed contracts closed in the period divided by contract sales volume of all contracts closed in the period. Financing propensity was 60.1 percent in the 2016 fiscal year and 64.9 percent in the 2017 first three quarters, reflecting successful incentive programs that have been helping to increase financing propensity. We expect financing propensity in 2017 to approximate 65 percent as we intend to continue to offer the financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

In the event of a default, we generally have the right to foreclose on or revoke the vacation ownership interest. We return vacation ownership interests that we reacquire through foreclosure or revocation back to real estate inventory. As discussed above, we record a vacation ownership notes receivable reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our Statements of Income. Historical default rates, which represent defaults as a percentage of each year’s beginning gross vacation ownership notes receivable balance, were as follows:
 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
Historical default rates2.8% 3.0%
Rental
We operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory. We obtain rental inventory from unsold inventory and inventory we control because owners have elected alternative usage options offered through our vacation ownership programs.
Rental revenues are primarily the revenues we earn from renting this inventory. We also recognize rental revenue from the utilization of plus points under the Marriott Vacation Club Destinations (“MVCD”) program when the points are redeemed for rental stays at one of our resorts or in the Explorer Collection, or upon expiration of the points.
Rental expenses include:
Maintenance fees on unsold inventory;
Costs to provide alternative usage options, including Marriott Rewards Points and offerings available as part of the Explorer Collection, for owners who elect to exchange their inventory;
Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, credit card expenses and reservation services); and
Costs associated with the banking and borrowing usage option that is available under our points-based programs.
Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), and owner use and exchange behavior. Further, as our ability to rent certain luxury inventory and inventory in our Asia Pacific segment is often limited on a site-by-site basis, rental operations may not generate adequate rental revenues to cover associated costs. Our vacation units are either “full villas” or “lock-off” villas. Lock-off villas are units that can be separated into a master unit and a guest room. Full villas are “non-lock-off” villas because they cannot be separated. A “key” is the lowest increment for reporting occupancy statistics based upon the mix of non-lock-off and lock-off villas. Lock-off villas represent two keys and non-lock-off villas represent one key. The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.
Cost Reimbursements
Cost reimbursements include direct and indirect costs that property owners’ associations reimburse to us. In accordance with the accounting guidance for “gross versus net” presentation, we record these revenues and expenses on a gross basis. We recognize cost reimbursements when we incur the related reimbursable costs. These costs primarily consist of payroll and payroll related expenses for management of the property owners’ associations and other services we provide where we are the employer. Cost reimbursements consist of actual expenses with no added margin.
Consumer Financing Interest Expense
Consumer financing interest expense represents interest expense associated with the debt from our non-recourse warehouse credit facility (the “Warehouse Credit Facility”) and from the securitization of our vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.
Interest Expense
Interest expense consists of all interest expense other than consumer financing interest expense.

Other Items
We measure operating performance using the following key metrics:
Contract sales from the sale of vacation ownership products;
Development margin percentage; and
•Volume per guest (“VPG”), which we calculate is calculated by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period. We believe that this operating metric is valuable in evaluating the effectiveness of the sales process as it combines the impact of average contract price with the number of touring guests who make a purchase.
Consolidated Results
The following discussion presents an analysis•Development profit margin is calculated by dividing Development profit by revenues from the sale of our results of operations for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$180,522
 $131,012
 $543,687
 $415,831
Resort management and other services76,882
 70,185
 229,004
 208,049
Financing34,685
 29,066
 99,326
 86,944
Rental81,177
 73,776
 250,621
 229,133
Cost reimbursements113,724
 97,598
 348,091
 303,973
TOTAL REVENUES486,990
 401,637
 1,470,729
 1,243,930
EXPENSES       
Cost of vacation ownership products42,826
 34,779
 131,589
 104,149
Marketing and sales100,527
 79,017
 305,217
 236,348
Resort management and other services44,696
 39,825
 130,349
 123,695
Financing5,062
 4,581
 12,528
 11,782
Rental71,048
 60,970
 211,643
 191,658
General and administrative26,666
 22,151
 83,739
 72,871
Litigation settlement2,033
 —
 2,216
 (303)
Consumer financing interest6,498
 5,361
 18,090
 15,840
Royalty fee15,220
 14,624
 47,597
 42,007
Cost reimbursements113,724
 97,598
 348,091
 303,973
TOTAL EXPENSES428,300
 358,906
 1,291,059
 1,102,020
Gains and other income, net6,977
 454
 6,752
 11,129
Interest expense(2,642) (2,262) (5,180) (6,331)
Other104
 (75) (365) (4,528)
INCOME BEFORE INCOME TAXES63,129
 40,848
 180,877
 142,180
Provision for income taxes(22,367) (14,041) (62,139) (54,656)
NET INCOME$40,762
 $26,807
 $118,738
 $87,524

Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership       
North America$179,227
 $150,964
 $28,263
 19%
Asia Pacific12,569
 11,169
 1,400
 13%
Europe6,664
 7,698
 (1,034) (13%)
Total contract sales$198,460
 $169,831
 $28,629
 17%
The changes in contract sales are described within the discussions of our segment results below. Our 2017 third quarter had eight more days than our 2016 third quarter due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 third quarter contract sales would have been approximately $17 million higher on a comparable basis. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership       
North America$547,546
 $436,214
 $111,332
 26%
Asia Pacific36,131
 31,049
 5,082
 16%
Europe18,509
 22,054
 (3,545) (16%)
Total contract sales$602,186
 $489,317
 $112,869
 23%
The changes in contract sales are described within the discussions of our segment results below. Our 2017 first three quarters had 22 more days than our 2016 first three quarters due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 first three quarters contract sales would have been approximately $43 million higher on a comparable basis. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 first three quarters.
Sale of Vacation Ownership Products
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Contract sales$198,460
 $169,831
 $28,629
 17%
Revenue recognition adjustments:       
Reportability1,135
 (18,994) 20,129
  
Sales reserve(11,740) (13,872) 2,132
  
Other(1)
(7,333) (5,953) (1,380)  
Sale of vacation ownership products$180,522
 $131,012
 $49,510
 38%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability had a positive impact in the 2017 third quarter due to a decrease in the amount of sales that remained in the rescission period as of the end of the quarter. Revenue reportability had a negative impact in the 2016 third quarter due to a decrease in the amount of sales that met the down payment requirement for revenue reportability during the period and an increase in the amount of sales that remained in the rescission period as of the end of the quarter.

The lower sales reserve reflected a lower required reserve in the 2017 third quarter ($2.7 million) due to lower default and delinquency activity, an unfavorable sales reserve adjustment in our North America segment in the 2016 third quarter ($0.9 million), and a favorable sales reserve adjustment in our Asia Pacific segment in the 2017 third quarter ($0.7 million), partially offset by higher vacation ownership contract sales volume ($2.2 million).
The increase in other adjustments for sales incentives was driven by an increase inproducts. We refer to revenues from the utilizationsale of plus points as a sales incentive in our North America segment in the 2017 third quarter due to the higher vacation ownership contract sales.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Contract sales$602,186
 $489,317
 $112,869
 23%
Revenue recognition adjustments:       
Reportability1,150
 (17,029) 18,179
  
Sales reserve(38,597) (33,447) (5,150)  
Other(1)
(21,052) (23,010) 1,958
  
Sale of vacation ownership products$543,687
 $415,831
 $127,856
 31%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability had a positive impact inproducts less the 2017 first three quarters due to an increase in the amount of sales that met the down payment requirement for revenue reportability during the period, partially offset by an increase in the amount of sales that remained in the rescission period as of the end of the period. Revenue reportability had a negative impact in the 2016 first three quarters due to a decrease in the amount of sales that met the down payment requirement for revenue reportability during the period and an increase in the amount of sales that remained in the rescission period as of the end of the period.
The higher sales reserve reflected the higher vacation ownership contract sales volume ($6.8 million of the increase), partially offset by an unfavorable sales reserve adjustment in our North America segment in the 2016 third quarter ($0.9 million) and a favorable sales reserve adjustment in our Asia Pacific segment in the 2017 third quarter ($0.7 million).
The decrease in other adjustments for sales incentives was driven by a decrease in the utilization of plus points as a sales incentive in our North America segment in the 2017 first three quarters.
Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$180,522
 $131,012
 $49,510
 38%
Cost of vacation ownership products(42,826) (34,779) (8,047) (23%)
Marketing and sales(100,527) (79,017) (21,510) (27%)
Development margin$37,169
 $17,216
 $19,953
 116%
Development margin percentage20.6% 13.1% 7.5 pts  
The increase in development margin reflected the following:
$13.1 million of favorable revenue reportability compared to the 2016 third quarter;
$5.5 million from higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$4.5 million from a favorable mixsales costs as Development profit. We believe that Development profit margin is an important measure of lower cost real estate inventory being sold;the profitability of our development and
$3.4 million from lower sales reserve activity.
These increases in development margin were partially offset by $6.5 million from higher subsequent marketing and sales costs (of which $1.1 million was due to the ramp-up of our six newest sales distributions).VOIs.

The 7.5 percentage point increase in the development margin percentage reflected a 6.9 percentage point increase due to the favorable revenue reportability year-over-year, a 2.5 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold in the 2017 third quarter, a 1.4 percentage point increase from the lower sales reserve activity, and a 0.3 percentage point increase from the higher North America vacation ownership contract sales (which have a development margin that•Total active members is higher than the company-wide average). These increases were partially offset by a 3.6 percentage point decline due to higher marketing and sales costs (of which 0.6 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions). We estimate the Hurricanes negatively impacted development margin percentage by 0.5 percentage points in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$543,687
 $415,831
 $127,856
 31%
Cost of vacation ownership products(131,589) (104,149) (27,440) (26%)
Marketing and sales(305,217) (236,348) (68,869) (29%)
Development margin$106,881
 $75,334
 $31,547
 42%
Development margin percentage19.7% 18.1% 1.6 pts  
The increase in development margin reflected the following:
$27.4 million from higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$18.5 million from a favorable mix of lower cost real estate inventory being sold;
$11.7 million of favorable revenue reportability compared to the 2016 first three quarters; and
$1.6 million from lower sales reserve activity.
  These increases in development margin were partially offset by the following:
$14.9 million from higher marketing and sales costs (of which $6.3 million was due to the ramp-up of our six newest sales distributions);
$11.2 million of unfavorable changes in product cost true-up activity ($1.0 million of favorable true-up activity in the 2017 first three quarters compared to $12.2 million of favorable true-up activity in the 2016 first three quarters); and
$1.6 million from higher other development and inventory expenses.
The 1.6 percentage point increase in the development margin percentage reflected a 3.4 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold in the 2017 first three quarters, a 2.0 percentage point increase due to the favorable revenue reportability year-over-year, a 0.9 percentage point increase from the higher North America vacation ownership contract sales (which have a development margin that is higher than the company-wide average) and a 0.3 percentage point increase from the lower sales reserve activity. These increases were partially offset by a 2.0 percentage point decrease due to the unfavorable changes in product cost true-up activity year-over-year, a 2.7 percentage point decline due to higher marketing and sales costs (of which 1.2 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions) and a 0.3 percentage point decrease from higher other development and inventory expenses.

Resort Management and Other Services Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Management fee revenues$22,249
 $19,460
 $2,789
 14%
Ancillary revenues31,095
 30,471
 624
 2%
Other services revenues23,538
 20,254
 3,284
 16%
Resort management and other services revenues76,882
 70,185
 6,697
 10%
Resort management and other services expenses(44,696) (39,825) (4,871) (12%)
Resort management and other services margin$32,186
 $30,360
 $1,826
 6%
Resort management and other services margin percentage41.9% 43.3% (1.4 pts)  
The increase in resort management and other services revenues reflected $2.8 million of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs acrossInterval International network active members at the system, $2.1 millionend of additional annual club duesthe applicable period. We consider active members to be an important metric because it represents the population of owners eligible to book transactions using the Interval International network.
•Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other revenues earned in connection withmember revenue for the MVCD program due toInterval International network by the cumulative increase in owners enrolled in the program, $1.2 million of higher resales commissions and other revenues and $0.6 million of higher ancillary revenues. The increase in ancillary revenues included $2.3 million of higher revenues from food and beverage and golf offerings at our resorts, partially offset by $1.7 million of lower revenue due to outsourcing multiple operations in our North America segment.
The improvement in the resort management and other services margin reflected the increases in revenue, partially offset by $4.9 million of higher expenses. Compared to the 2016 third quarter, expenses in the 2017 third quarter included $3.2 million of higher ancillary expenses from food and beverage and golf offerings at our resorts, $2.6 million of higher customer service expenses and expenses associated with the MVCD program, and $0.9 million of higher resales and other expenses, partially offset by $1.8 million of lower expenses due to outsourcing multiple operations in our North America segment.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Management fee revenues$65,680
 $57,311
 $8,369
 15%
Ancillary revenues91,404
 92,142
 (738) (1%)
Other services revenues71,920
 58,596
 13,324
 23%
Resort management and other services revenues229,004
 208,049
 20,955
 10%
Resort management and other services expenses(130,349) (123,695) (6,654) (5%)
Resort management and other services margin$98,655
 $84,354
 $14,301
 17%
Resort management and other services margin percentage43.1% 40.5% 2.6 pts  
The increase in resort management and other services revenues reflected $8.4 million of higher management fees resulting from the cumulative increase in themonthly weighted average number of vacation ownership products sold and higher operating costs acrossInterval International network active members during the system, $5.3 million of additional annual club dues and other revenues earnedapplicable period. We believe this metric is valuable in connection withmeasuring the MVCD program due to the cumulative increase in owners enrolled in the program, $2.7 million of higher refurbishment revenue due to an increase in the number of refurbishment projects completed in the 2017 first three quarters, $3.1 million of higher resales commissions, brand fees and other revenues and $2.2 million of higher settlement fees due to an increase in the number of closed contracts in the 2017 first three quarters. These increases were partially offset by $0.7 million of lower ancillary revenues. The decline in ancillary revenues included $6.2 million of lower ancillary revenues from the operating property in Surfers Paradise, Australia (a portion of which was disposed of in the 2016 second quarter) and $5.4 million of lower revenue due to outsourcing multiple operations in our North America segment, partially offset by $10.9 million of higher revenues from food and beverage and golf offerings at our resorts.
The improvement in the resort management and other services margin reflected the increases in revenue, partially offset by $6.7 million of higher expenses. The higher expenses included $8.9 million of higher ancillary expenses from food and beverage and golf offerings at our resorts, $5.4 million of higher customer service expenses and expenses associated with

the MVCD program, $2.1 million of higher refurbishment expenses due to an increase in the number of projects being refurbished in the 2017 first three quarters and $0.8 million of higher resales and other expenses, partially offset by $5.5 million of lower ancillary expenses from the operating property in Surfers Paradise, Australia and$5.0 million of lower ancillary expenses due to outsourcing multiple operations in our North America segment.
The ancillary revenue producing portions of the operating property in Surfers Paradise, Australia were included in the portion of the operating property sold in the second quarter of 2016. Therefore, we do not anticipate future ancillary revenues or expenses at this property.
Financing Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Interest income$32,945
 $27,703
 $5,242
 19%
Other financing revenues1,740
 1,363
 377
 28%
Financing revenues34,685
 29,066
 5,619
 19%
Financing expenses(5,062) (4,581) (481) (10%)
Consumer financing interest expense(6,498) (5,361) (1,137) (21%)
Financing margin$23,125
 $19,124
 $4,001
 21%
Financing propensity65.8% 63.4%    
The increase in financing revenues was due to a $147 million increase in the average gross vacation ownership notes receivable balance ($7.4 million) and higher other financing revenues ($0.4 million), partially offset by financing program incentive costs ($1.4 million) and a decrease in the weighted average coupon rateoverall engagement of our vacation ownership notes receivable ($0.8 million).Interval International network active members.
The increase•Segment financial results attributable to common shareholders represents revenues less expenses directly attributable to each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We consider this measure to be important in financing margin reflectedevaluating the higher financing revenues, partially offset by higher other expenses and higher consumer financing interest expense. The higher other expenses were due to an increase in variable expenses associated with the increase in the average gross vacation ownership notes receivable balance. The higher consumer financing interest expense was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cycle in 2017 that resulted in eight additional days in the 2017 third quarter.
We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Interest income$94,104
 $82,730
 $11,374
 14%
Other financing revenues5,222
 4,214
 1,008
 24%
Financing revenues99,326
 86,944
 12,382
 14%
Financing expenses(12,528) (11,782) (746) (6%)
Consumer financing interest expense(18,090) (15,840) (2,250) (14%)
Financing margin$68,708
 $59,322
 $9,386
 16%
Financing propensity64.9% 59.1%    
The increase in financing revenues was due to a $111 million increase in the average gross vacation ownership notes receivable balance ($18.8 million) and higher other financing revenues ($1.0 million), partially offset by financing program incentive costs ($5.2 million) and a slight decrease in the weighted average coupon rateperformance of our vacation ownership notes receivable ($2.2 million).
The increase in financing margin reflected the higher financing revenues, partially offset by higher consumer financing interest expense and higher other expenses. The higher other expenses were due to an increase in variable expenses

associated with the increase in the average gross vacation ownership notes receivable balance. The higher consumer financing interest expense was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cycle in 2017 that resulted in 22 additional days in the 2017 first three quarters.
We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
Rental Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Rental revenues$81,177
 $73,776
 $7,401
 10%
Unsold maintenance fees(19,186) (18,475) (711) (4%)
Other rental expenses(51,862) (42,495) (9,367) (22%)
Rental margin$10,129
 $12,806
 $(2,677) (21%)
Rental margin percentage12.5% 17.4% (4.9 pts)  
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
 (92 days) (84 days) 
Transient keys rented(1)
323,985
 287,911
 36,074 13%
Average transient key rate$213.20
 $218.46
 $(5.26) (2%)
Resort occupancy89.1% 91.7% (2.6 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating properties in San Diego, California and Surfers Paradise, Australia prior to their respective conversions to vacation ownership inventory.
The increase in rental revenues was due to a 13 percent increase in transient keys rented ($7.9 million) driven by a 20 percent increase in available keys, $1.1 million of higher plus points revenue (which is recognized when the points are redeemed or expire) and a $0.7 million increase in preview keys rented and other revenue, partially offset by a 2 percent lower average transient rate ($1.7 million) and $0.6 million of revenue in the 2016 third quarter at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory.
The decrease in rental margin reflected higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees. These higher expenses more than offset the higher rental revenues net of direct variable expenses (such as housekeeping) and the $1.1 million increase in plus points revenue.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Rental revenues$250,621
 $229,133
 $21,488
 9%
Unsold maintenance fees(57,085) (48,811) (8,274) (17%)
Other rental expenses(154,558) (142,847) (11,711) (8%)
Rental margin$38,978
 $37,475
 $1,503
 4%
Rental margin percentage15.6% 16.4% (0.8 pts)  

 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
 (274 days) (252 days) 
Transient keys rented(1)
984,198
 864,945
 119,253
 14%
Average transient key rate$217.89
 $220.06
 $(2.17) (1%)
Resort occupancy88.7% 89.3% (0.6 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating properties in San Diego, California and Surfers Paradise, Australia prior to their respective conversions to vacation ownership inventory.
The increase in rental revenues was due to a 14 percent increase in transient keys rented ($26.2 million) driven by a 15 percent increase in available keys, a $4.3 million increase in preview keys rented and other revenue and $2.6 million of higher plus points revenue (which is recognized when the points are redeemed or expire), partially offset by $6.1 million of revenue in the 2016 first three quarters from the operating property in Surfers Paradise, Australia prior to the conversion of the property to vacation ownership inventory (a portion of which was disposed of in the second quarter of 2016), $3.4 million of revenue in the 2016 first three quarters at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory and a 1 percent lower average transient rate ($2.1 million).
The increase in rental margin reflected the $2.6 million increase in plus points revenue and higher rental revenues net of direct variable expenses (such as housekeeping), partially offset by higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees.
Cost Reimbursements
2017 Third Quarter
Cost reimbursements increased $16.1 million, or 17 percent, over the 2016 third quarter, reflecting an increase of $9.5 million due to the change to an end-of-month quarterly reporting cycle in 2017, $5.3 million due to higher costs, $1.0 million due to additional managed unit weeks in the 2017 third quarter and a $0.3 million impact from foreign exchange rates in our Europe segment.
2017 First Three Quarters
Cost reimbursements increased $44.1 million, or 15 percent, over the 2016 first three quarters, reflecting an increase of $22.4 million due to the change to an end-of-month quarterly reporting cycle in 2017, $17.3 million due to higher costs and $4.7 million due to additional managed unit weeks in the 2017 first three quarters, partially offset by a $0.3 million negative impact from foreign exchange rates in our Europe segment.
General and Administrative
2017 Third Quarter
General and administrative expenses increased $4.5 million due to approximately $2.0 million from the change to an end-of-month quarterly reporting cycle in 2017 and $2.5 million due to higher personnel related and other expenses. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.
2017 First Three Quarters
General and administrative expenses increased $10.9 million due to approximately $6.0 million from the change to an end-of-month quarterly reporting cycle in 2017 and $6.4 million due to higher personnel related and other expenses, partially offset by $1.5 million of lower litigation related costs. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.

Royalty Fee
2017 Third Quarter
Royalty fee expense increased $0.6 million in the 2017 third quarter (from $14.6 million to $15.2 million) due to an increase in the dollar volume of closings ($0.5 million), the change to an end-of-month quarterly reporting cycle in 2017 that resulted in eight additional days in the 2017 third quarter ($1.0 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International ($0.5 million), partially offset by $1.4 million of lower costs due to an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
2017 First Three Quarters
Royalty fee expense increased $5.6 million in the 2017 first three quarters (from $42.0 million to $47.6 million) due to an increase in the dollar volume of closings ($3.0 million), the change to an end-of-month quarterly reporting cycle in 2017 that resulted in 22 additional days in the 2017 first three quarters ($2.9 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International ($1.7 million), partially offset by $2.0 million of lower costs due to an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
Interest Expense
2017 Third Quarter
Interest expense increased $0.4 million due to $0.9 million of imputed interest on a non-interest bearing note payable associated with the acquisition of vacation ownership units located on the Big Island of Hawaii, $0.4 million of higher other expenses and $0.2 million of interest expense associated with the Convertible Notes that were issued during the 2017 third quarter, partially offset by $1.1 million of expense incurred in the 2016 third quarter associated with the mandatorily redeemable preferred stock of a consolidated subsidiary. Due to the redemption of the mandatorily redeemable preferred stock in 2016, we will not incur further interest expense associated with this liability in the future.
2017 First Three Quarters
Interest expense decreased $1.2 million due to $3.4 million of expense incurred in the 2016 first three quarters associated with the mandatorily redeemable preferred stock of a consolidated subsidiary that we redeemed in 2016, partially offset by $1.4 million of imputed interest on a non-interest bearing note payable associated with the acquisition of vacation ownership units located on the Big Island of Hawaii, $0.6 million of higher other expenses and $0.2 million of interest expense associated with the Convertible Notes that were issued during the 2017 third quarter.
Gains and Other Income, Net
2017 First Three Quarters
In the 2017 third quarter, we recorded $7.0 million of gains and other income, including $8.7 million in net insurance proceeds related to the settlement ofreportable business interruption insurance claims arising from Hurricane Matthew, partially offset by a charge of $1.7 million associated with the estimated property damage insurance deductibles and impairment of property and equipment at several of our resorts, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria.
In the 2017 second quarter, we recorded $0.2 million of miscellaneous losses and other expense.
2016 First Three Quarters
In the 2016 third quarter, we recorded a $0.5 million favorable true-up of estimated costs related to the sale of the portion of the operating property in Surfers Paradise, Australia in the 2016 second quarter that we did not intend to convert to vacation ownership inventory.
In the 2016 second quarter, we recorded a $10.5 million gain on the disposition of excess inventory at The Ritz-Carlton Club and Residences, San Francisco (the “RCC San Francisco”), the reversal of the remaining $1.7 million accrual associated with the disposition of a golf course and related assets in Kauai, Hawaii because we no longer expected to incur additional costs in connection with this sale and a $1.5 million loss on the sale of the portion of the operating property in Surfers Paradise, Australia that we did not intend to convert to vacation ownership inventory.

Other
2017 First Three Quarters
During the 2017 first three quarters, we incurred $0.6 million of acquisition costs.
2016 First Three Quarters
During the 2016 first quarter, we incurred $2.3 million of acquisition costs associated with an operating property in the South Beach area of Miami Beach and the anticipated future acquisition of the operating property in New York that we currently manage, and $0.2 million of transaction related costs associated with the sale of the portion of the operating property located in Surfers Paradise, Australia that we did not intend to convert to vacation ownership inventory.segments. See Footnote No. 5, “Acquisitions and Dispositions” and Footnote No. 8, “Contingencies and Commitments,”16 “Business Segments” to our Financial Statements for further information related to these transactions.on our reportable business segments.
During the 2016 second quarter, we incurred $1.9 millionNM = Not meaningful.
38

Table of costs associated with the anticipated future acquisitionContents
Consolidated Results
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Sale of vacation ownership products$319 $444 $1,085 $1,179 
Management and exchange205 198 611 623 
Rental138 165 435 438 
Financing81 74 239 217 
Cost reimbursements443 371 1,163 1,011 
TOTAL REVENUES1,186 1,252 3,533 3,468 
EXPENSES
Cost of vacation ownership products50 76 174 216 
Marketing and sales202 207 618 603 
Management and exchange115 101 332 330 
Rental119 126 344 294 
Financing30 5 81 49 
General and administrative57 62 189 187 
Depreciation and amortization33 33 99 98 
Litigation charges2 2 7 7 
Royalty fee30 28 88 84 
Impairment— 1 4 1 
Cost reimbursements443 371 1,163 1,011 
TOTAL EXPENSES1,081 1,012 3,099 2,880 
Gains (losses) and other income (expense), net3 (2)34 39 
Interest expense, net(36)(34)(106)(91)
Transaction and integration costs(5)(34)(28)(99)
Other(1)(1)— — 
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS66 169 334 437 
Provision for income taxes(24)(59)(115)(134)
NET INCOME42 110 219 303 
Net income attributable to noncontrolling interests— (1)— — 
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$42 $109 $219 $303 
39

Table of vacation ownership units located on the Big Island of Hawaii and the anticipated future acquisition of the operating property in New York that we currently manage.Contents
During the 2016 third quarter, we incurred $0.1 million of acquisition costs.Operating Statistics
Income Tax
20172023 Third Quarter
Our provision for income taxes increased $8.4 million (from $14.0 million to $22.4 million) from the 2016 third quarter. The increase was primarily due to an increase in U.S. earnings.
Three Months Ended
(Contract sales $ in millions)September 30, 2023September 30, 2022Change% Change
Vacation Ownership
Total contract sales$443 $492 $(49)(10%)
Consolidated contract sales$438 $483 $(45)(9%)
Joint venture contract sales$5 $9 $(4)(51%)
VPG$4,055 $4,353 $(298)(7%)
Exchange & Third-Party Management
Total active members at end of period (000's)1,571 1,591 (20)(1%)
Average revenue per member$39.15 $38.91 $0.24 1%
2017
2023 First Three Quarters
Our provision for income taxes increased $7.4 million (from $54.7 million to $62.1 million) from the 2016 first three quarters. The increase was primarily due to increases in U.S. and foreign earnings, partially offset by the favorable impact
Nine Months Ended
(Contract sales $ in millions)September 30, 2023September 30, 2022Change% Change
Vacation Ownership
Total contract sales$1,349 $1,411 $(62)(4%)
Consolidated contract sales$1,325 $1,383 $(58)(4%)
Joint venture contract sales$24 $28 $(4)(16%)
VPG$4,118 $4,544 $(426)(9%)
Exchange & Third-Party Management
Total active members at end of period (000's)1,571 1,591 (20)(1%)
Average revenue per member$120.48 $122.30 $(1.82)(1%)
Revenues
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Vacation Ownership$1,126 $1,182 $(56)(5%)
Exchange & Third-Party Management64 71 (7)(8%)
Total Segment Revenues1,190 1,253 (63)(5%)
Consolidated Property Owners’ Associations(4)(1)(3)NM
Total Revenues$1,186 $1,252 $(66)(5%)
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Vacation Ownership$3,335 3,229 $106 3%
Exchange & Third-Party Management200 229 (29)(12%)
Total Segment Revenues3,535 3,458 77 2%
Consolidated Property Owners’ Associations(2)10 (12)NM
Total Revenues3,533 3,468 $65 2%
40

Table of the adoption of ASU 2016-09. See Footnote No. 1, “Summary of Significant Accounting Policies,” to our Financial Statements for additional information on ASU 2016-09.Contents
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense, net (excluding consumer financing interest expense)expense associated with term securitization transactions), provision for income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense because the associated debt is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us. Further,with term securitization transactions because we consider consumer financing interest expenseit to be an operating expense of our business. We consider EBITDA and Adjusted EBITDA to be indicatorsan indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, and expand our business.business, and return cash to shareholders. We also use EBITDA and Adjusted EBITDA, as do analysts, lenders, investors, and others, because these measures excludethis measure excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisionprovisions for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA reflects additional adjustments for certain items described below, and excludes non-cash share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. We evaluate Adjusted EBITDAis useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Together, EBITDA and Adjusted EBITDA facilitate ouralso facilitates comparison by us, analysts, investors, and others of results from our on-going core operations before the impact of these items with results from other vacation ownership companies.

EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income attributable to common shareholders, which is the most directly comparable GAAP financial measure.
41

Table of Contents
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
Net income$40,762
 $26,807
 $118,738
 $87,524
Interest expense2,642
 2,262
 5,180
 6,331
Tax provision22,367
 14,041
 62,139
 54,656
Depreciation and amortization5,610
 4,679
 15,802
 14,856
EBITDA71,381
 47,789
 201,859
 163,367
Non-cash share-based compensation3,898
 3,139
 12,349
 9,995
Certain items(1,327) (316) (308) (6,994)
Adjusted EBITDA$73,952
 $50,612
 $213,900
 $166,368
20172023 Third Quarter
Three Months EndedChange
($ in millions)September 30, 2023September 30, 2022% Change
Net income attributable to common shareholders$42 $109 $(67)(61%)
Interest expense, net36 34 2 4%
Provision for income taxes24 59 (35)(59%)
Depreciation and amortization33 33 — 1%
EBITDA135 235 (100)(42%)
Share-based compensation expense6 10 (4)(33%)
Certain items9 39 (30)NM
Adjusted EBITDA$150 $284 $(134)(47%)
Adjusted EBITDA Margin20%32%(12 pts)
The certaintable below details the components of Certain items for the 2017 third quarter consistedthree months ended September 30, 2023 and September 30, 2022.
Three Months Ended
($ in millions)September 30, 2023September 30, 2022
ILG integration$— $22 
Welk acquisition and integration5 5 
Other transformation initiatives— 6 
Other transaction costs— 1 
Transaction and integration costs5 34 
Purchase accounting adjustments3 5 
Litigation charges2 2 
Impairment— 1 
Gain on disposition of hotel, land and other(1)— 
Gain on disposition of VRI Americas— (1)
Foreign currency translation5 3 
Insurance proceeds(1)— 
Change in indemnification asset(6)(1)
Other— 1 
(Gains) losses and other (income) expense, net(3)2 
Expiration/forfeiture of deposits on pre-acquisition preview packages— (6)
Change in estimate relating to pre-acquisition contingencies— (2)
Other2 3 
Total Certain items$9 $39 
42

Table of $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew and a charge of $1.7 million associated with the estimated property damage insurance deductibles at several of our properties, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria (both of which were recorded in gains and other income), $3.7 million of variable compensation expense related to the impact of the Hurricanes, $2.0 million of litigation settlement expenses and a $0.1 million favorable true up of previously recorded acquisition costs. These exclusions decreased EBITDA by $1.3 million.Contents
2023 First Three Quarters
Nine Months EndedChange
($ in millions)September 30, 2023September 30, 2022% Change
Net income attributable to common shareholders$219 $303 $(84)(28%)
Interest expense, net106 91 15 15%
Provision for income taxes115 134 (19)(14%)
Depreciation and amortization99 98 1 1%
EBITDA539 626 (87)(14%)
Share-based compensation expense25 30 (5)(15%)
Certain items11 71 (60)NM
Adjusted EBITDA$575 $727 $(152)(21%)
Adjusted EBITDA Margin24%30%(6%)
The certaintable below details the components of Certain items for the 2016 third quarter consistednine months ended September 30, 2023 and September 30, 2022.
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022
ILG integration$15 $80 
Welk acquisition and integration13 10 
Other transformation initiatives— 6 
Other transaction costs— 3 
Transaction and integration costs28 99 
Early redemption of senior secured notes10 — 
Gain on disposition of hotel, land and other(8)(33)
Gain on disposition of VRI Americas— (17)
Foreign currency translation1 10 
Insurance proceeds(3)(5)
Change in indemnification asset(30)2 
Other(4)4 
Gains and other income, net(34)(39)
Purchase accounting adjustments6 13 
Litigation charges7 7 
Impairment4 1 
Expiration/forfeiture of deposits on pre-acquisition preview packages— (6)
Early termination of VRI management contract— (2)
Change in estimate relating to pre-acquisition contingencies— (5)
Other— 3 
Total Certain items$11 $71 
43

Table of $0.5 million of gains and other income and $0.1 million of acquisition costs. These exclusions decreasedContents
Segment Adjusted EBITDA by $0.3 million.
20172023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Vacation Ownership$173 $299 $(126)(42%)
Exchange & Third-Party Management30 39 (9)(20%)
Segment adjusted EBITDA203 338 (135)(40%)
General and administrative(53)(54)1 NM
Adjusted EBITDA$150 $284 $(134)(47%)
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Vacation Ownership$647 $772 $(125)(16%)
Exchange & Third-Party Management99 117 (18)(15%)
Segment adjusted EBITDA746 889 (143)(16%)
General and administrative(171)(162)(9)(6%)
Adjusted EBITDA$575 $727 $(152)(21%)
The certainfollowing tables present segment financial results attributable to common shareholders reconciled to segment Adjusted EBITDA.
Vacation Ownership
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Segment financial results$149 $270 $(121)(45%)
Depreciation and amortization23 23 — (3%)
Share-based compensation expense2 2 — 17%
Certain items(1)4 (5)NM
Segment adjusted EBITDA$173 $299 $(126)(42%)
The table below details the components of Certain items for the 2017 first three quarters consistedmonths ended September 30, 2023 and September 30, 2022.
Three Months Ended
($ in millions)September 30, 2023September 30, 2022
Transaction and integration costs$— $2 
Purchase accounting adjustments3 5 
Litigation charges2 2 
Impairment— 1 
Foreign currency translation— (1)
Insurance proceeds(1)— 
Change in indemnification asset(6)— 
Gains and other income, net(7)(1)
Expiration/forfeiture of deposits on pre-acquisition preview packages— (6)
Change in estimate relating to pre-acquisition contingencies— (2)
Other1 3 
Total Certain items$(1)$4 
44

Table of $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew and a charge of $1.7 million associated with the estimated property damage insurance deductibles at several of our properties, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria (both of which were recorded in gains and other income), $3.7 million of variable compensation expense related to the impact of the Hurricanes, $2.2 million of litigation settlement expenses, $0.6 million of acquisition costs and $0.2 million of losses and other expense. These exclusions decreased EBITDA by $0.3 million.Contents
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Segment financial results$578 $720 $(142)(20%)
Depreciation and amortization69 67 2 2%
Share-based compensation expense6 5 1 24%
Certain items(6)(20)14 NM
Segment adjusted EBITDA$647 $772 $(125)(16%)
The certaintable below details the components of Certain items for the 2016 firstnine months ended September 30, 2023 and September 30, 2022.
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022
Transaction and integration costs$— 3 
Purchase accounting adjustments6 13 
Litigation charges8 7 
Impairment4 1 
Gain on disposition of hotel, land and other(7)(33)
Insurance proceeds(3)(3)
Change in indemnification asset(9)— 
Other(4)— 
Gains and other income, net(23)(36)
Expiration/forfeiture of deposits on pre-acquisition preview packages— (6)
Change in estimate relating to pre-acquisition contingencies— (5)
Other(1)3 
Total Certain items$(6)$(20)
45

Table of Contents
Exchange & Third-Party Management
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Segment financial results$23 $29 $(6)(22%)
Depreciation and amortization7 8 (1)(3%)
Share-based compensation expense— 1 (1)(30%)
Certain items— 1 (1)NM
Segment adjusted EBITDA$30 $39 $(9)(20%)
The table below details the components of Certain items for the three quarters consistedmonths ended September 30, 2023 and September 30, 2022.
Three Months Ended
($ in millions)September 30, 2023September 30, 2022
Gain on disposition of hotel, land and other$(1)$— 
Gain on disposition of VRI Americas— (1)
Foreign currency translation— 2 
(Gains) losses and other (income) expense, net(1)1 
Other1 — 
Total Certain items$— $1 
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Segment financial results$75 $108 $(33)(30%)
Depreciation and amortization23 24 (1)(2%)
Share-based compensation expense1 2 (1)(22%)
Certain items— (17)17 NM
Segment adjusted EBITDA$99 $117 $(18)(15%)
The table below details the components of $11.1 millionCertain items for the nine months ended September 30, 2023 and September 30, 2022.
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022
Gain on disposition of hotel, land and other$(1)$— 
Gain on disposition of VRI Americas— (17)
Foreign currency translation— 2 
Gains and other income, net(1)(15)
Early termination of VRI management contract— (2)
Other1 — 
Total Certain items$— $(17)
46

Table of gains and other income, $4.7 million of acquisition costs, a $0.3 million reversal of litigation settlement expense, and $0.3 million of profit from the operations of the portion of the property we acquired in Surfers Paradise, Australia in 2015 that we sold in the second quarter of 2016. These exclusions decreased EBITDA by $7.0 million.Contents
Business Segments
Our business is grouped into threetwo reportable business segments: North America, Asia PacificVacation Ownership and Europe.Exchange & Third-Party Management. See Footnote No. 13,16 “Business Segments,”Segments” to our Financial Statements for further information on our segments.

North AmericaVacation Ownership
The following discussion presents an analysis of our results of operations for the North America segment for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Sale of vacation ownership products$319 $444 $1,085 $1,179 
Resort management and other services143 136 425 402 
Rental128 154 404 405 
Financing81 74 239 217 
Cost reimbursements455 374 1,182 1,026 
TOTAL REVENUES1,126 1,182 3,335 3,229 
EXPENSES
Cost of vacation ownership products50 76 174 216 
Marketing and sales202 207 618 603 
Resort management and other services69 64 202 178 
Rental122 130 354 311 
Financing30 5 81 49 
Depreciation and amortization23 23 69 67 
Litigation charges2 2 8 7 
Royalty fee30 28 88 84 
Impairment— 1 4 1 
Cost reimbursements455 374 1,182 1,026 
TOTAL EXPENSES983 910 2,780 2,542 
Gains and other income, net7 1 23 36 
Transaction and integration costs— (2)— (3)
Other(1)(1)— — 
SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS149 270 578 720 
Net income attributable to noncontrolling interests— — — — 
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$149 $270 $578 $720 
47

 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$163,454
 $116,184
 $495,958
 $373,341
Resort management and other services68,236
 62,956
 206,830
 182,665
Financing32,854
 27,438
 93,812
 81,699
Rental69,458
 63,387
 224,588
 201,524
Cost reimbursements103,799
 88,834
 320,242
 278,190
TOTAL REVENUES437,801
 358,799
 1,341,430
 1,117,419
EXPENSES       
Cost of vacation ownership products37,404
 30,134
 116,715
 89,876
Marketing and sales87,308
 67,662
 266,962
 202,888
Resort management and other services37,453
 33,849
 111,664
 101,322
Rental62,236
 53,131
 187,141
 164,680
Litigation settlement2,033
 —
 2,033
 (303)
Royalty fee1,956
 2,813
 7,684
 6,753
Cost reimbursements103,799
 88,834
 320,242
 278,190
TOTAL EXPENSES332,189
 276,423
 1,012,441
 843,406
(Losses) gains and other (expense) income, net(1,754) (27) (1,950) 12,297
Other46
 (55) 171
 (4,068)
SEGMENT FINANCIAL RESULTS$103,904
 $82,294
 $327,210
 $282,242
Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership$179,227
 $150,964
 $28,263
 19%
Total contract sales$179,227
 $150,964
 $28,263
 19%
The increase in North America vacation ownership contract sales reflected a $30.7 million increase in sales at on-site sales locations, partially offset by a $2.3 million decrease in sales at off-site (non tour-based) sales locations and a $0.1 million decrease in fractional sales as we continue to sell through remaining luxury inventory. Our 2017 third quarter had eight more days than our 2016 third quarter due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 third quarter contract sales would have been approximately $15 million higher on a comparable basis, the majorityTable of which would have occurred at on-site sales locations. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 third quarter.Contents
The increase in sales at North America on-site locations reflected an 18 percent increase in the number of tours and a 3 percent increase in VPG to $3,482 in the 2017 third quarter from $3,371 in the 2016 third quarter. The increase in the number of tours was due to increases in both owner tours and first time buyer tours, and was driven by programs that were implemented in 2015 or later to generate additional tours. The 18 percent increase in the number of total tours included an increase of approximately 11 percent due to the change in the financial reporting calendar in 2017 and an increase of 9 percent from new sales locations, partially offset by a decrease of 2 percent from existing sales locations. We estimate the Hurricanes negatively impacted the year over year change in tours by roughly 6.5 percent; the vast majority of this impact was at our exiting sales

locations. The increase in VPG resulted from a 0.2 percentage point increase in closing efficiency and higher pricing. The sales at North America off-site locations were negatively impacted by lower sales in Latin America.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership$547,546
 $436,214
 $111,332
 26%
Total contract sales$547,546
 $436,214
 $111,332
 26%
The increase in North America vacation ownership contract sales reflected a $116.0 million increase in sales at on-site sales locations, partially offset by a $4.3 million decrease in sales at off-site (non tour-based) sales locations and a $0.4 million decrease in fractional sales as we continue to sell through remaining luxury inventory. Our 2017 first three quarters had 22 more days than our 2016 first three quarters due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 first three quarters contract sales would have been approximately $38 million higher on a comparable basis, the majority of which would have occurred at on-site sales locations. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 first three quarters.
The increase in sales at North America on-site locations reflected a 23 percent increase in the number of tours and a 5 percent increase in VPG to $3,580 in the 2017 first three quarters from $3,414 in the 2016 first three quarters. The increase in the number of tours was due to increases in both owner tours and first time buyer tours, and was driven by programs that were implemented in 2015 or later to generate additional tours. The 23 percent increase in the number of total tours included an increase of approximately 11 percent due to the change in the financial reporting calendar in 2017, an increase of 9 percent from new sales locations and an increase of 3 percent from existing sales locations. We estimate the Hurricanes negatively impacted the year over year change in tours by nearly 3 percent; the vast majority of this impact was at our exiting sales locations. The increase in VPG resulted from a 0.3 percentage point increase in closing efficiency and higher pricing. The sales at North America off-site locations were negatively impacted by lower sales in Latin America, which were negatively impacted by currency fluctuations.
Sale of Vacation Ownership Products
20172023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023% of Consolidated Contract Sales, Net of ResalesSeptember 30, 2022% of Consolidated Contract Sales, Net of ResalesChange% Change
Total consolidated contract sales$438 $483 $(45)(9%)
Joint venture contract sales5 9 (4)(51%)
Total contract sales443 492 (49)(10%)
Less: resales contract sales(11)(10)(1)
Less: joint venture contract sales(5)(9)4 
Consolidated contract sales, net of resales427 473 (46)(10%)
Plus:
Settlement revenue12 3%10 2%2 
Resales revenue6 1%5 1%1 
Revenue recognition adjustments:
Reportability— —%54 12%(54)
Sales reserve(102)(24%)(64)(14%)(38)
Other(1)
(24)(6%)(34)(7%)10 
Sale of vacation ownership products$319 74%$444 94%$(125)(28%)
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales$179,227
 $150,964
 $28,263
 19%
Revenue recognition adjustments:       
Reportability1,446
 (16,853) 18,299
  
Sales reserve(10,277) (11,923) 1,646
  
Other(1)
(6,942) (6,004) (938)  
Sale of vacation ownership products$163,454
 $116,184
 $47,270
 41%
(1)Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability positively impactedContract sales in the 20172023 third quarter declined due to a 7% decrease in the amount of sales that remained in the rescission period as of the end of the quarter. Revenue reportability negatively impacted the 2016 third quarter due toVPG and a 3% decrease in tours. The decline in VPG was attributed to the amounttemporary suspension of activity at our sales that met the down payment requirement for revenue reportability during the period and an increasecenters in the amount of sales that remained in the rescission period as of the end of the quarter.
The lower sales reserve reflected a lower required reserve in the 2017 third quarter ($2.9 million) due to lower default and delinquency activity and an unfavorable sales reserve adjustment in the 2016 third quarter ($0.9 million), partially offset by the higher vacation ownership contract sales volume ($2.2 million of the increase).
The increase in other adjustments for sales incentives was driven by an increase in the utilization of plus points as a sales incentive in the 2017 third quarterMaui, due to the higherwildfires, lower closing efficiencies due to the continued transition associated with the launch of Abound by Marriott Vacations (which commenced in the third quarter of 2022) and the continued integration of the Hyatt and Legacy-Welk business models and sales processes. Though improving, we expect these factors to continue to impact VPG and contract sales for the remainder of 2023.
The favorable revenue reportability in the 2022 third quarter was primarily due to the Contract Alignment which resulted in the prospective acceleration of revenue for Marriott-branded vacation ownership contract sales.interests of $46 million.

Financing propensity was 64% in the third quarter of 2023, a 530 basis point increase over the third quarter of 2022. We expect to continue offering financing incentive programs throughout the remainder of 2023.The average FICO score of customers for whom a credit score was available, generally U.S. and Canadian residents, who financed a vacation ownership purchase was 729 and 730 for the three months ended September 30, 2023 and September 30, 2022, respectively.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales$547,546
 $436,214
 $111,332
 26%
Revenue recognition adjustments:       
Reportability1,887
 (12,982) 14,869
  
Sales reserve(33,090) (26,960) (6,130)  
Other(1)
(20,385) (22,931) 2,546
  
Sale of vacation ownership products$495,958
 $373,341
 $122,617
 33%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability positively impactedIn the 2017 first three quarters due to anthird quarter of 2023, we evaluated our vacation ownership notes receivable reserve in light of trends in delinquencies and default rates. As a result, we increased our originated vacation ownership notes receivable reserve by $59 million. We primarily used a historical period of increased defaults as a basis for estimating the increase in the amount of sales that met the down payment requirement for revenue reportability during the period, partially offset by an increase in the amount of sales that remained in the rescission period as of the end of the period. Revenue reportability negatively impacted the 2016 first three quarters dueour reserve. This additional reserve adjusts our future default rate estimate to a decrease in the amount of sales that met the down payment requirement for revenue reportability during the periodreflect current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and an increase in the amount of sales that remained in the rescission period as of the end of the period.increased global insecurity.
The higher2022 third quarter sales reserve reflectedincluded a $19 million increase attributed to the higher vacation ownership contract sales volume, partiallyReserve Alignment, which was offset by an unfavorable sales reserve adjustment in the 2016 first three quarters.
The decrease in other adjustments for sales incentives was driven by a decrease in the utilization of plus pointsacquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses.
48

Table of Contents
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023% of Consolidated Contract Sales, Net of ResalesSeptember 30, 2022% of Consolidated Contract Sales, Net of ResalesChange% Change
Total consolidated contract sales$1,325 $1,383 $(58)(4%)
Joint venture contract sales24 28 (4)(16%)
Total contract sales1,349 1,411 (62)(4%)
Less: resales contract sales(32)(30)(2)
Less: joint venture contract sales(24)(28)4 
Consolidated contract sales, net of resales1,293 1,353 (60)(4%)
Plus:
Settlement revenue29 2%26 2%3 
Resales revenue18 1%13 1%5 
Revenue recognition adjustments:
Reportability5 —%7 1%(2)
Sales reserve(185)(14%)(130)(10%)(55)
Other(1)
(75)(6%)(90)(7%)15 
Sale of vacation ownership products$1,085 84%$1,179 87%$(94)(8%)
(1)Adjustment for sales incentiveincentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.
Contract sales in the 2017 first three quarters.quarters of 2023 declined, despite tour growth of 5%, due to a 9% decrease in VPG. The decline in VPG was attributed to the temporary suspension of activity at our sales centers in Maui, due to the wildfires, lower closing efficiencies due to the continued transition associated with the launch of Abound by Marriott Vacations and the continued integration of the Hyatt and Legacy-Welk business models and sales processes.
Financing propensity was 58% in the first three quarters of 2023, a 390 basis point increase over the first three quarters of 2022. The average FICO score of customers for whom a credit score was available, generally U.S. and Canadian residents, who financed a vacation ownership purchase was 734 and 733 for the nine months ended September 30, 2023 and September 30, 2022, respectively.
The sales reserve in the first three quarters of 2023 increased $78 million in light of trends in delinquencies and default rates in 2023.
The sales reserve in the first three quarters of 2022 included a $19 million increase attributed to the Reserve Alignment, which was offset by a decrease in the acquired reserve for vacation ownership notes receivable recorded as a reduction of Financing expenses.
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Development MarginProfit
20172023 Third Quarter
Three Months EndedChange% Change
Quarter Ended Change % Change
September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
($ in millions)($ in millions)September 30, 2023% of RevenueSeptember 30, 2022% of RevenueChange% Change
Sale of vacation ownership products$163,454
 $116,184
 47,270
 41%Sale of vacation ownership products$319 $444 
Cost of vacation ownership products(37,404) (30,134) (7,270) (24%)Cost of vacation ownership products(50)(16%)(76)(17%)26 35%
Marketing and sales(87,308) (67,662) (19,646) (29%)Marketing and sales(202)(64%)(207)(47%)5 2%
Development margin$38,742
 $18,388
 $20,354
 111%
Development margin percentage23.7% 15.8% 7.9 pts 
Development profitDevelopment profit$67 $161 $(94)(59%)
Development profit marginDevelopment profit margin20.7%36.1%(15.4 pts)
The increasedecrease in development margin reflectedDevelopment profit reflects $43 million from unfavorable revenue reportability primarily attributed to the following:
$11.8Contract Alignment, which resulted in the prospective acceleration of $39 million of revenue recognition for Marriott-branded VOI sales in the 2022 third quarter, $24 million from lower contract sales volumes and $35 million related to higher sales reserves, partially offset by $8 million of favorable revenue reportability comparedproduct cost due mainly to the 2016sale of lower cost inventory. The $35 million of higher sales reserves included $49 million in the third quarter;
$5.9quarter of 2023 ($59 million gross increase in reserve offset by a decrease of $10 million to product cost), partially offset by $14 million from higher vacation ownership contract sales volume netthe Reserve alignment in the third quarter of 2022. Development profit margin, excluding the impact of the sales reserve increase of $49 million, was 30.5% in the third quarter of 2023. We expect Development profit margin for the full year to be in line with year-to-date 2023 results.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023% of RevenueSeptember 30, 2022% of RevenueChange% Change
Sale of vacation ownership products$1,085 $1,179 $(94)(8%)
Cost of vacation ownership products(174)(16%)(216)(18%)42 20%
Marketing and sales(618)(57%)(603)(51%)(15)(2%)
Development profit$293 $360 $(67)(18%)
Development profit margin27.0%30.5%(3.5 pts)
The decrease in Development profit reflects $47 million of lower contract sales volumes, $49 million related to higher sales reserves, and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$4.4$5 million from aunfavorable revenue reportability, partially offset by $28 million of favorable mixproduct cost due mainly to the sale of lower cost real estate inventory, being sold;
$2.8 million from lower sales reserve activity in the 2017 third quarter; and
$0.5 $6 million of favorable changes in product cost true-up activity ($1.5activity. Development profit margin, excluding the impact of the $49 million of favorable true-up activity in the 2017 third quarter compared to $1.0 million of favorable true-up activity in the 2016 third quarter).
These increases in development margin were partially offset by $5.1 million from higher marketing and sales costs (of which $1.3 million was due to the ramp-up of our newest sales distributions).
The 7.9 percentage pointreserve increase in the development margin percentage reflected a 6.6 percentage point increase due to the favorable revenue reportability year-over-year, a 2.7 percentage point increase due to a favorable mixthird quarter of lower cost vacation ownership real estate inventory being sold2023, was 29.9% in the 2017 third quarter, a 1.2 percentage point increase from the lower sales reserve activity, and 0.3 percentage point increase due to the favorable changes in product cost true-up activity year-over-year. These increases were partially offset by a 2.9 percentage point decline due to higher marketing and sales costs (of which

0.8 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions).We estimate the Hurricanes negatively impacted development margin percentage by 0.3 percentage points in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$495,958
 $373,341
 122,617
 33%
Cost of vacation ownership products(116,715) (89,876) (26,839) (30%)
Marketing and sales(266,962) (202,888) (64,074) (32%)
Development margin$112,281
 $80,577
 $31,704
 39%
Development margin percentage22.6% 21.6% 1.0 pts  
The increase in development margin reflected the following:
$28.0 million from higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$17.6 million from a favorable mix of lower cost real estate inventory being sold;
$9.6 million of favorable revenue reportability compared to the 2016 first three quarters; and
$0.4 million from lower sales reserve activity in the 2017 first three quarters.
These increases in development margin were partially offset by the following:
$11.8 million from higher marketing and sales costs (of which $7.3 million was due to the ramp-up of our newest sales distributions);
$10.7 million of unfavorable changes in product cost true-up activity ($0.7 million of favorable true-up activity in the 2017 first three quarters compared to $11.4 million of favorable true-up activity in the 2016 first three quarters); and2023.
$1.4 million from higher other development and inventory expenses.
50
The 1.0 percentage point increase in the development margin percentage reflected a 3.6 percentage point increase due to a favorable mix
Table of lower cost vacation ownership real estate inventory being sold in the 2017 first three quarters, a 1.5 percentage point increase due to the favorable revenue reportability year-over-year and a 0.1 percentage point increase from the lower sales reserve activity. These increases were partially offset by a 2.2 percentage point decrease due to the unfavorable changes in product cost true-up activity year-over-year and a 1.9 percentage point decline due to higher marketing and sales costs (of which 1.5 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions).Contents
Resort Management and Other Services Revenues, Expenses and MarginProfit
20172023 Third Quarter
Three Months Ended
Quarter Ended Change % Change
September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
($ in millions)($ in millions)September 30, 2023September 30, 2022Change% Change
Management fee revenues$19,810
 $17,330
 $2,480
 14%Management fee revenues$44 $41 $3 9%
Ancillary revenues25,924
 25,992
 (68) —%Ancillary revenues62 63 (1)(1%)
Other services revenues22,502
 19,634
 2,868
 15%
Other management and exchange revenuesOther management and exchange revenues37 32 5 16%
Resort management and other services revenues68,236
 62,956
 5,280
 8%Resort management and other services revenues143 136 7 6%
Resort management and other services expenses(37,453) (33,849) (3,604) (11%)Resort management and other services expenses(69)(64)(5)(8%)
Resort management and other services margin$30,783
 $29,107
 $1,676
 6%
Resort management and other services margin
percentage		45.1% 46.2% (1.1 pts) 
Resort management and other services profitResort management and other services profit$74 $72 $2 3%
Resort management and other services profit marginResort management and other services profit margin52.0%53.2%(1.2 pts)
Resort occupancy (1)
Resort occupancy (1)
86.1%88.9%(2.8 pts)
(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.
(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.
The increase in resortResort management and other services revenues reflected $2.5reflects higher club dues of $4 million, higher management fees and $1 million of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system, $2.0 million of additional annual club dues and otherrefurbishment project revenues, earned in connection with the MVCD program due to

the cumulative increase in owners enrolled in the program, and $0.9 million of higher resales commissions and other revenues. These increases were partially offset by $0.1 million of lower ancillary revenues.
The decrease$5 million increase in Resort management and other services expenses reflects an increase in ancillary revenues included $1.7expenses of $2 million of lower revenue due to outsourcing multiple operations, partially offset by $1.6inflation and foreign currency exchange rate changes in Mexico, and an increase in customer services and exchange company expenses of $3 million ofdue to incremental headcount, wages, benefits, and other operating cost increases.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Management fee revenues$134 $124 $10 8%
Ancillary revenues193 183 10 5%
Other management and exchange revenues98 95 3 4%
Resort management and other services revenues425 402 23 6%
Resort management and other services expenses(202)(178)(24)(14%)
Resort management and other services profit$223 $224 $(1)—%
Resort management and other services profit margin52.5%55.8%(3.3 pts)
Resort occupancy (1)
87.9%89.0%(1.1 pts)
(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.
The increase in Resort management and other services revenues reflects higher ancillary revenues, including revenues from food and beverage and golf offerings (as a result of an 8% increase in revenue per occupied key, partially offset by a 2% decrease in occupied keys at our resorts.resorts with ancillary businesses) and higher management fees and commissions from third-party vacation and other offerings. The decline in occupied keys at resorts with ancillary businesses was primarily in Maui due to the wildfires.
The increase in the resortResort management and other services margin reflectedexpenses reflects an increase in ancillary expenses of $15 million due to increased volumes sold, inflation and foreign currency exchange rate changes in Mexico, and an increase in customer services and exchange company expenses of $9 million due to incremental headcount, wages, benefits, and other operating cost increases.
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Rental Revenues, Expenses and Profit
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Rental revenues$128 $154 $(26)(17%)
Rental expenses(122)(130)8 6%
Rental profit$6 $24 $(18)(73%)
Rental profit margin5.1%15.9%(10.8 pts)
Three Months Ended
September 30, 2023September 30, 2022Change% Change
Transient keys rented(1)
509,057 509,621 (564)—%
Average transient rate$256 $267 $(12)(4%)
Rental occupancy(2)
64.3%69.2%(4.9 pts)
(1)Transient keys rented exclude those occupied through the increasesuse of plus points and preview stays.
(2)Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.
Rental profit for transient keys, including plus points and excluding keys from owned hotels, declined due to an $11 million increase in revenue,unsold maintenance fees associated with developer owned inventory, $9 million of decreased profit due largely to the Maui wildfires and declining average daily rates, offset by the continued rebound of the Asia Pacific region and $5 million of higher operating costs. These decreases were partially offset by $3.6$8 million of higher expenses. Theplus points revenue. In addition to these variances, there was a $25 million higher expenses included $2.5net down of rental revenues and expense in the 2023 third quarter associated with unsold VOIs that are registered and held for sale.
Rental profit for our owned hotels in the third quarter of 2023 decreased $1 million compared to the third quarter of 2022.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Rental revenues$404 $405 $(1)—%
Rental expenses(354)(311)(43)(14%)
Rental profit$50 $94 $(44)(47%)
Rental profit margin12.3%23.2%(10.9 pts)
Nine Months Ended
September 30, 2023September 30, 2022Change% Change
Transient keys rented(1)
1,605,926 1,626,294 (20,368)(1%)
Average transient key rate$269 $268 $1 —%
Rental occupancy(2)
68.5%70.3%(1.8 pts)
(1)Transient keys rented exclude those occupied through the use of plus points and preview stays.
(2)Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.
Rental profit for transient keys, including plus points and excluding keys from owned hotels, declined by $40 million due to a $34 million increase in unsold maintenance fees associated with developer owned inventory, $10 million of increased costs associated with higher owner utilization of third-party vacation and other offerings, $12 million of decreased profit due to lower demand, the Maui wildfires and an unfavorable change in the mix of keys available to rent, and $3 million of higher customer service expenses and expenses associated with the MVCD program, $2.2other costs. These decreases were partially offset by $16 million of higher ancillary expenses from foodplus points revenue and beveragea $3 million reduction of rental costs associated with occupancy used for marketing and golf offerings atsales activities. In addition
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to these variances, there was a $2 million lower net down of rental revenues and expense in the first three quarters of 2023 associated with unsold VOIs that are registered and held for sale.
Rental profit for our resortsowned hotels decreased by $4 million, or 30%, attributed to the disposition of our Puerto Vallarta hotel in 2022 and $0.7Branson hotel in 2023.
Financing Revenues, Expenses and Profit
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Financing revenues$81 $74 $7 10%
Financing expenses(11)9 (20)NM
Consumer financing interest expense(19)(14)(5)(36%)
Financing profit$51 $69 $(18)(26%)
Financing profit margin63.7%94.5%(30.8 pts)
Financing propensity64.0%58.7%
Financing revenues reflect $8 million of higher resales and other expenses,interest income as a result of a higher average notes receivable balance partially offset by $1.8$1 million of lowerhigher plus point financing incentive costs. The higher average notes receivable balance was the result of new loan originations in excess of the repayment of existing vacation ownership notes receivable, which we expect to continue. As part of our Reserve Alignment for Marriott-, Westin- and Sheraton-branded vacation ownership notes receivable, in the third quarter of 2022, we recorded a $19 million reduction in our estimated reserve for acquired vacation ownership notes receivable as a decrease in Financing expenses. Excluding this difference, Financing expenses increased $1 million due to outsourcing multiple operations.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Management fee revenues$58,725
 $51,182
 $7,543
 15%
Ancillary revenues78,522
 74,633
 3,889
 5%
Other services revenues69,583
 56,850
 12,733
 22%
Resort management and other services revenues206,830
 182,665
 24,165
 13%
Resort management and other services expenses(111,664) (101,322) (10,342) (10%)
Resort management and other services margin$95,166
 $81,343
 $13,823
 17%
Resort management and other services margin
percentage		46.0% 44.5% 1.5 pts  
higher operating costs.
The increase in resort managementconsumer financing interest expense is attributable to the higher average securitized debt at a higher average interest rate for the more recent term securitization transactions. We expect consumer financing interest expense to continue to remain elevated over our average outstanding interest rates on existing securitization transactions as a result of rising interest rates for the remainder of 2023. We do not adjust interest rates on consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates; thus we expect our financing profit margin to continue to decrease in 2023, as we repay existing securitization transactions with lower interest rates and other servicesenter into new securitization transactions with higher interest rates.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Financing revenues239 217 22 10%
Financing expenses(26)(10)(16)NM
Consumer financing interest expense(55)(39)(16)(41%)
Financing profit$158 $168 $(10)(6%)
Financing profit margin66.2%77.7%(11.5 pts)
Financing propensity58.2%54.3%
Financing revenues reflected $7.5reflect $24 million of higher management fees resulting from the cumulative increase in the numberinterest income as a result of vacation ownership products sold anda higher operating costs across the system, $4.9 million of additional annual club dues and other revenues earned in connection with the MVCD program due to the cumulative increase in owners enrolled in the program, $9.3average notes receivable balance partially offset by $2 million of higher ancillary revenuesplus point financing incentive costs. The higher average notes receivable balance was the result of new loan originations in excess of the repayment of existing vacation ownership notes receivable, which we expect will continue. Excluding the change in our estimated reserve for acquired vacation ownership notes receivable, Financing expenses were in line with prior year. In 2023, we recorded a $3 million reduction to our reserve for acquired vacation ownership notes receivable compared to a $19 million reduction in the comparable reserve in 2022.
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Royalty Fee
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Royalty fee$30 $28 $2 5%
Royalty fee expense increased in the third quarter of 2023 due to higher revenues from food and beverage and golf offerings at our resorts, $3.1an increase of $2 million in the volume of higher resales commissions, brand fees and other revenues, $2.7 millionclosings on Marriott-branded products.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Royalty fee$88 $84 $4 4%
Royalty fee expense increased in the first three quarters of higher refurbishment revenue2023 due to an increase in the numbervolume of refurbishment projects completedclosings on Marriott-branded products ($2 million) and increased variable royalty fees paid to Hyatt, which commenced in the fourth quarter of 2022 ($2 million).
Gains and Other Income
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Gains and other income, net$7 $1 $6 NM
During the third quarter of 2023, we recorded a $6 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition and $1 million related to the receipt of insurance proceeds related to property damage from the 2017 hurricanes.
During the third quarter of 2022, we recorded a $1 million gain from foreign currency translation.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Gains and other income, net$23 $36 $(13)(36%)
During the first three quarters and $2.1of 2023, we recorded $7 million of higher settlement fees duegains on the disposition of excess real estate, a $4 million gain associated with the earn out of additional proceeds from the 2019 disposition of a land parcel in Cancun, Mexico, a $9 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, $2 million related to an increase in the numberreceipt of closed contracts inbusiness interruption insurance proceeds, and $1 million related to the receipt of insurance proceeds related to property damage from the 2017 hurricanes.
During the first three quarters partially offset by $5.4of 2022, we recorded gains and other income of $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico and $3 million related to the receipt of business interruption insurance proceeds.
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Exchange & Third-Party Management
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Management and exchange$50 $55 $157 $177 
Rental10 11 31 33 
Cost reimbursements4 5 12 19 
TOTAL REVENUES64 71 200 229 
EXPENSES
Management and exchange31 28 91 93 
Depreciation and amortization7 8 23 24 
Cost reimbursements4 5 12 19 
TOTAL EXPENSES42 41 126 136 
Gains (losses) and other income (expense), net1 (1)1 15 
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$23 $29 $75 $108 
Management and Exchange Profit
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Management and exchange revenue$50 $55 $(5)(7%)
Management and exchange expense(31)(28)(3)(9%)
Management and exchange profit$19 $27 $(8)(25%)
Management and exchange profit margin38.9%48.1%(9.2 pts)
The decrease in management and exchange revenue reflects a $3 million decline in Aqua-Aston management revenues resulting from lower revenue due to outsourcing multiple operations.
The increaseper available room in the resortHawaii market and the wildfires in Maui. Interval International management and other services margin reflected the increases in revenue, partially offset by $10.3exchange revenues declined $2 million of higher expenses, including $5.1 million of higher customer service expenses and expenses associated with the MVCD program, $7.4 million of higher ancillary expenses from food and beverage and golf offerings at our resorts, $2.1 million of higher refurbishment expenses dueprimarily attributed to an increase in the number of projects being refurbished in the 2017 first three quarters, and $0.7 million of higher resales and other expenses, partially offset by $5.0 million of5% lower expenses due to outsourcing multiple operations.
Financing Revenues
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Interest income$31,146
 $26,107
 $5,039
 19%
Other financing revenues1,708
 1,331
 377
 28%
Financing revenues$32,854
 $27,438
 $5,416
 20%
Financing propensity66.1% 62.4%    
The increase in financing revenues was due to an increase in the average gross vacation ownership notes receivable balance ($7.2 million) and higher other financing revenues ($0.4 million), partially offset by financing program incentive costs ($1.4 million) and a decrease in the weighted average coupon rate of our vacation ownership notes receivable ($0.8 million). We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Interest income$88,698
 $77,582
 $11,116
 14%
Other financing revenues5,114
 4,117
 997
 24%
Financing revenues$93,812
 $81,699
 $12,113
 15%
Financing propensity65.0% 57.5%    
The increase in financing revenues was due to an increase in the average gross vacation ownership notes receivable balance ($18.3 million) and higher other financing revenues ($1.0 million), partially offset by financing program incentive costs ($5.2 million) and a decrease in the weighted average coupon rate of our vacation ownership notes receivable ($2.0 million). We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
Rental Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Rental revenues$69,458
 $63,387
 $6,071
 10%
Unsold maintenance fees(17,105) (16,688) (417) (2%)
Other rental expenses(45,131) (36,443) (8,688) (24%)
Rental margin$7,222
 $10,256
 $(3,034) (30%)
Rental margin percentage10.4% 16.2% (5.8 pts)  
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
 (92 days) (84 days) 
Transient keys rented(1)
296,159
 262,038
 34,121
 13%
Average transient key rate$198.05
 $204.89
 $(6.84) (3%)
Resort occupancy89.0% 92.3% (3.3 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating property in San Diego, California prior to conversion to vacation ownership inventory.
The increase in rental revenues was due to a 13 percent increase in transient keys rented ($7.1 million) driven by a 24 percent increase in available keys, a $0.5 million increase in preview keys rented and other revenue and $1.1 million of higher plus points revenue (which is recognized when the points are redeemed or expire),transaction volume, partially offset by a 3 percent decrease1% increase in average transient rate ($2.0 million) and $0.6 million of revenue in the 2016 third quarter at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory.per member.
The decrease in rental margin reflected higher expenses incurred duemanagement and exchange profit was primarily attributed to owners choosing alternative usage options and higher unsold maintenance fees. These higher expenses more than offset the higher rental revenues net of direct variable expenses (such as housekeeping) and the $1.1 million increase in plus points revenue.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Rental revenues$224,588
 $201,524
 $23,064
 11%
Unsold maintenance fees(50,814) (44,659) (6,155) (14%)
Other rental expenses(136,327) (120,021) (16,306) (14%)
Rental margin$37,447
 $36,844
 $603
 2%
Rental margin percentage16.7% 18.3% (1.6 pts)  
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
 (274 days) (252 days) 
Transient keys rented(1)
907,935
 797,729
 110,206
 14%
Average transient key rate$211.32
 $214.84
 $(3.52) (2%)
Resort occupancy89.1% 90.2% (1.1 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating property in San Diego, California prior to conversion to vacation ownership inventory.
The increase in rental revenues was due to a 14 percent increase in transient keys rented ($23.8 million) driven by a 17 percent increase in available keys, a $3.3 million increase in preview keys rented and other revenue and $2.6 million of higher plus points revenue (which is recognized when the points are redeemed or expire), partially offset by $3.4 million of revenue in the 2017 first three quarters at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory and a 2 percent decrease in average transient rate ($3.2 million).
The increase in rental margin reflected the $2.6 million increase in plus points revenue and higher rental revenues net of direct variable expenses (such as housekeeping), partially offset by higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees.

Asia Pacific
The following discussion presents an analysis of our results of operations for the Asia Pacific segment for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$11,362
 $10,010
 $32,378
 $26,645
Resort management and other services1,022
 816
 3,055
 8,594
Financing1,122
 918
 3,350
 2,906
Rental2,733
 2,324
 9,115
 12,773
Cost reimbursements713
 692
 2,584
 2,250
TOTAL REVENUES16,952
 14,760
 50,482
 53,168
EXPENSES       
Cost of vacation ownership products2,687
 1,712
 6,642
 5,018
Marketing and sales8,754
 7,166
 25,672
 20,072
Resort management and other services1,144
 900
 3,297
 8,546
Rental3,902
 3,330
 12,136
 15,884
Royalty fee225
 239
 674
 564
Cost reimbursements713
 692
 2,584
 2,250
TOTAL EXPENSES17,425
 14,039
 51,005
 52,334
Gains (losses) and other income (expense), net—
 490
 (20) (1,008)
Other1
 (20) (9) (249)
SEGMENT FINANCIAL RESULTS$(472) $1,191
 $(552) $(423)
Overview
In our Asia Pacific segment, we continue to identify opportunities for development margin growth and improvement. We plan to continue to focus on future inventory acquisitions with strong on-site sales locations. In 2015, we purchased an operating property located in Surfers Paradise, Australia and in 2016, we sold the portion of this operating property that we did not intend to convert to vacation ownership inventory and converted the remaining portion of this operating property to vacation ownership inventory, a portion of which was contributed to our points-based programs within this segment. We began selling from this new location at the end of the 2016 first quarter. During the 2017 third quarter, we completed the purchase of 51 completed vacation ownership units, as well as a sales gallery and related amenities and infrastructure, in Bali, Indonesia. We expect to begin selling from this new location in the coming months.
Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership$12,569
 $11,169
 $1,400
 13%
Total contract sales$12,569
 $11,169
 $1,400
 13%
The increase in Asia Pacific vacation ownership contract sales was driven by a 37 percent increase in tours, partially offset by an 18 percent decrease in VPG. The increase in tours included an increase of approximately 14 percent due to the change in the financial reporting calendar in 2017, a 15 percent increase from the new sales location in Surfers Paradise, Australia and an 8 percent increase at the existing sales locations. The decrease in VPG was driven by an increase in sales to first time buyers, which generally have a lower VPG than sales to existing owners. Contract sales at the new sales location in Surfers Paradise, Australia are not reported as sale of vacation ownership products until closing.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership$36,131
 $31,049
 $5,082
 16%
Total contract sales$36,131
 $31,049
 $5,082
 16%
The increase in Asia Pacific vacation ownership contract sales was driven by a 45 percent increase in tours, partially offset by a 20 percent decrease in VPG. The increase in tours included an increase of approximately 13 percent due to the change in the financial reporting calendar in 2017, a 26 percent increase from the new sales location in Surfers Paradise, Australia and a 6 percent increase at the existing sales locations. The decrease in VPG was driven by an increase in sales to first time buyers, which generally have a lower VPG than sales to existing owners. Contract sales at the new sales location in Surfers Paradise, Australia are not reported as sale of vacation ownership products until closing.
Sale of Vacation Ownership Products
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales$12,569
 $11,169
 $1,400
 13%
Revenue recognition adjustments:       
Reportability(264) 24
 (288)  
Sales reserve(572) (1,112) 540
  
Other(1)
(371) (71) (300)  
Sale of vacation ownership products$11,362
 $10,010
 $1,352
 14%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
The decrease in the sales reserve was due to a favorable sales reserve adjustment in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales$36,131
 $31,049
 $5,082
 16%
Revenue recognition adjustments:       
Reportability(385) (539) 154
  
Sales reserve(2,827) (3,748) 921
  
Other(1)
(541) (117) (424)  
Sale of vacation ownership products$32,378
 $26,645
 $5,733
 22%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability had an unfavorable $0.4 million impact in the 2017 first three quarters compared to an unfavorable $0.5 million impact in the 2016 first three quarters. The decrease in the sales reserve was due to an unfavorable sales reserve adjustment made in the 2016 second quarter to correct an immaterial error with respect to historical static pool data and a favorable sales reserve adjustment in the 2017 third quarter, partially offset by the higher vacation ownership contract sales.

Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$11,362
 $10,010
 $1,352
 14%
Cost of vacation ownership products(2,687) (1,712) (975) (57%)
Marketing and sales(8,754) (7,166) (1,588) (22%)
Development margin$(79) $1,132
 $(1,211) (107%)
Development margin percentage(0.7%) 11.3% (12.0 pts)  
The decrease in development margin reflected higher marketing and sales expense, higher information technology costs due to the shift to more first time buyer toursand higher wages and benefits and lower favorable product cost true-up activity, partially offset by the higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales).revenues.
2017
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Management and exchange revenue$157 $177 $(20)(11%)
Management and exchange expense(91)(93)2 3%
Management and exchange profit$66 $84 $(18)(20%)
Management and exchange profit margin42.3%47.3%(5.0 pts)
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$32,378
 $26,645
 $5,733
 22%
Cost of vacation ownership products(6,642) (5,018) (1,624) (32%)
Marketing and sales(25,672) (20,072) (5,600) (28%)
Development margin$64
 $1,555
 $(1,491) (96%)
Development margin percentage0.2% 5.8% (5.6 pts)  
TheExcluding the $12 million decrease in development margin reflected higher marketing and sales costs dueattributed to the shift to more first time buyer tours and lower favorable product cost true-up activity, partially offset by the higher vacation ownership contract sales volume netdisposition of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales).
Resort Management and Other Services Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Management fee revenues$674
 $582
 $92
 16%
Ancillary revenues—
 8
 (8) (100%)
Other services revenues348
 226
 122
 54%
Resort management and other services revenues1,022
 816
 206
 25%
Resort management and other services expenses(1,144) (900) (244) (27%)
Resort management and other services margin$(122) $(84) $(38) (45%)
Resort management and other services margin percentage(11.9%) (10.3%) (1.6 pts)  
The increase in resort management and other services revenues reflected $0.1 million of higher management fees and $0.1 million of higher other services revenues. The slight decline in the resort management and other services margin reflected the higher customer service expenses, partially offset by the increase in revenues.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Management fee revenues$2,059
 $1,657
 $402
 24%
Ancillary revenues—
 6,246
 (6,246) (100%)
Other services revenues996
 691
 305
 44%
Resort management and other services revenues3,055
 8,594
 (5,539) (64%)
Resort management and other services expenses(3,297) (8,546) 5,249
 61%
Resort management and other services margin$(242) $48
 $(290) (604%)
Resort management and other services margin percentage(7.9%) 0.6% (8.5 pts)  
The decrease in resort management and other services revenues reflected $6.2 million of lower ancillary revenues from the operating property in Surfers Paradise, Australia (a portion of which was disposed of inour VRI Americas business during the second quarter of 2016),2022, management and exchange revenue decreased $8 million or 4%. Aqua-Aston management revenue declined $3 million as a result of the wildfires in Maui and higher property level expenses adversely impacting management fees. Interval International management and exchange revenues declined $5 million, primarily attributed to lower membership fees and transaction revenues. Interval International transaction volume declined 6% and average revenue per member decreased 1% compared to the prior year comparable period.
Excluding the impact of the disposition of VRI Americas, management and exchange profit decreased by $14 million or 15% in the first three quarters of 2023, primarily attributed to higher information technology costs and higher wages and benefits and lower revenues.
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Rental Revenues
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Rental revenues$10 $11 $(1)(7%)
Results reflect higher rental inventory procurement costs, which are recorded net within Rental revenues.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Rental revenues$31 $33 $(2)(5%)
Results reflect higher rental inventory procurement costs, which are recorded net within Rental revenues.
Gains (Losses) and Other Income (Expense)
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Gains (losses) and other income (expense), net$1 $(1)$2 NM
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Gains and other income, net$1 $15 $(14)NM
During the first three quarters of 2022, we recorded a $17 million gain related to the sale of our VRI Americas business, partially offset by increases in management fees ($0.4 million) and other services revenues ($0.3 million). The decline in the resort management and other services margin reflected $0.8$2 million of ancillary profit fromforeign currency translation losses. See Footnote 3 “Acquisitions and Dispositions” for more information on the operating property in Surfers Paradise, Australia in the 2016 first three quarters (compared to no ancillary activity in the 2017 first three quarters), partially offset by the higher management fees in the 2017 first three quarters compared to the 2016 first three quarters.
The ancillary revenue producing portionsdisposition of the operating property in Surfers Paradise, Australia were included in the portion of the operating property sold in the second quarter of 2016. Therefore, we do not anticipate future ancillary revenues or expenses at this property.
Rental Revenues, Expenses and Margin
2017 Third Quarter VRI Americas.
56

 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Rental revenues$2,733
 $2,324
 $409
 18%
Rental expenses(3,902) (3,330) (572) (17%)
Rental margin$(1,169) $(1,006) $(163) (16%)
Rental margin percentage(42.8%) (43.3%) 0.5 pts  
The increase in rental revenues was due to increases in transient keys rented, preview keys rented and the average transient rate. The higher expenses were due to higher expenses incurred due to owners choosing alternative usage options and higher variable expenses (such as housekeeping) in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Rental revenues$9,115
 $12,773
 $(3,658) (29%)
Rental expenses(12,136) (15,884) 3,748
 24%
Rental margin$(3,021) $(3,111) $90
 3%
Rental margin percentage(33.1%) (24.4%) (8.7 pts)  
The decline in rental revenues was due to $4.9 millionTable of lower revenue from the operating property in Surfers Paradise, Australia (a portion of which was disposed of in the 2016 second quarter), partially offset by $1.2 million of higher revenues at the other resorts in the region due to increases in transient keys rented, preview keys rented and the average transient rate. The lower expenses were due to $4.8 million of lower expenses from the operating property in Surfers Paradise, Australia (a portion of which was disposed of in the 2016 second quarter), partially offset by $1.1 million of higher other rental expenses in the 2017 first three quarters.Contents

Europe
The following discussion presents an analysis of our results of operations for the Europe segment for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$5,706
 $4,818
 $15,351
 $15,845
Resort management and other services7,624
 6,413
 19,119
 16,790
Financing709
 710
 2,164
 2,339
Rental8,986
 8,065
 16,918
 14,836
Cost reimbursements9,212
 8,072
 25,265
 23,533
TOTAL REVENUES32,237
 28,078
 78,817
 73,343
EXPENSES       
Cost of vacation ownership products715
 1,599
 2,081
 4,158
Marketing and sales4,465
 4,189
 12,583
 13,388
Resort management and other services6,099
 5,076
 15,388
 13,827
Rental4,910
 4,509
 12,366
 11,094
Royalty fee70
 97
 195
 264
Cost reimbursements9,212
 8,072
 25,265
 23,533
TOTAL EXPENSES25,471
 23,542
 67,878
 66,264
SEGMENT FINANCIAL RESULTS$6,766
 $4,536
 $10,939
 $7,079
Overview
In our Europe segment, we are focused on selling our existing projects and managing existing resorts. We do not have any current plans for new development in this segment.
Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership$6,664
 $7,698
 $(1,034) (13%)
Total contract sales$6,664
 $7,698
 $(1,034) (13%)
The decrease in contract sales was primarily due to lower fractional sales due to limited reacquired inventory available and several large multi-week purchases in the 2016 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership$18,509
 $22,054
 $(3,545) (16%)
Total contract sales$18,509
 $22,054
 $(3,545) (16%)
The decrease in contract sales was primarily due to several large multi-week purchases in the 2016 first three quarters.

Sale of Vacation Ownership Products
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales$6,664
 $7,698
 $(1,034) (13%)
Revenue recognition adjustments:       
Reportability(47) (2,165) 2,118
  
Sales reserve(891) (837) (54)  
Other(1)
(20) 122
 (142)  
Sale of vacation ownership products$5,706
 $4,818
 $888
 18%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales$18,509
 $22,054
 $(3,545) (16%)
Revenue recognition adjustments:       
Reportability(352) (3,508) 3,156
  
Sales reserve(2,680) (2,739) 59
  
Other(1)
(126) 38
 (164)  
Sale of vacation ownership products$15,351
 $15,845
 $(494) (3%)
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$5,706
 $4,818
 $888
 18%
Cost of vacation ownership products(715) (1,599) 884
 55%
Marketing and sales(4,465) (4,189) (276) (7%)
Development margin$526
 $(970) $1,496
 154%
Development margin percentage9.2% (20.1%) 29.3 pts  
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$15,351
 $15,845
 $(494) (3%)
Cost of vacation ownership products(2,081) (4,158) 2,077
 50%
Marketing and sales(12,583) (13,388) 805
 6%
Development margin$687
 $(1,701) $2,388
 140%
Development margin percentage4.5% (10.7%) 15.2 pts  


Corporate and Other
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
EXPENSES       
Cost of vacation ownership products$2,020
 $1,334
 $6,151
 $5,097
Financing5,062
 4,581
 12,528
 11,782
General and administrative26,666
 22,151
 83,739
 72,871
Litigation settlement—
 —
 183
 —
Consumer financing interest6,498
 5,361
 18,090
 15,840
Royalty fee12,969
 11,475
 39,044
 34,426
TOTAL EXPENSES53,215
 44,902
 159,735
 140,016
Gains (losses) and other income (expense), net8,731
 (9) 8,722
 (160)
Interest expense(2,642) (2,262) (5,180) (6,331)
Other57
 —
 (527) (211)
TOTAL FINANCIAL RESULTS$(47,069) $(47,173) $(156,720) $(146,718)
Corporate and Other consists of results that are not specifically attributableallocable to an individual segment,our segments, including expenses in support of our financing operations, non-capitalizable development expenses incurred to support overall company development, company-wide general and administrative costs, corporate interest expense, consumer financing interesttransaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from Consolidated Property Owners’ Associations.
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Resort management and other services$12 $7 $29 $44 
Cost reimbursements(16)(8)(31)(34)
TOTAL REVENUES(4)(1)(2)10 
EXPENSES
Resort management and other services15 9 39 59 
Rental(3)(4)(10)(17)
General and administrative57 62 189 187 
Depreciation and amortization3 2 7 7 
Litigation charges— — (1)— 
Cost reimbursements(16)(8)(31)(34)
TOTAL EXPENSES56 61 193 202 
(Losses) gains and other (expense) income, net(5)(2)10 (12)
Interest expense, net(36)(34)(106)(91)
Transaction and integration costs(5)(32)(28)(96)
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(106)(130)(319)(391)
Provision for income taxes(24)(59)(115)(134)
Net income attributable to noncontrolling interests— (1)— — 
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(130)$(190)$(434)$(525)
Consolidated Property Owners’ Associations
The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance and the changes attributed to the deconsolidation of individual Consolidated Property Owners’ Associations.
Three Months EndedNine Months Ended
($ in millions)September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Resort management and other services$12 $6 $29 $42 
Cost reimbursements(16)(8)(31)(34)
TOTAL REVENUES(4)(2)(2)8 
EXPENSES
Resort management and other services15 9 39 59 
Rental(3)(4)(10)(17)
Cost reimbursements(16)(8)(31)(34)
TOTAL EXPENSES(4)(3)(2)8 
Losses and other expense, net— — — (3)
Interest expense, net— — 1 — 
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS— 1 1 (3)
Provision for income taxes(1)— (1)— 
Net income attributable to noncontrolling interests— (1)— — 
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(1)$— $— $(3)
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General and Administrative
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
General and administrative$57 $62 $(5)(7%)
The change in General and administrative expenses is due to $17 million of lower variable compensation expense and the fixed royalty fee payable under the license agreements that we entered into with Marriott International in connection with our spin-off from Marriott International.
Total Expenses
2017 Third Quarter
Total expenses increased $8.3 million from the 2016 third quarter. The $8.3 million increase resulted from $4.5$4 million of higher generalallocations of expenses to operations, offset by $9 million of incremental costs primarily related to compliance activities and new product development initiatives, $5 million of higher costs related to the implementation of technology, and a $2 million increase in wages and benefits.
We expect General and administrative expenses $1.5 millionfor the remainder of higher royalty fees2023 to increase due the continued impact of increased wages and additional investment in upgrading, maintaining, and implementing technology, including the continued transition to the changesoftware as a service, which are recorded as a component of General and administrative expense as opposed to an end-of-month quarterly reporting cycle in 2017 that resulted in eight additional days in the 2017 third quarter ($1.0 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International ($0.5 million), $1.1 million of higher consumer financing interest expense, $0.7 million of higher cost of vacation ownership products expenses due to higher development expenses, $0.5 million of higher financing expenses due to the change to an end-of-month quarterly reporting cycle in 2017 and the increase in the average gross vacation ownership notes receivable balance.Depreciation expense.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
General and administrative$189 $187 $2 1%
General and administrative expenses increased $4.5 million due to approximately $2.0$20 million fromof costs related to the changeimplementation of technology associated with the integration of Legacy-ILG, $15 million of incremental costs primarily related to an end-of-month quarterly reporting cycle in 2017compliance activities and $2.5new product development initiatives, $8 million due to higher personnel relatedof increased wages and other expenses. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.
The $1.1benefits, a $3 million increase in consumer financing interestinsurance expense, was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cycle in 2017.
2017 First Three Quarters
Total expenses increased $19.7 million from the 2016 first three quarters. The $19.7 million increase resulted from $10.9$2 million of other miscellaneous expenses, partially offset by a $40 million decrease in variable compensation expense and $6 million of higher allocations of general and administrative expenses $4.6to operations.
Gains (Losses) and Other Income (Expense)
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Losses and other expense, net$(5)$(2)$(3)NM
In the third quarter of 2023, we recorded $5 million of foreign currency translation losses.
In the third quarter of 2022, we recorded $2 million of foreign currency translation losses and $1 million of miscellaneous losses and other expense, partially offset by $1 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International for indemnified tax matters.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Gains (losses) and other income (expense), net$10 $(12)$22 NM
In the first three quarters of 2023, we recorded a $21 million increase in our receivable from Marriott International for indemnified income tax matters (the offsetting accrual is included in the Provision for income taxes line), partially offset by a $10 million expense attributed to the redemption premium and write-off of unamortized debt issuance costs in connection with the early redemption of our senior secured notes, and $1 million of foreign currency translation losses.
In the first three quarters of 2022, we recorded $8 million of foreign currency translation losses, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, $2 million of non-income tax related adjustments to the receivable for the indemnification we expect to receive from Marriott International for indemnified tax matters, and $1 million of miscellaneous losses and other expense, partially offset by $2 million of proceeds from corporate owned life insurance.
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Interest Expense
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Interest expense, net$(36)$(34)$(2)(4%)
The increase in Interest expense, net is attributed to $5 million associated with higher borrowings and higher variable interest rates on both the Warehouse Credit Facility and the Revolving Corporate Credit Facility, $2 million of higher royalty fees duevariable interest expense on the Term Loan, and $2 million of interest expense related to leased assets. This was partially offset by $4 million of lower interest expense associated with the changeearly redemption of our senior secured notes, $1 million of lower interest expense associated with our convertible notes, $1 million of lower other interest expense and $1 million of interest income.
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Interest expense, net$(106)$(91)$(15)(15%)
The increase in Interest expense, net is attributed to an end-of-month quarterly reporting cycle in 2017 that resulted in 22 additional days in$14 million associated with higher borrowings and higher variable interest rates on both the 2017 first three quarters ($2.9 million)Warehouse Credit Facility and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International ($1.7 million), $2.3Revolving Corporate Credit Facility, $7 million of higher consumer financing interest expense $1.1associated with our 2027 Convertible Notes issued in December 2022, $8 million of higher costvariable interest expense on the Term Loan, and $5 million of vacation ownership products expenses dueinterest expense related to higher development expenses, $0.7leased assets. This was partially offset by $12 million of lower interest expense associated with the early redemption of our senior secured notes, $3 million of lower interest on non-income tax related items, $3 million of higher financing expenses due tointerest income, and $1 million of lower other interest expense.
Income Tax
2023 Third Quarter
Three Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Provision for income taxes$(24)$(59)$35 59%
Our effective tax rate was 36.1% and 34.7% for the change to an end-of-month quarterly reporting cycle in 2017three months ended September 30, 2023 and theSeptember 30, 2022, respectively. The increase in the average gross vacation ownership notes receivable balanceeffective tax rate is predominately attributable to a decrease in Income before income taxes and $0.2 million of litigation settlementsnoncontrolling interests from 2022 to 2023 without a proportional decrease to non-deductible tax expenses, in addition to a net decrease in the 2017 first three quarters.tax expense for foreign uncertain tax benefits in 2023.
General
2023 First Three Quarters
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022Change% Change
Provision for income taxes$(115)$(134)$19 14%
Our interim effective tax rate was 34.3% and administrative expenses increased $10.9 million due30.6% for the nine months ended September 30, 2023 and September 30, 2022, respectively. The increase in the effective tax rate is predominately attributable to approximately $6.0 milliona decrease in Income before income taxes and noncontrolling interests from the change2022 to an end-of-month quarterly reporting cycle in 2017 and $6.4 million due2023 without a proportional decrease to higher personnel related and othernon-deductible tax expenses, partially offset by $1.5 million of lower litigation related costs. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.

The $2.3 milliona net increase in consumer financing interestthe tax expense was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cyclefor foreign uncertain tax benefits in 2017.2023.
59
Recent Accounting Pronouncements
See Footnote No. 1, “Summary
Table of Significant Accounting Policies,” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards.Contents
Liquidity and Capital Resources
OurTypically, our capital needs are supported by cash on hand, ($440.1 million at the end of the 2017 third quarter), cash generated from operations, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility, our ability to raise capital through securitizations in the asset-backed securitiesABS market, and, to the extent necessary, funds available under the Warehouse Credit Facilityour ability to issue new debt and our $250.0 million revolving credit facility (the “Revolving Corporate Credit Facility”).refinance existing debt. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to shareholders. AtWe continuously monitor the endcapital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs.
Our corporate debt, net of the 2017 third quarter, we had $1.2 billioncash and equivalents, to Adjusted EBITDA ratio was 3.5 at September 30, 2023. We have no material maturities of total grosscorporate debt outstanding, which included $906.7 million of non-recourse debt associated with vacation ownership notes receivable securitizations, $230.0 million of Convertible Notes and a $63.6 million non-interest bearing note payable issued in connection with the acquisition of completed vacation ownership units located on the Big Island of Hawaii.
In September 2017, we completed a private offering of $230.0 million of Convertible Notes. While we do not have an immediate need for the proceeds, we felt that it was an opportune time for us to capitalize on the current interest rate environment and the strength of our stock price to optimize our capital structure. We evaluated several different debt instruments and believe that the one we chose provided the most flexibility for us in terms of covenants and use of proceeds, while enabling us to take advantage of the strength of our stock price and a very low current rate of interest. In connection with the Convertible Notes, we also entered into Convertible Note Hedges at a cost of $33.2 million, and received proceeds of $20.3 million from the issuance of Warrants. Issuance of the Convertible Notes resulted in the receipt of net proceeds, after adjusting for debt issue costs, including underwriting discount, and the net cash used to purchase the Convertible Note Hedges and sell the Warrants, of $210.8 million. See additional discussion in “Cash from Financing Activities” below and in Footnote No. 9, “Debt,” to our Financial Statements.until 2025.
At the end of the 2017 third quarter we had $730.5 million of real estate inventory on hand, comprised of $390.4 million of finished goods, $338.1 million of land and infrastructure and $2.0 million of work-in-progress. In addition, we had $49.1 million of completed vacation ownership units that have been classified as a component of Property and equipment until2023, the time at which they are legally registered for sale as vacation ownership products.
Our vacation ownership product offerings allow usinterest rate applicable to utilize our real estate inventory efficiently. The majorityapproximately 80% of our sales aretotal corporate debt, excluding finance leases and including the impact of points-based products, which permits us to sell vacation ownership products at mostinterest rate hedges, was effectively fixed. The weighted average interest rate of our sales locations,total corporate debt, excluding finance leases and including those where little or no weeks-based inventory remains available for sale. Because we no longer need specific resort-based inventory at each sales location, we need to have only a few resorts under construction at any given time and can leverage successful sales locations at completed resorts. This allows us to maintain long-term sales locations and reduces the need to develop and staff on-site sales locations at smaller projects in the future. We believe our points-based programs enable us to align our real estate inventory acquisitions with the paceimpact of salesinterest rate hedges, was 3.9% as of vacation ownership products.September 30, 2023.
We are selectively pursuing growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. These capital efficient deal structures may consistSources of the development of new inventory, or the conversion of previously built units by third parties, just prior to sale.
We intend for our capital allocation strategy to strike a balance between enhancing our operations and using our capital to provide returns to our shareholders through programs such as share repurchase programs and payment of dividends.

During the 2017 first three quarters, we had a net increase in cash, cash equivalents and restricted cash of $288.7 million compared to a net increase of $44.1 million during the 2016 first three quarters. The following table summarizes these changes:
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Cash, cash equivalents and restricted cash provided by (used in):   
Operating activities$70,787
 $90,885
Investing activities(33,250) 46,080
Financing activities248,105
 (89,627)
Effect of change in exchange rates on cash, cash equivalents and restricted cash3,031
 (3,247)
Net change in cash, cash equivalents and restricted cash$288,673
 $44,091
Liquidity
Cash from Operating ActivitiesOperations
Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and (3)rental transactions, and (4) net cash generated from our rental and resort management and other services operations. Outflows include spending
Vacation Ownership Notes Receivable Securitizations
We periodically securitize, without recourse, through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the ABS term securitization market. These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes. In a vacation ownership notes receivable term securitization, several classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. In connection with each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued. Typically, we receive cash at inception of the term securitization transaction for the developmentamount of new phasesnotes issued less fees and monies held in reserve and we receive cash during the life of the transaction in amounts reflecting the excess spread of interest received on the related vacation ownership notes receivable less the interest payable on the ABS securities, less administrative fees and amounts from related vacation ownership notes receivable that default.
Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread of interest accruing on the related vacation ownership notes receivable less the interest accruing on the ABS securities and fees we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the third quarter of 2023, and as of September 30, 2023, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters. Since 2000, we have issued almost $8.5 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.
On an ongoing basis, we have the ability to use our Warehouse Credit Facility to securitize, on a revolving non-recourse basis, eligible consumer loans derived from certain vacation ownership sales. Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur twice a year. During the second quarter of 2023, we amended certain agreements associated with our Warehouse Credit Facility, which increased the borrowing capacity of the existing resorts,facility from $425 million to $500 million and extended the acquisitionrevolving period from July 28, 2024 to May 31, 2025. At September 30, 2023, we had $345 million of additional inventory and fundingborrowings outstanding on our Warehouse Credit Facility.
As of September 30, 2023, $70 million of gross vacation ownership notes receivable were eligible for securitization.
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Revolving Corporate Credit Facility
Our Revolving Corporate Credit Facility, which expires on March 31, 2027, provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, needs.capital expenditures, letters of credit, and acquisitions. At September 30, 2023, $90 million of borrowings were outstanding on our Revolving Corporate Credit Facility, and $1 million of letters of credit were outstanding.
Redemption of Senior Secured Notes
During the first quarter of 2023, we redeemed, prior to maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in the fourth quarter of 2022 and the terms of the indenture governing the 2025 Notes. In connection with this redemption, we incurred charges of $10 million, including a redemption premium and the write-off of unamortized debt issuance costs, which were recorded in Gains (losses) and other income (expense), net on our Income Statement for the nine months ended September 30, 2023.
Uses of Cash
We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to property owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of our owners’ repayment by owners of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for real estate inventory acquisitionacquisitions and development.
InSeasonality
Our cash flow from operations fluctuates during the 2017year due to the timing of certain receipts and contractual and compensation-related payments. Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occur in either the fourth quarter or the first three quarters, we generated $70.8 millionquarter of each year. Generally, cash flows from operating activities, comparedoutflows related to $90.9 millionour payment of maintenance fees associated with unsold inventory occurs in the 2016fourth quarter for our points-based products, and in the first three quarters. Excludingquarter for our weeks-based products. In addition, during the impactfirst quarter of changes ineach year, we generally have significant variable compensation-related cash outflows associated with payment of annual bonuses.
Operations
In addition to net income or loss and adjustments for non-cash items, the change in cash flows from operations reflected higher originations driven by higher contract sales and higher financing propensity due to the continued success of the financing incentive programs offered in our North America segment, higher real estate inventory spending and timing of payments related to unsold inventory, partially offset by higher closings on vacation ownership contract sales, higher collections due to an increasing portfolio of outstanding vacation ownership notes receivable and lower payments related to employee benefits programs.
In addition to net income and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:
Real Estate
Inventory Spending in Excess ofLess Than Cost of Sales
Nine Months Ended
($ in millions)September 30, 2023September 30, 2022
Inventory spending$(56)$(108)
Purchase of property for future transfer to inventory(27)(12)
Inventory costs137 183 
Inventory spending less than cost of sales$54 $63 
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Real estate inventory spending$(94,318) $(102,645)
Purchase of vacation ownership units for future transfer to inventory(33,594) —
Real estate inventory costs121,582
 95,746
Real estate inventory spending in excess of cost of sales
$(6,330) $(6,899)
We measureAlthough we have significant excess inventory on hand, we intend to continue selectively pursuing growth opportunities by targeting high-quality inventory that allows us to add desirable new destinations to our real estate inventory capital efficiency by comparing the cash outflow for real estate inventory spending (a cash item) to the amount of real estate inventory costs charged to expense on our Statements of Income related to sale of vacation ownership products (a non-cash item).
Our real estate inventory spending exceeded real estate inventory costs in the 2017 first three quarters assystems with new on-site sales locations. Where possible, we satisfied a portion of our commitments to purchase vacation ownership units in our North America and Asia Pacific segments.However, we expect our inventory spending to be in line with inventory costs throughout the remainder of 2017. Real estate inventory spending included the acquisition of 112 completed vacation ownership units located on the Big Island of Hawaii for $27.3 million, as well as 51 completed vacation ownership units located in Bali, Indonesia for $12.1 million. In connection with the acquisition on the Big Island of Hawaii, we also settled a $0.5 million note receivable from the seller on a non-cash basis, and

issued a non-interest bearing note payable for $63.6 million. Purchase of vacation ownership units for future transfer to inventory included the acquisition of 36 completed vacation ownership units located at our resort in Marco Island, Florida, for $33.6 million. We entered into these commitments in prior periods as part of our capital efficiency strategy towill structure transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. See Footnote No. 5, “Acquisitions and Dispositions,” and Footnote No. 8, “Contingencies and Commitments,” to our Financial Statements for additional information regarding these transactions.
Our real estate inventory spending exceeded real estate inventory costs in the 2016 first three quarters, as a result of our opportunistic acquisition efforts. Real estate inventory spending included $23.5 million for the acquisition of an operating property located in the South Beach area of Miami Beach, Florida. We rebranded this property as Marriott Vacation Club Pulse, South Beach and converted it, in its entirety, intoThese capital efficient vacation ownership inventory. See Footnote No. 5, “Acquisitions and Dispositions,” to our Financial Statements for additional information regarding this transaction.transaction structures may consist of the development of new inventory, or the conversion of previously built units, by third parties. In addition, we may develop inventory in key markets where opportunities generate acceptable risk adjusted returns.
Through our existing vacation ownership interestVOI repurchase program, we proactively buy backacquire previously sold vacation ownership interestsVOIs from owners’ associations and individual owners at lower costs than would be required to develop new inventory. ByAmong other reasons, by repurchasing inventory, in desirable locations, we expect to be able to help stabilize the future cost of our vacation ownership products.
Our spending for real estate inventory in the first three quarters of 2023 was lower than cost of sales and was primarily related to purchases under our VOI repurchase programs. Purchase of property for future transfer to inventory included the acquisition of property in Savannah, Georgia and Charleston, South Carolina in 2023 (see Footnote 3 “Acquisitions and Dispositions”). We expect inventory spending to be less than cost of sales for 2023.
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Vacation Ownership Notes Receivable Collections Less Than Originations
Nine Months Ended
Year to Date Ended
September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
($ in millions)($ in millions)September 30, 2023September 30, 2022
Vacation ownership notes receivable collections — non-securitized$59,115
 $54,209
Vacation ownership notes receivable collections — non-securitized$119 $91 
Vacation ownership notes receivable collections — securitized144,725
 123,242
Vacation ownership notes receivable collections — securitized342 378 
Vacation ownership notes receivable originations(345,663) (218,190)Vacation ownership notes receivable originations(749)(728)
Vacation ownership notes receivable collections less than originations$(141,823) $(40,739)Vacation ownership notes receivable collections less than originations$(288)$(259)
Vacation ownership notes receivable collections include principal from non-securitized and securitized vacation ownership notes receivable. Vacation ownership notes receivable collections increased duringwere less than originations in each of the 2017 first three quarters as compared to the 2016 first three quarters, due to an increase in the portfolio of outstanding vacation ownership notes receivable. Vacation ownership notes receivable originations in the 2017 first three quarters increased due to higher vacation ownership contract sales, including the impact from the change in the quarterly reporting cycle,2023 and an increase in financing propensity to 64.9 percent for the 2017 first three quarters compared to 59.1 percent for the 2016 first three quarters,2022 due to the continued successgrowth of the financing incentive programs that we offer in our North America segment. Given the success of these incentives to date, we expect financing propensity levels during the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs.
Cash from Investing Activities
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Capital expenditures for property and equipment (excluding inventory)$(21,167) $(22,445)
Purchase of company owned life insurance(12,100) —
Dispositions, net17
 68,525
Net cash (used in) provided by investing activities$(33,250) $46,080
Capital Expenditures for Property and Equipment
Capital expenditures for property and equipment relate to spending for technology development, buildings and equipment used at sales locations and ancillary offerings, such as food and beverage offerings, at locations where such offerings are provided.
In the 2017 first three quarters, capital expenditures for property and equipment of $21.2 million included $19.7 million to support business operations (including $11.4 million for ancillary and other operations assets and $8.3 million for sales locations) and $1.5 million for technology spending.
In the 2016 first three quarters, capital expenditures for property and equipment of $22.4 million included $16.8 million to support business operations (including $13.7 million for sales locations and $3.1 million for ancillary and other operations assets) and $5.6 million for technology spending.

Purchase of Company Owned Life Insurance
To support our ability to meet a portion of our obligations under the Marriott Vacations Worldwide Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), we acquired company owned insurance policies on the lives of certain participants in the Deferred Compensation Plan, the proceeds of which are intended to be aligned with the investment alternatives elected by plan participants as discussed in Footnote No. 1, “Summary of Significant Accounting Policies”, to our Financial Statements. During the 2017 first three quarters, we paid $12.1 million for the acquisition of these policies.
Dispositions, net
Dispositions in the 2016 first three quarters related to the sale of the remaining downsized portion of the operating property in Surfers Paradise, Australia for $49.1 million, the sale of excess inventory at the RCC San Francisco for $19.3 million and the sale of undeveloped land in Absecon, New Jersey for $0.1 million.
Cash from Financing Activities
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Borrowings from securitization transactions$400,260
 $376,622
Repayment of debt related to securitization transactions(231,921) (254,510)
Borrowings from Revolving Corporate Credit Facility87,500
 85,000
Repayment of Revolving Corporate Credit Facility(87,500) (85,000)
Proceeds from issuance of Convertible Notes230,000
 —
Purchase of Convertible Note Hedges(33,235) —
Proceeds from issuance of Warrants20,332
 —
Debt issuance costs(14,459) (4,065)
Repurchase of common stock(83,067) (163,359)
Accelerated stock repurchase forward contract—
 (14,470)
Payment of dividends(28,590) (26,067)
Payment of withholding taxes on vesting of restricted stock units(10,713) (3,972)
Other, net(502) 194
Net cash provided by (used in) financing activities$248,105
 $(89,627)
Borrowings from / Repayment of Debt Related to Securitization Transactions
We reflect proceeds from securitizations ofaverage vacation ownership notes receivable including draw downs on the Warehouse Credit Facility, as “Borrowings from securitization transactions.” We reflect repaymentspool attributed to sales of bonds associated with vacation ownership notes receivable securitizations and repayments on the Warehouse Credit Facility (including vacation ownership notes receivable repurchases) as “Repayment of debt related to securitization transactions.”VOIs.
In the 2017 third quarter, we completed the securitization of a pool of $360.8 million of vacation ownership notes receivable generating gross cash proceeds of $349.9 million. In connection with the securitization, investors purchased in a private placement $350.0 million in vacation ownership loan backed notes from the MVW Owner Trust 2017-1 (the “2017-1 Trust”). Three classes of vacation ownership loan backed notes were issued by the 2017-1 Trust: $276.0 million of Class A Notes, $46.9 million of Class B Notes and $27.1 million of Class C Notes. The Class A Notes have an interest rate of 2.42 percent, the Class B Notes have an interest rate of 2.75 percent and the Class C Notes have an interest rate of 2.99 percent, for an overall weighted average interest rate of 2.51 percent.
During the 2017 second quarter, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $59.1 million. The advance rate was 85 percent, which resulted in gross proceeds of $50.3 million. Net proceeds were $50.0 million due to the funding of reserve accounts in the amount of $0.3 million. There were no amounts outstanding under this facility as of September 30, 2017.
At September 30, 2017, $47.6 million of gross vacation ownership notes receivable were eligible for securitization. See Footnote No. 9, “Debt,” to our Financial Statements for additional information regarding our Warehouse Credit Facility.
In the 2016 third quarter, we completed the securitization of a pool of $259.1 million of vacation ownership notes receivable generating gross cash proceeds of $250.0 million. In connection with the securitization, investors purchased in a private placement $250.0 million in vacation ownership loan backed notes from the MVW Owner Trust 2016-1 (the “2016-1

Trust”). Two classes of vacation ownership loan backed notes were issued by the 2016-1 Trust: $230.6 million of Class A Notes and $19.4 million of Class B Notes. The Class A Notes have an interest rate of 2.25 percent and the Class B Notes have an interest rate of 2.64 percent, for an overall weighted average interest rate of 2.28 percent.
During 2016, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $149.5 million. The advance rate was 85 percent, which resulted in gross proceeds of $126.6 million. Net proceeds were $125.7 million due to the funding of reserve accounts in the amount of $0.9 million.
Borrowings from / Repayment of Revolving Corporate Credit Facility
During the 2017 first three quarters, we borrowed $87.5 million under our Previous Revolving Corporate Credit Facility to facilitate the funding of our short-term working capital needs, all of which was repaid as of September 30, 2017. See Footnote No. 9, “Debt,” to our Financial Statements for additional information regarding our Revolving Corporate Credit Facility.
Proceeds from Issuance of Convertible Notes
During the 2017 third quarter, we issued $230.0 million of Convertible Notes, which included the exercise in full of the $30.0 million over-allotment option we granted to the initial purchasers of the Convertible Notes. We received net proceeds from the offering of approximately $223.7 million after adjusting for debt issuance costs, including the discount to the initial purchasers. We used $40.1 million of the net proceeds to repurchase shares of our common stock from purchasers of the Convertible Notes in privately negotiated repurchase transactions, which is included as a Financing Activity in Repurchase of Common Stock as discussed below, and approximately $12.9 million of the net proceeds to pay the cost of the Convertible Note Hedges, after such cost was partially offset by the proceeds from the issuance of the Warrants, as discussed below. See Footnote No. 9, “Debt,” to our Financial Statements for additional information on our Convertible Notes transaction.
Purchase of Convertible Note Hedges / Proceeds from Issuance of Warrants
In connection with the offering of the Convertible Notes, we entered into Convertible Note Hedges with respect to our common stock, covering approximately 1.55 million shares of our common stock at a cost of $33.2 million. Concurrently, we sold Warrants to acquire approximately 1.55 million shares of our common stock at an initial strike price of $176.68 per share and received aggregate proceeds of $20.3 million. Taken together, the Convertible Note Hedges and the Warrants are generally expected to reduce the potential dilution to our common stock (or, in the event the conversion is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the Convertible Notes and to effectively increase the overall conversion price from $148.19 (or a conversion premium of 30 percent) to $176.68 per share (or a conversion premium of 55 percent). See Footnote No. 9, “Debt,” to our Financial Statements for additional information on our Convertible Notes transaction.
Debt Issuance Costs
In the 2017 first three quarters, we paid $14.5 million of debt issuance costs, which included $6.3 million associated with the initial purchaser discounts related to the Convertible Notes, $4.8 million associated with the 2017 vacation ownership notes receivable securitization, $2.2 million related to the new $250.0 million Revolving Corporate Credit Facility and $1.2 million associated with the amendment and extension of the Warehouse Credit Facility.
In the 2016 first three quarters, we incurred $4.1 million of debt issuance costs, which included $3.8 million associated with the 2016 vacation ownership notes receivable securitization and $0.2 million related to the amendment of the Previous Revolving Corporate Credit Facility.
Share Repurchase Program
The following table summarizes share repurchase activity under our current share repurchase program:
($ in millions, except per share amounts)Number of Shares RepurchasedCost Basis of Shares RepurchasedAverage Price
Paid per Share
As of December 31, 202222,773,218 $2,119 $93.06 
For the first three quarters of 20231,936,855 248 128.03 
As of September 30, 202324,710,073 $2,367 $95.80 
($ in thousands, except per share amounts)Number of Shares Repurchased Cost of Shares Repurchased Average Price Paid per Share
As of December 30, 20169,672,629
 $608,439
 $62.90
For the 2017 first three quarters728,385
 83,067
 114.04
As of September 30, 201710,401,014
 $691,506
 $66.48

As discussed above, we used $40.1 million of the proceeds from the sale of the Convertible Notes to repurchase 351,900 shares of our common stock under our existing share repurchase program. See Footnote No. 9, “Debt,” to our Financial Statements for additional information on our Convertible Notes transaction and Footnote No. 10, “Shareholders’ Equity,”13 “Shareholders' Equity” to our Financial Statements for further information related to our current share repurchase program.
Payment of Dividends to Common Shareholders
We distributed cash dividends to holders of common stock during the 2017 first three quarters of 2023 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
December 1, 2022December 22, 2022January 5, 2023$0.72
February 16, 2023March 2, 2023March 16, 2023$0.72
May 11, 2023May 25, 2023June 8, 2023$0.72
We declared cash dividends to holders of our common stock during the third quarter of 2023, and distributed such cash dividends subsequent to the end of the third quarter of 2023 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
December 9, 2016September 7, 2023December 22, 2016September 21, 2023January 4, 2017October 5, 2023$0.35
February 9, 2017February 23, 2017March 9, 2017$0.35
May 11, 2017May 25, 2017June 8, 2017$0.350.72
We currently expect to pay quarterly cash dividends in the future, but any future dividend payments will be subject to Board of Directors approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Revolving Corporate Credit Facility containsand the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit dividend payments.the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at the sameany particular rate or at all.
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Contractual Obligations and Off-Balance Sheet Arrangements
There have been no significant changes to our “Contractual Obligations and Off-Balance Sheet Arrangements” as presented in Part II, Item 7, “Management’s Discussion and Analysis
Table of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 30, 2016, other than as set forth below.Contents
Material Cash Requirements
The following table summarizes our future material cash requirements from known contractual or other obligations as of September 30, 2017:2023:
  Payments Due by Period
($ in millions)TotalRemainder
of 2023		2024202520262027Thereafter
Contractual Obligations
Debt(1)
$3,275 $33 $118 $882 $635 $723 $884 
Securitized debt(1)(2)
2,484 68 270 267 541 218 1,120 
Purchase obligations(3)
453 37 181 132 70 17 16 
Operating lease obligations(4)
130 7 24 22 20 13 44 
Finance lease obligations(4)(5)
528 4 17 15 13 12 467 
Other long-term obligations11 4 3 2 — 1 1 
$6,881 $153 $613 $1,320 $1,279 $984 $2,532 
(1)Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
(2)Payments based on estimated timing of cash flow associated with securitized notes receivable.
(3)Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.
(4)Includes interest.
(5)The lease term of the finance lease arrangement for our new global headquarters office building located in Orlando, Florida commenced for accounting purposes during the first quarter of 2023, upon substantial completion of construction. See Footnote 12 “Debt” to our Financial Statements for additional information on this lease.
In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the owners’ associations, these obligations have minimal impact on our net income and cash flow. These purchase commitments are excluded from the table above.
Supplemental Guarantor Information
The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
The following tables present consolidating financial information as of September 30, 2023 and December 31, 2022, and for the nine months ended September 30, 2023 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVWC, and MVW on a consolidated basis.
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    Payments Due by Period
($ in thousands) Total 
Remainder
of 2017
 
Years
2018 - 2019
 
Years
2020 - 2021
 Thereafter
Contractual Obligations          
Debt(1)
 $1,332,995
 $32,256
 $306,787
 $234,069
 $759,883
Operating leases 87,116
 4,268
 26,497
 20,010
 36,341
Purchase obligations(2)
 336,416
 15,463
 316,386
 3,134
 1,433
Capital lease obligations(3)
 7,582
 361
 7,221
 —
 —
Other long-term obligations 547
 547
 —
 —
 —
Total contractual obligations $1,764,656
 $52,895
 $656,891
 $257,213
 $797,657
Condensed Consolidating Statement of Income
_________________________
Nine Months Ended September 30, 2023
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Revenues$— $679 $2,077 $808 $(31)$3,533 
Expenses(15)(809)(1,834)(572)31 (3,199)
Benefit from (provision for) income taxes4 27 (76)(70)— (115)
Equity in net income (loss) of subsidiaries230 350 — — (580)— 
Net income (loss)219 247 167 166 (580)219 
Net income attributable to noncontrolling interests— — — — — — 
Net income (loss) attributable to common shareholders$219 $247 $167 $166 $(580)$219 
Condensed Consolidating Balance Sheet
As of September 30, 2023
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $46 $101 $118 $— $265 
Restricted cash— 27 63 148 — 238 
Accounts and contracts receivable, net13 115 72 97 1 298 
Vacation ownership notes receivable, net— 97 191 2,003 — 2,291 
Inventory— 207 323 112 — 642 
Property and equipment, net— 264 733 253 — 1,250 
Goodwill— — 3,117 — — 3,117 
Intangibles, net— — 837 31 — 868 
Investments in subsidiaries3,463 3,985 — — (7,448)— 
Other125 116 226 121 (104)484 
Total assets$3,601 $4,857 $5,663 $2,883 $(7,551)$9,453 
Accounts payable$51 $38 $77 $72 $— $238 
Advance deposits— 67 85 17 — 169 
Accrued liabilities12 79 160 108 — 359 
Deferred revenue— 9 171 198 (7)371 
Payroll and benefits liability— 102 65 26 — 193 
Deferred compensation liability— 118 35 3 — 156 
Securitized debt, net— — — 2,048 (22)2,026 
Debt, net1,130 1,720 176 5 — 3,031 
Other— 1 147 17 — 165 
Deferred taxes— 124 281 4 (74)335 
MVW shareholders' equity2,408 2,599 4,466 383 (7,448)2,408 
Noncontrolling interests— — — 2 — 2 
Total liabilities and equity$3,601 $4,857 $5,663 $2,883 $(7,551)$9,453 
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As of December 31, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$150 $119 $89 $166 $— $524 
Restricted cash— 25 145 160 — 330 
Accounts and contracts receivable, net10 120 116 73 (27)292 
Vacation ownership notes receivable, net— 132 195 1,871 — 2,198 
Inventory— 204 375 81 — 660 
Property and equipment, net— 202 659 278 — 1,139 
Goodwill— — 3,117 — — 3,117 
Intangibles, net— — 880 31 — 911 
Investments in subsidiaries3,417 4,076 — — (7,493)— 
Other106 129 228 78 (73)468 
Total assets$3,683 $5,007 $5,804 $2,738 $(7,593)$9,639 
Accounts payable$60 $45 $166 $85 $— $356 
Advance deposits— 63 79 16 — 158 
Accrued liabilities2 75 193 121 (22)369 
Deferred revenue— 9 169 172 (6)344 
Payroll and benefits liability— 139 86 26 — 251 
Deferred compensation liability— 110 27 2 — 139 
Securitized debt, net— — — 1,961 (23)1,938 
Debt, net1,125 1,876 76 11 — 3,088 
Other— 1 148 18 — 167 
Deferred taxes— 89 291 — (49)331 
MVW shareholders' equity2,496 2,600 4,569 324 (7,493)2,496 
Noncontrolling interests— — — 2 — 2 
Total liabilities and equity$3,683 $5,007 $5,804 $2,738 $(7,593)$9,639 
Recent Accounting Pronouncements
See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards.
(1)
Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
(2)
Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.
(3)
Includes interest.
Critical Accounting Policies and Estimates
TheOur preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if: (1) it requires assumptions to be made that are uncertain at the time the estimate is made; and (2) changes in the estimate, or different estimates that could have been selected, could have a material effect on our consolidated results of operations or financial condition.
While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly. Additionally, changes in our assumptions, estimates or assessments as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our most recent Annual Report on Form 10-K. Since the date of our most recent Annual Report on Form 10-K,

there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk has not changed materially from that disclosed in Part I, Item 7A of ourthe 2022 Annual Report, on Form 10-K for the year ended December 30, 2016, other than as set forth below.
In September 2017, we issued $230 millionWe manage the interest rate risk on our corporate debt through the use of Convertible Notes. Holders may convert the Convertible Notes prior to maturity upon the occurrence of certain circumstances. Upon conversion, holders of the Convertible Notes will receive cash, shares of our common stock or a combination of cashfixed-rate debt and sharesinterest rate swaps (certain of which expired in September 2023 and the remaining swaps will expire in April 2024) that fix a portion of our common stock, atvariable-rate debt. At September 30, 2023, after considering the impact of interest rate swap agreements and excluding finance leases, the interest rate applicable to approximately 80% of our election.
Concurrently withtotal corporate debt was effectively fixed and the issuanceinterest rate applicable to the remaining 20% (approximately $574 million) is variable. Assuming no outstanding balance on our Revolving Corporate Credit Facility, a 100 basis point increase in the underlying benchmark rate on our variable-rate debt would result in an increase of approximately $5 million in annual cash interest due to the Convertible Notes,impact of our hedging arrangements discussed in Footnote 12 “Debt” to our Financial Statements. Assuming we entered into Convertible Note Hedgeshad no outstanding hedging arrangements and Warrants. These separate transactions were intended to reduceno outstanding balance on our Revolving Corporate Credit Facility, a 100 basis point increase in the potential economic dilution from the conversionunderlying benchmark rate would result in an annual increase in cash interest of the Convertible Notes.approximately $8 million.
The Convertible Notes have fixed annual interest rates at 1.50 percentfollowing table presents the scheduled maturities and therefore, we do not have economic interest rate exposure on our Convertible Notes. However, the value of the Convertible Notes is exposed to interest rate risk. Generally, the fair market value of the Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, thetotal fair value of the Convertible Notes is affected by our stock price. The net carrying value of the Convertible Notes was $190.7 million as of September 30, 2017. This represents the liability component of the principal balance of the Convertible Notes, net of unamortized debt discount and issuance costs, as of September 30, 2017. The total estimated fair value of the Convertible Notes at September 30, 2017 was $241.6 million, and the fair value was determined based on the quoted2023 for our financial instruments that are impacted by market price of the Convertible Notes in an over-the-counter market as of the last day of trading for the quarter ended September 30, 2017. For further information, see Footnote No. 4, “Financial Instruments” and Footnote No. 9, “Debt,” to our Financial Statements.risks:
($ in millions)Average
Interest
Rate		Maturities by Period
Remainder of 20232024202520262027ThereafterTotal Carrying ValueTotal
Fair
Value
Assets – Maturities represent expected principal receipts; fair values represent assets
Vacation ownership notes receivable — non-securitized12.2%$10 $50 $37 $37 $36 $236 $406 $408 
Vacation ownership notes receivable — securitized13.3%$42 $174 $177 $182 $185 $1,125 $1,885 $1,947 
Contracts receivable for financed VOI sales, net13.3%$2 $3 $3 $3 $3 $21 $35 $35 
Liabilities – Maturities represent expected principal payments; fair values represent liabilities
Securitized debt4.3%$(46)$(188)$(191)$(482)$(176)$(965)$(2,048)$(1,937)
Term Loan7.2%$— $— $(784)$— $— $— $(784)$(782)
Revolving Corporate Credit Facility7.2%$— $— $— $— $(90)$— $(90)$(90)
Senior notes
2028 Notes4.8%$— $— $— $— $— $(350)$(350)$(306)
2029 Notes4.5%$— $— $— $— $— $(500)$(500)$(419)
2026 Convertible Notes—%$— $— $— $(575)$— $— $(575)$(508)
2027 Convertible Notes3.3%$— $— $— $— $(575)$— $(575)$(496)
Non-interest bearing note payable—%$— $(4)$— $— $— $— $(4)$(4)
Item 4.    Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-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 Rules 13a-15(e) and 15d-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 as of September 30, 2023, 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
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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 wereWe made no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-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
Currently, and from time to time, we are subject to claims in legal proceedings arising in the normal course of business, including, among others, the legal actions discussed under “Loss Contingencies” in Footnote No. 8,10 “Contingencies and Commitments,”Commitments” to our Financial Statements. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, cash flows, or overall trends in results of operations, legal proceedings are inherently uncertain, and unfavorable rulings could, individually or in aggregate, have a material adverse effect on our business, financial condition, or operating results.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosedset forth in Part I, Item 1A to Part 1 of our 2022 Annual Report, on Form 10-K for the fiscal year ended December 30, 2016, other than as set forth below.
The degree to which we are leveraged may have a material adverse effect on our financial position, results of operations and cash flows.
We can borrow up to $250 million under the Revolving Corporate Credit Facility and could also incur additional debt to the extent permitted under the Revolving Corporate Credit Facility. Our ability to make dividend payments to holders of our common stock and to make payments on and refinance our indebtedness, including debt under the Revolving Corporate Credit Facility, the Convertible Notes or any future debt that we may incur, will depend on our ability to generate cash in the future from operations, financings or asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that we cannot control. If we cannot repay or refinance our debt on commercially reasonable terms as it becomes due, we may be forced to sell assets or take other disadvantageous actions, including (1) reducing or delaying capital expenditures, (2) limiting financing offered to customers, which could result in reduced sales, and (3) dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in the vacation ownership industry could be impaired. If we cannot make scheduled payments on our debt, we will be in default and holders of the Convertible Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Corporate Credit Facility could terminate their commitments to loan money, lenders under our secured debt (including any borrowings outstanding under the Revolving Corporate Credit Facility) could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. If lenders of any of our debt are able to accelerate amounts due to them, a default or acceleration of our other debt could be triggered.
A lowering or withdrawal of the ratings assigned to our company or any of our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.
Any rating assigned to our company or our debt, including the Convertible Notes, could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing.
The fundamental change repurchase feature of the Convertible Notes may delay or prevent an otherwise beneficial attempt to take over our company.
The terms of the Convertible Notes require us to repurchase the Convertible Notes in the event of certain fundamental changes with respect to our company. A takeover of our company would trigger an option of the holders of the Convertible Notes to require us to repurchase the Convertible Notes. This may have the effect of delaying or preventing a takeover of our company that would otherwise be beneficial to holders of our common stock and holders of the Convertible Notes.
The terms of any future preferred equity or debt financing may give holders of any preferred equity or debt securities rights that are senior to rights of our common shareholders or dilute the ownership percentage of existing shareholders or impose more stringent operating restrictions on our company.
Debt or equity financing may not be available to us on acceptable terms. If we incur additional debt or raise equity through the issuance of preferred stock or convertible securities such as the Convertible Notes, the terms of the debt or the preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations. If we raise funds through the issuance of additional equity, the ownership percentage of our existing shareholders would be diluted.

The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
Although holders of the Convertible Notes are generally not permitted to convert the Convertible Notes until June 15, 2022, in the event the conditional conversion feature of the Convertible Notes is triggered due to the trading price of the Convertible Notes or our common stock, holders of the Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. See Footnote No. 9, “Debt,” to our Financial Statements for additional information. If one or more holders elect to convert their Convertible Notes, we may elect to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes or to repurchase the Convertible Notes upon a fundamental change.
Upon the occurrence of certain fundamental changes with respect to our company, holders of the Convertible Notes have the right to require us to repurchase their Convertible Notes at a purchase price equal to 100 percent of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the repurchase date. In addition, unless we elect to deliver solely shares of our common stock, we will be required to make cash payments in respect of the Convertible Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of Convertible Notes surrendered therefor or Convertible Notes being converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversions of the Convertible Notes is limited by the agreements governing our existing indebtedness (including the credit agreement governing the Revolving Corporate Credit Facility) and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the Indenture or to pay cash payable on future conversions of the Convertible Notes as required by the Indenture would constitute a default under the Indenture. A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness (including the credit agreement governing the Revolving Corporate Credit Facility). If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversions thereof.
The accounting method for convertible debt securities that may be settled in cash, such as the Convertible Notes, may have a material effect on our reported financial results.
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of certain convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the Convertible Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet, and the value of the equity component has been treated as original issue discount for purposes of accounting for the debt component of the Convertible Notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Convertible Notes to their face amount over the term of the Convertible Notes. We will report lower net income (or greater net loss) in our financial results because ASC 470-20 requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the market price of our common stock and the trading price of the Convertible Notes.
In addition, under certain circumstances, convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method if we have the ability and intent to settle in cash, the effect of which is that the shares issuable upon conversion of the Convertible Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the Convertible Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transactionfactual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors, which is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that we will be able to continue to demonstrate the ability or intent to settle in cash or that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the Convertible Notes, then our diluted earnings per share would be adversely affected.incorporated herein by reference.

The Convertible Note Hedges and Warrants may affect the value of our common stock.
In connection with the Convertible Notes, we entered into privately negotiated Convertible Note Hedges with affiliates of two of the initial purchasers. The Convertible Note Hedges cover, subject to customary anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the same number of shares of common stock that will initially underlie the Convertible Notes. The Convertible Note Hedges are expected generally to reduce potential dilution to our common stock and/or offset cash payments we are required to make in excess of the principal amount, in each case, upon any conversion of Convertible Notes. Concurrently with our entry into the Convertible Note Hedges, we entered into Warrant transactions with the hedge counterparties relating to the same number of shares of common stock. The Warrants could separately have a dilutive effect on our shares of common stock to the extent that the market price per share exceeds the applicable strike price of the Warrants on one or more of the applicable expiration dates.
In connection with establishing their initial hedges of the convertible note hedge transactions and warrant transactions, the hedge counterparties and/or their respective affiliates advised us that they expected to purchase shares of our common stock in secondary market transactions and/or enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Convertible Notes. The hedge counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock in secondary market. The effect, if any, of these activities on the market price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time, but any of these activities could cause or prevent an increase or a decline in the market price of our common stock or the Convertible Notes.
We are subject to counterparty risk with respect to the Convertible Note Hedges.
The counterparties to the Convertible Note Hedges are financial institutions, and we are subject to the risk that one or more of the hedge counterparties may default under the Convertible Note Hedges. Our exposure to the credit risk of the hedge counterparties is not secured by any collateral. If any of the hedge counterparties become subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with such counterparties. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by a hedge counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the hedge counterparties.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
PeriodTotal Number of Shares Purchased 
Average
Price per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
 
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs(1)
July 1, 2017 – July 31, 2017147,500
 $116.00 147,500
 1,047,371
August 1, 2017 – August 31, 2017196,282
 $111.84 196,282
 1,851,089
September 1, 2017 – September 30, 2017(2)
352,103
 $114.00 352,103
 1,498,986
Total695,885
 $113.81 695,885
 1,498,986
_________________________
(1)
On August 1, 2017, our Board of Directors authorized the repurchase of up to 1.0 million additional shares of our common stock under our existing share repurchase program and extended the duration of the program through May 31, 2018. Prior to that authorization, our Board of Directors had authorized the repurchase of an aggregate of up to 10.9 million shares of our common stock under the share repurchase program since the initiation of the program in October 2013.
(2)
On September 25, 2017, we used $40.1 million of the proceeds from the sale of the Convertible Notes to repurchase 351,900 shares of our common stock under our existing share repurchase program.
PeriodTotal Number of Shares Purchased
Average
Price Paid per Share(2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs(1)(2)
July 1, 2023 – July 31, 2023— $— — $560,680,772 
August 1, 2023 – August 31, 2023440,300 $111.70 440,300 $511,501,091 
September 1, 2023 – September 30, 2023353,000 $101.27 353,000 $475,753,637 
Total793,300 $107.06 793,300 $475,753,637 
Item 3.    Defaults Upon Senior Securities(1)On September 13, 2021, our Board of Directors authorized a share repurchase program under which we were authorized to purchase shares of our common stock for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022. On February 22, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $300 million of our common stock and extended the term of our share repurchase program to March 31, 2023. On August 1, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $500 million of our common stock and extended the term of our share repurchase program to June 30, 2023. On May 11, 2023, we announced that our Board of Directors increased the remaining authorization to authorize purchases of up to $600 million of our common stock and extended the term of our share repurchase program to December 31, 2024.
None.(2)The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. See Footnote 13 “Shareholders' Equity” to our Financial Statements for further information. All dollar amounts presented exclude such excise tax, as applicable.

Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
None.(c) Trading Plans
During the quarter ended September 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).
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Item 6.    Exhibits
All documents referenced below are being filed as a part of this Quarterly Report on Form 10-Q, unless otherwise noted.
Exhibit NumberDescriptionFiled
Herewith		Incorporation By Reference From
FormExhibitDate Filed
2.1
Agreement and Plan of Merger, dated as of April 30, 2018, by and among Marriott Vacations Worldwide Corporation, ILG, Inc., Ignite Holdco, Inc., Ignite Holdco Subsidiary, Inc., Volt Merger Sub, Inc., and Volt Merger Sub LLC*8-K2.15/1/2018
2.2
Agreement and Plan of Merger by and among Marriott Vacations Worldwide Corporation, Sommelier Acquisition Corp., Champagne Resorts, Inc., Welk Hospitality Group, Inc. and the Shareholder Representative, dated as of January 26, 20218-K2.11/26/2021
3.1
Second Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation8-K3.25/15/2023
3.2
Restated Bylaws of Marriott Vacations Worldwide Corporation (effective May 12, 2023)10-Q3.38/4/2023
4.1
Form of certificate representing shares of common stock, par value $0.01 per share, of Marriott Vacations Worldwide Corporation104.110/14/2011
4.2
Indenture, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee8-K4.110/1/2019
4.3
Supplemental Indenture, dated December 31, 2019, by and among Marriott Ownership Resorts, Inc., MVW Vacations, LLC and the Bank of New York Mellon Trust Company, N.A., as trustee10-K4.123/2/2020
4.4
Second Supplemental Indenture, dated February 26, 2020, by and among Marriott Ownership Resorts, Inc., MVW Services Corporation, and the Bank of New York Mellon Trust Company, N.A., as trustee10-K4.133/2/2020
4.5
Form of 4.750% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.2 above)8-K4.210/1/2019
4.6
Registration Rights Agreement, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and J.P. Morgan Securities LLC8-K4.310/1/2019
4.7
Indenture, dated as of May 13, 2020, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent8-K4.15/15/2020
4.8
Form of 6.125% Senior Secured Notes due 2025 (included as Exhibit A to Exhibit 4.7)8-K4.15/15/2020
4.9
Indenture, dated as of February 2, 2021, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc. and the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee8-K4.12/3/2021
4.10
Form of 0.00% Convertible Senior Note due 2026 (included as Exhibit A to Exhibit 4.9 above)8-K4.12/3/2021
4.11
Indenture, dated as of June 21, 2021, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee8-K4.16/22/2021
4.12
Form of 4.500% Senior Notes due 2029 (included as Exhibit A to Exhibit 4.11 above)8-K4.26/22/2021
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Table of Contents
Exhibit NumberDescriptionFiled
Herewith		Incorporation By Reference From
FormExhibitDate Filed
4.13
Indenture, dated as of December 8, 2022, by and among Marriott Vacations Worldwide Corporation, as issuer, Marriott Ownership Resorts, Inc. and the other guarantors party thereto from time to time and The New York Bank of Mellon Trust Company, N.A., as trustee8-K4.112/8/2022
4.14
Form of 3.25% Convertible Senior Notes due 2027 (included as Exhibit A to Exhibit 4.13 above)8-K4.212/8/2022
4.15
Description of Registered Securities10-K4.163/2/2020
10.1
Marriott Vacations Worldwide Corporation Change in Control Severance Plan**10-Q10.105/5/2023
10.2
Amendment No. 2 to Credit Agreement dated as of April 27, 2023, among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent10-Q10.208/4/2023
10.3
Form of Non-Employee Director Share Award Confirmation*10-Q10.308/4/2023
10.4
Form of Non-Employee Director Stock Appreciation Right Award Agreement*10-Q10.408/4/2023
10.5
Form of Director Stock Unit Agreement*10-Q10.508/4/2023
10.6
Amended and Restated Marriott Vacations Worldwide Corporation 2020 Equity Incentive PlanX
22.1
List of the Issuer and its Guarantor Subsidiaries10-Q22.108/4/2023
31.1
Certification by Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
31.2
Certification by Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
32.1
Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Furnished
32.2
Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Furnished
101The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Interim Consolidated Statements of Income, (ii) Interim Consolidated Statements of Comprehensive Income, (iii) Interim Consolidated Balance Sheets, (iv) Interim Consolidated Statements of Cash Flows, (v) Interim Consolidated Statements of Shareholders’ Equity, and (vi) Notes to Interim Consolidated Financial Statements
104The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL and contained in Exhibit 101
Exhibit Number*Description
Filed
Herewith
Incorporation By Reference FromSchedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplemental copies to the SEC of any omitted schedule upon request by the SEC.
**FormDate Filed
3.1
Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation8-K11/22/2011
3.2
Restated Bylaws of Marriott Vacations Worldwide Corporation8-K11/22/2011
4.1
Indenture between Marriott Vacations Worldwide Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee, dated September 25, 2017X
4.2
Form of 1.50% Convertible Senior Note due 2022 (included in Exhibit 4.1)X
10.1
Form of Call Option Transaction ConfirmationX
10.2
Form of Warrant ConfirmationX
10.3
Credit Agreement, dated as of August 16, 2017, among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., the several banks and other financial institutionsManagement contract or entities from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent8-K8/21/2017
10.4
Guarantee and Collateral Agreement, dated as of August 16, 2017, made by Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc. and certain other subsidiaries of Marriott Vacations Worldwide Corporation, in favorcompensatory plan or JPMorgan Chase Bank, N.A., as Administrative Agent for the banks and other financial institutions or entities from time to time parties to the Credit Agreement8-K8/21/2017
10.5
Omnibus Agreement No. 6, dated August 17, 2017, relating to, among other agreements, the Third Amended and Restated Indenture and the Second Amended and Restated Sale Agreement, by and among Marriott Vacations Worldwide Owner Trust 2011-1, Marriott Ownership Resorts, Inc., Wells Fargo Bank, National Association, MORI SPC Series Corp., Marriott Vacations Worldwide Corporation, the Purchasers signatory thereto, Deutsche Bank AG, New York Branch, Wilmington Trust, National Association, and MVCO Series LLC8-K8/21/2017
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
32.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
32.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
101.INSXBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.Electronically Submitted
101.SCHXBRL Taxonomy Extension Schema DocumentElectronically Submitted
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentElectronically Submitted
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentElectronically Submitted
101.LABXBRL Taxonomy Extension Label Linkbase DocumentElectronically Submitted
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentElectronically Submittedarrangement.
We have submitted electronically the following documents formatted in XBRL (Extensible Business Reporting Language) as Exhibit 101 to this report: (i) the Interim Consolidated Statements of Income for the 92 days ended September 30, 2017 and the 84 days ended September 9, 2016, as well as the 274 days ended September 30, 2017 and the 252 days ended September 9, 2016; (ii) the Interim Consolidated Statements of Comprehensive Income for the 92 days ended September 30,
69


2017 and the 84 days ended September 9, 2016, as well as the 274 days ended September 30, 2017 and the 252 days ended September 9, 2016; (iii) the Interim Consolidated Balance Sheets at September 30, 2017 and December 30, 2016; and (iv) the Interim Consolidated Statements of Cash Flows for the 274 days ended September 30, 2017 and the 252 days ended September 9, 2016.


SIGNATURES
Pursuant to the requirements 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.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
Date:November 2, 20173, 2023/s/ Stephen P. Weisz
Stephen P. Weisz
President and Chief Executive Officer
/s/ John E. Geller, Jr.
John E. Geller, Jr.
President and Chief Executive Officer
/s/ Jason P. Marino
Jason P. Marino
Executive Vice President and Chief Financial Officer

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