(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 ~~October~~April 23, ~~2020~~2021 was ~~85,106,483.~~85,542,182.

	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
	(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents	$	625	$	67	$	400	$	428
Restricted cash		92		85		105		98
Accounts receivable, net of allowance for credit losses of $18 and $21		109		174
Accounts receivable, net of allowance for doubtful accounts of $17 and $20						111		119
Timeshare financing receivables, net		1,012		1,156		940		974
Inventory		933		558		720		702
Property and equipment, net		488		778		501		501
Operating lease right-of-use assets, net		55		60		48		52
Investments in unconsolidated affiliates		49		44		53		51
Intangible assets, net		80		77		80		81
Land and infrastructure held for sale						41		41
Other assets		101		80		115		87
TOTAL ASSETS (variable interest entities - $866 and $748)	$	3,544	$	3,079
TOTAL ASSETS (variable interest entities - $733 and $800)					$	3,114	$	3,134
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	264	$	298	$	260	$	252
Advanced deposits		119		115		114		117
Debt, net		1,262		828		1,156		1,159
Non-recourse debt, net		837		747		698		766
Operating lease liabilities		70		76		63		67
Deferred revenues		261		186		336		262
Deferred income tax liabilities		209		259		118		137
Total liabilities (variable interest entities - $842 and $750)		3,022		2,509
Total liabilities (variable interest entities - $703 and $771)						2,745		2,760
Commitments and contingencies - see Note 19
Equity:
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
Preferred stock, $0.01 par value; 300,000,000 authorized shares, NaN issued or outstanding as of March 31, 2021 and December 31, 2020						—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 85,537,477 shares issued and outstanding as of March 31, 2021 and 85,205,012 shares issued and outstanding as of December 31, 2020						1		1
Additional paid-in capital		186		179		194		192
Accumulated retained earnings		335		390		174		181
Total equity		522		570		369		374
TOTAL LIABILITIES AND EQUITY	$	3,544	$	3,079	$	3,114	$	3,134

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
Revenues
Sales of VOIs, net	$	24		$	138		$	80		$	383		$	33		$	56
Sales, marketing, brand and other fees		52			143			171			429			53			106
Financing		40			43			127			127			37			44
Resort and club management		39			45			122			130			45			44
Rental and ancillary services		20			54			77			173			32			52
Cost reimbursements		33			43			105			128			35			49
Total revenues		208			466			682			1,370			235			351
Expenses
Cost of VOI sales		8			24			21			92			3			14
Sales and marketing		79			188			297			544			82			157
Financing		13			14			39			39			13			13
Resort and club management		9			11			27			34			8			12
Rental and ancillary services		24			36			85			108			31			37
General and administrative		22			30			65			87			36			21
Depreciation and amortization		11			12			34			32			11			12
License fee expense		11			26			39			75			14			22
Impairment expense														1			—
Cost reimbursements		33			43			105			128			35			49
Total operating expenses		210			384			712			1,139			234			337
Interest expense		(10	)		(12	)		(32	)		(33	)		(15	)		(10	)
Equity in (losses) earnings from unconsolidated affiliates		(1	)		1			3			4
Other gain (loss), net		1			(1	)		—			(3	)
(Loss) Income before income taxes		(12	)		70			(59	)		199
Equity in earnings from unconsolidated affiliates														2			3
Other (loss) gain, net														(1	)		2
(Loss) income before income taxes														(13	)		9
Income tax benefit (expense)		5			(20	)		12			(55	)		6			(1	)
Net (loss) income	$	(7	)	$	50		$	(47	)	$	144		$	(7	)	$	8
(Loss) Earnings per share:
(Loss) earnings per share:
Basic	$	(0.08	)	$	0.59		$	(0.55	)	$	1.61		$	(0.08	)	$	0.09
Diluted	$	(0.08	)	$	0.59		$	(0.55	)	$	1.60		$	(0.08	)	$	0.09

Nine Months Ended September 30,

2020

2019

Operating Activities

Net (loss) income

$
(47
)

$
144

Adjustments to reconcile net (loss) income to net cash provided by
operating activities:

Depreciation and amortization

34

32

Amortization of deferred financing costs, contract costs, and other

13

12

Provision for financing receivables losses

57

60

Other loss, net

—

3

Share-based compensation

10

18

Deferred income tax benefit

(50
)

(21
)
Equity in earnings from unconsolidated affiliates

(3
)

(4
)
Net changes in assets and liabilities:

Accounts receivable, net

65

17

Timeshare financing receivables, net

87

(79
)
Inventory

(59
)

(6
)
Purchases and development of real estate for future conversion to inventory

(27
)

(107
)
Other assets

(25
)

(24
)
Accounts payable, accrued expenses and other

(48
)

20

Advanced deposits

4

11

Deferred revenues

75

70

Net cash provided by operating activities

86

146

Investing Activities

Capital expenditures for property and equipment

(6
)

(25
)
Software capitalization costs

(16
)

(17
)
Investments in unconsolidated affiliates

(2
)

(2
)
Net cash used in investing activities

(24
)

(44
)
Financing Activities

Issuance of debt

495

455

Issuance of non-recourse debt

495

365

Repayment of debt

(62
)

(272
)
Repayment of non-recourse debt

(403
)

(327
)
Debt issuance costs

(8
)

(6
)
Repurchase and retirement of common stock

(10
)

(283
)
Payment of withholding taxes on vesting of restricted stock units

(3
)

(3
)
Proceeds from employee stock plan purchases

1

2

Other financing activity

(2
)

(2
)
Net cash provided by (used in) financing activities

503

(71
)
Net increase in cash, cash equivalents and restricted cash

565

31

Cash, cash equivalents and restricted cash, beginning of period

152

180

Cash, cash equivalents and restricted cash, end of period

$
717

$
211

Supplemental disclosure of non-cash operating activities:

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

⁽²⁾	~~See Note 8:~~ ~~Property and Equipment~~ ~~for more information.~~

	Three Months Ended March 31,
	2021			2020
Operating Activities
Net (loss) income	$	(7	)	$	8
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		11			12
Amortization of deferred financing costs, contract costs, and other		6			4
Provision for financing receivables losses		16			37
Impairment expense		1			—
Other loss (gain), net		1			(2	)
Share-based compensation		4			(2	)
Deferred income tax benefit		(21	)		(8	)
Equity in earnings from unconsolidated affiliates		(2	)		(3	)
Net changes in assets and liabilities:
Accounts receivable, net		8			16
Timeshare financing receivables, net		19			(3	)
Inventory		(14	)		(10	)
Purchases and development of real estate for future conversion to inventory		(6	)		(5	)
Other assets		(27	)		(42	)
Accounts payable, accrued expenses and other		2			(42	)
Advanced deposits		(3	)		2
Deferred revenues		74			91
Net cash provided by operating activities		62			53
Investing Activities
Capital expenditures for property and equipment		(1	)		(3	)
Software capitalization costs		(4	)		(5	)
Net cash used in investing activities		(5	)		(8	)
Financing Activities
Issuance of debt		—			495
Issuance of non-recourse debt		—			195
Repayment of debt		(2	)		(57	)
Repayment of non-recourse debt		(69	)		(58	)
Debt issuance costs		(3	)		—
Repurchase and retirement of common stock		—			(10	)
Payment of withholding taxes on vesting of restricted stock units		(5	)		(2	)
Proceeds from stock option exercises		2			—
Other financing activity		(1	)		(1	)
Net cash (used in) provided by financing activities		(78	)		562
Net (decrease) increase in cash, cash equivalents and restricted cash		(21	)		607
Cash, cash equivalents and restricted cash, beginning of period		526			152
Cash, cash equivalents and restricted cash, end of period	$	505		$	759

																				Additional			Accumulated
															Common Stock					Paid-in			Retained			Total
															Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2020																84		$	1	$	192		$	181		$	374
Net loss																0			0		0			(7	)		(7	)
Activity related to share-based compensation																0			0		2			0			2
Balance as of March 31, 2021																84		$	1	$	194		$	174		$	369


						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		0			0		0			8			8			0			0		0			8			8
Activity related to share-based compensation		0			0		(5	)		0			(5	)		0			0		(5	)		0			(5	)
Repurchase and retirement of common stock		(1	)		0		(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
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2018		94		$	1	$	174		$	441		$	616
Net income		0			0		0			55			55
Activity related to share-based compensation		0			0		1			0			1
Repurchase and retirement of common stock		(3	)		0		(5	)		(92	)		(97	)
Balance as of March 31, 2019		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 and Hilton Club exchange program (collectively the “Club”). As of ~~September 30, 2020,~~March 31, 2021, we had 6062 properties, comprised of ~~9,594 units,~~499,616 VOIs, located in the United States (“U.S.”), Japan, the United Kingdom, Italy, Barbados and ~~Barbados.~~Mexico. A significant number of our properties and ~~units~~VOIs are concentrated in Florida, Hawaii, Nevada, New York, and South ~~Carolina, with particular concentration of our units in Florida, Hawaii and New York.~~Carolina.

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,~~2020, included in our Annual Report on Form 10-K filed with the SEC on March ~~2, 2020.~~1, 2021.

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~~that started in early 2020 significantly negatively ~~impact~~impacted 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~~and caused various other 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~~conditions. In response to these events, we closed substantially all of our resorts and sales ~~centers.~~ centers during early 2020, but began a phased reopening of resorts and resumption of our business activities during the second quarter 2020 under new operating guidelines and with enhanced safety measures as mandates and orders for business closures, quarantine and travel restrictions began to ease. With the anticipated continuation of the pandemic receding, as well as COVID-19 vaccinations becoming more widespread, such mandates and orders have continued to ease, resulting in consumer confidence increasing to resume normal activities, including travel and leisure, and more businesses to continue to resume operations. Accordingly, the positive trends in leisure travel and stays at our properties have continued. For example, as of March 31, 2021, we have approximately 80 percent of our resorts and nearly all of our sales centers open and currently operating, although many are operating in markets with various capacity constraints, social distancing requirements and other safety measures, which are impacting consumer demand for resorts in those markets. We plan to continue to reopen our resorts and resume our normal business as conditions permit, but there can be no assurance that such positive trends will continue or that there will not be any increases of new infections or new variants that may impede or reverse recovery and such positive trends.

In ~~addition, in~~ response to the impact of COVID-19, we ~~have taken~~took a variety of actions in 2020 and to date in 2021 to ensure the continuity of our business and operations ~~including workforce furlough, implementing temporary salary reductions for~~and to secure our liquidity position to provide financial flexibility. These actions include amending certain financial covenant ratios in the ~~remaining active employees primarily during the second~~fourth quarter of 2020 ~~eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million. Further, during~~through the ~~first~~third 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 ratios2021, 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~~ We also furloughed team members beginning in the second quarter of 2020 and ~~Non-recourse debt~~ ~~for additional actions taken with respect to our financial flexibility. Recently, we announced~~completed a workforce reduction plan in the fourth quarter of 2020 that ~~will affect~~impacted approximately ~~1,600~~1,500 team members. As of March 31, 2021, 1,100 team members ~~in order~~continue to ~~better align our workforce with the Company’s needs in light of the current environment. In addition, approximately~~be furloughed. ~~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~~hope that conditions in the hospitality and travel industries continue to ~~reopen our resorts and resume our business as conditions permit,~~reflect the improvement that we saw during the March travel season, the pandemic continues to be unprecedented and rapidly changing, and has unknown duration and severity. F~~urther,~~ 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 continuing 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,~~2021 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. The~~rule 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~~simplifies 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~~adoption of ~~this~~ ASU ~~are effective for reporting periods after December 15, 2020. We are currently evaluating the effect that this ASU will~~2019-12 did not have a material impact 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~~statements 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.related disclosures.

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 September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
($ in millions)	2020		2019		2020		2019			2021		2020
Real Estate and Financing Segment
Sales of VOIs, net	$	24	$	138	$	80	$	383	$	33	$	56
Sales, marketing, brand and other fees		52		143		171		429		53		106
Interest income		34		37		108		109		31		38
Other financing revenue		6		6		19		18		6		6
Real estate and financing segment revenues	$	116	$	324	$	378	$	939	$	123	$	206

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
($ in millions)	2020		2019		2020		2019			2021		2020
Resort Operations and Club Management Segment
Club management	$	23	$	28	$	70	$	80	$	27	$	25
Resort management		16		17		52		50		18		19
Rental⁽¹⁾		19		48		71		153		30		47
Ancillary services		1		6		6		20		2		5
Resort operations and club management segment revenues	$	59	$	99	$	199	$	303	$	77	$	96

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

	September 30,		December 31,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
Receivables	$	67	$	129	$	69	$	64

	September 30,		December 31,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
Contract liabilities:
Advanced deposits	$	119	$	115	$	114	$	117
Deferred Sales of VOIs of projects under construction		148		84
Deferred sales of VOIs of projects under construction						201		169
Club activation fees, annual dues and other		96		86		120		77
Club Bonus Point incentive liability⁽¹⁾		60		59		41		48

Revenue earned for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 that was included in the contract liabilities balance at December 31, ~~2019~~2020 was approximately ~~$10 million and $63 million, respectively.~~$35 million.

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 ~~September 30, 2020:~~

	September 30,		December 31,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
Sales of VOIs, net	$	148	$	84	$	201	$	169
Cost of VOI sales⁽¹⁾		44		27		60		50
Sales and marketing expense		21		12		29		25

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

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of ~~September 30, 2020:~~March 31, 2021:

($ in millions)

Remaining

Transaction Price

Recognition Period

Recognition Method

Remaining

Transaction Price

Recognition Period

Recognition Method

Advanced deposits

119

18 months

Upon customer stays

114

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

	September 30,		December 31,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
Escrow deposits on VOI sales	$	61	$	59	$	76	$	69
Reserves related to non-recourse debt⁽¹⁾		31		26		29		29
	$	92	$	85	$	105	$	98

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

($ in millions)	September 30, 2020		March 31, 2021
Fee-for-service commissions⁽¹⁾	$	23	$	22
Real estate and financing	8		12
Resort and club operations	32		27
Tax receivables	42		41
Other receivables⁽²⁾		4		9
Total	$	109	$	111

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

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

($ in millions)	September 30, 2020			March 31, 2021
Balance as of December 31, 2019	$	19
Balance as of December 31, 2020				$	18
Current period provision for expected credit losses	5			1
Write-offs charged against the allowance		(8	)		(5	)
Balance at September 30, 2020	$	16
Balance as of March 31, 2021				$	14

	September 30, 2020									March 31, 2021
($ in millions)	Securitized			Unsecuritized⁽¹⁾			Total			Securitized			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	879		$	350		$	1,229		$	730		$	417		$	1,147
Less: allowance for financing receivables losses		(70	)		(147	)		(217	)		(54	)		(153	)		(207	)
	$	809		$	203		$	1,012		$	676		$	264		$	940

	December 31, 2019									December 31, 2020
($ in millions)	Securitized			Unsecuritized⁽¹⁾			Total			Securitized			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	758		$	582		$	1,340		$	805		$	380		$	1,185
Less: allowance for financing receivables losses		(54	)		(130	)		(184	)		(63	)		(148	)		(211	)
	$	704		$	452		$	1,156		$	742		$	232		$	974

As of ~~September 30,~~March 31, 2021 and December 31, 2020, we had timeshare financing receivables with a carrying value of ~~$19~~$15 million and $17 million, respectively, securing the Timeshare Facility 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~~In March 2020, we recorded an incremental $23 million revenue reduction related to the ~~nine~~changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic. For the three months ended ~~September 30, 2020,~~March 31, 2021 we recorded an adjustment to our estimate of variable consideration of ~~$57 million, which includes a $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.~~$16 million.

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 ~~September 30, 2020~~March 31, 2021 mature as follows:

($ in millions)	Securitized			Unsecuritized			Total			Securitized			Unsecuritized			Total
Year
2020 (remaining)	$	25		$	9		$	34
2021		103			32			135
2021 (remaining)										$	70		$	28		$	98
2022		107			33			140			95			37			132
2023		110			35			145			98			40			138
2024		113			36			149			100			42			142
2025											98			44			142
Thereafter		421			205			626			269			226			495
		879			350			1,229			730			417			1,147
Less: allowance for financing receivables losses		(70	)		(147	)		(217	)		(54	)		(153	)		(207	)
	$	809		$	203		$	1,012		$	676		$	264		$	940

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~~collectability 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 ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019,~~2020, we had interest receivable outstanding of $8$7 million ~~and $9 million, 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 ~~September 30, 2020,~~March 31, 2021, our timeshare financing receivables had interest rates ranging from ~~3.90~~1.5 percent to ~~20.50~~19.5 percent, a weighted-average interest rate of ~~12.60~~12.6 percent, a weighted-average remaining term of ~~7.6~~7.4 years and maturities through ~~2035.~~2036.

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

	September 30,		December 31,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
FICO score
700+	$	669	$	818	$	685	$	711
600-699		291		292		256		266
<600		51		39		35		36
No score⁽¹⁾		218		191
No score⁽¹⁾						171		172
	$	1,229	$	1,340	$	1,147	$	1,185

The following table details the origination year of our gross timeshare financing receivables by the origination year and average FICO score as of ~~September 30, 2020:~~March 31, 2021:

($ in millions)	2020		2019		2018		2017		2016		Prior		Total		2021		2020		2019		2018		2017		Prior		Total
FICO score
700+	$	86	$	209	$	142	$	91	$	61	$	80	$	669	$	42	$	114	$	196	$	130	$	85	$	118	$	685
600-699		40		91		62		39		23		36		291		13		43		72		48		30		50		256
<600		7		16		11		6		4		7		51		2		6		10		6		4		7		35
No score⁽¹⁾		34		67		40		27		18		32		218
No score⁽¹⁾																13		32		45		30		16		35		171
	$	167	$	383	$	255	$	163	$	106	$	155	$	1,229	$	70	$	195	$	323	$	214	$	135	$	210	$	1,147

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of ~~$117~~$111 million and ~~$74~~$117 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:

	September 30, 2020						March 31, 2021
($ in millions)	Securitized		Unsecuritized		Total		Securitized		Unsecuritized		Total
Current	$	858	$	230	$	1,088	$	710	$	307	$	1,017
31 - 90 days past due		12		12		24		11		8		19
91 - 120 days past due		5		3		8		4		2		6
121 days and greater past due		4		105		109		5		100		105
	$	879	$	350	$	1,229	$	730	$	417	$	1,147

	December 31, 2019						December 31, 2020
($ in millions)	Securitized		Unsecuritized		Total		Securitized		Unsecuritized		Total
Current	$	743	$	502	$	1,245	$	783	$	265	$	1,048
31 - 90 days past due		9		12		21		11		9		20
91 - 120 days past due		3		4		7		5		3		8
121 days and greater past due		3		64		67		6		103		109
	$	758	$	582	$	1,340	$	805	$	380	$	1,185

	September 30, 2020									March 31, 2021
($ in millions)	Securitized			Unsecuritized			Total			Securitized			Unsecuritized			Total
Balance as of December 31, 2019	$	54		$	130		$	184
Provision for financing receivables losses⁽¹⁾		(17	)		74			57
Balance as of December 31, 2020										$	63		$	148		$	211
Provision for financing receivables losses⁽¹⁾											(9	)		25			16
Write-offs		—			(24	)		(24	)		—			(20	)		(20	)
Securitization		33			(33	)		—
Balance as of September 30, 2020	$	70		$	147		$	217
Balance as of March 31, 2021										$	54		$	153		$	207

	September 30, 2019									March 31, 2020
($ in millions)	Securitized			Unsecuritized			Total			Securitized			Unsecuritized			Total
Balance as of December 31, 2018	$	43		$	129		$	172
Provision for financing receivables losses⁽¹⁾		(12	)		72			60
Balance as of December 31, 2019										$	54		$	130		$	184
Provision for financing receivables losses⁽¹⁾											(6	)		43			37
Write-offs		—			(53	)		(53	)		—			(9	)		(9	)
Securitization		29			(29	)		—
Balance as of September 30, 2019	$	60		$	119		$	179
Balance as of March 31, 2020										$	48		$	164		$	212

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

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

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

	September 30,			December 31,			March 31,			December 31,
($ in millions)	2020			2019			2021			2020
Land	$	104		$	154		$	108		$	109
Building and leasehold improvements		247			286			250			250
Furniture and equipment		68			65			62			65
Construction in progress		198			383			216			208
		617			888			636			632
Accumulated depreciation		(129	)		(110	)		(135	)		(131	)
	$	488		$	778		$	501		$	501

During the nine months ended 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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we consolidated4 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:

	September 30,		December 31,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
Restricted cash	$	30	$	26	$	29	$	28
Timeshare financing receivables, net		809		704		676		742
Non-recourse debt⁽¹⁾		837		747		698		766

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 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 ~~September 30, 2020,~~March 31, 2021, 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(losses)~~earnings (losses) from unconsolidated affiliates, respectively.

~~We held investments in our~~Our 2 unconsolidated affiliates ~~with~~have aggregated debt balances of $~~458~~$442 million and ~~$479~~$454 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals ~~$49~~$53 million and ~~$44~~$51 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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:

	September 30,			December 31,			March 31,			December 31,
($ in millions)	2020			2019			2021			2020
Debt⁽¹⁾
Senior secured credit facilities:
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
Term loan with a rate of 3.75%, due 2023							$	175		$	177
Revolver with a weighted average rate of 3.75%, due 2023								660			660
Senior notes with a rate of 6.125%, due 2024		300			300			300			300
Other debt		28			27			27			27
		1,268			834			1,162			1,164
Less: unamortized deferred financing costs and discount⁽²⁾⁽³⁾		(6	)		(6	)		(6	)		(5	)
	$	1,262		$	828		$	1,156		$	1,159

In ~~May 2020,~~March 2021, we amended our Credit Agreement which amended certain terms related to financial covenants to permit the previously announced proposed acquisition of Dakota Holdings, Inc., (“Diamond”), which indirectly owns all of the ~~Senior Secured Credit Facilities~~interests in Diamond Resorts International Inc. (the “Merger”), pursuant to ~~provide flexibility with respect~~that certain Agreement and Plan of Merger dated March 10, 2021. Refer to ~~satisfying certain negative and financial covenants and ratios as may be needed due to~~Note 20: Planned Acquisition for further information regarding the ~~ongoing and uncertain future impact of the COVID-19 pandemic on our business and operations.~~Merger. The borrowing capacity under the Credit Agreement remained the same. In connection with the ~~Amendment~~amendment, we incurred $1 million in debt issuance costs. In addition, we obtained a revolving credit facility commitment in connection with the Merger and incurred $2 million in debt issuance costs which were amortized over the term of the commitment in the first quarter of 2021. This was included in interest expense in our condensed consolidated statements of operations.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we ~~borrowed $495 million and~~ repaid ~~$62~~$2 million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus ~~1.75~~3.50 percent, subject to a 0.25 percent floor.

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,~~March 31, 2021, we had approximately ~~$180~~$175 million of our Term Loan subject to interest rate ~~swap.~~swaps. Such interest rate swaps converted the LIBOR-based variable rates on our Term Loan to an average fixed annual rate of 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,~~March 31, 2021 and December 31, 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 ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we recorded less than $1 million in accumulated other comprehensive loss related to the hedge.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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 ~~September 30, 2020.~~March 31, 2021.

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

September 30,

December 31,

($ in millions)

2020

2019

Non-recourse debt⁽¹⁾

Securitized Debt with an average rate of 1.810%, due 2026

$
—

$
46

Securitized Debt with an average rate of 2.711%, due 2028

116

149

Securitized Debt with an average rate of 3.602%, due 2032

220

275

Securitized Debt with an average rate of 2.431%, due 2033

238

285

Securitized Debt with an average rate of 3.658%, due 2039

273

—

847

755

Less: unamortized deferred financing costs⁽²⁾

(10
)

(8
)

$
837

$
747

	March 31,			December 31,
($ in millions)	2021			2020
Non-recourse debt⁽¹⁾
Securitized Debt with a weighted average rate of 2.711%, due 2028		96			106
Securitized Debt with a weighted average rate of 3.602%, due 2032		187			202
Securitized Debt with a weighted average rate of 2.431%, due 2033		196			216
Securitized Debt with a weighted average rate of 3.658%, due 2039		227			251
		706			775
Less: unamortized deferred financing costs⁽²⁾		(8	)		(9	)
	$	698		$	766

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. As of ~~September 30, 2020~~March 31, 2021, and December 31, ~~2019,~~2020, we had $450 million remaining borrowing capacity under our Timeshare ~~Facility. During the second quarter of 2020,~~Facility, respectively. In March 2021, we amended ~~the Timeshare Facility, temporarily changing certain covenant requirements pricing and advance rates to be consistent with the amended Credit Agreement. On August 14, 2020, we amended the~~our Timeshare Facility to ~~extend the maturity date from~~ ~~April 2022~~ to ~~August 2023. Additionally, the amendment reduces the maximum advance rate, replaces LIBOR~~align 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 debt issuance costs.our amended Credit Agreement, as described above.

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~~$29 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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 ~~September 30, 2020~~March 31, 2021 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total		Debt		Non-recourse Debt		Total
Year
2020 (remaining)	$	3	$	72	$	75
2021		12		292		304
2021 (remaining)							$	10	$	104	$	114
2022		12		130		142		11		174		185
2023		918		131		1,049		818		138		956
2024		300		74		374		300		115		415
2025								—		56		56
Thereafter		23		148		171		23		119		142
	$	1,268	$	847	$	2,115	$	1,162	$	706	$	1,868

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

	September 30, 2020						March 31, 2021
			Hierarchy Level						Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net⁽¹⁾	$	1,012	$	—	$	1,293
Timeshare financing receivables, net⁽¹⁾							$	940	$	—	$	1,209
Liabilities:
Debt, net⁽²⁾		1,262		311		965
Non-recourse debt, net⁽²⁾		837		—		835
Debt, net⁽²⁾								1,156		314		872
Non-recourse debt, net⁽²⁾								698		—		657

	December 31, 2019						December 31, 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⁾	$	1,156	$	—	$	1,446
Timeshare financing receivables, net⁽¹⁾							$	974	$	—	$	1,248
Liabilities:
Debt, net⁽²⁾		828		326		544
Non-recourse debt, net⁽²⁾		747		—		749
Debt, net⁽²⁾								1,159		315		871
Non-recourse debt, net⁽²⁾								766		—		732

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~~loan terms respective to the portfolio based on current market assumptions for similar types of arrangements.

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

Our assets ~~or liabilities~~that are measured at fair value on a ~~recurring or~~ non-recurring basis include land and infrastructure held for sale. These assets were measured to their estimated fair value as of ~~September 30,~~December 31, 2020. We utilized the market approach for the land and cost approach for the infrastructure to determine their respective fair values. The fair value determinations involve judgement and are sensitive to key assumptions utilized, including comparative sales for land (level 2) and replacement costs for infrastructure (level 3). As of March 31, 2021 and December 31, 2020, the estimated fair value of these assets were as follows and their carrying values were reflected in Land and infrastructure held for sale in our condensed consolidated balance sheets.

We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from 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 ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was $5$4 million and $6$5 million, ~~respectively, and $15 million and $16 million for the nine months ended September 30, 2020 and 2019,~~ respectively. These amounts include $1 million of short-term and variable lease costs for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019 and $2 million and $4 million for the nine months ended September 30, 2020 and 2019,~~ respectively.


	Nine Months Ended September 30,				Three months ended March 31,
($ in millions)	2020		2019		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	14	$	12	$	5	$	5
Right-of-use assets obtained in exchange for new lease liabilities:
Operating Leases		4		9		—		5

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

	September 30			December 31,			March 31,			December 31,
	2020			2019			2021			2020
Weighted-average remaining lease term of operating leases (in years)	5.6			6.1			5.3			5.4
Weighted-average discount rate of operating leases		4.93	%		5.34	%		4.98	%		4.95	%

~~Future~~The future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of ~~September 30, 2020,~~March 31, 2021, are as follows:

($ in millions)	Operating Leases			Operating Leases
Year
2020 (remaining)	$	5
2021		17
2021 (remaining)				$	12
2022		13			13
2023		12			13
2024		11			11
2025					11
Thereafter		22			11
Total future minimum lease payments	$	80		$	71
Less: imputed interest		(10	)		(8	)
Present value of lease liabilities	$	70		$	63

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 ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was approximately 2046 percent and 2811 percent, respectively. The ~~decrease in the~~ effective tax rate is higher primarily due to the ~~tax benefit on~~change in earnings mix of 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.~~a non-recurring discrete item recorded during the first quarter of 2021 as compared to the first quarter of 2020.

We have considered the income tax accounting and disclosure implications of the relief provided by the ~~Coronavirus Aid, Relief, and Economic Security (CARES)~~American Rescue Plan Act of 2021 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.11, 2021. As of ~~September 30, 2020,~~March 31, 2021, we evaluated the income tax provisions of the ~~CARES~~American Rescue Plan Act and have determined there to be no effect on either the ~~September 30, 2020~~March 31, 2021 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~~American Rescue Plan 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. We recognized share-based compensation expense of $6$4 million for the three months ended ~~September 30, 2020 and 2019, and $10 million and $18 million for~~March 31, 2021. For the ~~nine~~three months ended ~~September 30,~~March, 31, 2020, ~~and 2019, respectively.~~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 were not expected to achieve certain performance targets. As of ~~September 30, 2020,~~March 31, 2021, unrecognized compensation costs for unvested awards were approximately ~~$19~~$49 million, which is expected to be recognized over a weighted average period of ~~1.8~~1.6 years. As of ~~September 30, 2020,~~March 31, 2021, there were ~~5,213,524~~4,024,218 shares of common stock available for future issuance under this plan.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we issued ~~652,583~~560,604 Service RSUs with a grant date fair value of ~~$25.24,~~$38.22, which generally vest in equal annual installments over three years from the date of grant.

During the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021, we issued ~~566,401~~542,793 Options with an exercise price of ~~$25.80,~~$38.22, which vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was ~~$9.14,~~$13.30, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

As of ~~September 30, 2020,~~March 31, 2021, we had ~~1,102,064~~1,416,603 Options outstanding that were exercisable.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we issued ~~172,620~~124,711 Performance RSUs with a grant date fair value of ~~$25.80.~~$38.22. The Performance RSUs are settled at the end of a three-year performance period, with 7050 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 3050 percent of the Performance RSUs are subject to the achievement of certain contract sales targets. ~~In March 2020, we~~We determined that the performance conditions for ~~the 2018, 2019, and 2020 Performance RSU~~these awards 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. 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 improbableare probable of achievement and, ~~therefore no~~as of March 31, 2021, we recognized compensation expense ~~was recognized in~~based on the ~~current period.~~number of Performance RSUs we expect to vest.

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 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 ~~September 30,~~March 31, 2021 and 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-~~weighted average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~85,082,124and for the nine months ended September 30, 2020 was 85,198,910.~~85,307,705. The ~~weighted-average~~weighted average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~85,704,321~~85,519,151 and ~~86,272,979, respectively, and for the nine months ended September 30, 2019 was 89,863,807 and 90,348,418,~~86,044,525, respectively.

	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
($ and shares outstanding in millions, except per share amounts)	2020			2019		2020			2019		2021			2020
Basic EPS:
Numerator:
Net (loss) income⁽¹⁾	$	(7	)	$	50	$	(47	)	$	144	$	(7	)	$	8
Denominator:
Weighted average shares outstanding		85			86		85			90		85			86
Basic EPS	$	(0.08	)	$	0.59	$	(0.55	)	$	1.61	$	(0.08	)	$	0.09
Diluted EPS:
Numerator:
Net (loss) income⁽¹⁾	$	(7	)	$	50	$	(47	)	$	144	$	(7	)	$	8
Denominator:
Weighted average shares outstanding		85			86		85			90		85			86
Diluted EPS	$	(0.08	)	$	0.59	$	(0.55	)	$	1.60	$	(0.08	)	$	0.09

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~~943,373 for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021, 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 ~~September 30,~~March 31, 2021 and 2020, we excluded 638,050 and ~~2,816,707 and 2,506,497, respectively, and for the three and nine months ended September 30, 2019, we excluded 887,859 and 979,779~~1,754,656 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~~is currently constructing 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 September 30,					Nine Months Ended September 30,				Three Months Ended March 31,
($ in millions)	2020			2019		2020		2019		2021		2020
Equity in (losses) earnings from unconsolidated affiliates	$	(1	)	$	1	$	3	$	4
Equity in earnings from unconsolidated affiliates										$	2	$	3
Commissions and other fees		16			31		43		99		13		23

We also ~~have $7~~had $5 million and ~~$25~~$7 million of outstanding receivables related to the fee-for-service agreements as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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) other gains, including asset ~~dispositions; (ii)~~dispositions and foreign currency ~~transactions; (iii)~~translations; (ii) debt restructurings/retirements; ~~(iv)~~(iii) non-cash impairment losses; ~~(v) reorganization costs, including severance and relocation costs; (vi)~~(iv) share-based and other compensation expenses; ~~(vii)~~and (v) other items, including but not limited to costs ~~related to the spin-off;~~associated with acquisitions, restructuring and ~~(viii)~~ other ~~items.~~non-cash and one-time charges.

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
($ in millions)	2020			2019			2020			2019			2021			2020
Revenues:
Real estate sales and financing	$	116		$	324		$	378		$	939		$	123		$	206
Resort operations and club management⁽¹⁾⁽²⁾		61			108			209			332			80			104
Total segment revenues		177			432			587			1,271			203			310
Cost reimbursements		33			43			105			128			35			49
Intersegment eliminations⁽¹⁾⁽²⁾		(2	)		(9	)		(10	)		(29	)		(3	)		(8	)
Total revenues	$	208		$	466		$	682		$	1,370		$	235		$	351

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
($ in millions)	2020			2019			2020			2019			2021			2020
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	15		$	94		$	16		$	243		$	27		$	15
Resort operations and club management⁽¹⁾		30			62			100			193			42			55
Segment Adjusted EBITDA		45			156			116			436			69			70
General and administrative		(22	)		(30	)		(65	)		(87	)		(36	)		(21	)
Depreciation and amortization		(11	)		(12	)		(34	)		(32	)		(11	)		(12	)
License fee expense		(11	)		(26	)		(39	)		(75	)		(14	)		(22	)
Other gain (loss), net		1			(1	)		—			(3	)
Other (loss) gain, net														(1	)		2
Interest expense		(10	)		(12	)		(32	)		(33	)		(15	)		(10	)
Income tax benefit (expense)		5			(20	)		12			(55	)		6			(1	)
Equity in (losses) earnings from unconsolidated affiliates		(1	)		1			3			4
Equity in earnings from unconsolidated affiliates														2			3
Impairment expense														(1	)		—
Other adjustment items⁽²⁾		(3	)		(6	)		(8	)		(11	)		(6	)		(1	)
Net (loss) income	$	(7	)	$	50		$	(47	)	$	144		$	(7	)	$	8

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 ~~September 30, 2020,~~March 31, 2021, we were committed to purchase approximately ~~$457~~$453 million of inventory and land over a period of 10 years and ~~$16~~$11 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~~We are also committed to an agreement to exchange parcels of land in Hawaii, subject to the successful completion of zoning, land use requirements and other applicable regulatory requirements. The actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the ~~nine~~three months ended ~~September 30, 2020 and 2019,~~March 31, 2021, we purchased ~~$16~~$1 million ~~and $66 million, respectively,~~ as required under our inventory-related purchase commitments. We did 0t make any purchases related to our commitments for the three months ended March 31, 2020.As of ~~September 30, 2020,~~March 31, 2021, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:

($ in millions)	2020 (remaining)		2021		2022		2023		2024		Thereafter		Total		2021 (remaining)		2022		2023		2024		2025		Thereafter		Total
Inventory purchase obligations	$	10	$	225	$	110	$	58	$	40	$	14	$	457	$	226	$	114	$	58	$	40	$	3	$	12	$	453
Other commitments⁽¹⁾		1		10		3		2		—		—		16		9		2		—		—		—		—		11
Total	$	11	$	235	$	113	$	60	$	40	$	14	$	473	$	235	$	116	$	58	$	40	$	3	$	12	$	464

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 ~~September 30, 2020,~~March 31, 2021, will 0t materially affect our unaudited condensed consolidated financial statements.

On March 10, 2021, we and our wholly-owned subsidiary Hilton Grand Vacations Borrower LLC entered into an Agreement and Plan of Merger (“Merger Agreement”) with Dakota Holdings, Inc. (“Diamond”), which is controlled by the investment funds and vehicles managed by affiliates of Apollo Global Management Inc. (“Apollo”) and certain stockholders of Diamond, under which we agreed to acquire Diamond, in a stock transaction with an equity fair value of approximately $1.4 billion as of that date. Under the Merger Agreement, Apollo and other Diamond stockholders are expected to receive approximately 34.5 million shares of our common stock, par value $0.01 per share, subject to customary adjustments. Upon transaction close, existing HGV shareholders are expected to own approximately 72% of the combined company and Apollo is expected to own approximately 28% of the combined company. The transaction has been approved by the Board of Directors for both companies. Consummation of this transaction is subject to customary conditions, including approval from shareholders of both us and Diamond, receipt of any required regulatory approvals and other customary closing conditions.

We intend to finance the transaction through a combination of cash on hand, assumption of debt and incremental debt financing. The transaction is anticipated to close during the summer of 2021.

~~On October 15, 2020, we announced a workforce reduction plan~~Management has evaluated all subsequent events through April 29, 2021, the date the unaudited condensed consolidated financial statements were available to be issued. The results of management’s analysis indicated no significant subsequent events have occurred that required consideration or adjustment to our disclosures 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 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 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 repaid $100 million under our revolving credit 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.~~2020.

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~~the future of HGV, 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~~HGV makes 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,”, “would”, “seeks,” “approximately,” “projects,” predicts,” “intends,” “plans,” “estimates,” “anticipates” “future,” “guidance,” “target,” or the negative version of these words or other comparable words, although not all forward-looking statements may contain such words. The forward-looking statements contained in this Quarterly Report on Form 10-Q include statements related to HGV’s 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~~HGV cautions you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond ~~our~~HGV’s control, that may cause ~~our~~the actual results, performance or achievements to be materially different from the future results. Factors that could cause ~~our~~HGV’s actual results to differ materially from those contemplated by ~~our~~its forward-looking statements include: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the inability to complete the proposed Merger due to the failure to obtain stockholder approval for the proposed Merger or the failure to satisfy other conditions to completion of the proposed Merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; risks related to disruption of management’s attention from HGV’s ongoing business operations due to the transaction; the effect of the announcement of the proposed Merger on HGV’s relationships, operating results and business generally; the risk that the proposed Merger will not be consummated in a timely manner; exceeding the expected costs of the Merger; the material impact of the COVID-19 pandemic on ~~our~~HGV’s business, operating results, and financial condition; the extent and duration of the impact of the COVID-19 pandemic on global economic conditions; ~~our~~HGV’s ability to meet ~~our~~its liquidity needs; risks related to ~~our~~HGV’s indebtedness; inherent business risks, market trends and competition within the timeshare and hospitality industries; ~~our~~HGV’s ability to successfully source inventory and market, sell and finance VOIs; default rates on our financing receivables; the reputation of and our ability to access Hilton brands and programs, including the risk of a breach or termination of our license agreement with Hilton; compliance with and changes to United States and global laws and regulations, including those related to anti-corruption and privacy; risks related to ~~our~~HGV’s acquisitions, joint ventures, and other partnerships; ~~our~~HGV’s dependence on third-party development activities to secure just-in-time inventory; the performance of ~~our~~HGV’s information technology systems and our ability to maintain data security; regulatory proceedings or litigation; adequacy of our workforce to meet ~~our~~HGV’s business and operation needs; ~~our~~HGV’s ability to attract and retain key executives and employees with skills and capacity to meet our needs; and natural disasters or adverse geo-political conditions. Any one or more of the foregoing factors could adversely impact ~~our~~HGV’s operations, revenue, operating profits and margins, financial condition and/or credit rating.

For additional information regarding factors that could cause ~~our~~HGV’s actual results to differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q, 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,~~2020, 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~~and those described from time to time in 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~~HGV’s ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or ~~revise~~review 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”~~“VOIs” refer to the timeshare properties that we manage or own. Of these resorts and ~~units,~~VOIs, a portion is directly owned by us or our joint ventures in which we have an interest and the remaining resorts and ~~units~~VOIs 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”), and Adjusted ~~EBITDA, free cash flow and adjusted free cash flow.~~EBITDA.

This Quarterly Report on Form 10-Q includes discussion of key business operational metrics including contract sales, sales revenue, real estate ~~margin,~~profit, tour flow, and volume per ~~guest.~~ guest (“VPG”).

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 ~~September 30, 2020,~~March 31, 2021, we have 6062 properties, representing ~~9,594 units,~~499,616 VOIs, that are primarily located in vacation destinations such as Orlando, Las Vegas, the Hawaiian Islands, New York City, Washington D.C., ~~and~~ South Carolina, Barbados and Mexico and feature spacious, condominium-style accommodations with superior amenities and quality service. As of ~~September 30, 2020,~~March 31, 2021, 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 ~~6,200~~6,400 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 “Recent ~~Events”~~Events Related to the COVID-19 Pandemic and Impact on Our Results of Operations, Financial Condition, and Business During the Three Months Ended March 31, 2021” 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. 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 ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, sales from fee-for-service, just-in-time and developed inventory sources were 5540 percent, 2228 percent and 2332 percent, respectively, of contract sales. See “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Operating Metrics” for additional discussion of contract sales. The estimated contract sales value related to our 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 upon registration, delivery or construction is approximately $10 billion at current pricing.

Capital efficient arrangements, ~~represent~~comprised of our fee-for-service and just-in-time inventory, represented 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, Mexico 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, Carlsbad and ~~Carlsbad.~~Los Cabos. 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 ~~nine~~three months ended ~~September 30, 2020, 60~~March 31, 2021, 66 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 94 percent to 18 percent per annum. Financing propensity was 65 percent and 6763 percent for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 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,~~2020, 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.~~2020.

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) other gains, including asset ~~dispositions; (ii)~~dispositions and foreign currency ~~transactions; (iii)~~translations; (ii) debt restructurings/retirements; ~~(iv)~~(iii) non-cash impairment losses; ~~(v) reorganization costs, including severance and relocation costs; (vi)~~(iv) share-based and ~~certain~~ other compensation expenses; ~~(vii)~~and (v) other items, including but not limited to costs ~~related to the spin-off;~~associated with acquisitions, restructuring and ~~(viii)~~ other ~~items.~~non-cash and one-time charges.

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 Impact on Our Results of Operations, Financial Condition, and Business During the Three ~~and Nine~~ Months Ended ~~September 30, 2020.~~March 31, 2021.

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 or reinstate, 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 in March 2020, we started to temporarily close substantially all of our properties and suspended our U.S sales operations and closed such sales offices. ~~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~~In the second quarter of 2020, ~~implementing hiring freezes, eliminating all discretionary spending,~~we began a phased reopening of resorts and reducing our planned investment in new inventory by approximately $200 million. Recently, we announced a workforce reduction plan that will impact approximately 1,600 team members, and approximately 2,000resumption of our ~~team members remain furloughed.~~business activities, but under new operating guidelines and with safety measures. With the anticipated gradual receding of the pandemic, as well as COVID-19 vaccinations becoming more widespread and various restrictions continuing to ease, consumers have started to resume normal activities, including travel and leisure, and more businesses have commenced resuming operations. We plan to continue to reopen our resorts and resume our normal business as conditions permit, but there can be no assurance that such positive trends will continue or that there will not be any increases of new infections or new variants that may impede or reverse recovery and such positive trends.

In response to the impact of the COVID-19 pandemic, we ~~believe~~took a variety of actions to ensure the ~~following actions will provide adequate capital to meet~~continuity of our ~~short-and long-term liquidity requirements for anticipated operating expenses~~ business 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,operations and to ~~finance~~secure our ~~long-term growth plan~~liquidity position to provide financial flexibility. These actions include amending certain financial covenant ratios through the third quarter of 2021, as may be needed due to the ongoing and ~~capital expenditures for~~uncertain future impact of the ~~foreseeable future.~~COVID-19 pandemic on our business and operations.

The temporary closure of our resorts and sales centers, and the related suspensions of our operations, as well as various travel and other restrictions, expectedly have had a materially adverse impact on our revenues, net (loss) income ~~(loss)~~ and other operating results during the ~~third~~first quarter, as well as our business and operations generally, as more fully discussed below. As discussed in further detail below, substantially all of the unfavorable changes in our operating results during the ~~three and nine months~~quarter ended ~~September 30, 2020~~March 31, 2021 as compared to prior periods were 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 during the first half of 2020.~~

The COVID-19 pandemic has created an unprecedented and challenging time. Our current focus is on ~~taking critical actions that are aimed at positioning~~continuing to position the Company to be 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~~mentioned above, we have taken several steps to enhance our liquidity ~~preserve cash, reduce our expenditures~~ and provide financial flexibility. We will continue to assess the evolving COVID-19 pandemic, including the various ~~government mandates~~restrictions on travel, leisure and ~~orders that impact the re-opening of our properties~~other activities, and ~~any new recommended or required~~general business ~~practices,~~operations, and will take additional actions as appropriate.

As of March 31, 2021, approximately 80 percent of our resorts and nearly all of our sales centers are open and currently operating. However, some of our resorts and sales centers are operating in markets with capacity constraints and various safety measures, which are impacting consumer demand for resorts in those markets. Prior to ~~re-opening~~reopening 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. F~~urther, ongoing strict~~ Further, despite the recent receding of travel and other restrictions in regions and locations where we have a significant concentration of our properties and units ~~in particular, Hawaii~~ and ~~New York, are significantly impacting~~other positive trends with the pandemic, the pandemic continues to adversely impact consumer demand for our resorts in those ~~areas.~~areas and our business in general.

Accordingly, there remains significant uncertainty as to the continuing 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.

Please carefully review ~~carefully~~ the risk factors contained in this quarterly report on Form 10-Q, in Item 1A of our Form 10-K for the year ended December 31, ~~2019~~2020 and those described from time to time in other periodic reports that ~~are included in our Forms 10-Q for~~we file with the ~~quarters ended March 31, 2020 and June 30, 2020 and this Report~~SEC for discussions of various factors and uncertainties related to the pandemic that may materially impact us.

On March 10, 2021, we and our wholly-owned subsidiary Hilton Grand Vacations Borrower LLC entered into an Agreement and Plan of Merger (“Merger Agreement”) with Dakota Holdings, Inc. (“Diamond”), which is controlled by the investment funds and vehicles managed by affiliates of Apollo Global Management Inc. (“Apollo”) and certain stockholders of Diamond, under which we agreed to acquire Diamond, in a stock transaction with an equity fair value of approximately $1.4 billion as of that date. Under the Merger Agreement, Apollo and other Diamond stockholders will receive approximately 34.5 million shares of our common stock, par value $0.01 per share, subject to customary adjustments. Upon transaction close, existing HGV shareholders will own approximately 72% of the combined company and Apollo will own approximately 28% of the combined company. The transaction has been approved by the Board of Directors for both companies. Consummation of this transaction is subject to customary conditions, including approval from shareholders of both us and Diamond, receipt of any required regulatory approvals and other customary closing condition.

We intend to finance the transaction through a combination of cash on hand, assumption of debt and incremental debt financing. The transaction is anticipated to close during the summer of 2021.

Three ~~and Nine~~ Months Ended ~~September 30, 2020~~March 31, 2021 Compared with the Three ~~and Nine~~ Months Ended ~~September 30, 2019~~March 31, 2020

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 September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Revenues:
Real estate sales and financing	$	116		$	324		$	(208	)		(64.2	)%	$	378		$	939		$	(561	)		(59.7	)%	$	123		$	206		$	(83	)		(40.3	)%
Resort operations and club management		61			108			(47	)		(43.5	)		209			332			(123	)		(37.0	)		80			104			(24	)		(23.1	)
Segment revenues		177			432			(255	)		(59.0	)		587			1,271			(684	)		(53.8	)		203			310			(107	)		(34.5	)
Cost reimbursements		33			43			(10	)		(23.3	)		105			128			(23	)		(18.0	)		35			49			(14	)		(28.6	)
Intersegment eliminations⁽¹⁾		(2	)		(9	)		7			(77.8	)		(10	)		(29	)		19			(65.5	)		(3	)		(8	)		5			(62.5	)
Total revenues	$	208		$	466		$	(258	)		(55.4	)	$	682		$	1,370		$	(688	)		(50.2	)	$	235		$	351		$	(116	)		(33.0	)

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

	Three Months Ended September 30,					Variance						Nine Months Ended September 30,					Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019		$			%			2020			2019		$			%			2021			2020			$			%
Net (loss) income	$	(7	)	$	50	$	(57	)	NM⁽¹⁾			$	(47	)	$	144	$	(191	)	NM⁽¹⁾			$	(7	)	$	8		$	(15	)	NM⁽¹⁾
Interest expense		10			12		(2	)		(16.7	)%		32			33		(1	)		(3.0	)%		15			10			5			50.0	%
Income tax (benefit) expense		(5	)		20		(25	)	NM⁽¹⁾				(12	)		55		(67	)	NM⁽¹⁾				(6	)		1			(7	)	NM⁽¹⁾
Depreciation and amortization		11			12		(1	)		(8.3	)		34			32		2			6.3			11			12			(1	)		(8.3	)
Interest expense, depreciation and amortization included in equity in (losses) earnings from unconsolidated affiliates		1			—		1		NM⁽¹⁾				2			2		—			—
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates																								1			1			—			—
EBITDA		10			94		(84	)		(89.4	)		9			266		(257	)		(96.6	)		14			32			(18	)		(56.3	)
Other (gain) loss, net		(1	)		1		(2	)	NM⁽¹⁾				—			3		(3	)		(100.0	)
Other loss (gain), net																								1			(2	)		3		NM⁽¹⁾
Share-based compensation expense⁽²⁾		6			6		—			—			10			18		(8	)		(44.4	)		4			(2	)		6		NM⁽¹⁾
Impairment expense																								1			—			1		NM⁽¹⁾
Other adjustment items⁽³⁾		4			10		(6	)		(60.0	)		14			16		(2	)		(12.5	)		22			5			17		NM⁽¹⁾
Adjusted EBITDA	$	19		$	111	$	(92	)		(82.9	)	$	33		$	303	$	(270	)		(89.1	)	$	42		$	33		$	9			27.3

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	15		$	94		$	(79	)		(84.0	)%	$	16		$	243		$	(227	)		(93.4	)%	$	27		$	15		$	12		NM⁽¹⁾
Resort operations and club management⁽¹⁾		30			62			(32	)		(51.6	)		100			193			(93	)		(48.2	)		42			55			(13	)		(23.6	)%
Segment Adjusted EBITDA		45			156			(111	)		(71.2	)		116			436			(320	)		(73.4	)
Adjustments:
Adjusted EBITDA from unconsolidated affiliates		—			1			(1	)		(100.0	)		5			6			(1	)		(16.7	)		3			4			(1	)		(25.0	)
License fee expense		(11	)		(26	)		15			(57.7	)		(39	)		(75	)		36			(48.0	)		(14	)		(22	)		8			(36.4	)
General and administrative⁽²⁾		(15	)		(20	)		5			(25.0	)		(49	)		(64	)		15			(23.4	)		(16	)		(19	)		3			(15.8	)
Adjusted EBITDA	$	19		$	111		$	(92	)		(82.9	)	$	33		$	303		$	(270	)		(89.1	)	$	42		$	33		$	9			27.3

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~~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:

	Three Months Ended September 30,						Variance		Nine Months Ended September 30,						Variance			Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$		2020			2019			$			2021			2020			$
Sales of VOIs (deferrals)	$	(13	)	$	(15	)	$	2	$	(64	)	$	(49	)	$	(15	)	$	(32	)	$	(47	)	$	15
Sales of VOIs recognitions		—			—			—		—			—			—			—			—			—
Net Sales of VOIs (deferrals) recognitions		(13	)		(15	)		2		(64	)		(49	)		(15	)		(32	)		(47	)		15
Cost of VOI sales (deferrals)⁽¹⁾		(4	)		(5	)		1		(17	)		(16	)		(1	)		(10	)		(13	)		3
Cost of VOI sales recognitions		—			—			—		—			—			—			—			—			—
Net Cost of VOI sales (deferrals) recognitions⁽¹⁾		(4	)		(5	)		1		(17	)		(16	)		(1	)		(10	)		(13	)		3
Sales and marketing expense (deferrals)		(1	)		(2	)		1		(9	)		(7	)		(2	)		(4	)		(7	)		3
Sales and marketing expense recognitions		—			—			—		—			—			—			—			—			—
Net Sales and marketing expense (deferrals) recognitions		(1	)		(2	)		1		(9	)		(7	)		(2	)		(4	)		(7	)		3
Net construction (deferrals) recognitions	$	(8	)	$	(8	)	$	—	$	(38	)	$	(26	)	$	(12	)	$	(18	)	$	(27	)	$	9

Real estate sales and financing segment revenues decreased by ~~$208~~$83 million for the three months ended ~~September 30, 2020 and $561 million for the nine months ended September 30, 2020,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to decreases in sales revenue and marketing revenue as a result of the significant ongoing impact of the COVID-19 pandemic on travel ~~demand, along with the temporary closure~~demand. As of ~~substantially all~~March 31, 2021, operations at approximately 20 percent of our properties remain temporarily suspended, and ~~suspension~~a number of our ~~sales~~remaining markets continue to operate under capacity and ~~related operations during the first half of 2020.~~other constraints, which has led to decreased results.

Real estate sales and financing Adjusted EBITDA ~~decreased~~increased by ~~$79~~$12 million for the three months ended ~~September 30, 2020 and $227 million for the nine months ended September 30, 2020,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to the ~~decreases~~decrease in cost of VOI sales and real estate operating expenses exceeding the decrease in segment revenues associated with segment performance discussed ~~herein partially offset by a decrease in related expenses.~~herein. In addition, real estate sales and financing segment Adjusted EBITDA was impacted by $9the favorable impact of a $3 million ~~in one-time payroll related expenses,~~ net credit of government assistance from Japan and an employee retention credit granted ~~primarily~~ under the CARES Act, primarily related to payments made to employees as a result of operational closures caused by the COVID-19 pandemic for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

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 ~~$47 million and $123~~$24 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to decreases in rental and ancillary revenues as a result of the ongoing impact of the COVID-19 pandemic on travel ~~demand, along with the temporary closure~~demand. As of ~~substantially all~~March 31, 2021, operations at approximately 20 percent of our properties remain temporarily suspended, and ~~suspension~~a number of our ~~sales~~remaining markets continue to operate under capacity and ~~related operations during the first half of 2020.~~other constraints, which has led to decreased results.

Resort operations and club management segment Adjusted EBITDA decreased ~~$32 million and $93~~$13 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, 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 September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions, except Tour flow and VPG)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Contract sales	$	117		$	360		$	(243	)		(67.5	)	$	396		$	1,045		$	(649	)		(62.1	)	$	139		$	244		$	(105	)		(43.0	)%
Adjustments:
Fee-for-service sales⁽²⁾		(67	)		(194	)		127			(65.5	)		(216	)		(569	)		353			(62.0	)		(56	)		(130	)		74			(56.9	)
Provision for financing receivables losses		(12	)		(22	)		10			(45.5	)		(57	)		(60	)		3			(5.0	)		(16	)		(37	)		21			(56.8	)
Reportability and other:
Net deferral (recognition) of sales of VOIs under construction⁽³⁾		(13	)		(15	)		2			(13.3	)		(64	)		(49	)		(15	)		30.6			(32	)		(47	)		15			(31.9	)
Fee-for-service sale upgrades, net		4			15			(11	)		(73.3	)		13			39			(26	)		(66.7	)		2			8			(6	)		(75.0	)
Other⁽⁴⁾		(5	)		(6	)		1			(16.7	)		8			(23	)		31		NM⁽¹⁾				(4	)		18			(22	)	NM⁽¹⁾
Sales of VOIs, net	$	24		$	138		$	(114	)		(0.8	)	$	80		$	383		$	(303	)		(0.8	)	$	33		$	56		$	(23	)		(0.4	)
Tour flow		25,488			102,911			(77,423	)		(75.2	)		98,263			287,267			(189,004	)		(65.8	)		27,948			66,965			(39,017	)		(58.3	)
VPG	$	4,205		$	3,363		$	842			25.0		$	3,763		$	3,464		$	299			8.6		$	4,647		$	3,506		$	1,141			32.5

Contract sales decreased ~~$243 million and $649~~$105 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to a decrease in tour flow related to the ongoing impact of the COVID-19 pandemic on travel ~~demand, along with the temporary closure~~demand. As of ~~substantially all~~March 31, 2021, operations at approximately 20 percent of our properties remain temporarily suspended, and ~~suspension~~a number of our ~~sales~~remaining markets continue to operate under capacity and ~~related operations 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~~other constraints, ~~and are subject~~which has led to ~~various safety measures. As of September 30, 2020, we have over three quarters of our resorts and sales centers open and currently operating.~~decreased results.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Sales, marketing, brand and other fees	$	52		$	143		$	(91	)		(63.6	)%	$	171		$	429		$	(258	)		(60.1	)%	$	53		$	106		$	(53	)		(50.0	)%
Less:
Marketing revenue and other fees		11			34			(23	)		(67.6	)		40			102			(62	)		(60.8	)		21			25			(4	)		(16.0	)
Commissions and brand fees		41			109			(68	)		(62.4	)		131			327			(196	)		(59.9	)		32			81			(49	)		(60.5	)
Sales of VOIs, net		24			138			(114	)		(82.6	)		80			383			(303	)		(79.1	)		33			56			(23	)		(41.1	)
Sales revenue		65			247			(182	)		(73.7	)		211			710			(499	)		(70.3	)		65			137			(72	)		(52.6	)
Less:
Cost of VOI sales		8			24			(16	)		(66.7	)		21			92			(71	)		(77.2	)		3			14			(11	)		(78.6	)
Sales and marketing expense, net⁽²⁾		66			145			(79	)		(54.5	)		247			415			(168	)		(40.5	)		59			125			(66	)		(52.8	)
Real estate margin	$	(9	)	$	78		$	(87	)	NM⁽¹⁾			$	(57	)	$	203		$	(260	)	NM⁽¹⁾
Real estate margin percentage		(13.8	)%		31.6	%								(27.0	)%		28.6	%
Real estate profit (loss)																									$	3		$	(2	)	$	5		NM⁽¹⁾
Real estate profit margin																										4.6	%		(1.5	)%

Sales revenue decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, due to ~~decreases~~decrease in sales of VOI 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~~as discussed above in the ~~temporary closure~~discussion related to contract sales. Cost of ~~substantially all of our properties and suspension of our~~VOI sales, and ~~related operations during~~sales and marketing expense, net, decreased consistent with sales revenue decrease.

Real estate profit increased as a result of the ~~first half of 2020.~~decrease in expenses in the three months ended March 31, 2021 as compared to the same period in 2020, was greater than the decrease in revenue for the same period.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Interest income	$	34		$	37		$	(3	)		(8.1	)	$	108		$	109		$	(1	)		(0.9	)%	$	31		$	38		$	(7	)		(18.4	)%
Other financing revenue		6			6			—			—			19			18			1			5.6			6			6			—			—
Financing revenue		40			43			(3	)		(7.0	)		127			127			—			—			37			44			(7	)		(15.9	)
Consumer financing interest expense		9			8			1			12.5			23			22			1			4.5			7			7			—			—
Other financing expense		4			6			(2	)		(33.3	)		16			17			(1	)		(5.9	)		6			6			—			—
Financing expense		13			14			(1	)		(7.1	)		39			39			—			—			13			13			—			—
Financing margin	$	27		$	29		$	(2	)		(6.9	)	$	88		$	88		$	—			—
Financing margin percentage		67.5	%		67.4	%								69.3	%		69.3	%
Financing profit																									$	24		$	31		$	(7	)		(22.6	)
Financing profit margin																										64.9	%		70.5	%

Financing revenue decreased $3$7 million for the three months ended ~~September 30, 2020 and remained flat for the nine months ended September 30, 2020,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019~~2020 primarily due to a decrease in the timeshare financing receivables portfolio ~~balance.~~

balance, offset by an increase in revenue resulting from an increase in the related weighted average interest rate for the portfolio from 12.52 percent to 12.59 percent for the three months ended March 31, 2021, compared to the same period in 2020. Financing expense remained flat year over year.

Financing ~~margin~~profit decreased for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to the same period in ~~2019~~2020 related to the aforementioned decrease in interest income partially offset primarily by a decrease in other financing expenses. Financing margin percentage remained relatively flat for the three and nine months ended September 30, 2020 compared to the same periods in 2019.income.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Club management revenue	$	23		$	28		$	(5	)		(17.9	)%	$	70		$	80		$	(10	)		(12.5	)%	$	27		$	25		$	2			8.0	%
Resort management revenue		16			17			(1	)		(5.9	)		52			50			2			4.0			18			19			(1	)		(5.3	)
Resort and club management revenues		39			45			(6	)		(13.3	)		122			130			(8	)		(6.2	)		45			44			1			2.3
Club management expense		6			6			—			—			18			20			(2	)		(10.0	)		5			7			(2	)		(28.6	)
Resort management expense		3			5			(2	)		(40.0	)		9			14			(5	)		(35.7	)		3			5			(2	)		(40.0	)
Resort and club management expenses		9			11			(2	)		(18.2	)		27			34			(7	)		(20.6	)		8			12			(4	)		(33.3	)
Resort and club management margin	$	30		$	34		$	(4	)		(11.8	)	$	95		$	96		$	(1	)		(1.0	)
Resort and club management margin percentage		76.9	%		75.6	%								77.9	%		73.8	%
Resort and club management profit																									$	37		$	32		$	5			15.6
Resort and club management profit margin																										82.2	%		72.7	%

Resort and club management revenues ~~decreased~~increased for the three ~~and nine~~ months ended September 30, 2020, compared to the same periods in 2019, primarily due to a decrease in club management revenue 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,March 31, 2021, compared to the same period in ~~2019.~~2020, primarily due to an increase in club management revenue per member, compared to the same period in 2020.

Resort and club management ~~margin percentage~~profit increased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, primarily due to a reduction in resort and club management expenses driven by the ongoing impact of the COVID-19 pandemic on travel demand, along with the ~~temporary closure of substantially all~~phased reopening of our resort operations ~~during~~which continued throughout the first ~~half~~quarter of ~~2020.~~2021.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Rental revenues	$	19		$	48		$	(29	)		(60.4	)%	$	71		$	153		$	(82	)		(53.6	)%	$	30		$	47		$	(17	)		(36.2	)%
Ancillary services revenues		1			6			(5	)		(83.3	)		6			20			(14	)		(70.0	)		2			5			(3	)		(60.0	)
Rental and ancillary services revenues		20			54			(34	)		(63.0	)		77			173			(96	)		(55.5	)		32			52			(20	)		(38.5	)
Rental expenses		23			30			(7	)		(23.3	)		77			89			(12	)		(13.5	)		29			32			(3	)		(9.4	)
Ancillary services expense		1			6			(5	)		(83.3	)		8			19			(11	)		(57.9	)		2			5			(3	)		(60.0	)
Rental and ancillary services expenses		24			36			(12	)		(33.3	)		85			108			(23	)		(21.3	)		31			37			(6	)		(16.2	)
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 profit																									$	1		$	15		$	(14	)		(93.3	)
Rental and ancillary services profit margin																										3.1	%		28.8	%

Rental and ancillary services revenues, expenses, and ~~margin~~profit percentage decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared to the same periods in ~~2019,~~2020, due to the ongoing impact of the COVID-19 pandemic on travel ~~demand, along with the temporary closure~~demand. As of ~~substantially all~~March 31, 2021, operations at approximately 20 percent of our ~~resort operations during the first half of 2020.~~

~~Beginning in May 2020, we began~~properties remain temporarily suspended, and a ~~phased reopening of resorts and resumption~~number of our ~~business activities; however, many of our resorts are operating at significant~~remaining markets continue to operate under capacity and other constraints, ~~and are subject~~which has led to ~~various safety measures. As of September 30, 2020, we have over three quarters of our resorts open and currently operating.~~decreased results.

	Three Months Ended September 30,				Variance						Nine Months Ended September 30,				Variance						Three Months Ended March 31,				Variance
($ in millions)	2020		2019		$			%			2020		2019		$			%			2021		2020		$			%
General and administrative	$	22	$	30	$	(8	)		(26.7	)%	$	65	$	87	$	(22	)		(25.3	)%	$	36	$	21	$	15			71.4	%
Depreciation and amortization		11		12		(1	)		(8.3	)		34		32		2			6.3			11		12		(1	)		(8.3	)
License fee expense		11		26		(15	)		(57.7	)		39		75		(36	)		(48.0	)		14		22		(8	)		(36.4	)

The change in other operating expenses for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, is driven by ~~a decrease~~an increase in ~~General~~general and administrative expenses ~~related to (i) decreases~~offset by a decrease 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 during the first quarter of 2020 and (iii) lower license fee expense related to the corresponding decrease in real estate sales revenue. The increase in general and ~~resort operations revenue.~~administrative expenses is related to (i) an increase in consulting and legal expenses related to the recently announced acquisition of Diamond, (ii) decrease in salaries and wages from the furloughs and reduction in force consummated in the prior year, and (iii) increase in expense related to Performance RSUs. In the prior year, certain expenses related to Performance RSUs were reversed as the related RSUs were not expected to achieve certain performance targets, resulting in a credit to expense in the prior period.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			%			2020			2019			$			%			2021			2020			$			%
Interest expense	$	10		$	12		$	(2	)		(16.7	)%	$	32		$	33		$	(1	)		(3.0	)%	$	15		$	10		$	5			50.0	%
Equity in losses (earnings) from unconsolidated affiliates		1			(1	)		2		NM⁽¹⁾				(3	)		(4	)		1			(25.0	)
Other (gain) loss, net		(1	)		1			(2	)	NM⁽¹⁾				—			3			(3	)		(100.0	)
Equity in (earnings) losses from unconsolidated affiliates																										(2	)		(3	)		1			(33.3	)
Other loss (gain), net																										1			(2	)		3		NM⁽¹⁾
Income tax (benefit) expense		(5	)		20			(25	)	NM⁽¹⁾				(12	)		55			(67	)	NM⁽¹⁾				(6	)		1			(7	)	NM⁽¹⁾

The change in non-operating expenses for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared to the same ~~periods~~period in ~~2019,~~2020, is primarily due to an increase in interest expense as a result of an increase in related debt, and decrease in income tax expense due to a decrease in income before taxes combined with ~~a decrease~~an increase 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~~In response to the impact of COVID-19, we have taken a variety of actions to ensure the continuity of our business and operations and to secure our liquidity position to provide financial flexibility. This included amending certain financial covenant ratios through the third quarter of 2021 as may be needed due to the ongoing and ~~access to capital in light of the significant adverse~~uncertain future impact of the COVID-19 pandemic ~~particularly as substantially all~~on our business and operations.

As of our properties were temporarily closed and substantially all of our sales, operations and other activities were suspended during the first and second quarter of 2020, in addition to the steps discussed above,March 31, 2021, we have undertaken efforts to increase our capital and decrease our expenses. These include workforce furloughs, temporary salary reductions for employees primarily during the 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,~~ beginning 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 exist prior to the onset of the pandemic. ~~As of October 2020, we have over three quarters~~80 percent of our resorts and nearly all of our sales centers open and currently ~~operating; however, many~~operating. However, some of ~~our~~HGV’s resorts and sales centers are operating in markets with ~~significant~~ capacity constraints and are subject to various safety ~~measures.~~ measures, which are impacting consumer demand for resorts in those markets. 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~~

We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the ~~degree~~optimal level of ~~impact~~receivables, and ~~duration of~~provides 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 liquidityability to be strategically opportunistic in the ~~longer term. Any sustained material adverse impact on our revenues, net income (loss)~~marketplace. We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and ~~other operating results due to COVID-19 could adversely affect our ability to comply with our maintenance and financial covenants and ratios~~sold under our ~~debt obligations.~~Hilton Grand Vacations brand. As of March 31, 2021, our inventory-related purchase commitments totaled $453 million over 10 years.

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

	Nine Months Ended September 30,						Variance			Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			2021			2020			$
Net cash provided by (used in):
Operating activities	$	86		$	146		$	(60	)	$	62		$	53		$	9
Investing activities		(24	)		(44	)		20			(5	)		(8	)		3
Financing activities		503			(71	)		574			(78	)		562			(640	)

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 ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to the same period in ~~2019~~2020 was primarily due to ~~a reduction~~an increase in ~~the purchase and development of real estate for future conversion to inventory,~~proceeds from timeshare financing receivables, partially offset by decreased sources of cash from working capital.

	Nine Months Ended September 30,				Three Months Ended March 31,
($ in millions)	2020		2019		2021		2020
VOI spending - owned properties	$	70	$	61	$	15	$	17
VOI spending - fee-for-service upgrades⁽¹⁾		11		36		2		8
Purchases and development of real estate for future conversion to inventory		27		107		6		5
Total VOI inventory spending	$	108	$	204	$	23	$	30

	Nine Months Ended September 30,						Variance		Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$		2021			2020			$
Capital expenditures for property and equipment	$	(6	)	$	(25	)	$	19	$	(1	)	$	(3	)	$	2
Software capitalization costs		(16	)		(17	)		1		(4	)		(5	)		1
Investments in unconsolidated affiliates		(2	)		(2	)		—
Net cash used in investing activities	$	(24	)	$	(44	)	$	20	$	(5	)	$	(8	)	$	3

The change in net cash used in investing activities for the nine months ended 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 and 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.

The change in net cash used in investing activities for the three months ended March 31, 2021, compared to the same period in 2020, was primarily due to a reduction of property and equipment spending.

	Nine Months Ended September 30,						Variance			Three Months Ended March 31,						Variance
($ in millions)	2020			2019			$			2021			2020			$
Issuance of debt	$	495		$	455		$	40		$	—		$	495		$	(495	)
Issuance of non-recourse debt		495			365			130			—			195			(195	)
Repayment of debt		(62	)		(272	)		210			(2	)		(57	)		55
Repayment of non-recourse debt		(403	)		(327	)		(76	)		(69	)		(58	)		(11	)
Debt issuance costs		(8	)		(6	)		(2	)		(3	)		—			(3	)
Repurchase and retirement of common stock		(10	)		(283	)		273			—			(10	)		10
Payment of withholding taxes on vesting of restricted stock units		(3	)		(3	)		—			(5	)		(2	)		(3	)
Proceeds from employee stock plan purchases		1			2			(1	)
Proceeds from stock option exercises											2			—			2
Other financing activity		(2	)		(2	)		—			(1	)		(1	)		—
Net cash provided by (used in) financing activities	$	503		$	(71	)	$	574
Net cash (used in) provided by financing activities										$	(78	)	$	562		$	(640	)

The change in net cash (used in) provided by ~~(used in)~~ financing activities for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to the same period in ~~2019,~~2020, was primarily due to ~~(i)~~ the change in debt borrowings ~~and repayments under~~for both our ~~Revolver~~debt, revolving credit facility of ~~$40~~$495 million, and ~~$210~~non-recourse debt, Timeshare Facility of $195 million, ~~respectively, (ii) additional~~offset by fewer repayments ~~of $66 million of our securitized debt, (iii) the additional net borrowing of $120 million~~ on our ~~Timeshare Facility, and (iv) a reduction in repurchases and retirement of common stock.~~debt facilities.

The following table summarizes our significant contractual obligations as of ~~September 30, 2020:~~March 31, 2021:

	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	$	1,268	$	12	$	23	$	1,210	$	23	$	1,162	$	12	$	827	$	300	$	23
Non-recourse debt		847		301		304		160		82		706		145		328		151		82
Interest on debt⁽¹⁾		222		63		104		40		15		235		74		119		29		13
Operating leases		80		18		26		23		13		71		12		26		22		11
Inventory purchase commitments		457		235		168		42		12		453		227		172		43		11
Other commitments⁽²⁾		16		5		9		1		1		11		9		2		—		—
Total contractual obligations	$	2,890	$	634	$	634	$	1,476	$	146	$	2,638	$	479	$	1,474	$	545	$	140

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 ~~September 30, 2020,~~March 31, 2021, our inventory-related purchase commitments totaled ~~$457~~$453 million over 10 years ~~of which~~and we expect to purchase ~~$10~~$227 million ~~for~~of these commitments over the ~~remainder of 2020.~~next twelve months.

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 ~~$571~~$367 million as of ~~September 30, 2020~~March 31, 2021 which primarily consist of escrow and construction related bonds.

Our off-balance sheet arrangements as of ~~September 30, 2020~~March 31, 2021 consisted of ~~$457~~$453 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 ~~$16~~$11 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 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 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 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 a maximum amount, subject to applicable U.S. and non-U.S. laws. The guarantees can also be released upon the sale or transfer of a guarantor subsidiary’s capital stock or substantially all of 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 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,		March 31,		December 31,
($ in millions)	2020		2019		2021		2020
Assets
Cash and cash equivalents	$	587	$	35	$	366	$	393
Restricted cash		62		59		76		69
Accounts receivable, net - due from non-guarantor subsidiaries		19		41		34		25
Accounts receivable, net - due from related parties		7		25		5		7
Accounts receivable, net - other		85		126		66		77
Timeshare financing receivables, net		178		449		232		207
Inventory		843		524		626		605
Property and equipment, net		477		718		490		490
Operating lease right-of-use assets, net		53		58		47		51
Intangible assets, net		80		77		80		81
Land and infrastructure held for sale						41		41
Other assets		88		69		97		74
Total assets	$	2,479	$	2,181	$	2,160	$	2,120

Liabilities
Accounts payable, accrued expenses and other - due from non-guarantor subsidiaries	$	19	$	41	$	34	$	25
Accounts payable, accrued expenses and other - other		254		288		244		235
Advanced deposits		119		115		114		117
Debt, net		1,262		828		1,156		1,159
Operating lease liabilities		69		74		61		65
Deferred revenues		261		186		310		254
Deferred income tax liabilities		209		259		118		137
Total liabilities	$	2,193	$	1,791	$	2,037	$	1,992

	Nine Months Ended September 30,			Three Months Ended March 31,
($ in millions)	2020			2021
Total revenues - transactions with non-guarantor subsidiaries	$	5		$	2
Total revenues - other		584			209
Operating loss		(83	)		(10	)
Net loss		(103	)		(21	)

~~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 repaid $100 million under our revolving credit facility.~~unaudited financial statements.

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.~~2020.

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. 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.~~2020.

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 ~~September 30, 2020,~~March 31, 2021, 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⁾			2021		2022		2023		2024		2025		There- after		Total⁽²⁾		Fair Value
Assets:
Fixed-rate securitized timeshare financing receivables		12.253	%	$	25	$	103	$	107	$	110	$	113	$	421	$	879	$	920		12.271	%	$	70	$	95	$	98	$	100	$	98	$	269	$	730	$	770
Fixed-rate unsecuritized timeshare financing receivables		13.421	%		9		32		33		35		36		205		350		373		13.131	%		28		37		40		42		44		226		417		439
Liabilities:⁽³⁾
Fixed-rate debt		4.011	%		72		294		132		131		374		171		1,174		1,181		4.133	%		106		175		139		415		56		142		1,033		1,005
Variable-rate debt⁽⁴⁾		2.000	%		3		10		10		918		—		—		941		930
Variable-rate debt⁽⁴⁾																					3.750	%		8		10		817		—		—		—		835		838

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 and VAT receivables denominated in Mexican pesos, 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 the Japanese yen to U.S. dollar would change our gross timeshare financing receivables by less than $1$1.5 million. A 10 percent change in the foreign exchange rate of the Mexican ~~Peso~~peso to U.S. dollar would change our ~~gross~~ VAT ~~receivable~~receivables by ~~less than~~approximately $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 ~~September 30, 2020,~~March 31, 2021, 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 ~~September 30, 2020~~March 31, 2021 will not have a material effect on our unaudited condensed consolidated financial statements.

The following represents important changes and updates to the risk factors previously disclosed in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~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”~~“2020 Form 10-K”). The risk factors discussed below and the risk factors included in our ~~2019~~2020 Form 10-K ~~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. 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. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

In addition, the following risks and those risks described in our ~~2019~~2020 Form 10-K ~~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 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 our actual financial condition and results of operations to vary materially from past, or from anticipated future, financial condition and results of operations. Any of these factors, in whole or in part, could materially and adversely affect our business, results of operations and financial condition and the trading price of our common stock. Because of these factors affecting 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~~exchange ratio will not be adjusted for changes in our stock price.

The calculation of the number of shares of our common stock that Diamond common stockholders will receive as consideration in the Merger (the “exchange ratio”) is pre-determined such that each share of Diamond common stock (other than Appraisal Shares (as defined in the Merger Agreement), treasury shares, and ~~related events,~~shares owned directly or indirectly by Diamond) is currently expected to be converted into the right to receive 0.32066 shares of our common stock in connection with the Merger (based on calculations as of April 9, 2021), subject to certain adjustments as a result of changes in certain liabilities and other items between signing and closing of the Merger. This exchange ratio will not be adjusted for changes in the market price of our common stock between the date of signing the Merger Agreement and completion of the Merger.

Changes in the price of our common stock before the closing of the Merger will affect the market value of our common stock that Diamond common stockholders will receive at the closing of the Merger. The price of our common stock at the closing of the Merger may vary from their prices on the date the Merger Agreement was executed and on the date of the special meeting of our stockholders held in connection with the issuance of HGV common stock in the Merger. As a result, the value represented by the exchange ratio will also vary.

These variations could result from changes in the business, operations or prospects of Diamond or HGV before or following the Merger, regulatory considerations, general market and economic conditions and other factors both within and beyond our and Diamond’s control. The Merger may be completed a considerable period after the date of the special meeting. Therefore, at the time of the special meeting, stockholders will not know with certainty the value of the shares of our common stock that will be issued upon completion of the Merger.

We are subject to various uncertainties and contractual restrictions, including the ~~various measures implemented~~risk of litigation, while the Merger is pending, which may cause disruption and may make it more difficult to maintain relationships with employees, suppliers, vendors, customers or ~~adopted to respond to~~others.

Uncertainty about the ~~pandemic,~~effect of the Merger on relationships with our employees, suppliers, vendors, customers, or others may have ~~had, and will continue to have, a material~~an adverse effect on us. Although we intend to take steps designed to reduce any adverse effects, these uncertainties may impair Diamond’s and our ability to attract, retain and motivate key personnel until the Merger is completed and for a period of time thereafter, and could cause suppliers, vendors, customers, and others that deal with us to seek to change, not renew or discontinue existing business relationships with us.

Employee retention and recruitment may be challenging before the completion of the Merger, as employees and prospective employees may have uncertainty about their future roles with HGV after the Merger. If, despite our retention and recruiting efforts, key employees depart or prospective key employees are unwilling to accept employment with us because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us, our business ~~financial condition~~could be adversely affected.

The pursuit of the Merger and ~~results of operations~~the preparation for the ~~foreseeable future.~~integration may place a significant burden on management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our financial results.

~~The global COVID-19 pandemic~~In addition, the Merger Agreement restricts us and Diamond, without the other party’s consent, from making certain acquisitions and taking other specified actions until the Merger closes or the Merger Agreement terminates. These restrictions may prevent us and Diamond from pursuing otherwise attractive business opportunities and making other changes to our respective businesses before completion of the Merger or termination of the Merger Agreement.

One of the conditions to the closing of the Merger is the absence of any judgment, order, decree, statute, law, ordinance, rule or regulation, having been entered, enacted, promulgated, enforced or issued by any court or other governmental entity of competent jurisdiction or other legal restraint or prohibition that prevents the consummation of the Merger. Accordingly, while no litigation specific to the Merger has been commenced, it is possible that such litigation may commence, and in any such litigation if any of the plaintiffs is successful in obtaining an injunction prohibiting the consummation of the Merger, then such injunction may prevent the Merger from being completed, or delay it from being completed within the expected time frame.

Failure to complete the Merger could negatively impact our stock price 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 have, a significant adverse impact on domestic and international travel, consumer demand for travel, commercial activities across the travel, lodging and hospitality industries, businesses generally, and consequently, on our business and operations. The COVID-19 pandemic also has had, and will continue to have, significant adverse impacts on global economic, capital market, financial, healthcare, societal, and government regulatory conditions. In response to the growing pandemic and various governmental orders, we took certain significant actions to ensure the continuityfuture of our business and ~~operations beginning at~~financial results.

If the ~~end of the first quarter 2020, including temporarily closing operations at substantially all of~~Merger is not completed, our resorts, closing substantially all of our sales centers, implementing salary reductions and workforce furloughs, implementing hiring freezes, drawing down substantial amounts under our credit facility as a precautionary measure to ensure liquidity 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 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,ongoing business may be adversely affected, and we ~~plan~~may be subject to ~~continue to 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 with~~several risks, including 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.following:

The conditions caused by the 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’s impact on the global economy, consumer confidence, various businesses, and, consequently, our business and operations.

If the Merger is not completed, we cannot assure you that these risks will not materialize and will not materially adversely affect our business, financial results and stock price.

Our ability to complete the Merger is subject to certain closing conditions and the receipt of consents and approvals from government entities which may impose conditions that could adversely affect us or cause the Merger to be abandoned.

The Merger Agreement contains certain closing conditions, including, among others:

We cannot assure you that the various closing conditions will be satisfied, or that any required conditions will not materially adversely affect us following the Merger or will not result in the abandonment or delay of the Merger.

Any delay in completing the Merger may reduce or eliminate the benefits that we expect to achieve.

The Merger is subject to a number of conditions beyond our control that may prevent, delay or otherwise materially adversely affect the completion of the Merger. We cannot predict whether and when these conditions will be satisfied. Any delay in completing the Merger could cause us not to realize some or all of the synergies that we expect to achieve if the Merger is successfully completed within the expected time frame.

Our directors and executive officers may have interests in the Merger that may be different from, or in addition to, the interests of our stockholders generally.

Certain of our directors and executive officers negotiated the terms of the Merger Agreement, and our board of directors unanimously recommended that our stockholders vote in favor of the proposals to be presented to our stockholders at the special meeting. These directors and executive officers may have interests in the Merger that are different from, or in addition to, those of our stockholders. These interests include the continued employment of our executive officers after the Merger, the continued service of all of our directors following the Merger, and other rights held by our directors and executive officers. Our stockholders should be aware of these interests when they consider our board of directors’ recommendation that they vote in favor of the stock issuance proposal and the other proposals to be voted upon at the special meeting.

Our board of directors was aware of these potential interests and considered them in making its recommendations to approve the stock issuance proposal and the other proposals to be voted upon at the special meeting.

The opinion obtained by our board of directors from its financial advisor does not and will not reflect changes in circumstances after the date of such opinion.

On March 9, 2021, BofA Securities, Inc. (“BofA Securities”) delivered an opinion to our board of directors that, as of the date of such opinion, and based upon and subject to the assumptions, limitations, qualifications and conditions described in BofA Securities’ opinion, the Merger consideration was fair, from a financial point of view, to HGV. Changes in the operations and prospects of Diamond or HGV, general market and economic conditions and other factors that may be beyond our control, and on which the opinions of BofA Securities was based, may alter our or Diamond’s value or the price at which shares of our common stock are traded by the time the Merger is completed. We have not obtained, and we do not expect to request, an updated opinion from our financial advisor. BofA Securities’ opinion does not speak to the time when the Merger will be completed or to any date other than the date of such opinion. As a result, the opinion does not and will not address the fairness, from a financial point of view, of the Merger consideration to be paid by us in the Merger pursuant to the Merger Agreement at the time the Merger is completed or at any time other than the date when opinion was rendered.

We may not be able to integrate successfully and many of the anticipated benefits of combining us and Diamond may not be realized.

We entered into the Merger Agreement with the expectation that the Merger will result in various benefits, including, among other things, operating efficiencies. Achieving the anticipated benefits of the Merger is subject to a number of uncertainties, including whether the businesses of HGV and Diamond can be integrated in an efficient and effective manner.

It is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company’s ongoing businesses, processes and systems or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect our ability to achieve the anticipated benefits of the Merger. Our results of operations could also be adversely affected by any issues attributable to Diamond’s operations that arise or are based on events or actions that occur before the closing of the Merger. We may have difficulty addressing possible differences in corporate cultures and management philosophies. The integration process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization. Failure to achieve these anticipated benefits could result in increased costs or decreases in the amount of expected net income and could adversely affect our future business, financial condition, operating results and prospects.

Furthermore, we have agreed with Hilton Worldwide Inc. (“Hilton”) to develop a mutually agreeable plan pursuant to which the Diamond properties are to be operated during the integration period, and with respect to those Diamond properties that will not be converted to our brand. If we fail to develop such a plan with Hilton, such properties may remain subject to a number of restrictions related to how they are operated, and such restrictions may reduce the efficiencies anticipated in connection with the Merger.

We will take on additional indebtedness to finance the Merger, which could adversely affect our business, financial condition and results of operations, including by decreasing our business flexibility, as well as our ability to meet payment obligations under our indebtedness.

In connection with the completion of the Merger, we intend to significantly increase our level of indebtedness. Our increased level of debt, together with certain covenants and restrictions that will be imposed on us in connection with incurring this indebtedness, will, among other things: (a) require us to dedicate a larger portion of our cash flow from operations to servicing and repayment of debt; (b) reduce funds available for strategic initiatives and opportunities, dividends, share repurchases, working capital and other general corporate needs; (c) limit our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business, industry and economic conditions and increase borrowing costs; (d) create competitive disadvantages relative to other companies with lower debt levels and (e) increase our vulnerability to the impact of adverse economic and industry conditions. These covenants and restrictions may limit how our business is conducted. We may not be able to maintain compliance with these covenants and restrictions and, if we fail to do so, we may not be able to obtain waivers thereto and/or amend these covenants and restrictions. Our failure to comply with the covenants and restrictions could result in an event of default,which, if not cured or waived, could result in our being required to repay such indebtedness before its due date or to have to negotiate amendments to or waivers thereof, which may have unfavorable terms or result in the incurrence of additional fees and expenses.

Our ability to make scheduled cash payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate significant operating cash flow in the future, which, to a significant extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors, including the continued adverse impact of the COVID-19 pandemic on our business, that are beyond our control. We may not be able to maintain a sufficient level of cash flow from operating activities to permit us to pay the principal, premium, if any, and interest on our indebtedness.

In addition, our credit ratings will impact the cost and availability of future borrowings and, accordingly, our cost of capital. Our ratings will reflect each rating organization’s opinion of our financial strength, operating performance and ability to meet our debt obligations on a combined basis with Diamond. Downgrades in our ratings could adversely affect our businesses, cash flows, financial condition, operating results and share and debt prices, as well as our obligations with respect to our capital efficient inventory acquisitions.

Following the completion of the Merger, our vacation ownership business will depend on the quality and reputation of the brands associated with the portfolios of each of HGV and Diamond, and any deterioration in the quality or reputation of these brands could adversely affect our market share, reputation, business, financial condition and results of operations.

Following completion of the Merger, we intend to offer vacation ownership products and services under the Hilton Vacation Club brand, a new upscale HGV sub-brand that will consist of rebranded Diamond properties, all pursuant to the ~~foregoing,~~Amended and Restated License Agreement with Hilton ( the “A&R Hilton license agreement”). If the quality of any of these brands deteriorates, or the reputation of these brands declines, including as the result of actions by Hilton, our market share, reputation, business, financial condition or results of operations could be materially adversely affected. See “Risks Related to our Relationship with Hilton” below.

The maintenance and refurbishment of vacation ownership properties depends on maintenance fees paid by the owners of VOIs.

The maintenance fees that are levied on owners of our and Diamond’s VOIs by property owners’ association boards are used to maintain and refurbish the vacation ownership properties, to maintain reserves for capital expenditures, and to keep the properties in compliance with applicable brand standards. Property owners’ association boards may elect to not levy sufficient maintenance fees, or owners of VOIs may fail to pay their maintenance fees for reasons such as financial hardship, dissatisfaction with the Merger or because of damage to their VOIs from natural disasters such as hurricanes. In these circumstances, not only could our and Diamond’s management fee revenue be adversely affected, but the vacation ownership properties could fall into disrepair and fail to comply with applicable brand standards. If a resort fails to comply with applicable brand standards, Hilton could terminate our right under the A&R Hilton license agreement to use its trademarks at the non-compliant resort, which could result in the loss of management fees, decreased customer satisfaction and impairment of our ability to market and sell products at the non-compliant locations. See “Risks Related to Our Relationship with Hilton” below.

If maintenance fees at our or Diamond’s resorts are required to be increased, our or Diamond’s products could become less attractive and our or Diamond’s business could be harmed.

The maintenance fees that are levied on owners of our and Diamond’s VOIs by property owners’ association boards may increase as the costs to maintain and refurbish the vacation ownership properties, to maintain reserves for capital expenditures, and to keep the properties in compliance with brand standards increase. A similar situation may arise with respect to fees imposed on owners of VOIs with respect to new properties added to our portfolio following the completion of the Merger. Increased maintenance fees could make our or Diamond’s products less desirable, which could have a negative impact on sales of our or Diamond’s products and could also cause an increase in defaults with respect to our or Diamond’s vacation ownership notes receivable portfolio.

We expect to incur a number of non-recurring expenses both before and after completing the Merger, including fees for third party legal, investment banking and advisory services, the costs and expenses of filing, printing and mailing our merger proxy statement and all filing and other fees paid to the SEC in connection with the Merger, obtaining necessary consents and approvals and combining the operations of the two companies. These fees and costs will be substantial. Additional unanticipated costs may be incurred in our integration of Diamond. Although it is expected that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will offset the incremental transaction related costs over time, this net benefit may not be achieved in the near term, or at all. Further, if the Merger is not completed, we would have to recognize these expenses without realizing the expected benefits of the Merger.

Our stockholders will have a reduced ownership and voting interest after the completion of the Merger and will exercise less influence over management of us as compared to currently.

Our stockholders currently have the right to vote in the election of the board of directors and on other matters affecting us. Upon the completion of the Merger, each Diamond stockholder who receives shares of our common stock will become our stockholder. It is currently expected that the former Diamond stockholders as a group will receive shares in the Merger constituting approximately 28% of the shares of our common stock on a fully diluted basis immediately after the completion of the Merger. As a result, our current stockholders as a group will own approximately 72% of the shares of our common stock on a fully diluted basis immediately after the completion of the Merger. Because of this, our stockholders will have less influence on the management and policies of the combined company than they now have on the management and policies of us prior to the Merger.

Our future results will suffer if we do not effectively manage our expanded operations following the completion of the Merger.

Following the completion of the Merger, the size of our business will increase significantly beyond the current size of either our or Diamond’s current operations. Our future success depends, in part, upon our ability to manage this expanded business, including in non-US jurisdictions where we do not currently have operations, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. We may also need to obtain approvals of developers or HOAs in various instances to include additional resorts in the multi-resort trusts marketed, sold and managed by Diamond (the “Diamond Collections”) or increase maintenance fees or impose additional requirements in order to meet our brand and operating standards. There can be no assurances that we will be successful or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the transactions. In addition, there will be increased compliance and regulatory risk as a result of the expanded size of our business.

We may not be able to retain our and/or Diamond personnel successfully after the Merger is completed.

The success of the Merger will depend in part on our ability to retain the talents and dedication of key employees currently employed by us and Diamond. It is possible that these employees may decide not to remain with us or Diamond, as applicable, while the Merger is pending or with us after the Merger is consummated.

If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, our business activities may be adversely affected and management’s attention may be diverted from successfully integrating Diamond to hiring suitable replacements, all of which may cause our business to suffer. In addition, we may not be able to locate suitable replacements for any key employees who leave either company, or offer employment to potential replacements on reasonable terms.

We and Diamond may be subject to complaints, litigation or reputational harm due to dissatisfaction with, or concerns related to, the Merger from our current owners.

Our current owners may be concerned about the actual or perceived impact of the Merger on their VOIs, including related to a reduced quality of resorts and product offerings due to the increased size of the business and addition of new owners, or increase or change in HOA or other fees. Diamond’s current owners may have similar concerns related to a decline in the quality of product offerings or increase in fees as a result of the Merger and increase in size of the business. Complaints or litigation brought by existing owners following the completion of the Merger could harm our reputation, discourage potential new owners and adversely impact our results of operations.

The COVID-19 pandemic has impacted, and will likely continue to have a significant adverse impact on, the business, financial condition and results of operations of Diamond for the foreseeable future.

Tourism and travel-related industries continue to face significant disruption as a result of the COVID-19 pandemic. It may be an extended period of time before the business operations of Diamond and its affiliates return to full operational capacity or occupancy, particularly if there remains lingering actual and/or perceived concern and perception of significant transmission and infection risk due to the COVID-19 pandemic. Diamond has implemented new social distancing, hygiene protocols, and enhanced cleaning measures at its resorts, sales centers, and corporate offices in accordance with guidelines from federal, state and local authorities. Diamond and its subsidiaries’ management implemented and trained team members on the “Diamond Standard of Clean.” These measures, which are intended to protect human life, may result in additional costs, operational inefficiencies, and fewer revenue opportunities.

As a result of the COVID-19 pandemic and the ~~resulting~~various governmental mandates and orders for business closure, Diamond temporarily closed operations at substantially all of their resorts and closed substantially all of their sales centers. With the lifting or easing of such restrictions in certain locations in the United States, Diamond has re-opened the majority of its resorts and sales centers, albeit at reduced capacity levels and revenue has not returned to pre-pandemic levels. However, any re-opening of the resorts may be delayed, interrupted or reversed depending on government orders or recommendations or based on assessments of the state of the pandemic. It may be an extended period of time before the resorts return to pre-pandemic operational capacity or occupancy, particularly if there remains lingering actual and/or perceived concern and perception of significant transmission and infection risk due to the COVID-19 pandemic.

Any sustained materially adverse impact on Diamond’s revenues, net income and other operating results due to the impact of the COVID-19 pandemic could cause Diamond to breach its operating and financial covenants under certain of its debt obligations, which may mean lenders have the right to terminate their commitments under certain debt agreements and declare outstanding loans immediately due and payable.

Diamond operates in a number of locations outside the United States and is subject to certain additional risks related to international operations that are not applicable to our current business.

Diamond manages resorts in and sells VOIs in countries outside of the United States, including in Mexico, Canada, the United Kingdom and several countries in the European Union, which are subject to a number of risks, including compliance with local regulations and laws, regulations restricting the sale of VOIs, compliance with anti-corruption laws and regulations such as the Foreign Corrupt Practices Act, exposure to local economic conditions, potential adverse changes in the political or economic relation of foreign countries with the United States, withholding and restrictions on taxes and fluctuations in foreign currency exchange rates. Diamond is and may in the future be subject to litigation in foreign jurisdictions.

In Mexico, the developer of certain of Diamond’s resorts have agreed to requirements that they consider themselves as Mexican nationals with respect to certain property and agree to not invoke the protection of their governments in matters relating to the property. Generally, rules in Mexico limit ownership of land near Mexico’s borders and beaches to Mexican citizens and companies, unless granted the right by the Mexican government. If the developer of Diamond’s resort in Mexico fails to comply with the agreement with the Mexican government, it would forfeit the land back to Mexico.

We do not currently have operations in several of the non-US jurisdictions in which Diamond operates and may lack knowledge or familiarity with the rules and regulations, as well as experience and resources, related to operating such business in these countries.

Interests in Diamond’s resorts are offered through a trust system, which is subject to a number of regulatory and other requirements.

The Diamond Collections located in the United States are alternatives to traditional deeded timeshare ownership, inasmuch as they create a network of available resort accommodations at multiple locations. For those United States-based Diamond Collections, title to the units available through the Diamond Collections is held in a trust or similar arrangement that is administered by an independent trustee (the “Collection Trustee”). A purchaser of a timeshare interest in a Collection does not receive a deeded interest in any specific resort or resort accommodation, but acquires a membership in the timeshare plan which is denominated by an annual or biennial allotment of points. Owners of Diamond’s timeshare interests are allowed to use their allocated points to reserve accommodations at the various component site(s)/participating resort(s) within the Diamond Collections, thereby giving the members greater flexibility to plan their vacations. Owners may also elect to reserve accommodations at resorts that are not part of their Collection through Diamond’s exchange programs.

The Diamond Collections are registered pursuant to, exempted from, or otherwise in compliance with, the applicable statutory requirements for the sale of timeshare plans in a growing number of jurisdictions. Such registrations and formal exemption determinations for the Diamond Collections confirm the substantial compliance with the filing and disclosure requirements of the respective timeshare statutes by the developer of the applicable Diamond Collection. It does not constitute the endorsement of the creation, sale, promotion or operation of the Diamond Collections by any regulatory body nor relieve the developer of a Diamond Collection or any affiliates of such developer of any duty or responsibility under other statutes or any other applicable laws. Registration under a respective timeshare act (or other applicable law) is not a guarantee or assurance of compliance with applicable law nor an assurance or guarantee of how any judicial body may interpret the Diamond Collections’ compliance therewith. A determination that specific provisions or operations of the Collections do not comply with relevant timeshare acts or applicable law may have a material adverse effect on the developer, the Collection Trustee and the related non-profit members association for each of the Diamond Collections.

Increased activity by third-party exit companies on Diamond and its owners may cause distractions and adversely impact our integration.

Diamond and other timeshare companies continue to be significantly targeted by organized activities of third parties that actively pursue timeshare owners claiming to provide timeshare interest transfers and/or “exit” services. Any increases in the level of participation by the Diamond owners in response to such overtures and/or delinquencies or defaults with respect to the timeshare loans owed by such owners may disrupt Diamond’s business, affect cash flow from collections on the timeshare loans, and generally adversely affect our integration plans of Diamond. In addition, exit companies may target HGV owners to a greater extent than they already do in light of the proposed Merger with Diamond.

Our future results may suffer if Hilton seeks to modify or terminate the A&R Hilton license agreement.

We are a party to a license agreement with Hilton under which we license substantially all of the trademarks, brand names and intellectual property used in our business. The A&R Hilton license agreement also permits us to utilize the Hilton Honors program, which is a valuable asset for lead generation. These assets are critical to our business and the modification or amendment the A&R Hilton license agreement or any exercise by Hilton of its termination or other rights under the A&R Hilton license agreement will materially impact our business. The termination or amendment of the A&R Hilton license agreement in whole or in part could result in the loss of the right of HGV to use the Hilton brands in our business as currently conducted as well as in connection with our post-combination business, and in related services offered by Hilton, including marketing channels and guest loyalty programs. The loss of such rights will materially harm our business and results of operations and impair our ability to market and sell our VOI products and maintain our competitive position, and will have a material adverse effect on our financial position, results of operations or cash flows. Further, it is likely to be very challenging for us to find or develop a comparable replacement for the Hilton brand and the A&R Hilton license agreement. In addition, we may incur liabilities if any such termination results from our alleged breach of the A&R Hilton license agreement.

If the A&R Hilton license agreement is terminated, we may lose our rights to certain brands developed by us in connection with the integration of the Diamond business.

Pursuant to the A&R Hilton license agreement, Hilton would be the sole owner of certain licensed marks related to new brands associated with the Diamond portfolio that are developed by us in connection with our post-combination business. If, following the completion of the Merger, we default under the A&R Hilton license agreement, we could lose the right to use one or more of such new brands. The loss of these rights and/or certain other related rights could materially adversely affect our ability to generate revenue and profits from the vacation ownership business associated with the Diamond portfolio. The termination of the A&R Hilton license agreement following completion of the Merger would materially harm our combined business and results of operations and impair our ability to market and sell our products and maintain our competitive position.

Our ability to integrate the Diamond business and otherwise expand our business and remain competitive could be harmed if Hilton does not consent to the use of their trademarks in connection with the conversion of Diamond properties and/or new resorts that we may acquire or develop in the future.

Under the terms of the A&R Hilton license agreement, we must obtain Hilton’s approval to use the Hilton brand names and trademarks in connection with the conversion of the Diamond properties to branded properties using the Hilton marks, as well as for the branding of timeshare properties that we acquire or develop in the future. If Hilton does not permit us to use its trademarks in connection with such conversion and integration, or our future development or acquisition plans, or if we cannot come to an agreement with Hilton on how to brand and operate Diamond properties that are not approved by Hilton, our ability to successfully integrate Diamond and otherwise expand our business and remain competitive may be materially adversely affected. The requirement to obtain approval for such conversion and integration of Diamond properties and any future expansion plans, or the need to identify and secure alternative solutions because we cannot obtain such approval, may delay implementation of our integration and/or expansion plans or cause us to incur additional expense related to the branding of our properties.

Our ability to integrate the Diamond business depends on our compliance with the A&R Hilton license agreement, including the “Separate Operations” provisions and certain prohibitions on doing business with competitors. While the parties intend to provide some revisions to the applicable requirements, strict compliance with such provisions will negatively impact the synergies and efficiencies related to the Diamond acquisition.

For now, we have agreed with Hilton to operate the Diamond business as a “Separate Operation” under the A&R Hilton license agreement. Complying with that requirement can be costly and difficult and will likely significantly diminish the efficiencies and synergies that are critical to our successful integration of the Diamond business. In addition, the A&R Hilton license agreement requires Hilton’s approval in connection with our anticipated conversion of the Diamond properties into our branded properties and/or Hilton Vacation Club or another new brand of properties, and the creation of any such new brand also requires Hilton’s consent. While we and Hilton have agreed to modify the Separate Operations requirements, with such modifications to be made in Hilton’s sole discretion, so as to allow us to achieve greater operating efficiency and synergy than currently provided for, any failure of the parties to do so will adversely impact such operating efficiency and synergy. In addition, any failure to obtain Hilton’s approval with respect to the creation of any new brand or the conversion of the Diamond properties into such new brand or existing branded properties will significantly harm our ability to integrate the Diamond business and its properties. If we cannot come to an agreement with Hilton on how to brand and operate Diamond properties that do not currently or will not in the future meet the Hilton brand standards, then we will be required to continue to implicate or exacerbate the risk factors that we identified in our 2019 Form 10-K and our Prior Forms 10-Q. We encourage you to review such risk factors and related disclosure in such filings, together with the foregoing supplemental risk factors.operate them as separate operations.

~~Any~~In addition, the A&R Hilton license agreement contains a number of prohibitions on us entering into certain agreements and arrangements with competitors of Hilton. As a result of the ~~foregoing~~Merger, we will assume Diamond’s contracts with third parties, a number which are with competitors of Hilton and are prohibited under the A&R Hilton license agreement. The A&R Hilton license agreement provides for a cure period for agreements or ~~other risks, factors, and events~~arrangements related to the Diamond business that would result in a violation or breach of provisions in the A&R Hilton license agreement. However, to the extent we are not ~~foreseeable can result in significant negative impact on our results of operations, financial condition, business and operations, and reputation.~~able to terminate such agreements within the cure period or we are unable to obtain a waiver from Hilton, we may breach the A&R Hilton license agreement.

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 29^th day of ~~October 2020.~~April 2021.

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	2625
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4541
Item 4.		Controls and Procedures	4642

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		4743
Item 1A.	Risk Factors		4743
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5052
Item 3.	Defaults Upon Senior Securities		5052
Item 4.	Mine Safety Disclosures		5052
Item 5.	Other Information		5052
Item 6.	Exhibits		5153
	Signatures		5355

Expected volatility	~~35.4~~34.2	%
Dividend yield	0	%
Risk-free rate	~~1.0~~1.1	%
Expected term (in years)	6.0


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

	Hierarchy Level
($ in millions)	Level 2		Level 3
Land held for sale	$	47	$	—
Infrastructure held for sale		—		5

Exhibit No.		Description

2.1		Agreement and Plan of Merger, dated as of March 10, 2021, by and among Hilton Grand Vacations Inc., Hilton Grand Vacations Borrower LLC, Dakota Holdings, Inc., and certain stockholders named therein (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 11, 2021).**

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~~10.1		~~Rights Agreement,~~Commitment Letter, dated as of ~~April 16, 2020, between~~March 10, 2021, by and among Hilton Grand Vacations Borrower LLC, Bank of America, N.A, BofA Securities, Inc., Deutsche Bank Securities Inc., Deutsche Bank AG Cayman Islands Branch and ~~Equiniti Trust Company, as Rights Agent~~Barclays Bank PLC (incorporated by reference to Exhibit ~~4.1~~10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on ~~April 16, 2020)~~March 11, 2021).

10.2		Amended and Restated License Agreement, dated as of March 10, 2021, by and between Hilton Worldwide Holdings Inc. and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 11, 2021).

~~10.1~~10.3		~~Omnibus~~ Form of Performance and Service-Based Restricted Stock Unit Agreement (for all executive officers other than Mr. Wang)(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 24, 2021). +

10.4		Form of Performance and Service-Based Restricted Stock Unit Agreement (for Mr. Wang)(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 24, 2021). +

10.5		Separation, Waiver and Release Agreement, dated March 19, 2021, between Sherri Silver and Hilton Grand Vacations Inc.* +

10.6		Amendment No. 164 to the Credit Agreement, dated as of March 19, 2021, among Hilton Grand Vacations Parent LLC, Hilton Grand Vacations Borrower LLC, as borrower, Hilton Grand Vacations Inc., the guarantors party thereto, the lenders party thereto and Bank of America, N.A. as administrative agent, collateral agent, swing line lender and L/C issuer thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on March 25, 2021).

10.7		Amendment No. 17 to Receivables Loan Agreement, ~~Amendment No. 8 to the Sale and Contribution Agreement, and Amendment No. 1 to the Servicing Agreement,~~ effective as of ~~August 14,~~December 18, 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 and Bank of America, N.A., as administrative agent, and Wells Fargo Bank, National Association, as paying agent, securities intermediary and 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.agent.*

~~10.2~~10.8		~~Severance~~Amendment No. 18 to Receivables Loan Agreement, effective as of ~~September 21, 2020,~~March 22, 2021, by and ~~between~~among Hilton Grand Vacations ~~Inc.~~Trust I LLC, as borrower, the financial institutions signatory thereto as managing agents, the financial institutions signatory thereto as conduit lenders, the financial institutions signatory thereto as committed lenders and ~~Matthew A. Sparks. +~~Bank of America, N.A., as administrative agent.

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 10-Q (File No. 001-37794) filed on July 30, 2020).

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. *

Exhibit No.		Description

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		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL 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