(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)

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 requirement for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒ No

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of ~~April 24,~~October 23, 2020 was ~~84,987,241.~~85,106,483.

	March 31,		December 31,		September 30,		December 31,
	2020		2019		2020		2019
	(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents	$	669	$	67	$	625	$	67
Restricted cash		90		85		92		85
Accounts receivable, net of allowance for credit losses of $17 and $21		158		174
Accounts receivable, net of allowance for credit losses of $18 and $21						109		174
Timeshare financing receivables, net		1,122		1,156		1,012		1,156
Inventory		885		558		933		558
Property and equipment, net		473		778		488		778
Operating lease right-of-use assets, net		62		60		55		60
Investments in unconsolidated affiliates		47		44		49		44
Intangible assets, net		78		77		80		77
Other assets		120		80		101		80
TOTAL ASSETS (variable interest entities - $694 and $748)	$	3,704	$	3,079
TOTAL ASSETS (variable interest entities - $866 and $748)					$	3,544	$	3,079
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	268	$	298	$	264	$	298
Advanced deposits		117		115		119		115
Debt, net		1,266		828		1,262		828
Non-recourse debt, net		885		747		837		747
Operating lease liabilities		77		76		70		76
Deferred revenues		277		186		261		186
Deferred income tax liabilities		251		259		209		259
Total liabilities (variable interest entities - $694 and $750)		3,141		2,509
Total liabilities (variable interest entities - $842 and $750)						3,022		2,509
Commitments and contingencies - see Note 19
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, NaN issued or outstanding as of March 31, 2020 and December 31, 2019		—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 84,987,241 shares issued and outstanding as of March 31, 2020 and 85,535,501 shares issued and outstanding as of December 31, 2019		1		1
Preferred stock, $0.01 par value; 300,000,000 authorized shares, NaN issued or outstanding as of September 30, 2020 and December 31, 2019						—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 85,086,548 shares issued and outstanding as of September 30, 2020 and 85,535,501 shares issued and outstanding as of December 31, 2019						1		1
Additional paid-in capital		172		179		186		179
Accumulated retained earnings		390		390		335		390
Total equity		563		570		522		570
TOTAL LIABILITIES AND EQUITY	$	3,704	$	3,079	$	3,544	$	3,079

	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019			2020			2019
Revenues
Sales of VOIs, net	$	56		$	125		$	24		$	138		$	80		$	383
Sales, marketing, brand and other fees		106			141			52			143			171			429
Financing		44			41			40			43			127			127
Resort and club management		44			42			39			45			122			130
Rental and ancillary services		52			59			20			54			77			173
Cost reimbursements		49			42			33			43			105			128
Total revenues		351			450			208			466			682			1,370
Expenses
Cost of VOI sales		14			36			8			24			21			92
Sales and marketing		157			170			79			188			297			544
Financing		13			13			13			14			39			39
Resort and club management		12			11			9			11			27			34
Rental and ancillary services		37			35			24			36			85			108
General and administrative		21			27			22			30			65			87
Depreciation and amortization		12			8			11			12			34			32
License fee expense		22			23			11			26			39			75
Cost reimbursements		49			42			33			43			105			128
Total operating expenses		337			365			210			384			712			1,139
Interest expense		(10	)		(10	)		(10	)		(12	)		(32	)		(33	)
Equity in earnings from unconsolidated affiliates		3			1
Equity in (losses) earnings from unconsolidated affiliates								(1	)		1			3			4
Other gain (loss), net		2			(1	)		1			(1	)		—			(3	)
Income before income taxes		9			75
Income tax expense		(1	)		(20	)
Net income	$	8		$	55
Earnings per share:
(Loss) Income before income taxes								(12	)		70			(59	)		199
Income tax benefit (expense)								5			(20	)		12			(55	)
Net (loss) income							$	(7	)	$	50		$	(47	)	$	144
(Loss) Earnings per share:
Basic	$	0.09		$	0.59		$	(0.08	)	$	0.59		$	(0.55	)	$	1.61
Diluted	$	0.09		$	0.58		$	(0.08	)	$	0.59		$	(0.55	)	$	1.60

	Three Months Ended March 31,						Nine Months Ended September 30,
	2020			2019			2020			2019
Operating Activities
Net income	$	8		$	55
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(47	)	$	144
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		12			8			34			32
Amortization of deferred financing costs, contract costs, and other		4			4			13			12
Provision for financing receivables losses		37			14			57			60
Other (gain) loss, net		(2	)		1
Other loss, net								—			3
Share-based compensation		(2	)		5			10			18
Deferred income tax (benefit) expense		(8	)		5
Deferred income tax benefit								(50	)		(21	)
Equity in earnings from unconsolidated affiliates		(3	)		(1	)		(3	)		(4	)
Net changes in assets and liabilities:
Accounts receivable, net		16			7			65			17
Timeshare financing receivables, net		(3	)		(5	)		87			(79	)
Inventory		(10	)		(3	)		(59	)		(6	)
Purchases and development of real estate for future conversion to inventory		(5	)		(63	)		(27	)		(107	)
Other assets		(42	)		(33	)		(25	)		(24	)
Accounts payable, accrued expenses and other		(42	)		(27	)		(48	)		20
Advanced deposits		2			5			4			11
Deferred revenues		91			41			75			70
Other		—			1
Net cash provided by operating activities		53			14			86			146
Investing Activities
Capital expenditures for property and equipment		(3	)		(6	)		(6	)		(25	)
Software capitalization costs		(5	)		(4	)		(16	)		(17	)
Investments in unconsolidated affiliates								(2	)		(2	)
Net cash used in investing activities		(8	)		(10	)		(24	)		(44	)
Financing Activities
Issuance of debt		495			195			495			455
Issuance of non-recourse debt		195			—			495			365
Repayment of debt		(57	)		(23	)		(62	)		(272	)
Repayment of non-recourse debt		(58	)		(40	)		(403	)		(327	)
Debt issuance costs								(8	)		(6	)
Repurchase and retirement of common stock		(10	)		(92	)		(10	)		(283	)
Payment of withholding taxes on vesting of restricted stock units		(2	)		(2	)		(3	)		(3	)
Proceeds from employee stock plan purchases								1			2
Other financing activity		(1	)		—			(2	)		(2	)
Net cash provided by financing activities		562			38
Net cash provided by (used in) financing activities								503			(71	)
Net increase in cash, cash equivalents and restricted cash		607			42			565			31
Cash, cash equivalents and restricted cash, beginning of period		152			180			152			180
Cash, cash equivalents and restricted cash, end of period	$	759		$	222		$	717		$	211

Supplemental disclosure of non-cash operating activities:
Non-cash transfers from Inventory to Property and Equipment⁽¹⁾	$	301		$	—
Non-cash transfers from Property and Equipment to Inventory⁽²⁾							$	301		$	—
Non-cash transfers from Other Assets to Inventory⁽¹⁾											2
Non-cash transfers from Inventory to Property and Equipment⁽²⁾											16
Non-cash transfers from Other Assets to Property and Equipment⁽²⁾											40
Supplemental disclosure of non-cash financing activities:
Issuance of other debt	$	—		$	23		$	—		$	23

						Additional			Accumulated											Additional			Accumulated
	Common Stock					Paid-in			Retained			Total			Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity			Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2019		85		$	1	$	179		$	390		$	570			85		$	1	$	179		$	390		$	570
Net income		—			—		—			8			8			0			0		0			8			8
Activity related to share-based compensation		—			—		(5	)		—			(5	)		0			0		(5	)		0			(5	)
Repurchase and retirement of common stock		(1	)		—		(2	)		(8	)		(10	)		(1	)		0		(2	)		(8	)		(10	)
Balance as of March 31, 2020		84			1	$	172		$	390		$	563			84			1		172			390			563
Net loss																0			0		0			(48	)		(48	)
Activity related to share-based compensation																0			0		8			0			8
Balance as of June 30, 2020																84			1		180			342			523
Net loss																0			0		0			(7	)		(7	)
Activity related to share-based compensation																0			0		6			0			6
Balance as of September 30, 2020																84			1	$	186		$	335		$	522


						Additional			Accumulated											Additional			Accumulated
	Common Stock					Paid-in			Retained			Total			Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity			Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2018		94		$	1	$	174		$	441		$	616			94		$	1	$	174		$	441		$	616
Net income		—			—		—			55			55			0			0		0			55			55
Activity related to share-based compensation		—			—		1			—			1			0			0		1			0			1
Repurchase and retirement of common stock		(3	)		—		(5	)		(92	)		(97	)		(3	)		0		(5	)		(92	)		(97	)
Balance as of March 31, 2019		91			1	$	170		$	404		$	575			91			1		170			404			575
Net income																0			0		0			39			39
Activity related to share-based compensation																0			0		10			0			10
Repurchase and retirement of common stock																(5	)		0		(11	)		(163	)		(174	)
Balance as of June 30, 2019																86			1		169			280			450
Net income																0			0		0			50			50
Activity related to share-based compensation																0			0		6			0			6
Repurchase and retirement of common stock																(1	)		0		(1	)		(11	)		(12	)
Balance as of September 30, 2019																85			1	$	174		$	319		$	494

Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand. Our operations primarily consist of: selling vacation ownership intervals (“VOIs”) for us and third parties; financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing our points-based Hilton Grand Vacations Club exchange program (collectively the “Club”). As of ~~March 31,~~September 30, 2020, we had 5960 properties, comprised of ~~9,551~~9,594 units, located in the United States (“U.S.”), Japan, the United Kingdom, Italy and Barbados. A significant number of our properties and units are concentrated in Florida, Hawaii, Nevada, New York, and South Carolina, with particular concentration of our units in Florida, Hawaii and New York.

The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the SEC on March 2, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.

The novel coronavirus (“COVID-19”) pandemic continues to significantly negatively impact the hospitality, travel and leisure industries due to various mandates and orders to close non-essential businesses, impose travel restrictions, require “stay-at-home” and/or self-quarantine, and require similar actions. Such restrictions and directives have resulted in cancellations and significant reductions in travel around the world, as well as the negative global economic conditions resulting from the impact of the COVID-19 pandemic. As a result of the reduction in travel, during the first quarter of 2020 we closed substantially all of our resorts and sales centers.

In addition, in response to the impact of COVID-19, we have taken a variety of actions to ensure the continuity of our business and operations, including workforce furlough, implementing temporary salary reductions for the remaining active employees primarily during the second quarter of 2020, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million. Further, during the first quarter of 2020, we drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period and on May 8, 2020, we amended our Credit Agreement which amended certain terms of the credit facilities (“Senior Secured Credit Facilities”) to provide us with both near-term and long-term flexibility with respect to satisfying certain negative and financial covenant ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. See Note 11: Debt and Non-recourse debt for additional actions taken with respect to our financial flexibility. Recently, we announced a workforce reduction plan that will affect approximately 1,600 team members in order to better align our workforce with the Company’s needs in light of the current environment. In addition, approximately 2,000 of our team members remain furloughed.

Prior to re-opening our resorts and sales centers, we introduced the HGV Enhanced Care Guidelines, designed to provide owners, guests and team members with the highest level of cleaning protocols and safety standards recommended by the Center for Disease Control and Prevention and cleaning solutions approved by the Environmental Protection Agency in response to the COVID-19 pandemic. Along with providing personal protective equipment to team members, these Enhanced Care Guidelines include low-touch arrivals and departures, frequent and thorough cleaning, reduction of paper items, reduced capacity for our pool decks and fitness centers, and new technologies. While operations were suspended, essential resort personnel worked diligently maintaining the resorts for a safe re-opening. Annual deep cleanings, typically scheduled during slower seasons, were moved up and completed, allowing the resorts to be in top shape when owners and guests arrive.

Beginning in May 2020, various states and counties started to allow gradual relaxation of restrictions on activities and a resumption of businesses. In response, we began a phased reopening of resorts and resumption of our business activities during the second quarter of 2020, but under new operating guidelines and with safety measures. As of September 30, 2020, we have over three quarters of our resorts and sales centers open and currently operating however, many of our resorts and sales centers are operating with significant capacity constraints and subject to various safety measures. In addition, ongoing strict travel and other restrictions in regions and locations where we have a significant number of resorts and concentration of units, in particular, Hawaii and New York, are significantly impacting consumer demand for our resorts in those areas.

While we plan to continue to reopen our resorts and resume our business as conditions permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Further, various state and local government officials may issue new or revised orders that are different than current ones under which we are operating. Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income and other operating results, as well as our business and operations generally. Any significantly extended duration or worsening of the conditions associated with the pandemic may adversely impact our liquidity in the longer term, including our ability to finance our day-to-day business and operations, and may adversely affect our ability to comply with our maintenance and financial covenants and ratios under our debt obligations notwithstanding the recent amendments discussed above. However, we believe that prior to triggering an event of default, if any, in connection with the financial covenants under our debt agreements we would be able to reach an agreement with our lenders to amend such covenants in advance of any potential default.

Additionally, as a result of the ongoing COVID-19 pandemic, we are performing a review over certain of our long-lived assets in order to determine our optimal strategic direction with regards to these assets. These assets include undeveloped parcels of land and certain unallocated infrastructure costs related to future phases of existing resorts. The result of this review could have a material impact on the carrying value of certain assets, which could result in non-cash impairments.

Accounts receivable primarily consists of trade receivables and is reported at the customers’ outstanding balances, less any allowance for credit losses. The expected credit losses are measured using an expected-loss model that reflects the risk of loss and considers the losses expected over the outstanding period of the receivable.

We capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in Other assets in our condensed consolidated balance sheets and are expensed in the same line as the hosting arrangement in our condensed consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years. We review the CCAs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the fair value in our condensed consolidated statements of operations.

We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments

quarterly and record changes in fair value in accumulated other comprehensive income (“AOCI”) for the effective portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our condensed consolidated statements of operations. We release the derivative’s gain or loss from AOCI to match the timing of the underlying hedged items’ effect on earnings.

On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, (“ASU 2016-13”), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), using the modified retrospective approach. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our timeshare financing receivables are recorded net of an allowance that is calculated in accordance with ASC 606, Revenue from Contracts with Customers.

On January 1, 2020, we adopted ASU 2018-15 (“ASU 2018-15”), Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. This ASU has been adopted using the retrospective approach. Accordingly, previously reported financial information has been restated to reflect the application of the new standard to the comparative periods presented. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements.

In March 2020, the SEC issued a final rule, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, which simplifies the disclosure requirements related to registered securities under Rule 3-10 of Regulation S-X. Therule replaces the requirement for a parent entity to provide detailed disclosures with regard to guarantors of registered debt offerings within the footnotes to the consolidated financial statements. Under the final rule, a parent entity is required to present summarized financial information ofthe issuers’ and guarantors’ balance sheets and statements of operations on a consolidated basis. It also requires qualitative disclosures with respect to information about guarantors and the terms and conditions of guarantees. These disclosures may be provided outside the footnotes to the Company’s consolidated financial statements. We early adopted the reporting requirements of the rule in the second quarter of 2020 and elected to provide these disclosures in Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and which also clarifies and amends existing guidance to improve consistent application. The provisions of this ASU are effective for reporting periods after December 15, 2020. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.

The following tables show our disaggregated revenues by segment from contracts with customers. We operate our business in the following 2 segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 18: Business Segments below for more details related to our segments.

	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019		2020		2019
Real Estate and Financing Segment
Sales of VOIs, net	$	56	$	125	$	24	$	138	$	80	$	383
Sales, marketing, brand and other fees		106		141		52		143		171		429
Interest income		38		36		34		37		108		109
Other financing revenue		6		5		6		6		19		18
Real estate and financing segment revenues	$	206	$	307	$	116	$	324	$	378	$	939

The following table provides information on our accounts receivable ~~and contract assets~~ from contracts with customers which are included in Accounts receivable, net on our condensed consolidated balance sheets:

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
Receivables	$	115	$	129	$	67	$	129
Contract assets		1		—

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
Contract liabilities:
Advanced deposits	$	117	$	115	$	119	$	115
Deferred Sales of VOIs of projects under construction		131		84		148		84
Club activation fees, annual dues and other		130		86		96		86
Club Bonus Point incentive liability⁽¹⁾		61		59		60		59

Revenue earned for the three and nine months ended ~~March 31,~~September 30, 2020 that was included in the contract liabilities balance at December 31, 2019 was approximately ~~$36 million.~~$10 million and $63 million, respectively.

Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations (“HOA”) management agreements and are settled when the related cash is received. Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time. Refer to Note 6: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our timeshare financing receivables.

Contract assets relate to incentive fees that can be earned for meeting certain target on sales of VOIs at properties under our fee-for-service arrangements; however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period.

Contract liabilities include payments received or due in advance of satisfying our performance obligations. Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, club activation fees and annual dues and the liability for Club Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future.

Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Club Bonus Points that may be redeemed in the future. The following table represents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of ~~March 31,~~September 30, 2020:

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
Sales of VOIs, net	$	131	$	84	$	148	$	84
Cost of VOI sales⁽¹⁾		40		27		44		27
Sales and marketing expense		19		12		21		12

We expect to recognize the revenue, costs of VOI sales and direct selling costs upon completion of the projects in 2021.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of ~~March 31,~~September 30, 2020:

($ in millions)

Remaining

Transaction Price

Recognition Period

Recognition Method

Remaining

Transaction Price

Recognition Period

Recognition Method

Advanced deposits

117

18 months

Upon customer stays

119

18 months

Upon customer stays

Club activation fees

7 years

Straight-line basis over average inventory holding

period

7 years

Straight-line basis over average inventory holding

period

Club Bonus Points

24 months

Upon redemption

24 months

Upon redemption

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
Escrow deposits on VOI sales	$	59	$	59	$	61	$	59
Reserves related to non-recourse debt(1)		31		26		31		26
	$	90	$	85	$	92	$	85

The following table represents our accounts receivable, net of allowance for credit losses. Following the adoption of ASC 326 on January 1, 2020, accounts receivable within the scope of ASC 326 are measured at amortized cost.

($ in millions)	March 31, 2020		September 30, 2020
Fee-for-service commissions⁽¹⁾	$	63	$	23
Real estate and financing	15		8
Resort and club operations	28		32
Tax receivables	41		42
Other receivables⁽²⁾	11			4
Total	$	158	$	109

Our accounts receivable are all due within one year of origination. We use delinquency status and economic factors as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.

We sell VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing and brand fees. We use historical losses and economic factors as a basis to develop our allowance for credit losses. Under these fee-for-service arrangements, we earn commission fees based on a percentage of total interval sales. Additionally, the terms include provisions requiring the reduction of fees earned for defaults and cancellations.

($ in millions)	March 31, 2020			September 30, 2020
Balance as of December 31, 2019	$	19		$	19
Current period provision for expected credit losses	4			5
Write-offs charged against the allowance		(8	)		(8	)
Balance at March 31, 2020	$	15
Balance at September 30, 2020				$	16

	March 31, 2020									September 30, 2020
($ in millions)	Securitized and Pledged			Unsecuritized⁽¹⁾			Total			Securitized			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	703		$	631		$	1,334		$	879		$	350		$	1,229
Less: allowance for financing receivables losses		(48	)		(164	)		(212	)		(70	)		(147	)		(217	)
	$	655		$	467		$	1,122		$	809		$	203		$	1,012

	December 31, 2019									December 31, 2019
($ in millions)	Securitized and Pledged			Unsecuritized⁽¹⁾			Total			Securitized			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	758		$	582		$	1,340		$	758		$	582		$	1,340
Less: allowance for financing receivables losses		(54	)		(130	)		(184	)		(54	)		(130	)		(184	)
	$	704		$	452		$	1,156		$	704		$	452		$	1,156

As of ~~March 31,~~September 30, 2020, ~~the~~we had timeshare financing receivables with a carrying value of ~~our timeshare financing receivables~~$19 million securing the ~~outstanding debt balance of our~~ Timeshare Facility ~~was $191 million.~~ in anticipation of future financing activities.As of December 31, 2019, we had 0 timeshare receivables pledged to the Timeshare Facility. We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale. We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we recorded an adjustment to our estimate of variable consideration of ~~$37~~$57 million, which includes a $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.

In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables, which included a $15 million cash deposit that was subsequently released during the third quarter of 2020 upon pledging of qualified collateral, and issued approximately $186 million of 2.74 percent notes, $66 million of 4.22 percent notes and $48 million of 6.42 percent notes, which have a stated maturity date of February 25, 2039. The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized. The transaction is considered a secured borrowing; therefore, the proceeds from the transaction are presented as non-recourse debt (collectively, the “Securitized Debt”). The proceeds were primarily used to pay down the remaining borrowings on our Timeshare Facility and general corporate operating expenses. See Note 11: Debt and Non-recourse Debt for additional information.

Our timeshare financing receivables as of ~~March 31,~~September 30, 2020 mature as follows:

($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized			Unsecuritized			Total
Year
2020 (remaining)	$	69		$	43		$	112		$	25		$	9		$	34
2021		92			50			142			103			32			135
2022		93			54			147			107			33			140
2023		93			59			152			110			35			145
2024		92			63			155			113			36			149
Thereafter		264			362			626			421			205			626
		703			631			1,334			879			350			1,229
Less: allowance for financing receivables losses		(48	)		(164	)		(212	)		(70	)		(147	)		(217	)
	$	655		$	467		$	1,122		$	809		$	203		$	1,012

We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the credit quality of our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

We recognize interest income on our timeshare financing receivables as earned. As of ~~March 31,2020,~~September 30, 2020 and December 31, 2019, we hadinterest receivable outstanding of $8 million and $9 million, ~~of interest receivable outstanding~~respectively, included in our condensed consolidated balance sheets. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. As of ~~March 31,~~September 30, 2020, our timeshare financing receivables had interest rates ranging from 3.90 percent to 20.50 percent, a weighted-average interest rate of ~~12.52~~12.60 percent, a weighted-average remaining term of ~~7.9~~7.6 years and maturities through 2035.

Our gross timeshare financing receivables balances by average FICO score were as follows:

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
FICO score
700+	$	812	$	818	$	669	$	818
600-699		291		292		291		292
<600		39		39		51		39
No score⁽¹⁾		192		191		218		191
	$	1,334	$	1,340	$	1,229	$	1,340

The following table details the origination year of our gross timeshare financing receivables by average FICO score as of ~~March 31,~~September 30, 2020:

($ in millions)	2020		2019		2018		2017		2016		Prior		Total		2020		2019		2018		2017		2016		Prior		Total
FICO score
700+	$	78	$	266	$	178	$	115	$	75	$	100	$	812	$	86	$	209	$	142	$	91	$	61	$	80	$	669
600-699		22		92		64		41		27		45		291		40		91		62		39		23		36		291
<600		3		12		8		5		4		7		39		7		16		11		6		4		7		51
No score⁽¹⁾		19		62		39		21		15		36		192		34		67		40		27		18		32		218
	$	122	$	432	$	289	$	182	$	121	$	188	$	1,334	$	167	$	383	$	255	$	163	$	106	$	155	$	1,229

⁽¹⁾~~Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.~~

We apply payments we receive for timeshare financing receivables, including those in non-accrual status, to amounts due in the following order: servicing fees; interest; principal; and late charges. Once a receivable is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point. We resume interest accrual for receivables for which we had previously ceased accruing interest once the receivable is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the receivable is 121 days past due and, subsequently, we write off the uncollectible balance against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.

As of ~~March 31,~~September 30, 2020 and December 31, 2019, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of ~~$84~~$117 million and $74 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:

	March 31, 2020						September 30, 2020
($ in millions)	Securitized and Pledged		Unsecuritized		Total		Securitized		Unsecuritized		Total
Current	$	683	$	540	$	1,223	$	858	$	230	$	1,088
31 - 90 days past due		13		14		27		12		12		24
91 - 120 days past due		4		4		8		5		3		8
121 days and greater past due		3		73		76		4		105		109
	$	703	$	631	$	1,334	$	879	$	350	$	1,229

	December 31, 2019						December 31, 2019
($ in millions)	Securitized and Pledged		Unsecuritized		Total		Securitized		Unsecuritized		Total
Current	$	743	$	502	$	1,245	$	743	$	502	$	1,245
31 - 90 days past due		9		12		21		9		12		21
91 - 120 days past due		3		4		7		3		4		7
121 days and greater past due		3		64		67		3		64		67
	$	758	$	582	$	1,340	$	758	$	582	$	1,340

	March 31, 2020									September 30, 2020
($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized			Unsecuritized			Total
Balance as of December 31, 2019	$	54		$	130		$	184		$	54		$	130		$	184
Provision for financing receivables losses⁽¹⁾											(17	)		74			57
Write-offs		—			(9	)		(9	)		—			(24	)		(24	)
Provision for financing receivables losses⁽¹⁾		(6	)		43			37
Balance as of March 31, 2020	$	48		$	164		$	212
Securitization											33			(33	)		—
Balance as of September 30, 2020										$	70		$	147		$	217

	March 31, 2019									September 30, 2019
($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized			Unsecuritized			Total
Balance as of December 31, 2018	$	43		$	129		$	172		$	43		$	129		$	172
Provision for financing receivables losses⁽¹⁾											(12	)		72			60
Write-offs		—			(17	)		(17	)		—			(53	)		(53	)
Provision for financing receivables losses⁽¹⁾		(4	)		18			14
Balance as of March 31, 2019	$	39		$	130		$	169
Securitization											29			(29	)		—
Balance as of September 30, 2019										$	60		$	119		$	179

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
Completed unsold VOIs	$	241	$	241	$	402	$	241
Construction in process		386		59		273		59
Land, infrastructure and other		258		258		258		258
	$	885	$	558	$	933	$	558

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we recorded non-cash operating activity transfers from Property and equipment to Inventory. See Note 8: Property and Equipment.

Shown below are ~~(i)~~ costs of sales true-ups relating to VOI products and the related impacts to the carrying value of ~~inventory and (ii)~~inventory.

Shown below are expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects.

	March 31,			December 31,			September 30,			December 31,
($ in millions)	2020			2019			2020			2019
Land	$	104		$	154		$	104		$	154
Building and leasehold improvements		245			286			247			286
Furniture and equipment		66			65			68			65
Construction in progress		172			383			198			383
		587			888			617			888
Accumulated depreciation		(114	)		(110	)		(129	)		(110	)
	$	473		$	778		$	488		$	778

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we recorded non-cash operating activity transfers of $301 million related to the registrations for timeshare units under construction from Property and equipment to Inventory. Non-cash transfers are reflected in our unaudited condensed consolidated statements of cash flows.

As of ~~March 31,~~September 30, 2020 and December 31, 2019, we consolidated 4 variable interest entities (“VIEs”), respectively, that issued non-recourse debt backed by pledged assets consisting primarily of a pool of timeshare financing receivables which is without recourse to us. We are the primary beneficiaries of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. We are also the servicer of these timeshare financing receivables and we are required to replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. Only the assets of our VIEs are available to settle the obligations of the respective entities.

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

	March 31,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2020		2019
Restricted cash	$	26	$	26	$	30	$	26
Timeshare financing receivables, net		655		704		809		704
Non-recourse debt⁽¹⁾		690		747		837		747

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019, we did 0t provide any financial or other support to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.

As of ~~March 31,~~September 30, 2020, we have 25 percent and 50 percent ownership interests in BRE Ace LLC and 1776 Holding LLC, respectively, that are deemed as VIEs. We do not consolidate BRE Ace LLC and 1776 Holding LLC because we are not the primary beneficiary. Our investment interests in and equity earned from both VIEs are included in the consolidated balance sheets as Investments in unconsolidated affiliates and in the consolidated statements of operations as Equity in ~~earnings~~earnings(losses) from unconsolidated affiliates, respectively.

We held investments in our 2 unconsolidated affiliates with aggregated debt balances of $~~477~~458 million and $479 million as of ~~March 31,~~September 30, 2020and December 31, 2019, respectively. The debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals ~~$47~~$49 million and $44 million as of ~~March 31,~~September 30, 2020 and December 31, 2019, respectively and (ii) receivables for commission and other fees earned under fee-for-service arrangements. See Note 17: Related Party Transactions for additional information.

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

	March 31,			December 31,			September 30,			December 31,
($ in millions)	2020			2019			2020			2019
Debt⁽¹⁾
Senior secured credit facilities:
Term loan with a rate of 2.709%, due 2023	$	185		$	187
Revolver with a weighted average rate of 2.597%, due 2023		760			320
Term loan with a rate of 2.000%, due 2023							$	180		$	187
Revolver with a weighted average rate of 2.000%, due 2023								760			320
Senior notes with a rate of 6.125%, due 2024		300			300			300			300
Other debt		27			27			28			27
		1,272			834			1,268			834
Less: unamortized deferred financing costs and discount⁽²⁾⁽³⁾		(6	)		(6	)		(6	)		(6	)
	$	1,266		$	828		$	1,262		$	828

In May 2020, we amended our Credit Agreement which amended certain terms of the Senior Secured Credit Facilities to provide flexibility with respect to satisfying certain negative and financial covenants and ratios as may be needed due to the ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations. The borrowing capacity under the Credit Agreement remained the same. In connection with the Amendment we incurred $1 million in debt issuance costs.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we borrowed $495 million and repaid ~~$57~~$62 million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus 1.75 ~~percent.~~percent, subject to a 0.25 percent floor.

~~During the first quarter~~We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. As of September 30, 2020, we ~~entered into a pay-fixed/receive-variable~~had approximately $180 million of our Term Loan subject to interest rate ~~swap agreement~~swap. Such interest rate swaps converted the LIBOR-based variable rates on our ~~senior secured credit facility with a notional amount of $62 million. The one-month LIBOR was effectively modified~~Term Loan to aan average fixed annual rate of ~~0.62%~~0.53 percent per annum through November 2023. Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded as a liability in Accounts payable, accrued expenses and other in our condensed consolidated balance sheets as of September 30, 2020. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we recorded less than $1 million in accumulated other comprehensive ~~income~~loss related to the hedge.

As of ~~March 31,~~September 30, 2020 and December 31, 2019, we had $1 million of outstanding letters of credit under the revolving credit facility. We were in compliance with all applicable maintenance and financial covenants and ratios as of ~~March 31,~~September 30, 2020.

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

	March 31,			December 31,			September 30,			December 31,
($ in millions)	2020			2019			2020			2019
Non-recourse debt⁽¹⁾
Timeshare Facility with an average rate of 1.861%, due 2022	$	195		$	—
Securitized Debt with an average rate of 1.810%, due 2026		40			46		$	—		$	46
Securitized Debt with an average rate of 2.711%, due 2028		136			149			116			149
Securitized Debt with an average rate of 3.602%, due 2032		250			275			220			275
Securitized Debt with an average rate of 2.431%, due 2033		271			285			238			285
Securitized Debt with an average rate of 3.658%, due 2039								273			—
		892			755			847			755
Less: unamortized deferred financing costs⁽²⁾		(7	)		(8	)		(10	)		(8	)
	$	885		$	747		$	837		$	747

In June 2020, we completed a securitization of $300 million of gross timeshare financing receivables, which included a $15 million cash deposit that was subsequently released during the third quarter of 2020 upon pledging of qualified collateral, and issued approximately $186 million of 2.74 percent notes, $66 million of 4.22 percent notes and $48 million of 6.42 percent notes due February 2039. The Securitized Debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interests. The Securitized Debt is a non-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt. The proceeds were primarily used to pay down the remaining borrowings on our Timeshare Facility and general corporate operating expenses. In connection with the securitization we incurred $5 million in debt issuance costs.

In September 2020, we exercised our call option on the remaining outstanding principal balance on our securitized debt with an average rate of 1.810%, due 2026 (“2014-A Notes”) and prepaid the remaining balance in accordance with the terms of the arrangement.

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets.~~In January~~ As of September 30, 2020 and December 31, 2019, we had $450 million remaining borrowing capacity under our Timeshare Facility. During the second quarter of 2020, we amended the Timeshare Facility, temporarily changing certain covenant ~~requirements. All other terms~~requirements pricing and ~~borrowing capacity remained~~advance rates to be consistent with the ~~same~~amended Credit Agreement. On August 14, 2020, we amended the Timeshare Facility to extend the maturity date from April 2022 to August 2023. Additionally, the amendment reduces the maximum advance rate, replaces LIBOR with a successor benchmark interest rate, increases the excess spread percentage level that will trigger interest hedging obligations, and increases certain used and unused fees. In connection with the Amendment we incurred $2 million in ~~both amendments.~~debt issuance costs.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $31 million and $26 million as of ~~March 31,~~September 30, 2020 and December 31, 2019, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

The contractual maturities of our debt and non-recourse debt as of ~~March 31,~~September 30, 2020 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total		Debt		Non-recourse Debt		Total
Year
2020 (remaining)	$	9	$	174	$	183	$	3	$	72	$	75
2021		11		161		172		12		292		304
2022		11		307		318		12		130		142
2023		918		112		1,030		918		131		1,049
2024		300		43		343		300		74		374
Thereafter		23		95		118		23		148		171
	$	1,272	$	892	$	2,164	$	1,268	$	847	$	2,115

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

	March 31, 2020						September 30, 2020
			Hierarchy Level						Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net⁽¹⁾	$	1,122	$	—	$	1,377	$	1,012	$	—	$	1,293
Liabilities:
Debt, net⁽²⁾		1,266		270		962		1,262		311		965
Non-recourse debt, net⁽²⁾		885		—		845		837		—		835

Our estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values. The table above excludes cash and cash equivalents, restricted cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The estimated fair values of our timeshare financing receivables were determined using a discounted cash flow model. Our model incorporates default rates, coupon rates, credit quality and borrowing terms respective to the portfolio based on current market assumptions for similar types of arrangements.

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

We do 0t have any assets or liabilities measured at fair value on a recurring or non-recurring basis as of ~~March 31,~~September 30, 2020.

We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from ~~2020~~2021 through 2030, with varying renewal and termination options. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We recognize rent expense on leases with both contingent and non-contingent lease payment terms. Rent associated with non-contingent lease payments are recognized on a straight-line basis over the lease term. Rent expense for all operating leases for the three months ended ~~March 31,~~September 30, 2020 and 2019 was $2$5 million and $6 million, respectively, and $15 million and $16 million for the nine months ended September 30, 2020 and 2019, respectively. ~~This amount includes immaterial~~These amounts include $1 million of short-term ~~leases~~ and variable lease ~~costs.~~costs for the three months ended September 30, 2020 and 2019 and $2 million and $4 million for the nine months ended September 30, 2020 and 2019, respectively.


	Three Months Ended March 31,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5	$	5
Operating cash outflows from operating leases					$	14	$	12
Right-of-use assets obtained in exchange for new lease liabilities:
Operating Leases		5		1		4		9

Supplemental balance sheet information related to operating leases was as follows:

	March 31,			December 31,			September 30			December 31,
	2020			2019			2020			2019
Weighted-average remaining lease term of operating leases (in years)	5.9			6.1			5.6			6.1
Weighted-average discount rate of operating leases		5.24	%		5.34	%		4.93	%		5.34	%

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of ~~March 31,~~September 30, 2020, are as follows:

($ in millions)	Operating Leases			Operating Leases
Year
2020 (remaining)	$	14		$	5
2021		18			17
2022		13			13
2023		12			12
2024		11			11
Thereafter		22			22
Total future minimum lease payments	$	90		$	80
Less: imputed interest		(13	)		(10	)
Present value of lease liabilities	$	77		$	70

At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective tax rate is determined by the level and composition of pre-tax ordinary income or loss, which is subject to federal, foreign and state and local income taxes. The effective tax rate for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019 was approximately 1120 percent and 2728 percent, respectively. The decrease in the effective tax rate is primarily due to the tax benefit on our worldwide estimated ordinary loss being reduced by the incremental tax expense from the estimated ordinary income in our foreign jurisdictions, the interest due on income deferred related to installment sales, and the impact of estimated permanent differences between financial reporting and taxable income.

We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to

be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of ~~March 31,~~September 30, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no effect on either the ~~March 31,~~September 30, 2020 tax rate or the computation of the estimated effective tax rate for the year. We will continue to evaluate the income tax provisions of the CARES Act and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have income tax accounting and disclosure implications.

We have requested a change in accounting method effective for the taxable year beginning on January 1, 2020 and ending on December 31, 2020 which is pending IRS review as of September 30, 2020. The impact of the requested method change will be included in the financial statements upon IRS consent.

We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units (“Performance RSUs”) and nonqualified stock options (“Options”) to certain employees and directors. For the three months ended March, 31, 2020, we recognized a credit to share-based compensation expense of $2 million due to the reversal of $8 million of expense recognized in prior years related to our Performance RSUs which are not expected to achieve certain performance targets. See ~~Performance Shares~~ ~~below for additional information. For the three months ended March 31, 2019, we~~We recognized share-based compensation expense of $5~~million.~~$6 million for the three months ended September 30, 2020 and 2019, and $10 million and $18 million for the nine months ended September 30, 2020 and 2019, respectively. As of ~~March 31,~~September 30, 2020, unrecognized compensation costs for unvested awards were approximately ~~$32~~$19 million, which is expected to be recognized over a weighted average period of ~~1.9~~1.8 years. As of ~~March 31,~~September 30, 2020, there were ~~5,192,801~~5,213,524 shares of common stock available for future issuance under this plan.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we issued ~~609,311~~652,583 Service RSUs with a grant date fair value of ~~$25.80,~~$25.24, which generally vest in equal annual installments over three years from the date of grant.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we issued 566,401 Options with an exercise price of $25.80, which vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was $9.14, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

As of ~~March 31,~~September 30, 2020, we had ~~1,122,415~~1,102,064 Options outstanding that were exercisable.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we issued 172,620 Performance RSUs with a grant date fair value of $25.80. The Performance RSUs are settled at the end of a three-year performance period, with 70 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 30 percent of the Performance RSUs are subject to the achievement of certain contract sales targets. ~~As of~~In March ~~31,~~ 2020, we determined that the performance conditions for the 2018, 2019, and 2020 Performance RSU awards ~~are~~were improbable of achievement due to the significantly negative impact of the COVID-19 pandemic on the global economy, demand for travel and leisure, and our ~~business, including the temporary closures of substantially all of our properties and suspension of substantially all of our sales and other operations, as described in Note 21:~~ ~~COVID-19 and Subsequent Events~~.business. As a result, we reversed $8 million of previously recognized share-based compensation expense related to our 2018 and 2019 Performance RSUs and ceased accruing expense related to Performance RSUs granted in 2018, 2019, and 2020, during the three months ended March 31, 2020. As of September 30, 2020, we determined the performance conditions continue to be improbable of achievement and therefore no expense was recognized in the current period.

In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the Plan, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than ~~95%~~95 percent of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. During the three and nine months ended ~~March 31,~~September 30, 2020 and 2019, we recognized less than $1 million of compensation expense related to this plan.

The following table presents the calculation of our basic and diluted (loss) earnings per share (“EPS”). The weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~March 31,~~September 30, 2020 was ~~85,519,151~~ 85,082,124and ~~86,044,525, respectively,~~for the nine months ended September 30, 2020 was 85,198,910.The weighted-average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~March 31,~~September 30, 2019 was ~~94,092,147~~85,704,321 and ~~94,597,630,~~86,272,979, respectively, and for the nine months ended September 30, 2019 was 89,863,807 and 90,348,418, respectively.

	Three Months Ended March 31,				Three Months Ended September 30,					Nine Months Ended September 30,
($ and shares outstanding in millions, except per share amounts)	2020		2019		2020			2019		2020			2019
Basic EPS:
Numerator:
Net Income⁽¹⁾	$	8	$	55
Net (loss) income⁽¹⁾					$	(7	)	$	50	$	(47	)	$	144
Denominator:
Weighted average shares outstanding		86		94		85			86		85			90
Basic EPS	$	0.09	$	0.59	$	(0.08	)	$	0.59	$	(0.55	)	$	1.61
Diluted EPS:
Numerator:
Net Income⁽¹⁾	$	8	$	55
Net (loss) income⁽¹⁾					$	(7	)	$	50	$	(47	)	$	144
Denominator:
Weighted average shares outstanding		86		95		85			86		85			90
Diluted EPS	$	0.09	$	0.58	$	(0.08	)	$	0.59	$	(0.55	)	$	1.60

The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period. Potentially dilutive shares of 308,441 and 332,883 for the three and nine months ended September 30, 2020, respectively, were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share as a result of our net loss position.

For the three and nine months ended ~~March 31,~~September 30, 2020, we excluded2,816,707 and 2,506,497, respectively, and for the three and nine months ended September 30, 2019, we excluded~~1,754,656~~ 887,859 and ~~948,248~~979,779 share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.

We hold a 25 percent ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold a 50 percent ownership interest in 1776 Holding, LLC, a VIE, which will construct a timeshare resort property, known as “Liberty Place Charleston, by Hilton Club.”

We record Equity in earnings (losses) from our unconsolidated affiliates in our condensed consolidated statements of operations. See Note 10: Investments in Unconsolidated Affiliates for additional information. Additionally, we earn commissions and other fees related to fee-for-service agreements with the investees to sell VOIs at Elara, by Hilton Grand Vacations and Liberty Place Charleston, by Hilton Club. These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became related parties.

	Three Months Ended March 31,				Three Months Ended September 30,					Nine Months Ended September 30,
($ in millions)	2020		2019		2020			2019		2020		2019
Equity in earnings from unconsolidated affiliates	$	3	$	1
Equity in (losses) earnings from unconsolidated affiliates					$	(1	)	$	1	$	3	$	4
Commissions and other fees		23		36		16			31		43		99

We also have ~~$23~~$7 million and $25 million of outstanding receivables related to the fee-for-service agreements as of ~~March 31,~~September 30, 2020 and December 31, 2019, respectively.

The performance of our operating segments is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”). We define Adjusted EBITDA as EBITDA which has been further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

The following table present revenues for our reportable segments reconciled to consolidated amounts:

	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019			2020			2019
Revenues:
Real estate sales and financing	$	206		$	307		$	116		$	324		$	378		$	939
Resort operations and club management⁽¹⁾⁽²⁾		104			110			61			108			209			332
Total segment revenues		310			417			177			432			587			1,271
Cost reimbursements		49			42			33			43			105			128
Intersegment eliminations⁽¹⁾⁽²⁾		(8	)		(9	)		(2	)		(9	)		(10	)		(29	)
Total revenues	$	351		$	450		$	208		$	466		$	682		$	1,370

The following table presents Segment Adjusted EBITDA for our reportable segments reconciled to net (loss) income:

	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019			2020			2019
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	15		$	80		$	15		$	94		$	16		$	243
Resort operations and club management⁽¹⁾		55			65			30			62			100			193
Segment Adjusted EBITDA		70			145			45			156			116			436
General and administrative		(21	)		(27	)		(22	)		(30	)		(65	)		(87	)
Depreciation and amortization		(12	)		(8	)		(11	)		(12	)		(34	)		(32	)
License fee expense		(22	)		(23	)		(11	)		(26	)		(39	)		(75	)
Other gain (loss), net		2			(1	)		1			(1	)		—			(3	)
Interest expense		(10	)		(10	)		(10	)		(12	)		(32	)		(33	)
Income tax expense		(1	)		(20	)
Equity in earnings from unconsolidated affiliates		3			1
Income tax benefit (expense)								5			(20	)		12			(55	)
Equity in (losses) earnings from unconsolidated affiliates								(1	)		1			3			4
Other adjustment items⁽²⁾		(1	)		(2	)		(3	)		(6	)		(8	)		(11	)
Net income	$	8		$	55
Net (loss) income							$	(7	)	$	50		$	(47	)	$	144

We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of ~~March 31,~~September 30, 2020, we were committed to purchase approximately ~~$473~~$457 million of inventory and land over a period of 1110 years and ~~$26~~$16 million of other commitments under the normal course of business. Additionally, we have committed to develop additional vacation ownership units at an existing resort in Japan. During the second quarter of 2020, we entered into an agreement to exchange parcels of land in Hawaii, subject to the successful completion of zoning, land use requirements and other applicable regulatory requirements. The actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020 ~~we did 0t make any purchases under our commitments. During the three months ended March 31,~~and 2019, we purchased $9$16 million and $66 million, respectively, as required under our inventory-related purchase commitments. As of ~~March 31,~~September 30, 2020, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:

($ in millions)	2020 (remaining)		2021		2022		2023		2024		Thereafter		Total		2020 (remaining)		2021		2022		2023		2024		Thereafter		Total
Inventory purchase obligations	$	26	$	225	$	110	$	58	$	40	$	14	$	473	$	10	$	225	$	110	$	58	$	40	$	14	$	457
Other commitments⁽¹⁾		14		11		1		—		—		—		26		1		10		3		2		—		—		16
Total	$	40	$	236	$	111	$	58	$	40	$	14	$	499	$	11	$	235	$	113	$	60	$	40	$	14	$	473

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe that possible losses derived from an unfavorable outcome that is reasonably possible or remote is not reasonably estimable. While the actual results of claims and litigation cannot be predicted with certainty, we expect that the resolution of all pending or threatened claims and litigation as of ~~March 31,~~September 30, 2020, will 0t materially affect our unaudited condensed consolidated financial statements.

The following schedules present the unaudited condensed consolidating financial information as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 for the Parent, Subsidiary Issuers, Guarantors and Non-Guarantors.

March 31, 2020

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

ASSETS

Cash and cash equivalents

$
4

$
—

$
617

$
48

$
—

$
669

Restricted cash

—

—

59

31

—

90

Accounts receivable, net

—

—

168

34

(44
)

158

Timeshare financing receivables, net

—

—

276

846

—

1,122

Inventory

—

—

803

82

—

885

Property and equipment, net

—

—

462

11

—

473

Operating lease right-of-use assets, net

—

—

60

2

—

62

Investments in unconsolidated affiliates

—

—

47

—

—

47

Intangible assets, net

—

—

78

—

—

78

Other assets

—

5

103

12

—

120

Investments in subsidiaries

559

1,793

146

—

(2,498
)

—

TOTAL ASSETS

$
563

$
1,798

$
2,819

$
1,066

$
(2,542
)

$
3,704

LIABILITIES AND EQUITY

Accounts payable, accrued
expenses and other

$
—

$
—

$
278

$
34

$
(44
)

$
268

Advanced deposits

—

—

117

—

—

117

Debt, net

—

1,239

27

—

—

1,266

Non-recourse debt, net

—

—

—

885

—

885

Operating lease liabilities

—

—

76

1

—

77

Deferred revenues

—

—

277

—

—

277

Deferred income tax liabilities

—

—

251

—

—

251

Total equity

563

559

1,793

146

(2,498
)

563

TOTAL LIABILITIES AND EQUITY

$
563

$
1,798

$
2,819

$
1,066

$
(2,542
)

$
3,704

December 31, 2019

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

ASSETS

Cash and cash equivalents

$
2

$
—

$
33

$
32

$
—

$
67

Restricted cash

—

—

59

26

—

85

Accounts receivable, net

—

—

192

52

(70
)

174

Timeshare financing receivables, net

—

—

449

707

—

1,156

Inventory

—

—

524

34

—

558

Property and equipment, net

—

—

718

60

—

778

Operating lease right-of-use assets, net

—

—

58

2

—

60

Investments in unconsolidated affiliate

—

—

44

—

—

44

Intangible assets, net

—

—

77

—

—

77

Other assets

—

5

64

11

—

80

Investments in subsidiaries

568

1,364

136

—

(2,068
)

—

TOTAL ASSETS

$
570

$
1,369

$
2,354

$
924

$
(2,138
)

$
3,079

LIABILITIES AND EQUITY

Accounts payable, accrued
expenses and other

$
—

$
—

$
329

$
39

$
(70
)

$
298

Advanced deposits

—

—

115

—

—

115

Debt, net

—

801

27

—

—

828

Non-recourse debt, net

—

—

—

747

—

747

Operating lease liabilities

—

—

74

2

—

76

Deferred revenues

—

—

186

—

—

186

Deferred income tax liabilities

—

—

259

—

—

259

Total equity

570

568

1,364

136

(2,068
)

570

TOTAL LIABILITIES AND EQUITY

$
570

$
1,369

$
2,354

$
924

$
(2,138
)

$
3,079

For the Three Months Ended March 31, 2020

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Revenues

Sales of VOIs, net

$
—

$
—

$
32

$
24

$
—

$
56

Sales, marketing, brand and other fees

—

—

120

3

(17
)

106

Financing

—

—

20

26

(2
)

44

Resort and club management

—

—

44

—

—

44

Rental and ancillary services

—

—

51

1

—

52

Cost reimbursements

—

—

48

1

—

49

Total revenues

—

—

315

55

(19
)

351

Expenses

Cost of VOI sales

—

—

9

5

—

14

Sales and marketing

—

—

157

17

(17
)

157

Financing

—

—

5

10

(2
)

13

Resort and club management

—

—

12

—

—

12

Rental and ancillary services

—

—

35

2

—

37

General and administrative

—

—

21

—

—

21

Depreciation and amortization

—

—

12

—

—

12

License fee expense

—

—

22

—

—

22

Cost reimbursements

—

—

48

1

—

49

Total operating expenses

—

—

321

35

(19
)

337

Interest expense

—

(10
)

—

—

—

(10
)
Dividends from subsidiary

12

12

—

—

(24
)

—

Equity in earnings from unconsolidated
affiliates

—

—

3

—

—

3

Other gain, net

—

—

2

—

—

2

Income before income taxes

12

2

(1
)

20

(24
)

9

Income tax expense

—

—

(1
)

—

—

(1
)
Income before equity in earnings
from subsidiaries

12

2

(2
)

20

(24
)

8

Equity in earnings from subsidiaries

(4
)

18

20

—

(34
)

—

Net income

$
8

$
20

$
18

$
20

$
(58
)

$
8

For the Three Months Ended March 31, 2019

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Revenues

Sales of VOIs, net

$
—

$
—

$
107

$
18

$
—

$
125

Sales, marketing, brand and other fees

—

—

151

1

(11
)

141

Financing

—

—

18

25

(2
)

41

Resort and club management

—

—

42

—

—

42

Rental and ancillary services

—

—

58

1

—

59

Cost reimbursements

—

—

41

1

—

42

Total revenues

—

—

417

46

(13
)

450

Expenses

Cost of VOI sales

—

—

33

3

—

36

Sales and marketing

—

—

170

11

(11
)

170

Financing

—

—

4

11

(2
)

13

Resort and club management

—

—

11

—

—

11

Rental and ancillary services

—

—

34

1

—

35

General and administrative

—

—

27

—

—

27

Depreciation and amortization

—

—

8

—

—

8

License fee expense

—

—

22

1

—

23

Cost reimbursements

—

—

41

1

—

42

Total operating expenses

—

—

350

28

(13
)

365

Interest expense

—

(10
)

—

—

—

(10
)
Dividends from subsidiary

125

125

—

—

(250
)

—

Equity in earnings from unconsolidated
affiliates

—

—

1

—

—

1

Other loss, net

—

—

(1
)

—

—

(1
)
Income (loss) before income taxes

125

115

67

18

(250
)

75

Income tax expense

—

—

(20
)

—

—

(20
)
Income (loss) before equity in earnings
(loss) from subsidiaries

125

115

47

18

(250
)

55

Equity in (loss) earnings from subsidiaries

(70
)

65

18

—

(13
)

—

Net income

$
55

$
180

$
65

$
18

$
(263
)

$
55

For the Three Months Ended March 31, 2020

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Operating Activities

Net cash provided by (used in) operating
   activities

$
8

$
20

$
186

$
(104
)

$
(57
)

$
53

Investing Activities

Capital expenditures for property and
   equipment

—

—

(1
)

(2
)

—

(3
)
Software capitalization costs

—

—

(5
)

—

—

(5
)
Investments in unconsolidated affiliates

—

—

—

—

—

—

Dividends from subsidiary

12

12

—

—

(24
)

—

Net cash provided by (used in) investing
   activities

12

12

(6
)

(2
)

(24
)

(8
)
Financing Activities

Issuance of debt

—

495

—

—

—

495

Issuance of non-recourse debt

—

—

—

195

—

195

Repayment of debt

—

(57
)

—

—

—

(57
)
Repayment of non-recourse debt

—

—

—

(58
)

—

(58
)
Repurchase and retirement of common stock

(10
)

—

—

—

—

(10
)
Payment of withholding taxes on vesting of
   restricted stock units

(2
)

—

—

—

—

(2
)
Other financing activity

—

—

(1
)

—

—

(1
)
Intercompany transfers

(6
)

(470
)

405

(10
)

81

—

Net cash (used in) provided by financing
   activities

(18
)

(32
)

404

127

81

562

Net increase in cash, cash
   equivalents and restricted cash

2

—

584

21

—

607

Cash, cash equivalents and restricted cash,
   beginning of period

2

—

92

58

—

152

Cash, cash equivalents and restricted cash,
   end of period

$
4

$
—

$
676

$
79

$
—

$
759

For the Three Months Ended March 31, 2019

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Operating Activities

Net cash provided by (used in) operating
   activities

$
—

$
140

$
(2
)

$
66

$
(190
)

$
14

Investing Activities

Capital expenditures for property and
   equipment

—

—

(5
)

(1
)

—

(6
)
Software capitalization costs

—

—

(4
)

—

—

(4
)
Dividends from subsidiary

100

100

—

—

(200
)

—

Net cash used in investing activities

100

100

(9
)

(1
)

(200
)

(10
)
Financing Activities

Issuance of debt

—

195

—

—

—

195

Repayment of debt

—

(23
)

—

—

—

(23
)
Repayment of non-recourse debt

—

—

—

(40
)

—

(40
)
Repurchase and retirement of common stock

—

(92
)

—

—

—

(92
)
Payment of withholding taxes on vesting of
   restricted stock units

—

(2
)

—

—

—

(2
)
Intercompany transfers

(91
)

(318
)

37

(18
)

390

—

Net cash (used in) provided by financing
   activities

(91
)

(240
)

37

(58
)

390

38

Net increase in cash, cash equivalents and
   restricted cash

9

—

26

7

—

42

Cash, cash equivalents and restricted cash,
   beginning of period

4

—

134

42

—

180

Cash, cash equivalents and restricted cash,
   end of period

$
13

$
—

$
160

$
49

$
—

$
222

On October 15, 2020, we announced a workforce reduction plan in response to the continuing adverse impact of the COVID-19 pandemic and related government orders and mandates restricting travel and operations on our business and the travel and leisure industry in general. The reduction in force is expected to reduce our workforce by approximately 1,600 team members and better align the workforce with the evolving business needs.

The ~~novel coronavirus (“COVID-19”) pandemic has significantly impacted~~reduction in force is estimated to result in approximately $10 million to $12 million in restructuring and related expenses and charges, primarily related to employee severance, benefits and related costs. We expect to incur a majority of these costs during the ~~hospitality industry due to travel restrictions and stay-at-home directives that have resulted in cancellations and significantly reduced travel around the world. As a result~~last quarter of 2020. All of the ~~reduction~~restructuring and related expenses and charges are expected to result in travel, we have closed substantially all of our resorts and sales centers for an indeterminate duration. In response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million. cash expenditures.

~~In addition,~~Additionally, in October 2020, we ~~drew down on the availability~~repaid $100 million under our revolving credit facility as a precautionary measure to ensure liquidity for a sustained period. As we are not able to estimate the dates that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our business. Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.facility.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019.

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements convey management’s expectations as to our future, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time we make such statements. Forward-looking statements include all statements that are not historical facts, including those related to our revenues, earnings, cash flow and operations, and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” predicts,” “intends,” “plans,” “estimates,” “anticipates” “future,” “guidance,” “target,” or the negative version of these words or other comparable words. The forward-looking statements contained in this Report include statements related to our revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are not historical facts.

We caution you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond our control, that may cause our actual results, performance or achievements to be materially different from the future results, business performance or achievements expressed in or implied by such statements. The forward-looking statements in this Report are not guarantees of our future performance, and you should not place undue reliance on such statements.results. Factors that could cause our a~~ctual~~actual results to differ materially from those contemplated by our forward-looking statements include: the material impact of the COVID-19 pandemic on our business, operating results, and financial condition, including, without limitation, our ability to meet certain sales and performance levels, particularly as they relate to our fee-for-service and third party partners, the effectiveness of actions taken by us to manage the impact of the pandemic, and the duration of closure of substantially all of our properties and operations, and uncertainties of when our properties will re-open or the period of time required for ramp-up of operations upon re-opening;condition; the extent and duration of the impact of the COVID-19 pandemic on global economic conditions; ~~the extent and duration of government and other restrictions on travel and commercial activity in response to the COVID-19 pandemic;~~ our ability to meet our liquidity ~~needs~~needs; risks related to our indebtedness; inherent business risks, market trends and competition within the timeshare and hospitality industries; our ability to ~~remain compliant with~~successfully source inventory and market, sell and finance VOIs; default rates on our ~~debt covenants; risks associated with~~financing receivables; the ~~inherent business, financial~~reputation of and operating risks of the timeshare industry, including limited underwriting standards due to the real-time nature of industry sales practices, and the intense competition associated with the industry; our ability ~~successfully market~~to access Hilton brands and ~~sell VOIs; our development and other activities to source inventory for VOI sales; significant increases in defaults on our vacation ownership mortgage receivables;~~programs, including the ~~ability~~risk of managed homeowner associations to collect sufficient maintenance fees; general volatility in the economy and/or the financial and credit markets; adverse economic or market conditions and trends in the tourism and hospitality industry, which may impact the purchasing and vacationing decisions of consumers; our actions or the occurrence of other events that could cause a breach ~~under~~ or termination of our license agreement with Hilton that could affect or terminate our access to the Hilton brands and programs, or actions of Hilton that affect the reputation of the licensed marks or Hilton’s programs; economic and operational uncertainties related to our expanding global operations, including our ability ~~to manage the outcome and timing of such operations and~~Hilton; compliance with ~~anti-corruption, data privacy~~ and ~~other~~ ~~applicable~~changes to United States and global laws and regulations, ~~affecting our international operations;~~ ~~the effects of foreign currency exchange;~~ ~~changes in tax rates~~including those related to anti-corruption and ~~exposure~~privacy; risks related to ~~additional tax liabilities; the impact of future changes in legislation, regulations or accounting pronouncements;~~ our acquisitions, joint ventures, and ~~strategic alliances that that may not result in expected benefits, including the termination of material fee-for-service agreements;~~other partnerships; our dependence on third-party development activities to secure just-in-time inventory; ~~our use~~the performance of ~~social media platforms; cyber-attacks, security vulnerabilities, and~~our information technology ~~system failures resulting in disclosure of personal~~systems and our ability to maintain data company data loss, system outages or disruptions of our online services, which could lead to reduced revenue, increased costs, liability claims, harm to user engagement, and harm to our reputation or competitive position; the impact of claims against us that may result in adverse outcomes, includingsecurity; regulatory proceedings or litigation; adequacy of our ~~credit facilities, indenture~~workforce to meet our business and ~~other debt agreements and instruments, including variable interest rates, operating and financial restrictions,~~operation needs; our ability to ~~make scheduled payments,~~attract and ~~our ability to refinance our debt on acceptable terms; the~~ ~~continued service and availability of~~retain key executives and employees ~~including our ability~~with skills and capacity to meet ~~human capital needs given~~ our ~~recent furloughs as our business~~needs; and ~~operations normalize after the COVID-19 pandemic eases and the succession planning of our key executives; and~~ ~~catastrophic events or geo-political conditions including war, terrorist activity, political strife, pandemic outbreak (including COVID-19), or~~ natural disasters ~~that may disrupt our operations in key vacation destinations.~~or adverse geo-political conditions. Any one or more of the foregoing factors could adversely impact our operations, revenue, operating margins, financial condition and/or credit rating.

For additional information regarding factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements in this Report, please see the risk factors discussed in “Part I—Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented and updated by the risk factors discussed in “Part II-Item 1A. Risk Factors” of our Quarterly Reports on Forms 10-Q for the quarter ended March 31, 2020, June 30, 2020 and this Report, as well as those described from time to time other periodic reports that we file with the SEC. ~~There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.~~ Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, changes in management’s expectations, or otherwise.

Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” or “resorts” and “units” refer to the timeshare properties that we manage or own. Of these resorts and units, a portion is directly owned by us or orour joint ventures in which we have an interest and the remaining resorts and units are owned by our third-party owners.

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

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

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

This Quarterly Report on Form 10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including earnings before interest expense (excluding interest expense relating to our non-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, free cash flow and adjusted free cash flow.

This Quarterly Report on Form 10-Q includes discussion of key business operational metrics including contract sales, sales revenue, real estate margin, tour flow, and volume per ~~guest and transient rate.~~guest.

See “Key Business and Financial Metrics and Terms Used by Management” and “-Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providing non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S. GAAP.

We are a timeshare company that markets and sells VOIs, manages resorts in top leisure and urban destinations, and operates a points-based vacation club. As of ~~March 31,~~September 30, 2020, we have 5960 properties, representing ~~9,551~~9,594 units, that are primarily located in vacation destinations such as Orlando, Las Vegas, the Hawaiian Islands, New York City, Washington D.C., and South Carolina and feature spacious, condominium-style accommodations with superior amenities and quality service. As of ~~March 31,~~September 30, 2020, we have approximately 328,000 Hilton Grand Vacations Club and Hilton Club (collectively the “Club”) members. Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 18 industry-leading brands across approximately ~~6,000~~6,200 properties, as well as numerous experiential vacation options, such as cruises and guided tours. Our business has been and continues to be adversely impacted by the COVID-19 pandemic and its effects on the global economy, including the various government orders and mandates for closures of non-essential businesses. Please see ~~“COVID-19 and Subsequent~~“Recent Events” and other discussions throughout this Report for additional information regarding such impacts.

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

Our primary product is the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties. This ownership interest is an interest in real estate generally equivalent to one week on an annual basis, at the timeshare resort where the VOI was purchased. Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties. ~~In 2010, we began sourcing~~We source VOIs through fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix focused on developed properties as well as fee-for-service and just-in-time agreements. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers. Sales of owned, including just-in-time inventory, generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, sales from fee-for-service, just-in-time and developed inventory sources were 5355 percent, 2522 percent and 2223 percent, respectively, of contract sales. See “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics” for additional discussion of contract sales. ~~Based on~~The estimated contract sales value related to our ~~trailing twelve months sales pace, we have access to approximately seven years of~~inventory that is currently available for sale at open or soon-to-be open projects and inventory at new or existing projects that will become available for sale in the future ~~inventory, with capital~~upon registration, delivery or construction is $10 billion at current pricing.

Capital efficient arrangements ~~representing~~represent approximately 52 percent of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.

We sell our vacation ownership products under the Hilton Grand Vacations brand primarily through our distribution network of both in-market and off-site sales centers. Our products are currently marketed for sale throughout the United States and the Asia-Pacific region. We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership. We have sales distribution centers in Las Vegas, Orlando, Oahu, Japan, New York, Myrtle Beach, Waikoloa, Washington D.C., Hilton Head, Park City, Chicago, Korea and Carlsbad. Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach. We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products and have an affinity with Hilton and are frequent leisure travelers. Tour flow quality impacts key metrics such as close rate and VPG, defined in “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics.” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables. For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, 5560 percent of our contract sales were to our existing owners.

We provide financing for members purchasing our developed and acquired inventory and generate interest income. Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing loans that bear a fixed interest rate typically ranging from 9 percent to 18 percent per annum. Financing propensity was 6365 percent and 6567 percent for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019, respectively. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.

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

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

Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 6: Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

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

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

We also manage and operate the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Club members. When owners purchase a

VOI, they are generally enrolled in the Club and given an annual allotment of points that allow the member to exchange their annual usage rights in the VOI that they own for a number of vacation and travel options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.

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

We believe that the presentation of contract sales on a combined basis (fee-for-service and developed) is most appropriate for the purpose of the operating metric, additional information regarding the split of contract sales, is included in “—Real Estate” below. See Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our audited consolidated financial statements included in Item 8 in our Annual Report on form 10-K for the year ended December 31, 2019, for additional information on Sales of VOI, net.

For further information see Item 8. Financial Statements and Supplementary Data - Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2019.

EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income (loss), before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and certain other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

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

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

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

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

Recent Events Related to the COVID-19 Pandemic and ~~Other Matters~~Impact on Our Results of Operations, Financial Condition, and Business During the Three and Nine Months Ended September 30, 2020.

In March 2020, a National Public Health Emergency was declared in response to the coronavirus, known as COVID-19. As a result, many local, county and state government officials have issued, and continue to issue, various mandates and orders to close non-essential businesses, impose travel restrictions, and require “stay-at-home” and/or self-quarantine in certain cases, all in an effort to protect the health and safety of individuals and aimed at slowing and ultimately stopping the spread and transmission of the ~~virus.~~virus.

Accordingly, commencing ~~as of~~in March ~~31,~~ 2020, we ~~had~~started to temporarily ~~closed~~close substantially all of our properties and suspended our U.S sales operations and closed such sales offices. ~~In addition,~~We took a number of other actions to reduce our expenses and preserve liquidity, including workforce furlough, implementing salary reductions for the remaining active employees primarily during the second quarter of 2020, implementing hiring freezes, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million. Recently, we ~~have stopped accepting reservations at our U.S., Europe,~~announced a workforce reduction plan that will impact approximately 1,600 team members, and ~~Barbados resorts. We also furloughed more than 6,100~~approximately 2,000 of our ~~approximately 9,100 employees~~ team members remain furloughed.

Furthermore, we believe the following actions will provide adequate capital to meet our short-and long-term liquidity requirements for anticipated operating expenses and ~~implemented hiring freezes.~~ ~~We currently anticipate that these temporary closures. modified operating plans, non-acceptance of reservations,~~other expenditures, including payroll and related ~~actions will be in place through~~benefits, legal costs, and additional costs related to complying with various regulatory requirements and best practices for opening under the ~~end~~current environment resulting from the pandemic, and to finance our long-term growth plan and capital expenditures for the foreseeable future.

The closure of ~~April 2020, after which we will re-evaluate~~ our ~~decision~~resorts and sales centers, and the related suspensions of our operations, expectedly have had a materially adverse impact on ~~a case-by-case basis after taking into account various government orders~~our revenues, net income (loss) and ~~mandates at such time,~~other operating results during the third quarter, as well as our business and operations generally, as more fully discussed below. As discussed in further detail below, substantially all of the ~~safety~~unfavorable changes in our operating results during the three and nine months ended September 30, 2020 as compared to prior periods were as a result of ~~our owners, guests and employees.~~ ~~Our sales operations in Japan and South Korea remain open on a limited basis.~~

~~In April 2020, in response to~~ the ongoing impact of the COVID-19 pandemic ~~we filed a Current Report~~ on ~~Form 8-K disclosing that our executive officers and~~travel demand, along with the ~~Board~~temporary closure of Directors had agreed to temporarily reduce officers’ base salaries and forgo non-employee directors’ annual cash retainers. In addition, we disclosed that we had drawn down the substantial remaindersubstantially all of our ~~available borrowings under~~properties and suspension of our ~~credit facility through net borrowings~~sales and related operations during the first half of ~~an additional $445 million. After taking into account~~2020.

Additionally, as a result of the ~~other borrowings~~ongoing COVID-19 pandemic, we are performing a review over certain of our long-lived assets in order to determine our optimal strategic direction with regards to these assets. These assets include undeveloped parcels of land and ~~repayments over~~certain unallocated infrastructure costs related to future phases of existing resorts. The result of this review could have a material impact on the ~~course~~carrying value of ~~March 2020, the total amount outstanding under our credit facility immediately thereafter was $761 million at an average interest rate of 2.60%.~~certain assets, which could result in non-cash impairments.

The COVID-19 pandemic has created an unprecedented and challenging time. Our current focus is on taking critical actions that are aimed at positioning the Company in a sound position from an operational, liquidity, credit access, and compliance perspective for a strong recovery when the impact of COVID-19 subsides. As discussed above, we have taken several steps to enhance our liquidity, preserve cash, reduce our expenditures and provide financial ~~flexibility, and our management is continuing~~flexibility. We will continue to assess the evolving ~~situation and will take additional actions as appropriate. We will continue to monitor the~~ COVID-19 pandemic, ~~and its related impact,~~ including the various government mandates and orders that ~~have caused us to close substantially all~~impact the re-opening of our properties and any new recommended or required business ~~practice,~~practices, and ~~start~~will take additional actions as appropriate.

Prior to ~~re-open~~re-opening our resorts and sales centers, we introduced the HGV Enhanced Care Guidelines, designed to provide owners, guests and team members with the highest level of cleaning protocols and safety standards recommended by the Center for Disease Control and Prevention and cleaning solutions approved by the Environmental Protection Agency in response to the COVID-19 pandemic. Along with providing personal protective equipment to team members, these Enhanced Care Guidelines include low-touch arrivals and departures, frequent and thorough cleaning, reduction of paper items, reduced capacity for our pool decks and fitness centers, and new technologies. While operations were suspended,

essential resort personnel worked diligently maintaining the resorts for a safe re-opening. Annual deep cleanings, typically scheduled during slower seasons, were moved up and completed, allowing the resorts to be in top shape when owners and guests arrive.

Although we have started re-opening our sales centers, they have initially been operating at lower levels of utilization than they were prior to the temporary shutdown. This includes lower levels of sales staff, modified operating schedules to stagger tours in compliance with social distancing rules, and running a reduced weekly operating calendar. As we respond to changes in tour flow, we intend to adjust our sales operations accordingly while complying with all applicable social distancing rules and our own safety measures.

While we plan to continue to reopen our resorts and resume our business as conditions and applicable rules and regulations permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Further, ongoing strict travel and other restrictions in regions and locations where we have a significant concentration of our properties and ~~normalize~~units, in particular, Hawaii and New York, are significantly impacting consumer demand for our ~~operations. In~~resorts in those areas.

Accordingly, there remains significant uncertainty as to the ~~meantime, we will continue to work on key initiatives, such as our digital strategy~~degree of impact and ~~other sales strategy that may not be impacted by~~duration of the ~~various closures, so that we are as well positioned as possible once~~conditions stemming from the ~~impact of COVID-19 has eased.~~

~~Any sustained material adverse impact~~ongoing pandemic on our revenues, net income and other operating results, ~~due~~as well as our business and operations generally. Any significantly extended duration or worsening of the conditions associated with the pandemic may adversely impact our liquidity in the longer term, including our ability to ~~COVID-19 could cause~~finance our day-to-day business and operations, and may adversely affect our ability to comply with our maintenance and financial covenants and ratios under our debt obligations notwithstanding the recent amendments discussed above. However, we believe that prior to triggering an event of default, if any, in connection with the financial covenants under our debt ~~obligations~~agreements we would be able to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiationsreach an agreement with our lenders to amend such covenants ~~as needed and believe we will be able to reach an agreement~~ in advance of any ~~such~~potential default.

Please review carefully the risk factors contained in our Form 10-K for the year ended December 31, 2019 and those that are included in our Forms 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and this Report for discussions of various factors and uncertainties related to the pandemic that may materially impact us.

Three and Nine Months Ended ~~March 31,~~September 30, 2020 Compared with the Three and Nine Months Ended ~~March 31,~~September 30, 2019

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 18: Business Segments in our unaudited condensed consolidated financial statements. We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance. For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following tables set forth revenues and Adjusted EBITDA by segment:

	Three Months Ended March 31,						Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2020			2019			$			%
Revenues:
Real estate sales and financing	$	206		$	307		$	(101	)		(32.9	)%	$	116		$	324		$	(208	)		(64.2	)%	$	378		$	939		$	(561	)		(59.7	)%
Resort operations and club management		104			110			(6	)		(5.5	)		61			108			(47	)		(43.5	)		209			332			(123	)		(37.0	)
Segment revenues		310			417			(107	)		(25.7	)		177			432			(255	)		(59.0	)		587			1,271			(684	)		(53.8	)
Cost reimbursements		49			42			7			16.7			33			43			(10	)		(23.3	)		105			128			(23	)		(18.0	)
Intersegment eliminations⁽¹⁾		(8	)		(9	)		1			(11.1	)		(2	)		(9	)		7			(77.8	)		(10	)		(29	)		19			(65.5	)
Total revenues	$	351		$	450		$	(99	)		(22.0	)	$	208		$	466		$	(258	)		(55.4	)	$	682		$	1,370		$	(688	)		(50.2	)

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

	Three Months Ended March 31,					Variance						Three Months Ended September 30,					Variance						Nine Months Ended September 30,					Variance
($ in millions)	2020			2019		$			%			2020			2019		$			%			2020			2019		$			%
Net Income	$	8		$	55	$	(47	)		(85.5	)%
Net (loss) income												$	(7	)	$	50	$	(57	)	NM⁽¹⁾			$	(47	)	$	144	$	(191	)	NM⁽¹⁾
Interest expense		10			10		—			—			10			12		(2	)		(16.7	)%		32			33		(1	)		(3.0	)%
Income tax expense		1			20		(19	)		(95.0	)
Income tax (benefit) expense													(5	)		20		(25	)	NM⁽¹⁾				(12	)		55		(67	)	NM⁽¹⁾
Depreciation and amortization		12			8		4			50.0			11			12		(1	)		(8.3	)		34			32		2			6.3
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates		1			1		—			—
Interest expense, depreciation and amortization included in equity in (losses) earnings from unconsolidated affiliates													1			—		1		NM⁽¹⁾				2			2		—			—
EBITDA		32			94		(62	)		(66.0	)		10			94		(84	)		(89.4	)		9			266		(257	)		(96.6	)
Other (gain) loss, net		(2	)		1		(3	)	NM⁽¹⁾				(1	)		1		(2	)	NM⁽¹⁾				—			3		(3	)		(100.0	)
Share-based compensation expense⁽²⁾		(2	)		5		(7	)	NM⁽¹⁾				6			6		—			—			10			18		(8	)		(44.4	)
Other adjustment items⁽³⁾		5			2		3		NM⁽¹⁾				4			10		(6	)		(60.0	)		14			16		(2	)		(12.5	)
Adjusted EBITDA	$	33		$	102	$	(69	)		(67.6	)	$	19		$	111	$	(92	)		(82.9	)	$	33		$	303	$	(270	)		(89.1	)

	Three Months Ended March 31,						Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2020			2019			$			%
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	15		$	80		$	(65	)		(81.3	)%	$	15		$	94		$	(79	)		(84.0	)%	$	16		$	243		$	(227	)		(93.4	)%
Resort operations and club management⁽¹⁾		55			65			(10	)		(15.4	)		30			62			(32	)		(51.6	)		100			193			(93	)		(48.2	)
Segment Adjusted EBITDA		70			145			(75	)		(51.7	)		45			156			(111	)		(71.2	)		116			436			(320	)		(73.4	)
Adjustments:
Adjusted EBITDA from unconsolidated affiliates		4			2			2			100.0			—			1			(1	)		(100.0	)		5			6			(1	)		(16.7	)
License fee expense		(22	)		(23	)		1			(4.3	)		(11	)		(26	)		15			(57.7	)		(39	)		(75	)		36			(48.0	)
General and administrative⁽²⁾		(19	)		(22	)		3			(13.6	)		(15	)		(20	)		5			(25.0	)		(49	)		(64	)		15			(23.4	)
Adjusted EBITDA	$	33		$	102		$	(69	)		(67.6	)	$	19		$	111		$	(92	)		(82.9	)	$	33		$	303		$	(270	)		(89.1	)

In accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed. The Real estate sales and financing segment is impacted by construction related deferral and recognition activity. In periods where Sales of VOIs and related direct costs of projects under construction are deferred, margin percentages will generally contract as the indirect marketing and selling costs associated with these sales are recognized as incurred in the current period. In periods where previously deferred Sales of VOIs and related direct costs are recognized upon construction completion, margin percentages will generally expand as the indirect marketing and selling costs associated with these sales were recognized in prior periods.

The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under ~~construction for the three months ended March 31, 2020. There were no construction deferrals or recognitions for the three months ended March 31, 2019.~~construction:

	Three Months Ended March 31,			Three Months Ended September 30,						Variance		Nine Months Ended September 30,						Variance
($ in millions)	2020			2020			2019			$		2020			2019			$
Sales of VOIs (deferrals)	$	(47	)	$	(13	)	$	(15	)	$	2	$	(64	)	$	(49	)	$	(15	)
Sales of VOIs recognitions		—			—			—			—		—			—			—
Net Sales of VOIs (deferrals) recognitions		(47	)		(13	)		(15	)		2		(64	)		(49	)		(15	)
Cost of VOI sales (deferrals)⁽¹⁾		(13	)		(4	)		(5	)		1		(17	)		(16	)		(1	)
Cost of VOI sales recognitions		—			—			—			—		—			—			—
Net Cost of VOI sales (deferrals) recognitions⁽¹⁾		(13	)		(4	)		(5	)		1		(17	)		(16	)		(1	)
Sales and marketing expense (deferrals)		(7	)		(1	)		(2	)		1		(9	)		(7	)		(2	)
Sales and marketing expense recognitions		—			—			—			—		—			—			—
Net Sales and marketing expense (deferrals) recognitions		(7	)		(1	)		(2	)		1		(9	)		(7	)		(2	)
Net construction (deferrals) recognitions	$	(27	)	$	(8	)	$	(8	)	$	—	$	(38	)	$	(26	)	$	(12	)

Real estate sales and financing segment revenues decreased by ~~$101~~$208 million for the three months ended ~~March 31,~~September 30, 2020 and $561 million for the nine months ended September 30, 2020, compared to the same ~~period~~periods in 2019, primarily due to ~~a $99 million decrease~~decreases in sales revenue ~~a $5 million decrease in~~and marketing revenue as a result of the ongoing impact of the COVID-19 pandemic on travel demand, along with the temporary closure of substantially all of our properties and ~~a $3 million increase in financing revenue.~~suspension of our sales and related operations during the first half of 2020.

Real estate sales and financing ~~segment~~ Adjusted EBITDA decreased by ~~$65~~$79 million for the three months ended ~~March 31,~~September 30, 2020 and $227 million for the nine months ended September 30, 2020, compared to the same ~~period~~periods in 2019, primarily due to the decreases in segment revenues associated with segment performance discussed herein partially offset by ~~decreases~~a decrease in related expenses. In addition, real estate sales and financing segment Adjusted EBITDA was impacted by ~~$11~~$9 million in one-time payroll related expenses, ~~incurred~~net of an employee retention credit granted primarily under the CARES Act, primarily related to payments made to ~~employees’~~employees as a result of operational closures caused by the COVID-19 ~~pandemic.~~pandemic for the nine months ended September 30, 2020.

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

Resort operations and club management segment revenues decreased $6$47 million and $123 million for the three and nine months ended ~~March 31,~~September 30, 2020, respectively, compared to the same ~~period~~periods in 2019, primarily due to ~~a decrease~~decreases in rental and ancillary ~~services revenue, partially offset by an increase in resort~~revenues as a result of the ongoing impact of the COVID-19 pandemic on travel demand, along with the temporary closure of substantially all of our properties and ~~club management revenue.~~ suspension of our sales and related operations during the first half of 2020.

Resort operations and club management segment Adjusted EBITDA decreased ~~$10~~$32 million and $93 million for the three and nine months ended ~~March 31,~~September 30, 2020, respectively, compared to the same ~~period~~periods in 2019, primarily due to the decreases in segment margin associated with segment performance discussed herein.

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

	Three Months Ended March 31,						Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions, except Tour flow and VPG)	2020			2019			$			%			2020			2019			$			%			2020			2019			$			%
Sales of VOIs, net	$	56		$	125		$	(69	)		(55.2	)%
Contract sales													$	117		$	360		$	(243	)		(67.5	)	$	396		$	1,045		$	(649	)		(62.1	)
Adjustments:
Fee-for-service sales⁽²⁾		130			190			(60	)		(31.6	)		(67	)		(194	)		127			(65.5	)		(216	)		(569	)		353			(62.0	)
Provision for financing receivables losses		37			14			23		NM⁽¹⁾				(12	)		(22	)		10			(45.5	)		(57	)		(60	)		3			(5.0	)
Reportability and other:
Net deferral (recognition) of sales of VOIs under construction⁽³⁾		47			—			47		NM⁽¹⁾				(13	)		(15	)		2			(13.3	)		(64	)		(49	)		(15	)		30.6
Fee-for-service sale upgrades, net		(8	)		(14	)		6			(42.9	)		4			15			(11	)		(73.3	)		13			39			(26	)		(66.7	)
Other⁽⁴⁾		(18	)		7			(25	)	NM⁽¹⁾				(5	)		(6	)		1			(16.7	)		8			(23	)		31		NM⁽¹⁾
Contract sales	$	244		$	322		$	(78	)		(24.2	)
Sales of VOIs, net													$	24		$	138		$	(114	)		(0.8	)	$	80		$	383		$	(303	)		(0.8	)
Tour flow		66,965			82,644			(15,679	)		(19.0	)		25,488			102,911			(77,423	)		(75.2	)		98,263			287,267			(189,004	)		(65.8	)
VPG	$	3,506		$	3,677		$	(171	)		(4.7	)	$	4,205		$	3,363		$	842			25.0		$	3,763		$	3,464		$	299			8.6

Contract sales decreased ~~$78~~$243 million and $649 million for the three and nine months ended ~~March 31,~~September 30, 2020, respectively, compared to the same ~~period~~periods in 2019, primarily due to a decrease in ~~VPG from both a 29-basis point decline in close rate and a 5 percent average transaction price reduction coupled with a decrease in~~ tour flow ~~primarily~~ related to the ongoing impact of the COVID-19 pandemic on travel demand, along with the temporary closure of substantially all of our properties and suspension of our sales and related operations ~~due~~during the first half of 2020.

Beginning in May 2020, we began a phased reopening of resorts and resumption of our business activities, however many of our resorts and sales centers are operating with significant capacity constraints and are subject to ~~the COVID-19 pandemic.~~various safety measures. As of September 30, 2020, we have over three quarters of our resorts and sales centers open and currently operating.

	Three Months Ended March 31,						Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2020			2019			$			%
Sales, marketing, brand and other fees	$	106		$	141		$	(35	)		(24.8	)%	$	52		$	143		$	(91	)		(63.6	)%	$	171		$	429		$	(258	)		(60.1	)%
Less:
Marketing revenue and other fees		25			30			(5	)		(16.7	)		11			34			(23	)		(67.6	)		40			102			(62	)		(60.8	)
Commissions and brand fees		81			111			(30	)		(27.0	)		41			109			(68	)		(62.4	)		131			327			(196	)		(59.9	)
Sales of VOIs, net		56			125			(69	)		(55.2	)		24			138			(114	)		(82.6	)		80			383			(303	)		(79.1	)
Sales revenue		137			236			(99	)		(41.9	)		65			247			(182	)		(73.7	)		211			710			(499	)		(70.3	)
Less:
Cost of VOI sales		14			36			(22	)		(61.1	)		8			24			(16	)		(66.7	)		21			92			(71	)		(77.2	)
Sales and marketing expense, net⁽¹⁾⁽²⁾		125			131			(6	)		(4.6	)		66			145			(79	)		(54.5	)		247			415			(168	)		(40.5	)
Real estate margin	$	(2	)	$	69		$	(71	)	NM⁽¹⁾			$	(9	)	$	78		$	(87	)	NM⁽¹⁾			$	(57	)	$	203		$	(260	)	NM⁽¹⁾
Real estate margin percentage		(1.5	)%		29.2	%								(13.8	)%		31.6	%								(27.0	)%		28.6	%

Sales revenue decreased for the three and nine months ended ~~March 31,~~September 30, 2020, compared to the same ~~period~~periods in 2019, ~~primarily~~ due to ~~(i)~~ decreases in sales revenue, commissions and brand fees and related expenses as a result of the ongoing impact of the COVID-19 pandemic on travel demand, along with the temporary closure of substantially all of our properties and suspension of our sales and related operations ~~as a result~~during the first half of ~~the COVID-19 pandemic, (ii) $47~~2020.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Interest income	$	34		$	37		$	(3	)		(8.1	)	$	108		$	109		$	(1	)		(0.9	)%
Other financing revenue		6			6			—			—			19			18			1			5.6
Financing revenue		40			43			(3	)		(7.0	)		127			127			—			—
Consumer financing interest expense		9			8			1			12.5			23			22			1			4.5
Other financing expense		4			6			(2	)		(33.3	)		16			17			(1	)		(5.9	)
Financing expense		13			14			(1	)		(7.1	)		39			39			—			—
Financing margin	$	27		$	29		$	(2	)		(6.9	)	$	88		$	88		$	—			—
Financing margin percentage		67.5	%		67.4	%								69.3	%		69.3	%

Financing revenue decreased $3 million ~~of deferrals of VOI sales of projects under construction during~~for the three months ended ~~March 31,~~September 30, 2020 and remained flat for the nine months ended September 30, 2020, compared to the same periods in 2019 primarily due to a decrease in the timeshare financing receivables portfolio balance.

Financing margin decreased for the three months ended September 30, 2020, compared to the same period in 2019 ~~where there were no projects under construction, (iii) a $23 million incremental increase~~related to the ~~provision for financing receivables related to our estimate of the impacts to our portfolio as a result of the COVID-19 pandemic and (iv) a $30 million~~aforementioned decrease in ~~commission and brand fees as a result of the COVID-19 pandemic and due to a shift in inventory mix,~~interest income partially offset primarily by a ~~$5 million~~ decrease in ~~marketing revenue and~~ other ~~fees mainly associated with reduced vacation package sales and lower redemptions of marketing packages as a result of the COVID-19 pandemic.~~

financing expenses. Financing ~~revenue increased by $3 million~~margin percentage remained relatively flat for the three and nine months ended ~~March 31,~~September 30, 2020 compared to the same ~~period~~periods in 2019, due to higher interest income resulting from an increase in the weighted average interest rate we receive on our timeshare financing receivables balance and an increase in other financing revenue related to higher loan servicing fees. Financing margin and finance margin percentage increased for the three months ended March 31, 2020, compared to the same period in 2019, due to the increase in interest income and other financing revenue.2019.

	Three Months Ended March 31,						Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2020			2019			$			%
Club management revenue	$	25		$	26		$	(1	)		(3.8	)%	$	23		$	28		$	(5	)		(17.9	)%	$	70		$	80		$	(10	)		(12.5	)%
Resort management revenue		19			16			3			18.8			16			17			(1	)		(5.9	)		52			50			2			4.0
Resort and club management revenues		44			42			2			4.8			39			45			(6	)		(13.3	)		122			130			(8	)		(6.2	)
Club management expense		7			7			—			—			6			6			—			—			18			20			(2	)		(10.0	)
Resort management expense		5			4			1			25.0			3			5			(2	)		(40.0	)		9			14			(5	)		(35.7	)
Resort and club management expenses		12			11			1			9.1			9			11			(2	)		(18.2	)		27			34			(7	)		(20.6	)
Resort and club management margin	$	32		$	31		$	1			3.2		$	30		$	34		$	(4	)		(11.8	)	$	95		$	96		$	(1	)		(1.0	)
Resort and club management margin percentage		72.7	%		73.8	%								76.9	%		75.6	%								77.9	%		73.8	%

Resort and club management revenues ~~increased by $2 million~~decreased for the three and nine months ended ~~March 31,~~September 30, 2020, compared to the same ~~period~~periods in 2019, primarily due to a $3 million in increase in resort management revenue driven by (i) an increase of approximately 17,000 Club members and higher rates pertaining to annual dues and (ii) higher resort management revenue and other fees from the launch of new properties subsequent to the first quarter of 2019, partially offset by a $1 million decrease in club management revenue ~~primarily~~ related to the refunding and waiving of club transaction fees to accommodate our guests impacted by the COVID-19 pandemic. For the nine months ended September 30, 2020, the decrease in revenue was partially offset by (i) an increase of approximately 6,000 Club members and (ii) an increase in resort management revenue from the launch of new properties, compared to the same period in 2019.

Resort and club management margin percentage ~~decreased~~increased for the three and nine months ended ~~March 31,~~September 30, 2020, ~~compared to the same period in 2019,~~ primarily due to ~~an increase~~a reduction in ~~segment~~resort and club management expenses ~~relating to~~driven by the ~~launch~~ongoing impact of ~~new properties subsequent to~~ the ~~first quarter of 2019.~~

~~Rental and ancillary services revenues decreased by $7 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to~~COVID-19 pandemic on travel demand, along with the temporary closure of substantially all of our ~~properties~~resort operations during the first half of 2020.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%
Rental revenues	$	19		$	48		$	(29	)		(60.4	)%	$	71		$	153		$	(82	)		(53.6	)%
Ancillary services revenues		1			6			(5	)		(83.3	)		6			20			(14	)		(70.0	)
Rental and ancillary services revenues		20			54			(34	)		(63.0	)		77			173			(96	)		(55.5	)
Rental expenses		23			30			(7	)		(23.3	)		77			89			(12	)		(13.5	)
Ancillary services expense		1			6			(5	)		(83.3	)		8			19			(11	)		(57.9	)
Rental and ancillary services expenses		24			36			(12	)		(33.3	)		85			108			(23	)		(21.3	)
Rental and ancillary services margin	$	(4	)	$	18		$	(22	)	NM⁽¹⁾			$	(8	)	$	65		$	(73	)	NM⁽¹⁾
Rental and ancillary services margin percentage		(20.0	)%		33.3	%								(10.4	)%		37.6	%

Rental and ancillary services revenues, expenses, and margin percentage decreased for the three and nine months ended September 30, 2020, compared to the same periods in 2019, due to the ongoing impact of the COVID-19 pandemic on travel demand, along with the temporary closure of substantially all of our resort operations as a result of the COVID-19 pandemic. Rental and ancillary services expenses increased $2 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to the launch of new properties subsequent toduring the first ~~quarter~~half of ~~2019, partially offset by~~2020.

Beginning in May 2020, we began a ~~decrease in transient expenses driven by lower transient arrivals from the temporary suspension~~phased reopening of ~~operations due~~resorts and resumption of our business activities; however, many of our resorts are operating at significant capacity constraints and are subject to ~~the COVID-19 pandemic. Rental~~various safety measures. As of September 30, 2020, we have over three quarters of our resorts open and ancillary services margin and margin percentage decreased for the three months ended March 31, 2020, compared to the same period in 2019 primarily due to the decreases in revenue and increases in expenses discussed above.currently operating.

	Three Months Ended March 31,				Variance						Three Months Ended September 30,				Variance						Nine Months Ended September 30,				Variance
($ in millions)	2020		2019		$			%			2020		2019		$			%			2020		2019		$			%
General and administrative	$	21	$	27	$	(6	)		(22.2	)%	$	22	$	30	$	(8	)		(26.7	)%	$	65	$	87	$	(22	)		(25.3	)%
Depreciation and amortization		12		8		4			50.0			11		12		(1	)		(8.3	)		34		32		2			6.3
License fee expense		22		23		(1	)		(4.3	)		11		26		(15	)		(57.7	)		39		75		(36	)		(48.0	)

The change in other operating expenses for the three and nine months ended ~~March 31,~~September 30, 2020, compared to the same ~~period~~periods in 2019, is ~~primarily due~~driven by a decrease in General and administrative expenses related to (i) decreases in salaries and wages from the furloughs and pay decreases announced during the second quarter of 2020, (ii) the reversal of previously recognized expense related to our 2018 and 2019 Performance RSUs which are not expected to achieve certain performance targets and (ii) higher depreciation and amortization expense as a result of additional software placed into service related to systems enhancements and leasehold improvements at newly renovated sales centers subsequent toduring the first quarter of ~~2019.~~2020 and (iii) lower license fee expense related to the corresponding decrease in real estate sales and resort operations revenue.

	Three Months Ended March 31,						Variance						Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2020			2019			$			%
Interest expense	$	10		$	10		$	—			—		$	10		$	12		$	(2	)		(16.7	)%	$	32		$	33		$	(1	)		(3.0	)%
Equity in earnings from unconsolidated affiliates		(3	)		(1	)		(2	)	NM⁽¹⁾
Equity in losses (earnings) from unconsolidated affiliates														1			(1	)		2		NM⁽¹⁾				(3	)		(4	)		1			(25.0	)
Other (gain) loss, net		(2	)		1			(3	)	NM⁽¹⁾				(1	)		1			(2	)	NM⁽¹⁾				—			3			(3	)		(100.0	)
Income tax expense		1			20			(19	)		(95.0	)
Income tax (benefit) expense														(5	)		20			(25	)	NM⁽¹⁾				(12	)		55			(67	)	NM⁽¹⁾

The change in non-operating expenses for the three and nine months ended ~~March 31,~~September 30, 2020, compared to the same periods in 2019, is primarily due to ~~an increase in equity in earnings from unconsolidated affiliates and~~ a decrease in income tax expense due to a decrease in income before ~~income~~ taxes combined with a decrease in the effective tax rate. See Note 14: Income Taxes for additional information.

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

We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our senior secured credit facility and our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.

To optimize our liquidity and access to capital in light of the significant adverse impact of the COVID-19 pandemic, particularly as substantially all of our properties ~~have~~were temporarily closed and substantially all of our sales, operations and other activities ~~have been~~were suspended during the first and second quarter of 2020, in addition to the steps discussed above, we have undertaken efforts to increase our capital and decrease our expenses. These include ~~the furlough of approximately 67 percent of our employees,~~workforce furloughs, temporary salary reductions for employees primarily during the ~~remaining employees’,~~second quarter of 2020, eliminating discretionary spending, and reducing our planned investment in new inventory by approximately $200 million. We have also suspended the share repurchase program that was initially authorized by our Board in March 2020. Recently, we announced a workforce reduction plan that will impact approximately 1,600 team members for which we expect to incur between $10 million to $12 million in restructuring and related expenses and charges, primarily related to employee severance, benefits and related costs, primarily during the fourth quarter of 2020. In addition, approximately 2,000 of our workers remain furloughed.

We believe that these actions, together with drawing on available borrowings under our Revolver and preserving our capacity under our Timeshare Facility as described above, will provide adequate capital to meet our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, and additional costs related to complying with various regulatory requirements and best practices for opening under the current environment resulting from the pandemic, and to finance our long-term growth plan and capital expenditures for the foreseeable future.

In addition, as noted previously, Asbeginning in May 2020, in response to various states and counties starting to allow gradual relaxation of restrictions on activities and a resumption of businesses, we began a phased reopening of resorts and resumption of our business activities, including our sales activities. However, we are operating under new guidelines and with safety measures that did not ~~able~~exist prior to ~~estimate~~ the ~~date that~~onset of the ~~suspensions~~pandemic. As of ~~resort~~October 2020, we have over three quarters of our resorts and sales ~~operations will be lifted, we may need to take additional actions to ensure the continuity~~centers open and currently operating; however, many of our ~~business.~~resorts and sales centers are operating with significant capacity constraints and subject to various safety measures. While we plan to continue to reopen our resorts and resume our business as conditions permit, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. Accordingly, there remains significant uncertainty as to the degree of impact and duration of the conditions stemming from the ongoing pandemic on our revenues, net income (loss) and other operating results, as well as our business and operations generally and, accordingly, our future cash flows and our liquidity in the longer term. Any sustained material adverse impact on our revenues, net income (loss) and other operating results due to COVID-19 could ~~cause~~adversely affect our ability to comply with our maintenance and financial covenants and ratios under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.

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

	Three Months Ended March 31,						Variance		Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$		2020			2019			$
Net cash provided by (used in):
Operating activities	$	53		$	14		$	39	$	86		$	146		$	(60	)
Investing activities		(8	)		(10	)		2		(24	)		(44	)		20
Financing activities		562			38			524		503			(71	)		574

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

The change in net cash flows provided by operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020, compared to the same period in 2019 was primarily due to a reduction in the purchase and development of real estate for future conversion to inventory, partially offset by decreased sources of cash from working capital.

	Three Months Ended March 31,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
VOI spending - owned properties	$	17	$	26	$	70	$	61
VOI spending - fee-for-service upgrades⁽¹⁾		8		14		11		36
Purchases and development of real estate for future conversion to inventory		5		60		27		107
Total VOI inventory spending	$	30	$	100	$	108	$	204

	Three Months Ended March 31,						Variance			Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			2020			2019			$
Capital expenditures for property and equipment	$	(3	)	$	(6	)	$	3		$	(6	)	$	(25	)	$	19
Software capitalization costs		(5	)		(4	)		(1	)		(16	)		(17	)		1
Investments in unconsolidated affiliates											(2	)		(2	)		—
Net cash used in investing activities	$	(8	)	$	(10	)	$	2		$	(24	)	$	(44	)	$	20

The change in net cash used in investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020, compared to the same period in 2019, was primarily due to a reduction of property and equipment spending.

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

	Three Months Ended March 31,						Variance			Nine Months Ended September 30,						Variance
($ in millions)	2020			2019			$			2020			2019			$
Issuance of debt	$	495		$	195		$	300		$	495		$	455		$	40
Issuance of non-recourse debt		195			—			195			495			365			130
Repayment of debt		(57	)		(23	)		(34	)		(62	)		(272	)		210
Repayment of non-recourse debt		(58	)		(40	)		(18	)		(403	)		(327	)		(76	)
Debt issuance costs											(8	)		(6	)		(2	)
Repurchase and retirement of common stock		(10	)		(92	)		82			(10	)		(283	)		273
Payment of withholding taxes on vesting of restricted stock units		(2	)		(2	)		—			(3	)		(3	)		—
Proceeds from employee stock plan purchases											1			2			(1	)
Other financing activity		(1	)		—			(1	)		(2	)		(2	)		—
Net cash provided by financing activities	$	562		$	38		$	524
Net cash provided by (used in) financing activities										$	503		$	(71	)	$	574

The change in net cash ~~flows~~ provided by (used in) financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020, compared to the same period in 2019, was primarily due to (i) ~~higher issuances of~~the change in debt borrowings and ~~non-recourse debt relating to~~repayments under our Revolver of $40 million and $210 million, respectively, (ii) additional repayments of $66 million of our securitized debt, (iii) the additional net borrowing of $120 million on our Timeshare Facility, and ~~(ii)~~(iv) a reduction in ~~share~~ repurchases and retirement of common ~~stock, partially offset by higher repayments of debt and non-recourse debt. See Note 11:~~ ~~Debt & Non-recourse Debt~~stock. ~~in our condensed consolidated financial statements for further discussion.~~

The following table summarizes our significant contractual obligations as of ~~March 31,~~September 30, 2020:

	Payments Due by Period										Payments Due by Period
($ in millions)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Debt	$	1,272	$	12	$	22	$	1,215	$	23	$	1,268	$	12	$	23	$	1,210	$	23
Non-recourse debt		892		221		444		141		86		847		301		304		160		82
Interest on debt⁽¹⁾		258		67		115		61		15		222		63		104		40		15
Operating leases		90		19		29		23		19		80		18		26		23		13
Inventory purchase commitments		473		101		260		98		14		457		235		168		42		12
Other commitments⁽²⁾		26		18		8		—		—		16		5		9		1		1
Total contractual obligations	$	3,011	$	438	$	878	$	1,538	$	157	$	2,890	$	634	$	634	$	1,476	$	146

We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of ~~March 31,~~September 30, 2020, our inventory-related purchase ~~commitment~~commitments totaled ~~$473~~$457 million over 1110 years of which we expect to purchase ~~$26~~$10 million for the ~~remaining~~remainder of 2020.

We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating. We have commitments from surety providers in the amount of ~~$569~~$571 million as of ~~March 31,~~September 30, 2020 which primarily consist of escrow and construction related bonds.

Our off-balance sheet arrangements as of ~~March 31,~~September 30, 2020 consisted of ~~$473~~$457 million of certain commitments with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand and ~~$26~~$16 million of other commitments under the normal course of business. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note 19: Commitments and Contingencies in our unaudited condensed consolidated financial statements for a discussion of our off-balance sheet arrangements.

Certain subsidiaries, which are listed on Exhibit 22 of this Quarterly Report on Form 10-Q, have guaranteed our obligations related to our senior unsecured notes (the “Notes”). The notes were issued in November 2016 with an aggregate principal balance of $300 million, an interest rate of 6.125 percent, and ~~Subsequent Events~~maturity in December 2024.

Our senior unsecured notes were co-issued by Hilton Grand Vacations Borrower LLC and Hilton Grand Vacations Borrower Inc. (the “Issuers”) and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Hilton Grand Vacations Inc. (the “Parent”), Hilton Grand Vacations Parent LLC (the “Intermediate Parent”), the Issuers, and each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries (all entities that guarantee the Notes, collectively, the “Obligor group”).

The ~~novel coronavirus (“COVID-19”) pandemic has significantly impacted~~Notes rank equally in right of payment with all of our existing and future senior unsecured obligations, are senior in right of payment to any of our Guarantor’s subordinated indebtedness, and are subordinate to all existing and future liabilities of our entities that do not guarantee the ~~hospitality industry due~~Notes and our secured indebtedness, including our senior secured credit facilities and securitized non-recourse debt.

The guarantee of each guarantor subsidiary is limited to ~~travel restrictions~~a maximum amount, subject to applicable U.S. and ~~stay-at-home directives that have resulted in cancellations and significantly reduced travel around~~non-U.S. laws. The guarantees can also be released upon the ~~world. As~~sale or transfer of a ~~result of the reduction in travel, we have closed~~guarantor subsidiary’s capital stock or substantially all of ~~our resorts~~its assets, becoming designated as an unrestricted subsidiary, or upon its consolidation into a co-Issuer or another subsidiary Guarantor.

The following tables provide summarized financial information of the Obligor group on a combined basis after elimination of (i) intercompany transactions and ~~sales centers for an indeterminate duration. In~~balances between the Parent Company and the subsidiary Guarantors and (ii) investments in and equity in the earnings of non-Guarantor subsidiaries and unconsolidated affiliates:

	September 30,		December 31,
($ in millions)	2020		2019
Assets
Cash and cash equivalents	$	587	$	35
Restricted cash		62		59
Accounts receivable, net - due from non-guarantor subsidiaries		19		41
Accounts receivable, net - due from related parties		7		25
Accounts receivable, net - other		85		126
Timeshare financing receivables, net		178		449
Inventory		843		524
Property and equipment, net		477		718
Operating lease right-of-use assets, net		53		58
Intangible assets, net		80		77
Other assets		88		69
Total assets	$	2,479	$	2,181

Liabilities
Accounts payable, accrued expenses and other - due from non-guarantor subsidiaries	$	19	$	41
Accounts payable, accrued expenses and other - other		254		288
Advanced deposits		119		115
Debt, net		1,262		828
Operating lease liabilities		69		74
Deferred revenues		261		186
Deferred income tax liabilities		209		259
Total liabilities	$	2,193	$	1,791

On October 15, 2020, we announced a workforce reduction plan in response to the continuing adverse impact of the COVID-19 ~~we have taken actions to ensure the continuity of~~pandemic and related government orders and mandates restricting travel and operations on our business and ~~operations, including furloughing approximately 67 percent of~~the travel and leisure industry in general. The reduction in force is expected to reduce our ~~employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory~~workforce by approximately ~~$200 million.~~ 1,600 team members and better align the workforce with the evolving business needs.

~~In addition,~~The reduction in force is estimated to result in approximately $10 million to $12 million in restructuring and related expenses and charges, primarily related to employee severance, benefits and related costs. We expect to incur the majority

of these costs during the last quarter of 2020. All of the restructuring and related expenses and charges are expected to result in cash expenditures.

Additionally, in October 2020, we ~~drew down on the availability~~repaid $100 million under our revolving credit facility as a precautionary measure to ensure liquidity for a sustained period. As we are not able to estimate the date that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our business. Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the year ended December 31, 2019.

We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives and through pricing policies that may take into account currency exchange rates. During the course of March 2020, we drew down the substantial remainder of our credit facility through net borrowings of an additional $445 million that was available under our revolver facility, for a total amount of $761 million outstanding at an average interest rate of 2.60%, after taking into account repayments. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

We are exposed to interest rate risk on our variable-rate debt, comprised of the term loans, Revolver and our Timeshare Facility, of which the Timeshare Facility is without recourse to us. The interest rates are based on one-month LIBOR and we are most vulnerable to changes in this rate. We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt.

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

To the extent we continue to have variable-rate borrowings and continue to utilize variable-rate indebtedness in the future, any increase in interest rates beyond amounts covered under any corresponding derivative financial instruments, particularly if sustained, could have an adverse effect on our net income (loss), cash flows and financial position. While we have entered into certain hedging transactions to address such potential risk, such transactions and any future hedging transactions we may enter into may not adequately mitigate the adverse effects of interest rate increases or that counterparties in those transactions will honor their obligations.

The following table sets forth the contractual maturities, weighted-average interest rates and the total fair values as of ~~March 31,~~September 30, 2020, for our financial instruments that are materially affected by interest rate risk:

				Maturities by Period																			Maturities by Period
($ in millions)	Weighted Average Interest Rate⁽¹⁾			2020		2021		2022		2023		2024		There- after		Total⁽²⁾		Fair Value		Weighted Average Interest Rate⁽¹⁾			2020		2021		2022		2023		2024		There- after		Total⁽²⁾		Fair Value
Assets:
Fixed-rate securitized timeshare financing receivables		12.148	%	$	69	$	92	$	93	$	93	$	92	$	264	$	703	$	729		12.253	%	$	25	$	103	$	107	$	110	$	113	$	421	$	879	$	920
Fixed-rate unsecuritized timeshare financing receivables		12.945	%		43		50		54		59		63		362		631		648		13.421	%		9		32		33		35		36		205		350		373
Liabilities:⁽³⁾
Fixed-rate debt		3.930	%		176		162		113		112		343		118		1,024		954		4.011	%		72		294		132		131		374		171		1,174		1,181
Variable-rate debt⁽⁴⁾		2.489	%		7		10		205		918		—		—		1,140		1,123		2.000	%		3		10		10		918		—		—		941		930

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

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) or our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of the controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of effectiveness of controls and procedures to future periods are subject to the risk that the controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the controls and procedures may have deteriorated.

In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We will continue to assess the adequacy of our disclosure controls and procedures and make any appropriate changes given the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~March 31,~~September 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to assess the effectiveness of our internal controls over financial reporting consistent with past practice, particularly in light of the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe an unfavorable outcome is either reasonably possible or remote and/or for which are not reasonably estimable. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of ~~March 31,~~September 30, 2020 will not have a material effect on our unaudited condensed consolidated financial statements.

The following represents ~~material~~important changes and updates to the risk factors previously disclosed in Item 1A1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2019 (our “2019 Form 10-K”) and Item 1A. of Part II of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 (our “Prior Forms 10-Q”). The risk ~~factor~~factors discussed below and the risk factors included in our ~~Annual Report on~~2019 Form 10-K ~~may be~~and our Prior Forms 10-Q are important to understanding our business, operation, results of operations, financial condition, and prospects, especially during the current environment, and our statements generally in this Form ~~10-Q and~~10-Q. Therefore, they should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2,2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

~~The~~In addition, the following risks and those risks described in our ~~Annual Report on~~2019 Form 10-K ~~for the year ended December 31, 2019~~and our Prior Forms 10-Q contain forward-looking statements, and they may not be the only risks facing the Company. The future business, results of operations and financial condition ~~and operating results~~ of the Company can be affected by the risk factors described in such reports and by other factors currently unknown, that management presently believes not to be material, that management has made certain forward looking projections, estimates or assumptions, or that may rapidly evolve, develop or change, including those that are caused, directly or indirectly, by the COVID-19 pandemic. Any one or more of such factors could, directly or indirectly, cause ~~the Company’s~~our actual financial condition and ~~operating~~ results of operations to vary materially from past, or from anticipated future, financial condition and ~~operating results.~~results of operations. Any of these factors, in whole or in part, could materially and adversely affect ~~the Company’s~~our business, results of operations and financial condition ~~operating results~~ and the trading price of our common stock. Because of these factors affecting ~~the Company’s~~our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

The COVID-19 pandemic ~~has impacted,~~and related events, including the various measures implemented or adopted to respond to the pandemic, have had, and will ~~likely~~ continue to have, a material adverse ~~impact~~effect on our business, financial condition and results of operations for the foreseeable ~~future, and may also impact our ability to meet certain financial covenants under our debt agreements in the~~ future.

The global COVID-19 pandemic ~~has led~~and the various measures taken or implemented by governments and other authorities in the United States and around the world, businesses, organizations and individuals have had, and will continue to ~~impose measures intended to control its spread, including restrictions~~have, a significant adverse impact on ~~freedom of movement and business operations, such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. As a result, the pandemic has significantly disrupted~~ domestic and international travel, ~~and has adversely impacted~~consumer demand for travel, commercial ~~activity~~activities across the travel, lodging and hospitality industries, ~~including the timeshare industry.~~businesses generally, and consequently, on our business and operations. The COVID-19 pandemic also has had, and ~~is expected to or may~~will continue to have, significant adverse impacts on global economic, ~~and~~capital market, financial, healthcare, societal, and government regulatory conditions.

~~The effects of~~ In response to the ~~COVID-19~~growing pandemic ~~on the travel~~ and ~~hospitality industries are unprecedented with demand reaching historic lows. As of March 31, 2020,~~various governmental orders, we had temporarily closed operations at substantially all of our resorts and closed substantially all of our sales centers. We cannot predict when the effects of the pandemic will subside, and thus we cannot predict when we will be able to reopen our properties and if or when our business will return to normalized levels. There also can be no guarantee that when the restrictions implemented to mitigate the health impact of the pandemic are lifted, the demand for VOIs and consumer confidence in travel generally, will recover as quickly as other industries. The economic downturn resulting from the measures taken to mitigate the health impact of the pandemic may deter consumers from spending on travel and leisurely activities, which would adversely impact our business. The impact of the pandemic on our operations has had and will continue to have a significantly adverse impact on our revenues, results of operations and liquidity.

~~Although we have taken~~took certain significant actions to ensure the continuity of our business and operations beginning at the end of the first quarter 2020, including temporarily closing operations at substantially all of our resorts, closing substantially all of our sales centers, implementing salary reductions ~~employee~~and workforce furloughs, ~~of over 6,100 of our approximately 9,100 employees, and~~implementing hiring freezes, ~~we may need to take additional actions to ensure the continuity of our business. We drew~~drawing down ~~on the availability~~substantial amounts under our credit facility as a precautionary measure to ensure liquidity ~~for~~and amending both our credit facility and our warehouse facility to provide near-term flexibility on certain maintenance and financial covenants and ratios. On October 15, 2020, our board of directors approved a ~~sustained period but~~workforce reduction plan that is expected to result in the reduction of our workforce by approximately 1,600 members. All of these actions have had, and will likely continue to have, a material adverse effect on our results of operations, financial condition, and business.

Beginning in May 2020, various cities, counties and states in the US started to allow gradual relaxation of restrictions on activities and a resumption of businesses. We began a phased reopening of our resorts and resumption of our sales activities in accordance with applicable orders, and we ~~cannot guarantee we will have sufficient liquidity~~plan to continue to ~~fund~~reopen those of our resorts which remain closed as conditions permit. We have implemented a variety of measures that are required, or we believe are advisable, for our business ~~depending~~with the goal of keeping our customers, owners, team members, and the communities we serve as safe as reasonably feasible from the COVID-19 virus. These measures include additional cleaning and sanitation of our resorts and common areas, providing our team members with personal protective equipment, requiring our guests and owners use face masks based on CDC or other federal, state, or local health guidelines, and implementing physical distancing practices.

The conditions caused by the ~~extent~~pandemic continues to be unprecedented and rapidly changing. Accordingly, there remains significant uncertainties and risks around the duration and severity of the pandemic in the US and around the world, the breadth and duration of business disruptions resulting from COVID-19, the ~~pandemic and resulting economic downturn. The increase in our level of debt may adversely affect our financial and operating activities or ability to incur additional debt.~~

~~In addition, any sustained materially adverse~~pandemic’s impact on ~~our revenues, net income~~the global economy, consumer confidence, various businesses, and, other operating results due to the impact of the COVID-19 pandemic could cause us to breach our operating and financial covenants under our debt obligations, including our credit facility. If we are unable to comply with such covenants, or obtain modifications or waivers to such covenants prior to any such breaches under our credit facility, warehouse facility, term loans or indenture governing our public notes, as applicable, we may trigger events of defaults under such documents and the lenders may have the right to terminate their commitments thereunder and declare the outstanding loans thereunder to be immediately due and payable.

~~We rely on various commercial agreements and arrangements, including our arrangements with joint venture partners, key developers, and fee-for-service partners, that are critical to~~consequently, our business and operations.

Some of ~~those agreements, such as our fee-for-service arrangements, require us to achieve certain sales~~these uncertainties and ~~related performance levels before we earn our fees and~~risks may include the failure to achieve those targets will not only result in us not earning our fees but may give rise to the other parties’ ability to terminate such arrangements. While we believe we can rely on certain ~~force majeure~~ related exceptions to such termination rights, there can be no assurance that such parties will agree with our view. In addition, these events may result in renegotiating the agreements and there can be no assurance that we will be able to agree to new or revised terms that are favorable to us. Finally, parties to other commercial agreements may themselves assert or attempt to terminate various agreements and arrangements with us on the basis of ~~force majeure~~ ~~provisions that may be contained in such agreements. Any termination of significant commercial agreements may adversely harm our operations.~~following:

In addition to the foregoing, the COVID-19 pandemic and the resulting adverse ~~and unpredictable economic~~ conditions are likely to continue to implicate or exacerbate the risk factors that we identified in our ~~Annual Report on~~2019 Form 10-K ~~for~~and our Prior Forms 10-Q. We encourage you to review such risk factors and related disclosure in such filings, together with the ~~year ended December 31, 2019, which~~foregoing supplemental risk factors.

Any of the foregoing or other risks, factors, and events that are not foreseeable can result in ~~turn could significantly increase the adverse effects~~significant negative impact on our ~~business,~~results of operations, financial condition, ~~liquidity~~business and ~~results of operations. Such risks include, but are not limited to, the following:~~

~~The COVID-19 pandemic has also resulted in severe disruption~~ and volatility in the financial markets. Depending on the extent and duration of the COVID-19 pandemic, the price of our common stock on the NYSE may continue to experience declines and volatility which may negatively impact our ability to raise capital through the equity markets if necessary to increase our liquidity and will adversely impact your investments in our common stock.reputation.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 3029^th day of ~~April~~October 2020.

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

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		HGV		New York Stock Exchange

PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements	2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	3026
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.		Controls and Procedures	46

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		47
Item 1A.	Risk Factors		47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 3.	Defaults Upon Senior Securities		50
Item 4.	Mine Safety Disclosures		50
Item 5.	Other Information		50
Item 6.	Exhibits		51
	Signatures		5253

Expected volatility	35.4	%
Dividend yield	—0	%
Risk-free rate	1.0	%
Expected term (in years)	6.0


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

	March 31, 2020
($ in millions)	Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total
ASSETS
Cash and cash equivalents	$	4	$	—	$	617	$	48	$	—		$	669
Restricted cash		—		—		59		31		—			90
Accounts receivable, net		—		—		168		34		(44	)		158
Timeshare financing receivables, net		—		—		276		846		—			1,122
Inventory		—		—		803		82		—			885
Property and equipment, net		—		—		462		11		—			473
Operating lease right-of-use assets, net		—		—		60		2		—			62
Investments in unconsolidated affiliates		—		—		47		—		—			47
Intangible assets, net		—		—		78		—		—			78
Other assets		—		5		103		12		—			120
Investments in subsidiaries		559		1,793		146		—		(2,498	)		—
TOTAL ASSETS	$	563	$	1,798	$	2,819	$	1,066	$	(2,542	)	$	3,704
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	$	—	$	—	$	278	$	34	$	(44	)	$	268
Advanced deposits		—		—		117		—		—			117
Debt, net		—		1,239		27		—		—			1,266
Non-recourse debt, net		—		—		—		885		—			885
Operating lease liabilities		—		—		76		1		—			77
Deferred revenues		—		—		277		—		—			277
Deferred income tax liabilities		—		—		251		—		—			251
Total equity		563		559		1,793		146		(2,498	)		563
TOTAL LIABILITIES AND EQUITY	$	563	$	1,798	$	2,819	$	1,066	$	(2,542	)	$	3,704

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Appropriate Dollar Value of Shares that May Yet Be Purchased Under Plan
January 1 - January 31, 2020		—	$	—		—	$	—
February 1 - February 28, 2020		—		—		—		—
March 1 - March 31, 2020		814,128		11.92		814,128		190,314,211
Total		814,128	$	11.92		814,128	$	190,314,211

Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 17, 2017).

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 17, 2017).

3.3		Certificate of Designation of Series A Junior Participating Preferred Stock of Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on April 16, 2020).

4.1		Rights Agreement, dated as of April 16, 2020, between Hilton Grand Vacations Inc. and Equiniti Trust Company, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on April 16, 2020).

10.1		Omnibus Amendment No. 1316 to Receivables Loan Agreement, Amendment No. 8 to the Sale and Contribution Agreement, and Amendment No. 1 to the Servicing Agreement, effective as of ~~January 17,~~August 14, 2020, by and among Hilton Grand Vacations Trust I LLC, as borrower, Hilton Resorts Corporation, as seller, Grand Vacations Services LLC, as servicer, the financial institutions signatory thereto as managing agents, the financial institutions signatory thereto as conduit lenders, the financial institutions signatory thereto as committed lenders, Bank of America, N.A., as administrative agent, and Wells Fargo Bank, National Association, as paying agent, securities intermediary and ~~paying agent.~~backup servicer (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on August 17, 2020. *

10.2		~~Form~~Severance Agreement, effective as of ~~Second Amended~~September 21, 2020, by and ~~Restated Performance and Service Based Restricted Stock Unit Agreement under the~~between Hilton Grand Vacations Inc. ~~2017 Omnibus Incentive Plan (for use for all named executive officers other than Mr. Mark Wang) (2018 Awards).* +~~and Matthew A. Sparks. *+

~~10.3~~22		List of Issuer Subsidiaries of Guaranteed Securities and Guarantor Subsidiaries(incorporated by reference to Exhibit 22 to the Registrant’s Quarterly Report on Form ~~of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement for Mr. Mark Wang under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (2018 Awards)~~10-Q (File No. 001-37794) filed on July 30, 2020).* +

~~10.4~~		Form of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (for use for all named executive officers other than Mr. Mark Wang) (2019 Awards).* +

~~10.5~~		~~Form of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement for Mr. Mark Wang under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (2019 Awards).* +~~

~~10.6~~		Form of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (for use for all named executive officers other than Mr. Mark Wang) (2020 Awards).* +

~~10.7~~		~~Form of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement for Mr. Mark Wang under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (2020 Awards).*+~~

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

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

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

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

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Label Linkbase Document.

Exhibit No.		Description

101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document.

104		~~Cover Page Interactive Data File (embedded within~~The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL ~~document)~~and contained in Exhibit 101

	HILTON GRAND VACATIONS INC.

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

	By:	/s/ Daniel J. Mathewes
	Name:	Daniel J. Mathewes
	Title:	Executive Vice President and Chief Financial Officer